Articles Posted in Supreme Court of Texas

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A taxpayer that conducts business in multiple states must apportion its business revenue among the states in which it does business. Texas Tax Code section 171.106 provides for such apportionment under a single-factor formula, which compares the taxpayer’s gross receipts derived from its Texas business to its gross receipts everywhere. Section 141.001, however, adopts the Multistate Tax Compact, which sets out a three-factor formula for apportioning“business income” for an“income tax” and provides that a taxpayer subject to a state income tax may elect to apportion its income “in the manner provided by the laws of such state” or may elect to apportion using the Compact’s three-factor formula. The appeals court affirmed the trial court’s summary judgment, holding that apportionment of the Texas franchise tax is exclusively the province of chapter 171. The Supreme Court of Texas affirmed. Section 171.106 provides the exclusive formula for apportioning the franchise tax and, by its terms, precludes the taxpayer from using the Compact’s three-factor formula.The Compact is severable and contains no unmistakable language waiving the state’s exercise of the sovereign tax power. Nothing in the Compact expressly prohibits the states from adopting an exclusive apportionment method that overrides the Compact’s formula. View "Graphic Packaging Corp. v. Hegar" on Justia Law

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The Supreme Court affirmed the decision of the court of appeals reversing the trial court’s judgment awarding a constructive trust to Longview Energy Company on certain mineral leases and related property and requiring the disgorgement of money derived from past lease production revenues. Longview sued two of its directors and entities associated with them after discovering that one of the entities had purchased mineral leases in an area where Longview had been investigating the possibility of buying leases. The jury found (1) the directors breached their fiduciary duties to Longview by usurping a corporate opportunity and by competing with the corporation without disclosing the competition, and (2) the entity as issue acquired leases as a result of the breaches. The court of appeals reversed. The Supreme Court affirmed, holding (1) there was no evidence tracing the entity’s acquisition of any specific leases to any assumed breaches, and therefore, the trial court erred by imposing the constructive trust on and requiring the transfer of leases and properties to Longview; and (2) there was no evidence to support the trial court’s damages award. View "Longview Energy Co. v. Huff Energy Fund LP" on Justia Law

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Company sued two of its directors and entities associated with them after discovering that one of the entities had purchased mineral leases in an area where Company had been investigating the possibility of buying leases. A jury found that the directors breached their fiduciary duties to Company in two ways. The trial court awarded a constructive trust to Company on most of the leases in question and also required the disgorgement of money derived from past lease production revenues. The court of appeals reversed, concluding (1) the evidence was insufficient to support the jury’s finding that the directors breached their fiduciary duties by usurping a corporate opportunity; and (2) the pleadings were insufficient to support a claim for breach of fiduciary duty by undisclosed competition with Company. The Supreme Court affirmed, holding (1) the constructive trust award was erroneous; and (2) there was no basis for the trial court to render judgment in favor of Company for money. View "Longview Energy Co. v. Huff Energy Fund, LP" on Justia Law

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A jury awarded Plaintiff future lost profits based on Defendants’ failure to comply with their covenants not to compete and covenants not to solicit. The jury also awarded Plaintiff exemplary damages and attorney fees. The trial court awarded Plaintiff the full amount of damages. The court of appeals reversed and rendered a take-nothing judgment in part and remanded in part, concluding, inter alia, that the evidence was legally insufficient to support the jury’s award of future lost profits and that the exemplary damages award was unconstitutionally excessive. The Supreme Court affirmed in part and reversed in part, holding (1) the court of appeals did not err in concluding that the evidence of future lost profits was legally insufficient; (2) the court of appeals’ remitted exemplary damages award was unconstitutionally excessive; and (3) the court of appeals properly found that remand of the issue of attorney’s fees was proper. The court remanded the case to the court of appeals so that it may reconsider its suggested remittitur of exemplary damages. View "Horizon Health Corp. v. Acadia Healthcare Co." on Justia Law

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Certain minority shareholders filed suit in a Texas court alleging dilution of equity interests. Defendants responded by invoking a forum-selection clause designating Delaware as the proper forum for disputes arising out of a shareholders agreement. The court of appeals reversed the trial court’s grant of Defendants’ motion to dismiss, concluding that the forum-selection clause did not control because the shareholders’ extracontractual claims did not allege noncompliance or interference with any rights or obligations derived from the shareholders agreement. The Supreme Court reversed and dismissed the shareholders’ claims in part, holding (1) the shareholders’ statutory and common-law tort claims evidence a “dispute arising out of” the shareholders agreement; and (2) the shareholders’ noncontractual claims fell within the forum-selection clause’s scope. View "Pinto Technology Ventures, LP v. Sheldon" on Justia Law

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The First Pentecostal Church of Beaumont entrusted over one million dollars for safekeeping to The Lamb Law Firm, P.C., and the firm deposited the money into its trust account. In just over one year, the church’s money was gone. The church sued the law firm; Kip Lamb, the firm’s owner; and Leigh Parker, one of the firm attorneys representing the church. The trial court granted summary judgment in favor of Parker. The church appealed, challenging the court’s rulings with respect to the claims for breach of fiduciary duty, civil conspiracy, aiding and abetting, and joint venture. The court of appeals affirmed. The Supreme Court (1) affirmed the judgment on the church’s claims for civil conspiracy, aiding and abetting, and joint venture; but (2) reversed the church’s claim that it was entitled to equitable remedies as to Parker for breach of fiduciary duties he owed to the church, holding that the church did not need to prove that Parker’s breach of fiduciary duty caused actual damages as to the equitable remedies it sought, and the church did not waive its claim for equitable remedies. View "First United Pentecostal Church of Beaumont v. Parker" on Justia Law

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ERG, a Texas entity, filed suit against a Canadian entity and a Bermudian shareholder in Texas for tortious interference with its share purchase agreement. ERG also filed suit against the Bermudian owner of the Colombian oil and gas operations in Texas for fraud. The court held that when the Canadian entity sought to purchase shares of a Bermudian entity that owns Colombian assets from a Bermudian shareholder and did not intend to develop a Texas business, it did not purposefully avail itself of Texas’s jurisdiction. The court held, however, that Texas courts have specific - although not general - jurisdiction over the Bermudian owner of the Colombian oil and gas operations. In this case, the claims against the Bermudian owner turn on its Texas-based executives’ alleged misrepresentations in Texas to a Texas entity. While these claims alleging malfeasance stemming from the actions of the executives here, and of those to whom they gave marching orders, is relevant to the specific jurisdiction analysis, these contacts are insufficient to confer general jurisdiction over the Bermudian owner. Accordingly, the court affirmed the judgment. View "Searcy v. Parex Resources, inc." on Justia Law

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Defendants are three nonresident private-equity fund limited partnerships and their general partner. The funds invested in a newly created Texas subsidiary that purchased a chain of Texas hospitals from a Texas company. Cornerstone, a Texas company allegedly in the market to purchase the hospitals, filed suit alleging that this conduct was tortious and subjects defendants to Texas’s jurisdiction with respect to claims arising out of that conduct. The court held that the trial court has personal jurisdiction over the Funds and the General Partner where the claims arise out of defendants' Texas contacts and where exercising personal jurisdiction over defendants comports with traditional notions of fair play and substantial justice. Accordingly, the court affirmed the judgment. View "Cornerstone Healthcare Grp. Holding v. Nautic Mgmt." on Justia Law

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Dr. Lozano treated Andrade during her pregnancy and delivered her daughter at Women’s Hospital at Renaissance in Edinburg. The delivery was complicated by the baby’s shoulder dystocia, and Dr. Lozano allegedly engaged in excessive twisting. Andrade sued Lozano, alleging that his negligence caused the child permanent injury, including nerve damage and permanent paralysis of one arm. Andrade later added Renaissance, a limited partnership that owned and operated the Hospital, and RGV, Renaissance’s general partner. Lozano, an independent contractor with admitting privileges at the Hospital, was a limited partner in Renaissance. The Andrades settled with Lozano and nonsuited their claims against Renaissance. RGV moved for summary judgment, arguing that they were not liable for Lozano’s conduct because he was not acting within the scope of the partnership or with partnership authority when providing obstetrical care to Andrade, Tex. Bus. Org. Code 152.303. The trial court denied the motion. The Supreme Court of Texas reversed. The ordinary course of the partnership’s business does not include a doctor’s medical treatment of a patient and that the doctor was not acting with the authority of the partnership in treating the patient; the partnership cannot be liable for the doctor’s medical negligence. View "Doctor Hosp. at Renaissance, Ltd. v. Andrade" on Justia Law

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M-I and NOV compete, providing solid-control equipment to the oil-and-gas industry, including mesh screens that filter solid matter from drilling fluid. In 2012, Russo became business development manager of M-I’s screen division and obtained in-depth knowledge of M-I’s bidding strategies, pricing, customer preferences, solid-control systems, and deployment strategies. In 2014, Russo left M-I to become NOV’s screen division global product line manager. M-I sent Russo a letter, asserting breach of a non-compete agreement he executed when he joined M-I . Russo sought a declaration that the agreement was unenforceable. M-I counterclaimed for breach of the agreement, breach of fiduciary duty, misappropriation of trade secrets, and tortious interference, and asserted third-party claims against NOV. At a hearing on M-I’s application for a temporary injunction, M-I sought to establish its trade secrets by Moore’s oral testimony, and requested that everyone, except counsel, experts, and Russo be excluded from the courtroom. The trial court denied M-I’s request. Concerned about disclosing Moore’s testimony, M-I obtained a recess to petition the court of appeals for a writ of mandamus. M-I submitted, in camera to the court of appeals, Moore's affidavit detailing her proposed testimony . Russo and NOV objected to the affidavit as an ex parte communication. The court of appeals denied their motion for access, along with M-I’s mandamus petition. The Texas Supreme Court conditionally granted mandamus relief. The trial court erred in concluding that the exclusion of NOV’s designated representative from portions of the hearing involving trade secrets would violate due process without balancing the competing interests and must, on remand, conduct that balancing. The court also abused its discretion when it ordered the Moore affidavit disclosed without reviewing it in camera. View "In re M-I, L.L.C." on Justia Law