In another case dealing with the damage to the civil justice system caused by the indiscriminate use of the Texas Citizens Participation Act (Ch. 27, CPRC; TCPA), the Fourteenth Court of Appeals has upheld sanctions imposed on a TCPA movant for filing a frivolous motion to dismiss. The case, Patriot Contracting, LLC and Stephen J. Friedman v. Mid-Main Properties, LP (No. 14-20-00724-CV, is a more or less garden-variety dispute between a commercial property developer and a general contractor over a project gone bad (funny how many of these bogus TCPA claims arise out of standard business relationships like this one). When the general contractor allegedly failed to meet contract specifications, pay its subcontractors, and submitted false claims for retainage, the developer tried to restart the project by hiring the subcontractors directly. Patriot and Friedman (Patriot’s owner) slapped a mechanic’s lien on the project, imperiling the developer’s construction financing. Friedman also pestered the developer’s lender to sell the loan to Friedman for pennies on the dollar, hoping to acquire a $100 million project for less than half price. Friedman also allegedly interfered with the developer’s effort to resign subcontractors, resulting in duplicative retainage payments. Not a pretty fact picture.
Patriot and Friedman fired the first shot, filing suit against the developer in 2017. The developer filed a counterclaim, asserting common law fraud and for a declaratory judgment declaring the mechanic’s lien void. In 2019, the developer filed a Seventh Amended Pleading alleging breach of contract, breach of warranty, negligence, negligent misrepresentation, fraud, personal liability of Friedman under the Property Code for signing false affidavits, breach of surety bonds, declaratory judgment, tortious interference with prospective business relations, and tortious interference with its subcontractors. Trial was scheduled to begin in September 2020, which Patriot and Friedman sought to continue. The trial court reset the trial for November 2, 2020. Prior to that, the developer filed an Eight Amended Petition modifying a small number of factual details. The petition did not assert new claims or add new parties (it actually deleted claims). Patriot and Friedman sought another continuance, which the trial court denied. Subsequently, Patriot and Friedman filed its first TCPA motion to dismiss alleging that their motion was timely (i.e., made within the 60-day period prescribed by the statute) because the developer’s Eighth Amended Pleading contained “new allegations as to tortious interference, false pay applications, and fraudulent lien,” all of which implicated Friedman’s rights to free speech and petition. The 60-day TCPA clock, Friedman argued, had been reset by this petition.
The developer’s responded that the TCPA motion was untimely, that if it was timely the TCPA did not apply to its claims, and that in any event the developer could establish a prima facie case for each challenged cause of action. The trial court, clearly unamused by the plaintiffs’ last-minute use of the TCPA to get another trial delay, ruled that the motion was untimely, requested dismissal of a cause of action exempted by the TCPA, was frivolous, and was filed solely for the purpose of delaying the case. The trial court ordered that the developer recover its costs and reasonable attorney’s fees in responding to the motion. Patriot and Friedman appealed.
In an opinion by Justice Jewell, the court of appeals emphatically affirmed. Conducting an exhaustive analysis of the “differences” between the developer’s Seventh and Eighth Amended Petitions, the court found that not only did the last petition not state new claims, add new parties, or allege significant new facts, statements, or wrongful conduct, it basically repeated verbatim the same claims and facts as many of the prior petitions. Relying on recent SCOTX precedent in Montelongo v. Abrea,622 S.W.3d 290 (Tex. 2021) and Kinder Morgan SACROC, LP v. Scurry County, 622 S.W. 3d 835 (Tex. 2021), the court of appeals held that the 60-day TCPA clock did not restart. Unbelievably, Patriot and Friedman tried to argue that the clock restarts every time a claimant amends a pleading, despite a slew of appellate authority holding otherwise. That in itself shows the ridiculous extent to which some people are willing to use the TCPA to string out the other party in hopes of wearing it down.
The only issue with the Eighth Amended Petition that required discussion was a new statement that Friedman’s tortious interference “continues to the present.” Friedman argued that the inclusion of this language alleged a new and distinct tort that was not previously alleged. The court of appeals did not bite on this, pointing out that the language merely contends that Patriot and Friedman “have continued to engage in the same general type of wrongful conduct of which appellants have long had fair notice.” Moreover, the statement is “simply an allegation in the same nature as previously alleged that would support the same theory and recovery, and therefore insufficient to trigger a new sixty-day TCPA deadline” (citations omitted). In sum, nothing in the Eighth Amended Pleading altered the “essential nature” of the action, as SCOTX requires in order to reset the clock.
Finally, the court of appeals held that the trial court did not abuse its discretion in imposing sanctions on Patriot and Friedman for a frivolous TCPA motion to dismiss. Given the overwhelming weight of authority against the movants, the trial court could easily determine that the motion was in bad faith and solely intended to delay a trial they clearly did not want.
It appears to us that both trial and appellate courts, at least in many cases, have had enough of TCPA shenanigans and are willing to make offending parties pay for them. That is all to the good. This statute ran amok for far too long and has produced an enormous burden of cost and delay in the civil justice system. We are confident that the 2019 reforms will work the way they’re supposed to so that the Legislature doesn’t have to amend the statute again.