Straub v. Pesca Holding LLC

621 S.W.3d 299

Beverly STRAUB, Appellant

v.PESCA HOLDING LLC, Appellee

No. 04-20-00276-CV

Court of Appeals of Texas, San Antonio.

Delivered and Filed: March 10, 2021

Brian Smith, Dunn | Smith LLP, 811 Barton Springs Rd., Ste. 725, Austin, TX 78704-1100, for Appellant.

Olga Brown, Law Offices of Olga Brown, P.C., 106 S. St. Mary's St., Suite 250, San Antonio, TX 78205, Sergio Davila, The Law Office of Sergio R. Davila PLLC, 1220 Matamoros St., Suite 500, Laredo, TX 78040, for Appellee.

Sitting: Patricia O. Alvarez, Justice, Irene Rios, Justice, Beth Watkins, Justice

Opinion by: Patricia O. Alvarez, Justice

This accelerated interlocutory appeal arises from a common law fraud action filed by Pesca Holding LLC against Beverly Straub. Straub moved to dismiss the suit under the Texas Citizens Participation Act (TCPA). The motion was denied by operation of law. Because common law fraud claims are exempted from the 2019 amendments to the TCPA, Straub failed to meet her burden on the applicability of the TCPA. We affirm the denial of Straub's motion to dismiss under the TCPA and remand this cause for further proceedings.

BACKGROUND

On December 21, 2018, Pesca entered into a contract with Bengt Skoldeberg, Gudrun Skoldeberg, and Texas Sun & Shade to purchase Texas Sun & Shade's equity and VASA Window Covering, Inc.'s assets. On April 18, 2019, Pesca sued the Skoldebergs alleging fraudulent misrepresentation on the nature of VASA's financial stability and its true value.

On December 2, 2019, Pesca amended its petition to add a claim against the Skoldebergs for fraudulent misrepresentation of the value of Texas Sun & Shades's shares. On December 9, 2019, Pesca again amended its petition to add Beverly Straub, the Skoldebergs' accountant, as a defendant alleging she prepared and provided a balance sheet that misrepresented VASA's assets to Pesca's detriment. Pesca claimed Straub was liable for fraud and participatory "concert of action." Pesca further alleged that Straub breached her fiduciary duties to Pesca by preparing false accounting documents for both corporations with the intent to induce Pesca to purchase those corporations.

On January 29, 2020, Straub timely filed a motion to dismiss under the TCPA. The motion was heard on April 16, 2020. Because the trial court did not rule on the motion, on May 16, 2020, the motion was denied by operation of law. This accelerated interlocutory appeal followed.

ISSUES ON APPEAL

On appeal, Straub raises five issues: (1) whether the amendment to section 27.010 of the TCPA, which became effective on September 1, 2019, applies to Pesca's cause of action for common law fraud against Straub given that the original action was filed before the effective date of the 2019 amendment; (2) whether the TCPA applies because Pesca's claims are based on, related to, and are in response to Straub's exercise of the right to free speech on a matter of public concern; (3) whether the TCPA applies because Pesca's claims are based on, related to, and are in response to Straub's right of association with the Skoldebergs; (4) whether Pesca failed to make a prima facie case for each essential element of its claims; and (5) whether the trial court erred in failing to award Straub attorney's fees and mandatory sanctions under the TCPA.

Because we conclude that the September 1, 2019 amendments to the TCPA apply to Pesca's common law fraud cause of action against Straub, thus precluding Straub from invoking the TCPA, we will only address Straub's first issue.

STANDARD OF REVIEW

Questions of statutory construction are reviewed de novo. Adams v. Starside Custom Builders, LLC , 547 S.W.3d 890, 894 (Tex. 2018) ; ExxonMobil Pipeline Co. v. Coleman , 512 S.W.3d 895, 899 (Tex. 2017) ; Molinet v. Kimbrell , 356 S.W.3d 407, 411 (Tex. 2011). "In construing statutes our primary objective is to give effect to the Legislature's intent." Tex. Lottery Comm'n v. First State Bank of DeQueen , 325 S.W.3d 628, 635 (Tex. 2010) ; accord Molinet , 356 S.W.3d at 411. "[We] first look to the statute's language to determine that intent, as we consider it ‘a fair assumption that the Legislature tries to say what it means, and therefore the words it chooses should be the surest guide to legislative intent.’ " Leland v. Brandal , 257 S.W.3d 204, 206 (Tex. 2008) (quoting Fitzgerald v. Advanced Spine Fixation Sys., Inc. , 996 S.W.2d 864, 866 (Tex. 1999) ); accord Molinet , 356 S.W.3d at 411. We consider the statute as a whole rather than focusing on individual provisions. KMS Retail Rowlett, LP v. City of Rowlett , 593 S.W.3d 175, 183 (Tex. 2019) (citing TGS-NOPEC Geophysical Co. v. Combs , 340 S.W.3d 432, 439 (Tex. 2011) ). "Where statutory text is clear, that text is determinative of legislative intent unless the plain meaning of the statute's words would produce an absurd result." Tex. Mut. Ins. Co. v. Ruttiger , 381 S.W.3d 430, 452 (Tex. 2012) ; accord TGS–NOPEC , 340 S.W.3d at 439. Where the "statute assigns detailed definitions to many of the terms it employs, ... we must adhere to statutory definitions." Adams , 547 S.W.3d at 894 (citing TGS–NOPEC , 340 S.W.3d at 439 ).

SEPTEMBER 1, 2019 AMENDMENTS TO THE TCPA

The TCPA contemplates an expedited dismissal procedure applicable to claims brought to intimidate or silence a defendant's exercise of the rights enumerated in the Act. Creative Oil & Gas, LLC v. Lona Hills Ranch, LLC , 591 S.W.3d 127, 132 (Tex. 2019) ; Coleman , 512 S.W.3d at 898 ). The party invoking the TCPA may file a motion to dismiss the "legal action ... not later than the 60th day after the date of service of the legal action." TEX. CIV. PRAC. & REM. CODE ANN. § 27.003(b) ; accord Warner Bros. Entm't, Inc. v. Jones , 611 S.W.3d 1, 11 (Tex. 2020). In addition, under the September 1, 2019 amendments, the party must show its "legal action is based on or is in response to [the] party's exercise of the right of free speech, right to petition, or right of association." TEX. CIV. PRAC. & REM. CODE ANN. §§ 27.003(a), .005(b); accord Coleman , 512 S.W.3d at 898. Section 27.010, which provides the exemptions to the TCPA, was amended in 2019 to include an exemption for common law fraud. See Act of May 17, 2019, 86th Leg., R.S., ch. 378, § 9, sec. 27.010, 2019 Tex. Gen. Laws 684 (current version at TEX. CIV. PRAC. & REM. CODE ANN. § 27.010(a)(12) ).

The evolution of section 27.010 provides a context for our analysis. As enacted in 2011, the statute exempted only (a) enforcement actions brought in the name of Texas or a political subdivision of the State by state and county attorneys; (b) "legal action[s] brought against a person primarily engaged in the business of selling or leasing goods or services, if the statement or conduct arises out of the sale or lease of goods, services, or an insurance product or a commercial transaction in which the intended audience is a buyer or customer"; and (c) personal injury legal actions. Act of May 21, 2011, 82d Leg., R.S., ch. 341, § 2, sec. 27.010 (amended 2019) (current version at TEX. CIV. PRAC. & REM. CODE ANN. § 27.010 ). In 2019, the Texas Legislature amended the TCPA to exempt from its application various legal actions, including a legal action for common law fraud. See Act of May 17, 2019, 86th Leg., R.S., ch. 378, § 9, sec. 27.010, 2019 Tex. Gen. Laws 684 (current version at TEX. CIV. PRAC. & REM. CODE ANN. § 27.010(a)(12) ). The amendments to the Act, which took effect on September 1, 2019, applied "only to an action filed on or after the effective date of the Act." Id. §§ 11–12. "An action filed before the effective date of this Act is governed by the law in effect immediately before that date, and that law is continued in effect for that purpose." Id. § 11.

The issue before us is whether the "common law fraud" exception, which became effective on September 1, 2019, applies to Pesca's fraud claims against Straub, which were asserted when she was added as a party to the lawsuit after the effective date of the Act. See id. §§ 9, 11.

A. Parties' Arguments

Straub argues that the September 1, 2019 amendments to the TCPA do not apply to Pesca's cause of action for fraud because the legislature mandated that the amendments to the statute apply only to an "action filed before the [September 1, 2019,] effective date of [the] Act." Straub contends the legislature's clear instruction was that the amendments should apply only to new actions filed after the effective date of September 1, 2019. In Straub's view, because Pesca filed its original petition before September 1, 2019, the amendments do not apply to her even though she was added to the lawsuit after the effective date of the statute.

Pesca argues that because Straub was added as a party after the 2019 amendment exempting a legal action for common law fraud from the TCPA, the new TCPA applies, and Straub cannot move to dismiss under the TCPA.

B. Which Version of the Statute Applies?

To support her argument, Straub directs us to S&P Consulting Engineers PLLC v. Baker , 334 S.W.3d 390, 395–98 (Tex. App.—Austin 2011, no pet.) (en banc). In S&P Consulting Engineers , the Third Court of Appeals considered which version of section 150.002 of the Texas Civil Practice & Remedies Code applied when, after the suit was filed and after the amendments to the statute became applicable, another party was added to the lawsuit. Id. at 395. The Third Court concluded that the prior version of the statute applied because the suit was filed prior to the statutory amendments becoming effective. Id. at 397–98 ; see Jay Miller & Sundown, Inc. v. Camp Dresser & McKee Inc. , 381 S.W.3d 635, 644 (Tex. App.—San Antonio 2012, no pet.).

This case differs from S&P Consulting Engineers. There, the amendments applied

only to an action or arbitration filed or commenced on or after the effective date [Sept. 1, 2009] of this Act. An action or arbitration filed or commenced before the effective date of this Act is governed by the law in effect immediately before the effective date

...