The Texas Supreme Court issued three opinions with today’s order list. The headliners were a products-liability decision that changes two key definitions in the jury charge and a homestead-exemption decision that may affect a significant number of Texans refinancing their mortgages.

The Court did not grant review in any new cases.

  • Ford Motor Co. v. Ledesma [No. 05-0895]. This products-liability case speaks to two critical definitions in jury charges — that of “manufacturing defect” and of “producing cause.” In so doing, the Texas Supreme Court has expressly rejected the formulation of those terms given in the Texas Pattern Jury Charge (PJC 70.1 and PCJ 71.3). The Court’s summary of those issues on page 12: “In defining defect, the trial court followed Texas Pattern Jury Charge (PJC) 71.3. As specified in the comment to PJC 71.3, the trial court included in the question the definition of producing cause found in PJC 70.1. Ford objected that both PJC 71.3 and PJC 70.1 were ‘not accurate under the law’ and failed to track this Court’s precedent. We agree. Ledesma may have argued a manufacturing defect to the jury, but the law requires the jury to determine specifically whether he had proven one. The jury here received a legally incorrect charge that omitted an indispensable element: that the product deviated, in its construction or quality, from its specifications or planned output in a manner that rendered it unreasonably dangerous.” The Court also rejected Ford’s challenge to the admission of certain expert testimony. Justice Willett wrote the opinion for a unanimous Court.
    Comment: The definition of “producing cause” now sanctioned by the Court is a cause “that is a substantial factor that brings about the injury and without which the injury would not have occurred,” building on its decision in Trinity Universal Ins. Co. v. Bleeker, 966 S.W.2d 489, 491 (Tex. 1998). [See pages 20-21 of the pdf.]

    The opinion also discusses when it is appropriate to render judgment rather than to remand over a defective jury charge. The Court advances several grounds for its decision to remand — including that the PJC is widely used as a model and thus it would be unfair to render for a defect in the PJC — so there may be little new law to be gleaned on that point. This same reasoning would, however, appear to apply to any cases currently in the appellate pipeline that have also relied on the PJC charge for products-liability cases.

  • LaSalle Bank v. White [No. 06-1016] (per curiam). This is a case about Texas’s 1997 constitutional amendment permitting but regulating liens against a homestead. Tex. Const. art. XVI, § 50. These borrowers took out a loan against their homestead, used part of those proceeds at closing to pay off other pre-existing loans, and kept the rest. After the borrowers defaulted, the trial court declared the whole lien unenforceable and the court of appeals affirmed. The Texas Supreme Court reversed in part — but only in part. It held that the lender could recover only that portion of the loan that was used at closing to pay down other, pre-existing debt because the lender had become equitably subrogated to that portion. The Court explained that, even when the Texas Constitution prohibited homestead liens, Texas law still permitted the doctrine of equitable subrogation in similar cases. It then examined the text of the 1997 homestead amendments and concluded that they were not meant to change the equitable-subrogation aspect of the common-law background. The Court thus reversed in part and remanded the case.
    Comment: The Court explains the policy benefits of its decision, reasoning that equitable subrogation is a way to ensure that lenders don’t accidentally turn their pre-existing good liens into bad liens. The ruling certainly does shield lenders from that risk, which could well encourage more flexibility in refinancing. I’m wondering, however, if the decision might ultimately provide too much incentive to lenders to exert their influence to maximize the portion of the refinancing proceeds that go to these privileged prior debts rather than other uses and, if so, how that behavior comports with the consumer protections in Article XVI, §50. Time will tell, and these may be issues for a future case.
  • In re Mercier [No. 06-1008] (per curiam). In a relatively rare written opinion on a disbarment case, the Court confronted a situation where an attorney had been convicted of barratry and was appealing that conviction. The Board of Disciplinary Appeals suspended his license during that appeal and also issued an order that would have disbarred the attorney if that conviction were ultimately upheld. The Texas Supreme Court reversed that last aspect of the Board’s conclusion, explaining that Rule 8.05 provides for a multi-step process for final disbarment that begins after the conclusion of the criminal appeal, including a formal motion by the Board and an opportunity for the attorney to contest finality. For that reason, the Court held that this last aspect of the Board’s order was premature, and it reversed in part and affirmed in part the Board’s decision. [Per Curiam opinion]
    Comment: The Court’s ruling not only tracks the rule but also seems to make good sense. Even if the ultimate disbarment for this class of crime is compulsory, it makes sense to have a process to formalize that event and to remove future uncertainty about whether the license is merely suspended or has been revoked.