In this case, insurance agents C. Daniel Hurlbut and A.C. Hovater sued their former employer Gulf Atlantic Life Insurance Company and related defendants for fraud, business disparagement, and tortious interference with contract rights arising from the collapse of a group health insurance trust arrangement in 1974-1975. A jury awarded the plaintiffs actual and exemplary damages, but the court of appeals reversed and rendered judgment for the defendants on the ground that all claims were barred by the two-year statute of limitations. The Texas Supreme Court reversed the court of appeals, holding that the evidence raised a fact issue on when the plaintiffs should reasonably have discovered the defendants' alleged fraud, which affects the running of limitations. The court remanded the case for a new trial because the court of appeals had also concluded that the great weight of the evidence showed the fraud should have been discovered more than two years before suit was filed.

torts & liabilitybusiness & regulatoryprocedure

This case concerned ownership of an undivided one-half mineral interest in land originally mortgaged by the Scotts to Kocurek via a deed of trust in 1922. The Scotts later conveyed that half-mineral interest to Flag-Redfern's predecessors in 1931, then in 1932 deeded the full property to Kocurek in satisfaction of the debt; after further conveyances, Humble claimed the interest through Kocurek and sought a declaratory judgment. The trial court and court of appeals ruled for Humble, treating the 1932 deed as a deed in lieu of foreclosure that cut off Flag-Redfern's rights. The Texas Supreme Court reversed, holding that the deed did not extinguish Flag-Redfern's legal title because the instrument was a mortgage (not a vendor's lien), the Scotts no longer owned the full legal estate after their prior conveyance, and no merger occurred; formal foreclosure proceedings with notice would have been required to affect the intervening purchaser's interest.

property

This oil and gas case concerned whether lessee-operator Cabot Corporation breached an implied duty under its 1967 lease with lessors Martha Brown and others to reasonably market gas from the Kelln Well, where royalties were to be based on market value at the well. Cabot had entered an exchange agreement sending the gas into an interstate pipeline system subject to Federal Power Commission pricing jurisdiction, paid royalties at the lower regulated rates, and obtained a Henshaw exemption allowing some intrastate sales at higher prices without sharing those benefits with the royalty owners. Brown sued claiming the gas was not dedicated to interstate commerce or, alternatively, that Cabot should have sought FPC abandonment to market at higher prices; a jury found for Brown, and the trial court and court of appeals affirmed a damages award. The Texas Supreme Court reversed and rendered in part and remanded in part, focusing on the impact of the division orders, the applicability of FPC jurisdiction, and the scope of the implied marketing covenant in light of federal regulatory constraints.

propertybusiness & regulatoryfederal power

This case involved a claim of negligent entrustment after an employee of Esperanza Transmission Company, who had a record of speeding tickets, allowed an intoxicated companion to drive the company truck, resulting in a collision that injured Barry Schneider. Schneider sued Esperanza for negligence and gross negligence in entrusting the vehicle to the employee and sought actual and punitive damages. The trial court awarded damages based on the jury's findings, but the court of appeals reversed and rendered a take-nothing judgment. The Texas Supreme Court affirmed, holding that proximate cause was lacking because the employee was not driving at the time of the accident and there was no evidence that Esperanza knew or should have known of the employee's propensity to entrust the vehicle to an incompetent driver. The Court explained that negligent entrustment liability requires entrustment to an unlicensed, incompetent, or reckless driver who then negligently causes the accident, without imputing negligence from subsequent acts like those in joint venture cases.

torts & liability

In this mandamus proceeding, police officers J.E. Hobson and David Lott sought to overturn a trial court order compelling them to answer interrogatories in a civil lawsuit filed by Marlon Ray Davis concerning the officers' investigation into thefts of heavy equipment. The officers asserted that the requested information was privileged under the Texas Open Records Act because it related to an ongoing criminal investigation. The Texas Supreme Court recognized a privilege for law enforcement investigation records in civil cases but held that it had been waived. The court reasoned that objections to interrogatories are due within thirty days of service under Texas Rule of Civil Procedure 168(6), and the officers' six-day-late response without seeking an extension or showing good cause constituted a waiver of any privilege. The court therefore denied mandamus relief.

procedurecriminal law

This case involved a homeowner who sued a contractor and its assignee bank for damages after defective rock siding was installed under a retail installment contract, alleging violations of the Deceptive Trade Practices Act. The trial court entered a joint and several judgment against both defendants for $25,000 plus attorney's fees and voided the note, which the court of appeals affirmed on the ground that the FTC holder rule preserved all claims and defenses against the assignee. The Texas Supreme Court reversed as to the assignee's liability, holding that the FTC-mandated notice provision in the contract expressly limited any affirmative recovery against the assignee to the amounts the buyer had already paid ($1,256.90). The court reasoned that the FTC rule reallocates seller misconduct costs to the creditor-assignee but caps affirmative recovery at payments made, while preserving any greater rights available under state law only if separately pleaded and proved.

business & regulatorytorts & liability