Texas Supreme Court Opinions

Originally published by Rich Phillips.

Posted by Rich Phillips

In its weekly order list issued on April 1, 2016, the Supreme Court of Texas issued opinions in 11 cases and granted two new petitions for review. The Court also issued several per curiam orders to appoint counsel in parental-termination cases.

The Court issued opinions in the following cases:

• No. 14-0193, Caffe Ribs, Inc. v. State — This appeal arises from a condemnation proceeding. The landowner asserted that the trial court erred in excluding evidence about the state’s role in delaying environmental cleanup on the property at issue. During trial, the state argued that the property’s value should be substantially discounted because it would take eight years to clean up environmental contamination. The landowner offered evidence that the cleanup had been delayed by the state’s condemnation, but the trial court did not allow the landowners to present that evidence to the jury. In a unanimous opinion by Justice Devine, the Supreme Court found that the exclusion was an abuse of discretion. The Court reasoned that exclusion of the evidence allowed the state to benefit from diminished value caused by the condemnation, which is not permitted under the project-influence rule. Rather than excluding the evidence, the trial court should have admitted it and instructed the jury about the project-influence rule. The Court therefore reversed the trial court’s judgment and remanded for a new trial.

• No. 14-0379, Campbell v. Wilder — This appeal arose from attempts by the Tarrant County District Clerk to collect court costs from divorce litigants who had filed uncontested affidavits of indigency. Plaintiffs sued the clerk for mandamus, injunctive, and declaratory relief after they received collection notices based on statements in the final judgments that each party would bear his or her own costs of court. The trial court granted the injunction and the clerk appealed. The court of appeals reversed, finding that the plaintiffs had to seek the requested injunctive relief in the courts that signed the judgments at issue. The court also found that injunctive relief was improper because the plaintiffs had an adequate remedy at law. In a unanimous opinion by Chief Justice Hecht, the Supreme Court reversed. The Court reasoned that because Plaintiffs were challenging the clerk’s attempt to collect costs that they did not incur (because the indigency affidavits excused them from paying costs) and they were not challenging the judgments, they were not required to seek relief from the courts that entered the judgments.The Court also held that injunctive relief was proper because (1) the plaintiffs were complaining of a systematic policy that violates the law and (2) a broad injunction was necessary to prevent the evil complained of. 

• No. 14-0459, Houston Belt & Terminal Ry. Co. v. City of Houston — This appeal arose from challenges to the application of the City of Houston’s drainage ordinance. The petitioners (railroad companies that own property within the city) claimed that the city official charged with enforcing the ordinance exceeded his authority in imposing drainage fees on their properties. The City moved to dismiss the claims based on governmental immunity. The railroads argued that they had adequately alleged that the city official acted ultra vires such that governmental immunity did not apply. The court of appeals held that the claims were not ultra-vires claims because the official had some discretion to act. In an opinion by Justice Brown, the Supreme Court held that even where the governmental official has some discretion, it is possible to assert an ultra-vires claim, if the plaintiff pleads that the official acted outside of any discretion granted. Justice Lehrmann filed a concurring opinion in which she noted that there are still open issues about whether all the rules regarding subject-matter jurisdiction apply to assertions of governmental immunity. (In the interest of full disclosure, I represent the petitioners in this case.)

• No. 14-0645, Wasson Interests, Ltd. v. City of Jacksonsville — In this appeal, the Supreme Court resolved a long-running debate in governmental immunity cases. At common-law, political subdivisions of the state (such as counties and cities) were not immune from suit or liability when they were acting in their proprietary, as opposed to their governmental, capacities. That distinction was codified for tort claims in the Texas Tort Claims Act. But whether the distinction applies to other types of claims has been an open issue. The dispute between Wasson Interests and the City of Jacksonville arose from a lease of lakefront property owned by the city. The city asserted that it was protected by governmental immunity. Wasson Interests responded that the lease was in the city’s proprietary capacity and that therefore, immunity did not apply. In an opinion by Justice Brown, the Supreme Court held that the governmental/proprietary distinction applies to breach of contract claims just as it applies to tort claims. 

• No. 14-0747, Hegar v. Texas Small Tobacco Coalition — This case involves a state law imposing a tax on manufacturers of tobacco products who did not join the settlement of a lawsuit between the State of Texas and several of the largest tobacco companies over smoking-related Medicaid costs. The settlement agreement requires the tobacco companies to make annual payments to the State in perpetuity to fund health benefits program expenditures. The state law at issue was designed to recover the State’s health care costs that escaped the prior settlement, and target companies who were able to sell tobacco products at a lower cost than their competitors who had to make these annual payments. The non-settling manufacturers, represented by the Texas Small Tobacco Coalition, sued, alleging that the tax violates the Equal and Uniform Clause of the Texas Constitution. In a unanimous opinion by Justice Willett, the Supreme Court ruled that the tax was constitutionally permissible, reversing the court of appeals’ decision to affirm summary judgment in favor of the Coalition. The Court rejected the court of appeals’ reasoning that rational basis review of a taxation scheme must focus on the product taxed, not the entity taxed, because the Court’s precedent makes clear that the nature of the taxpayer is at the heart of an Equal and Uniform analysis, and that the Legislature has “full discretion” in determining how to structure tax classifications. Having noted these two principles, the Court had “little trouble finding that this taxation scheme does not violate the Equal and Uniform Clause.”

• No. 14-0903, Clint Indep. Sch. Dist. v. Marquez — In this school finance lawsuit, a number of parents allege that their school district, which covers multiple towns, unconstitutionally distributes its funds among the schools within the district. In a unanimous opinion by Justice Boyd, the Supreme Court declined to address the merits of the claims, because the parents were required to exhaust their administrative remedies before filing suit, and they had failed to do so. The parents argued that their complaints solely asserted violations of their children’s constitutional rights, rather than violations of school laws or rules which they admit would require administrative exhaustion. The Supreme Court, however, looked past the artfully pleaded nature of the parents’ complaints and held that the nature of the claims was that the district violated or disregarded statutory standards, which it held were school laws or rules within the jurisdiction of the Commissioner of Education. 

• No. 14-0964, Lira v. Greater Houston German Shepherd Dog Rescue, Inc. — Two siblings owned a prized German Shepherd named Monte, on whom they had spent over $10,000. Monte ran away through an open garage door, and the siblings  searched high and low for their pet. The City of Houston animal control department found Monte—who was not wearing tags at the time—and scheduled him to be euthanized. The Greater Houston German Shepherd Dog Rescue saved Monte, and he was fostered with a volunteer. Two days after Monte was sent to a foster home, the Liras discovered, through a lost and found website, that Monte had been sent to a foster home. They contacted the foster volunteer that day, but she—and Greater Houston German Shepherd Dog Rescue—refused to return the dog. The Liras sued, seeking declaratory judgment that they are Monte’s owners and an injunction ordering his return, and the trial court sided with the Liras. The court of appeals ruled that the Liras had lost their right to recover possession of Monte because they abandoned him. In a per curiam opinion, the Supreme Court held that no common-law authority divests a dog’s owners of their property rights because the dog is lost for a few days, and also that the Houston ordinance permitting the impounding of stray dogs does not divest a dog’s owner of their property rights. Accordingly, the Court reversed the court of appeals and reinstated the trial court’s order that Monte be returned to his rightful owners. 

• No. 14-1006, In re Bent — This case is the next in a series of decisions by the Supreme Court regarding mandamus review of new-trial orders issued by trial courts. As presented by the relators, the issue is whether the court of appeals went too far in reviewing (and reversing) the trial court’s decision to grant a new trial based on factual sufficiency. But in a unanimous opinion by Justice Brown,  the Supreme Court did not reach that issue because it found that most of the trial court’s reasons for granting a new trial did not satisfy the requirement to state a facially valid basis. And on the one ground that was facially valid, there was no evidence in the record to support it. The Court also emphasized that it does not intend merits review of new-trial orders to be conducted under any standard than the familiar abuse-of-discretion standard that applies to mandamus proceedings.

• No. 15-0100, McLean v. Livingston — This case involves the filings required by Civil Practice and Remedies Code Chapter 14 when a state prison inmate brings any action, including an appeal, in which an affidavit of inability to pay costs is filed. Chapter 14 requires that a separate affidavit or declaration and a certified copy of the inmate’s trust account statement for the last six months be filed with each action or appeal. At issue in this case is whether an inmate who fails to comply with Chapter 14 when filing an appeal must be given an opportunity to cure his defect before the court of appeals can dismiss his case. In a per curiam opinion, the Supreme Court held that an inmate must be afforded the opportunity to amend his appellate filings to cure Chapter 14 filing defects prior to dismissal of the appeal, because the Rules of Appellate Procedure mandate that a court of appeals must not dismiss an appeal for formal defects or irregularities without allowing a reasonable time to correct or amend. 

• No. 15-0184, Ex parte N.C. — This case also involves a state-prison inmate who failed to comply with two filing provisions of Chapter 14 of the Texas Civil Practice and Remedies Code when he appealed the denial of a petition to expunge criminal records. The Tenth Court of Appeals dismissed his action without giving him notice or an opportunity to cure his filing defects. Upon a motion for rehearing, the Court of Appeals issued a series of instructions to the prisoner, all of which he complied with, yet the court of appeals denied his motion anyway. In a per curiam opinion and in reliance on its companion opinion in McLean v. Livingston, the Court granted N.C.’s petition for review, and reversed the court of appeals without hearing oral argument. 

• No. 15-0489, Janvey v. The Golf Channel — The primary issue in this certified question from the Fifth Circuit, which arises from the Stanford fraud litigation, was the meaning of “reasonably equivalent value” as used in the Texas Uniform Fraudulent Transfer Act (“TUFTA”). An affirmative defense to a fraudulent transfer action is that the transferee took the asset from the transferor in good faith and for a reasonably equivalent value.  In this case, Stanford International Bank Limited (“Stanford”), through which R. Allen Stanford perpetuated his now-infamous Ponzi scheme, paid $5.9 million to the Golf Channel to provide media-advertising services to augment Stanford’s sponsorship of a PGA tour event covered by the Golf Channel. In a unanimous opinion by Justice Guzman, the Supreme Court rejected the Receiver’s argument that there is no “value” unless the transaction results in the transferor’s estate holding a tangible asset on which creditors can levy execution. The Supreme Court held that “reasonably equivalent value” can be satisfied with evidence that the transferee fully performed under an arms-length contract for fair market value, provided consideration that had objective value at the time of the transaction, and made the exchange in the ordinary course of its business. (In the interest of full disclosure, Thompson & Knight represents Mr. Janvey in his capacity as the court-appointed receiver for the Stanford entities. We are not involved in this case.)

The Court granted the petitions for review in the following two cases (which will likely be argued early in the Court’s fall argument schedule):

• No. 15-0197, UDR Texas Props., L.P. v. Petrie — This petition for review arises from a suit by a crime victim against the owner of the property where the crime occurred. This primary issues are (1) whether under Timberwalk Apartments, Partners, Inc. v. Cain, 972 S.W.2d 749 (Tex. 1998), the question of whether risk of the crime was unreasonable should be evaluated independently or in conjunction with the foreseeability requirement; and (2) whether the crime at issue was foreseeable. The date for argument has not yet been set.

• No. 15-0225, Denbury Green Pipeline-Texas, LLC v. Texas Rice Land Partners, Ltd. — This is the second time that this condemnation dispute is before the Supreme Court. The first time (Texas Rice Land Partners, Ltd. v. Denbury Green Pipeline-Texas, LLC, 363 S.W.3d 192 (Tex. 2012)), the Court held that to condemn property as a common carrier, the condemnor had the burden to establish a reasonable probability that the carbon dioxide pipeline at issue would be used to transport carbon dioxide for customers other than the pipeline owner. On remand, the trial court found that the condemnor carried this burden, but the court of appeals reversed. The primary issues in the Supreme Court are: (1) whether the test for common-carrier status is objective or subjective (i.e. based on the intent of the pipeline’s owner; (2) whether evidence of the reasonable probability is limited to the time the owner planned to build the pipeline or can also include evidence of contracts signed after the pipeline is constructed; and (3) whether public use must be “substantial” for the pipeline to be a common carrier. The date for argument has not yet been set.

Finally, in several per curiam orders, the Supreme Court found that indigent parents in parental-rights termination cases are entitled to appointed counsel for proceedings in the Supreme Court. The primary opinion was issued in No. 15-0171, In the Interest of P.M. The court construed Family Code section 107.013(a), which gives indigent parents the right to appointed counsel in suits in which the government seeks to terminate the parent-child relationship. The Court reasoned that the statutory right to counsel through exhaustion of all appeals includes proceedings in the Supreme Court. The Court directed the trial court to appoint counsel for proceedings in the Supreme Court. The Court issued orders in several other cases based on its per curiam opinion in P.M. directing the trial court to appoint counsel.

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