The Supreme Court of Texas convened Oct. 1-3, 2024, and heard oral arguments from several Austin Bar members.
Bertucci v. Watkins
Procedure-Appellate – Waiver
Steven A. Fleckman
Munck Wilson Mandala
for Petitioner
Elizabeth G. “Heidi” Bloch
Greenberg Traurig
for Respondent/Cross-petitioner
These cross-petitions raise issues of briefing waiver and whether fiduciary duties are owed among business partners.
Bertucci and Watkins founded several companies to develop lowincome housing projects. After many years of working together, Bertucci came to suspect that Watkins was misappropriating the companies’ funds and sought an accounting. Because of the dispute, certain company profits were placed in escrow, and eventually, Watkins sued for their distribution. Bertucci counterclaimed on behalf of himself and derivatively on behalf of the companies for theft and breach of fiduciary duty. Watkins maintains that Bertucci, now deceased, orally approved compensating Watkins with the allegedly misappropriated funds. The parties filed competing motions for summary judgment, and the trial court granted Watkins’ motion.
The court of appeals, sitting en banc, reversed. First, it held that Bertucci waived his appeal of the summary judgment on the derivative claims by failing to brief them. The court concluded fact issues precluded summary judgment on Bertucci’s individual claims. The court also held that Watkins’ testimony that Bertucci orally approved of the transactions should have been excluded under the Dead Man’s Rule, which precludes testimony by a testator against the executor in a civil proceeding. Both parties filed petitions for review.
Bertucci argues that his brief should have been liberally construed so that appeal of the derivative claims was not lost by waiver. He also argues that the trial court erred in admitting an auditor’s report into evidence, alleging that it is unverified and unreliable. Watkins argues that he is entitled to summary judgment on the breach of fiduciary duty claim because, as limited partners in a partnership, Watkins did not owe Bertucci a fiduciary duty as a matter of law. Watkins further argues that the statute of limitations has run on Bertucci’s claims because the discovery rule does not apply. Finally, Watkins argues that his testimony about Bertucci’s oral approvals was corroborated and therefore admissible under the Dead Man’s Rule. The Supreme Court granted both petitions for review.
Case documents can be viewed at https://search.txcourts.gov/Case.aspx?cn=23-0329&coa=cossup.
The recording of this argument can be found on YouTube at https://www.youtube.com/watch?v=qogJQ7EZn9g
Pohl v. Cheatham
Attorneys – Barratry
Thomas R. Phillips
Baker Botts
for second Petitioner, Robert Ammons
This case raises questions about the extraterritorial reach of Texas’s civil barratry statute and whether barratry claims are subject to a two- or four-year statute of limitations.
Mark Cheatham, a Louisiana plaintiff, hired Texas attorneys, Michael Pohl and Robert Ammons, to represent him in a wrongful-death suit. Cheatham later asserted civil barratry claims against Pohl and Ammons in Texas, alleging that the attorneys paid a sham financing company run by Pohl’s wife, Donalda, to offer him money for funeral expenses as an incentive to hire Pohl and Ammons.
Pohl and Ammons filed motions for partial summary judgment, asserting that Cheatham’s claims were barred by a two-year statute of limitations. The trial court denied the motions, concluding that a four-year statute of limitations applied. Pohl, Ammons, and Donalda filed subsequent motions for summary judgment, asserting that the barratry statute has no extraterritorial reach to conduct that occurred out of state. The trial court granted the motions. The court of appeals reversed and remanded, reasoning that the attorneys’ conduct occurred in Texas, but even if it had not, the statute can permissibly be extended to out-of-state conduct.
Pohl, Donalda, and Ammons petitioned for review, arguing that the court of appeals impermissibly extended the reach of the barratry statute and maintaining that such claims are subject to a two-year statute of limitations. The Supreme Court granted their petitions for review.
Case documents can be viewed at https://search.txcourts.gov/Case.aspx?cn=23-0045&coa=cossup
The recording of this argument can be found on YouTube at https://www.youtube.com/watch?v=KQCciqv7Xzg
425 Soledad, Ltd. v.
CRVI Riverwalk Hosp., LLC
Real Property – Bona Fide Purchaser
Kurt Kuhn
Kuhn Hobbs
for Petitioner
Jane Webre
Scott Douglass & McConnico
for Respondent
A main issue is whether a creditor’s bona fide protections pass to a subsequent purchaser if the property is purchased through a receivership sale rather than through foreclosure.
A parking garage, hotel, and office building initially were under common ownership. The owner retained the garage and hotel but sold the office building, which was eventually acquired by 425 Soledad. The original owner and purchaser executed an agreement making a certain number of parking spots in the garage available to the office building and its tenants. The agreement stated that it would run with the land and be binding on the parties’ successors and assigns, but it was never recorded.
The garage and hotel were later sold to a purchaser who financed the transaction with two promissory notes. CRVI Crowne acquired the B note. When the new owner of the garage and hotel defaulted, Crowne chose to place the properties into receivership rather than foreclose on them. A related entity, CRVI Riverwalk, purchased the garage and hotel through the receiver. After Riverwalk became the owner of the garage and hotel, 425 Soledad requested parking spaces pursuant to the agreement made by the garage and hotel’s original owner. Riverwalk refused to provide the spaces, and 425 Soledad sued.
Riverwalk argues that the parking agreement is unenforceable because Crowne was a bona fide creditor when it purchased the note without notice of the unrecorded agreement; then, when Riverwalk purchased the garage and hotel from the receiver, Crowne’s bona fide protections passed through to it. The trial court rejected these arguments and entered judgment for 425 Soledad after a bench trial.
The court of appeals reversed. The court agreed with the trial court that the parking agreement is an easement, but it concluded that Crowne was a bona fide creditor and that Crowne’s status “sheltered” and passed through to Riverwalk when Riverwalk purchased the garage and hotel through the receivership sale.
425 Soledad petitioned the Supreme Court for review. It argues that because Riverwalk purchased the properties from the debtor’s receiver, and not from creditor Crowne in a foreclosure sale, that Crowne’s bona fide protections, if any, cannot shelter or pass through to Riverwalk. The Court granted the petition.
Case documents can be viewed at https://search.txcourts.gov/Case.aspx?cn=23-0344&coa=cossup
The recording of this argument can be found on YouTube at https://www.youtube.com/watch?v=BJEzGpu2oE0
In re State Farm Mut. Auto. Ins. Co.
Insurance – Insurance Code Liability
Melissa Lorber
Enoch Kever
for the Realtors
The issue in this case is whether the trial court must sever and abate Insurance Code claims when a motorist sues her insurance company for underinsured motorist benefits and violations of the Insurance Code.
Mara Lindsey alleges that she was injured in an automobile accident. Lindsey settled with the driver of the other vehicle for his insurance policy limit and then sought underinsured motorist benefits from State Farm. State Farm, through its claims adjuster, offered Lindsey far less than she claims she is entitled to under her policy. Lindsey sued State Farm and the claims adjuster, seeking a declaratory judgment that she is entitled to additional benefits and for violations of the Insurance Code. State Farm moved to sever and abate the Insurance Code claims until the underlying declaratory judgment action determines the amount of liability and damages caused by the allegedly underinsured motorist. Lindsey opposed the motion, arguing that bifurcation is the proper procedure for underinsured motorist cases, and discovery on the extracontractual claims is permitted against the insurer before the bifurcated trial. The trial court denied State Farm’s motion and the court of appeals denied mandamus relief.
State Farm petitioned for a writ of mandamus from the Supreme Court. State Farm argues that the Insurance Code claims should have been severed and abated and that Lindsey is not entitled to discovery on those claims until she establishes that she is entitled to underinsured motorist benefits because the liability and damages caused by the underinsured driver exceeded the amount of the third party’s policy limits. State Farm also argues that because the claims should have been abated, the trial court abused its discretion in refusing to quash the depositions of State Farm’s corporate representative and claims adjuster, who lack personal knowledge about the facts of the underlying accident. Finally, State Farm argues that the trial court abused its discretion by limiting State Farm’s access to Lindsey’s medical records when her medical condition is at issue. The Court granted argument on the petition for writ of mandamus.
Case documents can be viewed at https://search.txcourts.gov/Case.aspx?cn=23-0755&coa=cossup
The recording of this argument can be found on YouTube at https://www.youtube.com/watch?v=qV4_Z218qjw