Are the Floodgates of Change Opening for Tort Liability in Texas?
A case will soon be argued before the Supreme Court of Texas which is worthy of the attention of all Texas construction and real estate lawyers and their clients. Cause No. 23-0808, Tenaris Bay City Inc. v. Ricky Ellisor et al. involves flood damage claims related to the construction of a major industrial facility. The Court’s decision could profoundly affect all construction and real estate development industries in Texas as well as tort law in general.
Background and Summary of the Case
In 2013, Tenaris purchased a former grass farm near Bay City and began constructing a massive seamless pipe manufacturing facility. Several years later in 2017, following the unprecedented and historic rainfall from Hurricane Harvey, properties near the facility were flooded. The affected property owners sued Tenaris in negligence and claimed the construction of the pipe manufacturing facility had altered local drainage patterns and was the cause of the unprecedented flooding. A judgment in favor of the plaintiffs was appealed by Tenaris. The Fourteenth Court of Appeals affirmed the trial court’s judgment despite the plaintiffs’ failure to meet longstanding and traditional Texas standards to establish causation in a complex tort case.
Issues Before the Court
Two main issues are presented before the Texas Supreme Court. In its opinion, the Fourteenth Court of Appeals created a new exception to the “but-for” causation standard. Tenaris Bay City Inc. v. Ellisor, No. 14-22-00013-CV, 2023 WL 5622855 (Tex. App.—Houston [14th Dist.] Aug. 31, 2023, pet. granted). Second, the Court of Appeals’ opinion eroded the traditional standard that expert testimony is required to prove complex, technical issues. City of Keller v. Wilson, 168 S.W.3d 802 (Tex. 2005). If the Court upholds the opinion of the Court of Appeals, the bar for expert testimony and causation will be substantially lowered, resulting in additional risk to be borne by virtually any Texas contractor, developer, or party involved with alteration of the ground surface.
Causation Standard Issue
Under Texas law, proximate cause has two components which must be demonstrated with competent evidence: (1) foreseeability and (2) cause-in-fact. Traditionally, the “cause-in-fact” element of proximate cause requires a showing of both but-for causation (meaning that the harm would not have occurred but for the act or omission in question) andthat the act or omission in question was a substantial factor in bringing about the harm. The Supreme Court has historically only allowed for an exception, or “carve-out,” to the traditional cause-in-fact standard in a few narrow situations. These carve-outs have historically only been recognized in cases when obtaining proof of but-for causation is not practically possible or such proof otherwise should not be required. This exception has historically only been applied in toxic tort litigation situations such as asbestos cases when multiple, concurrent acts of negligence combine over time to cause an injury to the plaintiff. This exception was created by the courts because toxic tort plaintiffs with obvious damages often have extreme difficulty in pinpointing the precise, individual causes of their injuries. Because the claimants’ illnesses are clearly associated with prolonged asbestos exposure, the Court did not require proof of specific events or types of asbestos exposure in order to establish causation. Now, by extending this relaxed causation standard exception to apply to flood damage claims, the Fourteenth Court of Appeals has essentially thrown out traditional causation standards and opened up the carve-out exception to an entirely new class of plaintiffs. If the Texas Supreme Court affirms the Court of Appeals’ lowered causation standard, the floodgates will be opened to allow plaintiffs to bring potentially successful damage claims without ever having to appropriately prove causation. In such a situation, flood-damage plaintiffs could potentially bring successful claims against any party involved in the development of real property without ever having to prove the traditional causal link between a contractor or developers’ actions and the plaintiff’s alleged damages.
Expert Testimony Issue
The second issue addresses expert testimony requirements in certain negligence claims. Traditionally, plaintiffs have been required to provide expert testimony in support of claims involving scientific or technical issues, including ones involving hydraulic engineering and hydrology. The Court has long held that expert testimony is required whenever scientific and technical issues are involved with questions of causation. The Fourteenth Court of Appeals departed from the traditional expert testimony requirements in Tenaris holding that expert testimony is no longer necessary and may be substituted with simple, lay opinion testimony. Even though the plaintiff’s purported expert witness in the Tenaris case admitted he had failed to conduct a detailed flooding analysis and could not determine what caused the flooding in the plaintiffs’ homes, the Court of Appeals held that the plaintiffs had provided sufficient evidence of proximate cause. Once again, the causation bar has been lowered. If the Supreme Court upholds the opinion of the Fourteenth Court of Appeals, a potentially unlimited number of plaintiffs could recover tort damages based on nothing more than personal, lay opinion testimony regarding causation. Under this new standard, a property owner who claimed his home was flooded by nearby construction activities could properly support his damage claims with nothing more than his personal opinion that nearby construction or development was the cause of the flooding.
Consequences For the Industry
The issues presented in Tenaris may have potentially dire consequences for the construction and real estate development industries in Texas. As Texas continues to see exponential growth, real estate development (especially in areas proximately located near water or flood plains) will undoubtedly experience an increase in litigation exposure. Under the potential new standard, plaintiffs will be able to survive summary judgment with arguably little more than vague personal opinions. “My property never flooded before that nearby project was built,” could be enough to support a claim. Further, if the Court abolishes the but-for causation standard in flood damage tort cases, plaintiffs will no longer be required to demonstrate a solid causal link between damages claimed and the activities of nearby contractors and developers. A homeowner downstream or downhill from a development, whose area is hit by historic rainfall, will not have to prove whether his damage was due to the development or construction activities. We must keep our eyes on this case which is scheduled to be argued on February 19.
For further information please contact Peter Wells and Mason Grayson.
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