Opposition Brief — Hughes v. Houston Northwest Medical Center, Inc.

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Supreme Court, U.S,

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DOYS 1985

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No. 85-640 =< JOSEPH F. SPANIOL, JR.

CLERK

————e

IN THE

Supreme Court of the United States

OCTOBER TERM, 1985

Louis B. HUGHES and

PHILIP T. EICHELBERGER, JR.,

Petitioners,

HOUSTON NORTHWEST MEDICAL CENTER, INC., ET AL.,

Respondents.

ON WRIT OF CERTIORARI

To THE CourRT OF APPEALS FOR THE

First SUPREME JUDICIAL DISTRICT OF TEXAS

RESPONDENTS’ BRIEF IN OPPOSITION

NORMAN RIEDMUELLER

Krist, Kinney, Puckett &

Riedmueller

Five Post Oak Park — Suite 2260

Houston, Texas 77027-3416

(713) 963-8963

Counsel of Record

for all Respondents

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Of Counsel:

KEVIN MCEvILy

Butler & Binion

Allied Bank Plaza

Houston, Texas 77002

(713) 237-2020

“A

QUESTION PRESENTED

By their Petition for Writ of Certiorari (the “Petition’”’) peti-

tioners have presented this question:

Whether the finding below that petitioners’ appearance

before an administrative agency constituted tortious

interference with contract impermissibly infringed upon the

Petition clause of the First Amendment.

There was no such “finding below” by any court or jury. At

the trial of this case evidence was admitted concerning the con-

duct of Mrs. Reba Eichelberger, the wife of Petitioner Philip T.

Eichelberger, Jr., before an administrative agency. The evidence

was relevant on several grounds. No “finding” regarding

Mrs. Eichelberger was rendered at any level.

The petitioners before this Court never appeared before any

administrative agency. It was the wife of Petitioner Philip T.

Eichelberger, Jr.. who appeared before the administrative

agency.

In order to get to the substance of the issue petitioners seek to

raise, some restatement of the question presented will be

necessary.

(i)

LIST OF PARTIES

There are only three parties to the tortious interference judg-

ment being complained of:

(i) Houston North Hospital Properties, a Texas general

partnership, which recovered the judgment for tortious

interference;

(ii) Louis B. Hughes; and

(iii) Philip T. Eichelberger, Jr.

The individuals listed as respondents in the List of Parties in the

Petition are all interested in the matter because they are general

partners in Houston North Hospital Properties. They are not,

however, proper respondents before this Court.

Houston Northwest Medical Center, Inc. has no interest

whatever in the tortious interference judgment. Houston

Northwest Medical Center, Inc. prevailed on a counterclaim for

attorneys’ fees under article 5.14(F) of the Texas Business

Corporation Act based on a finding that petitioners had brought

their shareholders’ derivative suit without reasonable cause.’

That award is not the subject of the Petition. Houston

Northwest Medical Center, Inc. is not a proper respondent

before this Court.

‘See Appendix B to Petition, pp. 27a-28a.

(ii)

SUBJECT INDEX

PAGE

8 a i

I eS Gino baie sp baa d's oe sade cos ii

os Si epee vs ics eacvecesenes ili

ER PR oe ee cee iv

Yee es 8 te re l

REASONS FOR DENYING THE WRIT ............ 3

I. Petitioners kack Standing to Raise the Question

SIRES GES aR rn ae 3

Il. The Judgment Below Is Supported by an

Adequate and Independent State Ground of

Decision Because the Constitutional Question

Presented Now Was Not Raised Below ......... 4

Ill. Petitioners Have Demonstrated No

Unconstitutional Infringement of the Right to

Petition for Redress of Grievances ............. 7

SN 2 Cc kN hiss Sg aiia ohn’ sw VN oieiw ale 0 1]

(iii)

TABLE OF AUTHORITIES

PAGE

CASES

Austin Co. v. Vaughn Bldg. Corp., 643 S.W.2d 113

Sg EE ee ert he rads Be 6

Bill Johnson’s Restaurants, Inc. v. NLRB, 461 wv. es | ae

EON i oc Pen ese e's Kae eee es Rea 8

Broadrick v. Oklahoma, 413 U.S. 601 (1973) ......... 4

California Motor Transport Co. v. Trucking Unlimited,

ee es EE oe oc bee ah oe Saks 9

Eastern Railroad Presidents Conference v. Noerr Motor

Poatant, Tab., Deo A. 427 CIGGI) LW «5 onc cesses. 9

Engle v. Isaac, 456 U.S. 107 (1982) ................. 6

Feminist Women’s Health Center v. Mohammad, 586

i Bi. gi Tk Re . : RR eee ee ee 10

Gainesville vy. Florida Power & Light Co., 488 F.Supp.

SU UR ONG Gov cas 4 5 o6 Gk hee Sel ps ower ss

Hankerson v. North Carolina, 432 U.S. 233 (1977) .... 6

Herndon v. Georgia, 295 U.S. 441 (1935)............. 6

Household Goods Carriers’ Bureau v. Terrell, 452 F.2d

See RE 2s oo ie ak cc beaks eww 10

Hughes v. Aycock, 598 S.W.2d 370 (Tex.Civ.App. —

Houston [14th Dist.] 1980, writ refd n.r.e.) . |

Hughes v. Houston Northwest Medical Center, Dee. 647

S.W.2d 5 (Tex.App. — Houston [Ist Dist.}] 1980, no

| gee penn pin Rese ve a eT Bh renee fa Pe ee ee 2

Hughes v. Houston Northwest Medical Center, 680

S.W.2d 838 (Tex.App. — Houston [Ist Dist.] 1984,

ee re I eons sk Pe ks cae eae eae kn tees ss 7

INS v. Lopez-Mendoza, 104 S.Ct. 3479 (1984) ........ 6

McDonald v. Smith, 105 S.Ct. 2787 (1985) ........... 8

MCI Communications Corp. v. American Telephone &

Telegraph Co., 708 F.2d 1081 (7th Cir.), cert. denied,

PE Se ee IEE eS cu bead ha des eed s Caw o's 9

Michel v. Louisiana, 350 U.S. 91 (1955) ............. 6

Secretary of State of Maryland v. Joseph H. Munson

ig See es ANU hoes oa Koes 3

(iv)

United Mine Workers v. Pennington, 381 U.S. 657

| FORGES RE er nar eae ire Sieg TOS Dean hg Pe:

Wainwright v. Sykes, 433 U.S. 72 (1977) .............

Warth'¥. Seldiin, 422 US. GIO CUSTS) .. we cece

Watson v. Glens Falls Insurance Co., 505 S.W.2d 793

hl FR | epee etal giannylt ead ths De

Wolfe v. North Carolina, 364 U.S. 177 (1960) ........

STATUTES

Texas Business Corporation Act, art. 5.14(F)..........

TEX.REV.CIvV.STAT.ANN. art. 6643a..................

TEXAS RULES

Temes Rele of Eveemee Fe ois in hee ee eens

Texas Rule of Civil Procedure 274...................

Texas Rule of Civil Procedure 418 ...................

Texas Rule of Civil Procedure 469(e) ................

ARTICLES

Note, Standing to Assert Constitutional Jus Tertii, 88

ase, 0. Fes Ge CeO cco ce hen kos cee ueee

(v)

ve eee ee

No. 85-640

IN THE

Suureme Court of the United States

OCTOBER TERM, 1985

Louis B. HUGHES and

PHILip T. Ei1CHELBERGER, JR.,

Petitioners,

Vv.

HOUSTON NORTHWEST MEDICAL CENTER, INC., ET AL.,

Respondents.

On WRIT OF CERTIORARI

To THE CouRT OF APPEALS For THE

FIRST SUPREME JUDICIAL DISTRICT OF TEXAS

RESPONDENTS’ BRIEF IN OPPOSITION

STATEMENT OF THE CASE

In the early 1970's, petitioners Hughes and Eichelberger

joined a Texas general partnership, respondent Houston North

Hospital Properties. Because petitioners breached their duties as

partners, they were involuntarily retired from the partnership in

1975. A long and bitter court battle ended with the decision in

Hughes v. Aycock, 598 S.W.2d 370 (Tex.Civ.App. — Houston

[14th Dist.] 1980, writ refd n.r.e.), affirming a judgment oust-

ing petitioners as partners.

In mid-1982, the partnership announced that it had agreed to

sell the hospital it owned. Immediately after the agreement to

sell was announced but before a sale could be consummated,

petitioners launched an unrestrained assault to block the sale.

Specifically they did the following:

(1) they filed a baseless lawsuit;

(2) they filed groundless is pendens notices on the hospital

land and improvements; and

(3) they wrote threatening letters to the proposed purchaser

of the hospital.

In addition to these things, petitioners conspired with the wife of

one of them (Mrs. Reba Eichelberger) to have her appear osten-

sibly as an interested citizen before the Texas Health Facilities

Commission. The Commission was considering a request by the

prospective hospital purchaser for approval of a transfer of the

Certificate of Need to operate the hospital. None of these

respondents was a party to that administrative proceeding but

any delay there naturally delayed consummation of the hospit*!

sale.

It is, of course, easy to claim that your opponents’ lawsuit is

baseless but in this case it was proven six times over. The verdict

speaks for itself. See Appendix B to Petition, pp. 14a-29a. This

was a strike suit, plain and simple. As the state appellate court

held, the evidence at trial “would entitle, if not compel, the jury

to believe” that petitioners’ suit was all wrong, even without

regard to the four affirmative defenses which were also sustained

by the jury’s verdict. See Appendix A to Petition, p. 10a. As the

lower court indicated, if petitioners had simply made “[a]

reasonable inquiry” they would have seen that they had “no

reasonable cause to bring” this suit. /d. at 10a.

The facts regarding the lis pendens are equally disturbing. An

interlocutory appeal yielded the result that the respondents’

ability to free the hospital from petitioners’ lis pendens notices

under TeEx.REV.Civ.STAT.ANN. art. 6643a might depend

entirely upon how much money petitioners were claiming as

damages. See Hughes v. Houston Northwest Medical Center,

Inc., 647 S.W.2d 5 (Tex. App. — Houston [Ist Dist.] 1980, no

writ). Petitioners promptly increased their ad damnum to over

$62,000,000.

The merits of the petitioners’ suit were disproved at trial by

the testimony of their own witnesses. Any disinterested review of

the record would yield the conclusion that this case was brought

not in order to recover a judgment but in order to have a suit on

file for purposes akin to blackmail.

The tortious interference counterclaim of respondent Houston

North Hospital Properties was blessed with compelling merit.

The trial court correctly instructed the jury that they could base

a finding of tortious interference only upon action “done with the

purpose of causing [Houston .orth Hospital Properties]

damage or loss without justifiabl cause... .” Because every-

thing petitioners did was a sham, the jury returned a verdict for

Houston North Hospital Properties for tortious interference.

Yet here we are, three years later, still waiting to enforce our

judgment.

REASONS FOR DENYING THE WRIT

PETITIONERS LACK STANDING TO RAISE

THE QUESTION PRESENTED HERE

Only Reba Eichelberger appeared before the administrative

agency in the purported exercise of a First Amendment right

under the Petition Clause. Only Drs. Hughes and Eichelberger

are petitioners before this Court. This is, then, a case of assertion

of jus tertii.

Someone once said that this Court’s general rule denying

standing to litigants asserting the rights of third parties “seems

honored only in the breach.” Note, Standing to Assert Constitu-

tional Jus Tertii, 88 Harv. L. Rev. 423, 425 (1974). It should be

honored in the observance here because it so distinctly applies

and because no exception to the rule is applicable.

As summarized by this Court most recently, the law of stand-

ing honored by this Court includes “prudential considerations

that limit the challenges courts are willing to hear.” Secretary of

State of Maryland v. Joseph H. Munson Co., 104 S.Ct. 2839

(1984). A litigant “generally must assert his own legal rights

and interests, and cannot rest his claim to relief on the legal

rights or interests of third parties.” Warth v. Seldin, 422 US.

490, 499 (1975).

The issue in this case becomes one of whether 2n exception

should be made in favor of petitioners.* Certainly none of the

exceptions previously created fits the facts of this case. Evén if

we focus on first Amendment cases, we see that there is nothing

preventing or “chilling” Mrs. Eichelberger’s freedom to asser:

her own rights. See Broadrick v. Oklahoma, 413 U.S. 601, 61z

(1973). The activity sought to be protected (objecting to an

administrative transfer of a certificate to operate a hospital) is

obviously not “at the heart” of Mrs. Eichelberger’s relationship

with the petitioners. See Munson, 104 S.Ct. at 2850.

Unless some new exception is to be created to fit the facts of

this case, the general rule against assertion of jus tertii deprives

petitioners of standing before this Court.

II.

THE JUDGMENT BELOW IS SUPPORTED BY AN

ADEQUATE AND INDEPENDENT STATE GROUND OF

DECISION BECAUSE THE CONSTITUTIONAL

QUESTION PRESENTED NOW WAS NOT RAISED

BELOW

Petitioners’ case has traveled from state District (trial) Court,

to the state Court of Appeals where judgment was affirmed, to

the Texas Supreme Court which considered the case in its deci-

sion to refuse petitioners’ writ, with a finding of “‘no reversible

error.” According to the Texas Rules of Evidence and the Texas

Rules of Civil Procedure, petitioners had at least three different

opportunities to assert that the conduct of Mrs. Reba

Eichelberger in appearing before an administrative agency was

protected by petitioners’ First Amendment rights. They were:

* Respondents note that the Petition in this case invokes no exception

to the general rule but merely declares: “Accordingly, the First

Amendment right to petition the government is variously refer-

enced to herein as belonging to both Mrs. Eichelberger and peti-

tioners.”” (Emphasis added) Petition, p. 4, n. 1.

1. The opportunity to object to the introduction of evidence

in the trial court on the ground of objection asserted

herein, viz, the infringement of petitioners’ First Amend-

ment rights;’

2. The opportunity to object to the charge to be presented to

the jury by specifying this complaint to that charge;*

3. The opportunity to present petitioners’ First Amendment

claims to the Court of Appeals under a “Point of Error”

in their Brief.°

At none of these stages in the proceedings below did petition-

ers assert any First Amendment right. And, although such a

complaint would probably have been considered waived by the

Texas Supreme Court’, petitioners never even mentioned the

First Amendment in their Application for Writ of Error to that

court.

* Texas Rule of Evidence 103(a)(1) provides that: “Error may not be

predicated upon a ruling which admits or excludes evidence unless

a substantial right of the party is affected, and objection or motion

to strike appears of record, stating the specific ground of objection,

if the specific ground was not apparent from the context.” During

the trial of this cause neither petitioners’ nor Mrs. Eichelberger’s

First Amendment rights were asserted. (Statement of Facts, pp.

960-973).

‘ Texas Rule of Civil Procedure 274 provides that “A party objecting

to a charge must point out distinctly the matter to which he objects

gud the grounds of his objection.” Petitioners’ objections to the

iwitious interference jury question had nothing to do with the

ground of objection they now assert. (Statement of Facts, pp. 1412-

1413).

* Texas Rule of Civil Procedure 418(d) requires that briefs contain

“fa] statement of the points upon which the appeal is predi-

cated .... Such points will be sufficient if they direct the attention

of the court to the error relied upon.”’ None of the Points of Error in

petitioners’ state Court of Appeals brief implicated any First

Amendment claims. See Brief for Appellants in the Court of

Appeals for the First Supreme Judicial District of Texas, pp. ix-xi

“Statement of Points of Error.”

® Texas Rule of Civil Procedure 469(e) requires that points raised in

an application for writ of error in the Texas Supreme Court “...

be assigned as error in the motion for rehearing in the Court of

Appeals... .”

Texas procedural law clearly provides many avenues for the

assertion and preservation of a claim of error. These petitioners

followed none of them.

If Texas is to have confidence in the finality of the decisigns of

its appellate courts, its rules of civil procedure cannot be lightly

disregarded. It is well established in Texas that a claim of error

is either preserved in the court below or lost. Austin Co. v.

Vaughn Bldg. Corp., 643 S.W.2d 113, 116 (Tex. 1982); Watson

v. Glens Falls Insurance Co., 505 S.W.2d 793, 797-98 (Tex.

1974). There can be no error in the judgment of the Court of

Appeals in Texas predicated on a point not preserved before that

Court. Watson v. Glens Falls Insurance Co., supra.

At trial and at both appellate levels, petitioners failed to take

advantage of the available mechanisms for the preservation of

error on their First Amendment claim. Petitioners’ waiver con-

stitutes an adequate and independent state ground of decision in

this case based on the legitimate interests of the State of Texas.

This Court has traditionally governed itself with the principles

of comity and orderly administration of justice by refusing to

review state court decisions based on nonfederal procedural

grounds that provide adequate and independent support for the

judgment, even in the presence of a substantial federal question.

See, e.g., Wolfe v. North Carolina, 364 U.S. 177 (1960); Michel

v. Louisiana, 350 U.S. 91 (1955); Herndon v. Georgia,'295 U.S.

441 (1935). Even in criminal cases where the life or liberty of

the petitioner may be at stake, a failure to preserve error accord-

ing to state rules results in waiver of the right to complain of

that error. Engle v. Isaac, 456 U.S. 107 (1982); Wainwright v.

Sykes, 433 U.S. 72 (1977); Hankerson v. North Carolina, 432

U.S. 233 (1977).

This Court has recently applied the rule that if the admission

of evidence is not objected to on a specific ground, that ground

cannot be used as the basis for an appeal. INS v. Lopez-

Mendoza, 104 S.Ct. 3479 (1984).

Petitioners nowhere explain their failure to properly raise a

First Amendment claim while they proceeded through the Texas

state court system. They have defaulted under each of the Texas

Rules of Civil Procedure cited above and have thereby waived

their right to cnallenge the judgment of the Texas courts.

iil.

PETITIONERS HAVE DEMONSTRATED NO

UNCONSTITUTIONAL INFRINGEMENT OF THE RIGHT

TO PETITION FOR REDRESS OF GRIEVANCES

A. The issue framed by the petitioners is not presented in this

litigation.

Petitioners attempt to bring a question before the Court which

is not presented by the litigation below. In fact, the Question

Presented in the Petition assumes an erroneous interpretation of

the judicial result and a subtly deceptive characterization of the

facts.

There was no “finding below that petitioners’ appearance

before an administrative agency constituted tortious interference

with contract.” Instead, the jury found, on the basis of all the

evidence admitted, “that Louis Hughes [and] Philip T.

Eichelberger, Jr. tortiously interfered with the contractual rela-

tions of Houston Norih Hospital Properties with respect to the

proposed purchaser of the hospital complex.”

There was evidence of an appearance before an administrative

agency, the Texas Health Facilities Commission, but it was the

appearance of neither of the petitioners. Reba Eichelberger’s

appearance before the agency was not the only evidence of peti-

tioners’ concerted effort to delay and prevent the sale of

* Special Issue No. 19 and the jury’s answer thereto is set out in

footnote 2 of the Opinion of the Court of Appeals of Texas for the

First Supreme Judicial District, Hughes v. Houston Northwest

Medical Center, Inc., 680 S.W.2d 838, 841 (Tex.App. — Houston

[ist Dist.] 1984, writ ref'd n.r.e.), reprinted as Appendix A to the

Petition (pp. 6a-7a). The issue also appears in the court’s charge,

reprinted as Appendix B to the Petition (pp. 26a-27a).

respondents’ valuable property. The legal and factual sufficiency

of the evidence was challenged in the state appellate courts

which, after close examination, concluded the evidence was suf-

ficient to support the judgment.’

B. The First Amendment issue petitioners raise has recently

been determined by this Court adversely to petitioners.

The evidence of Reba Eichelberger’s performance before the

Texas Health Facilities Commission supported, but was hardly

the sole basis for, respondents’ cause of action for tortious

interference. Petitioners’ argument that the affirmance of the

judgment “was wholly inconsistent with petitioners’ right to

freely inform the government of their wishes” is ultimately an

argument for absolute immunity. The limits of the First Amend-

ment right to petition the government were addressed by this

Court as recently as last term in McDonald v. Smith, 105 S.Ct.

2787 (1985). The unanimous Court was “not prepared to con- .

clude ... that the Framers of the First Amendment understood

the right to petition to include an unqualified right to express

damaging falsehoods in exercise of that right.” Jd. at 2790.

Similarly, there is nothing to suggest the Framers meant to insu-

late from liability those who would scheme to delay or prevent

other parties’ performance of a contract by needlessly invoking

the administrative procedures of a governmental agency.

Although petitioners would limit the implication of McDonald

to defamation cases (See Petition, p. 8, n. 2), this Court made

particuiar reference to the lack of absolute immunity in other

contexts:

Nor do the Court’s decisions interpreting the Petition

Clause in contexts other than defamation indicate that the

right to petition is absolute. For example, filing a complaint

in court is a form of petitioning activity; but “baseless liti-

gation is not immunized by the First Amendment right to

petition.” Bill Johnson’s Restaurants, Inc. v. NLRB, 461

* See Hughes v. Houston Northwest Medical Center, 680 S.W.2d

838, 842 (Tex.App. — Houston [Ist Dist.] 1984, writ refd n.r.e.),

reprinted on p. 8a of the Petition.

U.S. 731, 743 (1983); accord, California Motor Transport

Co. v. Trucking Unlimited, 404 U.S. 508 (1972).

The Petition offers no arguments for reconsideration of this

authority.

C. There is no conflict among the Courts of Appeals on any

issue in this case.

Without attempting to show how petitioners might benefit

from one of the allegedly conflicting descriptions of a sham, the

Petition urges the granting of the writ to resolve a conflict

among the Courts of Appeals by “defining the parameters of the

sham exception.” This case does not require any such resolution

of judicial conflict to resolve the issues in the case.

in MCI Communications Corp. v. American Telephone &

Telegraph Co., 708 F.2d 1081 (7th Cir.), cert. denied, 104 S.Ct.

234 (1983) a case cited by petitioners, the court noted that the

Noerr’ and Pennington’’ cases “themselves provide little defini-

tion of what a sham may be other than to indicate immunity for

‘genuine efforts’ or ‘good faith’ attempts to influence govern-

mental bodies.” 708 F.2d at 1155. The court found one of the

more cogent definitions of sham proceedings in Gainesville v.

Florida Power & Light Co., 488 F.Supp. 1258 (S.D. Fla. 1980):

Without a doubt, the intention to harm a competitor is

not sufficient to make litigation or administrative proceed-

ings a sham. That anticompetitive motive is the very matter

protected under Noerr-Pennington. Rather, the requisite

motive for the sham exception is the intent to harm one’s

competitors not by the result of the litigation but by the

simple fact of the institution of litigation.

Under this definition, or any other, the use of administrative

procedure solely as a ploy to hinder a party in the performance

of a contract is a sham.

* Eastern Railroad Presidents Conference v. Noerr Motor Freight,

Inc., 365 U.S. 127 (1961).

'° United Mine Workers v. Pennington, 381 U.S. 657 (1965); 488

F.Supp. at 1265-66 (emphasis in original); quoted at 708 F.2d at

1156.

D. The constitutional issue framed by petitioners does not

affect the judgment in the case.

As the judgment below was not predicated upon any finding

that Reba Eichelberger’s activities constituted a tortious

interference, the determination of the extent of her First

Amendment rights is immaterial to the outcome of the case. The

jury was charged to pass upon the conduct of the petitioners, not

Mrs. Eichelberger. In its answer to Special Issue 19, the jury

found petitioners’ interference with the contractual relations of

respondents without justifiable cause.

Even if Reba Eichelberger’s activity was absolutely immune,

the evidence of her activity was still admissible to show the pur-

pose and character of the actions of petitioners. United Mine

Workers v. Pennington, 381 U.S. at 670-71, n. 3; Feminist

Women’s Health Center v. Mohammad, 586 F.2d 539, 543, n. 7

(Sth Cir. 1978); Household Goods Carriers’ Bureau Vv. Terrell,

452 F.2d 152, 158, n. 18 (Sth Cir. 1971). Before the inter-

mediate Texas appeliate court, these petitioners argued against

the admissibility of this evidence on other grounds and lost. (See

Petition, Appendix A, p. 9a). No issue raised before this Court

would change the correctness of that ruling.

CONCLUSION

There is no good reason to further delay justice in this case.

Respondents respectfully request that the Petition for Writ of

Certiorari in this case be denied in all respects.

Respectfully submitted,