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Supreme Court Clarifies Abuse of Discretion Standard In Merits-Based Review of New Trial Motions

On April 1, 2016, the Texas Supreme Court sought to clarify “merits review” of new trial orders on mandamus review. In In re Bent[1], the Court confirmed that the familiar “abuse of discretion” standard applied to merits review of orders granting a new trial. In doing so, the Court may be reining in merits review before it crosses too far into sufficiency issues.

The controversy in In re Bent was between homeowners and an insurer, which originated in the aftermath of Hurricane Ike, and escalated in the wake of several re-assessments of the damage, the intervention of the City of Piney Point Village, and eventual foreclosure of the residence. A jury found no breach of contract by the Bents’ insurer, but did find the insurer violated certain Insurance Code provisions and awarded $400,000 in damages and $185,000 in attorney’s fees (but no appellate fees). The Bents successfully moved for a new trial. The court cited five reasons for granting a new trial, four of which were the focus of the Supreme Court’s opinion.

In re Bent is the latest opinion in an evolving area: mandamus review of a trial court’s power to grant a new trial. Until recently, the trial court’s discretion to grant a new trial “in the interests of justice and fairness” was largely unfettered. See Johnson v. Fourth Court of Appeals, 700 S.W.2d 916, 917 (Tex. 1985). The landscape shifted in 2009, when the Supreme Court found that litigants were entitled to a “reasonably specific explanation” from the trial court as to why a new trial after jury verdict was required. In re Columbia Med. Ctr. of Las Colinas, Subsidiary, L.P., 290 S.W.3d 204, 213 (Tex. 2009). Subsequent opinions sketched the contours of the new duty: the trial court’s order must identify an appropriate basis for a new trial, and the reasons given must be tied to the facts of the case before it. In re United Scaffolding, Inc., 377 S.W.3d 685, 688–89 (Tex. 2012). Finally, a trial court’s order must do more than meet these criteria; the reasons given must be supported by the record. In re Toyota Motor Sales, U.S.A., Inc., 407 S.W.3d 746, 749 (Tex. 2013). The Court labeled this last requirement “merits review.”

In In re Bent, the Court revisited the standard of review (which was not mentioned in the Toyota opinion). The Court first acknowledged that reviewing a trial court’s new trial order for support in the record “broke new ground,” but dismissed the idea that it had created a new standard. Instead, merits-based review was presented as a different aspect of the traditional use of mandamus: “Importantly, this Court has never suggested merits review of new-trial orders should be conducted under anything other than the abuse-of-discretion standard that is familiar and inherent to mandamus proceedings… ‘Merits review’ was simply a reference to the new authority granted to courts of appeals to consider, in mandamus proceedings, whether the record supports the trial court’s rationale for ordering a new trial.”

The Bents challenged four of the trial judge’s five enumerated reasons for granting a new trial. Specifically, the Bents argued: (1) the jury’s failure to find breach of the homeowner’s policy was contrary to the great weight and preponderance of the evidence; (2) there was no violation of the trial court’s order in limine concerning the Bents’ purported failure to seek a variance from Piney Point Village; (3) the diminished-value award was not supported by the evidence; and (4) the jury improperly failed to award appellate attorney’s fees. The Court disposed of reason (1) because the trial court presented matter-of-law or no-evidence complaints; the Court reasoned these are not “facially valid” reasons for granting a new trial. Reason (2) was disposed of based on the merits-based review announced in Toyota; the record showed that the insurer did not violate the motion in limine. Reasons (3) and (4) were rejected because the trial court’s order failed to show “that the trial judge considered the specific facts and circumstances of the case at hand and explain how the evidence (or lack of evidence) undermines the jury’s findings.”

Ultimately, the Court’s decision in In re Bent highlights the importance of a trial court’s duty to dot the “I’s” and cross the “T’s” if it intends to grant a new trial after jury verdict. By stressing that “merits review” is but one facet of the mandamus power, In re Bent reminds reviewing courts that the trial court’s decision to grant a new trial is still subject to some deference.

Questions about this case or other commercial litigation matters may be referred to Barry Conge Harris LLP appellate partner Andrew Parma (dparma@barrycongeharris.com; 713.331.7624) or litigation partner Felicia L. Harris (fharris@barrycongeharris.com; 713.331.7662).

Barry Conge Harris LLP is a full-service law firm with experience representing clients in diverse legal matters including commercial litigation and appeals, corporate and energy.

[1] No. 14-1006, __ S.W.3d __, 2016 WL1267580 (Tex., April 1, 2016).