Archive for December, 2010

Be careful what you concede . . .

Tuesday, December 28th, 2010

. . . because it can come back to bite you.  All lawyers—and particularly appellate lawyers—learn the value of preserving arguments for later review by an appellate court and choosing the right argument to advance.  Sometimes, this lesson gets learned the hard way.

In 2003, the Texas Legislature enacted a slew of healthcare “reform” initiatives aimed at lawsuits against healthcare providers.  Among the procedural niceties created by the new law was a requirement that any plaintiff bringing a healthcare liability claim provide a report authored by a qualified expert witness that outlined the plaintiff’s factual allegations and the basis for recovery of damages.  The expert report requirement hinges upon the case’s classification as a healthcare liability claim, which the applicable statute defines—more than a little tautologically—as a case brought “against a health care provider or physician” for a breach of accepted standards of medical care.

Fast forward to 2010 and the case of Roy Kenji Yamada, M.D., v. Laura Friend, an opinion recently issued by the Texas Supreme Court.  The case arose out of an incident at a waterpark owned by the City of Richland Hills, when Sarah Elizabeth Friend died from a heart condition for want of appropriate resuscitation with an automated external defibrillator (AED).  Dr. Yamada—a defendant in the trial court and the appellant on appeal—became involved by virtue of his having advised the City on placement of AEDs at the park.  In the trial court, Friend, the plaintiff, alleged that Dr. Yamada had a duty to act as a “reasonable emergency physician”—classic healthcare liability language—as well as a duty to “act with ordinary care”—standard negligence language.  Dr. Yamada moved for dismissal of the suit on the grounds that Friend failed to provide the expert report required by the 2003 healthcare reforms.  Friend countered that her suit was based upon Dr. Yamada’s mere provision of consultative advice and recommendations with regard to safety.  The trial court ultimately denied Dr. Yamada’s motion, and he appealed.

The Fort Worth Court of Appeals, in reviewing the case, held that Friend’s pleadings alleged negligence based on both the standards applicable to an emergency physician and standards of ordinary care.  The Court reasoned that medical testimony is not required to determine where an AED should be placed, thus any such argument was not a healthcare liability claim. Nevertheless, it also held that any claims implicating Dr. Yamada’s duty to act as an emergency physician were healthcare liability claims subject to the expert report requirement and that Friend’s failure to provide an expert report mandated dismissal of those claims.  Thus, the Court held that the same facts implicated two distinct claims—one subject to the healthcare liability law and one not.

Before the Texas Supreme Court, Friend’s lawyers made an understandable, though regrettable choice.  Rather than taking issue with the Court of Appeals’ characterization of any of their claims as healthcare liability claims, they conceded that the Court of Appeals correctly held that their claims implicating Dr. Yamada’s status as an emergency physician were healthcare liability claims and thus subject to dismissal.  Disputing this characterization might have been fruitful, as indicated by a footnote in Justice Johnson’s opinion for the Supreme Court.  He noted the lack of a physician-patient relationship—a classic prerequisite for a healthcare liability claim—as well as a possible argument that the basic facts did not implicate the provision of healthcare.  Nevertheless, the choice to concede on this point proved fatal to all of Friend’s claims.

The Court held that the same set of facts could not form the basis of both a healthcare liability claim and an ordinary negligence claim.  Had Friend not conceded that the facts did implicate the healthcare liability law, she could have argued the opposite.  Instead, the Court was able to make a more limited holding that sidestepped the potentially more fruitful aspects of her case.  Because Friend conceded that the underlying facts of both her claims implicated healthcare, she lost on both counts.  Choosing to concede on one point instead of to fight ultimately conceded the entire case.

While it is important to “pick a horse” at the appellate level, picking the right one is just as important.  Moreover, knowing when not to show deference to a lower court’s decision is the appellate lawyer’s art and should be his forte, lest abandoning one claim lead to abandoning an entire cause.

The Supreme Court’s opinion is here:  http://www.supreme.courts.state.tx.us/historical/2010/dec/080262.htm

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Arbitration and enforcement

Monday, December 27th, 2010

In the recent decision of Atlas Gulf-Coast, Inc. v. Stanford, Houston’s Fourteenth Court of Appeals opined on the enforceability of an arbitration agreement in a contract for foundation repair services.  Such provisions are more and more common in commercial agreements of all stripes, and Texas law provides for their enforceability in most instances.  But the Fourteenth Court held this particular provision unenforceable, based on section 171.002 of the Texas Civil Practice and Remedies Code–a portion of the Texas General Arbitration Act (TGAA).

That section provides that a mandatory arbitration clause contained in any agreement in which the consideration provided is less than $50,000 is unenforceable, absent the agreement being in writing and signed by each party to be bound and each party’s attorney. Because the agreement in question was indisputably for less than $50,000 worth of services and no attorney had signed off on the arbitration provision, the Court held the provision unenforceable.

Atlas–the party seeking enforcement of the arbitration clause–protested that such a reading of the TGAA would require all parties who enter into any contract containing arbitration clause enforceable under the TGAA to engage counsel to sign the contract even if there is no other reason to engage counsel at that time.  Justice Mirabal, sitting by assignment, countered that this was not the case because section 171.002 applies only to agreements to provide “property, services, money, or credit” in which the total consideration is less than $50,000.  The remaining question would seem to be:  what else is there?

Texas courts have opined at length on the state’s policy favoring arbitration, but rather than trying to argue that section 171.002 leaves some kind of smaller dispute more susceptible to arbitration, it seems to make more sense to say that Texas’ enthusiasm for arbitration has a $50,000 threshold.  Smaller consumer contracts are much less appropriate for arbitration than large commercial disputes where expertise in specific technical fields may provide better understanding of the issues, so it makes sense to exempt them from enforceability.  Moreover, it is a comforting thought that the myth that arbitration is always a less expensive and more efficient alternative to the court system has not been bought hook, line, and sinker–at least not entirely–by the Legislature.

The Atlas opinion is here:  http://tinyurl.com/2ahknfx

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Well, it gets your point across….

Wednesday, December 8th, 2010

Tired of getting hassled by TSA? Don’t like those body scans? Here’s a protest, though the jury is still out on whether it’s an effective one–skivvies with the Fourth Amendment of our Bill of Rights printed in metallic ink, claimed to be visible on x-ray or body scanner: http://cargocollective.com/4thamendment

Even if it doesn’t cause a change in policy, it should at least obscure the naughty bits.

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Insurers and the appraisal process

Wednesday, December 8th, 2010

This morning, the Texas Supreme Court heard argument in the original mandamus proceeding of In re Universal Underwriters of Texas, in which an insurer seeks to have the Court require a Tarrant County district judge to reconsider his ruling denying abatement of a suit for breach of an insurance contract. Specifically, the insurer seeks to have a non-judicial appraisal process go forward in preference to litigation. The wrinkle here is that the insurer waited for nearly a year and until suit had already been commenced before seeking appraisal in the first place. The question thus raised is whether the insurer waived its right to seek appraisal by its own inaction.

Before the Court, Universal’s counsel argued–correctly–that waiver under Texas law requires an intentional relinquishment of a known right. By that measure, he argued, Universal’s delay could not be seen as a waiver of its right under the insurance contract to seek appraisal. Universal had never stated that it would not seek appraisal or that it was ending the adjusting process. But his argument would seem to require a certain clairvoyance from trial judges in discerning the reasons behind an insurer’s action or inaction. Universal had sent a letter to its insured–a car dealership seeking to have hailstorm damage repaired and paid for–notifying the insured of the statute of limitations for filing a lawsuit on its insurance claim. This would seemingly indicate an end to the adjustment process. Yet, even if it did not, the notion that waiver cannot be implicated by delay alone and delay in exercise cannot serve to show intentional relinquishment of a right seems to fly in the face of a great deal of common law. Under Universal’s theory–and in theory–a trial judge would have to determine if a years-long delay in seeking appraisal was a conscious decision or mere negligence, even were appraisal not sought until well into litigation.

It seems unlikely that the Court would allow things to go so far, but Universal’s position would seem to set a potentially disadvantageous stage for both individual and business insureds. An insured should not be required to retain a lawyer in order to get its insurer to focus on a claim. Nevertheless, that could be the direction things go, depending on the Court’s final ruling.

Briefs for the case are here: http://tinyurl.com/2dgksza

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Proofreading is not for dorks….

Saturday, December 4th, 2010

If you think those Office Depot legal forms get the job done in all instances, let the following attest to the fact that even state legislatures make seemingly minor mistakes when it comes to punctuation and grammar, and those mistakes can have consequences: http://tinyurl.com/287wadb

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The Hidden Agenda

Saturday, December 4th, 2010

I had an interesting experience this week. As part of my practice, I work as a mediator, and I volunteer time at several of the Harris County Justice of the Peace courts. There, I work with plaintiffs and defendants on the small claims docket–often parties who are not represented by attorneys–to try to resolve their cases by compromise before trial. This week, I mediated the case of a young woman who was involved in a dispute with a used car dealer. She claimed to have been sold a “lemon” and returned the car to the dealer with a burned out engine. The dealer took the car but refused to refund her purchase money on the grounds that the car was now essentially worthless, absent more money–in fact, the equivalent of the original purchase price–being put into a new engine. The dealer claimed that the car was fine when it left the lot and that the damage resulted from the young woman’s misuse of the vehicle. Nevertheless, the dealer offered a monetary settlement before the case ever went to court.

When I spoke with the plaintiff one-on-one, it became clear that more was going on. This woman was young, African-American, tattooed, and gay. The dealer’s manager was an average Caucasian man in his early 50s. The young woman noted over and over that the dealer’s salesman had called her “stupid,” and the manager refused to speak to her. In the mediation’s joint session, she had a chance to tell her story to the manager directly, and I encouraged her to do so. When we spoke one-on-one, I told her that whatever the dealership’s people thought of her was unimportant. They didn’t matter to her future. And I didn’t think she was stupid; quite the contrary.

A strange thing happened then. The settlement offer that had previously been inadequate was suddenly acceptable. She agreed to take what the dealer would give and dismiss the case. The dispute was never about money in the first place, but about respect and her personal dignity. It was about having someone–and I think, perhaps, someone who could stand in for the manager of the dealership–show her respect.

The lesson of this for anyone who deals with disputes–be they among litigants, employees, or your own family members–is to dig deeper and look beyond what the disputants say the argument is about. You might be surprised what you find.

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The horse does come before the cart, but not always….

Friday, December 3rd, 2010

In Solar Applications Engineering v. T. A. Operating, the Texas Supreme Court confirmed that a release of liens in a construction contract was not–as argued by the Defendant/Appellee–a condition precedent to payment under the contract. The Court examined the contractual language and found that a lien-release provision did not contain the appropriate language to be construed as a condition precedent. The Court’s result is sensible, though one is left to wonder whether Justice Wainwright’s opinion went as far as it should have. It definitely did not go as far as it could have.

The entire purpose of a mechanic’s/materialman’s lien is to ensure payment. Thus, requiring that such a lien be released as a pre-condition to payment would defeat the entire purpose of the lien and effectively render Article 16, sec. 37 of the Texas Constitution–bestowing the right to a mechanic’s lien–a nullity. This seems like one of those cases where the Court should have been a bit more willing to cast caution to the wind. The opportunity was there to determine the validity of any such provision, but, despite a brief discussion of the Property Code and Constitutional schemes–the Court declined to address the larger public policy issue and left open the possibility that a lien-release provision could yet be construed to deny a right to collect on an otherwise fully performed contract.

The Court’s opinion is here: http://tinyurl.com/2ennhhj

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