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It’s Better to Have It and Not Need It than it is to Need It and Not Have It: How Early Lien Notices Can Simplify the Process for Securing Payment– Texas Construction Law Attorneys

Contractors and other professionals in the construction industry are afforded considerable rights and protections under Texas law. Those who provide labor and/or materials often run into problems when attempting to secure payment for work performed, but the Texas legislature has provided a mechanism designed to aid in the collection efforts of contractors and other professionals.

Many are familiar with the term Mechanic’s Lien, but few truly understand the proper procedure that must be followed in order to enjoy the protection it provides. In order to perfect one’s lien rights, notices must be mailed (certified mail return receipt requested) at a series of deadlines in order to make the landowner and other interested parties aware of the fact that a lien is being pursued.

These deadlines depend on a number of factors such as when the work was performed and completed, as well as where you fall in the chain of command (Original Contractor or Sub-Contractor). With so many variables at play, adhering to the deadlines can be and most often is a difficult task. Often times a contractor will lose its lien rights without ever knowing it.

Although you have no way of knowing whether a lien will be required until a significant amount (if not all) of the work has been completed, there are steps which can be taken before work even begins that will minimize the risk of losing your lien rights once its determined that a lien is necessary.

The first such step is to send a Notice of Contractual Retainage Agreement to everyone above you, including the property owner. This will alert the property owner that a sum of money needs to be withheld for payment of your bill. While this notice is not required to perfect your lien, it will eliminate the need for one of the subsequent notices that would otherwise be required. It is important to note that this notice must be sent to the contractor by the fifteenth day of the second month following the date you first provide labor or materials for the project. Also, this notice is only used when you do not have a contractual relationship with the property owner (hired by another contractor).

Another early lien notice is the Notice of Specially Fabricated Materials, which allows you to perfect a lien even if the customer does not receive or use your specially fabricated materials on the project in question. This notice must be sent to the property owner (and original contractor if you don’t have an agreement with the original contractor) by the fifteenth day of the second month following receipt and acceptance of the order for specially fabricated materials.

Additionally, when you execute your contract on any job, it is a good idea to request in writing from the property owner and all parties above you in the chain of command the following:

1. A legal description of the real property being improved;
2. A copy of any contracts executed for the project;
3. A copy of the surety bond, if any, including the name and last known address of the surety; and
4. Whether the real property in question is encumbered by any prior recorded liens or security interests, and if so, the name and last known address of any persons having such lien or security interest.

While these steps will not guarantee any payment or favorable result, they will help simplify the process and expedite payment of any money that is owed. When dealing with issues like the ones addressed hereinabove, it is always a good idea to consult with an experienced attorney who is familiar with Texas lien laws.

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.

Jun 10th, 2014 Construction Law

How to Collect when your Debtor does not own Property in Texas–Fort Worth, Texas Collections Attorneys

So you’ve been awarded a judgment against the individual or entity that owes you money. Time for them to pay up, right! Unfortunately it is rarely this simple. That judgment you have in your hand certainly has value, but it does not necessarily mean that your recovery efforts are concluded.

As discussed in the previous article, you can obtain from the court an Abstract of Judgment. You can also apply for a Writ of Execution, which allows a Texas sheriff or constable to seize any “nonexempt” real or personal property (cannot be the debtor’s homestead) to satisfy your judgment. However, these remedies are only helpful if your Debtor does in fact own nonexempt property within the state of Texas.

Riding the wave of the internet, companies and individuals alike are making transactions and entering into contracts with out of state customers and suppliers. As a result, it is not uncommon to have a Debtor who owns zero property within this great state. And while you may initially feel great sympathy for the poor soul(s) that have to live somewhere other than Texas, I imagine you ultimately still want to get paid. If so, the Abstract of Judgment and Writ of Execution will not do anything for you.

Thankfully, there is an alternative not confined by state boundaries. In the scenario envisioned above, you can file an application with the court for a Writ of Garnishment. The application must be accompanied by an active judgment and an affidavit stating that, to your knowledge, the Debtor does not possess property in Texas subject to execution and sufficient to satisfy the judgment.

Once issued, the Writ of Garnishment will allow you to acquire property owned by your Debtor while it is in the possession of a third party; and you are not limited to real property. This means that funds held by a bank in the Debtor’s name can be garnished to satisfy your judgment. For obvious reasons, a Writ of Garnishment can be a very effective tool when attempting to enforce a judgment, but as one might expect, there are specific rules and procedures that must be followed. For this reason I encourage you to seek legal counsel from a lawyer with significant experience handling collection matters before initiating a garnishment action.

Jun 10th, 2014 Collections and Foreign Judgments, Contracts and Commercial Litigation

Examinations Under Oath: An Opportunity to Minimize Loss– Fort Worth, Texas Insurance Defense Attorneys

In the insurance business, claims are the most significant expense. This is why the prompt yet efficient processing of claims is the paramount consideration for insurance companies and third party-administrators. Successful companies recognize that with each claim comes an opportunity to minimize losses. However, this can be a difficult task when the company is put at odds with its insured. The good news is that by subjecting each claim to a series of filters the claim process can still allow a company to effectively serve both the interests of its customer, as well as that of its own.

One effective filter that is often used in the early stages of the claim process is an Examination Under Oath (EUO). When a company wants a thorough investigation or desires answers to questions for which the claimant only provides a vague response, an EUO can provide a cost –conscious method for collecting valuable information.

A timely EUO will allow the company to address the issue of fault and can be extremely helpful when a company suspects a false claim. EUO’s can typically be conducted in a matter of hours, and will often reveal information or evidence that would otherwise only be obtainable during litigation. As a result, it is common for claims in which an EUO is conducted to be resolved long before litigation would otherwise arise.

The concern with EUO’s is that the scope can become too broad. This type of questioning should not be performed by individuals unfamiliar with the process or the rules by which the game is to be played. The questioning can quickly become harassing if not confined to the issues and subject-matter that is relevant to the underlying claim.

Although not required, it is recommended that EUO’s be left to experienced insurance defense counsel. Lawyers who regularly engage in this type of questioning possess the ability and temperament needed to maximize the value of this loss minimizing opportunity.

Jun 2nd, 2014 Insurance Defense Litigation

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.

Feb 28th, 2014 Insurance Defense Litigation

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.

Feb 28th, 2014 Contracts and Commercial Litigation, Employment Law Defense, Insurance Defense Litigation, Nonsubscriber Law

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.

Feb 28th, 2014 Insurance Defense Litigation, Nonsubscriber Law

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.

Feb 28th, 2014 Workers' Compensation Defense

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.

Feb 28th, 2014 Employment Law Defense, Nonsubscriber Law

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;

(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.

Feb 28th, 2014 Employment Law Defense, Insurance Defense Litigation, Nonsubscriber Law

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.

Feb 28th, 2014 Collections and Foreign Judgments, Contracts and Commercial Litigation, Employment Law Defense, Insurance Defense Litigation