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Notable 2012-2013 Texas Supreme Court Cases

By: Diana Faust and Kyle Burke

INTRODUCTION

     The Texas Supreme Court has seen marked change over the last year.  Three new justices (Jeff Boyd, John Devine, and Jeff Brown) were appointed or elected to the Court.  Chief Justice Jefferson resigned from the Court effective October 1, 2013, and Justice Nathan Hecht was elevated to Chief Justice by Governor Rick Perry.

     During the 2012-13 term, the Court issued 55 majority opinions and 30 per curiam opinions.  Hot topics included tax, labor, real property, oil and gas, defamation, and procedure and statutory interpretation.  This article briefly reviews a selection of some of the more notable and far-reaching decisions.

INSURANCE

Prompt Pay Statute Requires Privity of Contract

     In Christus Health Gulf Coast v. Aetna, Inc., 397 S.W.3d 651 (Tex. 2013), several hospitals sued Aetna under the Prompt Pay Statute, Texas Insurance Code §§ 843.336–.344, claiming that Aetna should have paid claims for services provided.  But the hospital and its providers had no direct contracts with Aetna; rather, their contracts were with third-party administrators and service providers.  The supreme court held that the plain language of the Prompt Pay Statute contemplated contractual privity, and the hospitals could not recover against an HMO under the statute because they were not in contractual privity with the HMO.   

Workers’ Compensation Benefits Are Exclusive Remedy for City Contract Employee

     In City of Bellaire v. Johnson, 400 S.W.3d 922 (Tex. 2013), a contract worker brought negligence claims against city and city garbage truck driver for injuries sustained when he fell into a garbage truck hopper.  The city and truck driver asserted governmental immunity based in part on the exclusive remedy under the provisions of the Labor Code providing that workers workers' compensation benefits are the exclusive remedy of an employee covered by workers' compensation insurance.  The supreme court held that, because the contract worker was paid by the City and controlled the details of work, the contract worker was an employee of the City, which provided workers' compensation coverage, and therefore his exclusive remedy was the compensation benefits to which he was entitled.

No Re-Opening of Determination of Lifetime Income Benefits Under Workers’ Compensation Act

     In Liberty Mut. Ins. Co. v. Adcock, No. 11-0934, 2013 WL 4730738 (Tex. Aug. 30, 2013), a workers’ compensation carrier sought a new hearing on a claimant’s continuing eligibility for Lifetime Income Benefits (“LIBs”) (which had been determined more than a decade before), claiming that the claimant had regained use of his extremities over time.  The supreme court affirmed the decision of the court of appeals that the Workers’ Compensation Act does not allow a re-opening of the determination of LIBs, and the Court would not judicially engraft a provision to allow such a re-opening.  Thus, trial court had no jurisdiction to re-open the final LIB determination.

CONSTRUCTION

Non-Suit Does Not Moot an Appeal of Denial of a Motion to Dismiss Under Chapter 150

     In CTL/Thompson Texas, LLC v. Starwood Homeowner's Ass'n, Inc., 390 S.W.3d 299, 300 (Tex. 2013), the plaintiff HOA sued defendant for providing deficient geotechnical engineering services, and the defendant moved to dismiss under Chapter 150 of the Civil Practice and Remedies Code, claiming that the certificate of merit filed by plaintiff was deficient.  After the trial court denied the defendant’s motion, the defendant filed an appeal, but then the plaintiff non-suited its claims against the defendant, and the court of appeals dismissed the appeal as moot.  The supreme court disagreed, holding that a motion under Chapter 150 is a motion for sanctions to deter meritless claims, which survives a non-suit; thus, the plaintiff’s non-suit did not moot the appeal.

MEDICAL MALPRACTICE

Chapter 74 Report Need Only Address One Theory of Liability

     In Certified EMS, Inc. v. Potts, 392 S.W.3d 625, 626 (Tex. 2013), a patient brought vicarious liability and direct liability action against a nurse staffing agency that employed a contract nurse who allegedly assaulted the patient while she was in hospital.  The staffing agency moved to dismiss, claiming that the plaintiff’s Chapter 74 expert report did not address the direct theories of liability, but the trial court denied the motion and the court of appeals affirmed.  The supreme court held that a Chapter 74 expert report need not address every theory of liability.  If a health care liability claim contains at least one viable liability theory, as evidenced by an expert report meeting the statutory requirements, the claim cannot be frivolous, and the entire case may move forward.

     Similarly, in TTHR Ltd. P'ship v. Moreno, 401 S.W.3d 41, 42 (Tex. 2013), the defendant moved to dismiss, alleging that the plaintiff’s Chapter 74 expert reports were deficient.  But the trial court and court of appeals concluded that the several expert reports, read together, adequately addressed the vicarious liability claims against the defendant hospital, based on several doctors’ negligence. The supreme court affirmed this portion of the judgment, holding that under Potts, so long as at least one theory of liability is sufficiently addressed, the case moves forward.  But the Court left open the issue of whether the court of appeals could remand to the trial court for it to consider granting a second extension of time for the plaintiff to cure her reports.

Under Chapter 74, a Defendant Is a “Party” When Named in a Suit

     In Zanchi v. Lane, ___ S.W.3d ___, No. 11–0826, 2013 WL 4609113 (Tex. 2013), the plaintiff filed a medical malpractice suit against physician, and served the required expert report within the statutory deadline, but before the defendant was served with process.  The defendant filed a motion to dismiss, arguing that he was not a “party” to the suit until he was served with process, such that transmittal of an expert’s report to him before he was served could not satisfy Chapter 74. The trial court denied the defendant’s motion to dismiss, and the court of appeals affirmed.  The supreme court agreed, holding that, in the context of the statute, the term “party” means one named in a lawsuit and that service of the expert report on the defendant before he was served with process satisfied the expert-report requirement. But, the court held, the twenty-one-day objection period does not begin to run until the defendant is served with process.  And, a plaintiff need not comply with TRCP 106 service of citation requirements for serving an expert report.

Plaintiff’s Non-Suit Tolls Period for Serving Chapter 74 Reports

     In CHCA Woman’s Hosp., L.P. v. Lidji, 403 S.W.3d 228 (Tex. 2013), the plaintiffs non-suited their medical malpractice claims against the defendant hospital 116 days after filing their original petition, and two years later, filed a new lawsuit and served an expert report on the hospital.  The hospital moved to dismiss, arguing that the 120-day period for serving reports ran from the filing of the first suit, such that the service of the report after filing the second suit was untimely.  The trial court denied the motion to dismiss, and the court of appeals affirmed.  The supreme court held that when a claimant non-suits a claim governed by Chapter 74 before the expiration of the statutory deadline to serve an expert report and subsequently re-files the claim against the same defendant, the expert-report period is tolled between the date non-suit was taken and the date the new lawsuit is filed.  The court reasoned that the statute did not expressly allow nor prohibit tolling of the expert-report period in the event of a claimant’s non-suit, but tolling the expert-report period both protects a claimant’s absolute right to non-suit and is consistent with the statute’s overall structure. 

Retaliation Claims Are Subject to Chapter 74 Expert Report Requirement

     In PM Mgmt.-Trinity NC, LLC v. Kumets, 404 S.W.3d 550, 552 (Tex. 2013), the plaintiff’s family alleged a nursing home provided inadequate care for their relative and also claimed that the home retaliated against the relative by discharging her from the home after the family’s complaints about care.  The trial court found that the plaintiffs’ expert report was deficient and dismissed all of the claims except the retaliation claim.  The defendants appealed, arguing that the retaliation claim was also a health care liability claim which should have been dismissed, but the court of appeals affirmed.  The supreme court reversed, holding that the claims for retaliatory discharge were based on the same factual allegations as other claims which had been determined as health care liability claims.  Because a plaintiff may not split claims or artfully plead around Chapter 74 requirements, the retaliation claims were also health care liability claims and should have been dismissed because the plaintiffs failed to produce a sufficient expert report.

More Safety Claims That Fall Under Chapter 74

     In Psychiatric Solutions, Inc. v. Palit, No. 12-0388, 2013 WL 4493118 (Tex. Aug. 23, 2013), the plaintiff, a psychiatric nurse at a behavioral health center was injured while trying to restrain psychiatric patient during “behavioral emergency,” and he sued the center for personal injury.  The trial court denied the center’s motion to dismiss for failure to serve a Chapter 74 report, and the court of appeals affirmed, holding that the claim was not for health care liability.  But the supreme court reversed, relying on Texas West Oaks Hospital, LP v. Williams, and explained that the plaintiff’s allegations invoked both the safety and health care provisions of Chapter 74.  Mental health facilities exercise professional mental health judgment regarding what the standards of care should be and whether they were in place at the time of injury, and expert testimony would be required regarding departures from accepted standards of safety and health care.

EXPERT TESTIMONY

Property Owner’s Testimony for Claim of Diminished Property Value Subject to Expert Standards

     Natural Gas Pipeline Co. of Am. v. Justiss, 397 S.W.3d 150, 152 (Tex. 2012) concerned a suit brought by homeowners who alleged that noise and odor emanating from a gas company’s compressor caused a permanent nuisance diminished their property values.  The jury found in favor of plaintiffs, and on appeal the gas company challenged the damages award for diminution in property values.  The supreme court held that while a property owner is qualified to testify as to the value of his property, the owner’s testimony is subject to the same standards as expert testimony.  The owner’s testimony on value cannot be mere ipse dixit, the owner must provide a factual basis to support his diminished value claim.  Evidence of price paid, nearby sales, tax valuations, appraisals, online resources, and any other relevant factors may be offered to support the claim.  The plaintiff’s speculative testimony on diminished value could not support the judgment for damages. 

Alternative Means for Proving Damages in Legal Malpractice Suit

     In Elizondo v. Krist, No. 11-0438, 2013 WL 4608558 (Tex. Aug. 30, 2013), the plaintiffs sued several attorneys for malpractice, complaining that the attorneys obtained an inadequate settlement flowing from an explosion at a BP plant.  The plaintiffs presented evidence by an attorney involved in BP litigation and familiar with settlement amounts.  The supreme court held that such evidence could establish damages in such a case as an alternative to the “suit within a suit” requirement for malpractice cases.  But the court ultimately concluded that the expert’s opinion was conclusory in that it failed to offer any specifics on why the plaintiffs’ case was worth $2-$3 million dollars instead of the $50,000 obtained by settlement.  The expert failed to compare the plaintiffs’ settlement with other actual settlements or link settlement amounts to specific injuries or circumstances.

DAMAGES

Mental Anguish Damages Still Require Substantial Disruption in Daily Routine or a High Degree of Mental Pain and Distress

     Hancock v. Variyam, 400 S.W.3d 59, 62 (Tex. 2013) concerned a defamation suit related to a letter penned by the defendant physician claiming that the plaintiff physician had a “reputation for lack of veracity” and “deals in half truths.”  The trial court ruled that the letter was defamatory per se and the jury awarded damages, including a total of $30,000 for past and future mental anguish.  On appeal, the defendant attacked the legal sufficiency of the mental anguish damages.  The supreme court held that no such evidence existed.  The plaintiff failed to prove that he suffered a substantial disruption in daily routine or a high degree of mental pain and distress, as required by the Court’s prior decision in Parkway Co. v. Woodruff.  Plaintiff’s testimony that he was embarrassed, anxious, and could not sleep was not sufficient to prove compensable mental anguish.

Non-Economic Damages Not Recoverable for Wrongful Death of a Pet

     In Stickland v. Medlen, 397 S.W.3d 184 (Tex. 2013), the Court tackled the issue of whether a party may recover non-economic damages for the wrongful death of a pet.  The plaintiffs’ pet dog was accidentally euthanized by an animal shelter, and the plaintiffs brought suit, alleging “sentimental or intrinsic value” damages.  The trial court dismissed the case, but the court of appeals reversed, holding that because an owner may be awarded damages based on the sentimental value of lost personal property, and because dogs are personal property, the plaintiffs could proceed.  But the supreme court disagreed and declined to permit non-economic damages rooted solely in a pet owner’s subjective feelings, relying largely on the 1891 decision Heiligmann v. Rose, which tied “special value” to a dog’s economic attributes, not subjective or emotional considerations.  And, loss of companionsip/consortium damages are available only for a few especially close family relationships, and to allow them in lost pet cases would be inconsistent with these limitations.  The Legislature is better suited to determine whether to allow such recovery. Ultimately, where a dog’s market value is unascertainable, the correct damages measure is the dog’s “special or pecuniary value” (that is, its actual value)—the economic value derived from its “usefulness and services,” not value drawn from companionship or other non-commercial considerations.

TRIAL AND APPELLATE PROCEDURE

Court Okays Merits Review of Trial Court’s Rationale for Granting New Trials

     In re Toyota Motor Sales, U.S.A., Inc., 407 S.W.3d 746, 749 (Tex. 2013) examined whether mandamus is available to review the merits of a trial court’s reasons for granting a new trial.  In a products liability and wrongful death suit, the jury returned a verdict in favor of Toyota, but the trial court granted the plaintiffs’ motion for new trial, reasoning that a new trial was warranted because Toyota’s counsel had presented evidence outside the record, violating the court’s limine order.  The court of appeals denied mandamus relief.  The supreme court recognized that courts of appeals had been unwilling to engage in merits-based review of new trial orders, but that such review is appropriate.  While a trial court’s reasonably-specific, superficially sound reasoning might meet the procedural requirements for new trial order, if the record does not support the trial court’s rationale for granting a new trial, an appellate court may grant mandamus relief.  The Court concluded that the record did not support the new trial order.

Attorney Fees Not Included in Calculating Supersedeas Bond

     In In re Nalle Plastics Family Ltd. Partnership, 406 S.W.3d 168, 169 (Tex. 2013), the court considered whether a supersedeas bond must include the amount awarded for attorney’s fees.  There, a law firm received a favorable verdict on its breach of contract claim for a client’s failure to pay legal fees.  The jury awarded actual damages of $132,000 and $150,000 as reasonable attorneys’ fees for collecting the amounts owed.  The client attempted to suspend the judgment by depositing an amount covering the actual damages, interest, and court costs, but not the attorney’s fees.  The trial court ruled that the client had not properly suspended the judgment and the court of appeals refused relief.  The supreme court conditionally granted a writ for mandamus relief.  The court reasoned that under the case law and statutes, attorney's fees incurred in the prosecution or defense of a claim are not compensatory damages nor costs, and the client was not required to include these awards in the supersedeas bond.

Post-Judgment Interest Calculated from Date of Original Judgment

     In Phillips v. Bramlett, 407 S.W.3d 229 (Tex. 2013), the court determined the appellate courts’ jurisdiction to hear appeals after remand and when post-judgment interest begins to accrue after remand.  There, a physician appealed a jury verdict against him, and the case proceeded to the supreme court, which held that statutory damage caps should have been applied.  The case was remanded to trial court, which awarded capped damages, plus post-judgment interest calculated from the date of the remand judgment.  The plaintiffs appealed, arguing that post-judgment interest is calculated from the date of the original judgment.  The court of appeals agreed, holding that trial court erred by vacating original judgment and calculating post-judgment interest from date of remand judgment rather than original judgment.  After determining the courts had jurisdiction over the remand, the supreme court held that when an appellate court remands a case to the trial court for entry of judgment consistent with the appellate court’s opinion, and the trial court is not required to admit new or additional evidence to enter that judgment, the date the trial court entered the original judgment is the “date the judgment is rendered,” and post-judgment interest begins to accrue and is calculated as of that date.  The court relied largely on its prior interpretations of the Finance Code provisions dealing with post-judgment interest, and that post-judgment interest should run from the date of the original judgment because that is the date the correct judgment should have been entered.  The court left open the question of whether post-judgment interest always accrues from the date of the original judgment when an appellate court remands a case to the trial court, and the trial court is required to admit additional evidence on remand.

CONCLUSION

     The 2012-13 Texas Supreme Court term produced a number of memorable and far-reaching decisions, but left several questions unanswered.  The current term will no doubt provide even more answers and still more questions.  Stay tuned.


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