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Court of Appeals of Texas, Houston (1st Dist.).

TEJAS TUBULAR PRODUCTS, INC., Appellant

v.

MAXIMO PALACIOS, Appellee

NO. 01-21-00136-CV

|

November 18, 2021

On Appeal from the 151st District Court

Harris County, Texas

Trial Court Case No. 2020-76668

Panel consists of Chief Justice Radack and Justices Rivas-Molloy and Guerra.

MEMORANDUM OPINION

Veronica Rivas-Molloy Justice

Opinion issued November 18, 2021.

Appellant Tejas Tubular Products, Inc. (“Tejas Tubular”) appeals the trial court’s order denying its motion to compel arbitration of Appellee Maximo Palacios’ (“Palacios”) negligence claim. In its sole issue, Tejas Tubular contends the trial court erred in denying its motion. We reverse and remand.

Background

Palacios sued Tejas Tubular, a non-subscribing employer, for negligence stemming from an alleged hand injury he claims he sustained while cleaning a piece of machinery in the course and scope of his employment. Palacios sought recovery of actual damages, past and future lost wages, medical expenses, damages for pain and suffering, mental anguish, and impairment, punitive damages, and attorney’s fees.

Tejas Tubular filed an “Original Answer Subject to Arbitration Rights.” It then moved to compel arbitration under the Federal Arbitration Act (“FAA”), asserting Palacios entered into an arbitration agreement with Tejas Tubular and his negligence claim was subject to arbitration. Tejas Tubular attached to its motion the business records affidavit of its records custodian, Dimitra Goode, which included authenticated copies of (1) an “Acknowledgement of Receipt and Notice of Mutual Agreement to Arbitrate, Summary Plan Description, and Other Nonsubscriber Documents” signed by Palacios on November 30, 2017, and (2) the “Mutual Agreement to Arbitrate.”

Palacios filed a response to the motion to compel arbitration, claiming the Mutual Agreement to Arbitrate (“Arbitration Agreement”) explicitly excludes workers’ compensation claims from its scope of coverage and his negligence claim against Tejas Tubular, a non-subscribing employer, qualifies as a workers’ compensation claim. He thus argued that arbitration could not be compelled because his claim fell outside the scope of the Arbitration Agreement. Tejas Tubular replied asserting Section 6(c) of the Arbitration Agreement delegates the determination of the scope and arbitrability of any claim to the arbitrator. Tejas Tubular further argued Palacios’ negligence claim falls within the scope of the Arbitration Agreement.

The trial court denied Tejas Tubular’s motion to compel arbitration and Tejas Tubular appealed.1

Standard of Review

We review interlocutory appeals of orders denying motions to compel arbitration for an abuse of discretion. Valerus Compression Servs., LP v. Austin, 417 S.W.3d 202, 207 (Tex. App.—Houston [1st Dist.] 2013, no pet.). We defer to the trial court’s factual determinations if they are supported by the evidence and review questions of law de novo. Id. We will reverse the trial court’s ruling only when “it acts in an arbitrary or unreasonable manner, without reference to any guiding rules or principles.” In re Nitla S.A. de C.V., 92 S.W.3d 419, 422 (Tex. 2002, orig. proceeding) (per curiam).

Applicable Law

A party seeking to compel arbitration must establish that (1) a valid, enforceable arbitration agreement exists and (2) the claims asserted fall within the scope of that agreement. Valerus Compression Servs., 417 S.W.3d at 207; In re Provine, 312 S.W.3d 824, 828 (Tex. App.—Houston [1st Dist.] 2009, orig. proceeding). The existence of a valid arbitration agreement is a legal question. In re D. Wilson Constr. Co., 196 S.W.3d 774, 781 (Tex. 2006). In interpreting an agreement to arbitrate, we apply ordinary contract principles. J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 227 (Tex. 2003); In re Houston Progressive Radiology Assocs., PLLC, 474 S.W.3d 435, 443 (Tex. App.—Houston [1st Dist.] 2015, no pet.).

When, as here, a party asserts a right to arbitration under the FAA, we determine whether a dispute is subject to arbitration under federal law. See Prudential Secs. Inc. v. Marshall, 909 S.W.2d 896, 899 (Tex. 1995). Under the FAA, any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration. See id. (citing Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24–25 (1983)). The policy in favor of enforcing arbitration agreements is so compelling that a court should compel arbitration “unless it can be said with positive assurance that an arbitration clause is not susceptible of an interpretation which would cover the dispute at issue.” Prudential Secs. Inc., 909 S.W.2d at 899 (emphasis in original) (citing Neal v. Hardee’s Food Sys., Inc., 918 F.2d 34, 37 (5th Cir. 1990)).

Arbitration Agreement

Tejas Tubular established the existence of an arbitration agreement, and Palacios does not challenge enforceability of the agreement. Thus, the question before us is whether Palacios’ claim is arbitrable and who determines this threshold issue of arbitrability. The parties’ Arbitration Agreement includes the following relevant provisions:

6. Scope of Arbitration Agreement

a. Claims Covered by this Agreement

This Agreement is mutual, covering all claims that Company or Claimant may have, including but not limited to, claims for negligence, gross negligence, and all claims for personal injuries, physical impairment, disfigurement, pain and suffering, mental anguish, wrongful death, survival actions, loss of consortium and/or services, medical and hospital expenses, expenses of transportation for medical treatment, expenses of drugs and medical appliances, emotional distress, exemplary or punitive damages and any other loss, detriment or claim of whatever kind and character.

b. Claims Not Covered by This Agreement

This agreement does not apply to:

....

(ii) Workers’ Compensation Benefits under the Texas Workers’ Compensation Act or any other similar state or federal law;

....

Nothing in this Agreement precludes the parties from agreeing to resolve claims that are otherwise not covered by this Agreement the same as if they were Covered Claims.

c. Arbitrability of Particular Dispute

Any question as to the arbitrability of any particular claim shall be arbitrated pursuant to the procedures set forth in this Agreement.

Analysis

Tejas Tubular contends the trial court erred by denying its motion to compel arbitration. It argues that, as a threshold matter, arbitration is mandated because Section 6(c) of the Arbitration Agreement delegates arbitrability determinations to the arbitrator. Thus, an arbitrator and not the trial court should determine whether Palacios’ negligence claim is subject to arbitration and whether the exception under 6(b) of the Arbitration Agreement applies. Beyond this threshold error, Tejas Tubular argues arbitration is mandated because Palacios’ claim falls within the scope of the Arbitration Agreement. In response, Palacios argues the trial court properly denied the motion to compel arbitration because his claim falls outside the scope of the Arbitration Agreement and its delegation provision. He asserts Section 6(b) of the Arbitration Agreement excludes workers’ compensation claims from its coverage and his negligence claim qualifies as a workers’ compensation claim.

“Whether parties have agreed to arbitrate is a gateway matter ordinarily committed to the trial court ....” Jody James Farms, JV v. Altman Group, Inc., 547 S.W.3d 624, 631 (Tex. 2018) (citing In re Rubiola, 334 S.W.3d 220, 224 (Tex. 2011)). “Parties can, however, agree to have the arbitrator determine gateway issues such as arbitrability of claims.” See RSL Funding, LLC v. Newsome, 569 S.W.3d 116, 121 (Tex. 2018); see also Myrtle Consulting Grp., LLC v. Resulting Partners, Inc., No. 01-20-00095-CV, 2021 WL 2231248, at *8 (Tex. App.—Houston [1st Dist.] June 3, 2021, no pet.) (mem. op.). We enforce clauses delegating arbitrability when there is “clear and unmistakable” evidence establishing the parties’ intent to delegate the matter to the arbitrator. Henry Schein, Inc. v. Archer & White Sales, Inc., –– U.S. —, 139 S. Ct. 524, 527, 531 (2019) (holding FAA “allows parties to agree by contract that an arbitrator, rather than a court, will resolve threshold arbitrability questions”); RSL Funding, 569 S.W.3d at 120 (“Arbitration clauses that assign gateway questions such as the arbitrability of the dispute are an established feature of arbitration law.”) (citing Rent-A-Ctr., W., Inc. v. Jackson, 561 U.S. 63, 68–69 (2010)). The “unmistakable clarity standard” serves the principle that “ ‘a party can be forced to arbitrate only those issues it specifically has agreed to submit to arbitration’ and protects unwilling parties from compelled arbitration of matters they reasonably expected a judge, not an arbitrator, would decide.” Jody James Farms, 547 S.W.3d at 631 (quoting First Options of Chi., Inc. v. Kaplan, 514 U.S. 938, 943 (1995)). To determine whether an agreement provides “clear and unmistakable evidence” of delegation, we consider “the specific language of the Arbitration Agreement.” Burlington Res. Oil & Gas Co., LP v. San Juan Basin Royalty Trust, 249 S.W.3d 34, 41 (Tex. App.—Houston [1st Dist.] 2007, pet. denied) (citing Kaplan, 514 U.S. at 944).

Tejas Tubular contends Section 6(c) of the Arbitration Agreement constitutes a clear and unmistakable expression of the parties’ intent to have the arbitrator decide arbitrability. Section 6(c) states: “Any question as to the arbitrability of any particular claim shall be arbitrated pursuant to the procedures set forth in this Agreement.” Tejas Tubular argues that because the parties’ enforceable Arbitration Agreement clearly and unmistakably delegates arbitrability to the arbitrator, the trial court was required to compel arbitration to permit the arbitrator to decide this gateway arbitrability issue.

Palacios argues the delegation provision in Section 6(c) does not apply to his claim because the terms of the Arbitration Agreement exclude his specific claim from arbitration. He points to Section 6(b) of the Arbitration Agreement which states “[t]his agreement does not apply to ... Workers’ Compensation Benefits under the Texas Workers’ Compensation Act or any other similar state or federal law[.]” In support of his argument, Palacios relies on the Fifth Circuit’s decision in Archer & White Sales Co., Inc. v. Henry Schein, Inc., 935 F.3d 274 (5th Cir. 2019).

In Archer, the plaintiff sued the defendants for alleged violations of federal and Texas antitrust law and sought money damages and injunctive relief. See id. at 277. The parties’ contract included the following arbitration clause:

Disputes. This Agreement shall be governed by the laws of the State of North Carolina. Any dispute arising under or related to this Agreement (except for actions seeking injunctive relief and disputes related to trademarks, trade secrets, or other intellectual property of Pelton & Crane), shall be resolved by binding arbitration in accordance with the arbitration rules of the American Arbitration Association [ (AAA) ]....”

Id. The defendants invoked the FAA and moved to compel arbitration. See id. at 278–79. The plaintiff opposed the motion, arguing its complaint sought injunctive relief and the arbitration clause explicitly excluded actions seeking such relief from arbitration. See id. at 278. After the magistrate judge granted the motion, the district court vacated the order concluding the action fell within the arbitration clause’s express exclusion of actions seeking injunctive relief. See id. Relying on a then-established narrow exception, the Fifth Circuit affirmed, holding the threshold arbitrability question should be decided by the district court. See id. The United States Supreme Court vacated the lower court’s judgment, eliminated the relied-upon exception, and remanded the case for the Fifth Circuit to determine whether clear and unmistakable evidence existed of the parties’ intent to delegate the issue of arbitrability to the arbitrator. See Henry Schein, Inc. v. Archer & White Sales, Inc., 139 S. Ct. 524, 531 (2019).

The Court held that “[w]hen the parties’ contract delegates the arbitrability question to an arbitrator, a court may not override the contract.” Id. at 529. “In those circumstances, a court possesses no power to decide the arbitrability issue ... even if the court thinks that the [arbitrability claim] is wholly groundless.” Id.

On remand, the Fifth Circuit noted that while it was undisputed the parties’ agreement incorporated the AAA rules delegating the threshold arbitrability inquiry to the arbitrator for at least some category of cases, the parties disputed the relationship of the carve-out clause—exempting actions seeking injunctive relief from arbitration—and the incorporation of the AAA rules. See Archer, 935 F.3d at 280. The Fifth Circuit concluded

[T]he placement of the ‘carve-out’ here is dispositive. We cannot re-write the words of the contract. The most natural reading of the arbitration clause at issue here states that any dispute, except actions seeking injunctive relief, shall be resolved in arbitration in accordance with the AAA rules. The plain language incorporates the AAA rules—and therefore delegates arbitrability—for all disputes except those under the cave-out. Given that carve-out, we cannot say that the Dealer Agreement evinces a “clear and unmistakable” intent to delegate arbitrability.

Id. at 281–82 (emphasis in original).

Palacios argues that, just as in Archer, the terms of the Arbitration Agreement exclude his negligence claim from arbitration, and thus the delegation provision in Section 6(c) is inapplicable.2 Archer is inapposite. Unlike the case before us, the agreement in Archer did not have an express delegation provision but instead incorporated AAA rules granting the arbitrator the power to determine his or her own jurisdiction, including questions related to the existence, scope, or validity of an arbitration agreement and the arbitrability of any claim. See id. at 279–80. The Fifth Circuit concluded that “[t]he parties could have unambiguously delegated [the arbitrability] question, but they did not, and we are not empowered to re-write their agreement.” Id. at 282. Here, by contrast, the specific language of the delegation provision and its placement under Section 6 of the Arbitration Agreement, entitled “Scope of Agreement,” reflect the parties’ clear and unmistakable intent that the arbitrator determine as a threshold matter the “arbitrability of any particular claim.” See RSUI Indem. Co. v. The Lynd Co., 466 S.W.3d 113, 118 (Tex. 2015) (“No one phrase, sentence, or section [of a contract] should be isolated from its setting and considered apart from the other provisions.”) (quoting Forbau v. Aetna Life Ins. Co., 876 S.W.2d 132, 134 (Tex. 1994)); Burlington Res. Oil & Gas, 249 S.W.3d at 41 (stating courts consider specific language of arbitration agreement in determining whether agreement provides “clear and unmistakable evidence” of delegation).

We further note that Palacios’ contractual interpretation is not supported by the express terms of the Arbitration Agreement. Holding the delegation provision in Section 6(c) applies solely to Section 6(a), as Palacios suggests, would require us to rewrite the parties’ agreement, which we cannot do. See Archer, 935 F.3d at 282. Section 6 of the Arbitration Agreement identifies two categories of claims: (1) “Claims Covered by this Agreement,” under Section 6(a) and (2) “Claims Not Covered by this Agreement,” under Section 6(b). In Section 6(b), the parties expressly refer to the claims in Section 6(a) as the “Covered Claims.” The delegation provision in Section 6(c), however, is not limited to “Covered Claims.” Instead, it provides that “[a]ny question as to the arbitrability of any particular claim shall be arbitrated pursuant to the procedures set forth in this Agreement.” (Emphasis added). The parties thus agreed to a broad delegation clause and they are bound by their agreement. See Jody James Farms, 547 S.W.3d at 631 (“Arbitration is a matter of contract, and that which the parties agree must be arbitrated shall be arbitrated.”).

Because the parties clearly and unmistakably delegated questions about “the arbitrability of any particular claim” to the arbitrator, the trial court abused its discretion by removing that issue from the arbitrator and denying Tejas Tubular’s motion to compel arbitration.

We sustain Tejas Tubular’s issue.3

Conclusion

We reverse the trial court’s order and remand the case to the trial court with instructions that it compel the parties to arbitration.

Footnotes

1

We have jurisdiction over the court’s interlocutory order. The Federal Arbitration Act (“FAA”) permits an interlocutory appeal from an order denying a motion to compel arbitration. See 9 U.S.C. § 16; see also TEX. CIV. PRAC. & REM. CODE § 51.016 (providing for appeal of interlocutory order denying motion to compel arbitration under FAA).

2

Palacios argues his negligence claim for damages is a claim for “Worker’s Compensation Benefits under the Texas Worker’s Compensation Act” excluded from the scope of the Arbitration Agreement. Tejas Tubular disputes this contention arguing Palacios’ claim is not a statutory claim, but rather a common-law negligence claim subject to arbitration.

3

Given our disposition of this threshold issue, we do not address Tejas Tubular’s argument that arbitration is mandated because Palacios’ claim falls within the scope of the arbitration agreement.

Court of Appeals of Texas, Houston (1st Dist.).

H-E-B, LP D/B/A JOE V’S SMART SHOP, Appellant

v.

MARIA SAENZ, Appellee

NO. 01-20-00850-CV

|

Opinion issued October 12, 2021

On Appeal from the 269th District Court

Harris County, Texas

Trial Court Case No. 2019-63447

Panel consists of Justices Kelly, Landau, and Hightower.

MEMORANDUM OPINION

Peter Kelly Justice

This is an interlocutory appeal from an order denying a motion to compel arbitration. TEX. CIV. PRAC. & REM. CODE § 51.016. Appellee Maria Saenz sued H.E.B., LP d/b/a Joe V’s Smart Shop (“HEB”), a nonsubscriber to Texas’s statutory workers’ compensation system, claiming that HEB’s negligence and the condition of the premises caused her workplace injury. HEB moved to compel arbitration based on a clause in its benefits agreement. Saenz argued procedural unconscionability as a defense to the motion to compel arbitration. The trial court denied the motion to compel arbitration, and HEB appealed. We reverse.

Background

While working as a baker for HEB, Saenz was struck by a forklift inside the store. Her injuries required back surgery. After Saenz filed suit, HEB moved to compel arbitration under the Work Injury Benefit Plan, which provided, among other things:

Partners agree that any and all disputes, claims (whether tort, contract, statutory or otherwise) and/or controversies which relate, in any manner to this agreement, the Plan or the Trust, or to any on-the-job or occupational injury, death or disease of Partner shall be submitted to final and binding arbitration under the Federal Arbitration Act in accordance with the terms and conditions outlined below. The claims covered by this agreement to arbitrate include, but are not limited to, those claims which relate to the following: ... claims for damages or monetary [sic] ....”

HEB relied on Saenz’s electronic signature on the “Partner Acknowledgment, Indemnity Agreement and Accidental Death Beneficiary Designation Form,” which provided:

I have received, read, and understood the H-E-B Work Injury Benefit Summary Plan Description. I have had the opportunity to ask questions regarding this Plan. I understand my employment with H-E-B constitutes an acceptance of the terms of the Plan. My signature below confirms:

....

• I understand my acceptance of employment with H-E-B constitutes an acceptance of the benefits under the Plan and my agreement to arbitrate disputes.

In response to the motion to compel arbitration, Saenz asserted procedural unconscionability and provided an affidavit in which she averred that she does not read or write English and that she ordinarily relies on her children to translate for her. She argued that she was pressured to electronically sign the documents in English and did not have time to review the documents or have them translated. She said that she completed the documents at an HEB store, and when she asked questions, HEB supervisors and department managers told her to keep answering questions, that she was “doing it right,” and not to worry because she was “answering correctly.” Saenz averred that she did not understand the English-language documents, and nobody informed her that she was waiving her right to sue HEB if a conflict arose.

The trial court held an evidentiary hearing on the motion to compel arbitration. The court heard testimony from Saenz and from Gladys Makiya Suma-Kieta, who was a “team administrator assistant” at the grocery store where Saenz was employed.

Suma-Kieta explained the recruitment and hiring process. She said that all applications are initially received online because HEB does not have an in-person application process. The application is available online in both English and Spanish, and Spanish-speaking applicants are interviewed in Spanish. Suma-Kieta called successful candidates to inform them that they would receive New Hire Paperwork that would be sent to the email address provided by the applicant in the application. Suma-Kieta instructed the successful candidates to verify their email addresses and to ask for clarification or not sign the documents if they did not understand them. Suma-Kieta testified that successful applicants are given a unique identification number and password, both of which must be entered into the electronic New Hire Paperwork forms provided through the email sent to the email address provided by the applicant. Suma-Kieta said that New Hire Paperwork could be accessed only through the email sent to the successful applicants. According to Suma-Kieta, this was the exclusive way to complete the New Hire Paperwork.

After the forms are electronically signed, HEB receives a notification that the documents have been completed, and it schedules new employees to attend a pre-employment orientation meeting at which they can ask questions about the documents they previously signed. New employees may choose to attend an orientation meeting conducted by Suma-Kieta in English or an orientation meeting conducted by store manager Tony Palomin in Spanish. Suma-Kieta attended the orientation meeting conducted in Spanish to provide support to Palomin as needed. A copy of the Work Injury Benefit Plan summary is provided to new employees at the orientation meeting.

Suma-Kieta testified an email was sent to the email address provided on Saenz’s application, which belonged to Saenz’s son.1 The email included a link to complete the required forms in English or in Spanish and a summary of the Work Injury Benefit Plan to review before signing the acknowledgement. HEB introduced copies of the electronic New Hire Paperwork electronically signed by Saenz on August 21, 2015.

Suma-Kieta attended the orientation meeting that Saenz attended, which was led by Palomin in Spanish. Saenz did not ask any questions. Suma-Kieta also testified that Saenz was given a summary plan description of the HEB Work Injury Benefit Plan in English and in Spanish when she came to work for HEB.

Saenz testified in Spanish with an interpreter. She said that Spanish is her primary language and that she does not speak, write, or understand English. Saenz testified that her son completed the online application for her and with her consent, and an HEB employee helped her with the new hire paperwork. Saenz testified that she had no access to her son’s email account.

Saenz testified that she never saw the email with the link to complete the new hire documentation in Spanish. She testified that she went to the HEB store, where she asked a supervisor, “Mr. Abel,” for help completing the New Hire Paperwork, and he directed another employee, “Mr. Jorge,” to help her.2 Saenz testified that she consented to Jorge’s help with the computer. She said that Jorge completed the new hire paperwork for her, in English, asking her for personal information needed to complete the documentation. She said that Jorge did all the typing; she did not press a single key.

The trial court judge asked Saenz several questions, with consent of counsel.

Court: Did Joe V’s [HEB] or any of their employees give you the opportunity to have a Spanish application?

Saenz: No, sir.

Court: Did you ever ask Joe V’s [HEB] for a Spanish application?

Saenz: No. No.

Court: Did you ever complain to any of the folks conducting the application process that you did not understand the English application?

Saenz: Yes. I was making the comments to Mr. Abel Valdez that a lot of things I was not understanding; and he would just tell me, “Don’t worry, Maria. You’re already here.”

Court: Did any of the Joe V’s employees tell you anything else regarding the application?

Saenz: No.

Court: Did any of either ... Mr. Palomin [the store manager]—or Jorge or Abel or anybody else try to explain any of the documents to you?

Saenz: No, never. After they helped me out, filling out the applications, nobody made any other comment; and that’s when I made the comment to Mr. Abel that I didn’t understand a lot of the papers.

The trial court stated on the record that it “found Ms. Saenz to be very credible.” The court denied the motion to compel arbitration, and HEB appealed.

Analysis

On appeal, HEB argues in two issues that (1) it established that Saenz agreed to arbitrate disputes against HEB arising from on-the-job injuries and that her claims fall within the scope of that agreement, and (2) Saenz failed to establish that her agreement to arbitrate is unenforceable due to procedural unconscionability. Saenz argues that the circumstances under which she completed the electronic New Hire Paperwork forms when she was hired by HEB were unconscionable because she is illiterate in English, an HEB employee assisted her in completing the New Hire Paperwork in English but did not explain anything about arbitration to her, and she was not given an opportunity to review the relevant documents in Spanish.

I. Standard of review

We have jurisdiction to review an interlocutory order denying a motion to compel arbitration. See TEX. CIV. PRAC. & REM. CODE § 51.016 (FAA). We review a trial court’s order denying a motion to compel arbitration for abuse of discretion, deferring to factual findings that are supported by evidence and determining legal questions de novo. Parker v. Schlumberger Tech. Corp., 475 S.W.3d 914, 922 (Tex. App.—Houston [1st Dist.] 2015, no pet.). Under the abuse of discretion standard, we will reverse the trial court’s ruling only when “it acts in an arbitrary or unreasonable manner, without reference to any guiding rules or principles.” In re Nitla S.A. de C.V., 92 S.W.3d 419, 422 (Tex. 2002) (per curiam).

II. Arbitration

A party seeking to compel arbitration must establish (1) the existence of a valid arbitration agreement and (2) that the claims asserted are within the scope of that agreement. Venture Cotton Coop. v. Freeman, 435 S.W.3d 222, 227 (Tex. 2014); Parker, 475 S.W.3d at 922. “Upon such proof, the burden shifts to the party opposing arbitration to raise an affirmative defense to the agreement’s enforcement.” Venture Cotton Coop., 435 S.W.3d at 227. We apply ordinary contract principles to determine the existence of a valid agreement to arbitrate and any defenses. See In re Kellogg Brown & Root, Inc., 166 S.W.3d 732, 738 (Tex. 2005).

Ordinarily, we presume that an unambiguous contract reflects the intent of the contracting parties, and we enforce them as written. Venture Cotton Coop., 435 S.W.3d at 228; see Royston, Rayzor, Vickery, & Williams, LLP v. Lopez, 467 S.W.3d 494, 501 (Tex. 2015) (party to written agreement is presumed to have knowledge of and understand its contents); EZ Pawn Corp. v. Mancias, 934 S.W.2d 87, 90 (Tex. 1996) (same); see also In re U.S. Home Corp., 236 S.W.3d 761, 764 (Tex. 2007) (“Like any other contract clause, a party cannot avoid an arbitration clause by simply failing to read it.”). An arbitration agreement need not be signed so long as it is in writing and agreed to by the parties. See In re AdvancePCS Health L.P., 172 S.W.3d 603, 606 (Tex. 2005) (enforcing arbitration provision referenced and agreed to in numerous enrollment forms).

II. Unconscionability

A contract or arbitration provision may be avoided, however, if the party opposing enforcement proves a defense, such as unconscionability. See In re Palm Harbor Homes, Inc., 195 S.W.3d 672, 677 (Tex. 2006). When a party asserts unconscionability as a defense to a motion to compel arbitration, the party must demonstrate that the unconscionability relates to the arbitration provision, not the contract as a whole. Royston, Rayzor, Vickery, & Williams, LLP, 467 S.W.3d at 501 (“[C]hallenges relating to an entire contract will not invalidate an arbitration provision in the contract; rather challenges to an arbitration provision in a contract must be directed specifically to that provision.”); In re FirstMerit Bank, N.A., 52 S.W.3d 749, 756 (Tex. 2001) (same).

“Unconscionability principles are applied to prevent unfair surprise or oppression.” Palm Harbor Homes, 195 S.W.3d at 679. “Substantive unconscionability refers to the fairness of the arbitration provision itself, whereas procedural unconscionability refers to the circumstances surrounding adoption of the arbitration provision.” Id. at 677.

“The principle [of procedural unconscionability] is one of preventing oppression and unfair surprise and not of disturbing allocation of risks because of superior bargaining power.” FirstMerit Bank, 52 S.W.3d at 757. “[T]he circumstances surrounding the negotiations must be shocking” to warrant a finding of procedural unconscionability. LeBlanc v. Lange, 365 S.W.3d 70, 88 (Tex. App.—Houston [1st Dist.] 2011, no pet.). “Absent fraud, misrepresentation, or deceit, a party is bound by the terms of the contract he signed, regardless of whether he read it or thought it had different terms.” In re McKinney, 167 S.W.3d 833, 835 (Tex. 2005).

Gross disparity in bargaining position is not evidence of procedural unconscionability, nor is an employer’s “take it or leave it” offer to at-will employees procedurally unconscionable. In re Halliburton Co., 80 S.W.3d 566, 572 (Tex. 2002) (“Because an employer has a general right under Texas law to discharge an at-will employee, it cannot be unconscionable, without more, merely to premise continued employment on acceptance of new or additional employment terms.”); see Palm Harbor Homes, 195 S.W.3d at 678 (“[A]dhesion contracts are not per se unconscionable or void.”). A party’s testimony that he did not understand the significance of his signature on a contract is not evidence of procedural unconscionability. See McKinney, 167 S.W.3d at 835. Likewise, testimony that a party is unsophisticated, or that she would not have signed the arbitration agreement if the concept of arbitration had been explained to her does not establish procedural unconscionability. Palm Harbor Homes, 195 S.W.3d at 679.

Illiteracy in English is also insufficient to prove procedural unconscionability when the agreement is either explained to the party or translated into a language in which the party is literate. See Superbag Operating Co., Inc. v. Sanchez, No. 01-12-00342-CV, 2013 WL 396247, at *6 (Tex. App.—Houston [1st Dist.] Jan. 31, 2013, no pet.) (mem. op.). Compare Delfingen US-Tex., L.P. v. Valenzuela, 407 S.W.3d 791, 802 (Tex. App.—El Paso 2013, no pet.) (finding procedural unconscionability where employee was illiterate in English, no Spanish language version of arbitration agreement was available, and employee was misled to believe that arbitration agreement was an attendance policy), with ReadyOne Indus., Inc. v. Casillas, 487 S.W.3d 254, 262 (Tex. App.—El Paso 2015, no pet.) (Spanish language version available and no evidence of misrepresentation of any terms), and Superbag Operating Co., 2013 WL 396247, at *6 (company supplied Spanish version of policies to employee, employee signed Spanish version of agreements, and no evidence showed that company rebuffed employee’s attempt to obtain more information).

III. A valid agreement to arbitrate exists, and Saenz’s claims are within its scope.

In this case, Saenz does not argue that no valid agreement to arbitrate exists or that her claims are not within the scope of the agreement. In response to the motion to compel arbitration, she provided an affidavit in which she averred that she completed the new hire paperwork at an HEB store, but the forms were in English, and her requests for help or translation were rebuffed by HEB employees. At the hearing on the motion to compel arbitration, she testified that she completed the paperwork at an HEB store, and when she asked for help, Abel Valdez, a supervisor, asked another employee named Jorge to assist her. According to Saenz, Jorge input all the information, and she did not press a single key. She said that Jorge asked her for personal information, which she provided. She said that she told him she did not understand the forms, and she testified that he told her they concerned an attendance policy.

HEB relies on Saenz’s electronic signature of August 21, 2015, on the New Hire Paperwork.3 The file included many acknowledgements of distinct HEB policies, including an acknowledgment of HEB’s Work Injury Benefit Plan. At the bottom of the acknowledgment of HEB’s work injury benefit plan, the following statement and fill-in spaces appeared:

Tabular or graphical material not displayable at this time.

The Work Injury Benefit Plan was an alternative to HEB’s participation in the worker’s compensation program under the Texas Worker’s Compensation Act (“TWCA”). The Plan included an arbitration provision, which provides:

Partners agree that any and all disputes, claims (whether tort, contract, statutory or otherwise) and/or controversies which relate, in any manner to this agreement, the Plan or the Trust, or to any on-the-job or occupational injury, death or disease of Partner shall be submitted to final and binding arbitration under the Federal Arbitration Act in accordance with the terms and conditions outlined below.

The arbitration provision also provided: “Adequate consideration for this arbitration requirement is represented by, among other things, your eligibility for benefits under this Plan and the fact that it is mutually binding on both the Company and you.”

A. Electronic signature

In Aerotek, Inc. v. Boyd, the Texas Supreme Court discussed the type of evidence needed to prove the authenticity of an electronic signature under the Texas Uniform Electronic Transactions Act. 624 S.W.3d 199, 201 (Tex. 2021). The Texas Uniform Electronic Transactions Act provides that “[a]n electronic record or electronic signature is attributable to a person if it was the act of the person.” TEX. BUS. & COM. CODE § 322.009(a). “The act of the person may be shown in any manner, including a showing of the efficacy of any security procedure applied to determine the person to which the electronic record or electronic signature was attributable.” Id. The Act defines “security procedure” as “a procedure employed for the purpose of verifying that an electronic signature ... is that of a specific person or for detecting changes or errors in the information in an electronic record.” Id. § 322.002(13). Security procedures may include “the use of algorithms or other codes, identifying words or numbers, encryption, or callback or other acknowledgment procedures.” Id. For example, security procedures may include:

requiring personal identifying information—such as a social security number or an address—to register for an account; assigning a unique identifier to a user and then tying that identifier to the user’s actions; maintaining a single, secure system for tracking user activities that prevents unauthorized access to electronic records; business rules that require users to complete all steps in a program before moving on or completing it; and timestamps showing when users completed certain actions.

Aerotek, 624 S.W.3d at 205–06. It is the “efficacy of the security procedure” that connects the electronic record to “the person to whom the record is attributed.” Id. at 206. “A record that cannot be created or changed without unique, secret credentials can be attributed to the one person who holds those credentials.” Id.

Suma-Kieta testified about the security procedures used by HEB. First, she said that the initial job application is available only online, not in paper form. She said that after interviews, she calls successful candidates to inform them that New Hire Paperwork will be sent to the email address provided by the applicant in the initial application. New employees are assigned a unique identification number and password, both of which must be entered into the New Hire Paperwork forms, which can only be accessed by a link in the email sent to the email address provided by the applicant in the initial application. She testified that this is the only way a new employee can complete the New Hire Paperwork. In addition, HEB offered printed copies of Saenz’s New Hire Paperwork, which showed her unique identification number.

Here, the New Hire Paperwork could not be created without unique, secret credentials, and therefore Saenz’s New Hire Paperwork, completed electronically, can be attributed to her. Therefore, the completion of the forms is considered her act, even if Jorge helped her physically input the information into the computer and without regard to whether she personally saw or read the electronic forms. See TEX. BUS. & COM. CODE § 322.009(a); Aerotek, 624 S.W.3d at 205–06. By enacting the Uniform Electronic Transactions Act, effective with safeguards, the Legislature announced the public policy of the state and provided the statutory framework for its implementation. See Fairfield Ins. Co. v. Stephens Martin Paving, LP, 246 S.W.3d 653, 665 (Tex. 2008) (“The Legislature determines public policy through the statutes it passes.”). Thus, we must conclude that Saenz electronically signed the documentation, including the acknowledgment of the Work Injury Benefit Plan, which includes the arbitration requirement. See Odyssey 2020 Acad., Inc. v. Galveston Cent. Appraisal Dist., 624 S.W.3d 535, 543 (Tex. 2021) (quoting Lippincott v. Whisenhunt, 462 S.W.3d 507, 508 (Tex. 2015)) (“A court may not judicially amend a statute by adding words that are not contained in the language of the statute. Instead, it must apply the statute as written.”).

B. Acceptance by performance

In addition, Suma-Kieta testified that a Spanish language copy of the Work Injury Benefit Plan Summary Plan Description was provided to Saenz when she began work and that this document was typically provided to new employees at the in-person orientation session. Saenz subsequently began working for HEB, which under the Plan constitutes an acceptance of benefits. This is the kind of adhesory, take-it-or-leave-it offer that the Supreme Court has endorsed as effective to bind an employee to an arbitration agreement when the employer has provided notice of the benefit plan and informed the employee that continuing employment constitutes an acceptance of the agreement. See Halliburton, 80 S.W.3d at 572. Thus, under Texas Supreme Court precedent, we must conclude that by undertaking employment at HEB, Saenz accepted the arbitration agreement in the Work Injury Benefit Plan. See id.; see also Benson v. Chalk, 536 S.W.3d 886, 902 (Tex. App.—Houston [1st Dist.] 2017, pet. denied) (court of appeals bound to follow precedent of Texas Supreme Court).

C. On-the-job injury

Saenz’s claims in this case arise from an on-the-job injury. It is not disputed that these claims fall within the scope of the arbitration provision.

* * *

We conclude that the parties had a valid agreement to arbitrate and that Saenz’s claims are within the scope of that agreement.

IV. Saenz did not prove procedural unconscionability.

In the trial court and in this court, Saenz has argued that the arbitration agreement should not be enforced because the circumstances by which she completed the New Hire Paperwork were unconscionable. She argues that she is illiterate in English, that the New Hire Paperwork was not made available to her in Spanish, and that her questions about the substance of the New Hire Paperwork were rebuffed. The trial court stated on the record that it found Saenz to be credible. However, Texas Supreme Court precedent compels us to conclude that Saenz has not established procedural unconscionability in this case.

First, a party to a written agreement is presumed to have read and understood its contents. See Royston, Rayzor, Vickery, & Williams, 467 S.W.3d at 501. This is true whether she understood the consequence of her signature on the contract or not. See McKinney, 167 S.W.3d at 835. Second, illiteracy in English is insufficient to establish procedural unconscionability when a translation has been provided. See Superbag, 2013 WL 396247, at *6. Suma-Kieta testified—and the printed documents showed—that an option to complete the New Hire Paperwork in Spanish was provided in the email that was sent to Saenz’s son’s email address. In addition, a Spanish language version of the Work Injury Benefit Plan was provided to Saenz at the orientation meeting before she began work, and her undertaking of employment at HEB was considered acceptance of the agreement. See Halliburton, 80 S.W.3d at 572. Third, while there is some evidence that Saenz’s questions were rebuffed by Jorge and Abel, there is also undisputed evidence that Saenz asked no questions at the Spanish-language orientation session led by store-manager Palomin. As we have explained, under Texas Supreme Court precedent, the provision of a Spanish-language version of the Work Injury Benefit Plan is an independent basis upon which we must conclude that Saenz agreed to the arbitration requirement by undertaking employment with HEB. See id.

HEB’s procedures are not a model of transparency and disclosure, and they can lead a new employee to unwittingly waive the right to a jury trial. Nonetheless, we are not presented with shocking evidence of fraud, misrepresentation, or deceit, and we are bound by the policy determinations made by the Texas Supreme Court and the Texas Legislature. We hold that Saenz did not demonstrate procedural unconscionability.

Conclusion

We reverse the order of the trial court and render judgment compelling the parties to arbitrate Saenz’s claims.

Footnotes

1

The email address was Saenz’s son’s name @ the email service provider.

2

Saenz testified that she was at the store location where she later worked, but Suma-Kieta testified that the location where Saenz later worked was under construction at the time.

3

The New Hire Paperwork included an electronic signature agreement by which the newly hired employee agreed that typing in a unique “H-E-B Careers password” would have “the same force and effect” as a handwritten signature. The electronic signature agreement itself required the new employee to input a password, which appears as a series of asterisks in the printed copy of the New Hire Paperwork Digital File that was admitted into evidence at the hearing.

Court of Appeals of Texas, Houston (1st Dist.).

HARRIS COUNTY (SELF-INSURED), Appellant

v.

LEVENT DOGAN, Appellee

NO. 01-19-01006-CV

|

Opinion issued September 16, 2021

On Appeal from the 189th District Court

Harris County, Texas

Trial Court Case No. 2017-14504

Panel consists of Justices Kelly, Landau, and Hightower.

MEMORANDUM OPINION

Peter Kelly Justice

This is an appeal in a workers’ compensation case. Appellee Levent Dogan suffered a heart attack while training to be a Harris County Sheriff’s Office deputy. He sought workers’ compensation benefits, but a hearing officer and an administrative appeals panel found that his heart attack was not compensable and that he had no disability. Dogan sought judicial review in the district court, and a jury found that he did have a compensable heart attack. The trial court entered judgment in Dogan’s favor, finding that he sustained a compensable injury in the form of a heart attack and that he was disabled from March 10, 2016 to July 10, 2016. Harris County appealed.

On appeal, Harris County argues that (1) the court erred by entering judgment that Dogan suffered a disability because he did not request a jury question on disability and none was submitted to the jury; (2) the court erred by submitting a liability question asking whether Dogan suffered an “injury”; and (3) the judgment is void because Dogan did not comply with a statutory requirement to file a copy of the proposed judgment with the Division of Workers’ Compensation (the “Division”) prior to entry.

We conclude that Dogan’s failure to timely file with the Division the proposed judgment that was actually signed by the court rendered the trial court’s judgment void. We dismiss this appeal for want of jurisdiction.

Background

On March 9, 2016, Dogan suffered a heart attack after running a mile as part of his training to become a Harris County Sheriff’s Office deputy. He was taken by ambulance to an emergency room, and later, he underwent heart catheterization and the placement of four stents.

Dogan filed a claim for workers’ compensation. The parties failed to resolve disputed issues at a benefits review conference, and a contested case hearing was held, specifically addressing whether Dogan’s heart attack was a result of the natural progression of underlying disease or was caused by the physical stress and exertion during the work-related training exercises. The hearing officer found the following facts:

....

3. [Dogan’s] heart attack was not caused by a specific event occurring in the course and scope of his employment with Harris County as a corrections officer.

4. The preponderance of the medical evidence regarding the heart attack indicates that [Dogan’s] work was not a substantial contributing factor of the attack.

5. The preponderance of the medical evidence regarding the heart attack indicates that [Dogan’s] heart attack was a result of a pre-existing condition and the natural progression of that pre-existing condition.

6. The heart attack of March 9, 2016 was a cause of [Dogan’s] inability to obtain and retain employment at wages equivalent to his preinjury wage during the period in dispute, from March 10, 2016 through July 10, 2016, but at no other times through the date of the contested case hearing in this matter.

The hearing officer concluded that: (1) Dogan “did not sustain a compensable heart attack on March 9, 2016,” and (2) “[b]ecause the claimed injury is not compensable, [Dogan] had no disability.”

The appeals panel adopted the hearing officer’s decision and order, and Dogan filed a lawsuit seeking judicial review. Dogan challenged the conclusions that his “injury was not compensable and that he had no disability.” He challenged the determinations that “he did not sustain a compensable heart attack on March 9, 2016 and a follow-on injury on March 15, 2016” and that “he did not sustain disability.” A jury found that Dogan had sustained a compensable heart attack and received an injury in the course and scope of his employment with Harris County.

On August 30, 3019, Dogan moved for entry of judgment on the verdict and attached a proposed final judgment. He served the motion and proposed final judgment on the General Counsel for the Texas Department of Insurance, Division of Workers’ Compensation (“the Division”) by certified mail, return receipt requested. On September 23, 2019, Dogan requested that the trial court make findings of fact and conclusions of law and filed a second, revised proposed final judgment, which was served on the Division seven days before the trial court entered judgment.

The trial court entered findings of fact and conclusions of law regarding disability and based on the hearing officer’s report. On September 30, 2019, the trial court entered final judgment that Dogan sustained a compensable injury in the form of a heart attack and that he was disabled from March 10, 2016 to July 10, 2016. Harris County appealed.

Analysis

Harris County raises three issues on appeal, but we focus on its third issue, which is dispositive. In its third issue, Harris County argues that the trial court’s judgment is entirely void because Dogan failed to provide the Division of Workers’ Compensation a copy of the proposed judgment prior to entry in compliance with the Labor Code. The Texas Labor Code provides:

The party who initiated a proceeding under this subchapter [Subchapter F. Judicial Review—General Provisions] or Subchapter G [Subchapter G. Judicial Review of Issues Regarding Compensability or Income or Death Benefits] must file any proposed judgment or settlement, including a proposed default judgment or proposed agreed judgment, with the [D]ivision not later than the 30th day before the date on which the court is scheduled to enter the judgment or approve the settlement.

TEX. LABOR CODE § 410.258(a) (emphasis added). “Division” means the “division of workers’ compensation of the department,” and “department” means “the Texas Department of Insurance.” TEX. LABOR CODE § 401.011(13-a) (department); id. § 401.011(16-a) (division). Section 410.258 “gives the Division the right to intervene in a judicial review proceeding.” Univ. of Tex. Sys. v. Thomas, 464 S.W.3d 754, 758 (Tex. App.—Houston [1st Dist.] 2015, no pet.). Section 410.258(f) provides: “A judgment entered or settlement approved without complying with the requirements of this section is void.” TEX. LABOR CODE § 410.258(f).

Some courts of appeals have held that the notice requirement in section 410.258 does not apply to judgments entered after fully adversarial proceedings, such as contested summary-judgment motions or a trial. See, e.g., Ace Am. Ins. Co. v. Elmer, No. 05-19-00386-CV, 2020 WL 5525181, at *4 (Tex. App.—Dallas Sept. 15, 2020, pet. denied) (mem. op.); Clewis v. Safeco Ins. Co. of America, 287 S.W.3d 197, 202–03 (Tex. App.—Fort Worth 2009, no pet.); Tex. Property & Casualty Ins. Guaranty Ass’n for Petroinsurance Casualty Co. v. Brooks, 269 S.W.3d 645, 650 (Tex. App.—Austin 2008, no pet.). However, this court has held that compliance with the notice provision of section 410.258 “is both mandatory and jurisdictional, and failure to give the required notice renders a judgment void.” Metro. Transit Auth. v. Jackson, 212 S.W.3d 797, 800–01 (Tex. App.—Houston [1st Dist.] 2006, pet. denied). We have held that the notice requirement applies “in all cases” and that “regardless of whether the trial court renders judgment after an adversarial proceeding ... the party initiating judicial review of the Division’s decision must send notice of the proposed judgment to the Division pursuant to section 410.258 or the trial court’s judgment is void.” Thomas, 464 S.W.3d at 759.

Dogan sent the Division notice of the first proposed judgment he filed on August 30, 2019, and he sent the Division notice of his second, revised proposed judgment on September 23, 2019. The trial court signed the second, revised proposed judgment on September 30, 2019. Although Dogan served both proposed judgments with the Division, he failed to timely file the proposed judgment that was actually signed by the court by serving it a mere seven days—not 30 days—before the date on which the court was scheduled to enter judgment. Because Dogan did not comply with section 410.258(a)’s mandatory and jurisdictional notice requirement, we hold that the judgment is void. We sustain Harris County’s third issue. See TEX. LABOR CODE § 410.258(a) (requiring “any” proposed judgment to be filed with the Division); Thomas, 464 S.W.3d at 759 (failure to comply with statute renders trial court judgment void); Jackson, 212 S.W.3d at 800–01 (same; statute is mandatory and jurisdictional).

Conclusion

We dismiss the appeal for lack of appellate jurisdiction. See Thomas, 464 S.W.3d at 760; Jackson, 212 S.W.3d at 799 (“[A] void judgment is a legal nullity, and the trial court retains plenary power to dispose of the case by rendering a valid final judgment.”).

Court of Appeals of Texas, Houston (1st Dist.).

J. MARCELINO E. CORNEJO GARCIA AND WIFE ERNESTINA RANGEL, AND CHILDREN, M.C.J., J.J.C., AND M.C., Appellants

v.

CITY OF WEST COLUMBIA, TEXAS, Appellee

NO. 01-20-00653-CV

|

July 27, 2021

On Appeal from the 412th District Court

Brazoria County, Texas

Trial Court Case No. 82509-CV

Panel consists of Justices Goodman, Hightower, and Rivas-Molloy.

MEMORANDUM OPINION

Gordon Goodman Justice

Opinion issued July 27, 2021

J. Marcelino E. Cornejo Garcia sued the City of West Columbia for injuries he allegedly sustained as a result of his work on a municipal water and sewer project. His wife and children alleged derivative claims for loss of consortium. The City moved for traditional and no-evidence summary judgment on several grounds. The trial court granted the City’s summary-judgment motion without stating a particular basis. Cornejo Garcia appeals. We affirm the trial court’s summary judgment.

BACKGROUND

Prior Appeal

This is the second time this suit is before us. In the first appeal, we addressed the City’s plea to the jurisdiction, in which it asserted governmental immunity. The trial court denied the City’s jurisdictional plea, and we affirmed in part and reversed in part. City of W. Columbia v. Cornejo Garcia, No. 01-16-00139-CV, 2016 WL 5940481, at *1 (Tex. App.—Houston [1st Dist.] Oct. 13, 2016, no pet.) (mem. op.).

Cornejo Garcia was employed by Matula & Matula Construction, Inc., which contracted with the City to work on a municipal water and sewer project. Id. Cornejo Garcia subsequently sued the City alleging that he was injured due to exposure to contaminated water while working on the project.1 Id. He asserted claims for intentional infliction of emotional distress, premises liability, and negligence. Id. His wife and children asserted derivative claims for loss of consortium.

In the prior appeal, which was interlocutory, we held that the trial court erred in denying the City’s plea to the jurisdiction with respect to Cornejo Garcia’s claims for intentional infliction of emotional distress and premises liability, and we dismissed both of those claims. Id. at *4. But we affirmed the trial court’s denial of the City’s jurisdictional plea with respect to Cornejo Garcia’s negligence claim. Id.

Cornejo Garcia alleged that the City was negligent in two ways. First, he alleged that the City had exercised control over the water and sewer project as a whole to such an extent that the City was vicariously liable for his employer’s failure to provide him with a respirator and other necessary safety equipment that would have prevented his injuries. Id. at *1, *3. Second, he alleged that the City maintained control over motor-driven water pumps in particular and that the City failed to adequately maintain these pumps. Id. at *3. Had the City adequately maintained the pumps, Cornejo Garcia alleged, they would have drained the contaminated water from the project site and thereby prevented his exposure. Id.

In its plea to the jurisdiction, the City argued that it merely had a contractual relationship with Cornejo Garcia’s employer and that the City had not exercised control over his employer’s work. See id. at *3. The City further argued that Cornejo Garcia’s water-pump claim was in actuality one for non-use of the pumps. See id. Under these circumstances, the City argued, it had not waived its governmental immunity. Id.

We concluded that the trial court had not erred in denying the City’s jurisdictional plea as to either of the types of negligence alleged by Cornejo Garcia. Id. at *3–4. As to his safety-equipment claim, we held that the City did not conclusively show it had not exercised control over the project as a whole to such an extent as to subject it to liability. Id. at *3. As to his water-pump claim, we similarly held that the City did not conclusively show it had not used the water pumps. Id. at *4. In both cases, our ruling was based on the record as it then existed. Id. at *3–4.

Present Appeal

Several months after our mandate issued, the City moved for traditional and no-evidence summary judgment. The City argued that there was no evidence that it exercised any control over Cornejo Garcia’s employer or its employees or that any City personnel or equipment were used in the water and sewer project. Thus, the City argued, Cornejo Garcia could not show that the City had waived its governmental immunity under the Texas Tort Claims Act. See TEX. CIV. PRAC. & REM. CODE § 101.021 (waiving governmental immunity for negligent conduct of government employees and injuries caused by use of tangible property). The City also submitted an affidavit made by the City Manager and a copy of the contract between the City and Cornejo Garcia’s employer as evidence in support of the City’s contentions that it did not control the project or provide personnel or equipment. In the City Manager’s affidavit, she stated that the City did not provide any personnel or equipment for use in the project. The contract stated that Cornejo Garcia’s employer was responsible for all work done under the project.

In opposition, Cornejo Garcia filed his own affidavit, in which he stated that between one to three City employees were always present while he worked on the project. According to Cornejo Garcia, these City employees provided him with equipment, like connectors and wrenches, whenever he lacked it. Cornejo Garcia further stated that a pump was used to clear his work area of dirty water. Sometimes his employer provided this water pump. Other times the City provided the water pump. Cornejo Garcia stated that City employees sometimes operated the pump. Cornejo Garcia signed his affidavit by thumbprint. Two employees of a nursing and rehabilitation center, in turn, signed affidavits stating they witnessed Cornejo Garcia affix his thumbprint to his affidavit.2

Cornejo Garcia also submitted photos of the work site and personnel. But the photos do not identify the personnel or equipment depicted.

The City later filed an amended motion for summary judgment. Relying on its contract with Cornejo Garcia’s employer, the City again argued that it exercised no control over the water and sewer project. The City emphasized that the contract required Cornejo Garcia’s employer to:

• provide trench protection for trenches deeper than five feet;

• exercise precautions for the safety of persons and bear responsibility for all damages to persons resulting from the work;

• furnish all necessary equipment, labor, and supervision; and

• assume responsibility for all work done under the contract.

The City further argued that Cornejo Garcia’s affidavit and photographs did not create a genuine issue of material fact as to the City’s control of Cornejo Garcia’s employer or Cornejo Garcia because the mere presence of City personnel is not evidence of control as a matter of law. But the City did not address Cornejo Garcia’s statements that City employees supplied him with equipment or used water pumps.

Instead, the City argued that Cornejo Garcia had admitted that his claim with respect to water pumps was that the City had not used them. In support, the City cited Cornejo Garcia’s responses to requests for admissions. In these responses, Cornejo Garcia admitted that he contended the City had failed to use a pump that otherwise would have drained the contaminated water from the site.

The City also added two additional grounds for summary judgment. First, it argued that Cornejo Garcia had no evidence that the water at the worksite contained a toxin capable of causing his injuries or that it did cause his injuries. Second, it argued that Cornejo Garcia’s exclusive remedy is workers’ compensation. As Cornejo Garcia failed to exhaust the process for workers’ compensation benefits, the City argued that the trial court lacks jurisdiction over his claims.

Finally, the City argued that any loss of consortium claim was derivative of Cornejo Garcia’s negligence claim and thus failed for the same reasons.

Cornejo Garcia did not file any additional evidence in response to the City’s amended summary-judgment motion.

The trial court granted the City’s amended traditional and no-evidence motion for summary judgment. The court did not specify a particular basis for summary judgment; it stated only that Cornejo Garcia and his family had “failed to establish a genuine issue of material fact in support of their claims.”

Cornejo Garcia, his wife, and his children appeal.

DISCUSSION

Cornejo Garcia contends that he pleaded facts sufficient to show that the City has waived its governmental immunity. Because he has pleaded sufficient facts to show waiver of immunity, Cornejo Garcia asks that we reverse the trial court’s summary judgment. Liberally construing his brief, Cornejo Garcia contends that genuine issues of material fact exist concerning the City’s involvement in the water and sewer project that preclude summary judgment. But Cornejo Garcia’s brief does not address the City’s alternative summary-judgment arguments premised on causation or the workers’ compensation statute.

Standard of Review

We review a summary judgment de novo. Farmers Grp. v. Geter, 620 S.W.3d 702, 708 (Tex. 2021). Traditional summary judgment is required when no genuine issue of material fact exists and the movant is entitled to judgment as a matter of law. TEX. R. CIV. P. 166a(c). No-evidence summary judgment is required when the movant challenges one or more essential elements of the nonmovant’s claims or defenses and the nonmovant fails to respond with evidence raising a genuine issue of material fact as to the challenged elements. TEX. R. CIV. P. 166a(i).

Applicable Law

The City moved for summary judgment on multiple grounds. The trial court granted summary judgment in favor of the City without specifying the particular ground or grounds. To prevail on appeal under these circumstances, Cornejo Garcia must negate all possible grounds on which the trial court’s summary judgment could have been based. Miner Dederick Constr. v. Gulf Chem. & Metallurgical Corp., 403 S.W.3d 451, 463 (Tex. App.—Houston [1st Dist.] 2013, pet. denied); see also Hanson v. Republic Ins. Co., 5 S.W.3d 324, 327 (Tex. App.—Houston [1st Dist.] 1999, pet. denied) (appellate court may affirm on any meritorious ground when summary-judgment motion raises multiple grounds for summary judgment).

Analysis

Failure to Exhaust Administrative Remedies

Assuming that Cornejo Garcia qualifies as an employee, rather than an independent contractor, the City argues that the trial court and this court lack jurisdiction over Cornejo Garcia’s negligence claim because Cornejo Garcia failed to exhaust his administrative remedies under Texas’s workers’ compensation statute. In support of this argument, the City asserts that both it and Cornejo Garcia’s employer were subscribers under the workers’ compensation statute, Cornejo Garcia filed a workers’ compensation claim against his employer but did not complete the administrative appeals process relative to his claim, and he did not file a workers’ compensation claim against the City at all within the one-year statutory deadline. See TEX. LAB. CODE §§ 408.001, 409.003(2) (workers’ compensation is exclusive remedy for work-related injury when employee is covered by workers’ compensation insurance, and claim for workers’ compensation must be made within one year of when employee knew or should have known that occupational disease was related to his employment).

We agree that the workers’ compensation statute generally requires exhaustion of remedies as a prerequisite to suit. LAB. § 410.251; see Mendoza v. Old Republic Ins. Co., 333 S.W.3d 183, 185–86 (Tex. App.—El Paso 2010, pet. denied) (summarizing workers’ compensation process). But on its own terms, the City’s exhaustion argument turns on the existence of jurisdictional facts, namely that:

• Cornejo Garcia’s employer had workers’ compensation insurance;

• the City had workers’ compensation insurance;

• Cornejo Garcia filed a workers’ compensation claim under his employer’s policy and received an adverse decision but failed to appeal from it; and

• Cornejo Garcia did not file a workers’ compensation claim under the City’s policy.

The City’s brief does not contain citations to the record conclusively showing any of these jurisdictional facts for purposes of summary judgment. Thus, we cannot affirm the trial court’s summary judgment on the basis of the City’s exhaustion argument even though Cornejo Garcia has not addressed it. See Croysdill v. Old Republic Ins. Co., 490 S.W.3d 287, 296 (Tex. App.—El Paso 2016, no pet.) (record must affirmatively reflect failure to exhaust administrative remedies); Mendoza, 333 S.W.3d at 187 (reversing summary judgment because defendant workers’ compensation carrier did not prove failure to exhaust as matter of law).

Causation in the Context of a Toxic Tort Claim

Causation is an essential element of negligence. IHS Cedars Treatment Ctr. of DeSoto, Tex. v. Mason, 143 S.W.3d 794, 798 (Tex. 2004). In a toxic tort or chemical exposure lawsuit, like this one, a plaintiff must present evidence that the toxin or chemical at issue can cause the specific injuries he alleges in human beings in general and that it caused his injuries in particular. E.g., Bostic v. Georgia-Pac. Corp., 439 S.W.3d 332, 348 (Tex. 2014) (asbestos/mesothelioma); Merck & Co. v. Garza, 347 S.W.3d 256, 262 (Tex. 2011) (prescription drug/heart attack); Brookshire Bros. v. Smith, 176 S.W.3d 30, 36–37 (Tex. App.—Houston [1st Dist.] 2004, pet. denied) (commercial cleaning products/reactive airways dysfunction syndrome); Daniels v. Lyondell–Citgo Ref. Co., 99 S.W.3d 722, 725–26 (Tex. App.—Houston [1st Dist.] 2003, no pet.) (benzene/lung cancer); Coastal Tankships v. Anderson, 87 S.W.3d 591, 601–02 (Tex. App.—Houston [1st Dist.] 2002, pet. denied) (naphtha/bronchiolitis obliterans organizing pneumonia). This necessarily requires a plaintiff to prove he was exposed to the toxin or chemical in question. E.g., Lockett v. HB Zachry Co., 285 S.W.3d 63, 67–74 (Tex. App.—Houston [1st Dist.] 2009, no pet.) (affirming summary judgment as plaintiff did not offer proof of exposure to benzene and thus could not show it caused his leukemia).

Cornejo Garcia alleges that he was exposed to contaminated water while working on the City’s water and sewer project, but he does not identify a particular contaminant. Cornejo Garcia further alleges that this unidentified contaminant caused his injuries, which include paralysis, Guillain-Barré syndrome, and deep vein thrombosis.

In its amended summary-judgment motion, the City asserted that Cornejo Garcia had failed to identify a contaminant and had no evidence that his exposure caused his injuries. Cornejo Garcia did not respond to this aspect of the City’s motion. On appeal, Cornejo Garcia does not cite any evidence of causation. We therefore hold that the trial court did not err in granting no-evidence summary judgment as to Cornejo Garcia’s negligence claim.

Derivative Claims for Loss of Consortium

A claim for loss of consortium is derivative of a claim for personal injury. Reagan v. Vaughn, 804 S.W.2d 463, 467 (Tex. 1990). Thus, the trial court also did not err in granting summary judgment as to the claims of Cornejo Garcia’s wife and children. See id. (defense to personal-injury claim is defense to consortium claim).

CONCLUSION

We affirm the trial court’s judgment.

Footnotes

1

Cornejo Garcia also sued his employer. They settled their disputes.

2

In his brief, Cornejo Garcia’s counsel states that Cornejo Garcia “has been continuously paralyzed since the occurrence and has not been able to communicate with counsel and translators or family members.” As the City did not obtain rulings on the admissibility or legal sufficiency of Cornejo Garcia’s affidavit in the trial court and does not raise these issues on appeal, we note but disregard them.

Court of Appeals of Texas, Houston (1st Dist.).

IN RE Reynaldo MORALES, Relator

NO. 01-20-00794-CV

|

Opinion issued July 13, 2021

Original Proceeding on Petition for Writ of Mandamus

Attorneys and Law Firms

Reynaldo Morales, Pro Se.

Barbara Ann Quigg, for Real party in interest.

Panel consists of Justices Goodman, Hightower, and Rivas-Molloy.

MEMORANDUM OPINION

PER CURIAM

Relator, Reynaldo Morales, has filed a document entitled “Emergency Motion to Stay,” but he has not provided an appellate case number and all previously-filed appeals and original proceedings have been finally adjudicated. Accordingly, the Court construed this motion to be a petition for writ of mandamus.1

Morales mentions harassment and persecution that he has experienced, but he does not complain of a ruling by the trial court. Morales attaches the following to his petition:

• A November 10, 2020 letter from this Court acknowledging receipt of a communication from Morales concerning appellate cause number 01-17-00474-CV, a case that is no longer pending, but noting that we no longer have jurisdiction to act in that cause;

• Postcards from this Court advising Morales of the denial of motions for rehearing in appellate cause number 01-17-00474-CV;

• This Court’s December 18, 2014 opinion in appellate cause number 01-14-00429-CV affirming the trial court’s dismissal of his appeal based on a grant of the defendant’s plea to the jurisdiction and motion to dismiss;

• A November 9, 2015 notice from the Supreme Court of the United States advising that Morales’s petition for certiorari had been denied;

• This Court’s mandate issued on June 5, 2015 in appellate cause number 01-14-00429-CV, affirming the trial court’s judgment;

• Worker’s compensation documentation from the Texas Department of Insurance, Division of Workers’ Compensation;

• Morales’s motion for en banc reconsideration in an unspecified case;

• A letter from this Court advising Morales that this Court no longer has jurisdiction in appellate cause number 01-19-00051-CV and that his communication was received and placed in the file, but no action would be taken;

• An order issued on April 30, 2020, stating that the mandate issued in appellate cause number 01-19-00051-CV on February 14, 2020, and the court no longer has jurisdiction over the appeal and thus, no further action would be taken on any filings;

• This Court’s mandate issued in appellate cause number 01-19-00051-CV on February 14, 2019, affirming the trial court’s judgment;

• This Court’s January 28, 2020 notice that the Court had denied Morales’s motion to reconsider and motion for rehearing in appellate cause number 01-19-00051-CV;

• The December 10, 2008 “Decision and Order” issued by the Texas Department of Insurance, Division of Workers’ Compensation.

Many of these documents concern previous appeals or original proceedings that have been adjudicated and are no longer active cases. But Morales has presented no argument, citation to the record, or complaint concerning any ruling or action by the trial court.

Because Morales presents no complaint about a trial court ruling or an action that requires this Court to enforce its jurisdiction, we have no power to issue relief. See TEX. GOV’T CODE § 22.221(a)-(b).

We deny the petition. Any pending motions are dismissed as moot.

Footnotes

1

The underlying case is Reynaldo Morales v. Travelers Indemnity Company of Connecticut, cause number 2013-54065, pending in the 165th District Court of Harris County, Texas, the Honorable Ursula Hall presiding.

Court of Appeals of Texas, Houston (1st Dist.).

CHG HOSPITAL BELLAIRE, LLC, Appellant

v.

SEKETA JOHNSON, Appellee

NO. 01-20-00437-CV

|

Opinion issued April 20, 2021

On Appeal from the 157th District Court

Harris County, Texas

Trial Court Case No. 2019-58375

Panel consists of Justices Goodman, Landau, and Guerra.

MEMORANDUM OPINION

Sarah Beth Landau Justice

Seketa Johnson sued CHG Hospital Bellaire, LLC for tort claims seeking damages for injuries she sustained in an on-the-job accident. CHG-Bellaire moved to stay litigation, and the trial court denied the motion. CHG-Bellaire then petitioned this Court for a writ of mandamus, and we denied the petition. CHG-Bellaire moved to compel arbitration under the Federal Arbitration (FAA), and the trial court denied the motion. CHG-Bellaire appealed, arguing that the trial court erred in denying its motion to compel arbitration because the parties entered into an enforceable arbitration agreement and Johnson’s claims fell within the scope of claims covered by the agreement.

We affirm.

Background

In August 2019, Johnson sued CHG-Bellaire for negligence, premises liability, and gross negligence, alleging that she had sustained injuries while training as a nurse at a hospital operated by CHG-Bellaire. Johnson and her trainer had to physically lift and adjust a “very heavy” patient on the bed because the hospital did not have the equipment ordinarily used to move patients. The trainer suddenly grabbed the bed sheets and began pulling the patient up the bed without first warning Johnson. Trying to catch the patient, Johnson quickly pulled the other side of the bed sheets and suddenly felt a pop in her spine followed by pain. She immediately stopped pulling the bed sheets and told her trainer about the injury.

Physicians treated Johnson’s injuries and advised her to not lift anything weighing more than 10 pounds until she fully recovered. Although Johnson had not fully healed, CHG-Bellaire placed her back on regular rotation. Johnson told her superiors that she could not perform the same duties because lifting patients violated her doctor’s orders. Despite her explanation, CHG-Bellaire still required her to lift patients.

As Johnson was caring for a patient, the patient became dizzy and started to fall. Johnson rushed to prevent the patient from falling and she suddenly felt a “pull and pain” in her spine. Since the incidents, the pain in her back continued to worsen and prevented her from performing tasks she could perform before.

CHG-Bellaire answered the suit with special exceptions, a general denial, and affirmative defenses, asserting that Johnson’s claims were subject to arbitration.

CHG-Bellaire then moved to stay the litigation. The trial court denied the motion, and CHG-Bellaire petitioned our Court for a writ of mandamus, requesting that we stay the litigation proceedings and compel arbitration. We denied the petition, noting a material defect:

Relator asserts in its petition for writ of mandamus that it seeks relief from the trial court’s denial of relator’s “motion to stay litigation and compel arbitration” but the order attached to the petition does not refer to a motion to compel arbitration.

In re CHB Hosp. Bellaire, LLC, No. 01-20-00278-CV, 2020 WL 2026478, at *1 n.2 (Tex. App.—Houston [1st Dist.] Apr. 28, 2020, no pet.) (orig. proceeding) (per curiam).

Then, CHG-Bellaire moved to compel arbitration, followed by a supplemental motion to compel arbitration and an amended motion to compel arbitration. CHG-Bellaire argued that the parties had entered into an enforceable arbitration agreement. It also argued that Johnson’s claims for injuries during her employment fell within the scope of arbitral claims under the agreement.

CHG-Bellaire attached evidence to its motion to show the existence and scope of an enforceable arbitration agreement. The evidence included copies of the Employee Injury Benefit Plan (EIBP), the Employee Handbook, and the Employment Dispute Resolution Agreement (EDRA).

Section 5(a)(i) of the EIBP included a provision entitled “Mutual Agreement to Arbitrate,” addressing the scope of the arbitration agreement and the claims covered by the agreement:

This Agreement is mutual, covering all claims that Company or Claimant may have which arise from: Any injury suffered by Claimant while in the Course and Scope of Claimant’s employment with Company, including but not limited to, claims for negligence, gross negligence, and all claims for personal injuries, physical impairment, disfigurement, pain and suffering, mental anguish, wrongful death, survival actions, loss of consortium and/or services, medical and hospital expenses, expenses of transportation for medical treatment, expenses of drugs and medical appliances, emotional distress, exemplary or punitive damages and any other loss, detriment or claim of whatever kind and character.

Section 508 of the EDRA included a provision articulating the claims covered by the arbitration agreement:

The Company and you mutually consent and agree to the resolution by arbitration of all claims or disputes (Claim(s)), whether or not arising out of your employment (or its termination), that the Company may have against you or that you may have against the Company or its officers, directors, members, owners, shareholders, partners, employees or agents, past or present, in their capacity as such or otherwise.... The Claims covered by this Agreement include, but are not limited to, claims for wages or other compensation due, claims for breach of any contract or covenant (express or implied); tort claims; equitable claims; claims for discrimination (including, but not limited to, race, color, sex, religion, national origin, age, marital status, or medical condition, handicap or disability); claims for retaliation or harassment; all common law claims and claims for violation of any federal, state, or other governmental law, statute, regulation, or ordinance, except for claims identified below.

Section 509 of the EDRA excludes certain claims, including worker’s compensation claims, from arbitration:

Claims you may have for workers’ compensation, unemployment compensation, or state disability insurance benefits are not covered by this Agreement.... This Agreement also does not apply to any Claim that an applicable federal statute expressly states cannot be arbitrated.

Similarly, the Employee Handbook included the same arbitration provision referenced in the EDRA:

Agreeing to the Employment Dispute Resolution Program Agreement (Agreement) electronically or otherwise constitutes your agreement to be bound by the EDR Program. Likewise, the Company agrees to be bound by this same program. This mutual agreement to arbitrate claims means that both you and the Company are bound to use the EDR Program as the sole means of resolving covered claims and disputes and agree to forego any right either may have to a jury trial on issues covered by the EDR Program. However, no remedies that otherwise would be available to you or the Company in a court of law will be forfeited by virtue of the agreement to use and be bound by the EDR Program.

CHG-Bellaire attached two affidavits to its motion. The first was from I. Tai, Escalation Manager for Saba TalentSpace, an onboarding platform. Tai testified that newly hired CHG-Bellaire employees had to access, review, and acknowledge several employment agreements containing arbitration provisions through the online platform. Each employee had to create a secure and unique username and password, which was encrypted and stored in the Saba database. After successfully entering login information, the system prompts the employee to complete the Employee Handbook course and the EIBP course. After the employee completes the course, the Saba database tests the employees understanding of the course content, generates transcript reports, and displays the employee’s scores.

Tai also testified that Johnson created a username and password on Saba, accessed various employment documents, and completed the Employee Handbook course and the EIBP course on July 8, 2019. Saba’s records showed that Johnson successfully answered all five questions in the Employee Handbook course and all three questions in the EIBP course.

CHG-Bellaire presented another affidavit from K. Mendez, the HR Director for the Cornerstone Healthcare Group Holdings, Inc., the parent company of CHG-Bellaire. Mendez testified that she was responsible for the “overall processes and implementation of policies involving documentation related to onboarding” new employees. Mendez confirmed that the Saba reports showed that Johnson had acknowledged reviewing the Employee Handbook, the EDRA, and the EIBP.

Johnson moved to strike the motion to compel arbitration, arguing that the arbitration agreements exclude workers’ compensation claims and that evidence did not establish that a valid arbitration agreement existed because she testified at her deposition that she could not recall acknowledging or agreeing to the arbitration agreements.1

CHG-Bellaire replied to Johnson’s motion, contending that her claims fell within the scope of the arbitration agreements because she sought damages for personal injuries for her tort claims and did not allege any claims under the Texas Workers Compensation Act. It also contended that the evidence established the existence of enforceable arbitration agreements and that our denial of mandamus relief did not constitute “law of the case” or address the merits.

The trial court denied CHG-Bellaire’s motion to compel arbitration without a hearing.

CHG-Bellaire appealed.2

Arbitration Agreement

CHG-Bellaire contends that the trial court erred in denying its motion to compel arbitration because the parties entered into enforceable arbitration agreement and the agreement covered Johnson’s claims. In response, Johnson asserts that CHG-Bellaire failed to establish that a valid arbitration agreement existed because she testified under oath that, based on her personal recollection, she did not execute the purported agreement. She argues that the parties lacked a meeting of the minds to form a valid agreement. She also asserts that CHG-Bellaire failed to establish that the purported arbitration agreement covered her claims because the agreement explicitly excludes workers’ compensation claims.

A. Standard of review

“We review interlocutory appeals of orders denying motions to compel arbitration for an abuse of discretion, deferring to the trial court’s factual determinations if they are supported by the evidence and reviewing questions of law de novo.” Valerus Compression Servs., LP v. Austin, 417 S.W.3d 202, 207 (Tex. App.—Houston [1st Dist.] 2013, no pet.). Under this standard, we will reverse the trial court’s ruling only when “it acts in an arbitrary or unreasonable manner, without reference to any guiding rules or principles.” In re Nitla S.A. de C.V., 92 S.W.3d 419, 422 (Tex. 2002) (per curiam). We construe the record in a light favorable to support the trial court’s ruling. J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 233 (Tex. 2003); In Estate of Guerrero, 465 S.W.3d 693, 701 (Tex. App.—Houston [14th Dist.] 2015, pet. denied) (en banc).

B. Applicable law

A court cannot order arbitration without an agreement to arbitrate. See Freis v. Canales, 877 S.W.2d 283, 284 (Tex. 1994) (per curiam). Thus, despite strong presumptions that favor arbitration, a valid agreement to arbitrate is a settled, threshold requirement to compel arbitration. See In re Kellogg Brown & Root, Inc., 166 S.W.3d 732, 737–38 (Tex. 2005) (orig. proceeding). The party moving to compel arbitration has the initial burden of proof to establish the arbitration agreement’s existence and to show that the claims asserted against it fall within the arbitration agreement’s scope. Rachal v. Reitz, 403 S.W.3d 840, 843 (Tex. 2013).

If the movant establishes that a valid arbitration agreement exists and that the claims fall within the agreement, a presumption arises in favor of arbitrating those claims and the party opposing arbitration has the burden to prove a defense to arbitration. Royston, Rayzor, Vickery & Williams, LLP v. Lopez, 467 S.W.3d 494, 499–500 (Tex. 2015).

A trial court may determine whether to compel arbitration by solely relying on the parties’ affidavits, pleadings, discovery, and stipulations. In re MHI P’ship, Ltd., 7 S.W.3d 918, 922 (Tex. App.—Houston [1st Dist.] 1999, no pet.). An evidentiary hearing is not required before the trial court makes its determination. In re Jim Walter Homes, Inc., 207 S.W.3d 888, 896 (Tex. App.—Houston [14th Dist.] 2006, no pet.).

C. Notice to form an agreement to arbitrate claims

Whether a valid arbitration agreement exists is a legal question that we resolve by ordinary contract principles. See In re D. Wilson Const. Co., 196 S.W.3d 774, 781 (Tex. 2006); Parker v. Schlumberger Tech. Corp., 475 S.W.3d 914, 922 (Tex. App.—Houston [1st Dist.] 2015, no pet.). Thus, the party that is trying to enforce the arbitration agreement must show that it meets all requisite contract elements, including an offer, an acceptance, a meeting of the minds, each party’s consent to the terms, and the execution and delivery of the contract with the intent that it be mutual and binding. See S.C. Maxwell Family P’ship, Ltd. v. Kent, 472 S.W.3d 341, 344–45 (Tex. App.—Houston [1st Dist.] 2015, no pet.); Montoya v. Glenny, No. 04-08-00923-CV, 2009 WL 4981329, at *3 (Tex. App.—San Antonio Dec. 23, 2009, no pet.) (mem. op.).

Key to this case, the formation of the contract, requires a meeting of the minds on the contract’s essential terms. The term “meeting of the minds” refers to the parties’ “mutual understanding and assent to the agreement regarding the subject matter and the essential terms of the contract.” Izen v. Comm’n For Lawyer Discipline, 322 S.W.3d 308, 318 (Tex. App.—Houston [1st Dist.] 2010, pet. denied). It is an essential element to the formation of a contract. See APMD Holdings, Inc. v. Praesidium Med. Prof’l Liab. Ins. Co., 555 S.W.3d 697, 707 (Tex. App.—Houston [1st Dist.] 2018, no pet.). We examine and consider the entire writing to harmonize and give effect to all the provisions of the contract so that none will be rendered meaningless. See Webster, 128 S.W.3d at 229.

CHG-Bellaire argues that its evidence—the EIBP, the Employee Handbook, the EDRA, and the two affidavits—establishes that Johnson reviewed the employment agreements containing the arbitration provision, correctly answered all questions at the end of the courses, and electronically agreed to arbitrate all covered claims, including her claims for negligence, gross negligence, and all claims seeking to recover damages for her personal injuries.

Johnson testified under oath that, based on her personal recollection, she did not recall seeing the EIBP or Employee Handbook:

Counsel: If I can—all right I’ve got something up here on the screen that says “Employee Injury Benefit Plan,” and it’s going to go through several slides.

Johnson: Uh-huh.

Counsel: And I want to go ahead and take you through this, and then I’m going to ask you whether you recall seeing this or not. Okay?

Johnson: Okay.

Counsel: It says—it has a question here. Do you see this? It says: “I understand that I must carefully read the document entitled ‘Cornerstone Health Group Employee Injury Benefit Plan Arbitration Acknowledgement’ on the previous slide.” Do you recall seeing something like this?

Johnson: No.

Counsel: Okay. All right. Do you recall seeing something that says that you acknowledge and agree that selecting “I agree,” clicking on the submit button below is binding like a written signature in ink and it talks about the Employee Injury Benefit Plan and the arbitration acknowledgment? Do you recall seeing that?

Johnson: No.

Counsel: All right. Next slide says: “I understand that if I do not understand any part of these instructions, I have the opportunity to contact my facility’s human resource representative.” Do you recall seeing this?

Johnson: No.

Counsel: And then after this, it says: “Submit quiz”?

Johnson: No.

* * *

Counsel: And I’ll ask you if you recall reviewing—it’s entitled “Cornerstone Employee Handbook, Code of Conduct and Arbitration Agreement.”

Johnson: And this would have been online?

Counsel: This would have been online, yes, ma’am. It would have been in a slide format, and these are actually screenshots of the slides that I’m showing you.

Johnson: No.

Counsel: You don’t recall—

Johnson: I don’t recall this.

Counsel: —reviewing this one?

Johnson: No.

Johnson also testified that she disputed and could not recall reviewing the EIBP arbitration acknowledgment:

Counsel: Okay. If you look at the—I believe it’s Exhibit 3. It says EDR agreement—I’m sorry. It says: “Employee Injury Benefit Plan, CHG - LATC/BH.” And it says the date you completed it was July 8th?

Johnson: Uh-huh.

Counsel: All right. What I showed you is that entry right there, and it shows that you completed it on July 8th. Is that something that you dispute, actually having gone through and reviewed the employee injury benefit plan arbitration acknowledgment?

Johnson: Do I dispute it? Yes, I don’t recall it.

Counsel: You don’t recall it?

Johnson: Yeah. So ...

CHG-Bellaire contends that Johnson’s failure to recall acknowledging or otherwise executing the arbitration agreement cannot raise a fact issue on notice. It relies on Barker v. UHS of Texoma, Inc., No. 4:18-CV-502, 2019 WL 2358923 (E.D. Tex. June 4, 2019) (mem. op.).

In Barker, an employee sued her employer, Texoma, for violating the Age Discrimination in Employment Act, the Americans with Disabilities Act, and the Family and Medical Leave Act. Id. at *1. Texoma moved to compel arbitration. Id. The parties disputed whether the Barker received proper notice of the arbitration agreement, which Texoma implemented during the course of her employment. Id. at *2. Texoma required its employees to complete a course titled “Alternative Resolution of Conflicts,” which informed employees of the arbitration agreement and their right to opt out in writing. Id. Although Barker denied receiving the agreement or taking the course, Texoma presented evidence showing that all employees had to complete the Alternative Resolution of Conflicts online course, that the course informs users of the new arbitration agreement and their right to opt out in writing, and that Barker completed the course. Id. Texoma also provided a document outlining each step in the course that Barker completed and a certificate of completion with Barker’s name on it. Id. This certificate would issue only if, on completing the course, Barker “acknowledged [that] this course contains the ARC Program materials” and that she “had an opportunity to review them.” Id.

The court held that Barker’s sworn denial could not create a fact issue on notice and that Texoma established the validity of the arbitration agreement by a preponderance of the evidence. Id. at *3. The court reasoned that trial courts may resolve factual disputes when parties present competing evidence, and it resolved the dispute in favor of Texoma. Id. (“In this case, the Court finds Texoma Medical’s records and its employees’ detailed affidavits on those records more reliable than Barker’s dated recollection.”).

Johnson, on the other hand, cites two cases in which the trial courts addressed whether an employee’s denial created a fact issue to defeat compelling arbitration based on the lack of notice. In Kmart Stores of Tex., L.L.C. v. Ramirez, 510 S.W.3d 559 (Tex. App.—El Paso 2016, pet. denied), an employer sought to compel arbitration under an agreement which it claimed its employee had electronically reviewed and consented to through an online portal the employer provided. Id. at 562–63. The employee denied under oath that she had ever acknowledged or agreed to the purported arbitration agreement. Id. The employer produced an affidavit from a compliance programs manager stating that the electronic system showed that the employee had created an “Arbitration Policy/Agreement Course” under her login credentials and that the employee had electronically acknowledged receipt of it. Id. The trial court held a hearing on the motion to compel arbitration and denied the motion. Id. at 563–64.

On appeal, the question before the court was whether the evidence established that both parties assented to arbitrate claims under the agreement. Id. at 564. The court deferred to the trial court’s factual findings and held that the employee’s sworn denial of notice was sufficient to create a genuine fact issue, even though the employer’s electronic records showed her unique login credentials were used to access and acknowledge the agreement on the online portal. Id. at 571. Because the trial court held a hearing on the employer’s motion to compel, the appellate court deferred to the trial court’s factual determinations of the parties’ competing evidence, reasoning that “the trial judge was free to believe whichever it thought was more persuasive.” Id. at 569–71 (“Notice is a fact question, and ultimately, this case boils down to which version of facts the trial court credits.”). The court also noted that the employer failed to cite “any authority requiring the courts to give credence to an employer’s electronic records over an employee’s testimony in arbitration determinations.” Id.

The second case Johnson cites is Gunda Corp., LLC v. Yazhari, No. 14-12-00263-CV, 2013 WL 440577 (Tex. App.—Houston [14th Dist.] Feb. 5, 2013, no pet.) (mem. op.). In Gunda, an employer presented a copy of an arbitration agreement purportedly signed by its employee, whom the employer was seeking to compel into arbitration. Id. at *4. The trial court held a non-evidentiary hearing and denied the employer’s motion to compel arbitration. Id. at *2.

On appeal, the court reviewed the record evidence presented by each party. Id. at *2–4.The employer’s evidence included signed acknowledgments that the employee read and understood certain policies and a copy of the arbitration agreement bearing employee’s signature. Id. at *3. The record also included an affidavit, asserting that the employee signed and returned documents containing the arbitration agreement. Id. The employee, on the other hand, informed the court that the employer never produced the original arbitration agreement signed by him and presented an affidavit denying ever having seen or signed the arbitration agreement. Id. at *9–10. The appellate court determined that the evidence did not establish an agreement to arbitrate claims and thus “the evidence raised a fact issue regarding the formation of an agreement to arbitrate ....” Id. at *4.

Although these cases are relevant and persuasive, we note a significant difference between those cases and the case before us: The trial court held no hearing on CHG-Bellaire’s motion to compel arbitration. Although a hearing is not required before the trial court determines whether to compel arbitration, we must review the parties’ competing affidavits, pleadings, discovery, and stipulations to determine whether the trial court’s ruling is supported by the evidence. See In re Jim Walter Homes, 207 S.W.3d at 896; Webster, 128 S.W.3d at 233.

After reviewing the competing evidence here, we cannot say that the trial court acted in “an arbitrary or unreasonable manner, without reference to any guiding rules or principles.” In re Nitla S.A. de C.V., 92 S.W.3d at 422. We note that CHG-Bellaire explicitly asked whether Johnson recalled viewing the agreement. It did not ask, however, whether she had executed or electronically signed the agreement. Nor did it properly impeach Johnson’s testimony. Johnson disputed reviewing the EIBP arbitration acknowledgment. The trial court could have reasonably believed that Johnson had no notice of the arbitration agreement based on her sworn testimony, even though CHG-Bellaire presented documents showing that she had acknowledged them. See, e.g., Big Bass Towing Co. v. Akin, 409 S.W.3d 835, 842 (Tex. App.—Dallas 2013, no pet.) (“The fact that a document was “available” for inspection does not demonstrate that Akin had notice of the document.”). We therefore conclude that the trial court did not abuse its discretion. See Austin, 417 S.W.3d at 207.

Because CHG-Bellaire failed to carry its burden of establishing a valid, enforceable arbitration agreement, we need not determine whether it carried its burden of establishing that Johnson’s claims asserted fell within the scope of the agreement. See TEX. R. APP. P. 47.1 (“The court of appeals must hand down a written opinion that is as brief as practicable but that addresses every issue raised and necessary to final disposition of the appeal.”).

Conclusion

We affirm the trial court’s order.

Footnotes

1

She also argued that the issues were collaterally or judicially estopped by the trial court’s denial of CHG-Bellaire’s motion to stay litigation.

2

The arbitration agreement here is governed by the FAA, and we have jurisdiction to review the trial court’s denial of CHG-Bellaire’s motion to compel arbitration under the FAA. See TEX. CIV. PRAC. & REM. CODE § 51.016; 9 U.S.C. §§ 16(a)(1)(C), 206; Acad., Ltd. v. Miller, 405 S.W.3d 152, 154 (Tex. App.—Houston [1st Dist.] 2013, no pet.).

Court of Appeals of Texas, Houston (1st Dist.).

MICHELLE HUDSON, Appellant

v.

MEMORIAL HOSPITAL SYSTEM, MEMORIAL HERMANN HEALTH SYSTEM, THYSSENKRUPP ELEVATOR CORPORATION, AND C.B. RICHARD ELLIS, INC., Appellees

NO. 01-19-00300-CV

|

Opinion issued April 15, 2021

On Appeal from the 152nd District Court

Harris County, Texas

Trial Court Case No. 2016-83958

Panel consists of Justices Hightower, Countiss, and Farris.

MEMORANDUM OPINION

Richard Hightower Justice

In this personal injury suit, Michelle Hudson challenges the trial court’s summary judgment rendered against her in favor of Memorial Hermann Health System1, CB Richard Ellis, Inc., and ThyssenKrupp Elevator Corporation. Hudson raises two issues on appeal. She contends that the trial court erred in granting summary judgment against her because it incorrectly applied principles of premises liability rather than principles of ordinary negligence to her claims, and she asserts that there are genuine issues of material fact with respect to her claims, precluding summary judgment.

We affirm.

Background

Hudson sued Memorial Hermann, claiming that she was injured on Memorial Hermann’s property. At the time, Hudson was employed by Memorial Hermann, a non-subscriber under the Texas Workers’ Compensation Act. In her first amended petition, Hudson alleged that she “was in an elevator on [Memorial Hermann’s] premises,” when “the elevator stopped suddenly and violently.” She stated that she had “then pushed the elevator buttons and felt what seemed like an electric shock.”

Hudson also sued CB Richard Ellis, Inc. (“CBRE”), which managed the premises, and ThyssenKrupp Elevator Corporation, which provided maintenance services for the elevator.

Hudson alleged that the malfunctioning elevator “was an unreasonably dangerous condition created by [the defendants’] failure to properly and timely maintain, control, inspect and/or service the improperly functioning elevator and/or warn of the unreasonably dangerous condition.” Hudson alleged that the defendants had “deviated from the reasonable standard of care,” which “they had a duty to exercise and [had] breached said duty through its [sic] negligent acts and omissions” of:

1. Failing to properly maintain the elevator in question;

2. Failing to regularly and systematically inspect the elevator in question so Defendants could make safe or warn of the dangerous condition;

3. Failing to properly inspect the elevator and elevator equipment;

4. Allowing an unreasonably dangerous condition to exist on the property;

5. Failing to correct the unreasonably dangerous condition;

6. Failing to correct the unreasonably dangerous condition before placing the elevator back into service;

7. Failing to properly inspect the elevator and the cause of its repeated failure condition before placing the elevator back into service;

8. Failing to warn Plaintiff of the unreasonably dangerous condition of the elevator and elevator equipment; and

9. Failing to discover the unreasonably dangerous condition.

Hudson also pleaded the doctrine of res ipsa loquitor.

Hudson further claimed that “[t]he conditions on the premises posed an unreasonable risk of harm because it is foreseeable that an improperly inspected and maintained elevator would malfunction and create an unsafe and unexpected hazard.” Hudson alleged that the defendants’ “negligent acts or omissions” proximately caused her “to suffer serious physical injuries.” She sought damages for medical expenses, physical pain, mental anguish, and lost wages.

Although it was later shown in the summary-judgment proceedings that Hudson was an employee of Memorial Hermann at the time of her alleged injury and that Memorial Hermann was a non-subscriber under the Texas Workers’ Compensation Act, Hudson did not allege in her first amended petition (her live pleading) that she was Memorial Hermann’s employee at the time of the incident. The only statement Hudson made in her petition, related to her employment, was her allegation that she “was an invitee at the time of injury because she was on the premises for work purposes.” In short, Hudson made no allegations that she was suing for injuries based on any duties Memorial Hermann owed to her in its role as her employer.

Memorial Hermann filed a no-evidence motion for summary judgment, asserting that Hudson had produced no evidence to support the required elements of her premises-liability claim. Specifically, Memorial Hermann asserted that there was no evidence (1) that the elevator, which Hudson claimed injured her, “had a condition that posed an unreasonable risk of harm,” (2) that Memorial Hermann “had actual knowledge of the condition,” or (3) that Memorial Hermann had “failed to exercise reasonable care to reduce or eliminate the risk.”

Hudson responded to Memorial Hermann’s motion by moving for a continuance to permit her to conduct additional discovery. The trial court granted the continuance.

ThyssenKrupp filed a combined traditional and no-evidence motion for summary judgment. In support of its no-evidence motion for summary judgment, ThyssenKrupp asserted that Hudson had presented no evidence of the elements of a negligence or premises-liability claim against ThyssenKrupp.

In support of its traditional motion for summary judgment, ThyssenKrupp offered the affidavit of Brent Early, its operations manager. Early testified that ThyssenKrupp provided “elevator maintenance services” to the elevators in the building where Hudson was allegedly injured. Early testified that the incident involving Hudson was reported to ThyssenKrupp on December 11, 2014, the day the incident occurred. He stated that the next day, ThyssenKrupp sent two of its mechanics to inspect the elevator. The mechanics “inspected and observed the elevator’s operation” and “confirmed” that the elevator was operating “correctly and without malfunction.”

Hudson responded to ThyssenKrupp’s combined motion for summary judgment. She offered her own deposition testimony in which she stated that, after the alleged incident, her supervisor, B. Hazard, had taken her to the building manager’s office to report the incident. Hudson testified that she then heard Hazard tell the building manager that Hazard had also experienced problems with the elevator that same day. In addition, she asserted that ThyssenKrupp’s negligence could be inferred by applying the doctrine of res ipsa loquitor.

Memorial Hermann filed a motion to reconsider its previously filed motion for summary judgment. Hudson responded by “incorporate[ing] by reference ... all arguments presented and evidence attached to her responses” to ThyssenKrupp’s motion for summary judgment.

CBRE also filed a combined no-evidence and traditional motion for summary judgment. In support of its no-evidence motion, CBRE claimed that Hudson had failed to adduce evidence supporting any element of a negligence or premises-liability claim.

Responding to CBRE’s motion, Hudson offered her own affidavit in which she stated that prior to the date of her alleged injury, she had observed the elevator malfunctioning on different occasions. She claimed that she “would then notice that the elevator would be shut down ... for maintenance.”

Hudson also offered the affidavit of B. Hazard, her former supervisor, who testified that she had also experienced the elevator malfunction on the same day as Hudson’s alleged elevator incident. Hazard stated that she had accompanied Hudson to the building manager’s office to report Hudson’s incident. While there, Hazard reported that she, too, had experienced the elevator malfunction that day.

In addition, Hudson offered the two-page expert report of J.R. Freeman, a certified elevator safety inspector. In his report, Freeman opined that, based on his education and experience, the elevator “probably had a contactor failure.” He stated that “[m]ore likely than not, this could [have] created a jerking or abrupt stop, or a clipping of a door lock which could create a jerking and stopping.” After reviewing documentation related to the maintenance of the elevator, Freeman also noted that ThyssenKrupp had not produced certain 2014 maintenance records required by the administrative code regulating elevator safety. Freeman also opined that documentation produced by ThyssenKrupp did not reflect maintenance of the elevator that complied with industry standards.

Hudson filed supplemental responses (1) to Memorial Hermann’s motion to reconsider its combined motion for summary judgment and (2) to ThyssenKrupp’s combined motion for summary judgment. In the supplemental responses to Memorial Hermann’s and ThyssenKrupp’s motions for summary judgment, Hudson stated that she was incorporating by reference her arguments and evidence offered in support of her response to CBRE’s motion.

ThyssenKrupp filed objections to Hudson’s evidence offered in support of her response to CBRE’s combined motion for summary judgment. Specifically, ThyssenKrupp objected to Hudson’s affidavit, Freeman’s expert report, and Hazard’s affidavit. CBRE also filed objections to the evidence, expressly adopting the objections filed by ThyssenKrupp. In addition, Memorial Hermann objected to Hudson’s affidavit and to Freeman’s expert report.

The trial court granted most of ThyssenKrupp’s objections to the evidence and ordered Freeman’s expert report and Hazard’s affidavit struck from the summary-judgment record. The trial court also struck the majority of Hudson’s affidavit from the record because her affidavit testimony was inconsistent with her earlier deposition testimony in which she had testified that she was not aware of any problems with the elevator before the alleged incident. This included the portions of Hudson’s affidavit in which she stated that, prior to the alleged incident in this case, she had observed the elevator malfunctioning.

The trial court signed orders granting Memorial Hermann’s no-evidence motion for summary judgment and the combined no-evidence and traditional motions for summary judgment of CBRE and ThyssenKrupp. The orders were signed on the same day. The trial court did not specify whether CBRE’s or ThyssenKrupp’s motions were granted on no-evidence or traditional grounds. By granting the motions for summary judgment, the trial court rendered a take-nothing judgment against Hudson in favor of Memorial Hermann, CBRE, and ThyssenKrupp (collectively, “Appellees,” hereafter).2

Summary Judgment

In two issues, Hudson asserts that the trial court erred in granting Appellees’ motions for summary judgment.

A. Standard of Review

We review a trial court’s summary judgment de novo. Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex. 2005). In conducting our review, we take as true all evidence favorable to the non-movant, and we indulge every reasonable inference and resolve any doubts in the non-movant’s favor. Id. If a trial court grants summary judgment without specifying the grounds for granting the motion, we must uphold the trial court’s judgment if any of the asserted grounds are meritorious. W. Invs., Inc. v. Urena, 162 S.W.3d 547, 550 (Tex. 2005).

A party seeking summary judgment may combine, in a single motion, a request for summary judgment under both the no-evidence and the traditional standards. Binur v. Jacobo, 135 S.W.3d 646, 650–51 (Tex. 2004). To prevail on a no-evidence summary-judgment motion, a movant must identify “one or more essential elements of a claim or defense ... as to which there is no evidence.” TEX. R. CIV. P. 166a(i); see B.C. v. Steak N Shake Operations, Inc., 598 S.W.3d 256, 259 (Tex. 2020). The burden then shifts to the nonmovant to produce “summary judgment evidence raising a genuine issue of material fact.” TEX. R. CIV. P. 166a(i); B.C., 598 S.W.3d at 259.

A no-evidence summary judgment may not be granted if the non-movant brings forth more than a scintilla of evidence to raise a genuine issue of material fact on the challenged elements. King Ranch, Inc. v. Chapman, 118 S.W.3d 742, 751 (Tex. 2003). Less than a scintilla of evidence exists when the evidence is “so weak as to do no more than create a mere surmise or suspicion” of a fact. Id. More than a scintilla of evidence exists when reasonable and fair-minded individuals could differ in their conclusions. Id.

To prevail on a traditional summary judgment, the movant bears the burden of proving that there is no genuine issue of material fact and that it is entitled to judgment as a matter of law. TEX. R. CIV. P. 166a(c); SeaBright Ins. Co. v. Lopez, 465 S.W.3d 637, 641 (Tex. 2015). When a defendant moves for summary judgment, it must either (1) disprove at least one essential element of the plaintiff’s cause of action or (2) plead and conclusively establish each essential element of its affirmative defense, thereby defeating the plaintiff’s cause of action. Cathey v. Booth, 900 S.W.2d 339, 341 (Tex. 1995). An issue is conclusively established if reasonable minds could not differ about the conclusion to be drawn from the facts in the record. Cmty. Health Sys. Prof’l Servs. Corp. v. Hansen, 525 S.W.3d 671, 681 (Tex. 2017).

If the movant meets its burden, the burden then shifts to the nonmovant to raise a genuine issue of material fact precluding summary judgment. See Centeq Realty, Inc. v. Siegler, 899 S.W.2d 195, 197 (Tex. 1995). The evidence raises a genuine issue of fact if reasonable and fair-minded jurors could differ in their conclusions in light of all of the summary judgment evidence. Goodyear Tire & Rubber Co. v. Mayes, 236 S.W.3d 754, 755 (Tex. 2007).

B. Premises-Liability Law Governs Claim Against Memorial Hermann

In her first issue, Hudson contends that the trial court erred by granting summary judgment for Memorial Hermann based on the legal principles governing premises liability rather than on the principles governing ordinary negligence. She argues that because she was employed by Memorial Hermann, a non-subscribing employer, and “was injured during the course and scope of her employment on premises owned and controlled” by Memorial Hermann, her injuries were “workplace injuries suffered by an employee and subject to the provisions of Chapter 406 of the Texas Labor Code.” Hudson asserts the Labor Code required that her claim against Memorial Hermann be “determined by an ordinary negligence standard rather than a premises liability standard.”3 Hudson contends that, for this reason, she was not required to offer evidence of the elements of premises liability in her summary-judgment responses, rather, she was required only to offer evidence of the elements of ordinary negligence.4

1. Argument not preserved

Hudson did not raise her argument that the trial court incorrectly applied the legal principles of premises liability rather than the principles of ordinary negligence in her summary-judgment responses. A nonmovant must expressly present to the trial court any reasons for avoiding the movant’s right to summary judgment. McConnell v. Southside ISD, 858 S.W.2d 337, 343 (Tex. 1993); see TEX. R. CIV. P. 166a(c) (“Issues not expressly presented to the trial court by written motion, answer or other response shall not be considered on appeal as grounds for reversal.”); D.R. Horton-Tex., Ltd. v. Markel Int’l Ins. Co., 300 S.W.3d 740, 743 (Tex. 2009) (“A non-movant must present its objections to a summary[-]judgment motion expressly by written answer or other written response to the motion in the trial court or that objection is waived.”). Because she did not raise this argument in her summary-judgment responses, Hudson failed to preserve this issue for our review, and we cannot consider it on appeal as a ground for reversal. See TEX. R. CIV. P. 166a(c); McConnell, 858 S.W.2d at 343.

2. Argument without merit

Even if Hudson’s legal argument is properly presented on appeal, we conclude it is without merit.

Hudson correctly points out that that an employer has a “duty to use ordinary care in providing a safe workplace.” LMC Complete Auto., Inc., v. Burke, 229 S.W.3d 469, 476 (Tex. App.—Houston [1st Dist.] 2007, pet. denied) (citing Kroger Co. v. Elwood, 197 S.W.3d 793, 794 (Tex. 2006)); see TEX. LAB. CODE § 411.103(1)–(3) (providing that each employer shall “provide and maintain employment and a place of employment that is reasonably safe and healthful for employees,” “install, maintain, and use methods, processes, devices, and safeguards,” and “take all other actions reasonably necessary to make the employment and place of employment safe”). Hudson also correctly points out that, under the Labor Code, if an employer elects to be a non-subscriber to workers’ compensation insurance, as Memorial Hermann has, then a consequence of that choice is that the non-scribing employer may be sued for negligence by or on behalf of the employee “to recover damages for personal injuries or death sustained by [the] employee in the course and scope of the employment.” TEX. LAB. CODE § 406.033(a), (d). And she accurately observes that the Labor Code strips the non-subscribing employer of certain defenses, including contributory negligence and assumed risk. Id. § 406.033(a). Hudson, however, incorrectly asserts that when an employee sues a non-subscribing employer for personal injuries sustained in the workplace in the course and scope of her employment, the employee’s claims are necessarily governed by principles of ordinary negligence, even when, as pleaded here, the employee’s injuries are proximately caused solely by an alleged dangerous condition of the workplace premises, and the plaintiff-employee asserts no claim that her injuries were caused by a breach of the additional duties an employer owes to its employees.

The unmeritorious nature of Hudson’s argument is revealed by the Supreme Court of Texas’s opinion in Austin v. Kroger Tex. L.P., 465 S.W.3d 193 (Tex. 2015). There, the court—in answering a certified question from the Fifth Circuit Court of Appeals regarding a premises-liability claim asserted by an employee against a non-subscribing employer5—confirmed that “an employer has the same premises-liability duty to its employees as other landowners have to invitees on their premises.” Id. at 202. The court stated that, “[w]hile an employer’s liability [to its employees] may differ from that of other landowners due to the statutory waiver of its defenses, its premises-liability duty is the same as that owed by landowners to invitees generally.” Id. (internal citation omitted; emphasis in original). The supreme court clarified that an employer’s premises-liability duty, which is the same general duty as other premises owners, was “a duty to make safe or warn against any concealed, unreasonably dangerous conditions of which the landowner is, or reasonably should be, aware but the invitee is not.” Id. at 203. Necessary to the Austin court’s confirmation that a non-subscribing employer’s premises-liability duty to its employee is the same as a landowner’s general premises-liability duty to an invitee is the recognition that an employee’s suit against her employer for workplace injuries may be based on premises-liability principles rather than on ordinary negligence principles. See id. at 202; see Arce v. McGough, No. 04-18-00064-CV, 2018 WL 4608464, at *3 (Tex. App.—San Antonio, Sept. 26, 2018, no pet.) (mem. op.) (citing Austin and recognizing that, regardless of whether plaintiff was contractor or employee of defendant-premises owner, duty owed to plaintiff by premises owner for claim arising from premises defect was the same; that is, “an employer’s duty to make its premises reasonably safe for employees is identical to a landowner’s duty to make its premises reasonably safe for invitees generally”).

We note that the court in Simon v. Johns Community Hospital more directly addressed the argument raised by Hudson here, holding that when “an employee seeks damages [against her non-subscriber employer] for injuries caused by a dangerous [premises] condition, he or she must prove the elements of a premises-liability case.” No. 03–07–00057, 2008 WL 2309295, at *3 (Tex. App.—Austin June 4, 2008, no pet.) (mem. op.). There, Simon, a nurse, was employed by a hospital, which was a non-subscriber. Id. at *1. She sued the hospital for injuries that she sustained when she slipped on a substance on the hospital floor. Id.

The hospital filed a no-evidence motion for summary judgment, asserting that there was no evidence that it had actual or constructive knowledge of the substance on the floor, an essential element Simon was required to prove to establish the hospital’s premises liability to her as an employee-invitee. Id. The trial court granted the hospital’s motion. Id.

On appeal, Simon emphasized that she had pleaded general negligence theories of recovery based on her allegation that the hospital had not provided a safe workplace. Id. She insisted that she was “not required to prove the elements of a premises liability claim because an employer’s duty to its employees to provide them a safe workplace is conceptually distinct and independent from the duties the employer owes to invitees generally.” Id. at *2. The court rejected Simon’s argument, recognizing that “[the] supreme court had stated the general principle that ‘the nature of the duty of the landowner to use reasonable care to make his premises reasonably safe may, in all material respects, be identical with the nature of the duty of the master to use reasonable care to provide his servant with a reasonably safe place to work.’ ” Id. (quoting Sears, Roebuck & Co. v. Robinson, 280 S.W.2d 238, 240 (Tex. 1955), rev’d, in part, on other grounds by Austin, 465 S.W.3d at 212)). The court clarified that “[t]his does not mean that every negligence claim brought by an employee against a non-subscriber employer is inherently a premises liability suit.” Id. at *3 (internal quotation marks omitted).

The court stated that “[t]he imposition of negligence liability for injury caused by a dangerous condition, as contrasted with injury that is the contemporaneous result of negligent activity, is what distinguishes a premises defect claim from a claim of ordinary negligence.” Id. at *2 (citing Keetch v. Kroger Co., 845 S.W.2d 262, 264 (Tex. 1992)). On appeal, Simon acknowledged that her “entire liability case revolve[d] on whether the substance on the floor was a dangerous condition.” Id. The court stated, “Had there been issues in the instant case not purely dependent on the existence of this dangerous condition, and on Johns Community Hospital’s knowledge of its presence, this would not have been a premises liability case.” Id. at *3 (internal quotation marks omitted). But, when “an employee seeks damages for injuries caused by a dangerous condition, [as Simon did,] he or she must prove the elements of a premises liability cause of action.” Id.

We are mindful that, in Austin, the Supreme Court of Texas clarified that “[i]n a typical premises-liability case, the landowner owes the invitee two duties: a duty to keep the premises reasonably safe and a duty not to injure the invitee through contemporaneous negligent activity,”6 but, in a case in which “the landowner is also an employer and the invitee is also its employee, this additional relationship may give rise to additional duties, such as a duty to provide necessary equipment, training, or supervision.” Austin, 465 S.W.3d at 215. The court observed that, although it had “addressed the interaction between premises-liability claims and negligent-activity claims on several occasions,” it had “never addressed the interaction between premises-liability claims and an employer’s other general negligence duties.” Id. at 215–16.

In Austin, the employee-plaintiff had, in addition to asserting a premises-liability claim against his employer, alleged that his landowner-employer had failed “to provide a ‘necessary instrumentality’ ” to safely do his job.” Id. at 215. The court stated that the employee’s “instrumentalities claim invoke[d] one of [the] additional duties [that an employer owed an employee]: the duty to furnish reasonably safe equipment necessary for performance of the job.” Id. The court observed, “When an injury arises from a premises condition, it is often the case that any resulting claim sounds exclusively in premises liability, but that is not necessarily the case. An injury can have more than one proximate cause.” Id. The court stated that the fact that the employee had alleged that a condition of the premises proximately caused his injury did not preclude an additional claim that the employer-landowner’s negligent failure to provide the instrumentality also caused his injury. Id.

The Austin court determined that, as an employer, the landowner owed its employee “duties in addition to its premises-liability duty and its duty not to engage in negligent activities, including the duty to provide [the employee] with necessary instrumentalities.” Id. at 216 (emphasis added). The court explained that an instrumentalities claim did not necessarily involve contemporaneous activity by the employer. Id. The court rejected the employer’s assertion that because the employee had not alleged any negligent activity by the employer-landowner contemporaneous with the employer’s alleged failure to provide the instrumentality, the employee’s failure-to-provide-instrumentality claim was barred. Id. However, as relevant to Hudson’s appellate argument here, the supreme court did not hold that the additional duties owed by an employer to its employees replaces the premises-liability duty owed by an employer-landowner for claims arising from a premises condition and sounding exclusively in premises liability. See id. Rather, an employee-plaintiff’s claim that her injuries were caused by a breach of the additional duties owed to her by her employer may be brought in addition to a claim that her injuries were caused by a breach of the premises-liability duty owed to her by her landowner-employer. See id.

Turning to the instant suit, a review of Hudson’s pleadings reveals that her claim against Memorial Hermann sounds in premises liability. Although Hudson’s amended petition contains separate headings of “Cause of Action: Negligence” and “Cause of Action: Premises Liability,” “we ... must look to the substance of a plea for relief, not merely its titles and headings, to determine the nature of relief sought.” Garden Oaks Maint. Org. v. Chang, 542 S.W.3d 117, 124 (Tex. App.—Houston [14th Dist.] 2017, no pet.); see Marks v. St. Luke’s Episcopal Hosp., 319 S.W.3d 658, 665 (Tex. 2010) (recognizing, in case in which plaintiff had divided petition under headings “Negligence” and “Premises Liability,” that health-care liability claim cannot be recast as another cause of action to avoid statutory requirements governing those claims and that whether pleading stated health-care liability depends on underlying substance of pleading, not its form).

“When the alleged injury is the result of the condition of the premises, the injured party can recover only under a premises liability theory.” Wyckoff v. George C. Fuller Contracting Co., 357 S.W.3d 157, 163 (Tex. App.—Dallas 2011, no pet.) (citing H.E. Butt Grocery Co. v. Warner, 845 S.W.2d 258, 259 (Tex. 1992)). “Adroit phrasing of the pleadings” to encompass other theories of negligence does not affect application of premises-liability law to the claims. McDaniel v. Cont’l Apartments Joint Venture, 887 S.W.2d 167, 171 (Tex. App.—Dallas 1994, pet. denied) (op. on reh’g).

In her first amended petition, Hudson alleged that she was injured on Memorial Hermann’s premises when “the elevator stopped suddenly and violently,” and she “then pushed the elevator buttons and felt what seemed like an electric shock.” Hudson expressly alleged that “[t]he elevator stopping suddenly and violently was an unreasonably dangerous condition.” She alleged that her injuries were a result of the condition of the premises and that the property itself was unsafe. To the extent that Hudson asserted that Memorial Hermann was negligent in failing “to properly and timely maintain, control, inspect and/or service the improperly functioning elevator and/or warn of the unreasonably dangerous condition,” these allegations relate to Memorial Hermann’s purported conduct in creating, failing to warn of, or failing to correct a condition on the premises that allegedly resulted in her injuries. See In re Tex. Dep’t. of Transp., 218 S.W.3d 74, 78 (Tex. 2007) (holding that appellants’ allegations that TxDOT failed to use ordinary care in designing, inspecting, maintaining, and employing others to inspect and maintain bridge and surrounding roadway pleaded cause of action for premises or special defect, not negligent activity, because activities listed by appellants “would be causes of the conditions at the scene of the accident,” not contemporaneous activities that caused appellants’ injuries); see also Austin, 602 S.W.3d at 203 (stating that, under premises-liability theory of recovery, landowner owes a “duty to make safe or warn against any concealed, unreasonably dangerous conditions of which the landowner is, or reasonably should be, aware but the invitee is not”). Thus, as pleaded, Hudson’s claim against Memorial Hermann was a premises-liability claim. See Warner, 845 S.W.2d at 259 (holding that when injury alleged resulted from condition of premises, injured party alleged only premises-liability claim); see also Shaw v. Wells Fargo Bank, No. 02-20-00011-CV, 2020 WL 5241188, at *2 n.1, *3 (Tex. App.—Fort Worth Sept. 3, 2020, no pet.) (mem. op.) (affirming summary judgment where defendant moved for no-evidence summary judgment only on claim for premises liability, even though plaintiff had pleaded “cause of action for premises liability, negligence, and/or negligence per se,” because plaintiff had alleged that “a premises condition caused her injuries,” thus making plaintiff’s claim a premises-liability claim).

Hudson’s first amended petition also shows that she made no claims against Memorial Hermann based on its additional duties to her as her employer. The only statement Hudson made in her amended petition regarding her employment was that she “was an invitee [on Memorial Hermann’s premises] at the time of injury because she was on the premises for work purposes.” Hudson indicated that she was suing Memorial Hermann based on its status as the party that “owned, operated, controlled and/or occupied” the premise where she was injured. Hudson asserted no claim against Memorial Hermann based on its status as her employer. And she made no claim that her injuries were proximately caused by any breach of Memorial Hermann’s duty to her as her employer to provide a safe workplace.

We hold that, even though the summary-judgment evidence later showed that Memorial Hermann was her employer, Hudson’s claim against Memorial Hermann, as pleaded, sounded only in premises liability. Hudson raised no claims against Memorial Hermann based on any duties that it owed her in its role as her employer. Cf. Austin, 5 S.W.3d at 215–216. Thus, the trial court properly analyzed Hudson’s claim against Memorial Hermann under the legal principles and elements of proof governing premises liability. See Simon, 2008 WL 2309295, at *2–*3.

We overrule Hudson’s first issue.

C. Propriety of Summary Judgment

In her second issue, Hudson contends that the trial court erred by granting summary judgment in favor of Appellees “because genuine issues of material fact existed as to the elements [of] Hudson’s negligence claims that precluded summary judgment.”

1. Premises-Liability Claim

In the trial court, Memorial Hermann filed a no-evidence motion for summary judgment, and ThyssenKrupp and CBRE each filed a combined no-evidence and traditional motion for summary judgment in which they asserted that Hudson could not produce more than a scintilla of evidence with respect to any of the elements of her premises-liability claim. See TEX. R. CIV. P. 166a(i); see also Henkel v. Norman, 441 S.W.3d 249, 251–52 (Tex. 2014). (listing elements of premises liability when plaintiff is invitee). In her second issue, Hudson has not challenged the merits of Appellees’ no-evidence motions for summary judgment on her premises-liability claim. Instead, Hudson continues to assert—as she did in her first issue—that the elements of proof for ordinary negligence, and not the elements of proof for premises liability, govern whether summary judgment in Appellees’ favor was proper. Thus, because she has not challenged the merits of Appellees’ motions for summary judgment as to her premises-liability claim, we must affirm the trial court’s grant of summary judgment as to that claim. See Little v. Delta Steel, Inc., 409 S.W.3d 704, 722 (Tex. App.—Fort Worth 2013, no pet.) (affirming no-evidence summary judgment as to gross negligence claim when appellant did not challenge merits of motion on that claim on appeal); Kipp v. Dyncorp Tech. Servs., LLC, No. 01-06-00906-CV, 2007 WL 3293719, at *5 (Tex. App.—Houston [1st Dist.] Nov. 8, 2007, no pet.) (mem. op.) (affirming no-evidence summary judgment on premises-liability claim because, in trial court, movant asserted no evidence was produced by non-movant on each element of claim, but, on appeal, non-movant did not address two elements); see also Vawter v. Garvey, 786 S.W.2d 263, 264 (Tex. 1990) (proscribing reversal of summary judgment without properly assigned error).

2. Negligence Claim

As held in the first issue, Hudson has asserted a claim against Memorial Hermann based only on premises liability, not on ordinary negligence. However, it is less clear whether Hudson’s claims against CBRE and ThyssenKrupp sound in premises liability or in negligence. Specifically, it is unclear from the record whether either CBRE, as property manager of Memorial Hermann’s premises, or ThyssenKrupp, as the company that serviced the elevator, had the required control over the property to be liable under a premises-liability theory. See United Scaffolding, Inc. v. Levine, 537 S.W.3d 463, 474 (Tex. 2017) (“[T]he duty to make the premises safe or warn of dangerous conditions generally runs with the ownership or control of the property, and a defendant’s liability under a premises liability theory rests on the defendant’s assumption of control of the premises and responsibility for dangerous conditions on it.” (internal quotation marks omitted)); Allen Keller Co. v. Foreman, 343 S.W.3d 420, 424 (Tex. 2011) (recognizing that general negligence principles apply to contractor, which left premises in unsafe condition). Thus, we determine whether summary judgment was proper based on ordinary negligence against CBRE and ThyssenKrupp.

The elements of a negligence claim are (1) the existence of a legal duty, (2) a breach of that duty, and (3) damages proximately caused by the breach. Gharda USA, Inc. v. Control Sols., Inc., 464 S.W.3d 338, 352 (Tex. 2015). In their respective combined no-evidence and traditional motions for summary judgment, CBRE and ThyssenKrupp listed each element of a negligence claim and asserted that Hudson could not produce evidence with respect to any of the elements. See TEX. R. CIV. P. 166a(i).

In her response to CBRE’s no-evidence motion, which she incorporated by reference into her supplemental response to ThyssenKrupp’s motion, Hudson pointed to Memorial Hermann’s “case report, a document” filled out after the alleged incident, describing the incident as reported by Hudson and indicating that the elevator had been shut down following the incident. Hudson asserted that the case report was evidence showing that CBRE and ThyssenKrupp had breached their duty of care to her. However, cases have long recognized that the mere occurrence of an accident is not itself evidence of negligence. See Rankin v. Nash-Tex. Co., 105 S.W.2d 195, 199 (Tex. [Comm’n Op.] 1937); Flores v. Rector, No. 07-19-00274-CV, 2020 WL 4912921, at *4 (Tex. App.—Amarillo Aug. 20, 2020, no pet.) (mem. op.); Trejo v. Laredo Nat’l Bank, 185 S.W.3d 43, 48 (Tex. App.—San Antonio 2005, no pet.).

Hudson also cited her own affidavit as evidence that CBRE and ThyssenKrupp breached their duty of care to her. On appeal, she also points to Hazard’s affidavit. However, the cited evidence is no longer part of the summary-judgment record. After granting objections to the affidavits, the trial court struck, from the summary-judgment record, (1) Hazard’s affidavit, (2) the cited portions of Hudson’s affidavit, and (3) Freeman’s expert report. Hudson raises no challenge on appeal to the trial court’s order striking her evidence from the record. When reviewing whether a summary judgment was properly granted, we may not consider evidence struck from the record because that evidence is not a part of the summary-judgment record considered by the trial court. See McCollum v. The Bank of New York Mellon Tr. Co., 481 S.W.3d 352, 362 (Tex. App.—El Paso 2015, no pet.) (citing Trudy’s Tex. Star, Inc. v. City of Austin, 307 S.W.3d 894, 898 n.2 (Tex. App.—Austin 2010, no pet.); Esty v. Beal Bank S.S.B., 298 S.W.3d 280, 294 (Tex. App.—Dallas 2009, no pet.)). Thus, we may not consider the struck portions of Hudson’s affidavit that she relied on in the trial court or Hazard’s affidavit now cited by Hudson on appeal.

Without more, Hudson’s summary-judgment evidence of a breach of duty falls short of raising a scintilla of evidence because it is “so weak as to do no more than create a surmise or suspicion” of fact.7 King Ranch, Inc., 118 S.W.3d at 751; see also Flores, 2020 WL 4912921, at *4 (holding that evidence showing merely that accident occurred was insufficient to demonstrate, for purposes of overcoming grant of no-evidence summary judgment, that defendant had breached duty to plaintiff). Accordingly, we hold that the trial court did not err in granting no-evidence summary judgment in favor of CBRE and ThyssenKrupp on Hudson’s negligence claim.

We overrule Hudson’s second issue.

Conclusion

We affirm the judgment of the trial court.

Footnotes

1

In her original and first amended petitions, Hudson listed both Memorial Hermann Health System and Memorial Hospital System as defendants. In its answer, Memorial Hermann Health System stated that it was “incorrectly designated as ‘Memorial Hospital System’ ” and indicated that Memorial Hermann Health System and Memorial Hospital System were the same entity being incorrectly referred to interchangeably by Hudson. The record does not reflect any answer or appearance by Memorial Hospital System. In her brief, Hudson refers to Memorial Hermann Health System, which was her employer and the owner of the premises where she claimed to have been injured in this suit, primarily as Memorial Hospital System. To avoid confusion, we refer to the party only as Memorial Hermann Health System (“Memorial Hermann”).

2

The trial court signed separate orders granting each of Appellees’ motions for summary judgment. The order granting Memorial Hermann’s motion ordered that Hudson’s “causes of action” against Memorial Hermann were dismissed with prejudice and that Hudson “take nothing by her claims” against Memorial Hermann. Similarly, the order granting ThyssenKrupp’s motion provided that the motion was “granted in its entirety, and that Plaintiff Michelle Hudson take nothing from ThyssenKrupp on her causes of action, such causes of action being disposed of by this Judgment.” The order granting CBRE’s motion, which sought summary judgment on causes of action for ordinary negligence and premises liability, ordered that the motion was granted “in all its parts.” Given the record, the orders, taken together, constitute a final judgment. See Lehman v. Har-Con Corp., 39 S.W.3d 191, 195 (Tex. 2001) (“Because the law does not require that a final judgment be in any particular form, whether a judicial decree is a final judgment must be determined from its language and the record in the case.”); see also Ritzell v. Espeche, 87 S.W.3d 536, 537–38 (Tex. 2002) (holding that summary judgment was final because it expressly ordered that plaintiff take nothing by his claims even though motion for summary judgment did not address claim added in amended petition after motion for summary judgment was filed); In re Harris Cty. Hosp. Dist. Aux., Inc., 127 S.W.3d 155, 159 (Tex. App.—Houston [1st Dist.] 2003, orig. proceeding) (holding summary judgment order indicated finality because it ordered plaintiff’s cause of action was “hereby dismissed with prejudice and that Plaintiff take nothing by her suit”); Noorian v. McCandless, 37 S.W.3d 170, 173 (Tex. App.—Houston [1st Dist.] 2001, pet. denied)) (“[A] final judgment may consist of several orders that cumulatively dispose of all parties and issues.”).

3

Hudson now contends on appeal that, based on her status as an employee and Memorial Hermann’s status as her non-subscribing employer, the elements of ordinary negligence—not those of premises liability—also apply to her claims against CBRE and ThyssenKrupp because they are liable as “agents” of Memorial Hermann.

4

Although premises liability is itself a branch of negligence law, it is a “special form” of negligence with elements that define a property owner or occupant’s duty with respect to those who enter the property. Occidental Chem. Corp. v. Jenkins, 478 S.W.3d 640, 644 (Tex. 2016). To prevail on a premises liability claim against a property owner, an injured invitee must establish four elements: (1) the property owner had actual or constructive knowledge of the condition causing the injury; (2) the condition posed an unreasonable risk of harm; (3) the property owner failed to take reasonable care to reduce or eliminate the risk; and (4) the property owner’s failure to use reasonable care to reduce or eliminate the risk was the proximate cause of injuries to the invitee. Henkel v. Norman, 441 S.W.3d 249, 251–52 (Tex. 2014).

5

The certified question was as follows: “Pursuant to Texas law, including § 406.033(a)(1)–(3) of the Texas Labor Code, can an employee recover against a non-subscribing employer for an injury caused by a premises defect of which he was fully aware but that his job duties required him to remedy?” Austin v. Kroger Tex. L.P., 465 S.W.3d 193, 199 (Tex. 2015). The supreme court provided the following answer:

Under Texas law, an employee generally cannot “recover against a non-subscribing employer for an injury caused by a premises defect of which he was fully aware but that his job duties required him to remedy.” As is the case with landowners and invitees generally, employers have a duty to maintain their premises in a reasonably safe condition for their employees, but they will ordinarily satisfy their duty as a matter of law by providing an adequate warning of concealed dangers of which they are or should be aware but which are not known to the employee. “The employee’s awareness of the defect” does not “eliminate the employer’s duty to maintain a safe workplace,” but with respect to premises conditions, that duty is ordinarily satisfied by warning the employee of concealed, unknown dangers; the duty to maintain a reasonably safe workplace generally does not obligate an employer to eliminate or warn of dangerous conditions that are open and obvious or otherwise known to the employee. Exceptions to this general rule may apply in premises liability cases involving third-party criminal activity or a necessary use of the premises. If an exception applies, the employer may owe a duty to protect the employee from the unreasonably dangerous condition despite the employee’s awareness of the danger, and the [Texas Workers’ Compensation Act] will prohibit a non-subscribing employer from raising defenses based on the employee’s awareness.

Id. at 217.

6

Hudson raises no issue on appeal that summary judgment should be reversed because her alleged injuries were caused by a breach of Appellees’ duty not to injure her through “contemporaneous negligent activity.” Instead, her appellate argument focuses on the duties that Memorial Hermann owed to her as her employer.

7

In her response to ThyssenKrupp’s no-evidence motion, Hudson relied on the doctrine of res ipsa loquitor to satisfy her burden on the breach-of-duty element. However, on appeal, Hudson does not assert that res ipsa loquitor would be a sufficient basis to reverse summary judgment on her negligence claim.

Court of Appeals of Texas, Houston (1st Dist.).

IN RE VC PALMSWESTHEIMER, LLC AND PARAWEST COMMUNITY DEVELOPMENT, LLC, Relators

NO. 01-20-00465-CV

|

Opinion issued December 10, 2020

Original Proceeding on Petition for Writ of Mandamus

Panel consists of Justices Keyes, Hightower, and Countiss.

OPINION

Julie Countiss Justice

*1 Relators, VC PalmsWestheimer, LLC (“Palms”) and Parawest Community Development, LLC (“Parawest”), have filed a petition for writ of mandamus, seeking to compel respondent, the Honorable Daryl Moore, to vacate an order denying their motion for leave to designate a responsible third party and to compel him to enter an order granting the motion.1

We conditionally grant the petition.

Background

On March 6, 2019, real party in interest, Seyedali Parsafar, filed his original petition, alleging that he was assaulted on the grounds of his apartment complex, The Palms on Westheimer, on March 21, 2017. Although Parsafar did not know the perpetrator of the assault, the security guard at his apartment complex knew the perpetrator’s identity and showed Parsafar a photograph of the perpetrator immediately after the assault. Parsafar called law enforcement officers and reported the assault.

Parsafar, acting pro se, sued Palms, the owner of The Palms on Westheimer apartment complex, Parawest, the management company for the apartment complex, and State Alliance Protective Services, LLC, the security contractor for the apartment complex.2 Parsafar brought claims for negligence, gross negligence, premises liability, and violations of the Deceptive Trade Practices Act (“DTPA”).3 Parsafar did not serve any discovery requests on Palms and Parawest with his original petition.

On April 15, 2019, Palms and Parawest filed separate original answers, generally denying the allegations in Parsafar’s original petition. Included in each original answer was a request for disclosures.4

Parsafar then moved to stay the trial court’s proceedings because of an unspecified medical reason. On June 17, 2019, the trial court granted the requested stay and abated the case until August 2, 2019. On June 20, 2019, the trial court issued a docket control order that included a joinder deadline of August 5, 2019 and a trial date of April 27, 2020. Meanwhile, Parsafar retained counsel.

On August 27, 2019, Palms and Parawest each filed a first amended answer that designated Jaeylen Deshawn Turner or “an unknown individual” as a responsible third party. That same day, Palms and Parawest filed a joint motion for leave to designate Turner or John Doe as a responsible third party. The motion for leave stated in pertinent part:

Upon information and belief, ... Turner was the individual who allegedly assaulted [Parsafar]. To the extent that it is shown that ... Turner was not involved in the incident in question, the individual who committed the crime in question is unknown.... Turner or an unknown criminal, John Doe ..., is responsible for the criminal acts because he allegedly assaulted [Parsafar] causing bodily injury.

*2 In his response to the motion for leave, Parsafar objected and asserted that Palms and Parawest’s request for leave to designate Turner or John Doe as a responsible third party was untimely and it failed to conform with the requirements of Texas Civil Practice and Remedies Code section 33.004.5 Parsafar argued that Turner had not been timely designated as a responsible third party because he was not designated before the statute of limitations period ran or by the joinder deadline in the trial court’s docket control order. And Parsafar argued that John Doe had not been timely designated as a responsible third party because he was not designated within sixty days of the date Palms and Parawest filed their original answers. Parsafar also asserted that the factual allegations in the motion for leave about John Doe were insufficient.

In their reply to Parsafar’s response, Palms and Parawest asserted that the designation of Turner as a responsible third party could not have been made before the statute of limitations period ran because suit was not filed until approximately two weeks before the limitations period expired. Palms and Parawest further asserted that the sixty-day deadline for designating an unknown responsible third party should have been tolled while the case was abated at Parsafar’s request. According to Palms and Parawest, their motion for leave sufficiently explained the factual basis for designating John Doe as a responsible third party. Finally, Palms and Parawest stated that they would agree to extend the joinder deadline in the docket control order to the extent that their motion for leave violated it.6

On October 9, 2019, the trial court denied Palms and Parawest’s motion for leave to designate Turner or John Doe as a responsible third party.7

Palms and Parawest filed a motion for reconsideration of the trial court’s denial of their motion for leave,8 which was heard by the trial court on December 16, 2019. During the hearing on the motion for reconsideration, the trial court implied that its previous ruling was based on Palms and Parawest’s failure to identify a responsible third party in their answers. Specifically, during the hearing, the trial court asked Palms and Parawest why did they not “say in [their] answer that the injuries of which [Parsafar] complain[ed] [were] caused in whole or in part by third party, if [they] knew about [him]?” The trial court continued:

If you knew about the existence of [a responsible third party], and you knew that time is short, without getting into your work product, the safest thing to do is to designate them and then nonsuit them. Rather than wait – you waited until June – April, May, June, so you had 60 days, and then it’s abated for 45 days and then you file your [responsible-third-party] request when?

On April 1, 2020, the trial court denied the motion for reconsideration.

On June 23, 2020, Palms and Parawest filed a petition for writ of mandamus, seeking relief from this Court with regard to the trial court’s October 9, 2020 order denying their motion for leave to designate Turner as a responsible third party.9

Standard of Review

*3 Relators who seek mandamus relief “must establish that an underlying order is void or a clear abuse of discretion and that no adequate appellate remedy exists.” In re Nationwide Ins. Co. of Am., 494 S.W.3d 708, 712 (Tex. 2016) (orig. proceeding); In re Prudential Ins. Co., 148 S.W.3d 124, 135 (Tex. 2004) (orig. proceeding); see also In re Coppola, 535 S.W.3d 506, 508 (Tex. 2017) (orig. proceeding). The trial court abuses its discretion if its ruling is “arbitrary and unreasonable, made without regard for guiding legal principles or supporting evidence.” In re Nationwide Ins., 494 S.W.3d at 712. A trial court also abuses its discretion if it “fails to analyze or apply the law correctly.” Id. This Court must “defer to the trial court’s factual determinations while reviewing its legal conclusions de novo.” In re Makris, 217 S.W.3d 521, 523 (Tex. App.—San Antonio 2006, orig. proceeding). The trial court’s “clear failure to analyze or apply the law correctly is an abuse of discretion.” In re CVR Energy, Inc., 500 S.W.3d 67, 72–73 (Tex. App.—Houston [1st Dist.] 2016, orig. proceeding).

Responsible Third Party

In their first and second issues, Palms and Parawest argue that the trial court abused its discretion in denying their motion for leave to designate Turner as a responsible third party because they had no obligation under the Texas Rules of Civil Procedure to identify Turner as a responsible third party before the statute of limitations ran, they were not obligated to identify Turner as a responsible third party given that Parsafar did not serve a request for disclosures on them, their motion for leave to designate Turner as a responsible third party was not untimely based on the joinder deadline in the trial court’s docket control order, and the motion for leave was not untimely even though it was filed some four months after they filed their original answers.

In response, Parsafar argues that the trial court properly denied the motion for leave to designate Turner as a responsible third party because, given that it was filed after the statute of limitations period ran, Palms and Parawest did not comply with their obligations to disclose Turner as a responsible third party. Parsafar also asserts that the motion for leave violated the docket control order issued by the trial court.

A. Responsible-Third-Party Statute

Texas Civil Practice and Remedies Code chapter 33 governs the designation of a responsible third party. “Responsible third party” is defined as

any person who is alleged to have caused or contributed to causing in any way the harm for which recovery of damages is sought, whether by negligent act or omission, by any defective or unreasonably dangerous product, by other conduct or activity that violates an applicable legal standard, or by any combination of these.

TEX. CIV. PRAC. & REM. CODE ANN. § 33.011(6). A motion for leave to designate a known person as a responsible third party “must be filed on or before the 60th day before the trial date unless the court finds good cause to allow the motion to be filed at a later date.” Id. § 33.004(a). That person may not be designated as a responsible third party

after the applicable [statute of] limitations period on the cause of action has expired with respect to the responsible third party if the defendant has failed to comply with its obligations, if any, to timely disclose that the person may be designated as a responsible third party under the Texas Rules of Civil Procedure.

Id. § 33.004(d).10 Thus, under chapter 33, an identifiable responsible third party generally must be identified at least sixty days before trial and before the statute of limitations period runs on that person. And if a motion for leave to designate the known individual as a responsible third party is filed after the statute of limitations period ran for that person, the movant must have complied with any previously existing obligations to identify that person.

*4 Chapter 33 requires the trial court to grant leave to designate the known individual as a responsible third party unless another party files an objection to the motion for leave within fifteen days of service of the motion. Id. § 33.004(f). But a timely objection only prevents the court from granting leave if the objecting party establishes that the defendants “did not plead sufficient facts concerning the alleged responsibility of the person to satisfy the pleading requirements of the Texas Rules of Civil Procedure” after having been granted leave to replead.11 Id. § 33.004(g). The designation of a responsible third party is automatic when the trial court grants a motion for leave to designate. Id. § 33.004(h).

B. First Amended Answers and Motion for Leave to Designate Responsible Third Party

Palms and Parawest separately filed original answers on April 15, 2019. These answers did not refer to the assault or any alleged perpetrators. Palms and Parawest each filed first amended answers on August 27, 2020, which stated in pertinent part:

[Palms/Parawest] designates ... Turner or an unknown person as a responsible third party within the meaning of Texas Civil Practice & Remedies Code section 33.004(j). Upon information and belief, ... Turner is the individual who committed the assault in question. Should it be proved that ... Turner did not commit the assault in question, the [perpetrator], John Doe ..., is unknown.... Turner or John Doe ... committed the acts that caused the loss or injury that is the subject of this lawsuit. Pursuant to Texas Penal Code chapter 22, the alleged acts committed by ... Turner or John Doe ... are criminal.

Palms and Parawest’s motion for leave to designate Turner as a responsible third party, also filed on August 27, 2020, stated:

According to Plaintiff’s Original Petition, on March 21, 2017, an individual assaulted him at [T]he Palms on Westheimer apartment complex located at 6425 Westheimer Road, Houston, Texas 77057 .... Upon information and belief, ... Turner was the individual who allegedly assaulted [Parsafar]. To the extent that it is shown that ... Turner was not involved in the incident in question, the individual who committed the crime in question is unknown.... Turner or an unknown criminal, John Doe ..., is responsible for the criminal acts because he allegedly assaulted [Parsafar] causing bodily injury.

The first amended answers and the motion for leave were filed 134 days after Palms and Parawest filed their original answers.

C. Response to Motion for Leave to Designate Responsible Third Party

In his response to Palms and Parawest’s motion for leave to designate Turner as a responsible third party, Parsafar objected to the designation of Turner because (1) the designation was not timely as it was not done within the statute of limitations period, (2) the designation violated the joinder deadline established in the trial court’s docket control order, and (3) the designation’s factual allegations about John Doe were insufficient.

1. Designation and Disclosure Within Time Periods Contemplated by Chapter 33

Given that the alleged assault of Parsafar occurred on March 21, 2017, the statute limitations period ran in this case on March 21, 2019.12 Parsafar filed suit against Palms and Parawest on March 6, 2019. Citations for Palms and Parawest were issued on March 13, 2019, and they were filed with the trial court clerk on April 1, 2019. The affidavits of service state that Parsafar’s petition was delivered to Palms on March 19, 2019 and to Parawest on March 20, 2019. Based on these events, it would have been nearly impossible for Palms and Parawest to answer, much less file a motion for leave to designate Turner as a responsible third party, before the statute of limitations period ran on March 21, 2019. Palms and Parawest timely filed their original answers on April 15, 2019.

*5 The filing of a petition near or after the expiration of the statute of limitations does not prevent a defendant from moving for leave to designate a responsible third party. See, e.g., In re Bustamante, 510 S.W.3d 732 (Tex. App.—San Antonio 2016, orig. proceeding). In In re Bustamante, which stemmed from a car accident that pinned one of the plaintiffs against the building where he worked, the plaintiffs filed suit against the owner of the building one day before the statute of limitations period ran. 510 S.W.3d at 734. A request for disclosures was included with the petition. Id. at 736. The defendant did not respond to the request for disclosures but, some three years after filing a timely answer, he moved for leave to designate two responsible third parties. Id. The two responsible third parties were the driver of the car that struck the one plaintiff, with whom the plaintiffs had settled, and the one plaintiff’s employer, from whom he had received workers’ compensation benefits. Id. at 734.

The trial court denied the defendant’s motion for leave to designate two responsible third parties, which the plaintiffs argued was untimely because it was filed after the statute of limitations period ran and the defendant had not timely disclosed the potential responsible third parties. Id. at 734–35. The defendant asserted that he could not have timely disclosed the two potential responsible third parties before the statute of limitations period ran and, therefore, he had no duty to timely disclose them. Id. at 735.

The San Antonio Court of Appeals explained that the plaintiffs were

taking the position that a defendant loses the statutory right to designate responsible third parties if the defendant fails to respond to a request for disclosure[s] of potential responsible third parties within the deadline contained in [Texas] Rule [of Civil Procedure] 194.3. This [was] inconsistent with Texas Rule of Civil Procedure 193.6(a), which allow[ed] a party who fail[ed] to respond to discovery [requests] to introduce the undisclosed material or information into evidence if the party show[ed] either (1) good cause existed for the failure to respond to the discovery [requests] or (2) the other party [would] not be unfairly surprised or unfairly prejudiced by the failure to timely respond.

Id. at 736. The court continued:

To hold as the [plaintiffs] suggest would convert [Texas] Rule [of Civil Procedure] 194.2(l) into a technical trap. A party who fail[ed] to timely respond to a request for disclosure[s] of information regarding a person who may be designated as a responsible third party would lose the statutory right to designate responsible third parties, while a party that fail[ed] to respond to a request for disclosure[s] of the information required by rules 194.2 (a)–(k) would not face such a penalty. We do not read [Texas Civil Practice and Remedies Code] [s]ection 33.004(d) so narrowly. Instead, we read section 33.004(d) to require a defendant to disclose a potential responsible third party before the expiration of the statute of limitations, if that is possible.

Id. at 736–37 (emphasis added). The court further stated that even if the trial court indulged in the “legal fiction” that the plaintiffs did not know of the existence of the two potential responsible third parties, the defendant’s disclosure obligations were satisfied by his testimony in a deposition and by his responses to a co-defendant’s discovery request. Id.

Here, it is undisputed that Palms and Parawest were unable to file a motion for leave to designate Turner as a responsible third party before the statute of limitations period ran. It is also undisputed that Parsafar did not serve his request for disclosures or any other discovery requests on Palms and Parawest with his original petition and discovery had not yet begun when the motion for leave was filed. Even so, the trial court concluded that Palms and Parawest breached their duty to disclose Turner as a responsible third party by failing to identify him in their original answers, which only generally denied the allegations in Parsafar’s original petition.

*6 At the hearing on Palms and Parawest’s motion for reconsideration of the trial court’s denial of the motion for leave, the trial court indicated that its ruling was based on Texas Civil Practice and Remedies Code section 33.004, which requires a defendant to “comply with its obligations, if any, to timely disclose that the person may be designated as a responsible third party under the Texas Rules of Civil Procedure.” (Emphasis added.) During the hearing, the trial court asked Palms and Parawest why did they not “say in [their] answer that the injuries of which [Parsafar] complain[ed] [were] caused in whole or in part by third party, if [they] knew about [him]?” The trial court continued:

If you knew about the existence of [a responsible third party], and you knew that time is short, without getting into your work product, the safest thing to do is to designate them and then nonsuit them. Rather than wait – you waited until June – April, May, June, so you had 60 days, and then it’s abated for 45 days and then you file your [responsible-third-person] request when?

Palms and Parawest responded that the Texas Rules of Civil Procedure do not require such disclosure when a defendant files its answer and Parsafar was not prejudiced in any event by the later designation.13 We agree, finding support in a recent Texas Supreme Court decision. See In re Mobile Mini, Inc., 596 S.W.3d 781, 784 (Tex. 2020) (orig. proceeding) (holding discovery responses that disclosed responsible third party provided timely notice of potential responsible third party even though responses were served after statute of limitations period ran; rejecting argument “as contrary to the statute’s plain language” that disclosure of responsible third party should have been made before discovery responses were due); see also In re Bustamante, 510 S.W.3d at 736–37.

In In re Mobile Mini, the plaintiff’s finger was injured at a construction site when a wind gust caused a trailer door to close on his hand. 596 S.W.3d at 783. Mobile Mini, Inc. (“Mobile Mini”) owned the trailer and leased it to Nolana Self Storage, LLC (“Nolana”), which owned the construction site. Id. The trailer was under the exclusive control of Nolana’s contractor, Anar Construction Specialists, LLC (“Anar”), when the plaintiff’s injury occurred. Id. The plaintiff sued Anar and Mobile Mini nineteen days before the statute of limitations period ran, serving his request for disclosures with his original petition. Id. He did not sue Nolana. Id. Mobile Mini timely answered and served its discovery responses, which were due after the statute of limitations period ran, on the plaintiff. Id. The discovery responses identified Nolana as a potential responsible third party. Id. The plaintiff amended his petition to add Nolana as a defendant within a week of receiving the discovery responses. Id. The next day, Mobile Mini filed a motion for leave to designate Nolana as a responsible third party. Id. No party filed an objection to the motion for leave to designate Nolana as a responsible third party, which was not ruled on by the trial court for nearly two years. Id.

*7 Meanwhile, the trial court found that the plaintiff’s tort claims against Nolana were time-barred and granted summary judgment in favor of Nolana on the those claims. Id. Subsequently, the plaintiff and Nolana filed written objections to Mobile Mini’s motion for leave to designate a responsible third party, asserting that Mobile Mini’s designation was improper “because Nolana could not be a responsible party once the limitations period had expired.” Id. After the trial court granted Nolana summary judgment on all claims against it, the trial court denied Mobile Mini’s request to designate Nolana as a responsible third party. Id.

Mobile Mini then filed a petition for writ of mandamus in the court of appeals, seeking to compel the trial court to grant its timely motion for leave to designate a responsible third party. The court of appeals denied Mobile Mini’s request for mandamus relief but the Texas Supreme Court held that the trial court abused its discretion in denying the motion for leave and Mobile Mini had no adequate remedy by appeal. Id. at 783. In doing so, the court explained: “The crux of the dispute here is whether Mobile Mini’s discovery response[s] disclosing Nolana as a potential[ ] responsible third party [were] ‘timely’ even though [they were] served after the statute of limitations ha[d] expired on [the plaintiff’s] tort claims.” Id. at 784. According to the supreme court, “Mobile Mini’s disclosure [of a potential responsible third party] was timely because under the Texas Rules of Civil Procedure, it was not obligated to disclose [a] potential[ ] responsible third part[y] until its discovery responses were due.Id. (emphasis added). The court stated that “placing the onus on a defendant to respond before the Rules of Civil Procedure obligate it to do so not only contravenes [Texas Civil Practice and Remedies Code] section 33.004(d)’s express language but would also be unfairly prejudicial to defendants.” Id. at 786. The supreme court’s analysis of the language in section 33.004(d) in In re Mobile Mini is controlling here.

We note that Parsafar, in his response to Palms and Parawest’s petition for writ of mandamus, relies on In re Melissa Dawson, 550 S.W.3d 625 (Tex. 2018). In In re Melissa Dawson, the Texas Supreme Court held that the trial court abused its discretion in allowing a defendant to designate a responsible third party that was not adequately identified in the defendant’s discovery responses. 550 S.W.3d at 629. But, in doing so, the supreme court disagreed that the defendant had put the plaintiff on notice that it might designate a responsible third party. Id. In re Melissa Dawson is inapposite here because the plaintiff in In re Melissa Dawson served her discovery requests on the defendant with her original petition and because In re Melissa Dawson does not address whether the identification of a responsible third party should or could be made in a defendant’s original, or amended, answer.

2. Relevance of Joinder Deadline

In his response to Palms and Parawest’s motion for leave to designate Turner as a responsible third party, Parsafar argued that Palms and Parawest’s motion was procedurally deficient because it was filed three weeks after the joinder deadline identified in the trial court’s docket control order. Palms and Parawest offered to agree to extend the joinder deadline, but Parsafar declined. None of the parties cited any authority in the trial court or in this Court that declares that a violation of a docket control order’s joinder deadline is a violation of the Texas Rules of Civil Procedure that prevents a defendant from filing a motion for leave to designate a responsible third party.

*8 Palms and Parawest assert in their petition for writ of mandamus that Texas Civil Practice and Remedies Code chapter 33 does not require a motion for leave to designate a responsible third party to be filed before a court-imposed joinder deadline. They cite two cases for the proposition that a trial court’s docket control order cannot accelerate a statutory deadline. See Spectrum Healthcare Res., Inc. v. McDaniel, 306 S.W.3d 249, 254 (Tex. 2010) (agreed docket control order generally ineffective to extend statutory deadline for expert reports); In re United Parcel Serv., Inc., No. 09-18-00002-CV, 2018 WL 753503, at *4 (Tex. App.—Beaumont Feb. 8, 2018, orig. proceeding) (trial court abused its discretion by issuing docket control order “requiring UPS and its driver to designate responsible third parties approximately six months before the initially scheduled trial, a period approximately three times the statutorily proscribed sixty-day period”). Parsafar does not provide opposing authority or address this argument in his mandamus response. Still yet, during the hearing on Palms and Parawest’s motion for reconsideration of the trial court’s ruling on their motion for leave, the trial court stated: “I don’t want to talk about joinder. That’s a red herring from both sides. You don’t need to address it.” Thus, Parsafar’s joinder-deadline argument was not the basis for the trial court’s decision to deny the motion for leave to designate Turner as a responsible third party.

3. Sufficiency of Factual Allegations in Motion for Leave

In addition to the temporal requirements for designating a responsible third party, pleading requirements can thwart a motion for leave. As set forth above, Palms’s and Parawest’s first amended answers both stated in pertinent part:

[Palms/Parawest] designates ... Turner or an unknown person as a responsible third party within the meaning of Texas Civil Practice & Remedies Code section 33.004(j). Upon information and belief, ... Turner is the individual who committed the assault in question. Should it be proved that ... Turner did not commit the assault in question, the [perpetrator], John Doe ..., is unknown.... Turner or John Doe ... committed the acts that caused the loss or injury that is the subject of this lawsuit. Pursuant to Texas Penal Code chapter 22, the alleged acts committed by ... Turner or John Doe ... are criminal.

Palms and Parawest’s motion for leave to designate a Turner as a responsible third party stated:

According to Plaintiff’s Original Petition, on March 21, 2017, an individual assaulted him at [T]he Palms on Westheimer apartment complex located at 6425 Westheimer Road, Houston, Texas 77057 .... Upon information and belief, ... Turner was the individual who allegedly assaulted [Parsafar]. To the extent that it is shown that ... Turner was not involved in the incident in question, the individual who committed the crime in question is unknown.... Turner or an unknown criminal, John Doe ..., is responsible for the criminal acts because he allegedly assaulted [Parsafar] causing bodily injury.

Parsafar asserted in the trial court that the first amended answers and the motion for leave that identified John Doe were not sufficient to satisfy the pleading requirements in the Texas Rules of Civil Procedure. But Parsafar did not urge this argument as to Turner.

Under Texas Civil Practice and Remedies Code section 33.004(g), an objection to a motion for leave to designate a responsible third party can only be effective if it is (1) timely filed and (2) the objection establishes that the defendant “did not plead sufficient facts concerning the alleged responsibility of the person to satisfy the pleading requirement of the Texas Rules of Civil Procedure.” TEX. CIV. PRAC. & REM. CODE ANN. § 33.004(g)(1). Parsafar’s objection was timely filed, but he did not argue that the motion for leave was insufficient as to Turner. Further, there is no indication in the record that the trial court found the motion for leave to designate Turner as a responsible third party insufficient to satisfy the Texas Rules of Civil Procedure’s pleading requirement. And Parsafar does not attempt to make that argument in response to Palms and Parawest’s petition for writ of mandamus.

We hold that the trial court abused his discretion in denying Palms and Parawest’s motion for leave to designate Turner as a responsible third party.

Adequate Remedy by Appeal

*9 The Texas Supreme Court has held that there is no adequate remedy by appeal for a trial court’s improper refusal to allow the designation of a responsible third party. “Allowing a case to proceed to trial despite [the] erroneous denial of a responsible-third-party designation ‘would skew the proceedings, potentially affect the outcome of the litigation, and compromise the presentation of [the relators’] defense in ways unlikely to be apparent in the appellate record.’ ” In re Coppola, 535 S.W.3d at 509 (quoting In re CVR Energy, 500 S.W.3d at 81–82).14 In re Coppola was the first time that the Texas Supreme Court addressed the adequacy of an appellate remedy in the context of a responsible-third-party designation, holding that, “ordinarily, ... relator[s] need only establish a trial court’s abuse of discretion to demonstrate entitlement to mandamus relief with regard to a trial court’s denial of a timely-filed section 33.004(a) motion” for leave to designate a responsible third party. Id. at 509–10.

We hold that Palms and Parawest have no adequate remedy by appeal.

We sustain Palms and Parawest’s first and second issues.

Conclusion

We conditionally grant Palms and Parawest’s petition for writ of mandamus and direct respondent to vacate the order denying Palms and Parawest’s motion for leave to designate Turner as a responsible third party. A writ of mandamus from this Court will issue only if respondent does not comply.

Footnotes

1

The underlying case is Seyedali Parsafar v. VC PalmsWestheimer, LLC, Parawest Community Development, LLC, and State Alliance Protective Services, LLC, Cause No. 2019-16627, pending in the 333rd District Court of Harris County, Texas, the Honorable Daryl Moore presiding.

2

State Alliance Protective Services, LLC is not a party to this mandamus proceeding.

3

See TEX. BUS. & COM. CODE ANN. §§ 17.41–.63.

4

See TEX. R. CIV. P. 194.

5

See TEX. CIV. PRAC. & REM. CODE ANN. § 33.004.

6

Parsafar filed a sur-reply to Palms and Parawest’s reply. Parsafar attached his declaration to his sur-reply.

7

The mandamus record does not contain any notice of a hearing on Palms and Parawest’s motion for leave or a transcript from a hearing. But the transcript from a hearing on Palms and Parawest’s motion for reconsideration of the trial court’s denial of their motion for leave indicates that a prior hearing was held on the motion for leave.

8

Parsafar filed a response to the motion for reconsideration.

9

Palms and Parawest do not seek relief related to the trial court’s denial of their motion for leave to designate John Doe as a responsible third party.

10

As a matter of statutory interpretation, Texas Civil Practice and Remedies Code section 33.004(d)’s statement that the defendant must “comply with its obligations, if any, to timely disclose that the person may be designated as a responsible third party under the Texas Rules of Civil Procedure” makes sense only when the disclosure refers to a response to a discovery request. See TEX. CIV. PRAC. & REM. CODE ANN. § 33.004(d) (emphasis added). If the statement required disclosure of a potential responsible third party in an answer, the “if any” verbiage would be surplusage, because all defendants have an obligation to file an answer. But the obligation to respond to a discovery request only arises under the Texas Rules of Civil Procedure when a discovery request is served on a defendant. A court must “give effect to all the words of a statute and not treat any statutory language as surplusage if possible.” Chevron Corp. v. Redmon, 745 S.W.2d 314, 316 (Tex. 1987). Thus, the Texas Supreme Court has said that the obligation to identify a responsible third party arises when “discovery responses [are] due.” In re Mobile Mini, Inc., 596 S.W.3d 781, 784 (Tex. 2020) (orig. proceeding).

11

“Fair notice” under the notice-pleading standard “is achieved if the opposing party can ascertain from the pleading the nature and basic issues of the controversy, and what type of evidence might be relevant. A trial court may not review the truth of the allegations or consider the strength of the defendant’s evidence.” In re CVR Energy, Inc., 500 S.W.3d 67, 80 (Tex. App.—Houston [1st Dist.] 2016, orig. proceeding) (internal quotations and citations omitted).

12

See, e.g., TEX. BUS. & COM. CODE ANN. § 17.565 (two-year statute of limitations period for DTPA claim); TEX. CIV. PRAC. & REM. CODE ANN. § 16.003 (two-year statute of limitations period for negligence claim).

13

Parsafar asserted at the hearing that allowing the designation of Turner as a responsible third party would cause prejudice because “[he] could have, maybe, done something different on [his] end internally, work product wise, strategy wise.” But Palms and Parawest confirmed that discovery had not yet commenced at the time they filed the motion for leave. Further, Parsafar never asserted in the trial court that Turner was not the perpetrator of the assault. Parsafar stated in his declaration attached to his sur-reply filed in the trial court that Palms and Parawest “ha[d] been aware of the alleged [perpetrator] they [were] ... attempting to untimely disclose since the [assault] occurred.... [Palms and Parawest and their counsel] were well-informed regarding ... Turner and his identity.”

14

This Court has previously held that a relator had an adequate remedy by appeal with respect to a trial court’s denial of a motion for leave to designate a responsible third party. See In re Unitec Elevator Servs. Co., 178 S.W.3d 53, 66 (Tex. App.—Houston [1st Dist.] 2005, orig. proceeding). The Texas Supreme Court’s decision in In re Coppola, 535 S.W.3d 506 (Tex. 2017) did not address In re Unitec Elevator Services, but in In re CVR Energy, a “complicated wrongful death case ... with multiple plaintiffs, multiple defendant parent and subsidiary companies, and multiple allegations of tortious conduct by the various companies,” this Court distinguished In re Unitec Elevator Services, a “relatively straightforward personal injury case.” In re CVR Energy, 500 S.W.3d at 82–83.

VICENTE A. MENCHACA, Appellant

v.

INSURANCE COMPANY OF THE STATE OF PENNSYLVANIA, Appellee

NO. 01-18-01122-CV

|

November 3, 2020

On Appeal from the 113th District Court

Harris County, Texas

Trial Court Case No. C-2017-04354

Panel consists of Chief Justice Radack and Justices Goodman and Hightower.

MEMORANDUM OPINION

Sherry Radack Chief Justice

*1 Opinion issued November 3, 2020

Appellant, Vicente A. Menchaca, was injured on the job in 1994. Although he received workers’ compensation benefits for the portion of his injuries related to his wrists, the Texas Department of Insurance Division of Workers’ Compensation determined that the compensable portion of his injuries did not extend to and include injuries to his neck. After exhausting his administrative remedies, Menchaca, proceeding pro se, brought the underlying lawsuit against his employer’s workers’ compensation carrier, the Insurance Company of the State of Pennsylvania (“ICSP”), seeking judicial review of the Texas Department of Insurance Division of Workers’ Compensation decision. The trial court granted summary judgment in favor of ICSP.

In five issues, Menchaca argues that the trial court: (1) lacked jurisdiction to determine whether the compensable injury included injuries to his neck; (2) erred in granting ICSP’s traditional and no-evidence motion for summary judgment; (3) erred in failing to issue findings of fact and conclusions of law; (4) erred in excluding his motion for sanctions; and (5) erred in refusing to consider Menchaca’s additional issues related to his neck injuries, depression, and request for lifetime income benefits.

We affirm.

Background

Menchaca was employed as a machinist for Baker Hughes, Inc. when he suffered a work-related injury on January 18, 1994. At the time of the injury, ICSP was the workers’ compensation carrier for Baker Hughes. On December 22, 1995, the Texas Workers’ Compensation Commission (the “Commission”) determined that Menchaca sustained a compensable injury and ordered ICSP to pay benefits in accordance with that decision.

In 2016, Menchaca sought benefits for injuries related to a cervical injury, contending that the 1994 compensable injury included C6-C7 foraminal encroachment, cervical radiculopathy, spondylolisthesis and atrophy. ICSP disputed that the compensable injury extended to or included C6-C7 foraminal encroachment, cervical radiculopathy, spondylolisthesis and atrophy.

A benefit review officer with the Division of Workers’ Compensation held a benefit review conference with the parties on May 16, 2016 to mediate resolution of the disputed issue. Because the parties were unable to reach an agreement, a contested case hearing was held on September 13, 2016 to decide the following disputed issue: “Does the compensable injury of January 18, 1994 extend to and include C6-C7 foraminal encroachment, cervical radiculopathy, spondylolisthesis and atrophy?”

After the hearing, the Hearing Officer determined that Menchaca had the burden to establish the compensability of the disputed cervicothoracic conditions and diagnoses by a preponderance of the evidence. The Hearing Officer determined that the disputed cervicothoracic conditions and diagnoses were so complex that a factfinder lacked the ability based on common knowledge to find a causal connection and thus expert medical evidence was necessary to establish a causal connection to the compensable injury. The Hearing Officer concluded that although Menchaca relied on his medical records, these medical records were insufficient to show how C6-C7 foraminal encroachment, cervical radiculopathy, spondylolisthesis or atrophy were either caused or aggravated by Menchaca’s activities at work or the compensable injury. Thus, the Hearing Officer found that Menchaca failed to establish the compensability of C6-C7 foraminal encroachment, cervical radiculopathy, spondylolisthesis or atrophy, found that the compensable injury did not extend to or include these conditions, and found that Menchaca was therefore not entitled to benefits for these conditions. On December 12, 2016, Texas Workers’ Compensation Commission Appeals Panel (“Appeals Panel”) upheld the decision.

*2 On January 23, 2017, Menchaca filed the underlying Request for Judicial Review of the administrative decision. Menchaca later filed an amended petition setting forth the specific determinations by which he claimed he was aggrieved, including:

1. [ICSP’s] argument there is no waiver;

2. Hearing Officer’s conclusion that “[t]he disputed issue required expert medical evidence to establish causation”;

3. Hearing Officer’s finding of fact #1(D) that ICSP has accepted a compensable injury on this claim to include bilateral hand/wrist tendinitis and depression;

4. Hearing Officer’s finding of fact #3 that Menchaca’s C6-C7 foraminal encroachment, cervical radiculopathy, spondylolisthesis and atrophy were neither caused nor accelerated, enhanced or worsened by Menchaca’s activities at work or the compensable injury of January 18, 1994; and

5. Hearing Officer’s conclusion of law #3 that the compensable injury of January 1, 1994 does not extend to or include C6-C7 foraminal encroachment, cervical radiculopathy, spondylolisthesis or atrophy.

Menchaca also sought lifetime income benefits.

ICSP filed a no-evidence and traditional motion for summary judgment alleging that there was no evidence that: the compensable injury extended to or included Menchaca’s cervical conditions; Menchaca’s cervical conditions were caused by his compensable injuries; Menchaca was entitled to lifetime income benefits; and Menchaca exhausted his administrative remedies on the issues of waiver and lifetime income benefits. And, ICSP argued that it was entitled to judgment because it established as a matter of law that there was no genuine issue of material fact that the injury did not extend to or include the cervical conditions. Menchaca responded, attaching various medical records as summary-judgment evidence. The trial court granted summary judgment in favor of ICSP and subsequently entered a final judgment on September 21, 2018.

Jurisdiction

In his first issue, Menchaca argues that “ICSP[’s] right to contest the ... compensability of injury should be dismissed because the trial court did not have jurisdiction” because the Commission had previously adjudicated the matter in 1995. Specifically, Menchaca asserts that, in its 1995 decision, the Commission found that his “bilateral hand wrist tendinitis/coupled with cervical outlet syndrome” injury “was the principal and sole compensable injury” and that ICSP had “waived its right to contest extent of injury.”

To the extent that Menchaca’s first issue can be read as one challenging the trial court’s subject matter jurisdiction to hear this case, we conclude that the trial court had jurisdiction. Though phrased as if it was ICSP who was challenging the administrative ruling, it was Menchaca himself who invoked the trial court’s jurisdiction by filing his petition for judicial review of the Commission’s decision. See 410.251 TEX. LAB. CODE § 410.251 (“A party that has exhausted its administrative remedies under this subtitle and that is aggrieved by a final decision of the appeals panel may seek judicial review ....”).

We also reject Menchaca’s argument that the trial court lacked jurisdiction to allow ICSP to contest the compensability of Menchaca’s injury because that issue had been previously adjudicated by the Commission in 1995. Menchaca is correct that the issue of compensability was previously adjudicated by the Commission; however, as demonstrated below, the issue of the extent of the compensable injury, not whether there was a compensable injury at all, was what was before the Commission in 2016.

*3 In the 1995 decision, the Hearing Officer considered whether ICSP “contest[ed] compensability on or before the 60[th] day after being notified of the injury” and whether Menchaca “sustain[ed] a compensable injury on January 18, 1994.” Without including specific findings of fact or conclusions of law, the Hearing Officer determined that ICSP “did not contest compensability on or before the 60[th] day after January 18, 1994” and that Menchaca “sustained a compensable injury on January 18, 1994.”1 The Hearing Officer did not include any findings or conclusions related to the extent of the compensable injury.

Here, ICSP does not dispute that Menchaca suffered a compensable injury in 1994. In fact, in the Commission’s decision in 2016, the Hearing Officer noted that the “parties stipulated that [Menchaca] sustained a compensable injury on January 18, 1994.” ICSP did, however, dispute that this compensable injury extended to include C6-C7 foraminal encroachment, cervical radiculopathy, spondylolisthesis or atrophy and, therefore, the sole issue before the Commission in 2016 was whether “the compensable injury of January 18, 1994 extend[ed] to and include[d] C6-C7 foraminal encroachment, cervical radiculopathy, spondylolisthesis or atrophy.”

In State Office of Risk Management v. Lawton, the Texas Supreme Court clarified the difference between a dispute regarding a compensable injury and a dispute regarding the extent of an injury:

When a carrier disputes the extent of an injury, it is not denying the compensability of the claim as a whole, it is disputing an aspect of the claim.... [A] dispute involving extent of injury is a dispute over the amount or type of benefits, specifically, medical benefits, to which the employee is entitled (i.e. what body areas/systems, injuries, conditions, or symptoms for which the employee is entitled to treatment); it is not a denial of the employee’s entitlement to benefits in general.

295 S.W.3d 646, 649 (Tex. 2009) (citing 25 Tex. Reg. 2096, 2097 (2000)). It is clear that while the issue of compensability had been previously determined by the Commission, the extent of the injury (i.e., specifically whether it included C6-C7 foraminal encroachment, cervical radiculopathy, spondylolisthesis or atrophy) had not. The trial court therefore had jurisdiction to consider this extent-of-injury issue.

Relatedly, because the sole issue before the Commission in 2016 was whether the compensable injury of 1994 extended to and included C6-C7 foraminal encroachment, cervical radiculopathy, spondylolisthesis or atrophy, we do not address Menchaca’s argument that ICSP “waived” its right to contest compensability or extent of injury.

“The Workers’ Compensation Act vests the Workers’ Compensation Division with exclusive jurisdiction to determine a claimant’s entitlement to medical benefits.” In re Liberty Mut. Fire Ins. Co., 295 S.W.3d 327, 328 (Tex. 2009) (orig. proceeding); see also In re Metro. Transit Auth., 334 S.W.3d 806, 811 (Tex. App.—Houston [1st Dist.] 2011, orig. proceeding [mand. denied] ). When an agency has exclusive jurisdiction, a party must exhaust all administrative remedies before seeking judicial review of the agency’s action. See Subaru of Am., Inc. v. David McDavid Nissan, Inc., 84 S.W.3d 212, 221 (Tex. 2002). “The exhaustion requirement ensures that the administrative agency has the opportunity to resolve disputed fact issues within its exclusive jurisdiction before a court addresses those issues.” In re Metro. Transit Auth., 334 S.W.3d at 811.

*4 The Texas Workers’ Compensation Act provides a four-tier system for the disposition of claims. Subsequent Injury Fund v. Serv. Lloyds Ins. Co., 961 S.W.2d 673, 675 (Tex. App.—Houston [1st Dist.] 1998, pet. denied); see generally 410.002 TEX. LAB. CODE §§ 410.002–410.308. The first tier is a benefit review conference conducted by a benefit review officer. Subsequent Injury Fund, 961 S.W.2d at 675; see 410.021 TEX. LAB. CODE §§ 410.021–.034. From the benefit review conference, the parties may seek relief at a contested case hearing. Subsequent Injury Fund, 961 S.W.2d at 675; see 410.151 TEX. LAB. CODE §§ 410.151–.169. The hearing officer’s decision is final in the absence of an appeal. 410.169 TEX. LAB. CODE § 410.169. At the third tier, a party may seek review by an administrative appeals panel. Subsequent Injury Fund, 961 S.W.2d at 675; see 410.201 TEX. LAB. CODE ANN. §§ 410.201–.209. In the fourth tier, a party aggrieved by a final decision of the appeals panel has the right to seek judicial review of the appeals panel decision. TEX. LAB. CODE § 410.251; Cont’l Cas. Ins. Co. v. Functional Restoration Assocs., 19 S.W.3d 393, 398 (Tex. 2000); see also In re Tex. Workers’ Comp. Ins. Fund, 995 S.W.2d 335, 337 (Tex. App.—Houston [1st Dist.] 1999, orig. proceeding [mand. denied] ).

A party may not raise an issue in the trial court that was not raised before an appeals panel. 410.302 TEX. LAB. CODE § 410.302(b); In re Metro. Transit Auth., 334 S.W.3d at 811. A trial is “limited to issues decided by the appeals panel and on which judicial review is sought,” and the “pleadings must specifically set forth the determinations of the appeals panel by which the party is aggrieved.” TEX. LAB. CODE § 410.302(b). A party waives judicial review of any issue not raised before the appeals panel and identified in a timely request for judicial review. Zurich Am. Ins. Co. v. Debose, No. 01-13-00344-CV, 2014 WL 3512769, at *6–7 (Tex. App.—Houston [1st Dist.] July 15, 2014, pet. denied) (mem. op.); Thompson v. Ace Am. Ins. Co., No. 01-10-00810-CV, 2011 WL 3820889, at *4 (Tex. App.—Houston [1st Dist.] Aug. 25, 2011, pet. denied) (mem. op.).

Here, the only issue before the Hearing Officer was the following: “Does the compensable injury of January 18, 1994 extend to and include C6-C7 foraminal encroachment, cervical radiculopathy, spondylolisthesis and atrophy?” The Hearing Officer’s decision does not include any findings or conclusions related to waiver. The record also does not include Menchaca’s request for review to the Appeals Panel, only the decision of the Appeals Panel determining that the Hearing Officer’s decision was the final decision, so we are unable to determine whether Menchaca presented the issue of waiver to the Appeals Panel.

Further, Menchaca’s First Amended Petition sets forth the following determinations by which Menchaca claimed he was aggrieved:

1. “[ICSP’s] argument there is no waiver;”

2. Hearing Officer’s conclusion that “[t]he disputed issue required expert medical evidence to establish causation;”

3. Hearing Officer’s finding of fact #1(D) that ICSP has accepted a compensable injury on this claim to include bilateral hand/wrist tendinitis and depression;

4. Hearing Officer’s finding of fact #3 that Menchaca’s C6-C7 foraminal encroachment, cervical radiculopathy, spondylolisthesis and atrophy were neither caused nor accelerated, enhanced or worsened by Menchaca’s activities at work or the compensable injury of January 18, 1994; and

5. Hearing Officer’s conclusion of law #3 that the compensable injury of January 1, 1994 does not extend to or include C6-C7 foraminal encroachment, cervical radiculopathy, spondylolisthesis or atrophy.2

*5 Although Menchaca references the issue of waiver in his First Amended Petition, it is in reference to an “argument” by ICSP, not in the context of any decision or finding by the Hearing Officer or the Appeals Panel. Menchaca has pointed to nothing in the record to demonstrate that the issue of whether ICSP waived its right to contest compensability or extent of injury was ever presented for consideration or decision in the administrative review process. Because a trial court is “limited to issues decided by the appeals panel and on which judicial review is sought,” and we see no evidence that the issue of waiver was presented or raised before the Hearing Officer or the Appeals Panel, we hold that Menchaca has waived judicial review of this issue. See TEX. LAB. CODE § 410.302(b); Debose, 2014 WL 3512769, at *6–7; Thompson, 2011 WL 3820889, at *4.

We overrule Menchaca’s first issue.3

Summary Judgment

In his second issue, Menchaca argues that the trial court erred in granting ICSP’s no-evidence and traditional motion for summary judgment. In particular, Menchaca raises the following arguments, some of which are the same as those raised in connection with his first issue related to jurisdiction: (1) the no-evidence motion was premature because an adequate time for discovery had not passed; (2) the issue of compensability and extent of injury had already been adjudicated; (3) ICSP waived its right to contest compensability; (4) Menchaca was not required to designate or present expert testimony because the issue of extent of injury had already been adjudicated; (5) Menchaca’s summary judgment response presented more than a scintilla of evidence on all elements; and (6) ICSP failed to comply with 410.258 Labor Code section 410.258 and, therefore, the trial court had no plenary power to render a final judgment. Because we have already addressed arguments two and three in disposing of Menchaca’s first issue, we do not address them again here.

A. Standard of Review

When a party moves for summary judgment on both traditional and no-evidence grounds, as XTO did here, we first address the no-evidence grounds. Merriman v. XTO Energy, Inc., 407 S.W.3d 244, 248 (Tex. 2013). If the non-movant fails to produce legally sufficient evidence to meet his burden as to the no-evidence motion, there is no need to analyze whether the movant satisfied his burden under the traditional motion. Id.

We review no-evidence summary judgments under the same legal sufficiency standard as directed verdicts. King Ranch, Inc. v. Chapman, 118 S.W.3d 742, 750 (Tex. 2003). Under that standard, we consider evidence in the light most favorable to the nonmovant, crediting evidence a reasonable jury could credit and disregarding contrary evidence and inferences unless a reasonable jury could not. City of Keller v. Wilson, 168 S.W.3d 802, 823 (Tex. 2005). The nonmovant has the burden to produce summary judgment evidence raising a genuine issue of material fact as to each challenged element of its cause of action. TEX. R. CIV. P. 166a(i); Johnson v. Brewer & Pritchard, P.C., 73 S.W.3d 193, 206 (Tex. 2002). A no-evidence challenge will be sustained when

(a) there is a complete absence of evidence of a vital fact, (b) the court is barred by rules of law or of evidence from giving weight to the only evidence offered to prove a vital fact, (c) the evidence offered to prove a vital fact is no more than a mere scintilla, or (d) the evidence conclusively establishes the opposite of the vital fact.

*6 King Ranch, 118 S.W.3d at 751 (internal quotation omitted).

To prevail on a “traditional” summary-judgment motion asserted under Rule 166a(c), a movant must prove that there is no genuine issue regarding any material fact and that it is entitled to judgment as a matter of law. See TEX. R. CIV. P. 166a(c); Little v. Tex. Dep’t of Criminal Justice, 148 S.W.3d 374, 381 (Tex. 2004). A matter is established as a matter of law if reasonable people could not differ as to the conclusion to be drawn from the evidence. See City of Keller, 168 S.W.3d at 816.

To determine if there is a fact issue, we review the evidence in the light most favorable to the nonmovant, crediting favorable evidence if reasonable jurors could do so, and disregarding contrary evidence unless reasonable jurors could not. See Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 289 S.W.3d 844, 848 (Tex. 2009). We indulge every reasonable inference and resolve any doubts in the nonmovant’s favor. Sw. Elec. Power Co. v. Grant, 73 S.W.3d 211, 215 (Tex. 2002).

B. No-Evidence Summary Judgment

In its no-evidence motion for summary judgment, ICSP argued that there was no evidence that the compensable injury extends to include C6-C7 foraminal encroachment, cervical radiculopathy, spondylolisthesis or atrophy or that the compensable injury was the producing cause of Menchaca’s C6-C7 foraminal encroachment, cervical radiculopathy, spondylolisthesis or atrophy. ICSP also argued that there was no evidence to support Menchaca’s claim for lifetime income benefits or that Menchaca had exhausted his administrative remedies as to any claim for lifetime income benefits. As the nonmovant, it was Menchaca’s burden to produce summary judgment evidence raising a genuine issue of material fact as to each challenged element of his cause of action. TEX. R. CIV. P. 166a(i); Johnson, 73 S.W.3d at 206.

1. Adequate time for discovery

Menchaca first argues that the trial court erred in granting the no-evidence summary judgment because the motion was premature. A party may move for a no-evidence summary judgment only “[a]fter adequate time for discovery.” TEX. R. CIV. P. 166a(i). The rule does not require that discovery must have been completed, only that there was “adequate time.” Specialty Retailers, Inc. v. Fuqua, 29 S.W.3d 140, 145 (Tex. App.—Houston [14th Dist.] 2000, pet. denied). In determining whether the trial court has permitted an adequate time for discovery, we generally consider the following non-exclusive factors: (1) the nature of the cause of action; (2) the nature of the evidence necessary to controvert the no-evidence motion; (3) the length of time the case has been active in the trial court; (4) the amount of time the no-evidence motion has been on file; (5) whether the movant has requested stricter time deadlines for discovery; (6) the amount of discovery that has already taken place; and (7) whether the discovery deadlines that are in place are specific or vague. Madison v. Williamson, 241 S.W.3d 145, 155 (Tex. App.—Houston [1st Dist.] 2007, pet. denied).

*7 In support of his contention that an adequate time for discovery had not yet passed, Menchaca points to the fact that the no-evidence motion was filed on May 25, 2018, before the close of discovery on June 15, 2018. We first note that although Menchaca argues that ICSP filed its motion before the close of discovery, the record does not contain a docket control order setting out the specific deadlines for discovery. Second, while a comment to rule 166a states that “ordinarily a motion ... would be permitted after the [discovery] period but not before,” see TEX. R. CIV. P. 166a cmt., we have previously concluded that this comment does not prohibit the filing of a no-evidence motion before the discovery period has ended. See Singleterry v. Etter, No. 01-16-00700-CV, 2017 WL 2545107, at *3 (Tex. App.—Houston [1st Dist.] June 13, 2017, no pet.) (mem. op.); see also Elgohary v. Lakes on Eldridge N. Cmty. Ass’n, Inc., No. 01-14-00216-CV, 2016 WL 4374918, at *5 (Tex. App.—Houston [1st Dist.] Aug. 16, 2016, no pet.) (mem. op.) (affirming no-evidence summary judgment granted three months before discovery period expired); Thibodeaux v. Toys “R” Us–Delaware, Inc., No. 01-12-00954-CV, 2013 WL 5885099, at *3–5 (Tex. App.—Houston [1st Dist.] Oct. 31, 2013, no pet.) (mem. op.) (affirming no-evidence summary judgment granted three weeks before discovery period expired). Thus, even if the no-evidence motion was filed before the close of discovery, this does not automatically mean there has not been adequate time for discovery.

Further, Menchaca has made no effort to identify any specific evidence he needed to respond to ICSP’s motion, nor did he move for a continuance in the trial court to allow for additional time for discovery. See Madison, 241 S.W.3d at 155 (holding that trial court did not abuse its discretion in determining that adequate time for discovery had passed based, in part, on plaintiff’s failure to specify “the additional evidence she needed to respond to the motion, or the reason she could not obtain it during the discovery period”); Lindsey Constr., Inc. v. AutoNation Fin. Servs., LLC, 541 S.W.3d 355, 360 (Tex. App.—Houston [14th Dist.] 2017, no pet.) (“When a party contends it has not had an adequate opportunity for discovery before a summary-judgment hearing or that there has not been adequate time for discovery under Texas Rule of Civil Procedure 166a(i), the party must file either an affidavit explaining the need for further discovery or a verified motion for continuance.”).

Here, Menchaca filed his petition for judicial review in January 2017. Sixteen months later, and less than two months before the trial date, ICSP filed its motion for no-evidence summary judgment. Menchaca did not specify below, or on appeal, any particular evidence that he was unable to obtain during the sixteen months the suit was on file before ICSP filed its no-evidence motion. On the contrary, Menchaca argued in his summary judgment response that he “use[d] due diligence in obtaining discovery despite physical, mental and economic complications,” and that he “meaningfully responded to discovery.” Further, Menchaca’s position below and on appeal is that he had no obligation to present expert or other testimony as to causation because the neck injuries had already been included as part of the compensable injury by the Commission in 1994. Under these circumstances, we conclude that Menchaca has failed to show that the trial court erred in granting the no evidence summary judgment because he did not have an adequate time for discovery.

2. Expert testimony necessary to show causation

Menchaca next argues that was not required to designate or present expert testimony because the issue of the extent of injury had already been adjudicated. Specifically, Menchaca argues that there was no need for expert testimony after these injuries were “diagnosed, treated, and diagnostic tests confirmed [the] extent of injury, followed by confirmation from [ICSP’s] own assigned Medical Expert[, which] conclusively established [that the] injury of 01/18/1994 exten[ded] to and include[d] ‘Cervical Thoracic Condition,’ and requested a Cervical Laminectomy.” Menchaca also argues that there was substantial medical evidence in the record that his 1994 compensable injury was the principal and producing cause of the “cervical thoracic condition.” Menchaca argues that, thus, he was not required to produce additional expert testimony as to causation.

*8 As an initial point, we have already determined that the Commission did not previously adjudicate the extent-of-injury issue. Thus, the only question is whether expert testimony was needed to establish that the C6-C7 foraminal encroachment, cervical radiculopathy, spondylolisthesis and atrophy were causally related to the compensable injury Menchaca suffered in 1994. We conclude that it was necessary.

As a general rule, expert testimony is necessary to establish causation as to medical conditions outside the common knowledge and experience of jurors. Guevara v. Ferrer, 247 S.W.3d 662, 665 (Tex. 2007). In limited cases, however, lay testimony may support a causation finding that links an event with a person’s physical condition. Id. at 666. This exception applies only in those cases in which general experience and common sense enable a layperson to determine the causal relationship with reasonable probability. See id.; Morgan v. Compugraphic Corp., 675 S.W.2d 729, 733 (Tex. 1984). In such cases, “lay testimony establishing a sequence of events which provides a strong, logically traceable connection between the event and the condition is sufficient proof of causation.” Morgan, 675 S.W.2d at 733.

The types of injuries for which Menchaca sought compensation—C6-C7 foraminal encroachment, cervical radiculopathy, spondylolisthesis and atrophy—are neither common nor basic. See Kelley v. Aldine Indep. Sch. Dist., No. 14-15-00899-CV, 2017 WL 421980, at *3 (Tex. App.—Houston [14th Dist.] Jan. 31, 2017, pet. denied) (holding that claimant needed expert testimony to establish causal connection between work-related fall and additional claimed injuries, including multiple disc herniations, cervical radiculitis, and lumbar radiculopathy, because those injuries were not within jurors’ common knowledge and experience); Croysdill v. Old Republic Ins. Co., 490 S.W.3d 287, 294 (Tex. App.—El Paso 2016, no pet.) (concluding that expert testimony was necessary to determine whether several diagnoses—including lumbar disc displacement, chronic lumbar radiculitis, chronic sciatica, spondylolisthesis, bilateral nerve root irritation, anterior disc herniation, foraminal stenosis, facet arthropathy, and broad-based disc bulge contributing to moderate to severe bilateral neural foraminal stenosis—were causally related to claimant’s compensable back injury); City of Laredo v. Garza, 293 S.W.3d 625, 632–33 (Tex. App.—San Antonio 2009, no pet.) (determining that lay testimony alone was not sufficient to prove medical causation of disc herniations and radiculopathy).

Moreover, even assuming that lay testimony was sufficient to link Menchaca’s conditions to his on-the-job injury, Menchaca has not pointed to any lay testimony, from himself or other lay witnesses, that establishes a sequence of events providing a strong, logically traceable connection between his additional medical conditions and his compensable injury. See Morgan, 675 S.W.2d at 733. Thus, this case is not one in which general experience and common sense enable a layperson to determine the causal relationship with reasonable probability and Menchaca needed expert testimony to establish a causal connection between his work-related injury in 1994 and his additional claimed injuries. See Kelley, 2017 WL 421980, at *3; Croysdill, 490 S.W.3d at 294; Garza, 293 S.W.3d at 632–33.

Having concluded that expert testimony was required, we turn to whether Menchaca satisfied his burden to produce at least a scintilla of evidence of causation in response to ICSP’s no-evidence motion. It is here that Menchaca argues that he did not need to produce expert testimony as to causation because there was substantial medical evidence in the record establishing that the compensable injury was the producing cause of his cervical conditions.4 It is undisputed that Menchaca presented no expert testimony and instead relied on medical records in his summary judgment response. Even if medical records alone could constitute the necessary expert evidence, the medical records relied upon by Menchaca do not establish that the cervical conditions were caused by the compensable injury Menchaca suffered in January 1994.

*9 Here, Menchaca’s medical records show that he was seen initially by a Dr. Robert J. McAnis, who diagnosed Menchaca in 1994 with tendinitis, as well as “bilateral cervical outlet syndrome.” Dr. McAnis referred Menchaca to Dr. Brian A. Schulman, who performed an EMG and nerve conduction study on him due to complaints of pain, numbness and weakness in his right arm. Dr. Schulman noted that he believed that Menchaca had a C-7 radiculopathy. An MRI exam of Menchaca’s cervical spine was then performed in February 1994, which found cervical spondylosis, spinal stenosis, and right neural foraminal attenuation. Finally, on March 8, 1994, Dr. J. Martin Barrash examined Menchaca, who noted that it was his impression that Menchaca has a C6-C7 foraminal encroachment causing C-7 radiculopathy.

However, the records attached to his summary judgment response also show that the only injury reported was tendinitis in both wrists—there is no mention of any cervical injuries. Further, nowhere in these medical records do any of the medical providers opine on the cause of the cervical conditions. In fact, Dr. Barrash described a previous neck injury Menchaca suffered in 1991 “when a heavy piece of metal pulled on his right arm pulling it down and [Menchaca] felt pain into the neck.”

The medical records likewise do not contain any expert opinions as to how Menchaca’s injuries to his wrists could and did cause the cervical conditions. To the contrary, the only statement related to causation found in the records attached to Menchaca’s summary judgment response establish that these two conditions were not causally related. Dr. Barrash stated in a March 23, 1994 letter: “I do not feel that [Menchaca’s] neck is related to his hands and that the hand problems are specifically stated as occurring without mention of [Menchaca’s] neck.” It is not enough for Menchaca to simply provide evidence that he suffered from or was diagnosed with these additional conditions. In order to receive workers’ compensation benefits for these injuries, he needed to establish, through expert testimony, that the compensable injury was a producing cause of those additional conditions. See Garza, 293 S.W.3d at 629.

We cannot conclude that the medical records submitted by Menchaca established the necessary causal connection between the compensable injury and his cervical conditions. See, e.g., Ballard v. Arch Ins. Co., 478 S.W.3d 950, 957–58 (Tex. App.—Houston [14th Dist.] 2015, no pet.) (holding that there was no evidence claimant’s compensable eye injury extended to blindness absent expert testimony affirmatively stating that compensable injury aggravated claimant’s preexisting glaucoma such that it caused blindness); State Office of Risk Mgmt. v. Larkins, 258 S.W.3d 686, 690–91 (Tex. App.—Waco 2008, no pet.) (holding that even if claimant’s medical records could be considered expert testimony, records did not establish that claimant’s depression, anxiety, and post-traumatic stress disorder were causally related to her on-the-job head injury where records did not explain how head injury could or did cause such diagnoses); see also Kelley, 2017 WL 421980, at *3 (holding trial court properly directed verdict in favor of school district where claimant failed to present expert testimony establishing that her work-related fall caused disc herniations, cervical radiculitis, and lumbar radiculopathy). Because the record contains no evidence of causation, the trial court did not err in granting ICSP’s no-evidence summary judgment motion as to Menchaca’s extent of injury claims.5

*10 Because we have concluded that the trial court properly granted ICSP’s no-evidence motion, we do not analyze whether ICSP satisfied its burden under the traditional motion. See Merriman, 407 S.W.3d at 248.

3. Lifetime income benefits

In its no-evidence motion, ICSP also argued that it was entitled to summary judgment on Menchaca’s claim for lifetime income benefits because there was no evidence he had exhausted his administrative remedies as to this claim. As stated above, a party may not raise an issue in the trial court that was not raised before an appeals panel. TEX. LAB. CODE § 410.302(b); In re Metro. Transit Auth., 334 S.W.3d at 811. A party waives judicial review of any issue not raised before the appeals panel and identified in a timely request for judicial review. Debose, 2014 WL 3512769, at *6–7; Thompson, 2011 WL 3820889, at *4.

Here, the only issue before the Hearing Officer was whether the compensable injury extended to and included Menchaca’s additional cervical conditions. The record reflects that Menchaca sought to include additional issues to be considered at the contested hearing, including the issue of lifetime income benefits. ICSP opposed the motion, noting that this issue had already been litigated.6 The Hearing Officer denied Menchaca’s request to add additional issues, finding good cause was not shown. Thus, the Hearing Officer’s decision does not include any findings or conclusions related to Menchaca’s entitlement to lifetime income benefits.

The record also does not include Menchaca’s request for review to the Appeals Panel, only the decision of the Appeals Panel denying the appeal, so we are unable to determine whether Menchaca presented to the Appeals Panel the issue of whether the Hearing Officer abused her discretion in denying his request to add the issue of lifetime income benefits. See Tex. Workers’ Comp. Comm’n, Appeal No. 972042, 1997 WL 34630298, at *3 (Jan. 1, 1997) (“We [appeals panel] review a hearing officer’s ruling on a motion for additional issues under an abuse of discretion standard.”). Moreover, in his petition requesting judicial review, Menchaca does not include the Hearing Officer’s decision denying his motion to include additional issues as one of the specific determinations by which he was aggrieved and for which he sought judicial review in the trial court. See TEX. LAB. CODE § 410.302(b) (“The pleadings must specifically set forth the determinations of the appeals panel by which the party is aggrieved.”). He merely claims in his petition that he is entitled to lifetime income benefits.

*11 Menchaca has not shown that this issue was presented to and considered by the hearing officer, Appeals Panel, or the trial court. Thus, he has waived judicial review of this issue. See Debose, 2014 WL 3512769, at *6–7; Thompson, 2011 WL 3820889, at *4. The trial court properly granted summary judgment on the issue of lifetime income benefits.

4. ICSP’s compliance with TEXAS LABOR CODE § 410.258

Menchaca next argues that the trial court’s final judgment is void because ICSP failed to comply with Texas Labor Code section 410.258. Specifically, Menchaca contends ICSP failed to provide notice to the Commission thirty days before the trial court signed its June 29, 2018 order granting summary judgment in favor of ICSP. We disagree.

Section 410.258(a) requires a party to file “any proposed judgment ... with the division not later than the 30th day before the date on which the court is scheduled to enter the judgment ....” TEX. LAB. CODE § 410.258(a). The division is then given the opportunity to intervene not later than 30 days after receipt of the notice if the commissioner determines that the proposed judgment is not in “compliance with all appropriate provisions of the law.” Id. § 410.258(b), (c). If the division does not intervene, the court shall enter the judgment if the court determines the proposed judgment is in compliance with the law. See Id. § 410.258(d). Finally, if a judgment is entered without complying with the requirements of section 410.258, the judgment is void. Id. § 410.258(f).

Here, the trial court granted summary judgment in favor of ICSP on June 29, 2018. The order expressly states that it is not a final appealable judgment and that “the Court shall enter a final judgment after notification to the Division of Workers’ Compensation [Commission] as set forth in Texas Labor Code § 410.258.” Prior to filing its motion for entry of final judgment, on July 5, 2018, ICSP provided notice to the Commission of the proposed final judgment. In a letter dated July 10, 2018, and in response to a communication from Menchaca, the Commission acknowledged receipt of the proposed final judgment from ICSP and stated that it did “not anticipate filing an intervention petition in [his] judicial review lawsuit because the proposed ‘Final Judgment’ appear[ed] to be in compliance with the Act.” After thirty days had passed from the date that Menchaca provided notice of the proposed final judgment to the Commission, on August 8, 2018, ICSP filed a motion for entry of judgment, which the court signed on September 21, 2018. The final judgment also expressly states that the “notice of the form of judgment was made pursuant to Texas Labor Code § 410.258.”

We conclude that ICSP complied with section 410.258 of the Texas Labor Code by providing notice of its proposed final judgment thirty days before filing its motion for entry of final judgment. ICSP was not required to provide notice of its proposed order on its motion for summary judgment, because any order on that motion was not a “judgment,” but rather interlocutory, and not subject to appeal or review until final judgment was entered. See, e.g., Dallas Symphony Ass’n, Inc. v. Reyes, 571 S.W.3d 753, 763 (Tex. 2019) (“An interlocutory order granting summary judgment is not subject to appeal.” (emphasis in original)). Section 410.258 speaks in terms of a proposed “judgment”; here, the court did not enter a final judgment until after ICSP provided notice of the proposed final judgment to the Commission and filed its motion for entry of final judgment. Accordingly, we hold that ICSP complied with section 410.258 and decline to hold that the trial court’s final judgment was void.

*12 For the reasons stated above, we overrule Menchaca’s second issue.

Findings of Fact and Conclusions of Law

In his third issue, Menchaca argues that, because he received an adverse decision on summary judgment, the trial court erred in failing to issue findings of fact and conclusions of law to explain the basis for its summary judgment ruling. Menchaca argues that because ICSP raised numerous points in its summary judgment, without findings from the court, he “must now guess the reasons behind the trial court[’s] ruling affecting his claim, an overwhelming/burdensome task.”

“[F]indings of fact and conclusions of law have no place in a summary judgment proceeding.” IKB Indus. (Nigeria) Ltd. v. Pro-Line Corp., 938 S.W.2d 440, 441 (Tex. 1997). This is because, for summary judgment to be rendered, there cannot be a genuine issue as to any material fact, and the legal grounds are limited to those stated in the motion and response. Id. “[I]f summary judgment is proper, there are no facts to find, and the legal conclusions have already been stated in the motion and response.” Id. Thus, “[t]he trial court should not make, and an appellate court cannot consider, findings of fact in connection with a summary judgment.” Id. Because there was no need for findings of fact and conclusions of law, we hold that the trial court did not err in failing to issue them at Menchaca’s request.

We overrule Menchaca’s third issue.

Motion for Sanctions

In his fourth issue, Menchaca argues that the trial court erred in “excluding” and failing to hold a hearing on his motion for sanctions. However, we hold that Menchaca has failed to preserve this issue for appeal.

In order to present a complaint on appeal, Texas Rule of Appellate Procedure 33.1 requires that the record demonstrate that (1) the complaint was made to the trial court by a timely request, objection, or motion and (2) the trial court either “ruled on the request, objection, or motion, either expressly or implicitly,” or “refused to rule on the request, objection, or motion, and the complaining party objected to the refusal.” TEX. R. APP. P. 33.1(a).

Here, Menchaca filed a motion for sanctions against ICSP for filing a frivolous and groundless motion for summary judgment. The record reflects that Menchaca filed a notice of hearing on his motion for sanctions for August 31, 2018. At the August 24, 2018 hearing on ICSP’s motion for entry of judgment, the trial court stated that the motion for sanctions was not set for hearing that day but that “[i]f it comes forth, I’ll consider it.” On August 31, 2018, Menchaca emailed the clerk of the 113th District Court, noting that he was informed that the trial court would not hold the hearing on August 31, 2018 on his motion for sanctions, and that he “wanted to go on record and request that the ... motion for sanctions be stayed to be lifted by the court at a later date.” On September 12, 2018, Menchaca filed a “request to trial court” requesting that his “motion for sanctions filed on July 19, 2018 be brought forth to the trial judge for consideration.” However, in a letter filed with the trial court on September 20, 2018, Menchaca stated that he “continues to request that his Motion for Sanctions be stayed for a later date.” On September 21, 2018, the trial court entered an order making the June 29, 2018 order granting summary judgment in favor of ICSP a final and appealable judgment; however, the final judgment makes no mention of the pending motion for sanctions.

*13 The record contains no ruling from the trial court, either implicit or explicit, on Menchaca’s motion for sanctions. Nor does the record reflect that the trial court refused to rule on such motion. In fact, the record reflects the opposite. The trial court indicated its intention to consider the motion, if it was presented to it for a ruling. However, Menchaca’s multiple requests to the trial court that the motion for sanctions be “stayed” demonstrate that he did not pursue a ruling on the motion or object to the trial court’s failure to rule. Thus, we hold that Menchaca failed to preserve this issue for appellate review. See TEX. R. APP. P. 33.1(a).

We overrule Menchaca’s fourth issue.

Additional Issues

In his fifth issue, Menchaca argues that the trial court erred in excluding his “motion to include additional issues.” Specifically, Menchaca argues that the Hearing Officer, and the trial court, erred in excluding his “other issues” relating to his neck, depression, and lifetime income benefits because good cause existed for the addition of such issues. However, we conclude that Menchaca has not preserved this issue for appellate review. Again, in order to preserve a complaint for appellate review, Rule 33.1 requires a party to make a timely request or motion stating the specifics of the complaint, as well as to obtain a ruling from the trial court on the request or motion. TEX. R. APP. P. 33.1(a).

Here, despite Menchaca’s claim that the trial court erred in excluding his “motion to include additional issues,” the record is devoid of any evidence that such a motion was filed in the trial court, or that review of the Hearing Officer’s decision on the motion to include additional issues was appealed to the Appeals Panel. Nor does the record reflect that Menchaca made even an informal request to the trial court to consider his additional issues. And, apart from the statement in his petition that he is entitled to lifetime income benefits, there is nothing in the record to suggest that Menchaca put on any evidence related to these additional issues or why the Hearing Officer abused its discretion in refusing to consider them. Because there is neither evidence that Menchaca made a request or motion to the trial court related to these additional issues, nor evidence that the trial court ever ruled on any such request or motion, we hold that Menchaca has failed to preserve this issue for our review. Id.

We overrule Menchaca’s fifth issue.

Conclusion

We affirm the trial court’s judgment.

Footnotes

1

We conclude that there is nothing in the Commission’s 1995 decision to support Menchaca’s claims that the Commission found that his “bilateral hand wrist tendinitis/coupled with cervical outlet syndrome” injury “was the principal and sole compensable injury” and that ICSP had “waived its right to contest [the] extent of [his] injury.”

2

Menchaca also states that he was aggrieved by the Hearing Officer’s finding of fact #4, but there is no finding of fact #4 in the September 16, 2016 order.

3

In connection with his first issue, Menchaca also argues that he was not required to present expert testimony on causation. As this argument is relevant to determining whether the trial court properly granted summary judgment in favor of ICSP (as opposed to whether the trial court had jurisdiction), we address that argument in connection with Menchaca’s second issue.

4

We note that in support of this argument that there is substantial evidence of a causal connection in the record, Menchaca cites “Vicente A. Menchaca v. Insurance Co. of the State of Pennsylvania, DOCKET NO. HE 94-088955-06-CC-HE48, decided July 16, 2010; “APD 961449”; and “Tab B.” We can find no reference in the record to any previous decision from the Commission in 2010. To the extent that such a decision exists and is relevant to the issues to be decided here, it was Menchaca’s burden to include that in the record on appeal. See Huston v. United Parcel Serv., Inc., 434 S.W.3d 630, 636 (Tex. App.—Houston [1st Dist.] 2014, pet. denied). Further, we presume that the reference to “Tab B” refers to Tab B of Menchaca’s Appendix, which is a copy of his First Amended Petition. Because pleadings are not competent summary judgment evidence, we do not consider his amended petition as evidence. See Laidlaw Waste Sys. (Dall.), Inc. v. City of Wilmer, 904 S.W.2d 656, 660–61 (Tex. 1995). Finally, the Appeals Panel Decision No. 961449 that Menchaca cites merely stands for the same proposition that in order for additional conditions to be compensable, the claimant must demonstrate a causal connection between the compensable injury and the additional conditions, i.e., that the compensable injury was a producing cause of the additional conditions. It in no way supports his argument that there is sufficient evidence in the record here to establish the necessary causal connection between his compensable injury and the additional cervical injuries.

5

Menchaca also includes a brief argument alleging that, although he exhausted his administrative remedies, ICSP failed to follow the same process related to raising its defense of causation and, thus, should not be permitted to raise that argument here. We disagree. Included in the four-tier system set forth in the Workers’ Compensation Act is the ability of an “aggrieved” party to seek judicial review of a final decision by the appeals panel. TEX. LAB. CODE § 410.251. A party who obtains a favorable result at the administrative level and against whom no adverse ruling was made need not affirmatively seek judicial review of the decision. See, e.g., Thompson v. Ace Am. Ins. Co., No. 01-10-00810-CV, 2011 WL 3820889, at *6 (Tex. App.—Houston [1st Dist.] Aug. 25, 2011, pet. denied) (mem. op.) (holding claimant not required to exhaust administrative remedies on issue of date of injury where claimant was prevailing party at both contested hearing and appeals panel and no adverse ruling was made against claimant); In re Metro. Transit Auth., 334 S.W.3d 806, 811 (Tex. App.—Houston [1st Dist.] 2011, orig. proceeding [mand. denied] ) (rejecting argument that claimant failed to exhaust her administrative remedies where claimant appealed hearing officer’s adverse findings to appeals panel and received decision from appeals panel in her favor and, thus, did not file a petition for judicial review in district court). Here, ICSP was the prevailing party at the contested hearing and the appeals panel and there were no adverse rulings made against it. In fact, the Commission found in ICSP’s favor on the issue of causation. ICSP, therefore, was not required to exhaust administrative remedies on the issue of causation.

6

Menchaca previously sought lifetime income benefits from ICSP based on the alleged total and permanent loss of the use of both hands resulting from the 1994 injury. The Commission determined that he was not entitled to lifetime income benefits, the appeals panel denied his administrative appeal, and he sought judicial review of that decision. The trial court granted summary judgment in favor of ICSP and Menchaca appealed. On appeal, the Fourteenth Court of Appeals affirmed, concluding that ICSP’s summary judgment evidence established that Menchaca possessed substantial utility of his hands above the wrists and that his inability to gain and keep employment did not result from the condition of his hands, and Menchaca failed to file a response raising a genuine issue of material fact. Menchaca v. Ins. Co. of State of Penn., No. 14-12-01158-CV, 2014 WL 871206, at *4 (Tex. App.—Houston [14th Dist.] Mar. 4, 2014, no pet.) (mem. op.).

Court of Appeals of Texas, Houston (1st Dist.).

Manisch SOHANI and Anis Virani, Appellants

v.

Nizar SUNESARA, Appellee

NO. 01-19-00122-CV

|

Opinion issued August 25, 2020

Attorneys & Firms

Keval Patel, 19855 Southwest Frwy., Ste. 330, Houston, Texas 77479, Louis F. Teran (Pro Hac), 1055 E. Colorado Blvd., Ste. 500, Pasadena, CA 1106, for Appellants.

Terrie L. Sechrist, Sarah A. Duckers, Sechrist & Duckers LLP, 6300 West loop South, Ste. 415, Bellaire, Texas 77401, for Appellee.

Panel consists of Justices Keyes, Kelly, and Landau.

OPINION

Evelyn V. Keyes, Justice

*1 This case is a dispute between former business associates. Appellants, Manisch Sohani and Anis Virani, sued appellee, Nizar Sunesara, for fraud and sought declaratory relief arising out of Sunesara’s formation of three limited liability companies. Sunesara asserted a counterclaim for declaratory relief, seeking a declaration that he was a member of each LLC and was entitled to one-third of the net profits from each LLC. A jury found that (1) Sunesara was a member of each LLC and was entitled to one-third of the net profits from each LLC, (2) Sohani and Virani were estopped from denying Sunesara’s membership in the LLCs, and (3) Sunesara did not commit fraud. The trial court entered judgment on the jury verdict. In a prior appeal, this Court affirmed the judgment, but modified it to delete the portion providing that Sunesara was entitled to one-third of the net profits from the LLCs. See Sohani v. Sunesara, 546 S.W.3d 393, 410 (Tex. App.—Houston [1st Dist.] 2018, no pet.).

After this Court’s mandate issued, Sohani and Virani filed two motions with the trial court: one seeking reconsideration of the court’s award of attorney’s fees in favor of Sunesara, and one seeking disgorgement of past profits previously distributed to Sunesara. The trial court denied both motions. In this appeal, Sohani and Sunesara argue (1) the trial court abused its discretion by failing to reconsider its award of attorney’s fees and (2) recovery of profits previously paid to Sunesara is “necessary and proper further relief” authorized by the Texas Declaratory Judgments Act (“DJA” or “the Act”).

We affirm.

Background

In 2002, Sunesara and Virani began selling smoking accessories at flea markets in Houston and Austin. In 2003, they decided to open up a brick-and-mortar retail store in Houston, called Zig Zag Smoke Shop, and they brought in Sohani as another owner. In 2012, Sunesara and Virani decided to expand their business, and they opened a second smoke shop called Burn Smoke Shop (“Burn I”). Toward the end of that year, another smoke shop, EZ Smoke Shop, sold its existing business to Sunesara, Virani, and Sohani, and they changed the name of this shop to Burn Smoke Shop Two (“Burn II”).

Before the acquisition of Burn II was finalized, Sohani and Virani asked Sunesara to file paperwork to form three limited liability companies to own and operate the three smoke shops. Sunesara filed paperwork to create three LLCs: ZZSS, LLC (which managed Zig Zag Smoke Shop), BRNSS, LLC (which managed Burn I), and EZSS, LLC (which managed Burn II). The paperwork for the LLCs lists Virani, Sohani, and Sunesara as governing persons. Virani, Sohani, and Sunesara were also all listed as “members” of the LLCs on the signature cards for bank accounts that they opened up for the companies.

Over the next few years, the parties’ working relationship deteriorated, and they began having disputes over whether Sunesara was entitled to profit distributions from the LLCs. Sohani and Virani filed suit against Sunesara in 2015, asserting causes of action for fraud and declaratory relief. With respect to their fraud claim, they alleged that Sunesara improperly listed himself as a member of the LLCs on the paperwork that he filed with the State of Texas and that he fraudulently represented that he was a member entitled to profit distributions and access to the LLCs’ books and records. With respect to their claims for declaratory relief, they sought declarations that Sunesara was not a member of the LLCs, he did not have a membership interest in the LLCs, he was not entitled to review the books and records of the LLCs, and he was not entitled to any profit distributions or other sums from the LLCs.

*2 Sunesara filed several counterclaims against Sohani and Virani, including claims for breach of fiduciary duty, breach of the duty of good faith and fair dealing, quantum meruit, fraud, and promissory estoppel. He sought an accounting and a declaration that he was a member of the LLCs and was entitled to one-third of the profits from the LLCs. Sunesara later dropped his claims for monetary damages, and, at trial, he sought only non-monetary relief, specifically, declarations that he was a member of the LLCs, he was entitled to one-third of the net profits from the LLCs, and he was entitled to examine the books and records of the LLCs.

The jury found that Sunesara was a member of each of the LLCs and was entitled to a one-third profit distribution from each of the LLCs. The jury also found that Sohani and Virani were estopped from denying that Sunesara was a member of the LLCs, and it found that Sunesara did not commit fraud against Sohani or Virani. The jury also made findings concerning both parties’ attorney’s fees. The trial court entered judgment on the jury verdict, declaring that Sunesara was a member of the LLCs and entitled to one-third of the profits from the LLCs, and awarding Sunesara $98,166 in trial-level attorney’s fees and a total of $110,000 in conditional appellate attorney’s fees.

Sohani and Virani appealed the trial court’s judgment to this Court. In one of their issues on appeal, they argued that the trial court’s declaration that Sunesara was a member of each of the LLCs and was entitled to one-third of the profits from the LLCs conflicted with Business Organizations Code section 101.201. Section 101.201 requires an LLC’s allocation of profits and losses to be made “on the basis of the agreed value of the contributions made by each member, as stated in the company’s records,” but no written records demonstrated Sunesara’s contributions to the LLCs or demonstrated that he was entitled to one-third of the profits. See Sohani, 546 S.W.3d at 404. Sohani and Virani did not raise any issues concerning the attorney’s fees. In their prayer for relief, they requested that this Court “set aside the Final Judgment entered by the Trial Court, in particular, the Trial Court’s judgment that [Sunesara] is entitled to profit distributions from the LLCs.”

We construed two sections of the Business Organizations Code

as requiring a limited liability company to include a statement of the amount of cash contributions made by each member and a statement of the agreed value of any other contribution made by each member in the written records of the company and that these records establish the allocation of a member’s share of the profits and losses of the company.

Id. at 407 (construing TEX. BUS. ORGS. CODE ANN. §§ 101.201, 101.501(a)(7)). Because Sunesara offered only his testimony at trial that he made contributions to the LLCs and did not offer any written records reflecting his contributions, we concluded that he presented no evidence that he was entitled to one-third of the profits of the LLCs. Id. We therefore held that “[b]ecause Sunesara was not assigned a share of profits in the company agreements and presented no evidence that he was entitled to a one-third share of profits in the LLCs, he was not entitled to a share in profits as a matter of law” and that the trial court erred to the extent it ruled that Sunesara was entitled to one-third of the profits. Id. at 408. We modified the trial court’s judgment to delete the declaration that Sunesara was entitled to one-third of the profits from the operation of the three LLCs and affirmed the remainder of the trial court’s judgment. Id. at 410. We did not make any holdings concerning attorney’s fees, nor were we asked to do so.

*3 After our mandate issued, Sohani and Virani filed two motions with the trial court. In their first motion, entitled, “Plaintiff’s Motion to Amend Judgment or Reconsideration,” Sohani and Virani requested that the trial court, in light of this Court’s opinion modifying the judgment, vacate the award of attorney’s fees to Sunesara and award attorney’s fees to Sohani and Virani. Sohani and Virani argued that the trial court’s initial attorney’s fees award in favor of Sunesara was based on the fact that he was the prevailing party, pointing to a discussion between counsel and the trial court after the jury verdict in which the court stated that the “normal situation” is that the prevailing party receives attorney’s fees but it wished to hear any arguments for why that practice should not be followed in this case. Sohani and Virani argued that, after this Court’s opinion, “the circumstances have changed substantially” and Sunesara was not the prevailing party. They sought, pursuant to Civil Practice and Remedies Code section 37.009, an award of their trial-level attorney’s fees, as well as their attorney’s fees on appeal because they prevailed on appeal. Alternatively, they requested that the trial court award attorney’s fees to all of the parties.

Sohani and Virani also filed a “Motion for Disgorgement of Ill-Gotten Gains.” They pointed out that, prior to litigation, Sunesara had received profit distributions from the LLCs, totaling around $17,500. They argued that, based on this Court’s opinion, which held that Sunesara was not entitled to profit distributions, “[i]t is now established that such distributions are ill-gotten gains or unjust enrichment,” and they requested that the trial court order Sunesara to return the distributions.

In response, Sunesara argued that because Sohani and Virani did not challenge the attorney’s fees award on appeal, this Court did not reverse the attorney’s fees award or remand the case to the trial court for reconsideration of attorney’s fees, and this Court had issued its mandate and the trial court’s plenary power had expired, it did not have jurisdiction to reconsider the attorney’s fees award. He argued that the trial court only had jurisdiction to issue orders regarding enforcement of the judgment, but it could not issue an order that materially changes the relief awarded in the judgment. With respect to the motion for disgorgement of profits, Sunesara again argued that, because this Court remanded no portion of the judgment to the trial court, the trial court lacked jurisdiction to grant the relief that Sohani and Virani sought. Sunesara also pointed out that Sohani and Virani never sought a finding in the trial court that would support disgorgement as a remedy, and they did not raise the issue of disgorgement on appeal.

After a hearing, the trial court signed orders denying both of Sohani and Virani’s motions on the basis that it lacked jurisdiction to vacate, modify, correct, or reform its final judgment. Sohani and Virani moved for reconsideration, arguing that under Civil Practice and Remedies Code section 37.011, the trial court has jurisdiction to grant supplemental relief based on a declaratory judgment, even after an appeal of the original declaratory relief. In response, Sunesara acknowledged that the trial court likely had jurisdiction to consider Sohani and Virani’s motions, but he argued that they had waived their request for reconsideration of attorney’s fees by not challenging the fee award on appeal and not requesting that this Court remand the fee award to the trial court.

The trial court withdrew its initial orders denying Sohani and Virani’s motions on the basis of lack of jurisdiction, but it nevertheless denied both motions. This appeal followed.

Reconsideration of Attorney’s Fees Award

In their first issue, Sohani and Virani contend that the trial court erred by failing to reconsider its award of attorney’s fees to Sunesara. Specifically, they argue that, while Sunesara was the prevailing party in the trial court, this Court’s previous opinion deleted a declaration in favor of Sunesara, and thus he was “no longer the undisputed prevailing party” in the dispute. Sohani and Virani argue that, in light of this Court’s modification of the judgment, the trial court abused its discretion by failing to reconsider the attorney’s fees award.

*4 The DJA, Civil Practice and Remedies Code Chapter 37, governs declaratory judgments in Texas. See TEX. CIV. PRAC. & REM. CODE ANN. §§ 37.001–.011. Section 37.009 provides that, “[i]n any proceeding under [the DJA], the court may award costs and reasonable and necessary attorney’s fees as are equitable and just.” Id. § 37.009. The statute’s “reasonable and necessary” requirements are questions of fact for the fact finder, but the “equitable and just” requirements are questions of law for the trial court. Ridge Oil Co. v. Guinn Invs., Inc., 148 S.W.3d 143, 161 (Tex. 2004); Bocquet v. Herring, 972 S.W.2d 19, 21 (Tex. 1998). We review the trial court’s decision to award or not award attorney’s fees under the DJA for an abuse of discretion. Ridge Oil, 148 S.W.3d at 163; Vincent v. Bank of Am., N.A., 109 S.W.3d 856, 868 (Tex. App.—Dallas 2003, pet. denied) (“We broadly construe the trial court’s discretion to award attorney’s fees and costs in a declaratory judgment action.”). A trial court abuses its discretion if it misinterprets or misapplies the law or acts arbitrarily or unreasonably. Tanglewood Homes Ass’n, Inc. v. Feldman, 436 S.W.3d 48, 69 (Tex. App.—Houston [14th Dist.] 2014, pet. denied).

The award of attorney’s fees under the DJA “is clearly within the trial court’s discretion and is not dependent on a finding that a party ‘substantially prevailed.’ ” Barshop v. Medina Cty. Underground Water Conservation Dist., 925 S.W.2d 618, 637 (Tex. 1996) (remanding case after rendition of judgment on merits for defendant for court to “consider and exercise its discretion on the amount of attorney’s fees, if any, which should be awarded to the parties in this case”); Approach Res. I, L.P. v. Clayton, 360 S.W.3d 632, 639 (Tex. App.—El Paso 2012, no pet.) (stating that attorney’s fees award in DJA action is not dependent on finding that party prevailed in action, and trial court may exercise its discretion and decline to award fees to either party); State Farm Lloyds v. C.M.W., 53 S.W.3d 877, 894 (Tex. App.—Dallas 2001, pet. denied) (“[A] trial court may, in its discretion, award attorneys’ fees to the nonprevailing party in a declaratory judgment action.”). “A prevailing party in a declaratory judgment action is not entitled to attorney’s fees simply as a matter of law; entitlement depends upon what is equitable and just, and the trial court’s power is discretionary in that respect.” Marion v. Davis, 106 S.W.3d 860, 868 (Tex. App.—Dallas 2003, pet. denied). “[A]warding attorneys’ fees to the nonprevailing party is not in itself an abuse of discretion.” Vincent, 109 S.W.3d at 868; Tanglewood Homes Ass’n, Inc. v. Henke, 728 S.W.2d 39, 45 (Tex. App.—Houston [1st Dist.] 1987, writ ref’d n.r.e.) (“An award of attorney’s fees under the [DJA] is not limited to the prevailing party.”). “When an appellate court reverses a declaratory judgment, it may reverse an attorney’s fee award, but it is not required to do so.” Kachina Pipeline Co. v. Lillis, 471 S.W.3d 445, 455 (Tex. 2015); City of Temple v. Taylor, 268 S.W.3d 852, 858 (Tex. App.—Austin 2008, pet. denied) (reversing merits of trial court’s declaratory judgment but declining to reverse attorney’s fees award, noting that when appellant asserts no issues on appeal challenging award of attorney’s fees under DJA, appellant “has waived all complaints in this regard”).

The law presumes that a defendant will “recognize and respect the rights declared by a declaratory judgment and will abide by the judgment in carrying out [his] duties.” Howell v. Tex. Workers’ Compensation Comm’n, 143 S.W.3d 416, 433 (Tex. App.—Austin 2004, pet. denied). However, a party may obtain ancillary injunctive relief when the evidence shows the defendant will not comply with the judgment. Id.; see Tex. Educ. Agency v. Leeper, 893 S.W.2d 432, 446 (Tex. 1994) (holding that trial court’s issuance of permanent injunction was unnecessary because no evidence existed that defendants would not abide by declaratory judgment). The DJA provides that the trial court may grant “[f]urther relief based on a declaratory judgment or decree ... whenever necessary or proper.” TEX. CIV. PRAC. & REM. CODE ANN. § 37.011. Under the DJA, a party may obtain supplemental ancillary relief, including a permanent injunction, to enforce a declaratory judgment. Funes v. Villatoro, 352 S.W.3d 200, 214 (Tex. App.—Houston [14th Dist.] 2011, pet. denied); see Feldman, 436 S.W.3d at 76 (“Ancillary injunctive relief may be obtained when the evidence establishes that a defendant will not comply with a declaratory judgment.”).

*5 “Courts have granted supplemental relief under the declaratory judgment act after an appeal and may award relief not requested on appeal.” In re State of Texas, 159 S.W.3d 203, 206 (Tex. App.—Austin 2005, orig. proceeding [mand. denied] ); Valley Oil Co. v. City of Garland, 499 S.W.2d 333, 336 (Tex. Civ. App.—Dallas 1973, no writ) (“[T]he losing party in a declaratory judgment action can normally be expected to recognize the rights declared by the judgment and act accordingly, but ... if he fails to do so, the court should have ample power to enforce the judgment by subsequent coercive orders, whether or not such relief was sought in the original action.”). “Further relief” may be sought in the same proceeding or a later proceeding, but when it is sought in a later proceeding, it must be “ ‘additional relief’ arising out of the issues resolved by the prior declaratory judgment.’ ” Lakeside Realty, Inc. v. Life Scape Homeowners Ass’n, 202 S.W.3d 186, 191 (Tex. App.—Tyler 2005, no pet.). Section 37.011 does not permit the relitigation of issues already resolved or the determination of new issues unrelated to the declaratory judgment. Id. We review a trial court’s decision to grant or deny further relief under section 37.011 for an abuse of discretion. Id. at 190.

The Austin Court of Appeals has addressed whether the trial court can award attorney’s fees as “further relief” under section 37.011 in State v. Anderson Courier Service. See 222 S.W.3d 62, 63 (Tex. App.—Austin 2005, pet. denied). In that case, Anderson Courier filed a declaratory judgment action seeking a declaration that a particular statute was unconstitutional, an injunction prohibiting the State from enforcing the statute, and attorney’s fees. Id. at 64. The trial court ruled that the statute was valid. On appeal, Anderson Courier asked the Austin Court of Appeals to reverse and remand the case for further proceedings, but it did not mention attorney’s fees. Id. The Austin Court agreed with Anderson Courier and rendered judgment declaring the statute was unconstitutional. Id. (citing Anderson Courier Serv. v. State, 104 S.W.3d 121, 123 (Tex. App.—Austin 2003, pet. denied)). Anderson Courier did not file a motion for rehearing asking the Austin Court to remand the case for consideration of attorney’s fees. Id. After the Texas Supreme Court denied the State’s petition for review, Anderson Courier filed a motion for supplemental relief under section 37.011 in the trial court, seeking permanent injunctive relief and an award of its attorney’s fees for prosecuting the case. Id. The trial court ordered the State to pay over $350,000 in attorney’s fees as “further relief” under section 37.011. Id. The State appealed the fee award.

The Austin Court addressed other Texas cases construing section 37.011 and concluded that supplemental relief under that section “must serve to effectuate the underlying judgment” and that the relief “must be ancillary to the judgment” and that the parties may not “relitigate issues already resolved by a declaratory judgment.” Id. at 65–66. The court noted that “a declaratory judgment does not necessarily bar supplemental relief even though such relief could have been granted in the original action.” Id. at 66. It also noted that, typically, further relief under section 37.011 “is granted in the form of an injunction for the purpose of enforcing a declaratory judgment where the evidence shows that a party will not comply with the judgment.” Id.

The court stated that “attorney’s fees expended to obtain the initial declaratory relief” could not be considered as relief “in addition to” the judgment because attorney’s fees are “part and parcel of the initial declaratory judgment action, not supplemental relief.” Id. at 66. The court noted that Anderson Courier sought attorney’s fees in its initial declaratory judgment action “but did not pursue the issue on appeal” and thus there was no reason for the Austin Court, in the first appeal of the case, to remand the attorney’s fees issue for further consideration after declaring the statute unconstitutional. Id. The Austin Court noted that Anderson Courier could have, on original submission of its first appeal, raised the attorney’s fees issue and sought remand to the trial court in the event the appellate court agreed with it on the merits of the declaratory judgment action; or, after the initial opinion issued, it could have filed a motion for rehearing seeking remand for reconsideration of attorney’s fees because it was now the prevailing party. Id. at 66–67. In either instance, the case could have been “remanded for consideration of attorney’s fees as part of the appellate decision,” but Anderson Courier did not raise attorney’s fees with the Austin Court: it waited until the mandate had issued and then sought further relief under section 37.011 in the trial court. Id. at 67.

*6 Anderson Courier argued that the award of attorney’s fees as further relief under section 37.011 was proper by pointing to federal case law—in which courts awarded attorney’s fees as further relief under the federal analogue to section 37.011—and section 37.002(c) of the DJA, which provides that the DJA should be interpreted and construed “to harmonize, as far as possible, with federal laws and regulations on the subject of declaratory judgments and decrees.” Id.; see TEX. CIV. PRAC. & REM. CODE ANN. § 37.002(c). The Austin Court rejected that argument, noting that, under federal law, attorney’s fees are “not considered with the merits of the case and must be sought by separate motion” after the judgment. Anderson Courier, 222 S.W.3d at 67 (citing FED. R. CIV. P. 54(d)(2)(B), (D)). Under Texas law, on the other hand, attorney’s fees are submitted “with the merits of the underlying dispute,” and a judgment that does not dispose of attorney’s fees is not final. Id. (citing McNally v. Guevara, 52 S.W.3d 195, 196 (Tex. 2001) (per curiam)).

Ultimately, the Austin Court concluded:

[P]ost-judgment relief under section 37.011 of the declaratory judgment act must be additional relief arising out of the original declaratory judgment. Although this does not preclude any relief that might have been requested in the original action, it does not open a back door to seek relief that should have been included in the original judgment or granted by the appellate court. By awarding Anderson Courier’s attorney’s fees for the declaratory judgment absent a remand, the district court permitted Anderson Courier to litigate an issue that it had waived on appeal. The award of attorney’s fees did not serve to effectuate the declaratory judgment.

Id. (internal citation omitted). The court held that the award of attorney’s fees “in obtaining declaratory relief was not necessary or proper further relief under section 37.011,” and the court reversed the attorney’s fees award and rendered a take-nothing judgment in favor of the State. Id. at 67–68.

This case is virtually identical to Anderson Courier. At trial, Sohani and Virani asserted a fraud claim against Sunesara and also sought declaratory relief, including a declaration that Sunesara was not entitled to any profit distributions or other sums from the LLCs. Sunesara asserted competing claims for declaratory relief, including a declaration that he was entitled to one-third of the profits from the LLCs. The jury found in favor of Sunesara on his claims for declaratory relief, found that he did not commit fraud, and awarded attorney’s fees. The trial court entered judgment on the jury verdict. On appeal, Sohani and Virani challenged, among other things, the propriety of the declaration that Sunesara was entitled to one-third of the profits from the LLCs. We agreed with Sohani and Virani that, under two provisions of the Business Organizations Code, Sunesara was not entitled to profit distributions and the trial court erred to the extent that it declared otherwise. We modified the judgment of the trial court to delete this declaration.

On appeal, Sohani and Virani did not ask this Court to review the attorney’s fees award in favor of Sunesara, nor did they ask us to remand the case for reconsideration of the fee award if we found that Sunesara was not entitled to the challenged declaratory relief. After we issued our opinion, in which we modified the judgment to delete the challenged declaration but otherwise affirmed the judgment as modified, Sohani and Virani did not move for rehearing and request that we remand the case for reconsideration of attorney’s fees on the basis that Sunesara was no longer the undisputed prevailing party. Instead, after our mandate issued, Sohani and Virani filed a motion in the trial court seeking reconsideration of the attorney’s fees award under section 37.011.

*7 We agree with the Austin Court of Appeals in Anderson Courier that, under the circumstances of this case, an award of attorney’s fees for prosecution of the original declaratory judgment action and for appeal of that action does not constitute necessary or proper further relief under section 37.011. See id. at 67–68. Unlike under federal law, in which attorney’s fees are not sought until after the merits of the underlying dispute have been decided and a judgment has been signed, under Texas law, attorney’s fees issues are submitted and resolved simultaneously with the dispute and a judgment that does not dispose of a claim for attorney’s fees is not final. See id. at 67; compare Bilmar Drilling, Inc. v. IFG Leas. Co., 795 F.2d 1194, 1202 (5th Cir. 1986) (stating that attorney’s fees award under federal counterpart to section 37.011 “cannot be made until after a declaratory judgment has issued” and that motion for attorney’s fees under that section “is collateral to an action, not precluding issuance of a final, appealable judgment on the merits”), with McNally, 52 S.W.3d at 196 (holding that judgment granting summary judgment motion that addressed only defendant’s declaratory relief claims but not defendant’s claim for attorney’s fees was not final and appealable judgment “because it did not dispose of the defendants’ claim for attorney fees”). The federal cases that Sohani and Virani cite in support of their argument that an award of their attorney’s fees constitutes necessary and proper further relief under section 37.011 are therefore inapposite.

Sohani and Virani had options available to them to seek reconsideration of the attorney’s fees award. They could have challenged the award in an issue on original submission of their prior appeal. Or, after this Court sustained their issue challenging the trial court’s declaration that Sunesara was entitled to profit distributions from the LLCs and issued a judgment modifying the trial court’s judgment and affirming the remainder of the judgment as modified, they could have filed a motion for rehearing and argued that, as Sunesara was no longer the undisputed prevailing party, the attorney’s fees award should be remanded to the trial court for reconsideration. See Anderson Courier, 222 S.W.3d at 66–67. They did not avail themselves of either of these options. We conclude that Sohani and Virani forfeited their ability to seek reconsideration of the attorney’s fees award. See id. at 66–68.

Moreover, Sohani and Virani have not established that the trial court abused its wide discretion by declining to reconsider the attorney’s fees award to Sunesara. The DJA—unlike, for example, Chapter 38 of the Civil Practice and Remedies Code—does not provide that only the prevailing party can recover attorney’s fees. Compare TEX. CIV. PRAC. & REM. CODE ANN. § 37.009 (“In any proceeding under this chapter, the court may award costs and reasonable and necessary attorney’s fees as are equitable and just.”), with TEX. CIV. PRAC. & REM. CODE ANN. § 38.001 (“A person may recover reasonable attorney’s fees ... in addition to the amount of a valid claim and costs....”), and Green Int’l, Inc. v. Solis, 951 S.W.2d 384, 390 (Tex. 1997) (“To recover attorney’s fees under Section 38.001, a party must (1) prevail on a cause of action for which attorney’s fees are recoverable....”). A prevailing party in a declaratory judgment action is not entitled to attorney’s fees as a matter of law, see Marion, 106 S.W.3d at 868, and an award of attorney’s fees to a non-prevailing party is not, in itself, an abuse of discretion. Vincent, 109 S.W.3d at 868. Similarly, an appellate court that reverses a declaratory judgment may also reverse the attorney’s fees award, but it is not required to do so. See Kachina Pipeline, 471 S.W.3d at 455; City of Temple, 268 S.W.3d at 858.

This is a case in which all parties obtained relief in their favor. On appeal, this Court deleted one of the declarations in favor of Sunesara. However, Sohani and Virani did not challenge the other declaration in favor of Sunesara, and they also did not challenge the jury’s findings that Sunesara did not commit fraud. Under the DJA, the trial court could have awarded attorney’s fees to Sohani and Virani only, to Sunesara only, to all parties, or to none of the parties. We conclude that the trial court’s decision not to reconsider the attorney’s fees award to Sunesara was not an abuse of its wide discretion to award fees under the DJA.1 See Barshop, 925 S.W.2d at 637.

*8 We overrule Sohani and Virani’s first issue.

Disgorgement of Profits

In their second issue, Sohani and Virani contend that the trial court erred by denying their motion seeking disgorgement of past profits distributed to Sunesara. They argue that, as a result of this Court’s prior holding that Sunesara was not entitled to a share of the profits of the LLCs, the profits previously paid to Sunesara constitute ill-gotten gains and he should be ordered to repay them. They argue that the trial court abused its discretion by failing to grant this “further relief” collateral to the declaratory judgment award.

Disgorgement is an equitable forfeiture of benefits that were wrongfully obtained. In re Longview Energy Co., 464 S.W.3d 353, 361 (Tex. 2015); Henry v. Masson, 333 S.W.3d 825, 849 (Tex. App.—Houston [1st Dist.] 2010, no pet.) (“[D]isgorgement of profits is an equitable remedy, appropriate for causes of action such as breach of fiduciary duty.”). The main purpose of forfeiture as a remedy “is not to compensate an injured principal” but to “protect relationships of trust by discouraging agents’ disloyalty.” ERI Consulting Eng’rs, Inc. v. Swinnea, 318 S.W.3d 867, 872–73 (Tex. 2010) (quoting Burrow v. Arce, 997 S.W.2d 229, 238 (Tex. 1999)). The Texas Supreme Court has stated examples of when disgorgement is an appropriate remedy, including “when a fiduciary agent usurps an opportunity properly belonging to a principal,” when “an agent divert[s] an opportunity from [a] principal or engage[s] in competition with the principal, [and] the agent ... profit[s] or benefit[s] in some way,” and when “a person who renders service to another in a relationship of trust ... breaches that trust.” Longview Energy, 464 S.W.3d at 361 (quoting ERI Consulting Eng’rs, 318 S.W.3d at 873, Johnson v. Brewer & Pritchard, P.C., 73 S.W.3d 193, 200 (Tex. 2002), and Burrow, 997 S.W.2d at 237). Texas law limits disgorgement of profits to the amount of a fiduciary’s profits obtained as a result of the fiduciary’s breach of duty.2 Shannon Med. Ctr. v. Triad Hldgs. III, L.L.C., 601 S.W.3d 904, 916 (Tex. App.—Houston [14th Dist.] 2019, no pet.).

Sohani and Virani argue that because this Court held that Sunesara is not entitled, as a matter of law, to profit distributions from the LLCs, the profits distributions that he indisputably received “should not have been given to him in the first place” and were “essentially ill-gotten gains” that they are entitled to recover. Sunesara argues that no evidence was presented at trial that he wrongfully obtained the profit distributions or that he coerced or defrauded Sohani and Virani into making the distributions. He argues that the distributions were voluntary.3 He further argues that Sohani and Virani never pleaded that he breached a fiduciary duty and the jury never made any such findings. As a result, there are no findings that can support disgorgement as a remedy under the facts of this case. We agree with Sunesara.

*9 Sohani and Virani did not assert a breach of fiduciary duty claim against Sunesara, and they did not recover on their fraud claim. Instead, the jury found that Sunesara did not commit fraud, and Sohani and Virani did not challenge that finding on appeal. This Court held that Sunesara was not entitled to profit distributions from the LLCs, but we disagree that that holding necessarily means that the profit distributions Sunesara received prior to suit being filed were wrongful or “ill-gotten.” Sunesara is not entitled to profit distributions, meaning that he does not have the right to demand distributions. The trial testimony, however, was that Sohani and Virani chose to give Sunesara a share of the profits from the LLCs. Under the Business Organizations Code, Sohani and Virani were not required to do this, but the fact that we later determined that Sunesara does not have an entitlement to a share of the profits does not make these distributions wrongful or ill-gotten.

In the absence of any pleadings to support a breach of fiduciary duty claim or jury findings that Sunesara breached a fiduciary duty or otherwise acted wrongfully, we conclude that Sohani and Virani were not entitled to seek post-appeal disgorgement of profits distributed to Sunesara. See ERI Consulting Eng’rs, 318 S.W.3d at 872–73 (stating that main purpose of disgorgement and forfeiture remedy “is to protect relationships of trust by discouraging agents’ disloyalty”); Stephens v. Three Finger Black Shale P’ship, 580 S.W.3d 687, 714 (Tex. App.—Eastland 2019, pet. filed) (holding that trial court erred in awarding damages in form of disgorgement when no evidence existed of relationship of trust “and a breach of the duties arising from it”). We hold that the trial court did not err by denying Sohani and Virani’s motion seeking disgorgement of profits.

We overrule Sohani and Virani’s second issue.

Conclusion

We affirm the judgment of the trial court.

Footnotes

1 Sohani and Virani argue that the trial court’s denial of their motion for reconsideration “was made without reference to any rules or principles and flies in the face of the trial court’s own reasoning in issuing the attorneys’ fee award in the first place,” pointing out that, prior to entry of judgment, the trial court stated its belief that the “normal situation” was to award fees to the prevailing party. At the time of the original trial in this case in 2016, the presiding judge of the Harris County Civil Court at Law Number One was the Honorable Clyde Leuchtag. At the time Sohani and Virani filed their motion for reconsideration in 2018, the presiding judge was the Honorable George Barnstone.
2 The Texas Supreme Court has stated, “While equitable disgorgement is a viable remedy for breach of trust by a fiduciary, we have not expressly limited the remedy to fiduciary relationships nor foreclosed equitable relief for breach of trust in other types of confidential relationships.” Sw. Energy Prod. Co. v. Berry-Helfand, 491 S.W.3d 699, 729 (Tex. 2016).
3 In their reply brief, Sohani and Virani agree that this is an accurate characterization of the distributions.
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