Workforce Investment Act of 1998

"The boys in Littleton are the tip of the iceberg. And the iceberg is all boys."

2008-09-25T22:19:00.000-07:00

Sunday, September 14, 2008

OUR SCHOOL SYSTEM: FOOD FOR THOUGHT: IS THE SCHOOL SYSTEM AND SOCIETY DOING RIGHT BY THE MALES IN OUR SOCIETY IN EDUCATION AND BEYOND

FROM WND.COM. FOOD FOR THOUGHT:

Are We Leaving The Boys Behind in School?

"The evidence of this almost unthinkable scenario is everywhere:
SCHOOL: In public school classrooms across America, in every category and every demographic group, boys are falling behind. Girls excel and move on to college, where three out of five students are female, while young boys – who don't naturally thrive when forced to sit still at a desk for six hours a day – are diagnosed by the millions with new diseases that didn't exist a generation ago. To make their behavior more acceptable, they are compelled to take hazardous psycho-stimulant drugs like Ritalin.
Boys are more than 50 percent more likely to repeat elementary school grades than girls, a third more likely to drop out of high school and twice as likely to have a "learning disability." And the suicide rate among teen boys is far higher than that of girls.
"What we have done," explains Thomas Mortenson, senior scholar at the Pell Institute for the Study of Opportunity in Higher Education, "is we have a K-12 school system that seems to work relatively well for girls and does not work for a very large share of boys."
HOME: It's well known that roughly half of America's marriages end in divorce, but not nearly as well known that two out of three of those divorces are initiated by the wives. Moreover, America's family court system is scandalously biased in favor of the mother in child custody disputes. Fathers get custody of children in uncontested cases only 10 percent of the time and 15 percent of the time in contested cases. Meanwhile, mothers get sole custody 66 percent of the time in uncontested cases and 75 percent of the time in contested cases.
"Where you have minor children, there's really no such thing as no-fault divorce for fathers," says Detroit attorney Philip Holman, vice president of the National Congress for Fathers and Children. "On the practical level, fathers realize that divorce means they lose their kids."
Unfortunately, this loss by children of their fathers' influence is directly responsible – far more than any other cause – for the modern national scourges of gang life, crime and much more.
CULTURE: Fifty years ago, "Father knows best" was a hit TV show, in which insurance agent Jim Anderson (actor Robert Young) would come home from work each evening, trade his sport jacket for a nice, comfortable sweater, and then deal with the everyday growing-up problems of his family. He could always be counted on to resolve that week's crisis with a combination of kindness, fatherly strength and common sense.
Today, television virtually always portrays husbands as bumbling losers or contemptible, self-absorbed egomaniacs. Whether in dramas, comedies or commercials, the patriarchy is dead, at least on TV where men are fools – unless of course they're gay. On "Queer Eye for the Straight Guy," the "fab five" are supremely knowledgeable on all things hip, their life's highest purpose being to help those less fortunate than themselves – that is, straight men – to become cool.
As this issue of Whistleblower shows, experts like Ph.D. scholar Christina Hoff Sommers, author of "The War Against Boys," agree: "It's a bad time to be a boy in America." Sommers provides example after example of what can only be called an all-out anti-male campaign:
"The carnage committed by two boys in Littleton, Colorado," declares the Congressional Quarterly Researcher, "has forced the nation to reexamine the nature of boyhood in America." William Pollack, director of the Center for Men at McLean Hospital and author of the best-selling "Real Boys: Rescuing Our Sons from the Myths of Boyhood," tells audiences around the country, "The boys in Littleton are the tip of the iceberg. And the iceberg is all boys."
In fact, Sommers reveals, it has become fashionable in elitist circles to conspire to change boys' very identity:
There are now conferences, workshops, and institutes dedicated to transforming boys. Carol Gilligan, professor of gender studies at Harvard Graduate School of Education, writes of the problem of "boys' masculinity … in a patriarchal social order." Barney Brawer, director of the Boys' Project at Tufts University, told Education Week: "We've deconstructed the old version of manhood, but we've not [yet] constructed a new version." In the spring of 2000, the Boys' Project at Tufts offered five workshops on "reinventing Boyhood." The planners promised emotionally exciting sessions: "We'll laugh and cry, argue and agree, reclaim and sustain the best parts of the culture of boys and men, while figuring out how to change the terrible parts."
"Terrible"? As this edition of Whistleblower shows, there is nothing wrong – and a very great deal right – with boys and masculinity. As maverick feminist Camille Paglia courageously reminds her men-hating colleagues, masculinity is "the most creative cultural force in history."
"The problem," said David Kupelian, managing editor of WND and Whistleblower, "is that misguided feminists, intent on advancing a radically different worldview than the one on which this nation was founded, have succeeded in fomenting a revolution. And that revolution amounts to a powerful and pervasive campaign against masculinity, maleness, boys, men and patriarchy."

2 comments:

funding provided through the Workforce Investment Act of 1998 (WIA)

2008-06-18T05:17:00.000-07:00

Workforce Development

The Texas Workforce Commission designated 28 Workforce Development Boards to administer funding provided through the Workforce Investment Act of 1998 (WIA). Many juvenile probationers are eligible to receive the services provided by this funding.

Youth eligible for these services are:

* Low income youth between the ages of 14 and 21 who meet at least one of the following criteria:
o Deficient in basic literary skills
o A school dropout
o Homeless, a runaway, or a foster child
o Pregnant or a parent
o An offender
o An individual who requires additional assistance to complete an educational program, or to secure and hold employment.

Workforce Boards are mandated to provide the following services to eligible youth:

* Tutoring, study skills training, and instruction to assist with completion of secondary schools
* Alternative secondary schools
* Summer employment opportunities linked to academic and occupational learning
* Paid and unpaid work experiences, internships and job shadowing
* Occupational skills training
* Leadership development opportunities
* Supportive services
* Adult mentoring
* Follow up services
* Comprehensive guidance and counseling

In addition, the Workforce Investment Act requires each board to appoint a “Youth Council.” The WIA mandates that the Youth Council “shall include representatives of youth service agencies, including juvenile justice and local law enforcement agencies.”

The duties of the Youth Council include developing portions of the local plan relating to eligible youth; recommending eligible providers of youth activities; conducting oversight with respect to the eligible providers; and coordinating youth activities.

Frequently asked questions:

* How can I find out more information about the services available in my community?
* How can our chief become a member of the youth council?

How can I find out more information about the services available in my community?
Contact your local workforce development board or workforce one-stop center. You can find information on both by going to Texas Workforce Commission’s website.

How can our chief become a member of the youth council?
Contact your local workforce development board. Click here for more information on your local workforce development board.

basis, factual, legal, or jurisdictional, existed. Fourth, Counter Defendants attempted to have [Livesay] thrown in jail for a debt,...

2008-03-20T01:52:00.000-07:00

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NUMBER 13-06-00367-CV

COURT OF APPEALS

THIRTEENTH DISTRICT OF TEXAS

CORPUS CHRISTI - EDINBURG

PAUL C. TANG and

STACY J. HAIGNEY, Appellants,

v.

EVANGELINA GARCIA and,

KEITH LIVESAY Appellees.

On appeal from the County Court at Law No. 5 of

Hidalgo County, Texas.

MEMORANDUM OPINION

Before Chief Justice Valdez and Justices Yañez and Vela

Memorandum Opinion by Chief Justice Valdez

Appellants, Paul Tang and Stacy Haigney, appeal the trial court's denial of their special appearance. Tex. Civ. Prac. & Rem. Code Ann. § 51.014(a)(7) (Vernon Supp. 2006). They contend that (1) appellees, Evangelina Garcia and Keith Livesay, failed to produce sufficient evidence to support the denial of their special appearance; (2) the trial court erred in denying their special appearance; and (3) appellees' claims in the underlying suit are moot because of the supreme court's decision in a related mandamus proceeding. We reverse and render.

I. BACKGROUND

The underlying suit is a bill of review proceeding that is related to a personal injury suit. On November 29, 2001, Garcia filed a personal injury suit against Burlington Coat Factory Warehouse of McAllen, Inc. ("Burlington"). The trial court rendered a default judgment in Garcia's favor on March 25, 2002. In September 2002, Garcia attempted to execute on the judgment. Burlington filed a bill of review and sought mandamus relief. The debate over the default judgment's status was not settled until July 1, 2005, when the supreme court declared the default judgment interlocutory. See In re Burlington Coat Factory Warehouse of McAllen, Inc., 167 S.W.3d 827, 831(Tex. 2005) (orig. proceeding). While the mandamus petition concerning the default judgment was pending, Garcia filed counterclaims in the bill of review proceeding against Burlington and two of Burlington's in-house attorneys, Tang and Haigney. Livesay entered the bill of review proceeding as an intervenor against Burlington and Tang. Tang and Haigney each filed a special appearance. (1)

Garcia's counterclaims sound in breach of contract, fraud, and wrongful injunction; she sought damages, attorney's fees, interest, and court costs. Factually, Garcia alleged the following:

After the writ of execution had been served, [Burlington] and [Garcia] entered into an agreement, where [Garcia] would cease the execution in exchange for the full amount of the judgment. Tang and/or Haigney were the agents for . . . Burlington who negotiated such settlement. However, at the time of the agreement, [they] did not possess any present intent to comply. [Garcia] complied with the terms of the agreement. However, [Tang and Haigney] failed to comply. Instead of tendering the proceeds to [Garcia], as promised, [Tang and Haigney] tendered the proceeds to the Hidalgo County's [sic] Sheriff's Office.

Clerk's Record, Vol. 1, pg. 32. In asserting jurisdiction, Garcia contends that the amount in controversy is within the court's jurisdictional limits, venue is proper in Hidalgo County because her cause of action or part of it accrued in Hidalgo County, and the counterclaims are compulsory. Clerk's Record, Vol. 1, pg. 31. Garcia also filed an affidavit, which states that she is not financially able to litigate her case in New Jersey, where Tang and Haigney work.

Livesay's plea in intervention identifies Burlington and Tang as the only counter-defendants. Clerk's Record, Vol. 1, pg. 135. Livesay asserts in the jurisdiction and venue section of his plea that the amount in controversy is within the court's jurisdictional limits, venue is proper in Hidalgo County because the counter-defendants' abusive conduct, in part, occurred in Hidalgo County, and venue is also proper in Hidalgo County because the court possesses jurisdiction over "the main case." Id. Livesay contends that he was retained and paid by Garcia's trial counsel for services related to the personal injury suit that ended in what was believed to be a default judgment. The factual allegations of his plea include:

Counter Defendants immediately breached their settlement agreement. They filed [the underlying] bill of review. Furthermore, they repeatedly lied to both the Court of Appeals and to the Texas Supreme Court, claiming that they filed a bond. No such bond has ever been filed. When Counter Defendants found that [Livesay] had been paid what was justly owed to him, Counter Defendants began a campaign of abuse and harassment. First, there was no basis, either legal or factual, for requiring [sic] Livesay to return any payment. Second, Counter Defendants attempted to serve Livesay with process. No basis existed for such process. Such efforts were unsuccessful. Third, Counter Defendants attempted to have findings made against [Livesay], when [no] basis, factual, legal, or jurisdictional, existed. Fourth, Counter Defendants attempted to have [Livesay] thrown in jail for a debt, when the court was without jurisdiction, and in direct violation of the provision of the Texas Constitution. . . . All of this caused [Livesay] harm and grief. Naturally, there is the mental anguish associated with the threat of being placed in jail for a debt which is not owed, in violation of the Texas Constitution. Counter Defendants' conduct also placed a strain on [Livesay's] marriage, such that [Livesay's] wife filed for divorce.

Clerk's Record, Vol. 1, pg. 136-37. To support jurisdiction, Livesay filed an affidavit, which states:

Counter Defendants attempted to have me become a guest in a Texas jail. This conduct was done intentionally; a party is not accident[ly] placed in jail [sic]. Obviously, the effects of Counter Defendants' misconduct was felt by me in Texas. I did not know whether I would have a sheriff at my front door at any minute. I also did not know whether I would be raped in the Texas prison. Likewise, I did not know how I would insure that my children had food to eat.

Livesay asserted causes of action for abuse of process and "intentional infliction of mental anguish;" he sought damages, interest, and court costs. Livesay supplemented his plea in intervention to include violations of chapters 9 and 10 of the Texas Civil Practice and Remedies Code, violations of rule 13 of the Texas Rules of Civil Procedure, and a "common law action for frivolous pleadings and conduct."

The clerk's record contains an affidavit filed by Corcoran, Garcia's trial counsel. Clerk's Record, Supp. Vol. 1, pg. 5-7. Corcoran states that he was in the process of executing what was then a final default judgment when Tang and Haigney contacted him by telephone, offered to settle the judgment for funds rather than an execution on store merchandise, promised to draft a settlement agreement, and pledged to immediately send payment of the judgment to him. According to Corcoran's affidavit, "[Tang and Haigney] were acting on behalf of Burlington Coat Factory; they were in charge of matters, as opposed to [Burlington's] local attorney." Instead of forwarding the payment to Garcia's counsel, Tang issued a check from a trust account to the Hidalgo County Sheriff's Department. Shortly thereafter, Burlington filed a bill of review in the trial court and a petition for a writ of mandamus in this Court.

The clerk's record also contains affidavits filed by Tang and Haigney. Tang's affidavit states that he is not a Texas resident, is employed as general counsel to Burlington, had never spoken to Garcia or any of her attorneys, and had never reached a settlement agreement with any of the litigants in the personal injury suit. His affidavit also states that he does not have day-to-day contact with the underlying litigation and has directed no action by Burlington's attorneys in this litigation of any kind, including the kind of activities alleged by Livesay.

Haigney's affidavit states that he is not a Texas resident, is employed as a senior attorney in Burlington's legal department, and that he did not speak to Garcia or any of her attorneys. Haigney acknowledged speaking to Deputy Andres Rios of the sheriff's department regarding the deposit of funds in order to prevent Garcia's judgment from being executed.

The only physical evidence found in the record is a copy of a check made on Tang's trust account payable to the Hidalgo County Sheriff's Office and a cover letter addressed to Deputy Rios typed on Burlington Coat Factory Warehouse Corporation stationery.

The trial court denied Tang and Haigney's special appearance. This appeal ensued.

II. APPLICABLE LAW

A. Standard of Review

"Whether a court has personal jurisdiction over a defendant is a question of law." BMC Software Belgium, N.V. v. Marchand, 83 S.W.3d 789, 794 (Tex. 2002). On the underlying standard, the "plaintiff bears the initial burden of pleading sufficient allegations to bring a nonresident defendant within the provisions of the long-arm statute." Id. at 793. At that point, a "defendant challenging a Texas court's personal jurisdiction over it must negate all jurisdictional bases." Id. We conduct a de novo review of the trial court's denial of a special appearance. Am. Type Culture Collection, Inc. v. Coleman, 83 S.W.3d 801, 806 (Tex. 2002). If we must review the facts underlying the legal conclusion, we review those for legal and factual sufficiency. Marchand, 83 S.W.3d at 794.

If a trial court does not issue findings of fact and conclusions of law when ruling on a special appearance (as in this case), we will assume that the court made all necessary findings of fact that are supported by the evidence. Id. at 795. If the record includes the reporter's and clerk's records, those implied findings may be challenged for legal and factual sufficiency. Id. We will affirm the trial court's determination on any legal theory supported by the evidence. Worford v. Stamper, 801 S.W.2d 108, 109 (Tex. 1990).

B. Due Process & Personal Jurisdiction

1. The Texas Long-Arm Statute

The Texas long-arm statute allows Texas courts jurisdiction over nonresident defendants doing business in Texas. Tex. Civ. Prac. & Rem. Code Ann. § 17.042 (Vernon 1997). While the long-arm statute enumerates certain examples of doing business, it does not provide an exclusive list. Id. ("In addition to other acts that may constitute doing business, a nonresident does business in this state if . . . ." describing three acts); see also Marchand, 83 S.W.3d at 795; Schlobohm v. Schapiro, 784 S.W.2d 355, 356-57 (Tex. 1990). The statute is construed as extending Texas courts' jurisdiction over nonresident defendants as far as the federal constitutional requirement of due process permits. Marchand, 83 S.W.3d at 795.

2. Due Process & Minimum Contacts

"The Due Process Clause of the Fourteenth Amendment limits the power of a state court to render a valid personal judgment against a nonresident defendant." World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 291 (1980). A Texas court's personal jurisdiction over a nonresident defendant is constitutional when two conditions are met: (1) the defendant has established minimum contacts with Texas, and (2) the exercise of jurisdiction comports with traditional notions of fair play and substantial justice. Marchand, 83 S.W.3d at 795 (citing Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)). The "touchstone" of the minimum contacts analysis is purposeful availment, i.e., that "the defendant purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws." Michiana Easy Livin' Country, Inc. v. Holten, 168 S.W.3d 777, 784 (Tex. 2005) (quoting Hanson v. Denckla, 357 U.S. 235, 253 (1958)).

The purposeful availment analysis has three components. See Holten, 168 S.W.3d at 785. First, the purposeful availment requirement ensures that a nonresident defendant's contacts with the forum state resulting from the unilateral activities of another party or a third person will not be the sole basis of haling that defendant into the jurisdiction. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475 (1985); Holten, 168 S.W.3d at 785. Thus, we look at only the defendant's contacts with the forum. Holten, 168 S.W.3d at 785. Second, the contacts must be "purposeful" rather than random, isolated, or fortuitous. Rudzewicz, 471 U.S. at 462; Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 774 (1984); Holten, 168 S.W.3d at 785. Third, the defendant must have "availed" itself of the jurisdiction by seeking some benefit, advantage, or profit from the forum state so as to consent to suit there. Holten, 168 S.W.3d at 785. Conversely, "a nonresident may purposefully avoid a particular jurisdiction by structuring its transactions so as neither to profit from the forum's laws nor be subject to its jurisdiction." Id.

3. Specific Jurisdiction

Specific jurisdiction exists when the defendant's alleged liability "arises from or is related to an activity conducted within the forum." Marchand, 83 S.W.3d at 796. In other words, the cause of action must arise from, or relate to, the defendant's purposeful contacts. Schexnayder v. Daniels, 187 S.W.3d 238, 243 (Tex. App.-Texarkana 2006, pet. dism'd w.o.j.).

III. ANALYSIS

A. Garcia's Counterclaims & The Fiduciary Shield Doctrine

In the special appearances, Tang and Haginey asserted that the fiduciary shield doctrine precludes jurisdiction over them. They contend that they cannot be personally liable for actions conducted by or on behalf of Burlington.

The fiduciary shield doctrine is a theory of liability that has been applied in a jurisdictional context. See Siskind v. Villa Found. for Educ., Inc., 642 S.W.2d 434, 437-38 (Tex. 1982) (speaking in terms of "alter ego"). The doctrine shields a nonresident defendant from suit in a forum state when his or her only contacts with that state are in a representative capacity. See Cadle v. Graubart, 990 S.W.2d 469, 473 (Tex. App.-Beaumont 1999, no pet.). We have previously noted that in applying the doctrine,"courts will not hold individual officers, directors, or stockholders liable on the obligations of a corporation except where it appears the individuals are using the corporate entity as a sham to perpetrate a fraud, avoid personal liability, avoid the effect of a statute, or in a few other exceptional situations . . . ." (2) J & J Marine, Inc. v. Le, 982 S.W.2d 918, 927 (Tex. App.-Corpus Christi 1998, no pet.).

In analyzing appellants' fiduciary shield doctrine argument that they were acting on Burlington's behalf, our attention is drawn to the factual allegations and admissions found in the pleadings. A judicial admission is a formal waiver of proof, usually found in pleadings or the stipulations of the parties, that dispenses with the production of evidence on an issue and bars the admitting party from disputing it. Mendoza v. Fidelity & Guar. Ins. Underwriters, Inc., 606 S.W.2d 692, 694 (Tex.1980); De La Pena v. Elzinga, 980 S.W.2d 920, 922 (Tex. App.-Corpus Christi 1998, no pet.). This rule is based on the public policy that it would be unjust to permit a party to recover after he has sworn himself out of court by clear, unequivocal testimony. De La Pena, 980 S.W.2d at 922 (citing United States Fidelity & Guar. Co. v. Carr, 242 S.W.2d 224, 229 (Tex. Civ. App.-San Antonio 1951, writ ref'd)). Pleadings in a particular case, for purposes of use in that case, are regarded as formal judicial admissions. Cameron County v. Velasquez, 668 S.W.2d 776, 782-83 (Tex. App.-Corpus Christi 1984, writ ref'd n.r.e.) (on rehearing) (citations omitted).

In this case, Garcia made a consequential admission. According to Garcia's counterclaim, "Tang and/or Haigney were the agents for . . . Burlington." (emphasis added). Corcoran's affidavit states that, "[Tang and Haigney] were acting on behalf of Burlington Coat Factory; they were in charge of matters, as opposed to [Burlington's] local attorney." (emphasis added). Garcia's pleading and her attorney's affidavit conclusively admit that Tang and Haigney were acting as "agents" or fiduciaries for Burlington. The only physical evidence is a check made payable from Tang's trust account and a cover letter typed on Burlington stationery-hallmarks of one acting in a fiduciary capacity. (3) Moreover, the record contains no evidence that Tang and Haigney obtained some benefit, advantage, or profit from this state so as to consent to suit here. Holten, 168 S.W.3d at 785 (explaining the third element of a purposeful availment analysis).

In this case, Garcia did not plead any facts raising personal liability against Tang and Haigney. To the contrary, she chose to couch her claims against Tang and Haigney in fiduciary terms. Tang and Haigney's fiduciary status is further evidenced by Garcia's former trial attorney's sworn statement that Burlington's lawyers were acting as its agents. Garcia's factual allegations and jurisdictional evidence presents an extraordinarily unique set of facts that compels the application of the fiduciary shield doctrine. The trial court made a mistake of law in denying Tang and Haigney's special appearance as it applied to Garcia's counterclaim and asserting jurisdiction over Burlington's foreign fiduciaries.

B. Livesay's Plea in Intervention & Purposeful Availment

Along with raising the fiduciary shield doctrine, Tang's special appearance contends there is no evidence establishing his minimum contacts with Texas. Specifically, Tang contends that he did not purposefully avail himself of the laws of this State.

When reaching a decision to exercise or decline jurisdiction based on the defendant's alleged commission of a tort, the trial court should rely only upon the necessary jurisdictional facts and should not reach the merits of the case. See Ring Power Sys. v. Int'l De Comercio & Consultoria, S.A., 39 S.W.3d 350, 353 (Tex. App.-Houston [14th Dist.] 2001, no pet.). "The purpose of a special appearance is not to determine liability, but whether the actions alleged by a plaintiff are of a type that suggest a defendant should expect to be subject to Texas jurisdiction." Mort Keshin & Co., Inc. v. Houston Chronicle Publ'g Co., 992 S.W.2d 642, 648 (Tex. App.-Houston [14th Dist.] 1999, no pet.) (emphasis added).

Tang's alleged contacts with this State are, according to Livesay, that "Counter Defendants . . . repeatedly lied to both the Court of Appeals and to the Texas Supreme Court," "began a campaign of abuse and harassment," "attempted to serve Livesay with process," "attempted to have findings made against Livesay," and "attempted to have Livesay thrown in jail." Livesay's affidavit, like his plea, continues the vague identification of parties by asserting that "Counter Defendants attempted to have me become a guest in a Texas jail." Tang swears in his affidavit that he does not have day-to-day contact with the underlying litigation and that he did not direct Burlington's attorney to act as alleged by Livesay.

Specific jurisdiction turns on the defendant's contacts with Texas, not on whether those contacts were tortious. Holten, 168 S.W.3d at 791-92 (Texas Supreme Court "disapproving of those opinions holding that . . . specific jurisdiction turns on whether a defendant's contacts were tortious rather than the contacts themselves."). Livesay's plea and affidavit do not specify which counter defendant "lied" to Texas courts, "began a campaign of abuse and harassment," or "attempted" the actions alleged. Tang offered an affidavit stating that he did not have day-to-day contact with the underlying litigation and that he did not direct Burlington's attorney to partake in the activities alleged by Livesay. (4) Assuming Livesay intended to accuse Tang of every allegation in his plea, he does not refer to a specific act committed, nor does he explain how or where the "attempted" actions occurred. Livesay's vague accusations are entirely inadequate when measured by Holten's requirement of physical facts. See Holten, 168 S.W.3d at 791 (noting that business contacts are generally a matter of physical fact, while tort liability turns on what the parties thought, said, or intended and cautioning judges to focus on physical facts rather than accusations of a tort). Thus, Livesay has neither pleaded nor offered any physical evidence of a purposeful act on Tang's part.

We find the record in the instant case completely devoid of any evidence supporting jurisdiction over Tang based on Livesay's plea. Accordingly, we conclude that Tang has negated all bases for an assertion of specific jurisdiction. The trial court erred in denying Tang's special appearance as to Livesay's claims. Tang and Haigney's second issue is sustained.

IV. CONCLUSION (5)

Because Garcia admitted that appellants were acting in their fiduciary capacity and Tang established that there was no evidence of his purposeful availment regarding Livesay's allegations, we reverse the trial court's denial of the special appearance and render judgment dismissing the claims against Tang and Haigney for want of jurisdiction. (6)

_______________________

ROGELIO VALDEZ,

Chief Justice

Concurring Memorandum Opinion

by Justice Yañez.

Memorandum Opinion delivered and filed

this the 2nd day of August, 2007.

1. The trial court held a hearing where arguments were made, but no live testimony was taken. The clerk's record contains affidavits by Garcia, Livesay, William Corcoran, Gracia's counsel who obtained the default judgment, Tang, and Haigney.

2. We are mindful that the fiduciary shield doctrine has not been used in a specific jurisdiction analysis. Brown v. General Brick Sales Co., 39 S.W.3d 291, 300 (Tex. App.-Fort Worth 2001, no pet.) (noting that where intermediate appellate courts have applied some aspects of the fiduciary shield doctrine, they have limited its application to jurisdictional claims based on the theory of general jurisdiction as opposed to specific jurisdiction). We are also mindful that an agent is not protected from the exercise of specific jurisdiction if he engages in tortious or fraudulent conduct, directed at the forum state, for which he may be held personally liable. SITQ E.U., Inc. v. Reata Rest., Inc., 111 S.W.3d 638, 651 (Tex. App.-Fort Worth 2003, pet. denied); see also Morris v. Kohls-York, 164 S.W.3d 686, 695 (Tex. App.-Austin 2005, pet. dism'd).

3. The term "fiduciary capacity" is "not restricted to technical or express trusts, but includes also such officers or relations as those of an attorney at law, a guardian, executor, or broker, a director of a corporation, and a public officer." Black's Law Dictionary 753 (4th ed. 1951).

4. In the trial court, no objection was raised regarding Tang's affidavit.

5. To the extent a motion for sanctions can be gleaned from Livesay's brief, said motion is hereby denied.

6. This relieves us from having to address Tang and Haigney's first and third issues, for their resolution would not further affect the outcome of this appeal. Tex. R. App. P. 47.1.

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The other party acts in reliance on the misrepresentation and thereby suffers injury.

2008-01-07T21:41:00.000-08:00

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NUMBER 13-97-790-CV

COURT OF APPEALS

THIRTEENTH DISTRICT OF TEXAS

CORPUS CHRISTI

____________________________________________________________________

RUBEN RIVAS AND HAPPY YEARS, INC., Appellants,

v.

CASIMIRO (CASEY) CANTU, Appellee.

____________________________________________________________________

On appeal from the 139th District Court of Hidalgo County, Texas.

____________________________________________________________________

O P I N I O N

Before Chief Justice Seerden and Justices Hinojosa and Yañez

Opinion by Justice Hinojosa

Casimiro Cantu sued Happy Years, Inc. (an adult day-care business), Ruben Rivas, Josie Alvear, and Juan Guerra (shareholders of the corporation), and First State Bank of Mission (Rivas's employer), alleging causes of action, inter alia, for breach of contract and fraud. Guerra was non-suited after he filed for bankruptcy, First State Bank was dismissed from the suit before trial, and Alvear was dismissed from the suit before the charge was submitted to the jury. Only the causes of action against Happy Years and Rivas were submitted to the jury. The jury found that: (a) Happy Years had breached its contract with Cantu, (b) Cantu was entitled to Happy Years stock, and (c) Cantu had suffered damages for constructive dividends paid by the corporation to other shareholders. The jury also found that Rivas had committed fraud against Cantu and found actual and exemplary damages resulting from the fraud.

By six issues, Happy Years contends: (a) the evidence is legally and factually insufficient to support the jury's answers to Question Nos. 1 and 5; (b) the trial court erred in granting judgment in favor of Cantu because there is no evidence or insufficient evidence "to support the trial court's implied finding of Breach of Contract" and because there are no pleadings to support the judgment; and (c) appellee's claims are barred by the statute of frauds. By eleven issues, Rivas contends the evidence is legally and factually insufficient: (a) to support the jury's findings that Rivas committed fraud against Cantu; (b) to support the jury's award of actual damages for fraud; and (c) to support the award of exemplary damages and prejudgment interest. He further complains that Cantu's claims are barred by the statute of frauds. We affirm in part and reverse and remand in part.

A. Jury Findings

The jury answered the following questions:

Question No. 1: Did Casimiro Cantu and Happy Years, Inc., agree: To employee [sic] Casimiro Cantu as executive director for a salary of $2,500.00 per month beginning in March 1990?

Answer: YES

Question No. 2: Do you find that Casimiro Cantu complied with his end of the agreement in Question No. 1?

Answer: YES

Question No. 3: Was Happy Years, Inc.'s failure to comply with the agreement in Question No. 1 excused?

Answer: NO

Question No. 4: What sum of money, if any, if paid now in cash, would fairly and reasonably compensate Casimiro Cantu for his damages, if any, that resulted from such failure to comply with the agreement in Question No. 1?

Do not add any amount for interest on past damages, if any.

Answer: $25,000

Question No. 5: Did Casimiro Cantu and Happy Years, Inc., agree: To award Casimiro Cantu 25% of the Stock of Happy Years, Inc,. if he fulfilled his obligations under their agreement?

Answer: YES

Question No. 6: Do you find that Casimiro Cantu complied with his end of the agreement in Question No. 5?

Answer: YES

Question No. 7: Was Happy Years, Inc.'s, failure to comply with the agreement in Question No. 5 excused?

Answer: NO

Question No. 8: What percentage (%) of ownership of Happy Years, Inc., if any, should be transferred to Casimiro Cantu?

Answer: Fifty -- 50%(1)

Question No. 9: What sum of money, if any, if paid now in cash, would fairly and reasonably compensate Casimiro Cantu for his damages, if any, that resulted from such failure to comply with the agreement in Question No. 5? Answer as to the Defendant listed below:

Consider the following elements of damages, if any, and no other. Lost economic benefits including profits that were a natural, probable and foreseeable consequence of Defendant HAPPY YEARS, INC. [sic] failure to comply.

Do not add any amount for interest on past damages, if any.

Answer: Happy Years, Inc. -- $ 86,569.00

Question No. 10:

Did Ruben Rivas commit fraud against Plaintiff Casimiro (Casey) Cantu? Fraud occurs when --

a. A party makes a material misrepresentation,

b. The misrepresentation is made with knowledge of the its [sic] falsity or made recklessly without any knowledge of the truth and a positive assertion,

c. The misrepresentation is made with the intention that it should be acted on by the other party, and

d. The other party acts in reliance on the misrepresentation and thereby suffers injury.

Answer: YES.

Question No. 11:

What sum of money, if any, if paid now in cash, would fairly and reasonably compensate Casimiro Cantu for his damages, if any, that resulted from such fraud on the part of Ruben Rivas. Consider the following elements of damages, if any, and none other.

Lost economic benefits including profits that were a natural, probable, and foreseeable consequence of Defendant Ruben Rivas's failure to comply.

Answer: $86,569.00

The mental anguish sustained by Plaintiff:

Answer: $0.00

Question 12:

Did the Defendant Ruben Rivas act with actual malice? "Actual malice" means ill will, spite, evil motive, or purpose to injure another.

Answer: NO

The verdict was unanimous.

Cantu elected his fraud remedy because it supported the finding of exemplary damages. After various post-judgment motions, the trial court entered an Amended Final Judgment ordering:

(a) Happy Years to immediately issue stock certificates transferring a twenty-five percent ownership interest to Cantu;

(b) that Cantu recover from Happy Years actual damages in the amount of $21,600.00,(2) and prejudgment interest in the amount of $8,856.00; and

(c) that Cantu recover from Rivas actual damages of $86,569.00, prejudgment interest of $63,852.07, and exemplary damages of $100,000.00.

B. Testimony at Trial

The record reflects that Cantu, Rivas, and Alvear testified at trial, as did Cantu's expert witness on damages. The following are summaries of their testimony.

1. Testimony of Casimiro Cantu

Casimiro Cantu testified that he had been a social worker with the Texas Department of Human Services for many years. In 1988, Cantu realized that due to changes in the federal Medicaid program, there was a business opportunity in providing day-care services to certain elderly people with Medicaid coverage. In 1989, he compiled a feasibility study concerning the possible profitability of such an adult day-care center. At that time, there were approximately three such centers in the area. Cantu learned about the lengthy and complicated procedure involved in obtaining a state license to operate an adult day-care center, which includes a contract with the state to provide services to eligible Medicaid recipients.(3)

In 1989, Cantu entered into an agreement with Frank Flores to open an adult day-care center called "My Golden Years." Flores was to receive a sixty percent share of the business for providing the start-up money. Cantu was to receive a forty percent share of the business for providing the expertise to start the business and a salary of $2,000 per month to run it. He was paid this salary during the time he was setting up the business and obtaining the license. After Cantu obtained a state license for the business, the Flores/Cantu partnership ended after a dispute over ownership percentages and hiring decisions.

Cantu consulted local Small Business Administration (SBA) officials, who told him that before the SBA could consider him for a loan, he had to prepare a written proposal and try to obtain a loan from a bank. Cantu talked with Alvear, a licensed vocational nurse who worked at My Golden Years, about his plan. She then referred him to her "very close friend" Rivas, a loan officer with First State Bank. In February 1990, Cantu went to First State Bank seeking a start-up loan.

Rivas did not permit Cantu to fill out a loan application. He told Cantu that the Bank would not lend him the money because the idea was too risky and Cantu had no business experience and no collateral. Rivas instead proposed that he would finance Cantu's idea in exchange for fifty percent of the day-care business. Rivas stated that he had access to $250,000 and that they could open five or six centers. He pointed out that it would be better for Cantu to own fifty percent of six centers, rather than one hundred percent of one center. Cantu relied on Rivas's representations, and after several meetings, agreed to incorporate the business. Rivas and Cantu agreed that Rivas would receive a fifty percent ownership interest in the corporation in return for the financing, and Cantu would receive a fifty percent ownership interest in the corporation for his knowledge and expertise in obtaining the necessary license and starting up the business. Rivas and Cantu also agreed that Cantu would receive a salary of $2,500 per month (the same as his salary at DHS) to act as the executive director of the business.(4) Cantu retained a local "legal assistant," Luis Ramirez, to handle the incorporation, and immediately began working to obtain the license.

Rivas later told Cantu he wanted Guerra, Rivas's business partner (whom Cantu had never met) included in the venture because of Guerra's business experience. Cantu objected, and Rivas "said that's okay."

Later, Rivas demanded that Alvear also be included as an owner because she could provide state-required nursing services to the business and contacts to referring physicians. As an employee, she could also be paid for her nursing services. Rivas "made it seem like . . take it or leave it."

When they met to sign the incorporation documents in April of 1990, Rivas told Cantu he had decided that Guerra would be a corporate owner:

to protect his interest . . you have to take it, accept it, or bye-bye. So I didn't really have much of a choice. . . . He said that the people with the money need to have control so he and Mr. Guerra needed to own minimum fifty percent so they could set the rules and they could say what's going on. . . . That's when Mr. Rivas introduced Mr. Guerra and gave me the ultimatum. So at that point they brought me down to 25 percent. It was going to be me, Mr. Rivas, Mr. Guerra and Ms. Alvear, 25 percent each.

Cantu reluctantly agreed because he did not want to abandon the plan in which he had already invested so much time.

The incorporation was completed on April 9, 1990. The articles of incorporation for Happy Years, Inc. list Cantu, Rivas, Guerra and Alvear as incorporators and board members, and authorize the issuance of up to one million shares of stock without par value. The articles specify that the corporation "will not commence business until it has received for the issuance of the shares consideration of the value of One Thousand Dollars ($1,000.00), consisting of money, labor done, or property actually received." At the first board meeting, Cantu was elected president, Alvear was elected secretary, Rivas became vice-president, and Guerra became the treasurer. Guerra never invested any time or effort into the business and filed for bankruptcy soon after the incorporation.

Beginning in late March, 1990, Cantu oversaw the remodeling of an old leased warehouse to insure compliance with state specifications for adult day-care centers. He obtained the license for the business, and Happy Years opened its doors on July 30, 1990. Cantu received no compensation for the work he performed from March, 1990 through August, 1990. He kept working without pay because "they had promised me that as soon as we opened I would be getting paid and I would be getting some back pay for all this." In September, 1990, he began receiving wages of $200 per week. When he brought up the matter of his promised $2,500 monthly salary at board meetings, he was outvoted each time, three to one.

Cantu's working conditions at Happy Years began to deteriorate shortly after the business opened. He had no input into staff hiring, which was done by Alvear, and his authority as executive director was usurped by Alvear, who countermanded his instructions to the staff.(5) He was regularly humiliated in front of the staff and others. For example, Alvear had Cantu's desk removed from his office and placed in hers without telling Cantu, causing him humiliation and embarrassment in front of a business contact. Feeling he was being forced out by not being paid, and by his humiliating treatment, Cantu stopped working as a Happy Years employee in mid-December, 1990. He felt that he had already fulfilled his end of the bargain, as far as getting the business started, and had earned his twenty-five percent of the corporation:

my intent was that I had already done my end to deserve my percentage . . . . I had done the incorporation process. They used my expertise. They used my knowledge. I had already done what I had promised them that I would do to earn my percentage now as [sic] a matter of working there just like Mrs. Alvear and everybody that was employed there.

He made several attempts to convene a board meeting to discuss the status of his ownership in the business, and demanded the issuance of his stock certificates, but Alvear and Rivas refused to do so. The locks at the center were changed the day after Cantu quit. Cantu later served as a consultant in helping start up and obtain licensing for another day-care business, and eventually opened his own, successful adult day-care centers.

2. Testimony of Ruben Rivas

Ruben Rivas testified that he was a consumer loan officer with First State Bank. He also owned five Movie Land Video stores, two finance companies, and other real estate holdings. Guerra was his partner in Movie Land Video and some of the real estate holdings. Movie Land Video was incorporated. His real estate holdings with Guerra were also incorporated.

Rivas's first meeting with Cantu did not occur at the Bank. It occurred at the Doubletree Hotel where Alvear had set up a dinner meeting. Cantu claimed he knew all about the adult day-care business and had just formed such a business. Cantu wanted to set up his own business and asked if Rivas was interested in financing it. Cantu left a copy of his proposal with Rivas. They had several other meetings. At the last meeting, the stock percentages were finalized at twenty-five percent each for Rivas, Guerra, Alvear and Cantu. Cantu was not happy with the ownership percentages. Rivas denied telling Cantu that he had $250,000 with which to open a chain of day-care centers. Cantu hired Ramirez, who had helped him incorporate My Golden Years, to do the incorporation. Ramirez never prepared or delivered any stock certificates.

In 1990, Rivas had no experience with or knowledge of the adult day-care industry or of how to start up such a business. He borrowed $60,000 from a bank that was affiliated with First State Bank. The loan was made out to Happy Years, but Rivas personally guaranteed it and put up some stock he owned as collateral. The loan payments were initially made out of the loan proceeds. Cantu was not receiving any pay during that time. The loan was paid off within two years. Rivas never made any loan payments with his own money, but put some of his own money into Happy Years to keep the new company going until it was profitable.

When they entered into their agreement, Rivas, Cantu, Alvear, and Guerra were each to receive twenty-five percent of the business. Guerra was to receive his twenty-five percent because:

I did not have the time. I trust Mr. Guerra. We have had numerous business dealings. I respect his judgment. He's -- he's good at it. The only reason I went in is if he went in to take care of my interest and basically that's because I trusted him. I didn't know Mr. Cantu. I wasn't just going to drop $50,000 on his lap and let him do, I mean, I'm sorry. It doesn't work like that. I put Mr. Guerra [sic] to take care of my money and for his services, he was going to get 25 percent of it.

Rivas did not know in March of 1990 that Guerra was on the verge of filing for bankruptcy.

Alvear became a partner because she was the one who "brought the idea to me," and because Rivas knew and trusted Alvear. She also was to be hired as an employee because the business needed nursing services. Rivas admitted he could have just hired her as an employee, but said he brought her in as a corporate owner "because I needed her." Happy Years has since built a second day-care center, and Rivas had an ownership interest in another adult day-care business called Dias Felices.

Rivas admitted that Cantu had a twenty-five percent ownership in Happy Years when it started. Rivas never received a stock certificate for his shares of Happy Years stock. Rivas has received directors' fees from Happy Years. Currently, Rivas has no ownership interest in Happy Years. After Guerra filed for bankruptcy, Rivas and Guerra traded Happy Years and Movie Land Video stock. Rivas got the Happy Years stock; Guerra got the Movie Land Video stock. Rivas later transferred his interest in Happy Years to Alvear.

Cantu lost his ownership percentage "when he walked out on me . . . he drops the ball in the middle of the game and he walks off." Cantu did not earn his twenty-five percent because "he led me to believe he knew the day-care business, which he didn't." Cantu had two roles. One was to get the business licensed and started; the other was to be the director of the business.

When Rivas's own attorney asked him:

And what had you and the other members of the board of directors, what had you all agreed was going to happen in regards to Mr. Cantu's salary?

Rivas responded:

We had all agreed that once the company, or the entity was operating and producing enough money, we would be glad to give him these $2,000. But not until then. I mean there was a lot of money involved and it could not afford it.

Cantu was required to stay with Happy Years until it turned a profit to earn his twenty-five percent. He did not do that. When Cantu left, it was like a "bomb blew up in my face." Happy Years had to find a qualified director immediately, or the state would have canceled Happy Years' contract.

3. Testimony of Josie Alvear

Josie Alvear testified that she now owns 100 percent of Happy Years' stock. She traded her interest in another adult day-care business, Dias Felices, to Rivas in 1997 in exchange for his two-thirds interest in Happy Years. They started Dias Felices in 1993 when Happy Years reported a loss of $16,000. Rivas and Guerra were also stockholders in Dias Felices, but Alvear "was the main person." They each held a one-third interest.

Alvear said Cantu forfeited his twenty-five percent of Happy Years:

the day he walked out and he did not do the job that he was given 25 percent of the stock to do. [H]e walked out and didn't keep his end of the bargain. He was supposed to help get this company off the ground. He walked off three months into the business.

Alvear did not know what Cantu was paid when he worked at Happy Years.

The current director of Happy Years, who is also the registered nurse (RN) required by state adult day-care regulations, is paid twenty dollars per hour. The licensed vocational nurse (LVN) who currently works at Happy Years was paid $26,700 in 1995. Alvear was paid $45,000 for her work as an LVN and manager of Happy Years. In 1996, Alvear was paid $67,529, but the other LVN was paid $27,500. Alvear sets the salaries, including her own. Alvear's position of manager is not required by the state. The state only requires a director. Under current state regulations, a director must have a college degree.

Happy Years has never had any money to pay dividends to its shareholders. According to Happy Years' corporate income tax returns, in 1994, when Alvear made $39,000, Happy Years grossed $568,619 and reported a profit of $51,854; in 1995, when Alvear made $45,000, Happy Years grossed $568,621 and reported a loss of $16,244. In 1996, when Alvear paid herself $67,000, the company grossed $568,610 and reported a loss of $16,000. According to Alvear, Happy Years is not a profitable business "at this moment." Nevertheless, she has "increased benefits for everyone." Alvear has not taken a pay cut to ensure profitability.

She is also a stockholder in two other adult day-care centers. She did not put up any money, only her expertise.

Alvear has relatives who work at Happy Years. Currently, her son Alfredo is a driver/attendant earning "about $5 an hour." Her daughter Cynthia is a driver/activities director, but she does not know what Cynthia's salary is. Alvear's sister is an attendant/activities director who "started probably at minimum wage and got a raise afterwards." Alvear's brother is a driver/attendant who also started at minimum wage and got a raise. Alvear does all the hiring and decides how much to pay each employee.

Alvear was paid $100 per week when Happy Years opened. She took a pay cut to come to Happy Years because of the promise of a twenty-five percent ownership in the company. "[I]t did give me an incentive that one of these days I was part owner of this business." She worked many more hours than forty per week. By January, 1991, she was making $200 per week. By mid-1991, the company was profitable enough that she was paid $10 per hour. Before that, the company was struggling. Alvear paid herself only if there were funds left over after the rest of the payroll was met. Currently, Alvear makes $20 per hour and works about 110 hours every two weeks. She is the person in charge at Happy Years, and has been since 1990.

Alvear said she removed the desk from Cantu's office because she needed it to fill out paperwork qualifying Happy Years clients under Medicaid regulations so that Happy Years could get paid for its services.

Alvear has earned the money she has been paid by Happy Years because she is the manager and has to hire new directors when they leave, which is about once a year. She also trains kitchen workers regarding food safety procedures and meal portions. Cantu did not have the expertise in running an adult day-care center that he said he had.

4. Testimony of Ricardo Cortez

Ricardo Cortez, a Certified Public Accountant and businessman, testified as Cantu's expert witness on damages. Cortez has prepared financial evaluations of businesses and has testified in approximately sixty lawsuits regarding his evaluation of business profits. He has served several times as a special master in cases involving business disputes. He is familiar with audit procedures, and has previously worked with adult day-care businesses. He has vast experience working with closely-held corporations, such as Happy Years.

Cortez arrived at his opinion in this case by examining Happy Years' corporate income tax returns for the fiscal years 1991, 1992, 1993, 1994, 1995, and 1996. He also examined "cost reports" that Happy Years submitted to the state for the years 1994, 1995, and 1996. The state requires that all adult day-care centers file "cost reports" containing statistical information on: (1) the number of days they are open, (2) the number of clients they have served, (3) the amount of revenue they have received, (4) the expenses they have incurred, and (5) the fixed assets they own. Cortez was asked: (1) to formulate the current value of Happy Years(6) and (2) to determine discretionary profits of the business from its inception.

Cortez testified that dividends are paid to corporate stockholders out of corporate profits. The board of directors decides when to pay a dividend, and how much the dividend will be. Happy Years was profitable over the last six years. Happy Years' financial documents indicate it was "a very good business." It had many clients and stability in normal expenses, which are those that are incurred in running a business. Discretionary expenses are non-essential expenses, such as purchasing a new vehicle instead of a used one.

In the last six years, Happy Years reported taxable income in three years, and a loss in three years. Cortez opined:

It was obvious to me because of the comparability of the revenues and the normal expenses that there was [sic] a lot of discretionary expenses being incurred by this company that would explain why some years you would have a loss and some years you would have a profit.

Cortez saw discretionary expenses in the "fluctuation of compensation to owners and owners' relatives." He considered compensation the corporation paid to Alvear's relatives, known as "related-party compensation," to be discretionary expenses. The total of such compensation was $85,955 in 1994, $65,670 in 1995, and $108,104 in 1996. According to Cortez, the fluctuation in these amounts showed that these were discretionary expenses.

Cortez testified that the owners of a corporation determine how much profit it will make by deciding how much the corporation is allowed to spend. If there are no profits, actual dividends cannot be paid. In this case, the related-party compensation went to Rivas, Guerra, Alvear, and Alvear's son, daughter, brother and sister. These amounts reduced the corporation's profits.

In a closely-held corporation, a stockholder can receive constructive dividends. For example, if a stockholder receives a Lexus as his company vehicle when a Volkswagen would do, that is a constructive dividend. Cortez determined that Happy Years had given constructive dividends, but he could not determine the actual amount:

Well, I have to estimate because I don't have the underlying records. I didn't see check by check and things like that so I have to go on experience of and my knowledge of day-care centers. And I estimated that to be, from the period from inception to March 31 of 1997, approximately $405,000.

Cortez arrived at the $405,000 figure by taking gross income and subtracting what he considered normal expenses. Happy Years had retained earnings as of March 31, 1996, the last date for which he has data, and also had outstanding loans to stockholders of $70,360.

On cross-examination, Cortez testified that only a board of directors has the discretion to declare a dividend, and a stockholder has no automatic right to be a director. In 1994, Rivas may have been paid $7,000 in director's fees, and Guerra may have been paid $7,500. From the documentation he was provided, Cortez was not sure these amounts had actually been paid. He found no record indicating that Alvear ever received any director's fees.

Cortez admitted there is nothing illegal about a stockholder's relatives working for a corporation. Adult day-care centers are all incorporated, and all are family-owned businesses. The state requires such a center to have one employee for every eight clients. However, Cortez would not expect a company such as this to have legal expenses of $6,000 for 1993, 1994, and 1995.

According to Cortez, "when you put all the years together . . . it's my opinion, based on the information I have, that the net profit of this entity would have been approximately [$]405[,000] considering only normal and necessary expenses." Cortez could not break it down year-by-year as to where the undeclared dividends were, "not with the limitations of the records that I have." According to Happy Years' federal income tax returns, its reported income during that time period was approximately $85,000. Cortez estimated that corporate profits were approximately $320,000 more than what was actually reported.

Under generally accepted accounting principals (GAAP), there must be numbers to support whatever is reported as income. Cortez admitted that his estimate of $405,000 did not comport with GAAP standards. When Cortez was asked:

Q. So your numbers do not agree with the federal government and your number does not agree with the generally accepted accounting principles?

He answered:

A. That's correct. . . . I have given [the jury] my opinion based on my experience and my analysis of the numbers. You may not like it, but that's my opinion.

Cortez admitted that tax forms may not reflect actual necessary expenses in any given year because of I.R.S. depreciation rules. Under those rules, a taxpayer may not be able to deduct all the expenses he actually incurred in the year of purchase of some items (such as vehicles).

Of the $320,000 discretionary profit that Cortez calculated, related-party compensation accounted for approximately $260,000. If a company needs a van driver, there is nothing wrong with hiring a family member to drive the van; however, his salary would be reported as related-party compensation. Wages are discretionary. It is acceptable to hire a relative, but if you pay that relative more than the going rate, "that may not be okay." Alvear's son, Fred, was paid $9,500 in 1994 as a driver/attendant. That was "probably not" overcompensation.

Alvear's daughter, Cindy Ruiz, was paid $11,300 as a receptionist. That would be overcompensation "if she wasn't needed." Cortez testified:

Q. Do you have anything to show that this was over compensation?

A. Well, if I compare Happy Valley Years [sic] with other day-care centers, with similar income and similar in expenses, the expenses of Happy Valley Years [sic] would be in excess -- in excess of others in a comparable situation.

Q. That wasn't anything near my question.

A. I'm sorry.

Q. Are you --

A. I misunderstood.

Q. The other day-care centers that you are familiar with don't have telephones?

A. Yes, sir, they do.

Q. They don't have anybody that picks up the phone and answers it?

A. Yes, sir, they do.

Q. They don't have to pay that person to pick up and answer it?

A. Well, that may be an attendant, that may be a nurse, that may be the administrator. That may be anybody in the facility.

Q. But they got to pay somebody?

A. Well --

Q. Are you saying that roughly $900 a month it's just way too much for a receptionist?

A. If she's needed, maybe no; if she is not needed then, well, yeah.

Cortez testified he arrived at the $405,000 in discretionary income as follows:

What I did is I went year by year and I subtracted the difference of what I thought that each year should have made based on the gross income that it had. And I went from year 1992, I said the company would have made 30,000; '93, 40[,000]; '94, 65[,000], and from '95, '96 and '97, 70,000. That's why your math over here is skewed because you're not including '97 which I did include '97 in my [figure of] 405[,000]. And if I look at the tax returns, I'll look at retained earnings, retained earnings from $67,000, loans to officers are $80,000, so there's zero, zero retained earnings, the difference is $405,000.

Loans to shareholders and officers may be deemed constructive dividends by the internal revenue service if a company is audited. However, loans to shareholders have nothing to do with calculation of the company's profits, except that any interest paid on the loans would be corporate income. Cortez included the $73,000 loan amount in his $405,000 figure "because that's no longer in the corporation, that's in the pockets of the shareholders that took it out," even though the note is still a corporate asset. If the amount of the loan was still in the corporate bank account, Cortez would have to lower the $405,000 estimate by that amount.

Alvear's salary was part of the $320,000 difference between reported earnings and what Cortez estimates the profits should have been. The cost reports show how many hours she worked. He has no documentation of what Alvear was paid in 1990 or 1991. He determined she was overpaid, but could not say by how much:

That's a good question. The owners of a corporation obviously have discretion as to what to pay. The fair market value of the services that you provide is that you can get anybody else to do similar services so the -- value of the similar service by another person would roughly approximate between [$]24[000] to $30,000.

Cortez also admitted there was a mistake in his calculation. He added the amount for 1995 twice. There is "an extra . . . [$]70,000 that should not be in there because of the error."

C. Standard of Review

When we review the legal sufficiency of the evidence, we must consider all of the record evidence in a light most favorable to the party in whose favor the verdict has been rendered, and indulge in that party's favor every reasonable inference deducible from the evidence. Formosa Plastics Corp. USA v. Presidio Eng'rs & Contractors, Inc., 960 S.W.2d 41, 48 (Tex. 1998); Hines v. Comm'n for Lawyer Discipline, 28 S.W.2d 697, 701 (Tex. App.--Corpus Christi, no pet.). A legal sufficiency point may only be sustained when the record discloses: (1) a complete absence of evidence of a vital fact; (2) the court is barred by rules of law or of evidence from giving weight to the only evidence offered to prove a vital fact; (3) the evidence offered to prove a vital fact is no more than a mere scintilla; and (4) the evidence established conclusively the opposite of the vital fact. Juliette Fowler Homes, Inc. v. Welch Assoc., 793 S.W.2d 660, 666 n. 9 (Tex. 1990). If there is more than a scintilla of evidence to support the finding, the legal sufficiency challenge fails. Formosa Plastics, 960 S.W.2d at 48; Stafford v. Stafford, 726 S.W.2d 14, 16 (Tex. 1987). When the evidence offered to prove a vital fact is so weak as to do no more than create a mere surmise or suspicion of its existence, the evidence is not more than a scintilla and, in legal effect, is no evidence. Kindred v. Con-Chem, Inc., 650 S.W.2d 61, 63 (Tex. 1983). The test for the application of this no evidence/scintilla rule is: if reasonable minds cannot differ from the conclusion, then the evidence offered to support the existence of a vital fact lacks probative force, and it will be held to be the legal equivalent of no evidence. Id.; Hines, 28 S.W.2d at 701.

When we review the factual sufficiency of the evidence, we consider, weigh and examine all of the evidence, whether it supports or undermines the finding of the trier of fact. Plas-Tex, Inc. v. United States Steel Corp., 772 S.W.2d 442, 445 (Tex. 1989). We review the evidence, keeping in mind that it is the jury's role, not ours, to judge the credibility of the evidence, to assign the weight to be given to testimony, and to resolve inconsistencies within or conflicts among the witnesses' testimony. Corpus Christi Teachers' Credit Union v. Hernandez, 814 S.W.2d 195, 197 (Tex. App.--San Antonio 1991, no writ). We then set aside the jury's finding only when we find that the evidence standing alone is too weak to support the finding or that the finding is so against the overwhelming weight of the evidence that it is manifestly unjust and clearly wrong. Ortiz v. Jones, 917 S.W.2d 770, 772 (Tex. 1996); Garza v. Alviar, 395 S.W.2d 821, 823 (Tex. 1965).

D. The Happy Years Appeal

In its first issue, Happy Years complains the evidence is legally and factually insufficient to support the jury's finding in Question No. 1 that an agreement existed between Happy Years and Cantu that Cantu would be employed as executive director at a salary of $2,500 per month. Happy Years contends there is no evidence in the record that it ever ratified a pre-incorporation agreement Cantu had with Rivas.

The powers of a corporation are exercised by and through its board of directors. Tex. Bus. Corp. Act Ann. art. 2.31 (Vernon Supp. 2000); see also Hoggett v. Brown, 971 S.W.2d 472, 491 (Tex. App.--Houston [14th Dist.] 1997, no pet.). The record reflects that Happy Years' board of directors agreed to pay Cantu a salary. When Rivas's attorney asked him:

And what had you and the other members of the board of directors, what had you all agreed was going to happen in regards to Mr. Cantu's salary?

Rivas replied:

We had all agreed that once the company, or the entity was operating and producing enough money, we would be glad to give him these $2,000. But not until then. I mean there was a lot of money involved and it could not afford it.

Rivas testified that the board of directors had agreed to pay Cantu a salary of $2,000 per month. Cantu testified extensively that the agreement was for $2,500 per month. Obviously, the jury chose to believe Cantu's version. It is the jury's role, not ours, to judge the credibility of the evidence, to assign the weight to be given to testimony, and to resolve inconsistencies within or conflicts among the witnesses' testimony. Corpus Christi Teachers' Credit Union, 814 S.W.2d at 197.

We hold the evidence is legally and factually sufficient to support the jury's finding that Happy Years agreed to pay Cantu $2,500 per month to act as its executive director. Happy Years' first issue is overruled.

In its second issue, Happy Years contends the evidence is legally and factually insufficient to support the jury's finding in Question No. 5 that Happy Years agreed to award Cantu twenty-five percent of its stock if Cantu fulfilled his obligations under the agreement. At trial, neither appellant disputed that such an agreement existed. Rivas and Alvear testified that the agreement did exist, but contended that Cantu did not fulfill his obligations under the agreement. Cantu testified as to the existence and terms of the agreement, and that he had fulfilled his end of the bargain.

We hold the evidence is legally and factually sufficient to support the jury's finding. Happy Years' second issue is overruled.

In its third and fourth issues, Happy Years complains the trial court erred in granting Cantu a judgment against Happy Years because there is no evidence, or insufficient evidence, to support the court's "implied" finding that a breach of contract occurred. Specifically, Happy Years contends:

[t]he Court erred when it implicitly found that Appellant's breach of contract was a proximate cause of a pecuniary loss to Appellee, because there is no evidence, or in the alternative, insufficient evidence, to support these findings.

The jury found that Cantu's damages from Happy Years' breach of the salary agreement were $25,000. The trial court later reduced this amount by the amount of salary Happy Years had already paid Cantu. This finding is supported by Cantu's testimony.

The jury also found that Cantu should be awarded fifty percent ownership of Happy Years, later reduced by the trial court to twenty-five percent. This finding is supported by the testimony of Cantu, Rivas and Alvear, who all testified the board of directors had agreed that Cantu would receive that percentage of stock upon completion of his duties under the agreement. Accordingly, Happy Years' third and fourth issues are overruled.

In its sixth issue, Happy Years contends the trial court erred "in granting Appellee judgment against Happy Years, Inc. for Breach of Contract because there are no pleadings to support said judgment."

At the time of trial, Cantu's live pleading was Plaintiffs' First Amended Petition. Paragraph 48 of Plaintiffs' First Amended Petition states:

48. Alternatively, if [Cantu] did not have an express or implied contract in fact then an agreement implied in law arose whereby [Cantu] is entitled to the reasonable value of such sums in order to prevent an injustice.

This portion of the petition follows a long recitation of facts in which Cantu asserts, inter alia, that he had an agreement with Happy Years regarding a twenty-five percent ownership in the company and a salary of $2,500 per month, and that Happy Years did not perform its end of the agreement.

It is true, as Happy Years contends, that pleadings must give fair and reasonable notice of the claims asserted. See Tex. R. Civ. P. 47;SmithKline Beecham Corp. v. Doe, 903 S.W.2d 347, 354 (Tex. 1995);Garner v. Corpus Christi Nat'l Bank, 944 S.W.2d 469, 476-77 (Tex. App.--Corpus Christi 1997, writ denied). However, an appellate court should uphold a petition containing a cause of action that a person may reasonably infer from what is specifically stated, even if an element of the cause of action is not stated. SmithKline, 944 S.W.2d at 476;Boyles v. Kerr, 855 S.W.2d 593, 601 (Tex. 1993). We hold that Cantu sufficiently pleaded a cause of action for breach of contract against Happy Years.

Further, even if a cause of action for breach of contract had not been sufficiently pleaded, the issue of breach of contract was tried without objection. When issues not raised by the pleadings are tried by express or implied consent of the parties, they shall be treated in all respects as if they had been raised in the pleadings. Tex. R. Civ. P. 67;see also Roark v. Stallworth Oil & Gas, Inc., 813 S.W.2d 492, 495 (Tex. 1991). The party who allows an issue to be tried by consent and who fails to raise the lack of a pleading before submission of the case cannot later raise the pleading deficiency for the first time on appeal. Roark, 813 S.W.2d at 495.

The record shows that neither Rivas nor Happy Years ever objected on the ground that a cause of action for breach of contract had not been pleaded by Cantu. For example, at the beginning of voir dire, Cantu's attorney told the jury panel, "One of the things this case essentially involves it's [sic] a contract dispute. . . . " Appellants did not object. In fact, during voir dire, appellants' attorney told the jury panel:

[I]t's a contract case. And contracts basically deal with -- with one thing. Those are promises. We can -- we can have contracts both orally, we can have them verbally -- in written form they're both all [sic] binding . . . .

At no time did appellants claim that Cantu had not pleaded a breach of contract action. In fact, appellants defended themselves on the theory that Cantu did not perform his part of the contract. Happy Years' sixth issue is overruled.

In its fifth issue, Happy Years contends that Cantu's claims against it are barred by the statute of frauds. In support of this contention, Happy Years cites the version of section 8.319 of the Texas Business & Commerce Code in effect at the time of the agreement, which generally requires that for a contract for the sale of securities to be enforceable, it must be in writing. Acts 1983, 68th Leg., R.S., ch. 442, § 1, 1983 Tex. Gen. Laws 2511 (repealed by Acts 1995, 74th Leg., R.S., ch. 962, § 1, 1995 Tex. Gen. Laws 4760, effective September 1, 1995).

This issue must fail because Happy Years did not assert the statute of frauds at trial. While it did plead the affirmative defense of the statute of frauds (in addition to accord and satisfaction, fraud, illegality, laches, payment, release, waiver and limitations), Happy Years utterly failed to raise the issue at trial, failed to request a jury question concerning the statute of frauds, and failed to object to the lack of such a question in the court's charge. Other than pleading the statute of frauds, Happy Years did not raise this defense until the trial court's hearing on post-judgment motions. At that hearing, the following occurred:

Cantu's counsel: Judge, regard [sic] to the statute of fraud argument, you, know, that is an affirmative defense which they have the burden if they really believe that, you know, that's something you need to submit to the jury and got a ruling from the jury. They failed to do that. As a result, I mean that I don't see why we're hearing this.

The Court: Was there -- did you make an objection to that portion of the charge?

Cantu's counsel: No objection whatsoever, Judge. It wasn't offered to the court. There was no objection on it. It was never brought up --

The Court: Yes.

Cantu's counsel: -- at the last hearing. This is the very first time we've ever heard of this.

Appellants' counsel: No, there's no objection to the charge that was under the statute. They had the duty to prevent -- to present -- they had the burden on that issue because they didn't meet their burden. They're not entitled to an --

The Court: I'm going to deny it.

We hold that Happy Years waived the affirmative defense of the statute of frauds, and that Happy Years cannot raise it for the first time on appeal. See Tex. R. App. P. 33.1.(7) Happy Years' fifth issue is overruled.

E. Rivas's Appeal

By his tenth issue, Rivas contends the judgment against him must be reversed and rendered in his favor because Cantu's claims are barred by the statute of frauds.

As we discussed above, neither Happy Years nor Rivas asserted the affirmative defense of the statute of frauds at trial. We hold that Rivas waived the affirmative defense of the statute of frauds, and that Rivas cannot raise it for the first time on appeal. See Tex. R. App. P. 33.1. Rivas's tenth issue is overruled.

In his first issue, Rivas complains the evidence is legally and factually insufficient to support the jury's finding in Question No. 10 that Rivas committed fraud against Cantu. In his second, third, fourth, fifth, and sixth issues, Rivas contends the evidence is legally and factually insufficient to support each element of fraud.

A fraud cause of action requires a material misrepresentation, which was false, and which was either known to be false when made or was asserted without knowledge of its truth, which was intended to be acted upon, which was relied upon, and caused injury. Formosa Plastics, 960 S.W.2d at 47 (citing Sears, Roebuck & Co. v. Meadows, 877 S.W.2d 281, 282 (Tex. 1994)). A party's mere failure to perform a contract, standing alone, is not evidence of the requisite intent. Crim Truck & Tractor Co. v. Navistar Inter. Transp. Corp., 823 S.W.2d 591, 596-97 (Tex. 1992). The promisor's denial that any promise was ever made is a factor in showing lack of intent. Hoechst Celanese Corp. v. Arthur Bros., Inc., 882 S.W.2d 917, 925 (Tex. App.--Corpus Christi 1994, writ denied). However, the subsequent acts of the promisor may be scrutinized to infer intent. Hill v. Heritage Resources, Inc., 964 S.W.2d 89, 104 (Tex. App.--El Paso 1997, no writ).

Cantu testified that Rivas initially represented that he and Cantu would each receive a fifty percent ownership interest in the day-care business. In reliance on this representation, Cantu set about obtaining the required license and remodeling an old warehouse to meet state specifications for adult day-care centers. Rivas's intent not to perform the representations he made to Cantu can be inferred from his subsequent actions: (1) forcing two more partners on Cantu at the last minute, (2) refusing to vote that Cantu be paid the promised salary, (3) forcing Cantu out of the business, (4) refusing to see that the stock certificates were issued upon Cantu's request, and (5) refusing to meet with Cantu when requested to do so. The testimony at trial also showed that Cantu was damaged by his inability to obtain his twenty-five percent ownership in the corporation and by not being paid according to the agreement.

We hold the evidence is legally and factually sufficient to support the jury's finding that Rivas committed fraud against Cantu. We overrule Rivas's first, second, third, fourth, fifth, and sixth issues.

In his seventh issue, Rivas complains the evidence is legally and factually insufficient to support the jury's award of actual damages "because there is no evidence of direct fraud damages, and there is neither pleading nor evidence of consequential damages." Specifically, Rivas challenges the reliability of Cortez, Cantu's expert witness on damages.

Texas recognizes two measures of direct damages for common-law fraud: (1) the out-of-pocket measure and (2) the benefit-of-the-bargain measure. Formosa Plastics, 960 S.W.2d at 49; Arthur Andersen & Co. v. Perry Equip. Corp., 945 S.W.2d 812, 817 (Tex. 1997); W.O. Bankston Nissan, Inc. v. Walters, 754 S.W.2d 127, 128 (Tex. 1988). The out-of-pocket measure computes the difference between the value paid and the value received, while the benefit-of-the-bargain measure computes the difference between the value as represented and the value received. Formosa Plastics, 960 S.W.2d at 49;Arthur Andersen, 945 S.W.2d at 817.

In his pleadings, Cantu claimed that Rivas had committed fraud against him, and that as a result, he had suffered damages of "loss of agreed wages, loss of value of stock, lost profits [and] mental anguish." Clearly, the measure of damages in this case is the benefit-of-the-bargain measure.

Consequential fraud damages, such as foreseeable profits from other business opportunities lost as a result of the fraudulent misrepresentation, may also be awarded if properly pleaded and proved. Formosa Plastics, 960 S.W.2d at 49;Arthur Andersen, 945 S.W.2d at 817. The record reflects that consequential damages were not pleaded or proven at trial, they were not the subject of a jury question, and they were not found by the jury.

At trial, Cantu claimed his fraud damages were the amount of constructive dividends Rivas and the other Happy Years shareholders had received from the corporation. As we discussed above, a constructive dividend occurs when an expenditure is made by a corporation for the personal benefit of a stockholder, or corporate-owned facilities are used by a stockholder for his personal benefit. Hillsboro Natl' Bank v. Comm'r of Internal Revenue, 460 U.S. 370, 392 (1983);Ireland v. United States, 621 F.2d 731, 735 (5th Cir. 1980). In determining whether a constructive dividend has been made, the crucial concept is that the corporation conferred an economic benefit on the stockholder without expectation of repayment. Ireland, 621 F.2d at 735; United States v. Smith, 418 F.2d 589, 593 (5th Cir. 1969).

Cortez testified that a constructive dividend occurs when excessive compensation is paid by a corporation to family members of corporate stockholders. A constructive dividend does not occur automatically when a stockholder's family member works for the corporation, but only when that relative is overcompensated. Cortez further testified that, based on his experience with adult day-care businesses, Happy Years had too many discretionary expenses, and the amount it paid out as salary was too high. However, Cortez did not show that: (1) Alvear's relatives failed to perform the jobs for which they were paid, (2) the jobs they performed were unnecessary to the corporation, or (3) the compensation they received was unreasonably high. In fact, Cortez testified that Fred Alvear's $9,500 annual salary as a driver/attendant was "probably not" overcompensation. He testified that Cindy Ruiz's $11,500 annual salary as a receptionist would constitute overcompensation "if she wasn't needed." However, we find no evidence in the record that a receptionist was not needed at Happy Years.

The jury based its fraud damages finding on Cortez's calculation of the constructive dividend allegedly received by Alvear, which consisted primarily of compensation received by her family members. Because we find more than a scintilla of evidence of a constructive dividend, we hold the evidence is legally sufficient to support the jury's finding. However, because we find that the evidence, standing alone, is too weak to support the finding, we hold the evidence is factually insufficient to support the jury's finding. Accordingly, we sustain Rivas's seventh issue.

Because we have sustained Rivas's seventh issue, we need not address his eighth, ninth, and eleventh issues. See Tex. R. App. P. 47.1.

We affirm the trial court's judgment against Happy Years. We reverse the trial court's judgment against Ruben Rivas and remand that cause to the trial court for a new trial.

FEDERICO G. HINOJOSA

Justice

Dissenting Opinion by Chief Justice Robert J. Seerden.

Publish. Tex. R. App. P. 47.3

Opinion delivered and filed this

the 21st day of December, 2000.

1. The trial court later reduced this amount to twenty-five percent.

2. Happy Years successfully moved to have the amount of actual damages awarded by the jury for back pay reduced by the amount of wages Cantu was paid.

3. The arduousness of the licensing procedure was further established by Ezequiel Salazar, a former Texas Department of Human Services (DHS) contract specialist who conducted state licensing inspections of adult day-care centers.

4. Rivas and Happy Years disputed Cantu's qualifications to serve as the director of an adult day-care center. The evidence adduced at trial shows that during the relevant time period, Cantu was qualified to serve as the director. State regulations were later changed and required an adult day-care facility director to have a college degree, which Cantu did not have.

5. Rebecca Gonzalez, a former Happy Years employee, testified that Alvear made it clear that she, not Cantu, was in charge of the business. Ninfa Tijerina, another former employee, testified that Alvear called her before Cantu quit and told her to be ready to assume the director's duties at Happy Years. Tijerina thought Alvear was trying to "force out" Cantu. Tijerina testified that Alvear, Rivas and Guerra avoided meeting with Cantu after he quit.

6. Appellants objected to Cortez's testimony about the current value of Happy Years on the ground that it was not relevant to any of the damages sought (a twenty-five percent ownership of the corporation, a share of any actual or constructive dividends paid to shareholders, and back pay), and that a forced partition could not be awarded. The trial court did not allow testimony regarding the current value of Happy Years.

Appellants also objected to Cortez's testimony on the ground that Cantu had not complied with appellant's discovery request for the production of all testifying expert witness reports. Cantu responded that appellants had not deposed Cortez, although they knew of his existence for over six years before the trial, and that appellants had provided Happy Years' tax returns and cost reports only days before the trial. The trial court allowed the documents prepared by Cortez to the extent that they summarized evidence already before the court (the tax returns and cost reports).

Appellants further objected that constructive dividend damages had not been pleaded, and moved to strike Cortez's testimony regarding them. The trial court overruled this objection.

7. Furthermore, even if this issue had somehow been preserved for our review, the section of the Texas Business and Commerce Code appellants rely on states that a contract for the sale of securities must be in writing to be enforceable unless:

the party against whom enforcement is sought admits in his pleading, testimony, or otherwise that a contract was made for sale of a stated quantity of described securities at a defined or stated price.

Acts 1983, 68th Leg., R.S., ch. 442, § 1, 1983 Tex. Gen. Laws 2511 (repealed by Acts 1995, 74th Leg., R.S., ch. 962, § 1, 1995 Tex. Gen. Laws 4760, effective September 1, 1995). Rivas and Alvear both testified that Cantu was to receive twenty-five percent of the corporation for helping start it up. They did not dispute the terms of the agreement. They disputed only Cantu's compliance with the agreement.

NUMBER 13-97-790-CV

COURT OF APPEALS

THIRTEENTH DISTRICT OF TEXAS

CORPUS CHRISTI

_____________________________________________________________________

RUBEN RIVAS AND HAPPY YEARS, INC. , Appellants,

v.

CASIMIRO (CASEY) CANTU, Appellee.

_____________________________________________________________________

On appeal from the 139th District Court

of Hidalgo County, Texas.

_____________________________________________________________________

DISSENTING OPINION

Before Chief Justice Seerden and Justices Hinojosa and Yañez

Dissenting Opinion by Chief Justice Seerden

The majority concludes that the evidence adduced at trial is sufficient to support a finding of liability against Happy Years. Additionally, without considering the

reliability of Richard Cortez's expert testimony, the majority concludes that the evidence is factually insufficient to support his conclusions. On each of these issues, I respectfully dissent.

I. HAPPY YEARS' LIABILITY

By its first issue, Happy Years complains that the evidence is legally and factually insufficient to support the finding that an agreement existed between it and Cantu. Happy Years specifically contends that it never ratified a pre-incorporation agreement between Rivas and Cantu. Without mentioning the theory of non-ratification, the majority opinion states that "the record does contain evidence that Happy Years' board of directors agreed to pay Cantu a salary." The sole basis for this conclusion was Rivas's testimony that "We had all agreed that once the company, or the entity was operating and producing enough money, we would be glad to give him these $2000. But not until then." Relying only upon this statement, the majority concludes that Happy Years was bound to pay Cantu $2500 per month for his services.

A. Employment Agreement Between Cantu & Happy Years

1. Counteroffer made by Happy Years and accepted by Cantu

This conclusion fails to account for Cantu's testimony, which is that he asked several times that Happy Years increase his pay. Upon the opening of Happy Years, Cantu, by decision of the board of directors, was paid $200 per week. This evidence is uncontroverted. By its very terms, that decision of the board constitutes a counter-offer made to and accepted by Cantu. See United Concrete Pipe Corp. v. Spin-Line Co., 430 S.W.2d 360, 364 (Tex.1968) (modification of original terms of agreement constitutes counteroffer if the modified terms are material). A modification of the offer from an alleged $2500 per month salary to a $200 per week salary constitutes a modification of a material term of the original offer.

In contractual terms, Cantu offered his services to the corporation and sought payment of $2500 per month in compensation. Happy Years chose to offer Cantu $200 per week instead. Cantu accepted that agreement. There is no controverting evidence in the record on this matter.

By choosing to accept employment with Happy Years under those materially modified terms, Cantu accepted Happy Years' counteroffer, thereby making that agreement the operative and binding agreement between the parties. See Chapman v. Mitsui Eng'g & Shipbuilding Co., 781 S.W.2d 312, 316 (Tex. App.-- Houston [1st Dist.] 1989, writ denied); Arguelles v. Kaplan, 736 S.W.2d 782, 785 (Tex. App.--Corpus Christi 1987, writ ref'd n.r.e.) (acceptance of counteroffer is sufficient to create a binding agreement between the parties). Thus, as a matter of law, from the outset of the corporation's existence, the operative agreement between it and Cantu was the agreement that Cantu would be employed as the director of the day care centers and would be paid a salary of $200 per week, notwithstanding any understandings reached between Cantu and Rivas. Moreover, by Cantu's acceptance of the counteroffer, the original offer was rejected. See Blackstone v. Thalman, 949 S.W.2d 470, 474 n.4 (Tex. App.--Houston [14th Dist.] 1997, no writ). Once rejected, an original offer cannot be revived. Gasmark, Ltd. v. Kimball Energy Corp., 868 S.W.2d 925, 928 (Tex. App.--Fort Worth 1994, no writ).

Because there is no controverting evidence on this matter, the evidence is legally insufficient to support the conclusion that Happy Years ever entered into an agreement with Cantu to pay him $2500 per month for services rendered. See Formosa Plastics Corp. USA v. Presidio Eng'r & Contractors, Inc., 960 S.W.2d 41, 48 (Tex. 1998) (in assessing the legal sufficiency of the evidence, the court must consider all evidence favorable to the party in whose favor the verdict was rendered and determine whether there is more than a mere scintilla of evidence to support the fact finder's conclusion). Here, because there is no evidence to support the conclusion that Happy Years ever agreed to pay Cantu $2500 per month, there is not even a mere scintilla of evidence which supports the majority's conclusion.

2. Need for Ratification to Bind Happy Years

An alternate theory to bind Happy Years to the purported $2500 per month agreement is ratification because, to the extent that Cantu is party to such an agreement, that agreement was reached prior to the incorporation of Happy Years.

A non-existent corporation cannot have an agent and is not bound by pre-incorporation agreements absent some proof that the corporation adopted or ratified the agreement. See e.g., Fish v. Tandy Corp., 948 S.W.2d 886, 897-98 (Tex. App.--Fort Worth 1997, pet. denied). Here, the uncontroverted evidence, straight from Cantu, is that he presented the board of directors with as many as six opportunities to adopt the pre-incorporation agreement and that on each occasion, the board chose not to do so. The only evidence to suggest that any such adoption was even remotely contemplated is the isolated statement by Rivas cited by the majority. However, that statement does not support the fact finder's conclusion of adoption for two significant reasons: 1) Rivas's statement itself makes it clear that the board placed conditions on Cantu's salary increase; and 2) the board, on a consistent basis, expressly chose not to adopt the agreement by its vote. There is nothing in this record to suggest that any of the directors were unreasonable in concluding that the corporation had not yet attained sufficient profitability to warrant Cantu's pay raise. Moreover, Cantu neither pleaded nor proved that the board's decision was a violation of the business judgment rule or justification for piercing the corporate veil. Thus, as a matter of law, there is nothing in the record which shows that the corporation undertook any acts to bind itself to this pre-incorporation agreement.

3. Actions of the Board of Directors Conclusively Show No Ratification

The testimony cited by the majority is persuasive; however, the conclusion reached by the majority, based on this testimony alone, fails to account for the unfulfilled conditions imposed by Rivas and the other directors as a predicate for increasing Cantu's salary. Rivas testified that "once the company . . . was operating and producing enough money, we would be glad" to pay Cantu an increased salary. This statement, while evidencing some future willingness to increase Cantu's salary, nevertheless expressly states the board of directors' requirement that the corporation make sufficient money, in the board's opinion, to justify that raise. The actions of the board of directors, as illustrated by testimony in the record, demonstrate that the Board had not yet concluded that the corporation was making sufficient money to justify the raise.

Cantu himself testified that at various times during his employment at Happy Years, he proposed to the Board of Directors that his salary be increased. Cantu recalled that the board would meet once a week. During these meetings, Cantu said he felt that the corporation was making money and that he was entitled to a salary increase, and reiterated that he felt he had been promised $2500 per month. The remaining directors called for a vote of the board. Cantu testified that on as many as six different occasions, the board voted three to one against increasing his salary.

The powers of a corporation are exercised by and through its board of directors. Tex. Bus. Corp. Act. Ann. art. 2.31 (Vernon Supp. 2000). The act of the majority of the directors present at a meeting at which a quorum is present shall be the act of the board of directors. Tex. Bus. Corp. Act. Ann. art 2.35 (Vernon Supp. 2000). Thus, when the majority of the board of directors chooses a particular course of action, that decision is deemed to be the act of the corporation. Here, the board of directors, by Cantu's own recollection, voted six different times to deny his request for a pay raise. That is the unequivocal determination of the board of directors and comports with Rivas' statement that Cantu would not receive any pay increase until the board believed the corporation was making sufficient money to support such an increase.

Moreover, the record does not support the majority's conclusion that Happy Years was not bound to follow the statutory corporate formalities because it acted as a closely-held corporation. See generally Tex. Bus. Corp. Act. Ann. art. 12.37(F) (Vernon Supp. 2000). In order to qualify as a closely-held corporation, the articles of incorporation must specifically set out that the entity is incorporated as a close corporation. Tex. Bus. Corp. Act Ann. art. 12.11(A) (Vernon Supp. 2000).(1)Regardless of the wishes of the incorporators, the record here clearly shows that the articles of incorporation denominate Happy Years as a corporation, not a closely-held corporation.

The failure of the Happy Years' board of directors to formally adopt the agreement between Rivas and Cantu negates any claim of ratification. Additionally, the repeated vote of the board to deny Cantu his sought-after pay increase is overwhelming evidence that the corporation did not take any action to ratify any agreements made between Rivas and Cantu.

Because I would conclude that there is no evidence in the record to support the majority's conclusion regarding a purported agreement between Cantu and Happy Years, I would sustain Happy Years' first issue.(2)

B. Stock Agreement Between Cantu & Happy Years

By its second issue, Happy Years contends the evidence is legally and factually insufficient to support the finding that it agreed to award Cantu 25% of its stock if Cantu fulfilled his obligations under the agreement. The majority concludes that there was no dispute that such an agreement existed and that the jury chose to accept Cantu's assertions that he had fulfilled his obligations under that agreement.

1. Lack of Pleadings

The majority fails to disclose that there are no pleadings in the record requesting that Happy Years issue stock to Cantu. I would conclude that in the absence of pleadings to support the award, the trial court erred by ordering Happy Years to issue stock to Cantu. See Tex. R. Civ. P. 301 (judgment of the trial court shall conform to the pleadings).

2. No Ratification, No Agreement

Furthermore, because I would conclude that Happy Years was not obligated to pay Cantu a salary of $2500 per month, I would likewise conclude that Happy Years was not obligated to issue stock to or repurchase the stock owned by Cantu. The agreement regarding the stock in Happy Years is not an agreement between Happy Years and Cantu; it is an agreement between Rivas and Cantu. As a matter of law, it cannot be anything else, regardless of the conclusion reached by the jury. As noted above, Happy Years did not undertake any actions to expressly or implicity ratify or otherwise adopt this agreement; in fact, it counteroffered to Cantu with materially different terms and Cantu accepted that counteroffer. Any subsequent corporate decision to give Cantu stock would have to be made by the board of directors. See Tex. Bus. Corp. Act Ann. art. 2.35 (Vernon Supp. 2000). There is no evidence in this record which indicates that the board of directors made such a decision. Thus, there is not legally sufficient evidence to support the finding that the corporation agreed to award Cantu any stock.

I would conclude that there is no evidence that Happy Years entered into an agreement with Cantu to award him any stock.(3)

C. Conclusion as to Happy Years

Because I would conclude that there is no evidence to substantiate any agreements between Happy Years and Cantu, I would reverse the judgment of the trial court, as it relates to Happy Years, and render judgment that Cantu take nothing.

II. RELIABILITY OF RICHARD CORTEZ'S EXPERT TESTIMONY

Although I agree with the majority in its disposition of Rivas's appeal, I dissent from the majority's implicit conclusion that Richard Cortez's testimony is reliable.

Cortez testified that he examined all of Happy Years' financial reports. He testified that his review of these records indicated that Happy Years's aggregate profit could have been much greater. Cortez opined that Happy Years had excessive discretionary expenditures, including related-party compensation and purchases of unnecessary equipment. Cortez also cited what he concluded were non-business related expenses: the purchase of a Lexus automobile and the payment of country club fees. Deducting these unnecessary expenditures, Happy Years' profit increased to $405,000(4) over the relevant time period. He agreed that his determination was an estimate, made to calculate what he termed a "constructive dividend." (5)

On cross-examination, Cortez acknowledged that his conclusion was rooted in speculation. He agreed that his methodology did not comport with the Generally Accepted Accounting Principles ("GAAP") and acknowledged that he could not pinpoint the lost dividends on a year-by-year basis. He testified that he had "guessed" about certain figures in his calculation, specifically the amount of director's fees paid to both Rivas and Guerra between 1991 and 1994. He stated that he had no records available to determine how much time Alvear spent at the day care center during this time, but nevertheless suspected that she had been grossly overpaid during Happy Years' operation. Cortez acknowledged that there were no records to indicate that Happy Years had purchased the Lexus, and similarly agreed that the records provided no evidence regarding the payment of country club fees out of corporate funds. Cortez acknowledged that in this particular circumstance, the State of Texas requires adult day care centers to maintain an eight-to-one client-to-employee ratio, and agreed that hiring qualified family members to fill those positions would not be unreasonable. Finally, Cortez stated that he could not account for the $320,000 he alleged was misspent.

The reliability of an expert's opinion is a threshold question of law, particularly when the expert testifies to the extent of lost profits(6)associated with a business. See Szczepanik v. First S. Trust Co., 883 S.W.2d 648, 649 (Tex. 1994); see generally Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579 (1993); Gamill v. Jack Williams Chevrolet, 972 S.W.2d 713, 720 (Tex. 1998). Absent the hallmarks of reliability, the expert's opinion constitutes no evidence. See Merrill Dow Pharm., Inc. v. Havner, 953 S.W.2d 706, 712-14 (Tex. 1997); E.I. du Pont de Nemours, Inc. v. Robinson, 923 S.W.2d 549, 557 (Tex. 1995). Where, as here, lost profits are at issue, the amount of lost profits need not be susceptible to exact calculation. Szczepanik, 883 S.W.2d at 649. However, the loss must nevertheless be shown by competent evidence and with reasonable certainty. Id. Opinions or estimates of lost profitability must, at the very least, be based upon objective facts, figures, or data from which the amount of lost profits may be ascertained. Id. Rank speculation or guesses do not constitute objective information. Frank B. Hall & Co. v. Beach, Inc., 733 S.W.2d 251, 259 (Tex. App.--Corpus Christi 1987, writ ref'd n.r.e.) (an award of damages based upon speculation cannot be upheld on appeal). The record must show how the lost profits were calculated. Holt Atherton Indus., Inc. v. Heine, 835 S.W.2d 80, 84 (Tex. 1992). Our review of the record is fact-intensive. Texas Instruments, Inc. v. Teletron Energy Management, Inc., 877 S.W.2d 276, 279 (Tex. 1994).

In the instant case, I would conclude that Cortez's method was insufficient to support his conclusions. Cortez's methodology did not comport with GAAP. Instead, Cortez relied on conjecture to estimate what Happy Years' profits should have been. These conclusions stood in stark contrast to the empirical proof of Happy Years' actual profits. Moreover, Cortez acknowledged that he could not demonstrate where the lost profits could be found and accounted for in any of Happy Years' financial statements. His conclusions were not the result of any particular calculation. I would conclude that Cortez's method was unreliable and, thus, constituted no evidence. On that basis, and not the factual insufficiency of evidence, I would sustain Rivas's seventh issue.

CONCLUSION

For the foregoing reasons, I respectfully dissent from the majority's opinion. I would reverse and render a judgment that, as to Happy Years, Cantu take nothing.

ROBERT J. SEERDEN, Chief Justice

Publish .

Tex. R. App. P. 47.3.

Dissenting Opinion delivered and filed

this 21st day of December, 2000.

1. A recognized exception to this rule occurs when the corporation serves as the alter ego of a shareholder. See Manpower Corp. v. Culpepper, 802 S.W.2d 226, 228 (Tex. 1990). There is no pleading in this record to support an alter ego finding in this case.

2. Furthermore, because I am convinced that Happy Years' first issue should be sustained, I would also conclude that we need not reach Happy Years' issues related to its breach of contract claims. Tex. R. App. P. 47.1.

3. I would also conclude that we need not reach Happy Years' fifth issue related to satisfaction of the statute of frauds. Tex. R. App. P. 47.1.

4. This number was admittedly wrong and was subsequently corrected by the trial court.

5. It is, of course, axiomatic, that ownership of stock in a corporation does not entitle an individual to any share of profits. See generally Tex. Bus. Corp. Act Ann. art. 2.38-1 (Vernon 1998). Instead, stockholders are entitled to a share of dividends declared by the corporation's board of directors. However, in this case, the instruction and question submitted to the jury concerned, inter alia, Cantu's entitlement to lost profits. Neither party objected to either the instruction or the question. Because error was not preserved, I would not consider the propriety of either, but would proceed as though the instruction was correct. However, this should not be taken as my approval of using lost profits as a measure of damages in suits by shareholders against directors.

6. Cortez explained that his calculations were for the purposes of determining a "constructive dividend" and not lost profits. However, the record indicates that Cortez consistently refers to the $405,000 constructive dividend as lost profits. For current purposes, I will consider these terms to be indistinguishable.

It is always "a bargain between adversaries to suppress testimony" or was made for some other "improper" purpose. See Castellanos, 945 S.W.2d at 240.

2007-09-28T21:01:00.000-07:00

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NUMBER 13-07-405-CV

COURT OF APPEALS

THIRTEENTH DISTRICT OF TEXAS

CORPUS CHRISTI - EDINBURG

IN RE: CHRISTUS SPOHN HOSPITAL KLEBERG, ET AL.

On Petition for Writ of Mandamus

MEMORANDUM OPINION

Before Justices Yañez, Rodriguez, and Benavides

Memorandum Opinion by Justice Benavides

Relator, Christus Spohn Hospital Kleberg and Christus Spohn Health System Corporation d/b/a Christus Spohn Hospital Kleberg (collectively "Spohn"), has filed a petition for writ of mandamus asking this Court to compel the trial court to allow it to de-designate its expert witness, Nurse Kendra Menzies, and quash the deposition of Sandra Northcutt, the hospital's internal investigator. Based on the record and proceedings herein, we conclude that the trial court abused its discretion in refusing to allow Spohn to de-designate Menzies, but it did not abuse its discretion in failing to quash Northcutt's deposition. Accordingly, we conditionally grant, in part, and deny, in part, Spohn's petition for writ of mandamus.

Background

In the underlying medical malpractice lawsuit, Spohn mistakenly provided an internal investigative report written by employee Northcutt to its designated testifying expert witness, Menzies. The trial court did not allow Spohn to "snap-back" the document. Spohn contested this ruling through a petition for writ of mandamus with this Court, which was denied, and a further petition for writ of mandamus with the Texas Supreme Court. The Texas Supreme Court also denied the writ, holding that:

[T]he inadvertent nature of the production in this case preserved the privilege under Rule 193.3(d) and entitled the hospital to recover the documents upon realizing its mistake, provided the hospital's designated expert does not testify at trial. The hospital has not attempted to name another testifying expert, instead indicating an intent to rely upon the expert to whom the documents were disclosed. So long as the hospital stands upon its testifying expert designation, Rule 192's plain language and purpose and the policy considerations that surrounded its amendment compel the conclusion that the documents may not be snapped back. Accordingly, we deny the hospital's petition for writ of mandamus without prejudice to any right the hospital might have to designate another testifying expert and recover the privileged documents.

* * *

We are sympathetic to the Hospital's concerns over losing valuable work-product protections when documents are produced to a testifying expert by mistake. But the producing party in such a situation is not without a remedy. An attorney who discovers that privileged documents have been inadvertently provided to a testifying expert may presumably withdraw the expert's designation and name another. Although such a course may entail additional expense and perhaps delay, these concerns do not outweigh countervailing concerns that require full disclosure from an expert who will testify. If leave of court is necessary for an alternative designation -- when, for example, the expert designation deadline has passed -- courts should carefully weigh the alternatives available to prevent what may be akin to a death-penalty sanction for the party forced to trial without a necessary expert. The Hospital did not pursue such a course in this case, however, and we voice no opinion on the trial court's discretion in that regard.

Finally, the Hospital contends that, even if discoverable for purposes of deposing Menzies, the Northcutt documents should otherwise retain their privilege and not be used for other purposes or at trial. Since Menzies has already been questioned about the documents, the Hospital argues, their discovery should be confined to that context. Specifically, the Hospital seeks to quash Sandra Northcutt's deposition, which has been postponed pursuant to the parties' agreement pending the outcome of this mandamus proceeding. We decline to opine on the potential admissibility of the Northcutt documents at trial, as that issue is premature. And in light of Rule 192.5(c)'s provision that information discoverable under Rule 192.3 "is not work product protected from discovery," we cannot say that the trial court abused its discretion in denying the Hospital's motion to quash Sandra Northcutt's deposition.

In re Christus Spohn Hosp. Kleberg, 222 S.W.3d 434, 435, 445 (Tex. 2007) (internal citation omitted). The supreme court issued its opinion on April 27, 2007, denying the petition without prejudice to any right the hospital might have to designate another testimony expert and recover the privileged documents. Id.

On May 8, Spohn filed a de-designation of Menzies and a motion to quash the deposition of Northcutt. On June 6, the trial court held a hearing on Spohn's motion to quash. After hearing argument, the trial court refused to allow the de-designation of Menzies, denied the motion to quash, and set a new docket control order under which discovery closed July 20, 2007, a pretrial hearing was set for August 23, and the case was set for trial on September 4.

Relator filed its petition for writ of mandamus on June 26. On June 27, this Court granted Spohn's motion for emergency stay and stayed all proceedings in the trial court, including the deposition of Northcutt, pending further order of this Court or until the case is finally decided. See Tex. R. App. P. 52.10(b).

Standard of Review

A writ of mandamus will issue to correct a trial court's clear abuse of discretion. Walker v. Packer, 827 S.W.2d 833, 839 (Tex. 1992). "[A] clear failure by the trial court to analyze or apply the law correctly will constitute an abuse of discretion . . . ." Id. at 840. In addition to showing an abuse of discretion, the relator must show he has no other adequate remedy at law. Id. When an order requires the disclosure of information excepted from discovery, mandamus is appropriate because the remedy by appeal is inadequate. In re State Farm Mut. Auto. Ins. Co., 100 S.W.3d 338, 340 (Tex. App.-San Antonio 2002, orig. proceeding); Castellanos v. Littlejohn, 945 S.W.2d 236, 241 (Tex. App.-San Antonio1997, orig. proceeding).

The trial court is imbued with discretion to rule on matters related to discovery. Gen. Tire, Inc. v. Kepple, 970 S.W.2d 520, 526 (Tex. 1998); Jampole v. Touchy, 673 S.W.2d 569, 574-75 (Tex. 1984). In matters committed to a trial court's discretion, the test is whether the trial court acted arbitrarily or without reference to guiding legal principles. Cire v. Cummings, 134 S.W.3d 835, 838 (Tex. 2004); Lopez v. Martin, 10 S.W.3d 790, 794 (Tex. App.-Corpus Christi 2000, pet. denied).

Applicable Law

"Texas Law permits a testifying expert to be 'de-designated' so long as it is not part of 'a bargain between adversaries to suppress testimony' or for some other improper purpose." Castellanos, 945 S.W.2d at 240; see In re State Farm Mut. Auto. Ins. Co., 100 S.W.3d at 340; Lopez, 10 S.W.3d at 794; In re Doctors' Hosp., 2 S.W.3d 504, 506 (Tex. App.-San Antonio 1999, orig. proceeding).

The policy underlying the discovery rules is to seek the truth so that disputes may be decided by facts that are revealed rather than concealed. Tom L. Scott, Inc. v. McIlhany, 798 S.W.2d 556, 560 (Tex. 1990) (orig. proceeding); Rendon v. Avance, 67 S.W.3d 303, 309 (Tex. App.-Fort Worth 2001, orig. proceeding). A de-designation is ineffective where it violates the policy underlying the rules of discovery. McIlhany, 798 S.W.2d at 560. The protection afforded by the consulting expert privilege is intended to be only a shield to prevent a litigant from taking undue advantage of his adversary's industry and effort, not a sword to be used to thwart justice or to defeat the salutary objects of discovery. Id.

Analysis

In the instant case, the record before us is devoid of evidence that Spohn's attempted de-designation was part of "a bargain between adversaries to suppress testimony" or was made for some other "improper" purpose. See Castellanos, 945 S.W.2d at 240. And as previously discussed, the Texas Supreme Court denied Spohn's previous mandamus "without prejudice to any right the hospital might have to designate another testifying expert and recover the privileged documents." In re Christus Spohn Hosp. Kleberg, 222 S.W.3d at 435. With this directive and without additional evidence, we must conclude that the trial court abused its discretion in failing to allow the de-designation of Menzies. See id.

We reach a different conclusion, however, with regard to the trial court's refusal to quash Northcutt's deposition. The Texas Supreme Court considered and addressed this issue in its opinion and concluded that "[I]n light of Rule 192.5(c)'s provision that information discoverable under Rule 192.3 'is not work product protected from discovery,' we cannot say that the trial court abused its discretion in denying the Hospital's motion to quash Sandra Northcutt's deposition." See id. at 445. We reach the same conclusion herein.

Conclusion

The petition for writ of mandamus is conditionally granted, in part, and denied, in part, as described herein. We direct the trial court to vacate its order denying the de-designation of Menzies. The writ will issue only if the trial court fails to comply.

___________________________

GINA M. BENAVIDES

Justice

Memorandum Opinion delivered and

filed this the 26th day of September, 2007.

Since a defendant is not legally trained .......Obstruction of justice is in the heart of the Opinion.....not be published.....originals are required!

2007-09-28T20:37:00.000-07:00

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NUMBERS 13-06-584-CR

COURT OF APPEALS

THIRTEENTH DISTRICT OF TEXAS

CORPUS CHRISTI - EDINBURG

JOSE GARZA, Appellant,

v.

THE STATE OF TEXAS, Appellee.

On appeal from the 24th District Court of De Witt County, Texas

MEMORANDUM OPINION

Before Justices Yañez, Rodriguez, and Garza

Memorandum Opinion by Justice Garza

Appellant, Jose Garza, was indicted for aggravated sexual assault of A.S., a nine-year-old child, enhanced by four prior felony convictions. See Tex. Penal Code Ann. § 22.021 (Vernon Supp. 2006). Appellant pleaded "not guilty" to the charge and "not true" to the enhancement paragraphs. The jury found appellant "guilty" of the offense of aggravated sexual assault. See id. The trial court found the enhancement paragraphs to be "true" and sentenced appellant to sixty years' imprisonment. By eight issues, taken out of order, appellant challenges his conviction. Appellant claims the trial court erred by: (1) admitting testimony that bolstered the victim's testimony, (2) denying his motion for mistrial, (3) admitting a written statement made by appellant during questioning, (4) allowing hearsay evidence presented by the sexual assault nurse examiner, (5) not instructing the jury to disregard his written statement, (6) not instructing the jury with regard to the standard of proof regarding evidence of prior bad acts, and (7) admitting evidence of appellant's conviction during the punishment phase of trial. Appellant also claims the State failed to prove the elements of the offense beyond a reasonable doubt. We affirm.

I. Analysis

1. Testimony of Investigator Campbell

By his first issue, appellant claims the trial court erred by admitting the testimony of Investigator Colin Campbell regarding what A.S. had told him about how appellant sexually assaulted her. Appellant claims Campbell's testimony was used to bolster the victim's testimony. He claims that, because the victim's rendition of the facts of the case were not challenged by him, "there was no reason to show the consistency of her prior statements." We review a trial court's decision to admit or exclude evidence under an abuse of discretion standard. McDonald v. State, 179 S.W.3d 571, 576 (Tex. Crim App. 2005); Burden v. State, 55 S.W.3d 608, 615 (Tex. Crim. App. 2001). If the trial judge's decision is within the "bounds of reasonable disagreement," we do not disturb the ruling on the admissibility of evidence. Apolinar v. State, 155 S.W.3d 184, 186 (Tex. Crim. App. 2005).

The record reflects that the State asked Campbell if he recalled what the victim related to him. In response, appellant's defense counsel objected, "Your Honor, I'm going to object bolstering the witness." The trial court overruled the objection. Campbell proceeded to answer the question. Defense counsel lodged a second objection, again claiming, "he's bolstering the testimony of [A.S.]."

A general objection to "bolstering" is not sufficient to preserve error, because it does not sufficiently inform the trial court of the nature of the objection. In re J.G., 195 S.W.3d 161, 183 (Tex. App.-San Antonio 2006, no pet.); Montoya v. State, 43 S.W.3d 568, 573 (Tex. App.-Waco 2001, no pet.). Prior to the adoption of the Texas Rules of Evidence, "bolstering" was a proper objection when one item of evidence was used by a party to add credence or weight to some earlier unimpeached evidence that the same party had offered. See McKay v. State, 707 S.W.2d 23, 33 (Tex. Crim. App. 1985); Pless v. State, 576 S.W.2d 83, 84 (Tex. Crim. App. 1978); Montoya, 43 S.W.3d at 573 n.2. "Under case law existing prior to the promulgation of the Rules of Evidence, bolstering an unimpeached witness was 'automatically' error." Montoya, 43 S.W.3d at 573 n.2. However, although the Texas Rules of Evidence incorporate some concepts from "bolstering" in rules 613(c) and 608(a), the rules do not contain a specific rule pertaining to or prohibiting "bolstering." See id. Indeed, "nothing in the Rules prevents a party from adding credence to an unimpeached witness or adding credence to other evidence as long as that additional evidence is relevant." Id. "In fact, the Rules favor admissibility." Id. (citing Tex. R. Evid. 402, 403). "Given the focus of the Rules favoring admission, as well as the lack of a specific prohibition of this type of evidence, an objection that certain evidence is 'bolstering' in no way invokes the Rules or informs the trial court of the basis for exclusion under the Rules." Id. As such, a party's objection must inform the trial court why or on what basis the otherwise admissible evidence should be excluded. Id.; see Cohn v. State, 849 S.W.2d 817, 819-21 (Tex. Crim. App. 1993). Here, appellant's defense counsel did not identify which rule of evidence, if any, was violated by the admission of the complained-of portion of Campbell's testimony. Accordingly, he failed to preserve his objection for appeal. (1) Appellant's first issue is overruled.

2. Motion for Mistrial

By his second issue, appellant claims the trial court erred in denying his motion for mistrial. We review a trial court's denial of a motion for mistrial for abuse of discretion. Ladd v. State, 3 S.W.3d 547, 567 (Tex. Crim. App. 1999). A mistrial is only required if the impropriety is clearly calculated to inflame the minds of the jury and is of such a character as to suggest the impossibility of withdrawing the impression produced on the minds of the jury. Hinojosa v. State, 4 S.W.3d 240, 253 (Tex. Crim. App. 1999).

The record reflects that during direct examination, the State asked Campbell when he first initiated contact with appellant. Campbell replied that he spoke with appellant on the phone on August 23, at which time Campbell told appellant about the investigation. Campbell stated that, at the time of the conversation, appellant was residing in Freer, Texas. The State asked Campbell if, during the conversation, appellant indicated that he knew about the investigation. Campbell replied, "Yes. He knew about the investigation." The State asked Campbell if he knew how appellant found out about the investigation. Campbell stated that he did not know. The State then asked Campbell, "Okay. Now what was it you were asking him at that time?" Campbell responded, "I asked him if he'd take a polygraph and he agreed to it and we talked a few more minutes and then he made the comment that-." Defense counsel immediately asked to approach the bench, and during the bench conference, lodged an objection on the ground that evidence of a polygraph is inadmissible. The State responded, "I have no intention of getting into anything about a polygraph. That was inadvertent, Judge. I had no intention of bringing out anything further regarding that." Defense counsel asked the court to instruct the jury to disregard the comment and also moved for a mistrial. The trial court instructed the jury to "disregard any statement with respect to a polygraph in this case" and subsequently denied the motion for mistrial. On appeal, appellant asserts:

Even though the jury was instructed to disregard the statement, the error could not be cured by the instruction. The investigator's statement about [appellant] taking a polygraph can lead to so many conclusions with regard to the truthfulness of his statements to police, that his trial was unfairly prejudiced by this testimony. No curative instruction given to the jury could cure the prejudice placed on [appellant's] case by the assertion that he was given the opportunity to take a polygraph exam.

Because of their inherent unreliability and tendency to be unduly persuasive, polygraph examination results are inadmissible for any purpose in a criminal proceeding on proper objection. Gregory v. State, 56 S.W.3d 164, 173 (Tex. App.-Houston [14th Dist.] 2001, pet. dism'd) (citing Marcum v. State, 983 S.W.2d 762, 765 (Tex. App.-Houston [14th Dist.] 1998, pet. ref'd) (citing Shiflet v. State, 732 S.W.2d 622, 630 (Tex. Crim. App. 1985))). However, the mere mention of a polygraph examination does not automatically constitute reversible error. Id. (citing Marcum, 983 S.W.2d at 765).

"Where a witness gives a nonresponsive answer that mentions a polygraph test was offered or taken, but does not mention the results of the test, there is no error in failing to grant a mistrial." Id. at 173, n.4. An instruction to disregard the answer is generally sufficient to reduce any prejudicial effect the answer might have had in the minds of the jurors. Id. (citing Kugler v. State, 902 S.W.2d 594, 595 (Tex. App.-Houston [1st Dist.] 1995, pet. ref'd)). Because Campbell's nonresponsive comment did not reveal whether appellant submitted to a polygraph exam, much less the results, if any, the trial court's immediate instruction to disregard the reference was sufficient to cure any error. See Richardson v. State, 624 S.W.2d 912, 914-15 (Tex. Crim. App. 1981); Gregory, 56 S.W.3d at 173. Appellant's second issue is overruled.

3. Appellant's Written Statement

In his third issue, appellant claims the trial court erred in admitting his written statement, introduced as State's exhibit number 3, in which he admits that he penetrated A.S.'s sexual organ with his finger. (2)

On appeal, appellant claims he was in custody at the time he provided the complained-of statement. (3) Appellant further claims "[t]he State failed to comply to [sic] with requirements of the Code of Criminal Procedure." We do not address this issue because appellant inadequately briefed it by failing to provide a clear and concise argument or authority with respect to how the State failed to comply with the requirements of the code of criminal procedure. See Tex. R. App. P. 38.1(h). Appellant's third issue is overruled.

4. Testimony of Sexual Assault Nurse Examiner

By his fourth issue, appellant claims the trial court erred in allowing the testimony of sexual assault nurse examiner, Leslie Kallus. Kallus was permitted to testify, over appellant's hearsay objection, about a study conducted by another person explaining why a child victim of a sexual assault would not show evidence of trauma to the vagina.

We review a trial court's decision to admit or exclude evidence under an abuse of discretion standard. McDonald, 179 S.W.3d at 576; Burden, 55 S.W.3d at 615. If the trial judge's decision is within the "bounds of reasonable disagreement," we do not disturb the ruling on the admissibility of evidence. Apolinar, 155 S.W.3d at 186.

Appellant claims Kallus' testimony, which was "a narrative of what a report found," was hearsay and did not fall under any of the exceptions to the hearsay rule. See Tex. R. Evid. 801(d), 803. Appellant further claims the testimony prejudiced his defense because "the State used this inadmissible testimony to explain why [A.S.] had no evidence of injury to her sexual organ." The State responds that it proffered the evidence under the exception to the hearsay rule that allows "statements for purposes of medical diagnosis or treatment." See Tex. R. Evid. 803(4).

A violation of the evidentiary rules resulting in the erroneous admission of evidence is non-constitutional error. See Johnson v. State, 967 S.W.2d 410, 417 (Tex. Crim. App. 1998). We are to disregard errors, defects, irregularities, or variances that do not affect the substantial rights of the accused. Tex. R. App. P. 44.2(b); Solomon v. State, 49 S.W.3d 356, 365 (Tex. Crim. App. 2001). A substantial right is affected when the error had a substantial and injurious effect or influence in determining the jury's verdict. King v. State, 953 S.W.2d 266, 271 (Tex. Crim. App. 1997). In making this determination, we should consider the entire record, including testimony, physical evidence, the State's theories and any defensive theories, closing arguments, and voir dire, if applicable. Bagheri v. State, 119 S.W.3d 755, 763 (Tex. Crim. App. 2003). If evidence similar to the complained-of evidence is admitted without objection elsewhere in the trial, we will conclude any error was harmless. Josey v. State, 97 S.W.3d 687, 698 (Tex. App.-Texarkana 2003, no pet.).

The testimony that appellant complains of consists of the following:

In this case there were 200 exams done. We know these girls were sexually active. The reason we know that they were sexually active is because they were pregnant. Only in the very few numbers, once again, in the four percent did you actually find injury. Why? Because the bodies are actually made to give. The estrogen in that area relaxes the hymen, middle area, where a penis, since they were pregnant, could be inserted without leaving injury.

On cross-examination, defense counsel elicited the following testimony from Kallus:

Counsel: Would you also agree that sometimes when the hymen is injured even after some time that there is some scars, that there are scars that might be left on the hymen?

Kallus: There's that probability, but once again, you still--that's in that 4 percent. That would be the diagnostic evidence of that 4 percent if there was injury.

Counsel: But, I mean, that's possible; right? You would be able to see the scars?

Kallus: There is that possibility, yes.

Assuming, without deciding, that the trial court erred in admitting the complained-of testimony, we would nonetheless conclude that any error was harmless given the overwhelming evidence of appellant's guilt that was introduced at trial. See Tex. R. App. P. 44.2(b); Solomon, 49 S.W.3d at 365; Wesbrook v. State, 29 S.W.3d 103, 119 (Tex. Crim. App. 2000) (stating, "the presence of overwhelming evidence supporting the finding in question can be a factor in the evaluation of harmless error."). (4) Accordingly, appellant's fourth issue is overruled.

5. Jury Instruction Regarding Voluntariness

By his fifth issue, appellant claims the trial court erred in refusing to submit a "special jury instruction with regard to [appellant's] statement to Investigator Campbell." Presumably, appellant is referring to his requested jury instruction regarding the voluntariness of his written statement, specifically, State's exhibit number 3. Appellant argues, "[s]ince [he] properly objected and requested a special instruction on this issue, [appellant] believes that the Court should have presented the instruction to the jury." Appellant concludes that "the failure of the lower court to instruct the jury with regard to this special issue requires that this Honorable Court reverse and remand this case back to the trial court."

However, appellant has failed to provide a clear and concise argument for his contention that, because he "properly objected and requested" the instruction, the trial court "should have presented the instruction to the jury." See Tex. R. App. P. 38.1(h). (5) In addition, appellant has failed to develop any argument whatsoever and has failed to cite authority to support his conclusory statement that the trial court's failure to submit the requested instruction requires a new trial; thus, he presents nothing for our review. See id. Accordingly, appellant's fifth issue is overruled.

6. Jury Instruction Regarding Prior Bad Acts

By his sixth issue, appellant claims the trial court erred in refusing to instruct the jury with regard to the State's burden of proof regarding prior bad acts. Appellant claims, "[s]ince [appellant] properly objected and requested a special instruction on this issue, [appellant] believes that the Court should have presented the instruction to the jury." We decline to address this issue because it is inadequately briefed. See id.

7. Legal Sufficiency of the Evidence

By his seventh issue, appellant claims the State failed to prove the elements of the offense of aggravated sexual assault beyond a reasonable doubt. See Tex. Penal Code Ann. § 22.021. Specifically, appellant claims the State failed to prove, beyond a reasonable doubt, that A.S. "was penetrated by [appellant]." See id. Appellant concedes, however, that "[t]he evidence presented demonstrates that [appellant] may have committed a sexual assault of the child."

In a legal sufficiency review, we consider all of the properly or improperly admitted evidence in the light most favorable to the verdict and determine whether, based on that evidence and reasonable inferences therefrom, a rational jury could have found the accused guilty of the essential elements of the offense beyond a reasonable doubt. Jackson v. Virginia, 443 U.S. 307, 319 (1979); Rosillo v. State, 953 S.W.2d 808, 811 (Tex. App.-Corpus Christi 1997, pet. ref'd). Section 22.021 provides, in relevant part, that a person commits the offense of aggravated sexual assault if he, intentionally or knowingly, causes the penetration of the anus or sexual organ of a child by any means. Tex. Penal Code Ann. § 22.021(a)(1)(B)(i).

The evidence at trial included A.S.'s testimony that appellant was her grandmother's boyfriend. He would come to her bedroom (at her grandmother's house) at night, cover her mouth, and "mess with [her]." A.S. testified that she would feel pain in her "private" when appellant would mess with her. See Tex. Code Crim. Proc. Ann. art. 38.07(a) (Vernon 2005) (providing that the testimony of a child victim alone is sufficient to support a conviction for sexual assault of a child). She testified appellant did this more than six times. She further testified that appellant said he would hurt her and her brother if they told anyone. In addition, the evidence included appellant's written statement that he "put [his] finger in [A.S.'s] [private] just a little bit."

Viewed in the light most favorable to the verdict, we conclude a rational jury could have found the essential elements of the offense beyond a reasonable doubt. Jackson, 443 U.S. at 319; Rosillo, 953 S.W.2d at 811. Accordingly, appellant's seventh issue is overruled.

8. Evidence of Prior Conviction

By his eighth issue, appellant claims the trial court erred in admitting State's exhibit number 8 during the punishment phase of trial because the State failed to "comply with the statutory time to file a business records affidavit as provided by the rules of evidence." Appellant further asserts that because exhibit 8 was improperly admitted, and it was necessary for the State to authenticate exhibit 7, exhibit 7 was also improperly admitted. (6)

As set out above, we review a trial court's decision to admit or exclude evidence under an abuse of discretion standard. McDonald, 179 S.W.3d at 576; Burden, 55 S.W.3d at 615. If the trial judge's decision is within the "bounds of reasonable disagreement," we do not disturb the ruling on the admissibility of evidence. Apolinar, 155 S.W.3d at 186.

Exhibit number 8 consists of a copy of a sealed, certified copy of appellant's jail records, which includes appellant's fingerprints, mug shots, and case/booking summary from the Tarrant County Records Management Office. The records indicate that appellant was in the Tarrant County Jail on two separate occasions. At trial, defense counsel objected to the admission of exhibit 8. He stated,

I'm assuming that the State is attempting to introduce this through the business records exception by written business records affidavit. There's certain predicate that needs to be complied with. I believe they need to be filed with the Court a certain number of days prior to today's date and we'd object to that.

See Tex. R. Evid. 902(10).

Texas Rule of Evidence 902(10) encompasses business records and the self-authentication of same through an affidavit. Id. One pursuing that avenue is obligated to file the records and affidavit with the court clerk at least fourteen days before trial and notify the other parties of the filing. Id. However, pen packets and official records such as exhibits 7 and 8, may be authenticated under rule 902(4) via a certification by their custodian that the records are correct copies of the originals. Reed v. State, 811 S.W.2d 582, 586 (Tex. Crim. App. 1991); accord, Cuddy v. State, 107 S.W.3d 92, 96 (Tex. App.-Texarkana 2003, no pet.) (holding the same); see Tex. R. Evid. 902(4) (stating that a copy of an official record may be self-authenticated via certification as to its accuracy by the custodian or other person authorized to so certify). The affidavits attached to exhibits 7 and 8 include a certification by their custodian that the documents were true and correct copies of the original records on file in the office and maintained in the regular course of business "within the Bureau of Classification and Records of the Texas Department of Criminal Justice-Correctional Institutions Division" and "the Tarrant County Sheriff's Department." The affidavits sufficiently authenticate exhibits 7 and 8 under rule 902(4). See Tex. R. Evid. 902(4). Because exhibits 7 and 8 are admissible pursuant to rule 902(4), which does not contain a notice requirement, we conclude appellant's contention is without merit. See id. Appellant's eighth issue is overruled.

II. Conclusion

The judgment of the trial court is affirmed.

_________________________

DORI CONTRERAS GARZA,

Justice

Do not publish.

Tex. R. App. P. 47.2(b).

Memorandum Opinion delivered and

filed this the 28th day of August, 2007.

1. In fact, on appeal, appellant still does not identify which Texas Rule of Evidence was violated. See Tex. R. App. P. 38.1(h) (requiring appellant's brief to contain a clear and concise argument for the contentions made, with appropriate citations to authorities and to the record).

2. The record reflects that appellant filed a pre-trial motion to suppress the complained-of statement. The trial court carried the motion with the trial. The record does not show that the trial court actually ruled on the motion and there is no objection to the refusal to rule. See Tex. R. App. P. 33.1(a) (stating that, "[a]s a prerequisite to presenting a complaint for appellate review, the record must show that . . . the trial court . . . ruled on the request, objection, or motion, either expressly or implicitly . . . .").

3. After trial, the trial court entered findings of fact and conclusions of law pertaining to the complained-of statement. The trial court found that (1) the complained-of statement was made before appellant was arrested or in any manner placed into custody, and (2) appellant understood that he was not in custody during the time he made the admitted statement. The trial court concluded, as a matter of law, that article 38.22 did not come into play in the admission of the complained-of statement. See Tex. Code Crim. Proc. Ann. art. 38.22 (Vernon 2005).

The trial court further found that: (1) even though the warnings called for in article 38.22, section 2, were not required by law, Campbell fully advised appellant of his rights to remain silent, to an attorney, etc., as specified in article 38.22, section 2, (2) appellant was advised of these rights prior to being interviewed, (3) appellant understood those rights, and (4) appellant knowingly, voluntarily, and without compunction or promise or favor, gave the complained-of statement. See id.

4. The record contains the testimony of A.S., who testified that appellant, "would mess with her" and her "private" would hurt when he would "mess" with her. The record also contains appellant's written statement, wherein he admits that he "put [his] finger in [A.S.'s] [private] just a little bit."

5. We note that appellant cites to Almanza v. State, 686 S.W.2d 157, 171 (Tex. Crim. App. 1985), in support of his contention that "the Court should have presented the instruction to the jury." In Almanza, the court held that if error in a jury charge was subject to timely objection, reversal was required if the error was not harmless. Id. If proper objection was not made, however, but the error was fundamental, reversal was warranted only if the error was so egregious and created such harm that the accused was denied a fair and impartial trial. Id.

In the present case, defense counsel objected to the jury charge and requested a special instruction regarding voluntariness. Accordingly, we conclude that, in the present case, reversal would only be required if the error was not harmless. See id. However, appellant has failed to develop any argument whatsoever regarding whether the alleged error in this case was not harmless. See Tex. R. App. P. 38.1(h).

6. Exhibit 7 consists of the pen packet from the Texas Department of Criminal Justice-Correctional Institutions Division, which includes appellant's fingerprints, mug shot, and jail records from Tarrant County.

This order is not intended to, and does not, create any right, benefit, or privilege, substantive or procedural, enforceable at law or in equity, by a

2007-07-31T03:55:00.000-07:00

For Immediate Release
Office of the Press Secretary
July 18, 2007

Executive Order: Establishing An Interagency Working Group on Import Safety

RSS Feed White House News

By the authority vested in me as President by the Constitution and the laws of the United States of America, and to ensure that the executive branch takes all appropriate steps to promote the safety of imported products, it is hereby ordered as follows:

Section 1. Establishment of Interagency Working Group on Import Safety. The Secretary of Health and Human Services shall establish within the Department of Health and Human Services for administrative purposes only an Interagency Working Group on Import Safety (Working Group).

Sec. 2. Membership and Operation of Working Group.

(a) The Working Group shall consist exclusively of the following members, or their designees who shall be officers of the United States appointed by the President or members of the Senior Executive Service:

(i) the Secretary of Health and Human Services, who shall serve as Chair;

(ii) the Secretary of State;

(iii) the Secretary of the Treasury;

(iv) the Attorney General;

(v) the Secretary of Agriculture;

(vi) the Secretary of Commerce;

(vii) the Secretary of Transportation;

(viii) the Secretary of Homeland Security;

(ix) the Director of the Office of Management and Budget;

(x) the United States Trade Representative;

(xi) the Administrator of the Environmental Protection Agency;

(xii) the Chairman of the Consumer Product Safety Commission; and

(xiii) other officers or full-time or permanent part-time employees of the United States, as determined by the Chair, with the concurrence of the head of the department or agency concerned.

(b) The Chair shall convene and preside at meetings of the Working Group, determine its agenda, and direct its work. The Chair may establish and direct subgroups of the Working Group, as appropriate to deal with particular subject matters, that shall consist exclusively of members of the Working Group. The Chair shall designate an officer or employee of the Department of Health and Human Services to serve as the Executive Secretary of the Working Group. The Executive Secretary shall head any staff assigned to the Working Group and any subgroups thereof, and such staff shall consist exclusively of full-time or permanent part-time Federal employees.

Sec. 3. Mission of Working Group. The mission of the Working Group shall be to identify actions and appropriate steps that can be pursued, within existing resources, to promote the safety of imported products, including the following:

(a) reviewing or assessing current procedures and methods aimed at ensuring the safety of products exported to the United States, including reviewing existing cooperation with foreign governments, foreign manufacturers, and others in the exporting country's private sector regarding their inspection and certification of exported goods and factories producing exported goods and considering whether additional initiatives should be undertaken with respect to exporting countries or companies;

(b) identifying potential means to promote all appropriate steps by U.S. importers to enhance the safety of imported products, including identifying best practices by U.S. importers in selection of foreign manufacturers, inspecting manufacturing facilities, inspecting goods produced on their behalf either before export or before distribution in the United States, identifying origin of products, and safeguarding the supply chain; and

(c) surveying authorities and practices of Federal, State, and local government agencies regarding the safety of imports to identify best practices and enhance coordination among agencies.

Sec. 4. Administration of Working Group. The Chair shall, to the extent permitted by law, provide administrative support and funding for the Working Group.

Sec. 5. Recommendations of Working Group. The Working Group shall provide recommendations to the President, through the Assistant to the President for Economic Policy, on the matters set forth in section 3 within 60 days of the date of this order, unless the Chair determines that an extension is necessary. The Working Group may take other actions it considers appropriate to promote the safety of imported products.

Sec. 6. Termination of Working Group. Following consultation with the Assistant to the President for Economic Policy, the Chair shall terminate the Working Group upon the completion of its duties.

Sec. 7. General Provisions.

(a) Nothing in this order shall be construed to impair or otherwise affect (i) authority granted by law to a department, agency, or the head thereof, or (ii) functions of the Director of the Office of Management and Budget relating to budget, administrative, or legislative proposals.

(b) This order shall be implemented consistent with applicable law and subject to the availability of appropriations.

(c) This order is not intended to, and does not, create any right, benefit, or privilege, substantive or procedural, enforceable at law or in equity, by any party against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person.

GEORGE W. BUSH

THE WHITE HOUSE,

July 18, 2007.

More Money 4 the rich by stealing from the poor.......Must b d money

2007-06-19T04:31:00.000-07:00

Off the Kuff
Knowledge Is Good in the Reality-Based Community
Contact me: kuff - at - offthekuff.com
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June 24, 2003
What they didn't tell you

The Gunther Concept, which now has permalinks even if they are blogspotted, found a curious omission in this Sunday Chron story about Gregg Phillips, the $144K-per-year "leader of the most sweeping social services overhaul in modern Texas history". Here's what the story says:

After three tumultuous years as former Mississippi Gov. Kirk Fordice's young political choice to lead a major overhaul of that state's Department of Human Services, the embattled executive director could no longer stand the heat. Facing a tidal wave of opposition, he resigned in 1995.

State employees protested privatization of child support collections. Legislators, upset by the issue and at odds with Fordice, threatened to close the agency. Advocates for the poor called Phillips a liar, and a Jackson Clarion-Ledger editorial cartoon portrayed him as Pinocchio.

"I had a son in second grade at the time. The final straw was when he came home really upset one day because some of his friends had seen someone being ugly to me on TV," he said recently from his new office at the Texas Health and Human Services Commission.

As HHSC deputy commissioner for program services, Phillips will make key decisions on downsizing and consolidating 12 agencies serving the blind, deaf, nursing home residents, abused children, mentally impaired, physically disabled and other needy Texans into only five agencies.

Phillips also will oversee the privatization of eligibility screening for services to sick and needy Texans as part of a new state law designed to shrink government and save $1.1 billion. Instead of the 800 Mississippi state jobs jeopardized by privatization, Texas aims to eliminate 3,600 health and human services workers during the next two years.

[...]

The ambitious social services overhaul in Texas might take up to six years to complete, Phillips said, predicting the most complex and challenging tasks will be privatizing eligibility screening and splitting mental retardation and mental health services into separate agencies.

He said he no longer believes the argument should be whether privatization saves more money than government-run services. The focus should be to create competition by preventing either public or private monopolies, perhaps splitting tasks among several bidders.

Republican leaders who pushed through the changes in Texas human services predict it will lead to greater efficiencies and better outcomes for the needy and taxpayers. But advocates for the poor who remember Phillips' work in Mississippi, predict his leading role could end in chaos, disaster and perhaps squandering of tax dollars.

"He really knows his stuff," said Rep. Arlene Wohlgemuth, R-Burleson, author of House Bill 2292, the health and human services overhaul, noting Phillips played a critical role in drafting the new law.

She said he possessed a wealth of knowledge needed for such an ambitious reinvention of government and if he didn't have an answer, he quickly got one.

"There are not very many conservatives who are all that involved in health and human services issues. I knew he was," she added. "He had an excellent reputation."

Larry Temple, who worked for Phillips in Mississippi before landing at the Texas Workforce Commission as the director of welfare reform, predicted a successful future for his friend in Texas.

"He's no-nonsense, very direct, very focused, extremely loyal," Temple said. "He's a good soldier, the kind of guy you can depend on to carry out any mandates you're given."

Temple said Phillips is the "perfect person" to pull off changes in the landmark legislation, but several civil rights advocates and others in Mississippi disagree.

"Mr. Phillips has been identified as one of those people that can come in and make all those drastic cuts and not feel any compunction about what he's doing to the poor people of Texas," said Wendell Paris of Mississippi Action for Community Education in the poverty-stricken Mississippi Delta. "If he does in Texas what he did in Mississippi, I feel sorry for the poor people of Texas."

Many recall controversial welfare-to-work policies, which reduced welfare rolls by more than 80 percent, sometimes by putting welfare recipients to work in poultry processing plants or casinos. Their benefit checks went to employers to subsidize their low-wage jobs. Phillips described the approach as "tough love," but Paris saw the impact they had in less flattering terms.

"Those Texas legislators ought to research what his history is, and they ought to be ashamed of themselves," he said, noting the state's recruitment of both Temple and Phillips. "They're bringing in that whole crew of these ruthless wolves hiding in sheep's clothing."

Carol Burnett of Mississippi's Low Income Child Initiative said Phillips was a "very controversial choice" to head Mississippi's human services department because he was so inexperienced with the issues faced by poor families.

"I think his work in government is more political than it is really trying to promote any kind of improvement over time for human services for low-income families," she said. "I regret that type of person is the choice to head agencies that have such incredible influence over how programs are shaped that so influence the lives of children and families."

Warren Yoder, director of the Public Policy Center of Mississippi, said Phillips' controversial privatization of child support collections under a contract to Maximus Inc. was limited by the Legislature in scope.

Even so, he said the experiment was a failure, and the Legislature later turned both child support collections and welfare-to-work training programs back to the state.

While this seems like a reasonable get-quotes-from-supporters-and-detractors-alike approach, there's a factual matter that wasn't addressed. According to this report by the Mississippi Legislature's Joint Committee on Performance Evaluation and Expenditure Review (PEER), Phillips departure from his position there caused ethical questions to be raised:

After terminating his employment as MDHS Executive Director, Gregg Phillips immediately contracted with Synesis, a subcontractor of the LEAP program, which creates the appearance of impropriety and could constitute a violation of state ethics laws. (See page 26.)

Gregg Phillips, former Executive Director for the Department of Human Services, signed a contract modification in 1993 which added two mobile learning labs to the LEAP program. Centec Learning entered into a contract with University of Mississippi to convert two vehicles into these mobile learning labs, while also maintaining and operating them for the term of the contract.

On April 26, 1995, Gregg Phillips resigned his position as Executive Director of MDHS and on the same day entered into a contract with Synesis Corporation, of which Centec is a division. Contract terms called for Mr. Phillips to be paid $84,000 per year to make industry contacts and market Synesis products and services.

Mr. Phillips's actions create the appearance of impropriety, facilitating an erosion of the public trust.

LEAP stands for Project Learn, Earn, and Prosper, and it was developed by Mississippi's Department of Human Services (MDHS) as part of program called JOBS (Job Opportunity and Basic Skills), which in turn was created to comply with the federal Family Support Act of 1988. All of that is in the introduction in the beginning of the report - the bit about Phillips is towards the end.

The PEER committee made the following recommendation:

The Executive Director of the PEER Committee shall immediately refer copies of this report to the Executive Director of the Ethics Commission and the Attorney General for an investigation of Mr. Gregg Phillips's contractual relationship with a LEAP subcontractor for determination of violation of state ethics laws. If the Ethics Commission and the Attorney General do not determine this to be a violation based on strict adherence to the law, the Legislature should consider making terms of the ethics law more specific to address contracts executed by an executive officer who does not report to a board or commission.

As noted in this followup story, the contract with Centec was for $875,000 and was one-third of Centec's entire net worth at the time.

Phillips was not ultimately prosecuted for this; as the PEER report anticipated, his behavior violated the spirit rather than the letter of the state's ethics laws. I have no idea if the Mississippi legislature followed the recommendation to amend the law to ensure that no one else can get away with what Gregg Phillips did. I do know that I would have found this information to be a more substantial criticism of Phillips' tenure than some crabbing by bleeding heart types. Gunther suggests writing a letter to the editor and point this out to them, along with the links he dug up. I've called and left a message for reporter Polly Ross Hughes to ask her about it. Though my past history in getting clarifications from the Chron is spotted at best, I'll try to be optimistic.
Posted by Charles Kuffner on June 24, 2003 to Scandalized! | TrackBack
Comments

I am currently an online PhD student at Capella University. I am working on a project "against" privatization in the State of Texas and would appreciate any information, links, input or articles you might have.

Thank you
Posted by: Kathryn McMahon on April 13, 2004 7:00 PM

I have tons of information on the privatization of State services, i.e. Health and Human Services in Texas. If interested, provide me with your email address. I can also put you in touch with others who would provide you information as well.
I am a current employee with the Department of Human Services and a member of TSEU who is fighting against privatization - not just for my job but because I know that our poor, elderly and disabled will not be able to navigate the system they have in mind. I also know that this is not about saving money or providing access to services but it appears to be a political game set up years ago!

http://www.offthekuff.com/mt/archives/002029.html

http://www.cppp.com/

http://www.prnewswire.com/cgi-bin/stories.pl?ACCT=105&STORY=/www/story/09

I have much more. Let me know.

Fighting Privatization in Texas.

kccaseworker@yahoo.com
Posted by: kccaseworker on June 12, 2004 6:22 PM

I am writing a paper on ethical issues about House Bill 2292. Any other updates would greatly be appreciated.
Posted by: Cheryl Balthazar on October 2, 2004 10:09 PM
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A no‑evidence point will be sustained only if there is no more than a scintilla of evidence to prove the existence of a fact. Quantum Chem., 47 S.W.3

2007-06-01T23:19:00.000-07:00

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NUMBER 13-05-086-CV

COURT OF APPEALS

THIRTEENTH DISTRICT OF TEXAS

CORPUS CHRISTI - EDINBURG

QUALITY DIALYSIS, INC., Appellant,

v.

HERBERT ADAMS, Appellee.

On appeal from the 240th District Court

of Fort Bend County, Texas.

MEMORANDUM OPINION

Before Chief Justice Valdez and Justices Rodriguez and Castillo

Memorandum Opinion by Justice Castillo

Appellant, Quality Dialysis, Inc. ("QD"), brings this appeal from a jury verdict finding that age was a motivating factor in the constructive discharge of appellee, Herbert Adams ("Adams"). Damages were awarded based upon back pay, health benefits, and the jury's finding of malice. We affirm.

I. Background

QD began in approximately 1996 as a company providing in-home kidney dialysis care. Adams was hired by QD in September 1996 at the age of 63. He began as temporary help and then was quickly hired by QD's owner, Cynthia Barclay, on a part-time basis. Shortly thereafter, he was hired on a full-time basis, with full-time benefits including health care. Although initially hired as a transport driver, Adams later became Distribution Manager. He was consistently given excellent reviews, receiving the highest possible scores in his 1998, 1999, and 2000 reviews. Adams received several raises, and was making $14.42 an hour by September 2000. Testimony of QD's marketing representative, Barbara Williams, reflected that Adams's work performance was "excellent." "Everybody raved about him; patients, doctors, anyone who came into contact with him." Evidence was undisputed that Adams was capable of performing all his job functions and that he did so in an exemplary manner.

Sometime between September 2000 and October 2001, Barclay's daughter, Genevieve (also known as Starr Estelle), was promoted to the position of office manager. She was then in her early 30's. In 2001, the company changed its health care provider. At a meeting in May 2001, the insurance representative commented that Adams might not be able to be insured because he was too old. Adams testified that others at the meeting laughed at the comment. It is undisputed that Adams and his wife were subsequently accepted on the new insurance plan.

In August 2001, Adams was involved in a hit-and-run accident for which he was not at fault. Williams testified that after this accident, in the fall of 2001, she was in Genevieve's office along with Barclay when Genevieve stated that Adams was getting too old and "we needed to push him out of there." Adams testified that "after the accident, things started going downhill for me."

In October 2001, Marian Wilson, Adams's immediate supervisor, was instructed by Genevieve to inform Adams that his hours were being reduced from forty to thirty hours per week, and his pay was being reduced from $14.42 to $14.00 per hour. Any questions were to be directed to Genevieve. Wilson told Adams in early November of the reductions; the reason given to Adams was a declining patient census. However, at trial Genevieve could neither identify the exact number of patients at that time nor the extent of any decline in census.[1] Because Adams's hours were reduced, his health coverage was also terminated. He discovered this when he presented his card at a pharmacy to purchase medication for his wife. Later, he noticed QD was no longer making deductions for his share of the insurance.

At the time of Adams's reductions, QD had two full-time and one-part-time employee drivers; Adams was the only employee, however, for whom hours and pay were reduced. None of the later-hired younger drivers, whom Adams supervised, received any such reductions. Adams requested that his hours be increased back to thirty-two hours per week so that he could maintain health insurance, but that request was denied. Adams determined that he could not pay his bills on the resulting salary and gave two weeks' notice. He did not look for new employment while he remained an employee with QD. After a disagreement over his entitlement to some vacation time, Adams ceased his employment with QD. He found new employment approximately two weeks later, at a lesser hourly salary but with full-time hours and attendant benefits. Adams claims he had no choice but to quit, having been "forced out." Adams's last day was December 4, 2001.

Later in December 2001, QD hired a replacement driver at full-time status for forty hours per week. The new hire was in his early thirties. The new hire, Williams Bassett, did not work out and approximately six weeks later, Barclay called Adams to ask if he would like to come back to work; she needed help because QD had secured a new contract with the Harris County Hospital District. There was no evidence as to the hours, wages, or other terms that would have been offered. Adams declined. At trial, Adams testified that he had been QD's longest-term employee in a company with high turnover, and he felt he had helped to build the company and had always done his job well. He felt "used" and "forced out," and had no desire to return to where he had been treated "so hostile." He did not feel he would be welcomed back.

Adams filed an age discrimination claim with the Equal Employment Opportunity Commission ("EEOC") and with the Texas Commission on Human Rights ("TCHR"). The EEOC issued a right to sue letter which reflected that it had found "reasonable cause to believe that violations of the statute(s) occurred with respect to some or all of the matters alleged in the charge." The TCHR also issued a right to sue letter, and Adams subsequently brought suit alleging violations of the Texas statute. Both these letters were included in evidence to the jury.

The jury returned a verdict finding that age was a motivating factor in QD's decision to discharge Adams. It awarded Adams $30,339 as damages for back pay and employment benefits. The jury also found that QD had acted with malice (by clear and convincing evidence) and awarded Adams $30,339 in exemplary damages.

II. Issues on Appeal

QD brings four issues on appeal: (1) there is no evidence to support the jury's finding that QD discharged Adams due to his age; (2) in the alternative, the finding is against the great weight and preponderance of the evidence; (3) the finding of malice is against the great weight and preponderance of the evidence; and (4) the award of exemplary damages is excessive. As sub-issues under the first two issues, QD argues that the trial court erred in (a) overruling its motion for directed verdict, and (b) overruling its motion for "judgment J.N.O.V." As sub-issues relating to the finding of malice, QD argues that the trial court erred in (a) admitting certain opinion testimony of Adams, (b) admitting hearsay evidence of statements allegedly made by an independent insurance agent, and (c) overruling QD's objection to including the malice and exemplary damages questions in the jury charge.

III. Standard of Review

1. Legal and Factual Sufficiency

We address legal-sufficiency challenges as either "no-evidence" or "matter-of-law" issues. Gooch v. Am. Sling Co., 902 S.W.2d 181, 183-84 (Tex. App.BFort Worth 1995, no writ). We analyze the issue as a "no-evidence" challenge when, as here, the party complaining on appeal did not bear the burden of proof at trial. Id.

When reviewing facts, the

. . . final test for legal sufficiency must always be whether the evidence at trial would enable reasonable and fair‑minded people to reach the verdict under review. Whether a reviewing court begins by considering all the evidence or only the evidence supporting the verdict, legal‑sufficiency review in the proper light must credit favorable evidence if reasonable jurors could, and disregard contrary evidence unless reasonable jurors could not.

City of Keller v. Wilson, 168 S.W.3d 802, 827 (Tex. 2005). We will review the evidence "in the light most favorable to the verdict, disregarding all contrary evidence that a reasonable jury could have disbelieved." Ysleta Indep. Sch. Dist. v. Monarrez, 177 S.W.3d 915, 917 (Tex. 2005) (per curiam). If the evidence presented at trial would permit reasonable and fair-minded people to differ in their conclusions, then jurors must be allowed to do so. Keller, 168 S.W.3d at 822. The trier-of-fact, whether the trial court or the jury, remains the sole judge of the credibility of the witnesses and the weight to give their testimony. Id. at 819. It may choose to believe one witness and disbelieve another, and a reviewing court cannot impose its own opinions to the contrary. Id. at 822. "A reviewing court cannot substitute its judgment for that of the trier-of-fact, so long as the evidence falls within this zone of reasonable disagreement." Id. "The court must consider evidence in the light most favorable to the verdict, and indulge every reasonable inference that would support it. But if the evidence allows of only one inference, neither jurors nor the reviewing court may disregard it." Id.

When reviewing factual insufficiency complaints, this Court considers, weighs, and examines all evidence which supports or undermines the finding. Golden Eagle Archery v. Jackson, 116 S.W.3d 757, 761 (Tex. 2003). The finding is set aside only if the evidence standing alone is too weak to support the finding or the finding is so against the overwhelming weight of the evidence as to be manifestly unjust and clearly wrong. Id.

IV. Analysis

A. Sufficiency of Evidence to Support Jury's Finding

that Discharge was Motivated by Age

Jury question number one inquired whether age was a motivating factor in QD's decision to discharge Herbert Adams, as defined. The question included the following instructions:

An employee is considered to have been discharged when an employer makes conditions so intolerable that a reasonable person in the employee's position would have felt compelled to resign;

A "motivating factor" in an employment decision is a reason for making the decision at the time it was made. There may be more than one motivating factor for an employment decision.

QD argues that the evidence is neither legally nor factually sufficient to support the jury's finding that Adams's discharge was motivated by age.

Adams's claim of age discrimination was brought under section 21.051 of the Texas Commission on Human Rights Act ("TCHRA"). Tex. Lab. Code Ann. ' 21.051 (Vernon 1996). The legislature drafted the TCHRA to "correlate state law with federal law in the area of discrimination in employment." M.D. Anderson Hosp. & Tumor Inst. v. Willrich, 28 S.W.3d 22, 24 (Tex. 2000); Schroeder v. Texas Iron Works, Inc., 813 S.W.2d 483, 485 (Tex. 1991). In adhering to the legislative intent, Texas courts look to the pertinent federal law in interpreting the relevant provisions of the TCHRA. M.D. Anderson, 28 S.W.3d at 24; Gold v. Exxon Corp., 960 S.W.2d 378, 380 (Tex. App.BHouston [14th Dist.] 1998, no pet.) (citing DeMoranville v. Specialty Retailers, Inc., 933 S.W.2d 490, 492 (Tex. 1996); Trico Tech. Corp. v. Rodriguez, 907 S.W.2d 650, 652‑53 (Tex. App.BCorpus Christi 1995, no writ); Farrington v. Sysco Food Servs., Inc., 865 S.W.2d 247, 251 (Tex. App.BHouston [1st Dist.] 1993, writ denied)).

Under the TCHRA, an unlawful employment practice is shown if the plaintiff establishes that age was a motivating factor, even if other factors also motivated the practice. Quantum Chem. Corp. v. Toennies, 47 S.W.3d 473, 481 (Tex. 2001). In order to establish a prima facie case of age discrimination under the TCHRA, a plaintiff must prove that he (1) is a member of a protected class, (2) was discharged, (3) was qualified for the position from which he was discharged, and (4) was either replaced by someone outside the protected class, replaced by someone younger, or was otherwise discharged because of his age. Machinchick v. PB Power, Inc., 398 F.3d 345, 356 (5th Cir. 2005) (citing Russo v. Smith Int'l, Inc., 93 S.W.3d 428, 435 (Tex. App.BHouston [14th Dist.] 2002, pet. denied)). A plaintiff may rely on circumstantial or direct evidence to make the requisite proof. Kokes v. Angelina College, 148 S.W.3d 384, 392 (Tex. App.BBeaumont 2004, no pet.).

In a discrimination suit, constructive discharge may satisfy the discharge element of the claim. Passons v. Univ. of Tex., 969 S.W.2d 560, 562 (Tex. App.BAustin 1998, no pet.). Constructive discharge occurs when an employer makes conditions so intolerable that the employee reasonably feels compelled to resign. Id. To argue constructive discharge, it follows that the employee must actually resign his employment. See Winters v. Chubb & Son, Inc., 132 S.W.3d 568, 575 (Tex. App.BHouston [14th Dist.] 2004, no pet.).

A burden-shifting analysis applies in discrimination cases. M.D. Anderson, 28 S.W.3d at 24 (citing Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 142 (2000)). Once the plaintiff establishes a prima facie case, the "burden of production shifts to the employer to articulate a legitimate, nondiscriminatory reason for the disparate treatment." Winters, 132 S.W.3d at 575 (citing Kokes, 148 S.W3d at 391). Where the employer claims that the termination was part of a reduction in force, the employee makes out a prima facie case of age discrimination by tendering evidence, circumstantial or direct, from which a fact finder might reasonably conclude the employer intended to discriminate in reaching its decision. Gold, 960 S.W.2d at 381. If the employer comes forward with nondiscriminatory reasons for the employment decision, the plaintiff is then "required to show either 1) the reasons were not true but, rather, were a pretext for discrimination, or 2) even if the reasons were true, another motivating factor was . . . age." Kokes, 138 S.W.3d at 393.[2] Expressions may be "direct evidence" of motivation "when they are (1) made by the decision maker or one whose recommendation is sought by the decision maker, (2) related to the specific employment decision challenged, and (3) made close in time to the decision." Id. at 392 (citing Lo v. Fed. Deposit Ins. Corp., 846 F. Supp. 557, 564 (S.D. Tex. 1994)).

A no‑evidence point will be sustained only if there is no more than a scintilla of evidence to prove the existence of a fact. Quantum Chem., 47 S.W.3d at 481; General Motors Corp. v. Sanchez, 997 S.W.2d 584, 588 (Tex. 1999). We conclude Adams presented some evidence that QD's stated reasons for the dismissal were a pretext for age discrimination.

We similarly conclude that the jury finding was not against the great weight and preponderance of the evidence. When reviewing for factual sufficiency, a finding is set aside only if the evidence standing alone is too weak to support the finding or the finding is so against the overwhelming weight of the evidence as to be manifestly unjust and clearly wrong. Golden Eagle Archery, 116 S.W.3d at 761. At trial, Adams presented four witnesses, including himself. The only controverted testimony related to motivation and Genevieve's comment that Adams was getting too old and "we needed to push him out of there."

We remain mindful that the trier-of-fact remains the sole judge of the credibility of the witnesses and the weight to give their testimony. Keller, 168 S.W.3d at 819. It may choose to believe one witness and disbelieve another; we may not impose any opinions to the contrary or substitute our judgment for that of the jurors, "so long as the evidence falls within this zone of reasonable disagreement." Id. at 822. "We consider evidence in the light most favorable to the verdict, and indulge every reasonable inference that would support it." Id. We conclude that the evidence is factually sufficient to support the jury finding.

1. The Motion for Directed Verdict

As a sub-issue under its issues relating to sufficiency of the evidence, QD urges that the trial court erred in failing to grant its motion for directed verdict.

QD argues in its brief that the trial court had the duty to instruct a verdict because the evidence was insufficient as a matter of law to show the element of constructive discharge. Whether an employee would feel forced to resign is case and fact specific, but the following factors are relevant, singly or in combination: (1) demotion, (2) reduction in salary, (3) reduction in job responsibilities, (4) reassignment to menial or degrading work, (5) reassignment to work under a younger or less experienced/qualified supervisor, (6) badgering, harassment, or humiliation by the employer calculated to encourage the employee's resignation, or (7) offers of early retirement (or continued employment on terms less favorable than the employee's former status). Haley v. Alliance Compressor LLC, 391 F.3d 644, 649-50 (5th Cir. 2004) (citing Brown v. Kinney Shoe Corp., 237 F.3d 556, 566 (5th Cir. 2001)).

At trial, QD's motion for directed verdict was brief and encompassed only the following:

The evidence has established, right through the plaintiff himself, that, one he did not mitigate damages for the first two weeks; secondarily, he resumed employment with the first application that he made with Humana Health Care Service; thirdly, he was re-offered his job at Quality Dialysis when Mr. Adams terminated his position, and he stated that he walked off the job. He said he was forced off the job, but, nevertheless, he could have maintained a cause of action through the Texas Commission or EEOC.[3] While being unemployed, he was re-tendered employment, through his own testimony, and he obtained another job. There are no damages nor causation to address for the jury, Your Honor.

None of the concerns raised in the foregoing motion address any of the factors to be considered in evaluating whether or not constructive discharge took place, and they do not conform to the complaint being made on appeal. Under rule 33.1 of the Texas Rules of Appellate Procedure, an appellant must make a timely objection, stating the specific grounds for the ruling sought, and receive a ruling from the trial court on that objection in order to preserve error for appellate review. Tex. R. App. P. 33.1; Wal‑Mart Stores, Inc. v. McKenzie, 997 S.W.2d 278, 280 (Tex. 1999). Even constitutional errors, such as due process complaints, are waived if not raised first in the trial court. See Birdo v. Ament, 814 S.W.2d 808, 811 (Tex. App.BWaco 1991, writ denied).

We conclude that QD did not preserve error on the question of constructive discharge vis-a-vis the motion for directed verdict on the basis set forth in its brief.[4]

2. Motion for Judgment Notwithstanding the Verdict

As a second sub-issue, QD contends the trial court erred in overruling its motion for judgment notwithstanding the verdict, urging that as a matter of law there was no evidence upon which the jury could rely for its finding of age discrimination. The standard of review for a trial court's denial of a motion for judgment notwithstanding the verdict is to determine whether the evidence conclusively proves a fact that establishes a party's right to a judgment as a matter of law. Oyster Creek Fin. Corp. v. Richwood Invs. II, Inc., 176 S.W.3d 307, 322 (Tex. App.BHouston [1st Dist.] 2004, pet. denied) (citing Fort Bend County Drainage Dist. v. Sbrusch, 818 S.W.2d 392, 394 (Tex. 1991)). If so, then the trial court erred in denying the motion for judgment notwithstanding the verdict. Id.

The record does not include any motion for judgment notwithstanding the verdict. However, QD did file a motion for new trial, in which it contended that (1) the evidence conclusively proved that Adams was not discharged, (2) age was not a motivating factor,[5] and (3) the jury finding was also against the great weight and preponderance of the evidence.

The standard of review for a trial court's denial of a motion for new trial is abuse of discretion and, absent manifest abuse of discretion, its action will not be disturbed on appeal. Equitable General Ins. Co. v. Yates, 684 S.W.2d 669, 670 (Tex. 1984) (citing Neunhoffer v. State, 440 S.W.2d 395, 397 (Tex. Civ. App.BSan Antonio 1969, writ ref'd n.r.e.)).[6] In reviewing a trial court decision under an abuse of discretion standard, we must determine whether the trial court acted without reference to any guiding rules or principles. Downer v. Aquamarine Operators, Inc., 701 S.W.2d 238, 241-42 (Tex. 1985). The exercise of discretion is within the sole province of the trial court, and an appellate court may not substitute its discretion for that of the trial judge. Johnson v. Fourth Court of Appeals, 700 S.W.2d 916, 918 (Tex. 1985). An abuse of discretion occurs only when the trial court reaches a decision that is "so arbitrary and unreasonable as to amount to a clear and prejudicial error of law." Id. at 917. We will affirm the judgment of the trial court if that judgment can be upheld on any reasonable theory supported by the evidence. Ex parte E.E.H., 869 S.W.2d 496, 497-98 (Tex. App.BHouston [1st Dist.] 1993, writ denied); Harris County Dist. Attorney's Office v. Burns, 825 S.W.2d 198, 200 (Tex. App.BHouston [14th Dist.] 1992, writ denied). We consider only the evidence most favorable to the judgment, and if there is some evidence to support the judgment, we will affirm. State v. Knight, 813 S.W.2d 210, 211 (Tex. App.BHouston [14th Dist.] 1991, no writ).

We have already determined that the evidence was legally and factually sufficient to support the jury's finding. We reject QD's contention that the evidence "conclusively proved" that the jury's answer to question number one was "wrong." We also conclude there was no abuse of discretion in denying the motion for new trial. Accordingly, we overrule QD's issues one and two, and their respective sub-issues.

B. The Finding of Malice

In its third issue, QD contends that the jury's finding of malice is against the great weight and preponderance of the evidence. There is no contention that the jury was not properly instructed either in the burden of proof or in the definition of malice.

QD argues that the employer must be shown to have engaged in a discriminatory practice with malice or with reckless indifference to the rights of an aggrieved individual, and that this requires "subjective knowledge" on the part of the employer that it is engaged in discrimination. However, case law provides that "the terms 'malice' or 'reckless indifference' pertain to the employer's knowledge that it may be acting in violation of federal law, not its awareness that it is engaging in discrimination." Kolstad v. Am. Dental Ass'n, 527 U.S. 526, 535 (1999). An employer must at least discriminate in the face of a perceived risk that its actions will violate federal law to be liable in punitive damages. Id.

Malice is defined as ill will, evil motive, or gross indifference or reckless disregard of the rights of others, and may be established by direct or circumstantial evidence. Gren Indus., Inc. v. Brown, 2001 Tex. App.LEXIS 1190, at *16 (Tex. App.BDallas 2001) (designated as opinion) A plaintiff is not required to prove the defendant acted with personal spite, but instead that the defendant committed wrongful acts in reckless disregard of another's rights and with indifference as to whether that party would be injured. Id. Evidence of egregious or outrageous acts may serve as evidence supporting an inference of the requisite "evil motive." Kolstad, 527 U.S. at 538 (citing 1 T. Sedgwick, Measure of Damages '' 366, 368, pp. 528, 529 (8th ed. 1891) ("The allowance of exemplary damages depends upon the bad motive of the wrong‑doer as exhibited by his acts."); 2 J. Sutherland, Law of Damages ' 394, p. 1101 (3d ed. 1903) ("The spirit which actuated the wrong‑doer may doubtless be inferred from the circumstances surrounding the parties and the transaction.")).[7]

In a case involving similar issues of an individual approaching retirement age, with attendant concerns relating to medical costs and benefits, our sister court concluded that this awareness, coupled with issues of credibility of the witnesses, supported the theory that lay-offs would generate savings "on the costs associated with higher paid, long‑term employees and retirees. . . . The jury was within its power to question the veracity of USAA's evidence, and to conclude that USAA acted with malice." U.S. Auto. Ass'n v. Brite, 161 S.W.3d 566, 575 (Tex. App.BSan Antonio 2005, pet. filed). Here, the jury was similarly provided with evidence of alleged wrongful acts, and with evidence that challenged the credibility of QD representatives, from which it was entitled to infer malicious intent. Sufficient evidence existed to enable the jury, as the sole finder of fact and the sole judge of the credibility of the witnesses, to conclude that QD acted with malice. See Keller, 168 S.W.3d at 819, 822. We cannot conclude that the jury's finding was against the great weight and preponderance of the evidence.

1. Opinion Testimony of Adams

As a sub-issue related to the finding of malice, QD argues that the trial court erred in admitting certain opinion testimony of Adams, specifically Adams's statement that, "after the [hit-and-run] accident, things started going downhill for me." On appeal, QD argues that the trial court erred in permitting this opinion testimony because it was nothing more than speculation.

First, the admission and exclusion of evidence is committed to the trial court's sound discretion. Oyster Creek, 176 S.W.3d at 316; Moore v. Bank Midwest, N.A., 39 S.W.3d 395, 401 (Tex. App.BHouston [1st Dist.] 2001, pet. denied). We must uphold the trial court's evidentiary ruling if there is any legitimate basis for the ruling. Owens-Corning Fiberglas Corp. v. Malone, 972 S.W.2d 35, 43 (Tex. 1998) (citing State Bar of Tex. v. Evans, 774 S.W.2d 656, 658 n.5 (Tex. 1989)). Moreover, we will not reverse a trial court for an erroneous evidentiary ruling unless the error probably caused the rendition of an improper judgment. See Tex. R. App. P. 44.1; Malone, 972 S.W.2d at 43; see also Gee v. Liberty Mut. Fire Ins. Co., 765 S.W.2d 394, 396 (Tex. 1989).

Secondly, to preserve error for appeal a party must have made a timely, specific objection at the earliest possible opportunity. Tex. R. App. P. 33.1; Oyster Creek, 176 S.W.3d at 316. Failure to object in a timely and specific manner during trial forfeits complaints about the admissibility of evidence. Oyster Creek, 176 S.W.3d at 316; Atlantic Richfield Co. v. Misty Prods., Inc., 820 S.W.2d 414, 421 (Tex. App.BHouston [14th Dist.] 1991, writ denied). Here, no objection was raised at trial to the statement made by Mr. Adams based on speculation. The exchange was as follows:

A: And he ran into the truck, and it was a hit and run.

Q: You talked to the officer about that; is that right?

A: Yes, I sure did.

Q: Okay. Do you think someone blamed you for causing that accident?

Counsel: I Object. No proper predicate being laid.

Court: What's the specific legal objection?

Counsel: It calls for speculation.

Court: Sustained.

Q: The reason you bring that upBhelp me understand. How do you think that plays into this?

Counsel: Your Honor, that's leading.

Court: Overruled. You can answer that question.

A: That plays into that because after the accident, things started going downhill for me.

Q: Mr. Adams, did you cause that accident?

A: No I did not.

Q: You weren't found at fault in it?

A: I wasn't at fault.

Q: The fact the accident occurred had nothing to do with your age?

A: Not anything to do with my age.

An objection based on speculation was raised to a preceding question ("Do you think someone blamed you for causing that accident?") and that objection was sustained. Adams was then asked, "How do you think that plays into this?" The only objection raised to this question, which was overruled, was "leading." Even if QD had raised a timely and proper objection, we conclude Adams could properly testify to his own perceptions, and the comment in issue was rationally based on his perception. See Tex. R. Evid. 701 (providing that the opinion of a lay‑witness is admissible if based on his perception and if his opinion helps in determining a fact in issue); Sierad v. Barnett, 164 S.W.3d 471, 483 (Tex. App.BDallas 2005, no pet.). Further, in light of other evidence tendered, we cannot conclude that the comment in question probably caused the rendition of an improper judgment. We conclude the trial court did not abuse its discretion in admitting Adams's opinion testimony, and we overrule QD's sub-issue on this point.

2. Hearsay Testimony

As a second sub-issue, QD claims that the trial court erred in admitting testimony of comments made by an insurance agent. The exchange between Adams and counsel was as follows:

Q: Now, you were in a meeting when the insurance representative we talked about came to a staff meeting, were you?

A: Yes, I was.

Q: Did he mention your age in that meeting?

A: He mentioned it afterB. . . He questioned me and saying, "Are you still here?"[8]

Q: Meaning were you still there from the time that he talked about Aetna, maybe, until you talked about the new area?

A: Right. From the time we got on Aetna and he left, I didn't see him any more until he came with United Health Care.

A: What, if anything, did he say about your age?

A: He say,"I don't believe you're going to be accepted, because you're too old."

Q: You're too old?

A: But, he said, he said, "Don't tell everybody I said that." Everybody laughed, because we was in a meeting.

A: Was Star Stell [sic] [Genevieve Barclay] in that meeting?

Q: Yeah. Everyone was there.

Q: Was she in the meeting when he said, "Don't tell anyone I said that?"

A: She was there. I don't know whether she heard it or not, but she was there.

Q: Did a lot of the people laugh? Did she hear them laughing?

Hearsay is "a statement, other than one made by the declarant while testifying at the trial or hearing, offered in evidence to prove the truth of the matter asserted." Tex. R. Evid. 801(d); Sierad, 164 S.W.3d at 484. If the record discloses a legitimate basis for a trial court's evidentiary ruling, we uphold the ruling. Oyster Creek, 176 S.W.3d at 317; Malone, 972 S.W.2d at 43. However, here no objection was raised at trial on any basis to the testimony in issue, and therefore there was no evidentiary ruling. We conclude that QD failed to preserve error on this sub-issue for appeal. Tex. R. App. P. 33.1; Oyster Creek, 176 S.W.3d at 316. Further, in light of other evidence tendered, we cannot conclude that the testimony in question probably caused the rendition of an improper judgment.

3. Jury Charge Error

As a final sub-issue under the primary issue that the finding of malice was against the great weight and preponderance of the evidence, QD asserts that the trial court erred in including the malice and exemplary damages questions in the jury charge.

The test for preservation of error concerning the jury charge is whether the party made the trial court aware of the complaint, timely and plainly, and obtained a ruling. See State Dep't of Highways & Pub. Transp. v. Payne, 838 S.W.2d 235, 240‑41 (Tex. 1992); Melendez v. Exxon Corp., 998 S.W.2d 266, 281 (Tex. App.BHouston [14th dist.] 1999, no pet.). The standard of review for alleged jury charge error is abuse of discretion. Tex. Dep't of Human Servs. v. E.B., 802 S.W.2d 647, 649 (Tex. 1990); Rosell v. Cent. W. Motor Stages, Inc., 89 S.W.3d 643, 653 (Tex. App.BDallas 2002, pet. denied). To determine whether alleged jury charge error is reversible, we consider the parties' pleadings, the evidence presented at trial, and the charge in its entirety. See Hyundai Motor Co. v. Rodriguez, 995 S.W.2d 661, 663 (Tex. 1999). Error in the jury charge is similarly reversible only if it probably caused the rendition of an improper judgment or probably prevented the appellant from properly presenting the case on appeal. See Tex. R. App. P. 44.1(a); Timberwalk Apts. v. Cain, 972 S.W.2d 749, 756 (Tex. 1998).

At trial, during the charge conference and following discussion over the form of question number one (in which QD's counsel contended there was no evidence that Adams was discharged), QD participated in the following exchange:

Court: Any other objections to the form of the charge?

Counsel: We're going to object, Your Honor, to the exemplary damage.

Court: Just to the inclusion of that?

Counsel: Yes.

Court: That objection is overruled. Any other objections to the form or substance of the charge?

Counsel: No. The rest of it B it's out of the pattern jury instructions.

Clearly, at trial there was no objection to inclusion of the question on malice.[9] Because QD did not apprise the trial court of its complaint about inclusion of the question on malice during the charge conference and did not obtain a ruling, it did not preserve this complaint for appeal. Payne, 838 S.W.2d at 241.

Moreover, although QD argues on appeal that there was no admissible evidence that QD acted with malice, and that inclusion of the jury question was erroneous and probably caused the jury to improperly award exemplary damages, we have already determined the evidence was legally and factually sufficient to place the question before the jury and to sustain its finding. We overrule QD's third issue.

C. Exemplary Damages Award

QD's final issue on appeal is that the award of exemplary damages is excessive. Here, the exemplary damage award is equal to the amount of actual damages awarded.

We have already noted that an appellant waives any complaint about the trial court's judgment that is not timely raised. Tex. R. App. P. 53.2(f); Bunton v. Bentley, 153 S.W.3d 50, 53 (Tex. 2004); Johnson v. Lynaugh, 796 S.W.2d 705, 707 (Tex. 1990) ("If the matter complained of originated in the trial court, it should have been preserved for appellate review in the trial court"). No issue relating to the amount of the exemplary damages award was raised in the motion for new trial and error, if any, has not been preserved.

Even if the issue had been properly raised, the amount of such an award rests largely in the discretion of the jury and will not be set aside as excessive unless the amount is so large as to indicate that it is the result of passion, prejudice, or corruption, or that the evidence has been disregarded. Ethicon, Inc. v. Martinez, 835 S.W.2d 826, 835-36 (Tex. App.BAustin 1992, no pet.); Crutcher‑Rolfs‑Cummings, Inc. v. Ballard, 540 S.W.2d 380, 389 (Tex. Civ. App.BCorpus Christi 1976, writ ref'd n.r.e.). Whether a jury award is excessive is a question of fact. Alamo Nat'l Bank v. Kraus, 616 S.W.2d 908, 910 (Tex. 1981).

Exemplary damages must be reasonably proportioned to actual damages. Id. When reviewing an exemplary damage award, we consider (1) the nature of the wrong, (2) the character of the conduct involved, (3) the degree of culpability of the wrongdoer, (4) the situation and sensibilities of the parties concerned, and (5) the extent to which such conduct offends a public sense of justice and propriety. Id.[10]

We conclude the award of exemplary damages in this case is not excessive or the likely result of passion, prejudice, or corruption, or that the evidence has been disregarded. See Martinez, 835 S.W.2d at 835-36; Ballard, 540 S.W.2d at 389.[11] QD's fourth issue is overruled.

V. Conclusion

We affirm the trial court's judgment in all respects.

ERRLINDA CASTILLO

Justice

Memorandum Opinion delivered and filed

this the 8th day of June, 2006.

[1] When Adams was first hired, patient census was approximately five to six. By the time he left, QD's patient census averaged in the mid to high thirties. QD experienced a lot of growth in 1999 and 2000. Genevieve Barclay testified that QD tried to keep its patient load at a minimum of thirty-eight, and she believed it had been at either thirty, perhaps thirty-four or thirty-five patients in the fall of 2001, but was not certain. She also testified that QD was profitable and made money in 2001, 2002, and 2003.

[2] The employee has the burden of establishing a prima facie case of unlawful discrimination. Tex. Dep't of Human Servs. v. Hinds, 904 S.W.2d 629, 636 (Tex. 1995) (citing Tex. Dep't of Cmty. Affairs v. Burdine, 450 U.S. 428, 252-56 (1981)). The employer then has the burden of producing evidence of legitimate reasons for its actions. Id. The employee has the burden of rebutting this evidence. Id. While the burden of production shifts, the ultimate burden of persuasion remains on the employee. Id. Texas courts of appeals have adopted similar procedures in such cases. Id. (citing Adams v. Valley Fed. Credit Union, 848 S.W.2d 182, 185‑87 (Tex. App.BCorpus Christi 1992, writ denied) (jury in age discrimination case must be instructed on the shifting burdens prescribed by Burdine)).

[3] We note that while an issue was initially raised before the trial court that Adams had not timely filed his lawsuit, based upon the dates of his right to sue letters from the EEOC and the TCHR, there is no such issue on appeal. The right to sue letters are part of the record, and there is no contention that Adams failed to exhaust administrative remedies.

[4] Even if error had been preserved on the issue presented, we have already determined the evidence was legally sufficient to place the question of constructive discharge impliedly before the jury in the first question of the jury charge.

[5] QD argued in its motion for new trial that since Adams was hired when he was sixty-three years old and received salary increases during his tenure with QD, age could not have been a factor: "If age was a motivating factor Adams would not have been hired initially."

[6] The latitude of the trial court's discretion is addressed in rule 320 which provides that "[n]ew trials may be granted and judgment set aside for good cause, on motion or on the court's own motion on such terms as the court shall direct." Equitable General Ins. Co. v. Yates, 684 S.W.2d 669, 670 (Tex. 1984) (citing Tex. R. Civ. P. 320).

[7] See also Koehler v Sircovich, 269 S.W. 812, 818 (Tex. Civ. App.BGalveston 1925, no writ) ("The existence of an evil intent can seldom if ever be shown by direct evidence, and evidence of facts and circumstances from which it is reasonably inferable is sufficient to show its existence.").

[8] Adams was the only employee still with QD from when the same agent had come to speak about the prior insurance coverage.

[9] We acknowledge that in the motion for new trial, counsel argued that "the Court erred in overruling Defendant's Objection to the charge;" however, the record fails to include any such objection to question number 3.

[10] There is no set rule of ratio between the amount of actual and exemplary damages that will be considered reasonable. Alamo Nat'l Bank v. Kraus, 616 S.W.2d 908, 910 (Tex. 1981); Beacon Nat'l Ins. Co. v. Reynolds, 799 S.W.2d 390, 398 (Tex. App.BFort Worth 1990, writ denied); Aetna Cas. & Sur. Co. v. Joseph, 769 S.W.2d 603, 607 (Tex. App.BDallas 1989, no writ). The ratio of exemplary to actual damages here was 1 to 1. See Donnel v. Lara, 703 S.W.2d 257, 262 (Tex. App.BSan Antonio 1985, writ ref'd n.r.e.) (approving ratio of 2250 to 1); Beacon, 799 S.W.2d at 398 (approving ratio of 28 to 1); Wal Mart Stores, Inc. v. Kee, 743 S.W.2d 296, 298-99 (Tex. App.BTyler 1987, no writ) (approving ratio of 5.56 to 1).

[11] No issue has been raised contending that the award is unconstitutionally excessive. See BMW of N. Am. v. Gore, 517 U.S. 559, 574-75 (1996); Owens Corning Fiberglas Corp. v. Malone, 972 S.W.2d 35, 45 (Tex. 1998).

and thus, are "as effective" as services provided to individuals without disabilities).~ right....right....watt y now?

2007-05-29T02:25:00.001-07:00

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Summary of Policy Guidance

Prohibition Against Discrimination on the Basis of Disability in the Administration of TANF (Temporary Assistance for Needy Families)

Department of Health and Human Services Office for Civil Rights

The United States Department of Health and Human Services (HHS) is issuing policy guidance on the prohibition of discrimination on the basis of disability in Section 504 of the Rehabilitation Act of 1973 and Title II of the Americans with Disabilities Act of 1990 in the administration of TANF programs.

The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA) created Temporary Assistance for Needy Families (TANF), and repealed the Aid to Families with Dependent Children Program (AFDC), the Job Opportunities and Basic Skills Training program (JOBS) and the Emergency Assistance program (EA). Both the Americans with Disabilities Act of 1990 (ADA) and the Rehabilitation Act of 1973 apply to TANF programs. See 42 U.S.C. § 608(c) (Federal TANF statute reiterating ADA/Section 504 application to TANF programs). Title II of the ADA provides that no qualified individual with a disability shall, by reason of such disability, be excluded from participation in or be denied the benefits of the services, programs or activities of a public entity, or be subjected to discrimination by any such entity. 42 U.S.C. § 12131. Section 504 of the Rehabilitation Act of 1973 prohibits the same discrimination by entities that receive Federal financial assistance. 29 U.S.C. § 794.

On August 27, 1999, the HHS Office for Civil Rights (OCR) issued two-part guidance on civil rights laws and welfare reform.(1) These materials explain how Federal civil rights laws apply to certain aspects of welfare reform. The purpose of the present guidance is to respond to a myriad of additional questions that have been raised by State agencies, counties, service providers, and persons with disabilities regarding the obligations to adopt methods for administering welfare programs to ensure equal opportunity for persons with disabilities in all aspects of a TANF program, including applications, assessments, work program activities, sanctions, and time limits. The guidance also is necessary because the Department has indicated that States may be subject to penalties if audits show that they "over-sanction," i.e., impose sanctions on individuals when sanctions are inappropriate.(2)

This policy guidance clarifies the obligations Title II of the ADA and Section 504 impose on State and local government entities, and on recipients of Federal financial assistance from HHS involved in TANF activities, in fulfilling their responsibilities pursuant to Title II of the ADA and Section 504 of the Rehabilitation Act.(3) Specifically, this guidance identifies essential requirements of an ADA-504 compliant TANF program that the Office for Civil Rights will apply in its compliance reviews and/or investigations of complaints of discrimination on the basis of disability in TANF programs. These requirements are not new; rather, they reiterate ADA Title II and Section 504 principles that OCR has been enforcing for many years.

The guidance also sets out "promising practices" - policies, procedures and other recommended steps that recipients and covered entities can take to ensure meaningful access to TANF programs by people with disabilities. These "promising practice" provisions are not mandatory requirements; they are one way for a TANF agency (as noted in footnote 3, this guidance uses the term "TANF agency" to refer to all covered entities under Section 504 and State and local governmental entities under Title II of the ADA) to meet obligations to ensure equal access through the provision of appropriate services, modify policies, practices and procedures to provide such access, unless doing so would result in a fundamental alteration to the program, and to adopt non-discriminatory methods of administration. Descriptions of possible approaches that comply with Section 504 and the ADA in this guidance should not be construed to preclude States from devising alternative approaches to meet these legal requirements.

OCR has provided substantial technical assistance for more than 20 years to recipients and covered entities seeking to ensure that people with disabilities can meaningfully access social service programs. This guidance applies that experience to the relatively new challenges presented in the complex context of administering TANF programs, and is consistent with OCR's commitment to seeking voluntary compliance by recipients and covered entities and its commitment to providing technical assistance. OCR will continue to be available to provide such assistance.

Policy Guidance

Prohibition Against Discrimination on the Basis of Disability

in the Administration of TANF (Temporary Assistance for Needy Families)

Table of Contents

Background

1. Legislative and Regulatory Framework

2. The Challenges

3. State Activities

4. OCR Guidance

Legal Authority

The Disability Policy Framework

a) Ensuring Equal Access to TANF Programs Through the Provision of Appropriate Services to People with Disabilities

b) Modifications of Policies, Practices and Procedures

c) Non-Discriminatory Methods of Administration

Coverage

1. Covered Entities

2. Protected Individuals

Legal Requirements and "Promising Practices"

1. The Legal Requirement to Ensure Equal Access to TANF Programs Through the Provision of Appropriate Services

Promising Practices in the Provision of Equal Access to TANF Programs

2. The Legal Requirement to Modify Policies, Practices and Procedures to Ensure Equal Access to TANF Programs and Services

Promising Practices in Modifying Policies and Programs to Ensure Access for People with Disabilities

The Legal Requirement to Adopt Non-Discriminatory Methods of Administration

Promising Practices in Non-Discriminatory Methods of Administration

Appendix 1: Example of Promising Practice in Modifying Policies and Programs to Ensure Equal Access -- Sample Diagnostic Review Checklist

Policy Guidance

Prohibition Against Discrimination on the Basis of Disability in the Administration of TANF (Temporary Assistance for Needy Families)

A. BACKGROUND

1. Legislative and Regulatory Framework

On August 22, 1996, President Clinton signed into law the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA).(4) This legislation repealed the Aid to Families with Dependent Children program (AFDC), the Job Opportunities and Basic Skills Training program (JOBS) and the Emergency Assistance program (EA) and created Temporary Assistance for Needy Families (TANF).

PRWORA requires that programs established with TANF funds serve one of four purposes, to:

(1) provide assistance to needy families so that children may be cared for in their own homes or in the homes of relatives;

(2) end the dependence of needy parents on government benefits by promoting job preparation, work, and marriage;

(3) prevent and reduce the incidence of out-of-wedlock pregnancies and establish annual numerical goals for preventing and reducing the incidence of these pregnancies; and

(4) encourage the formation and maintenance of two-parent families.(5)

Under TANF, States have flexibility in how they respond to individual family needs. In return, States are expected to move towards a strategy that provides appropriate services for needy families.(6)

PRWORA also specifies, among other things, that Section 504 of the Rehabilitation Act (Section 504) and the Americans with Disabilities Act (ADA) apply to any program or activity that receives Federal TANF funds.(7)

Title II of the ADA also applies to the programs and activities of all State and local government entities. Title II and Section 504 require State and local government entities and HHS Federal fund recipients to ensure equal access through the provision of appropriate services, to modify policies, practices and procedures to provide such access unless these modifications would fundamentally alter the nature of the service, program, or activity, and to adopt non-discriminatory methods of administration. The inclusion of these civil rights protections ensures equal opportunity for persons with disabilities to benefit from all aspects of welfare reform, including access to the proper support services to enable such individuals to work and to keep their families healthy, safe and intact.(8)

2. The Challenges

Notwithstanding gains in work for many TANF clients, other families with multiple barriers to work are at risk of losing benefits before obtaining employment or of being unable to benefit from TANF job training, education and other programs. Some former welfare beneficiaries have succeeded in moving to work despite extraordinary obstacles. However, others, due to known or unrecognized disabilities, need additional training, accommodations, and support services to prepare for or succeed at work.

According to a recent report by the Presidential Task Force on Employment of Adults with Disabilities, studies show that as much as 40 percent of the adult welfare population may have learning disabilities. The studies also found that up to 28 percent of welfare beneficiaries have mental health conditions.(9) A significant number of these beneficiaries also have physical disabilities, while some have multiple impairments or face multiple barriers to work.(10)

Reports of the Presidential Task Force on Employment of Adults with Disabilities point to a multitude of employment barriers faced by persons with disabilities, including inadequate work opportunities resulting from discrimination and inadequate education and job skills, as well as lack of access to health insurance. The complexity of existing work incentives and lack of benefits counseling also raise significant employment hurdles for people with disabilities.(11)

3. State Activities

In the course of its enforcement activities, OCR has found that States vary significantly in the extent to which they have planned and implemented policies, practices, and procedures to identify barriers to employment for people with disabilities and provide necessary supports and services. Many States have undertaken substantial efforts to address the needs of individuals with disabilities, especially for individuals with learning disabilities. Other States, however, have no systems established for assessing the needs of people with disabilities or for ensuring access to programs or services of their TANF programs. In still others, although States have made significant efforts to design TANF policies, practices and procedures promising equal opportunity for individuals with disabilities, TANF agency personnel lack adequate training and educational or training programs identified as necessary for beneficiaries are not available.

For some public entities, TANF policies relating to individuals with disabilities consist only of exemption from TANF requirements. This practice, however, denies individuals with disabilities access to TANF services and results in discriminatory exclusion of many individuals with disabilities from the program.(12) The Federal TANF statute is founded on the public policy that individuals formerly on welfare will be better off if provided with job and/or training opportunities rather than continued public assistance. This same policy should be applied, where appropriate, to those formerly eligible for public assistance who have disabilities, but who can work if provided with modified training or accommodated job opportunities. Applying and implementing this policy may require modification of agency procedures, policies and practices to allow people with disabilities to benefit from the employment and training opportunities offered to others.

4. OCR Guidance

On August 27, 1999, the HHS Office for Civil Rights (OCR) issued two-part guidance explaining how Federal civil rights laws apply to certain aspects of welfare reform on civil rights laws and welfare reform.(13) The purpose of the present guidance is to respond to additional questions that have been raised by State agencies, counties, service providers, and persons with disabilities regarding the obligations to adopt methods for administering the TANF program to ensure equal opportunity for persons with disabilities in all aspects of the program, including applications, assessments, work program modifications, sanctions, and time limits.

This policy guidance clarifies the obligations Title II of the ADA and Section 504 impose on State and local government entities that are involved in the delivery or administration of TANF programs, and on recipients of Federal financial assistance from HHS involved in TANF activities, in fulfilling their responsibilities pursuant to Title II of the ADA and Section 504 of the Rehabilitation Act. Specifically, this guidance identifies essential requirements of an ADA-504 complaint TANF program that the Office for Civil Rights will apply in its compliance reviews and/or investigations of complaints of discrimination on the basis of disability in TANF programs. These requirements are not new; rather, they reiterate ADA Title II and Section 504 principles that OCR has been enforcing for many years. This guidance is limited to the social services context, and is not intended to address the obligations of employers under Section 504 or Title I of the ADA.

The guidance also sets out "promising practices" - policies, procedures and other recommended steps that recipients and covered entities can take to ensure meaningful access to TANF programs by people with disabilities. Many of the "promising practices" are based on reports of current TANF practices in a number of States and other localities. These "promising practice" provisions are not mandatory requirements; they are one way for a TANF agency (as noted in footnote 3, this guidance uses the term "TANF agency" to mean all covered entities under Section 504 and State and local governmental entities under Title II of the ADA) to meet the obligation to provide individuals with disabilities with an equal opportunity to benefit from TANF programs, to reasonably modify TANF policies for individuals with disabilities and to adopt non-discriminatory methods of administering TANF programs. Descriptions of possible approaches that comply with Section 504 and Title II of the ADA in this guidance should not be construed to preclude States from devising alternative approaches to meet these legal requirements.

This guidance does not, and is not intended to, reflect the best of the full range of TANF practices with respect to individuals with disabilities. The "promising practices" portion of the guidance should therefore be regarded as a work in progress while States continue to develop more and better solutions to issues raised by disability in administering TANF programs.

B. LEGAL AUTHORITY

The Disability Policy Framework

The legal framework governing the administration of programs, projects, and activities by State agencies and service providers are set out in regulations promulgated by the Department of Justice(14) and the Department of Health and Human Services.(15) A recitation of the key provisions is set out in OCR's August 27, 1999 Technical Assistance materials concerning welfare reform and disability issues.

Two concepts central to Section 504 and Title II of the ADA are of particular importance to administration of TANF programs in a manner that ensures equality of opportunity for individuals with disabilities. These concepts are: (1) individualized treatment; and (2) effective and meaningful opportunity.

Individualized treatment requires that individuals with disabilities be treated on a case-by-case basis consistent with facts and objective evidence. Individuals with disabilities may not be treated on the basis of generalizations and stereotypes.(16) Such prohibited treatment would include denying TANF beneficiaries with disabilities access to parts of the TANF agency's program based on the stereotypical view, unsupported by any individual assessment, that people with disabilities are unable to participate in anything but the most rudimentary work activities.

Moreover, individuals with disabilities must be afforded the opportunity to benefit from TANF programs that is as effective as the opportunity the TANF agency affords to individuals who do not have disabilities,(17)

and must also be afforded "meaningful access" to TANF programs.(18)

TANF agencies must provide reasonable accommodations, auxiliary aids and services, and communication and program accessibility, unless the agency can demonstrate that such provision would result in a fundamental alteration in the nature of the program or in undue financial and administrative burdens. TANF agencies must also make reasonable modifications to policies, practices, and procedures when the modifications are necessary to avoid discrimination on the basis of disability unless the agency can demonstrate that making the modifications would fundamentally alter the nature of the service, program, or activity.(19)

In addition, the "methods of administration" or operating methods of a TANF agency must not have a discriminatory effect. Specifically, a public entity may not directly or through contract or other arrangement utilize criteria or methods of administration that, among other things, have the effect of subjecting qualified individuals with disabilities to discrimination on the basis of disability, or that have the purpose or effect of defeating or substantially impairing accomplishment of the objectives of the public entity's program with respect to individuals with disabilities.(20)

In this guidance, the Office for Civil Rights addresses three key requirements of Title II of the ADA and 504 that are relevant to the rights of TANF beneficiaries with disabilities. These requirements are: (1) to ensure equal access through the provision of appropriate services; (2) to modify policies, practices and procedures to provide such access, unless doing so would result in a fundamental alteration to the program; and (3) to adopt non-discriminatory methods of administration. The essential components of these requirements are set forth below, along with promising practices that outline steps that TANF agencies and providers can take to accommodate the needs of TANF beneficiaries with disabilities. The promising practices are illustrative and are not mandatory requirements. Thus, a TANF agency's failure to take particular steps outlined in this promising practices will not by itself result in a finding of noncompliance by OCR.

a. Ensuring Equal Access to TANF Programs Through the Provision of Appropriate Services to People with Disabilities

The TANF agency provides TANF beneficiaries who have disabilities with appropriate services. These services are designed to afford TANF beneficiaries who have disabilities with an opportunity to participate in or benefit from the TANF program that is equal to the opportunity the agency affords to non-disabled individuals.

b. Modifying Policies, Practices and Procedures to Ensure Equal Opportunity

The TANF agency modifies policies, practices and procedures when necessary to ensure equal opportunity for people with disabilities. Modifications required may affect all stages of the TANF program, from application to training, education and work stages, to ensure that people with disabilities have an equal opportunity to benefit from TANF programs. The TANF agency should undertake a comprehensive examination of its own policies, practices and procedures to determine changes necessary to ensure that TANF participants with disabilities have an equal opportunity to benefit, or otherwise ensure that necessary modifications to policies, practices and procedures are made.

c. Non-Discriminatory Methods of Administration

The TANF agency operates its program in such a way as to ensure that individuals with disabilities are not subjected to discrimination on the basis of disability. In order to ensure that the agency's policies and practices do not subject individuals to disability-based discrimination, the TANF agency should: train its staff to provide equal access to TANF programs for individuals with disabilities; ensure that training occurs for staff of service providers who have contractual or vendor relationships with the TANF agency; establish clear written policy that incorporates modifications to policies, practices and programs made to ensure access for persons with disabilities; conduct regular oversight of TANF programs and services to ensure that people with disabilities have equal access; or otherwise ensure that its policies and practices do not subject individuals with disabilities to discrimination.

Section D of the guidance provides additional details about legal requirements and about "promising practices" that may assist TANF agencies in carrying out their legal obligations.

C. COVERAGE

1. Covered Entities ("TANF Agencies")

Title II of the ADA covers all States, as well as counties and other local governments administering all or part of a TANF program. In addition, Section 504 covers all entities that receive Federal financial assistance from HHS, either directly or indirectly, through a grant, contract or subcontract.(21)

Under Section 504, "covered entities" include any State or local agency, private institution or organization, or any public or private entity that (1) operates, provides or engages in health or social service programs and activities and that (2) receives federal financial assistance from HHS directly or through another recipient/covered entity. Examples of covered entities include but are not limited to State, county and local welfare agencies, programs for families, youth and children, job training and welfare to work agencies and their contractors, subcontractors and vendors, whether public or private, for-profit or nonprofit, and other providers who receive Federal financial assistance from HHS. As noted earlier, this guidance uses the term "TANF agency" to refer to covered entities under Section 504 and State and local governmental entities under Title II of the ADA.

2. Protected Individuals

Federal definitions govern who is considered an individual with a disability for purposes of compliance with the ADA and Section 504. The ADA and Section 504 define a "disability" with respect to an individual to mean a physical or mental impairment that substantially limits one or more of the major life activities of such individual, a record of such an impairment, or being regarded as having such an impairment. See 28 C.F.R. § 35.104 (definitions section of ADA Title II regulations); See also U.S. Department of Justice, The Americans with Disabilities Act: Title II Technical Assistance Manual, at 4-9 (Nov. 1993); See also 45 C.F.R. § 84.3(j)(1)(I) (definitions section of Section 504 regulations). The definition of disability under the ADA and Section 504 is a different definition of disability than that typically used to determine eligibility in programs that provide cash assistance based upon disability, such as the Federal Supplemental Security Income and Social Security Disability Insurance programs. It may also be different than the definition of disability that some States use in determining whether an individual may be exempt from certain program rules in TANF.

D. LEGAL REQUIREMENTS AND "PROMISING PRACTICES"

1. The Legal Requirement to Ensure Equal Access to TANF Programs Through the Provision of Appropriate Services

TANF agencies must afford qualified individuals with disabilities an opportunity to participate in or benefit from TANF programs that is equal to the opportunity the agency offers to individuals without disabilities.(22)

In order to comply with this legal requirement, TANF agencies must provide TANF beneficiaries with disabilities with services that are appropriate, and that give these beneficiaries an equal opportunity to benefit from the agency's job placement, education, skills training, employment and other TANF activities.

The TANF statute and regulations require the TANF agency to assess the "skills, prior work experience and employability" of beneficiaries.(23)

It is critical that TANF beneficiaries with disabilities receive an assessment that allows them equal opportunity to benefit from TANF programs and the assessment process. This assessment should incorporate an individualized analysis of each person's ability to meet the program requirements, rather than on stereotypes or assumptions about the effect of a type of a disability. TANF agencies should tell applicants and beneficiaries that, although disclosure of disability is not required, individuals can alert the agency to a disability.(24)

Agencies should also inform applicants and beneficiaries that any disclosure is voluntary. At a minimum, intake workers should be able to recognize potential disabilities, and to conduct an initial screening to identify possible disability for those individuals who agree to undergo screening. Such screening should be conducted only by trained staff, using screening tools that have been properly validated. If there is an initial indication that an individual has a disability that may impact his/her ability to successfully complete or benefit from a current or proposed program assignment based on applicant or beneficiary disclosure, an initial screening or other information, the TANF agency should give the individual an opportunity for a more comprehensive evaluation or assessment.(25)

The appropriate services provided by the TANF agency should be based on the agency's review of its own programs (See discussion of "diagnostic review," in Section D.2), on TANF beneficiaries' needs as identified through the agency's screening and assessment processes, or on other methods the TANF agency utilizes to ensure that appropriate services are provided. For example, an individual with a learning disability or mental retardation may need specialized instruction in reading and writing before the individual can comply with a TANF plan that requires the individual to obtain employment. A person may also need on-the-job training and mentoring. A person may need job skills training or employment opportunities in settings that are accessible for individuals with mobility impairments.

The TANF agency's obligation to ensure equal access to TANF programs for individuals with disabilities also includes the obligation to ensure that service providers have the requisite knowledge, experience, and expertise to serve beneficiaries with disabilities.(26) Without such providers, TANF beneficiaries with disabilities may be deprived of equal access to TANF programs while they wait for services, or are diverted to inappropriate services. Since the TANF statute establishes a 60-month limit on TANF benefits and allows more stringent limits at State option, a TANF agency's failure to ensure an adequate supply of knowledgeable service providers for people with disabilities may result in their being terminated from the TANF rolls without having obtained the job skills or work experience necessary to move successfully from welfare to self-sufficiency.

TANF agencies must also ensure that individuals with disabilities have access to the entire range of TANF programs and services for which they are qualified, with or without reasonable accommodation.(27) Agencies must provide TANF programs in the most integrated setting appropriate to the needs of individuals with disabilities.(28) Thus, agencies should take steps to ensure that individuals with disabilities can participate in all programs and services for TANF beneficiaries, not just those programs and services that are designed solely for individuals with disabilities.(29)

TANF agencies have the obligation to ensure effective communication with individuals who have hearing, speech, or visual impairments. TANF agencies must provide such persons with auxiliary aids (including such aids as interpreters, note-takers, and materials in alternative formats) if necessary to ensure effective communication, so long as providing these aids does not cause a fundamental alteration in the TANF program or result in undue financial or administrative burdens.(30)

In addition, TANF agencies may not exclude individuals with disabilities by providing TANF services in buildings that are inaccessible to people with mobility impairments. The TANF agency is not, however, required to make structural changes in existing facilities where other methods are effective in achieving equal access.(31)

New construction and alterations to existing facilities must be made accessible and useable by persons with disabilities except where structurally impracticable.(32)

Finally, TANF agencies frequently use contracts and vendors in the administration of their TANF programs. Agencies should be aware that these contractual and financial relationships do not eliminate TANF agencies' responsibility to ensure that TANF beneficiaries are not subjected to disability-based discrimination, even if such discrimination is more directly the result of unlawful treatment by TANF contractors and vendors. Implementing regulations for Section 504 and Title II of the ADA state clearly that a recipient of federal funds (in the context of Section 504) or a State or local government program (in the context of the ADA), may not directly or indirectly (e.g., "through contractual or other arrangements") put into place, or allow to be into place, a system or program which has the effect of subjecting qualified individuals with disability to discrimination on the basis of disability.(33)

Thus, TANF agencies are responsible for ensuring that the opportunities afforded TANF applicants and beneficiaries with disabilities to participate in TANF program benefits and services are equal to the opportunities afforded to applicants and beneficiaries without disabilities, even if the TANF agency carries out its program through the use of contractual or other arrangements.(34)

Promising Practices in the Provision of Equal Access to TANF Programs

Examples of practices that, if effectively implemented, would assist TANF agencies in ensuring that individuals with disabilities are provided with an assessment that affords equal opportunity to benefit from TANF programs, including the assessment process, include:

* •The TANF agency utilizes a combination of screening and assessment tools to determine whether TANF beneficiaries face a variety of obstacles, including physical, emotional, learning or behavioral disabilities.(35)

* •The TANF agency trains its case workers to administer a client interview guide and objective screening instruments designed to identify TANF beneficiaries who may have learning disabilities. The TANF agency then refers beneficiaries who appear to have learning disabilities for an in-depth assessment by the State vocational rehabilitation agency or by mental health or education providers.(36)

* •When there is an initial indication that applicants and beneficiaries may have disabilities as a result of applicant or beneficiary disclosure, an initial screening or other information, these individuals are offered the opportunity to receive a comprehensive assessment. This assessment determines: whether the individual in fact has disabilities; the nature of any disability; the extent to which the individual is capable of employment or participation in employment-related (e.g. job training or education) activities and under what conditions; the implications of the disability on securing and maintaining employment; the appropriateness of a particular work assignment or plan for employment; the need for reasonable accommodations, reasonable modifications to policies, the provision of auxiliary aids and services and communication assistance; the need for training and education prior to employment; the applicability of work participation rules and time limits, and the appropriateness of applying sanctions. To the extent the State requires the development of an individual responsibility plan, the components of the plan must be based on results of such assessments as are undertaken by the State.

* •The TANF agency ensures that qualified personnel, including specialized staff, conduct comprehensive assessments.(37) Specialized staff may provide assessments and other assistance for TANF beneficiaries who are unable to complete work activities, do not remain employed and who are recommended for further assessments by a service provider.(38) The agency might also decide to adopt a team approach to assessments, including psychologists and other medical, vocational, and rehabilitation experts, who are trained in making assessments of adults with disabilities in the employment context.

* •The agency ensures that any screening or assessment tools it uses are validated for the purposes for which they are intended.

Examples of practices that, if effectively implemented, would assist TANF agencies in providing appropriate services to ensure equal access to individuals with disabilities include:

* •A TANF agency provides appropriate counseling services (e.g., mental health services, anger management counseling) to TANF beneficiaries with mental or emotional disabilities who have barriers to employment and self-sufficiency.(39) The TANF agency establishes linkages and partnerships with other public (including State education and vocational rehabilitation agencies, State community colleges), nonprofit or private agencies to fulfill these aspects of their obligations under the Title II of the ADA and Section 504.
* •To evaluate and properly serve TANF beneficiaries who may be hampered by a variety of barriers to employment, the TANF agency enters into a partnership with the State vocational rehabilitation agency to provide assessment and follow-up services for long-term TANF beneficiaries. TANF beneficiaries who are eligible for vocational rehabilitation services are provided with such services. The vocational rehabilitation agency develops an "employability plan" for beneficiaries who are ineligible, and refers these beneficiaries back to the TANF agency for plan implementation.(40)
* •TANF beneficiaries identified by case workers as having learning, mental and physical disabilities are referred to providers who have contracted with the agency to provide services for individuals with these disabilities and for other TANF beneficiaries identified by the agency as "hard to serve." The contractors help TANF beneficiaries prepare for, find and maintain jobs.(41)
*

•In order to ensure an adequate supply of providers, the TANF agency reimburses providers in such a way as to facilitate, rather than impede, equal opportunity for individuals with disabilities to benefit from the TANF program. Where the State establishes a system of outcome-based reimbursement (i.e., of paying service providers only when TANF beneficiaries complete a program) the TANF agency takes into consideration the additional costs of providing services to persons with disabilities so that service providers do not reject such persons, or provide them with inappropriate or inadequate services to persons with disabilities.

* •When individuals with disabilities leave the TANF program, the TANF agency conducts "exit interviews" that include a discussion of whether the individuals believe that any disabilities they have were appropriately assessed, and whether the individuals' disability-related needs were addressed and accommodated. The agency utilizes this information to refer individuals with disabilities to other support services that may assist them after they are no longer TANF beneficiaries, and to evaluate the agency's own effectiveness in serving beneficiaries with disabilities (See, e.g, discussion of "diagnostic review," in Part D.2, below).

Examples of practices that, if effectively implemented, would assist TANF agencies in affording individuals with disabilities access to all TANF programs for which they are qualified include:

* •The TANF agency enters into a partnership with a non-profit agency to provide supportive services that enable individuals with developmental disabilities to participate in the work activities of subsidized public and private employment.
* •The TANF agency provides a special job training course for TANF beneficiaries with speech and hearing impairments, but it does not require these individuals to participate in the special program or refuse to permit individuals with speech and hearing impairments to participate in job training courses in which both individuals with disabilities and individuals without disabilities participate.

Examples of practices, that, if effectively implemented, would assist TANF agencies in providing individuals with disabilities with equal access to TANF programs when TANF services are provided through contractual and other relationships include:

* •The TANF agency obtains information from contractors and vendors as part of the agency's diagnostic review process (see discussion of diagnostic review in Part D.2 below) that includes information about accessibility, reasonable accommodations and appropriate services for people with disabilities.

* •The TANF agency provides training and technical assistance to contractors and vendors regarding the needs of and appropriate services for individuals with disabilities.
* •The TANF agency provides training and technical assistance to contractors and vendors regarding reasonable modifications to policies, practices and procedures and reasonable accommodations and auxiliary aids for individuals with disabilities.

* •The TANF agency monitors contractors and beneficiaries for compliance with Title II of the ADA and Section 504 (see additional discussion of monitoring in Part D-3, below).

2. The Legal Requirement to Modify Policies, Practices and Procedures to Ensure Equal Access to TANF Programs and Services

Program providers are required to make reasonable modifications to policies, practices, and procedures that deny equal access to individuals with disabilities unless a fundamental alteration in the program would result.(42)

In order to ensure that necessary modifications are made, the TANF agency may need to conduct a diagnostic review of agency policies, practices and procedures. Based on this review, the agency would determine changes necessary to ensure that people with disabilities have an equal opportunity to benefit from TANF programs. As part of this review, the TANF agency would conduct a thorough assessment of the prevalence of various populations of people with disabilities who participate in its TANF programs. Based on this information, the entity analyzes each step of the TANF program to determine what changes are necessary to ensure people with disabilities have an equal opportunity to access and benefit from TANF programs and related activities. Appropriate areas for modification following a diagnostic review include: (1) the application process and procedures relating to notifying beneficiaries of their rights; (2) the nature and requirements of TANF programs; and (3) policies and practices to aid individuals in sustaining TANF program participation. Programs appropriate for a diagnostic review include TANF, "welfare to work," child care, and any other forms of Federally assisted or State or local government-run programs related to TANF activities. Alternatively, the TANF agency may engage in other means to ensure that necessary modifications are made to policies, practices and procedures.

TANF agencies should also make reasonable modifications in policies and practices that govern exemptions for individuals who are unable to meet requirements and sanctions for such failure. For example, TANF agencies may exempt individuals with disabilities from work requirements or time limits when, due to their disabilities, these individuals are unable, with or without reasonable accommodation, to participate in work or other TANF program requirements.(43)

In addition, rather than sanctioning TANF beneficiaries who, due to their disabilities, do not comply with work or other program requirements, TANF agencies may make reasonable modifications that facilitate compliance, or grant extensions or temporary exemptions to TANF requirements.(44)

Promising Practices in Modifying Policies and Programs to Ensure Access for People with Disabilities

Examples of practices, that, if effectively implemented, would assist TANF agencies in modifying policies and programs to ensure access for people with disabilities include undertaking a "diagnostic review" of current programs and practices:

* •In order to better understand the barriers to employment for TANF beneficiaries, the TANF agency conducts a study to determine the prevalence of specific barriers among the TANF population, including learning disabilities, mental disabilities, physical disabilities, and possible low IQ.(45) Based on this information, the agency develops screening mechanisms and services designed to assist TANF beneficiaries with these barriers to participate in the TANF program.(46)

* •With respect to each step of the welfare or TANF program, the TANF agency develops an "ADA/504 checklist" to ascertain accessibility for persons with various types of disabilities. See Sample Diagnostic Review Checklist at Appendix 1. The checklist covers every aspect of the entity's program, from the application stage (including checklist questions regarding assistance provided to individuals with disabilities); to the screening/assessment stage (including checklist of methods to determine the existence of disability and necessary accommodations); to the education/training and employment stage (including checklist questions used by the agency to ensure that contractors and vendors are educated about and implement appropriate accommodations).

Examples of practices, that, if effectively implemented, would assist TANF agencies in modifying policies and programs to ensure access for people with disabilities include modifications in the application process and procedures relating to notifying beneficiaries of their rights:

* •A TANF agency with a complicated application process modifies its application process to ensure the process is accessible to individuals with learning disabilities or mental retardation. The agency may do this by modifying the application form itself, by obtaining the information needed to apply for benefits through a verbal interview, by providing necessary assistance for individuals with disabilities to complete the application process, or by other similar means.
* •A TANF agency includes the following language in notices:

"If you have a physical or mental condition that substantially limits one or more major life activities, you may have rights under Section 504 of the Rehabilitation Act and the Americans with Disabilities Act. Physical or mental conditions include, for example, a learning disability, mental retardation, a history of drug or alcohol addiction, depression, a mobility impairment, or a hearing or vision impairment.

You can let us know if you have a disability.

If you cannot do something we ask you to do, we can help you do it or we can change what you have to do.

Here are some of the ways we can help:

We can call or visit if you are not able to come to our office.

We can tell you what this letter means.

If you are on [insert the name of the TANF program], we can help if you cannot do something in your plan.

We can help you devise an employability plan that allows you to work even though you have a disability.

We can help you appeal.

If you need some other kind of help, ask us. Call your caseworker or call.."(47)

* •Where a TANF agency's notice is sent to a person the agency knows will be unable to comprehend the notice due to a mental impairment or learning disability, the TANF agency modifies its procedures to ensure other modes of communication are attempted, such as oral communication, phone calls, and home visits, before taking a negative action based upon the notice.

* •Where the TANF beneficiary would like the agency to involve a family member, a legal representative, or another advocate to assist the person in understanding TANF agency rules and the consequences of not following them, and to assist the agency to understand the beneficiary's limitations, the TANF agency incorporates such persons in the process. The TANF agency would not, however, avoid its own obligations to explain policies in a meaningful manner, or to provide interpreters or other required assistance.

* •When communicating with TANF beneficiaries, the TANF agency routinely includes: (1) easy to understand instructions for those with developmental or mental impairments; (2) TTY numbers for persons who are deaf/hearing impaired; and (3) location of accessible sites for people with mobility impairments. The TANF agency also posts signage alerting people with disabilities how they can obtain further assistance.

Examples of practices, that, if effectively implemented, would assist TANF agencies in modifying policies and programs to ensure access for people with disabilities include modifications in education, job training, work and other TANF programs:

* •The TANF agency provides services appropriate to address the needs of beneficiaries with disabilities as identified by the beneficiary in the screening process or assessment processes, or at some other time. For example, a person with a specific learning disability or mental retardation is provided with specialized instruction in reading and writing so that the individual can comply with a TANF plan that requires the individual to obtain employment.

* •The agency modifies procedures to ensure that beneficiaries with disabilities receive on-the-job training, and/or training and supports over a longer period than typically afforded if necessary, and time limits are suspended. For example, a TANF agency allows TANF beneficiaries who score below the ninth-grade level on a standardized adult basic education test to enroll in adult basic education classes. The TANF program's time limits and work requirements do not apply to these beneficiaries until beneficiaries either reach the ninth-grade level or complete adult basic education courses.(48)

Similarly, an agency suspends State-imposed time limits while individuals with suspected learning disabilities are being assessed.(49)

* •The TANF agency continuously reviews the progress of TANF beneficiaries to ascertain whether a beneficiary's disability is affecting the ability to make progress toward meeting an employment goal. This responsibility includes providing follow-up contact on missed appointments or missed deadlines and referral for additional comprehensive assessments if the beneficiary is not making progress in ability to find work or in work assignments.

* •A TANF agency broadly defines activities that "count" toward the State's TANF work participation rate(50)

in order to assist TANF beneficiaries with disabilities, such as including supported work activities(51) in the definition of subsidized private employment.(52)

TANF allows States to use their discretion in defining "countable" activities.(53)

* •A State TANF agency establishes practices that permit TANF beneficiaries with disabilities to engage in certain "allowable" activities, such as granting work credit for TANF beneficiaries who are engaged in remedial education if those beneficiaries are also working part-time, even though such activities will not "count" for purposes of the State's TANF work participation rate.(54)

States may establish their own work requirements, and may choose to recognize participation in other activities toward these requirements. States may use TANF funds for a wide variety of activities designed to meet the purposes of TANF, whether or not these activities are countable toward either State or federal work requirements.

Examples of practices, that, if effectively implemented, would assist TANF agencies in modifying policies and practices to ensure access for people with disabilities include modifications in policies and practices concerning exemptions, extensions and sanctions:

* •The TANF agency modifies work program procedures to ensure that, where a TANF beneficiary has a known disability that prevents the beneficiary from carrying out work requirements with or without reasonable accommodations, the individual is exempted from the work requirement.
* •A TANF agency exempts individuals with disabilities from State-imposed time limits, or provides an extension to the 60-month limit imposed by federal law.
* • A TANF agency requires a beneficiary with a disability to complete ten job contacts within one week. The beneficiary completes only six contacts, explaining that her disabilities - active cancer and a chronic mental illness - prevented her from securing ten contacts. Instead of sanctioning the beneficiary, the TANF agency takes her disability into consideration, and modifies the job search requirement to six contacts per week.
* •A TANF agency grants TANF beneficiaries who have been diagnosed with learning disabilities an extension to State-imposed time limits for completing education and training programs when the failure to complete these programs in accord with time limits is the result of the beneficiaries' disability.(55)
* •A TANF beneficiary who receives mental health counseling on a regular basis during the work day requires a flexible schedule. The employer to whom the beneficiary is referred is unwilling to permit this flexibility and will hire the beneficiary only if the beneficiary agrees to keep a consistent, pre-established schedule. Rather than sanction the beneficiary for failure to obtain employment, the TANF agency either works with the employer to make the accommodation required by the beneficiary or provides the beneficiary with an alternative referral.

Examples of promising practices, that, if effectively implemented, would assist TANF agencies in modifying policies and programs to ensure access for people with disabilities also include modifications in policies and practices that aid individuals in sustaining TANF program participation:

* •A TANF agency that utilizes individual responsibility plans addresses in the plan not only the suitability of job opportunities, but also the needs of a beneficiary with a disability for health care, benefits counseling, and disability-related services and supports. Because many persons with disabilities face multiple barriers and require interventions funded by a multiplicity of agencies and programs, the agency also provides comprehensive case management/service coordination.
* •The TANF agency takes steps to ensure that the person with a disability is applying for benefits for which the person or his/her children may be eligible, including benefits available through State-operated programs such as Medicaid, Children's Health Insurance Program benefits, Food Stamps, child care, transportation assistance.
* •Where a family has a child whose disability affects the parent's ability to work, the TANF agency modifies its practices to facilitate the parent's compliance with an employment plan. For example, the TANF agency grants the parent an extension of time to meet work requirements until the time that specialized child care required by her child is available, or helps identify appropriate child care so that the parent can work. Similarly, where the parent does begin to work and then is unable to work because of the repeated need to leave work to care for the child with a disability, the TANF agency establishes procedures which ensure that the parent and her family are not sanctioned for the parent's inability to retain her job.(56)

* •Where a TANF beneficiary, as a result of a disability, needs intervening assistance, training, or treatment in order to continue working, the TANF agency provides it. When there is a break in a person's work or training due to a disability, the agency does not simply determine the person is no longer eligible for supports such as child care, transportation, and training when she is able to return to work or training. Further, time limits may be extended.

3. The Legal Requirement to Adopt Non-Discriminatory Methods of Administration

TANF agencies may not utilize methods of administration that have the effect of subjecting qualified individuals with disabilities to disability-based discrimination.(57)

This legal requirement governs both activities engaged in directly by the TANF agency, as well as activities that the agency carries out through contractual or other arrangements.(58)

The phrase "methods of administration" refers to the "official written policies" of the TANF agency and to the "actual practices" of the agency.(59)

TANF agencies may need to fulfill their obligation to ensure that the agency's policies and practices do not subject individuals to disability-based discrimination by TANF agencies by training staff to provide equal access to TANF programs for individuals with disabilities. Effective training is one means of ensuring that there is not a gap between a TANF agency's written policies and procedures, and the actual practice of employees in the front line interacting with persons with disabilities. Effective training ensures that employees are knowledgeable and aware of policies and procedures relating to persons with disabilities and are trained to work effectively with persons with disabilities. The TANF agency should also ensure that similar training is provided to staff of TANF contractors and vendors to help these providers carry out TANF activities that comply with Title II and Section 504.

TANF agencies may need to fulfill their obligation to ensure that the agency's policies and practices do not subject individuals to disability-based discrimination by developing and implementing a comprehensive written policy that incorporates modifications made to policies, practices and programs. Clear written policies that describe in detail how to respond when a TANF participant has a disability should be provided to all TANF agency and provider staff who have contact with beneficiaries with disabilities. These policies should be incorporated into any manual, handbook or directive that sets out agency policy with respect to the State's TANF program as well any regulations promulgated by the agency.

Finally, TANF agencies may need to fulfill their obligation to ensure that the agency's policies and practices do not subject individuals to disability-based discrimination by conducting regular oversight of TANF programs and services to ensure that people with disabilities are being served. Agencies and service providers should also monitor their policies and procedures in all programs they administer regarding persons with disabilities and their implementation. For example, such monitoring should evaluate the current needs of TANF beneficiaries with disabilities, and determine whether existing screening and assessment tools and procedures are adequate, whether assistance provided is meeting the needs of such individuals, whether staff is knowledgeable about policies and procedures and how to implement them, and whether sources of and arrangements for assistance are current and viable. Further, the TANF agency should also establish procedures to monitor periodically all aspects of compliance with Section 504 and the ADA by service providers and other entities with whom it has entered into contractual or other arrangements.

Also integral to operating a non-discriminatory system consistent with Section 504 and Title II of the ADA is the obligation to establish several types of procedural safeguards, including procedures for processing ADA/504 complaints; procedures for addressing disability-related issues in placement; and procedures for raising disability-related problems prior to any imposition of sanction.

Promising Practices in Non-Discriminatory Methods of Administration

Examples of promising practices, that, if effectively implemented, would assist TANF agencies in modifying policies and programs to employ non-discriminatory methods of administration include appropriate training practices and the creation and implementation of written policies ensuring access for people with disabilities:

* •The TANF agency trains caseworkers and service providers to:

(1) look for and recognize the possibility that an applicant or beneficiary has a disability;

(2) treat TANF beneficiaries with disabilities as individuals, and not on the basis of disability-based stereotypes;

(3) understand disability issues and services (including reasonable accommodations, reasonable modifications to policies, auxiliary aids and services), and referral arrangements and in the use of screening instruments;

(4) work with agencies with specialized expertise in addressing the needs of persons with disabilities such as vocational rehabilitation agencies;

(5) become knowledgeable about State policy regarding provision of services to persons exempt from work participation requirements; and

(6) become knowledgeable about disability benefit programs such as SSI, SSDI, Medicaid, and Medicare, as well as other benefit programs.

* •Through an interagency memorandum of understanding, a State provides cross-training for employees of its TANF and vocational rehabilitation agencies regarding the needs of TANF beneficiaries with physical and developmental disabilities, and the services provided to this population by each agency.(60)

* •Under a contract with the State Department of Education, the State TANF agency hires a "disability support specialist" to train TANF case managers to identify TANF beneficiaries with learning disabilities and arrange for reasonable accommodations for these beneficiaries in the TANF work program. The disability support specialist also trains GED instructors to identify, modify and adapt instructional materials to meet the needs of TANF beneficiaries with learning disabilities.(61)

* •A State provides training to employees of various State agencies, including the TANF and vocational rehabilitation agencies, regarding the modification of teaching instruction, materials and policies and practices for adults with learning disabilities. The State also conducts a "train-the-trainer" workshop for other States in its geographical region.(62)

Examples of practices that, if effectively implemented, would assist TANF agencies in employing non-discriminatory methods of administration include monitoring compliance with Title II of the ADA and Section 504 and establishing procedural safeguards:

* •The TANF agency monitors its staff, its contractors and its sub-contractors to ensure implementation of programs, projects and activities in a nondiscriminatory manner by analyzing data and records and conducting reviews. The agency imposes penalties on and requires corrective actions of contractors and sub-contractors for violations noted during a review. Additionally, the agency's monitoring rules include a process for reviewing policies and procedures.

* •The TANF agency systematically and routinely investigates and assesses which beneficiaries are being sanctioned and why to determine whether or not beneficiaries who are sanctioned have a disability and whether the disability substantially contributed to the beneficiaries' noncompliance. The agency's ADA/Section 504 notice includes information regarding the right to have disability taken into account if disability is a basis of non-compliance.

* •The TANF agency establishes and publishes procedures for resolving complaints under Section 504 and the ADA that follow the guidelines established by the Department of Labor for implementing the welfare-to-work programs and the Workforce Investment Act.(63)

* •Where a beneficiary tells the TANF agency that the proposed work assignment is not compatible with his or her disability, the agency has a procedure in place that permits the beneficiary's claim to be fully considered before placement can be made.

APPENDIX 1

EXAMPLE OF PROMISING PRACTICE IN MODIFYING POLICIES AND PROGRAMS TO ENSURE EQUAL ACCESS

SAMPLE DIAGNOSTIC REVIEW CHECKLIST

Application Stage:

Notice/Information Issues

1. Do staff ask applicants whether assistance will be necessary during the application process due to disability?

2. Is this inquiry accompanied by examples of such assistance (e.g., "if you have a disability that affects your ability to understand or respond to questions in the application, we can help. For example, we can assist you by reading the questions to you; recording your answers, etc. Do you need this or another kind of help to fill out the application?").

3. When communicating with beneficiaries about TANF, does the agency routinely include further instructions for people with disabilities who need extra help in responding? Are these additional instructions easy to understand for those with developmental or mental impairments? Do the instructions include (1) TTY numbers for persons who are deaf/hearing impaired and (2) the location of accessible sites for people with mobility impairments?

4. Do TANF agency offices prominently feature posters or other signage alerting people with disabilities how they can obtain further assistance?

Initial Screening for Disability and Accommodation Needs

* Do initial intake procedures used by TANF staff include a screening of applicants to ascertain potential disability and accommodation needs? Do these intake procedures allow staff to ascertain whether the person may need a more comprehensive assessment to make such a determination?

* Are intake workers trained to recognize potential disabilities? If there is an initial indication that an individual has a disability that may impact his/her ability to successfully complete or benefit from a current or proposed program assignment based on applicant or beneficiary disclosure, an initial screening or other information, does the intake worker give the individual an opportunity for a more comprehensive evaluation or assessment?

* Do TANF workers inform individuals that they can disclose a disability and/or a need for a reasonable accommodation?

* Is it made clear that disclosure of disability is voluntary?

* Are screening instruments validated for the purpose for which they are used?

Assessment of Accommodation Needs for People with Disabilities

1. Does the agency provide for an assessment after initial intake where appropriate? Does the assessment determine:

* •Whether the individual has one or more disabilities;
* •Nature of the disability;
* •Extent to which an applicant is capable of employment or participation in employment-related activities;
* •Under what conditions the individual is capable of employment;
* •Implications of the disability on immediately securing employment;
* •Appropriateness of a particular work assignment;
* •The need for reasonable accommodations, reasonable modifications to policies, provision of auxiliary aids and services and communication assistance, and/or additional training and education; and
* •Applicability of work participation rules and time limits, and the appropriateness of applying sanctions.

2. Is it clear that participating in an assessment is voluntary?

3. Are qualified personnel conducting these comprehensive assessments?

4. Where necessary to ensure equal opportunity for individuals with disabilities, does the TANF agency involve in the assessment process medical, psychological, vocational, and rehabilitation experts who are trained in making assessments of adults with disabilities related to employment?

Job Training/Education Stage

1. Where a TANF program features training or educational opportunities, are these opportunities accessible for beneficiaries with disabilities? Specifically, are they accessible for people with mobility impairments? People with impairments affecting communication? People with developmental impairments? People with mental or emotional impairments?

2. To the extent these job training and education programs are operated by other agencies or entities, are TANF agency staff trained in how to get beneficiaries with disabilities enrolled in these programs?

3. To the extent these programs are operated by other agencies or entities, has the State or primary TANF agency made the other entities aware of their obligations under the ADA and Section 504 to modify policies and procedures to ensure that people with disabilities have an equal opportunity to benefit?

4. How does the TANF agency monitor how individuals with disabilities function in training programs? Is there a method in place to ensure close tracking of whether an individual's accommodation needs are being met?

Work Program Stage

1. Was there a determination of whether modifications or accommodations to job opportunities are necessary due to disability?

2. Is the TANF agency working with employers to ensure that employers are aware of ADA obligations regarding reasonable accommodations for individuals with disabilities?

3. Is the agency working with employers to ensure that beneficiaries with disabilities are not steered to dead-end jobs?

4. How does the TANF agency monitor how individuals with disabilities function in job placements? Is there a method in place to ensure close tracking of whether an individual's accommodation needs are being met?

5. Is the agency ensuring that potential obstacles to sustaining employment for people with disabilities are being addressed?

1. "Civil Rights Laws and Welfare Reform--Overview" and "Technical Assistance for Caseworkers on Civil Rights Law and Welfare Reform," Office for Civil Rights, U.S. Department of Health and Human Services, August 1999, http://www.hhs.gov/ocr/tanfintro.htm.

2. 64 FR 17793 (April 12, 1999).

3. For ease of reference and readability, in this guidance we use the term "TANF agency" to mean both "covered entities" as defined by Section 504 (including any State or local agency, private institution or organization, or any public or private entity that (1) operates, provides or engages in health or social service programs and activities and that (2) receives federal financial assistance from HHS directly or through another recipient/covered entity), and State and local governmental entities covered by Title II of the ADA.

4. P.L. 104-193. This legislation is codified at 42 U.S.C. §601 et seq. Regulations implementing the legislation may be found in 45 C.F.R. Parts 260-265.

5. Section 401 of TANF (42 U.S.C. §601); 45 C.F.R. §260.20. While this guidance focuses largely on the first and second purposes of TANF, the information in the guidance also applies to the third and fourth purposes.

6. 64 FR 17722 (April 12, 1999).

7. Section 408(d) of TANF, 42 U.S.C. §608(d)); 45 C.F.R. § 260.35.

8. Presidential Task Force on Employment of Adults with Disabilities, "Re-charting the Course: First Report of the Presidential Task Force on Employment of Adults with Disabilities" at Appendix-17 (November 15, 1998), http://www.dol.gov/_sec/welcome.html, (hereafter "Re-charting the Course"). The Task Force was established pursuant to Executive Order 13078 (March 13, 1998). Other statutory requirements affecting the civil rights of beneficiaries with disabilities in the context of welfare to work may also apply. See, e.g., Section 188 of the Workforce Investment Act of 1998 (WIA), 29 U.S.C. § 2938, and its implementing regulations at 29 C.F.R. Part 37. These provisions bar discrimination on various grounds, including disability, in programs and activities that are operated by One-Stop partners and are part of the One-Stop Center delivery system established by the WIA, even if the programs are not physically located within a One-Stop Center. See 29 C.F.R. §§ 37.2(a)(2), 37.4 (definition of "recipient"). If States opt to include their TANF programs as part of their One- Stop systems, their programs may be subject to the jurisdiction of the Department of Labor's Civil Rights Center.

9. Id.

10. Eileen P. Sweeney, Recent Studies Indicate that Many Parents Who are Current or Former Welfare Recipients Have Disabilities or Other Medical Conditions, Center on Budget and Policy Priorities, February 2000, http://www.cbpp.org/2-29-00wel.htm. Of course, not every person with such disorders or conditions is covered by the ADA or Section 504. Individuals are protected by these statutes when their physical or mental condition substantially interferes with a major life activity. See discussion of legal definition of disability in Part C, infra.

11. "Re-charting the Course" at page 5; Presidential Task Force on Adults with Disabilities, "Re-charting the Course: If Not Now, When? The Second Report of the Presidential Task Force on Adults with Disabilities," at 1, (Nov. 15, 1999), http://www.dol.gov/dol/_sec/public/programs/ptfead/ifnotnow.htm. Other barriers include the lack of adequate care for a child with a disability and inaccessible or non-existent transportation. See, e.g., Timmons, Jaimie Ciulla, Susan Foley, Jean Whitney-Thompson and Joseph Green, Negotiating the Landscape: The Path to Employment for Individuals with Disabilities in the TANF System, Institute for Community Inclusion/UAP Research and Training Center on Promoting Employment, Children's Hospital, at 27-28 (March 1999), http://www.communityinclusion.org/publications/text/tanftext.html.

12. See, e.g. "Civil Rights Laws and Welfare Reform-- An Overview" and "Technical Assistance for Caseworkers on Civil Rights Law and Welfare Reform," Office for Civil Rights, U.S. Department of Health and Human Services, August 1999, http://www.hhs.gov/ocr/tanfintro.htm (stating that although individuals with disabilities may be eligible under some State programs for exemptions from work requirements and time limits, program providers may not refuse to allow a person with a disability to participate in training programs or be employed because the person has a disability).

13. Id.

14. 28 C.F.R. Part 35.

15. 45 C.F.R. Part 84.

16. See 28 C.F.R. Part 35, Appendix A, § 35.130(b), at 466 (Department of Justice commentary to ADA Title II regulations, identifying regulatory provisions as "intended to prohibit exclusion and segregation of individuals with disabilities and the denial of equal opportunities enjoyed by others, based on, among other things, presumptions, patronizing attitudes, fears and stereotypes about individuals with disabilities. Consistent with these standards, public entities are required to ensure that their actions are based on facts applicable to individuals and not on presumptions as to what a class of individuals with disabilities can or cannot do."). See also School Board of Nassau County, Fla. v. Arline, 480 U.S. 273, 284 (1987) (Supreme Court decision stating that Section 504's "basic purpose" is "to ensure that handicapped individuals are not denied jobs or other benefits because of the prejudiced attitudes or the ignorance of others.")

17. See 28 C.F.R. § 35.130(b)(1)(ii), (iii), (iv), (vii) (ADA regulations); 45 C.F.R. § 84.4(b)(1)(ii), iii) (Section 504 regulation). See also Alexander v. Choate, 469 U.S. 287, 304-06 (1985) (Supreme Court decision, discussing proper interpretation of HHS' Section 504 regulations requiring that individuals with disabilities be provided with health and human services that offer an equal opportunity to benefit from such programs and thus, are "as effective" as services provided to individuals without disabilities).

18. See Choate at 301-07 (discussing proper interpretation of Section 504 requirement that individuals with disabilities have meaningful access to federally assisted benefits).

19. See 28 C.F.R. § 35.130(b)(7), 28 C.F.R. § 35.149-151; 28 C.F.R. § 160-164. See also Choate at 301 (eligibility for federally assisted benefits "cannot be defined in a way that effectively denies otherwise qualified handicapped individuals the meaningful access to which they are entitled; to assure meaningful access, reasonable accommodations in the grantee's program or benefit may have to be made.")

20. 28 C.F.R. §35.130(b)(3); 45 C.F.R. §84.4(b)(4).

21. See 42 U.S.C. § 2000d-4a (defining "program or activity" with respect to the applicability of Section 504 in federally-assisted programs).

22. See 28 C.F.R. § 35.130(b)(1)(ii),(iii) (ADA regulation); 45 C.F.R.§ 84.4(b)(1)(ii),(iii) (Section 504 regulation).

23. See 42 U.S.C. § 608(b)(1); 45 C.F.R. § 261.11.

24. We recognize that TANF agencies may benefit from further technical assistance concerning certain issues related to screening and assessment, including appropriate agency decisions regarding which beneficiaries should be offered screening or assessment, the point at which screening or assessments should be offered to beneficiaries, agencies' obligations if a beneficiary refuses to disclose a disability or refuses an accommodation that is offered after screening or assessment, and how TANF agencies can appropriately implement screening or assessment practices.

25. TANF agencies should also protect the confidentiality and privacy of information regarding the existence of disability. Employers are subject to specific requirements with respect to obtaining information about the disabilities of employees and job applicants. See 42 U.S.C. § 12112(d); 29 C.F.R. §1630.14 (ADA statutory and regulatory provisions governing disability-related inquiries in the employment context); See also U.S. Equal Employment Opportunity Commission, "Enforcement Guidance: Disability-Related Inquiries and Medical Examinations of Employees Under the Americans with Disabilities Act," (July 27, 2000), http://www.eeoc.gov/docs/guidance-inquiries.html, and other information available on the EEOC website, http://www.eeoc.gov.

26. The ADA and Section 504 prohibit TANF agencies from utilizing "methods of administration" that have the effect of subjecting qualified individuals with disabilities to discrimination on the basis of disability. See 28 C.F.R. § 35.130(b)(3)(I) (ADA regulations); 45 C.F.R. § 84.4(b)(4) (Section 504 regulations). Commentary to ADA regulations makes clear that the "methods of administration" covered by these ADA includes agencies' "official written policies" and "actual practices." See 28 C.F.R. Part 35, Appendix A § 35.130, at 467 (1996).

27. Regulations promulgated under the ADA and Section 504 prohibit the provision of "different or separate aid, benefits or services" to people with disabilities "unless such action is necessary to provide [these individuals] with aid, benefits or services that are as effective as those provided to others." See 28 C.F.R. § 35.130(b)(1)(iv) (ADA regulations); 45 C.F.R. § 84.4(b)(1)(iv) (Section 504 regulations).

28. 28 C.F.R. § 35.130(d).

29. 28 C.F.R. § 35.130(b)(1)(iv); 28 C.F.R. § 35.130(b)(2) (ADA regulations); 45 C.F.R. § 84.52(a)(5) (Section 504 regulations). For example, a TANF agency should establish an explicit practice of allowing qualified individuals with disabilities access to all services and programs that are a part of the State's TANF program.

30. See 28 C.F.R. § 35.160(b) (ADA regulations); 45 C.F.R. § 85.52(d) (Section 504 regulations). For example, if a TANF agency generally provides printed information about job training programs, it must, where necessary and not a fundamental alteration, provide this information in Braille or on audiotape for individuals with vision impairments. Similarly, a TANF agency must ensure that vendors providing adult basic education programs utilize sign language interpreters for TANF beneficiaries enrolled in the program who have hearing impairments, when interpreters are necessary to ensure effective communication for these beneficiaries and do not constitute a fundamental alteration.

31. For example, a TANF agency located on the second floor of a building with no elevator could conduct intake interviews in an accessible ground floor office for TANF applicants who have mobility impairments. However, when the ground-floor office is unavailable for evening job counseling sessions involving both TANF beneficiaries with disabilities and beneficiaries without disabilities, the agency should host the session in an alternate, accessible location.

32. See, e.g. 28 C.F.R. § 35.150(a)(3) (Title II ADA regulations requiring procedural safeguards in cases in which requested structural modifications will not be made).

33. 33 See 28 C.F.R. § 35.130(b)(8) (ADA regulations); 45 C.F.R. § 84.4(b)(1) (Section 504 regulations).

34. We recognize that TANF agencies may benefit from further technical assistance concerning specific ways to ensure that individuals with disabilities have an equal opportunity to benefit from TANF programs run by contractors and vendors.

35. This approach is being utilized by the States of Washington and Utah. See Thompson, Terri S., and Kelly S. Mikelson, Screening and Assessment in TANF/WtW: Ten Important Questions TANF Agencies and Their Partners Should Consider, Office of the Assistant Secretary for Planning and Evaluation/Office of Planning, Research and Evaluation, U.S. Department of Health and Human Services, Forthcoming (February 2001), at 29, 42 & Appendix A at A-3 (hereafter "Ten Important Questions"). See also id., at Appendix B, at A-18 (describing separate screening tool specifically for learning disabilities utilized by Washington and eight other States). As noted previously in this guidance, staff should, of course, be trained to administer such documents.

36. This approach is being utilized by the State of Kansas. See Ten Important Questions, at 31 & Appendix A at A-19.

37. This approach is being utilized by the States of Kentucky (in eight designated counties) and Tennessee. See Ten Important Questions, at 42-43.

38. This approach is being utilized by the State of Tennessee. See Ten Important Questions, at 43.

39. The TANF agency can appropriately pay for these counseling services with Federal TANF funds. See U.S. Department of Health and Human Services, Administration for Children and Families, Helping Families Achieve Self-Sufficiency: A Guide on Funding Services for Children and Families Through the TANF Program, at 14 (Dec. 21, 1999) (providing examples for the appropriate use of funds) (hereafter TANF Funding Guide), http://www.acf.dhhs.gov/programs/ofa/funds2.htm. TANF funds cannot, however, be used for medical services (with the exception of pre-pregnancy family planning services). See 42 U.S.C. § 608(a)(6).

40. This approach is being utilized in the State of Georgia, through an agreement between the Georgia Department of Family and Children's Services (the TANF agency) and the Division of Rehabilitation Services (the vocational rehabilitation agency). See Georgia TANF Project Overview: The Assessment of TANF Recipients.

41. This approach is utilized by the State of Maine. Among the strategies used by contractors are assessing disabilities and other barriers, coordinating with TANF agency staff to develop a service plan for TANF beneficiaries, helping beneficiaries access needed services and providing job search assistance. See Thompson, Terri S., Pamela A. Holcomb, Pamela Loprest and Kathleen Brennan, State Welfare-to-Work Policies for People with Disabilities: Changes Since Welfare Reform, Office of the Assistant Secretary for Planning and Evaluation/Office of Planning, Research and Evaluation, U.S. Department of Health and Human Services, at 19-20 (Oct. 1998) (hereafter "Changes Since Welfare Reform"), http://www.urban.org/welfare/wel2work_es.html; Holcomb, Pamela A. and Terri S. Thompson, State Welfare-to-Work Policies for People with Disabilities: Implementation Challenges and Considerations, Office of the Assistant Secretary for Planning and Evaluation/Office of Planning, Research and Evaluation, U.S. Department of Health and Human Services at 33 (August 2000) (describing this approach as in use specifically in Portland, Maine), http://www.urban.org/welfare/wel-wrk-2k.html. Similarly, in a pilot program in one county in New Jersey, a TANF agency has entered into partnerships with mental health providers to create teams in which providers work with TANF agency staff to identify TANF beneficiaries with mental illness, assess these beneficiaries' clinical needs, and link these beneficiaries to mental health services and supported employment. See Ten Important Questions, at 32.

42. See 28 C.F.R. § 35.130(b)(7) (ADA regulation); See also Alexander v. Choate, 469 U.S. at 301 (Supreme Court decision concerning Section 504, stating that "reasonable accommodations in the grantee's program or benefit may have to be made" in order to ensure meaningful access to the program or benefit.)

43. As set out in OCR's August 1999 welfare reform guidance, although TANF agencies may exempt individuals with disabilities, agencies may not prohibit a qualified individual with a disability from participating in work and other TANF programs because the person has a disability. Eligibility for participation in any benefit, service or program must be based on an individual assessment of each person's ability to meet the eligibility requirements rather than on stereotypes or assumptions about the effects of a type of disability. See "Civil Rights Laws and Welfare Reform--An Overview," at 4. Where reasonable accommodations and reasonable program modifications would allow a TANF beneficiary with a disability to work, the agency should provide the accommodations and modifications unless doing so would fundamentally alter the TANF program. Similarly, if the TANF agency allows individuals who are exempt to volunteer to participate in TANF programs, the TANF agency should allow individuals with disabilities who are exempt to participate, and should ensure that these individuals receive the necessary accommodations to facilitate their participation, unless ensuring the participation of these individuals would constitute a fundamental alteration of the TANF program.

44. Referral to determine eligibility for Supplemental Social Security Income (SSI) and continued receipt of cash assistance pending determination is another acceptable course of action.

45. This approach is being utilized by the State of Kansas. See Kansas Department of Social and Rehabilitation Services, State of Kansas - Kansasworks: Comprehensive Screening and Assessment (April 24, 2000). Through reviewing a variety of data, the State of Kansas determined that 30% of TANF beneficiaries screened "positive" for learning disabilities, 16% of beneficiaries appeared to have either a mental or muscoloskeletal impairment, and 26% of beneficiaries scored below 80 on an IQ test. Id.

46. Id. In response to a survey from the American Public Human Services Association (APHSA), many States indicated that aggregate client assessment data was "very important" for the planning and development of programs to meet service needs. See American Public Human Services Association Research Notes, TANF Client Assessments: Program Philosophies and Goals, Sequencing of Process, Uses of Information and State Changes or Modifications, Promising Practices and Lessons Learned, at 7 (Sept. 2000), http://www.aphsa.org/opd/research/researchnotes0900.html.

47. Of course, if such notice is provided, the TANF agency should in fact be ready, willing and able to assist the person receiving the notice.

48. This approach is being utilized in Tennessee. See National Governors' Association Reports Online, Serving Welfare Recipients with Learning Disabilities in a Work First Environment, at 6 (July 28, 1998) (hereafter "Serving Welfare Recipients"), http://www.nga.org/center/divisions/1,1188,C_ISSUE_BRIEF^D_1764,00.html); National Governors' Association Center for Best Practices, Online document, Learning Disabilities: Tennessee Learning Disabilities Initiative (undated), http://www.nga.org/special/1,1260,C_MINI_WEB_SITE^D_1707,00.html.

49. This approach is being used in Arkansas, and was implemented as a result of a legislative amendment. See Ten Important Questions, at 17.

50. Section 407(d) of PRWORA sets out the12 work, training and education activities in which TANF beneficiaries may participate in order to be "engaged in work" for the purpose of counting toward the State's work participation rate requirements. Among these activities are education directly related to employment, satisfactory attendance in secondary school or a GED program for individuals without a secondary school diploma or GED certificate and job skills training directly related to employment. 42 U.S.C. § 607(d); See also TANF regulations at 45 C.F.R. §§ 261.30-261.36 (outlining the federal work activities and how they count for purposes of the work participation rate).

51. Individuals with disabilities who receive supported employment might, for example, have the services of a "job coach" to work alongside the person with a disability and assist the person with job duties.

52. The Department of Health and Human Services' Administration for Children and Families has indicated that States may appropriately use Federal TANF or State "maintenance of effort" funds for this purpose. See TANF Funding Guide, at 12-13.

53. The preamble to the TANF regulations makes clear that HHS intended States to have discretion and flexibility in defining "countable" work activities, so long as States' definitions are consistent with Congress' intent in drafting PRWORA. See Department of Human Services, Administration for Children and Families, Temporary Assistance for Needy Families, Final Rule, 45 C.F.R. Part 260, et al., Preamble, Section VI, 64 Fed. Reg. 17720 at 17776 (April 12, 1999).

54. This approach is being utilized in Minnesota. See Ten Important Questions, at 21. A State can also allow TANF beneficiaries to participate in such activities as disability screening, assessment and treatment, even though these activities may not "count" for purposes of the State's work participation rate. Id., at 20-21.

55. This approach is being utilized in New Hampshire. See Ten Important Questions, at 20.

56. These modifications would be consistent with the first purpose of the TANF program: to "provide assistance to needy families so that children may be cared for in their own homes or in the homes of relatives." See 42 U.S.C. § 601(1).

57. See 28 C.F.R. § 35.130(b)(3) (ADA regulations); 45 C.F.R. § 84.4(b)(4) (Section 504 regulations).

58. See 28 C.F.R. § 35.130(b)(3) (ADA regulations); 45 C.F.R. § 84.4(b)(4) (Section 504 regulations).

59. See 28 C.F.R. Part 35, Appendix A, § 35.130, at 467 (1996) (commentary to Title II ADA regulations).

60. This approach is being utilized in four districts in the State of Vermont. This project is supported by U.S. Department of Labor Welfare-to-Work (WtW) formula grant funds. See National Governors' Association Center for Best Practices, Online document, Physical and Developmental Disabilities: Vermont Welfare-to-Work/Vocational Rehabilitation Collaboration (undated), www.nga.org/Welfare/barriers/VTWelfareToWork/asp.

61. This approach is being utilized in New Hampshire. See Serving Welfare Recipients, at 4.

62. This approach is being utilized in Arkansas. See National Governors' Association Center for Best Practices, Online document, Learning Disabilities: Arkansas Learning Disabilities Training and Dissemination Project (undated), http://www.nga.org/special/1,1260,C_MINI_WEB_SITE^D_1705,00.html.

63. See 29 C.F.R. § 37.70-37.80 (WIA nondiscrimination regulations setting forth complaint processing procedures).

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and thus, are "as effective" as services provided to individuals without disabilities).~ right....right....watt y now?

2007-05-29T02:25:00.000-07:00

Texas Public Education Watchdog Authority: Dear Chuy Hinojosa, Florence Shapiro and distinguished Education Committee Members

2007-05-27T02:31:00.000-07:00

Texas Public Education Watchdog Authority: Dear Chuy Hinojosa, Florence Shapiro and distinguished Education Committee Members

Just give us (Education) the Lottery Proceeds as per original bill of sale. The Lottery was sold to us (the voters of the great State of Texas) as 100% of the proceeds were for Educating our youth.

What percentage of the Lottery proceeds (currently) are dedicated to the education of our youth?

Why is it, the wealth always steals from our children after acting like they were creating, “doing it for th kids” huge reservoirs of Avarice to siphon off.

Like the Lottery originally was ratified by the people of the Great State of Texas with the belief ot was a moneymaker for our Children’s Education. And now how much of the Lottery revenue makes it to Public Education?

Perry Craddick & Corporate Welfare in the name of WIA, ED Byrne Grant, and under the guise of helping the poor.

With the Education funding we should demand that the dedication of lottery money to the Education of our Children be adhered to as it was sold to Texas. The Lottery when legislated was for the Education of Texas Students. Finally, the Private Sector is funded under the WIA slush fund for Corporate Welfare Recipients under the Guise of a Welfare Reform or Welfare to Work / JOB generating program to help the poor. The rich are getting richer in the name of helping the poor. And one needs to always remember it is both parties dippin into the creative crony contractualism. Give it a title, write a grant and set up a front office with a computer and a sign; then get some brochures and a few token clients and funnel the Avarice in a shell game like manner and voila a new ranch or a new house maybe an agency hummer or King Ranch Pickup Truck with a magnetic sign. Give a few JOBS to your network affiliates and send the clients to perform community based work and get rich and richer doing it. Ask Mary Cano or Oscar Martinez to explain it in detail. Charmed I'm sure.

TFT LEGISLATIVE HOTLINE--FRIDAY, MAY 25, 2007
>(copyright 2007 Texas Federation of Teachers)
>
>Proposed State Budget Shortchanges Schools and Educators; Keep Up the Fight
>For House TRS Plan; House at a Standstill as Speaker Clings to Power
>
>Proposed Budget Shortchanges Public Schools, Education Employees: TFT
>President Linda Bridges put out a press statement today deploring the
>results of the House-Senate conference committee on the 2008-2009 budget.
>The state budget plan in House Bill 1 still must win the approval of
>majorities in both the House and Senate. As President Bridges' statement
>below explains, HB 1 in its current form does not deserve that approval:
>
>"Education and educators would be shortchanged badly in the budget proposed
>by House-Senate conferees this afternoon. Based on the information
>currently
>available, school funding would remain static, not even getting back to the
>level of state and local funding school districts had in 2002 in real
>terms, after you take inflation into account. The $850-a-year
>cost-of-living pay raise for teachers passed by the House last month would
>shrivel to about $425, according to the legislative budget staff. If paid
>out to all teachers across the board, this would amount to less than $25 a
>month after taxes and deductions--not even enough to cover the cost of
>rising average health-care premiums. And the conferees took pains today to
>say the money would not even have to be paid out across the board to all
>teachers.
>
>"Worst of all is what this budget proposal would do regarding TRS pension
>benefits. The bill would withhold an eminently affordable and exceedingly
>modest pension boost--a 13th check for TRS retirees--unless other
>legislation passes
>to impose new levies on all current school employees. The only way retirees
>would get a 13th check, under this scheme devised by Sen. Robert Duncan,
>would be if active school employees pay a higher contribution rate, taking
>roughly $50 million a year out of their pockets. This plan totally
>contradicts the House legislation passed unanimously on Wednesday that
>would provide a 13th check for retirees fully funded by the state, without
>imposing any new levies on active employees.
>
>"In short, school districts under this budget would regain none of the
>ground they have lost financially, teachers would get at best a measly pay
>raise of less than $25 a month that wouldn't even keep up with inflation,
>and 300,000 school support personnel would suffer an actual pay cut, as a
>result of the higher levies imposed on them for TRS with no compensating
>increase in pay. You have to give the
>conferees credit--it takes a certain ingenuity to come up with a plan this
>bad at a time when the state is sitting on a record-high budget surplus."
>
>Keep Up the Fight for House TRS Plan! At this writing members of the Texas
>House are standing firm in support of their unanimously approved plan for a
>13th check for TRS retirees, funded by an increase in the state
>contribution rate to 6.7 percent, with no new costs imposed on active
>school employees. Several Senate offices reported to us today that they are
>receiving a high volume of calls in support of this House version of SB
>1846--as well they should be. The Senate alternative proposed by Sen.
>Robert Duncan, Republican of Lubbock, is a thinly veiled attempt to shift
>state costs for TRS pensions onto active employees and their school
>districts.
>
>Duncan let slip the real agenda during floor debate on his plan,
>noting that increasing the TRS levy on active employees and requiring a
>contribution from school districts could "free up general revenue for other
>purposes." In other words, this scheme would allow the state to save money
>by shifting costs onto education employees and local taxpayers.
>
>Duncan's staff in response to callers today reportedly was claiming that
>the freshly hatched budget deal (see above) means that there's no money and
>no time left to provide this session for the 6.7-percent state contribution
>rate that the House proposes. But that's not so. The legislature has
>billions of dollars left to allocate right now, and it would take only a
>tiny fraction of that treasure--less than 1 percent of it, in fact--for the
>state to get to the 6.7-percent TRS contribution rate from the 6.58 percent
>already built into the budget. Even if the budget bill passes in its
>current form, the
>House plan for a fully state-paid 13th check with no new costs imposed on
>active employees could also still pass and become law with full force and
>effect, delivering a 13th check in September.
>
>The upshot is that you have an opportunity right now to shape the outcome
>of this TRS benefit fight in the critical remaining days before adjournment
>of the legislative session on Monday. Just send the letter on this issue to
>your state senator from the TFT Web site. If you don't know your state
>senator, you can find out quickly when you go to that Web letter.
>
>Speaker's Grip on Gavel Threatened: The Texas House came to a standstill at
>8 PM this evening, as Speaker of the House Tom Craddick shut off House
>members' microphones and called a three-hour recess to head off a
>rank-and-file revolt
>threatening to oust him from the speaker's chair. The Midland Republican is
>under heavy fire from both fellow Republicans and Democrats for what many
>consider his tyrannical rule of the House. Tonight he gave them new grist
>for their argument, by ruling that there is no appeal to the membership as
>a whole if he blocks the parliamentary procedure needed to oust him. His
>ruling, epitomizing the arbitrary, one-man rule of which Speaker Craddick
>stands accused, apparently has led to the resignation of the House
>parliamentarian in protest this evening. Like everyone else at the capitol,
>we are now waiting to see if the House will actually reconvene tonight.
>Keep an eye out for news of the latest developments in the daily TFT
>hotlines that will be published each of the next three days as the
>legislative session hurtles toward final adjournment.

Senate Committee on Education

Committee Information

Chair

.Florence Shapiro

Vice-Chair

.Kyle Janek

Members:

.Kip Averitt
.Steve Ogden
.Dan Patrick
.Leticia Van de Putte

.Royce West
.Tommy Williams
.Judith Zaffirini

CCISD: TAKS (Most Correct Answer): “I didn't fail the test, I just found 100 ways to do it wrong”

2007-05-24T05:25:00.000-07:00

CCISD: TAKS (Most Correct Answer): “I didn't fail the test, I just found 100 ways to do it wrong”

Need to read the Big Picture Click on Picture for Large Image

“The secret of education lies in respecting the pupil.”

Too often students are given answers to remember, rather than problems to solve”
Roger Lewin

“Instead of a national curriculum for education, what is really needed is an individual curriculum for every child.” Charles Handy

“The only thing more expensive than education is ignorance.”

“Being ignorant is not so much a shame, as being unwilling to learn.”

“any person who willfully violates any provision of this chapter . . . .” The SEC has jurisdiction to enforce this provision....

2007-05-13T03:32:00.000-07:00

“any person who willfully violates any provision of this chapter . . . .” The SEC has jurisdiction to enforce this provision.

A court must consider the private and public factors. See id. The private factors are:

2007-04-02T10:23:00.000-07:00

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COURT OF APPEALS

EIGHTH DISTRICT OF TEXAS

EL PASO, TEXAS

YOROSHII INVESTMENTS (MAURITIUS) PTE. LTD., WELGAS HOLDINGS LTD., AND ENERGY INFRASTRUCTURE GROUP LTD.,

Appellants,

v.

BP INTERNATIONAL LTD. AND BP OIL INTERNATIONAL LTD.,

Appellees.

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§

No. 08-04-00163-CV

Appeal from the

County Court at Law No. 2

of Dallas County, Texas

(TC# 02-05196-B)

O P I N I O N

This is an appeal from the trial court’s dismissal of Appellants’ lawsuit on the grounds of forum non conveniens. For the reasons stated herein, we affirm.

I. FACTUAL AND PROCEDURAL BACKGROUND

The parties to the underlying litigation are foreign corporations suing for allegations related to fraud and breach of fiduciary duty based upon allegedly improper conduct regarding a possible joint venture to build a liquid petroleum gas distribution system in India. The Appellants are three, foreign owned, Mauritius companies, who sued two of British Petroleum’s (“BP”) subsidiaries related to the project. Footnote The Mauritius companies filed suit in Dallas, Texas. The parties engaged in extensive discovery limited to issues regarding the special appearances filed by the defendants and the Motion to Dismiss for Forum Non Conveniens filed by the defendants. After a hearing on the Motion to Dismiss for Forum Non Conveniens, the trial court granted the motion and dismissed the case. The trial court entered findings of fact and conclusions of law. Appellants appeal raising seven issues. Issue No. One is a challenge to the trial court’s dismissal of the case as an abuse of discretion. Issue Nos. Two through Seven challenge the trial court’s specific findings of fact and conclusions of law on the grounds that the findings were either an abuse of discretion or not supported by legally or factually sufficient evidence.

II. SUMMARY OF RELEVANT FACTS

Appellants are Mauritius based corporations that have been engaged in an attempt to create an entity for the purpose of importing and marketing liquid petroleum gas products (“LPG project”) in India. Appellees are English corporations that were approached by Appellants for the purpose of forming a joint venture for the LPG project. Beginning in the early 1990’s and continuing over the course of several years, Appellants contacted various entities seeking to market the project and obtain investors, some of whom were Texas companies. Ultimately, four Texas companies expressed an interest in the project and the Appellants engaged in negotiations with the various companies. In 1997, Appellees began discussions with Wimco Petrogas Limited (“Wimco”) regarding the project and signed a Confidentiality Agreement. Footnote Early in 1998, the Appellants informed Appellees that other companies were seriously considering investing in the project.

The parties continued negotiations and the exchange of information which ultimately resulted in the parties signing of a Memorandum of Agreement (“MOA”) in July of 1998. The agreement provided for, among other things, that the parties would negotiate in good faith to obtain final shareholder approval for the project, and that the Appellees would not negotiate with any third party for a proposal similar to the LPG project in India.

Appellants contend that while they engaged in negotiations with Appellees, Appellees merged with Amoco Oil Company, and as a result of the merger, acquired technology related to a synthetic product known as di-methyl ether (“DME”). DME is a form of synthetic LPG and a direct substitute for the products contemplated by the LPG project. Appellants contend that Appellees did not inform Appellants of this significant development and that they engaged in fraudulent conduct which was a breach of their fiduciary duty under the agreements related to the LPG project.

Appellees withdrew from participation in the LPG project as of December 1998. Appellants filed suit in Texas asserting a cause of action for fraud and breach of fiduciary duty related to the LPG project on the grounds that Appellees obtained and misused confidential proprietary information as a result of their business relationship with Appellants. Also, as a result of Appellees’ alleged misrepresentations, Appellants did not enter into agreements with other potential investors, several of which are located in Texas, and therefore, they suffered harm as a result.

Appellants contend that BP committed fraud based upon its representatives’ misrepresentations of BP’s business and financial commitment to them with regard to the LPG project. These alleged misrepresentations resulted in Appellants’ rejection of other alternative Texas partners. Appellants also contend that BP breached its fiduciary duty to Appellants through its development of a competing product. They also contend that BP engaged in the wrongful use of confidential, proprietary information.

Appellants filed suit in Dallas County, Texas against the BP defendants. After negotiations related to special appearance motions filed by the BP entities, the parties entered into a Rule 11 Agreement whereby certain BP defendants were dismissed and the remaining two withdrew their special appearance motions. The Rule 11 Agreement also contained several other clauses which Appellants contend support their position that suit should be brought and remain in Texas.

BP contends that the MOA and the Confidentiality Agreement signed by the parties provide that any dispute among the parties would be resolved in England under English law. After disputing the jurisdiction and venue in Texas, BP sued Appellants in the High Court of Justice in London seeking a declaratory judgment that the MOA had been properly terminated according to its terms. After a hearing before that court, Justice Morison of the High Court of Justice issued his findings and entered an order abating the English proceedings until such time as the Texas court ruled on the pending forum non conveniens motion.

On February 27, 2004, the Texas court held a hearing on BP’s motion to dismiss based on the doctrine of forum non conveniens. At the hearing, the parties introduced several thousand pages of exhibits and two witnesses were called. On April 13, 2004, the trial court judge signed an order granting defendants’ Motion to Dismiss for Forum Non Conveniens. On June 2, 2004, the trial court judge signed findings of fact and conclusions of law which were filed on July 30, 2004. Appellants appeal raising seven issues.

III. STANDARD OF REVIEW

A. Forum Non Conveniens

A trial court’s denial of jurisdiction based on forum non conveniens is reviewed on the abuse of discretion standard. See Coots v. Leonard, 959 S.W.2d 299, 301 (Tex. App.--El Paso 1997, no writ) (citing Couch v. Chevron Int’l Oil Co., Inc., 672 S.W.2d 16 (Tex. App.--Houston [14th Dist.] 1984, writ ref’d n.r.e.)). The test for abuse of discretion is whether the trial court acted arbitrarily and unreasonably, without reference to any guiding principles and rules. See Craddock v. Sunshine Bus Lines, Inc., 134 Tex. 388, 133 S.W.2d 124, 126 (Tex. 1939); Coots, 959 S.W.2d at 301. An abuse of discretion does not occur merely because the reviewing court would act differently than the trial court. See Downer v. Aquamarine Operators, Inc., 701 S.W.2d 238, 242 (Tex. 1985), cert. denied, 476 U.S. 1159, 106 S.Ct. 2279, 90 L.Ed.2d 721 (1986).

The doctrine of forum non conveniens allows the courts to exercise equitable power to prevent the imposition of an inconvenient jurisdiction on a litigant, upon a court’s determination that the interests of the litigants and witnesses warrant a different forum. See Keller Dev., Inc. v. One Jackson Pl., Ltd., 890 S.W.2d 502, 505 (Tex. App.--El Paso 1994, no writ). A court must consider the private and public factors. See id. The private factors are:

(1) the relative ease of access to sources of proof;

(2) the availability of compulsory process for attendance of unwilling witnesses; and

(3) the enforceability of a judgment if one is obtained.

See id. (citing Flaiz v. Moore, 359 S.W.2d 872, 874 (Tex. 1962) (adopting the factors announced in Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 67 S.Ct. 839, 91 L.Ed. 1055 (1947))). Footnote

The public factors are:

(1) the burden imposed upon the citizens and courts of Texas in trying a case that has no relation to Texas;

(2) the general interest in having localized controversies decided locally; and

(3) the interest in having a diversity case tried in a forum that is familiar with the law that must govern the action.

See id. A plaintiff’s choice of forum is not disturbed unless the balance of factors strongly favor the defendant. See id. (citing Keller Dev., Inc., 890 S.W.2d at 505-06; Gulf Oil Corp., 330 U.S. at 508, 67 S.Ct. at 843).

A defendant has the burden to invoke the doctrine of forum non conveniens and prove all elements. See Sarieddine v. Moussa, 820 S.W.2d 837, 841 (Tex. App.--Dallas 1991, writ denied). The doctrine presumes that at least two forums are available to a plaintiff, and once a defendant establishes the availability of another forum, the plaintiff has the burden to prove the second forum is inadequate. See id.

A foreign forum is available if it has jurisdiction over all parties and the entire case, or if any evidence exists that all defendants are amenable to process at that forum. See Sarieddine, 820 S.W.2d at 840-41. A defendant may also consent to jurisdiction and thus make a forum available. See id.

The parties have signed various agreements which provide that English law shall govern any disputes related thereto. Further, BP has filed suit in England. The English lawsuit has been abated, pending a determination of the forum non conveniens issues by the Texas courts. England is an available alternative forum.

The alternative forum must also be adequate. Appellants do not appear to argue that an English court would be inadequate. It is clear from the record that the English courts do in fact have jurisdiction over the parties and have exercised jurisdiction. The matter pending before the English courts has been abated but it is clear that it may be revived. We hold that Appellants have not established the forum’s inadequacy.

We finally reach the consideration of the Gulf Oil Corp. factors to determine whether the balance favors the defendants such that the plaintiffs’ choice of forum should be disturbed.

B. Private Factors

The three private factors are: (1) relative ease of access to sources of proof; (2) availability of compulsory process; and (3) enforceability of a judgment obtained. See Keller Dev., Inc., 890 S.W.2d at 505.

This controversy involves a highly complex plan to implement an international project of mammoth scope creating a liquid propane gas distribution system for the nation of India. As we noted previously, the parties are all foreign corporations. The Appellants are three Mauritius companies who pursued negotiations with large, multinational corporations, BP International Ltd. and BP Oil International Ltd. and their related entities. The Appellants are complaining about the action of the BP defendants related to an international project that involved foreign corporations negotiating about a project that would not take place on American soil.

In November 1997, BP International Ltd. signed a Confidentiality Agreement with an entity apparently related to the Appellants, Wimco, which provided BP International Ltd. an opportunity to obtain more detailed information about and conduct a more thorough analysis of the project. The discussions and meetings related to this stage of the negotiations took place primarily in England. None of the discussions or meetings took place in Texas, or even the United States.

On April 27, the Executive Committee for BP International was scheduled to meet in London and discuss the project. Fred Jones, the primary representative for Appellants, was traveling to Tulsa, Oklahoma from London and stopped in Dallas during his journey. BP International’s representatives contacted Jones via telephone in Dallas to inform him about the decisions made by the Executive Committee with regard to the project. Jones contends that during that phone conversation of less than 15 minutes duration, BP International committed to the project. BP International contends, and the Appellants do not dispute, that of the thousands of contacts between the parties regarding this project, only the single phone call while Mr. Jones was on layover in Dallas involved Texas or even the United States in any way.

In July 1998, Appellants and BP International Ltd. entered into an MOA which described the rights and obligations of the parties related to the Indian LPG project. The agreement was negotiated and signed outside the United States. The agreement provided that the parties had the right and obligation to “co-operate, to facilitate a full due diligence investigation into all aspects of the Project. . . .” Significantly, the MOA contains a requirement that any disputes related to the agreement be construed under English law, and to have those disputes determined by an English Court. The parties agreed that the existence of the choice of law and venue clauses in the agreement is a factor that may be considered by the court in evaluation of the forum non conveniens factors.

From July 1998 until December 1998, BP International conducted due diligence on the project and meetings and discussions took place among the parties. These activities took place primarily in London with some meetings occurring in India. None took place in Texas. In late December 1998, BP International decided to withdraw from participation in the project and informed Appellants’ representatives at a meeting in London.

In April of 2002, Appellants filed suit in Dallas, Texas alleging that BP had committed fraud based upon the phone call to Jones that occurred in Dallas on April 27, 1998. We agree with Appellees that the substance of this dispute involves a foreign commercial dispute between corporate plaintiffs from Mauritius and corporate defendants from the United Kingdom. Texas has little, if any, interest in or involvement in the underlying dispute.

It appears from the evidence presented that the primary witnesses to the dispute are not located in Texas, but rather in England. Included in the record is a list of proposed witnesses which contains over 300 names the majority of which reflect a contact address outside the United States. In this broad based, international dispute, it appears as if the long list of witnesses includes many individuals who may or may not be subject to compulsory process in either jurisdiction. It appears from the record that Texas has no greater power to compel the appearance of the international witnesses than does England. Further, it is clear from the record that the parties to this dispute are sophisticated world travelers, “international entrepreneurs” for whom global meetings and world travel are a regular occurrence.

We recognize that the production of documentary evidence in this global dispute may be complex. We also recognize the reality of the tremendous assistance that technology provides to document management and analysis. BP’s related documents are in England or India. We do not find Appellants’ argument that the difficulties associated with production of documents related to this litigation in England, because the documents were previously transported to Texas by the Appellants, is persuasive as evidence of a “private factor” reason to keep the litigation in Texas.

Finally, the enforceability of a judgment should Appellants prevail in a suit against the Appellees, is not an issue because the parties have submitted to the jurisdiction of the English courts.C. Public Interest Factors

The public factors are: (1) burden imposed upon the citizens and courts of Texas in trying a case that has no relation to Texas; (2) general interest in having localized controversies decided locally; and (3) interest in having a diversity case tried in a forum that is familiar with the law that must govern the action. See Keller Dev., Inc., 890 S.W.2d at 505.

This suit does not involve a local dispute. The parties are all foreign corporations, though we recognize that the BP International defendants have contacts with Texas including employees and ongoing projects. The events and negotiations related to this suit, however, originated from events occurring outside of Texas. The events themselves were governed by laws completely unrelated to Texas. We find no justification for burdening Texas citizens and courts with litigation that has already produced thousands of pages of pretrial appellate record. We find no merit to Appellants’ argument that the suit should be kept in Texas merely because the Appellants’ representative was passing through Texas when he received a phone call discussing the project between the parties. Similarly, the fact that some of the other potential multinational corporate investors had ties to Texas is not evidence of a “public factor” justifying retention of this litigation in Texas.

We agree with Appellees that the argument propounded by Appellants that the harm suffered by the Appellants as a result of the call occurred in Texas because of damage to their ability to obtain other investors is specious. This project was a global, international proposal, involving global participants but dealing with an Indian project. If a tort occurred, it is inextricably intertwined with the fundamental basis for the relationship between the parties, the potential Indian project, the Confidentiality Agreement providing for resolution of any disputes in England under English law, and the MOA, also invoking the jurisdiction of English courts. Virtually all the discussions, negotiations, exchange of information and decisions related to the project took place outside Texas and the United States. The fortuitous contact consisting of a single phone call to Appellants’ representative as he passed through Texas weighs in favor of the trial court’s finding that the public factors weigh against Appellants’ choice of a Texas forum.

We agree that the fact that the parties are already subject to the jurisdiction of the English courts weighs strongly in favor of the trial court’s determination. Further, it appears that even if a tort claim in favor of the Appellants may be asserted, it is related to the contractual agreements between the parties. The contracts are clearly governed by English law. An action generally should be tried in a court familiar with the law governing the case. Gulf Oil Corp., 330 U.S. at 508-09, 67 S.Ct. at 843. We agree with Appellees that the potential choice of law controversy weighs heavily in support of the trial court’s decision to dismiss.

Appellants have characterized the trial court’s decision in this case as an abuse of discretion, primarily related to the court’s findings and conclusions for the reason that the findings and conclusions were not supported by legally or factually sufficient evidence. We note that the trial court conducted a hearing on the issue of forum non conveniens and was presented with testimony from two witnesses and several thousand pages of documents and deposition excerpts, resulting in eight volumes of the reporter’s record on appeal. The findings of fact and conclusions of law is a document consisting of twenty-four pages which includes a detailed description of the procedural background of the case, twenty-six findings of fact that track the Gulf Oil Corp. factors in detail, and thirty-five conclusions of law that support the trial court’s determination.

The evidence is overwhelmingly favorable to the trial court’s judgment. We overrule Appellants’ Issue No. One that the trial court abused its discretion in dismissing the suit under the forum non conveniens doctrine. Because this issue is dispositive of this appeal, we do not reach Appellants’ remaining issues.

Having overruled Appellants’ Issue No. One on review, we affirm the judgment of the trial court.

RICHARD BARAJAS, Chief Justice

September 15, 2005

Before Barajas, C.J., McClure, and Chew, JJ.