Court Opinion

ID: 4049323
Source: CourtListenerOpinion
Date Created: 2016-09-29 00:55:31.741104+00
Date Added: 2024-06-11T14:05:15.696938
License: Public Domain

ACCEPTED
                                                                                 06-14-00106-CV
                                                                       SIXTH COURT OF APPEALS
                                                                            TEXARKANA, TEXAS
                                                                           3/30/2015 10:44:46 AM
                                                                                 DEBBIE AUTREY
                                                                                          CLERK

                         NO. 06-14-00106-CV

                IN THE SIXTH COURT OF APPEALS                FILED IN
                                                      6th COURT OF APPEALS
                      TEXARKANA, TEXAS                  TEXARKANA, TEXAS
                                                      3/30/2015 10:44:46 AM
PETER G. MILNE, INDIVIDUALLY, PETER G. MILNE P.C., & HEALY   , MILNE
                                                           DEBBIE      &
                                                                   AUTREY
                                                               Clerk
                           ASSOCIATES, P.C.

                                                    Appellants

                                   v.

                        VAL RYAN & JOY RYAN

                                                    Appellees

               Appeal from the 4th Judicial District Court
                         Rusk County, Texas

                 REPLY BRIEF FOR APPELLANTS

                                 J. CHAD PARKER
                                 Cparker@theparkerfirm.net
                                 Bar Card No: 15489000
                                 FORREST F. MAYS
                                 Fmays@theparkerfirm.net
                                 Bar Card No: 24072228
                                 THE PARKER FIRM, P.C.
                                 3808 Old Jacksonville Rd.
                                 Tyler, Texas 75701
                                 (903) 595-4541 - telephone
                                 (903) 595-2864 - facsimile

                                 Attorneys for Appellants Peter G. Milne,
                                 Ind., Peter G. Milne, P.C.,
PETER G. MILNE
Pmilne@tylertaxlaw.com
Bar Card No. 24037118
327 W. Houston St.
Tyler, Texas 75702
903-593-9300 - telephone
903-593-9325 - facsimile
Attorneys for Appellant Milne &
Associates, P.C.

  i
                      IDENTITY OF PARTIES AND COUNSEL

Appellants/Defendants

      Peter G. Milne, Individually
      Peter G. Milne, P.C.
      Healy, Milne & Associates, P.C.

Counsel for Appellants

      J. CHAD PARKER
      Bar Card No: 15489000
      FORREST F. MAYS
      Bar Card No: 24072228
      THE PARKER FIRM, P.C.
      3808 Old Jacksonville Rd.
      Tyler, Texas 75701

      Attorneys for Appellants Peter G. Milne, Ind., & Peter G. Milne, P.C.,

      PETER G. MILNE
      Bar Card No. 24037118
      327 W. Houston St.
      Tyler, Texas 75702

      Attorneys for Appellant Healy, Milne & Associates, P.C.

Appellees/Plaintiff

      Val Ryan
      Joy Ryan

Counsel for Appellees

      James A. Holmes
      State Bar No. 00784290
      212 South Marshall
      Henderson, Texas 75654

                                        ii
        John R. Mercy
        State Bar No. 13947200
        1724 Galleria Oaks Drive
        Texarkana, Texas 75503

        Attorneys for Appellees Val & Joy Ryan

                                             TABLE OF CONTENTS

IDENTITY OF PARTIES AND COUNSEL .................................................................. ii-iii

INDEX OF AUTHORITIES ....................................................................................... iv-v

REPLY TO POINTS RAISED IN APPELLEES’ BRIEF ..............................................

I.      The Appellants have standing to appeal portions of class certification order
        pertaining to the Hicks’ Defendants because Appellees seek to have
        Appellants held vicariously liable for that conduct ..................................1–2

II.     Appellees’ argument that class is “present ascertainable” fails to appreciate
        differences in how the Injunction treats services rendered by the Hicks’
        Defendants alone versus those rendered in conjunction with a licensed
        attorney and how this dooms the trial court’s class definition..................3

III.    Appellees’ argument that Hicks’ Defendants conduct was unconscionable as
        a matter of law relies on inapposite case law and statutes and eschews the
        rigorous analysis required for class certification
        ................................................................................................................... 3–5

IV.     Appellees’ argument in support of typicality ignores vital differences
        between experiences of proposed class members and relies on same failed
        reasoning that dooms the class definition ................................................ 5–6

V.      Appellees’ argument that the money damages sought flow directly from the
        requested declaration ignores a vital prong of the inquiry and is merely used
        to shoehorn a damages claim into a claim for declaratory relief.............. 7–9

CONCLUSION AND PRAYER ................................................................................9–10

                                                             iii
CERTIFICATE OF COMPLIANCE WITH RULE 9.4(E) ................................................. 10

CERTIFICATE OF SERVICE ...................................................................................... 11

                                       INDEX OF AUTHORITIES

Cases

Allison v. Citgo Petroleum Corp.,
      151 S.W.3d 402 (5th Cir. 1998) ................................................................7

Bailey v. Kemper Casualty Ins. Co.,
      83 S.W.3d 840 (Tex. App. – Texarkana 2002, pet dism’d w.o.j) ............6

Bhatia v. Piedrahita,
      756 F.3d 211, 218 (2d Cir. 2014) .............................................................2

Bolin v. Sears, Roebuck & Co.,
      231 F.3d 970 (5th Cir. 2000) .................................................................7, 8

Bratcher v. Monumental Life Ins. Co.,
      365 F.3d 408 (5th Cir. 2004) ................................................................... 7

Builders Transp., Inc. v. Grice-Smith,
      167 S.W.3d 18 (Tex. App. – Waco 2005, pet. denied) ............................ 2

Ex parte Elliot,
      815 S.W.2d 251 (Tex.1993) ..................................................................... 1

In re Turner Bros. Trucking Co.,
      8 S.W.3d 370 (Tex. App. – Texarkana 1999, no pet.) ............................. 4

Ski River Dev., Inc. v. McCalla,
      167 S.W.3d 121 (Tex. App. – Waco 2005, pet. denied) .......................... 4

Sonat Exploration Co. v. Cudd Pressure Control, Inc.,
      271 S.W.3d 228 (Tex.2008) ..................................................................... 1

                                                       iv
Turner, Collie & Braden, Inc. v. Brookhollow, Inc.,
     642 S.W.2d 160 (Tex.1982) ....................................................................... 2

Statutes

Tex. Bus. & Com. Code § 2.302(a) ...................................................................... 4

Tex. Bus. & Com. Code Ann. § 17.45(5) (Vernon Supp.1998) ....................4, 8, 9

Rules

Tex. R. Civ. P. 42 .................................................................................................. 7

Fed. R. Civ. P. 23 .............................................................................................. 7, 8

                                                           v.
                 REPLY TO POINTS RAISED IN APPELLEES’ BRIEF

I.     The Appellants have standing to appeal portions of class certification
       order pertaining to the Hicks’ Defendants because Appellees seek to
       have Appellants held vicariously liable for that conduct

       Appellees cited to several cases for the proposition that Appellants’ do not

have standing to appeal certain portions of the district court’s class certification order

because those portions of the order do not “injuriously affect” Appellants. See Brief

of Appellees at pp. 9–12. However, only one of those cases dealt with the issue in the

context of a class certification order with that case being clearly distinguishable.

Moreover, the general rule that “appealing parties may not complain of errors that do

not injuriously affect them or that merely affect the rights of others” has been held not

to apply where the rights of the “appealing and nonappealing parties ‘are so

interwoven and dependent on each other as to require a reversal of the entire

judgment.’ ” Sonat Exploration Co. v. Cudd Pressure Control, Inc., 271 S.W.3d 228,

236–37 (Tex.2008) (quoting Ex parte Elliot, 815 S.W.2d 251, 251 (Tex.1993) (per

curiam)). In this case, Appellees seek to have Appellants held liable under theories

of partnership liability, joint enterprise liability, and civil conspiracy, for the conduct

alleged to be unconscionable and in breach of the Hicks’ Defendants fiduciary duty

to the proposed Class. 1CR:144–161; 1CR:165–167; 1CR:263–264; 1CR:316–320.

Courts have held that reversal of judgment is proper even where one defendant did

not appeal and other defendant did appeal when issue of vicarious liability is at play.

                                          Page 1
See Builders Transp., Inc. v. Grice-Smith, 167 S.W.3d 18, 20 (Tex. App. – Waco

2005, pet. denied)(holding that claims against employee and employer based upon

vicarious liability are significantly interwoven such that employee’s failure to appeal

did not prevent reversal of entire judgment)(citing Turner, Collie & Braden, Inc. v.

Brookhollow, Inc., 642 S.W.2d 160, 166 (Tex.1982)).

      The Bhatia case cited by Appellees is inapposite to the facts of this case and

not controlling. In that case, the court held to the general rule that a non-settling

defendant generally lacks standing to object to a court order approving a partial

settlement because a non-settling defendant is ordinarily not affected by such a

settlement. See Bhatia v. Piedrahita, 756 F.3d 211, 218 (2d Cir. 2014). The instant

case does not involve settling and non-settling defendants in the class context. As

such, the general rule for standing enunciated by the Texas Supreme Court should

control the Court’s disposition of the standing issue. Clearly, Appellants are

prejudiced and injuriously affected by the district court’s Certification Order by virtue

of the vicarious liability theories certified that make the rights of the Appellants and

Hicks Defendants so interwoven and dependent on each other that Appellants’

justiciable interests are clearly implicated by the portions of the Certification Order

that certify claims against the Hicks’ Defendants directly.

                                         Page 2
II.    Appellees’ argument that class is “present ascertainable” fails to
       appreciate differences in how the Injunction treats services rendered by
       the Hicks’ Defendants alone versus those rendered in conjunction with a
       licensed attorney and how this dooms the trial court’s class definition

       Appellees’ own Statement of Facts contains the relevant text necessary to

address this point and even emphasizes the text that renders the district court’s

Certification Order erroneous. See Appellees’ Brief at 1–2. The Hicks’ Defendants

are enjoined from performing those services listed as a-l unless certain conditions are

complied with by the Hicks’ Defendants. See id. at 1. Because a significant portion

of the proposed class constitute persons for whom the Hicks Defendants’ performed

services in conjunction with a licensed attorney, they are not presently ascertainable

without a determination on the merits. Not only that, but there are other

determinations that must be made on the merits before the class is clearly

ascertainable. Those determinations have already been spelled out in Appellants’

Brief. See Brief of Appellants at p. 8.

III.   Appellees’ argument that Hicks’ Defendants conduct was unconscionable
       as a matter of law relies on inapposite case law and statutes and eschews
       the rigorous analysis required for class certification

       Appellees cite to various cases and other portions of the Texas Business &

Commerce Code for the proposition that unconscionability is frequently determined

as a matter of law and that such a determination is appropriate to this case. Appellees’

suggested approach essentially renders the commonality inquiry unimportant

depending upon the particular factual circumstance faced by the certifying court.
                                          Page 3
Appellees cite to case law and statutes that do not apply to the claims being made by

Appellees and seek to circumvent the rigorous analysis required of the district court

instead advocating the “certify now, worry later” approach rejected by the Texas

Supreme Court.

      Appellees cite to cases involving written contracts on which the “ultimate issue

of unconscionability of a contract is one of law to be decided by the courts”, Ski River

Dev., Inc. v. McCalla, 167 S.W.3d 121, 136 (Tex. App. – Waco 2005, pet.

denied)(determining unconscionability of written lease); In re Turner Bros. Trucking

Co., 8 S.W.3d 370, 375 (Tex. App. – Texarkana 1999, no pet.)(determining

unconscionability of arbitration agreement with employee). They also cite to Tex.

Bus. & Com. Code § 2.302(a) to support their claim that unconscionability is

appropriately resolved as a matter of law. However, Appellees have not brought their

unconscionability claims under a contract theory of recovery but under Tex. Bus. &

Com. Code § 17.45(5) for which “unconscionable action or course of action” is

specifically defined. The specific elements underlying that claim necessarily require

particularized inquiries into whether the Hicks’ Defendants conduct took advantage

of the proposed Class members “lack of knowledge, ability, experience, or capacity

of the consumer to a grossly unfair degree.” Moreover, Tex. Bus. & Com. Code §

2.302(a) applies to contracts involving the sale of goods which are not involved here

and do not involve the precise definition for unconsionability assigned to § 17.45(5).

                                        Page 4
Appellees are seeking to morph their unconscionability claims into another cause of

action or theory where unconscionability is measured as a matter of law by the courts

so as to circumvent the commonality requirement required to properly certify a class.

This is improper. The commonality requirement has not been met and certification of

the unconscionability cause of action was error.

IV.   Appellees’ argument in support of typicality ignores vital differences
      between experiences of proposed class members and relies on the same
      failed reasoning that dooms the class definition

      Appellees insist that Hicks’ conduct that allegedly violated the Injunction is the

course of conduct that makes Appellees claims typical of the class as a whole.

Appellees seek to point out that the lack of a contract is an insignificant difference

that will not defeat typicality. However, Appellants pointed out the lack of a

“contract” or “letter agreement” as one of the key reasons that differentiated the

experience of certain proposed Class members from Appellees in that the “contract”

or “letter agreement” often, if not every time, specifically delineated the roles that the

Hicks Defendants would have versus those the Appellants would have in the

rendition of services, contained certain disclaimers regarding the Hicks’ Defendants

non-lawyer status and regarding certain commissionable services that they

exclusively provided. The lack of any reference to Appellants in materials recovered

from Hicks’ files pertaining to numerous members of the proposed class also portrays

                                         Page 5
a significant difference from that experienced by Appellees since they testified that

they believed Appellants were involved based upon Hicks’ representations and the

materials he presented to them. Finally, the most glaring difference is between those

proposed Class members that the Hicks Defendants and Appellants dealt with

conjunctively and for whom Hicks believed, at least at one time, he was rendering

services for in compliance with the Injunction. These differences are not trivial and

they are sufficient to defeat typicality.

      Appellees argument is also based on the same flawed reasoning that supports

its claim that the class definition is “clearly ascertainable”. They analogize this case

to the Bailey case and assert that Appellees’ claim arise from the same course of

conduct and same legal theories as those of the class as a whole – namely that the

Hicks Defendants provided enjoined services. See Br. of Appellee at 21. Just as with

the “clearly ascertainable” inquiry, Hicks conduct cannot be viewed in a vacuum

when it comes to the typicality analysis. The Appellants involvement in conjunction

with the Hicks Defendants exposes another discrete class whose claims, if any, are

not typical of Appellants.

                                            Page 6
V.    Appellees’ argument that the money damages sought flow directly from
      the requested declaration ignores a vital prong of the inquiry and is
      merely used to shoehorn a damages claim into a claim for declaratory
      relief

      Appellees’ argument that Rule 42(b)(2) relief is proper in this case relies solely

addresses whether the damages are “incidental” to the claim for declaratory relief.

However, as the case they principally rely upon in support of that argument observes,

“Certification under rule 23(b)(2) is appropriate only if members of the proposed

class would benefit from the injunctive relief they request. The question whether the

proposed class members are properly seeking such relief is antecedent to the question

whether that relief would predominate over money damages.” Bratcher v.

Monumental Life Ins. Co., 365 F.3d 408, 416 (5th Cir. 2004). Here, Appellees skip

this antecedent step and move directly to analyze whether monetary damages flow

from the declaratory relief sought. In Bratcher, the Fifth Circuit described the

approach they took in Bolin to analyze this two-pronged inquiry: “Before applying

the Allison predominance test . . . we observed that ‘[m]ost of the class consists of

individuals who do not face further harm from Sear's [sic ] actions.’ Because only a

negligible proportion of proposed class members were properly seeking injunctive

relief, we held that rule 23(b)(2) certification was inappropriate.” 365 F.3d at

416(quoting Bolin, 231 F.3d 970, 978 (5th Cir. 2000)). In Bolin, the court went on to

state that “Rule 23(b)(2) states that certification is proper for a class seeking ‘final

                                        Page 7
injunctive relief or corresponding declaratory relief.’ Thus, the declaratory relief must

‘as a practical matter afford[ ] injunctive relief or serve[ ] as a basis for later

injunctive relief.’ The extent to which the declaratory relief sought satisfies Rule

23(b)(2) is thus no greater than the extent to which the substantive statutes underlying

the claim for declaratory relief satisfy Rule 23(b)(2).” Bolin, 231 F.3d at 978–79 (5th

Cir. 2000)(emphasis in original).

      Appellees fail to meet either one of these requisites. First, the declaratory relief

in and of itself provides nothing to the proposed Class members. As in Bolin, the

declaration that Appellants and the Hicks Defendants are in violation of the

Injunction does not provide any meaningful injunctive or declaratory relief because

there is no showing that class members are in jeopardy of further harm from

Appellants or the Hicks Defendants. Secondly (and subject to the foregoing), there

are no underlying claims upon which monetary relief will automatically flow from the

declaration sought by Appellees.1 By example, Appellees do not seek a “declaration

that Appellants and the Hicks Defendants violated Tex. Bus. & Com. Code §17.45(5)

with respect to the Class as a whole” or a “declaration that Appellants and Hicks

violated a fiduciary duty to the Class as a whole.”

      Appellees’ argument that the monetary relief sought by the proposed Class

members will be subject to easy calculation only addresses part of the inquiry and

      1
          See Brief of Appellant at pp. 16–17.

                                                 Page 8
entirely ignores any analysis of the substance of the declaratory relief sought of which

there is none.

                             CONCLUSION AND PRAYER

      Appellants have standing to appeal those portions of the Certification Order

relating to claims against the Hicks Defendants because Appellants’ rights are so

intertwined with the Hicks Defendants by virtue of the theories of vicarious liability

upon which Appellees seek recovery from Appellants that the Certification Order

injuriously affects and prejudices Appellants.

      The Certification Order improperly defines the class in that the term “enjoined

services” necessarily requires a determination on the merits before the class is clearly

ascertainable not to mention the issues of whether the Injunction binds Appellants or

is subject to interpretation by the district court, neither issue of which was briefed by

Appellees.

      Unconscionability for purposes of this appeal is defined by Tex. Bus. & Com.

Code §17.45(5). Appellees attempt to morph their claims into unconscionability

under a contract theory of recovery to circumvent the commonality requirement for

class certification and pose this as a matter of law for the district court. Individual

inquiries are necessary to satisfy the unique elements of §17.45(5) unconscionability

and an answer to the inquiry as to Appellees does not answer the question for the

                                         Page 9
class as a whole.

      Appellees’ claims are not typical of the proposed Class as their experience

varied in significant aspects from proposed Class members. The typicality

requirement has not been met.

      Appellees’ claims for declaratory relief do not meet the requisites of Tex. R.

Civ. P. 42(b)(2) because they do not seek any meaningful injunctive or corresponding

declaratory relief. Meeting this requirement is antecedent to the Court’s determination

of whether monetary relief flows directly from the injunctive or corresponding

declaratory relief sought and Appellees have not made this showing. It was error to

certify claims Appellees’ claims declaratory judgment.

           CERTIFICATE OF COMPLIANCE WITH RULE 9.4(e)

1.    This brief complies with the type-volume limitation of Texas Rule of Appellate
      Procedure 9.4(e) and (i)(2)(B) because, according to the Microsoft Word 2010
      word count function, it contains a total of 4,896 words on pages 7-17 of the
      Appellants Brief and on pages 1-10 of the Appellants Reply Brief, excluding
      the parts of the brief exempted by Texas Rule of Appellate Procedure
      9.4(e)(i)(1).

2.    This brief complies with the typeface requirements of Texas Rule of Appellate
      Procedure 9.4(e) because it has been prepared in proportionally spaced
      typeface using Microsoft Word 2010 software in Times New Roman 14-point
      font in text and Times New Roman 12-point in footnotes.

                                               /s/ J. Chad Parker
                                              J. Chad Parker

                                       Page 10
                          CERTIFICATE OF SERVICE

      I certify that a true and correct copy of the Brief of Appellant PETER G. MILNE,
IND., PETER G. MILNE, P.C. was served by electronic service and/or email to the
following counsel of records on March 30, 2015.

James A. Holmes
Law Office of James Holmes, PC
212 South Marshall
Henderson, TX 75654
Via Email

John R. Mercy
Mercy Carter Tidwell, LLP
1724 Galleria Oaks Drive
Texarkana, Texas 75503
Via Email

Peter G. Milne
Peter G. Milne, PC
327 W Houston
Tyler, TX 75702
Via Email

                                               /s/ J. Chad Parker
                                              J. Chad Parker

                                       Page 11