Opinion

Denise Stroup, as Legal Guardian of D. L. S., an Incapacitated Person v. MRM Management, Inc.

Court: Texas Court of Appeals, 3rd District (Austin)
Filed: Jan 2, 2018
Status: Published
Cited by: 0 cases
Authority: More cited than 4.1%

employee injured crossing street from hotel to restaurant was in course and scope

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employee injured crossing street from hotel to restaurant was in course and scope
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The opinion

ACCEPTED

03-17-00534-CV

21540047

THIRD COURT OF APPEALS

AUSTIN, TEXAS

1/1/2018 3:21 PM

JEFFREY D. KYLE

CLERK

NO. 03-17-00534-CV

FILED IN

3rd COURT OF APPEALS

IN THE COURT OF APPEALS AUSTIN, TEXAS

FOR THE THIRD DISTRICT OF TEXAS 1/2/2018 8:00:00 AM

AUSTIN, TEXAS JEFFREY D. KYLE

Clerk

DENISE STROUP, AS LEGAL GUARDIAN OF D.L.S.,

AN INCAPACITATED PERSON

Appellant,

VS.

MRM MANAGEMENT, INC.

Appellee.

On Appeal from the 53RD District Court of Travis County, Texas

No. D-1-GN-17-003290

Honorable Karin Crump

BRIEF OF APPELLANT

APPELLANT RESPECTFULLY REQUESTS ORAL ARGUMENT

FOGELMAN & VON FLATERN, LLP

Aaron von Flatern

State Bar No. 24076892

3101 Bee Cave Road, Suite 270

Austin, Texas 78746

(512) 375-3198

(512) 372-3209 (telecopier)

aaron@fvlawfirm.com

COUNSEL FOR APPELLANT

LIST OF PARTIES AND COUNSEL

Pursuant to Rule 38.2(a)(1)(A), the following is a list of parties and counsel

before the Court.

Appellant:

Sarah Denise Stroup as legal guardian of D.L.S., an incapacitated

person.………………………………….…………………………….Plaintiff

Counsel for Appellant:

Aaron von Flatern........................................................Trial/Appellate Counsel

State Bar No. 24076892

Fogelman & Von Flatern, LLP

3101 Bee Cave Road, Suite 100

Austin, Texas 78746

(512) 375-3198

(512) 372-3209 (telecopier)

aaron@fvlawfirm.com

Appellee:

MRM Management, Inc..………………………………………......Defendant

Counsel for Appellee:

Gregory R. Ave....................................................................Appellate Counsel

State Bar No. 01448900

Walters, Balido & Crain, LLP

Meadow Park Tower, Suite 1500

10440 North Central Expressway

Dallas, Texas 75231

(214) 347-8310

(214) 347-8311 (telecopier)

AveEdocsNotifications@wbclawfirm.com

TABLE OF CONTENTS

LIST OF PARTIES AND COUNSEL.............................................................i

TABLE OF CONTENTS................................................................................ii

INDEX OF AUTHORITIES...........................................................................v

STATEMENT OF THE CASE.......................................................................1

ISSUES PRESENTED....................................................................................4

STATEMENT OF THE FACTS.....................................................................4

SUMMARY OF THE ARGUMENT..............................................................6

ARGUMENT..................................................................................................8

A. Standard of Review....................................................................8

1. Traditional Motion for Summary Judgment Review.........8

2. No Evidence Motion for Summary Judgment Review......9

3. Summary Judgment Review in General..........................10

B. The Trial Court Erred in Granting MRM’s Traditional Motion

for Summary Judgment.............................................................11

1. Appellee MRM Has Failed to Conclusively Negate

Respondeat Superior Liability........................................11

a. The independent contractor agreement cannot

override the broker’s responsibility under Texas

law........................................................................12

b. Because it dissuaded Taylor from purchasing

additional insurance, MRM should be estopped

from using the independent contractor agreement to

escape exposure that Taylor would otherwise have

insured………………………………..................15

c. Fact questions abound in the determination of the

independent-contractor

question................................................................17

i. The independent nature of Taylor’s business

……………………………………………18

ii. Taylor’s obligation to supply necessary

supplies, tools, and materials……………..19

iii. Taylor’s right to control the progress of her

work...........................................................20

iv. The actual control exercised by Appellee

MRM..........................................................21

v. The permanency of the working relationship

……………………………………..……..23

vi. Whether the parties believe they are creating

an employer-employee relationship...........23

vii. The time for which Taylor was employed...24

viii. The method by which Taylor was paid......24

2. Appellee MRM Has Failed to Conclusively Negate Joint-

Enterprise Liability.........................................................24

3. Appellee MRM Has Failed to Conclusively Negate

Liability Under the Texas Occupations Code ................28

iii

4. Texas Labor Code Jurisprudence Is Persuasive In Favor of

‘Course and Scope’ Versus ‘Detour’ for Each of

Appellant’s Theories of Recovery...................................35

a. The dual purpose rule............................................35

b. The continuous coverage doctrine........................36

C. The Trial Court Erred in Granting MRM’s No Evidence Motion

for Summary Judgment.............................................................38

PRAYER..................................................................................................................39

CERTIFICATE OF SERVICE................................................................................40

CERTIFICATE OF COMPLIANCE.......................................................................41

INDEX OF AUTHORITIES

Cases

Aetna Cas. & Sur. Co. v. Orgon,

721 S.W.2d 572 (Tex. App.—Austin 1986, writ ref'd n.r.e.)………........................37

Aluminum Chemicals, Inc. v. Bechtel Corp.,

28 S.W.3d 64 (Tex. App.—2000, no pet.)…………................................................25

Arbelaez v. Just Brakes Corp.,

149 S.W.3d 717 (Tex. App.–Austin 2004, no pet.).............................................37, 38

City of Keller v. Wilson,

168 S.W.3d 802 (Tex. 2005)....................................................................................10

Denson v. Dallas County Credit Union,

262 S.W.3d 846 (Tex. App.—Dallas 2008, no pet.)……….......................................9

Flood v. Katz,

294 S.W.3d 756 (Tex. App.—Dallas 2009, pet. denied) ...........................................9

Gipson v. Davis Realty Co.,

215 Cal. App. 2d 190 (1963)...............................................................................14, 30

Home Interiors & Gifts, Inc. v. Veliz,

695 S.W.2d 35 (Tex. App.—Corpus Christi 1985, writ ref. n.r.e.)...........................18

Kindred v. Con/Chem, Inc.,

650 S.W.2d 61 (Tex. 1983)......................................................................................10

King Ranch, Inc. v. Chapman,

118 S.W.3d 742 (Tex. 2003)......................................................................................9

Merrell Dow Pharms., Inc. v. Havner,

953 S.W.2d 706 (Tex. 1997) ……..............................................................................9

Nixon v. Mr. Prop. Mgmt. Co.,

690 S.W.2d 546 (Tex. 1985).................................................................................8, 10

Pitchfork Land and Cattle Co. v. King,

346 S.W.2d 598 (Tex. 1961)...............................................................................11, 18

Saenz. v. Southern Union Gas Co.,

999 S.W.2d 490 (Tex. App.—El Paso 1999, no pet.)...............................................10

Shelton v. Standard Ins. Co.,

389 S.W.2d 290 (Tex. 1965)....................................................................................37

Sudan v. Sudan,

199 S.W.3d 291 (Tex. 2006)....................................................................................10

Texas DOT v. Able,

35 S.W.3d 608 (Tex. 2000)......................................................................................25

Tex. Mut. Ins. Co. v. Jerrols,

385 S.W.3d 619 (Tex. App.—Houston [14th Dist.] 2012, pet. dism'd)..............35, 36

Triton Oil & Gas Corp. v. Marine Contractors & Supply, Inc.,

644 S.W.2d 443 (Tex. 1982)…..................................................................................9

Wornick Co. v. Casas,

856 S.W.2d 732 (Tex. 1993)......................................................................................8

Zurich Am. Ins. Co. v. McVey,

339 S.W.3d 724 (Tex. App.—Austin 2011, pet. denied)....................................35, 36

Statutes

Tex. Occ. Code § 1101.001...........................................................................12, 28, 29

Tex. Occ. Code § 1101.002…...........................................................12, 13, 29, 31, 34

Tex. Occ. Code § 1101.351..........................................................................12, 13, 18, 29

Tex. Occ. Code § 1101.803....................................................................12, 14, 17, 29, 30

Rules

Tex. R. Civ. P. 166a(i) .........................................................................................9, 10

vii

NO. 03-17-00534-CV

IN THE COURT OF APPEALS

FOR THE THIRD DISTRICT OF TEXAS

AUSTIN, TEXAS

DENISE STROUP, AS LEGAL GUARDIAN OF D.L.S.,

AN INCAPACITATED PERSON

Appellant,

VS.

MRM MANAGEMENT, INC.

Appellee.

On Appeal from the 53RD District Court of Travis County, Texas

No. D-1-GN-17-003290

Honorable Karin Crump

BRIEF OF APPELLANT

TO THE HONORABLE JUSTICES OF THE COURT OF APPEALS:

Appellant Denise Stroup respectfully presents this Brief of Appellant.

Appellant requests that this Court reverse the judgment of the 53rd District Court of

Travis County, Texas, and in support thereof would show the Court as follows:

STATEMENT OF THE CASE

This is an appeal from summary judgment in a personal injury car-crash case.

It should be noted that the sole injured party in the case—Douglas Lee Stroup a/k/a

D.L.S—became incapacitated as a result of his injuries. He was therefore

represented in the proceedings below by his legally appointed guardian, Sarah

Denise Stroup a/k/a Denise Stroup (hereafter “Stroup”, “Appellant”, “Appellant

Stroup”, or “Plaintiff below”). Supp CR 4. On July 27, 2017, by order of the Probate

Court No. 1 of Travis County, Douglas Lee Stroup’s rights were restored, and the

guardianship discharged.

The procedural history is as follows. Appellant Stroup sued a real estate agent

named Penny Harrington Taylor alleging negligent operation of a motor vehicle.

Supp. CR 4-8; Supp. CR 118-124. Stroup additionally sued the corresponding real

estate broker of record, MRM Management, Inc. (the Appellee in this proceeding)

alleging MRM Management, Inc. was vicariously liable for the tortious conduct of

Penny Harrington Taylor. Supp. CR 4-8; Supp. CR 118-124. MRM Management,

Inc. will be referred to herein as “MRM”, “Appellee”, or “Appellee MRM”.

Appellee MRM filed a combined Traditional and No-Evidence Motion for

Summary Judgment. As grounds for summary judgment, Appellee MRM asserted

there was no evidence to support any of Stroup’s theories of vicarious liability,

and/or that the summary judgment evidence conclusively negated Stroup’s theories

of vicarious liability as to MRM.

In its motion, Appellee MRM did not challenge Stroup's underlying claims of

negligence as to Defendant Taylor, or assert any grounds with respect to Taylor’s

conduct—only the existence of Defendant MRM’s vicarious liability for Taylor’s

conduct.

The order granting MRM Management, Inc.’s First Amended Traditional and

No Evidence Motions for Summary Judgment was signed on February 28th, 2017

in Travis County Cause No. D-1-GN-15-004909. Supp. CR 407. That case was

styled Sarah Denise Stroup, as Legal Guardian of Douglas Lee Stroup, an

Incapacitated Person v. Penny Harrington Taylor and MRM Management, Inc. in

the 98th Judicial District Court of Travis County, Texas. Supp. CR 407.

By order of that Court, Stroup’s claims against MRM Management, Inc. were

subsequently severed on July 17, 2017 to a new cause—Cause No. D-1-GN-

17003290, styled Douglas Lee Stroup v. MRM Management, Inc. in the 53rd Judicial

District Court of Travis County, Texas. Supp CR 435-36. Accordingly, on July 17,

2017 the prior order granting Summary Judgment as to defendant MRM

Management, Inc., became final as it disposed of all claims and parties within cause

number D-1-GN-17-003290.

Stroup timely filed notice of appeal on August 10, 2017 in Cause No. D-1-

GN-17-003290. Supp. CR 8-9.

ISSUES PRESENTED

The sole issue on appeal in this case is whether the trial court’s order granting

summary judgment in favor of MRM was proper. That is: has Stroup presented

evidence raising a genuine issue of material fact as to each element of Stroup’s

vicarious-liability theories of recovery against MRM, including: respondeat

superior; joint-venture liability; and statutory vicarious liability?

A key sub-issue is whether the Texas Real Estate License Act (within the

Texas Occupations Code) requires real estate brokers to be responsible for the

tortious conduct of real estate agents, regardless of the agents’ status as employees

or independent contractors.

SUMMARY OF THE FACTS

This is a personal injury case arising from a car-versus-motorcycle crash.

According to the police report, on August 6, 2015, in Austin, Texas, Penny

Harrington Taylor (hereafter “Taylor” or “Defendant Taylor”), caused a collision

when she advanced her car into a public roadway from a hotel driveway. Supp. CR

347-348. Defendant Taylor was a licensed realtor at the time and Appellee MRM

was her sponsoring broker for that license. Supp. CR 350. Taylor testified that she

believes she was engaged in selling real estate at the time of the subject crash. Supp.

CR 329 (76:21-24). Taylor had traveled to east Austin that Thursday morning from

Lakeway, Texas with the intent of devoting the weekend to performing landscape

improvement work on a residential property that she was listing for sale at 2705

Crest Avenue, in Austin, Texas. Supp. CR 318 (59:3-9); Supp. CR 161 (69:14-21).

The listing agreement for 2705 Crest Avenue designates Taylor as the listing agent,

and Keller Williams Realty (trade name for Appellee MRM Management, Inc.) as

the broker of record. See Appendix Ch. 1; see also Supp. CR 352-360; see also Supp.

CR 267 (establishing Keller Williams Realty as the trade name for MRM

Management, Inc.).

In the proceeding below, Appellant Stroup sued Penny Harrington Taylor

(hereafter “Defendant Taylor”) for negligently causing the motor vehicle crash.

Supp. CR 4-8; Supp. CR 118-124. Because Stroup alleged Defendant Taylor was a

licensed real estate salesperson engaged in real estate sales activities at the time of

the crash, Stroup additionally sued the real estate broker of record, Appellee MRM,

alleging that MRM was vicariously liable for Defendant Taylor’s tortious conduct.

Supp CR 4-8; Supp. CR 118-124. Stroup alleged that MRM was vicariously liable

pursuant to one or more of the following theories: respondeat superior; principle-

agent liability; joint enterprise liability; and statutory vicarious liability pursuant to

the Texas Real Estate License Act within the Texas Occupations Code. Supp. CR

118-124.

Appellee MRM’s Traditional and No-evidence Motion for Summary

Judgment asserted there was no evidence to support any of Stroup’s theories of

vicarious liability, and/or that its summary judgment evidence conclusively negated

Stroup’s theories of vicarious liability as to MRM.

SUMMARY OF THE ARGUMENT

The Trial Court erred in granting MRM Management, Inc.’s Traditional

Motion for Summary Judgment. Appellee has failed to conclusively negate

respondeat superior liability for Appellant's tort claims against Appellee’s employee

Penny Taylor. Appellee argues Taylor was an independent contractor to whom

respondeat superior could not apply. However, because Taylor was a real estate

agent, and Appellee was Taylor's real estate broker of record, the independent

contractor agreement presented by Appellee cannot override Texas law requiring

MRM to be responsible for Defendant Taylor's conduct. Further, because the

wording of the agreement dissuaded Taylor from purchasing additional insurance,

MRM should be estopped from using the independent contractor agreement to

escape exposure that Taylor would otherwise have insured. Further, fact questions

abound in this case when weighing the independent-contractor-versus-employee

factors established by the Texas Supreme Court. Factors with fact questions include:

the independent nature of Taylor’s business; Taylor’s obligation to supply necessary

supplies, tools, and materials; Taylor’s right to control the progress of her work; the

actual control exercised by Appellee MRM; the permanency of the working

relationship; whether the parties believe they created an employer-employee

relationship; the time for which Taylor was employed; and the method by which

Taylor was paid.

In addition to respondeat superior liability, Appellee MRM has failed to

conclusively negate joint-enterprise liability. Appellee argues there was no evidence

of the element of equal right of control, and that Taylor was outside the scope of any

alleged joint-enterprise. However, substantial evidence suggests MRM’s real estate

agents participated in the governance of the organization, and that Taylor was within

the scope of her work for the organization when the crash occurred. The course-and-

scope evidence applies not only to the joint-enterprise theory of recovery, but also

to the respondeat superior theory of recovery, and the statutory vicarious liability

theory of recovery.

Appellee MRM has failed to conclusively negate vicarious liability under the

Texas Occupations Code, which requires real estate brokers to answer for the

tortious conduct of the real estate agents who carry out the broker’s business.

Finally, the trial court erred in granting MRM’s no-evidence motion for

summary judgment. Because MRM has only challenged its vicarious liability for

Taylor's conduct, and not the elements of Plaintiff's tort claims against Taylor, the

fact issues established in response to Appelle's Traditional Motion are equally

responsive to the no-evidence motion. Appellant has presented more than a scintilla

of evidence as to Appellee MRM's right of control as an employer, vicarious liability

as a joint-venturer, and statutory responsibility as a sponsoring broker. Further,

Appellant has presented more than a scintilla of evidence as to Taylor's acting within

the course and scope of the relevant work under the doctrines of respondeat superior,

joint-enterprise, and statutory vicarious liability.

ARGUMENT

A. Standard of Review

1. Traditional Motion for Summary Judgment Review

The standard for reviewing a traditional summary judgment is well

established. Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548-49 (Tex. 1985).

Defendants who move for traditional summary judgment must show the plaintiff has

no cause of action. See Id. Defendant (here, the Appellee MRM) may meet this

burden by either disproving at least one essential element of each theory of recovery,

or by conclusively proving all elements of an affirmative defense. Wornick Co. v.

Casas, 856 S.W.2d 732, 733 (Tex. 1993).

A matter is conclusively established if ordinary minds cannot differ as to the

conclusion to be drawn from the evidence. Triton Oil & Gas Corp. v. Marine

Contractors & Supply, Inc., 644 S.W.2d 443, 446 (Tex. 1982). After the movants

have established a right to summary judgment, the burden shifts to the nonmovants

to present evidence creating a fact issue. Denson v. Dallas County Credit Union, 262

S.W.3d 846, 849 (Tex. App.--Dallas 2008, no pet.).

2. No Evidence Summary Judgment Review

The standard for reviewing a no-evidence summary judgment is the same

legal sufficiency standard used to review a directed verdict. See Tex. R. Civ. P.

166a(i); Flood v. Katz, 294 S.W.3d 756, 762 (Tex. App.—Dallas 2009, pet. denied).

Accordingly, this Court must determine whether the nonmovant—here, the

Appellant--produced more than a scintilla of probative evidence to raise a fact issue

on the material questions presented. See Flood, 294 S.W.3d at 762.

A no-evidence summary judgment is improperly granted if the respondent—

here, the Appellant—has brought forth more than a scintilla of probative evidence

to raise a genuine issue of material fact. King Ranch, Inc. v. Chapman, 118 S.W.3d

742, 751 (Tex. 2003). "More than a scintilla of evidence exists when the evidence

rises to a level that would enable reasonable, fair-minded persons to differ in their

conclusions." Id. (quoting Merrell Dow Pharms., Inc. v. Havner, 953 S.W.2d 706,

711 (Tex. 1997)). "Less than a scintilla of evidence exists when the evidence is 'so

weak as to do no more than create a mere surmise or suspicion' of a fact." Id.

(quoting Kindred v. Con/Chem, Inc., 650 S.W.2d 61, 63 (Tex. 1983)).

Appellant–as non-movant responding to a no-evidence motion for summary

judgment–is not required to have marshalled her proof, but need only have pointed

out evidence that raises a fact question on the challenged elements. See Saenz. v.

Southern Union Gas Co., 999 S.W.2d 490, 493-94 (Tex. App.–El Paso 1999, no

pet.); see also Comments to Tex. R. Civ. P. 166a(i).

3. Summary Judgment review in general

In deciding or reviewing either a traditional or no-evidence motion for

summary judgment, every reasonable inference must be indulged in favor of the

non-movant, and any doubts resolved in the non-movant’s favor. See Nixon v. Mr.

Property Management Co., 690 S.W.2d 546, 548 (Tex. 1985); Sudan v. Sudan, 199

S.W.3d 291, 292 (Tex. 2006) (quoting City of Keller v. Wilson, 168 S.W.3d 802, 823

(Tex. 2005)).

Thus, the Appellant should prevail in this case on both the traditional motion

for summary judgment and the no-evidence motion for summary judgment if the

summary judgment evidence contains more than a scintilla of evidence to raise a

genuine issue of material fact for each of the challenged theories of recovery.

B. The Trial Court Erred in Granting MJM’s Traditional Motion for

Summary Judgment

Appellee MRM’s summary judgment evidence failed to conclusively negate

vicarious liability under any of the Appellant Stroup’s theories of recovery,

including respondeat superior, joint enterprise, and statutory liability. The summary

judgement evidence raised, at a minimum, a genuine issue of material fact as to each

theory. Therefore, the trial court erred in granting Appellee MRM’s traditional

motion for summary judgment.

1. Appellee MRM has failed to conclusively negate respondeat

superior liability

Appellee MRM’s Traditional Motion for Summary Judgment argued that the

summary judgment evidence conclusively established that Defendant Taylor was an

independent contractor, and thus not MRM’s employee. Supp. CR 206-207. In

support of this proposition, Appellee MRM points to an independent contractor

agreement that Taylor signed, and further argued that the Court should apply a multi-

factored test pursuant to, inter alia, Pitchfork Land & Cattle v. King. Supp. CR 206;

See Pitchfork Land and Cattle Co. v. King, 346 S.W.2d 598, 602-03 (Tex. 1961);

see also Appendix Ch. 2 (independent contractor agreement).

Plaintiff would show that the independent contractor agreement is void to the

extent it conflicts with the Texas Occupation Code’s statutory mandate that real

estate brokers answer for their salespersons’ tortious conduct.

Additionally, Plaintiff will show that Defendant MRM should be estopped

from using the independent contractor agreement to shield itself from liability that

the agreement itself places at the feet of Defendant MRM.

Finally, even assuming the multifactored Pitchfork test were the only

consideration for the question of respondeat superior liability, the summary

judgment evidence presents genuine issues of material fact within the application of

that test.

a. The independent contractor agreement cannot

override the broker’s responsibility under Texas law

MRM’s main argument against respondeat superior liability is the

independent contractor agreement that Defendant Taylor signed. However, the

independent contractor agreement is void to the extent it conflicts with the Texas

Occupation Code’s statutory mandate that real estate brokers answer for their

salespersons’ tortious conduct.

Chapter 1101 of the Texas Occupations Code is known as the Texas Real

Estate License Act (hereafter “the Act”). See Tex. Occ. Code § 1101 et seq.; See also

Appendix Ch. 3. The Act sets forth the authority, professional standards, and

licensure requirements for persons and entities engaged in real estate transactions in

Texas, including real estate “brokers” and “salespersons”. Id.1 In general terms, the

Act defines “brokers” as persons who are paid to perform certain acts (referred to

herein as “broker acts”) for others. See Tex. Occ. Code § 1101.002(1). Those broker

acts are presented within a statutory laundry list that covers virtually all of the things

the general public would commonly understand to be the job of a “realtor” including:

buying and selling real estate; listing real estate; locating real estate; procuring

prospects to accomplish the sale of real estate; and promoting the sale of real estate.

Id.

The Act defines a “salesperson” as a person who is sponsored by a licensed

broker for the purpose of performing the above [broker] acts. See Tex. Occ. Code §

1101.002(7). Further, the Act states that “[a] licensed salesperson may not engage

or attempt to engage in real estate brokerage unless the sales agent is sponsored by

a licensed broker and is acting for that broker. Tex. Occ. Code § 1101.351(c)

(emphasis added).

In other words, all aspects of all real estate transactions in Texas are

technically carried out by real estate brokers, or by salespersons who are authorized

to engage in real estate brokerage for their sponsoring broker on the brokers’

1 The Occupations Code was revised effective January 1, 2016 (after the subject crash). Under the

revision, the term “salesperson” was changed to “sales agent”. The code provisions cited herein

were otherwise unchanged.

behalves. As such, the Act establishes a master-servant relationship as a matter of

law, and assigns legal responsibility for all statutory broker acts to the brokers.

Section 1101.803 of the Act states “[a] licensed broker is liable to the commission,

the public, and the broker's clients for any conduct engaged in under this chapter by

the broker or by a salesperson associated with or acting for the broker. Tex. Occ.

Code § 1101.803 (emphasis added).

The Act contains no provision authorizing brokers to contractually assign that

responsibility back to the salespersons, and thus brokers like Defendant MRM have

a non-delegable duty to the public for the conduct of salespersons associated with

Defendant MRM.

Therefore, any agreement that purports to characterize a salesperson’s

relationship to her sponsoring broker as that of an independent contractor is simply

void and unenforceable for the purposes of vicarious liability. Although Plaintiff

could locate no cases in which such a contract has been deemed void in Texas,

Plaintiff would point the court to persuasive authority in California, where a similar

statute was construed to void a realtor’s independent contractor agreement with his

sponsoring broker. See Gipson v. Davis Realty Co., 215 Cal. App. 2d 190 (1963);

See Appendix Ch. 3.

Because Defendant MRM’s traditional motion for summary judgment relative

to the theory of respondeat superior is entirely predicated on the argument that

Defendant Taylor should be characterized as an independent contractor, and because

that characterization is statutorily prohibited, Defendant MRM’s motion should be

denied.

b. Because it dissuaded Taylor from purchasing additional

insurance, MRM should be estopped from using the

independent contractor agreement to escape exposure

that Taylor would otherwise have insured

Even if the independent contractor agreement cited by Appellee MRM were

deemed enforceable, the agreement on its face implies that MRM will accept a large

share of liability for Defendant Taylor’s conduct. Supp. CR 267-273; See Appendix

Ch. 4. Because the misleading document dissuaded Defendant Taylor from

purchasing additional insurance, or from investigating the need for same, MRM

should be estopped from using the independent contractor agreement to shield itself

from the exposure presented by Appellant’s claims. Id.

Section D within page 4 of the subject agreement states that “for

risks…arising from Agent’s negligent…breach of any law, regulation, or standard

of conduct that applies to Agent’s actions or activities as a licensed real estate sales

associate, Agent agrees to indemnify and hold [Appelle MRM] harmless from and

against that percentage of Liability that equals the percentage of commissions

payable to the Agent on the date of the incident or omission that gave rise to the

Liability occurred.” Id (emphasis added). Section B goes on within that same page

to define “Liability” to mean “all liability, claims, damages, losses, costs and

expenses that a party sustains or incurs as a result of or in connection with a

particular incident or situation”. Id. Thus, for “[all] damages”, “[all] claims”, and

“[all] losses that a party sustains” MRM only requires its agents to indemnify MRM

or hold MRM harmless from a (capped) portion of MRM’s liability. See Id.

This reads like a co-insurance requirement. One can imagine Dominos Pizza

telling its delivery drivers: “If you cause a crash, you must forfeit a portion of your

delivery tip to cover Dominos’ exposure”. Most delivery drivers would take that to

mean Dominoes was assuming responsibility for the rest of the exposure, or that

Dominos anticipated it would be vicariously liable for the driver’s conduct. The

same applies here, especially when viewed within the totality of the circumstances

of MRM’s sponsorship of Taylor’s license, including:

(1) MRM’s requirement that Taylor insure her car to a certain level, and to

have (MRM’s trade name) Keller Williams named as an additional

insured; CR 375 (59:4-8); and

(2) the express vicarious liability requirement stated in the Texas Real

Estate License Act through which Taylor obtained her license. See Tex.

Occ. Code § 1101.803 (stating “[a] licensed broker is liable to… the

public… for any conduct engaged in under this chapter by… a

salesperson associated with or acting for the broker).

The clear implication of this agreement is that MRM anticipated its own

liability for losses arising from the agent’s negligence, and viewed that risk as a

routine part of its business. It only asked the agent to cover a portion of the MRM

exposure. Under the agreement, the agent’s percentage of responsibility for “all

claims” against MRM could never exceed the commission that she earned on the day

of the subject negligence. See Supp. CR 267-273; see Appendix Ch. 4.

To the extent Defendant Taylor was consciously or subconsciously mislead

by this agreement, and otherwise might have secured additional liability insurance

for herself, Defendant MRM should be estopped from using the agreement to shield

itself from the master-servant liability that the agreement implies is MRM’s.

c. Fact questions abound in the determination of the

independent-contractor question

Even if the Court finds the Occupations Code inapplicable, the question of

whether Defendant Taylor was an employee or independent contractor, is a factually

intense, multi-factored inquiry. Appellee’s MRM’s evidence fails to conclusively

establish that Defendant Taylor was an independent contractor under the “Pitchfork”

factors urged by MRM. Those factors are: (1) the independent nature of the

contractor’s business; (2) the contractor’s obligation to supply necessary supplies,

tools, and materials; (3) the contractor’s right to control the progress of the work; (4)

the actual control exercised by the employer; (5) the permanency of the work

relationship; (6) whether the parties believe they are creating an employer-employee

relationship; (7) the time for which she is employed; and (8) the method by which

she is paid. See Pitchfork Land and Cattle Co. v. King, 346 S.W.2d 598, 602-03

(Tex. 1961); see also Home Interiors & Gifts, Inc. v. Veliz, 695 S.W.2d 35, 41 (Tex.

App.-Corpus Christi 1985, writ ref. n.r.e.).

Appellant would show the court the following genuine issues of material fact

concerning those same factors:

i. The independent nature of Taylor’s

business

Texas law prohibits Defendant Taylor from engaging in any real estate

business without Appellee MRM’s sponsoring brokerage. Further, all of Defendant

Taylor’s real estate related activities would be illegal “unless [she] is sponsored by

a licensed broker and is acting for that broker.” See Tex. Occ. Code § 1101.351(c)

(emphasis added); See also above Section B(1)(a) of Appellant’s Brief, describing

the linkage between real estate salespersons and brokers created by the Texas Real

Estate License Act, and fact that virtually all known real estate related activities are

legally the actions of real estate brokers like MRM. Therefore, the nature of

Defendant Taylor’s real estate business is to be completely dependent upon Appellee

MRM’s sponsoring brokerage.

ii. Taylor’s obligation to supply necessary

supplies, tools, and materials

Appellee MRM supplied Taylor with a business card (showing Appellee’s

MRM’s trade name Keller Williams, and describing her as a Keller Williams “Real

Estate Agent”). Supp. CR 337. Defendant MRM supplied training, including a

dedicated training agent and training book, software training, a website containing

training materials, videos, forms, calculators, and kits. Supp. CR 306-11 (17:13-

18:12;19:16-19;23:7-24:7). Defendant MRM also supplied software for

electronically managing Taylor’s real estate transactions. Supp. CR 308-09 (19:16-

20:3). Defendant MRM also supplied packets and checklists to realtors like Taylor

to guide them through, e.g., the listing process and open houses. Supp. CR 373-74

(57:8-58:6).

iii. Taylor’s right to control the progress of her

work

Most employees who are licensed professionals, whether realtors, engineers,

attorneys, or insurance adjusters, are likely to enjoy a high level of autonomy even

while remaining subject to their employer’s right of control. As such, it is no surprise

that Defendant Taylor was empowered to manage her real estate transactions with a

high degree of professional independence. It is telling, however, that Appellee MRM

nonetheless subjected her to a number of policies and procedural requirements, the

violation of which could be considered a “fire-able offense.” Supp. CR 375 (59:4-

10). Many of those policies are contained in the Keller Williams Policies and

Guidelines manual, excerpts from which are attached hereto See Supp. CR 379-93;

Appendix Ch. 5. That document, on page 1-1, starts off with a dramatic, if vague,

definition of “interdependence”, which quotes Stephen Covey to directly refute the

concept of “independence” in favor of the more magical paradigm of

“interdependence”. See Id. That interdependence is evident from the numerous ways

that Defendant MRM exercised control over Taylor including:

• Requiring Taylor to insure her car to a certain level, and to have Keller

Williams named as an additional insured. Defendant Taylor; Supp. CR

375 (59:4-8).

• Requiring Taylor to keep her car clean (this one is particularly relevant

in this case as Ms. Taylor was—in addition to conducting other real

estate business—looking for a car wash at the time of the subject crash);

Supp. CR 333 (101:7-24); See also Supp. CR 389 ¶ 1-2; See generally

Supp. CR 267-273 and specifically Supp. CR 267 ¶ 3.

• Creating “standards” that Appellee MRM alleges Taylor violated

including the standard of turning in listing agreements within 3 days of

execution, refraining from performing manual labor on real property,

and refraining from hiring contractors to perform work. Supp. CR 368-

72 (49:22-52:3).

iv. The actual control exercised by Defendant

MRM

As partly-described in the preceding section, Defendant MRM exercised

control over its agents by contractually binding them to follow the aforementioned

100-plus page Policies and Guidelines manual. Supp. CR 333 (101:7-24); see

generally Supp. CR 267-273 and specifically CR 267 ¶ 3; see also Appendix Ch. 5.

This was not just a handout, but something the agents had to agree in writing to

follow. Id. Within the manual, control is exerted in the form of, e.g., section

“4.9.1.12 Conduct” which governs alcohol consumption, conduct at the market

center, and cooperation with other brokers. Supp. CR 366-67 (16:17-17:2);

Appendix Ch. 5. Likewise, the preceding section of this brief gives examples of

policies within the manual concerning the maintenance of a certain level of

automobile insurance covering MRM, and the need for agents to keep their cars

clean. The manual further instructs Taylor to, e.g., contact her sellers at least once

per week. See Supp. CR 390 ¶ 5 (Section 4.9.1.20.2). Further, in Section 4.9.1.20.3,

the manual instructs Taylor to maintain complete and accurate records, and, in clear

employer-speak, admonishes Taylor in bold letters that “there is no excuse for the

violation of this guideline by any associate”. See Supp. CR 390 ¶ 6 (Section

4.9.1.20.3).

Oddly, that bold admonition uses the watered-down term “guideline” instead

of the stronger, more accurate term “policy.” This is a transparent attempt by

Appellee MRM to enjoy absolute control without having to be responsible for that

control. This theme is repeated in Appellee MRM’s corporate representative Jessica

Tenant’s deposition. Although her lawyers sent requests for admissions to Defendant

Taylor asking Taylor to admit that “Keller Williams associates should not perform

repair work for listed properties”, Ms. Tenant testified that that is “not a demand”,

but rather “a professional standards suggestion.” Supp. CR 369-71 (50:13-52:1);

Supp. CR 395-399. Likewise, when she was asked about her lawyers’ request that

Defendant Taylor admit that Taylor was not allowed to hire contractors without

Keller Williams’ [MRM’s] express consent, Ms. Tenant backtracked and said that

there actually is no written policy on that, but that Defendant Taylor should have

talked to [Appellee MRM] about it. Id.

Such vagueness should not benefit the party who created it, especially in the

context of summary judgment.

v. The permanency of the working

relationship

Defendant Taylor’s real estate license has been solely sponsored by Appellee

MRM for nearly 10 years. Supp. CR 303-04 (6:7-7:18).

vi. Whether the parties believe they are

creating an employer-employee relationship

As pointed out in Appellee’s Motion for Summary Judgment, Defendant

Taylor has stated she believes she was an independent contractor. Supp. CR 211 ¶

1. However, she is also a lay witness. She has no reason to doubt the force and effect

of the independent contractor agreement she was made to sign when she joined

MRM. As above, Appellant Stroup maintains that the agreement is misleading and

void. Moreover, to the extent Taylor’s subjective belief about her employment status

was misinformed by Appellee MRM, her subjective belief should be given little if

any weight.

vii. The time for which Taylor was employed

As above, Defendant Taylor’s real estate license has been solely sponsored by

Appellee MRM for nearly 10 years. Supp. CR 303-04 (6:7-7:18).

viii. The method by which Taylor was paid

All of Taylor’s compensation was paid by Appellee MRM (or its dba Keller

Williams). Supp. CR 372 (55:4-55:6).

Putting all of the above factors together, it is clear that genuine issues of

material fact exist as to whether Defendant Taylor was an independent contractor or

an employee. The trial court therefore erred in granting Appellee MRM’s traditional

motion for summary judgment.

2. Appellee MRM has failed to conclusively negate joint-

enterprise liability

In both its traditional and no evidence motions, Appellee MRM argues there

is no evidence supporting the existence, and no fact questions as to the absence of,

a joint enterprise through which Appellant Stroup could hold Appellee MRM

vicariously liable for Defendant Taylor’s actions. Supp. CR 143-44; 213-14.

Appellant Stroup agrees with the elements as stated in Appellee’s motion, and

that for joint-enterprise liability to attach, Appellant must establish: an agreement; a

common purpose; a community of pecuniary interest; and an equal right of control

between Defendant Taylor and Appellee MRM. See Supp. CR 143-144; Texas DOT

v. Able, 35 S.W.3d 608, 613 (Tex. 2000). Appellant also agrees that Appellant must

establish that Taylor was acting within the scope of that joint enterprise to hold

Appellee MRM vicariously liable. Supp CR 143-144; see also Aluminum Chemicals,

Inc. v. Bechtel Corp., 28 S.W.3d 64, 67 (Tex. App.--Texarkana 2000, no pet.)

Appellee MRM has wholly failed to offer evidence conclusively negating any

of those elements within its traditional motion for summary judgment. As such the

traditional motion for summary judgment should be denied on its face.

Within its no-evidence motion, Appellee MRM did not challenge the elements

of agreement, common purpose, or community of pecuniary interest. Instead

MRM’s no-evidence motion has challenged the elements of (1) equal right of

control; and (2) acting in the scope of the joint enterprise. Supp. CR 216-217. As to

equal right of control, there is ample evidence, as described above, that Taylor was

contractually bound to follow MRM’s policies including keeping her car clean, and

that she was doing exactly that leading up to the crash. Appellee MRM, who is

charged by the Texas Occupations Code with responsibility for the salesperson

Taylor’s actions, and who promulgated policies for its agents to follow, clearly had

the ability and right to tell Taylor what to do in connection with buying and listing

real estate. Meanwhile MRM’s corporate representative Jessica Tennant has testified

that the agent’s leadership committee was developed so that agents would “…have

a voice in the decision-making and how the office was run…” Supp. CR 371 (52:6-

21).

As for the question of scope, there is ample evidence that in a broad sense,

Taylor had traveled to east Austin from Lakeway Texas with the intent of devoting

the entire weekend of the crash to performing work on the property she was listing

at 2705 Crest Avenue. Supp. CR 318 (59:3-9). Taylor was the listing agent, and

Keller Williams Realty (trade name for Defendant MRM) was listed as the broker

on the listing agreement. Supp. CR 352-360.

The morning of the crash, Defendant Taylor had met with the head

landscaping worker, and had driven with him to Home Depot where she purchased

supplies including a chainsaw and chainsaw oil for use by the landscapers on the

subject house. Supp. CR 319-23 (60:17-61:9:4; 62:24-63:2; 63:19-64:12). The plan

was to clear trees to open up the view in order to improve the marketing of the

property. Supp. CR 322-23 (63:25-64:12). Taylor went to the hotel to check in with

him following the couple’s trip to Home Depot. Supp. CR 326 (70:11-22). Given

that Ms. Taylor testified that she was having an affair with the landscaper, there is a

fact question about whether she would have deviated from her real estate activities

at some point for romantic activities before returning to the enterprise of marketing

2705 Crest Ave. However, this red-hearing question would exist with any couple

who happened to work together. There is absolutely no evidence that the couple in

this case did anything but work on the day of the crash.

The summary judgment evidence shows that Taylor went to Home Depot,

returned to check in at the hotel with the landscaper (in anticipation of a multiple-

day job), dropped her stuff in the room, and was getting ready to return to the

worksite at 2705 Crest Avenue. At that point she decided to move her car out of the

sun, and in so doing, to peer around for a nearby car wash. Supp. CR 326-28 (70:23-

72:3). Importantly, the logical reason for her to move her car out of the sun at that

moment was that the couple was about to take the landscaper’s truck back to 2705

Crest Ave, leaving her car where it was parked in the August sun. Supp. CR 326

(70:11-71:3). Thus, even if a romantic detour had occurred after the trip to Home

Depot (which is contrary to what Taylor testified to), she was at a minimum re-

engaging with the enterprise of marketing 2705 Crest Avenue, the property for

which she was the contractual listing agent and Appellee MRM was the contractual

broker.

The Defendant’s suggestion that by looking for a car wash, Taylor somehow

deviated from her joint enterprise with MRM—when keeping one’s car clean was

an express directive from MRM—is clearly well short of conclusive. The fact that

Taylor didn’t plan to meet potential buyers that day is also irrelevant given that she

agreed in her deposition that the active makeover of the 2705 Crest Ave property

presented opportunities to discuss the impending sale with neighbors, who might

themselves be interested in selling property that Taylor could list, and which

Defendant MRM could make money from. Supp. CR 329-31 (76:21-78:23).

Ultimately, Defendant Taylor testified that she believes she was engaged in the

selling of real estate at the time of the subject crash. Supp. CR 329 (76:21-24).

3. Appellee MRM has failed to conclusively negate liability

under the Texas Occupations Code

Above, in Section B(1)(a) of this Brief, the applicability of the Texas

Occupations Code is discussed as a reason for voiding the independent contractor

agreement in this case. That information is repeated here for ease of reference and

in order to expand the argument.

Repeated text:

Chapter 1101 of the Texas Occupations Code is known as the Texas Real

Estate License Act (hereafter “the Act”). See Tex. Occ. Code § 1101.001. The Act

sets forth the authority, professional standards, and licensure requirements for

persons and entities engaged in real estate transactions in Texas, including real estate

“brokers” and “salespersons”. See Tex. Occ. Code. § 1101 et seq. In general terms,

the Act defines “brokers” as persons who are paid to perform certain acts (referred

to herein as “broker acts”) for others. See Tex. Occ. Code § 1101.002(1). Those

broker acts are presented within a statutory laundry list that covers virtually all of

the things the general public would commonly understand to be the job of a “realtor”

including: buying and selling real estate; listing real estate; locating real estate;

procuring prospects to accomplish the sale of real estate; and promoting the sale of

real estate. Id. The Act defines a “salesperson” as a person who is sponsored by a

licensed broker for the purpose of performing the above [broker] acts. See Tex. Occ.

Code § 1101.002(7). Further, the Act states that “[a] licensed salesperson may not

engage or attempt to engage in real estate brokerage unless the sales agent is

sponsored by a licensed broker and is acting for that broker. Tex. Occ. Code §

1101.351(c) (emphasis added).