The case involved Perry Equipment Corporation (PECO) suing accounting firm Arthur Andersen for a faulty audit of Maloney Pipeline Systems, which PECO relied on when purchasing the company that later went bankrupt; PECO brought claims under the Deceptive Trade Practices Act (DTPA), fraud, negligence, and breach of warranty. The trial court entered judgment for PECO based on the jury verdict, which the court of appeals affirmed. The Texas Supreme Court held that PECO qualified as a DTPA consumer because it was the beneficiary of the audit services procured as a condition of the sale, even though it did not pay for them directly. The court reversed and remanded, however, because the jury charge failed to instruct on the proper measure of damages and because the award of attorney's fees was improperly based on a percentage of recovery rather than a specific dollar amount supported by evidence of reasonableness and necessity under the DTPA.
This case involved a homeowner who sued her insurance company for breach of contract and bad faith after the insurer denied a claim for foundation damage caused by a water leak. The insurer moved to sever the contract claim from the bad faith claim and abate the latter until the former was resolved, arguing that certain evidence would prejudice its defense on the contract issue. The trial court denied the motions, and the Texas Supreme Court considered whether this was an abuse of discretion in a mandamus proceeding. The Court held that the trial court acted within its discretion, reasoning that the claims are independent but bad faith typically requires a showing of contract breach, severance is not required in every instance, and the rules give trial courts broad discretion over severance without a clear showing of undue prejudice such as from settlement offers.
This case involved a proposed class action settlement in Texas state court on behalf of approximately 645,000 owners of certain 1978-1991 GMC and Chevrolet pickup trucks, who alleged that the trucks' side-mounted gas tanks reduced the vehicles' market value due to heightened fire risk in side-impact collisions; the plaintiffs sought only economic damages and expressly disclaimed personal injury claims. The trial court certified the class for settlement purposes only and approved an agreement under which class members could receive $1,000 certificates (or $500 nontransferable certificates) redeemable toward the purchase of new GM vehicles, in exchange for releasing claims against GM related to the fuel system design. The court of appeals reversed, holding that the trial court abused its discretion, and the Texas Supreme Court affirmed that ruling, concluding that the record lacked sufficient findings on the fairness, adequacy, and reasonableness of the settlement and that the class notice was deficient for failing to disclose the amount of requested attorney's fees. The court reasoned that Texas Rule of Civil Procedure 42(e) requires careful judicial scrutiny of class settlements to protect absent class members, particularly where class counsel's interests may conflict with those of the class, and remanded for further proceedings including evidence on the necessity and reasonableness of the fees.
In Ford Motor Co. v. Leggat, Ford sought mandamus relief from a trial court order compelling production of documents and information in a products liability suit stemming from a fatal Bronco II rollover on Interstate 45. The disputed items included a 1982 in-house counsel report to Ford's Policy and Strategy Committee, technical data prepared by engineers at the request of outside counsel, and settlement amounts paid in other Bronco II rollover cases. The Texas Supreme Court conditionally granted the writ, concluding the trial court abused its discretion because the materials were protected by attorney-client privilege or the work-product doctrine, the settlement figures were irrelevant to the claims, and Ford lacked an adequate appellate remedy.
The case involved homeowners who sued a real estate developer for property damage from repeated flooding, which they attributed to the developer's later negligent regrading and construction activities in an adjacent section of a master-planned community years after the lot was sold; the homeowners asserted claims under the Texas Deceptive Trade Practices Act for breach of an implied warranty to perform development services in a good and workmanlike manner and for unconscionable conduct, in addition to negligence and other theories. The Texas Supreme Court rejected the DTPA claims, reformed the judgment to eliminate all DTPA-based damages including additional damages and attorney's fees, and deleted a duplicative portion of the property damage award. It affirmed the negligence-based actual damages and out-of-pocket expenses, while upholding the deletion of mental anguish damages. The court's reasoning centered on the conclusion that no implied warranty applied to the developer's services in this context and that the evidence did not support unconscionability or mental anguish under Texas law.
In Mafrige v. Ross, plaintiffs sued multiple defendants for tort claims including malicious prosecution and negligence arising from prior federal litigation, and the trial court granted several motions for summary judgment using language stating that plaintiffs take nothing against the defendants. The court of appeals dismissed the appeal for want of jurisdiction, concluding the judgments were interlocutory because some motions did not address all causes of action and no severance had occurred. The Texas Supreme Court reversed, holding that inclusion of Mother Hubbard language or its equivalent in a summary judgment order makes the judgment final for appeal purposes even if it disposes of claims not addressed in the motions. The Court reasoned that orders appearing final on their face should be treated as appealable, with any improper granting of relief resolved on the merits rather than through jurisdictional dismissal.
