AGAR Corporation, Inc. v. Electro Circuits International, LLC and Suresh Parikh

Appellant’s Motion for Rehearing En Banc Denied and Concurring Opinion
on Denial of Motion for Rehearing En Banc filed July 25, 2017.
In The
Fourteenth Court of Appeals
NO. 14-15-00134-CV
AGAR CORPORATION, INC., Appellant
V.
ELECTRO CIRCUITS INTERNATIONAL, LLC AND SURESH PARIKH,
Appellees
On Appeal from the 11th District Court
Harris County, Texas
Trial Court Cause No. 2008-20480A
CONCURRING OPINION ON DENIAL OF
MOTION FOR REHEARING EN BANC
I join the court’s decision to deny appellant Agar Corporation, Inc.’s motion
for rehearing en banc. I write separately to address the statute-of-limitations issue1
1
The court appropriately denies en banc rehearing as to Agar’s other two en banc issues, though
those issues are not addressed in this opinion.
— Agar’s argument that the en banc court should overrule the precedent in Mayes
v. Stewart,2 step away from the holding that a two-year statute of limitations always
applies to civil conspiracy, and instead hold that civil conspiracy is subject to the
statute of limitations governing the underlying tort on which the civil conspiracy is
based.
Agar roots its argument in the premise that civil conspiracy is a vicarious-
liability theory rather than an independent tort. The rule Agar promotes makes sense.
It may be the sounder rule, but Texas law is unclear as to whether civil conspiracy
is a vicarious-liability theory, an independent claim, or both. Until the Supreme
Court of Texas clarifies this issue, it is hard to tell what statute of limitations applies
to civil conspiracy.
Eleven sister courts of appeals have agreed with the Mayes holding on the
statute of limitations for civil conspiracy, including the First Court of Appeals with
whom we share a courthouse in downtown Houston and appellate jurisdiction in a
ten-county region. Stepping away from the Mayes holding would mean stepping
away from uniformity in the law within our shared jurisdiction.
Though Agar proposes the better rule, adopting it is not the better choice.
Doing so would create a split of authority in the First-Fourteenth shared jurisdiction
and that would cause more harm than keeping the inferior rule. So, rather than
dissent to the denial of en banc review and advocate for this court to embrace a new,
sounder rule, I instead urge the Supreme Court of Texas to clarify the law in this
murky area and announce this new rule for applying the statute of limitations to civil
conspiracy.
2
11 S.W.3d 440, 453 (Tex. App.—Houston [14th Dist.] 2000, pet. denied).
2
Civil Conspiracy: A Muddled Place in Texas Jurisprudence
Agar asks the en banc court to overrule Mayes v. Stewart,3 a binding precedent
this court followed in Navarro v. Thornton.4 According to Agar, under Texas law
civil conspiracy is a vicarious-liability theory that depends on an underlying tort, and
civil conspiracy is not an independent claim. Based on this premise, Agar says it is
absurd to apply the two-year statute of limitations to bar liability based on civil
conspiracy when a three-year or four-year statute of limitations governs the
underlying torts on which Agar bases its claims of conspiracy liability, and Agar’s
claims would be timely under those statutes.
Though some Texas cases support Agar’s premise, it is not clear that the
premise is correct. Texas law on this point is uncertain.
Civil Conspiracy as a Vicarious-Liability Theory
Under the law of most American states, civil conspiracy is a vicarious-liability
theory under which a co-conspirator who is not liable for a tort by its own conduct
may be held jointly and severally liable with another co-conspirator for the tort
liability incurred by the other co-conspirator’s conduct.5 Under this approach to civil
3
Id.
4
316 S.W.3d 715, 719 (Tex. App.—Houston [14th Dist.] 2010, no pet.).
5
See Freeman v. Holyfield, 179 So. 3d 101, 106 (Ala. 2015); Thompson v. Cal. Fair Plan Ass’n,
270 Cal. Rptr. 590, 593 (Ct. App. 1990); Sterenbuch v. Goss, 266 P.3d 428, 435–36 (Colo. App.
2011); Nader v. Democratic Nat’l Comm., 567 F.3d 692, 697 (D.C. Cir. 2009) (applying District
of Columbia law); Adcock v. Brakegate, Ltd., 645 N.E.2d 888, 894 (Ill. 1994); Birge v. Town of
Linden, 57 N.E.3d 839, 846 (Ind. Ct. App. 2016); Dickson v. Young, 210 N.W. 452, 452 (Iowa
1926); Meyer Land & Cattle Co. v. Lincoln Cty. Conservation Dist., 31 P.3d 970, 976 (Kan. Ct.
App. 2001); Mackey v. Compass Mktg., Inc., 892 A.2d 479, 485 (Md. 2006); Potter, Prescott,
Jamieson & Nelson, P.A. v. Campbell, 708 A.2d 283, 286 (Me. 1998); Terlecki v. Stewart, 754
N.W.2d 899, 906 (Mich. 2008); Upah v. Ancona Bros. Co., 521 N.W.2d 895, 901–02 (Neb. 1994);
Lopez v. Swyer, 300 A.2d 563, 568 (N.J. 1973); Schlotthauer v. Sanders, 545 N.Y.S.2d 197, 199
(N.Y. App. Div. 1989); Henry v. Deen, 310 S.E.2d 326, 334 (N.C. 1984); Davis v. Clark Cty. Bd.
3
conspiracy, if a claimant proves the elements needed to show a conspiracy between
two alleged co-conspirators and if the claimant proves that one co-conspirator is
liable in tort based on conduct in furtherance of the conspiracy, then the other co-
conspirator is jointly and severally liable for the first co-conspirator’s tort liability,
except as to any exemplary damages assessed against the first co-conspirator.6
Civil Conspiracy as an Independent Claim
A minority of American states treat civil conspiracy as an independent claim,
under which a claimant who proves the essential elements of a conspiracy claim may
recover the damages the claimant sustained as a proximate result of the conspiracy.7
Under this approach, liability under a conspiracy claim is not premised on liability
for any other tort.8
Civil Conspiracy as a Vicarious-Liability Theory or an Independent Claim,
or Both
Theoretically, a state also could allow claimants to use civil conspiracy as
Of Comm’rs, 994 N.E.2d 905, 909 (Ohio Ct. App. 2013); Granewich v. Harding, 985 P.2d 788,
792 (Or. 1999); Auld v. Mobay Chemical Co., 300 F. Supp. 138, 140 (W.D. Pa. 1969) (applying
Pennsylvania law); Bainum v. Coventry Dep’t, 156 A.3d 418, 421 (R.I. 2017); Huether v. Mihm
Transp. Co., 857 N.W.2d 854, 861 (S.D. 2014); Dunlap v. Cottman Transmission Sys., LLC, 754
S.E.2d 313, 317–18 (Va. 2014); Dunn v. Rockwell, 689 S.E.2d 255, 269 (W. Va. 2009); Segall v.
Hurwitz, 339 N.W.2d 333, 338 (Wis. Ct. App. 1983).
6
See cases cited in footnote 5 above. See also Tex. Civ. Prac. & Rem. Code Ann. § 41.006 (West
2015) (“In any action in which there are two or more defendants, an award of exemplary damages
must be specific as to a defendant, and each defendant is liable only for the amount of the award
made against that defendant”); Energy Maintenance Services Group I v. Sandt, 401 S.W.3d 204,
220–22 (Tex. App.—Houston [14th Dist.] 2012, pet. denied) (concluding that a finding of
conspiracy does not make one co-conspirator vicariously liable for the exemplary damages
assessed against another co-conspirator).
7
See Allegro, Inc. v. Scully, 791 S.E.2d 140, 144–45 (S.C. 2016); Pohl, Inc. v. Webelhuth, 201
P.3d 944, 955 (Utah 2008).
8
See Allegro, Inc., 791 S.E.2d at 144–45; Pohl, Inc., 201 P.3d at 955.
4
either a vicarious-liability theory or an independent claim, or both, though research
has not revealed any jurisdiction that employs this approach.
It is unclear where Texas falls — whether civil conspiracy is a vicarious-
liability theory, an independent claim, or both. Though the Supreme Court of Texas
does not appear to have stated expressly that civil conspiracy is an independent
claim, in some cases the high court has indicated that a party may have conspiracy
liability in the absence of liability for any other tort, thus suggesting that conspiracy
is an independent claim.9
In various cases decided in the last 35 years, the supreme court has set forth
five essential elements of a conspiracy claim.10 For example, in Massey v. Armco
Steel Company, the high court called civil conspiracy a “cause of action” and
proclaimed:
The essential elements are: (1) two or more persons; (2) an object to be
accomplished; (3) a meeting of minds on the object or course of action;
(4) one or more unlawful, overt acts; and (5) damages as the proximate
result.11
The elements include damages the conspiracy proximately caused but not damages
caused by one co-conspirator’s commission of a tort in furtherance of the conspiracy.
If these are the essential elements of a conspiracy claim under Texas law, one might
9
See First United Pentecostal Church of Beaumont v. Parker, 2017 WL 1032754, at *6–7 (Tex.
March 17, 2017); Operation Rescue-Nat’l v. Planned Parenthood of Houston, 975 S.W.2d 546,
553–54 (Tex. 1998); Massey v. Armco Steel Co., 652 S.W.2d 932, 934 (Tex. 1983); Estate of
Stonecipher v. Estate of Butts, 591 S.W.2d 806, 807–808 (Tex. 1979).
10
See First United Pentecostal Church of Beaumont, 2017 WL 1032754, at *6; Tri v. J.T.T., 162
S.W.3d 552, 556 (Tex. 2005); Operation Rescue-Nat’l, 975 S.W.2d at 553; Juhl v. Airington, 936
S.W.2d 640, 644 (Tex. 1996); Massey, 652 S.W.2d at 934.
11
Massey, 652 S.W.2d at 934.
5
think it is clear that Texas treats conspiracy as an independent claim.
Yet, in other cases, the supreme court has concluded that civil conspiracy is a
“derivative tort” and thus a defendant is not liable under a conspiracy theory unless
one of the co-conspirators committed some other tort.12 In some cases the high court
has noted that civil conspiracy is a means by which a claimant can hold all co-
conspirators jointly and severally liable for the torts committed by any co-
conspirator in furtherance of the conspiracy.13 In one case, the supreme court
expressly said that civil conspiracy can be used as a vicarious-liability theory:
The concept of civil conspiracy is sometimes used by an injured
plaintiff as a basis for establishing joint and several tort liability among
several parties. To be distinguished from the concept of vicarious
liability for concerted action, civil conspiracy “came to be used to
extend liability in tort . . . beyond the active wrongdoer to those who
have merely planned, assisted, or encouraged his acts.”14
Though research reveals no case in which the supreme court explicitly says
that civil conspiracy may be either a vicarious-liability theory or an independent
claim, the high court’s use of “sometimes” in the above-cited quotation suggests that
perhaps claimants can choose to use civil conspiracy in either way. 15 But, this
conclusion is undermined by the high court’s holdings that civil conspiracy failed as
12
See Chu v. Hong, 249 S.W.3d 441, 444 (Tex. 2008); Tilton v. Marshall, 925 S.W.2d 672, 681
(Tex. 1996); Carroll v. Timmers Chevrolet, Inc., 592 S.W.2d 922, 925–26 (Tex. 1979). The
Supreme Court of Texas has held that the underlying tort cannot be negligence and has indicated
that the underlying tort must be an intentional tort. See Firestone Steel Prods. Co. v. Barajas, 927
S.W.2d 608, 614, 617 (Tex. 1996).
13
See Tilton, 925 S.W.2d at 680–81; Carroll, 592 S.W.2d at 925–26; Berry v. Golden Light
Coffee Co., 327 S.W.2d 436, 438–39 (Tex. 1959).
14
Carroll, 592 S.W.2d at 925–26 (quoting W. PROSSER, HANDBOOK OF THE LAW OF TORTS § 46,
at 293 (1971)) (emphasis added).
15
See id.
6
a matter of law because the claimant did not establish any other tort, without any
mention that the claimant had chosen to use civil conspiracy as a vicarious-liability
theory, as opposed to as an independent claim.16
So, though we have no shortage of Texas case law on civil conspiracy, we
lack clarity on the nature of it. We do not know whether civil conspiracy is a
vicarious-liability theory, an independent claim, or both.17 This uncertainty becomes
a problem in determining which statute of limitations applies to civil conspiracy.
The Challenge for Determining the Statute of Limitations
If civil conspiracy is an independent tort claim that a claimant may plead and
prove without the need to rely on any other tort, it makes sense that civil conspiracy
would have its own statute of limitations that would govern all conspiracy claims,
as the Mayes court concluded.18 But, if civil conspiracy is a vicarious-liability
theory, it would not make sense for a two-year statute of limitations to apply to all
liability based on conspiracy, even though the underlying tort in some cases may be
governed by a one-year statute of limitations and in other cases by a fifteen-year
statute of limitations.19
16
See Chu, 249 S.W.3d at 444, 447; Tilton, 925 S.W.2d at 680–81.
17
The Committee on Pattern Jury Charges of the State Bar of Texas tried to reconcile the
conflicting components in the cases when crafting “PJC 109.1 Question and Instruction on
Conspiracy.” See Texas Pattern Jury Charges, Business Consumer Insurance Employer, 277–79
(2014) (stating that “[l]iability must be dependent on participation in some underlying statutory
violation or a tort (other than negligence). . . It is a means for imposing joint and several liability
on persons in addition to the actual perpetrator(s) of the underlying tort”).
18
See Mayes, 11 S.W.3d at 453 (concluding that two-year statute of limitations in section 16.003(a)
of the Civil Practice and Remedies Code applies to all conspiracy claims).
19
See, e.g., Tex. Civ. Prac. & Rem. Code Ann. § 16.002 (West 2015) (providing that a one-year
statute of limitations applies to claims for malicious prosecution, libel, and slander); Tex. Civ.
Prac. & Rem. Code Ann. § 16.0045 (West 2015) (providing that a fifteen-year statute of limitations
applies to personal-injury claims based on injuries arising as a result of certain criminal conduct).
7
If the Texas Legislature has reached the public-policy judgment that libel
claims should be brought within one year of accrual, it would be incongruous to
allow claimants two years to seek recovery based on conspiracy to commit libel. 20
Likewise, if the Texas Legislature has decided as a matter of public policy that
battery claims arising as a result of conduct that violates Penal Code section
22.011(a)(2) (sexual assault of a child) may be brought within fifteen years of
accrual, it would strike most as bizarre and bewildering to allow claimants only two
years to seek recovery based on conspiracy to commit this type of battery. 21 A
number of states that treat civil conspiracy as a vicarious-liability theory have
concluded that the statute of limitations for the underlying tort applies to any attempt
to impose vicarious liability on a co-conspirator for that tort liability.22
If claimants could choose to assert civil conspiracy as an independent tort or
as a vicarious-liability theory, it would make sense to apply the same statute of
limitations whenever claimants asserted civil conspiracy as an independent claim,
but it would be problematic to do so when claimants used civil conspiracy as a
vicarious-liability theory.
Until the Supreme Court of Texas brings clarity to this muddled area of Texas
20
See, e.g., Tex. Civ. Prac. & Rem. Code Ann. § 16.002 (providing that a one-year statute of
limitations applies to claims for libel).
21
See Tex. Civ. Prac. & Rem. Code Ann. § 16.0045 (providing that a fifteen-year statute of
limitations applies to personal-injury claims based on injuries arising as a result of certain criminal
conduct).
22
See Filmservice Labs., Inc. v. Harvey Bernhard Enters., Inc., 256 Cal. Rptr. 735, 742 (Ct. App.
1989); Sterenbuch, 266 P.3d at 435–36; Nader, 567 F.3d at 697 (applying District of Columbia
law); Mauvais-Jarvis v. Wong, 987 N.E.2d 864, 894–95 (Ill. Ct. App. 2013); Meyer Land & Cattle
Co., 31 P.3d at 976–77; Prince George’s County v. Longtin, 19 A.3d 859, 877 (Md. 2011);
Terlecki, 754 N.W.2d at 906; Upah, 521 N.W.2d at 901–02; Schlotthauer, 545 N.Y.S.2d at 199;
Stainbrook v. Ohio Sec. of State, — N.E.3d —, —, 2017 WL 1464523, at *7 (Ohio Ct. App. Apr.
25, 2017); Auld, 300 F. Supp. at 140 (applying Pennsylvania law); Dunlap, 754 S.E.2d at 320–21;
Dunn, 689 S.E.2d at 269; Segall, 339 N.W.2d at 338–39.
8
law and reveals the true nature of civil conspiracy, intermediate courts of appeals
will find it tough to analyze and resolve the statute-of-limitations issue.
The Better Course: Promoting Predictability in the Law
Every sister court of appeals in Texas that has addressed which statute of
limitations applies to conspiracy liability has agreed with this court’s conclusion in
Mayes.23 The two that have yet to adopt the Mayes rule do not appear to have
addressed the issue.24 If this court were to grant en banc rehearing, overrule Mayes,
and adopt the rule Agar advocates, we would create a conflict among the courts of
appeals that most likely would persist until the Supreme Court of Texas resolved the
issue.
While a conflict among the state’s intermediate courts would mean a lack of
statewide consistency, the law, though unsettled at the state level, at least would be
clear and predictable within each court-of-appeals district — except for the
uniquely-situated First and Fourteenth. These two independent courts hold the
highly unusual distinction of sharing judicial power within the same geographical
23
See Tucker v. Bedgood, 2016 WL 7011584, at *3 (Tex. App.—Corpus Christi Mar. 17, 2016,
no pet. h.) (mem. op.); Archer v. Allison, 2015 WL 7889910, at *3 (Tex. App.—Amarillo Dec. 3,
2015, pet. denied) (mem. op.); Bennett v. Reynolds, 2014 WL 4179452, at *10 (Tex. App.—Austin
Aug. 22, 2014, pet. denied) (mem. op.); Dodson v. Ford, 2013 WL 5433915, at *4 (Tex. App.—
Fort Worth Sept. 26, 2013, no pet.) (mem. op.); Sharpe v. Roman Catholic Diocese of Dallas, 97
S.W.3d 791, 795 (Tex. App.—Dallas 2003, pet. denied); Chandler v. Chandler, 991 S.W.2d 367,
394 (Tex. App.—El Paso 1999, pet. denied); Martz v. Weyerhaeuser Co., 965 S.W.2d 584, 587
(Tex. App.—Eastland 1998, no pet.); Fisher v. Yates, 953 S.W.2d 370, 381 (Tex. App.—
Texarkana 1997, writ denied); Allen v. City of Midlothian, 927 S.W.2d 316, 322 (Tex. App.—
Waco 1996, no writ); Stroud v. VBFSB Holding Corp., 917 S.W.2d 75, 82 (Tex. App.—San
Antonio 1996, writ denied); Stevenson v. Koutzarov, 795 S.W.2d 313, 318 (Tex. App.—Houston
[1st Dist.] 1990, writ denied).
24
See Tucker, 2016 WL 7011584, at *3; Archer, 2015 WL 7889910, at *3; Bennett, 2014 WL
4179452, at *10; Dodson, 2013 WL 5433915, at *4; Sharpe, 97 S.W.3d at 795; Chandler, 991
S.W.2d at 394; Martz, 965 S.W.2d at 587; Fisher, 953 S.W.2d at 381; Allen, 927 S.W.2d at 322;
Stroud, 917 S.W.2d at 82; Stevenson, 795 S.W.2d at 318.
9
jurisdiction. For these atypical courts, conflicts in the law are more complicated and
more costly.
When either the First or the Fourteenth creates a conflict with the other, an
inescapable consequence is the loss of uniformity on that point of law within the
shared jurisdiction. A split of authority between the First and Fourteenth upends
stability and makes the law uncertain and unpredictable for trial courts and litigants
in the jurisdiction the two courts share. Simply stated, because the geographical
districts for the First and Fourteenth completely overlap,25 when these two courts
disagree, it means there will be no uniformity on that point within the ten-county
region. So, if the two courts were not aligned on today’s statute-of-limitations issue,
litigants on the north side of the Harris County 1910 Courthouse (home of the First
Court of Appeals) would face a different statute-of-limitations rule for civil
conspiracy than litigants on the south side of the courthouse (home of the Fourteenth
Court of Appeals), and there would be divergent outcomes in the same courthouse
in cases with substantially similar facts. The rule of law is not well served when
litigants in like circumstances are not treated alike.
Under the doctrine of vertical stare decisis, trial courts in our shared
jurisdiction are duty-bound to follow the precedents of both the First and the
Fourteenth Courts of Appeals. If the Fourteenth were to part ways with the First on
today’s statute-of-limitations issue, then trial courts in our shared jurisdiction
ostensibly would be obliged to follow two equally binding yet different rules, the
application of which often would lead to opposite outcomes. On appeal, the trial
judge’s ruling would be held to be correct or incorrect based on which court of
25
See Tex. Gov’t Code Ann. § 22.201. The ten counties comprising the shared jurisdiction are the
counties of Austin, Brazoria, Chambers, Colorado, Fort Bend, Galveston, Grimes, Harris, Waller,
and Washington. See Tex. Gov’t Code Ann. § 22.201.
10
appeals reviews the case, a key fact not known to the trial judge or the litigants until
after the decisions are made. If the trial judge guesses wrong and the court of appeals
to which the case is assigned deems the error harmful, then the trial court will be
reversed, and the case may be remanded for retrial. Time, money, and judicial
resources will be wasted. Expectations will be frustrated. And, the rule of law will
not be served.
When two independent courts share judicial power within a single
jurisdiction, predictability in the law is always at risk because the law does not
command a single result. In split-of-authority cases, the doctrine of vertical stare
decisis effectively disappears, and with it goes this valuable rule-of-law benefit.
Despite this unwelcome consequence, it is not unusual for the First and Fourteenth
to disagree on points of law. Nor is it unusual for either of these sister courts to
sacrifice uniformity in the shared jurisdiction for the sake of what they perceive to
be a sounder, more efficient, or otherwise better rule.
Today’s en banc rehearing motion presents a rare combination of
circumstances that makes the case for forgoing the sounder option that Agar urges
and instead preserving the Mayes precedent. Too many questions surround the law
on civil conspiracy. Unless and until the supreme court clarifies that civil conspiracy
is a vicarious-liability theory, there can no assurance that Mayes should be overruled.
Perhaps hindered by the lack of clarity, the courts of appeals that have addressed the
statute-of-limitations issue may not have analyzed it fully or reached the right
answer, but they stand together in perfect alignment. Because the issue is a
frequently-recurring one, we face a heightened need for certainty and uniformity
within our shared jurisdiction. So, today the better course is to promote
predictability in the law by sticking with the Mayes rule even though it is the lesser
option. Extraordinary circumstances do not require en banc rehearing to overrule
11
Mayes, nor is en banc rehearing necessary to secure or maintain uniformity in this
court’s decisions.26 The en banc court rightly denies rehearing en banc.
/s/ Kem Thompson Frost
Chief Justice
The En Banc Court consists of Chief Justice Frost and Justices Boyce, Christopher,
Jamison, Busby, Donovan, Brown, Wise, and Jewell.
Chief Justice Frost issues an En Banc Concurring Opinion in which Justice
Christopher joins.
26
See Tex. R. App. P. 41.2(c).
12