FANNING, HARPER & MARTINSON, P.C.

NEWS

January 2002

The FHM "e" newsletter is a new, free service for our clients in 2002. We have summarized recent cases and changes in statutory law for you. Legal topics include:

INSURANCE COVERAGE & BAD FAITH UPDATE,

MUNICIPAL LAW UPDATE,

PREMISES LIABILITY UPDATE,

CLASS ACTIONS UPDATE,

PRODUCTS LIABILITY UPDATE, and

EMPLOYMENT LAW UPDATE.

For convenience, each of these topics is presented as a separate category. These abbreviated summaries are provided for information only, and are not intended as legal advice.

At Fanning, Harper, & Martinson, we use every method available to achieve success for our clients. Of course, this includes winning jury trials. Success also comes by successfully pursuing

summary judgment motions, dismissals in federal court, and by appealing judgments that we believe were wrongfully entered. Some of our recent victories are summarized below.

If you prefer not to receive this newsletter, please reply with the term "unsubscribe".

RECENT SUCCESSES

BARRY FANNING and JOSHUA KUTCHIN obtained a DEFENSE VERDICT on a jury trial in Younger v. Harry, 95th District Court, Judge Karen Johnson, DALLAS COUNTY. Plaintiff, a plumber employed by a subcontractor of new residential construction, sued the framing contractor. The plaintiff fell after he leaned his ladder on the frame of a house, which was under construction. Plaintiff had a lumbar fusion. Plaintiff’s lowest demand was $675,000. The jury returned a complete defense verdict for FHM’s client.

BARRY FANNING and JOSHUA KUTCHIN obtained a DEFENSE VERDICT on a jury trial in Kalogirou v. Member’s Building Maintenance Corp. and S & N Associates, 342^nd District Court, before Judge McGrath, TARRANT COUNTY. Plaintiff was an American Airline employee who alleged he was injured in a restroom due to alleged negligence of the cleaning contractor. Plaintiff demanded $2,000,000 at mediation and $1,000,000 at trial. Plaintiff received a 360 degree, 3 level fusion, which FHM contended was unnecessary. In a case with potentially high damages, FHM successful defended S & N Associates by obtaining a complete defense verdict for its client.

MARC FANNING obtained a SUMMARY JUDGMENT in Maria Murillo v. Fiesta Mart, 192^nd District Court, DALLAS COUNTY. Plaintiff alleged she slipped on grapes and demanded $90,000. The trial court (Judge Merril Hartman) granted FHM’s no-evidence motion for summary judgment.

GERALD LOTZER and SCOTT HUBER obtained a SUMMARY JUDGMENT on behalf of Thunderbird Speedway, Inc. in Landrum v. Thunderbird Speedway, Inc., 86^th Judicial District Court, KAUFMAN COUNTY. Plaintiffs filed a wrongful death lawsuit and demanded $250,000. The deceased was fatally injured in the pit area of the raceway when he was struck by a tire coming off of a race car.

ALAN MOORE and KING FIFER obtained a NONSUIT in Gotcher v. Reynolds Metal Company, TARRANT COUNTY. Plaintiff chose to nonsuit claims against FHM’s client after FHM filed a motion for summary judgment.

KING FIFER obtained a SUMMARY JUDGMENT for FHM’s client in Custom Roofing v. Slaten. District Court, TITUS COUNTY. The plaintiff alleged serious injuries from a motor vehicle accident. The trial court granted FHM’s no-evidence motion for summary judgment.

BARRY FANNING and STEVE HENNINGER obtained a FEDERAL DISMISSAL in Dunn v. Board of Incorporators of the African Methodist Episcopal Church in the U.S. District Court for the NORTHERN DISTRICT OF TEXAS. Judge Fitzwater granted the motion based on the free exercise of religion clause contained in the First Amendment.

KING FIFER obtained a FEDERAL DISMISSAL for failure to state a claim in the U.S. District Court for the NORTHERN DISTRICT OF TEXAS in Scott & Daniels v. Living Word Missionary Church. Judge Fitzwater granted the motion to dismiss based on a lack of jurisdiction.

FANNING, HARPER & MARTINSON, P.C. obtained an APPELLATE VICTORY in Feria v. CU Lloyds of Texas before the DALLAS COURT OF APPEALS. In this case, an underlying plaintiff sought to intervene in a declaratory action regarding coverage between the insurer and the insured. The Dallas Court affirmed the trial court’s striking of plaintiff’s petition in intervention. The decision can be located on Westlaw at 2001 WL 1263666.

FANNING, HARPER & MARTINSON, P.C. obtained an APPELLATE VICTORY in Janik v. Amica Mutual Ins. Co. The case involved claims of bad faith regarding the handling of a claim brought on a renter’s insurance policy. Janik sought review by the U.S. SUPREME COURT after losing in lower courts. FHM opposed Janik’s writ of certiorari. The U.S. Supreme Court agreed with FHM, denied Janik’s writ, and put an end to the litigation.

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INSURANCE BAD FAITH - CASE LAW UPDATE

In American Motorists, a workers compensation claimant brought an action against its insurer for breach of the duty of good faith and fair dealing, negligence, fraud, and violations of the Texas Deceptive Trade Practices-Consumer Protection Act (DTPA) and the Texas Insurance Code. Fodge, a data entry operator, claimed compensation benefits for a back injury she suffered at work. The carrier, American Motorists Insurance Co., denied Fodge's claim on two grounds: that her injury was not work-related, and that she did not timely notify her employer of the injury. The County Court granted the insurer's motion to dismiss, and the claimant appealed. The Court of Appeals reversed and remanded, and the insurer petitioned for review. On grant of petition, the Supreme Court held that: (1) the trial court lacked jurisdiction over claims regarding medical benefits, but (2) the trial court had jurisdiction over claims regarding temporary income benefits. The Court further held that the workers compensation process precludes bad-faith liability for denying benefits to which the claimant is not entitled. The Court stated that "for [compensation] claims we think that bad faith liability for denial of a non-covered claim is not even a possibility because of the detailed statutory regulation of the processes of making and resolving such claims [and as such we] conclude that the process precludes bad faith liability for denying benefits to which the claimant is not entitled."

A mandamus petition was filed in a case involving a bad-faith insurance claim. The Waco Court of Appeals held that severance of the breach-of-contract claim from the bad-faith insurance claims was not required. Specifically, the court reasoned that severance of the breach of contract claim from the bad-faith insurance claims was not required where there would not be trial on breach of contract issues that were the subject of a partial summary judgment in favor of the insured, and the record indicated little likelihood that if the breach of contract issues were to be appealed and reversed, that the claim would be remanded for trial. As such, the court held that the question of whether to sever and abate a case involving bad-faith insurance claims lies within the discretion of the trial judge.

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MUNICIPAL LAW UPDATE

The Texas Tort Claims Act (Chapters 101 to 109 of the Texas Civil Practices & Remedies Code) controls governmental immunity and related issues of who may sue which governmental entities under what circumstances, has recently been amended by the 77th Legislative Session of the Texas Legislature in 2001. The following is a brief summary of the changes:

Section 101.0211. New provision providing no common-law vicarious liability for water districts participating in a joint venture.

Section 101.0215(a)(36). Added a subsection providing liability to government entities for its enforcement of land use restrictions.

Section 103.001 - 103.003. Revised sections on compensation to prisoners later found innocent.

Section 103.051 - 103.052. Added sections on application for compensation to innocent prisoners.

Section 103.101 - 103.104. Semantic amendments to these sections.

Sections 103.105. Revised provisions on damages to innocent prisoners

Sections 103.151 - 103.154. Added sections on payment and requirements for compensation.

Section 104.001(4). New subsection providing State indemnity for chaplains under contract with state agencies

Sections 109.002, 109.004 - 109.0005. Amended sections on appropriations and payment of claims.

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PREMISES LIABILITY - CASE LAW UPDATE

Discount store was sued by sidewalk vendor who had store’s permission to conduct business on the sidewalk. Vendor used gas powered equipment and was injured by an explosion when lighting pilot light on equipment. Even though the store manager directed activities of vendor in most every case, the manager did not control vendor’s lighting of the equipment. The Court of Appeals held that in order for an independent contractor to recover for premises defect conditions, the premises owner or operator must retain control over the specific activity that caused the injury.

An air conditioner repairman contracted with a premises owner to work on a roof mount unit. The repairman was injured when he was shocked by the air conditioner unit and fell off the roof. The shock was caused by improper installation and the lack of a disconnect switch, all in violation of municipal code. Disagreeing with a Dallas Court of Appeals decision (McDaniel v. Continental Apartments, 887 S.W.2d 167 (Tex.App. –Dallas 1994, writ denied), the Corpus Christi Court held that the applicable municipal codes were enacted to protect repairmen and other independent contractors. Thus, the premises owner or operator is on constructive notice of the codes and the failure to comply with such codes charges the owner/operator with the knowledge of the dangerous condition.

Plaintiff, a licensee, fell when he tried to maneuver around boxes left on stairway. Although plaintiff noticed that the boxes were on the stairs and that stairs were slippery, he did not notice that the boxes blocked the handrail. The Court of Appeals held that these facts were sufficient to show that Plaintiff did not have actual knowledge that the condition of the stairway was unreasonably dangerous until he fell, justifying his recovery.

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CLASS ACTION - CASE LAW UPDATE

Individual issues of plaintiff’s expectations predominated over common issues.

Initially the San Antonio court remanded the case on appeal because the certification order did not comply with Bernal. See West Teleservices, Inc. v. Carney, 37 S.W.3d 36 (Tex. App. - San Antonio 2001, no pet. h.). On this second, subsequent appeal, the court reversed certification. The case involved employees of a telemarketing agency bringing a class action for their employer’s failure to pay them for the 10 to 15 minutes prior to the commencement of their shift. Quantum meruit was the only equitable theory of recovery left on appeal, and the appellate court found that because quantum meruit required proof that each individual plaintiff expected to be paid, the case was not amenable to a class action. In short, the state of mind of every single class member was "vitally important to the appellee’s defense." Therefore, individual issues predominated over common issues and the trial court abused its discretion in granting class certification.

Class representative must have standing for class to be viable.

Shipman stated that he developed kidney problems as a result of using MET-Rx and once he made the association that they might be caused by MET-Rx, stopped using MET-Rx products and filed suit. The class sought injunctive and declaratory relief, not damages for personal injuries. Specifically, Shipman asked for a declaration that MET-Rx’s products did not contain adequate warnings. But Shipman admitted that he would not use MET-Rx products in the future and had stopped using them. The court ruled that adequate warnings on the products would therefore not affect Shipman - he had already stopped using them - and therefore he had no standing to pursue the class action. As a result, the court lacked subject matter jurisdiction and the trial court’s class certification order was reversed.

Court may decertify class even after certification if it finds case unmanageable.

This case is notable because initially the trial court certified the class, which was a group of trust beneficiaries who sued banks alleging fraud, conversion, and breach of fiduciary duty in connection with substitution of newly formed trust companies as fiduciaries for their accounts. After the trial court initially certified the class, the court of appeals approved certification. See Texas Commerce Bank v. Wood, 994 S.W.2d 796 (Tex. App. -- Corpus Christi 1999, no pet.). As the case went on, the court found that it was increasingly difficult to manage the litigation as a class action, and the court entered an order decertifying the class. The order decertifying the class was appealed, and the court of appeals upheld the trial court’s decision to decertify the class.

First, the court of appeals determined that it did have jurisdiction. In other words, an order decertifying a class is appealable. Id. at *2. Second, the court of appeals found that the trial court had a rational basis for decertifying the class. Specifically, the trial court certified the class under the pre-Bernal "certify now and worry later" approach. Moreover, the trial judge became increasingly aware of the difficulty of managing the case as a class action. Finally, the court pointed out that no argument was made regarding how decertification would affect interests of unnamed class members, and in the absence of any indication to the contrary, that it would presume that decertification would further the interests of the unnamed class members.

In case involving mineral leases, individual issues predominated, and court did not conduct preliminary inquiry to determine substantive common issues.

Royalty owners brought claims under mineral leases for breach of contract, tortious interference of contract, and conspiracy. The trial court certified a class of 30,000 royalty owners, who had conveyed lease interests under more than 26,000 mineral leases. The court of appeals reversed the ruling, finding that questions of law or fact to the class predominated over questions affecting individual members. Specifically, the class was premised on the existence of an implied covenant in each lease; but the court did not first examine the express terms of the leasing contracts. Therefore, the court did not identify the substantive issues dispositive of the case, as mandated by Tex. R. Civ. P. 42(b)(4). Moreover, individual rather than common issues predominated due to the necessity of a location-by-location inquiry for each lease regarding what a reasonably prudent operator would charge.

Even if class certified for settlement only, court should conduct rigorous Rule 42 analysis of class.

Class action against Blockbuster for charging extended viewing fees. The trial court certified the class for settlement purposes and a number of appellants, who were unnamed members of the proposed class, claimed on appeal that the class should be decertified because of procedural irregularities and because the plaintiffs were not adequate class representatives or had claims not typical to the class. The court of appeals affirmed the ruling of the trial court certifying the class for settlement purposes.

The court here interpreted the Supreme Court decision in McAllen Med. Ctr., Inc. v. Cortez, No. 00-0710, 2001 WL 987350 (Tex. Aug. 30, 2001) as requiring a trial court to rigorously analyze a case under Rule 42 before issuing notice to a class. This hearing regarding Rule 42 should be on the record and conducted before preliminary certification of the class. The appellate court here found that the trial court adequately scrutinized the case in light of Rule 42's criteria. Specifically, the court held several hearings and reconsidered its initial order. Id. at *5. Moreover, the court was familiar with the litigation because it had been pending in its court and the settlement terms were not complex. Id. The trial court did not abuse its discretion in finding that the class representation was adequate and that the class counsel was adequate. Typicality was met because the unifying issue here was whether the fees charged by Blockbuster were excessive and unauthorized. Finally, the court found that the class notice was adequate. Id. at *11 (class notice may be found at ).

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PRODUCTS LIABILITY - CASE LAW UPDATE

Under the Texas Products Liability Act, a product manufacturer must indemnify a seller of that product for any actions brought against the seller related to the product except when the seller independently causes the loss. In this case, the Court held that the defense of a negligence claim was included as a loss arising out of the products liability action and the manufacturer had a duty to defend or pay for the attorneys' fees of the seller.

Plaintiffs' common law conspicuity claims were not preempted by federal safety standards because they did not interfere or conflict with the standard in question's objectives or requirements.

The court denied Graco's request to narrowly construe the indemnification statute and disallow payment of attorneys' fees when the seller's defense was provided by its insurance carrier. The court held that such construction would impair a seller's ability to obtain legal representation in product liability claims and prolong an innocent seller's involvement in litigation.

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EMPLOYMENT LAW - CASE UPDATE

A program administrator for MHMR sued MHMR alleging retaliation under the Whistleblower Act. The court held that an adverse personnel action included actions effecting transfer, work assignment or performance evaluation, not just ultimate employment decisions. However, in this specific case, the court held that the evidence was legally insufficient to show that the three adverse employment actions of which the employee complained would not have been taken if the employee had not made the whistleblower report. Therefore, the court found there was no evidence of causation.

Employee brought an action against an employer, asserting claims of sexual discrimination, retaliation, and sexual harassment under the Texas Commission on Human Rights Act and common law claims for negligent training or negligent supervision and intentional infliction of emotional distress. The court held that a "right to sue" letter issued by the Federal Equal Employment Opportunity Commission (EEOC) does not trigger the sixty day time period for filing a suit asserting claims under the TCHRA as provided by § 21.254 of the Texas Labor Code.

Former employee brought suit against his former employer alleging that he was wrongfully discharged from employment because he had filed a workers’ compensation claim in good faith. The employee had previously filed six workers’ compensation claims. His last injury occurred in October of ‘96 and after six months has passed, the employer terminated the employee pursuant to a policy that an employee cannot take a leave of absence over six months. The court held that the employer’s uniform application of a reasonable absence control policy does not constitute a retaliatory discharge. It further held that the policy was not required to be written and could be established by affidavit of supervisory and administrative personnel. The court ultimately held that the employee failed to establish the causal link between the filing of the workers’ compensation claim and the employee’s termination.

An employee for an airline employer sued for discrimination under the ADA. The employee worked as a customer service representative and was injured on the job. A physician concluded that he was incapable of working as a customer service representative in an unrestricted fashion. The employer encouraged the employee to apply for other positions within the company that were consistent with his physical restrictions. The employee was unable to find a position and was reassigned to an unpaid extended leave of absence. The employee asserted that he was wrongfully perceived as disabled by the employer, qualifying him as disabled under the "regarded as" prong. In this case the court found that the employee suffered from a physical impairment limiting his ability to lift, push and pull items above a certain weight, but that the impairment did not substantially limit his general ability to work. In addition, the court found that the employer did not erroneously perceive that the employee was not able to work. In fact, the court pointed out that the employer encouraged the employee to apply for other jobs within the company.

Georgia Woods, a telephone sales clerk for Delta Beverage, asserts a claim for sexual harassment in violation of Title VII and a constructive discharge claim. She alleges that she was sexually harassed by a co-employee. Woods reported the alleged harassment to management who held a meeting with the harasser. After the meeting, the management approached the employee and asked if the situation had gotten better. She stated that it had. The employee thereafter continued to experience sexual harassment from the co-worker but did not report this to management. The employee then missed several days of work; never returned calls and never showed up for work again. She then filed suit against the employer, asserting a hostile work environment and a constructive discharge claim.

With regard to her hostile working environment claim under Title VII, the court held that the co-worker’s conduct did not effect a "term, condition or privilege" of the employee’s employment because (1) she only subject to unwelcome touching for only a few minutes a day and (2) the employee had failed to address how or if her work performance was effected by the co-worker’s conduct. It also found that the employer took prompt remedial action and could not be held liable for conduct of which it had no knowledge.

With regard to her constructive discharge claim, the court held that a reasonable woman experiencing the type of harassment complained of in this case would not have felt compelled to resign. A reasonable woman would have felt compelled to report the behavior, the alleged post-meeting behavior, to her supervisors. The court held that the employee’s hostile working environment and constructive discharge claim failed as a matter of law.

Aldrup filed a retaliation claim against his employer under Title VII and discrimination under the ADA. Aldrup, who was employed as a fire fighter, was sent to another station on a particular day. Aldrup refused to drive his personal vehicle between stations, citing a regulation that prohibits the use of privately owned vehicles for government purposes. Aldrup was charge with insubordination. Since this was his third citation for insubordination, he was terminated. The court held that the failure of a subordinate to follow a direct order of the supervisor is a legitimate, nondiscriminatory reason for taking an adverse employment action and that Aldrup’s insubordination on three separate occasions was a sufficient, nondiscriminatory reason for his removal. With regard to the ADA claim, the court held that Aldrup failed to establish that he was a qualified individual with a disability.

The employee claimed that his disability was depression caused by the stress and anxiety of having to work with certain employees. The court held that this evidence would merely tend to show that he was unable to perform any job at one specific location and not evidence of a general inability to perform a broad class of jobs. In addition, the court held that a letter from a physician concluding that he "has a medical condition that substantially limits one or more of his major life activities" was conclusory and was not entitled to evidentiary weight. The court also held that evidence that Aldrup was on medical leave for a thirty-five day period was not sufficient to create a jury question as to whether he was disabled.

Discharged employee brought an age discrimination action against his former employer. With regard to causation, the trial court instructed the jury "That an employer commits an unlawful employment practice if, because of age, the employer discharges an individual." The Supreme Court held this was an erroneous jury charge. The proper causation standard under § 21.125 of the Texas Commission on Human Rights Act requires an employment discrimination Plaintiff to show that discrimination was a motivating factor in an adverse employment decision regardless of how many factors influenced the employment decision. Therefore, the trial court should have instructed the jury that the employee established an unlawful employment practice if he demonstrated that age was a motivating factor in the employer’s decision to terminate him.

While three disciplinary actions that the postal service took against its employee were pending in a grievance proceeding, pursuant to a collective bargaining agreement with the employee’s union, the postal service terminated the employee after a fourth violation. The employee appealed to the American System Protections Board, who considered the prior disciplinary actions. The Supreme Court held the board may review independently prior disciplinary actions pending in grievance proceedings when reviewing termination and other serious disciplinary actions.

The Supreme Court held that the Eleventh Amendment bars suit by state employees to recover money damages by reason of the state’s failure to comply with the provisions of Title I of the Americans With Disabilities Act.

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© Fanning, Harper & Martinson, P.C. January 2002.

Fanning, Harper & Martinson, P.C.

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4849 Greenville Ave., Suite 1300

Dallas, Texas 75206

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