in Re Rescue Concepts, Inc.

Opinion

ACCEPTED 01-15-00624-CV FIRST COURT OF APPEALS HOUSTON, TEXAS 8/14/2015 8:53:28 AM CHRISTOPHER PRINE CLERK

No. 01–15–624–CV _______________________________________________________ FILED IN In the First Court of Appeals 1st COURT OF APPEALS HOUSTON, TEXAS Houston, Texas 8/14/2015 8:53:28 AM _______________________________________________________ CHRISTOPHER A. PRINE Clerk In re: Rescue Concepts, Inc., Relator. _______________________________________________________ Original proceeding from the 270th Judicial District Court, Harris County, Texas Honorable Brent Gamble _______________________________________________________ Reply in Support of Petition for Writ of Mandamus _______________________________________________________

James G. Munisteri Gardere Wynne Sewell LLP State Bar No. 14667380 2000 Wells Fargo Plaza John MacVane 1000 Louisiana Street State Bar No. 24085444 Houston, Texas 77002 Tel: 713.276.5500 Fax: 713.276.5555 Email: jmunisteri@gardere.com jmacvane@gardere.com - and - Jacqueline Lucci Smith LUCCI SMITH LAW, PLLC State Bar No. 00786073 10575 Katy Freeway, Suite 405 Houston, Texas 77024 Telephone: (832) 494-1700 Facsimile: (832) 494-1426 Email: jacq@luccismithlaw.com

ATTORNEYS FOR PLAINTIFF RESCUE CONCEPTS INC.

ORAL ARGUMENT REQUESTED Table of Contents Page Table of Contents ................................................................................................... ii Table Of Authorities ............................................................................................. iii Argument .................................................................................................................1 I. HouReal’s argument makes this an incredibly simple mandamus. ..........................................................................................1 A. HouReal’s reading creates the absurd result of making service the only requirement to avoid expunction of a lis pendens. ...................................................3 B. HouReal’s reading is contrary to the cases construing the statute. .............................................................5 C. HouReal’s application of In re Cohen misses the mark. ..........................................................................................6 II. RCI stands on its remaining arguments..........................................7 Prayer for Relief.......................................................................................................8 Certificate of Service/Compliance .......................................................................9

ii Table Of Authorities Page(s) CASES

City of Dallas v. TCI W. End, Inc., No. 13-0795, 2015 WL 2147986 (Tex. May 8, 2015) (slip op.) (per curiam)...........................................................2

City of Lorena v. BMTP Holdings, L.P., 409 S.W.3d 634 (Tex. 2013).............................................................................2

Gunn v. Phillips, 410 S.W.2d 202 (Tex. Civ. App.—Houston 1966, writ ref’d n.r.e) ..............................................2

In re Cohen, S.W.3d 889 (Tex. App.—Houston [1st Dist.] 2011, no pet.)…………………………….. 6, 7

In re Moreno, No. 14-14-00929-CV, 2015 WL 225049 (Tex. App.—Houston [14th Dist.] Jan. 15, 2015, no pet.) .................................5

Nat’l City Bank of Indiana v. Ortiz, 401 S.W.3d 867 (Tex. App.—Houston [14th Dist.] 2013, pet. denied) .................................4, 5

Sw. Bell Tel., L.P. v. Emmett, 459 S.W.3d 578, 588 (Tex. 2015). ..........................3

STATUTES

TEX. PROP. CODE ANN. § 12.0071...................................................................passim

OTHER AUTHORITIES

ANTONIN SCALIA & BRYAN A. GARNER, READING LAW: THE INTERPRETATION OF LEGAL TEXTS 116 (2012)……………...2

.

iii Argument

I. HouReal’s argument makes this a simple mandamus.

HouReal Corporation (“HouReal”) is absolutely correct that the crux

of this case is interpretation of section 12.0071 of the Texas Real Property

Code. As HouReal’s response makes clear:

 HouReal does not dispute that the proper remedy for wrongful denial of a motion to expunge is mandamus,

 Nor does HouReal dispute that Rescue Concepts, Inc. (“RCI”) properly raised and preserved the bases for expunction stated in its mandamus petition,

 Nor does HouReal even argue that it “establish[ed] by a preponderance of the evidence the probable validity of [its] real property claim.”

Instead HouReal relies exclusively on a simple, flawed argument.

According to HouReal, because section 12.0071 requires expunction “if the

court determines” that any one of three situations exists, the statute

supposedly gives the trial court unlimited discretion to determine which of

the three scenarios to examine.

HouReal cites no statute—and RCI has found none—that has been

construed to allow the trial court to decide—willy-nilly—which statutory

requirements to examine and which to disregard. HouReal simply

1 contends that the trial court was free to completely ignore the argument

that HouReal could not establish the probable validity of its claim—in its

discretion—for any reason or no reason.

HouReal’s interpretation of the expunction statute to confer such

discretion is nonsense. The word “or,” as used in section 12.0071, joins a

disjunctive list. See ANTONIN SCALIA & BRYAN A. GARNER, READING LAW:

THE INTERPRETATION OF LEGAL TEXTS 116 (2012). The Texas cases standing

for this proposition are legion. See, e.g., City of Dallas v. TCI W. End, Inc., No.

13-0795, 2015 WL 2147986, at *4 (Tex. May 8, 2015) (slip op.) (per curiam)

(“The statute's use of ‘or,’ a disjunctive, identifies two alternative bases for

recovering civil penalties.”); City of Lorena v. BMTP Holdings, L.P., 409

S.W.3d 634, 642 (Tex. 2013) (“We have previously held that the

Legislature's use of the disjunctive word ‘or’ is significant when

interpreting statutes.”); Gunn v. Phillips, 410 S.W.2d 202, 206 (Tex. Civ.

App.—Houston 1966, writ ref’d n.r.e) (“[T]he word ‘or’ is a disjunctive

conjunction that indicates a choice between two alternatives generally

corresponding to ‘either’ or ‘either this or that’.”).

And in section 12.0071 the legislature plainly required that “a court

shall order the notice of lis pendens expunged if the court determines that: 2 (1) the pleading on which the notice is based does not contain a real property claim;

(2) the claimant fails to establish by a preponderance of the evidence the probable validity of the real property claim; or

(3) the person who filed the notice for record did not serve a copy of the notice on each party entitled to a copy under Section 12.007(d).” (Emphasis added).

“The use of the word ‘shall’ evidences the mandatory nature of the

duty imposed . . . .” See Sw. Bell Tel., L.P. v. Emmett, 459 S.W.3d 578, 588

(Tex. 2015). In this case, that mandatory duty is on the trial court to

expunge the lis pendens if the claimant fails to plead, prove, or properly

serve the notice of lis pendens.

HouReal’s construction would be a complete anomaly in statutory

interpretation case law—as evidenced by the absence of a single cited

authority applying such a construction to any statute—ever.

A. HouReal’s reading creates the absurd result of making service the only requirement to avoid expunction of a lis pendens.

HouReal’s reading leads to the absurd result of allowing a trial court

to leave a lis pendens on file that is neither pleaded nor proved if the lis

pendens has been properly served. According to HouReal, the trial court

3 has discretion to determine which of the three disjunctive sections to

examine (even if—as undisputedly happened here—more than one basis

for expunction is raised). Thus, according to HouReal, a court would be

within its discretion to ignore (1) that no real property claim had been pled,

and (2) that no probable right had existed, and to focus entirely on the third

item in the disjunctive list: that the person who filed the lis pendens served

it according to section 12.007(d) of the Texas Property Code.

This reading of the statute cannot plausibly be entertained. To the

contrary, the revisions to section 12.0071 “mark[ed] a substantial change in

the legal standard by which parties can seek expunction of notices of lis

pendens” because it “includ[ed] language that requires consideration of the

merits of the claim that forms the basis of the lis pendens.” Nat'l City Bank

of Indiana v. Ortiz, 401 S.W.3d 867, 903-04 (Tex. App.—Houston [14th Dist.]

2013, pet. denied) (Frost, J., dissenting). The purpose of the amendments

was thus to add means of obtaining expunction, not give a trial court

discretion to leave lis pendens undisturbed whenever they were properly

served. See id.

4 B. HouReal’s reading conflicts with cases construing the statute.

As the Houston Fourteenth Court of Appeals has explained,

“[s]ection 12.0071 identifies three circumstances in which the trial court

‘shall order the notice of lis pendens expunged.’” In re Moreno, No. 14-14-

00929-CV, 2015 WL 225049, at *2 (Tex. App.—Houston [14th Dist.] Jan. 15,

2015, no pet.) quoting Tex. Real Prop. Code Ann. § 12.0071. The Fourteenth

Court’s language is clear; three separate scenarios exist that require

expunction.

In another case, the Fourteenth Court described section 12.0071 as

requiring that “[t]he court shall order the notice of lis pendens expunged if

the court determines that . . . the claimant fails to establish by a

preponderance of the evidence the probable validity of the real property

claim . . . .” Nat'l City Bank of Indiana, 401 S.W.3d at 887 (ellipses original).

These cases do nothing more than rephrase the plain language of the

statute. Put simply, HouReal could not be more wrong. This is a simple

mandamus requiring this Court to do no more that read the statute and

apply its plain language. The word “or” means that the trial court shall

expunge the lis pendens if the claimant failed to plead, prove or properly

5 serve the notice of lis pendens.

C. HouReal’s reading of In re Cohen misses the mark.

HouReal misinterprets In re Cohen as holding that a court has free

reign to disregard certain elements of the lis pendens statute at its pleasure.

See Response to Relator’s Petition for Writ of Mandamus, at 10.

But In re Cohen, in fact, says the exact opposite. According to In re

Cohen, “The court must grant the motion if (1) ‘the pleading on which the

notice is based does not contain a real property claim,’ or (2) ‘the claimant

fails to establish by a preponderance of the evidence the probable validity

of the real property claim.’” S.W.3d 889, 892 (Tex. App.—Houston [1st

Dist.] 2011, no pet.). Nowhere did the Cohen court say or suggest a trial

court may avoid its mandatory obligation to expunge by focusing on one

requirement and ignoring other requirement.

Contrary to HouReal’s argument, the “probable validity” basis for

expunging lis pendens was not analyzed in In re Cohen. According to the

court’s opinion, the “probable validity” basis “ha[d] yet to be addressed by the

trial court, rendering review . . . premature.” Id. at 899-900 (emphasis added).

In stark contrast to In re Cohen, RCI did raise that HouReal failed to

establish by a preponderance of evidence the probable validity of a real

6 property claim. This assertion was both (1) raised by RCI’s motion, (see

Tab I, R. 63)—as HouReal does not dispute—and (2) addressed by

HouReal’s response—which said that HouReal had no need to establish

probable validity (Tab E, R. 37, at ¶¶2-3).

Thus the probable validity prong was squarely before the trial court.

But HouReal did not prove probable validity—nor does HouReal contend

that it did—and the trial court abused its discretion by denying the motion

to expunge.

II. RCI stands on its remaining arguments.

For the reasons discussed above, this Court need not address the

second ground. Should this Court reach HouReal’s argument that it pled a

real property claim in the amended petition, HouReal stands on its

argument that HouReal did not plead a claim that entitled it to lis pendens.

These arguments are explained in Part II.B. of RCI’s mandamus petition.

HouReal’s response largely ignores these arguments that provide an

independent—albeit slightly less straightforward—basis for granting

mandamus relief.

7 Prayer for Relief For the foregoing reasons, RCI asks this Court to issue a writ of

mandamus:

(a) directing the district court to vacate its Order Denying Rescue

Concepts, Inc.’s Motion to Expunge Lis Pendens, signed on July 13, 2015, in

the underlying lawsuit, HouReal Corporation v. Rescue Concepts, Inc., No.

2014-71749 (270th J. Dist. Ct., Harris Cty., Tex., filed Dec. 10, 2014);

(b) directing the district court to order HouReal’s lis pendens, a copy

of which is located at Tab E, R. 39-40, expunged pursuant to section 12.0071

of the Texas Real Property Code; and

(c) taxing costs against Real Party in Interest, HouReal Corporation.

Respectfully submitted, -and- /s/ James G. Munisteri James G. Munisteri /s/Jacqueline Lucci Smith State Bar No. 14667380 Jacqueline Lucci Smith John MacVane LUCCI SMITH LAW, PLLC State Bar No. 24085444 Texas Bar Number: 00786073 GARDERE WYNNE SEWELL LLP 10575 Katy Freeway, Suite 405 2000 Wells Fargo Plaza Houston, Texas 77024 1000 Louisiana Street Telephone: (832) 494-1700 Houston, Texas 77002 Facsimile: (832) 494-1426 Telephone: (713) 276-5500 Email: jacq@luccismithlaw.com Facsimile: (713) 276-5555 Email: jmunisteri@gardere.com ATTORNEYS FOR PLAINTIFF Email: jmacvane@gardere.com RESCUE CONCEPTS INC.

8 Certificate of Service/Compliance I certify that a copy of this document was served by efiling, as

follows, on August 14, 2015.

Mr. Gregory N. Jones Hon. Brent Gamble Law Office of Gregory N. Jones 270th Judicial District Court 2323 S. Shepherd, 14th Floor Harris County Civil Courthouse Houston, Texas 77019 201 Caroline, 13th Floor Email: gjones@gnjlaw.net Houston, Texas 77002 Facsimile: (713) 979-4440 [By Efiling to the email address of the [by Efiling] Court’s clerk, Danielle Gutierrez at Danielle.Gutierrez@hcdistrictclerk.com]

Counsel for HouReal Corporation

I further certify that this document contains 1,509 words. To prepare

this certificate, I relied upon the word count of the computer program used

to prepare this document.

/s/ James G. Munisteri James G. Munisteri

9 Gardere01 - 6934908v.1