Texas Supreme

Court Update

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Texas Supreme Court Opinions FY2008 & 2009

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ArbitrationForum / VenueDiscoveryHabeasExpert ReportsOther

Court Changes

Court Changes

Justice Eva GuzmanFamily District Court Judge (1999-2001)

14th Court of Appeals (2001-2009) 900 opinions (4 of 12 dissents successful)

Court Changes

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JeffersonHechtO'NeillWainwrightBristerMedinaGreenJohnsonWillett

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JeffersonHechtO'NeillWainwrightBristerMedinaGreenJohnsonWillett

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JeffersonHechtO'NeillWainwrightBristerMedinaGreenJohnsonWillett

Issues Affecting Business Litigation

Arbitration

In re Morgan Stanley 2009 WL 1901635 (Tex. 2009)

Case: Customer signs contracts with arbitration clause, later declared incompetent.

Issue: Who decides whether client was competent when agreed to arbitration?

Holding: TC decides, not arbitrator.

Arbitration

In re Houston Pipe Line,2009 WL 1901640 (Tex. 2009)

Case: TC allows discovery on liability and damages before motion to compel arbitration.

Issue: Was discovery proper?Holding: No. Discovery strictly limited to

deciding motion to compel.

Pre-Suit Appraisal

St. Farm v. Johnson, 2009 WL 1900538 (Tex. 2009)

Case: Property policies all include pre-suit appraisal requirement.

Issue: Can appraisers decide causation?Holding: Appraisers decide damages, courts

decide liability. Check after appraisal to see if appraisers went too far.

Forum Selection Clause

In re Int’l Profit, 268 SW3d 921 (Tex. 2009)

Case: Contract sets disputes for Illinois, suit filed in Dallas.

Issue: Must forum-selection clause be specifically pointed out?

Holding: No. Parties are presumed to read their own contracts.

Limitations

Ditta v. Conte, 2009 WL 1566989 (Tex. 2009)

Case: Suit to remove trustee more than 4 years after improprieties began.

Issue: What is the limitations period for removing a trustee?

Holding: Like divorce, there is no statute of limitations.

Noncompetes

Mann Frankfort v. Stein, (Tex. 2009)

Case: Accounting firm requires employee to “buy” clients he takes if he leaves.

Issue: Is there are enforceable noncompete?Holding: Yes. Even if employer does not

expressly promise to provide confidential information, it can be implied from nature of the work.

Corporate Knowledge

Chrysler Ins. v. Greenspnt. (Tex. 2009)

Case: Defamation suit. Insurer denies coverage under known-falsity exclusion.

Issue: Can a corporation know of defamation when its officers did not?

Holding: Yes. Acts and knowledge of vice-principal are acts and knowledge of entity.

Corporate Structure

SSP v. Gladstrong, 275 SW3d 444 (Tex. 2009)

Case: Products suit against US importer/ subsidiary of Hong Kong manufacturer.

Issue: Can importer be liable for taking part in “single business enterprise”?

Holding: No. “Creation of affiliated corporations to limit liability while pursuing common goals lies firmly within the law.”

Derivative Suits

In re Schmitz, 285 SW3d 451 (Tex. 2009)

Case: Demand preceding derivative suitIssue: Must pre-suit demand: (1) name a

shareholder, and (2) give details of claim?Holding: Yes. Statute requires (1) current

shareholder, and (2) complaint stated “with particularity.”

Evidence

Reliance v. Sevcik, 267 SW3d 867 (Tex. 2008)

Case: Car wreck. P not seeking punitives, but proves D’s gross sales were $2 billion.

Issue: Harmful error?Holding: Yes. Wealth generally inadmissible.

Hard to claim evidence harmless when went to great effort to introduce it.

New Trial

In re Columbia Med. Ctr, 290 SW3d 204 (Tex. 2009)

Case: TC grants new trial “in the interests of justice”

Issue: Must TC state reasons?Holding: Yes. Trial judge cannot substitute own

views for those of the jury without explaining reasons.

Texas Supreme

Court Update

Supreme Court of Texas Update:

The train has left the station.Is it on the right track?

Joseph M. CoxPatton Boggs, LLP

jcox@pattonboggs.comPatton Boggs, LLP

2001 Ross Avenue, Suite 3000Dallas, Texas 75201

214.758.3417

Attorney’s fees Smith v. Tam Trust, No. 07-0970, Oct. 23, 2009 Can TC, as a matter of law, award attorneys’ fees if

uncontroverted? In this case, P puts in evidence of $62k for attorneys fees

on $215k in damages Jury gives $65k in damages and $0 in atty’s fees TC affirms damages award and vacates $0 finding on atty’s

fees; CA reverses award on atty’s fees and gives full amount because fees were uncontroverted

TSC – reverses CA and states fee “was unreasonable in light of the amount involved and the results obtained, and in the absence of evidence that such fees were warranted due circumstances unique to case”

Evidence raised a fact issue since fees were unreasonable based upon results obtained

No evidence supports jury award of $0

ARBITRATION

Do unconscionable terms matter?

Even if the arbitration provisions have grossly unconscionable terms, the matter still has to go to arbitration?

In re Poly America, L.P., 262 SW3d 337 (August 2008)

TC compels arbitration and Plaintiff files a mandamus

Wait a minute – cannot appeal when TC compels arbitration, right?

Wrong! See dissent of Justice Brister – “Apparently, so long as one expresses qualms, Palacios is a dead letter.”

Provisions of limitation of remedies is unconscionable but arbitrator to decide if fee-splitting and discovery limits are unconscionable but SCT does not see them on their face as being unconscionable

When is mandamus available?

Justice Brister gets his revenge and actually writes an opinion on when a party can use mandamus in relation to a TC compelling it?

In re Gulf Exploration, April 17, 2009 “We granted oral argument to address more

specifically when mandamus relief is available in connection with orders compelling arbitration.”

“To be entitled to mandamus, ‘a petitioner must show that the trial court clearly abused its discretion and that the relator has no adequate remedy by appeal.’ ” citing In re McAllen Medical Center, 275 SW3D 458 – Wainwright dissent, “A whole new world …”

Who wrote majority for In re McAllen Medical Center?

Trial court and discovery

TC can order pre-arbitration discovery that relates to the scope of the underlying claim?

In re Houston Pipe Company (July 3, 2009)

TC ordered pre-arbitration discovery that went to the merits of the case as to scope of claim prior to ruling on motion to compel arbitration

CA affirmed SCT reversed – TC should have ruled

on arbitration issue and not allowed discovery

The fun continues!

Trial and jury issues

Ready, willing and able

Party must get jury finding on ready, willing and able in order to recover damages?

DiGiuseppe v. Lawler, 269 SW3d 588 Argued 10/20/05; decision 10/17/08 Must get jury finding on ready,

willing and able – if allegations were the equivalent of proof, there would be no need for trials

Vigorous dissent – the Court misrepresents the rule in Buford case

Evidence of gross sales

It can be error to admit evidence of gross annual sales of a company when there is no claim for punitive damages?

Reliance Steel v. Sevcik, 267 S.W.3d 867

Error to admit evidence of gross annual sales

“Neither a plaintiff’s poverty nor a defendant’s wealth can help a jury decide whose negligence caused an accident.” opening line of case

Contractual jury waivers

There is a presumption against a contractual jury waiver?

In re Bank of America, N.A. (278 SW3d 342 )

Just like arbitration provision, there is no presumption against jury waivers in contract

A bench trial is another form of alternate dispute resolution as court of appeals erred in distinguishing jury waivers from arbitration clauses

Motion for new trial

Signing a scheduling order instead of an order granting a new trial meets criteria of TRCP 329b(c)?

In re Lovito-Nelson (278 SW3d 773) Per curiam Scheduling order does not meet

criteria of 329b(c) unless it specifically states in the order that the motion for new trial has been granted

In the interests of justice

Can trial judge grant a new trial in the “interests of justice” without stating reasons?

In re Columbia Medical Center (July 3, 2009)

In re Baylor Medical Center at Garland (7/3/09)

In re E.I DuPont (7/3/09) TC must state its reasons as to why

motion for new trial is granted Broad to considerable to significant

to great discretion given to trial judges

Focus on Justice Brister

Does Justice Brister have a heart? Tanner v. Nationwide (April 17, 2009) – he

dissents and so you think not – plaintiffs verdict upheld (Tanner took default against Gibbons relating to high speed car chase of Gibbons by police)

Hagen v. Hagen (May 1, 2009) – he dissents and you will see that he does – this case is a modification of divorce decree (majority held VA benefits not the same as military retirement benefits and pours out ex-wife)

Dallas County v. Posey (May 22, 2009) Posey hung himself with phone cord in

cell Parents sue county – had evidence that

county had ordered replacement of all corded phones

County files pleas to jurisdiction – TC and CA deny the plea

SCT says that use of a phone cord is not tangible personal or real property to waive immunity – Posey used the cord not the governmental agency

Forum Selection Clauses

Does a defendant have to prove that it showed the forum selection clause to the plaintiff in order for the clause to be effective?

In re International Profit Associates (June 12, 2009 per curiam)

TC ordered that defendant had to prove that it showed f.s.c. to plaintiff and denied motion to dismiss on f.s.c. (CA affirmed)

SCT – TC abused its discretion in ordering this

Another In re Int’l Profit f.s.c. case (274 SW3d 672) - -SCT found f.s.c. valid

Chapter 33 Galbraith Engineering Consultants, Inc. v.

Pochuca (June 26, 2009) Case involves construction and design

defects of a home built in 1995 Pochucas sue builder who names engineer

as a RTP under Ch. 33, then Pochuca sues engineer

Engineer says post 10 years therefore you cannot sue me

SCT – correct as Chapter 33 does not revive claim barred by statute of repose

Expert testimony Is an objection at trial necessary to preserve

error on expert testimony? Apparently not so says SCT in City of San

Antonio v. Pollock (May 1, 2009) – benzene case Pollock’ daughter developed acute lymphoblastic

leukemia No objection to expert at time of trial but

objection first alleged at appellate level All parties agree that expert’s analysis was

reliable but on appeal testimony is challenged as conclusory

SCT does factual sufficiency review (in my opinion) of each expert and deems them inadequate as a matter of law despite no objection at trial