May 13, 2016

The Texas Supreme Court released three opinions and no grants this week

One opinion deals with the constitutionality of the Texas school finance system. The second opinion discusses whether the Comptroller can adjust reimbursement amounts for a wrongfully incarcerated prisoner to include court-ordered child support arrearages. The third opinion, which is discussed in more detail below, addresses whether the Texas Property Code's public policy prohibits liability imposed on a tenant for losses suffered in situations except when a landlord's negligence or at fault in a residential lease agreement.

Philadelphia Indemnity Insurance Co. v. Carmen A. White (14-0086) arose out of a clothes-dryer fire that destroyed White's apartment and several others' apartments in the same complex. The insurer, Philadelphia, sued White under the terms of the lease, which provided that the tenant would be liable for any property losses that resulted from causes other than the landlord's negligence or fault. The jury found White was not negligent in causing the fire but was liable under the lease for the losses suffered. The trial court entered judgment for White, and Philadelphia appealed. The Court of Appeals affirmed the Trial Court's ruling by holding that (1) the lease clearly shifted liability to the tenant and (2) the lease provision violated the Texas Property Code's public policy because it exceeded the state's tenant liability.

The Texas Supreme Court (1) affirmed the court of appeals' finding that the lease clearly shifted liability to the tenant but (2) reversed and rendered judgment because the lease provision was not invalid on public policy grounds, and (3) remanded for further proceedings on the additional defenses asserted by the Tenant, which were not addressed by the court of appeals. The Court explained that in order for the lease provision to violate public policy, the tenant must establish that the provision cannot be performed without violating the Property Code. In other words, the Court will "read the agreement in conformity with the limitations imposed in the Property Code and refuse enforcement only when enforcement would create an actual conflict with the statute." Where the agreement is capable of being performed without violation of the statute, the tenant "must establish [the agreement's] invalid under the particular circumstances" to avoid enforcement of the agreement.

In this case, the Texas Property Code does not impose a duty on the landlord to repair tenant-caused conditions. Because the tenant failed to establish that she did not cause the condition, the tenant failed to meet the burden of proof required to establish that the agreement was invalid under these particular circumstances.