Preston Hollow Capital, LLC; and PHCC LLC v. Truist Bank, formerly known as Branch Bank & Trust

Summary

The Texas Business Court addresses the definition of a responsible third party under Texas Civil Practice and Remedies Code Chapter 33 and interprets the phrase "the harm for which recovery of damages is sought." The court concludes that a responsible third party need only have contributed to at least one alleged harm, even through violation of a different legal standard, and upholds Truist Bank’s designation of Senior Care and Bouldin subject to repleading.

Holdings

1. The term harm in section 33.011(6) refers more closely to injury, loss, or damage—the result or effect of unlawful conduct—than to the defendant's breach itself.
2. A responsible third party need not have breached the same legal duty or standard as the named defendant. Different breaches may contribute to a shared harm.
3. A person may be designated as a responsible third party if the person plausibly contributed to at least one pleaded harm associated with a cause of action; the person need not have contributed to every harm alleged in the lawsuit.
4. Truist pleaded sufficient facts to plausibly allege that Senior Care and Bouldin caused or contributed to harms for which Preston Hollow seeks damages, including deterioration of the trust estate and harms connected to the alleged failure to monitor and improper fund transfers.

Questions Presented

1. What does harm mean in the definition of responsible third party under Texas Civil Practice and Remedies Code section 33.011(6)?
2. Must a designated responsible third party have breached the same legal duty as the named defendant?
3. May a person who contributed to one of multiple harms alleged in a lawsuit be designated as a responsible third party?
4. Did Truist plead sufficient facts connecting Senior Care's and Bouldin's alleged conduct to harms for which Preston Hollow seeks damages?

Disposition

other