Personal Injury. An oil field worker, having completed a 6 p.m. to 6 a.m. shift, crossed the center line while driving home and collided with and killed the occupants of another car. The jury found the worker's employer negligent. The Texas Supreme Court reversed and rendered. The Court held that the employer owed no duty to prevent injuries caused by the worker's fatigue or to train him regarding the dangers of fatigue. The Court distinguished Otis Eng'g Corp. v. Clark, 668 S.W.2d 307, 308, 311 (Tex. 1983) because Otis involved intoxication rather than fatigue and unlike the employer in Otis, the defendant had no knowledge of any incapacity and took no affirmative action to control the worker. Nabors Drilling v. Escoto, __ S.W.3rd __ (Tex. 6/19/09).

Civil Procedure. A jury returned a defense verdict in a medical malpractice case. The trial judge granted a motion for new trial as to some of the defendants "in the interests of justice and fairness." The Texas Supreme Court, emphasizing the Texas Constitution's dictate that the right of trial by jury "shall remain inviolate," granted the defendants' writ of mandamus and ordered the trial court to more specifically set forth its grounds for granting a new trial. The Court held that broad statements such as "in the interest of justice" are not sufficiently specific and that the reasons for granting a new trial should be clearly identified. The Court disapproved of earlier decisions to the contrary. In re Columbia Medical Center of Las Colinas , __ S.W.3rd __ (Tex. 7/3/09); See also, In. Re E.I. Du Pont de Nemours and Company, __ S.W.3rd __ (Tex. 7/3/09).

Insurance. An insured made a claim on her homeowners' policy for hail damage. Her insurance company determined that the hail damage was limited to roof ridgeline and estimated repair cost at less than the deductible. Her contractor determined roof needed to be replaced at a significantly higher cost. She invoked the appraisal clause of the insurance contract. The insurance company refused to participate contending that the dispute involved "causation," not the "amount of loss." She filed suit seeking a declaratory judgment compelling an appraisal. The Texas Supreme Court ordered the insurer to participate in the appraisal process. The Court, without deciding whether the appraisal will necessarily be binding, held that the insurance company could not avoid the appraisal merely because there might be a causation question involved.State Farm Lloyds v. Johnson, __ S.W.3rd __ (Tex. 7/3/09).

Legal Malpractice. Husband was executor of Wife's estate and retained counsel to advise him in the administration of same. Husband's allocation of assets excluded certain assets from a trust Wife created. Twenty-nine years later, Husband dies and leaves all of his estate to charity. One month later, the children, as beneficiaries of Wife's trust, sued Husband's estate for misallocation of assets. The executor of Husband's estate settled with the children and brought suit against the law firm that advised Husband. The Texas Supreme Court held that the Husband's malpractice claim, brought by the executor of his estate, survived his death and could be prosecuted by his executor in his stead. Smith v. O'Donnell, __ S.W.3rd __ (Tex. 6/26/09).

Wills and Estates. A wife dies, followed shortly by her husband. A dispute arose between the children from prior marriages of the deceased husband and wife over whether the wife's share of brokerage accounts, and securities certificates issued therefrom, passed to her husband by survivorship or passed to her children through her will. The Texas Supreme Court held that the designations "joint tenancy," "JT TEN" and "Joint (WROS)" in different account agreements were each sufficient to create a right of survivorship to the Wife's community property under the Probate Code and that such right continued in the securities certificates issued from those accounts. The Court reasoned that by definition all joint tenancies include a right of survivorship so the designation "JT TEN" was a sufficient to create a survivorship interest. Holmes v. Beatty, __ S.W.3rd __ (Tex. 6/26/09).

Whistleblower Act. A public employee filed suit alleging that he was fired after sending an email to his supervisor warning that if the State did not take specific action it would violate the law by failing to remedy non-compliance with reporting requirements. The Texas Supreme Court held that the employee's e-mail only warned of regulatory non-compliance, not a violation of law, and that an agency supervisor is not an appropriate law enforcement authority to whom a report should be made. As such, the employee failed to allege a violation of the Act, sovereign immunity was not waived, and the State's plea to the jurisdiction should have been granted. The State of Texas v. Lueck, __ S.W. 3rd __ (Tex. 6/26/09).

Employment. The City failed to notify a suspended police officer, as required by statute, that if he appealed to a hearing examiner, rather than the civil service commission, his right of appeal was limited. The Texas Supreme Court held that the notification was mandatory but not jurisdictional. The proper remedy was to abate the proceeding to give the employer an opportunity to provide the notice and to permit the employee to make a new election. City of DeSoto v. White, __ S.W.3rd __ (Tex. 6/19/09).

Statute of Limitations/ Service. Motor vehicle collision in Texas in 2003. In 2004 one driver moved to California leaving no forwarding address. In 2005 the other driver sued the absent driver but did not obtain service on her until 2006. The defendant asserted a limitations defense, claiming a lack of diligence in effecting service. The Texas Supreme Court held that the defendant driver's absence from the State did not suspend limitations under TCPRC §16.063 because the defendant was amenable to service under the Texas long-arm statute and, therefore, was considered "present" in the State. The Court also held that an unexplained eight month gap between service attempts, with no attempt at substituted service, demonstrated a lack of diligence as a matter of law. Ashly v. Hawkins, __ S.W.3rd __ (Tex. 6/26/09).

Statute of Repose. A builder designated an engineer as a responsible third party. Within 60 days the plaintiff sought to join the engineer as a defendant. The engineer claimed that his joinder was precluded by the 10 year statute of repose. The Texas Supreme Court agreed, holding that TCPRC § 33.004(e), which precludes the assertion of limitations to prevent the joinder of a designated responsible third party, does not apply to claims barred by the statute of repose. Those claims are not revived by § 33.004(e). Galbraith Engineering Consultants, Inc. v. Pochuca, __ S.W.3rd __ (Tex. 6/26/09).

Partnerships. A psychologist and a psychiatrist had an oral agreement that the latter would serve as the medical director for a pain clinic and would receive one third of the clinic's revenues. A dispute arose over whether a partnership existed between the two or whether the psychologist was the sole owner. The jury found that a partnership existed. The Texas Supreme Court reversed and rendered holding that there was no evidence of a partnership.

In a wide ranging opinion, the Court reviewed the five factors listed in the Texas Revised Partnership Act and held that whether a partnership has been formed should be determined by examining the totality of the circumstances. No single factor is necessary or sufficient by itself to establish the existence of a partnership although the existence of all of the factors or none of the factors is determinative. Here, the Court found that there was no evidence of any of the statutory factors: (1) there was no agreement to share profits, only gross revenue; (2) there was no proof that both parties had expressed their intent to be partners; (3) the psychiatrist did not have the right to participate in control of the business; (4) there was no agreement to share losses; and (5) the psychiatrist did not contribute or agree to contribute money or property to the business.

The Court also held that the absence of a verified denial of partnership was waived as the issue was tried by consent. Ingram v. Deere, __S.W.3rd __ (Tex. 7/3/09).

Legal Build Needs Our Help

Great Courthouse Photos

Law Practice Magazine

Silver Linings in Recessionary Times

Travel Texas

To facilitate scheduling, my mediation calendar is now online. You can access it from my website www.mcmediate.com which also provides an e-mail link to schedule or hold a date for mediation.

There are no travel or additional charges for mediations within 100 miles of Austin.

I am committed to providing you with the most productive and professional mediation service possible. I welcome your comments and your suggestions about any and all aspects of the mediation process.

Please use the Forward Email link below to send this newsletter to anyone you think might have an interest in receiving it. If you are already overwhelmed with e-mail and do not want to receive future issues, you may unsubscribe as indicated below.

Best Regards,

Michael Curry

Construction. An electrical subcontractor on a bonded public-works project walked off the job leaving his parts supplier unpaid. The supplier missed the McGregor Act deadline to pursue a claim on the bond, but filed suit against the prime contractor for violation of the Texas Construction Trust Fund Act and breach of a separate Joint Check Agreement. The trial court held that the prime contractor's president violated the Trust Fund Act by failing to pay the supplier, and that under the Joint Check Agreement, the prime contractor guaranteed payment for the materials and was therefore liable, as well. The court of appeals reversed and rendered, holding that the McGregor Act was the suppliers exclusive remedy. The Texas Supreme Court disagreed, holding that the McGregor Act is the unpaid laborer and materialman's exclusive remedy against the payment bond but does not otherwise limit their other statutory and common-law claims. Dealers Electrical Supply Co. v. Scoggins Construction Co. Inc., __ S.W.3rd __ (Tex. 7/3/09).

Forum Selection. A purchaser of services sued the seller in Dallas County, Texas. The seller moved to dismiss the suit based upon the contract's forum selection clause which vested exclusive jurisdiction in a judicial district in Illinois. In response, the purchaser contended that the clause was procured by fraud. The trial court denied the seller's motion, holding that the seller had failed to prove that the page of the contract containing the forum-selection clause was presented to the purchaser. The Texas Supreme Court reversed: the party challenging a forum-selection clause has the burden of proving the clause is invalid. Evidence that a party concealed a forum-selection clause with the intent to defraud may be sufficient to invalidate same, but there was no such evidence here. In re International Profit Associates, Inc et al., __ S.W.3rd __(Tex. 6/12/09).

Medical Malpractice. A patient filed a health care liability claim followed by an expert report. The doctor filed a motion to dismiss contending the report was inadequate and seeking attorney's fees. The motion was overruled and the doctor did not take an interlocutory appeal. Months later the patient non-suited his claim and the trial court entered a final judgment of dismissal. The doctor then appealed the denial of his motion to dismiss. The court of appeals dismissed the appeal as moot. The Texas Supreme Court reversed, holding that the doctor did not waive his right to challenge the report and seek attorney's fees by failing to pursue an interlocutory appeal before final judgment. Ashley v. Hawkins, __ S.W. 3rd __ (Tex. 6/26/09).

Medical Malpractice. Health care liability claim governed by article 4590i. The trial court dismissed the plaintiffs' claims for failure to file an expert report but denied the defendant doctor's claim for attorney's fees and costs because they had not been "incurred" by the doctor but by the doctor's insurance company. The Texas Supreme Court reversed, holding that the fees and costs were recoverable because the insurer was "standing in the shoes" of the doctor when they paid his costs of defense. Aviles v. Aguirre, __ S.W.3rd __ (Tex. 7/3/09).

Arbitration. In 1999, Ms. Taylor was diagnosed with dementia. That year, she transferred several of her securities accounts to Morgan Stanley. Each account agreement included an arbitration clause. In 2004, a probate court appointed a guardian of Taylor's estate. The guardian brought suit against Morgan Stanley, who moved to compel arbitration. The guardian opposed the motion arguing that Ms. Taylor lacked the mental incapacity to form a contract when the account agreements were signed and that the question of capacity was for the court not the arbitrator to decide. The Texas Supreme Court agreed. The Court held that mental capacity is a matter bearing on the formation of the contract, as opposed to the validity of the contract, and accordingly was a question for the court. In re Morgan Stanley & Co., __ S.W.3rd __ (Tex. 7/3/09).

Arbitration. The trial court, faced with a motion to compel arbitration, ordered discovery to assist it in deciding the motion. The Texas Supreme Court held that the trial court's order was overbroad and an abuse of discretion. The Court indicated that while pre-arbitration discovery is authorized when a trial court lacks sufficient information regarding the scope of an arbitration provision or other issues of arbitrability, discovery as to the merits of the underlying controversy is not proper. While the necessity of identifying other culpable parties could, under some circumstances, be related to arbitrability a party must link the identity of the defendants to that issue, which was not done here. In Re Houston Pipeline Co., __ S.W.3rd __ (Tex. 7/3/09).

Arbitration. The plaintiff injured her back in April 2007 while working at Macy's department store. On May 9, 2007 she signed a document acknowledging that she had read a summary of the Injury Benefit Plan and that the Plan required arbitration of on-the-job injuries asserted against "the Company." The Texas Supreme Court granted the store's writ of mandamus compelling arbitration. The Court held that the definition of "the Company" in the Plan as "your particular employer" was specific enough to make the agreement enforceable even though the Macy's division for which she worked was not specifically named as a company covered by the Plan. In a footnote the Court attached no importance to the fact that the injury predated the written acknowledgment since the the Plan was in effect at the time of the injury. In re Macy's Texas, Inc., __ S.W.3rd __ (Tex. 6/26/09).

Zoning Authority. A city resident, as part of a religious ministry, offered men recently released from prison free housing and religious instruction in two homes he owned. The city passed a zoning ordinance that effectively eliminated all locations within the city for the ministry to operate. The Texas Supreme Court held the city had violated the Texas Religious Freedom Restoration Act because the ordinance placed a substantial burden on the free exercise of religion and did not further a compelling governmental interest in the least restrictive means possible. Barr et. al. v. Sinton, __S.W.3rd __(Tex. 6/19/09).