The lull of the summer recess continues. The Texas Supreme Court did not issue any opinions or choose any new cases for argument with today’s orders list.

The Texas Supreme Court issued a quiet orders list this week. No opinions were issued, and no cases were selected for oral argument.

The Texas Supreme Court did not issue any opinions or choose any new cases for oral argument with this week’s orders list.

The Court’s calendar doesn’t note any internal conferences until August 9, 2012, the first of five conference days scheduled for August.

With today’s orders list, the Texas Supreme Court released one opinion. The Court did not select any new cases for oral argument this fall.

Notice by Publication: Maybe not the best idea in parental-termination cases

In re E.R., J.B., E.G., and C.L., children, No. 11-0282 (DB) (Jefferson, C.J.)

With today’s unanimous opinion (PDF), the Texas Supreme Court held that the Texas statute that sets a six-month limit on challenges to parental termination must yield to the background constitutional concern that a person receive adequate notice of a proceeding. (( Tex. Fam. Code §161.211(b). This statute sets a six-month limit for challenging default judgments about parent termination after notice by publication — which is shorter than the two-year limit applicable to such challenges in most civil litigation. It appears that the Legislature wanted a strict, no-questions limit, which the Court today found incompatible with the parent’s interest in due process. )) Here, the state only gave formal notice through publication in a newspaper — which the Court called “poor, hopeless, and unjustifiable under these circumstances.”

This is undoubtedly an important decision for family-law practitioners. It also deserves some attention by anyone else who might deal with a default judgment — such as appellate lawyers or those on either side of the collections business.

The core of the Court’s holding is its discussion of notice by publication (pp. 8-13), which is applicable even beyond the family-law context. The Court noted that, even at the time of Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306 (1950) — when roughly 80% of the public read a newspaper — notice by publication was already acknowledged as an inferior and often ineffective means of service. As the Court explained, Mullane and later U.S. Supreme Court cases draw a distinction between defendants whose identity is known and those whose identity is unknown. For those whose identity is known, service by publication is only rarely appropriate.

The justification for using it here was particularly thin. The state knew the mother’s identity, had a telephone number for her, had a previous recent address, and knew the identity of some relatives. Yet, the case officer used almost none of that information in trying to effect regular service on her (see page 3). The Court also notes that the mother had actually visited the state offices during this time period, but had apparently not been told about the looming hearing.

The Court held that publication notice here was constitutionally insufficient and that, for that reason, the Texas statute limiting these challenges to six months could not be applied. The more difficult question was whether the parent was foreclosed for some other reason — such as a common-law notion of laches or waiver — from trying to overturn this judgment now.

That analysis began with the Restatement’s formulation, which in a comment suggests that courts should consider the reliance interests of third parties rather than strict notions about whether a judgment is “void” (see pages 23-24). The Restatement commentary suggested that, in cases about money damages, this might be very slow to occur. Indeed, the comment seems to suggest that reliance on a money judgment might not occur until some formal execution process is underway. By contrast, in judgments that determine marital or parental rights, there are other ways that third parties might justifiably rely on a judgment.

Adopting this basic approach, the Court decided to remand the case to the trial court for further proceedings — with the guidance that it should look at two questions: (1) whether the mother had unreasonably failed to act after learning about the judgment and, if so, (2) whether granting relief now would impair a third party’s “substantial interest in reliance on that judgment.”

With today’s orders list, the Texas Supreme Court issued opinions in a dozen cases. The Court also chose two new petitions for oral argument this fall.

Today’s Decisions

• Larry York d/b/a York Tank Trucks v. State of Texas and Wise County, Texas, No. 09-0905 (DB) (Hecht, J.). A state-court judgment in violation of the bankruptcy automatic stay is void as a matter of state law. The Court also held that government conduct did not fit the “police power” exception when it was not exercised for a legitimate purpose (here, refusing to return a truck to its rightful owner, when that owner was known and well-established). And it reiterated that a takings claim could not be brought where the owner had other, more direct avenues of recourse against the government. Opinion (Hecht): PDF

• Ford Motor Co. v. Patricia Chacon, et al., No. 10-0506 (DB) (per curiam). This guardian ad litem was, the Court held, appointed for the limited purpose of evaluating one particular settlement offer. He thus could not recover fees for actions taken beyond the narrow scope of that appointment. Per Curiam: PDF

• American Zurich Ins. Co. v. Daniel Samudio, No. 10-0554 (DB) (Lehrmann, J.). This is a workers comp case in which the beneficiary argued that the district court had no power to review the agency decision. The reason? Because the agency had chosen an invalid classification, which the beneficiary argued placed it outside the district court’s subject-matter jurisdiction. The Texas Supreme Court reversed, holding that this was not a jurisdictional bar. Opinion (Lehrmann): PDF

• Texas West Oaks Hospital, LP and Texas Hospital Holdings, LLC v. Frederick Williams, No. 10-0603 (DB). Divided 6-3, the Court holds that an employee’s claim against their employer hospital can be a “health care liability claim” subject to the special procedural rules and liability limits of the Texas medical-malpractice statute. The majority noted that, in this case, the substantive proof for “injuries arising out of inadequate training, supervision, risk-mitigation, and safety in a mental health facility.” A dissent, written by Justice Lehrmann and joined by Justices Medina and Willett, argues that it stretches the statute too far to apply it outside of a patient-provider relationship. (The dissent begins by tweaking the opening line of one of Justice Wainwright’s own dissents: “A whole new world [of health care liability claims], hinted by opinions in the last few years, is here.” ) Majority (Wainwright, for 6 votes): PDF. Dissent (Lehrmann, for 3 votes): PDF

• Robert Sutherland, Jesus de la Garza and Southern Customs Paint and Body v. Robert Keith Spencer, No. 10-0750 (DB). The question was whether the first element of the Craddock test was met, allowing a defendant to obtain a new trial after a no-answer default judgment. Here, the evidence was that “the citation was left in a stack of papers on a desk and forgotten about because of limited time spent at the office due to weather conditions over a nearly three-week period during the Christmas holiday season.” The majority, written by Justice Green for 7 Justices, held that this would satisfy the first element of Craddock if not controverted (as it was not here). But Chief Justice Jefferson, joined by Justice Willett, dissented. They characterized this type of an excuse as “I forgot,” and said, “[w]e reject this excuse when tax returns are late, or when homework is missing, but a defendant can now use it to disregard an official [citation].” Your malpractice carrier is probably glad that the dissenters didn’t carry the day on this one. Opinion (Green, for 7 votes): PDF. Dissent (Jefferson, for 2 votes): PDF

• Mission Consolidated Independent School District v. Gloria Garcia, No. 10-0802 (DB). Divided 6-3, the Court held that a plaintiff suing for age discrimination under the TCHRA cannot establish a prima facie case when the evidence is undisputed that the plaintiff was replaced by someone older. Majority (Willett, for 6 votes): PDF. Dissent (Jefferson, 3 votes): PDF

• In re XL Specialty Ins. Co. and Cambridge Integrated Services Group, Inc., No. 10-0960 (DB). “[I]n a bad faith action brought by an injured employee against a workers’ compensation insurer,” does the attorney-client privilege apply to “communications between the insurer’s lawyer and the employer during the underlying administrative proceedings. We hold that the privilege does not apply.” Justice Willett dissented to the Court taking up this issue when it had already issued Ruttiger holding that this substantive claim does not exist. Majority (Jefferson, for 8 votes): PDF Dissent (Willett): PDF

• Jerry McGinty and Villas by Design, Inc. v. Thomas J. Hennen, No. 11-0288 (DB) (per curiam). This was a case about mold damage to a house, which the jury found caused either $651,000 in repair costs or $262,000 in reduction in market value. The plaintiff elected a judgment based on repair costs. The Texas Supreme Court reversed both measures of damage. It found that there was no evidence that the repair cost was “reasonable and necessary” under Mustang Pipeline. And it found that there was no evidence of the difference in value at the time of the sale, as opposed to the time of the trial. The Court thus reversed and rendered a take-nothing judgment. Per curiam: PDF

• Michael B. Wansey, individually and d/b/a Rio Grande Defensive Driving School v. Cheryl D. Hole, No. 11-0348 (DB) (per curiam). “In this case, we must decide whether a plaintiff may recover on a claim for negligent hiring and supervision despite suffering no harm at the hands of the employee who was allegedly negligently hired.” The Court rejected this type of claim. Per curiam: PDF.

• City of North Richland Hills, Texas v. Laura Friend, individually and as personal representative of the estate of Sarah Friend, deceased and Luther Friend, No. 11-0367 (DB). The Court held that failure of a city-owned water park to quickly provide a defibrillator did not constitute the “use of tangible personal property” and, thus, the city’s immunity was not waived. Opinion (Lehrmann): PDF

• Reddy Partnership/5900 North Freeway LP and Reddy Partnership, et al. v. Harris County Appraisal District, No. 11-0400 (DB) (per curiam). The Court held that what it called a “trivial misnomer” in a property owner’s challenge to a property tax did not deprive the trial court of jurisdiction to hear the challenge. Per curiam: PDF

• Evanston Insurance Co. v. Legacy of Life, Inc., No. 11-0519 (DB) (Guzman, J.). This was a certified question from the Fifth Circuit asking whether, under Texas law, a company’s liability insurance policy covered claims involving mistreatment of a deceased relative’s remains. The Texas Supreme Court answered that this did not qualify under the policy’s provision covering “bodily injury” or “property damage.” Opinion (Guzman): PDF

New Grants

The Court chose two new cases for argument in December. (The Court has already filled its argument calendar for September, October, and November. You can see a list of which grants were assigned to which dates on last week’s orders.)

• Petroleum Solutions, Inc. v. Bill Head d/b/a Bill Head Enterprises and Titeflex Corp., No. 11-0425 (DB). The case grows out of a diesel spill at a truck stop. The issues are about the trial court’s decisions involving a defense of limitations (which it did not allow), spoliation, and indemnification. Set for argument December 4, 2012.

• Texas Adjutant General’s Office v. Michele Ngakoue, No. 11-0686 (DB). Set for argument December 4, 2012. This is (yet another) case about §101.106 of the Tort Claims Act.

With today’s orders list, the Texas Supreme Court issued one opinion, granted two petitions for argument this fall, and granted one motion for rehearing of a previously denied petition.

The lines between contract and tort claims and between direct and consequential damages

El Paso Marketing, L.P. and Enterprise Texas Pipeline, LLC v. Wolf Hollow I, L.P., No. 11-0059 (Hecht, J.)

This case may not break new ground, but it is a useful example of the categorization problems that sometimes afflict complex commercial cases. This dispute was between a reseller of natural gas (El Paso) and a customer for that gas (Wolf Hollow) that, in turn, sold electric power to downstream customers. When insufficient gas was supplied, Wolf Hollow sued. The Texas Supreme Court had to decide if a particular claim was really for negligence or instead sounded in contract. It also had to decide whether Wolf Hollow’s damages theory was “consequential damages” barred by the contract or was instead “cover damages” that might have been permissible.

It ultimately concluded:

• The duties here flowed from the contract, not from a background common-law rule against behaving negligently. So damages were negligence would be barred by the economic-loss rule.

• The damages that Wolf Hollow suffered in losses for sales to its customers are classic consequential damages — they grow out of other contracts, not anything directly from the contract at issue in this suit. Thus, they might normally be barred by a contractual provision that waived consequential damages.

• But the contract also had a special provision about “cover damages,” under which Wolf Hollow might be able to recover its added costs for the fuel it purchased to continue providing electricity to its customers.

The Court reversed in part but, because Wolf Hollow still had a valid theory of damages for cover damages, it remanded to the court of appeals to consider the remaining issues in the case.

Two cases granted for argument this fall

Defamation for repeating a false statement attributed to another

Byron D. Neely, Individually and Byron D. Neely, M.D., P.A. V. Nanci Wilson, CBS Stations Group of Texas, L.P., D/B/a KEYE-Tv and Viacom, Inc., No. 11-0228.

Is a newspaper absolutely shielded from liability for having republished a defamatory statement that the article attributes to a third party?

Environmental regulations and preemption

Southern Crushed Concrete, LLC V. City of Houston, No. 11-0270

Is a set of environmental regulations imposed by the City of Houston preempted by state law or the issuance of a state permit?

Rehearing granted

The Court granted rehearing of the petition in Homer Merriman v. XTO Energy, Inc., No. 11-0494, an oil-and-gas case. The motion for rehearing takes a narrower approach than the original petition, arguing that even if oral argument were not granted, the case might be appropriate for a per curiam.

With today’s orders list, the Court issued one opinion and granted one petition for review. For those watching the calendar, the Court is scheduled to hold another internal conference next Monday and Tuesday.

Casteel does not apply to an erroneous contributory-negligence submission

Thota v. Young, No. 09-0079 (Green, J.) (opinion).

This was a medical-malpractice case that actually made it past the expert-witness phase to a merits trial. The question on appeal was whether a jury charge question about contributory negligence (by the patient) had been erroneous and, if so, whether that was a harmful error. The doctor argued that this issue had been waived because the plaintiff had not made a specific enough objection at the charge conference.

Where there is broad-form submission, there are appellate lawyers arguing over Casteel. In this case, the court of appeals concluded that the particular charge error qualified for a Casteel “presumed harm” analysis that would allow it to reverse for a new trial without walking through a formal harmless-erorr analysis. The court of appeals thus ordered a new trial.

The Texas Supreme Court originally denied the petition for review. On rehearing, however, it decided to grant the petition and set it for oral argument last November. Today, the Court issued a unanimous opinion reversing the court of appeals. (I wrote a blurb about the case when rehearing was granted.)

The Court first addressed the question of whether this appellate point had been preserved by a no-evidence objection. Here, it sided with the plaintiff, concluding that — at least for this particular type of charge error — the no-evidence objection was specific enough.

It then reached the question whether this charge error was significant enough to reverse the judgment. The Court rejected the court of appeals’s analysis about “presumed harm,” concluding that the “presumed harm” analysis of Casteel did not apply to a contributory-negligence question in a case with only one theory of liability.

That extends (or maybe just applies) the Court’s decision in Bed, Bath, and Beyond v. Urista, which had refused to apply the presumed-harm rule to an erroneous “inferential rebuttal” instruction in a single-theory case. This case, unlike Urista involved a question about a defense (not just an instruction about weighing the evidence). But the Court found the principle the same, refusing to presume that it was harmful error.

The Court then walked through a more traditional harmful-error analysis, concluding that any error here was not harmful. It reversed the court of appeals and remanded to that Court for it to consider other issues in the case.

New grant: Debts of a spouse after divorce

The Court granted the petition for review in Tedder v. Gardner Aldrich, LLP, No. 11-0767, a divorce case out of the Fort Worth Court of Appeals. The case should be scheduled for an oral argument on the fall calendar.

The suit is between one of the wife’s creditors and her ex-husband. And, if you couldn’t guess by the style of the case, the wife’s creditor (Gardner Aldrich LLP) is the law firm she hired to handle the divorce litigation. The husband’s petition for review argues that the Family Code limits which debts of a spouse can be attributed to the other, and that the creditor did not establish that the debts involved were “necessaries” or that the husband had not complied with the support orders of the divorce court.

The Court issued a quiet orders list today, with no opinions and no new cases chosen for review.

The next private conference of the Justices is scheduled for next Monday and Tuesday (with another conference scheduled for the following week).