News & Insights

Case Updates from the First Court of Appeals – July 2022


July 20, 2022


Appellate Lawyer

Budget Rent a Car System, LLC v. Ozumba, No. 01-20-00408-CV, 2022 WL 2347742 (Tex. App.—Houston [1st Dist.] June 30, 2022, no pet. h.) (mem. op.) (Rivas-Molloy, J.).

This case reinforces a fundamental lesson regarding jury charges: be careful about combining different theories of liability or defense into one jury question where there is a possibility that one of the theories is legally improper.

Ozumba rented a car from Budget, but the car’s front wheel dislodged. Budget provided a substitute rental car, but then demanded Ozumba pay for the costs of repair. Ozumba refused.

Budget sued for breach of the car rental agreement, which included a provision that shifted any responsibility for loss or damage to rented vehicles to Ozumba—even if someone else caused the loss or damage or the cause was unknown.

Ozumba argued that his performance was excused for two reasons. First, Budget committed a prior material breach by not providing a safe, working, and reliable rental car. Second, the responsibility-shifting clause was unconscionable.

The case was tried to a jury. The two theories of excuse were combined into a single jury question. This was reversible charge error.

The First Court held that the theory of prior material breach was valid. Although the rental agreement did not “expressly require Budget to provide a safe, working, and reliable rental car, such a promise is necessarily implied.” Id. at *8. Moreover, there was legally sufficient evidence that Budget committed a prior material breach by failing to provide a safe, working, and reliable rental car. Importantly, Ozumba did not need expert testimony on the issue of whether the rental car was working properly or not.

Thus, as to one theory of excuse, Ozumba had presented a valid defensive theory and sufficient evidence.

But the other theory of excuse should not have been submitted to the jury. Unconscionability of a contract is a question of law that must be decided by the court, not the jury. Although facts underlying the defense may present a question of fact for the jury, the ultimate issue is still one for the court. The jury charge wrongly presented the ultimate issue for the jury’s consideration. This was error.

The two theories of excuse—prior material breach and unconscionability—were combined into a single jury question. This was harmful error. The jury question incorporated a valid defensive theory (prior material breach) and an invalid defensive theory (unconscionability). The court could not discern which defensive theory the jury relied on in answering the question in Ozumba’s favor.

Thus, the trial court’s judgment was reversed and the matter was remanded for a new trial.

In re State Farm Fire & Casualty Co., No. 01-22-00099-CV, 2022 WL 1462940 (Tex. App.—Houston [1st Dist.] May 10, 2022, orig. proceeding) (mem. op.) (Hightower, J.).

This case is important because it reinforces another fundamental lesson: be careful that the orders being signed by the trial court are not accidentally final judgments.

The plaintiff settled with one of the defendants. The plaintiff and the settling defendant asked the trial court to sign an order with the following language:

ORDERED, ADJUDGED AND DECREED that this suit be and it is hereby DISMISSED WITH PREJUDICE, and the Defendant Narciso Pavon, is hereby in all things discharged.

All relief sought herein by any of the parties hereto which is not expressly granted is denied. This Order is final and disposes of all parties and claims.

Id. at *1 (emphasis added). The trial court signed the order on October 26, 2021.

The plaintiff eventually filed a motion to reinstate her claims against State Farm (the non-settling defendant) on January 3, 2022. When the trial court granted the motion to reinstate, State Farm filed a mandamus petition, which was conditionally granted.

The First Court held that the October 26 order was a final judgment. Under Lehmann v. Har-Con Corp., 39 S.W.3d 191 (Tex. 2001), the order was final because it contained finality language that disposed of all parties and claims: “This Order is final and disposes of all parties and claims.” Id. at *1.

The October 26 order also contained a “Mother Hubbard clause,” which stated: “All relief sought herein by any of the parties hereto which is not expressly granted is denied.” Id. at *1. Such Mother Hubbard clauses do not signal finality where there has been no conventional trial on the merits. The First Court acknowledged this legal principle, but held that it was not relying on the Mother Hubbard clause.

The First Court also refused to review the record to assess whether the October 26 order was final. Such a record review is only permitted if the order is not clear and unequivocal on its face. Because the October 26th order was clear and unequivocal, review of the record was improper.

Finally, because the motion to reinstate was filed after the expiration of the trial court’s plenary power, it was void and of no legal effect.

Parth S. Gejji 713.951.6288