Are Non-Economic Damages Recoverable for The Death of a Pet or Animal?– Fort Worth, Texas Insurance Defense Attorneys

In Stickland v. Medlen, 397 S.W.3d 184 (Tex. 2013), the Texas Supreme Court addressed whether an aggrieved party may recover non-economic damages for the wrongful death of a pet or animal.  Under the facts of that case, the family dog was accidentally euthanized by an animal shelter, and the plaintiffs filed suit, alleging that the loss of the dog had caused “sentimental or intrinsic value” damages. The Supreme Court rejected the plaintiff’s theory, and focused the right of recovery on economic impact, rather than emotional loss.

The Court relied on the over a century old decision in Heiligmann v. Rose, 16 S.W. 931 (Tex. 1891), which held that the value for the death of a dog was restricted to “market value, if the dog has any” or some “special or pecuniary value to the owner, that may be ascertained by reference to the usefulness and services of the dog.” But Heiligmann v. Rose tied “special value” to a dog’s economic attributes, not to emotional or otherwise subjective factors. This 1891 interpretation has stood the test of time, as is reflected most recently in the Strickland v. Medlin decision. Same Old Dog, Same Old Case.

The Court in Stickland v. Medlen emphasized the importance of animals in our society by stating “…that is precisely why Texas law forbids animal cruelty generally (both civilly and criminally), and bans dog fighting and unlawful restraints of dogs specifically—because animals, though property, are unique.” The Court also made reference to a comment from the Restatement (Third) of Torts as follows: “Recovery for intentionally inflicted emotional harm is not barred when the defendant’s method of inflicting harm is by means of causing harm to property, including an animal.”  Ultimately, however, the Court decided that the common law in Texas does not provide for the recovery of emotional loss damages in this situation.

The Court’s opinion puts forth common law principles and public policy concerns in its rationale. Fundamentally, the Court found that animals and pets are property. The Court made the point that emotional distress is typically not recoverable for property damage, but is rather more suitable to recovery for personal injury damages caused to human beings. In short, animals are not humans. While this approach by Texas courts has been the source of debate for years, it seems that the old is new again when it comes to the analysis of emotional damages and pets.

Williams, McClure & Parmelee is dedicated to high quality legal representation of businesses and insurance companies in a variety of matters. We are experienced Texas civil litigation attorneys based in Fort Worth who know Texas courts and Texas law. For more information, please contact the law firm at 817-335-8800. The firm’s office location is 5601 Bridge Street, Suite 300, Fort Worth, Texas 76112.

Martindale AVtexas[2]

Mental Anguish Damages Require More Than Anxiety and A Bad Night’s Sleep–Texas Insurance Defense Attorneys

In a case grounded in allegations of defamation, The Texas Supreme Court addressed the minimum amount of proof necessary to support damages for mental anguish. The case of Hancock v. Variyam, 400 S.W.3d 59, 62 (Tex. 2013) involved a defamation suit relating to a letter written by a medical doctor alleging that another doctor had a “reputation for lack of veracity” and “deals in half truths.”  The trial court ruled that the letter was defamatory per se and the jury awarded damages, including a total of $30,000 for mental anguish, past and future. The defendant doctor appealed, attacking the legal sufficiency of the mental anguish damages.  Plaintiff’s testimony at trial had been that he was embarrassed, anxious, and could not sleep.  The Supreme Court stated “There is no evidence of mental anguish because evidence that (Plaintiff) experienced some sleeplessness and other anxiety does not rise to the level of a substantial disruption in his daily routine or a high degree of mental pain and distress.” The court therefore held that the plaintiff doctor failed to prove that he suffered a substantial disruption in daily routine or a high degree of mental pain and distress. Also, the plaintiff must additionally show the nature, duration, and severity of the mental anguish.

The court referenced an older Supreme Court case styled Parkway Co. v. Woodruff, 901 S.W.2d 434, 443 (Tex. 1995)  and stated that the plaintiff had not come forward with sufficient proof of actionable or compensable mental anguish. In Parkway v Woodruff, the court had found no evidence of mental anguish damages where the plaintiff had testified that he had “a lot of anguish, a lot of grief” and disappointment and humiliation because they did not rise to the level of a high degree of mental pain and distress or indicate a substantial disruption of his daily routine; Parkway, 901 S.W.2d at 445. The Parkway v Woodruff court had held that “anger, frustration, or vexation . . . do not support the conclusion that these emotions rose to a compensable level”.

Although the Hancock v. Variyam case happened to involve allegations of defamation, the Supreme Court’s interpretation of what is required to prove mental anguish damages has a broad effect across a wide spectrum of causes of action and practice areas. Mental anguish damages can arise in employment law matters, personal injury lawsuits, non-subscriber litigation and elsewhere. It is expected that this decision will continue to impact the way that mental evidence damages are pled, presented, and defended in Texas civil litigation for years to come. The Hancock v. Variyam decision was not entirely surprising, given some of the older case law. But it very squarely served notice to plaintiff lawyers not to try to come forward with evidence that lacks something of a “magic word” threshold. And to those of us defending lawsuits on behalf of employers, businesses and insurance companies, we have some fresh case law to help defeat those marginal mental anguish claims that we frequently see.

Williams, McClure & Parmelee is dedicated to high quality legal representation of businesses and insurance companies in a variety of matters. We are experienced Texas civil litigation attorneys based in Fort Worth who know Texas courts and Texas law. For more information, please contact the law firm at 817-335-8800. The firm’s office location is 5601 Bridge Street, Suite 300, Fort Worth, Texas 76112.

Martindale AVtexas[2]

Personal Injury Damages and the Effect of Unreasonable Medical Management– Fort Worth, Texas Insurance Defense Attorneys

Perhaps years of practicing insurance defense litigation has jaded me.  I am ever more amazed that some of the doctors who routinely treat injured Plaintiffs involved in litigation do not seem to recognize that failing fail to follow a reasonable medical care management approach often leads to much closer scrutiny of the claim and a poor legal outcome for their patients. But even worse for the injured Plaintiff, these doctors set their patient’s on a path that leads to a failed medical outcome. It could be an unnecessary surgery. Or maybe an uncomplicated soft tissue injury that is followed by years of overtreatment and hundreds of therapy and doctor visits. While it is true that more medical damages can give the appearance of a more serious injury, in most of the cases we have defended on behalf of insurance companies, we have seen this approach by the Plaintiffs and their doctors backfire in terms of improvement of case value.  A lack of credibility always seems to follow unreasonable and unnecessary treatment, and Texas juries are typically not sympathetic.

Since the goal of medical treatment is ostensibly to try to return the patient to their pre-injury status , or as close as possible to such status, a well-managed case will include decreased treatment frequency while occupational and daily activities are slowly reintroduced over time. In our experience as lawyers who defend against personal injury lawsuits, we have found that a constant treatment frequency maintained from the onset of care can lead to problems for the Plaintiff attorney and the plaintiff. This is because they are forced to explain this apparent inconsistency, and it is hard to do.

An unreasonable approach to treatment more often than not complicates settlement. When we ask, “how can an accurate prognosis of the patient’s future medical condition be measured if the treatment has remained basically the same?”, we are frequently met with a blank stare or an evasive answer when we cross examine the Plaintiff’s doctor.  Also how can the patient reach their pre-injury status if the stresses of daily life and normal occupational effects were never reintroduced while under treatment?

The medical care rendered by the providers should be reasonable and fall within reasonable guidelines for treatment duration. Of course, an accurate diagnosis and prognosis are always fundamental to a determination of what the medical care needs are and will be in term of future care. The amount of settlement should be based on accurate medical information based on reasonable protocols and treatment guidelines.

Red flags that signal unreasonable medical management, overtreatment, or mismanaged care include: if the patient’s condition gets worse under the care rendered; when the patient’s subjective complaints reach a point where the treatment rendered only makes them feel better for a few days and then they are the same as before medical visit; or if the patient fails to make progress between visits over a lengthy time period, and the clinical potential for further significant healing or improvement is remote.

Williams, McClure & Parmelee is dedicated to high quality legal representation of businesses and insurance companies in a variety of matters. We are experienced Texas civil litigation attorneys based in Fort Worth who know Texas courts and Texas law. For more information, please contact the law firm at 817-335-8800. The firm’s office location is 5601 Bridge Street, Suite 300, Fort Worth, Texas 76112.

Martindale AVtexas[2]

Occupational Disease or Ordinary Disease of Life?–Fort Worth, Texas Workers’ Compensation Attorneys

We represent insurance carriers and self-insureds in Texas workers compensation litigation, and have often have litigated disputes regarding whether or not the claimant has sustained a compensable injury in the course and scope of his or her employment, rather than a non-compensable  ordinary disease of life.

In the Texas workers’ compensation system, ordinary diseases of life are illnesses or conditions that the general public is exposed to outside the scope of employment.  If an employee has an injury that is considered to be an ordinary disease of life, he or she is generally not entitled to receive benefits.  An illness or injury is considered an ordinary disease of life, and therefore not compensable, when there is no causal connection between the injury and the work, and the disease is not indigenous to the workplace or present at an increased degree with the employment.  Congenital heart disease, cancer and diabetes are common ordinary diseases which usually are determined to be non-compensable. But that is not always true.

Claimant’s attorneys are sure to remind us that not all diseases are ordinary diseases of life. Some diseases are instead, occupational diseases. There has to be some substantial connection to the employment, and the disease must not be an ordinary disease of life. Although workers’ compensation law draws a distinction between ordinary diseases of life and occupational diseases, the distinction between the two is often difficult.

When injuries are occupational, the date of injury for an occupational disease is the date on which the employee knew or should have known the disease may be related to the employment.  Section 408.007 of the Texas Labor Code. This date is not necessarily the date on which symptoms first appeared, but is the date on which a reasonable person recognizes the nature, seriousness, and work-relatedness of the disease.  Commercial Ins. Co. of Newark, New Jersey v. Smith, 596 S.W.2d 661, 665 (Tex. Civ. App.—Ft. Worth 1980, writ ref’d n.r.e.).

If an injury is an occupational disease, the employer in whose employ the employee was last injuriously exposed to the hazards of the disease is considered to be the employer of the employee.  Section 406.031(b)of the Texas Labor Code.  The date of injury is the determining factor as to which of various workers compensation insurance carriers is liable for compensation of an occupational disease.  However, when an employee has worked for several employers over a period of time and is exposed to similar causes of the occupational disease throughout his or her employment but had no distinct manifestation of the disease, the insurance company liable for compensation will be the one that insured the employer that the injured employee worked for when last injuriously exposed to the causes of the disease.  Hernandez v. Travelers Indemnity Co. of Rhode Island, 855 S.W.2d 786 (Tex. App.—El Paso 1993, no writ).

Williams, McClure & Parmelee is dedicated to high quality legal representation of businesses and insurance companies in a variety of matters. We are experienced Fort Worth, Texas workers’ compensation attorneys in Tarrant County who know Texas courts and Texas law. For more information, please contact the law firm at 817-335-8800. The firm’s office location is 5601 Bridge Street, Suite 300, Fort Worth, Texas 76112.

Martindale AVtexas[2]

Premises Liability Issues in Defense of Non-Subscribers in Texas–Fort Worth, Texas Non Subscriber Attorneys

Premises liability claims are often brought against businesses and companies we represent in Texas. Any business which is in possession of a building or land (i.e. a premises) is subject to the possibility of a claim being brought by anyone who is injured while on the premises. Some of the most common forms of premises liability involve slip and fall cases, swimming pool accidents, landlord negligence, elevator accidents, improper maintenance and negligent security.

But Premises liability claims in Texas are not limited to third party claims. Premises liability claims are frequently brought by employees against their nonsubscriber employers. Premises liability can be described as the legal responsibility for an injury (usually a personal injury) that arises out of the ownership or operation of property.  When we represent businesses who have taken advantage of their rights to be responsible non-subscribers, we see premises liability claims arise when an employee is injured by a condition of the employer’s property. This type of claim is in contrast to non-premises claims, which would involve acts or activities of a co- employee, a third party, or even the employee himself or herself.

Premises owners are not guarantors of the safety of its customers or employees.  As a result, an employee is not automatically entitled to recover for his or her injuries simply because the injury occurred on the employer’s property.

To prevail on a premises-liability claim against his or her employer in Texas, an employee must generally prove four elements (notice; unreasonably dangerous condition; failure to exercise ordinary care; and proximate cause).

The four elements are more specifically described as follows:

(1) Actual or constructive knowledge of a condition on the premises by the owner or occupier;

(2) That the condition posed an unreasonable risk of harm;

(3) That the owner or occupier did not exercise reasonable care to reduce
or eliminate the risk; and

(4) That the owner or occupier’s failure to use such care proximately caused the employee’s injury.

Employers who do not subscribe to the Texas Worker’s Compensation Act under Section 406.033 of the Texas Labor Code are denied the common law defenses of assumption of the risk and contributory negligence. But the employee still has to prove that the employer owes a duty to the employee.

In one of the leading cases on premises liability law in Texas,  Brookshire Grocery Company v. Goss, 262 S.W.3d 793 (2008), the Texas Supreme Court reversed a jury verdict and the court of appeals when a grocery store was found negligent after its employee was injured when she attempted to maneuver around a loaded cart in a deli cooler. Because any danger inherent to stepping around such carts is commonly known, the court held that the employer had no duty to warn employees of the risk or provide specialized training to avoid that hazard. In reversing the verdict, the Supreme Court noted that the threshold question was one of duty, and that the employer had no such duty. The court asserted that an absence of duty is not an affirmative defense, stating that it ““depends on a legal analysis balancing a number of factors, including the risk, foreseeability, and likelihood of injury, and the consequences of placing the burden on the defendant.” There was no evidence that it was unusually dangerous for an employer to keep a loaded lowboy in a cooler. Furthermore, to the extent that stepping over a lowboy is dangerous, it held that it is a danger apparent to anyone, including the injured employee.

For Texas non-subscribers, this decision of the Court is a welcome sight. If your company is a non-subscriber to Texas workers’ compensation, we can answer questions you might have regarding premises liability issues and the safety of your employees.

Williams, McClure & Parmelee is dedicated to high quality legal representation of businesses and insurance companies in a variety of matters. We are experienced Fort Worth, Texas non-subscriber defense attorneys in Tarrant County who know Texas courts and Texas law. For more information, please contact the law firm at 817-335-8800. The firm’s office location is 5601 Bridge Street, Suite 300, Fort Worth, Texas 76112.

Martindale AVtexas[2]

Cell Phone Laws for Texas Drivers– Fort Worth, Texas Insurance Defense Attorneys

As insurance defense attorneys in Texas, we have been asked by insurance companies to defend lawsuits on a number of occasions that have involved allegations against the insured driver that cell phone use while driving contributed to or was a proximate cause of a motor vehicle accident.

It is well known that Texas has no statewide law that bans the use of cell phones while driving. However, many local areas prohibit or limit the use of cell phones while driving. Also, Texas law prohibits the use of cell phones while driving if a person has had a learner’s permit for six months or less; if he or she is under 18 years old; or if he or she operates a school bus when children are present; and if the driver is in a school crossing zone.

As the proud owner of a teenage driver myself, I am glad that there are restrictions on his ability to use a wireless communication device at all while driving.  At least the law is trying to do the right thing.

Some of the various jurisdictions in Texas that may have further restrictions on cell phone use while driving include the following: Arlington, Austin, Bellaire, Brownsville, Conroe, El Paso, Galveston, Harlingen, Houston, Magnolia, McAllen, Mission, Missouri City, Mount Vernon, Nacogdoches, San Antonio, Stephenville, Tomball and Universal City.  This is far from an exhaustive list, and the trend is towards more regulation rather than less.

Nearly 25% of all motor vehicle accidents likely involve driver distraction. It is often argued by Plaintiff’s lawyers who we handle cases against that drivers who use cell phones in their vehicles have a higher risk of collision than drivers who don’t, whether holding the phone or using a hands-free device. Sometimes expert witnesses are brought into lawsuits to debate the use of cell phones as a causative factor to the accident.

Chapter 545 of The Texas Transportation Code is the key statutory guidance as far as state regulation of cell phone usage on the rods of Texas. Section 545.425 reads as follows:

Sec. 545.425.  USE OF WIRELESS COMMUNICATION DEVICE; OFFENSE.  (a)  In this section:

(1)  “Hands-free device” means speakerphone capability or a telephone attachment or other piece of equipment, regardless of whether permanently installed in the motor vehicle, that allows use of the wireless communication device without use of either of the operator’s hands.

(2)  “Wireless communication device” means a device that uses a commercial mobile service, as defined by 47 U.S.C. Section 332.

(b)  Except as provided by Subsection (c), an operator may not use a wireless communication device while operating a motor vehicle within a school crossing zone, as defined by Section 541.302, Transportation Code, unless:

(1)  the vehicle is stopped; or

(2)  the wireless communication device is used with a hands-free device.

(b-1)  Except as provided by Subsection (b-2), a municipality, county, or other political subdivision that enforces this section shall post a sign that complies with the standards described by this subsection at the entrance to each school crossing zone in the municipality, county, or other political subdivision.  The department shall adopt standards that:

(1)  allow for a sign required to be posted under this subsection to be attached to an existing sign at a minimal cost; and

(2)  require that a sign required to be posted under this subsection inform an operator that:

(A)  the use of a wireless communication device is prohibited in the school crossing zone; and

(B)  the operator is subject to a fine if the operator uses a wireless communication device in the school crossing zone.

(b-2)  A municipality, county, or other political subdivision that by ordinance or rule prohibits the use of a wireless communication device while operating a motor vehicle throughout the jurisdiction of the political subdivision is not required to post a sign as required by Subsection (b-1) if the political subdivision:

(1)  posts signs that are located at each point at which a state highway, U.S. highway, or interstate highway enters the political subdivision and that state:

(A)  that an operator is prohibited from using a wireless communication device while operating a motor vehicle in the political subdivision; and

(B)  that the operator is subject to a fine if the operator uses a wireless communication device while operating a motor vehicle in the political subdivision; and

(2)  subject to all applicable United States Department of Transportation Federal Highway Administration rules, posts a message that complies with Subdivision (1) on any dynamic message sign operated by the political subdivision located on a state highway, U.S. highway, or interstate highway in the political subdivision.

(b-3)  A sign posted under Subsection (b-2)(1) must be readable to an operator traveling at the applicable speed limit.

(b-4)  The political subdivision shall pay the costs associated with the posting of signs under Subsection (b-2).

(c)  An operator may not use a wireless communication device while operating a passenger bus with a minor passenger on the bus unless the passenger bus is stopped.

(d)  It is an affirmative defense to prosecution of an offense under this section that:

(1)  the wireless communication device was used to make an emergency call to:

(A)  an emergency response service, including a rescue, emergency medical, or hazardous material response service;

(B)  a hospital;

(C)  a fire department;

(D)  a health clinic;

(E)  a medical doctor’s office;

(F)  an individual to administer first aid treatment; or

(G)  a police department; or

(2)  a sign required by Subsection (b-1) was not posted at the entrance to the school crossing zone at the time of an offense committed in the school crossing zone.

(d-1)  The affirmative defense available in Subsection (d)(2) is not available for an offense under Subsection (b) committed in a school crossing zone located in a municipality, county, or other political subdivision that is in compliance with Subsection (b-2).

(e)  This section does not apply to:

(1)  an operator of an authorized emergency vehicle using a wireless communication device while acting in an official capacity; or

(2)  an operator who is licensed by the Federal Communications Commission while operating a radio frequency device other than a wireless communication device.

(f)  Except as provided by Subsection (b-2), this section preempts all local ordinances, rules, or regulations that are inconsistent with specific provisions of this section adopted by a political subdivision of this state relating to the use of a wireless communication device by the operator of a motor vehicle.

Williams, McClure & Parmelee is dedicated to high quality legal representation of businesses and insurance companies in a variety of matters. We are experienced Fort Worth, Texas civil litigation lawyers in Tarrant County who know Texas courts and Texas law. For more information, please contact the law firm at 817-335-8800. The firm’s office location is 5601 Bridge Street, Suite 300, Fort Worth, Texas 76112.

Martindale AVtexas[2]

 

Negligent Misrepresentation As a Weapon For the Defense–Texas Insurance Defense Attorneys

THE BASICS OF NEGLIGENT MISREPRESENTATION

Negligent misrepresentation claims in Texas are something we see arise both in the insurance defense context and in business disputes. Sometimes, we have asserted negligent misrepresentation claims in a defensive manner as we represent defendants businesses who have been sued in personal injury, transactional or workers compensation retaliation lawsuits. Negligent misrepresentation is a tort, but frequently it arises in a business related way. That is because such actions only lie when the target defendant has a pecuniary interest in the transaction. The theory of negligent misrepresentation basically allows plaintiffs or third party plaintiffs who are not parties to a contract for professional services to recover from the contracting professionals.

The tort of negligent misrepresentation in Texas is not in any required respect based on a breach of duty of professional to a client, but rather is based on an independent duty owed to non-clients arising when a professional knows a non-client will rely on the representation and the professional intends for the non-client to rely on the representation. The tort of negligent misrepresentation permits plaintiffs and counter plaintiffs who are not parties to a contract for professional services to recover from the contracting professionals. McCamish, Martin, Brown & Loeffler v. FE Appling Interest, 991 S.W.2d 787, 792-793 (Tex. 1999).

The representation in question is not absolutely required to be in writing. The Court of Appeals in Houston, in Hagans v. Woodruff, 830 S.W.2d 732, 733 (Tex – App. Houston [14 Dist.], 1992, no writ), has held that such a representation can be either written or oral.

The Texas Supreme Court has adopted the tort of negligent misrepresentation as described by the RESTATEMENT (SECOND) OF TORTS § 552.  It was expressly stated in the case of Federal Land Bank Ass’n of Tyler v. Sloane, 825 S.W.2d 439, 442 (Tex. 1991) that the Court would look to section 552 for guidance.  In that case, the Texas Supreme Court referenced section 552 to define the scope of a lender’s duty to avoid negligent misrepresentations to prospective borrowers.  Section 552(1) provides:

One who, in the course of his business, profession or employment, or in any transaction in which he has a pecuniary interest, supplies false information for the guidance of others in their business transactions, is subject to liability for pecuniary loss caused to them by their justifiable reliance upon the information, if he fails to exercise reasonable care or competence in obtaining or communicating the information.

NEGLIGENT MISREPRESENTATION HAS BEEN APPLIED TO NUMEROUS TYPES OF PROFESSIONALS    

The tort of negligent misrepresentation casts a wider net than one would expect. Texas courts a section 522 cause of action against numerous professionals, and it can be anticipated that the list of professionals may be expanding.  The list of professionals includes banks, auditors, doctors, real estate brokers and agents, securities agents and brokers, surveyors, lawyers, title agents and title insurers, C.P.A.’s, druggists  and mortgage lenders. It is foreseeable that engineers, computer programmers, information technology specialists and software engineers could be added to the lists.

THERE IS NO PRIVITY REQUIRED

It must be remembered that a negligent misrepresentation claim is not really at all equivalent to a legal malpractice claim. Under the tort of negligent misrepresentation, liability is not based on the breach of duty a professional owes clients or others in privity. Rather there exists an independent duty to the non-client based on the professional’s awareness of the non-client’s reliance on the misrepresentation and the professional’s intention that the non-client so rely.  (Eisenberg v. Gagnon, 766 F. 2d 770 (3d Circ. 1985).  Therefore, a professional can be subject to a negligent misrepresentation claim in a case in which he is not subject to a professional malpractice claim.  Kirkland Construction Co. v. James, 39 Mass.App. 559, 658 N.E.2d 699, 700-02 (1995). The practical reality is that section 552 imposes a duty to avoid negligent misrepresentation, irregardless of privity.

SHOULD THE PARTY HAVE KNOWN THE INFORMATION WOULD BE RECEIVED BY PLAINTIFF OR COUNTER PLAINTIFF?

A party may establish that it is entitled to maintain an action for negligent misrepresentation when the party shows that it is within a class of persons whom the Defendant knew or should have known would receive the information. Transgulf Corporation v. Performance Aircraft Services, 82 S.W.3d 691, 696 (Tex. App. – Eastland 2002, no pet.).

To prove negligent misrepresentation, a party must establish that the Defendant gave false information for the guidance of others in their business.  Federal Land Bank Association v. Sloane 825 S.W.2d 439, 442 (Tex. 1991) Assurances about coverage to healthcare providers made by insurance companies is an example of information provided for the guidance of others.

TO BE NEGLIGENT, THE MISREPRESENTATION IS ONLY REQUIRED TO BE FALSE BY ACCIDENT

The supplier of the information must exercise reasonable care and competence to ascertain the facts on which the information is based.  RESTATEMENT (2d) of Torts Section 552 & Comment f.  To prove an action for negligent misrepresentation, a party must establish that the Defendant did not use reasonable care in obtaining or communicating information and, as always, what is reasonable will depend on the circumstances of each case.  RESTATEMENT (2d) of Torts Section 552 & Comment e.

The standard is negligence and oversight, not intent. Honesty or good faith is not a defense to a claim of negligent misrepresentation.  DSA, Inc. v. Hillsboro ISD, 793 S.W.2d 662, 664 (Tex. 1998).  To be actionable,a defendant’s negligent  representation need only be false by accident.  Milestone Props v. Federated Metals, 867 S.W. 2d 113, 119 (Tex. App – Austin 1993, no writ).

We have found that the defensive use of a negligent misrepresentation cause of action is an underutilized tool in the tool belt of the Insurance Defense attorney or Business Litigation attorney in Texas looking to adequately protect his or her insured client or business defendant. The intervening cause of someone else’s professional negligence, may just be the theory that protects the client, and so third party claims against these seemingly uninvolved entities or persons should not be overlooked as possibilities.

Williams, McClure & Parmelee is dedicated to high quality legal representation of businesses and insurance companies in a variety of matters. We are experienced Fort Worth, Texas insurance defense attorneys in Tarrant County who know Texas courts and Texas law. For more information, please contact the law firm at 817-335-8800. The firm’s office location is 5601 Bridge Street, Suite 300, Fort Worth, Texas 76112.

Martindale AVtexas[2]

When Workers’ Compensation Claims and Child Support Orders Meet–Fort Worth, Texas Workers’ Compensation Defense Attorneys

Texas employers and insurance carriers who write in Texas are often confronted with child support orders directing them to withhold earnings from an employee’s income. But what happens when that employee is still employed but receiving workers’ compensation benefits instead of wages?

Workers’ compensation payments are not regarded as “income” for purposes of federal income taxes. However, they are regarded as “income” for purposes of calculating an employee’s child support obligations in Texas.

As an employer, it is important not to disregard such an order. If an employee is receiving workers’ compensation benefits and not receiving wages, unless the employer is self-insured, the employer must send a copy of the order to the workers compensation insurance carrier with whom the claim has been filed. If the employee is not expected to be returning to work, the employer must notify the court and obligee of the termination of employment within seven days and provide the employee’s last known address, and the name and address of the new employer, if known. [TFC §158.206 and §158.213]. If the employee returns to work after receiving income benefits for lost time, the employer should resume income withholding according to the order.

Relevant statutes that employers and workers compensation insurance carriers should consult when a child support order hits your desk are as follows:

Texas Family Code – Section 158.206

§ 158.206. LIABILITY AND OBLIGATION OF EMPLOYER;

WORKERS’ COMPENSATION CLAIMS.

(a) An employer receiving an order or a writ of withholding under this chapter, including an order or writ directing that health insurance be provided to a child, who complies with the order or writ is not liable to the obligor for the amount of income withheld and paid as required by the order or writ.

(b)  An employer receiving an order or writ of withholding who does not comply with the order or writ is liable:

(1)  to the obligee for the amount not paid in compliance with the order or writ, including the amount the obligor is required to pay for health insurance under Chapter 154;

(2)  to the obligor for:

(A)  the amount withheld and not paid as required by the order or writ;  and

(B)  an amount equal to the interest that accrues under Section 157.265 on the amount withheld and not paid;  and

(3)  for reasonable attorney’s fees and court costs.

(c)  If an obligor has filed a claim for workers’ compensation, the obligor’s employer shall send a copy of the income withholding order or writ to the insurance carrier with whom the claim has been filed in order to continue the ordered withholding of income.

Texas Family Code – Section 158.213

§ 158.213. WITHHOLDING FROM WORKERS’ COMPENSATION BENEFITS.

(a) An insurance carrier that receives an order or writ of withholding under Section 158.206 for workers’ compensation benefits payable to an obligor shall withhold an amount not to exceed the maximum amount allowed to be withheld from income under Section 158.009 regardless of whether the benefits payable to the obligor for lost income are paid as lump sum amounts or as periodic payments.

(b)  An insurance carrier subject to this section shall send the amount withheld for child support to the place of payment designated in the order or writ of withholding.

Texas Family Code – Section 158.009

§ 158.009. MAXIMUM AMOUNT WITHHELD FROM EARNINGS.  An order or writ of withholding shall direct that any employer of the obligor withhold from the obligor’s disposable earnings the amount specified up to a maximum amount of 50 percent of the obligor’s disposable earnings.

Williams, McClure & Parmelee is dedicated to high quality legal representation of businesses and insurance companies in a variety of matters. We are experienced Texas civil litigation attorneys based in Fort Worth who know Texas courts and Texas law. For more information, please contact the law firm at 817-335-8800. The firm’s office location is 5601 Bridge Street, Suite 300, Fort Worth, Texas 76112.

Martindale AVtexas[2]

 

Defending Against Retaliation Claims Under Title VII–Fort Worth, Texas Employment Attorneys

As employment law defense attorneys who represent employers and businesses in Texas, we have helped employers attempting to defend and prevent retaliation claims under Title VII.  Retaliation claims against employers are on the rise in Texas. Over a third off all EEOC complaints these days include some form of retaliation allegation.

Title VII of the Civil Rights Act of 1964 prohibits employers from discriminating against employees based on their personal characteristics, including their race, color, religion, sex, and national origin, as set forth in 42 U.S.C. § 2000e-2, referred to by the Court as “status discrimination.” Title VII also prohibits employers from retaliating against employees based on an employee’s opposition to employment discrimination or complaint of discrimination. See 42 U.S.C. § 2000e-3(a).

Before 2006, the Fifth Circuit, which includes Texas, used the standard of retaliation established in Mattern v. Eastman Kodak Company, 104 F.3d 702 (5 Cir. 1997). That case defined retaliation as an “ultimate employment decision” in response to an employee’s charge or participation in a charge. The effect of cases like Mattern was that unless an employee was actually fired, demoted, received a pay cut, or was not hired or promoted because of a discrimination charge, employees had difficulty prevailing on retaliation cases.

The Mattern court held that alleged action directed against an employee, such as hostility from fellow employees, theft of tools, a visit by supervisors to the employee’s private home, and placing the employee on final warning were not sufficient to constitute “adverse employment actions” for purposes of Title VII retaliation action.  Such alleged actions were not the kinds of “ultimate employment decisions” which Title VII was intended to remedy, per the Mattern court.

In the same era that Mattern was decided, the Fifth Circuit also held in another case that an employer’s criticism of an employee without more does not constitute an actionable adverse employment action.  The court stated that criticism contained in an evaluation is not an adverse employment action standing alone.  A dean’s failure to award the professors certain merit pay increases did not constitute an actionable adverse employment action. Harrington v. Harris, 118 F.3d 359 (5th Cir. 1997)

But in a June 2006 decision, the United States Supreme Court broadened the definition of the term “retaliation” in Title VII of the Civil Rights Act of 1964. Burlington Northern & Santa Fe (BNSF) Railway Co. v. White, 548 U.S. 53 (2006). In that case, the employee filed a sexual discrimination complaint with the Equal Employment Opportunity Commission. After she filed the complaint, she was reassigned from operating a forklift to doing more menial tasks and was suspended without pay for over thirty days.

In finding that the employer’s conduct towards the employee was retaliation, the Burlington decision had the effect of then overruling the retaliation standards of several federal jurisdictions, including the Fifth Circuit. The Burlington court essentially stated that retaliation can take the form of any negative action that would effectively discourage a reasonable employee from making a discrimination charge. Retaliation would then no longer be confined to concrete decisions about hiring, firing, promotion, or pay, or even be limited to decisions that were related to the employment. An action that causes harm to an employee outside the workplace also seemed to fall under the broad umbrella of the Burlington court’s definition of retaliation.

While the Fifth Circuit Mattern standard was limited in its protection of employees, the U.S. Supreme Court standard in Burlington was so broad that it seemed to make employers uncertain about whether the slightest corrective action, criticism or discipline would invite a lawsuit for retaliation.

Following Burlington, often, the most common method employees used to try to prove that retaliation was the reason for an adverse action is through circumstantial evidence.  The EEOC considered that a violation is established if there is circumstantial evidence raising an inference of retaliation and if the employer fails to produce evidence of a legitimate, non-retaliatory reason for the challenged action, or if the reason put forth by the employer is a pretext to hide true the retaliatory motive.

But more recent United States Supreme Court treatment of the subject of retaliation suggests that the pendulum has swung back to where it is not so favorable to employees. In June, 2013, the United States Supreme Court determined that an employee in a Title VII retaliation case must prove that the retaliation was the “but for” cause of the employer’s adverse action. University of Texas S.W. Med. Ctr. v. Nassar, No. 12-484 (June 24, 2013). In a narrow vote, by this decision, the Court rejected a decision of the U.S. Court of Appeals for the Fifth Circuit which had applied a significantly less burdensome standard which required that the employee only show that retaliation was one “motivating factor,” among others, that resulted in the adverse action in question. The Court stated that the “motivating factor” test applied only to status-based discrimination (discrimination on the basis of race, color, religion, sex, national origin, promotion etc.), not retaliation claims. In arriving at this perspective, the Court relied on its earlier decision in Gross v. FBL Fin. Serv., Inc., 557 U.S. 167 (2009), which had held that the Age Discrimination in Employment Act requires proof that age is “the but for cause” of an adverse employment decision.

Thus, according to the Nassar decision, different causation standards now apply to retaliation claims and status-based discrimination claims. The effect of Nassar is that employees have to prove that the alleged retaliation by the employer actually caused the harm that is alleged. The more lenient standard of “motivating factor”, which was rejected by the Court, would allow employees to prove liability even if the allegedly conduct were just one motivating factor for the adverse employment action, not the actual reason.

While this “new” approach is helpful to employers, retaliation is an area of law that remains fluid and ever changing.  We advise employers to consult with counsel if confronted with even a hint of an allegation of   retaliation, because the repercussions can be severe for employers who are not adequately protected. It is also a good idea to educate your supervisory and management level employees as to what may constitute retaliation under Texas and Federal  law.

Williams, McClure & Parmelee is dedicated to high quality legal representation of businesses and insurance companies in a variety of matters. We are experienced Fort Worth, Texas employment law attorneys in Tarrant County who know Texas courts and Texas law. For more information, please contact the law firm at 817-335-8800. The firm’s office location is 5601 Bridge Street, Suite 300, Fort Worth, Texas 76112.

Martindale AVtexas[2]

 

When Texans Pierce the Corporate Veil–Fort Worth, Texas Collections Attorneys

Particularly in commercial litigation and collections lawsuits in Texas, situations often arise when an attempt is made to “pierce the corporate veil”.  As attorneys who represent businesses on both sides of commercial disputes, we have had to offensively use corporate fiction arguments and defend against them. We have sued corporate personnel in an individual capacity, sued corporate entities, and defended against claims of corporate veil.

“Piercing the corporate veil” is a legal term that means that the owners of a corporation lose the limited liability that having a corporation provides them, thus the piercing of the veil. When this happens, personal assets can be used to satisfy business debts and liabilities, not just corporate assets.  The result is that individuals start getting named in lawsuits, in addition to the corporate entities they are affiliated with. However, this concept doesn’t apply just to corporations. Any business organization that provides limited liability to its owners is at risk of an offensive piercing of the corporate veil if the owners don’t take important to assure this protection from liability remains in place.

In order to impose liability upon a parent corporation for the obligations of a subsidiary corporation, important factors that Texas courts will consider include:

(1) common stock ownership between parent corporation and subsidiary;

(2) common directors and officers between parent and subsidiary;

(w) common business departments between parent and

subsidiary;

(3) the parent’s incorporation of the subsidiary;

(4) consolidated financial statements and tax returns filed by

parent and subsidiary;

(5) the parent’s financing of the subsidiary;

(6) undercapitalization of the subsidiary;

(7) parent’s payment of salaries and other expenses of subsidiary;

(8) whether parent is subsidiary’s sole source of business;

(9) parent’s use of subsidiary’s property as its own;

(10) the combination of corporations’ daily operations;

(11) lack of corporate formalities by the subsidiary;

(12) whether directors and officers of subsidiary are acting

independently or in the best interests of the parent; and

(13) whether the parent’s employee, officer or director was connected

to the subsidiary’s action that was the basis of the suit.

The history of Texas law in this area is of commercial litigation is exemplified by the 5th Circuit case of Rimade Ltd. v. Hubbard Enterprises, 388 F.3d 138 (5th Cir. 2004), and the pivotal Texas Supreme Court case of Castleberry v. Branscum, 721 S.W.2d 270 (Tex. 1986). The Rimade court stated, “Under Texas law, there are three broad categories in which a court may pierce the corporate veil: (1) the corporation is the alter ego of its owners and/or shareholders; (2) the corporation is used for illegal purposes; and (3) the corporation is used a sham to perpetrate a fraud.” 388 F.3d at 143.

After the Rimade decision was handed down, the Texas legislature enacted section 101.114 of the Texas Business Organizations Code, which had the effect of limiting corporate piercing by codifying the law in this area of law. That seminal section reads as follows:

§ 101.114. Liability for Obligation

Except as and to the extent the company agreement specifically provides otherwise, a member or manager is not liable for a debt, obligation, or liability of a limited liability company, including a debt, obligation, or liability under a judgment, decree, or order of a court.

Section 21.223 of the Texas Business Organizations Code further clarifies and limits the exposure of shareholders and members:

§ 21.223. Limitation of Liability for Obligations

(a) A holder of shares, an owner of any beneficial interest in shares, or a subscriber for shares whose subscription has been accepted, or any affiliate of such a holder, owner, or subscriber of the corporation, may not be held liable to the corporation or its obligees with respect to:

(1) the shares, other than the obligation to pay to the corporation the full amount of consideration, fixed in compliance with sections 21.157-21.162, for which the shares were or are to be issued;

(2) any contractual obligation of the corporation or any matter relating to or arising from the obligation on the basis that the holder, beneficial owner, subscriber, or affiliate is or was the alter ego of the corporation or on the basis of actual or constructive fraud, a sham to perpetrate a fraud, or other similar theory; or

(3) any obligation of the corporation on the basis of the failure of the corporation to observe any corporate formality, including the failure to:

(A) comply with this code or the articles of incorporation or bylaws of the corporation; or

(B) observe any requirement prescribed by this code or the articles of incorporation or bylaws of the corporation for acts to be taken by the corporation or its directors or shareholders.

(b) Subsection (a)(2) does not prevent or limit the liability of a holder, beneficial owner, subscriber, or affiliate if the obligee demonstrates that the holder, beneficial owner, subscriber, or affiliate caused the corporation to be used for the purpose of perpetrating and did perpetrate an actual fraud on the obligee primarily for the direct personal benefit of the holder, beneficial owner, subscriber, or affiliate.

The fact that a defendant must “perpetrate an actual fraud …primarily for the direct personal benefit of the holder, beneficial owner, subscriber, or affiliate?” has had the effect of greatly limiting the success of corporate veil piercing arguments. Actual fraud committed primarily for the “direct personal benefit” of the shareholder or member is arguably required for piercing in Texas, as pertains to contract-related claims.

In the case of In re JNC Aviation, LLC, 376 B.R. 500, 527 (Bankr. N.D. Tex. 2007), aff’d, 418 B.R. 898 (Bankr. N.D. Tex.2009), the court stated that to “to determine if the members of an LLC are liable under the asserted veil-piercing theories, the Court must analyze both the question of whether the facts satisfy any of the asserted veil-piercing strands and the question of whether any of the members caused the LLC to be used for the purpose of perpetrating and did perpetrate an actual fraud on the plaintiff primarily for the direct personal benefit of the considered defendant.”

Therefore, merely alleging “alter ego” is by itself probably insufficient as a matter of law, when the courts are talking in terms of actual fraud. Texas courts recognize the “strict restrictions on a contract claimant’s ability to pierce the corporate veil.” Ocram, Inc. v. Bartosh, No. 01-11-00793-CV2012, WL 4740859, at *2-3 (Tex. App.–Houston [1st Dist.] 2012, no pet.).

While piercing may have lost some traction in Texas commercial disputes, nonetheless, it is always important for owners to undertake necessary formalities and document their business actions. Be sure to provide for adequate business capitalization and don’t comingle personal and business assets. Also, any contracts, leases and legal documents an owner signs should always be in the company name.

Williams, McClure & Parmelee is dedicated to high quality legal representation of businesses and insurance companies in a variety of matters. We are experienced Fort Worth, Texas collections attorneys in Tarrant County who know Texas courts and Texas law. For more information, please contact the law firm at 817-335-8800. The firm’s office location is 5601 Bridge Street, Suite 300, Fort Worth, Texas 76112.

Martindale AVtexas[2]