Texas Supreme Court Opinions and Orders (3/6/15)

Posted by Rich PhillipsIn its weekly order list, the Supreme Court of Texas issued four opinions and accepted a certified question from the Fifth Circuit.The Court issued the following opinions:No. 13-0199, KCM Financial, LLC v. Bradshaw – In this oil and gas dispute, the Court addressed the duties owed by the executive-rights owner to the non-executive rights owners. The plaintiffs contended that the executive-rights owner breached its duties by accepting a below-market royalty in exchange for an above-market bonus payment. The plaintiff argued this was a breach because all of the owners shared in the below-market royalty, but only the executive-right owner enjoyed the benefit of the bonus. In a unanimous opinion by Justice Guzman, the Court reiterated that “unlike a typical fiduciary relationship, the executive is not required to wholly subordinate its interests in favor of the non-executive if their interests conflict.” Moreover, “although the parameters of the duty are imprecise, at bottom, the executive is prohibited from engaging in acts of self-dealing that unfairly diminish the value of the non-executive interest.” Because the nature of the duty is so fact-specific, the Court declined to articulate a bright-line test. The Court therefore held that fact questions prevent summary-judgment and remanded the case for further proceedings in the trial court.No. 13-0573, The Fredricksburg Care Company, L.P.  v. Perez – This appeal arose from a dispute with a nursing home. The nursing home sought to compel arbitration as provided in the admission agreement. The plaintiffs argued that because the arbitration clause did not comply with Texas Civil Practice and Remedies Code section 74.451, it was unenforceable. The nursing home countered that section 74.451 is preempted by the Federal Arbitration Act, and therefore cannot invalidate the arbitration clause. The plaintiffs responded that the FAA did not preempt section 74.451 because of the McCarran-Ferguson Act, which exempts from federal preemption any state law enacted for regulation of the business of insurance. In a unanimous opinion by Justice Green, the Court found that section 74.451 is not a law enacted to regulate the business of insurance. Therefore, the Court held that the exemption in the McCarran-Ferguson Act does not apply, and section 74.451 is preempted by the Federal Arbitration Act. The Court therefore remanded the case to the trial court with instructions to issue an order compelling arbitration.No. 13-0576, The Williamsburg Care Company, L.P. v. Acosta – In a short per curiam opinion, the court remanded this case to the trial court in light of the Court’s decision in the Perez case.No. 13-0577, The Fredricksburg Care Company, L.P. v. Lira – In a short per curiam opinion, the court remanded this case to the trial court in light of the Court’s decision in the Perez case.The Court accepted the certified question in No. 15-0146, Wal-Mart Stores, Inc. v. Forte. The certified question relate to the civil penalty provisions of the Texas Optometry Act. Essentially, the Supreme Court has been 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. There are two questions: (1) whether the civil penalties are “damages” as that term is used in Texas Civil Practice and Remedies Code section 41.002(a); and (2) if the civil penalties are “damages,” whether they are subject to the limitation in Texas Civil Practice and Remedies Code section 41.004(a), which precludes recovery of exemplary damages if there is no recovery of actual damages.