Court Opinion

ID: 2910302
Source: CourtListenerOpinion
Date Created: 2015-09-10 04:42:52.557522+00
Date Added: 2024-06-11T14:54:52.180196
License: Public Domain

IN THE
TENTH COURT OF APPEALS

 

No. 10-06-00307-CR
 
Michelle Harr Rice,
                                                                      Appellant
 v.
 
The State of Texas,
                                                                      Appellee
 
 

From the 272nd District Court
Brazos County, Texas
Trial Court No. 05-03413-CRF-272
 

MEMORANDUM  Opinion

 
            Michelle Rice appeals the denial of her motion
to disqualify the Brazos County District Attorney.
          The Clerk of this Court warned Rice
that because it appeared to the Court that the order from which the appeal was
taken was interlocutory, the Court may dismiss the appeal unless a response was
filed showing grounds for continuing the appeal.  See Tex. R. App. P. 44.3.  Rice has not
responded to the Clerk's warning.
          This appeal is dismissed.
                                                                   TOM
GRAY
                                                                   Chief
Justice
 
Before
Chief Justice Gray,
          Justice
Vance, and
          Justice
Reyna
Appeal
dismissed 
Opinion
delivered and filed November 8, 2006
Do
not publish
[CR25]

 state deliver the highest possible quality of care.” 
Tex. Health & Safety Code Ann.
§ 242.001(a) (Vernon 2001).  The Legislature directs us to construe chapter 242
broadly to accomplish the regulation of the operation of nursing homes in a
manner that protects nursing home residents.  Id. § 242.001(d-f).
            This regulatory scheme includes, among
other things, a statutory requirement for the oral and written reporting of
abuse and neglect to the Texas Department of Human Services or a law
enforcement agency.  See id. § 242.122–.135 (Vernon 2001 & Supp.
2006).  A nursing home owner’s or employee’s failure to report under section
242.122 is a Class A misdemeanor.  Id. § 242.131.  In addition, section
242.133 prohibits retaliation for reporting a violation of law and provides nursing
home employees who are retaliated against for reporting a violation of law with
a retaliation cause of action:
(b) An employee has a cause of action against an
institution, or the owner or another employee of the institution, that suspends
or terminates the employment of the person or otherwise disciplines or
discriminates or retaliates against the employee for reporting to the
employee's supervisor, an administrator of the institution, a state
regulatory agency, or a law enforcement agency a violation of law, including
a violation of this chapter or a rule adopted under this chapter, or for
initiating or cooperating in any investigation or proceeding of a governmental
entity relating to care, services, or conditions at the institution.
 
Id. § 242.133(b) (emphasis added).  
 
            An affected employee may recover:  (1)
the greater of $1,000 or actual damages, including mental anguish damages and lost
wages; (2) exemplary damages; (3) court costs; and (4) attorney’s fees.  Id. § 242.133(c).  The employee has the burden of proof, except there is a rebuttable
presumption that the person’s employment was suspended or terminated for
reporting abuse or neglect if the person is suspended or terminated within sixty
days after the date on which the person reported in good faith.  Id. § 242.133(f).  
Background
            In May 2000, Cathy, a nurse for almost
thirty years, became employed by Town Hall Estates-Whitney, Inc. (Town Hall), a
nursing home owned by American Religious Town Hall Meeting, Inc. (ARTH). 
Darren Long was Town Hall’s administrator, and his wife Crystal was the
assistant administrator.  Both served on the boards of Town Hall and ARTH.
            Cathy worked the night shift (11 p.m.
to 7 a.m.) on Friday, June 29, 2001.  On the morning of Saturday, June 30,
A.R., an elderly female resident of Town Hall, complained to Cathy that overnight
Pete Coviello, a certified nursing assistant (CNA), had exposed his penis to
A.R. and made her touch it.  Without giving him a reason, Cathy told Pete to
stay out of A.R.’s room the rest of the shift and asked the charge nurse, Beth
Lewis, whether and how to write up the incident in A.R.’s chart.  Lewis said
she did not know, and nothing was written in A.R.’s chart.  Cathy then called
Fran Jackson, a floor nurse and Cathy’s supervisor, at home, and reported
A.R.’s allegation.  According to Cathy, Jackson indicated that she wasn’t happy
to hear about the allegation.  Because of A.R.’s history of false complaints
and belligerence, both Cathy and Jackson were unsure about the truth of A.R.’s
allegation;[1] Jackson testified that Cathy told her she felt she had a duty to report it to Jackson.
            Jackson went to work that morning,
spoke with Cathy again about the allegation, and then interviewed A.R., who
repeated a similar allegation.  Jackson wrote a summary of her interview with
A.R. and then called Crystal Long, the assistant administrator, at home, and informed
her of the situation.  Jackson also relayed Cathy’s report and Cathy’s
disbelief in the allegation.  Two days later, the Longs terminated Cathy’s
employment, stating that she was being terminated for insubordination and
progressive discipline.[2]  This
lawsuit for retaliatory discharge under section 242.133 against the Longs, Town
Hall, and ARTH followed.  See id. § 242.133(b).
A jury unanimously found that Cathy was terminated
for reporting sexual abuse of a resident to her supervisor and awarded her
$3,100 for lost wages, $20,000 in compensatory damages, and $34,200 for
attorney’s fees.  Based on a finding that the Longs, Town Hall, and ARTH acted
with malice in terminating Cathy’s employment, the jury unanimously assessed
exemplary damages against the Longs for $20,000 each, against Town Hall for
$2,000, and against ARTH for $350,000.  In accordance with the cap in Texas
Civil Practice and Remedies Code section 41.008(b), the trial court reduced the
exemplary damages award against ARTH to $200,000 and otherwise entered a
judgment based on the jury’s findings.
Was there a Report?
The first of Appellants’ six issues asserts that
section 242.133 does not apply because, as a matter of law, Cathy did not
report an incident of abuse as contemplated by that statute.  Appellants first
argue that Cathy did not make a “report” because she did not believe A.R.’s
allegation of sexual abuse.[3]  Therefore,
Appellants reason, if Cathy did not believe a violation of law had occurred,
she could not have made a report of a violation of law under section 242.133.  This
superficially clever contention does not withstand scrutiny in the context of
chapter 242 and the facts of this case.
It is not disputed that Cathy reported A.R.’s
sexual abuse allegation to Jackson, her supervisor, orally, and to the Longs,
in writing.[4]  Instead,
Appellants’ first issue centers on the substance of Cathy’s report. 
Essentially, Appellants’ argument is that, because Cathy did not manifest a
subjective belief in A.R.’s sexual abuse allegation, Cathy was not reporting a
violation of law and section 242.133 simply does not apply.  We reject
Appellants’ argument for several reasons.
First and foremost, it is not supported by the
language of section 242.133, which we construe broadly to accomplish its
purposes.  Id. § 242.001(f); cf. Rogers v. City of Fort Worth, 89
S.W.3d 265, 274 (Tex. App.—Fort Worth 2002, no pet.) (stating that
Whistleblower Act is remedial in nature and must be liberally construed).   We
should determine and give effect to the Legislature’s intent, starting with the
plain and common meaning of the words used.  McIntyre v. Ramirez, 109
S.W.3d 741, 745 (Tex. 2003).  If the statutory language is unambiguous, we will
interpret the statute according to its plain meaning.  Id.  We presume
that the Legislature did not intend an unjust result.  Tex. Gov’t Code Ann. § 311.021(3) (Vernon 2005); see also
Univ. of Tex. Southwestern Med. Ctr. at Dallas v. Loutzenhiser, 140 S.W.3d
351, 367 n.20 (Tex. 2004) (appellate court should not construe statute in
manner that will lead to foolish or absurd result when another alternative is
available).
In
providing a cause of action for an employee who is retaliated against “for
reporting . . . a violation of law” in section 242.133, the Legislature did not
require that the employee subjectively believe there had been a violation of
law.  And we cannot think of a reason why—especially in a situation like this
case where an elderly, disoriented nursing home resident with a history of
false complaints has made a sexual abuse allegation to a nurse employee—the
employee’s subjective belief in the allegation should matter when the employee
reports the allegation in accordance with her statutory duty to report.  In the
nursing home setting, we imagine that the abuse, neglect, or violation of law against
a resident will not occur in plain view and that, as in this case, the original
allegation will be made by the resident to another employee.  Requiring that
the employee know or subjectively believe the allegation to be true appears to
us not only to add to the statute, but to add a requirement that contradicts
the reality of nursing home abuse and neglect.[5]  And
it would appear unjust or absurd for the Legislature (1) to impose a legal duty
on a nursing home employee to report abuse or neglect; (2) to provide a cause
of action for retaliation for reporting a violation of law (including abuse or
neglect), but only if the employee subjectively believed there had been a
violation of law; and (3) to omit from the statute such a subjective belief
requirement.  We cannot conceive that the Legislature would so frustrate a
cause of action while creating it.
Appellants also argue that Cathy did not make a
report contemplated by section 242.133 because Cathy did not comply with
chapter 242’s reporting requirements.  See Tex. Health & Safety Code Ann. § 242.122-.125.  Turning
again to the relevant statutory language, an employee must orally report abuse
or neglect immediately upon learning of it and in writing no later than five
days after the oral report.  Id. § 242.122.  The report must contain the
name and address of the resident, the name and address of the person
responsible for the care of the resident, and the address or phone number of
the person making the report.  Id. § 242.123.  The report shall be made
to the Department of Human Services or to a local or state law enforcement
agency.  Id. § 242.125.
Section 242.133, which creates the retaliation
cause of action, makes no reference to the reporting requirements in sections
242.122-.125, unlike section 242.122(a), which requires the employee to “report
the abuse in accordance with this subchapter.”  (Emphasis added).  In
creating the retaliation cause of action, the Legislature could have easily
required the employee to have reported in “in accordance with this subchapter,”
but it didn’t.[6] 
“[I]t would be a usurpation of our powers to add language to a law where the
legislature has refrained. . . .  Courts should carefully search out a statute’s
intent, giving full effect to all of its terms.  ‘But they must find its intent
in its language and not elsewhere.  They are not the law-making body.  They are
not responsible for omissions in legislation.’”  Seay v. Hall, 677
S.W.2d 19, 25 (Tex. 1984) (quoting Simmons v. Arnim, 110 Tex. 309, 220 S.W. 66, 70 (1920)).
There are other obvious differences between
section 242.133 and sections 242.122-.125, which serve different purposes:

Section
     242.122 requires an employee “who has cause to believe that the physical
     or mental health or welfare of a resident has been or may be adversely
     affected by abuse or neglect caused by another person” to “report the
     abuse or neglect.”  Id. § 242.122(a) (emphasis added).  Section
     242.133, on the other hand, creates a retaliation cause of action for
     reporting “a violation of law, including a violation of this
     chapter or a rule adopted under this chapter, or for initiating or
     cooperating in any investigation or proceeding of a governmental entity
     relating to care, services, or conditions at the institution.”  Id. § 242.133(b) (emphasis added).

 

Section
     242.123 provides detailed requirements for the report.  See id. §
     242.123.  Section 242.133 doesn’t require any details; it merely requires “reporting
     . . . a violation of law.”  Id. § 242.133(b).

 

Section
     242.125 requires that the report be made to the Department of Human
     Services or to law enforcement.  Id. § 242.125.  The reporting that
     is the basis of the retaliation cause of action can have been made “to the
     employee’s supervisor, an administrator of the institution, a state
     regulatory agency, or a law enforcement agency.”  Id. § 242.133(b).

 
In conclusion, a report under sections 242.122-.125
undoubtedly can serve as the report that is the basis of a retaliation action
under section 242.133, but nothing in these statutes supports Appellants’
argument that Cathy’s report must have been made in accordance with sections
242.122-.125 before the protection against retaliation is available.
For the above reasons, as a matter of law we hold
that Cathy made reports of a violation of law as contemplated by section
242.133.  We overrule Appellants’ first issue.
Sufficiency of the Evidence
In their second issue, Appellants assert that the
evidence is legally and factually insufficient to support the jury’s finding
that Cathy made a report and that she was retaliated against for making a
report.[7]
On Appellants’ point that the evidence is legally
and factually insufficient to show that Cathy made a report as contemplated by
section 242.133, we agree with Cathy that their argument is the same one that they
made in their first issue, which we have rejected.  On their point that the
evidence is legally and factually insufficient to show that Cathy was
retaliated against for making a report, Appellants essentially are contesting
the sufficiency of the evidence on causation.
No case has articulated a causation standard for a
retaliation cause of action under section 242.133, but we find an almost identical
retaliation cause of action in Health & Safety Code § 161.134 (providing a
retaliation cause of action for employees of a hospital, mental health
facility, or treatment facility).  In a retaliation case under section 161.134,
the Austin court applied the “but-for” causation standard applied in
whistleblower and similar cases.  See Tomhave v. Oaks Psychiatric
Hosp., 82 S.W.3d 381, 385 (Tex. App.—Austin 2002, pet. denied), overruled
on other grounds by Binur v. Jacobo, 135 S.W.3d 646 (Tex. 2004).  We will do
likewise.  
Once an employer submits evidence that it would
have taken adverse action in the absence of the report, the rebuttable
presumption disappears and the plaintiff must submit evidence of causation.  See
id. at 385; Texas A&M Univ. v. Chambers, 31 S.W.3d 780, 784 (Tex. App.—Austin 2000, no pet.).  Cathy was required to prove by a preponderance of the
evidence that the Appellants would not have terminated her employment when they
did “but for” her report.  See Tomhave, 82 S.W.3d at 385.
The Texas Supreme Court established a general
causation standard to be applied in whistleblower and similar cases, stating “the
employee's protected conduct must be such that, without it, the employer’s
prohibited conduct would not have occurred when it did.”  Texas Dept.
of Human Servs. v. Hinds, 904 S.W.2d 629, 636 (Tex. 1995).  We see nothing
in the Health and Safety Code that would cause us to depart from the “but-for”
causation standard that has been applied in other whistleblower cases.  Id.  Thus, in order to prevail at trial, Tomhave would be required to prove by a
preponderance of the evidence that the Hospital would not have terminated her
employment when it did “but for” her report.
 
Id.
            Appellants argue that Cathy was
terminated for insubordination and for cumulative, progressive violations.  Cathy
did not dispute that in 2000, when she was a new employee, she received a
“Verbal Counseling Verification” because she had documented vital signs in the
wrong chart.  She explained that she was still learning the residents’ names
and room numbers and simply made a mistake.  Cathy also received a “Written
Warning Notification” for allowing an aide to administer prescription skin
cream to a resident when only a nurse should have.  Cathy explained that she
did this during a busy shift and made a bad judgment.  Conversely, Cathy’s
employment evaluations at Town Hall had been extremely positive.
            Returning to the occasion in question,
on the morning when Cathy called Jackson and told her of A.R.’s allegation, according
to Cathy, Jackson said, “Please don’t tell me this today.  I don’t need this
today.”  Jackson also said to Cathy, “Oh shit, I’ll have to call Darren on
it.”  Jackson immediately called Crystal Long, the assistant administrator, at
home, to inform her of this allegation and then went to work and spoke with
Cathy again about the allegation, saying to Cathy, “Can’t you go down there and
make her tell the truth?”  Jackson then interviewed A.R., who repeated the allegation
to Jackson.  Jackson wrote a summary of her interview with A.R.  Jackson then
called Crystal again and informed her of the situation, along with Cathy’s
disbelief in the allegation.  Crystal told Jackson to have Cathy write a
report.  According to Cathy, that Saturday morning Jackson did not tell her to
write a report, and no one contacted Cathy the rest of the day.  Jackson said that she told Cathy to have a written report prepared by 7 a.m. Sunday
morning, when Jackson would arrive for work.
            Cathy worked the night shift on
Saturday night/Sunday morning.  She was surprised and upset to find that Pete was
working that night and had not been suspended from working with patients.  At
the start of her shift, Cathy found a note from Jackson that said:
You will need to write up a statement about the
[A.R.]/Pete thing—I’ll be here before you leave the shift to discuss this
further with you.  Pete is NEVER to go into that room ever
again.  I know that I told you that last time and Darren said he & Carol
both said last time there was an encounter between the two that Pete wasn’t to
go back in that Rm.  So, he should not have been in the Rm.  Darren has been
informed & will f/up on Monday.  See ya in the morning.  Thx.  
 
Cathy did not interpret the note to mean that she
should immediately write a report; she thought it could wait until Monday
because Jackson had written that that was when Darren would follow up.[8] 
And because Cathy disputed that she had been told to keep Pete out of A.R.’s
room, Cathy suspected from this part of Jackson’s note that she was somehow
going to be the “fall guy” or “scapegoat” for having reported A.R.’s sexual
abuse allegation.  When Jackson showed up the next morning (Sunday), she asked
Cathy if she had written a statement yet, and Cathy, who was completing her
shift paperwork, responded that because they had been short a CNA overnight,
she had been too busy to prepare it.  Jackson walked away, and Cathy finished
her paperwork.  
Soon, Jackson called Cathy into her office and
presented her with a disciplinary “write-up” (a “Second Written Warning”) for
failing to follow the instruction to keep Pete from A.R.’s room, which had consequently
resulted in another accusation by A.R.  Crystal had told Jackson to do this
write-up.  Cathy was shocked by the write-up and refused to sign it because she
considered it to be false—she disputed that anyone had told her to keep Pete from
A.R.’s room.  She explained that the instruction was not put in A.R.’s chart
and that, if such a verbal instruction had been given to her, the director of
nursing would also have been informed.  Cathy said that Jackson, when
questioned, admitted that no one else had been informed about the alleged
instruction to keep Pete from A.R.’s room.[9]  Cathy
also told Jackson that Pete should not be working.  
The write-up said nothing about Cathy’s failure to
have prepared a written statement by Sunday morning, despite Jackson’s alleged
oral instruction that she do so.  After Cathy refused to sign the write-up, Jackson got “very mad” and left the office.  Cathy testified that Jackson said nothing
about preparing a written statement about A.R.’s allegation during the exchange
in the office.  Jackson’s write-up also stated that Cathy was to prepare a
written statement by 7 a.m. on July 1 (Monday).  Jackson called Crystal, who
told Jackson to write up a “Termination Notification” for Cathy’s
insubordination in refusing to sign the “Second Written Warning” and for not
having prepared the statement by Sunday morning.
Cathy then went home and, anticipating a busy
Sunday night/Monday morning shift, decided that she would write the statement
on her home computer.  Crystal then called her at home and told her not to
report for duty that night (Sunday) but to come in on Monday morning to talk to
her and Darren.  Cathy feared that she was going to be fired, but she wrote her
statement anyway and brought it in the next morning when she met with Darren
and Crystal.  She gave the Longs a copy of the statement and had them sign it
to evidence their receipt of it.
In that meeting, the Longs notified Cathy that she
was being terminated for insubordination for refusing to sign Jackson’s
write-up and for not preparing the written statement about A.R.’s sexual abuse
allegation.[10]  In
the meeting, Cathy had a notepad with the word “scapegoat” and the letters
“TDH” (for Department of Human Services) and its 1-800 phone number written on
it.  Cathy said that Crystal saw her notes, became agitated, and quizzed Cathy
on whether she had called TDH.  Cathy testified that she did not think the
Longs were going to call TDH until Crystal saw Cathy’s notes because the notes
agitated Crystal and because they called TDH only after terminating Cathy.  Crystal disputed Cathy’s version, stating that Cathy claimed to have already called TDH. 
Cathy denied calling TDH, and no evidence shows that she actually did.
Courts recognize the inherent difficulty of
producing direct evidence of an employer’s improper motivation for terminating employment,
particularly at the summary judgment stage of legal proceedings.  See Ruiz
v. City of San Antonio, 966 S.W.2d 128, 132 (Tex. App.—Austin 1998, no
pet.) (citing Castaneda v. Texas Dep’t of Agric., 831 S.W.2d 501, 505
(Tex. App.—Corpus Christi 1992, writ denied)).  Consequently, causation may be
established by either direct or circumstantial evidence and reasonable
inferences from such evidence.  Paragon Hotel Corp. v. Ramirez, 783 S.W.2d
654, 658 (Tex. App.—El Paso 1989, writ denied).  Factors including timing,
adverse employment action taken soon after the protected activity; knowledge of
the protected activity by employees making the decision to suspend or terminate
employment; a negative attitude towards the protected activity; deviation from
company policy or disparate treatment of similarly situated employees; and
whether the stated reason for employment termination is false or only a pretext
all can be considered circumstantial evidence that a report of unlawful
activity caused or led to termination of employment.  Continental Coffee
Prods. Co. v. Cazarez, 937 S.W.2d 444, 450 (Tex. 1996).  While these
factors are not exclusive, they reflect the type of circumstantial proof that
could tend to establish causation in a retaliatory termination case.  Investment
Props. Mgmt., Inc. v. Montes, 821 S.W.2d 691, 694 (Tex. App.—El Paso 1991,
no writ).
 
Id. at
385-86; see City of Fort Worth v. Zimlich, 29 S.W.3d 62, 69 (Tex. 2000);
see also Clay A. Hartmann &
Laura M. Franze, 2 Texas Employment Law § 34:2 at 34-9 (2006)
(“Causation may be established by direct or indirect evidence.  Because most
employers do not admit their decisions are retaliatory (i.e., direct evidence),
most cases involve indirect or circumstantial evidence.”).
            In this case, Appellants rebutted the
presumption that Cathy was terminated for reporting A.R.’s sexual abuse
allegation.  Not surprisingly, no direct evidence of retaliation exists.  Thus,
we must address whether there exists legally and factually sufficient evidence
that Appellants would not have terminated Cathy’s employment when they did “but
for” her report.  See Tomhave, 82 S.W.3d at 385.  Viewing the
evidence in the light most favorable to the verdict, crediting favorable
evidence if reasonable jurors could, and disregarding contrary evidence unless
reasonable jurors could not, the causation factors above in the context of the
evidence in this case show:

Timing:  Cathy was
     terminated two days after the protected activity (reporting A.R.’s
     allegation of sexual abuse). 

 

Knowledge of the protected activity by employees making the
     decision to suspend or terminate employment:  The Longs knew that Cathy had reported
     A.R.’s allegation of sexual abuse to Jackson, Cathy’s supervisor.

 

Negative attitude towards the protected activity:  Jackson reacted negatively when Cathy
     called her at home to report A.R.’s allegation of sexual abuse, and Crystal became agitated when she saw Cathy’s notes referring to the Department and its
     phone number.  Ironically, Cathy had been told not to come to work (i.e.,
     suspended)—and the decision to terminate her also had been made—before
     Pete, the alleged perpetrator, was even suspended, and he wasn’t suspended
     until after the DHS investigators had arrived.

 

Deviation from company policy or disparate treatment of
     similarly situated employees: 
     The alleged instruction to keep Pete from A.R.’s room after the recanted
     slapping allegation was not documented, and no other nurse was disciplined
     for not keeping him from A.R.’s room.  And according to Jackson, Pete told
     her that Cathy had told him to stay out of A.R.’s room only “for a while,”
     which he did for a week.  Jackson, who also interviewed A.R. about the
     sexual abuse allegation and also wrote a report, was not disciplined for
     not turning in her report sooner to administration.

 

Whether the stated reason for employment termination is false or
     only a pretext:  Cathy
     presented credible evidence contradicting the allegations that she had
     failed to follow the undocumented instruction to keep Pete from A.R.’s
     room, that she had failed to follow the undocumented instruction to
     prepare her statement by Sunday morning, and that she had refused to
     prepare the statement.

 
The jury may draw reasonable and logical
inferences from the evidence.  Hammerly Oaks, Inc. v. Edwards, 958
S.W.2d 387, 392 (Tex. 1997).  It is within the province of the jury to draw one
reasonable inference from the evidence although another inference could have
been made.  See City of Keller, 168 S.W.3d at 821.
The above indirect and circumstantial evidence, as
a whole, is “more than a scintilla;” it “rises to a level that would enable
reasonable and fair-minded people to differ in their conclusions.”  Merrell Dow Pharms., Inc. v. Havner, 953
S.W.2d 706, 711 (Tex. 1997).  And from this evidence reasonable jurors could
draw a reasonable and logical inference that Cathy’s employment would not have
been terminated but for her report. Crediting all favorable evidence that
reasonable jurors could believe and disregarding all contrary evidence except
that which they could not ignore, we conclude that the evidence is legally
sufficient to support the jury’s finding that Cathy’s employment would not have
been terminated but for her report of A.R.’s allegation of sexual impropriety. 
City of Keller, 168 S.W.3d at 830.  
Viewing all the evidence in a neutral light, we
find that it is factually sufficient to support the jury’s finding.  We cannot
say that the finding is so contrary
to the overwhelming weight of the evidence that it is clearly wrong and unjust. 
Maritime Overseas Corp. v. Ellis, 971 S.W.2d 402, 407 (Tex. 1998).  Reasonable jurors could disbelieve Appellants’
testimony on why Cathy’s employment was terminated; their testimony was
unsupported by any documentation in a setting—instructions on patient care and
employee discipline in a nursing home—that expects documentation.  When
conducting a factual sufficiency review, we do not pass on the credibility of
the witnesses or substitute our judgment for that of the trier of fact.  See Dallas County v. Holmes, 62 S.W.3d 326, 329 (Tex. App.—Dallas 2001, no pet.). 
There were conflicts in the testimony, but we will not substitute our judgment
for that of the jury’s.  Golden Eagle Archery, Inc. v. Jackson, 116
S.W.3d 757, 761 (Tex.  2003) (“[T]he jury is the sole judge of the credibility
of witnesses and the weight to be given their testimony.”).  It is the jury’s
role “to resolve conflicts and inconsistencies in the testimony of any one
witness as well as in the testimony of different witnesses.”  Ford v.
Panhandle & Santa Fe Ry., 151 Tex. 538, 252 S.W.2d 561, 563 (1952).   We
overrule issue two.
Piercing the Corporate Veil
 
            ARTH, the parent corporation of Town
Hall, complains in its third issue that the evidence is legally and factually
insufficient to support the jury’s finding that ARTH retaliated against Cathy. 
The jury found that both Town Hall and ARTH retaliated against her.
            Various theories exist for “piercing the
corporate veil” or disregarding the corporate form.[11] 
These theories must be specifically pleaded or they are waived, unless they are
tried by consent.  See Mapco, Inc. v. Carter, 817 S.W.2d 686, 688 (Tex. 1991).  We need not decide whether Cathy pled a theory for piercing the corporate veil
because ARTH does not argue that she did not, and it otherwise appears to have
been tried by consent.  The only pleading to support a theory for piercing the
corporate veil is the allegation that ARTH was the parent company of Town Hall
and provided Town Hall with its personnel policies.  We construe it to be a pleading
of alter ego.
[D]isregard of the “legal fiction of corporate
entity” is “an exception to the general rule which forbids disregarding
corporate existence.”  Lucas v. Texas Industries, Inc., 696 S.W.2d 372,
374 (Tex. 1984); First National Bank in Canyon v. Gamble, 134 Tex. 112, 132 S.W.2d 100 (1939).
 
Generally, a court will not disregard the
corporate fiction and hold a corporation liable for the obligations of its
subsidiary except where it appears the corporate entity of the subsidiary is
being used as a sham to perpetrate a fraud, to avoid liability, to avoid the
effect of a statute, or in other exceptional circumstances.  Lucas, 696
S.W.2d at 374-75.   See also, Torregrossa v. Szelc, 603 S.W.2d 803 (Tex. 1980); Pace Corp. v. Jackson, 155 Tex. 179, 284 S.W.2d 340 (1955).  There must
be something more than mere unity of financial interest, ownership and control
for a court to treat the subsidiary as the alter ego of the parent and make the
parent liable for the subsidiary’s tort.  Lucas, 696 S.W.2d at 374-75; Hanson
Southwest Corp. v. Dal-Mac Construction Co., 554 S.W.2d 712 (Tex. Civ.
App.—Dallas 1977, writ ref’d n.r.e.); see also Bell Oil & Gas Co. v.
Allied Chemical Corp., 431 S.W.2d 336 (Tex. 1968).  The corporate entity of
the subsidiary must have been used to “bring about results which are condemned
by the general statements of public policy which are enunciated by the courts
as ‘rules’ which determine whether the courts will recognize their own child.” 
Lucas, 696 S.W.2d at 374-375; Roylex, Inc. v. Langson Brothers
Construction Co., 585 S.W.2d 768 (Tex. Civ. App.—Houston [1st Dist.] 1979,
writ ref’d n.r.e.); Sutton v. Reagan & Gee, 405 S.W.2d 828 (Tex.
Civ. App.—San Antonio 1966, writ ref’d n.r.e.).  The plaintiff must prove that
he has fallen victim to a basically unfair device by which a corporate entity
has been used to achieve an inequitable result.  Lucas, 696 S.W.2d at
374-75; Torregrossa, 603 S.W.2d at 803; Preston Farm & Ranch
Supply, Inc. v. Bio-Zyme Enterprises, 615 S.W.2d 258 (Tex. Civ. App.—Dallas), aff’d, 625 S.W.2d 295 (Tex. 1981).
 
Cementos de Chihuahua, S.A. de C.V. v. Intermodal Sales Corp., 162 S.W.3d 581, 585-86 (Tex. App.—El Paso 2005, no pet.); see
also BMC Software Belgium, N.V. v. Marchand, 83 S.W.3d 789, 798-99 (Tex. 2002).
            The evidence relied on by Cathy to
pierce the corporate veil and reach ARTH, Town Hall’s parent, is:  (1) the
Longs were members of the boards of directors of both ARTH and Town Hall; (2) one
sentence in Town Hall’s personnel manual generally refers to “employees of Town
Hall and ARTH;” and (3) ARTH’s president testified that he had the authority to
discipline and terminate Darren.  This evidence is legally insufficient to
support a finding that ARTH is vicariously liable for Town Hall’s retaliation
liability under an alter ego theory.[12]  See
BMC Software, 83 S.W.3d at 799.  We sustain ARTH’s third issue.  Because of
our holding that ARTH is not liable for Town Hall’s retaliation, we need not
address issues four (as to ARTH), five, and six on the exemplary damages
awarded against ARTH.
Malice
            In issue four, Appellants contend that
the evidence is legally and factually insufficient to support the jury’s finding
by clear and convincing evidence that any appellant acted with malice.
When a jury makes an affirmative finding of malice
that is required to be based on clear and convincing evidence, in conducting a
legal sufficiency review we review all the evidence in the light most favorable
to the jury’s finding, taking into account contrary undisputed facts, to
determine whether reasonable jurors could have formed a firm belief or
conviction regarding malice.  Qwest Int’l Communications, Inc. v. AT & T
Corp., 167 S.W.3d 324, 326 (Tex. 2005); see also Southwestern Bell Tel.
Co. v. Garza, 164 S.W.3d 607, 627 (Tex. 2004) (reviewing court must assume
factfinder resolved disputed facts in favor of its finding if a reasonable factfinder
could and disregard all evidence a reasonable factfinder could have disbelieved
or found to have been incredible); In re J.F.C., 96 S.W.3d 256, 264-68
(Tex. 2002).
When reviewing the factual sufficiency of the
evidence to support a finding required to be based on clear and convincing
evidence, we must give due consideration to any evidence the factfinder could
reasonably have found to be clear and convincing.  J.F.C., 96 S.W.3d at
266-67.  We must consider the disputed evidence and determine whether a
reasonable factfinder could have resolved that evidence in favor of the finding. 
  Id.  The evidence is factually insufficient if, in light of the entire
record, the disputed evidence that a reasonable factfinder could not have
credited in favor of its finding is so significant that a factfinder could not
have reasonably formed a firm conviction or belief.  Id. (citing In
re C.H., 89 S.W.3d 17, 25 (Tex. 2002)).  Both legal and factual sufficiency
reviews of a finding required to be based on clear and convincing evidence must
take into consideration whether the evidence is such that a factfinder could
reasonably form a firm belief or conviction about the truth of the matter
required to be established by clear and convincing evidence.  J.F.C., 96
S.W.3d at 265-66; C.H., 89 S.W.3d at 25.
The trial court asked the jury whether it found by
clear and convincing evidence that Cathy was terminated as a result of malice,
defining malice as follows:
(a)        a specific intent by defendants to
cause substantial injury to plaintiff Cathy Ann Winters; or
 
(b)       an act or omission by defendants,
(i)        which when viewed objectively from the
standpoint of defendants at the time of its occurrence, involved an extreme
degree of risk, considering the probability and magnitude of the potential harm
to others, and
(ii)       of which defendants had actual,
subjective awareness of the risk involved, but nevertheless proceeded with
conscious indifference to the rights, safety, or welfare of others.
 
See
Act of April 11, 1995, 74th Leg., R.S., ch. 19, § 1, 1995 Tex. Gen. Laws 108, 109
(current version at Tex. Civ. Prac.
& Rem. Code Ann. § 41.001(7) (Vernon Supp. 2006)).[13] 
We thus focus our review on whether there was clear and convincing evidence
that the defendants terminated Cathy’s employment with malice as defined in the
charge.
            Gross negligence and malice may be proved
by direct or circumstantial evidence. See Mobil Oil Corp. v. Ellender,
968 S.W.2d 917, 921 (Tex. 1998); Transportation Ins. Co. v. Moriel, 879
S.W.2d 10, 23 (Tex. 1994).  Evidence of retaliation alone is generally
insufficient to support an award of punitive damages; otherwise, punitive
damages would be awarded automatically in every retaliation case.  See
Continental Coffee Products Co. v. Cazarez, 937 S.W.2d 444, 454 (Tex. 1996); Ancira Enter’s., Inc. v. Fischer, 178 S.W.3d 82, 94 (Tex. App.—Austin 2005,
no pet.).  We thus focus on evidence other than the fact of retaliation.
In other retaliation contexts, knowledge by the
employer of laws prohibiting retaliation and that the employer is violating the
employee’s legal rights has been found to be some evidence of malice.  See
Tesmec USA, Inc. v. Whittington, 2006 WL 827849, at *7 (Tex. App.—Waco Jan. 18, 2006, pet. denied) (mem. op.); Fischer, 178 S.W.3d at 94-95.  The
Longs demonstrated detailed knowledge of the law on reporting nursing home
abuse and neglect, including many references to “Senate Bill 9,” which is what
they called that law and the written statement that nursing home employees are
required to sign to show that they realize they may be criminally liable for
failing to report abuse or neglect.  See Tex. Health & Safety Code Ann. § 242.122(b) (“Each
institution shall require each employee of the institution, as a condition of
employment with the institution, to sign a statement that the employee realizes
that the employee may be criminally liable for failure to report those abuses.”). 
The anti-retaliation statute also provides that a nursing home shall require
each employee of the institution, as a condition of employment with the
institution, to sign a statement that the employee understands the employee’s
rights under this section, and that the statement must be part of the statement
required under section 242.122.  See id. § 242.133(h).  Therefore, there
is circumstantial evidence that the Longs knew that they were violating the law
and Cathy’s legal rights, and reasonable jurors could have credited that
evidence in their malice finding.
Courts also consider that evidence of economic incentive—that money was a factor—in a retaliatory
termination, combined with other factors, can be sufficient to establish
malice.  See Tesmec, 2006 WL 827849, at *7; Whole Foods Mkt. Southwest L.P. v. Tijerina, 979 S.W.2d 768, 780 (Tex. App.—Houston [14th Dist.] 1998, pet.
denied).  As we noted in footnote 2, Town Hall was subjected to sanctions and
penalties as a result of the report to DHS.  Given Cathy’s testimony that she
did not think the Longs were going to report the abuse, the undisputed fact
that they did not report it until they had terminated Cathy’s employment, and
Cathy’s testimony about Crystal’s agitation upon seeing Cathy’s note with DHS’s
1-800 number and her quizzing of Cathy on whether she had already called DHS, there
is circumstantial evidence that the Longs were not going to report the abuse
and that they terminated Cathy’s employment in an attempt to avoid having to
report it because they feared the financial repercussions from a DHS
investigation.  Reasonable jurors could have credited that evidence in their
malice finding.
We have also detailed the evidence on how Cathy
was treated differently than other Town Hall employees who committed similar
alleged acts, and how Coviello, the alleged perpetrator of the sexual abuse,
was not suspended until the state investigation had begun.  This singling-out
of Cathy is circumstantial evidence that reasonable jurors could have credited as
evidence of specific intent to cause substantial injury to Cathy.
Finally, there was evidence that, in a subsequent
state nursing board investigation of Cathy regarding her handling of A.R.’s
sexual abuse allegation, Town Hall furnished the board with an updated version
of its policies and procedures manual that was not in effect during Cathy’s
employment at Town Hall.  As a result, Cathy’s conduct looked worse before the
board in that her conduct violated many of the updated abuse reporting policies
that were not in effect during her employment.  Cathy was placed on two years’
probation.  The Longs called the furnishing of the updated manual a mistake and
disclaimed any intent to harm Cathy.  Although this incident occurred about a
year after Cathy’s termination, it is circumstantial evidence that a reasonable
juror could have credited as evidence of specific-intent malice or
gross-negligence malice.  Cf. Spoljaric v. Percival Tours, Inc., 708
S.W.2d 432, 434 (Tex. 1986) (a party’s fraudulent intent is determined at the
time of the party’s conduct in question, but it may be inferred from the
party’s subsequent acts); Yeldell v. Goren, 80 S.W.3d 634, 637 (Tex.
App.—Dallas 2002, no pet.) (same).
There is no contrary undisputed evidence to
consider in our sufficiency review of the malice finding.  Cf. Garza,
164 S.W.3d at 628.  The jury could have found the Longs’ testimony on malice, their
intent, and their reason for terminating Cathy’s employment to have been
incredible.  See City of Keller, 168 S.W.3d at 822; Vaughn v.
Drennon, 202 S.W.3d 308, 324 (Tex. App.—Tyler 2006, no pet. h.); see
also Wilen v. Falkenstein, 191 S.W.3d 791, 801 (Tex. App.—Fort Worth 2006,
pet. denied) (jury free to discredit defendant’s protestation that no harm was
intended) (citing Twyman v. Twyman, 855 S.W.2d 619, 623 (Tex. 1993)).  The evidence is sufficient to produce in the mind of the trier of fact a firm
belief or conviction that the harm suffered by Cathy resulted from malice.  We
overrule issue four.
Conclusion
            Having sustained issue three, we
modify the judgment to provide that Cathy take nothing from American Religious
Town Hall Meeting, Inc.  As modified, we affirm the trial court’s judgment.
 
BILL VANCE
Justice
 
Before
Chief Justice Gray,
Justice Vance, and
Justice Reyna
(Chief Justice Gray dissenting)
Affirmed
as modified
Opinion
delivered and filed February 7, 2007
[CV06]

[1]               A.R. had a history
of false complaints and of being disoriented at times.  A.R. had complained to
her visiting husband in March 2001 that Pete had slapped her.  Darren had the
director of nurses investigate this allegation and interview A.R., but she did
not make a written report.  Nor was the allegation reported to the Department
of Human Services (DHS).  This incident had occurred on Cathy’s shift, but she
did not learn of it until the next day.  Cathy first spoke with A.R.’s husband
and reminded him of A.R.’s history of false complaints, and he sounded
satisfied after talking with Cathy.  A few days later Cathy spoke with A.R.,
who recanted the slapping allegation.  Cathy wrote a report on this incident,
which included the following:
I never heard or saw Pete treat
her in any manner other than a CNA in a professional manner.  She never told me
when I was alone with her of anything untoward that Pete had done.  [A.R.] is
not inhibitive when it comes to complaints, she has cursed me & called me
names several times & I’ve seen her do the same with other staff members. 
She has also told her husband, me or another staff member untruths about her
care, such as being dropped, having a shower, or whirlpool on the shift that I
am working.  They have always been untrue & when confronted, she always
changes her mind.  I don’t know if it is deliberate, she has never appeared angry
or upset when telling them or recanting. . . .  Then I assured [A.R.’s husband]
that I’ve worked [with] Pete for a while & that I’ve [ ] never seen nor
heard any indications of Pete being abusive either verbally or physically.
 

[2]               About two hours
later, the Longs reported the sexual abuse allegation to DHS, which dispatched
a response team to investigate.  Town Hall suspended Coviello only after the
DHS team arrived.  A few days later, the Longs, after being threatened by DHS
with sanctions, contacted the police.  DHS placed Town Hall in “Immediate
Jeopardy Situation” and assessed a $3,050 per day penalty against Town Hall for
not immediately suspending Coviello, and it temporarily canceled Town Hall’s
Medicare contract and denied payments for new residents.  Coviello subsequently
confessed and ultimately pled guilty to indecent exposure.
 

[3]               Gonzales v.
Methodist Retirement Communities, Inc., a summary judgment case relied on
by Appellants, is inapposite.  There, suit was brought under an earlier version
of section 242.133 that provided a cause of action to an employee “for
reporting the abuse or neglect or other complaint” to the employee’s
supervisors.  Gonzales v. Methodist Retirement Communities, Inc., 33
S.W.3d 882, 883-84 (Tex. App.—Houston [14th Dist.] 2000, pet. denied) (quoting
Act of June 20, 1997, 75th Leg., R.S., ch. 1159, § 1.25, 1997 Tex. Gen. Laws
4363, 4376 (amended 1999) (current version at Tex.
Health & Safety Code Ann. § 242.133(a)).  Gonzales came on duty at a
nursing home and found that a resident had fallen from a geriatric chair. 
Gonzales’s suit focused on the allegation that she was fired for reporting
neglect to the medical director.  
Applying the dictionary
definition of neglect, the court concluded as a matter of law that Gonzales had
not reported an incident of neglect.  Id. at 884-85.  Gonzales did not
report that the resident had been neglected.  She reported only that a resident
had fallen out of a chair; she did not know why or how the resident had fallen,
nor did she say or imply that the resident had been ignored and fell because of
inattention.  Id. at 885.  That an employee may have been careless or
negligent in the way they placed the resident in the chair did not translate
into neglect under the statute.  Id.  “Thus, that a resident fell out of
a chair into which she should have been buckled, is not, in and of itself,
evidence that neglect—as that word is used in the statute—occurred.”  Id.  We agree with Cathy that the facts in Gonzales bear no resemblance to
this case.  Here, Cathy’s report to Jackson that A.R. had alleged sexual abuse—whether
or not Cathy believed the allegation—unquestionably, and in and of itself,
involved the report of a violation of law.
 

[4]               The fact that the Longs had decided
to terminate Cathy before she tendered her written report is of no consequence
to liability for retaliatory discharge.  See Clark v. Texas Home Health, Inc., 971 S.W.2d 435, 437 (Tex. 1998) (holding that anti-retaliation provision
in Nurse Practice Act provided a cause of action to nurse who is the victim of
retaliation in response to “reporting,” not just for nurse who “had reported”;
employer could not escape liability by demoting nurses before they could
report).  
 

[5]               It is a class A
misdemeanor to report abuse or neglect under subchapter E of chapter 242 in bad
faith, maliciously, or recklessly.  Tex.
Health & Safety Code Ann. § 242.132 (Vernon 2001).

[6]               As Cathy points out, the
Legislature knows how to specifically require that a report be in writing for
it to serve as the basis for a report in a retaliation cause of action.  In the
statutes that create a retaliation cause of action for the reporting of another
nurse who exposes a patient to a risk of harm or for other reasons, the report
must be written, signed, and include the identity of the nurse.  See Tex. Occ. Code Ann. § 301.402(b), (d) (Vernon Supp. 2006) (report requirements); id. § 301.413 (Vernon 2004) (retaliation
cause of action).

[7]
          In reviewing the
legal sufficiency of the evidence, we view the evidence in the light most
favorable to the verdict, crediting favorable evidence if reasonable jurors
could, and disregarding contrary evidence unless reasonable jurors could not.  City of Keller v. Wilson, 168 S.W.3d
802, 807, 822 (Tex. 2005).  There is legally insufficient evidence or “no
evidence” of a vital fact when (a) there is a complete absence of evidence of a
vital fact; (b) the court is barred by rules of law or of evidence from giving
weight to the only evidence offered to prove a vital fact; (c) the evidence
offered to prove a vital fact is no more than a mere scintilla; or (d) the
evidence conclusively establishes the opposite of the vital fact.  Merrell Dow Pharms., Inc. v. Havner,
953 S.W.2d 706, 711 (Tex. 1997).  More than a scintilla of evidence exists when
the evidence supporting the finding, as a whole, “rises to a level that would
enable reasonable and fair-minded people to differ in their conclusions.”  Id. (quoting Burroughs Wellcome Co. v. Crye, 907 S.W.2d 497, 499 (Tex. 1995)).  If the evidence is so weak as to do no more than create a mere surmise or
suspicion of its existence, its legal effect is that it is no evidence.  Haynes & Boone v. Bowser Bouldin, Ltd.,
896 S.W.2d 179, 183 (Tex. 1995).
When the party without the burden of proof at
trial complains of the factual sufficiency of the evidence to support an
adverse jury finding, we must consider and weigh all of the evidence, not just
the evidence that supports the verdict.  Maritime Overseas Corp. v. Ellis,
971 S.W.2d 402, 406-07 (Tex. 1998); Checker Bag Co. v. Washington, 27
S.W.3d 625, 633 (Tex. App.—Waco 2000, pet. denied).  We will set aside the
finding only if it is so contrary to the overwhelming weight of the evidence
that the finding is clearly wrong and unjust.  Ellis, 971 S.W.2d at 407. 
Reversal can occur because the finding was based on weak or insufficient
evidence or because the proponent's proof, although adequate if taken alone, is
overwhelmed by the opponent's contrary proof.  Checker Bag, 27 S.W.3d at
633.

[8]               Jackson did not submit her written
report to Crystal until Monday morning, but she was not reprimanded for that. 
Also, Jackson did not report A.R.’s allegation to DHS, and she was not disciplined
for failing to do so.
 

[9]               After Cathy had
refused to sign the write-up, Jackson wrote a note to Crystal; in it, Jackson
wrote that she had talked to Pete that morning and he said to her that Cathy
had told him to stay out of A.R.’s room after the alleged slapping incident
“for a while” and that about a week later he had started to go back in to her
room.

[10]             Jackson wrote the
following in the termination notice:
Insubordination, refused to sign
2nd written warning regarding above, did not write statement as requested. 
Stated to me that she had to work as an aide & nurse & that she doesn’t
even have enough time as it is, and that she wouldn’t be writing this up
tonight either because she wouldn’t have enough time, but she did stay over
until 8:33 a.m. to chart, she could’ve written a statement and then clocked out
but did not.  Denied knowing that Pete was not to go into resident Rm, I did
tell her myself. . . .
Crystal then added the following comments to the notice:
Refusing to perform the nursing
duty of making a written report upon an allegation of abuse is not only
insubordination, it is against the law (see Senate Bill 9 for reference) and
may further endanger the Resident if the report is not investigated.  This is
grossly negligent of the Resident and the Nurse’s job.  Termination is in
order.  . . .   See attached statement by Ms. Winters written on 07-01-01 after
C. Long requested meeting.  Refused to do this for supervisor upon request but
did after Asst. Adm. called her.  Ms. Winters stated she “has been advised not
to sign anything.”
 

[11]             Those theories are: 

·        
when the
fiction is used as a means of perpetrating fraud; (Castleberry v. Branscum,
721 S.W.2d 270, 272 (Tex. 1986))
·        
where a
corporation is organized and operated as a mere tool or business conduit of
another corporation (“alter ego”); (Id.)
·        
where the
corporate fiction is resorted to as a means of evading an existing legal
obligation; (Id.)
·        
where the
corporate fiction is employed to achieve or perpetrate monopoly; (Id.)
·        
where the
corporate fiction is used to circumvent a statute; (Id.)
·        
where the
corporate fiction is relied upon as a protection of crime or to justify wrong;
(Id.)
·        
inadequate
capitalization so as to work an injustice; (Id. at 272 n.3) and
·        
two or more
businesses were operated as a single business enterprise.  Paramount Pet.
Corp. v. Taylor Rental Ctr., 712 S.W.2d 534, 536 (Tex. App.—Houston [14th
Dist.] 1986, writ ref’d n.r.e.); Allright Tex. v. Simons, 501 S.W.2d
145, 149-50 (Tex. App.—Houston [1st Dist.] 1973 (writ ref’d n.r.e.).
 

[12]             This evidence would
also be legally insufficient under a single business enterprise theory, which
some courts consider to be a separate and distinct theory from alter ego.  See
North Am. Van Lines v. Emmons, 50 S.W.3d 103, 119 (Tex. App.—Beaumont 2001,
pet. denied).  Factors to be considered in determining whether two corporations
have not been maintained as separate entities include the following:  common
employees; common offices; centralized accounting; payment of wages by one
corporation to another corporation’s employees; common business name; services
rendered by the employees of one corporation on behalf of another corporation; undocumented
transfers of funds between corporations; and unclear allocation of profits and
losses between corporations.   Paramount, 712 S.W.2d at 536.  No
evidence of any of these factors exists in this case.
 

[13]             In 2003, the Legislature removed
subpart (b) (“gross-negligence malice”) from the malice definition, recodifying
it as the definition of “gross negligence.”  See Tex. Civ. Prac. & Rem. Code Ann. § 41.001(11).