Firm News – December 2014

The attorneys at Bailey Brauer obtained successful outcomes for several clients over the past quarter, including two notable examples.

Defeating federal contempt allegations: Bailey Brauer was hired on the Wednesday before Thanksgiving to represent two individuals at a show cause hearing the following week. The defendants were facing contempt charges for allegedly violating a federal injunction.

Attorneys Clayton Bailey, Ben Stewart and Alex Brauer, and Paralegal Brynn Long sprang into action over Thanksgiving weekend in preparation for the upcoming hearing. The federal magistrate judge found not only that our clients did not violate the injunction, but also that Bailey Brauer’s legal arguments carried the day and the injunction was unenforceable as written.

Obtaining resolution of Furr’s Cafeteria bankruptcy issues: Within 90 days of being retained, Attorneys Ben Stewart and Alex Brauer obtained a favorable ruling in federal bankruptcy court requiring the investment fund controlling the bankrupt entities to pay administrative expenses and address outstanding tax issues. The ruling benefited limited partner investors represented by Bailey Brauer and allowed them to avoid potential tax liability.

Is Your Injunction Enforceable?

Injunctions are court orders that govern a party’s conduct. The most common form of injunction prevents a party from taking certain actions. An example is an injunction that prevents a person from buying or selling certain products. This is the type of injunction recently faced by two of Bailey Brauer’s clients. Because injunctions are orders issued by state or federal courts, they can be very powerful weapons. However, injunctions must meet certain requirements to be enforceable.

Federal Rule of Civil Procedure 65 and Texas Rule of Civil Procedure 683 govern injunctions. They require, among other things, that the injunction: (a) state the reasons why it issued; (b) state its terms specifically; and (c) describe in reasonable detail—and not by referring to the lawsuit or other document—the act or acts restrained or required.

In recent cases, Bailey Brauer has successfully challenged injunctions issued against its clients on several fronts, including (a) the injunctions did not state why they were issued, and (b) the injunctions required our clients to examine other documents, such as websites listed in the injunctions, to determine whether certain conduct was prohibited.

If you are currently subject to an injunction or obtained an injunction order against someone else, you may want to have a Bailey Brauer attorney review it for enforceability issues.

Has the Texas Supreme Court Limited the Scope of Discovery?

In a recent controversial decision, the Texas Supreme Court in In re Nat’l Lloyds Ins. Co. narrowed the scope of discovery available against a property insurer. In Lloyds, the plaintiff sued her insurer alleging that it undervalued her claims relating to damage suffered to her Cedar Hill, Texas home during two storms.

During discovery, the plaintiff requested all claim files from the previous six years involving the adjusters involved with her claims, and all claim files from the past year for properties in Dallas and Tarrant Counties involving the firms that handled her claims.

The insurer objected and the trial court limited the requests to the two firms that adjusted the plaintiff’s claims and also to the two storms in Cedar Hill that damaged the plaintiff’s property. On appeal, the Texas Supreme Court determined that the requests were overbroad. The Supreme Court reasoned that the insurer’s overpayment, underpayment, or proper payment of the claims of unrelated third parties was irrelevant to its conduct with respect to the plaintiff’s claims.

While some believe that this ruling will narrow the scope of discovery in all cases, we are not so sure. Our recent experience before trial courts since the opinion was issued indicates that courts may limit the holding to the insurance context, and plaintiffs in other types of cases will still be entitled to broad discovery. Only time will tell whether the decision will materially impact Texas discovery practice.