In this edition of Litigation Roundup, a widow asks the Texas Supreme Court to decide that she owns space artifacts that belonged to her astronaut husband, the high court clarifies the contours of when insurers can avoid liability under life insurance policies and a huge win for an Austin company gets undone by a federal judge in Michigan.
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Tarrant County District Court
Cop Shot During Active-Shooter Training Files Suit
A police officer who was shot in the eye with a live round during active shooter training — leaving her with permanent brain damage and resulting in the loss of her left eye — has filed a lawsuit against the company that conducted the training and its CEO.
Sansom Park Police Officer Lina Mino named Texas Police Trainers and Janice Washington as defendants in the lawsuit filed April 25, alleging the company and its CEO negligently allowed someone to bring a gun with live rounds into the training.
The training exercise took place at David K. Sellars Elementary School in Forest Hill in November 2022, according to the lawsuit. Another officer participating in the training shot at Mino, striking her in the left eye.
Mino is seeking more than $1 million in damages.
Mino is represented by Frank Branson and Tim D. Newsom of the Law Offices of Frank L. Branson.
Counsel information for the defendants wasn’t available Tuesday.
The case number is 017-341841-23.
Southern District of Texas
World’s Largest Real Estate Services Firm Brings TM Suit
CRBE, which bills itself as the largest real estate services firm in existence, has taken aim at a competing firm, accusing it of infringing its trademark and of unfair competition.
The lawsuit, filed April 24, names CXRE and Stratiq as defendants and is seeking unspecified damages, including punitive and trebled damages.
CRBE alleges it began using its trademark in 2002 and had the mark registered three years later. Problems arose in 2018 when CXRE began using the “confusingly similar” mark in connection with their real estate services business across Texas.
“Defendants are illegally and unfairly benefitting greatly from misappropriating the CBRE brand and using it in association with defendants’ real estate services,” the suit alleges. “Defendants are also illegally and unfairly trading on the goodwill established by CBRE in its CBRE Marks.”
The case has been assigned to U.S. District Judge Andrew S. Hanen.
CBRE is represented by Aimee M. Housinger, Jeff E. Scott, Craig S. Krummen and Stephen R. Baird of Greenberg Traurig.
Counsel for CXRE had not yet appeared as of Tuesday.
The case number is 4:23-cv-01506.
Eastern District of Michigan
Austin Software Co.’s $105M IP Win Against Ford Reduced to $3
U.S. District Judge Matthew F. Leitman on Monday determined that Austin-based Versata Software’s $105 million jury win against Ford Motor cannot stand because of a lack of evidence.
“The court recognizes that, as Versata points out, ‘[o]verturning a jury verdict is difficult by design.’ But here, as explained in detail above, the lack of evidence presented by Versata forced the jury to rest its damages awards on nothing more than speculation,” the court held.
Instead of the $82.2 million in breach of contract damages and $22.3 million in trade secret misappropriation damages doled out by the Detroit jury in October, Judge Leitman entered judgment awarding Versata $3 — $1 for each breach of contract found by the jury.
The jury had agreed with Versata that Ford misused its patented software, called the Automotive Configuration Manager, that’s used to configure cars and trucks from billions of possible combinations of parts, features and options by solving mathematical, logical and logistical problems that arise in designing and configuring vehicles.
Versata alleged that some Ford engineers who had worked with its software stole those trade secrets to create a replacement software system Ford called Product Definition and Offer. Ford unsuccessfully argued at trial that its software used “entirely different technologies” than Versata’s.
“While Versata did show that Ford’s breaches caused it (Versata) to suffer damages, it did not present sufficient evidence to permit the jury to quantify those damages in compliance with Michigan law,” the court held. “For that reason, the jury’s award of contract damages cannot stand.”
Steve Mitby of Mitby Pacholder Johnson was the lead attorney for Versata.
Thomas A. Lewry of Brooks Kushman was the lead attorney for Ford.
The case number is 2:15-cv-10628.
Supreme Court of Texas
Life Insurer Must Prove ‘Intent to Deceive’ on New Policies
A life insurance company must prove that a newly insured man intended to deceive the company by omitting health information on his application, the Texas Supreme Court said in a ruling closely watched by insurers.
The court said that a 2003 recodification of the Texas Insurance Code does not negate a century-old common law rule that insurers may not avoid liability under an insurance policy based on a misrepresentation in an insurance application unless the insurer pleads and proves the insured intended to deceive or induce the insurer to issue the policy.
The industry, in amicus letters and briefs, had argued that insurers must be able to contest misrepresentations in the two-year period after policy issuances to provide needed coverage promptly while preventing fraud.
During a chance encounter with an insurance agent at a motorcycle shop, Sergio Arce spontaneously applied for a $25,000 life insurance policy with American National Insurance Co., according to the court. Answering questions read by American National’s agent, Arce did not disclose serious health conditions, including a diagnosis of hepatitis C. Arce died in a car accident 13 days after the policy was issued. His mother’s claim for benefits was denied by American National after the company discovered Arce had misrepresented his medical history.
American National argued that the common law intent-to-deceive element for rescission claims conflicts with the Insurance Code, which does not require an intent to deceive for policies in place less than two years. Requiring an intent to deceive for all rescission claims would eliminate that statutory distinction, the insurance company said.
Bertha Arce’s lawyers said American National is using a recodification of the Insurance Code to create a new statutory defense for insurers and abrogate more than a century of Texas common law by eliminating the “intent to deceive” element.
Bertha Arce sued for breach of contract and violations of the Texas Insurance Code. The Hardeman County trial court in 2019 granted summary judgment for American National. The Seventh Court of Appeals in 2021 reversed, concluding a fact issue exists as to whether Sergio Arce intended to deceive on his application for coverage.
Justice John Devine wrote the opinion for the court.
“Adhering to our precedent, we therefore hold that insurers must plead and prove intent to deceive to avoid contractual liability based on a misrepresentation in an application for life insurance, whether the policy is contestable or not. Proof of a material inaccuracy is not enough. We express no opinion as to whether the record bears legally sufficient evidence of intent because ANIC’s summary-judgment motion did not argue that intent was conclusively established,” Devine said.
The court reversed and rendered judgment that ANIC did not forfeit its misrepresentation defense under a statutory notice provision that was inapplicable to the policy as a matter of law.
In a concurring opinion, Justice Evan Young said that it would be improper for the court to abandon the intent-to-deceive requirement. “Doing so would not reflect judicial humility or deference to a statute, as it might seem at first glance; it instead would be an aggressive flexing of judicial muscle,” he said.
American National was represented by Paul W. Green of Alexander Dubose & Jefferson and Michael Adams, David Le Blanc and Angie Olalde of Greer, Herz & Adams.
Bertha Arce was represented by John Smithee of Templeton Smithee Hayes Heinrich & Russell and Mark A. Ticer and Jennifer W. Johnson of the Law Office of Mark A. Ticer.
The case number is 21-0843.
Apollo-Era Astronaut’s Widow Fights Space Artifacts Ruling
Leslie Bean, who was married to Apollo-era astronaut Alan Bean, has asked the Texas Supreme Court to decide she is the rightful owner of 39 space artifacts that she alleges were community property at the time of his death in May 2018.
In December, the Fifth Court of Appeals decided the case of first impression by holding a probate court correctly awarded possession of the artifacts to Alan Bean’s daughter, Amy Bean. The ruling required the court to interpret HR 4158, which was passed by Congress in 2012 and gave astronauts full ownership rights for certain artifacts from their space missions.
Leslie Bean argued that despite a prenuptial agreement with her and a property settlement between Alan Bean and his first wife where he declared the artifacts as his separate property, he didn’t actually own the property until HR 4158 went into effect, after they married, making them community property.
The appeal was filed Thursday and argues that the Fifth Court of Appeals’ ruling, if left undisturbed, would “undermine settled property-rights expectations.”
“Under the Family Code, separate property is property that one spouse actually owns or has a legal right to demand prior to marriage,” the petition reads. “A bare assertion of ownership or a conclusory statement that the property is ‘separate’ is not enough. The decision threatens to gut the statutory community-property presumption. If one spouse (or someone else) can co-opt community property to be the spouse’s separate property by merely so asserting, with no showing of true ownership or a verifiable legal right to the property, there is no limit to the community property that can be re-characterized.”
Leslie Bean is represented by Jennifer Caughey, Sarah Patel Pacheco, Joshua Flores, Danica L. Milios and Cody Lee Vaughn of Jackson Walker.
Counsel information for Amy Bean wasn’t available Monday.
The case number is 23-0066.
U.S. Court of Appeals for the Fifth Circuit
Claims Revived for Dallas UPS Worker Who Was Denied Bathroom Break
A lawsuit brought by an employee of United Parcel Service against the company over its decision to deny him a bathroom break, forcing him to defecate on himself, was partially revived by an appellate panel on April 27.
In a per curiam opinion, the court held that while Joshua Amin can’t proceed with his claim of intentional infliction of emotional distress, the trial court had wrongly tossed his claims for negligent supervision and invasion of privacy.
Amin, who was a package sorter at a Dallas warehouse, filed notice of appeal in March 2022 after U.S. District Judge Brantley Starr dismissed his claims entirely. According to the lawsuit, Amin was en route to the bathroom when a supervisor stopped him and told him to return to his workstation because he had already used his 10-minute break earlier in the day.
Amin complied, the supervisor followed him to his workstation taunting him, telling him he could use the restroom “right here, where you are.” Amin did and the supervisor then yelled out to other workers within earshot that if they needed a break outside the 10-minutes allotted then they, too, could relieve themselves at their workstations “just like Josh.”
The supervisor made Amin work in his soiled pants for another 20 minutes and followed up the next day by giving him a written warning for “insubordination.”
In fighting the claim for invasion of privacy, UPS had argued that because Amin defecated publicly, and not in the seclusion of a bathroom while Castro watched, there had been no invasion of privacy. The Fifth Circuit disagreed, writing that the tort “stands for more than physical or auditory invasions.”
“It encompasses Amin’s humiliation as Castro forced him to defecate, a function all civilized humans believe to be manifestly private, in public,” the panel held.
“In recent years, there have been troubling reports of industry practices that deny employees adequate bathroom breaks,” the court wrote. “It is important to clarify that such actions, or similar examples of public humiliation by exhibition of intimate personal details or actions, are not immune from liability.”
Judges Patrick E. Higginbotham, Edith H. Jones and Andrew S. Oldham sat on the panel.
Amin is represented by Robert Clary of Murphy, Texas.
UPS is represented by John Day Peake III, Kim Maria Boyle and Andrea W. Paris of Phelps Dunbar.
The case number is 22-10295. Editor’s note: Janet Elliott contributed to this report.