Civil Case Law Update

2015 Collin County Bench Bar Conference

May 15-17, 2015

Martin E. Thornthwaite

What This Covers

1. Collin County Local Rules

2. Texas Rules of Evidence

3. Important Texas cases in 2014 and 2015

4. Proposed change to Texas court system

Collin County Local RulesSelf-Represented Litigants (Rule 1.2)

Electronic Recordings (Rule 1.3(c))

Document and Filing Requirements (Rule 2.2)

Applications for TRO and Other Ex Parte Orders (Rule 2.4)

Discovery Protective Order (Rule 2.5)

Certificate of Conference (Rules 3.3 and 3.4)

Service of Subpoenas on Non-litigant Government Officials and Employees (Rule 3.6)

Motions to dismiss (Rule 91a)

Pretrial Conference (Rule 5.1)

Registry of the Court (Rule 7.3)

Self-Represented LitigantsRule 1.2 – added

•Local Rules apply with equal force to self-represented litigants.

•Contact information to be provided to the District Clerk.

•Failure to accept delivery or pick up mail at designated address is considered constructive receipt of the document.

–May be established by a postal service receipt for certified or registered mail or comparable proof of delivery.

Electronic RecordingsRule 1.3(c) – added

• No photos or electronic recordings of any kind are allowed in the courthouse, unless specifically authorized by the Judge in accordance with Texas Rule of Civil Procedure 18(c). 

• Includes:– Cell phones– Camera phones– iPads

Document and Filing RequirementsRule 2.2– specifies format and content of court filings

• Descriptive title  • Each page numbered and titled• Orders and judgments separated  • One-inch margins • Signature blocks containing complete contact information• Compliance with TRCP 21c on sensitive data• No malware or viruses E-filing constitutes a certification that the

document has been checked and is clear of any malware or viruses• Fiat filed as a separate Notice of Hearing  • No combined filings   • Multiple documents pertaining to a single filing combined in a single PDF

with bookmarks• Proposed orders filed as a subsequent filing/envelope • Constable service requests verified through the Collin County Interactive

Map, Precinct Finder at http://gismaps.collincountytx.gov.

TRO and Other Ex Parte OrdersRule 2.4 – added

Notification Requirement Party MUST notify and provide copy of application and proposed order at least two (2) hours before presentment to the court

Two Exceptions:Requires a verified certificate filed with the application• Imminent irreparable harm + insufficient time to notify• Notification would impair or annul the Court’s power to

grant relief because the subject matter of the application could be compromised or property removed, secreted or destroyed

Discovery Protective OrderRule 2.5 – new standard form

Available at: http://www.co.collin.tx.us/district_courts/Documents/Local%20Rules%20Protective%20Order%202014.pdf

Certificate of ConferenceRule 3.3 and Rule 3.4

• Certificate of Conference REQUIRED for non-dispositive motions

• Does not apply to– Dispositive motions– Motions for summary judgment– Default judgments– Motions for voluntary dismissal or nonsuit– Post-verdict motions– Motions involving service of citation

Service of Subpoenas on Certain Non-Litigants

Rules 3.6– added

Applies to: Service of subpoena and subpoena duces tecumServed on: Non-litigant government officials and employees

Requirements• First: Contact representative and make “reasonable good faith inquiry” to

identify appropriate official or employee to serve- Contact during regular business hours AND- Contact at least 3 business days before subpoena is issued

• Second: Serve the subpoena with certificate detailing compliance with rule

Remedies available by court order• Expenses, including attorney fees, paid to the person/entity opposing the

subpoena

Pretrial Conference

Rule 5.1 – added

In all cases in which a jury fee has been paid…

The Court MUST conduct a pretrial conference prior to the selection of the jury

Unless…

Otherwise agreed to by the parties or order of the Court.

Registry of the CourtRule 7.3 – new model language for Orders releasing Registry Funds

“THE DISTRICT CLERK IS ORDERED TO ISSUE A CHECK PAYABLE TO JANE MARIE DOE FOR AN AMOUNT EQUAL TO ALL FUNDS PLUS ACCRUED INTEREST or THE PRINCIPLE AMOUNT OF $_______, PLUS ACCRUED INTEREST.”

WaiverRequires the express language:

“WAIVE THE THIRTY-DAY WAITING PERIOD”

Texas Rules of Evidence• Non-Substantive Changes

• Substantive Changes– Authentication of Business Records (TRE

902(10))– Waiver of Privilege by Voluntary

Disclosure (TRE 511)– Prior Statements of Witnesses:

Impeachment & Support (TRE 613)

Texas Rules of EvidenceNon-Substantive Changes

• Effective April 1, 2015

• Mirrors the 2011 amendments to the Federal Rules of Evidence

• Intended to make the rules easier to understand through clearer language and a better format

• Rules will keep the same numbers

Texas Rules of EvidenceSubstantive Changes Effective September 1, 2014

TRE 902(10) – Authentication of Business Records• Before: Authentication requires notarized

affidavit• Now: Authentication requires opposing counsel

be served with the business records AND– (a) an affidavit; OR – (b) an unsworn declaration made under

penalty of perjury, at least 14 days before trial.

Texas Rules of EvidenceSubstantive Changes Effective April 1, 2015

TRE 511 – Waiver of Privilege by Voluntary Disclosure• Incorporates the provisions of Federal Rule of Evidence 502

– Only addresses disclosure of communications or information covered by the lawyer-client privilege or work-product protection

– Does not affect the law governing waiver of other privileges or protections.

TRE 613 – Prior Statements of Witnesses: Impeachment & Support• Before: Witness must be first be given an opportunity to explain

or deny in order for the examining attorney to introduce extrinsic evidence

• Now: Still required but no longer part of examining attorney’s foundation to introduce evidence

Civil Case Law•Constitutional Law

– Defamation damages incurred by for-profit corporations•Contracts

– Arbitration clauses between medical providers and patients– Economic loss rule as applied to contractual strangers

•Corporations– Shareholder oppression in closely-held corporations

•Employment Law– Reporting requirements under the Texas Whistleblower Act– Attorney’s fees under the Texas Labor Code

•Evidence–Admissibility of seat belt evidence to limit plaintiff damages–Framework for addressing evidence spoliation

•Insurance–Limitation of “additional insured” coverage

Constitutional LawDefamation Damages Incurred by For-Profit Corporations

Waste Management of Texas, Inc. v. Texas Disposal Systems Landfill, Inc., 434 S.W.3d 142 (Tex. 2014).

• Issue:  Whether there was sufficient evidence for a jury to award reputation damages to a corporation.

• Rule: A corporation may recover reputation damages as non-economic damages for purposes of the statutory cap on exemplary damages. 

ContractsArbitration Clauses

Arbitration Clauses Between Medical Providers and Patients

The Fredericksburg Care Co., L.P. v. Juanita Perez et al, No. 13-0573, 2015 Tex. LEXIS 221 (Tex. March 6, 2015).

• Issue:  Whether the arbitration provision of the Health Care Liability Act (“TMLA”) is preempted by the Federal Arbitration Act (“FAA”).

• Rule: The arbitration provision of the TMLA is generally preempted by the FAA where the healthcare contract affects interstate commerce, unless an exception applies.– The McCarran-Ferguson Act does NOT exempt the

TMLA from preemption by the FAA.

ContractsEconomic Loss Rule

Economic Loss Rule As Applied to Contractual Strangers

Chapman Custom Homes, Inc. v. Dallas Plumbing Co., 445 S.W.3d 716 (Tex. 2014) vs. LAN/STV v. Martin K. Eby Constr. Co., Inc., 435 S.W.3d 234 (Tex. 2014).

Differences??

• Parties (owner vs. contractor)• Claims (breach of the duty of good workmanship vs.

negligent misrepresentation)• Damages (property vs. delay)

CorporationsShareholder Oppression in Closely-Held Corporations

Ritchie v. Rupe, 443 S.W.3d 856 (Tex. 2014).

Issue: Whether the majority shareholders’ refusal to meet with potential buyers of a minority shareholder’s interest constitutes shareholder oppression.

Rules• Statutory claim available only under rehabilitative receiver statute in

section 11.404 of the Texas Business Organizations Code• “Oppression” requires the directors or manager to act:

(1) in abuse of authority over the corporation; (2) with the intent to harm the interests of one or more

shareholders; (3) in a manner that does not comport with the honest exercise of

their business judgment; and (4) in manner that creates a serious risk of harm to the corporation. 

• NO common law cause of action

Employment LawReporting Requirements under the Texas Whistleblower Act

Tex. Comm’n on Envtl. Quality v. Resendez, 450 S.W.3d 520 (Tex. 2014).

• Issue:  Whether the Texas Whistleblower Act applies to a government employee’s report of wrongdoing up her chain of command and then to a state senator’s office.

• Rule: Internal reports of wrongdoing do not trigger the Whistleblower Act, even where agency policy is to forward the reports to the agency’s enforcement arm. 

Attorney’s Fees Under the Texas Labor Code

Bill Miller Bar-B-Q Enters. v. Gonzales, 2014 Tex. App. LEXIS 11796 (Tex. App.—San Antonio Oct. 29, 2014, no pet.) (not designated for publication).

• Issue:  Whether the reasonableness of statutory attorney fees is a fact question for the jury’s determination.

• Rule: The jury must decide the reasonableness of statutory attorney fees Circuit SPLIT

EvidenceSeat Belt Evidence

Admissibility of Seat Belt Evidence to Limit Damages

Nabors Well Servs., Ltd. v. Romero, No. 13-0136, 2015 Tex. LEXIS 142 (Tex. Feb. 13, 2015).

• Issue:  Whether evidence that a plaintiff was not wearing a seat belt during a collision is admissible to reduce her recovery.

• Rule: Seat belt evidence is admissible for the purpose of apportioning responsibility under Texas’ proportionate responsibility statute if the defendant can establish that the nonuse caused or contributed to cause the plaintiff’s injuries. 

• But….– Still limited by the Rules of Evidence Must be relevant

• Relevant only if the defendant establishes that the nonuse caused or contributed to cause the plaintiff’s injuries. 

• Trial court should consider this outside the presence of the jury– Cannot be used to establish failure to mitigate

EvidenceSpoliation

Framework for Addressing Evidence Spoliation

Brookshire Bros. v. Aldridge, 438 S.W.3d 9 (Tex. 2014).

• Framework - Competing concerns that spoliation can deprive the nonspoliating party of relevant evidence and that spoliation remedies can shift the focus of the trial away from the merits of the case.

• First: Court - Party has spoliated evidence as a matter of law.• Second: The spoliation sanction must be

– (1) directed against the wrongful conduct and toward remedying any prejudice suffered, and

– (2) no more severe than necessary to satisfy its legitimate purpose.• Third: The court should submit an instruction only if it finds (1) the

spoliating party acted with intent to conceal discoverable evidence, or (2) the spoliating party acted negligently and caused the nonspoliating party to be irreparably deprived of any meaningful ability to present a claim or defense. – Intentional = Intent to conceal or destroy discovery evidence

(including “willful blindness”)

InsuranceLimitation of “Additional Insured” Coverage

In Re Deepwater Horizon, No. 13-0670, 2015 Tex. LEXIS 141 (Tex. Feb. 13, 2015).

• Issue:  Whether a contractor’s status as an “additional insured” under an insurance policy is limited by its assumption of liability under the terms of a drilling contract such that it assumes liability for claims otherwise covered under the language of the umbrella policies alone.

• Rule: The standard for determining the scope of coverage is based on the language employed in the insurance policy.  If the policy directs the court elsewhere, the court will refer to an incorporate document to the extent required by the policy.  But to consider coverage limitations in underlying transactional documents, the terms of the policy must obligate the court to make such consideration. 

Up Next?H.B. 1603 Chancery Courts Bill•Proposed bill would create new chancery courts in Texas

–Concurrent jurisdiction with district courts •Derivative actions•Actions related to qualified transactions•Corporate governance•Internal affairs•Securities•Trade Law

•Courts would feature judges with extensive expertise in business•Goal: Enhance business-friendly environment to attract more businesses to Texas

Civil Case Law Update

2015 Collin County Bench Bar Conference

May 15-17, 2015

Martin E. Thornthwaite