Texas Supreme Court Under Fire

Yesterday, I wrote about the decline in Texas civil jury trials.  One of the key reasons that our founding fathers considered the jury trial so important was that it was a check on runaway judges.  Even Thomas Jefferson explained the importance of having juries as a check over judges when he wrote:

[judges] are liable to be tempted by bribery; that they are misled by favor, by relationship, by a spirit of party, by a devotion to the executive or legislative; that it is better to leave a cause to the decision of cross and pile (a flip of a coin) than to that of a judge biased to one side; and that the opinion of twelve honest jurymen gives still a better hope of right than cross and pile does.

These are the types of problems that some see in the Texas Supreme Court, and it came to light recently in two different areas.  Unfortunately, one of them involved one of our cases where the Texas Supreme Court took away a jury verdict for our client.  On March 26, NPR did a story that looked at how the oil and gas industry is potentially underpaying royalty owners and how Texas Supreme Court decisions (inlcuding our case) make it more difficult for the royalty owners to prevail.    

And then the Texas Supreme Court created a firestorm with its decision involving public access to Texas beaches.  That decision has led to attacks on the Texas Supreme Court on all fronts.  For example, it has been called out by the liberal-leaning Burka blog to calls from Republican Land Commissioner Jerry Patterson to vote out the five members of the Supreme Court who supported the decision.

These allegations about the Texas Supreme Court are not new.  One of the more popular posts on my blog is a 2007 post detailing a study from law professors finding that in the 2004 and 2005 terms, the Texas Supreme Court ruled for defendants 87% of the time.  The study even used Wal-Mart as an example of the alleged problem.  From 1998-2005, there were 81 cases around the country (excluding Texas) at their states highest courts.  In those cases, Wal-Mart won 56% of the time.  During that same time period, Wal-Mart had 12 cases at the Texas Supreme Court and won them all. 

I’m not sure where this increased publicity will go, but I do think it’s positive for the people of Texas to be informed about the civil justice system, including the Texas Supreme Court, and the best way to do that is through the popular press.



Texas Civil Jury Trials Plummet

The right to trial by jury in civil cases is so important that our forefathers insisted in including it in the Bill of Rights.  Indeed, one of the main grievances leading up the American Revolution was the unfair treatment of the colonies with respect to jury trials.  In England, judges were viewed as subjects to the King, which often resulted in biased and unfair results, but citizens were protected by the jury trial.  But in King George III abolished the jury trial in the colonies, leaving colonists subject to the decisions of corrupt judges who served at the pleasure of the king.

Unfortunately, jury trials in Texas are quickly disappearing.  This week, the Dallas Morning News had an excellent article about the problem.  They state:

Civil jury trials are becoming rare in Texas.

The right to have disputes decided by a panel of fellow citizens is cited in the Declaration of Independence and explicitly confirmed in the constitutions of Texas and the United States.

But new statistics show that the right to “trial by jury” is quietly and steadily disappearing.

The 1,195 jury trials conducted in 2011 are one-third the number held in 1996, according to the Texas Administrative Office of Courts.  during the same period, the number of lawsuits rose 25 percent.

In 1996, juries decided one out of every 48 lawsuits filed.  Last year, only one in 183 new civil complaints resulted in jury verdicts. 


Experts say that there are three things that have contributed to this huge slide.  First, the Texas legislature passed significant tort reform measures.  Second, the Texas Supreme Court has become more pro-defense.  Third, courts have issued a series of decisions that shifted questions previously considered to be questions for the jury to questions to be decided by judges.

We’re doing what we can to reverse this trend.  While the deck is stacked against us by these three factors, we’ll continue to file lawsuits, set cases for trial, and try those cases that can’t be resolved.   We just hope other attorneys will do the same.




Auto Accidents: What Is A “Stowers Demand”?

If you’re one of our clients, we might send you a draft demand letter to the insurance company that tells the insurance company that the letter is intended to be a “Stowers demand.”  What does that phrase mean?

Every insurance policy has a “policy limit” — the maximum amount of coverage the policy offers.  (You can read more about that here.)

Way back in 1929, the Texas Supreme Court, in the G.A. Stowers Furniture Co. v. American Indemnity Co. case, ruled that insurance companies had a duty to their insureds to accept a reasonable settlement offer if the offer is within the policy limits.  If the insurance company rejects a reasonable settlement offer within the policy limits and the case later resulted in a verdict higher than the policy limits, then the insurance company could be liable for the full amount, even though the amount is higher than the policy limit.

The “Stowers demand” serves two purposes.

For cases with values near or above the policy limits, an offer to settle for the policy limits puts pressure on the insurance company to settle because they don’t want to be liable for an amount more than the policy.

This can sometimes result in funny phenomenon.  For example, if a car wreck case is worth between $25,000 and $35,000, an insurance company with $30,000 will likely pay the amount due to the Stowers pressure.  However, if the same case had $300,000 of insurance (instead of $30,000), the insurance company doesn’t have any pressure, and they might hold fast to paying $25,000 or less.

If your case far exceeds the policy limits, then the demand will likely result in the settlement of the claim for the limits of the policy.  Unfortunately, unless you have purchased underinsured motorist coverage, you’re likely out-of-luck in your attempts to obtain full value of the claim.  But, if the insurance company rejects the offer for some reason and a jury later finds that the case is worth more than the policy, then the Stowers demand is necessary to try and set up the claim to make a claim for the full value of the case, similar to that made in the Stowers Furniture Company case.

In short, the demand is necessary to try and settle the case, and failing that, hope that it sets you up to make a full recovery in the future.

A Tea Party Leader On Tort Reform

Andrew Cochran keeps a blog dedicated to the 7th Amendment — the amendment guaranteeing US citizens the right to a jury trial in civil cases.  Earlier this month, he had a post quoting Judson Phillips, a leader of the Tea Party movement. 

It seems that Mr. Phillips understands the role of the civil justice system in deterring bad behavior.  He writes:

The free market is a wonderful system. It produces amazing efficiencies and amazing wealth. The free market system has delivered more prosperity to more people than any other system. There is another beauty to the free market system that many people do not think about. The free market system punishes bad behavior. If I open a business and decide to sell something that is a really bad product, people do not come to my business. I have the incentive to produce a really good product because that way people will want to come to my business.

The civil jury system is a part of the free market. Our founding fathers thought enough of it to make it the 7 th Amendment to the Constitution. Jury awards are a part of the free market. They do not exist in a vacuum. They not only compensate someone for an injury but like so many other parts of the free market, they act to deter bad behavior.

If I am injured by a bad doctor or suffer some other type of injury or loss, I do not want the Federal Government telling me what my pain is worth. I want twelve citizens deciding justice for me.

Too few people recognize the importance of the tort system — civil lawsuits — in deterring bad behavior.  A few years ago, the Texas Supreme Court (all Republicans, by the way) explained that important role in the case of Roberts v. Williamson: 

The fundamental purposes of our tort system are to deter wrongful conduct, shift losses to responsible parties, and fairly compensate deserving victims. 

I have never understood why so many conservatives — hell bent on making society safer by strictly enforcing criminal laws — want to eliminate the civil justice system, which is just as important  in deterrence of wrongful conduct as the criminal system.

In fact, in many cases, the civil justice system may be a more important deterrent.  For example, routine car wrecks don’t often involve a criminal component, and if they do, it’s usually just a minor ticket.  They don’t really deter wrongful conduct.  On the other hand, the prospects of facing a huge verdict from reckless driving — that might deter wrongful action.

I don’t know whether the tea party will be enough to change the debate on this issue, but I’m at least thankful that the issue is becoming a source of some discussion.


Former Texas Supreme Court Justice Sued — When Can A Person Be Sued For Providing Alcohol To Others? (An Important Question For Footall Game-Watching Parties)

  In yesterday’s Austin American Statesman, Chuck Lindell wrote an article describing a lawsuit filed against former Texas Supreme Court Justice Tom Phillips.  The lawsuit alleges that Phillips and his wife allowed a party to go on at their home where minors were served alcohol and that one of the minors was killed in a one-car wreck on the way home from the party.

Because Texas football season — and hundreds of game-watching parties — starts tomorrow, the question of “When can a person be sued for providing alcohol to others?” is timely.

And there are generally two types of cases.  The type of case that is involved in the Phillips case (and would be involved in most game-watching cases) is described as “social host” liability because the cases seek to hold private individuals liable for providing alcohol to their social guests.  These types of cases are tough.  In most instances, a social host will not be liable for providing alcohol to a person who later causes an accident.

There are two exceptions to this general rule.  The first, as in the Phillips case, involves minors.   Adults (as long as they’re not the minor’s parents or guardian) can be liable for damages if they knowingly provide alcohol to the minor or allowed the minor to be served alcohol on premises the adults own or lease.  (You can read the full statute here.)

The second exception is more of a “maybe” exception because the law isn’t as settled.  But injured persons may have a claim against social hosts if the social hosts take charge of a person and then are negligent in the way that they take charge of someone.  The best example is a host who takes a driver’s keys because the driver is too drunk to drive, but then decides to put the driver in the car and let the drunk drive off.   As you might suspect, these situations are rare.

The second category of cases are called dram shop cases, and they involve claims agains commercial providers of alcohol, such as restaurants and bars.   These entites may be liable for damages caused by the drunk driver when they serve alcohol to a person when it is apparent that the person was intoxicated to the extent that he presented a clear danger to himself or others.  These are the most common cases against providers of alcohol.  There are a number of special details, and I may discuss those in a post next week.

(Image courtesy of vizzual.com on flickr)

San Antonio Jury Hits Akin Gump With $72.6 Million Verdict

Last Thursday, a San Antonio jury returned a $72.6 million dollar verdict against Akin, Gump in a case where the plaintiff alleged that the patent lawyers failed to properly obtain patents on a device that the plaintiff invented.

The verdict is another in the trend of larger verdicts against large law firms.  The American Bar Association publishes a semi-regular survey of legal malpractice claims as reported by legal malpractice insurers.  In September 2008, the ABA’s latest version came out, covering claims from 2004-2007.   The previous study looked at claims from 2000-2003.  One of the more stunning statistics in the study is that claims that were in excess of $1 million doubled from the 2003 survey to the 2007 survey.  It’s my hypothesis, not mentioned or addressed in the study, is that one of the reasons is more successful claims against mega-firms.

Interestingly, Akin, Gump is also a party to a legal malpractice case (Akin, Gump v. Nat’l Development and Research Corporation) currently before the Texas Supreme Court, and the ultimate decision promises to be critical to the legal malpractice jurisprudence of our state.

Another Texas Supreme Court Victory for Big Business

Last Friday, the Texas Supreme Court issued another opinion where it opted for big business over consumers. The question in Perry Homes v. Cull was whether the Culls’ claim was properly submitted to arbitration. In the case, the Culls filed suit against Perry Homes for defects in their house. Fourteen months later, after completing discovery and on the eve of trial (of which the defendants sought to delay), the Culls asked that the case be submitted to arbitration. The trial court agreed, and the case proceeded in arbitration, where the Culls received a judgment of $800,000.00. Perry Homes then appealed saying that the Culls had waived their right to arbitration, and the majority of the Supreme Court agreed.

While reading the facts on their face makes it appear that the ruling was correct, I don’t think it was. If you compare this case to other decisions where the plaintiffs accused the defendants of delaying before seeking arbitration, you’ll find little difference in the conduct, but a completely different result.

There are two elements that a party must prove to establish that the party seeking arbitration waived its rights to arbitration. First, the party opposing arbitration must prove the party seeking arbitration has substantially invoked the litigation process prior to asking for arbitration. And second, the party opposing arbitration must show that it was prejudiced by the other party’s invoking of litigation.

The issue in this case is whether Perry Homes was prejudiced by the Culls’ actions. When reaching this decision, the majority didn’t point to any specific evidence offered, but seemed to say “Gosh, it’s just inherently unfair to delay so long or to invoke the discovery process and then ask for arbitration.” However, the Court has specifically rejected these types of arguments in the past when finding that defendants didn’t waive their rights to arbitration.

In 2006, the Supreme Court handed down the decision of In Re Vesta Insurance Group. In that case, the defendant filed a Motion to Dismiss, sent written discovery, and took 4 depositions. After two years of going through litigation, the defendant then asked that the case be sent to arbitration. The court held that this long delay (longer than the Cull case) and the sending of discovery were not enough to show that the plaintiff was prejudiced by the defendant’s invoking of the litigation process, and the case was sent to arbitration.

The Court has also rejected the idea that the notion of engaging in discovery is enough to show prejudice because many arbitrations allow discovery proceedings. In the 1998 decision of In re Bruce Terminix Co., the Supreme Court said, “Even substantially invoking the arbitration process does not waive a party’s arbitration rights unless the opposing party proves that it suffered prejudice as a result.” In rejecting the plaintiff’s argument that it was prejudiced by discovery, the court said that being forced to responded to written discovery “does not establish prejudice because AAA rules allow arbitrators to arrange for ‘production of relevant documents and other information.’”

In 1996, the Court again addressed arbitration in the case of EZ Pawn Corp. v. Macias, and the court found that the plaintiff didn’t prove prejudice despite a year delay by the defendant in invoking arbitration and despite the defendant sending written discovery.

For all the reasons that the Supreme Court found that plaintiffs didn’t prove prejudice in these cases, the Court should have found that Perry Homes didn’t prove prejudice.

However, even more important than the actual substance may be the tone of the opinions. In each opinion where the defendant sought arbitration, the Court engaged in a rigorous analysis to show how the plaintiff’s proffered evidence didn’t support a claim of prejudice. In the Perry decision, there was no such rigorous analysis and the majority seems to assume that the delay and discovery caused prejudice.

Clearly, I think that if the Court had applied the standards and analysis set out in their prior opinions, they would have held that the trial court properly sent the case to arbitration.

I will also give credit where it is due. I have often expressed my displeasure with several members of the court, but Justices Johnson, Jefferson, Green and Willet all dissented, finding that Perry Homes didn’t fulfill its burden to show prejudice.

Now, I will add that the most interesting or sensationalist part of the case involves the actual parties. Bob Perry of Perry Homes is one of the biggest contributors to the Republican party, both in Texas and nationwide. All nine judges on the court have each received contributions totaling more than $260,000 from Perry’s family. Perry is also a major donor to Texans for Lawsuit Reform, which has given an additional $185,000 to the justices. Several of the posts below touch on that relationship.

This case has received a lot of publicity, and you can find more discussion at the sources below:

Texas Supreme Court: Justice Delayed

Texas Watch, a bi-partisan advocacy group working to improve consumer and insurance laws for Texas families, has issued a new report about the increasing backlog of cases at the Texas Supreme Court.  The report, entitled Snail’s Pace: An Analysis of the Texas Supreme Court’s Growing Backlog, made the following findings:

  • The Court took an average of 852 days (2.3 years) to dispose of a case in the 2006-2007 term, an increase of 24% from the 2004-2005 term.
  • Justices took an average 416 days to write an opinion after the Court has heard oral arguments. This represents a 31% increase from 04-05 to 06-07.
  • Justices Wainwright and Johnson have fallen behind their colleagues’ output by routinely taking longer to write fewer opinions.
  • The Court’s backlog has steadily increased from 14 in fiscal year 2000 to 60 in FY2007, an increase of 328%.
  • The Court has left 72 cases pending for more than a year. An additional 31 cases have been pending for more than 2 years.
  • Dallas news station WFAA ran their own story based on the report.

    Thanks to Todd Smith for his link to the WFAA story.

To contact Austin Personal Injury Lawyer, Austin Personal Attorney, Austin Accident Lawyer, Austin Injury Lawyer Perlmutter & Schuelke, PLLC or to learn more about Austin Personal Injury visit http://www.civtrial.com/.

Justice Medina’s Saga Continues, plus more Supreme Court drama

As we have previously reported and updated, Texas Supreme Court Justice David Medina and his wife were indicted in connection with an alleged arson event at their home.  At the District Attorney’s request, the indictments were dismissed.  But the story appears to be far from over.  Today, the grand jurors are stating that they will re-urge the investigation when a new grand jury convenes in February.

But Justice Medina isn’t the only Texas Supreme Court Justice feeling the heat.  Justice Paul Green is now the subject of a complaint with the Texas Ethics Commission for allegedly using campaign funds improperly.

It should make for interesting election year.

To contact Austin Personal Injury Lawyer, Austin Personal Attorney, Austin Accident Lawyer, Austin Injury Lawyer Perlmutter & Schuelke, PLLC or to learn more about Austin Personal Injury visit http://www.civtrial.com/.

Lawmakers Criticize Texas Supreme Court

In what may be unprecedented, a bi-partisan group of Texas lawmakers filed an amicus brief with the Texas Supreme Court asking them to overturn their decision in Entergy v Summers. In that August 31, 2007 opinion, the court was faced with the question of whether a premises owner was a “general contractor” under the worker’s comp provisions of the Labor Code.

The Texas Labor Code provides that if an employer purchases worker’s comp insurance, an employee can’t sue its employer for injuries sustained in an on-the-job accident. In later sections, the statute also provides that if a general contractor purchases worker’s comp insurance that covers the employees of the general’s subcontractors, then the general contractor is considered the employer of the sub’s employees for purposes of worker’s comp laws.  In such a situation, if an employee of a sub is injured in an on-the-job accident, then the employee couldn’t sue the general contractor.  Contrast that to the situation where the sub buys its own insurance for its employees.  In that situation, if a sub’s employee is injured, then the employee can’t sue the sub (his employer) but could sue the general contractor if the general’s conduct contributed to the employee’s injuries.

In Entergy, the plaintiff was an employee of International Maintenance Corp. The company had contracted with Entergy to provide construction and maintenance on Entergy’s premises. In exchange for a reduced contract price, Entergy agreed to purchase worker’s comp coverage for IMC’s employees. The plaintiff was injured and sued Entergy for his damages.

Entergy argued that because it was the entity that purchased the worker’s comp insurance then it should be considered a “general contractor” and receive protection under the worker’s comp statute. The plaintiff, with whom the Court of Appeals agreed, made the logical argument that Entergy couldn’t be a contractor because it was the owner of the property — Entergy couldn’t contract with itself to perform work.   The plaintiff and the Court of Appeals cited existing Texas authority and such mainstream sources as CJS for the proposition that a general contractor is someone that contracts directly with the owner to perform work, not the owner itself.

It took the Texas Supreme Court a mere 13 paragraphs to dismiss the plaintiff’s arguments and his claims. Much of the opinion was based on the Court’s argument that the clear language of the statute demonstrates a clear legislative intent that an owner could be a contractor.

A motion for rehearing was filed, and with that motion, several groups have filed amicus curiae briefs. One of those briefs was a brief filed by four Texas legislators (two Republicans and two Democrats), who argued that it was never the legislature’s intent to allow immunity for landowners. The lawmakers wrote:

This Court, by disregarding the express terms of the Legislature’s enactments, has violated the separation of powers clause of the Texas Constitution and impermissibly encroached on the powers and functions expressly reserved the Legislature…

This Court’s holding in this case improperly extends that immunity to non-employer premises (plant) owners. The Legislature has never authorized such an extension, never intended to provide such an extension, and, in fact, has repeatedly rejected such an extension.

Of interest, one union has pointed out that if the Court’s opinion were in place in 2005, it would have prevented many of the injured workers from pursuing claims following the BP Texas City blast.

It should be interesting to watch how this plays out. I have no real faith that the Court will reverse the opinion, but maybe the amicus signals some hope that this problem will be fixed during the next legislative session.   At a minimum, it’s another group criticizing the Texas Supreme Court for what has become a pattern of results-oriented opinions in the favor of big business and insurance companies.

Fort Worth personal injury lawyer John Cummings also has a post on this subject.

To contact Austin Personal Injury Lawyer, Austin Personal Attorney, Austin Accident Lawyer, Austin Injury Lawyer Perlmutter & Schuelke, PLLC or to learn more about Austin Personal Injury visit http://www.civtrial.com/.

Schuelke Law maintains offices in Austin, Texas. However, our attorneys and lawyers represent clients throughout the state of Texas, including Dallas, Houston, San Antonio, Forth Worth, El Paso, New Braunfels, San Marcos, Kyle, Buda, Round Rock, Georgetown, Lockhart, Bastrop, Elgin, Manor, Brenham, Cedar Park, Burnet, Marble Falls, Temple and Killeen. By Brooks Schuelke

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