Reverse and Render : Texas Appellate Lawyer & Attorney : Cowles & Thompson Law Firm : Court of Appeals, Texas Supreme Court

The Dallas Court of Appeals held that a temporary injunction order that does not on its face set the cause for trial on the merits or fix the amount of security to be given is void and must be dissolved.  In CLST Holdings, Inc. v. Red Oak Partners, LLC, the trial court granted Red Oak Partners', Pinnacle Fund's and Red Oak Fund's application for injunctive relief to compel CLST to conduct its annual shareholder's meeting.  CLST filed an interlocutory appeal to complain and sought emergency relief. 

The court of appeals observed that when an order grants injunctive relief that is effective immediately so that it operates during the pendency of the suit, it is a temporary injunction.  The Court further held that the rules of civil procedure are mandatory and require that the order "set the cause for trial on the merits and fix the amount of security to be given by the applicant."  Further, becuase Rule 683 is strictly construed as to its requirements, the court of appeals held that the order must be complete on its face, such that it is unacceptible to set a trial date in a separate document.  Here, the court granted CLST's motion for emergency relief, declared the injunction void and ordered it dissolved.  The court's opinion can be found at this link.

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The Austin Court of Appeals recently held that a plaintiff's notice of non-suit precludes a defendant from recovering attorney's fees as prevailing party under a written agreement.  In this case, the plaintiffs bought a house from defendants under a standard-form sales contract promulgated by the Texas Real Estate Commission.   Plaintiffs brought suit against defendants for failing to disclose alleged defects to the house and sought attorney's fees.  Defendants also requested attorney's fees.  Section 17 of the contract provides that the prevailing party is entitled to attorney's fees.  Plaintiffs nonsuited their claims prior to trial leaving only the defendant's claim for attorney's fees unresolved.  The trial court entered a take nothing judgment against the plaintiffs (despite the nonsuit) and awarded the defendants attorney's fees.

The court of appeals reversed the take-nothing judgment against the plaintiffs because the trial court had no discretion but to dismiss the plaintiffs' claims without prejudice once the notice of nonsuit was filed.  More importantly, however, the court reversed the attorney's fees award and held that the defendants were not prevailing parties because they had not prevailed on the merits of any legal proceeding related to the contract.  The court of appeals stated:

Because the court did not adjudicate the [plaintiffs'] claims, and because the [defendants] brought no claim for relief on which they could prevail other than their request for attorney's fees, the [defendants] did not prevail on any claims that would entitled them to attorney's fees under the terms of contract.

The court of appeals also rejected defendants' argument that allowing parties to nonsuit at the last minute to avoid liability for attorney's fees was poor public policy.  The court distinguished a case in which a party sought statutory attorney's fees after a partial nonsuit.  The court's opinion in Fowler v. Epps can be found here.

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The Dallas Court of Appeals granted a petition for writ of mandamus in In re Hunter, and ordered the trial court to specify the reasons for ordering a new trial.

The court's opinion  relies upon the Texas Supreme Court's opinion in In re Columbia Medical Center, 290 S.W.3d 204 (Tex. 2009), to support its holding.  Interestingly, the relator (Hunter) apparently argued that the trial court was required to vacate or set aside its order granting the new trial.  The court's opinion does not state what reasoning the relator gave to support her argument.  However, the court of appeals cites the Texas Supreme Court's opinion in In re United Scaffolding, Inc., for the proposition that vacating or setting aside the order is not required.  Without knowing what reason the relator gave to support her argument, it's hard to know how United Scaffolding applies.  The opinion in In re United Scaffolding addressed whether the granting of the new trial was improper to the extent it was based upon a lack of sufficient evidence.  The supreme court stated that because it did not know the reason the new trial was granted, it could not grant relief other than requiring the trial court to specify the reasons.  This language almost implies that other relief could be granted in some circumstance.  Here, we don't know if Hunter made the same argument as United Scaffolding, or if some new and different argument was presented and rejected.

The court's opinion in In re Hunter may be found at this link.

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The United States Supreme Court recently resolved a split of authority as to the citizenship of corporations for purposes of federal diversity jurisdiction.  Corporations are deemed citizens of the state in which they are incorporated and the state in which they have their "principal place of business."  In Hertz Corp. v. Friend, the Court adressed the interpretation of the phrase "prinicipal place of business."  The Court first discussed the various tests developed and applied by the courts of appeals focusing on the "nerve center" test  and "business activities" test.  In this case, the Ninth Circuit employed the business activities test and held that because Hertz did more business in California than any other state, it was a citizen of California.  The Supreme Court disagreed and held that 

“[P]rincipal place of business" is best read as referring to the place where a corporation’s officers direct, control, and coordinate the corporation’s activities. It is the place that Courts of Appeals have called the corporation’s “nerve center.”  And in practice it should normally be the place where the corporation maintains its headquarters . . .

The Court concluded by acknowledging that "seeming anomalies" will arise under this test, but the Court was willing to accept them "in an effort to find a single, more uniform, interpretation of the statutory phrase" and "in view of the necessity of having a clearer rule."  Thus, a corporation's dual citizenship for diversity purposes consists of the state of incorportation and the state in which the headquarters is located.  Accordingly, the Court reversed the Ninth Circuit and remanded for reconsideration in light of this test.  The Supreme Court's unaminous opinion can be found here. 

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Supersedeas aficionados will want to take a look at the Austin Court of Appeals' opinion in Shook v. Walden.  The opinion gives a very thorough treatment of the parties' arguments and analysis of the law relating to elements of damages that must be superseded.  To summarize, the court of appeals makes the following holdings:

• Attorney's fees awarded under Civil Practice and Remedies Code Chapter 38 are not compensatory damages that must be superseded under Civil Practice and Remedies Code Section 52.006.  The court distinguishes the Houston Fourteenth Court of Appeals decision in Clearview Props., L.P. v. Property Tex. SC One Corp., 228 S.W.3d 262 (Tex. App.--Houston [14th Dist.] 2007, pet. denied)
• Prejudgment interest is a form of compensatory damages that must be superseded under Civil Practice and Remedies Code Section 52.006.
• The clerk's record for an appeal is not a cost awarded in the judgment and does not have to be superseded under Civil Practice and Remedies Code Section 52.006.
• Post-judgment interest, including the post-judgment interest awarded on prejudgment interest, trial and post-judgment attorney's fees, and costs must be superseded under Civil Practice and Remedies Code Section 52.006.
• Post-judgment interest for one year's estimated is adequate since the trial court has continuing jurisdiction to revisit the matter after a year has passed.

The court's opinion may be found here.  The court's opinion that post-judgment interest on post-judgment attorney's fees must be superseded is interesting in light of the Fourteenth Court's holding that post-judgment interest on post-judgment attorney's fees should not begin to run until the appeals court judgment is final.  Protechnics Int'l, Inc. v. True-Tag Sys., Inc., 843 S.W.2d 734, 736 (Tex. App.-- Houston [14th Dist.] 1992, no writ).

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The Dallas Court of Appeals has held that "due process requires that a party be given the opportunity to present its arguments to a court before the court makes a ruling." (citing TRAP 52.4).

In In re Victor Enterprises, Inc., the trial court (Dallas County Court at Law No. 1) granted a petition for writ of mandamus without requesting a response from Victor Enterprises.  Victor Enterprises sought mandamus relief in the court of appeals.  Interestingly, the court of appeals requested a response from the real party in interest.  The real party in interest filed no response.  The court of appeals concluded that the trial court abused its discretion by granting the petition without requesting a response or allowing Victor Enterprises time to file a response.   The writ of mandamus was conditionally granted.  The court's opinion may be found here.

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The Twelfth Court of Appeals recently held that lack of consideration is an affirmative defense that must be plead.  In this case involving a will contest, the court reversed an order granting a no-evidence motion for summary judgment on the basis that the agreement at issue lacked consideration.  The court ruled that consideration for a written instrument is presumed.  The Court also held, however, that lack of consideration is an affirmative defense.  Thus, the court concluded, it was improper for a movant to utilize a no-evidence motion regarding a claim on which the movant has the burden of proof.  The court's opinion in Burges v. Mosley can be found here. 

In my opinion, there is a problem with treating lack of consideration as an affirmative defense.

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Attorney's Fees for travel time are recoverable under Chapter 38 of the Texas Civil Practice and Remedies Code, according to the San Antonio Court of Appeals.   In Wilkerson v. Atascosa Wildlife Supply, Atascosa sought recovery of attorney's fees inclusive of $5,500 for travel time.  Atascosa offered evidence that the travel time was reasonable and necessary considering the distance traveled.  The evidence also showed that he billed only one-half of his rate for 36 hours of the travel time in which he was driving and not actively working on the case.  After the trial court granted Atascosa's attorney's fees, Wilkerson appealed.

The court of appeals observed that it could find no Texas case precluding an award of attorney's fees that includes travel time.  Based upon the evidence presented, the court concluded that there was nothing in the record showing the award of attorney's fee for travel time was unreasonable or arbitrary and the court affirmed the judgment.  The court's opinion may be found here.  Wilkerson has now been filed in the Texas Supreme Court.  The docketing information can be found here.

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The Houston (Fourteenth) Court of Appeals recently held that a trial court abuses its discretion if it conditions a trial setting on the payment of sanctions.  Here, after a plaintiff and his attorney were sanctioned $45,000 and $5,000, respectively, they challenged the sanctions order by mandamus.  In its memorandum opinion, the court of appeals began by holding that because the plaintiff and his attorney did not claim that the sanctions threatened their ability to continue the litigation, they had an adequate remedy by appeal and, thus, were not entitled to mandamus relief with respect to the sanctions.

In addition to awarding sanctions, however, the order set the trial for the "next available trial date following payment of the fees in full as ordered herein."  Citing precedent, the court held that "[a] sanctions award that impedes the prosecution of the case warrants extraordinary relief."  Accordingly, the court of appeals conditionally granted mandamus and ordered the trial court to delete the language in the sanctions order that conditioned the trial setting on the payment of sanctions.  The court's opinion in In re Gawlikowski can be found here. 

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