This morning, the Third Court of Appeals issued a memorandum opinion that is useful for practitioners who file, respond to or appeal Special Exceptions. The opinion, written by Justice Patterson, affirms a trial court decision (by Judge Davis) to dismiss Plaintiffs’ lawsuit with prejudice when they failed to re-plead within 45 days of the Special Exceptions having been sustained. Significantly, the Third Court did not consider whether or not the Special Exceptions were sustained properly or not in the first place, Justice Patterson being of the opinion that the appealing Plaintiffs waived that issue by not briefing it. That being the case, according to the Court, the Plaintiffs could not challenge the dismissal other than by making a showing that they did in fact re-plead (which apparently they did not, according to the opinion). In other words, without challenging the actual act of sustaining the special exceptions, the Appellants could not meaningfully challenge on appeal the trial court’s subsequent decision to dismiss the lawsuit with prejudice. So, even though the opinion was not reported, it states a critical rule anytime a practitioner is in the business of appealing a case involving special exceptions: you must challenge not only the aftermath of the special exceptions, but the special exceptions themselves. Perry, et al. v. Cohen, et al.

On December 22, 2006, the Supreme Court came down with the opinion quoted below. The opinion is significant in two important respects: 1. The opinion demonstrates the Supreme Court holding exemplary damages “constitutionally excessive” even though the exemplary damages are within the Chapter 41 limit of $200,000.00. Therefore, this is a case where the constitutionally excessive defensive pleadings came into play. The court holds that it has the power to decide whether the exemplary damages are “constitutionally excessive”. If the court holds that the exemplary damages are excessive (here for fraud in the inducement), then the remedy is a remand to the court of appeals to set a remittitur amount. 2. Even more importantly, this case makes a large change in the law with broad impact. The court changes the burden on a party seeking to recover attorney’s fees. In the past, if P sued on theory A that allowed fees, and on theory B that did not allow fees, P’s most often claimed that the fees were “intertwined” and thus they could recover all. Blister’s opinion here changes the burden of recovery for attorney’s fees. Much more attention must be paid by the Plaintiff to the recovery of attorney’s fees. This is a significant (but subtle) change in current law. Blister’s Opinion says: Accordingly, we reaffirm the rule that if any attorney’s fees relate solely to a claim for which such fees are unrecoverable, a claimant must segregate recoverable from unrecoverable fees. Intertwined facts do not make tort fees recoverable; it is only when discrete legal services advance both a recoverable and unrecoverable claim that they are so intertwined that they need not be segregated. We modify Sterling to that extent. Tony Gullo Motors v. Chapa, ___ S.W.3d ___ (Tex. 2006) (Cause No. 04-0961) Technorati Tags: litigation, Texas Supreme Court, law

The Texas Supreme Court has in the past year or two emphasized that non-signatories to arbitration agreements can still be required to arbitrate certain disputes. (see prior blog posts here, here, and here). This morning, the Court analyzed circumstances in which a non-signatory can actually compel arbitration pursuant to a contract to which the non-signatory was, of course, not a party. The majority opinion, written by Justice Hecht, continues the trend of judicial empowerment of arbitration contracts. In this case, a jilted potential purchaser of a Ford dealership sued Ford, the dealership, and the eventual succesful purchaser when Ford exercised a right of first refusal and caused the purchase and sale agreement (“PSA”) between first purchaser and the dealership to be terminated. The PSA was a contract between the dealership and the first purchaser; Ford and the eventual purchaser were not parties. The first purchaser sued based on a theory that Ford’s right of first refusal was not valid and did not allow Ford to terminate the PSA or allow the dealership to get out of the PSA. The first purchaser also sued the eventual purchaser for interfering with the PSA. The PSA, which, again was between only the dealership and the first purchase, included an arbitration clause. However, in what could be described as the “flip side” of the normal fact pattern, Ford and the eventual purchaser, who were never parties to the PSA, moved to compel arbitration, based on the PSA’s arbitration clause. The trial court and the Court of Appeals refused to compel arbitration, but the Supreme Court saw the issue differently. According to Justice Hecht, since the plaintiff-first purchaser’s claims against Ford and the eventual purchaser were completely intertwined with its claims against the dealership, and since a arbitration agreement did exist between it and the dealership, equitable estoppel requires that all the claims be arbitrated. In her dissent, Justice O’Neill argues that this claim for tortious interference with a contract could not be so intertwined with a claim for breach of that contract to support equitable estoppel, especially since the arbitration clause itself was not a traditional sweepingly broad clause. The opinion discusses in detail the doctrine of equitable estoppel as it applies to the enforcement of arbitration agreements, and it continues a powerful trend in Texas jurisprudence making arbitration clauses extremely difficult to avoid. Meyer v. WMCO-GP, ___ S.W.3d ___ (Tex. 2006) (Cause No. 04-0252) Technorati Tags: arbitration, ADR, Texas Supreme Court, law

This morning, the Texas Supreme Court issued a per curiam opinion in a case which concludes that a guardian ad litem’s fee was unreasonable and remands to the trial court the issue of the reasonableness of the fee. The case discusses the applicable standard for evaluating an ad litem’s fee and is an important one for anyone who litigates cases in which settlements are made on behalf of minor children. The underlying case stemmed from a Land Rover rollover involving a family of four. The parents and one of the children survived, but the other child was killed in the rollover. The parents, the estate of the killed son, and the surviving son (the brother) brought claims against vehicle manufacturer and the tire manufacturer. When settlement became a possibility, the trial court appointed a guardian ad litem to represent the interest of the surviving brother. The tire company, as part of its settlement, paid the ad litem $45,000.00. When the ad litem requested $100,000.00 from Land Rover, however, Land Rover objected. The trial court ultimately awarded the guardian ad litem $100,000.00 in fees assessed against Land Rover, Land Rover appealed, and the 13th Court of Appeals affirmed the fee award. According to the Court of Appeals, the plaintiffs’ attorneys submitted evidence of the ad litem’s having spent in excess of 150 hours on the extremely complex case, of his impressive reputation, and of his customary hourly rate of $500.00. That being the case, evidence supported the award, and the Court of Appeals affirmed, writing that “courts of appeals are not factfinders, and thus, are not free to second-guess a factual determination made by a trial court under an abuse of discretion standard of review.” The Supreme Court, however, reversed both courts, on the basis that the fee was unreasonable. According to this morning’s opinion, a guardian ad litem must represent the interest of the minor, but not serve as the minor’s attorney. Therefore, the role does not allow for the ad litem to expend large amounts of time duplicating work performed by the plaintiffs’ attorney. In this case, according to the Supreme Court, the ad litem did just that. Additionally, according to the Court, since the ad litem did not really keep track of his time it was difficult for him to justify the amount of his fee, even assuming an hourly rate of $500.00. Land Rover v. Juan Hinojosa, ___ S.W.3d ___ (Tex. 2006) (Cause No. 04-0794).