Umbrella Insurance Policies and Texas Non Subscriber Coverage Issues–Fort Worth, Texas Non Subscriber Defense Attorneys

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 08-11052
AMERICAN INTERNATIONAL SPECIALTY LINES INSURANCE CO.,
Plaintiff-Appellant,
v.
RENTECH STEEL LLC; PRESTON TEEL; LESA CROSSWHITE;
JENNINGS TEEL,
Defendants-Appellees.
Appeal from the United States District Court
for the Northern District of Texas (Abilene Division)
Before KING, BARKSDALE, and ELROD, Circuit Judges.
JENNIFER WALKER ELROD, Circuit Judge:
This case addresses whether an insurance policy that excludes coverage
for an “obligation” incurred under “any workers’ compensation law” bars
coverage for a judgment that an employee recovers in a negligence action against
a Texas employer that does not subscribe to the Texas workers’ compensation
system. Because the Texas Workers’ Compensation Act (“TWCA”) imposes no
obligation on a nonsubscriber to compensate an employee for injuries sustained
due to the employer’s own negligence, we find that the exclusion is not
applicable. Accordingly, we AFFIRM the district court’s summary judgment in
favor of defendants-appellees.
United States Court of Appeals
Fifth Circuit
F I L E D
September 21, 2010
Lyle W. Cayce
Clerk
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I.
Plaintiff-Appellant American International Specialty Lines Insurance Co.
(“AISLIC”) appeals from the district court’s summary judgment in favor of
defendants, holding that AISLIC’s umbrella insurance policy (“the AISLIC
policy”), issued to Rentech Boiler Systems, Inc., covered the negligence claims
that Preston Teel, Lesa Crosswhite, and Jennings Teel (“the Teels”) asserted
against Rentech Steel, L.L.C. in the underlying litigation and the resulting
judgment. Rentech Steel, Rentech Boiler Systems, Inc., and Renz Family
Partnership, Ltd. are entities under the control of or owned by a common
owner/entity. Rentech Steel, a nonsubscriber to the Texas workers’
compensation insurance system, maintained both a primary indemnity policy,
which is not implicated in this case, and the AISLIC Policy. Rentech Steel
shared the AISLIC Policy with Rentech Boiler Systems, a subscriber to the
workers’ compensation system, but they maintained separate primary policies
due to their differing statuses in relation to the workers’ compensation system.
The underlying litigation commenced when sixteen-year-old Preston Teel
sustained severe injuries while working at Rentech Steel’s manufacturing
facility in Abilene, Texas. Following the incident, the Teels sued Rentech Steel
in state court for gross negligence, negligence, and negligence per se. Lexington
Insurance Company, Rentech Steel’s primary insurer, initially defended Rentech
Steel in the litigation. But after Lexington Insurance denied further coverage,
AISLIC assumed Rentech Steel’s defense as the umbrella insurer. A few weeks
before trial was to begin, AISLIC sought a declaratory judgment that it had no
obligation to defend or indemnify Rentech Steel in the lawsuit. On the first day
of trial, Rentech Steel entered Chapter 7 bankruptcy. According to Rentech
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Steel, the bankruptcy was necessary because AISLIC would not pay for the suit.
The bankruptcy court, however, lifted the stay and permitted the case to proceed
to trial on the condition that any recovery would be limited to the proceeds of the
AISLIC insurance policy.
The jury found for the Teels on their negligence and negligence per se
claims, but it did not find gross negligence on the part of Rentech Steel. The
court then entered a judgment against Rentech Steel for $12,470,000 in actual
damages, which was reduced to $10,570,000 after applying a settlement credit.
Rentech Steel has appealed the judgment, and AISLIC has continued to defend
Rentech Steel under a reservation of rights during the appeal. As a consequence
of the state-court judgment, the Teels became proper claimants to Rentech
Steel’s insurance policy.
Shortly after the state court entered its judgment, AISLIC filed a
declaratory judgment action in federal court seeking to establish that it had no
duty to either defend Rentech Steel in the underlying state-court lawsuit or to
indemnify Rentech Steel for the judgment because the AISLIC policy’s “Various
Laws” exclusion excluded coverage for any “obligation of the Insured under . . .
any workers’ compensation, disability benefits, or unemployment compensation
law, or any similar law.” AISLIC moved for summary judgment, arguing that
a negligence claim filed against a nonsubscribing employer is an obligation
arising under the TWCA, not state common law, so the Teels’ judgment against
Rentech Steel was necessarily an “obligation” under Texas’s workers’
compensation law—an obligation explicitly excluded from coverage under the
“Various Laws” exclusion. The Teels and Rentech Steel opposed AISLIC’s
motion.
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The district court denied AISLIC’s summary-judgment motion, holding
that the judgment against Rentech Steel did not fall within the Policy’s “Various
Laws” exclusion. The order explained that, although the TWCA deprives
appellees of the right to assert a common-law negligence or negligence per se
claim against a subscribing employer, the Act imposed no “obligation” on a
nonsubscribing employer to compensate an employee for injuries resulting from
the employer’s negligence, but merely limited an employer’s defenses against an
employee’s common-law claims. Alternatively, the court held that, because the
“Various Laws” exclusion was ambiguous, Texas law required that the exclusion
be interpreted against AISLIC and in favor of coverage where appellees’
interpretation of the exclusion was reasonable.
Following the district court’s denial of AISLIC’s motion for summary
judgment, appellees filed for summary judgment on the ground that the AISLIC
policy’s “Various Laws” exclusion did not bar coverage of the judgment against
Rentech Steel, which the district court granted. This appeal followed.
II.
We review a district court’s summary judgment de novo, applying the same
legal standards that the district court applied, viewing the evidence in the light
most favorable to the nonmoving party. Am. Int’l Specialty Lines Ins. Co. v.
Canal Indem. Co., 352 F.3d 254, 259–60 (5th Cir. 2003). We affirm “only if
there is no genuine issue of material fact and one party is entitled to prevail as
a matter of law.” Cedyco Corp. v. PetroQuest Energy, LLC, 497 F.3d 485, 488
(5th Cir. 2007) (citations omitted). Where, as here, parties have filed crossmotions
for summary judgment, each motion must be considered separately
because each movant bears the burden of showing that no genuine issue of
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material fact exists and that it is entitled to a judgment as a matter of law.
Shaw Constructors v. ICF Kaiser Engr’s, Inc., 395 F.3d 533, 538–39 (5th Cir.
2004).
III.
At issue in this case is whether an employee’s negligence action against an
employer that does not subscribe to the Texas workers’ compensation system is
an “obligation” under the TWCA, such that it is excluded under the AISLIC
Policy’s “Various Laws” exclusion. The AISLIC Policy’s “Various Laws”
exclusion provides:
This insurance does not apply to any obligation of the Insured
under any of the following:
1. the Employee Retirement Income Security Act of 1974
(including amendments relating to the Consolidated
Omnibus Budget Reconciliation Act of 1985), or any
amendment or revision thereto, or any similar law; or
2. any workers’ compensation, disability benefits or
unemployment compensation law, or any similar law.
Because Texas law governs this claim, we employ the principles of Texas
contract construction in interpreting the “Various Laws” exclusion. Texas law
provides that insurance policies are construed according to common principles
governing the construction of contracts, and the interpretation of an insurance
policy is a question of law for a court to determine. New York Life Ins. Co. v.
Travelers Ins. Co., 92 F.3d 336, 338 (5th Cir. 1996). Limiting our inquiry to the
four corners of the underlying complaint and the four corners of the insurance
policy, we interpret the contract to discern the intention of the parties from the
language expressed in the policy. See Amerisure Ins. Co. v. Navigators Ins.
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Co., 611 F.3d 299, 309 (5th Cir. 2010). “No single provision taken alone will be
given controlling effect; rather, all the provisions must be considered with
reference to the whole instrument.” See Coker v. Coker, 650 S.W.2d 391, 393
(Tex. 1983) (citations omitted). Where, as here, the disputed provision is an
exclusion, the insurer bears the burden of establishing that the exclusion
applies. Guaranty Nat’l Ins. Co. v. Vic Mfg. Co., 143 F.3d 192, 193 (5th Cir.
1998).
Whether a contract is ambiguous is a question of law. Kelley-Coppedge,
Inc. v. Highlands Ins. Co., 980 S.W.2d 462, 464 (Tex. 1998). An ambiguity does
not arise simply because the parties present conflicting interpretations; it “exists
only if the contractual language is susceptible to two or more reasonable
interpretations.” Am. Mfrs. Mut. Ins. Co. v. Schaefer, 124 S.W.3d 154, 157 (Tex.
2003) (citation omitted). “If policy language is worded so that it can be given a
definite or certain legal meaning, it is not ambiguous,” and the court construes
it as a matter of law without admitting evidence for the purpose of creating an
ambiguity. Id.; see Univ. C.I.T. Credit Corp. v. Daniel, 243 S.W.2d 154, 157 (Tex.
1951). But if the policy language is ambiguous, we construe it “strictly against
the insurer and liberally in favor of the insured,” Barnett v. Aetna Life Ins. Co.,
723 S.W.2d 663, 666 (Tex. 1987), and an “even more stringent construction is
required” where the ambiguity pertains to an “exception or limitation on [the
insured’s] liability under the policy,” Gulf Chem. & Metallurgical Corp. v.
Associated Metals & Minerals Corp., 1 F.3d 365, 369 (5th Cir. 1993).
Consequently, we must adopt the “construction of an exclusionary clause urged
by the insured as long as that construction is not itself unreasonable, even if the
construction urged by the insurer appears to be more reasonable or a more
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accurate reflection of the parties’ intent.” Glover v. Nat’l Ins. Underwriters, 545
S.W.2d 755, 761 (Tex. 1977).
Employing these principles, we find no ambiguity in the language of the
“Various Laws” exclusion. The exclusion plainly excludes from coverage only
those legal obligations imposed by “any workers’ compensation . . . law.” This
provision is straightforward. If Texas’s workers’ compensation law imposes a
duty upon Rentech Steel to compensate the Teels for the injuries Preston Teel
incurred due to Rentech Steel’s negligence, the exclusion applies and bars
coverage. Hence, the only question before the court concerns the proper
interpretation of Texas law: does the TWCA obligate a nonsubscribing employer
to compensate an employee for injuries sustained as a result of the employer’s
own negligence, or is such compensation a duty under Texas common law? 1
IV.
AISLIC and appellees disagree on two fundamental aspects of Texas law:
(1) whether an employee’s negligence claim against a nonsubscribing employer
arises under the TWCA or common law, and (2) if it arises under the TWCA,
whether the TWCA imposes an “obligation” upon a nonsubscriber to compensate
an employee for injuries caused by its own negligence. AISLIC contends that the
provision of the TWCA addressing negligence actions against nonsubscribers,
codified at section 406.033 of the Texas Labor Code, wholly supplanted the Texas
common-law claim with a statutory claim. According to AISLIC, because the
TWCA creates the cause of action under which the Teels sued Rentech Steel for
Although AISLIC challenges both its duties to indemnify and defend Rentech Steel, 1
which are separate duties creating separate causes of action under Texas law, see Amerisure,
611 F.3d at 309–10, the parties agree that the applicability of the “Various Laws” exclusion
is determinative of whether AISLIC owes both duties.
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negligence, the TWCA necessarily imposes an obligation on Rentech Steel to pay
the Teels’ judgment. AISLIC premises its theory on the fact that section 406.033
deprives nonsubscribing employers of certain defenses available at common law
and sets out an employee’s burden of proof in negligence cases. Tex. Labor Code
§ 406.033 (b), (c).
Appellees contend that AISLIC can prove neither that the TWCA creates
the cause of action for negligence against a nonsubscriber, nor that section
406.033 imposes any “obligation” on a nonsubscriber to pay a judgment to an
employee for injuries caused by negligence. According to appellees, rather than
displacing the common law, section 406.033 “simply leaves the common law
intact with one modification: as a carrot-and-stick incentive to participate in the
compensation program, the TWCA deprives nonsubscribers of some traditional
common-law defenses.” But regardless of what law creates the cause of action,
appellees argue that section 406.033 is devoid of any language creating an
“obligation” for nonsubscribing employers to compensate employees for accidents
resulting from negligence, so the exclusion does not apply.
Where, as here, the proper resolution of the case turns on the
interpretation of Texas law, we “are bound to apply [Texas] law as interpreted
by the state’s highest court.” Barfield v. Madison Cnty., Miss., 212 F.3d 269,
271–72 (5th Cir. 2000). Because the Texas Supreme Court has never ruled on
whether the Texas Workers’ Compensation Act “obligates” a nonsubscribing
employer to compensate an employee for injuries sustained due to employer
negligence, we must make an “Erie guess” as to how the Texas Supreme Court
would rule upon the issue based on
(1) decisions of the [Texas] Supreme Court in analogous cases, (2)
the rationales and analyses underlying [Texas] Supreme Court
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decisions on related issues, (3) dicta by the [Texas] Supreme Court,
(4) lower state court decisions, (5) the general rule on the question,
(6) the rulings of courts of other states to which [Texas] courts look
when formulating substantive law and (7) other available sources,
such as treatises and legal commentaries.
Hodges v. Mack Trucks, Inc., 474 F.3d 188, 199 (5th Cir. 2006) (quoting
Centennial Ins. Co. v. Ryder Truck Rental, Inc., 149 F.3d 378, 382 (5th Cir.
1998)).
Turning first to the text of section 406.033, nothing in the text indicates
that the Texas Legislature intended to impose a legal “obligation” on a
nonsubscriber to compensate an injured employee. The statute simply specifies
that, “[i]n an action against an employer who does not have workers’
compensation insurance coverage to recover damages for personal injuries or
death sustained by an employee in the course and scope of employment,” the
defendant employer is deprived of certain defenses available at common law,
though other defenses remain available. § 406.033(a), (b). It also clarifies that
the common-law negligence standard continues to apply: “the plaintiff must
prove negligence of the employer or of an agent or servant of the employer acting
within the general scope of an agent’s or servant’s employment.” § 406.033(c).
Although we believe that this statute, on its face, does no more than
modify the defenses available at common law, and does not create a cause of
action that usurps the common-law cause of action, we “are emphatically not
permitted to do merely what we think best; we must do that which we think the
[Texas] Supreme Court would deem best.” Jackson v. Johns-Manville Sales
Corp., 781 F.2d 394, 397 (5th Cir. 1986) (en banc). Thus, we consider the
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relevant authorities to determine how the Texas Supreme Court would interpret
section 406.033.
A. Texas Cases
In making our Erie guess, we look first to those Texas Supreme Court
cases that, while not deciding the issue, provide guidance as to how the Texas
Supreme Court would decide the question before us. Our preeminent Erie-guess
authorities, language and decisions from the Texas Supreme Court, suggest that
the court would find that a negligence claim against a nonsubscriber is a
common-law claim, and that section 406.033 imposes no “obligation” upon
Rentech Steel to pay the Teels’ judgment. The Texas Supreme Court in Kroger
Company v. Keng, 23 S.W.3d 347, 349 (Tex. 2009), indicated in dicta that a
negligence claim against a non-subscriber is modified by the TWCA, but remains
a claim at common law. In that case, the court addressed whether Chapter 33
of the Texas Civil Practice and Remedies Code required the district court to
submit a comparative-responsibility question to the jury in a negligence action
against a nonsubscriber, or alternatively, whether section 406.033 prevented the
jury from considering comparative responsibility. The Texas Supreme Court
explained in dicta that the TWCA
allow[s] injured workers, whose employers subscribed to workers’
compensation insurance, to recover without establishing the
employer’s fault and without regard to the employee’s negligence.
In exchange, the employees received a lower, but more certain,
recovery than would have been possible under the common law.
Employers were, however, allowed to opt out of the system, resulting
in their employees retaining their common-law rights. 2
The Texas Supreme Court went on to explain that the purpose of enacting section 2
406.033 was to discourage employers from choosing to opt out by depriving them of certain
traditional common-law defenses to an employee’s negligence action. Kroger, 23 S.W.3d at
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Id. at 349–50 (emphasis added). This suggests that the right to bring a claim
against a nonsubscriber for negligence remains what it has always been—a right
arising under common law.
AISLIC, however, argues that this case supports exactly the opposite
conclusion: that such a claim is an obligation arising under the TWCA because
the TWCA “governs” the negligence cause of action. AISLIC reads Kroger as
“unequivocally stat[ing] that the [TWCA] governs an employee’s personal-injury
claim against a nonsubscribing employer,” as the Texas Supreme Court there
explained that
Labor Code § 406.033, which is part of the Workers’ Compensation
Act, governs an employee’s personal-injury action against his or her
employer, when the employer is a nonsubscriber under the Act.
. . . .
In enacting section 406.033 and its predecessors, the
Legislature intended to delineate explicitly the structure of an
employee’s personal-injury action against his or her nonsubscribing
employer. Section 406.033(a) prescribes the defenses that are
unavailable to a nonsubscriber; section 406.033(c) dictates the
defenses that implicate the employee’s conduct and on which an
employer may rely; and section 406.033(d) provides the employee’s
burden of proof . . . .
23 S.W.3d 347, 349–51 (Tex. 2000). Thus, according to AISLIC, because the
TWCA governs an employee’s negligence claim against a nonsubscriber, it also
provides an obligation for the nonsubscriber to compensate the injured employee.
Not so. We agree that this language in Kroger indicates that a negligence
claim against a nonsubscriber must proceed within the parameters delineated
in section 406.033. But it does not follow that simply by virtue of governing the
350.
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claim, the TWCA also “obligates” Rentech Steel to pay the Teels’ judgment.
Many common-law claims are “governed” by statutes of limitations, but those
statutes neither give rise to the cause of action they govern, nor do they obligate
any party to pay a judgment arising from a governed claim. See Texas Civ. Prac.
& Rem. Code § 16.003(a), (b) (providing a two-year statute of limitations for such
common-law claims as trespass, injury to the estate or property of another,
conversion of personal property, taking or detaining the personal property of
another, personal injury, and forcible entry and detainer); Porterfield v. Ethicon,
Inc., 183 F.3d 464, 467 (5th Cir. 1999) (citing section 16.003(a) for the premise
that “a two-year statute of limitations governs personal injury actions.”
(emphasis added)). Because it is clear that AISLIC’s chain of logical
assumptions is missing a key link, we must conclude that Kroger provides no
support for AISLIC’s theory.
Moreover, in Kroger, the Texas Supreme Court explicitly declined to adopt
the appellate court’s reasoning, favorable to AISLIC, that a suit against a
nonsubscriber is “‘an action to collect workers’ compensation benefits under the
workers compensation laws of this state.’” See Kroger, 23 S.W.3d at 352 (quoting
Texas Civ. Prac. & Rem. Code § 33.002(c)(1)). The court reserved that question
for another day, and instead affirmed the appellate court’s decision that no
comparative-responsibility jury instruction was required on the ground that no
such jury instruction was possible because section 406.033 precludes a finding
of comparative responsibility. Id. Thus, we do not read Kroger to suggest that
the TWCA imposes an obligation on Rentech Steel to compensate the Teels for
Preston’s injuries.
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Further, the Texas Supreme Court’s decision in Fairfield Insurance Co. v.
Stephens Martin Paving, L.P., demonstrates that, even where the TWCA sets
certain parameters on an employee’s claim against a nonsubscriber, it does not
necessarily transform the claim into an obligation under the TWCA. 246 S.W.3d
653, 659 (Tex. 2008). In Fairfield, the Texas Supreme Court held that the
standard-form employers’ liability policy—the same policy AISLIC issued to
Rentech Steel, containing the very same “Various Laws” exclusion—did not
exclude coverage for claims of gross negligence against nonsubscribers. See id.
This holding is significant because Texas Labor Code section 408.001(b), the
provision of the TWCA governing gross-negligence claims against
nonsubscribers, specifies the employee’s burden of proof in that action: the
employee must prove that the employee’s “death was caused by an intentional
act or omission of the employer or by the employer’s gross negligence.” Tex. 3
Lab. Code § 408.001(b). Fairfield thus belies AISLIC’s contention that section
406.033 subsumed the common law because it “specif[ies] the employee’s burden
of proof and the defenses available to the employer.” Where the TWCA provides
the employee’s burden of proof for both gross-negligence and negligence claims,
and the former are unquestionably covered by the insurance policy, the statute’s
provision of the employee’s burden of proof cannot provide the basis for a
contrary result here.
Though the decisions and dicta of the Texas Supreme Court weigh more
heavily in our Erie analysis, we also consider those decisions of Texas appellate
courts in determining how the Texas Supreme Court would rule on this issue.
Further, section 408.001 goes on to define “gross negligence” as “the meaning assigned 3
by Section 41.001, Civil Practices and Remedies Code.” Tex. Lab. Code § 408.001(c).
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AISLIC invites us to follow Robertson v. Home State County Mutual Insurance
Company, —S.W.3d—, 2010 WL 2813488 (Tex. App.—Ft. Worth, 2010, no pet.),
which held that the employee’s judgment for damages against his
nonsubscribing employer was an “obligation” under workers’ compensation law,
excluded from coverage by the “Various Laws” exclusion in his employer’s
liability policy. We decline this invitation, as Robertson is inconsistent with 4
both the relevant Texas Supreme Court caselaw and the plain reading of section
406.033. See Warfield v. Byron, 436 F.3d 551, 558 (5th Cir. 2006) (finding that,
where authorities were split, the Texas Supreme Court would adopt the view
that was most consistent with the “plain reading” of the statute).
We consider Robertson to be unpersuasive because it conflates “governs”
with “obligates,” and because it fails to account for the Texas Supreme Court’s
decision in Fairfield. See Robertson, 2010 WL 2813488, at *5. The Robertson
court grounded its holding that no coverage existed on the statute’s provision of
the plaintiff’s burden of proof, id. at *7. This conflicts, however, with Fairfield’s
holding that the standard employers’ liability policy covered claims for gross
negligence, though the TWCA sets the standard of proof for those claims as well,
See Fairfield, 246 S.W.3d at 657. We are convinced by the plain language of
section 406.033 and by Fairfield that the Texas Supreme Court would not follow
Robertson, so we do not defer to it. Mem’l Hermann Healthcare Sys., Inc., v.
Eurocopter Deutschland, GMBH, 524 F.3d 676, 678 (5th Cir. 2008) (explaining
that we need not defer to an intermediate state appellate court decision where
we are “convinced by other persuasive data that the highest court of the state
But see In re Autotainment Partners, 183 S.W.3d 532, 537 (Tex. App.—Houston [14th 4
Dist.] 2006, no pet.) (holding that a negligence claim against a nonsubscriber for workers’
compensation benefits does not arise under the TWCA).
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would decide otherwise.”); see also Warfield, 436 F.3d at 558 (holding that the
Texas Supreme Court would follow those decisions that were most consistent
with the “plain reading” of the statute).
B. Decisions From Other Courts
Although Texas cases provide greater guidance for our Erie analysis, we
may likewise “consider, among other sources, treatises, decisions from other
jurisdictions, and the ‘majority rule.’” SMI Owen Steel Co. v. Marsh USA, Inc.,
520 F.3d 432, 437 (5th Cir. 2008) (citation omitted); see also Amerisure Ins. Co.
v. Navigators Ins. Co., 611 F.3d 299, 311 (5th Cir. 2010). Here, we have the
benefit of a number of federal cases interpreting the TWCA, and we consider 5
these cases in determining whether the Texas Supreme Court would conclude
that section 406.033 imposes an obligation on Rentech Steel to pay the Teels’
judgment.
We generally consider decisions from other states to the extent they are relevant, but 5
the decisions AISLIC submits are largely inapposite because, unlike most other states, Texas
grants employers the right to choose whether to participate in the workers’ compensation
system. In AISLIC’s cases, the courts considered how nonsubscribers were acting illegally
under state law, but Rentech Steel is not similarly situated. See Indian Harbor Ins. Co. v.
Williams, 998 So. 2d 677, 678–79 (Fla. Ct. App. 2009); Weger v. United Fire & Cas. Co., 796
P.2d 72, 74 (Colo. Ct. App. 1990); Hanover Ins. Co. v. Ramsey, 539 N.E.2d 537, 538 (Mass.
1989); Florida Ins. Guar. Ass’n v. Revoredo, 698 So. 2d 890, 892–93 (Fla. Ct. App. 1997);
Tri-State Constr., Inc. v. Columbia Cas. Co., 692 P.2d 899, 903 (Wash. App. 1984); cf. Liberty
Mut. Ins. Co. v. United Nat’l Ins. Co., 731 P.2d 167, 168–70 (Haw. 1987) (addressing a different
issue).
In states where employers are compelled to participate in the workers’ compensation
system, there is a stronger argument that employers who fail to participate in the mandatory
system are nevertheless “obligat[ed]” by law to compensate injured employees. See 21 Eric
Mills Holmes & Mark S. Rhodes, Holmes’ Appleman on Insurance 2d, § 132.5 (Lexis Nexis ed.
2002) (“The [policy] exclusion excludes ‘any obligation’ of the insured under a workers’
compensation, disability benefits, or unemployment compensation, or any similar law.
Including the word ‘obligation’ means that no coverage applies when (1) an insured has
statutory coverage and it applies to a loss or (2) an insured should have obtained the statutory
protection that applies to a loss.”).
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We begin this analysis by considering Middleton v. Texas P&L Co., a
Supreme Court decision examining the TWCA only a few years following its
1913 enactment. 249 U.S. 152 (1919). The TWCA withstood constitutional
challenge in the Texas Supreme Court in 1916, but with United States Supreme 6
Court review imminent, the Texas Legislature amended the Act while the appeal
was pending to allow workers to forego workers’ compensation remedies and
thereby retain their common-law rights of action. See Ferguson v. Hosp. Corp.
Int’l, 769 F.2d 268, 271 (5th Cir. 1985). In 1919, the Supreme Court affirmed
the Texas Supreme Court and held that the statute was constitutional.
Middleton, 249 U.S. at 155. In describing the Act, the Court explained that the
TWCA shielded employers from common-law suits, but “[e]mployers who do not
become subscribers are subject as before to suits for damages based on
negligence.” Id. (emphasis added). Negligence suits preceding the enactment of
the TWCA were unquestionably suits under common law. Therefore, the
Supreme Court’s statement leaves little doubt that it interpreted the TWCA as
not fundamentally changing the characterization of common-law negligence
claims against nonsubscribers.
We are also guided by those federal decisions that have considered the
question whether an action against a nonsubscriber arises under common law
or the TWCA. Rentech Steel argues that we should follow Pyle v. Beverly
Enters.-Tex., 826 F. Supp. 206, 209 (N.D. Tex. 1993), holding that negligence
Middleton v. Texas P. & L. Co., 185 S.W. 556, 561-62 (1916) (rejecting an employee’s 6
challenge that the statute’s requirement that he accept compensation under his employer’s
compensation policy in lieu of common-law damages constituted a deprivation of property
without due process in violation of the Fourteenth Amendment).
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claims against nonsubscribers exist independently of the TWCA. In that well- 7
reasoned opinion, Judge Fitzwater considered whether the plaintiff’s negligence
suit against her nonsubscribing employer arose under the TWCA, such that it
was not preempted by ERISA. The court held that they were not so preempted
because the plaintiff’s
state court petition does not seek recovery pursuant to the TWCA.
It clearly alleges common law claims of negligence, intentional
infliction of emotional distress and breach of duty of good faith and
fair dealing. These are not causes of action that are created by the
TWCA; they exist independently. Moreover, the fact that the TWCA
deprives employers of certain defenses to negligence claims does not
mean that claims by employees against nonsubscribing employers
are brought pursuant to the TWCA. See Eurine v. Wyatt Cafeterias,
Inc., 1991 WL 207468 at *2 (N.D. Tex. Aug. 21, 1991) (Sanders, C.J.)
(“A cause of action does not arise under workers’ compensation laws
merely because the workers’ compensation statute deprives the
defendant of certain defenses to the cause of action.”).
Id.
This approach, we believe, is consistent with the Texas Supreme Court’s
approach in Kroger v. Keng, 23 S.W.3d 347 (Tex. 2000), and with the history of
the TWCA, see Nunez, 771 F. Supp. at 167–68 (“When the Texas Legislature put
a workers’ compensation law into effect in 1917 it, for all practical purposes,
abolished the right of an employee to bring a common-law action against an
employer having workers’ compensation insurance coverage. However, the
Legislature preserved the common law right of action for the employees of an
See also Nunez v. Wyatt Cafeterias, Inc., 771 F. Supp.165, 167–68 (N.D. Tex. 1991) 7
(holding that by bringing a cause of action against his nonsubscribing employer, the plaintiff
had “but exercised his common law rights, as those rights have been enhanced by the workers’
compensation laws of Texas”).
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employer who elected not to carry workers’ compensation insurance, and
enhanced those rights by a statutory provision that prevented an employer in
such an action from asserting defenses that theretofore had been available to
employers.”).
AISLIC, however, contends that we must consider those district-court
decisions holding that claims against nonsubscribers are not removable to
federal court under 28 U.S.C. § 1445(c), the federal statute addressing
“nonremovable actions,” because such claims “arise” under the TWCA. See
Figueroa v. Healthmark Partners, 125 F. Supp. 2d 209, 210 (S.D. Tex. 2000); see
also Smith v. Tubal-Cain Indus., Inc., 196 F. Supp. 2d 421, 423 (E.D. Tex. 2001);
Dean v. Tex. Steel Co., 837 F. Supp. 212, 214 (N.D. Tex. 1993). But see Eurine
v. Wyatt Cafeterias, Inc., No. 3-91-0408-H, 1991 WL 207468, at *2 (N.D. Tex.
Aug. 21, 1991) (unpublished) (holding that, for the purposes of section 1445(c),
a negligence action against a nonsubscriber is a common-law claim that does not
arise out of the TWCA). We find these cases to be of limited value because
section 1445(c) does not require the court to determine whether the TWCA
imposes an “obligation” on a nonsubscriber to pay a judgment to an employee
injured as a result of the employer’s negligence. It provides only that “a civil
action in any State court arising under the workmen’s compensation laws of such
state may not be removed to any district court of the United States.”
Further, even if we assume arguendo that a claim that “arises under” the
TWCA becomes an “obligation” under that law, the section 1445(c) cases
nevertheless remain an imperfect litmus test for how the Texas Supreme Court
would resolve the case before us. This is because of the deference courts afford
to the congressional intent behind the removal statute, which is not applicable
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here. As the district court explained in Figueroa, “Section 1445(c) denotes an
effort by Congress to restrict the district courts’ diversity jurisdiction in order to
relieve the collectively overburdened docket of the federal courts. Courts have
therefore construed section 1445(c) broadly in order to further this purpose.”
Figueroa, 125 F. Supp 2d. at 211 (internal citations omitted). This broad
construction was also apparent in Smith, where the court found that a
negligence claim “aro[se] under” the TWCA simply because “[n]egligence actions
against nonsubscribing employers are expressly contemplated by Texas workers’
compensation law; indeed, several common-law defenses have been eliminated
by statute.” Smith, 196 F. Supp. 2d at 423 (citation omitted). We do not
comment on whether the TWCA’s mere “contemplat[ion]” of a cause of action
provides sufficient justification to deny removal under section 1445(c), but it is
no proof at all that the TWCA actually “obligate[s]” a nonsubscriber to
compensate an employee for negligence-induced injury.
Likewise, Illinois National Insurance Co. v. Hagendorf Construction Co.,
337 F. Supp. 2d 902 (W.D. Tex. 2004), is similarly unpersuasive. In that case,
the court held that a policy exclusion, similar to the one considered here,
excluded coverage for an employee’s negligence claim against a nonsubscriber
because the claim arose under the TWCA. See id. at 905. We are disinclined to 8
follow this decision for four reasons. First, though the Texas appellate court in
Kroger followed the reasoning that the federal district court would later apply
in Hagendorf, the Texas Supreme Court expressly declined to adopt that
reasoning, and decided the case on other grounds. Kroger v. Keng, 23 S.W.3d
The exclusion in Hagendorf excluded “[a]ny obligation for which the insured or the 8
insured’s insurer may be held liable under any workers compensation, disability benefits or
unemployment compensation law or any similar law.” Hagendorf, 337 F. Supp. 2d at 904.
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347 (Tex. 2000). This inspires little confidence that the court would opt to follow
that decision in this instance. Second, Hagendorf’s holding is grounded on
Figueroa, Smith, and Dean—decisions that were decided using a broad
construction of the term “arising under,” a construction that we do not apply
here. Illinois Nat’l, 337 F. Supp. 2d at 905 (citing Figueroa,125 F. Supp. 2d 209;
Smith, 196 F. Supp. 2d 421; Dean, 837 F. Supp. 212). Third, just as in the
removal cases, Hagendorf held that the exclusion applied because the negligence
claims were “commenced pursuant” to the TWCA, but this reasoning does not
hold water. The text of the exclusion does not purport to exclude claims
“commenced pursuant” to any workers’ compensation law. The language
required the court to determine whether the TWCA actually imposed an
obligation on the nonsubscriber to compensate an employer for injuries caused
by negligence. The court did not do so.9
Finally, we find Hagendorf unreliable because the three decisions upon
which the court premised its holding—Figueroa, Smith, and Dean—derive their
respective holdings, at least in part, from a misreading of Foust v. City Insurance
Co, 704 F. Supp. 752 (W.D. Tex. 1989) (Gee, J., sitting by designation). These
courts interpreted Foust’s language—that employers “depart the general
common-law tort system” upon hiring workers regardless of whether they choose
to subscribe to the workers’ compensation system—as implying that the
common-law claims had been extinguished. Id. at 753; see also Figueroa, 125 F.
Supp. 2d at 211 (quoting Foust, 704 F. Supp. at 753); Smith, 196 F. Supp. 2d at
423 (same); Dean, 837 F. Supp. at 214 (same). This interpretation conflicts with
For these same reasons, we 9 are not persuaded by Markel Insurance Company, Inc. v.
Spirit of Texas Cheer & Gymnastics, No. 4:08-CV-758-Y, 2010 WL 3283051 (N.D. Tex. Aug. 19,
2010), which followed Hagendorf. See id. at *6.
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Foust’s language just sentences later: depending on whether an employer
subscribed to the workers’ compensation system, the TWCA either “admitted
[the employer] to the worker’s compensation system or removed its defenses and
relegated it to Texas common law, shorn of [its] defenses.” Foust, 704 F. Supp.
at 753 (emphasis added). Accordingly, we hold that a negligence claim against
a nonsubscriber is not an “obligation” imposed by the TWCA.
V.
Alternatively, assuming arguendo that the “Various Laws” exclusion is
ambiguous, summary judgment for appellees would still be proper if their
interpretation of the exclusion is reasonable. See Amerisure 10 Ins. Co. v.
Navigators Ins. Co., 611 F.3d 299, 309 (5th Cir. 2010) (explaining that we must
adopt the “interpretation of the exclusionary clause urged by the insured if it is
‘not itself unreasonable,’ even if the insurer’s interpretation seems ‘more
reasonable or a more accurate reflection of the parties’ intent.’” (citation
omitted)). The district court stated in its alternative holding that the phrase
“any obligation . . . under any workers’ compensation . . . law” could be
We reject AISLIC’s argument that the district court was prohibited from finding 10
ambiguity sua sponte, as we have previously held that “[t]he interpretation of the contract and
determination of ambiguity, however, is a matter of law, and the court ‘may conclude that a
contract is ambiguous even in the absence of such a pleading by either party.’” In re Newell
Indus., Inc., 336 F.3d 446, 449 n.5 (5th Cir. 2003) (quoting Sage St. Assocs. v. Northdale
Constr. Co., 863 S.W.2d 438, 445 (Tex. 1993)). As this court has observed, this scenario rarely
presents itself. Brooks, Tarlton, Gilbert, Douglas & Kressler v. U.S. Fire Ins. Co., 832 F.2d
1358, 1365 (5th Cir. 1987) (citations omitted) (“An allegation of ambiguity. . . is of pivotal
importance. Moreover, ‘[a]s necessity is the mother of invention, so is ambiguity the father of
multiple reasonable constructions, and where lawyers are involved, one never lacks an eager
parent of either gender.’ . . . It is interesting, therefore, that the allegation of ambiguity in this
case came, not from the parties, but from the district court.”).
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interpreted to incorporate only workers’ compensation benefits, not a judgment
in a negligence suit. It explained that
the “Various Laws”exclusion could be interpreted as only excluding
claims already covered by workers’ compensation benefits rather
than excluding all claims of employees, whether filed to collect
workers’ compensation benefits or damages by common-law. In such
a case, there is more than one plausible interpretation of the
“Various Laws” exclusion. Thus, applying the provisions of the
“Various Laws” exclusion to the dispute before the Court produces
an uncertain or ambiguous result, and the exclusion will be
interpreted against AISLIC and in favor of coverage.
We agree with the district court that an “obligation” under “workers’
compensation law” could be interpreted to refer only to benefits paid by the
workers’ compensation system, as the meaning of the term obligation has “many,
wide, and varied meanings” that depends on the context in which the word is
used. See Black’s Law Dictionary (9th ed. 2009). Where negligence claims
against nonsubscribers, at least traditionally, have been recognized as arising
under common law, we conclude that it is reasonable to interpret the “Various
Laws” exclusion to exclude only mandatory benefit payments.
CONCLUSION
In summary, AISLIC has failed to meet its burden of proving that the
“Various Laws” exclusion bars coverage of the Teels’ claims and the judgment
against Rentech Steel. AISLIC has not shown that the Texas Supreme Court
would conclude either that a negligence claim against a nonsubscriber arises
under the TWCA rather than common law, or that Texas Labor Code section
406.033 imposes any obligation upon Rentech Steel to pay the Teels’ judgment.
For these reasons, we AFFIRM the judgment of the district court.
22
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Employment Law Defense, Nonsubscriber Law

Timely Contest by Insurance Carrier in Texas Workers’ Compensation Claims–Fort Worth, Texas Workers’ Compensation Attorneys

Appeals Panel Decision Manual – Liability/Compensability Issues

Timely Contest by Insurance Carrier 

Overview

In Continental Casualty Company v. Downs, 81 S.W.3d 803 (Tex. 2002), the Texas Supreme Court held that taking some action within seven days is what entitles the IC to a 60-day period to investigate or deny compensability. In Southwestern Bell Telephone Company L.P. v. Mitchell, 276 S.W.3d 443 (Tex. 2008), the Texas Supreme Court noted that less than nine months after Downs was decided the Legislature amended the statute to make clear that an IC who failed to comply with Section 409.021(a) did not waive the right to contest the compensability of the injury, and overruled the Downs case. Therefore, the determination of IC wavier based on a seven-day waiver period is error and must be reversed. Prior APDs applying the seven-day waiver period have been overruled by the Mitchell case. Any APDs cited within this manual that discuss a seven-day waiver period are not cited for that proposition.

An IC is liable for accrued benefits if it fails to dispute compensability of the injury within 15 days after receiving written notice of the claimed injury. Section 409.021; Section 124.3(a)(1). If the IC disputes compensability of the claimed injury after 15 days, but within 60 days of receiving written notice of the claimed injury, the IC is liable for all accrued benefits up until the time of dispute. Section 124.3(a)(2). Once the IC files a dispute with the Division, before the 60th day after receiving written notice of the injury, the IC is no longer liable for further benefits unless the Division determines that the injury is in fact compensable.

If the IC fails to dispute compensability of the claimed injury within 15 days of receiving written notice, but does successfully dispute compensability within 60 days of receiving written notice, and if the IW is being treated in a network as provided for in House Bill 7, Section 8.016, the IC’s maximum liability for accrued medical benefits prior to the dispute is limited to $7,000.00. Texas Insurance Code Section 1305.153. The $7,000.00 limit is effective for claims with a DOI on and after the date of the contract establishing the certified network.

If the IC does not dispute the claimed injury within 60 days after it received written notice of the claimed injury, the IC waives the right to dispute the compensability of the claimed injury unless the IC can prove that there is newly discovered evidence that could not have reasonably been discovered earlier. Section 409.021(d). An IC that contests compensability of the claimed injury after 60 days on the basis of newly discovered evidence is liable for, and must continue to pay, all benefits due until the Division has made a finding that the evidence could not have been reasonably discovered earlier. Section 124.3(c)(2).

Defense Waived. If the IC waives the right to contest compensability of the claimed injury due to its failure to take the action required by Section 409.021, at a minimum the IC waives:

1. The exceptions (IC defenses) listed in Section 406.032. These include:

(A) The right to assert that the injury occurred while the IW was in a state of intoxication. APD 030663-s.
(B) The right to assert that the injury occurred by the IW’s willful attempt to injure himself or to unlawfully injure another person. APD 992365.
(C) The right to assert that the injury was caused by a third person due to personal animosity. APD 992365.
(D) The right to assert that the injury arose out of voluntary participation in an off-duty recreational, social, or athletic activity that did not constitute part of the IW’s work-related duties.
(E) The right to assert that the injury arose out of an act of God.
(F) The right to assert the IW’s horseplay was a producing cause of the injury.

2. The right to assert that no injury occurred in the course and scope of employment. Cont’l Cas. Ins. Co. v. Williamson, 971 S.W.2d 108 (Tex. App.-Tyler 1998, no pet.); Zurich Am. Ins. Co. v. Gill, 173 S.W.3d 878 (Tex. App.-Fort Worth 2005, pet. denied); Alexander v. Lockheed Martin Corp., 188 S.W.3d 348 (Tex. App.-Forth Worth 2006, pet. denied); Lopez v. Zenith Ins. Co., 229 S.W.3d 775 (Tex. App.-Eastland 2007, pet. denied); State Office of Risk Mgmt. v. Peeples, No. 07-04-0408-CV, 2006 Tex. App. LEXIS 6511 (Amarillo July 25, 2006, pet. denied)(mem. op.); APD 041065; APD 032610. However, Williamson held that if the HO finds there was no injury and that finding is not against the great weight and preponderance of the evidence, the IC’s waiver cannot create an injury as a matter of law.

In Zurich American Insurance Company v. Gill, 173 S.W.3d 878 (Tex. App.-Fort Worth 2005, pet. denied), the IW had suffered from allergy problems since childhood; however, in June 2000 she began suffering increased problems. The IW discovered tiles in the office she worked in contained stachybotrys mold, and the IW was medically diagnosed with allergic rhinitis and maxillary sinusitis. She filed a worker’s compensation claim, and although the IC received notice of the IW’s claim in May 2001 it did not contest compensability of the alleged injury until January 8, 2002. The HO found, among other things, that the IW sustained injuries that were ordinary diseases of life – specifically, chronic allergic rhinitis and maxillary sinusitis – and that these injuries were not an occupational disease. The court noted that Continental Casualty Insurance Company v. Williamson, 971 S.W.2d 108 (Tex. App.-Tyler 1998, no pet.), which held that if the IW does not have an injury the IC’s failure to contest compensability cannot create an injury, did not apply to the facts of this case because the HO found that the IW sustained an injury. Williamson is limited to situations where there is a determination that the IW did not have an injury as opposed to cases where there is an injury that was determined by the HO not to have been causally related to the employment. Here the IW’s condition met the definition of “injury”, so she did sustain an injury, a key finding in the determination of whether the IC was liable for benefits when it did not meet the deadline for contesting compensability. The court held that although the IW’s condition was an ordinary disease of life, not incident to a compensable injury or occupational disease, her condition was an “injury” under Section 401.011(26). The court concluded that the IW had an injury, the IC did not contest the compensability of the injury, and thus the IC owes medical benefits to the IW.

In Alexander v. Lockheed Martin Corporation, 188 S.W.3d 348 (Tex. App.-Forth Worth 2006, pet. denied) the IW had a pre-existing condition but filed a workers’ compensation claim asserting an injury occurred on October 17, 2002. The IC paid benefits within the seven-day waiver period but did not contest the compensability of the claimed injury within the 60-day waiver period set forth in Section 409.021(c). The IC later filed a dispute claiming that it should be able to reopen the issue of compensability because it had newly discovered evidence of a pre-existing condition which the IC did not receive until after the 60-day waiver period. The HO found that the IW had an injury but that the injury did not occur in the course and scope of employment. The HO also determined that the IC waived its right to contest compensability. The IC only appealed the waiver and disability determinations. The court held that the IC waived its right to contest compensability of the injury despite the HO’s finding that the injury did not occur in the course and scope of employment.

In Lopez v. Zenith Insurance Company, 229 S.W.3d 775 (Tex. App.-Eastland 2007, pet. denied) the HO held that the IW did not sustain a compensable injury in the course and scope of employment on March 21, 2003, and that the IC did not waive the right to contest compensability because the IW did not have a compensable injury. The AP reversed because Continental Casualty Insurance Company v. Williamson, 971 S.W.2d 108 (Tex. App.-Tyler 1998, no pet.) applies when there is a finding of no injury but not when there is a finding of no compensable injury. Medical records showed the IW had an injury. The court agreed with the interpretation that there is a distinction between an injury and a compensable injury, at least in part to effectuate the legislative intent behind Section 409.021. The court pointed out that the statute requires an IC to make a prompt initial decision and creates an incentive for ICs to initially pay benefits if there is any question about the compensability of a claim. The court stated that pre-existing conditions are not normally compensable and the effect of a waiver holding is to require an IC to pay benefits for an injury that may be a non-compensable, pre-existing condition, however, the court noted that in Alexander v. Lockheed Martin Corporation, 188 S.W.3d 348 (Tex. App.-Forth Worth 2006, pet. denied) and Zurich American Insurance Company v. Gill, 173 S.W.3d 878 (Tex. App.-Fort Worth 2005, pet. denied) and in this case the medical records indicated that the IW had an injury, whereas in Williamson a doctor noted that there was no injury. The court further noted that the language of Section 409.021 does not support a construction that exempts medical issues from this process. The appeals court held that the trial court erred when it held that as a matter of law the HO’s finding of no injury in the course and scope of employment prohibited the application of the waiver provision.

In State Office of Risk Management v. Peeples, No. 07-04-0408-CV, 2006 Tex. App. LEXIS 6511 (Amarillo, July 25, 2006, pet. denied)(mem. op.), the court noted that the IW had been medicated for pre-existing back problems at the time of the April 1, 2002 incident. The court stated that the HO made reference to his medications and to a diagnosis of a degenerative disc made by the IW’s TD. The TD’s report described the IW’s “history of chronic low back pain” and commented that he exhibited all the classical findings of spinal stenosis. The court disagreed with the IC that the HO’s finding that on April 1, 2002, during the course and scope of employment the IW did not injure himself or cause harm to his body was a determination that the IW had no injury. The court agreed with the AP that Continental Casualty Insurance Company v. Williamson, 971 S.W.2d 108 (Tex. App.-Tyler 1998, no pet.) did not apply.

3. The right to assert that the IW failed to give timely notice of the claimed injury in accordance with Section 409.002. Zurich Am. Ins. Co. v. Gill 173 S.W.3d 878 (Tex. App.-Fort Worth 2005, pet. denied); APD 022027-s.

4. The right to assert that the IW failed to timely file a claim for compensation in accordance with Section 409.004. Southern Ins. Co. v. Brewster, 249 S.W.3d 6 (Tex. App.-Houston [1st Dist.] 2007, pet. denied); APD 022091-s.

5. The right to assert that the IW has made an election of remedies. APD 030793-s.

Determination of Waiver. [Cross reference. Issue Not Previously Raised (P01)]. Whether an IC has waived the right to contest compensability pursuant to Section 409.021 is a distinct issue which must be properly raised. In evaluating a Section 409.021 waiver case, the fact finder must consider and resolve the following:

1. Was the issue timely and properly raised, and if not, does good cause exist to add the issue:

a. The IW raised the issue of IC waiver for the first time in his appeal of the HO’s CCH decision. There was no evidence that the issue of IC waiver was raised at the BRC, or that the parties consented to adding the issue, or that good cause existed for not properly raising the issue. The AP refused to consider the issue because it was raised for the first time on appeal. APD 011436.

b. The HO resolved the disputed issues by determining that the IC did not waive the right to contest compensability of the claimed injury, but further determined that the IW sustained a compensable injury and had resulting disability. The IC appealed the injury and disability determinations to the AP. The IW did not file a response to the appeal, nor did she appeal the HO’s waiver determination. The AP reversed the HO’s injury and disability determinations, and rendered a decision that the IW did not sustain a compensable injury and, therefore, did not have disability. The IW filed a petition in district court seeking judicial review and asserted that the IC had waived the right to contest compensability. The IC filed a motion for summary judgment asserting that the IW was barred from raising the waiver issue because she failed to raise it before the AP. The district court granted summary judgment in favor of the IC. The IW appealed and the court of appeals affirmed the district court’s ruling. Judicial review is limited to the issues decided by the AP. A party may not raise an issue in the trial court which was not raised before the AP. Krueger v. Atascosa County, 155 S.W.3d 614 (Tex. App.-San Antonio 2004, no pet.).

c. At the CCH on remand the issues before the HO were (1) who is the correct IC for the DOI and (2) does the IC have liability for benefits prior to the date the IC filed notice of denial pursuant to Section 124.3. The IW requested to add an issue of IC waiver of the claimed injury but the attorney representing both ICs at the CCH objected on the grounds that an IC waiver issue had not previously been raised. The HO declined to add the issue, and determined the correct IC and that the correct IC waived the right to contest compensability of or liability for the claimed injury because the IC failed to file a denial within 60 days of receiving first written notice of the injury. The IC appealed and argued that the HO decided an issue not before her by incorporating IC waiver in her decision. The AP disagreed, noting that Section 124.3 covers both IC liability for accrued benefits for failure to dispute by the 15th day after receiving first written notice of the claimed injury as well as IC waiver of the right to contest compensability of the claimed injury if not disputed on or before the 60th day after receiving first written notice of the claimed injury pursuant to Section 124.3(b). APD 081665-s. [Cross-reference: Other Procedural Issues (P00)]

2. When did the IC receive its first written notice of the claimed injury, thereby triggering the start of the period of time to contest compensability of the claimed injury:

a. When an IW asserts that the IC has waived the right to contest compensability, the IW has the burden to prove when the IC received the first written notice of injury; once that is done, the burden shifts to the IC to prove that it timely filed a dispute. APD 051656.

i. Self-insured. For a claim for workers’ compensation benefits based on a compensable injury that occurs on or after September 1, 2003, written notice to a certified self-insured occurs only on written notice to the qualified claims servicing contractor designated by the certified self insurer under Section 407.061(c). Section 409.021(f) (added by Acts 2003, 78th Leg., ch. 939, Section 1). See also Section 409.021(f)(1) (added by Acts 2003, 78th Leg., ch. 1100, Section 1)

ii. Political subdivision self-insured individually or collectively. For a claim for workers’ compensation benefits based on a compensable injury that occurs on or after September 1, 2003, written notice to a political subdivision that self-insures, either individually or collectively through an interlocal agreement as described by Section 504.011, occurs only on written notice to the intergovernmental risk pool or other entity responsible for administering the claim. Section 504.002(d); APD 070912. See also Section 409.021(f)(2) (added by Acts 2003, 78th Leg., ch. 1100, Section 1).

b. Written notice to the IC does not have to be contained on an Employer’s First Report of Injury. Written notice can be established by showing that the IC received any communication, regardless of its source, that fairly informs the IC of the IW’s name, DOI, identity of the employer, and information asserting the injury was work related. Section 124.1(a); APD 032668.

c. If the IC receives an unwritten notice of injury which contains all of the information required by Section 124.1(a), the IC must immediately create a written record. Section 124.1(d).

3. On what date did the IC properly dispute compensability of the claimed injury:

a. Once it is established when the IC received the first written notice of injury, the IC has the burden to prove that it timely filed a proper dispute. APD 051656.

b. A dispute must be filed with the Division and the IW, and must contain the following information:

i. The IC must use plain language notices with language and content prescribed by the Division;

ii. Notice that the IW has the right to request a BRC and include the means for the IW to obtain additional information from the Division regarding the IW’s claim;

iii. The notice must contain a full and complete statement describing the IC’s actions and its reasons for such actions; and

iv. The statement must contain sufficient claim-specific information to enable the IW to understand the IC’s position or action taken. Sections 409.022, 124.2, and 124.3.

c. To determine whether the IC’s dispute is specific enough to comply with Sections 409.022 and 124.2(f), the AP will look at a fair reading of the reasoning listed to determine if the contest is sufficient. No magic words are required. The key point to be determined is whether, when read as a whole, any of the reasons listed by the IC would be a defense to compensability that could prevail in a subsequent proceeding and whether the grounds listed, when considered together, encompass a controversion or dispute on the basic issue that an injury was not suffered within the course and scope of employment. APD 022145. Whether an IC’s dispute is sufficiently specific is a question of fact for the HO to resolve. APD 971404.

d. The grounds for denial of the claim specified in the IC’s dispute constitute the only basis for the IC’s defense on the issue of compensability in a subsequent proceeding, unless the defense is based on newly discovered evidence that could not reasonably have been discovered at an earlier date. Section 409.022(b).

An issue at the CCH was whether the IC is relieved of liability because the IW failed to file a claim within one year after the DOI as required by Section 409.003. The IC denied benefits in a Notice of Denial of Compensability/Liability and Refusal to Pay Benefits (PLN-1); however, the IC did not contest compensability of the claim based on the IW’s failure to file a claim within one year. The HO found that although the IW contended at the CCH the IC had waived the defense of the IW’s untimely filing by not raising that defense in its PLN-1, that issue was not contained in the BRC report, was not requested in a response to the BRC report to be added as an issue at the CCH, and was not actually litigated at the CCH. The AP found evidence that the issue had been actually litigated by the parties and therefore addressed it. The HO determined that the IC is relieved of liability under Section 409.004 because the IW failed to file a claim within one year of the DOI. The AP reversed the HO’s determination and rendered a decision that the IC is not relieved of liability under Section 409.004 because, under Section 409.022(b), the IC waived the right to contest based on failure to file a claim within one year. APD 060631-s.

For injuries occurring on or after September 1, 2003, an IC may file as many disputes as it wishes within the initial 15-day period, and does not have to prove that there was newly discovered evidence for the additional filings within that time period.

e. A dispute of benefit entitlement is not a dispute of compensability/liability.

The IC filed a Notice of Disputed Issue(s) and Refusal to Pay Benefits (PLN-11) within 15 days of receiving written notice of injury disputing entitlement to TIBs. The IC filed a Notice of Denial of Compensability/Liability and Refusal to Pay Benefits (PLN-1) after the 15th day but before the 60th day after receipt of written notice of the injury. The HO held that the IC’s defense on compensability was limited to the disability defense listed on the PLN-11 filed within 15 days of receiving written notice of injury. The AP reversed and rendered a new decision that the IC’s defense on compensability is not limited to the disability defense listed on the PLN-11 filed with the Division within 15 days of written notice. The dispute of benefit entitlement is not a dispute of compensability/liability, and in filing a dispute of benefit entitlement, the IC retains the right to contest compensability and liability of a claim within the 60-day period, subject to Section 124.3. APD 072002-s.

4. If the IC did not dispute compensability of the claimed injury within the waiver period, did the IC present newly discovered evidence that could not reasonably have been discovered earlier, which would allow the IC to reopen the issue of compensability?

a. An IC that has accepted an IW’s claimed injury, either expressly or, for injuries that occurred on or after September 1, 2003, by failure to dispute within the 60-day time period, may still dispute compensability of the claim if the IC can prove that the dispute is based on evidence that could not reasonably have been discovered earlier with the exercise of due diligence. Section 409.021(d); APD 94224.

b. A two-prong test is used to determine whether an IC may reopen the issue of compensability. First it must be determined whether the IC exercised due diligence in obtaining the evidence. Second it must be determined whether the IC exercised due diligence in contesting compensability upon discovering the new evidence. Whether the IC should be allowed to re-open the issue of compensability pursuant to Section 409.021(d) is a question of fact for the HO to resolve. APD 002920.

5. Extent of injury disputes:

In State Office of Risk Management v. Lawton, 2009 Tex. LEXIS 629 (Tex. August 28, 2009), the Texas Supreme Court held that the 60-day period for challenging compensability of an injury does not apply to a dispute over the extent of injury if the basis for the extent of injury dispute could have been discovered by a reasonable investigation within the 60-day waiver period. Therefore, a determination that an IC has waived an extent of injury because that injury or condition was reasonably discoverable within the 60-day waiver period is error and must be reversed. Any prior APDs ruling that an IC has waived an extent of injury because the IC could have discovered that injury or condition by a reasonable investigation during the 60-day waiver period are overruled by the Lawton case, and future decisions will apply Lawton.

 

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 new office location is 5601 Bridge Street, Suite 300, Fort Worth, Texas 76112.

Martindale AVtexas[2]

Workers' Compensation Defense

Texas Workers’ Compensation Labor Code Definitions–Texas Workers’ Compensation Defense Attorneys

TEXAS LABOR CODE CHAPTER 401. GENERAL PROVISIONS

SUBCHAPTER B. DEFINITIONS



Sec. 401.011. GENERAL DEFINITIONS. In this subtitle:


(1) “Adjuster” means a person licensed under Chapter 4101, Insurance Code.


(2) “Administrative violation” means a violation of this subtitle, a rule adopted under this subtitle, or an order or decision of the commissioner that is subject to penalties and sanctions as provided by this subtitle.


(3) “Agreement” means the resolution by the parties to a dispute under this subtitle of one or more issues regarding an injury, death, coverage, compensability, or compensation. The term does not include a settlement.


(4) “Alien” means a person who is not a citizen of the United States.


(5) “Benefit” means a medical benefit, an income benefit, a death benefit, or a burial benefit based on a compensable injury.


(5-a) “Case management” means a collaborative process of assessment, planning, facilitation, and advocacy for options and services to meet an individual’s health needs through communication and application of available resources to promote quality, cost-effective outcomes.


(6) “Certified self-insurer” means a private employer granted a certificate of authority to self-insure, as authorized by this subtitle, for the payment of compensation.


(7) “Child” means a son or daughter. The term includes an adopted child or a stepchild who is a dependent of the employee.


(8) “Commissioner” means the commissioner of workers’ compensation.


(9) “Commute” means to pay in a lump sum.


(10) “Compensable injury” means an injury that arises out of and in the course and scope of employment for which compensation is payable under this subtitle.


(11) “Compensation” means payment of a benefit.


(12) “Course and scope of employment” means an activity of any kind or character that has to do with and originates in the work, business, trade, or profession of the employer and that is performed by an employee while engaged in or about the furtherance of the affairs or business of the employer. The term includes an activity conducted on the premises of the employer or at other locations. The term does not include:


(A) transportation to and from the place of employment unless:


(i) the transportation is furnished as a part of the contract of employment or is paid for by the employer;


(ii) the means of the transportation are under the control of the employer; or


(iii) the employee is directed in the employee’s employment to proceed from one place to another place; or


(B) travel by the employee in the furtherance of the affairs or business of the employer if the travel is also in furtherance of personal or private affairs of the employee unless:


(i) the travel to the place of occurrence of the injury would have been made even had there been no personal or private affairs of the employee to be furthered by the travel; and


(ii) the travel would not have been made had there been no affairs or business of the employer to be furthered by the travel.


(12-a) “Credentialing” has the meaning assigned by Chapter 1305, Insurance Code.


(13) “Death benefit” means a payment made under this subtitle to a legal beneficiary because of the death of an employee.


(13-a) “Department” means the Texas Department of Insurance.


(14) “Dependent” means an individual who receives a regular or recurring economic benefit that contributes substantially to the individual’s welfare and livelihood if the individual is eligible for distribution of benefits under Chapter 408.


(15) “Designated doctor” means a doctor appointed by mutual agreement of the parties or by the division to recommend a resolution of a dispute as to the medical condition of an injured employee.


(16) “Disability” means the inability because of a compensable injury to obtain and retain employment at wages equivalent to the preinjury wage.


(16-a) “Division” means the division of workers’ compensation of the department.


(17) “Doctor” means a doctor of medicine, osteopathic medicine, optometry, dentistry, podiatry, or chiropractic who is licensed and authorized to practice.


(18) “Employer” means, unless otherwise specified, a person who makes a contract of hire, employs one or more employees, and has workers’ compensation insurance coverage. The term includes a governmental entity that self-insures, either individually or collectively.


(18-a) “Evidence-based medicine” means the use of current best quality scientific and medical evidence formulated from credible scientific studies, including peer-reviewed medical literature and other current scientifically based texts, and treatment and practice guidelines in making decisions about the care of individual patients.


(19) “Health care” includes all reasonable and necessary medical aid, medical examinations, medical treatments, medical diagnoses, medical evaluations, and medical services. The term does not include vocational rehabilitation. The term includes:


(A) medical, surgical, chiropractic, podiatric, optometric, dental, nursing, and physical therapy services provided by or at the direction of a doctor;


(B) physical rehabilitation services performed by a licensed occupational therapist provided by or at the direction of a doctor;


(C) psychological services prescribed by a doctor;


(D) the services of a hospital or other health care facility;


(E) a prescription drug, medicine, or other remedy; and


(F) a medical or surgical supply, appliance, brace, artificial member, or prosthetic or orthotic device, including the fitting of, change or repair to, or training in the use of the appliance, brace, member, or device.


(20) “Health care facility” means a hospital, emergency clinic, outpatient clinic, or other facility providing health care.


(21) “Health care practitioner” means:


(A) an individual who is licensed to provide or render and provides or renders health care; or


(B) a nonlicensed individual who provides or renders health care under the direction or supervision of a doctor.


(22) “Health care provider” means a health care facility or health care practitioner.


(22-a) “Health care reasonably required” means health care that is clinically appropriate and considered effective for the injured employee’s injury and provided in accordance with best practices consistent with:


(A) evidence-based medicine; or


(B) if that evidence is not available, generally accepted standards of medical practice recognized in the medical community.


(23) “Impairment” means any anatomic or functional abnormality or loss existing after maximum medical improvement that results from a compensable injury and is reasonably presumed to be permanent.


(24) “Impairment rating” means the percentage of permanent impairment of the whole body resulting from a compensable injury.


(25) “Income benefit” means a payment made to an employee for a compensable injury. The term does not include a medical benefit, death benefit, or burial benefit.


(25-a) “Independent review organization” has the same meaning as in Section 1305.004(a)(11), Insurance Code.


(26) “Injury” means damage or harm to the physical structure of the body and a disease or infection naturally resulting from the damage or harm. The term includes an occupational disease.


(27) “Insurance carrier” means:


(A) an insurance company;


(B) a certified self-insurer for workers’ compensation insurance;


(C) a certified self-insurance group under Chapter 407A; or


(D) a governmental entity that self-insures, either individually or collectively.


(28) “Insurance company” means a person authorized and admitted by the Texas Department of Insurance to do insurance business in this state under a certificate of authority that includes authorization to write workers’ compensation insurance.


(29) “Legal beneficiary” means a person entitled to receive a death benefit under this subtitle.


(30) “Maximum medical improvement” means the earlier of:


(A) the earliest date after which, based on reasonable medical probability, further material recovery from or lasting improvement to an injury can no longer reasonably be anticipated;


(B) the expiration of 104 weeks from the date on which income benefits begin to accrue; or


(C) the date determined as provided by Section 408.104.


(31) “Medical benefit” means payment for health care reasonably required by the nature of a compensable injury and intended to:


(A) cure or relieve the effects naturally resulting from the compensable injury, including reasonable expenses incurred by the employee for necessary treatment to cure and relieve the employee from the effects of an occupational disease before and after the employee knew or should have known the nature of the disability and its relationship to the employment;


(B) promote recovery; or


(C) enhance the ability of the employee to return to or retain employment.


(31-a) “Network” or “workers’ compensation health care network” means an organization that is:


(A) formed as a health care provider network to provide health care services to injured employees;


(B) certified in accordance with Chapter 1305, Insurance Code, and rules of the commissioner of insurance; and


(C) established by, or operates under contract with, an insurance carrier.


(32) “Objective” means independently verifiable or confirmable results that are based on recognized laboratory or diagnostic tests, or signs confirmable by physical examination.


(33) “Objective clinical or laboratory finding” means a medical finding of impairment resulting from a compensable injury, based on competent objective medical evidence, that is independently confirmable by a doctor, including a designated doctor, without reliance on the subjective symptoms perceived by the employee.


(34) “Occupational disease” means a disease arising out of and in the course of employment that causes damage or harm to the physical structure of the body, including a repetitive trauma injury. The term includes a disease or infection that naturally results from the work-related disease. The term does not include an ordinary disease of life to which the general public is exposed outside of employment, unless that disease is an incident to a compensable injury or occupational disease.


(34-a) “Orthotic device” means a custom-fitted or custom-fabricated medical device that is applied to a part of the human body to correct a deformity, improve function, or relieve symptoms related to a compensable injury or occupational disease.


(35) “Penalty” means a fine established by this subtitle.


(35-a) “Prosthetic device” means an artificial device designed to replace, wholly or partly, an arm or leg.


(36) “Repetitive trauma injury” means damage or harm to the physical structure of the body occurring as the result of repetitious, physically traumatic activities that occur over time and arise out of and in the course and scope of employment.


(37) “Representative” means a person, including an attorney, authorized by the commissioner to assist or represent an employee, a person claiming a death benefit, or an insurance carrier in a matter arising under this subtitle that relates to the payment of compensation.


(38) “Research center” means the research functions of the Texas Department of Insurance required under Chapter 405.


(38-a) “Retrospective review” means the utilization review process of reviewing the medical necessity and reasonableness of health care that has been provided to an injured employee.


(39) “Sanction” means a penalty or other punitive action or remedy imposed by the commissioner on an insurance carrier, representative, employee, employer, or health care provider for an act or omission in violation of this subtitle or a rule, order, or decision of the commissioner.


(40) “Settlement” means a final resolution of all the issues in a workers’ compensation claim that are permitted to be resolved under the terms of this subtitle.


(41) “Subjective” means perceivable only by an employee and not independently verifiable or confirmable by recognized laboratory or diagnostic tests or signs observable by physical examination.


(42) “Treating doctor” means the doctor who is primarily responsible for the employee’s health care for an injury.


(42-a) “Utilization review” has the meaning assigned by Chapter 4201, Insurance Code.


(42-b) “Utilization review agent” has the meaning assigned by Chapter 4201, Insurance Code.


(42-c) “Violation” means an administrative violation subject to penalties and sanctions as provided by this subtitle.


(43) “Wages” includes all forms of remuneration payable for a given period to an employee for personal services. The term includes the market value of board, lodging, laundry, fuel, and any other advantage that can be estimated in money that the employee receives from the employer as part of the employee’s remuneration.


(44) “Workers’ compensation insurance coverage” means:


(A) an approved insurance policy to secure the payment of compensation;


(B) coverage to secure the payment of compensation through self-insurance as provided by this subtitle; or


(C) coverage provided by a governmental entity to secure the payment of compensation.


Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993. Amended by Acts 1997, 75th Leg., ch. 1443, Sec. 1, eff. Sept. 1, 1997; Acts 2003, 78th Leg., ch. 275, Sec. 2, eff. Sept. 1, 2003.


Amended by:


Acts 2005, 79th Leg., Ch. 265 (H.B. 7), Sec. 3.003, eff. September 1, 2005.


Acts 2007, 80th Leg., R.S., Ch. 133 (H.B. 1003), Sec. 1, eff. September 1, 2007.


Acts 2007, 80th Leg., R.S., Ch. 134 (H.B. 1006), Sec. 1, eff. September 1, 2007.


Acts 2007, 80th Leg., R.S., Ch. 147 (S.B. 458), Sec. 1, eff. September 1, 2007.


Acts 2009, 81st Leg., R.S., Ch. 1330 (H.B. 4290), Sec. 13, eff. September 1, 2009.




Sec. 401.012. DEFINITION OF EMPLOYEE. (a) In this subtitle, “employee” means each person in the service of another under a contract of hire, whether express or implied, or oral or written.


(b) The term “employee” includes:


(1) an employee employed in the usual course and scope of the employer’s business who is directed by the employer temporarily to perform services outside the usual course and scope of the employer’s business;


(2) a person, other than an independent contractor or the employee of an independent contractor, who is engaged in construction, remodeling, or repair work for the employer at the premises of the employer; and


(3) a person who is a trainee under the Texans Work program established under Chapter 308.


(c) The term “employee” does not include:


(1) a master of or a seaman on a vessel engaged in interstate or foreign commerce; or


(2) a person whose employment is not in the usual course and scope of the employer’s business.


(d) A person who is an employee for the purposes of this subtitle and engaged in work that otherwise may be legally performed is an employee despite:


(1) a license, permit, or certificate violation arising under state law or municipal ordinance; or


(2) a violation of a law regulating wages, hours, or work on Sunday.


(e) This section may not be construed to relieve from fine or imprisonment any individual, firm, or corporation employing or performing work or a service prohibited by a statute of this state or a municipal ordinance.


Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993. Amended by Acts 1997, 75th Leg., ch. 456, Sec. 6, eff. Sept. 1, 1997.




Sec. 401.013. DEFINITION OF INTOXICATION. (a) In this subtitle, “intoxication” means the state of:


(1) having an alcohol concentration to qualify as intoxicated under Section 49.01(2), Penal Code; or


(2) not having the normal use of mental or physical faculties resulting from the voluntary introduction into the body of:


(A) an alcoholic beverage, as defined by Section 1.04, Alcoholic Beverage Code;


(B) a controlled substance or controlled substance analogue, as defined by Section 481.002, Health and Safety Code;


(C) a dangerous drug, as defined by Section 483.001, Health and Safety Code;


(D) an abusable glue or aerosol paint, as defined by Section 485.001, Health and Safety Code; or


(E) any similar substance, the use of which is regulated under state law.


(b) The term “intoxication” does not include the loss of normal use of mental or physical faculties resulting from the introduction into the body of a substance:


(1) taken under and in accordance with a prescription written for the employee by the employee’s doctor; or


(2) listed under Subsection (a) by inhalation or absorption incidental to the employee’s work.


(c) On the voluntary introduction into the body of any substance listed under Subsection (a)(2)(B), based on a blood test or urinalysis, it is a rebuttable presumption that a person is intoxicated and does not have the normal use of mental or physical faculties.


Acts 1993, 73rd Leg., ch. 269, Sec. 1, eff. Sept. 1, 1993. Amended by Acts 1995, 74th Leg., ch. 76, Sec. 14.48, eff. Sept. 1, 1995; Acts 1999, 76th Leg., ch. 1426, Sec. 1, eff. Sept. 1, 1999.

Martindale AVtexas[2]

 


 


 


 


 


 


 


 


 


 


 

		
	






	
	
		
		Workers' Compensation Defense			
	

	
	
				
				

			
						
				

					
				 			
				

			
	

				
Texas Pay Day Law Appeals–Texas Employment Attorneys

			

	
	

		
Texas Payday Law Appeals — Texas Workforce Commission 
























Overview




An appeal is your written notice that you disagree with a TWC decision and want your case decided through the appeal process. State law gives TWC sole authority in disputed wage claims; no other state agency or official can affect the outcome of an appeal. To participate in an appeal you must meet submission deadlines.


The appeal process is structured so that you do not need an attorney. You may choose to have an attorney or other person represent you at your own expense.


There are three levels of appeal. You start with the first level, and if you disagree with that decision, you may proceed through the other levels.


    

  1. Appeal to the Appeal Tribunal
    2. 

  2. Appeal to the Commission
    3. 

  3. Motion for Rehearing or Appeal to a Civil Court
    4. 









Appeal to the Appeal Tribunal




The first step in the appeals process is an appeal to the Appeal Tribunal. The Appeal Tribunal is the name the Texas Payday Law gives to hearing officers who hold wage claim hearings. Each appeal case has only one hearing officer.


The first appeal is a telephone hearing, except that when a sign-language interpreter is required the hearing may be in-person instead.


The claimant and employer may present testimony, witnesses, and documents relevant to its case. During the Appeal Tribunal hearing, the hearing officer will determine what is relevant and make sure that the record is complete. After the hearing, the hearing officer will mail a decision to the interested parties.


How to Appeal a Determination


These instructions are for the first step in the appeals process, which is an appeal to the Appeal Tribunal. The first step is to appeal in writing to TWC.


You must appeal in writing within 21 calendar days from the date that we mail you the Preliminary Wage Determination Order, which is shown at the top of that form. If the twenty-first day falls on a federal or state holiday, you have until the next business day to submit your appeal.


You can submit your written appeal online, in person at your Workforce Solutions office, or by mailing or faxing your appeal letter to the Special Hearings Department at the address or fax number on your Preliminary Wage Determination Order. You cannot submit an appeal by e-mail or over the telephone. If you choose to fax the information, keep the paperwork that indicates successful transmission of your appeal.


Your letter or appeal form must include:


    

  • Your name
    • 

  • Wage claim number
    • 

  • Your Social Security Number or TWC Tax ID number
    • 

  • Your current address
    • 

  • The date TWC mailed you the Preliminary Wage Determination Order
    • 

  • A copy of the Preliminary Wage Determination Order, if possible
    • 

  • Any dates on which you will not be able to participate in a hearing
    • 



Keep a copy of your appeal for your records.


Accommodations for Your Hearing


Inform us in writing as early as possible if you need accommodations for the appeal hearing:


    

  • If you or your witnesses need interpreters – include needed languages
    • 

  • If you or your witnesses have a hearing impairment
    • 

  • If you need access to a telephone or fax machine
    • 



Appeal Hearing Notification Details


It may take six to eight weeks to receive a hearing information packet with information about your appeal. TWC will mail you the packet ten to twenty days before your hearing.


The hearing information packet includes:


    

  • The Notice of Telephone Hearing, which includes the date and time of hearing, the telephone number to call for the hearing, and the name and contact information of the hearing officer assigned to the hearing
    • 

  • Instructions on how to participate in the hearing
    • 

  • Instructions on how to submit documents for the telephone hearing to the hearing officer and to the other side
    • 

  • The claim issues up for discussion
    • 









Change Your Address




It is important that you keep your mailing address up to date because we will mail the hearing information packet and appeal decision to the address in our records. Change your address with us as needed in writing by mail or fax to the Special Hearings address or fax number listed under Contact Information.








Preparing for Your Hearing




Allow enough time for your hearing. How long the hearing takes depends on many things, including the number of witnesses, documents, and issues in the case. Usually, hearings take from one hour to four hours to complete.


It is important to prepare all of the documentation, witnesses and evidence that you need to support your side of the issues. It is your responsibility to make sure that both the hearing officer and the other side receive copies of all the documents you wish to refer to before the hearing date. This will increase your credibility and allow the hearing officer to make a just determination of the facts.


Document Evidence You Want to Present at Your Hearing


Case documentation could include:


    

  • Letters and memos
    • 

  • Timecards
    • 

  • Pay stubs or payroll records
    • 

  • Employee handbooks
    • 

  • Written authorizations for deductions from wages
    • 

  • Employment agreements
    • 

  • Commission agreements and invoices
    • 



All documents must relate directly to the issues on the hearing notice. Be ready to tell who prepared the evidence and how it helps your case.


Any documents you want to present during the hearing must be provided to the hearing officer and to the other party in your appeal (the employee or the employer) if applicable.


    

  • For a telephone hearing, mail or fax a copy of all of the documents you want to present to the hearing officer and to the other party. Send them as far in advance as possible. Documents cannot be used if they are not provided in enough time before the hearing begins.
    • 

  • The hearing officer’s address and fax number is on the first page of the hearing information packet. If there is another party in your case, that person’s mailing address is also on the first page.
    • 

  • For an in-person hearing, you can bring the documents with you or send them in advance.
    • 



Calling Witnesses & Notifying the Hearing Officer


If you wish to call witnesses, they should have personal (first-hand) knowledge about the background, policies, incidents, or events regarding the issues on the hearing notice. For example, they either saw the incident, heard a supervisor say something directly, or saw the paperwork connected to the event.


Contact your witnesses before the hearing and have them arrange their schedules so they can participate in the hearing.


During the hearing, you must give the hearing officer your list of witnesses and the contact phone numbers. Have your witnesses remain available for the call until the hearing officer or you release them from the hearing.


If your hearing is in person, simply have your witnesses appear at the hearing location at the time and date for the hearing, or they may participate by phone as stated above.


If You Need to Subpoena Witnesses


A subpoena is a written legal order that requires a person to appear at a hearing to testify or produce documents for a hearing.


Subpoenas may be issued at the discretion of the hearing officer. A request for a subpoena will be granted only after the hearing officer determines that the records or witnesses requested to be subpoenaed are relevant to the issues on appeal.


TWC pays the applicable fees for issuing a subpoena.








Withdrawing Your Appeal




If you no longer want to proceed with the hearing, you have the option to withdraw your appeal. Only the individual who filed the appeal can withdraw or cancel the appeal.


The withdrawal of your appeal must be done in writing or recorded by contacting the hearing officer and also must contain the specific words that you wish to “withdraw your appeal.”


The appeal can be withdrawn either before or during the hearing.








Participating in Your Appeal Hearing




Before the Hearing


For telephone hearings, you must provide a phone number where we can reach you for the hearing. Provide your contact information on the day of your hearing, at least 10 minutes before your hearing is scheduled to begin. You can give us your phone number in one of two ways:


    

  • Register online at C2T Online Registration, https://tx.c2tinc.com/register, and follow the instructions on that web site. You will need your Case Number.
    • 

  • Call TWC at our toll-free number shown on your Notice of Hearing and speak with the receptionist.
    • 



If you do not call in on time, you may not be allowed to participate in the hearing.


Beginning the Hearing


When it is time for the hearing, the hearing officer will call you and connect all parties and witnesses to a conference call. The hearing will begin when everyone is connected.


All of the hearings are scheduled for the Central Time zone. If you have any questions about when you should call, please call the toll-free number listed on the Notice of Hearing.


Why You Should Participate


It is very important that you provide your phone number for your hearing before the scheduled hearing time and that you take part in your appeal hearing. The hearing officer makes their decision based entirely on the evidence given at the appeal hearing.


If you find you cannot participate in the hearing for any reason, mail or fax a written postponement request as soon as you can. TWC rules allow hearing officers to delay or reschedule hearings only in specific, limited cases.








What Happens in the Appeal Tribunal Hearing




All hearings are recorded. The law requires the hearing officer to give a very specific opening statement at the beginning of each hearing. This opening statement includes:


    

  • Information identifying the case for the record
    • 

  • What determination and issues are on appeal
    • 

  • Who is taking part in the hearing
    • 

  • Each party’s rights
    • 

  • The procedures used for the hearing
    • 



The hearing officer will put everyone who will speak under oath, and then answer questions about the opening statement before hearing any testimony.


If you have more than one person present, you must designate one primary representative, which may be you or your chosen representative. That primary representative will be able to:


    

  • Question the witnesses
    • 

  • Give their own testimony
    • 

  • Look at and object to documents
    • 



Order of Testimony in a Hearing


The hearing officer will hear statements from each side in turn, one witness at a time. The hearing officer will question the witnesses, and then allow them to add relevant information.


The witness’s primary representative will be able to question the witness. The other side can then question the witness. The hearing will follow this procedure until everyone has spoken.


The hearing officer will discuss any documents that were sent in by either party or that are part of the case file. Documents will be admitted into evidence after ruling on any objections by either side.


The hearing officer will then let both sides add any new testimony before ending the hearing.








What to Do If You Did Not Participate in the Appeal Hearing




If you did not participate in the Appeal hearing and disagree with the decision, you can submit a request to reopen your case at the Appeal Tribunal level within 14 calendar days after the mailing date of the decision. However, you must show that you had a good reason for missing the prior hearing.








After the Hearing




After the hearing is complete, the hearing officer will mail you a written decision, usually within five to ten working days.


Request an Audio Recording of Your Hearing


You can request a copy of the CD recording of your hearing. Your written request must include identifying information: your name, appeal number, the last four digits of your Social Security number, and your telephone number and mailing address.


Mail or fax your request in writing to the TWC Special Hearings Department:


    

  • Special Hearings
    
Texas Workforce Commission
    
Attn: CD Duplication
    
101 E 15th St, Rm 406
    
Austin, TX, 78778
    • 

  • Fax: 512-463-9318, Attention: CD Duplication
    • 



It usually takes one to two weeks for you to receive your copy. The first copy is free; there is a small charge for any additional copies. Only parties to the appeal can request a copy of the recording.








Appeal to the Commission




If you disagree with the results of the Appeal Tribunal, you may appeal to the Texas Workforce Commission. The Commission will rule on your case after reviewing the Appeal Tribunal decision and listening to the recorded hearing. E-mail questions to commission.appeals@twc.state.tx.us.




You must appeal in writing within 14 calendar days from the date TWC mailed you the Appeal Tribunal decision. The mailing date is printed on the coversheet of your appeal decision.


You can submit your written appeal online, in person at your Workforce Solutions office, or by mailing or faxing your appeal letter to Commission Appeals at the address or fax number in the instructions included with your Appeal Tribunal decision. You cannot file an appeal by e-mail or over the telephone. If you choose to fax the information, keep the paperwork that indicates successful transmission of your appeal.


Commission Appeal Process


A reviewing attorney in Commission Appeals will review the audio-recording of your hearing. The attorney will also review all other evidence accepted at your first appeal hearing. The reviewing attorney will make a recommendation to the Commission regarding the decision in the case.


The Commissioners will review the recommendation separately and will decide whether or not to follow it. Then the Commission will vote on the case and issue a written decision. They may order an additional hearing to gather more evidence, but they usually do not.


We will mail you the decision from the Commission.


If you disagree with the Commission decision, you have two options: a Motion for Rehearing, or an appeal to a civil court.








Motion for Rehearing




If you disagree with the Commission decision, you may request a Motion for Rehearing by the Commission within 14 calendar days after the date TWC mailed you the Commission decision. TWC will grant the Motion for Rehearing only if you show these three things


    

  • Important new information about your case
    • 

  • A compelling reason why you did not present the new information earlier
    • 

  • Why you think the new information could change the Commission decision
    • 



You can submit your written Motion for Rehearing online, in person at your nearest Workforce Solutions office, or by mailing or faxing your letter to Commission Appeals at the address or fax number in the instructions included with your Commission decision. You cannot file a Motion for Rehearing by e-mail or telephone. If you choose to fax the information, keep the paperwork that indicates successful transmission of your Motion for Rehearing.


If you ask for a rehearing and the Commission denies it, you can still appeal that decision to a civil court.








Appeal to a Civil Court




You may appeal to a civil court within 30 calendar days after the date TWC mailed you the Commission decision. You must have completed all the appeal steps available through TWC, except the optional Motion for Rehearing, before appealing to a civil court. The instructions for submitting an appeal to a civil court are included with the Commission decision.


 








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 new office location is 5601 Bridge Street, Suite 300, Fort Worth, Texas 76112.

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		Employment Law Defense			
	

	
	
				
				

			
						
				

					
				 			
				

			
	

				
Suits to Collect on McGregor Act Footnote Payment Bond in Texas Construction Law– Fort Worth, Texas Construction Law Attorneys

			

	
	

		




United Fire & Casualty Company v. Boring & Tunneling Company of America (pdf)

(Tex.App.- Houston [1st Dist.] Feb. 11, 2010)(Keyes) (construction bond, notice provisions of the

McGregor Act substantially complied with; sworn statement was defective in that notary signature and

seal was missing, but issue overruled as a  technicality)

AFFIRM TC JUDGMENT: Opinion by Justice Evelyn Keyes

Before Justices Keyes, Hanks and Sharp

01-08-00487-CV  United Fire & Casualty Company v. Boring & Tunneling Company of America d/b/a

Bortunco   Appeal from 270th District Court of Harris County

Trial Court Judge:  Hon. Brent GambleO P I N I O N


 On cross motions for summary judgment in a suit to collect on a McGregor Act Footnote payment

bond, the trial court granted summary judgment in favor of appellee, Boring & Tunneling Company of

America (“Bortunco”), and denied the motion of appellant, United Fire & Casualty Company (“United

Fire”). In two issues, United Fire argues that (1) Bortunco failed to substantially comply with the notice

provisions of the McGregor Act; and (2) it did not waive its right to, nor is it estopped from, asserting

notification defects.We affirm.


BACKGROUND


Golf Services Group contracted with Harris County and the City of Houston to complete two different

water line projects and, in compliance with the McGregor Act, obtained a payment bond through United

Fire to ensure that any subcontractors would be paid if Golf Services defaulted. Golf Services

subcontracted with Bortunco in May 2004 to complete the boring and tunneling work on the projects.

Bortunco completed all work and fully performed its obligations under its agreement with Golf Services,

but Golf Services failed to pay Bortunco for its work.


Bortunco sent notices to United Fire that it was seeking to collect against the payment bond for the

services it had provided. Among the notices that Bortunco sent was one dated October 14, 2005,

relating a claim for work and material expenses incurred in July and August of 2005. Bortunco sent the

notice on a “sworn statement form,” and an agent for Bortunco signed the statement, but the notary did

not attach a seal or signature. Bortunco’s notice comported with the statute in all other respects.

Bortunco’s notice also requested that United Fire notify Bortunco if the claim was deficient in “any way.”

United Fire received the notice and sent a letter acknowledging receipt of the claim and informing

Bortunco that it would investigate the claim. The letter United Fire sent Bortunco stated, “Neither this

letter, or any investigation by the Surety, should be construed to be a waiver of any rights under the

bond.” United Fire did not object to the missing notary signature and seal.


On December 14, 2005, nearly two months after the claim filing deadline, Bortunco noticed that the

original sworn statement was missing a notary seal and sent an identical sworn statement with a notary’

s signature and seal. United Fire responded on January 11, 2006 with the same letter it had sent the

first time.


Neither Golf Services nor United Fire, as the surety on Golf Service’s payment bond, paid Bortunco for

the work it completed, and, on February 7, 2006, Bortunco filed suit against both Golf Services and

United Fire seeking recovery of the contract balances on both projects in the amount of $438,389.74.

Subsequently, Bortunco and United Fire settled the majority of Bortunco’s claims except for work and

material expenses Bortunco incurred in July and August 2005. United Fire moved for summary

judgment on the ground that Bortunco was not entitled to recover the remaining expenses because it

had failed to give proper notice, specifically arguing that the October 14, 2005 notice lacked a sworn

statement of account as required by the McGregor Act. United Fire supported its motion for summary

judgment with copies of the October 14 and December 14 notices.


Bortunco filed its own motion for summary judgment and response to United Fire’s motion, arguing that

its notice substantially complied with the McGregor Act notice provisions, or, alternatively, that United

Fire “waived strict compliance with the notice provisions of the McGregor Act” and should be “estopped

from demanding strict compliance.” In addition to copies of the relevant notices and United Fire’s

responses, Bortunco supported its motion for summary judgment with the affidavit of Joe Gibbs

averring that the notary had placed him under oath and that he had sworn to and signed the sworn

statement of account dated October 14, 2005 in the notary’s presence, and that the notary’s oversight

resulted in the missing signature and seal. Bortunco also provided the affidavit of the notary averring

that Gibbs did swear to the contents of the sworn statement under oath and signed it in her presence

and stating, “[T]he absence of my signature is solely indicative of a clerical error committed by me; Mr.

Gibbs swore to and signed the Sworn Statement of Account under oath and in my presence and I

simply neglected to place thereon my signature and seal as notary before mailing it to the surety and

contractor. . . .”


On December 12, 2007, the trial court granted Bortunco’s motion for summary judgment, awarding

Bortunco the $142,542.75 it claimed for the July and August 2005 work, and denied United Fire’s

motion without an opinion. United Fire appeals.


Standard of Review


We review a trial court’s grant or denial of summary judgment de novo. Provident Life & Accident Ins.

Co. v. Knott, 128 S.W.3d 211, 215 (Tex. 2003). To prevail on a traditional summary judgment motion,

the movant has the burden of proving that it is entitled to judgment as a matter of law and that there

are no genuine issues of material fact. Tex. R. Civ. P. 166a(c); Cathey v. Booth, 900 S.W.2d 339, 341

(Tex. 1995). When both parties move for summary judgment and the trial court grants one motion and

denies the other, the reviewing court should review the summary judgment evidence presented by both

sides, determine all questions presented and render the judgment that the trial court should have

rendered. Tex. Workers’ Comp. Comm’n v. Patient Advocates, 136 S.W.3d 643, 648 (Tex. 2004).


McGregor Act and Substantial Compliance


United Fire contends that the notice Bortunco sent did not include a “sworn statement” as required by

the McGregor Act because the notice did not have a notary seal or signature. Therefore, United Fire

contends Bortunco failed to adhere to notice provisions in the McGregor Act and is not entitled to

payment. Bortunco avers it substantially complied with the McGregor Act because the document was

only defective as a result of the notary’s clerical error.


The legislature passed the McGregor Act to ensure payment to subcontractors because they may not

place a lien against a public building. Suretec Ins. Co. v. Myrex Ind., 232 S.W.3d 811, 813 (Tex. App.—

Beaumont 2007, no pet.); Ramex Constr. Co. v. Tamcon Serv. Inc., 29 S.W.3d 135, 139 (Tex. App.—

Houston [14th Dist.] 2000, no pet.). It was not intended to set up “technical tricks, traps, and stumbling

blocks to the filing of legitimate notices of claims,” but “to provide a simple and direct method of giving

notice and perfecting claims.” Agree Corp. & Seaboard Sur. Co. v. Solis, 932 S.W.2d 39, 52–53 (Tex.

App.—Beaumont 1995), rev’d on other grounds, 951 S.W.2d 384 (Tex. 1997). The notice requirements

were also intended “to protect the prime contractor from incurring double liability [and to relieve them

of] liability for claims not asserted before retainage is paid in full.” Commercial Union Ins. Co. v. Spaw-

Glass Corp., 877 S.W.2d 538, 540 (Tex. App.—Austin 1994, writ denied).


The McGregor Act requires general contractors to secure a bond from a surety, allows a subcontractor

to sue the surety for unpaid balances for work and materials, and awards reasonable attorneys’ fees.

Id.; see Tex. Gov’t Code Ann. §§ 2253.021, 2253.073 (Vernon 2008). To recover under the act, a

claimant or subcontractor must provide notice to the general contractor and the surety in writing. Tex.

Gov’t code § 2253.041. The McGregor Act further provides that the notice must conform to the

following requirements:


(b)     The notice must be mailed on or before the 15th day of the third month after each month in which

any of the claimed labor was performed or any of the claimed material was delivered.


(c)     The notice must be accompanied by a sworn statement of account that states in substance:


(1)     the amount claimed is just and correct; and


(2)     all just and lawful offsets, payments, and credit known to the affiant have been allowed.


(d)     The statement of account shall include the amount of any retainage applicable to the account

that has not become due under the terms of the public work contract between the payment bond

beneficiary and the prime contractor or between the payment bond beneficiary and a subcontractor.


Tex. Gov’t Code Ann. § 2253.041(b)–(d) (Vernon 2008).


The McGregor Act is remedial in nature, and, therefore, “[t]he statute is to be given the most

comprehensive and liberal construction possible.” Ramex, 29 S.W.3d at 139; see also City of LaPorte

v. Taylor, 836 S.W.2d 829, 832 (Tex. App.—Houston [1st Dist.] 1992, no writ). As a result, case law has

established that adherence to notification deadlines requires strict compliance, but substantial

compliance is adequate for the other notice provisions. Cf. Commercial Union Ins., 877 S.W.2d at 540

(holding that claimants could not recover when they failed to give any notice); Suretec Ins. Co., 232 S.

W.3d at 816 (failure to provide notice by 15th day of month not saved by substantial compliance);

Capitol Indem. Corp. v. Kirby Rest. Equip. & Chem. Supply Co., 170 S.W.3d 144, 147 (Tex. App.—San

Antonio 2005, pet. denied) (holding “sworn certificate” that did not precisely comport with statutory

language sufficient); U.S. Fid. & Guar. Co. v. Parker Bros. & Co., 437 S.W.2d 880, 881–82 (Tex. Civ.

App.—Houston [1st Dist.] 1969, writ ref’d n.r.e.) (claimant substantially complied with notice provisions

although sworn statements were sent to general contractor and unsworn statements sent to surety).

Substantial compliance has been defined as “compliance with the ‘essential requirements of a statute’”

and occurs when an actor’s deviation does not seriously impede the legislative purpose of the statute.

See Stratton v. Austin Indep. Sch. Dist., 8 S.W.3d 26, 30 (Tex. App.—Austin 1999, no pet.).


United Fire cites several cases which have held that late notification did not substantially comply with

the McGregor Act. See, e.g., Laboratory Design & Equip., Inc. v. Brooks Dev. Auth., No. 04-07-00284-

CV, 2008 WL 36614, at *3 (Tex. App.—San Antonio, no pet.) (holding that notice mailed one year late

and failure to provide any sworn statement whatsoever with notice prevented subcontractor from

recovering against payment bond). However, the issue here is not one of late notification. United Fire

argues that Bortunco’s notice was deficient because it lacked the notary signature and seal, not

because the notice was untimely. Nor did Bortunco’s notice fail to provide any sworn statement

whatsoever. Therefore, Laboratory Design and the other cases United Fire relies on are

distinguishable. Footnote


We conclude that this case is similar to Acme Brick. In Acme Brick, the claimant sent an otherwise

correct notice with the affiant’s signature in the wrong place on the sworn statement. Acme Brick, a Div.

of Justin Indus., Inc. v. Temple Assoc., 816 S.W.2d 440, 441 (Tex. App.—Waco 1991, writ denied). The

document contained a notice of claim, factual statement that the claims were just and correct, the

signature of the affiant, and the notary’s certification of the statement with a seal. Id. The court held

that the document did qualify as an affidavit, but stated, “Moreover, even if the statement was not an

affidavit, the McGregor Act requires only substantial compliance with its notice provisions. . . . We find

the notices sent by Acme to [the prime contractor and surety] substantially complied with the notice

provisions of the McGregor Act.” Id. (citing Featherlite Bldg. Prods. Corp. v. Constructors Unlimited,

Inc., 714 S.W.2d 38, 69 (Tex. App.—Houston [14th Dist.] 1986, writ ref’d n.r.e.).


Here, although Bortunco’s sworn statement is missing the official certification by the notary to qualify

as a affidavit, it is uncontested that Bortunco’s agent swore to the statement before an “officer

authorized to administer oaths” and signed the statement in the notary’s presence. Likewise, the notice

otherwise supplies the statutorily required statements and information and was delivered by the

required deadline. Bortunco’s notification was only deficient because of the nortary’s clerical error in

failing to attach her signature and seal before mailing the document.


We also note that United Fire received actual notice within the statutory deadline Footnote and that, as

soon as Bortunco noticed the clerical omission, it sent an identical notice and sworn statement, this

time with the notary’s signature and seal. Bortunco’s notary’s failure to affix a seal and signature to the

sworn statement did not expose the prime contractor or the surety to increased liability, nor did it

prevent United Fire from having actual notice of the claims Bortunco was making against the payment

bond, especially in light of the fact that Bortunco apparently submitted numerous notices in compliance

with the McGregor Act in the course of its dealings with United Fire.


Because Bortunco’s sworn statement met the essential requirements of the statute in providing actual

notice to United Fire of Bortunco’s claims against the bond and adequately protected both Golf

Services and United Fire from undue liability, we hold that the document substantially complied with the

McGregor Act’s notice provisions. To hold otherwise would require that we set up “technical tricks,

traps, and stumbling blocks to the filing of legitimate notices of claims” rather than providing “a simple

and direct method of giving notice and perfecting claims” as the legislature intended. See Agree Corp.,

932 S.W.2d at 52–53. Therefore, Bortunco met its burden of proving that it was entitled to judgment as

a matter of law and that there were no genuine issues of material fact. See Tex. R. Civ. P. 166a(c);

Cathey, 900 S.W.2d at 341.


We overrule United Fire’s first issue.


Because we have determined that Bortunco’s notice substantially complied with the requirements of

the McGregor Act, we do not need to address United Fire’s argument that it is not estopped and did not

waive its right to assert notification defects.


CONCLUSION


We affirm the judgment of the trial court.

Evelyn V. Keyes


Justice


[FN] Chapter 2253 of the Texas Government Code is commonly referred to as the“McGregor Act.” See Tex. Gov’t Code

Ann. §§ 2253.001–.079 (Vernon 2008 &Supp. 2009).  The McGregor Act requires general contractors to secure payment

bonds on public works projects because subcontractors cannot secure liens on public buildings and provides the

procedure for collecting on the bonds. Id.


[FN] A surety’s actual notice has been discussed and used in some cases to establish substantial compliance. See

Redland Ins. Co. v. Sw. Stainless, L.P., 181 S.W.3d 509,512 (Tex. App.—Fort Worth 2005, no pet.) (holding that because

surety received actual notice, need of subcontractor to comport with statutory requirement that noticebe sent certified

mail was negated); Tex-Craft Builders, Inc. v. Allied Constructors of Houston, Inc., 465 S.W.2d 786, 792 (Tex. Civ. App.—

Tyler 1971, writ ref’d n.r.e.)(discussing possibility that surety’s actual knowledge and notice of details of claim could be

sufficient to establish substantial compliance with McGregor Act).


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 new office location is 5601 Bridge Street, Suite 300, Fort Worth, Texas 76112.


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		Construction Law			
	

	
	
				
				

			
						
				

					
				 			
				

			
	

				
Apportionment of Fault in Negligence Lawsuits in Texas– Fort Worth, Texas Insurance Defense Attorneys

			

	
	

		
IN THE SUPREME COURT OF TEXAS


NO. 13-0136


NABORS WELL SERVICES, LTD. F/K/A POOL COMPANY TEXAS, LTD.

AND LAURO BERNAL GARCIA,

PETITIONERS,

v.

ASUNCION ROMERO, INDIVIDUALLY AND AS REPRESENTATIVE OF THE

ESTATE OF AYDEE ROMERO, DECEASED, AND AS NEXT FRIEND OF

EDGAR ROMERO AND SAUL ROMERO; ESPERANZA SOTO, INDIVIDUALLY

AND AS NEXT FRIEND OF ESPERANZA SOTO, GUADALUPE SOTO,

MARIA ELENA SOTO; AND MARTIN SOTO,

RESPONDENTS


ON PETITION FOR REVIEW FROM THE

COURT OF APPEALS FOR THE EIGHTH DISTRICT OF TEXAS


Argued October 9, 2014

JUSTICE BROWN delivered the opinion of the Court.

For more than forty years evidence of a plaintiff’s failure to use a seat belt has been

inadmissible in car-accident cases. That rule, which this Court first announced in 1974, offered

plaintiffs safe harbor from the harshness of an all-or-nothing scheme that barred recovery for even

the slightest contributory negligence. Moreover, the Court reasoned that although a plaintiff’s failure

to use a seat belt may exacerbate his injuries, it cannot cause a car accident, and therefore should not

affect a plaintiff’s recovery.

In 1985 the Legislature jumped in to statutorily prohibit evidence of use or nonuse of seat

belts in all civil cases. It repealed that law in 2003, leaving our rule to again stand alone. But much

has changed in the past four decades. The Legislature has overhauled Texas’s system for

apportioning fault in negligence cases—a plaintiff’s negligence can now be apportioned alongside

a defendant’s without entirely barring the plaintiff’s recovery. And unlike in 1974, seat belts are now

required by law and have become an unquestioned part of daily life for the vast majority of drivers

and passengers.

These changes have rendered our prohibition on seat-belt evidence an anachronism. The rule

may have been appropriate in its time, but today it is a vestige of a bygone legal system and an oddity

in light of modern societal norms. Today we overrule it and hold that relevant evidence of use or

nonuse of seat belts is admissible for the purpose of apportioning responsibility in civil lawsuits.

I

This case arises from a collision between a Nabors Well Services, Ltd. transport truck and

a Chevrolet Suburban with eight occupants—three adults and five children. Both vehicles were

traveling southbound on two-lane U.S. Highway 285 in rural West Texas. As the transport truck

slowed to make a left turn into a Nabors facility, Martin Soto, the Suburban’s driver, pulled into the

opposing traffic lane and attempted to pass the transport truck. As Soto passed, the transport truck

began its left turn and clipped the Suburban, which careened off the highway and rolled multiple

2

times. The evidence is disputed as to whether the transport truck used a turn signal and for how long

and whether Soto could have passed the transport truck within the legal passing zone.

Aydee Romero, an adult passenger, was killed in the accident. Martin, his wife Esperanza

Soto, and all five children—Esperanza, Guadalupe, and Marielena Soto, and Edgar and Saul

Romero—suffered injuries. There is conflicting evidence as to which occupants were belted and

which were ejected from the Suburban. A responding state trooper wrote in his report that all

occupants were unrestrained except Marielena and the elder Esperanza. But both of them, along with

the younger Esperanza, testified they did not use seat belts, while Martin and Guadalupe testified

they wore theirs. Guadalupe testified all occupants were ejected except for Martin and Edgar, but

Edgar testified he was ejected. And an EMS report stated one of the family members reported at the

scene that seven of eight occupants were ejected.

The Soto and Romero families sued Nabors and its truck driver. At trial, Nabors sought to

offer expert testimony from a biomechanical engineer, James Funk, Ph.D., that seven of the eight

Suburban occupants were unbelted (all except Martin, the driver), that five of those seven were

ejected from the vehicle, and that the failure to use seat belts caused the passengers’ injuries and the

one fatality. Nabors also hoped to introduce evidence of a citation issued to Soto for driving without

properly restraining the child passengers as well as testimony from the plaintiffs as to who was

unbelted and who was ejected.

Following our precedent in Carnation Co. v. Wong, 516 S.W.2d 116 (Tex. 1974), the trial

court excluded all evidence of nonuse of seat belts. Additionally, the trial court separately excluded

portions of Dr. Funk’s testimony on Robinson grounds, specifically, that Dr. Funk was unqualified

3

to opine that the failure to use seat belts caused the unbelted occupants’ injuries. See E.I. du Pont

de Nemours & Co. v. Robinson, 923 S.W.2d 549 (Tex. 1995). The trial court emphasized that even

if it had allowed seat-belt evidence, it would have excluded Dr. Funk’s injury-causation testimony

under Robinson. The jury found Nabors 51% and Soto 49% responsible for the accident, and

awarded the Soto and Romero families collectively just over $2.3 million.

The court of appeals affirmed the trial court’s judgment based solely on the Carnation

prohibition on seat-belt evidence. The court of appeals did not separately consider whether the trial

court properly excluded Dr. Funk’s injury-causation testimony under Robinson. We granted review

to consider the current viability of Carnation in light of the Legislature’s repeal of its statutory ban

on seat-belt evidence.

II

A

Texas’s earliest cases on the admissibility of seat-belt evidence first appeared in the late

1960s. They culminated in this Court’s 1974 decision in Carnation to severely limit admissibility

of seat-belt evidence. The context within which these cases arose is instructive. First, there was no

law requiring seat-belt use; in fact, a federal mandate that seat belts be installed as standard

equipment on all new passenger vehicles was barely in its infancy. Brian T. Bagley, The Seat Belt

Defense in Texas, 35 ST. MARY’S L.J. 707, 717 (2004). And second, Texas courts operated under an

unforgiving all-or-nothing rule in negligence cases that entirely barred a plaintiff from recovery if

the plaintiff himself was negligent in any way. Parrot v. Garcia, 436 S.W.2d 897, 901 (Tex. 1969).

4

The first court of appeals to address the issue was quick to point out that no statute required

seat-belt use and no Texas authority supported a common-law duty to use seat belts. See Tom Brown

Drilling Co. v. Nieman, 418 S.W.2d 337, 340–41 (Tex. Civ. App.—Eastland 1967, writ ref’d n.r.e.).

And in lieu of forging a new path, some courts of appeals were able to dispose of the issue on the

ground that defendants had no evidence the failure to use seat belts caused the plaintiffs’ injuries.

See United Furniture & Appliance Co. v. Johnson, 456 S.W.2d 455, 459 (Tex. Civ. App.—Tyler

1970, writ dism’d); Nieman, 418 S.W.2d at 341. Others grappled with the evidentiary difficulties

of admitting seat-belt evidence. See Red Top Taxi Co. v. Snow, 452 S.W.2d 772, 779 (Tex. Civ.

App.—Corpus Christi 1970, no writ) (holding evidence of nonuse of seat belts irrelevant to “the

liability issues involving the [plaintiff’s] alleged contributory negligence”); Sonnier v. Ramsey, 424

S.W.2d 684, 689 (Tex. Civ. App.—Houston [1st Dist.] 1968, writ ref’d n.r.e.) (declining to decide

whether a common-law duty to use a seat belt exists, but suggesting if so it “should be considered

in connection with damages rather than liability”). At least one court seized the opportunity to

declare there was no common-law duty to use a seat belt and that the omission was not actionable

negligence because the plaintiff could not reasonably foresee the effects of a failure to use a seat belt.

See Quinius v. Estrada, 448 S.W.2d 552, 554 (Tex. Civ. App.—Austin 1969, writ ref’d n.r.e.). By

the time this Court weighed in, all courts of appeals that reached the issue had either decided a

failure to use seat belts was not actionable negligence or left the issue undecided. None supported

admitting seat-belt evidence with the aim of reducing or negating a plaintiff’s recovery.

This Court first encountered the issue in Kerby v. Abilene Christian College, in which the

driver of a linen truck, Kerby, was ejected through the open sliding door of his truck after colliding

5

with an ACC bus. 503 S.W.2d 526, 526 (Tex. 1973). The jury found Kerby negligent and 35%

responsible for his injuries. Id. at 527. The trial court accordingly reduced Kerby’s recovery by 35%,

but the court of appeals tossed his award entirely because under the law at the time his contributory

negligence barred any recovery whatsoever. Id.

This Court reversed both lower courts and restored Kerby’s recovery in full, reasoning that

“[c]ontributory negligence must have the causal connection with the accident that but for the conduct

the accident would not have happened.” Id. at 528. Accordingly, “negligence that merely increases

or adds to the extent of the loss or injury occasioned by another’s negligence is not such contributory

negligence as will defeat recovery.” Id. In so holding, the Court drew “a sharp distinction between

negligence contributing to the accident and negligence contributing to the damages sustained.” Id.

The Court further likened the facts of Kerby to earlier cases in which courts of appeals held the

failure to use a seat belt was not “actionable negligence” or “contributory negligence such that would

bar recovery,” and underscored the “conceptual difficulty of applying the mitigation[-]of[-]damages

concept to Plaintiff’s conduct antedating the negligence of the Defendant.” Id. In so doing, the Court

declared seat-belt evidence incompatible with the only two legal doctrines—contributory negligence

and failure to mitigate damages—that arguably could accommodate it.

A year later in Carnation v. Wong, the jury found plaintiffs involved in a car accident

negligent for failing to use seat belts. 516 S.W.2d at 116. The jury attributed 50% of the fault for the

husband’s injuries against him and 70% of the fault for the wife’s injuries against her. Id. The trial

court reduced the Wongs’ awards correspondingly, but the court of appeals overturned those

reductions. Id. Finding no reversible error, this Court refused to grant the writ of error in Carnation,

6

but accompanied that refusal with an opinion correcting the court of appeals’ too-expansive reading

of Kerby. Id. Contrary to the court of appeals’ interpretation, the Kerby Court did not rule there was

no common-law duty to use seat belts. And the Carnation Court stopped short of that holding as

well. Instead, the Court focused on the difficulty of applying the “various legal theories” supporting

admissibility of seat-belt evidence in the available legal framework. Id. The Court rejected out of

hand “those cases barring completely plaintiff’s recovery based on contributory negligence,” noting

only that “our courts have not followed such an approach.” Id. (citations omitted). The Court also

acknowledged that other jurisdictions had considered seat-belt evidence under mitigation-ofdamages

and apportionment-of-damages theories, but could “find no reported appellate decision

where a court has actually relied upon either of these two theories to uphold definitively a trial

court’s reduction of plaintiff’s recovery from defendant based on the plaintiff’s failure to wear

available seat belts.” Id. at 117 (citations omitted). With that, the Court announced: “We now hold

that . . . persons whose negligence did not contribute to an automobile accident should not have the

damages awarded to them reduced or mitigated because of their failure to wear available seat

belts.” Id.

B

About a decade after Carnation, the federal government began to push seat-belt-use

initiatives that would give rise to the first seat-belt laws in Texas and in several other states. In 1984,

the National Highway Traffic Safety Administration issued a regulation requiring all passenger

vehicles beginning with the 1990 model year to include passive-restraint systems unless states

constituting two-thirds of the nation’s population adopted mandatory seat-belt laws. See Federal

7

Motor Vehicle Safety Standard; Occupant Crash Protection, 49 Fed. Reg. 28,962-01 (July 17, 1984)

(codified as amended at 49 C.F.R. § 571.208). The Texas Legislature, along with many others,

responded, and in 1985 for the first time made it a criminal offense for anyone fifteen years or older

to ride in a front seat unbelted, and further placed on drivers a responsibility to properly restrain

children under fifteen riding in a front seat. Act of June 15, 1985, 69th Leg., R.S., ch. 804, § 1,

sec. 107C, 1985 Tex. Gen. Laws 2846, 2846–47, repealed by Act of May 23, 1995, 74th Leg, R.S.,

ch. 165, § 24(a), 1995 Tex. Gen. Laws 1870, 1870–71. The new law further provided that: “Use or

nonuse of a safety belt is not admissible evidence in a civil trial.” Id. This outright prohibition of

seat-belt evidence, seemingly for any purpose, was broader than the rule adopted in Carnation,

which simply held seat-belt evidence was inadmissible to reduce a plaintiff’s recovery. See

Carnation, 516 S.W.2d at 117. And with that prohibition, Carnation was mothballed—not stricken

from the books but preempted by a stricter statutory prohibition.

Texas’s seat-belt law has expanded in its applicability over the years. In 2004, when the car

accident at issue in this case occurred, Texas law required a driver to properly restrain most children

riding anywhere in the vehicle. Act of June 14, 2001, 77th Leg., R.S., ch. 910, § 2, 2001 Tex. Gen.

Laws 1821, 1821–22 (amended 2005) (current version at TEX. TRANSP. CODE § 545.413(b)). Today,

anyone fifteen years or older in any seat is required to buckle up, and drivers have a responsibility

to make sure anyone seventeen years or younger anywhere in the vehicle is properly restrained. TEX.

TRANSP. CODE §§ 545.413(a), (b). The prohibition against seat-belt evidence in civil trials remained

intact throughout the law’s evolution until 2003, when the Legislature repealed the provision as part

of the sweeping House Bill 4 tort-reform legislation. Act of June 11, 2003, 78th Leg., R.S., ch. 204,

8

§ 8.01, 2003 Tex. Gen. Laws 863, 863 (repealing TEX. TRANSP. CODE §§ 545.412(d), 545.413(g)).

The Legislature did not replace the prohibition with any language affirming the use of seat-belt

evidence—it simply struck the provision altogether.

III

A

Nabors argues legislative history reveals the purpose of the repeal was to begin allowing seatbelt

evidence in civil trials. The families argue that if the Legislature intended that, it could have

enacted language favoring admissibility or overruling Carnation. We simply take the Legislature’s

action at face value—it once had something specific to say about seat-belt evidence, and now it does

not. See Girouard v. United States, 328 U.S. 61, 69 (1946) (“It is at best treacherous to find in

Congressional silence alone the adoption of a controlling rule of law.”); Brown v. De La Cruz, 156

S.W.3d 560, 566 (Tex. 2004) (“[L]egislative silence . . . may reflect many things, including implied

delegation to the courts or administrative agencies, lack of consensus, oversight, or mistake.”). But

everyone in this case agrees the statutory repeal revived this Court’s holding in Carnation, a

common-law rule subsumed for eighteen years by a broader statutory prohibition but never

overruled. The question is whether that rule, established more than forty years ago, should still stand

today. To answer, we will not strain to determine legislative intent behind the Legislature’s statutory

repeal and subsequent silence; instead, what the Legislature has said will guide us. And while the

Legislature now says nothing about seat-belt evidence specifically, it has said much since Carnation

about the assignment of responsibility in negligence lawsuits.

9

The evolution of Texas’s system for attributing fault in negligence cases over the past four

decades is well documented. At the time Kerby and Carnation were tried, Texas “followed the all-ornothing

system of contributory negligence.” Dugger v. Arredondo, 408 S.W.3d 825, 830 (Tex.

2013). “Under contributory negligence, if a plaintiff was even one percent at fault, he or she could

not recover.” Id.; see also Parrot, 436 S.W.2d at 901. In 1973, the Legislature adopted article 2212a,

the first comparative-negligence statute, evincing “‘a clear policy purpose to apportion negligence

according to the fault of the actors.’” Dugger, 408 S.W.3d at 830 (quoting Parker v. Highland Park,

Inc., 565 S.W.2d 512, 518 (Tex. 1978)); see also Act of April 9, 1973, 63d Leg., R.S., ch. 28,

§§ 1–2, 4–5, art. 2212a, 1973 Tex. Gen. Laws 41, 41–43, repealed by Act of June 16, 1985, 69th

Leg., R.S., ch. 959, § 1, sec. 33.001, 1985 Tex. Gen. Laws 3242, 3270–71. Later, the Legislature

replaced article 2212a with the comparative-responsibility framework in chapter 33 of the Civil

Practice and Remedies Code. See TEX. CIV. PRAC. & REM. CODE §§ 33.001–.004; Act of June 16,

1985, 69th Leg., R.S., ch. 959, § 1, secs. 33.001–.004, 1985 Tex. Gen. Laws 3242, 3270–71,

amended by Act of June 16, 1987, 70th Leg., 1st C.S., ch. 2, §§ 2.03–.12, secs. 33.001–.004, 1987

Tex. Gen. Laws 37, 41–44; JCW Electrs., Inc. v. Garza, 257 S.W.3d 701, 703 (Tex. 2008) (setting

out the evolution of comparative-fault rules in Texas). In 1995, the Legislature modified Chapter 33

by replacing comparative responsibility with proportionate responsibility. Act of May 18, 1995, 74th

Leg., R.S., ch. 136, § 1, 1995 Tex. Gen. Laws 971, 971–75 (amended 2003) (current version at TEX.

CIV. PRAC. & REM. CODE §§ 33.001–.004). Section 33.003(a) now provides:

The trier of fact, as to each cause of action asserted, shall determine the percentage

of responsibility, stated in whole numbers, for the following persons with respect to

each person’s causing or contributing to cause in any way the harm for which

10

recovery of damages is sought, whether by negligent act or omission, by any

defective or unreasonably dangerous product, by other conduct or activity that

violates an applicable legal standard, or by any combination of these:

(1) each claimant;

(2) each defendant;

(3) each settling person; and

(4) each responsible third party who has been designated under Section

33.004.

Gone is the “harsh system of absolute victory or total defeat.” See Parker, 565 S.W.2d at 518. Under

proportionate responsibility, the fact-finder apportions responsibility according to the relative fault

of the actors, thus allowing a plaintiff to recover while reducing that recovery by the percentage for

which the plaintiff was at fault. As long as the plaintiff’s own responsibility does not exceed 50%,

he is entitled to a recovery reduced by his responsibility percentage. TEX CIV. PRAC. & REM. CODE

§§ 33.001, 33.012. And the statute casts a wide net over conduct that may be considered in this

determination, including negligent acts or omissions as well as any conduct or activity that violates

an applicable legal standard. The directive is clear—fact-finders should consider each person’s role

in causing, “in any way,” harm for which recovery of damages is sought. The question we now face

is whether the “sharp distinction” between occurrence-causing and injury-causing negligence this

Court drew in Kerby is still viable in light of the Legislature’s current mandate. In other words, can

a plaintiff’s failure to use a seat belt, though it did not cause the car accident, limit his recovery if

it can be shown that the failure to use a seat belt caused or contributed to cause his injuries?

B

This Court has never absolved plaintiffs of a duty to use seat belts, nor has it held seat-belt

evidence irrelevant. Rather, in Kerby and Carnation, the Court struggled with the mismatch between

11

the character of seat-belt evidence and the legal doctrines that might support its admission. One

option was to treat it as evidence of a plaintiff’s failure to mitigate his damages—a doctrine typically

applied to a post-occurrence action, such as when a plaintiff fails to follow his doctor’s treatment

instructions. See, e.g., Moulton v. Alamo Ambulance Serv., Inc., 414 S.W.2d 444, 447 (Tex. 1967)

(“We recognize the universality of the rule that an injured person cannot recover damages which can

be avoided by that care and treatment of his injury which an ordinary prudent person would exercise

in the same or similar circumstances . . . .”). Courts were accustomed to instructing juries to consider

a plaintiff’s failure to mitigate when awarding damages, but the doctrine proved awkward when

applied to pre-occurrence actions—how can one mitigate damages that have not yet occurred? See

Kerby, 503 S.W.2d at 528. The other option was to treat seat-belt nonuse as contributory negligence,

which would entirely bar a plaintiff’s recovery. But the Court dismissed this option. See Carnation,

516 S.W.2d at 116 (“We reject those cases barring completely plaintiff’s recovery based on

contributory negligence; our courts have not followed such an approach.”) (citations omitted). So

under the existing legal framework, there simply was no vehicle to logically or fairly admit seat-belt

evidence.

The holdings in Kerby and Carnation are best viewed as examples of a class of common-law

doctrines designed to blunt the austerity of an all-or-nothing contributory-negligence scheme and

ensure an equitable civil-justice system for all Texans. After the Legislature adopted comparative

negligence in 1973, this Court “sought to abolish those doctrines directed to the old choice between

total victory and total defeat for the injured plaintiff.” French v. Grigsby, 571 S.W.2d 867, 867 (Tex.

1978) (abolishing doctrine of last clear chance or discovered peril). More than forty years later, “‘we

12

have discarded categories like imminent[-]peril, last-clear-chance, and assumption-of-the-risk in

favor of a general submission of comparative negligence.’” Del Lago Partners., Inc. v. Smith, 307

S.W.3d 762, 772 (Tex. 2010) (quoting Jackson v. Axelrad, 221 S.W.3d 650, 654 (Tex. 2007)). But

we are still occasionally called on to shake off vestiges of our defunct contributory-negligence

scheme. As recently as 2013, for example, we held the common-law unlawful-acts doctrine could

not coexist alongside proportionate responsibility. Dugger, 408 S.W.3d at 827.

The systematic elimination of outmoded ameliorative doctrines has led to speculation about

the continued viability of the “sharp distinction” we recognized in Kerby. So far, however, the Court

has stopped short of a formal declaration that proportionate responsibility incorporates both

occurrence-causing and injury-causing conduct. See Thomas v. Uzoka, 290 S.W.3d 437, 444 n.2

(Tex. App.—Houston [14th Dist.] 2009, pet. denied) (observing the Legislature “may have intended

to abolish the common-law distinction between a plaintiff’s ‘occurrence-causing’ and ‘injurycausing’

negligence”); Comm. on Pattern Jury Charges, State Bar of Tex., Texas Pattern Jury

Charges: General Negligence, Intentional Personal Torts, Workers’ Compensation PJC 4.1 cmt. at

53 (2014) (“The Committee is unable to determine whether the [L]egislature, by using ‘injury’ in

section 33.011(4), intended to abolish the distinction between ‘occurrence-causing’ and ‘injurycausing’

contributory negligence and mandate the use of ‘injury’ to the preclusion, at any time, of

‘occurrence.’”). The Third Restatement has specifically cited Carnation as an example of how

“[s]ome courts used to forgive a plaintiff of pre-accident negligence that merely aggravated the

injury.” RESTATEMENT (THIRD) OF TORTS: APPORTIONMENT OF LIAB. § 3 Reporter’s Note, cmt. b

at 39 (2000) (emphasis in original). Of such decisions, the Restatement observes:

13

They gave various rationales for this rule, including that the legislature had not

mandated the conduct, that counting the conduct would constitute a windfall for the

defendant, and that a plaintiff should not have to foresee and guard against the

possibility of a defendant’s negligence. None of these rationales provides an adequate

account for the rule, because each of them could be applied with equal force to

ordinary contributory negligence. . . . [T]he most satisfactory explanation is that

courts were hostile to the harsh consequences of contributory negligence as an

absolute bar to recovery and developed the rule as an ameliorative device.

Comparative responsibility eviscerates that rationale.

Id. at 39–40 (internal citations omitted).

C

Our precedents holding that a plaintiff’s injury-causing negligence cannot reduce a plaintiff’s

recovery cannot stand if today’s proportionate-responsibility statute contradicts those precedents.

And we hold it does. We recently observed in Dugger that the proportionate-responsibility statute

“indicates the Legislature’s desire to compare responsibility for injuries rather than bar recovery,

even if the claimant was partly at fault or violated some legal standard.” Dugger, 408 S.W.3d at 832

(emphasis added). Although we did not then directly address the distinction between injury-causing

and occurrence-causing negligence drawn by Kerby, our reference to “injuries” was not

accidental—it reflected the language chosen by the Legislature in the proportionate-responsibility

statute. Under that scheme, the fact-finder must allocate the “percentage of responsibility” for each

claimant, defendant, settling person, and responsible third party. TEX. CIV. PRAC. & REM. CODE

§ 33.003(a). And “percentage of responsibility” is defined as:

that percentage, stated in whole numbers, attributed by the trier of fact to each

claimant, each defendant, each settling person, or each responsible third party with

respect to causing or contributing to cause in any way, whether by negligent act or

omission, by any defective or unreasonably dangerous product, by other conduct or

activity violative of the applicable legal standard, or by any combination of the

14

foregoing, the personal injury, property damage, death, or any other harm for which

recovery of damages is sought.

Id. § 33.011(4) (emphasis added).

Section 33.011(4) directs the fact-finder to assign responsibility to plaintiffs who cause or

contribute to cause “in any way” personal injury or death. Similarly, section 33.003(a) also holds

plaintiffs accountable for “causing or contributing to cause in any way the harm for which recovery

of damages is sought.” “In any way” can mean only what it says—there are no restrictions on

assigning responsibility to a plaintiff as long as it can be shown the plaintiff’s conduct “caused or

contributed to cause” his personal injury or death. See United States v. Gonzales, 520 U.S. 1, 5

(1997) (“[T]he word ‘any’ has an expansive meaning, that is, ‘one or some indiscriminately of

whatever kind.’”) (quoting WEBSTER’S THIRD NEW INTERNATIONAL DICTIONARY 97 (1976)). We

cannot maintain a “sharp distinction” between two categories of evidence when the Legislature has

instructed fact-finders to consider conduct that was “in any way” a cause of the plaintiff’s damages.

Furthermore, sections 33.003(a) and 33.011(4) focus the fact-finder on assigning

responsibility for the “harm for which recovery of damages is sought”—two examples of which are

“personal injury” and “death”—and not strictly for the underlying occurrence, such as a car accident.

This distinction recognizes plaintiffs do not sue simply because they were involved in a car accident;

they sue because they suffered damages for which they have not been compensated. See Nabors

Drilling, U.S.A., Inc. v. Escoto, 288 S.W.3d 401, 404 (Tex. 2009) (“Negligence actions in Texas

require ‘a legal duty owed by one person to another, a breach of that duty, and damages proximately

caused by the breach.’”) (quoting D. Houston, Inc. v. Love, 92 S.W.3d 450, 454 (Tex. 2002)).

15

Though the facts of the occurrence, such as who caused the car accident, shape the narrative of the

case and rightly contribute to the fact-finder’s responsibility apportionment, the proportionateresponsibility

statute specifies the apportionment should ultimately be based on responsibility for

the damages suffered, in this case personal injury and death. Accordingly, the question is not simply

who caused the car accident, but who caused the plaintiff’s injuries.

We believe most reasonable people considering who caused a plaintiff’s injuries in a car

accident would not lean on a logical distinction between occurrence-causing and injury-causing

conduct. Rather, most would say a plaintiff who breaks the law or otherwise acts negligently by not

using a seat belt is at least partially responsible for the harm that befalls him. This is true even if he

did not cause the car accident, provided it can be shown the failure to buckle up exacerbated his

injuries. It is this common-sense approach, and not a philosophical abstraction articulated over forty

years ago, that our proportionate-responsibility statute captures. We do not suggest there is no logical

difference between occurrence-causing and injury-causing conduct. The sharpest rhetorical argument

against admitting seat-belt evidence has been that failure to use a seat belt cannot cause an accident,

and it is those who cause accidents who should pay. But it is equally true that failure to use a seat

belt will sometimes exacerbate a plaintiff’s injuries or lead to his death. Accordingly, the conclusion

is unavoidable that failure to use a seat belt is one way in which a plaintiff can “cause[] or

contribut[e] to cause in any way” his own “personal injuries” or “death.” TEX. CIV. PRAC. & REM.

CODE §§ 33.003(a), 33.011(4). The proportionate-responsibility statute calls for an apportionment

of fault for “personal injuries” and “death” rather than for the underlying occurrence that introduced

16

a sequence of events in which the end result is potentially influenced by whether the plaintiff acted

unreasonably or even broke the law.

Given the statute’s plain language, and without any statutory language preserving the

distinction set out in Kerby or our holding in Carnation, we conclude that, for purposes of the

proportionate-responsibility statute, the Legislature both intends and requires fact-finders to consider

relevant evidence of a plaintiff’s pre-occurrence, injury-causing conduct. This comports with the

modern trend in tort law toward “abolishing doctrines that give all-or-nothing effect to certain types

of plaintiff’s negligence based on the timing of the plaintiff’s and defendant’s negligence” and

instead considering “the timing of the plaintiff’s and defendant’s negligence [as] factors for assigning

percentages of responsibility.” RESTATEMENT (THIRD) OF TORTS: APPORTIONMENT OF LIAB. § 3,

Reporter’s Note, cmt. b at 41. We do not quarrel with the approach this Court took when it decided

Kerby and Carnation. We simply reach the issue again under a different legal system that considers

seat-belt evidence in a way the contributory-negligence scheme could not. Accordingly, although we

must overrule Kerby and Carnation to effect today’s decision, we do not reject them as mistaken

jurisprudence, but as once-prudent measures that have outlived their usefulness.

D

Today’s holding opens the door to a category of evidence that has never been part of our

negligence cases, but we need not lay down a treatise on how and when such evidence should be

admitted. Seat-belt evidence has been unique only in that it has been categorically prohibited in

negligence cases. With that prohibition lifted, our rules of evidence include everything necessary to

handle the admissibility of seat-belt evidence. As with any evidence, seat-belt evidence is admissible

17

only if it is relevant. See TEX. R. EVID. 401, 402. And relevance is the trial court’s province. See id.

104(a). The defendant can establish the relevance of seat-belt nonuse only with evidence that nonuse

caused or contributed to cause the plaintiff’s injuries. And the trial court should first consider this

evidence, for the purpose of making its relevance determination, outside the presence of the jury. See

id. 104(c). Otherwise, the jury will have already heard evidence of nonuse before such evidence has

been deemed relevant. Expert testimony will often be required to establish relevance, but we decline

to say it will be required in all cases. And, of course, like any other evidence, even relevant seat-belt

evidence is subject to objection and exclusion under Rule 403.

Our holding should likewise not introduce any confusion into how to construct a jury charge

when seat-belt evidence or any other pre-occurrence, injury-causing conduct is admitted. Under

section 33.003(a), the fact-finder may consider relevant evidence of a plaintiff’s failure to use a seat

belt as a “negligent act or omission” or as a violation of “an applicable legal standard” in cases where

the plaintiff was personally in violation of an applicable seat-belt law. See TEX. CIV. PRAC. & REM.

CODE § 33.003(a). And in cases in which an unrestrained plaintiff was not personally in violation

of a seat-belt law, the fact-finder may consider whether the plaintiff was negligent under the

applicable standard of reasonable care. This scenario is likely to arise when children are among the

passengers of the plaintiff’s vehicle. Most children do not violate seat-belt laws by failing to restrain

themselves; rather, it is the driver upon whom the law places the responsibility to properly restrain

them. Nonetheless, a minor is still held to the degree of care that would be exercised by an

“ordinarily prudent child of [the same] age, intelligence, experience and capacity . . . under the same

or similar circumstances.” Rudes v. Gottschalk, 324 S.W.2d 201, 204 (Tex. 1959). The jury may

18

further apportion third-party responsibility to the person upon whom the law places the burden to

properly restrain the child.

There also should be no confusion on the relationship of this holding with the existing

failure-to-mitigate-damages doctrine. A plaintiff’s failure to mitigate his damages traditionally

occurs post-occurrence and, as noted in Kerby, the doctrine does not readily translate in the preoccurrence

context. 503 S.W.2d at 528 (noting “conceptual difficulty of applying the mitigation[-

]of[-]damages concept to Plaintiff’s conduct antedating the negligence of the Defendant”). That

distinction remains. A plaintiff’s post-occurrence failure to mitigate his damages operates as a

reduction of his damages award and is not considered in the responsibility apportionment. It is only

the plaintiff’s pre-occurrence, injury-causing conduct that should be considered in the responsibility

apportionment.

Lastly, there is no need, as some have suggested, to deviate from a single apportionment

question. See Bagley, supra, at 736–37 (suggesting two fault analyses). A jury can consider a

plaintiff’s pre-occurrence, injury-causing conduct alongside his and other persons’ occurrencecausing

conduct. In crashworthiness cases, for instance, a product defect often “causes or enhances

injuries but does not cause the accident”; nonetheless, “[t]he jury is asked to apportion responsibility

between all whose actions or products combined to cause the entirety of the plaintiff’s injuries.”

Duncan v. Cessna Aircraft Co., 665 S.W.2d 414, 428 (Tex. 1984). This exercise may at times prove

challenging for jurors, but no more so than what they already face in distilling the multiple factors

they must consider in one responsibility allocation. There is nothing about injury-causing conduct

19

that renders it incompatible with being considered alongside occurrence-causing conduct in one

responsibility apportionment for the harm suffered by the plaintiff.

E

Today’s holding is rooted in statutory interpretation and the unavoidable conclusion that our

proportionate-responsibility statute both allows and requires fact-finders to consider pre-occurrence,

injury-causing conduct. But the arguments against allowing seat-belt evidence, including some urged

by the families in this case, transcend statutory interpretation and touch on themes of general fairness

and fundamental principles of tort law. We respond to them because we believe our holding is not

merely correct statutory interpretation; it also promotes sound public policy.

Attitudes toward use of seat belts have evolved drastically since the early 1970s. When we

decided Kerby and Carnation, seat-belt use was not required by law. Car manufacturers had only

recently been required to install seat belts as standard equipment on all passenger vehicles, but

relatively few people wore them—as few as 14% nationwide in 1984, the year before Texas enacted

its first seat-belt law. Peter Scaff, The Final Piece of the Seat Belt Evidence Puzzle, 36 HOUS. L.

REV. 1371, 1378 n.43 (1999). But in the intervening time since seat-belt use became the law, that

number has jumped to 84%. NAT’L HIGHWAY TRAFFIC SAFETY ADMIN., DEP’T OF TRANSP., DOT

HS 811 651, TRAFFIC SAFETY FACTS, CRASH STATS–SEAT BELT USE IN 2011 1–2 (Aug. 2012). And

Texas boasts an even higher usage rate of 93.7%. Id.

A wealth of research has established that seat belts reduce injuries and save lives. According

to the National Highway Traffic Safety Administration, seat belts prevent more than 11,000 deaths

each year. NAT’L HIGHWAY TRAFFIC SAFETY ADMIN., DEP’T OF TRANSP., DOT HS 810 649,

20

PRIMARY ENFORCEMENT SAVES LIVES–THE CASE FOR UPGRADING SECONDARY SAFETY BELT LAWS

25 (Sept. 2006). And while ejection is “one of the most injurious events that can happen to a person

during a crash,” seat belts are up to 99% effective at preventing “total ejections.” Id. The percentage

of seat-belt nonuse in fatal accidents is alarming. For example, in 2012, between 48% and 54% of

people killed in car accidents were not using seat belts. NAT’L HIGHWAY TRAFFIC SAFETY ADMIN.,

DEP’T OF TRANSP., DOT HS 812 070, TRAFFIC SAFETY FACTS, 2012 DATA–PASSENGER VEHICLES

4 (Sept. 2014). But we will not belabor the point with statistics. To do so suggests there is still

legitimate debate over the propriety of seat-belt use. That debate has long ended. Seat-belt laws are

now in effect in every state, and the vast majority of Texans buckle up on a regular basis. Yet until

today a contradictory legal system punished seat-belt nonuse with criminal citations while allowing

plaintiffs in civil lawsuits to benefit from juries’ ignorance of their misconduct.

Perhaps the most common argument against seat-belt evidence is one we have already

addressed—that the failure to use a seat belt does not cause an accident, and it is those who cause

accidents who should pay. But as we have pointed out, our legal system now takes a broader view

toward assigning responsibility for a plaintiff’s damages. So although this argument points out a

logical distinction between occurrence-causing and injury-causing conduct, it engages a debate the

Legislature has settled—the distinction does not immunize a plaintiff from his own injury-causing

conduct.

Some argue that admitting seat-belt evidence violates the principle that a plaintiff is not

required to anticipate the negligent or unlawful conduct of another. See Humble Oil & Refining Co.

v. Martin, 222 S.W.2d 995, 1001 (Tex. 1949) (noting the “general axiom that a person is not bound

21

to anticipate the negligence of others”). But this has never been a steadfast rule of tort law. Rather,

it is a guiding principle the law has balanced with the duty everyone has to guard against foreseeable

risks—a duty that has been recognized at least since Palsgraf v. Long Island R. Co., 162 N.E. 99

(N.Y. 1928). See also The Kroger Co. v. Keng, 23 S.W.3d 347, 351 (Tex. 2000) (“Contributory

negligence contemplates an injured person’s failure to use ordinary care in regard to his or her own

safety.”). We have consistently held that foreseeability turns on existence of a general danger, not

awareness of the exact sequence of events that produces the harm. See, e.g., Mellon Mortg. Co. v.

Holder, 5 S.W.3d 654, 655 (Tex. 1999) (collecting cases). The general danger of driving is obvious

to everyone. The NHTSA reports that in 2012, the most recent year for which data is available,

nearly ten million passenger-vehicle accidents occurred, causing injuries to two million people—and

these numbers encompass only accidents reported to police. NAT’L HIGHWAY TRAFFIC SAFETY

ADMIN., DEP’T OF TRANSP., DOT HS 812 070, TRAFFIC SAFETY FACTS, 2012 DATA–PASSENGER

VEHICLES 1 (Sept. 2014). From the rural Texan who braves harrowing two-lane highways to the

urban commuter who plans his route to avoid daily accident-related congestion, the dangers of

driving are ubiquitous. So when it comes to foreseeing the general hazard of automobile travel,

“[t]here is nothing to anticipate; the negligence of other motorists is omnipresent.” Law v. Superior

Court, 755 P.2d 1135, 1141 (Ariz. 1988). Indeed, by enacting seat-belt laws, the Legislature has

required motorists to anticipate the negligence of others.

Finally, some insist that admitting seat-belt evidence provides a windfall for defendants who

will be relieved of paying the full damages caused by their negligence. But the reverse is equally

arguable—a plaintiff whose injuries were exacerbated by failure to use a seat belt benefits from the

22

jury’s ignorance of his own conduct. The result is certainly an oddity: the unbelted plaintiff is likely

to be punished with a criminal citation carrying a monetary fine from the police officer investigating

the accident, but in the civil courtroom his illegal conduct will be rewarded by monetary

compensation. There are no windfalls under the rule we announce today. Even when trial courts

properly admit seat-belt evidence, defendants will still be held liable for the damages they caused,

but not the injuries the plaintiff caused by not using a seat belt.

IV

The families argue we need not reconsider the seat-belt evidence prohibition in

Carnation because without Dr. Funk’s injury-causation testimony, excluded on Robinson grounds,

Nabors has no evidence the plaintiffs’ failure to use seat belts caused their injuries or the lone

fatality. Nabors argues the jury could have inferred injury causation from other evidence even

without the excluded expert testimony. Specifically, Nabors suggests ejection itself gives rise to a

reasonable inference that the occupant was unbelted, and that Dr. Funk’s “biomechanical testimony”

alone would have established the plaintiffs “would not have been flung around inside—nor ejected

from—the Suburban if they had been wearing their seat belts.”

The trial court relied on our precedent in prohibiting seat-belt evidence but insisted it would

have struck Dr. Funk’s injury-causation testimony on Robinson grounds even if seat-belt evidence

were allowed. Nabors argued to the court of appeals that the trial court abused its discretion in

excluding Dr. Funk’s injury-causation testimony, but the court of appeals affirmed the trial court’s

judgment solely on the ground that seat-belt evidence was properly excluded. It did not address the

independent Robinson issues.

23

We decline to consider whether the trial court acted within its discretion in limiting Dr.

Funk’s testimony or whether Nabors had sufficient injury-causation evidence without Dr. Funk’s full

testimony. Those issues were not considered by the court of appeals and were not fully briefed to this

Court. Instead, this appeal has turned on whether Carnation should still stand. We believe any

remaining issues will be elucidated with the Carnation prohibition no longer in place and that the

parties will benefit from the opportunity to narrow their focus at the court of appeals to these

remaining issues.

* * *

We hold relevant evidence of use or nonuse of seat belts, and relevant evidence of a

plaintiff’s pre-occurrence, injury-causing conduct generally, is admissible for the purpose of

apportioning responsibility under our proportionate-responsibility statute, provided that the

plaintiff’s conduct caused or was a cause of his damages. Accordingly, we reverse the court of

appeals’ judgment and remand this case to the court of appeals for further proceedings consistent

with this opinion.

_____________________________

Jeffrey V. Brown

Justice

OPINION DELIVERED: February 13, 2015


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 new office location is 5601 Bridge Street, Suite 300, Fort Worth, Texas 76112.

Martindale AVtexas[2]
		
	






	
	
		
		Insurance Defense Litigation			
	

	
	
				
				

			
						
				

					
				 			
				

			
	

				
Necessity and Nature of Venue in Texas Civil Litigation–Texas Civil Litigation Attorneys

			

	
	

		
Court of Appeals of Texas,Dallas.

Rutilio Ignacio VELASCO, Individually and a/n/f

Josue Velasco, A Minor, Erick Velasco, A Minor,

and Steven Velasco, A Minor, and as Representative

of The Estate of Gloria Oviedo Velasco, Appellant

v.

TEXAS KENWORTH COMPANY, Texas Kenworth

Company d/b/a MHC Kenworth-Dallas,

Texas Kenworth Company d/b/a MHC Kenworth-

Fort Worth, Texas Kenworth Company d/b/a Texas

Kenworth Co. Dallas, Texas Kenworth Company d/

b/a Texas Kenworth Co. Fort Worth, Texas Kenworth

Corporation and Mark Sims, Appellees.

No. 05-03-01160-CV.

Aug. 17, 2004.

Rehearing Overruled Sept. 30, 2004.

Background: Husband of driver killed in accident,

individually, as representative of driver’s estate, and

on behalf of minor children, brought wrongfuldeath

action against manufacturer of tractor involved

in accident, and against individual. After

transfer of venue from county where accident occurred,

the 192nd Judicial District Court, Dallas

County, Merrill Hartman, J., granted summary

judgment for defendants. Husband appealed.

Holding: The Court of Appeals, Joseph B. Morris,

J., held that venue lay in county where accident occurred.

Vacated and remanded.

West Headnotes

[1] Venue 401 8.2

401 Venue

401I Nature or Subject of Action

401k8 Actions for Torts

401k8.2 k. Particular Torts. Most Cited

Cases

Pursuant to venue statute, venue for wrongful-death

case brought by husband of driver killed in multivehicle

accident lay in county where accident occurred,

where driver died, where bid for tractor involved

in accident was submitted and opened by

county authorities, and where individual defendant

talked to county authorities. V.T.C.A., Civil Practice

& Remedies Code § 15.002(a)(1).

[2] Venue 401 1.5

401 Venue

401I Nature or Subject of Action

401k1.5 k. Nature and Necessity of Venue in

Action. Most Cited Cases

A plaintiff has the first choice to fix venue in a

proper county. V.T.C.A., Civil Practice & Remedies

Code § 15.002(a)(1).

[3] Appeal and Error 30 1043(8)

30 Appeal and Error

30XVI Review

30XVI(J) Harmless Error

30XVI(J)6 Interlocutory and Preliminary

Proceedings

30k1043 Interlocutory Proceedings

30k1043(8) k. Objections to Venue

and Motions for Change of Venue. Most Cited

Cases

It is reversible error to transfer venue from a proper

venue, even if the county of transfer would have

been proper if originally chosen by the plaintiff.

V.T.C.A., Civil Practice & Remedies Code §

15.002(a)(1).

[4] Appeal and Error 30 840(1)

30 Appeal and Error

30XVI Review

30XVI(A) Scope, Standards, and Extent, in

General

30k838 Questions Considered

30k840 Review of Specific Questions

144 S.W.3d 632 Page 1

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and Particular Decisions

30k840(1) k. In General. Most

Cited Cases

To determine whether a trial court improperly

transferred venue in a case, an appellate court must

consider the entire record, including any trial on the

merits. V.T.C.A., Civil Practice & Remedies Code

§ 15.002(a)(1).

[5] Venue 401 33

401 Venue

401III Change of Venue or Place of Trial

401k33 k. Power and Duty of Court in General.

Most Cited Cases

If there is any probative evidence that supports venue

in the county of suit, the trial court must deny a

transfer; this is true even if the evidence preponderates

to the contrary. V.T.C.A., Civil Practice &

Remedies Code § 15.002(a)(1).

[6] Venue 401 2

401 Venue

401I Nature or Subject of Action

401k2 k. Place in Which Action May Be

Brought or Tried in General. Most Cited Cases

Venue statute limits the number of counties where

venue can be maintained to those with a substantial

connection with the lawsuit. V.T.C.A., Civil Practice

& Remedies Code § 15.002(a)(1).

*632 M. Kevin Queenan, Queenan Law Firm, P.C.,

DeSoto, for Appellant.

*633 James L. Williams, Williams, Peters &

Parmelee, P.C., and Carolyn Mitchell, Law Office

of Carolyn Mitchel, Fort Worth, for Appellee.

Before Justices MORRIS and

WHITTINGTON.FN1

FN1. The Honorable Tom James, Retired,

Court of Appeals, Fifth District of Texas at

Dallas, was a member of the panel at the

time this case was argued and submitted

for decision. Due to his retirement from

the Court, Justice James did not participate

in the issuance of this opinion.

SeeTEX.R.APP. P. 41.1(a) & (b).

OPINION

Opinion by Justice MORRIS.

In this wrongful death case, appellant Rutilio Ignacio

Velasco, individually and as next friend to

Josue Velasco, a minor, Erick Velasco, a minor,

and Steven Velasco, a minor, and as Representative

of the Estate of Gloria Oviedo Velasco, appeals the

trial court’s final judgment dismissing his claims

with prejudice. On appeal, appellant makes three

general arguments: first, he asserts his case was improperly

transferred from Johnson County to Dallas

County; second, he claims the Johnson County trial

court erred in granting summary judgment to appellee

Mark Sims; and third, he contends the Dallas

County trial court erred in denying his motion for a

continuance and granting summary judgment to appellees

Texas Kenworth Company, Texas Kenworth

Company d/b/a MHC Kenworth-Dallas, Texas Kenworth

Company d/b/a MHC Kenworth-Fort Worth,

Texas Kenworth Company d/b/a Texas Kenworth

Co. Dallas, Texas Kenworth Company d/b/a Texas

Kenworth Co. Fort Worth and Texas Kenworth

Corporation. Because we conclude appellant’s case

was transferred to Dallas County in error, we vacate

the Dallas County trial court’s final summary judgment

and remand the case to that court for transfer

back to the trial court in Johnson County.

Appellant filed this lawsuit after his wife died in a

multi-vehicle collision in Johnson County, Texas.

In his petition, appellant alleged that a used Kenworth

semi-tractor purchased by Johnson County

from the Kenworth appellees shortly before the accident

had faulty brakes and was a proximate cause

of the collision. Appellant asserted claims for negligence,

strict liability, breach of warranty, and misrepresentation.

FN2 Kenworth filed an answer

denying each allegation in appellant’s petition and

filed a motion to transfer the case from Johnson

County to Dallas County. Appellant amended his

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petition to include Mark Sims as defendant. Appellant

asserted venue was proper in Johnson County

because it is the location where a substantial part of

the events or omissions giving rise to his claims occurred

and because appellee Mark Sims resided in

Johnson County. Sims moved for and was granted

summary judgment. The trial court then granted

Kenworth’s motion to transfer appellant’s lawsuit to

Dallas County. In Dallas, Kenworth filed a traditional

and a no-evidence motion for summary judgment.

The trial court granted summary judgment in

Kenworth’s favor and rendered a final judgment incorporating

all of the previous interlocutory orders.

It is from this judgment that appellant appeals.

FN2. Appellant also asserted claims

against the previous owners of the vehicle,

Unimin Corporation and Unimin Texas

Company, L.P. The Unimin defendants

were granted summary judgment by the

Johnson County trial court.

[1][2][3][4][5] In his first point of error, appellant

complains about the trial court’s order transferring

his lawsuit from Johnson *634 County to Dallas

County.FN3 Texas venue law is well-established.

The plaintiff has the first choice to fix venue in a

proper county. See Wilson v. Texas Parks & Wildlife

Dept., 886 S.W.2d 259, 261 (Tex.1994). It is reversible

error to transfer venue from a proper venue

even if the county of transfer would have been

proper if originally chosen by the plaintiff. See id.

at 262. To determine whether a trial court improperly

transferred the case, we must consider the entire

record, including any trial on the merits. Ruiz

v. Conoco, Inc., 868 S.W.2d 752, 758 (Tex.1993).

If there is any probative evidence that supports venue

in the county of suit, the trial court must deny

the transfer. Bonham State Bank v. Beadle, 907

S.W.2d 465, 471 (Tex.1995). This is true even if

the evidence preponderates to the contrary. Id.

FN3. In addition to opposing the trial

court’s transfer order on the merits, appellant

also claims that Kenworth waived the

venue issue by “waiting almost a year to

seek a hearing on its motion.” Because appellant

has provided no argument or authority

to support this contention, appellant

does not present the issue for review.

SeeTEX.R.APP. P. 38.1(h).

[6] In the case before us, appellant relies on section

15.002(a)(1) of the Texas Civil Practices and Remedies

Code to establish venue in Johnson County.

This section provides that venue is proper in the

county where “all or a substantial part of the events

or omissions giving rise to the claim occurred.”

TEX. CIV. PRAC. & REM.CODE ANN. §

15.002(a)(1) (Vernon 2002). This provision limits

the number of counties where venue can be maintained

to those with a substantial connection with

the lawsuit. Chiriboga v. State Farm Mut. Auto. Ins.

Co., 96 S.W.3d 673, 681 (Tex.App.-Austin 2003,

no pet.). Appellant’s factual basis for maintaining

venue in Johnson County is that Johnson County is

where the accident occurred, where appellant’s wife

died, where the bid for the semi-tractor was submitted

and opened by Johnson County representatives,

and where Sims talked to Johnson County representatives

about the semi-tractor. Thus, appellant

contends, Johnson County became the site for a

substantial part of the facts giving rise to his

claims. We agree.

Appellant’s wrongful death claim arose when his

wife died in the accident in Johnson County. See

Ray v. Farris, 887 S.W.2d 164, 166

(Tex.App.-Texarkana 1994,rev’d on other

grounds, 895 S.W.2d 351 (Tex.1995)). Additionally,

appellant’s petition complains about the failure

of Kenworth to inform or warn Johnson County

about the dangerous condition of the semi-tractor,

the breach of various warranties contained in the

bid proposal, and misrepresentations made to Johnson

County with respect to the character or quality

of the semi-tractor. Appellant complains that these

omissions or acts occurred at the time the bid was

delivered to Johnson County representatives in

Johnson County. Because a substantial number of

the essential facts upon which appellant’s claims are

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based occurred in Johnson County, we conclude

venue was proper in Johnson County.

Conceding that there is no dispute that appellant’s

claim arose when the accident occurred in Johnson

County, Kenworth argues that for purposes of a

venue analysis under subsection (a)(1), we must focus

solely on the defendant’s action or inaction giving

rise to appellant’s claims. Specifically, Kenworth

asserts that because appellant’s petition alleges

that it failed to properly repair, service, or inspect

the brakes on the semi-tractor, Tarrant County

is the proper venue under subsection (a)(1) because

that is where these alleged acts or omissions occurred.

FN4 Initially, we *635 note that there is no

indication that the present venue statute contemplates

only one county can satisfy the requirements

of subsection (a)(1). Indeed at least one appellate

court has concluded more than one county may

qualify as proper venue under subsection (a)(1)

provided a “substantial part of the event or omissions”

giving rise to the claim occurred there. See

Southern County Mut. Ins. Co. v. Ochoa, 19

S.W.3d 452, 458 (Tex.App.-Corpus Christi 2000).

Therefore, to succeed on its motion to transfer,

Kenworth had to establish that no substantial part

of the events giving rise to appellant’s claims occurred

in Johnson County, not merely that a substantial

part of the events or omissions occurred in

another county. Kenworth has failed to do so. Even

assuming that Tarrant County qualified as a county

where a substantial part of the events or omissions

giving rise to appellant’s cause of action occurred,

there was probative evidence that Johnson County

also satisfied subsection (a)(1)’s requirements. Accordingly,

the trial court erred in transferring the

case from Johnson County.

FN4. Although Kenworth argued in the trial

court that the appropriate venue under

subsection (a)(1) was Tarrant County,

Kenworth requested the trial court to transfer

the case to Dallas County under subsection

(a)(3) because that is where its principal

place of business is located.

Although our research has revealed no Texas case

directly on point, we find support for our conclusion

in several federal cases. Because subsection

(a)(1) appears to have been patterned after a federal

venue statute, we may presume the legislature intended

to adopt the construction placed on that

wording by the federal courts and look to federal

cases to guide our interpretation of the state

statute.FN5 See id at 457. The ninth circuit has

reasoned that because the harm a plaintiff experienced

occurred in Nevada, venue was proper there

as the location where a substantial part of the

events and omission giving rise to the claim occurred.

See Myers v. Bennett Law Offices, 238

F.3d 1068, 1075 (9th Cir.2001). In product liability

cases against manufacturers, other courts have

stated the accident or crash constituted a substantial

part of the events giving rise to the claim such that

venue is appropriate where the crash or accident occurred.

Cali v. E. Coast Aviation Serv., Ltd., 178

F.Supp.2d 276, 282 (E.D.N.Y.2001) (venue proper

where airplane crashed); Roll v. Tracor, Inc., 26

F.Supp.2d 482, 485 (W.D.N.Y.1998) (venue proper

where accident occurred); and Dwyer v. Gen. Motors

Corp., 853 F.Supp. 690, 692 (S.D.N.Y.1994).

Contrary to Kenworth’s position, federal courts

have interpreted the subsection (a)(1)’s federal

counterpart to allow venue in a district where acts

or omissions closely related to the legal action occurred,

even if none of those acts or omissions were

the act or omission that allegedly caused the injury.

See e.g., Ciena Corp. v. Jarrard, 203 F.3d 312,

315-16 (4th Cir.2000).

FN5. The federal statute provides venue in

a diversity action may be placed in “a judicial

district in which a substantial part of

the events or omission giving rise to the

claim occurred.” 28 U.S.C. § 1391(a)(2).

Because the accident, appellant’s wife’s death, and

other events of which appellant complains occurred

in Johnson County, we conclude that Johnson

County has a close connection to this lawsuit and

that the requirements of subsection (a)(1) have been

144 S.W.3d 632 Page 4

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satisfied. We therefore sustain appellant’s first point

of error. Because our determination on the venue

question is dispositive, we do not address appellant’s

remaining points of error. SeeTEX.R.APP. P.

47.1.

We vacate the judgment of the trial court and remand

this case to the trial *636 court for transfer to

the Johnson County trial court for further proceedings

consistent with this opinion.

Tex.App.-Dallas,2004.

Velasco v. Texas Kentworth Co.

144 S.W.3d 632

END OF DOCUMENT

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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 new office location is 5601 Bridge Street, Suite 300, Fort Worth, Texas 76112.

Martindale AVtexas[2]
		
	






	
	
		
		Collections and Foreign Judgments, Contracts and Commercial Litigation, Employment Law Defense, Insurance Defense Litigation, Nonsubscriber Law			
	

	
	
				
				

			
						
				

					
				 			
				

			
	

				
Tortious Interference With Contract Claims in Texas–Fort Worth, Texas Contracts Law Attorneys

			

	
	

		
Reversed and Remanded and Opinion Filed January 28, 2015


In The Court of Appeals Fifth District of Texas at Dallas No. 05-13-01285-CV CREST INFINITI II, LP, Appellant V. TEXAS RV OUTLET AND TURN KEY RECOVERY, Appellees On Appeal from the County Court at Law No. 1 Collin County, Texas Trial Court Cause No. 1-860-2012


MEMORANDUM OPINION Before Justices Francis, Evans, and Stoddart Opinion by Justice Francis Crest Infiniti II, LP appeals the trial court’s take-nothing judgment in favor of Texas RV Outlet and Turn Key Recovery.


In two issues, Crest claims the evidence established as a matter of law Crest was entitled to judgment on its tortious interference with a contract and conversion claims, or alternatively, the trial court’s conclusion to the contrary is against the great weight and preponderance of the evidence. Crest also contends it was entitled to attorney’s fees. Appellees did not file a brief. We reverse the trial court’s judgment and remand for further proceedings consistent with this opinion. Billy Whitaker bought an Infiniti M45 from Texas RV Outlet, financing the purchase through Texas RV Outlet’s finance company. In November 2011, Whitaker took his car to Crest for maintenance and repair work. After receiving an estimate of the cost, Whitaker approved the –2– work. Although a Crest employee contacted Whitaker when the work was completed, Whitaker did not pay for the work or pick up his car. Nearly three weeks later, at the request of Texas RV Outlet, Turn Key Recovery repossessed Whitaker’s car for nonpayment, removed it from the Crest lot, and towed it to Texas RV Outlet. When Texas RV Outlet refused to return the vehicle, and ultimately sold it, Crest sued for tortious interference with a contract and conversion and sought attorney’s fees. The trial court ordered Crest take nothing and filed findings of fact and conclusions of law, including that appellees did not convert property owned by Crest, Crest did not have a lien on the car, and Crest did not sustain any actual damages. In its first issue, Crest contends the trial court’s judgment was contrary to the law and manifestly wrong and unjust because the undisputed evidence shows Crest had a lien under section 70.001 of the property code, Crest’s lien had priority over that held by Texas RV Outlet, Crest had possession of the car and appellees converted the car when they towed it from Crest’s car lot without permission. We review a trial court’s findings of fact under the same legal and factual sufficiency of the evidence standards used when determining if sufficient evidence exists to support an answer to a jury question. Catalina v. Blasdel, 881 S.W.2d 295, 297 (Tex. 1994).


When the appellate record contains a reporter’s record, as it does in this case, findings of fact are not conclusive on appeal if the contrary is established as a matter of law or if there is no evidence to support the findings. Ramsey v. Davis, 261 S.W.3d 811, 815 (Tex. App.―Dallas 2008, pet. denied). A party challenging the sufficiency of the evidence supporting an adverse finding on which the appealing party had the burden of proof must show the matter was established as a matter of law, or the trial court’s failure to make the finding was against the great weight and preponderance of the evidence. See Croucher v. Croucher, 660 S.W.2d 55, 58 (Tex. 1983). –3– Conversion is the unauthorized and wrongful assumption and exercise of dominion and control over the owner’s or possessor’s property to the exclusion of, or inconsistent with, the owner/possessor’s rights. See Waisath v. Lack’s Stores, Inc., 474 S.W.2d 444, 447 (Tex. 1971); see French v. Moore, 169 S.W.3d 1, 14 (Tex. App.―Houston [1st Dist.] 2004, no pet.) (conversion not restricted to owners of property but may also be brought by aggrieved party possessing or having right of immediate possession of property). Conversion is designed to protect against interference with a person’s possessory interest in personal property. Zapata v. Ford Motor Credit Co., 615 S.W.2d 198, 201 (Tex. 1981); see also Killian v. Trans Union Leasing Corp., 657 S.W.2d 189, 192 (Tex. App.―San Antonio 1983, writ ref’d n.r.e.) (conversion “is concerned with possession, not title”). To establish a claim for conversion of personal property, a plaintiff must prove: (1) it owned or had legal possession of the property or entitlement to possession; (2) the defendant unlawfully and without authorization assumed and exercised dominion and control over the property to the exclusion of, or inconsistent with, the plaintiff’s rights; (3) the plaintiff demanded return of the property; and (4) the defendant refused to return the property. Khorshid, Inc. v. Christian, 257 S.W.3d 748, 758−59 (Tex. App.―Dallas 2008, no pet.). Chapter 70 of the Texas Property Code provides that a worker “who by labor repairs a vehicle” has a lien on the vehicle and may retain possession of the vehicle pending payment of the amount due under a contract for the repairs. TEX. PROP. CODE ANN. § 70.001 (West 2014).


A possessory mechanic’s lien has priority over a seller’s perfected security interest in an automobile. Gulf Coast State Bank v. Nelms, 525 S.W.2d 866, 869−70 (Tex. 1975). At trial, Chance Simpson, a Crest service advisor, said Whitaker brought his car in for service, and Simpson completed a work order detailing the problems Whitaker was experiencing. Whitaker also presented a warranty to cover the work, but Simpson said it was an “after market” –4– warranty (not issued by Crest or the factory) and did not cover the repairs. James Saliva, the service manager at Crest, spoke with Whitaker before the repairs were made and offered him a 10% discount; he also offered to trade in the Infiniti on a newer model. Whitaker approved the work order, and on December 2, Crest completed the work, which totaled $5,925.81. When Crest offered the exhibit with the work estimate and the actual repair amount, appellees did not object. Simpson said they called Whitaker, but he did not pay for the repairs nor did he claim his vehicle. On December 21, 2011, a Crest technician called Saliva and told him a tow company was taking Whitaker’s car. Saliva went to the area on Crest’s property where all the completed cars are placed awaiting customer pick up and saw the Turn Key Recovery tow truck with Whitaker’s car leaving the property. Saliva got in his car and tried to chase the truck but due to traffic was unable to stop it; he also “tried calling them with my cellphone as I was driving.” When he returned to Crest, he called Turn Key Recovery and Texas RV Outlet and demanded the return of the car; however, neither company returned the car or paid for the repairs. Saliva described the Crest lot where Whitaker’s car was as the staging area holding “all of the completed cars for customers to pick up.” The lot is not public property but is Crest private property. Saliva stated that the lot was not locked during hours of operation in order to allow customers to easily retrieve their cars and to comply with fire code regulations. But “the whole property is locked down and guarded by security after hours.” Saliva also said the property had “No Trespass” signs posted on the wall that were visible to all. Lenny Zak, the owner of Texas RV Outlet, said Whitaker bought the car and, after making only one payment, defaulted on the remainder of the payments. Turn Key Recovery repossessed Whitaker’s car at Zak’s request. Zak said he did not believe they had broken the law because Texas RV Outlet had the lien on the car title. He conceded Turn Key Recovery was –5– acting as Texas RV Outlet’s agent. When asked if he knew about mechanic’s liens and the right of a dealership or auto shop to retain possession of a vehicle until payment for work is made, he replied, “I don’t know about that.” This evidence shows Crest performed $5,925.81 worth of repairs and maintenance on Whitaker’s car at Whitaker’s request and authorization; as a result, Crest had a possessory mechanic’s lien in that amount for the work performed on the car; Turn Key Recovery, acting as Texas RV Outlet’s agent, took control over the car to the exclusion of Crest without Crest’s permission or authorization; Crest demanded return of the property; and Texas RV Outlet refused and sold the car. Given this undisputed evidence, the trial court erred by concluding Crest did not have a lien on the car, appellees did not convert the car which Crest possessed at the time, and Crest did not sustain $5,925.81 in actual damages. See Gulf Coast State Bank, 525 S.W.2d at 869. Appellees spent considerable time at trial discussing Crest’s security, including why the lot remained unlocked during regular business hours, and even suggested addition measures Crest could have taken to protect its property from appellees.


In short, Crest was faulted for failing to prevent appellee Turn Key Recovery from entering its lot and “peaceably” towing the car. While a possessory lien held by a mechanic or repairman may be lost upon the voluntary delivery of the vehicle to the owner, we conclude it was not lost when appellees trespassed and took the car from Crest’s private lot without permission or authority. We sustain Crest’s first issue. In its second issue, Crest contends it was entitled to attorney’s fees under Chapter 70 of the property code and asks this Court to award the same. Section 70.008 of the property code provides, in relevant part, “The court in a suit concerning possession of a motor vehicle . . . and a debt due on it may award reasonable attorney’s fees to the prevailing party.” TEX. PROP. CODE –6– ANN. § 70.008 (West 2014). The statute does not restrict the award of attorney’s fees to one suing on a debt who wishes to retain possession of a vehicle. Elite Towing v. LSI Fin. Grp., 985 S.W.2d 635, 645 (Tex. App.―Austin 1999, no pet.); Kollision King, Inc. v. Calderon, 968 S.W.2d 20, 24 (Tex. App.―Corpus Christi 1998, no pet.). Crest’s right of possession of the vehicle and the debt secured by the possessory lien were at issue in this case. And because Crest established as a matter of law that Texas RV Outlet and Turn Key Recovery, as its agent, converted the vehicle, Crest is the prevailing party.


We sustain Crest’s second issue to the extent it seeks a determination of whether attorney’s fees may be awarded to Crest in this case. See Elite Towing, 985 S.W.2d at 645 (prevailing party entitled to attorney’s fees); Kollision King, Inc., 968 S.W.2d at 24 (same); Seureau v. Mudd, 515 S.W.2d 746, 749 (Tex. Civ. App.—Houston [14th Dist.] 1974, writ ref’d, n.r.e.) (within trial court’s discretion to award attorney’s fees to prevailing party). We reverse the trial court’s judgment that Crest take nothing and remand this case to the trial court to (1) render judgment in favor of Crest in the amount of $5,925.81 on its claim for conversion and (2) determine the amount of attorney’s fees, if any, to be awarded to Crest as the prevailing party.


 


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 new office location is 5601 Bridge Street, Suite 300, Fort Worth, Texas 76112.

Martindale AVtexas[2]
		
	






	
	
		
		Collections and Foreign Judgments, Contracts and Commercial Litigation			
	

	
	
				
				

			
						
				

					
				 			
				

			
	

				
Final Pay for Commissions and Bonuses Under the Texas Pay Day Law–Fort Worth, Texas Employment Defense Attorneys

			

	
	

		
According to the Texas Workforce’s interpretation and analysis, a common problem is that of what happens with an employer’s duty to pay commissions and bonuses once an employee has left the company. The answer depends upon the terms of the commission or bonus agreement. Commission pay agreements are enforceable whether they are oral or in writing, and agreements can be established with a showing of a pattern or practice of paying commissions in a certain way. Thus, the advice to have a clear, signed written wage agreement applies with particular force to commissions. Changes to written agreements must be in writing. A good agreement will avoid the risks of ambiguity by clearly setting out how commissions are earned, when and under what circumstances they are paid, whether “chargebacks” are made and under what circumstances, and what happens to commissions from sales in progress at the time of work separation. Similarly, a bonus agreement should specify exactly how a bonus is earned, how it is calculated, when it is paid, whether it is discretionary in any way (as to the amount, timing, or ability of the company to cancel the bonus altogether under certain conditions), and what happens to a bonus that is not determined or paid out until after an employee has left the company. If the commission or bonus agreement provides for payment of commissions and bonuses in any way after an employee has separated from employment, the deadline for such a payment would be based upon the wording of the agreement. Prior draws against commissions may be offset against the final pay; under 40 T.A.C. § 821.26(d), “[d]raws against commissions or bonuses may be recovered from the current or any subsequent pay period until fully reconciled.” The key to protecting the company’s interests is to spell out in a clear, written agreement exactly how, when, and under what circumstances commissions and bonuses will be paid, and then follow the written agreement to the letter, because that is how TWC will enforce the agreement in the event of a wage claim concerning such payments.


 


The Texas Family Code provides that garnishment for support obligations apply to certain post-termination lump-sum payments such as a bonus, commission, or payout of accrued leave (see Texas Family Code § 158.215): if such a lump-sum payment is $500 or more, the employer must notify the Attorney General’s office (do it in writing or electronically – see https://portal.cs.oag.state.tx.us/wps/portal/WageWithholdingResponsibilities#lumpsum) before making the payment so that that agency can determine whether a support deduction should be made. The agency then has ten days after that date to notify the employer about its duty to make the support deduction; if no such notification occurs, the employer may make the payment without the deduction. If, however, the agency informs the employer that the support order would apply to the lump-sum payment, the employer would need to make the deduction. Since such a garnishment would be pursuant to a court order, it would not have to be authorized in writing by the employee.


 


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 new office location is 5601 Bridge Street, Suite 300, Fort Worth, Texas 76112.

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Traffic Signals and Governmental Immunity Under the Texas Tort Claims Act– Fort Worth, Texas Insurance Defense Attorneys

			

	
	

		


THE CITY OF GRAPEVINE, TEXAS v. AMY SIPES AND TANA (TREVINO) WADDELL






IN THE SUPREME COURT OF TEXAS============No. 04-0933============


City of Grapevine, Texas


Petitioner,


v.


Amy Sipes and Tana (Trevino) Waddell


Respondents


====================================================


On Petition for Review from the


Court of Appeals for the Second District of Texas


====================================================


Argued February 15, 2006


Chief Justice Jefferson delivered the opinion of the Court.


Under the Texas Tort Claims Act, a governmental unit retains immunity for claims based on the absence of a traffic signal unless the absence is not corrected by the governmental unit within a reasonable time after notice. Tex. Civ. Prac. & Rem. Code 101.060(a)(2). The trial court held that this provision immunized the City of Grapevine from liability based on its alleged negligence in failing to install a traffic signal within a reasonable time after initially deciding to do so. The court of appeals disagreed and reversed in part the trial court s judgment. Because we conclude that absence, as used in subsection (a)(2), requires a prior presence, we reverse in part the court of appeals judgment and render judgment dismissing the case for lack of subject matter jurisdiction.


I


Factual Background


The City of Grapevine and Grapevine Mills, L.L.C. ( Mills ) entered into an agreement pursuant to which Mills would build the Grapevine Mills Mall (the Mall ). To accommodate increased traffic, the City planned to widen a nearby road, Business 114, from two lanes to five, as part of what was termed the Northwest Highway Expansion Project. The City hired an engineering firm to create a traffic control plan for the project; the resulting plan required a permanent traffic signal at the intersection of Business 114 and State Highway 26. The plan did not call for a temporary traffic signal during construction, however.


Because the intersection became a high accident site during construction, the City asked the Texas Department of Transportation (TxDOT) to erect a temporary traffic signal on the state-owned right-of-way. TxDOT responded that funding was inadequate for such a signal, so the City began to raise the necessary monies itself. The City hired a private consultant to prepare a warrant study justifying the need for a temporary signal, and on October 29, 1997, City officials met to coordinate its construction; the City planned to begin installation by November 7. The signal was not installed, however, until December 5.


On November 28, the day after Thanksgiving, Amy Sipes and her daughter, Tana Trevino Waddell, were traveling northbound on 114, heading to the newly opened Grapevine Mills Mall. At the intersection of 114 and 26, Sipes stopped at the temporary stop sign, but alleges that her vision was obstructed by concrete barriers, a road closed sign, and barrels. As Sipes inched her vehicle forward, it was struck by a truck driven by Jerry Gaston, who had been traveling eastbound on Northwest Highway. Both Sipes and Waddell sustained injuries.


Sipes, individually and as next friend of her daughter, sued the City and others for damages from injuries sustained in the accident. The City pleaded governmental immunity and moved for summary judgment on that and other bases.[1] Sipes responded, alleging in part that the City had notice of a dramatic increase in vehicular accidents at the intersection, and that the absence of a traffic signal or a four-way stop, where a permanent signal was provided for, waived the City s immunity pursuant to section 101.060. The trial court granted the City s motion and severed the claims. Sipes appealed.


The court of appeals reversed and remanded the trial court s judgment in favor of the City on the traffic signal issue, but affirmed the remainder of the judgment. 146 S.W.3d 273, 284-85. The court held that, while the City exercised discretion in deciding to install a temporary traffic signal at the intersection, a question of material fact exists concerning whether the City properly implemented its decision by installing the temporary traffic signal within a reasonable time thereafter. Id. at 281. We granted the City s petition for review.[2] 49 Tex. Sup. Ct. J. 259 (Jan. 20, 2006).


II


Discussion


The Tort Claims Act


The Texas Tort Claims Act (TTCA) waives immunity for personal injuries and deaths proximately caused by a condition or use of personal or real property if a governmental unit would, were it a private person, be liable. Tex. Civ. Prac. & Rem. Code 101.021(2). This use-of-property waiver, with which we have long grappled,[3] is an exception to the general rule of governmental immunity. Today we construe an exception to the exception: the waiver s non-application to claims arising from the absence, condition, or malfunction of a traffic or road sign, signal or warning device unless the absence, condition, or malfunction is not corrected by the responsible governmental unit within a reasonable time after notice. Id. 101.060(a)(2). Specifically, we must decide whether and under what conditions the absence of a traffic light may give rise to a governmental unit s liability under the TTCA.


Section 101.060, entitled Traffic and Road Control Devices, identifies three exceptions to the TTCA s waiver of immunity provisions:


(a) This chapter does not apply to a claim arising from:


(1) the failure of a governmental unit initially to place a traffic or road sign, signal, or warning device if the failure is a result of discretionary action of the governmental unit;


(2) the absence, condition, or malfunction of a traffic or road sign, signal, or warning device unless the absence, condition, or malfunction is not corrected by the responsible governmental unit within a reasonable time after notice; or


(3) the removal or destruction of a traffic or road sign, signal, or warning device by a third person unless the governmental unit fails to correct the removal or destruction within a reasonable time after actual notice.


Id. 101.060(a)(1)-(3) (emphasis added); see also State v. Gonzalez, 82 S.W.3d 322, 326 327 (Tex. 2002).


Sipes agrees that the City s initial decision to install a traffic signal was discretionary, but contends that, once the City made that decision, it faced liability for negligently implementing it. The court of appeals agreed. 146 S.W.3d at 279-81. That court noted that governmental units may be liable for negligent implementation of discretionary acts, and that [s]ection 101.060 reiterates this principle within the specific context of traffic control devices. Id. at 279-80. The court held that, once the city makes the decision to install a traffic control device, it has no discretion but to do so within a reasonable time, and [i]f the traffic control device is not installed after the policy decision is made to do so, then it would constitute absence under section 101.060(a)(2). Id. at 280 (citations omitted). Thus, the court concluded that the Act waives immunity when the city exercises its discretion in deciding to install a traffic control device but does not implement that decision within a reasonable amount of time. Id. (citing Tex. Civ. Prac. & Rem. Code 101.060(a)(2); City of Fort Worth v. Robles, 51 S.W.3d 436, 442 (Tex. App. Fort Worth 2001, pet. denied)).


We have not previously construed the term absence as used in subsection 101.060(a)(2). But see Gonzalez, 82 S.W.3d at 325 (using the phrase the signs absence to describe two stop signs that were removed after being in place); Alvarado v. City of Lubbock, 685 S.W.2d 646, 649 (Tex. 1985) (holding that a speed-limit sign posting the wrong speed limit constituted the absence of or condition of a traffic sign ).[4] As noted by the parties, our courts of appeals have differed in their interpretation of the term. At least one has determined that an absence refers to a sign or warning device that was in place at one time but was subsequently removed, see Tex. Dep t of Transp. v. Sanchez, 75 S.W.3d 24, 27 (Tex. App. San Antonio 2001, pet. denied) (quoting City of San Antonio v. Schneider, 787 S.W.2d 459, 468 (Tex.App. San Antonio 1990, writ denied)), while others have held that an absence occurs when a governmental unit exercises its discretion in deciding to install a traffic signal, but then fails to implement the decision within a reasonable time. See, e.g., Zambory v. City of Dallas, 838 S.W.2d 580, 583 (Tex. App. Dallas 1992, writ denied); see also Tex. Dep t of Transp. v. Bederka, 36 S.W.3d 266, 272 (Tex. App. Beaumont 2001, no pet.) ( [T]he non-discretionary implementation of the policy decision to install a different device . . . would be the absence of a particular traffic device under 101.060(a)(2) . . . . ); Reyes v. City of Houston, 4 S.W.3d 459, 462 (Tex. App. Houston [1st Dist.] 1999, pet. denied). As one court summarized: Courts of appeals have interpreted subsection 101.060(a)(2) to mean that immunity is waived for the absence of a warning sign . . . if the absence is due to the disappearance of an installed sign or the failure to install a sign [within a reasonable time] after the governing body authorized its installation. Ihlo v. State, 71 S.W.3d 494, 496 (Tex. App. Austin 2002, no pet.)(emphasis added)(employing both definitions to conclude that warning signs were not absent); see also Robles, 51 S.W.3d at 442 (utilizing both definitions to conclude that stop signs were not absent); Sanchez, 75 S.W.3d at 27 (applying first definition but recognizing the second); 19 William V. Dorsaneo III, Texas Litigation Guide 293.12[9][b][ii] (2005) (noting dual definition).


Accordingly, we must decide whether an absence, as used in (a)(2), requires a prior presence, or whether it includes the failure to install a traffic signal within a reasonable time after the decision is made to do so. We begin by examining the statutory context within which absence is placed. See Liberty Mut. Ins. Co. v. Garrison Contractors, Inc., 966 S.W.2d 482, 484 (Tex. 1998) (stating that a court must . . . view a statute s terms in context ). Subsection (a)(1), which immediately precedes (a)(2), retains immunity for the failure of a governmental unit initially to place a traffic or road sign, signal, or warning device if the failure is a result of discretionary action of the governmental unit. Tex. Civ. Prac. & Rem. Code 101.060(a)(1) (emphasis added). In subsection (a)(1), therefore, the Legislature expressed its intent that a governmental unit remains immune for an initial placement decision, provided it was the result of a discretionary act. If (a)(2) s absence included not just signs that were previously present, but those that had not yet been placed, it is difficult to imagine what would remain of (a)(1) s immunity retention. See Robles, 51 S.W.3d at 441 ( To hold that subsection (a)(2) s absence requirement also applied to traffic signals that had not been installed would nullify subsection (a)(1)[, which] . . . exempts a governmental unit from liability for the failure to initially install a traffic sign or signal as long as its failure . . . was the result of a discretionary action. ).


Indeed, characterizing a failure to initially install a traffic signal as an absence would contravene the Legislature s intent to immunize governmental units from claims based on the failure to initially place signals, provided such failures were the result of discretionary acts. When the City first installs a traffic signal is no less discretionary than whether to install it. The timing of implementation could be affected by the governmental unit s balancing of funding priorities, scheduling, traffic patterns, or other matters; to impose liability for the failure to timely implement a discretionary decision could penalize a governmental unit for engaging in prudent planning and paralyze it from making safety-related decisions. This sort of planning and execution is precisely the type of discretionary act for which the TTCA retains immunity. See Tex. Dep t of Transp. v. Garza, 70 S.W.3d 802, 807 (Tex. 2002) (noting that Legislature intended only a limited waiver of immunity in the TTCA). Thus, when subsections (a)(1) and (a)(2) are read together, (a)(2) logically applies only to those traffic signals that have already been installed.


We used similar reasoning in interpreting the term condition, one of the trilogy of words ( absence, condition, or malfunction ) used in (a)(2) to describe situations in which a governmental unit may face liability for claims involving traffic signals. In Gonzalez, vandals had removed stop signs at an intersection, and a fatal collision occurred soon thereafter. Gonzalez, 82 S.W.3d at 326-27. We considered whether the vandals theft of the stop signs was a condition of the signs (and therefore governed by (a)(2)) or a removal or destruction of the signs (and thus covered by (a)(3)). Id. at 328-30. We concluded it was the latter:


Gonzalez cannot characterize TxDOT s failure to make certain discretionary decisions affecting a stop sign s susceptibility to repeated vandalism as a failure to correct the sign s condition under subsection (a)(2) in order to sue under the Act. . . . To do so would contradict the Legislature s express intent to impose liability in cases involving a third person vandalizing a traffic sign only if the State fails to correct the vandalized sign after receiving actual notice [pursuant to (a)(3)].


Id. at 329.


Both subsections (a)(2) and (a)(3) refer, among other things, to the government s failure to replace a missing traffic device. In (a)(3), the statute provides a safe harbor if the government corrects a traffic device s removal; the safe harbor is provided in (a)(2), if the government corrects the absence of the device. Compare Tex. Civ. Prac. & Rem. Code 101.060(a)(2) with (a)(3). Logically, correct in (a)(3) must be predicated on the prior existence of a traffic device, because it modifies that device s removal, and a failure to correct waives immunity only after the governmental unit has been put on actual notice, presumably of a change in the device s status. So, at least with respect to (a)(3), the Legislature used the word correct to refer to replacing a device that has been removed. The question here is whether correct in (a)(2) similarly requires replacement of a preexisting device after its disappearance. We hold that it must. With respect to the cause of a traffic device s non-presence, there is only one material difference between the subsections. Subsection (a)(3) refers to a third person s intervention, whereas the cause in (a)(2) is not so qualified. Both subsections, however, reflect the Legislature s intent to waive a governmental unit s immunity only if it has been placed on notice of some change in status and fails to correct it within a reasonable time. A traffic signal that never existed as in this case cannot serve to put a governmental unit on notice of something needing correction. Both removal and absence, therefore, presuppose a preexisting device.


Subsection (a)(2) s other terms reinforce this conclusion. We have noted that the Legislature intended liability for a condition to attach only after a traffic signal is in place, as the term implies not just any condition, but only something wrong with the traffic sign or signal such that it would require correction . . . after notice. Garza, 70 S.W.3d at 807 (noting [t]he Legislature s placement of condition in between absence and malfunction, coupled with the language that recants section 101.060(a)(2) s retention of immunity when the condition is not corrected after notice ). Similarly, the Legislature s use of the term malfunction further evidences that (a)(2) was intended to apply only to existing traffic signals, as a signal must be in place before it can malfunction and require correction. See Robles, 51 S.W.3d at 442 ( A traffic . . . signal cannot malfunction if it has never been installed. ).


This interpretation comports with (a)(2) s waiver of immunity only for governmental units that fail to correct problems within a reasonable time after notice. Tex. Civ. Prac. & Rem. Code 101.060(a)(2). This language requires the State to maintain traffic signs in a condition sufficient to perform their intended traffic-control function. Gonzalez, 82 S.W.3d at 327 (emphasis added) (construing (a)(2)). Maintenance involves ongoing caretaking; traffic signs that have not yet been installed cannot be maintained.


It is undisputed that the City s initial decision to install the traffic signal was discretionary. Unquestionably, therefore, the City would have retained immunity had it decided not to install the traffic signal. See Tex. Civ. Prac. & Rem. Code 101.060(a)(1). It makes little sense to waive immunity for a governmental unit that decides to install a signal and is endeavoring to do so. Considering the plain meaning of the statutory terms, the interplay between subsections (a)(1), (a)(2), and (a)(3), and the context within which absence is used in subsection (a)(2), we conclude that an absence requires a prior presence; that is, it does not apply to a governmental unit s initial installation of, or failure to initially install, a traffic signal. To the extent other opinions have held differently, we disapprove them.[5]


III


Conclusion


We reverse in part the court of appeals judgment and render judgment dismissing the case for lack of subject matter jurisdiction. See Tex. R. App. P. 60.2(c).


______________________________


Wallace B. Jefferson


Chief Justice


OPINION DELIVERED: June 16, 2006

[1] The City also contended that Trevino did not give statutorily required notice and that the City s placement of traffic control devices to the left of the intersection (which Sipes alleged obstructed her vision) did not proximately cause the accident. 146 S.W.3d at 277, 281-84.


[2] Sipes did not file a petition for review.


[3] See, e.g., Tex. Dept. of Criminal Justice v. Miller, 51 S.W.3d 583, 589-93 (Tex. 2001) (Hecht, J., concurring); id. at 593 95 (Enoch, J., dissenting); Univ. of Tex. Med. Branch v. York, 871 S.W.2d 175, 177 (Tex. 1994); Lowe v. Tex. Tech Univ., 540 S.W.2d 297, 301-03 (Tex. 1976) (Greenhill, C.J., concurring)


[4] In Tex. Dep t of Transp. v. Garza, 70 S.W.3d 802, 807 (Tex. 2002), we described the sign at issue in Alvarado as present[ing] a condition within the meaning of the . . . Act.


[5] See Ihlo v. State, 71 S.W.3d 494, 495-96 (Tex. App. Austin 2002, no pet.); Tex. Dep t of Transp. v. Bederka, 36 S.W.3d 266, 271-72 (Tex. App. Beaumont 2001, no pet.); City of Fort Worth v. Robles, 51 S.W.3d 436, 443 (Tex. App. Fort Worth 2001, pet. denied); Reyes v. City of Houston, 4 S.W.3d 459, 462 (Tex. App. Houston [1st Dist.] 1999, pet. denied); Zambory v. City of Dallas, 838 S.W.2d 580, 583 (Tex. App. Dallas 1992, writ denied).




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 new office location is 5601 Bridge Street, Suite 300, Fort Worth, Texas 76112.

Martindale AVtexas[2]


		
	






	
	
		
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