In this edition of Litigation Roundup, Judge Andrew S. Oldham of the U.S. Court of Appeals for the Fifth Circuit issued a fiery opinion taking to task the city of Houston and its attorneys who have argued a Good Samaritan’s lawsuit against two police officers should be dismissed.
“For those who worry that qualified immunity can be invoked under absurd circumstances: Buckle up,” he wrote to kick off the 21-page opinion issued Friday.
We also highlight a Dallas jury’s decision to award a small business owner $5.6 million in a fraud lawsuit, certified questions the Fifth Circuit has asked the Texas Supreme Court to answer and the trimming of a defamation lawsuit brought against the Anti-Defamation League.
Have a development we should include in the next Litigation Roundup? Please let us know at tlblitigation@texaslawbook.net.
Dallas County District Court
Jury awards $5.6M in Hostile Takeover Fraud Case
A family-owned furniture company was recently vindicated by a jury in Dallas County that awarded it $5.65 million in damages in a lawsuit where it accused a former business partner of mounting a hostile takeover.
Amigos Furniture and its owner Shantal Albarran had filed suit against Rabi De Jebara and Mohamed Sadeq in October 2021, alleging they diverted millions in cash from her company and forged documents that conveyed 66 percent of the business to themselves.
Dallas County District Judge Monica Purdy presided over the trial that began April 22 and ended April 24.
The verdict included about $2 million in actual damages, $3.25 in punitive damages, about $235,000 in attorney fees and $80,000 in conditional attorney fees.
Dave Wishnew of Crawford, Wishnew & Lang, who represents Albarran, presented evidence to the jury that Albarran’s signature had been forged on a shareholders’ rights agreement that transferred most of the company to Jebra and Sadeq. The victory in this case hinged on convincing the jury of the existence and terms of two oral contracts between the parties.
“This case is about hard work, trust and betrayal — a theme that jurors found clear and convincing enough to send a message that the defendants’ conduct in this case has no place in our society,” Wishnew said.
Albarran is also represented by Matt Muckleroy, Cameron Jean and Gracen Daniel of Crawford, Wishnew & Lang.
Jebara and Sadeq are represented by Dallas solo practitioner Moses Jun.
The case number is DC-21-14740.
Northern District of Texas
Navy Vet Sees $25M Defamation Trimmed, Not Tossed
U.S. District Judge Reed O’Connor on April 30 partially granted a request from the Anti-Defamation League and cut some claims from a Navy veteran’s defamation suit against the organization, but he declined to bring an end to the claims.
The judge granted ADL’s motion as it related to parts of the defamation suit stemming from statements made in Congressional testimony but allowed the parts of the suit based on “all other claims of defamation and injurious falsehood” to proceed.
John Sabal, a veteran who organizes what his attorneys have called “patriotic festivals” and is also known by the nickname QAnon John, sued the group in October after it published his name in its ADL Center on Extremism’s Glossary of Extremism and Hate alongside the names of mass shooters and terrorists.
“To a reasonable reader, the glossary may objectively indicate that all persons on this list are similarly dangerous and abhorrent,” Judge O’Connor wrote in his 21-page ruling.
Sabal had also lodged a claim connected to Congressional testimony ADL offered, alleging that it “promoted the belief that ‘a global cabal of pedophiles (including Democrats) who are kidnapping children for their blood, will be executed when Donald Trump is reinstated as president.’”
Judge O’Connor noted that Congressional testimony is “subject to an absolute privilege from defamation liability.”
Sabal is represented by Jason Greaves, Mary McCann and Jared Roberts of Binnall Law Group and Paul Davis of Paul M. Davis & Associates.
ADL is represented by Robert P. Latham and Trevor Paul of Jackson Walker and Jesse Feitel, Katherine M. Bolger and Nathan E. Siegel of Davis Wright Tremaine.
The case number is 4:23-cv-01002.
Third Court of Appeals, Austin
Justices Pause Aspire, PUCT Fight
A dispute between the Public Utility Commission of Texas and Aspire Power Ventures has been momentarily paused by an appellate court until the Texas Supreme Court issues a ruling in a similar case pending before that court, Public Utility Commission of Texas v. RWE Renewables Americas.
Aspire, the energy trading company that filed suit, opposed the request to abate the appeal, arguing that the Third Court of Appeals ruling in the RWE case is binding precedent that must be applied to this case “unless and until” it’s overturned by the Texas Supreme Court.
Aspire alleges that PUCT promulgated orders that created a modified program intended to provide reserve power in emergency situations without first allowing for public comment, in violation of the Texas Administrative Procedure Act.
RWE alleges in its suit that PUCT ran afoul of the APA in July 2021 when it approved an Electric Reliability Council of Texas protocol called the Nodal Protocol Revision Request 1081. NPRR 1081 requires setting electricity prices at the $9,000/MWh maximum anytime an inadequate electricity supply cuts off consumers from power in an emergency. It was enacted after PUC directed ERCOT during 2021’s Winter Storm Uri to temporarily set electricity prices at the statutory maximum of $9,000/MWh.
The Texas Supreme Court heard oral arguments in that case in March, and it’s expected the court will issue a ruling before the end of its term in late June.
Chief Justice Darlene Byrne and Justices Edward Smith and Rosa Lopez Theofanis sat on the panel that issued the Friday ruling.
Aspire is represented by Chrysta Castañeda and Nicole Michael of The Castañeda Firm and Monica Latin of Carrington, Coleman, Sloman & Blumenthal.
PUCT is represented by John R. Hulme and Kellie E. Billings-Ray of the office of the attorney general.
The case number is 3-24-00102-CV.
Texas Supreme Court
SCOTX Determines What Qualifies as a ‘Home’ for Medicaid Calculation
An elderly couple who purchased a half-interest in a home where their daughter lived after they entered a skilled-nursing facility were not eligible for Medicaid assistance, a 6-3 majority ruled on Friday.
Clyde and Dorothy Burt had lived in their Cleburne home for 36 years before selling it in 2010 to their daughter and son-in-law, Linda and Robby Wallace. The Burts moved to a rental property the Wallaces owned.
In 2017 the Burts moved to a skilled-nursing facility. They used cash assets and cash value in a life insurance policy to buy an undivided one-half interest in the Cleburne house from the Wallaces. A Lady Bird deed granted the Burts’ newly acquired interest back to the Wallaces upon the Burts’ deaths. The transaction reduced the Burts’ cash from about $65,000 to about $2,000, under the $3,000 maximum resource threshold for Medicaid eligibility.
Texas Health and Human Services Commission denied the claim for assistance. The trial court reversed the agency’s determination, and the Third Court of Appeals affirmed. The court of appeals held that a property interest created after admission can be excluded if the applicant states an intent to live at the property in the future.
Justice Jane Bland wrote the Supreme Court’s majority opinion.
“We hold that a ‘home’ is the applicant’s principal place of residence before the claim for Medicaid assistance arises, coupled with the intent to reside there in the future. A property interest purchased with qualifying resources after the applicant moves to a skilled-nursing facility is an available resource for determining Medicaid eligibility under federal eligibility rules, as the property was not the applicant’s principal place of residence at the time the claim for benefits arose,” Bland said.
“The home exemption prevents applicants from having to sell their homes to pay for their care; it does not authorize the conversion of available resources to make them unavailable after the claim for assistance arises. The resources calculation instead does the opposite, requiring liquidation of nearly all assets except a home,” the court said.
“A later developed ‘intent to return’ to the Cleburne house does not bring the Burts within the exclusion because it was not their residence in the years preceding their Medicaid claim.”
Chief Justice Nathan Hecht dissented in an opinion joined by Justices Jeff Boyd and John Devine. Hecht said it is unfair of the majority to suggest the Burts engaged in “artificial impoverishment” to abuse Medicaid.
“That they’d lived in a rental home for seven years in the interim doesn’t detract from the fact that in acquiring a half interest in the home and entering nursing care, they were hoping to return to their long-time home. It was their very real and poetic goal, as they expressly affirmed,” Hecht said.
If they had bought the half interest in the home and lived there for a day on their way to the nursing facility, it would have been excluded as an asset, Hecht noted.
The state was represented by members of Office of the Solicitor General, including Natalie Thompson, Ryan S. Baasch and Bill Davis.
The estate of Clyde L. Burt and Linda S. Wallace were represented by Jacob A. Hale of The Hale Law Firm in Waxahachie.
The case number is 22-0437.
City of Denton Beats Back $4M Whistleblower Suit
The Texas Supreme Court on Friday unanimously sided with the city of Denton and ended a lawsuit brought under the Texas Whistleblower Act by two former city employees who alleged they were fired for reporting a councilmember had violated the law.
Because councilwoman Keely Briggs wasn’t paid by the city for her services, she wasn’t an employee as required under the act, which meant the court had to dismiss the lawsuit brought by Michael Grim and Jim Maynard. The ruling wiped out a $4 million jury verdict in favor of Grim and Maynard and clarified that the act only protects reports of illegal conduct by the employing governmental entity or another public employee.
“The lone city council member lacked any authority to act on behalf of the city, and her actions therefore cannot be imputed to the city,” Justice Jimmy Blacklock wrote for the court. “As a result, her violation of law was in no sense a ‘violation of law by the employing governmental entity.’”
Grim and Maynard were employed by Denton Municipal Electric and alleged they were fired after reporting that Briggs had violated the Public Information Act and the Open Meetings Act by meeting with a reporter at her home and disclosing confidential vendor information related to a controversial new power plant called the Denton Energy Center.
Briggs, who opposed the plant, gave a newspaper reporter internal city documents about the project.
“We are very pleased with the Texas Supreme Court’s decision, which is well-reasoned and comprehensive. The Supreme Court has recognized the limitations and scope of whistleblower protections under Texas law,” said Christopher D. Kratovil of Dykema, who represented the city. “This ruling will benefit cities and other local governmental entities throughout Texas by protecting them from liability for the actions of rogue council members and others who act without proper authorization.”
Denton is also represented by Alison R. Ashmore and Elizabeth A. Voss of Dykema Gossett and Darrell G-M Noga of Fee, Smith & Sharp.
Grim and Maynard are represented by Robert E. Goodman Jr. and Eric N. Roberson of Kilgore & Kilgore.
The case number is 22-1023.
U.S. Court of Appeals for the Fifth Circuit
‘Buckle Up’ Fifth Circ. Says in Rejecting Qualified Immunity Defense
A former police officer who was driving for Uber when he effectuated an early morning citizen’s arrest of a drunken driver on a Houston highway will get to proceed with his lawsuit alleging two city police officers who arrested him for impersonating a cop violated his civil rights.
Austin Thompson Hughes, who had two Uber passengers in his Jeep, had called 911 around 2:30 a.m. on March 23, 2019, after witnessing the driver of a GMC Sierra pickup truck swerve across the lanes of Loop 610, hitting concrete barriers on both sides of the highway.
The driver came to a stop and Hughes told the 911 operator he was speaking to “I need to get [the driver] out of the car because, I mean, they’re going to kill somebody,” according to the opinion.
Hughes then grabbed the driver’s keys, his license and bottles of alcohol from the truck.
“But when police officers arrived at the scene, they let the drunk driver go and then arrested Good Samaritan Hughes. (Seriously.),” Judge Oldham wrote. “Piling insanity on irrationality, the officers then charged Hughes with a felony for impersonating a peace officer.”
After the driver of the pickup then tried to flee on foot toward the center of the highway, Hughes yelled at him to get back in the car and used his own handcuffs to restrain the man until police arrived.
“Inexplicably, the officers did not arrest the drunk driver,” Judge Oldham wrote, explaining the officers had accepted the drunken driver’s characterization of what had occured, that he and Hughes, who he misidentified as “Jesse,” had been drinking together at an area flea market and decided to drive back to “Jesse’s” house.
The drunken driver told police “Jesse” began questioning him during the ride about whether he was carrying on an illicit relationship with his wife and eventually stopped the truck and placed him in handcuffs.
“The report credited the drunk driver’s version of events — despite the obvious fact that Hughes’s name is not ‘Jesse’; Hughes and the drunk driver had never met; there is no evidence that Hughes accused the stranger of fooling around with Hughes’s wife; Hughes never drove the drunk driver anywhere; multiple independent witnesses and 911 callers (including Hughes’s own, recorded 911 call) and the Uber app screenshots confirm Hughes was not driving the white GMC Sierra; and there is no evidence of a flea market open in Houston at 2:00 a.m., much less a flea market that doubles as a bar where the drunk driver could drink more than 7 beers.”
Despite all that, Judge Oldham wrote, the report filed by the officers was for impersonating a police officer and named Hughes as a suspect. Two days later, Officer Michael Garcia went to Hughes’ home at 3 a.m. to arrest him.
“The record does not reveal, and judicial imagination cannot fathom, why officers needed or wanted to execute this arrest warrant at 3:00 a.m.,” Judge Oldham wrote, noting Hughes was jailed for more than 24 hours and was facing a charge punishable by up to 10 years in prison.
Three months later, the charges were dropped and Hughes filed this lawsuit alleging the officers violated his Fourth Amendment rights by prosecuting him without probable cause because they included “material misstatements and omissions in their warrant affidavit and materials.”
“It is unclear which part of this case is more amazing: (1) That officers refused to charge a severely intoxicated driver and instead brought felony charges against the Good Samaritan who intervened to protect Houstonians; or (2) that the City of Houston continues to defend its officers’ conduct,” Judge Oldham wrote. “Either way, the officers’ qualified immunity is denied, and the district court’s decision is affirmed.”
Judges Andrew S. Oldham, Kurt D. Engelhardt and E. Grady Jolly sat on the panel.
Hughes is represented by Courtney Warren of Houston.
Garcia is represented by William Hughes and Melissa Azadeh of the city’s legal department.
The case number is 22-20621.
Certified Question Sent to SCOTX in Sex Assault, Defamation Case
The Texas Supreme Court has been asked to answer two certified questions from the Fifth Circuit in a lawsuit brought by a former student of the Southwestern Baptist Theological Seminary who alleges the school failed to protect her from sexual assault and defamed her.
Jane Roe is suing SBTS and its former president, Leighton Paige Patterson, but U.S. District Judge Sean Jordan granted a summary judgment win to the defendants, prompting Roe to appeal in May 2023.
The Fifth Circuit, calling Judge Jordan’s rulings in the case “comprehensive and well-reasoned,” explained that it needed the Texas Supreme Court’s input before analyzing one statement Roe alleges Patterson made in a donor letter that he did not sign but is vicariously responsible for.
The letter stated her “allegations of rape were false” among other statements Roe alleges were defamatory.
The questions the Fifth Circuit would like the Texas Supreme Court to answer are:
- Can a person who supplies defamatory material to another for publication be liable for defamation?
- If so, can a defamation plaintiff survive summary judgment by presenting evidence that a defendant was involved in preparing a defamatory publication, without identifying any specific statements made by the defendant?
Judges Carolyn Dineen King, James C. Ho and Kurt D. Engelhardt sat on the panel.
Roe is represented by Sheila P. Haddock of Zalkin Law Firm in San Diego.
Patterson is represented by Travis Jones and James Grau of Grau Law Group.
Southwestern Baptist Theological Seminary is represented by Bryan Rutherford and David Macdonald.
The case number is 23-40281.
Editor’s Note: Janet Elliott contributed to this report.