The Third Court of Appeals issued an interesting memorandum opinion this morning affirming a trial court’s default judgment in a case where a registered agent refused to accept service of process in a premises case. In the underlying case, the plaintiff hired two separate process servers who tried unsuccessfully to serve a restaurant’s registered agent, both personally and via certified mail (the certified mailings were returned marked “refused,” and an employee of the agent apparently told the process server that the agent would not come out and accept service). When all that failed, the plaintiff served via the Secretary of State, who sent the petition to the registered agent via registered mail. When that mailing was also returned marked “refused,” and when the Defendant restaurant never answered, the plaintiff took the Secretary of State’s certificate to the courthouse and got a default judgment. In a motion for new trial, the agent argued that he did not instruct an employee to refuse service, and that he had to refuse certified mail since his employees kept losing it when he accepted it. The Third Court of Appeals found that the trial judge was absolutely correct in noting that a registered agent in Texas ought not refuse to accept certified mail. The opinion provides a good example of how to serve a recalcitrant registered agent, as well as how to prove up the recalcitrance in support of a default judgment. It’s also probably a nice cautionary tale in the event a client calls and says (in a whisper) “there’s a process server in my reception area.” Finally, I’d like to take a moment to plug the process server we use. We switched to Professional Civil Process about six months ago and have been completely impressed with their work. Don’t hesitate to email me if you’d like their contact information. Katin v. Loesch, Cause No. 03-05-00412 (Tex. App. – Austin 2006) (mem. opinion). Technorati Tags: litigation, Third Court of Appeals, law

On Thursday, the Fifth Circuit handed down an opinion in a complicated case (link is to .pdf of opinion) which implicates, in part, the Federal Arbitration Act, to the extent it codifies the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (we blogged on the New York Convention and its roots back in June). In any event, while Thursday’s case is not really about arbitration, an international arbitration is at its root, and it provides a detailed discussion of a complicated procedural situation involving removal and the res judicata effect of a prior arbitral award. The case itself is an insurance coverage dispute, I think. The web of related disputes began with a CompUSA policy to contract with a third party, Warrantech, to administer the warranties it sells along with the consumer electronics it retails (someone’s probably tried to pressure you into buying one of these). Pursuant to that contract, Warrantech was required to obtain an insurance policy to cover the potential claims; Warrantech did so through a carrier called Houston General. Houston General, in turn, reinsured a portion of the risk with Certain Underwriters at Lloyds, London (“Underwriters”). Anyhoo, after about a year, the Underwriters decided that Warrantech was paying unauthorized claims, and they told Houston General that they would not reinsure the claims. Houston General did not take that lying down, and it fired up an international arbitration against the Underwriters pursuant to the New York Convention. The arbitration took five weeks, the panel eventually awarded Houston General $39 Million, and a federal court in New York confirmed the award. A month after the award, Underwriters filed a Texas state court lawsuit directly against Warrantech, asserting as damages the reinsurance award that Houston General had won in the arbitration. Underwriters made claims for fraud and misrepresentation, via its right to subrogate for claims it had to pay Houston General. Warrantech asserted counterclaims against Underwriters and removed the case to federal court pursuant to Section 205 of the Federal Arbitration Act (our prior blog post we linked to earlier is all about Section 205 removal, for those so inclined). Warrantech argued that res judicata and collateral estoppel barred the Underwriters’ claims. Underwriters moved for summary judgment on Warrantech’s counterclaims, got them dismissed, and then moved for remand, saying that with the counterclaims’ dismissal the link to the foreign arbitration award (and hence the basis for the Section 205 removal) was severed. The district court remanded, Warrantech appealed to the Fifth Circuit, and Underwriters moved to dismiss the appeal for lack of appellate jurisdiction. We’ll leave it to you to read the opinion and watch the Fifth Circuit sort it all out. The opinion really does not have much to do with arbitration, ultimately, but it is an excellent example of the FAA and the interplay between courts and arbitrators and foreign countries and warranties and insurance carriers and reinsurers. Certain Underwriters at Lloyd’s vs. Warrantech, ___ F.3d ___ (5th Cir. 2006) (Cause No. 04-11168). Technorati Tags: arbitration, litigation, Fifth Circuit, law, international law

Robert Scoble (self-decribed as a “Tech Geek Blogger”) is one of my absolute favorite bloggers on technical subjects. He’s a recently-former Microsoft employee who blogs about technical and business issues surrounding the internet and blogs and the phenomena folks call Web 2.0 and the like. He also writes well and, at times, beautifully and powerfully. At any rate, his blog is one we read all the time. At any rate, Mr. Scoble made an interesting post the other day about lawyers and intellectual property and the role of cease and desist letters. His point, which is in response to a discussion about some letters sent by Google’s legal team, is that there are often important reasons us lawyers do things that may not always be apparent. The comments to the post are also helpful, and Scoble sums up his perspective in one of his responses to a commenter: one reason I survived at Microsoft is I made friends with the lawyers and they explained their world to me and why they do seemingly stupid and lame things. But in their world those seemingly stupid and lame things will save your ass. . There’s no particularly deep point here, but I thought some of the folks who read this blog to delve into the minutia of arbitration procedure might be interested in a glimpse at how folks on the other side see us and what we do. I’d also, again, recommend Scoble’s blog to anyone. Even if you don’t care about the technical substance (and much of what he blogs about is way over my head), his writing is excellent and his perspective is wise, and frankly that makes it worth reading in and of itself. Technorati Tags: litigation, law

The Third Court of Appeals has released an opinion on an interlocutory appeal which clearly sets forth the rule that in enacting the Whistleblower Act the Texas Legislature waived immunity from both suit and liability, and that a governmental entity is not entitled as a matter of right to an evidentiary hearing on a plea to the jurisdiction on sovereign immunity grounds. First, some quick background. The Texas Supreme Court has held that sovereign immunity is so strong a defense for a governmental entity that it is jurisdictional. In other words, when a Texas governmental entity is sued, that entity may file a plea to the jurisdiction immediately if a legislative waiver of immunity that would apply to the plaintiff’s case is not evident from the plaintiff’s petition. In the event a trial court denies the immunity-based plea to the jurisdiction, the governmental may make an immediate interlocutory appeal. The Texas Whistleblower Act, however, is such a waiver of immunity, both from suit and from liability (sovereign immunity in Texas has two components: immunity from suit, and immunity from liability, and they mean more or less what they sound like they mean). Section 554.035 of the Whistleblower Act states: A public employee who alleges a violation of this chapter may sue the employing state or local governmental entity for the relief provided by this chapter. Sovereign immunity is waived and abolished to the extent of liability for the relief allowed under this chapter for a violation of this chapter. Tex. Gov’t Code §554.0035. In other words, according to the statute (and the Court), all a plaintiff needs to allege in his or her petition is that he or she is a public employee and that the Whistleblower Act has been violated. In this case, the plaintiff did just that. So, since the plaintiff’s petition set forth a clear waiver of sovereign immunity, the trial court had jurisdiction over the claim and the governmental defendant. Accordingly, the trial court denied TXDOT’s plea to the jurisdiction TXDOT, however, was not satisfied. It claimed that a 2004 Texas Supreme Court case entitled them to an evidentiary hearing on its plea, and that at the hearing it would have established that the plaintiff’s whistleblower claim was without merit. The Court points out that the case on which TXDOT relies does not give governmental defendants an absolute right to an evidentiary hearing, but instead merely holds that in some circumstances an evidentiary hearing is appropriate to flesh out jurisdictional facts. That last bit is the rub. Here, TXDOT claimed that the hearing would have shown that the plaintiff did not make a good faith report of a violation of law to an appropriate authority. Those facts, even if proven, would have not disturbed the trial court’s jurisdiction over the case. They may have established a defense to the case as a matter of law, if this had been a summary judgment, but they do not negate jurisdiction. A jurisdictional fact would have been, say, an employment record demonstrating that the plaintiff had never been a public employee. The facts TXDOT wanted to offer, however, went to the merits of the claim, but did not have a bearing on the jurisdictional issue, which is only “did plaintiff allege facts which demonstrated a waiver of immunity.” All told, it’s quite a useful opinion, since it demonstrates the important procedural difference between pleas to the jurisdiction and motions for summary judgment, both of which can and are used by Texas governmental defendants to assert sovereign immunity defenses. Texas Department of Transportation v. Lueck, Cause No. 03-05-00510-CV Technorati Tags: litigation, Third Court of Appeals, law