This is my second installment about last Friday’s big orders list. You can also read the first installment, which summarized five of the cases and listed out the new grants.

Opinion Summaries (continued)

The majority opinion sums up the question this way: “In this case we consider whether claims that a doctor assaulted patients by exceeding the proper scope of physical examinations are subject to [Texas law’s medical] expert report requirements.” If so, then as a health-care liability claim (HCLC), a plaintiff must offer sufficiently detailed expert reports on a short timetable after filing suit. (( That status also triggers interlocutory appeals for defendants and certain fee-shifting provisions that are not implicated here. ))

The summary of the facts:

Two female patients sued a medical doctor … alleging the doctor assaulted the patients by groping their breasts while examining them for sinus and flu symptoms. Although they maintained that the claims were not HCLCs, the patients served the doctor and professional association with reports from a physician who, based only on the assumption that allegations in the plaintiffs’ pleadings were true, opined that the defendant doctor’s alleged actions did not fall within any appropriate standard of care. The defendants argued that the claims were HCLCs and moved for dismissal of the suit on the basis that the reports were deficient.

Justice Johnson, writing for four other Justices (and for Justice Willett in part) concluded that Texas law “creates a rebuttable presumption that a patient’s claims against a physician or health care provider based on facts implicating the defendant’s conduct during the patient’s care, treatment, or confinement are HCLCs.” The majority concluded that the presumption had not been rebutted here, placing the burden on the plaintiff to make this showing by conclusive proof (leaving open no factual dispute whatsoever). The majority then addressed the expert reports, concluding that this evidence was not sufficient to carry that burden.

Justice Hecht, joined by Justice Medina, would have concluded that this expert evidence was indeed sufficient to show that the alleged conduct (groping) did not fit within medical practice: “The expert report here says, in essence, that sexual assault is not a part of health care. One need not turn to the Mayo Clinic for such an opinion. … The claimants in this case proceeded exactly as they should have. Insisting that their claims are not HCLCs but claims for assault, they nevertheless produced an expert report.” In the view of these two Justices, the report could fairly be criticized for having unduly relied on the allegations in the pleadings (rather than medical records), but as they note, “it seems unlikely that a chart notation, ‘groped patient unnecessarily’, will be found.” For that reason, they would have concluded that this expert report was good enough to rebut the presumption.

Justice Lehrmann’s opinion takes issue with the standard of proof, arguing that “the Court places too onerous a burden on claimants by requiring them to conclusively establish that their claims are not health care liability claims.” She would still place a burden on the plaintiffs to show that the claim was not about health care liability (and would make it a heavy burden, perhaps the “clear and convincing” standard). But in her view the Court’s standard of conclusive proof is too hard to meet.

Justice Willett’s opinion explains why he did not join the opinion in full. In his view, the Court should not have reached the question of the sufficiency of these expert reports, leaving that for the trial court.

This case about valuing property in condemnation is framed in terms of the “value to the taker” rule, which generally excludes evidence of how a condemning authority plans to use the property.

The Court split 6-3 over how to apply that principle here. And the stakes for the parties were particularly high, with one side suggesting a value of about $50,000 for these 24 acres, and the other suggesting a value of nearly $21 million.

Why the divergence? This land sits under a working gas-processing facility. The land had been leased to a private gas company decades before, and as the lease term approached its end, the land owner and this tenant could not strike a new deal. So, the tenant gas company merged with a public utility and then condemned the land on which its processing facility sat.

Justice Lehrmann wrote the majority, which concluded that the expert testimony setting a $21 million valuation should not have been admitted. In particular, the opinion criticized the expert’s focus on the unique costs and cost-savings that would be incurred by this particular former tenant if it had to dismantle this plant or construct a new one — not a general market price for the land.

Justice Johnson wrote the dissent, which contended that an appraisal should (in circumstances such as these) consider the effect that existing contractual arrangements have on the land’s value: “the lease provision giving [the utility] six months to move its plant was a factor affecting the value of the property that not only could be taken into consideration, but had to be taken into consideration under the USPAP [Uniform Standards of Professional Appraisal Practice] and Texas law because it would affect the value to a hypothetical willing buyer.” The dissent also criticized the majority’s focus on statements in the expert report (which was not submitted into evidence), as distinguished from the trial testimony itself.

This case about collateral and direct attacks on a judgment involves a default judgment. Once the default was brought to the defendant’s attention, it was too late to file any sort of direct attack upon the judgment.

The defendant argued that the judgment was void, not merely voidable, because it had not been properly served with notice. The Texas Supreme Court discussed some confusion in Texas law over the distinction between void and voidable judgments, especially as that distinction relates to allegations that a defendant had not been notified about a lawsuit. (In general, Texas law had classified these complaints as involving merely voidable errors that had to be more timely raised. Void judgments can be challenged at any time, even “collaterally” through other lawsuits. Merely voidable judgments, by contrast, must be challenged through some more “direct” attack that can be barred if brought more than four years after judgment.)

The Texas Supreme Court traced this distinction in Texas case law to a (presumed) distinction between subject-matter and personal jurisdiction. Because questions of personal jurisdiction could be waived by the parties, Texas cases had concluded, similar complaints about a lack of notice involved merely voidable errors and thus could be time-barred.

In this opinion, the Texas Supreme Court changes that analysis — a holding that could be very significant for those fighting default judgments. The Court noted an intervening U.S. Supreme Court decision holding that the U.S. Constitution requires some way to challenge a judgment entered without adequate notice or service. Thus, “[i]n light of Peralta, we hold that a judgment may also be challenged through a collateral attack when a failure to establish personal jurisdiction violates due process.” (( Peralta v. Heights Medical Center, Inc., 485 U.S. 80 (1988). ))

Critically, this new avenue to challenge default judgments applies only to defects in notice that rise to a federal constitutional level — not merely technical defects that might otherwise violate state procedural rules (which can still be time-barred). The Court walked through the record here, ultimately holding that this defendant’s complaint about service involved technical defects that did not deprive the defendant of a meaningful opportunity to be heard so as to render the judgment void. Because it did not involve constitutional defects, this challenge was time-barred.

But the defendant had a second line of attack: an argument that this judgment had been procured by extrinsic fraud. Among other arguments, the defendants contended that the attorney for the plaintiffs had violated the Texas Lawyer’s Creed (by not trying to notify opposing counsel of an intent to take a default judgment) and other disciplinary violations. The Texas Supreme Court held that this conduct did not constitute evidence of extrinsic fraud that might subject a judgment to attack. On the other hand, the Court concluded, “under the specific circumstances presented in this case,” that lawyer’s failure to provide the clerk with the accurate last-known address for the defendant — despite himself knowing that information — was at least some evidence of extrinsic fraud that would defeat summary judgment and allow the defendant’s challenge to the default judgment to move forward in the trial court.

This was a civil-commitment case involving an alleged sexually violent predator. Texas law permits civil commitment if statutory requirements are met. Here, the district court concluded that commitment was warranted — after excluding one of the expert witnesses on behalf of the defendant. The court of appeals reversed and ordered a new trial.

The Texas Supreme Court agreed that a new trial was warranted, but it disagreed with the court of appeals’ reasons, especially its interpretation of the Texas statute governing sexually violent predators.

The court of appeals had viewed the statute as having two somewhat distinct elements — one of which suggested a particular medical diagnosis (“a congenital or acquired condition”) that might require psychological expert testimony:

“Behavioral abnormality” means a congenital or acquired condition that, by affecting a person’s emotional or volitional capacity, predisposes the person to commit a sexually violent offense, to the extent that the person becomes a menace to the health and safety of another person. (Tex. Health and Safety Code §841.002(2))

The Texas Supreme Court disagreed about how to read that statute. It held that “[t]he condition and predisposition cannot be separate things, as the court of appeals tried to make them.” Instead, the Texas Supreme Court concluded that expert testimony offered in support — or in opposition to — this type of civil commitment could be offered by someone with non-medical expertise (such as the very experienced counselor offered as an expert here).

Thus, the Court affirmed the court of appeals judgment (which had also remanded for a new trial), but for different reasons. The Court holds that it was improper for the trial court to have excluded the defendant’s key expert, “not for reasons peculiar to her experience and training, but because she is not a physician or psychologist. In this context, we think a more careful review of the trial court’s ruling is warranted.”

The plaintiffs brought negligence claims against what the Court describes as “several U-Haul corporate entities” over an accident that had caused a serious injury. The trial court entered judgment for the plaintiffs on a jury verdict. U-Haul challenged, among other things, whether the evidence of a pattern of negligence had, in fact, been so attenuated and unrelated to this particular accident that the evidence was irrelevant and caused confusion on the jury.

The Court referred back to its holding in Service Corporation International and Sci Texas Funeral Services, Inc., d/b/a Mont Meta Memorial Park v. Juanita G. Guerra, Julie Ann Ramirez, Gracie Little and Mary Esther Martinez, No. 09-0941 , in which it concluded that “evidence of other lawsuits, verdicts, and judgments” had been too attenuated. The test it applied was that this evidence would be admissible if “the prior acts were ‘so connected with the transaction at issue that they may all be parts of a system, scheme or plan.'” [see page 21 of U-Haul]

Here, some of the evidence described investigations about U-Haul’s Canada operations, including different types of vehicles that had different mechanical problems. [Slip op. 23-27] The Court concluded that the record did not explain how all of these disparate pieces of evidence were woven together into the kind of single system that would have satisfied Service Corporation International.

The Court held that admitting this testimony likely led to an improper verdict, and thus one that should be reversed. But it stopped short of rendering judgment. Instead, it concluded that there was sufficient (proper) evidence to support a new trial.

That reversal on liability would have had the effect of reversing the exemplary damage award as well. Even so, the Court addressed U-Haul’s exemplary damages arguments. The guidance it offered may be useful on remand — or to other litigants trying to amass “clear and convincing” evidence under the Texas exemplary-damage statute.

The Court held that this record was not “clear and convincing” about gross negligence. In this type of negligent-hiring case, the evidence must show not only that the hiring posed an objectively high risk, but also that the employer had subjective awareness of that risk:

[W]e are concerned about the impact the court of appeals’ reasoning may have on future gross-negligence cases involving alleged reckless hiring. Under the court of appeals’ reasoning, any time an employer hires a previously inexperienced employee requiring training in specific safety tasks, the employer conceivably may be found grossly negligent and subject to punitive damages if the employee acts negligently in performing her tasks. However, a party cannot be liable for gross negligence when it actually and subjectively believes that circumstances pose no risk to the injured party, even if they are wrong. (Slip op. 36)

This is a case about contractual risk-shifting in an oil and gas operating agreement. Here, the language chosen for the contract “exempts the operator from liability for activities under the agreement unless it arises from gross negligence or willful misconduct.”

The court of appeals held that the clause did not apply to this dispute, which it characterized as being in the nature of contract.

After a detailed analysis of the contract language and the history of similar clauses, the Texas Supreme Court concluded that the clause did apply to this situation