The Texas Supreme Court handed down decisions in two cases this morning. In addition, it granted review in three new cases (one of which was a certified question from the Fifth Circuit), but only set one of those cases for its upcoming February 5th-7th sitting.

Details after the jump.

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While writing about the five things the Court did today, I neglected to mention that it also issued two opinions related to actions it did not take. Both were decisions related to the Court’s denial of a pending motion for rehearing of a petition.

One of these was a per curiam decision from the Court that expressly rejected the court of appeals’s formulation of the test for when a trial court should grant a motion for new trial to set aside a default judgment. Nonetheless, the Court denied the petition for review, explaining that the court of appeals — although it stated the test incorrectly — had applied it correctly. Details follow the break.

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Deviating slightly from its posted calendar, the Texas Supreme Court did issue an order list today containing an opinion that could be very important to trial lawyers and appellate counsel trying to time their post-trial motions.

A summary and analysis of that case, In re Brookshire Grocery Co., No. 05-0300, follows the break. You can click on the title of this post to read more.

In orders affecting other granted cases, in Southwestern Bell Telephone v. Harris County Toll Road Authority, No. 06-0933, the Court denied the request of amicus curiae GTE and Verizon to participate in oral argument. That case is set for oral argument on January 15, 2008, and more information will be posted about it that week.

The rest of the order list was very brief — the Court disposed without comment of one other mandamus action and a pending case involving the interests of a child — suggesting that the bulk of the Court’s work is being left for the conference it has scheduled next week.

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The Court issued an exceptionally short order list this week, disposing of a single mandamus petition and issuing its annual year-end order formally carrying its docket forward to 2008. ((Because the only case on the order list was an expedited mandamus petition, I suspect the Court’s normal ‘conveyor belt’ disposition of petitions is also taking a holiday to accommodate the court staffers who make that process run.))

The Texas Supreme Court issued three opinions with today’s order list. The headliners were a products-liability decision that changes two key definitions in the jury charge and a homestead-exemption decision that may affect a significant number of Texans refinancing their mortgages.

The Court did not grant review in any new cases.

• Ford Motor Co. v. Ledesma [No. 05-0895]. This products-liability case speaks to two critical definitions in jury charges — that of “manufacturing defect” and of “producing cause.” In so doing, the Texas Supreme Court has expressly rejected the formulation of those terms given in the Texas Pattern Jury Charge (PJC 70.1 and PCJ 71.3). The Court’s summary of those issues on page 12: “In defining defect, the trial court followed Texas Pattern Jury Charge (PJC) 71.3. As specified in the comment to PJC 71.3, the trial court included in the question the definition of producing cause found in PJC 70.1. Ford objected that both PJC 71.3 and PJC 70.1 were ‘not accurate under the law’ and failed to track this Court’s precedent. We agree. Ledesma may have argued a manufacturing defect to the jury, but the law requires the jury to determine specifically whether he had proven one. The jury here received a legally incorrect charge that omitted an indispensable element: that the product deviated, in its construction or quality, from its specifications or planned output in a manner that rendered it unreasonably dangerous.” The Court also rejected Ford’s challenge to the admission of certain expert testimony. Justice Willett wrote the opinion for a unanimous Court.
  

  Comment: The definition of “producing cause” now sanctioned by the Court is a cause “that is a substantial factor that brings about the injury and without which the injury would not have occurred,” building on its decision in Trinity Universal Ins. Co. v. Bleeker, 966 S.W.2d 489, 491 (Tex. 1998). [See pages 20-21 of the pdf.]

  The opinion also discusses when it is appropriate to render judgment rather than to remand over a defective jury charge. The Court advances several grounds for its decision to remand — including that the PJC is widely used as a model and thus it would be unfair to render for a defect in the PJC — so there may be little new law to be gleaned on that point. This same reasoning would, however, appear to apply to any cases currently in the appellate pipeline that have also relied on the PJC charge for products-liability cases.

• LaSalle Bank v. White [No. 06-1016] (per curiam). This is a case about Texas’s 1997 constitutional amendment permitting but regulating liens against a homestead. Tex. Const. art. XVI, § 50. These borrowers took out a loan against their homestead, used part of those proceeds at closing to pay off other pre-existing loans, and kept the rest. After the borrowers defaulted, the trial court declared the whole lien unenforceable and the court of appeals affirmed. The Texas Supreme Court reversed in part — but only in part. It held that the lender could recover only that portion of the loan that was used at closing to pay down other, pre-existing debt because the lender had become equitably subrogated to that portion. The Court explained that, even when the Texas Constitution prohibited homestead liens, Texas law still permitted the doctrine of equitable subrogation in similar cases. It then examined the text of the 1997 homestead amendments and concluded that they were not meant to change the equitable-subrogation aspect of the common-law background. The Court thus reversed in part and remanded the case.
  

  Comment: The Court explains the policy benefits of its decision, reasoning that equitable subrogation is a way to ensure that lenders don’t accidentally turn their pre-existing good liens into bad liens. The ruling certainly does shield lenders from that risk, which could well encourage more flexibility in refinancing. I’m wondering, however, if the decision might ultimately provide too much incentive to lenders to exert their influence to maximize the portion of the refinancing proceeds that go to these privileged prior debts rather than other uses and, if so, how that behavior comports with the consumer protections in Article XVI, §50. Time will tell, and these may be issues for a future case.

• In re Mercier [No. 06-1008] (per curiam). In a relatively rare written opinion on a disbarment case, the Court confronted a situation where an attorney had been convicted of barratry and was appealing that conviction. The Board of Disciplinary Appeals suspended his license during that appeal and also issued an order that would have disbarred the attorney if that conviction were ultimately upheld. The Texas Supreme Court reversed that last aspect of the Board’s conclusion, explaining that Rule 8.05 provides for a multi-step process for final disbarment that begins after the conclusion of the criminal appeal, including a formal motion by the Board and an opportunity for the attorney to contest finality. For that reason, the Court held that this last aspect of the Board’s order was premature, and it reversed in part and affirmed in part the Board’s decision. [Per Curiam opinion]
  

  Comment: The Court’s ruling not only tracks the rule but also seems to make good sense. Even if the ultimate disbarment for this class of crime is compulsory, it makes sense to have a process to formalize that event and to remove future uncertainty about whether the license is merely suspended or has been revoked.

A wide variety of activity in today’s order list. Two merits opinions, one granted case, one dismissal of a granted petition as having been improvidently granted, a supplemental opinion issued on denial of rehearing expanding the holding of a case, and a three-Justice dissent from denial of rehearing to a certified question.

No new briefs on the merits were requested this week.

Merits decisions

• 04‑0751: Texas Municipal Power Agency v. P.U.C. and City of Bryan consolidated with 04‑0752: Texas Municipal Power Agency v. P.U.C. and City of Bryan. The Court reversed and rendered in part, and remanded the case to the court of appeals. Justice Green wrote for the Court. Justice Brister filed a dissenting opinion, in which Justice Willett joined.
• 06‑1073: Chambers v. O’Quinn. In a per curiam opinion, the Court reverses the court of appeals’ judgment and remands the case to that court.
  

  Commentary: While this case involves the Texas Arbitration Act, its reasoning does not seem at all confined to that context. This appeal followed the final judgment below. One of the issues raised had to do with compelling arbitration — a question that the parties had already taken up through “another court of appeals” (I’m guessing the Fourteenth) and the Supreme Court, each of which had simply denied mandamus relief. In the merits appeal, the First Court held that it lacked “appellate jurisdiction” to decide the question.

  The Texas Supreme Court reversed. Holding that mere denial of interlocutory mandamus relief did not preclude relitigating the same issue even in the same case, the Court explained: “The writ of mandamus is a discretionary writ, and its denial, without comment on the merits, cannot deprive another appellate court from considering the matter in a subsequent appeal.” (citing its prior decision in In re AIU Ins. Co., 148 S.W.3d 109, 119 (Tex. 2004)). For that reason, the Court remanded the case back to the court of appeals for it to review the merits.

Dismissal as Improvidently Granted

<li><strong>05‑0645: </strong> <em>Allstate Insurance Co. v. Fleming</em>.The Court withdraws its order of April 21, 2006, granting the petition for review, as the petition was improvidently granted. The petition for review is dismissed for want of jurisdiction.  <a href="http://www.supreme.courts.state.tx.us/historical/2007/dec/050645.pdf">Per Curiam</a>

Commentary: Although this is presented as an “improvident grant” — the designation usually made when a court with discretionary review decides for some prudential reason not to hear a case, such as realizing that the issue is not squarely presented — the Court explains that this dismissal was for want of interlocutory appellate jurisdiction. Even so, there is very little here that an appellate practitioner will find useful in framing their own jurisdictional arguments. The pivotal sentence of the Court’s per curiam simply states: “No dissenting opinion was filed in the court of appeals, and after reviewing the parties’ briefs and the relevant authorities, we do not find the requisite conflict.”

The Texas Supreme Court used identical language in another opinion issued in today’s list that was a more routine dismissal of a pending (and not yet granted) petition for want of appellate jurisdiction. Liberty Mutual Ins. Co. v. Greisling(No. 04-0902) (per curiam).

Opinions Issued While Denying Rehearing

• 05‑0832: Lamar Homes, Inc. v. Mid-Continent Cas. Co. Justice Brister delivered an opinion dissenting from the denial of rehearing, in which Justice Hecht and Justice Willett joined.
• 06‑0575: Knapp Medical Ctr. v. De La Garza. Supplemental Per Curiam Opinion.
  

  Commentary: This supplemental opinion rejects the argument that a party can use a claim of fraud to circumvent a Rule 11 settlement agreement. It seems that De La Garza advanced that argument in his merits briefing and then filed a motion for rehearing complaining that the Texas Supreme Court did not decide the question. Now they have:

  ‘Texas Rule of Civil Procedure 11 is essentially a “statute of frauds” for settlement agreements. See 7 William V. Dorsaneo III, Texas Litigation Guide § 102.02[5] (2007). We have previously rejected attempts to “use a fraud claim essentially to enforce a contract the Statute makes unenforceable” as an improper circumvention of the statute’s purpose. Haase v. Glazner, 62 S.W.3d 795, 799 (Tex. 2001); see also Nagle v. Nagle, 633 S.W.2d 796, 801 (Tex. 1982). Thus, we have held that “the Statute of Frauds bars a fraud claim to the extent the plaintiff seeks to recover as damages the benefit of a bargain that cannot otherwise be enforced because it fails to comply with the Statute of Frauds.” Haase, 62 S.W.3d at 799. Similarly, a fraud claim cannot be used to circumvent Rule 11 in this manner and thereby enforce an otherwise unenforceable settlement agreement.’

Petition Granted and Set for Argument

• 06‑0979: Sonat Exploration Co. v. Cudd Pressure Control, Inc.. The case has been set for oral argument at 9:00 a.m., February 6, 2008. Here’s the court of appeals opinion, the Texas Supreme Court’s docket sheet, and the set of briefs that have been posted online.
  

  Commentary: This case raises several choice-of-law issues about indemnity contracts. The petition suggests a conflict between the courts of appeals over how to determine which state’s law applies to an indemnity contract and, further, suggests tension between the court of appeals’s decision and the Restatement of Conflicts of law over whether it is proper to choose a state’s law that would have the effect of invalidating the agreement.

As expected from the conference schedule, there were no grants in today’s orders. The Court did issue two decisions — one very deeply divided, the other unanimous. I’ll write more about the divided decision in Igal later.

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