I’ve written before about how much I valued my experience as a law clerk at the Texas Supreme Court (back when we had the more accurate but less nationally-portable title of “briefing attorney”). Remarkably, the Texas Supreme Court justices open their regular conferences to law clerks, who can watch how they work through the accumulated petitions for review and pending opinions.

The brochure describes what is needed for each application and lists out which Justices prefer paper applications and which prefer electronic ones. This vote is 5-4 in favor of paper.²

So what can applicants do to make the process easier for the Justices who have chosen to accept electronic applications? I would suggest paying attention to the Court’s expectations for e-briefs. Although the context is different, your goal of making the judge’s task easier is much the same. By all means, use natively-generated PDFs rather than scans. And consider using a healthy font size that might look good on a screen to readers with less fresh eyes than your own.³

1. The document notes that the Court does not follow the timelines of the “Federal Law Clerk Hiring Plan,” which this year has moved to a single June 28 kickoff that Above the Law speculates (hopes?) could lead to “an utterly shambolic process.” No worries about that here.
2. From the brochure: “Chief Justice Jefferson and Justices Willett, Guzman, Lehrmann and Devine prefer paper applications. … Justices Hecht, Green, Johnson, and Boyd prefer electronic applications.”
3. As one data point, the Court now requires at least 14-point font for briefs, a rule change that has been explained as making e-filed documents easier to work with on screens. That size might be constraining on a resume but surely would work for a writing sample.

The Court also announced its first two argument sittings for the fall, which will begin on Tuesday September 9, 2013 and Tuesday October 8, 2013. The October sitting still has some argument slots open, for the next round of petition grants.

The May 10 orders list did not include any opinions or grants.

Arbitration against a trust beneficiary

HAL RACHAL, JR. v. JOHN W. REITZ, No. 11-0708

Opinion of the Court

A written trust contained a broad arbitration clause. One of the trust’s beneficiaries, who had not personally signed the trust itself, sued the trustee for misconduct. The trustee sought to invoke the arbitration clause against the (non-signatory) beneficiary.

The court of appeals concluded that this clause could not be enforced because it was not part of “an agreement” between the trustee and the beneficiary.

The Texas Supreme Court disagreed. The Court rejected the argument that trusts do not qualify as “agreements” under the Texas Arbitration Act. Unlike traditional contracts negotiated between two parties, they are created by one party (the settlor) for the benefit of others (beneficiaries). But the Court noted other cases where Texas law enforced an arbitration clause against a non-signatory through the doctrine of “direct benefits estoppel,” which holds that a person who seeks to enforce a contract has assented to its arbitration clause as well. The Court was unpersuaded that the unilateral nature of a trust made it less of an “agreement” for purposes of the Texas Arbitration Act.

Looking at the particular claims here, the Court concluded that the beneficiary had framed his claims in terms of enforcing the terms of the trust. For that reason, bringing this lawsuit “constituted the assent required to form an enforceable agreement to arbitrate under the [Texas Arbitration Act].”

Parental termination: affidavits of voluntary relinquishment and what right a non-custodial father has to notice or to counsel

This set of petitions (filed by the mother, father, and grandmother) raise a number of issues related to parental termination, including:

• The mother argues that she did not have the mental capacity to understand the affidavit of voluntary relinquishment. Among other reasons, the petition notes that the form of affidavit used by the Department deviated from the format promoted by the State Bar.

• The father argues that he was denied personal notice of earlier hearings in the case (given only by publication) and that the trial court judge should have inquired whether he was indigent and needed appointed counsel.

An expedited oral argument date has been set for Monday June 3, 2013. This is the only case on the argument calendar between now and September.

The Court’s calendar shows a two-day private conference of the Justices next Monday and Tuesday. Most results of that conference will be released with next Friday’s orders list.

Shared discovery orders and litigation involving trade secrets

The dispute is over the scope of a protective order for the defendant’s trade secrets. The wrinkle is that the order permits limited sharing with other qualifying litigants beyond this case — so similar plaintiffs in another state might obtain this information and might, in turn, share discovery information that they have gathered. The defendant argues that this is an abuse of discretion and constitutes a taking. The plaintiff side argues that these shared discovery orders are commonly permitted in other jurisdictions and promote judicial efficiency while adequately protecting the producing party.

Expert certifications to sue architects, engineers, and surveyors

Chapter 150 of the Civil Practice and Remedies Code requires those suing architects, engineers, or surveyors to include a certification about the claim from a qualified expert with the original filing or risk dismissal. Here, the two sides reached a Rule 11 agreement about expert deadlines that might extend this time. Before that (new) deadline was reached but after the underlying statute of limitations on the claim had expired, the defendant moved to dismiss under section 150.002. The trial court denied the motion. The court of appeals reversed, concluding that the case did not qualify for a “good cause” extension under the statute. Justice Keyes dissented, arguing that the defendant had waived this right through the Rule 11 agreement.

The petition argues, among other things, that the court of appeals lacked interlocutory appellate jurisdiction over a trial court decision to extend time (rather than to dismiss) and that the Rule 11 agreement should be enforced.

ERISA preemption of severance agreements

The case asks if a group of employees of a company that sold a business unit to another company had, on these facts, a contract claim against their former employer over severance benefits. At the court of appeals level, the three-judge panel split three ways:

• an opinion conveying the judgment, which concluded that the claims were not preempted by ERISA but that these facts did not demonstrate any contract breach;

• a concurring opinion in the judgment only, which concluded that this claim was preempted by ERISA; and

• a dissenting opinion, which concluded the claim was not preempted and that these facts were consistent with a contract claim.

Suits by insurers to recover funds paid out by mistake of fact (with some appellate twists)

This appeal involves a complex tangle of insurance obligations for an oilfield blowout in 1997. The petition is brought by the insurer, seeking to recover some funds previously paid out to certain parties involved in the operation. The petition claims that the payments were made “under a mistake of fact” and seeks restitution from those who ultimately received the funds. The respondents argue that this is an extra-contractual claim that is barred by Excess Underwriters at Lloyd’s v. Frank’s Casing Crew & Rental Tools, 246 S.W.3d 42 (Tex. 2008).

One argument made involves “law of the case.” This case has percolated up and down the appellate chain, with two previous decisions of the court of appeals (Gotham I and Gotham II) resulting in petition denials. The petition argues that the appellate decision below (called Gotham III in the briefing) violated the law-of-the-case doctrine by reversing field on a legal point because of the intervening Frank’s Casing decision.

That points toward an even more arcane lurking issue — how does “law of the case” work in a case that has been transferred by docket equalization? Under Texas Rule of Appellate Procedure 41.3, “the court of appeals to which the case is transferred must decide the case in accordance with the precedent of the transferor court under principles of stare decisis…” The Gotham III version of this appeal was sent from the San Antonio Court to the El Paso Court. It was that transferee court that set aside the San Antonio Court’s holding in Gotham I. If Frank’s Casing represented such a sharp break with the prior law that even the San Antonio Court would have been required to change its result, then the decision seems consistent with both Rule 41.3 and “law of the case.” But if Frank’s Casing did not change the principle upon which Gotham I rested, does Rule 41.3 prevent a transferee court from revisiting the issue?

This last question might be turn out to be academic. The Texas Supreme Court itself is not bound by the law-of-the-case doctrine in regard to the substance of this appeal, because its prior petition denial does not have the effect of blessing the result of Gotham I on the merits. But how the Court’s opinion juggles these doctrines may give some guidance to litigants and judges who dealing with the kind of blockbuster cases that tend to spin off a whole series of appellate sequels.

The Court will hear oral argument next Tuesday in IN THE INTEREST OF E.C.R., A CHILD, No. 12-0744 . This is the only case that was given an April argument date, due to the time-sensitive subject matter. Other cases in which review has been granted are waiting for argument dates in the fall.

Opinions

Texas’s Prompt Pay law does not protect hospitals in disputes against HMO network providers

CHRISTUS HEALTH GULF COAST, ET AL. v. AETNA, INC. AND AETNA HEALTH, INC., No. 11-0483

Opinion of the Court

The medical services that led to this payment dispute were accumulated beginning in the 1990s. At that time, Aetna delegated its HMO care through a third party (called “Management Services” in the opinion) that, in turn, entered contracts with each of these hospitals. Management Services hit financial troubles in 2000 and was, shortly thereafter, removed from Aetna’s system.

Ultimately, the hospitals billed $13 million that the middleman refused to pay. They then brought suit directly against Aetna under Texas’s prompt-pay law that applies to insurers.

With today’s opinion by Justice Willett, the Supreme Court holds that the statute does not apply here because there was no direct contractual privity between Aetna and the hospitals for this care. The Court’s reasoning was based on the text, as well as a subsequent amendment to the statute. The Court rejected the hospitals’ argument that the statute applied to the whole web of agreements involved in HMO care rather than requiring direct privity between two parties. The Court pointed to statutory language that payment amounts should be “in accordance with the contract between the physician or provider and the health maintenance organization.” Because there was no direct “contract between” these litigating parties, the Court held, the statute did not apply.

More interesting to appellate advocates may be the Court’s reliance on the subsequent history of the statute as an interpretative aid about what a prior Legislature had meant:

… a 2001 amendment to the Prompt Pay Statute, though inapplicable here, is instructive, and underscores Aetna’s nonliability for its delegated network’s failure to pay the Hospitals. Specifically, the Legislature in 2001 gave the Insurance Commissioner the discretionary authority to compel an HMO to “reassum[e] the functions delegated to the delegated entity, including claims payments for services previously rendered to enrollees of the health maintenance organization . . . .” Tellingly, the 2001 change provides administrative relief in situations like this, but it nowhere grants providers a private action against HMOs. It authorizes administrative intervention but not private litigation. As the Legislature is presumed to know its previous enactments, we read statutes not in a vacuum but contextually, and the implication of this 2001 amendment is significant: There would be no need for the Legislature to impose such a duty on HMOs (notably, one triggered solely by discretionary administrative action) if the pre-2001 statute already imposed that duty (actionable by private lawsuit).

The lesson for advocates is that sometimes even a Justice with no love for legislative history arguments can be moved by one. And the lesson for lobbyists is that your success in lobbying today — like reaching a compromise that could get hospitals paid in the most egregious cases with no litigation expenses — might inadvertently be creating “instructive” evidence that cuts against your clients in the future.

Reasoning from the “subsequent history” of a law is tricky because it’s guessing not what the Legislature was voting for, but what it was voting against. Commonly, people argue that a subsequent amendment confirms what an ambiguous law meant before. In that case, the Legislature is rejecting the ambiguity.

Here, the opinion reasons that by adding an administrative remedy in 2001, the Legislature confirmed that there had been no private claim before. This presumes that the Legislature’s goal was to expand relief to hospitals through this administrative process, rather than limiting litigation costs (another common legislative goal). That may be so, based on this legislative history. But it is analytically a question of legislative history and purpose — one that lobbyists and legislators should be attentive to when explaining the purpose behind these amendments.²

A no-evidence case about child support

VILMA GRANADO v. PEDRO C. MEZA, No. 11-0976

Per Curiam

When is a trial court’s award of back child support so low that there is “no evidence” to support it?

In Office of the Attorney General v. Burton, 369 S.W.3d 173 (Tex. 2012) (per curiam), the Court held that a zero-dollar award was impermissible when the record contained admissions from the father that he was at least somewhat behind on payments. As a threshold matter, the Supreme Court held that the award should be evaluated under the Court’s usual rules for no-evidence review. In Burton, that meant that the issue could be raised for the first time on appeal.

Fast forward to today. In VILMA GRANADO v. PEDRO C. MEZA, No. 11-0976 , the Supreme Court held that there was “no evidence to support the trial court’s specific finding of $500 in arrearages.”

Like Burton, this case also involved an incomplete record. In Burton, the record was missing certain Social Security information that the trial court determined was necessary to compute a precise number. Here, the record was missing some Office of the Attorney General child-support records that had (due to an office error) been frozen when the child was only six and the total obligation had still been below $500.

As the Supreme Court relates, the father here “admitted his total obligation was $11,200″ and had paid some unspecified amount. The Court said that although the OAG records reflected a total unpaid amount of $500 when the child was 6, that total was “no evidence” of the total obligation when the child turned 18.³ The Court therefore reversed and remanded to the trial court for further proceedings.

1. My mistake. By the time I wrote this post on Friday afternoon, my eyes just didn’t focus correctly on the screen. A separate post will describe the new cases.
2. Of course, not all people voting for a legislative amendment may share the same prior understanding of the law, and they may not share the same understanding as the prior Legislature that actually enacted that earlier law. But this canon of construction presumes that despite those two imperfections in the lens, the picture formed is still clear enough to tell the court something useful about the prior intent.
3. Rather than talking about this as the weight of the evidence, the Court viewed it through the lens of legal relevance and fault: “the OAG clerical error cannot serve as a basis for modifying the child-support obligation [and] is no evidence supporting the trial court’s determination.” In other words, if the OAG’s document purports to describe the obligation accrued during the wrong period of time, it cannot stand alone as sufficient proof for the right period of time.

Four of the justices are speaking at today’s Practice Before the Texas Supreme Court seminar in Austin. I’m on the menu as a lunch speaker, so please say hello if you are attending.

If you just want a general sense of the voting dynamic, then the top-level percentage totals are what you need. But as an advocate, I want to know which types of cases and legal arguments led two Justices to disagree. To accomplish that goal, my system allows you to drill down and see the specific opinions that led to each set of agreements and disagreements.

As a bonus, this also makes my math transparent. By clicking through, you can see exactly which cases were rolled up to compute each percentage in the chart (and, I hope, will let me know if you see any data points that need to be adjusted).

How often do the Justices vote together?

The basic voting chart shows how often the justices on the Texas Supreme Court vote together.

If you want to change the time period or focus of the chart, just pick one of the options at the top of the main page:

Those options show the pattern I look to most often: whether each pair of Justices agrees about the judgment in those cases where at least one Justice dissented.

Using that set of criteria, the pair of Justices with the closest voting record since September 2011 is Justice Johnson and Justice Wainwright at 84%. Focusing just on current Justices,¹ the closest pair is Justice Green and Justice Johnson at 70%.

Over the same time period, the pair of Justices who voted least often for the same judgment in divided cases was Justice Johnson and Justice Lehrmann, at 29%.

One of my favorite features of these charts is that you can click through to see a complete breakdown of how each individual pair of Justices voted — one a case-by-case basis:

From the detail pages, you can click on the words “Majority” or “Dissent” under each case to jump to the specific opinions about which they agreed or disagreed.

Who has written which opinions?

Each year, the OCA publishes a leaderboard of how many opinions each Justice has written, broken down by type of opinion.

I have a similar chart that shows the current count (through last week’s opinions): Texas Supreme Court opinions by Justice. You can click on the values in the chart to reach a backup page listing which specific opinions fall in each category.²

So far, the 2013 Term has not been very contentious, with just 5 separate opinions in the partial term (just over seven months so far). By comparison, the full 2012 term had 26 separate opinions and the 2011 term had 45 separate opinions.

One factor, no doubt, is that the Court is still absorbing its two newest Justices. We’ll have to wait to see how the pattern plays out for the rest of the term. (These chart will continue to be updated as more opinions are released.)

Who has joined the opinions written by each Justice?

You can think of this third category of chart as a combination of the first two.

It shows how often each Justice joined the opinions written by each other Justice. Each row on the chart shows the opinions authored by a particular Justice. Reading across, you can see how many of the opinions were “solo” separate opinions and how many were joined by each of the other Justices with which they sat on that case.

Using the controls at the top of the chart, you can also narrow its focus just to dissents, just separate opinions (concurrences and dissents), or just deciding majority opinions.

1. The second- and third-closest pairs also involved Justices who have stepped down: the pair of Justice Wainwright and Justice Guzman was ranked second, and the pair of Justice Medina and Justice Lehrmann was in third.
2. OCA does have one data set that outsiders don’t: knowing which per curiam opinions were penned by each Justice. For previous years, I have updated my chart to display the number of per curiam opinions that OCA has later reported were written by each Justice, but the backup pages don’t try to guess who wrote each of the per curiams.

CARLA STRICKLAND v. KATHRYN AND JEREMY MEDLEN, No. 12-0047

Opinion of the Court

The case asks if the Medlen family, who argued that its pet was euthanized due to the negligence of an animal-control shelter, could seek damages for their emotional loss or whether they were limited to the (presumably much lower) economic value of the dog.

The court of appeals held that Texas law permitted a claim for emotional damages as an aspect of the “intrinsic value” of the dog as property. The court of appeals reasoned that Texas law had changed a great deal since 1891 (when the Texas Supreme Court first confronted this question) and that sentimental damages had been permitted for some other narrow classes of property claims. This court of appeals decision created a split with other Texas courts of appeals and triggered this petition for review, which attracted an understandable amount of press attention.

The Texas Supreme Court reversed the court of appeals. holding that Texas’s general common-law does not provide for the recovery of emotional-loss damages in this situation.

Justice Willett’s opinion (PDF) for the Court effusively acknowledges the important role that pets play in American society — noting that there are more pets than people in America, and four times as many pets as children.

But the Court chose to adhere to its 1891 decision in Heiligmann v. Rose, 16 S.W. 931 (Tex. 1891), that the value for the death of a dog was limited to “market value, if the dog has any” or some “special or pecuniary value to the owner, that may be ascertained by reference to the usefulness and services of the dog.” As the opinion explained, the Heiligmann test focuses on economic impact, not emotional loss.

Along the way, the Court distinguished Brown v. Frontier Theatres, Inc., 369 S.W.2d 299 (Tex. 1963), its prior case permitting recovery for the loss of some family heirlooms (such as a wedding dress and a pistol that had been passed down several generations). The pivot of the Court’s reasoning is on page 12 of today’s slip opinion:

An owner’s attachment to a beloved pet is more: It is emotional. Pets afford here-and-now benefits — company, recreation, protection, etc. — unlike a passed-down heirloom kept around chiefly to commemorate past events or passed family members.

This step echoes the tone of the opinion: Pets are so important it would be inappropriate for courts to try to measure their emotional loss in this manner.

The precise distinction that the Court offers from Brown is that pets have some measurable, current utility value while family heirlooms do not (although I suspect that the producers of “Antiques Roadshow” would tell you that the market value of many heirlooms exceeds the market value of your average much-beloved pet).¹ That distinction, taken in isolation, does not seem particularly satisfying as a way to explain the outcome here.² I would instead read this part of the Court’s opinion as a common-law court politely declining to extend Brown beyond family heirlooms, without quite confining it to its facts.

The reason why the Court declines is explained in the next few sentences:

We agree with the amicus brief submitted by the American Kennel Club (joined by several other pet-welfare groups): ‘While no two pets are alike, the emotional attachments a person establishes with each pet cannot be shoe-horned into keepsake-like sentimentality for litigation purposes.’ Finally, as explained below, permitting sentiment-based damages for destroyed heirloom property portends nothing resembling the vast public-policy impact of allowing such damages in animal-tort cases.

That may be the nub of it. This is a pure common-law case, unfettered by statute, so the Court has broad discretion to tweak Texas tort law to better fit the duties we expect of our neighbors in the modern world.

In the Court’s judgment, the policy reasons against expanding the measure of damages here outweighed those in favor. The opinion discusses amicus briefs filed by groups on both sides of the issue (at pages 17-18) — with some pet-related groups warning that tort liability could cause unintended harmful consequences to veterinarians or others who try to render aid to animals. Some other groups argued that pets would be better protected if the law did acknowledge the value of pets.

The Court compared this aspect of its role in a common-law tort case to conducting a “cost-benefit analysis,” weighing the arguments of both sides. (If you collect examples of the Court taking amicus arguments seriously, this opinion might be a good one to bookmark.) Having heard both sides, it ultimately chose not to expand tort liability to include emotional-loss damages for pets.

What’s next?

The Court ended by inviting the Legislature to take action. It noted favorably a Tennessee law from about a decade ago that set up a limited cause of action for pet owners to sue for damages.

The opinion does not discuss whether a different damage rule might apply to negligent conduct as opposed to intentional conduct — a question not really raised in this case (which alleged only negligence). Some areas of tort law do draw that distinction — including mental-anguish damages, the propriety of which can turn on the culpability of the wrongdoer.

Few people want a rule of liability so harsh that it would deter animal-welfare workers from trying to help injured or lost animals. That weighs against heavy liability for negligent but well-meaning misconduct.

But there is a deep and visceral reaction to intentional killings of a neighbor’s (or stranger’s) pets, as the famous Star-Telegram headline from March 13, 1990 attests.³

When the Legislature considers whether and how to measure damages for the loss of a pet, drawing a distinction between negligence and intentional acts may help bring the two sides of this debate together. The death of a pet is an inevitable sadness in the life of a pet owner. But the manner of that death surely affects how we, and the law, should feel about it. They say that even a dog understands the difference between being tripped over and being kicked. Dog owners do, too.

1. One also wonders whether the pistol mentioned in Brown could still have offered protection from intruders. It would be a puzzling rule of law that a well-maintained antique — such as a family clock passed down through the years — has less value under the law than one of the same age and history that has fallen into disrepair.
2. As the Court notes later in the opinion, the Medlens posed the hypothetical that under the Court’s rule “they could seek sentimental damages if a taxidermied [pet] had been negligently destroyed” but not if a living pet had been. Especially in light of the Court’s holding here, I doubt that the Brown family-heirloom case could be stretched that far, but it is an excellent hypothetical.
3. Perhaps it’s that I grew up in a time of relative peace and prosperity, but half a lifetime away, I still remember this headline vividly.

I’ll be writing separate posts about some of today’s bigger cases. For now, here are quick summaries:

• THE CITY OF ROUND ROCK, TEXAS AND ROUND ROCK FIRE CHIEF LARRY HODGE v. JAIME RODRIGUEZ AND ROUND ROCK FIRE FIGHTERS ASSOCIATION, No. 10-0666 : Divided 6-3, the Court holds that unionized Texas public-sector workers — unlike federal public-sector workers or unionized private-sector workers — do not have the right to have union representation during an internal investigation.

• CARLA STRICKLAND v. KATHRYN AND JEREMY MEDLEN, No. 12-0047 : In perhaps the most watched case of the term, the Texas Supreme Court holds that Texas common law does not include a claim for emotional damages for the loss of a pet. The opinion noted that the Legislature could create such a remedy, as some other states have done.

• TEXAS DEPARTMENT OF TRANSPORTATION AND CITY OF EDINBURG v. A.P.I. PIPE AND SUPPLY, L.L.C. AND PAISANO SERVICE COMPANY, INC., No. 10-1020 : The Court resolved a disputed chain of title in favor of the state as landowner. The two relevant links in the title chain were judgments: a 2003 judgment (awarding the state an easement) and a 2004 judgment in the same case (eliminating the state’s interest in favor of a private party). The Court held that later-issued judgment was void because (on this record) it was a substantive change that exceeded the proper bounds of a nunc pro tunc correction of a prior judgment.

• TRACFONE WIRELESS, INC. AND VIRGIN MOBILE USA, L.P. v. COMMISSION ON STATE EMERGENCY COMMUNICATIONS, No. 11-0473 : The Court examined the Texas statute that imposes a tax to fund the e911 system, concluding that the 1997 version of this statute was not broad enough to reach prepaid wireless plans (which had not yet been introduced in Texas). Accordingly, those prepaid wireless providers could obtain a refund of the taxes still in dispute between that time and the amendment of the statute in 2010.

• Last October, the Texas Supreme Court held in CERTIFIED EMS, INC. D/B/A CPNS STAFFING v. CHERIE POTTS, No. 11-0517 that the expert report filed in a medical-malpractice case only needed to address one valid theory for the plaintiff to move forward: “If a health care liability claim contains one viable liability theory, as evidenced by an expert report meeting the statutory requirements, the claim cannot be frivolous [and the claimant has a] right to have the entire case move forward.” (Page 10 of that slip opinion)

  Today, in TTHR LIMITED PARTNERSHIP D/B/A PRESBYTERIAN HOSPITAL OF DENTON v. CLAUDIA MORENO, INDIVIDUALLY AND AS NEXT FRIEND OF F.C., A MINOR, No. 11-0630 , the Court applies that holding. The Court examined the expert report’s sufficiency as to the theory that the hospital was vicariously liable, found that it was sufficient to meet the statute as to that theory, and remanded the case to the trial court for further proceedings.

This week’s opinions

Takings applied to a future interest in property

EL DORADO LAND COMPANY, L.P. v. CITY OF MCKINNEY, No. 11-0834

Opinion of the Court

A landowner sold a parcel of land to the City of McKinney, with a condition attached: that if the land were used for anything other than a city park, the seller would have the right to repurchase it.

Ten years later, the city placed a public library on the land. The previous owner sued for inverse condemnation, arguing that the government’s action had deprived it of a compensable property interest, namely, the right to repurchase the land.

The court of appeals held that this condition in a deed was in the nature of a contract and, thus, that the city was immune from suit.

The Texas Supreme Court reversed, with Justice Devine writing for a unanimous court. The Court held that the case concerned a property interest rather than a mere contract right and, thus, no immunity attached.

Along the way, the Court rejected several arguments about why this particular flavor of future property interest — a “right of reentry” — should not be compensable in a taking. The Court noted that the most recent Restatement largely “dispenses with the historical parsing of future interests, recognizing only reversions and remainders. It thus abandons distinctions that previously differentiated a possibility of reverter from a right of entry because, in its view, no legal consequences attach to such distinctions.”

When an express warranty supersedes an implied warranty

NELDA GONZALES v. SOUTHWEST OLSHAN FOUNDATION REPAIR COMPANY, LLC, D/B/A OLSHAN FOUNDATION REPAIR COMPANY, No. 11-0311

Opinion of the Court

In a suit over a defective home-foundation repair, the jury found that the repair company had violated the implied warranty but had not violated the express warranty stated in the sales contract.

The court of appeals reversed, concluding that this claim was barred by limitations. In particular, it held that there was no free-standing claim here for “implied warranty” but that, instead, the theory would have to be raised under the DTPA — and thus subject to a two-year statute of limitations.

The Texas Supreme Court granted review, and now affirms (on different grounds). The Court did not, however, ultimately reach the question of whether Texas has a freestanding claim for “implied warranty” or whether it must be brought under the DTPA — an issue “over which courts have differed.” (Footnote 9 on page 5) Instead, the Court chose to first ask whether the express warranty made here superseded the implied warranty.¹

The Court held that the implied warranty “of good and workmanlike repair” applicable here is just a gap filler.² As a gap-filler warranty, it cannot be disclaimed, but it can be superseded — the parties can agree to replace the implied warranty with a custom-tailored express warranty.

Looking at the agreements here, the Court found “language [that] ‘sufficiently describes the manner, performance or quality’” of the work to supersede the implied warranty and replace it with an express warranty. Thus, the judgment could not be supported on the basis of an implied-warranty theory, whether brought as a freestanding claim or as a facet of the DTPA. The statutory question of whether implied warranty claims fall within the DTPA will be left for another day.

The more immediate lesson to counsel with warranty claims may be to handle gingerly any evidence suggesting a warranty obligation — even if not part of a signed contract. The Supreme Court did not analyze the loss of implied-warranty claims as a question of waiver; express warranties can attach — and displace the implied warranty — without the plaintiff signing anything.

Here, the trial court viewed this unsigned document as a problem and decided to admit it for a limited purpose — just to show “what in [the defendant's] opinion the company was supposed to do.” (Discussion at pages 8.) Yet on appeal, the Supreme Court looked to the terms of this document as part of its analysis of whether the express warranty superseded the implied warranty. The Court explained that, even unsigned, the disputed document “could fairly be characterized as an obligation of [the defendant] to [the plaintiff].” Accordingly, the document’s broad language could weigh in favor of the express warranty superseding the implied warranty.

Correction of a judgment that had reversed some unchallenged parts of a trial court’s decision

In WENDELL REEDER v. WOOD COUNTY ENERGY, LLC; WOOD COUNTY OIL & GAS, LTD.; NELSON OPERATING..., No. 10-0887 , the Court issued a short supplemental opinion explaining that it was modifyings its previous judgment. In August 2012, the Court had reversed and “render[ed] a take-nothing judgment.” As this week’s opinion (PDF) explains, that language was too broad because there were some parts of the trial court’s judgment that had not been challenged in the scope of the appeal. The Supreme Court thus issued a corrected judgment, specifying the issues on which it was reversing the trial court.

Two New Grants

• GENE E. PHILLIPS, INDIVIDUALLY AND D/B/A PHILLIPS OIL INTERESTS, LLC, ET AL. v. CARLTON ENERGY GROUP, LLC, No. 12-0255 : The petition argues that damages measured by lost “market value” must be held to the same evidentiary standards as damages for “lost profits.” An amicus letter from the Texas Civil Justice League urges the Court to take the petition to overrule Castleberry v. Branscum, 721 S.W.2d 270 (Tex. 1986), a decision about piercing the corporate veil.

• MAN ENGINES & COMPONENTS, INC. AND MAN NUTZFAHRZEUGE AKTIENGESELLSCHAFT v. DOUG SHOWS, No. 12-0490 : The petition argues that the implied warranty of merchantability cannot be invoked by subsequent purchasers of (used) goods.

1. The Court had its choice of which sub-issue to address first. Had it started with the question of whether the DTPA controlled, then it might never have needed to reach this question about when express warranties supersede implied warranties.
2. The Court also held that a general “no evidence” objection at the charge conference was sufficient to preserve this question of whether an implied warranty existed under Texas law.