Robert B. James, DDS, Inc. v. Elkins

• Decision Date: 30 May 2018
• Docket Number: No. 04-17-00160-CV,04-17-00160-CV
• Citation: 553 S.W.3d 596
• Parties: ROBERT B. JAMES, DDS, INC. ; Robert B. James, DDS, Individually; Jean James, Individually; and Alexis Mei Pyles, Individually, Appellants v. Cassandra J. ELKINS, DDS, Appellee
• Court: Texas Court of Appeals

553 S.W.3d 596

ROBERT B. JAMES, DDS, INC. ; Robert B. James, DDS, Individually; Jean James, Individually; and Alexis Mei Pyles, Individually, Appellants

v.Cassandra J. ELKINS, DDS, Appellee

No. 04-17-00160-CV

Court of Appeals of Texas, San Antonio.

Delivered and Filed: May 30, 2018

APPELLANT ATTORNEY: Linda R. Stahl, Edgar Leon Carter, Carter Scholer, PLLC, 8150 N. Central Expressway, Suite 500, Dallas, TX 75206, David R. Montpas, Prichard Hawkins Young, 10101 Reunion Place, Suite 600, San Antonio, TX 78216.

APPELLEE ATTORNEY: Eric D. Sherer, Sherer & Crow, PLLC, 11120 Wurzbach Road, Suite 200, San Antonio, TX 78230.

Sitting:Marialyn Barnard, Justice, Luz Elena D. Chapa, Justice, Irene Rios, Justice

Opinion by: Irene Rios, Justice

This is an appeal from a trial court’s order denying two motions to dismiss under the Texas Citizens Participation Act (TCPA). In this appeal, we must determine whether the TCPA applies to Cassandra J. Elkins, DDS’s legal actions and, if so, whether Dr. Elkins established by clear and specific evidence each element challenged on appeal. As explained in this opinion, we affirm as to some legal actions, reverse and render a dismissal as to others, and remand for a determination of attorney’s fees and costs as to the dismissed legal actions.

BACKGROUND

In 1991, Robert James, DDS hired Dr. Elkins to work at his San Antonio-based pediatric dental practice, Robert B. James, DDS, Inc. ("the Practice"). Dr. James and Dr. Elkins signed a written employment contract providing the terms of Dr. Elkins’s compensation. Dr. Elkins worked for the Practice for twenty-three years and, according to her, the Practice consistently paid her 30% of her gross production. Dr. James hoped that when he retired, Dr. Elkins would purchase the Practice. But when he offered to sell the Practice to Dr. Elkins, she declined.

Dr. James had his wife, Jean James, investigate Dr. Elkins’s payroll history, and Jean sought the help of the Practice’s administrator, Alexis Mei Pyles. Dr. James informed Jean and Pyles that, under Dr. Elkins’s employment contract, she should have been paid only 30% of net production, a calculation based on collections and not gross production. Jean and Pyles reviewed financial records for the prior three years and found Dr. Elkins was being paid 30% of gross production. Pyles prepared a Fraud Examination Report, concluding that Dr. Elkins misappropriated over $350,000. When Jean and Pyles informed Dr. James of their findings, Dr. James decided to terminate Dr. Elkins’s employment. Thereafter, Jean and Pyles reported Dr. Elkins’s alleged theft to the San Antonio Police Department (SAPD). During the SAPD’s investigation, Dr. James, Jean, and Pyles each made statements to the SAPD alleging Dr. Elkins stole money from the Practice. The Practice also made an insurance claim based on Dr. Elkins’s purported theft with its insurer, Travelers Casualty Insurance Company. Dr. Elkins was later indicted and arrested.

Dr. Elkins sued the Practice, Dr. James, Jean, and Pyles, alleging various causes of action against them. Her theories of liability included defamation, business disparagement, intentional infliction of emotional distress, and civil conspiracy. The Practice, Dr. James, and Jean (collectively "the James Appellants") filed a partial motion to dismiss under the TCPA; Pyles filed a separate TCPA motion to dismiss. Dr. Elkins responded by producing her affidavit, records from the Practice, the Fraud Examination Report, the SAPD report, Dr. James’s and Jean’s written statements to the SAPD, and other documents. Dr. Elkins also filed a motion for continuance and for discovery, which the trial court denied. No party produced the employment contract, which had been lost over the years.

After hearing the motions to dismiss, the trial court signed an order denying both motions without specifying the basis for its order. The James Appellants and Pyles filed a joint motion to reconsider, attaching additional evidence it alleged was newly discovered. In response, Dr. Elkins produced additional evidence to dispute the authenticity of the evidence attached to the joint motion. The trial court signed an order denying the joint motion, and this appeal followed.

APPLICABLE LAW & STANDARD OF REVIEW

If a legal action is based on, relates to, or is in response to a party’s exercise of First Amendment rights listed in the TCPA, that party "may file a motion to dismiss the legal action." TEX. CIV. PRAC. & REM. CODE. § 27.003 (listing rights of free speech, association, and petition); see Reyna v. Baldridge , No. 04-14-00740-CV, 2015 WL 4273265, at *1 (Tex. App.—San Antonio July 15, 2015, no pet.) (mem. op.). The TCPA’s dismissal procedure contains a burden-shifting framework to ensure the legal actions to which the TCPA applies have merit and are not brought to intimidate or silence those who exercise First Amendment rights listed in the TCPA. See Youngkin v. Hines , No. 16-0935, 546 S.W.3d 675, 678–80, 2018 WL 1973661, at *2 (Tex. Apr. 27, 2018). However, the TCPA exempts several categories of legal actions from its dismissal procedure. § 27.010.

We review de novo the denial of a TCPA motion to dismiss and whether the parties satisfied their respective burdens as set out in the TCPA. Reyna , 2015 WL 4273265, at *2. In our review, we must "consider the pleadings and supporting and opposing affidavits stating the facts on which the liability or defense is based." § 27.006(a); see In re Lipsky , 460 S.W.3d 579, 587 (Tex. 2015) (orig. proceeding). We view the pleadings and evidence in the light most favorable to the nonmovant. See Spencer v. Overpeck , No. 04-16-00565-CV, 2017 WL 993093, at *4 (Tex. App.—San Antonio Mar. 15, 2017, pet. denied) (mem. op.).

THE INSURANCE CONTRACT EXEMPTION IN SECTION 27.010(d)

Dr. Elkins argues we should affirm the trial court’s order in its entirety because, even if her legal actions relate to Pyles’s and the James Appellants' exercise of their First Amendment rights, the TCPA does not apply because her legal actions fall under the insurance contract exemption. The TCPA exempts "a legal action ... arising out of an insurance contract." § 27.010(d). The TCPA broadly defines a "legal action," which can mean a "lawsuit" or a "cause of action." § 27.001(6); accord D Magazine Partners, L.P. v. Rosenthal , 529 S.W.3d 429, 442 (Tex. 2017). The TCPA does not further define "cause of action," but "a ‘cause of action’ means the fact or facts entitling one to institute and maintain an action, which must be alleged and proved in order to obtain relief." Loaisiga v. Cerda , 379 S.W.3d 248, 262 (Tex. 2012) (internal quotation marks omitted). It is undisputed that this case involves the Practice’s insurance policy with Travelers and Dr. Elkins has alleged causes of action. The only dispute about the insurance contract exemption is whether the alleged facts entitling Dr. Elkins to relief (i.e. her causes of action) are legal actions "arising out of" the insurance policy with Travelers.

A. Legal Actions "Arising Out of an Insurance Contract"

Whether Dr. Elkins’s causes of action arise out of the insurance contract requires construing the phrase "arising out of" in the TCPA. We review issues of statutory construction de novo. Adams v. Starside Custom Builders, LLC , No. 16-0786, 547 S.W.3d 890, 893–95, 2018 WL 1883075, at *3 (Tex. Apr. 20, 2018). "Our fundamental goal when reading statutes is to ascertain and give effect to the Legislature’s intent." Cadena Comercial USA Corp. v. Tex. Alcoholic Beverage Comm'n , 518 S.W.3d 318, 325 (Tex. 2017) (internal quotation marks omitted). "[T]he [TCPA]’s plain language is the surest guide to the Legislature’s intent." Sullivan v. Abraham , 488 S.W.3d 294, 299 (Tex. 2016) (internal quotation marks omitted). We must presume the Legislature purposefully chose the statute’s language, intending each word used to have a purpose. Cadena Comercial USA Corp. , 518 S.W.3d at 325-26. Statutory words and phrases must be considered "in the context of the statute as a whole." Id. at 326.

1. Pyles’s & the James Appellants' Construction is Contrary to the TCPA’s Text

Pyles and the James Appellants argue that Dr. Elkins’s causes of action do not "arise out of" an insurance contract because Dr. Elkins is not seeking a remedy provided for in the insurance policy, specifically insurance benefits, and her theories of liability sound in common-law torts, not in contract. These arguments are contrary to the TCPA’s plain language in at least four ways. First, in the insurance contract exemption, the Legislature used the term "legal action," which is defined as "a lawsuit, cause of action, petition, complaint, cross-claim, or counterclaim or any other judicial pleading or filing that requests legal or equitable relief." § 27.001(6). The definition of "legal action" does not contain the term "remedy." A "cause of action" consists of the operative facts entitling the plaintiff to the relief sought. See Loaisiga , 379 S.W.3d at 262. The relief sought is the "remedy." BLACK'S LAW DICTIONARY 1320 (8th ed. 2006) (defining "remedy" as "legal or equitable relief"). Thus, under the insurance contract exemption, if the facts comprising a cause of action arise out of an insurance contract, the remedy requested need not arise out of the insurance contract. See §§ 27.001(6), 27.010(d).

Second, the insurance contract exemption in 27.010(d) contrasts with section 27.010(c), which exempts legal actions "seeking recovery for bodily injury, wrongful death, or survival." § 27.010(c) (emphasis added). The insurance contract exemption in section 27.010(d) does not exempt legal actions "seeking recovery for benefits under" an insurance contract. Similarly, the insurance contract exemption in 27.010(d) contrasts with other statutory provisions, such as the Texas Tort Claims Act, that refer to the nature of exempted claims. See, e.g. , TEX. CIV. PRAC. & REM. CODE § 101.057(2) (exempting claims "arising out of...