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Andrews Myers
We Mean Business in Texas
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Construction
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New Legislation Affecting Government Contractors
by Kenton Andrews   On June 14, 2019, Governor Abbott signed Senate Bill 943 into law, in a major victory for government transparency advocates. This bill significantly alters the landscape on determining what type of government contractor bidding and contract information on public jobs can remain confidential, and what is now subject to public disclosure under the state’s freedom of information law. Contractors had previously been able to successfully deny public information act requests if they could prove that the disclosure of that information could give their competitors an unfair advantage.  This argument was previously supported by the Texas Supreme Court ruling in Boeing v. Paxton in 2015.   
 
Under the new law, which takes effect January 1, 2020, contractors will no longer be able to argue that disclosure of sensitive bidding and contract information would create “competitive disadvantage.” Government contractors will need to make significant adjustments to their public information act response arguments in order to advance a legal, legitimate, and hopefully successful basis to deny disclosure of sensitive information which may in fact give their competitors an advantage on bidding the next job. 
Recent Legislation Impacting School District Construction Defect Lawsuits
by Clayton Utkov and Andrew Scott  The 86th Legislative Session ended with Governor Abbott vetoing 58 bills by June 16, 2019. Two pieces of legislation notably omitted from those vetoes significantly impact contractors involved in school district construction. As discussed in further detail below, HB 1734 limits the use of funds recovered by school districts related to claims and HB 1999 provides contractors a right of repair. Thus, beginning September 1, 2019, a new framework will exist for school district construction defect lawsuits.
 
HB 1734, authored by Representative Holland and sponsored in the Senate by Senator Lucio, requires a school district to notify the commissioner of education and the Attorney General that it is bringing an action to recover damages for the defective design, construction, renovation, or improvement of a school district’s facility financed by bonds. The district must give notice no later than 30 days after it files the action. If the district does not meet this notice requirement, the school district’s case is subject to dismissal without prejudice.  Read more...
Real Estate
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Texas' New Crop of Tenants
by Scott McKaig  Although you may have seen numerous health and wellness retailers (and even veterinarians) offering Cannabidiol (CBD) Oil online and across the state after Congress passed the Agriculture Improvement Act of 2018 (the 2018 Farm Bill), these products had actually remained in a legal gray area in Texas, as the State had not yet enacted its own laws legalizing such products. That has now changed.
 
On June 10, 2019, Governor Greg Abbott signed HB 1325 into law, causing significant changes to Texas’ previous laws on CBD oil and other hemp products. In short, HB 1325 legalizes hemp farming and the distribution and possession of hemp and hemp-derived CBD Oil containing less than .3% of THC (the psychoactive ingredient commonly known to give users a ‘high’). This bill is the first step to potentially significant growth for wellness retailers desiring to enter into the CBD industry via brick and mortar stores. Read more...
New Firearm Legislation 
by Bret Rycroft   In the last legislative session, ten firearm bills were passed into law which will become effective on September 1, 2019.  Here is a summary of five of the newest laws pertaining to firearms which can affect property owners and developers:
 
House Bill 302 now prohibits “no firearms” clauses in multifamily leases and protects tenant’s rights to possess lawfully owned firearms and ammunition in dwelling units and on manufactured home lots.  Additionally, the new law allows tenants to transfer their guns directly between their personal vehicles and these locations. 
 
House Bill 121 provides a legal defense to Concealed Handgun License (CHL) holders who unknowingly enter an establishment with posted 30.06 or 30.07 signs, provided that they leave the premises after being verbally informed of the policy. Read more...
Our Summer Law Clerk Program Wraps Up
We say farewell to our summer law clerks, Ingrid Silfvast-Kaiser (South Texas College of Law) and Matthew Mouer (University of Houston Law Center), as they wrap up a productive, six-week session in Houston and move on to their next summer clerkship.
Nine AM Attorneys Recognized in Best Lawyers 2019
  • Bill Andrews - Lawyer of the Year
  • Hunter Barrow
  • Bill Davidson
  • Carson Fisk
  • Patrick Hayes
  • Tom Myers
  • Clayton Utkov
  • Jason Walker
  • Ben Westcott
Click here for the entire listing.
Employment
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Legal Low-THC Products and Employee Drug Tests
by Tony Stergio and Andy Clark   Governor Greg Abbott signed a new law on June 10, 2019, allowing for the legal use of hemp or hemp-derived products containing less than 0.3 percent of THC, the substance found in marijuana that produces the “high.”  This includes CBD products made from hemp oil.  The federal government also recently removed hemp from its list of controlled substances.  As a result of the loosening of these legal standards, stores specializing in the sale of CBD products have already begun to open throughout Texas.  As a result, employees may now legally buy zero-to-low THC products in retail storefronts statewide, and not just from online vendors.  Recreational use of marijuana, however, is still not permitted under Texas law.
 
Can an employee or potential new hire take CBD oil and pass a drug test?  Not always, is the complicated answer.  Several online sources of CBD oil products have had problems with mislabeling the level of THC (testing far over the 0.3 percent threshold) within their products, and there is still the possibility that small (and thus legal) amounts of THC found in CBD products can actually build up in a body over time.
 
What does this mean for employers?  Read more...
Changes to Texas' Anti-SLAPP Statute Brings Much Needed Relief
by Colby Hodges    Since being codified in 2011, the Texas Citizens Participation Act (“TCPA”) has become a useful tool for defendants (and their counsel) staring down the barrel of employment-related lawsuits; particularly disputes involving non-compete agreements and theft of trade secrets.  The TCPA was originally designed to ferret out anti-SLAPP (strategic lawsuits against public participation) claims and give defendants a means to dismiss a case early in its lifecycle where it was clear the right of free speech, right of free association, or right to petition was being targeted.  However, the years that followed the TCPA’s enactment have seen the law’s use vastly expanded, and anti-SLAPP motions have quickly become the expected norm in complex and hotly contested litigation.  The TCPA’s requirement of a mandatory award of attorneys’ fees to a prevailing movant did little to deter the filing of Anti-SLAPP motions, even if the claims asserted were, at best, tangentially SLAPP related.

With the coming and going of Texas’ 86th Legislative Session, the TCPA is set for some serious revisions beginning in September 2019.   Read more...
Bankruptcy
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Rare $1.6 M Fee Award in M&G Bankruptcy for Construction Lienholders Group
by Josh Judd   An ad hoc construction lien holder group that asserted liens of over $230 million for unpaid work at the M&G Corpus Christi chemical plant was recently awarded their legal and financial advisory fees totaling $1.6 million. In October 2017, M&G Resins USA, LLC, along with its affiliated debtors (M&G), filed bankruptcy in Delaware seeking relief from costs associated with the unfinished Corpus Christi chemical plant that was expected to be the world’s largest producer of chemicals to make common plastic compounds.  M&G claimed that bankruptcy was necessary due to design and technical problems with the plant, underestimated labor costs, and a dispute with its North Carolina based general contractor, Integrity Mechanical Specialists.
 
Upon the bankruptcy filing, a group of 23 construction lien holders formed a group to protect the interest of the construction lien holders, and similarly situated creditors, in the bankruptcy case.  Andrews Myers represented 14 members of the ad hoc construction lien holder group (the “CLG”), initiated formation of the group, and retained legal professionals within Delaware to represent the group.  The CLG retained Jeff Waxman and Eric Monzo with the Delaware office Morris James LLP as local bankruptcy counsel.  Shortly thereafter, the CLG retained Providence, Inc., to serve as its financial advisor.  Read more...
Tony Stergio Receives Safety Excellence Award
Houston Shareholder Tony Stergio was recognized this month at the 2019 AGC Houston Mid Year Safety Meeting for his years of service and counsel to AGC members. Clients and members nominated Tony and Andrews Myers as the 2019 recipient of the Safety Excellence Award in the Affiliate Category. 
Join Us at the Upcoming Special Events in June & July

6/28 - Billy Davis speaks on Construction Contracts at HalfMoon Education Seminar
6/28 - Tony Stergio presents on OSHA Accident Investigations to AGC Houston
7/15 - Carson Fisk and Andy Harris present on the State of the Construction Industry to Surety Association of South Texas in San Antonio
7/19 - Lisa Norman presents on Fraudulent Transfers to NACM Southwest
7/25 - Ben Westcott provides a Legislative Update and presents on Key Contractual Risk Shifting Provisions at the MCA Texas Annual Conference in San Antonio
7/26 - Andrews Myers sponsors the Houston Business Journal's Commercial Real Estate Breakfast Series/Galleria-Uptown Focus.  Click here to register!
Litigation & Arbitration
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Former Members of an LLC are Entitled to LLC Records
by Bob Plessala   The Amarillo Court of Appeals delivered its opinion on June 18, 2019, in Davis v. Highland Coryell Ranch, LLC, __ S.W.3d __, 2019 WL 2524080 (No. 07-18-00185) (Tex.App.—Amarillo 2019, nph), holding a former member of an LLC is entitled to request and receive records of the LLC. The Court did not hold the right is absolute. There is a dissenting opinion (2019 WL 2519455).
 
The opinions do not contain a great deal of factual detail but the briefs of the parties are available online. Davis was a member of Highland until 2005 when he sold his interest to the other member. A year later, Davis hired a lawyer to request a meeting with Highland to discuss issues which occurred while he was still a member. The meeting was declined. Davis’ lawyer again requested records from the LLC, and while some were provided they were copies of documents Davis already had. Additional records which Davis wanted were not provided. After several more requests, Davis ultimately filed suit to obtain the records.
 
According to the Davis brief, he sought access to records only from the time period in which he was a member. Highland contended in its brief that only active members are entitled to access to records of an LLC and that to allow access to non-members would invite abuse and open up the affairs of a private entity. The trial court denied the request.  Read more... 
A Patent Assignee's Right to Sue is Dictated by a "Totality" of the Transfer Agreement
by Wade Johnson   In the recent opinion of Lone Star Silicon Innovations LLC v. Nanya Technology Corporation et al., the Federal Circuit further clarified when a purported patent assignee has the right to sue under its own name.
 
By way of background, a patentee (whether the inventor or assignee) may bring a civil action for patent infringement, but a mere licensee may not. To determine whether someone other than the original patentee can bring an infringement claim under its own name, the critical question is whether the transfer agreement is really an assignment or simply a license. 
 
Lone Star argued that the District Court was wrong to dismiss its case because the agreement conveyed “all right, title, and interest” in the patents. The Federal Circuit rejected that this single provision controlled and, instead, looked at a “totality” of the agreement to determine if it transferred all substantial rights in the asserted patents. The Federal Circuit noted that “totality is often focused on two salient rights: enforcement and alienation.”  Read more...
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