No. 16-0966
IN THE SUPREME COURT OF TEXAS
June 14, 2019
ON PETITION FOR REVIEW FROM THE COURT OF APPEALS FOR
JUSTICE BOYD, joined by CHIEF JUSTICE HECHT and JUSTICE BLACKLOCK, dissenting.
The issue in
I.
Estoppel and Waiver
Estoppel and waiver “are frequently referenced together, but they are
Waiver, by contrast, is “largely a matter of intent.” Jernigan v. Langley, 111 S.W.3d 153, 156 (Tex. 2003) (per curiam). It occurs only when a party who knows about a right intentionally relinquishes it. Crosstex Energy Servs. v. Pro Plus, Inc., 430 S.W.3d 384, 391 (Tex. 2014). To waive a right, a party must clearly communicate its intent to relinquish or abandon the right. G.T. Leach Builders, LLC v. Sapphire V.P., LP, 458 S.W.3d 502, 511 (Tex. 2015). Waiver does not depend on the opposing party. It is “‘essentially unilateral’ in character and ‘results as a legal consequence from some act or conduct of the party against whom it operates; no act of the party in whose favor it is made is necessary to complete it.‘” Shields Ltd. P‘ship v. Bradberry, 526 S.W.3d 471, 485 (Tex. 2017) (quoting Mass. Bonding & Ins. Co. v. Orkin Exterminating Co., 416 S.W.2d 396, 401 (Tex. 1967)).
A party may communicate its intent to waive a right either expressly or impliedly. G.T. Leach, 458 S.W.3d at 511–12. To impliedly waive a right, the party must engage in conduct that is “unequivocally inconsistent with,” Van Indep. Sch. Dist. v. McCarty, 165 S.W.3d 351, 353 (Tex. 2005), or “in contravention of” the right, G.T. Leach, 458 S.W.3d at 514, so as to “clearly demonstrat[e]” the party‘s intent to relinquish it, Crosstex, 430 S.W.3d at 394 (quoting Jernigan, 111 S.W.3d at 156). “There can be no waiver of a right if the person sought to be charged with waiver says or does nothing inconsistent with an intent to rely upon such right.” Jernigan, 111 S.W.3d at 156.
Although the homeowners claimed they would be “penalized” if the trial court dismissed their claims, they have never argued that the engineers should be estopped from claiming their right to dismissal. Instead, they argue only that the engineers impliedly waived their chapter 150 dismissal right by engaging in this litigation. A party can impliedly waive a right through its litigation conduct, but regardless of whether the right is contractual3 or statutory,4 the litigation conduct
In various contexts, we have identified a wide variety of factors that may indicate that a party “substantially invoked the judicial process” so as to impliedly waive a particular right. See G.T. Leach, 458 S.W.3d at 512; Perry Homes, 258 S.W.3d at 589–90. But our purpose in considering those factors has always been to determine not merely whether the party “substantially invoked the judicial process,” but whether the party‘s conduct clearly demonstrated the party‘s intent to waive the right at issue. G.T. Leach, 458 S.W.3d at 515 (concluding evidence did not establish that party “substantially invoked the judicial process to the extent required to demonstrate a waiver of its right to arbitration“) (emphasis added). The “substantially invoked” phrase, as we have used it, reflects the fundamental principle that “[i]mplying waiver from a party‘s actions is appropriate only if the facts demonstrate that the party . . . intended to waive its . . . right.” EZ Pawn Corp. v. Mancias, 934 S.W.2d 87, 89 (Tex. 1996) (per curiam).
In other words, we do not impute an intent to waive a contractual arbitration right because the party “substantially invoked the judicial process;” rather, we conclude that a party substantially invoked the judicial process, and thus impliedly waived the right, because its litigation conduct demonstrated an intent to waive the right. Crosstex, 430 S.W.3d at 393–94 (holding no waiver because party‘s litigation conduct “d[id] not demonstrate intent to waive its right to seek dismissal” under chapter 150); Jernigan, 111 S.W.3d at 156–58 (holding no waiver because party‘s “actions were not so inconsistent with an intent to assert the right to dismissal under [the medical-liability act] as to amount to a waiver of that right“).5 Stated differently, we use the “substantially invoked” phrase as a shorthand label to describe litigation conduct that is so inconsistent with the right at issue that it clearly demonstrates an intentional relinquishment of that right. G.T. Leach, 458 S.W.3d at 515 (holding evidence did not establish that party “substantially invoked the judicial process to the extent required to demonstrate a waiver of its right to arbitration“) (emphasis added); EZ Pawn, 934 S.W.2d at 89 (“Implying
In making that determination, we consider all of the facts and circumstances—the “totality of the circumstances“—in each particular case, whether the right at issue is a contractual arbitration right,7 a contractual forum-selection right,8 or a statutory right.9 But even when an alleged waiver is based on litigation conduct, we “will not infer waiver where neither explicit language nor conduct indicates that such was the party‘s intent.” In re Universal Underwriters of Tex. Ins. Co., 345 S.W.3d 404, 410–11 (Tex. 2011) (orig. proceeding).10
The Chapter 150 Dismissal Right
To correctly determine whether a party has impliedly waived a right through litigation conduct, we must consider the specific right at issue. Here, the homeowners contend that the engineers impliedly waived their right to mandatory dismissal under chapter 150 of the Texas Civil Practice & Remedies Code. Chapter 150 requires a plaintiff who sues in Texas for damages arising out of services provided by certain licensed professionals to file a “certificate of merit.”
Crucially, chapter 150 does not impose any deadline by which the defendant must assert its right to mandatory dismissal. It does not require the defendant to file a dismissal motion before filing an answer, before attempting to settle the claim, before participating in discovery, before designating third parties, or before engaging in any other litigation conduct. Under the statute, the defendant has the right to seek and obtain dismissal at any point in the litigation process. Because the statute “does not include a deadline, a defendant does not waive the right to move for dismissal simply by waiting to file the motion.” Jernigan, 111 S.W.3d at 157 (citing Strom v. Mem‘l Hermann Hosp. Sys., 110 S.W.3d 216, 227 (Tex. App.—Houston [1st Dist.] 2003, pet. denied); Hernandez v. Piziak, No. 03-02-00544-CV, 2003 WL 248329, at *8–10 (Tex. App.—Austin Feb. 6, 2003, pet. denied) (mem. op.); Kidd v. Brenham State Sch., 93 S.W.3d 204, 208 (Tex. App.—Houston [14th Dist.] 2002, pet. denied); Chisholm v. Maron, 63 S.W.3d 903, 908 (Tex. App.— Amarillo 2001, no pet.)); cf. John v. Marshall Health Servs., Inc., 58 S.W.3d 738, 741 (Tex. 2001) (per curiam) (holding that when a rule of civil procedure “imposes no deadline, . . . none can be added by decision“).
The Court correctly acknowledges that the engineers’ litigation conduct “must necessarily be weighed differently here” than in cases involving a contractual right to arbitration or to litigate in a particular forum, because those rights are “materially different” than the chapter 150 dismissal right. Ante at ___. But it finds waiver only by misconstruing the right and relying on cases involving the “materially different” right to arbitration. Instead of identifying the right at issue—the right to dismissal for failure to file a certificate of merit, unlimited by any statutory deadline—the Court confuses the potential benefits of the defendant‘s dismissal right with the nature of the right as chapter 150 describes it. The Court notes, for example, that the dismissal right “helps ensure frivolous claims are expeditiously discharged,” ante at ___, “obviates the need to litigate the lawsuit altogether,” ante at ___, allows the defendant to “avoid litigation entirely,” ante at ___, enables the trial courts to “quickly jettison meritless lawsuits,” ante at ___, “saves parties the expense of protracted litigation,” ante at ___, “provides ample opportunity to [obtain dismissal] without the need to engage in any other litigation activity,” ante at ___, and “eliminate[s] the obligation to litigate at all,” ante at ___. In light of these observations, the Court concludes that “all of the Engineers’ conduct in this case was inconsistent with” their dismissal right. Ante at ___.
But the right the statute actually grants—to seek and obtain dismissal at any time—is far broader than the right the Court describes. To be sure, the statue permits the defendant to obtain all the benefits of early—even immediate—dismissal,
A. Waiver of the right
We have addressed implied waiver of statutory dismissal rights on only two occasions, and we found no waiver in either case. First, in Jernigan, we held that the defendant had not impliedly waived the right to dismissal due to the plaintiff‘s failure to timely file adequate expert reports under the medical-liability act, specifically noting that courts have held that “because the statute does not include a deadline, a defendant does not waive the right to move for dismissal simply by waiting to file the motion.” Jernigan, 111 S.W.3d at 157 (citations omitted). The plaintiff argued the defendant impliedly waived the right by failing to object to the reports until more than 600 days after they were filed, participating in discovery during that time, seeking summary judgment on different grounds, and amending his answer to delete any complaint that the plaintiff had failed to meet statutory prerequisites to suit. Id. at 155. Holding that the defendant had not impliedly waived the right because his “silence or inaction” was not “inconsistent with the intent to rely upon the right to dismissal,” we suggested that implied waiver could occur only if the defendant had failed to object “until after the case is disposed of on other grounds.” Id. at 157.
More recently, we held in Crosstex that the defendant had not impliedly waived the chapter 150 dismissal right at issue here even though it had participated in discovery, filed an answer, joined in agreed continuance and docket-control orders, and entered into a rule 11 agreement, and then filed a dismissal motion three days later, after limitations had run. 430 S.W.3d at 394. We rejected the waiver argument because none of this conduct “clearly demonstrated” an “intent to waive the right to dismiss.” Id. at 394–95 (emphasis added).
As the Court notes, the engineers engaged longer and more extensively in this litigation than the defendants in Jernigan or Crosstex. The engineers agreed to a scheduling order setting a trial date and imposing deadlines for discovery, expert designations, and amended pleadings; substituted their counsel; filed amended answers; engaged in written discovery; designated experts and responsible third parties; agreed to a continuance; supplemented discovery responses; amended their pleadings; and participated in both voluntary and court-ordered mediation. But none of this conduct was inconsistent with their chapter 150 right to seek dismissal at any time, or otherwise clearly demonstrated that they knew about and
As we said in Jernigan, in the absence of a deadline, a party does not waive its deadline-free dismissal right simply by waiting to assert that right. 111 S.W.3d at 157. But we suggested that a party could waive the right by asserting it only after the case is “disposed of on other grounds.” Id. The Court suggests that a party could waive its dismissal right by “[s]eeking and obtaining affirmative relief from the trial court, especially summary judgment,” ante at ___, or by “electing to litigate the case to a merits-based disposition,” ante at ___. I agree with the Court that asking the trial court to enter judgment on the merits based on a ground other than the plaintiff‘s failure to file the certificate of merit is “inconsistent with the right to dismissal of the case without litigation.” Ante at ___. And at least under some circumstances, announcing “ready” for trial could clearly demonstrate a defendant‘s intent to forego dismissal. See Apodaca, 281 S.W.3d at 127; see also Uduma v. Wagner, No. 01-12-00796-CV, 2014 WL 4259886, at *7 (Tex. App.—Houston [1st Dist.], Aug. 27, 2014, pet. denied) (mem. op.) (finding waiver when defendant sought dismissal “only after the first full trial on the merits concluded“); Mem‘l Hermann Hosp. Sys. v. Hayden, No. 01-13-00154-CV, 2014 WL 2767128, at *10 (Tex. App.—Houston [1st Dist.] June 17, 2014, pet. denied) (mem. op.) (finding waiver when defendant twice announced ready for trial and thus “attempted to obtain a final judgment through other means“); but see Alexander v. Colonnades Health Care Ctr. Ltd., No. 14-16-00500-CV, 2017 WL 4930885, at *10 (Tex. App.—Houston [14th Dist.] Oct. 31, 2017, no pet.) (mem. op.) (“[T]rial settings do not equate to an announcement of ready.“).
But as the Court acknowledges, the engineers never filed any summary-judgment motions, never asked the trial court for affirmative relief on the merits, and never expressed that they were ready and willing to proceed with a trial. Ante at ___. The Court notes that the engineers pleaded for attorneys’ fees (in their original answer) and later sought to designate responsible third parties, ante at ___, but these pleadings did not ask the court to grant relief, much less merits-based relief. See G.T. Leach, 458 S.W.3d at 513 (refusing to consider as evidence of waiver the counterclaim filed because it “was defensive in nature, and our rules required G.T. Leach to file it or risk losing it altogether“); BHP Petroleum Co. v. Millard, 800 S.W.2d 838, 841 (Tex. 1990) (“To qualify as a claim for affirmative relief, a defensive pleading must allege that the defendant has a cause of action, independent of the plaintiff‘s claim, on which he could recover benefits, compensation or relief, even though the plaintiff may abandon his cause of action or fail to establish it.“) (quoting Gen. Land Office v. Oxy U.S.A., Inc., 789 S.W.2d 569, 570 (Tex. 1990)). Pleading for relief is not the same as asking the trial court to enter relief based on those pleadings. See Crosstex, 430 S.W.3d at 394 (“We should not penalize parties or their attorneys for acting out of an abundance of caution and protecting their interests by filing an answer.“).
We cannot rely on implied waiver to judicially restrict the engineers’ statutory right by imposing a deadline or prohibitions the statute does not impose. While the Court might think it best that parties be required to move for dismissal early in the litigation process, and it might think that allowing the defendant to delay filing the motion while engaging in settlement discussions and the litigation process is unfair to plaintiffs, neither public policy nor any sense of fairness can dictate the
In support of its conclusion, the Court suggests that “the more developed a case is, and the closer it is to trial, the stronger the implication becomes that the defendant intended to abandon the certificate-of-merit requirement, and accordingly, the remedy for noncompliance.” Ante at ___. But the Court necessarily assumes that the only possible reason the engineers could have delayed filing their dismissal motion was an intent to litigate the case to a final judgment. See ante at ___ (“[E]very fact in this case . . . demonstrates an intent to litigate contrary to the Engineers’ statutory dismissal right.“). The only reason the record supports, however, is that the parties were engaged in negotiations, attempting to settle the case without having to go to trial. Indeed, the record suggests that the parties repeatedly pursued settlement and worked cooperatively with each other throughout the case. The engineers did not even answer or appear in the suit until twenty months after it was filed, and the homeowners made no effort to seek a default during that time.11 After the engineers answered, the parties agreed to a scheduling order and participated in voluntary mediation. They then agreed to continue the first trial setting, and the case again remained mostly inactive for the next ten months. And as the Court itself acknowledges, the parties continued their negotiations for five months even after the engineers filed their dismissal motion. Ante at ___.
If the record supports any reasonable inference as to why the engineers delayed seeking dismissal, it is that they wanted to find a way to satisfy their customers, not that they wanted to go to trial. That they did not intend to seek dismissal at any particular point in the process does not “clearly demonstrate” that they intended to waive the right to dismissal completely.
B. Prejudice and estoppel
Finally, straying from waiver into estoppel, the Court relies on our decision in Perry Homes and suggests that—despite the lack of any statutory deadline to seek dismissal—the engineers waived their dismissal right by waiting until “the eve of trial,” and after limitations had run, to assert it. Ante at ___. But Perry Homes involved alleged waiver of a contractual arbitration right, not a statutory dismissal right. 258 S.W.3d at 584. As the Court itself acknowledges, a contractual arbitration right is “materially different” from the chapter 150 dismissal right. Ante at ___.
Because the Federal Arbitration Act governed most of the arbitration agreements we have addressed, our objective in those cases was to uphold “the FAA‘s goal of resolving disputes without the delay and expense of litigation.” In re Vesta Ins. Grp., Inc., 192 S.W.3d 759, 764 (Tex. 2006) (per curiam) (orig. proceeding).12 For this reason,
The engineers urge us to adopt a prejudice requirement for implied waiver of the chapter 150 dismissal right. The Court dodges that issue, but then suggests that, even if prejudice is a requirement, “prejudice exists” here. Ante at ___. It acknowledges that prejudice is an element of estoppel, not waiver, see ante at ___ (“Prejudice, in comparison [to waiver], is an estoppel-based requirement . . . .“), yet it holds that “allowing limitations to expire before asserting a right that significantly pre-existed the time bar provides some indication they intended to waive the pleading defect and the remedy,” ante at ___. Ultimately, this is the type of estoppel-based waiver we applied in Perry Homes, not the intent-based waiver we applied in Crosstex and Jernigan. In fact, we specifically held in Crosstex that the defendant did not clearly demonstrate an intent to waive the chapter 150 dismissal right by waiting until after limitations had run before filing its dismissal motion. 430 S.W.3d at 393–94. Even if the homeowners showed they were prejudiced by the engineers’ delay in seeking dismissal, they cannot establish waiver unless they show that the engineers clearly demonstrated an intent to relinquish their dismissal right.
III.
Conclusion
Ultimately, two fundamental truths should determine the outcome of this case. First, chapter 150 gave the engineers the right to obtain dismissal of the homeowners’ claims at any time during this litigation process. And second, we cannot hold that the engineers impliedly waived that right through litigation conduct unless that conduct clearly demonstrated that they knew about and intended to relinquish that right. Because the statute did not require them to seek dismissal early in
Jeffrey S. Boyd
Justice
Opinion delivered: June 14, 2019