The Appellate Advocate - K&L Gates...Page 168 — The Appellate Advocate The Chair’s Report Doug...

The Appellate Advocate State Bar of Texas Appellate Section Report Vol. 20, No. 3 Spring 2008

OFFICERS

Douglas W. Alexander, Chair

Alexander Dubose Jones & Townsend LLP 512-482-9301 Fax: 512-482-9303

[email protected]

Daryl Moore, Chair-Elect Daryl L. Moore, P.C.

713-529-0048 Fax: 713-529-2498 [email protected]

Marcy Hogan Greer, Vice-Chair

Fulbright & Jaworski L.L.P. 512-474-5201 Fax: 512-536-4598

[email protected]

David S. Coale, Treasurer Carrington, Coleman, Sloman

& Blumenthal, L.L.P. 214-855-3073 Fax: 214-758-3788

[email protected]

Scott Rothenberg, Secretary Law Offices of Scott Rothenberg

713-667-5300 Fax: 713-667-0052 [email protected]

COUNCIL

Terms Expire 2008:

Sharon E. Callaway, San Antonio

Elaine A.G. Carlson, Houston Jeffrey S. Levinger, Dallas

Terms Expire 2009:

Lauren Beck Harris, Houston

Ann McGowan Johnson, Dallas Andrew Weber, Austin

Terms Expire 2010:

Keith D. Calcote, Houston Jerry D. Bullard, Bedford

Macey Reasoner Stokes, Houston

IMMEDIATE PAST CHAIR

Robert M. (Randy) Roach, Jr.

SECOND PAST CHAIR

Warren W. Harris

BOARD ADVISOR

Randall O. Sorrels

ALTERNATE BOARD ADVISOR

Janna W. Clarke

EDITOR

D. Todd Smith, Austin

ASSOCIATE EDITORS

Dylan O. Drummond, Austin James C. Ho, Austin

William C. Little, Beaumont Ruth E. Piller, Houston

Brandy M. Wingate, McAllen

Copyright © 2008 Appellate Section, State Bar of Texas

All Rights Reserved

IN THIS ISSUE

ARTICLES THE PROBATE EXCEPTION TO THE “ONE FINAL JUDGMENT” RULE Troy A. Hornsby...................................................................... 169

RENDER UNTO JUDGE CALVERT . . . CORRECT APPELLATE COURT JUDGMENTS Marc O. Knisely and Emily Frost............................................. 174

SPECIAL FEATURE ¡YA BASTA! RUMINATIONS ON TRYING THE PATIENCE OF THE COURTS Jane Webre ............................................................................ 180

REGULAR FEATURES

THE CHAIR’S REPORT Doug Alexander ...................................................................... 168

UNITED STATES SUPREME COURT UPDATE Dori E. Kornfeld, John F. Blevins, and Lee B. Kovarsky... ...... 182

TEXAS SUPREME COURT UPDATE Don Cruse .............................................................................. 194

TEXAS COURTS OF APPEALS UPDATE—SUBSTANTIVE Thomas F. Allen, Jr. and Elliot D. Fladen ............................... 212

TEXAS COURTS OF APPEALS UPDATE—PROCEDURAL Ben Mesches and Jeremy D. Kernodle .................................. 223

FIFTH CIRCUIT CIVIL APPELLATE UPDATE Christopher D. Kratovil and Stephen Dacus ........................... 228

TEXAS CRIMINAL APPELLATE UPDATE Alan Curry............................................................................... 237

FEDERAL WHITE COLLAR CRIME UPDATE Sarah M. Frazier, Rachel L. Grier, and Dustin Sullivan .......... 245

SPECIAL ANNOUNCEMENT .................................................................... 249

SECTION WEB SITE: www.tex-app.org

— The Appellate Advocate

The Chair’s Report Doug Alexander, Alexander Dubose Jones & Townsend LLP, Austin Dear Fellow Section members and colleagues,

I would like to devote this Chair’s Report to informing you of some of the ways in which the Section is taking advantage of technology to better serve our members.

First, beginning in the fall, the Section began to use teleconferencing for Section Council meetings. Historically, Council meetings—which are attended by both Council members and committee chairs—have been held in a single location. This has been both a significant financial expense for the Section, which reimburses travel, and a significant time expense for out-of-town participants, given that one can spend a day’s worth of time attending a three-hour meeting. After a successful experiment in October, when we used a videoconference site in Houston, we have since expanded to include sites in Dallas and Fort Worth, in addition to our principal meeting site in Austin. The savings to the Section have been substantial—our travel reimbursements for a meeting now run about one half of the approximately $3,000 that they used to be. We have also gone “paperless” at our Council meetings—we now post the agenda and various committee reports on a central intranet site accessible by meeting participants.

Second, we have offered our members the opportunity to link their firm’s website or their personal biographical page to the Section’s website membership list. The membership list is the target of numerous “hits” each month, so this is a good way for our members to provide information about themselves or their firms to persons who use the list to find appellate attorneys. And, I am pleased to say, this valuable service is provided free to our Section’s members. Scrolling through a representative sampling of the membership list the other day, I noted that a significant number of our members have already taken advantage of this opportunity, but an even

greater number have not. If you are listed in the Section’s membership directory and would like to add a link, simply send an e-mail to Scott Rothenberg at [email protected] and list the desired link.

Third, I am pleased to report that the Council voted unanimously to approve the funds necessary to substantially upgrade the Section’s website. We have contracted the services of a website designer, who will help us transform the website into a valuable one-stop reference tool for our Section’s members. Among other improvements, we anticipate adding a large number of links to state, federal and international archival and reference materials. The new website will be rolled out at the State Bar Advanced Civil Appellate Practice Course in September. So, stay tuned!

By embracing these technological advances (videoconferences for Section meetings, paperless meetings, and intra-Section communication through our website rather than mailed documents), the Appellate Section is doing its part to help conserve precious environmental resources at the same time it saves its members money on the cost of doing Section business.

Doug Alexander Chair, Appellate Section [email protected]

.


The Probate Exception to the “One Final Judgment” Rule Troy A. Hornsby, Miller, James, Miller & Hornsby, LLP, Texarkana I. INTRODUCTION

Parties may generally appeal only from a final judgment. Lehmann v. Har Con Corp., 39 S.W.3d 191, 195 (Tex. 2001). Traditionally, there is only one such final appealable judgment. See TEX. R. CIV. P. 301. Therefore, a party cannot appeal interlocutory rulings unless there is a specific legislative grant of jurisdiction to do so. New York Underwriters Ins. Co. v. Sanchez, 799 S.W.2d 677, 679 (Tex. 1990) (per curiam).

Likewise, with regard to probate proceedings, Texas Probate Code section 5(g) provides that “[a]ll final orders of any court exercising original probate jurisdiction shall be appealable to the courts of appeals.” TEX. PROB. CODE ANN. § 5(g) (Vernon 2003). The probate code specifies that some orders are final and appealable. For example, section 55(a) provides that a judgment that determines heirship is final and appealable. Id. § 55(a). But the probate code does not otherwise clarify what constitutes a “final” and, therefore, “appealable” judgment or order for purposes of section 5(g). Young v. First Cmty. Bank, 222 S.W.3d 454, 456 (Tex. App.—Houston [1st Dist.] 2006, no pet.).

However, in an exception to the “one final judgment” rule, Texas law has long recognized that probate proceedings may involve multiple judgments “on certain discreet issues,” each of which may be “final for purposes of appeal.” Id. (citing De Ayala v. Mackie, 193 S.W.3d 575, 578 (Tex. 2006)). These “multiple” final judgments are exceptions to the “one final judgment” rule. De Ayala, 193 S.W.3d at 578. The need to review controlling, interlocutory decisions before an error can harm later phases of the probate proceeding has been held to justify this deviation from the “one final judgment” rule. See id.; Logan v. McDaniel, 21 S.W.3d 683, 688 (Tex. App.—Austin 2000, pet. denied); Christensen v. Harkins, 740 S.W.2d 69, 74 (Tex. App.—Fort Worth 1987, no writ).

Originally, it was held that such an appealable interlocutory order in a probate proceeding had to adjudicate conclusively a controverted question or a substantial right. See Kelly v. Barnhill, 144 Tex. 14, 188 S.W.2d 385, 386 (1945) (interpreting the predecessor to section 5(f)). Under that standard, once the probate court adjudicated a “substantial right,” the order was appealable. See, e.g., Huston v. F.D.I.C., 800 S.W.2d 845, 848 (Tex. 1990); In re Est. of Wright, 676 S.W.2d 161, 163 (Tex. App.—Corpus Christi 1984, writ ref’d n.r.e.). However, this “substantial right” test was later modified. See De Ayala, 193 S.W.3d at 578 (citing Crowson v. Wakeham, 897 S.W.2d 779, 783 (Tex. 1995)). In Crowson, the Texas Supreme Court concluded that, in a probate setting, an otherwise interlocutory order is only appealable if: (1) there is an express statute (such as the one for the complete heirship judgment) declaring the phase of the probate proceedings to be final and appealable; (2) the order is properly severed making it final; or (3) the order adjudicates a “substantial right” and the order disposes of all issues in the phase of the proceeding for which it was brought. However, if there is a proceeding of which the order in question may logically be considered a part, but one or more pleadings also part of that proceeding raise issues or parties not disposed of, then the probate order is not appealable. De Ayala, 193 S.W.3d at 578; Crowson, 897 S.W.2d at 783. The first two standards are clear and objective. The third is more subjective but also represents the core of the probate exception.

II. EXPRESS STATUTE

Express statutes declaring a phase of the probate proceedings to be final are appealable under the probate exception. Crowson, 897 S.W.2d at 783. For example, as stated above, the Probate Code specifies that a judgment declaring heirship is a final appealable judgment. § 55(a); see also In re Est. of Loveless, 64 S.W.3d 564, 570 (Tex. App.—Texarkana 2001, no pet.) (order relating to


section 54 final pursuant to section 55). Likewise, an order of confirmation or disapproval of the report of sale has been found to be final. In re Est. of Bendtsen, 229 S.W.2d 845, 848 (Tex. App.—Dallas 2007, no pet.) (citing § 355). Additionally, courts have found that other probate sections make judgments final even without the kind of express language found in Texas Probate Code section 55. See In re Est. of Gomez, 161 S.W.3d 615, 616 (Tex. App.—San Antonio 2005, no pet.) (order relating to section 83(a), second application for probate is appealable). However, an order approving final settlement pursuant to Texas Probate Code section 405 was found not to be final because it did not expressly authorize an appellate challenge and did not close the estate. Bozeman v. Kornblit, 232 S.W.3d 261, 264-65 (Tex. App.—Houston [1st Dist.] 2007, no pet.).

III. SEVERANCE

In Crowson, the Texas Supreme Court concluded that an interlocutory order, such as an interlocutory partial summary judgment, could be made final for appeal purposes by severing the claim from the remaining claims and parties. Crowson, 897 S.W.2d at 783. This is the same mechanism as that employed in non-probate cases to make an otherwise interlocutory order appealable. See, e.g. Teer v. Duddlesten, 664 S.W.2d 702, 703, (Tex. 1984). Interestingly, in at least one case, such a severance has been granted sua sponte by the appellate court in the interest of judicial efficiency in order to maintain jurisdiction under the probate exception. See In re Est. of Loveless, 64 S.W.3d at 571.

Like any other interlocutory order, an interlocutory probate order can be appealed if a statute declares it to be final and appealable or if it is severed to make it final and appealable. Crowson, 897 S.W.2d at 783. Therefore, the important core to the probate exception to the one final judgment rule is the substantial right test and the otherwise interlocutory orders it allows to be appealed.

IV. SUBSTANTIAL RIGHT

An order in a probate proceeding adjudicating a “substantial right” and disposing of all issues in the phase of the proceeding for which it was brought is appealable under the probate exception. However, if there is a proceeding of which the order in question may logically be considered a part, but one or more pleadings also part of that proceeding raises issues or parties not disposed of, then the probate order is not appealable. Id. The Texas Supreme Court did not elaborate on this standard. Therefore, we must look to case law to interpret it. A list of cases applying this third exception, broken down by general subject area, follows:

A. Estate Procedure

Orders concerning preliminary issues such as venue, transfer, and jurisdiction do not appear to meet the substantial right test under the probate exception. An order transferring a case from a general civil court to a probate court was found not to be appealable under the substantial right test. Forlano v. Joyner, 906 S.W.2d 118, 120 (Tex. App.—Houston [1st Dist.] 1995, no writ). Similarly, an order transferring venue on a guardianship proceeding was found not to satisfy the test. In re Est. of Fears, No. 06-03-00139-CV, 2004 WL 111423, at *1-3 (Tex. App.—Texarkana Jan. 22, 2004, no pet.) (mem. op.); see also In re Est. of Murphy, 1 S.W.3d 171, 175 (Tex. App.—Fort Worth 1999, no pet.). Appellate courts have also found that an order denying a plea to the jurisdiction is not appealable. In re Est. of O'Bryant, No. 04-04-00359-CV, 2004 WL 2616323, at *1 (Tex. App.—San Antonio Aug. 11, 2004, no pet.) (mem. op.); Mobil Oil Corp. v. Shores, 128 S.W.3d 718, 721 (Tex. App.—Fort Worth 2004, no pet.).

Orders admitting wills to probate may or may not meet the substantial right test. If an order admitting the will to probate disposed of all issues raised in the pleadings, conclusively disposes of that phase of the proceeding, and finally adjudicated a substantial right, it is final and


appealable. In re Est. of Padilla, 103 S.W.3d 563, 565-66 (Tex. App.—San Antonio 2003, no pet.). On the other hand, if the order admitting the will to probate merely leads to further hearings on an issue, it is interlocutory. Vineyard v. Irvin, 855 S.W.2d 208, 210 (Tex. App.—Corpus Christi 1993, orig. proceeding). For example, the Corpus Christi Court of Appeals determined that an order admitting a will to probate was not appealable because of a lingering issue concerning a no-contest clause. In re Est. of McKissick, No. 13-02-022-CV, 2003 WL 1847072, at *2-5 (Tex. App.—Corpus Christi Apr. 10, 2003, no pet.) (mem. op.). Additionally, the Fort Worth Court of Appeals determined that an order admitting a will to probate was not appealable because it did not resolve a lingering issue of an interest in an estate. In re Est. of Wilson, No. 2-06-075-CV, 2006 WL 2986566, at *3 (Tex. App.— Fort Worth Sept. 19, 2006, no pet.) (mem. op.).

The Forth Worth appellate court has concluded that an order approving an inventory and appraisement was appealable. Garner v. Long, 106 S.W.3d 260, 266 (Tex. App.—Fort Worth 2003, no pet.). However, an order denying a motion to dismiss an ancillary probate proceeding or to have an executor removed is not appealable. De Ayala, 193 S.W.3d at 578. Finally, neither an order consolidating two cases nor an order granting a petition in interpleader was found to meet the probate exception. Wimer v. Bank of Am., No. 03-03-00394-CV, 2003 WL 22250342, at *1 (Tex. App.—Austin Oct. 2, 2003, no pet.) (mem. op.).

B. Attorneys and Attorney’s Fees

Some orders concerning attorneys and fees are appealable under the substantial right test. For example, an order continuing the appointment of an attorney ad litem in a guardianship proceeding was found to be appealable. Coleson v. Bethan, 931 S.W.2d 706, 712 (Tex. App.—Fort Worth 1996, no writ). An order determining a Rule 12 motion pertaining to authority to represent a party was likewise determined to be appealable. Logan v. McDaniel, 21 S.W.3d 683, 689 (Tex. App.—Austin 2000, pet. denied). Finally, an interim

order approving a temporary administrator’s requests for payment of attorney’s fees and expenses was found to be appealable. Roach v. Rowley, 135 S.W.3d 845, 847 48 (Tex. App.—Houston [1st Dist.] 2004, no pet.).

However, orders for attorney’s fees do not appear to be appealable under the substantial right test. For example, an order denying a request for attorney’s fees from a person attempting to remove an executor was found to not meet the substantial right test. Young, 222 S.W.3d at 459. Similarly, the denial of a law firm’s application for attorney’s fees earned representing an executor was found not to meet the test. In re Est. of Hersey, 223 S.W.457, 459 (Tex. App.—Amarillo 2006, no pet.). In fact, lingering attorney’s fees claims can prevent another otherwise appealable order from being appealable. See, e.g., Stepan v. Chamness, No. 14-02-00842-CV, 2003 WL 21664297, at *1 (Tex. App.—Houston [14th Dist.] Jul. 17, 2003, no pet.) (mem. op.) (holding order on multiple motions not final because claims against attorney remained); Halbert v. Box, No. 12-02-00342-CV, 2003 WL 21254918, at *1 (Tex. App.—Tyler May 30, 2003, no pet.) (mem. op.) (holding partial summary judgment which did not resolve attorney’s fees claim).

Finally, an order denying a motion to disqualify an attorney is not appealable. Spitaleri v. Est. of Dominguez, No. 4-04-00441-CV, 2005 WL 2988732, at *1 (Tex. App.—San Antonio Nov. 9, 2005, pet. denied) (mem. op.).

C. Personal Representatives

Many orders concerning personal representatives are appealable under the substantial right test. An order denying an application for letters testamentary based upon the disqualification of the applicant has been found to be appealable. In re Est. of Vigen, 970 S.W.2d 597, 599 (Tex. App.—Corpus Christi 1998, no pet.); see also Spies v. Milner, 928 S.W.2d 317, 318 19 (Tex. App.—Fort Worth 1996, no writ). An order denying a request to remove independent co-executors based upon lack of standing has also


been held to be appealable. A & W Indus., Inc., v. Day, 977 S.W.2d 738, 740 (Tex. App.—Fort Worth 1998, no pet.). An order refusing to appoint an applicant as a co-executor was also found to be appealable. In re Est. of Robinson, 140 S.W.3d 801, 805 (Tex. App.—Corpus Christi 2004, pet. dism’d). Likewise, an order removing a co-guardian was appealable. See generally In re Guardianship of Finley, 220 S.W.3d 608 (Tex. App.—Texarkana 2007, no pet.). Finally, an order setting bond of independent executor nominated to serve without bond was found to be appealable. In re Est. of Brimberry, No. 12-04-00154-CV, 2006 WL 861483, at *3 (Tex. App.—Tyler Mar. 31, 2006, no pet.) (mem. op.).

However, an order refusing to remove an executor was determined to be unappealable. De Ayala, 193 S.W.3d at 579. Likewise, an order denying bill of review challenging appointment of executor was not appealable. In re Est. of Davidson, 153 S.W.3d 301, 304 (Tex. App.—Beaumont 2004, pet. denied). An order requiring an independent executor to post bond was not appealable because it did not remove him as the executor. Est. of Navar v. Fiztgerald, 14 S.W.3d 378, 379-80 (Tex. App.—Amarillo 2000, no pet.). Finally, a show cause order seeking to compel an executor to act was found to be unappealable. Pollard v. Pollard, No. 05-06-00375-CV, 2007 WL 1366040, at *1-2 (Tex. App.—Dallas May 10, 2007, no pet.) (mem. op.).

D. Summary Judgment

Partial summary judgments may or may not be appealable under the substantial right test. Partial summary judgments are not appealable if they do not address all issues raised by the pleading. See In re Est. of Willett, 211 S.W.3d 364, 367 (Tex. App.—San Antonio 2006, no pet.). Even a summary judgment with a “Mother Hubbard” clause in a probate proceeding was not final because it did not resolve all parties and claims. Villarreal v. Zukowsky, 54 S.W.3d 926, 929-30 (Tex. App.—Corpus Christi 2001, no pet.).

However, the Austin Court of Appeals found that a partial summary judgment determining

ownership of property between an estate and a trust was appealable because it resolved a discrete phase of the litigation; however, its jurisdiction determination was explicitly based upon an order admitting the will to probate. Sanders v. Capitol Area Council, 930 S.W.2d 905, 909-10 (Tex. App.—Austin 1996, no writ). Similarly, the First Court of Appeals concluded that a summary judgment order finding a surviving spouse abandoned homestead rights and ordering former homestead property sold and proceeds divided was appealable. Churchill v. Mayo, 224 S.W.3d 340, 345 (Tex. App.—Houston [1st Dist.] 2006, no pet.). However, in In re Estate of Davis, the Texarkana Court of Appeals found that a partial summary judgment resolved only one issue and was, therefore, interlocutory. In re Est. of Davis, No. 06-07-00033-CV, 2007 WL 2609929, at *6 (Tex. App.—Texarkana Sep. 12, 2007, no pet.) (mem. op.). Likewise, an order resolving ownership of only one of several pieces of property was not final in a guardianship proceeding. Ramsay v. Morris, No. 13-02-045-CV, 2003 WL 1923513, at *4-5 (Tex. App.—Corpus Christi Apr. 24 2003, no pet.) (mem. op.). In a probate action to construe a will, an order which did not dispose of a party’s claim for fair rental value or attorney’s fees was found not to have resolved all issues and was not appealable. Villarreal, 54 S.W.3d at 929. Finally, a summary judgment resolving one party’s claim to interpleaded funds was not appealable because another party’s claim to the same funds was not resolved. Wimer, 2003 WL 22250342, at *1.

V. CONCLUSION

Under the probate exception parties may appeal certain specific probate orders which statutes declare to be final. Additionally, as in other appellate situations, severance can be employed in the probate setting to create a final appealable order from an otherwise non-appealable interlocutory order. These exceptions are clear and objective. However, the “substantial right” standard of the probate exception is more subjective. Different appellate courts may reach different conclusions as to what is a “substantial right” and whether the order may be considered a


part of another phase of the proceeding. Therefore, in considering whether a particular order meets the “subjective right” test under the probate exception one must carefully review and apply precedent.

*

*

See Hon. Don R. Willett, An Inconvenient Truth: Conservatives Behaving Charitably, 12 TEX. REV. L. & POL. 181, 191 n.64 (Spring 2008) (reviewing ARTHUR C. BROOKS, WHO REALLY CARES: THE SURPRISING TRUTH ABOUT COMPASSIONATE CONSERVATISM (Basic Books 2006) and citing Carry a Big Sticker, http://www.carryabigsticker.com/images/fema_big_500.jpg (last visited May 23, 2008)).

The following political bumper sticker graphics are reprinted here with permission from Texas Supreme Court Justice Don Willett’s acclaimed book review, which appeared recently in the Texas Review of Law & Politics.


Render Unto Judge Calvert . . . Correct Appellate Court Judgments

Marc O. Knisely, McGinnis, Lochridge & Kilgore, LLP, Austin Emily Frost, McGinnis, Lochridge & Kilgore, LLP, Austin In 1975, the Honorable Robert W. Calvert, retired Chief Justice of the Supreme Court of Texas, authored an article about Texas appellate court judgments. Robert W. Calvert, Appellate Court Judgments or Strange Things Happen on the Way to Judgment, 6 TEX. TECH L. REV. 915 (1975). Chief Justice Calvert wrote the article because he observed that some appellate court opinions and judgments had not been compliant with the fundamental concepts by which they should have been governed. Similarly, today, some appellate court opinions and judgments have strayed from those concepts, and thus the basic principles and rules controlling appellate judgments merit review.

CONTROLLING PRINCIPLES

(1) Trial courts “render” and “sign” judgments and orders, but they do not “enter” them. “Entry” of a judgment or order is a clerical function.

“A [trial court] judgment routinely goes through three stages: (1) rendition; (2) reduction to writing; and (3) entry.”1 As the Supreme Court of Texas has reiterated, “a judgment is rendered when the decision is officially announced orally in open court, by memorandum filed with the clerk, or otherwise announced publicly.”2 The date a judgment or order is signed determines the beginning of the post-judgment and appellate time periods.3

This contrasts with federal court practice, in which the beginning date for the post-judgment

1 In re Marriage of Wilburn, 18 S.W.3d 837, 840 (Tex. App.—Tyler 2000, pet. denied).

2 Garza v. Tex. Alcoholic Beverage Comm’n, 89 S.W.3d 1, 6 (Tex. 2002); see also In the Interest of R. A. H., 130 S.W.3d 68, 70 (Tex. 2004) (per curiam).

3 See, e.g., TEX. R. CIV. P. 306a(1); TEX. R. APP. P. 26.1.

and appellate deadlines is the date the clerk enters the judgment.4 The first two stages may occur simultaneously—that is, a judgment may first be rendered when it is reduced to writing and signed by the trial court. Nonetheless, trial courts still frequently render judgments and orders orally, before they sign a written judgment or order, and an oral rendition may be significant in some circumstances.5

By contrast with the first two stages, entry of judgment is performed by the clerk and “is a ministerial act which memorializes the judicial act of rendition.”6

4 See, e.g., FED. R. CIV. P. 58(b) and 79(a); FED. R.

APP. P. 4(a). 5 For example, if the parties announce a settlement

in open court, if the trial court does not then render judgment based on the parties’ consent, and if a party later withdraws its consent, thereafter the trial court cannot render a valid consent judgment. Able Cabling Servs., Inc. v. Aaron-Carter Elec., Inc., 16 S.W.3d 98, 100-01 (Tex. App.—Houston [1st Dist.] 2000, pet. denied); see also Chisholm v. Chisholm, 209 S.W.3d 96, 98 (Tex. 2006) (per curiam) (“A court ‘cannot render a valid agreed judgment absent consent at the time it is rendered.’”) (quoting Padilla v. LaFrance, 907 S.W.2d 454, 461 (Tex. 1995)). If, however, the trial court orally pronounces its present intent to render judgment on the settlement agreement, at the time the parties announce the agreement, the judgment is effective, even though not yet reduced to writing and signed, and a party may not thereafter properly withdraw its consent. In re Marriage of Joyner, 196 S.W.3d 883, 886-88 (Tex. App.—Texarkana 2006, pet. denied) (“Your divorce is granted” expressed present intent to render judgment) (emphasis added); Able Cabling Servs., 16 S.W.3d at 101; see also TEX. R. CIV. P. 306a(1) (after stating that the date a judgment or order is signed determines the beginning of specified time periods, the rule then continues, “but this rule shall not determine what constitutes rendition of a judgment or order for any other purpose”).

6 Able Cabling Servs., 16 S.W.3d at 100; see also TEX. GOV’T CODE ANN. § 24.017 (Vernon 2004) (providing that a district court judge in a multi-county district may sign an order in any county in the district “and forward the order or decree to the clerk for filing and entry”); TEX. R. CIV. P.


(2) Parties appeal from trial court judgments or orders, and appellate courts review and act upon those judgments and orders.7 Parties do not appeal from, nor do appellate courts act in their judgments with regard to, for example, findings of fact, jury instructions, or evidence rulings—although issues about the latter matters may of course be the subject of a party’s complaint that the trial court’s judgment or order is founded on reversible error.

(3) When a party perfects an appeal from a judgment or order, the case is brought before the court of appeals, and the filing of a petition for review in the Texas Supreme Court brings the case to that court.8

26 (requiring each district and county court clerk to “keep a court docket in a permanent record that shall include the number of the case and the names of the parties, the names of the attorneys, the nature of the action, the pleas, the motions, and the ruling of the court as made”); Bridgman v. Moore, 143 Tex. 250, 183 S.W.2d 705, 707 (1944) (“Under the provisions of Art. 1899, Vernon’s Ann. Civ. Stat., district clerks are required to keep a fair record of all of the acts done, and proceedings had, in their respective courts, and to ‘enter all judgments of the court, under direction of the judge . . . in record books to be kept for the purpose.’ . . . The judgment in question was signed by the judge, filed and entered by the clerk, and recorded in the minutes of the court on July 3, 1942.”); Matthews v. Looney, 132 Tex. 313, 123 S.W.2d 871, 872 (1939) (“No formal decree signed by attorneys for all parties was ever presented to the court for approval, or to the clerk for entry.”); Eastin v. Eastin, 588 S.W.2d 812, 814 (Tex. Civ. App.—San Antonio 1979, writ dism’d) (“Finally, [after a judgment is rendered and reduced to writing and signed by the trial court,] the clerk of the court ‘enters’ the judgment upon the minutes of the court by copying it in such minutes . . . .”).

7 See, e.g., TEX. R. APP. P. 25.1(b) (providing that “[t]he filing of a notice of appeal by any party invokes the appellate court’s jurisdiction over all parties to the trial court’s judgment or order appealed from.”) (emphasis added) and 25.1(d)(2) (stating that a notice of appeal must “state the date of the judgment or order appealed from”) (emphasis added).

8 Texas Rule of Appellate Procedure 12.1(c) requires that the clerk of the court of appeals, upon receiving a copy of the notice of appeal, and the clerk of the Texas Supreme Court, upon receiving a petition for review, “docket the case” (emphasis added). Other parts of Rule 12 also refer to “the case.” See also TEX. R. APP. P. 10.1(a)(5), 19.2, 25.1(d)(1), 32.1, 34.1, 38.1(d), 53.2(d)(1), 53.2(d)(4), 53.2(d)(9), 56.1(a)(3), 56.2, 57.2, and 65.2, all of which

Appellate courts must decide and dispose of the entire case.9

(4) Appellate courts render judgments whenever they decide cases on appeal. The reasons for whatever judgment an appellate court renders are stated in an opinion, which the court must hand down.10 An appellate court commonly states what its judgment is at the end of its opinion, though it is not required to do so, and sometimes it also recites its judgment in the opening paragraph or section of its opinion.

(5) Texas Rule of Appellate Procedure 43.2 enumerates the types of judgment that a court of appeals may render:

(a) affirm the trial court’s judgment in whole or in part;

(b) modify the trial court’s judgment and affirm it as modified;

(c) reverse the trial court’s judgment in whole or in part and render the judgment that the trial court should have rendered;

(d) reverse the trial court’s judgment and remand the case for further proceedings;

(e) vacate the trial court’s judgment and dismiss the case; or

(f) dismiss the appeal.

Likewise, Texas Rule of Appellate Procedure 60.2 specifies the types of judgment that the Supreme Court may render:

make clear that “cases” are brought before the courts of appeals and the supreme court.

9 The following rules confirm that courts of appeals and the supreme court decide “cases” that are brought before them: TEX. R. APP. P. 39.1, 40.1, 41.1, 41.2, 47.2(a), 49.3, 53.5, 56.3, 59.2, 60.2(d), 60.2(e), 60.2(f), 60.3, 60.6, 61.4(a)(1), and 63.

10 TEX. R. APP. P. 47.1 (“The court of appeals must hand down a written opinion that is as brief as practicable but that addresses every issue raised and necessary to final disposition of the appeal.”).


(a) affirm the lower court’s judgment in whole or in part;

(b) modify the lower court’s judgment and affirm it as modified;

(c) reverse the lower court’s judgment in whole or in part and render the judgment that the lower court should have rendered;

(d) reverse the lower court’s judgment and remand the case for further proceedings;

(e) vacate the judgments of the lower courts and dismiss the case; or

(f) vacate the lower court’s judgment and remand the case for further proceedings in light of changes in the law.

Thus, as Chief Justice Calvert observed, when a court of appeals decides to reverse the trial court’s judgment, but not remand the case for further proceedings, it is required by rule “to place itself in the position of the trial court and write the decretal part of a judgment exactly as the trial court should have written it.”11 If the supreme court decides to reverse the judgment of the court of appeals,

[The supreme court must] place itself in the position of the [court of appeals] and write the decretal part of a judgment exactly as the intermediate court should have written it. Thus restrained, the supreme court cannot reverse the trial court’s judgment unless it finds that the trial court also committed reversible error. If the supreme court finds reversible error in the trial court’s judgment, it must then place itself in the position of the trial court and write the

11 Robert W. Calvert, Appellate Court Judgments or

Strange Things Happen on the Way to Judgment, 6 TEX. TECH L. REV. 915, 922 (1975); see also TEX. R. APP. P. 43.3.

decretal part of the judgment exactly as the trial court should have written it.12

Based on the principles and rules discussed above, an appellate court is required to perform four distinct functions: “(1) to decide issues and causes; (2) to write opinions which reflect the reasons for the court’s decisions; (3) to render judgments which must act upon lower court judgments; and (4) to dispose of causes.”13

STRAYING FROM CORE CONCEPTS

Recent appellate court opinions illustrate how courts sometimes have failed to adhere to the principles discussed above:14

“[T]he trial court entered a take-nothing judgment against the [plaintiffs] . . . .” Vela v. Wagner & Brown, Ltd., 203 S.W.3d 37, 45 (Tex. App.—San Antonio 2006, no pet.) (emphasis added).15

12 Id.; see also TEX. R. APP. P. 61.1. 13 Calvert, supra note 10, at 915-16. 14 The examples discussed here were derived from

the courts’ opinions, not their judgments. Some of the errors likely were repeated in the judgments, but in any event, because most practitioners and judges, other than those involved in the cited cases, see only the reported opinions, a correct description of the appellate court’s disposition of the case is essential to the opinion. Furthermore, in interpreting an appellate court judgment or mandate, the trial court is instructed to look at the opinion as well as the judgment, so the opinion should accurately state the judgment. Denton County v. Tarrant County, 139 S.W.3d 22, 23 (Tex. App.—Fort Worth 2004, pet. denied); see also Garcia v. Martinez, 988 S.W.2d 219, 221 (Tex. 1999) (per curiam). The authors do not intend to criticize particular courts or justices. These examples were selected merely by beginning with the latest Southwestern Reporter available when this article was prepared, then reading the opinions in reverse order.

15 In the several volumes of the Southwestern Reporter examined for this article, there are many opinions in which the appellate courts refer to a trial court’s having entered a judgment or order. Some, but not all, of those opinions are as follows: Fifth Club, Inc. v. Ramirez, 196 S.W.3d 788, 798 (Tex. 2006) (“[W]e enter a take-nothing judgment in Fifth Club’s favor.”) (emphasis added); Disney v. Gollan, 233 S.W.3d 591, 594 (Tex. App.—Dallas 2007,


Trial courts do not enter judgments or orders; only clerks do so. Trial courts render or sign judgments and orders. no pet.) (op. nunc pro tunc) (“The trial judge entered an order on September 21, 2004 granting appellants’ motion in part.”) (emphasis added); Abilene Diagnostic Clinic v. Downing, 233 S.W.3d 532, 534 (Tex. App.—Eastland 2007, pet. denied) (“The trial court entered an order dismissing with prejudice Downing’s claims against Dr. Wachs and the Clinic.”) (emphasis added); King v. Cirillo, 233 S.W.3d 437, 439 (Tex. App.—Dallas 2007, pet. filed) (“On August 24, 2006, the trial court entered an ‘Agreed Level III Pre-Trial Scheduling Order.’”) (emphasis added); Landry’s Seafood House v. Snadon, 233 S.W.3d 430, 432 (Tex. App.—Dallas 2007, pet. denied, reh’g filed) (“A jury found in Snadon’s favor, and the trial court entered a final judgment on the verdict.”) (emphasis added); State v. Fiesta Mart, Inc., 233 S.W.3d 50, 53 (Tex. App.—Houston [14th Dist. 2007, pet. denied) (“[T]he trial court entered an order severing the State’s statutory condemnation claim from Fiesta’s inverse condemnation claim.”) (emphasis added); Walker v. Anderson, 232 S.W.3d 899, 906 (Tex. App.—Dallas 2007, no pet.) (“[O]n June 12, 2000, the trial court entered a judgment in favor of the Andersons . . . .”) (emphasis added); AlliedSignal, Inc. v. Moran, 231 S.W.3d 16, 21 (Corpus Christi 2007), vacated by agreement by Orders Pronounced May 2, 2008, available at http://www.supreme.courts.state.tx.us/historical/2008/may/050208.htm (last visited May 21, 2008) (“The trial court entered a final judgment on the verdict over the objections of Allied and DCC.”) (emphasis added); Park v. City of San Antonio, 230 S.W.3d 860, 865 (Tex. App.—El Paso 2007, pet. denied) (“Following the bench trial, the trial court entered judgment in favor of the City on the inverse condemnation claim.”) (emphasis added); Lal v. Harris Methodist Fort Worth, 230 S.W.3d 468, 471 (Tex. App.—Fort Worth 2007, no pet.) (“[T]he trial court entered the order granting Appellees’ motions to dismiss with prejudice.”) (emphasis added); Mullins v. Mullins, 202 S.W.3d 869 (Tex. App.—Dallas 2006, pet. denied) (referring throughout opinion to orders “entered” by the trial court); Arocha v. State Farm Mut. Auto. Ins. Co., 203 S.W.3d 443, 444 (Tex. App.—Houston [14th Dist.] 2006, no pet.) (plaintiffs “appeal a take-nothing judgment entered in favor of” defendant) (emphasis added); Belew v. Rector, 202 S.W.3d 849, 852 (Tex. App.—Eastland 2006, no pet.) (“The trial court conducted a bench trial and entered judgment for” plaintiff) (emphasis added); Tex. Thoroughbred Breeders Ass’n v. Donnan, 202 S.W.3d 213, 214 (Tex. App.—Tyler 2006, pet. denied) (defendants “challenge the trial court’s entry of a judgment ordering a permanent injunction and awarding” plaintiffs damages) (emphasis added); Parker v. Barefield, 202 S.W.3d 211, 212 (Tex. App.—Tyler 2006), rev’d, 206 S.W.3d 119 (Tex. 2006) (“[T]he trial court entered an order sustaining Appellees’ special exceptions and granting the motion to dismiss with prejudice.”) (emphasis added).

Defendants “appeal the trial court’s finding that . . . [plaintiff] adversely possessed certain property in Horton County, Texas.” Johnson v. McClintock, 202 S.W.3d 821, 822 (Tex. App.—Corpus Christi 2006, no pet.) (emphasis added).

Parties cannot appeal a trial court’s findings; rather, they appeal its judgment.16 In this case, defendants appealed the trial court’s judgment by challenging the finding of adverse possession on which the judgment is based.

Defendant “appeals the trial court’s rulings on” several issues. “We affirm the trial court’s rulings granting special exceptions, but reverse and remand the ruling dismissing the declaratory judgment and conversion causes of action.” Ross v. Goldstein, 203 S.W.3d 508, 510, 514 (Tex. App.—Houston [14th Dist.] 2006, no pet.) (emphasis added).

Again, a party appeals the trial court’s judgment, not its rulings. The court of appeals cannot affirm a trial court’s rulings sustaining special exceptions; rather, it affirms the portion of the judgment concerning such rulings. Likewise, a court of appeals neither reverses nor remands rulings; instead, the court of appeals reverses the portion of the judgment pertaining to those rulings and remands the case to the trial court.

“That part of the judgment [holding there is no duty to indemnify] is

16 Nor can parties appeal a jury’s verdict or findings.

Akin, Gump, Strauss v. Nat’l Dev. & Res Corp., 232 S.W.3d 883, 887, 889 (Tex. App.—Dallas 2007, pet. filed) (“This is an appeal from a jury verdict . . . . On appeal, Akin Gump does not appeal the [jury’s] finding of negligence . . . .”) (emphasis added); Smith v. Dean, 232 S.W.3d 181, 184 (Tex. App.—Fort Worth 2007, pet. denied) (“[A]ppellants Dr. David and Mrs. Cathy Smith appeal the jury’s verdict and trial court’s judgment for appellees . . . .”) (emphasis added); Bryan v. Watumull, 230 S.W.3d 503, 507 (Tex. App.—Dallas 2007, pet. denied) (“Valerie Bryan appeals an adverse medical malpractice jury verdict in favor of Dr. Denton Watumull.”) (emphasis added).


reversed and remanded to the trial court for a determination of the amount of that indemnity.” Seelin Med., Inc. v. Invacare Corp., 203 S.W.3d 867, 873 (Tex. App.—Eastland 2006, pet. denied) (emphasis added).17

A court of appeals can reverse a portion of a judgment, but it cannot remand a portion of the judgment to the trial court. The entire case is remanded to the trial court for a determination of the indemnity amount.18

“We remand the issue of Johnson’s attorneys’ fees to the trial court for consideration.” Johnson v. State Farm Lloyds, 204 S.W.3d 897, 903 (Tex. App.—Dallas 2006, pet. granted) (emphasis added).19

An “issue” cannot be remanded; instead, the entire case is remanded for a determination of the issue the trial court must decide.20

17 See also Abilene Diagnostic Clinic, 233 S.W.3d at

535 (“[T]he portion of the trial court’s order denying the Clinic’s request for attorney’s fees and costs of court is reversed and remanded for an entry of an award of attorney’s fees and costs of court.”) (emphasis added); Thomas v. Alford, 230 S.W.3d 853, 860 (Tex. App.—Houston [14th Dist.] 2007, no pet.) (“[T]he judgment of the trial court is affirmed as to the dismissal of claims against Malone and reversed and remanded as to the dismissal of claims against Alford and Sweetwater.”) (emphasis added).

18 See, e.g., Trunkhill Capital, Inc. v. Jansma, 905 S.W.2d 464, 470 (Tex. App.—Waco 1995, writ denied) (reversing a portion of the trial court’s judgment, affirming a portion of the trial court’s judgment, and remanding “the entire cause” for further proceedings in accordance with the opinion).

19 See also Sefzik v. Mady Dev., L.P., 231 S.W.3d 456, 466 (Tex. App.—Dallas 2007, pet. granted) (“We also reverse the trial court’s award of attorney’s fees for [plaintiff] and remand the issue of attorney’s fees to the trial court.”) (emphasis added).

20 Lifshutz v. Lifshutz, 199 S.W.3d 9, 20-21 (Tex. App.—San Antonio 2006, pet. denied) (prior appeal resulted in remand of case limiting trial to particular issue, and trial court erred in making determination outside scope of remand).

“We reverse and remand the remaining claims . . . . We reverse the trial court’s judgment as to the remaining claims and remand those claims for further proceedings consistent with this opinion.” Prospect High Income Fund v. Grant Thornton, L.L.P., 203 S.W.3d 602, 606, 622 (Tex. App.—Dallas 2006, pet. filed) (emphasis added).21

An appellate court cannot reverse “claims”; rather, the court reverses the portion of the judgment pertaining to those claims. Likewise, an appellate court does not remand “claims” for further proceedings, but instead remands the entire case for further proceedings as to the identified claims.

“We reverse the judgment of the court of appeals, and render judgment in favor of [defendant] Cooper Tire.” Cooper Tire & Rubber Co. v. Mendez, 204 S.W.3d 797, 808 (Tex. 2006) (emphasis added).22

21 See also Kalyanaram v. Univ. of Tex. Sys., 230

S.W.3d 921, 923 (Tex. App.—Dallas 2007, pet. denied) (“We reverse the trial court’s judgment as to [plaintiff’s] claim for breach of the Settlement Agreement by the University of Texas System and UTD and remand that claim to the trial court for further proceedings.”) (emphasis added); Wagner v. Edlund, 229 S.W.3d 870, 879 (Tex. App.—Dallas 2007, pet. filed) (“We reverse that portion of the judgment awarding Wagner attorney’s fees and remand Wagner’s claim for attorney’s fees to the trial court for further proceedings.”) (emphasis added); Brown v. Villegas, 202 S.W.3d 803, 807 (Tex. App.—San Antonio 2006, no pet.) (stating that the trial court’s order dismissing the plaintiff’s claims “must be reversed, and those claims must be remanded to the trial court for further proceedings”).

22 See also Borg-Warner Corp. v. Flores, 232 S.W.3d 765, 774 (Tex. 2007) (“We reverse the court of appeals’ judgment and render judgment for [defendant,] Borg-Warner.”); Sefzik, 231 S.W.3d at 466 (“[W]e reverse the portion of the trial court’s judgment awarding [plaintiff] $17,379.09 and render judgment in favor of [defendants].”); Kennedy v. Andover Place Apartments, 203 S.W.3d 495, 498 (Tex. App.—Houston [14th Dist.] 2006, no pet.) (“We sustain Kennedy’s second issue, reverse the trial court’s judgment, and render judgment in favor of [defendant,] Kennedy.”); Kilpatrick v. McKenzie, 230 S.W.3d 207, 208 (Tex. App.—Houston [14th Dist.] 2006, no pet.) (“We


The appellate court judgment is favorable to the defendant, but the appellate court is supposed to render the judgment that the trial court should have rendered. In this situation, the judgment should be one denying relief to the plaintiff and not one granting relief to the defendant: “We reverse the judgment of the court of appeals, and render judgment that plaintiffs take nothing.”23

CONCLUSION

The supreme court and courts of appeals should render judgments that are unambiguous and accurate. This requires that they observe controlling principles and use correct terminology. Clarity and precision are necessary for each case's parties, who should not have to litigate further over the disposition of the case intended by the appellate court, and for the trial court, which must observe and enforce the appellate court judgment. Furthermore, because most judges and attorneys in the state read only appellate court opinions and not appellate court judgments, a careful and accurate description of the determinative actions of the trial court and of the appellate court’s disposition of the case is essential to the opinion. By adhering to governing principles, rules and terminology, appellate courts assist the parties in understanding and lower courts in following their appellate judgments.

reverse and render judgment in favor of the defendant/appellant.”).

23 See White v. CBS Corp., 996 S.W.2d 920, 921 (Tex. App.—Austin 1999, pet. denied); see also Cash v. Kosberg, 374 S.W.2d 773, 774 (Tex. Civ. App.—San Antonio 1963, writ ref’d n.r.e.) (per curiam).


¡Ya Basta!

Ruminations on Trying the Patience of the Courts Jane Webre, Scott, Douglass & McConnico, LLP, Austin The courts deserve a great deal of credit for the infinite patience they are required to show. When lawyers and litigants advance baseless arguments, or file duplicative claims, or quarrel like toddlers over insignificant discovery disputes, the courts by and large have to exercise restraint and deal with the dispute on the merits. Judges have to resist being a mom who threatens, “don’t make me come down there,” because we expect them to have not only the wisdom of Solomon, but also the patience of Job. (Unless you are a federal judge, in which case you can issue orders in rhyming couplets that say things like: “So, let me tell you both and be abundantly clear:/If you can’t work this out without me I will be near.”).1

But sometimes courts reach the limits of their patience with recalcitrant litigants and lawyers, and when that happens, sometimes they announce: “¡Ya Basta!” or, “enough is enough.” Probably the most famous use of the phrase came from former Supreme Court Justice Raul Gonzalez in a case involving a litigant named Pat Holloway. Holloway v. Fifth Court of Appeals, 767 S.W.2d 680, 686 (Tex. 1989) (Gonzalez, J., dissenting).

At issue in the Holloway case was a writ of prohibition issued by the Dallas Court of Appeals, barring Holloway from filing any further suits to collaterally attack a final judgment against him. The majority of the Supreme Court granted Holloway mandamus relief from the writ of prohibition, based on analysis of the court of appeals’s jurisdiction over the judgment. The majority noted there had been significant litigation involving the validity of the judgment, but decided the court of appeals had gone too far

1 Order dated Apr. 25, 2007, by Hon. Sam Sparks in

Keystone Media Int’l, LLC v. Hancock; Case No. A-06-CA-594-SS; in the United States District Court for the Western District of Texas, Austin Division.

in prohibiting future challenges: “Like other courts which have considered the underlying dispute between the Brownings and Holloway, we are vexed by this hydra-headed litigation. The answer, however, is not to lock the doors of all our state courts and summarily declare the matter at an end.” 767 S.W.2d at 684.

In dissent, however, Justice Gonzalez made clear that he had had enough. First, he noted that there had been plenty of judicial review of the judgment: “To a greater or lesser extent, Holloway’s litigious whims and contentions have been reviewed by approximately 50 state court judges in 9 state court proceedings and approximately 34 federal judges in 10 federal court proceedings.” 767 S.W.2d at 685. That statement is followed by a hellacious string cite of numerous published opinions involving Holloway and the same underlying judgment. Id. Given the litigation history, Justice Gonzalez concluded the court of appeals was right to shut the door on a vexatious litigant: “With every legal setback Holloway receives, he initiates another lawsuit or appeal. ¡Ya Basta!” 767 S.W.2d at 686 (Gonzalez, J. dissenting). Justice Gonzalez also included a helpful footnote for you non-Spanish speakers, translating “ya basta” as “enough is enough.” Id.

Other courts have similarly reached the limits of their patience with lawyers or litigants, and announced “ya basta” to put an end to the recalcitrance. Very recently, the Corpus Christi court of appeals sanctioned a lawyer for filing a frivolous mandamus, and the sanctions included: (1) paying the other side’s attorneys’ fees; (2) paying for the court reporter for the court of appeals’ show cause hearing on the sanctions issue; and (3) attending a CLE course on advanced civil procedure (that’s gotta hurt). Twist v. McAllen Nat’l Bank, 248 S.W.3d 351 (Tex. App.—Corpus Christi 2007, [mand. pending])).


Most significant for our purposes today, the court of appeals ordered the lawyer “to cease and desist from filing frivolous motions and pleadings in this Court and the trial court. Ya Basta!” Id. (giving credit to Justice Gonzalez with a citation to the Holloway case).

Other courts have expressed the same sentiment in one language only, announcing that “enough is enough” with certain litigants. See, e.g., Buren v. U. S. Postal Serv., 883 W.W.2d 429, 431 (5th Cir. 1989) (former postal worker sued repeatedly for wrongful termination, though he had “evidently beat up a lady’s three dogs, threw the mail in the lady’s face and called the lady and her daughter a bitch;” 5th Circuit affirmed the district court’s dismissal, stating that “plaintiff should be thankful that the district court merely dismissed his complaint rather than impose Rule 11 sanctions,” and announcing: “Enough is enough.”); Bugarin v. State, 777 S.W.2d 556, 557 (Tex. App.—El Paso 1989, pet. ref’d) (affirming lengthy criminal sentence imposed on seriously recidivist defendant and announcing “Enough is enough!”; court also noted that “it is somewhat surprising that one who is apparently so fond of incarceration would even complain about the sentence imposed in this case”).

Some courts have used such language to express frustration with the judicial process itself, as cases are appealed and remanded endlessly due to the courts’ failure to make final decisions. Schwartz v. Prairie Producing Co., Inc., 833 S.W.2d 629, 633 (Tex. App.—Houston [1st Dist] 1992, writ dism’d) (Cohen, J., dissenting) (“Let us have mercy on these parties. They have suffered enough . . . . Under these circumstances, any decision we could reach is better than none at all.”); In re Hearn, 418 F.3d 444, 453 (5th Cir. 2005) (Smith, J., dissenting) (“I only protest that even in light of that sensitivity, it is our duty, as keepers of the first ‘gate,’ to call a halt and say ‘enough is enough’ when faced with a claim that plainly fails to make a prima facie case”).

Patience is a virtue, they say (along with other nice attributes like charity, hope, and benignity). But judges are people, too. And undoubtedly their patience is sorely tried from time to time, with “Rambo” litigation tactics and undeterred serial litigants. So we can’t fault the occasional judge who runs out of the capacity to smile and nod at such misbehavior, reaches the end of his or her patience, and announces, ¡Ya Basta!


United States Supreme Court Update Dori E. Kornfeld, Yetter & Warden LLP, Houston John F. Blevins, Assistant Professor, South Texas College of Law Lee B. Kovarsky, Pillsbury Winthrop Shaw Pittman LLP, Houston ARBITRATION

Hall Street Assocs., L.L.C. v. Mattel, Inc., No. 06-989, 128 S. Ct. 1396 (2008)

The Supreme Court held that sections 10-11 of the Federal Arbitration Act (FAA) provide the exclusive grounds for federal courts to modify or vacate an arbitration agreement under expedited judicial review. The FAA allows parties to seek expedited judicial review of arbitration agreements, which courts must confirm unless they determine that the agreements should be modified or vacated on the grounds specifically listed in sections 10-11. The Court held that parties cannot contractually expand the grounds upon which courts can modify or vacate the underlying arbitration agreements.

Mattel successfully sued its landlord, Hall Street, seeking termination of its lease following the discovery of environmental contamination on the manufacturing site. The parties submitted to arbitration the issue of indemnification for cleanup costs. The arbitration agreement authorized the federal district court to vacate or modify the award if the arbitrator’s “conclusions of law are erroneous.” Applying this standard of review, the district court originally vacated the first arbitration award, concluding that the arbitrator committed legal error. After a complicated procedural history, the Ninth Circuit ultimately reversed, concluding that federal courts may vacate or modify agreements only on the specific grounds listed in sections 10-11.

In 6-3 opinion by Justice Souter, the Court affirmed the Ninth Circuit’s conclusion that sections 10-11 provide the exclusive grounds for modification and vacatur, but remanded the case for different reasons. Distinguishing Wilko v. Swan (1953), the Court emphasized that the statutory text precludes parties from adding to the underlying agreement additional grounds on

which courts may modify or vacate the arbitration award. It added that the permissible statutory grounds are limited to extreme circumstances such as fraud and misconduct. The Court remanded the case to the Ninth Circuit to determine whether the arbitration agreement was submitted in the course of litigation, which might provide an independent ground for vacating the award.

Justice Stevens, joined by Justice Kennedy, dissented. He argued that the overriding interest of the FAA was to give effect to the parties’ intent. Reviewing the historical context of the FAA’s enactment, he argued that sections 10-11 are best understood as “shields” to protect parties from hostile courts, not “swords” to challenge otherwise enforceable arbitration awards.

Justice Breyer wrote a short dissent, arguing that there is no need to remand the case for further judicial decisionmaking in light of the Court’s conclusion.

Preston v. Ferrer, No. 06-1463, 128 S. Ct. 978 (2008)

The Supreme Court held that when parties agree to arbitrate all questions arising under a contract, the Federal Arbitration Act (FAA) supersedes state laws establishing primary jurisdiction in another forum, whether judicial or administrative.

Preston, a California entertainment lawyer, initiated an arbitration proceeding against television performer Ferrer, seeking to recover fees allegedly due under their contract. Ferrer subsequently filed a petition to the California Labor Commissioner, charging that Preston had acted as a talent agent without the requisite license and that the contract was therefore invalid and unenforceable under the California Talent Agencies Act (TAA). The Labor Commissioner denied Ferrer’s motion to stay the arbitration on


the ground that she lacked authority to order such relief. Ferrer then filed suit in the Los Angeles Superior Court, which enjoined Preston from proceeding before the arbitrator unless and until the Labor Commissioner determined that she lacks jurisdiction. While appeal of the superior court decision was pending, the U.S. Supreme Court in Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440 (2006) reaffirmed that challenges to the validity of a contract providing for arbitration ordinarily should be considered by an arbitrator, rather than by a court. The California Court of Appeal nevertheless affirmed the superior court’s judgment, finding Buckeye to be inapposite because it did not involve an administrative agency with exclusive jurisdiction over a disputed issue. The California Supreme Court denied Preston’s petition for review.

In an opinion by Justice Ginsburg, the Court reversed and remanded. The Court clarified that the dispositive issue is not whether the FAA preempts the TAA wholesale, but is instead who decides whether Preston acted as an unlicensed talent agent in violation of the TAA. Noting that the contract falls within the purview of section 2 of the FAA and that there had been no discrete challenge to the validity of the arbitration clause, the Court concluded that Buckeye requires that the arbitrator resolve the dispute. Rejecting the argument that the TAA merely requires exhaustion of administrative remedies before the parties proceed to arbitration, the Court asserted that the TAA’s procedural proscriptions conflict with the FAA’s dispute resolution regime and that postponing arbitration would contravene the FAA’s objective of achieving expeditious results. The Court dismissed Ferrer’s reliance on Volt Information Sciences, Inc. v. Board of Trustees of Leland Stanford Junior University, 489 U.S. 468 (1989), explaining that the arbitration clause speaks to the matter in controversy and that, in accordance with Mastrobuono v. Shearson Lehman Hutton, Inc., 514 U.S. 52 (1995), the selection of California law should be read to encompass prescriptions governing the parties’ substantive rights and obligations but not the State’s rules limiting the authority of arbitrators.

Justice Thomas wrote a short dissent reiterating his longstanding view that the FAA does not apply to state court proceedings.

CRIMINAL PROCEDURE

Snyder v. Louisiana, No. 06-10119, 128 S. Ct. 1203 (2008)

The Supreme Court held that a state trial court erred in dismissing a juror challenge under Batson v. Kentucky, 476 U.S. 79 (1986), which famously held racially-animated juror challenges to be unconstitutional. A Louisiana court convicted Snyder of murder. During the second phase of voir dire, the venire was questioned in 13-person panels, and each juror was subject to removal for cause and to peremptory challenges. The second phase of voir dire proceeded until a full jury was seated. Thirty-six prospective jurors survived for-cause challenges, and five of those were black. The prosecution subsequently eliminated all five black prospective jurors through peremptory strikes. The Louisiana Supreme Court twice rejected Snyder’s Batson claim that the peremptory strikes were racially motivated, the second time after the U.S. Supreme Court’s decision in Miller-El v. Dretke (2005).

In an opinion by Justice Alito, the Court determined that the prosecution violated Batson and reversed. The Court began by reciting the three-step Batson inquiry: (1) an offender must make a prima facie showing that the prosecution made a racially-motivated peremptory strike; (2) if an offender makes the requisite showing, then the prosecution must offer a race-neutral basis for the strike; and (3) in light of the parties’ submissions, the court must decide whether the defendant has shown purposeful discrimination. When Snyder’s attorney made a Batson objection to the prosecution’s peremptory challenge of one of the two contested jurors, Mr. Brooks, the prosecutor offered two race-neutral reasons for the challenge: (1) that Brooks looked nervous during questioning; and (2) that Brooks’ student teaching obligations would improperly encourage him to avoid punishment-phase questions of capital culpability by returning a not-guilty

4 — The Appellate Advocate

verdict. The trial court rejected the Batson objection, but did not state why.

First, the Supreme Court refused to uphold the strike on the “nervousness” rationale because there was no record that the trial court actually relied on it. Second, the Supreme Court refused to uphold the strike on the student-teaching rationale—even on highly deferential review—because Brooks had secured the university authorization necessary to serve on the jury and because peremptory challenges were not lodged against (and the trial court seated) similarly-situated white jurors. Although Snyder challenged two jurors, because the Court sustained the Batson objection to Mr. Brooks, it did not reach the legality of the challenge to the other juror.

Justice Thomas, joined by Justice Scalia, dissented. He argued that the trial court did in fact rely on the nervousness rationale and that the Supreme Court should therefore defer to that determination. He refused to credit Snyder’s argument about similarly-situated white jurors because it had not been raised until the merits briefing before the Court. Having rejected the Batson challenge to Brooks, Justice Thomas concluded by noting that he would also reject any Batson challenge to the other prospective juror.

ELECTION LAW

N.Y. St. Bd. of Elections v. López Torres, No. 06-766, 128 S. Ct. 791 (2008)

The Supreme Court held that New York’s system of choosing party nominees for the State Supreme Court does not violate the First Amendment associational rights of prospective party candidates. Since 1921, New York’s election law has required parties to select their nominees by a convention of delegates chosen by party members in a primary election. An individual may run for delegate by submitting a 500-signature petition collected within a specified time. The convention’s nominees appear on the general-election ballot, along with any independent

candidates who meet certain statutory requirements.

Judicial candidates, voters, and a non-profit organization filed suit against the New York State Board of Elections, seeking both a declaration that the convention for selecting Supreme Court Justices violated their First Amendment rights and an injunction mandating the establishment of a direct primary election to select party nominees for Supreme Court justice. The district court issued a preliminary injunction, pending enactment of a new statutory scheme, and the Second Circuit affirmed.

Justice Scalia wrote for the Court, which reversed. The Court rejected plaintiffs’ attempt to rely upon the First Amendment associational right of political parties to structure their internal party processes and to select candidates. Reasoning that plaintiffs’ “real complaint” is that the convention process does not assure them a realistic opportunity to secure the party’s nomination, the Court declared that the First Amendment does not secure a right to a “fair shot” at winning a party’s nomination. The Court dismissed the contention that the existence of entrenched “one-party rule” demands that the First Amendment be used to impose additional competition in the parties’ nominee-selection process.

Justice Stevens, joined by Justice Souter, concurred, emphasizing that the majority’s constitutional analysis should not be misread as endorsement of the electoral system under review or as disagreement with the findings of the district court that describe glaring deficiencies in the system. Justice Kennedy also concurred, finding that the First Amendment argument would be more compelling were there not an alternative mechanism for placement on the final election ballot by petition. Joined by Justice Breyer, Justice Kennedy further stated in his concurrence that New York’s statutes for nominating and electing judges should promptly be changed if they do not produce both the perception and the reality of a system committed to the highest ideals of law.


Wash. St. Grange v. Wash. St. Republican Party, No. 06-713, 128 S. Ct. 1184 (2008)

Washington passed an initiative allowing voters to select any candidates in a primary, with the top two vote-getters for each office advancing to the general election regardless of their political party preference. Each candidate would identify a preferred party on the primary ballot. Immediately after the implementing regulations were enacted, Washington’s Republican, Democratic, and Libertarian parties obtained a permanent injunction against enforcement of the law. The Ninth Circuit affirmed, declaring the law to be a facially unconstitutional burden on First Amendment associational rights.

In an opinion by Justice Thomas, the Court reversed. The Court rejected the argument that Washington’s plan would allow unaffiliated, independent primary voters to choose a party’s nominee. It explained that the primary serves not to determine a political party’s nominees, but rather to allow the top two candidates to proceed to the general election. It further dismissed as sheer speculation the contention that voters would assume that candidates on the general election ballot were the nominees of their preferred parties. The Court reasoned that the absence of evidence that voters were actually confused was fatal to the facial challenge, and that an as-applied challenge would therefore remain the proper vehicle for determining the extent of voter confusion. Concluding that the law does not severely burden associational rights, the Court found the State’s asserted interest in providing voters with relevant information about candidates on the ballot sufficient to sustain the law against a facial challenge.

Chief Justice Roberts, joined by Justice Alito, concurred. He stated that the law should survive a facial challenge because the ballot could be designed so that no reasonable voter would believe that the listed candidates were associated with the parties they claimed to prefer. However, if the ballots were designed in a manner that failed to convey clearly that the parties and candidates were not necessarily associated, he

would rule that the primary system does not pass constitutional muster.

Justice Scalia, joined by Justice Kennedy, dissented. He asserted that a political party’s message is undermined when it is compelled to associate with a person whose views it does not accept. Moreover, he argued that the party’s goodwill is diminished by a system that allows any candidate to garner support by identifying with a party while simultaneously prohibiting that party from using the ballot to disassociate itself from the candidate. Finding that the law imposes a severe burden on political parties’ associational rights, he concluded that Washington failed to show the compelling state interest that the First Amendment requires.

EMPLOYMENT DISCRIMINATION

Fed. Express Corp. v. Holowecki, No. 06-1322, 128 S. Ct. 1147 (2008)

Like other federal employment discrimination statutes, the Age Discrimination in Employment Act of 1967 (ADEA) requires an employee wishing to commence a civil action to first file, at least 60 days prior to initiating suit, a “charge” with the Equal Employment Opportunity Commission (EEOC) alleging unlawful discrimination. FedEx moved to dismiss suit, arguing that the plaintiff did not satisfy this requirement by merely submitting an EEOC Form 283 “Intake Questionnaire” and a detailed affidavit describing the alleged discriminatory employment practices.

In a majority opinion by Justice Kennedy, the Court held that, in order to be deemed a “charge” under the ADEA, a filing must be capable of being reasonably construed as a request that the EEOC take remedial action to protect an employee’s rights or otherwise to settle a dispute between an employer and an employee. Applying Skidmore deference, the Court endorsed the EEOC’s request-to-act requirement as articulated in internal agency directives. The Court then concluded that the plaintiff’s filing satisfied this rule, noting that the affidavit included a request


for the EEOC to “force Federal Express to end their age discrimination plan” and that the plaintiff had checked a box on the questionnaire consenting to the release of her identity to her employer.

Justice Thomas, joined by Justice Scalia, dissented. He stated that a document merely describing the alleged discrimination and seeking the EEOC’s assistance—but not objectively manifesting an intent to initiate enforcement proceedings—is not a “charge” under the ADEA. He asserted that a charge must request that the agency take a particular form of remedial action, rather than ambiguously requesting the agency to take “some action.”

Sprint/U. Mgmt. Co. v. Mendelsohn, No. 06-1221, 128 S. Ct. 1140 (2008)

In support of her claim of age discrimination, the plaintiff sought to introduce the testimony of five other former Sprint employees who alleged age discrimination by supervisors other than her own. In a minute order, the district court excluded the testimony, stating that the plaintiff could only offer evidence of discrimination against employees “similarly situated” to her. The Tenth Circuit treated the minute order as invoking a per se rule against admitting evidence involving other supervisors. Finding that the excluded evidence was relevant and not unduly prejudicial, the Tenth Circuit reversed and remanded for a new trial.

In a unanimous opinion by Justice Thomas, the Supreme Court vacated and remanded. The Court ruled that the Tenth Circuit erred in concluding that the district court applied a per se rule, rather than remanding the case for clarification. Emphasizing that district courts possess broad discretion in evidentiary matters, the Court stated that it is improper for an appellate court to presume that a district court reached an incorrect legal conclusion when the order is equally consistent with a properly stated rule. Noting that relevance and prejudice determinations under Federal Rules of Evidence 401 and 403 are fact-specific inquiries that are not amenable to broad per se rules, the Court remanded the case to the

district court to clarify the basis for its evidentiary ruling.

EMPLOYMENT LAW

LaRue v. DeWolff, Boberg & Assocs., Inc., No. 06-856, 128 S. Ct. 1020 (2008)

The Court held that ERISA section 502(a)(2) provides a remedy for fiduciary breaches to individuals participating in contribution-based retirement plans when the breach diminishes the account’s value.

LaRue participated in a 401(k) retirement plan administered by DeWolff, his former employer. LaRue sued after DeWolff neglected to follow LaRue’s investment instructions, allegedly lowering the value of LaRue’s individual assets. The district court dismissed the case, and the Fourth Circuit affirmed. Relying on Massachusetts Mutual Life Insurance Company v. Russell, 473 U.S. 134 (1985), the Fourth Circuit explained that section 502(a)(2) provides remedies only for harms to the entire plan and not to individual accounts.

In an opinion by Justice Stevens, the Court reversed. The Court first reaffirmed that ERISA’s fiduciary obligations exist to ensure that participants receive their benefits. LaRue’s allegations of lost benefits, the Court explained, fall squarely within the statute’s protections. The Court then distinguished Russell by limiting its application to fixed-benefit pension plans rather than to more modern contribution-based plans. Under fixed-benefit plans (which were at issue in Russell), the Court reasoned that participants suffer losses only when the “entire plan” is harmed. This reasoning, however, has little relevance to contribution-based plans, where mismanagement can more directly harm individual participants.

Chief Justice Roberts, joined by Justice Kennedy, concurred. While agreeing that the Fourth Circuit misread section 502(a)(2), he cautioned that this statutory provision does not necessarily authorize recovery. Specifically, he noted that section


502(a)(1)(B) may provide the only appropriate remedy in this context.

Justice Thomas, joined by Justice Scalia, concurred, arguing that the statutory text alone justified the result. Specifically, he rejected as irrelevant both the statute’s purpose and the fact that pension plans have evolved toward contribution-based systems since Russell was decided. He further clarified that injuries to individual contribution accounts should necessarily be considered injuries to the entire plan.

HABEAS CORPUS

Danforth v. Minnesota, No. 06-8273, 128 S. Ct. 1029 (2008)

The Supreme Court held that the restraints on retroactively applying rules of criminal procedure do not apply in state collateral proceedings. A Minnesota jury convicted Danforth for criminal sexual misconduct with a minor. The victim did not testify at the trial, but the jury saw and heard a videotaped interview with the child. In Crawford v. Washington, 541 U.S. 36 (2004), the Court held that the Confrontation Clause required that a defendant literally be allowed to confront a witness in court. The Court, however, has since declared that Crawford is not retroactive, and therefore that it does not apply on federal collateral review. When Danforth sought state collateral relief, the Minnesota Supreme Court held that Supreme Court precedent prohibited states from giving greater retroactive effect to constitutional rules than that given in federal court under Teague v. Lane, 489 U.S. 288 (1989).

The Court reversed in an opinion by Justice Stevens. The Court first emphasized that, although Crawford was formally a “new rule” for the purposes of Teague analysis, it was not a “new rule” in the sense of being of the Court’s own invention. The Court then explained that terms such as “new rule” and “new right” are misleading, because the Teague jurisprudence really involves a remedial decision about whether relief will be afforded to violations of an existing

right. After scrutinizing its retroactivity jurisprudence, the Court concluded that no precedent constrained States’ authority to provide broader collateral remedies for constitutional violations in state court than those available on federal habeas review. Finally, the Court agreed that states could not broaden constitutional protections by misconstruing federal law, but held that state retroactivity rules were creatures of state law and that there was therefore no applicable federal law to misconstrue.

Chief Justice Roberts, joined by Justice Kennedy, dissented. He first argued that, contrary to the majority’s characterization, the retroactivity of federal rules is exclusively a question of federal law. He next argued that the majority improperly treated retroactivity as a remedial question, and that it is in fact a federal choice-of-law question that should be decided by the Supreme Court and binding, through the Supremacy Clause, during state collateral proceedings.

Wright v. Van Patten, No. 07-212, 128 S. Ct. 743 (2008)

The Seventh Circuit had previously held that Van Patten was entitled to habeas relief under 28 U.S.C. section 2254 because, when his lawyer participated in a plea hearing only by speaker phone, that lawyer’s assistance was presumptively ineffective and required no prejudice inquiry under Strickland v. Washington, 466 U.S. 668 (1984). The Court granted certiorari, vacated, and remanded the case for reconsideration in light of Carey v. Musladin, 549 U.S. 70 (2006). The Seventh Circuit affirmed its earlier decision. Again granting certiorari, the Supreme Court reversed.

Although the Court agreed that a lawyer who is physically present is more likely to be effective than a lawyer whose participation is telephonic, it emphasized that there was no line of cases clearly establishing that telephonic participation was objectively and presumptively ineffective. The Court also noted that the result might be different if the issue were presented on direct appeal.


Justice Stevens reluctantly concurred, arguing that, while the state court interpretation of the relevant law was not objectionably unreasonable, it may nonetheless be erroneous. The central precedent, United States v. Cronic, 466 U.S. 648 (1984), held that counsel’s assistance might be presumptively ineffective (thereby rendering unnecessary an inquiry into prejudice) where a defendant lacked representation at a crucial phase of the criminal proceedings. Justice Stevens noted that, because Cronic was written before teleconferencing became commonplace, on direct appeal the precedent might require the physical presence of counsel in court. He conceded, however, that disagreement with such a reading was not unreasonable.

INTERNATIONAL LAW / FEDERALISM

Medellin v. Texas, No. 06-084, 128 S. Ct. 1346 (2008)

In the Case Concerning Avena and Other Mexican Nationals (Mex.v.U.S.), 2004 I.C.J. 12 (Judgment of Mar. 31) (Avena), the International Court of Justice (ICJ) held that 51 named Mexican nationals were entitled to review of their state-court convictions and sentences because they were not notified of their Vienna Convention rights to contact the Mexican consulate about their detention. In Sanchez-Llamas v. Oregon, 548 U.S. 331 (2006), the Supreme Court held that the Vienna Convention did not protect offenders not named in Avena from forfeiting these rights for failing to comply with generally applicable state procedural rules requiring that they be timely invoked at trial. After Avena, however, President Bush issued a memorandum stating that the U.S. would discharge its international obligations by requiring state courts to give effect to the decision, notwithstanding state procedural rules.

Medellin had been convicted of murder in Texas, and was named in Avena. Relying on Avena and on President Bush’s order, Medellin sought state habeas relief in a successive petition. The Texas Court of Criminal Appeals (CCA) dismissed Medellin’s application as an abuse of the writ because, under Texas law, he failed to raise the

Vienna Convention claim in a timely manner. The Supreme Court granted certiorari in order to determine whether Avena or the Presidential memorandum superseded state procedural law.

The Court affirmed the CCA in an opinion by Chief Justice Roberts. The Court first explored whether Avena was binding of its own force. The Court observed that not all international law obligations are automatically enforceable in state and federal courts. Employing a textualist approach to treaty interpretation, the Court held that none of the treaty sources cited by Medellin—the Vienna Convention Optional Protocol, the United Nations Charter, or the ICJ Statute—rendered Avena automatically binding domestic law. Second, the Court held that President Bush’s memorandum could not foreclose the application of state procedural law to bar certain challenges to state criminal convictions. The Court stated that, while the President may enforce international law obligations in many ways, he may not unilaterally convert a non-self-executing treaty into a self-executing one. The Court emphasized that a non-self-executing treaty could become domestically enforceable law only through an implementing statute. It also rejected the United States’ position that the Presidential memorandum was a valid and binding exercise of the President’s foreign affairs authority to resolve disputes with other countries.

Justice Stevens concurred in the judgment. Agreeing with Justice Breyer’s dissent, he believed that neither the Supremacy Clause nor the Court’s precedent supported an interpretive presumption against self-executing treaties. On the circumstances before the Court, however, he determined that the relevant treaties do not require domestic courts to enforce Avena.

Justice Breyer, joined by Justices Souter and Ginsburg, dissented. Accusing the Court of overemphasizing irrelevant treaty text and undertaking his own comprehensive analysis of precedent, Justice Breyer would have held that, under the Supremacy Clause, an ICJ judgment automatically becomes enforceable in federal and state courts.


LIMITATIONS / COURT OF FEDERAL CLAIMS

John R. Sand & Gravel Co. v. United States, No. 06-1164, 128 S. Ct. 750 (2007)

John R. Sand & Gravel sued the United States in the Court of Federal Claims, alleging that various EPA activities on its leasehold amounted to an unconstitutional taking. The Government waived the statute of limitations, but the Federal Circuit abrogated the waiver and imposed limitations sua sponte.

The Supreme Court affirmed in an opinion by Justice Breyer. He began by distinguishing statutes of limitations that are affirmative defenses from statutes of limitations that are jurisdictional. The Court held that the statute of limitations applicable to actions instituted in the Court of Federal Claims was jurisdictional. An appeals court may therefore consider it sua sponte and the time-bar is not subject to equitable tolling. The Court rejected the argument that it had previously overturned the jurisdictional status of the relevant limitations statute, and refused to overturn that status in the case before it.

Justice Stevens, joined by Justice Ginsburg, dissented. He noted that the Court had long-ago abandoned the rule that limitations statutes capable of being asserted by the United States were jurisdictional. Under his reading of precedent, stare decisis required that the applicable statute of limitations be treated as an affirmative defense. Justice Ginsburg also dissented, stating that, even if the majority had correctly described the precedent, she would have revisited the rule and affirmed the Federal Circuit.

PREEMPTION

Riegel v. Medtronic, No. 06-179, 128 S. Ct. 999 (2008)

The Medical Device Amendments of 1976 (MDA) created federal oversight of medical devices, preempting many state regulatory schemes in the process. Devices described as belonging to “Class III” require premarket approval. A Class III Medtronic catheter ruptured

in Riegel’s coronary artery during heart surgery and Riegel alleged that the catheter was designed, labeled, and manufactured in a manner that violated New York common law. The district court held that the MDA preempted the common law causes of action, and the Second Circuit affirmed. The Supreme Court granted certiorari and affirmed in an opinion by Justice Scalia.

The Court framed the decision as a two-step inquiry: (1) whether the federal government had established a requirement applicable to the catheter; and (2) whether the New York rules were “different from, or in addition” to the applicable federal requirements. First, the Court reasoned, FDA premarket approval allows little variation from the approved device and is conditioned on reasonable assurances of safety and effectiveness. It therefore determined that there were federal requirements applicable to the catheter. Second, the court determined that New York tort duties constituted state “requirements” that would be pre-empted by federal requirements specific to a medical device.

Justice Stevens concurred in part and concurred in the judgment. He agreed with Justice Ginsburg’s dissent in that he considered the Court’s holding inconsistent with the MDA’s purpose and he would not apply the preemption provision to all state common law causes of action. He nonetheless considered the preemption provision sufficiently unambiguous that he would not have allowed the claims for negligence and strict liability to proceed.

Justice Ginsburg dissented, arguing that Congress did not intend to dramatically curtail state common law suits seeking compensation for injuries caused by devices that were designed or labeled defectively. She would have found the statute ambiguous, and would have instead invoked the presumption against preemption to allow the suits to proceed.


Rowe v. N.H. Motor Transp. Ass’n, No. 06-457, 128 S. Ct. 989 (2008)

The Supreme Court held that a federal statute that prohibits states from enacting any law “related to” a motor carrier “price, route, or service” preempts two provisions of a Maine tobacco law that regulates the delivery of tobacco to customers within the state. Although the Federal Aviation Administration Authorization Act of 1994 (FAAAA) forbids states to “enact or enforce a law … related to a price, route, or service of any motor carrier,” Maine adopted a law that: (1) requires a state-licensed tobacco retailer to utilize a delivery company that provides a recipient-verification service confirming the buyer is of legal age; and (2) in prohibiting unlicensed tobacco shipments in the State, provides that a person is deemed to know that a package contains tobacco if it is marked as originating from a Maine-licensed tobacco retailer or if it is sent by someone whose name appears on a distribution list of unlicensed tobacco retailers. In a lawsuit brought by transport carrier associations, the district court held that federal law preempts the “recipient-verification” and “deemed to know” provisions, and the First Circuit affirmed.

In an opinion by Justice Breyer, the Supreme Court affirmed. In Morales v. Trans World Airlines, Inc., 504 U.S. 374 (1992), the Court interpreted similar language in the Airline Deregulation Act of 1978 and determined that state enforcement actions having a connection with, or reference to, carrier rates, routes, or services are preempted—at least where the state laws have a significant impact on Congress’ deregulatory and preemption-related objectives. Relying on Morales, the Court concluded that the FAAAA preempts the Maine statute, whose “recipient-verification” provision focuses on trucking and other motor carrier services and substitutes its own governmental commands for competitive market forces. Moreover, the “deemed to know” provision requires an examination of every package, thereby directly regulating a significant aspect of the motor carrier’s package pick-up and delivery service and creating an improper state-mandated regulation.

The Court rejected Maine’s argument that the FAAAA creates a public health exception to prevent minors from obtaining cigarettes, noting that neither the statute nor its legislative history mentions such an exception.

Justice Ginsburg concurred, noting that the FAAAA’s broad preemption provisions facilitate minors’ access to tobacco and urging Congress to provide an effective solution to the problem. In a short concurrence, Justice Scalia stated that he did not join the portions of the majority’s opinion that rely on “the reports of committees of one House of Congress to show the intent of that full House and of the other” with respect to propositions that either are readily apparent from the statutory text or unnecessary to the disposition of the case.

TAX LAW

Boulware v. United States, No. 06-1509, 128 S. Ct. 1168 (2008)

The Court unanimously held that defendants accused of criminal tax evasion can claim that distributions are non-taxable “returns of capital” regardless of whether they originally intended the distributions to be capital returns. A necessary element of criminal tax evasion is the existence of a tax deficiency, which turns on how distributions are classified. 47 U.S.C. sections 301 & 316 provide that distributions of “dividends” must come from “earnings and profits” and are taxable. Returns of capital, by contrast, are non-taxable.

Michael Boulware was convicted of tax evasion stemming from the distributions of his closely-held corporation. In defense, he argued that he had no tax deficiency. Specifically, he claimed that, because the corporation had no earnings and no profits, the distributions were all non-taxable returns of capital. The district court barred evidence supporting his argument, relying on Ninth Circuit precedent requiring defendants to establish that they intended the distributions to be returns of capital at the time the distributions were made. The Ninth Circuit affirmed.

In an opinion by Justice Souter, the Court unanimously reversed. The Court observed that


tax classifications of distributions turn on objective economic criteria rather than on intent. Next, the Court offered several reasons why the Ninth Circuit’s contemporaneous intent requirement was inconsistent with the text of sections 301 & 306. In particular, the Court explained why tax deficiencies should turn solely on the existence of earnings and profits at the end of the taxable year, rather than on contemporaneous intent. For instance, distributions originally intended to be taxable dividends could become non-taxable capital returns if a company subsequently lost money. The Court also rejected the government’s request to affirm on other grounds because facts necessary to that determination had not yet been reviewed.

Knight v. Comm’r of Internal Revenue, No. 06-1286, 128 S. Ct. 782 (2008)

The Court unanimously held that investment advisory fees incurred by a trust are subject to the “2% floor” for tax deduction purposes. Federal tax law provides that individuals can subtract itemized or “below-the-line” deductions from adjusted gross income if those deductions exceed 2% of adjusted gross income. The 2% floor is generally applicable to both individuals and trusts, with one important exception. 26 U.S.C. section 67(e)(1) allows trusts to fully deduct administration-related expenses that “would not have been incurred if the property were not held in such trust or estate.”

Knight, acting as trustee, hired a financial company to provide advice regarding investing the trust’s assets. At the end of the taxable year, the trust fully deducted these investment advisory fees. After an audit, the Commissioner of Internal Revenue concluded that these deductions were subject to the 2% floor, thus resulting in a tax deficiency. Knight filed a petition in the United States Tax Court, arguing that these expenses fell within the section 67(e)(1) exception for trusts, and were therefore fully deductible. The Tax Court rejected the petition, and the Second Circuit affirmed.

Chief Justice Roberts, writing for a unanimous Court, affirmed that the 2% floor applied, albeit on different grounds. The Court held that the section 67(e)(1) exception applies only to trust-related expenses that would be uncommon or unusual for an individual to incur if the property were not held by a trust. The Court interpreted the term “would” to encompass concepts such as custom and probability. The Court thus rejected the Second Circuit’s reading, which had excepted any expenses that an individual “could” have theoretically incurred. The Court concluded that investment advisory fees are expenses that an individual commonly incurs, and are therefore subject to the 2% floor. The Court rejected the argument that individuals necessarily cannot incur “trust” investment advisory fees under Connecticut law, noting that Connecticut’s standard itself requires trustees to act as reasonable individual investors would.

SECURITIES

Stoneridge Inv. Partners, LLC v. Scientific-Atlanta, Inc., No. 06-43, 128 S. Ct. 761 (2008)

In what has been called the most important securities case in a generation, the Court held that third party securities fraud defendants who do not themselves mislead investors are not liable in suits for private damages under section 10(b) of the Securities Exchange Act. The Court had previously ruled that section 10(b), which prohibits securities fraud, implies a private cause of action for damages, but that it does not create secondary liability for those who “aid and abet” the primary actor. Securities plaintiffs, however, began to assert primary liability against entities that did not themselves make misleading statements, but that had participated in a “scheme” facilitating the actionable fraud.

Stoneridge was a putative class action under section 10(b), filed on behalf of shareholders of Charter Communications, a cable television company. Charter allegedly overpaid set-top box vendors, and in return the vendors paid the mark-up back in advertising. Charter allegedly used these transactions to overstate its earnings by $17


million. Plaintiffs asserted that the vendors were primarily liable under a theory of scheme liability because the fraud could not have occurred without their participation, even though the vendors themselves made no fraudulent statements and did not prepare any fraudulent documents. The district court dismissed the suit against the vendors, and the Eighth Circuit affirmed.

In a 5-3 opinion by Justice Kennedy (Justice Breyer was recused), the Supreme Court affirmed and held that section 10(b) did not create a private cause of damages for scheme liability. First, the Court emphasized that section 10(b) requires that plaintiffs show that they directly relied on a defendant’s deceptive acts. Second, the Court refused to define “reliance” so broadly as to include acts of vendors and other third parties whose statements and actions were not actually known to the plaintiffs. Third, the Court expressed its reluctance to extend any implied theory of damages to include secondary actors. The Court concluded by reiterating that secondary actors remained subject to criminal penalties and to civil enforcement by the SEC.

Justice Stevens, joined by Justices Souter and Ginsburg, dissented. Justice Stevens insisted that section 10(b) did not require a formal, verbal “misstatement,” and that the vendors’ deceptive conduct was sufficient to support a cause of action. He also argued that the majority’s reliance requirement was unduly stringent, and that a “fraud on the market” theory was sufficient to support a section 10(b) action, even if the plaintiffs did not actually rely on the misstatement themselves.

SOVEREIGN IMMUNITY

Ali v. Fed. Bureau of Prisons, No. 06-9130, 128 S. Ct. 831 (2008)

This case addressed the scope of the phrase “any other law enforcement official” for purposes of sovereign immunity under 28 U.S.C. section 2680. The Federal Tort Claims Act (FTCA) waives sovereign immunity for torts committed by federal officials. Section 2680, however,

carves out an exception for claims arising from the detention of property by “any officer of customs or excise or any other law enforcement officer.” Ali, a federal prisoner, sued the Federal Bureau of Prisons under the FTCA for property loss following a prison transfer. He argued that the exception in section 2680 applied only to federal officials enforcing custom and excise laws. Reading the phrase “any other law enforcement official” broadly, the district court disagreed and dismissed his claim for lack of subject matter jurisdiction. The Eleventh Circuit affirmed.

In a 5-4 opinion by Justice Thomas, the Court affirmed, concluding that the statutory exception was not limited to the customs and excise context. In reaching this conclusion, the Court interpreted the word “any” broadly enough to cover all federal officials, relying on both the text and the structure of the overall statutory scheme. The broad interpretation, the Court argued, was also consistent with prior cases that read “any” broadly in similar contexts. The Court added that its interpretation was strengthened by recent amendments to section 2680.

Justice Kennedy, joined by Justices Stevens, Souter, and Breyer, dissented. He argued that the Court wrongly interpreted the statute and embraced a flawed analytical approach. Specifically, Justice Kennedy argued that both the text and the larger statutory context limited the exception to custom and excise enforcement. He added that the Court applied interpretative canons such as ejusdem generis too narrowly. He also disagreed with the Court’s conclusion that the recent amendments to section 2680 implied a broader interpretation. Finally, he argued that, to the extent the Court was attempting to limit frivolous claims against federal officials, the statute had other limitations that more properly address this concern.

Justice Breyer, joined by Justice Stevens, offered a shorter dissent, emphasizing the need to look beyond interpretative canons to the overall statutory context. Specifically, he emphasized the importance of considering the text, legislative


history, and other relevant statutes that imply a more narrow interpretation.

*

* See Hon. Don R. Willett, An Inconvenient Truth: Conservatives Behaving Charitably, 12 TEX. REV. L. & POL. 181, 198

n.115 (Spring 2008) (reviewing ARTHUR C. BROOKS, WHO REALLY CARES: THE SURPRISING TRUTH ABOUT COMPASSIONATE CONSERVATISM (Basic Books 2006) and citing StickerGiant.com, http://www.stickergiant.com/I-called-in-Dead_zbs704.html (last visited May 23, 2008)).


Texas Supreme Court Update Don Cruse, Law Office of Don Cruse, Austin ADMINISTRATIVE LAW

El Paso Hosp. Dist. v. Tex. Health & Human Servs. Comm’n, 247 S.W.3d 709 (Tex. 2008) (op. on reh’g)

The Texas Department of Health and Human Services (HHSC) was tasked with seting certain hospital reimbursement rates. The rates were calculated, in part, based on expenses the hospitals incurred in previous years. HHSC set a deadline by which hospitals had to submit bills to have them included in a particular year’s calculation; bills received after that point would not be folded into HHSC’s formula.

The hospitals sued, arguing the deadline was itself a rule that needed to go through the rule-making process and contending that the deadline disproportionately prevented their larger bills from being counted.

On August 31, 2007, the Texas Supreme Court ruled for the hospitals, holding that HHSC’s deadline was a rule that should have undergone the normal rule-making process. That original judgment left the invalidated “deadline” rule in place so that HHSC would have a chance to cure the defect under Texas Government Code section 2001.040.

The hospitals filed a motion for rehearing asking the Court to instead render judgment. HHSC filed a response agreeing that leaving the rule in place was inappropriate.

Writing for the Court on rehearing, Justice Medina modified the Court’s earlier judgment to provide that the invalid agency rule should be enjoined immediately under Texas Government Code section 2001.035. Accordingly, the Court rendered judgment for the hospitals.

Tex. Mun. Power Agency v. Pub. Util. Comm’n of Tex., No. 04-0751, ___ S.W.3d ___, 51 Tex. Sup. Ct. J. 216, 2007 WL 4357538 (Tex. Dec. 18, 2007)

Before Texas began to deregulate its electrical-power system, the Texas Municipal Power Agency (TMPA) entered into long-term contracts with a number of municipal electricity providers. Those contracts set a bundled rate for the electricity that included all the components (generation, transmission, and other elements). Customers paid the bundled rate; they were not billed separately for its elements.

When deregulation began, the Public Utility Commission (PUC) was granted authority to regulate transmission rates. This was, in part, to facilitate new market entrants who could provide competition in the market.

In 1997, the PUC adopted rules that included a methodology for the wholesale pricing of electricity transmission. In 2001, the Texas Supreme Court invalidated those first pricing rules. Pub. Util. Comm’n v. San Antonio 53 S.W.3d 310, 318-21 (Tex. 2001).

In 1999, the PUC adopted a different set of regulations governing wholesale power transmission. In related administrative proceedings, the PUC issued an order that the Texas Supreme Court later characterized as meaning “that [the City of] Bryan was ‘entitled to unbundled transmission service.’”

The court of appeals affirmed, holding the PUC had jurisdiction to determine whether the pricing terms of TMPA’s contract with its customers were reasonable.

In an opinion by Justice Green, the Texas Supreme Court held the Public Utility Act did not authorize the PUC “to regulate, modify, or abrogate the [contract] between TMPA and its member cities or the bundled uniform sales rate


charged to [municipal power providers] under that contract.”

Although the PUC characterized its actions as merely affecting how TMPA had to account for the “transmission” portion of the price, the Court concluded that, in effect, the PUC was forcing the “unbundling” of what had been negotiated as a bundled contract. Because the Court could find no authority in the statute for the PUC to take such an action, the Court held the PUC lacked jurisdiction to do so.

The Court reversed and rendered on those claims, but it remanded the declaratory-judgment claims to the court of appeals.

The dissent by Justice Brister and joined by Justice Willett would have framed the question differently. It would have asked whether the regulation of transmission rates was necessary to the tasks that were delegated to the PUC. In the dissent’s view, regulating these rates was within that grant of authority.

The dissent would also have characterized the PUC’s challenged order differently. To the dissent, this was not an attempt to “unbundle” a contract but instead merely governed the reporting of rates to the PUC. The dissent would have left those technical decisions to the agency.

APPELLATE PROCEDURE

A. Perfection / Motions for New Trial

In re Brookshire Grocery Co., No. 05-0300, ___ S.W.3d ___, 51 Tex. Sup. Ct. J. 275, 2008 WL 53702 (Tex. Jan. 4, 2008) (orig. proceeding)

Divided 5-4, the Texas Supreme Court held that a second motion for new trial cannot extend the trial court’s plenary power. Only the first motion for new trial can do so.

Barbara Goss brought a tort claim against Brookshire Grocery Company (Brookshire) and prevailed in a jury trial.

Between the jury verdict and final judgment, Brookshire moved for a new trial, along with its motion for judgment notwithstanding the verdict. At that time, it advised the trial court that it had other grounds for a new trial that it would file in a more comprehensive post-trial motion; the trial court seemed to acquiesce. When the trial court rendered judgment, it denied Brookshire’s motion for new trial.

Twenty-nine days after judgment, Brookshire filed the promised new trial motion. After twenty-five more days passed (fifty-four days after judgment), the trial court opted to grant that second motion for new trial.

Goss sought mandamus relief from the court of appeals, which ultimately granted relief, vacating the trial court order’s order and holding the trial court no longer had power to grant a new trial.

Brookshire Grocery then sought mandamus relief from the Texas Supreme Court. The Court set the case for oral argument and ultimately divided 5-4 on the result.

The majority opinion was written by the Chief Justice and was joined by Justices O’Neill, Medina, Johnson, and Willett. The Court denied mandamus relief, agreeing with the court of appeals that the trial court’s plenary power was not extended by the second motion for new trial and, thus, had already expired before the order granting new trial.

The dissent was written by Justice Hecht and joined by Justices Wainwright, Brister, and Green.

B. Notices of Appeal

Houser v. McElveen, 243 S.W.3d 646 (Tex. 2008) (per curiam)

Houser filed a district-court action for mandamus to compel the county clerk to probate his father’s will. The district court dismissed his petition.

Houser asserts (as the Texas Supreme Court notes, “without challenge”) that he deposited a


notice of appeal in the mail thirty-five days later. The court of appeals did not receive the notice until forty-six days after judgment.

The Court stated the general rule that, even after Houser’s period for filing an appeal expired, the court of appeals “should have extended that time if, within the next fifteen days, Houser filed his notice of appeal an a motion of extension with reasonable explanation.”

The notice was deemed filed when mailed, and the “motion” for extension was implied by the late filing. See Verburgt v. Dorner, 959 S.W.2d 615, 617 (Tex. 1997).

The question was if there was “any plausible statement of circumstances” indicating that the failure to file within thirty days was the result of inadvertence, mistake, or mischance.

The Court found that the record provided an explanation. In his notice of appeal (and the Court again notes, “without challenge”), Houser asserted that he mailed a motion for new trial to the trial court within nine days of the judgment. Such a motion would have extended the time to file an appeal. The trial court record did not, however, contain any such motion for new trial.

The Court sided with Houser, relying in part on Houser’s circumstances as a prison inmate dependent on the prison-mail system. The Court characterized its holding this way: “An inmate who does everything in his power to satisfy timeliness requirements may not be penalized for the error or tardiness of prison officials,” and the Court relied on its earlier decision in Williams v. T.D.C.J.-I.D., 142 S.W.3d 308 (Tex. 2004) (per curiam). The Court concluded that Houser’s extension of time should have been granted and remanded to the court of appeals for further proceedings.

Warwick Towers Council of Co-Owners ex rel. St. Paul Fire & Marine Ins. Co. v. Park Warwick, L.P., 244 S.W.3d 838 (Tex. 2008) (per curiam)

An insurer subrogated into the shoes of its insured filed a notice of appeal, but the insurer filed only in its insured’s name, not its own. The court of appeals held that this failed to perfect the insurer’s appeal.

The Texas Supreme Court reversed, holding the insurer made a “bona fide attempt to appeal by filing the notice of appeal in the name of its insured, and by listing its interest in the docketing statement and other appellate pleadings.” Accordingly, the Court reversed and remanded to the court of appeals.

ARBITRATION

Chambers v. O’Quinn, 242 S.W.3d 30 (Tex. 2007) (per curiam)

A legal-malpractice dispute arose between John O’Quinn and 183 of his former clients, including Bob Chambers. When the clients brought a legal-malpractice suit, O’Quinn invoked an arbitration clause in their contingency-fee agreement. The trial court granted the motion to compel arbitration.

Chambers immediately sought mandamus from the court of appeals. The petition was assigned to the Fourteenth Court of Appeals, which denied mandamus relief. A further petition was made to the Texas Supreme Court, which also denied mandamus relief.

When Chambers refused to submit his claim to arbitration, the trial court dismissed for want of prosecution. Chambers appealed.

The appeal was assigned to the First Court of Appeals, which held that it was powerless to reach a different result on the key question of arbitration law involved in the prior mandamus action.


The Texas Supreme Court reversed. The Court held that the mere denial of interlocutory mandamus relief did not preclude relitigating the issue in a later merits appeal.

It explained: “The writ of mandamus is a discretionary writ, and its denial, without comment on the merits, cannot deprive another appellate court from considering the matter in a subsequent appeal.”

The Court remanded the case to the court of appeals for it to review the merits.

ATTORNEY DISCIPLINE

In re Mercier, 242 S.W.3d 46 (Tex. 2007) (per curiam) (orig. proceeding)

This attorney-discipline case asks whether the Board of Disciplinary Appeals (the “Board”) can issue an order of conditional disbarment to take effect upon conclusion of a criminal appeal.

Eugene Mercier was convicted of barratry and appealed his conviction. In considering what disciplinary action to take, the Board both suspended Mercier’s license and issued an order that would disbar him if his conviction were ultimately upheld.

In this appeal, the Texas Supreme Court reversed the disbarment portion of the Board’s order. The Court explained the multi-step process for disbarment provided in Texas Rule of Disciplinary Procedure 8.05 contemplates a procedure that begins only after criminal appeals are exhausted. Holding that the conditional-disbarment portion of the Board’s order was premature, the Court reversed in part and affirmed in part the Board’s order.

CLASS ACTIONS

Bowden v. Phillips Petroleum Co., 247 S.W.3d 690 (Tex. 2008)

This oil and gas class-action case involves breach-of-contract claims related to royalty payments. The plaintiffs divided into three subclasses,

loosely divided by type of royalty agreement. Within each subclass, the class representatives focused only on the claims held commonly by that subclass.

The trial court certified all three subclasses.

The court of appeals reversed in full, holding that none of the subclasses was viable.

In so holding, the court of appeals faulted the class representatives’ focus on the commonly held claims to the exclusion of other claims held by some class members.

Writing for the Court (Justice Brister did not participate in this decision), Justice Wainwright disagreed with that criticism, holding that class representatives are not per se inadequate merely because they narrowly tailor their claims:

“Under that approach, class representatives would always risk being inadequate representatives if they did not assert all possible claims for each individual class member. At the same time, though, class representatives bringing excessive numbers of individual claims may burden their ability to satisfy the typicality and predominance requirements.” The Court emphasized that the fact that the class representatives narrowed their focus was just “one relevant factor in evaluating the requirements for class certification,” not a per se bar.

Having set aside the court of appeals’s broadest rationale, the Court examined each subclass in detail. As to one subclass, the Court held that the class met the requirements for a class-action contract claim. When the court of appeals had rejected this subclass, it had reasoned that a key contract provision, although uniform among the leases, was also ambiguous. Because it was ambiguous, the court of appeals reasoned, individual issues of contract interpretation would predominate.

The Court disagreed with the court of appeals’s premise, holding the key contract language was, in fact, unambiguous. For that reason, the Court reversed the court of appeals’s decision to


decertify that subclass.

But, as to the other two subclasses, the Court affirmed the result reached by the court of appeals, concluding that individual issues of duty, breach, and damages would predominate. In particular, the Court noted that those subclasses contained leaseholders with divergent contract language about key terms, including the method of calculating royalties. The Court affirmed the court of appeals’s holding that the trial court had abused its discretion in certifying those two subclasses.

DEFAULT JUDGMENTS

Levine v. Shackelford, Melton & McKinley, L.L.P., 248 S.W.3d 166 (Tex. 2008) (per curiam) (op. denying reh’g)

In this case, three law firms sued the Levines for legal fees owed. The Levines’ attorney did not file a response. The law firms asked when an answer would be forthcoming, and, at several points, the Levines’ attorney would promise (but not follow through) on filing an answer. Eventually, the law firms informed the Levines’ attorney that they would seek a default judgment if no answer were filed.

The district court entered a default judgment and the court of appeals affirmed. In reviewing that default judgment, the court of appeals misstated—but correctly applied—the governing test for reopening a default judgment.

That three-prong test comes from Craddock v. Sunshine Bus Lines, Inc., 133 S.W.3d 124 (Tex. 1939). The first prong asks if “the failure of the defendant to answer before judgment [i]s not intentional, or the result of conscious indifference on his part, but [i]s due to a mistake or an accident.”

Restating the test, the court of appeals explained “conscious indifference” as a kind of negligence rather than intentional conduct.

The Texas Supreme Court denied the petition for review. After the Levines filed a motion for

rehearing, the Court denied rehearing and issued a per curiam opinion explaining the intermediate appellate court’s restatement of the test was enough to satisfy Craddock: “This pattern of ignoring deadlines and warnings from the opposing party amounts to conscious indifference.”. Although the court of appeals misstated the standard, the Court explained, it reached the correct result on these facts.

DISCOVERY AGREEMENTS

In re BP Prods. N. Am, Inc., 244 S.W.3d 840 (Tex. 2008) (orig. proceeding)

This litigation arose from the Texas City refinery explosion. The plaintiffs’ counsel sought to depose, among others, two executives of the defendant’s parent corporation.

Both sides agreed on terms for a limited deposition of one of those executives (John Mazoni). If that first deposition established that the other, more senior executive (John Browne) had unique knowledge, then he would be made available for a one-hour telephonic deposition. This agreement was memorialized under Rule 11 and Rule 191.1.

The deposition of the first executive was held and the plaintiffs then noticed the deposition of the second executive. BP Products moved to quash. The trial court denied the motion to quash and, instead of ordering a one-hour telephonic deposition, ordered the deposition to proceed “without limitations [of] the Rule 11.” The trial court concluded that this was appropriate under normal principles governing an “apex deposition.”

On petition for writ of mandamus, the Texas Supreme Court held that those principles yielded when the parties had agreed to a different standard.

Writing for the Court by designation, Justice David Gaultney of the Beaumont Court of Appeals (Justice O’Neill did not sit on this case), explained:

The apex doctrine, however, does not


control the outcome in this case. The discovery agreement displaced the common law standard with the parties’ own standard. As BP Products explained in its brief: “If new evidence was developed during Manzoni’s deposition showing that Browne had unique and superior knowledge of relevant facts, then Browne would be presented at a limited deposition. ... Both parties retained the right to appeal the trial court’s ruling on the new evidence issue.”

The Court also rejected the alternate grounds that might have supported setting aside the parties’ discovery agreement. It found no evidentiary support for any misrepresentation about the discovery agreement. It rejected not only the estoppel argument, but also the view that the deponent’s public statements about the case were “the kind of changed circumstance that might amount to ‘good cause’ for setting aside the discovery agreement.” The Court thus conditionally issued mandamus relief.

ELECTIONS

In re Torry, 244 S.W.3d 849 (Tex. 2008) (per curiam) (orig. proceeding)

This petition for writ of mandamus challenged whether the Harris County Democratic Party had the authority to exclude LaRhonda Torry from the Democratic primary ballot for state representative.

The party chair concluded that Torry was not eligible because she had not timely appointed a campaign treasurer with the Texas Ethics Commission and thus removed her from the primary ballot (without a treasurer, a candidate cannot legally accept contributions or make campaign expenditures).

On petition for writ of mandamus, the Texas Supreme Court noted that the party chair conceded that Torry had met the constitutional requirements set out in Article III, section 7, and that her ballot application complied with the relevant provisions of the Elections Code. The

party chair’s decision was based on other provisions of the Election Code that related to campaign finance.

The Court held that those provisions were beyond the enforcement authority of the local party chair:

We cannot locate … any Election Code provision that authorizes a party chair to refuse to certify a candidate’s name for placement on the ballot on the basis of the candidate’s failure to designate a campaign treasurer with the Texas Ethics Commission. Nor does the Election Code authorize a party chair to insert additional certification requirements beyond those prescribed in the Election Code.

Accordingly, the Court conditionally granted the mandamus relief.

EMINENT DOMAIN & TAKINGS

AIC Mgmt. v. Crews, 246 S.W.3d 640 (Tex. 2008)

The Crews family owned a parcel of land in Houston. In 1989, the City and County instituted tax-sale proceedings to cover back taxes on part of the land. The Aldine school district, however, did not join in this proceeding, although it was also owed taxes. After these proceedings, the City sold its interest in the land to AIC Management.

Sometime later, the City decided to condemn the land for expansion of an airport. A dispute arose over who had a stake in the property as to be compensated for that taking. AIC Management claimed that it bought the land outright. The Crews family claimed that the property description used in the tax-sale proceeding was inadequate to have transferred title. And the school district intervened seeking to assert its own tax lien against the proceeds. AIC Management argued that the county civil court in which the case was pending had no jurisdiction to decide questions of title in general or this question in particular because the amount exceeded that


court’s jurisdictional limits.

The court of appeals applied a heightened level of scrutiny to the property description because it was a tax sale. Applying that standard, it concluded that this property description had been inadequate to transfer title from the Crews family.

Writing for the majority, Justice O’Neill rejected the heightened standard used by the court of appeals. Instead, applying a conventional standard, the Court concluded that this record was too uncertain to support summary judgment. The Court further confirmed the statute vested jurisdiction in the county civil courts over this subject matter, regardless of the amount in controversy. The Court also explained how this result was consistent with the legislative history. Accordingly, the Court reversed the court of appeals’s judgment and remanded to the trial court.

Justice Willett concurred to state that legislative history was an improper basis for statutory construction, even in cases where it is consonant with the statute’s text.

PR Invs. & Specialty Retailers, Inc. v. State of Tex., No. 04-0431, ___ S.W.3d ___, 51 Tex. Sup. Ct. J. 484, 2008 WL 400396 (Tex. Feb. 15, 2008)

In this condemnation case, the trial court held that it lost jurisdiction over TxDOT’s petition when the department made minor changes to the design of its proposed road.

The trial court cited language in the Texas Supreme Court’s decision State v. Nelson, 334 S.W.2d 788, 791 (Tex. 1960), to the effect that a trial court’s jurisdiction in condemnation matters was merely “appellate” regarding the decision of the special commissioners. The trial court reasoned that, with merely “appellate” jurisdiction, it could not consider evidence of changed plans and accordingly it dismissed the State’s condemnation action. It also sanctioned the State $650,000 to cover PR Investment’s fees and costs.

The Fourteenth Court of Appeals reversed, holding that the trial court had not lost jurisdiction when the department updated its roadway plans.

Writing for a unanimous Texas Supreme Court, Justice Willett addressed the confusion over its earlier use of the term “appellate” and emphasized that the trial court was not precluded from considering new evidence:

The trial court’s function in a condemnation proceeding is “appellate” in the sense that the case is first considered by the special commissioners, and hence, as we noted in Nelson, the court’s jurisdiction “is appellate as distinguished from original or concurrent.” The court’s jurisdiction is not, however, “appellate” in the sense that the evidence is fixed in the record of the proceedings below and the court is confined to that paper record, as ordinarily occurs when an appellate court reviews a case. Quite the opposite, the statutory scheme makes no provision for the commissioners’ hearing to be recorded, and provides that “[i]f a party files an objection to the findings of the special commissioners, the court shall cite the adverse party and try the case in the same manner as other civil causes.” In other words, the proceedings that occurred before the special commissioners are not considered, and the case is tried to the court de novo.

The Court thus affirmed the court of appeals judgment and remanded for the trial court to reconsider its original award of discovery sanctions (which had been predicated on the erroneous assumption that it had been divested of jurisdiction).


FAMILY LAW

In re D.N.C., Nos. 08-0621-25, ___ S.W.3d ___, 51 Tex. Sup. Ct. J. 442, 2008 WL 344806 (Tex. Feb. 8, 2008) (per curiam) (op. denying pet. for review)

The Department of Family and Protective Services (the “Department”) sought to terminate a parent’s custody of her seven children. The trial court granted that relief and appointed the Department as the childrens’ sole managing conservator. On appeal, the mother challenged the termination order but did not separately challenge the conservatorship order.

The court of appeals reversed the termination order on factual-sufficiency grounds and, in addition, reversed the conservatorship order. The court of appeals reasoned the conservatorship order had resulted solely from the termination order and that the trial court had not made findings independently supporting an order relating to conservatorship.

The Department filed a petition for review seeking to reinstate the conservatorship order. The Department relied on the Texas Supreme Court’s recent decision in In re J.A.J., 243 S.W.3d 611 (Tex. 2007), in which the Court required a parent to separately challenge both a termination order and a conservatorship order.

The Texas Supreme Court issued an opinion explaining its reasons for denying the Department’s petition for review — and, in the process, clarifying J.A.J.:

In J.A.J., … the Department requested conservatorship pursuant to Family Code section 153.131 and the trial court made the specific findings that the statute requires: …. In light of these findings, we emphasized that the differing elements and standards of review applied to conservatorship and termination orders required separate challenges on appeal.

The J.A.J. case did not establish a strict

requirement that the two types of orders be separately appealed. In J.A.J. the two orders had been supported by independent grounds and thus required separate appellate attacks. By contrast, in D.N.C., the conservatorship order depended entirely on the termination order.

Thus, the Texas Supreme Court denied the petition for review and let stand the court of appeals’s judgment.

FRAUD (VIRGINIA LAW)

Arkoma Basin Exploration Co. v. FMF Assocs. 1990-A, Ltd., No. 03-1066, ___ S.W.3d ___, 51 Tex. Sup. Ct. J. 342, 2008 WL 204503 (Tex. Jan. 25, 2008)

This fraud case involved questions of both Virginia law (concerning liability) and Texas law (regarding damages).

Eight Virginia limited partnerships hired Arkoma to evaluate the production capacity of certain mineral properties in Oklahoma. When the mineral output failed to live up to the expectations created by Arkoma, the limited partnerships sued in Texas.

The trial court applied Virginia law to the fraud claims, and the jury awarded $5.5 million in damages. The court of appeals upheld most of that award.

Regarding liability, the Texas Supreme Court read Virginia law to distinguish false “statements of fact” that might be fraudulent from mere “statements of opinion” which could not. The Court noted that this legal characterization depended on the circumstances of the case and had to be filtered through Virginia’s clear-and-convincing-evidence standard for fraud claims.

Writing for the majority, Justice Brister applied those standards and determined that some—but not all—of the plaintiffs had established fraud. The Court affirmed the jury’s verdict as to claims brought by two of the partnerships and reversed the remainder.


Regarding damages, the Court applied Texas law. Arkoma did not object to the damage evidence at trial, and its post-trial motion simply said, “there is no evidence … to support the jury’s answers to each part of [the damages question].” The Court held this was enough, reiterating that “post-trial objections will rarely be as detailed as an appellate brief because time is short, the record may not be ready, and the trial court is already familiar with the case. In that context, an objection is not necessarily inadequate because it does not specify every reason the evidence was insufficient.”

Arkoma also challenged the damage award. The Court examined the damages evidence and concluded that, while the expert testimony “could have been a lot clearer,” it was sufficient to meet the no-evidence standard. Accordingly, the Court affirmed the damage award for the two limited partnership who had succeeded in establishing liability.

Justice O’Neill filed a concurring and dissenting opinion that took issue with the Court’s characterization of some of Arkoma’s representations as having been matters of “opinion” rather than “fact.”

HOMESTEAD AMENDMENT

LaSalle Bank Nat. Ass’n v. White, 246 S.W.3d 616 (Tex. 2007) (per curiam)

This case explains how the doctrine of equitable subrogation applies to a loan that is invalid under the home-equity-lending provisions of the Texas Constitution.

The Whites took out a loan against their homestead, used part of those proceeds at closing to pay off other pre-existing loans, and kept the rest. The Whites then defaulted on the loan. When the bank sought to enforce the load, the trial court held that the entire lien was unenforceable. The court of appeals affirmed.

The Texas Supreme Court reversed, but only in part. The Court held the lender could recover that portion of the loan—and only that portion—that

was used at closing to pay down other pre-existing debt because the lender had become equitably subrogated to that portion.

The Court explained that permitting equitable subrogation comported with the Texas Constitution because, even before the recent liberalization in home-equity lending, Texas common law already recognized that equitable subrogation could apply in limited situations. The Court held that the homestead amendments to the Texas Constitution were not meant to change that aspect of the common-law background.

IMMUNITY LAW

Nueces County v. San Patricio County, 246 S.W.3d 651 (Tex. 2008) (per curiam)

In this suit between two counties, the Texas Supreme Court held that immunity divested the courts of jurisdiction.

San Patricio County argued that Nueces County lacked immunity against claims alleging conduct not authorized by law.

The court of appeals held immunity did not apply. It reasoned, in part, that actions beyond a county’s authority were more akin to “proprietary” rather than “governmental” functions, echoing a distinction sometimes used to determine the extent of municipalities’ governmental immunity.

The Texas Supreme Court rejected the application of that distinction to counties, which, unlike municipalities, are agents of the State itself.

The Court also repeated its stress from City of Galveston v. State, 217 S.W.3d 466, 469 (Tex. 2007) regarding the practical considerations weighing against judicial involvement in intragovernmental disputes:

In a world with increasingly complex webs of governmental units, the Legislature is better suited to make the distinctions, exceptions, and limitations that different situations require. The extent to which any particular city,


county, port, municipal utility district, school district, or university should pay damages involves policy issues the Legislature is better able to balance.

The Court therefore vacated the judgment of the court of appeals and dismissed the action.

INSURANCE

Evanston Ins. Co. v. ATOFINA Petrochems., Inc., No. 03-0647, ___ S.W.3d ___, 51 Tex. Sup. Ct. J. 460, 2008 WL 400394 (Tex. Feb. 15, 2008)

This case asks whether a commercial umbrella insurance policy that covered the insured’s indemnity obligations to a third party (ATOFINA) also provides direct liability coverage to that third party.

Originally, the Texas Supreme Court issued a unanimous opinon concluding this policy did not extend direct liability coverage to ATOFINA and thus reversed the judgment of the court of appeals in full.

On rehearing, the Court reached the opposite conclusion. By a vote of 9-0, the Court held that this policy does extend coverage to ATOFINA. The Court thus affirmed the conclusion of the court of appeals that ATOFINA was covered.

The Court also rejected Evanston’s arguments that ATOFINA failed on this record to establish coverage. Evanston argued that this settlement amount was unreasonable, that ATOFINA should not be able to claim coverage for its own sole negligence, and that the policy language here actually should have yielded (“followed form”) to a more limited insurance contract. The Court rejected each of those grounds in turn.

But the Court reversed the portion of the court of appeals’s judgment relating to attorney’s fees and damages under article 21.55 of the Texas Insurance Code. Article 21.55 permits damages where “a claim is made pursuant to a policy of insurance and the insurer liable therefore is not in compliance with this article.” TEX. INS. CODE art.

21.55 § 6, recodified in TEX. INS. CODE ANN. Titles. 3, 5, 9, 11, 13, and subtitles. A to G, and I of Title. 8. That statute defines a “claim” as a “first party claim.” The Court held that the claim in this case was a “classic” third-party claim, not a first-party claim, because ATOFINA sought coverage for injuries sustained to third parties.

Justice Green delivered the opinion of the Court, joined by Chief Justice Jefferson and Justices O’Neill, Wainwright, Brister, Medina, and Willett. Justice Johnson joined the majority opinion in part.

Justice Hecht, joined by Justice Johnson, concurred in part and dissented in part and would have remanded for a determination whether—even if the policy language provided such coverage—ATOFINA should be estopped from challenging the reasonableness of the underlying settlement because it refused to participate in the negotiations. The dissenting Justices considered that equitable defense to turn on a factual dispute inappropriate for the Court to resolve.

Excess Underwriters at Lloyd’s v. Frank’s Casing Crew & Rental Tools, Inc., 246 S.W.3d 42 (Tex. 2008) (op. on reh’g)

When one of its customers (ARCO) sued over a drilling-platform collapse, Frank’s Casing Crew & Rental Tools, Inc. (Frank’s Casing) notified its insurers.

The insurers were layered into a primary and an excess layer, with the excess layer provided by Excess Underwriters at Lloyd’s, London (Lloyd’s). Although the excess carrier was not required to provide a defense, it was permitted to associate with other defense counsel.

The insurers decided to settle with the plaintiff to cap their exposure and then to sue Frank’s Casing for reimbursement on the theory that the policy did not cover this risk. To preserve that second option, the insurers sent reservation-of-rights letters.

Frank’s Casing, meanwhile, refused to settle without first resolving the coverage dispute.


The excess insurers proceeded to enter a settlement, and the primary carrier tendered its remaining policy limits of approximately $500,000. A written settlement agreement among ARCO, Frank’s Casing, and the excess underwriters preserved “any claims that exist presently” between Frank’s Casing and the underwriters.

The excess underwriters filed this suit, which ultimately found its way to the Texas Supreme Court. In 2005, the Court rendered judgment in favor of the excess insurer’s ability to seek reimbursement in these circumstances. That judgment was supported 7-0 by the Justices who sat on the case, but they were fragmented into four separate opinions supporting that conclusion.

Frank’s Casing filed a motion for rehearing that was eventually granted. On rehearing, the Court split 5-3 in favor of the opposite result, with Justice O’Neill delivering the opinion of the Court affirming the judgment below, in which Chief Justice Jefferson, Justice Medina, Justice Johnson, and Justice Willett joined. The Court held that that an excess insurer does not have a right to seek reimbursement when “[t]he policy language says nothing about the underwriters’ reimbursement rights should they decide to negotiate a settlement of the claim.”

The Court rejected the insurers’ suggestion that equitable principles could imply such a term in the contract. The Court also rejected suggestions that it overrule its prior decision in Matagorda County to better fit the example of other States that are more permissive about such insurer claims.

Justice Hecht delivered a dissenting opinion, in which Justice Green joined, arguing that equitable principles supported finding a right for insurers to bring such a suit. Justice Wainwright delivered a dissenting opinion in which he argued that the record in this case supported a right to reimbursement because the excess insurers made it a condition of their settlement offer.

Justice Brister did not sit on this case.

Fairfield Ins. Co. v. Stephens Martin Paving, L.P., 246 S.W.3d 653 (Tex. 2008)

In a certified question, the Fifth Circuit asked if an agreement to indemnify against punitive damages was consistent with Texas public policy.

The Texas Supreme Court answered that Texas public policy can be reconciled with an indemnity agreement covering punitive damages. But the Court divided into three camps regarding how broad an answer to give to the certified question.

All nine Justices agreed that Texas public policy did not preclude this liability insurance provider from indemnifying an award of punitive damages based on gross negligence. The Court concluded the governing Texas statutes did not prevent the indemnification.

The Court’s opinion was written by Justice Wainwright. That opinion included a section titled “Public Policy Considerations,” offering additional guidance because of “the import of this issue.” In that section, the Court “discuss[ed] some of the considerations relevant to determining whether Texas public policy prohibits insurance coverage of exemplary damages in other contexts in the absence of a clear legislative policy decision.”

Justice Hecht wrote a concurring opinion, joined by Justices Brister, Medina, and Willett. That opinion offered even more guidance: “The Court provides some insight into the relevant considerations, but I would add to them and describe in more detail the way they should be analyzed.”

Justice Johnson also wrote separately. He was the only Justice not to join the part of the Court’s opinion relating to “Public Policy Considerations.” In his view, that discussion went “further than necessary in responding to the certified question presented even in light of Texas Constitution article V, section 3-c. Accordingly, I do not join part III and express neither agreement nor disagreement with its substance.”


Grimes Constr., Inc. v. Great Am. Lloyds Ins. Co., No. 06-0322, ___ S.W.3d ___, 51 Tex. Sup. Ct. J. 643, 2008 WL 821035 (Tex. Feb. 29, 2008) (per curiam)

In this case, a per curiam Texas Supreme Court applied its decision in Lamar Homes, Inc. v. Mid-Continent Casualty Co., 242 S.W.3d 1 (Tex. 2007).

As in Lamar Homes, the question was whether a commercial-general-liability policy could be read to cover a property-damage claim alleging bad worksmanship by a homebuilder. Grimes Construction sought to force its insurer to defend it against such claims. The trial court and court of appeals (before Lamar Homes was decided) ruled for the insurer, relying in part on a distinction between claims sounding in contract and those sounding in tort.

The Texas Supreme Court reversed, concluding the analysis of the court of appeal conflicted with the Court’s holding in Lamar Homes that “labels of tort or contract could not override the language of the insuring agreement.” The Court remanded to the trial court.

National Union Fire Ins. Co. of Pittsburgh, PA v. Crocker, 246 S.W.3d 603 (Tex. 2008)

The Fifth Circuit certified questions to the Texas Supreme Court about the duties owed to additional insureds under Texas law.

Beatrice Crocker was injured when a staff member of her nursing home swung open a door, striking her. She sued the nursing home (Emeritus) and the staff member (Morris). Her claims were covered by its commercial general liability policy.

Morris, who was acting within the course and scope of his employment, was an additional insured under the policy. Nonetheless, the insurer did not offer him a defense.

Crocker moved to sever her claims against Morris and, ultimately, received a $1 million default judgment on those severed claims. She then sued

the insurer, asserting she was a third-party beneficiary of the policy covering Morris as an additional insured.

Delivering the opinion of a unanimous Court, Justice Willett concluded that: (1) “on the facts presented,” Texas law did not require the insurer to notify Morris that he had coverage; and (2) that, under Texas law, an insurer’s actual knowledge of a lawsuit does not preclude the insurer from showing that it was prejudiced by the lack of a formal request from the insured for a defense.

With regard to the first question, the Court focused on the contract language, holding that Texas law did not impose a duty on the insurer to notify an additional insured unless such a term appeared in the contract. With regard to the second question, the Court held an insurer could still invoke the defense that no formal notice of the lawsuit had been given even if the insurer had actual knowledge of the lawsuit.

The Court distinguished its recent decision in PAJ v. Hanover Insurance Co., 243 S.W.3d 630 (Tex. 2008) by explaining that, “[i]n the pending case, … the additional insured’s notice was not merely late” but had never been given at all. The Court explained that an insurer could justifiably believe that the insured had chosen not to give notice because it did not want an insurer-provided defense:

As we have said, the requirement that an additional insured provide notice that it has been served with process is driven by a purpose distinct from the purpose underlying the requirement for notice of a claim or occurrence. Notice of service of process lets the insurer know that the insured is subject to default and expects the insurer to interpose a defense. An insurer cannot necessarily assume that an additional insured who has been served but has not given notice to the insurer is looking to the insurer to provide a defense. Potential insureds, for a variety of reasons, might well opt against


seeking a defense from an insurer. For example, an additional insured may opt against invoking coverage because it wants to hire its own counsel and control its own defense. Indeed, Emeritus’s counsel believed that Morris had done just that in this case. Counsel for Emeritus testified that he had asked Morris before his deposition if he could speak to him and Morris “refused on the basis that he was waiting for a call from his attorney. [Emeritus’s counsel] assumed that [Morris] had an attorney and did not want to talk to [Emeritus’s counsel] on that basis.

PAJ, Inc. v. Hanover Ins. Co., 243 S.W.3d 630 (Tex. 2008)

Divided 5-4, the Texas Supreme Court held a policyholder did not lose coverage by the “immaterial breach” of giving late notice to its insurer of a filed claim, so long as the insurer was not prejudiced by the delay.

PAJ, Inc. (PAJ), a jewelry manufacturer and distributor, bought a commercial-general-liability policy from Hanover Insurance Company that covered, among other things, liability for advertising injury. The policy required PAJ to notify Hanover of any claim or suit brought against PAJ “as soon as practicable.”

In 1998, Yurman Designs, Inc. demanded that PAJ cease marketing a particular jewelry line and then sued PAJ for copyright infringement. Initially unaware that a copyright-infringement claim might fall within the terms of its policy, PAJ did not notify Hanover of the suit for several months. PAJ ultimately sued Hanover for a declaration that it was contractually obligated to defend and indemnify PAJ from the copyright suit. As to the facts, the parties stipulated that PAJ failed to notify Hanover of the claim “as soon as practicable” but that Hanover was not prejudiced by the untimely notice.

The trial court ruled in Hanover’s favor, and the court of appeals affirmed.

The Texas Supreme Court held that this breach was not a material breach and thus did not excuse Hanover’s further performance (absent some showing of prejudice). Writing for the majority, Justice O’Neill relied on the Court’s prior decision in Hernandez v. Gulf Group Lloyds, 875 S.W.2d 691, 692 (Tex. 1994), which reached a similar result regarding uninsured motorist coverage. In particular, the Court noted that sister states and some treatises had read the Hernandez case to establish Texas a so-called “notice-prejudice” state—one that would require a showing of prejudice to the insurer for such a breach to discharge the insurer’s coverage obligation.

Justice Willett wrote a dissent, joined by Justice Hecht, Justice Wainwright, and Justice Johnson. The dissent focused on the policy language, suggesting the case should have been distinguished from Hernandez because the policy language formed a “condition precedent” to coverage rather than a mere “covenant.” The dissent argued that the policy language should be given effect until insurance regulators or the Legislature say otherwise: “Courts should enforce unambiguous policy terms in accordance with their plain meaning. … The ‘better policy’ remains that insurance contracts should be construed by courts and spruced up, if necessary, by nonjudicial bodies.”

JURY ARGUMENT

Living Ctrs. of Tex., Inc. v. Peñalver, No. 06-0929, ___ S.W.3d ___, 51 Tex. Sup. Ct. J. 370, 2008 WL 204502 (Tex. Jan. 25, 2008) (per curiam)

Ninety-year-old nursing-home resident Belia Peñalver was dropped while being transferred from a wheelchair to her bed. She died the next day from her injuries. The defendant, Living Centers of Texas, Inc. (Living Centers) stipulated liability. A trial was held on the question of damages.

The plaintiffs’ closing argument drew a parallel between Living Centers’ defense strategy and a


Nazi-era program in which elderly persons were

used for medical experiments and killed:

In World War II, the Germans had a

program called T-Four.… [T]hey took all

the people who they thought were

inferior in society, primarily older

people, impaired people, and they used

them for experiments. … And we‘re not

at the point where we‘re tolerant today,

as the defense would like you to be, of

this wrongful death.

Living Centers did not contemporaneously object

to give the trial court a chance to cure the error

through an instruction. Living Centers did,

however, raise the issue in its motion for new

trial.

The trial court rendered judgment for Peñalver,

and the court of appeals affirmed.

The Texas Supreme Court held that the error was

so grave as to be incurable, and thus it need not

have been preserved by an immediate objection:

The argument which Living Centers

complains of struck at Living Centers

and its trial counsel by comparing trial

counsel to perpetrators of the T-4 Project

atrocities. The T-4 Project was brought

up only once during trial when, upon

inquiry by the Peñalvers‘ counsel, a

witness testified that he was not familiar

with the program. There was no

evidence that Living Centers either

intended to injure or kill Belia or that

Living Centers performed medical

experiments on her. … The Peñalvers‘

improper comments were not

inadvertent, and the jury argument was

designed to incite passions of the jury

and turn the jurors against defense

counsel for doing what lawyers are

ethically bound to do: advocate clients‘

interests within the bounds of law. …

The argument struck at the integrity of

the courts by utilizing an argument that

was improper, unsupported, and

uninvited. Failure to deal harshly with

this type of argument can only lead to its

emulation and the entire judicial system

will suffer as a result.

Accordingly, the Court reversed the judgment and

remanded for a new trial.

SETTLEMENT AGREEMENTS

Knapp Medical Ctr. v. De La Garza,

238 S.W.3d 767 (Tex. 2007) (per curiam)

Dr. Javier De La Garza sued Knapp Medical

Center for defamation, business disparagement,

interference with business relations, and civil

conspiracy. During the trial, De La Garza‘s

attorney offered to settle for the hospital‘s policy

limits of $1 million. De La Garza‘s attorney

asserted he understood the hospital would be

contributing an additional $200,000 to the total,

but while the hospital‘s attorney acknowledged

that such an amount had been discussed, he

claimed that no agreement had been reached.

Nonetheless, De La Garza‘s attorney agreed on

the record to settle these claims while also

indicating he reserved his rights to pursue the

$200,000 from the hospital. De La Garza then

sued the hospital to seek the $200,000 that he

contended had been promised to induce the

settlement.

The trial court ruled for De La Garza, and the

court of appeals affirmed.

On November 2, 2007, the Texas Supreme Court

issued a decision reversing and rendering

judgment that De La Garza take nothing. See

Knapp Medical Ctr. v. De La Garza, No. 06-0575

(Tex. Nov. 2, 2007) (per curiam), available at

http://www.supreme.courts.state.tx.us/historical/2

007/nov/060575.pdf (last visited May 20, 2008).

The Court concluded that this was an improper

attempt to enforce an oral settlement agreement,

contrary to Rule 11 because the purported

settlement was neither in writing nor made in

open court.

De La Garza filed a motion for rehearing urging


that the Court address his theory that the hospital’s alleged fraud would prevent it from relying on Rule 11 as a defense. On December 14, 2007, the Court issued a supplemental per curiam opinion acknowledging—and expressly rejecting—De La Garza’s argument. See Knapp Medical Ctr. v. De La Garza, No. 06-0575 (Tex. Dec. 14, 2007) (per curiam), available at http://www.supreme.courts.state.tx.us/historical/2007/dec/060575_rh.pdf (last visited May 20, 2008). The Court explained that—just as a fraud claim cannot be used to seek the benefit of a bargain that would violate the statute of frauds, see Haase v. Glazner, 62 S.W.3d 795, 799 (Tex. 2001)—a fraud claim also cannot be used to circumvent the requirements of Rule 11. To permit a fraud claim in those circumstances would undermine the policies behind the rule.

STANDING

DaimlerChysler Corp. v. Inman, No. 03-1189, ___ S.W.3d ___, 51 Tex. Sup. Ct. J. 422, 2008 WL 274903 (Tex. Feb. 1, 2008)

Three putative class representatives sued DaimlerChrysler Corp. (DaimlerChrysler) over defective seatbelts. These plaintiffs had not suffered any physical injury from defective seatbelts. Instead, they argued the fact that the seatbelts were more prone to failure was itself a breach of warranty. They sought damages for replacement seatbelts and compensation for the loss of use of their vehicles while the seatbelts were replaced.

The district court certified a nationwide class action, after which DaimlerChrysler appealed under a statute permitting interlocutory appeal of a class certification. The court of appeals agreed with DaimlerChrysler on the questions related to class certification, reversing the class certification and remanding. Nonetheless, DaimlerChrysler filed a petition for review seeking outright dismissal of the entire action for want of standing.

By a 5-4 vote, the Texas Supreme Court held the putative class representatives lacked constitutional standing and thus dismissed the entire action.

Writing for the majority, Justice Hecht held the plaintiffs’ theories were too hypothetical to support judicial involvement. The Court noted that DaimlerChrysler received only fifty complaints from ten million vehicle owners and lessees over ten years—five per year, one for every 200,000 owners and lessees. Accordingly, the risk of any of these plaintiffs being injured was vanishingly small.

The Court’s opinion did not confirm this same standing analysis will apply outside of the class-action context or precisely how low a risk can be justiciable. Nor did the Court even “rule out the possibility that somewhere there may be owners or lessees of vehicles with [these same] seatbelt buckles that can allege concrete injury. Our focus is on Inman, Castro, and Wilkins, and they have not shown that they can.”

The dissent was written by Chief Justice Jefferson and joined by Justices O’Neill, Green, and Johnson. In it, the dissenting Justices took sharp issue with the majority’s analysis, contending that it the “invert[ed] traditional standing doctrine” by placing undue weight on the merits of the claim rather than the posture of the plaintiffs. The dissent further worried that that such a broad view of standing would invite collateral attacks on settled judgments, as well as create difficulties for the appellate courts if defendants choose to raise the issue for the first time during merely interlocutory appeals, when the parties may not yet have had the opportunity to develop the relevant record.

TORTS: MEDICAL MALPRACTICE

Chau v. Riddle, No. 07-0035, ___ S.W.3d ___, ___ Tex. Sup. Ct. J. ___, 2008 WL 2069841 (Tex. Feb. 15, 2008) (per curiam)

Thao Chau and her family sued Dr. Riddle and others for negligence in the way Dr. Riddle intubated Chau’s newborn son. Riddle was the on-call anesthesiologist for the labor and delivery unit. While on shift, he anesthestitized Chau for her emergency cesarean section. One of Chau’s twins was born not breathing; Riddle was asked


to, and did, intubate. He then immediately left the area. When the neonatologist arrived, it was discovered that Riddle had inserted the breathing tube down the infant’s esophagus instead of his trachea. By the time this error was discovered, the child had suffered permanent brain damage. The doctor invoked Texas’s “Good Samaritan” statute, which shields medical providers from liability in certain circumstances if the care is given voluntarily outside of a doctor’s normal duties.

The court of appeals affirmed a summary judgment for the doctor, citing that statute.

The Texas Supreme Court explained that, while the Good Samaritan statute applied to the hospital setting, it was only meant to shield doctors who responded outside their normal scope of duties. The Court held that was the critical distinction between this case and McIntyre v. Ramirez, 109 S.W.3d 741 (Tex. 2003):

[T]his case can be distinguished from McIntyre, where we upheld the doctor’s assertion of the Good Samaritan defense. There, Douglas McIntyre, an obstetrician, was in the hospital visiting one of his patients when he responded to a page over the intercom requesting that a doctor immediately assist with Debra Ramirez’s delivery.

Because Riddle was a part of the labor and delivery team at the hospital, the Court held his summary judgment on the Good Samaritan defense was error. The Court remanded to the court of appeals to consider the alternate grounds Riddle advanced for affirming his summary judgment.

TORTS: PRODUCTS LIABILITY

Ford Motor Co. v. Ledesma, 242 S.W.3d 32 (Tex. 2007)

In 1999, Tiburicio Ledesma purchased a new Ford truck. A few months later, Ledesma was involved in an accident in which his truck hit two parked cars. At that time, his truck had only 4,100 miles

on it. Ledesma sued Ford, alleging a manufacturing defect. Both parties agreed that Ledesma’s rear axle assembly broke apart. The disputed question was whether it came apart before or after the collision—whether that was the cause or effect of the accident. Each side offered expert testimony. The jury sided 11-1 with Ledesma, finding the truck had a manufacturing defect.

The trial court rendered judgment for Ledesma, and the court of appeals affirmed.

The Texas Supreme Court ultimately rejected Ford’s challenges to the trial court’s admission of Ledesma’s expert witness, concluding that Ford’s objections concerned the testimony’s weight, not its admissibility. But the Court accepted Ford’s challenges to the jury charge—in particular, Ford’s argument that the Pattern Jury Charge itself contained inappropriate definitions for “manufacturing defect” and “producing cause”—two terms critical to any manufacturing-defect case. Writing for the Court, Justice Willett, held that the PJC definition of “manufacturing defect” omitted the requirement that “a manufacturing defect must deviate from its specifications or planned output in a manner that renders the product unreasonably dangerous.” The Court explained that this was an “indispensable element” and helped to distinguish between manufacturing-defect and design-defect theories. Nonetheless, the Court declined to render judgment for Ford and instead remanded the case for a new trial. The Court noted that the PJC is widely used as a model and suggested it would be inequitable in these circumstances to render judgment based on a deficiency in the PJC.

The Court also noted that the PJC definition of “producing cause” was so antiquated that it might confuse a jury. The PJC definition describes such a cause as “an efficient, exciting, or contributing cause that, in a natural sequence, produces the incident in question.” The Court observed that the precise meaning the PJC presumed for the words “efficient” and “exciting” was “foreign to modern English” and that the phrasing “provides little concrete guidance to the jury.” The Court


therefore directed that a new definition be used on rehearing — a “producing cause” is one “that is a substantial factor that brings about the injury and without which the injury would not have occurred.”

WORKERS COMPENSATION

Igal v. Brightstar Info. Tech. Group, Inc., No. 04-0931, ___ S.W.3d ___, 51 Tex. Sup. Ct. J. 840, 2008 WL 1931319 (Tex. Dec. 7, 2007) (reh’g pending)

Saleh Igal entered into an employment agreement with Brightstar. Igal alleges that Brightstar terminated his employment in violation of that agreement on January 19, 2000, triggering an obligation to pay “post-termination salary.” About eighteen months later, Igal filed a wage claim with the Texas Workforce Commission (TWC). A TWC hearing officer dismissed Igal’s claim in a preliminary order. Igal requested a hearing to challenge that determination, and a TWC appeals tribunal heard Igal’s arguments. On February 19, 2002, TWC issued a decision concluding that Igal’s claims failed on the merits, and that TWC lacked jurisdiction because Igal filed his claim more than 180 days after his wages came due.

Instead of “filing a motion for rehearing with TWC or seeking judicial review of TWC’s decision,” Igal sued Brightstar in district court to enforce the employment contract. Brightstar moved for summary judgment on the ground that Igal’s claims were barred by res judicata or, alternatively, by failure to exhaust administrative remedies. The district court ruled for Brightstar, finding the claims were barred by res judicata.

The court of appeals affirmed, holding the 180-day period was not jurisdictional and thus TWC had power to reach a dispositive determination on Igal’s claim.

With one Justice recused, the sitting Justices divided 4-4, with the tie-breaking fifth vote cast by Justice McCoy of the Second Court of Appeals, sitting by appointment. (Justice Hecht did not participate in this case.)

Writing for the majority, Justice Wainwright held that Igal’s failure to file within 180 days as required by section 61.051 of the Texas Labor Code did not deprive the TWC of jurisdiction. The Court held this requirement was mandatory—and thus could prevent Igal from prevailing—but that it did not divest TWC of authority to rule on those merits. As for whether Igal’s claim was barred by claim preclusion, the Court noted that, “in courts of law,” a litigant cannot pursue a claim to completion in one forum and then try again in another. Such an attempt would generally be barred by the doctrine of res judicata. The Court concluded the same principle should be extended to apply to final TWC decisions. Because Igal did not withdraw his administrative claim before TWC reached its final decision, that final decision precluded further litigation of the question. The Court held that claim preclusion applied even to agency decisions that merely disposed of a claim summarily for having failed to meet a filing requirement; it was not necessary for an agency to reach the claim’s merits for it to preclude a lawsuit.

Justice McCoy did not, however, provide a fifth vote in support of Part IV.B.1 of Justice Wainwright’s opinion, which would have read TWC’s decision more broadly to be a decision on the merits of Igal’s claims.

Justice Brister delivered a dissenting opinion, in which Chief Justice Jefferson, Justice O’Neill, and Justice Medina joined. The dissent agreed the 180-day limit was not jurisdictional but disagreed as to its preclusive effect. The dissent would have held that this particular order was not a decision on the merits so as to be entitled to res judicata effect. The dissent also would have held that administrative agency dismissals on limitations grounds do not as a general matter have preclusive effect.

Morales v. Liberty Mut. Ins. Co., 241 S.W.3d 514 (Tex. 2007)

Guadalupe Morales was fatally injured while repairing a commercial roof. Margarita Morales, his widow, filed a claim for workers’


compensation benefits. After mediation failed to reach agreement between Morales and the affected insurers, the dispute moved to a contested-case hearing. The hearing examiner determined that, Guadalupe Morales was an independent contractor at the time of his injury and thus not covered by workers’ compensation. The appeals panel of the Texas Workers’ Compensation Commission affirmed the hearing examiner’s decision.

Margarita Morales then faced a dilemma — if the question of employment status was one of “compensability,” then it could be appealed to a district court in El Paso County (where Morales lived) and decided under a modified de novo standard of review. But if that same question was not one of “compensability,” then it had to be appealed to a district court in Travis County and decided under a deferential substantial-evidence standard of review. Morales initially chose to do both. In the El Paso district court, Liberty Mutual filed a plea to the jurisdiction, which was granted. Afterwards, Morales voluntarily nonsuited her Travis County suit and instead pursued the appeal of her El Paso action.

The court of appeals affirmed, concluding the question of employment status was one of “coverage” not of “compensability.”

The Texas Supreme Court reversed. Writing for a unanimous Court, Justice O’Neill explained the statute’s structure for determining which court should hear an appeal. Issues of “compensability or eligibility” were to be heard in the county of residence. By contrast, only those issues “other than” questions of compensability or eligibility were to be raised in Travis County. In these circumstances, the Court acknowledged that the issue of employment status fell somewhere in the middle:

It is true an element of that inquiry may concern a potential employer’s

subscriber status for purposes of determining coverage. … But resolving that issue in this case will directly impact whether Guadalupe suffered a ‘compensable injury’ and determine Margarita’s eligibility for workers’ compensation benefits.

For that reason, the Court held the statute favored filing the appeal in El Paso: “Under these circumstances, we cannot conclude that something ‘other than’ compensability is in issue for purposes of judicial review.” Accordingly, the Court reversed and remanded to the district court.


Texas Courts of Appeals Update—Substantive Thomas F. Allen, Jr., Carrington, Coleman, Sloman & Blumenthal, LLP, Dallas Elliot D. Fladen, Carrington, Coleman, Sloman & Blumenthal, LLP, Dallas CONSTITUTIONAL LAW—TAKINGS

City of Dallas v. VSC, LLC, 242 S.W.3d 584 (Tex. App.—Dallas 2008, no pet.)

VSC, LLC (VSC) operated a storage facility that received and stored vehicles that had been towed without their owners’ consent. According to VSC, officers of the Dallas Police Department entered the facility and seized 277 vehicles, and the City then disposed of the vehicles without notice to VSC while retaining the funds collected from the vehicles’ disposition. The City asserted that the vehicles had been reported stolen, had altered serial numbers, or were involved in other felonies. VSC sued the City in state court, alleging that the seizure and disposition of the vehicles was a taking of VSC’s property without compensation, in violation of the Texas and federal constitutions. In addition to its takings claims, VSC also sought declaratory relief. After the case had been removed to federal court and then partially remanded, the City filed a plea to the trial court’s jurisdiction on the ground that VSC had not asserted a cognizable claim under article one, section 17 of the Texas Constitution. The trial court denied the plea, and the City appealed. The Dallas Court of Appeals affirmed in part and reversed and dismissed in part.

The court of appeals rejected the City’s various arguments that a cognizable taking had not occurred. The City argued that it did not “take” the vehicles because it seized them pursuant to its police power, not its eminent domain power. The court disagreed and stated that the seizure, damage, or destruction of property “pursuant to the government’s police power does not bar a takings claim” under the Texas Constitution. The court also disagreed with the City’s argument that a taking did not occur because the City lacked the “specific governmental intent” to exercise its eminent domain power. The relevant inquiry, the court explained, is whether the government intended to act under its sovereign powers, which

subsumed both eminent domain and police power.

The court of appeals likewise dismissed the City’s argument that VSC lacked a congnizable property interest in the vehicles. VSC maintained that it had a “garageman’s lien” on the vehicles, pursuant to section 70.003(c) of the Texas Property Code. The City argued that section 70.003(c) did not apply to the nonconsensual towing and storage of vehicles that occurred at VSC’s facility, but the court disagreed, pointing out that Texas drivers impliedly agree that their vehicles can be towed and stored as authorized by law. The City’s allegation that the vehicles had been stolen did not change the validity of this implied consent and, in any event, the City never proved that the vehicles had, in fact, been stolen. Moreover, contrary to the City’s claim on appeal, a lien is property that can be “taken” under the Texas Constitution.1

The court of appeals did agree, however, that the trial court abused its discretion in denying the City’s plea regarding its claim that the City took and disposed of the vehicles for a private purpose. Accordingly, it reversed trial court’s order in that regard and dismissed VSC’s private purpose claim, but otherwise affirmed.

EXPERT WITNESSES—“STIGMA” FLOOD DAMAGES AND MARKET VALUE OF RESIDENCE

Royce Homes, L.P. v. Humphrey, 244 S.W.3d 570 (Tex. App.—Beaumont 2008, pet. dism’d)

Mitch Humphrey sued Royce Homes, L.P. (Royce) under section 11.086 of the Texas Water Code for damages to his residence after surface

1 The court of appeals disposed of the remainder of

the City’s arguments on procedural grounds, including the justiciability of VSC’s claims. Notably, the City waived multiple arguments by either not raising them in its plea to the jurisdiction or briefing them insufficiently on appeal.


waters from Royce’s construction site on an adjacent property flowed across his backyard and flooded his home. The jury found that Royce had diverted the natural flow of surface water in a manner that proximately caused damage to Humphrey’s property, and it awarded Humphrey $5,314.27 for repair costs and $20,000 for the difference in the home’s market value following the flood. Royce appealed, and the Beaumont Court of Appeals reversed and remanded.

First, Royce contended that the trial court erred in submitting the jury question regarding diminution of market value because the underlying injury—the “stigma” that attaches to flooded homes—was only temporary. Humphrey proffered Ray Steinmann, a real estate appraiser, as an expert witness to testify that the stigma damages were permanent. Though the court found no cases under section 11.086 that discussed “stigma” damages, it noted that Texas courts had allowed stigma damages awards in other real estate contexts. Based on his experience with the financial market for flood-damaged properties, Steinmann testified that the flood would diminish the value of Humphrey’s home. Though Royce’s expert criticized Humphrey’s analysis, including the absence of any “paired sales analysis” with comparable homes, the court of appeals held that Steinmann’s testimony was more than a scintilla of evidence to support the jury’s finding that the flood permanently diminished the home’s market value.

Second, the court of appeals rejected Royce’s challenge to the legal sufficiency of the evidence supporting the jury’s damages award for repair costs. The court of appeals held that Humphrey’s testimony regarding the repairs he made, materials purchased, and labor costs was sufficient to support the award.

Third, the court of appeals agreed with Royce that legally insufficient evidence supported the jury’s award for $20,000 in lost market value. Steinman testified that the residence suffered a 20 percent reduction in market value, but he arrived at this percentage based on his own experience, without providing any data (such as comparisons with

other flood-damaged property) to support his testimony. Because Steinmann did not sufficiently explain why the 20 percent adjustment was justified, and because he did not identify the alleged flooded houses he used as comparisons, “too great an analytical gap” existed between his conclusions and data. Humphrey testified that his property suffered a $30,000 reduction in market price, but he acknowledged that he pulled that figure “out of the air.” This “purely speculative” testimony was also legally insufficient.

Citing TEX. R. APP. P. 44.1(b), the court of appeals held that the appropriate remedy was reversal and remand of the entire case, as to both liability and damages, because the damages were unliquidated and Royce contested liability.

The court then went on to address Royce’s argument that the trial court awarded Humphrey a double recovery by allowing him to recover damages for both repairs and diminution of market value. After concluding that Royce had preserved this argument, the court of appeals held that, under the language of the jury question, the damages award did in fact represent a double-recovery. Question No. 2(a) had asked the jury to determine “the reasonable cost of the repairs necessary to restore the property to its condition immediately prior to the incident.” Question No. 2(b) had asked the jury to determine the difference in the market value “immediately before and immediately after” the flood; the latter inquiry required the jury to determine the value of the home before the repairs. Thus, the findings as to repair costs and pre-repair diminution in value overlapped.2

2 The court also rejected Royce’s legal insufficiency

challenge to the jury’s finding regarding proximate cause. The testimony by Humphrey and a civil engineer employed by the county was legally sufficient to support the jury’s finding that Royce’s conduct proximately caused Humphrey’s damages.


FAMILY LAW

In re Collins, 242 S.W.3d 837 (Tex. App.—Houston [14th Dist.] 2007, no pet.)

Collins is the father of S.E.E., a minor. He and S.E.E.’s mother were never married. Under a 2000 order issued by the district court in Fort Bend County, the parents served as joint managing conservators for S.E.E., but the mother had the exclusive right to determine S.E.E.’s residence and to manage lawsuits on her behalf. In 2007, the mother was killed in an office building fire. Purporting to act on S.E.E.’s behalf as her next friend, S.E.E.’s maternal grandfather filed a wrongful death action based on the mother’s death. Two days later, Collins, also acting as S.E.E.’s next friend, intervened in a lawsuit filed by unrelated plaintiffs regarding the same fire that had killed S.E.E.’s mother. S.E.E.’s maternal grandparents obtained an ex parte restraining order against Collins; a day later, they sought sole managing conservatorship of S.E.E. and a temporary injunction restraining Collins from filing lawsuits or making legal decisions on S.E.E.’s behalf. Collins filed a counter-petition for sole managing conservatorship.

On May 30, 2007, the trial court appointed Chad Ellis as amicus attorney “to provide legal services necessary to assist the court in protecting the best interests of” the child and granted Ellis the “sole right to make legal decisions on behalf of the child.” The court also ordered Collins and the grandparents to deposit money to pay for Ellis’s services and to cease all personal injury suits filed on S.E.E.’s behalf. Ellis retained an attorney to file a new lawsuit for S.E.E. On July 16, 2007, the court signed temporary orders appointing Collins and the maternal grandparents joint managing conservators and awarding the grandparents the exclusive right to designate the child’s primary residence. Collins filed a petition for mandamus, seeking to vacate the portion of the trial court’s orders permitting Ellis to act as S.E.E.’s next friend, hire lawyers for her, and to be paid in connection with litigation in which the child was a party (other than the pending child

custody dispute).

The court of appeals conditionally granted Collins’ petition. The court noted that while the mother had previously held the exclusive right to make legal decisions for S.E.E., upon her death, that right passed to Collins as the only surviving parent.3

The court of appeals held that the trial court had exceeded its statutory authority in its appointment of Ellis. As enumerated in the Texas Family Code, the rights and duties of an amicus attorney do not encompass those the trial court conferred on Ellis. The trial court rebuffed the grandparents’ suggestions that the Family Code, the exigencies of managing the wrongful death litigation, or the trial court’s own “inherent authority” justified the scope of the appointment.

LIBEL AND DEFAMATION—LEGISLATIVE / JUDICIAL PRIVILEGE

Clark v. Jenkins, 248 S.W.3d 418 (Tex. App.—Amarillo 2008, no pet. h.)

Gladys Jenkins, a member of the Athens, Texas, City Council, sued Paul Martin Clark and the Black Citizens for Justice, Law and Order, Inc. (BCJLO) for libel and defamation based on statements about her contained in a memorandum written by Clark, who served as BCJLO’s president.

In November 2002, the city of Athens convened a City Council workshop to discuss an expired Memorandum Agreement, which had been entered into between the Athens Police Chief, the NAACP, and a community organization known as the Concerned Citizens of North Athens (CCNA), which was formed to open lines of communication between the Athens Police Department and the North Athens community.

3 The court of appeals also rejected the

grandparents’ arguments that Collins had waived his arguments regarding the trial court’s orders and was unauthorized to file any lawsuits on behalf of his daughter.


Clark attended the meeting. Afterwards, he and others convened at a community residence to discuss their concerns. The next day, he delivered to Daisy Evella Joe, BCJLO’s CEO, a memorandum (the “Clark Memorandum”), which was based on Clark’s notes at the after-meeting and which was designed to instigate an investigation by Congressman Pete Sessions and the Department of Justice’s Civil Rights Division. Among the items discussed in the Clark Memorandum were allegations that Jenkins should be removed from the City Council because she was a convicted felon who had served prison time in Texas and California. These allegations were later determined to be demonstrably false.

Upon receipt of the memorandum, Joe briefly glanced over it, prepared a cover page, and sent it on to a staff member at Sessions’s office and to the DOJ. Sessions faxed the memorandum to a member of his Athens office staff, who was the subject of another allegation, and to the mayor, who in turn sent a copy to the city administrator and the police chief. The City Council also received copies of the memorandum.

Jenkins filed a defamation and libel action against Clark and BCJLO. After a two-day trial, the jury returned a verdict against both defendants, and it awarded Jenkins $300,000 for past and future damages and $200,000 for exemplary damages. Clark and BCJLO appealed, and the Amarillo Court of Appeals affirmed.

The court of appeals first rejected Clark’s claim that, because his statements were allegedly made in a petition for redress, he was absolutely immune from liability. The court noted that the Petition Clause of the Texas Constitution imparts no “‘special’ First Amendment status for petitioners,” as opposed to speakers in other contexts. Under the common law, an absolute privilege attaches to communications made in proceedings before legislative, executive, and judicial bodies, as well as in quasi-judicial proceedings before executive officers, boards, or commissions. The governmental entity must have the authority to investigate and decide the matters at issue. In contrast, initial communications

regarding alleged wrongful conduct, made to an official authorized to address such conduct, is subject only to a qualified privilege.

The court of appeals held that Clark’s communications were not absolutely immune because the Memorandum was a preliminary report attempting to foment an investigation about Jenkins. It was not communicated to Sessions as part of a legislative proceeding, and Sessions lacked the authority investigate Jenkins or remove her from office. Clark’s statements to the DOJ were also preliminary allegations designed to start an investigation, not communications made as part of an executive, judicial, or quasi-judicial proceeding. Accordingly, his statements were subject only to a qualified privilege (i.e., statements not actionable unless made with actual malice). 4

Because she was a public figure, Jenkins could not recover damages unless she demonstrated by clear and convincing evidence that Clark acted with actual malice. The court of appeals held that sufficient evidence supported the jury’s finding of actual malice. Uncontroverted evidence belied Clark’s claim that he was simply a scrivener of other people’s statements at the after-meeting: not all of the statements in the Memorandum were made at that meeting; the Memorandum was “an advocacy document” with the appearance of being written by someone with command of the facts; and many of the other allegations in the Memorandum were incorrect. Thus, the jury was justified in inferring that Clark falsely reported or fabricated the allegations against Jenkins. Moreover, Clark did nothing to verify these allegations (which was a departure from his training as an archivist) and testified that he had no belief, “good faith or otherwise,” in their accuracy. In the court’s view, this behavior was not just a reckless disregard for the truth, but

4 The court of appeals also held that the Noerr-Pennington antitrust doctrine, which immunizes petitioning the government for anticompetitive purposes, did not apply to this case. Clark was not sued for attempting to influence governmental decision making for anticompetitive ends, and in any event, the Noerr-Pennington doctrine applied in the context of the business world.


“simply no regard.”5 Accordingly, the court affirmed the judgment below.

PRODUCTS LIABILITY—MARKETING DEFECT, PRODUCING CAUSE, AND “INDEPENDENT KNOWLEDGE” DOCTRINE

Ethicon Endo-Surgery, Inc. v. Meyer, 249 S.W.3d 513 (Tex. App.—Fort Worth Dec. 20, 2007, no pet.)

On February 7, 2000, Dr. Curtis Mosier performed a laparoscopy on Dianne Meyer to locate the cause of her general abdominal pain. Two days later, Mosier performed a second laparoscopy to repair a loop of Meyer’s small intestine that had herniated through its incision. This repair involved removing a three-foot length of her small intestine and reconnecting the cut ends with a TLC-55 linear cutter, a surgical device that is designed, manufactured, and marketed by Ethicon.

After some initial improvement, Meyer’s condition soon declined. Approximately two weeks later, she underwent a third surgery, this time by another doctor. During this surgery, the doctor determined that one of the staples from the second surgery had separated, or “dehisced.” This separation allowed bowel contents to leak into Meyer's abdomen, causing a severe infection and leading to additional surgeries and hospitalization.

In 2001, Meyer sued Mosier for medical negligence. In 2002, she amended her petition to sue Ethicon for products liability, alleging design, manufacturing, and marketing defects in the TLC-55. Meyer eventually settled or dismissed her complaints against all defendants except Ethicon, and the case proceeded to trial. The jury found that TLC-55 was defectively marketed and awarded Meyer $538,281.73 in damages, for which it found that Ethicon was fifty percent responsible. Ethicon appealed, and the Fort

5 The court also found that the Memorandum

was “not of a character that should receive protection under the principles of the First Amendment.”

Worth Court of Appeals reversed.

In its legal sufficiency review of the jury’s marketing defect finding, the court of appeals considered whether Mosier’s testimony that he had independent knowledge regarding the risks of using the TLC-55 conclusively negated the essential element of producing cause. Writing for the majority, Justice Gardner discussed the “independent knowledge doctrine,” under which the decision to use a product—despite the user’s knowledge that doing so entails certain risks—negates any causal link between a defect in the product’s warning and an injury from the product’s use. Justice Gardner recognized that while Texas courts have only applied this doctrine in cases involving defectively marketed drugs, courts from other states have applied it in medical device cases, as did the Fifth Circuit in a case decided under Texas law. Moreover, no court has declined to apply it in the medical device context.

Having decided that the independent knowledge doctrine applied, the majority examined the warnings that Meyer’s expert claimed should have been given to doctors like Mosier. When asked about the effect warnings would have had on his decision to use the TLC-55, Moser testified that he did not recall reading any package insert; at the time of the second surgery, he was aware that a staple line could leak or even result in a complete separation; he did not need Ethicon to inform him of that risk; and if a safety warning contained no information in addition to what he already knew, it probably would not affect his approach to surgery. He further testified that there was no way to determine what actually caused Meyer’s staple line to dehisce and that he had first-hand experience with another staple-line separation two months before he operated on Meyer.

Based on this evidence, the majority concluded that Mosier “had independent knowledge of the risk that [Meyer’s expert] said Ethicon should have warned him about.” Meyer argued that this testimony did not establish that Mosier’s independent knowledge of the precise risk that occurred in her surgery, and thus did not break the causal link, but the majority disagreed. Because


Mosier testified that it was impossible to determine precisely what caused Meyer’s staple line to separate (and her expert did not identify a precise cause), there was “no evidence that the failure to warn of any specific risk” caused Meyer’s injury. Similarly unpersuasive to the majority was Mosier’s testimony that, if he had received a “Dear Doctor” letter from the company, he would have “taken it very seriously.” Because Mosier testified that he could only speculate as to his likely reaction, this speculation was insufficient to support the jury’s finding. As a result, the majority reversed the trial court’s judgment and rendered a take-nothing judgment in favor of Ethicon.

Justice Dauphinot dissented. She contended that Mosier’s testimony did not conclusively negate the element of producing cause. Specifically, she believed that Mosier’s testimony “clearly revealed that he was not aware of the full extent of the risks at the time of Ms. Meyer’s surgery.” In her view, the jury plainly discerned this fact, especially from Mosier’s testimony that a warning from the manufacturer carries special significance. Justice Dauphinot also noted that, as a result of Meyer’s injury, Mosier stopped using the TLC-55 and even reported the problem to Ethicon. Under the legal sufficiency standard of review, this evidence was more than a scintilla to support the jury’s finding.

PROFESSIONAL NEGLIGENCE—CLAIM FRACTURING

Murphy v. Gruber, 241 S.W.3d 689 (Tex. App.—Dallas 2007, pet. filed)

VSMI/Blockbuster Ltd. I (VSMI), a limited partnership, was formed to own and operate Blockbuster franchises. One limited partner, Charles D. Howell, retained G. Michael Gruber, William D. Elliott, and the firm Kane, Russell, Coleman & Logan, P.C. (the Lawyers) to represent him in a lawsuit over the sale of VSMI’s general partnership interest. The suit was successful, and Howell recovered a $123 million judgment.

Coleman Renick and Harry Joe Brock had also been limited partners in VSMI. After Brock’s death, Renick encouraged Brock’s widow and children (the “Brocks”) to join with him in pursuing claims similar to Howell’s, also to be litigated by the Lawyers. The Brocks did so and allowed Renick to act as their agent in dealing with the Lawyers. During the lawsuit, the defendants filed a counterclaim against Renick. The Lawyers negotiated a $7.5 million settlement, to which the parties agreed.

The Brocks sued the Lawyers for, among other claims, breach of fiduciary duty and fraud and sought a fee forfeiture and constructive trust.6 They claimed that the Lawyers had operated with divided loyalties between them and Renick, had failed to inform them of certain material facts as soon as a conflict arose, and also failed to fully and fairly disclose all aspects of a proposed settlement agreement. The Lawyers moved for summary judgment on various grounds, including their contention that both the breach of fiduciary duty and fraud claims were in fact professional negligence claims, and thus barred by the two-year limitations period for professional negligence.

The trial court granted the Lawyers’ motions. The Brocks then appealed both rulings, which the Dallas Court of Appeals affirmed.

The court of appeals observed the general prohibition against “fracturing” professional negligence claims into multiple claims such as breach of fiduciary duty and fraud. In this case, the distinction was crucial because, if the Brocks’ characterization of their claims was correct, those claims would be subject to a four-year limitations period instead of the shorter two-year period for professional negligence.

With regard to the Brocks’ claim for breach of fiduciary duty, the court of appeals acknowledged “a lack of clarity” in the caselaw regarding whether one of the Brocks’ allegations—failure to

6 The Brocks also sued Renick, but those claims

were not at issue in the appeal.


disclose a conflict of interest—gives rise to a claim for professional negligence or breach of fiduciary duty. Despite the unsettled nature of this question, the court examined “the real substance” of the Brocks’ claim and concluded that all the allegations underlying it, including those about conflicts of interest, really supported a claim for professional negligence. Specifically, the court noted that the Brocks alleged a failure to properly advise, inform, and communicate about the case. And although they contended that the Lawyers had engaged in self-dealing, there was not an allegation that the Lawyers deceived them, pursued their own pecuniary interests over the Brocks’ interests, or obtained any improper benefit.

Similarly, the court concluded that the allegations underlying the Brocks’ fraud claim also sounded in professional negligence. Instead of false billing practices or the like, the Brocks alleged that the Lawyers withheld material information or provided false information, which was essentially a complaint about the quality of the Lawyers’ representation. In sum, the Brocks’ fiduciary duty and fraud claims were actually claims for professional negligence, and thus the trial court did not err in ruling that they were barred by the two-year statute of limitations.7

SHAREHOLDER LITIGATION

Johnson ex rel. MAII Holdings, Inc v. Jackson Walker, L.L.P., 247 S.W.3d 765 (Tex. App.—Dallas 2008, no pet. h.)

In 2003, Marcus C. Johnson, a shareholder of MAII Holdings, Inc. (MAII), filed a putative derivative action on behalf of MAII pursuant to Article 5.14 of the Texas Business Corporations

7 Because the district court failed to specify the grounds on which it had granted summary judgment on the fraud claim, the Brocks, as appellants, were obligated to specifically challenge every possible ground for the district court’s ruling. In their appeal, the Brocks failed to address the Lawyers’ alternative ground for summary judgment: that the fraud claim, even if properly characterized as such, was still barred by the applicable four-year limitations period because it had accrued more than four years before it was filed.

Act. Johnson asserted various causes of action against MAII’s CEO, members of its board, and its outside law firm, Jackson Walker, L.L.P.8 MAII moved to stay this derivative action and to have the court appoint Ernest E. Figari, Jr. as “an independent and disinterested investigator,” pursuant to article 5.14(H)(3). Johnson opposed these motions on a number of grounds. The day before the hearing on the motions, Johnson also filed an amended petition, in which he added himself (in his individual capacity) as a plaintiff and sought the appointment of a receiver for MAII. Following a hearing, the trial court granted MAII’s motions. It later denied Johnson’s application for appointment of a receiver, as well as his request for a further hearing on the application.

After conducting his investigation, Figari determined that the continuation of Johnson’s suit was not in MAII’s best interest. Soon after, MAII moved to dismiss the derivative proceeding. The trial court conducted an evidentiary hearing, granted MAII’s motion to dismiss, made findings of fact and conclusions of law, and entered judgment dismissing all claims with prejudice. Johnson appealed, and the Dallas Court of Appeals affirmed.

The court of appeals rejected Johnson’s challenges regarding the trial court’s denial of his application for appointment of a receiver. Under Texas Civil Practices & Remedies Code section 64.002(b), a receiver may only be appointed “on the petition of one or more stockholders of the corporation.” And while Johnson had filed suit in both his individual and representative capacities, his notice of appeal was filed in his representative capacity only. Because Johnson could not assert his receivership arguments in this capacity, as opposed to his individual capacity, those arguments were “not before” the court.

The court then held that legally and factually

8 Carrington, Coleman, Sloman & Blumenthal,

L.L.P., the authors’ firm, represented Jackson Walker in this appeal.


sufficient evidence supported the trial court’s findings that Johnson challenged on appeal.9 First, Figari’s letter and affidavit, which described his lack of interest in the dispute and his experience with special litigation committees, were sufficient to support the trial court’s finding that he was disinterested, independent, and qualified to serve as an independent investigator. Additionally, Johnson had not overcome his burden to prove otherwise. Second, Figari’s report, which detailed the documents he reviewed and individuals he interviewed, was sufficient to support the trial court’s finding that Figari’s inquiry had been reasonable and that his determination regarding the continuation of Johnson’s lawsuit was made in good faith. Johnson argued that Figari’s alleged failure to consider certain evidence demonstrated his bad faith and inadequate inquiry, but the court of appeals noted that not only did Figari investigate the specific matters about which Johnson complained, but Johnson also failed to produce some of the very evidence that he believed Figari should have reviewed. Moreover, to the extent Johnson disagreed with Figari’s conclusions and recommendations, those “substantive matters” were irrelevant to the court’s analysis of Figari’s good faith and reasonable procedures. TEX. BUS. CORP. ACT art. 5.14(D)(2).

In addition to his statutory arguments, Johnson argued unsuccessfully that Article 5.14 also violated various provisions of the federal and Texas constitutions. Johnson claimed that Article 5.14 constituted an improper delegation of judicial authority to a non-judicial officer (the disinterested and independent investigator). The court of appeals disagreed, noting that, under the statute, the trial court exercises its discretion in analyzing the investigator’s independence and good faith and that no stay or dismissal may be granted without the trial court’s approval. Johnson’s “due course of law” (i.e., due process) challenge also failed because a shareholder like

9 The court of appeals also rejected Johnson’s

arguments that he had been unfairly denied certain discovery regarding Figari’s interest in the lawsuit and compensation.

Johnson has no cognizable property interest in a derivative action. The court of appeals dismissed Johnson’s equal protection argument based on its finding that Article 5.14 was rationally related to the purpose of balancing the rights of shareholders in holding corporate officers accountable against avoiding abusive strike suits. The court also rejected Johnson’s contention that Article 5.14 violated the open courts and right to jury trial provisions of the Texas Constitution. Because a derivative action is “historically an equitable matter,” and not a cognizable common-law cause of action or “an action in law,” it does not implicate those constitutional provisions.10

SOVEREIGN IMMUNITY

Saturn Capital Corp. v. City of Houston, 246 S.W.3d 242 (Tex. App.—Houston [14th Dist.] 2007, pet. filed)

In 1992, the City of Houston demolished buildings at a certain property location and assessed the property owner a fee for the demolition’s cost. The owner did not pay the fee, and the City filed a demolition lien on the property. Along with a school district and other taxing authorities, the City also obtained a judgment in 2000 against the property owner for unpaid taxes. The property was subsequently put up for sale at a public tax sale. Acting with the approval of the property owner, Saturn Capital Corporation (Saturn) purchased the tax lien on the property and, at the tax sale, purchased the property itself. In 2003, Saturn attempted to sell the property but was unable to do so because the City refused to release the still-unpaid demolition lien. Rather than lose the sale of the property, Saturn paid the lien in full ($88,5000.32) “under protest,” reserving its rights to file suit for recovery of its payment. Saturn then sued the City for the money. In response, the City filed a plea to the district court’s jurisdiction on the ground of sovereign immunity. The trial court granted the City’s motion, and Saturn appealed.

10 Johnson asserted additional constitutional

challenges, but the court of appeals held that he had waived those arguments by failing to adequately brief them.


The Houston Fourteenth Court of Appeals reversed and remanded. The court began with the venerable principle that sovereign immunity will not prevent a party who has paid an illegal fee under duress from filing a lawsuit to get the fee back. Regarding the question of an illegal fee, the court noted that Saturn acquired the property free from the demolition lien because that lien, as a subordinate lien to the tax lien, was extinguished upon Saturn’s purchase of the property at the tax foreclosure sale. The City’s insistence that the lien still be paid, despite the tax sale, was “an effort to collect an illegal fee.”

The court also concluded that Saturn had paid the fee under duress. If it had refused to pay the fee, Saturn would have lost not only the pending sale of the property, but also likely the property itself because, without the sale, Saturn would not have been able to pay property taxes. Contrary to the City’s claim that the payment was voluntary—and thus, not recoverable—the court of appeals recognized that the payment was made to avoid substantial damage to Saturn’s business and only after the City had demanded it. These circumstances demonstrated that the payment was made under “business compulsion” or “economic duress.” Accordingly, the City was not immune from the lawsuit.

WILLS—“IN EXTREMIS” REQUIREMENT FOR NUNCUPATIVE WILL

In re Est. of Alexander, No. 10-06-00360-CV, 2008 WL 256837 (Tex. App.—Waco Jan. 30, 2008, no pet. h.)

In 2001, Alexander and his two sisters, Cheryl and Deborah, each received a substantial inheritance upon the death of their paternal grandmother. Alexander consulted with an attorney about preparing a will, but he never executed one.

Alexander suffered from multiple chronic health conditions. From June 18 through July 8, 2002, he was hospitalized at the VA hospital in Temple for these conditions, which had been compounded by his alcohol abuse. During his stay, on July 4,

Alexander allegedly made a nuncupative will. Sometime after his release, he was taken to the VA hospital in Waco for fluid retention, but he was discharged a few days later. On July 24, he was taken by ambulance to another Waco hospital for extreme intoxication. He died on July 26.

In the McLennan County constitutional court, Alexander’s sister Cheryl filed an application to determine heirship and for independent administration of Alexander’s estate. The court appointed Cheryl as independent administrator and declared that she and Deborah were the sole heirs.

A few months later, Appellant Ben C. Lambeth, who had previously executed an affidavit of heirship in support of Cheryl’s application, filed a separate application to probate Alexander’s alleged nuncupative will. Cheryl and Deborah answered and filed traditional and no-evidence summary judgment motions denying the existence of a valid nuncupative will. The trial court granted the traditional summary judgment motion and rendered a take-nothing judgment against Lambeth, who then appealed.

The Waco Court of Appeals affirmed. On appeal, Lambeth complained that genuine issues of material fact foreclosed summary judgment on his claim that Alexander made a valid nuncupative will, as provided by section 65 of the Texas Probate Code. While the parties disputed nearly every element of this claim, the court of appeals focused on the first: whether the will was made “in the time of the last sickness of the deceased.” TEX. PROB. CODE ANN. § 65 (Vernon 2003). Under this element, the testator must be “in extremis,” which Black’s Law Dictionary defines as “[n]ear the point of death; on one’s deathbed.” Lambeth contended that because Alexander had suffered from the same chronic conditions on July 4, 2002—the date of the alleged nuncupative will—that would contribute substantially to his death on July 26, a fact question existed as to whether this element had been satisfied.

The court of appeals disagreed. Citing McClain v. Adams, 135 Tex. 627, 146 S.W.2d 373 (1941),


among other authorities, the court held that sufferers of chronic conditions are not “in extremis” during the entire duration of their illness for purposes of a nuncupative will. Were this the case, the “last sickness” requirement would be virtually meaningless. The court held that “it is only in the very last stage and extremity” of a chronic illness that a nuncupative will can be made.

Viewed in the light most favorable to Lambeth, the summary judgment evidence showed only that when Alexander allegedly made the will on July 4, he was hospitalized in Temple for several chronic conditions that would contribute significantly to his death nearly three weeks later. In the intervening time, he was released from the Temple hospital and subsequently hospitalized again for a few days. The court of appeals held that this evidence conclusively established that Alexander was not “in extremis” on July 4, and thus the trial court did not err in granting Cheryl and Deborah’s summary judgment motion.11

WORKER’S COMPENSATION

Gulf Ins. Co. v. Hennings, No. 10-06-00192-CV, 2008 WL 256828 (Tex. App.—Waco Jan. 30, 2008, pet. filed)

Chad Hennings was a defensive lineman for the Dallas Cowboys from 1992 through March 2001. During a game in October 2000, he injured his spinal cord at the C3-4 level. In November 2000, Hennings underwent cervical fusion surgery. He was required to wear a neck brace for six weeks and was unable to play for the remainder of the season. During this time, Hennings remained a salaried Cowboys employee, earning a bi-weekly salary of $52,352.94.

When the Cowboys placed Hennings on the injured reserve list in November 2000, they estimated that he would return to “game condition” in six months. But on March 7, 2001, the Cowboys terminated his contract. Because

11 In addition to ruling on the summary judgment

motion, the court also disposed of various procedural issues.

Hennings was severely injured at the time of his termination, he received a $225,000 payment under the NFL players’ collective bargaining agreement, as well as $87,000 in severance pay, based his years in the league. The termination did not prohibit Hennings from playing for another NFL team, but he had decided that the risk of further injury was too great; in June 2001, he retired from the NFL.

Hennings filed a contested application for workers’ compensation benefits with Gulf Insurance Company (Gulf), the Cowboys’ workers’ compensation insurance carrier. After a hearing, the administrative judge determined that Hennings was not barred from pursuing workers’ compensation benefits because his medical benefits with the Cowboys—which ceased upon his termination—were not equal to or greater than the benefits under the Texas Workers’ Compensation Act (the “Act”). Hennings was therefore entitled to reasonable medical benefits under the Act; the judge concluded that he was only eligible for a period of 6 weeks, from his termination on March 7, 2001, through April 17, 2001. A Texas Workers’ Compensation Panel affirmed. Gulf then filed a lawsuit in state court, challenging the judicial panel’s decision. The jury found that Hennings was entitled to income benefits of $533 per week for 15 weeks, plus attorney’s fees. Gulf appealed the award, and Hennings appealed the limitation of his disability period to 15 weeks. Initially, the Waco Court of Appeals reversed and rendered a take-nothing judgment against Hennings. Gulf Ins. Co. v. Hennings, No. 10-06-00192, 2007 WL 2005022 (Tex. App.—Waco July 11, 2007, op. withdrawn on reh’g). Hennings filed a motion for rehearing, which the court granted. The court withdrew its earlier opinion and substituted the present opinion, in which it affirmed the trial court’s judgment.

As a preliminary matter, the court first rejected Gulf’s factual sufficiency challenge to the jury’s finding that the “highest benefits” available to Hennings were statutory, not his employment benefits. Based on the undisputed evidence, including the facts that Hennings suffered an on-


the-job injury and his medical benefits ended upon his termination, the jury could reasonably have inferred that the medical benefits he might receive under the Act would be greater than the non-existent medical benefits he would receive from the Cowboys.

The court’s central inquiry focused on section 406.095 of the Texas Labor Code, which provides that a professional athlete may not receive benefits under the statute while also receiving employment benefits that are “equal to or greater than” the statutory benefits. Under those circumstances, the athlete must elect to receive either their employment or statutory benefits. However, the parties disagreed about how to determine when benefits were “equal to or greater” to that provided under the Act.

Under Gulf’s view, because Hennings’s aggregate medical and income benefits exceeded the total provided for under the Act, Hennings was required to make an election between his employment and statutory benefits. Under Hennings’s view, the Act only requires an election in the event that both income and medical benefits each separately exceed their corresponding benefit under the act. Because a jury had already found that his medical benefits failed to exceed what the Act provided, Hennings argued that the Act did not require him to elect between his employment and statutory benefits, as he was entitled to both.

The court of appeals agreed with Hennings’s reading of the Act. The court of appeals ruled that under Act’s plain language, a professional athlete must elect benefits only when both income and medical benefits under his employment contract are equal to or greater than the corresponding benefits under the Act. The court of appeals held that this interpretation is supported by the plain language of section 406.095, the liberal construction in favor of providing benefits to injured workers, and comments from the Texas Workers’ Compensation Commission that evince “an intent that both the income benefits and the medical benefits under the athlete’s employment contract,

considered separately, must be equal or greater than the corresponding income and medical benefits available under the Act.”

The court finally affirmed the jury’s finding that Hennings was disabled for only 15 weeks. Hennings testified that he could have continued to play football, but decided not to because he did not want to risk greater injury; under the court’s legal sufficiency review, this testimony was more than a scintilla to support the jury’s finding.


Texas Courts of Appeals Update—Procedural Ben Mesches, Haynes and Boone, LLP, Dallas Jeremy D. Kernodle, Haynes and Boone, LLP, Dallas APPELLATE JURISDICTION—TEMPORARY INJUNCTION

A&B Bolt Supply, Inc. v. Nat’l Oil Well Varco, L.P., No. 01-07-01069-CV, 2008 WL 340511 Tex. App.—Houston [1st Dist.] Feb. 7, 2008, no pet.)

In this case, the court of appeals concluded that it had interlocutory-appeal jurisdiction over “additional” and “amended” temporary injunction orders. The trial court initially issued temporary injunctive relief barring the use of confidential information. The defendants waived the right to appeal that order. After determining that a defendant had violated this order, the trial court ordered additional injunctive relief (in two separate orders). These “additional” and “amended” orders went farther than the original order and prohibited the defendant from soliciting business from specifically identified customers. The court of appeals held that the “additional” and “amended” orders constituted a “new” temporary injunction order and were thus appealable separate and apart from the original injunction. The parties’ waiver-of-appeal agreement did not apply to these later orders.

ARBITRATION—WAIVER

Nw. Constr. Co. v. The Oak Partners, L.P., 248 S.W.3d 837 (Tex. App.—Fort Worth 2008, pet. filed)

The court of appeals rejected the argument that a court lacks subject-matter jurisdiction to decide whether a party has waived its right to arbitration, even after the court has decided that the dispute is subject to arbitration. The defendant argued that, once a trial court determines that a valid arbitration agreement exists and that the claims in the suit are within its scope, the court lacks jurisdiction to determine waiver. After deciding that a dispute is subject to arbitration, the defendant argued, the trial court must defer to the

arbitrator to decide whether there are any defenses to arbitration, including waiver.

The court of appeals disagreed, holding that although such questions “are presumptively not for the judge, but for an arbitrator to decide,” they are not beyond the trial court’s subject-matter jurisdiction. Accordingly, because the issue is not one of subject-matter jurisdiction, the defendant was required to raise it in the trial court in order to preserve the argument for appeal.

DISCOVERY—MANDAMUS CHALLENGE TO ORDER REQUIRING PRODUCTION OF TAX RETURN

In re Miller, No. 11-07-00310, 2008 WL 191960 (Tex. App.—Eastland Jan. 14, 2008, orig. proceeding)

The trial court ordered the production of federal income-tax returns for in camera inspection. On mandamus review, the court of appeals noted the protection historically afforded tax returns, as well as Texas decisions holding that tax returns are immaterial if the same information can be obtained elsewhere. Plaintiff argued that the in camera inspection afforded sufficient privacy protection. The court of appeals, however, held that the threshold question is whether the information sought could be obtained from other sources and because plaintiff did not meet this burden, mandamus relief was appropriate, regardless of the privacy protections.

INTERLOCUTORY APPEALS—GOVERNMENT EMPLOYEES

Lanphier v. Avis, 244 S.W.3d 596 (Tex. App.—Texarkana 2008, pet. filed)

The Texarkana court joined five other courts of appeals in holding that an appellate court may review an order denying a motion to dismiss based on a government employee’s assertion of


sovereign immunity. Although section 51.014(a)(5) of the Texas Civil Practice and Remedies Code grants appellate courts jurisdiction over orders denying motions for summary judgment based on immunity, the court concluded that the provision is not limited “only [to] one specific procedural vehicle.” The court reasoned that the Texas Supreme Court has applied a similar provision to all claims of immunity by governmental units, and that courts should therefore “look to the substance of the argument rather than the title of the procedural vehicle.”

In reaching its decision, the court expressly disagreed with the Dallas Court of Appeals, which recently held that section 51.014(a)(5) applies only to appeals from orders denying summary judgment. Although the Dallas court strictly construed the statute, the court held that a motion’s form should not trump its substance.

JOINDER—DISMISSAL OF SUIT

Longoria v. Exxon Mobil Corp., No. 04-06-00474-CV, 2008 WL 227970 (Tex. App.—San Antonio Jan. 30, 2008, pet. denied)

The court of appeals affirmed the trial court’s order of dismissal where the trial court had determined that absent persons should be joined under Texas Rule of Civil Procedure 39(a), but the plaintiffs failed to do so. The trial court had abated the case for six months to give the plaintiffs an opportunity to join the absent parties, and there was no evidence that any absent person was not amenable to service or could not be made a party for some other reason. Under these circumstances, the court of appeals held, the trial court did not abuse its discretion in dismissing the case.

PERSONAL JURISDICTION

In three separate cases, the Dallas Court of Appeals held that the trial court lacked personal jurisdiction over out-of-state defendants because of insufficient minimum contacts.

Asshauer v. Farallon Capital Partners, L.P., NO. 05-05-01219-CV, 2008 WL 367619 (Tex. App.—Dallas Feb. 12, 2008, no pet.)

The court concluded that none of the four nonresident defendants had sufficient minimum contacts with Texas to support either specific or general jurisdiction, even though they had, among other things: (1) held a meeting in Texas but did not discuss any business relationship; (2) conducted negotiations with Texas-based entities by fax and telephone; (3) received legal opinions from Texas lawyers; and (4) conducted due diligence regarding Texas entities. The court held that these contacts, without more, did not rise to the level of purposeful availment required to satisfy due process.

Turner Schilling, L.L.P. v. Gaunce Mgmt., Inc., 247 S.W.3d 447 (Tex. App.—Dallas 2008, no pet.)

In this breach of contract dispute, the court held that a Kentucky accounting firm did not have sufficient minimum contacts with Texas to satisfy due process, even though it had contracted to purchase software consulting services from a company doing business in Texas. The court first held that, although the Kentucky defendant had provided accounting services to six Texas restaurants over the years, these contacts did not support the exercise of general jurisdiction over the defendant because it had provided the services remotely from Kentucky. The defendant merely received data from the Texas restaurants and processed the data, using its local software and employees, entirely in Kentucky.

Second, the court held that there were insufficient contacts to justify the exercise of specific jurisdiction. Although the contract required that it would mostly be performed in Texas, this performance was rendered entirely by the Texas plaintiff, not the Kentucky defendant. Instead, the only contacts with Texas by the Kentucky defendant occurred when its employees remotely accessed servers and software located in Texas. These activities were insufficient to satisfy due process, because there was no evidence that the


Kentucky defendant “purposefully directed the servers to be located [in Texas].” In addition, the court noted, when the Kentucky defendant initially contracted with the Texas plaintiff, it had done so through the plaintiff’s office in Tennessee and was not even aware that the plaintiff had a Texas location “until well into the contract negotiations.” As a result, the court held, there was no evidence that the Kentucky defendant purposefully availed itself of a Texas forum.

Olympia Capital Assocs., L.P. v. Jackson, 247 S.W.3d 399 (Tex. App.—Dallas 2008, no pet.)

The court refused to impute the contacts of one entity to another for purposes of exercising personal jurisdiction. First, the court rejected the argument that the two entities could be treated as one under the “single business enterprise theory,” which holds entities jointly and severally liable if they commit wrongful conduct in carrying out a common business objective. The Texas Supreme Court has not yet endorsed the single business enterprise theory, the court reasoned, and has expressly held that some of the factors supporting the theory are not relevant to constitutional due process. Second, the court held that the two entities did not have a principal/agent relationship, even though one listed the other as an “affiliate” and the affiliate negotiated an agreement on behalf of the other. The affiliate was still required to obtain final approval from the other entity, the court noted, and there was no other evidence that the entity exercised control over the “means and details” of the affiliate’s work.

SANCTIONS—CONSIDERATION OF LESSER SANCTIONS

Bader, Inc. v. Sandstone Prods., Inc., 248 S.W.3d 802 (Tex. App.—Houston [1st Dist.] 2008, no pet.)

The trial court found that the defendant engaged in bad-faith discovery abuse by withholding documents and concealing information material to claims regarding a product’s specifications. Because the trial court concluded that this conduct

was ongoing and interfered with core functions of the judiciary, it: (1) ordered a spoliation-presumption instruction be directed to the jury; (2) limited the defendant’s reliance on witnesses deposed before the production of previously-withheld documents; (3) ordered defendant to pay $68,000 for attorneys’ fees incurred by plaintiff; and (4) set aside earlier summary judgment rulings. During trial, defendant’s trial counsel also violated a limine ruling by injecting plaintiff’s liability insurance into the case, resulting in a mistrial and a $79,012 sanctions order.

A divided court of appeals reversed the trial court’s judgment in part. The court of appeals agreed that defendant’s conduct was sanctionable but reversed the jury instruction and limitations on use of deposed witnesses because the record did not establish why lesser sanctions would not deter future misconduct. The court of appeals left intact the attorney fees awards. The dissent, relying on the supreme court’s decision in Cire v. Cummings, 134 S.W.3d 835 (Tex. 2004), concluded that the trial court’s detailed sanctions order was sufficient to justify the penalties imposed and that the trial court is only required to “consider” lesser sanctions, not “recite” why every other lesser sanction would be ineffective.

SPECIAL EXCEPTIONS—DISMISSAL FOR FAILURE TO STATE A CLAIM

Wagner ex rel. Nationwide Mut. Tex. Emps. v. Nationwide Lloyds, No. 03-07-00292-CV, 2008 WL 537484 (Tex. App.—Austin Feb. 27, 2008, no pet.) (mem. op.)

Plaintiffs sued Nationwide Lloyds for breach of fiduciary duties and fraud regarding notices of a class-action settlement sent by Nationwide Mutual Insurance Company. Nationwide Lloyds specially excepted and requested dismissal, asserting the pleading defects asserted were incurable. The trial court agreed and dismissed plaintiffs’ claims. The court of appeals affirmed the dismissal on the same grounds. Among the defects that justified dismissal were: (1) plaintiffs had notice of settlement, defeating their lack-of-


notice claim; and (2) as a nonparty to the settlement, Nationwide Lloyds had no duty to advise plaintiffs of claims against it or to assure that plaintiffs were part of a class-action settlement.

STATUTE OF REPOSE—CONSTITUTIONALITY

Rankin v. M. Healthcare Sys. of San Antonio, Ltd., No. 04-07-00305-CV, 2008 WL 587444 (Tex. App.—San Antonio Mar. 5, 2008, no pet. h.)

The court of appeals upheld an as-applied challenge to the constitutionality of the statute of repose, set forth in section 74.251(b) of the Civil Practice and Remedies Code, under the open courts provision of the Texas Constitution.

Twelve years after surgery, the plaintiff discovered that a surgical sponge was left in her abdomen. Within a few months of this discovery, the plaintiff sued the physicians and hospital involved in the surgery. The defendants moved for summary judgment based on section 74.251(b), which sets forth a ten-year statute of repose for all health care liability claim[s].

The court of appeals held that applying this provision to the plaintiff would violate Article I, section 13 of the Texas Constitution, which provides that “[a]ll courts shall be open, and every person for an injury done him . . . shall have remedy by course of law.” Applying the two-part test for establishing an open courts violation, the court first held that the plaintiff’s cause of action was a “cognizable, common-law claim,” and that section 74.251(b) restricted the plaintiff’s right to bring that claim. Second, the court held that this restriction was unreasonable in light of the statute’s purposes. Although the legislature’s aims in enacting section 74.251(b)—lowering insurance rates and healthcare costs—are legitimate, applying the statute in this case would deny the plaintiff the right to sue before she was even able to discover her injury. Under these circumstances, the court held, the statute violates the open courts provision of the Texas Constitution.

SUPERSEDEAS BONDS—NET WORTH DETERMINATION

Enviropower, L.L.C. v. Bear, Stearns & Co., No. 01-04-01111-CV, 2008 WL 483666 (Tex. App.–Houston [1st Dist.] Feb. 21, 2008, pet. filed)

In this en banc decision from the First Court of Appeals, the court addressed the definition of “net worth” for purposes of determining the propriety of a supersedeas bond under Texas Rule of Appellate Procedure 24 and section 52.006 of the Civil Practice and Remedies Code. Agreeing with prior decision from the First, Fourteenth and Fifth Courts of Appeals, the court held that net worth is the difference between total assets and total liabilities as determined by generally accepted accounting principles. In focusing on whether the debtor can meet section 52.006(a)’s requirements and whether satisfying those requires would cause substantial economic harm, the en banc majority rejected the dissent’s consideration of the value of the judgment debtor’s assets upon a proposed sale and expected future earnings (e.g., a market-value approach). Because the judgment debtor’s book value was undisputed, the majority vacated the trial court’s order setting the bond and remanded to the trial court to determine the amount of an appropriate bond or alternate security.

VENUE—APPLICATION OF STATUTE TO JUDGMENT ENFORCEMENT ACTION

Cantu v. Grossman, No. 14-06-00078-CV, 2008 WL 220321 (Tex. App.—Houston [14th Dist.] Jan. 29, 2008, no pet.)

The court of appeals considered an issue of first impression—whether the general venue statute applies to an action to enforce a foreign judgment. A divided court of appeals concluded that the venue statute applied. The majority opinion relied on the language of the statute, its purpose and out-of-state authorities to conclude that the judgment-enforcement action should have been filed in Hidalgo—not Harris—County because Hidalgo was the defendant’s principal place of residence. The majority emphasized that the uniform judgment-enforcement statute was silent


regarding venue and that its interpretation (relying heavily on other states’ decisions) would further the goal of consistency in interpreting uniform acts. The dissenting opinion criticized the majority for over-reliance on inapposite out-of-state statutes and ignoring the plain language of the venue statute, which applies only to suits. Because a judgment-enforcement action, according to the dissent, is not a suit under the venue statute, a venue challenge to a judgment-enforcement action is impermissible.

VENUE SELECTION CLAUSE

In re Great Lakes Dredge & Dock Co. L.L.C., No. 13-07-437-CV, 2008 WL 100505 (Tex. App.—Corpus Christi Jan. 10, 2008, no pet.)

In this mandamus proceeding, the court of appeals refused to enforce a venue selection clause where a mandatory venue statute was in effect at the time the suit was filed. The parties had agreed that, if suit were filed in Texas, it would be filed in Harris County. Former section 15.018 of the Texas Civil Practice & Remedies Code, however, provided that suit could not be brought in Harris County.

The court first noted the Texas Supreme Court’s recent trend toward enforcement of forum selection agreements. But the court distinguished between “forum selection agreements,” in which parties choose a particular state as the location for trial, and “venue selection agreements,” in which parties choose a particular county or court within a state. Although the supreme court has held that courts must enforce forum selection agreements where reasonable and just, the supreme court has not yet applied this holding to venue selection agreements. In addition, the supreme court’s recent forum selection cases do not address the unique policies underlying mandatory venue statutes—e.g., establishing fixed rules that provide convenience and expediency for Texas litigants and courts.

Finally, the court noted, in the mandatory venue statute at issue, the legislature expressly provided that only parties to “a major transaction” could

contract around the statute. By providing this narrow exception, the court concluded, the legislature must have intended “that any other type of venue-selection agreement would be unenforceable.”

TEMPORARY INJUNCTION—PRESERVING THE STATUS QUO

EPG, Inc. v. RDM, Inc., No. 14-07-00415-CV, 2008 WL 323742 (Tex. App.—Houston [14th Dist.] Feb. 7, 2008, no pet.) (mem. op.)

The court of appeals reversed the trial court’s temporary injunction because it improperly altered the status quo—the last peaceable, noncontested status preceding suit. The hotly disputed issue in this case was whether the plaintiff was a general partner of defendant EPG, Inc. Because the plaintiff took steps to alter its the relationship with EPG, Inc. (and EPG, Inc. contested that action), the status quo is not the parties’ relationship after a contested action but rather their relationship before that action. Accordingly, the court of appeals concluded that the injunction requiring the release of EPG, Inc.’s assets and property to plaintiff was an abuse of discretion.


Fifth Circuit Civil Appellate Update Christopher D. Kratovil, K&L Gates, Dallas Stephen M. Dacus, K&L Gates, Dallas CIVIL PRACTICE / PERSONAL JURISDICTION

Walk Haydel & Assoc., Inc. v. Coastal Power Prod. Co., 517 F.3d 235 (5th Cir. 2008)

Walk Haydel & Assoc. v. Coastal Power Production Co. addresses an interesting personal jurisdiction issue that could impact lawyers whose practices cross state boundaries. A Louisiana corporation doing business as “Delasa” acquired a contract for the construction of a power plant in El Salvador. Delasa originally planned to develop this power plant along with several other joint venturers. Winston & Strawn (W&S), a Chicago-based law firm, was allegedly hired to represent all of the joint venturers in their dealings with third parties. The joint venture’s main investor soon lost interest in continuing with the joint venture. Soon thereafter, W&S suggested that an entity named Tenneco might serve as a replacement investor and provide capital to the joint venture. At that time, W&S was representing Tenneco in other projects in Latin America. Delasa met with Tenneco and eventually Tenneco was brought into the joint venture. After the deal unraveled, Tenneco stepped in and acquired 100% of the project and W&S continued to represent Tenneco in the project. Litigation ensued in Louisiana state court, and Delasa ultimately filed a third party complaint against W&S. W&S removed the case to federal court and then moved to dismiss, arguing that it was not subject to personal jurisdiction in the state of Louisiana. The district court agreed, and dismissed the action against W&S. Delasa appealed.

On appeal, the Fifth Circuit reversed the district court’s finding that W&S was not subject to personal jurisdiction in Louisiana. The Court began by discussing the applicable rules. Though the plaintiff must ultimately show by a preponderance of evidence that the court has personal jurisdiction over the defendant, the plaintiff was only required to make a prima facie

showing of personal jurisdiction where, as here, the court only allows limited discovery on the issue of personal jurisdiction. The district court may hold a full evidentiary hearing at which the plaintiff must prove personal jurisdiction by a preponderance. However, in order to hold the plaintiff to this higher standard, the court must allow the plaintiff to take a greater amount of discovery and give the plaintiff the benefit of live testimony and other forms of discovery. Here, the district court curtailed Delasa’s right to take discovery and only allowed Delasa to obtain documents from W&S. Thus, the Court found, the district court erred in requiring Delasa to prove personal jurisdiction by a preponderance based solely on these limited discovery materials.

Addressing the core jurisdictional issue, the Court found that Delasa had established a prima facie case for specific personal jurisdiction over W&S. The Court set out the familiar due process standard for general personal jurisdiction, which permits the court to exercise personal jurisdiction over a nonresident when (1) the defendant has purposefully availed itself of the benefits and protections of the forum state by establishing minimum contacts with the forum state, and (2) the exercise of jurisdiction over that defendant does not offend traditional notions of fair play and substantial justice. The Court also reviewed the requirements for specific jurisdiction, which exists where the defendant has purposefully directed its activities at a forum state and the litigation results from alleged injuries that arise out of or relate to those activities.

Applying this standard, the Court found that personal jurisdiction in Louisiana was proper. Although forming an attorney-client privilege with a Louisiana corporation was not enough on its own, specific jurisdiction was proper under Fifth Circuit precedent which holds that a non-resident attorney’s misrepresentations and omissions directed at the forum state are sufficient


to support personal jurisdiction. Wien Air Alaska, Inc. v. Brandt, 195 F.3d 208, 212-13 (5th Cir. 2001). When the disputed facts were construed in Delasa’s favor, the facts showed that the litigation related to activities and omissions directed at Louisiana. The Court emphasized that a single trip by W&S to New Orleans could be enough to support a finding of minimum contacts. W&S’s connection with Louisiana was further supported by W&S’s hundreds of phone calls, faxes, and letters amounting to over 3,400 pages of documents, many of which were sent by W&S to Delasa’s office in Louisiana. The Court emphasized that the foreseeable harmful effects of W&S’s alleged tortious conduct were aimed at Louisiana. Based upon this evidence, the Court found that Delasa established a prima facie case of specific jurisdiction in Louisiana, and accordingly reversed and remanded to the district court.

CIVIL PRACTICE / VENUE

In Re: Volkswagen, 506 F.3d 376 (5th Cir. Oct. 24, 2007), reh’g en banc granted by 517 F.3d 785 (5th Cir. 2008)

Three plaintiffs filed a products liability action against Volkswagen in the Marshall Division of the U.S. District Court for the Eastern District of Texas. The plaintiffs were injured in a car accident that occurred in Dallas, Texas, and the plaintiffs alleged that their injuries were caused by design defects in the Volkswagen vehicle that they were driving. Volkswagen moved to transfer the case pursuant to 28 U.S.C. § 1404(a) to the Dallas Division of the Northern District of Texas and asserted that the transfer was warranted because all of the factors relevant to a transfer of venue clearly pointed to venue in the Northern District of Texas. According to Volkswagen, the only factor that favored venue in the Eastern District of Texas was the plaintiffs’ decision to file there; otherwise, Marshall has no connection to the parties or the case. The district court denied the motion to transfer venue. Volkswagen petitioned to the Fifth Circuit for a writ of mandamus directing the district court to transfer the case to the Northern District of Texas. A Fifth

Circuit panel initially declined to issue the writ, but later withdrew the decision. After holding oral arguments, the Court issued the writ of mandamus and directed the district court to transfer the case to the Northern District of Texas.

The Court began its analysis by stressing the extraordinary nature of writs of mandamus. However, the Court held that mandamus was appropriate in this case because the district court clearly and indisputably abused its discretion in refusing to transfer the case. The Court set out the applicable standard for a transfer of venue. In assessing a motion to transfer, the preliminary question is whether the suit could have been originally filed in the destination venue. This threshold was clearly met here, so the Court next turned to the requirements set forth in 28 U.S.C. section 1404(a). Section 1404(a) provides that “[f]or the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought.” Under Fifth Circuit precedent, the determination of whether to transfer a case requires the court to assess a number of private and public interest factors, none of which is dispositive standing alone. The “private interest” factors are: (1) the relative ease of access to sources of proof; (2) the availability of compulsory process to secure the attendance of witnesses; (3) the cost of attendance for willing witnesses; and (4) all other practical problems that make trial of a case easy, expeditious and inexpensive. The “public interest” factors are: (1) the administrative difficulties flowing from court congestion; (2) the local interest in having localized interests decided at home; (3) the familiarity of the forum with the law that will govern the case; and (4) the avoidance of unnecessary problems of conflict of laws or in the applicable foreign law.

The Court recognized that the plaintiff’s choice of forum is also a relevant factor to be considered in the analysis, and indeed the court held that the plaintiff’s choice of forum is entitled to deference. The Court was required to consider, however, exactly how much weight was to be accorded to the plaintiff’s choice of forum. Applying an


earlier binding precedent, the Court held that the party seeking to transfer a case under Section 1404 must show “good cause” for the transfer. Humble Oil & Ref. Co. v. Bell Marine Serv. Inc., 321 F.2d 53, 56 (5th Cir. 1963). This requires the moving party to demonstrate that the transfer is “[f]or the convenience of the parties and witnesses, in the interests of justice.” 28 U.S.C. § 1404(a). The Court held that this “good cause” standard comports with the language and the express purposes of Section 1404.

The Court then went through the private and public interest factors and held that each of the applicable factors weighed heavily in favor of transfer to the Northern District of Texas, and therefore, the district court erred in applying these factors. The Court held that the district court abused its discretion in refusing to transfer the case and, accordingly, remanded the case to the district court with instructions to transfer the case to the Northern District of Texas.

On February 14, 2008, the Fifth Circuit vacated this decision and ordered en banc rehearing. The case has been set for oral arguments before the en banc Court the week of May 19, 2008.

EMPLOYMENT LAW / DISCRIMINATION / EXHAUSTION OF ADMINISTRATIVE REMEDIES

McClain v. Lufkin Indus., Inc., 519 F.3d 264 (5th Cir. 2008)

In McClain v. Lufkin Industries, Inc., the Fifth Circuit addressed a complex and important Title VII issue in which some 700 class action plaintiffs argued that defendant Lufkin Industries, Inc.’s (“Lufkin”) policy of delegating subjective decision-making authority to its managers disparately impacted African-American employees. Lufkin is a major manufacturing corporation that consists of four production divisions, including the Foundry, Trailer, Oil Field, and Power Transmission divisions. Two of the representative plaintiffs filed charges against Lufkin with the (Equal Employment Opportunity Commission (EEOC). One of these plaintiffs, McClain, worked in Lufkin’s Trailer division, and

the other plaintiff, Thomas, worked in the Power Transmission and Oil Field Divisions. The district court certified a class of employees as to the plaintiffs’ disparate impact claims but refused to certify a disparate treatment class. After a brief bench trial (limited by the district court to twenty hours per side), the district court found that Lufkin’s practice of delegating subjective decision-making authority to white managers for initial assignments and promotions resulted in a disparate impact on black employees and thus violated Title VII. The district court awarded the plaintiffs $3.4 million in back pay along with attorneys’ fees and injunctive relief. Both sides appealed.

On appeal, the Fifth Circuit reviewed Lufkin’s argument that the plaintiffs had failed to exhaust their administrative remedies with the EEOC. The Court articulated the general rule that private-sector employees must file an administrative charge with the EEOC as a prerequisite to a suit in federal court. To construe the scope of the EEOC’s investigation, the Court employs a fact-intensive analysis of the EEOC administrative charge and broadly construes the EEOC complaint in terms of the EEOC investigation that can reasonably be expected to grow out of the discrimination charge. Sanchez v. Standard Brands, Inc., 431 F.2d 455, 466 (5th Cir. 1970). The Court held that McClain’s EEOC complaint letter did not sufficiently allege disparate impact against Lufkin because it failed to specifically set out a neutral but discriminatory employment policy. However, Thomas’ letter did meet this burden, and thus the EEOC administrative exhaustion requirement was met as to the plaintiffs’ allegations of disparate impact. However, the Court held that the EEOC administrative remedies were not exhausted as to plaintiff class members who were employed in Lufkin’s Foundry division. Because neither Thomas nor McClain, the only two plaintiffs who filed charges with the EEOC, were employed in the Foundry division, the Court held that the EEOC would not reasonably have investigated conduct in this division. Therefore, the Court held, the plaintiffs employed in this division had not exhausted their administrative remedies.


The Court then reviewed the specific test for discrimination based on disparate impact, which requires that the plaintiff show (1) an identifiable, facially neutral personnel policy or practice; (2) a disparate effect on members of a protected class; and (3) a causal connection between the two. Watson v. Fort Worth Bank & Trust, 487 U.S. 977, 994 (1988). In applying this test, the Court first held that the district court did not commit clear error when it held that Lufkin’s promotions were based upon subjective decision-making, because the evidence showed that Lufkin’s managers used subjective standards in awarding promotions to lower-level employees. The Court also affirmed the district court’s finding that Lufkin’s employment decision-making processes were not capable of separation for analysis and, therefore, should be analyzed as a single employment practice. While the Court admitted that the Fifth Circuit had not previously set out when this “not capable of separation” rule applies, it held that the district court did not apply incorrect legal principles in reaching its result. Turning to the issue of whether the plaintiffs had shown that there was a statistically-significant disparity in the promotions awarded to African-American employees, the Court deferred to the district court, which had credited the plaintiffs’ expert over Lufkin’s expert. On the issue of damages, the Court agreed with the district court that it was not possible to determine back-pay on an individualized basis due to the large number of class plaintiffs and the uncertainty of individual claims.

Finally, the Court addressed the plaintiffs’ arguments in turn. The Court affirmed the district court’s refusal to certify a class of plaintiffs with respect to the disparate treatment claims. The Court then held that the district court’s injunctive relief was too vague and did not meet the specificity requirements set forth in Federal Rule of Civil Procedure 65. However, the Court sympathized with the district court’s difficult task in crafting sufficiently narrow relief in the face of the plaintiffs’ broad allegations of discrimination by Lufkin. The Court also remanded for reconsideration of the proper measure of plaintiffs’ attorney fee award. The Court ended

by noting that the district court still had much to reconsider in this complex and wide-ranging discrimination case.

EMPLOYMENT LAW / PUNITIVE DAMAGES

Abner v. Kan. City S. R.R. Co., 513 F.3d 154 (5th Cir. 2008)

In Abner v. Kansas City Railroad Co., the Court addressed an issue of first impression in the Fifth Circuit: whether Title VII authorizes an award of punitive damages where the defendant is not found liable for compensatory damages. In Abner, eight plaintiffs claimed that the defendant subjected them to a hostile work environment in violation of Title VII and 42 U.S.C. section 1981. A jury awarded each plaintiff $125,000 in punitive damages but did not award any compensatory damages. The district court added a one-dollar nominal damage award and entered the jury’s punitive damages verdict. On appeal, the defendant argued that Title VII and section 1981 did not permit an award of punitive damages without accompanying compensatory damages.

Under Fifth Circuit precedent, the general rule is that punitive damages may be awarded even in the absence of actual damages so long as the plaintiff proves that the defendant committed a constitutional violation. La. ACORN Fair Hous. v. LeBlanc, 211 F.3d 298, 303 (5th Cir. 2000). In this case, however, the jury did not assess whether a constitutional violation had occurred. Although Title VII and section 1981 were enacted pursuant to the Enablement Clause of the Thirteenth Amendment, the Court noted that a violation of these provisions does not necessarily amount to a constitutional violation. Thus, the Court moved on to the question that it had previously avoided: whether Title VII would support a stand-alone punitive damages award.

The Fifth Circuit, agreeing with several Sister Circuits, held that the stand-alone punitive damages award was authorized under Title VII and section 1981. The Court relied upon the text and legislative history of these statutes, although the Court noted that these sources were somewhat


inconclusive because the statutory text and legislative history neither anticipated nor proscribed an award of punitive damages without any actual damages. Thus, the Court turned to federal common law to resolve the issue.

The Court stressed the importance of jury discretion in awarding punitive damages. On the other hand, the Court noted, the Due Process Clause of the Fourteenth Amendment limits punitive damages awards. Here, the Court held that the award of punitive damages comports with Due Process because of the statutory caps imposed by Title VII and section 1981. In addition, Due Process was not offended here because the relevant statutes require a high degree of culpability before punitive damages may be imposed. The Court also looked to Congress’s purpose in enacting Title VII and section 1981 and held that a stand-alone punitive damages award comported with congressional intent. According to the Court, the specific harms addressed by Title VII cannot always be reduced into financial terms, and, in any event, the defendant should not enjoy a windfall just because the defendant’s egregious conduct did not cause quantifiable physical harm to the plaintiff. Furthermore, the Court found it unnecessary for the district court to award nominal damages of $1, finding that this “ceremonial anchor” was unnecessary to support an award of punitive damages.

FIRST AMENDMENT / PUBLIC EMPLOYEES

Davis v. McKinney, 518 F.3d 304 (5th Cir. 2008)

Davis v. McKinney is an important case in that it sheds light on how the Fifth Circuit will interpret First Amendment protections in the wake of the Supreme Court’s landmark Garcetti v. Ceballos decision. 547 U.S. 410 (2006). Plaintiff Cynthia Davis was employed as an IS Audit Manager at the UT Health Science Center in Houston (UTHSC-H). Part of Davis’ role included overseeing computer-related audits. To that end, Davis was approached after some UTHSC-H employees were suspected of viewing pornography at work. Davis began an

investigation and eventually confiscated a number of computers from employee-physicians who were suspected of accessing pornographic images. Defendant Dr. Michael McKinney, the Senior Vice President and Chief Operating Officer of UTHSC-H, authorized Davis to confiscate employee computers if Davis had a clear indication of wrongdoing. Dr. McKinney later told Davis that he wanted to meet to discuss the investigation. However, Dr. McKinney never met with Davis, and Davis was later told to terminate the investigation. Davis believed that UTHSC-H officials were abdicating their responsibilities in terminating this investigation. Davis wrote a complaint letter to the UTHSC-H president alleging that officials were engaging in misconduct, including disparate treatment of women and African Americans, and other acts of favoritism. Davis also filed complaints with the Equal Employment Opportunity Commission and brought the pornography allegations to the Federal Bureau of Investigation’s attention. During this time frame, Davis applied for a promotion for which Davis had allegedly been told she was the most likely candidate. This position was then “frozen” and not filled, and Davis eventually resigned from UTHSC-H.

Davis filed a Section 1983 action against UTHSC-H and several officials, arguing that she had been retaliated against for exercising her First Amendment free speech rights. On cross motions for summary judgment, the district court held that: (1) Davis’ speech was protected under the First Amendment; and (2) the officials were not entitled to qualified immunity because their actions were not objectively reasonable. The defendants appealed.

The Fifth Circuit began by setting out the rule for whether an official enjoys qualified immunity by evaluating: (1) whether the plaintiff has alleged a violation of a constitutional right; and (2) whether the defendant’s conduct was objectively reasonable in light of the clearly established law at the time of the incident. Connelly v. Tex Dep’t of Crim. Justice, 484 F.3d 343, 346 (5th Cir. 2007). Turning to the first prong, the Court applied the Supreme Court’s recent Garcetti


decision, though the Court noted that not all of Garcetti’s implications were yet clear. Indeed, the Court noted that this was only the second Fifth Circuit decision applying Garcetti. The Court noted that Garcetti had added a new layer of First Amendment analysis in the context of public employees—the Court must shift its focus away from the content of the speech and instead focus on the role the speaker occupied when making the speech. The Court applied its precedents, as altered by Garcetti, and held that a public employee’s speech is subject to First Amendment protection if: (1) the employee’s speech is not pursuant to his or her official duties; (2) the speech is on a matter of public concern; and (3) the employee’s interest in expressing such a concern outweighs the employer’s interest in promoting the efficiency of the public services it performs through its employees.

Applying this test, the Court first looked to whether Davis’ complaint letter was made pursuant to Davis’ job duties, or instead whether the complaint letter was made as a public citizen. The Court first held that Davis’ complaint letter was not a “single” communication. Instead, the letter consisted of numerous components. The Court evaluated the different components of Davis’ complaint letter and found that portions of Davis’ letter pertained to her job functions, while other portions had nothing to do with her job functions and, instead, were more akin to statements made as a public citizen. However, the Court noted that the parties did not address the second prong of the test, whether those portions of the letter that were made as a public citizen were on a matter of public or private concern. Thus, the Court remanded so that the parties could brief and the district court could consider whether the matters were of a public or private concern.

Turning to the qualified immunity issue, the Fifth Circuit found that there were genuine issues of fact as to whether the defendant officials’ actions were objectively reasonable such that the officers would be protected by qualified immunity. Since the arguments on appeal only raised questions of fact, the Court was without jurisdiction to pass on these matters. Accordingly, the Court affirmed in

part, reversed in part, and remanded in part to the district court.

INTELLECTUAL PROPERTY / COPYRIGHTS

Armour v. Knowles, 512 F.3d 147 (5th Cir. 2007)

In Armour v. Knowles, the Fifth Circuit dealt with perhaps its most “entertaining” case of 2007. Amateur singer/songwriter Jennifer Armour recorded a demo of a song entitled “Little Bit of Love.” Armour filed for copyright protection of an a cappella version of this song in 2003 and then for the instrumental version in 2006. In the hopes of promoting the song, Armour’s manager sent a demo copy to a few individuals associated with singer Beyoncé Knowles sometime in the beginning of 2003. During the same time frame, Beyoncé began recording a new album that included the now-hit song “Baby Boy.” Armour filed suit against Beyoncé and claimed that Beyoncé’s song “Baby Boy” was substantially similar enough to Armour’s song “Little Bit of Love” to support a claim for copyright infringement. The district court granted summary judgment against Armour, who appealed the judgment.

In analyzing the issue, the Court described the similarities in the two songs in footnote 1:

Armour’s hook repeats twice and accompanies the following lyrics:

Let me know what you wan-na do, ba-by it’s your call

Got-ta l’il bit a love for you, I can stop it or make it grow

Let me know what you wan-na do, ba-by it’s your call

Got-ta l’il bit a love for you, I can stop it or make it grow

Beyonce’s hook repeats four times and accompanies the following lyrics:


Ba-by boy you stay on my mind, ful-fill my fan-ta-sies

I think a-bout you all the time, I see you in my dreams

Ba-by boy not a day goes by, with-out my fan-ta-sies

I think a-bout you all the time, I see you in my dreams

The lyrics differ in word and substance: Armour’s evince a somewhat less love for her “ba-by” – “a l’il bit” – and somewhat more control over such love, which she can “stop” or “make grow;” Beyoncé’s suggest a deeper and more stubborn love, which pervades her thoughts, dreams, and “fan-ta-sies.” Yet, though the nature and depth of their loves may differ, Armour claims they find expression by way of the same musical melody.

Armour, 512 F.3d at 151 n.1.

Based on the differences noted, the Court held that Beyoncé did not infringe Armour’s copyrights, and therefore affirmed the judgment of the district court. The Court set out the applicable standard for copyright infringement, which requires the plaintiff to establish ownership of a valid copyright, factual copying, and substantial similarity. The “factual copying” element can be established by either direct or circumstantial proof. Here, Armour put forth circumstantial evidence of factual copying based upon Beyoncé’s access to the song and the probative similarities between the relevant songs. The district court based its grant of summary judgment on the absence of the third factor (substantial similarity). Though the Fifth Circuit affirmed, it did so for a different reason and found that Armour had not met the second factor (factual copying) based upon Armour’s circumstantial evidence of access. The Court found that Beyoncé had composed “Baby Boy” over a long period of time and that Beyoncé was putting her final touches on the song at the time

that Armour claims that Beyoncé had access to “Little Bit of Love.” The Court also rejected Armour’s arguments that Beyoncé had access to “Little Bit of Love” through other sources. Finding that a required element of copyright infringement was absent, the Court affirmed the district court’s dismissal.

QUALIFIED IMMUNITY / INTERLOCUTORY APPEALS

Charles v. Grief, 512 F.3d 753 (5th Cir. 2008)

In Charles v. Grief, the Fifth Circuit issued a stern warning concerning the use of interlocutory appeals. Though this decision was directed at the Texas Attorney General’s Office, all appellate practitioners would do well to heed the Court’s admonishments on the use of interlocutory appeals. Plaintiff-Appellee Shelton Charles worked as a systems analyst for the Texas Lottery Commission. Charles alleged that the Commission was engaged in misconduct, including violations of the Texas Open Records Act and misuse of state funds. Charles sent e-mails outlining this alleged misconduct to the legislative committee that oversees the Commission. Charles subsequently forwarded one of these e-mails to Commission officials. Defendant-Appellant Gary Grief, who was a high-ranking Commission official, ordered Charles to meet with his supervisor to answer questions regarding these e-mails. During this questioning, Charles requested that the Commission’s questions be put in writing so that Charles could submit written answers. Later that day, Grief fired Charles, purportedly based on Charles’ insubordination.

Charles filed a Section 1983 action and argued that Grief and the Commission had retaliated against him in violation of Charles’ First Amendment right to free speech. Grief defended on qualified immunity grounds. The magistrate judge recommended denial of the qualified immunity defense because the record demonstrated genuine issues of fact. The district court adopted the magistrate’s findings and refused to dismiss the case on qualified immunity


grounds. Grief filed an interlocutory appeal challenging the district court’s decision.

A Fifth Circuit panel dismissed the appeal and found that it was without jurisdiction over Grief’s interlocutory appeal. The Court emphasized that a federal court of appeals does not have jurisdiction over an interlocutory appeal except in a few narrow situations. Though the Fifth Circuit can hear an interlocutory appeal where the district court denies a claim of qualified immunity, settled precedent established that interlocutory appeals are only proper where the denial was based on disputed legal issues, not where, as in Charles v. Grief, there are genuine disputes over material facts.

The Fifth Circuit acknowledged that “[e]very argument in counsel’s brief to the court might be correct and might ultimately prevail.” Nonetheless, Grief’s appeal was premature. The Court then issued a warning for future appellants, calling this appeal “unwarranted” and “unconscionable in light of this court’s burgeoning precedent uniformly rejecting such appeals.” Because the typical plaintiff in cases such as this one is at a severe financial disadvantage relative to the government, the Court stated that such an appeal “smacks of economic duress.” The Court also noted that it had recently dismissed a similar interlocutory appeal by the Texas Attorney General and warned counsel to “carefully heed” the Court’s precedents before filing an interlocutory appeal “lest they incur penalties, sanctions, damages for, e.g., frivolous appeals, or worse.”

TAX LAW / VALUATION OF ANNUITIES

Anthony v. United States, 520 F.3d 374 (5th Cir. 2008)

James Louis Bankston, Sr. was seriously injured in a 1990 car accident. In settlement of his claims, Bankston entered into a structured settlement arrangement and became the beneficiary under three annuities. Each annuity was non-transferable under its terms. Bankston died in 1996, and his Estate filed a tax return that

included the value of these three annuities. Under the Internal Revenue Code, the Estate must pay tax on the annuities based upon the fair market value of the annuities at the time of the decedent’s death. Treas. Reg. § 20.2031-1(b). The fair market value is set forth in specific annuity tables that are codified in the Internal Revenue Code. 26 U.S.C. § 7520. The Estate valued the annuities under the applicable annuity tables and paid its entire tax liability of $610,683. In 2001, the Estate claimed that the three annuities had been overvalued on the Estate’s tax return and, as a result, the Estate had overpaid its tax liability by $427,620. The district court held that the Estate’s annuities were properly valued under the annuity tables and, therefore, the Estate was not entitled to a tax refund. The Estate appealed.

Regulations promulgated by the Treasury Department provide an exception to the otherwise mandatory application of the annuity tables. This exception allows departure from the annuity tables for “restricted beneficial interests,” which are defined by the Regulations as “an annuity, income remainder, or reversionary interest that is subject to any contingency, power, or other restriction…” Treas. Reg. § 20.7520-3(b)(ii). Here, the Estate argued that the non-transferability of the annuities qualified as an “other restriction” under the Regulations, and therefore the Estate was not required to value the annuities using the Internal Revenue Code’s annuity tables.

In evaluating the merits, the Fifth Circuit reviewed its previous decision in Cook v. Commissioner. 349 F.3d 850 (5th Cir. 2003). In Cook, the Fifth Circuit refused to depart from the annuity tables based upon the non-transferability of an annuity, holding that the non-transferability of an annuity is a basic assumption built into the annuity tables. Id. at 854. The Estate conceded that Cook involved a nearly identical issue as was presented in this case. However, the Estate argued that this case was controlled by the “restricted beneficial interest” exception, which did not become a part of the Regulations until after Cook was decided. In its first decision applying this Regulation, the Court held that the


non-transferability of an annuity does not qualify as an “other restriction” under the “restricted beneficial interest” exception. Accordingly, the Estate must use the annuity tables set out in the Internal Revenue Code. The Court performed a thorough textual analysis of the Regulation and found that it would not support the Estate’s position. The Court held that the Regulation was only intended to codify the existing case law concerning exceptions to the use of the annuity tables. Under the Fifth Circuit’s precedent of Cook, the non-marketability of an annuity was a basic assumption underlying the annuity tables, not a basis for departing from the use of these annuity tables.

The Court expressly recognized that the annuity tables used by the Internal Revenue Code sacrifice accuracy of valuation for convenience and ease of administration. Moreover, the Court recognized that financial markets assign different values to annuities based upon whether the annuity is transferable or not. The Court held that this distinction is simply irrelevant under the Internal Revenue Code. According to the Court, the fact that the annuity tables do not reflect the true value of many annuities is acceptable because “the error costs are perceived as small in the aggregate.” Despite the Estate’s arguments to the contrary, the Court could not justify a departure from the annuity tables provided by the Tax Code and, therefore, affirmed the district court’s decision.


Texas Criminal Appellate Update Alan Curry, Harris County District Attorney’s Office, Houston ABATEMENT OF APPEAL—CLARIFICATION OF TRIAL COURT ORDER

Taylor v. State, No. 247 S.W.3d 223 (Tex. Crim. App. 2008)

The defendant was convicted of indecency with a child, and the defendant filed a motion for new trial. The trial judge signed the “Order” portion of the motion and circled “granted.” The judge also appointed counsel for appeal and certified the case for appeal. The State subsequently filed a motion to abate the appeal, asking that the case be sent back to the trial court to determine whether the trial court “intended to grant the defendant a new trial or intended for the defendant to attempt to gain relief via resort to the appellate process.” The court of appeals dismissed the appeal, holding that, because the trial court granted the motion for new trial, it had no jurisdiction to consider the defendant’s appeal or the State’s motion to abate.

The State filed a petition for discretionary review, contending that, because there was a conflict in the record as to whether the trial court intended to grant a motion for new trial or an appeal, the court of appeals should have abated the appeal to ascertain the trial court’s intent. The Court of Criminal Appeals agreed. The court noted that the trial court could not have intended to grant the defendant a new trial and an appeal. Faced with a conflicting record concerning its jurisdiction, the court of appeals should have abated to clarify which action was intended by the trial court.

ABATEMENT OF APPEAL—PRO SE MOTION FOR NEW TRIAL

Bogany v. State, No. 1-07-00050-CR, 2008 WL 623590 (Tex. App.—Houston [1st Dist.] Feb. 21, 2008, no pet.)

The defendant was charged by indictment with the offense of possession with intent to deliver a controlled substance, and the charge was

enhanced by two prior felony convictions—burglary of a habitation and aggravated robbery. At trial, the court granted the defendant’s request that he be permitted to proceed pro se. The defendant pleaded not guilty to the primary offense and pleaded “not true” to the enhancements. But a jury found the defendant guilty as charged in the primary offense, found the enhancement paragraphs true, and assessed punishment at ninety-nine years’ confinement. The defendant timely filed a pro se motion for new trial and a notice of appeal. In his notice of appeal, the defendant asserted that he was indigent and requested the appointment of appellate counsel. Several weeks later, the trial court found the defendant indigent and granted the defendant’s request for the appointment of appellate counsel. One week later, the defendant’s appointed counsel presented the defendant’s motion for new trial to the trial court, which the trial court denied.

On appeal, the defendant claimed that the trial court erred by failing to appoint counsel during the time for filing a motion for new trial. The defendant claimed that, had his appellate counsel been appointed before the period for filing a motion for new trial had expired, his counsel could have filed an amended motion. Specifically, the defendant contends that he “lost the opportunity for counsel to file an amended sworn motion clarifying the points in his pro se motion in addition to including a ground alleging jury charge error in the punishment phase,” and that “the defendant was denied the ability to add a ground in the motion asking the trial judge to grant a new trial in the interest of justice based on issues that the defendant failed to preserve. . . .” The defendant requested the court of appeals abate the appeal, attesting that counsel was not notified of her appointment to represent the defendant until eleven days after the deadline for filing a motion for new trial. But the court of appeals noted a pro se litigant is held to the same standards as licensed attorneys and must comply


with applicable laws and rules of procedure. A defendant may not choose to proceed pro se and then argue on appeal that his own representation was ineffective. The defendant may not be heard to complain on appeal that abatement is warranted because his new appellate counsel, in essence, could have written a more effective motion. Furthermore, even if it was concluded that, by withdrawing his waiver of counsel nine days prior to the expiration of the period for filing a motion for new trial and thereby rendering himself without counsel for that period, the defendant still did not show that he was harmed.

ABILITY TO APPEAL—DENIAL OF MOTION FOR JAIL TIME CREDIT

Abbott v. State, 245 S.W.3d 19 (Tex. App.—Waco 2007, pet. granted)

The defendant was convicted of indecency with a child and sentenced to twenty years’ imprisonment. Upon imposition of sentence, the defendant was taken into custody and imprisoned during the pendency of his appeal. The court of appeals affirmed the defendant’s conviction in 2006, but reversed his punishment and remanded the case for a new punishment hearing. The defendant spent 740 days in prison pending his appeal.

At the new punishment hearing, the jury assessed ten years probation. As a condition of probation, the trial court imposed confinement in the county jail for 180 days (with no good-time credit permitted). The defendant filed a “motion for time credit” in which he requested the trial court credit the 180-day confinement with time (740 days) he served while his appeal was pending. The trial court denied the defendant’s motion, and the defendant appealed from that denial.

The State claimed the court of appeals did not have jurisdiction over the defendant’s appeal because the defendant could not appeal the trial court’s order denying his motion for time credit without also appealing the judgment and sentence. The court of appeals disagreed, noting it was unaware of any statute or rule precluding the

defendant’s appeal, and further noting there was actually authority indicating that the trial court’s order was appealable. See Watson v. State, 942 S.W.2d 723 (Tex. App.—Houston [14th Dist.] 1997, no pet.) (appeal of trial court’s failure to grant credit toward period assessed as condition of probation where judgment reflected no credit for jail time served pending appeal). The court of appeals additionally held the defendant could not have pursued the matter by way of an appeal of a denial of relief on an application for a writ of habeas corpus, filed pursuant to Article 11.072 of the Code of Criminal Procedure. That statute prevents such an application for habeas corpus relief if the defendant could have obtained the relief by way of a direct appeal.

BAIL PENDING APPEAL

Abbott v. State, 245 S.W.3d 23 (Tex. App.—Waco 2007) (pet. dism’d)

The court of appeals reversed the trial court’s order denying the defendant’s motion for time credit and remanded this case to the trial court with the instructions to apply the defendant’s prison time served (740 days) as a credit toward the defendant’s 180-day sentence as a condition of probation and, because that credit greatly exceeds 180 days, to immediately release the defendant from jail. However, the defendant was not released because the mandate of the court of appeals was not issued, and the State therefore could not file a petition for discretionary review. The defendant then filed a motion to be released on bond pursuant to Article 44.04(h) of the Code of Criminal Procedure, which requires a defendant to be released on bond if his conviction has been reversed by a court of appeals. The State claimed that Article 44.04(h) did not apply because the defendant had not appealed his conviction, and the judgment of the court of appeals had not reversed his conviction. The court of appeals held that the purpose of Article 44.04(h) was to ensure that a defendant does not serve time in jail or prison when the court of appeals has issued a decision reversing an order that requires the service of time in jail or prison and that Article 44.04(h) was intended to delay


service of the sentence until a final determination is made on the sentence imposed by the trial court. The purpose and intent of Article 44.04(h) would be subverted if the court of appeals did not apply it to the defendant.

ESTOPPEL ON APPEAL—CHALLENGING SUFFICIENCY OF EVIDENCE TO SUPPORT PUNISHMENT

Schultz v. State, No. 4-07-00035-CR, 2008 WL 182877 (Tex. App.—San Antonio Jan. 23, 2008, no pet.)

The defendant was indicted for assault against a family member, his wife, as a second offense. The indictment alleged the defendant had a prior assault conviction against a member of his family, which elevated the charged assault from a Class A misdemeanor to a third degree felony. The defendant pled not guilty and proceeded to a jury trial. After the jury found him guilty of the charged felony assault, but before the punishment phase began, the defendant entered into an agreement with the State pursuant to which he agreed to a ten-year sentence in exchange for the State’s agreement not to file additional charges against him. The court imposed the agreed ten-year felony sentence. On appeal, the defendant challenged the sufficiency of the evidence to prove that he was previously convicted of family assault because: (1) there was no evidence that he is the person who was convicted of that offense; and (2) there was no evidence the prior assault conviction involved a member of his family.

The State claimed that, because the defendant agreed to a ten-year sentence after the jury returned a guilty verdict, the appeal was a “plea bargain case” in which there was no right of appeal. But the court of appeals held the defendant entered a not guilty plea and proceeded through the guilt/innocence phase of trial to a jury verdict of guilty; it was only after the jury returned its verdict that he entered into an agreement with the State on a recommended sentence, thereby foregoing the punishment phase of trial. The defendant never changed his plea to guilty or nolo contendere, never signed any plea

papers, and never affirmatively waived his right to appeal. Therefore, this was not a “plea bargain case” within the meaning of Rule 25.2(a)(2) of the Rules of Appellate Procedure.

The State also claimed the defendant was estopped from challenging the legal sufficiency of the evidence that enhanced the offense to a felony because he agreed at trial to the imposition of a felony sentence, and the court of appeals agreed. After the jury found him guilty of the felony assault, the defendant expressly agreed on the record to accept the maximum ten-year sentence for the third degree felony offense in exchange for certain concessions by the State. Although he framed his issue as a legal sufficiency challenge to the prior conviction evidence that enhanced the charge from a misdemeanor to a felony, the relief he sought was instead a reformation of the judgment and reduction of the agreed ten-year sentence. The defendant could not be heard to complain that a felony conviction and sentence should not have been imposed.

MOTION FOR NEW TRIAL—CORRECTION OF CLERICAL ERROR

Stepan v. State, 244 S.W.3d 642 (Tex. App.—Austin 2008, no pet.)

The defendant was convicted of possessing methamphetamine and was sentenced to twenty-one months in a state jail. Six days later, the defendant filed a motion for new trial, alleging his guilty plea was involuntary. A hearing was set for the motion for new trial, but that hearing was never held. However, the trial court did hold a hearing on defense counsel’s motion to withdraw, and the court granted that motion. The trial judge also signed the prepared order that was attached to the defendant’s motion for new trial.

Over one month later, and over seventy-five days after the date the defendant’s sentence had been imposed, the trial judge signed a nunc pro tunc order purporting to correct a mistake in granting the defendant’s motion for new trial. The trial judge stated he intended to sign an order granting defense counsel’s motion to withdraw, not the


motion for new trial. The defendant claimed the trial judge did not have the authority to set aside the order granting the motion for new trial because the action did not occur within the 75-day period prescribed for the granting or denying of a motion for new trial. See Awadelkariem v. State, 974 S.W.2d 721, 728 (Tex. Crim. App. 1998). However, the court of appeals held the trial court does not lose all authority to revisit an order granting a new trial after the 75- day period has expired. Rather, after that 75-day period, an order granting a motion for new trial can be set aside if it was inadvertently signed as a result of clerical error.

POST-CONVICTION WRIT OF HABEAS CORPUS—RECONSIDERATION ON COURT’S OWN MOTION

Ex parte Moreno, 245 S.W.3d 419 (Tex. Crim. App. 2008)

In 1987, the defendant was convicted of capital murder and sentenced to death, and the Court of Criminal Appeals affirmed his conviction on direct appeal in 1993. In 1996, the defendant filed an initial state application for writ of habeas corpus. In ground for relief number ten of his initial writ application, the defendant argued the punishment charge submitted to the jury was flawed under the Eighth Amendment because it did not empower the jury to give effect to certain mitigating evidence he had offered at the punishment phase of trial. In 2000, the Court of Criminal Appeals rejected that claim, upholding the habeas court’s conclusion that the jury could adequately consider the particular mitigating evidence that the defendant had presented within the ambit of the statutory special issues, which in 1987 did not include the particular mitigation instruction currently found in Article 37.071, section 2(e)(1) of the Code of Criminal Procedure.

In 2001, the defendant filed an initial federal petition for writ of habeas corpus, in which he claimed for the first time that he was mentally retarded. The defendant did not raise his “mitigating evidence” claim in his federal petition. The federal district court granted the defendant’s motion to abate his federal petition,

so that he could return to state court to exhaust the newly recognized claim that he could not be executed consistent with the Eighth Amendment because he was mentally retarded. However, in 2005, when the defendant returned to federal court, the district court denied relief on all the claims raised in his federal habeas petition, finding the defendant failed to establish a prima facie case that he was mentally retarded. The United States Supreme Court denied the defendant’s petition for a writ of certiorari in 2007. But, in that same year, the Supreme Court issued opinions in two companion cases, Abdul-Kabir v. Quarterman, 127 S. Ct. 1654 (2007), and Brewer v. Quarterman, 127 S. Ct. 1706 (2007). In light of these opinions, the defendant filed a second subsequent application for writ of habeas corpus in state court, arguing he satisfied the criteria for filing a subsequent writ as enumerated in section 5 of Article 11.071 of the Code of Criminal Procedure. The Court of Criminal Appeals declined to take any action.

On the following date the defendant was scheduled to be executed, the defendant filed a “suggestion” that the Court of Criminal Appeals reconsider ground ten of his initial habeas application on its own initiative, pursuant to Rule 79.2(d) of the Texas Rules of Appellate Procedure, which provides that a habeas defendant may not file a motion for rehearing from an order denying relief, but that “[t]he Court may on its own initiative reconsider the case.” The Court of Criminal Appeals found no language in Article 11.071 of the Code of Criminal Procedure that either allowed or prohibited the court’s reconsideration of an initial disposition of a capital writ on the court’s own motion or that expressly or implicitly prescribed temporal limitations on any such reconsideration. The court stated, although it obviously would not choose to exercise this authority very often, especially years after an initial order denying relief, the court nevertheless held that, under the most extraordinary of circumstances, it may do so. The court held its authority to revisit a state writ application under Rule 79.2(d) was not adversely impacted, even if the court had initially denied a defendant relief in his state habeas proceedings


and he proceeded through the federal habeas corpus process and was denied relief there. It does not encroach upon any federal prerogative for the Court of Criminal Appeals to entertain rehearing of an initial writ after federal proceedings have been resolved against the defendant. An individual state must surely retain the authority, if it should so choose, to revisit one of its own judgments if there is a compelling reason to believe that it may not have been “correct” on original submission.

That does not mean that we are bound to [conduct such a hearing] or that we should ever do so lightly. Even if comity or the possibility of inconsistent results are not implicated at this juncture, judicial economy and the avoidance of piecemeal litigation remain legitimate concerns that counsel against disturbing our initial disposition, absent compelling circumstances. . . . We should and will be extremely hesitant ever to exercise our authority to reconsider a decision on an initial post-conviction habeas corpus application, particularly after the passage of a substantial number of years. In almost every instance, the State’s legitimate interest in the repose and finality of its convictions—even its interest in punishment as weighty and irrevocable as the death penalty—will be substantial indeed and ought not to be disturbed, even in the face of a reasonable and good faith argument that our disposition on original submission was “incorrect.”

Nevertheless, the Court of Criminal Appeals found it appropriate under the extraordinary circumstances of this particular case to exercise its authority under Rule 79.2(d) to reconsider its original disposition of the defendant’s “mitigating evidence” claim. On that reconsideration, the court granted relief to the defendant and ordered that he be given a new punishment hearing.

PRESERVATION OF ERROR—ARTICLE 38.23 INSTRUCTION

Holmes v. State, No. 248 S.W.3d 19 (Tex. Crim. App. 2008)

The defendant was charged with possession of cocaine. Immediately before opening statements in his jury trial, the defendant asked to file a motion to suppress evidence alleging he was seized and searched without a warrant, probable cause, or exigent circumstances. The trial judge carried the motion to suppress with the trial. The testimony at trial showed the police officers were on patrol during very early morning hours when they were called “to a weapons disturbance regarding a male and a female.” As they arrived at the location, they saw a male and a female arguing in front of the residence, and the man—the defendant—was holding a garden hoe. As soon as the defendant saw the officers, he dropped the hoe. One of the officers ordered the defendant to approach him, but the defendant turned and began to walk away, saying that he needed to go inside the house for something. The officer told him to stop, but the defendant did not comply and instead started running. The defendant ran through the backyard and through several vacant lots before officers were finally able to apprehend him. A search of the defendant revealed that he was in possession of a metal crack pipe in his left rear pocket; the substance in the pipe tested positive for cocaine. Another officer testified he spoke with the woman with whom the defendant had been arguing, and she said the defendant was high on drugs, and that he had gotten angry and had threatened to kill her. She claimed he tried to strangle her with a telephone cord, and ran after her with a hoe. A chemist testified that she conducted a lab test on the pipe residue and that it was cocaine. When the State offered the crack pipe into evidence, the defendant’s attorney stated, “No objection.”

In the defense case, the defendant testified the woman had been living at his residence for about a month. The defendant claimed that the woman wanted to have an intimate relationship with him but he did not. The defendant admitted to


drinking approximately four cans of beer on that particular night, and that he was getting ready to leave when he saw the police approach. Purportedly because he had been drinking and did not want any conflict, the defendant walked away from the officers. The defendant did not think the officers saw him, and he did not know that they were behind him until he heard an officer talk into his radio. He said that he did not have a garden hoe, and he did not have a crack pipe. At the jury charge conference, the defendant’s attorney asked for a charge under Article 38.23 of the Code of Criminal Procedure. The trial court denied the defendant’s request for such a charge, and the jury found the defendant guilty.

The Court of Criminal Appeals reaffirmed that a defendant who affirmatively states, “no objection,” when evidence is offered, waives his right to complain on appeal that the evidence was illegally obtained under Article 38.23. But the court held the same defendant may still request and receive a jury instruction under Article 38.23 if the evidence raises a contested factual issue that is material to the lawfulness of obtaining the evidence. These are two distinct issues: one is a legal question of admissibility for the judge, and the other is a question of disputed fact for the jury’s consideration and resolution. There is a definite distinction between the admissibility of evidence under Article 38.23 (which is decided solely by the trial judge) and the jury’s role under Article 38.23 in considering evidence that has been admitted. Frequently, a defendant’s attorney will not know precisely what historical facts are disputed until the defense case-in-chief. It serves no one’s interests to require defense counsel to object to evidence that, at the time it is offered, appears to have been lawfully obtained. When the foundation testimony presented by the State in a jury trial is, if believed, sufficient to support a ruling that the evidence was obtained lawfully and the facts are not-at that point-disputed, then the evidence is admissible. The defendant is not required to make an invalid objection to the admission of evidence solely to preserve his right to request a jury instruction under Article 38.23 if a disputed fact issue should later develop.

PRESERVATION OF ERROR—EQUAL PROTECTION CLAIM

Flores v. State, No. 245 S.W.3d 432 (Tex. Crim. App. 2008)

The defendant and his girlfriend had been dating for over a year when the defendant’s girlfriend discovered she was pregnant with twins. Several months later, the defendant’s girlfriend told her doctor that she was considering an abortion, but the doctor informed her the pregnancy was at such a late stage that he could not perform an abortion safely and that no local physicians performed abortions. The defendant’s girlfriend then asked the defendant to help her terminate the pregnancy by stepping on her abdomen. The defendant allegedly did so on two occasions: two weeks and one week before the premature delivery. She allegedly had to ask him repeatedly before he agreed to step on her. The defendant claimed that he used a “slow, steady press” on her abdomen, and stopped pressing once she asked him to stop. The defendant’s girlfriend also testified that she took measures to induce the deaths of the fetuses. She struck herself in the abdomen more than ten times. She began engaging in this behavior two weeks before the premature delivery; by the last week of her pregnancy, she was striking herself every day. After her doctor instructed her to refrain from jogging and going on walks, she took up jogging and failed to limit her walking, in a deliberate attempt to endanger the pregnancy. When the defendant’s girlfriend was approximately twenty to twenty-two weeks pregnant, she prematurely delivered the twins at home, and they were stillborn. According to the doctor who conducted the autopsies, the cause of the deaths appeared to be some sort of “blunt force trauma.” The twins had been dead in utero for at least one day before they were delivered.

The defendant was indicted for capital murder for intentionally or knowingly causing the deaths of “unborn child # 1” and “unborn child # 2.” The defendant pled not guilty and filed a pretrial motion to dismiss the indictment on the grounds of due process, equal protection, and the Establishment Clause. The trial court denied the


motion, and the defendant was tried by a jury. The jury convicted the defendant of capital murder and sentenced him to life in prison.

The defendant claimed the statute’s exception for pregnant women terminating their own pregnancies violated equal protection in this case by exempting the defendant’s girlfriend from criminal prosecution while allowing him to be prosecuted. The defendant’s argument depended upon the unusual facts of this case. The defendant claimed that, because the defendant’s girlfriend was cooperating with his attempts to kill the fetuses, the statute treated the two of them differently, even though they were both engaging in the same behavior. In advancing this argument, the defendant ignored significant evidence that his girlfriend did not, in fact, consent to the defendant’s stepping on her abdomen. She had bruises on her abdomen, arms, and face, and her lips were swollen and bloody. The defendant admitted to hitting her in the face, but argued that the other bruises had innocent explanations—namely, that the bruises on her abdomen were caused by her striking herself, and the bruises on her arms resulted from consensual roughhousing between the two. The State also presented evidence that the defendant’s girlfriend seemed to be looking forward to carrying the twins to term.

Given that the defendant’s acts might not have been consensual, the very predicate for the defendant’s equal protection claim—that both he and his girlfriend were engaging in the same behavior—need not have been found to be true by a rational trier of fact. Only if the acts were consensual could the defendant argue that the statute treated him and his girlfriend unequally by allowing the State to prosecute the defendant, but not his girlfriend, for the same acts. In short, the defendant sought a pretrial dismissal of the prosecution based on a claim that, even if it had been correct on the underlying merits, could have been resolved only by evidence adduced at trial. That is not the purpose of a pretrial motion, such as a motion to quash the indictment; rather, its purpose is to address “those issues that can be determined before there is a trial on the general issue of the case.” The defendant’s equal

protection argument, based on his allegation that his girlfriend consented to the acts for which he was being prosecuted, did not present such an issue. The Court of Criminal Appeals held that, even if it were to agree with the defendant that the Equal Protection Clause bars a prosecution of one who acts in concert with a pregnant woman to terminate her pregnancy, the appropriate remedy would not be dismissal of the indictment, but a new trial in which the jury could be instructed on the question of the girlfriend’s consent. The defendant waived this remedy by neglecting to raise the issue at trial.

PRESERVATION OF ERROR—IN PARI MATERIA ARGUMENT

Azeez v. State, 248 S.W.3d 182 (Tex. Crim. App. 2008)

The defendant was pulled over by a police officer and issued a speeding citation. By signing the citation, the defendant promised to appear in municipal court. But he failed to appear, and was charged by complaint with “unlawfully and knowingly fail[ing] to appear . . . in accordance with the terms of his release after having been lawfully released from custody on condition that he subsequently appear in said court.” On the first day of his trial in municipal court, before jury selection commenced, the defendant orally moved to quash the complaint, arguing that, while he was charged with an offense in the express terms of section 38.10 of the Penal Code, he should instead have been charged under section 543.009 of the Transportation Code, which he contended was “the more specific” provision. The trial court denied the defendant’s motion to quash. The defendant repeated his claims in a motion for instructed verdict and a motion for new trial, and the trial judge also denied those motions. In the trial court’s charge to the jury, without objection from either party, the trial court expressly set out the offense with which the defendant had been charged in terms of section 38.10 of the Penal Code. On appeal from the municipal court conviction, the defendant again claimed that he should have been charged under the Transportation Code, instead of the Penal Code.


The county court at law held that the defendant “waived” this claim because he did not begin to voice it until jury selection had begun.

The Court of Criminal Appeals held that the two provisions in the Penal Code and in the Transportation Code should be construed in pari materia, and that the trial court erred to allow the defendant to be prosecuted and punished under the Penal Code provision, instead of the Transportation Code provision. The court also noted that Article 1.14(b) of the Code of Criminal Procedure requires that, in order to preserve error in a complaint, a defendant must object “before the date on which the trial on the merits commences[.]” Therefore, to the extent that the defendant claimed on appeal that he did not have sufficient notice from the complaint of the particular offense with which he was charged, that alleged error was not preserved. But the Court of Criminal Appeals disagreed with the county court holding that the defendant had not timely objected that the evidence showed that he was being prosecuted and punished under the wrong statute. It was only after the State’s evidence disclosed the case involved the failure to appear under the terms of a speeding citation that a basis for the defendant’s in pari materia challenge became manifest. When the defendant reiterated that challenge in his motions for directed verdict and new trial, the trial court was effectively put on notice that the defendant was being prosecuted under the wrong statutory provision. The defendant thereby presented his objection to the trial court clearly enough, and at a time when the trial court could have remedied the problem. The trial court should have taken steps to assure that the defendant was not being prosecuted, and more critically, punished, under the wrong statutory provision.

PRESERVATION OF ERROR—PREMATURE OBJECTION

Rangel v. State, No. PD-0447-06, 2008 WL 375446 (Tex. Crim. App. Feb. 13, 2008)

The defendant was convicted of aggravated sexual assault of a child, and the trial judge assessed his

punishment at fifty years’ imprisonment. On appeal, the defendant claimed that the trial judge’s decision to admit a videotaped interview of the child-victim with a Child Protective Services investigator in lieu of the victim’s testimony violated the defendant’s rights under the Confrontation Clause of the Sixth Amendment. The defendant alleged the videotaped interview was inadmissible because he did not have an opportunity to cross-examine the victim and the victim’s statements constituted “testimonial” hearsay. The court of appeals conceded the victim’s statements constituted testimonial hearsay, but the court went on to hold the defendant waived his confrontation challenge because he failed to avail himself of the procedure set out in Article 38.071, section 2(b) of the Code of Criminal Procedure, which purportedly would have provided an effective alternative means to the traditional face-to-face confrontation at trial.

The Court of Criminal Appeals held its decision to grant the parties’ petitions for discretionary review was improvident. The court explained that, in reviewing whether the court of appeals erred by holding that the videotaped statement of the victim was “testimonial,” the court was limited to considering only the evidence before the judge at the time the ruling was made. But a thorough review of the record revealed that all of the evidence—most importantly, the videotape and the evidence concerning the circumstances surrounding the interview—required to properly analyze the court’s ruling was admitted after the trial judge made his ruling on the defendant’s confrontation objection. The issue was never consensually re-litigated by the parties at a later time. The court refused to examine the propriety of a trial judge’s ruling based on evidence the trial judge had no opportunity to consider when he made his ruling.


Federal White Collar Crime Update Sarah M. Frazier, Berg & Androphy, Houston, Texas Rachel L. Grier, Berg & Androphy, Houston, Texas Dustin Sullivan, Berg & Androphy, Houston, Texas CRIMINAL FORFEITURE

United States v. Silvious, 512 F.3d 364 (7th Cir. 2008)

In United States v. Silvious, the Seventh Circuit joined other circuits in interpreting 28 U.S.C. section 2461 to authorize the criminal forfeiture of the proceeds of any offense for which there is no specific statutory basis for criminal forfeiture if civil forfeiture is permitted in connection with the crime charged. The defendant pled guilty to five counts of mail fraud in violation of 18 U.S.C. section 1341 for engaging in a scheme to defraud a flour mill by falsely promising a shipment of wheat. On appeal, the defendant challenged the district court’s grant of criminal forfeiture, raising several grounds. The defendant argued that the criminal forfeiture was invalid because it was ordered under statutes not listed in the indictment and that the statute listed in the indictment only allowed forfeiture where the mail fraud violation affected a financial institution. The government argued that 28 U.S.C. section 2461(c) authorized the forfeiture. 28 U.S.C. section 2461 provides that the government may include a notice of forfeiture in an indictment if the defendant is charged with a violation of law for which the civil or criminal forfeiture of property is authorized and if the defendant is convicted of the offense, the court must order the forfeiture as part of the sentence.

The Seventh Circuit adopted the position of a majority of circuits in holding that 28 U.S.C. section 2461 authorizes criminal forfeiture of proceeds of any offense for which there is no specific statutory basis for criminal forfeiture as long as civil forfeiture is permitted in connection that offense. The court therefore affirmed the district court’s determination that the authorization of civil forfeiture in mail fraud cases under 18 U.S.C. section 981 allowed the government to seek criminal forfeiture of the

proceeds of the defendant’s mail fraud. Further, the court rejected the defendant’s argument that the forfeiture was invalid because the substitution of the proper statute constituted a constructive amendment of the indictment, noting that the indictment was not broadened in any way by the substitution of the proper statute authorizing forfeiture. Likewise, the court held that the indictment’s listing of the incorrect forfeiture statute did not fail to provide the defendant with proper notice, as the indictment informed the defendant of the government’s intent to seek forfeiture and identified the targeted assets.

EXTORTION

United States v. Bly, 510 F.3d 453 (4th Cir. 2007)

In United States v. Bly, the Fourth Circuit held that the defendant’s motion to dismiss an indictment under 18 U.S.C. § 876(b) was properly denied because: (1) the statements made by the defendant constituted “true threats” that were not protected by the First Amendment; and (2) the University of Virginia (UVA) was a “person” subject to being extorted under section 876(b). The defendant’s indictment alleged that he “‘knowingly, and with intent to extort from the University of Virginia a sum of money or other thing of value’” mailed a written communication containing a threat to injure certain individuals. Evidence at trial was that the defendant had demanded redress for complaints related to his ejection from UVA’s doctoral program in engineering, coupling those demands with repeated references to the ease with which he could shoot his adversaries at UVA. The defendant moved to dismiss the indictment and was denied by the district court. As a result, the defendant pled guilty but reserved his right to appeal the court’s denial of his motion.


The defendant argued on appeal that his motion to dismiss should have been granted for two reasons. First, the defendant contended that the statements he made were not “true threats,” but were political hyperbole protected by the First Amendment. The court, however, determined that because the defendant’s statements: (1) were made privately to specific individuals rather than publicly; (2) were not conditioned on an identifiable event so as to remove the imminence of the threat; and (3) both implicitly and explicitly promised violent retribution if his demands were not met, they were not protected by the First Amendment, but were “true threats” that sustained the conviction. Second, the defendant contended that UVA was not a “person” subject to being extorted under section 876(b). The defendant argued that the term “person” as used within the statute applied only to living persons and did not apply to entities such as UVA. Further, the defendant argued, even if some entities did qualify under section 876(b), UVA did not, because it was an arm of the sovereign.

The majority in Bly decided against the defendant and determined that the plain meaning of the word “person,” the context of the term in the statute provision, and the definition of “person” under the 1947 Dictionary Act supported the qualification of an entity such as UVA as a “person” subject to extortion under section 876(b). Additionally, the majority dismissed as unconvincing the defendant’s argument that an arm of the sovereign could not be a “person” under section 876(b). A concurrence, in contrast, noted that the Dictionary Act presumed that the term “person” in federal statutes did not include the sovereign. Nevertheless, after accounting for both the common meaning of “person” in case law at the time section 876(b) was enacted in 1932 and Congress’ policy in enacting section 876(b) to penalize every mailed extortion demand coupled with a threat, the concurrence concluded that UVA qualified as a “person” subject to extortion under the statute.

IMMIGRATION

Ogunwomoju v. United States, 512 F.3d 69 (2nd Cir. 2008)

In Ogunwomoju v. United States, the Second Circuit held that a non-citizen who is in immigration detention or is subject to an order of removal as a consequence of a state court conviction is not “in custody” as required by 28 U.S.C. section 2254 and therefore not entitled to seek habeas relief from the conviction once the sentence imposed has expired. In 2000, a state court convicted the petitioner of criminal drug charges and sentenced him to “time served” incarceration and six month’s license suspension. In 2004, as a result of this and other prior convictions, an Immigration Judge ordered the petitioner removed to Nigeria. In 2006, while in immigration detention, the petitioner filed a habeas petition in federal district court challenging the 2000 drug conviction. The district judge dismissed the habeas petition for want of jurisdiction because the petitioner was in immigration custody, not “in custody” pursuant to judgment of a state court, as is required for seeking habeas relief from a conviction under section 2254.

On appeal (granted by the circuit court even after status to appeal had been denied by the district court), the petitioner contended that because his immigration detention resulted from an order of removal issued in consequence of a state conviction, he qualified as being “in custody” pursuant to the judgment of a state court. The circuit court, however, reviewed Supreme Court case law and determined that once a sentence imposed for a conviction has completely expired, the collateral consequences of that conviction are not themselves sufficient to render an individual “in custody” for the purposes of challenging a conviction under section 2254. Therefore, because the petitioner’s state sentence had expired nearly six years before he filed his habeas petition, the petitioner’s immigration detention was “at best” only a collateral consequence of a state conviction and the petitioner was not “in custody” for the purposes of challenging his


conviction under section 2254. The court also noted that, pursuant to the passage of the REAL ID Act in 2005, district courts no longer have jurisdiction to consider habeas petitions challenging immigration detention under section 1252(a)(5). The petitioner’s means of review of a removal order is thus a petition filed with the appropriate circuit court within 30 days of a final order of removal and the court determined that the petitioner was limited to that remedy.

SEARCH AND SEIZURE

Baranski v. United States, 515 F.3d 857 (8th Cir. 2008)

In Baranski v. United States, the Eighth Circuit held that a federal prisoner may raise Fourth Amendment claims in a federal habeas corpus proceeding under 28 U.S.C. section 2255 despite precedent barring such claims in federal habeas corpus petitions challenging state convictions.

At trial on charges of conspiracy to import guns illegally, Baranski moved to suppress evidence obtained under a search warrant resulting in the seizure by Bureau of Alcohol, Tobacco and Firearms (ATF) agents of 372 machine guns and 12 crates of accessories from a warehouse. The district court denied the motion and allowed a limited number of weapons into evidence. Following conviction, the defendant appealed on several grounds, including a Fourth Amendment challenge that the search warrant failed to list the items sought. In affirming the conviction, the Eighth Circuit noted that the search warrant incorporated a sealed affidavit that specified the objects of the search, although the affidavit was not attached to the warrant when the search occurred. The court concluded that the ATF agents had acted in good faith in executing the warrant and that the admission of the guns was harmless.

The defendant then filed a motion under 28 U.S.C. section 2255, claiming, inter alia, that the search warrant violated the Fourth Amendment and required a reversal of his conviction. The district court denied the petition, holding that

Fourth Amendment claims were not cognizable in federal prisoners’ habeas petitions once litigated on direct appeal. The district court nevertheless granted a certificate of appealability on that ruling because of the intervening decision in Groh v. Ramirez, 540 U.S. 551 (2004), on the theory that if Groh represented a new rule, then the issue was not fully and fairly litigated on direct appeal.

As a matter of first impression, the circuit court addressed whether a federal prisoner could raise Fourth Amendment issues in a section 2255 habeas proceeding following litigation on direct appeal in light of Stone v. Powell, 428 U.S. 465 (1976). Stone held that “where the State has provided an opportunity for full and fair litigation of a Fourth Amendment claims, the Constitution does not require that a state prisoner be granted federal habeas corpus relief [under section 2254] on the ground that evidence obtained in an unconstitutional search or seizure was introduced at his trial.” Stone did not address whether federal prisoners may raise Fourth Amendment claims under section 2255, however. The court referenced the Supreme Court’s holding in Kaufman v. United States, 394 U.S. 217 (1969) that a claim of unconstitutional search and seizure is a recognized claim in a section 2255 proceeding. The court then stressed that a federal appellate court has duty to supervise district courts—with accompanying powers that are broader than its authority to review state court decisions under section 2254. Based on this principle, the court held that Stone did not bar its consideration of the defendant’s Fourth Amendment claims in his section 2255 petition.

The court then addressed the defendant’s argument that the Supreme Court’s decision in Groh created a new bright-line rule requiring any supporting documentation about the seizure of items be attached to a warrant at the time of execution to meet the particularity requirement of the Fourth Amendment. The court held that Groh did not entitle the defendant to relief because it did not announce a new principle of law. Indeed, the court found that precedent supported the finding that where an incorporated document provides the necessary particularity for a search


warrant, even if not attached at execution, the search is not unconstitutional.

*

* See Hon. Don R. Willett, An Inconvenient Truth: Conservatives Behaving Charitably, 12 TEX. REV. L. & POL. 181, 198

n.116 (Spring 2008) (reviewing ARTHUR C. BROOKS, WHO REALLY CARES: THE SURPRISING TRUTH ABOUT COMPASSIONATE CONSERVATISM (Basic Books 2006) and citing StickerGiant.com, http://www.stickergiant.com/retired_zbs792.html (last visited May 23, 2008)).


Appellate Section Wins Pro Bono Award The State Bar of Texas has selected the Appellate Section as the winner of its $1,000 Pro Bono Award for a mid-sized section. The award was given to the Appellate Section based on its development of two new pilot programs, in partnership with the Supreme Court of Texas and the Third Court of Appeals in Austin, to help low-income Texans with appellate cases. Thus far, over sixty Texas appellate lawyers have volunteered to serve as lead lawyers or as mentors, and the Appellate Section has placed four cases in the Supreme Court’s pilot program and three cases in the Austin Court of Appeals’ pilot program.

The Supreme Court refers cases to the program when it requests full briefing on the merits and there is at least one party who is proceeding pro se because of his or her financial circumstances. Parties represented by counsel at the petition stage may also request the Appellate Section’s pro bono committee to be included in the program if the Court requests merits briefing as well.

In the Third Court of Appeals’s pilot program, a special subcommittee of the Section’s pro bono committee also screens, selects, and finds volunteer lawyers to represent pro bono clients. Through this program, the Section’s volunteer lawyers obtain greater experience in, and exposure to, the Austin Court of Appeals, which has indicated that it will give priority to program cases for oral argument.

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