in Re: Christy and Kory Hill
12-15-00115-CV
| Tex. App. | May 1, 2015Background
- Plaintiffs Christy and Kory Hill sued Andrew and Daniel Shaw (doing business as Engines Unlimited) after repairs to a recently purchased used truck were allegedly overpriced, not performed, and the truck withheld; claims included conversion, fraud, DTPA violations, and a punitive damages demand.
- Plaintiffs served discovery seeking defendants’ net worth; defendants objected, arguing punitive damages are not recoverable on some pleaded claims (citing the DTPA), and refused to provide net-worth information.
- Defendants moved to designate the used-car dealer (JCT Auto Sales) a responsible third party for allegedly selling the truck in a defective condition; plaintiffs objected, noting the truck was sold “as is” and the dealer’s culpability was not pled.
- At a hearing with no evidentiary presentation, the trial court denied plaintiffs’ motion to compel net-worth discovery (stating net worth might be ordered later) and granted leave to designate JCT Auto Sales as a responsible third party.
- Plaintiffs petitioned this Court for writ of mandamus, arguing (1) net-worth discovery is permissible whenever punitive damages are pleaded and (2) the defendants’ third‑party designation fails to plead facts negating the seller’s “as is” defense or otherwise showing the seller’s responsibility for the harms alleged against the Shaws.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether plaintiffs may obtain net‑worth discovery | Pleading claims that allow punitive damages (fraud, conversion) suffices to authorize net‑worth discovery; no evidentiary threshold required | Net worth discovery is premature because punitive damages may not be recoverable on all pleaded claims and plaintiffs must show relevance; discovery burdens and insurance coverage make net worth irrelevant now | Trial court denied net‑worth discovery; relators seek mandamus to compel production because pleading punitive damages suffices under Lunsford |
| Whether defendants may designate JCT Auto Sales as a responsible third party | Designation is improper: dealer sold the truck “as is,” defendants did not plead fraudulent inducement or facts showing the dealer’s responsibility for the Shaws’ alleged misconduct | Dealer failed to disclose preexisting defects and thus can be designated as responsible; designation permits discovery and allocation of fault | Trial court granted leave to designate JCT Auto Sales; relators argue designation is legally insufficient and should be stricken absent repleading that negates the “as is” defense |
Key Cases Cited
- Lunsford v. Morris, 746 S.W.2d 471 (Tex. 1988) (pleading punitive damages permits net‑worth discovery without an evidentiary showing)
- Tony Gullo Motors I, L.P. v. Chapa, 212 S.W.3d 299 (Tex. 2006) (fraud is a claim that may support punitive damages)
- Walker v. Packer, 827 S.W.2d 833 (Tex. 1992) (mandamus doctrine: extraordinary relief appropriate where no adequate remedy by appeal exists)
- In re Colonial Pipeline Co., 968 S.W.2d 938 (Tex. 1998) (judicial‑economy principle: when mandamus is issued to correct one error, courts may correct other errors in the same proceeding)
- Prudential Ins. Co. of Am. v. Jefferson Assocs., Ltd., 896 S.W.2d 156 (Tex. 1995) (an "as is" sale generally bars recovery for claims based on the condition of the goods absent fraud in the inducement)
- Soon Phat, L.P. v. Alvarado, 396 S.W.3d 78 (Tex. App.—Houston [14th Dist.] 2013) (net worth is a relevant factor in assessing punitive damages and both parties may seek to prove it)