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.

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.

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.

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.

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.

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.

The Dallas Bar Association Appellate Law Section will have its monthly CLE at the Belo Mansion on Thursday, May 16, 2013, at noon.  This month’s speaker is Richard Smith from Lynn, Tillotson, Pinker & Cox, LLP, and Mr. Smith will speak about developments at the Dallas Court of Appeals.  One hour of CLE credit is available.

The Class Action Fairness Act (CAFA) gives federal courts jurisdiction of class actions where the matter in controversy exceeds $5 million.  The U.S. Supreme Court considered the question of whether a named class representative can avoid application of CAFA by stipulating that he will not seek damages that exceed $5 million in Standard Fire Ins. Co. v. Knowles.

In an unanimous opinion, the Court holds that the stipulation is ineffective.  In other words, the stipulation will not foreclose application of CAFA.  Why?  The Court reasons that a plaintiff cannot legally bind members of the proposed class before the class is certified.  This opinion resolves a split that had developed between the circuit courts of appeals.

One issue the Court did not resolve was whether the plaintiff’s counsel for the named representative could avoid application of CAFA by stipulating that he would limit attorney’s fees sought.  The Court did not address this because that particular stipulation had not been offered in the district court.  The Court’s opinion may be found here.