June 2009 Cases Impacting Houston Appellate Lawyers

HBA Appellate Practice Section

July 16, 2009

SELECTED CASE SUMMARIES

June 18, 2009 - July 16, 2009


Presented by:

Jenny Kingaard

Baker Botts L.L.P.

jennifer.kingaard@bakerbotts.com

SUPREME COURT OF TEXAS

In re Columbia Med. Ctr. of Las Colinas, No. 06-0416 (July 3, 2009) (Johnson, J.) (O’Neill, J., dissenting)

Significance: Protecting the right to jury trial is an exceptional circumstance that justifies mandamus relief whenever either a trial court or an appellate court sets aside a jury verdict without specifically setting forth its reasons for doing so.

Holding: A trial court must specify its reasons for setting aside a jury verdict “in the interest of justice, and the Court directed the trial court to do so. It refused to direct the trial court to set aside its order and enter judgment on the verdict. Justice O’Neill, joined by Chief Justice Jefferson and Justices Medina and Green, dissented, arguing that the Court should not overturn its own precedent that a trial court has discretion to order a new trial “in the interests of justice and fairness” because (1) this will cause appellate intervention and delay and (2) statutory or procedural rules—not the Court—should determine the standards for when a trial court may grant a new trial.

Facts: A jury unanimously ruled against Creech’s claims against Columbia for her husband’s death. On Creech’s motion, the trial court granted a new trial “in the interests of justice and fairness[.]”Columbia petitioned the Supreme Court for a writ of mandamus, arguing that the trial court abused its discretion by granting the partial new trial, not specifying its grounds for doing so other than “in the interests of justice and fairness,” and not entering judgment on the verdict.


In re Morgan Stanley & Co., No. 07-0665 (July 3, 2009) (Medina, J.) (Brister and Willett, JJ., concurring) (Hecht, J., dissenting).

Significance: A party’s capacity to enter into an arbitration agreement is a gateway matter concerning the existence of an agreement that must be decided by the court, not an arbitrator.

Holding: Formation-of-contract issues—such as whether a party to a contract had the mental capacity to enter a contract—must be determined by the court. On a federal question of first impression, the Supreme Court held that the trial court did not abuse its discretion in declining to send the issue capacity to the arbitrator. Justice Brister concurred, but argued that the guardian could not sue Morgan Stanley under the agreements and simultaneously dispute Helen’s capacity to assent to arbitration. Justice Willett concurred, but found the majority’s exhaustive review of case law on the point unnecessary, as the Federal Arbitration Act clearly and decisively settles the issue. Justice Hecht dissented, arguing that since mental incapacity precludes the enforcement—but not the formation—of a contract, the issue is severable and should be decided by an arbitrator.

Facts: Taylor had transferred several securities accounts to Morgan Stanley under agreements that each contained an arbitration clause. She had also signed a durable power of attorney in favor of her granddaughter and a trust agreement naming that granddaughter as trustee. A Dallas probate court appointed a different guardian, who sued the granddaughter and Morgan Stanley for fiduciary breaches and theft. When Morgan Stanley moved to compel arbitration, the guardian asserted that Taylor had lacked the requisite mental capacity to consent to the arbitration agreements.


FIRST COURT OF APPEALS

Fogal v. Stature Construction, Inc., No. 01-07-00456-CV (June 18, 2009) (Alcala, J.).

Significance: A nonsignatory to an arbitration agreement may compel arbitration when the nonsignatory is bound to the contract under principles of contract law and agency.

Holding: A nonsignatory homebuilder was entitled to compel arbitration because it was doing business as the entity named in the contract, notwithstanding the fact that it had not filed an assumed name certificate. Under Business & Commerce Code § 36.25, failure to register an assumed name does not impair the validity of a contract, including a contract requiring arbitration.

Facts: The Fogals bought a house from Tremont Homes by entering into an earnest money contract that contained an arbitration agreement. After they moved into the house, they asked Stature, the homebuilder, to repair the house’s defective roof. Stature declined, and the leak eventually caused mold to grow in the home. The Fogals sued, arguing that Stature could not enforce an arbitration agreement to which it was not a party. Stature furnished evidence that it did business under the name “Tremont Custom Homes,” that “Tremont Homes” was a typographical error, and that it—Stature—was the party that actually sold the house to the Fogals. The judge compelled arbitration. On Stature’s motion, the trial court confirmed an arbitration award for the Fogals, who reurged their objections to the arbitration.


FOURTEENTH COURT OF APPEALS

Lowe’s Home Centers, Inc. v. GSW Marketing, Inc., No. 14-07-00953-CV (June 30, 2009) (Guzman, J.).

Significance: Parties that build or maintain a display to which an object is attached have a duty to ensure safe attachment, but they do not have a duty to ensure correct assembly of the object when they have no control over or knowledge of faulty assembly of the object.

Holding: Neither the company that built the display on which a toilet originally had been mounted nor the company that maintained the display from which the toilet tank fell had a duty to discover that the toilet itself was incorrectly assembled. The court held that the display builder neither controlled the unidentified assembler of the toilet nor created a dangerous condition by mounting the toilet at an angle. Additionally, the court held that although the maintainer was responsible for ensuring safe installation of the toilet and safe maintenance of the display, it did not have a duty to inspect the toilet for correct assembly.

Facts: An improperly assembled toilet tank separated from an overhead display and hit Tanner, a Lowe’s employee, who sued Snow Mountain Construction, Salesmakers (now called GSW), and others. Lowe’s had hired Snow Mountain to construct the display, and Salesmakers was responsible for maintaining the display. The trial court entered summary judgment for the defendants on Tanner’s negligent activity and premises liability claims.