10 New Issues in Business
Torts that Every Trial
Lawyer Should Know
Brian P. Lauten, Esq.
Sawicki & Lauten, L.L.P.
4040 N. Central Expressway, Suite 850
Dallas, Texas 75204
214-720-0022 telephone
214-720-0024
blauten@sawickilauten.com
www.sawickilauten.com
No. 1: New Voir Dire Standards
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Seth Hill found to be a violent sexual predator. Trial court
refused to allow Hill’s attorney to inquire about his
homosexuality and whether the jury would convict alone based
on prior sexual offenses without reference to the second prong
of behavioral abnormality. Supreme Court held reversible error.
“A court abuses its discretion when its denial of the right to ask a
proper question prevents determination of whether grounds
exist for cause or denies intelligent use of preemptory challenges.”
In re Commitment of Hill, 334 S.W.3d 226 (Tex. 2011)
Sawicki & Lauten, L.L.P.
Is Hyundai good law?
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Supreme Court held that it was reversible error to disallow Hill’s
lawyer from asking the jury whether they would require the State
to prove both elements of a conjunctive statute. Held: not an
improper commitment question.
Error preserved simply by asking a proper question that would
have allowed for the “intelligent use of preemptory challenges” and
receiving a direct ruling rejecting the inquiry. See Hill, 2011 WL
836933 at *1.
Opinion cites Babcock v. NW. Memorial Hosp., 767 S.W.2d 705,
709 (Tex. 1989) (Mauzy, J.) for the proposition that a Court may
not foreclose upon a proper line of voir dire questions.
Sawicki & Lauten, L.L.P.
No. 2: Breach of Fiduciary Duty
Equitable Forfeiture/No Actuals Needed
1.
2.
ERI Consulting, Inc. v. Swinnea, 318 S.W.3d 867 (Tex. 2010),
Courts may disgorge ALL ill-gotten profits from a fiduciary
when the fiduciary agent usurps an opportunity belonging to a
principal or competes with a principal. Equitable forfeiture
including all contractual consideration may be awarded for breach
even if NO actual damages proven
Court adopts a 5 factor test in determining an equitable
remedy: (1) whether the trustee acted in good faith; (2)
whether the breach of trust was intentional, negligent, or
without fault; (3) whether the breach of trust related to the
management of the whole trust or just part; (4) whether the
breach caused a loss; and (5) whether the trustee’s services
were of value
Sawicki & Lauten, L.L.P.
Number 3
From Prudential (1995) to Prudential (2011)
Can Parties Contract away their own fraud?
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2.
It depends. The enforceability of a waiver of reliance provision
in an agreement, under certain circumstances, can conclusively
negate the element of reliance barring a later claim for fraud
and fraudulent inducement
Prudential v. Jefferson, 896 S.W.2d 156 (Tex. 1995). An “as is”
agreement may preclude any argument that the seller
proximately caused damages. Save and except: (i) fraudulent
concealment by the seller and (ii) buyer not bound by “as is” if
purchaser’s right to an inspection impaired by the seller.
Sawicki & Lauten, L.L.P.
Sandwiched in the Middle
Schlumberger
1.
2.
In 1997, the Texas Supreme Court in Schlumberger v. Swanson,
959 S.W.2d 171 (Tex. 1997) held that the two exceptions in
Prudential are still legally enforceable, BUT fraudulent
inducement did not prevent the court from enforcing a waiver
of reliance provision in a settlement agreement.
The contract and the circumstances surrounding its formation
determine whether the disclaimer of reliance is binding.
Because the parties were attempting to put an end to their
deal, and had become embroiled in a dispute over the value of
the project, the disclaimer of reliance negates the element of
reliance; and therefore, no fraud claim.
Sawicki & Lauten, L.L.P.
The Day that Fraud Died
Sort of
1.
2.
In Forest Oil Corp. v. McAllen, 268 S.W.3d 51 (Tex. 2008), the
Texas Supreme Court held that an unambiguous waiver of
reliance provision in a settlement agreement precluded a
fraudulent inducement claim as a matter of law.
The Test from Forest Oil: (a) whether the contract was
negotiated rather than boilerplate; (b) represented by counsel;
(c) arms length transaction; (d) parties knowledgeable in
business matters; and (e) release language is clear
Sawicki & Lauten, L.L.P.
Prudential….We’re back….
1.
2.
In Italian Cowboy v. Prudential Ins., 341 S.W.3d 323 (Tex. 2011),
the Texas Supreme Court reversed and held that Forest Oil did
not bar a claim for fraudulent inducement based upon a
merger clause and language stating that the landlord was
making no representations other than those in the agreement.
Held: A “no representations” clause does not equal waiver of
reliance. Parties must unequivocally disclaim reliance.
No. 4. on the Top 10 List
New Causation Standards in
Business Tort Cases?
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2.
3.
4.
In Ford Motor Co. v. Ledesma, 242 S.W.3d 32 (Tex. 2007), trial
court committed reversible error in submitting a pattern jury
instruction on producing cause in a products liability case.
Ledesma held that producing cause “is a substantial factor that
brings about injury and without which the injury would not
have occurred.” Court reasoned that “efficient” and “exciting”
are adjectives foreign to the English language and in explaining
causation. Transcontinental v. Crump, 330 S.W.3d 211 (Tex.
2010); Lancer v. Garcia, 2011 WL 2586878 (Tex. 2011)
Wal-Mart Stores, Inc. v. Merrell, 313 S.W.3d 837 (Tex. 2010) no
evidence of causation where expert failed “to explain or
adequately disprove alternative theories of causation [making]
his own theory speculative and conclusory.”
But what about more than one proximate cause?
Sawicki & Lauten, L.L.P.
No. 5: Attorney’s Fees
in a Mixed Contract/Tort Case
1.
2.
3.
Tony Gullo Motors v. Chapa, 212 S.W.3d 299 (Tex. 2006). Parties
are required to segregate fees between time spent on
recoverable claims versus non-recoverable. Save and except,
inextricably intertwined claims.
Medical City Dallas v. Carlisle Corp., 251 S.W.3d 55, 63 (Tex.
2008) held that attorney’s fees could be recovered for breach
of an express warranty.
AMX Enterprises LLP v. Master Realty, 283 S.W.3d 506 (Tex.
App. – Fort Worth 2009, no pet. h.). In an issue of first
impression, in house counsel can recover attorney’s fees at a
market rate for outside counsel, even though salaried
employees.
Sawicki & Lauten, L.L.P.
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Attorney’s Fees:
Who is the Prevailing Party?
Intercontinental v. KB Home, 295 S.W.3d 650 (Tex. 2009), a standalone finding of breach of contract with no actual damages
awarded does not confer “prevailing party” status. Court adopts
a no-harm/no-fee rule. Must have actual damages or an
equitable judgment.
BUT may define “prevailing party”
differently in the agreement
MBM Financial Corp. v. Woodlands Operating Co., 292 S.W.3d 660
(Tex. 2009) the Court held that there was legally insufficient
evidence of $1,000 in damages; therefore, the Court vacated an
award of $149,000 in fees. The Court also held that declaratory
relief could not sustain attorney’s fees because there was
insufficient evidence on the contract claim
Sawicki & Lauten, L.L.P.
No. 6: Chapter 41 Repealed
Capping the Unlimited Caps
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2.
3.
Bennett v. Reynolds, 315 S.W.3d 867 (Tex. 2010) reversing
$1.25M in uncapped exemplary damages for felony cattle theft.
Held: even the $200,000 cap too much
Constitutional due process 4:1 ratio between exemplary
damages and actuals is borderline appropriate, but maybe not
Adopts 5 point reprehensibility factors: (1) harm inflicted
physical rather than economic; (2) tortious conduct showed a
reckless disregard for safety; (3) target of the conduct had
financial vulnerability; (4) repeated actions or isolated incident;
(5) harm resulted from malice, trickery or deceit, rather than
mere accident
Sawicki & Lauten, L.L.P.
No. 7: Where are we Litigating?
An Update on Forum Selection Clauses
1.
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Forum selection clauses are generally enforceable and a party
seeking to avoid the clause bears a “heavy burden.”
Test: (i) clause is invalid for fraud or overreaching; (ii)
enforcement would be unreasonable or unjust; (iii)
enforcement would contravene a strong public policy of the
forum; (iv) and the selected forum would be seriously
inconvenient.
The Texas Supreme Court is frequently granting mandamus
and enforcing forum selection clauses. In Re International Profit
Associates, 274 S.W.3d 672 (Tex. 2009); ADM Investor Services,
304 S.W.3d 371 (Tex. 2010); In re Lisa Laser USA, Inc., 310
S.W.3d 880, 883-887 (Tex. 2010).
Sawicki & Lauten, L.L.P.
No. 8: Bye-bye Jury Trial
Hello Arbitration New Case Law
1.
2.
3.
A delegation provision in an arbitration agreement providing
that the arbitrator decides whether the arbitration clause is
enforceable rather than the Court is legal and enforceable.
Rent-A-Center, West, Inc. v. Jackson, 130 S.Ct. 2772, 2779-2780
(2010) (Scalia)
Labatt Food Service, L.P., 279 S.W.3d 640 (Tex. 2009) and In Re
Jindal Saw Limited, 289 S.W.3d 827 (Tex. 2009). Wrongful
death beneficiaries bound by agreements to arbitrate signed by
their deceased loved one even though they were nonsignatories to the agreements.
Because wrongful death beneficiaries stand in the legal shoes
of the decedent, they are bound by the agreements signed by
the deceased (even if non-parties).
Sawicki & Lauten, L.L.P.
No. 9: Shareholder Oppression
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Officers and Directors in closely held company refused to meet
with potential purchasers of minority stock holder which
defeated any reasonable expectation of marketing the stock to a
third party. Dallas Court of Appeals held that a court ordered
buy back of stock is an appropriate remedy in an oppression
case. Receivership is a remedy, but only if all other remedies fail.
Court held the refusal to meet with potential purchasers was a
“visible departure from standards of fair dealing and a violation
of fair play.” Court held the appropriate value for the buy back
is fair market value including discounts for lack of marketability
and for the stock’s minority position. Ritchie v. Rupe, 339 S.W.3d
275 (Tex. App. – Dallas 2011, pet. denied) (Moseley, J.).
No. 10: A New Tort of Conversion
and Disgorgement
1.
Texas Mutual Insurance Co. v. Ledbetter, 251 S.W.3d 31 (Tex.
2008). Ledbetter electrocuted and killed. Settlement reached
for 4.5 million. Before minor-prove up, carrier intervened.
Plaintiffs non-suit all claims but the Estate. Texas Supreme
Court reversed. Held: when an injured worker settles without
reimbursing the carrier everyone is liable to the carrier for
conversion including disgorgement. Plaintiffs were even
precluded from a non-suit without the carrier’s permission.
Sawicki & Lauten, L.L.P.