In re Hurst Saturn, Ltd.

          OPINION ON ORIGINAL PROCEEDING FOR WRIT OF MANDAMUS

          Before QUINN, C.J., ^[1] and PIRTLE and PARKER, JJ.

          MEMORANDUM OPINION

          Judy C. Parker, Justice

         Relators filed this mandamus proceeding after the trial court issued an order granting the motion filed by the real party in interest to designate responsible third parties, pursuant to section 33.004 of the Texas Civil Practice and Remedies Code. We find that mandamus relief is not warranted and deny the writ.

         Background

         This case arises from financial problems at three Metroplex-area car dealerships: Hurst Saturn, Ltd., Fort Worth Saturn, Ltd., and Arlington Saturn, Ltd. The three entities, along with their owners, Michael Edwards, Jenni Marshall, and Glen Pollard, are Relators herein.

         Relators allege that, between 2010 and 2015, real party in interest Robinson Burdette Martin & Seright, LLP ("Robinson") prepared and reviewed financial statements and tax returns that tended to show that the dealerships were turning a profit. According to Relators, they relied on the documents and representations from Robinson in making investment decisions and paying taxes. In 2015-16, however, Relators learned that the dealerships were not in sound fiscal shape, but were in fact "hemorrhaging money" and near collapse. When they investigated this financial downturn, Relators discovered mismanagement and theft by some of the dealerships' employees and their associates. These discoveries led them eventually to file lawsuits against employees, lenders, and others. In the present case, they sued Robinson, alleging professional negligence, breach of contract, and negligent misrepresentation. Relators contend that Robinson's failures caused them to pour money into failing businesses and pay taxes on nonexistent profits.

         Robinson moved for leave to designate as responsible third parties several other entities and individuals, including dealership employees and their affiliates, who Relators had alleged to be involved in falsifying records, sales fraud, financing fraud, rebate fraud, audit fraud, and more. Over Relators' objection, the trial court granted Robinson leave to designate eighteen responsible third parties.

         Relators then filed the instant petition for writ of mandamus, in which they argue that the trial court's decision was an abuse of discretion and that they have no adequate remedy by appeal.

         Law and Analysis

         Standards for Mandamus

         A writ of mandamus will issue only if the trial court clearly abused its discretion and the relator has no adequate remedy on appeal. In re Prudential Ins. Co. of Am., 148 S.W.3d 124, 135-36 (Tex. 2004) (orig. proceeding). "A trial court abuses its discretion if it reaches a decision so arbitrary and unreasonable as to amount to a clear and prejudicial error of law . . . ." In re Cerberus Capital Mgmt., L.P., 164 S.W.3d 379, 382 (Tex. 2005) (orig. proceeding) (per curiam) (internal quotations omitted). A trial court also abuses its discretion if it fails to correctly analyze or apply the law, because a trial court has no discretion in determining what the law is or applying it to the facts. See Prudential, 148 S.W.3d at 135.

         No Adequate Remedy by Appeal

         The Texas Supreme Court has held that "[a]llowing a case to proceed to trial despite [the] erroneous denial of a responsible-third-party designation would skew the proceedings, potentially affect the outcome of the litigation, and compromise the presentation of [the relator's] defense in ways unlikely to be apparent in the appellate record." In re Coppola, 535 S.W.3d 506, 509 (Tex. 2017) (orig. proceeding) (per curiam) (internal quotations omitted). Consequently, the court determined that mandamus may be appropriate to review an order that either denies or grants a defendant's motion to designate a responsible third party. See In re Dawson, 550 S.W.3d 625, 631 (Tex. 2018) (orig. proceeding) (per curiam). ...