Two Texas Supreme Court Decisions

The Blog will occasionally summarize Supreme Court of Texas decisions which might be of interest to its readers. Here are two for your review.

No. 23-0427  Pitts, et al. v. Rivas, et al. (On petition for Review from the Court of Appeals for the Fifth District of Texas)

[Chief Justice Blacklock, Author] – Opinion Dated February 21, 2025

Civil case – Professional malpractice and Texas’s anti-fracturing rule.

The defendant accountants provided accounting services for plaintiffs, a home builder and real estate developer, including preparing financial statements; plaintiffs alleged defendants were responsible for errors in the financial statements which caused them to overpay their taxes and resulted in them being rejected for loans, forcing them into bankruptcy. The plaintiffs filed claims for professional malpractice, fraud, breach of fiduciary duty, and breach of contract. Defendants moved for summary judgment, arguing, among other things, that the claims for breach of fiduciary duty, breach of contract, and fraud were barred by the anti-fracturing rule because they should be classified as  professional negligence claims. The district court granted defendants summary judgment, but the court of appeals reversed as to the fraud and breach of fiduciary duty claims, holding the anti-fracturing rule did not bar these two claims and that the evidence supporting them was sufficient to survive summary judgment. Defendants appeal.

Held: (1) under the anti-fracturing rule as it has developed in the courts of appeals, plaintiffs in professional negligence cases may not convert what are really negligence claims into other claims such as fraud, breach of contract, or breach of fiduciary duty in order to gain a litigation advantage; (2) in determining whether a claim is subject to the rule, courts look to see if the gravamen of the complaint is one about the quality of professional services – whether the professional failed to exercise the degree of care, skill, or diligence professionals of ordinary skill and knowledge would exercise – and if that is the basis for the claim, the anti-fracturing rule applies; and (3) while the Court has not expressly applied the rule before this case, it does so today; (4) the Court notes, however, that if the gravamen of the claim extends beyond a claim for professional negligence, the plaintiff may rightly maintain such a claim.

Here all of the defendants’ alleged errors fell within the scope of services that an outside accountant might commonly perform for a small business client; the court of appeals erred in determining that anti-fracturing rule was limited to the scope of the client’s engagement letter, as the fraud claims were allegations of accounting malpractice and could not be reframed as fraud claims to avoid the two-year statute of limitations applicable to malpractice claims.

With respect to the claim for breach of fiduciary duty, the court need not apply an anti-fracturing analysis because, on the undisputed facts, no fiduciary duty existed as a matter of law; plaintiffs provided no evidence supporting the existence of an informal relationship between themselves and any defendant.

Justice Huddle, joined by Justice Lehrman, Justice Bland, and Justice Young, concurring.

Misc. Docket No. 25-9013  Patrick Kelly, et al. v. Richard Homminga, et al (On Motion to Transfer from the Fifteenth Court of Appeals)

Misc. Docket No. 25-9014 Devon Energy Production Company, L.P., et al. v. Robert Oliver, et al. (On Motion to Transfer from the Fifteenth Court of Appeals)

[Per Curiam] – Opinion Dated March 14, 2025.

Jurisdiction  of the Fifteenth Court of Appeals.

The Fifteenth Court of Appeals has forwarded two motions to transfer an appeal noticed to that court. In each case, the losing party in a dispute noticed their appeal to the Fifteenth Court. While conceding that the appeal is not within that court’s exclusive jurisdiction, each party asserted that the Fifteenth Court could hear the appeal because the Government Code gives that court statewide jurisdiction. Both respondents moved to transfer their cases to the regional court of appeals that hears appeals from the relevant county. The Fifteenth Court of Appeals denied each transfer motion; the two relevant regional courts of appeals filed letters explaining their position with respect to the Fifteenth Court of Appeals’ decision – the court in Kelly agreeing with the decision to retain the case, while the court in Devon Energy disagreed.

Held: The only appeals properly filed with the Fifteenth Court of Appeals are those over which it has exclusive intermediate appellate jurisdiction, and when appeals regarding matters outside this jurisdiction are noticed to the court, they are inappropriately filed and must be transferred; any other interpretation of S.B. 1045 would lead to the collapse of the Legislature’s design for all fifteen courts of appeals; the fair meaning of the act is that the Legislature  intended the Fifteenth Court to hear (1) appeals and writs within its exclusive intermediate appellate jurisdiction and (2) appeals the Supreme Court may transfer to it for docket-equalization purposes. The motions to transfer the appeals to the appropriate regional court of appeals are granted.