In today’s very busy order list, the Texas Supreme Court decided six cases (including two certified questions from the Fifth Circuit) and set three new cases for oral argument.

Visitors from Above the Law…

Welcome! The part of this post that relates to “a talent for bench-slappery down in Texas” was originally buried at the end. Here’s what you’re looking for:

In today’s order list, the Texas Supreme Court granted review in City of Waco v. Kelley, No. 07-0485, from the intermediate court of appeals located in Waco, Texas. COA Majority COA Dissent

The dissent, written by the Chief Justice of the Waco Court of Appeals, has a (cited) quote from Pretty Woman and concludes one of its sections with “I dissent, I really dissent.”

It also contains the following epilogue, which I quoted in my original post:

Dear City of Waco,

Sorry to put you through this, but you are going to have to go to the Supreme Court in Austin, again. The Tenth Court of Appeals in Waco has some problems right now that I hope are fixed real soon. But for now, you are in the appellate district that was reversed in 2006 more often than any other appellate court in Texas. I have done what I could, by writing lots of dissenting opinions, but it has not really helped the situation any. Good luck on your trip to Austin.

Sincerely,

The dissenting Chief Justice

Back to regularly scheduled blog programming …

This post covers the first three decisions and also the three granted cases. I’ll have another post up shortly that discusses today’s other three decisions.

• Evanston Insurance Co. v. ATOFINA Petrochemicals, Inc., No. 03-0647. As with Frank’s Casing two weeks ago, this is another case in which the Court grants a motion for rehearing and then reconsiders its earlier decision.

  The pre-rehearing decision, also written by Justice Green, was 9-0, holding that “the policy language excludes coverage for the additional insured’s sole negligence.” The Court reversed and remanded.

  The post-rehearing decision reaches the opposite conclusion. By a vote of 9-0, the Court holds that the policy in question did provide that coverage. And it then proceeds to walk through (and reject) the insurer’s other arguments for denying coverage. The Court thus affirmed the court of appeals’s conclusion that ATOFINA was an insured entitled to coverage but it reversed the aspect of the judgment that had approved attorney’s fees and damages under article 21.55 of the Texas Insurance Code.

  Justice Green delivered the majority opinion (unanimous on some points), in which Chief Justice Jefferson, Justice O’Neill, Justice Wainwright, Justice Brister, Justice Medina, and Justice Willett joined, and in which Justice Hecht and Justice Johnson joined as to the parts not covered by their separate opinion. Justice Hecht filed an opinion concurring in part and dissenting in part, in which Justice Johnson joined. Those two Justices would have remanded the question whether the insured should now be estopped from challenging the reasonableness of the underlying settlement because it refused to participate in those negotiations. The dissent argues that is a factual dispute warranting a remand.

• Bowden v. Phillips Petroleum Co., No. 03-0824. In this oil-and-gas class action, the court of appeals had reversed a trial court order that had certified three subclasses of plaintiffs. The Texas Supreme Court affirmed as to two of those subclasses, but it reversed the court of appeals as to one of those subclasses — holding that a class action was permissible.

  With regard to the subclass of plaintiffs whose certification was approved, the court of appeals had concluded that the contract language they sought to enforce was ambiguous and thus that individual issues would predominate. The Texas Supreme Court disagreed, holding that the language was unambiguous.

  As for the other two subclasses, the Court analyzed the claims and concluded that individual issues would predominate.

  In this analysis, the Court took an approach at odds with that of the court of appeals, which had focused on the adequacy of the class representatives. The court of appeals had concluded that, because the class representatives were willing to narrowly tailor their claims to try to meet the other requirements for class certification, they were per se inadequate. ((The reason would have to do with how res judicata would apply to class actions. Those strategically excluded claims might preclude individual class members from bringing similar claims.))

  The court of appeals summarily concluded the “willingness of the class representatives to abandon claims for the sake of achieving commonality” means the representatives cannot adequately represent the class, and thus the trial court abused its discretion in certifying the class. 108 S.W.3d at 404. Under that approach, class representatives would always risk being inadequate representatives if they did not assert all possible claims for each individual class member. At the same time, though, class representatives bringing excessive numbers of individual claims may burden their ability to satisfy the typicality and predominance requirements.

  We previously explained that a class representative’s decision to assert certain claims and abandon others affects the certification determination. The choice of claims to pursue or abandon is one relevant factor in evaluating the requirements for class certification such as typicality, superiority, and adequacy of representation. …

  Although the Court affirmed the court of appeals with regard to two of the subclasses, it did so on the different ground of predominance. With regard to the third subclass, the Court reversed the court of appeals and remanded the case to the trial court.

  Justice Wainwright delivered the opinion of the Court. (Justice Brister not sitting)

• PR Investments and Specialty Retailers, Inc. v. State of Texas, No. 04‑0431. This case concerns the nature of a trial court’s jurisdiction over a condemnation action. Here, TxDOT began condemnation proceedings involving a parcel owned by PR Investments. At some time between a valuation being suggested by a commissioners hearing and the trial de novo in the trial court, TxDOT announced some changes to its plans for the proposed roadway. PR Investments moved, and the trial court agreed, that those changed facts meant that it had no jurisdiction to hear the case because its jurisdiction was merely “appellate,” echoing the Texas Supreme Court’s use of that term in a prior case. ((State v. Nelson, 334 S.W.2d 788 (Tex. 1960). ))

  In a unanimous opinion authored by Justice Willett, the Court today explained that the “appellate” metaphor cannot be carried so far as to exclude the trial court from hearing new evidence:

  The trial court’s function in a condemnation proceeding is “appellate” in the sense that the case is first considered by the special commissioners, and hence, as we noted in Nelson, the court’s jurisdiction “is appellate as distinguished from original or concurrent.” The court’s jurisdiction is not, however, “appellate” in the sense that the evidence is fixed in the record of the proceedings below and the court is confined to that paper record, as ordinarily occurs when an appellate court reviews a case. Quite the opposite, the statutory scheme makes no provision for the commissioners’ hearing to be recorded, and provides that “[i]f a party files an objection to the findings of the special commissioners, the court shall cite the adverse party and try the case in the same manner as other civil causes.” In other words, the proceedings that occurred before the special commissioners are not considered, and the case is tried to the court de novo. There is no option typically available to an appellate tribunal to simply affirm the special commissioners’ award; instead, “[u]pon the filing of objections, the Special Commissioners’ award is vacated and the administrative proceeding converts into a normal pending cause . . . .” We agree with TxDOT that it is incongruous to label the trial court as appellate in the ordinary sense “given that its function is not to review and correct, but to determine the value of the property anew.”

  The Court thus affirmed the court of appeals judgment and remanded for the trial court to reconsider its original award of discovery sanctions (which had been predicated on the trial court’s erroneous conclusion that it had been divested of jurisdiction).

The next blog post will cover the following three decisions, also handed down today:

• Fairfield Insurance Co. v. Stephens Martin Paving, L.P., No. 04-0728.

• National Union Fire Insurance Co. v. Crocker, No. 06-0868.

• Chau v. Riddle, No. 07-0035. With a per curiam opinion, the Court reverses the court of appeals’ judgment and remands the case to that court.

Three cases set for oral argument

The date and time for these arguments has yet to be announced.

Petitions granted

• Kerlin v Sauceda, No. 05-0653, from Cameron County; 13th district (13‑01‑00062‑CV, ___ SW3d ___, 06‑09‑05) COA Decision

  This case goes way back, involving the ownership of Padre Island as traced back to a Mexican land grant in 1829. That interest was conveyed, mortgaged, litigated, and contested in courts of both nations for years. The current litigation involves about as many flavors of claim and issue preclusion as can be found in any textbook.

• City of Waco v. Kelley, No. 07-0485, from McLennan County; 10th district (10‑03‑00214‑CV, 226 SW3d 672, 05‑02‑07). COA Majority COA Dissent

  Here’s an excerpt from the dissent:

  Dear City of Waco,

  Sorry to put you through this, but you are going to have to go to the Supreme Court in Austin, again. The Tenth Court of Appeals in Waco has some problems right now that I hope are fixed real soon. But for now, you are in the appellate district that was reversed in 2006 more often than any other appellate court in Texas. I have done what I could, by writing lots of dissenting opinions, but it has not really helped the situation any. Good luck on your trip to Austin.

  Sincerely,

  The dissenting Chief Justice

Mandamus set for argument

• In re Schmitz, No. 07‑0581,from Bexar County; 4th district (04‑07‑00359‑CV, ___ SW3d ___, 07‑11‑07) (Chief Justice Jefferson not sitting)

With today’s order list, the Texas Supreme Court issued one per curiam opinion explaining why it denied review in a series of child-custody cases.

The Court did not grant any new cases for review.

• In re D.N.C., No. 07-0621, -consolidated with-, In re T.L.J. and T.B.J., No. 07-0622, -consolidated with-, In re T.J.C. and T.D.C., No. 07-0623, -consolidated with-, In re E.D.C., No. 07-0624, -consolidated with-, In re J.D.M., No. 07-0625. Per curiam on denial of petition for review.

  The Department of Family and Protective Services sought termination of a parent’s right to her seven children — leading to these five appeals.

  The court of appeals reversed the termination order.

  The Department here contends reversal of the conservatorship order was erroneous under our recent decision in In the Interest of J.A.J., ___ S.W.3d ___ (Tex. 2007). In J.A.J., however, the Department requested conservatorship pursuant to Family Code section 153.131 and the trial court made the specific findings that the statute requires: that appointment of a parent as J.A.J.’s managing conservator would not be in his best interest because it would significantly impair his physical health or emotional development, and that appointment of the Department was in J.A.J.’s best interest. Id. at ___. In light of these findings, we emphasized that the differing elements and standards of review applied to conservatorship and termination orders required separate challenges on appeal. Id. at ___. In this case, by comparison, the only available statutory mechanism for the Department’s appointment was as a consequence of the termination pursuant to section 161.207. See Tex. Fam. Code § 161.207. Accordingly, J.A.J. does not apply, and Colbert’s challenge to the conservatorship appointment was subsumed in her appeal of the parental-rights termination order.

  The Department’s petition for reviews are denied.

The Texas Supreme Court issued its opinion in In re J.A.J. on November 2, 2007 — the same day it asked for expedited briefing in these five consolidated cases. ((For those of you who read my earlier post about the timing of the Court’s requests for briefing on the merits, this set of cases was the aberration noted in footnote 4. In retrospect, this was no aberration at all. It is clear that the Court was waiting to issue J.A.J. before issuing these briefing requests so that the parties would be able to react to that new decision in their briefs.))

This post completes my coverage of last Friday’s order list, which began here.

Standing is one of those arguments that only an appellate lawyer could really love. It’s apparent that both sides of Friday’s opinion in DaimlerChrysler v. Inman , No. 03-1189 (majority dissent), have expressed equal measures of affection for the principle. They just disagree about what standing is.

In this case, three putative class representatives sued DaimlerChrysler over defective seatbelts. These three plaintiffs had not yet been physically injured by a seatbelt failure. Instead, they argued that the fact that the products were defective was itself a breach of warranty. They sought relief including the value of replacement seatbelts and the loss of use of their vehicles while the seatbelts were replaced.

The district court certified a nationwide class action, after which DaimlerChrysler appealed under a statute permitting interlocutory appeal of a class certification. The court of appeals reversed that certification and remanded. Nonetheless, DaimlerChyrsler filed a petition for review seeking additional relief — dismissal of the entire action for want of standing.

A five-Justice majority of the Court held that the plaintiffs lacked standing because

DaimlerChrysler argues that the claimed injury is so hypothetical, so iffy, that the plaintiffs do not have standing to assert it and the court does not have jurisdiction to hear it. The issue is important because courts must not decide hypothetical claims. Practically speaking, the timing is important, because a disagreement over $2,400 is one thing and a disagreement over $8 billion is quite another.

DaimlerChrysler … argues that whatever the plaintiffs’ causes of action may require, they have not suffered the kind of injury to give them standing to invoke the trial court’s subject-matter jurisdiction. If there is no injury sufficient for jurisdiction, surely there is no injury sufficient for a cause of action. But if the plaintiffs have no standing, the trial court has no more jurisdiction to deny their claims than it does to grant them. Without jurisdiction, the trial court should not render judgment that the plaintiffs take nothing; it should simply dismiss the case.

Here, according to the plaintiffs themselves, DaimlerChrysler received only fifty complaints from ten million vehicle owners and lessees over ten years — five per year, one for every 200,000 owners and lessees. By comparison, in Cole, GM received 306 reports in two years, one for every 732 owners and lessees. In any event, evidence of such complaints cannot prove defect.

The four-Justice dissent, penned by Chief Justice Jefferson, disagreed with the approach of the majority:

Today the Court inverts traditional standing doctrine, focusing not on the party but on the issues to be adjudicated. …

Absent a full record, in which the claim’s contours can be thoroughly vetted, I am not prepared to say the plaintiffs’ claims of economic injury are conclusively unsound. …

Moreover, crafting new standing rules creates a host of problems, not the least of which involves collateral attacks on judgments. Without standing, a court lacks subject matter jurisdiction to hear the case. … Because “a judgment will never be considered final if the court lacked subject-matter jurisdiction,” … the Court’s holding “opens the way to making judgments vulnerable to delayed attack for a variety of irregularities that perhaps better ought to be sealed in a judgment.” … Additionally, by holding that standing requires the plaintiff to establish the validity of its claim, and because standing may be raised for the first time on appeal, a class-action defendant could—on interlocutory appeal of a certification order—seek dispositive rulings on all of the plaintiffs’ claims, even without first asking the trial court to determine the merits of the claims and absent any sort of evidentiary record. Defendants who lose at trial may now, under the guise of standing, raise affirmative defenses that were never pleaded in, or considered by, the trial court.

Proposals to modify class action procedure present serious questions of policy. Standing is different. It implicates a court’s fundamental power to adjudicate a claim, rather than an assessment of whether the claim will ultimately succeed. Today, the Court conducts an extraordinary and unworkable reading of both pleading and precedent to conclude that the plaintiffs “lack[s] standing because [their] claim of injury is too slight for a court to afford redress.” We have never before stretched the doctrine this far.

The big question for practitioners is whether the Court’s discussion of standing applies equally outside of the class-action context. In a passage that has been noted elsewhere, the Chief Justice’s dissent suggested that the majority’s “opinion reveals a visceral distaste for class actions.” Some of the majority’s reasoning also seems to hinge on the heightened stakes that flow from having a class action. There is some possibility that the Court may decline to extend the same strict standing requirements to conventional litigation, although it is not immediately clear what constitutional line would support such a distinction.

In the class-action context, it’s easy to imagine a savvy lawyer arguing that a prior adverse judgment — even a prior settlement — does not preclude a new suit because the theory of the prior case did not satisfy this new standing requirement and, thus, the prior judgment is a nullity.

Time may tell. It seems equally likely that this case will effectively become limited to its facts. The majority does not spell out how “iffy” a plaintiff’s claims must be to fail to plead standing — it’s not clear where such a numerical threshold might fall. Without a crisp test, future defendants (or perhaps plaintiffs seeking to avoid adverse judgments) will be reduced to drawing statistical comparisons with the facts of this case. And, as those facts illustrate, it is very hard to express constitutional requirements in statistical terms.

The Court issued two decisions today in argued cases with today’s order list. This set of orders did not contain any normal “conveyor belt” petition denials.

I will follow a little later today with a summary of today’s second case, DaimlerChysler Corporation v. Inman, which looks to be a potentially significant case about Texas standing law.

This post focuses on the first case, in which the Court revisits on rehearing — and withdraws — a previous holding about an insurer’s right to seek reimbursement from its insured after the insurer settles a case. This is, needless to say, also an example of a very successful motion for rehearing.

• Excess Underwriters at Lloyd’s v. Frank’s Casing Crew & Rental Tools, Inc., No. 02-0730.

  Frank’s Casing had two layers of insurance — a primary layer and an excess layer. The excess layer was provided by Lloyd’s. When one of Frank’s Casings customers sued it over a drilling platform collapse, Frank’s Casing notified its insurers. Today’s opinion explains:

  The excess policy did not require
  the underwriters to assume control of the defense or the settlement of any claims, but did give them
  the right to associate with defense counsel retained by Frank’s Casing or the primary insurer if it was
  reasonably likely that the excess coverage layer would be reached. After Frank’s Casing notified the
  excess underwriters of ARCO’s claims, the underwriters issued reservation-of-rights letters asserting
  that coverage for ARCO’s claims was “limited or negated” under the policy’s terms.

  As that case proceeded, it became clear that the insurers wanted to settle the case to cap their own exposure and then to seek reimbursement later from Frank’s Casing on the theory that there was actually no coverage:

  Frank’s Casing forwarded ARCO’s demand to the excess underwriters …. The letter reiterated Frank’s Casing’s disagreement with the underwriters’ coverage position,
  and stated that Frank’s Casing was looking to the underwriters to fund the settlement. In their
  response two days later, the underwriters agreed that the case should be settled, but noted that
  coverage issues remained. The underwriters offered to fund the entire settlement if Frank’s Casing
  would agree to reserve those issues for resolution later. Frank’s Casing rejected the underwriters’
  proposal, contending that the excess insurance policies obligated the underwriters to fund the
  settlement. In response, the excess underwriters advised Frank’s Casing that they would pay $7.5
  million to settle the claim, less any contribution from the primary carrier, and then seek
  reimbursement from Frank’s Casing. Within hours, the underwriters contacted ARCO and orally
  accepted its settlement offer, and the primary carrier tendered its remaining policy limits of
  approximately $500,000. A written settlement agreement among ARCO, Frank’s Casing, and the
  excess underwriters preserved “any claims that exist presently” between Frank’s Casing and the
  underwriters. Before that agreement was executed, the excess underwriters filed this suit.

  In 2005, the Court issued a decision in this case in which all the Justices of the Court agreed that an excess insurer could seek reimbursement in these circumstances. ( original majority — original Hecht concurrence —
  original O’Neill concurrence —
  original Wainwright concurrence ) The Texas Supreme Court’s judgment was that the court of appeals be reversed and the cause remanded to the trial court to enter judgment for the excess insurers.

  The losing party filed a motion for rehearing that was eventually granted. (( The Court’s opinion also mentions a number of policy arguments advanced by amici as weighing on its decision. From the majority opinion at pages 7-8:

  Several amici further warn that implying a reimbursement right would create a significant
  conflict for defense counsel during settlement discussions. According to the amici, if an insured’s
  acknowledgment of a settlement offer’s reasonableness were to expose the insured to an extra-
  contractual reimbursement obligation, as the underwriters here contend it should, defense counsel’s
  traditional role in evaluating and recommending settlement could end up advancing the insurer’s
  interest over that of the insured, necessitating the insured’s retention of its own coverage counsel
  during what may be a critical point in the proceedings. Indeed, the amici argue, with defense counsel
  thus hindered from encouraging settlement, both the insured and the insurer will likely feel the need
  to hire their own “settlement counsel” to evaluate the case and formulate a strategy for the
  anticipated reimbursement litigation. Whether or not the concerns the amici voice are real or
  imagined, we believe they do portend significant distrust in the insurer/insured relationship during
  the settlement process should an equitable reimbursement right be implied.

  Several amici also warn that recognizing a reimbursement right risks weakening the insurer’s
  incentive to negotiate a settlement most favorable to its insured. Knowing that the insured will likely
  bear the ultimate payment obligation could incentivize the insurer to curtail attorney’s fees and
  litigation expenses early in the proceedings by negotiating a quick settlement, with the added benefit
  of extinguishing any risk of Stowers liability. See Stowers, 155 S.W.2d at 547. The potentially
  protracted coverage/reimbursement litigation likely to follow would be at the insured’s expense,
  even though the insured purchased insurance for the very purpose of hedging the risk and expense
  of future litigation.))

  Today, the Court withdrew its original opinion and substituted one that reached the opposite result. Now divided 5-3, ((Justice Brister has always been recused. He was Chief Justice of the Fourteenth Court while the case was pending below.)) the Court holds today that an excess insurer does not have a right to seek reimbursement when “The policy language says nothing about the underwriters’ reimbursement rights should they decide to negotiate a settlement of the claim.” (Majority opinion at page 12.) The Court rejected the insurers’ suggestion that it use equitable principles to add such a term to the contract or that it overrule its prior decision in Matagorda County and instead follow the example of other States that are more permissive about such insurer claims.

  Justice O’Neill delivered the opinion of the Court affirming the judgment below, in which Chief Justice Jefferson, Justice Medina, Justice Johnson, and Justice Willett joined. Justice Hecht delivered a dissenting opinion, in which Justice Green joined, arguing that equitable principles supporting finding a right for insurers to bring such a suit. Justice Wainwright delivered a dissenting opinion in which he argued that the record in this case supports finding such a right because the excess insurers made it a condition of their settlement offer.

  For those counting heads between the original opinion and this new opinion on rehearing….

  The original decision was 7-0 on the merits (although fragmented into four opinions), with Justice Brister recused and Justice Johnson not sitting. ((This was shortly after Justice Johnson joined the Court. New Justices often will choose not to join the voting on cases in which they did not hear argument and in which their vote is not necessary to a decision.))

  Of those seven, three of them joined today’s majority —Chief Justice Jefferson, Justices O’Neill, and Justice Medina. Three of them stayed with their original judgment and today joined dissents — Justice Hecht, Justice Wainwright, and Justice Green. That 3-3 tie was broken by two Justices who were not on that original panel — Justice Johnson and Justice Willett.

This is the third part of my posting about today’s order list, in which the Texas Supreme Court decided eight cases and set three others for argument. ((I’m making a note that, when the Court schedules a two-day conference, I should keep my Friday morning free.))

This post discusses the three new cases set for argument. Previous posts cover the per curiam decisions and decisions in argued cases.

Cases Set for Argument

The Court granted two petitions for review and set one disciplinary appeal for oral argument.

Set for April 1, 2008

• Edwards Aquifer Authority v. Chemical Lime, Ltd., No. 06-0911. From the Third Court of Appeals. (Set for April 1, 2008) COA Opinion

  This case raises a thorny question about when court decisions “take effect” in the rare but important context when a decision purports to strike down or enjoin a state law.

  In some ways, this is a lawsuit about how to interpret a previous lawsuit. The previous lawsuit was the Texas Supreme Court’s previous decision in Barshop v. Medina County Underground Water Conservation District, 925 S.W.2d 618 (Tex. 1996). In that case, a lower court held that a statute (the 1993 Edwards Aquifer Authority Act) was unconstitutional and enjoined its enforcement. The Supreme Court later reversed that decision.

  The wrinkle is that the statute contained a six-month time window in which parties could file claims with the Edwards Aquifer Authority to declare their historical use of water. And, during the pendency of the Barshop appeal, that time window expired. When the Supreme Court reversed, it created a new six-month time window in which parties could make such filings to effectuate the Legislature’s intent. The Texas Supreme Court’s order did not specify whether that time period would begin on the issuance of its opinion, on the issuance of its mandate, or by rule from the water district. The court of appeals explains how this became a problem:

  In lieu of the then-expired 1994 statutory deadline, the Authority, relying on an interpretation of Barshop, set by rule a deadline of December 30, 1996–six months after the Barshop opinion was issued–for existing users to file declarations of historical use. Appellee Chemical Lime, Ltd., whose New Braunfels plant had used aquifer water since the early 1900s, filed its declaration on January 17, 1997. …

  The Authority’s argument rests upon two subsidiary propositions. First, the Authority interprets Barshop to hold that the historical use declaration filing deadline is six months after the EAA Act became enforceable. Second, the Authority contends that the EAA Act became enforceable on June 28, 1996, at the moment when the supreme court issued its Barshop opinion and judgment. Therefore, the Authority concludes, its rule setting a filing deadline of December 30, 1996 is within its statutory powers, and Chemical Lime’s January 17, 1997 filing is untimely as a matter of law.

  Chemical Lime disputes that the EAA Act took effect immediately upon the supreme court’s judgment in Barshop. Chemical Lime argued in its brief that the EAA Act did not become effective until at least August 16, 1996, the date the supreme court denied rehearing in Barshop, because the court’s judgment was not final until that date. During oral argument, Chemical Lime suggested that the date the supreme court issued its mandate in Barshop–February 10, 1997–might also control. Six months after these dates would have been February 16, 1997, or August 10, respectively, making the Authority’s rule invalid.

  The court of appeals concluded that the six-month window did not begin until the Texas Supreme Court’s mandate issued. The Texas Supreme Court has now accepted the petition’s invitation to explain precisely what the judgment in its Barshop decision meant and — whether predicated on the narrow circumstances of Barshop or on broader principles involving supersedeas and appellate mandates — when the six-month window properly began.

The disciplinary appeal:

• In re Rolando Caballero, No. 07-0484 (Set for April 1, 2008). The decision below and the briefing are not available online. The description of the action published in the Texas Bar Journal reads as follows:
  

  On March 28, 2007, the Board of Disciplinary Appeals signed a judgment of disbarment against Roland Caballero (#03569280), 54, of San Antonio. ((The order list today and the Court’s docket recite the party’s first name as Rolando, while the Texas Bar Journal’s summary of his case gives his first name as Roland.)) On June 1, 2006, Caballero pleaded guilty to mail fraud in violation of 18 U.S.C. §1341, an intentional crime as defined in the Texas Rules of Disciplinary Procedure in Cause No. SA-04-CR-611(1)FB, styled United States of America v. Roland Caballero, United States District Court, Western District of Texas, San Antonio Division. Caballero was placed on supervised probation for a term of five years. He was also ordered to pay a special assessment in the amount of $100 and $57,937.50 in restitution. BODA cause number 38821.

Set for April 2, 2008

• Phillips v. Bramlett, No. 07-0522. From the Seventh Court of Appeals. (Set for April 2, 2008) (Set for April 2, 2008) COA Opinion

  This medical-malpractice case involves a question left open in today’s decision in Living Centers of Texas, Inc. v. Penalver, No. 06‑0929 Per Curiam Opinion (discussed in this earlier blog post) — what steps a party must take at trial to preserve error about an improper jury argument.

  In this case, the plaintiff used a “send the message” theme in his closing argument, which was objected to only once. At that time, the trial court told the jury that this was not evidence, merely argument. The Amarillo Court concluded that further steps would be necessary to preserve for appellate review a complaint that the whole line of argument was improper:

  [T]o preserve an allegation of error for appellate review, the record must show a timely objection stating the grounds for the requested ruling with enough specificity to make the trial court aware of the complaint, unless the specific grounds were apparent from the context. Tex. R. App. P. 33.1(a)(1)(A). From the language used in the objection and the response of the trial court, it is apparent that the trial court did not perceive the objection to be directed toward improper jury argument. Rather, the record reflects that the trial court simply clarified that the statement was not evidentiary.

  The Amarillo Court also concluded that this particular line of argument was not so objectionable as to be incurable because:

  in each instance, the refrain from Bramlett’s counsel was in connection with the evidence and what the community should tolerate as a standard for proper medical care. Thus framed, we cannot say that the argument was one that appealed only to the prejudices of the jury or was so inflammatory as to override the jury’s collective ability to review the evidence and base a verdict on the evidence.

  The second issue in this case is whether the statutory damage caps in Article 4590i, §11.02 still applies even when an insured doctor might have a valid claim under the “Stowers Doctrine,” which generally “permits an insured to maintain a cause of action against his insurer for the negligent failure of the insurer to settle a claim within applicable policy limits.”

  The court ultimately concluded that the statutory damage cap in §11.02(a) did not apply when the case involved a potential Stowers claim. The court explained:

  Because the trial court found that the present case presented facts which would allow the invocation of a “Stowers” claim and because we construe art. 4590i, section 11.02(c), as making the damages cap of section 11.02(a) inapplicable in that event, we conclude that the trial court did not err in refusing to apply the damage caps to the judgment rendered.

  The court acknowledged its disagreement with a decision of the Second Court of Appeals in Fort Worth over the same question of statutory construction. The Second Court’s decision was in Welch v. McLean, 191 S.W. 3d 147 (Tex. App.—Fort Worth 2005, no pet.), available here.

Eliminating the Late February Oral Argument Sitting

In addition the Court moved the argument date for another case from its previous setting on February 26, 2008 to a new date of April 1, 2008. That case is Prodigy Communications Corp. v. Agricultural Excess & Surplus Insurance Co., No. 06-0598, and is discussed in this previous post.

Because that case had been the only one set for the late-February argument sitting, this rescheduling removes any need for the argument sitting previously scheduled for February 26th–28th.

This is the second part of my posting about today’s order list, in which the Texas Supreme Court decided eight cases and set three others for argument.

This post covers the four decisions handed down in cases from the Court’s oral argument calendar — which include a decision in the mandamus action involving the Texas City refinery explosion at a British Petroleum facility now pending in Galveston, as well as a more typical array of decisions about how to preserve error for appeal and whether to construe statutes “literally” or “naturally.”

A previous post covered today’s four per curiam decisions. A later post will cover the three new cases set for argument.

Decisions in Argued Cases

• Arkoma Basin Exploration Co. v. FMF Associates 1990-A, Ltd., No. 03-1066. Justice Brister delivered the majority opinion, in which Chief Justice Jefferson, Justice Hecht, Justice Wainwright, Justice Green, Justice Medina, Justice Johnson, and Justice Willett joined. Justice O’Neill filed a concurring and dissenting opinion.

  This fraud case involved questions of both Virginia law (about liability) and Texas law (about damages). On the liability question, the Court read Virginia law as drawing a distinction between false “statements of fact” that might be actionable by fraud claims and mere “statements of opinion” which would not.

  [W]e reject arguments that Virginia law would uniformly treat all reserve estimates — regardless of the circumstances — as mere opinions (Arkoma’s view) or as statements of fact (the partnerships’). Instead, viewing all the surrounding circumstances in a light favorable to the verdict, and keeping in mind Virginia’s clear and convincing evidence standard, we hold that Arkoma’s reserve estimates in the mature Wilburton field were actionable as statements of fact,while those in the South Panola field were nonactionable statements of opinion. We affirm the jury’s fraud verdict as to the 1988-B and Lazare partnerships, and reverse the remainder.

  On the damages question, the Texas Supreme Court first confronted the question of what is sufficient to preserve an no-evidence objection. Here, Arkoma did not object at trial and its post-trial motion asserted merely that “there is no evidence … to support the jury’s answers to each part of Question 4” (the damages question).

  The Court held that, in these circumstances, this was sufficient treatment in a post-trial motion. It explained:

  Generally, a no-evidence objection directed to a single jury issue is sufficient to preserve error without further detail. Thus, as Justice Calvert wrote for this Court 50 years ago, while a single such objection to all 79 jury answers is too general, the same objection addressed to each individual issue is adequate. Several commentators suggest this is precisely what careful practitioners should do. …

  Of course, stock objections may not always preserve error. If a single jury question involves many issues, it is possible that a general objection may not tell the trial court where to start. But post-trial objections will rarely be as detailed as an appellate brief because time is short, the record may not be ready, and the trial court is already familiar with the case. In that context, an objection is not necessarily inadequate because it does not specify every reason the evidence was insufficient.

  Somewhat interestingly (at least to an appellate lawyer), the Court did not complete its analysis of the other preservation question — whether an objection to the adequacy of this expert testimony at trial was necessary. Instead, the Court noted the issue and then jumped ahead to the substantive question. The Court held that this challenged expert testimony was sufficient. For that reason, the Court explained, it was unnecessary to decide the threshold procedural question of whether the objection had been preserved at trial. ((In that light, the Court does not explain why it was nonetheless necessary to decide the first preservation question, the one about post-trial motions. The answer may simply be that the Court saw a clear answer to the first question and no clear answer to the second. Given the amount of time that this case was pending, it seems possible that this argumentative move in the Court’s opinion was designed to step around an issue on which the Justices may have disagreed that might have fragmented the opinion or further delayed its issuance.))

  The Texas Supreme Court affirmed the fraud judgment for two of the eight partnerships involved in this case. With regard to the other six, it reversed and rendered a take-nothing judgment.

• City of Rockwall v. Hughes, No. 05-0126. Divided 5-4, the Texas Supreme Court held that the Legislature did not grant permission for a landowner to arbitrate against a city when its land was denied inclusion in a certain kind of city annexation plan. The majority opinion and dissent differed about what the Legislature intended to accomplish. Justice Johnson writing for the majority, seizing the rhetorical ground of giving literal construction to the statute, explained that:

  We decline to read additional language into the statute as the Estate urges us to do. We go no further than the unambiguous language of the statute to interpret it. Section 43.052(i) does not create a substantive private right for a landowner to compel arbitration if a municipality takes action on the landowner’s petition by denying it, as the City did. Accordingly, the Estate lacks standing to pursue the suit it filed.

  The dissent, through Justice Willett, argued that:

  The Court espouses sound principles of statutory construction but unsoundly applies them. Basically, it takes literalism too literally. Read naturally, section 43.052(i) means this: landowners who request inclusion of their land in a city’s annexation plan may arbitrate the city’s failure to include it.

  Choosing between a “literal” and a “natural” reading of a statute is of course a somewhat slippery question of legislative intent, and one on which it is easy for courts to disagree (as this Court did by dividing 5-4). The dissent explains its reasoning in favoring the “natural” reading in this case by suggesting that any other reading is absurd in this context:

  Given the power of context to transform the meaning of language, courts should resist rulings anchored in hyper-technical readings of isolated words or phrases, or forced readings that are exaggerated or, at the other extreme, constrained.

  This “context matters” maxim—a cardinal rule not only of statutory construction but “of language itself”—is rooted in common sense, Texas statutory law, and caselaw from both this Court and the United States Supreme Court. (( For this last point, the dissent quotes a blistering dissent by Justice Scalia. The dissent could as well have cited Justice Breyer’s recent “butter in the refrigerator” dissent in Ali v. Federal Bureau of Prisons, in which he explained why he thought that statute’s use of the word “any” must be read in context: “When I call out to my wife, ‘There isn’t any butter,’ I do not mean, ‘There isn’t any butter in town.’ The context makes clear to her that I am talking about the contents of our refrigerator. That is to say, it is context, not a dictionary, that sets the boundaries of time, place, and circumstance within which words such as ‘any’ will apply.”))

  Justice Johnson delivered the five-Justice majority opinion, in which Chief Justice Jefferson, Justice Wainwright, Justice Medina, and Justice Green joined. Justice Willett wrote a dissenting opinion, in which Justice Hecht, Justice O’Neill, and Justice Brister joined.

• AIC Management v. Crews, No. 05‑0270. Justice O’Neill delivered the majority opinion:

  In this condemnation proceeding, we must decide whether property descriptions in a series of quitclaim deeds transferred through constable’s sales were insufficient as a matter of law to identify the lands to be conveyed, and whether the trial court, a county civil court at law in Harris County, had jurisdiction to decide the issue. We hold that, pursuant to section 25.1032(c)(1) of the Texas Government Code, the county court had jurisdiction to decide issues of title arising out of the condemnation suit irrespective of the amount in controversy. We further hold that the property descriptions’ adequacy to permit location of the land conveyed cannot be conclusively determined on this record, and therefore summary judgment voiding the conveyances was improper. Accordingly, we reverse the court of appeals’ judgment and remand the case to the trial court for further proceedings consistent with this opinion.

  Justice Willett’s concurrence states his view that legislative history is an improper basis for statutory construction, even in cases where it is consonant with the statute’s text.

  It is interesting to read this concurrence in light of Justice Willett’s dissent today in City of Rockwall, in which he takes the majority to task for applying a statute too literally. There is a subtle difference between citing legislative history (as the majority does in this case) and looking beyond the statute’s text to its “context” (as the dissent advocates in City of Rockwall). Exploring that difference goes far beyond the reach of this simple case summary.

• In re BP Products North America, Inc., No. 07‑0119. This is an “apex deposition” case arising out of the Texas City refinery explosion. The Court issued mandamus relief against a trial court that had ordered the deposition of a key corporate executive (John Browne, then the CEO of BP, p.l.c., the parent company of BP Products North America). That trial court order had expressly overridden the parties’ agreement about the circumstances under which the plaintiff would be permitted to depose a particular corporate officer. Justice Gaultney, sitting by designation, delivered the opinion of the Court. ((The order list indicates that Justice Gaultney was “sitting by commission pursuant to Section 22.005 of the Texas Government Code” and that Justice O’Neill was not sitting on this case. He serves on the Ninth Court of Appeals in Beaumont. His official biography is here.))

  The parties agreed under Rule 11 and Rule 191.1 to a procedure that would permit the plaintiffs to depose a different corporate officer and — if that deposition supported the view that the CEO had unique information — a very limited, one-hour telephonic deposition would be permitted.

  Sometime later, the trial court set aside that agreement and instead ordered an “apex deposition” to take place under the normal common-law standards governing apex depositions. The Texas Supreme Court rejected the view that the common-law principles would apply when the parties had agreed to a different standard and had relied on that agreement in conducting discovery:

  The apex doctrine, however, does not control the outcome in this case. The discovery agreement displaced the common law standard with the parties’ own standard. As BP Products explained in its brief: “If new evidence was developed during Manzoni’s deposition showing that Browne had unique and superior knowledge of relevant facts, then Browne would be presented at a limited deposition. . . . Both parties retained the right to appeal the trial court’s ruling on the new evidence issue.”

  The Texas Supreme Court walked through and rejected the possible grounds that might have supported setting aside the parties’ discovery agreement, concluding that there was no support for the “grounds of misrepresentation, estoppel, and changed circumstances.” The Court found no evidentiary basis for a misrepresentation involving the discovery agreement. It rejected the estoppel argument. And it rejected the view that the deponent’s public statements about the case were “the kind of changed circumstance that might amount to ‘good cause’ for setting aside the discovery agreement.”

  The Court also rejected the argument that striking the discovery agreement could have been construed as a sanctions order against BP for trying to taint the jury pool. The Court’s analysis focused on the procedural trappings of this particular trial court hearing, which did not appear to be a sanctions hearing; the trial court did not give notice of a sanctions hearing or expressly invoke any sanctions power.

In today’s orders, the Texas Supreme Court decided eight cases and set three others for argument. The list included one of the longest-pending cases on the Court’s docket, another 5-4 decision, and four per curiam decisions (including one issued only one week after the filing of the petition — yes, an elections case).

In addition to setting three new cases for oral argument in April, the Court also consolidated its calendar. It moved the only case it had previous scheduled for its February 26th–28th argument sitting back to that April sitting.

Because of the number of orders, I have divided this into three posts. This first post covers the four per curiam decisions in detail. Another post (in a few minutes) will cover the decisions in the four argued cases. A third post will offer details about the three new cases set for argument.

The Four Per Curiam Decisions

• Living Centers of Texas, Inc. v. Penalver, No. 06‑0929 Per Curiam Opinion The Texas Supreme Court examined a closing argument that “compared Living Centers’ lawyer’s attempts to minimize damages to a World War II German program in which elderly and infirm persons were used for medical experimentation and killed.” ((Here is the wikipedia entry about the particular Nazi program that was mentioned.)) The Court held this type of argument to not only be improper, but held that the effect of the argument was incurable (and thus need not have been the subject of a timely objection that might have led to a curing instruction):
  

  Incurable argument is, however, rare. Not all personally critical comments concerning opposing counsel are incurable. But arguments that strike at the courts’ impartiality, equality, and fairness inflict damage beyond the parties and the individual case under consideration if not corrected. Such arguments damage the judicial system itself by impairing the confidence which our citizens have in the system, and courts countenance very little tolerance of such arguments.

  The argument which Living Centers complains of struck at Living Centers and its trial counsel by comparing trial counsel to perpetrators of the T-4 Project atrocities. The T-4 Project was brought up only once during trial when, upon inquiry by the Peñalvers’ counsel, a witness testified that he was not familiar with the program. There was no evidence that Living Centers either intended to injure or kill Belia or that Living Centers performed medical experiments on her. … The Peñalvers’ improper comments were not inadvertent, and the jury argument was designed to incite passions of the jury and turn the jurors against defense counsel for doing what lawyers are ethically bound to do: advocate clients’ interests within the bounds of law. …
  The argument struck at the integrity of the courts by utilizing an argument that was improper, unsupported, and uninvited. Failure to deal harshly with this type of argument can only lead to its emulation and the entire judicial system will suffer as a result.

  After that discussion, it is no surprise that the Court reversed the judgment and remanded for a new trial.

• Nueces County v. San Patricio County, No. 07‑0166. Per Curiam Opinion

  In this suit between two counties, the Texas Supreme Court explored the nature of the governmental immunity held by each, concluding that immunity ultimately barred this lawsuit. It rejected the court of appeals’s view that immunity only extended to authorized actions by a county:

  The court of appeals’ reasoning that Nueces County was not entitled to immunity because it acted beyond its governmental authority in taxing what turned out to be San Patricio’s land is additionally flawed to the extent it is based upon a line of cases holding that cities do not enjoy immunity from suit when they undertake “proprietary” rather than “governmental” functions. The court of appeals reasoned that, although counties are granted the power to assess taxes on their own land, they have no governmental authority to tax other counties’ land; when they do, they act beyond their governmental authority and thus outside sovereign immunity’s protections.
  However, as “involuntary agents of the state” without the power to serve the local interests of their residents, counties have no “proprietary” functions; all of their functions are “governmental” in nature.

  The Texas Supreme Court emphasized the role of immunity in preserving certain kinds of decisions for the Legislature in the first instance, rather than the courts:

  San Patricio County contends that allowing a money-damages suit against Nueces County under these circumstances is consistent with the policies supporting governmental immunity, insofar as the suit does not seek to divert Nueces County’s properly collected tax resources from their intended purpose; rather, Nueces County is itself the wrongful depletor of tax revenues which belong to San Patricio County. See Tex. Natural Res. Conservation Comm’n v. IT-Davy, 74 S.W.3d 849, 854 (Tex. 2002). However, we emphasized in City of Galveston that the “heavy presumption in favor of immunity” derives not just from principles related to separation of powers but from practical concerns: “In a world with increasingly complex webs of governmental units, the Legislature is better suited to make the distinctions, exceptions, and limitations that different situations require. The extent to which any particular city, county, port, municipal utility district, school district, or university should pay damages involves policy issues the Legislature is better able to balance.” City of Galveston, 217 S.W.3d at 469. That principle holds equally true here.

• Warwick Towers Council of Co-Owners v. Park Warwick, L.P., No. 07‑0384. The Court held that an insurer, asserting its rights to subrogation, could perfect its own appeal by filing a notice of appeal in its insured’s name because that was a “bona fide attempt to appeal by filing the notice of appeal in the name of its insured, and by listing its interest in the docketing statement and other appellate pleadings.” Per Curiam Opinion

• In re LaRhonda Torry, No. 08-0057. Just one week after the petition was filed, the Texas Supreme Court conditionally granted mandamus relief requiring the Chair of the Harris County Democratic Party (Birnberg) to place LaRhonda Torry’s name on the primary ballot. From the per curiam opinion:

  Birnberg does not contend that Torry has failed to satisfy the qualifications for office of state representative set forth in Article III, Section 7 of the Texas Constitution.[2] Nor does Birnberg contend that Torry’s application failed to comply with the applicable requirements of the Election Code. See TEX. ELEC. CODE §§ 141.031, 172.021. Birnberg further acknowledges that Torry paid the $750 filing fee before 6:00 p.m. on January 2, 2008, the deadline for applying for a place on the ballot. See id. § 172.023(a). We cannot locate, and Birnberg does not identify, any Election Code provision that authorizes a party chair to refuse to certify a candidate’s name for placement on the ballot on the basis of the candidate’s failure to designate a campaign treasurer with the Texas Ethics Commission. Nor does the Election Code authorize a party chair to insert additional certification requirements beyond those prescribed in the Election Code.

  Birnberg is correct that the Election Code requires a candidate for state representative to appoint a campaign treasurer and report that appointment to the Texas Ethics Commission. Id. §§ 252.001, 252.005(1)(A). Neither statute prescribes a penalty for a candidate’s noncompliance with those provisions. Birnberg is also correct in asserting that, pursuant to section 253.031(a), a candidate may not “knowingly accept a campaign contribution or make or authorize a campaign expenditure at a time when a campaign treasurer appointment for the candidate is not in effect” and that a violation of that provision is a Class A misdemeanor. Id. § 253.031(a), (f). Additionally, a candidate may not knowingly accept from a contributor in a reporting period a cash contribution that in the aggregate exceeds $100. Id. § 253.033(a). Assuming, without deciding, that Torry violated sections 253.031(a) and 253.033(a) of the Election Code in paying the filing fee, the Penal Code would provide for any appropriate penalty. The Election Code does not authorize Birnberg, as a county party chair, to prescribe his own penalty for a candidate’s failure to comply with any of these provisions.

The Texas Supreme Court did not grant review in any new cases or issue any opinions in this week’s orders.

The order list is available here.