Justia Texas Supreme Court Opinion Summaries

Articles Posted in Class Action
by
Cobalt International Energy partnered with three Angolan companies to explore and produce oil and gas off the coast of West Africa. Later, the federal Securities and Exchange Commission announced it was investigating Cobalt for allegations of illegal payments to Angolan government officials and misrepresentation of the oil content of two of its exploratory wells. This led to a significant drop in Cobalt’s stock price and prompted a class action lawsuit from Cobalt's investors, led by GAMCO, a collection of investment funds that held Cobalt shares. Prior to these events, Cobalt had purchased multiple layers of liability insurance from a number of insurance companies, collectively referred to as the Insurers in this case. When the allegations surfaced, Cobalt notified the Insurers, who denied coverage on the grounds that Cobalt's notice was untimely and certain policy provisions excluded the claims from coverage.In 2017, Cobalt filed for bankruptcy and began settlement negotiations with GAMCO. Eventually, a settlement agreement was reached, which stipulated that Cobalt would pay a settlement amount of $220 million to GAMCO, but only from any insurance proceeds that might be recovered. Cobalt and GAMCO then jointly sought approval of the settlement from the federal court and the bankruptcy court, both of which granted approval.The Insurers then filed a petition for a writ of mandamus, arguing that the settlement agreement was not binding or admissible in the coverage litigation, that Cobalt had not suffered a "loss" under the policies, and that GAMCO could not sue the Insurers directly.The Supreme Court of Texas held that (1) Cobalt had suffered a “loss” under the policies because it was legally obligated to pay any recoverable insurance benefits to GAMCO, (2) GAMCO could assert claims directly against the Insurers, and (3) the settlement agreement was not binding or admissible in the coverage litigation to establish coverage or the amount of Cobalt’s loss. The court reasoned that the settlement was not the result of a "fully adversarial proceeding," as Cobalt bore no actual risk of liability for the damages agreed upon in the settlement. The court conditionally granted the Insurers' petition for a writ of mandamus in part, ordering the trial court to vacate its previous orders to the extent they relied on the holding that the settlement agreement was admissible and binding to establish coverage under the policies and the amount of any covered loss. View "IN RE ILLINOIS NATIONAL INSURANCE COMPANY" on Justia Law

by
The Supreme Court reversed the judgment of the court of appeals affirming a modified version of the order of the district court certifying a class, holding that when the claims for which the plaintiffs seek class certification have no basis in law, even taking all the allegations as true, class certification cannot be granted.Tenants sued Landlord alleging a violation of Tex. Prop. Code 92.056(g), arguing that Landlord was strictly liable for omitting a required lease term. Tenants sought class certification of a class of more than 65,000 former tenants. Landlord moved for summary judgment, arguing that the lawsuit amounted to an "ineffectual[] attempt to manufacture strict-liability requirements and civil-penalty remedies that do not exist under a plain reading of the Texas Property Code." The district court granted the motion for class certification, and the court of appeals affirmed as modified. The Supreme Court reversed, holding that where Tenants' proposed class claims had no basis law, the "rigorous analysis" necessary to certify the class could not meaningfully be performed. View "American Campus Communities, Inc. v. Berry" on Justia Law

Posted in: Class Action
by
The Supreme Court reversed the judgment of the court of appeals affirming the trial court's order certifying a class in this action claiming violations of Tex. Prop. Code 92.019, which regulates landlords' ability to impose late fees on tenants who untimely pay their rent, holding that the trial court abused its discretion by failing to address Petitioners' defenses in the trial plan and their effects on the requirement for class certification.Respondent sued Petitioners for breach of Tex. Prop. Code 92.019 for charging and collecting late fees and charging back rent concessions. Respondent later moved for class certification. After a hearing, the trial court granted the motion. The court of appeals affirmed. The Supreme Court reversed, holding that the trial court abused its discretion by failing correctly to identify the elements of Petitioners' defenses in the trial plan and address their effect on the requirements for class certification in violation of Tex. R. Civ. P. 42(c)(1)(D). View "Mosaic Baybrook Once, L.P. v. Cessor" on Justia Law

by
In this dispute over a "Water/Sewer Base Fee" that Landlords billed tenants each month to recover certain amounts it had paid the municipal utility district the Supreme Court affirmed the trial court's grant of partial summary judgment in Tenant's favor and the court of appeals' judgment affirming the trial court's order certifying a class under Rule 24 of the Texas Rules of Civil Procedure, holding that there was no error.Tenant brought suit against Landlords challenging a fee that included not only each apartment's allocated portion of the utility's customer service charge for water and sewer service but also an undisclosed amount equivalent to a portion of the utility's charges for non-water emergency services. Tenant sued under the Water Code on behalf of a tenant class. The trial court granted Landlords' motion for partial summary judgment on liability and certified a class. The Supreme Court affirmed, holding that the trial court (1) did not err in granting partial summary judgment; and (2) did not abuse its discretion in certifying the class. View "Mosaic Baybrook One, L.P. v. Simien" on Justia Law

by
The Supreme Court affirmed the decision of the court of appeals affirming the judgment of the trial court declining to compel arbitration of class claims under the parties' agreement in this case, holding that the lower courts applied the correct legal standards in declining to compel class arbitration.This arbitration dispute between homeowners and their home warranty company evolved into a putative class action complaining about releases the warranty allegedly demanded before making covered repairs. Plaintiffs demanded arbitration, asserting that Defendant was required to arbitrate the class claims under the arbitration provisions in the warranty. The trial court granted Defendant's motion to dismiss, concluding that the question of whether the parties agreed to class arbitration was a question of arbitrability for the court to make and that the warranty agreement did not permit class arbitration. The court of appeals affirmed. The Supreme Court affirmed, holding (1) arbitratibility of class claims is a gateway issue for the court unless the arbitration agreement clearly and unmistakably expresses a contrary intent; (2) an agreement to arbitrate class claims cannot be inferred from silence or ambiguity, but rather, an express contractual basis is required; and (3) the lower courts correctly determined that Defendant was not bound to arbitrate Plaintiffs' putative class claims. View "Robinson v. Home Owners Management Enterprises, Inc." on Justia Law

by
The Supreme Court affirmed the judgment of the court of appeals reversing the judgment of the trial court concluding that Petitioner, who represented a putative class of citizens seeking to strike down state statutes and a city's ordinance authorizing use of red-light cameras as a traffic-enforcement tool, was not required to seek an administrative remedy before filing his case in district court, holding that Petitioner lacked standing to bring one of his claims, that governmental immunity applied to another claim, and that Petitioner was required to seek administrative relief before filing a takings claim in district court.In reversing, the court of appeals concluded that the trial court had no jurisdiction over Petitioner's claims because Petitioner had failed to seek administrative relief. The Supreme Court affirmed but for different reasons, holding (1) Petitioner lacked standing to bring his prospective claims for declaratory and injunctive relief; (2) governmental immunity barred Petitioner's reimbursement claim; (3) Petitioner was required to exhaust his administrative remedies before bringing his constitutional takings claim in district court; and (4) an amended pleading would not cure the defects in Petitioner's claims. View "Garcia v. City of Willis" on Justia Law

by
Two subcontractors employed by Petitioner, a homebuilder, asserted claims on behalf of a class of subcontractors whose pay Petitioner had docked when the subcontractors did not furnish proof of adequate general liability insurance coverage. The parties settled. Under the terms of the settlement agreement, Petitioner would issue refunds checks, sending them to existing subcontractors as it would their paychecks or by mailing checks to the last known addresses of former subcontractors. The class representatives agreed, on behalf of the settlement class members, that refund checks not negotiated within ninety days of issuance would be void and that those and other unclaimed funds would be given to The Nature Conservancy as a cy pres award. The trial court approved the settlement and rendered final judgment accordingly. The court of appeals reversed, concluding that the Texas Unclaimed Property Act prohibited the imposition of a ninety-day deadline for negotiating settlement checks and the cy pres award. The Supreme Court reversed, holding that the Act did not apply in this case and that the judgment approving the settlement agreement was binding on all settlement class members. View "Highland Homes Ltd. v. State" on Justia Law

by
This suit was filed as a putative class action on behalf of Texas royalty owners alleging that Phillips Petroleum Company underpaid oil and gas royalties. The trial court certified three subclasses of royalty owners. The court of appeals reversed. The Supreme Court affirmed as to two of the subclasses but reversed as to the third subclass, which alleged breach of a uniform express royalty provision contained in gas royalty agreements that amended the class members' leases. On remand, Respondent, class representative of the remaining subclass, amended her petition to add a claim for breach of the implied covenant to market. Phillips unsuccessfully filed various motions contending that there was no class claim for breach of the implied covenant to market. The court of appeals dismissed Phillips' interlocutory appeal for lack of jurisdiction and denied Phillips' petition for writ of mandamus. The Supreme Court reversed, holding (1) the court of appeals erred in dismissing the interlocutory appeal for lack of jurisdiction; and (2) the trial court abused its discretion in allowing the addition of a class claim for breach of the implied covenant to market without requiring Respondent to file an amended motion for class certification or holding a certification hearing. View "Phillips Petroleum Co. v. Yarbrough" on Justia Law

by
A small group of landowners sought to certify a class composed of all owners of any real property interests in a twelve-mile stretch of land located adjacent to the Canadian River to litigate alleged takings claims against the State. The trial court denied certification, finding that the landowners failed to satisfy two prerequisites required by Tex. R. Civ. P. 42(a) and any one of the three Rule 42(b) requirements. The court of appeals affirmed, concluding that certain conflicts identified by the trial court prevented the landowners from satisfying Rule 42(a)(4)'s adequacy-of-representation prerequisite. The Supreme Court reversed, holding (1) the trial court abused its discretion by relying on the conflicts identified in its order denying class certification to establish that the landowners failed to satisfy Rule 42(a)(4)'s adequacy-of-representation prerequisite; and (2) the court of appeals erred when it affirmed the trial court's order on the same grounds. View "Riemer v. State" on Justia Law

by
This matter arose out of a dispute over whether the City of Dallas paid its firefighters and police officers in accord with a 1979 ordinance adopted pursuant to a voter-approved referendum. Claiming the City had not properly paid them, some firefighters and police officers brought a class action asserting breach of contract claims and seeking a declaratory judgment. For the reasons set out in City of Dallas v. Albert, the court concluded that: (1) the ordinance's adoption by means of referendum did not result in the City's loss of immunity from suit; (2) the City had immunity from suit as to the declaratory judgment action; (3) by non-suiting its counterclaim the City did not reinstate immunity from suit as to the Officers' claims that were pending against the City when it non-suited the counterclaim; and (4) the case must be remanded for the trial court to consider whether the Legislature waived the City's immunity by amending the Local Government Code. View "City of Dallas v. Martin, et al." on Justia Law