Dallas court limits discovey of expert's finances

The Dallas Court of Appeals recently issued an opinion limiting the discoverability of an expert's finances. In this personal injury case, the defendant hired an expert employed by a firm that derived ninety percent of its revenues "from the defense side of the docket." Armed with this information, the plaintiff sought financial information regarding the firm's ties to insurance companies in an effort to demonstrate bias. The defendant objected to the plaintiff's request. The trial court, however, modified the scope of information sought and ordered the defendant to disclose its expert's gross revenues from insurance companies over the past five years. Defendant responded by filing a petition for writ of mandamus.

In an opinion by Justice Ada Brown, the court of appeals first held that Rule 195 of the Texas Rules of Civil Procedure, which provides the scope of discovery related to expert witnesses, does not allow the discovery sought. The Court noted that the Texas Supreme Court has held that while discovery regarding payment received for work performed is allowed, "expansive" discovery to establish financial bias is prohibited. Finally, the Court decided that even if the Supreme Court's opinion in Walker v. Packer survived the enactment of Rule 195 with respect to expert discovery, the discovery was still improper barring other extrinsic evidence placing the expert's credibility in doubt. Because no such evidence was present here, the Court held that the trial court abused its discretion by ordering the discovery. Accordingly, the Court conditionally granted the writ of mandamus and directed the trial court to vacate its discovery order. The Court's opinion in In re Central North Construction, LLC can be found at this link.

New Standard for Mandamus Relief?

The Dallas Court of Appeals has issued an Opinion in a mandamus proceeding that establishes a new standard for mandamus relief.  In In re Pendragon Transportation, LLC, Pendragon complained of a trial court order that appointed a special master to attend depositions in the case and to make rulings on any objections, assertions of privilege, and instructions not to answer, in real-time.  Pendragon also complained that the order required Pendragon to pay the special master's fees up front.   In support of its order, the trial court found that the exceptional circumstances of the case justified taking the action in question.  Pendragon filed a written objection to the order over two months after it was rendered, and four months later Pendragon sought mandamus relief from the court of appeals.

In its opinion, the court of appeals notes that the threshold for "exceptional" circumstances to appoint a special master is quite high, but the court ultimately concludes that Pendragon was not entitled to mandamus relief as to the appointment of the master because of its delay in seeking mandamus relief without providing any justification for the delay.  However, in addressing the portion of the order requiring that Pendragon pay the special master's fees in advance, the court of appeals concludes that there was a clear abuse of discretion and no adequate remedy by appeal, and the opinion adds this reasoning:

Because the trial court's order regarding fees was clearly in direct contravention of the rules of civil procedure, Pendragon's delay in filing its petition does not bar its right to relief on this issue.

Whether the court intended this change in mandamus practice remains to be seen, but it now becomes the law that delay is not an obstacle to mandamus relief if you are faced with a clear and direct contravention of the rules of civil procedure.  The Court's opinion may be found here.

Thanks to Andy Korn for calling this one to my attention.





Appellate CLE on Privilege

The Dallas Bar Association Appellate Law Section will have its monthly meeting on Thursday, March 20, 2014, at noon at the Belo Mansion.  The guest speaker this month is Jadd Masso of Strasburger & Price.  He will be speaking on the subject of "Preserving, Proving, and Challenging Privilege."  One hour of CLE credit is available.

Trial court's denial of motion to designate RTP subject to mandamus

The Dallas Court of Appeals recently held (again) that the improper denial of a motion for leave to designate a responsible third party under Chapter 33 of the Civil Practice & Remedies Codes is subject to review by mandamus. The case arose from a collision between a crane truck and a bus. Plaintiff was a passenger on the bus and sued the defendants, but not the company that owned and operated the crane truck. Consequently, the defendants filed a motion for leave to designate the crane company as a responsible third party. The trial court denied the defendants' motion, but allowed the parties the opportunity to replead. After repleading, the parties again filed a motion for leave to designate a responsible third party, which the trial court again denied.

In holding that the trial court erred by failing to grant defendants' motion, the Court stated that the trial court must take the allegations against the third party as true. The Court also noted that the proper method to attack the designation on the merits is by a motion to strike the designation or by motion for summary judgment. Next, the Court held that mandamus was available by citing its holding in In re Oncor Elec. Delivery Co. that "an improper denial of leave to designate a responsible third party may not be adequately addressed by appeal." Accordingly, the Court conditionally granted the writ of mandamus. The Court's opinion in In re Greyhound Lines, Inc. can be found at this link.

Appellate CLE: Appeals in Removals and Remands

The Dallas Bar Association, Appellate Law Section will have its monthly CLE lunch on Thursday, February 20th at noon at the Belo Mansion.  Ken Carroll, of Carrington Coleman, will speak on the subject of "Appeals in Removals and Remands."  The program is worth one hour of CLE credit.

Hecht Becomes Longest Serving Supreme Court Justice

On Sunday, January 26th, 2014, Chief Justice Nathan Hecht became the longest serving justice on the Supreme Court of Texas in state history.  Sunday marked his 9,157th day of service on the Texas Supreme Court.  Hecht was first elected in November of 1988, and took his seat on the court on January 1, 1989. 

Prior to Sunday, the longest serving justice had been Chief Justice Joe R. Greenhill.

Congratulations to Chief Justice Hecht for your service to the citizens and jurisprudence of the state.

Dallas Court of Appeals issues rare en banc decision addressing summary judgment practice

The Dallas Court of Appeals recently addressed summary judgment practice in a rare en banc opinion. At issue was whether the defendants' no-evidence motion for summary judgment adequately challenged the elements of plaintiffs' claims by listing the elements  and then stating that the plaintiffs had no evidence to support "one or more" of the elements of the claims.  In an opinion by Justice Evans, a divided en banc court joined a number of other courts that have addressed this issue and held that a no-evidence motion must expressly identify the challenged element as required by Rule 166a(i). The court also held that there is no "fair notice" exception to the specificity requirement, and that the plaintiffs did not waive their challenge to the motion by failing to specially except because the legal sufficiency of a no-evidence motion for summary  judgment can be challenged for the first time on appeal.  Accordingly, the majority reversed the summary judgment and remanded the case to the trial court. 

In dissent, Justice O'Neill, joined by two other justices, would have affirmed the trial court because the motion "as a whole" gave plaintiffs fair notice that defendants were challenging each and every element, and because plaintiffs waived any challenge by failing to object or specially except in the trial court.  The Court's opinion in Joe Fuentes Co., Inc. v. Alfaro can be found here and the dissent here.

Admissions not binding on employment status

Attorneys should think twice before relying on an admission regarding a party's employment status.  The Dallas Court of Appeals recently held that discovery admissions are not binding on legal issues, and do not raise a genuine issue of material fact on questions of law.  In this case, the plaintiff sued the City of Dallas for injuries sustained on the job.  The plaintiff was employed by a staffing company and paid by the City through the staffing company based on hours worked.  The City filed a plea to the jurisdiction and the issue came down to whether the plaintiff was an "employee" allowing the City to invoke the workers compensation bar.  The City claimed the plaintiff was an employee because it controlled the details of the plaintiff's work and paid the plaintiff by the hour through the staffing company.  The plaintiff countered that he was an independent contractor because the City did not provide him with all of his equipment and did not control the details of work.  The plaintiff also relied on two discovery responses in which the City, in disputing the plaintiff's entitlement to workers' compensation benefits, "admitted" the plaintiff was an independent contractor and was not a borrowed servant. 

Despite these "admissions,"  the Court held that "[plaintiff's] employment status with the city is a question of law based on the undisputed facts regarding the City's right to control the details of [plaintiff's] work."  The Court noted that admissions "are not binding, nor do they create a fact issue" on questions of law.  As a result, the Court reversed the trial court and rendered judgment for the City dismissing the plaintiff's claim.  The Court's opinion in Salyer v. City of Dallas can be found here.

More Fun with Supersedeas Practice

The Houston Fourteenth Court of Appeals recently issued an opinion that addresses a couple of important issues for supersedeas practice, namely consolidated financial statements, burden of proof, and expert requirements.

In Hunter Buildings & Manufacturing L.P. v. MBI Global L.L.C., the trial court signed a judgment against six entities for joint-and-several liability.  Three of the judgment debtors--who I'll call X, Y, and Z--filed net worth affidavits and posted cash bonds.  X posted a cash bond of $1,579,190, claiming net worth of $2,864,743.25.  Y and Z each posted cash bonds of $100, claiming negative net worths.  MBI Global filed a contest to the affidavits of net worth.  The trial court found Y's net worth to be $9,997,810 and ordered additional security to be posted.  The trial court made no findings as to X's and Z's net worth. X, Y, and Z moved for review of the net worth determinations under Appellate Rule 24.

The court of appeals first held that GAAP's rule relating to consolidated financial statements did not override case law requiring that the net worth of each individual judgment debtor must be determined separately.  The trial court had determined Y's net worth based upon a consolidated financial statement that included 8 different entities.

Next, the court of appeals held that a judgment debtor does not have to present audited net worth evidence with a certification from a CPA that all requirements of GAAP have been met.  Instead, a judgment debtor can meet its burden of proof by evidence from a bookkeeper with knowledge of the debtor's records and can present a balance sheet of the debtor using GAAP principles to show net worth.

In addition, the court of appeals held that uncontradicted testimony can be used to prove net worth as a matter of law.

Finally, the court of appeals held that the trial court erred in using a consolidated financial statement of Y based only on evidence Y controlled the subsidiaries listed when there was no evidence that Y was the alter ego of the other entities listed.

The court's opinion may be found here.

Incremental Clarity for Supersedeas: Attorney's Fees

Little by little, appellate practitioners are getting answers to the many questions emanating from the supersedeas statute and law that came about as part of tort reform in 2003.  The Texas Supreme Court's opinion in In re Nalle Plastics Family Limited Partnership holds that attorney's fees are not compensatory damages that must be superseded. 

The law firm of Porter, Rogers, Dahlman & Gordon, P.C. sued Nalle Plastics for breach of contract to recover unpaid legal fees.  After a jury trial, the law firm recovered $132,661 in damages and the jury awarded $150,000 for attorney's fees in connection with the breach of contract action.   Nalle Plastics superseded the $132,661 in damages, but not the attorney's fees.  The trial court concluded that Nalle Plastics was required to also supersede the attorney fee award.  After the court of appeals held that attorney's fees are compensatory damages that must be superseded, Nalle Plastics sought supreme court review by petition for mandamus. 

After review of the legislative history, the plain meaning of compensatory damages, and the legislative scheme, the supreme court held that attorney's fees are not compensatory damages.  The court also held that attorney's fees are not costs of court that must be superseded. 

There is one caveat in the court's opinion.  The court refused to hold that attorney's fees can never be considered compensatory.  As an example, the court noted that the breach of contract cause of action against Nalle Plastics was to recover unpaid attorney's fees as damages.  The court held that these fees which were the damage element of the breach of contract claim and as such would constitute compensatory damages.

The court's opinion may be found here.