Delarosa v. Great Neck Saw Mfrs., Inc.

• Decision Date: 30 September 2021
• Docket Number: CASE NO. 1:20-cv-00402
• Citation: 565 F.Supp.3d 832
• Parties: James DELAROSA, Individually and d/b/a Delarosa Auto and Diesel, Plaintiff, v. GREAT NECK SAW MANUFACTURERS, INC., O'Reilly Auto Enteprises, LLC, Ozark Purchasing, LLC, O'Reilly Automotive, Inc., O'Reilly Auto Parts, O'Reilly/First Call, O'Reilly Automotive, George Edward Murphy III (previously identified as Trey Murphy), James Russell, and Chien Yu Hong Co., Ltd., Defendants.
• Court: U.S. District Court — Eastern District of Texas

565 F.Supp.3d 832

James DELAROSA, Individually and d/b/a Delarosa Auto and Diesel, Plaintiff,

v.GREAT NECK SAW MANUFACTURERS, INC., O'Reilly Auto Enteprises, LLC, Ozark Purchasing, LLC, O'Reilly Automotive, Inc., O'Reilly Auto Parts, O'Reilly/First Call, O'Reilly Automotive, George Edward Murphy III (previously identified as Trey Murphy), James Russell, and Chien Yu Hong Co., Ltd., Defendants.

CASE NO. 1:20-cv-00402

United States District Court, E.D. Texas, Beaumont Division.

Signed September 30, 2021

Micky N. Das, Tyler & Das, Houston, TX, Gilbert Timbrell Adams, III, Law Offices of Gilbert T. Adams, Beaumont, TX, Robert Timothy Tate, Tate Law Offices, P.C., Dallas, TX, for Plaintiff.

Randy Lynn Fairless, Kelley J. Friedman, Johanson & Fairless, LLP, Sugar Land, TX, Kurt W. Meaders, Meaders and Lanagan, Dallas, TX, Michael J. Lombardino, Reed Smith LLP, Houston, TX, for Defendant Great Neck Saw Manufacturers, Inc.

Peter Joseph Bambace, Jr., Kevin Dale Didway, Holm | Bambace LLP, Michael J. Lombardino, Stephen Edward Scheve, Reed Smith LLP, Houston, TX, Kelley J. Friedman, Johanson & Fairless, LLP, Sugar Land, TX, for Defendants O'Reilly Auto Enterprises, LLC, Ozark Purchasing, LLC, O'Reilly Automotive Inc.

Michael J. Lombardino, Reed Smith LLP, Houston, TX, for Defendants O'Reilly Auto Parts, O'Reilly/First Call.

Peter Joseph Bambace, Jr., Kevin Dale Didway, Holm | Bambace LLP, Michael J. Lombardino, Reed Smith LLP, Houston, TX, for Defendant O'Reilly Automotive.

O'Reilly/First Call, Pro Se.

ORDER REGARDING PLAINTIFF'S MOTION AND BRIEF IN SUPPORT FOR LEAVE OF COURT TO FILE AND USE AFFIDAVITS PURSUANT TO TEXAS CIVIL PRACTICES AND REMEDIES CODE § 18.001

Michael J. Truncale, United States District Judge

Before the Court is Plaintiff's Motion and Brief in Support for Leave of Court to File and Use Affidavits Pursuant to Texas Civil Practice and Remedies Code § 18.001. [Dkt. 35].

I. BACKGROUND

Texas law allows a plaintiff to recover for past medical expenses caused by a defendant's conduct if he can prove those expenses were reasonable and necessary. In 1985, the state legislature enacted a statute to streamline and reduce the costs of that process for cash-strapped plaintiffs. TEX. CIV. PRAC. & REM. CODE § 18.001, et seq. It works in the following way. In a state case, a plaintiff submits affidavits attesting to the reasonableness and necessity of past medical expenses. Id. § 18.001(b). A defendant may then respond with controverting affidavits. Id. § 18.001(b), (e). If the defendant successfully controverts the plaintiff's affidavits, neither set of affidavits are admissible at trial. Id. § 18.001(b). Instead, both parties must establish or counter the reasonableness and necessity of the plaintiff's expenses the traditional and more expensive way, by using expert testimony.¹ If the defendant fails to controvert the plaintiff's affidavits their two roads diverge: the plaintiff takes the Affidavit Bypass, while the defendant is stuck paying steep fees on the Expert Tollway.²

The plaintiff now seeks leave to use the same process in federal court. For the reasons provided below, that request is GRANTED .

II. DECISIONAL HISTORY

Wading into Erie ’s murky waters can be daunting. So, a federal court should readily grab hold of the lifeline created when a state court interprets the scope and nature of its own laws. By ignoring such decisions, federal courts risk "doing the very thing we profess to avoid ... giving the state law a different meaning in federal court than the state courts have given it." Woods v. Interstate Realty Co. , 337 U.S. 535, 539, 69 S.Ct. 1235, 93 L.Ed. 1524 (1949) (Jackson, J., dissenting). That is why, as a general rule, the blurry line between substance and procedure is brought into sharp focus when "stated in the final decisions of the state's highest court." Baker v. RR Locking Sys., Inc. , 721 F.3d 716, 717 (5th Cir. 2013). However, a federal court must only follow the subsequent decisions of a state's highest court if they are "clearly contrary" to prior federal decisions. Farnham v. Bristow Helicopters, Inc. , 776 F.2d 535, 537 (5th Cir. 1985).

To answer that question, the Court recounts the history of § 18.001 ’s sojourn in federal court. That decisional history comes in three distinct phases. The first phase started with Rahimi v. United States , 474 F. Supp. 2d 825 (N.D. Tex. 2006), which was decided without the benefit of any guidance from the Texas Supreme Court. The second phase spanned the Texas Supreme Court's decisions in Haygood v. De Escabedo , 356 S.W.3d 390 (Tex. 2011) and Gunn v. McCoy , 554 S.W.3d 645 (Tex. 2018) and their aftermath. The third phase was initiated by the Texas Supreme Court's recent decision in In re Allstate Indem. Co. , 622 S.W.3d 870 (Tex. 2021).

1. Phase One: Rahimi.

When a federal court must decide whether to apply state law under Erie in the absence of a controlling state decision, it makes an "Erie guess." See SMI Owen Steel v. Marsh USA, Inc. , 520 F.3d 432, 436–37 (5th Cir. 2008). In the first case to decide § 18.001 ’s applicability in diversity cases, Rahimi v. United States , 474 F. Supp.2d 825 (N.D. Tex. 2006), Magistrate Judge Sanderson, Jr. was placed in such a position. The decisions of Texas’ intermediate courts of appeals were unhelpful because they were split on whether § 18.001 was (1) "a rule of evidence that creates a hearsay exception" or (2) merely a process "by which a plaintiff may prove up the reasonableness and necessity of damages incurred." Rahimi , 474 F. Supp. 2d at 827–28 (listing cases).

Magistrate Judge Sanderson sided with the state appellate courts characterizing § 18.001 as an evidentiary rule, reasoning that it allowed a plaintiff to "establish prima facie proof of damages sustained." Id. at 828. He contended that characterizing § 18.001 as procedural would deprive the plaintiff of the "means to avoid the significantly more expensive and time-consuming alternatives to proving damages which would otherwise be available" in state court. Id. at 829. So, he concluded, § 18.001 is "so bound up or intertwined with a litigant's substantive rights" that under Erie , it would be "inequitable" not to apply it in federal court. Id.

2. Phase Two: Haygood and Gunn.

Five years later, the Supreme Court of Texas took up the issue in Haygood v. De Escabedo , 356 S.W.3d 390 (Tex. 2011). The Texas Supreme Court concluded that § 18.001 is "purely procedural, providing for the use of affidavits to streamline proof of the reasonableness and necessity of medical expenses." Haygood , 356 S.W.3d at 397. Seven years later, in Gunn v. McCoy , 554 S.W.3d 645 (Tex. 2018), the Texas Supreme Court reaffirmed Haygood ’s holding that § 18.001 affidavits are "purely procedural." Gunn , 554 S.W.3d at 672. It also explained that within the statute's procedural scheme, "an affidavit ... does not amount to conclusive evidence of the expenses," since "[t]he statute expressly contemplates that [it] can be controverted." Id. 674–75. Gunn also emphasized that the statute does not negate the requirement that "reasonableness and necessity be in fact proven by legally sufficient evidence." Id. at 672–73.

Following Haygood and Gunn , there was an "emerging consensus" among U.S. District Courts sitting in Texas that § 18.001 is "purely procedural" and should not apply in federal court.³

Espinoza v. State Farm Mut. Auto Ins. Co. , No. 7:19-cv-00299, 2020 WL 4333558, at *4–5 (S.D. Tex. July 28, 2020) (Alvarez, J.) (collecting and assessing cases). But a different approach continues in the Eastern District. See Bagley v. Dollar Tree Stores, Inc. , No. 1:18-CV-580, 2019 WL 6492585 (E.D. Tex. 2019) (Crone, J.); Sikes v. Transp. Ins. Co. , 2019 U.S. Dist. LEXIS 144132 (E.D. Tex. 2019) (Gilstrap, J.); Reynolds v. United Fin. Cas. Co. , 2020 WL 8269667 (E.D. Tex. Dec. 14, 2020) (Hawthorn, M.J.); Vansill v. Dollar Tree Stores, Inc. , 520 F.Supp.3d 847 (E.D. Tex. 2021) (Priest Johnson, M.J.). And in the Western District, Magistrate Judge Chestney acknowledges the statute is "procedural," but allows the use of § 18.001 affidavits "if both parties agree." Zuniga v. Tri-National, Inc. , 2021 WL 4083411, at *1 (W.D. Tex. Sept. 8, 2021) (Chestney, M.J.).

3. Phase Three: Allstate.

The Texas Supreme Court recently weighed in on this issue for a third time. In In re Allstate Indem. Co. , 622 S.W.3d 870 (Tex. 2021), the Court refined its holdings in Haygood and Gunn. It found that § 18.001 did not suggest "that an uncontroverted affidavit may be conclusive on reasonableness and necessity." Allstate , 622 S.W.3d at 881. But at the same time, it emphasized substantive aspects of the § 18.001 process.

The dispute in Allstate arose when a trial court entered a pre-trial order prohibiting Allstate from contesting the reasonableness and necessity of medical expenses at trial after its controverting affidavit failed. Id. at 875. The Court found that the trial court "abused its discretion" by doing so because it had struck a substantive component of Allstate's defense, barring the "meaningful adversarial adjudication" of the plaintiff's claim for past medical expenses. Id. at 883. Thus, the Court granted Allstate's mandamus writ, explaining that the failure to controvert a plaintiff's affidavit does not "constrain the defendant's ability to challenge—through evidence or argument—the claimant's assertion that her medical expenses are reasonable and necessary." Id. at 881.

A state court's characterization of a rule as "procedural" does not always decide an Erie issue. Guaranty Trust Co. v. York , 326 U.S. 99, 109, 65 S.Ct. 1464, 89 L.Ed. 2079 (1945). On the other side of the looking glass, Allstate also shows how § 18.001 is often intertwined with a claimant's substantive rights. For example, if a plaintiff successfully files affidavits, either by agreement or as uncontroverted, the defendant may surprise the plaintiff at trial by objecting to those affidavits. A plaintiff who must rely entirely on those...