Posted by Rich Phillips
In its weekly order list on April 15, 2016, the Supreme Court of Texas issued opinions in four argued cases. The Court did not grant any new petitions for review.
- No. 14-0669, Greer v. Abraham — In this appeal arising from a motion to dismiss under the Texas Citizens Participation Act (TCPA), the Supreme Court was asked to clarify the "implied reference" standard for determining whether the subject of an allegedly libelous article is so-well known in his community that the actual-malice standard for public officials applies even without an express reference to his official capacity in the article. The issue was whether application of the implied-reference standard should be determined based on the official's notoriety within the community where he lives or on his notoriety among all of the potential readers of the article, which was published on the Internet. In a unanimous opinion by Justice Devine, the Court held that the test applies to the community where the official lives, not to a community defined by the circulation of the publication.
- No. 14-0987, Sullivan v. Abraham — This case was consolidated for argument with Greer v. Abraham. The issue in this case was the application of the attorneys' fees provision of the Texas Citizens Participation Act. The provision states that if the court dismisses a suit, it shall award "court costs, reasonable attorney's fees, and other expenses incurred in defending against the legal action as justice and equity may require." The court of appeals held that the statute gives the trial court discretion to award less than "reasonable and necessary" attorneys' fees because it includes the phrase "as justice and equity may require." In a unanimous opinion by Justice Devine, the Court examined the structure and grammar of the provision and held that the "justice and equity" provision applies only to the award of "other expenses incurred in defending against the legal action" and not to the award of attorneys' fees.
- No. 14-1075, Hallmark Marketing Co., LLC v. Hegar — This franchise-tax case involves construction of the term “net gain,” as used in Tax Code § 171.105(b). The section provides that if a taxable entity sells an investment or capital asset, the entity's gross receipts from its entire business, for franchise tax apportionment purposes, includes only the net gain from the sale. The Comptroller adopted a rule stating that net losses from the sale of investments and capital assets should also included in the denominator for the statutory apportionment factor fraction. (The effect of including net losses would be to lower the denominator, which in turn would result in a higher apportionment factor, which would then result in a higher ratio of Texas receipts to overall receipt, which would increase the amount of franchise tax due.) The court of appeals deferred to the Comptroller's rule, finding that the term "net gain" was ambiguous. In a unanimous opinion by Justice Brown, the Court held that regardless of whether the terms is ambiguous, the Court could not defer to the Comptroller because Hallmark suffered only a net loss and there is no way to read "net gain" to include "net loss."
- No. 15-0029, Wheelabrator Air Pollution Control, Inc. v. City of San Antonio — This case involves governmental immunity and the governmental/proprietary dichotomy that the Court addressed in two opinions issued on April 1. In those cases, the Court held that the governmental/proprietary dichotomy applies to contract claims against political subdivisions and that if the subdivision is acting in a proprietary capacity, immunity does not apply. In this case, the question is whether a municipality can be liable for attorneys' fees in a breach of contract case related to a proprietary function. In a unanimous opinion by Justice Green, the Court held that the city's action (entering into a contract for installation of pollution control equipment for a public utility) was proprietary and that the claim for fees arising from the breach of that contract is not barred by governmental immunity.