06.24.19

June 24, 2019

Over the last two weeks, the Texas Supreme Court has issued five opinions and no grants. This blog discusses three of these recent opinions, which provide guidance on several important issues.

In Thomas A. LaLonde Jr., P.E., et al. v. Paul Gosnell and Kim Gosnell, the Texas Supreme Court ruled on whether a Defendant engineer has waived their right of dismissal of a lawsuit when the Plaintiff failed to file a certificate of merit as required by Section 150.002 of the Texas Practice and Remedies Code but the Defendant engineer engaged substantially in the process of litigation. In this case, the Gosnell family, who had hired a group of engineers to work on the foundation of their home, filed suit claiming that the engineers caused significant damage to their home. Although the Gosnell family failed to file a certificate of merit as required under Section 150.002, the engineers did not move to dismiss the case. Instead, over the next eighteen months, the engineers filed pleadings and engaged in substantial discovery, including responding to discovery requests, designating expert witnesses, moving to designate responsible third parties, supplementing their pleadings, and engaging in two mediations. A few weeks before trial, the engineers sought dismissal of the case based on the failure to file a certificate of merit. The trial court granted this motion, and the Gosnell family appealed. The appellate court reversed holding that due to the totality of the circumstances, the engineers "...engagement in the judicial process indicated their intention to litigate and amounted to waiver."

On review, the Texas Supreme Court first noted that, "...the universal test for implied waiver by litigation conduct is whether the party's conduct...clearly demonstrates the party's intent to relinquish, abandon, or waive the right at issue-whether the right originates in a contract, statute, or the constitution." When a party's conduct shows an intent to waive, a court must take into account the totality of the circumstances. Second, the Court clarified that the absence of a specific deadline by which to seek dismissal based on failure to comply with Section 150.002 does not mean that the right to seek such a dismissal cannot be waived. Third, the Court considered the totality of circumstances, including the engineers' extensive participation in discovery and mediation, the amount of time the litigation has been pending, and the proximity to trial, and concluded that, "the Engineers impliedly waived the right to seek dismissal under Section 150.002."

In Joy Worsdale et al. v. City of Killeen, a wrongful death case, the Texas Supreme Court ruled on whether the City of Killeen had "actual notice" as required by section 101.101(c) of the Tort Claims Act when the evidence established that the City knew: (1) a crash investigation identified the particular road hazard and the absence of any warning indicators as contributing to the accident; (2) maintenance of the road was alleged to be the municipal defendant's responsibility; (3) it had annexed and never officially abandoned the property; and (4) shortly after the crash, it complied with the accident investigator's instructions to remove the dirt mound and install permanent barricades and signage.

Noting that "actual notice" requires "a governmental unit's subjective awareness of its alleged fault producing or contributing to the death, injury, or property damage," the Court held that the evidence "conclusively establishes the governmental unit had actual notice it may be responsible for the deaths of two motorists whose vehicle struck an unbarricaded dirt mound completely blocking an unlit country road."

In Rhaul K. Nath, M.D. v. Texas Children's Hospital and Baylor College of Medicine, the Texas Supreme Court reviewed a second appeal of a $1.4 million sanction awarded to the Hospital as reasonable and necessary attorney's fees.

During the first appeal, the Court agreed that Dr. Nath's pleadings were groundless and sanctionable, but remanded for a reassessment of the amount awarded as "a party cannot arbitrarily shift the entirety of its costs on its adversary simply because it ultimately prevails on a motion for sanctions." On remand, additional affidavits were submitted in support of the fees, and the trial court reassessed the same $1.4 million sanction.

Noting that "there must be some evidence of reasonableness" before a court may exercise its discretion to shift attorney's fees as a sanction, the Court evaluated whether the additional affidavits submitted by the Hospital satisfied the prevailing parties' burden "to put forth some affirmative evidence of attorney's fees incurred and how those fees resulted from or were caused by the sanctionable conduct." Because the affidavits "merely reference the fees without substantiating either the reasonable hours worked or the reasonable hourly rate," they are conclusory and legally insufficient to justify the sanction awarded. For these reasons, the Court reversed and remanded for further proceedings.