Case Updates for June, July, and August 2014

TEXAS SUPREME COURT

Burbage v. Burbage, No. 12-0563 (Tex. Aug. 29, 2014)

Casteel error is waived by failure to assert a specific objection.

Chad Burbage was found liable for several million dollars in damages for making defamatory statements about the plaintiff. The trial court determined that ten of the statements at issue were defamatory per se and submitted each statement to the jury to determine whether it was substantially true when made. On damages, the trial court submitted broad-form questions for all ten statements. On appeal, Chad argued Casteel error in the submission of broad-form questions on damages, and the Third Court of Appeals held that Chad waived any error because he did not object specifically to the submission of broad-form damages questions.

In the Supreme Court, Chad argued that he preserved error because he objected to six of the liability questions on grounds of qualified privilege to make the statements. The Court first noted that if some of the liability questions were improperly submitted, the broad-form damages questions commingling valid and invalid bases of liability could constitute harmful error. But before reaching the potential Casteel issue, the Court first examined whether Chad preserved error as to the liability questions through a proper objection.

At trial, Chad’s counsel objected to six of the liability questions based on qualified privilege, but he asserted no objection to the form of the damages question. During the formal charge conference, Chad’s counsel stated that he believed that qualified privilege applied to six of the statements at issue. When asked by the court if he had an instruction to propose, Chad’s lawyer stated vaguely that he would have the jury be asked whether it found the statements to be false at the time they were made.

The Texas Supreme Court held that Chad’s objection was insufficient to apprise the trial court of the alleged error such that the court had an opportunity to correct the problem. When the trial court asked whether Chad had a requested instruction, counsel simply responded with a request that addressed the falsity of the statements. Qualified privilege can still apply even to false statements, so Chad’s requested instruction did nothing to apprise the trial court that he was attempting to raise a qualified privilege issue. Based on the vague instruction requested, the Court held that Chad did not preserve error in the submission of the liability questions. Because the Court could not reach the alleged error in the liability questions, the Court did not reach the potential Casteel issues involved in the damages questions.

King Fisher Marine Service, L.P. v. Jose H. Tamez, No. 13-0103 (Tex. Aug. 29, 2014)

The trial court may refuse to entertain charge objections made prior to the reading of the charge to the jury where the court previously set an earlier deadline for objections if the parties were afforded a reasonable amount of time to make their objections.

Jose H. Tamez, a welder on board a dredging vessel, sued the vessel operator, King Fisher Marine Service, to recover for injuries he sustained while helping two crew members lift a large and heavy socket-wrench assembly.

At an informal charge conference during trial, Tamez's counsel informed the court of a significant point of disagreement over whether the jury should be instructed on the “specific order” doctrine. At the formal charge conference, King Fisher objected to the instruction proposed by Tamez but did not submit an alternate definition. The trial court admonished the parties that any objections had to be made before the end of the formal charge conference. The next day, after the charge conference but before the charge was read to the jury, King Fisher submitted its proposed definition, but the court rejected it as untimely. The jury ultimately rendered a verdict in favor of Tamez, concluding that he had been acting under a specific order. Although the jury found Tamez 50% at fault for his injuries, because of the specific order finding, the trial court did not reduce the award. King Fisher appealed, and the court of appeals affirmed.

In a 5-4 decision, the Texas Supreme Court held that the trial court did not err in refusing to consider King Fisher's proposed definition. Writing for the majority, Justice Brown, joined by Justices Johnson, Willett, Lehrmann and Boyd, held that Tex. R. Civ. P. 272's requirement that objections be asserted before the charge is read to the jury merely sets an "outside limit" on when objections may be allowed. It does not preclude the trial court from setting of an earlier deadline so long as the parties are afforded a reasonable amount of time to object. Here, the record showed that King Fisher was on notice of the specific order issue well in advance of trial, and the trial court had set no limit on the length of the formal charge conference, but had merely required that all objections be made prior to its conclusion. Given that trial courts are traditionally afforded wide latitude in managing their dockets, the majority concluded that the trial court had not abused its discretion in refusing to consider the later proffered definition.

In a dissent joined by Chief Justice Hecht and Justices Green and Devine, Justice Guzman argued that the majority elevated adjudication on procedural technicalities above adjudication on the merits, and that the plain language of Rule 272 permits objections to be made at any point prior to the reading of the charge to the jury.


FIRST COURT OF APPEALS

In re United Services Automobile Association, No. 01-13-00508-CV (Tex. App.—Houston [1st Dist.] Aug. 21, 2014, orig. proceeding)

When the trial court grants a new trial following a verdict for the plaintiff, and its reasons are invalid or unsupported by the evidence, mandamus will issue to require the trial court to enter judgment on the verdict.

Also, when the evidence of damages supports a range, any award within that range will be upheld if a rational basis exists to support the jury’s calculation.

The plaintiffs, Mark and Stacey Bond, sued their homeowners’ insurer, USAA, in connection with damage to their home from Hurricane Ike. After the jury returned a mixed verdict, the trial court granted the plaintiffs’ motion for new trial, citing five separate grounds for its ruling. The defendant filed a petition for writ of mandamus, challenging each of the five grounds.

The reviewability of new trial orders has been in a state of flux since the Supreme Court’s decision in In re Columbia Medical Center, 290 S.W.3d 204 (Tex. 2009). Three years later, the Court decided In re United Scaffolding, Inc., 377 S.W.3d 685 (Tex. 2012), which broadened the scope of review of new trial orders a bit more. Then, in 2013, the Court decided In re Toyota Motor Sales U.S.A., Inc., 407 S.W.3d 746 (Tex. 2013), which opened new trial orders up to merits-based review.

The USAA court provided some clarity regarding the steps a court must take in reviewing new trial orders following the Texas Supreme Court’s trilogy of cases. First, the court considered whether the trial court’s stated bases were specific pursuant to In re Columbia. Second, the court considered whether the trial court’s stated bases were legally appropriate, pursuant to In re United Scaffolding. Finally, the court conducted the equivalent of a legal and factual sufficiency review pursuant to In re Toyota. Upon conducting this analysis, the court found that none of the trial court’s purported grounds for a new trial were adequate, and granted the petition for writ of mandamus.

One of the reasons for the trial judge’s grant of a new trial was that the jury’s damage figure of $150,000 “seem[ed] arbitrary.” The case involved the diminished value of a home. The defendant urged the trial court to disregard the award and award zero damages, while the plaintiff argued that the evidence showed that damages should have been $900,000 at a minimum.

The court held that “when the evidence presented at trial supports a range of damages, the jury has discretion to award damages within that range, so long as a rational basis exists for the jury’s calculation.” The plaintiffs argued that the difference in the value of their home before it was hit by a hurricane and the value after it was damaged set the mark for the reduction in market value. The court found, however, that the jury could have answered “zero,” so the plaintiff’s evidence really established a range of zero to $725,000 – the difference between the value of the home before the hurricane and a purchase offer the plaintiffs received after the hurricane. Additionally, the defendant produced evidence of estimates of the cost of repair that ranged between $14,000 and $300,000. Because $150,000 fell within both ranges, the court upheld the jury’s award.

Also of note is the court’s disposition of the new trial order following its in-depth review of the grounds relied upon by the trial court. The court held that when all of a trial court’s stated reasons for granting a new trial are invalid, the proper remedy is to order the trial court to enter judgment on the verdict.


FOURTEENTH COURT OF APPEALS

Patel v. Harris County Appraisal District, No. 14-12-00892-CV (Tex. App.—Houston [14th Dist.] June 5, 2014)

A property owner who protests the appraised value of their home to the Appraisal Review Board of the Harris County Appraisal District, and obtains relief lowering the appraised value, may nonetheless appeal the determination for a trial de novo in district court.

Hasadbhai and Dharmishtha Patel challenged the Harris County Appraisal District’s (“HCAD’s”) 2010 appraisal of the value of their real property and improvements. HCAD had determined that the market value of the property was $2,132,414, and that the appraised value was $2,078,655. The Patels filed a notice of protest to the Appraisal Review Board. Shortly before the formal hearing before the Review Board, the Patels' designated property-tax agent signed a "Hearing Affidavit," opining that the appraised value of the property should be $1,911,490.00. The "Hearing Affidavit" was an unsworn form document. Following the hearing, the Review Board determined that the appraised value of the Property for the 2010 tax year should be $1,911,490.00 and ordered that the appraisal records be changed accordingly.

Nevertheless, the Patels timely appealed the Review Board's determination to the district court, seeking relief under sections 42.25 and 42.26 of the Tax Code, which provide remedies for excessive appraisal and unequal appraisal, respectively. HCAD moved for summary judgment on the theory that the Patels' appeal was barred by judicial estoppel, since the statements contained in the Hearing Affidavit were proffered by them. The district court granted the motion and dismissed the Patels' appeal with prejudice.

The Court of Appeals reversed and remanded, concluding that the Tax Code permits an appeal by a property owner of the Review Board's determination, even where favorable, since the statute does not specify that the determination must be unfavorable to permit appellate review by the district court. The court held that judicial estoppel did not apply since: (a) the Review Board hearing was not a judicial proceeding; and (b) the Hearing Affidavit was not sworn testimony.

Thu Binh Si Ho v. Saigon National Bank, No. 14-13-00607-CV (Tex. App.—Houston [14th Dist.] July 22, 2014)

A suit to collect on a promissory note requires affirmative proof that the claimant is the owner and holder of the note, which may not be inferred from the surrounding circumstances.

Saigon National Bank sued Thu Binh Si Ho to collect on a promissory note that he defaulted on. The bank moved for summary judgment, attaching the affidavit of Patrick Siu, its Chief Credit Officer and Executive Vice President. Photocopies of the original note and business loan agreement, both signed by Ho, were attached to the affidavit. In his affidavit, Siu averred that the bank had executed a loan agreement with Ho, that Ho had subsequently defaulted upon the agreement, and that the bank had demanded the amount due and owing. However, Siu failed to state that the bank was the current owner and holder of the note. The trial court granted summary judgment in favor of the bank, and Ho appealed.

The Court of Appeals reversed and remanded, holding that, in the absence of affirmative proof demonstrating current ownership of the note, the bank had not established that it had standing to collect the debt.

In a dissenting opinion, Chief Justice Frost agreed that the trial court's decision ought to be reversed and remanded, but disagreed that the evidence before the trial court (which included not only the exhibits to the bank’s motion but other evidence on file) was insufficient to establish current ownership. Justice Frost stated that she would reverse the summary judgment because Siu's affidavit failed to state that, in calculating the amount due and owing, all just and lawful offsets, payments and credits had been allowed.

Alice M. Wood, et al. v. HSBC Bank USA, No. 14-13-00389-CV (Tex. App.—Houston [14th Dist.] July 31, 2014)
 
A Texas home equity lien originated in violation of the home-equity lending provisions found in Tex. Const. art. XVI, section 50(a)(6) is voidable, not void; therefore, the residual statute of limitations under Tex. Civ. Prac.& Rem. Code § 16.051 bars claims for forfeiture of principal and interest under § 50(a)(6) as well as claims for monetary relief, where those claims are brought for the first time more than four years after the date of origination.

Alice and Daniel Wood obtained a home equity loan from Fremont Investment & Loan in July 2004, secured by a first lien on their homestead. In March 2012, the Woods sent HSBC Bank, the current holder of the lien, a "Notice of Request to Cure," in which they alleged that the lien was originated in violation of Tex. Const. art. XVI, section 50(a)(6), and demanded that HSBC cure the alleged violations. HSBC did not respond.

In July 2012, the Woods filed suit against HSBC, its loan servicer Ocwen Loan Servicing L.L.C. ("Ocwen"), and others, seeking forfeiture of principal and interest for constitutional violations; damages for breach of contract and fraud; and a declaratory judgment that the lien was void, that HSBC had failed to cure the alleged defects, and that HSBC must forfeit all principal and interest. HSBC and Ocwen moved for summary judgment, arguing that the Woods' claims were barred by limitations. The trial court granted summary judgment, and the Woods appealed.

The Court of Appeals affirmed. First, the court held that the constitutional defects rendered the lien voidable, not void. The court reasoned that, because a void act is null from the outset and may not be made valid by subsequent action, whereas a voidable act is binding until disaffirmed, and may be made valid by failure to have it annulled within the proper time or through ratification, and Article XVI, § 50(a)(6)(Q)of the Texas Constitution specifically provides for a cure, the constitutional defects in the origination of a home equity lien are properly characterized as voidable, rather than void. Second, the court held that, consistent with prior state and federal decisions, the four year residual statute of limitations under Tex. Civ. Prac. & Rem. Code § 16.051 applied to the alleged constitutional defects. Third, the court held that the legal injury for a constitutionally defective home equity lien occurs on the date the transaction closes, and the right to seek either forfeiture or monetary relief accrues on that date. The court rejected the Woods’ argument that the demand for a cure was a condition precedent to bringing their claims for monetary relief and held that limitations barred all of the Woods' claims from July 2008 onward.