Warren W. Harris and Walter A. Simons 2017-12-20 04:50:43
The Texas Supreme Court addressed several important and recurring appellate issues last year. These issues include the recovery of lost-profits damages, the excessiveness of exemplary damages awards, and challenges to expert testimony as conclusory. The Supreme Court reviewed a jury’s award of lost profits and exemplary damages in Horizon Health Corp. v. Acadia Healthcare Co.1 Horizon, a provider of contract-management services, sued its former managers and salesperson for copying Horizon’s confidential documents and joining a competitor.2 A jury awarded Horizon lost profits from a hospital contract, salesperson’s future sales, and $1.75 million in exemplary damages.3 The court of appeals reversed the lost-profits award and suggested the exemplary damages should be remitted to about $220,000 per defendant.4 The Supreme Court agreed there was no evidence of lost-profits damages; there was no proof that, absent the defendants’ misconduct, Horizon would have won the hospital contract, there was no evidence regarding the profitability of the salesperson’s contracts, and the evidence was speculative about how long he would have remained at Horizon or how many contracts he would have sold.5 Addressing the amount of exemplary damages, the court held that courts must compare the amount of exemplary damages assessed against each defendant to the harm caused by each defendant.6 Because each defendant caused $20,000 or less in actual damages, the exemplary damages award of $220,000 per defendant was excessive, the court found.7 The Supreme Court also considered exemplary damages in Bennett v. Grant.8 Bennett fraudulently caused Grant to be indicted, but the indictments were quashed because the statute of limitations had expired.9 Grant sued Bennett for malicious prosecution and received $10,703 in actual damages and $1 million in exemplary damages.10 The court of appeals reduced the exemplary damages to $512,109, reasoning that Grant would have been eligible for $160,000 from the state if he had been wrongfully imprisoned.11 The Supreme Court reversed, holding that potential damages can include only the harm “likely to result” from a defendant’s conduct, and Grant’s wrongful imprisonment was unlikely because the statute of limitations had expired.12 The court also addressed whether expert testimony was conclusory in two cases. In Starwood Management, LLC ex rel. Gonzalez v. Swaim, Starwood hired attorney Don Swaim to recover an aircraft that was seized by the Drug Enforcement Agency, or DEA.13 Because Swaim failed to provide the DEA with timely pre-suit notice, Starwood’s case was dismissed.14 Starwood also retained attorney George Crow, who provided timely notice and successfully recovered other seized aircraft.15 Starwood sued Swaim for legal malpractice, and Crow offered an expert affidavit that Swaim’s failure to provide notice caused the forfeiture of the aircraft.16 The lower courts rejected the affidavit as conclusory, but the Supreme Court reversed, holding that Crow’s record of following the notice procedures and recovering the aircraft provided a proper basis for his opinion because it explained the link between the facts relied on and the opinion.17 The Supreme Court similarly held that expert testimony was not conclusory in Bustamante v. Ponte, a medical malpractice case.18 The experts based their opinions on specific evidence from their review of the defendants’ deposition testimony, the plaintiff’s medical records, a seminal medical study in which the experts participated, other studies, and their own clinical experience.19 Notes 1) 520 S.W.3d 848 (Tex. 2017). 2) Id. at 855-57. 3) Id. at 858. 4) Id. at 858-59. 5) Id. at 860-66. 6) Id. at 877-79. 7) Id. at 880. 8) 525 S.W.3d 642 (Tex. 2017). 9) Id. at 646-47. 10) Id. at 647. 11) Id. at 647, 652. 12) Id. at 651-53, 655. 13) No. 16-0431, 2017 WL 4320421, at *1 (Tex. Sept. 29, 2017). 14) Id. 15) Id. at *2. 16) Id. 17) Id. at *2-5. 18) No. 15-0509, 2017 WL 4320708, at *10-15 (Tex. Sept. 29, 2017). 19) Id. WARREN W. HARRIS is a partner in Bracewell in Houston, where he heads the firm’s appellate practice group. He is a past president of the Texas Supreme Court Historical Society and a past chair of the Texas Bar Journal Board of Editors. WALTER A. SIMONS is an appellate associate in Bracewell’s Houston office. Previously, he clerked for Judge Patty Shwartz, of the U.S. Court of Appeals for the 3rd Circuit, and Judge Gray H. Miller of the U.S. District Court for the Southern District of Texas.
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