02.19.18

Last week the Supreme Court of Texas issued no opinions, but did issue four grants - two of which are of particular interest.

In Jody James Farms, JV v. The Altman Group Inc. and Laurie Diaz out of the Amarillo Court of Appeals, the Texas Supreme Court will consider whether an arbitration agreement incorporating the American Arbitration Association rules establishes intent for an arbitrator to determine whether the arbitration agreement covers claims against non-signatories. In this case, Jody James Farms (JJF) purchased a Crop Revenue Coverage Policy from Rain & Hail, through The Altman Group. JJF incurred a loss and alleged that they notified The Altman Group's agent. The claim was not submitted to Rain & Hail until later, and Rain & Hail denied the claim on the grounds that it was not timely submitted. The dispute went to arbitration where the arbitrator held for Rain & Hail. JJF then filed a suit against Altman Group asserting a breach of fiduciary duty based the failure to timely submit the claim. Altman Group sought an order compelling arbitration, which the trial court granted. The arbitrator found in favor of Altman Group.

JJF appealed contending that the trial court erred because the arbitrator exceeded his authority as the agreement to arbitrate in the policy was not between JJF and Altman Group; therefore, according to JJF, the claims are outside the scope of the policy's arbitration agreement. The court of appeals affirmed the trial court. On March 20, 2018, the Texas Supreme Court will hear oral arguments on this issue.

On the same day, in Sky View at Las Palmas LLC v. Martinez-Mendezthe Texas Supreme Court will hear oral arguments on the applicability of the One-Satisfaction Rule and the Collateral Source Rule on the claimed settlement credits in the context of this contract-breach and fraud case. In this case, Sky View was attempting to raise funds to develop a tract of property in 2008. Sky View sought a loan from Martinez and received a loan of $ 1.275 million. Ultimately, Sky View defaulted, and Martinez brought a claim against seven defendants including Sky View and Sky View's attorneys, the Title Company, and Martinez's own counsel. Four out of the seven defendants settled prior to trial. The trial court ruled against the non-settling defendants for breach of guaranty agreements, fraud, promissory estoppel, quantum meruit, and conspiracy. Although the Defendants sought settlement credits, the trial court did not rule on the motions and the requested settlement credits were denied by operation of law. The Defendants appealed; however, the 13th Court of Appeals held that the One-Satisfaction Rule did not apply because the injuries claimed against the non-settling Defendants was independent of the injuries alleged against the settling defendants.