Source: http://www.hbaappellatelawyer.org/2013/09/case-updates-for-july-and-august-2013.html
Timestamp: 2019-04-20 00:19:24+00:00

Document:
Proving proper service by judicial notice in a default judgment case: potential pitfalls.
Issue Presented: Can proper service in a default judgment situation be proven by asking a court to take judicial notice of facts surrounding service?
Relevant Facts: The State of Texas filed a petition against Victor A. Charles seeking to establish paternity and to establish his child support obligations for J.M.H. Charles was incarcerated in a Texas Department of Criminal Justice facility at the time. A private process server delivered citation and a copy of the petition to a correctional officer at the facility. Charles did not appear at the hearing, and the trial court issued an order adjudicating Charles the father of the child and setting his child support obligations. Charles filed a motion for new trial, which was denied. Charles appealed, alleging that the court lacked jurisdiction over him because he was not properly served.
Legal Summary: Before a trial court may enter a default judgment, the record must affirmatively indicate that a defendant was properly served. A provision of the Texas Civil Practice and Remedies Code provides that the warden at a TDCJ facility may designate an employee to accept service of process on behalf of an inmate. However, in the case before it, the record contained no evidence that the TDCJ employee that accepted service on Charles’ behalf was designated by the warden of the facility to serve as an agent for service of process on inmates confined in the facility.
To fill the gap, the State asked the First Court to take judicial notice of two facts: 1) that the employee that received service works in the law library at the facility, and 2) that all law library employees have been designated by the warden to receive service of process on behalf of inmates. The First Court noted that it can only take judicial notice of a fact that is “not subject to reasonable dispute in that it is either (1) generally known within the territorial jurisdiction of the trial court or (2) capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned.” Tex. R. Evid. 201. The court held that neither of the facts the State requested the court to judicially notice met that criteria; therefore, the court declined to take judicial notice of those facts. Accordingly, the State did not meet its burden to show proper service, and the default judgment against Charles was reversed.
Standing to file suit as assignee of a cause of action: when does the cause of action arise?
Issue Presented: When does a cause of action arise such that it may be assigned by one individual to another?
Relevant Facts: Before filing suit for breach of an earnest money contract, the executor of an estate executed an assignment of all causes of action under the contract to two trusts. The trusts then filed suit against the Magills. At trial, the trustees prevailed and were awarded a judgment against the Magills. The Magills appealed, asserting that the trusts lacked standing to file the suit.
Legal Summary: A plaintiff may acquire standing by the assignment of a cause of action. On appeal, the Magills alleged that, because the assignments took place before suit was filed, the assignments were void when executed. To be effective, the Magills argued, a suit must have been filed by the estate at the time of the assignment.
To prove standing under an assignment, a party claiming to be the assignee of the assignment must prove “(1) a cause of action existed that was capable of assignment and (2) the cause was in fact assigned to the party seeking recovery.” In examining whether a cause of action existed at the time of the assignment, the court first addressed the Magills’ argument that Section 12.014 of the Texas Property Code permits a cause of action to be sold only after it is filed with a court. The First Court held that the only purpose of that section was to require notice to parties already involved in a lawsuit of the sale of a cause of action by one of the parties to the suit. The provision was never intended to limit the sale of causes of action to existing claims in lawsuits. Thus, the court held, Section 12.014 of the Texas Property Code did not apply.
The court went on to note that, “[a]t common law, a ‘cause of action’ ordinarily consists of two distinct and separate elements, the primary right and duty of the parties respectively and the wrongful act or omission violating it.” Further, “‘a cause of action’ has also been said to consist of those facts entitling one to institute and maintain an action at law or in equity.” Accordingly, the court noted, a cause of action may exist before a suit is filed. Therefore, the court held that the fact that the estate had not filed suit before it assigned its cause of action to the trusts was not a ground to conclude that the trustees lacked standing.
Is an applicable statute of limitations tolled for each day a defendant is not present in the State of Texas?
Issues Presented: Does a resident defendant’s absence from the State of Texas for any period of time during which an applicable statute of limitations is running toll the running of the statute?
Relevant Facts: Medina sued Tate for injuries occurring on Tate’s premises. Medina filed his suit two years and one day following the date of the injury—i.e., the date after the relevant limitations period expired. Tate moved for summary judgment on limitations grounds. The trial court granted the motion.
The absence from this state of a person against whom a cause of action may be maintained suspends the running of the applicable statute of limitations for the period of the person’s absence.
The court began by noting that numerous courts from around the State of Texas have held for years that an applicable statute of limitations is tolled each time a defendant is absent from the State, and is tolled for the whole time that the defendant is outside the State. In fact, the court noted its own precedent so holding. Winston v. Am. Med. Int’l, Inc., 930 S.W.2d 945, 955 (Tex. App.—Houston [1st Dist.] 1996, writ denied).
Tate did not address the court’s prior precedent, but rather urged the court to adopt the reasoning of a 2010 case from the Fourteenth Court of Appeals, Zavadil v. Safeco Insurance Co. of Illinois, 309 S.W.3d 593, 596 (Tex. App.—Houston [14th Dist.] 2010, pet. denied). In Zavadil, the Fourteenth Court relied on two Texas Supreme Court decisions concerning the tolling of the statute of limitations for non-resident defendants, Kerlin v. Sauceda, 263 S.W.3d 920 (Tex. 2008) and Ashley v. Hawkins, 293 S.W.3d 175 (Tex. 2009), to hold that a resident defendant’s time outside the State of Texas does not toll any applicable statutes of limitations. The Zavadil court based its ruling on the notion that, even when resident defendants are physically absent from the State, they are still subject to personal jurisdiction in Texas and are always amenable to suit in the State.
Although it noted its desire to achieve uniformity with its sister court, the First Court held that it could not follow Zavadil. The First Court noted that the Fourteenth Court’s interpretation of Section 16.063 “essentially appends to the statute the additional provision, ‘unless the person is subject to personal jurisdiction in Texas and amenable to service.’” This addition, the First Court held, would essentially render Section 16.063 meaningless. Accordingly, the Court held that the statute of limitations was tolled for the time Tate was out of the State of Texas, and that Medina’s action was not barred by limitations.
Calculation of prejudgment interest: when does the meter begin to run?
Issue Presented: When a litigant files a lawsuit and subsequently added additional causes of action, and at trial recovers only on the subsequently added causes of action, what is the proper date on which to begin the calculation of prejudgment interest?
Relevant Facts: Carswell sued Christus on June 7, 2005 for medical malpractice allegedly committed against her late husband. After conducting discovery, on January 5, 2007, Carswell amended her petition to add post-mortem claims against Christus for improper handling of her husband’s heart, body, and other organs. At trial, the jury awarded Carswell damages for her post-mortem claims only. In the final judgment, the trial court awarded prejudgment interest accruing from June 7, 2005, the date the suit was initially filed.
Legal Summary: On appeal, Christus challenged the date on which the trial court began the calculation of prejudgment interest, arguing that the proper date on which to begin the calculation was January 5, 2007, the date on which the post-mortem claims were added. The court began by noting the purposes behind prejudgment interest, namely to compensate plaintiffs for lost use of the money due between the time of filing and judgment, as well as to encourage settlements. Prejudgment interest is not awarded to punish the defendant.
Next, the court noted two 2012 cases from the Fourteenth Court of Appeals holding that where a plaintiff amends its pleadings to add claims on which it is eventually entitled to prejudgment interest, the calculation of prejudgment interest begins from the date the amended pleading was filed. Those decisions noted that the two main purposes underlying prejudgment interest awards are not served by permitting the interest to be calculated from the date of the initial filing of the suit. A plaintiff is not deprived of money if he is not awarded interest prior to the date the claim on which an award of prejudgment interest is based. Further, and perhaps more importantly, the goal of efficient settlement cannot be served by awarding prejudgment interest before a claim is filed, namely because a defendant is not aware of the claim and cannot attempt to settle it. The court agreed with the holdings of the Fourteenth Court of Appeals and held that an award of prejudgment interest is calculated from the date on which the claim supporting the award of prejudgment interest is filed.
Issue Presented: The issue presented in this appeal was whether a series of letters filed of record as an alleged Rule 11 agreement together constitute an enforceable contract.
Relevant Facts: Zachary Coleman and John Coleman (collectively, the "Colemans") filed suit to recover damage allegedly sustained in a motor vehicle accident with Christopher DeWayne Reich ("Reich"). On July 14, 2011, the Colemans' attorney sent a letter to Reich, offering to settle their claims for $8,000 and $4,500, respectively. The offer required a response by July 21, 2011.
On July 20, 2011, Reich responded, offering to pay $8,000 to settle Zachary's claim and $4,500 to settle John's claim, but adding that no settlement checks would be issued until the Colemans executed settlement documents and confirmed that no outstanding liens existed. Reich's letter included a signature line for the Colemans' attorney to indicate acceptance, which was never signed.
Thereafter, John executed a formal settlement agreement, but Zachary refused to agree to settle his claim, whereupon Reich moved for summary judgment on a counterclaim for breach of contract, alleging that the parties correspondence constituted an enforceable Rule 11 agreement. Zachary responded that Reich's July 20 letter was not an acceptance, but only a counter-offer, which Zachary was free to reject. The trial court agreed with Reich, entering summary judgment in his favor. After denial of a motion for new trial, Zachary appealed.
Outcome/Holding: The Court held that, because the July 20 letter included additional terms not found in the July 14 letter, referred to the fact that Reich was making an offer to settle, and further contained the unexecuted signature line, the July 20 letter was ambiguous as to whether Reich intended to accept Zachary's offer or to propose a counter-offer. Consequently, the Court concluded that the trial court had erred in granting summary judgment for Reich, and reversed and remanded.
Issue Presented: The issue presented by this appeal was whether a general warning to "don't slip" was sufficient to discharge the duty of the owner or occupier of land to an invitee.
Relevant Facts: Appellant Christopher Norman is a mail carrier whose walking route included Christopher and Lisa Henkel's neighborhood. On January 9, 2010, an abnormally cold day in Houston during which there was a hard-freeze warning in effect until the following day, Norman delivered mail to the Henkels, handing the mail directly to Lisa, who was standing at the front door. Lisa contended that she cautioned Norman to be careful and specifically mentioned the icy conditions. Norman contended that Lisa never said anything to him about ice on the Henkels' premises and saw no ice as he approached to deliver the mail, but acknowledged that she said, "[d]on't slip," after he gave her the mail. As he walked away, Norman slipped and fell on a patch of ice on the Henkels' walkway. Norman sued the Henkels for premises liability, negligence and gross negligence, seeking damages for injuries sustained in the fall.
The Henkels moved for summary judgment, on the ground that "all evidence presented by either side shows that Defendant Lisa Henkel explicitly warned Plaintiff regarding potentially icy conditions just seconds before he fell." The trial court granted summary judgment, and Norman appealed.
Outcome/Holding: The Court reversed and remanded, concluding that the phrase "don't slip" was too general an instruction to constitute an adequate warning of the slippery condition, noting the public policy concerns that might be raised by an alternate holding. Justice Jeffrey V. Brown dissented, concluding that, under the circumstances of the event (the generally icy conditions, the hard-freeze warning, etc.), a reasonably prudent person in Norman's position would have understood the warning to relate to ice as the cause of slippery conditions, and Lisa Henkel's warning was therefore adequate.
Issue Presented: The issue presented by this consolidated interlocutory appeal was whether the City of Houston, as the owner and operator of Bush Intercontinental Airport ("the Airport"), waived immunity under the Texas Tort Claims Act (TTCA) in connection with an accident involving the automated people mover (APM) system at the Airport in which several of the Appellees were injured.
Relevant Facts: The APM is a remotely controlled, above-ground train that transports passengers along elevated guideways from terminal to terminal. Because Houston and its employees do not possess the knowledge to operate and maintain the APM, Houston has always retained a third-party to perform these functions. For all times relevant, that third-party operator was Johnson Controls, Inc., one of the appellees.
At the time of the incident, Houston had decided to expand the APM system at the Airport to include an additional guideway connecting terminals 2 and 3, said expansion being referred to as the "Phase 3 Project." Houston contracted with Continental Airlines, Inc. to manage the Phase 3 Project. Two of the companies involved in the Project were Post, Buckley, Schuh & Jernigan, Inc. (PBS&J) and Webber, L.L.C. (Webber). Once the new guideway was substantially complete, it was turned over to Johnson Controls for inclusion under its existing contract to operate and maintain the APM system.
On October 26, 2010, James Farr, a Johnson Controls employee, escorted appellee Juan Cordero and two other Webber employees into an area of the new guideway where trains were not allowed due to the ongoing work. They were later joined by appellee Travis Turner, an employee of PBS&J. Subsequently, Farr left the worksite. At some point thereafter, Turner and Cordero walked onto a part of the guideway where the trains were running and were struck, Turner dying as a result of his injuries and Cordero suffering incapacitating injuries. Appellees filed suit.
At the trial court, Houston filed a plea to the jurisdiction, asserting that the TTCA did not waive Houston's sovereign immunity because no Houston employee was alleged to have used or operated the train in a negligent manner. The evidence presented showed that, although Houston owned the APM system, neither it nor its employees had the knowledge or expertise to operate it on a day-to-day basis. The evidence further showed that, under its contract, Houston (a) could give Johnson Controls permission to operate the system with a reduced number of trains and could shut down the system entirely by cutting the electrical feed for the Airport, but that Houston had no ability to directly affect the daily operation of trains on the APM guideway, for which Johnson Controls personnel were required; and (b) had input into the formulation of policies and procedures related to the APM guideway, but that Houston never provided Johnson Controls with a set of safety rules and regulations for the APM system, as Johnson Controls was given the authority to enact site policies and procedures without obtaining Houston's approval. It was also undisputed that the guideway was elevated, and could only be accessed by an elevator that was under the exclusive control of a Johnson Controls employee. Nevertheless, the trial court denied Houston's plea, and this appeal followed.
Outcome/Holding: The Court held that the TTCA did not waive Houston's immunity because the evidence showed that neither Houston nor its employees had the ability or contractual authority to directly control the operation or use of the APM trains. Though the Court noted that the evidence indicated that Houston had the contractual authority to instruct Johnson Controls to hold trains in the station and had participated in the formulation of the policy governing access to the APM guideway, this was insufficient to establish the level of control necessary to make Johnson Controls an employee, and thus subject Houston to waiver of immunity under the TTCA. As it concluded that remand would be futile, the Court reversed and rendered, dismissing appellees' claims against Houston.
Issue Presented: The issue presented in this appeal was whether the trial court erred in granting summary judgment in favor of the College of the Mainland (the "College") as to Navy's claims for disparate-treatment racial discrimination and retaliation under the Texas Commission on Human Rights Act (the "Act").
Relevant Facts: Navy, an African-American professor at the College who was terminated, sued the College, alleging that his firing was due to racism on the part of his superiors, and constituted disparate treatment and retaliation in violation of the Act. The College moved for summary judgment.
The summary judgment evidence showed that Navy was terminated because he failed to positively respond to disciplinary intervention, specifically by making unsupported allegations against colleagues, delaying answering students' correspondence, and exhibiting insubordinate behavior. In addition, the evidence showed that the quality of Navy's online courses was significantly substandard, he incorrectly calculated students' grades over a multiyear period, he inappropriately assigned an excessive number of incomplete grades, and his performance had been the subject of an excessive number of student complaints. Further, the evidence showed that a high-school principal whose students took classes at the College specifically requested that her students be assigned to any instructor other than Navy. The evidence also demonstrated that Navy had engaged in several activities protected under the Act, including filing numerous grievances and complaints against colleagues and against the College itself. Prior to his discharge, Navy was given a negative peer review evaluation in 2007, in which his colleagues gave him low scores. He was also denied tenure on multiple occasions, his tenure file being disorganized and containing multiple instances of plagiarism, as well as numerous spelling and grammatical errors. The evidence further showed that Navy had been unreceptive to feedback by the ad hoc review committee, which questioned Navy's professional judgment and ethics because, among other things, Navy included an e-mail in his tenure file which was, in fact, two separate e-mails that Navy had combined so as to change their meaning.
The trial court granted the College's motion, and Navy appealed.
Outcome/Holding: The Court addressed Navy's disparate-treatment and retaliation theories separately. As to both theories, the Court noted that it was undisputed that Navy was a member of a protected class and had engaged in protected activities (e.g., filing grievances, filing claims with the Texas Workforce Commission, etc.). As to Navy's disparate-treatment theory, the Court noted that the Act does not address every decision made by employers that arguably might have some tangential effect upon employment decisions (e.g., disciplinary filings, supervisor's reprimands, and even poor performance evaluations), but rather addresses only "ultimate employment decisions", such as those that involve hiring, granting leave, discharging, promoting, and compensation. Accordingly, the only, ultimate employment decision presented by Navy was his termination. The Court held that the College had presented ample evidence of non-discriminatory bases for Navy's termination, and that, for his part, Navy had failed to present evidence of any professor at the College with a similar history of misconduct and performance issues that had received different treatment. As to his retaliation claim, although the Court noted that retaliation claims are broader in scope than disparate treatment claims, encompassing decisions beyond merely "ultimate employment decisions," they also require that the claimant demonstrate that the adverse employment decision would not have occurred "but for" his engaging in the protected activity and that the adverse decision would deter a reasonable person from engaging in the protected activity. In this case, the adverse employment decisions cited by Navy included negative peer review evaluations and denials of tenure, for which the Court held that the record contained ample evidence of alternative bases for the adverse decisions (Navy's misconduct, history of complaints about his performance from within and outside the College, the poor state of his tenure file, etc.). Moreover, the Court concluded that the adverse decisions made by the College were not such as would deter a reasonable person from filing grievances, etc., and, in fact, the evidence showed that they had not deterred Navy himself. Accordingly, the Court concluded that Navy had failed to raise a genuine issue of material fact as to either of his claims, and it therefore overruled Navy's issues and affirmed the summary judgment of the trial court.
Justice Christopher filed a concurring opinion, as she determined that Navy's Pleadings raised an additional claim beyond disparate-treatment and retaliation: that the College committed discrimination in Navy's discharge. However, because Navy failed to present any evidence that he was replaced by anyone outside of his protected class, Justice Christopher found that he had likewise failed to raise a fact issue as to discrimination.
Issue Presented: The issues presented in this appeal included, but were not limited to, (1) whether the statute of frauds barred the appellees' breach of contract claim because a promise to make a contribution to a limited liability company is unenforceable unless it is in writing, see TEX. BUS. ORG. CODE § 101.151; (2) whether evidence that the money in one party's account all came from a second party, and that all of the second party's money came from a third party, is legally sufficient to support a conversion claim by the third party against persons who took the money out of the account of the first party; and (3) the effect of the omission of a question or instruction on justifiable reliance as to the sufficiency of the evidence for a claim of fraud.
Relevant Facts: Appellee Grover and a partner wrote a screenplay for a movie called 97 Minutes, featuring a plot involving a terrorist attack, and assigned the rights to the screenplay to Grover's company, appellee PAV Entertainment, L.L.C. ("PAV"). In November 2006, Grover formed appellee 87 Minutes Productions, L.L.C. ("87 Minutes") for the purpose of producing the film, naming PAV as the registered agent for 87 Minutes and causing PAV to assign the rights to the screenplay to 87 Minutes. He also hired Maureen Doherty as 87 Minutes' attorney. At all times relevant, Doherty also represented appellant Sutapa Ghosh ("Ghosh") and his company, Cinemawalla, Inc. ("Cinemawalla").
Over the course of the next year, Grover, PAV and 87 Minutes (collectively, "Appellees") secured a written commitment from William Hurt, an Academy-Award winning actor, to star in the film, as well as written commitments from a director, casting director and a director of photography. By the end of 2007, however, Appellees had failed to secure financial backing for the film. At around that time, Doherty suggested that Grover contact Ghosh, who was attempting to produce a film called Ex-Pats that similarly featured a terrorist attack as a key plot point. Doherty explained that Ghosh had secured financing for his project in the form of $4 million in escrowed funds, but had not been able to obtain commitments from actors, directors or other necessary personnel. Grover met with Ghosh, who verified Doherty's statements. The two then agreed to combine the resources of their respective companies and form Cinemawalla 97 Minutes, L.L.C. ("the LLC") for the purpose of producing 97 Minutes, and filed a certificate of formation naming 87 Minutes and Cinemawalla as the LLC's members. the certificate was silent as to any capital contributions to be made in exchange for those membership interests. After opening a bank account in the LLC's name, Grover and Ghosh orally agreed that, in exchange for their respective membership interests, (a) 87 Minutes would contribute the rights to the screenplay for 97 Minutes, as well as the written commitments obtained by Appellees, plus an additional $1 million -- $600,000 cash and a $400,000 credit; and (b) Ghosh would attempt to modify Cinemawalla's existing financing contract and have the $4 million escrowed funds released for the production of 97 Minutes instead of Ex-Pats.
Grover gave Ghosh the business plan for 97 Minutes to submit to her financier. Over the next several months, Ghosh repeatedly assured Grover that the financier had agreed to the reallocation of the escrowed funds to the 97 Minutes project, and would release the first portion thereof at the end of April, but would need proof of 87 Minutes' capital contribution before it would authorize the release. Accordingly, Grover wired an additional $633,979 from 87 Minutes' account to the LLC's account. With Grover's approval, Ghosh then wrote herself a check from the LLC's account for preproduction expenses that she had incurred, but for which she could not otherwise reimburse herself until the first portion of the escrowed funds was released. Over the course of that month, the parties used funds from the LLC's account to buy an airplane that was to be the primary set of the film, pay for a trip to Argentina to scout locations, and to pay various personnel, including $375,000 to pay Hurt half of the fee he required to secure his commitment to the film. The parties' relationship subsequently deteriorated, and, on April 28, Ghosh told Grover that the financier had backed out.
In July 2008, Appellees sued Ghosh and Cinemawalla (collectively, "Appellants"), alleging, among other things, breach of contract, conversion, and common-law fraud. Following a trial on the merits, a jury returned a verdict in the Appellees' favor on each cause of action.
On appeal, Appellants argued, in part: (1) the statute of frauds barred the breach of contract claim; (2) the evidence was legally insufficient to support the jury's finding on the conversion claim; and (3) the trial court erred in entering judgment in Appellees' favor on the fraud claim because the evidence conclusively established that Grover's reliance on Ghosh's alleged misrepresentations was unjustifiable.
Outcome/Holding: The Court reversed in part and remanded. The Court concluded that the statute of frauds barred enforcement of Ghosh's oral promise to secure the $4 million escrowed funds for the project. Addressing Grover's argument that Ghosh had waived the statute of frauds as an affirmative defense by failing to request a jury instruction on it, the Court concluded that the issue had been conclusively established by the evidence, and the defense was therefore not waived, consistent with the Court's prior holding in XCO Prod. Co. v. Jamison, 194 S.W.3d 622, 632 (Tex. App.—Houston [14th Dist.] 2006, pet. denied). The Court further concluded that the evidence was legally insufficient to support Grover's conversion claim, as the evidence showed that he no longer had the immediate right of possession, having lost upon deposit of the funds into 87 Minutes account, which, in turn, lost any claim for possession of the funds upon their deposit into the LLC's account. Disposing of Grover's argument that he retained a right to immediate possession because he was entitled to rescind the fraudulently induced oral contract, the Court noted that there was no legally enforceable contract to rescind. Turning to Ghosh's legal sufficiency point of error, the Court noted that Ghosh had not requested a jury instruction on the issue of justifiable reliance. Therefore, consistent with the Court's prior holdings in Yeng v. Zou, No. 14-11-00819-CV, 2013 WL 3864320 (Tex. App.—Houston [14th Dist.] Jul. 25, 2013, no pet. h.), and Energy Maint. Servs. Grp. I, LLC v. Sandt, 401 S.W.3d 204 (Tex. App.—Houston [14th Dist.] 2012, pet. denied), because the jury charge did not require Appellees to prove justifiable reliance, and legal insufficiency of the evidence on that issue would not prevent the trial court from rendering judgment on the fraud claim. Accordingly, the Court overruled Ghosh's legal sufficiency point of error as to the fraud claim.

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