Emerald Waco Investments, Ltd. v. David Randolph Petree, RPLS

ACCEPTED
05-15-00863-CV
FIFTH COURT OF APPEALS
DALLAS, TEXAS
12/21/2015 1:58:55 PM
LISA MATZ
CLERK
NO. 05-15-00863-CV
FILED IN
5th COURT OF APPEALS
IN THE DALLAS, TEXAS
FIFTH COURT OF APPEALS 12/21/2015 1:58:55 PM
DALLAS, TEXAS LISA MATZ
Clerk
EMERALD WACO INVESTMENTS, LTD.
Appellant
V.
DAVID RANDOLPH PETREE, RPLS,
Appellee
ON APPEAL FROM CAUSE NO. DC-15-04276
101ST JUDICIAL DISTRICT COURT,
DALLAS COUNTY, TEXAS
APPELLANT’S REPLY BRIEF
Elizabeth G. Bloch Peter J. Harry
State Bar No. 2495500 State Bar No. 09134600
Heidi.Bloch@huschblackwell.com Pete.Harry@huschblackwell.com
Husch Blackwell LLP Chad A. Johnson
111 Congress Avenue, Suite 1400 State Bar No. 24026259
Austin, Texas 78701 Chad.Johnson@huschblackwell.com
(512) 472-5456 Husch Blackwell LLP
(512) 480-5002 Fax 2001 Ross Avenue, Suite 2000
Dallas, Texas 75201
(214) 999-6100
(214) 999-6170 fax
ATTORNEYS FOR EMERALD
WACO INVESTMENTS, LTD.
ORAL ARGUMENT REQUESTED
AUS-6204908-2 523514/2
TABLE OF CONTENTS
ARGUMENT AND AUTHORITIES IN REPLY TO PETREE’S BRIEF...............1
I.  EWI’s Certificate of Merit is Substantively Sufficient. ..................................1
A.  Petree is barred from raising a substantive complaint to the Certificate of
Merit. ..........................................................................................................1
B.  Petree is barred from raising a substantive complaint to the Certificate of
Merit. ..........................................................................................................2
II.  EWI Complied with the Statute. ......................................................................4
A.  “Good Cause” is Not a Requirement for the Exemption............................4
B.  EWI Properly Invoked the Exemption. ......................................................6
C.  The Statutory Exemption did not have to be in the original pleading. ......9
III.  Dismissal of EWI’s Claims Elevates Form Over Substance.........................10
CONCLUSION AND PRAYER .............................................................................11
INDEX OF AUTHORITIES
STATE COURT CASES
Atkins v. Crosland,
417 S.W.2d 150 (Tex. 1967) ..............................................................................7, 8
Benchmark Eng’g Corp. v. Sam Houston Race Park,
316 S.W.3d 41 (Tex. App.—Houston [14th Dist.] 2010, pet. dism’d by
agr.) .......................................................................................................................11
CBM Engineers, Inc. v. Tellepsen Builders, L.P.,
403 S.W.3d 339 (Tex. App.—Houston [1st Dist.] 2013, pet. denied) ..............2, 3
Couchman v. Cardona,
471 S.W.3d 20 (Tex. App.—Houston [1st Dist.] 2015, no pet. hist.) ....................3
Criterium-Farrell Eng'rs v. Owens,
248 S.W.3d 395 (Tex. App.—Beaumont 2008, no pet.) ........................................2
Crosstex Energy Services, L.P. v. Pro Plus, Inc.,
430 S.W.3d 384 (Tex. 2014) ........................................................................... 5, 10
DHM Design v. Morzak,
2015 WL 3823942 (Tex. App.—Dallas June 19, 2015) ......................................10
Dunham Engineering, Inc. v. Sherwin-Williams Co.,
404 S.W.3d 785 (Tex. App.—Houston [14th Dist.] 2013, no pet.) ................ 3, 11
Elness Swenson Graham Architects, Inc. v. RLJ II-C Austin Air, LP,
No. 03-10-00805-CV, 2011 WL 1562891 (Tex. App.—Austin Apr. 20,
2011, pet. denied) ...................................................................................................2
Epco Holdings, Inc. v. Chicago Bridge and Iron Co.,
352 S.W.3d 265 (Tex. App.—Houston [14th Dist.] 2011, pet. dism’d)6, 10, 11, 12
Gatrell v. Wren,
No. 01-11-00586-CV, 2011 WL 6147786 (Tex. App.—Houston [1st
Dist.] Dec. 8, 2011, pet. denied) .............................................................................2
M-E Eng'rs, Inc. v. City of Temple,
365 S.W.3d 497 (Tex. App.—Austin 2012, pet. denied) ......................................2
Pakal Enterprises, Inc. v. Lesak Enterprises LLC,
369 S.W.3d 224 (Tex. App.—Houston [1st Dist.] 2011, pet. denied) ...............8, 9
Trinity River Auth. v. URS Consultants, Inc., Texas,
889 S.W.2d 259 (Tex. 1994) ..................................................................................8
WCM Group, Inc. v. Brown,
305 S.W.3d 222 (Tex. App.—Corpus Christi 2009, pet. review dism’d)............10
STATUTORY AUTHORITIES
Tex. Civ. Prac. & Rem. Code § 150.002(c) ........................................................ 5, 11
STATE RULES AND REGULATIONS
Tex. R. App. P. 9.4(e) ..............................................................................................13
ARGUMENT AND AUTHORITIES
IN REPLY TO PETREE’S BRIEF
In his brief, as he did below, Petree continues to insist that EWI be required
to jump through procedural hurdles that the statute simply does not require EWI to
clear in order to invoke the statutory exception to filing the Certificate of Merit
with its Original Petition. Moreover, for the first time, Petree asserts that EWI’s
Certificate of Merit was substantively deficient—an argument never asserted
below. As a result, EWI files this Reply.
I. EWI’s Certificate of Merit is Substantively Sufficient.
A. Petree is barred from raising a substantive complaint to the
Certificate of Merit.
Perhaps recognizing the procedural hoops and technicalities that Petree is
asking the Court to require of EWI (all of which are contrary to the statute’s
purpose), Petree’s initial argument—raised for the first time in this case—concerns
the substantive content of EWI’s Certificate of Merit. At no time before the trial
court did Petree complain or object regarding the “content” of EWI’s Certificate of
Merit.1 Instead, his motion to dismiss, and the supplement thereto, focused
exclusively on the alleged failure by EWI to comply with the statute’s procedures.
Nevertheless, Petree now asks this Court to review the substance of the Certificate
1
CR 20-29.
of Merit and find it deficient. This issue was never raised in the trial court and
cannot be a basis for affirming the trial court’s decision.
B. EWI’s Certificate of Merit is Sufficient.
In the event that the Court entertains Petree’s new argument, the Certificate
of Merit filed by EWI was sufficient to allow EWI’s claims to proceed. Contrary
to his contentions, the level of detail Petree seeks to require from EWI is not
required.
“The purpose of the certificate of merit is to provide a basis for the trial
court to conclude that the plaintiff's claims are not frivolous.” CBM Engineers,
Inc. v. Tellepsen Builders, L.P., 403 S.W.3d 339, 345 (Tex. App.—Houston [1st
Dist.] 2013, pet. denied) citing Criterium–Farrell Eng’rs v. Owens, 248 S.W.3d
395, 399 (Tex. App.—Beaumont 2008, no pet.). While the certificate must
provide a factual basis for the allegations it does not need to recite the standard of
care or how they were allegedly violated to sufficiently identify the professional
errors. See M–E Eng'rs, Inc. v. City of Temple, 365 S.W.3d 497, 506 (Tex. App.-
Austin 2012, pet. denied); Gartrell v. Wren, No. 01–11–00586–CV, 2011 WL
6147786, at *5 (Tex. App.-Houston [1st Dist.] Dec. 8, 2011, pet. denied) (mem.
op.); Elness Swenson Graham Architects, Inc. v. RLJ II–C Austin Air, LP, No. 03–
10–00805–CV, 2011 WL 1562891, at *4 (Tex. App.-Austin Apr. 20, 2011, pet.
denied) (mem. op.).
“The statute does not require a plaintiff to marshal his evidence or provide
the full range of information that the defendant is entitled to obtain through formal
discovery.” CBM Engineers, 403 S.W.3d at 346 citing M-E Eng’rs, 365 SW.3d at
504; see also Couchman v. Cardona, 471 S.W.3d 20, 26-27 (Tex. App.—Houston
[1st Dist.] 2015, no pet. hist.); Dunham Eng’g, Inc. v. Sherwin-Williams Co., 404
S.W.3d 785, 796 (Tex. App.—Houston [14th Dist.] 2013, no pet.). The statute only
requires that EWI’s Certificate of merit be from “a licensed professional,
practicing in the same area of expertise as the defendant, provide a sworn written
statement certifying that the defendant's actions were negligent or erroneous and
stating the factual basis for this opinion.” Id. The Certificate of Merit filed by
EWI satisfied this standard.
Mr. Stark’s sworn statement sets forth that (a) he holds the same license as
Petree; (b) he reviewed the survey, the grading plan based thereon, the excavation
work, and his own post-grading measurements of the site; (c) there should have
been little to no excess dirt if Petree’s survey was even reasonably accurate; and
(d) there was more than 65,000 cubic yards of excess dirt.2 Mr. Stark then does on
to say that, based on his experience, the only way such an “error was made” was
either (i) no survey was conducted; (ii) the survey was done inaccurately; or (iii) an
2
CR 17-18.
out of date survey was provided.3 These statements support both the negligence
and breach of contract theories of recovery. Petree appears to contend that EWI
was required to identify specific acts that caused the inaccuracy of the survey but
that is precisely the type of information EWI will learn through discovery—not
what is required for the Certificate of Merit.
Petree should not be permitted to ask this Court to review the substance of
EWI’s Certificate of Merit having never sought that review from the court below.
However, even if the Court is inclined to review the content of the Certificate, Mr.
Stark’s affidavit is clearly sufficient and, as such, this argument does not provide
an alternative basis for affirming the dismissal.
II. EWI Complied with the Statute.
A. “Good Cause” is Not a Requirement for the Exemption.
In what can only be seen as a further effort to confuse the issue, Petree
continues to assert that there is, what he now terms a “statutory good cause
exemption,” as opposed to a “discretionary good cause extension.” Petree asserts
that EWI misunderstands the distinction. If that is the case perhaps that is because
Petree never made this distinction until now. In fact, even with this newly
described distinction, Petree continues to use the phrase “good cause” to discuss a
statutory exemption that does not require “good cause.” The initial thirty (30) day
3
CR 17-18.
extension to file the certificate of merit is automatic if limitations will expire
within ten (10) days and the plaintiff alleges an affidavit could not be prepared
before filing—good cause is not required. See TEX. CIV. PRAC. & REM. CODE
§150.002(c). Rather, a showing of good cause is only required if the plaintiff seeks
to extend the initial thirty (30) day extension. Id. See also Crosstex Energy
Services, L.P. v. Pro Plus, Inc., 430 S.W.3d 384, 391 (Tex. 2014). EWI never
sought or asserted the “good cause” extension of the automatic 30-day exemption
because it was not necessary—the Certificate of Merit was filed prior to the
expiration of 30 days.
Moreover, Petree did not use this newly-described distinction when arguing
to the trial court—instead he argued that good cause was, in fact, required,
asserting that “there can be no ‘good cause’ for Plaintiff’s failure to timely file the
certificate of merit . . . .”4 Indeed, at the hearing Petree clearly argued that “good
cause” was required for the initial automatic 30-day exemption, arguing:
[T]here was no good cause invocation, and that good
cause in fact was affirmatively negated by the certificate
of merit affidavit of the registered professional land
surveyor that they hired. So those are the issues that I
want to address before the Court today.
(RR 6-7) (emphasis added)
4
(CR 28) (emphasis added)
Petree also argued that EWI was required to establish that the Certificate of
Merit could not be prepared “in order to invoke the ‘good cause’ exemption.”5
Similar to the fact that “good cause” is not required by the statute, EWI is only
required to allege that the affidavit could not be prepared—not establish.
As set forth above, and in EWI’s initial brief, there simply is not a “good
cause” requirement in the statute for the initial, automatic 30-day exemption
claimed by EWI. The trial court’s decision to grant Petree’s motion, which was
based on a non-existent requirement, was an abuse of discretion.
B. EWI Properly Invoked the Exemption.
Petree incorrectly asserts that EWI could not invoke the 30-day exemption
because limitations was not about to expire on either EWI’s negligence or breach
of contract claim.6 As noted in its initial brief, EWI was not required to wait for
the certificate of merit and allow the two-year anniversary of the survey to pass in
hopes that the discovery rule would save its claims; nor has Petree cited any
authority for such a proposition.
5
(CR 25-26) (emphasis added)
6
As noted in its initial brief, Petree’s argument regarding the breach of contract claim is a red
herring--EWI is not required to plead its claims piecemeal to satisfy the statute. Moreover, at
least one Court of Appeals impliedly held that satisfying the exemption for negligence satisfied it
for all claims. See e.g., Appellants Epco Holdings, Inc., et al.’s Brief, 2011 WL 994669, *11
(Cause No. 14-10-01266-CV in the Court of Appeals of Texas, Houston [14th Dist.]) (“[a]s
alleged in the Original Petition and First Amended Petition, the failure to design sufficient
catwalks constitutes breach of contract, breach of warranty, and negligence”); see also Epco
Holdings, Inc., 352 S.W.3d at 267 (“we reverse the trial court’s order dismissing appellants’
claims related to the design of the catwalks”) (emphasis added).
Petree, in his brief, appears to abandon the ‘discovery rule’ argument in
favor of arguing that limitations was not about to expire because the negligence
cause of action did not accrue until there was a legal injury. In support of this
argument Petree cites two cases discussing the test for legal injury and the accrual
of a cause of action—neither of which involved application of the Certificate of
Merit statute at issue in this case. For example, in Atkins v. Crosland, the Court
stated that the test for accrual “is whether the act causing the damage does or does
not of itself constitute a legal injury.” Atkins v. Crosland, 417 S.W.2d 150, 153
(Tex. 1967). In essence, Petree contends that EWI, prior to filing suit, was
required to engage in an analysis of its ‘legal injury’ and determine if that injury
occurred on the date the deficient survey was prepared, the date the deficient
survey was given to the engineer for use, the date dirt began to be moved in
reliance on a deficient survey, the date dirt had to be hauled away, or any number
of other dates. Then, in reliance on that determination, EWI should have held off
filing suit in hope that its determination was correct and its claims were not now
barred by limitations.
Petree provided no evidence below, and cites to nothing in the record in this
Court, to provide the date of the ‘legal injury’ but, instead, simply concludes it was
not the date of the survey. However, what cannot be questioned is that the earliest
possible date that a ‘legal injury’ could have occurred was the date Petree provided
a deficient product—a negligently prepared survey to EWI. That date was exactly
two-years prior to the filing of the instant lawsuit.
Moreover, the cases cited by Petree reveal that, as with the discovery rule,
the legal injury/accrual analysis only comes into play when a defendant asserts that
the normal limitation period has expired—there is no other reason to engage in that
analysis. See generally, Atkins, 417 S.W.2d 150; Trinity River Auth. v. URS
Consultants, Inc., Texas, 889 S.W.2d 259, 262 (Tex. 1994). Yet Petree asserts that
EWI should have engaged in this analysis and taken the risk that it chose the
correct date for legal injury rather than relying on the earliest possible date—the
date of the survey—that limitations could have begun running. As with the
discovery rule, Petree cites no authority for requiring EWI to engage in this
analysis and run this risk.
Further, Petree’s reliance on Pakal Enterprises, Inc. v. Lesak Enterprises
LLC is misplaced. Pakal Enterprises, Inc. v. Lesak Enterprises LLC, 369 S.W.3d
224 (Tex. App.—Houston [1st Dist.] 2011, pet. denied). Contrary to Petree’s
assertion, Pakal does not “suggest” that the injury occurred sometime after the first
survey.7 Rather, the Court “[a]ssum[ed] without deciding” that limitations expired
on a date that was after the date of the first survey because it was the date asserted
by the Appellant. Pakal, 369 S.W.3d at 229. However, the accrual date and the
7
Appellee’s Brief, p. 18.
running of limitations was not the issue in Pakal. Instead, the issue in Pakal was
that the plaintiff filed a petition alleging damages from the provision of
professional services well in excess of 10-days prior to limitations expiring, using
its own asserted limitations date, but “did not file a certificate of merit until . . . 95
days after it filed its original petition.” Id. Neither of these facts are present in the
instant case.
C. The Statutory Exemption did not have to be in the original
pleading.
EWI filed the Certificate of Merit and its First Supplement to its Original
Petition on May 7, 2015—less than thirty (30) days after, and before service of, the
Original Petition.8 EWI complied with the statute. Contrary to Petree’s position,
EWI was not required to invoke the exemption in the “first-filed pleading.”9 The
plain language of the statute does not require the invocation to be in the first-filed
pleading nor has any court so held. As set forth in EWI’s initial brief, the only
Courts of Appeal to decide the issue have found the statute satisfied so long as the
invocation of the exemption occurred within the statutory 30-day window. Indeed,
Petree admits as much when the only authority he cites for his assertion is a
8
CR 5-9 & 14-19.
9
Appellee’s Brief, pp. 21-22.
dissenting opinion.10 There is no case holding that the exemption must be
“invoked” in the original petition.11 As exhaustively set forth in the majority
opinion in the Epco case, neither the statute nor the legislative history imposes
such a requirement. See Epco, 352 S.W.3d at 270-72. As a result, it was an abuse
of discretion for the trial court to impose such a requirement in dismissing EWI’s
claims.
III. Dismissal of EWI’s Claims Elevates Form Over Substance.
As set forth in EWI’s initial brief, the purpose of the statute is “not to
dismiss meritorious claims on a procedural technicality.” WCM Group, Inc. v.
Brown, 305 S.W.3d at 230 (emphasis added). Yet that is exactly what Petree
sought and the trial court did. The trial court dismissed this case where it is
undisputed that the Certificate of Merit was filed within twenty-two (22) days of,
and was served contemporaneously with, the Original Petition.12 As noted above,
although attempting to do so before this Court, Petree made no substantive
complaint about the Certificate of Merit in the court below. Instead, his complaint
10
Appellee’s Brief pp. 22-24 citing Epco Holdings, Inc. v. Chicago Bridge & Iron Co., 352
S.W.3d 265, 277 (Tex. App.—Houston [14th Dist.] 2011, pet. dismissed) (dissenting opinion).
11
Petree also points to DHM Design v. Morzak and CrossTex Energy Services, L.P. v. Pro
Plus, Inc., in support of his position. See Appellee’s Brief, p. 24. However, Petree’s reliance is
misplaced. As EWI set forth in its initial brief the issue of in which pleading the invocation of
the exemption had to be made was not before the Court in either of those cases. See Appellant’s
Brief, n. 32; DHM Design v. Morzak, 2015 WL 3823942 (Tex. App.—Dallas June 19, 2015);
CrossTex Energy Services, L.P. v. Pro Plus, Inc., 430 S.W.3d 384, 391 (Tex. 2014).
12
CR 5-9, 14-19, & 65-66; App. A.
to the trial court was based entirely on a procedural technicality. Petree’s
contentions, and the trial court’s dismissal based thereon, is the height of elevating
form over substance and acts contrary to the statute’s purpose. In short, the trial
court acted “in an unreasonable and arbitrary manner . . . without reference to any
guiding rules or principles.” Dunham Engineering, Inc. v. Sherwin-Williams Co.,
404 S.W.3d 785, 789 (Tex. App.—Houston [14th Dist.] 2013, no pet.) citing
Benchmark Eng’g Corp. v. Sam Houston Race Park, 316 S.W.3d 41, 44 (Tex.
App.—Houston [14th Dist.] 2010, pet. dism’d by agr.). As such, the trial court
abused its discretion.
CONCLUSION AND PRAYER
Because Plaintiff’s Original Petition was filed within ten days of the
expiration of the statute of limitations, and the Supplemental Petition contained the
allegation that the Certificate of Merit could not be served contemporaneously due
to time constraints, Plaintiff met all the requirements of Section 150.002(c). As in
the Epco case, “[d]ismissal of [EWI’s] lawsuit under the present circumstances—
when [EWI] made the allegation and filed the certificate of merit within thirty (30)
days—[is not] a just and reasonable result under the express terms or purpose of
the statute.” Epco, 352 S.W.3d at 272. This is particularly true where, as here,
Petree was served with the Original Petition, as supplemented, and the Certificate
of Merit on the same day. The trial court abused its discretion by failing to
correctly analyze and apply the law. Epco, 352 S.W.3d at 269. Therefore, EWI
respectfully requests that this Court reverse the trial court and remand the case for
further proceedings.
Respectfully submitted,
HUSCH BLACKWELL LLP
2001 Ross Avenue, Suite 2000
Dallas, Texas 75201
(214) 999-6100
(214) 999-6170 (fax)
By: /s/ Peter J. Harry
Peter J. Harry
Pete.Harry@huschblackwell.com
State Bar No. 09134600
Chad A. Johnson
Chad.Johnson@huschblackwell.com
State Bar No. 24026259
ATTORNEYS FOR APPELLANT,
EMERALD WACO INVESTMENTS, LTD.
CERTIFICATE OF COMPLIANCE
1. I hereby certify that the foregoing document contains 3,466 words,
according to the word count of the computer program used to prepare it, in
compliance with Rule 9.4(i)(2).
2. This brief complies with the typeface requirements of TEX. R. APP. P.
9.4(e). This brief has been prepared in a proportionally spaced typeface using
Microsoft 2010 in 14-point font Times New Roman.
/s/ Chad A. Johnson
CHAD A. JOHNSON
CERTIFICATE OF SERVICE
I hereby certify by my signature below that a true and correct copy of the
foregoing document has been forwarded to counsel of record for Appellee via U.S.
Mail on this the 21st day of December, 2015, in compliance with the Texas Rules
of Civil Procedure.
/s/ Chad A. Johnson
CHAD A. JOHNSON