With its January 9, 2015 orders list, the Texas Supreme Court issued opinions in two cases.

Section 101.106 election of remedies does not foreclose a federal claim against state officials

Justice Lehrmann delivered the opinion for a unanimous court, affirming the court of appeals.

Section 101.106 of the Texas Tort Claims Act makes plaintiffs choose whether to sue the government entity or the state officials. If a plaintiff tries to have it both ways by suing both categories of defendant, “the employees shall immediately be dismissed.” Tex. Civ. Proc. & Rem. Code §101.106(e).

This petition asked the Court to clarify two situations:

  • Is a plaintiff barred from filing an amended petition after the State files a motion under Section 101.106(e)?

  • Does Section 101.106(e) also require the dismissal of claims that a plaintiff might have against state officials under federal law, such as a Section 1983 claim?

On the first, the Court held that this statute does not prevent a plaintiff from amending its petition to add a new claim. The Court distinguished its recent opinion in a health-care-liability case that a plaintiff could not dismiss its claim in an effort to avoid the penalty for not filing a timely expert report. See Op. at 10 (discussing AUSTIN STATE HOSPITAL, DR. VIKAR NUZHATH AND DR. ERIK LINDFORS v. JOEL GRAHAM, No. 10-0674 ). Here, the Court holds that the wording of the Tort Claims Act (using the word “immediately”) does not change the normal background rules of Texas procedure that would generally permit a party to amend its petition.

On the second, the Court held that Section 101.106(e) does not bar federal claims because they are not brought “under” the Tort Claims Act. See Op. at 6-7. The Court reached that result as a matter of statutory construction and so did not consider questions related to preemption or constitutionality. See Op. at 13.

In the news:
  • Texas SC rules governmental immunity not applicable to claims brought outside act (Southeast Texas Record)
    • Previously:
  • Three grants of review and one rehearing grant (October 18, 2013)
  • Seven opinions and two grants (June 11, 2014)
  • Three opinions, one grant (June 16, 2014)
  • What’s on the SCOTX argument calendar for September? (September 15, 2014)
    • A party cannot avoid an unambiguous contractual release that he chose not to read

    Although this appeal led to a per curiam opinion, there is more than one holding of interest for commercial cases.

    This dispute grows out of settlement negotiations in a related case. The allegation is that, when the parties were negotiating a formal written settlement agreement, one of them (Plank) promised the other (Westergren) that they would be in a partnership to develop a piece of property for which he would receive $1 million plus a share of future development profits. Westergren contends this agreement is enforceable.

    The written settlement agreement, however, contained a provision described as a “RELEASE” that provided for a one-time $500,000 payment.

    Westergren sued Plank and the developer of the property (NPH), claiming that he was defrauded into settling or that, at a minimum, those promises constituted an enforceable oral contract. His theory was that the release was unenforceable because of fraudulent inducement, as he had not actually read the provision but instead relied on the promises made. A jury largely agreed with him, but the trial court entered judgment notwithstanding the verdict. A divided court of appeals reversed, reinstating the verdict.

    With this per curiam, the Court holds:

    • A contractual release is not defeated by a party choosing not to read the contract. The Court had little patience for the contention for Westergren’s explanation of why he did not read this release language, characterizing it as “because he was ‘in a hurry’ and did not have his reading glasses with him.” See Op. at 7.

    • A release is not a covenant not to sue. Plank argued that Westergren even bringing this suit was a breach of the settlement agreement, for which it should be entitled to damages. The Supreme Court holds that the language involved was merely a release of claims, and that the language used in this release did not imply a covenant not to sue.

    • The statue of frauds. The Court also addressed whether the alleged oral agreement was enforceable at all. The statute of frauds would normally bar an oral agreement regarding real estate. Westergren contended that an exception applied here for partial performance because Plank paid $500,000. Westergren’s theory is that this represented the first half of performance under the alleged oral contract and, thus, was partial performance.

      The Court disagreed that Westergren’s framing of this issue accurately stated the law about “partial performance” — explaining in footnote 2 that more would be required but that it would reserve that issue for a proper case. See Op. 9n.2. This case does not shed much light on what law does apply in that situation.

      The Court did not need to provide more clarity because, even accepting Westergren’s framing, the record was still legally insufficient here. The Court held that this $500,000 payment was not “’unequivocally referable’ to the agreement.” See Op. 9. Here, NPH’s payment of $500,000 could easily be explained as referable to the settlement agreement, not the alleged partnership agreement. The Court thus held that Westergren’s statute-of-frauds theory failed even his own suggested test.