Following up on my earlier post, here are the summaries of Friday’s opinions.
The decisions involved piercing the corporate veil, what constitutes “personal knowledge” in a summary judgment affidavit, a special wrinkle in how to appeal from a trial court’s dismissal for failure to comply with special exceptions, whether corporations have a “residence” for purposes of mandatory venue statutes, whether you can circumvent random assignment of judges by intervening in an ongoing action, and more.
Click through to see the summaries.
Piercing the Corporate Veil, Just a Little More Challenging
- SSP Partners and Metro Novelties, Inc. v. Gladstrong Investors (USA) Corp., No. 05‑0721. Justice Hecht delivered the opinion for a unanimous Court.
In this case, the Texas Supreme Court abolished the “single enterprise liability” theory for piercing the corporate veil. For details, I will defer to the fine analysis of this case penned Saturday by Blawgletter.
You Can’t Have “Personal Knowledge” About Events Before Your Birth
Gilbert Kerlin, et al. v. Gloria Soto Arias, et al., No. 06‑0097 (per curiam)
This is (another) case about ownership of Padre Island. The Texas Supreme Court reversed and rendered judgment, holding that the summary judgment evidence offered on the question of fraud did not create a disputed question of fact. Why? “[T]he only evidence of fraud in 1847 is an affidavit by one of the current heirs — who could not possibly have personal knowledge of those events ….” And under Texas Rule of Civil Procedure 166a(f), to be valid summary judgment evidence, an affidavit must be based on personal knowledge. The Court held that knowledge about a person’s age or marital status in 1847, when gleaned from documents and other sources, was not “based on personal knowledge.”
Appealing from Special Exceptions: Hard, But Not Hopelessly Formalistic
Emory B. Perry, et al. v. Darryl R. Cohen, et al., No. 07‑0301 (per curiam)
This case is about a wrinkle in Texas appellate practice that requires a person appealing from certain orders to appeal both the merits of the trial court’s order and the procedure of how it was issued. This arises when the trial court has granted a defendant’s “special exceptions,” ordering the plaintiff to redraw the petition to fix the defects. If the plaintiff does not satisfactorily comply, the trial court can dismiss.
In this fraud case, the trial court granted the defendants’ special exceptions, ordering the plaintiffs to redraw their petition “supporting each shareholder’s cause of action against each defendant, identify the maximum amount of damages each shareholder suffered, and identify any alleged harm separate from that allegedly suffered by [the group].” An amended petition was filed, but the defendants asked for dismissal on the ground that the new petition failed to comply with the special exceptions. The trial court dismissed the action.
On appeal, the defendants argued—and the court of appeals concluded—that the appellate question had been waived because the plaintiff advanced only the “issue” that the dismissal had been wrong on the merits, without including a distinct “issue” about whether the trial court had been wrong about the special exceptions.
The Texas Supreme Court reversed:
The court of appeals relied on Cole v. Hall, 864 S.W.2d 563 (Tex. App.—Dallas 1993, writ dism’d w.o.j.), to conclude that the shareholders waived any challenge to the trial court’s special exceptions order. In Cole, the court held that for the merits of a trial court’s order sustaining special exceptions and dismissing a suit to be reviewed on appeal, the plaintiff must challenge both the order granting special exceptions and the order of dismissal. 864 S.W.2d at 566-67. We agree with that determination. Both the final order of dismissal and the interlocutory order granting special exceptions must be challenged in order for the merits of the order granting special exceptions to be reviewed. We disagree with how the court of appeals applied the rule in this case.
In particular, the Court held that an appellant need not separate these two concerns into two entirely separate “issues.” Instead, the appeal was preserved so long as the substance of the concerns were both present in the brief. Here, the Court held, the appellate brief adequately addressed both concerns.
Having concluded that there was no waiver, the Texas Supreme Court reversed and remanded to the court of appeals so that it could consider the remaining issues.
Corporations Have Homes, Too (At Least for Purposes of Venue Statutes)
In re Transcontinental Realty Investors, Inc., No. 07‑0608 (per curiam)
The Court can take this one:
The question here is whether an amendment to the permissive-venue statute in the 1980s should be interpreted to eliminate businesses from every venue statute that refers to where a party “resides.” ….
In sum, when the Legislature amended the permissive-venue statute to distinguish between a natural person’s “residence” and a business’s “principal office,” we do not think it intended to eliminate corporations and other legal entities from all statutes that refer to a place where one “resides.” Undoubtedly, the Legislature could exclude corporations from section 21.013.But until it does so, we hold that landowners who are businesses—just like landowners who are individuals—can insist on venue where they reside if the condemned property is partly located there.
Pursuant to Texas Rule of Appellate Procedure 52.8(c), without hearing oral argument, the Court conditionally grants the petition for writ of mandamus.
Intervention Is Not (Always) a Way To Choose Your Trial Judge
In re Union Carbide Corp., No. 07‑0987 (per curiam)
A set of plaintiffs with tort claims against Union Carbide Corporation tried to intervene in an ongoing lawsuit by a different set of tort plaintiffs then already pending in Galveston County. Under Texas Rule of Civil Procedure 60, a party can intervene as of right “by filing a pleading subject to being stricken out by the court for sufficient cause on the motion of any party,” so long as that party has a justiciable interest in the pending controversy.
The Texas Supreme Court held that these plaintiffs did not have a justiciable interest in the other plaintiff’s suit against Union Carbide because it would not affect their own future recovery. And the Court held that the intervention should have been struck before the trial court could reach further questions, such as whether to sever it into a separate action. The decision to strike must come before the trial court can otherwise exercise jurisdiction over the claim.
On the question of whether mandamus was proper, the Court explained that there was no adequate remedy by appeal here because of the risk of forum shopping. This intervention had the practical effect of letting the plaintiffs choose a trial court judge, circumventing the local procedures that provided for random assignment of judges to new cases. The Texas Supreme Court agreed that — regardless of whether the parties meant to circumvent the random-assignment rule — that violation made mandamus relief appropriate to protect the integrity of the process.
Experts Are Fungible
In re Shondra Buster, No. 08‑0125 (per curiam)
The Court granted mandamus to bring this case into line with Lewis v. Funderburk, No. 06-0518, issued in April of this year. In Lewis, the Court held (in part) that the Texas statute governing medical malpractice suits did permit a party to cure an originally defective expert report by interposing a new expert. The Lewis Court noted that the statute said “a claimant may satisfy any requirement of this section … by serving reports of separate experts,” and placed emphasis on the phrase “any requirement.”
In this case, the court of appeals had held the opposite (admittedly, in January — prior to Lewis). The Texas Supreme Court granted mandamus relief and brought this case in line with the holding of Lewis.
NASD Arbitration Clause Includes Sabine Pilot Claims
In re NEXT Financial Group, Inc., No. 08‑0192 (per curiam)
I’ll let the Court take this one, too:
The issue in this mandamus proceeding is whether a former securities broker must arbitrate a claim that his employer wrongfully discharged him for refusing to commit an illegal act. See Sabine Pilot Serv., Inc. v. Hauck, 687 S.W.2d 733, 734-35 (Tex. 1985). We hold that the employee’s Sabine Pilot claim falls within the scope of his arbitration agreement and is not subject to an exception limited to statutory employment discrimination claims. …
So, even though the Sabine Pilot tort claim had at its heart the idea that a criminal act was involved, the Texas Supreme Court held that it was still a civil claim that did not fall outside of the reach of the NASD arbitration provisions. For that reason, the Court granted mandamus relief.