Texas Court Reporters Certification Board and Michele Henricks, as Director of the Court Reporters Certification Board v. Esquire Deposition Services, L.L.C., No. 03-06-00002-CV (Tex.App.- Austin, Jul. 20, 2007)(Opinion by Justice Pemberton)(disciplinary proceeding, jurisdiction)(Before Justices Patterson, Pemberton and Waldrop)
Appeal from 250th District Court of Travis County
Dispostion: Reversed and dismissed
FROM THE DISTRICT COURT OF TRAVIS COUNTY, 250TH JUDICIAL DISTRICT
NO. GN503367, HONORABLE MARGARET A. COOPER, JUDGE PRESIDING
OPINION BY JUSTICE PEMBERTON
The Texas Court Reporters Certification Board (the "Board") set a hearing on a disciplinary complaint against Esquire Deposition Services, L.L.C. ("Esquire") alleging that Esquire provided court reporting services during a December 2003 deposition pursuant to a long-term volume discount arrangement that violated statutes and rules governing Texas court reporting firms. Esquire sued the Board and its director, Michele Henricks, alleging that the Board lacked statutory authority to regulate or prohibit "long term discounts in contracts by court reporters and court reporting firms" and seeking declaratory and injunctive relief. The Board and Henricks filed a plea to the jurisdiction, which the district court denied. The Board appeals the district court's order denying its plea to the jurisdiction. See Tex. Civ. Prac. & Rem. Code Ann. § 51.014(8) (West Supp. 2006). (1) We reverse the district court's order and dismiss Esquire's suit for want of jurisdiction.
STANDARD OF REVIEW
The subject matter jurisdiction of a trial court may be challenged through a plea to the jurisdiction. See Texas Dep't of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 225-26 (Tex. 2004); Bland Indep. Sch. Dist. v. Blue, 34 S.W.3d 547, 554 (Tex. 2000). The determination of whether a trial court has subject matter jurisdiction begins with the pleadings. See Miranda, 133 S.W.3d at 226. The pleader has the initial burden of alleging facts that affirmatively demonstrate the trial court's jurisdiction to hear the cause. Id. (citing Texas Ass'n of Bus. v. Texas Air Control Bd., 852 S.W.2d 440, 446 (Tex. 1993)). Whether the pleader has met this burden is a question of law that we review de novo. Id. We construe the pleadings liberally and look to the pleader's intent. Id.
If the pleadings do not contain sufficient facts to affirmatively demonstrate the trial court's jurisdiction but do not affirmatively demonstrate incurable defects in jurisdiction, the issue is one of pleading sufficiency and the plaintiffs should be afforded the opportunity to amend. Id. at 226-27; Elgin Indep. Sch. Dist. v. R.N., 191 S.W.3d 263, 272 (Tex. App.--Austin 2006, no pet.). If the pleadings affirmatively negate the existence of jurisdiction, then a plea to the jurisdiction may be granted without allowing the plaintiffs an opportunity to amend. Miranda, 133 S.W.3d at 227.
A defendant may also challenge the jurisdictional facts alleged by the plaintiff through the process described in Miranda. See Miranda, 133 S.W.3d at 227 (citing Bland, 34 S.W.3d at 555). When a plea to the jurisdiction challenges the existence of facts alleged by the pleader to establish the trial court's subject matter jurisdiction, the trial court must consider relevant evidence submitted by the parties. Bland, 34 S.W.3d at 555. Here, the Board and Henricks did not challenge the jurisdictional facts alleged by Esquire, nor did they introduce jurisdictional evidence. Instead, they challenged only the sufficiency of Esquire's pleadings. Thus, we take as true the facts alleged in Esquire's pleadings and construe them liberally in favor of jurisdiction. Id. at 226.
Additionally, although the Board did not present jurisdictional evidence, Esquire did attach evidence to its pleadings, and we may consider it in resolving the jurisdictional challenges the Board has raised. Bland, 34 S.W.3d at 555 ("[A] court deciding a plea to the jurisdiction is not required to look solely to the pleadings but may consider evidence and must do so when necessary to resolve the jurisdictional issues raised.").
PLEADINGS AND JURISDICTIONAL EVIDENCE
Esquire is a national court reporting firm. It is registered in Texas and has eight offices statewide. Esquire's factual allegations center on a disciplinary complaint filed against it by Henricks, in her capacity as director of the Board. To place these allegations in context, it is helpful first to briefly review the statutes governing the Board's regulatory and disciplinary powers over court reporting firms.
Regulatory framework
Chapter 52 of the government code regulates the business and practice of court reporting in the State of Texas, including establishing certification, education, and conduct requirements for court reporters and court reporting firms. Tex. Gov't Code Ann. §§ 52.001-.059 (West 2005).
The Board is a state agency, administratively attached to the Office of Court Administration of the Texas Judicial System, whose statutory charges include administering and enforcing chapter 52, administering examinations and other requirements related to reporter certification, prescribing educational programs, and "the executive functions necessary to carry out the purposes of this chapter under rules adopted by the supreme court." Id. §§ 52.013-.0131 (West 2005). The supreme court appoints the Board, and "may adopt rules consistent with this chapter," including rules governing the certification and conduct of court reporters and the registration and conduct of court reporting firms. Id. §§ 52.002, .011. The Board does not have its own rule-making authority.
To practice court reporting, a person must be certified by the supreme court. Id. § 52.021(a)-(b). To obtain court-reporter certification, a person must file an application with the Board, pass an examination, and comply with other requirements of the statute and rules. Id. §§ 52.0211-.026. The Board certifies each qualified applicant's name to the supreme court, which issues the formal certification. Id. § 52.024. Court reporting firms must also register with the Board, and "[r]ules applicable to a court reporter are also applicable to a court reporting firm." Id. §§ 52.021(h)-(i), 52.0255.
The Board is also authorized--and required-- to take disciplinary action against court reporters and court reporting firms. Id. §§ 52.029, 52.0295. Section 52.0295(a) is addressed to court reporting firms, and provides that the Board "shall reprimand, assess a reasonable fine against, or suspend, revoke, or refuse to renew the registration of a shorthand reporting firm or affiliate office for" any of twelve enumerated grounds that conclude with "other sufficient cause." Id. § 52.0295(a). Among these disciplinary grounds is:
unprofessional conduct, including a pattern of giving directly or indirectly or benefitting from being employed as a result of giving any gift, incentive, reward, or anything of value to attorneys, clients, or their representatives or agents, except for nominal items that do not exceed $100 in the aggregate for each recipient each year. Id. § 52.0295(a)(9).
However, the legislature has provided that "nothing in Subsection (a)(9) [the "unprofessional conduct" prohibition] shall be construed to define providing value-added business services, including long-term volume discounts, such as the pricing of products and services, as prohibited gifts, incentives, or rewards." Id. § 52.0295(b).
On the other hand, the legislature has prohibited, as a separate disciplinary ground, "entering into or providing services under a prohibited contract described by Section 52.034." Id. § 52.0295(a)(10). Section 52.034 defines "prohibited contracts" in relevant part as "any contractual agreement, written or oral, exclusive or nonexclusive," that "undermines the impartiality of the court reporter," "requires a court reporter to provide any service not made available to all parties to an action," or "gives or appears to give an exclusive advantage to any party." Id. § 52.034(a)(1), (3)-(4).
Procedurally, the Board's disciplinary process is triggered by the filing of a complaint against a court reporter or court reporting firm by a person with personal knowledge of the alleged violation, which may include the Board or a court of this state. Id. § 52.027(a), (c). (2) If, after receiving a complaint, the Board "believes that a hearing on the complaint is advisable," it is required to set a hearing not later than the 30th day after the date the Board received the complaint. Id. § 52.028(a). Immediately after setting the hearing date, the Board must give notice to the subject reporter or firm, stating "the cause of any contemplated disciplinary action" and the hearing time and place. Id. § 52.028(b).
At the hearing, the Board shall apply "the general rules of evidence applicable in a district court" in determining whether a violation occurred, and "shall produce a written summary of the evidence before it and a written finding of facts." Id. §§ 52.028(d), .028(g), .029(a), .0295(a). If it finds a ground for discipline against a court reporting firm, the Board is authorized to "reprimand, assess a reasonable fine against, or suspend, revoke, or refuse to renew the registration of" the firm. Id. § 52.0295; see also id. § 52.0321 (authorizing administrative penalties). An aggrieved court reporter or court reporting firm may appeal a disciplinary action of the Board to district court. Id. § 52.030. This appeal shall be by trial de novo. Id.
The complaint against Esquire
The Board's present actions against Esquire stem from an earlier complaint that a certified court reporter, Donna Collins, filed against Esquire and one of its reporters alleging that Esquire had committed "unprofessional conduct" by failing to timely disclose, prior to a December 2003 deposition, the existence of a contract under which Esquire had agreed to provide services to one of the parties to a lawsuit. See Standards & Rules for Certification of Certified Shorthand Reporters § IV(B)(4) (requiring disclosure of "existing or past financial, business, professional, family or social relationships, including contracts for court reporting services, which might reasonably create an appearance of partiality."). Michael E. Jarvis, Esquire's general counsel, filed a written response to Collins's complaint disputing that the disclosure requirement applied to court reporting firms, as opposed to individual reporters who had a relationship requiring disclosure. Jarvis went on to assert that "the mere fact that Esquire has provided competitive rates to a party" did not create an appearance of partiality that would require disclosure under the rule. He observed that the legislature had explicitly excluded from prohibited "unprofessional conduct" "value-added business services, including long-term volume discounts, such as the pricing of products and services." Tex. Gov't Code Ann. § 52.0295(a)(9), (b). Jarvis also pointed out that the legislature had restricted the supreme court's power to adopt "rules restricting advertising or competitive bidding by a [reporter or firm] except to prohibit false, misleading, or deceptive practices." See id. § 52.003.
In response to Jarvis's letter, Collins amended her complaint to allege that Esquire had entered into a "prohibited contract" in violation of section 52.034. See id. § 52.034. (3) At a preliminary hearing, the Board directed its staff to file a complaint concerning the issues Collins had raised because Collins lacked the required personal knowledge of the violations she had alleged. (4) The Board dismissed the allegation regarding untimely disclosure, after which Henricks filed the complaint that is the focus of Esquire's suit.
The complaint filed by Henricks cites excerpts from Jarvis's letter and alleges:
The disclosure signed by the court reporter states, "Please be advised that Esquire Deposition Services has entered into a volume-related discount fee structure with a party in this lawsuit." If Esquire Deposition Services (1) negotiated directly with a party litigant and (2) i[t] negotiated for all future litigation and not for this specific case only, this is a violation of prohibited contracts under Section 52.034 of the Government Code.
It appears that Esquire may negotiate volume discounts in exchange for all future work which is not permissible and does not fall under the definition of competitive bidding. A volume discount is permissible only when negotiated on a specific case, but it must be disclosed to all parties. Competitive bidding for depositions in a particular case can be accomplished by contacting several reporting firms and asking them to bid on a volume of depositions over a period of time. A long-term volume discount handled in such a manner would not be a prohibited gift, incentive or reward.
The complaint referenced the following statutory prohibitions and rules applicable to court reporting firms:
Tex. Gov't Code Ann. § 52.0295(a)(2) (prohibiting "dishonesty" by court reporting firms).
Tex. Gov't Code Ann. § 52.0295(3)-(4) (prohibiting ordering, or failing to mitigate, employee conduct that court reporting firm's officers or managers know or should know violates chapter 52).
Tex. Gov't Code Ann. § 52.0295(9) (prohibiting "unprofessional conduct").
Tex. Gov't Code Ann. § 52.0295(b) (excluding from "unprofessional conduct" under subsection (a)(9) "providing value-added business services, including long-term volume discounts, such as the pricing of products and services, as prohibited gifts, incentives, or rewards.").
Tex. Gov't Code Ann. § 52.0295(10) (prohibiting court reporting firms from entering into or providing services under a "prohibited contract" under section 52.034).
Tex. Gov't Code Ann. § 52.034 (defining "prohibited contracts").
Tex. Gov't Code Ann. § 52.0295(12) ("other sufficient cause" for disciplining a court reporting firm).
Tex. Gov't Code Ann. § 52.021(i) (providing that rules applicable to a court reporter are also applicable to a court reporting firm).
Standards & Rules for Certification of Certified Shorthand Reporters § IV(B)(4) (requiring disclosure of "existing or past financial, business, professional, family or social relationships, including contracts for court reporting services, which might reasonably create an appearance of partiality"), (6) (failing to charge all parties and attorneys to the action the same price for services performed in an action), and (7) (failure to disclose an itemization of all rates and charges to all parties or their attorneys).
Tex. Gov't Code Ann. § 52.003 (prohibiting supreme court from adopting rules restricting competitive bidding, subject to sections 52.021(i), 52.0295, 52.034, and "any rules related to ethics or professional conduct promulgated by the supreme court").
The Board set a formal hearing on its complaint for January 28, 2006.
Esquire also emphasizes that during the same period in which the Board was deciding to prosecute a complaint against it, the Board also proposed rules to the supreme court that would define "prohibited conduct related to contracting issues." These proposed rules, which were attached to Esquire's petition, included explicit prohibitions against contractual arrangements under which court reporters or court reporting firms establish rates and terms for court reporting services that extend beyond a single case or proceeding, place a court reporter on any list of preferred providers of court reporting services after reaching an agreement specifying prices or other terms upon which future court reporting services will be provided, prohibit or restrict the discretion of the noticing attorney from using the court reporter of the attorney's choice, fail to offer comparable services to all parties in the litigation, or allow the court reporter to deal directly with a party at interest except to provide invoices. The proposed rules exclude "situations where fees or special services may be negotiated, provided that they are the same for all parties and are negotiated on a case-by-case basis" and governmental entities obligated to obtain court-reporter services on a long-term basis through competitive bidding. (5) To date, the supreme court has not adopted the Board's proposed rules.
Esquire's claims
In advance of the formal hearing date on the Board's complaint against Esquire, Esquire filed its suit in district court against the Board and Henricks, in her capacity as the Board's director. Esquire pleads that "[a]s it stands, the practice of negotiating long-term volume discounts is not conduct that is prohibited by law or any regulation of the Board. Otherwise, there would not have been the need for the Board to submit a rule to the Texas Supreme Court." Esquire alleges that the Board is acting outside its statutory authority by seeking (1) to prohibit contracts "that are not prohibited by any current statute or rule" and (2) to "end-run" the supreme court's rule-making authority by attempting to enforce its proposed rules as if the court had adopted them. Esquire requested declarations under the Uniform Declaratory Judgments Act (UDJA) that "in seeking to prohibit long term discounts in contracts by court reporters and court reporting firms, the Board is acting in an ultra vires manner and outside of its statutory jurisdiction." See Tex. Civ. Prac. & Rem. Code Ann. §§ 37.001-.011 (West 1997 & Supp. 2006). Esquire also requested injunctive relief prohibiting the Board from "[p]roceeding with that portion of the Complaint regarding long-term volume discounts because any action by the Board to prohibit such discounts is ultra vires and outside the scope of its jurisdiction."
During oral argument, the Board rendered moot Esquire's claims that are predicated on the allegation that the Board is attempting to enforce proposed rules that the supreme court has not adopted. It made the judicial admission that the Board lacked authority to enforce its proposed rules against Esquire because the rules had not been approved by the supreme court, see Tex. Gov't Code Ann. § 52.002, and that the rules thus could not serve as a basis for its disciplinary complaint against Esquire. Accordingly, we consider only the claims founded on the allegation that the Board currently lacks statutory authority to regulate or prohibit long-term volume discount contracts.
ANALYSIS
As grounds for reversal, the Board asserts that (1) Esquire's claim is not ripe, and Esquire lacks standing, because it is founded on the "contingencies" or "hypotheticals" that the Board will actually determine that Esquire's particular contract violates section 52.0295 and, in so doing, exceed its authority; (2) the subject matter of Esquire's claim is within the Board's exclusive jurisdiction, and the district court accordingly lacks subject-matter jurisdiction unless and until Esquire exhausts its administrative remedies and brings an appeal as permitted by chapter 52; and (3) the UDJA does not confer additional subject-matter jurisdiction on the district court and, in any event, does not waive sovereign immunity barring Esquire's suit.
Our analytical starting point in cases, such as this one, involving disputes over whether a trial court or administrative agency has subject-matter jurisdiction over a dispute is article V, section 8 of the Texas Constitution. It provides that a district court's jurisdiction "consists of exclusive, appellate, and original jurisdiction of all actions, proceedings, and remedies, except in cases where exclusive, appellate, or original jurisdiction may be conferred by this Constitution or other law on some other court, tribunal, or administrative body." Tex. Const. art. V, § 8. The legislature has provided by statute that district courts possess "the jurisdiction provided by Article V, Section 8, of the Texas Constitution," and "may hear and determine any cause that is cognizable by courts of law or equity and may grant any relief that could be granted by either courts of law or equity." Tex. Gov't Code Ann. §§ 24.007-.008 (West 2004). Thus, "[c]ourts of general jurisdiction presumably have subject matter jurisdiction unless a contrary showing is made." Subaru of Am., Inc. v. David McDavid Nissan, Inc., 84 S.W.3d 212, 220 (Tex. 2002).
By contrast, "there is no presumption that administrative agencies are authorized to resolve disputes. Rather, they may exercise only those powers the law, in clear and express statutory language, confers upon them." Id. "Courts will not imply additional authority to agencies, nor may agencies create for themselves any excess powers." Id. The courts are not divested by an agency of the subject-matter jurisdiction they would otherwise possess to adjudicate a dispute unless the legislature has granted the agency exclusive jurisdiction, or the sole power to make the initial determination in the dispute. Id. at 221; Bexar Metro. Water Dist. v. City of Bulverde, 156 S.W.3d 79, 90 (Tex. App.--Austin 2004, pet. denied). Whether an agency has exclusive jurisdiction is determined by construction of the relevant statutory scheme. See Thomas v. Long, 207 S.W.3d 334, 340 (Tex. 2006). The legislature's intent to grant an agency the sole authority to make the initial determination in a dispute may be reflected in either express statutory language to that effect or the overall statutory scheme. Id. at 340-42.
We agree with the Board that the legislature has granted it exclusive jurisdiction to make the initial determination, "[a]fter receiving a complaint and giving . . . notice and an opportunity for a hearing as prescribed by Section 52.028," whether grounds for discipline against a court reporting firm exist under section 52.0295. See Tex. Gov't Code Ann. § 52.0295(a). Although the legislature did not explicitly use the term "exclusive" to describe the Board's jurisdiction over disciplinary claims against court reporting firms, such intent is apparent from the statutory scheme. Chapter 52 comprehensively regulates the practice of court reporting in Texas, including establishing certification, education, and conduct requirements for court reporters and court reporting firms. The Board is charged with the duty to "administer and enforce this chapter" and "the executive functions necessary to carry out the purposes of this chapter under rules adopted by the supreme court." Court reporting firms are required to register with the Board, and "[r]ules applicable to a court reporter are also applicable to a court reporting firm." Id. §§ 52.021(h)-(i), .0255; see id. §§ 52.013(1), .0131. The legislature has mandated that the Board "shall reprimand, assess a reasonable fine against, or suspend, revoke, or refuse to renew the registration of" a court reporting firm if grounds for discipline exist under section 52.0295. Id. § 52.0295(a). To this end, the legislature established a procedure whereby a person with knowledge of disciplinary grounds may file a complaint, and the Board determines (1) whether the complaint is "properly executed" (i.e., complies with the requisites of section 52.027(a)), (2) whether the "board believes that a hearing on the complaint is advisable," and (3) whether, based on the hearing, one or more of the grounds for discipline enumerated in section 52.0295 has been established. See id. §§ 52.027, .028, .0295. A court reporting firm that is aggrieved by a Board disciplinary action may appeal that action to district court. See id. § 52.030. We can discern from this statutory scheme that the legislature intended the Board to have exclusive authority to make these determinations as an initial matter. See Thomas, 207 S.W.3d at 340-42.
Esquire maintains, however, that the subject matter of its suit does not fall within the Board's exclusive jurisdiction over chapter 52 disciplinary complaints. It characterizes its claims as challenges to whether the Board has statutory authority to regulate or prohibit any "long-term volume discounts" for court reporting services, which it would distinguish from the subject matter of the Board's complaint against it regarding specific potential violations. Cf. Texas Mun. Power Agency v. Public Util. Comm'n, 100 S.W.3d 510, 517-20 (Tex. App.--Austin 2003, pet. denied) (distinguishing between APA appeal of "a particular Commission order" and UDJA claim for "a determination of the Commission's general authority" that would resolve a larger underlying controversy reflected in other agency proceedings; the latter was "broader than the effectiveness of one particular order and requests relief more expansive than the reversal of a particular Commission determination"); see also Texas Dept. of Ins., Div. of Workers' Comp. v. Lumbermens Mut. Cas. Co., 212 S.W.3d 870, 875 (Tex. App.--Austin 2006, pet. denied) (distinguishing between complaint that agency acted ultra vires in issuing advisories regarding impairment determination and complaints arising from specific contested-case proceedings relating to the advisories' application). Esquire relies on the established principle that the legislature's delegation of exclusive jurisdiction to an agency to make an initial determination in a dispute does not necessarily divest courts of their subject-matter jurisdiction over a dispute concerning whether the agency has acted beyond its delegated powers. See Southwestern Bell Tel. Co. v. Public Util. Comm'n, 735 S.W.2d 663, 668 (Tex. App.--Austin 1987, no writ) (characterizing this power as the "inherent, original, equitable jurisdiction of the district court to protect against agency action that is ultra vires of the agency's constitutional and statutory powers" and observing that "[i]t is indisputable that the district courts of the State possess such jurisdiction"). Claims predicated on such agency action thus are not subject to the exhaustion-of-remedies requirements applicable to a dispute within the agency's jurisdiction, see City of Sherman v. Public Util. Comm'n, 643 S.W.2d 681, 683, 686 (Tex. 1983); Westheimer Indep. Sch. Dist. v. Brockette, 567 S.W.2d 780, 785 (Tex. 1978), nor barred by the principle of judicial non-interference with agency functions within the scope of its delegated authority. Brockette, 567 S.W.2d at 785 ("Courts generally hold that administrative bodies are entitled to and should exercise the duties and functions conferred by statute without interference by the courts. It follows, however, that intervention by the court in administrative proceedings may be permissible when an agency is exercising authority beyond its statutorily conferred powers."). Such a claim may be asserted through a common-law injunction suit, see id. at 585-86, or, where it requires construction of the agency's statutory powers, through the UDJA. City of Sherman, 643 S.W.2d at 682, 683-86; see Tex. Civ. Prac. & Rem. Code Ann. § 37.004(a) (West 1997) (a claimant "whose rights, status, or other legal relations are affected by a statute . . . may have determined any question of construction or validity arising under [it] and obtain a declaration of rights, status, or other legal relations thereunder").
Esquire contends that the Board has exceeded its statutory authority because section 52.0295 and related provisions do not authorize the Board to regulate or prohibit long-term volume discount contracts for court reporting services. This is the same basic question presented in the disciplinary proceeding--whether or how any of the disciplinary grounds enumerated in section 52.0295 apply to a long-term volume discount contract for court reporting services. The two proceedings differ only in that while the disciplinary proceedings would address whether the particular Esquire contract or contract underlying the 2003 deposition violates section 52.0295, Esquire's UDJA claim would determine, in effect, whether any long-term volume discounts for court reporting services could ever violate the provision. The disciplinary proceeding could thus address the same issues presented in Esquire's claims. If the Board decides that Esquire violated section 52.0295, it will necessarily have determined that a long-term volume discount contract could violate the provision. Conversely, if the Board decides that Esquire did not violate section 52.0295, it may do so on the basis that long-term volume discounts categorically are not prohibited by the provision. In these ways, Esquire's claims fall within the exclusive subject-matter jurisdiction of the Board. See Blue Cross Blue Shield of Tex. v. Duenez, 201 S.W.3d 674, 676 (Tex. 2006) (emphasizing that UDJA cannot be used to circumvent agency's exclusive jurisdiction over same subject matter).
On the other hand, Esquire's claims are not entirely duplicative of the disciplinary proceeding, as the Board could conceivably determine that Esquire's contract does not violate section 52.0295 without reaching the question of whether long-term volume discount contracts for court reporting services would ever violate those prohibitions. To this extent, Esquire's claims for a declaration that no such contracts would ever violate section 52.0295 and injunctive relief on that basis would seek broader relief than might be available in the disciplinary proceeding. See Texas Mun. Power Agency, 100 S.W.3d at 519. However, such claims, to the extent they are not within the Board's exclusive jurisdiction, are not ripe.
Esquire must allege a justiciable controversy regarding whether the Board is acting beyond its statutory powers in order for the district court to have subject-matter jurisdiction over either its UDJA (6) or common-law injunction claims. Brooks v. Northglen Ass'n, 141 S.W.3d 158, 163-64 (Tex. 2004); Bonham State Bank v. Beadle, 907 S.W.2d 465, 467 (Tex. 1995) (citing Texas Ass'n of Bus., 852 S.W.2d at 446). "To constitute a justiciable controversy, there must exist a real and substantial controversy involving genuine conflict of tangible interests and not merely a theoretical dispute." Beadle, 907 S.W.2d at 467 (quoting Bexar-Medina-Atascosa Counties Water Control & Improvement Dist. No. 1 v. Medina Lake Prot. Ass'n, 640 S.W.2d 778, 779-80 (Tex. App.--San Antonio 1982, writ ref'd n.r.e.). Ripeness and standing are related doctrines of justiciability: each is a threshold question that implicates subject matter jurisdiction and each emphasizes the necessity of a concrete injury for a justiciable claim to be presented. Waco Indep. Sch. Dist. v. Gibson, 22 S.W.3d 849, 851 (Tex. 2000) (citing Patterson v. Planned Parenthood, 971 S.W.2d 439, 442 (Tex. 1998)). Ripeness and standing, like other justiciability doctrines, derive in part from the constitutional prohibition against advisory opinions, which in turn stems from separation-of-powers principles. Patterson, 971 S.W.2d at 442.
A case is not ripe when its resolution depends upon contingent or hypothetical facts or upon events that have not yet come to pass. Gibson, 22 S.W.3d at 852. In addition to restraining courts from issuing unconstitutional advisory opinions, ripeness also has a pragmatic, prudential aspect that aims to conserve "judicial time and resources for real and current controversies, rather than abstract, hypothetical, or remote disputes." Patterson, 971 S.W.2d at 443 (quoting Mayhew v. Town of Sunnyvale, 964 S.W.2d 922, 928 (Tex. 1998)). In this regard, avoiding premature litigation over administrative actions prevents courts from "'entangling themselves in abstract disagreements over administrative policies' while at the same time serving to 'protect the agencies from judicial interference until an administrative decision has been formalized and its effects felt in a concrete way by the challenging parties.'" Id. (quoting City of El Paso v. Madero Dev. & Constr. Co., 803 S.W.2d 396, 398-99 (Tex. App.--El Paso 1991, writ denied) (citing Abbott Labs. v. Gardner, 387 U.S. 136, 149 (1967))). These factual and prudential concerns underlie the court's determination of ripeness, in which it considers: (1) the fitness of the issues for judicial decision and (2) the hardship occasioned to a party by the court's denying judicial review. Perry v. Del Rio, 66 S.W.3d 239, 250 (Tex. 2001) (citing Abbott Labs., 387 U.S. at 149).
This Court has recognized that, in the context of claims regarding the scope of agency authority, ripeness may turn on whether the issues presented are purely legal in nature as opposed to requiring consideration of particularized facts in light of agency expertise. Compare City of Waco v. Texas Natural Res. Conservation Comm'n, 83 S.W.3d 169, 175-77 (Tex. App.--Austin 2002, pet. denied) (holding that UDJA claim that agency acted beyond statutory authority "presents a purely legal inquiry" that "will not benefit from the development of additional facts in connection with a specific permit application"), with Beacon Nat'l Ins. Co. v. Montemayor, 86 S.W.3d 260, 268 (Tex. App.--Austin 2002, pet. denied) (distinguishing City of Waco and holding that UDJA claims there "require[d] determination of several factual matters which have not been sufficiently developed") (7); cf. Montemayor, 86 S.W.3d at 271-72 (discussing primary jurisdiction doctrine and holding that it compelled court to await department of insurance's initial determination regarding interpretation of policy forms where inquiry entailed "fact-based questions" whose resolution would benefit from agency's expertise). (8) We conclude that Esquire's claims fall into the latter category.
To determine whether the Board has statutory authority to regulate or prohibit long-term volume discounts for court reporting services, a court would have to decide whether any such contracts could "undermine the impartiality of the court reporter," "give or appear to give an exclusive advantage to any party," or constitute "dishonesty" or "other sufficient cause" for discipline. Such broad and somewhat subjective terms contemplate fact-specific application. Whether or how such prohibitions would apply to "long-term volume discount contracts" for court reporting services without concrete facts regarding their features, the circumstances surrounding their use, and their effects would present the sorts of "hypothetical, or remote disputes," Patterson, 971 S.W.2d at 443, and "abstract disagreements over administrative policies" that the ripeness doctrine is intended to prevent. We further observe that these statutory terms, like others in chapter 52, contemplate considerations of policy and ethics related to the court reporting industry and its role in the justice system. The Board (and ultimately, the supreme court) is statutorily empowered and equipped to identify and weigh such determinations in its administration of chapter 52, and the legislature has manifested the intent that it do so when interpreting and applying the statutory disciplinary grounds. These considerations confirm that Esquire's suit is not ripe, to the extent it is not entirely subsumed within the Board's exclusive subject-matter jurisdiction.
For these reasons, we hold that the district court erred in overruling the Board's plea to the jurisdiction. We need not address the Board's other issues. Accordingly, we reverse the order of the district court overruling the Board's plea to the jurisdiction and render judgment dismissing Esquire's claims.
__________________________________________
Bob Pemberton, Justice
Before Justices Patterson, Pemberton and Waldrop
Reversed and Dismissed
Filed: July 20, 2007
1. Henricks has joined in this appeal. Esquire has filed a motion to dismiss Henricks's interlocutory appeal on the grounds that she is not a "governmental unit" authorized to take an interlocutory appeal from the denial of a plea to the jurisdiction. See Tex. Civ. Prac. & Rem. Code Ann. § 51.014(a)(8) (West Supp. 2006) (authorizing interlocutory appeal from order granting or denying plea to jurisdiction by "governmental unit" as defined in Texas Tort Claims Act), § 101.001(3) (West 2005) (defining "governmental unit"); see also Texas A&M Univ. Sys. v. Koseoglu, 167 S.W.3d 374, 378 (Tex. App.--Waco 2005, pet. granted). We need not reach that question here. Because Esquire has sued Henricks solely in her official capacity as director of the Board, our disposition of the Board's appeal also controls the district court's jurisdiction over Esquire's claims against Henricks. We accordingly dismiss both Henricks's appeal and Esquire's motion as moot.
2. The complainant must also execute a complaint form provided by the Board and attach any "pertinent documentary evidence to the form." Tex. Gov't Code Ann. § 52.027(a)(2)-(4) (West 2005).
3. Collins also added an allegation that Esquire had sought to circumvent Texas law by cancelling depositions and rescheduling them through out-of-state offices. This allegation was later replicated in the complaint Henricks filed and was originally a subject of Esquire's lawsuit. The Board has since dismissed this allegation, and the parties agree that Esquire's claims relating to it are moot.
4. In its pleadings, Esquire questioned whether Henricks had been authorized by the Board to initiate the complaint regarding long-term volume discounts. On appeal, Esquire does not appear to press this allegation other than to state, in a footnote, that although the Board is authorized to file disciplinary complaints, id. § 52.027(c), "it is far from clear that the Board is authorized to simply adopt a complaint filed by the staff member, which in this case was adopted from a complaint filed by a third party without personal knowledge."
5. Esquire states that the Board's decision to adopt these rules was preceded by a three-hour public hearing with "significant public comment." The transmittal letter from the Board's chair to the supreme court summarizes the debate. "The primary concern expressed by those supporting the changes was that 'bulk' contracting by court reporters may create an appearance of partiality," that there was "confusion about the exact types of contractual arrangements that are prohibited," and that without the explicit prohibitions, "contractors may continue to take advantage of this uncertainty." "The primary concern expressed by those opposing the changes was . . . anti-competitive effect," that the contracting practices in question had lowered prices and increased competition and were already regulated fully by section 52.034 of the government code, that the proposed rule would violate antitrust laws, and that section 52.003 prohibited the supreme court from enacting rules on that issue.
6. The UDJA does not create or augment a trial court's subject-matter jurisdiction--it merely provides a remedy where subject-matter jurisdiction already exists. See Tex. Civ. Prac. & Rem. Code Ann. § 37.003(a) (West 1997) ("A court of record within its jurisdiction has power to declare rights, status and other legal relations . . . ." (emphasis added)); Chenault v. Phillips, 914 S.W.2d 140, 141 (Tex. 1996); Texas Ass'n of Bus. v. Texas Air Control Bd., 852 S.W.2d 440, 444 (Tex. 1993).
7. The federal ripeness jurisprudence that the Texas Supreme Court has applied, see Perry v. Del Rio, 66 S.W.3d 239, 250 (Tex. 2001) (citing Abbott Labs., 387 U.S. at 149), appears to employ a similar analysis in determining the "fitness" for judicial resolution of issues regarding an agency's statutory authority, considering whether the issues are primarily legal rather than factual in nature, whether further factual development in the agency would significantly aid the court's ability to decide the issue, and whether the court's decision would be informed by the agency's specialized expertise in applying the statute to concrete facts. See Abbott Labs., 387 U.S. at 149-50; see also National Park Hosp. Assoc. v. Dep't of the Interior, 538 U.S. 803, 812 (2003) (determining that facial challenge to regulation, although "a purely legal one," was not fit for review because its resolution could depend upon specific features of contracts impacted by regulation); Toilet Goods Ass'n v. Gardner, 387 U.S. 158, 164 (1968) (determination of whether agency acted within statutory power to adopt regulations "for efficient enforcement" of statute should be informed by "an understanding of what types of enforcement problems are encountered by the [agency], the needs for various sorts of supervision in order to effectuate the goals of the Act, and the safeguards needed . . . . We believe that judicial appraisal of these factors is likely to stand on a much surer footing in the context of a specific application of the regulation than could be the case in the generalized challenge made here.").
8. See also Ronald L. Beal, 2 Texas Administrative Practice and Procedure § 12.2, at 12-50 to 12-51 (2006) (suggesting that primary-jurisdiction principles govern whether challenge to allegedly ultra vires agency actions can proceed or must yield to agency proceeding).
Friday, July 20, 2007
Dismissal for Want of Personal Jurisdiction Affirmed
Eric Red v. John Doherty and Doherty & Catlow, A Law Corporation,
No. 03-06-00478-CV (Tex.App.- Austin, Jul. 20, 2007)(Opinion by Justice Waldrop)(special appearance)(Before Justices Patterson, Pemberton and Waldrop)
Full case style: Eric Red v. John Doherty and Doherty & Catlow, A Law Corporation
Appeal from 345th District Court of Travis County
Disposition: Affirmed
FROM THE DISTRICT COURT OF TRAVIS COUNTY, 345TH JUDICIAL DISTRICT
NO. D-1-GN-05-001664, HONORABLE SUZANNE COVINGTON, JUDGE PRESIDING
MEMORANDUM OPINION BY JUSTICE KEN LAW
The trial court granted the special appearance of appellees John Doherty and Doherty & Catlow, A Law Corporation, and dismissed appellant Eric Red's claims against them for lack of personal jurisdiction. In one issue, Red contends that the trial court erred in ruling that it did not have personal jurisdiction over appellees. We affirm.
In May 2000 in Los Angeles, California, Red drove his vehicle into a crowded bar, killing two individuals. Family members of those two individuals filed wrongful death claims against Red in California state court, and John Doherty of the California law firm Doherty & Catlow was hired to defend Red against those claims under a $30,000 automobile insurance policy issued by Mercury Insurance Group.
After the wrongful death claims were filed against Red, he briefly moved to Austin, Texas, where he filed for bankruptcy protection. He sought and received a stay of the California state court wrongful death lawsuit. Red retained Austin attorney Steven Hake to represent him in the bankruptcy. Red sought to discharge all of his debts, including any contingent liability to the wrongful death claimants, but the wrongful death claimants filed an adversary proceeding in the bankruptcy objecting to the discharge of their claims. On the advice of Hake, Red hired another Texas attorney, Stephen Sather, to represent him in the adversary proceeding in the bankruptcy. After a trial, the bankruptcy court determined that the wrongful death claims qualified as exceptions to discharge under 11 U.S.C. § 523(a)(6) because the collision was the result of Red's willful and malicious conduct. The district court affirmed the bankruptcy court's decision on similar grounds, and the Fifth Circuit Court of Appeals affirmed that decision. See In re Red, 96 F. App'x. 229, 230 (5th Cir. 2004).
After the Texas bankruptcy court rendered its decision, the California state court in which the wrongful death claims were pending ruled that the Texas court's decision was res judicata as to Red's liability for the wrongful death claims. The court directed a verdict in favor of the claimants on the issue of liability, and the issue of damages was tried to a jury, which returned a verdict awarding slightly over $1,000,000 to the plaintiffs. That judgment was affirmed on appeal. See Roos v. Red, 130 Cal. App. 4th 870, 874 (Cal. Ct. App. 2005), cert. denied, 546 U.S. 1174 (2006).
In May 2006, Red sued Sather in Texas state court for legal malpractice in connection with the adversary proceeding in the Texas bankruptcy. He later amended his petition to add as defendants John Doherty, the law firm Doherty & Catlow, Mercury Insurance Group, and an employee of Mercury Insurance Group. Against these defendants, Red asserted claims for breach of contract, civil conspiracy, fraud, breach of fiduciary duty and the duty of good faith and fair dealing, negligent misrepresentation, legal malpractice, and DTPA violations.
Appellees John Doherty and Doherty & Catlow filed a special appearance arguing that the Texas court did not have personal jurisdiction over them. After an evidentiary hearing, the trial court granted appellees' special appearance and dismissed Red's claims against them. The court issued findings of fact and conclusions of law. This appeal followed.
The existence of personal jurisdiction is a question of law, but proper exercise of that jurisdiction must sometimes be preceded by the resolution of underlying factual disputes. Goodenbour v. Goodenbour, 64 S.W.3d 69, 75 (Tex. App.--Austin 2001, pet. denied). An appellate court determines the appropriateness of the trial court's resolution of those disputes by an ordinary sufficiency of the evidence review based on the entire record. Id.
Red contends that several of the trial court's findings of fact are not supported by legally and factually sufficient evidence. A legal sufficiency challenge fails if there is more than a scintilla of evidence to support the finding. BMC Software Belg., N.V. v. Marchand, 83 S.W.3d 789, 795 (Tex. 2002). More than a scintilla of evidence exists when the evidence rises to a level that would enable reasonable and fair-minded people to differ in their conclusions. Merrell Dow Pharms., Inc. v. Havner, 953 S.W.2d 706, 711 (Tex. 1997). When reviewing a challenge to the factual sufficiency of the evidence, we examine the entire record, considering both the evidence in favor of, and contrary to, the challenged finding. Alenia Spazio, S.P.A. v. Reid, 130 S.W.3d 201, 209 (Tex. App.--Houston [14th Dist.] 2003, no pet.). We set aside the fact finding only if it is so contrary to the overwhelming weight of the evidence as to be clearly wrong and unjust. Id.
Although Red does not enumerate which of the trial court's findings of fact he challenges on appeal, he alleges in his brief that the trial court had jurisdiction over appellees because Doherty "transacted business within the State of Texas in the course of the Texas bankruptcy proceeding" and "had numerous significant contacts with Texas resident domiciled citizens," and because "all or most of the events that caused the bringing of this suit took place in Texas in the course of those Texas bankruptcy proceedings." Red also alleges that appellees "hired" Sather, directed Sather "in the course of appellees' representation of [Red] in the Texas bankruptcy," and "paid" Sather for his work.
We interpret these allegations as challenges to the trial court's findings that: (1) appellees did not perform any act or omission in Texas that relates to Red's allegations; (2) appellees did not agree or consent to act as Red's co-counsel in the Texas bankruptcy case; (3) appellees did not enter into a joint representation agreement with Sather; (4) appellees did not contract with, retain, or recruit Sather to represent Red; (5) Hake recommended to Red that Sather be retained; (6) appellees never solicited or promoted business in Texas; (7) appellees did not perform any act or legal work in Texas on Red's behalf, but performed such work only in California; and (8) appellees' mail and telephone contacts with Sather were minimal and not the result of purposefully conducting activities within the State of Texas.
We conclude that more than a scintilla of evidence exists to support the trial court's findings of fact. At the hearing on appellees' special appearance, the trial court considered, among other things, affidavits from both Red and Doherty, correspondence between Hake and Doherty, correspondence between Doherty and Sather, and live testimony from Hake. The trial court is the sole judge of witness credibility and the weight to be given to testimony. Navasota Res., Ltd. v. Heep Petroleum, Inc., 212 S.W.3d 463, 468 (Tex. App.--Austin 2006, no pet.).
We may not disturb a trial court's resolutions of evidentiary conflicts that turn on credibility determinations or the weight of the evidence. Id. One of Doherty's affidavits states, in relevant part:
Neither D & C nor I agreed, consented or were aware that we were designated as co-counsel in the bankruptcy proceeding for Plaintiff. Neither D & C nor I entered into any joint representation agreement with Plaintiff's Texas counsel. Neither D & C nor I contracted with, retained, or recruited Steven R. Hake or Stephen W. Sather (collectively referred to as Plaintiff's "Texas Counsel") to represent Plaintiff in the Texas proceedings.
While D & C represented Plaintiff in California, Plaintiff elected to relocate to Texas. When in Texas, Plaintiff retained Mr. Hake to represent him in the bankruptcy proceeding. Once Mr. Hake determined that a bankruptcy litigator was needed, Mr. Hake recommended that Mr. Sather be retained to represent Plaintiff. . . . At no time did either D & C or I provide any input into the selection of Plaintiff's Texas counsel.
In addition, at no time did either D & C or I make any promises or representations to Plaintiff that we would perform any act in Texas. D & C and I also never solicited or promoted business in Texas. Furthermore, neither D & C nor I performed any act, legal work, or otherwise, in Texas on Plaintiff's behalf. I did not visit Texas or travel to Texas for any activity connected directly or indirectly to Plaintiff's Texas legal proceedings. The only legal work that D & C or I performed on Plaintiff's behalf was in California.
The correspondence between the parties is consistent with Doherty's version of events. Because more than a scintilla of evidence supports the trial court's findings of fact, the evidence is legally sufficient to support those findings.
We also conclude that the evidence is factually sufficient to support the findings of fact. Red contends that the following evidence, which was considered by the trial court in ruling on the special appearance, contradicts the findings of fact: (1) a February 6, 2002 letter from Hake to Doherty in which Hake recommends that Mercury Insurance Group retain Sather to represent Red in the Texas proceedings; (2) a February 13, 2002 letter from Doherty to Sather "as a follow up to our conversations regarding the representation of Eric Red" in which Doherty states that "you [Sather] send your billings to me and I will forward them immediately to Mercury Insurance for payment. Their payment will be sent directly to you."; (3) a May 14, 2002 letter from Doherty to Sather inquiring as to whether Sather could include "any potential claim of Dr. Rubin against Eric [Red], as an item to be protected by the bankruptcy action"; (4) an invoice for Hake's legal services reflecting several conference calls with Doherty; and (5) testimony from Hake to the effect that he advised Doherty to have Mercury Insurance hire Sather and that Red actually hired Sather. However, this evidence is not contrary to the trial court's findings that appellees acted on Red's behalf only in California, did not consent to act as Red's co-counsel in the Texas bankruptcy case, did not hire Sather to represent Red, did not solicit or promote business in Texas, and had contacts with Texas only as necessary to coordinate the defense of Red in the California and Texas proceedings. The trial court's findings of fact are supported by factually sufficient evidence.
We now turn to whether the trial court correctly ruled that it did not have personal jurisdiction over appellees. A plaintiff suing a nonresident defendant bears the initial burden of pleading sufficient allegations to satisfy the Texas long-arm statute, which authorizes a trial court to exercise jurisdiction over a nonresident who "does business" in Texas. BMC Software, 83 S.W.3d at 795; see Tex. Civ. Prac. & Rem. Code Ann. § 17.042 (West 1997). Texas courts may exercise personal jurisdiction over a nonresident if it is authorized by the Texas long-arm statute and comports with constitutional guarantees of due process. Schlobohm v. Schapiro, 784 S.W.2d 355, 356 (Tex. 1990).
Under the federal constitutional test, a state may assert personal jurisdiction over a nonresident defendant if: (1) the defendant has purposefully established minimum contacts with the forum state; and (2) the exercise of jurisdiction comports with fair play and substantial justice. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475-76 (1985). When applying the minimum contacts analysis, we focus on appellees' intentional activities and expectations in deciding whether it is proper to call them before a Texas court. See World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 291-292 (1980).
To establish minimum contacts with Texas, appellees must have purposefully availed themselves of the privilege of conducting activities within the state, thereby receiving the benefit and protection of Texas laws. See Burger King, 471 U.S. at 474-75. The activities must be substantial enough to justify a conclusion that appellees reasonably anticipated being called into a Texas court. Id. The presence of sufficient minimum contacts may support either general or specific jurisdiction. Guardian Royal Exch. Assurance, Ltd. v. English China Clays, P.L.C., 815 S.W.2d 223, 227 (Tex. 1991). Red contends that Texas courts have specific jurisdiction over appellees.
When specific jurisdiction is asserted, the cause of action must arise out of or relate to the nonresident defendant's contact with the forum state in order to satisfy the minimum contacts requirement. Id. However, the contact must have resulted from the nonresident defendant's purposeful conduct and not the unilateral activity of the plaintiff or others. Id. When specific jurisdiction is asserted, the minimum contacts analysis focuses on the relationship among the defendant, the forum and the litigation. Id.
Red contends that the phone calls and correspondence between appellees and Texas attorneys Hake and Sather were sufficient contacts to authorize personal jurisdiction over appellees. However, long distance telephone calls to the forum state, even coupled with written correspondence and isolated trips to the forum state, are generally not, without more, considered purposeful activities directed toward residents of the forum state. Lang v. Capital Res. Invs., I & II, LLC, 102 S.W.3d 861, 867 (Tex. App.--Dallas 2003, no pet.); Eakin v. Acosta, 21 S.W.3d 405, 409 (Tex. App.--San Antonio 2002, no pet.), disapproved of on other grounds by BMC Software, 83 S.W.3d at 194 n.1. The facts of this case are similar to Bergenholtz v. Cannata, 200 S.W.3d 287 (Tex. App.--Dallas 2006, no pet.). In that case, Bergenholtz, a Texas resident, was represented by Texas attorneys in a Texas bankruptcy proceeding and California attorneys in a lawsuit in California. Id. at 290. Bergenholtz sued his California attorneys in Texas state court for legal malpractice in connection with the California lawsuit. Id. The trial court granted the California attorneys' special appearance. Id. On appeal, Bergenholtz argued that the California attorneys purposefully availed themselves of the jurisdiction of Texas courts when they entered into contracts to represent Bergenholtz, billed Bergenholtz in Texas, and accepted payment from Bergenholtz mailed from Texas. The court held that Texas courts lacked personal jurisdiction over the California attorneys because the California attorneys' representation of Bergenholtz was limited to the California lawsuit, was not the result of seeking clients in Texas, and did not involve any contacts with Texas other than communication with the bankruptcy attorneys about the California lawsuit. Although one California attorney made an appearance in the Texas bankruptcy proceeding, the court stated:
The fact that the bankruptcies were pending in Texas, however, was fortuitous rather than the result of [the California attorney's] "purposeful availment" of the benefit of Texas law; [the California attorney] undertook to represent appellants in California and agreed as part of that representation to cooperate in bankruptcy proceedings already pending in Texas.
Id. at 296.
The contacts alleged in this case are even more attenuated than the ones found to be insufficient to authorize personal jurisdiction over the nonresident defendants in Bergenholtz. Appellees were hired to represent Red before he moved to Texas. They did not contact Red in Texas to represent him in the California litigation or have contacts with the Texas attorneys hired by Red except as necessary to coordinate the defense of Red in the California litigation. It is undisputed that Doherty never traveled to Texas to perform legal work. Although Hake advised Doherty that Mercury Insurance should hire Sather to represent Red, there is no evidence that Doherty hired Sather or exercised control over Sather's handling of the litigation in Texas. Appellees' contacts with the Texas attorneys were limited to long distance telephone calls and correspondence coordinating Red's defense in the California and Texas state court proceedings.
Red contends that this Court's opinion in Rowland & Rowland, P.C. v. Texas Employers Indemnity Co. supports the exercise of personal jurisdiction. See 973 S.W.2d 432 (Tex. App.--Austin 1998, no pet.). In that case, a Tennessee law firm wrote a letter to a Texas company representing that the firm would protect the company's interest in a pending Tennessee wrongful death case. Id. at 434. Relying on that letter, the Texas company did not intervene in the Tennessee litigation. Id. At the conclusion of the litigation, the Tennessee firm distributed the entire recovery to the wrongful death claimants to the exclusion of the Texas company, which then sued the Tennessee firm in Texas for breach of contract, conversion, fraud, and negligent misrepresentation. Id. This Court determined that the Texas court had specific jurisdiction over the Tennessee firm based on two purposeful contacts with Texas: (1) the letter to the Texas company confirming that the firm would represent it in the litigation, and (2) the Tennessee firm's unilateral decision to distribute the entire recovery to the wrongful death claimants and their lawyers, all of whom were Texas residents. Id. at 435-36.
The facts of this case are different from the facts presented in Rowland. As discussed above, appellees did not contact Red in Texas to represent him in the California litigation or have contacts with the Texas attorneys hired by Red except as necessary to coordinate the defense of Red in the California litigation. Red contends that the February 13, 2002 letter from Doherty to Sather in which Dorerty states "you [Sather] send your billings to me and I will forward them immediately to Mercury Insurance for payment. Their payment will be sent directly to you" is comparable to the letter sent from the Tennessee law firm to the Texas company in Rowland.
We disagree.
Although the correspondence was initiated by Doherty, it states "[t]his is a follow-up on our conversations regarding the representation of Eric Red." We are of the view that appellees did not purposefully avail themselves of the privileges and benefits of conducting business in Texas by sending this one letter coordinating the payment between Mercury Insurance Group and Sather. The trial court correctly dismissed Red's claims against appellees for lack of personal jurisdiction.
Affirmed.
__________________________________________
G. Alan Waldrop, Justice
Before Justices Patterson, Pemberton and Waldrop
Affirmed
Filed: July 20, 2007
No. 03-06-00478-CV (Tex.App.- Austin, Jul. 20, 2007)(Opinion by Justice Waldrop)(special appearance)(Before Justices Patterson, Pemberton and Waldrop)
Full case style: Eric Red v. John Doherty and Doherty & Catlow, A Law Corporation
Appeal from 345th District Court of Travis County
Disposition: Affirmed
FROM THE DISTRICT COURT OF TRAVIS COUNTY, 345TH JUDICIAL DISTRICT
NO. D-1-GN-05-001664, HONORABLE SUZANNE COVINGTON, JUDGE PRESIDING
MEMORANDUM OPINION BY JUSTICE KEN LAW
The trial court granted the special appearance of appellees John Doherty and Doherty & Catlow, A Law Corporation, and dismissed appellant Eric Red's claims against them for lack of personal jurisdiction. In one issue, Red contends that the trial court erred in ruling that it did not have personal jurisdiction over appellees. We affirm.
In May 2000 in Los Angeles, California, Red drove his vehicle into a crowded bar, killing two individuals. Family members of those two individuals filed wrongful death claims against Red in California state court, and John Doherty of the California law firm Doherty & Catlow was hired to defend Red against those claims under a $30,000 automobile insurance policy issued by Mercury Insurance Group.
After the wrongful death claims were filed against Red, he briefly moved to Austin, Texas, where he filed for bankruptcy protection. He sought and received a stay of the California state court wrongful death lawsuit. Red retained Austin attorney Steven Hake to represent him in the bankruptcy. Red sought to discharge all of his debts, including any contingent liability to the wrongful death claimants, but the wrongful death claimants filed an adversary proceeding in the bankruptcy objecting to the discharge of their claims. On the advice of Hake, Red hired another Texas attorney, Stephen Sather, to represent him in the adversary proceeding in the bankruptcy. After a trial, the bankruptcy court determined that the wrongful death claims qualified as exceptions to discharge under 11 U.S.C. § 523(a)(6) because the collision was the result of Red's willful and malicious conduct. The district court affirmed the bankruptcy court's decision on similar grounds, and the Fifth Circuit Court of Appeals affirmed that decision. See In re Red, 96 F. App'x. 229, 230 (5th Cir. 2004).
After the Texas bankruptcy court rendered its decision, the California state court in which the wrongful death claims were pending ruled that the Texas court's decision was res judicata as to Red's liability for the wrongful death claims. The court directed a verdict in favor of the claimants on the issue of liability, and the issue of damages was tried to a jury, which returned a verdict awarding slightly over $1,000,000 to the plaintiffs. That judgment was affirmed on appeal. See Roos v. Red, 130 Cal. App. 4th 870, 874 (Cal. Ct. App. 2005), cert. denied, 546 U.S. 1174 (2006).
In May 2006, Red sued Sather in Texas state court for legal malpractice in connection with the adversary proceeding in the Texas bankruptcy. He later amended his petition to add as defendants John Doherty, the law firm Doherty & Catlow, Mercury Insurance Group, and an employee of Mercury Insurance Group. Against these defendants, Red asserted claims for breach of contract, civil conspiracy, fraud, breach of fiduciary duty and the duty of good faith and fair dealing, negligent misrepresentation, legal malpractice, and DTPA violations.
Appellees John Doherty and Doherty & Catlow filed a special appearance arguing that the Texas court did not have personal jurisdiction over them. After an evidentiary hearing, the trial court granted appellees' special appearance and dismissed Red's claims against them. The court issued findings of fact and conclusions of law. This appeal followed.
The existence of personal jurisdiction is a question of law, but proper exercise of that jurisdiction must sometimes be preceded by the resolution of underlying factual disputes. Goodenbour v. Goodenbour, 64 S.W.3d 69, 75 (Tex. App.--Austin 2001, pet. denied). An appellate court determines the appropriateness of the trial court's resolution of those disputes by an ordinary sufficiency of the evidence review based on the entire record. Id.
Red contends that several of the trial court's findings of fact are not supported by legally and factually sufficient evidence. A legal sufficiency challenge fails if there is more than a scintilla of evidence to support the finding. BMC Software Belg., N.V. v. Marchand, 83 S.W.3d 789, 795 (Tex. 2002). More than a scintilla of evidence exists when the evidence rises to a level that would enable reasonable and fair-minded people to differ in their conclusions. Merrell Dow Pharms., Inc. v. Havner, 953 S.W.2d 706, 711 (Tex. 1997). When reviewing a challenge to the factual sufficiency of the evidence, we examine the entire record, considering both the evidence in favor of, and contrary to, the challenged finding. Alenia Spazio, S.P.A. v. Reid, 130 S.W.3d 201, 209 (Tex. App.--Houston [14th Dist.] 2003, no pet.). We set aside the fact finding only if it is so contrary to the overwhelming weight of the evidence as to be clearly wrong and unjust. Id.
Although Red does not enumerate which of the trial court's findings of fact he challenges on appeal, he alleges in his brief that the trial court had jurisdiction over appellees because Doherty "transacted business within the State of Texas in the course of the Texas bankruptcy proceeding" and "had numerous significant contacts with Texas resident domiciled citizens," and because "all or most of the events that caused the bringing of this suit took place in Texas in the course of those Texas bankruptcy proceedings." Red also alleges that appellees "hired" Sather, directed Sather "in the course of appellees' representation of [Red] in the Texas bankruptcy," and "paid" Sather for his work.
We interpret these allegations as challenges to the trial court's findings that: (1) appellees did not perform any act or omission in Texas that relates to Red's allegations; (2) appellees did not agree or consent to act as Red's co-counsel in the Texas bankruptcy case; (3) appellees did not enter into a joint representation agreement with Sather; (4) appellees did not contract with, retain, or recruit Sather to represent Red; (5) Hake recommended to Red that Sather be retained; (6) appellees never solicited or promoted business in Texas; (7) appellees did not perform any act or legal work in Texas on Red's behalf, but performed such work only in California; and (8) appellees' mail and telephone contacts with Sather were minimal and not the result of purposefully conducting activities within the State of Texas.
We conclude that more than a scintilla of evidence exists to support the trial court's findings of fact. At the hearing on appellees' special appearance, the trial court considered, among other things, affidavits from both Red and Doherty, correspondence between Hake and Doherty, correspondence between Doherty and Sather, and live testimony from Hake. The trial court is the sole judge of witness credibility and the weight to be given to testimony. Navasota Res., Ltd. v. Heep Petroleum, Inc., 212 S.W.3d 463, 468 (Tex. App.--Austin 2006, no pet.).
We may not disturb a trial court's resolutions of evidentiary conflicts that turn on credibility determinations or the weight of the evidence. Id. One of Doherty's affidavits states, in relevant part:
Neither D & C nor I agreed, consented or were aware that we were designated as co-counsel in the bankruptcy proceeding for Plaintiff. Neither D & C nor I entered into any joint representation agreement with Plaintiff's Texas counsel. Neither D & C nor I contracted with, retained, or recruited Steven R. Hake or Stephen W. Sather (collectively referred to as Plaintiff's "Texas Counsel") to represent Plaintiff in the Texas proceedings.
While D & C represented Plaintiff in California, Plaintiff elected to relocate to Texas. When in Texas, Plaintiff retained Mr. Hake to represent him in the bankruptcy proceeding. Once Mr. Hake determined that a bankruptcy litigator was needed, Mr. Hake recommended that Mr. Sather be retained to represent Plaintiff. . . . At no time did either D & C or I provide any input into the selection of Plaintiff's Texas counsel.
In addition, at no time did either D & C or I make any promises or representations to Plaintiff that we would perform any act in Texas. D & C and I also never solicited or promoted business in Texas. Furthermore, neither D & C nor I performed any act, legal work, or otherwise, in Texas on Plaintiff's behalf. I did not visit Texas or travel to Texas for any activity connected directly or indirectly to Plaintiff's Texas legal proceedings. The only legal work that D & C or I performed on Plaintiff's behalf was in California.
The correspondence between the parties is consistent with Doherty's version of events. Because more than a scintilla of evidence supports the trial court's findings of fact, the evidence is legally sufficient to support those findings.
We also conclude that the evidence is factually sufficient to support the findings of fact. Red contends that the following evidence, which was considered by the trial court in ruling on the special appearance, contradicts the findings of fact: (1) a February 6, 2002 letter from Hake to Doherty in which Hake recommends that Mercury Insurance Group retain Sather to represent Red in the Texas proceedings; (2) a February 13, 2002 letter from Doherty to Sather "as a follow up to our conversations regarding the representation of Eric Red" in which Doherty states that "you [Sather] send your billings to me and I will forward them immediately to Mercury Insurance for payment. Their payment will be sent directly to you."; (3) a May 14, 2002 letter from Doherty to Sather inquiring as to whether Sather could include "any potential claim of Dr. Rubin against Eric [Red], as an item to be protected by the bankruptcy action"; (4) an invoice for Hake's legal services reflecting several conference calls with Doherty; and (5) testimony from Hake to the effect that he advised Doherty to have Mercury Insurance hire Sather and that Red actually hired Sather. However, this evidence is not contrary to the trial court's findings that appellees acted on Red's behalf only in California, did not consent to act as Red's co-counsel in the Texas bankruptcy case, did not hire Sather to represent Red, did not solicit or promote business in Texas, and had contacts with Texas only as necessary to coordinate the defense of Red in the California and Texas proceedings. The trial court's findings of fact are supported by factually sufficient evidence.
We now turn to whether the trial court correctly ruled that it did not have personal jurisdiction over appellees. A plaintiff suing a nonresident defendant bears the initial burden of pleading sufficient allegations to satisfy the Texas long-arm statute, which authorizes a trial court to exercise jurisdiction over a nonresident who "does business" in Texas. BMC Software, 83 S.W.3d at 795; see Tex. Civ. Prac. & Rem. Code Ann. § 17.042 (West 1997). Texas courts may exercise personal jurisdiction over a nonresident if it is authorized by the Texas long-arm statute and comports with constitutional guarantees of due process. Schlobohm v. Schapiro, 784 S.W.2d 355, 356 (Tex. 1990).
Under the federal constitutional test, a state may assert personal jurisdiction over a nonresident defendant if: (1) the defendant has purposefully established minimum contacts with the forum state; and (2) the exercise of jurisdiction comports with fair play and substantial justice. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475-76 (1985). When applying the minimum contacts analysis, we focus on appellees' intentional activities and expectations in deciding whether it is proper to call them before a Texas court. See World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 291-292 (1980).
To establish minimum contacts with Texas, appellees must have purposefully availed themselves of the privilege of conducting activities within the state, thereby receiving the benefit and protection of Texas laws. See Burger King, 471 U.S. at 474-75. The activities must be substantial enough to justify a conclusion that appellees reasonably anticipated being called into a Texas court. Id. The presence of sufficient minimum contacts may support either general or specific jurisdiction. Guardian Royal Exch. Assurance, Ltd. v. English China Clays, P.L.C., 815 S.W.2d 223, 227 (Tex. 1991). Red contends that Texas courts have specific jurisdiction over appellees.
When specific jurisdiction is asserted, the cause of action must arise out of or relate to the nonresident defendant's contact with the forum state in order to satisfy the minimum contacts requirement. Id. However, the contact must have resulted from the nonresident defendant's purposeful conduct and not the unilateral activity of the plaintiff or others. Id. When specific jurisdiction is asserted, the minimum contacts analysis focuses on the relationship among the defendant, the forum and the litigation. Id.
Red contends that the phone calls and correspondence between appellees and Texas attorneys Hake and Sather were sufficient contacts to authorize personal jurisdiction over appellees. However, long distance telephone calls to the forum state, even coupled with written correspondence and isolated trips to the forum state, are generally not, without more, considered purposeful activities directed toward residents of the forum state. Lang v. Capital Res. Invs., I & II, LLC, 102 S.W.3d 861, 867 (Tex. App.--Dallas 2003, no pet.); Eakin v. Acosta, 21 S.W.3d 405, 409 (Tex. App.--San Antonio 2002, no pet.), disapproved of on other grounds by BMC Software, 83 S.W.3d at 194 n.1. The facts of this case are similar to Bergenholtz v. Cannata, 200 S.W.3d 287 (Tex. App.--Dallas 2006, no pet.). In that case, Bergenholtz, a Texas resident, was represented by Texas attorneys in a Texas bankruptcy proceeding and California attorneys in a lawsuit in California. Id. at 290. Bergenholtz sued his California attorneys in Texas state court for legal malpractice in connection with the California lawsuit. Id. The trial court granted the California attorneys' special appearance. Id. On appeal, Bergenholtz argued that the California attorneys purposefully availed themselves of the jurisdiction of Texas courts when they entered into contracts to represent Bergenholtz, billed Bergenholtz in Texas, and accepted payment from Bergenholtz mailed from Texas. The court held that Texas courts lacked personal jurisdiction over the California attorneys because the California attorneys' representation of Bergenholtz was limited to the California lawsuit, was not the result of seeking clients in Texas, and did not involve any contacts with Texas other than communication with the bankruptcy attorneys about the California lawsuit. Although one California attorney made an appearance in the Texas bankruptcy proceeding, the court stated:
The fact that the bankruptcies were pending in Texas, however, was fortuitous rather than the result of [the California attorney's] "purposeful availment" of the benefit of Texas law; [the California attorney] undertook to represent appellants in California and agreed as part of that representation to cooperate in bankruptcy proceedings already pending in Texas.
Id. at 296.
The contacts alleged in this case are even more attenuated than the ones found to be insufficient to authorize personal jurisdiction over the nonresident defendants in Bergenholtz. Appellees were hired to represent Red before he moved to Texas. They did not contact Red in Texas to represent him in the California litigation or have contacts with the Texas attorneys hired by Red except as necessary to coordinate the defense of Red in the California litigation. It is undisputed that Doherty never traveled to Texas to perform legal work. Although Hake advised Doherty that Mercury Insurance should hire Sather to represent Red, there is no evidence that Doherty hired Sather or exercised control over Sather's handling of the litigation in Texas. Appellees' contacts with the Texas attorneys were limited to long distance telephone calls and correspondence coordinating Red's defense in the California and Texas state court proceedings.
Red contends that this Court's opinion in Rowland & Rowland, P.C. v. Texas Employers Indemnity Co. supports the exercise of personal jurisdiction. See 973 S.W.2d 432 (Tex. App.--Austin 1998, no pet.). In that case, a Tennessee law firm wrote a letter to a Texas company representing that the firm would protect the company's interest in a pending Tennessee wrongful death case. Id. at 434. Relying on that letter, the Texas company did not intervene in the Tennessee litigation. Id. At the conclusion of the litigation, the Tennessee firm distributed the entire recovery to the wrongful death claimants to the exclusion of the Texas company, which then sued the Tennessee firm in Texas for breach of contract, conversion, fraud, and negligent misrepresentation. Id. This Court determined that the Texas court had specific jurisdiction over the Tennessee firm based on two purposeful contacts with Texas: (1) the letter to the Texas company confirming that the firm would represent it in the litigation, and (2) the Tennessee firm's unilateral decision to distribute the entire recovery to the wrongful death claimants and their lawyers, all of whom were Texas residents. Id. at 435-36.
The facts of this case are different from the facts presented in Rowland. As discussed above, appellees did not contact Red in Texas to represent him in the California litigation or have contacts with the Texas attorneys hired by Red except as necessary to coordinate the defense of Red in the California litigation. Red contends that the February 13, 2002 letter from Doherty to Sather in which Dorerty states "you [Sather] send your billings to me and I will forward them immediately to Mercury Insurance for payment. Their payment will be sent directly to you" is comparable to the letter sent from the Tennessee law firm to the Texas company in Rowland.
We disagree.
Although the correspondence was initiated by Doherty, it states "[t]his is a follow-up on our conversations regarding the representation of Eric Red." We are of the view that appellees did not purposefully avail themselves of the privileges and benefits of conducting business in Texas by sending this one letter coordinating the payment between Mercury Insurance Group and Sather. The trial court correctly dismissed Red's claims against appellees for lack of personal jurisdiction.
Affirmed.
__________________________________________
G. Alan Waldrop, Justice
Before Justices Patterson, Pemberton and Waldrop
Affirmed
Filed: July 20, 2007
Termination of Parental Rights Affirmed
Austin Court of Appeals overrules venue challenge as untimely and affirms termination of parental rights.
Boyd v. Texas DFPS, No. 03-05-00656-CV (Tex.App.- Austin, Jul. 20, 2007)(Opinion by Justice Puryear)(termination)(Before Chief Justice Law, Justices Patterson and Puryear)
Full style: Frances Boyd v. Texas Department of Family and Protective Services
Appeal from 274th District Court of Hays County
Disposition: Affirmed
THE DISTRICT COURT OF HAYS COUNTY, 274TH JUDICIAL DISTRICT
NO. 2003-0606, HONORABLE RONALD G. CARR, JUDGE PRESIDING
MEMORANDUM OPINION BY JUSTICE PURYEAR
Following a jury trial, the trial court signed an order terminating the parental rights of appellant Frances Boyd to her son, C.B. Boyd appeals, complaining that the trial court erred in overruling her motion to transfer venue and admitting evidence that Boyd had been investigated earlier by the Department. We affirm the order of termination.
Background
Boyd does not contest the sufficiency of the evidence supporting the jury's verdict. Therefore, only a brief recitation of the facts is necessary. C.B. was born in June 1999, and was removed from Boyd's custody by the Department in April 2003, when he was almost four years old. John Matthew Boyd is the child's father, and at the time of trial, had relinquished his parental rights to C.B. The Department had been involved with Boyd and her children since 1993, receiving approximately eight referrals between April 1993 and April 2002 alleging neglectful supervision, emotional and physical abuse, and physical neglect. (1) In July 1998, Adult Protective Services received a referral alleging that Boyd was exploiting and physically neglecting her mother; only the exploitation allegation was validated.
The Department took custody of C.B. in April 2003 after receiving a referral alleging physical abuse, neglectful supervision, and physical neglect of C.B. The referral came from a community shelter in New Braunfels, where Boyd had gone seeking assistance. The referral stated that Boyd appeared "manic and delusional," and that C.B. was unkempt, constantly crying, and appeared to be developmentally delayed. When the Department arrived to investigate, Boyd was angry and unfocused. She denied having a mental illness and said she avoided going out in public because she feared someone would make a report against her. She thought this referral had been made because she is Christian and "had been 'praying a lot lately.'" When the caseworker attempted to discuss the shelter's allegations, Boyd said she and C.B. were leaving and began to walk away. Law enforcement had to escort her back to the Department caseworker, and Boyd became irate and disoriented and eventually had to be restrained by the police officers.
The Department prepared a service plan requiring Boyd to participate in parenting classes, individual therapy, and anger management classes, undergo a drug and alcohol assessment, obtain and provide proof of stable employment and suitable housing, allow the Department to make home visits, and keep the Department informed of her address and phone number. Boyd completed the parenting classes, psychological evaluations, and drug and alcohol assessment, but she did not complete individual therapy or anger management or maintain or provide proof of employment or housing. Witnesses testified that C.B. did not appear to have bonded with Boyd, and C.B.'s therapist testified that C.B. had improved in foster care, but that he probably would need additional therapy. He believed C.B. had improved because of the stability of his foster placement but would regress if returned to an unstable environment with Boyd. C.B.'s therapist, caseworker, and guardian ad litem all testified that C.B. was doing well in foster care and that being returned to Boyd's care would be detrimental to the child. The jury returned a verdict finding that Boyd's parental rights should be terminated, and the trial court signed an order of termination. It is from this order that Boyd appeals, complaining that the trial court should have transferred the case to Taylor County and that the court committed reversible error by admitting hearsay into evidence.
Motion to Transfer
In her first point of error, Boyd argues that the trial court erred in refusing to transfer this case from Hays County, where the Department filed its petition, to Taylor County. She argues that because she filed a proper motion asserting continuing jurisdiction in Taylor County and no controverting affidavits were filed, the transfer was mandatory. We disagree.
The Department filed its petition in Hays County on April 23, 2003, alleging that it believed no other court had continuing, exclusive jurisdiction over C.B. The petition alleged that Boyd had a New Braunfels address, but the accompanying affidavit, sworn to by caseworker Tara Hopkins and describing the facts that led the Department to believe that removal was in C.B.'s best interest, gave a San Marcos address. According to the affidavit, Boyd told someone at the shelter that she and C.B. were living out of Boyd's car. When interviewed by the Department, however, Boyd said she was not homeless. She made inconsistent statements about her residence, saying that she lived in Abilene and was going back; that her mother was sick in Abilene and Boyd was going there to help care for her; that Boyd was going to New Braunfels to stay with friends; and that she was going to stay in San Marcos, where a legal advocate was going to help her regain custody of her eleven-year-old daughter.
On May 9, a show-cause hearing was held. Boyd appeared in person and was not represented by counsel. It was discussed that Boyd had not yet been served with the Department's petition. The Department explained that it attempted service first at the New Braunfels address Boyd had provided but was unsuccessful because she had moved. When Boyd informed the Department that she had an Abilene address, the Department filed an amended petition requesting service in Abilene, but Boyd then called to say she had moved to Cedar Park. There was a discussion at the hearing that a constable was supposed to be serving Boyd with citation that day. The trial court explained to Boyd that she could continue with the hearing, in which case the court would enter temporary orders, or that the hearing could be reset for two weeks "to give you time to be served and prepare for a hearing and hire a lawyer" or have one appointed. Boyd said she wanted to go forward with the hearing, explaining that she had already tried unsuccessfully to get an attorney through a legal aid office. The record does not reflect when, if ever, Boyd was finally served with citation; she asserts that her attorney was appointed on May 21, and the Department does not contest that date.
On June 12, 2003, Boyd's appointed attorney filed a motion to transfer, stating that Taylor County had continuing, exclusive jurisdiction over C.B. "as a result of prior proceedings" and that the cause should be transferred there. The next day, a status hearing was held before an associate judge, and Boyd sought a ruling on her motion to transfer. The Department asserted that jurisdiction should remain in Hays County, and the child's attorney ad litem objected to the transfer, stating that it was not in C.B.'s best interest. Later in the hearing, the trial court stated that there was continuing jurisdiction in Taylor County, but that it would carry the motion to transfer forward, saying, "I think where the case ends up depends on how things develop in the case." At that point, the attorney ad litem said, "I would like to make a formal objection to any discussion or proceedings on the motion," asserting that "all we've had is an oral motion, which is not contemplated under 155.204." The court informed the attorney ad litem that a written motion had been filed, and although the motion stated that it had been served on all parties, the ad litem said he had not been served with and was unaware of the written motion. The ad litem said, "We had no opportunity to write a controverting affidavit. And without specific knowledge right now of when the petition was filed, it may very well not even be timely filed by the 12th. And if so, I lodge that objection." The court said it would revisit the issue in September.
Boyd immediately filed an appeal of the associate judge's denial of the transfer, seeking review by the trial court. C.B.'s attorney ad litem filed an objection, stating that Boyd had not served him with the motion and arguing that due to the lack of service and notice, there was no valid motion for the associate judge to consider and, therefore, no valid ruling for Boyd to appeal. The ad litem also argued that the motion was untimely because it was filed more than twenty days after the petition was filed, that no notice was provided that the motion would be heard, and that the child and his attorney ad litem were not given sufficient time to file a controverting affidavit.
No hearing was held on Boyd's appeal, and the motion to transfer was not raised again until a February 2004 hearing on Boyd's attorney's motion to withdraw, when the issue of a transfer was briefly mentioned. At that hearing, John Boyd was asked if he intended to hire an attorney. Rather than answering the question, Mr. Boyd stated that he wanted to file a motion to transfer, and the trial court said, "That's not the question. The question to you, sir, do you intend to hire a lawyer?" Mr. Boyd explained that he and Boyd had reconciled after a separation and that he intended to hire an attorney to represent both of them. Later in that hearing, Boyd mentioned the transfer issue, but the trial court stopped her, returning to the issue of whether the Boyds were going to hire an attorney or needed appointed counsel. The court gave the Boyds forty-five days to hire an attorney; when neither party hired a lawyer, a new attorney was appointed to represent Boyd.
On June 12, 2004, one year after Boyd's motion to transfer was filed, Boyd's attorney filed a "motion to enter order," stating that the June 2003 motion to transfer was timely filed because Boyd was never served with citation. The motion also asserted that because no controverting affidavits had been filed, transfer was mandatory under section 155.204 of the family code. The motion recited that the motion was served on the Department and C.B.'s attorney ad litem, but did not state the date on which the motion was mailed. A hearing on the motion was set for July 22, 2004. In that very brief hearing, Boyd's attorney introduced himself and stated, "We filed a Motion to Enter Order, and we have argued the Motion to Transfer should be granted and order be entered. The Court has ruled that the Motion to Enter Order is denied and a subsequent motion will be presented to the Court for its approval. And that's all I have." The attorney ad litem stated that "in regards to [Boyd's attorney's] argument, in fact, the Attorney Ad Litem was never served with any copy of a Motion to Transfer Venue."
On appeal, Boyd argues that because no opposing affidavits were filed by C.B.'s attorney ad litem or the Department, the transfer to Taylor County was mandatory. She argues that the motion to transfer was timely because the record does not show that she was served with the Department's citation and petition. Boyd acknowledges that her participation in the May 9 hearing could constitute notice, but argues that because of the magnitude of the constitutional rights involved, we should consider her motion timely, counting its due date from the date she was appointed counsel, May 21. Boyd further argues that the motion's certificate of service "creat[ed] a presumption of proper service" and that the attorney ad litem's objection to her appeal from the associate judge's denial of the transfer "conceded actual notice." Boyd further notes that although the attorney ad litem objected to a lack of notice, the Department never raised such complaints.
Section 155.204 of the family code provides that if a motion to transfer is timely filed and no controverting affidavits are timely filed in response, the trial court shall transfer the case without a hearing. Tex. Fam. Code Ann. § 155.204(c) (West Supp. 2006).
A motion to transfer is timely if filed (1) on or before the first Monday following the twentieth day after service of citation or notice of the suit or (2) before the hearing commences, whichever is sooner. Id. § 155.204(b). A controverting affidavit must be filed on or before the first Monday following the twentieth day after "the date of notice of a motion to transfer is served." Id. § 155.204(d).
We recognize the weight of constitutional rights involved in this case. However, the statute is clear that to invoke mandatory transfer provisions, a motion to transfer must be filed on the first Monday following twenty days from service of citation or notice of the suit. Id. § 155.204(b). There is no doubt that Boyd had notice of the suit on May 9, when she appeared and participated in the hearing. Thus, the motion to transfer was due by June 2, 2003. See id. Because Boyd's motion was filed ten days late, it only raised the issue of a discretionary transfer, not a mandatory transfer. See Bollard v. Berchelmann, 921 S.W.2d 861, 864-65 (Tex. App.--San Antonio 1996, orig. proceeding); Garza v. Texas Dep't of Human Servs., 757 S.W.2d 44, 47-48 (Tex. App.--San Antonio 1988, writ denied); see also Tex. Fam. Code Ann. § 155.202 (West 2002) (governing discretionary transfers).
Boyd does not argue that the trial court would have abused its discretion in denying her motion to transfer if the motion sought a discretionary transfer; she only asserts that the transfer was mandatory under section 155.204. The Department asserts that the trial court did not err in refusing to exercise its discretion to transfer the case. We agree.
The records from the pretrial hearings contain little information about why Taylor County would have jurisdiction over this matter. (2) At the show-cause hearing held in May 2003, Boyd testified that she had family in Abilene and was living there. Boyd mentioned filing for divorce in Taylor County, but then said "it hasn't been final. I have to reapply, in other words." The Department stated that it had attempted to serve Boyd with citation at the New Braunfels address she first provided, then at the Abilene address she gave, and that she most recently told the Department she was living in Cedar Park. A Department caseworker testified that one of Boyd's daughters told the Department that Boyd was homeless and "moving around constantly." An employee for the shelter from which C.B. was removed, which is located in San Marcos, testified that Boyd said she and C.B. were homeless and living out of her car. She also testified that Boyd had sought services from the San Marcos shelter six times in the past year and had gone to the affiliated Salvation Army facility "several times." The associate judge placed C.B. with his half-sisters and Boyd's ex-husband, who live in Hays County.
At the time of the June 2003 hearing, Boyd was living in Cedar Park and had a job there as a caregiver for a health-care provider. She testified that before C.B.'s removal, she had been in San Marcos "a couple of times" and had stayed at the shelter from which C.B. was removed once in the past, before the incident that led to his removal. However, she also testified that she had an apartment and was a substitute teacher in Abilene. (3) Boyd testified that at the time of C.B.'s removal, she was not living in her car, was in New Braunfels to visit her daughters, and was considering giving up her apartment in Abilene. She testified that John Boyd was incarcerated in Abilene but had previously lived and worked in New Braunfels. When asked where she thought C.B. would be best placed during the pendency of the proceeding, she said that her first preference would be for him to be placed with her and her next choice would be with a cousin who lives in San Antonio; the trial court continued C.B.'s placement with his half-sisters and Boyd's ex-husband. The court observed that if it transferred the case, Boyd would have to start all over in Abilene, whereas she had obtained a place to live and a good job in the Hays County area. The court also noted that Boyd had begun to make progress in Hays County, had an excellent attorney in Hays County, and had evaluations and services set up in Hays County.
Boyd's motion to transfer was not timely filed under section 155.204 of the family code so as to call for a mandatory transfer. Based on this record, we cannot hold that the trial court abused its discretion in refusing to transfer the case. We overrule Boyd's first point of error.
Admission of Evidence
In her second point of error, Boyd argues that the trial court erred in admitting evidence of earlier Department investigations because the Department's reports contained inadmissible hearsay in the form of allegations by people who were not Department employees.
We review a trial court's decisions related to the admission or exclusion of evidence for an abuse of discretion. Taylor v. Texas Dep't of Protective & Regulatory Servs., 160 S.W.3d 641, 652 (Tex. App.--Austin 2005, pet. denied). Hearsay evidence is inadmissible unless it falls within an exception provided by the rules or a statute. Tex. R. Evid. 802. However, a party waives any complaint related to the admission of hearsay if she does not object. See id. A party who preserves a complaint related to the admission of hearsay must show on appeal that the erroneous admission "probably caused the rendition of an improper judgment." Owens-Corning Fiberglas Corp. v. Malone, 972 S.W.2d 35, 43 (Tex. 1998); see Tex. R. App. P. 44.1(a)(1).
The Department called Tara Hopkins, a Department investigator, to testify about her investigation into the referral the Department received in April 2003. Hopkins described the process of receiving and investigating a referral, explaining that after receiving the referral, she looked up Boyd's history with the Department and with Adult Protective Services. Hopkins was asked, "And when you went out to report [sic] this specific referral, what kind of information had you received?" Boyd objected, asserting, "[T]hat calls for hearsay if she's going to testify as to what the information is." The Department countered that the testimony was admissible under the hearsay exception set out in rule 803(8)(b) as a matter observed and reported "pursuant to a duty imposed by law" and that the report was a "record, report, statement, or data" compiled by a public agency. The trial court overruled Boyd's objection, and the Department asked, "What kind of report did you receive?" Hopkins answered that the Department received a referral stating that Boyd and C.B. were staying at the community shelter and alleging abuse, neglectful supervision, and physical neglect. She was then asked, "What kind of report did you receive, and what was the basis of that report?" Boyd objected "to any testimony about any kind of hearsay or about mental health," and the trial court sustained Boyd's objection "to the extent of hearsay."
The Department moved on to ask Hopkins "[w]hat other concerns were there," and Hopkins, reading from the April 2003 referral, answered that there were concerns that Boyd and C.B. were living in a car and had only eaten bread for two days or two weeks; that Boyd yelled at C.B. "all the time" and had dragged him on the floor and knocked him down; that C.B. had an unexplained eye injury; that Boyd became defensive "when her parenting skills [were] questioned"; that C.B. was unkempt, developmentally delayed, and largely unsupervised by Boyd; and that C.B. was "constantly crying and having fits." Later, Hopkins testified without objection that Boyd had an "extensive history" with the Department. Hopkins also testified without objection about Boyd's history with the Department, such as when the Department received referrals, what children were involved, how many referrals were received, the basis for some of the referrals, and about the referral related to Boyd's mother. On cross-examination, Hopkins was asked whether she had personal knowledge about the veracity of the people making the earlier referrals, and she said she did not. She also testified that she did not have personal knowledge or proof beyond the Department's computer records of what services were provided to or what requirements were placed on Boyd in the past. On redirect, Hopkins was asked without objection what "other issues" arose during her investigation, and she explained that she "learned that on two separate occasions [C.B.] was left unsupervised in a hot car for lengths of time."
The next witness called was Leslie Ontiveros, a supervisor with the Department who, along with Hopkins, interviewed Boyd about the 2003 referral. When the Department asked what information was provided in the referral, Boyd objected, "I'm going to object to hearsay, if she's going to respond based on what someone has told her," and the Department responded that "under 803(8)(b) this is certainly a matter of--this is a matter that is observed pursuant to a duty to report, and it is therefore an exception to the hearsay rule." The trial court overruled Boyd's objection, and Ontiveros testified that the report alleged that Boyd was "constantly yelling and spanking" C.B., had dragged him on the floor and knocked him down, and was unable to explain an injury under his eye. Ontiveros further stated that the referral alleged that Boyd and her son were living out of their car, that C.B. was developmentally delayed and was allowed to run around unsupervised, and that Boyd said she and C.B. had only had bread for the last two weeks. Ontiveros testified that when she received the referral, she reviewed Boyd's history with the Department and then went with Hopkins to investigate. After describing her interview with Boyd, Ontiveros was asked without objection whether she "had a referral from--there was a prior referral in April of 2002 concerning Ms. Boyd out of Abilene"; Ontiveros said that was correct. The Department then asked whether the earlier referral "was alleging basically the same type things," and Ontiveros answered, "Yes, that's correct." When the Department asked "what kind of things were alleged in that specific referral," Boyd objected that it was cumulative and had already been testified to, and the trial court sustained the objection. On cross-examination, Boyd asked Ontiveros a series of questions about whether Ontiveros spoke to any of the people who gathered information related to the earlier referrals or whether she had personal knowledge about the allegations made in the earlier referrals. On redirect, Ontiveros testified without objection that she asked Boyd about earlier referrals and her "extensive history" with the Department but that Boyd refused to discuss those matters.
On appeal, Boyd complains that the trial court erred in allowing Hopkins to "describe previous reports" made to the Department about Boyd, asserting that she raised a hearsay objection but was overruled. However, the testimony to which Boyd directs us and the objections she raised were related to questions about the April 2003 referral that led to C.B.'s removal, not to questions related to older referrals. When Hopkins testified about Boyd's history with the Department, Boyd did not raise hearsay objections--she raised that objection only twice, in reference to questions asked of Hopkins and Ontiveros about the allegations made in the April 2003 referral. Thus, Boyd has not preserved her complaint on appeal. See Tex. R. Evid. 802.
Furthermore, Boyd does not complain on appeal about Ontiveros's testimony, and at trial, she objected only to Hopkins's and Ontiveros's testimony about the April 2003 allegations, which were also testified to by Valerie Schultz, the director of social services at the community shelter who made the report to the Department. Schultz testified in detail about the basis of her report and about her observations of Boyd's and C.B.'s behavior on the day she made the referral. Because Schultz's testimony provided the same or similar evidence as the objected-to testimony and because Boyd does not assert on appeal that Ontiveros's testimony was erroneously admitted, any error in the admission of Hopkins's testimony is waived. See Volkswagen of Am., Inc. v. Ramirez, 159 S.W.3d 897, 907 (Tex. 2004).
Finally, even if we assume that Boyd made a proper complaint concerning testimony about past referrals and that such testimony was inadmissible, when we view the entire record, we hold that Boyd has not shown that the testimony probably caused the rendition of an improper judgment. Tex. R. App. P. 44.1(a)(1); Malone, 972 S.W.2d at 43. We overrule Boyd's second point of error.
Conclusion
Having overruled both of Boyd's complaints on appeal, we affirm the trial court's order of termination.
__________________________________________
David Puryear, Justice
Before Chief Justice Law, Justices Patterson and Puryear
Affirmed
Filed: July 20, 2007
1. Boyd has four older daughters who live with their father and were not part of this case.
2. Evidence from the trial on the merits showed that C.B.'s paternity was established in a January 2000 order out of the 326th District Court of Taylor County, which found that John Boyd was the child's father. The Boyds were married in May 2000. Generally, once a court acquires continuing, exclusive jurisdiction over a child by issuing a final order, see Tex. Fam. Code Ann. § 155.001(a) (West 2002), that court may continue to exercise jurisdiction over matters related to the child. Id. § 155.003(a) (West 2002). However, a court loses continuing, exclusive jurisdiction if the parents remarry after a divorce but then file a new suit for divorce and child custody in a different court. Id. § 155.004(a)(2) (West 2002). This case presents a more unusual situation in which the parents were not married before the paternity proceeding took place but married afterwards. It is arguable that Taylor County's continuing, exclusive jurisdiction arising out of its issuance of the paternity order was extinguished when the Boyds married. See id.; id. § 154.006(b) (West Supp. 2006) (providing that court orders related to child support, conservatorship, possession, or access generally terminate if obligor and obligee marry).
3. A witness testified during the trial itself that she contacted Boyd's apartment manager in Abilene and was told that Boyd had been evicted and did not have a house in Abilene.
Boyd v. Texas DFPS, No. 03-05-00656-CV (Tex.App.- Austin, Jul. 20, 2007)(Opinion by Justice Puryear)(termination)(Before Chief Justice Law, Justices Patterson and Puryear)
Full style: Frances Boyd v. Texas Department of Family and Protective Services
Appeal from 274th District Court of Hays County
Disposition: Affirmed
THE DISTRICT COURT OF HAYS COUNTY, 274TH JUDICIAL DISTRICT
NO. 2003-0606, HONORABLE RONALD G. CARR, JUDGE PRESIDING
MEMORANDUM OPINION BY JUSTICE PURYEAR
Following a jury trial, the trial court signed an order terminating the parental rights of appellant Frances Boyd to her son, C.B. Boyd appeals, complaining that the trial court erred in overruling her motion to transfer venue and admitting evidence that Boyd had been investigated earlier by the Department. We affirm the order of termination.
Background
Boyd does not contest the sufficiency of the evidence supporting the jury's verdict. Therefore, only a brief recitation of the facts is necessary. C.B. was born in June 1999, and was removed from Boyd's custody by the Department in April 2003, when he was almost four years old. John Matthew Boyd is the child's father, and at the time of trial, had relinquished his parental rights to C.B. The Department had been involved with Boyd and her children since 1993, receiving approximately eight referrals between April 1993 and April 2002 alleging neglectful supervision, emotional and physical abuse, and physical neglect. (1) In July 1998, Adult Protective Services received a referral alleging that Boyd was exploiting and physically neglecting her mother; only the exploitation allegation was validated.
The Department took custody of C.B. in April 2003 after receiving a referral alleging physical abuse, neglectful supervision, and physical neglect of C.B. The referral came from a community shelter in New Braunfels, where Boyd had gone seeking assistance. The referral stated that Boyd appeared "manic and delusional," and that C.B. was unkempt, constantly crying, and appeared to be developmentally delayed. When the Department arrived to investigate, Boyd was angry and unfocused. She denied having a mental illness and said she avoided going out in public because she feared someone would make a report against her. She thought this referral had been made because she is Christian and "had been 'praying a lot lately.'" When the caseworker attempted to discuss the shelter's allegations, Boyd said she and C.B. were leaving and began to walk away. Law enforcement had to escort her back to the Department caseworker, and Boyd became irate and disoriented and eventually had to be restrained by the police officers.
The Department prepared a service plan requiring Boyd to participate in parenting classes, individual therapy, and anger management classes, undergo a drug and alcohol assessment, obtain and provide proof of stable employment and suitable housing, allow the Department to make home visits, and keep the Department informed of her address and phone number. Boyd completed the parenting classes, psychological evaluations, and drug and alcohol assessment, but she did not complete individual therapy or anger management or maintain or provide proof of employment or housing. Witnesses testified that C.B. did not appear to have bonded with Boyd, and C.B.'s therapist testified that C.B. had improved in foster care, but that he probably would need additional therapy. He believed C.B. had improved because of the stability of his foster placement but would regress if returned to an unstable environment with Boyd. C.B.'s therapist, caseworker, and guardian ad litem all testified that C.B. was doing well in foster care and that being returned to Boyd's care would be detrimental to the child. The jury returned a verdict finding that Boyd's parental rights should be terminated, and the trial court signed an order of termination. It is from this order that Boyd appeals, complaining that the trial court should have transferred the case to Taylor County and that the court committed reversible error by admitting hearsay into evidence.
Motion to Transfer
In her first point of error, Boyd argues that the trial court erred in refusing to transfer this case from Hays County, where the Department filed its petition, to Taylor County. She argues that because she filed a proper motion asserting continuing jurisdiction in Taylor County and no controverting affidavits were filed, the transfer was mandatory. We disagree.
The Department filed its petition in Hays County on April 23, 2003, alleging that it believed no other court had continuing, exclusive jurisdiction over C.B. The petition alleged that Boyd had a New Braunfels address, but the accompanying affidavit, sworn to by caseworker Tara Hopkins and describing the facts that led the Department to believe that removal was in C.B.'s best interest, gave a San Marcos address. According to the affidavit, Boyd told someone at the shelter that she and C.B. were living out of Boyd's car. When interviewed by the Department, however, Boyd said she was not homeless. She made inconsistent statements about her residence, saying that she lived in Abilene and was going back; that her mother was sick in Abilene and Boyd was going there to help care for her; that Boyd was going to New Braunfels to stay with friends; and that she was going to stay in San Marcos, where a legal advocate was going to help her regain custody of her eleven-year-old daughter.
On May 9, a show-cause hearing was held. Boyd appeared in person and was not represented by counsel. It was discussed that Boyd had not yet been served with the Department's petition. The Department explained that it attempted service first at the New Braunfels address Boyd had provided but was unsuccessful because she had moved. When Boyd informed the Department that she had an Abilene address, the Department filed an amended petition requesting service in Abilene, but Boyd then called to say she had moved to Cedar Park. There was a discussion at the hearing that a constable was supposed to be serving Boyd with citation that day. The trial court explained to Boyd that she could continue with the hearing, in which case the court would enter temporary orders, or that the hearing could be reset for two weeks "to give you time to be served and prepare for a hearing and hire a lawyer" or have one appointed. Boyd said she wanted to go forward with the hearing, explaining that she had already tried unsuccessfully to get an attorney through a legal aid office. The record does not reflect when, if ever, Boyd was finally served with citation; she asserts that her attorney was appointed on May 21, and the Department does not contest that date.
On June 12, 2003, Boyd's appointed attorney filed a motion to transfer, stating that Taylor County had continuing, exclusive jurisdiction over C.B. "as a result of prior proceedings" and that the cause should be transferred there. The next day, a status hearing was held before an associate judge, and Boyd sought a ruling on her motion to transfer. The Department asserted that jurisdiction should remain in Hays County, and the child's attorney ad litem objected to the transfer, stating that it was not in C.B.'s best interest. Later in the hearing, the trial court stated that there was continuing jurisdiction in Taylor County, but that it would carry the motion to transfer forward, saying, "I think where the case ends up depends on how things develop in the case." At that point, the attorney ad litem said, "I would like to make a formal objection to any discussion or proceedings on the motion," asserting that "all we've had is an oral motion, which is not contemplated under 155.204." The court informed the attorney ad litem that a written motion had been filed, and although the motion stated that it had been served on all parties, the ad litem said he had not been served with and was unaware of the written motion. The ad litem said, "We had no opportunity to write a controverting affidavit. And without specific knowledge right now of when the petition was filed, it may very well not even be timely filed by the 12th. And if so, I lodge that objection." The court said it would revisit the issue in September.
Boyd immediately filed an appeal of the associate judge's denial of the transfer, seeking review by the trial court. C.B.'s attorney ad litem filed an objection, stating that Boyd had not served him with the motion and arguing that due to the lack of service and notice, there was no valid motion for the associate judge to consider and, therefore, no valid ruling for Boyd to appeal. The ad litem also argued that the motion was untimely because it was filed more than twenty days after the petition was filed, that no notice was provided that the motion would be heard, and that the child and his attorney ad litem were not given sufficient time to file a controverting affidavit.
No hearing was held on Boyd's appeal, and the motion to transfer was not raised again until a February 2004 hearing on Boyd's attorney's motion to withdraw, when the issue of a transfer was briefly mentioned. At that hearing, John Boyd was asked if he intended to hire an attorney. Rather than answering the question, Mr. Boyd stated that he wanted to file a motion to transfer, and the trial court said, "That's not the question. The question to you, sir, do you intend to hire a lawyer?" Mr. Boyd explained that he and Boyd had reconciled after a separation and that he intended to hire an attorney to represent both of them. Later in that hearing, Boyd mentioned the transfer issue, but the trial court stopped her, returning to the issue of whether the Boyds were going to hire an attorney or needed appointed counsel. The court gave the Boyds forty-five days to hire an attorney; when neither party hired a lawyer, a new attorney was appointed to represent Boyd.
On June 12, 2004, one year after Boyd's motion to transfer was filed, Boyd's attorney filed a "motion to enter order," stating that the June 2003 motion to transfer was timely filed because Boyd was never served with citation. The motion also asserted that because no controverting affidavits had been filed, transfer was mandatory under section 155.204 of the family code. The motion recited that the motion was served on the Department and C.B.'s attorney ad litem, but did not state the date on which the motion was mailed. A hearing on the motion was set for July 22, 2004. In that very brief hearing, Boyd's attorney introduced himself and stated, "We filed a Motion to Enter Order, and we have argued the Motion to Transfer should be granted and order be entered. The Court has ruled that the Motion to Enter Order is denied and a subsequent motion will be presented to the Court for its approval. And that's all I have." The attorney ad litem stated that "in regards to [Boyd's attorney's] argument, in fact, the Attorney Ad Litem was never served with any copy of a Motion to Transfer Venue."
On appeal, Boyd argues that because no opposing affidavits were filed by C.B.'s attorney ad litem or the Department, the transfer to Taylor County was mandatory. She argues that the motion to transfer was timely because the record does not show that she was served with the Department's citation and petition. Boyd acknowledges that her participation in the May 9 hearing could constitute notice, but argues that because of the magnitude of the constitutional rights involved, we should consider her motion timely, counting its due date from the date she was appointed counsel, May 21. Boyd further argues that the motion's certificate of service "creat[ed] a presumption of proper service" and that the attorney ad litem's objection to her appeal from the associate judge's denial of the transfer "conceded actual notice." Boyd further notes that although the attorney ad litem objected to a lack of notice, the Department never raised such complaints.
Section 155.204 of the family code provides that if a motion to transfer is timely filed and no controverting affidavits are timely filed in response, the trial court shall transfer the case without a hearing. Tex. Fam. Code Ann. § 155.204(c) (West Supp. 2006).
A motion to transfer is timely if filed (1) on or before the first Monday following the twentieth day after service of citation or notice of the suit or (2) before the hearing commences, whichever is sooner. Id. § 155.204(b). A controverting affidavit must be filed on or before the first Monday following the twentieth day after "the date of notice of a motion to transfer is served." Id. § 155.204(d).
We recognize the weight of constitutional rights involved in this case. However, the statute is clear that to invoke mandatory transfer provisions, a motion to transfer must be filed on the first Monday following twenty days from service of citation or notice of the suit. Id. § 155.204(b). There is no doubt that Boyd had notice of the suit on May 9, when she appeared and participated in the hearing. Thus, the motion to transfer was due by June 2, 2003. See id. Because Boyd's motion was filed ten days late, it only raised the issue of a discretionary transfer, not a mandatory transfer. See Bollard v. Berchelmann, 921 S.W.2d 861, 864-65 (Tex. App.--San Antonio 1996, orig. proceeding); Garza v. Texas Dep't of Human Servs., 757 S.W.2d 44, 47-48 (Tex. App.--San Antonio 1988, writ denied); see also Tex. Fam. Code Ann. § 155.202 (West 2002) (governing discretionary transfers).
Boyd does not argue that the trial court would have abused its discretion in denying her motion to transfer if the motion sought a discretionary transfer; she only asserts that the transfer was mandatory under section 155.204. The Department asserts that the trial court did not err in refusing to exercise its discretion to transfer the case. We agree.
The records from the pretrial hearings contain little information about why Taylor County would have jurisdiction over this matter. (2) At the show-cause hearing held in May 2003, Boyd testified that she had family in Abilene and was living there. Boyd mentioned filing for divorce in Taylor County, but then said "it hasn't been final. I have to reapply, in other words." The Department stated that it had attempted to serve Boyd with citation at the New Braunfels address she first provided, then at the Abilene address she gave, and that she most recently told the Department she was living in Cedar Park. A Department caseworker testified that one of Boyd's daughters told the Department that Boyd was homeless and "moving around constantly." An employee for the shelter from which C.B. was removed, which is located in San Marcos, testified that Boyd said she and C.B. were homeless and living out of her car. She also testified that Boyd had sought services from the San Marcos shelter six times in the past year and had gone to the affiliated Salvation Army facility "several times." The associate judge placed C.B. with his half-sisters and Boyd's ex-husband, who live in Hays County.
At the time of the June 2003 hearing, Boyd was living in Cedar Park and had a job there as a caregiver for a health-care provider. She testified that before C.B.'s removal, she had been in San Marcos "a couple of times" and had stayed at the shelter from which C.B. was removed once in the past, before the incident that led to his removal. However, she also testified that she had an apartment and was a substitute teacher in Abilene. (3) Boyd testified that at the time of C.B.'s removal, she was not living in her car, was in New Braunfels to visit her daughters, and was considering giving up her apartment in Abilene. She testified that John Boyd was incarcerated in Abilene but had previously lived and worked in New Braunfels. When asked where she thought C.B. would be best placed during the pendency of the proceeding, she said that her first preference would be for him to be placed with her and her next choice would be with a cousin who lives in San Antonio; the trial court continued C.B.'s placement with his half-sisters and Boyd's ex-husband. The court observed that if it transferred the case, Boyd would have to start all over in Abilene, whereas she had obtained a place to live and a good job in the Hays County area. The court also noted that Boyd had begun to make progress in Hays County, had an excellent attorney in Hays County, and had evaluations and services set up in Hays County.
Boyd's motion to transfer was not timely filed under section 155.204 of the family code so as to call for a mandatory transfer. Based on this record, we cannot hold that the trial court abused its discretion in refusing to transfer the case. We overrule Boyd's first point of error.
Admission of Evidence
In her second point of error, Boyd argues that the trial court erred in admitting evidence of earlier Department investigations because the Department's reports contained inadmissible hearsay in the form of allegations by people who were not Department employees.
We review a trial court's decisions related to the admission or exclusion of evidence for an abuse of discretion. Taylor v. Texas Dep't of Protective & Regulatory Servs., 160 S.W.3d 641, 652 (Tex. App.--Austin 2005, pet. denied). Hearsay evidence is inadmissible unless it falls within an exception provided by the rules or a statute. Tex. R. Evid. 802. However, a party waives any complaint related to the admission of hearsay if she does not object. See id. A party who preserves a complaint related to the admission of hearsay must show on appeal that the erroneous admission "probably caused the rendition of an improper judgment." Owens-Corning Fiberglas Corp. v. Malone, 972 S.W.2d 35, 43 (Tex. 1998); see Tex. R. App. P. 44.1(a)(1).
The Department called Tara Hopkins, a Department investigator, to testify about her investigation into the referral the Department received in April 2003. Hopkins described the process of receiving and investigating a referral, explaining that after receiving the referral, she looked up Boyd's history with the Department and with Adult Protective Services. Hopkins was asked, "And when you went out to report [sic] this specific referral, what kind of information had you received?" Boyd objected, asserting, "[T]hat calls for hearsay if she's going to testify as to what the information is." The Department countered that the testimony was admissible under the hearsay exception set out in rule 803(8)(b) as a matter observed and reported "pursuant to a duty imposed by law" and that the report was a "record, report, statement, or data" compiled by a public agency. The trial court overruled Boyd's objection, and the Department asked, "What kind of report did you receive?" Hopkins answered that the Department received a referral stating that Boyd and C.B. were staying at the community shelter and alleging abuse, neglectful supervision, and physical neglect. She was then asked, "What kind of report did you receive, and what was the basis of that report?" Boyd objected "to any testimony about any kind of hearsay or about mental health," and the trial court sustained Boyd's objection "to the extent of hearsay."
The Department moved on to ask Hopkins "[w]hat other concerns were there," and Hopkins, reading from the April 2003 referral, answered that there were concerns that Boyd and C.B. were living in a car and had only eaten bread for two days or two weeks; that Boyd yelled at C.B. "all the time" and had dragged him on the floor and knocked him down; that C.B. had an unexplained eye injury; that Boyd became defensive "when her parenting skills [were] questioned"; that C.B. was unkempt, developmentally delayed, and largely unsupervised by Boyd; and that C.B. was "constantly crying and having fits." Later, Hopkins testified without objection that Boyd had an "extensive history" with the Department. Hopkins also testified without objection about Boyd's history with the Department, such as when the Department received referrals, what children were involved, how many referrals were received, the basis for some of the referrals, and about the referral related to Boyd's mother. On cross-examination, Hopkins was asked whether she had personal knowledge about the veracity of the people making the earlier referrals, and she said she did not. She also testified that she did not have personal knowledge or proof beyond the Department's computer records of what services were provided to or what requirements were placed on Boyd in the past. On redirect, Hopkins was asked without objection what "other issues" arose during her investigation, and she explained that she "learned that on two separate occasions [C.B.] was left unsupervised in a hot car for lengths of time."
The next witness called was Leslie Ontiveros, a supervisor with the Department who, along with Hopkins, interviewed Boyd about the 2003 referral. When the Department asked what information was provided in the referral, Boyd objected, "I'm going to object to hearsay, if she's going to respond based on what someone has told her," and the Department responded that "under 803(8)(b) this is certainly a matter of--this is a matter that is observed pursuant to a duty to report, and it is therefore an exception to the hearsay rule." The trial court overruled Boyd's objection, and Ontiveros testified that the report alleged that Boyd was "constantly yelling and spanking" C.B., had dragged him on the floor and knocked him down, and was unable to explain an injury under his eye. Ontiveros further stated that the referral alleged that Boyd and her son were living out of their car, that C.B. was developmentally delayed and was allowed to run around unsupervised, and that Boyd said she and C.B. had only had bread for the last two weeks. Ontiveros testified that when she received the referral, she reviewed Boyd's history with the Department and then went with Hopkins to investigate. After describing her interview with Boyd, Ontiveros was asked without objection whether she "had a referral from--there was a prior referral in April of 2002 concerning Ms. Boyd out of Abilene"; Ontiveros said that was correct. The Department then asked whether the earlier referral "was alleging basically the same type things," and Ontiveros answered, "Yes, that's correct." When the Department asked "what kind of things were alleged in that specific referral," Boyd objected that it was cumulative and had already been testified to, and the trial court sustained the objection. On cross-examination, Boyd asked Ontiveros a series of questions about whether Ontiveros spoke to any of the people who gathered information related to the earlier referrals or whether she had personal knowledge about the allegations made in the earlier referrals. On redirect, Ontiveros testified without objection that she asked Boyd about earlier referrals and her "extensive history" with the Department but that Boyd refused to discuss those matters.
On appeal, Boyd complains that the trial court erred in allowing Hopkins to "describe previous reports" made to the Department about Boyd, asserting that she raised a hearsay objection but was overruled. However, the testimony to which Boyd directs us and the objections she raised were related to questions about the April 2003 referral that led to C.B.'s removal, not to questions related to older referrals. When Hopkins testified about Boyd's history with the Department, Boyd did not raise hearsay objections--she raised that objection only twice, in reference to questions asked of Hopkins and Ontiveros about the allegations made in the April 2003 referral. Thus, Boyd has not preserved her complaint on appeal. See Tex. R. Evid. 802.
Furthermore, Boyd does not complain on appeal about Ontiveros's testimony, and at trial, she objected only to Hopkins's and Ontiveros's testimony about the April 2003 allegations, which were also testified to by Valerie Schultz, the director of social services at the community shelter who made the report to the Department. Schultz testified in detail about the basis of her report and about her observations of Boyd's and C.B.'s behavior on the day she made the referral. Because Schultz's testimony provided the same or similar evidence as the objected-to testimony and because Boyd does not assert on appeal that Ontiveros's testimony was erroneously admitted, any error in the admission of Hopkins's testimony is waived. See Volkswagen of Am., Inc. v. Ramirez, 159 S.W.3d 897, 907 (Tex. 2004).
Finally, even if we assume that Boyd made a proper complaint concerning testimony about past referrals and that such testimony was inadmissible, when we view the entire record, we hold that Boyd has not shown that the testimony probably caused the rendition of an improper judgment. Tex. R. App. P. 44.1(a)(1); Malone, 972 S.W.2d at 43. We overrule Boyd's second point of error.
Conclusion
Having overruled both of Boyd's complaints on appeal, we affirm the trial court's order of termination.
__________________________________________
David Puryear, Justice
Before Chief Justice Law, Justices Patterson and Puryear
Affirmed
Filed: July 20, 2007
1. Boyd has four older daughters who live with their father and were not part of this case.
2. Evidence from the trial on the merits showed that C.B.'s paternity was established in a January 2000 order out of the 326th District Court of Taylor County, which found that John Boyd was the child's father. The Boyds were married in May 2000. Generally, once a court acquires continuing, exclusive jurisdiction over a child by issuing a final order, see Tex. Fam. Code Ann. § 155.001(a) (West 2002), that court may continue to exercise jurisdiction over matters related to the child. Id. § 155.003(a) (West 2002). However, a court loses continuing, exclusive jurisdiction if the parents remarry after a divorce but then file a new suit for divorce and child custody in a different court. Id. § 155.004(a)(2) (West 2002). This case presents a more unusual situation in which the parents were not married before the paternity proceeding took place but married afterwards. It is arguable that Taylor County's continuing, exclusive jurisdiction arising out of its issuance of the paternity order was extinguished when the Boyds married. See id.; id. § 154.006(b) (West Supp. 2006) (providing that court orders related to child support, conservatorship, possession, or access generally terminate if obligor and obligee marry).
3. A witness testified during the trial itself that she contacted Boyd's apartment manager in Abilene and was told that Boyd had been evicted and did not have a house in Abilene.
No brief filed - appeal from DFPS suit abated
Williams v. Texas DFPS 03-07-00103-CV (Tex.App.- Austin, Jul. 20, 2007)(Opinion by Chief Justice Law) (Before Chief Justice Law, Justices Puryear and Pemberton)
Full style: Kameron Williams v. Texas Department of Family and Protective Services
Disposition: ABATED
Appeal from 146th District Court of Bell County
FROM THE DISTRICT COURT OF BELL COUNTY, 146TH JUDICIAL DISTRICT
NO. 214,846-B, HONORABLE RICK MORRIS, JUDGE PRESIDING
M E M O R A N D U M O P I N I O N
Appellant Kameron Williams filed a first amended notice of appeal with the trial court on February 14, 2007, the last volume of the clerk's record was filed on March 9, 2007, and final volume of the reporter's record was filed on March 27, 2007. Appellant's brief was therefore due on April 16, 2007. See Tex. R. App. P. 38.6(a). The brief has not been received and no extension of time has been requested or granted. On June 21, 2007, this Court sent notice that the brief was overdue to appellant's appointed counsel, Pauline Wiseman Stevens. To date, counsel has not responded to this Court's notice that the brief is overdue.
The appeal is abated.
The trial court shall conduct a hearing to determine whether appellant desires to pursue her appeal, whether she is indigent and, if she is, whether her appointed counsel has abandoned this appeal. See Tex. R. App. P. 38.8(a)(2) see also Tex. R. App. P. 38.8(b)(2).
The court shall make appropriate findings and recommendations, and a supplemental record from this hearing--including copies of all findings and orders and a transcription of the court reporter's notes--shall be forwarded to the clerk of this Court no later than August 20, 2007. See Tex. R. App. P. 38.8(b)(3).
__________________________________________
W. Kenneth Law, Chief Justice
Before Chief Justice Law, Justices Puryear and Pemberton
Abated
Filed: July 20, 2007
Full style: Kameron Williams v. Texas Department of Family and Protective Services
Disposition: ABATED
Appeal from 146th District Court of Bell County
FROM THE DISTRICT COURT OF BELL COUNTY, 146TH JUDICIAL DISTRICT
NO. 214,846-B, HONORABLE RICK MORRIS, JUDGE PRESIDING
M E M O R A N D U M O P I N I O N
Appellant Kameron Williams filed a first amended notice of appeal with the trial court on February 14, 2007, the last volume of the clerk's record was filed on March 9, 2007, and final volume of the reporter's record was filed on March 27, 2007. Appellant's brief was therefore due on April 16, 2007. See Tex. R. App. P. 38.6(a). The brief has not been received and no extension of time has been requested or granted. On June 21, 2007, this Court sent notice that the brief was overdue to appellant's appointed counsel, Pauline Wiseman Stevens. To date, counsel has not responded to this Court's notice that the brief is overdue.
The appeal is abated.
The trial court shall conduct a hearing to determine whether appellant desires to pursue her appeal, whether she is indigent and, if she is, whether her appointed counsel has abandoned this appeal. See Tex. R. App. P. 38.8(a)(2) see also Tex. R. App. P. 38.8(b)(2).
The court shall make appropriate findings and recommendations, and a supplemental record from this hearing--including copies of all findings and orders and a transcription of the court reporter's notes--shall be forwarded to the clerk of this Court no later than August 20, 2007. See Tex. R. App. P. 38.8(b)(3).
__________________________________________
W. Kenneth Law, Chief Justice
Before Chief Justice Law, Justices Puryear and Pemberton
Abated
Filed: July 20, 2007
One-Sentence Disposition
Minimalist appellate jurisprudence: Third Court of Appeals denies another mandamus petition in one-sentence "opinion"
In re Blake Taylor, No. 03-07-00370-CV (Tex.App.- Austin, Jul. 20, 2007)(Opinion by Justice Pemberton)(one-line opinion) (Before Justices Puryear, Pemberton and Waldrop)
Appeal from County Court at Law No. 2 of Bell County
ORIGINAL PROCEEDING FROM BELL COUNTY
M E M O R A N D U M O P I N I O N
The petition for writ of mandamus is denied. See Tex. R. App. P. 52.8(a).
__________________________________________
Bob Pemberton, Justice
Before Justices Puryear, Pemberton and Waldrop
Filed: July 20, 2007
In re Blake Taylor, No. 03-07-00370-CV (Tex.App.- Austin, Jul. 20, 2007)(Opinion by Justice Pemberton)(one-line opinion) (Before Justices Puryear, Pemberton and Waldrop)
Appeal from County Court at Law No. 2 of Bell County
ORIGINAL PROCEEDING FROM BELL COUNTY
M E M O R A N D U M O P I N I O N
The petition for writ of mandamus is denied. See Tex. R. App. P. 52.8(a).
__________________________________________
Bob Pemberton, Justice
Before Justices Puryear, Pemberton and Waldrop
Filed: July 20, 2007
Thursday, July 19, 2007
Unilateral and Mutual Mistake as Basis for Rescission of Conveyance Rejected
Jackie Doss Smith v. Virginia Lagerstam, Emil Lagerstam, Kathryn Lagerstam Wilbeck, Vivian Lagerstam Savage, and Annika Lagerstam Kaye, No. 03-05-00275-CV (Tex.App.- Austin, Jul. 19, 2007)(Opinion by Justice Puryear on rehearing)(Before Chief Justice Law, Justices Patterson and Puryear)
FROM THE DISTRICT COURT OF TRAVIS COUNTY, 345TH JUDICIAL DISTRICT
NO. GN402753, HONORABLE MARGARET A. COOPER, JUDGE PRESIDING
M E M O R A N D U M O P I N I O N
Appellant Jackie Doss Smith has filed a motion for rehearing. We withdraw our opinion, dissenting opinion, and judgment issued on June 1, 2007, and the following opinions and judgment are substituted. We overrule Smith's motion for rehearing.
Jackie Doss Smith sought to rescind three deeds under which she conveyed her royalty interest to her cousins, Kathryn Lagerstam Wilbeck, Vivian Lagerstam Savage, and Annika Lagerstam Kaye (the "Lagerstam daughters"). Smith requested that the court invalidate the deeds on the grounds of mutual and unilateral mistake because, at the time of the transaction, the parties were mistaken regarding the interest that was conveyed. In response, the Lagerstam daughters and their parents, Virginia and Emil Lagerstam (collectively the "Lagerstams"), (1) filed a motion for summary judgment, asserting that the elements of both types of mistake were not met. The district court granted the Lagerstams' motion for summary judgment, and Smith now appeals. We will affirm the judgment of the district court.
BACKGROUND
Smith and her aunt, Virgina Lagerstam, inherited identical mineral interests to land in Robertson County, Texas. In 1984, Smith and Virginia leased their mineral interests to XTO Energy by separate oil and gas leases. XTO Energy subsequently created a pooled unit, which included Smith's and Virginia's interests. Smith and Virginia were each entitled to a .0009901 royalty interest on the production of oil from any wells on the pooled unit.
Smith and Virginia began to receive royalty payments in 1985 when the first well was completed. For several years the royalty payments amounted to less than $100 per year, but in 2002, a second well was completed and payments rose to $250-$300 per month. In 2003, payments again rose when a third well was completed. By the start of 2004, Smith and Virginia were receiving over $300 per month in royalty payments. (2)
On February 9, 2004, Smith received an unsolicited offer from San Saba Royalty to purchase her entire interest for $6,658.99. She had received other offers before, but this offer was considerably higher than any of the previous offers. Due to the large amount offered and the fact that Smith had recently learned her son owed over $6,000 in back taxes, she considered accepting the offer. Consequently, Smith phoned Virginia, who Smith assumed had received the same offer, in order to discuss her options. Virginia stated that she would purchase Smith's royalty interest for the same price and explained that she wanted to give the interest to her three daughters. Desiring to keep the interest in the family and to help her son, Smith agreed to Virginia's offer. On March 9, 2004, Smith executed three deeds, conveying her entire interest to the Lagerstam daughters for $6,660.
In January and February 2004, just prior to the sale, two additional wells were installed on the pooled unit. However, due to the lag between oil production and royalty payments, neither party had received royalty payments from these two wells at the time of the sale. For several months after the sale, Smith continued to receive royalty payments for the oil production that occurred prior to the sale. These post-sale payments reflected the production from the additional two wells and were for the amounts of $510.10 in March, $1,025.90 in April, and $974.85 in May. After receiving these payments, Smith claims she attempted to verify their accuracy but was unsuccessful in contacting XTO Energy.
In June 2004, Smith received a transfer order from XTO Energy, indicating that she had successfully transferred her entire interest, including her interest in production from the two new wells, to the Lagerstam daughters. On that same day, Smith received another purchase offer from San Saba, this one for $62,651.38. After receiving this offer, she contacted Virginia and ultimately wrote a letter to the Lagerstam daughters, requesting that they sell her royalty interest back to her for the original purchase price of $6,600 plus interest. The Lagerstam daughters refused. (3)
Smith then filed suit to rescind the three deeds on the grounds that the deeds were entered into under a mutual or a unilateral mistake. Specifically, she asked that the transfer be rescinded because, at the time of the conveyance, she was unaware that additional gas wells had been placed on the property. As a result, she insists that she was mistaken about the interest she was conveying. In response, the Lagerstams filed a motion for summary judgment, contending that the deeds should be upheld because there was no mistake, mutual or otherwise, regarding the interest that was sold. The district court granted the motion, and Smith appeals the district court's judgment.
DISCUSSION
Summary Judgment Motion
On appeal, Smith contends that the district court erred when it granted the Lagerstams' motion because fact issues were present regarding whether the deeds should be rescinded on the basis of a mutual or unilateral mistake. Before addressing the merits of this case, we need to address the dissent's concerns regarding the Lagerstams' summary judgment motion. Essentially, the dissent attacks the adequacy of the Lagerstams' motion on the basis of its length and its lack of citation to case law.
Although the Lagerstams' motion asserted that the Lagerstams were entitled to relief under both traditional and no evidence summary judgment standards, the motion is more properly read as a traditional motion for summary judgment because it did not specify which elements of Smith's claims there was no evidence for and because it referred to evidence attached to the motion as proof that the Lagerstams were entitled to relief as a matter of law. See Tex. R. Civ. P. 166a(i) (in no evidence motion, movant "must state elements as to which there is no evidence."). Accordingly, we will limit our discussion to the requirements of traditional summary-judgment motions and need not address the dissent's assertions that the motion fails as a no-evidence summary judgment motion.
We first note that Smith did not contest the adequacy of the motion to the trial court and raises no issue regarding the sufficiency of the motion on appeal. See McConnell v. Southside Indep. Sch. Dist., 858 S.W.2d 337, 342-43 (Tex. 1993) (holding that in order for non-movant to complain on appeal that grounds raised in motion for summary judgment were unclear, non-movant must file exception to motion); Lochabay v. Southwestern Bell Media, Inc., 828 S.W.2d 167, 170 n.2 (Tex. App.--Austin 1992, no writ) (same). Assuming without deciding that it is proper in this case to review the sufficiency of the motion when neither party has asked us to, we believe that the motion satisfies the requirements of a traditional summary judgment motion.
The motion is admittedly brief; however, to be effective, the motion need only list the grounds upon which relief is requested, and the specified grounds may be stated "concisely, without detail and argument." Lochabay, 828 S.W.2d at 170 n.2 (affirming summary judgment motion on deceptive trade practice grounds when motion simply stated that non-moving party's counterclaim "citing [the movant's] use of deceptive trade practices is wholly unsupported by legal authority."). The motion stated that Smith is not entitled to relief on the grounds of unilateral or mutual mistake. Further, the Lagerstams attached several documents to their motion for summary judgment, including Virginia's affidavit, an offer letter from San Saba, and the deeds conveying Smith's interest to the Lagerstam daughters. In their motion, the Lagerstams referred to the attached evidence and stated that the evidence "conclusively establishes" that the Lagerstams "never intended for their purchase to be anything other than for the entire interest owned by" Smith and that Smith "never said or did anything to indicate that the sale was supposed to be a transfer only of an interest that involved a certain number of existing wells."
In light of the preceding, the motion falls far short of the type of motions that have been held ineffective because they presented no grounds for consideration. See, e.g., McConnell, 858 S.W.2d at 338, 341 (holding that summary judgment that only stated there were "no genuine issues as to any material facts" was insufficient); Bean v. Reynolds Realty Group, Inc., 192 S.W.3d 856, 859 (Tex. App.--Texarkana 2006, no pet.) (holding that motion that stated only that "there is no evidence to support the plaintiff's causes of actions and allegations" was ineffective); Great-Ness Prof'l Servs., Inc. v. First Nat'l Bank, 704 S.W.2d 916, 917 (Tex. App.--Houston [14th Dist.] 1986, no writ) (holding that motion was ineffective in breach-of-lease case because motion made no mention of breach-of-lease claim and, instead, stated as its only ground that "[t]his is a suit on a sworn account.").
For all the reasons previously given, we conclude that the Lagerstams' motion for summary judgment was effective. We now turn to the standard with which appellate courts review district court determinations regarding summary judgment motions. A summary judgment may be upheld only if no genuine issue of material fact exists. Tex. R. Civ. P. 166a(c). To establish that no genuine issue of material fact exists, a defendant moving for summary judgment must disprove at least one element of the plaintiff's cause of action. Randall's Food Mkts., Inc. v. Johnson, 891 S.W.2d 640, 644 (Tex. 1995); Arbelaez v. Just Brakes Corp., 149 S.W.3d 717, 719 (Tex. App.--Austin 2004, no pet.). In reviewing the summary judgment evidence, all evidence favorable to the nonmovant must be taken as true. Johnson, 891 S.W.2d at 644.
Mutual Mistake
In her first issue on appeal, Smith claims that there was a fact issue as to whether there existed a mutual mistake warranting rescission of the deeds. Smith argues that the parties entered the sales contract under the mistaken belief that she was selling, and the Lagerstams were buying, only three producing wells. This mistake about the number of producing wells, she contends, materially affected the sales transaction and caused her to sell her interest for between 11% to 25% of its true value. (4)
Under Texas law, when parties to an agreement have contracted under a mutual misconception of material fact, the agreement is voidable under the doctrine of mutual mistake. Williams v. Glash, 789 S.W.2d 261, 264 (Tex. 1990).
However, the doctrine of mutual mistake is applied only in rare circumstances in order to allow parties to "rely on the finality" of their agreements and to prevent the routine use of the doctrine to avoid the effects of an "unhappy bargain." Id. at 265; see Wallerstein v. Spirt, 8 S.W.3d 774, 781 (Tex. App.--Austin 1999, no pet.).
A mutual mistake must be proven by "clear, exact, and satisfactory evidence." Estes v. Republic Nat'l Bank, 462 S.W.2d 273, 275 (Tex. 1970) (citing Sun Oil Co. v. Bennett, 84 S.W.2d 447, 452 (Tex. 1935)).
To be entitled to rescind an agreement due to a mutual mistake, a party must show that there exists (1) a mistake of fact, (2) held mutually by the parties, (3) which materially affects the agreed upon exchange. Wallerstein, 8 S.W.3d at 781; De Monet v. PERA, 877 S.W.2d 352, 357 (Tex. App.--Dallas 1994, no writ). "[T]he mistake must relate to the subject matter of the contract and not to a matter that is merely collateral or incidental to the contract." Petrey v. John F. Buckner & Sons, 280 S.W.2d 641, 643 (Tex. Civ. App.--Waco 1955, writ ref'd n.r.e.); see also De Monet, 877 S.W.2d at 359 (relief only appropriate where mistake upsets basis of contract); Chambers v. Huggins, 709 S.W.2d 219, 224 (Tex. App.--Houston [14th Dist.] 1986, no writ) (requiring party show that mistake was mutual and that it was material inducement to transaction).
When determining whether there was a mutual mistake, courts must consider the language of the agreement. See, e.g., Sun Oil Co., 84 S.W.2d at 449 (refusing to invalidate lease on ground it mistakenly included particular tract of land, where intent to include land in controversy "clearly and unmistakably appear[ed] from the language of the lease"); see also Estes, 462 S.W.2d at 275 (presume written agreement embodies parties' intentions).
However, the existence of a mutual mistake cannot always be determined exclusively by the language in a contract. Williams, 789 S.W.2d at 264. In such cases, other objective circumstances surrounding the execution of the document may also be considered. Id. ("the question of mutual mistake is determined not by self-serving subjective statements of the parties' intent . . . but rather solely by objective circumstances"). These include the knowledge of the parties and the substance of the negotiations at the time of the contract execution. De Monet, 877 S.W.2d at 358; see Williams, 789 S.W.2d at 264. Essentially, the party seeking reformation due to mistake must show what the true agreement between the parties was and must prove that the written agreement does not comport with the true agreement because of a mutually held mistake. Estes, 462 S.W.2d at 275; Beyers v. Roberts, 199 S.W.3d 354, 362 (Tex. App.--Houston [1st Dist.] 2006, pet. denied).
Even when the evidence is viewed in the light most favorable to Smith, it fails to create a fact issue regarding whether there existed a mutual mistake materially affecting the agreement. The relevant language of the deeds reads as follows:
all of [the] Grantor's interest in and to all oil, gas, minerals and royalties, including, but not limited to, a 0.0009901 royalty, mineral interest, royalty interest, leasehold interest, reversionary interests, after acquired property interests, rights of substitution, rights of entry and re-entry, interests in claims or causes of action, rights of subrogation, regardless of whether
any of such rights, titles and interests are vested now or will be vested in the future . . . .
The language in the deeds is broad. Rather than specifically delineate or limit the interest to be conveyed, the deeds outline a comprehensive, non-exhaustive list of what is to be included in the conveyance. It lists Smith's specific mineral interest in the property but also conveys any other interest Smith might have in the property. There is no indication in the language of the deeds that the parties intended to convey anything other than Smith's entire interest, whatever that might have been, including her stake in the production from whatever wells were on the property at the time of the conveyance. The deeds do not limit the interest to be conveyed to any number of wells and, in fact, make no mention of wells. Cf. Sun Oil Co., 84 S.W.2d at 452 (language of deed written broadly for purpose of ensuring entire interest conveyed and preventing grantor from retaining any interest in property due to lack of precision in describing property or lack of knowledge of totality of interest by parties).
Second, although documents at the time of the sale indicate that only three wells were producing, the evidence concerning the various discussions and negotiations between Smith and Virginia demonstrate that the parties understood themselves to be buying and selling Smith's entire mineral interest. In Smith's deposition, she admitted that she understood the San Saba offer to be for her entire interest and further admitted that she intended to sell the Lagerstams the exact interest she would have sold to San Saba. San Saba's offer letter made no mention of any wells; on the contrary, the offer letter stated that the offer was for "any and all of the royalty interest that" Smith owned at the time of the offer. In addition to the letter, San Saba attached a document that would have allowed Smith to transfer her ownership to San Saba. Like the offer letter, this document did not list any wells. Moreover, contained within the document was the following phrase written in a font that was significantly larger than fonts used for the other parts of the document: "BY EXECUTING AND DELIVERING THIS INSTRUMENT YOU ARE SELLING YOUR ENTIRE MINERAL AND ROYALTY INTEREST IN THE PROPERTY DESCRIBED ABOVE."
Although in her affidavit Smith says she believed her interest included the production from only three wells, nothing in the record suggests that Smith attempted to convey only three wells or to limit the conveyance in any way. Moreover, nothing in the record suggests that the parties negotiated regarding the number of wells on the property. On the contrary, in her deposition Smith admitted that she did not communicate a desire to convey only her interest in three wells. Further, Virginia's affidavit states that neither party mentioned the number of wells prior to the sale, and this testimony was not controverted.
In support of her argument that the mistake was material, Smith relies on a comment and an illustration accompanying section 152 of the restatement of contracts. Section 152 provides, in relevant part, as follows:
(1) Where a mistake of both parties at the time a contract was made as to a basic assumption on which the contract was made has a material effect on the agreed exchange of performances, the contract is voidable by the adversely affected party unless he bears the risk of the mistake . . . .
Restatement (Second) of Contracts § 152 (1981). The first illustration to this section provides as follows:
A contracts to sell and B to buy a tract of land, the value of which has depended mainly on the timber on it. Both A and B believe that the timber is still there, but in fact it has been destroyed by fire. The contract is voidable by B. Id. § 152, illus. 1.
Smith asserts that this case involves the reverse of the situation described in this example. Specifically, she contends that, because the addition of the wells increased the value of the property, she should be allowed to rescind her conveyances.
Our case is not analogous to this example. The example addresses what happens when there is a mistake about the very essence of what is sold--a bare tract of land versus timberland. There is no such basic mistake in our case: both parties believed they were dealing with a mineral interest, and both parties knew that the land was actively producing minerals. Moreover, a mistake in the number of wells conveyed does not render the essence of the exchange--the conveyance of an active mineral interest--inherently different from the intended conveyance. The Restatement example would be more applicable if the mistake in the illustration was about the number of trees on the lot rather than the existence of any trees at all. Finally, the example cited by Smith does not address the situation here where the seller wants to undo a transaction due to a mistake.
Comment b to section 152 reads, in relevant part, as follows:
The parties may have had such a "basic assumption," even though they were not conscious of alternatives. . . . Where, for example, a party purchases an annuity on the life of another person, it can be said that it was a basic assumption that the other person was alive at the time, even though the parties never consciously addressed themselves to the possibility that he was dead.
Restatement (Second) of Contracts § 152, cmt. b. However, as with the previous example, the situation described in the comment is not congruent to the circumstances present in this appeal. The basic assumption underlying the agreement in this case is that there was gas present on the pooled unit, not the precise value of the interest or the amount pumped from the pooled unit. This comment would have more applicability to a situation in which two parties believed that gas was present on the property when the sale was finalized but later discovered that the unit was dry.
In further support of her argument, Smith refers to two cases in which a court concluded there was a fact issue regarding the existence of a mutual mistake: De Monet v. PERA and Williams v. Glash. In De Monet, the parties entered into an agreement to sell an office building. 877 S.W.2d at 354. Prior to the sale, the sellers discovered that the building contained asbestos and hired a company to remove it. Id. at 355. The parties extensively negotiated regarding the removal of the asbestos prior to the sale being finalized, and the sellers made several representations that the asbestos would be removed prior to the sale. However, the purchaser discovered asbestos in the building after the sale was finalized. Due to the various actions performed by the parties and the significant negotiations concerning the asbestos, the court concluded there was a fact issue regarding whether the sellers assumed the risk of there being a mistake regarding the asbestos or whether the mistake was so "fundamental to the parties' agreement" that it "materially altered the agreement." Id. at 359.
De Monet is distinguishable from this case. In De Monet, the sellers were required to engage in certain actions and warrant that they had completed those tasks before the buyers would agree to purchase the building, and the mistake both parties had was the belief that the action had been completed. In the present case, the parties did not negotiate regarding the number of wells present on the property, and neither party made any representations regarding the wells.
Furthermore, there was no action either party needed to complete before the Lagerstams would agree to purchase Smith's mineral interest, and accordingly, there is no mistake regarding any action engaged in by Smith: she agreed to sell all of her mineral interest to the Lagerstams for an agreed price, and subsequently conveyed the property to the Lagerstam daughters.
In Williams v. Glash, Williams was involved in a car accident but did not feel injured immediately after the accident and stated on her claim form that no one had been injured in the accident. 789 S.W.2d at 263. The other driver's insurance company agreed to pay to fix Williams's car. Id. During the various negotiations Williams had with the insurance company, neither she nor any of the company's employees mentioned a personal-injury claim. Id. Further, the code stamped on the check the insurance company gave Williams to repair her car signified that the case did not involve a personal injury. Id. However, the check did contain a release clause stating that the amount offered constituted a full settlement precluding future claims for property or personal-injury damages. Id. After depositing the check, Williams discovered that she had been injured in the accident. Id. Given the lack of knowledge of an injury at the time the release was signed, the absence of any negotiation concerning personal injuries, the amount of money offered, and the code on the check, the supreme court concluded that there was a fact issue as to whether the parties intended the release to cover personal injuries. Id. at 264.
Smith's reliance on this case is misplaced. In Williams, there was evidence that created a fact issue as to whether the parties intended the release to cover the unknown, personal-injury claims. This case does not involve a determination of whether an agreement entered into by the parties forecloses the possibility of asserting unknown future claims. Regardless of the number of wells on the property, the dispute in this case involves only one known claim to one mineral interest.
The language of the deed and the objective circumstances surrounding the execution of the deeds all indicate that the subject matter of the conveyance was Smith's entire mineral interest, not the number of wells present on the pooled unit. Accordingly, any mistake concerning the number of wells did not materially affect the exchange.
Moreover, even if a mistake about the number of wells were material, relief would still be barred by the principle that a party to an agreement may not seek relief on the ground of mistake if the risk of the mistake is allocated to that party. See Cherry v. McCall, 138 S.W.3d 35, 40 (Tex. App.--San Antonio 2004, pet. denied). A party bears the risk of a mistake when "the risk is allocated to him by agreement of the parties." Restatement (Second) of Contracts § 154(a) (1981). The risk of a mistake was allocated to Smith by the terms of the deeds she signed. The terms specified that Smith agreed to sell "all oil, gas, minerals, and royalties, including but not limited to, a .0009901 royalty, mineral interest, royalty interests, . . . regardless of whether any of such . . . interests are vested now or will be vested in the future." (Emphasis added).
Additionally, relief is also barred by the principle that a mistake must ordinarily not be due to negligence on the part of the petitioner. See Commercial Standard Ins. Co. v. White, 423 S.W.2d 427, 433 (Tex. Civ. App.--Amarillo 1967, writ ref'd n.r.e.); see also Restatement (Second) of Contracts § 154(b) (1981) (party assumes risk of mistake if he "is aware, at the time the contract is made, that he has only limited knowledge with respect to the facts to which the mistake relates but treats his limited knowledge as sufficient."). As discussed more thoroughly in the next section, despite the fact that her royalty payments had increased significantly in recent years, Smith failed to ascertain or investigate the value of her interest prior to selling it to the Lagerstams. (5)
For all the reasons previously given, we conclude that the conveyance was not subject to rescission under the doctrine of mutual mistake and overrule Smith's first issue on appeal.
In addition to attacking the motion's adequacy, the dissent also improperly limits its discussion to one element of mutual mistake. In their motion for summary judgment, after generally stating that Smith may not employ the doctrine of mutual mistake and noting that a claim of mutual mistake involves proving several elements, the Lagerstams stated that "[t]he most basic element of this cause of action is that the mistake was MUTUAL." In light of this statement, the dissent reasons that this Court may only address whether Smith and the Lagerstams were mutually mistaken about the number of wells.
In essence, the dissent argues that by specifically listing the word "mutual," the Lagerstams have only presented one element for consideration.
We see no reason to conclude that after generally stating that Smith may not rely on mutual mistake, the Lagerstams effectively conceded or waived the materiality requirement by individually listing the mutuality requirement. Moreover, were we to limit our conclusion in the same manner as the dissent, we would be ignoring one of the well-settled principles of summary-judgment jurisprudence. When, as here, a district court does not specify the grounds upon which it granted summary judgment, this Court must affirm the summary judgment if any of the grounds presented to the district court are meritorious. Joe v. Two Thirty Nine Joint Venture, 145 S.W.3d 150, 157 (Tex. 2004).
The Lagerstams claimed that Smith is not entitled to recovery under the doctrine of mutual mistake, and it is therefore appropriate for this Court to consider whether the difference in the number of wells was material to the transaction.
Furthermore, as mentioned previously, although the Lagerstams did not specifically use the word material in their motion, they did state that they "never intended for their purchase to be anything other than for the entire interest owned by" Smith and that Smith "never said or did anything to indicate that the sale was supposed to be a transfer only of an interest that involved a certain number of existing wells." By making these statements, the Lagerstams effectively argued that the exact number of wells was not material to the transaction at issue in this case.
Unilateral Mistake
In her second issue on appeal, Smith claims that there was a fact issue as to whether there existed a unilateral mistake necessitating rescission of the deeds. In order to obtain relief due to a unilateral mistake, the following requirements need to be satisfied: (1) the mistake must be "of so great a consequence that to enforce the contract as made would be unconscionable"; (2) it must "relate to a material feature of the contract"; (3) it "must have been made regardless of the exercise of ordinary care"; and (4) "the parties can be placed in status quo in the equity sense." Taylor v. Arlington Indep. Sch. Dist., 335 S.W.2d 371, 373 (Tex. 1960); see Zapatero v. Canales, 730 S.W.2d 111, 114 (Tex. App.--San Antonio 1987, writ ref'd n.r.e.). The party seeking relief has the burden of establishing all these elements. Zapatero, 730 S.W.2d at 114. Requiring that these elements be met prevents a merely dissatisfied party from seeking to set aside an agreement by claiming that he did not understand the agreement he was signing. Cf. Wheeler v. Holloway, 276 S.W. 653, 654 (Tex. 1925).
Smith argues that all four elements are satisfied in this case. Specifically, she argues that her mistake regarding the number of wells was material to the contract and led to the unconscionable result in which she lost thousands of dollars. Further, she argues that she is willing to return the $6,600 the Lagerstams paid for the interest and that, therefore, rescission of the contract would place the parties in the position they were in prior to the sale. Moreover, she claims that her actions were not the result of a failure to exercise ordinary care that would prohibit rescinding the contract. She argues she has little knowledge regarding mineral interests, believed $6,600 was a reasonable price for the amount of royalty payments she received, and relied on the Lagerstams for advice on whether to sell her interest. Finally, she contends that her actions were reasonable under these circumstances.
We disagree with Smith for several reasons. In general, a party is not entitled to relief due to its unilateral mistake if the mistake was not known or induced by the other party. Johnson v. Snell, 504 S.W.2d 397, 399 (Tex. 1973); Zapatero, 730 S.W.2d at 114. Smith makes no claim that her mistaken belief was induced by the Lagerstams or that the Lagerstams knew the true number of wells on the property and realized Smith did not. See Zapatero, 730 S.W.2d at 114 (appellant not entitled to relief under doctrine of unilateral mistake because no evidence was presented showing that appellee knew of appellant's mistaken belief).
Moreover, even viewing the evidence in the light most favorable to Smith, we must conclude that the evidence presented disproves at least one of the required elements of Smith's claim: that Smith's mistake would have been made regardless of the exercise of ordinary care. (6)
Even though the royalty payments Smith received in the months before the sale stated that the payments were for production from three wells, the documents also specified that the payment was for gas production that had occurred months earlier. In other words, the documents did not provide an accurate assessment of activity that was currently happening on the unit either in terms of the amount of gas that was pumped or the number of wells that were active.
In addition, the number of wells present on the property has increased over time. From the time Smith began receiving royalty payments to the time of the sale, three wells were added to the property. Of these three wells, two were added in the two years preceding the sale. Even assuming that Smith never knew the number of wells on the property, Smith was aware that amount of her royalty payments had increased substantially. In the two years prior to sale, Smith's royalty payments increased by more than threefold. However, Smith made no effort to ascertain the number of wells on her property or determine the value of her mineral interest until after she sold her interest to the Lagerstams. See Wheeler, 276 S.W. at 654 (court concluded that because Holloway failed to engage in any effort to determine end point of property he acquired, he was not entitled to relief under doctrine of unilateral mistake: "The whole trouble in this case is that Hollway traded and investigated afterward. He should have reversed this procedure."); Zapatero, 730 S.W.2d at 114 (party cannot claim unilateral mistake concerning outstanding mineral interest because interest fully described in deed records); see also Anderson Bros. Corp. v. O'Meara, 306 F.2d 672, 677 (5th Cir. 1962) (appellee not entitled to relief by unilateral mistake because, prior to purchasing equipment, he did not attempt to ascertain whether equipment was suited for his purposes). A party cannot obtain relief from an agreement as a result of a unilateral mistake if the party's "ignorance of the facts was the result of carelessness, indifference, or inattention." Roland v. McCullough, 561 S.W.2d 207, 213 (Tex. Civ. App.--San Antonio 1978, writ ref'd n.r.e.).
For all the reasons previously given, we conclude that the conveyance was not subject to reformation or rescission under the doctrine of unilateral mistake and overrule Smith's second issue on appeal.
Response to the Dissent
In arguing that, on the merits, summary judgment was improper in this case, the dissent ignores the clear warning articulated by the supreme court that courts should only sparingly allow bargains to be undone due to a mistake by one or more of the parties to an agreement. Williams, 789 S.W.2d at 265. It is not the job of the courts to ensure that all parties to a transaction equally benefit from their bargain or that the sale price of an item accurately reflects the true value of that item. For a variety of reasons, people often sell items for amounts that are significantly less than market value. Although the seller may lose the full benefit of the bargain, it is possible that, in the seller's eyes, that loss is well worth the benefit of quickly selling an asset. It is also possible that a seller may choose to exert absolutely no effort to ascertain the true value of the item before selling it to avoid the hassle of inspecting or appraising the property. Courts should tread carefully before entering into the business of determining whether, in hindsight, the benefit obtained by a quick sale or by being able to sell an item without valuing an asset is equivalent to the difference between the market value and the sale
price.
CONCLUSION
Having overruled Smith's two issues on appeal, we affirm the judgment of the district court.
David Puryear, Justice
Before Chief Justice Law, Justices Patterson and Puryear;
Dissenting Opinion by Justice Patterson
Affirmed on Motion for Rehearing
Filed: July 19, 2007
1. Due to the shared surname of the appellees, we will refer to them by their first names where necessary to avoid confusion.
2. The January and February 2004 royalty checks were $329.90 and $353.85, respectively.
3. It is worth noting that after the sale had completed and before receiving the second offer from San Saba, another company offered to purchase Virginia's mineral interest for $1,087.50.
4. This estimate is based on San Saba's offer to purchase the interest for $62,651.38, made after the sale, and on testimony that the interest was worth $28,000 at the time of sale.
5. Our conclusion that the deeds are not subject to rescission is bolstered by Smith's admission
on appeal that she would be unable to rescind the agreements if the wells had been added after the sale was completed. When making this statement, Smith necessarily admitted that she was not under the mistaken belief that the value of the property could not be increased by the addition of future wells.
6. In light of our discussion of materiality in the previous section, we also conclude that the materiality requirement of a unilateral mistake is not met.
FROM THE DISTRICT COURT OF TRAVIS COUNTY, 345TH JUDICIAL DISTRICT
NO. GN402753, HONORABLE MARGARET A. COOPER, JUDGE PRESIDING
M E M O R A N D U M O P I N I O N
Appellant Jackie Doss Smith has filed a motion for rehearing. We withdraw our opinion, dissenting opinion, and judgment issued on June 1, 2007, and the following opinions and judgment are substituted. We overrule Smith's motion for rehearing.
Jackie Doss Smith sought to rescind three deeds under which she conveyed her royalty interest to her cousins, Kathryn Lagerstam Wilbeck, Vivian Lagerstam Savage, and Annika Lagerstam Kaye (the "Lagerstam daughters"). Smith requested that the court invalidate the deeds on the grounds of mutual and unilateral mistake because, at the time of the transaction, the parties were mistaken regarding the interest that was conveyed. In response, the Lagerstam daughters and their parents, Virginia and Emil Lagerstam (collectively the "Lagerstams"), (1) filed a motion for summary judgment, asserting that the elements of both types of mistake were not met. The district court granted the Lagerstams' motion for summary judgment, and Smith now appeals. We will affirm the judgment of the district court.
BACKGROUND
Smith and her aunt, Virgina Lagerstam, inherited identical mineral interests to land in Robertson County, Texas. In 1984, Smith and Virginia leased their mineral interests to XTO Energy by separate oil and gas leases. XTO Energy subsequently created a pooled unit, which included Smith's and Virginia's interests. Smith and Virginia were each entitled to a .0009901 royalty interest on the production of oil from any wells on the pooled unit.
Smith and Virginia began to receive royalty payments in 1985 when the first well was completed. For several years the royalty payments amounted to less than $100 per year, but in 2002, a second well was completed and payments rose to $250-$300 per month. In 2003, payments again rose when a third well was completed. By the start of 2004, Smith and Virginia were receiving over $300 per month in royalty payments. (2)
On February 9, 2004, Smith received an unsolicited offer from San Saba Royalty to purchase her entire interest for $6,658.99. She had received other offers before, but this offer was considerably higher than any of the previous offers. Due to the large amount offered and the fact that Smith had recently learned her son owed over $6,000 in back taxes, she considered accepting the offer. Consequently, Smith phoned Virginia, who Smith assumed had received the same offer, in order to discuss her options. Virginia stated that she would purchase Smith's royalty interest for the same price and explained that she wanted to give the interest to her three daughters. Desiring to keep the interest in the family and to help her son, Smith agreed to Virginia's offer. On March 9, 2004, Smith executed three deeds, conveying her entire interest to the Lagerstam daughters for $6,660.
In January and February 2004, just prior to the sale, two additional wells were installed on the pooled unit. However, due to the lag between oil production and royalty payments, neither party had received royalty payments from these two wells at the time of the sale. For several months after the sale, Smith continued to receive royalty payments for the oil production that occurred prior to the sale. These post-sale payments reflected the production from the additional two wells and were for the amounts of $510.10 in March, $1,025.90 in April, and $974.85 in May. After receiving these payments, Smith claims she attempted to verify their accuracy but was unsuccessful in contacting XTO Energy.
In June 2004, Smith received a transfer order from XTO Energy, indicating that she had successfully transferred her entire interest, including her interest in production from the two new wells, to the Lagerstam daughters. On that same day, Smith received another purchase offer from San Saba, this one for $62,651.38. After receiving this offer, she contacted Virginia and ultimately wrote a letter to the Lagerstam daughters, requesting that they sell her royalty interest back to her for the original purchase price of $6,600 plus interest. The Lagerstam daughters refused. (3)
Smith then filed suit to rescind the three deeds on the grounds that the deeds were entered into under a mutual or a unilateral mistake. Specifically, she asked that the transfer be rescinded because, at the time of the conveyance, she was unaware that additional gas wells had been placed on the property. As a result, she insists that she was mistaken about the interest she was conveying. In response, the Lagerstams filed a motion for summary judgment, contending that the deeds should be upheld because there was no mistake, mutual or otherwise, regarding the interest that was sold. The district court granted the motion, and Smith appeals the district court's judgment.
DISCUSSION
Summary Judgment Motion
On appeal, Smith contends that the district court erred when it granted the Lagerstams' motion because fact issues were present regarding whether the deeds should be rescinded on the basis of a mutual or unilateral mistake. Before addressing the merits of this case, we need to address the dissent's concerns regarding the Lagerstams' summary judgment motion. Essentially, the dissent attacks the adequacy of the Lagerstams' motion on the basis of its length and its lack of citation to case law.
Although the Lagerstams' motion asserted that the Lagerstams were entitled to relief under both traditional and no evidence summary judgment standards, the motion is more properly read as a traditional motion for summary judgment because it did not specify which elements of Smith's claims there was no evidence for and because it referred to evidence attached to the motion as proof that the Lagerstams were entitled to relief as a matter of law. See Tex. R. Civ. P. 166a(i) (in no evidence motion, movant "must state elements as to which there is no evidence."). Accordingly, we will limit our discussion to the requirements of traditional summary-judgment motions and need not address the dissent's assertions that the motion fails as a no-evidence summary judgment motion.
We first note that Smith did not contest the adequacy of the motion to the trial court and raises no issue regarding the sufficiency of the motion on appeal. See McConnell v. Southside Indep. Sch. Dist., 858 S.W.2d 337, 342-43 (Tex. 1993) (holding that in order for non-movant to complain on appeal that grounds raised in motion for summary judgment were unclear, non-movant must file exception to motion); Lochabay v. Southwestern Bell Media, Inc., 828 S.W.2d 167, 170 n.2 (Tex. App.--Austin 1992, no writ) (same). Assuming without deciding that it is proper in this case to review the sufficiency of the motion when neither party has asked us to, we believe that the motion satisfies the requirements of a traditional summary judgment motion.
The motion is admittedly brief; however, to be effective, the motion need only list the grounds upon which relief is requested, and the specified grounds may be stated "concisely, without detail and argument." Lochabay, 828 S.W.2d at 170 n.2 (affirming summary judgment motion on deceptive trade practice grounds when motion simply stated that non-moving party's counterclaim "citing [the movant's] use of deceptive trade practices is wholly unsupported by legal authority."). The motion stated that Smith is not entitled to relief on the grounds of unilateral or mutual mistake. Further, the Lagerstams attached several documents to their motion for summary judgment, including Virginia's affidavit, an offer letter from San Saba, and the deeds conveying Smith's interest to the Lagerstam daughters. In their motion, the Lagerstams referred to the attached evidence and stated that the evidence "conclusively establishes" that the Lagerstams "never intended for their purchase to be anything other than for the entire interest owned by" Smith and that Smith "never said or did anything to indicate that the sale was supposed to be a transfer only of an interest that involved a certain number of existing wells."
In light of the preceding, the motion falls far short of the type of motions that have been held ineffective because they presented no grounds for consideration. See, e.g., McConnell, 858 S.W.2d at 338, 341 (holding that summary judgment that only stated there were "no genuine issues as to any material facts" was insufficient); Bean v. Reynolds Realty Group, Inc., 192 S.W.3d 856, 859 (Tex. App.--Texarkana 2006, no pet.) (holding that motion that stated only that "there is no evidence to support the plaintiff's causes of actions and allegations" was ineffective); Great-Ness Prof'l Servs., Inc. v. First Nat'l Bank, 704 S.W.2d 916, 917 (Tex. App.--Houston [14th Dist.] 1986, no writ) (holding that motion was ineffective in breach-of-lease case because motion made no mention of breach-of-lease claim and, instead, stated as its only ground that "[t]his is a suit on a sworn account.").
For all the reasons previously given, we conclude that the Lagerstams' motion for summary judgment was effective. We now turn to the standard with which appellate courts review district court determinations regarding summary judgment motions. A summary judgment may be upheld only if no genuine issue of material fact exists. Tex. R. Civ. P. 166a(c). To establish that no genuine issue of material fact exists, a defendant moving for summary judgment must disprove at least one element of the plaintiff's cause of action. Randall's Food Mkts., Inc. v. Johnson, 891 S.W.2d 640, 644 (Tex. 1995); Arbelaez v. Just Brakes Corp., 149 S.W.3d 717, 719 (Tex. App.--Austin 2004, no pet.). In reviewing the summary judgment evidence, all evidence favorable to the nonmovant must be taken as true. Johnson, 891 S.W.2d at 644.
Mutual Mistake
In her first issue on appeal, Smith claims that there was a fact issue as to whether there existed a mutual mistake warranting rescission of the deeds. Smith argues that the parties entered the sales contract under the mistaken belief that she was selling, and the Lagerstams were buying, only three producing wells. This mistake about the number of producing wells, she contends, materially affected the sales transaction and caused her to sell her interest for between 11% to 25% of its true value. (4)
Under Texas law, when parties to an agreement have contracted under a mutual misconception of material fact, the agreement is voidable under the doctrine of mutual mistake. Williams v. Glash, 789 S.W.2d 261, 264 (Tex. 1990).
However, the doctrine of mutual mistake is applied only in rare circumstances in order to allow parties to "rely on the finality" of their agreements and to prevent the routine use of the doctrine to avoid the effects of an "unhappy bargain." Id. at 265; see Wallerstein v. Spirt, 8 S.W.3d 774, 781 (Tex. App.--Austin 1999, no pet.).
A mutual mistake must be proven by "clear, exact, and satisfactory evidence." Estes v. Republic Nat'l Bank, 462 S.W.2d 273, 275 (Tex. 1970) (citing Sun Oil Co. v. Bennett, 84 S.W.2d 447, 452 (Tex. 1935)).
To be entitled to rescind an agreement due to a mutual mistake, a party must show that there exists (1) a mistake of fact, (2) held mutually by the parties, (3) which materially affects the agreed upon exchange. Wallerstein, 8 S.W.3d at 781; De Monet v. PERA, 877 S.W.2d 352, 357 (Tex. App.--Dallas 1994, no writ). "[T]he mistake must relate to the subject matter of the contract and not to a matter that is merely collateral or incidental to the contract." Petrey v. John F. Buckner & Sons, 280 S.W.2d 641, 643 (Tex. Civ. App.--Waco 1955, writ ref'd n.r.e.); see also De Monet, 877 S.W.2d at 359 (relief only appropriate where mistake upsets basis of contract); Chambers v. Huggins, 709 S.W.2d 219, 224 (Tex. App.--Houston [14th Dist.] 1986, no writ) (requiring party show that mistake was mutual and that it was material inducement to transaction).
When determining whether there was a mutual mistake, courts must consider the language of the agreement. See, e.g., Sun Oil Co., 84 S.W.2d at 449 (refusing to invalidate lease on ground it mistakenly included particular tract of land, where intent to include land in controversy "clearly and unmistakably appear[ed] from the language of the lease"); see also Estes, 462 S.W.2d at 275 (presume written agreement embodies parties' intentions).
However, the existence of a mutual mistake cannot always be determined exclusively by the language in a contract. Williams, 789 S.W.2d at 264. In such cases, other objective circumstances surrounding the execution of the document may also be considered. Id. ("the question of mutual mistake is determined not by self-serving subjective statements of the parties' intent . . . but rather solely by objective circumstances"). These include the knowledge of the parties and the substance of the negotiations at the time of the contract execution. De Monet, 877 S.W.2d at 358; see Williams, 789 S.W.2d at 264. Essentially, the party seeking reformation due to mistake must show what the true agreement between the parties was and must prove that the written agreement does not comport with the true agreement because of a mutually held mistake. Estes, 462 S.W.2d at 275; Beyers v. Roberts, 199 S.W.3d 354, 362 (Tex. App.--Houston [1st Dist.] 2006, pet. denied).
Even when the evidence is viewed in the light most favorable to Smith, it fails to create a fact issue regarding whether there existed a mutual mistake materially affecting the agreement. The relevant language of the deeds reads as follows:
all of [the] Grantor's interest in and to all oil, gas, minerals and royalties, including, but not limited to, a 0.0009901 royalty, mineral interest, royalty interest, leasehold interest, reversionary interests, after acquired property interests, rights of substitution, rights of entry and re-entry, interests in claims or causes of action, rights of subrogation, regardless of whether
any of such rights, titles and interests are vested now or will be vested in the future . . . .
The language in the deeds is broad. Rather than specifically delineate or limit the interest to be conveyed, the deeds outline a comprehensive, non-exhaustive list of what is to be included in the conveyance. It lists Smith's specific mineral interest in the property but also conveys any other interest Smith might have in the property. There is no indication in the language of the deeds that the parties intended to convey anything other than Smith's entire interest, whatever that might have been, including her stake in the production from whatever wells were on the property at the time of the conveyance. The deeds do not limit the interest to be conveyed to any number of wells and, in fact, make no mention of wells. Cf. Sun Oil Co., 84 S.W.2d at 452 (language of deed written broadly for purpose of ensuring entire interest conveyed and preventing grantor from retaining any interest in property due to lack of precision in describing property or lack of knowledge of totality of interest by parties).
Second, although documents at the time of the sale indicate that only three wells were producing, the evidence concerning the various discussions and negotiations between Smith and Virginia demonstrate that the parties understood themselves to be buying and selling Smith's entire mineral interest. In Smith's deposition, she admitted that she understood the San Saba offer to be for her entire interest and further admitted that she intended to sell the Lagerstams the exact interest she would have sold to San Saba. San Saba's offer letter made no mention of any wells; on the contrary, the offer letter stated that the offer was for "any and all of the royalty interest that" Smith owned at the time of the offer. In addition to the letter, San Saba attached a document that would have allowed Smith to transfer her ownership to San Saba. Like the offer letter, this document did not list any wells. Moreover, contained within the document was the following phrase written in a font that was significantly larger than fonts used for the other parts of the document: "BY EXECUTING AND DELIVERING THIS INSTRUMENT YOU ARE SELLING YOUR ENTIRE MINERAL AND ROYALTY INTEREST IN THE PROPERTY DESCRIBED ABOVE."
Although in her affidavit Smith says she believed her interest included the production from only three wells, nothing in the record suggests that Smith attempted to convey only three wells or to limit the conveyance in any way. Moreover, nothing in the record suggests that the parties negotiated regarding the number of wells on the property. On the contrary, in her deposition Smith admitted that she did not communicate a desire to convey only her interest in three wells. Further, Virginia's affidavit states that neither party mentioned the number of wells prior to the sale, and this testimony was not controverted.
In support of her argument that the mistake was material, Smith relies on a comment and an illustration accompanying section 152 of the restatement of contracts. Section 152 provides, in relevant part, as follows:
(1) Where a mistake of both parties at the time a contract was made as to a basic assumption on which the contract was made has a material effect on the agreed exchange of performances, the contract is voidable by the adversely affected party unless he bears the risk of the mistake . . . .
Restatement (Second) of Contracts § 152 (1981). The first illustration to this section provides as follows:
A contracts to sell and B to buy a tract of land, the value of which has depended mainly on the timber on it. Both A and B believe that the timber is still there, but in fact it has been destroyed by fire. The contract is voidable by B. Id. § 152, illus. 1.
Smith asserts that this case involves the reverse of the situation described in this example. Specifically, she contends that, because the addition of the wells increased the value of the property, she should be allowed to rescind her conveyances.
Our case is not analogous to this example. The example addresses what happens when there is a mistake about the very essence of what is sold--a bare tract of land versus timberland. There is no such basic mistake in our case: both parties believed they were dealing with a mineral interest, and both parties knew that the land was actively producing minerals. Moreover, a mistake in the number of wells conveyed does not render the essence of the exchange--the conveyance of an active mineral interest--inherently different from the intended conveyance. The Restatement example would be more applicable if the mistake in the illustration was about the number of trees on the lot rather than the existence of any trees at all. Finally, the example cited by Smith does not address the situation here where the seller wants to undo a transaction due to a mistake.
Comment b to section 152 reads, in relevant part, as follows:
The parties may have had such a "basic assumption," even though they were not conscious of alternatives. . . . Where, for example, a party purchases an annuity on the life of another person, it can be said that it was a basic assumption that the other person was alive at the time, even though the parties never consciously addressed themselves to the possibility that he was dead.
Restatement (Second) of Contracts § 152, cmt. b. However, as with the previous example, the situation described in the comment is not congruent to the circumstances present in this appeal. The basic assumption underlying the agreement in this case is that there was gas present on the pooled unit, not the precise value of the interest or the amount pumped from the pooled unit. This comment would have more applicability to a situation in which two parties believed that gas was present on the property when the sale was finalized but later discovered that the unit was dry.
In further support of her argument, Smith refers to two cases in which a court concluded there was a fact issue regarding the existence of a mutual mistake: De Monet v. PERA and Williams v. Glash. In De Monet, the parties entered into an agreement to sell an office building. 877 S.W.2d at 354. Prior to the sale, the sellers discovered that the building contained asbestos and hired a company to remove it. Id. at 355. The parties extensively negotiated regarding the removal of the asbestos prior to the sale being finalized, and the sellers made several representations that the asbestos would be removed prior to the sale. However, the purchaser discovered asbestos in the building after the sale was finalized. Due to the various actions performed by the parties and the significant negotiations concerning the asbestos, the court concluded there was a fact issue regarding whether the sellers assumed the risk of there being a mistake regarding the asbestos or whether the mistake was so "fundamental to the parties' agreement" that it "materially altered the agreement." Id. at 359.
De Monet is distinguishable from this case. In De Monet, the sellers were required to engage in certain actions and warrant that they had completed those tasks before the buyers would agree to purchase the building, and the mistake both parties had was the belief that the action had been completed. In the present case, the parties did not negotiate regarding the number of wells present on the property, and neither party made any representations regarding the wells.
Furthermore, there was no action either party needed to complete before the Lagerstams would agree to purchase Smith's mineral interest, and accordingly, there is no mistake regarding any action engaged in by Smith: she agreed to sell all of her mineral interest to the Lagerstams for an agreed price, and subsequently conveyed the property to the Lagerstam daughters.
In Williams v. Glash, Williams was involved in a car accident but did not feel injured immediately after the accident and stated on her claim form that no one had been injured in the accident. 789 S.W.2d at 263. The other driver's insurance company agreed to pay to fix Williams's car. Id. During the various negotiations Williams had with the insurance company, neither she nor any of the company's employees mentioned a personal-injury claim. Id. Further, the code stamped on the check the insurance company gave Williams to repair her car signified that the case did not involve a personal injury. Id. However, the check did contain a release clause stating that the amount offered constituted a full settlement precluding future claims for property or personal-injury damages. Id. After depositing the check, Williams discovered that she had been injured in the accident. Id. Given the lack of knowledge of an injury at the time the release was signed, the absence of any negotiation concerning personal injuries, the amount of money offered, and the code on the check, the supreme court concluded that there was a fact issue as to whether the parties intended the release to cover personal injuries. Id. at 264.
Smith's reliance on this case is misplaced. In Williams, there was evidence that created a fact issue as to whether the parties intended the release to cover the unknown, personal-injury claims. This case does not involve a determination of whether an agreement entered into by the parties forecloses the possibility of asserting unknown future claims. Regardless of the number of wells on the property, the dispute in this case involves only one known claim to one mineral interest.
The language of the deed and the objective circumstances surrounding the execution of the deeds all indicate that the subject matter of the conveyance was Smith's entire mineral interest, not the number of wells present on the pooled unit. Accordingly, any mistake concerning the number of wells did not materially affect the exchange.
Moreover, even if a mistake about the number of wells were material, relief would still be barred by the principle that a party to an agreement may not seek relief on the ground of mistake if the risk of the mistake is allocated to that party. See Cherry v. McCall, 138 S.W.3d 35, 40 (Tex. App.--San Antonio 2004, pet. denied). A party bears the risk of a mistake when "the risk is allocated to him by agreement of the parties." Restatement (Second) of Contracts § 154(a) (1981). The risk of a mistake was allocated to Smith by the terms of the deeds she signed. The terms specified that Smith agreed to sell "all oil, gas, minerals, and royalties, including but not limited to, a .0009901 royalty, mineral interest, royalty interests, . . . regardless of whether any of such . . . interests are vested now or will be vested in the future." (Emphasis added).
Additionally, relief is also barred by the principle that a mistake must ordinarily not be due to negligence on the part of the petitioner. See Commercial Standard Ins. Co. v. White, 423 S.W.2d 427, 433 (Tex. Civ. App.--Amarillo 1967, writ ref'd n.r.e.); see also Restatement (Second) of Contracts § 154(b) (1981) (party assumes risk of mistake if he "is aware, at the time the contract is made, that he has only limited knowledge with respect to the facts to which the mistake relates but treats his limited knowledge as sufficient."). As discussed more thoroughly in the next section, despite the fact that her royalty payments had increased significantly in recent years, Smith failed to ascertain or investigate the value of her interest prior to selling it to the Lagerstams. (5)
For all the reasons previously given, we conclude that the conveyance was not subject to rescission under the doctrine of mutual mistake and overrule Smith's first issue on appeal.
In addition to attacking the motion's adequacy, the dissent also improperly limits its discussion to one element of mutual mistake. In their motion for summary judgment, after generally stating that Smith may not employ the doctrine of mutual mistake and noting that a claim of mutual mistake involves proving several elements, the Lagerstams stated that "[t]he most basic element of this cause of action is that the mistake was MUTUAL." In light of this statement, the dissent reasons that this Court may only address whether Smith and the Lagerstams were mutually mistaken about the number of wells.
In essence, the dissent argues that by specifically listing the word "mutual," the Lagerstams have only presented one element for consideration.
We see no reason to conclude that after generally stating that Smith may not rely on mutual mistake, the Lagerstams effectively conceded or waived the materiality requirement by individually listing the mutuality requirement. Moreover, were we to limit our conclusion in the same manner as the dissent, we would be ignoring one of the well-settled principles of summary-judgment jurisprudence. When, as here, a district court does not specify the grounds upon which it granted summary judgment, this Court must affirm the summary judgment if any of the grounds presented to the district court are meritorious. Joe v. Two Thirty Nine Joint Venture, 145 S.W.3d 150, 157 (Tex. 2004).
The Lagerstams claimed that Smith is not entitled to recovery under the doctrine of mutual mistake, and it is therefore appropriate for this Court to consider whether the difference in the number of wells was material to the transaction.
Furthermore, as mentioned previously, although the Lagerstams did not specifically use the word material in their motion, they did state that they "never intended for their purchase to be anything other than for the entire interest owned by" Smith and that Smith "never said or did anything to indicate that the sale was supposed to be a transfer only of an interest that involved a certain number of existing wells." By making these statements, the Lagerstams effectively argued that the exact number of wells was not material to the transaction at issue in this case.
Unilateral Mistake
In her second issue on appeal, Smith claims that there was a fact issue as to whether there existed a unilateral mistake necessitating rescission of the deeds. In order to obtain relief due to a unilateral mistake, the following requirements need to be satisfied: (1) the mistake must be "of so great a consequence that to enforce the contract as made would be unconscionable"; (2) it must "relate to a material feature of the contract"; (3) it "must have been made regardless of the exercise of ordinary care"; and (4) "the parties can be placed in status quo in the equity sense." Taylor v. Arlington Indep. Sch. Dist., 335 S.W.2d 371, 373 (Tex. 1960); see Zapatero v. Canales, 730 S.W.2d 111, 114 (Tex. App.--San Antonio 1987, writ ref'd n.r.e.). The party seeking relief has the burden of establishing all these elements. Zapatero, 730 S.W.2d at 114. Requiring that these elements be met prevents a merely dissatisfied party from seeking to set aside an agreement by claiming that he did not understand the agreement he was signing. Cf. Wheeler v. Holloway, 276 S.W. 653, 654 (Tex. 1925).
Smith argues that all four elements are satisfied in this case. Specifically, she argues that her mistake regarding the number of wells was material to the contract and led to the unconscionable result in which she lost thousands of dollars. Further, she argues that she is willing to return the $6,600 the Lagerstams paid for the interest and that, therefore, rescission of the contract would place the parties in the position they were in prior to the sale. Moreover, she claims that her actions were not the result of a failure to exercise ordinary care that would prohibit rescinding the contract. She argues she has little knowledge regarding mineral interests, believed $6,600 was a reasonable price for the amount of royalty payments she received, and relied on the Lagerstams for advice on whether to sell her interest. Finally, she contends that her actions were reasonable under these circumstances.
We disagree with Smith for several reasons. In general, a party is not entitled to relief due to its unilateral mistake if the mistake was not known or induced by the other party. Johnson v. Snell, 504 S.W.2d 397, 399 (Tex. 1973); Zapatero, 730 S.W.2d at 114. Smith makes no claim that her mistaken belief was induced by the Lagerstams or that the Lagerstams knew the true number of wells on the property and realized Smith did not. See Zapatero, 730 S.W.2d at 114 (appellant not entitled to relief under doctrine of unilateral mistake because no evidence was presented showing that appellee knew of appellant's mistaken belief).
Moreover, even viewing the evidence in the light most favorable to Smith, we must conclude that the evidence presented disproves at least one of the required elements of Smith's claim: that Smith's mistake would have been made regardless of the exercise of ordinary care. (6)
Even though the royalty payments Smith received in the months before the sale stated that the payments were for production from three wells, the documents also specified that the payment was for gas production that had occurred months earlier. In other words, the documents did not provide an accurate assessment of activity that was currently happening on the unit either in terms of the amount of gas that was pumped or the number of wells that were active.
In addition, the number of wells present on the property has increased over time. From the time Smith began receiving royalty payments to the time of the sale, three wells were added to the property. Of these three wells, two were added in the two years preceding the sale. Even assuming that Smith never knew the number of wells on the property, Smith was aware that amount of her royalty payments had increased substantially. In the two years prior to sale, Smith's royalty payments increased by more than threefold. However, Smith made no effort to ascertain the number of wells on her property or determine the value of her mineral interest until after she sold her interest to the Lagerstams. See Wheeler, 276 S.W. at 654 (court concluded that because Holloway failed to engage in any effort to determine end point of property he acquired, he was not entitled to relief under doctrine of unilateral mistake: "The whole trouble in this case is that Hollway traded and investigated afterward. He should have reversed this procedure."); Zapatero, 730 S.W.2d at 114 (party cannot claim unilateral mistake concerning outstanding mineral interest because interest fully described in deed records); see also Anderson Bros. Corp. v. O'Meara, 306 F.2d 672, 677 (5th Cir. 1962) (appellee not entitled to relief by unilateral mistake because, prior to purchasing equipment, he did not attempt to ascertain whether equipment was suited for his purposes). A party cannot obtain relief from an agreement as a result of a unilateral mistake if the party's "ignorance of the facts was the result of carelessness, indifference, or inattention." Roland v. McCullough, 561 S.W.2d 207, 213 (Tex. Civ. App.--San Antonio 1978, writ ref'd n.r.e.).
For all the reasons previously given, we conclude that the conveyance was not subject to reformation or rescission under the doctrine of unilateral mistake and overrule Smith's second issue on appeal.
Response to the Dissent
In arguing that, on the merits, summary judgment was improper in this case, the dissent ignores the clear warning articulated by the supreme court that courts should only sparingly allow bargains to be undone due to a mistake by one or more of the parties to an agreement. Williams, 789 S.W.2d at 265. It is not the job of the courts to ensure that all parties to a transaction equally benefit from their bargain or that the sale price of an item accurately reflects the true value of that item. For a variety of reasons, people often sell items for amounts that are significantly less than market value. Although the seller may lose the full benefit of the bargain, it is possible that, in the seller's eyes, that loss is well worth the benefit of quickly selling an asset. It is also possible that a seller may choose to exert absolutely no effort to ascertain the true value of the item before selling it to avoid the hassle of inspecting or appraising the property. Courts should tread carefully before entering into the business of determining whether, in hindsight, the benefit obtained by a quick sale or by being able to sell an item without valuing an asset is equivalent to the difference between the market value and the sale
price.
CONCLUSION
Having overruled Smith's two issues on appeal, we affirm the judgment of the district court.
David Puryear, Justice
Before Chief Justice Law, Justices Patterson and Puryear;
Dissenting Opinion by Justice Patterson
Affirmed on Motion for Rehearing
Filed: July 19, 2007
1. Due to the shared surname of the appellees, we will refer to them by their first names where necessary to avoid confusion.
2. The January and February 2004 royalty checks were $329.90 and $353.85, respectively.
3. It is worth noting that after the sale had completed and before receiving the second offer from San Saba, another company offered to purchase Virginia's mineral interest for $1,087.50.
4. This estimate is based on San Saba's offer to purchase the interest for $62,651.38, made after the sale, and on testimony that the interest was worth $28,000 at the time of sale.
5. Our conclusion that the deeds are not subject to rescission is bolstered by Smith's admission
on appeal that she would be unable to rescind the agreements if the wells had been added after the sale was completed. When making this statement, Smith necessarily admitted that she was not under the mistaken belief that the value of the property could not be increased by the addition of future wells.
6. In light of our discussion of materiality in the previous section, we also conclude that the materiality requirement of a unilateral mistake is not met.
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