| The
Tort Times |
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January
2010
Volume 182 |
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| WRONGFUL
DEATH BENEFICIARIES ARE BOUND BY THE DECEASED’S |
In
re Labatt Food Serv., 52 Tex. Sup.Ct.J. 352. Labatt Food
Service contracts with its employees to provide an “occupational
injury plan.” The contract between Labatt and its employees
contains an arbitration clause, and an indemnify provision.
Mr. Dancy was a Labatt employee. He died while on the job and
his parents and children filed a wrongful death suit.
Labatt filed a motion to compel arbitration. It asserted that
the plan’s arbitration clause applied to these wrongful
death claims by third parties. Mr. Dancy’s family members
argued that they were not bound by the plan’s arbitration
clause because they had not signed the contract. Additionally,
they took the position that the entire agreement was void because
the indemnity clause was a pre-injury waiver in violation of the
Texas Labor Code.
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The
trial court denied Labatt’s motion. Labatt sought a
writ of mandamus from the Court of Appeals, but the application
was denied.
The Texas Supreme Court reviewed the case. It
noted that the arbitration agreementwas silent about who is
to determine whether particular persons are bound by the agreement.
The Court believed that the courts, not the arbitrator, should
determine the issue.
The Supreme Court commented that
statutory wrongful death beneficiaries placed themselves in
the exact legal shoes of the deceased, and they are subject
to the same defenses to which the deceased would have been
subject. The Court went on to say that the legislature created
an entirely derivative cause of action when it enacted the
wrongful death act, and Mr. Dancy’s beneficiaries are
bringing an entirely derivative claim. Thus, even though Mr.
Dancy’s family members are seeking compensation for
their own personal loss, they still stand in Mr. Dancy’s
legal shoes and are bound by an agreement. |
The Supreme
Court also examined the claim that the entire contract was void
because of its indemnity clause. It said that a challenge to the
validity of the contract as a whole, and not specifically to the
arbitration clause, must be decided by the arbitrator. The question
of a contract’s validity is for the arbitrator and not for
the courts.
The Supreme Court granted the petition for writ of mandamus
and ordered the trial court to compel arbitration.
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In this issue.
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Wrongful Death Beneficiaries Are Bound By The
Deceased’s Contract 1
Extrinsic Evidence Not Allowed To Invoke Coverage
In Favor Of Insured Party 1
Significant Sexual Harassment Verdict Awarded Against
Waffle House 2
A Cliff Is An Obviously Dangerous
Thing 2
Competing Law Firms Fight Over City 2-3
Property Owner Not Liable For
Execution Style Murder 3
Competing Law Firms Fight Over City Contract 3
At-Will Employees Win Claim For Bonus 3 |
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| EXTRINSIC
EVIDENCE NOT ALLOWED TO INVOKE COVERAGE IN FAVOR OF INSURED PARTY |
Pine Oak Builders, Inc. v. Great Am.
Lloyds Ins. Co., 52 Tex.Sup.Ct.J. 348. Old American Lloyds
Insurance Company issued a commercial general liability policy of
insurance to a homebuilder called Pine Oak Builders.
Pine Oak was sued by home purchasers in five lawsuits.
All of the suits alleged that improper installation of a synthetic
stucco product known as Exterior Insulation and Finish Systems (EIFS)
had caused water damage to their homes.
The EIFS had not been installed by Pine Oak. It had
been installed by subcontractors at the request of Pine Oak. Four
of the lawsuits alleged this fact. One of them, the Glass case,
did not. In the Glass petition, the Plaintiff alleged only that
Pine Oak had improperly installed the EIFS.
The policy of insurance in question excluded defective
construction unless the work had been done by a subcontractor. Pine
Oak wanted Great American to defend all five cases. Great American
took the position that it should not be required to defend the Glass
case because it did not allege that the work had been done by subcontractors.
A declaratory judgment suit resulted.
Pine Oak wanted to introduce evidence into the declaratory
judgment suit that the work had been done by a subcontractor so
as to invoke coverage. When both sides moved for summary judgment,
the trial court found in favor of Great American and the Court of
Appeals affirmed.
The Texas Supreme Court reviewed the case and affirmed
the decision of the two lower courts. It reminded the parties of
the “eight corner rule.” The four corners of the Plaintiffs’
petition alleged in the Glass case that the work had been done by
Pine Oak builders. The four corners of the policy said that it did
not cover claims for defective work by Pine Oak Builders. The Court
found that the extrinsic evidence that Pine Oak wanted to offer
would contradict the facts alleged in the Glass suit. |
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SIGNIFICANT
SEXUAL HARASSMENT VERDICT AWARDED AGAINST WAFFLE HOUSE
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Waffle House Inc. v. Williams,
52 Tex.Sup.Ct.J. 340. Ms. Williams worked at a Waffle
House restaurant for several years. She complained numerous times
to several different managers of sexual harassment by a fellow
employee.
Eventually, Ms. Williams resigned her position and
sought a right to sue Waffle House from the Equal Employment Opportunity
Commission and the Texas Commission on Human Rights. Both agencies
granted a right to sue notice.
Ms. Williams then sued the harassing employee and
Waffle House, alleging violations of the Labor Code, assault and
battery, ratification and negligent supervision and retention.
She also alleged reckless indifference and willful or malicious
conduct by Waffle House.
The alleged harassing employee could not be found
at the time of trial and was nonsuited.
Following a jury trial, the trial court rendered judgment
favoring Ms. Williams for $425,000 in actual damages, $57,929.69
in interest and costs, plus $3,450,000 in punitive damages, reduced
by statute to $425,000.
On appeal, Waffle House claimed that there was no
evidence to support an award of punitive damages. Waffle House
pointed out that there was never any corroborating evidence to
support Ms. Williams’ allegations and that the alleged harasser
had denied them. In other words, it was a swearing match without
any evidence to corroborate either the story of Ms. Williams or
the story of the alleged harasser. The Court of Appeals rejected
Waffle House’s argument and affirmed the decision of the
trial court.
The Supreme Court has granted a petition for review.
If the decision is published, we will report on it here.
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| A
CLIFF IS AN OBVIOUSLY DANGEROUS THING |
City of Waco
v. Kirwan, 53 Tex.Sup.Ct.J. 140. Mr. McGehee fell to
his death while sitting on the edge of Circle Point Cliff in Cameron
Park, a city park in Waco, Texas. The city had erected a sign
to prevent persons from approaching the cliff edge and had built
a wall. Mr. McGehee had ignored the sign and climbed over the
wall. Mr. McGehee’s mother brought a wrongful death action
against the city alleging a premises defect. As many TORT TIMES
readers know, governmental units are immune from suit unless that
immunity has been specifically waived by the provisions of the
Texas Tort Claims Act.
The city filed a plea to the jurisdiction alleging
that the court did not have jurisdiction over it because the Texas
Tort Claims Act did not waive immunity under this circumstance.
The trial court sustained the motion. The Court of Appeals, however,
reversed and remanded the case back to the trial court.
The Texas Supreme Court granted the
city’s petition for review. It saw this as an opportunity
to determine whether the Texas Recreational Use statute created
an obligation for the city to warn or protect recreational users
against the danger of naturally occurring conditions. The Court
said, “It is generally unreasonable and unduly burdensome
to ask a landowner to seek out every naturally occurring condition
that might be dangerous and then warn of the condition or make
it safe... This is not to say that the risk of harm may never
outweigh the burden of imposing a duty of care on landowners to
warn or protect others from the dangers of natural conditions
on the land.”
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| The Supreme
Court opined that a person could reasonably expect a cliff
to impose a risk of harm. The Court said that it would be
obvious to a reasonable recreational user that many cliffs
have the potential to crumble. The risk of harm was therefore
foreseeable, not just to the city, but also to Mr. McGehee.
The Court reversed the decision of the Court of
Appeals and dismissed the case with prejudice. It said that
a landowner, lessee or occupant under the Texas Recreational
Use statute does not generally owe a duty to others to protect
or warn against the dangers of natural conditions on the land,
and therefore may not ordinarily be held to have been grossly
negligent for failing to have done so. The Court said, “A
barrier and a sign warning a recreational user to stay away
from a dangerous natural condition generally will be sufficient
to avoid a showing of ‘conscious indifference to the
rights, safety and welfare of others under the statute.’
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| COMPETING LAW FIRMS FIGHT OVER CITY |
| Perdue, Brackett,
Flores, Utt & Burns v. Linebarger, Goggan, Blair, Sampson
& Meeks, 291 S.W.3d 448 (Tex.App.–Fort Worth 2009).
The Plaintiff and Defendant in this case are two
law firms. They each specialize in collecting delinquent
ad valorem property taxes for taxing entities across Texas.
Perdue, Brackett etc. entered into a 3-year contract with
the City of Fort Worth to collect delinquent ad valorem
property taxes. The contract had an option for two 1-year
extensions.
The city manager wanted to exercise
the option to extend the contract. This issue was put on
the city council’s executive session agenda. On the
day of the meeting, prior to the meeting taking place, the
Linebarger, Goggan etc. firm had delivered a memorandum
that criticized the Perdue, Brackett firm. The memorandum
accused Perdue, Brackett of providing false information
to the city council and claimed that Perdue, Brackett had
cost the city over $700,000 in uncollected tax revenue.
The city council voted to continue
the contract month-by-month until an audit of the contract
could be completed. When the audit was completed, it was
critical of Perdue, Brackett for its handling of certain
cases. |
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The city then
requested new proposals for the tax collection contract.
Both law firms submitted proposals and made presentations
to the city council at an open meeting. Perdue, Brackett
alleges that Linebarger, Goggan made additional defamatory
statements at the open meeting. The city ultimately
awarded the contract to Linebarger, Goggan.
Perdue, Brackett sued Linebarger, Goggan
for defamation, tortious interference, business disparagement,
and conspiracy, alleging that statements Linebarger,
Goggan made in the memorandum and the city council
meeting were false and defamatory and had caused the
city council to not exercise its extension option
in favor of Perdue, Brackett.
Linebarger, Goggan moved for summary judgment,
claiming that the allegedly defamatory statements
were absolutely privileged under the doctrine of quasi-judicial
immunity. The trial court granted summary judgment
and Perdue, Brackett appealed.
Two requirements must be met in order
for the absolute privilege under the doctrine of quasi-judicial
immunity to apply. First, a governmental entity must
have the power and authority to investigate and decide
the issue, that is, quasi-judicial power. Second,
the communication must bear some relationship to a
pending or proposed quasi-judicial proceeding. The
Fort Worth Court of Appeals believed that quasi-judicial
immunity was present in this case and, therefore,
the allegedly defamatory statements were absolutely
privileged. It affirmed the decision of the trial
court. |
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PROPERTY
OWNER NOT LIABLE FOR EXECUTION
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Trammell Crow
Cent. Texas, Ltd. v. Gutierrez, 51 Tex.Sup.Ct.J. 1355.
Trammell Crow owns a 53-acre shopping mall in San Antonio called
The Quarry Market. Mr. Gutierrez, a police informant who had allegedly
been threatened by robbers he had identified, was shot four times
in the back and head while at The Quarry Market by a man wearing
a ski mask.
Mr. Gutierrez’s wife and other survivors then
brought this action against Trammell Crow alleging negligent failure
to provide adequate security.
At trial, the Plaintiffs’ security expert testified
that three off-duty police officers employed by Trammell Crow were
not conspicuous enough which, in his opinion, would have prevented
the execution-style murder from taking place until after Mr. Gutierrez
had left the premises. In that expert’s opinion, Mr. Gutierrez
would have been murdered anyway, but elsewhere, had the security
been more conspicuous.
The jury reached a verdict in favor of the Plaintiffs
for more than $5 million.
The Court of Appeals rejected Trammell Crow’s
arguments that the murder was not foreseeable and that it had breached
no duty of care to the Plaintiffs. It affirmed the judgment of the
trial court.
The Supreme Court reversed the decision of the two lower
courts and rendered judgment that the Plaintiffs take nothing.
The Court thought the murder was not foreseeable. It
said that landowners are not the insurers of crime victims. The
foresee-ability requirement protects the owners and controllers
of land from liability for crimes that are so random, extraordinary,
or otherwise disconnected from them that they could not reasonably
be expected to foresee or prevent the crimes.
This is a case in which the shooting was going to take
place somewhere. It was personally motivated and not a simple crime
of opportunity because of inadequate security. |
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AT-WILL
EMPLOYEES WIN CLAIM FOR BONUS
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Vanegas v.
American Energy Servs., 53 Tex.Sup.Ct.J. 204. American
Energy Services employed Mr. Vanegas and others as at-will employees.
The employees alleged that American Energy told them that if
they would continue working for it, they would collectively
receive a bonus of 5% of the proceeds received in the event
American Energy Services was merged with another company or
sold.
It was claimed that American Energy merged with
another company, but the employees did not get a bonus. The
employees sued American Energy and its shareholders seeking
to enforce the alleged contract.
The trial court granted summary judgment in favor
of American Energy and the shareholders. The Court of Appeals
said that the alleged promise to pay the bonus was illusory.
It ruled that performance of an act called for in an illusory
promise cannot create a binding agreement. It affirmed the judgment
of the trial court.
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The
Texas Supreme Court studied the case. It pointed out
the difference between a bilateral contract and a unilateral
contract. A bilateral contract is one in which there
are mutual promises between the two parties. A unilateral
contract is created by a promissor promising a benefit
if the promisee performs. The unilateral contract becomes
enforceable when the promisee performs. A unilateral
contract occurs when there is only one promissor and
the other party accepts, not by mutual promise, but
by actual performance or forbearance.
The Supreme Court went
on to say that whether the promise was illusory at the
time it was made is irrelevant. The Court said that
what matters is whether the promise became enforceable
by the time of the alleged breach. It observed that
almost all unilateral contracts begin as illusory promises.
The Court decided that the
judgment of the Court of Appeals should be reversed
and the case should be remanded to the trial court for
further proceedings consistent with its opinion. The
Court said that the employees claimed that American
Energy made an offer to split 5% of the proceeds of
the sale or merger. Assuming that allegation to be true,
the employees accepted this offer by remaining employed
for the requested period of time. At that point, American
Energy’s promise became binding. American Energy
then breached its agreement with the employees by failing
to pay the 5% bonus.
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NOTICE
The Tort Times is not a
substitute for legal counsel and does not presume to constitute
legal opinion. We urge you to consult legal counsel on specific
matters.
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