Judicial Admission Alone Defeats Anti-SLAPP Motion

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You may not lose your case if you fail to file a response to an Anti-SLAPP motion to dismiss, but you should always file a response . . . to any dispositive motion. In Bumjin Park and Jaeyoung Park v. Suk Baldwin Properties, LLC, et al., the Austin Court of Appeals, affirming the trial court’s denial of the movants’ motion to dismiss, held that a judicial admission by the movants established by clear and specific evidence the nonmovants’ counterclaim under section 17.50(c) of the Texas Deceptive Trade Practices Act. In other words, the plaintiffs defeated their own motion by their own pleadings.

Facts and Holding in Suk Baldwin Properties, LLC

The plaintiffs in Suk Baldwin Properties, LLC alleged that they purchased property from the defendants for $1,000,000 and that the defendants made various misleading statements about the condition of the property, among other misleading statements, during the negotiations. The plaintiffs asserted causes of action against the defendants for common law fraud and violations of the Deceptive Trade Practices Act. The defendants filed counterclaims for breach of contract, tortious interference with existing contracts and prospective business, and for attorney fees and court costs on the ground that the plaintiffs’ DTPA action was “groundless in fact or law or brought in bad faith, or brought for the purpose of harassment.” Tex. Bus. & Com. Code § 17.50(c). The plaintiffs filed a motion to dismiss the defendant's’ counterclaims pursuant to Texas Civil Practice and Remedies Code § 27.003(a), alleging that the defendants’ counterclaims were based on, related or in response to the plaintiffs’ exercise of their rights to petition government, namely filing their Original Petition.

The appellate court held the defendants’ tortious interference and breach of contract claims were based on alleged conduct by the plaintiffs outside the context of their lawsuit. The plaintiffs’ petition was based on alleged misrepresentations or material-misleading statements during the negotiations for the purchase of the property at issue. The defendants’ tortious interference and breach of contract claims alleged the plaintiffs engaged in a concerted effort to run off all existing tenants, including one of the defendants (Cen-Tex Dental), by “increasing their rent significantly” and “refus[ing] to provide services required by the tenants’ leases” and by preventing Cen-Tex Dental from erecting its sign for its customers to see and blocking customer parking and obstructing the front view of Cen-Tex Dental’s office with large trash dumpsters. The appellate court concluded that the plaintiffs failed to prove by a preponderance of the evidence the defendants’ counterclaims were based on, related or in response to the plaintiffs filing their Original Petition.

For the defendants’ section 17.50(c) counterclaim, however, the appellate court found the plaintiffs sustained their burden to prove Chapter 27 applied. The defendants sought attorney fees and court costs against the plaintiffs on the ground that the plaintiffs’ DTPA causes of action were groundless, in bad faith, or solely to harass the defendants. As a result, the defendants’ section 17.50(c) counterclaim was directly in response to the Plaintiffs’ DTPA claims in their Original Petition. The burden then shifted to the defendants to demonstrate by clear and specific evidence a prima facie case for each essential element to their section 17.50(c) counterclaim. See Tex. Civ. Prac. & Rem. Code § 27.005(c).

Since the plaintiffs filed no affidavits in support of their motion to dismiss and the defendants filed no response whatsoever, the appellate court looked solely to the pleadings to determine whether the defendants met their burden of proof. The plaintiffs relied on the fact that the defendants failed to file a response to the motion to dismiss as a sufficient ground for the court to find the defendants did not sustain their burden. However, the plaintiffs affirmatively pleaded in their Original Petition that they paid $1,000,000 for the property at issue. The plaintiffs’ assertion of fact as to the purchase price, the court held, constituted a judicial admission. Section 17.49(g) of the DTPA exempts from the DTPA commercial transactions “involving total consideration by the consumer of more than $500,000.” As a result, the appellate court held, “‘[the plaintiffs’] judicial admission as to the purchase price of the property was sufficient to establish by clear and specific evidence a prima facie case’ that their DTPA claims are groundless in fact.”

Implications of and Lessons from the Suk Baldwin Properties, LLC Holding

The Suk Baldwin Properties, LLC holding carries two large implications. First, asserting a section 17.50(c) counterclaim brings that counterclaim within Chapter 27’s reach, making it ripe for an Anti-SLAPP motion to dismiss. Section 17.50(c) can only be raised in response to a DTPA cause of action and, therefore, will always implicate Texas Civil Practice & Remedies Code chapter 27. Second, a judicial admission in the movant’s pleadings alone can defeat the movant’s motion, even if the movant demonstrates that Chapter 27 applies and even when the burden of proof lies with the nonmovant.

For practitioners, there are some lessons to glean from Suk Baldwin Properties, LLC. For one thing, if you are representing a client against whom a DTPA action is pending, and you truly believe the DTPA action is groundless in fact, brought in bad faith, or brought solely to harass your client, consider whether an alternative route to filing a counterclaim exist to recover attorney fees and court costs under section 17.50(c). Section 17.50(c) does not state whether a party wishing to recover attorney fees or court costs under its provision must file with the court a request for such fees and costs in a motion or pleading or any other document. Section 17.50(c) simply states: “On a finding by the court that an action under this section was groundless in fact or law or brought in bad faith, or brought for the purpose of harassment, the court shall award to the defendant reasonable and necessary attorneys' fees and court costs.” Also, section 17.50(c) is not an affirmative defense, so it need not be pleaded. See O’Shea v. International Business Machines Corp., 578 S.W.2d 844, 848 (Tex. App.—Houston [1st Dist.] 1979, writ ref’d n.r.e.). Since section 17.50(c)’s plain language makes clear that the judge, not a jury, decides whether the DTPA action was groundless, brought in bad faith or to harass, it would appear one could raise the issue at a hearing on a dispositive motion or raise it in the trial of the matter, rather than in an actual filing with the court, thereby taking the section 17.50(c) issue outside of Chapter 27’s reach. After all, Chapter 27 only applies to pleadings or filings with the court that seek legal or equitable relief. See Tex. Civ. Pray. & Rem. Code § 27.001(6). Section 17.50(c) may be an issue the judge can take up sua sponte, so informing the court of the issue at a hearing may be enough to recover under section 17.50(c). See Blizzard v. Nationwide Mut. Fire Ins. Co., 756 S.W.2d 801, (Tex. App.—Dallas 1988, no writ) (“[F]indings prerequisite to an award of attorney fees under section 17.50(c) must be made by the court and not by the jury.”); see also Schlager v. Clements, 939 S.W.2d 183, 190 (Tex. App.—Houston [14th Dist.] 1996, (holding the question whether a suit is groundless in fact or law or brought in bad faith under section 17.50(c) “is a question of law for the trial court”).

But don’t you have to specifically plead that you seek attorney fees and the statutory basis for an attorney fees award? Not always. For example, section 17.50(c) is similar to Texas Civil Practice & Remedies Code § 27.009(b), which states: “If the court finds that a motion to dismiss filed under this chapter is frivolous or solely intended to delay, the court may award court costs and reasonable attorney's fees to the responding party.” Chapter 27 does not require the party responding to an Anti-SLAPP motion to dismiss to first amend its answer to include a request for an award of attorney fees pursuant to Chapter 27 before the court may award attorney fees to the respondent. The responding party, for all intents and purposes, may simply request the court to award the respondent reasonable attorney fees and court costs if the judge denies the motion and finds that the motion was frivolous or for the purpose of delay.

More obvious lessons to glean from the Suk Baldwin Properties, LLC holding include the following: (1) always check your pleadings before they are filed to ensure you do not affirmatively state facts that defeat your client’s own cause of action; (2) always support an Anti-SLAPP motion to dismiss, or response thereto, with an affidavit; and (3) always file a response to any dispositive motion.

Daniel Correa