Volume I, No. 10

The Texas Supreme Court issued only two (2) opinions in the month of September. Neither opinion is of interest to those of us handling claims or to those of us in the insurance industry. As a result, we are reporting on four (4) opinions from different appellate courts.

In the medical malpractice area, the Corpus Christi Court of Appeals in Sheryl Tesch v. David Stroud, M.D., held that the requirement of §13.01(d) of 4590i concerning filing expert reports is mandatory and any agreements to extend the time periods required by the statute must be specific.

The San Antonio Court of Appeals in Salinas v. Gary Pools applied the discovery rule to a claim under the Deceptive Trade Practices Act.

In Edwards v. Silva and Labatt Institutional Supply Company the San Antonio Court of Appeals upheld a summary judgment arising out of a serious automobile accident wherein it was alleged that Labatt Institutional Supply Company was responsible for providing food and drinks to Mr. Edwards. Mr. Edwards was involved in a one-car accident on his way home.

Finally, in Well Solutions, Inc. v. Ross Stafford, Jr. d/b/a Superior Trailer Sales, the Fourth Court of Appeals discussed the importance of obtaining a ruling on objections to summary judgment evidence. It also examined the difference between objections to the form versus the substance of summary judgment evidence.

1. AGREEMENTS TO EXTEND DEADLINES UNDER ARTICLE 4590i MUST BE SPECIFIC
   1. AGREEMENT TO EXTEND DEADLINE FOR FILING AN EXPERT REPORT IS DIFFERENT FROM DEADLINE FOR DESIGNATING EXPERTS

   The Court of Appeals acknowledged that the plaintiff's attorney had sent an agreed scheduling order to the attorney for the defendant which provided that the plaintiff would designate her experts by December 15, 1998. However, the agreed scheduling order had never been signed. Nevertheless, the attorney for Dr. Stroud contended that while he may have agreed to discovery deadlines for designation of experts that he had not agreed to extend the deadline for filing the expert report required by §13.01(d) of Article 4590i.

   The Court found that an agreement to extend the deadlines of §13.01(d) must be specific. In this case, an agreement to extend the deadline for filing an expert report was required by §13.01(h). At best, the only agreement that existed between the attorneys was an agreement to designate expert witnesses for trial.

   2. THIRTY (30) DAY EXTENSION

   The Court did note that §13.01(g) provides a mechanism for the Court to allow a thirty (30) day extension for filing the expert report required by §13.01(d). However, granting such an extension could only "... have extended the time for filing the expert report for thirty (30) days (210 days after the filing of the lawsuit)." In this case, the motion to dismiss was not filed until the 240^th day after the case was filed. As a result, even if the plaintiff had filed an extension under §13.01(f), such extension would not have been timely.

   3. ANALYSIS OF OPINION

   The Court of Appeals strictly construed the application of the Medical Liability and Insurance Improvement Act in favor of the health care provider. Any deviations from the strict requirements of the Act must be agreed to by counsel and the agreement set out in writing.

FACTS OF CASE

The opinion of the Corpus Christi Court of Appeals in Cheryl Tesch v. David W. Stroud, M.D., (NO. 13-99-318-CV , August 31, 2000) illustrates the importance of strict compliance with the provisions of the Medical Liability and Insurance Improvement Act, Article 4590i, Texas Revised Civil Statutes. The plaintiff in Tesch had her case dismissed, with prejudice, due to her failure to file an expert report as required by §13.01 of Article 4590i. The Court pointed out that the plaintiff did not file a written report by an expert as required by §13.01(d) of Article 4590i within 180 days after suit was filed. As a result, Dr. Stroud filed a motion to dismiss Ms. Tesch's claim against him. Section 13.01(e) of Article 4590i provides that if a plaintiff does not file an expert report within 180 days of the date suit was filed and fails to nonsuit the case then the Court shall enter an order awarding sanctions which shall include the award of reasonable attorney's fees, the forfeiture of any cost bond previously filed, and dismissal of the case, with prejudice, against the defendant health care provider.

Dr. Stroud filed his motion to dismiss 240 days after the suit was filed. The plaintiff filed a response and furthermore requested that the Court grant a thirty (30) day grace period as allowed under §13.01(g) of Article 4590i to file the required expert report. The plaintiff claimed that an agreed scheduling order between counsel provided that the plaintiff was not to designate expert witnesses until December 15, 1998. As a result, the plaintiff's attorney claimed that it was his understanding that the agreed scheduling order operated as an extension of time to file the expert report required under §13.01(d).

2. STATUTE OF LIMITATIONS IN CASE FILED PURSUANT TO THE TEXAS DECEPTIVE TRADE PRACTICES ACT WAS TOLLED FOR 10 YEARS UNDER THE "DISCOVERY RULE"

FACTS OF CASE

In Salinas v. Gary Pools, Inc., __SW3rd__, 2000 WL 1344509 (4^th Court of Appeals - San Antonio, September 20, 2000)., the Fourth Court of Appeals decided whether or not the discovery rule applied to tolling statute of limitations in a case alleging violations of the Texas Deceptive Trade Practices Act (DTPA) and negligence. The Court found that the statute of limitations was tolled for the cause of action alleging violations of DTPA for a period of ten (10) years and found that summary judgment based upon the statute of limitations was improper.

In 1988, Jose and Maria Salinas contracted with Gary Pools (Gary) to install a pool in the backyard of their home. All contracts were signed, agreed to, and the necessary approvals obtained from the City of San Antonio. During the course of the construction of the pool, it was determined by Gary that the construction of the pool would not work in the backyard and the pool was moved to a side yard. The pool area was built upon the city's easement. Gary failed to get a modification of the contract or submit the revised plan to the City of San Antonio. Ten (10) years later, in 1998, the Salinas' attempted to sell their home. In the course of selling their home, it was discovered during a title search that the pool had been built upon the easement owned by the City of San Antonio. The easement was not apparent from a visual view.

Mr. and Mrs. Salinas brought a cause of action against Gary for violations of the DTPA and negligence. Gary moved for summary judgment based upon statute of limitations, specifically that the Salinas' failed to bring their causes of action within two (2) years after the building of the pool or before 1990. The trial court granted the summary judgment in favor of Gary and the Salinas' appealed to the Fourth Court of Appeals. The Fourth Court of Appeals reversed the trial court's finding and found that the statute of limitations had been tolled under the discovery rule.

DISCOVERY RULE TOLLED STATUTE OF LIMITATIONS AS CONSTRUCTIVE NOTICE DID NOT APPLY TO CASES FILED PURSUANT TO THE TEXAS DECEPTIVE TRADE PRACTICES ACT

The Court noted that the "discovery rule" defers accrual of certain causes of action until the plaintiff knew or exercising reasonable diligence should have known of the wrongful act causing injury. In cases under the DTPA, claims accrue on the date on which the false, misleading or deceptive act or practice occurred or when the consumer discovered or in the exercise of reasonable diligence should have discovered the occurrence of the false, misleading, or deceptive act or practice. Gary argued that since the easement was recorded in the public records, the Salinas' knew or in the exercise of reasonable diligence should have discovered, the existence of the easement. Gary Pools, Inc. argued that the Salinas' had "constructive notice" of the public easement.

The Court of Appeals noted that the constructive notice doctrine only applies in situations involving title to real property or in rem proceedings. The Court of Appeals noted that this case did not involve either of those two situations and therefore the constructive notice doctrine did not apply. The Court further confirmed that the constructive notice doctrine does not apply to causes of action brought under the DTPA . In their response to Gary's Motion for Summary Judgment, the Salinas' noted that the easement was not visible to the naked eye and that they had never done a search of the record prior to their purchase of the home (due to the fact that they assumed the note from the previous owner.) Consequently, they were not on notice of the easement and therefore the discovery rule applied. The Court found that in this situation, the statute of limitations for the violation of the DTPA was tolled until 1998- when the Salinas's first discovered the easement in the public records.

STATUTE OF LIMITATIONS FOR NEGLIGENCE CAUSE OF ACTION NOT NECESSARILY TOLLED

The Court further discussed the fact that the discovery rule is different in a negligence cause of action. Under a negligence cause of action, the "discovery rule" tolls a statute of limitations when the nature of the injury is inherently undiscoverable and the injury itself is objectively verifiable. The Court declined to apply the discovery rule in the negligence action as it had under the Deceptive Trade Practices Act cause of action. Essentially, the court noted that "constructive notice" of the filing of the easement would apply as the public record of the easement was not inherently undiscoverable. In this regard, the court noted that if the easement was on file for more than two years before the Salinas' filed their cause of action, then the two-year statute of limitations would prevent the Salinas' from moving forward with their negligence cause of action. However, the Court found that in this case, Gary had provided no evidence that the easement had been on file more than two (2) years before the Salinas' eventually discovered it and therefore the Court found that the negligence cause of action should be remanded back to the Court for trial.

ANALYSIS OF OPINION

In summary, the Court of Appeals stated that the discovery rule under the DTPA is somewhat different from the discovery rule in a negligence cause of action. "Constructive notice" of an easement is not a defense in regards to the tolling of limitations under the DTPA. However, "constructive notice" of an easement would be enough to raise a defense under statute of limitations in a negligence cause of action.

3. THE FOURTH COURT OF APPEALS RECENTLY AFFIRMED THAT AS A GENERAL RULE, A PERSON IS UNDER NO DUTY TO CONTROL THE CONDUCT OF ANOTHER
   1. GENERALLY NO DUTY TO CONTROL THE CONDUCT OF ANOTHER

   The Court of Appeals noted that the primary inquiry was whether there was a duty owed to the Plaintiff by the Defendant. The Court of Appeals reiterated the general rule that "a person is under no duty to control the conduct of another" Otis Eng'g v. Clark, S.W.2d 307, 309 (Tex. 1983). The Court did recognize exceptions to the general rule where a special relationship exists between the actor and the third party.

   2. SPECIAL RELATIONSHIP NEEDED

   The Court noted that one of those special relationships is in the employer-employee relationship. Still, the Court noted that the duty attaches in the employer-employee relationship only when the employer performs some affirmative act of control over the incapacitated employee. In the instant case the Court of Appeals noted that the Otis Eng'g v. Clark decision created a duty owed by an employer only to innocent third parties who are injured by the acts of an intoxicated employee. The Court of Appeals also noted that the common law has long recognized that the imbiber is the person primarily responsible for his own behavior, and best able to avoid the foreseeable risks of that behavior. Graff v. Beard, 858 S.W.2d 918, 921-922 (Tex. 1993).

   3. LACK OF EVIDENCE ALLOWS SUMMARY JUDGMENT TO STAND

   Although the Plaintiffs alleged that the meeting between the Plaintiff and Silva was a business meeting, they were not able to produce evidence that the meeting was for a business purpose. In addition, they were unable to produce any competent summary judgment evidence that there was any control exercised over the Plaintiff by Silva. As a result, since there was no affirmative act of control taken by Silva after the Plaintiff's intoxication, the Court ruled that Silva had no duty to keep the Plaintiff from harming himself.

In Edwards v. Silva, Opinion No. 04-99-00471-CV, San Antonio Court of Appeals, decided September 29, 2000, the Plaintiffs were appealing a summary judgment granted in favor of the Defendants, Al Silva and Labatt Institutional Supply Company dba Labatt Food Service (Labatt).

FACTS OF CASE

On April 16, 1997, the Plaintiff, Robert Edwards, joined his supervisor, Al Silva, for drinks. During the course of the evening, the Plaintiff consumed approximately eight (8) beers. The alcohol and appetizers were purchased with a company credit card. After they were done drinking, Mr. Silva drove Mr. Edwards back to his vehicle on Labatt's premises. Edwards was on his way home when he was involved in one car accident, sustaining serious personal injuries.

The Plaintiffs, Edwards and his wife, then sued Silva and Labatt alleging that the Defendants were negligent in furnishing the Plaintiff alcohol; placing him in danger and failing to take reasonable precautions to ensure safety; failing to make alternative arrangements for him to get home; failing to implement reasonable practices involving use of alcoholic beverages and failing to supervise the Plaintiff. The Defendants moved for summary judgment which was granted by the trial court.

4. OBJECTING TO THE FORM OF SUMMARY JUDGMENT EVIDENCE IS NECESSARY TO RAISE IT ON APPEAL. AN OBJECTION TO THE SUBSTANCE OF THE SUMMARY JUDGMENT EVIDENCE MAY BE RAISED FOR THE FIRST TIME ON APPEAL
   1. NEED TO OBTAIN A RULING ON SUMMARY JUDGMENT EVIDENCE

   In reversing the trial court's granting of the motion for summary judgment the Court found that Well Solutions, Inc.'s summary judgment evidence raised a material issue of fact concerning whether Superior Trailers manufactured the trailer. At issue is whether or not Superior Trailer waived its objections to the form of the summary judgment evidence by failing to obtain a ruling by the Court on its objections.

   Prior to September 1, 1997, Tex. R. App. P. 33.1(a) stated that a complaint is preserved for appellate review only if the record establishes the complaint was made known to the trial court in a timely manner and the trial court ruled on the complaint. Effective September 1, 1997, the Tex. R. App. P. 33.1 (a)(2)(A) changed the rule to permit a trial court's ruling to be either express or implicit.

   The Court of Appeals rejected Superior Trailer's argument that the trial court implicitly granted its objections because it granted its motion for summary judgment.

   2. DIFFERENCE BETWEEN OBJECTIONS TO FORM AND OBJECTIONS TO SUBSTANCES

   Superior Trailer also argued that its objections went to the substance of Well Solutions summary judgment proof and therefore it may raise its objections for the first time on appeal. The Court of Appeals noted the difference between objections to the form of the summary judgment evidence, which must be raised before the trial court or are waived, and defects in the substance of the proof which are not waived despite the lack of an objection. The Court of Appeals held that the evidence that was objected to, including excerpts from the deposition of a witness in the prior lawsuit, are objections to the form of the summary judgment evidence, not to its substance.

   The Court of Appeals concluded that Superior Trailer waived its objections to the form of Wells Solutions, Inc.'s summary judgment evidence which controverted its motion for summary judgment, since Superior Trailer failed to obtain rulings on its objections.

FACTS OF CASE

Well Solutions, Inc. v. Ross Stafford, 4^th Court of Appeals - SA, (No. 04-00-00001-CV, September 29, 2000) involved Well Solutions, Inc.'s appeal of a summary judgment granted against it in favor of Ross Stafford, Jr. d/b/a Superior Trailer Sales.

The underlying lawsuit arises out of an accident that occurred on January 20, 1997. Roland Benavidez was driving a truck and towing a trailer. He was involved in a one car accident in which his brother, Raul, was killed. The survivors and the Estate of Raul Benavidez filed suit against Dawson Production Services, Inc., Well Solutions, Inc. and others in Duval County. After that litigation was resolved Roland Benavidez and his wife sued Well Solutions, Inc. for injuries arising out of the same accident. Well Solutions, Inc. filed a third-party claim against Ross Stafford, Jr. d/b/a Superior Trailer Sales alleging that company manufactured the trailer involved in the accident. Superior Trailer Sales moved for summary judgment on the ground that it did not manufacture the trailer and supported its motion with affidavits.

Well Solutions, Inc. filed a response to the Motion for Summary Judgment including deposition excerpts and an affidavit from the underlying case involving survivors and Estate of Raul Benavidez. It also included uncertified copies of records of the Texas Department of Public Safety and the Texas Department of Public Transportation. Superior Trailer Sales objected to the evidence alleging that it was inadmissible hearsay and incompetent summary judgment evidence. The objections were not ruled upon by the trial court. The trial court granted Superior Trailers' motion for summary judgment.

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