17 Jun Texas Supreme Court Opinions for Friday, June 17th, 2022
Matthew M. BuschiCounsel
Grassroots Leadership, Inc. et. al. v. Tex. Department of Family and Protective Services: The Court considered whether plaintiffs have standing to challenge a Department of Family and Protective Services licensing rule governing immigration detention centers. The licensing rules established licensing requirements for family residential detention centers where detained families with children are held. The particular rule at issue was a rule permitting the centers to not comply with a rule not allowing children to share a bedroom with an adult…if the bedroom is being shared in order to allow a child to remain with the child’s parent or other family member. Petitioners alleged that the private detention centers at issue allowed unrelated adults to share a bedroom with children, leading to the sexual assault of a minor while sharing her room with an unrelated adult. The court of appeals ruled that the plaintiffs lacked standing, however, the Texas Supreme Court found that because the detained mothers and their children allege concrete personal injuries raceable to the adoption the rule, the plaintiffs had standing.
In the Matter of the Estate of Richard C. Poe: Richard Poe was the patriarch in a family-owned car-dealership enterprise. Mr. Poe structured his many businesses to consolidate control into a single entity: Poe Management, Inc. (PMI), where Mr Poe was the sole director. Mr. Poe’s son was the only other shareholder in PMI. Shortly before he died, Mr. Poe authorized PMI to issue new shares, which he bought, making him the majority shareholder of PMI. When he passed, control of the company enterprise vested in his two co-executors rather than his son. The son challenged the share issuance as a breach of fiduciary duty in the probate court and won. Petitioners contended that the jury was improperly charged on whether the PMI issuance, as self-dealing, was fair to PMI, and contended that the probate court improperly submitted a theory of liability not recognized in Texas law: that as the sole director, Mr. Poe owed his son
an informal fiduciary duty to manage PMI in the son’s best interest. The Supreme Court agreed with the challenges and reversed and remanded for new trial. With regard to the fiduciary duty claim, Petitioner’s argued that Mr. Poe’s fiduciary duty was strictly to manage PMI in the best interest of PMI, and could be simultaneously held to a duty to manage PMI in the best interest of a particular shareholder based on an informal fiduciary duty founded in a relationship of trust and confidence. The Texas Supreme Court ruled that a director cannot simultaneously owe those two conflicting duties.
In the Matter of Troy S. Poe Trust: In this case, the Texas Supreme Court addressed whether parties seeking or opposing a trust modification under Texas Trust Code 112.054 have a right to a jury trial. The trial court denied the jury demand, but the court of appeals reversed and held that the Trust Code conferred a right to a jury trial. The Texas Supreme Court held that there is no statutory right to a jury trial in a section 112.054 judicial trust-modification proceeding, and that a Section 112.054 proceeding is not a “cause” within the meaning of Article V, Section 10 of the Texas Constitution but is instead a “special proceeding” falling outside of its purview, and as such there is no constitutional right to a jury trial in such a proceeding either.
S.C. v. M.B. as Next Friend of I.C.: In a case related to community property that is not divided within a divorce decree, the property stops being community after the marriage, and both spouses hold it as tenants in common. Tenants in common may seek partition under Property Code 23.001. The partition under the Property code presumes an even split, but in a divorce, a judge uses a “just and right” standard to divide the property. Subchapter C, Chapter 9 of the Family Code was enacted in 1987 and created an option for former spouses even after divorce to use the “just and right” standard. The question before the Court was whether Subchapter C created the exclusive remedy and vest exclusive jurisdiction over the original divorce court. The Court answered no, Subchapter C creates an option to be invoked, does not create an exclusive remedy and jurisdiction.
In re UPS: In a wrongful death suit, the trial court ordered UPS to produce the results of all alcohol and drug tests conducted on all current and former drivers at its Irving, Texas facility for a stated time period preceding a fatal multi-vehicle accident. The Supreme Court granted the mandamus because the discovery requests were overbroad and sought irrelevant information about uninvolved UPS drivers.
Glenn Hegar, Comptroller and Ken Paxton, Attorney General v. Health Care Service Corporation: The question presented to the Court was whether under Insurance Code Chapters 222 and 257, the comptroller properly taxed an insured based on premiums it received from sales of stop-loss policies (policies that reimburse the employer when the employer’s self-insured health-care costs exceed certain thresholds). The Court held that the governing statutes unambiguously impose such taxes on the insurer’s premiums, and as such the Comptroller properly assessed such taxes.
In re Contract Freighters, Inc. and Randall Scott Folks: CFI and Folks filed for mandamus challenging certain discovery rulings in an underlying vehicle collision lawsuit. The discovery requests were withdrawn by the McPhersons, who issued the requests, after the Court requested a response to the petition. The McPhersons argued this mooted the controversy, however the Texas Supreme Court held that a unilateral withdrawal of the requests was insufficient to moot the controversy, especially when appellate scrutiny grows imminent. Here, the McPhersons did not provide any enforceable assurances, such as a Rule 11 agreement, that would sufficiently provided certainty that they would not refile the same of similar requests if the Court dismissed the petition. In essence, unilateral withdrawal of discovery while the “appellate courts are looking” does not moot a discovery dispute.
Weekly Homes, LLC v. Paniagua et. al.: This case is a negligence and premises-liability cases arising from a fatal accident on a construction site. The trial court had granted summary judgment for the defendant, but the court of appeals reversed in part holding that the defendant could not rely on allegations in the plaintiff’s pleadings to satisfy its summary judgment burden because pleadings do not constitute summary judgment evidence. However, recent opinions of the Texas Supreme Court had come out holding that courts may grant summary judgments based on deficiencies in an opposing party’s pleadings and movants may rely on allegations in an opposing party’s pleadings that constitute judicial admissions, after the lower courts addressed this case. As such, the Court remanded this case to the court of appeals for further consideration in light of those decisions that had come out in the interim.
United Supermarkets, LLC v. McIntire: McIntire sued the premises owner after she sustained injuries from tripping over a divot in a grocery store parking lot on a theory of premises-liability. The trial court granted summary judgment finding that the divot did not rise to the level of being an unreasonably dangerous condition as a matter of law. The court of appeals reversed, holding that a fact issue still existed as to whether the defect presented an unreasonable risk of harm. The Texas Supreme Court agreed with the trial court that it did not present an unreasonably dangerous condition as a matter of law. The Court reasoned that testimony that a condition could injure an invitee is not evidence that it poses an unreasonable risk of harm. The Court found that the divot was small, unremarkable, and had posed no previous safety concerns, and thus was not unreasonably dangerous as a matter of law.
In the Interest of ALR: To terminate a parent’s rights under Subsection (O) of the Texas Family Code, the court’s order must be sufficiently specific to warrant termination of parental rights for failure to comply with it. The father appealed, contending the trail court’s order did not support termination under Subsection (O) because the order adopted tasks to be completed phrased as requests. The Texas Supreme Court agreed that Subsection (O) only authorizes termination for failure to comply with a family service plan when that plan requires the parent to perform specific actions. Because the Department only requested, rather than required, the completion of various tasks, the plan was ambiguous as to the specific actions required to obtain the child’s return. The Court reversed the court of appeals on Subsection (O) and remanded the case to the court of appeals to consider the trial court’s alternative basis for termination under Subsection (Q).
In re YRC Inc.: In a workplace injury case, the defendants sought to designate the plaintiff’s employer as a responsible party 62 days before the suit’s third trial setting, and more than five years after the injury. Texas Civil Practice & Remedies Code 33.004 provides that a defendant in a tort action can designate a responsible third party by filing a motion for leave before the 60th day before the trial date, but cannot do so after the limitations period on the plaintiff’s cause of action has expired with respect to the third party. The Court held that the motion was timely filed as it was more than 60 days before the then-pending trial date, and held that because the plaintiff’s exclusive remedy against his employer was worker’s compensation, which Plaintiff successfully pursued, there was no applicable statute of limitations period and as such the motion for leave to designate a responsible third party was timely, and the trial court’s denial of the motion was an abuse of discretion. The Court granted mandamus and directed the trial court to grant the motion.
Gabriel Investment Group, Inc. v. TABC: 1995 legislation prohibited public corporations from owning or holding an interest in package store permitted retail liquor stores. The Legislature exempted from the prohibition any public corporation that as of April 1995, already had permits pending or already had a permit. The Fifth Circuit certified two questions to the Court: (1) if a package store sells any, most, or all of its shares to a corporation that does not qualify under the exemption, does the package store’s permit remain valid, and (2) if yes, can the package store accumulate additional package store permits? The Texas Supreme Court answered yes to both questions.
ABOUT THE AUTHOR: Matthew M. Buschi is Counsel at Rapp & Krock, PC in the Litigation group.
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