The Energy Law Blog : Energy Lawyer & Attorney : Liskow & Lewis Law Firm : Gulf Coast, Offshore

Bennett v. Reynolds, No. 08-0074, 2010 WL 2541096 (Tex. June 25, 2010).

By Natalie Barletta and Andrew Wooley

In Bennett v. Reynolds the Supreme Court of Texas clarifies that the maximum ratio for exemplary to actual damages in Texas will rarely exceed 4 to 1 and that a defendant’s conduct generally, not just that specifically related to a tort, may be considered in gauging reprehensibility for federal due process purposes.

Reynolds sued Bennett and the Bonham Corporation, of which Bennett served as president, for conversion, alleging that they sold thirteen head of Reynolds’s cattle that strayed onto corporate land. The trial court awarded $5,327.11 in actual damages for the cattle’s market value and exemplary damages of $250,000 against Bennett and $1 million against the corporation. On appeal, Bennett and the corporation argued that the exemplary-to-compensatory ratios of 47:1 as to Bennett and 188:1 as to the Corporation “offend the ‘substantive’ limitations of the Due Process Clause of the Fourteenth Amendment.” The Supreme Court of Texas agreed, and remanded the case to the court of appeals for remittitur consistent with its opinion.
 

• Email This
• Print
• Comments
• Trackbacks
• Share Link

By Michael A. Mahone, Jr.

The United States Court of Appeals for the Fifth Circuit recently dismissed the appeal in Comer v. Murphy Oil USA et al. because of the lack of a quorum. The appeal had been taken from the Southern District of Mississippi and a panel of the Fifth Circuit ruled on the merits. The case was then "voted en banc by a duly constituted quorum of the court consisting of nine members in regular active service who [were] not disqualified." However, "[a]fter the en banc court was properly constituted, new circumstances arose that caused the disqualification and recusal of one of the nine judges, leaving only eight judges in regular active service, on a court of sixteen judges, who [were] not disqualified." This, therefore, prevented the court from having a quorum.

Faced with this unique situation, the Fifth Circuit recognized that it could not conduct judicial business with respect to the appeal and could not reinstate the panel's decision, as it had been vacated. So, the court instead chose to order the clerk to dismiss the appeal without ever having reached the merits. Judges Davis and Dennis both authored dissenting opinions. Judge Davis argued that Chief Judge E. Grady Jolly should have, pursuant to 28 U.S.C. § 291, appointed a judge from another circuit so as to constitute a quorum. Judge Dennis first argued that the court, in fact, had a quorum as the en banc panel included a majority of all of the judges who were not disqualified (rather than a majority of all of the judges). He also provided several additional arguments against the action taken by the majority: (1) because the panel's decision was vacated, the en banc panel had a duty to decide the case; (2) the Rule of Necessity would require the disqualified judges to participate in the decision because the appellants' constitutional right to an appeal would otherwise be infringed; (3) as Judge Davis argued, the court could have invited a judge from another circuit to participate in the decision; and (4) the court could have held the case in abeyance until an additional judge was appointed to the Fifth Circuit, assuming, of course, that this judge was not also disqualified.
 

For more information see http://www.ca5.uscourts.gov/opinions/pub/07/07-60756-CV2.wpd.pdf.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

By Marie Carlisle: 

           The principle issue addressed in Adobe Oilfield Services v. Trilogy Operating, Inc., No. 11-09-00162-CV (Tex. App.—Eastland January 29, 2010), involves the granting of a temporary injunction to prevent the filing of liens against oil wells. Trilogy entered into contracts with Adobe to drill six wells. Trilogy paid Adobe’s invoices for the first five wells, but was subsequently contacted by PNC Bank claiming a security interest in Adobe’s accounts receivables and a right to the amounts owed to Adobe for the sixth well. Trilogy held the amount still owed to Adobe in suspense, eventually depositing the funds into the registry of the Court. Adobe then threatened to file liens against all six wells for the unpaid amounts owed, causing Trilogy to file suit seeking injunctive relief to protect the wells from the threatened liens. Trilogy offered proof that it had a contractual obligation to protect the wells from liens, that the placement of liens on the wells would have a negative impact on Trilogy and its ability to serve as operator for the wells, and that it had paid all amounts owed to Adobe either directly via check or by depositing such sums with the Court. Trilogy also offered proof that Adobe had a contractual obligation to pay its subcontractors to prevent the filing of liens against the property. The trial court granted the temporary injunction, and the Court of Appeals upheld the injunction because Trilogy was able to show that it had a cause of action against Adobe, it had a probable right to the relief sought, and that there would be probable imminent and irreparable injury if the liens were filed.

            A secondary issue in the case involves whether or not the deposit of a sum of cash into the trial court’s registry is sufficient to satisfy the requirement of filing a bond with the court. Pursuant to the trial court’s order, Trilogy deposited $1000 cash as security for a temporary injunction field against it, as well as $300,000 cash into the registry of the court. The court’s order, however, was not conditioned as required by TRCP 684, and appellants asserted that this failure voids the temporary injunction. The Appellate Court, however, followed the decision of the Dallas Court of Appeals in finding that Rule 14c, which allows for the deposit of cash in lieu of a bond, automatically incorporates with a cash deposit the conditions for a proper statutory bond. See Seib v. American Savings & Loan Ass’n of Brazoria County, No. 05-89-01231-CV, 1991 WL 218642 (Tex.App.—Dallas 1991). 

• Email This
• Print
• Comments
• Trackbacks
• Share Link