Owen v. Jim Allee Imports, Inc.
2012 Tex. App. LEXIS 7271
| Tex. App. | 2012Background
- Krisle bought a VW Eos from RW in 2007, with negative equity financed into the purchase price totaling $46,437.27.
- RW’s financing included Krisle’s trade-in balance of $14,500, plus taxes and fees, creating an upside-down loan.
- Krisle contacted the Weinstein Law Firm after seeing advertising suggesting possible auto-finance fraud and filed suit in April 2009 for multiple claims, including cash-price violations under the Texas Finance Code.
- Owen, an attorney with the Weinstein Firm, represented Krisle and later amended the petition; Krisle then nonsuited her claims after RW’s summary-judgment motion was pursued.
- RW sought sanctions against Krisle and her counsel under Rule 13, §10.001, and §17.50(c) after the case proceeded and Krisle’s claims were dismissed with prejudice.
- The trial court granted sanctions against Owen for filing a groundless cash-price claim and for bad-faith conduct; RW cross-petition sought sanctions for frivolous appeal, which the court partially granted.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| whether an intermediate court's rejection of a theory sanctions later suits | Krisle’s suit based on the same theory is not sanctionable | Pleadings based on rejected theory are sanctionable | Sanctions upheld; cash-price claim groundless |
| whether Owen had a good-faith argument to reverse Bledsoe/Stephens | Owen had a good-faith basis to challenge prior decisions | There was no proper good-faith basis; failure to raise Bledsoe/Stephens in time | No good-faith basis; issue overruled |
| whether Texas Finance Code allowing financing of negative equity rendered Krisle's claims groundless | Finance Code permits the practice, not necessarily a violation | Financing negative equity violated cash-price provisions as a matter of law | Cash-price claim groundless; sanctions proper |
| whether Krisle’s knowledge barred recovery (in pari delicto) | Krisle could pursue claims despite knowledge | In pari delicto barred recovery where plaintiff knowingly participated | In pari delicto applies; no recovery for Krisle under cash-price theory |
| retroactive application of 2009 amendments to bar Krisle's claim | Amendments should not retroactively bar ongoing litigation | Amendments reduce penalties retroactively; applicable per statute | amendments applied; sanctions upheld |
Key Cases Cited
- Bledsoe Dodge, L.L.C. v. Kuberski, 279 S.W.3d 839 (Tex.App.-Dallas 2009) (negative equity not a finance charge; no cash-price violation)
- Donwerth v. Preston II Chrysler-Dodge, Inc., 775 S.W.2d 634 (Tex. 1989) (definition of groundless under sanctions standards)
- Low v. Henry, 221 S.W.3d 609 (Tex.2007) (sanctions framework and proof of bad faith; circumstantial evidence allowed)
- Spohn Hosp. v. Mayer, 104 S.W.3d 878 (Tex.2003) (sanctions standard and nexus between conduct and sanction)
- Mosk v. Thomas, 183 S.W.3d 691 (Tex.App.-Houston [14th Dist.] 2003) (sanctions; abuse of discretion standard)
- Roe v. Ladymon, 318 S.W.3d 502 (Tex.App.-Dallas 2010) (binding authority of higher court decisions and precedents)
- Geis v. Colina Del Rio, LP, 362 S.W.3d 100 (Tex.App.-San Antonio 2011) (in pari delicto consideration in sanctions context)