Texas Supreme Court Opinions (5/27/16)

Posted by Rich PhillipsWith apologies for the delay, here are the summaries of the opinions issued by the Texas Supreme Court on May 27, 2016. The court decided a total of 9 cases:No. 14-0572, Coyote Lake Ranch LLC v. City of Lubbock — This suit between a landowner and the owner of an interest in the groundwater revolved around the issue of whether the accommodation doctrine applies to a severed groundwater estate as well as severed mineral estates. In a majority opinion, Chief Justice Hecht held that the court of appeals erred in holding that it does not apply, but agreed with the court of appeals that the trial court’s injunction was too broad and that the case should be remanded to the trial court. The petitioner, Coyote Lake Ranch LLC, owns a 26,600 acre ranch on the Texas-New Mexico border. The ranch sits atop the Ogallala Aquifer, which is the principal source of water for  much of the Panhandle, including the respondent, the City of Lubbock. The City bought the Ranch’s groundwater in 1953, and when the City announced plans to increase their water-extraction efforts, the Ranch objected that this would unnecessarily injure the surface. When the parties could not come to an agreement, the Ranch sued to enjoin the City from drilling additional water wells. The trial court granted the injunction and the City appealed, arguing that the accommodation doctrine, which restricts the actions mineral owners can take that impact the surface owner, does not apply. The Court held that the accommodation doctrine does apply, largely based on similarities between mineral estates and groundwater estates. Justice Boyd, joined by Justices Willett and Lehrmann, filed a concurrence arguing that the express terms of the deed permit the City to drill as many wells, in any location, as the City permits, but that the accommodation doctrine restricts the City’s ability to build access roads, paths, and power lines.No. 14-0593, Hebner v. Reddy — This appeal addresses the Texas Medical Liability Act (TMLA) requirement that plaintiffs serve an expert report on each party with 120 days of filing their petition. In this case, the plaintiffs sent an expert report to the defendant six months before actually filing suit, along with a pre-suit notice letter, and then attempted to serve the same report on the defendant after their petition was filed. But they mistakenly served a different report—from the same expert, but addressing a different claim. The defendant did not object, opting to wait out the 120-day period and then moving to dismiss for failure to serve an expert report. The trial court denied that motion, but the court of appeals reversed. Justice Brown held, for the majority, that pre-suit service of the correct report satisfied the TMLA requirement. To hold otherwise would frustrate the purpose of the Act, which is to eliminate frivolous healthcare-liability claims, not meritorious claims. The Court relied heavily on a somewhat similar case from 2013, Zanchi v. Lane, 508 S.W.3d 373 (Tex. 2013), in which the Court rejected an argument that the expert report was served too early because it was sent before the defendant had been served with process. Ultimately, in both cases, what was important was that the defendant received the expert report less than 120 days after the petition was filed. Thus, allowing pre-suit notice complies with the plain language of the TMLA.Justice Boyd, joined by Justice Willett, concurred in the result, but disagreed with the majority’s purpose-based approach. According to the concurrence, all that matters is that the statute expressly sets an end date, but not a start date, to the expert report period, and that it does not specify whether the party must have already been served (and therefore became a party to the suit) on the date of service of the expert report.Finally, Justice Johnson dissented, applying a text-based approach and arguing that a person cannot be a “party” for purposes of receiving an TMLA expert report until they have become a party to the suit by being named as a defendant in the petition. According to Justice Johnson, because the expert report here was served before the defendant was named in the petition, service did not comply with the TMLA’s precise requirements, and the case should have been dismissed. No. 14-0767, Linegar v. DLA Piper LLP (US) — This case arises from a legal malpractice claim asserting that the law firm failed to perfect a security interest related to a loan that the petitioner made from his retirement account. The retirement account was managed by a corporate trustee. The primary question was whether the petitioner had standing to sue for legal malpractice. The court of appeals held that he did not, because the holder of the note was the trustee for his retirement account, reasoning that the trustee was the only injured party. Justice Johnson, writing for the Court, reversed the court of appeals and held that the petitioner did have standing. The Court reasoned that the petitioner had standing because he pleaded his case in terms of the duties the law firm owed to him individually, rather than to his retirement trust, and because the ultimate effect of the firm’s failure to perfect the security interest would impact the beneficiary, not the trustee.No. 14-1077, In re Christus Santa Rosa Health System — The sole issue in this mandamus petition is whether the district court abused its discretion in the underlying medical malpractice suit by ordering a hospital (which has been designated as a responsible third party) to produce a peer review report of the surgery at issue without a proper in camera inspection to determine whether an exception to the medical peer review committee privilege applied. The court of appeals denied the writ of mandamus, but the Supreme Court, through Justice Green’s opinion, conditionally granted the writ. Because the statute governing the privilege requires a peer review committee to have taken some action beyond merely convening in order for the exception to apply, and because there were no facts in the record to establish whether the committee did more than merely convene, the Court ruled that the trial court abused its discretion in failing to adequately review the merits of the documents.No. 15-0106, Town of Lakewood Village v. Bizios — The primary issue in this case is whether a general law municipality has authority to apply its building codes in its extraterritorial jurisdiction (“ETJ”).  The petitioner, a general law municipality, sued Bizios, an individual homeowner, to enjoin him from building a house within the petitioner’s ETJ without complying with the city’s building codes and without obtaining a building permit.  The trial court granted the injunction, but the court of appeals reversed, holding that the city could not enforce its building codes in its ETJ. Justice Boyd, writing for the court, affirmed the court of appeals. Justice Boyd distinguished between home-rule municipalities, which derive their powers from the Constitution, and general-law municipalities, which derive their powers from the Legislature. Thus, home-rule municipalities inherently posses the power to adopt and enforce things like building codes, while general-law municipalities only have that power if it is expressly conferred by the State. Examining four sections of the Local Government Code that purportedly grant general-law municipalities the power to enforce their building codes within their ETJ, the Court ruled that none of the four either expressly or impliedly do so. Accordingly, the Court held that the city lacked statutory authority to force Bizios to get a building permit before building his house.No. 15-0117, In re Lazy W Dist. No. 1 — This mandamus petition arises from the intersection of condemnation law and governmental immunity. Both the condemnor and the condemnee are governmental entities. The condemnee filed a plea to the jurisdiction, and the trial court held that it would not appoint special commissioners to determine the damages caused by the taking until after it disposed of the plea to the jurisdiction. The court of appeals issued a writ of mandamus ordering the trial court to appoint special commissioners and wait for their award before considering the plea to the jurisdiction. The court of appeals reasoned that the trial court has no discretion to do anything but appoint special commissioners until after the commissioners issue their award and a party objects to that award. Chief Justice Hecht, writing for the court, disagreed with the court of appeals. He reasoned that the statute governing the special commissioner procedure was mandatory, but not restrictive: it requires the trial court to appoint commissioners, but does forbid other actions. This, together with the principle that courts always have jurisdiction to determine their own jurisdiction, persuaded the Court that the trial court did not abuse its discretion when it considered the condemnee’s plea to the jurisdiction before appointing special commissioners.No. 15-0563, Doctors Hosp. at Renaissance Ltd. v. Andrade — This appeal arises from a medical malpractice claim based on injuries sustained during the birth of the plaintiffs’ daughter. The issues are (i) whether a limited partnership that owns a hospital can be vicariously liable for alleged medical malpractice committed by a limited partner in the partnership and (ii) whether the general partner of the limited partnership can be vicariously liable. In an opinion written by Justice Lehrmann, the Supreme Court held that the limited partnership cannot be vicariously liable for a limited partner’s medical negligence. Because the ordinary course of the partnership’s business does not include medical treatment of patients, its limited partner—a doctor—was not acting with the authority of the partnership when he treated the plaintiff and her daughter.No. 15-0625, In re HEB Grocery Co., L.P. — This mandamus proceeding arose out of a personal-injury suit against HEB. The trial court denied HEB’s motion to conduct a physical examination of the real party in interest, who had suffered another slip-and-fall accident during the pendency of this suit. HEB’s motion was supported by documentation from their retained orthopedic expert, but the trial court nonetheless denied it without explanation. HEB filed a petition for writ of mandamus, which was denied by the court of appeals. In a per curiam opinion, the Court granted relief, holding that the trial court committed a prejudicial error of law by denying HEB’s motion after HEB satisfied the requirements of the Texas Rules of Civil Procedure. No. 15-0631, In re J.B. Hunt Transp., Inc. — As Justice Willett put it in his unanimous opinion for the Court, this is a case about both traffic lanes and jurisdictional lanes. One of Relator’s tractor-trailers struck a disabled vehicle on I-10 that had entered the truck’s lane, injuring the Real Parties and ultimately killing one of them. Relator filed suit in Waller County but did not immediately serve the defendants. Relator claims that it agreed to delay service until the Real Parties were out of the hospital. A few days later, the Real Parties filed suit in Dallas County and served citations. Relator filed a plea in abatement, arguing that the Waller County court had dominant jurisdiction, and the Court agreed. Real Parties argued that two exceptions to the first-filer doctrine applied: that the filer displayed inequitable conduct, and that the filer lacked the intent and diligence to prosecute the first lawsuit. The inequitable conduct exception, however, requires that the inequity resulted in the first-filer being first to the courthouse, and the Real Parties did not allege that Relator’s conduct caused them to delay filing suit. Likewise, the Court rejected the Real Parties’ argument that Relator lacked intent and diligence based on a 26-day delay between filing suit and serving the Real Parties.The Court also held considered whether the proper test for the availability of mandamus relief in a dominant-jurisdiction case is found in In re Prudential Insurance Co. of America, 148 S.W.3d 124 (Tex. 2004) (orig. proceeding) or in Abor v. Black,  695 S.W.2d 564 (Tex. 1985). The Court found that Prudential abrogated the more stringent test in Abor.The Court also granted 5 petitions for review. I will post summaries of the issues in those cases next week.