Justia Business Law Opinion Summaries

Articles Posted in Supreme Court of Texas
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Richard Wade, the former president, CEO, and director of Vertical Computer Systems, Inc., was sued in April 2020 by the company's chief technical officer and several shareholders for breach of fiduciary duty and fraud. Wade's address was initially listed as "3717 Cole Avenue, Apt. 293, Dallas, Texas 75204." After a year, the claims against Wade were severed into a separate action, and the trial court ordered binding arbitration. Wade's attorney later filed a motion to withdraw, listing Wade's address as "3717 Cole Ave., Apt. 277, Dallas, Texas 75204." Notice of the trial was sent to this incorrect address.The trial court scheduled a bench trial for April 19, 2022, and Wade appeared pro se but did not present any evidence. The court ruled in favor of the plaintiffs, awarding them over $21 million. Wade filed a pro se notice of appeal, arguing that he did not receive proper notice of the trial. The Court of Appeals for the Fifth District of Texas affirmed the judgment.The Supreme Court of Texas reviewed the case and found that Wade did not receive proper notice of the trial setting, which violated his due process rights. The court noted that the notice was sent to an incorrect address and that Wade had informed the trial court of this issue. The court held that proceeding to trial without proper notice was reversible error and that Wade was entitled to a new trial. The court reversed the judgment of the Court of Appeals and remanded the case to the trial court for further proceedings. View "Wade v. Vertical Computer Systems, Inc." on Justia Law

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The case involves a dispute between Mary Alice Keyes and Sean Leo Nadeau, who are the owners and agents of MonoCoque Diversified Interests, LLC, and David Weller, who provides aviation consulting services through his company, IntegriTech Advisors, LLC. Weller was discussing a potential employment relationship with MonoCoque. After several discussions and email exchanges outlining the agreed terms, Weller accepted MonoCoque’s offer and began working for them. However, disagreements arose over the terms of Weller's compensation, leading to Weller's resignation. Weller and IntegriTech sued MonoCoque, Keyes, and Nadeau, asserting various fraud claims and a Texas Securities Act claim against all three defendants.The defendants argued that they were shielded from liability by Section 21.223 of the Texas Business Organizations Code because they were acting as agents of the company and there was no evidence that they were seeking a direct personal benefit. The trial court granted the defendants' motion for partial summary judgment on the fraud claims. On appeal, the court of appeals reversed the trial court’s decision, holding that Section 21.223 does not abrogate the common law principle that individuals are directly liable for their own tortious conduct, even if committed in the course and scope of their employment.The Supreme Court of Texas affirmed the judgment of the court of appeals. The court held that Section 21.223 does not limit an individual’s liability under the common law for tortious acts allegedly committed while acting as a corporate officer or agent, even when the individual is also a shareholder or member. The court concluded that the trial court erred in granting summary judgment on the fraud claims against Keyes and Nadeau and remanded the case to the trial court for further proceedings. View "KEYES v. WELLER" on Justia Law

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The case revolves around a sexual harassment claim brought by Nicole Harris against her former employer, Fossil Group, Inc. Harris alleged that she was sexually harassed by an assistant store manager, Leland Brown, during her employment at a Fossil store in Frisco, Texas. The harassment primarily occurred through social media and included obscene and sexually explicit videos, photos, and messages. Harris claimed that she sent an email reporting the harassment through Fossil's anonymous reporting system in late April 2019, but received no response. She resigned from her position in early May 2019.The trial court granted Fossil's motion for summary judgment, ruling in favor of the company. The court found that there was no evidence that Fossil knew or should have known about the harassment but failed to remedy the situation. Harris appealed this decision.The Court of Appeals reversed the trial court's judgment. The appellate court held that Harris's testimony about her email was some evidence that Fossil knew or should have known about Brown's misconduct. The court also stated that Fossil took no remedial action after Harris sent the email.The Supreme Court of Texas disagreed with the Court of Appeals' decision. The court held that even if Fossil had received Harris's email, there was no evidence that its subsequent actions were not prompt and remedial. The court noted that mere days after Harris sent the email, she voluntarily resigned, and she did not identify any instances of interim harassment. The following week, the store manager reported the matter to human resources after learning about the harassment from another source. By the end of the month, Fossil had fired Brown. The court also held that Harris did not raise a fact issue that Fossil knew or should have known about the harassment before the date of the email. Therefore, the Supreme Court of Texas reversed the Court of Appeals' judgment and reinstated the trial court's judgment in favor of Fossil. View "Fossil Group, Inc. v. Harris" on Justia Law

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In this case, Bay, Ltd., a construction company, filed suit against The Most Reverend Wm. Michael Mulvey, Bishop of the Diocese of Corpus Christi, seeking to recover the value of unauthorized improvements made to a ranch leased from the Bishop by Michael Mendietta, a former Bay employee. Mendietta had used Bay's resources for these improvements without the company's consent. Bay also filed a separate lawsuit against Mendietta for damages related to his unauthorized actions, including the improvements to the ranch.Six years later, Bay and Mendietta entered into an agreement settling their claims. This agreement required Mendietta to pay Bay $750 per month to avoid a $1.9 million final judgment. The agreement allocated $175,000 of the settlement amount to Mendietta's homestead, but did not allocate specific values to the other injuries suffered by Bay, including the improvements to the ranch.After Bay dropped its claims against Mendietta and proceeded to trial against the Bishop alone, the jury awarded damages to Bay. However, the Bishop requested a settlement credit of $1.725 million (the total settlement amount minus the $175,000 allocated to Mendietta's homestead). The lower court denied this request, but the appellate court reversed, concluding that the unallocated amount of the settlement exceeded the jury's award to Bay.The Supreme Court of Texas affirmed the appellate court's decision, holding that the agreement between Bay and Mendietta constituted a $1.9 million settlement agreement. Because the agreement allocated $175,000 to an injury other than the one Bay sought to recover from the Bishop, the remaining $1.725 million was credited against the jury's verdict, resulting in a take-nothing judgment for Bay. View "BAY, LTD. v. MULVEY" on Justia Law

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Cobalt International Energy partnered with three Angolan companies to explore and produce oil and gas off the coast of West Africa. Later, the federal Securities and Exchange Commission announced it was investigating Cobalt for allegations of illegal payments to Angolan government officials and misrepresentation of the oil content of two of its exploratory wells. This led to a significant drop in Cobalt’s stock price and prompted a class action lawsuit from Cobalt's investors, led by GAMCO, a collection of investment funds that held Cobalt shares. Prior to these events, Cobalt had purchased multiple layers of liability insurance from a number of insurance companies, collectively referred to as the Insurers in this case. When the allegations surfaced, Cobalt notified the Insurers, who denied coverage on the grounds that Cobalt's notice was untimely and certain policy provisions excluded the claims from coverage.In 2017, Cobalt filed for bankruptcy and began settlement negotiations with GAMCO. Eventually, a settlement agreement was reached, which stipulated that Cobalt would pay a settlement amount of $220 million to GAMCO, but only from any insurance proceeds that might be recovered. Cobalt and GAMCO then jointly sought approval of the settlement from the federal court and the bankruptcy court, both of which granted approval.The Insurers then filed a petition for a writ of mandamus, arguing that the settlement agreement was not binding or admissible in the coverage litigation, that Cobalt had not suffered a "loss" under the policies, and that GAMCO could not sue the Insurers directly.The Supreme Court of Texas held that (1) Cobalt had suffered a “loss” under the policies because it was legally obligated to pay any recoverable insurance benefits to GAMCO, (2) GAMCO could assert claims directly against the Insurers, and (3) the settlement agreement was not binding or admissible in the coverage litigation to establish coverage or the amount of Cobalt’s loss. The court reasoned that the settlement was not the result of a "fully adversarial proceeding," as Cobalt bore no actual risk of liability for the damages agreed upon in the settlement. The court conditionally granted the Insurers' petition for a writ of mandamus in part, ordering the trial court to vacate its previous orders to the extent they relied on the holding that the settlement agreement was admissible and binding to establish coverage under the policies and the amount of any covered loss. View "IN RE ILLINOIS NATIONAL INSURANCE COMPANY" on Justia Law

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The Supreme Court reversed the trial court's denial of Defendant's motion to compel arbitration, holding that remand was required for reconsideration in light of this Court's holdings in TotalEnergies E&P USA, Inc. v. MP Gulf of Mexico, LLC, 667 S.W.3d 694 (Tex. 2023).Lone Star Cleburne Autoplex filed this suit asserting that Alliance Auto Auctions of Dallas conspired with two of Lone Star's employees in order to embezzle money from Lone Star. Alliance moved to compel arbitration based on arbitration clauses contained in authorization agreements between Lone Star and a company Alliance used to verify and authorize car dealerships to buy and sell in the company's auctions. In opposing the motion Lone Star asserted that its claims fell outside the scope of the arbitration agreement. The trial court denied Alliance's motion to compel. The court of appeals affirmed. The Supreme Court reversed, holding that because the court of appeals decided this case without addressing arguments rejected in TotalEnergies, remand was required. View "Alliance Auto Auction of Dallas, Inc. v. Lone Star Cleburne Autoplex, Inc." on Justia Law

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The Supreme Court reversed the decision of the court of appeals affirming the judgment of the trial court in this declaratory judgment suit, holding that a corporate resolution did not authorize the law firm to redeem a departing shareholder's shares on terms unilaterally set by the firm's founders.Under Tex. Bus. Orgs. Code 21.801 , a professional corporation may redeem corporate shares, which are personal property, if one of three conditions is met. After the firm in this case terminated a shareholder's employment the founders purported to redeem his shares at no cost. The trial court concluded that a resolution generally authorizing the founders to take affirmative action on behalf of the firm unambiguously encompassed redemption. The court of appeals affirmed. The Supreme Court reversed, holding that the resolution did not authorize redemption of the departing shareholder's shares on terms dictated by the founders. View "Skeels v. Suder" on Justia Law

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In this tort and breach-of-contract lawsuit, the Supreme Court affirmed in part and reversed in part the trial court's take-nothing summary judgment entered on the claim brought by several affiliated retailers (the Retailers), holding that the trial court erred in part.The Retailers in this case sought to recoup millions of dollars in disallowed reimbursements for purchases their customers made under the federally-funded Supplemental Nutrition Assistance Program (SNAP) after a lengthy outage in a third-party contractor's Electronic Benefit Transfer (EBT) system. The Retailers had permitted their SNAP customers to make purchases during the system outage, as authorized by a federal regulation, but held the EBT transactions in abeyance until they could be submitted and the Retailers reimbursed. The EBT contractor, however, later declined reimbursement for nearly 90,000 transactions. The trial court rendered a final take-nothing judgment against the Retailers, and the court of appeals affirmed. The Supreme Court affirmed the judgment on the Retailers' breach of contract claim but reversed the judgment as to losses from certain transactions and the Retailers' tort claims, holding that the court relied on an erroneous construction of 7 C.F.R. 274.8(e)(1). View "Wal-Mart Stores, Inc. v. Xerox State & Local Solutions, Inc." on Justia Law

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The Supreme Court affirmed in part and reversed in part the judgments of the court of appeals in these companion cases brought by advocacy groups supporting legalized abortion against Defendant, who publicly advocated against legalized abortion, holding that the court of appeals properly dismissed the defamation suit but erred in permitting the companion suit to advance.Plaintiffs claimed that Defendant legally defamed them by making statements that equated abortion to murder and by characterizing plaintiffs as criminal. One court of appeals concluded that Defendant's statements were political opinions that voiced disagreement with legal protections afforded to abortion providers and dismissed the suit. The other court of appeals concluded that the statements were inconsistent with the Penal Code and permitted that defamation suit to continue. The Supreme Court reversed in part, holding that Defendant properly invoked the Texas Citizens Participation Act and that Plaintiffs failed to adduce evidence of defamation in response. View "Dickson v. Afiya Center" on Justia Law

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The Supreme Court reversed the judgment of the court of appeals reversing the trial court's dismissal of the complaint and reinstated the judgment of the trial court dismissing all of Petitioner's claims against Respondents for breach of contract, fraud, and related torts, holding that the discovery rule did not defer accrual of Petitioner's cause of action until it knew that Respondents caused its injury.The trial court granted summary judgment in favor of Petitioner on the grounds that Respondents' claims were time-barred. The appellate court reversed, concluding that the discovery rule deferred accrual of Respondents' cause of action until it knew that Petitioner caused its injury. The Supreme Court reversed and reinstated the dismissal of all claims, holding that summary judgment was appropriate because, at the time of the breach of contract at issue, Respondent learned of facts that, if pursued, would have led to the discovery of Petitioner's alleged misrepresentations. View "Marcus & Millichap Real Estate Investment Services of Nev. v. Triex Texas Holdings, LLC" on Justia Law