HYLA CLE Presentation Things Every Associate Should Know (Because the Partner and Client May Not) Presented by: David Stockel and Kasi Chadwick

1. Things Every Associate Should Know
(Because the Partner and Client May Not)
Presented by:
David Stockel and Kasi Chadwick
BoyarMiller
713.850.7766
dstockel@boyarmiller.com
kchadwick@boyarmiller.com
HYLA CLE Presentation October 15, 2014

2. TOPICS TO COVER
 Rule 91a Motions to Dismiss
 Rule 202 Depositions Before Suit and Tolling of Statutes
of Limitations
 2014 Changes to the Texas Rules of Civil Procedure
(Service of Documents)
 Anti-SLAPP Motions to Dismiss (TEX. CIV. PRAC. & REM.
CODE 27.001, et. seq.)
 Current State of Shareholder Oppression Law in Texas
 Recent Changes Surrounding Spoliation Instructions
and Sanctions

3. RULE 91a
MOTIONS TO DISMISS

4. RULE 91a MOTIONS TO DISMISS
 Under Rule 91a, a party may move to dismiss a cause
of action that has “no basis in law or fact”
– A claim has no basis in law if the allegations, taken as
true, together with any reasonable inference, “do not
entitle the claimant to relief”
– A claim has no basis in fact if “no reasonable person
could believe the facts pleaded”

5. RULE 91a MOTIONS TO DISMISS
 A Rule 91a movant must file their motion to dismiss within 60
days after the first pleading is filed and at least 21 days
before the hearing on the motion
 Each party is entitled to at least 14 days notice of the hearing
 The non-movant’s response is due 7 days before the hearing
 If the non-movant amends the cause of action at issue at
least 3 days before the hearing, the movant may withdraw or
amend the motion to dismiss
 If the non-movant nonsuits the challenged cause of action at
least 3 days before the hearing, the Court may not rule on
the motion

6. RULE 91a MOTIONS TO DISMISS
 The Court must rule on the motion (grant or deny) within
45 days after the motion is filed
 No evidence may be considered – the Court must
decide based solely on the pleadings
 The motion may be decided on written submissions
(Court’s discretion)

7. RULE 91a MOTIONS TO DISMISS
 Rule 91a contains a MANDATORY fee award for the
prevailing party
 The prevailing party must be awarded all costs and
reasonable/necessary attorney’s fees incurred
 The Court must consider evidence regarding costs in
deciding the amount of the mandatory fee award

8. RULE 91a MOTIONS TO DISMISS
 Rule 91a does not affect the order of pleadings under
the Texas Rules of Civil Procedure
 By filing a Rule 91a Motion to Dismiss, a party does not
waive a special appearance or motion to transfer venue
― By filing a Rule 91a Motion, a party submits to the Court’s
jurisdiction only in proceedings on the Motion

9. RULE 202 DEPOSITIONS
BEFORE SUIT AND
STATUTES OF LIMITATIONS

10. RULE 202 DEPOSITIONS BEFORE SUIT
 A person may petition the court for an order authorizing
the taking of a deposition on oral examination or written
questions either:
(1) to perpetuate or obtain the person’s own testimony or that of any
other person for use in an anticipated suit; or
(2) to investigate a potential claim or suit.
Tex. R. Civ. P. 202.1.

11. RULE 202 and STATUTES OF LIMITATIONS
 At least one Texas Court has found that the filing of a
Rule 202 Petition can toll statutes of limitations for an
underlying cause of action
– See Lee v. GST Transp. Sys. 334 S.W.3rd 16 (Tex. App—Dallas 2008,
pet. denied)
 “Relation-Back” Doctrine (Tex. Civ. Prac. & Rem. Code
§16.068)
– If a filed pleading relates to a cause of action, cross action,
counterclaim, or defense that is not subject to a plea of limitation when
the pleading is filed, a subsequent amendment or supplement to the
pleading that changes the facts or grounds of liability or defense is not
subject to a plea of limitation unless the amendment or supplement is
wholly based on a new, distinct or different transaction or occurrence

12. RULE 202 & THE STATUTE OF LIMITATIONS
 Per Lee, the filing of a Rule 202 Petition triggers the
“Relation-Back” Doctrine
– Effectively tolls the statute of limitations while a potential claim is
investigated
 Lee suggests that if a cause of action will be lost on
statue of limitations grounds, as long as cause of action
is not “wholly based on a new, distinct, or different
transaction or occurrence,” the filing of a Rule 202
Petition can preserve that claim

13. 2014 CHANGES TO THE
TEXAS RULES OF
CIVIL PROCEDURE –
SERVICE OF DOCUMENTS

14. SERVICE OF DOCUMENTS
 Prior to the changes, when a document was served on
another party via fax, three days were added to the time
for that party to respond
– After the changes, three days are not added if the item is received via
fax (TEX. R. CIV. P. 4 and 21a(c))
 Every pleading now requires at least one attorney’s e-mail
address in the signature block on documents that
are electronically filed (TEX. R. CIV. P. 57)
 Service of documents on other lawyers is permitted via
e-mail at the e-mail address provided in the signature
block (TEX. R. CIV. P. 21a(a)(2))
– Three days are not added to the response time

15. SERVICE OF DOCUMENTS
 Items that are not electronically filed may also be served
via commercial delivery service (Fed-Ex, UPS, etc.)
(TEX. R. CIV. P. 21a(a)(2))
 Items that are electronically filed are considered timely
when filed any time before midnight in the Court’s time
zone (TEX. R. CIV. P. 21(f)(5)
 Electronic filing of documents is now required in courts
where e-filing has been mandated
– Electronic service is considered complete when the item is served on
the serving party’s electronic filing service provider

16. ANTI-SLAPP MOTIONS TO
DISMISS THE TEXAS CITIZENS
PARTICIPATION ACT

17. MOTIONS TO DISMISS UNDER THE TCPA
 Allows a Court to dismiss a frivolously filed lawsuit that
is “based on, relate[d] to, or is in response to a party’s
exercise of the right of free speech, right to petition, or
right of association”
 “[E]xercise of the right of free speech,” “right to petition,”
and “right of association” are broadly defined under the
TCPA

18. MOTIONS TO DISMISS UNDER THE TCPA
 “[E]xercise of the right to free speech”
– “[A] communication made in connection with a matter of public
concern”
 “[E]xercise of the right of association”
– “[A] communication between individuals who join together to
collectively express, promote, pursue, or defend common interests”
 “[E]xercise of the right to petition”
– “[A] communication in or pertaining to (i) a judicial proceeding…”
• When there are parallel cases going on simultaneously, one case
might be dismissed if the second cause of action is based on a
communication made in the first

19. MOTIONS TO DISMISS UNDER THE TCPA
 Initial burden on the TCPA movant to show that the
lawsuit was filed in response to the movant’s exercise of
her First Amendment Rights (speech, petition,
association)
 Burden then shifts to non-movant to establish by “clear
and specific” evidence a prima facie case for each
essential element of her claim
 Forces the non-movant to produce evidence before
discovery has been conducted

20. MOTIONS TO DISMISS UNDER THE TCPA
 TCPA Movant - Mandatory fee shifting when a TCPA
movant prevails on their TCPA motion
 TCPA Non-Movant - Discretionary fee award if the Court
finds the TCPA motion was frivolous when brought or
brought solely for the purpose of delaying the
proceedings

21. MOTIONS TO DISMISS UNDER THE TCPA
 Immediate right to expedited appeal if TCPA motion to
dismiss is denied
 Statute applies to counterclaims that implicate the
movant’s First Amendment rights

22. CURRENT STATE
OF SHAREHOLDER
OPPRESSION CLAIMS

23. SHAREHOLDER OPPRESSION IN TEXAS
 The Supreme Court’s decision in Ritchie v. Rupe
dramatically changed the state of shareholder
oppression claims in Texas
 The Court found there is no common law cause of
action for minority shareholder oppression
 No judicially mandated, forced buy-out of the minority
shareholder's interest

24. SHAREHOLDER OPPRESSION IN TEXAS
 Shareholder oppression type behavior:
– failure to allow access to books and records of the corporation;
– improper declaration of dividends;
– termination of employment;
– improper use of corporate funds and diversion of corporate
opportunities; and/or
– manipulation of stock values

25. SHAREHOLDER OPPRESSION IN TEXAS
 Supreme Court’s existing remedies and protections
– TBOC states that shareholders can initiate proceedings to enforce
close corporation provisions, seek appointment of a provisional
director, or appoint a custodian. See Tex. Bus. Orgs. Code §§
21.701-.732, 21.751-.763
– Section 21.563 reduces the burden on shareholders in closely held
corporations to bring a shareholder derivative suit
– Contract claims based on the shareholder agreements
– Common-law actions: (1) an accounting, (2) breach of fiduciary duty,
(3) breach of contract, (4) fraud and constructive fraud, (5) conversion,
(6) fraudulent transfer, (7) conspiracy, (8) unjust enrichment, and (9)
quantum meruit

26. SHAREHOLDER OPPRESSION IN TEXAS
 Aside from denying the existence of a common law
cause of action for oppression, the Court acknowledged
significant hurdles to establish a shareholder
oppression action
– Business judgment rule
– Elements of intent and actual risk of harm into “oppression”
– Receivership only allowed if no other adequate remedy exists
• Receivership can be expensive and time-consuming; likely not a
favorable outcome for a minority shareholder

27. SHAREHOLDER OPPRESSION IN TEXAS
 Implications
– Minority shareholders in a close corporation would do well to protect
themselves on the front end with contractual protections built into the
shareholder agreements
• E.g., buyout provisions

28. CHANGES IN THE LAW
SURROUNDING SPOLIATION
INSTRUCTIONS AND SANCTIONS

29. SPOLIATION INSTRUCTION & SANCTIONS
 In Brookshire Brothers v. Aldridge, 2014 Tex. LEXIS 562
(July 3, 2014), Supreme Court changed framework
under which a spoliation instruction may be issued
 Aldridge slip and fell in a Brookshire Brothers Store and
store had fall on videotape
 Brookshire Brothers retained the requested portion of
video footage of the plaintiff's fall, but allowed additional
footage to be automatically erased
 Supreme Court found a spoliation instruction was not
warranted here using the two step analysis it developed

30. BEFORE BROOKSHIRE BROTHERS
Two basic frameworks:
 Justice Baker’s concurring opinion in Trevino v. Ortega
– A party may be entitled to a remedy for the opposing party’s
spoliation of evidence if:
• the party who destroyed or failed to produce evidence had a
duty to preserve it;
• the party either negligently or intentionally breached that duty
by destroying the evidence or rendering it unavailable; and
• the breach prejudiced the nonspoliating party.
 Wal-Mart Stores, Inc. v. Johnson
– Spoliation instructions are permitted if:
• a party deliberately destroys relevant evidence; or
• the party fails to produce relevant evidence or explain its
nonproduction

31. AFTER BROOKSHIRE BROTHERS
 Texas Supreme Court holds that spoliation analysis
involves a two step process:
– the trial court must determine, as a question of law, whether a party
spoliated evidence; and
– if spoliation occurred, the court must assess an appropriate remedy.
 Evidentiary hearing must be outside jury’s presence

32. DID A PARTY SPOLIATE EVIDENCE?
 Did the spoliating party have a duty to reasonably preserve
evidence?
– Yes, if the party knew or reasonably should know there is a substantial
chance that a claim will be filed and that evidence in its possession or
control will be material and relevant to the litigation
 Did the spoliating party intentionally or negligently breach that duty
by failing to preserve material and relevant evidence?

33. REMEDY FOR SPOLIATION
 The remedy must have a direct relationship to the act of spoliation
and may not be excessive
– Award of attorney’s fees or costs
– Exclusion of evidence
– Striking a party’s pleadings
– Dismissing a party’s claims
– Any other remedy the trial court deems appropriate
• Culpability vs. Prejudice

34. WHEN IS A SPOLIATION INSTRUCTION AN
APPROPRIATE REMEDY?
 A party must intentionally spoliate evidence in order for a spoliation
instruction to constitute an appropriate remedy
 Caveat: If the act of spoliation, although merely negligent, so
prejudices the nonspoliating party that it is irreparably deprived of
having any meaningful ability to present a claim or defense, a
spoliation instruction may not be excessive
– E.g., there is no other way for a party to present their case without the
spoliated evidence
 Generally, evidence of spoliation is not admissible

35. Questions?
David Stockel and Kasi Chadwick
BoyarMiller
713.850.7766
dstockel@boyarmiller.com │ kchadwick@boyarmiller.com