On pages 62-63 of the May 2020 issue of “D CEO” magazine, you can read a profile of me as the only Tarot-reading lawyer in Dallas–a skill first acquired on trips to New Orleans for appellate business!
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Eight corners, more or less
While Texas continues to strictly follow the “eight corners” rule about insurance coverage, that is a doctrine grounded in contract law. “Given the contractual foundations of the eight-corners rule, we conclude it does not bar courts from considering such extrinsic evidence regarding collusive fraud by the insured in determining the insurer’s duty to defend.” And while undisputed evidence of such fraud could justify an insurer’s denial of coverage without filing a declaratory-judgment action, the potential damages under various statutes “are adequate to ensure that insurers will seek a favorable declaratory judgment before withdrawing a defense in most cases where there is a real controversy regarding the duty to defend.” Loya Ins. Co. v. Hurtado Avalos, No. 18-0837 (May 1, 2019).
Fraud verdict affirmed.
The headline-grabbing aspect of Credit Suisse AG v. Claymore Holdings LLC is its reversal of a large award of rescission damages, but that holding should not obscure its affirmance of a fraudulent-inducement verdict and judgment: “The fact that certain irregularities might have been gleaned from a close examination of the 200-page Appraisal and its supporting documentation does not eviscerate the jury’s finding that Credit Suisse had superior knowledge of the material facts. The central failure of the Appraisal was that it did not provide an independent, objective, as-is fair market value as required by FIRREA. The falsity of Credit Suisse’s misrepresentation to the contrary was not apparent from the document itself. The intentional misstatement of compliance with FIRREA and the attendant overstatement of the fair market value of the collateral was not discoverable to Claymore ‘by the exercise of ordinary intelligence.’ In sum, given the jury finding of its superior knowledge, Credit Suisse cannot rely on the contractual disclaimers to defeat liability for fraudulent inducement.“ No. 18-0403 (April 24, 2020) (citation omitted).
The two-space battle is over.
As reported by The Verge on April 24, Microsoft Word now auto-corrects the use of two spaces after a period at the end of a sentence. The battle, such as it was, should now be considered over. This influential article in Slate explains why the one-spacers – while correct during the era of typewriters, which made every letter and space the same size – have been wrong since the early 1990s and the widespread availability of proportional spacing in modern word processing software.
Finality and/or Finality
The trial court’s judgment concluded: “All relief not granted herein is denied. This is a final judgment.” It later issued a supplemental order confirming that it meant this judgment to be final.
The court of appeals saw things differently: “After examining the record, the court of appeals concluded the November 2016 summary judgment was interlocutory, not final, because claims against Timothy were not properly addressed. The court of appeals therefore dismissed the appeal for want of jurisdiction.” (citations omitted).
The supreme court reversed: “We have previously held that a judgment is final either if “’it actually disposes of every pending claim and party’ or ‘it clearly and unequivocally states that it finally disposes of all claims and all parties.’The court of appeals mistakenly read Lehmann to require record evidence of finality and an unequivocal expression of finality. But this approach ‘would distill Lehmann’s joint tests into a simple rule: when there has not been
a conventional trial on the merits, a court must look to the record to determine whether the
judgment is final. That is not Lehmann’s rule.’” (citations omitted, emphasis in original).
Bella Palma LLC v. Young, No. 19-0204 (April 17, 2020) (per curiam).
Vacation
A case about state education policy became moot after the plaintiff nonsuited (after a favorable court of appeals opinion, and during the course of merits briefing before the supreme court). The Court dismissed the appeal and vacated the court of appeals opinon, nothing the general Texas rules on the subject and observing:
“Vacatur removes the opinion’s binding precedential nature but does not strike it from case reporters or foreclose litigants and courts in future cases from relying on it as persuasive authority. Thus, while we use the term ‘vacated’ to describe the court of appeals’ opinion in this case, the practical effect of today’s action is to remove from the opinion any formal precedential effect. Again, we previously compared the precedential status of a court of appeals opinion after the judgment has been vacated to a case bearing the notation ‘writ dismissed.’ Whatever the precise import of that notation, ‘vacating’ such an opinion simply eliminates any binding precedential effect it may have. This ensures the path is truly clear for relitigation by indicating to lower courts and future panels of the court of appeals that they are under no obligation to follow the opinion in future cases. It does not, however, eliminate altogether ‘the public nature of the court of appeals opinion.'”
Morath v. Lewis, No. 18-0555 (April 17, 2020) (per curiam).
Preservation Pointer
In an insurance-law opinion about the effect of paying an appraisal award, the supreme court offered an instructive example of preservation: “Although Alvarez did not expressly allege a [Texas Prompt Payment of Claims Act] claim in his original petition, he alleged that he was entitled to 18% statutory interest (which reflects the statutory interest rate for violations of the TPPCA) and argued in his no-evidence motion for partial summary judgment that he was entitled to TPPCA damages. State Farm appeared to acknowledge this claim, too, arguing in its own summary-judgment motion that it was not subject to TPPCA damages. So to the extent State Farm suggests Alvarez failed to preserve his TPPCA claim, State Farm is mistaken.” Alvarez v. State Farm Lloyds, No. 18-0127 (April 17, 2020) (per curiam).
Shakeup of Steak & Shake
In B.C. v. Steak & Shake, the supreme court reversed a Dallas case case that declined to consider a late-filed summary judgment submission, holding: “We . . . conclude that the trial court’s recital that it considered the ‘evidence and arguments of counsel,’ without any limitation, is an ‘affirmative indication’ that the trial court considered B.C.’s response and the evidence attached to it. The court of appeals concluded this reference ‘indicates nothing more than the trial court considered [Steak N Shake’s evidence] in conjunction with the traditional motion.’ But a court’s recital that it generally considered ‘evidence’—especially when one party objected to the timeliness of all of the opposing party’s evidence—overcomes the presumption that the court did not consider it.” No. 17-1008 (March 27, 2020) (per curiam).
Did you know this TRAP?
This is a cross-post from 600 Commerce, which follows the Dallas Court of Appeals.
The coronavirus situation has prompted review of once-obscure statutes and rules; among them, Tex. R. App. 17, which addresses where to go if the ordinarily-assigned court of appeals is unavailable. Surprisingly, Rule 17.2 sends the relevant party to the nearest alternative court of appeals, measured by distance from the trial court. For courts in the Dallas district, then, that could be Fort Worth, Waco, Tyler, or Texarkana. (To be clear, THE DALLAS COURT IS AVAILABLE, this post is just a note on a TRAP that has become less obscure in light of current events.)
Eight corners = Eight corners
In Richards v. State Farm Lloyds, the Texas Supreme Court answered a certified question from the Fifth Circuit: “According to one federal district court applying Texas law, the eight-corners rule does not apply unless the policy includes language requiring the insurer to defend ‘all actions against its insured no matter if the allegations of the suit are groundless, false or fraudulent.’ The Fifth Circuit has asked whether the district court’s ‘policy language exception’ to the eight-corners rule is ‘a permissible exception under Texas law.’ As explained below, we answer that it is not.” No. 19-0802 (March 20, 2020).
