Supreme Court of Texas Blog: Legal Issues Before the Texas Supreme Court
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Category: 'News and Links'

The economic loss rule in Texas is more restrictive than the Restatement

June 23rd, 2014 · Comments Off

An architect on a commercial project was sued by a contractor on the project for their negligent work, which allegedly caused significant increased costs that the contractor could not recoup.

The key fact here turns out to be that the architect worked for the project owner, not the contractor. For that reason, the architect argued, Texas law does not permit the contractor to sue it for pure economic losses (those unconnected to some bodily harm or property damage) caused by its allegedly negligent work. The principle involved is the “economic loss rule.”

As the opinion explains, the economic loss rule aims to draw a clearer line to the edges of tort liability than offered by older principles such as “foreseeability.” While foreseeability can turn on idiosyncratic facts, the economic loss rule instead invites a court to announce broad policy determinations about whether tort liability should apply in a particular situation.

The Texas Supreme Court ultimately agreed with the architect and held that the architect had no liability for these economic losses suffered by a contractor relying on its plans. What makes this opinion notable — and ensures it will be frequently cited, despite its narrow holding — is the depth of its examination of the policies and principles behind the economic loss rule, both in terms of Texas law and the larger national academic discussion.

That extensive background sets the stage for the Court to announce a rule at odds with the Restatement. Some commentary in the Restatement addresses just this situation — an architect, whose plans inflict economic loss on others in the project. The Restatement suggests that an architect on a commercial project should expect exactly this degree of reliance from contractors bidding on the project and, thus, that it is appropriate to impose tort liability as the default rule and let the parties choose, if they wish, to modify that by contract.

A unanimous Texas Supreme Court disagreed. It viewed the policies behind the economic loss rule as better served by leaving this kind of liability among people engaged in the same economic transaction exclusively to the realm of contract law: “We think it more probable that a contractor will assume it must look to its agreement with the owner for damages if the project is not as represented or for any other breach. Though there remains the possibility that a contractor may not do so, we think the availability of contractual remedies must preclude tort recovery in the situation generally because … ‘clarity allows parties to do business on a surer footing’.”

To explain its thinking, the Court offered an excerpt from a 1992 law review article by Professor William Powers, an extensive block quote that may soon be a favorite example for those defending the practical value of the legal academy.1

The Court’s precise holding turns out to be narrow: That a general contractor cannot recover pure economic losses from an architect hired by the project’s owner. The implications for future contractors are clear enough: negotiate for contractual or insurance-based protection.

  1. This opinion extensively discusses academic publications by Professor Powers, Professor Fleming James, and Judge Posner, among others. []

Tags: News and Links

Upcoming event: “An evening with the Texas Supreme Court” on April 17, 2014 in Austin

April 11th, 2014 · Comments Off

On Thursday April 17, the Civil Appellate Section of the Austin Bar is hosting “An Evening with the Texas Supreme Court.” This has become a well-attended biennial event. If you want a sense of what topics are covered, I blogged about the 2012 and 2010 events.

The “evening” begins at 4:30, with a ninety-minute substantive panel of the Justices. There seven Justices listed on the announcement, so the panel should offer a broad view. A reception follows the panel, from 6:00 to 7:00.

Thursday, April 17, 2014 · 4:30–7:00 InterContinental Stephen F. Austin Hotel 701 Congress Avenue · Austin, Texas $25 if paid in advance, $30 at the door

You can find details about how to register, or how to suggest questions for the panel, on this page.

Tags: News and Links

Texas Supreme Court halts disclosure of identity of pharmacies supplying execution drugs

March 30th, 2014 · Comments Off

The Texas Supreme Court does not often touch issues relating to the death penalty. Criminal appeals and habeas questions go, instead, to the Court of Criminal Appeals.

But the latest hot-button aspect of the death penalty — the supply of the execution drugs — did make an appearance on the docket.

On Thursday, a district court in Austin ruled that officials had to reveal the identity of its supplier. The Public Information Act suit was pursued on behalf of two prisoners currently scheduled to be executed in early April. Previous suppliers in Texas and other states have been sued or faced public pressure, leading them to stop providing lethal-injection drugs.

The Austin Court denied a stay on Friday. That very brief opinion conveys the court’s impression that the release of information would be limited: “The order compels disclosure of the requested information to a limited group of attorneys, with further limitations on their use or disclosure of the information.”

Later on Friday, the Texas Supreme Court was persuaded to issue a stay stopping the release: IN RE TEXAS DEPARTMENT OF CRIMINAL JUSTICE, No. 14-0243 .

The Court has set a merits briefing schedule with dates falling in mid- and late April. (The Texas Supreme Court has no power to alter the execution dates, a question which will be handled by courts with criminal jurisdiction.)

Coverage: AP/Dallas Morning News

Tags: Case Notes · News and Links

Can the Legislature prevent a court from striking down a statute on constitutional grounds until 45 days after the AG has been notified?

March 25th, 2014 · Comments Off

That’s the question that the Texas Court of Criminal Appeals, which has the final say on state criminal matters, answered last week.

After the criminal court struck down on First Amendment grounds the Texas criminal statute that had been applied to “sexting” with an underage participant, the AG sought rehearing. One reason offered by the AG’s office is that it had not been formally notified of a constitutional challenge under Texas Government Code 402.010. In denying that rehearing, the Court of Criminal Appeals addressed why it viewed that notice provision as unconstitutional.

The core reason is separation of powers. Section 402.010 provides that a court must forward notice to the attorney general when a party has raised a constitutional challenge, and that “[a] court may not enter a final judgment holding a statute of this state unconstitutional before the 45th day after” such notice is given.

The CCA refused to abide this limitation on its authority to act as a court:

… the potential length of the delay is not so much the problem as the fact of the attempted interference at all. Entering a final judgment is a core judicial power; it falls within that realm of judicial proceedings “so vital to the efficient functioning of a court as to be beyond legislative power.” Thus, the 45-day time frame provided for in subsection (b) is a constitutionally intolerable imposition on a court’s power to enter a final judgment and a violation of separation of powers.

Rehearing Opinion at 6.

In a concurrence, Presiding Judge Keller made two further points. First, that in one year, the CCA disposed of “well over nine thousand matters” in which many made such a claim. Second, that the CCA website makes available “a list of the issues upon which discretionary review has been granted.” Concurrence at 2-3

What does this mean for civil cases?

The statute applies to both civil and criminal cases. The CCA has made plain that it does not think criminal courts and, presumably, courts of appeals hearing criminal dockets need not comply. But the CCA does not have jurisdiction over civil cases.

The question becomes: What does SCOTX think of this notice requirement?

The Context in Which It May Be Answered: The Same-Sex Divorce Cases

The notice statute, it turns out, was passed by the Texas Legislature in 2011 — in the wake of the AG complaining that its office had not been notified about a constitutional challenge lurking in a divorce decree to a gay marriage. There, the AG sought to intervene after the fact, asserting an interest in defending the state’s laws.

The trial court and Austin Court denied that request; that case is now pending before the Texas Supreme Court as IN RE STATE OF TEXAS, No. 11-0222 .

At oral argument, there was substantial discussion about the source and nature of the Attorney General’s interest to intervene in private lawsuits. Oral Argument Tr. at 14-18 Although Section 402.010 could not be the source of that authority in In re State — because it was enacted after-the-fact — it was discussed as reflecting the same concerns.

It’s conceivable that the Texas Supreme Court will decide the narrow issue in IN RE STATE OF TEXAS, No. 11-0222 without ever mentioning Section 402.010 — certainly, it would not strictly need to discuss a statute enacted after the fact. But not mentioning the statute would be curious, given its provenance and role at oral argument. And it seems unlikely that the Court could mention the statute without acknowledging that its sister court of last resort had held that to violate the separation of powers.

The Texas Supreme Court has not taken warmly to legislative attempts to cut short its consideration of constitutional issues. Whether it embraces legislative attempts to slow down judicial resolution of constitutional issues remains to be seen.

Tags: Case Notes · News and Links

I’ll be a panelist at the Ms. JD conference in Austin

February 12th, 2014 · 1 Comment

On February 21st, I’ll be on a panel about what law students and new attorneys should consider about blogging (or writing for similar platforms) as they start to build their professional identities. My co-panelists are Emily Frost of Austin, Erin Gilmer of Austin, and Valarie Hogan of very far from Austin. Lisa Salazar will be moderating.

This is part of the Ms. JD conference “Passion Forward”.

Friday’s events include two other breakout panels (one on social media, one on community involvement), and a small-group workshop to help participants turn their abstract professional-development ideas into more concrete plans.

On Saturday, Ms. JD is co-hosting a “Women’s Law Institute” with UT’s Center for Women in Law, featuring a distinguished list of speakers and participating mentors.

The registration for both days is being coordinated through this page. The Friday sessions are reasonably priced, and the Saturday program is free.

Tags: News and Links

Chief Justice Hecht becomes the longest serving member of SCOTX

January 27th, 2014 · Comments Off

Hecht Tribute Photo

The Court posted this photo tribute to mark Chief Justice Hecht becoming the longest-serving member in its history.

The previous mark was held by Chief Justice Greenhill, who had served for 25 years and 25 days when he retired in 1982.

According to Wolfram Alpha, Justice Hecht has had 1308 opportunities for weekly orders lists, so far.

Tags: News and Links

CLE program this Thursday in Dallas

November 18th, 2013 · 3 Comments

I will be speaking this week at the Dallas appellate section lunch.

The main topic is one that I’ve wanted a good excuse to explore: Testing the Conventional Wisdom of Appeals. Here’s the overall concept —

As appellate lawyers, we develop through our own experience a kind of intuition about which strategies make a difference on appeal. Those intuitions become tips or advice, or once repeated at enough appellate CLEs, our shared conventional wisdom about strategy.

Can the accuracy of our shared assumptions and conventional wisdom be tested against real data?

I am lucky enough to already have a large pool of (mostly) well-structured data about the Texas Supreme Court in particular. Because the Texas appellate courts now require native PDF e-briefs, it has increasingly been possible to connect each petition to the outcome.

The task I set for myself was testing how some of our conventional wisdom about Texas Supreme Court practice holds up under empirical scrutiny. When the conventional wisdom fits the data, we can be more assured in giving our clients strategic advice. When it doesn’t fit the data, we need to go deeper.

What I’m sharing on Thursday is a kind of “working paper” of my progress so far, with some interesting early results. Either at the program or later, I’d also appreciate feedback about which pieces of conventional wisdom you the appellate bar would like to see more deeply tested against real-world data.

I am also preparing a light dessert course of E-Briefs for Advocates, with a few pointers for the lawyer who might rely on others to execute the technical steps.

Event Information

Thursday November 21, 2013
Belo Mansion in Dallas
Dallas Bar website

Here’s the email that was circulated announcing the event:

Please join us at the Belo Thursday of next week, November 21, 2013, at noon for the section’s regular monthly meeting. Don Cruse (The Supreme Court of Texas Blog, http://www.scotxblog.com/) will speak on “Testing Conventional Wisdom on Appeal.” One hour of CLE credit is available. NOTE: There is a “JFK Public Forum” going on at the Belo at the same time. So, come early to ensure parking.

Tags: News and Links

Justice Jeff Brown joins the Court; no opinions or grants this week [Oct. 4, 2013]

October 4th, 2013 · Comments Off

With today’s orders list, the Court did not issue any opinions or choose new cases for oral argument.

On Tuesday of this week, departing Chief Justice Jefferson passed the torch to new Chief Justice Hecht, swearing him in during a ceremony in the Supreme Court chamber. (photos)

On Thursday, new Justice Jeff Brown took the oath of office to join the Court. (photos) He has been promoted from Houston’s Fourteenth Court of Appeals, where he had served since 2007. From 2001 to 2007, he was a district judge in Houston.

Tags: News and Links · Order Lists