August 2021 Headnotes by Jessica Smith

Dallas Bar Association

HEADNOTES |

Focus | Construction/Real Property Law

August 2021 Volume 46 Number 8

DBA Trial Lawyer of the Year: Professor Cheryl Wattley BY ANASTASIA TRIANTAFILLIS

As the daughter of a woman who held distinctive positions in both the political and educational arenas, Professor Cheryl Wattley was inspired to follow in her mother’s footsteps as an activist and academic. Her recognition as the Dallas Bar Association’s Trial Lawyer of the Year is but a confirmation of a life dedicated in service to others, especially those who might not otherwise have a voice. Born and raised in Connecticut, Professor Wattley boldly declared at the young age of nine years old, after watching children who looked like her be threatened with police dogs during the Birmingham marches, that she would become a lawyer to “make sure that people are aware that laws are being changed.” After graduating from Smith College, cum laude with high honors in sociology, and from Boston University College of Law, Professor Wattley began her legal career as an Assistant United States Attorney in the District of Connecticut representing the United States in civil litigation. Her professionalism and hard work were demonstrated early on in her legal career, when just at the age of 26, she confidently wrote a justification memorandum successfully

Focus

urging the United States’ entry as litigating amicus curiae in Connecticut ARC v. Thorne. This case dismantled the large state institution and established decentralized residential placement of individuals with intellectual disabilities in the State of Connecticut. Professor Wattley also secured a settlement with the Department of Housing and Urban Development to assure that families of a New Haven pub- Cheryl B. Wattley lic housing facility would have proper and suitable housing. For these cases and other work, Prof. Wattley was presented a Department of Justice Special Achievement Award. She later transferred to the United States Attorney’s Office for the Northern District of Texas, where she focused on the prosecution of white-collar crime, serving as Chief of the Economic Crime Unit. Dur-

ing her time in this office, she secured a number of jury verdicts in publicized fraud cases. Professor Wattley received the Department of Justice Special Achievement Award, the United States Postal Inspection Service National Award, and commendations from the Department of Treasury, the Immigration and Naturalization Service, and the Customs Department. She then went into private litigation practice, where her work and trial experience spanned civil rights, federal and state criminal defense, and postconviction proceedings. In 1995, she was nominated by President Bill Clinton for a federal judgeship. However, her career path took a different turn—as a professor of law—and her extensive work in the university clinics and mentoring of students is a path that

she recognizes has a far greater impact in shaping the generations of law makers and society changers. Her first teaching experience was as a criminal law professor at the University of Oklahoma College of Law, but she quickly pursued her passion to influence the new generation of legal professionals by also serving as the Director of Clinical Education. Professor Wattley’s approach to teaching through practical experience, afforded her students with litigation experience before completing their academic curriculum. She coordinated and supervised students in litigating actual trials and provided them with the invaluable knowledge of a courtroom experience early on in their careers. Through the International Human Rights Clinic, she also worked with nongovernmental organizations to provide shadow reports in relation to countries’ mandatory human rights reports to the United Nations. Her students’ tireless and meticulous work contributed to an amendment to a Central American country’s education statutes to remove corporal punishment for indigenous students as allowable discipline. continued on page 22

Construction/Real Property Law

What To Do When You Notice Your Client Didn’t Give Notice BY WALKER M. DUKE

Most construction contracts, and many non-construction contracts, contain notice provisions under which a party seeking an adjustment of the contract price or time must give notice of a claim, usually accompanied by supporting documentation, within a specified period of time. These notice provisions are frequently conditions precedent to litigation or arbitration, and a failure to comply could potentially bar your client’s claims from ever seeing the courthouse. So, what do you do when you notice that your client didn’t give notice? First and foremost, determine whether the notice required is even enforceable. Texas Civil Practice & Remedies Code Section 16.071(a) states: “A contract stipulation that requires a claimant to give notice of a claim for damages as a condition precedent to the right to sue on the contract is not valid unless the stipulation is reasonable. A stipulation that requires notification within less than 90 days is void.”

While that provision may appear to be a get-out-of-jail-free card for shorter notice provisions, the statute’s applicability is not entirely settled. In one of the few construction cases analyzing Section 16.071(a), the El Paso Court of Appeals refused to strike a 7-day notice provision, holding that it did not fall within the statute’s scope. However, in a 2020 opinion, the Corpus Christi Court of Appeals allowed a party to assert Section 16.071(a) as a defense to a 30-day notice provision. If the notice provision is indeed valid, the next step is to establish compliance or develop defenses to compliance. If your client did not strictly comply with the terms of the notice provision, determine whether you can establish substantial compliance. Substantial compliance is an equitable doctrine that allows breaching parties who have substantially completed their obligations to recover on a contract. The doctrine recognizes that if a contractor has not completed performance, it is in breach of the contract; however, the owner cannot use the contractor’s failure to completely perform as an excuse for its

own non-performance. Per the doctrine of substantial compliance, exactitude in the performance of contractual duties may not be required where any deviations or deficiencies do not seriously impair the purpose underlying the contractual provision. Look to see if your client provided some kind of notice, even if informally. Were there meeting minutes that mentioned impacts on time and cost? Maybe a schedule update that showed a delay due to unforeseen site conditions? The key is to find documentation establishing your client gave some form of notice of their issue, even if not in a formal claim document. The next line of defense is waiver, i.e., establishing that the other party waived compliance with the notice provision. Waiver is an intentional relinquishment of a known right or intentional conduct inconsistent with claiming that right. A condition precedent may be waived, and the waiver of a condition precedent may be inferred from a party’s conduct. Was your client’s claim evaluated even though they may not have complied with the

notice provision? Did the owner offer some adjustment of price, just not a sufficient amount? If so, you may be able to argue that the owner waived compliance with the notice provision. Determining whether there has been a waiver is a question of fact that depends on the circumstances of the case and is a matter of each party’s intent; there can be no waiver unless intended by one party and understood by the other. Intent must be clearly demonstrated by the surrounding facts and circumstances. The key is to find actions that demonstrate that the notice provision was not enforced. When parties are busy advancing the work on a project, strict compliance with notice provisions can sometimes get overlooked. This can potentially be fatal to your client’s claim, but examining enforceability of the provision, establishing substantial compliance, or proving waiver can be three tools to help preserve your client’s claims. HN Walker M. Duke is a Partner at Duke Seth, PLLC. He may be reached at wduke@dukeseth.com.

Inside 6 Equal Access to Justice Campaign Co-Chairs Named 8 The Best-Laid Plans of Mice and Men – Texas Senate Bill 219 16 DBA WE LEAD: From the Corporate Perspective 23 Court Clarifies the Duties Owed by a General Contractor

NEED TO REFER A CASE? The DBA Lawyer Referral Service Can Help. Log on to www.dallasbar.org/lawyerreferralservice or call (214) 220-7444.

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All CLE and Section programs are presented virtually. Check the DBA Online Calendar (www.dallasbar.org) for webinar links and the most up-to-date information.

Calendar August Events FRIDAY CLINICS

AUGUST 6 Noon

MONDAY, AUGUST 9

“Balancing the Legal Profession and Life when Dealing with Alcohol and Substance Abuse Issues,” Dan Garrigan, Tyler Jordan and Artichala Wise. Co-sponsored by the Peer Assistance Committee. (Ethics 1.00)*

AUGUST 20 Noon

“Why We Should Make the First Move in Settlement Talks,” Prof. Laura Frase. (MCLE 1.00)*

MONDAY, AUGUST 2 Noon

Tax Law Section “Recent Tax Updates,” Prof. Bruce A. McGovern. (MCLE 1.00)*

TUESDAY, AUGUST 3 Noon

Corporate Counsel Section “Protecting Trade Secrets in a Remote Work Environment,” Raquel Alvarenga, Bill Kleinman, Kathryne (Kate) Morris, and Siddiq Ozz. (MCLE 1.00)*

Tort & Insurance Practice Section “Insurance and Public Policy Issues Arising from the 9/11 Terrorist Attack,” Steve Badger. (MCLE 1.00)*

WEDNESDAY, AUGUST 4 Noon

Employee Benefits & Executive Compensation Law Section Topic Not Yet Available

Solo & Small Firm Section “What Kayne Can Teach Us About Litigation,” Brent Turman. (MCLE 1.00, Ethics 0.50)*

Juvenile Justice Committee

Public Forum/Media Relations Committee

4:00 p.m. LegalLine E-Clinic. Volunteers needed. Contact sbush@dallasbar.org. 4:30 p.m. Equality Committee

THURSDAY, AUGUST 5

7:45 a.m. Energy Law Section Seminar 2021 Annual Review of Oil & Gas Law. Two-day event. For more information, or to register, log on to www.reviewofoilandgaslaw.com. Noon

Construction Law Section “Update on the 87th Texas Legislative Session,” Sean McChristian. (MCLE 1.00)*

FRIDAY, AUGUST 6

7:45 a.m. Energy Law Section Seminar 2021 Annual Review of Oil & Gas Law. Two-day event. For more information, or to register, log on to www.reviewofoilandgaslaw.com. Noon

Visit www.dallasbar.org for updates on Friday Clinics and other CLEs.

Friday Clinic “Balancing the Legal Profession and Life when Dealing with Alcohol and Substance Abuse Issues,” Dan Garrigan, Tyler Jordan and Artichala Wise. Co-sponsored by the CLE & Peer Assistance Committees. (Ethics 1.00)*

Noon

4:00 p.m. LegalLine E-Clinic. Volunteers needed. Contact sbush@dallasbar.org.

Peer Assistance Committee

THURSDAY, AUGUST 19

Noon

Business Litigation Section Topic Not Yet Available

Immigration Law Section “Supreme Court Updates,” Furqan Sunny Azhar. (MCLE 1.00)*

WEDNESDAY, AUGUST 11 Noon

Bankruptcy & Commercial Law Section “Call Me Maybe: Communicating with the Texas Attorney General’s Office on Hot-Button Bankruptcy Case Issues,” Jason Binford. (MCLE 1.00)*

Blockchain Law Study Group “Commercial Law, Blockchain, and Crypto,” Carla L. Reyes. Bench Bar Conference Committee

4:00 p.m. LegalLine E-Clinic. Volunteers needed. Contact sbush@dallasbar.org.

THURSDAY, AUGUST 12 Noon

CLE Committee

Publications Committee

FRIDAY, AUGUST 13 Noon

Trial Skills Section “The Rules of Evidence as the Litigator’s Bill of Rights,” Prof. Fred Moss. (MCLE 1.00)*

MONDAY, AUGUST 16 Noon

Labor & Employment Law Section “Emerging Issues Facing Restrictive Covenants,” John Fugitt and Brent Hockaday. (MCLE 1.00)*

TUESDAY, AUGUST 17

DBA MEMBER BENEFIT

FREE Room Rental in 2021 & 2022 Book a personal or professional event by December 31, 2021 and the rental fee will be waived. Event must be held by December 31, 2022. Contact Dawn Finley to book your event today.

Noon

Franchise & Distribution Law Section “Intellectual Property in Franchise Law: What Franchise Lawyers Need to Know about Trademarks,” Mike McArthur. (MCLE 1.00)*

Community Involvement Committee

WEDNESDAY, AUGUST 18 Noon

Pro Bono Activities Committee

Alternative Dispute Resolution Section Topic Not Yet Available

TUESDAY, AUGUST 10

Health Law Section “Handling Licensing Board Investigations from Complaint to SOAH Trial,” D. Wade Emmert. (MCLE 1.00)*

Noon

Living Legends Program “Maureen Armour, interviewed by Corinna Chandler.” Pre-recorded program. (Ethics 1.00)*

FRIDAY, AUGUST 20 Noon

Friday Clinic “Why We Should Make the First Move in Settlement Talks,” Prof. Laura Frase. (MCLE 1.00)*

MONDAY, AUGUST 23 Noon

Science & Technology Law Section “Initial Coin Offerings, Security Tokens, and Securities Law,” Lewis Cohen and Andrew Hinkes. (MCLE 1.00)*

TUESDAY, AUGUST 24 No DBA Events Scheduled

WEDNESDAY, AUGUST 25 Noon

Collaborative Law Section Topic Not Yet Available

Entertainment Art & Sports Law Section Topic Not Yet Available

Judiciary Committee

4:00 p.m. LegalLine E-Clinic. Volunteers needed. Contact sbush@dallasbar.org.

THURSDAY, AUGUST 26 Noon

Criminal Law Section Topic Not Yet Available

Environmental Law Section Topic Not Yet Available

Intellectual Property Law Section “The Implications of Google v. Oracle,” Prof. Pamela Samuelson. (MCLE 1.00)*

FRIDAY, AUGUST 27 No DBA Events Scheduled

MONDAY, AUGUST 30 No DBA Events Scheduled

TUESDAY, AUGUST 31 No DBA Events Scheduled

WELCOME BACK We’ve missed you!

When returning to the DBA headquarters, please note that in accordance with CDC guidelines, fully vaccinated members, guests, and staff are not required to wear face coverings while in the building. Face coverings are required for those who are unvaccinated.

214-220-7472 or dfinley@dallasbar.org Rental fee waived for current DBA Members and their firms. Membership will be verified by the Dallas Bar Association. Events must be booked by 12/31/21 and held by 12/31/22.

If special arrangements are required for a person with disabilities to attend a particular seminar, please contact Alicia Hernandez 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 the DBA office at (214) 220-7447. **For information on the location of this month’s North Dallas Friday Clinic, contact yhinojos@dallasbar.org.

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D al l as Bar A ssoci ati on l Headnotes 3

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President’s Column

Headnotes

Let’s Celebrate Women Lawyers BY AARON TOBIN

I have heard the term “strong woman” and have often wondered about its meaning. Is someone trying to communicate that there is one prototype for what makes for a “strong woman.” I would certainly hope not. Strong, tough, tenacious, intelligent, creative, courageous, skilled, ethical, and hard-working are just a few of the adjectives I would use to describe the women lawyers I have been fortunate enough to represent and practice in front of, with, and on the opposite side of. Like men, these women are not all alike. They have different personalities, goals, and lives. There is no “cookie cutter” example or definition of a “strong woman.” Rather, each of our female colleagues, with their differences, can be described as strong in skill and in character. Women in our profession, every day, embody the wide breadth of what it means to be a strong lawyer, strong judge, strong partner, strong colleague, strong leader, and strong human being. This is to be celebrated.

Progress is All Around Us

A quick survey of the local legal landscape shows there is much room for improvement, yet still a lot to celebrate. A significant majority of our local state court benches are held by women, to include over 80 percent of the trial benches. Between the federal district, magistrate and bankruptcy benches, the majority of our Dallas federal judiciary is made up of women. Leadership and service in the local bar further reflects the strength of our female colleagues. A majority of the board of directors for the Dallas Bar Association is comprised of women. The majority of our affinity/sister bar organizations are led by women this year. Three of the next four presidents of the Dallas Bar Association will be women. The same is true for the DBA’s section and committee leadership where over half of the chair positions are held by women. Not to mention the invaluable contributions made by the many women serving on each of our committees. If you look beyond the local landscape, women lawyers are serving in key bar leadership positions across the state and the country, to include the current state bar president and the current president of the ABA. Likewise, corporate America is more and more turning to women to lead sophisticated legal departments. Here locally, many of North Texas’ largest companies have legal departments led by women—Toyota, Vistra Energy, Pizza Hut, and Mary Kay, just to name a few.

There is Still Much Work to be Done

These achievements are in spite of the significant challenges that women in our profession still face. The landscape of our profession needs to improve for our diverse female colleagues. Access to good mentorship, a more realistic work environment and schedule, equal pay, and greater access to partnership opportunities must remain priorities in order to achieve true progress. Law firms need to do a better job of promoting from within and placing women in meaningful leadership positions. I am proud of the Dallas Bar Association and our sister bars

Save the Dates September 2 at Noon

9/11, Twenty Years On: A Look Back at the Investigation, the Commission’s Findings, and Subsequent Events with Phil Zelikow, Executive Director of the 9/11 Commission Moderated by David Kent & Faegre Drinker

September 10 at Noon

Remembering 9/11: Then and Now with White House Counsel Harriet Miers and Ambassador Robert Jordan Moderated by Doug Dunbar, KTVT 11

efforts to celebrate and promote the women in our profession. The DBA WE LEAD (Women Empowered to Lead in the Legal Profession) program, now in its fourth year of existence, will by the end of the year have over 100 alumni working to empower our women lawyers and promote awareness for issues that are unique to women in our profession. Led by the talented Ophelia Camina and Lisa Tomiko Blackburn, as well as dozens of our bar’s most highly regarded female practitioners who serve as mentors, the DBA WE LEAD program is making a positive impact on the advancement of women in our profession. Women should be able to “have it all.” However, we need to redefine what it means to “have it all” because it doesn’t mean the same thing for every woman, nor every person in our profession. It is up to us to not only provide flexible and realistic work arrangements for those who place an emphasis on personal and professional objectives, but also to be open and welcoming to our practitioners in all walks of life, especially those who have taken a break and seek to reengage in the practice. The Dallas Bar’s RELAUNCH program is a unique program aimed at assisting women who have taken a step back, or all together stepped away from the practice, to be able to reengage in the profession.

Celebrating and Honoring Women Lawyers

Traditionally, our profession’s most important awards and programs that spotlight achievement have focused disproportionately on men. This needs to change as well. This year, the Dallas Bar Association started the Living Legends program, a monthly interview series that focuses on spotlighting the careers of our great lawyers. In its inaugural year, the series has focused and will continue to focus entirely on women. The series has featured some of our most accomplished lawyers and jurists such as the Honorable Mary Murphy, the Honorable Maricela Moore, the Honorable Liz Lang-Miers, Nina Cortell and most recently, Kim Askew. In August, the series will continue with Maureen Armour, Professor Emeritus at the SMU Dedman School of Law. Likewise, the DBA’s most significant awards have been swept by women this year, a trend that I suspect will continue for the rest of the year. For example, the Honorable Tonya Parker received the DBA’s MLK Justice Award this past January. It was recently announced that during our Bench Bar conference in November, Cheryl B. Wattley will receive the prestigious Trial Lawyer of the Year award. I have benefited greatly from so many wonderful people who have influenced my life and my career, many of whom have been strong women from all walks of life. I am sure that many of my colleagues—men and women—have similar testimonies. It is important for all of us to not only continue to work hard to recognize and help with the challenges that face women in our profession, but also to celebrate the great achievements of all of these wonderfully strong women lawyers. I look forward to working with you to achieve these goals, my friends. Aaron

Published by: DALLAS BAR ASSOCIATION

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: Aaron Z. Tobin President-Elect: Krisi Kastl First Vice President: Cheryl Camin Murray Second Vice President: Bill Mateja Secretary-Treasurer: Ebony Rivon Immediate Past President: Robert L. Tobey Directors: Vicki D. Blanton (Chair), Rob Cañas, Jonathan Childers (Vice Chair), Stephanie G. Culpepper, Whitney Keltch Green (President, Dallas Association of Young Lawyers), Marissa Hatchett (President, J.L. Turner Legal Association), Stacey Cho Hernandez (President, Dallas Asian American Bar Association), Hon. Martin Hoffman, Kate Kilanowski, Jennifer King (President, Dallas Women Lawyers Association), Hon. Audrey Moorehead, Javier Perez (President, Dallas Hispanic Bar Association), Hon. Monica Purdy, Lindsey Rames, Kelly Rentzel, Bill Richmond, Sarah Rogers, Mary Scott, Amy M. Stewart, and Mary Walters Advisory Directors: Ashlei Gradney (President-Elect, J.L. Turner Legal Association), Andy Jones (PresidentElect, Dallas Association of Young Lawyers), Jonathan Koh (President-Elect, Dallas Asian American Bar Association), Elsa Manzanares (President-Elect, Dallas Hispanic Bar Association), Derek Mergele-Rust (President, Dallas LGBT Bar Association), and Marisa O’Sullivan (President-Elect, Dallas Women Lawyers Association) Delegates, American Bar Association: Hon. Rhonda Hunter, Mark Sales Directors, State Bar of Texas: Chad Baruch, Rebekah Brooker, Michael K. Hurst, Mary Scott, Robert Tobey HEADNOTES Executive Director/Executive Editor: Alicia Hernandez Communications/Media Director & Headnotes Editor: Jessica D. Smith In the News: Judi Smalling Display Advertising: Annette Planey, Jessica Smith PUBLICATIONS COMMITTEE Co-Chairs: James Deets and Beth Johnson Vice-Chairs: Elisaveta (Leiza) Dolghih and Joshua Smeltzer Members: Logan Adcock, Benjamin Agree, Dallas Andersen, Andrew Botts, David Brickman, Catherine Bright Haws, Ian Brown, Srinivasan Chakravarthi, Lindsay Drennan, Alexander Farr, Dawn Fowler, Candace Groth, Ted Huffman, Neil Issar, Alexandra Jones, Krisi Kastl, Katherine Kim, Brian King, Jared Knight, John Koetter, Margaret Lyle, Majed Nachawati, Keith Pillers, David Ritter, Carl Roberts, John Shipp, Jared Slade, Sarah Spires, Jay Spring, Sarah-Michelle Stearns, Scott Stolley, Robert Tarleton, Paul Tipton, Anastasia Triantafillis, Pryce Tucker, Kathleen Turton, Peter Vogel, Benton Williams, Jason Winford DBA & DBF STAFF Executive Director: Alicia Hernandez Accounting Assistant: Shawna Bush Communications/Media Director: Jessica D. Smith Controller: Sherri Evans Events Director: Rhonda Thornton Executive Assistant: Liz Hayden Executive Director, DBF: Elizabeth Philipp LRS Director: Biridiana Avina LRS Program Assistant: Marcela Mejia LRS Interviewer: Viridiana Rodriguez Law-Related Education & Programs Coordinator: Melissa Garcia Marketing Coordinator: Mary Ellen Johnson Membership Director: Kimberly Watson Director of Legal Education: Kathryn Zack Publications Coordinator: Judi Smalling Receptionist: Araceli Rodriguez Staff Assistant: Yedenia Hinojos DALLAS VOLUNTEER ATTORNEY PROGRAM Director: Michelle Alden Managing Attorney: Holly Griffin Mentor Attorneys: Kristen Salas, Katherine Saldana Paralegals: Whitney Breheny, Miriam Caporal, Star Cole, Tina Douglas, Carolyn Johnson, Andrew Musquiz, Alicia Perkins Community Engagement Coordinator: Marísela Martin Copyright Dallas Bar Association 2021. 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.

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Equal Access to Justice Campaign Co-Chairs Named STAFF REPORT

Stewart Clancy, Olesja Cormney, and Amy M. Stewart have been named CoChairs of the 2021-2022 Equal Access to Justice (EAJ) Campaign benefiting the Dallas Volunteer Attorney Program (DVAP). Hilda Galvan, of Jones Day, and Lanesha Minnix, of Flowserve Corporation, will serve as Honorary Chairs. Hilda Galvan, is the Partner-in-Charge of the Dallas office of Jones Day. She is a nationally recognized trial lawyer who has represented technology companies in intellectual property litigation in courts across the country for more than 25 years. She has served as lead counsel in the enforcement of patent portfolios as well as defense of infringement allegations. Her cases have involved various technologies, including electronics, software wireless communication, and semiconductor processes, among others. “2020 is a year that due to COVID brought such great losses to our community, including loss of lives, jobs, and homes. Those losses had an even greater impact on women, especially women of color. EAJ gives these women and their families’ access to the legal assistance that they need to deal with some of those losses. It gives them access to justice. That is why it is especially important to me, as a woman of color, to serve as the Co-Chair of EAJ in 2021,” said Ms. Galvan. “From helping veterans gain access to health benefits to supporting families move forward in life—the Equal Access to Justice Campaign affords civil legal aid for people who otherwise wouldn’t have the financial resources to obtain legal representation,” added Lanesha Minnix, Flowserve Chief Legal Officer. “I’m honored to serve as CoChair for this year’s Campaign and support members of our community in their journey for justice.”

Hilda Galvan

Lanesha Minnix

Ms. Minnix has served as SVP, Chief Legal Officer since June 2018. Prior to joining Flowserve, Ms. Minnix served as SVP, General Counsel for BMC Stock Holdings, Inc. (BMC), a leading provider of diversified building products and services. Prior to joining BMC, Ms. Minnix was Vice President, Deputy General Counsel and Chief Compliance Officer for ABM Industries Incorporated (ABM), a Fortune 500 facility solutions company. Stewart Clancy is the Senior Director, Risk Management, at Capital One. He began his career with Capital One in 2017. In his current position, he leads the Risk Office team in supporting Capital One Financial Services’ largest line of business. In addition, he is a member of the executive leadership team, advising senior executives on risks, legal and regulatory compliance associated with all products, services and practices. “There is a large population of people in the Dallas area with very limited or no access to the protections offered by our legal system. I support the EAJ Campaign and DVAP because it directly addresses this inequality, and offers a unique opportunity to make an incredible impact on thousands of lives in our community,” said Mr. Clancy. Olesja Cormney is Managing Counsel in

Stewart Clancy

Olesja Cormney

the Labor and Employment Group for Toyota Motor North America, Inc. In her role, Ms. Cormney provides strategic advice and training to her clients on all aspects of labor and employment law, and oversees defense of employment matters. Most recently, she has been on the front line of the response to the pandemic, helping guide human resources and the executive team through all the challenges and opportunities presented by COVID-19. “My passion is to be a Champion of Hope and a Disruptor of the Poverty Cycle,” said Ms. Cormney. “Effective legal assistance remains out of reach for many members of our community. Lack of access to justice perpetuates poverty, exacerbates societal inequities, and destroys hope for a better future. Access to legal aid is a lifeline for the most vulnerable. My work as a Co-Chair on the Equal Access to Justice Campaign gives me a platform to champion hope during these challenging times, create tangible opportunities, help break a cycle of poverty and devastation, and stand up for access to justice for all.” Amy M. Stewart is the Founding Partner at Stewart Law Group PLLC, a minority and woman-owned litigation boutique. Her areas of legal practice include labor and employ-

Amy M. Stewart

ment litigation/ADR, commercial litigation, product liability and ERISA-related work. She has served the legal and Dallas community in numerous ways, some of which include holding positions on the Board for not only the DBA, but also Texas Association of Defense Counsel, The Salvation Army and Educational First Steps, as well as participating in Fellowship Bible Church’s Bridging the Gap Food Program. In addition, she has served as Co-Chair of various ABA Sections. “During my tenure on the DBA Board of Directors, one of the most rewarding experiences is serving as a Co-Chair for the 2021 Equal Access to Justice Campaign. To whom much is given, much is expected. So, I expect that my colleagues in the legal profession and beyond will be ‘all in’ this year on providing the resources my Co-Chairs Olesja, Stewart, and I need to fully support the Dallas Volunteer Attorney Program’s initiatives,” said Ms. Stewart. The Chairs will be assisted by Co-Vice Chairs Wes Alost, of Mayer LLP, Stephanie Gause Culpepper, of ORIX USA Corporation, and Yuki Whitmire, of Vistra Energy. The Campaign will culminate at the Inaugural of 2022 DBA President Krisi Kastl on January 22, 2022. HN

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D al l as Bar A ssoci ati on l Headnotes 7

2021 DBA 100 CLUB MEMBERS – THANK YOU! We are proud to recognize the following firms, organizations, corporate legal departments, government agencies and law schools for their 100% support of the Dallas Bar Association as members of the 2021 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 involvement in the community. The DBA 100 Club consists of firms with two or more attorneys as well as corporate legal departments, organizations, law schools and government agencies that have 100% membership in the DBA. Recognition is free and given to the 2021 DBA 100 Club members in our Headnotes publication, at our Annual Meeting in the fall and in the 2022 DBA Membership Directory. Please note that the DBA 100 Club is FREE recognition and open for renewal annually. We do not automatically renew an organization’s membership due to changes in attorney rosters each year. It is not too late to become a member of the 2021 DBA 100 Club! Please submit your request via email including a list of all lawyers in your Dallas office to Kim Watson, kwatson@dallasbar.org. We will verify your list with our membership records and once approved, your organization will be added to the 2021 DBA 100 Club for recognition at our Annual Meeting and the 2022 DBA Directory!

THANK YOU FOR YOUR SUPPORT OF THE DALLAS BAR ASSOCIATION! DBA 100 Club Members as of July 8, 2021 2 to 5 Attorneys Adair, Morris & Osborn, P.C. Adam L. Seidel, P.C. Addison Law Firm P.C. Albert & Stobaugh, PLLC Aldous Walker LLP Anderson & Brocious P.C. Anderson & Riddle, LLP Anderson Grossman PLLC Arnold & Freeman Ashcraft Law Firm Atkins, O’Toole & Briner, L.L.C. Atwood Gameros LLP Avant Law Firm Ayres Law Office, P.C. Balekian Hayes, PLLC Barbee & Gehrt, L.L.P. Bisignano Harrison Neuhoff LLP Blackwell & Duncan, PLLC Blankenship, Wiland & O’Connor, P.C. Booth Albanesi Schroeder PLLC Bower PLLC Braziel Dixon LLP Broden & Mickelsen Campbell & Associates Law Firm, P.C. Capshaw & Associates Chen Dotson, PLLC Chris Lewis & Associates, P.C. Clark Law Firm Crain Brogdon Rogers, LLP Davenport & Epstein, P.C. Dyer & Mauro, PLLC Fisher & Welch, P.C. Fuller Mediations FurgesonMalouf Law PLLC Gauntt Koen Binney & Kidd, LLP Hitchcock Evert LLP Horton & Archibald, P.C. Hosch & Morris, PLLC Howard & Spaniol, PLLC Howell & Willingham, PLLC JMA Firm, PLLC Johnston Tobey Baruch, P.C.

Kastl Law, P.C. Kellett & Bartholow PLLC Langley LLP Law Office of Andrew & Mark Cohn Law Office of Jodi McShan, PLLC Law Offices of Maduforo & Osimiri Law Offices of Otstott & Jamison Law Offices of Richard A. Gump, Jr., P.C. Lawrence Law PLLC Lisa E. McKnight, P.C. Marshall & Kellow, LLP Mincey-Carter, PC Murchison Law Firm Pace & Pace, L.L.P. Peeples & Kohler, P.C. Prager & Miller, P.C. Pyne & Prather, PC Quaid Farish, LLC RegitzMauck PLLC Riney Packard PLLC Russell & Wright, PLLC Sawicki Law Sheils Winnubst, PC Skierski Jain PLLC Smith, Stern & Friedman, P.C. Spencer & Johnson, PLLC Stromberg Stock, PLLC Thomas, Feldman & Wilshusen, L.L.P. Turton & Pinkerton, PLLC Voge Rohe PLLC Walker & Long Waranch & Nunn PLLC Westerburg & Thornton, P.C. Wisener Nunnally Roth LLP Wolff Law, PLLC Woolley <> Wilson, LLP. Yarbrough & Elliott, P.C. 6 or More Attorneys Ackels & Ackels, L.L.P. Bradley Arant Boult Cummings, LLP Bragalone Olejko Saad PC Burford & Ryburn, L.L.P.

Calabrese Budner LLP Canterbury, PC Cavazos Hendricks Poirot, P.C. Cobb Martinez Woodward PLLC Condon Tobin Sladek Thornton Nerenberg Cooper & Scully, P.C. Cowles & Thompson, P.C. Cozen O’Connor DeHay & Elliston, L.L.P. Durham, Pittard & Spalding, LLP Estes Thorne & Carr PLLC Godwin Bowman PC Griffith Barbee PLLC Guida, Slavich & Flores, P.C. Hall Render Killian Heath & Lyman Harper & Bates LLP Hayward PLLC JAMS Johnston Clem Gifford PLLC Jones, Allen & Fuquay, L.L.P. K&L Gates LLP Kilgore & Kilgore, PLLC KoonsFuller McGuire, Craddock & Strother, P.C. Meadows, Collier, Reed, Cousins, Crouch & Ungerman, L.L.P. Parsons McEntire McCleary PLLC Passman & Jones, P.C. Payne Mitchell Ramsey Law Group L.L.P. Peckar & Abramson, P.C. Sargent Law, P.C. Scroggins Law Group, PLLC Shackelford, Bowen, McKinley & Norton, LLP Stacy Conder Allen LLP Staubus & Randall, L.L.P. Steed Dunnill Reynolds Bailey Stephenson LLP The Ashmore Law Firm, P.C. The Hartnett Law Firm Tollefson Bradley Mitchell & Melendi, LLP Touchstone Bernays Winstead PC

Ziegler Gardner Bell, PLLC Corporate Legal Departments Arcosa, Inc. Borden Dairy Company Capital Senior Living, Inc. Compatriot Capitol Inc. Dunhill Partners, Inc. El Rancho Inc. Gaedeke Energy GFR Holdings, LP HomeVestors of America, Inc. LALA U.S., Inc. North Texas Tollway Authority Rosewood Resources, Inc. Tenaska, Inc. The Rosewood Corporation Government Agencies, Law Schools & Organizations City of Irving City Attorney’s Office CitySquare LAW Dallas County Community College District Dallas County Probate Courts Federal Reserve Bank of Dallas Mosaic Family Services Inc. UNT Dallas College of Law Special Recognition Students of the UNT Dallas College of Law

8 He a d n o t e s l D a l l a s B a r A s s o ciation

Focus

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Construction/Real Property Law

The Best-Laid Plans of Mice and Men – Texas Senate Bill 219 BY BRIAN M. STORK

On June 16, 2021, Governor Greg Abbott signed into law Senate Bill 219 bringing Texas in line with the majority of other states limiting the ability of a property owner to hold contractors responsible for design errors. This article explores the history of Texas law on this subject and the changes enacted by Senate Bill 219. Contractors frequently assume they will have no responsibility for errors in the plans and specifications prepared by design professionals. Understandably, contractors often assume if they build a project per the plans and specifications and later there is a problem resulting from a design error, the owner and/or design professional will bear the risk of loss. However, before the passage of Senate Bill 219, in what is commonly referred to as the Lonergan Rule,

Texas followed the minority position that a contractor, and not the owner, bears the risk of any design errors when the applicable contract does not specifically address this issue (as is often the case). To further compound the inequity of this situation, contractors also, generally, do not have a direct cause of action against the design professional whose plans and specifications contained the applicable error. This is because contractors do not have a direct contractual or other relationship with the design professional. Rather, the design professional is, generally, hired by the owner. Consequently, if the operative construction contract was silent on this issue, a contractor could be held responsible for any construction defects existing merely because the contractor followed the design professional’s plans and specifications. The Lonergan Rule was first promul-

Save the Date Judicial Investiture of the

Hon. Rhonda Hunter 303rd District Court

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gated by the Texas Supreme Court in Lonergan v. San Antonio Loan & Trust Co., 104 S.W. 1061 (Tex. 1907). The Lonergan Rule states a contractor bears the risk of loss arising from any defective plans and specifications unless the construction contract contains express language to the contrary. In 1918, in United States v. Spearin, the United States Supreme Court took a contrary position and held, “if the contractor is bound to build according to plans and specifications prepared by the owner, the contractor will not be responsible for the consequences of defects in the plans and specifications.” 248 U.S. 132, 136 (1918). Since such time, the Spearin Doctrine has become the majority rule. Indeed, for a time, some Texas courts expressed approval of the Spearin Doctrine. However, in 2012, the Texas Supreme Court reinforced its adoption of the Lonergan Rule, and rejected the Spearin Doctrine in El Paso Field Servs. v. MasTec North America, Inc. Accordingly, the Lonergan Rule remained controlling authority in Texas. Senate Bill 219 represents the Texas Legislature’s effort to bring Texas in line with the majority of other jurisdictions by way of adopting the Spearin Doctrine, with some modifications/exceptions. Senate Bill 219 is found in the newly created Chapter 59 of the Texas Business and Commerce Code. It will apply to contracts entered into on or after September 1, 2021. Under Senate Bill 219, a contractor is not responsible for the consequences of design defects in plans and specifications provided to the contractor by the owner. Tex. Bus. & Com. Code § 59.051. A contractor also may not warranty the accuracy, adequacy, sufficiency

or suitability of any such plans and specifications. Id. However, if a contractor is aware of a defect, or using ordinary diligence should have discovered a defect, the contractor must notify the owner, in writing, within a reasonable time of discovering the defect, or the contractor may be liable for the consequences resulting from the failure to disclose the defect. Tex. Bus. & Com. Code §§ 59.051(b) and (c). Any attempted contractual waiver of this issue is deemed void. Tex. Bus. & Com. Code § 59.03. Importantly, Senate Bill 219 will not apply to construction contracts related to: (i) critical infrastructure facilities; (ii) design-build contracts; and (iii) engineering, procurement and construction contracts. Tex. Bus. & Com. Code § 59.02. Practitioners should closely examine the detailed definitions for each of these terms found in Section 59.001 of the Texas Business and Commerce Code, as they are quite broad in scope. Further, construction contracts should be updated to comply with the terms of the new statute, with specific attention to requiring contractors to provide timely written notice of defects. Senate Bill 219 represents an important update to Texas construction law that brings the state in conformity with almost all other jurisdictions. It should lead to greater predictability regarding which parties on a construction project bear the risk of loss arising out of a design error. With greater predictability of risk of loss comes cost savings and increased efficiencies. HN Brian M. Stork is a partner at Kane Russell Coleman Logan PC. He can be reached at bstork@krcl.com.

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D al l as Bar A ssoci ati on l Headnotes 9

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10 H e a d n o t e s l D a l l a s B a r A s s ociation

Focus

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Construction/Real Property Law

Construction Defects and the RCLA BY MONICA URIBE

Several Texas metro areas lead the country in new residential construction starts. However, the race to build homes can lead to sacrifices in quality, resulting in shoddy construction. Homeowners may spend several months going back and forth with their builder before they seek an attorney. While time is of the essence to preserve claims, failure to follow the procedures of the Residential Construction Liability Act (RCLA) can be detrimental to a homeowner’s claim.

Applicability

The Texas legislature created the RCLA (Texas Property Code Chapter 27) over 30 years ago to encourage homeowners and builders to work out their disputes prior to litigation. Because construction involves multiple trades, construction defect cases often become large, multi-party matters, and thus, pre-suit negotiations may indeed help avoid unnecessary expense. The RCLA is a mandatory framework for all actions arising from residential construction defects. The RCLA does not create a cause of action, but rather modifies causes of action that otherwise exist for damages arising from construction defects. The RCLA defines “construction defect” as “a matter concerning the design, construction, or repair of a new residence, of an alteration of or a repair or addition to an existing residence, or an appurtenance to a residence, on

which a person has a complaint against a contractor.” Further, a “contractor” is broadly defined to encompass 1) builders, 2) persons contracting with purchasers of a new residence, or 3) persons contracting with an owner or developer of a condominium for the construction, alteration, or repair of a new residence, existing residence, or appurtenance. The RCLA does not apply to damages arising from personal injuries, wrongful deaths, damage to goods, fraudulent real estate transactions, contractor’s wrongful abandonment claims, or violations of the Construction Trust Fund Act. Whether the RCLA applies to defective construction products designed and installed by a contractor in a new residence remains unanswered.

RCLA Procedures

A homeowner may be rewarded for following the RCLA in the form of early settlement or access to certain categories of damages. On the other hand, failure to follow procedures may result in abatement, dismissal, and/or a limitation of damages. Notice - Prior to initiating an action, a claimant must provide 60 days’ notice to the contractor(s), via certified mail, specifying the defects in reasonable detail. The notice must clearly state it is made pursuant to the RCLA. Upon receipt of the notice, the contractor may request several forms of evidence. Therefore, a claimant would be prudent to seek a preliminary expert

opinion from a relevant construction professional regarding their purported defects. (Note: cases brought by condominium associations organized pursuant to Tex. Prop. Code Ch. 82 require reports by an engineer.) Inspect - Following receipt of the notice, a contractor has 35 days to request to inspect the claimant’s property and document the purported defects. Offer - Following receipt of the notice, a contractor has 45 days in which it may make a written offer of settlement to the claimant via certified mail. The contractor may offer to make the repairs, have repairs made by a third-party, or provide a monetary settlement. Any offer to make repairs must describe the kind of repairs in reasonable detail. Reject - Within 25 days of receiving the contractor’s offer, if considered unreasonable by the claimant, the claimant shall advise the contractor in writing of the rejection and provide reasonable detail why the offer is unreasonable. An offer is considered rejected if it is not accepted within this time frame. Supplemental Offer - Following receipt of the claimant’s rejection, the contractor has 10 days in which it may supplement its written offer. Repairs – Upon receiving a written acceptance of an offer, the contractor has 45 days in which to make the agreed repairs.

Caution for Homeowners

Failure to provide proper notice

or allow the contractor a reasonable opportunity to inspect may result in an automatic abatement. Failure to accept a reasonable offer or failure to permit a contractor to make repairs pursuant to an accepted offer of settlement may result in limited damages and can cut off attorney’s fees from the date of the unreasonable rejection.

Caution for Contractors

Repairs made pursuant to an accepted settlement offer shall be made within 45 days of acceptance, unless the delay is caused by the claimant or events beyond the contractor’s control. If an offer of settlement is unreasonable or a contractor refuses to initiate repairs pursuant to an accepted settlement, limitations on the claimant’s damages shall not apply.

Conclusion

Among construction practitioners, there is no doubt that the RCLA can benefit from an overhaul. The RCLA controls in the event of a conflict with any another law or cause of action, including the DTPA. However, purchase agreements, home warranties, or insurance policies may also have their own procedures which may add another layer of complexity. An attorney representing a homeowner or contractor would be wise to read and reread the RCLA’s requirements. HN

Monica Uribe is an Attorney at Kerrane Storz, P.C. She may be reached at muribe@kerranestorz.com

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D al l as Bar A ssoci ati on l Headnotes 11

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12 He a d n o t e s l D a l l a s B a r A s s ociation

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Construction/Real Property Law

Traditional Financing? Where We’re Going, We Don’t Need It BY JULIA BECKMAN AND PHILLIP J.F. GEHEB

When we hear “alternative forms of financing,” our first thought is usually that there has to be a reason traditional financing cannot be obtained. We may also assume a project will be more challenging overall, and possibly unsuccessful. While this is sometimes the case, there are some very worthwhile alternative forms of financing available to a variety of borrowers and projects. Tax-credit programs such as the New Markets Tax Credit, the Low-Income Housing Tax Credit and the Historic Tax Credit, and the Property Assessed Clean Energy program, among others, are unique sources of financing for real estate developers and investors. While they can be complex, the benefits are significant, and attorneys should have a basic understanding of these programs. The New Markets Tax Credit (NMTC) is a federal tax-credit program that is available to borrowers depending on the purpose and location of their project. The program was passed originally as part of the Community Renewal Tax Relief Act

of 2000, and though it is temporary and must be renewed, it has continued to be extremely successful. Some of the benefits of the NMTC include non-conventional financing terms such as lower interest rates, higher loan to value ratios, lower debt service coverage ratios, and low or no origination fees. Typically, these loans are interest-only for the first seven years, the time during which the credit is claimed. The tax credit is equal to 39 percent of the amount of cash investments made as part of the NMTC project that are used to make an investment, known as a Qualified Low-Income Community Investment (QLICI), into a Qualified Active LowIncome Community Business (QALICB), the borrower. To be eligible, the borrower must be in a low-income community or serve a targeted population, both of which are defined by the IRS. Some examples of investments include community facilities operated by non-profits, manufacturing facilities, and other projects that create jobs, provide services to low-income communities, or have beneficial social or environmental impacts. The Low-Income Housing Tax Credit

Need Help? You’re Not Alone. Texas Lawyers’ Assistance Program…………...(800) 343-8527 Alcoholics Anonymous…………………………...(214) 887-6699 Narcotics Anonymous…………………………….(972) 699-9306 Al Anon…………………………………………..…..(214) 363-0461 Mental Health Assoc…………………………….…(214) 828-4192 Crisis Hotline………………………………………..1-800-SUICIDE Suicide Crisis Ctr SMU.…………………………...(214) 828-1000 Metrocare Services………………………………...(214) 743-1200 More resources available online at www.dallasbar.org/content/peer-assistance-committee

(LIHTC) incentivizes the development of affordable rental housing. The available tax credits vary depending on the type of project. The application process is extremely competitive, and the projects are lengthy and often complex, requiring various real estate, legal, and financial professionals. The Texas Department of Housing and Community Affairs administers this program, after the federal government has made allocations to each state annually. The LIHTC program requires properties to meet certain requirements for the rental rates charged to tenants and the income of tenants. In addition to the income-tax benefits that investors receive, the LIHTC program is one of the most successful federal affordable housing programs in history. Nationally, there are approximately 110,000 affordable units created each year through the program, and the projects typically perform well for the investors involved. The Historic Tax Credit (HTC) is also a federal program, encouraging rehabilitation of properties located within and contributing to a registered historic district or those that are listed on the National Register of Historic Places. The HTC is a 20 percent tax credit for qualified expenditures to rehabilitate an eligible property and can be claimed over a 5-year period. Qualified expenditures include structural work, plumbing, HVAC, and associated construction fees, legal fees, and other construction-related costs that increase the property’s basis. Like the other programs, the HTC requires collaboration across multiple specialties, including historic consultants and architects. In addition to the federal program, Texas also has its own program, the Texas Historic

Rehabilitation Tax Credit, which is a 25 percent credit against the Texas Franchise Tax in addition to real-property tax abatement and a sales-tax exemption on labor costs associated with a historic rehabilitation. Finally, the Property Assessed Clean Energy program (PACE), creates low-cost, long-term loans through voluntary assessments imposed on many types of commercial real property with the consent of existing mortgage lenders. The focus of the program is energy efficiency and water conservation improvements made to existing structures. There are a number of benefits, including the ability to transfer the repayment obligation to the next owner upon a sale of the property. Like many states, Texas has passed an enabling statute that allows local governments to create PACE programs at the city or county level. The Texas PACE Authority (TPA) administers the program for most municipalities in Texas. Beyond the benefits to investors, the process is streamlined by the TPA, and is not quite as complex as the Federal programs described above. The PACE program also creates jobs, saves water and energy, and reduces CO2 emissions. While these programs may seem daunting due to their complexity, there are significant benefits for investors and borrowers, and the additional community benefits such as job creation, neighborhood revitalization, and environmental conservation do not typically result from traditional financing projects. HN Julia Beckman is an Associate at Munsch Hardt Kopf & Harr, P.C. She can be reached at jbeckman@munsch.com. Phillip J.F. Geheb is a Shareholder at the firm and can be reached at pgeheb@munsch.com.

DVAP’s Finest TED HUFFMAN

Ted Huffman is a litigation associate with Hunton Andrews Kurth LLP.

Our KRCL Construction Team Builds on Advice & Solutions.

How did you first get involved in pro bono? One of my first exposures to pro bono work was during law school, when I had the opportunity to serve as a student attorney in SMU’s Civil Clinic. Through the Clinic, many of us felt for the first time in our young careers that we were making an impact, and the clients were always very appreciative. This experience left an indelible mark on me and served as an early motivator for future community involvement. What types of cases have you accepted? Each pro bono case is different. As a litigator, I enjoy the cases that require court room participation. My cases so far have included a variety of civil litigation matters, including issues of family law, adoption proceedings, and real property disputes. Which clinics have you assisted with? I have participated in various legal clinics throughout my career. During the COVID19 pandemic, Fawaz Bham at my firm helped set up an online tool that was used to host virtual intake clinics for DVAP. These virtual clinics became one of my favorite and more rewarding pro bono activities. Describe your most compelling pro bono case. A young family was being mistreated by its landlord, and the case ended up in an ugly eviction court proceeding. We represented the family and were able to get the landlord’s case thrown out. After the hearing, the family was overjoyed. It is cases like these that make it all worth it. Why do you do pro bono? There is a great need in our community for those who need legal assistance but cannot afford it. We have an opportunity as attorneys to provide important services for this community, just by getting involved. There is also something very fulfilling about using your role as an attorney to give back and make an impact without expecting anything in return. This feeling keeps me coming back for more.

Pro Bono: It’s Like Billable Hours for Your Soul. Visit Our Construction Law Blog at www.framingissues.com www.krcl.com Dallas + Houston

To volunteer or make a donation, call 214/748-1234, x2243.

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D al l as Bar A ssoci ati on l Headnotes 13

12:16 PM

CMY

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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

Column

A ugust 2021

Ethics

The Ethics of Abstracts of Judgment: Get A-OK with your AOJ BY ANDREW R. KORN

“Any competent attorney who has just won a judgment ought to be able to complete an abstract with ease.” JSW Steel, 771 F.3d 301 (5th Cir. 2014) (Jones, J. dissenting). In Texas, an abstract of judgment (AOJ) is a printed form designed to give notice of a judicial lien upon all non-homestead real property of a judgment debtor, in any County where an AOJ that complies with the law is properly recorded and indexed by the County Clerk. A lien created by an abstract of judgment does not attach to the judgment debtor’s personal property. Texas Property Code (TPC) Chapter 52 governs AOJs. Even though the TPC specifies a “substantial compliance” standard, the standard is often applied as “strict compliance.” Thus, the risk that a judgment creditor will forfeit the ability to create a lien by its own failure

to comply with TPC §52.003 is a genuine possibility given Texas courts stringent enforcement of the abstract requirements. For example, in In re EP Energy (S.D.Tex. Bankr. 2020) the court held an AOJ invalid where it listed a single interest rate for the entire judgment, rather than separate interest rates for principal and attorney’s fees. Filing an AOJ for a client involves several ethical rules, including TDRPC 1.01 (Competency); 1.02 (Scope and Objectives of Representation); 1.03 (Communication); 1.04 (Fees) and 8.04(a)(2-4) (Misconduct). Before filing an AOJ, a lawyer must be capable of determining: • Finality of judgment. Because an AOJ on an interlocutory judgment is void. • Dormancy and revival of judgments. Because a judgment lien is only as good as the life of the underlying judgment. • Alias or other names used by the judgment debtor. Because the judgment lien will only be indexed in the name(s)

of the judgment debtor as they appear in the judgment, if the judgment debtor owns real property in a variation of his name, the lawyer will need to obtain an order adding names to an AOJ. • Where judgment debtor may own real property. The obvious starting point is determining where the judgment debtor owns or stands to inherit real property. The lawyer and client need to be clear on who is going to perform the research that will be used in selecting where to file AOJs. • The balance of the judgment. Math is involved. The lawyer should communicate to the client the importance of identifying the date and amount of every credit to the judgment. • Whether the Clerk’s form AOJ is defective. The Clerk’s AOJ form may not substantially comply with TPC §52.003. Fortunately, TPC §52.002 permits the judgment creditor to prepare an AOJ, which can be a more efficient way to make sure the AOJ complies. When time is of the essence for filing an AOJ, preparing it yourself may be the only option.

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ment to file AOJs when the lawyer is ignorant about what is involved? A lawyer should communicate the limitations of an AOJ. For example, an AOJ does not perfect the judgment for purposes of extending the life of a judgment. For that, the client must pursue judgment enforcement by Writ of Execution. A lawyer should identify matters that may arise after filing AOJs, such as: • Homestead contests. The judgment debtor’s assertion of homestead rights against the judgment lien can be tested, and contested. • Determination of priority of liens. Compare Hazle, (Eastland 1947) with Martin v. Cadle Co., (Dallas 2004).

Avoiding Misconduct

Several cases have determined that filing an AOJ after a bankruptcy is a violation of the automatic stay, and that a knowing violation constitutes contempt. Furthermore, TCP&RC §12.002 prohibits filing a fraudulent lien or claim against real property, providing recovery of $10,000 minimum damages, attorney’s fees, and exemplary damages “found by the court.” Whether the filing of a void or defective AOJ violates this civil statute, or any criminal statute, has not been determined.

Andy Korn is board certified in civil appellate law by the Texas Board of Legal Specialization. He may be contacted at akorn@ receiverandrewkorn.com.

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D al l as Bar A ssoci ati on l Headnotes 15

KOONSFULLER DALLAS TEAM Left to Right: Lindsey Vanden Eykel, Justin Whiddon, Taylor Joeckel, Fred Adams,* Ike Vanden Eykel* (CEO),

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DBA WE LEAD: From the Corporate Perspective the discussions I had with the mentors in the DBA WE LEAD program, I made a concerted effort to insert myself into more of the business discussions rather than just be the contracts and compliance resource at my company. Additionally, on multiple occasions since the program concluded, I have advocated to be put on certain projects (such a debt financing deal) and take a more prominent role in corporate governance (such as becoming corporate secretary). The mentors made me more confident in asserting myself at work. —Shruti

BY CRYSTAL MOORE-MITCHELL AND SHRUTI KRISHNAN

Read Part II next month from the firm perspective. When I first saw the inaugural announcement of the DBA WE LEAD program, I was immediately ready to apply for the program. I was eager to participate in a program that offered an opportunity to network and learn with a group of like-minded women attorneys, and even more excited to participate in a program that assisted with navigating through a crucial point in an attorney’s career. However, after reading the fine print (like every good attorney) I realized that I had not reached the experience level required for the program. So, I marked my calendar for 2019, and then waited…2019 finally arrived and like every good plan, life was threatening to derail it. I was in the middle of switching jobs and I thought it wasn’t a good time, since I needed to focus on my new job. However, I am so glad that I didn’t listen to myself and applied anyway. The program turned out to be just what I needed, and right when I needed it. It gave me the confidence I needed to manage the overwhelming learning curve that comes with any new role, and provided the perfect sounding board to remind me that I was prepared and that they didn’t pick the wrong person. As an in-house attorney, I relished the opportunity to meet one-on-one with executive level in-house attorneys, who were once in my shoes, and had successfully climbed the ranks in their respective industries and areas. More importantly, these successful women were willing to volunteer their time to help others also succeed professionally. As

———

Crystal Moore-Mitchell

Shruti Krishnan

a result of their advice and guidance, I volunteered for a project at work, which resulted in an unexpected promotion. The most exciting and unexpected part of just simply raising my hand to take on a project, was not the promotion, but rather the professional growth and experience that has had rippling effects in my career. One of the stark differences between traditional firm and in-house roles is the lack of clear promotion opportunities, since most in-house departments are relatively flat. As I walked through this reality with my in-house mentors, they walked me through the steps to chart my own course and create my own opportunities for professional growth, which admittedly looked different, but still provided an incredible opportunity to garner experience. In addition to encouraging me to raise my hand, they held me accountable to my plans, which in most cases is 90 percent of the battle. This advice was golden, and this encounter undoubt-

edly changed my career trajectory. And while I was not in the room during the creation of the DBA WE LEAD program, I imagine this advice and professional impact is the exact reason why this program was created and thoughtfully designed. In addition to the incredible professional impact, the program also offered the opportunity to connect with peers. One of those peers was Shruti Krishnan. Ironically, this was not the first time that Shruti and I participated together in leadership programing. Shruti and I initially met while participating in the Dallas Association of Young Lawyers (DAYL) Leadership Class, and we became fast friends. —Crystal

DBA WE LEAD WOMEN EMPOWERED TO LEAD APPLY NOW! DBA WE LEAD (Women Empowered to Lead in the Legal Profession) is a leadership program designed to address the challenges of high-performing women who have practiced law for 8 to 15 years. WHO DBA WE LEAD is accepting applications from women lawyers who graduated from law school between 2006 and 2013, have established themselves in their careers and communities, and want to further explore advancement opportunities and leadership skills. WHEN DBA WE LEAD runs from February 2022 to November 2022 and includes four half-day sessions with mandatory attendance.

Cost: $1,000 Application Deadline: November 22, 2021 Need-based scholarships are available For information and online application visit: www.tinyurl.com/2022DBAWELEAD Questions? Contact Judi Smalling at jsmalling@dallasbar.org.

——— I echo Crystal’s sentiments above. I also was hesitant to apply to the DBA WE LEAD program due to my own transition in 2019 from Associate General Counsel to General Counsel at the company I work at; however, I applied because I was looking for a broader support system of in-house women attorneys. As a solo GC at a company, I did not have the built-in support and camaraderie of a team of attorneys at work. Many of my friends in the legal community are firm attorneys, and while we do lean on and empower each other, there is a clear difference in the politics at law firms versus companies. Additionally, as a fairly young (in my career) female GC, I wanted to seek guidance from those who have been in my shoes and have worked in different corporate environments so that I could determine what the next steps I needed to take were with respect to my career growth. The speed networking event with executive level in-house attorneys was invaluable in terms of the guidance that was given. While in the past I was hesitant to speak up to be put on a specific project or provide strategic advice from a business rather than purely legal perspective, based on

While 2020 was met with many challenges due to the global pandemic, the DBA WE LEAD planning committee was able to quickly and successfully switch the programming from in-person to virtual, and while we are looking forward to once again connecting with the larger group in-person, we still feel that our experience was seamless, thanks to the heroic efforts of the planning committee. In addition to being able to participate in the small mentor groups, the DBA WE LEAD program also featured brain health and mindfulness virtual sessions, and a final session featuring Valorie Burton. Shruti and I will forever be grateful for the impact that the program had on our careers, and thankful for the serendipitous opportunity to once again participate in another leadership program together. While we can’t promise that participation in the DBA WE LEAD program will result in promotions and lifelong friendships. We will promise that your time will be well spent; and you will certainly walk away from the program feeling empowered, prepared to face any career challenge, and equipped to impact the Dallas legal community in a major way! DBA WE LEAD (Women Empowered to Lead) is a leadership program designed to address the challenges of high-performing women who have practiced law for 8 to 15 years. The purpose of DBA WE LEAD is to address the unique challenges facing women in the legal profession; to empower, educate and uplift women lawyers to take an already successful law practice to new heights; and to prepare lawyers for active professional leadership within their law firm, the business community and the community at large. This program is designed for all women lawyers in whatever career role they are in, from law firms to inhouse counsel to those in private industry. To request an application or receive more information, contact Judi Smalling at jsmalling@dallasbar.org. Shruti Krishnan is General Counsel at Tabletop Media LLC d/b/a Ziosk and may be reached at shruti@ziosk.com. Crystal Moore-Mitchell is Senior Counsel at CHRISTUS Health and may be reached at crystal.mooremitchell@ christushealth.org.

DBA ENERGY LAW SECTION'S 2021

XXXVI REVIEW OF OIL & GAS LAW SYMPOSIUM August 5-6, 2021 at the Dallas Bar Association 2101 Ross Ave., Dallas, TX Register at www.reviewofoilandgaslaw.com

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Legal Billing Language to Help Reduce Payment Delays BY CALLISTA HINMAN

Clearly defining all expectations related to fees, billing, and payments during client intake can go a long way toward preventing payment delays and chargebacks. In this article, we will share valuable examples of sample legal billing language that can help you reduce late and non-payments to make sure you get paid for your hard work.

Updating Your Attorney Fee Agreement

To be confident that you and your new clients are on the same page from the initial conversation, start by updating your attorney fee agreement to contain discussions of all essential payments-related topics. At a minimum, this includes the following:

1. Fee Basis

A summary of your firm’s base fees,

including descriptions of specific costs associated with referrals, new matters, work performed by others (such as legal assistants and clerks), and appeals. Be sure to clarify when fees will be calculated using a set hourly rate or as a percentage of the amount recovered on behalf of the client.

Once you’ve made these updates, your next step should be expanding your client intake paperwork to include details about responsibilities related to invoices and payments—both in terms of what you expect from the client and what they can expect from you.

2. Expenses

4. Examples of Essential Billing Language

A description of your out-of-pocket expenses for which the client is responsible (e.g., court costs, filing fees, deposition fee, and transcript fees), how those costs will be deducted, and how expenses will be recalculated in the event there is zero or insufficient recovery of funds on behalf of the client.

In addition to your fee basis, expenses, and fee calculations, there are a few other topics you should consider covering either in your attorney fee agreement or elsewhere in your client intake paperwork.

Attorney’s Billing Obligations 3. Calculation of Attorney’s Fees 5. Let your clients know when they can An explanation of how your fees will be collected and the factors that will be taken into account, such as expenses paid on behalf of your client and any fees owed to a referring attorney.

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expect invoices and what information will be included on those invoices. Example: Attorney will provide Client, at monthly intervals, an itemized statement setting forth in reasonable detail all services by Attorney on behalf of Client, and any costs that have been incurred and/or advanced by Attorney on behalf of Client in the above-referenced matter. The invoice will also show the application of prepaid fees to the monthly invoice, and any resulting balances of prepaid fees and/or unpaid fees.

6. Client’s Payment Obligations

Outline the expectations regarding when the client is required to submit payment as well as the forms of payment your firm accepts. Example: Your legal fees are due and payable [ex: upon receipt of the billing] to be paid no later than [ex:

the last day of the month] and may be satisfied with any of the following payment options: a) By the application of funds held in the firm’s trust account for prepayment of fees, which the firm shall be entitled to transfer upon invoicing b) By paying by paper check or ACH/ eCheck (automated deduction from Client’s designated checking account) c) By the use of a credit card in person or online via the firm’s payment portal d) By paying in cash at the offices of the firm

7. Promise to Pay Provision

A Promise to Pay clause helps guarantee the client understands and agrees to their contractual obligation to pay your firm for the services performed. Example: Once services are engaged, Client recognizes that they are contractually bound to Attorney for their entire fee. All fees paid are non-refundable and must be paid in full. Client understands that fees paid through the use of a debit card, credit card, or other electronic means cannot be revoked or reversed in any manner by the client after legal services are performed. Refunds, when appropriate, shall be paid by check or other electronic funds transfer from Attorney to Client. The key to maximizing your accounts receivable at the end of the year is making a commitment to take these steps at the beginning of every engagement. Start by discussing all expectations related to fees, billing, and payments during client intake. Then use a secure legal payment solution to make it easy for clients to pay. HN

Callista Hinman is a Content Strategist at LawPay. She can be reached at chinman@lawpay.com.

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Construction/Real Property Law

The Times They Are a Changing for Texas Lien Law BY PERRIN B. FOURMY

Chapter 53 of the Texas Property Code contains the basis for statutory Texas mechanic’s and materialman’s liens. Chapter 53 provides one of the main tools contractors and suppliers can use to obtain payment on a project. Failure of contractors, suppliers, or their attorneys to properly apply these provisions can be fatal to a lien claim, especially because perfection of a lien claim involves multiple steps. The Texas Legislature recently passed House Bill 2237, a substantial revision to Chapter 53, which goes into effect in 2022. HB 2237 was touted as a “clean up” bill, intended to make the process easier for parties to interpret and apply Chapter 53. However, the law includes several major changes affecting lien perfection and enforcement. Although there are more changes than the space of this article permits, some of the significant revisions include: • Shortening the statute of limitations to file suit to foreclose a lien from 2 years to 1 year. • Extending lien and notice deadlines that fall on a weekend or holiday to the next business day. • Expressly providing lien rights to design professionals and equipment rental companies. • Providing a standard form for notice letters, similar to the standard forms already in Chapter 53 for lien waivers. • Amending definitions, including for “improvements,” “labor,” and

“work,” and adding “purported original contractor” to simplify sham contractor provisions. “Retainage” now means only contractual retainage. Funds previously called statutory retainage are now “reserve funds.” • Clarifying the deadlines for filing a lien affidavit without reference to the date “the indebtedness accrues.” An original contractor on a commercial project must file the lien affidavit before the 15th day of the 4th month after the month in which the work was completed (by the 15th day of the 3rd month for residential projects). A subcontractor must file the lien affidavit before the 15th day of the 4th month after the later of the month the labor or materials were provided, or the specially fabricated materials were delivered (by the 15th day of the 3rd month for residential projects). • Providing that a subcontractor with a claim for retainage (previously known as contractual retainage) must file an affidavit of lien before the 15th day of the 3rd month after the month the original contract is completed, terminated, or abandoned. • Providing expedited discovery after a claimant files a motion to remove an invalid lien. HB 2237 also eliminated certain provisions of Chapter 53, including: • Eliminating the “2nd Month Notice Letter” requirement for subcontractors. A subcontractor is currently required to give notice to the original contractor by the 15th day of the 2nd month following the month in which the work was performed, or

material was delivered. While the law will expressly permit subcontractors to send the 2nd Month Notice Letter (many subcontractors agree the 2nd Month Notice Letter is very helpful in obtaining payment), it is no longer required to perfect a lien claim. The 3rd month notice to the owner and original contractor remains. • Eliminating Section 53.083, “Payment to Claimant on Demand,” which required an owner to pay any claim not disputed by an original contractor within 30 days after the original contractor received a copy of a claimant’s payment demand to the owner. • Eliminating any penalty for failure to furnish bonding or project information to a lower tier subcontractor when requested under Section 53.159. Many subcontractors will appreciate eliminating the 2nd Month Notice Letter, which often served as a gotcha to perfecting lien claims. Owners will appreciate elimination of the payment on demand requirement, which barred them from defending lien claims if the original contractor did not dispute the claim. Eliminating any penalty for failing to supply bond or project information may cause problems. Although original contractors and owners are

still required to furnish certain information on request, the lack of any effective consequence may mean they refuse to supply that information. As a result, subcontractors may not be able to learn project or bond information necessary to timely notice the claim. HB 2237 was signed by Governor Abbott on June 15, 2021, with an effective date of January 1, 2022. The new law will apply to original contracts entered on or after the effective date. Original contracts entered prior to the effective date will operate under current law. This means your clients may still be required to perfect, enforce, and litigate lien claims under two different sets of requirements. A copy of the enrolled bill with a markup showing comparisons to existing Chapter 53 can be found at https://legiscan.com/ TX/text/HB2237/id/2407686. Practitioners in construction or real property law should review the law in full before it goes into effect in 2022 to properly advise clients about what to expect and to help them minimize any exposure. HN Perrin Fourmy is a Senior Associate at Bell Nunnally & Martin LLP and may be reached at pfourmy@ bellnunnally.com.

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D al l as Bar A ssoci ati on l Headnotes 21

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Construction/Real Property Law

Cost Escalation: COVID Aftershocks Rocking the Contractor World BY BRYAN M. KELLY AND MATTHEW L. MOTES

Construction contracts, like other contracts, create a set of obligations and allocate risk between parties. Typically, the allocated risks are known and fall within a foreseeable range. For example, a steel supplier may bid a job accepting the risk that steel prices could fluctuate plus or minus 5–10 percent, decreasing or increasing its ultimate profit margin. But life is full of surprises, like the occasional world-changing pandemic. And currently, sharply inflated materials prices, especially prices for lumber, are plaguing the construction industry. Diligent contractors routinely include contract provisions such as a traditional

force majeure clause, which allocates the risk of loss if performance becomes impossible or impracticable, especially as a result of an event or effect that the parties could not have anticipated or controlled. However, relief under force majeure is limited to events or effects that can be neither anticipated nor controlled, like uncontrollable acts of nature (i.e., floods) and people (i.e., war). The recent hurricanes might fall under force majeure for performance required in the affected areas. But increased prices due to COVID-19 in 2021 generally do not—price increases can be anticipated and controlled. And even if a force-majeure-type clause provides some relief, it might not provide for cost escalation, as illustrated by the Federal Circuit Court of Appeals in a recent

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case denying cost escalation due to complications created by an Ebola outbreak. Further undermining the concept of force majeure and non-contractual protection is Texas’s treatment of impossibility and impracticability defenses (used interchangeably in this state), which can arise upon the occurrence of an event the non-occurrence of which was a basic assumption of a contract. Texas partially recognizes the concept but carves out economic impracticability as not a recognized defense. Indeed, to argue that stable material prices are a “basic assumption” of a contract is difficult when industry professionals know that material prices fluctuate daily and are sensitive to a variety of variables, including supply, demand, tariffs, regulations, availability, labor, and, as it turns out, pandemics. Undeterred by the hardships it would cause, COVID-19 skyrocketed lumber prices in the past year. As of July 2, 2021, the national average cost of lumber per thousand board foot was $756.70, down from a high in May 2021 of $1,686.00. Compare this price to $351.00 last June. In one year, lumber prices increased almost five-fold. And, these price increases are negatively affecting all parties. Owners with new projects must scale back designs or square footage. Subcontractors and suppliers must absorb overages to perform for the contract price or walk away from the project, breaching those contracts. If the subcontractors walk away, and the general contractor has not negotiated relief or allocated sufficient allowances and contingencies, then the general contractor can be left holding the bag. So, if boiler-plate contractual provisions and common-law defenses will not

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Bryan M. Kelly is an Associate at Shackelford, Bowen, McKinley & Norton, and can be reached at bkelly@shackelford.law. Matthew L. Motes is a Partner at the firm, and can be reached at mmotes@shackelford.law.

DBA Trial Lawyer of the Year: Professor Cheryl Wattley CONTINUED FROM PAGE 1

There is no better way to prepare for trial

protect parties to a construction contract, what will? Try a cost escalation provision. Such provision can be used up and down the contract chain. A typical cost-escalation provision states that if material costs increase by more than a certain percentage due to events beyond a contractor’s control, then the owner and contractor shall execute a change order for at least a portion of the increase. The question then becomes, “what is beyond a contractor or subcontractor’s control?” The contractor and its subcontractor must take reasonable steps to mitigate against substantial cost increases. One of the best methods is to lock in material prices, even for future contracts, early and often. Subcontractors should work with their suppliers and the general contractor to pre-purchase materials, eliminating future variability. This approach is particularly viable when the owner is willing to provide funding for project materials up front. And doing so can be in the owner’s best interest: it reduces (i) the owner’s risk under the cost-escalation provision; (ii) the likelihood that suppliers or subcontractors walk out on the job; and (iii) the chance that the general contractor becomes disgruntled as its entire margin is consumed by the lumber mill. Cost escalation and supply-chain interruptions will be part of the market for years to come. The best approach to minimize risk and build the best project possible is to negotiate specific contract provisions with all construction parties. HN

For her work at OU, she received the DaVinci Institute Fellow Award for Innovative Teaching; the University of Oklahoma Regents’ Award for Superior Professional and University Service and Public Outreach; the Oklahoma Bar Association’s Ada Lois Sipuel Fisher Diversity Award (2012); and the Association of Black Lawyers’ Ada Lois Sipuel Fisher Award (2012). In January of 2014 Professor Wattley left the University of Oklahoma College of Law and undertook another teaching challenge by accepting a position in the newly formed UNT Dallas College of Law. As one of the pioneers in establishing this new institution, she worked—and continues to work—to create an environment of innovative teaching. Her work, and that of her students, have a great impact in the community at large. As the Director of Experiential Education, Professor Wattley has created legal clinics, not only within the law school’s physical borders, but also in neighborhoods where legal services are not usually offered. With the opening of two Community Lawyering Centers in the greater Dallas area and others envisioned, she is engaging her students in holistic lawyering with an understanding of the context of their clients’ lives. She also created the Community Engagement Program which requires UNT Dallas College of Law students to give at least 75 hours of volunteer service in partnership with local non-

profit agencies, government organizations and community programs. Through this outreach, UNT Dallas COL students have contributed tens of thousands of hours in service to the North Texas community. At the same time, they have been engaged in “hands-on” lawyering skills such problem solving, interviewing, counseling, and document drafting. A cause close to Professor Wattley’s heart is her pro bono work with Centurion Ministries—a non-profit organization dedicated to the vindication of the wrongly convicted—which recently led to the release of Benjamine Spencer after 34 years in the Texas penitentiary. She also helped achieve the exoneration of Kerry Max Cook, Richard Miles, and Mary Barbosa. In her “free” time, Professor Wattley writes publications and authors books, which serve her ultimate goal in her career, as proclaimed in her young years: “to make sure that people are aware that the laws have changed.” Examples of her authoring labor include the creation of a trial case file, published by the National Institute of Trial Advocacy, and her book A Step Toward Brown v. Board of Education: Ada Lois Sipuel Fisher and Her Fight to End Segregation which won the 2015 Oklahoma Book Award, Non-Fiction category. Congratulations to Professor Cheryl Wattley, the Dallas Bar Association’s 2021 Trial Lawyer of the Year. HN Anastasia Triantafillis is an Associate at Walters Balido & Crain. She may be reached at anastasia.triantafillis@wbclawfirm.com.

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D al l as Bar A ssoci ati on l Headnotes 23

Construction/Real Property Law

Court Clarifies the Duties Owed by a General Contractor BY TRAVIS M. BROWN AND E. SAMUEL CRECELIUS III

The Dallas-area construction industry remains strong, despite the challenges posed by the COVID-19 pandemic since early 2020. Construction jobsites are as ubiquitous as ever across Dallas—unfortunately, they carry with them an inherent risk: the jobsite injury, and the oftenaccompanying litigation. Each jobsite involves a complex mix of “players”: developer, general contractor, subcontractors, and their respective employees. When a jobsite injury occurs, it can be equally complex to sort out the duties, obligations, and legal responsibilities of these various entities. However, at least as to the general contractor, the Texas Supreme Court recently provided some clarity in its JLB Builders, LLC v. Hernandez opinion. Broadly speaking, a general contractor is responsible for overall direction of the work and, commonly, for promulgating general safety guidelines for subcontractors on site. Accordingly, general contractors often face lawsuits stemming from injuries to their subcontractors’ employees. Because these lawsuits are ordinarily based in negligence—either ordinary negligence or premises liability—the injured worker must demonstrate that the general contractor breached an applicable duty of care. However, under Texas law, a general contractor does not owe a duty of care to its subcontractors’ employees, unless the general contractor exercised actual or contractual control over the details of those employees’ work. Accordingly, a threshold issue in these jobsite injury

lawsuits is the extent of control that the general contractor exercised over the injured employee’s work. In JLB Builders, the Texas Supreme Court addressed, in detail, the nature of a general contractor’s supervisory role at a jobsite and the sort of actual control over a subcontractor’s employees that gives rise to a duty of care. The case arose when a subcontractor’s employee was injured during erection of a concrete column for a high-rise construction project where JLB was the general contractor. In the ensuing lawsuit, JLB moved for summary judgment, arguing that it owed no duty of care because it exercised no control over the details of the subcontractor’s work that caused the employee’s injury. The trial court agreed and granted summary judgment. On appeal, the Dallas Court of Appeals held that there was a fact issue concerning JLB’s control over the details of the injury-producing work based on JLB’s daily safety inspections, the presence of JLB supervisors on site every day, and JLB’s awareness of potential risks of the work. The court also noted that JLB retained control over the daily schedule, the order in which work was to be done, the mandatory use of safety harnesses, and when the crane used in erecting the column would be on site. After the Court of Appeals opinion, some notable commentators expressed concern that, under this type of analysis, general contractors would now owe a broad duty of care to all subcontractor employees simply by virtue of implementing and enforcing safety policies and their inherent supervisory role. General contractors could be faced with a serious quandary when balancing implementa-

tion of workplace safety policies with Supreme Court found it implausible the risk of increased liability exposure for that, for instance, requiring the use of injuries that occur. safety harnesses increased, rather than The Texas Supreme Court resolved decreased, the risk of injury to workers. this quandary when it granted review and Accordingly, the Supreme Court held reversed the Dallas Court of Appeals. that JLB’s jobsite safety requirements did The resulting opinion is significant for not give rise to a duty of care. at least two reasons. First, it clarifies the The long-standing rule in Texas is required “nexus” between the control that a party, such as a general contracexercised by a general contractor and the tor, is not liable for the work of its subspecific injury-causing work. Because the contractors unless the general contracevidence showed only a general right to tor controls the details of the work. JLB direct the work at the jobsite, and not affirms this protection. It allows general detailed control over the injury-causing contractors to oversee the construcwork, the Supreme Court held that JLB tion project, without assuming respondid not exercise control sufficient to give sibility for the means and methods each rise to a duty of care. subcontractor uses to perform its work. Second, the JLB opinion reassures Similarly, it allows general contractors general contractors that they can take to implement and enforce general safety steps to make their jobsites safe without regulations without assuming liability for exposing themselves to liability. When every potential hazard. HN promulgating safety policies, a general contractor assumes only a narrow duty to Travis M Brown is a Principal at Cokinos | Young and may be ensure those requirements do not unrea- reached at tbrown@cokinoslaw.com. E. Samuel Crecelius III is sonably increase, rather thanPosition decrease,Wanted, Office Space, an Associate at the firm and may be reached at screcelius@ Office Space, Position Wanted, cokinoslaw.com. the risk of harmPositions to workers. The Texas Available, Services Positions Available, Services

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Trent Appleby 469.916.7700 x113 Trent@theholmesfirm.com

Lynnsee Starr 469.916.7700 x114 Lynnsee@theholmesfirm.com

14241 Dallas Parkway, Suite 800, Dallas, Texas 75254 | 469-916-7700 | www.theholmesfirm.com

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24 H e a d n o t e s l D a l l a s B a r A s s o ciation

CMY

A ugust 2021