Case Updates for July, August, and September 2017

By Andrew Nelson, Wright & Close, LLP, and Jill Schumacher, 14th Court of Appeals

FIRST COURT OF APPEALS

Davati v. McElya, No. 01-16-00544-CV, 2017 WL 3429958 (Tex. App.—Houston [1st Dist.] Aug. 10, 2017, no pet. h.)

A severed partial summary judgment is not appealable when the parties to the suit still have claims remaining against each other.

McElya sought a declaratory judgment that she owned a driveway between her property and Davati’s. McElya also filed other claims in the suit, and Davati filed counterclaims. The trial court granted summary judgment in McElya’s favor on the declaratory judgment claim, but did not grant summary judgment as to the other claims. After the court granted the partial summary judgment, it purported to sever the declaratory judgment claim from the other claims in the case. The summary judgment in the severed case stated that the judgment was “final and appealable.” Davati appealed from the severed action.

The court began by noting that a severance does not make an interlocutory judgment final and appealable if it only disposes of a subset of claims between the parties. If a party appeals from a partial summary judgment that disposes of some, but not all, claims between the parties, the appellate court must dismiss the appeal for lack of jurisdiction, even if the court severs the partial summary judgment into a new action. The court ultimately held that “[a]s the severance order neither actually disposed of every pending claim between the severed parties nor clearly and unequivocally stated that it finally disposed of the parties and claims, it does not make the summary judgment final and appealable.” The court rejected Davati’s argument that a severance and a new cause number makes an otherwise interlocutory order final and appealable, regardless of the language the trial court used in its order.


Livingston v. Livingston, No. 01-16-00127-CV, 2017 WL 4171903 (Tex. App.—Houston [1st Dist.] Sep. 21, 2017, no pet. h.)

A permanent injunction issued after a trial need not detail the reasons for its issuance.

Catherine Livingston (“Catherine”) sued her step-son, Robert, for a variety of intentional torts, including false imprisonment and intentional infliction of emotional distress. The jury found for Robert on the false imprisonment claim, but for Catherine on the intentional infliction of emotional distress claim. The jury did not award Catherine any damages; however, the trial court issued a permanent injunction preventing Robert from coming within 1,000 feet of Catherine.

On appeal, Robert contended that the permanent injunction was defective because it did not specify the reasons for its issuance, pursuant to Texas Rule of Civil Procedure 683, which requires a court to specifically state its reasons for issuing injunctive relief. The court began its discussion of the point by noting that it previously held Rule 683’s requirement “that reasons for issuance of an injunction be stated applies only to ancillary injunctive relief.” Likewise, other courts in the state have held that the requirement “applies only to temporary injunctions, in which the relief ordered is ancillary to the ultimate relief sought, and not to permanent injunctions.”

Robert argued that Rule 683 applied to the permanent injunction in that case, because the injunction was ancillary to the other relief sought, namely damages. The court rejected that argument. The court held that the key consideration was not whether the final judgment under review is one from a case whose sole purpose was to obtain a permanent injunction, but rather whether the injunctive relief itself is ancillary, such as a temporary injunction. Accordingly, Rule 683 did not apply to the injunction, and the trial court did not have to specifically state its reasons for granting it. The court affirmed the judgment below.



FOURTEENTH COURT OF APPEALS

Berkel & Co. Contractors, Inc. v. Lee, No. 14-15-00787-CV, 2017 WL 2986856 (Tex. App.—Houston [14th Dist.] Jul. 13, 2017, no pet. h.)

A corporation is liable for the intentional tort of a vice-principal or manager.

An individual commits an intentional tort when she has substantial certainty that her conduct will injure the individual seeking relief.

During construction, an employee of a general contractor suffered an injury. The superintendent of the subcontractor decided to violate safety policies, and that decision caused the employee’s injury. The employee received workers’ compensation benefits through a plan that the general contractor administered. Relying on common law, the employee successfully sued the subcontractor for additional damages.

On appeal, the subcontractor asserted that the Texas Workers’ Compensation Act precludes the employee’s recovery of common-law damages. The court held that the Act precludes liability in this case because the injured employee is a statutory co-employee of the subcontractor and the subcontractor’s employee’s action does not fall within an exception to the Act because the employee did not have the requisite mental state to commit an intentional tort.

Texas Labor Code section 408.001(a) immunizes subscribers from an injured employee’s claims for negligence and gross negligence by making compensation under the Act an injured employee’s exclusive remedy. The court applied section 408.001(a) after concluding that the subcontractor was a statutory co-employee of the injured employee. Because section 408.001(a) applied, it barred the employee’s recovery based on the subcontractor’s negligence and gross negligence.

The employee asserted that he could avoid the Act’s exclusive-remedy provision under a court-made exception that allows an employee to recover damages for intentional torts. In its answer to one question, the jury found that an employee of the subcontractor knew his conduct was substantially certain to cause an injury. In its answer to another question, the jury found that the employee’s conduct was attributable to the subcontractor because the employee was a principal or manager.

The subcontractor objected to the jury charge for two reasons. First, the subcontractor argued that to commit an intentional tort, an employee must be substantially certain that his conduct will cause a specific injury. Second, the subcontractor argued that it was not liable for its superintendent’s conduct because the superintendent was not an upper-level executive or alter ego.

Addressing vicarious liability first, the court gave significant attention to policy concerns Professor Lex Larson discussed in his treatise, Larson’s Workers’ Compensation. The court ultimately rejected the alter-ego test Professor Larson advocates. Instead, the court applied the holding of an analogous case from the Supreme Court of Texas. The court held that a corporation is liable if a corporation’s vice principal, acting within the course and scope of his employment, intentionally injures another. In this case, the court explained that the subcontractor was liable if the superintendent committed an intentional tort.

Next, the court clarified the law surrounding intentional torts. The court held that an individual commits an intentional tort if she is substantially certain that her conduct will injure a particular individual or someone within a small class of potential victims within a localized area. (An individual does not commit an intentional tort if she is substantially certain that her conduct will cause injury to someone.) In reaching its holding, the court catalogued many contexts in which courts applied the definition of intent contained in the Third Restatement of Torts, and concluded that the results of those cases matched statements contained in the commentary to the Third Restatement.

The court ultimately concluded that the subcontractor was liable for the actions of its superintendent, but that the superintendent did not act with intent because he did not have substantial certainty that the injured employee “would be a particular victim of his behavior.” The court reversed and rendered judgment in favor of the subcontractor.


TecLogistics, Inc. v. Dresser-Rand Grp., Inc., No. 14-16-00189-CV, 2017 WL 3194164 (Tex. App.—Houston [14th Dist.] Jul. 27, 2017, no pet. h.)

Cases are not binding if they are decided under a prior statute that is materially different than the current statute.

Dresser-Rand hired TecLogistics to transport parts and supplies between Dresser-Rand and its customers.

Dresser-Rand asserted counterclaims for breach of contract and fraud against TecLogistics and TecLogistics’ president in her individual capacity. The breach-of-contract claims were based on evidence that Dresser-Rand twice paid the same invoice. The fraud claims were based on evidence that TecLogistics’ president created false invoices that overstated charges from one of TecLogistics’ subcontractors. TecLogistics used those false invoices to pass the inflated charges to Dresser-Rand. The trial court refused to submit questions to the jury on the president’s liability for fraud in her individual capacity. The jury awarded damages for both breach of contract and fraud.

On appeal, TecLogistics challenged the damage awards. Dresser-Rand cross-appealed, challenging the trial court’s refusal to submit a jury instruction on the president’s individual liability for fraud.

The language of the charge determined the answers to both questions relating to the jury’s assessment of damages. The charge asked the jury whether TecLogistics breached the contract by charging Dresser-Rand too much. The record did not contain evidence that TecLogistics charged the invoice twice, so the court modified the judgment to delete the damages the jury awarded for breach of contract.

The court measured the sufficiency of the evidence supporting the fraud damages by looking to the jury charge. Although TecLogistics argued that the damages were speculative and that Dresser-Rand did not realize the damages because Dresser-Rand passed the inflated charges on to its customers, the language in the charge informed the jury how to assess damages. Noting the presumption that the jury followed the charge, the court found the evidence was sufficient to support the jury’s assessment of damages.

In addressing the cross appeal, the court determined that Texas Business Organizations Code section 21.223(a)(2), which bars individual liability in some instances, applied to the case. Dresser-Rand argued that even if section 21.223(a)(2) applied, the president could be held liable based on common law. The court noted that section 21.224 expressly precluded common-law liability unless the individual “(1) expressly assumes, guarantees, or agrees to be personally liable to the obligee for the obligation; or (2) is otherwise liable to the obligee for the obligation under [the Business Organizations Code] or other applicable statute.” The court explained that no one alleged nor offered evidence that either exception applied.

The court noted that many cases appear to hold individuals liable when the predicates of section 21.223(a)(2) are met. In an overview of cases that appear to reach opposite results, the court explained that many of those cases discussed language of a prior statute with less robust protection or incorrectly relied on cases decided under an older version of the statute. The court concluded the trial court did not err in refusing Dresser-Rand’s proposed question because the question would have allowed the jury to find the president liable for common-law fraud without finding that a statutory exception permitted liability based on common law.