Case Updates for April, May, and June 2011

by Lucy Forbes, The Forbes Firm, PLLC, and Jessica Zavadil, Wright & Close, LLP

Does the exclusivity bar of TEX. LAB. CODE ANN. § 408.001 (2006) hinge on whether the employer had provided notice of coverage under TEX. LAB. CODE ANN. § 406.005 (2006)? No.

Warnke v. Nabors Drilling USA, L.P., No. 01-09-00734-CV, 2011 Tex. App. LEXIS 2543 (Tex. App.—Houston [1st Dist.] Apr. 7, 2011, no pet. h.).

Issue Presented: One of the main issues in this case was whether the worker’s negligence claims were barred by the worker’s compensation exclusivity bar even though the employer did not show that it gave such notice to the worker before his injury. The Court found that even though no notice was given, the exclusive remedy provision barred the worker’s negligence claims against the employer for his on-the-job injury.

Relevant Facts: Warnke suffered an on-the-job injury when a pipe connected by a co-worker, Bruce Wilkinson, came free and crushed his hand. Warnke testified that his supervisor told him after his injury that he was not covered by workers’ compensation insurance and that an employee in the human resources department, Brandon Cannady, denied the company’s responsibility for Warnke’s medical expenses. Warnke also alleged that Nabors never provided him written notice of coverage under workers’ compensation insurance before his injury. Eight months after the accident and about three months after filing suit, Warnke began receiving workers’ compensation benefits. He filed suit against Nabors and Wilkinson, asserting claims of negligence, fraud, and negligent misrepresentation. In his original petition, Warnke claimed that he and Wilkinson were both employees of Nabors. He later amended his petition to plead in the alternative that Wilkinson was an independent contractor. Nabors and Wilkinson filed a motion for summary judgment arguing, among other things, that no genuine issue of material fact existed because the Act’s exclusive remedy provision bars Warnke’s recovery. They also asserted that the exclusive remedy provision excluded Warnke’s fraud and negligent misrepresentation claims against all defendants.

Outcome/Holding: The court held that the exclusivity bar of Tex. Lab. Code Ann. § 408.001 (2006) did not hinge on whether the employer had provided notice of coverage under Tex. Lab. Code Ann. § 406.005 (2006). Thus, although Nabors did not show that it gave such notice to the worker before his injury, the exclusive remedy provision barred the worker’s negligence claims against the employer for his on-the-job injury. However, because Wilkinson did not prove conclusively that he was an employee under § 408.001(a), a fact issue existed as to whether the exclusive remedy provision applied to the negligence claim against him. The Court further held that the exclusive remedy provision applied only to work-related injuries, thus, Warnke’s negligent misrepresentation claims against Nabors could go forward.

If consideration is given for a gift from a parent during a marriage, is it separate or community property? Community property. Make sure when your parents give you gift, you don’t agree to give any money for the gift!
Zoller v. Zoller, No. 01-09-00992-CV, 2011 Tex. App. LEXIS 3025 (Tex. App.—Houston [1st Dist.] Apr. 21, 2011, no pet. h.)

Issue Presented: Among other issues in this case, the Court considered whether a car given to the husband from his parents was a gift.

Relevant Facts: The parties’ dispute concerned a 1997 Oldsmobile and a 2001 Mercury Marquis that the husband, Joseph received from his parents. Joseph testified that the Oldsmobile was a gift from his parents. No other evidence regarding the Oldsmobile was offered. Joseph testified at trial that the Mercury "was partially a gift." He explained that he agreed to pay his father $1,000 for the car and one of Joseph's sons agreed to pay another $1,000. Joseph valued the car at $4,500.

Outcome/Holding: The court held that the trial court erred in characterizing as separate property under Tex. Const. art. XVI, § 15 and Tex. Fam. Code Ann. § 3.001(1) (2006) the car for which the husband paid because it did not qualify as a gift and thus was community property pursuant to Tex. Fam. Code Ann. §§ 3.002, 3.003(a) (2006). A gift is a “voluntary transfer of property to another made gratuitously and without consideration.” To establish the existence of a gift, the party must prove three elements: (1) intent to make a gift; (2) delivery of the property; and (3) acceptance of the property. The very fact that Joseph's father agreed to and received consideration in exchange for the Mercury, however, establishes that it was not given as a gift.

Can a judge that does not preside over a trial grant a motion for new trial? Yes.

Hull v. S. Coast Catamarans, L.P., No. 01-10-00724-CV, 2011 Tex. App. LEXIS 3628 (Tex. App.—Houston [1st Dist.] May 12, 2011, no pet. h.)

Issue Presented: In this case, the buyer, Edgar Hull argued that the district court’s order granting a new trial was void because the district judge did not have authority to rule on the motion because she did not preside over the actual trial.

Relevant facts: Hull purchased a boat from South Coast. After the purchase, Hull hired a surveyor to inspect the boat and the surveyor concluded that the boat’s poor structural integrity precluded its safe use. Hull demanded a full refund plus other coasts he had incurred in relation to the boat. Hull then sued South Coast, and others for fraud, negligent misrepresentation, breach of contract, negligence and breach of warranty. The district judge conducted numerous hearings on discovery and other pretrial matters. However, a visiting judge presided over the actual trial in the case. The jury returned a unanimous verdict in favor of Hull on all of his claims. The district judge received the jury’s verdict and made an entry of judgment. Defendants moved for a new trial on various grounds. The district court granted the new trial, specifying her reasons for granting the motion as the violation of the court’s discovery and docket control order and a juror error.

Outcome/Holding: On appeal, the court found that it was proper under Tex. R. Civ. P. 330(g) for the regular trial judge to rule on the motion for a new trial on the discovery issue about which she had heard argument and evidence.

Does a trial court abuse its discretion in denying a motion to file late summary-judgment response without a showing of undue prejudice? Yes.

Williams v. Fort Bend Indep. Sch. Dist., No. 01-10-00611-CV, 2011 Tex. App. LEXIS 4778 (Tex. App.—Houston [1st Dist.] June 23, 2011, no pet. h.)

Issue Presented: In this case, the court considered whether a trial court abused its discretion in denying Williams’s motion for leave to file a late response.

Relevant Facts: Williams appealed the trial court's rendition of summary judgment in favor of Fort Bend Independent School District. Williams filed suit alleging racial discrimination in violation of the Texas Commission on Human Rights Act. The District filed a combined traditional and no-evidence motion for summary judgment. Williams did not file a response. After denying Williams's motion for leave to file a late response and to continue the summary judgment hearing for one week, the trial court granted the District's motion. On appeal, Williams argued that the trial court abused its discretion by denying her motion for leave to file a late response and to continue the hearing by seven days and that summary judgment was improper because the summary judgment evidence raises fact issues on her claims.

Outcome/Holding: A late summary judgment response should be allowed upon a showing of good cause and no undue prejudice to the opposing party. "Good cause" means the failure to timely file a summary judgment response was due to an accident or mistake and was not intentional or the result of conscious indifference. Under the good cause standard applicable to these types of cases, “[e]ven a slight excuse will suffice, especially when delay or prejudice to the opposing party will not result.” Williams's counsel explained that she miscalendared the date that the response was due. The District counters that a "bare assertion" that an attorney miscalendared the response date is insufficient to show good cause. Williams's counsel explained that when she received the motion on June 2, she miscalendared the response date and immediately drafted and sent a letter to her client, Williams, which contained the erroneous response date. The Court held that this was good cause. Williams asked for the deadline to file a response to be moved to Monday, June 21 and the hearing to be postponed for one week until June 25. Williams's counsel explained that no trial setting existed and, therefore, a one week delay would not prejudice the District. The District did not argue or produce evidence before the trial court and does not argue on appeal that it would suffer undue prejudice from a one week delay—either by a delay in the trial or being hampered in its ability to prepare for trial. The Court held that the District would not be harmed by a one week delay and the trial court abused its discretion in denying Williams's motion to file a late summary judgment response.

You can’t get summary judgment on a ground you didn’t raise in your motion

PAS, Inc. v. Engel, No. 14-10-00813-CV, 2011 Tex. App. LEXIS 4851 (Tex. App.—Houston [14th Dist.] June 28, 2011, no pet. h.).

In this case, the Fourteenth Court of Appeals held it was error for the trial court to grant summary judgment on a claim that was properly pleaded, but that was not addressed as a ground in the Summary Judgment Motion, and that the limited “common ground” exception did not apply.

Cory Engel worked for Matrikon, which was a competitor of a company (PAS) that provided consulting services to process and power companies. Engel later worked for PAS and signed two employment agreements with PAS containing non-compete clauses and provisions addressing confidential and trade-secret information belonging to PAS. Engel resigned nine days after signing the second agreement and incorporated Caputech, which entered into an “Exclusive Reseller Partner Agreement” with Matrikon under which Caputech agreed to sell Matrikon products and services.

PAS sued Engel and Caputech, alleging theories of breach of and intentional interference with the employment agreement, theft of trade secrets, fraud, and civil conspiracy. PAS amended its pleadings so that, at the time of summary judgment, it had also asserted a claim breach of fiduciary duty.

Engel and Caputech filed a First Amended Traditional and No-Evidence Motions for Summary Judgment (the Summary Judgment Motion). The Summary Judgment Motion did not seek summary judgment on PAS’s breach of fiduciary duty claim. The trial court granted summary judgment on all of PAS’s claims.

On appeal to the Fourteenth Court of Appeals, PAS asserted that the trial court erred in granting summary judgment on its breach of fiduciary duty claim because that claim was not a ground addressed by the Summary Judgment Motion.

It was undisputed that the Summary Judgment Motion did not address the breach of fiduciary duty cause of action. The Court thus held it was error for the trial court to grant summary judgment on a claim that was not addressed by the Summary Judgment Motion. The Court noted that while the Engel and Caputech arguably asserted a challenge to that claim in their reply, a movant may not use its reply to amend its motion for summary judgment or to raise new and independent summary judgment grounds.

Engel and Caputech asserted limited exceptions to the general rule that a trial court may not properly grant summary judgment on claims not addressed in the motion for summary judgment. They argued that the appellate court should affirm the summary judgment on the breach of fiduciary cause of action because: (1) under a “common ground” analysis, the breach of fiduciary duty claim fails for the same reason as the fraud claim; (2) the breach of fiduciary duty claim was tried by consent; and (3) PAS waived its right to complain of the trial court’s error.
The Court disagreed with the “common ground” argument because even though the at-will employment precluded PAS from establishing justifiable reliance for purposes of its fraud claim, it did not bar its breach of fiduciary duty claim.

The Court disagreed with the “trial by consent” argument because even assuming that trial by consent could apply under these facts, PAS had listed the breach of fiduciary duty claim in its pleadings and that it was not clear that the breach of fiduciary duty claim was fully discussed and tried by the parties.

Finally, the Court disagreed with the waiver argument, holding that PAS was not required to file a motion for new trial to preserve error when a trial court improperly grants summary judgment.