Friday, February 20, 2015

The Fiduciary Shield Doctrine and Personal Jurisdiction over Non-resident Employees

Should an individual who resides in another state be subject to a Texas Court’s jurisdiction for his work done in Texas when his work was done solely on behalf of his employer?

Generally, an out-of-state resident who is working on behalf of an employer would not be individually liable in Texas because of the “fiduciary shield doctrine.”  The “fiduciary shield doctrine” protects nonresident employees from the jurisdiction of Texas courts when all of the employee’s contacts with Texas were made on behalf of his employer.  Nichols v. Tseng Hsiang Lin, 282 S.W.3d 743, 750 (Tex. App.–Dallas 2009, no pet.)  This doctrine is consistent with the Texas Supreme Court’s holding that an out-of-state employee, in his individual capacity, cannot be subject to Texas personal jurisdiction based solely on the activities of his employer.  Siskind v. Villa Found. for Educ., Inc., 642 S.W.2d 434, 437-38 (Tex. 1982).  For example, a Texas court should not exercise personal jurisdiction over a Colorado resident who traveled to a Texas office every few months to conduct business on behalf of his employer.  See Urban v. Barker, 2007 Tex. App. LEXIS 1633, at *21 (Tex. App.–Houston [14th Dist.], March 6, 2007).

The fiduciary shield doctrine does not apply to an officer’s or employee’s tort’s  committed in Texas.  See Ennis v. Losieau, 164 S.W.3d 698, 707 (Tex. App.–Austin 2005, no pet.)  This rule is not based on an exception to the fiduciary shield doctrine, but rather on the well-established principal that "a corporate officer is primarily liable for his own torts."  Morris v. Kohls-York, 164 S.W.3d 686, 695 (Tex. App.–Austin 2005, no pet.).

Thursday, February 19, 2015

The Discovery Rule as an Exception to Statutes of Limitation

Can I pursue a lawsuit for a wrongful act even though the limitations period has expired?

Generally, No.  In certain limited circumstances however, Texas courts apply the “discovery rule” as an exception to the statutory limitations period.

The discovery rule delays the accrual of a cause of action until the plaintiff knows, or by the exercise of reasonable diligence, should have known of the facts giving rise to his cause of action.  See Baker v. Eckman, 213 S.W.3d 306, 311-312 (Tex. 2006).  In order for the discovery rule to apply, the nature of the injury must be inherently undiscoverable and objectively verifiable.  HECI Exploration Co. v. Neel, 982 S.W.2d 881, 886 (Tex. 1998).  When applied, the discovery rule tolls the running of limitations until the plaintiff (1) discovers the wrongful act that causes an injury or (2) acquires knowledge of facts that would lead to the discovery of the wrongful act.  S.V. v. R.V., 933 S.W.2d 1, 4 (Tex. 1996).  Similarly, a defendant cannot avoid liability for his actions by purposefully concealing the wrongdoing until the statute of limitations has run.  Id. at 6.

A party trying to rely upon the discovery rule must both plead and prove that the rule applies.  See Woods v. William M. Mercer, Inc., 769 S.W.2d 515, 518 (Tex. 1988).

Texas Statute of Limitations for Unfair Claims Settlement Practices Under the Texas Insurance Code

Is there a time limit within which one must file claims under the Texas Insurance Code for unfair claims settlement practices?

Yes.  Under the Texas Insurance Code, a person must bring an action within two years of (1) the date the unfair or deceptive act or practice occurred; or (2) the date the person discovered or, by the exercise of reasonable diligence, should have discovered that the unfair or deceptive act or practice occurred.  Tex. Ins. Code. § 541.162(a)(1-2).  This two year limitations period may be extended for 180 days if the plaintiff proves that the failure to bring the action within the two year period was caused by  the defendant’s attempt to induce the plaintiff to refrain or postpone bringing the action.  Tex. Ins. Code. § 541.162(b).

A cause of action under the Insurance Code for unfair claims based on denial of insurance coverage accrues on the date that the insurer denies coverage.  See Celtic Life Ins. Co. v. Coats, 885 S.W.2d 96, 100 (Tex. 1994).

Wednesday, February 18, 2015

Statute of Limitations for an Insurer’s Breach of the Duty of Good Faith and Fair Dealing

If my insurance company cancelled my insurance policy without a reasonable basis or denied payment of a claim when it was required to pay, is there a limited time within which I have to file a lawsuit against the insurance company?

Yes.  Claims against an insurer for breach of the duty of good faith and fair dealing must be brought not later than two years from the date the claim accrued.  See Tex. Civ. Prac. & Rem. Code § 16.003(a); Murray v. San Jacinto Agency, Inc., 800 S.W.2d 826, 827 (Tex. 1990).  The “accrual date” (the date when the two year limitations period begins to run) is the day the insurer wrongfully denied coverage.  See Murray, 800 S.W.2d at 828.  The fact that damage may continue to occur for a period after the denial date does not prevent the statute of limitations from starting to run.  Id.  However, if the insurance company “strings the insured along” without denying or paying the claim, then the accrual date may be tolled.  See, e.g., Murray, 800 S.W.2d at 829 n.2.

Wednesday, February 11, 2015

Texas Court’s have “All Purpose” Jurisdiction if a Company is “At Home” in Texas

Does a Texas court have general (i.e., “all-purpose”) jurisdiction over a foreign corporation for alleged injuries that took place entirely outside of Texas?

Generally, the Due Process Clause of the Fourteenth Amendment does not permit a Texas court to exercise general jurisdiction over a foreign corporation for alleged injuries that took place entirely outside of Texas unless the corporation’s affiliations with Texas are so constant as to render it essentially “at home” in Texas.  See Daimler AG v. Bauman, 134 S. Ct. 746, 748 (2014).

General jurisdiction (or all-purpose jurisdiction) is appropriate only when a foreign corporation’s continuous corporate operations within Texas are so substantial that its activity justifies jurisdiction over dealings entirely different from its activities in Texas.  See International Shoe Co. v. Washington, 236 U.S. 310, 318 (1945).  The proper test for general jurisdiction is whether a foreign corporation’s affiliations with a state are so continuous and systematic as to render it essentially at home in the state.  See Goodyear Dunlop Tires Operations, S.A. v. Brown, 131 S.Ct. 2846 (2011).  A company’s place of incorporation and principal place of business are normally where a corporation is “at home” and that is the state in which a corporation may normally be sued.  See Daimler AG, 134 S. Ct. at 760.  In Daimler, the Supreme Court noted that it is possible for general jurisdiction to exist in a state other than where its formal place of incorporation or principal place of business is, but such a such a case would have to be exceptional and the company’s operations in the state would have to be substantial.  See Daimler AG, 134 S. Ct. at 760.

Web Sites and Texas Court Jurisdiction

If my company is not incorporated in Texas and does no business in Texas, will its merely having a web site nevertheless subject it to the jurisdiction of a Texas court?

Generally, a company that is neither incorporated in Texas nor does business in Texas, will not be subject to a Texas court’s jurisdiction just because of its web site. See Monkton Ins. Servs. v. Ritter, 768 F.3d 429, 432 (5th Cir. 2014).  The Supreme Court recently held that the proper test for general jurisdiction is whether the defendant’s affiliations with a state are so continuous and systematic as to render it “at home” in the state.  Daimler AG v. Bauman, 134 S. Ct. 746, 760 (2014).  For corporations, it is therefore “incredibly difficult to establish general jurisdiction in a forum other than the place of incorporation or principal place of business.”  Monkton Ins. Servs., 768 F.3d at 432.

Generally, a foreign corporation’s website, at most, shows that the corporation conducts business with the forum state, not in the forum state.  Id.   An interactive website is not enough to render a defendant “at home” and general jurisdiction is therefore improper. Id.  Even evidence that the foreign corporation communicated with other residents of the forum state through its website would not be enough for general jurisdiction.  Monkton Ins. Servs., 768 F.3d at 434.