Recent Texas Supreme Court Error Preservation Decisions, 4/20/18

April 20, 2018

Dear All:

Conflicting jury answers, illegality, subpoenas, and damage experts–Oh, my!

The Supreme Court issued several error preservation decisions last week, so I thought I would dedicate this post to those.

So what about preserving a complaint about those conflicting jury answers?

If you want my two cents worth, I would say to continue objecting to conflicting jury answers before the trial court dismisses the jury, and get the trial judge to have the jury continue deliberating. Tex. R. Civ. P. 295. And even though Rule 324 does not list conflicting jury answers as one of the complaints for which a motion for new trial is required, I believe I would still complain about such conflicting answers in some kind of motion for new trial or judgment modification, just because. And the recent multiple, competing, non-majority opinions in Lloyds v. Menchaca are why I say that.

The Supreme Court issued its opinions on rehearing in USAA Tex. Lloyds Co. v. Menchaca a little over a year after its initial opinion in that case. That initial opinion was unanimous, save for Justice Johnson, who did not participate. Like its original opinion, the opinions on rehearing in Menchaca dealt with an insured’s claims against her homeowner’s insurance company concerning damage to her home from Hurricane Ike. USAA Tex. Lloyds Co. v. Menchaca, No. 14-0721, __ WL ___, 2018 Tex. LEXIS 313, *4 (Apr. 13, 2018). Justice Boyd’s opinion, which announced the Court’s judgment, talked about “the clarification we provide today,” and “the benefit of the guidance we have provided today regarding the preservation of such error.” Menchaca,*49, *83. Those statements must have survived artifacts from an earlier draft of the opinion, because it’s hard to see how much error preservation clarification or guidance comes from three competing opinions, none of which drew a majority concerning certain error preservation issues, and which two Justices were not part of. If anything, this case shows the need for revising Rule 295, which governs the correction of verdicts, and particularly incomplete, nonresponsive, and conflicting jury answers.

The error preservation issue here dealt with conflicting jury answers:

  •  The jury answered “No” when asked if the insurance company “failed ‘to comply with the terms of the insurance policy with respect to the [plaintiff’s] claim for damages.’” Menchaca, at *5.
  • But the jury also found that the insurance company engaged in various unfair or deceptive practices, including refusing to pay a claim without conducting a reasonable investigation with respect to that claim; the jury also found the damages for that statutory violation. The trial court instructed the jury that the damages were “the difference, if any, between the amount [the insurance company] should have paid . . . and the amount that was actually paid.” Menchaca, *5.

All justices who wrote or joined opinions in Menchaca did agree on some error preservation aspects about these conflicting answers. For example, Justice Boyd, in the part of his opinion joined by all Justices but Justice Johnson (who did not participate) and Justice Blacklock (who concurred in the judgment but did not join with any opinion), held that the Court “unanimously reaffirm[ed]” the holding “in our first opinion that the trial court erred in this case by disregarding the jury’s answer to Question 1, in which the jury failed to find that the insurer failed to comply with its obligations under the policy.” Menchaca, *2. Chief Justice Hecht pointed out, in his concurring opinion, that the “Court [also] unanimously disagrees” with the parties’ contentions that the jury answers did not conflict. Menchaca, *83-84.

But what’s where things start to unravel, from a standpoint of how and when a party preserves error concerning conflicting jury answers, and which party must do so. Four Justices–Justice Boyd, joined by Chief Justice Hecht, Justice Lehrmann, and Justice Devine–held that the irreconcilable conflict in the jury answers was fatal. These four Justices reached that conclusion because the jury answer about compliance with the policy, standing alone, would require a judgment in favor of the insurance company, while the answers to the statutory violation and damage question, without the policy compliance question, would require a judgment in favor of plaintiff. Menchaca, *61-62.

Stating that “neither party has objected to the conflict” in the jury answers, Justices Boyd, Lehrmann, and Devine, without Chief Justice Hecht, provided a lengthy historical discussion about whether conflicting jury answers constituted fundamental error; they concluded that “the fatal conflict in the jury’s verdict in this case does not constitute fundamental error, and as a result, we cannot consider that conflict unless the error was properly preserved.” Menchaca, *61, 69. After another lengthy discussion of Rule 295, those three Justices also held that “to preserve error based on fatally conflicting jury answers, parties must raise that objection before the trial court discharges the jury.” Menchaca, *74. Finally, those three Justices held that, since the plaintiff’s failure to prevail on her contract claim did not automatically negate the findings on her statutory claim, “[w]e are thus left with a judgment based on fatally conflicting jury answers, but since neither party preserved that error, we cannot consider the conflict as a basis for reversing the trial court’s judgment.” Menchaca, *80. Instead of rendering judgment for the plaintiff, though, the Boyd-Lehrmann-Devine Triumvirate remanded the case to the trial court for a new trial in the interest of justice, “[i]n light of the parties’ obvious and understandable confusion over our relevant precedent and the effect of that confusion on their arguments in this case, as well as our clarification of the requirements to preserve error based on conflicting jury answers.” Menchaca, *81-82.

Chief Justice Hecht, in his solo concurrence, disagreed that an objection to the conflicting jury answers here was necessary “for the reasons given by Justice Green in his dissent,” but agreed with the remand and retrial because “a retrial is the only way to correct the trial court’s error” in rendering judgment on fatally conflicting jury answers. Menchaca, *84-85.

Justice Green, in a dissent joined by Justices Guzman and Brown, on the other hand, would render judgment for the insurance company because the plaintiff failed to obtain an affirmative finding on her contract claim, which was “requisite . . . to recover policy benefits for a violation of the Texas Insurance Code.” Menchaca, *86. Joined by Chief Justice Hecht, Justice Guzman, and Justice Brown–a plurality, as Justice Green pointed out–Justice Green pointed out that while “a party should object to conflicting answers before the trial court dismisses the jury,” the “absence of such an objection . . . should not prohibit us from reaching the issue of irreconcilable conflicts in jury findings.”. Menchaca, *95-96. Justice Green reached this conclusion based on Rule 295 saying that “‘[i]f [a] purported verdict is defective, the court may” but is not required to “direct it to be reformed,’” and both the Rule and the Rule Commentary “simply mandates written instructions in the event that the court decides to have the jury deliberate further to reform the verdict.” Menchaca, *96.

Justice Green also pointed out that plaintiff’s counsel “raised the possibility of conflicting answers before the jury was dismissed, attempting to argue that any conflicts would not be irreconcilable,” but discussions with the trial court showed that “the trial court and both parties were satisfied that further deliberations were unnecessary.” Menchaca, *101-102. Put another way, the Green plurality noted that “the trial court here practically invited the parties to object before the jury was dismissed . . . . Despite Menchaca’s counsel noting a conflict in the jury’s answers, neither party objected because they each believed they had won . . . [T]hat should not prevent us from considering whether the verdict can support a judgment in the plaintiff’s favor.” Menchaca, *107. “Under these circumstances,” the Green plurality “would hold that the appellate court is not prohibited from considering whether a judgment on the verdict can stand.” Menchaca, *102. Justice Green also noted:

Although I do not believe our preservation requirements prevent us from ruling in USAA’s favor or even from considering the issue of conflicting jury answers in this case, I do believe that USAA’s post-verdict motions [a motion for judgment, and a subsequent motion to alter or amend the judgment and motion for new trial] were sufficient “to bring this question [of conflicting answers] to the trial court’s attention” and thus preserved error.

Menchaca, *105. Justices Green, Guzman, and Brown would render a take nothing judgment for the insurance company defendant.

Here is a link to table I put together to try to correlate the various holdings.  180420 I hope this is easier for you to parse through than it was for me.

A contract’s illegality is an affirmative defense which must be raised in the trial court–not an impediment to a party’s standing, which is jurisdictional and can be raised at any time.

In another recent opinion, the Supreme Court held that “illegality [of a contract] is an affirmative defense to a claim [which “forecloses its enforcement regardless of whether it has been blessed by an arbitrator’], not an impediment to a party’s standing to assert it. Tex. R. Civ. P. 94.” Jefferson Cty. v. Jefferson Cty. Constables Ass’n, No. 16-0498, 2018 Tex. LEXIS 314, at *9-10 (Apr. 13, 2018). As an affirmative defense, the Court held that illegality must be raised in the trial court. Id., at *12. Having said that, the Court went ahead and addressed the illegality of the contract because “ both parties have fully briefed and argued the merits of the issue here. Further, the Constables Association does not ask us to resolve the question on waiver grounds and concedes that its general collective bargaining rights depend on the deputy constables’ status as police officers under the Act. For these reasons, and because the issue is of continuing importance to our jurisprudence, we will address it.” Id., at *12. Justice Boyd, joined by Justice Johnson, dissented on other grounds. Jefferson Cty, at *30-31.

You’ve not waived a complaint about the new subpoena because you didn’t object to its withdrawn predecessor.

A failure to object to an initial subpoena, which is cancelled and then reissued, does not waive an objection to the reissued subpoena. In re Garza, No. 17-0395, 2018 Tex. LEXIS 315, at *11-12 (Apr. 13, 2018)

The Court provided an example of successfully preserving a complaint about the opinion of a damage expert which was based on an unenforceable oral agreement.

In Hill v. Shamoun & Norman, the Court held that a “motion for directed verdict and renewed motion for directed verdict” which “argued . . . that S&N’s only damages evidence was the oral agreement and the statute of frauds bars recovery based on the oral agreement” preserves a “legal sufficiency challenge” such as the one here, to wit: “that the value of the alleged unenforceable oral contingent-fee agreement between Hill and Shamoun cannot be given any legal weight, thus prohibiting consideration of Sayles’s expert opinion, which relied on the terms of that agreement.” Hill v. Shamoun & Norman, LLP, No. 16-0107, 2018 Tex. LEXIS 309, at *25 n.7 (Apr. 13, 2018)

I’ll put recent error preservation decisions from the court of appeals in another blog post.  As always, I hope this helps.

Yours, Steve Hayes

www.stevehayeslaw.com

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