Insurance. In a long awaited and much anticipated decision, the Texas Supreme Court held that when a home buyer sues the general contractor for construction defects and alleges only damage to or loss of use of the home, those allegations are sufficient to trigger the insurer's duty under a CGL policy to defend the contractor. In answering certified questions from the 5th Circuit, the Court concluded that "allegations of unintended construction defects may constitute an 'accident' or 'occurrence' under the CGL policy and ... allegations of damage to or loss of use of the home itself may also constitute 'property damage' sufficient to trigger the duty to defend under a CGL policy." The Court did not reach the duty to indemnify because "that duty is not triggered by allegations but rather by proof at trial." The Court also held that a claim for defense costs by the insured is a "first party claim" subject to the prompt payment of claims provisions of the Insurance Code (art.21.55, now §542.051 et. seq.). Lamar Homes, Inc. v. Mid- Continent Casualty Company, __S.W.3rd __(Tex. Sup. 8/31/07). PDF. Dissent.

Personal Injury Expert medical evidence is required to prove causation unless competent evidence supports a finding that the conditions in question, the causal relationship between the conditions and the accident, and the necessity of the particular medical treatments for the conditions are within the common knowledge and experience of laypersons (e.g. certain types of pain, bone fractures, and similar basic conditions following an automobile collision). In this case, lay testimony was sufficient to prove that the accident caused some of the conditions and treatment but was insufficient to prove that the accident caused all of the conditions and the expenses for their treatment as found by the jury. The Court remands the case for remittitur or new trial. Guevara v. Ferrer, __S.W.3rd __ (Tex. Sup. 8/31/07). PDF.

Employment. Employer sought to enjoin former employee from disclosing or using any of employer's proprietary or confidential information and from soliciting or contacting employer's customers in violation of confidentiality and non-competition provisions in employment agreement. Court holds that trial court did not abuse its discretion in denying temporary injunction because the employer failed to prove that it would suffer a probable, imminent, and irreparable injury: the employer had not lost any customers to the former employee, failed to prove that it had suffered any damages from the temporary loss of a customer (since regained), or that the former employee had actually used or disclosed any of employer's confidential information while working for a competitor. W.R. Grace & Co. v. Posey, __ S.W.3rd __ (Tex. App. -- Austin, 8/30/07).

Principal/Agent Evidence that mortgage broker had lender's loan applications in his office and was authorized to deliver the loan documents and facilitate the transaction with the borrower was no evidence of actual or apparent authority to represent the loan as a "done deal" and, thus, lender was not liable for actions of broker. Gaines v. Kelly, __S.W.3rd __ (Tex. Sup. 8/24/07). PDF.

Employment. A plaintiff need not further exhaust his or her administrative remedies by filing a separate charge for retaliation when it grows out of an earlier, properly filed charge that is before the court -- the trial court had ancillary jurisdiction over claim. However, under Chapter 21 of the Labor Code an employee is not entitled to a temporary injunction; injunctive relief is only available upon a finding that a respondent engaged in an unlawful employment practice, a determination that can only be made after a resolution of the case on the merits. San Antonio Water System v. Odem, __ S.W.3rd __ (Tex. App -- San Antonio 8/22/07).

Limitations. Once a defendant has pled the statute of limitations as an affirmative defense and shown that service was effected after limitations expired, the burden shifts to the plaintiff to explain every lapse in effort or period of delay by presenting evidence that he or she acted as an ordinary prudent person in diligently attempting service. Proulx v. Wells, __S.W.3rd __ (Tex. Sup. 8/31/07). PDF.

Attorney's Fees/Subrogation Suit brought by homeowners against architect/builder and subcontractors for construction defects. Homeowner's insurance company intervenes seeking reimbursement of moneys paid. Prior to trial, homeowners settle with all defendants but the architect/builder. At trial, jury awards an amount of damages that is less than the pre-trial settlement. Held: (1) even though verdict was fully offset by the settlement credit, homeowners were nevertheless a "prevailing party" under the DTPA and entitled to their attorneys fees. Court remands for attorney fee segregation; (2) trial court did not abuse its discretion in denying insurer's equitable claim for subrogation as insurer was judicially estopped from contending that homeowners had been "made whole" having asserted homeowner's entitlement to larger damage amounts in the trial court. Court remands to determine whether insurer had contractual subrogation rights not subject to equitable considerations, whether those rights were defeated by the failure to allocate the funds to covered versus uncovered losses, and to reconsider the equitable subrogation claim in light of the award of attorney's fees. Osborne v. Jauregui, Inc., __ S.W.3rd__ (Tex. App. -- Austin, 8/29/07).

Limitations. Court "categorically" declares that unjust enrichment claims are governed by the two-year statute of limitations in §16.003 TCPRC. Elledge v. Friberg-Cooper Water Supply Corporation, __ S.W.3rd __ (Tex. Sup. 8/24/07). PDF.

Personal Injury/Sovereign Immunity. Excessive gravel on highway from road reconstruction constituted a "special defect" for which State owed the same duty that a private landowner owes an "invitee." Evidence supported finding that single "Loose Gravel" sign, even with existing "Curve Ahead" sign, was an inadequate warning that proximately caused the accident. Court also holds that the Texas Tort Claims Act's waiver of immunity includes bystander claims. Texas Department of Transportation v. Gutierrez, __S.W. 3rd __ (Tex. App. -- San Antonio 9/5/07). Dissent.

Indemnity. Energy and Superior were each contractors of Mitchell. In separate agreements with Mitchell, Energy and Superior agreed to indemnify the other (and Mitchell) from claims by their respective employees. The Court held that even though Energy and Superior were not parties to and did not sign the other's indemnity agreement with Mitchell, either one could enforce the written agreement to indemnify as third party beneficiaries and language in the Workers Compensation statute that appeared to require an indemnity agreement between the two did not reflect the intention of the Legislature. Energy Service Company of Bowie, Inc. v. Superior Snubbing Services, Inc. __ S.W.3rd __ (Tex. Sup. 8/24/07). PDF. Dissent.

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Employment. Evidence, including testimony that co-workers of Plaintiff, a practicing Muslim born in India, mocked his religious dietary and prayer practices and continuously referred to him as "Taliban" and "Arab," was sufficient evidence of a hostile work environment based upon Plaintiff's religion and his national origin to defeat summary judgment -- even though comments did not refer to India. The availability of mental anguish damages in a Title VII claim is determined by Federal , not State, law. EEOC v. WC & M Enterprises, Inc. __F.3rd__(5th Cir. 8/10/2007).

Arbitration. Plaintiffs invested money with Merrill Lynch (ML) and signed a contract requiring arbitration of disputes with ML. Thereafter, on the advice of a ML employee, Plaintiffs purchased investment products from two ML affiliates under contracts not requiring arbitration. Ultimately Plaintiffs sued the employee and the ML affiliates but not ML. In multiple opinions the majority held that the employee could invoke the arbitration clause because ML would have been liable for the actions of its employee had it been sued. However, since the ML affiliate corporations were separate corporations with separate contracts, they cannot invoke the ML arbitration clause even if the misconduct of the employee and the affiliates was "substantially interdependent and concerted." The Court also holds that in order to keep arbitration a "rapid, inexpensive alternative to traditional litigation" the lawsuit against the affiliates must be stayed pending resolution of the arbitration involving the employee. In re Merrill Lynch Trust Company FSB et al., __S.W.3rd__ (Tex. Sup. 8/24/07) PDF. Concurring and Dissenting. Concurring and Dissenting.

Arbitration. A financial advisor acting as agent of a company with whom the plaintiffs had contracted, could invoke the contract's arbitration clause when "liability arises from and must be determined by reference to the parties' contract rather than general obligations imposed by law." In re H & R Block Financial Advisors, Inc. et al, __S.W.3rd__(Tex. Sup. 8/24/2007). PDF.

Arbitration. Students sued parent company of a vocational college and the Admissions Director for fraudulent inducement into an enrollment contract. Held: students bound by arbitration clause in contract even though (1) parent company and Admissions Director were non-signatories and (2) students are not suing on the contract. Court reasoned that college would be liable for tuition refund if students win case against the parent company; a party cannot avoid an arbitration clause by recasting a breach of contract claim as an action for fraudulent inducement. Whether there was fraudulent inducement into a contract (as opposed to fraudulent inducement pertaining to the arbitration clause) is determined by the arbitrator. In re Kaplan Higher Education Corporation, __S.W.3rd__ (Tex. Sup. 8/24/07). PDF