City National Bank of Sulphur Springs v. John Alexander Smith

ACCEPTED
06-15-00013-CV
SIXTH COURT OF APPEALS
TEXARKANA, TEXAS
10/2/2015 10:29:13 AM
DEBBIE AUTREY
CLERK
NO. 06-15-00013-CV
IN THE COURT OF APPEALS FOR THE FILED IN
6th COURT OF APPEALS
SIXTH DISTRICT OF TEXAS TEXARKANA, TEXAS
10/2/2015 10:29:13 AM
AT TEXARKANA DEBBIE AUTREY
Clerk
JOHN ALEXANDER SMITH,
Cross-Appellant
V.
CITY NATIONAL BANK OF SULPHUR SPRINGS,
Cross-Appellee.
Appeal from the District Court of Hopkins County, Texas
62nd Judicial District
Honorable Will Biard Presiding
BRIEF OF CROSS-APPELLEE
John R. Mercy Coy Johnson
Texas State Bar No. 13947200 Texas State Bar No. 10698000
MERCYpCARTER pTIDWELL, L.L.P. Email: coy@clayjohnsonlaw.com
1724 Galleria Oaks Drive Clay Johnson
Texarkana, TX 75503 Texas State Bar No. 24007450
Telephone: (903) 794-9419 Email: clay@clayjohnsonlaw.com
Facsimile: (903) 794-1268 JOHNSON LAW FIRM, P.C.
Email: jmercy@texarkanalawyers.com 609 Gilmer Street
Sulphur Springs, TX 75482-4121
Telephone: (903) 885-8866
Facsimile: (903) 584-1313
ATTORNEYS FOR CROSS-APPELLEE
IDENTITY OF PARTIES AND COUNSEL
Pursuant to Rule 38.1(a) of the Texas Rules of Appellate Procedure, Cross-
Appellee lists below the names and addresses of all parties to the trial court’s final
judgment together with their counsel in the trial court. This list is provided so that
the justices of this Court may evaluate possible disqualification and recusal, and so
that the Clerk of the Court of Appeals may notify all parties of this Court’s final
judgment.
John Alexander Smith. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cross-Appellant
J. Mark Sudderth
NOTEBOOM LAW FIRM
669 Airport Freeway, Suite 100
Hurst, TX 76053-3698.. . . . . . . . . . . . . . . . . . . . . . . . Trial and Appellate Counsel
for Cross-Appellant
City National Bank of Sulphur Springs. . . . . . . . . . . . . . . . . . . . . . Cross-Appellee
Coy Johnson
Clay Johnson
JOHNSON LAW FIRM, P.C.
609 Gilmer Street
Sulphur Springs, TX 75482-4121. . . . . . . . . . . . . Trial Counsel for Cross-Appellee
John R. Mercy
MERCY p CARTER p TIDWELL, L.L.P.
1724 Galleria Oaks Drive
Texarkana, TX 75503. . . . . . . . . . . . . . . . . . Appellate Counsel for Cross-Appellee
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TABLE OF CONTENTS
Page
Identity of Parties and Counsel. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i
Table of Contents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ii
Index of Authorities.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iii
Statement of the Case. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Response to Issue Presented. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Statement of Facts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Statement Regarding Oral Argument. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Summary of the Argument. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Argument and Authorities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Responsive Issue. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Standard of Review. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Proper Calculation of Prejudgment Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Conclusion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Prayer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Certificate of Service.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Certificate of Compliance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ii
INDEX OF AUTHORITIES
Cases: Page
Brookshire Grocery Co. v. Smith,
99 S.W.3d 819 (Tex. Civ. App. – Beaumont 2003, pet. denied). . . . . . . . . . . . . . . 8
Christus Health Gulf Coast v. Carswell,
433 S.W.3d 585 (Tex. App. – Houston [1st Dist.] 2013, pet. granted). . . . . . 7, 9, 10
DeLeon v. Harlingen Consol. Indep. School Dist.,
552 S.W.2d 922 (Tex. Civ. App. – Corpus Christi 1977, no writ).. . . . . . . . . . . . . 9
Goode v. Shoukfeh,
943 S.W.2d 441 (Tex. 1997). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Hopkins v. Spring Indep. Sch. Dist.,
736 S.W.2d 617, 619 (Tex.1987). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
I-10 Colony, Inc. v. Chao Kuan Lee,
393 S.W.3d 467 (Tex. App. – Houston [14th Dist.] 2013, pet. denied). . . . . . . . . 10
Johnson & Higgins of Texas, Inc. v. Kenneco Energy, Inc.,
962 S.W.2d 507 (Tex. 1998). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8, 9
Morales v. Morales,
98 S.W.3d 343 (Tex. App. – Corpus Christi 2003. pet. denied).. . . . . . . . . . . . . . . 7
Robinson v. Brice,
894 S.W.2d 525 (Tex. App.– Austin 1995, writ denied). . . . . . . . . . . . . . . . . . . . . 8
Samlowski v. Wooten,
332 S.W.3d 404 (Tex. 2011). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Statutes:
Tex. Fin. Code Ann. § 304.104. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8, 9
Other:
BLACK’S LAW DICTIONARY 247 (6th Ed. 1991). . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
iii
NO. 06-15-00013-CV
IN THE COURT OF APPEALS FOR THE
SIXTH DISTRICT OF TEXAS
AT TEXARKANA
JOHN ALEXANDER SMITH,
Cross-Appellant
V.
CITY NATIONAL BANK OF SULPHUR SPRINGS,
Cross-Appellee.
BRIEF OF CROSS-APPELLEE
TO THE HONORABLE COURT OF APPEALS:
COMES NOW Cross-Appellee, CITY NATIONAL BANK OF SULPHUR
SPRINGS, and files this its brief in response to Cross-Appellant’s brief, and would
show unto the Court the following.
Statement of the Case
Nature of the Case This began as a legal malpractice case against an
attorney. Through a designation of a responsible
third party and subsequent joinder it became a
malicious prosecution case against City National.1
Trial Court: The Honorable Will Biard
62nd District Court, Hopkins County
Parties: Plaintiff – John Alexander Smith
Defendant – City National Bank of Sulphur Springs
1
Cross-Appellant, John Alexander Smith, will be referred to as “Smith” and Cross-Appellee,
City National Bank of Sulphur Springs, will be referred to as “City National”. The Clerk’s Record
will be cited as “CR __”.
1
Trial: Jury Trial - 3 days
Verdict: The jury answered questions finding City National
liable for malicious prosecution and exemplary
damages. The jury found damages of $150,000.00
for physical pain and mental anguish, $250,000.00
for injury to the reputation, and $500,000.00 in
exemplary damages. (CR 535).
Post-Trial Motions: City National filed a Motion for Judgment
Notwithstanding the Verdict. (CR 577). It was
denied. City National filed a Motion for New Trial.
(CR 611). It was denied. (CR 629). City National
filed a Motion to Modify the Judgment. (CR 605) It
was granted. (SCR 5).The judgment was modified to
reduce the pre-judgment interest from $84,542.00 to
$54,243.00. (SCR 5).
Judgment: The trial court entered judgment on the verdict. (CR
582). City National filed a motion to modify the
judgment which was granted, reducing the pre-
judgment interest from $84,542.00 to $54,243.00.
(SCR 5).
Appeal: City National appealed the judgment and has filed
its brief on the bases. Smith cross-appealed the
modification of the prejudgment interest award.
2
RESPONSE TO ISSUE PRESENTED
The trial court exercised his discretion in calculating
the prejudgment interest awarded to Smith.
3
STATEMENT OF FACTS
Cross-Appellee does not take issue with Smith’s Statement of Facts as far as
it goes, but Smith fails to include two very significant facts that were important to the
trial court’s decision: (a) Smith’s initial lawsuit against Charles Clark was for legal
malpractice, not malicious prosecution; and (b) the statute of limitations on any claim
by Smith against City National for malicious prosecution had run and was only
revived, if at all, when Smith joined City National into the malpractice suit against
Clark. To the extent that other facts are relevant to this cross-issue, City National
would adopt the Statement of Facts contained in its original Appellant’s Brief herein.
4
STATEMENT REGARDING ORAL ARGUMENT
The Court should not independently grant oral argument on this issue.
5
SUMMARY OF THE ARGUMENT
The trial court correctly calculated prejudgment interest from Smith’s Second
Amended Original Petition. That Second Amended Original Petition was the first
time a viable claim was provided to City National.
Smith’s argument that it should have been calculated from the time of the Rule
202 investigatory deposition fails because (a) the deposition notice did not constitute
a “claim” sufficient to trigger prejudgment interest; and (b) it would not be equitable
to assess prejudgment interest during the time that the malicious prosecution claim
was barred by limitations.
6
ARGUMENT AND AUTHORITIES
Responsive Issue
The trial court exercised his discretion in calculating
the prejudgment interest awarded to Smith.
Smith argues that he is entitled to prejudgment interest during the time that he
did not bring his malicious prosecution claim, and could not bring it because of the
statute of limitations.
Standard of Review
Smith proposes that the standard of review for this Court on the issue of
prejudgment interest is de novo. Actually the standard for review that should be
followed by this Court is whether the trial court abused its discretion in calculating
the prejudgment interest. Christus Health Gulf Coast v. Carswell, 433 S.W.3d 585,
611 (Tex. App. – Houston [1st Dist.] 2013, pet. granted). Morales v. Morales, 98
S.W.3d 343, 348 (Tex. App. – Corpus Christi 2003. pet. denied). The trial court only
abuses its discretion if its action is “arbitrary and unreasonable and without reference
to any guiding rules and principles.” Samlowski v. Wooten, 332 S.W.3d 404, 410
(Tex. 2011) (citing Goode v. Shoukfeh, 943 S.W.2d 441, 446 (Tex. 1997)).
7
Proper Calculation of Prejudgment Interest
Prejudgment interest accrues on the amount of a judgment during the period
beginning on the earlier of the 180th day after the date the defendant receives notice
of a claim or the date the suit is filed. Tex. Fin. Code Ann. § 304.104.
Here Smith argues that the Court should consider his Application for
Investigative Depositions as a “claim”. This is not supported by the case law.
Typically the term “claim” describes a demand for compensation or an assertion of
a right to be paid. See Johnson & Higgins of Texas, Inc. v. Kenneco Energy, Inc.,
962 S.W.2d 507, 531 (Tex. 1998). See also Robinson v. Brice, 894 S.W.2d 525, 528
(Tex. App.– Austin 1995, writ denied). The prejudgment interest statute does not
have a definition of claim. Where a statute does not define a word, it must be given
its plain and ordinary meaning. Hopkins v. Spring Indep. Sch. Dist., 736 S.W.2d 617,
619 (Tex.1987). “A ‘claim’ is ‘a demand for money or property as of right’.”
BLACK’S LAW DICTIONARY 247 (6th Ed. 1991). To constitute a claim for purposes of
the prejudgment statute there must be a demand for payment or compensation.
Brookshire Grocery Co. v. Smith, 99 S.W.3d 819 (Tex. Civ. App. – Beaumont 2003,
pet. denied), citing Robinson, 894 S.W.2d at 528.
Here the Application for Investigative Depositions entailed no demand for
payment. In fact it specifically says that “Petitioner seeks to investigate a potential
claim by Petitioner against Respondents” (CR 623) and that the facts they are
8
seeking are “vital to Petitioner’s determining whether or not he will file a lawsuit
against the Respondents”. (CR 626). There is no mention of a dollar amount, no
request for payment. Clearly the Application for Investigative Depositions do not
constitute a claim for purposes of §304.104 Tex. Fin. Code Ann.
This Court may also look at the object and purpose of the prejudgment interest
statute. DeLeon v. Harlingen Consol. Indep. School Dist., 552 S.W.2d 922, 925 (Tex.
Civ. App. – Corpus Christi 1977, no writ) . The purpose of the prejudgment interest
statute in addition to ensuring that plaintiffs are fully compensated is to (1) encourage
settlements, and (2) expedite settlements and trials by removing incentives for
defendants to delay. Johnson v. Higgins, 962 S.W.2d at 529. The purposes of the
statute are not served by determining that prejudgment accrues before the date the
defendant receives notice of the claim. Christus Health Gulf Coast, 433 S.W.3d at
611.
Here no real argument can be made that using the Application for Investigative
Depositions in any way furthers the purpose of prejudgment interest by encouraging
a settlement or allowing City National to expedite a settlement. In fact, after the
investigative deposition, no suit was filed, and the statute of limitations ran on any
malicious prosecution claim against City National. City National should therefore be
entitled to rely upon that right of limitations without being required to settle claims
that could not even be brought. It would not be equitable to charge the City National
9
with prejudgment interest before a claim was asserted against it, and at a time when
it would not logically settle a case. See Christus Health Gulf Coast, 443 S.W.3d at
611. See also I-10 Colony, Inc. v. Chao Kuan Lee, 393 S.W.3d 467, 480 (Tex. App.
– Houston [14th Dist.] 2013, pet. denied).
Based upon the foregoing it is clear that the trial court did not abuse its
discretion in determining that prejudgment interest should run from Smith’s Second
Amended Original Petition, when City National was joined as a defendant in the case
for a malicious prosecution claim, which was arguably revived.
CONCLUSION
The trial court did not abuse its discretion in its award of prejudgment interest.
PRAYER
WHEREFORE, PREMISES CONSIDERED, Cross-Appellee, CITY
NATIONAL BANK OF SULPHUR SPRINGS, prays that if this Court reaches this
issue that it affirm the trial court’s determination of prejudgment interest; and for such
other and further relief to which it may show itself to be entitled.
10
Respectfully submitted,
/s/ John R. Mercy
John R. Mercy
Texas State Bar No. 13947200
MERCY p CARTER p TIDWELL, L.L.P.
1724 Galleria Oaks Drive
Texarkana, TX 75503
Telephone: (903) 794-9419
Facsimile: (903) 794-1268
Email: jmercy@texarkanalawyers.com
Coy Johnson
Texas State Bar No. 10698000
Email: coy@clayjohnsonlaw.com
Clay Johnson
Texas State Bar No. 24007450
Email: clay@clayjohnsonlaw.com
JOHNSON LAW FIRM, P.C.
609 Gilmer Street
Sulphur Springs, TX 75482-4121
Telephone: (903) 885-8866
Facsimile: (903) 584-1313
ATTORNEYS FOR APPELLANT
11
CERTIFICATE OF SERVICE
I hereby certify that on October 2, 2015, a true and correct copy of the
foregoing Brief of Cross-Appellee was forwarded to counsel of record for Appellee
by the Electronic Service Provider, as follows:
Mr. J. Mark Sudderth
NOTEBOOM LAW FIRM
669 Airport Freeway, Suite 100
Hurst, TX 76053-3698
Email: sudderth@noteboom.com
/s/ John R. Mercy
John R. Mercy
CERTIFICATE OF COMPLIANCE
Pursuant to Tex. R. App. P. 9.4, I hereby certify that the foregoing Brief of
Cross-Appellee contains 1056 words. This is a computer-generated document created
in WordPerfect using 14-point typeface. In making this certificate I am relying on the
word count provided by the software used to prepare the document.
/s/ John R. Mercy
John R. Mercy
12