Thursday, August 27, 2015

The perils of making a counter-offer when time is running out


If you keep negotiating and don't settle with the insurance company of the motorist who caused the accident in which you were hurt, you may yet face more grief, as a case recently decided by the First Court of Appeals illustrates. Kamisha Davis v. Texas Farm Bureau Insurance, No. 01-14-00686-CV (Tex.App.- Houston, July 2, 2015)(Opinion by Justice Higley). 

Following an automobile accident, offers and counteroffers went back and forth between the claimant and the insurer of the other driver, until the statute of limitations had run, with no lawsuit on file. The claimant then wanted to accept the last settlement offer made by the insurer, but had made a Stowers demand for policy limits after receiving the offer from the insurer, which was for less. 

The claimant eventually sued the insurer for refusing to settle and denying the claim in its entirety. The court of appeals held that the Stowers demand for policy limits constituted a counter-offer, and as such, also constituted a rejection of the insurer's then outstanding offer. Since the insurer's offer had been rejected, the claimant could no longer accept it, and the insurer was under no obligation to renew it. Nor was the insurer obligated to accept the counteroffer. Therefore, no contract was formed, and the claimant couldn't pursue a viable cause of action for breach against the insurance company. And since the two-year limitations period had expired, it was too late to file a lawsuit on the original personal injury claim.

In ruling for the insurer, the court of appeals rejected the plaintiff's alternative theory of promissory estoppel, holding that it was not reasonable for a claimant to rely on the insurer's representations in the adversarial context of claim settlement, and that the other elements for a viable promissory estoppel claim were not satisfied either.  
  
The opinion, written by Justice Higley, is worth reading in its entirety because it suggests, though implicitly, how the problem could be avoided (leaving aside the obvious solution of timely filing a lawsuit if a mutually satisfactory settlement of the claim is not promptly reached). 

KAMISHA DAVIS, Appellant,
v.
TEXAS FARM BUREAU INSURANCE, Appellee.

No. 01-14-00686-CV.

Court of Appeals of Texas, First District, Houston.

Opinion issued July 2, 2015.

Panel consists of Chief Justice Radack and Justices Higley and Massengale.

OPINION

LAURA CARTER HIGLEY, Justice.

Kamisha Davis sued Texas Farm Bureau Insurance, asserting several causes of action. The trial court granted summary judgment against Davis in favor Texas Farm Bureau. On appeal, Davis raises two issues in which she asserts that the trial court erred in granting summary judgment on her breach of contract and promissory estoppel claims.

We affirm.

Background

On August 26, 2009, Kamisha Davis was involved in a motor vehicle accident with Texas Farm Bureau's insured. Davis hired attorney Corey Gomel to pursue a personal injury claim arising out of the accident. On April 19, 2011, Gomel sent Texas Farm Bureau a letter, stating that Davis would be willing to settle her personal-injury claims against Texas Farm Bureau's insured for $37,500. Texas Farm Bureau, through its claims adjuster, Jody Roe, made a counter-offer of $10,000 on May 2, 2011.
Gomel, on behalf of Davis, sent a second settlement offer of $22,500 to Texas Farm Bureau on June 9, 2011. On June 10, 2011, Texas Farm Bureau responded that, "[a]fter careful review and evaluation of the information you have submitted, we believe this claim has a value of $12,000.00." Gomel made a counteroffer of $18,000.00 on June 21, 2011. In response, Texas Farm Bureau sent a letter to Gomel on June 30, 2011, again stating that it valued her claim at $12,000.00.

On July 28, 2011, Davis's attorney faxed Texas Farm Bureau a Stowers demand.[1] The fax cover sheet stated, "We are withdrawing past [June 21] demand. Please see attached."
The Stowers demand informed Texas Farm Bureau that Davis would settle her claims only if Texas Farm Bureau paid her "the limits of your insured's policy." It further stated, "This will be the only correspondence that you will receive prior to us filing suit." The demand also informed Texas Farm Bureau that the offer to settle for the policy limits expired on August 29, 2011.
Davis never filed a personal injury suit against Texas Farm Bureau or the insured. At some point, Davis retained new counsel. On April 12, 2012, Davis's new counsel sent a letter to Texas Farm Bureau, which stated, "We have been retained by Corey Gomel to assist . . . in the prosecution of this matter for Ms. Davis. Please be advised our client, Ms. Kamisha Davis, has given us authorization to accept your final offer of $12,000.00. Please forward settlement documents to the address above."
On April 20, 2012, claims adjuster Roe responded, denying Davis's claim. Roe informed Davis, "Our offer expired on the two year anniversary from the date of accident 8-26-2009; therefore, we are respectfully declining your client's claim."

Davis filed suit against Texas Farm Bureau on April 16, 2013. She alleged as follows:
In an attempt to settle the matter, [Texas Farm Bureau] offered [Davis] $12,000.00 to settle [Davis's] claims on June 10, 2011.[2] This offer of settlement had neither a designated time period in which [Davis] had to accept the offer, nor did the offer state that it expired on any date or upon any action or inaction of [Davis] or that the offer would otherwise be revoked. [Texas Farm Bureau] never revoked the offer. Furthermore, [Davis] never rejected the offer. . . . On April 13, 2012, [Davis] accepted the offer to settle the case and sent the acceptance letter via fax. On April 20, 2012, [Texas Farm Bureau] denied the offer, stating that the offer expired on the expiration of limitations of the underlying incident. . . . [Davis] relied on the representations made by [Texas Farm Bureau], that being that there was an open ended offer to settle her case for $12,000.00. [Texas Farm Bureau] never revoked the offer to [Davis] until after [Davis] had accepted the offer. . . . [Texas Farm Bureau has] failed to make the offer of settlement good. [Davis] relied on [Texas Farm Bureau's] promise to [Davis's] detriment.
Based on these allegations, Davis asserted claims for breach of contract, promissory estoppel, fraud, and quantum meruit against Texas Farm Bureau.

Texas Farm Bureau moved for traditional summary judgment on Davis's breach-of-contract claim, asserting that Davis's Stowers demand was a rejection of its last $12,000 offer. Texas Farm Bureau argued that, because it offered to settle the dispute for full policy limits, a sum greater than the $12,000 offer, the Stowers demand was a counteroffer. Texas Farm Bureau cited authority for the proposition that a settlement offer does not remain open after a counteroffer has been made. Thus, according to Texas Farm Bureau, Davis could no longer accept the $12,000 offer after she made theStowers demand. It asserted that, without a valid acceptance, no contract had been formed between Texas Farm Bureau and Davis as a matter of law.

Wednesday, July 15, 2015

The Asset-rich Anna Nicole Smith Saga: Houston Court of Appeals writes one more chapter - Will it be the last? [Stern v Marshall Family appeal decided]

HOWARD STERN AS EXECUTOR OF THE ESTATE OF VICKIE LYNN MARSHALL, V. ELAINE MARSHALL AS INDEPENDENT EXECUTRIX OF THE ESTATE OF E. PIERCE MARSHALL, NO. 01-02-00114-CV (Tex.App. - Houston [1st Dist.] July 14, 2015, no pet h.) (hyperlink to appellate docket)
 
Opinions issued by Texas Courts of Appeals  typically do not attract much public attention, nor does even the Texas Supreme Court receive much media coverage; -- at least not on a regular basis. But there are exceptions, such as when same-sex marriage is on the agenda, or when a prominent person with large assets, or -- as in this case -- a fight over what is left worth fighting over in the aftermath of their demise, occasions litigation that ends up in the courts of appeals; -- not to mention multiple courts of appeals; -- not to mention a couple of trips to the U.S. Supreme Court. Not to mention when what's at stake involves millions of dollars, and attorney's fees in the six-figure range. 


And so it was with Vickie Lynn Marshall (a/k/a Anna Nicole Smith) and the fight over the fortunes of her husband, who preceded her in death, but not by much, despite the huge age difference between the former playmate and the asset-rich old man with a weak spot for the erstwhile Texas store clerk and subsequent playmate -- rich in assets too -- albeit assets of a different sort. 

Judgment - HOWARD STERN AS EXECUTOR OF THE ESTATE OF VICKIE LYNN MARSHALL, V. ELAINE MARSHALL AS INDEPENDENT EXECUTRIX OF THE ESTATE OF E. PIERCE MARSHALL, NO. 01-02-00114-CV (Tex.App. - Houston [1st Dist.] July 14, 2015, no pet h.)
Judgment issued contemporaneously with
opinion in Stern v Marshall Family  

Yesterday, the First Court of Appeals wrote another chapter in the saga, and it has already attracted the attention of Forbes Magazine: "Court Ruling Likely Ends Anna Nicole Smith Estate's Fight For Marshall Family Millions"; -- with more than 3,000 pageviews within 24 hours of posting. 

The opinion, written by Chief Justice Radack, runs sixty pages and covers a number of procedural issues relating to propriety and viability of declaratory judgment claims, effect of nonsuit, and compulsory counterclaims, that were implicated in the proceeding that played out in Harris County probate court, in a protracted legal fight that also involved courts elsewhere, most notably a bankruptcy court in California. 
  
Most importantly, however, the Houston appeals court threw out the attorneys fees awarded to Pierce Marshall against the Estate of Anna Nicole in the probate court's judgment, -- also for procedural reasons. The issue of attorney's fees against Anna Nicole -- for defending against her claims -- had not been submitted to the jury, nor had any been awarded by the trial court judge based on a motion made to the court independent of the jury trial. Therefore, the award of attorneys' fees in the final judgment of the probate court - in the six-figure range -- did not have a proper basis. 
  
Writes Radack: "We agree with Stern that Pierce waived recovery of attorneys’ fees from Vickie by failing to request submission of that issue to the jury." 

Bottom line: The Houston Court of Appeals affirms the adverse ruling against Vickie (with minor modifications), but reverses the attorneys’ fees awarded to Pierce from Vickie and renders judgment that Pierce take nothing on that claim. 




THE MATTER OF PRECLUSION 
IN THE CONTEXT OF PARALLEL LITIGATION
IN DIFFERENT COURTS IN DIFFERENT STATES

The issues on appeal, however, were not as straightforward as one might think. They hinged on matters of Texas procedural law, including the viability of declaratory judgment claims covering the same issues when the opponent had dropped its claim involving those issues, and the interplay of what happened in the Texas court with what happened in Vickie's bankruptcy in California, not mention matters such as scope of bankruptcy stay and  jurisdiction. 
   In the Harris County probate case, Vickie had actually dropped (nonsuited) her claims, but the Marshall Family Defendants asserted their own claims against her and did not let her out of the case. The jury and court in the end rejected the challenges to the validity of Marshall's will and estate plan (most of his assets were transferred via a living trust), and also passed on the merits of Vickie's claims because they were closely tied to the will contest brought by  J. Howard Marshall, III, and because Vickie's opponents invoked the Declaratory Judgments Act as a basis for their counterclaim. 
  
As the surviving spouse, Vickie would have had a claim to part of the estate as an heir-at-law under the intestacy statute, had the will and estate plan documents been set aside for lack of testamentary capacity or duress. Therefore, she was deemed a necessary party, and was not permitted to get out of the case.  
     
Vickie only non-suited her claims in Texas after she obtained a favorable multi-million dollar judgment against E. Pierce Marshal in her bankruptcy case in California, in which she asserted that Pierce tortiously interfered with an intended gift from her late husband. But that legal victory was later undone based on the final judgment rendered by the Harris County Probate Court after a drawn-out jury trial, which finally adjudicated the validity of the will and living trust, subject to review by the Texas courts of appeals, of course.  
   
The principal purpose of the appeal by Howard Stern (as representative of Vickie's estate) in Houston was therefore to reverse the judgment of the probate court and thereby remove the bar to the claims Vickie had successfully pursued (initially) in California. 
  
But the reversal of attorneys fees constitutes at least a partial victory for her estate, and -- while small compared to the one-time award in California that she did not get to keep -- not exactly in a trivial amount: $541,000 for services rendered through the trial and $100,000 each for appeals to the court of appeals and the Texas Supreme Court, respectively. And as for court costs run up for the first level of appeal, the Houston Court of Appeals split them 50-50.  
    


No need for her to turn in her grave. The supreme court has not yet had a chance to weigh in on the latest issues. The story of Anna Nicole's rise, fall, and aftermath may yet grow by a few more chapters, perhaps enough for a full feature-long sequel. 


Editorial note: This blog post on the First Court of Appeal's July 14, 2015 decision in Stern v Marshall was updated and expanded on 7/16/2015) 


Click appellate cause number to link to court of appeals' docket for this case 


Opinion issued July 14, 2015
In The
Court of Appeals
For The
First District of Texas
————————————
———————————
HOWARD STERN AS EXECUTOR OF THE ESTATE OF VICKIE LYNN
MARSHALL, Appellant
V.
ELAINE MARSHALL AS INDEPENDENT EXECUTRIX OF THE ESTATE
OF E. PIERCE MARSHALL, ROBERT MCINTYRE AS TEMPORARY
ADMINISTRATOR OF THE ESTATE OF J. HOWARD MARSHALL, II,
APPLICATION TO APPOINT ELAINE MARSHALL PENDING, IV
ELAINE MARSHALL AS TRUSTEE OF THE MARSHALL
GRANDCHILDREN’S TRUST FOR THE BENEFIT OF E. PIERCE
MARSHALL, JR., ELAINE MARSHALL AS TRUSTEE OF THE
MARSHALL GRANDCHILDREN’S TRUST FOR THE BENEFIT OF
PRESTON MARSHALL, E. PIERCE MARSHALL, JR., ELAINE
MARSHALL, AND PRESTON MARSHALL AS TRUSTEES OF THE
MARSHALL PETROLEUM, INC. STOCK HOLDING TRUST, E. PIERCE
MARSHALL, JR., ELAINE MARSHALL, AND PRESTON MARSHALL AS
TRUSTEES OF THE MARSHALL HERITAGE FOUNDATION AND THE
MARSHALL LEGACY FOUNDATION, ELAINE MARSHALL AS
TRUSTEE OF THE BETTYE B. MARSHALL LIVING TRUST, ELAINE
MARSHALL AS TRUSTEE OF THE J. HOWARD MARSHALL, II,
MARITAL TRUST NUMBER TWO, ELAINE MARSHALL AS TRUSTEE 
2
OF THE E. PIERCE MARSHALL FAMILY TRUST CREATED UNDER
THE BETTYE B. MARSHALL LIVING TRUST INDENTURE DATED
OCTOBER 30, 1990, ELAINE MARSHALL INDIVIDUALLY
ELAINE MARSHALL AS TRUSTEE OF THE MARSHALL
GRANDCHILDREN’S TRUST FOR THE BENEFIT OF E. PIERCE
MARSHALL, JR., ELAINE MARSHALL AS TRUSTEE OF THE
MARSHALL GRANDCHILDREN’ TRUST FOR THE BENEFIT OF
PRESTON MARSHALL, E. PIERCE MARSHALL, JR., PRESTON
MARSHALL, TROF, INC., FINLEY HILLIARD, ELAINE MARSHALL
AND STEPHEN COOK AS TRUSTEES OF THE J. HOWARD
MARSHALL, II LIVING TRUST, E. PIERCE MARSHALL, JR., ELAINE
MARSHALL AND PRESTON MARSHALL AS TRUSTEES OF
THE MARSHALL PETROLEUM, INC. STOCK HOLDING TRUST,
Appellees
On Appeal from the Probate Court No. 2
Harris County, Texas
Trial Court Case No. 276815402

O P I N I O N

This is an appeal from a probate court judgment. We reverse the attorneys’ fees awarded in favor of one of the appellees and render judgment that appellee take nothing on that claim. We additionally modify the trial court’s judgment and affirm the judgment as modified.



Thursday, July 9, 2015

Simien v Unifund's shaky premise - U.S. Comptroller of the Currency (OCC) enforcement action against Chase Bank punctures presumption of trustworthiness of credit card debt records established by Houston Court of Appeals in 2010


The Comptroller of the Currency has now fined Chase Bank $30 million dollars for robosigning and other less than kosher debt collection practices that have been known for years. See July 8, 2015 Press release here. Consent Order for the Assessment of a Civil Money Penalty here.

But meanwhile our local courts of appeals have gone out of their way to accommodate and legitimize wrongful collection conduct, and other intermediate courts around Texas (but not all) have followed their lead. In light to the regulatory actions involving robosigning, including the most recent consent order against a major bank, the time seems ripe to revisit Simien v. Unifund CCR Partners321 S.W.3d 235 (Tex. App.-Houston [1st Dist.] 2010, no pet.)(overruling objections to admissiblity of credit card bank records sought to be admitted through an employee testifying for debt buyer).

THE LOWERING OF EVIDENTIARY STANDARDS IN COLLECTION CASES 

This is how the issue was handled in Texas when assignees of credit card debt used dubious affidavits and documentation in credit card debt collection cases: Rather than holding debt collection plaintiffs and their attorneys to the same evidentiary standards that others have to live by, the Houston appellate courts fashioned special interest jurisprudence to accommodate debt collection firms' interest in efficient and fast-paced mass-litigation and procurement of judgments.

The First Court of Appeals (later followed by some others) simply changed the case law governing admissibility of business records to accommodate the debt collectors, and provided them with a remedy for their problems in proving their debt claims with poor documentation in the trial courts. How so? By creating new controlling precedent for admissibility of original creditor records through otherwise unqualified witnesses on the premise that the records must be trustworthy because the bank that sold the account would be violating the law -- and face penalties -- if it had not acted properly in running its business.

BANK RECORDS TRUSTWORTHY QUA BANK RECORDS

The debt buyer was therefore justified in relying on whatever documentation they had received upon purchase of portfolios of charged-off credit card accounts because those records were deemed inherently trustworthy. That exempted them from the need to actually know anything about the operations of the original creditor to put them in a position to vouch for the reliability of those records.

In other words, the Houston Court of Appeals blessed the practice of robosigning by employees of companies that bought charged-off accounts from banks such as Chase, Citibank, Capital One, GEMB, HSBC, and others. They substituted an evidentiary presumption of trustworthiness, thereby short-circuiting the safeguards for quality control that otherwise apply to use of documentary evidence in the litigation process, including authentication and hearsay.

Essentially, the justices on the court of appeals took the position that a major national bank could not possibly have done anything wrong, and that the records that the debtbuying company suing on the debt claims to have received must necessarily be trustworthy because they are business records created by a national bank. After all, if the bank were to engage in shady practices, they would face consequences.

Here is an example of a Houston appellate justice's reasoning used to affirm a judgment on a credit account sold by Chase Bank USA, N.A., citing her former colleague Elsa Alcala, who now sits on the CCA and took the lead in fashioning the precedent to lower the bar for admissibility of credit card debt records on the premise that a major bank like Citibank can do no wrong. See Simien v. Unifund CCR Partners, 321 S.W.3d 235, 240-43 (Tex. App.-Houston [1st Dist.] 2010, no pet.) (establishing alternative predicate for admissibility of business records).

Chief Justice Adele Hedges writes:

Chase's failure to keep accurate records could result in criminal or civil penalties. See Tex. Fin. Code Ann. § 392.304(a)(8) (prohibiting misrepresentations of amount of consumer debt); id. § 392.402 (providing for criminal penalties for violations of chapter 392 of Texas Finance Code); see also Fair Debt Collection Practices Act, 15 U.S.C.A. § 1692e(2)(a) (prohibiting misrepresentation of amount of debt); id. § 1692l (providing for administrative enforcement of Administrative Debt Collection Practices Act). These circumstances otherwise indicate the trustworthiness of the Chase Bank documents.[3] See Simien, 321 S.W.3d at 243-44. Accordingly, because the business-records affidavit at issue here meets the criteria for admission as business records under Texas Rule of Evidence 803(6), the trial court did not abuse its discretion in admitting these records. See id. We overrule Ainsworth's first issue.  

The OCC has now imposed penalties to the tune of $30 million on Chase Bank for practices that the Houston Court of Appeals justices simply presumed would not occur because Chase and its like would be deterred by the possibility of facing an enforcement action by regulators. And the OCC is not the only regulator whose attention Chase attracted with its dubious practices. The CFPB and a bevy of state attorneys general also took action against the bank over improper conduct.

CFPB Action against JPMorgan Chase over wrongful debt collection conduct
URL: http://www.consumerfinance.gov/blog/were-ordering-jp-morgan-chase-to-refund-50-million-and-stop-collecting-on-528000-accounts

But misconduct and illegal conduct by major financial institutions is hardly man-bites-dog news. Nor was that so when Siemien v Unifund was decided in 2009 (with a superseding opinion in 2010).

BANKS TRUSTWORTHY AS A MATTER OF LAW - EVEN FAILED ONES 

Not to mention that the FDIC had shut down and liquidated Washington Mutual Bank years ago because of unsound practices (and resulting lack of trustworthiness). Chase Bank acquired WaMu's credit card portfolio (and other assets) via the FDIC acting as receiver, which also included accounts originated by Providian Bank that had been assumed by WaMu before its demise by merger.

Yet the Houston Courts of Appeals found such records presumptively trustworthy, and instructed (through the precedent set in Simien and its progeny) the lower courts to overrule evidentiary objections made by consumers lucky enough to find a competent attorney to make evidentiary objections to offers of dubious records and shoddy affidavits by robosigners in credit card and other consumer debt collection cases.

The Texas Supreme Court was not asked to weigh in at the time; nor is it likely that it would have ruled differently. But the latest regulatory developments have again shown that the premise underlying Simien was wrong. It was wrong all along. -- An exercise not in legislating from the bench, but of handing down special-interest jurisprudence to ease the burdens of proof for a particular category of litigants at the expense of others. And that amounts to policymaking too: Policymaking by other means. On the back-end of the law.

Presumed Trustworthiness 

EXCERPT FROM AINSWORTH V. CACH, LLC
MEMORANDUM OPINION BY ADELE HEDGES, 
CHIEF JUSTICE, 14th COURT OF APPEALS 

Admissibility of the Business-Records Affidavit

Ainsworth challenged the admission of the business-records affidavit and supporting documentation on numerous grounds, including hearsay and that the supporting documents were unreliable and not trustworthy. The admission and exclusion of evidence are within the sound discretion of the trial court. Bayer Corp. v. DX Terminals, Ltd., 214 S.W.3d 586, 609 (Tex. App.-Houston [14th Dist.] 2006, pet. denied) (citing City of Brownsville v. Alvarado, 897 S.W.2d 750, 753 (Tex. 1995)). The complaining party must show that the trial court erred and that such error probably resulted in an improper judgment, which usually requires a showing that the judgment turned on the challenged evidence. Id.; see also Tex. R. App. P. 44.1(a)(1) (requiring that before a judgment can be reversed on appeal it must be determined that the error probably caused rendition of an improper judgment or prevented the appellant from properly presenting the case on appeal).

A proponent of hearsay evidence bears the burden of showing that testimony fits within an exception to the general rule prohibiting admission of the hearsay evidence. Volkswagen of Am., Inc. v. Ramirez, 159 S.W.3d 897, 908 n. 5 (Tex. 2004); see also Tex. R. Evid. 802. Rule of Evidence 803(6) provides an exception to the hearsay rule for business records if the offering party shows (1) the records were made and kept in the regular course of business; (2) the business kept the records as part of its regular practice; (3) the records were made at or near the time of the event they contain; and (4) the person making the records or submitting the information had personal knowledge of the events being recorded. See Tex. R. Evid. 803(6). Business records may also be "admissible in evidence in any court in this state upon the affidavit of [a] person" who can satisfy the requirements of Rule 803(6). Tex. R. Evid. 902(10)(a).

Finally, third-party documents can become the business records of an organization and, consequently, admissible under rule 803(6), if the records are (1) incorporated and kept in the course of the testifying witness's business; (2) the business typically relies upon the accuracy of the contents of the documents; and (3) the circumstances otherwise indicate the trustworthiness of the documents. Simien v. Unifund CCR Partners, 321 S.W.3d 235, 240-41 (Tex. App.-Houston [1st Dist.] 2010, no pet.) (citing Bell v. State, 176 S.W.3d 90, 92 (Tex. App.-Houston [1st Dist.] 2004, pet. ref'd)).

The business-records affidavit, described above, meets these criteria. Hwang stated that she is the custodian of records for CACH and that it is CACH's "regular business practice to obtain, integrate and rely upon documents prepared by the original creditor of the account at issue." She further averred that CACH relies on the accuracy of the documents in its day-to-day business activities and that the records are made and maintained by individuals who have a duty to keep the record accurately at or near the time of the event that they record. Finally, one of the documents attached to the business-records affidavit is the "affidavit of sale," which is notarized. Such a notarized document is self-authenticating under the Texas Rules of Evidence. See Tex. R. Evid. 902(8).

In this document, described above, an authorized agent of Chase Bank, N.A., stated that Chase had acquired Ainsworth's account from Washington Mutual Bank, sold it to CACH in December 2008, and that the amount due on the account at the time of the sale was $4,567.07.

Chase's failure to keep accurate records could result in criminal or civil penalties. See Tex. Fin. Code Ann. § 392.304(a)(8) (prohibiting misrepresentations of amount of consumer debt); id. § 392.402 (providing for criminal penalties for violations of chapter 392 of Texas Finance Code); see also Fair Debt Collection Practices Act, 15 U.S.C.A. § 1692e(2)(a) (prohibiting misrepresentation of amount of debt); id. § 1692l (providing for administrative enforcement of Administrative Debt Collection Practices Act).

These circumstances otherwise indicate the trustworthiness of the Chase Bank documents.[3] See Simien, 321 S.W.3d at 243-44. Accordingly, because the business-records affidavit at issue here meets the criteria for admission as business records under Texas Rule of Evidence 803(6), the trial court did not abuse its discretion in admitting these records. See id.

We overrule Ainsworth's first issue.

RELATED LINKS:  07/08/2015: OCC Fines JPMorgan Chase $30 Million for Deficiencies in Debt Collection Practices and Servicemembers Civil Relief Act Compliance

Thursday, June 25, 2015

Massengale vs. Lehrmann: Primary-campaigner for Supreme Bench Takes Aim at Alleged Judicial Legislator


Conservativer than thou .... 
   
Challenger paints incumbent Texas Supreme Court Justice Debra Lehrmann as Liberal, not to mention as a Leftist Legislator 

On the conservative side of the political spectrum one of the worst things to say about a judge's job performance is that he or she legislates from the bench. Launching his bid for Place 3 on the Texas Supreme Court, sitting First Court of Appeals Justice Michael Massengale has done just that, promising that he will not be guilty of that offense, if elected.

But he is not taking on a wayward liberal ready to be knocked off the bench with gusto, Texas-style. The Texas Supreme Court is firmly in Republican clutches, and there are no easy pickings. The seat on the nine-member high-court he has set his eyes on is currently occupied by a fellow Republican, Debra Lehrmann, who has made it known that she loves the job and will fight to keep it.

Massengale's announcement: He does not mention Opponent
Lehrmann by name 
Massengale v Lehrmann is a judicial contest in which the Republican primary electorate will ultimately render judgment, and there won't be any findings of facts and conclusions of law to explain the outcome. Nor any appeal of the verdict. The election contest will be it, and the only thing that counts is winning. The appeals - including appeals to primary voters' preconceived notions of what makes for good and not-so-good judges -- come before the critical decision-making event, not after.

And Massengale is getting an early start.

But what does it mean to not legislate from the bench, and what is conservative justice, as a distinct genre? 

To legislate means to make law, and the specific term refers to such law-making by the legislature, one of the three branches in the separation-of-powers system. So, by definition, the Supreme Court does not legislate. Legislating from the bench is an insult meted out upon those judges whose decisions are disfavored, and who allegedly usurped the function of the legislature in making those decisions and justifying them in appellate opinions.

But that does not mean the Supreme Court is not a policymaker; does not make binding rules; does not make law.

Quite to the contrary.

The Texas Supreme Court makes law by announcing what the state's common law is, and occasionally modifying it.  And it does not just do so by press release. It does so by issuing opinions that have the force of binding precedent for the state as a whole. Case law that all lower courts have to follow, if they like it or not. And the same goes for declaring what constitutional law is and is not and how it applies, and what statutes enacted by the Texas Legislature mean, for that matter. Rather than calling it interpretation, lawyers and jurists merely use a fancier term: statutory construction.

The Supreme Court makes law through opinions it issues upon deciding the legal issues presented in cases it decides to review. That is its principal function.

The Supreme Court also promulgates, and periodically amends and revises, the rules of court, a recent example being the new Rules of Evidence. And that is not even an adjudicative function. It is a legislative function, albeit of the delegated variety. The Texas Supreme Court also oversees the State Bar and the attorney disciplinary system, and makes the rules by which it operates.

So, when Justice Massengale says he will not legislate from the bench, is he saying that he does not intend to do his job, should he be elected to the Texas Supreme Court, or that he does not understand the multiple roles the court of last resort in civil matters performs in this state's system of government?

Surely not.

Much rather, it is readily apparent that he is broadcasting buzz words to attract primary votes implying that his opponent is an out-of-control liberal. thereby hoping to counteract her incumbency advantage, and her already well-established record on the court to which Massengale now aspires.

Which just goes to show that judges are politicians, not just jurists, and that some are prone to stoop low when it comes to the exigencies of having to win an election, in this case a primary contest against an opponent deemed, for whatever reason, to be the most vulnerable of those up for re-election in the forthcoming season.

Not only are Massengale and Lehrmann both Republicans and bona-fide conservatives; they were both initially appointed to their respective appellate posts by Governor Rick Perry. So, in his rhetoric, Massengale is positioning himself to the right of Lehrmann, which puts him on a point of the ideological spectrum where he can paint her as a leftie, and as an activist judge. Massengale claims to be not merely more conservative than thou, but styles himself as the conservative choice in the primary race. Just what Republican primary voters need and deserve. What does that make Lehrmann? 

CASE-SPECIFIC CONSERVATISM: A TEST CASE - WHAT WOULD A TRUE CONSERVATIVE DO? 

So how would Massengale decide a case with a defining hot-button social values issue like same-sex divorce case disposed of by the Supremes last week?

How would Massengale tackle the issues in State v Naylor & Daly as a true conservative, and as a jurist who does not legislate from the bench? The case in which a majority of the current supreme court, in an opinion written by Justice Jeff Brown, ultimately concluded that the issue of same-sex marriage and legality of divorce could not be reached for jurisdictional reasons because the AG did not intervene in a timely manner and did not have standing to appeal?


State of Texas v. Naylor, No. 11-0114 (Tex. June 19, 2015)
("We agree with the court of appeals that the State lacks standing to appeal the trial court’s decree.").

Would Massengale hold the Attorney General to the same rules and standards that govern interventions in the trial courts that other would-be interlopers have to abide by, or would he join Justice Willett in amending the common-law to allow the Attorney General to appeal as a nonparty? Or would he join Justice Devine's dissent and address the merits of the federal constitutional arguments that Justice Willett complains the Attorney General was not even heard on?

What's a true conservative and a strict constructionist to do in such a messy case? 

Obviously, the current members did not come to a consensus, even though State of Texas v. Naylor & Daly had been lingering on the docket for years, and even though they ordered an additional round of briefing to address the implications, if any, of freshly decided federal cases.

Nor would the addition of Massengale even have made a difference. Justice Devine, whose strategy playbook for success in the Republican primaries Massengale appears to be emulating, found himself in a minority of one, and the majority of five in favor of jurisdictional dismissal would still have prevailed even if Lehrmann had participated in deciding the case, no matter how she would have voted. Unless Lehrmann -- or in her place Massengale -- could have persuaded the peers to switch their votes.

The same majority, or even a larger one, may yet reach the merits, - in one of the other two same-sex marriage cases that remain pending, assuming the U.S. Supreme Court does not take the burden of deciding them on their merits out of their hands. The case numbers in the Texas Supreme Court are 15-0139 and 15-0135 respectively. Both cases are styled In Re State of Texas because they are mandamus proceedings. 

But at least one of these pending same-sex marriage cases is procedurally messy also. The underlying lawsuit against the Travis County Clerk was nonsuited by the parties after they got their same-sex marriage license on orders of a Travis County district court judge. Goodfriend v. Debeauvoir, No. D-1-GN-15-000632 (Travis Cnty. Dist. Ct. Feb. 19, 2015).


And you can't normally appeal a nonsuited case because the nonsuit renders it moot. Not to mention mandamusing a trial judge to set aside a temporary restraining order that is no longer in effect.

So what would Massengale do were he already a member of the Texas Supreme Court? 
How would he put his credo into effect? 

Would he deny the Attorney General's petition as procedurally barred? Would he come up with a new ad hoc rule allowing the AG to attack a moot TRO citing "unique and extraordinary circumstances" (which Justice Lehrman and other thoughtful jurists might very well view as an exercise in legislating from the bench), or would he -- like Justice Devine -- simply write a dissenting opinion addressing the merits of the issue about which - as a self-declared true conservative - he presumably feels strongly: Same-sex marriage? -- Never mind mootness, jurisdiction, and procedural posture.


RELATED LINKS:

Justice Lehrmann's Official Bio and Pic on Texas Supreme Court Website
Justice Massengale's Official Bio and Pic on First Court of Appeals Website

Massengale to Challenge Lehrmann for Supreme Court Seat, by Ross Ramsey in The Texas Tribune June 16, 2015.





Sunday, June 7, 2015

Memorial Hermann seeks court-ordered deposition of local personal injury attorney over nonpayment of hospital liens resulting from treatment of accident victims


Memorial Hermann Health System does not just sue uninsured patients, as detailed in last week's Houston Press cover story written by Dianna Wray, it also goes after lawyers who represent accident victims treated in its hospitals; in search of its cut of personal injury settlement proceeds.

On Friday, June 5, 2015, MHHS brought legal action against Houston attorney Max F. Stovall in Harris County District Court to obtain information on a list of clients whom he allegedly represented in connection with car wrecks. Stovall's attorney profile page on the State Bar of Texas web site indicates that he is a member in good standing. He lists himself as a personal injury attorney. A search of Harris County Court records identifies him as attorney of record in 87 cases in district courts, but none of them recent. In the county civil courts at law Max Franklin Stovall has 132 to his name, with the last one filed in 2009. 

MHHS's petition, which was assigned to the 189th District Court, is based on Rule 202 of the Texas Rules of Civil Procedure, which allows a potential litigant to invoke the power of a court to order deposition of witnesses and production of documents in order to investigate facts for a possible lawsuit to be filed later. Such a proceeding is a vehicle to conduct what is otherwise called "discovery" without actually filing a lawsuit that seeks damages. It is also used to find out the identity of a party or parties that may be liable on a claim, but whose identity is not known or easily determined, -- in this case insurance carriers that may have made disbursements to settle Stovall's clients' claims, from which the hospital system says it was not paid its fair share. MHHS asserts statutory hospital liens for treatment it had provided and not been paid for (or not been paid for in full) ranging from a low of $219.72 to a high of $101,973.10 per accident victim. It names them in the pleading. MHHS says it requested the information on the status of these individuals' claims from Stovall to no avail. It now seeks to compel the information by court-ordered deposition and production of documents ("duces tecum").
 
Bringing a Rule 202 proceeding also allows the hospital  system to avoid directly accusing Stovall of any wrongdoing in claims settlement and disbursement, while still giving it a powerful tool to investigate Stovall's representation of claimants, assuming the judge approves its request at the required hearing.

The ten-page petition, titled "MEMORIAL HERMANN HEALTH SYSTEM'S VERIFIED PETITION TO TAKE DEPOSITION BEFORE SUIT" was filed by Sarah K. Payne, an attorney with the law firm of Sullins, Johnston, Rohrbach & Magers. This is the same lawfirm that sues uninsured patients who received treatment at Memorial Hermann hospital facilities over unpaid hospital bills, as recently reported - with in-depth case studies telling the stories of affected individuals - by the Houston Press.
  

EXCERPTS FROM MHHS' PETITION TO INVESTIGATE CLAIMS







TEXAS RULE OF CIVIL PROCEDURE 202
(AUTHORIZING PRESUIT INVESTIGATION OF POTENTIAL CLAIMS) 
TRCP 202 Petition to Investigate Claims and Perpetuate Testimony

Tex. R. Civ. P. 202 (providing for presuit depositions)






Monday, May 4, 2015

Slippery floor at hospital is not a medical condition after all - Texas Supreme Court (Comment on Ross v St Luke's Episcopal Hospital)


In 2013 a panel of the Fourteenth Court of Appeals found itself compelled to rule that injury sustained by a hospital visitor's fall on a slippery floor was a health care liability claim, and that the visitor's lawsuit had to be dismissed because the Plaintiff had not filed an expert report explaining how the wet floor constituted medical malpractice, or rather more specifically, how the wet floor departed from the applicable standard of medical care. 



Why did the panel reach the absurd conclusion that a wet floor is medical malpractice, and therefore required proof of malpractice by expert testimony under the Health Care Liability Act? It did so because it felt duty-bound to follow Texas Supreme Court precedent to the effect that a claim need not constitute a medical malpractice claim to be treated as such for purposes of a lawsuit brought against a health care provider, and therefore required a medical malpractice expert report. 

In the meantime, a doctor who owned cattle that had been allowed to wander onto a rural road causing a collision sought dismissal of the lawsuit that the injured driver brought against him because no medical-export report regarding the cow-car-collision and the applicable standard of care had been filed. The attorney for the doctor, too, was just relying on Texas Supreme Court precedent, and zealously protecting the interests of his client, who happened to be a doctor. Or so the story went. 
  
Finally, last Friday, the Supremes announced that an ordinary negligence claim is not a health care liability claim after all if it does not arise out of provision of healthcare. Therefore, the hospital visitor who slipped and fell was not required to file an expert report. Good grief. Why did it take so long for the Supremes to come to their senses and admit the obvious? Why did they only do so after the roaming-cow med-mal practice case had made the news, and exposed the level of absurdity of which tort reform, both legislative and judicial, had reached? 





But in Fourteenth Court of Appeals got reversed in the process, and told that they -- rather than the Supremes -- had gotten it wrong. 

The irony (if not absurdity): They were just following binding precedent from the Texas Supreme Court. As an intermediate court, they said, they did not have the authority to go against the Supreme Court. They were just following orders. They felt compelled to march in lock-step and become extras in a theater of the absurd. 

Perhaps the roaming cows would not have come home to roost had the underlings on the inferior court been brave enough to say that the emperors had lost their wits and had no clothes. The Supremes would have had to affirm them.

Perhaps the Fourteenth Court of Appeals should have mopped up the slippery-slope mess that med-mal litigation had become thanks to "tort reform", rather than merely griping, and -- in the case of the one justice on the panel who has since made it to the policymaking level and become one of the emperors with stare decisis powers - concur in the absurdity without writing a separate opinion. 


Affirmed and Memorandum Opinion filed March 19, 2013.

In The
Fourteenth Court of Appeals
NO. 14-12-00885-CV

LEZLEA ROSS, Appellant
V.
ST. LUKE'S EPISCOPAL HOSPITAL, Appellee

On Appeal from the 215th District Court
Harris County, Texas
Trial Court Cause No. 2010-75291

M E M O R A N D U M     O P I N I O N

Appellant Lezlea Ross appeals from the trial court’s interlocutory order dismissing her suit against appellee St. Luke’s Episcopal Hospital. The trial court dismissed the suit because Ross failed to file an expert report as required by Section 74.351 of the Texas Civil Practice and Remedies Code. See TEX. CIV. PRAC. & REM. CODE ANN. § 74.351 (West 2011).

The sole issue on appeal is whether Ross’s claim based on a slip and fall occurring on the Hospital’s premises is a ―health care liability claim (HCLC) to which the expert-report requirement applies. Compelled by stare decisis, we hold that this claim is an HCLC, and we affirm.

BACKGROUND

Ross slipped and fell in the lobby of St. Luke’s Episcopal Hospital after visiting a patient.

Ross brought this action against the Hospital and its maintenance and training contractor, Aramark Management Services L.P.

After the Texas Supreme Court decided Texas West Oaks Hospital, LP v. Williams, 371 S.W.3d 171, 179–80 (Tex. 2012), the Hospital filed a motion to dismiss because Ross did not file an expert report explaining how the Hospital had breached a standard of care, or an expert report from a physician demonstrating how said breach caused Ross an injury. The trial court granted the Hospital’s motion, decreed that Ross’s claims against the Hospital were HCLCs subject to Chapter 74, dismissed with prejudice Ross’s claims against the Hospital, and ordered that Ross pay attorneys fees of $1,000. Ross filed a timely notice of appeal from the trial court’s interlocutory order. See TEX. CIV. PRAC. & REM.CODE ANN. § 51.014(a)(10) (West Supp. 2012).

ANALYSIS

In a single issue, Ross contends the trial court erred by granting theHospital’s motion to dismiss because her slip and fall claim is not an HCLC within the meaning of Chapter 74.

Ross was not a patient at the Hospital; she did not have a physician-patient relationship with any health care provider at the Hospital. She was a visitor, injured in the lobby of the Hospital. Yet, the Texas Supreme Court instructs that these facts are irrelevant for purposes of determining whether Ross brings an HCLC.

The Hospital, a health care provider, is the defendant. The Hospital is a defendant because of the condition of its floors in the lobby, not because of any act or omission related to health care—unless the decision to have polished floors is health care—which the Hospital does not allege here. Yet, the Texas Supreme Court instructs that a connection between the act or omission and health care is
unnecessary for purposes of determining whether Ross brings an HCLC.

Ross likely never imagined that, under the Texas Supreme Court’s construction, the plain language of the Texas Medical Liability Act would swallow her garden-variety slip and fall case. But it has. And, having failed to file an expert report as required by the Act, Ross owes the Hospital $1,000 in mandatory fees.

Ross does not contest that an allegation that the floors are slippery is a ―safety-related claim. Ross does not attempt to remove her claim from the Texas Supreme Court’s construction of the requites of the Act: A claimant (plaintiff), a defendant health care provider, and a harm or loss (safety). Ross argues simply that this court should ignore Williams because to apply it demands that we affirm.
 
Because the result in this case is absurd, Ross urges, this court should resort to TEX. GOV’T CODE ANN. § 311.021(3) (West 2005) (stating that the Legislature is presumed to have intended a ―just and reasonable result), to disregard the TexasSupreme Court decision on point. We are without such authority. See Lubbock Cnty., Tex. v. Trammel’s Lubbock Bail Bonds, 80 S.W.3d 580, 585 (Tex. 2002) (―It is not the function a court of appeals to abrogate or modify established precedent.
That function lies solely with this Court. Generally, the doctrine of stare decisis dictates that once the Supreme Court announces a proposition of law, the decision is considered binding precedent. (citations omitted)). Thus, we must overrule her sole issue.

CONCLUSION

Having overruled Ross’s sole issue on appeal, we affirm the trial court’s order.

/s/ Sharon McCally, Justice

Panel consists of Justices Brown, Christopher, and McCally. (Brown, J., concurring without opinion).

Footnotes:

Ross testified by deposition that a man was buffing the lobby floor.

See Williams, 371 S.W.3d at 188–89 (citing TEX. CIV. PRAC. & REM. CODE ANN. § 74.001(a)(13) (West Supp. 2012)). ―[A] claim need not involve a patient-physician relationship for it to be an HCLC.2 Id. at 189.3

See TEX. CIV. PRAC. & REM. CODE ANN. § 74.001(a)(2).][3 See Williams, 371 S.W.3d at 186 (allegations pertaining to safety need not be ―directly related to health care‖).

See id. at 184 (holding that ―safety in the context of the Act has the broadest meaning: ―untouched by danger; not exposed to danger; secure from danger, harm or loss‖ (quotations omitted)).

See TEX. CIV. PRAC. & REM. CODE ANN. § 74.351(b)(1) (the trial court shall enter an order that awards fees and costs). During oral argument, the Hospital withdrew its request for fees on appeal.

FOR FURTHER READING

OUCH! THE EXPANDING DEFINITION OF HEALTH CARE LIABILITY CLAIMS UNDER THE TEXAS MEDICAL LIABILITY ACT AND WHY TEXAS TOOK IT TOO FAR