# Opposition Brief — Richards v. Liberty Mutual Fire Insurance

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Opposition Brief
- **Published:** January 1, 1992
- **Citation:** 503 U.S. 1004

## Text

Supreme Court, U.S.
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No. 91-1234 ae APR 3 1992

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Richards’ claim that the Motion for Rehearing in the Court of
Appeals presented her first opportunity to raise the federal Due Process
issue is incorrect because the decision in Murray, announced even before
the Court of Appeals heard oral argument in the instant case, clearly
presented the possibility that Richards’ cause of action would be barred
if the Court of Appeals applied the new rule retroactively. Thus,
Richards had the opportunity to raise her Due Process concerns well
before the Court of Appeals ruled and Richards pursued rehearing.

ee

5

on November 6, 1991, Richards Appendix at 10a, Richards
filed her Petition for Writ of Certiorari on January 31, 1992.

REASONS FOR DENYING THE WRIT

Summary of Argument

The Petition should be denied first because it fails to
present a federal question. Under Texas law, Richards failed
to preserve in the Texas appellate courts the federal
constitutional issue now raised in her Petition. For this
Court to assume jurisdiction, it must plainly appear that a
federal question is necessarily presented. Richards’ failure
to present the issue below thus constitutes a sufficient,
independent non-federal ground on which the judgment below
rests, depriving this Court of jurisdiction.

The issue Richards raises is settled under early,
unquestioned decisions of this Court that recently have been
reaffirmed. Since statutes of limitations constitute remedial
rather than fundamental rights, a state may apply decisions
effecting changes in limitations to pending cases without
offending Due Process. The lower court opinions Richards
reads as creating a split of authority on the issue of "vesting"
are, in fact, either consistent with this rule or factually so
distinguishable as to be inapposite. Moreover, granting
certiorari would have no beneficial effect on the
administration of justice in the state or federal courts.
Granting certiorari and reversing this case would, rather,
create disruption and confusion with respect to a rule of law
that has been settled since the late nineteenth century.

Contrary to Richards’ contention, review of this case
would give this Court no opportunity to address any tension
among federal cases refusing, on policy rather than
constitutional grounds, to retroactively apply intervening
changes in law. Finally, the lack of any real unfairness to

6

Richards in terms of the degree of foreseeability of the
change in the limitations trigger date further supports denial
of her Petition. ;

Argument

I

Certiorari should be denied for lack of
jurisdiction because Richards did _ not
present her federal Due Process claim to the
Texas Court of Appeals, the court to which

— a-writ of certiorari is sought, or to the
Texas Supreme Court.

Richards seeks a writ of certiorari to the Texas Court
of Appeals on the ground that its ruling violated her right to
Due Process of law. Richards never properly asserted this
argument before the Texas Court of Appeals or in her
application for writ of error to the Texas Supreme Court.

This Court has long adhered to the rule that, when
reviewing State court decisions, it will not consider federal
constitutional questions unless they were raised and “actually
decided" in the state courts. Cardinale v. Louisiana, 394
U.S. 437, 438 (1969); Beck v. Washington, 369 U.S. 541,
553 (1962); Ferguson v. Georgia, 365 U.S. 570, 572 (1961).
"If both these do not appear on the record, the appellate
jurisdiction fails." Cardinale, at 438. For this Court to
assume jurisdiction, it must plainly appear that a federal
question is necessarily presented, that is, that the judgment
below could not rest on an independent non-federal ground
sufficient to support it. Department of Mental Hygiene v.
Kirchner, 380 U.S. 194, 197 (1965); Ferguson, 365 U.S. at
572 n. 1. A sufficient independent non-federal ground is
established if the state appellate courts from which the case

7

derives would consider the federal issue waived. Beck, 369
U.S. at 553. Since Richards’ Due Process challenge was
neither properly preserved nor "actually decided" at the state
court level, the sole federal question Richards presents is not
properly before this Court.

While Richards did insert a topic heading mentioning
her federal rights in her Motion for Rehearing before the
Court of Appeals, Richards Appendix at 6a, this heading is
not sufficient under Texas law to present error to the Court
of Appeals. An uninterrupted line of Texas cases establishes
that error is waived before the Court of Appeals if not
supported with either argument or authorities. Martin v.
Cohen, 804 S.W.2d 201 (Tex. App. 1991, no writ); Housron
Lighting & Power v. Klein Independent School Dist., 739
S.W.2d 508, 514 (Tex. App. 1987, writ denied); Brown v.
Capital Bank, N.A., 703 S.W.2d 231, 234 (Tex. App. 1985,
writ ref'd n.r.e.); TEX. R. APP. P. 74(f), 100(a),
131(f)(Vernon Supp. 1992). This Court has found that a
similar failure to preserve an issue on appeal pursuant to
State law undermines this Court’s jurisdiction to review the
issue On certiorari. Beck, 369 U.S. at 553-54. The Texas
Court of Appeals’ silence on the issue of Due Process in this
case can be attributed only to Richards’ failure to raise the
point properly.

In addition, Richards failed to present her federal
constitutional claim to the Texas Supreme Court. In order to
be considered by the Texas Supreme Court, an issue must be
assigned as error in the Application for Writ of Error.
Nobility Homes of Texas, Inc. v. Shivers, 557 §.W.2d 77, 83
(Tex. 1977); City of Deer Park v. State, 275 S.W.2d 77, 84
(Tex. 1955); U.S. v. Ray Thomas Gravel Co., 380 S.W.2d

8

576, 579 (Tex. 1964).* Richards did not assign as error to
the Texas Supreme Court any violation of her Due Process
rights. Appendix at A8-A12.

Moreover, had Richards raised such a challenge in
her Application for Wnt of Error, that contention was
nonetheless not preserved before the Texas Supreme Court
because she failed properly to raise it in her Motion for
Rehearing before the Court of Appeals. The Texas Supreme
Court has held repeatedly that it “cannot consider points of
error that were not assigned on rehearing in the court of
appeals." Albright v. City of Houston, 677 S.W.2d 487, 488
(Tex. 1984); see also Smith v. Baldwin, 611 S.W.2d 611,
618 (Tex. 1980); TEX. R. App. P. 131(e) (Vernon Supp.
1992). Richards failed to raise her Due Process argument in
her Motion for Rehearing in the Court of Appeals and in her
Application for Writ of Error to the Texas Supreme Court.
This failure constitutes an independent state law ground for
denying the writ. Dept. of Mental Hygiene v. Kirchner, 380
U.S. 194 (1965).

“ While fundamental error may be considered even if not assigned
in the Application, McCauley v. Consolidated Underwriters, 304 S.W.2d
265, 266 (Tex.1957)(jurisdictional defect is fundamental error),
application of a limitations period, even if erroneous, cannot be
considered error that is apparent on the face of the record and that
“directly and adversely affects the interest of the public generally”, as the
Texas Supreme Court defines fundamental error. City of Deer Park v.
State, 275 S.W.2d at 85; Ramsey v. Dunlop, 205 S.W.2d 979, 983 (Tex.
1947)(disputed election to public office as fundamental error).

ee

9
II

While a cause of action is considered a
“species" of property within the meaning of
the Fourteenth Amendment, retroactive
application of a change in the date from
which the applicable statute of limitations
runs is within the discretion of the state and
does not implicate Due Process concerns.

The issue presented by this case is neither new nor
controversial. Absent from Richards’ Petition is any mention
of the consistent line of precedent from this Court holding
that, generally, retroactive operation of state court rulings,
whether concerning statutes of limitations or other procedural
requirements, is not repugnant to any provision of the U.S.
Constitution. See, e.g., Tidal Oil Co. v. Flanagan, 263 U.S.
444, 450 (1924) (reversal of prior decision by state court to
prejudice of one party does not deprive that party of Due
Process because parties were fully heard in state court):
Fleming v. Fleming, 264 U.S. 29 (1924) (no impairment of
right to contract); Central Land Co. v. Laidley, 159 U.S.
103, 112 (1895) (no Due Process violation); see also Annot.,
“Prospective or retroactive operation of overruling decision,"
10 A.L.R.3d 1371, 1391-93, n. 19 (1966); Annot.,
“Retroactive or merely prospective operation of new rule
adopted by court in overruling precedent - federal cases," 14
L.Ed.2d 992, 1002-1003 (1965). As Justice Cardozo wrote
in Great Northern R. Co. v. Sunburst Oil & Refining Co..,
287 U.S. 358 (1932), with respect to the issue of
retrospective versus prospective operation of changes in the
law:

We think the Federal constitution has no voice
upon the subject. A state in defining the

10

limits of adherence to precedent may make a
choice for itself between the principle of
forward operation and that of relation
backward. [W]e are not at liberty, for
anything contained in the constitution. . . to
thrust upon those courts a different conception
either of the binding force of precedent or of
the meaning of the judicial process.

Id. at 364-365. In short, “[s]ound or unsound, there is
involved in [this choice] no denial of a right protected by the
Federal Constitution". /d. at 364; see also Linkletter v.
Walker, 381 U.S. 618 (1965) (retroactive operation of
decision overruling another is a matter of judicial policy not
constitutional compulsion).

Moreover, in a case not cited in Richards’ Petition,
this Court rejected a contention similar to that she advances.
In Chase Securities Corp. v. Donaldson, 325 U.S. 304
(1945), the Court addressed a challenge to the Minnesota
Supreme Court’s retroactive application of a change in the
date of commencement of a statute of limitations, effectively
removing the limitations defense in that action and rendering
the action timely. In rejecting the claim that this retroactive
application violated the defendant’s Due Process nights, the
Court recognized that the issue had been settled since
Campbell v. Holt, 115 U.S. 620 (1885), in which the Court
held that “where lapse of time has not invested a party with
title to real or personal property, a state legislature,
consistently with the Fourteenth Amendment, may repeal or
extend a statute of limitations." Chase Securities Corp. , 325
U.S. at 311.

The Court based its holding on the nature of statutes
of limitation, which it described in the following, widely-
quoted language:

1]

Statutes of limitation. . . are practical and
pragmatic devices to spare the courts from
litigation of stale claims, and the citizen from
being put to his defense after memories have
faded, witnesses have died or disappeared,
and evidence has been lost. (citation omitted).
They are by definition arbitrary, and their
operation does not discriminate between the
just and the unjust claim, or the avoidable and
unavoidable delay. . . . Their shelter has never
been regarded as. . . a ‘fundamental’ right. .
. the history of pleas of limitation shows them
to be good only by legislative grace and to be
subject to a relatively large degree of

legislative control.

Id. at 314 (emphasis added). The Court then pointed out that
Campbell v. Holt adopted the view that “as a matter of
constitutional law, statutes of limitations go to matters of
remedy, not to destruction of fundamental rights," a
distinction that emphasizes “the real and valid difference
between rules in which stability is of prime importance and
those in which flexibility is a more important value." /d.
The Court therefore held that "the existence of the policy at
the time the action was commenced did not. . . give the
[defendant] a constitutional right against change of policy
before final adjudication". /d. at 316.

Chase Securities was explicitly approved in Logan v.
Zimmerman Brush Co., 455 U.S. 422 (1982), the case on
which Richards founds her argument. After holding that an
injured employee who had never had an opportunity to be
heard on her employment discrimination claim was deprived
of Due Process, the Logan Court went on to write that

[o]bviously, nothing we have said entitles

12

every civil litigant to a hearing on the merits
in every case. The State may erect reasonable
procedural requirements for triggering the
right to an adjudication, be they statutes of
limitations, cf. Chase Securities Corp. v.
Donaldson, 325 U.S. at 314-316. . . or, in
an appropriate case, filing fees. United States
v. Kras, 409 U.S. 434 (1973). And the State
certainly accords due process when it
terminates a claim for failure to comply with
a reasonable procedural or evidentiary rule.
Hammond Packing Co. v. Arkansas, 212 U.S.
at 351; Windsor v. McVeigh, 93 U.S. at 278.

Logan, 455 U.S. at 437.° Under Logan and Chase
Securities, a cause of action is, of course, a species of
property entitled to Due Process protection. Nonetheless,
until that cause of action has reached “final adjudication",
Chase Securities, 325 U.S. at 316, it is subject to intervening
changes in procedural rules that may, consistent with Due
Process, terminate the “right to adjudication" of the claim.
Logan, 455 U.S. at 437.

Campbell v. Holt and Chase Securities both relied on
the distinction between a cause of action that “has not
invested a party with title to real or personal property" and
one that has reached “final adjudication". Jd. at 311, 316.
Richards, however, contends that unadjudicated causes of
action like her own should be treated like final judgments
(and, apparently, other forms of property as well) for Due
Process purposes. As Chase Securities recognizes, however,

° This Court also reaffirmed the holding of Chase Securities in
International Union of Electrical, Radio & Machine Workers v. Robbins
& Myers, 429 U.S. 229, 244 (1976).

haseieadeninatiaene renee

13

this proposal-is unworkable because of the need for flexibility
in matters of judicial procedure, which, as a purely practical
matter, can affect only those causes of action that have not
been finally adjudicated; final judgments, like other forms of
property, are unaffected by changes in procedural rules such
as statutes of limitations.

Richards’ attempt to find a conflict among the lower
court rulings on the issue of "vesting" is based on the same
misconception. The cases Richards reads as holding that the
property interest in a cause of action does not vest, for
Fourteenth Amendment purposes, until final, unreviewable
victory (the “final victory" cases)*®, are entirely consistent
with the approach taken in Campbell and Chase Securities
and approved in Logan. The “final victory" cases treat non-
final claims in the same way Chase Securities did, holding
that changes in state limitations rules may be applied to
pending cases without offending the Fourteenth Amendment.
The “vesting” language in these cases that is emphasized by
Richards merely follows the distinction employed in Chase
Securities between the intangible property interest in a cause
of action and the more tangible interests in, for example, real
property or a judgment for damages.’ These latter interests
are different simply because they are beyond the reach of
procedural contingencies such as statutes of limitations or

* These cases are Arbour v. Jenkins, 903 F.2d 416 (6th Cir.
1990); Sowell v. American Cyanamid Co., 888 F.2d 802, 805 (11th
Cir.1989); Konizeski v. Livermore Labs, 820 F.2d 982 (9th Cir. 1987),
cert. denied, 485 U.S. 905 (1988); Hammond v. United States, 786 F.2d
8, 12 (Ist Cir.1986); and Clausell v. Hobart Corp., 515 So.2d 1275
(Fla. 1987) cert. denied, 485 U.S. 1000 (1988).

’ Richards concedes in her Petition that a final, unreviewable
judgment for damages is a more tangible property interest than a simple
cause of action. Petition at 8-9.

14

filing fees, to which non-final claims are subject. See, e.g.,
Konizeski, 820 F.2d at 989. The putative “final victory"
cases merely follow Campbell v. Holt and Chase Securities
in recognizing this distinction and adjusting Due Process
scrutiny in light of the need for flexibility in matters of
remedy, as opposed to fundamental rights. /d. Since, as a
matter of policy, procedural rules must remain flexible, they
are, in the language of Chase Securities, 325 U.S. at 314,
matters of legislative or judicial grace rather than
constitutional right. Consequently, a state’s power to
terminate the right to adjudicate a cause of action by
changing a procedural rule is unlimited by the Fourteenth
Amendment. These cases, therefore, neither contradict the
view of property in Logan nor overextend that taken in New
York Central R.R. Co. v. White, 243 U.S. 188 (1917) and
Duke Power Co. v. Environmental Study Group, Inc., 438
U.S. 59 (1978).

It is also incorrect to suggest that the "final victory"
cases conflict with the approach taken in such cases as
Grimes v. Pearl River Valley Water Supply Dist., 930 F.2d
441 (Sth Cir. 1991); Williams v. Hofley Mfg. Co., 424
N.W.2d 278 (Mich. 1988), appeal dism’d, 489 U.S. 1001
(1989); Crier v. Whitecloud, 496 So.2d 305 (La. 1986); and
Black v. Ball Janitorial Service, Inc., 730 P.2d 511 (Okla.
1986), since these latter cases do not involve issues of
retroactive application of intervening changes in the law.
These cases thus implicate very different Due Process
concerns from those that involve issues of retroactive
application of law. These cases are distinguishable from, not.
inconsistent with, the “final victory" cases.*

* — The lower court cases considering this issue are reconcilable on

the additional ground that each litigant affected by an intervening change
in law actually received all the process due under the Fourteenth

15

Richards has not cited a single case from any court,
federal or state, that upheld a challenge to retroactive
application of a statute of limitations or other procedural
requirements, on Due: Process grounds, in conflict with
Logan. This is simply because the issue is well settled and,
at least since Campbell v. Holt (1885), has ceased to be a
matter of any controversy among state or federal courts.

Besides being well-settled, the issue presented is of no
national importance. As the cases discussed above reflect,
the issue is one of state discretion, not Due Process. In
addition, the choice between retroactive and prospective
application of a change in the law will affect only a small
portion of cases affected by the change itself, that is, those
cases that happen to be in the judicial process when the
change takes effect. Review of the instant case thus would
not advance the orderly and efficient administration of
justice, in either the state or federal systems. Moreover, far
from conserving judicial resources and saving time and
money for litigants, granting certiorari and reversing this
case would require overruling at least Campbell v. Holt and
Chase Securities and disapproving several lower court
rulings, creating disruption and confusion.

Amendment, having been heard before the respective court or legislature
on the issue of retroactive application. See, e.g., Central Land Co. v.
Laidley, 159 U.S. at 112; Konizeski, 820 F.2d at 990; Grimes, 930 F.2d
at 444. Due Process guarantees only an opportunity to be heard, not
ultimate success. Konizeski, 820 F.2d at 990. Reliance on this principled
reconciliation of the cases is far preferable to the disruption that would
be occasioned by a ruling in this case on “vesting” for Due Process

purposes.

16
Ill

Any tension between Chevron and Lampf or
between Logan and Lampf cannot be
resolved by considering the instant case
because Lampf and Chevron were decided
on federal policy grounds, not the
constitutional ground on which Richards
relies.

Richards finds “tension” between Chevron Oil Co. v.
Huson, 404 U.S. 97 (1971) and Lampf, Pleva, Lipkind, Pupis
& Petigrow v. Gilbertson, _U.S.__, 111 S. Ct. 2773
(1991), and requests that this Court review the instant case
sO as to resolve this tension. Even if there is in fact some
conflict between these decisions, the case before this Court
is not an effective vehicle to settle the controversy because
that issue is not properly before this Court.

As Richards concedes, Chevron; James B. Beam
Distilling Co. v. Georgia, 501 U.S. _, 111 S.Ct. 2439
(1991); American Trucking Assn. v. Smith, 496 U.S. 167
(1990); Sr. Francis College v. Al-Khazraji, 481 U.S. 604
(1987); Gulf Offshore Co. v. Mobile Oil Corp. , 453 U.S. 473
(1981); Thorpe v. Housing Auth. oj City of Durham, 393
U.S. 268 (1969); and Bradley v. Richmond School Board,
416 U.S. 696 (1974) considered the issue of retroactive
application of federal judicial decisions or statutes only as a
matter of federal policy.

Lampf, on the other hand, merely resolved a federal
limitations question and, without discussing the Chevron
standards, applied the new rule retroactively. Thus,
resolution of the only issue Richards seeks to raise here, i.e. ,
the constitutional limits on a state’s power to apply
limitations decisions retroactively, would have no effect on
the issues of federal policy decided in Chevron. Granting

17

certiorari in this case would not, logically, give this Court an
opportunity to address itself either to the viability of the
Chevron standards or to the silence of Lampf with respect to
those standards, or to resolve any tension that might exist
between the two. In deciding the instant case, any
pronouncements the Court might make with respect to
Chevron or Lampf would be pure dicta. Thus, Richards’
contention that this Court could resolve open issues of federal
policy by considering the issue of Due Process limits on
retroactive State decisions is incorrect.

Further, Richards experienced not unfairness, but at
most the retraction of a windfall. As she concedes, Richards
filed this “bad faith" suit when no such cause of action
existed in Texas. Thus, she had no reasonable expectation
that her theory would be given credence in the first place.
A rational evaluation of her chances, in fact, would have
recognized that, based on the law as it stood at filing,’ her
suit was barred when filed more than two years after it
accrued.'° From any perspective, Richards’ suit was a

* As the Court of Appeals recognized, the general rule at the time

Richards filed her suit was that a cause of action accrues for limitations
purposes at the time facts come into existence that authorize a claimant
to seek a judicial remedy. Liberty Mutual v. Richards, 810 S.W.2d at
233 (citing Robinson v. Weaver, 550 S.W.2d 18, 19 (Tex. 1977)). Since
the essence of Richards’ claim was that her benefits had been denied in
bad faith, it could only be concluded that limitations would be triggered
on the date of such denial. Moreover, there is no unfairness where
Richards had no reasonable expectancy in the viability of her suit until
Arnold and Aranda changed Texas law.

0 Richards’ argument that the two year statute appeared
inapplicable at the time she filed suit, Petition at 3 n.1, 16 n.6, ts
incorrect. Richards’ pleadings expressly sought recovery for the personal
injury concept of mental anguish. Appendix Al-A2. Thus, the two year
statute, TEX. Crv. Prac. & REM. CODE ANN. §16.003, Richards

18

gamble when it was filed in March 1986."

Indeed, when Aranda recognized the “bad faith"
theory in workers’ compensation cases (and consequently
required application of the Arnold trigger date), it appeared
that Richards would receive a windfall, since her suit had
been filed before the erroneous Arnold trigger date -- final
adjudication of the underlying contract claim. When,
however, Murray corrected Arnold's erroneous holding two
years later, the Texas Supreme Court merely restored the law
to the status quo in effect at the time Richards filed suit.
Thus, what Richards claims to be “manifest injustice" is that

Appendix at Ila, clearly applied at the time suit was filed. Obviously,
this cause of action could not have been more specifically enumerated
because it did not exist. Moreover, in Arnold, the Texas Supreme Court
affirmed the applicability of the two year statute, while changing the date
on which this period commences to run. 725 S.W.2d at 168. Thus,
Richards was on notice from the beginning that her claim was governed
by a two year limitation period. Significantly, Richards does not contend
that Arnold's application of the two year statute was a change in the law
that in any way prejudiced her rights, though she claims that at the time
she filed suit the governing statute “reasonably appeared to be" the four
year provision. Petition at 16 n. 6. Essentially, she concedes that she
had no reasonable expectation that the four year statute applied.

'' Richards fares no better in terms of notice even if she relies on
California law, the leading body of law in the area of bad faith. At the
time Richards filed suit, California adhered to a rule, identical to Murray,
that a cause of action for bad faith accrues, and limitations commences,
on the date the insured’s claim is denied by the insurer. Frazier v.
Metropolitan Life Ins. Co., 169 Cal. App. 3d 90, 103, 214 Cal. Rptr.
883, 890 (1985); McDowell v. Union Muil. Life Ins. Co., 404 F. Supp.
136, 147 (C.D. Cal. 1975). Further, “bad faith” sounds in tort under
Texas law. Under Califormia law, a tort action for bad faith was
governed by a two year, not a four year, statute of limitations.
Richardson v. Allstate Ins. Co., 117 Cal. App. 3d 8, 13, 172 Cal. Rptr.
423, 426 (1981).

19

during pendency of her claim, she was briefly the beneficiary
of the fortuitous (and erroneous) change in the law which
breathed life into her moribund claim (barred when filed) but
was later corrected when Murray restored the status quo
ante."

The convoluted procedural history of this case makes
it an inappropriate vehicle for deciding any issue of Due
Process. Its unique posture would seriously limit its
precedential effect. Consistent application of any principle
announced would be fraught with difficulty. An area of Due
Process law, exceptional for its clarity and certainty, would
be subjected to the kind of confusion that has plagued the
larger body of Due Process law.

Thus, the lack of any real injustice to the individual
Petitioner, together with the unique procedural posture of this
case, render it an inappropriate vehicle to decide any issue
presented. In addition, no new or controversial issue of
importance to the efficient administration of justice or other
interests of national importance are presented. These
circumstances dictate a denial of the Petition.

'2 Murray herself was in the same position as Richards, having
filed suit under Robinson and received the temporary benefit of Arnold.
The Texas Supreme Court nonetheless applied the new trigger rule
retroactively to the very case in which it was announced. Murray, 800
S.W.2d at 830. Thus, the Court of Appeals in the instant case had little
choice but to apply the new rule retroactively. This Court, in fact,
considers it erroneous not to apply a new rule of federal law retroactively
when that rule was so applied in the case announcing the rule. James B.
Beam, 111 S. Ct. at 2444, 2446.

20
CONCLUSION

For the foregoing reasons, the Petition for Writ of
Certiorari should be denied.

Respectfully submitted,

Of Counsel:
J. HAMPTON SKELTON
JEFF GLASS 100 Congress, Suite 1800
Law Office of Austin, Texas 78701
J. Hampton Skelton (512) 469-5520
100 Congress, Suite 1800
Austin, Texas 78701 Counsel of Record for

Respondent
ANDREW T. MCKINNEY
PHILLIPS & AKERS
3200 Phoenix Tower
3200 Southwest Fwy.
Houston, TX 77027
(713) 552-9595

April 6, 1992

APPENDIX

Al

No. 86-14004
DOLORES J. RICHARDS IN THE DISTRICT COURT OF
VS. : HARRIS COUNTY, TEXAS
LIBERTY MUTUAL FIRE 127TH JUDICIAL DISTRICT

INSURANCE COMPANY

PLAINTIFF'S ORIGINAL PETITION

TO THE HONORABLE JUDGE OF SAID COURT:

COMES NOW DOLORES J. RICHARDS, hereinafter called
Plaintiff, complaining of LIBERTY MUTUAL FIRE INSURANCE
COMPANY, hereinafter called defendant, and for cause of action
respectfully show unto the Court and Jury as follows:

I.

Plaintiff is a resident of Harris County, Texas. The Defendant
is a duly incorporated insurance company doing business [sic] the State
of Texas where service of process may be obtained by serving the
Commissioner of Insurance, 1110 San Jacinto, Austin, Texas 78701-1998.

I].
NATURE OF CASE

On or about December 23, 1981, Plaintiff was working as an
employee of Federated Department Stores, Inc. in Harris County, Texas.
Prior to that date, Defendant LIBERTY MUTUAL FIRE INSURANCE
COMPANY had sold a policy of workers’ compensation insurance to
Plaintiff's employer. As a result of the relationship between Plaintiff and
Defendant, the Defendant owed Plaintiff a duty of good faith and fair
dealing. After Plaintiff suffered an on-the-job injury on or about
December 23, 1981, Defendant received notice that Plaintiff had suffered
such an injury. From that time up until the present, the Defendant has
continuously refused to pay the Plaintiff any weekly benefits under the
policy of workers’ compensation insurance. Although the Defendant
agreed to pay some of Plaintiff's medical bills prior to tral, the
Defendant has continuously refused to pay all medical bills incurred since
that time. As a result of the conduct of the Defendant Plaintiff has
suffered damages, including, but not limited to, physical pain, mental
anguish, physical impairment, and loss of credit rating.

sen er re rrr een meet

A2

tI.

Plaintiff alleges that the conduct of Defendant as set forth above
constitutes a breach of the duty of good faith and fair dealing that arises
from the relationship of the parties. Such breach was done willfully and
intentionally or, in the alternative, with such an entire want of care that
would raise the belief that such conduct was the result of conscious
indifference to the rights or welfare of Plaintiff. Plaintiff has sustained
actual damages as a result of the Defendant’s conduct.

IV.
ACTUAL DAMAGES

Plaintiff has suffered the following actual damages as a result
of the Defendant’s conduct, to-wit:

a. Severe mental anguish and emotional distress,

b. Physical pain in the past, and in all reasonable probability in
the future,

c. Physical impairment in the past, and in all reasonable
probability in the future,

d. Loss of enjoyment of life in the past, and in reasonable
probability in the future, and

e. Loss of credit rating in the past, and in reasonable probability
in the future.

V.
EXEMPLARY DAMAGES
Plaintiff further seeks exemplary damages from Defendant.

WHEREFORE, PREMISES CONSIDERED, Plaintiff prays
upon final trial herein, she have and recover against the Defendant in
actual damages and exemplary damages in an amount in excess of the
minimal jurisdictional limits of this court, together with interest on such
amounts as allowed by law, for costs of court, and for such other and
further relief to which Plaintiff may show herself to be justly entitled.

Respectfully submitted,

LAW OFFICES OF KIRK PURCELL
/S/KIRK PURCELL

SBT# 16394300

1608 Bissonnet

Houston, Texas 77005
(713) 528-1000

A3

[Excerpts from Richards’ Supplemental Brief]

No. 14-88-00966-CV

IN THE FOURTEENTH COURT OF APPEALS
AT HOUSTON

LIBERTY MUTUAL FIRE INSURANCE COMPANY,
Appellant,

VS.

DOLORES J. RICHARDS,
Appellee

Appealed from the 127th Judicial District Court
of Harris County, Texas

SUPPLEMENTAL BRIEF FOR APPELLEE

KIRK PURCELL
State Bar No. 16394300

STEPHENS & CLARK
Suite 600

520 Post Oak Boulevard
Houston, Texas 77027

(713) 629-1111

ORAL ARGUMENT REQUESTED

A4

* OK ok Ok

REPLY POINTS

REPLY POINT ONE
THERE WAS SUFFICIENT EVIDENCE TO SUPPORT THE
SUBMISSION OF, AND JURY RESPONSE TO, QUESTION NO. |
CONCERNING LIBERTY MUTUAL’S BREACH OF THE DUTY OF
GOOD FAITH AND FAIR DEALING. (In response to Appellant's
Points of Error 1-10).

REPLY POINT TWO
THE TRIAL COURT PROPERLY SUBMITTED QUESTION
NO. 1 CONCERNING LIBERTY MUTUAL’S BREACH OF THE
DUTY OF GOOD FAITH AND FAIR DEALING. (In response to
Appellant’s Points of Error 11 and 12).

REPLY POINT TEN

THERE WAS SUFFICIENT EVIDENCE TO SUPPORT THE
SUBMISSION OF, AND JURY RESPONSE TO, QUESTION NO. 5
CONCERNING THE AMOUNT OF EXEMPLARY DAMAGES. (in
response to Appellant’s Points of Error 39-42). _

REPLY POINT THIRTEEN

MRS. RICHARDS’ CLAIM OF BREACH OF THE DUTY OF
GOOD FAITH AND FAIR DEALING WAS NOT BARRED BY THE
TWO-YEAR STATUTE OF LIMITATIONS. (In response to Appellant's
Point of Error 57).

BRIEF OF ARGUMENT

* * *

REPLY POINT THIRTEEN
MRS. RICHARDS’ CLAIM OF BREACH OF THE DUTY OF
GOOD FAITH AND FAIR DEALING WAS NOT BARRED BY THE
TWO-YEAR STATUTE OF LIMITATIONS. (In response to Appellant's
Point of Error 57).

A. The Two-Year Statute of Limitations Does Not Govern

AS

The Murray Case Because a Cause Of Action For A
Breach Of The Duty of Good Faith And Fair Dealing
Is Not One Of The Actions Listed In Section 16.003(a)
Of The Texas Practice & Remedies Code.

* * *

: B. The Four-Year Statute of Limitations Governs A Cause
of Action For A Breach Of The Duty Of Good Faith
And Fair Dealing.

* * mk

©. Any Change In The Statute Of Limitations Should Be
Applied Prospectively.

Mrs. Richards filed her lawsuit in March, 1986. In Arnold and
Aranda the Texas Supreme Court declared that the Statute of Limitations
in “bad faith" cases did not begin to run until the underlying case was
finally resolved. See Arnold v. Nat. County Mutual Fire Ins. Co., 725
S.W.2d 165, 167 (Tex. 1987) and Aranda v. Ins. Co. of North America,
748 S.W.2d 210, 213 (Tex. 1988). Mrs. Richards’ underlying lawsuit
was finally resolved in June, 1986 when the Texas Supreme Court refused
Liberty Mutual's application for writ of error. Operating under the
unmistakable impression that she had filed suit within the permissible
time, Mrs. Richards and her lawyer proceeded to trial in this case in
June, 1988. As a matter of fundamental faimess, any change in the
statute of limitations should be applied prospectively.

In Chevron Oil Company v. Huson, 92 S. Ct. 349 (1971), the
Untied States Supreme Court addressed the question of whether a new
statute of limitations should be applied non-retroactively. In doing so, the
Court observed:

In our cases dealing with the nonretroactivity question,
we have generally considered three separate factors.
First, the decision to be applied nonretroactively must
establish a new principle of law, either by overruling
clear past precedent on which litigants may have relied,
(citation omitted), or by deciding an issue of first
impression whose resolution was not clearly
foreshadowed (citation omitted). Second, it has been

-

—Seeee aaa. ee

A6é

stressed that “we must * * * weigh the merits and
demerits in each case by looking to the prior history of
the rule in question, its purpose and effect, and whether
retrospective operation will further or retard its
operation" (citation omitted). Finally, we have weighed
the inequity imposed by retroactive application, for
“[w]here a decision of this Court could produce
substantial inequitable results if applied retroactively,
there is ample basis in our cases for avoiding the
‘injustice or hardship’ by a holding of nonretroactivity"
” (citation omitted).
Upon consideration of each of these factors, we
conclude that the Louisiana one-year statute of
limitations should not be applied retroactively in the
present case. Rodrigue was not only a case of first
impression in this Court under the Lands Act, but it
also effectively overruled a long line of decisions by the
Court of Appeals for the Fifth Circuit holding that
admiralty law, including the doctrine of laches, applies
through the Lands Act.
** *
When the respondent was injured, for the next two
years until he instituted his lawsuit, and for the ensuing
year of pretrial proceedings, these Court of Appeals
decisions represented the law governing his case. It
cannot be assumed that he did or could foresee that this
_consistent interpretation of the Lands Act would be
overtumed. The most he could do was to rely on the
law as it then was.
*“*
Yet retroactive application of the Louisiana statute of
limitations to this case would deprive the respondent of
any remedy whatsoever on the basis of superseding
legal doctrine that was quite unforeseeable. To abruptly
terminate this lawsuit that has proceeded through
lengthy and, no doubt, costly discovery stages for a
year would surely be inimical to the beneficent purposes
of the Congress.
Id. at 355-56.
As a general rule, a decision of the Texas Supreme Court is to
be applied retrospectively. “However, exceptions are recognized when

A7

considerations of fairness and policy preclude full retroactivity.
Resolution of the issue turns primarily on the extent of public reliance on
the former rule and the ability to foresee a coming change in the law."
Sanchez v. Schindler, 651 S.W.2d 249, 254 (Tex. 1983). Mrs. Richards
and many other injured workers have relied on the Texas Supreme
Court's standard in Arnold and Aranda. It was virtually impossible for
Mrs. Richards to foresee that the Texas Supreme Court would change the
Arnold-Aranda statute of limitations formula.

Appellee respectfully urges this court to follow the reasoning of
the Court in Huson and apply any new statute of limitations in a
prospective manner. For these reasons, Appellant's appointive [sic] error
57 should be overruled.

PRAYER FOR RELIEF

For these reasons, Dolores J. Richards respectfully requests that
this court affirm the judgment of the trial court, and prays for any further
relief to which she may show herself to be entitled.

Respectfully submitted,

/S/KIRK PURCELL
State Bar No. 16394300

STEPHENS & CLARK

520 Post Oak Blvd., Suite 600
Houston, Texas 77027

(713) 629-1111

ATTORNEYS FOR APPELLEE,
DOLORES J. RICHARDS

A8

{Excerpts from Richards’ Application for Wnt of Error
in Texas Supreme Court: Complete Table of Contents]

NO.

~IN THE
SUPREME COURT OF TEXAS

DOLORES J. RICHARDS,
Petitioner,
Vv.
LIBERTY MUTUAL FIRE INSURANCE COMPANY,
Respondent.

On Application for Writ of Error
from the
Court of Appeals
for the
Fourteenth Supreme Judicial District

APPLICATION FOR WRIT OF ERROR

KIRK PURCELL

State Bar No. 16394300

440 Louisiana, Suite 1850
Houston, Texas 77002

(713) 225-9700

KENNETH D. McCONNICO
State Bar No. 1344900

711 Bay Area Boulevard,
Suite 611

Webster, Texas 77598

(713) 488-3795
ATTORNEYS FOR PETITIONER,
DOLORES J. RICHARDS

ORAL ARGUMENT REQUESTED

* * * &

|

A9

TABLE OF CONTENTS

PRE SON PU COME FOR we RR 8 ee nw ws i

ReWuee! FOR ORAL ARGUMENE . nce ccwesvssunecnes i
ge ee ae iv
PR a ee l
SENET E CO FUPEMEPTS ETN ove we wee eee wees 3
Pa Cae ae I hs hk ew a en a ee ek 4
Pe ETS Se WIRE eins oe eS ae op ea Se =
PE ms 660.4 e 88S PE ee GES ee 10
i, POINT OF ERROR ONE: THE COURT_ OF
APPEALS ERRED BY RETROACTIVELY
APPLYING A STATUTE OF LIMITATIONS ........ 10
A. Under Texas Law, A Statute of Limitations
Should Not Be Applied Retroactively ne ae
B. The Decision Of The Court Of Appeals
Violated Article I, Section 16 Of The Texas
ee re ee re Eo ee 1]
1. The Decision By The Court of

Appeals Destroyed Or Impaired Mrs.
Richards’ Vested Rights Under
Existing Substantive Law .......... 12

Z Any Change In The Statute Of
Limitations Should Not Affect Or
Invalidate Steps Previously Taken In
po SP en ere ae ere 15

3. The Decision Of The Court of
Appeals Destroyed Mrs. Richards’

ORT Ar Ieee COREE Oder it

Al0
magmt To A Remedy 2.06.6 be ass 15
to Considerations Of Fairness And Public Policy
Preclude Retroactive Application Of The
Statute Of Limitations To This Case ......... 17

1. The New Principle Of Law
Established In The Murray Decision
Does Not Govern Mrs. Richards’

Case Because The New Rule Was Not

; Clearly Foreshadowed ............ 21

tO

The New Principle Of Law
Announced In Murray Can Be
Effectuated Without Being Applied
Retroactively . NAP SA a ae Ne 23

8 Retroactive Application of The New
Principle of Law Announced In
Murray Would Result in Injustice .... . 23

I]. POINT OF ERROR TWO: THE COURT OF
APPEALS ERRED IN HOLDING THAT, AS A
MATTER OF LAW, THE STATUTE OF
LIMITATIONS BARRED MRS. RICHARDS’ CAUSE

oe BE sea ea cuale as ace ee ee 24
A. There Was A Fact Question On When Mrs.
Richards’ Cause of Action Accrued ......... 25

5. No Outright Denial Of Mrs.

oo ge ee eee 26

> No Judicial Remedy Existed on
er ere 29

B. Liberty Mutual Waived Its Right to Complain

By Failing To Request A jury Question And
Obtain A Jury Finding On The Affirmative
pene Ge CNN ns ew ee 31

All

Ill. POINT OF ERROR THREE: THE COURT OF
APPEALS ERRED IN HOLDING THAT THE TWO-
YEAR STATUTE OF LIMITATIONS GOVERNED
MRS. RICHARDS’ CAUSE OF ACTION BECAUSE
SECTION 16.003(a) OF THE CIVIL PRACTICE &
REMEDIES CODE DOES NOT EXPRESSLY
MENTION AN ACTION FOR BREACH OF THE
DUTY OF GOOD FAITH AND FAIR DEALING ..... 33

A. Section 16.003 of the Civil Practice And
Remedies Code Does Not Govern Mrs.
Richards’ Action Because It Does Not
Expressly Mention An Action For Breach Of
The Duty Of Good Faith And Fair Dealing . . . . . 34

B. Section 16.051 Of The Civil Practice And
Remedies Code Governs Mrs. Richards’
Action Because Section 16.003(a) Of The Civil
Practice And Remedies Code Does Not
Expressly Mention An Action For Breach Of
The Duty Of Good Faith And Fair Dealing... . . 37

V. POINT OF ERROR FOUR: THE COURT OF
APPEALS ERRED IN HOLDING THAT THE
STATUTE OF LIMITATIONS BARRED MRS.
RICHARDS* CAUSE OF ACTION BECAUSE THE
RETROACTIVE APPLICATION OF A NEW
STATUTE OF LIMITATIONS STANDARD
VIOLATED MRS. RICHARDS* RIGHTS UNDER
THE OPEN COURTS PROVISION OF THE TEXAS

CUO CUUEREUIOE 6 64.6 6 44 0.0 0.68 65 6508 OKO 41
PRT ee OE GE 66. 680 5 O66 444 OK OAR ORE ORO 42
ee) he 4, a are a 43

* * ok

Al2

PRAYER FOR RELIEF

For these reasons, Dolores J. Richards respectfully requests that
this Court reverse the judgment of the court of appeals and remand this
cause to the Fourteenth Court of Appeals for further consideration of
Liberty Mutual’s other points of error. Petitioner also prays for any
further relief to which she may show herself to be entitled.

Respectfully submitted,

/S/KIRK PURCELL
State Bar No. 16394300
440 Louisiana, Suite 1850
Houston, TX 77002
(713) 225-9700
(713) 229-0074 FAX
KENNETH D. MCCONNICO
State Bar No. 13449000
711 Bay Area Blvd., Suite 611
Webster, Texas 77598
(713) 488-3795
(713) 338-1868 FAX

ATTORNEYS FOR PETITIONER,
DOLORES J. RICHARDS

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386011_0121%3A2. Public record. Not legal advice.