Texas Supreme Court: Reviewing the 2014-2015 Term
The Texas Supreme Court issued 88 opinions during its 2014-15 term, and, for the first time since records were kept, the Court cleared its docket of all argued cases and carried no pending cases over into the 2015-16 term. Of the 88 opinions, 56 were authored opinions and 32 were per curiam (“by the court”) opinions. The most prolific author was Justice Eva Guzman, who wrote eight majority opinions, four concurring opinions, and one dissenting opinion.
As usual, the topics of the Court’s rulings were wide-ranging, from procedure and evidence issues to whistleblower, insurance, governmental immunity, medical malpractice, arbitration, contract interpretation, oil and gas, family law, statutory construction, jurisdiction, and worker’s compensation. This year, the Court also addressed new issues involving trespass claims, the anti-SLAPP statute (the Texas Citizens’ Participation Act), and Chapter 95 of the Civil Practice & Remedies Code (governing independent contractors’ claims against property owners). This paper will briefly summarize key holdings of the opinions on the topics of insurance, medical malpractice, construction, and “miscellaneous.” You can locate the full opinions by date on the Orders and Opinions page of the Texas Supreme Court’s website, http://www.txcourts.gov/supreme/orders-opinions.aspx.
Insurance Law. In In re National Lloyds Ins. Co. (10-31-14), the Court held a trial court abused its discretion in ordering the defendant insurer to produce evidence related to its adjusting firm’s assessments of insurance claims other than the plaintiff’s claim, arising from the same storm. The Court said, “Scouring claim files in hopes of finding similarly situated claimants whose claims were evaluated differently from [plaintiff’s] is at best an “impermissible fishing expedition,” and, thus, the requested discovery should have been denied.
In In re Essex Ins. Co. (11-21-14), the Court reaffirmed the no-direct-action rule (i.e., an injured party cannot sue the tortfeasor’s insurer directly until the tortfeasor’s liability has been finally determined by agreement or judgment), held that the rule applies to declaratory judgment actions, and determined that no exceptions to the rule applied.
In Farm Bureau County Mutual Ins. Co. v. Rogers (1-30-15), the Court held that a summary judgment order in an insurance coverage lawsuit was not final because it did not resolve the parties’ competing requests for attorneys’ fees.
In In re Deepwater Horizon (2-13-15), the Court answered two certified questions from the Fifth Circuit Court of Appeals: (1) whether Evanston Ins. Co. v. ATOFINA Petrochem., Inc., 256 S.W.3d 660 (Tex. 2008), compels a finding that BP is covered for the damages at issue, because the language of the umbrella policies alone determines the extent of BP’s coverage as an additional insured if, and so long as, the additional insured and indemnity provisions of the Transocean Drilling Contract are “separate and independent”; and (2) whether the doctrine of contra proferentem applies to the interpretation of the insurance coverage provision of the Drilling Contract under ATOFINA, 256 S.W.3d at 668, given the facts of this case.
The Court held: (1) the Transocean insurance policies include language that necessitates consulting the Drilling Contract to determine BP's status as an “additional insured”; (2) under the terms of the Drilling Contract, BP’s status as an “additional insured” is inextricably intertwined with limitations on the extent of coverage to be afforded under the Transocean policies; (3) the only reasonable construction of the Drilling Contract’s additional-insured provision is that BP’s status as an “additional insured” is limited to the liabilities Transocean assumed in the Drilling Contract; and (4) BP is not entitled to coverage under the Transocean insurance policies for damages arising from subsurface pollution because BP, not Transocean, assumed liability for such claims. Thus, the Court answered “no” to the first certified question and did not reach the second question.
In RSUI Indemnity Co. v. Lynd Co. (5-8-15), the Court considered competing interpretations of an excess insurance policy that covered multiple commercial properties and limited coverage to “the least” of three alternative amounts. When fifteen of the covered properties were damaged in one occurrence, RSUI calculated “the least” of the three alternative limits separately for each covered item at each damaged property, on an item-by-item basis. Lynd contended that “the least” of the three limits applies just once in any one occurrence to the total of all losses from all covered items at all of the damaged properties. The Court concluded that both constructions were reasonable and, therefore, the policy was ambiguous. The Court construed the insurance policy’s ambiguous language in favor of coverage for the insured.
In McGinness Industrial Maintenance Corp. v. Phoenix Insurance Co. (6-26-15), the Court again answered a certified question from the Fifth Circuit: whether “suit” as used in a standard form CGL policy includes superfund cleanup proceedings conducted by the EPA under the federal Comprehensive Environmental Response, Compensation, and Liability Act of 1980. The Court joined the “overwhelming majority of jurisdictions to have considered the issue” and answered “yes.”
Medical Malpractice Law. The Court finally addressed whether non-patient “slip and fall” claims constituted “health care liability claims” under Chapter 74 of the Civil Practice & Remedies Code and decided they do not. In Ross v. St. Luke’s Episcopal Hospital (5-1-15), the Court held that, for a claim based on a breach of standards of “safety” as used in section 74.001(a)(13) to be a “health care liability claim,” there must be “a substantive nexus between the safety standards allegedly violated and the provision of health care” and not just facts that the injury occurred in a health care setting or that the defendant is a health care provider. The Court set out a non-exhaustive list of factors to be considered by a trial court deciding whether a safety standards-based claim is a “health care liability claim.”
In Randol Mill Pharmacy v. Miller (4-24-15), the Court held that a compounding pharmacy and its employees were engaged in “the dispensing of prescription medicines” when they compounded an injectable lipoic acid for office use by a physician, such that claims against the pharmacy and its individual pharmacists for injuries suffered from a particularly adverse reaction to the medicine were “health care liability claims” subject to the Chapter 74 expert report requirements.
In Van Ness v. ETMC First Physicians (4-24-15), the Court considered the sufficiency of a Chapter 74 expert report and whether some conflicting statements in the expert report failed to link the expert’s conclusions to the underlying facts. Although the opinion is fact-specific, the Court held that the court of appeals did not fully credit all of the expert’s factual statements and opinions, and that the trial court could have determined in its discretion that the report represented an objective good-faith effort to satisfy the expert report requirements. Thus, it found no error in the trial court’s denial of the defendant’s Chapter 74 motion to dismiss.
In In re Memorial Hermann Hospital System (5-22-15), the Court considered a mandamus petition challenging whether a trial court abused its discretion in compelling production of documents the hospital claimed were subject to the medical peer review committee privileges or whether those documents fell within the anticompetitive action exception to the privilege in section 160.007(b) of the Occupations Code. The opinion is extremely fact-intensive; but, the Court construed the language of the statute and the anticompetitive action exception, and the Court ultimately held the plaintiff made a sufficient showing to trigger the exception, such that some documents were privileged and some documents were not.
Construction Law. In what it called a “case of first impression,” the Court in Abutahoun v.Dow Chemical Co. (5-18-15) interpreted Chapter 95 of the Civil Practice & Remedies Code, which governs claims by independent contractors against property owners and others and imposes limitations on liability unless the plaintiff can prove a right to control or actual exercise of control by the property owner. Here, the Court concluded that the statute applied not only to premises liability claims based on a defective condition of the property, but also to claims against property owners arising out of their negligent activities – in this case, out of the use of asbestos-containing insulation that allegedly caused the plaintiff to contract mesothelioma.
In Austin v. KrogerTexas, LP. (6-12-15), the Court answered a certified question from the Fifth Circuit involving legal duties owed in premises liability cases. It held: (1) subject to two limited exceptions, an employer generally does not have a duty to warn or protect its employees from unreasonably dangerous premises conditions that are open and obvious or known to the employee; and (2) under this general rule, the Texas Worker’s Compensation Act’s waiver of a nonsubscribing employer’s common-law defenses does not eliminate an employee’s burden to prove that the employer owed him a duty as an element of a premises liability claim. The two exceptions the Court recognized are the criminal-activity exception (when the owner knows or has reason to know of a risk of harm to invitees that is unreasonable and foreseeable) and the necessary-use exception (owner has a duty to make premises safe when, despite an awareness of risks, it is necessary that the invitee use dangerous premises and the landowner should have anticipated that the invitee is unable to take measures to avoid the risks).
Miscellaneous Topics. In In re Nabors Well Services, Ltd. v. Romero (2-13-15), the Court held that relevant evidence of use or non-use of seat belts is admissible in civil lawsuits for purposes of apportioning responsibility among plaintiffs and defendants for causing an auto accident.
In Zorilla v. Aypco Construction II (6-12-15), the Court held that the punitive damages cap in section 41.008 of the Civil Practice & Remedies Code is not an affirmative defense that has to be pleaded and, thus, is not waived if not pleaded.
In Patel v. Texas Department of Licensing and Regulation (6-26-15), the Court held a provision of the Texas Occupations Code unconstitutional for requiring individuals seeking to practice commercial eyebrow threading to undergo at least 750 hours of training to obtain a state esthetician license to practice. The Court found the requirements so burdensome as to be oppressive, given that nearly half the hours had nothing to do with health and safety related to eyebrow threading, and yet the individuals had to pay for the training while being deprived of the opportunity to make money practicing their trade.