Court Opinion

ID: 3218026
Source: CourtListenerOpinion
Date Created: 2016-06-29 08:16:17.388213+00
Date Added: 2024-06-11T13:55:30.877162
License: Public Domain

COURT OF APPEALS
                         SECOND DISTRICT OF TEXAS
                              FORT WORTH

                             NO. 02-16-00118-CV

IN RE INFLIGHT PRODUCTIONS
USA INC.

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                          ORIGINAL PROCEEDING
                      TRIAL COURT NO. 067-272926-14

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                DISSENTING MEMORANDUM OPINION1

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      Because I believe that mandamus relief is warranted under the reasoning

and holding of Mantas v. Fifth Court of Appeals, 925 S.W.2d 656 (Tex. 1996)

(orig. proceeding), I respectfully dissent to the denial of relator Inflight

Productions USA Inc.’s petition for writ of mandamus.

      Real party in interest American Airlines, Inc. sued Inflight in July 2014

seeking a declaration of rights between the parties in connection with an

      1
       See Tex. R. App. P. 47.4.
indemnification provision in a purchase agreement.        American later added a

breach of contract claim. In March 2016, Inflight filed a counterclaim alleging that

after American filed its suit, two executives with authority to act for Inflight and

American––independently of counsel––entered into a binding settlement

agreement through a series of email correspondence.          According to Inflight’s

petition, a formal settlement agreement document was drafted and circulated but

never signed because the draft presented by American changed a material term

of the executives’ agreement. Inflight sought a declaratory judgment that the

email agreement settled this litigation and damages for the alleged breach of the

email agreement.

      Inflight also sought to stay “all proceedings involving any issues or causes

of action related to [American’s then live petition], including any pending

discovery, until the Counterclaims are fully litigated and decided by the Court,”

citing Mantas as controlling. American opposed the stay, contending that Mantas

is inapplicable and that Inflight’s counterclaim is a frivolous attempt to avoid

answering discovery. Key to American’s position is that Inflight did not allege or

produce any evidence that the email agreement meets the requirements of a

rule 11 settlement agreement because the email signature blocks do not contain

indicia of a valid electronic signature sufficient for rule 11 purposes. Tex. R. Civ.

P. 11; Cunningham v. Zurich Am. Ins. Co., 352 S.W.3d 519, 529–30 (Tex. App.—

Fort Worth 2011, pet. denied).

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      After a hearing at which no reporter’s record was taken, the trial court

denied Inflight’s motion to stay in an order that did not state its reasoning. Along

with a motion to reconsider,2 Inflight filed the emails with the trial court for in

camera review. American moved to strike the documents proffered in camera.

After a hearing on the motion to reconsider, the trial court denied the motion and

further ordered as follows:

      The exhibits attached to [Inflight’s] Motion, and any references to
      that evidence contained in its Motion or otherwise in the record, are
      hereby stricken, and the District Clerk is instructed to detach the
      stricken evidence from the record of this cause. References to
      exhibits attached to [Inflight’s] Motion are redacted from the copy of
      [Inflight’s] Motion attached hereto as Exhibit A. All copies of
      [Inflight’s] Motion in the record will be similarly redacted.

      Inflight filed this petition for writ of mandamus. This court stayed all of the

underlying proceedings pending resolution of the original proceeding, and we

requested a response from American, in which it raised substantially the same

arguments as it did in the trial court.

      In Mantas, the parties entered into a written, postjudgment settlement

agreement––while a direct appeal was pending––as a result of mediation

ordered by the appellate court. 925 S.W.2d at 657–58.     The appellant had

tendered the settlement amount and signed a release, and the parties filed a joint

motion to dismiss the appeal. Id. at 658. The same day, the appellee withdrew

its consent to the settlement, and the appellant filed a motion to enforce the

      2
       In its motion to reconsider, Inflight contended that the emails were “signed
in a manner consistent with governing case law.”

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settlement agreement in the court of appeals, which was denied.             Id.   The

appellant then filed a breach of contract suit to enforce the settlement agreement

in the trial court and also moved to abate the appeal pending the outcome of the

contract suit. Id. The court of appeals denied the motion to abate, and the

appellant filed a petition for writ of mandamus in the supreme court. Id.

      The supreme court held that mandamus relief was warranted because the

court of appeals abused its discretion by refusing to abate the appeal pending

resolution of the settlement enforcement suit:

      It makes no sense for the court of appeals to expend its resources,
      and require the parties to expend theirs, on an appeal which may be
      moot. Certainly, a ruling on the merits of the appeal before judgment
      is rendered in the enforcement suit would inject needless uncertainty
      and confusion into the issues surrounding the settlement.

Id. at 659. The supreme court also held that relief by appeal was inadequate

because “[i]f the agreement is ultimately upheld, Mantas will have lost much of

the settlement’s benefit if he has been required to expend time and resources in

prosecuting the appeal.” Id.

      I believe the same logic applies here. Although the alleged settlement

agreement occurred during pretrial proceedings in the trial court and there

appears to be a potential fact issue regarding whether it is enforceable under

rule 11,3 I do not believe that the Mantas holding hinged upon the procedural

      3
       Although Cunningham was a summary judgment appeal, we noted in our
discussion of the email signature block that there was no evidence offered to
show that the signature block was not automatically generated, that nothing in
the email itself indicated an intent for the signature block to operate as a

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posture of that case. The supreme court’s overriding concern in Mantas was the

potential loss of the benefit of the alleged settlement, the crux of which was the

avoidance of continued proceedings on the merits of the allegedly settled case,

i.e., the appeal. Id. at 658–59. By refusing to abate the appeal before the trial

court could decide whether the settlement agreement was enforceable, the court

of appeals essentially rendered the settlement agreement moot.             Likewise,

Inflight’s counterclaim alleges that the series of emails between the two

executives constitutes an enforceable settlement agreement that would obviate

the need for further proceedings in the trial court on the merits of American’s

claims. By refusing to abate the trial proceedings on the merits of those claims

pending resolution of Inflight’s counterclaim, the trial court is effectively denying

Inflight the potential benefit of the settlement if it were later found to be

enforceable.

      American’s opposition to the stay is rooted in its argument that Inflight

cannot prevail on the merits of its counterclaim, i.e., its argument that the emails

cannot possibly be construed as an enforceable rule 11 agreement, and, thus,

the only reason Inflight filed the counterclaim is to attempt to avoid discovery on

signature, and that there was no evidence that the parties intended to conduct
transactions via electronic means. 352 S.W.3d at 530; see Tex. Bus. & Com.
Code Ann. § 322.005(b) (West 2015); Parks v. Seybold, No. 05-13-00694-CV,
2015 WL 4481768, at *5 (Tex. App.––Dallas July 23, 2015, no pet.) (mem. op.).
But see Williamson v. Bank of New York Mellon, 947 F. Supp. 2d 704, 710 (N.D.
Tex. 2013) (disagreeing with Cunningham and opining that Texas supreme court
would as well).

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American’s claim. Although that may or may not be true, I believe that, at this

point, the proper procedural vehicle for deciding that argument is a motion for

summary judgment. Tex. R. Civ. P. 166a; cf. Tex. R. Civ. P. 91a (allowing party

to move for dismissal of a claim on grounds that it has no basis in law or in fact

but setting forth time limits in which such a motion may be filed). I do not believe

that––absent    a   simultaneously    pending,      proper   procedural   motion   for

determining the merits of claims––the merits of a settlement enforcement claim

should be litigated or considered to be dispositive of the issue of whether a stay

is required pending the resolution of that claim.

      I further believe that the trial court’s order striking the in camera documents

and causing the references to those documents in the motion for reconsideration

to be redacted was unnecessary. Although I believe that the issue of whether a

stay is warranted did not require consideration of those documents, the trial

court’s order is premature until the counterclaim is resolved. See Tex. R. Evid.

408. Accordingly, I respectfully dissent and would grant mandamus relief.

                                                      /s/ Terrie Livingston

                                                      TERRIE LIVINGSTON
                                                      CHIEF JUSTICE

DELIVERED: June 23, 2016

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