Opinions Released January 11, 2018

The State of Texas v. Jose Ruiz, No. 13-13-00507-CR (Opinion by Justice Benavides; Panel Members: Justices Valdez and Hinojosa)

In this interlocutory appeal from an order suppressing blood evidence, which was remanded by the Court of Criminal Appeals for reconsideration, the Thirteenth Court of Appeals reviewed the evidentiary requirements for warrantless blood draws in light of the Court of Criminal Appeals’ recent case law on the issue.   

Jose Ruiz got into a car accident in Gonzales, Texas around midnight. When Officer Bethany McBride responded to the scene, the other driver in the accident as well as several bystanders informed McBride that the driver of the Lincoln—Ruiz—had fled behind a nearby car wash. McBride found several exploded beer cans in the Lincoln. The vehicle was registered to Ruiz, and it contained insurance paperwork in Ruiz’s name. A backup officer then arrived and helped locate Ruiz behind the car wash. Ruiz was unresponsive but had no apparent injuries to his body, and he smelt strongly of alcohol. Ruiz was taken to the hospital and remained unconscious overnight.

Officer McBride later went to the hospital to place Ruiz under arrest and ensure that Ruiz’s blood was drawn. She did not obtain a warrant prior to the blood draw, even though she testified that she had no concern he would flee the hospital or destroy evidence. She later testified that the Gonzales Police Department did not have procedures in place to obtain a search warrant, and that it would have been difficult and inconvenient to find a judge able to sign one that night. She instead relied upon Texas Transportation Code Chapter 724 and 724 for the blood draw, based on Ruiz’s 4 prior DWI convictions.

The trial court granted Ruiz’s motion to suppress the blood evidence, finding that no exigent circumstances existed, and that suppression was required under McNeely. The State appealed. The court of appeals originally decided the case in 2015, but the Court of Criminal Appeals vacated and remanded the decision for reconsideration in light of the its intervening opinions on the suppression of blood evidence. The Thirteenth Court thus addressed whether the trial court erred in granting Ruiz’s motion to suppress.

Held: The trial court properly held that exigent circumstances did not exist to justify Ruiz’s warrantless blood draw. The trial court’s order suppressing the blood evidence was affirmed.

Because the State acknowledged the warrantless nature of the blood draw, the State had the initial burden to establish that the search was reasonable. To meet this burden, the State relied on Texas’s implied consent law in Texas Transportation Code Chapter 724, while arguing in the alternative that exigent circumstances existed.

Transportation Code Chapter 724

The Thirteenth Court noted that the consent implied by Chapter 724 of the Transportation Code can be revoked if a defendant refuses to submit to a blood draw. If the defendant is unconscious however, the implied consent is considered not to have been withdrawn. Nonetheless, the Thirteenth Court of Appeals held that the implied consent law does not create a per se exception to the warrant requirement.

Consent to a blood draw must be freely and voluntarily given—a fact issue the State must prove by clear and convincing evidence. Here, Ruiz was unconscious and could not give his consent freely or voluntarily, nor did he have an opportunity to revoke his consent. Thus, the State could not rely on the implied consent law to justify Ruiz’s blood draw.

Exigent Circumstances

Regarding the State’s alternative argument that exigent circumstances existed to justify the warrantless blood draw, the Thirteenth Court conducted a two-prong test: (1) was there probable cause to search, and if so, (2) did exigent circumstances exist to justify the warrantless search?

The court agreed that the State had probable cause to search, in light of the automobile accident, beer cans, and Ruiz’s alcoholic odor and unconscious state. The court then turned to the exigent circumstances analysis, relying heavily on the Court of Criminal Appeals’ opinions in Cole v. State, 490 S.W.3d 918 (Tex. Crim. App. 2016), and Weems v. State, 493 S.W.3d 574, 582 (Tex. Crim. App. 2016).

In Cole, the Court of Criminal Appeals held that exigent circumstances existed to justify a warrantless blood draw where the defendant was high on meth, but there were no available officers to leave the scene or hospital to obtain a warrant, and intervening medical treatment would have tainted the blood sample while the warrant was being obtained. Moreover, unlike alcohol, meth does not have a known elimination rate that could be traced backward if the test were delayed.

In Weems, the Court of Criminal Appeals held that exigent circumstances did not exist to justify a warrantless blood draw after Weems struck a pole with his car, admitted he was drunk, refused a blood draw, then waited at the busy hospital to have his blood forcibly taken more than 2 hours after his arrest. The Court of Criminal Appeals emphasized that the wait for a blood draw was foreseeable, the hospital was close to the scene of the accident, there were law enforcement personnel available to wait with the defendant while the warrant was obtained, and there was a magistrate on duty to review warrant applications.

Applying these cases, the court held that exigent circumstances did not exist to justify Ruiz’s warrantless blood draw. The court noted that Ruiz was held at the hospital overnight with no concern that he would flee. While there were no procedures in place to obtain a warrant, obtaining a warrant would take several hours, and McBride testified that there were no available officers, the Thirteenth Court of Appeals held that this testimony was insufficient to show exigent circumstances without elaboration as to why a delay would affect or taint the blood sample, or what important functions the other available officers were performing that prevented them from helping obtain a warrant. Moreover, McBride erroneously relied on the implied consent law, believing she did not need to obtain a warrant.

Thus, the State did not meet its burden to show exigent circumstances sufficient to satisfy the Fourth Amendment. The trial court’s order suppressing the blood evidence was affirmed.

Read the Full Opinion Here

 

 

First Cash, Ltd. v. JQ-Parkdale, LLC, H&JQ PD, LLC, W-SB Staples/SPID, LLC, R-SB Staples/SPID, LLC, Parkdale Income Partners, LP, and Capital Area Retail Development II, Inc., No. 13-16-00099-CV (Opinion by Justice Rodriguez; Panel Members: Justices Contreras and Longoria)

In this direct appeal, the Thirteenth Court of Appeals reviewed the legislative history and construction of Section 38.001 of the Texas Civil Practice and Remedies Code to determine if the statute provides for the recovery of attorney’s fees from an LLC.

In September 2001, First Cash leased space in the Parkdale Shopping Center from the “Legacy Landlords”—a group of 4 entities. The lease had a 10-year term, with the option to renew for two additional 5-year terms. The lease also allowed the landlord to terminate in the event of casualty or a significant loss in the premise value.

In 2007, Legacy Landlords entered into discussions with Walmart about the possibility of redeveloping the property, including demolishing the Parkdale shopping center and building a Walmart. Then, in June 2009, a fire destroyed parts of the Parkdale Shopping Center, but the fire did not damage the building First Cash leased. The Landlords notified First Cash that it was terminating the lease as a result of the fire.

First Cash moved to a new location but demanded compensation for the breach and reimbursement for the cost of improvements at the new location. The Landlords meanwhile, demolished the Parkdale Shopping Center and sold most of the lot to Walmart, while developing new retail space on the remaining portion of the property. The Landlords also transferred their interests in Parkdale to the “Current Landlords”—two entities owned by the same company as the Legacy Landlords.

First Cash sued for breach of contract, and the case was tried to a jury. The court granted a directed verdict for the Current Landlords, but the jury found that the Legacy Landlords breached the lease. The jury awarded First Cash $182,400 in “rent differential” damages, and $130,000 in  “build-out” damages for rebuilding in a new location. The jury also awarded $800,000 in attorney’s fees, with $65,000 in fees for appeal. The trial court granted the Legacy Landlord’s JNOV and set aside the fee award because the Legacy Landlord entities were LLCs and not “individual[s] or corporation[s]” as required by the attorney’s fee statute.

Both parties appealed the adverse portions of the judgment.

Held: There was insufficient evidence of the amount of rent charged at the Parkdale Shopping Center after the breach, and thus insufficient evidence of the specific damages awarded. The $182,400 award was reversed and remanded for a new trial on damages only. However, the award for build-out costs was affirmed. Moreover, the trial court properly entered a JNOV on First Cash’s attorney’s fees because Section 38.001 does not allow the recovery of fees from an LLC.

Attorney’s Fees

First Cash argued that the attorney’s fee statute in Section 38.001 of the Texas Civil Practice and Remedies Code allows for the recovery of fees from an LLC. First Cash claimed that the phrase “individual or corporation” in the statute is intended to be interpreted as a whole, rather than separately as “individual” and “corporation.” First Cash argued that the phrase “individual or corporation” has a unique meaning based on the legislative history and comparable usage, and is intended to mean virtually any legal entity.

The Thirteenth Court noted that every Texas and federal court to address the issue has held that Section 38.001 does not allow the recovery of fees from LLCs because an LLC is not an “individual” or a “corporation.” However, the specific argument presented by First Cash was an issue of first impression.

The court reviewed the legislative history and construction of the term “individual or corporation.” The court noted that Section 38.001 was a recodification of Article 2226 of the Texas revised Civil Statutes, which provided that “any person, corporation, partnership, or other legal entity  having a valid claim against a person or corporation.” “Person” is defined in the Code Construction Act to include any “corporation, organization, government or governmental subdivision or agency, business trust, estate, trust, partnership, association, or any other legal entity.” Nonetheless, all but one court of appeals—the Beaumont Court of Appeals—interpreted Article 226 to not permit the recovery of fees from governmental entities. “Person” was then changed to “individual” during the “non-substantive” recodification, and a reviser’s note clarified that the term “person” was not used to avoid the broad definition of that term in the Code Construction Act. First Cash thus argued that “individual or corporation” should be interpreted to have the same meaning as “person or corporation,” excluding only the governmental entities the Legislature intended to remove from the statute with its modification of the language. First Cash argued that its interpretation was supported by comparable uses of the phrase, such  as in the repealed Texas Revised Partnership Act where the phrase was used to refer to legal entities with the power to sue or be sued.

However, the Thirteenth Court noted that, since the recodification of Section 38.001, the courts— including the Beaumont Court of Appeals—have interpreted “individual” according to the “plain language” and consistent with the definition in the Business Organizations Code: meaning a “natural person.” Only one federal district court has held that Section 38.001 allows the recovery of fees against an LP, LLC, or LLP. Furthermore, other uses of the phrase enacted at the same time as the recodification have since been repealed and replaced with the broader term, “person,” indicating the intentionality of the Legislature’s decision to limit the recovery of attorney’s fees from certain entities.

The Thirteenth Court of Appeals thus concluded that (1) the broad definition of “person” in the Code Construction Act did not govern the application of the predecessor statute; (2) defining “person” to encompass “partnership[s]” and “other legal entit[ies],” which were separately listed as potential claimants in the predecessor statute, would render these terms surplusage; (3) the reviser’s note clarifies that the broad definition of “person” was not intended; and (4) Section 38.001 has the same substantive meaning as the predecessor statute. Attorney’s fees are thus only available against a natural person or corporation. The trial court thus properly granted a JNOV and set aside the jury’s award of attorney’s fees.

Conversion

First Cash next argued that the trial court erred by granting a directed verdict in favor of the Current Landlords because they are successors to all the liabilities of the Legacy Landlords. However, First Cash had no evidence of a formal conversion under Section 10.101 of the Business Organizations Code, and relied on one line of testimony where a co-owner stated was asked whether he “converted your ownership to a limited partnership.” The issue was thus overruled.

Damages

Finally, the Legacy Landlords cross-appealed on the damages awarded, arguing that  there was insufficient evidence to support the $182,400 in “rent differential” damages, and that the $130,000 was …

Rent Differential Damages

The court of appeals recognized that a normal measure of breach of contract damages is the benefit of the bargain, which can be measured by the difference between the agreed rent and the actual market rental value of the remaining lease term. The plaintiff may also recover consequential damages that result naturally from the breach.

In the court’s charge, the jury was asked to find the difference between First Cash’s rent under the lease, and the actual market value of the remaining lease term. First Cash argued that the difference was $7.60 per square foot per year, but the jury returned a broad-form answer equivalent to $3.06 sq. ft./yr.

There was no dispute regarding the value of First Cash’s rent under the lease: $10.16 sq. ft./yr. However, the Legacy Landlords argued that there was no evidence the market value of the lease was at least $13.22 sq. ft./yr or more, as required to support the jury’s verdict. The jury heard significant testimony about the rental rates the Landlord offered to First Cash and other businesses for space in the new Parkdale Shopping Center, ranging from $14 to $18 sq. ft./yr. However, unaccepted offer prices are not competent evidence of market value. Although there was sufficient evidence to show that the new rental rate was higher, there was insufficient evidence of a specific rate to support a specific amount of damages. The court thus remanded the case for a new trial on First Cash’s rent differential damages.

Build-Out Damages

The Legacy Landlords next argued that First Cash failed to show its build-out damages were “reasonable and necessary” costs required to construct the pawn shop in the new location. However, the Thirteenth Court of Appeals held that the “reasonable and necessary” requirement was established in the construction context in McGinty v. Hennen, 372 S.W.3d 625 (Tex. 2012) (per curiam), and was inapplicable in suits for breach of lease. The issue was overruled.

Read the Full Opinion Here

 

Luis Armando Carreon v. State of Texas, No. 13-16-00347-CR (Opinion by Justice Hinojosa; Panel Members: Chief Justice Valdez and Justice Contreras)

In this appeal from an order revoking probation, the Thirteenth Court of Appeals examined the evidentiary requirements for revocation based on a probationer’s failure to pay.

Luis Carreon pleaded guilty to two counts of burglary of a habitation in April 2006. On the count underlying his appeal, the trial court sentenced Carreon to ten years’ confinement, suspended the sentence, placed him on probation, and ordered him to pay $23,107.36 in restitution, $347 in court costs, and a $750 fine.

In February 2016, the State moved to revoke Carreon’s probation based on 4 violations, all related to Carreon’s failure to fully pay the restitution, court costs, and the fine. Carreon’s counsel argued he was unable to pay the restitution, and the State requested two years’ confinement as punishment. The trial court rejected the plea bargain, calling it “ridiculous” because it was not even the minimum punishment. The court then set the case for an evidentiary hearing the following day. The State moved to dismiss the motion to revoke, stating it did not have sufficient evidence. The trial court denied the State’s motion to dismiss, stating “I’m not dismissing it. I’m going to make you go to trial.”

The State, following the court’s direction, called Carreon’s current and previous probation officers. Garcia, Carreon’s’ current probation officer, testified that he attended all the required meetings, was not arrested, and tested negative for drugs. The accounting department determined how Carreon’s monthly payments were allocated between his two burglary offenses, and Garcia was not sure why the accounting department allocated the payments as it did. Garcia also admitted that she neglected to help Carreon create a monthly budget to afford the required payments.

Carreon then called himself and his wife to testify. Carreon testified he was placed on community supervision when he was 18 and had no work experience and a wife and infant son to feed. He worked several jobs, but had trouble finding steady employment as a convicted felon without a car. He earned his GED and a computer accounting degree, but the degree left him with student debt. Carreon mowed his neighbors’ yards and worked for family members, but earned only about $100 each week. Carreon’s wife Erica then testified, confirming that the couple did not own a car and that they and their three children live with Erica’s parents and sisters in a 3-bedroom trailer.

The trial court then granted the State’s motion to revoke, commenting that Carreon willfully refused to pay restitution for multiple years, and willfully made himself underemployed.

Carreon appealed, arguing that (1) the evidence is legally insufficient to support revocation for failure to pay restitution; and (2) it is unconstitutional to put him in jail for poverty.

Held: There was legally insufficient evidence to revoke Carreon’s probation for failure to pay restitution. Moreover, the revocation violated Carreon’s right to fundamental fairness under the Fourteenth Amendment because there was legally insufficient evidence of willfulness and the trial court failed to consider alternative punishments. The judgment was reversed and rendered.

Legal Sufficiency

Article 42.037 of the Texas Code of Criminal Procedure provides that the court “may” revoke community supervision for failure to pay restitution, but states that the trial court “shall” consider six factors in its determination: (1) the defendant’s employment status, (2) the defendant’s earning ability, (3) the defendant’s financial resources, (4) the defendant’s willfulness in any failure to pay, (5) special circumstances affecting the ability to pay, and (6) the victim’s financial resources. Citing the Court of Criminal Appeals’ opinion in Bryant v. State, 391 S.W.3d 86 (Tex. Crim. App. 2012), the Thirteenth Court held that the statute implicitly requires the trial court to hear some evidence on each of the six factors. The court then listed out the evidence on each factor, noting that there was no non-speculative evidence of Carreon’s future financial resources, or his willfulness, and there was no evidence whatsoever regarding the victim’s financial resources. Furthermore, the trial court placed significant weight on Carreon’s alleged willfulness, which was based on assumptions and speculation demonstrated by the trial court’s direct examination of the witness.

The Thirteenth Court thus held that there was insufficient evidence of willfulness or of the victim’s financial resources, and thus insufficient evidence to support the revocation of Carreon’s probation for failure to pay restitution.

Ability to Pay

The Thirteenth Court next turned to the remaining revocation grounds related to Carreon’s failure to pay fees, fines, and court costs.

The Supreme Court held in Bearden v. Georgia, 461 U.S. 660 (1983) that a court must “inquire  into the reasons for the failure to pay” before revoking a defendant’s probation on that basis. Revocation is only permitted if the probationer failed to make bona fide efforts to pay, or if there is no alternate measure of punishment that would satisfy the State’s interests in punishment and deterrence. Doing otherwise would violate the Fourteenth Amendment guarantee of fundamental fairness.

The Thirteenth Court reiterated that the trial court’s finding regarding Carreon’s alleged willfulness was legally insufficient. Moreover, although the trial court noted that it could not extend Carreon’s probation because the term had lapsed, it did not consider other alternate measures to meet the State’s interests. There was no evidence that the trial court’s emphasis on making the victim whole was the State’s primary interest, and the victim was not even at the hearing. The Thirteenth Court thus held that revoking Carreon’s probation was erroneous and violated the Fourteenth Amendment. 

Because Carreon’s term of community supervision had already expired, the court reversed and rendered a judgment discharging Carreon from community supervision.

Read the Full Opinion Here