Dallas Bar Association
HEADNOTES
Focus Real Property/Construction Law
August 2014 Volume 39 Number 8
Inspiring Women VII
The DBA hosted the seventh annual “Inspiring Women” luncheon on Wednesday, July 16. More than 550 members of the Dallas legal community came to hear inspiring stories from a panel of esteemed women lawyers who related humorous and honest insights into professionalism and how they have reached the pinnacles in their careers. Those participating in the panel included (Back row, left to right) Beverly Bell Godbey, Gardere Wynne Sewell LLP; Judge Irma C. Ramirez, U.S. Magistrate Judge, Northern District of Texas; Judge Brenda Rhoades, U.S. Bankruptcy Chief Judge, Eastern District of Texas; Marilea Lewis, Godwin Lewis. (Front row, left to right) Karen Gren Scholer, Carter Scholer Arnett Hamada & Mockler, PLLC; Elizabeth Dane, ORIX USA Corporation; and Jill Lewis, FleetPride, Inc.
DBA Wins State Bar Awards
The DBA received several awards at the State Bar of Texas Annual Meeting in June, including the Award of Merit for best overall programs, Outstanding Partnership Award and two Star of Achievements. Headnotes was recognized in all publications categories, including Best Overall Newsletter. (Left to right) DBA Executive Director Cathy Maher, SBOT President Lisa Tatum and DBA President Scott McElhaney.
Focus
Real Property & Construction Law
A Construction Defect Damages Your Client’s Property, Now What? by David Fisk and Anne Cook
A construction defect can mean any issue relating to the design, construction, or repair of a structure, including any physical damage to the structure caused by the defect. Even with insurance in place an owner can have a significant uninsured loss and may need assistance in understanding the claim process and initial steps to take after damage from a construction defect is discovered. First, the owner should immediately notify its property insurer of the loss. Once notified, a property insurer typically will conduct an investigation into the cause of the damage to determine, among other things, if there is a third-party responsible for causing the damage. Immediate notification of the loss helps protect the insurer’s subrogation interest—the insurer’s right, once a payment has been made under a policy, to seek recovery of damages from a thirdparty. The owner also may have an interest in protecting its right to recover the uninsured loss from the responsible party. To lessen the impact of the loss and prevent further damage, most owners want to begin repairs immediately. However, preserving evidence is of critical importance after
Inside 3 Avoiding Subcontractor Lien Liability 5 Construction Indemnification & the Anti-Indemnification Statute 9 Fifth Circuit’s Lodestar to Maximize Title Insurance Coverage
a defect is discovered. The owner needs to balance the duty of exercising reasonable care to minimize damages with the importance of not performing repairs that destroy evidence of the construction defect. Unless there is an imminent threat to health or safety, or immediate repair work is necessary to prevent further damage, the best course of action is to hold off making repairs until all interested parties have been given notice and the opportunity to inspect the property. Within a few days after receiving notice of the loss, a property insurer normally will conduct a preliminary investigation into the cause of a loss. Owners with high deductibles or large self-insured retentions may want to be more involved in the investigation and retention of qualified experts. If the preliminary investigation indicates a third-party may have caused or contributed to cause the loss, the property insurer will typically notify that party and give them the opportunity to participate in the investigation or observe the condition of the property. The process of identifying and notifying the interested parties can take time, but the owner can speed up the process continued on page 6
The 2014 DBA Membership Directory is now available in print & online. Check out the directory and legal resource guide used by Dallas attorneys! To view the Online Directory and Legal Resource & Expert Witness Guide, go to www.dallasbar.org/pictorial and login. To request a copy of the new directory, contact pictorial@dallasbar.org.
2 He a d n o t e s l D a l l a s B a r A s s o ciation
A ugust 2014
Calendar August Events FRIDAY CLINICS
AUGUST 1-BELO Noon
Visit www.dallasbar.org for updates on Friday Clinics and other CLEs.
“Avoiding Legal Malpractice: Traps for the Unwary,” Randy Johnston. (Ethics 1.00)*. RSVP to kzack@ dallasbar.org.
AUGUST 8-NORTH DALLAS** Noon
“Shoulder to Shoulder: Equipping Attorneys to Recognize and Assist Fellow Attorneys in Crisis,” Brian Farlow and Steve Kelly. (Ethics 1.00)* At Two Lincoln Centre, 5420 Lyndon B. Johnson Frwy., Ste. 240, Dallas, TX 75240. Parking is available in the Visitor’s Lot located in front of the entrance to Two and Three Lincoln Centre. There are several delis within the building. Food is allowed inside the Conference Center. Thank you to our sponsor The Dallas Bar Foundation. RSVP to kzack@dallasbar.org.
AUGUST 15-BELO Noon
“Personal Injury or Death: When Is It A Product Liability Case?” Leon Russell. (MCLE 1.00)* RSVP to kzack@dallasbar.org.
FRIDAY, AUGUST 1 Noon
Friday Clinic at Belo “Avoiding Legal Malpractice: Traps for the Unwary,” Randy Johnston. (Ethics 1.00)* RSVP to kzack@dallasbar.org. Dismantling the Schools to Prison Pipeline “Turn This School Around,” Linda CliattWayman, Principal, Strawberry Mansion High School. (MCLE 1.00)* A special CLE presentation celebrating the 60th anniversary of Brown v. Board of Education. RSVP to mjohnson@dallasbar.org.
MONDAY, AUGUST 4 Noon
Tax Law Section “Passive Activity and Hobby Loss Limitations: Withstanding an IRS Attack of Your Client’s Outside Business Activities Under IRC Section 469 & 183,” Mary Wood. (MCLE 1.00)*
Juvenile Justice Committee
Public Forum Committee
DAYL Judiciary Committee
5:30 p.m. Bankruptcy & Commercial Law Section Topic Not Yet Available
THURSDAY, AUGUST 7 Noon
TUESDAY, AUGUST 5 Noon
Business Litigation Section “The Mockingbird Next Door: Life With Harper Lee,” Marja Mills. (Ethics 1.00)*
Tort & Insurance Practice Section “Appellate Standards of Review,” Brent Cooper. (MCLE 1.00)*
6:00 p.m. DAYL Board of Director’s Meeting
WEDNESDAY, AUGUST 6 Noon
Employee Benefits & Executive Compensation Law Section Topic Not Yet Available
Solo & Small Firm Section “Ethical and Malpractice Issues in Contracting with Clients and Collecting Fees,” Jett Hanna. (Ethics 1.00)*
Construction Section “Product Liability Issues in Construction Defect Litigation,” John Slates. (MCLE 1.00)* Judiciary Committee “How Social Media Affects Lawyers, Judges and Juries: Tips to Avoid Disaster,” John Browning and Judge Tonya Parker. (Ethics 1.00)* Public Forum “Connecting Dallas Beyond the Automobile: A Roadmap of Transportation Options in Dallas,” Ashley Haire, Leandre Johns, Patrick Kennedy, Gary Thomas and Hon. Margaret Keliher. (MCLE 1.00)* RSVP to sevans@ dallasbar.org.
Friday Clinic-North Dallas** “Shoulder to Shoulder: Equipping Attorneys
6:00 p.m. J.L. Turner Legal Association
Trial Skills Section “Effective Use of Documentary Evidence in Pre Trial Deposition Examinations,” Susan M. Halpern. (MCLE 1.00)*
MONDAY, AUGUST 18
FRIDAY, AUGUST 15 Noon
Energy Law Section Seminar 29th Annual Review of Oil & Gas Law. Two-day event. For more information, or to register, log on to www.reviewofoilandgaslaw.com.
Friday Clinic at Belo “Personal Injury or Death: When Is It A Product Liability Case?” Leon Russell. (MCLE 1.00)* RSVP to kzack@dallasbar.org.
Noon
Labor & Employment Law Section “Hot Topics in FMLA Law,” Mike Birrer and Angelina LaPenotiere. (MCLE 1.00)*
Senior Lawyers Committee
DAYL Freedom Run Committee
MONDAY, AUGUST 11 Noon
Alternative Dispute Resolution Section Topic Not Yet Available
Peer Assistance Committee
TUESDAY, AUGUST 12
TUESDAY, AUGUST 19 Noon
Franchise & Distribution Law Section “Choice of Law; Choice of Forum,”Christianne Edlund and Maral Kilejian. (MCLE 1.00)*
Speakers Committee DAYL Elder Law Committee
Noon
DAYL Lawyers Promoting Diversity Committee
DAYL Young Partners Committee
WEDNESDAY, AUGUST 20
WEDNESDAY, AUGUST 13
Noon
Health Law Section “Health Care and Uncompensated Care – A Dallas County Snapshot and Key Legal Considerations for Medical Practitioners,” Hon. Clay Jenkins and Evangeline Lalangas. (MCLE 1.00)*
Pro Bono Activities Committee
DAYL Solo & Small Firm CLE. For more information, email cherieh@dayl.com.
11:30 a.m. House Committee Walk Through Noon
Bench Bar Conference Committee
Library Committee
DAYL Lunch & Learn CLE. For more information, email cherieh@dayl.com.
5:15 p.m. Legalline. Volunteers welcome. Second floor Belo.
THURSDAY, AUGUST 14 Noon
Energy Law Section Seminar 29th Annual Review of Oil & Gas Law. Two-day event. For more information, or to register, log on to www. reviewofoilandgaslaw.com.
Lawyer Referral Service Committee
FRIDAY, AUGUST 8 Noon
to Recognize and Assist Fellow Attorneys in Crisis,” Brian Farlow and Steve Kelly. (Ethics 1.00)* At Two Lincoln Centre, 5420 Lyndon B. Johnson Frwy., Ste. 240, Dallas, TX 75240. Parking is available in the Visitor’s Lot located in front of the entrance to Two and Three Lincoln Centre. There are several delis within the building. Food is allowed inside the Conference Center. Thank you to our sponsor The Dallas Bar Foundation. RSVP to kzack@ dallasbar.org.
CLE Committee
Publications Committee
5:15 p.m. Legalline. Volunteers welcome. Second floor Belo.
THURSDAY, AUGUST 21 Noon
DAYL Animal Welfare Committee
Christian Legal Society
Dallas Gay & Lesbian Bar Association
3:30 p.m. DBA Board of Directors Meeting
FRIDAY, AUGUST 22 Noon
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DVAP Bankruptcy Chapter 7 CLE Hon. Stacey G.C. Jernigan, Jim Rea and Marc Taubenfeld. (MCLE 1.50). Contact reed-brownc@ lanwt.org to register.
MONDAY, AUGUST 25
Hc legal search (214) 522-2020 www.hclegalsearch.com Hiring Made Simple
Intellectual Property Law Section “Patent Preferences and Pet Peeves: What I Know Now as a Judge That I Didn’t Know as a Lawyer,” Judge Barbara M.G. Lynn. (Ethics 1.00)*
Reporting & Litigation Services
Millennium Settlements (469) 644-5747 www.msettlements.com
Structured Settlements, Special Needs Trusts, Medicare Set-Aside Trusts, Lien Resolution
Wendy Ward Roberts (972) 494-2000 www.texascourtreporters.net Certified Shorthand Reporters
Noon
Computer Law Section Topic Not Yet Available
DAYL Solo & Small Firm Committee
TUESDAY, AUGUST 26 Noon
American Immigration Lawyers Association
6:00 p.m. Dallas Hispanic Bar Association
WEDNESDAY, AUGUST 27 Noon
Sports & Entertainment Law Section “Issues in Licensing for Entertainment and Sports Collectibles,” Ted Barker. (MCLE 1.00)* DAYL Equal Access to Justice Committee
DAYL Foundation Board Meeting
DVAP New Lawyer Luncheon. To RSVP, contact reed-brownc@lanwt.org.
Municipal Justice Bar Association
THURSDAY, AUGUST 28 Noon
Collaborative Law Section Topic Not Yet Available
Criminal Law Section “Lab Errors in Blood Discovery for DWI Cases,” Deandra Grant. (MCLE 1.00)*
Environmental Law Section “Shale Gas Development/Hydraulic Fracturing Lawsuits vs. Conventional Oil & Gas Operations Lawsuits,” John Connor. (MCLE 1.00)*
FRIDAY, AUGUST 29 Noon
DAYL CLE Committee
If special arrangements are required for a person with disabilities to attend a particular seminar, please contact Cathy Maher at 214/220-7401 as soon as possible and no later than two business days before the seminar. All Continuing Legal Education Programs Co-Sponsored by the DALLAS BAR FOUNDATION. *For confirmation of State Bar of Texas MCLE approval, please call Teddi Rivas at the DBA office at 214/220-7447. **For information on the location of this month’s North Dallas Friday Clinic, contact KZack@dallasbar.org.
Augu st 2 0 1 4
Focus
D al l as Bar A ssoci ati on l Headnotes 3
Real Property & Construction Law
Commercial Construction: Avoiding Subcontractor Lien Liability by Sarah B. Sparling and Lawrence E. Henke
Under Texas law, a subcontractor enjoys no direct lien rights against the owner’s commercial property. Instead, a subcontractor must rely upon statutory, derivative rights to collect funds due from the general contractor (GC) or, failing that, impose a lien on the property. Stolz v. Honeycutt, 42 S.W.3d 305, 310 (Tex. App.-- Houston [14th Dist.] 2001, no pet.). An owner of commercial real estate is typically only liable to a subcontractor for an amount equaling “retained” and “trapped” funds. By carefully following the trapping and retainage provisions of the Texas Property Code, an owner can avoid liability to subcontractors and likewise avoid subcontractor liens. Throughout a construction project, and for 30 days after the work is completed, an owner must retain either 10 percent of the contract price or 10 percent of the value of the work (Retained Funds). Tex. Prop. Code §53.101. The Retained Funds secure the payment of subcontractors and others who provided material, labor and service for any contractor, subcontractor, agent or receiver in the performance of the work. If an owner fails to retain the 10 percent, an owner may become personally liable to the subcontractor, despite payment to the GC. Furthermore, if the owner receives a notice letter from the subcontractor that he has not been paid by GC, the claimant has “trapped” those funds and the owner may withhold payment to the GC in an amount sufficient to cover the claim for which he received notice. In the case of a lien by a subcontractor, the owner should determine whether the claimant perfected the lien pursuant to the stringent notice and timing
Connecting Dallas Beyond the Automobile: A Roadmap of Transportation Options in Dallas
Thursday, August 7, Noon at Belo Speakers: Ashley Haire, City of Dallas Leandre Johns, General Manager, Uber Patrick Kennedy, Urban Design Gary Thomas, President, DART Hon. Margaret Keliher, Texas Business for Clean Air, Moderator Open to the public. | MCLE 1.00 (pending) RSVP to sevans@dallasbar.org. Sponsored by the Public Forum Committee
Do You Want to Refresh Your Spanish? Spanish for Lawyers is the Answer! 10-Week Fall Course | $180 September 2-November 4, 2014 All courses are a continuation of spring semester. For more information, contact Teddi Rivas at trivas@dallasbar.org or (214) 220-7447.
requirements set forth in Chapter 53 of the Texas Property Code. The property owner should first establish whether he received proper notice. For a supplier to perfect a statutory lien, the first-tier subcontractor must send a letter by certified mail, return receipt requested, to the owner and the original contractor informing them of the unpaid claim not later than the 15th day of the third calendar month following each month in which labor was performed or material delivered. Tex. Prop. Code §53.056(a) and (b). For example, if the subcontractor was not paid from the months of July through December and sent proper timely notices for each of the months except the month of August, the lien was not properly perfected. A claimant is limited in its lien to the amount of funds he is able to trap by providing proper notice to the property owner. Tex. Prop. Code §53.084. An owner is not liable for any amount paid to the GC before the owner is on
notice to trap funds under Texas Property Code §53.084. The property owner should then establish whether the lien affidavit complied with §53.054 of the Property Code and whether notice of the filed affidavit was furnished to the owner or original contractor as required by §53.055. For commercial property, a lien affidavit must be filed not later than the 15th day of the fourth calendar month after the day on which the indebtedness accrues. Tex. Prop. Code §53.052(a). It must include a description that is meaningful and intelligible and meets the substantial compliance test. The property owner should also determine whether the claimant is owed the amount asserted in the affidavit and notice letters. In order for the claimant to have a lien against the 10 percent of Retained Funds, the claimant must send timely notices and file an affidavit claiming a lien not later than the 30th day after the earliest of the date (a) the work was completed;
(b) the original contract is terminated; or (c) the original contractor abandons performance under the contract. Tex. Prop. Code §53.103. Any non-compliance technicalities with the notice or lien affidavit subject the lien to challenge. A motion for summary judgment to remove invalid or unenforceable lien is a statutory procedural attack. Furthermore, the 2011 amended Texas Property Code §53.156 states “the court shall award costs and reasonable attorney’s fees as are equitable and just,” rather than “may award,” for “any proceeding to declare that any lien or claim is invalid or unenforceable in whole or in part.” (Emphasis added). Every property owner should ensure, and challenge if necessary, compliance of any HN lien filing. Sarah B. Sparling is an associate at Brown Fox Kizzia & Johnson PLLC. She can be reached at sarah@brownfoxlaw. com. Lawrence E. Henke is senior counsel at the firm and can be reached at larry@brownfoxlaw.com.
4 He a d n o t e s l D a l l a s B a r A s s o ciation
A ugust 2014
Headnotes
President's Column
Published by: DALLAS BAR ASSOCIATION
A Habitat Habit. Scott M. McElhaney
One of the more entertaining things about serving as president of the Dallas Bar Association is seeing otherwise relatively buttoned-up lawyers and judges break out of their serious, professional roles and show true musical and comedic ability. At the end of June, a few dozen bar members with real talent put on the twenty-ninth annual Bar None production to benefit the Dallas Bar Foundation’s support of the Sarah T. Hughes Diversity Scholarships. Led by long-time director Martha Hardwick Hofmeister, the Bar None Production Company put on Kinky Suits (a take-off on the Broadway hit Kinky Boots) and entertained four almost full houses at SMU’s Greer Garson Theatre with skits and musical numbers parodying songs ranging from Jimmy Kennedy’s 1953 standard “Istanbul (Not Constantinople)” to Macklemore & Ryan’s hit “Thrift Shop” from 2012. The production raised more than $80,000 to support the Hughes Scholarships. I had great fun making an inconsequential cameo appearance, but I can say that the most amusing part of my involvement was getting to see other lawyers pursuing their passion and using their great talents separate from the practice of law. The Dallas Bar offers many other opportunities to get out of the office and do good work in the community. One of our proudest traditions is our ongoing work with the Dallas Area Habitat for Humanity. This June we completed our 23rd Habitat house, and Home Build Committee Co-Chairs K.C. Ashmore and Greg McAllister did yeoman’s work in leading the DBA’s effort. It seems we have something of a “Habitat habit.” The Dallas Bar is the longest continually running whole house sponsor for Habitat for Humanity in the area. Each year we raise about $60,000 to fund the sponsor’s portion of a house build. The homes go to hardworking families who have often been spending unsustainable levels (as much as 50 percent) of their income on (often substandard) housing. But Habitat for Humanity is not a give-away program. Habitat homeowners go through a rigorous qualification process, and instead of a down payment, the owners must contribute 250 hours of “sweat” equity to the build. Then they assume a mortgage on the house, but the mortgage is held by Habitat for Humanity, and payments made by Habitat homeowners are put into a fund used to build more Habitat homes. This year dozens of lawyers, judges, paralegals, and court reporters volunteered their Saturday mornings for the house build. Without their hard work, we could not maintain our tradition of Habitat sponsorship. And who knew that Judge Eric Moyé and Judge Ken Tapscott are pretty skilled at putting up siding on a house, or that DBA President-Elect Brad
Weber and Director Robert Tobey are good with an electric power shear? You do not have to have building experience or special skills to contribute to the effort in a Habitat build. If you are interested, I would encourage you to volunteer at the DBA’s 24th annual home build next year. If working for the Dallas Volunteer Attorney Program is like earning “billable hours for your soul,” then volunteering for a Habitat build may be like manual labor for your soul. Luckily, though, you do not have to wait until next year to contribute to the Habitat for Humanity mission. For 30 years, former President Jimmy Carter and his wife Rosalyn have targeted a select community and contributed a week of their time to promote Habitat for Humanity’s mission to improve or build homes, revitalize neighborhoods and raise awareness of the need for affordable housing. This fall, the Dallas-Fort Worth area is the site of the Jimmy and Rosalynn Carter Work Project. From Sunday October 5 through Saturday, October 11, the Carters and the volunteers who accompany them will construct about 20 homes and repair more than 20 more in the Oak Cliff Gardens area behind the Dallas Veteran’s Administration Hospital, and they will build about 15 and repair 15 more homes in Fort Worth. Hundreds of volunteers will come to Dallas, but hundreds more are needed to provide logistical and transportation support for the workers. Past DBA President Al Ellis is coordinating the volunteer efforts of the Dallas Bar and other local bar associations for the project. Al’s infectious energy and occasional Elvis impersonations are helping to raise over $100,000 in order to make the lawyers of Dallas an official corporate sponsor of the Carter Work Program. There is still a need for contributions, so if you can pitch in, you can visit www.dallasareahabitat.org/web/guest/lawyers. With this level of sponsorship, we have the opportunity to construct a new home during the work project. Our home will be at 2627 Custer in the Oak Cliff Gardens area. To complete the build, we will also have to recruit 25 construction volunteers per day. So far, Haynes and Boone LLP, a $5,000 sponsor, has committed to bringing about 15 volunteers one day, and DAYL has also committed to bringing a slate of volunteers for a build day. Volunteers from TYLA, SMU’s Dedman School of Law and the new University of North Texas School of Law at Dallas are also expected, and thanks are due to all of them. If you want to be a construction volunteer, you can visit vhub.at/DallasLawyersJCWP. If you want to provide other support, you can register at vhub. at/MacGyverTeamJCWP. Volunteers can be lawyers, paralegals, and staff members of any sort, so if you are interested in HN volunteering, jump in.
DVAP PARTICIPATES IN GIVING DAY!
PLEASE SAVE THESE DATES October 5‐11, 2014 President Jimmy Carter, together with thousands of volunteers, will be in the DFW area for a weeklong build. The DBA and the sister bar associa�ons will partner with Dallas Habitat for Humanity on this project. To donate, visit: www.dallasareahabitat.org/web/guest/lawyers Sign up to be a construc�on volunteer at: vhub.at/DallasLawyersJCWP Sign up to be a support volunteer at: vhub.at/MacGyverTeamJCWP
2101 Ross Avenue Dallas, Texas 75201 Phone: (214) 220-7400 Fax: (214) 220-7465 Website: www.dallasbar.org Established 1873 The DBA’s purpose is to serve and support the legal profession in Dallas and to promote good relations among lawyers, the judiciary, and the community. OFFICERS President: Scott M. McElhaney President-Elect: Bradley C. Weber First Vice President: Jerry C. Alexander Second Vice President: Rob Crain Secretary-Treasurer: Audrey Moorehead Immediate Past President: Sally L. Crawford Directors: Tatiana Alexander (President, J.L. Turner Legal Association), A. Shonn Brown (At-Large), Wm. Frank Carroll, Laura Benitez Geisler (Vice Chair), Hon. Martin Hoffman, Hon. David Horan (Judicial At-Large), Michael K. Hurst (Chair), Krisi Kastl, Michele Wong Krause, Meyling Ly (President, Dallas Association of Young Lawyers), Karen McCloud, Courtney Barksdale Perez (At-Large), Sakina Rasheed (President, Dallas Asian American Bar Association), Mary Scott, Scott Stolley, Diane M. Sumoski, Robert L. Tobey, Aaron Tobin and Elisabeth A. Wilson (President, Dallas Hispanic Bar Association) Advisory Directors: Jonathan Childers (President-Elect, Dallas Association of Young Lawyers), Monica Lira (President-Elect, Dallas Hispanic Bar Association), Bill Richmond (PresidentElect, Dallas Asian American Bar Association) and Ebony Rivon (President-Elect, J.L. Turner Legal Association). Delegates, American Bar Association: Rhonda Hunter, Hon. Liz Lang-Miers Directors, State Bar of Texas: Lawrence Boyd, Wm. Frank Carroll, E. Leon Carter, John Jansonius and Florentino A. Ramirez HEADNOTES Executive Director/Executive Editor: Catharine M. Maher Communications/Media Director & Headnotes Editor: Jessica D. Smith In the News: Judi Smalling Art Director: Thomas Phillips Display Advertising: Deni Ackerman, Tina DeRobertis, Annette Planey, Jessica Smith Classified Advertising: Judi Smalling PUBLICATIONS COMMITTEE Co-Chairs: Dawn Fowler and Jared Slade Vice-Chairs: Paul Clevenger and Meghan Hausler Members: Timothy Ackermann, Vincent Allen, Natalie Arbaugh, Benjamin Barmore, Joi-lee Beachler, Martha Beard-Duncan, Lisa Blackburn, Jason Bloom, Eric Blue, Leigh Bradford, Bobby Braxton, Kandice Bridges, Kelsey Brock, Sara Ann Brown, John G. Browning, Casey Burgess, Eliot Burriss, Stacie Cargill, Nancy Carroll, Lance Caughfield, Julie Chandler, Joel Crouch, Walter Dean, Lea Dearing, David Dodds, Adam Dougherty, Brandon Duck, Christopher Elam, Alexander Farr, J. Martin Futrell, Jenny Givens, Jennifer Gjesvold, Andrew Gould, James Gourley, Nadia Haghighatian, Susan Halpern, William Hammel, Jordan Harrison, Jeremy Hawpe, John Herring, Zachary Hilton, Kelli Hinson, Tyler Hokanson, Alison Hollender, Mary Louise Hopson, Mandy Jenkins, Soji John, Amanda Kelley, Cynthia Jon-Ubabuco, Yoon-Joo Jung, Tiffany Kamuche, Nicholas Kennedy, Adam Kielich, Michelle Koledi, Matthew Kolodoski, Susan Kravik, Norman Lofgren, Sixuan Lu, Margaret Lyle, Ashley Mason, Andrew Mayo, Jennifer McCollum, Christina McCracken, R. Sean McDonald, Scott McElhaney, Elizabeth “Jodi” McShan, John McShane, Michael Merrick, Christopher Meuse, Aaron Michelsohn, Wendy Mills, Constance Mims, Ethan Minshull, Paige Montgomery, Caitlin Morgan, Hon. Jim Moseley, Terah Moxley, Derek Neilson, Nick Nelson, Christopher Norcross, David Parham, Murali Pasupulati, Seth Phillips, Keith Pillers, Amiee Pingenot, Kirk Pittard, Irina Plumlee, Laura Anne Pohli, Ellen Pryor, Gabriel Reyes, Edward Rice, Morgan Richards, David Ritter, Carl Roberts, Richard Salgado, Joshua Sandler, Brandon Schwarzentraub, Calvin Scott, Ifeyinwa “Ify” Seales, Isabel Segarra, Micah Skidmore, Crystal Smith, Phillip Smith, Bradley Smyer, Yon Sohn, Thad Spalding, Timothy Springer, Jacob Stasny, Cori Steinmann, John Stevenson, Scott Stolley, Brian Stork, Amy Stowe, Billye Summers, Kristopher Tate, SaKinna Thomas, Pryce Tucker, Brent Turman, Peter S. Vogel, Whitney Warren, Bradley C. Weber, Suzanne Westerheim, Elisabeth Wilson and Andrew Wirmani DBA & DBF STAFF Executive Director: Catharine M. Maher Accounting Assistant: Shawna Bush Communications/Media Director: Jessica D. Smith Controller: Sherri Evans Director of Community Services: Alicia Hernandez Events Director: Rhonda Thornton Executive Assistant: Mary Ellen Johnson Executive Director, DBF: Elizabeth Philipp LRS Program Assistant: Biridiana Avina LRS Interviewer: Marcela Mejia Law-Related Education & Programs Coordinator: Kimberlynn Taylor Membership Coordinator: Kimberly Watson Projects Coordinator: Kathryn Zack Publications Coordinator: Judi Smalling Receptionist/Staff Assistant: Teddi Rivas
SAVE THE DATE!
SEPTEMBER 18 - 6 A.M. TO MIDNIGHT
DALLAS VOLUNTEER ATTORNEY PROGRAM Director: Alicia Hernandez Managing Attorney: Michelle Alden Volunteer Recruiter: Chris Reed-Brown Paralegals: Whitney Breheny, Tina Douglas, Marisol Guzman, Andrew Musquiz, Carmen Perales, Karina Sanchez Program Assistant: Patsy Quinn Copyright Dallas Bar Association 2014. All rights reserved. No reproduction of any portion of this publication is allowed without written permission from publisher. Headnotes serves the membership of the DBA and, as such, editorial submissions from members are welcome. The Executive Editor, Editor, and Publications Committee reserve the right to select editorial content to be published. Please submit article text via e-mail to jsmith@dallasbar.org (Communications Director) at least 45 days in advance of publication. Feature articles should be no longer than 750 words. DISCLAIMER: All legal content appearing in Headnotes is for informational and educational purposes and is not intended as legal advice. Opinions expressed in articles are not necessarily those of the Dallas Bar Association. All advertising shall be placed in Dallas Bar Association Headnotes at the Dallas Bar Association’s sole discretion. Headnotes (ISSN 1057-0144) is published monthly by the Dallas Bar Association, 2101 Ross Ave., Dallas, TX 75201. Non-member subscription rate is $30 per year. Single copy price is $2.50, including handling. Periodicals postage paid at Dallas, Texas 75260. POSTMASTER: Send address changes to Headnotes, 2101 Ross Ave., Dallas, TX 75201.
Augu st 2 0 1 4
Focus
D al l as Bar A ssoci ati on l Headnotes 5
Real Property/Construction Law
Construction Indemnification after the Anti-Indemnification Statute by Kimber Davison
On June 17, 2011, Governor Perry signed House Bill 2093 under the title “Consolidated Programs/Prohibitions on Broad Form Indemnity and Defense,” which was later codified in Chapter 151 of the Texas Insurance Code (the Statute). The Statute applies to construction contracts entered into on or after January 1, 2012, and has shifted risk in the Texas construction industry. Generally, the Statute makes certain indemnity provisions void and unenforceable as a matter of law. Specifically, the Statute prohibits indemnification of claims arising out of the indemnitor’s work if the damage is caused by the concurrent, contributing or comparative negligence of an indemnitee. In other words, a construction contract can no longer contain an indemnification clause that requires a person to indemnify, defend or hold harmless another party for a claim due to that party’s own negligence (whether solely or in part). The Statute also impacts additional insureds by providing that an indemnitor cannot be required to purchase additional insured coverage if that additional insured coverage would be prohibited when examined in light of the indemnification agreement. The provisions of the Statute cannot be waived, and any provision in a contract is void to the extent that it requires one party to indemnify another for claims arising out
of the fault of the indemnitee. As is often the case, there are exceptions to the rule. Here, the Statute provides eleven specific circumstances where the prohibition does not apply. For example, indemnification of claims for “the bodily injury or death of an employee of the indemnitor, its agent, or its subcontractor of any tier” (commonly referred to as “action over claims”) where the indemnitee is contributorily negligent is not prohibited. Additionally, the Statute exempts contracts for residential and public works projects. In the early stages of its implementation, there was speculation as to the overall effect the Statute would have on the industry. Among other things, concerns were raised about the effect the Statute would have on pricing, construction defect litigation and the cost of insurance. There were also debates as to how the courts would interpret the Statute in light of an offending contractual provision. Could a savings clause or specifically crafted language preserve the non-violating aspects of an indemnification clause? Unfortunately, these issues have not been resolved by the courts and there has been little guidance from the courts since the Statute went into effect. Consequently, methods to effectively address and manage the prohibitions of the Statute have largely fallen to construction contract attorneys. Among the practitioners, there are two basic schools of thought. From the perspective of the indemnitee (typically, an owner
in an owner-general contractor contract or the general contractor in a general contractor-subcontractor contract), the issue is how to address the statutory restrictions and maximize the indemnification provided, without risking a violation of the Statute and therefore rendering the provision void. One school of thought is to leave the indemnification provisions in the basic form that they were pre-Statute and then add a clause modifying the provision back to the limits of the Statute to the extent an exception does not apply. An example of such a restrictive provision is as follows:
Nothing herein shall be construed to require the contractor to indemnify an indemnitee for an indemnified claim caused by or resulting solely from an indemnitee’s own negligence unless otherwise permitted by applicable provisions of Chapter 151 of the Texas Insurance Code. It is agreed that with respect to any legal limitations now or hereafter in effect and affecting the validity and enforceability of the indemnification obligation under this Section, such legal limitations are made a part
of the indemnification obligation to the minimum extent necessary to bring this Section into conformity with the requirements of such limitation, and as so modified, the indemnification obligation shall continue in full force and effect. This tactic has the upside of attempting to maximize the indemnification obtained by the indemnitee. However, the risk, which is certainly significant, is the voiding of the entire indemnity provision. The other school of thought advocated by certain construction contract lawyers is to specify the various exceptions that may be applicable to the circumstances of the contract. This approach requires the contract attorney to be artful in drafting a provision to encompass the limits of the exceptions while being deft enough to include the right exceptions. The decision as to which path to take often depends on the risk tolerance of the client. Pending guidance from the courts, the debates as to the appropriate manner of addressing the Statute and its HN exceptions rage on. Kimber Davison is a partner at Griffith Davison, P.C. She can be reached at kdavison@griffithdavison.com.
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A Construction Defect Damages Your Client’s Property, Now What? continued from page 1
by providing relevant information and documentation, including construction contracts, and design drawings. Except for claims subject to the Residential Construction Liability Act (RCLA), which are discussed in more detail below, there are no set rules governing the deadlines in which a party has to respond to a notice of claim. If a legal issue arises later, the courts presumably would apply a reasonableness standard. Depending on
the number of parties involved and the extent of the damage, two to four weeks or more could pass before a final inspection can be completed. If litigation becomes necessary, failing to give a defendant notice and the opportunity to inspect the defect before performing repairs or conducting tests that alter the condition of the defect could entitle a defendant to spoliation sanctions. If the damage concerns the design, construction, or repair of a residence, the owner and its property insurer need
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to comply with the RCLA requirements of providing written notice, the opportunity to inspect, and offer to repair. RCLA requires a claimant to give written notice by certified mail, return receipt requested, to the builder/contractor at the contractor’s last known address, specifying in reasonable detail the construction defects that are the subject of the complaint. During the 35-day period after the contractor received written notice, the contractor must be given a reasonable opportunity to inspect the property. Within 45 days after the contractor receives the required notice, the contractor may make a written offer of settlement to the claimant. There are additional deadlines depending on whether the settlement offer is accepted or rejected. The RCLA also establishes limitations
Susan Anderson is a solo practitioner, and her practice is focused on criminal defense law. She has been working with DVAP since 2002 when she began teaching the Juvenile Law Class at Henry Wade in conjunction with LeTot and Dallas Challenge. She created a PowerPoint presentation to be used in the class and in training others who wish to teach the class, and has presented several CLEs on the topic. She has volunteered on several occasions to help finalize divorces at DVAP’s monthly Prove-Up Clinic, and she recently spoke on the topic of cross-training between family and criminal law attorneys. In December, she will be speaking at a J.L. Turner and DVAP Joint CLE for new lawyers entitled, “I Just Passed the Bar, Now What?” Susan stated, “I think DVAP is a wonderful organization and I am very thankful to be a part of it.” Thank you for all you do, Susan!
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on available damages. Other legal issues can arise in construction defect claims and should be considered early on in the process. Some of these issues include the application of provisions in contract documents, the 10-year statute of repose applicable to claims against design professionals and contractors, and the need for an expert qualified to prepare a certificate of merit affidavit if the responsible party is a design professional. Making sure your client understands what to do when it has damages arising from a construction defect will help protect your client’s uninsured interests and its insurer’s subrogation rights. HN David Fisk is a member at Cozen O’Connor. He can be reached at dfisk@cozen.com. Anne Cook is also a member at the firm and can be reached at acook@cozen.com.
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D al l as Bar A ssoci ati on l Headnotes 7
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Dallas Bar Association Builds 23rd Habitat for Humanity House Staff Report
The DBA dedicated its 23rd house for Habitat for Humanity on Saturday, June 28. The DBA’s Home Project Committee, led by co-chairs KC Ashmore, of the Law Office of KC Ashmore, and Greg McAllister, of Littler Mendelson, P.C., partners with Dallas Area Habitat for Humanity (DAHfH) to sponsor and build a Habitat home each spring. The DBA is DAHfH’s longest running whole-house sponsor. The Dallas Bar Association’s President-Elect Bradley Weber, of Locke Lord LLP, presented the keys to the 2014 DBA Habitat house’s owner, Jennifer Thomas. This year’s Habitat highlights include: • Over 300 volunteers and more than 10 judges building with us—special thanks to Judges Ken Tapscott, Martin Hoffman and Harlin “Cooter” Hale; • Mayor Mike Rawlings meeting with volunteers on site for second consecutive year; • Fundraising goals exceeded on Bankruptcy Law Day (lead by Stras-
burger & Price), Insurance Law Day (lead by Amy Stewart PC), and Construction Law Day (lead by Slates Harwell); • Gardere Wynne Sewell’s $24,000 donation; • Total donations exceeding the goal; and • Raising interest in the DBA (led by Al Ellis of Sommerman & Quesada) to build a home during Habitat’s Jimmy Carter Work Project in October (see page 8 for more details). The DBA Home Project began in 1991 when the association decided to adopt an additional community service project— one that would motivate, inspire, and benefit the Dallas community. Volunteer attorneys carry the torch, making the project what it is today: a coordinated effort by hundreds of Dallas attorneys that give their time and money to support the cause of affordable, decent housing. The central theme is that no commitment of time or money is too small; every hour and every dollar make a difference. This year’s donors include: • Gold Hard Hats ($5,000+):
Fifth Circuit Judges Panel at Belo Tuesday, September 9, at Noon Panelists: Hon. Gregg Costa | Hon. Jennifer Elrod Hon. James Graves | Hon. Stephen Higginson Hon. Catharina Haynes, Moderator MCLE 1.00 Sponsored by the Business Litigation, Trial Skills & Appellate Law Sections
On June 28th, DBA dedicated its 23rd Habitat for Humanity home. DBA Home Project Co-Chairs Greg McAllister (left) and KC Ashmore (right) led the dedication, as volunteers celebrated the completion and dedication of the home. To participate in the project for next year, contact Greg at gmcallister@ghjhlaw.com.
Dentons; Gardere Wynne Sewell; and Thompson & Knight LLP • Silver Hard Hats ($3,0005,000): Mark and Wendy Castellana; Cozen O’Conner; Dallas Association of Young Bankruptcy Lawyers; DBA Bankruptcy Section; Energy Future Holdings; Haynes and Boone, LLP; Kane Russell Coleman & Logan; Lackey Hershman, L.L.P.; Munsch Hardt Kopf & Harr; Amy Stewart PC; Strasburger & Price; and Carol Winklemann • Hard Hats ($1,500-$3,000): Alston & Bird; Austin Industries; Canterbury Law; DBA Construction Law Section; DBA Real Property Law Sec-
tion; Deloitte; Ford Nassen & Baldwin, PC; Griffith Davison & Shurtleff, P.C; Gruber Hurst Johansen Hail Shank; Hill & Wilkinson; Koning Rubarts LLP; Living Green Designs; SettlePou ; Slates Harwell; UNT Dallas College of Law; Westside Crossfit; and Weil Gotshal & Manges • Special Thanks: The Texas LawBook, Tower Club and The Woolworth. To learn more about the DBA Home Project Committee’s work with Habitat for Humanity, log on to www.dbahp. com or contact Mr. Ashmore (kc@ ashmorelawfirm.com) or Mr. McAllister HN (gmcallister@littler.com).
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Focus
D al l as Bar A ssoci ati on l Headnotes 9
Real Property & Construction Law
Fifth Circuit’s Lodestar to Maximize Title Insurance Coverage by J. Edwin Martin
Who remembers Palsgraf v. Long Island R.R. Co., 248 N.Y. 339, 162 N.E. 99 (N.Y. 1928)? It is the hidden-firecrackers case (not the hairy hand case, the monkey trial, or the trees-have-standing case). Anywho, there is, admittedly, an odd analogy between that landmark case and the recently-decided Lawyers Title Insurance v. Doubletree Partners, LP, 739 F.3d 848 (5th Cir. 2014). Palsgraf is best described as a torts exam for the New York Court of Appeals, and the opinion sets forth a lodestar for torts analysis. Doubletree is best described as a titleinsurance exam for the Fifth Circuit, and the opinion sets forth a lodestar for: (a) scrutinizing title commitments, exception documents, surveys, and title policies; (b) lodging title objections; (c) negotiating and drafting contracts of sale and closing documents; and (d) purchasing Endorsement Form T-19.1. This lodestar includes these practice pointers: 1. When it comes to title-and-survey review, never settle for any survey designation as “approximate;” that word is a giant red flag. Indeed, if an easement is material to the development or intended use of the property, then procuring and scrutinizing a meets and bounds description of that easement to determine its exact location and
magnitude is integral to the title-and-survey review. 2. Scrutinize the title policy. If it appears “too good to be true,” then it is; notify the insurer. 3. For survey coverage, in addition to modifying the survey exception, have each survey identified exception be modified to read “, but only to the extent shown on survey.” 4. Disclaim the application of the Actsof-the-Insured Exclusion at every opportunity, particularly with regard to “subject to” conveyances. Amplify the phrase “subject to,” akin to the way the “as is, where is” clause was amplified after the Texas Supreme Court decided Prudential Ins. Co. of Am. v. Jefferson Assocs., Ltd., 896 S.W.2d 156, 161 (Tex. 1995). 5. Never call the title exceptions “permitted.” Instead, use no descriptor whatsoever or describe the exceptions as “without warranty” or “with reservation of rights by Grantee.” 6. In the vesting deed, designate the title exceptions as warranty exceptions only (rather than exceptions to conveyance and warranty), and quitclaim the grantor’s rights to those exceptions. 7. To avoid warranting the survey’s accuracy, when representing a seller, do not reference the survey in the deed unless each survey-identified exception is modified to read “, but only to the extent shown on survey.”
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8. To avoid warranting the survey’s accuracy, when representing a buyer, do not reference the survey in the deed of trust unless each survey-identified exception is modified to read “, but only to the extent shown on survey.” 9. To buttress the disclaimer of the application of the Acts-of-the-Insured Exclusion, when representing a buyer, reference the survey in the vesting deed using the qualifier “, but only to the extent shown on survey.” This lingo will limit the scope of the seller’s warranty, but it will add gravitas to the disclaimer of the application of the Actsof-the-Insured Exclusion. Caveat: When representing a buyer, referencing the survey in the deed runs the risk of clouding the chain of title (because the survey is an unrecorded
document referenced in the buyer’s chain of title). Thus, this practice pointer is debatable. To the author, strengthening titleinsurance coverage trumps the title cloud, which can be overcome through due diligence. 10. To avoid any conflicts between Endorsement Form T-19.1 and the body of the title policy, follow the Fifth Circuit’s lodestar regarding survey coverage and purchase the endorsement. Kudos to the Fifth Circuit for peppering its opinion with practice pointers—whether intentionally or as a byproduct of its exten HN sive analysis. J. Edwin Martin is a solo practitioner. He may be reached at jedwinmartin@yahoo.com.
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2014 DBA 100 CLUB – CONGRATULATIONS! We are proud to recognize the following Firms, Corporate Legal departments and Government agencies for their 100% support of the Dallas Bar Association as members of the 2014 DBA 100 Club! The DBA 100 Club is a distinguished membership recognition category that reflects a commitment to the advancement of the legal profession and the betterment of the community. The DBA 100 Club consists of Firms and Government agencies with two or more attorneys as well as corporate legal departments that have 100% membership in the DBA. Recognition for 100% support is given to the 2014 DBA 100 Club members in our Headnotes publication, at our Annual meeting in November and in the 2015 DBA Membership Directory. It is not too late to become a member of the 2014 DBA 100 Club! Please submit your request via email including a list of all lawyers in your Dallas office/corporate legal department to Kim Watson, kwatson@dallasbar.org. We will verify your list with our membership records and once approved, your name will be added to the 2014 DBA 100 Club! THANK YOU FOR YOUR SUPPORT OF THE DALLAS BAR ASSOCIATION! DBA 100 Club Members As of July 15, 2014 Law Firms with 2 to 5 Attorneys 123 Divorce Company A. William Arnold III & Associates, P.C. Ackerman & Savage, L.L.P. Adair, Morris & Osborn, P.C. Aldous Law Firm Alexander Dubose & Townsend LLP Alexandra Geczi PLLC | Family Law Anderson & Brocious P.C. Anderson Beakley, PLLC Armstrong Kellett Bartholow P.C. Ashcraft Law Firm Ashley & Laird Atkins, O’Toole & Briner, L.L.C. Atwood Gameros LLP Bailey Brauer PLLC Barnett • McNair • Hall, L.L.P. Blackwell & Duncan, PLLC Blankenship, Wiland & O’Connor, P.C. Boone, Boone & Phillips, L.L.P. Broden & Mickelsen Brousseau Naftis & Massingill Burdette & Rice, PLLC Calabrese Huff, P.C. Campbell & Chadwick, P.C. Carlock-Gormley-Hight Christiansen Davis LLC Clark Law Firm Clark Law Firm PC Coffin & Driver, PLLC Collins Law Group PC Connatser Family Law Crain Lewis, L.L.P. Curtis | Castillo PC Curtis Law Group Daniel Sheehan & Associates, LLP Dedman Law, PLLC Dement | Stern PLLC Dunn Sheehan LLP Edwards & de la Cerda, L.L.C. Elliott Thomason & Gibson, LLP ELROD, PLLC Erhard & Jennings, P.C. Fair & Watts, P.C. Fisher & Welch, P.C. Franklin Chapman Skierski Hayward LLP Grau Law Group, PLLC Grogan & Brawner P.C. Groover Hamilton, LLP Hamilton & Squibb, LLP Hance | Wickham, P.C. Harper | Washam LLP Hicks Thomas LLP Hollingsworth Walker Holmes Firm PC Horton & Archibald, P.C. Hunt | Ham, PLLC Johnson | Broome, P.C. Johnson & Silver, LLP Johnston ♦ Tobey, P.C. Kabani & Kabani, PLLC Kapioltas & Forni, PLLC Karel & Hicks, P.C. Keane, Fowler & Donohue Kelly, Durham & Pittard, LLP Kevin Buchanan & Associates, P.L.L.C. Kinser & Bates, L.L.P. Kish Manktelow & Bailey, P.C. Kleiman, Lawrence, Baskind & Fitzgerald, L.L.P. Koning Rubarts LLP Langley Weinstein LLP Law Offices of Carmen S. Mitchell, LLP Law Office of Kevin B. Ross, P.C. Law Offices of Richard A. Gump, Jr., P.C. Law Offices of Terrence G. Turzinski, P.C. Lawrence Law PLLC Lidji Dorey & Hooper Lillard Wise Szygenda PLLC
Lippe & Associates Little Pedersen Fankhauser LLP Lori A. Leu & Associates Malouf & Nockels LLP Maris & Lanier, P.C. Marshall & Kellow, LLP Martin & Martin Law, P.C. McElree | Smith McShane & Davis, L.L.P. McTaggart & Beasley, PLLC Mincey-Carter, PC Orenstein Law Group, PC Peter & Lanzillo, PLLC Prager & Miller, P.C. Pratt & Yungblut, P.C. Quaid Farish, LLC Raggio & Raggio, P.L.L.C. Ramirez & Associates, P.C. Ray & Thatcher, Attorneys at Law PC Richardson Koudelka, LLP Riney Packard PLLC Rochelle & Rankin LLP Rosenberg Paschall Johnson LLP Sawicki & Lauten, LLP Schein Calixto Stevens PLLC Schubert & Evans, P.C. Schuerenberg & Grimes, P.C. Sessions Fishman Nathan & Israel LLP Sheils Winnubst, PC Sherman & Yaquinto, L.L.P. Silverman Goodwin, LLP Simon | Paschal PLLC Simon, Ray & Winikka LLP Smith Kendall P.C. Smith, Stern, Friedman & Nelms, P.C. Stanton Law Firm PC The Collie Firm, PLLC The DeLoney Law Group, PLLC The Elliott Law Firm, P.C. The Holmes Law Firm The Korn Diaz Firm, LLP The Law Offices of Shanna Nugent, P.C. The Vermillion Law Firm, LLC Thomas, Cinclair & Beuttenmuller, PC Tillman Batchelor LLP Tinsley Law Firm Tobolowsky & Burk, P.C. Walker & Long Ward & Turton, PLLC Webb Family Law Firm, P.C. Weeks Law Firm, PLLC Winn, Beaudry & Winn, L.L.P. Wisener Nunnally Gold LLP Withers & Withers, P.C. Wolfish & Newman, P.C. Woodward & Shaw Woolley <> Wilson, LLP. Wormington & Bollinger Yarbrough & Elliott, P.C. Zaby & Associates Law Firms with 6 or More Attorneys Ackels & Ackels, L.L.P. Addison Law Firm P.C. Anderson Tobin, PLLC Andrews & Barth, PC Asiatico & Associates Baker Botts, L.L.P. Beirne, Maynard & Parsons, L.L.P. Bell Nunnally & Martin LLP Blanscet Hooper & Hale, LLP Blume, Faulkner, Skeen & Northam, PLLC Boyle & Lowry, L.L.P. Brown Fox Kizzia & Johnson PLLC Burford & Ryburn, L.L.P. Calloway, Norris, Burdette & Weber, PLLC Canterbury, Elder, Gooch, Surratt, Shapiro & Stein, P.C. Carrington, Coleman, Sloman & Blumenthal, L.L.P. Carstens & Cahoon, LLP Cavazos, Hendricks, Poirot & Smitham, P.C. Condon Thornton Sladek Harrell LLP
Cooper & Scully, P.C. Cowles & Thompson, P.C. Cox Smith David & Goodman, P.C. Deans & Lyons, LLP Estes Okon Thorne & Carr PLLC Farrow-Gillespie & Heath LLP Fee, Smith, Sharp & Vitullo, L.L.P. Figari & Davenport, L.L.P Fletcher, Farley, Shipman & Salinas, LLP Ford, Nassen & Baldwin, P.C. Godwin Lewis PC Goranson Bain, PLLC Griffith Davison & Shurtleff, P.C. Gruber Hurst Johansen Hail Shank LLP Guida, Slavich & Flores, P.C. Hankinson LLP Hermes Sargent Bates, LLP Hiersche, Hayward, Drakeley & Urbach, P.C. Higier Allen Lautin, P.C. Hoge & Gameros, L.L.P. Johnson Jordan Cresswell Monk, PC Kessler Collins, P.C. Key Harrington Barnes PC Klemchuk Kubasta LLP KoonsFuller Kroney Morse Lan, PC Locke Lord LLP Loewinsohn Flegle Deary L.L.P. Malouf Lynch Jackson & Swinson, P.C. Matthews, Stein, Shiels, Pearce, Knott, Eden & Davis, L.L.P. McCurley, Orsinger, McCurley, Nelson & Downing, L.L.P. McGuire, Craddock & Strother, P.C. McKool Smith P.C. Meadows, Collier, Reed, Cousins, Crouch & Ungerman, L.L.P. Milby, PLLC Mullin Hoard & Brown, L.L.P. Munsch Hardt Kopf & Harr, P.C. Palter Stokley Sims Wright PLLC Passman & Jones, P.C. Reese Gordon Marketos, LLP Rochelle McCullough LLP Rose Walker, L.L.P. Sayles Werbner, P.C. SettlePou Shackelford, Melton & McKinley, LLP Snell Wylie & Tibbals, P.C. Sorrels, Udashen & Anton Staubus & Randall, L.L.P. Steed Flagg Lamberth LLP Susman Godfrey L.L.P. The Bassett Firm, P.C. The Blum Firm, P.C. The Hartnett Law Firm The Law Offices of Frank L. Branson, P.C. Thiebaud Remington Thornton Bailey LLP Thomas, Feldman & Wilshusen, L.L.P. Thompson & Knight LLP Tollefson Bradley Mitchell & Melendi, LLP VernerBrumley PC White & Wiggins L.L.P. Winstead PC Wright Ginsberg Brusilow P.C. Zelle Hofmann Voelbel & Mason LLP Corporate Legal Departments Alon USA Energy Inc. Austin Industries, Inc. Baptist Foundation of Texas Contran Corporation Front Burner Restaurants, LP Morgan Management Corporation Neuberger Berman ORIX USA Corporation Tenaska Power Services Co. The North American Coal Corporation Government Agencies City of Irving
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Dal l as Bar A ssoci ati on l Headnotes 11
Obtaining Jurisdiction Over Nonresident Business Defendants by Alex Beard
Texas courts may exercise personal jurisdiction over a non-resident defendant if (1) the Texas long-arm statute authorizes the exercise of jurisdiction, and (2) the exercise of jurisdiction is consistent with federal and state constitutional due-process guarantees. The Texas long-arm statute allows the exercise of personal jurisdiction over a non-resident defendant who “commits a tort in whole or in part in this state.” Although allegations that a tort was committed in Texas satisfy the long-arm statute, they do not necessarily satisfy the due process requirements of the United States Constitution. In Moncrief Oil International, Inc. v. OAO Gazprom, 414 S.W.3d 142 (Tex. 2013), the Texas Supreme Court engaged in minimum contacts analysis to decide whether specific jurisdiction existed over out-of-state defendants. These defendants had been sued for trade-secret misappropriation and tortious interference. Since the Court was addressing specific or “caselinked” jurisdiction as opposed to general jurisdiction, the Court began by noting that jurisdiction could exist over the defendants with regard to some claims but not others. Since the minimum contacts supporting each claim in Moncrief Oil were different, the Court analyzed each claim separately. The Court ultimately held that jurisdiction existed over the defendants as to the trade-secrets claim, but not the tortious interference claim. As to the trade-secrets claim, although the Court recognized that
a defendant’s physical presence within the state was not required, it nevertheless relied heavily on the fact that the alleged trade secrets were obtained by the defendants at meetings they voluntarily attended in Texas. By contrast, none of the conduct giving rise to the tortious interference claim occurred in Texas, and therefore jurisdiction did not exist over the defendants as to that claim. In reaching this conclusion, the Court made clear that “directing a tort from afar” is insufficient to confer specific jurisdiction. Further, the Court emphasized that a court’s focus must always be on the extent of the defendant’s activities in the forum, not the residence of the plaintiff. Earlier this year, the U.S. Supreme Court further refined the minimum contacts analysis required for specific jurisdiction. In Walden v. Fiore, 134 S.Ct. 1115 (2014), the Court held that specific jurisdiction did not exist over a Georgia police officer who was sued in Nevada by Nevada residents after he seized cash from them at a Georgia airport. In reaching its decision, the Court made clear that for a state to exercise jurisdiction consistent with due process, the defendant’s suit-related conduct must create a “substantial connection” with the forum state. This relationship must arise out of contacts that the “defendant himself” creates with the forum state. Moreover, the analysis looks to the defendant’s contacts with the forum state itself, and not the defendant’s contacts with persons who reside there. In reaching its decision, the Court in Walden declined an invitation by the plaintiff to consider what impact its deci-
sion would have on cases involving intentional torts committed via the Internet or by other electronic means. The Court chose not to address “the very different questions whether and how a defendant’s virtual ‘presence’ and conduct translate into ‘contacts’ with a particular State,” and left “questions about virtual contacts for another day.” With more business being transacted over the Internet and by other electronic means, the number of Texas lawsuits alleging tortious conduct originating outside Texas will inevitably rise. It remains to be seen, though, whether on-line contacts that give rise to tort claims will alter the current analytical framework. When the next case is decided, it could usher in a new era of specific jurisdiction analysis. Until the U.S. Supreme Court provides the necessary guidance, the best way to obtain jurisdiction over an out-of-state
defendant conducting business with a Texas resident may be through the use of a contractual forum selection clause. Even with the use of such a clause, however, caution must be exercised to ensure that the language of the clause encompasses all claims that might be filed. Care must also be taken to ensure that the defendant assents to the clause. In Bob Montgomery Chevrolet, Inc. v. Dent Zone Companies, 409 S.W.3d 181 (Tex. App. – Dallas 2013, no. pet.), the Dallas Court of Appeals held that a written contract did not sufficiently incorporate a forum selection clause found only on the plaintiff’s website. Accordingly, the out-of-state defendant was not found to have waived or consented to jurisdiction in Texas and was dis HN missed from the litigation. Alex Beard is a partner with Saunders, Walsh & Beard. He can be reached at alex@saunderswalsh.com.
ABA Publication Discount For DBA Members
Dallas Bar members can purchase ABA books at a 15% discounted rate. For a complete list of titles or to place an order, visit www.ababooks.org. Enter code “PAB7EDBA” upon checkout and the 15% discount will be automatically applied to your order. Discount does not apply to ABA-CLE iPod products. For assistance, call (312) 988-6112. JRFRIM_Ad2012.indd 1
Kleiman Lawrence Baskind Fitzgerald LLP
Attorneys and Counselors 214-265-7400 phone 8350 North Central Expressway, Suite 650, Dallas TX 75206
Representing commercial and residential builders, owners, homeowners, contractors, subcontractors, sureties and suppliers in construction transactions and disputes, including mediation, arbitration and litigation. David Kleiman and Laird Lawrence, the firm’s construction/surety lawyers, both: • Are past chairs of the Dallas Bar Construction Law Section • Currently serve as neutrals on the American Arbitration Association’s construction roster • Have been recognized for many years as “Texas Super Lawyers” • Are A/V rated by Martindale-Hubbell
From drafting contracts to responding to bond claims to litigating multi-party construction disputes, David and Laird are the “go-to” attorneys.
www.klbf.com Kleiman Lawrence Baskind Fitzgerald LLP is a certified Women’s Business Enterprise.
10/9/12 10:39 AM
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YO U d o n’t H AV E TO B E A B I L L I O N A I R E TO B E A P H I L A N T H R O P I S T.
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Augu st 2 0 1 4
D al l as Bar A ssoci ati on l Headnotes 13
SBOT President’s Update by Trey Apffel
We marked the beginning of summer at the State Bar of Texas Annual Meeting, which was held this year at the Austin Convention Center. The conference proved successful in large part because of the support and contributions of the Austin legal community. It was an extraordinary time to be in the Capital City, which had recently hosted four of the five living presidents at the Civil Rights Summit, and we were honored to learn more about the significance of the Civil Rights Act of 1964 from two keynote speakers, Lynda Johnson Robb, daughter of former President Lyndon Baines Johnson, and Larry Temple, who served as LBJ’s special counsel. In two short days, we also networked with friends and colleagues; participated in CLE programming; and heard from Bobby Ray Inman, the former director of the National Security Agency, and Jeffrey Rosen, president and CEO of the National Constitution Center. And in keeping with the theme of celebrating civil rights, we witnessed a reenactment of the oral argument in Sweatt v. Painter in the historic Supreme Court Courtroom in the Capitol. I want to thank the Annual Meeting Committee and
each of you for your time, and I hope you will continue to be involved with the bar throughout the year. As we move through summer and toward the busy fall, my focus will be on communications. I want you to know what we are doing to better provide services to members. I plan to use every available channel— from print to email to social media—to communicate with you in all the different ways you receive information. We are expanding our breadth of social media platforms— we’ve seen an increase of more than 2,300 Facebook fans and 3,700 Twitter followers since June of 2013—and have Trey Apffel recently launched a beta version of Texas Bar Connect, a private online community that allows Texas attorneys to engage in legal discussions, share files, create blogs and make professional connections. Our new mobile-friendly version of our website makes it easy to navigate our most visited pages—Find a Lawyer, Contact Us, Calendar of Events—and find links to our
North Dallas Friday Clinic Presents:
Shoulder to Shoulder: Equipping Attorneys to Recognize and Assist Fellow Attorneys in Crisis Friday, August 8, Noon Two Lincoln Centre (5420 LBJ Frwy, Ste. 240) Speakers: Brian Farlow and Steve Kelly Ethics 1.00 RSVP to sevans@dallasbar.org. Sponsored by the Peer Assistance Committee.
blogs, all from your tablet or smartphone. We are also working on a refresh of our website, texasbar.com, so that the public and members can find the information they need in a well-designed user-friendly environment. If we are communicating effectively, every attorney who needs guidance on an ethical dilemma will know to call the State Bar Ethics Helpline. If we are doing our job, Texans who are in a legal bind will know to turn to our Lawyer Referral Information Service to find an attorney. If we are getting our message out, then every lawyer, judge, and law student will know to call the Texas Lawyers’ Assistance Program if a substance abuse or mental health issue is affecting their life or the life of a colleague or friend. Staying relevant means not only reaching you through a new communications effort, but also addressing other issues that are facing the profession. We have to find ways to lessen the effects of a turbulent job market for younger lawyers and also provide
a comfort zone for attorneys as they practice into their later years. I understand the daily challenges that a majority of you face, and I want to assist you in making your practices more productive and lives less stressful. To that end, there are already many benefits and resources available, from the Texas Bar Career Center, which provides a searchable database of job opportunities, distributes an electronic Job Flash highlighting new job postings, and allows users to post their résumés and sign up for job alerts to Fastcase, a free legal research engine new to members that makes running a practice more manageable and features legal research apps for iPhone, iPad, and Android devices. But I need your input—and your help—to do more and to work together to make our profession stronger. As we look to a new year, think of these three words: engage, inform, and inspire. Engage: Be present and active. Inform: Learn about a service the bar provides to members and spread the word. Inspire: Recommit yourself to the profession. I will be living by those three words. I hope you will do the same. I am looking forward to working with you and hearing your thoughts. Email me at statebar HN president@texasbar.com.
14th Annual Freedom Run 5K Run
Thursday, September 11, at 6:30 p.m. at Dallas City Hall Plaza Benefitting the Assist The Officer Foundation Paying tribute to the victims and heroes of 9/11. Register Online at www.freedomrun.com Organized by the Dallas Association of Young Lawyers.
Holmes Diggs & Eames PLLC i s c e l e b r a t i n g i t s 2 0 t h y e a r. We are one of the largest law fi r m s i n Te x a s d e v o t e d t o family law. Our attorneys offer a wealth of experience in every aspect of family law.
A Passion for Excellence www.texasfamilylawyers.com 214.520.8100 Dallas-Houston-Denton-Frisco
14 H e a d n o t e s l D a l l a s B a r A s s o ciation
A ugust 2014 Now Available - Order Your Copy Today!
New from Texas Lawyer Books: Texas Business Litigation Edited by Sofia Adrogué and Caroline Baker, Texas Business Litigation is a comprehensive handbook for litigators and transactional attorneys.
Texas Business Litigation
Learn from the collective wisdom, experience and practical advice of a stellar panel of veteran Texas litigators, judges and arbitrators
2015
Texas Business Litigation gives you thorough treatment of:
• Bankruptcy Ramifications in Business Sofia adrogué, Editor • Breach of Fiduciary Duty Claims CarolinE in BusinessTransactions BakEr, Co-Editor • Evaluating Commercial Cases: Avoiding Icebergs • Criminal Law in Business Torts Cases • Employment Law Litigation • Fraud and Negligent Misrepresentation • Intellectual Property and Trade Secrets Litigation • Selected Causes of Action Unique to the Oil and Gas Industry • Preservation of Error – Appeal Tactics • Speech Based Torts: Libel, Slander, Business • Disparagement and Invasion of Privacy
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To learn more:
Visit www.TexasLawyerBooks.com or call 1-800-756-8993 TX_Business_Litigation_Cover.indd 1
2014
Dallas County Bench Book
Top 5 reasons to purchase the new 2014 Dallas County Bench Book: 1. Real insight of the courtroom straight from the judge 2. Includes new and updated questionnaires 3. Contains procedures for local, state and federal courts 4. Four surrounding counties in addition to Dallas County are included 5. A portion of the proceeds benefits the Dallas Bar Association
www.TexasLawyerBooks.com
Special DBA member price: $150.00 $120.00 Call 800.756.8993 and mention your DBA membership to receive your discount.
3/26
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Dal l as Bar A ssoci ati on l Headnotes 15
Classifieds
August
EXPERT WITNESS
Economic Damages Experts - Thomas Roney has more than twenty five years’ experience providing economic consulting services, expert reports and expert testimony in court, deposition and arbitration. His firm specializes in the calculation of economic damages in personal injury, wrongful death, employment, commercial litigation, IP, business valuation, credit damage and divorce matters. Mr. Roney and his experienced team of economic, accounting and finance experts can help you with a variety of litigation services. Thomas Roney LLC serves attorneys across Texas with offices in Dallas, Fort Worth and Houston. Contact Thomas Roney in Dallas/Fort Worth (214) 6659458 or Houston (713) 513-7113. troney@ thomasroneyllc.com. “We Count.” Mexican Law Expert - Attorney, former law professor testifying since 1997 in U.S. lawsuits involving Mexican law issues: FNC motions, Mexican claims/ defenses, personal injury, moral damages, contract law, corporations. Co-author, leading treatise in field. J.D., Harvard Law. David Lopez, (210) 222-9494. dlopez@ pulmanlaw.com.
OFFICE SPACE
Uptown/ Travis Walk: Law firm has an affordable window/patio office in Travis Walk off Knox St. for sublease. Great location at 4514 Travis Street, large conference room, kitchen, secretarial space, all amenities, short walking distance from a dozen restaurants. Seek compatible attorneys with their own practice to office with friendly group of litigators. Call Andrew Bergman at (214) 528-2444 or Paul Sartin at (214) 599-0448 or email rsanchez@abergmanlaw.com. Offices available for rent with law firm located in Downtown Dallas Class A, arts district building. Amenities include conference room, law library, secretarial station, kitchen, parking garage, photocopy/scanner/postage/facsimile and related amenities. Contact Laura at (214) 922-9265. Large office and/or secretarial office available at 4054 McKinney Avenue. Shared conference and break room, copier, fax, DSL & phone equipment are available if needed. No long term commitment and a monthly rate of $850.00 for the
unfurnished large office and $300.00 for the furnished secretarial office. Call (214) 520-0600. North Dallas Tollway/LBJ – Class A Building - Lincoln Centre. Approx. 5,000 sq. ft. of office space for sublease. Several varying sized offices available. Shared Amenities include: Receptionist, use of conference rooms, copiers, postage meter, high-speed Internet, phones, kitchen area and parking garage. Contact: Cindy Robbins (972) 458-5358. North Dallas. Law firm located at Lincoln Centre has two partner size offices available. located at Tollway and LBJ; two conference rooms; break room/kitchen; copiers; postage machine. Email: dallasipfirm@gmail.com for more information. Pearlstone Suites in the West End of downtown Dallas are unique new law offices combined with professional law firm marketing services to help attorneys launch or grow a solo practice or small firm. Suites include these amenities at no additional cost: Direct dial phone with personalized voicemail and call forwarding, high-speed Internet access, IT support, law office reception, on-site building security, conference rooms, kitchen and coffee service, fitness center, building directory listing, all utilities and CAM charges. Marketing services available include websites, branding, brochures, strategy, coaching and more. Pre-leasing discounts available until June 30. Visit www.pearlstonesuites.com or call (214) 446-3943. East Dallas, Mesquite, Garland Office Space For Rent. Office share or complete office in self-standing building on major road with programmable LED signage. This practice has been the main neighborhood law office for more than 30 years, including the past 11 years in this recently renovated building. Perfect office share for someone who wants to try private practice, or could lease the whole building, which is comprised of two offices, receptionist/assistant area, large conference room, kitchen, two restrooms (one with shower), waiting area, copy/file room and more. Currently being leased by one attorney. Office share $750.00/ mo., plus half utilities, or $1,500.00 for the entire office. Contact John at 214-275-
The Mockingbird Next Door: Life With Harper Lee
Speaker: Marja Mills
Speaking on her book The Mockingbird Next Door: One journalist’s memoir of her friendship with Harper Lee and her sister Alice, drawing on the extraordinary access they gave her to share their stories and their daily lives.
Tuesday, August 5, Noon at Belo | Ethics 1.00
Need Help? You’re Not Alone.
Sponsored by the Business Li�ga�on, Appellate, Corporate Counsel, Construc�on, Criminal and TIPS Sec�ons
Need Help? You’re Not Alone. Need Help? You’re Not Alone. Need Help? You’re Not Alone. Alcoholics Anonymous…………………………...(214) 887-6699
Texas Lawyers’ Assistance Program…………...(800) 343-8527 Texas Lawyers’ Assistance Program…………...(800) 699-9306 343-8527 Narcotics Anonymous…………………………….(972) Texas Lawyers’ Assistance Program…………...(800) 343-8527 Alcoholics Anonymous…………………………...(214) 887-6699 Al Anon…………………………………………..…..(214) Texas Lawyers’ Assistance Program…………...(800) 363-0461 343-8527 Alcoholics Anonymous…………………………...(214) 887-6699 Narcotics Anonymous…………………………….(972) Mental Health Assoc…………………………….…(214) 699-9306 828-4192 Alcoholics Anonymous…………………………...(214) 887-6699 Narcotics Anonymous…………………………….(972) 699-9306 Al Anon…………………………………………..…..(214) 363-0461 Crisis Hotline………………………………………..1-800-SUICIDE Narcotics Anonymous…………………………….(972) 699-9306 Al Anon…………………………………………..…..(214) 363-0461 Mental Health 828-4192 Suicide Crisis Assoc…………………………….…(214) Ctr SMU.…………………………...(214) 363-0461 828-1000 Al Anon…………………………………………..…..(214) Mental Health Assoc…………………………….…(214) 828-4192 Crisis Hotline………………………………………..1-800-SUICIDE Metrocare Services………………………………...(214) Mental Health Assoc…………………………….…(214) 743-1200 828-4192 Crisis Hotline………………………………………..1-800-SUICIDE SuicideHotline………………………………………..1-800-SUICIDE Crisis Ctr SMU.…………………………...(214) 828-1000 Crisis Suicide Crisis Ctr SMU.…………………………...(214) 828-1000 Metrocare Services………………………………...(214) 743-1200 Suicide Crisis Ctr SMU.…………………………...(214) 828-1000 DBA Peer Assistance Committee Metrocare Services………………………………...(214) 743-1200 Metrocare Services………………………………...(214) 743-1200 DBA Peer Assistance Committee
8585, or john@shumakerlawfirm.com.
POSITIONS AVAILABLE
Small AV rated North Dallas firm seeks experienced civil litigator, probate experience preferred. Send resume in confidence to: Dallas Bar Association, Box 14–07, 2101 Ross Avenue, Dallas, Texas 75201. North Dallas. Intellectual Property Law firm located at Lincoln Centre is looking for a Patent Agent. At least 3 years’ experience in patent prosecution. Engineering or Computer Science preferred. Email: dallasipfirm@gmail.com for more information. Business litigation firm seeks experienced trial attorney with first chair trial, deposition, and appellate experience. Some existing hourly clientele a plus. Compensation negotiable. Firm offers first rate office facility, a tenured, experienced support staff, and good work environment. Send cover letter and resume in confidence to oaklawnfirm@aol.com. Pro Se Law Clerk – U.S. District Court. Attorney with strong research and writing skills needed. Texas criminal law experience would be helpful. See posting at: http://www.txnd.uscourts.gov/ employment/dc_jobs.html Legal Aid of NorthWest Texas (LANWT) currently has various openings throughout its firm at various locations. We are a Section 501(c)(3) nonprofit Texas Corporation. LANWT provides free civil legal services to eligible low-income residents in 114 Texas Counties. If you are interested in joining a great team that offers you the opportunity to rapidly develop litigation skills in court, a generous health benefits package, and the ability to be of
service to others, we encourage you to visit LANWT’s career site at www.lanwt.org.
POSITION WANTED
Real Estate and Finance Attorney. Over fifteen years major firm experience representing lenders, buyers and sellers of commercial real estate, including multistate portfolios. Full- or part-time. Willing to maintain own insurance. Dallas area. Prefer real estate section of law firm. Respond to: Dallas Bar Association, Box 14-08, 2101 Ross Avenue, Dallas, Texas 75201.
SERVICES
Diamond and Gold Buyer. Buying all types of Diamonds, Immediate Cash Paid. Consignment terms available @ 10 -20% over CASH. For consultation and offers please call (214) 739-0089. Energy Acquisition(s): I buy any size royalty(ies), mineral(s), working interest(s) and try to reach (and pay) the sellers asking price. I am a licensed attorney and have been making oil and gas purchases for 35 +/- years. E-mail to bleitch@prodigy.net or call Brenda at 1-800-760-9890 or (214) 720-9890 for a friendly and quick analysis and response. Oil and Gas Buyer. Buying royalty interests, overriding royalty interests and non-operating working interests. Send descriptive information to royalty@ coromandelenergy.com for a prompt and fair evaluation. Owner is SBOT and DBA member. To place an affordable classified ad here, contact Judi Smalling at (214) 220-7452 or email jsmalling@dallasbar.org.
Connect jobseekers with employers in the legal field. Run your ad in the DBA’s online Career Center. www.dallasbar.org/career-center.
16 H e a d n o t e s l D a l l a s B a r A s s o ciation
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Setting a new standard in family law
Founded in 1978, KoonsFuller, P.C. is one of the largest and most highly-regarded family law firm in the nation. Ingrained in the firm’s culture is an individualized approach tailored to meet the needs of each client. KoonsFuller has big firm resources with a personal touch.
Divorce Child Custody Complex Property Division Business Owners in Divorce Child Visitation Asset Tracing Appeals Paternity Pre- and Post-Marital Agreements Enforcement of Orders Post-Divorce Modification Collaborative Law
We remain focused on how we can best-serve our clients, ways we can continually improve, and stay ahead of the game by anticipating the next move. It’s all about maintaining forward momentum. Ike Vanden Eykel - CEO, KoonsFuller, P.C.
Dallas | Houston | Plano | Southlake | Denton www.koonsfuller.com