This morning, the Texas Supreme Court issued two opinions. One explains the application of the voluntary payment rule in Texas, and the other explains the procedure by which one can appeal a small claims court judgment in Texas. Both probably warrant additional discussion on this blog, but we probably will not be able to get to it today. However, I wanted to alert readers to the opinions, in the event that someone has a case pending in which the voluntary payment rule has been invoked. Technorati Tags: litigation, Texas Supreme Court, law

By Rick Freeman In a recent article herein, Karl and Rob discussed the recent opinion by the Texas Supreme Court – In re Weekley Homes, L.P. In that decision the Texas Supreme Court compelled a non-signatory to a contract to submit her personal injury claim to arbitration pursuant to the home purchase contract. Basically, the Court says that if you gain benefits from the contract, you are subject to the contract’s arbitration clause. To quote Justice Brister’s non-judicious pun “(a) non-party cannot both have his contract and defeat it too.” Conversely, in a recent decision by Judge Harmon out of the U.S. District Court, S.D. Texas, non-signatories were allowed to compel arbitration of a claim. Much like the tropical Atlantic and Gulf, storm after storm of litigation is spinning off in some way related to the Enron debacle. In In Re Enron, (MDL-1446, CIV.A H-01-3624) [.pdf link] decided on August 1, 2005, Judge Harmon ruled that non-signatories to a contract could compel arbitration of claims. In a very short summary of a long and complicated set of facts, some outside Enron directors moved to compel arbitration with regard to the distribution of the proceeds of $200 million in excess D&O liability insurance coverage. The D&O proceeds had been interpleaded into the registry of the court. Although the outside directors were not signatories to the insuring contracts, the Court held that they could compel arbitration since they were the intended third-party beneficiaries of the contracts. The Court went on to say, like the Texas Supreme Court did in the Weekley case, that the ultimate question of whether the parties agreed to arbitrate is determined by state contract law and not federal law. Once there has been is a determination that state contract law compels arbitration under the FAA, the FAA has created its own body of federal substantive law applicable to any arbitration agreement within FAA coverage. Another interesting aspect of Judge Harmon’s opinion is that, although the non-signatories could compel arbitration, the Court ultimately ruled that under Texas contract law the Court would not compel arbitration. (I will leave it to the interested reader to review the opinion for the Court’s reasoning.)

The Texas Supreme Court issued a per curiam opinion this morning reversing the Fourteenth Court of Appeals and a trial court, both of which had previously denied a special appearance in a suit involving the alleged wrongful denial of insurance claims. The Court held that the district court could not properly exercise specific personal jurisdiction over Commonwealth General Corporation (“CNC”) just because CNC was the sole shareholder of a Texas insurance company. “Stock ownership and the related right of control that stock ownership gives to stockholders are insufficient to destroy the distinctness of corporate entities for jurisdictional purposes.” According to the Supreme Court, since no evidence existed that CNC did anything other than wholly own the Texas insurance company whose denial of claims was the subject of the lawsuit, denial of CNC’s special appearance was inappropriate, at least on specific jurisdictional grounds. The Court remanded the question of whether or not general jurisdiction over CNC exists in Texas to the Court of Appeals. Cause No. 04-0829, CNC v. York and Roberson Technorati Tags: litigation, Texas Supreme Court, law

The Third Court of Appeals issued three opinions this morning. The first, which came from a case against the City of San Angelo Fire Department, explains an affirmative defense to the Texas Tort Claims Act’s waiver of sovereign immunity for claims involving the use of a motor vehicle. While sovereign immunity is usually waived in Texas in cases where a governmental employee negligently operates a motor vehicle, there is no waiver in cases where the claim arises out of the action of an employee responding to an emergency call in compliance with applicable laws and ordinances. The plaintiff in the underlying case had sued the San Angelo Fire Department after she got into a wreck with a fire engine responding to a report of a burning daycare center. According to the Court of Appeals, San Angelo established that its fire fighter had obeyed applicable regulations in responding to the call, so the City’s sovereign immunity from the claim was not waived by the Tort Claims Act, and the trial court had no subject-matter jurisdiction over the City. Finally, the Court found that the fire fighter in question was entitled to official immunity, as he was performing a discretionary act at the time of the accident, and he was acting in good faith as the first unit responding to what he believed was a burning daycare facility with children trapped inside. Cause No. 03-04-00179-CV, City of San Angelo and Kelly Hood v. Hudson The Third Court of Appeals also issued memorandum opinions in a case for termination of parental rights and a restricted appeal of a default divorce.