In this edition of Litigation Roundup, the Texas Supreme Court revives a lawyer’s fight with a litigation funder and settles a “fuzzy math” problem in a $50 million royalty dispute.
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Eastern District of Texas
Pizza Hut Sues Ex-Franchisee to Collect $11M Judgment
A franchisee who was licensed to operate more than 40 Pizza Hut stores in the Philadelphia area but who was found to have breached the agreement by not operating the stores in accordance with Pizza Hut guidelines has been sued after failing to pay an $11 million judgment.
The pizza company alleges Jignesh N. Pandya has been making fraudulent transfers to other entities he controls since U.S. District Judge Robert W. Schroeder III entered the amended final judgment in July.
“J. Pandya made transfers to the transfer defendants without receiving reasonably equivalent value,” Pizza Hut alleges in the lawsuit filed Feb. 15.
Pizza Hut is represented by Geoffrey P. Culbertson and Kelly Tidwell of Patton Tidwell & Culbertson and Joel B. Bailey and Megan Altobelli of Hedrick Kring Bailey.
Pandya had not retained counsel as of Monday.
The case number is 5:23-cv-0017.
Northern District of Texas
Paxton Sues Feds Over $1.7B Spending Bill
Texas has filed a lawsuit against the Biden administration over the recent signing of a $1.7 billion omnibus spending bill.
The lawsuit was filed Feb. 15 and alleges the U.S. House of Representatives failed to have a quorum present when the bill was passed in December. Fewer than half of the members were present and more than half of the members voted by proxy, Texas Attorney General Ken Paxton alleges.
Paxton has asked the court to declare that the spending bill “has not been enacted and is not law.”
The case has been assigned to U.S. District Judge James Wesley Hendrix.
Texas is represented by Aaron Reitz and Leif A. Olson of the state attorney general’s office and Nathan Curtisi, Matthew R. Miller and Chance Weldon of the Texas Public Policy Foundation.
Counsel had not yet made an appearance for the federal government as of Monday.
The case number is 5:23-cv-00034.
Texas Supreme Court
Law Firm Wins New Trial Over Covid Rescheduling Notice
A lawyer being sued over a business loan is entitled to a new trial after being denied due process because he did not receive adequate notice of a rescheduled proceeding at the start of the Covid pandemic, the Supreme Court said Friday.
The trial court had canceled an in-person summary judgment hearing and subsequently rescheduled it for submission on briefs the same day. The state’s high court said that action amounted to a new hearing and required new notice be given to the lawyer, B. Gregg Price.
The lender, Series 1 – Virage Master, sued Price over a $3.25 million promissory note he had personally guaranteed for his law firm, B. Gregg Price P.C. On March 12, Virage served Price with notice of an oral hearing on its motion for summary judgment set for April 2.
March 2020 was when courts began modifying in-person hearings due to the pandemic. The Harris County Board of District Judges canceled all nonessential court matters on days that public schools were closed. The board said courts that decided to proceed with scheduled hearings must contact all parties and inform them that the scheduled proceedings would continue. The Harris County Civil Division canceled all previously set, non-essential in-person hearings.
According to the Supreme Court’s unsigned opinion, Alan Gerger, Price’s attorney, read those announcements and concluded that the April 2 oral hearing on Virage’s motion for summary judgment was canceled. Gerger contacted the court clerk April 1 to confirm the cancellation and said he was not told that the motion would be submitted on briefs the following day.
Gerger went ahead and filed a response to Virage’s motion April 1 and Virage immediately moved to strike the response as untimely. On April 2, the trial court granted Virage’s motion for summary judgment and struck Price’s response to it. Price moved for a new trial, which the trial court denied. Houston’s First Court of Appeals affirmed.
Virage said in its briefs to the Supreme Court that Price received proper notice because the trial court did not cancel the hearing but simply changed the method of considering the motion.
The court said that after Covid closures canceled the originally scheduled oral hearing, Virage had a renewed obligation to provide notice of any rescheduled hearing, which it failed to do.
“We cannot agree with Virage’s argument that its April 1 motion to strike sufficiently notified Price that a summary-judgment hearing would go forward by submission on April 2 despite the cancellation notices,” the opinion states. The trial court erred by refusing to grant a new trial upon Price’s request.
Price and his law firm were represented by Steven D. Sanfelippo of Cunningham Swaim. Virage is represented by Marc S. Tabolsky and Penelope Nicholson of Schiffer Hicks Johnson.
The case number is 21-1104.
Double Fraction ‘Fuzzy Math’ Case Decided
Recognizing that arithmetic under the law can be “bizarre, unsatisfying” and result in “fuzzy math,” the justices on Friday determined that in a fight over $50 million in disputed royalties, one-half of one-eighth equals one-half of the mineral estate.
The case, Susan Van Dyke et al. v. The Navigation Group et al., centers on language frequently written into Texas land deeds a century ago, when landowners — mistakenly, it turns out, under subsequent case law — believed that they retained only one-eighth of any royalty interest when they leased mineral rights on their land.
In 1924, George H. Mulkey sold 424.5 acres in Martin County to G.R. White and G.W. Tom and reserved for himself “one-half of one-eighth of all minerals and mineral rights in said land.” At issue in this case was whether he reserved one-half of the mineral rights, as his successors argued, or one-sixteenth.
“We conclude that an accurate construction of the 1924 text requires us to accept that the equation ‘one-half of one-eighth’ equals one-half of the mineral estate,” the justices held. “Even if this were not so, nearly a century of the parties’ unbroken understandings and representations would require us to recognize that allocation of present-day ownership by applying the presumed-grant doctrine.”
White and Tom are represented by David Keltner of Kelly Hart & Hallman.
The Mulkeys are represented by Marc S. Tabolsky of Schiffer Hicks Johnson.
The case number is 21-0146.
Editor’s Note: Janet Elliott contributed to this report.