Daybreak Express, Inc v. Lexington Insurance Company, as Subrogee of Burr Computer Environments, Inc. and J. Supor & Sons Trucking & Rigging Co.

Majority and Dissenting Opinions Issued January 11, 2011, Withdrawn; Reversed and Rendered and Substitute Majority and Dissenting Opinions filed May 26, 2011.

In The

Fourteenth Court of Appeals

NO. 14-09-01032-CV

Daybreak Express, Inc., Appellant

V.

Lexington Insurance Co., as Subrogee of Burr Computer Environments, Inc. AND J. SUPOR & SONS TRUCKING & RIGGING CO., Appellees

On Appeal from the 333rd District Court

Harris County, Texas

Trial Court Cause No. 2005-01530

SUBSTITUTE DISSENTING OPINION

            I would hold that the Carmack-Amendment claim is not barred by the Texas two-year statute of limitations, because under section 16.068 of the Civil Practices and Remedies Code, the amended pleading of May 4, 2007 relates back to the original timely-filed pleading of January 6, 2005.  See Tex. Civ. Prac. & Rem. Code § 16.068 (West 2008).  I therefore respectfully dissent.

            Section 16.068 of the Civil Practices and Remedies Code is designed to protect litigants from loss of their claims by a plea of limitations, and as a remedial statute, it should be liberally construed.  Milestone Props., Inc. v Federated Metals Corp., 867 S.W.2d 113, 116 (Tex. App.—Austin 1993, no writ); Republic Nat’l Bank of Dallas v. Rogers, 575 S.W.2d 643, 647 (Tex. App.—Waco 1978, writ ref’d n.r.e.). This statute provides as follows:

If a filed pleading relates to a cause of action . . . that is not subject to a plea of limitation when the pleading is filed, a subsequent amendment or supplement to the pleading that changes the facts or grounds of liability or defense is not subject to a plea of limitation unless the amendment or supplement is wholly based on a new, distinct, or different transaction or occurrence.

(emphasis added).

            The majority concludes that the breach-of-settlement claim originally pled rests on a “wholly different transaction” from the Carmack-Amendment claim.  The original pleading described the fact of the original shipment; that the shipment was damaged in transit; and that Burr sustained property damages in the form of the lost value of the equipment.  Lexington also pled that it was subrogated to the rights of Burr in both contract and equity and that it was subrogated to Burr’s causes of action in both contract and tort.  While it is true that the only cause of action pled in the original petition was for breach of the settlement contract, section 16.068 specifically allows for changes in facts and grounds of liability.  If, as Daybreak contended, there was no settlement agreement, then Lexington/Burr retained its original tort claim.

            The majority, without saying so explicitly, seems to be applying an estoppel argument against Lexington because of Lexington’s response to removal of its case to federal court.  But, Daybreak has taken the same inconsistent positions.  Daybreak removed the case to federal court arguing that Lexington asserted a Carmack-Amendment claim rather than a breach-of-contract claim in the original petition, but Daybreak now argues that the Carmack-Amendment claim is a wholly-new transaction and does not relate back to the same original petition that it removed to federal court.

            The majority focuses on the remand opinion and discusses federal preemption at length, concluding that Lexington’s argument is foreclosed.  The remand opinion on lack of subject-matter jurisdiction is not subject to appellate review even if clearly erroneous.  Dahiya v. Talmidge Int’l, Ltd., 371 F.3d 207, 209 (5th Cir. 2004).  It has no precedential value on a defense of preemption.  Smith v. Tex. Children’s Hosp., 172 F.3d 923, 926 (5th Cir. 1999).  It is based solely on federal law and does not address Texas procedural issues.  Cf. Hampton v. Union Pac. R.R. Co., 81 F. Supp. 2d 703, 705 (E.D. Tex. 1999) (explaining that Texas Rule of Civil Procedure Rule 5 does not apply to removal proceedings, which are governed by federal law, not state law).  The remand order does not control or limit the state court in its subsequent proceedings.  Seeligson’s Ex’rs v. Tex. Transp. Co., 70 Tex. 198, 200, 7 S.W. 708, 709–10 (1888)

The district court’s opinion was based on the pleading before it, in which the claim was styled as one for breach of contract.  That ruling did not foreclose amendments to Lexington’s pleading, and it does not address the state-law issue as to whether or not the Carmack-Amendment claim is a wholly-new, distinct, or different transaction or occurrence within the meaning of section 16.068.  Moreover, under federal law, a party may remove a lawsuit based on an amended pleading.  28 U.S.C. § 1446(b).  Daybreak could have removed the case to federal court again after Lexington amended its pleading to assert the Carmack-Amendment claim, but it chose not to do so.

            In the original petition, Lexington described the damage to Burr’s equipment during transit as the occurrence that was the subject of the settlement agreement.  After Daybreak denied that a settlement agreement existed, Lexington, as Burr’s subrogee, asserted Burr’s tort cause of action under the Carmack Amendment.  That claim is not a new occurrence.  See Milestone, 867 S.W. 2d at 117 (tort claim for misrepresentations added to an original contract claim for indemnity was not a new transaction or occurrence).

            Because the Carmack-Amendment claim is not barred by limitations, I therefore would address the remaining issues not reached by the majority.

                                                            /s/        Tracy Christopher

                                                                        Justice

Panel consists of Justices Seymore, Boyce, and Christopher. (Boyce, J., Majority.)