Posted by Rich Phillips
On Thursday, February 9, 2017, beginning at 9:00 am, the Supreme Court of Texas will hear argument in three cases:
No. 15-0847, Sommers v. Sandcastle Homes, Inc. consolidated with No. 15-0848, Sommers v. NewBiss Property, LP — In these consolidated cases, there are two primary issues. The first issue is procedural: whether petitioner Sommers, a bankruptcy trustee, has standing to seek review of the summary judgments at issue. The summary judgments were issued in a case involving other claims and parties, and they were made final by severance. After the court of appeals issued its opinion, the plaintiffs in the original case sought bankruptcy protection and that case was transferred to the bankruptcy court. The two severed cases were not transferred. The bankruptcy trustee argues that he has standing because the bankruptcy court ordered that the trustee owns of all of the plaintiffs' claims (including the claims at issue in the severed cases). Respondents argue that the bankruptcy court's order does not extend to these appeals and that it did not authorize the trustee to pursue the petitions for review.
The substantive issue is whether the respondents were bona fide purchasers for value of certain property. The plaintiffs in the original case filed notices of lis pendens regarding the property at issue when they filed suit. Those notices were eventually expunged as provided in Texas Property Code section 12.0071. Petitioner argues that even though the lis pendens notices were expunged, the respondents cannot be bona fide purchasers because they had actual notice of the claims and they acquired that knowledge by means other than the expunged lis pendens notices. Petitioner argues that expungement (as opposed to cancellation) negates both constructive notice and actual notice because expungement requires a finding by the trial court that the claimant has not shown the probable validity of its claim of an interest in the real property.
No. 15-0968, Longview Energy Co. v. The Huff Energy Fund LP — This appeal arises from a claim that two of petitioner Longview's directors (and companies associated with those directors) breached fiduciary duties owed to the petitioner. The jury found breach of the duty by usurpation of a corporate opportunity and by improper competition. Respondents argue (and the court of appeals found) that there is no evidence to support the jury's finding that a corporate opportunity was usurped because Longview did not establish that it had an expectancy in the opportunity. Longview contends that the court of appeals misapplied the law regarding Longview's expectancy in the opportunity. Longview also challenges the court of appeals' conclusion that the improper competition claim should not have been submitted to the jury because it was not properly pleaded. In cross-issues, the respondents have also argued that even if there is evidence to support the liability findings, the trial court's remedy (imposition of a constructive trust) was improper.
You can watch the arguments live (or access a recording after the fact), here.