Contract Cases Fare Better Than Torts Claims in Texas Appeals

Given the nature of tort reform laws in Texas, it is not surprising to find that cases on appeal related to contract disputes fared much better than cases based on tort claims.  During the Sept. 2010 to Aug. 2011 time frame, Texas Courts of Appeal reversed almost half of the lower court’s judgments based on tort claims (49%) versus a reversal rate of only one third (32%) in contract disputes.

Although this may seem like a fairly small variance, it is actually more significant than it appears at first blush. Due to enactment of Texas’ tort reform laws, the total number of tort claims has dropped significantly, as plaintiff’s counsel now choose to take more compelling cases to court. The Office of Court Administration in Texas has reported a 12% drop in the number of “injury or damage” cases filed from 2002 to 2010. So even the “better” tort claims have even odds of being reversed on appeal.

In summary, creditors should take extra pains to obtain signed agreements documenting the terms of the deal and should include a contract-based claim whenever possible. 

By: Cynthia W. Veidt

 

Source: Liberato & Rutter, “Reasons for Reversal in the Texas Courts of Appeal,” 48 Hous. L. Rev. 993 (2012).

What is the registered office?

The address listed for the Registered Agent is referred to as the “registered office.”  The registered office need not be a place of business for the entity.  Generally speaking, the registered agent must be capable of being served at the registered office.  For organizations serving as the registered agent, Texas law states explicitly that there must be an employee on hand during normal business hours in order to receive any process, notice or demand that is sent to the organization.  While the statute does not impose the same explicit requirements on a person serving as the registered agent, Texas law nevertheless imposes a general requirement that the registered office be a “street address where process may be personally served on the registered agent” (See Texas Business Organizations Code Section 5.201(c)(1)).

Post by Iain A. Berry, Attorney

Who can serve as my registered agent? What if I don’t have a registered agent or fail to keep my registered agent up to date?

A person can be a registered agent if they are a resident of Texas and have consented to be a registered agent. This can include any person who is an employee, officer or owner of the business, but it may be any third party that has agreed to serve as the registered agent.  An organization may be a registered agent if they are authorized to do business in Texas, and have similarly consented to be the registered agent.  In fact, there are companies whose entire business is to serve as the registered agent for various entities.  Failure to secure the consent of the person or entity being listed as the registered agent may constitute the filing of a false instrument and may open the entity who filed the instrument, and any person who directed or signed the document up to potential civil liability and criminal charges, so it is vitally important to obtain a signed written consent of the registered agent and it is advisable for the entity to file this document among the entity’s corporate books/papers.

Failure to maintain a registered agent for an entity is a serious matter and can have dire consequences for a business.  Under Texas law, when an entity fails to appoint a registered agent in the state (or fails to maintain a registered agent at the registered office), the person seeking to serve a lawsuit or other notice on the entity is then entitled to serve that process or notice on the Secretary of State in place of that registered agent.  By serving the secretary of state, that lawsuit or other notice has been deemed to be served on the entity itself, regardless of whether the entity actually is made aware of the lawsuit or notice.  This means that a lawsuit may filed and served on an entity and a judgment taken against the entity potentially without the entity ever actually knowing about it.


By Iain Berry

What is a registered agent? Do I need one for my business?

A Registered Agent is a person or organization that may be served any process, notice, or demand that is required or permitted by law to be served on the entity they represent.  Texas law requires that corporate entities (corporations, limited partnerships, limited liability companies, professional associations, cooperatives, and real estate investment trusts) operating in the state have a registered agent (See Texas Business Organizations Code Section 5.201).  At the time of the creation of the corporate entity, the registered agent must be declared.

By Iain Berry, Attorney