In 2010, Texas trial courts in Austin and Dallas granted divorces to same-sex couples. The State (through the Attorney General) sought to intervene in both cases — once before the formal divorce decree was issued and once after. Neither trial court permitted the intervention. The State took each case before its local court of appeals.

The Dallas Court concluded that the State should have been permitted to intervene and, further, that Texas trial courts lacked any power to issue a divorce for a same-sex marriage. The trial court was ordered to dissolve its decree, reinstating the same-sex marriage.

In its case, the Austin Court concluded that the State’s intervention after the decree had been ineffective and, thus, it lacked appellate jurisdiction to consider the State’s complaints. This divorce stood.

Where things stand in the Texas Supreme Court

The State filed a petition challenging the Austin Court’s ruling. The case is docketed as State of Texas v. Angelique Naylor and Sabina Daly, No. 11-0114 (more information). In this case, the divorcing couple has elected to waive its response, and the Court has not yet requested one.

The Dallas case was challenged by the couple who had sought a divorce. They filed a petition, which has been docketed as In re Marriage of J.B. and H.B., No. 11-0024 (more information). The State filed a response that — quite unusually for a party who won below — urges the Court to grant the petition and review the case to set a statewide precedent. The docket sheet also shows a referral to the Court’s pro bono program (which is a signal of the Court’s serious interest).

The Court has not yet set these cases for full briefing on the merits. Looking at the two docket sheets side-by-side, my guess would be that the Court is treating the two cases as linked and wants to get a response in the Naylor case before moving forward with both petitions. (( This may be the rare case where the Court chooses to grant review before seeing full briefing on the merits. If so, the Court might be waiting for a response to satisfy Texas Rule of Appellate Procedure 53.3 (“A petition will not be granted before a response has been filed or requested by the Court.”) ))

The first amicus brief

Yesterday, an amicus curiae brief was filed by Rep. Warren Chisum, former State Senator Todd Staples. (( For those who keep score on Texas politics, Staples now holds a different state job (Agriculture Commissioner). This brief clarifies that he is signing in his “individual capacity,” not as a state official. )) As would be expected from an amicus briefs filed by legislators about the laws they wrote, it urges the Court to conclude that the statute is constitutional. The Liberty Institute served as counsel on the brief.

The brief was filed in both cases, with slight tweaks to fit the procedural posture. In the Austin case, the brief (PDF) argues that the lower courts had “sub silentio” struck down the Texas statute by dismissing the State’s appeal on a procedural ground. In the Dallas case, the brief (PDF), like the State’s petition, urges the Texas Supreme Court to grant the petition for review and affirm.

Nafta Traders, Inc. v. Margaret A. Quinn, No. 08-0613 (DB).

This is the long-awaited decision about whether the rule the U.S. Supreme Court announced in Hall Street — which held that parties to an arbitration agreement could not themselves agree to have a federal appellate court review the award because courts were prohibited by the Federal Arbitration Act (FAA) from second-guessing most of the substantive aspects of an arbitration decision — also applied under the Texas Arbitration Act (TAA).

Today, the Texas Supreme Court declined to adopt the same reading of its own statute, holding that parties had the freedom to design a hybrid system that had an arbitration panel make an initial award and later review by a (real) appellate panel. Justice Hecht wrote the opinion for a unanimous Court.

The heart of the decision is a detailed examination of the U.S. Supreme Court’s reasoning of Hall Street. The Texas Supreme Court noted that the question could be framed in two different ways: whether judicial authority can be expanded (as Hall Street asked) or what Justice Hecht calls “the flip-side” of the same question — whether parties can by their agreement choose to limit the power of their arbitrators.

Adopting that second framing, the Texas Supreme Court was somewhat critical of the U.S. Supreme Court’s reasoning. The problem was a section of the FAA that seems to suggest that the parties can agree to limit the power of arbitrators and, in turn, that courts can review whether arbitrators exceeded that limit:

[T]he Supreme Court, in holding that under the FAA the grounds for vacating, modifying, or correcting an arbitration award cannot be expanded beyond those listed in sections 10 and 11, did not discuss section 10(a)(4), which like section 171.088(a)(3)(A) of the TAA, provides for vacatur “where the arbitrators exceeded their powers”. The omission appears to us to undercut the [U.S.] Supreme Court’s textual analysis.

In the end, the Texas Supreme Court was not persuaded by the reasoning of Hall Street and thus declined to adopt the same reading of the Texas statute. As the opinion sums things up:

The problem comes down to this. Under the TAA (and the FAA), an arbitration award must be vacated if the arbitrator exceeds his powers. Generally, an arbitrator’s powers are determined by agreement of the parties. Can the parties agree that an arbitrator has no more power than a judge, so that his decision is subject to review, the same as a judicial decision? Hall Street answers no, based on an analysis of the FAA’s text that ignores the provision that raises the problem, and a policy that may be at odds with the national policy favoring arbitration. With great respect, we are unable to conclude that Hall Street‘s analysis of the FAA provides a persuasive basis for construing the TAA the same way.

Chief Justice Jefferson wrote a concurrence, joined by Justice Wainwright and Justice Lehrmann, with some bigger-picture thoughts about what it means when litigants opt for arbitration instead of using the courts:

I write only to observe that our system is failing if parties are compelled to arbitrate because they believe our courts do not adequately serve their needs. If litigation is leaving because lawsuits are too expensive, the bench and the bar must rethink the crippling burdens oppressive discovery imposes. If courts have yet to embrace modern case-management practices, the Legislature should ensure that the justice system has resources to improve technology and to hire qualified personnel—two sure ways to improve efficiency. …

As the Court does, I would affirm that right. Nevertheless, we must, in the future, address those aspects of our justice system that compel litigants to circumvent the courts and opt for private adjudication.

In a nutshell: The Court interpreted the Texas Arbitration Act to diverge from Hall Street. So if your arbitration agreement is governed by federal law (and thus Hall Street), you cannot agree to have judicial appellate review of the award. But if your agreement is governed by Texas law (and thus Nafta Traders), you do have this added measure of flexibility. With those stakes, attorneys drafting arbitration agreements have extra incentive to determine at the outset whether the agreement falls solely under Texas law or whether federal law applies.

Friday’s theme, once again, was contractual ways to avoid litigation. But the featured special is an “appraisal clause” in an insurance contract, which lets either party demand a third-party process to fix the amount of property damage. As the Texas Supreme Court’s opinion notes, it has only dealt with these appraisal clauses a handful of times.

This weekly orders list did not contain any new grants of review.

Appraisal clauses in insurance contracts

In re Universal Underwriters of Texas Insurance Co., No. 10-0238 (Jefferson, J.) (DB).

The question before the Court was: “When has a party to an insurance contract waived its rights under an appraisal clause?”

The answer, it turns out, is “almost never.”

In this case, the two sides disagreed for several months, leading to a lawsuit being filed by the insured. Only then did the insurer try to invoke the appraisal clause. The trial court held that the insurer’s delay had waived these contractual appraisal rights.

Read more about appraisal and the employment-arbitration stay

Railroad Commission of Texas and Pioneer Exploration, Ltd. v. Texas Citizens for a Safe Future and Clean Water and James G. Popp, No. 08-0497 DDB.

A statute charged the Railroad Commission with evaluating whether the “public interest” supported granting permits for injection drilling in the Barnett Shale. A citizens group argued, among other things, that the drilling would cause problems because of large and unsafe drilling trucks being sent down their local roads. The Commission granted the permits without considering these effects, focusing instead on how the permits would affect the energy market and the water supply.

The core question on appeal was about the scope of the phrase “public interest” in the statute — did it encompass all factors that might bear on whether issuance of the permits was a good idea, or was it limited to just considering other factors mentioned in the statute (such as the energy market and the water supply)?

Today, the Texas Supreme Court sided with the Commission — and did so in a way that will be of great interest to those who litigate against government agencies.

Having concluded that this statutory phrase was ambiguous, the six Justices in the majority opinion (written by Justice Guzman) chose to defer to the agency’s own interpretation rather than looking for other aids to statutory construction. (( In some ways, this case echoes the reasoning of last week’s In re Smith decision, which relied primarily on a Texas AG opinion to guide construction of an ambiguous statute. ))

The Court reiterated that Texas has not adopted the federal model for agency deference but instead follows its own test:

We have long held that an agency’s interpretation of a statute it is charged with enforcing is entitled to “serious consideration,” so long as the construction is reasonable and does not conflict with the statute’s language. We have stated this principle in differing ways, but our opinions consistently state that we should grant an administrative agency’s interpretation of a statute it is charged with enforcing some deference.

In short, the Court will defer to an agency’s interpretation of a genuinely ambiguous statute “so long as the construction is reasonable and does not contradict the plain language of the statute.”

Applying that test, the Court concluded that the Commission’s reading of “public interest” was reasonable.

Three Justices, speaking through Chief Justice Jefferson, concurred only in the judgment. They would have concluded that the statute was actually unambiguous on this point — that no matter what the Commission thought of the question, the Legislature had spoken clearly enough to limit the scope of this inquiry just to the factors set out in the statute.

But the result of today’s decision is that the scope of the term “public interest” was in large part left up to the agency, and that the agency’s decision on that is accorded deference until the Legislature says otherwise.

That’s the question in the Safeshred, Inc. v. Louis Martinez, III, No. 10-0426 (DDB), which has now been chosen for oral argument by the Texas Supreme Court.

The employee’s claim against the employer is what’s known in Texas as a Sabine Pilot claim, named after a case in which the Texas Supreme Court recognized it as a new cause of action.

In this case, the employee was a truck driver who refused to carry a particular load, which he contended was illegal and unsafe. The company fired him. Although the company contested those facts at trial, in the Texas Supreme Court it only challenges the award of exemplary damages to the employee.

The company argues that a Sabine Pilot claim can never support exemplary damages. Alternatively, it argues that the exemplary damages are improper because the company’s “malice” was directed at others (those who might’ve been hurt by the unsafe load) rather than at the employee who was fired for refusing to carry out its instructions.

The employee responds that Sabine Pilot claims are judicially created in Texas and bear the hallmarks of a tort claim (for which exemplary damages are generally available) rather than a contract claim (for which they are not).

The Court has not yet assigned this case to a specific argument date.

With today’s orders list, the Texas Supreme Court issued one opinion and did not select any new cases for review.

Compensation for wrongful imprisonment when the wrongful conviction also triggers parole revocation

In re Billy James Smith, No. 10-0048 (DDB)

In this case, the Texas Supreme Court confronted the question whether a wrongfully convicted prisoner could recover for time he spent in prison due to the revocation of a previous parole — caused by that wrongful conviction.

Smith was convicted of armed robbery in 1970, eventually being released on parole in 1983. In 1986, he was convicted to aggravated sexual assault — the conviction later determined to be wrongful. This conviction led to the revocation of his previous parole, and for a brief time he was jailed for both reasons. Then, in 1987, his parole came to an end and he was imprisoned only for his later conviction.

In 2006, it was determined through DNA evidence that he was actually innocent of this second conviction. He applied for compensation under the Texas statute. The Comptroller paid most of the claim, but withheld payment for the period of time when he was imprisoned for the parole revocation.

The dispute is over this provision of the statute, which carves out an exception for time periods when “the person was also serving a concurrent sentence for another crime.” Tex. Civ. Prac. & Rem. Code §103.001(b).

The Texas Supreme Court, after hearing oral argument, determined that this provision was ambiguous about whether “serving … a sentence” included parole. It thus looked to other sources beyond the statutory text for guidance.

The key outside source became a 2007 opinion from the Texas Attorney General that dealt with a similar situation arising from the Tulia prosecutions. In that case, one of the applicants had been released on probation (rather than parole, as in this case). The Attorney General eventually determined that the Comptroller should approve the application “if the concurrent sentence was served solely because of the wrongful conviction.”

In defending the Comptroller’s decision not to pay this claim, the AG took the position that parole was different than probation. The Texas Supreme Court acknowledged that the two were different, but concluded that the differences did not bear on the Legislature’s intent in this statute: “it seems unlikely that the Legislature intended to compensate wrongfully-imprisoned probationers, and not parolees, given the similarity in their circumstances.”

The Texas Supreme Court granted relief, conditionally ordering the Comptroller to pay the remainder of the claim.

With today’s regular orders list, the Court granted rehearing in a petition for review. It also rescheduled oral argument, at the parties’ request, in one of the cases that had been chosen for argument in March. (( The rescheduled case is Texas Rice Partners v. Denbury Green Pipeline-Texas LLC, No. 09-0901 (DDB). The new argument date will be April 19, 2011. ))

Fraudulent concealment to toll the statute of limitations on royalty payments

Last fall, the Court denied the petition for review in Shell Oil Co., et al. v. Ralph Ross, No. 10-0429 (DDB). The issue was whether the court of appeals was right that the royalty owner in this case had proven an exception to the statute of limitations that would otherwise have defeated their claim against Shell. The Court denied review without requesting full briefs.

Shell filed a motion for rehearing. Along the way, there were three amicus filings by industry groups and one by a competing energy company, all urging the Court to grant rehearing to avoid what they saw as negative consequences from the rule announced by the court of appeals. (( As with most of the cases I mention on the blog, you can reach the briefs and list of amicus parties through the “DDB” link. ))

That’s a little more conventional pattern than the grants of rehearing in last week’s orders. The rehearing stage has become the season for amicus groups to flock. It is also, unfortunately, the time when the odds are most stacked against the party they support.

With today’s order, the Court granted rehearing without granting the underlying petition. The case has been returned to the pool of pending cases, and the Court has now requested full merits briefs.

The Court is hearing three arguments on Thursday morning. I wrote quick overviews of these cases when they were granted — the topics include when attorneys fees can be available to a defendant under the DTPA and whether a dishonored check is a “contract” that can support an award of attorneys fees.

The third case, CMH Homes Inc., et al. v. Adam Perez, No. 10-0688 (DDB), is about the proper way to challenge a trial court’s order appointing an arbitrator to break the parties’ impasse — by interlocutory appeal or by mandamus. The provision involved is Texas Civil Practice and Remedies Code § 51.016 — a relatively new statute authorizing interlocutory appeals “under the same circumstances that a federal district court’s order would be permitted….”

But for Court watchers, the attraction of that argument may be the return of former Justice Brister to the Court as an advocate.

Among other things, he was known for colorful hypotheticals. He once asked an advocate to imagine “[i]f we velcroed the Sword of Damocles right over the spot where you’re standing…”

On reflection, that seems like a pretty fair description of how oral argument itself can feel. And on Thursday, that podium will be his.

Other coverage: Texas Supreme Court to Hear Interlocutory Appeal of an Arbitral Order (Disputing)