Texas Alcoholic Beverage Commission v. I Gotcha, Inc. D/B/A Main Stage

Opinion

NO. 07-05-0411-CV

IN THE COURT OF APPEALS

FOR THE SEVENTH DISTRICT OF TEXAS

AT AMARILLO

PANEL C

JULY 28, 2006

______________________________

TEXAS ALCOHOLIC BEVERAGE COMMISSION, APPELLANT

V.

I GOTCHA, INC. D/B/A MAIN STAGE, APPELLEE

_________________________________

FROM THE 67TH DISTRICT COURT OF TARRANT COUNTY;

NO. 67-212790-05; HONORABLE DON COSBY, JUDGE

_______________________________

Before QUINN, C.J., and REAVIS and HANCOCK, JJ.

MEMORANDUM OPINION

The Texas Alcoholic Beverage Commission (TABC) issued an order adopting the Administrative Law Judge's (ALJ's) Proposal For Decision recommending that I Gotcha, Inc. d/b/a Main Stage pay a civil penalty of $1,500 in lieu of having its mixed beverage and mixed beverage late hours permits suspended for a period of ten days. The trial court reversed the order finding it was not supported by substantial evidence, and TABC filed this appeal. By two issues, TABC contends the trial court erred as a matter of law in (1) holding that I Gotcha's motion for rehearing was sufficiently specific and did not waive error, and (2) finding no substantial evidence to support its finding that the place and manner of I Gotcha's operations violated applicable law and regulations. We reverse and render.

On July 31, 2001, Officer Randy Watkins was conducting an undercover investigation at Main Stage, a topless bar in Fort Worth. The establishment held a mixed beverage permit and a mixed beverage late hours permit issued by TABC. Jeree Land, a topless dancer, offered to perform a table dance for Watkins for thirty dollars. After he accepted, they relocated to a dimly lit semi-private area surrounded by only three walls and with an opening facing the pool table area. During her performance, Land touched Watkins's clothed genital area and also licked his clothed genital area.

Almost four months later, Land was arrested for the incident. Four years later, TABC gave I Gotcha administrative notice of a hearing for a place or manner violation stemming from the incident involving Watkins and Land. Following the hearing, the ALJ entered a Proposal For Decision finding that I Gotcha violated the following sections of the Texas Alcoholic Beverage Code:

§ 11.61(b)(2)-the permittee violated a provision of this code or a rule of the commission;

§ 11.61(b)(7)-the place or manner in which the permittee conducts his business warrants the cancellation or suspension of the permit based on the general welfare, health, peace, morals, and safety of the people and on the public sense of decency;

§ 61.71(a)(1)-the licensee violated a provision of this code or a rule of the commission during the existence of the license sought to be cancelled or suspended or during the immediately preceding license period;

§ 61.71(a)(11)-the licensee permitted a person on the licensed premise to engage in conduct which is lewd, immoral, or offensive to public decency;

§ 61.71(a)(17)-the licensee conducted his business in a place or manner which warrants the cancellation or suspension of the license based on the general welfare, health, peace, morals, safety, and sense of public decency of the people; and

§ 104.01(6)-[n]o person . . . or employee may engage in or permit conduct on the premises of the retailer which is lewd, immoral, or offensive to public decency, including, but not limited to, any of the following acts:

permitting lewd or vulgar entertainment or acts . . . .

See Tex. Alco. Bev. Code Ann. (Vernon 1995 & Supp. 2005).

The ALJ recommended a ten-day suspension of I Gotcha's permits or in lieu thereof a civil penalty of $1,500. After the ALJ's Proposed Findings of Fact and Proposed Conclusions of Law were adopted by TABC, an order was entered suspending I Gotcha's permits for ten days unless payment of $1,500 was received. After I Gotcha's motion for rehearing was denied, it sought judicial review. The trial court entered judgment reversing TABC's order as not being supported by substantial evidence.

Relevant to the Commission's issues are the following findings of fact: 8. Ms. Land performed a table dance for Officer Watkins wearing only a "G" string and high-heeled shoes.

• During the dance, Ms. Land grabbed Officer Watkins' [sic] clothed genitals and licked his genital area.
• Officer Watkins had been inside Respondent's licensed premises several times over numerous years and observed the same manner of conduct occurring as described in Findings of Fact Nos. 8 and 9; he made arrests at Respondent's licensed premises for persons soliciting alcoholic beverages and engaging in lewd behavior in the past.

Also relevant to this appeal is Conclusion of Law Number 3 which provides: ⁽¹⁾

Based upon Findings of Fact Nos. 1 - 10, Respondent operated its business in a place or manner contrary to general welfare, health, peace, morals, and safety of the people and the public sense of decency on July 31, 2001, because sufficient evidence was presented to establish that a pattern of inappropriate conduct, namely lewd physical contact between Respondent's employee and a patron at the licensed premises, solicitation of alcoholic beverages, and other lewd behavior, was ongoing in relation to Respondent's business in violation of Tex. Alco. Bev. Code Ann. §§ 11.61(b)(2), 11.61(b)(7), 61.71(a)(1), 61.71(a)(11), 61.71(a)(17), and 104.01(6).

We address TABC's issues in a logical rather than sequential order. By issue two, TABC contends the trial court erred as a matter of law in substituting its judgment by concluding there was no substantial evidence to support its finding that I Gotcha's employee was intoxicated on the licensed premises. As pointed out by I Gotcha in its brief, TABC misstates its issue as there was no controversy regarding an intoxicated employee. However, we will address the substance of issue two by which TABC asserts the ALJ's decision that Land engaged in lewd conduct by sexual contact is supported by substantial evidence.

An administrative ruling of TABC is reviewed under the substantial evidence rule. See Tex. Alco. Bev. Code Ann. § 11.67(b) (Vernon 1995); Tex. Gov't Code Ann. § 2001.174 (Vernon 2000). See also Texas Alcoholic Beverage Com'n v. Sierra, 784 S.W.2d 359, 360 (Tex. 1990). Substantial evidence is more than a mere scintilla. Alamo Express v. Union City Transfer, 158 Tex. 234, 309 S.W.2d 815, 823 (1958). The rule is designed to discourage courts from administering regulatory statutes enacted by the Legislature. Lewis v. Metropolitan S. & L. Ass'n, 550 S.W.2d 11, 13 (Tex. 1977). A court may not invade the fact finding authority of an administrative agency. State Banking Bd. v. Allied Bank, 748 S.W.2d 447 (Tex. 1988). Nor may a court substitute its judgment for that of an administrative agency on the weight of the evidence on questions committed to agency discretion. See Tex. Gov't Code Ann. § 2001.174. See also Auto Convoy Co. v. Railroad Commission of Texas, 507 S.W.2d 718, 722 (Tex. 1974). A reviewing court may only determine whether the contested order is reasonably supported by substantial evidence. Auto Convoy Co., 507 S.W.2d at 722.

An agency's action will be sustained if the evidence is such that reasonable minds could have reached the conclusion that the agency must have reached in order to justify its action. Suburban Util. Corp. v. Public Util. Com'n, 652 S.W.2d 358, 364 (Tex. 1983). ⁽²⁾ An agency's findings and conclusions are presumed to be supported by substantial evidence, and the burden is on the opponent to prove otherwise by showing that no substantial evidence existed at the time of the hearing to support the order. Imperial Am. Resources Fund v. R. R. Com'n of Tex., 557 S.W.2d 280, 286 (Tex. 1977). Finally, the agency's decision must be upheld even if the evidence actually preponderates against the agency's finding so long as enough evidence suggests the agency's determination was within the bounds of reasonableness. Gerst v. Goldsbury, 434 S.W.2d 665, 667 (Tex. 1968). See also Southwestern Pub. Serv. v. Public Utility, 962 S.W.2d 207, 215 (Tex.App.-Austin 1998, pet. denied).

I Gotcha received a citation for a place or manner violation permitting public lewdness for Land's conduct toward Officer Watkins. ⁽³⁾ The ALJ correctly determined that there was no substantial evidence to establish that Land's conduct occurred in a public place or that Land acted recklessly about whether another patron would be offended by her conduct. Although "public lewdness" is described in the Penal Code, we agree with the ALJ that it does not apply in the underlying proceeding.

The ALJ did, however, conclude there was substantial evidence to support a finding that a place or manner violation occurred contrary to provisions of the Texas Alcoholic Beverage Code. Specifically, she found that TABC established Land engaged in lewd conduct because adult "entertainment should not extend to physical contact" between patrons and I Gotcha's employees. "Lewd" has no fixed legal meaning in either the Penal Code or the Alcoholic Beverage Code. Thus, we apply its ordinary meaning in our analysis. ⁽⁴⁾ See Tex. Gov't Code Ann. § 312.002 (Vernon 2005). "Lewd" means obscene or indecent, tending to moral impurity or wantonness. See Black's Law Dictionary 919 (7th ed. 1999).

It is undisputed that I Gotcha operates a topless bar, and during cross-examination, Watkins acknowledged that patrons expect sexual entertainment. It is not uncommon for patrons to request a table dance at topless bars. However, according to the testimony, Land went beyond what is generally expected in a table dance when she touched Watkins's clothed genitals and licked them.

In the analysis of the ALJ's Proposal For Decision, she recites that TABC contended that "one instance" had occurred where Land engaged in lewd conduct. However, at the administrative hearing, Watkins responded affirmatively when asked whether he had observed on eight to ten previous occasions between 1998 and 2001 "the same activity each time, in that ladies dancing half nude, men there ogling, sexualities, et cetera, et cetera." He could not, however, recall the particular offenses for which he had made arrests.

I Gotcha argues the ALJ's finding that provisions of the Alcoholic Beverage Code were violated contradicts the finding that no Penal Code violation was found. It also argues that Watkins's testimony alone was insufficient to establish a pattern of place or manner violations. We disagree. I Gotcha provides no authority requiring a Penal Code violation to sustain a violation of the rules or provisions of the Alcoholic Beverage Code. Further, Watkins's testimony that he observed eight to ten instances of lewd conduct qualifies as substantial evidence of a pattern.

I Gotcha asserts in its brief that neither the Alcoholic Beverage Code nor the City of Fort Worth had a "no touch" provision or ordinance in effect at the time of the incident. Thus, it argues that the ALJ 's conclusion that Land's conduct should not have extended to physical contact with a patron has no basis in statutory law. However, I Gotcha's assertion is unsubstantiated by the record before us. Further, I Gotcha relies on two criminal cases to support its contention. See generally Donoho v. State, 643 S.W.2d 698 (Tex.Cr.App. 1982) (finding the evidence insufficient to support deviate sexual intercourse); Smykay v. State, 898 S.W.2d 350 (Tex.App.-San Antonio 1995, pet ref'd) (finding the evidence insufficient to support public lewdness). Criminal cases are evaluated under a different standard of review than the substantial evidence test, and we find Donoho and Smykay do not apply.

Under the ordinary meaning of "lewd," Land's conduct in touching Watkins's genitals and licking them can be characterized as vulgar entertainment which constitutes a violation of certain provisions of the Alcoholic Beverage Code. See §§ 11.61(b)(2), 61.71(a)(1), (11), and 104.01(6). Additionally, Watkins's testimony that he observed a pattern of place or manner violations over numerous years is sufficient to support the ALJ's findings and conclusions. We conclude TABC's order is reasonable and supported by substantial evidence, and the trial court erred in substituting its judgment for that of TABC. Issue two is sustained. Our disposition of issue two pretermits consideration of TABC's first issue.

Accordingly, the trial court's judgment is reversed and judgment is rendered that I Gotcha, Inc. d/b/a Main Stage have its Mixed Beverage Permit MB462005 and Mixed Beverage Late Hours Permit LB462006 suspended for ten days or in lieu thereof, pay a civil penalty of $1,500. See Tex. R. App. P. 43.2(c).

Don H. Reavis

Justice

1. The Conclusions of Law mistakenly contain two separate conclusions numbered "3." The other conclusion labeled "3" is not relevant to our analysis as it pertains to adequate notice.

2. I Gotcha cites Hardy St. Invest. v. Texas Water Rights Com'n, 536 S.W.2d 85, 87 (Tex.Civ.App.-Waco 1976, writ ref'd n.r.e.), for the substantial evidence test as being "whether the evidence as a whole is such that reasonable minds could not have reached the conclusion that the agency must have reached in order to justify its action." Hardy, however, misinterpreted the Supreme Court's statement in Railroad Commission v. Shell Oil Co., 139 Tex. 66, 161 S.W.2d 1022, 1030 (1942), that "[i]f the evidence as a whole is such that reasonable minds could not have reached the conclusion that the agency must have reached in order to justify its action, then the order must be set aside." Cf. Suburban Util. Corp., 652 S.W.2d at 364; Dotson v. Tex. State Bd. of Medical Exam., 612 S.W.2d 921, 922 (Tex. 1981).

3. Under the Texas Penal Code, public lewdness occurs if a person engages in sexual contact in a public place, or if not in a public place, the person is reckless about whether another is present who will be offended by the act. See Tex. Pen. Code Ann. § 21.07(a)(3) (Vernon 2003).

4. Terms such as "lewd," "vulgar," and the phrase "public decency," as sole descriptive elements of an offense, have been held too vague to be enforceable in criminal proceedings. See generally Courtemanche v. State, 507 S.W.2d 545 (Tex.Cr.App. 1974) (finding a statute void for vagueness because it contained "lewd" and "vulgar"; Irven v. State, 138 Tex. Crim. 368, 136 S.W.2d 608 (1940) (finding a law ineffective for not sufficiently defining "offensive to public decency"); cf. State v. Eaves, 786 S.W.2d 396, 399 (Tex.App.-Amarillo 1990), aff'd, 800 S.W.2d 220 (Tex.Cr.App. 1990) (holding a statute of the Alcoholic Beverage Code not unconstitutionally vague because "intoxication" is "sufficiently clear and unambiguous to give a person notice of the proscribed conduct").

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NO. 07-10-00388-CV

IN THE COURT OF APPEALS

FOR THE SEVENTH DISTRICT OF TEXAS

AT AMARILLO

PANEL C

FEBRUARY 3, 2011

IN RE YORKSHIRE INSURANCE CO., LTD. AND OCEAN MARINE INSURANCE CO., LTD., RELATORS

Before QUINN, C.J., and HANCOCK and PIRTLE, JJ.

OPINION

Relators, Yorkshire Insurance Company, Ltd., and Ocean Marine Insurance Company, Ltd. (collectively “Insurers”), filed a petition for writ of mandamus seeking the overruling of respondent’s, the 84^th District Court of Hutchinson County, Texas, August 17, 2010 discovery order that certain documents were privileged and that quashed a request to depose Cynthia Gillman Fisher.  Real Parties in Interest, Roy Seger, the estate of Shirley Faye Hoskins, Diatom Drilling Company, and Cynthia Gillman Fisher (collectively, “the Segers”), filed a response urging this Court to deny Insurers’ request for mandamus relief.  We will deny Insurers’ petition for writ of mandamus.

Background[1]

            After this Court reversed and remanded certain issues in this case on direct appeal, see Yorkshire Ins. Co., 279 S.W.3d at 775, Insurers filed a Notice of Deposition seeking to depose Cynthia Gillman Fisher.[2]  Gillman was the general partner of Diatom, who was the insured under a comprehensive general liability policy that assigned its right to bring a Stowers[3] action against Insurers to Roy Seger and Shirley Faye Hoskins.  In response, the Segers moved to quash the deposition of Gillman and for protective order regarding certain documents that had been held privileged by the trial court by order dated December 14, 2004, but that had subsequently become part of the appellate record.[4]

            In the direct appeal resulting in remand, Insurers challenged the trial court’s ruling that the documents now sought to be protected by the Segers were privileged as work product and attorney-client communications.  Our review of the record revealed that, “[s]ome of the evidence sought by Insurers was included in the appellate record in this cause.”  Id. at 773.  Further, we noted that, “[a]fter reviewing all of the documents provided to the trial court for in camera inspection [which remain under seal in the appellate record], the documents Insurers seek by this issue are duplicates of the documents that were included in the appellate record [unsealed].”  Id. at 774.  Because nothing in the appellate record reflected that Diatom or Gillman had asserted any claim that these documents were privileged after they were publicly disclosed, we concluded that, for the present litigation, “Diatom’s prior assertion of privilege as to these documents has been waived.”  Id. at 773.  However, we expressly noted that, because Diatom was no longer a party to the case, our determination that Diatom had waived its prior assertion of privilege in that appeal was not a determination that Diatom had actual knowledge of the disclosure or that it had waived its right to subsequently assert the privilege.  Id. at 773 n.28. 

            The trial court held a hearing on the motion to quash the deposition of Gillman and for protective order relating to the documents.  During this hearing, Diatom[5] asserted that the documents were privileged and that it had not voluntarily produced the documents to anyone other than when they were submitted to the trial court for in camera inspection.  Diatom suggested that the documents must have been erroneously included unsealed in the appellate record by the district clerk.  Further, the Segers contended that Insurers had already deposed Fisher for the allotted ten hours and that the entirety of this deposition was conducted before the trial court ruled on Diatom’s claim that these documents were privileged.  Insurers responded by contending that this Court had already determined that Diatom’s claim of privilege as to these documents had been waived and that, to the extent that we did not so hold, it was because the record did not establish whether Diatom was actually aware of the public disclosure of these documents.  Insurers then presented evidence that Diatom was actually aware of the public disclosure of these documents by October 31, 2005, and that it took no action to assert its claim of privilege relating to these documents until it filed its motion to quash and for protective order on February 8, 2010.  Insurers also contended that they had a substantial need for additional time to depose Gillman because they did not know the contents of these documents until after they had completed their deposition of Gillman and these documents go to the heart of Insurers’ Gandy[6] defense to the pending Stowers action.  At the close of this hearing, the trial court took the issue under advisement.  Subsequently, on August 17, 2010, the trial court issued its order quashing the deposition of Gillman and further finding that the documents are privileged and may not be used in this litigation.  The trial court’s order additionally orders that all parties and counsel return any copies of these documents to Gillman’s attorney within 30 days of the order and that the district clerk place any unsealed copies of these documents in the clerk’s record under seal. 

            By their petition for writ of mandamus, Insurers contend that they are entitled to mandamus relief because the trial court clearly abused its discretion by (1) ruling that documents filed in the public records of an appellate court for many years are subject to a claim of privilege, (2) failing to apply the snap back procedures of Texas Rule of Civil Procedure 193.3(d) to Diatom’s assertion of privilege, (3) prohibiting the use of the documents in the underlying litigation, requiring all parties and lawyers to return all copies of the documents, and ordering public records sealed without compliance with applicable rules, and (4) failing to apply the crime-fraud exception to Diatom’s claim of privilege.  Insurers also contend that the trial court’s abuse of discretion leaves them with no adequate remedy by appeal because the challenged order vitiates Insurers’ ability to present their Gandy defense.  We disagree with Insurers’ contention that the trial court’s order denies them an adequate remedy by appeal.

Standard of Review

            Mandamus is an extraordinary remedy that will issue only if (1) the trial court clearly abused its discretion and (2) the party requesting mandamus relief has no adequate remedy by appeal.  See In re Prudential Ins. Co. of Am., 148 S.W.3d 124, 135-36 (Tex. 2004); Walker v. Packer, 827 S.W.2d 833, 839 (Tex. 1992).  A trial court has no discretion in determining what the law is or in applying the law to the facts.  Walker, 827 S.W.2d at 840.  When mandamus is sought to overcome a trial court’s conclusion that evidence is privileged, this Court must determine whether the party asserting the privilege has discharged its burden of proof.  See Barnes v. Whittington, 751 S.W.2d 493, 494 (Tex. 1988).  An appellate remedy is not inadequate because it may involve more expense or delay than obtaining an extraordinary writ, rather it is inadequate only when parties stand to lose their substantial rights.  Walker, 827 S.W.2d at 842.  Whether ordinary appeal can provide an adequate remedy to a trial court’s abuse of discretion depends on a careful analysis of the costs and benefits of interlocutory review.  In re McAllen Med. Ctr., Inc., 275 S.W.3d 458, 464 (Tex. 2008).  This balancing analysis recognizes that the adequacy of an appeal depends on the facts involved in each case.  Id. at 469. 

The Adequacy of Appeal

            For purposes of this analysis, we will assume without deciding that Insurers met their burden to establish that the trial court clearly abused its discretion in issuing its August 17, 2010 discovery order.  However, to establish their entitlement to mandamus relief, Insurers must also establish that ordinary appeal would not provide them adequate relief.  See In re Prudential, 148 S.W.3d at 135-36; Walker, 827 S.W.2d at 839.  In attempting to meet this burden, Insurers contend that the trial court’s order denies discovery going to the heart of Insurers’ Gandy defense, and denies the reviewing court evidence that would be necessary for it to determine whether the trial court’s erroneous order was harmful.[7]

            As this Court has previously recognized, the general rule in a Stowers action is that damages are fixed as a matter of law in the amount of the excess of the judgment rendered in the underlying suit in favor of the plaintiff over the applicable policy limits.  See Yorkshire Ins. Co., 279 S.W.3d at 772.  However, the Texas Supreme Court has created an exception to this general rule when the insured assigns his Stowers claim to the plaintiff in the underlying suit.  See Gandy, 925 S.W.2d at 714.  When such an assignment occurs, the underlying judgment is not only not conclusive, but is inadmissible as evidence of damages unless rendered as the result of a “fully adversarial trial.”  Id.  In making the determination whether an underlying judgment was the result of a fully adversarial trial, we must review the extent to which the parties to the underlying proceeding participated.  See Yorkshire Ins. Co., 279 S.W.3d at 772 n.25 (citing Gandy, 925 S.W.2d at 713).  When the judgment is an agreed judgment, default judgment, or when the underlying defendant’s participation is so minimal as to evidence that the hearing was not adversarial, the judgment resulting from that hearing may not be admitted as evidence of damages in the Stowers action.  Id. (citing Gandy, 925 S.W.2d at 713, 714).

            In analyzing Insurers’ Gandy defense in the initial appeal of this case, we noted that the Segers’ only evidence of damages in the Stowers action was the judgment from the underlying suit, and that the trial court could only direct a verdict on damages in favor of the Segers if the Insurers failed to raise a genuine issue of material fact regarding the reliability of the judgment as evidence of Diatom’s damages.  See id. at 773.  In other words, we had to determine whether Insurers raised a genuine issue of material fact regarding whether the judgment from the underlying suit was the result of a fully adversarial trial.  Our conclusion that the evidence raised such a genuine issue of material fact did not rely on anything contained within the documents or from the deposition testimony of Gillman.[8]  Thus, our review of Insurers’ Gandy defense was limited to a review of Diatom’s participation in the underlying proceeding.

            In the instant petition for writ of mandamus, Insurers contend that the trial court’s order denying them the ability to use the documents and to further depose Gillman “precludes Insurers from forging their Gandy defense” because this discovery “is essential to Insurers’ defense,” and “going through another trial without this vital evidence would result in an utter waste of judicial and party resources.”  We cannot agree with these assertions.  During the first trial of this Stowers action, Insurers raised their Gandy defense, which was rejected by the trial court.  However, on appeal, this Court found that the evidence raised a genuine issue of material fact regarding the defense without considering the documents.  See id.  If, as Insurers now contend, the documents and the additional deposition of Gillman are essential, vital, and necessary to avoid an utter waste of judicial resources, then their assertion of the Gandy defense in the initial Stowers action would have been the assertion of a defense that Insurers were aware could not be supported by the available evidence.[9]  However, this was not the case because, as we found, see id., it is a review of Diatom’s participation in the underlying proceeding that determines whether the judgment in that proceeding resulted from a fully adversarial trial.  See Gandy, 925 S.W.2d at 713.  While we certainly understand Insurers’ desire to have the documents and Gillman’s additional deposition testimony available to bolster their Gandy defense, we cannot conclude that this evidence is of such a vital nature as to justify this Court’s interlocutory interference with the trial court’s discovery rulings.  See In re McAllen Med. Ctr., Inc., 275 S.W.3d at 464.

Conclusion

            Because this Court concludes that Insurers have failed to meet their burden to show how the trial court’s August 17, 2010 discovery order denies them an adequate remedy by appeal, Insurers’ petition for mandamus relief is denied.[10]

                                                                                                Mackey K. Hancock

                                                                                                            Justice

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[1] We will limit our discussion of the facts and procedural history in this opinion to those that are directly relevant to our disposition of this matter.  For a more complete recitation of the facts and procedural history of this litigation, see our June 20, 2007 opinion.  See Yorkshire Ins. Co. v. Seger, 279 S.W.3d 755 (Tex.App.—Amarillo 2007, no pet.).

[2] In an effort to be consistent with our prior opinion, further reference to Cynthia Gillman Fisher will be by reference to Gillman.

[3] See G.A. Stowers Furniture Co. v. Am. Indem. Co., 15 S.W.2d 544, 548 (Tex. Comm’n App. 1929, holding approved).

[4] Specifically, the documents at issue in this proceeding are identified as “Privileged Documents 1-44 Delivered from Jody Sheets to Mark N. Buzzard in Open Court on January 8, 2003.”  Further reference to “the documents” will be references to the documents so identified and appearing unsealed in the appellate record.

[5] During this hearing and in the briefs submitted in this mandamus proceeding, the Segers appear to contend that Diatom and Gillman have separate rights to claim privilege in regard to these documents.  However, it is clear that Gillman’s participation in this case has always been as a representative of Diatom and not in her individual capacity.  Further, the trial court’s December 14, 2004 order finding these documents to be privileged was based on Diatom’s assertion of privilege, rather than Gillman’s.  As such, while we recognize that Gillman is the individual that possesses the right to assert the privileges, in this case and as to these documents, she holds that right as the representative of Diatom.

[6] See State Farm Fire & Cas. Co. v. Gandy, 925 S.W.2d 696, 714 (Tex. 1999). 

[7] Both of Insurers’ contentions regarding how the trial court’s discovery ruling denies them an adequate remedy by appeal are categories of discovery rulings that were identified by the Texas Supreme Court as rulings that would render appeal inadequate.  See Walker, 827 S.W.2d at 843.  However, the ad hoc categorical approach employed in Walker has subsequently been rejected by the Texas Supreme Court in favor of the balancing of costs and benefits of mandamus review, as presented in In re Prudential, 148 S.W.3d at 136.  See In re McAllen Med. Ctr., 275 S.W.3d at 468-69.

[8] Specifically we stated, “Insurers raised the question of whether the judgment in the underlying action was the result of a fully adversarial trial.  As evidence that it was not, Insurers correctly indicated that Diatom was not represented by counsel at the trial in the underlying suit, made no opening or closing statements, offered no evidence, and conducted no cross-examination of the Segers' witnesses.  Further, Insurers cite the trial court's own characterization of this proceeding as a nihil dicit prove up.”  Id.

[9] This is so because the documents did not become part of the public record until after judgment in the initial Stowers action had been issued and the appellate record was prepared.

[10] Because the trial on the remanded issues was scheduled to begin on November 1, 2010, Insurers filed a motion for stay of trial pending this Court’s resolution of the current mandamus proceeding.  We granted that motion.  As this opinion resolves the current mandamus action, we now vacate our prior stay order.