Today the Texas Supreme Court released a quiet order list. The Court did not issue any opinions or grant any petitions for review.

The Court is scheduled to hold a private conference next Tuesday.

The Texas Supreme Court handed down one signed opinion and four per curiam dispositions with today’s order list.

Some (but not very much) of the attorney’s fees from the original lawsuit are recoverable in a later malpractice action

Akin, Gump, Strauss, Hauer & Feld, L.L.P. v. National Development and Research Corporation, No. 07-0818

This is a case about what categories of damages are recoverable for legal malpractice.

The significant holding — and I’m not just saying this as an appellate lawyer — is the Court’s recognition that some of the attorney’s fees paid out to appeal the underlying judgment were recoverable as damages in the later malpractice suit.

We see little difference between damages measured by the amount the malpractice plaintiff would have, but did not, recover and collect in an underlying suit and damages measured by attorney’s fees it paid for representation in the underlying suit, if it was the defendant attorney’s negligence that proximately caused the fees. In both instances, the attorney’s negligence caused identifiable economic harm to the malpractice plaintiff. The better rule, and the rule we adopt, is that a malpractice plaintiff may recover damages for attorney’s fees paid in the underlying case to the extent the fees were proximately caused by the defendant attorney’s negligence.

The key is that last phrase: “to the extent the fees were proximately caused by the defendant attorney’s negligence.”

So the additional portion of fees attributable to the original lawyer’s negligence — added hearings, procedures, or appellate procedures — might be recoverable in a later malpractice action.

The Court rejects the argument, however, that the whole appeal costs are recoverable. In its words, “There is no evidence that if NDR had recovered a favorable judgment in the Panda suit, it would not have paid appellate fees to defend the judgment.”

But, here, NDR also hired separate appellate counsel to assist with briefing a particular issue — the very issue involved in the malpractice. The Court concluded that there was some evidence that those damages were, indeed, a result of the law firm’s negligence. (( The lesson for clients who are contemplating malpractice suits could be “segregate your fees.” The lesson for later appellate counsel in these cases could be the same. To the extent you see a possible malpractice issue, your client may benefit if you can clearly distinguish the portion of your fees attributable to that issue. )) With that in mind, the Court chose to remand the math to be sorted out by the courts below.

On the other categories of damages, the Court agreed with the court of appeals that NDR had failed to show that — even if there had been no negligence and it had obtained a large judgment in the original action — those damages could ever have been collected from the original defendant. The Texas Supreme Court reaffirmed that it’s not enough for a malpractice plaintiff to show that they could have gotten a large judgment but for the malpractice. As one of my professors was fond of saying, “A judgment is just a piece of paper suitable for framing.”

Justice Johnson wrote the opinion for the Court. Justice Guzman did not sit on this decision.

A corporate liability insurance policy that excludes defamation also excludes defamation made by “vice-principals” of the corporation

Chrysler Insurance Company, f/k/a DaimlerChrysler Insurance Company v. Greenspoint Dodge of Houston, Inc., No. 08?0780 (per curiam)

This case is about construing an insurance policy that excluded defamation claims were the insured had knowledge that the statements were false when made.

The wrinkle is that the insured was a corporation — and the people with knowledge were not high-ranking officers. Nonetheless, the corporation was subjected to a defamation claim in an arbitration proceeding. Its insurer denied coverage.

The fascinating part of this opinion is its discussion of a category of corporate officials who — although not truly “officers” — nonetheless are important enough that their personal knowledge can be imputed back to the corporation itself.

That category is “corporate vice-principals”: (( Yes, it sounds like those are the people to whom you would be sent if you were tardy too often to meetings or didn’t have a hall pass. ))

A corporation’s knowledge, however, is not limited to what its officers know, but may include other employees’ knowledge, if those employees are corporate vice-principals.

This issue was apparently “litigated” in a previous arbitration proceeding, in which these people were found to be corporate vice-principals.

What is a little interesting (to me, at least) is that the Texas Supreme Court treated the “findings” of the arbitration panel about whether these people were vice-principals as dispositive of this later insurance-coverage dispute: “The arbitrators found that the individuals who engaged in the campaign to defame and injure Martinez were Greenspoint vice-principals.”

The Court’s review might have been somewhat constrained because the prior proceeding was an arbitration. But in these circumstances, the Court concluded that the insurance policy did not cover this defamation claim:

The policy expressly named Greenspoint as an insured, and the arbitration proceeding effectively determined that Greenspoint made the defamatory remarks, through its vice-principals, and knew them to be false when made. Accordingly, there is no coverage under the Primary Policy for Greenspoint’s defamation, and the court of appeals erred in holding otherwise.

Justice Guzman did not sit on this per curiam.

If the trial court dismisses on jurisdictional grounds before entering a jury’s verdict as a judgment, the court of appeals cannot itself enter that judgment

City of Houston, Texas v. Trail Enterprises, Inc. d/b/a Wilson Oil Company, et al., No. 08?0413 (per curiam)

The trial court held a jury trial before deciding to grant the City’s motion arguing that the case was not yet ripe. The trial court dismissed the case on that ground of subject-matter jurisdiction before it formally rendered judgment.

The court of appeals reversed, concluding that the action was ripe. We agree that the action was ripe, and on this issue we affirm. Rather than remanding, though, the court of appeals rendered judgment on the jury verdict for the owners based on the trial court’s finding of liability. However, because the trial court relied only on the jurisdictional ripeness issue in disposing of the case, it was improper for the court of appeals to render judgment on the jury verdict. Our rules provide procedures through which parties may challenge a verdict’s or judgment’s propriety. E.g., Tex. R. Civ. P. 301 (motion for judgment notwithstanding the verdict); Tex. R. Civ. P. 320 (motion for new trial). Remand was necessary at least to enable these further proceedings. See TEX. R. APP. P. 43.3. The court of appeals circumvented these procedures by treating a motion for summary judgment on a jurisdictional issue as if it were a motion for judgment notwithstanding the verdict, and doing so was error.

[some citations omitted]

If the trial court never wraps ups its proceedings by rendering a final judgment, then the appeal is merely interlocutory — and the relief that can be awarded on appeal is somewhat limited.

Default judgements require strict compliance with every procedural rule

Insurance Company of the State of Pennsylvania v. Edward Lejeune, No. 08?0829 (per curiam)

Because default judgments deprive a defendant of their day in court, even a fairly small defect introduced by the clerk’s office can undermine a default judgment:

In this case we consider whether a default judgment must be overturned because the clerk’s endorsement of the return of citation lacked the time of service, as required by Rules 16 and 105 of the Texas Rules of Civil Procedure. “For well over a century, this court has required that strict compliance with the rules for service of citation affirmatively appear on the record in order for a default judgment to withstand direct attack.” … Because we hold that the endorsement in this case did not satisfy Rules 16 and 105, we reverse the court of appeals’ judgment and remand the case to the trial court.

The Court remands in a case where there was at least some evidence of damages

Aquaplex, Inc. and James Edward Jones, Jr. v. Racho La Valencia, Inc. and Charles R. “Randy” Turner, No. 08-0280 (per curiam)

In this case, we decide whether the evidence presented at trial was legally sufficient to support the award of damages. The trial court believed so and entered judgment on the jury verdict, but the court of appeals reversed, holding that no evidence supported the amount of damages awarded….

We hold that some evidence supported an award of damages for fraud…, just not at the level awarded by the trial court. This Court may not order a remittitur, but the courts of appeals may. Tex. R. App. P. 46.3. … We remand the case to the court of appeals so that it may determine whether to remand for a new trial on damages, or whether to suggest a remittitur.

[some citations omitted]

As has been its recent pattern, the The Texas Supreme Court ended its conference week with a bang, deciding five cases, granting thirteen more for argument this winter, and issuing a supplemental opinion on a rehearing with today’s order list.

(I am shepherding a brief out the door, so I will not be able to give detailed summaries today. The raw opinions are collected on this page from the Court’s website.)

Appellate geeks may notice that today’s order list is the first time that the Court has specified which decisions new Justice Eva Guzman joined. She participated in today’s merits decisions and petition grants, other than Missouri Pacific Railroad Co. v. Limmer, No. 06-0023, in which she had written the court of appeals opinion that the Court reversed today. Justice Guzman did not, however, participate in today’s routine petition denials.

The Texas Supreme Court issued another quiet weekly order list this morning, denying review and rehearing in a handful of cases.

Since the Texas Supreme Court’s annual end-of-summer flurry of opinions, the Court has lost one Justice to the private bar (Scott Brister) and has just welcomed new Justice Eva Guzman.

The Court is scheduled to hold a private conference next Monday and Tuesday to discuss pending petitions.

The Court did not issue any opinions or grant any petitions for review with today’s order list.

There were no opinions or petition grants with today’s order list from the The Texas Supreme Court.

Next week, the Court has its second oral argument sitting of the Term.

The Texas Supreme Court issued one opinion with today’s order list, granted two new petitions to be argued in December, and invited the Solicitor General to give the views of the State about whether the privilege that attaches to civil investigative demands extends to private litigation.

As always, briefs and opinions are available through the “DB” link.

What’s needed to overcome trade secret protection when trying to prove negligence?

In re Union Pacific Railroad Co., No. 08-0740 (DB)

This is a negligence case brought against a railroad for damages caused by its handling of hazardous cargo.

As part of proving negligence, the plaintiffs argued that the railroad should have moved the cars containing these chemicals farther back in the train and also should not have positioned those cars near steel cars that might puncture their tanks.

The railroad admitted that it had flexibility about how to arrange the cars and that it charged more for handling hazardous materials.

The plaintiffs then requested the railroad’s exact rates for that period for handling that class of materials. The railroad filed for a protective order, which the trial court denied. The court of appeals denied mandamus review. In a per curiam opinion, the Texas Supreme Court grants mandamus relief against disclosure.

The Texas Supreme Court concluded that these rates were a trade secret, in part because of the unique regulatory environment in which railroads operate. The Court then concluded that the plaintiffs had not carried their burden of proof to show why they needed the exact rates to make their negligence arguments.

As the Court noted, the railroad had conceded the points in the abstract — that they charged more and that they had flexibility about where to place the cars. With that in mind, “It is unclear to us, and Constanzo has not explained, why she needs the specific rate structures to advance this negligence theory.” Thus, the Court concluded, the plaintiff had failed to establish that this information was “material and necessary” to the case.

Petition about assignment of lottery winnings

Texas Lottery Commission v. First State Bank of DeQueen; Stone Street Capital, Inc.; and Cletius L. Irvan, No. 08-0523 (DB) [to be argued Dec. 16, 2009]

This petition asks if it is legal for a lottery winner to assign a future stream of winnings to a structured-settlement company in exchange for a lump-sum payment.

The Legislature passed a bill amending the Lottery Act to limit those assignments. During the very same session, the Legislature also passed amendments to the UCC that generally strike down anti-assignment laws.

A divided Third Court held that the Texas UCC controlled this question and rendered the relevant parts of the Lottery Act ineffective.

(Disclosure: I was counsel for the Lottery Commission in the court of appeals, before I moved to private practice.)

Must a product manufacturer indemnify downstream sellers of the item for the amount of their settlements?

Fresh Coat, Inc. v. K-2, Inc., No. 08-0592 (DB) [to be argued Dec. 17, 2009]

This products-liability indemnity lawsuit is between a manufacturer of stucco products and the firm that installed the stucco on houses. The installation firm had already settled with the homeowner.

The dispute is about how the statutory indemnity provided by Section 82.002(a) of the Texas Civil Practice & Remedies Code applies to this situation. That provision states:

(a) A manufacturer shall indemnify and hold harmless a seller against
loss arising out of a products liability action, except for any loss
caused by the seller’s negligence, intentional misconduct, or other
act or omission, such as negligently modifying or altering the
product, for which the seller is independently liable.

Both parties ended up filing petitions for review. The issues include whether this installer was a “seller” of the goods; whether the statutory provision applies to losses incurred pursuant to contractual indemnity clauses the installer had entered; and what must be established to show that the manufacturer is independently liable for this claim.

CVSG: Are materials produced for a civil investigative demand privileged from disclosure in private antitrust litigation?

In re Memorial Hermann Healthcare System and Memorial Hermann Hospital System, No. 08-1046 (DB)

The Texas statute governing state civil investigative demands (CIDs) creates a privilege against disclosure of those materials by the Attorney General. The relator argues that the statute also gives the target of the CID a privilege against disclosing those materials in discovery in private litigation.

The Fourteenth Court rejected that legal argument. It further concluded that this particular request was not overbroad:

Both the attorney general and Stealth may prosecute antitrust actions against Memorial Hermann for the same statutory violations. Memorial Hermann has not demonstrated that all or part of the CID materials do not relate to Stealth’s claims in this lawsuit.

The Solicitor General has been invited to file a brief in this case expressing the views of the State.

This was a quiet order list from the Texas Supreme Court. It did not issue any opinions or grant any petitions for review.

The Court has a two-day private conference next Monday and Tuesday to discuss pending cases.