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Reply-er Beware!

The Supreme Court of Texas took up a pair of cases tackling whether a string of emails can form a contract. Both cases involved negotiations in which the parties might have formed a contract by email. In each case, the Court held that no contract existed. But the Court was quick to warn that emails—though informal—may create legal obligations.   

The cases serve as a cautionary tale to all who negotiate by email. As the Court warned, contracting by email is a “developing area of contract law.” The cases help highlight some of the perils and ways to avoid them.

Copano Energy v. Bujnoch

In Copano, the Supreme Court of Texas held that a string of emails “surely contain an offer and an acceptance,” but failed to spell out the deal’s “essential” terms.  

The deal was between a  landowner and an energy company, Copano Energy. Copano needed an easement across the landowner’s property. An agent for Copano shot an email to the landowner offering to pay $70 per foot of easement. 25 minutes later, the landowner responded by email “in reliance on this representation we accept your offer.”

Later, a second Copano agent tried to walk back the deal. In an email, the second agent stated that there was no way Copano would pay more than $40 per foot of easement. The first agent chimed back in, again by email, affirming the original agreement. There he stated, “the deal still stands.”

Copano backed out and never made good on the agreement. The landowner sued to enforce the $70 per foot deal.

The Supreme Court of Texas held that no contract existed. While the emails, taken together, contained offer and acceptance, they did not say what was being offered and accepted. Other than the price per foot, the emails failed to contain the “essential terms of the agreement,” which might include the location of the easement and other basic information necessary to consummate the deal. For that reason, under the statute of frauds, the emails did not constitute an enforceable contract.

The Court also noted the prevalence of emails, hinting that this will remain an issue for many years to come.

E-mail is a ubiquitous feature of modern life. It is used by nearly everyone for nearly every type of communication, from the flippantly inconsequential to the bindingly formal.

The Court followed up this opinion shortly after with Chalker Energy. There too the Court held that emails failed to create a contract; but again, the Court was quick to warn that may not be true in cases to come.

Chalker Energy Partners III v. Le Norman Operating

In Chalker, the Supreme Court of Texas spotlighted the use of a “No Obligation Clause” to conclude that no contract existed through emails.

Chalker was selling millions of dollars in interests in oil and gas leases. To facilitate the bidding process, Chalker opened an online system to exchange offers and emails. One of the buyers, Le Norman, sent an offer. Chalker soon responded they were “on board” with the offer, subject to a mutually agreeable purchase and sale agreement.

Chalker then backed out of the deal with Le Norman after getting a higher offer from another buyer. Le Norman sued to enforce the deal.

The Court held that the email exchange failed to reflect a meeting of the minds necessary for a contract to sell millions of dollars of assets in oil and gas leases. Key among the holdings was the effect of a “No Obligation Clause.” Before entering negotiations, the parties agreed that a definitive written agreement was a condition precedent to contract formation. This “No Obligation Clause” provided the parties the freedom to negotiate without fear of being bound. The Court held that the parties were doing just that, and so, no contract existed.  

Again, though, the Court cautioned that even though no contract existed by email, that may not be so in the future. The Court noted the growing use of email negotiations and warned that the unwary may bind themselves without knowing it.

The common law has long recognized that an agreement can be expressed in multiple writings exchanged between the parties. Emails are such writings. Email can be a convenient way to reach an agreement, but it is also a distinctly conversational, informal medium. Hitting send may be deliberate; it may be hasty… [W]e must begin to give certainty to this developing area of contract law. 

Takeaways

Cobbling together a deal by email is possible, so long as the writing contains the essential elements of a contract. And as the Court was quick to note, with more communications happening electronically, the number of cases will continue to rise. Whether by email, text, or Facebook messenger, think twice before firing off that hasty reply. And for prolonged negotiations, consider using a no obligation clause.

If you’ve got a case like this, shoot me a message at talbert@scanesrouth.com

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Family Law trending in the Supreme Court of Texas

Opinions in Family Law cases are on the rise in the Supreme Court of Texas.

Opinions in Family Law cases are on the rise in the Supreme Court of Texas. The state’s highest civil court issues about 90 opinions each term. Just five years ago, only 3% of the Court’s opinions were Family Law cases. That number has jumped in recent years; this term the Court is on pace for 10%.

So what’s the reason? An easy explanation is that there are just more cases than before. In 2018, the number of new Family Law cases reached an all time high, with 281,327 cases filed. That number dropped by about 3% in 2019. But as those handling appeals are all too familiar, it takes a while for a case to wind its way up the Supreme Court of Texas.

The cases that make their way up the high court usually involve predictable Family Law issues: parental rights, child support, division of community property, and mediated settlement agreements.

But with increasing regularity, these cases are making a splash on legal issues beyond just the traditional Family Law realm.

Take, for example, In re R.R.K., that staked out a place in the ongoing evolution on “finality” of judgments. There, the issue was whether the trial court’s memorandum order was “final” for purposes of appeal. That’s important because appellate deadlines begin to run if it was final.

The trial court included what lawyers call a “Mother Hubbard Clause” stating that “all relief not granted is denied.” This is often an indicator of finality. But the Supreme Court of Texas held that neither the trial court nor the parties intended the order to be final. And so, the mother was not too late to pursue appellate relief.

The case suggests another explanation for the increasing prevalence of Family Law on the Supreme Court of Texas’ docket. Family Law cases may offer the Court opportunities to clarify legal issues that trouble parties even outside the Family Law context (finality, for example).

Another case generating buzz is In re C.C. The issue is whether the fiancé of a deceased parent is entitled to partial custody of the child. (And just to unpack that, the fiancé is not the biological parent of the child). The case raises interesting issues about a non-parent’s ability to seek possession of a child, standing, and the fit-parent presumption.

The trial court granted the fiancé some rights. The child’s biological father appealed (by way of mandamus). The father argued that the trial court’s order violated a parent’s constitutional rights to determine how to care for his own child free from state interference. The Father’s brief argued:

“An opinion from this court is vitally important to ensure all fit parents in Texas have their constitutional rights protected in light of the generous standing awarded to non-parents by statutes not requiring a showing of significant impairment”

The case was one of the first handful of oral arguments by Zoom, which I looked at here. An opinion is expected this month, before the end of the Court’s term.

The case has attracted 10 amicus briefs groups including State Bar of Texas Family Law Section’s council, the newly-formed advocacy group Texas Association of Family Defense Attorneys, the conservative-leaning think tank the Texas Public Policy Foundation, and even the state of Texas itself.

With increasingly regularity, expect to see Family Law cases occupy a place on the Supreme Court of Texas’ docket. It’s a good reminder to find experienced Family Law attorneys at trial and appellate counsel on appeal.

Trial by Zoom

The doors may be shut, but Texas courts are still open for business. Courts continue to hum amid the Covid-19 pandemic. Increasingly courts are embracing technology to continue to push cases and provide resolution to parties. 

Paving the way for this tech-transformation was the Supreme Court of Texas’ emergency order of March 13. The Court authorized judges to require attorneys and parties to appear by video. Although many judges ask for the parties’ consent, courts need not do so.

While hearings by phone were not unheard of, they were far from the norm before the pandemic. But over the past two months, remote access to courts has flourished. Chief among this tech revolution  is reliance on Zoom and other video-conferencing platforms to keep dockets moving.

Trial by Zoom

Several Texas courts have held entire trials by Zoom. One attention-grabbing case was a bench-trial in the 190th District Court (Harris County) last week. The case involved an insurance dispute over the recovery of attorneys’ fees.

The attorneys and witnesses appeared by video-conferencing from the comfort of their offices and homes. The parties were prepped and dressed for trial. On the other hand, one Florida court had to admonish lawyers not to appear in bathing suits or while still in bed.

What’s more impressive, the court live-streamed the trial in real time. Onlookers could watch on as the attorneys sparred, lodged objections, and argued their cases. It’s not sports, but it was close enough!

While it was initially touted as the first trial entirely by Zoom, eagle-eyed observers were quick to note that other trials had already occurred across Texas, including one as early as March 25.  Though, this was the first in Harris County.

One of the questions curious observers had was about the court’s bold warning that recording the court proceeding could result in contempt of court. One observer noted that attorneys generally cannot make their own recording of court proceedings.

Remote trials raise other novel issues. Unlike a party sitting on the stand, witnesses have full access to their computers. Witnesses could pull up documents to answer thorny questions–a luxury not otherwise available. Additionally, the witnesses, in theory, could “chat” while on the “stand,” raising questions about coaching. Courts will continue to grapple with these and other issues, and innovate in the process. One creative idea to prevent attorneys from talking over each other: “Objection Paddles” to lodge objections on video.

Paddle
Objection!

Oral Argument by Zoom 

Trial courts are not the only ones soldiering on with the help of technology. The Supreme Court of Texas held its first ever oral argument by Zoom on April 8. Tom Wright and Kevin Dubose were the inaugural attorneys arguing a case involving the “borrowed servant” doctrine.

Justices appeared remotely, clad in judicial robes and with the Supreme Court of Texas background behind them. The Court Clerk circulated some sharp images of the Court for advocates to use as backgrounds. Remote arguments weren’t exactly the same, but the process was altogether seamless. The Justices took efforts to reduce the potentially awkward interruption of questions by often beginning “Mr. _____, I have a question.” Additionally, one of the Zoom “participants” was the clock keeping time. Another great innovation.

Image

The Supreme Court of Texas has now heard four cases remotely. Afterwards, Justice Guzman offered some thoughts on the process. Some of the tips include simple, but often overlooked, basics of “remoting in” including:

  • Choose an appropriate background or location. Our judges used a uniform background to help set the tone.
  • Fully charge your battery and use a power cord. Batteries discharge quickly while using video applications.
  • Maximize internet connectivity to avoid dropping off mid‑argument. Disengaging other household devices from wifi is helpful but may prove difficult with so many children distance learning these days.

I cannot imagine the terror of having your laptop die or wi-fi disconnect mid argument! Having a judge insist that he could not hear me by phone for an MSJ hearing was bad enough!

The global health crisis has spurred a tech-revolution for courts. Judges, advocates, and parties continue to adapt and innovate–and endure some of the awkwardness as we iron out the kinks in the process.

Requests for Admission: tool or trapdoor?

Requests for admission are a discovery tool intended to simplify the issues for trial. The requests may ask the responding party to admit or deny the authenticity of documents or to agree to uncontroverted evidentiary matters. Simple? Not quite. 

Responding to RFAs is fraught with peril. If a party fails to respond or responds late, the requests are automatically “deemed” admitted. No court order deeming the admissions admitted is required, and the admissions can be used against the party at summary judgment or trial. Problems also arise when the request asks the responding party to give away their whole case. Examples include: 

  • Admit you were negligent in causing the wreck.
  • Admit that you breached the contract.
  • Admit that you are liable for $100,000.

The Supreme Court of Texas dissected RFAs recently in  Medina v. Zuniga. There the Court reined in the severity of RFAs, cautioning that “requests for admission are a tool, not a trapdoor.” The Supreme Court of Texas admonished that “merits-preclusive” requests–essentially asking the responding party to admit liability–exceed the scope of permissible discovery. The Court held

When requests for admissions are used as intended—addressing uncontroverted matters or evidentiary ones like the authenticity or admissibility of documents—deeming admissions by default is unlikely to compromise presentation of the merits. But a deemed admission that precludes a defendant from contesting the validity of the plaintiff’s claims or that forces him to concede his defenses, wields a result more severe than the rules intend or that due process will tolerate.

As this holding percolates throughout lower courts , it will be interesting to see how each court tackles this issue: including the proper procedure (and timing) for objecting and raising the issue that the RFA is merits-preclusive.

There is already one bright-line rule from a recent 5th Court of Appeals case, Torres v. Lee. If you’ve got deemed admissions or merits-preclusive RFAs, seek relief quickly.  Don’t wait six months to bring it to the court’s attention.

How long, how long . . . to file your claim?

“How long, how long” croon the Red Hot Chili Peppers in “Otherside.” The Supreme Court of Texas tackled that same question this year. How long does a party have to sue before the statute of limitations bars the claim? The answers is–the most favorite of lawyer answers– “it depends.”

In Agar Corp. v. Electro Circuits Int’l, LLCthe Court addressed whether the limitations period for a civil conspiracy claim is two years or four years. The answer is both! Civil conspiracy is a derivative claim that takes the limitations period and accrual date of the underlying tort.

In Nghiem v. Sajib, the Court took up the limitations period for a breach of an implied warranty of good and workmanlike repair. Ordinarily, this claim is brought under the Texas Deceptive Trade Practices Act (DTPA), with a two-year limitations period. But in Nghiem, the Court reasoned that a warranty claim not brought under the DTPA is not barred by the two year limitations period. The obligation arises by contract; thus the limitations period is four years.

Savvy attorneys can avail themselves of these cases to revive claims they otherwise thought were dead.

 

Talking “old-fashioned punishment” with SCOTX

An intriguing little piece came out of the Supreme Court of Texas today, In the Interest of A.M., a child.  The two concurring Justices took up reliance on “old-fashioned punishment methods” in a parental rights termination case.

These punishments included that the father:  (1) withheld Christmas presents from his daughter as punishment for misbehavior, (2) made her swallow a little hot sauce or eat a hot pepper when she told a lie, and (3) made her do physical exercises when she acted up.

As the Justices quipped:

Threatening to withhold presents as punishment is a ubiquitous part of popular Christmas culture. A little hot sauce for lies or bad words seems downright humane compared to the vigorous mouth-washing feared by generations of foul-mouthed children and administered by generations of loving mothers. And how many parents at their wits’ end have made their kids run around the block or do pushups or jumping jacks?

And, the Justices more sternly observed

If reliance on these old-fashioned punishments—and others like them, such as spanking—can be used against parents by a government that seeks to take away their parental rights, then “the fundamental right of parents to make decisions concerning the care, custody, and control of their children” is no longer what it once was.

The nature of the opinion itself was a little bit of an oddity. It was a concurrence to denial of a petition for review. The court denies hundreds of petitions each term, generally without comment. All in all, it is a quirky, intriguing read worth checking out.

Jane Bland named newest Supreme Court of Texas Justice

Governor Greg Abbot announced Monday that Jane Bland will be the newest Justice of the Supreme Court of Texas. Bland will fill the vacancy left by Jeff Brown as he moves to the U.S. District Court for the Southern District of Texas.

Bland served on Houston’s First Court of Appeals for 15 years. She was a trial judge before that. She is board certified in Civil Appellate Law and Civil Trial Law. Bland will bring the tally of female justices to three, joining Justices Lehrmann and Guzman. She is expected to start in September.

Winning through a Bill of Review

Six months after a judgment is entered against your client, they call you in a panic. Now what?

A trial court signs a judgment against your client for thousands of dollars. Somehow months go by without the client ever learning about it. One day a constable shows up at the client’s door with a copy of judgment and ready to start seizing assets. What now? 

This scenario plays out more often than you’d imagine. After six months have elapsed from a trial court’s entry of a final judgment, the client (judgment debtor) has just one option: an equitable Bill of Review.

To prevail in a Bill of Review, the client must show three things:

(1) Meritorious Defense;

(2)  Fraud, accident, mistake or wrongful act by the opposing party; and

(3) The absence of fault on the client’s part.¹

But if the client did not receive service of citation as required by law, it’s King’s Ex. The trial court must set aside the judgment.² For that reason, you should carefully analyze all service documents and run to ground any discrepancies.

The Bill of Review is a last resort; but it can provide an effective method to set aside a default judgment  and obtain a new trial on the merits. Importantly, a “win” in the Bill of Review context means back to square one. The plaintiff must prove its case and the defendant can raise any defenses. Removing the judgment hanging over your client’s head–like the sword of Damocles–is a indispensable (and encouraging) first step. 

¹McDaniel v. Hale, 893 S.W.2d 652 (Tex. App.—Amarillo 1994, writ denied).

²Caldwell v. Barnes, 975 S.W.2d 535, 537-38 (Tex. 1998)

Tyler Talbert is a lawyer in Waco, Texas, with the firm Scanes & Routh. He focuses on appeals and appellate law and has practiced before numerous Courts of Appeal and argued before the Supreme Court of Texas. 

Third Court of Appeals holds that the ‘commercial-speech’ exception precludes TCPA motion to dismiss.

The ever popular (and often abused) Texas Citizens Participation Act (TCPA) appeared again today in an opinion from the Third Court of Appeals. The TCPA’s stated purpose is to protect citizens who speak on matters of public concern by “curb[ing] strategic lawsuits against public participation.”¹ In practice, though, the TCPA has taken on a life of its own, with parties trying to apply it to “an increasing range of situations that do not further [its] purpose.”²

The TCPA has a “commercial-speech” exception built in. It provides that the TCPA does not apply to

A legal action brought against a person primarily engaged in the business of selling or leasing . . . services, if the statement or conduct arises out of the sale or lease of goods, services . . . or a commercial transaction in which the intended audience is an actual or potential buyer or customer.

Tex. Civ. Prac. & Rem. Code § 27.010(b)

The Supreme Court of Texas recently examined the exception in Castleman v. Internet Money Ltd., 546 S.W.3d 684, 688 (Tex. 2018).  The Third Court of Appeals applied it in Woodhall Ventures 2015, LP v. Megatel Homes II, LLC. by noting that the exception applies when four conditions are met:

  1. The non-movant must have been primarily engaged in the business of selling or leasing goods or services at the time the disputed statement was made.
  2. That party must have made the statement or engaged in the conduct on which the claim is based in the defendant’s capacity as a seller or lessor of those goods or services.
  3. This statement must have [arisen] out of a commercial transaction involving the kind of goods or services the defendant provides.
  4. The intended audience of the statement or conduct” must have been the “actual or potential customers of the defendant for the kind of goods or services the defendant provides.

The Third Court of Appeals concluded that each element of the exception was satisfied in the case. As such, the Court held that the exception applied and denied the TCPA motion to dismiss.

¹See ExxonMobil Pipeline Co. v. Coleman, 464 S.W.3d 841, 846-850 (Tex. App.—Dallas 2015), rev’d on other grounds, 512 S.W.3d 895 (Tex. 2017).

² Misko v. Johns, No. 05-18-00487-CV, 2019 Tex. App. LEXIS 3508, at *1 (Tex. App.—Dallas May 1, 2019.

Tyler Talbert is a lawyer in Waco, Texas, with the firm Scanes & Routh. He focuses on appeals and appellate law and has practiced before numerous Courts of Appeal and argued before the Supreme Court of Texas. 

Supreme Court of Texas grants oral argument in 33 cases

The Supreme Court of Texas is shaping up its docket for the upcoming term. On June 28, the Court set 33 cases for oral argument for this fall. The orders show 30 granted petitions for review and 3 mandamus actions set for argument.

Glancing through them, a couple of trends pop out. Franchise taxes take the cake in this early batch of oral arguments, with at least four cases turning on franchise taxation issues. The “Fun Five” lotto case has finally made its way up to the high court. I addressed the issue previously in a post here. That should be an intriguing one for anyone keeping tabs on sovereign immunity developments. Atrium Medical Center will examine liquidated damages clauses that border on unenforceable penalty provisions. This is a fascinating area of law that hasn’t gotten much attention lately.

There are of course the usual suspects, TCPA, sovereign immunity, and arbitration clauses. The zaniest though, has to be  Shary Pruski v. Joshua Garciawhich asks what the standard of care is for bulls wandering the roads!

The Court also kept up its trend of clearing all argued cases from its docket this term. It is a feat that started when Chief Justice Hecht took the reins and has continued ever since. Impressive and appreciated from anyone who practices in front of the Court.

 

Tyler Talbert is a lawyer in Waco, Texas, with the firm Scanes & Routh. He focuses on appeals and appellate law and has practiced before numerous Courts of Appeal and argued before the Supreme Court of Texas.