Be Careful What You Ask for – The Invited Error Doctrine In Texas

In preparing for a hearing recently, I kept coming up on cases citing the “invited error” doctrine. The doctrine of invited error seems pretty straight forward. It is a form of estoppel. The doctrine states that a party cannot complain on appeal that the trial court took a specific action the complaining party requested. See Tittizer v. Union Gas Corp., 171 S.W.3d 857 (Tex. 2005), citing, Ne. Tex. Motor Lines v. Hodges, 138 Tex. 280, 158 S.W.2d 487, 488 (Tex. 1942). However, there are a number of cases that discuss the doctrine and find that it does not apply. So, when does it apply? The short answer is to look carefully at the relief requested and provided by the trial court.

In Tittizer v. Union Gas Corp., Union Gas asked for a uniform date to apply to all royalty owners so that the effective date of pooling was the date of first production. The court granted a uniform date to all royalty owners but one. Because the court make a different ruling as to one royalty owner, the invited doctrine did not apply. See Tittizer v. Union Gas Corp., 171 S.W.3d 857, 862 (Tex. 2005).

In Neasbitt v. Warren, 22 S.W.3d 107 (Tex. App. – Fort Worth 2000, n.w.h.), horse owners sued their veterinarian, Warren, for a botched surgery that caused their horse to be put down. Warren filed a motion for cost bond and production of expert report as required by the Texas Medical Liability and Insurance Improvement Act (i.e. article 4590i) and Neasbitt did not comply. Warren filed a no-evidence motion for summary judgment and in response Neasbitt stated that suit was filed under Texas Medical Liability and Insurance Improvement Act and they therefore had 180 days to file an expert report. The court issued a notice of intent to dismiss and Neasbitt filed a response stating that Texas Medical Liability and Insurance Improvement Act did not apply and also, alternatively, attached a copy of the expert report but did not file a cost bond. The trial court dismissed the case for the failure to file a cost bond and Neasbitt appealed arguing that the Texas Medical Liability and Insurance Improvement Act did not apply. The trial court never ruled on the motion for summary judgment or the response filed by Neasbitt.

The Court of Appeals reversed and held that the Texas Medical Liability and Insurance Improvement Act did not apply to veterinarians and also that Nesbitt was not prohibited on appeal for raising that issue even though Neasbitt’s response to Warren’s motion for summary judgment stated that the Texas Medical Liability and Insurance Act did apply. Because the trial court never ruled on Warren’s motion for summary judgment or Neasbitt’s response, it was Warren, not Neasbitt, who brought up the issue as the basis for the motion to dismiss for want of prosecution. Therefore, the invited doctrine did not apply to Neasbitt.

While seemingly straightforward, the invited error doctrine does require a comparison, among other things, of the relief requested and granted and the party moving for and receiving the requested relief. The opinions in this blog are solely the author’s and any comments, suggestions or replies can be sent to john@jrjoneslaw.com.

Pre-Suit Contractual Waivers of Statute of Limitations in Texas

It has long been the law in Texas that an agreement to waive or not plead the statute of limitations was void as against public policy. See Simpson v. McDonald, 179 S.W.2d 239 (Tex. 1944). Texas courts that have interpreted Simpson have allowed contractual waivers of the statute of limitations if the waiver is “specific and for a reasonable time.” See, e.g., Am. Alloy Steel, Inc. v. Armoco, Inc., 777 S.W.2d 173, 177 (Tex. App. – Houston [14th Dist.] 1989, no writ). Sounds clear cut doesn’t it? However, the Supreme Court of Texas in Godoy v. Wells Fargo Bank, N.A., 2019 Tex. LEXIS 443 (May 10, 2019) muddied the waters up and a more detailed analysis is now required.

Godoy guaranteed a loan and Wachovia nka Wells Fargo foreclosed on the loan secured by real property in Texas. The guaranty contained a section entitled “Guarantor’s Waivers” that waived any and all rights or defenses by reason of (A) any “one action” or “anti-deficiency” law” that would prevent Wells Fargo from bringing a deficiency suit. The Guaranty also had a savings clause that stated that if any such waiver is determined to be contrary to any applicable law or public policy, such waiver shall be effective only to the extent permitted by law or public policy. Godoy v. Wells Fargo Bank, N.A., 2019 Tex. LEXIS 443, *2 (May 10, 2019). The guaranty did not contain any language that set out a specific and for a reasonable time on the statute of limitations waiver.

Wells Fargo filed suit three and one-half years after the foreclosure and Godoy replied that Wells Fargo’s claim was barred by the Texas Property Code Section 51.003 two-year statute of limitations to bring an action for a deficiency. Godoy moved for summary judgment based on the two-year statute of limitations and Wells Fargo filed a partial motion for summary judgment claiming that Godoy waived section 51.003’s two-year statute of limitation when he signed the guaranty agreement. The trial court denied Godoy’s motion and granted Wells Fargo’s motion who then moved for and received a final summary judgment on its deficiency claim. The court of appeals affirmed.

The Supreme Court of Texas reaffirmed the principles of Simpson v. McDonald as modified by the various courts to include that a pre-suit contractual waiver of the statute of limitations may be effective if it is specific and for a reasonable time.Godoy v. Wells Fargo Bank, N.A., 2019 Tex. LEXIS 443, *12-13 (May 10, 2019).  The Supreme Court then clarified that Simpson was not an absolute bar on contractual waivers of statutes of limitations. Citing to Am. Alloy Steel, Inc. v. Armoco, Inc., the Texas Supreme Court held that blanket pre-dispute waivers of all statutes of limitations are unenforceable, but waivers of a particular limitations period for a defined and reasonable amount of time may be enforced. Godoy v. Wells Fargo Bank, N.A., 2019 Tex. LEXIS 443, *13 (May 10, 2019). But how to get there when the guaranty did not contain any language specifying a defined and reasonable amount of time?

To overcome that hurdle, the Supreme Court of Texas waved its magic wand and held that the two-year anti-deficiency statute was waived by Section (A) of the guaranty but it was enforceable because the law (but not the contract or guaranty) provided a reasonable four-year statute of limitations that applied to suits on a debt. When read with the savings clause of the guaranty, the Supreme Court of Texas held that Section (A) was effectively an an agreement to move the two-year anti-deficiency statute of limitations to the four-year statute of limitations period to collect a debt and affirmed the Court of Appeals on that sole point. Godoy v. Wells Fargo Bank, N.A., 2019 Tex. LEXIS 443, *1-19 (May 10, 2019). It was a key fact that the lawsuit was filed before the four-year debt statute of limitations period had expired.

Creative lawyers are going to have a field day with this opinion and trial courts (unfortunately) will be grappling with this decision for the foreseeable future. Despite the lack of any language in the guaranty contract providing a specific and reasonable time on the pre-suit waiver of the statute of limitations, contracts can now be opened up based on a savings clause and any law on the books to backstop the claim. There is also no reason why this analysis could not be applied to other contractual provisions that contain the same apparent lack of clarity as long as there is a good savings clause. There was really no reason at all for the Supreme Court of Texas to reach this result as the legislature had made it pretty clear that deficiency claims had to be brought within two-years.

The opinions in this blog are solely the author’s and any comments, replies or suggestions can be sent to john@jrjoneslaw.com. A late Happy Mother’s Day to all the mothers.

 

Limitations on Civil Conspiracy in Texas is Not What You Thought?

The Supreme Court in Texas issued an opinion on April 5, 2019 that effectively changes the statute of limitations analysis on civil conspiracy claims in Texas. See Agar Corporation, Inc. v. Electro Circuits International LLC, 2019 Tex. LEXIS 351 (April 5, 2019). The Supreme Court of Texas also clarified its position on whether a civil conspiracy claim is an independent tort or a theory of vicarious liability and held that it was  theory of vicarious liability and a derivative claim that depends on some underlying tort or illegal act.  Because a civil conspiracy requires an underlying tort, most civil conspiracy claims should accrue when the underlying tort claim causes harm to the plaintiff, that is, the same time as the tort claim against the primary wrongdoer. Further, limitations run separately for each such tortious act.

Agar was a summary judgment appeal. The trial court granted summary judgment on various tort claims based on the general two-year statute of limitations generally applicable to torts at section 16.003 of the Texas Civil Practice and Remedies Code. Included in the grant of summary judgment were various civil conspiracy claims. The court of appeals affirmed the trial court’s decision and the issue before the Supreme Court of Texas was what statute of limitations applies to a claim of civil conspiracy. Texas. See Agar Corporation, Inc. v. Electro Circuits International LLC, 2019 Tex. LEXIS 351, *1.

The Supreme Court of Texas held that it did not agree that section 16.003 of the Texas Civil Practice and Remedies Code universally applies to claims of civil conspiracy. Because civil conspiracy is a derivative tort that “depends on participation in some underlying tort,” the Supreme Court held that the applicable statute of limitations on a civil conspiracy claim must coincide with that of the underlying tort for which the plaintiff seeks to hold at least one of the named defendants liable.” See Agar Corporation, Inc. v. Electro Circuits International LLC, 2019 Tex. LEXIS 351, *1-2, citing, Tilton v. Marshall, 925 S.W.2d 672, 681 (Tex. 1996). Because one of the claims in Agar may not be barred by the applicable statute of limitations, the decision of the court of appeals was reversed in part and affirmed in part.

The Agar opinion has a lot of meat on it and if you are considering adding a civil conspiracy claim to your pleadings, it is a must read as it also sets out the elements of civil conspiracy and discusses what other jurisdictions have decided and why the court reached the opinion it did. The Supreme Court also goes through an analysis and finds that while civil conspiracy is a cause of action, it is not an independent tort.See Agar Corporation, Inc. v. Electro Circuits International LLC, 2019 Tex. LEXIS 351, *9. The court finally goes to great pains to point out that damages come from the underlying wrongful act, not the conspiracy itself. See Agar Corporation, Inc. v. Electro Circuits International LLC, 2019 Tex. LEXIS 351, *9, citing, Tilton v. Marshall, 925 S.W.2d 672, 680-681 (Tex. 1996).The opinions in this blog are solely the author’s and any comments, suggestions, or replies can be sent to john@jrjoneslaw.com.

 

 

Nonjudicial Foreclosures and the Fair Debt Collection Practices Act

The United States Supreme Court’s unanimous opinion in Obduskey v. McCarthy & Holthus LLP, Case No. 17-1307, 2019 U.S. LEXIS 2090, ___U.S. ___ (March 20, 2019) held that a business engaged in no more than a nonjudicial foreclosure proceeding is not a “debt collector” under the Fair Debt Collection Practices Act (“FDCPA”), except for the limited purposes of Section 1692f(6) dealing with the enforcement of security interests.  The opinion also continues the shift into a more mechanical and textual analysis and approach used by the current United States Supreme Court.

The facts of this case are straight forward. Obduskey defaulted on his mortgage and in 2014, McCarthy & Holthus, on behalf of its client, sent a notice initiating a nonjudicial foreclosure. The notice complied with the mandatory notice under Colorado law and once received by Obduckey, Obduskey responded demanding validation of the debt as allowed under the FDCPA. McCarthy & Holthus did not respond and simply initiated a new nonjudicial foreclosure in 2015. Obduskey then sued McCarthy & Holthus under the FDCPA. The issue before the courts was very limited.

As restated by Justice Breyer, the question before the court was “Does it mean that one principally involved in the enforcement of security interests is not a debt collector (except for the purposes of section 1692f(6))? If that is true, then numerous other provisions of the FDCPA do not apply or does it simply reinforce the fact that those principally involved in enforcement of security interests are also subject to the other provisions of the FDCPA? Strictly reading the statute, Justice Breyer, writing for an unanimous court, held that the last sentence does (with its section 1692f(6) exception) place those whose principal purpose is the enforcement of security interests outside the scope of the primary debt collector definition at section 1692a(6), where the business is engaged in no more that a nonjudicial foreclosing like the one before the court.

This is an important opinion in Texas as Texas is one of the states that allows for nonjudicial foreclosures on real property loans. However, it can also be a trap for the unwary as it is an extremely narrow decision and only deals with situations when a nonjudicial foreclosure action simply meets the minimum requirements of state law and does not do more. Additional actions by McCarthy & Holthus could have easily tipped the scale to where the Supreme Court could have gone the other way on this decision and found that other sections of the FDCPA applied to any additional actions.

The opinions in this blog are solely the author’s and any suggestions, comments or replies can be sent to john@jrjoneslaw.com.

Jury Verdicts and Inconsistent Jury Findings in Texas

Jury trials have a lot of moving parts to them. In my many years of practice, courts, counsel and jurors do an amazing job and get the answers right most of the time. However, what happens when the jury verdict is inconsistent and the jury’s answers are inconsistent. The Texas Supreme Court plurality opinion in USAA Tex. Lloyd’s Co. v. Menchaca, 545 S.W.3d 479 (Tex. 2018) provides some guidance and also reminds parties that they can waive the conflict in the jury’s answers by failing to voice a complaint before the jury is discharged.

In Menchaca, the jury found the insurer had not failed to comply with its obligations under the insurance policy, but found in response to another jury question that the insurer violated the insurance code section regarding failing to pay the claim for policy benefits without conducting a reasonable investigation. And so, the conflict exists because an insured cannot recover policy benefits for an insurer’s statutory violation if the policy does not provide the insured a right to receive the benefits.

When reviewing a jury verdict for conflicts, the threshold question is whether the findings are about the same material fact. Courts must try and reconcile apparent conflicts in the jury’s findings if reasonably possible in light of the pleadings and evidence, the manner of submission and the other findings considered as a whole. Sometimes the conflict between the jury’s findings are fatal. A fatal conflict exists when the answer to one jury question requires a judgment in favor of the plaintiff and the answer to another jury question requires a judgment in favor of the defendant. Since a trial court should not enter a judgment based on a verdict containing a fatal conflict, what should the court do?

If the jury’s answers are in a fatal conflict, the trial court must give the jury written instructions regarding the nature of the conflict and allow them to retire for further deliberations. See Tex. R. Civ. P. 295. To preserve error on conflicting findings, a party must object to the conflicting findings by the jury before the trial court discharges the jury. See USAA Tex. Lloyd’s Co. v. Menchaca, 545 S.W.3d 479, 518-519 (Tex. 2018). What the jury intended by the conflicting answers is best determined by the jury itself, and that is the solution that TRCP 295 requires.

Jury trials are full of landmines from the opening statement to the jury charge. Preserving error is the key because, despite the determined efforts of the parties and courts to get the charge right, there are very few jury trials where an error does not exist. Under Texas Rule of Appellate Procedure 33.1(a)(1)(A), appellate courts will not consider an error that was properly raised in the trial court. While there is a fundamental error exception to this rule, trying to raise an exception after the fact is easier said than done. The better practice is to draft your charge at the start of the case to use as a roadmap, modify it as you go and then remain vigilant to make sure the jury findings are consistent.

The opinions in this blog are solely the author’s and any suggestions, comments and replies can be sent to john@jrjoneslaw.com.

The Economic Loss Rule and Mere Breach of Contract Defense and the Texas Deceptive Trade Practices Act

It has long been the law in Texas that an allegation of a mere breach of contract, without more, does not constitute a false, misleading or deceptive act or practice” in violation of the Texas Deceptive Trade Practices – Consumer Protection Act (“DTPA”). Shakeri v. ADT Sec. Servs., Inc., 816 F.3d 283, 295 (5th Cir. 2016) (quoting Ashford Dev. Inc. v. USLife Real Estate Servs. Corp., 661 S.W.2d 933, 935 (Tex. 1983)). In the past few years, the relationship between the mere breach of contract defense and the economic loss rule have been reviewed by the courts. See Salek v. SunTrust Mortgage, Inc., 2018 U.S. District LEXIS 133396 (S..D. TX. August 8, 2018);  BCC Merch. Solutions, Inc. v. Jet Pay, LLC, 129 F. Supp. 3d 440 (N.D. Tx. 2015).

Under Texas law, where the damages claimed are the economic loss to the subject of the contract itself, the remedy is ordinary is one of the contract alone. Kevin M. Ehringer Enters., Inc. v. McData Servs., Corp., 646 F.3d 321, 325 (5th Cir. 2011). In determining whether the economic loss rule precludes particular tort claims, including the DTPA, Texas courts look to the source of the duty allegedly violated and the nature of the loss claimed. El Paso Mktg., L.P. v. Wolf Hollow I, L.P., 383 S.W.3d 138, 143 (Tex. 2012), citing, Sw Bell Tel. Co. v. Delanney, 809 S.W.2d 493, 494-495 (Tex. 1991).

Recently in Salek, the Court was faced with the issue of whether a DTPA unconscionable claim or course of action was exempt and beyond the scope of the “economic loss rule’ under one of the many pending Hurricane Harvey related lawsuits over repairs and the release of insurance related funds.  Defendant SunTrust filed a 12(b)(6) motion to dismiss for failure to state a claim. Plaintiff argued that under Sharyland Water Supply Corp. v. City Alton, 354 S.W.3d 407 (Tex. 2011), that unconscionability claims are exempt from the economic loss rule and therefore, Plaintiff’s DTPA claims could go forward.

Rejecting Plaintiff’s interpretation of Sharyland, the Court noted that courts have allowed recovery of economic damages even absent physical injury or property damage including for statutory causes of action. The Court also noted that the Supreme Court of Texas did not mention a DTPA unconscionable claim in Sharyland and did not overrule or otherwise limit the “mere breach of contract” defense.  Salek v. SunTrust Mortgage, Inc., 2018 U.S. District LEXIS 133396 *16-17 (S..D. TX. August 8, 2018). In reviewing Plaintiff’s claims, and granting the motion to dismiss, the court noted the essence of the claim was that SunTrust breached its promises under the deed of trust concerning the repair and disbursement of insurance proceeds and there was no independent legal duty to do so under Texas law. Therefore, the claims can be asserted in contract only, and not in tort under the DTPA.

The Court’s ruling essentially states that the mere breach of contract defense is the application of the economic loss rule to the DTPA. An allegation of a mere breach of contract does not constitute a false, misleading, or deceptive act in violation of the DTPA. A party raising the economic loss rule needs to look at the nature of the claim and whether there is a duty outside the contract. The opinions in this blog are solely the author’s and any comments, suggestions and replies can be sent to john@jrjoneslaw.com. Happy New Year to everyone!

 

 

Vexatious Pro Se Litigants in Texas

Texas has multiple procedural rules that allow a party to challenge a litigant’s position to make sure there is a valid legal and factual basis to the claims. Today’s blog will provide a simplified overview of Chapter 11 of the Texas Civil Practice and Remedies Code (“CPRC”) for vexatious pro se litigants who continually file multiple lawsuits without a valid basis. Anyone who has ever dealt with a republic of texas pro se litigant will want to brush up on Chapter 11 procedures. The filings usually come fast and furious.

Under Chapter 11, you can only file a motion against a pro se defendant and the statute specifically excludes licensed attorneys. Essentially, there are two types of Chapter 11 motions: (1) a motion requesting that a plaintiff be declared a vexatious litigant and be required to furnish security to proceed, and (2) a motion by any party or the court requesting that the vexatious litigant be prohibited from filing a new lawsuit without the permission of the local administrative judge. CPRC 11.051, 11.101(a).

Chapter 11 motions are time sensitive. The motion must be filed within 90 days after a party files their original answer or makes a special appearance. Defendant must also show that there is no reasonable probability that the plaintiff will prevail in the litigation. CPRC 11.054. In addition, Defendant must show one of the following: (a) in the seven years before the motion, pro se plaintiff commenced, prosecuted, or maintained at least five lawsuits that were (1) decided against the plaintiff, (2) pending for at least two years without being brought to trial or hearing, or (3) determined by a trial or appellate court to be frivolous or groundless. CPRC 11.054(1); (b) that another lawsuit was finally determined against the plaintiff and pro se plaintiff repeatedly relitigated or attempted to relitigate the cause of action, claim or controversy, issues of fact, issues of law, or validity of the final judgment against the same defendant. CPRC 11.054(2);or  (c) plaintiff has already been declared a vexatious litigant by a state or federal court based on the same or substantially similar facts, transactions or occurrences.

Once the Chapter 11 motion is filed, the litigation is stayed until the trial court rules on the Chapter 11 motion. A Plaintiff does not have to file a response; however, if a response is filed, a plaintiff should refute each of the arguments before the hearing. After notice, the court must conduct a hearing and evidence can be considered at the hearing via live testimony or affidavit. CPRC 11.053(b). If the court grants the Chapter 11 motion, the plaintiff must furnish security to cover the reasonable expenses incurred by the defendant, including costs and attorneys fees that would be recoverable if the litigation is dismissed. If Plaintiff does not furnish security as order by the court, the case will be dismissed.

The steps that have been taken over the past few years to reduce the number of baseless filing has made a difference although it sometimes has gone to far in restricting remedies for valid claims. The burden of proof is high on Chapter 11 motions, but at least there is another tool to stop the filing of lawsuits without merit so the judicial system can focus on the cases with merit. The opinions in this blog are solely the author’s and any comments, replies, or suggestions can be sent to john@jrjoneslaw.com. Happy New Year to everyone and their families.

The Discovery Rule in Texas is Still Alive

This past Friday, November 16, 2018, the Supreme Court of Texas reminded everyone that the discovery rule is alive and well in Texas. In Carl M. Archer Trust No. Three v. Tregallas, 2018 Tex. LEXIS 1153 (Tex. November 16, 2018), the Supreme Court of Texas was faced with the issue of whether the statute of limitations barred a claim for breach of a recorded right of first refusal to purchase a mineral interest. The grantors of the right of first refusal conveyed the mineral interest to a third party without notifying the holders of the right of first refusal. More than four years later, the holders of the right of first refusal finally learned of the conveyance and sued the third party for breach, seeking specific performance. The trial court ruled in favor of the holders of the right of first refusal option and the court of appeals reversed, holding that the statute of limitations barred the claim.

In reversing the court of appeals in part (on the discovery rule), and affirming in part (on the accrual date of the claim), the Supreme Court of Texas held that the discovery rule is a “limited exception” to the general theory that a cause of action accrues when a legal injury is incurred. Carl M. Archer Trust No. Three v. Tregallas, 2018 Tex. LEXIS 1153, *15 (Tex. November 16, 2018), citing, BP Am. Prod. Co. v. Marshall, 342 S.W.3d 59, 66 (Tex. 2011). The discovery rule is applied when the nature of the injury is inherently undiscoverable and the evidence is objectively verifiable and when applicable, it defers accrual of the cause of action until the plaintiff knew or should have known of the facts that gave rise to the cause of action. Carl M. Archer Trust No. Three v. Tregallas, 2018 Tex. LEXIS 1153, *15 (Tex. November 16, 2018), citing, S.V. v. R.V., 933 S.W.2d 1,  4 (Tex. 1996). The elements of the discovery rule try to strike a balance between the policy of barring stale claims and preventing an unjust result when claims could not be brought with the limitations period. Id. at 3, 6.

The Supreme Court of Texas also set out that an injury is inherently undiscoverable when it is “unlikely to be discovered within the prescribed limitations period despite due diligence.” Carl M. Archer Trust No. Three v. Tregallas, 2018 Tex. LEXIS 1153 (Tex. November 16, 2018), citing, Via Net v. TIG Insurance Co., 211 S.W.3d 310, 313-314 (Tex. 2006). Significantly, the Supreme Court held that the determination of whether an injury is inherently undiscoverable is made on a categorical basis rather than on the facts of the individual case. Carl M. Archer Trust No. Three v. Tregallas, 2018 Tex. LEXIS 1153 (Tex. November 16, 2018), citing, HECI Expl. Co. v. Neel, 982 S.W.2d 881, 886 (Tex. 1998). As a result, the Court held that the inquiry is not whether the trustees in particular could have discovered their injury with diligence, but whether the injury was “the type of injury that could be discovered through the exercise of reasonable diligence.” Carl M. Archer Trust No. Three v. Tregallas, 2018 Tex. LEXIS 1153 (Tex. November 16, 2018), citing, BP Am. Prod. Co. v. Marshall, 342 S.W.3d 59, 66 (Tex. 2011).

Disagreeing with the court of appeals that the injury was not inherently undiscoverable, and rejecting that the injury could have been gleaned in a recorded public instrument from public sources like tax rolls and commercial sources, the Supreme Court of Texas provided other examples of cases where the discovery rule was applicable even though the injury could have been gleaned from reviewing publicly available information.  Carl M. Archer Trust No. Three v. Tregallas, 2018 Tex. LEXIS 1153, *16-18 (Tex. November 16, 2018), citing, Kelley v. Rinkle, 532 S.W.2d 947, 949 (Tex. 1976) (accrual of libel action in false credit report) and Vanderbilt Mortgage & Fin, Inc. v. Flores, 692 F.3d 358, 369-370 (5th Cir. 2012) (fraudulent lien claims in real property records); but see Shell Oil Co. v. Ross, 356 S.W.3d 924, 929-930 (Tex. 2011) (underpayments in royalties available in public accessible information).The Supreme Court of Texas’ opinion and the examples provided in its opinion give excellent guidance for when the discovery rule may be a tool in a litigator’s tool box should the need arise. 

The opinions in this blog are solely the author’s and any replies, comments or suggestions can be sent to john@jrjoneslaw.com. Happy Thanksgiving to everyone!

 

 

Litigation Over Commissions Under the Texas Real Estate Licensing Act

There has been significant litigation in the last few years over individuals trying to circumvent the requirements set out in the Texas Real Estate Licensing Act to recover a commission for the sale of real property in Texas. Section 1101.806(c) of the Texas Real Estate Licensing Act entitled “Liability for Payment of Compensation or Commission” is the statute of frauds provision of the Real Estate Licensing Act (hereinafter “RELA”).

Strict compliance is required with RELA and an agreement to pay a real estate commission must be in writing or it is not enforceable. Lathem v. Kruse, 290 S.W.3d 922 (Tex. App.– Dallas 2009, no pet.); see also Expo Holdings, LP v. Jacobson, 2010 Tex. App. LEXIS 6851 (Tex. App. – [14^th Dist.] 2010, n.w.h.). RELA also limits the persons who can receive a commission and a person must be either a licensed real estate agent or an attorney to receive a commission for the sale of real estate in Texas. See Tex. Occ. Code 1101.806 (b).  Therefore, in order to recover for a commission, the agreement to do so must be in writing and paid to either a licensed real estate agent or attorney. Despite the plain language of the statute, creative attempts continue to pop-up around Texas to try and circumvent the requirements of RELA.

Texas courts have strictly construed RELA because of the policy to protect the public and have insisted on compliance with the RELA regardless of the types of claims made. Texas courts also look to the substance, not the form of the contract at issue to determine the applicability of the RELA. McKellar v. Marsac, 778 S.W.2d 573, 575 (Tex. App.–Houston [1^st Dist.] 1989, no writ) (holding that when RELA applies and its requirements are not met, courts have denied recovery when fraud, conspiracy, deceit, quantum meruit and breach of contract have been plead); See Trammell Crow Co. No. 60 v. Harkinson, 944 S.W.2d 631,634 (Tex. 1997) (rejecting tortious interference claim by broker against lessors because claim wholly derivative of unenforceable oral commission agreement and only translates into loss of expectancy of receiving a commission at the end of lease negotiations). Even when someone introduces a party and helps locate property and negotiate the sales transaction, they are not entitled to a commission unless they are a person entitled to recover a commission under RELA and the fee agreement is in writing and signed by the parties. See Expo Holdings, LP v. Jacobson, 2010 Tex. App. LEXIS 6851 (Tex. App. – [14^th Dist.] 2010, n.w.h.).

The Texas Real Estate Licensing Act is designed to protect the public and rightfully, in my opinion, requires that any fee agreement be in writing and can only be paid to a licensed real estate agent or an attorney. The most valuable asset people own is their home and protections are necessary. The opinions in this blog are solely the author’s and any comments, suggestions and replies can be sent to john@jrjoneslaw.com. Happy Halloween!

 

The Texas Citizens Participation Act – To SLAPP or Anti-SLAPP That is the Question?

This week’s political turmoil in Washington and the heated discussion it has caused, makes a discussion of the Texas Citizens Participation Act (“TCPA”), as set out in Chapter 27 of the Texas Civil Practice and Remedies Code, an appropriate topic. Before giving a general overview to wet your appetite, I recommend that you get a copy of the State Bar Litigation Section Report The Advocate, Volume 84, Fall 2018 as an excellent primer on the TCPA, its exemptions, and procedural hurdles. It is an excellent resource, a great place to start and the articles are exceptionally well-written.

For many years prior to the passage of the TCPA in 2011, frequent lawsuits were being filed against political participants by parties who had opposing views in order to silence the individual or group as opposed to genuinely seeking to recover for injuries caused by tying up the opposing party or group in expensive and time-consuming litigation. This litigation was called “strategic lawsuits against public participation” or SLAPP.

The TCPA, also known as the Anti-SLAPP statute, was enacted to protect the constitutional rights of persons to speak freely, associate freely and to petition and otherwise engage in government activities to the maximum extent of the law and to protect the rights of a person to file meritorious lawsuits for a demonstrable injury. It is also significant that the TCPA mandate is that it be construed liberally to effectuate its purpose and intent fully and it is very broadly construed. The TCPA has a built in Motion to Dismiss process to dismiss a SLAPP legal action filed against a person that requires the motion to dismiss to be filed no later than 60th day after the date of service of the legal action and hearing must be set the 60th day after service of the motion to dismiss. While there can be an short extension for hearing the motion to dismiss upon a showing of a crowded docket or good cause, the motion and hearing must still occur within 120 days after service of the motion to dismiss.

The TCPA also requires the Court to dismiss a legal action against the moving party that, under a preponderance of the evidence standard, is based on, relates to or is in response to a person’s right of free speech, right to petition the government, or the right of association. If the motion to dismiss is granted, the court must award court costs and reasonable attorneys’ fees relating to defending the legal action and may also award other expenses, as justice and equity may require. Tex. Civ. Prac. & Rem. Code 27.009(a)(1). There is a flip side of the coin when filing a motion to dismiss. If the court finds that a motion to dismiss is frivolous or solely intended to delay, the court may award court costs and reasonable fees to the other side.Sullivan v. Abraham, 488 S.W.3d 294, 299 (Tex. 2016).

Our country is blessed that we are able to actively participate in our government. While things that are said may cause your blood to stir and general gnashing of your teeth, the right to participate in or make petitions to our government and for the freedom to speak and associate are amazing freedoms not enjoyed by everyone in the world. The Texas Citizens Participation Act along with the United States and Texas Constitutions help define the limits of those rights and a way to protect them when someone is trying to unlawfully silence your public participation. The opinions in this blog are solely the author’s and any comments, suggestions or replies are welcome at john@jrjoneslaw.com.