With today’s orders list, the Texas Supreme Court decided three pending case, granted two new cases for argument this fall, and revised its opinion in a major oil & gas case.
The new cases chosen for argument this fall are on a familiar topic: What conduct by a hospital or doctor falls within the special procedural rules adopted in 2003 for health-care liability claims? The two fact patterns — a sexual assault and a hospital technician beating a psychiatric patient to death — could push the boundaries of the test.
Three decisions today
Notice requirements in med-mal cases: Jose Carreras, M.D. v. Carlos Francisco Marroquin, et al., No. 09-0857 (Wainwright, J.) (DDB). The Court held that, in order to meet the notice requirement of the medical-malpractice statute, a potential plaintiff must send not only a simple notice but also the form authorizing release of the patient’s information.
Who can sue over broken commercial lending agreements: Basic Capital Management, Inc., American Realty Trust, Inc., Transcontinental Realty Investors, Inc., Continental Poydras Corp., Continental Common, Inc., and Continental Baronne, Inc. v. Dynex Commercial, Inc. and Dynex Capital, Inc., No. 08-0244 (Hecht, J.) (DDB). The context here was commercial real-estate development loans. Basic Capital, through two investment companies it managed, set out to develop three properties — each owned, in turn, by a “SABRE” (a separately owned, bankruptcy-remote entity). One purpose of a SABRE was to make collection easier on the lender, if the loan should fail; having the assets in a single entity with no other significant debt would help ensure that the lender on that project did not have to split the asset with other creditors.
Here, however, the projects did not get that far. When the lending environment changed, Dynex walked away from its agreement. Basic Capital then sued, arguing that it had suffered financial injury by Dynex’s refusal to fund the loan commitments.
Dynex argued, in turn, that Basic Capital and its subsidiaries lacked standing to enforce its agreements with the SABREs. The Court held that — at least in the context of this type of arrangement — a corporate owner could was a third-party beneficiary who could sue:
We certainly agree that as a general proposition, a corporate parent is not a third-party beneficiary of its subsidiary’s contract merely by virtue of their relationship. But here the benefit to each SABRE not only inured to its parent, the transaction was so structured to benefit Dynex. SABRE-borrowers provided a mechanism for ART and TCI to hold investment property directly but in a way that would provide Dynex greater security. If Dynex and Basic did not intend the Commitment to benefit ART and TCI directly, then the Commitment had no purpose whatever.
That’s a long way of saying that you shouldn’t expect the Court to extend the third-party-beneficiary doctrine in your case, unless you can show some business benefit to the other side.
The Court also held that this kind of financial injury was a foreseeable result of breaching the contract and, thus, Basic Capital could pursue consequential damages.
Burden of proof in arbitration enforcement: Veronica Ellis and Pacesetter Builders, Inc. d/b/a Coldwell Banker Pacesetter Steel Realtors v. Dr. Ron and Tana Schlimmer, No. 10-0243 (per curiam)(DDB). This is yet another case about the very different procedural landscape facing parties who have an agreement under the Texas Arbitration Act versus the Federal Arbitration Act. (( Under the TAA, a party can file an interlocutory appeal if the trial court does not compel arbitration. But that statute does not permit the same appeal for arbitration agreements under the FAA. So litigants often end up fighting over whether the court of appeals has jurisdiction to hear the appeal at all. ))
This case presented a wrinkle — how do you decide if the TAA or FAA applies when the agreement did not say and the record below was not well developed?
The court of appeals focused on the general rule that the appellant has the burden, if questioned, to prove the court’s jurisdiction over the appeal. Because the broker had not proven that the FAA did not apply, the court of appeals was not convinced it had jurisdiction. So it dismissed.
The Texas Supreme Court focused on a different presumption — the rule that, once a contract with an arbitration clause has been introduced, the burden falls on the party opposing arbitration to show any defenses. The Court characterized the FAA argument as a defense to the enforceability of the agreement, explaining that the FAA would preempt the TAA. (( I don’t know of an argument in this case why the FAA would have preempted the enforceability of the agreement itself. )) Because the home buyer had not shown that defense was applicable, the Court held, the court of appeals should have retained jurisdiction over the case.
New petitions granted (argument dates TBA)
The theme is: Does the medical-malpractice statute apply to intentional assaults by hospital staff?
Matthew W. Wasserman, M.D. v. Christina Bergeron Gugel, No. 10-0513 (DDB). The question is whether “health care liability claims” include allegations of assault or sexual assault by health-care providers.
Texas West Oaks Hospital, LP and Texas Hospital Holdings, LLC v. Frederick Williams, No. 10-0603 (DDB). In the psychiatric context, does a “health care liability claim” include a fight between a psychiatric technician and a psychiatric patient, when the technician kept hitting the patient after he was down & the patient died of the injuries.
Revised opinion in the Exxon well-plugging case
The orders list mentions a revised opinion in the Exxon well-plugging case. Exxon Corporation and Exxon Texas, Inc. v. Emerald Oil & Gas Company, L.C. and Laurie T. Miesch, et al., No. 05-1076 (DDB). The old opinion is here. The new opinion is here; the changes were very minor. (( According to Osler’s email, the changes were: – Wording in the first paragraph, page 1, noting the substituted opinion and modified judgment. – Tense change in first paragraph, page 13. – Insert “the” before date in continuing paragraph, page 21. – Tense changes in footnote 20, page 31. – “Different from” changed from different than and two citations omitted in case cites in last paragraph, page 41. – “The” inserted before sale and Company inserted to make Pace Oil & Gas Company in first sentence in first full paragraph and wording changed in later sentences in same paragraph, page 42. – “Further proceedings” substituted at the end of concluding paragraph, page 44. )) The judgment did not change.