Saturday, July 26, 2008

Privilege claim lost by filing document at issue unsealed

On the second try for appellate court mandamus, the Fourteenth Court of Appeals rules that litigant who invoked privilege waived the claim of privilege by filing unsealed copies of the consulting expert's report she wanted protected. The Court concludes that voluntary and intentional disclosure of the document at issue defeats the privilege, and denies the petition for mandamus relief.

In re Heide Ortuno
(Tex.App.- Houston [14th Dist.] July 24, 2008)(orig. proc.)(mem. op.)
(discovery mandamus re: consulting expert privilege claim denied)

FROM THE OPINION:

A party waives a privilege if it voluntarily discloses the privileged information to an open court. See Stroud Oil Props., Inc. v. Henderson, No. 02-03-00003-CV, 2003 WL 21404820, at *3 (Tex. App.- Fort Worth June 19, 2003, pet. denied) (mem. op.). Likewise, the voluntary submission of unsealed materials in an appellate record waives any asserted privileges as to those materials:

Some of the evidence . . . was included in the appellate record in this cause. These documents were made part of the record on December 28, 2004. They were included in the appellate record after [Appellee] asserted its claims of privilege. Nothing in this court's file evidences any attempt by [Appellee] to recall these documents as privileged. Therefore, for the present litigation, we conclude that [Appellee's] prior assertion of privilege as to these documents has been waived. Yorkshire Ins. Co., ___ S.W.3d ___, 2007 WL 1771614, at *14 (citation omitted). Because Yorkshire presented as a regular appeal, the responsibility for preparing, certifying, and timely filing the record therein lay with the trial court personnel. See Tex. R. App. P. 35.3. By contrast, in a mandamus proceeding, the relator - here, Ortuno - prepares and files the mandamus record. See Tex. R. App. P. 52.7(a). This obligation does not relieve her of the duty to properly preserve an asserted privilege, as through, for example, the submission of a sealed mandamus record. See, e.g., In re Jeffcoat, No. 01-04-00430-CV, 2005 WL 428213, at *1 (Tex. App.- Houston [1st Dist.] Feb. 24, 2005, orig. proceeding [mand. denied]) (mem. op.).

Ortuno has voluntarily filed unsealed copies of the Caudle report on at least two occasions. We conclude that she has not carried her burden of demonstrating that she did not waive the consulting-expert privilege. See Giffin, 688 S.W.2d at 114; Stroud Oil Props., Inc., 2003 WL 21404820, at *3; Yorkshire Ins. Co., ___ S.W.3d ___, 2007 WL 1771614, at *14.

We therefore do not find that the trial court abused its discretion in denying Ortuno's motion for protection. Because of our resolution here, we need not address the trial court's other stated grounds for denying Ortuno's requested relief.

Accordingly, we deny the petition for writ of mandamus.

In re Heide Ortuno (Tex.App.- Houston [14th Dist.] July 24, 2008)(Brown) (discovery mandamus denied, order of protection, privilege claim waived by voluntary disclosure)
Opinion by Justice Jeff Brown
Panel: Before Justices Brock Yates, Guzman and Brown
Appeals Court case number: 14-08-00457-CV
Full case style: In Re: Heide Ortuno, Individually and as next friend of J.O. a minor child
Appeal from 215th District Court of Harris County
Trial Court Judge: Levi James Benton

Friday, July 25, 2008

Post-Divorce Partition Suit: Ex who returned to family court for an encore gets burnt

Court of Appeals affirms sanctions and judgment for attorney's fees in ex-wife's unwarranted attempt to relitigate property issues via post-divorce partition suit. Wife failed to engage in discovery to marshal evidence that allegations about concealed undivided marital property were not baseless. Both the trial court judge, and a majority of the appellate panel were women judges, but that did not get the unhappy divorcee greater sympathy. Although she filed nonsuit at the last minute, family court judge dismissed her claims with prejudice to prevent her from coming back with a new action later. Appellate panel approves the unusual ruling as an appropriate sanction under the circumstance.

Messina v. Messina (Tex.App- Houston [1st Dist.] July 24, 2008)(Bland)(divorce post-judgment proceeding to divide undisclosed assets, MSA, mediated settlement agreement, Rule 13 sanctions, dismissal with prejudice following nonsuit)

FROM THE OPINION

Dismissal with Prejudice

Susan contends that the trial court abused its discretion in: (1) granting Louis’s motion to dismiss with prejudice after granting her nonsuit and (2) imposing any sanctions against her, including the dismissal of her suit.

Sanctions Following Nonsuit

Susan contends that the trial court could not dismiss her case with prejudice after granting her motion for nonsuit. We disagree. “[A] plaintiff’s right to take a nonsuit is unqualified and absolute as long as the defendant has not made a claim for affirmative relief.” BHP Petroleum Co. v. Millard, 800 S.W.2d 838, 840 (Tex. 1990). “The nonsuit extinguishes a case or controversy from ‘the moment the motion is filed’ or an oral motion is made in open court; the only requirement is ‘the mere filing of the motion with the clerk of the court.’” Univ. of Tex. Med. Branch at Galveston v. Estate of Blackmon ex rel. Shultz, 195 S.W.3d 98, 100 (Tex. 2006) (quoting Shadowbrook Apts. v. Abu-Ahmad, 783 S.W.2d 210, 211 (Tex. 1990)). A nonsuit does not, however, affect the trial court’s authority to act on a motion for sanctions pending at the time of dismissal. Tex. R. Civ. P. 162. Louis moved to dismiss Susan’s suit and sought sanctions in October 2006, three months before Susan moved for nonsuit. The motion for sanctions was therefore pending at the time of nonsuit, and thus, the trial court had jurisdiction to hear Louis’s motion for sanctions. Dismissal with prejudice, rather than without prejudice, is one form of sanctions because it precludes any hearing of the claims on the merits. See Lentworth v. Trahan, 981 S.W.2d 720, 722 (Tex. App.—Houston [1st Dist.] 1998, no pet.). We overrule Susan’s first issue.

Dismissal with Prejudice as a Sanction

Susan next contends that the trial court abused its discretion in dismissing her case with prejudice and awarding Louis attorney’s fees because: (1) the trial court failed to specify the reasons for its dismissal order, and (2) she presented sufficient evidence to overcome a finding that her claims were groundless. We note that Susan does not contend that the trial court failed to consider lesser sanctions before dismissing the case with prejudice. See TransAmerican Natural Gas Corp. v. Powell, 811 S.W.2d 913, 917 (Tex. 1991) (reasoning that because sanctions imposed for discovery should be no more severe than necessary, courts must consider lesser sanctions and whether such lesser sanctions would fully promote compliance).

Standard of Review

A trial court’s ruling on a motion for sanctions is reviewed under an abuse of discretion standard. Cire v. Cummings, 134 S.W.3d 835, 838 (Tex. 2004). The test for an abuse of discretion is not whether, in the opinion of the reviewing court, the facts present an appropriate case for the trial court’s action, but “whether the court acted without reference to any guiding rules and principles.” Id. at 839 (quoting Downer v. Aquamarine Operators, Inc., 701 S.W.2d 238, 241 (Tex. 1985)). The trial court’s ruling “should be reversed only if it was arbitrary or unreasonable.” Id., 134 S.W.3d at 839. In reviewing sanction orders, we independently review the entire record to determine whether the trial court abused its discretion. Am. Flood Research, Inc. v. Jones, 192 S.W.3d 581, 583 (Tex. 2006).

Texas Rule of Civil Procedure 13

Rule 13 of the Texas Rules of Civil Procedure provides for sanctions if a party files a groundless pleading brought in bad faith or for harassment. Tex. R. Civ. P. 13. If a pleading is filed in violation of Rule 13, “the court, upon motion or upon its own initiative, after notice and hearing, shall impose an appropriate sanction available under Rule 215.2(b), upon the person who signed it, a represented party, or both.” Id. No sanction under Rule 13 may be imposed “except for good cause, the particulars of which must be stated in the sanction order.” Id. “A trial court’s failure to specify the good cause for sanctions in a sanction order may be an abuse of discretion.” Gaspard v. Beadle, 36 S.W.3d 229, 239 (Tex. App.—Houston [1st Dist.] 2001, pet. denied).

Particularity Requirement

Susan first contends that the trial court erred in failing to state with particularity what acts or omissions justified the Rule 13 sanctions order. Susan failed to preserve this issue for our review. She did not object to the form of the trial court’s judgment, she failed to file a request for traditional findings of fact and conclusions of law, and she failed to draw the court’s attention to the need for particularized findings under Rule 13. See Parker v. Walton, 233 S.W.3d 535, 541 n.7 (Tex. App.—Houston [14th Dist.] 2007, no pet.) (holding that appellant failed to preserve for appellate review its claim that trial court’s judgment nunc pro tunc imposing sanctions for groundless or bad faith claims did not comply with rule governing such sanctions, where appellant failed to raise such objection to the trial court); see also Olibas v. Gomez, 242 S.W.3d 527, 532 (Tex. App.—El Paso 2007, pet. denied) (noting that complaint regarding a trial court’s compliance with Rule 13, regarding sanctions for frivolous pleadings, may be waived if the error is not preserved by objection or a request that the particular grounds for awarding sanctions be set out by the court); Spiller v. Spiller, 21 S.W.3d 451, 456 (Tex. App.—San Antonio 2000, no pet.) (concluding that trial court’s failure to include required findings in order imposing sanctions against plaintiff was not basis for reversal of order, where plaintiff did not call failure to trial court’s attention); Schexnider v. Scott & White Mem’l Hosp., 953 S.W.2d 439, 441 (Tex. App.—Austin 1997, no pet.) (holding that sanctioned attorney did not preserve for review contention that sanction order under Rule 13 was erroneous due to trial court’s failure to state particulars upon which trial court’s conclusions of law, where attorney failed to bring error to attention of trial court); cf. Barkhausen v. Craycom, Inc., 178 S.W.3d 413, 421 n.6 (Tex. App.—Houston [1st Dist.] 2005, pet. denied) (noting that appellant alerted trial court that sanctions order failed to meet particularity requirement). We therefore overrule Susan’s first issue.

Groundless

Susan next contends that the trial court erred in determining her suit was groundless because she presented sufficient evidence to support her claim. For the purposes of Rule 13, “groundless” means “no basis in law or fact and not warranted by good faith argument for the extension, modification, or reversal of existing law.” Tex. R. Civ. P. 13. “When determining whether Rule 13 sanctions are proper, the trial court must examine the circumstances existing at the time the litigant filed the pleading.” State v. PR Invs. & Specialty Retailers, Inc., 180 S.W.3d 654, 670 (Tex. App.—Houston [14th Dist.] 2005, pet. granted), aff’d, 251 S.W.3d 472 (Tex. 2008). “Rule 13 requires the trial court to base sanctions on the acts or omissions of the party or counsel.” Id. It also requires the trial court to hold an evidentiary hearing to make the necessary factual determinations about the motives and credibility of the person signing the allegedly groundless petition. Barkhausen, 178 S.W.3d at 421 (quoting McCain v. NME Hosps., Inc., 856 S.W.2d 751, 757 (Tex. App.—Dallas 1993, no writ)). “In evaluating an allegation of a Rule 13 violation, ‘[c]ourts shall presume that pleadings, motions, and other papers are filed in good faith.’” Id. (quoting Tex. R. Civ. P. 13).

Susan alleges that certain community assets were not partitioned when she and Louis divorced. Susan first claims that Louis actually received either more Pace stock or more money from the sale of the stock than was reflected in the AID and/or the MSA. The record does not support this contention. The sale of Pace stock occurred in February 1998, over a year before the parties divorced. The MSA and AID divided the remaining 89,128 shares of stock as: 11,074 shares to Susan for transfer into a trust for the children, 11,074 shares to Louis for transfer into a trust for the children, and the remaining 66,980 to Louis. The record does not contain any evidence that Louis owned more Pace stock than was divided by the AID, and Susan did not produce any evidence despite requests for production from Louis.

Susan further contends that she has a community property interest in a ranch in New Ulm. Louis made the initial option payments on the New Ulm property on July 20, 1999, six days prior to the final divorce decree. The payment was for more than 75 unimproved acres of land. Louis attached evidence to his answer that showed that he made the initial payments for the land from an account partitioned to him as his separate property in the MSA. Louis later purchased a 44-acre adjoining tract in 2003, and then developed the property. He sold the property in 2005 for $1.2 million.

Susan asserts that because Louis purchased the property before the AID was final, she would have been liable for the community debt and therefore, has a community interest in the property. The MSA, however, precludes such a result. The MSA took effect on May 24, 1999 and stated that it “shall be effective immediately . . . and shall serve as a partition of all property set forth herein to the person to whom such property is awarded.” The Texas Family Code provides: “At any time, the spouses may partition or exchange between themselves all or part of their community property, then existing or to be acquired, as the spouses may desire. Property or a property interest transferred to a spouse by a partition or exchange agreement becomes that spouse’s separate property.” Tex. Fam. Code Ann. § 4.102 (Vernon 2006).

Since the parties agreed to partition their community property, the bank account became Louis’s separate property on May 24 pursuant to its MSA listing, before Louis’s initial option payments. In addition, the MSA states that Louis agrees to pay “[a]ll debts incurred solely by Louis Anthony Messina not mentioned elsewhere herein,” and holds Susan harmless from any failure to so discharge such debts and obligations. Because Louis signed the loan agreement alone, and the loan was not mentioned in the MSA, Louis was solely responsible for the debt. Louis presented clear and convincing evidence that the New Ulm ranch was purchased as his separate property, and Susan does not offer evidence to the contrary. See id. § 3.003.

In addition to failing to produce any evidence in support of her claims, Susan also failed to conduct discovery despite court leave to do so. In October 2006, the court warned Susan that “if intuition is it, sanctions will be granted because it’s taking up the court’s time.” Despite this warning, the only discovery Susan had pursued by January 2007 was a subpoena of Louis’s bank records for the previous twenty years. She had still not deposed the witnesses that she stated were necessary to her case.
Susan had opportunities to set forth the factual and legal basis for the lawsuit but failed to do so. Susan’s failure to avail herself of the discovery process, coupled with the lack of any affirmative showing that her claims have merit, warrant the presumption that her claims have no merit. See Ins. Corp. of Ir., Ltd. v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 705–06, 102 S. Ct. 2099, 2105–06 (1982) (discussing presumption that refusal to produce evidence material to administration of due process was admission of lack of merit of asserted defense). We thus hold that the trial court did not abuse its discretion in dismissing Susan’s suit with prejudice under Rule 13.

Attorney’s Fees

Susan further contends that the trial court abused its discretion in awarding Louis attorney’s fees. The trial court, however, had statutory authority to award fees independent of Susan’s sanctionable conduct. The Texas Family Code provides: “In a proceeding to divide property previously undivided in a decree of divorce or annulment as provided by this subchapter, the court may award reasonable attorney’s fees as costs.” Tex. Fam. Code Ann. § 9.205 (Vernon 2006). Given that Susan did not prevail on her claim, the trial court properly exercised its discretion to award fees to Louis. Louis’s counsel testified to their fees and submitted billing invoices. Furthermore, Susan’s own attorney testified that he believed that Louis had a right to attorney’s fees. The trial court did not abuse its discretion in awarding Louis attorney’s fees.

AFFIRM TC JUDGMENT: Opinion by Justice Jane Nenninger Bland
Panel composition: Chief Justice Radack, Justices Jennings and Bland
Appellate cause number:
01-07-00277-CV
Full case style: Susan Gail Messina v. Louis Anthony Messina
Appeal from 308th District Court of Harris County
Trial Court
Judge: Hon. Georgia Dempster
Linke:
Divorce property division cases Other family law cases

Thursday, July 24, 2008

Misrepresentation claim fails - No evidence of detrimental reliance offered

In this suit by a student alleging the school misrepresented graduation requirements for a chiropractor degree, the Fourteenth Court of Appeals affirms summary judgment for the private college because the plaintiff, who brought DTPA, fraud, and misrepresentation claims after she was denied her degree, failed to show that she relied on the school's alleged mis-representations in her response to defendant's no-evidence motion for summary judgment.

Wood v. Texas Chiropractic College
(Tex.App.- Houston [1st Dist.] July 24, 2008) (Jennings) (suit by student against private educational institution, DTPA claim, misrepresentation, equitable estoppel) (no-evidence summary judgment for defendant affirmed for failure to marshal evidence to support element of reliance)

FROM THE COURT'S OPINION:

Under section 17.50(a) of the DTPA, a consumer may maintain an action where any of the following constitute a producing cause of economic damages or damages for mental anguish: (1) the use or employment by any person of a false, misleading, or deceptive act or practice that is specifically enumerated under section 17.46(b) of the DTPA and is relied on by a consumer to her detriment, (2) breach of an express or implied warranty, (3) any unconscionable action or course of action by any person, or (4) the use or employment by any person of an act or practice in violation of chapter 541 of the Texas Insurance Code. See Tex. Bus. & Com. Code Ann. § 17.50(a) (Vernon Supp. 2007).

In order to prove fraud, a plaintiff must show that (1) the defendant made a material representation that was false, (2) the defendant knew the representation was false or made it recklessly as a positive assertion without any knowledge of its truth, (3) the defendant intended to induce the plaintiff to act upon the representation, and (4) the plaintiff actually and justifiably relied on the representation, which caused the injury. Ernst & Young, L.L.P. v. Pac. Mut. Life Ins. Co., 51 S.W.3d 573, 577 (Tex. 2001).

In order to prove negligent misrepresentation, a plaintiff must show that (1) the defendant made a representation in the course of her business, or in a transaction in which she has a pecuniary interest, (2) the defendant supplied "false information" for the guidance of others in their business, (3) the defendant did not exercise reasonable care or competence in obtaining or communicating the information, and (4) the plaintiff suffered a pecuniary loss by justifiably relying on the representation. Henry Schein, Inc. v. Stromboe, 102 S.W.3d 675, 686 n.24 (Tex. 2002).

The doctrine of equitable estoppel requires (1) a false representation or concealment of material facts, (2) made with knowledge, actual or constructive, of those facts, (3) with the intention that it should be acted on, (4) to a party without knowledge or means of obtaining knowledge of the facts, and (5) who detrimentally relied on the representations. Johnson & Higgins of Tex., Inc. v. Kenneco Energy, Inc., 962 S.W.2d 507, 515-16 (Tex. 1998).

The common element of all of Wood's causes of action is reliance. TCC moved for summary judgment, asserting that there was no evidence of reliance. Neither in the trial court below nor in her briefing to this Court has Wood shown how she relied on any of TCC's alleged misrepresentations that she did not have to take and pass the CSCE as a requirement for graduation. Dr. Conklin's purported statement to her, before she took the CSCE, simply noted that students who had failed the CSCE did eventually graduate. Also, the fact that TCC had approved her application for graduation does not show that Wood did not have to take and pass the CSCE as a requirement for graduation. Moreover, the clinic director's certification that Wood satisfied the internship requirements and the transcript do not show that the CSCE was not a requirement for graduation.

Accordingly, we hold that the trial court did not err in granting TCC's no-evidence summary judgment motion because Wood did not show how she relied on any alleged misrepresentation by TCC.

AFFIRM TC JUDGMENT: Opinion by Justice Terry Jennings
Panel: Before Justices Taft and Jennings, The Honorable Hudson
Appellate case no.: 01-07-00952-CV
Full case style: Kelly Wood v. Texas Chiropractic College
Appeal from 190th District Court of Harris County
Trial Court Judge: Hon. Jennifer Walker Elrod
Disposition: Summary judgment for defendant affirmed

Wednesday, July 23, 2008

No Authority to Prosecute Appeal

Court finds that attorney who filed notice of appeal had no authority to do so. Appeal dismissed for want of jurisdiction.

OPINION EXCERPT

There is a general presumption that an attorney is acting with authority; however, that presumption is rebuttable. Breceda v. Whi, 187 S.W.3d 148, 152 (Tex. App.--El Paso 2006, no pet.); Kelly v. Murphy, 630 S.W.2d 759, 761 (Tex. App.--Houston [1st Dist.] 1982, writ ref'd n.r.e.); see also City of San Antonio v. Aguilar, 670 S.W.2d 681, 684 (Tex. App.--San Antonio 1984, writ dism'd) ("[A]n attorney who has conducted a case in the trial court is presumed to have authority to pursue an appeal, although this presumption can be rebutted.").

Here, appellees have rebutted the presumption that Bonner had authority to represent Pessarra when she filed the notice of appeal by pointing to the trial court's multiple orders, rulings, and conclusions of law that Bonner was limited in her representation to acting through the court-appointed attorney, Greg Donnell.

The trial court's rulings and orders on this issue make it clear that Bonner does not have authority to file documents with the trial court on Pessarra's behalf, and Bonner did not object to those rulings and orders in the trial court. (6) We conclude that Bonner lacked authority to file a notice of appeal on Pessarra's behalf.

Furthermore, Bonner herself does not have standing to appeal any of the orders establishing Pessarra's guardianship. Standing presents a question of law which we review de novo. See Hairgrove v. City of Pasadena, 80 S.W.3d 703, 705 (Tex. App.--Houston [1st Dist.] 2002, pet. denied).

Standing is implicit in the concept of subject matter jurisdiction. Waco Indep. Sch. Dist. v. Gibson, 22 S.W.3d 849, 851 (Tex. 2000). Subject matter jurisdiction is essential to the authority of a court to decide a case. Tex. Ass'n of Bus. v. Tex. Air Control Bd., 852 S.W.2d 440, 443 (Tex. 1993). Standing, as a necessary component of a court's subject matter jurisdiction, is a constitutional prerequisite to maintaining suit. Id. at 444.

The standing requirement under Texas law stems from two limitations on subject matter jurisdiction: the separation of powers doctrine and the open courts provision, "which contemplates access to the courts only for those litigants suffering an injury." Id.

Here, Bonner has not shown that she had authority to represent Pessarra as required to appeal on Pessarra's behalf. Nor has she shown either that herself suffered an injury from the trial court's October 25, 2006 orders appointing Chafin as Pessarra's permanent guardian, creating a management trust for Pessarra's estate, approving the final accounting, or granting attorney's fees and expenses to the other lawyers involved in this case. We hold, therefore, that Bonner lacked standing to bring this appeal. See id.

We dismiss this cause for lack of jurisdiction. Because we conclude that Bonner did not have authority to file this appeal and we do not have jurisdiction to consider it, we do not need to address the nine issues raised in her brief. See Tex. R. App. P. 47.1.

Pessarra v. Seidler (Tex.App.- Houston [1st Dist.] July 17, 2008) (Keyes) (probate court, guardianship proceeding, no authority to file appeal)
Opinion by Justice Evelyn Keyes
Panel members: Chief Justice Radack, Justices Keyes and Higley
Appellate cause number: 01-06-01035-CV
Full case style: Tera Pessara v. Frank Wayne Seidler, Kimberly McMillian, Floyd Christian, Jr., Tera Hollie Stowe and Janet Douvas Chafin
Appeal from Probate Court of Brazoria County
Disposition: Dismiss Appeal