Industry News: Texas Supreme Court Limits Application of Certificate of Merit Statute

Chapter 150 of the Texas Civil Practice & Remedies Code requires that when a “plaintiff” sues a design professional for damages arising out of professional services, the “plaintiff” must file an affidavit, signed by a similarly licensed or registered design professional, and setting forth the factual basis for the lawsuit.  The statute therefore requires a party suing a design professional for damages arising out of the provision of professional services to find an expert willing to swear that the design professional’s conduct was somehow deficient.  Accordingly, the Texas Supreme Court has held that the purpose of Chapter 150 is to deter meritless claims.  CTL/Thompson Texas, LLC v. Starwood Homeowner’s Ass’n, Inc., 390 S.W.3d 299, 301 (Tex. 2013).

In Jaster v. Comet II Const., Inc., No. 12-0804, –S.W.3d–, 2014 WL 2994503 (Tex. 2014), a plurality of the Texas Supreme Court held that design professionals sued in existing lawsuits, as third-party defendants or cross-claim defendants, could not rely on the protections of Chapter 150.  In that case, a construction company sold a house to a homeowner who alleged that the house was defectively designed and constructed.  The homeowner sued the construction company, and the construction company filed “third-party claims” against the design group that had sold the home’s foundation plans to the construction company, and against the structural engineer who had designed the foundation.  (A third-party claim is a claim brought by a party other than the original plaintiff in a lawsuit.  It is very common for parties sued in construction defect disputes to file third-party claims against the parties with whom they have contracted, typically subcontractors and sub-consultants.)  The design group then filed a “cross-claim” against the structural engineer.  (A cross-claim is a claim brought by a defendant in an existing lawsuit against another defendant.  These, too, are fairly common in construction defect disputes.)

The structural engineer moved to dismiss the third-party claim filed by the construction company, and the cross-claim filed by the design group, on the basis of those parties’ failure to attach a certificate of merit to their third-party and cross-claims, respectively.  The trial court denied the dismissal motions.  On appeal, the Austin Court of Appeals affirmed the trial court’s denial, on the basis that the statute did not apply to the third-party or cross-claims at all.

The Supreme Court affirmed, holding that the legislature’s use of “plaintiff” (among other things) indicated that it intended that the statute applied only to original plaintiffs who initiate lawsuits.  The decision significantly limits the scope of the statute, especially given how ubiquitous third-party claims, cross-claims, and counter-claims are in construction disputes.  As a result, Chapter 150 seemingly only applies when architects and engineers are sued by original plaintiffs in lawsuits.  (In ENGlobal U.S. Inc. v. Jefferson Refinery, L.L.C., No. 09-14-00120-CV, 2014 WL 4363679 (Tex. App.—Beaumont 2014, no pet. h.) (memo. op.), the Beaumont Court of Appeals extended the Supreme Court’s holding to counter-claims as well.  A counter-claim is a claim brought by the defendant against the plaintiff.)

A note: only four Justices (Boyd, Johnson, Willett, and Devine) joined in the plurality opinion.  Justices Willett and Devine also filed a concurring opinion, in which Justice Lehrmann joined.  Thus, five justices (Boyd, Johnson, Willett, Devine, and Lehrmann) agreed that the statute applied only to original plaintiffs, but Justice Lehrmann specifically refused to join the plurality opinion’s reasoning.  In dissent, four Justices (Chief Justice Hecht, and Justices Green, Guzman, and Brown) suggested that the Court’s decision undermined the “manifest object of Chapter 150” which “is to require a prima facie showing of liability at the time certain professionals are sued for malpractice.”

-Will Allensworth

Disclaimer:  This synopsis reflects only the views and interpretation of the author.