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Case Updates from the First Court of Appeals

Houston Bar Association Appellate Practice Section

January 31, 2022

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Patriot Contracting, LLC v. Shelter Prods., Inc., __ S.W.3d __, No. 01-19-00971-CV, 2021 WL 6067721 (Tex. App.—Houston [1st Dist.] Dec. 23, 2021, no pet. h.) (Countiss, J.).

This opinion is notable because it deals with Mary Carter agreements—an important topic in Texas law that arises on occasion.

Patriot Contracting, LLC (“Patriot”) was the general contractor on a construction project. Patriot hired Kancor Companies, LLC (“Kancor”) as its roofing subcontractor. Kancor bought its lumber from Shelter Products, Inc. (“Shelter”). Travelers Casualty and Surety Company of America (“Travelers”) issued a bond to guarantee payment to subcontractors and suppliers.

Although the number of claims and cross-claims complicate the case, the facts are straightforward. Patriot was paid by the project owner, but did not pay Kancor. As a result, Kancor was unable to pay Shelter. Shelter sued Patriot, Kancor, and Travelers, and the other parties brought various cross-claims.

Before trial, Shelter and Kancor entered into two agreements about Shelter’s claims against Kancor. First, in an agreed stipulation of facts and law, the two parties agreed to the remaining damages owed to Shelter from Kancor and certain other facts. Kancor also assigned to Shelter certain rights it had against Patriot and Travelers. Second, in a Rule 11 agreement, Kancor waived objections to Shelter’s proposed charge questions and Shelter agreed not to seek to reduce the jury’s verdict on certain questions.

Patriot and Travelers argued that the agreed stipulation and Rule 11 agreement constituted Mary Carter agreements—which are prohibited under Texas law.

The First Court of Appeals disagreed. The agreements did not guarantee Kancor any payment and did not give Kancor a financial interest in Shelter’s recovery. Moreover, there was no misalignment of the parties. The common interest between Shelter and Kancor was made plain to the jury throughout the trial. Thus, because the agreements did not give Kancor a financial interest and did not create a false impression of adversity, the agreements did not constitute prohibited Mary Carter agreements.

The opinion also discusses sufficiency of the evidence, improper jury argument, jury charge error, perfection of liens, attorney’s fees, pre-judgment interest, and other issues.

Village Green Alzheimer’s Care Home, LLC v. Graves ex rel. Graves, __ S.W.3d __, No. 01-21-00131-CV, 2021 WL 6067695 (Tex. App.—Houston [1st Dist.] Dec. 23, 2021, no pet. h.) (Landau, J.).

This opinion deals with whether a claim qualifies as a health care liability claim—a perennial issue in litigation involving health care defendants.

Norma Graves, a resident of an assisted living facility, was mauled by a dog in the lobby of the facility.

The dog (Charlie) was a stray dog that an employee of the facility, A. Asgar, had found. Asgar brought the dog to live at the facility, and the dog was allowed to roam the lobby and common areas freely. The dog had acted aggressively with another employee and a resident before the mauling incident, but the facility had ignored those incidents. Eventually, Charlie severely mauled Graves’s face. Graves brought a premises liability claim.

This was not the first time this had happened. Asgar had previously found another stray dog (Marley) and allowed it to live at the facility. Marley had attacked a nurse on the premises as well.

The trial court held that Graves’s claim was not a health care liability claim within the meaning of Chapter 74 of the Texas Civil Practice & Remedies Code.

The First Court of Appeals affirmed. The court explained that expert reports are required at the outset of litigation for health care liability claims. But health care liability claims have a specific statutory definition. Two prongs of that definition were relevant to this case—whether the claim involved a departure from the accepted standard of care of “safety” and of “health care.” Neither prong was met.

In analyzing whether the claim was a “safety claim,” the court cited the Texas Supreme Court’s seminal decision in Ross v. St. Luke’s Episcopal Hospital, 462 S.W.3d 496 (Tex. 2015). The First Court of Appeals explained the four key holdings in Ross and noted the multi-factor analysis that Ross requires.

Surprisingly, on appeal, the facility did not engage in an analysis under the Ross factors. Rather, the facility pointed to Omaha Healthcare Center, LLC v. Johnson, 344 S.W.3d 392 (Tex. 2011). In that case, the Texas Supreme Court found that a claim by a nursing home resident regarding a spider bite was a safety standards-based health care liability claim.

The First Court of Appeals noted, however, that Johnson involved the violation of both a general duty to provide a safe environment and a specific safety statute regarding an effective pest control program. Cases that involve only a general duty to provide a safe environment do not qualify as safety standards-based health care liability claims.

“It simply is not enough for Village Green to point to a general duty to provide a safe environment to turn every act or failure to act within its premises into a health care liability claim.” Village Green, 2021 WL 6067695, at *8.

Thus, the court engaged in a detailed analysis of the Ross factors. Although it found one factor weighed in favor of the facility, the rest did not. As a result, the claim was not a health care liability claim, but rather a simple premises liability action based on the presence of an aggressive dog.

The court next tuned to whether the claim was a health care liability claim because it involved a departure from the standard of care for health care. Although “health care” has a broad definition, it has limits. “There must be a direct connection between the health care standard and the provision of medical services.” Id. at *13.

The court found that connection lacking. The claim was separate from health care services because the dog attack had no connection to the residential services Graves received from the facility. The only connection was that health care was provided in the same location as the dog attack. Thus, the claim did not quality as a health care standards-based health care liability claim.

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