Texas Supreme Court Opinions - 5/20/16

Posted by Rich PhillipsOn May 20, 2016, the Supreme Court of Texas issued opinions in seven cases:No. 14-0362, Christus Health Gulf Coast v. Carswell — This medical malpractice case arose from the death of a patient at Christus St. Catherine Hospital. The plaintiffs asserted that malpractice caused the patient’s death and later added claims that the hospital tried to cover up the malpractice after the death. The jury found no malpractice in treating the patient, but found for the plaintiffs on their claim that the hospital improperly obtained consent to perform an autopsy. In a unanimous opinion by Justice Johnson, the Supreme Court held that the claim that the hospital improperly obtained permission for the autopsy is a healthcare liability claim because “the professional or administrative services underlying the Carswells’ complaint were directly related to the improper health care they alleged [the patient] received, or health care they alleged he should have received but did not.” Because these claims were not added to the lawsuit until more than two years after the patient’s death, the Court found that the claims are barred by the two-year statute of limitations in Texas Civil Practice and Remedies Code section 74.251(a). The Court found that the post-mortem claims did not relate back to the filing of the plaintiffs’ original petition because they were based on separate, distinct, or differing transactions or occurrences.No. 14-0714, Wood v. HSBC Bank USA, N.A. — This is one of two cases decided today that arise from the Texas Constitution’s provisions regarding home-equity loans. Eight years after obtaining a home-equity loan, the Woods notified the current holder of the note that the loan did not comply with the constitutional provisions governing home-equity loans. After the holder and servicer did not attempt to cure the alleged defects, the Woods brought suit to quiet title, seeking a declaration that the loan was void and that all principal and interest be forfeited. In an opinion by Justice Lehrmann (joined by Justices Johnson, Guzman, Boyd, Devine, and Brown), the Supreme Court held that although defects in home-equity loans can be cured, the loans are invalid until the defects are cured. Therefore, the Court held that a suit to quiet title on an invalid home-equity loan is not subject to any limitations period. But the Court held that the Woods could not seek a declaratory judgment to obtain forfeiture of principal and interest paid on the loan. This decision was based on the reasoning in Garofolo v. Ocwen Loan Servicing, LLC, which is summarized below. Chief Justice Hecht filed a dissenting opinion (joined by Justices Green and Willett). The dissenters would have held that a noncompliant loan is valid until it is invalidated, and that a suit to invalidate is therefore subject to a four-year statute of limitations.No. 14-1045, In re M-I, LLC — This mandamus proceeding arises from a trade-secret dispute. The trial court rejected the relator’s request to exclude the opposing party’s designated representative from the courtroom during a temporary-injunction hearing in which trade secrets were going to be discussed. The trial court held that the exclusion would be a violation of the opposing party’s due process rights. The trial court also ordered production of a memo that allegedly contained trade secrets without conducting an in camera review. In a unanimous opinion by Justice Devine, the Supreme Court held that the trial court abused its discretion in refusing the request to exclude the party’s representative because it did not conduct the required balancing between the relator’s right to protect its trade secrets and the opposing party’s right to have a representative (other than its lawyers or experts) at the hearing. The Court also rejected several other grounds based on Texas law that the real party in interest asserted to support the trial court’s decision. Finally, the Court held that the trial court abused its discretion by ordering production of the memo without first conducting an in camera review.No. 15-0046, Hoskins v. Hoskins — In this arbitration appeal, the Supreme Court definitively resolved an issue that has been festering for years—whether the vacatur grounds listed in the Texas Arbitration Act are the exclusive grounds to seek vacatur of an arbitration award. In a unanimous opinion by Justice Lehrmann, the Court held that the former common-law grounds are fully preempted by the statutory grounds listed in the TAA. In reaching this conclusion, the Court rejected an argument that the decision in Nafta Traders, Inc. v. Quinn, 339 S.W.3d 84 (Tex. 2011) held that the common-law grounds were still viable. The Court noted that in Nafta Traders, the arbitration agreement prohibited the arbitrators from making a decision that contained reversible error under state or federal law. Thus, the vacatur there was based on a statutory ground—an argument that the arbitrators had exceeded their authority. Justice Willett filed a concurring opinion to emphasize the significance of the Court’s decision that the common-law grounds for vacatur are no longer viable in Texas.No. 15-0146, Wal-Mart Stores, Inc. v. Forte — This case presents certified questions from the Fifth Circuit about the application of the civil penalty provisions of the Texas Optometry Act. Essentially, the Supreme Court was asked to resolve how the civil penalty provisions of the Texas Optometry Act should be harmonized with the restrictions on exemplary damages found in Chapter 41 of the Texas Civil Practice and Remedies Code. This case has a procedural wrinkle because the State of Texas filed an amicus curiae brief arguing that private litigants cannot recover under the civil penalty provisions of the Texas Optometry Act, even though neither party had addressed that issue. In a decision by Chief Justice Hecht (joined by Justices Green, Johnson, Guzman, and Brown), the Court elected to address the question (and not address the State’s arguments). The Court held that if the civil penalty provisions can be invoked by civil litigants, the penalties are “damages” and “exemplary damages” and therefore subject to the limits of Chapter 41. Justice Boyd (joined in part by Justices Lehrmann and Devine), filed a dissent. Justice Boyd would have reached the issue raised by the State and held that the civil penalty provisions cannot be invoked by private litigants. Justices Lehrmann and Devine would have simply declined to answer the certified questions without resolving the issues raised by the State. Justice Willett did not participate in the case.No. 15-0294, In re DePinho — This mandamus decision (which the Court decided without hearing argument) addresses the scope of Texas Rule of Civil Procedure 202, which allows depositions to investigate a claim. In a per curiam opinion, the Court held that Rule 202 cannot be used to investigate a claim that is not yet ripe. It cannot be used to investigate claims that may come into existence based on future actions.No. 15-0437, Garofolo v. Ocwen Loan Servicing, LLC — This certified question proceeding from the Fifth Circuit also addresses the scope of the Texas Constitution’s provisions governing home-equity loans. After paying off her home equity loan, the borrower brought a claim for forfeiture of all principal and interest paid because the holder and servicer did not provide her with a recordable release of lien after the loan was paid off. The borrower’s claim was based on the constitutional provision and a provision in her loan agreement, both of which required the lender to giver the borrower a release in recordable form after the loan was paid off. In an opinion by Justice Brown (joined by Chief Justice Hecht and Justices Green, Willett, Guzman, Lehrmann, and Devine), the Court held that the borrower did not have either a constitutional or contractual right to seek forfeiture. Rather, the borrower must prove actual damages or seek other relief, such as specific performance. Justice Boyd filed a dissenting opinion (joined by Justice Johnson). The dissenters agreed with the majority that there is no constitutional cause of action for forfeiture. But they would have held that the loan agreement gave the borrower a contractual right to rescission.Access the complete order list here.