Trial court in error for denying defendant’s designation of responsible third party even after SOL deadline says San Antonio Court of Appeals

In re Cleo Bustamante, Jr., 04-16-00333-CV (Tex.App— San Antonio, November 23,2016)

This is a mandamus case of interest to litigators primarily who deal with proper designations for responsible third parties. The Fourth Court of Appeals, sitting en banc, determined it was error to deny the Defendant the ability to designate a responsible third party beyond the statute of limitations. Long opinion so the summary is a bit long.

Plaintiff Fernandez sued Cleo Bustamante, Jr. for injuries he sustained while working for Cleo Bustamante Enterprises, Inc. (“CBE”).  A vehicle driven by Irasma Riojas struck Fernandez in front of the Cleo Convention Center. Fernandez received worker’s compensation benefits from CBE and settled with the driver, Riojas for $300,000.  However, he sued the owner of the convention center,  Cleo Bustamante, Jr.  one day before the statute of limitations expired. After the case, had been progressing for some time, Bustamante filed a motion for leave to designate Riojas and CBE as responsible third parties pursuant to §33.004 of the Texas Civil Practice and Remedies Code. Fernandez opposed the designation and argued Bustamante had not disclosed CBE and Riojas as potential responsible third parties in response to the request for disclosure or before the statute of limitations expired. The trial court denied the designation. Bustamante sought mandamus while simultaneously filing an interlocutory appeal.

Bustamante pointed out Fernandez was already aware of the existence and potential liability of CBE and Riojas. Bustamante further argued the purpose of disclosure in regards to the designation of responsible third parties is to allow plaintiffs an opportunity to sue third parties before limitations expire, but that had already occurred. He did not have time to designate responsible parties since Fernandez sued the day before the statute expired.

A defendant in a tort claim may designate as a responsible third party “any person who is alleged to have caused or contributed to causing in any way the harm for which recovery of damages is sought, whether by negligent act or omission, by any defective or unreasonably dangerous product, by other conduct or activity that violates an applicable legal standard, or by any combination of these.” Tex. Civ. Prac. & Rem. Code § 33.011(6).  Bustamante’s motion for leave to designate responsible third parties was filed prior to the 60th day deadline before the trial date. Under § 33.004(d) a defendant cannot designate a responsible third party if the statute of limitations has expired.   However, Fernandez was made aware of these potential responsible third parties (and settled with them) prior to the limitations period expiring. Fernandez’ position is inconsistent with Texas Rule of Civil Procedure 193.6(a), which allows a party who fails to respond to discovery to introduce the undisclosed material or information into evidence if the party shows either (1) good cause existed for the failure to respond to the discovery or (2) the other party will not be unfairly surprised or unfairly prejudiced by the failure to timely respond. Tex. R. Civ. P.  193.6(a). “To hold as the Fernandezes suggest would convert Rule 194.2(l) into a technical trap.” In this case, “Bustamante did not fail to comply with his obligation to timely disclose Riojas and CBE as potential responsible third parties because it was impossible for Bustamante to make a disclosure before the statute of limitations ran.” Fernandez knew Riojas and CBE were potential responsible third parties and, “..even if [the court] indulge[d] in the legal fiction that the Fernandezes did not know Riojas and CBE were potential responsible third parties, their existence was disclosed when Bustamante was deposed and responded to the co-defendant’s requests for disclosure.”

Once a motion for leave to designate is filed, a court shall grant leave to designate a named person as a responsible third party, unless a timely objection is filed establishing “the defendant did not plead sufficient facts concerning the alleged responsibility of the person to satisfy the pleading requirements of the Texas Rules of Civil Procedure” and the defendant fails to plead sufficient facts after being given leave to replead. Tex. Civ. Prac. & Rem. Code § 33.004(g) (West 2015).  Fernandez did not plead or establish Bustamante failed to plead sufficient facts concerning CBE’s and Riojas’ alleged responsibility to satisfy the pleading requirements. Under the Texas “fair notice” standard, the trial court errored in denying the designation. The court then “revisited” its prior opinions which had held mandamus relief is not available for the denial of a motion for leave to designate a responsible third party because the moving party has an adequate remedy by appeal.  Instead the court held the Texas Supreme Court and other sister courts of appeal have held the better approach to the erroneous denial of a motion for leave to designate a responsible third party is to recognize that an appeal is inadequate and mandamus relief is proper.

Justice Chapa dissented asserting In re Prudential Insurance Company of America, 148 S.W.3d 124 (Tex. 2004) requires a court conduct a case-by-case benefits-and-detriments analysis and not adopt rigid rules to determine whether an appeal is an inadequate remedy. She would hold the mandamus record in this case does not show that the benefits of mandamus relief outweigh the detriments. Justice Martinez dissented and would have denied the request to review en banc as being inconsistent with TEX.R. APP. P. 41.2(c).

If you would like to read this opinion click here. The Panel includes Chief Justice Marion, Justice Angelini, Justice Barnard, Justice Martinez, Justice Alvarez, Justice Chapa, and Justice Pulliam. Justice Barnard delivered the opinion of the court. If you would like to read the Dissenting opinion delivered by Justice Chapa click here. If you would like to read the Dissenting opinion delivered by Justice Martinez click here.   To see the Representatives for the Parties click here for the docket page.