Texas Supreme Court Opinions and Orders (8/29/14)

As expected, the last order list of the Supreme Court’s fiscal year was a busy one. The Court issued opinions in 12 argued cases, so I apologize in advance for the length of this post. There were no grants and no mandamus petitions were set for argument. According to Don Cruse’s helpful tracking over at the SCOTX Blog, this leaves the Court with 6 cases that have been argued, but not yet decided: 4 from 2013 and 2 from 2014.Interestingly (similar to the United States Supreme Court), it appears that the Court saved the contentious decisions for last. Of the 12 opinions, 5 were decided on a 5-4 vote and 7 included a concurrence or a dissent.Access the whole order list here. All of the opinions are collected here.The Court issued the following opinions: 12-0348, Hamrick v. Ward – The Court took an opportunity to clarify the law of implied easements. In a unanimous opinion by Justice Guzman (with Justice Brown recused), the Court clarified that the proper type of implied easement for roadway access to a landlocked, previously unified parcel is easement by necessity, rather than easement by prior use (which was the plaintiffs’ theory in the trial court). In doing so, the Court also clarified that to obtain roadway access by implied easement, a party must prove both necessity at the time of severance and a present necessity. Because the Court concluded that the law was not previously clear on this issue, the Court remanded the case to the trial court to allow the plaintiffs the opportunity to plead and prove an easement by necessity.No. 12-0563, Burbage v. Burbage – This defamation case arose from a dispute about the operation of a family business. One brother (Kirk Burbage) accused another (Chad Burbage) of making defamatory statements about him and his operation of the family-owned funeral home. In a unanimous opinion by Justice Green, the Supreme Court held that Chad waived any error regarding the application of a qualified privilege to some of the allegedly defamatory statements. Chad contended that the damages question improperly mixed valid and invalid theories of recovery because it did not properly account for the qualified privilege. At trial, Chad’s counsel objected to the lack of an instruction about the qualified privilege in the liability question, but did not object to the commingling of valid and invalid theories in the damages question. Therefore, the Supreme Court found that he waived error because his request for an instruction did not inform the trial court of the alleged error in the damages question or give the court the opportunity to correct the error. The Court applied its recent decision in Waste Mgmt. of Tex., Inc. v. Tex. Disposal Sys. Landfill, Ltd., 434 S.W.3d 142, 156 (Tex. 2014) to find that the damages evidence was legally insufficient. Finally, the Supreme Court also found that a permanent injunction barring certain types of communications by Chad was an unconstitutional prior restraint on speech.No. 12-0604, Highland Homes Ltd. v. State – In a 5-4 decision, the Court determined that the Unclaimed Property Act does not apply to damages and settlement proceeds in a class action. As part of a class-action settlement, the class representatives and the defendant agreed that unclaimed proceeds would be donated as a cy pres award to The Nature Conservancy. The state intervened to argue that the cy pres award violated the Unclaimed Property Act. The Court (in an opinion by the Chief Justice, joined by Justices Green, Guzman, Lehrmann, and Brown) held that property held by the administrator of the settlement fund was not “abandoned” because it had been claimed by the absent class members’ representatives. Therefore, the majority reasoned, the Unclaimed Property Act cannot apply. The dissent (authored by Justice Devine, and joined by Justices Johnson Willett, and Boyd) contends that the majority’s interpretation of the class representative’s role effectively eliminates the prohibitions against private escheat agreements and contractual time limits contained in the Unclaimed Property Act.No. 12-0620, Nath v. Texas Children’s Hospital – The Court considered the propriety of one of the largest sanction awards arising from baseless pleadings in the history of Texas and the United States. The trial court awarded approximately $1.3 million in sanctions against a physician, after finding that his pleadings against other healthcare providers were groundless and filed in bad faith and for an improper purpose. The majority (in an opinion by Justice Guzman, joined by the Chief Justice and Justices Johnson, Willett, and Devine) agreed with the trial court that the physicians pleadings were sanctionable because they asserted claims that were time-barred and made allegations that were irrelevant to the lawsuit for the purpose of leveraging a more favorable settlement. But the majority found that the trial court did not properly account for the fact that the defendants’ attorneys’ fees were affected by their decision to litigate for over four years before seeking sanctions. Therefore, the Court reversed and remanded for a new determination of the amount of the sanctions. The dissent (by Justice Green, joined by Justices Lehrmann, Boyd, and Brown) would have held that the trial court’s order indicated that it did consider the fact that the defendants’ had litigated for four years before seeking sanctions, and therefore would have affirmed the award as within the trial court’s discretion.No. 12-0621, Exxon Mobil Corp. v. Drennen – This dispute between Exxon and a former executive presents the issue of the enforceability of a choice-of-law provision in a bonus-compensation incentive program. The agreement at issue called for forfeiture of unvested stock options if the employee chose to compete with Exxon. Although the employee was based in Texas, the company is headquartered in Texas, and the company is a New Jersey corporation, the choice-of-law provision specified that New York law would apply to any disputes. Applying the approach of the Restatement (Second) of Conflict of Laws, the Court (in an opinion by Justice Green), found that Section 187(2)(a) of the Restatement did not bar application of New York law because there was a reasonable basis for the parties to choose New York law, regardless of whether there was a substantial relationship between the parties and the agreements and New York. The Court then applied the three part test from DeSantis v. Wackenhut Corp., 793 S.W.2d 670 (Tex. 1990) to determine whether the choice-of-law provision violates section 187(2)(b) of the Restatement. The Court found that (1) Texas had a more significant relationship to the transaction and the parties than did New York; (2) Texas had a materially greater interest in the enforcement of the agreement than did New York; but (3) enforcement of New York law would not contravene any fundamental Texas public policy. In reaching the third conclusion, the Court analyzed at length whether the agreement at issue was a covenant-not-to-compete that would violate Texas law. The Court concluded that it was not a covenant-not-to-compete, because it did not restrict the former employee’s ability to compete with Exxon. Rather, it required the employee to “choose between competing with the former employer without restraint from the former employer and accepting benefits of the retirement plan to which the employee contributed nothing.” (Justices Guzman and Lehrmann did not participate in the decision of this case.)No. 12-0728, In re K.M.L. – This parental termination case resulted in the most fractured opinion of the day. The majority opinion (by Justice Green) was joined fully by the Chief Justice and Justices Willett, Guzman, and Brown, joined in part by Justices Johnson and Boyd, and joined in a different part by Justices Lehrmann and Devine. The majority concluded that the intellectually disabled and mentally ill mother did not knowingly agree to voluntarily relinquish her rights to the child and that the father did not receive notice of trial and did not waive notice even though he appeared at trial under subpoena to testify. Therefore, the Court reversed the termination decision. Justice Lehrmann (joined by Justice Devine) agreed with the Court’s reasoning as to the mother and with the Court’s result as to the father, but wrote a separate concurrence to give different reasons for the result as to the father. Justice Lehrmann would have found that the judgment as to the father should be reversed because the trial court did not appoint the statutorily required counsel and did not admonish him about his right to counsel. Although Justice Johnson (joined by Justice Boyd) agreed with the result as to the father, he wrote a dissent in which he disagreed with the result as to the mother. He would have found that there was sufficient evidence that the mother’s voluntary relinquishment was made knowingly.No. 12-0772, Zachry Construction v. Port of Houston Authority of Harris County, Texas – In a majority opinion by the Chief Justice (joined by Justices Green, Guzman, Devine, and Brown), the Court found that a no-damages-for-delay clause does not shield the owner from claims that it intentionally and wrongfully interfered with the contractor’s attempts to complete its work. The Court also found that this result applied even though the owner was a local government entity, because the entity’s governmental immunity from suit and liability had been waived by statute. The Court also concluded that the waiver of liens and claims for work associated with progress payments does not waive claims already asserted by the contractor “unless the claim is specifically mentioned” or the intent to waive is clear. Justice Boyd (joined by Justices Johnson, Willett, and Lehrmann) dissented. The dissenters would have held that the waiver of governmental immunity is limited to “the balance due and owed by the local governmental entity under the contract” and therefore does not include damages for delay here because the contract expressly excluded them.No. 12-0867, Greene v. Farmers Insurance Exchange – The Court construed a vacancy provision in a Texas homeowner’s insurance policy to determine that it applied to damage from a fire that spread from a neighboring home. In an opinion by Justice Johnson (joined by the Chief Justice and Justices Green, Guzman, Lehrmann, Devine and Brown), the Court noted that the homeowner could have purchased coverage for the period of vacancy but did not. The Court also the rejected the homeowner’s arguments that (1) the anti-technicality statute prevented the insurance company from relying on the vacancy provision and (2) the provision should not be enforced because the vacancy did not prejudice the insurance company and was not causally related to the loss. Justice Boyd (joined by Justice Willett) concurred in the Court’s judgment but would have taken the opportunity to clarify the Court’s jurisprudence on when a prejudice requirement will be applied to provisions in insurance policies.No. 13-0043, Kinney v. Barnes – In this defamation case, the court (in a unanimous opinion by Justice Lehrmann) held that an injunction requiring removal of defamatory statements from a website is not an unconstitutional prior restraint, but that a permanent injunction against the same or similar speech in the future is unconstitutional. Because the court of appeals did not make that distinction and instead found that any injunction would be unconstitutional, the Supreme Court reversed and remanded to the trial court for further proceedings.No. 13-0073, In re John Doe – This case involves a Rule 202 petition for a pre-suit deposition of an anonymous blogger. The petitioners claim that the blogger posted defamatory and disparaging comments about the petitioners. As part of the Rule 202 petition, they sought to compel Google, Inc. to disclose the identity of the blogger. With the trial court’s permission, a copy of the petition was served on the blogger by sending it to the blog’s email address. The blogger appeared anonymously through counsel and filed a special appearance. In a 5-4 decision, the Court held that the trial court must have personal jurisdiction over the proposed deponent before it can order a Rule 202 deposition. The Court (in an opinion by the Chief Justice and joined by Justices Green, Willett, Guzman, and Brown) concluded that the requirement that the petition be brought “in a proper court” means that it must be brought in a court with personal jurisdiction over the proposed deponent. The dissent (by Justice Lehrmann, joined by Justices Johnson, Boyd, and Devine) reasons that a petitioner should not be required to establish personal jurisdiction over a party who refuses to disclose jurisdictional facts (such as identity and location).No. 13-0103, King Fisher Marine Service, LP v. Tamez – The primary issue in this case is the timing of objections to the jury charge. The trial court made clear to the parties that all objections to the charge (and requests for inclusion in the charge) needed to be done at the formal charge conference. The morning after the formal charge conference (and just a few minutes before the charge was to be read to the jury), defense counsel requested an additional instruction. The trial court rejected that request as untimely. In a 5-4 decision, the Supreme Court found that the trial court did not abuse its discretion in holding the request untimely. The Court (in an opinion by Justice Brown joined by Justices Johnson, Willett, Lehrmann, and Boyd) reasoned that Rule 272 does not require a trial court to accept objections to the charge right up to the moment the charge is read to the jury. Instead, Rule 272 states only that objections made after the charge is read are untimely. Moreover, the rule requires the court to give the parties reasonable time to inspect and object to the charge. Thus, the majority concluded, Rule 272 “affords trial courts the discretion to set a deadline for charge objections that precedes the reading of the charge to the jury as long as a reasonable amount of time is afforded for counsel to examine and object to the charge.” Justice Guzman (joined by the Chief Justice and Justices Green and Devine) filed a dissenting opinion. The dissenters criticize the majority for replacing a bright-line rule (object before the charge is read to the jury) with “a system riddled with uncertainty and potential for abuse.” No. 13-0234, Gilbert Wheeler, Inc. v. Enbridge Pipelines (East Texas), L.P. – This case involves the proper measure of damages for destruction of trees during construction of a pipeline. The parties’ agreement required the pipeline company to install the pipeline using boring rather than excavation, specifically to preserve trees. But the contractor used excavation and, in the process, destroyed the trees. In a unanimous opinion by Justice Lehrmann, the Court held that the distinction between temporary and permanent injury to real property applies to breach-of-contract claims just as it does for tort claims. Thus, temporary injuries to real property caused by breach of contract are measured by the cost to restore the property. And permanent injuries to real property caused by breach of contract are measured by diminution of the property’s market value. The court also found that the common-law exception for the intrinsic value of trees applied here. Under that exception, damages for permanent injury can be measured in terms of the intrinsic value of the trees (aesthetics, shade, and perhaps other factors) where the diminution to the property’s value is zero or nominal. – Rich Phillips, Thompson & Knight