Justice Dale Wainwright and Warren W. Harris 2012-12-26 02:03:25
The Texas Supreme Court addressed a number of interesting and important appellate issues during its 2011-12 term. In Hemyari v. Stephens, 355 S.W.3d 623 (Tex. 2011), the court held that court orders must be read as a whole and in a common sense fashion, when an overly literal reading would lead to an absurd result. A bankruptcy court order authorized the foreclosure sale “on August 1, 2000” of property owned by the Stephens Groups. The foreclosure occurred on Sept. 5, 2000. The Stephens Groups contended that the foreclosure sale could occur only on Aug. 1. The court of appeals concluded that the bankruptcy court’s order was not ambiguous because it expressly provided for a sale “on August 1, 2000” and that the foreclosure sale was invalid because it did not strictly comply with the order. As Hemyari pointed out, a sale “on August 1, 2000” may have been impossible because the payment to avoid default was due on or before Aug. 1. Thus, that payment could have been made at any point through Aug. 1. The Supreme Court explained that even a “literal” interpretation of an unambiguous order required it to look at the order as a whole. The court “conclude[d] that the Stephens Groups’ proposed interpretation would render the entire foreclosure sale provision in the order meaningless.” The court reversed the judgment of the court of appeals and construed the order in a way that avoided a contradiction. In re Service Corporation International, 355 S.W.3d 655 (Tex. 2011) (per curiam), presented the court with the issue of whether mandamus was appropriate to remedy a trial court’s appointment of an arbitrator in contravention of the parties’ agreement. The Federal Arbitration Act governed the agreement and provided that the parties may select an arbitrator only by mutual agreement or, if the parties cannot agree, the American Arbitration Association selects an arbitrator. When the parties failed to agree on an arbitrator and negotiations halted for a month, the trial court appointed an arbitrator. The Supreme Court determined that because the contract required the AAA to appoint an arbitrator when mutual agreement fails, the trial court abused its discretion by appointing an arbitrator unless an exception under the FAA applied. The court reasoned that, as a matter of law, a onemonth halt in negotiations between the parties does not in itself constitute a failure of the contractual right to have the AAA select the arbitrator. The court conditionally granted mandamus relief and directed the trial court to allow the parties a reasonable opportunity to select an arbitrator pursuant to their agreement. See also In re Service Corporation International, 355 S.W.3d 662 (Tex. 2011) (per curiam) (as a matter of law, two month delay does not constitute lapse under FAA permitting court to appoint arbitrator contrary to parties’ agreement). In limited circumstances, a notice of trial setting received by a party’s counsel may not be sufficient to sustain a default judgment against the party. The court so held in Mabon Limited v. Afri-Carib Enterprises Inc., 369 S.W.3d 809 (Tex. 2012). The court considered whether a corporation seeking a bill of review is required to prove its diligence in monitoring the status of its underlying case when that bill-of-review plaintiff was represented by counsel but proves that, through no fault of its own, it did not receive notice of the trial setting that led to a default judgment. Once a bill-of-review plaintiff proves the absence of service or the lack of notice of the dispositive trial setting, the plaintiff is then relieved of proving the traditional bill-of-review elements and the court should grant the plaintiff’s bill of review. The court held that once a billof- review plaintiff proves it had no notice of the trial setting or the default judgment, it need not establish that it diligently monitored the status of its case. Although usually cited for its application to Texas property law, Severance v. Patterson, 370 S.W.3d 705 (Tex. 2012), established the procedure the Supreme Court presumably will follow in handling parties’ actions that may moot a federal lawsuit while a certified question is pending before the court. The Supreme Court granted the certified question and issued its opinion. The court later granted respondents’ motion for rehearing and held reargument of the case. While the rehearing was pending, petitioner sold the remaining parcel of property at issue to the City of Galveston. The State of Texas and the City argued in the Supreme Court that the sale mooted the case and filed a similar motion in the 5th Circuit. The Supreme Court concluded that the question of whether the case was moot was one for the certifying court and abated proceedings to allow the 5th Circuit to consider respondents’ motion to dismiss the case as moot. The 5th Circuit denied the motion, concluding that the statutory threat of civil penalties against the property owner imparted continued vitality to petitioner’s action. The Supreme Court then reinstated the rehearing of the certified question and issued a new opinion. In Thota v. Young, 366 S.W.3d 678 (Tex. 2012), the court addressed the doctrine of presumed harm when an allegedly improper inferential rebuttal instruction was given to the jury. The court previously held in Casteel v. Crown Life Insurance Co. and Harris County v. Smith that reversible error is presumed when a broad-form question submitted to the jury incorporates multiple theories of liability and one or more of those theories is invalid or when the broad-form question commingled damage elements that are unsupported by legally sufficient evidence. It had not, however, addressed whether that presumed harm analysis applies to a broad-form submission in a single- theory-of-liability case when the negligence charge includes both an improper defensive theory of contributory negligence and an improper inferential rebuttal instruction. The court held that reversible error is not presumed in this case, and that meaningful appellate review is provided through a traditional harm analysis. In Bed, Bath & Beyond Inc. v. Urista, 211 S.W.3d 753 (Tex. 2006), the court explained that unlike alternate theories of liability and damage elements, inferential rebuttal issues cannot be submitted in the jury charge as separate questions and instead must be presented through jury instructions. Therefore, although harm can be presumed when meaningful appellate review is precluded because valid and invalid liability theories or damage elements are commingled, the court was not persuaded that harm must likewise be presumed when proper jury questions are submitted along with improper inferential rebuttal instructions. Harm must be established. JUSTICE DALE WAINWRIGHT is a partner in the Bracewell & Giuliani, L.L.P., appellate group in Austin. Wainwright previously served as a Justice on the Texas Supreme Court and on the District Court in Harris County. WARREN W. HARRIS is a partner in the Bracewell & Giuliani, L.L.P., appellate group in Houston. Harris is president of the Texas Supreme Court Historical Society and is a past chair of the Texas Bar Journal editorial board and the State Bar Appellate Section.
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