The Texas Supreme Court issued four opinions with today’s order list. It did not set any new cases for argument.
According to the Court’s online calendar, this is the last regular order list of 2009. The next regular orders are scheduled for January 8, 2010.
Unilateral contracts in at-will employment
Ed Vanegas, et al. v. American Energy Services, et al., No. 07-0520 (more info)
This is a case about unilateral contracts — that strange subspecies of contract that can only be accepted by full performance, not by mere words alone.
These come up surprisingly often in the at-will employment context. That’s because the Court is reluctant to find a promise by the employer to retain the employee. So, when a contract attaches some benefit (or detriment) to the mere fact of continued employment, the Court has sometimes found it to be a unilateral contract that both sides “accept” by continuing the employment relationship.
That gets the employer off the hook when they fire the employee. But it can also undermine attempts to bind the employee to things like non-compete agreements, as in Light v. Centel Cellular Co. of Texas, 883 S.W.2d 642 (Tex. 1994) and Sheshunoff v. Johnson, 209 S.W.3d 644 (Tex. 2006).
In this case, the company promised that 5% of its value would be paid out to its original employees if the company eventually merged or was sold. The company was sold. The original employees who had stuck around demanded their payment and were refused. The company argued that, because employment was merely at-will, this contract was illusory. The court of appeals agreed.
In an opinion by Justice Green, the Texas Supreme Court reversed, holding that this fact pattern presented a unilateral contract.
Almost all unilateral contracts begin as illusory promises. Take, for instance, the classic textbook example of a unilateral contract: “I will pay you $50 if you paint my house.” The offer to pay the individual to paint the house can be withdrawn at any point prior to performance. But once the individual accepts the offer by performing, the promise to pay the $50 becomes binding. The employees allege that AES made an offer to split five percent of the proceeds of the sale or merger of the company among any remaining original employees. Assuming that allegation is true, the seven remaining employees accepted this offer by remaining employed for the requested period of time.
The Court also noted that any other rule could jeopardize other employee benefits in an at-will employment state. And it quoted the commentary to Corbin on Contracts about this very court of appeals opinion (!), which reduced the court of appeals’s reasoning to this absurdity: “why is an employer’s original promise to pay a certain wage to an at-will employee enforceable when the employee performs? The court’s analysis would suggest that the employer’s promise was never enforceable.”
The Texas Supreme Court reversed the judgment in favor of the employer and remanded to the trial court.
A correction deed cannot include a piece of property completely omitted from the original deed
Myrad financed two pieces of property, defaulted on the note, and had them put up for auction. LaSalle bid on the property and won the auction. But the deed it received listed only one piece of property. A correction deed was filed, listing both properties.
Myrad argued that a correction deed cannot include a piece of property that was entirely omitted from the first deed. LaSalle argued that Myrad would be unjustly enriched if it were allowed to keep the piece of property on which it had defaulted (and on which LaSalle had bid).
In an opinion by Justice Green, the Texas Supreme Court agreed with both. It held that this correction deed was void:
To allow correction deeds to convey additional, separate properties not described in the original deed would introduce unwarranted and unnecessary confusion, distrust, and expense into the Texas real property records system.
But the Court also agreed with LaSalle that this would create an unjust enrichment.
The Court found its answer in the procedural posture of the case. Because both sides below had moved for summary judgment on an “equitable rescission” claim — and because neither urged that there were any factual disputes — the Texas Supreme Court held that it could resolve that question for the first time on appeal.
The Texas Supreme Court found that the original deed had been based on a mutual mistake by the parties, rendering judgment that it should also be rescinded. (If I have the facts right, that puts the parties back where they started before the erroneous deed, with the idea that LaSalle can now get a deed that lists both properties.)
Be sure to put a time limit in your proposed discovery order
The lesson of this case might be, “Don’t put more in a proposed order than you actually want the trial court to grant.”
The plaintiff sought discovery from John Deere of its customer complaints about the sidestep on some of its products. After a hearing, the Texas Supreme Court explains, the parties “agreed to limit production to documents relating to models with similar handles and step assemblies, and only going back approximately 12 to 15 years.”
But the proposed order submitted by the plaintiff did not include that time limit.
The trial court signed the order. John Deere sought mandamus relief, and ultimately the Texas Supreme Court granted it.
In a per curiam opinion, the Court concluded that “the trial court’s order … exceeded the scope of permissible discovery by neglecting to set a reasonable time limit.” The Court noted that the plaintiff’s counsel had specifically requested a time limit, but because the trial court’s signed order did not include one, the order abused the trial court’s discretion.
The trial court’s order was signed in December 2008. So that’s a full year of time (and two levels of mandamus review) sorting out a proposed order.
Texas Whistleblower Act is (still) jurisdictional
The University of Texas Southwestern Medical Center at Dallas v. Larry M. Gentilello, M.D., No. 08-0696 (per curiam) (more info)
When a state agency defends itself against a lawsuit, it has more luck when it can classify the particular defect as being “jurisdictional” in nature, including the option to take an immediate appeal of the question if the trial court refuses to dismiss after a plea to the jurisdiction.
In State v. Lueck, 290 S.W.3d 876 (Tex. 2009), the Court held that the various elements of a claim brought against the state under the Whistleblower Act are jurisdictional requirements.
In today’s case, the court of appeals originally held that one of the statutory elements — “whether the reporting of violations of Medicare and Medicaid regulations to a supervisor is a good-faith report of a violation of law to an appropriate law-enforcement authority” — was not jurisdictional. In a brief per curiam opinion, the Texas Supreme Court reversed in light of Lueck and remanded so the court of appeals could hear the appeal.