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

Dallas Court of Appeals.

Urban Television Network Corp. v. Creditor Liquidity Solutions, L.P., No. 05-07-01629-CV.

Westar Satellite Services, L.P. and Urban Television Network Corporation entered into a five year services agreement. The agreement contained a liquidated damages clause. After two years, Urban Television defaulted on its obligations and Westar sued to enforce the liquidated damages clause.

Urban Television tried to invalidate the liquidated damages clause by claiming it was an unenforceable penalty. A line of cases starting in the 1970’s allowed parties to invalidate liquidated damage clauses if they applied equally to the breach of trivial clauses as well as material clauses. Thus, attorneys now search a contract for any minor promise that could potentially trigger liquidated damages in hopes of declaring the provision a penalty.

The usual target of these searches is a provision usually found in contracts that provides for termination for basically any promise made in the contract. These general provisions are put in contracts to protect the drafting attorney from inadvertently failing to specify an important promise that could trigger liquidated damages. However, such provisions are so all-encompassing that any minor promise in the contract could be construed to trigger liquidated damages. Thus, attorneys would get rulings invalidating the clauses where they could find broad termination clauses that would include minor promises.

In this case, the Westar contract avoided such a problem by inserting “material” into the termination clause so as to read ‘either party fails to perform or observe any material term or obligation…” (Emphasis added). By adding “material,” the termination clause excluded any trivial promises that may have been in the contract.  That key distinction made the liquidated damages provision enforceable and allowed Westar to win summary judgment in the trial court and affirm that judgment on appeal.

The opinion can be read here.

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In Shaw v. Radionic Industries, Inc., the plaintiff moved for summary judgment against the pro se defendant on a claim for a suit on a sworn account. The court set a hearing for the motion on April 2, 2007. Later, the plaintiff sent a transmittal letter dated March 22, 2007 to the defendant to inform him of the hearing. The letter did not contain a certificate of service.

Did the defendant receive proper notice?

The trial court did grant the summary judgment, but the Dallas Court of Appeals later overturned the judgment in a restricted appeal. Because summary judgment is such a harsh remedy, the court scrutinized the record and discovered that the plaintiff was dilatory in sending the notice of hearing letter.  As a result, the defendant only received 11 days notice of the hearing.  But Tex. R. Civ. P. 166a(c) requires that the non-movant receive notice 21 days before the hearing. So the court reversed the summary judgment and remanded the case back to the trial court for further proceedings.

Because the untimely notice was sufficient to overturn the judgment, the court did not reach the other complaints regarding service. One involved the lack of a certificate of service in the letter. Incidentally, if a party sends notice of a hearing by way of a transmittal letter as oppposed to a completed fiat, notice may be defective unless the letter contains a certificate of service.  See Tex. R. Civ. P. 21a.

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The Beaumont Court of Appeals recently addressed the difference between judicial estoppel and a judicial admission.  Plaintiff filed a claim with the EEOC and brought suit against defendant for gender discrimination.  After her federal suit was dismissed, she sued the defendant in state court for unlawful termination based on her refusal to perform an illegal act.  Defendant sought summary judgment arguing that plaintiff's federal pleading consituted a judical admission that plaintiff had been fired because of her gender.  In deciding the case, the court of appeals noted that the defendant moved for summary judgment on the basis of plaintiff's alleged judicial admission, but the plaintiff's response only addressed judicial estoppel.   The court explained the difference:

Judicial admission and judicial estoppel are separate principles.  Judicial estoppel is a rule of procedure based on justice and sound policy that bars a party from taking a position inconsistent with one taken in a earlier proceeding.  A judicial admission, by contrast, results when a party makes a statement of fact which conclusively disproves a right of recovery or defense currently asserted.

The court then held that plaintiff's statment in her federal pleadings that she was fired for gender discrimination constituted a judicial admission barring recovery on her state claim under Sabine Pilot that she was fired for refusing to perfom an illegal act.  The court affirmed summary judgment for the defendant.  The court's opinion in Louviere v. Hearst Corp., can be found at this link. 

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The Texarkana Court of Appeals held that a no-evidence motion for summary judgment need only identify the challenged element in order to comply with Rule 166a(i).  Plaintiff argued that the motion must list all of the elements and identify the challenged element(s).  The court of appeals disagreed and held the motion sufficient if it "merely reference[s] the element on which there is no evidence,"  in this case cause-in-fact.  The opinion in Driskill v. Ford Motor Co. can be found at this link. 

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The defendant moved for summary judgment on the plaintiff's claims based on the statute of limitations. To show the accrual date, the defendant attached several documents to his motion. But the defendant's motion did not specifically identify where the evidence was in those documents. Did this meet the summary judgment requirement that a party must specifically identify its proof in the motion?

According to the Amarillo Court of Appeals, in West v. Hamilton, the answer is "no." The court held that generally referencing documentary evidence in a motion does not relieve the movant from the duty to direct the trial court and the non-movant specifically to where the issues are located in those documents, even if the documents are not voluminous.

The specificity requirement directs the movant to provide "fair notice" of the summary judgment contentions and refer the court and parties to the evidence on which the movant is relying for judgment. Because the defendant in this case failed to specifically direct the court and the plaintiff to the evidence he relied on to prove the accrual date, his summary judgment victory in the trial court was reversed on appeal.

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