Corporate Law
There seems to be a trend in Texas by the courts to provide maximum protection to the owners of corporations against claims by creditors of corporations. In one recent case, a Texas Court held that the shareholder of the debtor corporation could not be held personally liable to the corporation or its creditor with respect to any contractual obligation of the corporation on the basis that the shareholder is or was the alter ego of the corporation or on the basis of actual or constructive fraud. We believe that the Courts will hold that similar protections should apply to owners of limited liability companies. Willis v. Donnelly, 199 S.W.3d 262 (Tex. 2006).
Internet Law
Internet law and e-commerce are emerging areas of the law. Many of the issues involve rights to privacy and freedom of Speech. In a recent case a Texas Court held that a Trial Judge could not order an internet service provider to reveal the identity of an anonymous blogger. In Re: Does 1-10, 242 S.W.3d 805 (Tex. App. – Texarkana, 2007).
Employee Agreements not to Compete
One area of the law that has caused much confusion over the past decade is employee agreements covenants not to compete. In a typical situation, an employee signs an agreement as a condition of their employment that they will not compete with their employer upon leaving employment. These covenants are considered restraints of trade and must comply with statutory law to be enforceable. However, the Texas Supreme Court recently handed down an opinion clarifying this area of the law and making it easier for employers to enforce these covenants. Alex Sheshunoff Management Services v. Johnson, 209 S.W.3d. 644 (Tex. 2006).
Proof of Insurance
One troubling area of insurance law involves the right of a third party to rely upon a certificate of insurance for coverage purposes. This is common in the construction industry. In the typical scenario a general contractor will hire a subcontractor and require the subcontractor to add the general contractor as an additional insured to the subcontractor’s commercial general liability policy. The subcontractor is normally required to provide a certificate of insurance showing that the general contractor has been added as an additional insured. However, the courts have now held that under this scenario the general contractor cannot rely upon the certificate of insurance to create coverage. Thus, the party wishing to be named as an additional insured should now require that a complete copy of the policy and declarations page showing all named insured parties be provided. Via Net v. TIG Ins. Co., 211 S.W.3d 310 (Tex. 2007).
Insurance Coverage for Construction Defects
The Texas Supreme Court recently issued a surprising opinion in which it held that a commercial general liability policy may afford protection to a contractor who is sued for the amount it costs to repair defective workmanship. Up until this opinion, many courts held that this was more in the nature of a breach of contract and not covered by liability insurance. You can bet that insurance carriers will be excluding this type of occurrence from coverage in the future. Lamar Homes v. Mid-Continent Co., 242 S.W.3d 1 (Tex. 2007).
Workers Compensation Policy of Temporary Staffing Agency No Help to Client Employer
A concerning insurance decision for employers by the Texas Supreme Court held that an employer that hired a temporary worker from a staffing agency was not protected by the staffing agency’s workers compensation insurance policy from liability for injuries sustained by the temporary worker while on the job. The court said that in order to be protected the employer would have to have their own workers compensation insurance policy in effect. Garza v. Exel Logistics, 161 S.W.3d 473 (Tex. 2005).
Social Host Responsibility for Serving Alcohol to Minors
An adult can now be held liable in Texas for allowing alcohol to be served to a minor if the minor subsequently operates a vehicle while intoxicated and causes an accident. Do not let your teenage kids throw a party in your home and serve alcohol! Texas Alcoholic Beverage Code, § 2.02.