In this edition of Litigation Roundup, Kinder Morgan gets a win at the Texas Supreme Court in a tax fight with a school district, a jury sides with the widow of a NASA astronaut in a probate dispute involving space artifacts, and a Houston company is accused of monopolizing an ERCOT savings program.
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Harris County Probate Court
Jury Sides with NASA Astronaut’s Widow
The widow of the fourth man to walk on the moon recently received a $1.66 million award from a Harris County jury that agreed she was entitled to damages in a probate dispute over ownership of certain space-related items, including mission patches, medallions and paintings.
Leslie Bean was sued by Alan Bean’s daughter from a previous marriage, Amy Bean, and brought counterclaims alleging improper conduct as co-executor of Alan Bean’s estate. The jury agreed with Leslie Bean that she had been gifted some space artifacts during her 36-year marriage to Alan Bean, and that other items belonged to a trust Alan Bean established for his two children — Amy Bean and Clay Bean.
The jury found both Leslie Bean and Amy Bean had breached fiduciary duties in managing the estate but found Leslie Bean had acted in good faith while Amy Bean acted in bad faith, with malice or gross negligence. The jury awarded Leslie Bean $600,000 in actual damages and about $363,000 in exemplary damages. It also found Amy Bean was wrongly holding estate assets and awarded it $700,000.
Leslie Bean is represented by Sarah Patel Pacheco and Joshua R. Flores of Jackson Walker.
Amy Bean is represented by David S. Cook of Houston.
Judge Pamela Medina presided over the two-week trial that ended May 16.
The case number is 467316-401.
Harris County District Court
AZA Beats $5M Contract Suit in Fuel Dispute
Harris County District Judge Kyle Carter entered a final judgment May 8 that Trafigura Trading and TCPU are not entitled to any damages on their claim that Texas Fueling Services breached a fuel supply contract.
Trafigura filed suit in September 2019, according to court records, and a one-week bench trial took place before Judge Carter in April. Trafigura had accused Texas Fueling of failing to purchase and transport specific amounts of fuel under 2018 contracts between the parties.
Texas Fueling argued that the contracts it was accused of breaching were oral contracts and that Trafigura failed to prove they met all the requirements of contract formation to be enforceable.
Texas Fueling Services is represented by Todd Mensing, Kyle A. Poelker and Harrison Scheer of Ahmad Zavitsanos & Mensing.
Trafigura Trading is represented by Kenneth E. Broughton and Daniel Avila II of Reed Smith.
The case number is 2019-70683.
Bexar, Comal County District Courts
Texas AG Goes After ‘Hidden’ Hotel Costs
Marriott International and Hyatt Hotels recently found themselves in the crosshairs of Attorney General Ken Paxton’s efforts to eradicate what he calls a lack of transparency in hotel pricing practices.
Marriott reached a settlement with the state and signed onto an assurance of voluntary compliance filed in Bexar County District Court May 16. But Hyatt did not and is facing a lawsuit filed in Comal County District Court May 15 accusing the hotel chain of duping “unsuspecting Texans by not including mandatory fees in the advertised room rate.”
Marriott has agreed to clearly disclose “resort fees” and other costs added to the price of a room.
“In contrast, other major hotel chains have defended their deceptive practices, and they will be facing the full force of the law for their actions,” Paxton said in a news release.
As an example in the lawsuit against Hyatt, Texas alleges consumers are shown a listing for a Hill Country hotel room at $408 a night that after mandatory fees are added ends up costing $526.93.
Marriott is represented by Alicia G. Curran of Cozen O’Connor. Counsel information for Hyatt was not available Monday.
Valeria Sartorio, Jameson C. Joyce and Johnathan Stone of the attorney general’s office are representing Texas.
The case numbers are C2023-0884D and 2023CI09717.
Southern District of Texas
Houston Co. Accused of Monopolizing ERCOT Savings Program
Houston-based Lancium has been accused in a federal lawsuit of using the threat of patent infringement litigation against a Baltimore-based software company as a means to monopolize an Electric Reliability Council of Texas incentive program.
OBM filed suit filed May 16, alleging Lancium has repeatedly threatened to bring a patent infringement lawsuit against OBM to stop it from providing services to cryptomining companies that want to participate in ERCOT’s cost savings incentive program called the Controllable Load Resource policy.
The CLR policy aims to protect the electric grid during peak demand by allowing heavy energy users like cryptominers to opt in and reduce consumption when ERCOT requests it. Compliance requires those companies to use sophisticated energy management technology, according to the lawsuit, and OBM has designed such software.
“Upon information and belief, multiple cryptocurrency software companies that are considering assisting its customers in participating in ERCOT’s energy curtailment programs and qualifying participation as a CLR with ERCOT have been approached by Lancium with threats” of patent enforcement, the suit alleges.
U.S. District Judge Keith P. Ellison has scheduled an initial conference in the case for Aug. 25.
OBM is represented by Rodney R. Miller of Womble Bond Dickinson.
Counsel information for Lancium wasn’t available Monday.
The case number is 4:23-cv-01798.
Northern District of Texas
Deadlines Set in Case Challenging Oversight Board’s Authority
U.S. District Judge Karen Gren Scholer has given a John Doe auditor until June 13 to respond to a motion filed by the U.S. Public Company Accounting Oversight Board seeking to dismiss his lawsuit challenging its authority.
Doe filed the lawsuit in January, asking the court to stop the Board “from continuing its unlawful and unconstitutional prosecution of him in secret disciplinary proceedings” on grounds that it violates the constitution.
The Board moved to dismiss John Doe’s suit April 14, alleging the lawsuit doesn’t belong in Texas courts and that the anonymous auditor’s complaint “is also defective in numerous other threshold respects.”
“This court lacks subject-matter jurisdiction over plaintiff’s due process challenge to the procedures under which the board is conducting the proceeding against him, because any such challenge must first be made to the Securities and Exchange Commission, and then to a federal court of appeals,” the board argued in the three-page motion.
Doe alleges in his suit he is an accountant who previously worked as an auditor at a firm in Colombia and became the target of a board investigation in 2019 stemming from his alleged failure to cooperate with an audit of an unnamed company’s 2015 financial statements.
Formal disciplinary procedures commenced against Doe in December 2022, after he declined to settle the allegations by agreeing to a $150,000 penalty and lifetime restrictions on the type of work he could do, the suit alleges
Doe is represented by Katherine Addleman and Ronald Breaux of Haynes and Boone, Russell Ryan of New Civil Liberties Alliance and Ian Roffman of Nutter McClennen & Fish.
The Board is represented by Donald Verrilli Jr., Elaine J. Goldenberg, Ginger D. Anders, Dahlia Mignouna and Elissa A. Walter of Munger Tolles & Olson, Paul Watler, Marc Fuller and Hannah Walsh of Jackson Walker and Jeffrey Lamken of MoloLamken. The United States is represented by Richard Guiltinan of the Department of Justice.
The case number is 3:23-cv-00149.
Texas Supreme Court
Contingent-Fee Contract in Kinder Morgan School Tax Case Not Allowed
The Iraan-Sheffield Independent School District will get a chance to pursue claims that Kinder Morgan omitted taxable property for valuation but must do so with a lawyer not hired on a contingent-fee basis, the court said Friday.
The court concluded that the school district did not have explicit or implied authority to arrange a contingent-fee contract with Dallas attorney D. Brent Lemon. The contract awarded Lemon 20 percent of amounts received by the school district from claims he pursued.
Lemon alleged erroneous appraisals of Kinder Morgan’s properties, which was denied by the Pecos County Appraisal District. Lemon appealed to district court, and Kinder Morgan filed a Texas Rule of Civil Procedure 12 motion to show authority for the fee agreement. The district court granted the motion and dismissed the suit with prejudice.
The Eighth Court of Appeals reversed and remanded the case, holding that the fee contract was authorized by Section 6.30(c) of the Texas Tax Code, which permits taxing units to hire private counsel on a contingent-fee basis “to represent the unit to enforce the collection of delinquent taxes.”
Writing for the Supreme Court, Justice Jimmy Blacklock said the property appraisal dispute was about collecting delinquent taxes. The school district’s effort to increase Kinder Morgan’s appraisals is only the first stage in assessing and collecting additional taxes, Blacklock said.
While the trial court correctly granted Kinder Morgan’s Rule 12 motion, it should not have dismissed the case with prejudice, the court decided. “The school district must be afforded the opportunity to adjust its contract with its attorney or to substitute other counsel if it wishes to continue prosecuting this lawsuit,” Blacklock said.
In an otherwise routine opinion, Blacklock poked fun at the parties’ back-and-forth on whether Lemon was acting as a “tax ferret” seeking to locate property that had been omitted from the tax rolls. He noted that the Tax Code does not “use mammalian metaphors” and added in a footnote:
“We assume the parties mean no disrespect to the furry mammal itself, a beloved pet of Queen Elizabeth I, celebrated annually on National Ferret Day, April 2.”
Justice Jane Bland did not participate in the decision.
Kinder Morgan was represented by Michael A. Heidler, Ethan Nutter, Christopher Popov, and James L. Leader Jr. of Vinson & Elkins and Harper Estes and B. Jack Shepherd of Lynch, Chappell & Alsup. The appraisal district was represented by James R. Evans Jr of Low Swinney Evans & James. The school district was represented by Lemon and Robert N. Grisham II.
The case number is 22-0313.
LG Chem Can’t End Faulty Lithium-Ion Battery Suit
South Korea-based LG Chem Ltd. lost a bid on Friday to bring an end to a products liability lawsuit brought against it by a Texas resident who alleges he was injured when a lithium-ion battery manufactured by the company, which powered an e-cigarette, exploded in his pocket.
LG had argued it didn’t have sufficient contacts with Texas that would allow courts in the state to hear Tommy Morgan’s lawsuit, because it didn’t specifically send its batteries to Texas with the intent that they would be used in e-cigarettes. LG told the court it believed the batteries were to be used in cordless power tools and laptop computers.
The state’s high court determined that LG Chem’s claims it hadn’t targeted the e-cigarette market did not mean courts in Texas lacked personal jurisdiction.
“[T]he relatedness prong of the minimum-contacts analysis does not require that the plaintiff’s claims arise out of a set of facts mirroring the defendant’s expectations about the course its product would follow after it entered Texas,” the court held.
Justice Evan Young didn’t participate in the decision.
LG is represented by Sean M. Higgins of Lewis Brisbois Bisgaard & Smith.
Morgan is represented by Neil K. Sawhney of Gupta Wessler.
The case number is 21-0994.
Jerry Jones Fights Revival of Assault Suit
Jerry Jones and the Dallas Cowboys Football Club asked the Texas Supreme Court in a May 15 petition for review to undo a February ruling from the Fifth Court of Appeals that revived the lawsuit of a woman who alleges Jones forcibly kissed her on the mouth and grabbed her without consent at AT&T Stadium.
Jones alleges the lower appellate court disregard statutory pleading requirements and “summarily redefined what constitutes good faith compliance” by reviving J.G.’s lawsuit. State law requires that the plaintiff here, identified in pleadings as J.G., must include her name, residence, last three digits of her social security number and last three digits of her driver’s license number to proceed with her suit, Jones argued.
“This unambiguous language is not subject to any other interpretation to determine when a party meets this requirement. Either the information is included in the petition, or it is not,” Jones told the court. “In four different petitions, respondent never included any of this statutorily required information in her pleadings.”
J.G. filed suit in September 2020 alleging assault and battery, intentional infliction of emotional distress, negligence and gross negligence stemming from an alleged encounter with Jones in September 2018 in the Tom Landry Room.
Dallas County District Judge Aiesha Redmond tossed the suit in February 2022, granting a motion to dismiss. The Fifth Court of Appeals found that was in error because J.G. had made a good faith attempt to amend her pleadings, including by identifying herself to defense counsel, before the motion to dismiss was granted.
On May 17 J.G. informed the court she would be waiving a response to the petition unless the court requests one.
Jones is represented by Levi G. McCathern II, Jesse L. Cromwell and Aaron Dekle of McCathern Shokouhi Evans Grinke.
J.G. is represented by Thomas D. Bowers III of Irving and Samuel C. Cole of Victoria.
The case number is 23-0274.