San Antonio Lawyer, January/February 2024

Official Publication of the San Antonio Bar Association

Sara dysart 2023 SABA Lifetime Achievement Award Honoree

January–February 2024

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contents ON THE COVER 6 Excellence in Service

By June Moynihan

FEATURES 12 Produced Water: The Next “Title” Wave of Litigation, Part I

By Bobby Biedrzycki, Peter Hosey, Reagan Marble

18 Virginia Jordan Dial: Founding Director of San Antonio College’s Legal Assisting Program

By Regina Stone-Harris

21 Demystifying Cryptocurrency: A Guide for Lawyers, Part II

By Daniel Wood

6 Sara Dysart with Jaz and Bear Photo by Mewborne Photography

DEPARTMENTS 5

Feedback

26 Fourth Court Update

By Justice Lori Valenzuela and Austin Reyna

28 Federal Court Update

By Soledad Valenciano, Melanie Fry, and Jeffrie Lewis

January–February 2024 | San Antonio Lawyer® 3

®

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OFFICERS / DIRECTORS President Steve Chiscano President-Elect Patricia “Patty” Rouse Vargas Treasurer Nick Guinn Secretary Jaime Vasquez Immediate Past President Donna McElroy

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Directors (2023-2025) Kacy Cigarroa Melissa Morales Fletcher Elizabeth “Liz” Provencio Krishna Reddy Directors (2022-2024) Emma Cano Charla Davies Charles "Charlie" Deacon Jorge Herrera Executive Director June Moynihan

STATE BAR / SA BAR FOUNDATION State Bar of Texas Directors Tom Crosley Lawrence Morales, II

San Antonio Bar Foundation Chair Donna McElroy

LOCAL BAR ASSOCIATIONS Association of Corporate Counsel South/Central TX Bexar County Women’s Bar Association Christian Legal Society Defense Counsel of San Antonio Federal Bar Association—San Antonio Mexican-American Bar Association—San Antonio San Antonio Black Lawyers Association San Antonio Criminal Defense Lawyers Association San Antonio Trial Lawyers Association San Antonio Young Lawyers Association TEX-ABOTA, American Board of Trial Advocates—San Antonio William S. Sessions Inn of Court

feedback 2023 Belva Lockwood Award Winners On November 2, 2023, the Bexar County Women’s Bar Foundation recognized two leaders in the community with the annual Belva Lockwood Outstanding Lawyer of the Year and Belva Lockwood Outstanding Young Lawyer of the Year awards. The awards recognize the recipients’ contributions to the legal profession, and contributions to the community in the form of charitable and volunteer work. Nominees are evaluated based on experience, reputation, and standing in the legal community. ileta! Sumner, a long-time member of the San Antonio Bar Association Publications Committee and frequent contributor to the San Antonio Lawyer, was this year’s recipient of the Belva Lockwood Outstanding Lawyer of the Year. ileta! has contributed many articles to this magazine over her tenure, including her outstanding 2019 series about the life, death, and legacy of Emmett Till. In 2022, ileta! received the San Antonio Bar Foundation’s Peacemaker Award for her many years of service to the Women’s Bar, including her election as the first Black President of that organization, as well

as her service to the San Antonio Black Lawyers Association and her role as the first General Counsel of the Battered Women’s Shelter. In 2005, ileta! contracted viral cardiomyopathy, which brought her career as general counsel to an end, but she has never let her illness slow her down. She continued to advocate as a Director of Disability Rights Texas, to educate through written works, and to inspire others with her tenacious optimism. ileta! was recognized alongside another former President of the Bexar County Women’s Bar, Danielle Rushing Behrends. Danielle is a Senior Attorney at Dykema. In addition to her service to the Women’s Bar, Danielle has been active in Junior League of San Antonio and the San Antonio Legal Services Association (SALSA).

The Publications Committee heartily congratulates ileta! and Danielle for this welldeserved recognition. ileta! Sumner, right, is pictured with Danielle Rushing Behrends, with their 2023 Belva Lockwood Awards.

January–February 2024 | San Antonio Lawyer® 5

Excellence

in Service

By June Moynihan

2023 SABA Lifetime Achievement Award Honoree

Sara Dysart Photo by Mewborne Photography

6 San Antonio Lawyer® | sabar.org

What a Night!

On September 23, 2023, over 600 friends celebrated the profession at the University of Incarnate Word’s Sky Room. The San Antonio Young Lawyers Association (SAYLA) presented three awards, and the San Antonio Bar Foundation (SABF) presented two awards. The San Antonio Bar Association (SABA) presented just one award, the prestigious Lifetime Achievement Award – the Joe Frazier Brown Award of Excellence. This award recognizes an attorney who exemplifies all that is good about the legal profession and demonstrates the highest level of professionalism, exceptional skills as a counselor and advocate, and such personal attributes as honor, integrity, service, and intelligence.

Recipients are a model of the Texas Lawyer’s Creed and inspire others to serve clients and fulfill their responsibility to the legal system. This year, the honor was awarded to Sara Dysart.

Sara called the event “indescribable.” “I felt an immense wave of love, being celebrated and having my friends and family in the audience cheering for me. I will treasure that evening and remember that feeling for the rest of my life,” Sara Dysart thoughtfully shared about the entire evening, especially her dialogue with her cheer section—the entire audience—as she was presented with the 2023 Lifetime Achievement Award.

It was a room filled with love and delight in honoring an esteemed colleague. Many in attendance count Sara as a mentor and friend. One of those friends is Mary Stich, a law school classmate who credits Sara for helping her thrive in law school and beyond. Forty-five years later, she remains grateful to be a “bestie.” Sara’s goddaughter, Katelyn, refers to Sara as her inspiration of a true “go-getter” and, more importantly, a “go-giver.” That spirit of enthusiasm and generosity has been a constant throughout Sara’s life and career.

Meet the Dysarts Sara was raised in a traditional Catholic home by Willliam (Willie) and Eileen Dysart along with her much older (by twenty-two months) brother Jack Dysart.

Willie Dysart was a US Air Force in-flight radio operator in WWII and flew missions from his post in Canada to Europe. While in Alberta, the thirty-one-year-old airman courted the twenty-year-old Eileen Gannon, and the two were married within three months. Willie was later assigned to Keesler Air Force Base in Biloxi, Mississippi, where their two children were born. After a transfer to Anchorage, Alaska for fourand-a-half years, the Dysart family moved to San Antonio, where Willie finished his Air Force career as a Master Sergeant and became a civil service worker at Kelly Air Force Base.

Like many brides of soldiers in the 1950s, Eileen initially was a stayat-home mom. But after volunteering in the cafeteria at the Catholic grade school attended by Jack and Sara, Eileen accepted a job as the cafeteria manager.

Eileen did not drive a car. She depended upon Willie for transportation or walked, rode the bus, or relied upon friends to travel to work, run errands, and attend school events.

With Willie’s retirement pay from the Air Force and employment at Kelly AFB, the family was middle class. They had a busy life centered on work, school, and church. Sara reflected, “I’m not sure how my parents managed. My brother participated in sports. I had dance lessons. There were always plenty of gifts under the Christmas tree. Looking back, I know my parents struggled to make ends meet.”

Impact of a Catholic Education Willie and Eileen wanted their kids to have a Catholic education. Jack attended Central Catholic High School while Sara attended Incarnate Word High School (IWHS). Both schools are across town from their

Sara crowned Ms. Central of Central Catholic High School.

Sara, brand new lawyer

Bexar County Women’s Bar friends

southside home. The first time Sara saw IWHS was when Willie dropped her off to take the entrance exam. After the exam, Sara rode the city bus home—a route she would come to know well over the next three years. Before her senior year, Willie and Eileen bought Sara a Volkswagen Beetle, ending her bus riding days.

Eileen was told that Sara would not do well at IWHS. A teacher at the grade school warned Eileen that the IWHS girls would “discriminate against Sara because she was from the southside, and the nuns would encourage it.”

Eileen kept this warning to herself and did everything possible for Sara to be successful at IWHS. “If we were enthusiastic, my mother was, too,” recalls Sara. “My mom helped as much as she could and was our biggest fan.” Sara’s spunky “give it my best shot” attitude began in childhood, and Eileen encouraged it.

“While the main risk my mother took was marrying Willie after a three-month courtship and leaving her home in Canada, she always encouraged us to do whatever we dreamed of,” Sara recalls.

Sara enjoyed four memorable years at IWHS. She was successful in her bid for cheerleader—first at her all-girls high school, and then at the all-boys Central Catholic.

Eileen kept the “nay-saying teacher” aware of Sara’s success, especially when Sara was voted by her classmates onto the IWHS Winter Frolic court as a freshman duchess and selected by the boys at Central Catholic High School as Miss Central her senior year.

Sara’s two best friends are from IWHS, Nancy Spengler and Terri Boggess. Sara considers herself blessed with such steadfast friends. “Nothing keeps you honest like a friend who has known you since you were fourteen!”

Sara attributes her success in college, graduate school, and law school to attending IWHS. The teachers, many of whom were Sisters of Charity of the Incarnate Word, provided strong academic preparation and encouragement to attend college. Willie and Eileen would be pleased with their return on investment for their hard-earned tuition dollars.

The Challenges of the 1970s Sara was in her senior year of college when her father was diagnosed with advanced thoracic cancer. Sara drove her mother back and forth to January–February 2024 | San Antonio Lawyer® 7

the hospital during the six weeks that Willie spent at Wilford Hall hospital with the terminal diagnosis. “My mother was widowed at age forty-eight.

She had to learn to drive and do the things my father took care of. I was graduating from college. We were both starting brand new life chapters.”

In 1974, Sara graduated from St. Mary’s University magna cum laude with a degree in history and a secondary teaching certificate. Her cheerleading experience was instrumental in securing a job at John Jay High School as an American history and government teacher and pep squad advisor. Sara says “her ‘hardest job ever’ was her first year teaching.” Sara’s students include Joe Gonzales, current Bexar County District Attorney, and Lamont Jefferson, former SABA President and partner at Jefferson Cano. “I love visiting with Joe and Lamont. While we are colleagues, I still think of them as high school students,” she recalls fondly. “I like to joke that they have gotten older than me!”

Sara Goes to Law School Sara had wanted to be a lawyer since sixth grade. While earning her master’s degree in education from University of Texas – San Antonio, Sara dated an attorney and socialized with his attorney friends. Sara only half teases, “I learned that if these guys could go to law school and pass the bar, then I could also.” She saved enough money to cover nine months of living expenses, and a student loan paid for tuition and books.

Sara knew that she had to give law school her best. If unsuccessful, she would have to return to teaching and pay the student loan on her teacher salary. Most importantly, Sara was not going to fail!

Sara did not know what to expect at law school. She recalls having coffee with a classmate who stated that he wanted to be in the top ten percent of the class because the top ten percent of the class wrote for law journal. Not knowing what law journal was, Sara decided that her goal should not only be to pass, but to do well enough to write for law journal.

Writing for St. Mary’s Law Journal set the groundwork for Sara’s career as a commercial real estate attorney. As the editor of the symposium issue on commercial real estate finance, 3L Sara engaged with accomplished Texas real estate attorneys.

Impact of a Summer Job After her first year of law school, Sara needed a summer job. Mitzi Staewen hired her to sell condominiums at an apartment project that Mitzi had sold to a real estate developer. Mitzi and Sara sold forty condo units in three months. Being paid well at each closing, Sara’s living expenses were covered for her second year in law school. A scholarship paid for tuition and books.

Mitzi became Sara’s mentor, lifelong friend, and “running buddy” (as described in Mitzi’s obituary in February 2022). Mitzi was a trailblazer who added sparkle to the lives of her friends. “Mitzi led the way in fashion, home décor, vacations, and fun!”

Launch of Legal Career In 1981, Sara graduated with distinction from St Mary’s University School of Law. As a first-year attorney, she served as Justice Klingeman’s briefing attorney. Sara cherished that experience because it gave her insight into the judicial system and allowed her to interact with outstanding jurists and law clerk colleagues.

While serving at the Fourth Court, Sara accepted a job with a Dallas law firm upon completion of the one-year clerkship. In January 1982, Sara notified the law firm that she had decided not to move to Dallas. She had no job opportunity identified in San Antonio despite her accolades and experience. Sara had her own law practice for a year before joining the law firm of Martin & Drought, where she represented commercial lenders and other real estate clients for six-and-a-half years.

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On Her Own Again!

The Texas real estate market crashed at the end of the 1980’s. Real estate attorneys were charged with finding clients and other legal expertise. While not eager to have her own solo practice again, Sara struck out on her own in January 1990. “Commercial real estate is a practice area I could work as a solo practitioner. Not everyone has a practice where they can wear all the hats.” And wear all the hats, she did. Even with a full-time legal assistant, Sara recognized the benefits of being on a computer. In 1992, Sara purchased a computer and took a WordPerfect course at San Antonio College with her friend Faye Bracey. “I became efficient at producing my own documents. I developed trust with my clients who continued to send me work and referred their colleagues to me. With the exception of joining with outstanding lawyers in an allfemale law firm in the early 1990s and going under a plaintiff’s attorney letterhead for eight months in 2021, Sara has had her solo practice for over thirty years. For the last twenty-one years, she has been assisted by Stella Delgado, her obviously outstanding legal assistant.

The Rest of the Story In the mid-1980s, Eileen, at the age of sixty, entered a rehab program upon the advice of her doctors. Eileen completed the inpatient program and stopped drinking, but refused to join Alcoholics Anonymous (AA).

“In her words, ‘she was not a drunk under the bridge. She did not belong in AA!’” Sara recounted.

Eileen’s rehab program brought out remembrances of Willie who had been deceased for thirteen years, and family dynamics that had never been discussed, especially the prevalence of alcohol. Defending her parents, Sara says, “Our home was quiet and loving; there was no abuse or mistreatment.” Sara shares an example of the consequences of alcohol use by explaining her parents’ absence at school events, especially Friday night football games to watch Jack play or Sara cheer. Sara’s parents were responsible not to drive under the influence but failed to realize the void caused by their absence. “It was disappointing that they seldom saw us perform in person, but they were always eager to hear the details the next morning.” Sara is especially sad for her mother, who had no voice in the decision not to attend these events. Years of counseling has given Sara insight into her family of the ‘50s and ‘60s with parents from the “Greatest Generation” who had their own challenges.

After college, Sara maintained her physical condition as an avid jogger. For Sara, an exercise routine meant you were healthy. Exercise was part of working hard and playing hard. While acutely aware of her family history, Sara was a social drinker who very often drank too much, surrounded by friends and acquaintances whom she could count on to drink with her. Sara is clear that whether her friends drank too much is not her call.

“I was not out every night. And most nights, I had drinks without getting drunk. There was no identifiable crisis that called on me to stop drinking other than my inner voice that told me I had a problem that I should deal with.”

Eileen died at age sixty-three, only three years after quitting drinking.

Shortly after her mother’s passing, Sara stopped drinking, but like her mother, avoided AA. In the spirit of Eilleen, Sara considered AA for “alcoholics,” and she could manage her drinking alone. After nearly a year of sobriety, social drinking returned to Sara’s life. The impact of drinking started to escalate, with “hangovers” often making it hard to get up for work.

In November 2001, Sara attended a two-and-a-half-day seminar on law practice management to find an easier or better way to practice law. In a presentation on professional roadblocks, the presenter asked, “What keeps you from being the best you can be?” Every participant was

asked to share with the group. Sara instantly thought, “Drinking.” But when her turn came to share, she blurted “procrastination” and fumbled with a story about how she kept putting off getting her winter boots repaired.

Sara had an internal dialogue about how to deal with her actual roadblock— drinking. She had worked hard to build her law practice and reputation. But she knew being out of control due to drinking, a DWI, or—even worse—an accident could ruin her reputation and legal career. The angel on her shoulder admonished her to seek help while the devil on the other side argued that she was a “party girl.”

The next month, on the Friday night between Christmas and New Year’s Eve, Sara went to a party, had a tequila shot or two after several other drinks, drove home at 3 a.m., and woke up at 11:00 a.m. and went jogging. It was a long, painful jog filled with Sara with Sophie, Jaz, and Bear thoughts of remorse.

She then cancelled her plans for the After three years of sobriety, Sara attended her day and was compelled to pull out her mother’s “unread” AA book. She first Lawyers Concerned for Lawyers conference spent the evening reading and being a referee between the angel on one shoulder—”get help”—and the devil on the other—”you always make it held as part of the State Bar Texas Lawyers home—you are a party girl!”

On Sunday, Sara attended 9 a.m. Mass as she planned to attend an Assistance Program (TLAP).

11 a.m. “open” AA meeting. Anyone interested in AA can attend an open meeting. “After Mass I went for coffee as I spent the hour listening to the angel and devil debate. Finally, I struck a deal with both of them—I would attend the 11 a.m. AA meeting and then I could do anything I wanted In 2010, State Bar of Texas President Terry Tottenham asked TLAP afterwards, including joining the devil for a drink or two.” volunteers to speak at State Bar CLE multi-day seminars. Sara was the At the 11 a.m. meeting, Sara sat behind a well-known attorney. He TLAP speaker at seminars in Galveston and in San Antonio. After each was surprised to see her. She pronounced for the first time in her life to session, colleagues approached Sara with surprise and respect. another person, “I’m a drunk.”

Following the San Antonio presentation, a friend asked Sara how she Other attorneys in recovery greeted her. She met a woman who later could be so public about her recovery. Sara responded, “No question, became her sponsor. “I went back that same day for a 3 p.m. beginners talking about alcohol and drug abuse makes many people uncomfortable. meeting.” Like all things in Sara’s life, once she decided to do it, she “gave If sharing my story helps one person in the audience seek help for him- or it [her] best shot. herself, or to recognize the signs to help a friend, then overcoming my Small incentives kept her going. “I did not want to face someone else fear and discomfort of sharing my story is worth it.” telling me the jig was up. I wanted to do this on my terms.” Sara worked Now What? the twelve steps with her sponsor and attended three to four AA meetings a week for many years. Currently, Sara does not frequent AA meetings, Sara has joined the ranks of another “category” of the bar – attorneys but she remains committed to the AA program. over seventy years old. Sara turned seventy in August 2022. In December For years, Sara was very private about her recovery. She delayed 2022, the Texas Bar invited her to be the lunch speaker at a CLE program attending the Thursday San Antonio lawyers-sponsored AA meeting titled: “Empowering Senior Lawyers: Tools for Success in Life and in because she did not want to face her peers. She relented when a friend the Profession.” Sara has spoken publicly about her career as a solo confided that they were saving a seat for her. practitioner, a woman attorney, an expert on commercial real estate law, After several years of sobriety, Sara realized that sharing her story and her sobriety. But this was new territory – her age! could help others to have hope and seek help. “My story is relatable to After agreeing to speak, the State Bar staff asked for the title of her problem drinkers who do not have a big crisis or a ‘rock bottom.’” presentation. Sara came up with: “Joy Is an Inside Job—Apply Today!”

After three years of sobriety, Sara attended her first Lawyers Then the State Bar staff wanted a paper. She replied that the lunch Concerned for Lawyers conference held as part of the State Bar Texas speaker should not have to write a paper. The State Bar staff disagreed.

Lawyers Assistance Program (TLAP). The conference was hosted in San Since eventually she would have to figure out what she would say, she Antonio. The “party girl” chaired the hospitality room, greeting guests agreed to write a paper. and making sure there was plenty of food and non-alcoholic drinks. “I Sara went with what she knew—the principles of AA that have guided became friends with attorneys in recovery throughout Texas. I attend the her recovery journey. She addressed turning seventy and retirement (or LCL conference every year!” planning for retirement) using the twelve steps of Alcoholics Anonymous January–February 2024 | San Antonio Lawyer® 9

as a template. She calls for those over seventy to face retirement by being honest with themselves, clearing the slate of past hurts and resentments, releasing control over the uncontrollable, and living life with renewed principles of joy and sharing. (This article is published with the State Bar CLE program and republished by the Texas Bar College.)1 In recognition of Sara’s focus on senior attorneys, Sister Grace Walle, Chaplain of the St. Mary’s University School of Law, commissioned an art piece that celebrated Sara’s article for the senior attorneys of the SBOT. Sister Grace chose this piece because it epitomized Sara, gave readers “a glimpse inside the person,” and allowed them to “witness her vulnerability as she talks about her ego, letting go of control, and allowing God to lead.”

Friend and mentor, Mitzi Staewen

Was It a Set-Back?

In 2020, Sara ran for State Bar of Texas President-elect. The pandemic was in full force with no in-person gatherings. Sara contemplated the challenges of running a virtual campaign and ultimately accepted the nomination. Experiencing the challenges of Zoom, Sara created a strong message, launched a website, built a social media presence, and embraced the power of a good ring light for virtual “appearances.”

While losing the race by a small margin hurt and led to questions of how she could have done better, she appreciates the many other paths available to her. She considers the campaign as one of many challenges that she has walked through. Applying the principles of AA, she realizes that the campaign gave her the opportunity to update her moral inventory; strengthen her ability to respond appropriately to persons, places, and things she cannot control; and continue defining “joy” in her life. San Antonio attorney and friend Beth Smith calls Sara the “consummate gatherer of people into relationships.” Smith shares, “Sara talks about her president-elect campaign as a unique experience that allowed her to meet attorneys throughout the state and to share her story. She is proud of her journey from a modest background, working through college and law school, to a successful and fulfilling career. She likes connecting with new people.”

Sara has not contained her gift for connecting others to her professional life, though. Commercial real estate attorney Kacy Cigarroa remains indebted to Sara for introducing her to her husband, Josh: “Sara was coming home from the airport and the driver started telling her about a frequent airport client who was single and a ‘good catch.’ After getting more information, Sara said that she knew someone who would be perfect. Perhaps putting the cart before the horse, Sara and the driver agreed to dance at our wedding.” Sara then “introduced” Kacy to the mystery frequent flyer. Kacy agreed to the date only because Sara set it up. Kacy and Josh met on a blind date in January, were engaged in June, and married in November. The happy couple “give[s] Sara all the credit for [their] whirlwind romance.”

Sara Embraces the San Antonio Legal Community She may not have won the chance to lead the entire State Bar, but Sara did not let that stop her from continuing to serve the local legal community. Beth Eby served on the San Antonio Legal Service Association (SALSA) board of directors and worked with Sara on a fundraising event.

Beth was impressed by how this well-connected lawyer generously opened her Rolodex to SALSA. Beth remembers that Sara knew she could speed the path to success and accessed her network, “Sara is a master at growing good things, instead of resting on her success, she keeps planting.”

Sara exclaims, “We brag about how collegial the San Antonio legal community is—and it’s true. Of course, you have to be out there and attend CLEs and other gatherings, volunteer on a committee, or help organize a social event to get the most out of it. You have to be involved!”

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Friend, mentor and fellow SABA Lifetime Achievement Award recipient, Tommy Smith

Friend and mentor, Allan DuBois

Sara put her advice into practice when Patricia “Patty” Roberts started as Dean of the St. Mary’s University School of Law in June 2020, during the pandemic. Dean Roberts credits a small group of women, featuring Sara, for making the transition from William & Mary Law School in Virginia to St. Mary’s Law School in San Antonio a smooth one: “Sara set up Zoom meetings with community leaders and invited my husband and me to historic Mission events, the rodeo, and more.

Sara [understood] that for me to be successful in San Antonio, it [was] imperative to cultivate relationships outside the office and classroom.”

Dean Roberts applauds Sara’s “focused giving back” as an alumna.

“St Mary’s Law School benefits from the Mentor Circle program that Sara and Mary Brennan Stich co-founded. This program brings law school students and practitioners together informally at three meetings during a semester. In its fourth year, participant feedback is positive and rewarding.” She also launched the Financial Wisdom series for law students interested in financial planning experience. “She can’t help but cheerlead for the new lawyers. If she can be helpful, she may provide an introduction for a student or extend an invitation for coffee or a Zoom call to follow up,” reports Dean Roberts. “Many students have benefited from her guidance.”

Why did Sara let us publish such a personal story? Her answer is immediate and decisive. “I tell my story of recovery and service to inspire others to have hope, seek help, and/or get involved. You do not have to be in recovery to benefit from service work! There are so many opportunities for all of us to serve.”

June Moynihan is the Executive Director of the San Antonio Bar Association.

ENDNOTES https://texasbarcollege.com/joy-is-an-inside-job-apply-today/.

1

SABA, SABF & SAYLA Award Nominations NOMINATIONS DUE: FEBRUARY 23

2024 award nominations are now open through February 23.

Scan the QR code for more information. Nominations require letters of support—start your nominations early!

SABA LIFETIME ACHIEVEMENT AWARD (JOE FRAZIERBROWN SR. AWARD OF EXCELLENCE):

Recognizes an attorney who demonstrates the highest level of professionalism, exceptional skills as a counselor and advocate, and such personal attributes as honor, integrity, service, and intelligence.

This person should be a model of the Texas Lawyers Creed and an inspiration for others in serving clients and fulfilling their responsibility to the legal system.

SABF OUTSTANDING LAWYER IN COMMUNITY SERVICE (CAROLYN THURMOND AWARD):

Recognizes a lawyer who has demonstrated outstanding service to our community.

SABF PEACEMAKER:

SAYLA LIBERTY BELL AWARD:

Recognizes an individual or entity who has promoted non-violent resolutions to community conflicts, furthering SABA’s goal of including and welcoming local diverse and vibrant communities.

Awarded at the discretion of the San Antonio Bar Foundation Board.

Recognizes one outstanding nonlawyer who has made the most selfless contribution to their community to strengthen the effectiveness of the American system of justice by instilling better understanding and appreciation of the law.

SAYLA OUTSTANDING YOUNG LAWYER AWARD:

SAYLA OUTSTANDING MENTOR AWARD:

Recognizes one young lawyer who has demonstrated professional proficiency, service to the profession and the community and is 36 years or younger as of June 1, 2024, or initially licensed within 60 months prior to June 1, 2023.

Recognizes one attorney who serves as a role model and consistently demonstrated a commitment to mentoring younger lawyers in their legal community.

January–February 2024 | San Antonio Lawyer® 11

Produced Water: The Next “Title” Wave of Litigation PART I

By Bobby Biedrzycki, Peter Hosey, Reagan Marble

W

hen you think oilfield litigation, what comes to mind? Lease termination disputes, fixed versus floating royalties, oilfield injuries? Maybe your mind goes toward environmental statutes such as the Comprehensive Environmental Response, Compensation, and Liability Act and Resource Conservation and Recovery Act. But what if we told you the next major fight in the oil and gas space has nothing to with oil or gas? What if we told you it would not fall under claims for trespass to try title, breach of contract, negligence, or any of the aforementioned environmental statutes?

Rather it would be a constitutional fight over the ownership of one of the oilfield’s largest byproducts—water; and instead of trying to shift liability for disposal of that water, we would be fighting over who has to right to own and possess that water.

The fight over produced water has potential to be the next major area of contention in the oil patch, primarily because produced water is a new and unforeseen source of revenue for operators and landowners alike.

You cannot drill and complete an oil and gas well without water—lots of it; and you cannot produce oil and gas without also producing water.

In the oil and gas industry, water treatment and recycling is improving; fresh water grows scarcer; and regulation of fresh water is increasing.

Therefore, until either a legal resolution is achieved or the ability to monetize produced water disappears (unlikely), more and more disputes are certain to arise.

Like many issues in the oil patch, disputes arise not because of anyone’s bad acts, but because of the law of unintended consequences. Imagine being there the first time our predecessors decided “1/2 of the usual 1/8” was the best way to describe an oil and gas reservation. Imagine trying to explain to an operator in the early 2000s that, in a few short years, they would be drilling horizontal wells with 3-mile laterals. Now explain to that same operator that one of their greatest liabilities—produced water— would soon produce more than $1 million in revenue per well. No doubt, if we could see disputes in the future, we would advise clients and draft deeds and leases differently today.

What was once considered a liability has now become an asset, but whose asset is it? This series sets out to provide a general overview of how the transition occurred and will examine: (1) what produced water is; (2) the recent legislation surrounding produced water (specifically HB 2767 and HB 3246); (3) the present litigation landscape; and (4) the impending constitutional fight. For San Antonio lawyers who represent clients surrounded by one of the largest and most active shale formations in the world, understanding your landowner clients’ rights is essential, and chances are good that the oil and gas lease they signed back in 2010 does not even address what is quickly becoming their largest commodity—water.

12 San Antonio Lawyer® | sabar.org

Rags To Riches—What Is Produced Water, and Who Actually Owns It? Generally speaking, produced water is water that comes out of the well with the crude oil during crude oil production. This produced water can include water existing in the shale formation, as well as water injected into the wellbore during production that is now flowing back up the wellbore. But is the produced water existing naturally within the shale formation properly considered groundwater? According to the Texas Water Code, the answer appears to be “yes.” Specifically, the Texas Water Code defines groundwater as “water percolating below the surface of the earth,”1 and under well-established Texas law, that groundwater is part of the surface estate, owned by the surface owner as a vested property right.2 Nevertheless, until a few years ago, the fight over produced water was not over who “wanted” to take it, but rather over who “had” to take it. This is because produced water contains soluble and non-soluble oil/ organics, suspended solids, dissolved solids, and various chemicals used in the production process.

The ratio of produced water to oil varies from well to well and over the life of the well. Generally, this ratio is more than three parts of water per one part of oil, and in some parts of the world can exceed a ratio of twenty to one. Quantifying and defining produced water can be difficult because both flowrate and composition change over the life of the well. It is currently estimated that the United States generates some twenty to twentyfive billion barrels of produced water each year, and now that a market has been established, regulations are increasing, and availability of freshwater is decreasing, it is easy to see how a liability has become an asset.

Traditionally, produced water was treated as a waste byproduct, obligating operators to dispose of it in accordance with applicable disposal requirements. In 2013, the industry standard practice of obligating operators to dispose of produced water (typically by injecting the produced water into a disposal well) was codified by HB 2767.3 More recently, in 2019, HB 3246 added language which purportedly transferred not only liability, but ownership of the produced water to the operator.4 Between 2013 and 2019, however, there were significant shifting economic opportunities with respect to produced water. By 2019, water haulers had already begun monetizing produced water by either dedicating it to companies who treat and sell recycled water, or treating and selling the recycled water themselves. Operators quickly followed suit. By treating and monetizing produced water, a question arose—who is entitled to the proceeds of sale from the produced water? Operators and surface owners both raised their hands. Operators argue that historical practices and the newly enacted HB 3246 support their claims.

Surface owners argue that correlative rights and their ownership rights in groundwater support their claims.

Correlative Rights and the Implied Rights Protecting the Surface Estate While common knowledge for most oil and gas attorneys, the implied doctrines limiting the mineral estates’ dominance warrant some discussion at this point.5 Texas recognizes the in-place ownership of minerals. Prior to severance of the mineral estate, a fee simple owner enjoys proprietary rights and constitutional protections for all resources located within the borders of his property. Like other states, Texas allows severance of the surface and mineral interests. Traditionally, upon severance, the mineral estate possesses the hydrocarbons in place, while the surface estate retains all groundwater. These divisions, though, are always subject to the express terms of the conveying instrument. After severance, the mineral interest owner possesses the dominant interest over the surface estate, but the mineral estate’s dominance is limited by four important implied doctrines: (1) the accommodation doctrine; (2) the “reasonable and non-negligent use of the surface” doctrine; (3) the “use, as opposed to ownership” doctrine; and (4) the “use of the surface must benefit the mineral estate” doctrine. For the purposes of this analysis, the most significant implied doctrines are (1) the distinctions between use and ownership; and (2) the implied doctrine that surface use must benefit the mineral estate.

The Implied Right to Use—Not Own—the Surface Under Texas law, a mineral interest owner holds an implied right of surface use, not ownership. While a mineral interest owner may use such part, and so much, of the surface as is reasonably necessary to comply with the terms of the mineral lease and effectuate its purpose, the implied right does not grant ownership of the surface to the mineral interest owner.

The Supreme Court of Texas has made this distinction in numerous decisions, often in passing and in the context of defining the implied right of the mineral interest owner. In Getty Oil, the court held “the oil and gas estate is the dominant estate in the sense that use of as much of the premises as is reasonably necessary to produce and remove the minerals is held to be impliedly authorized by the lease.”6 Similarly, in Sun Oil, the court upheld the dominance of the mineral interest owner’s rights over the servient, surface estate, but tempered its holding by noting that the implied right was limited to “use of such part and so much of the premises as is reasonably necessary to effectuate the purposes of the lease.”7 In Brown v. Lundell8 and Humble Oil & Refining Company v.

Williams,9 the court held, respectively, that the mineral interest owner had the right to “use so much of the land . . . as is reasonably necessary to comply with the terms of the lease,”10 and to “use as much of the premises, and in such a manner, as was reasonably necessary to comply with the terms of the lease and to effectuate its purposes.”11 The Supreme Court of Texas’ language is significant for two reasons, each of which represents a significant impediment to widespread acceptance, implementation, and use of water treatment technologies throughout the state. First, the rights of a mineral interest owner are described in the context of use, not ownership. In each instance, the Court’s recognition of a mineral interest owner’s implied right of surface use implicitly recognizes the surface estate owner’s ownership of the surface.

Second, the Court’s language confines surface use to effectuating the purposes of the mineral lease. In so doing, the Court prohibits a mineral interest owner from using the surface in any manner that does not benefit the mineral estate of the subject tract and lands pooled therewith. This latter impediment is discussed in further detail in the following section.

The sale of an asset cannot be divorced from the issue of ownership.

That is, one must own something in order to sell it. Since a mineral interest owner’s right to water is usufructuary—giving it a present right of use only—it cannot sell that which it does not own. Upon the expiration

of the mineral lease, and absent language to the contrary, the fee simple determinable interest held by the mineral lessee automatically reverts to the mineral estate owner, and with it all rights, implied or otherwise.

Notwithstanding the Court’s likely deference toward the reasonably necessary use of water in hydraulic fracturing, mineral interest owners using water treatment technologies to treat wastewater would ultimately be prevented from realizing any economic benefit from the sale of treated wastewater because such wastewater would remain the property of the surface estate owner. Thus, a mineral interest owner must ultimately obtain ownership of water from the surface estate owner in order to sell treated wastewater and derive any economic benefit from the sale.

Without such ownership, mineral interest owners are unlikely to be incentivized to adopt water treatment technologies. Costs expended on such technologies would create no cost or economic benefits for the mineral interest owner, and the implementation of water treatment technologies would yield to less costly disposal well alternatives. Furthermore, recent confirmation in Edwards Aquifer Authority that groundwater in place is a vested real property right subject to constitutional protection means that Texas courts would likely not sustain a mineral interest owner’s claim to any ownership interest in treated wastewater produced from the surface estate, since denial of the surface estate owner’s ownership would give rise to a takings claim akin to that argued in Edwards Aquifer Authority.12

Surface Use Must Benefit the Dominant Estate The mineral interest owner’s use of the surface is not unlimited, since the implied right of surface use confines use of the surface to that which benefits the mineral estate of the subject tract only and the lands pooled therewith. Absent language to the contrary, a mineral interest owner is prohibited from using the surface of one mineral estate for the benefit of another. Since the purpose of a mineral lease is to enable the mineral interest owner to carry out mineral exploration, production, and development activities on the subject tract, the fee simple owner must have impliedly intended that a right to use the surface pass to the mineral interest owner. It follows, then, that use of the surface cannot be for the benefit of activities or any other purposes that do not benefit the mineral estate of the subject tract.

Texas cases have consistently held the implied right of surface use is limited to that which benefits the mineral estate of the subject tract only. In Robinson v. Robbins Petroleum Corporation, Inc.,13 the mineral interest owner sought to undertake waterflood operations to re-pressure the formation.14 In doing so, Robbins Petroleum produced saltwater from the surface owned by Robinson, which Robinson acquired subject to the existing Wagoner oil and gas lease.15 Saltwater produced from the surface, which Robbins Petroleum included in a secondary recovery waterflood unit, was used to drive waterflood operations throughout the entire, field-wide unit, portions of which did not benefit the Wagoner lease.16 Robinson argued the use of his surface estate was unreasonable to the extent that it benefited other mineral estates within the unit that were not included in the Wagoner lease.17 The Court agreed. Distinguishing its ruling in Sun Oil as applicable only to circumstances where use of the surface was for waterflood operations benefiting a single mineral estate, the Court held: Even if the waterflood operation is reasonably necessary to produce oil from premises of the Wagoner lease, it does not follow that the operator is entitled to the use of Robinson’s surface for the secondary recovery unit that includes acreage outside the Wagoner lease. . . . Nothing in the Wagoner lease or the reservation contained in Robinson’s deed authorized the mineral owner to increase the burden on the surface estate for the benefit of additional lands.

January–February 2024 | San Antonio Lawyer® 13

Robinson, as owner of the surface, is entitled to protection from uses thereof, without his consent, for the benefit of owners outside of and beyond premises and terms of the Wagoner lease. . . .18 Likewise, in TDC Engineering, Inc. v. Dunlap,19 a Texas appellate court held that the mineral interest owner had the right to dispose of saltwater in injection wells located on the surface from which the saltwater was produced, but did not have the right, absent language to the contrary, to dispose of such saltwater on land covered by another mineral lease.20 Where the express terms of a mineral lease permit pooling of tracts owned by separate surface estate owners, Texas cases have upheld a mineral interest owner’s implied right of surface use, but have maintained that such surface use must be for the exclusive benefit of the collective mineral estate. In Delhi Gas Pipeline Corporation v. Dixon,21 the court confirmed that a mineral interest owner’s use of the surface was reasonable where the surface was included in a pooled unit as expressly permitted by the terms of the mineral lease. Delhi Gas laid a gas gathering pipeline, a portion of which ran across the surface owned by Dixon, to transport natural gas from a well located on another tract within the unit.22 In reaching its decision, the court acknowledged that the pipeline served only to transport gas from the well within the unit, and held that the pipeline did not violate Dixon’s rights even though transportation of the gas benefited a tract other than his own.23 In so holding, the court stated that the mineral interest owner had “the right to use as much of the premises as is reasonably necessary to produce and remove the oil, gas, and other minerals [including] the right to use as much of the surface estate as is reasonably necessary to produce oil or gas from a well located on a production unit with which the tract has been unitized.”24

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Similarly, in Miller v. Crown Central Petroleum Corporation,25 the Millers purchased the surface of two tracts subject to an existing oil and gas lease, which permitted the pooling of lands.26 Following several years of oil production from the formation, Crown Central obtained approval from all mineral interest owners to undertake waterflood operations.27 Without the Millers’ approval, Crown Central buried a pipeline beneath the surface of the Millers’ tracts to transport saltwater to another tract included within the waterflood operation.28 Finding that the language of the mineral lease expressly granted Crown Central the right to pool the Millers’ tracts with other lands, the court held there was insufficient evidence to support a finding that Crown Central acted unreasonably, since its use of the surface benefited the mineral estate, as provided by the mineral lease.29 Application of this limitation to treated wastewater means that, notwithstanding the implied right of surface use, the use of such wastewater is confined to that which benefits the mineral estate of the subject tract only and lands pooled therewith. This only permits mineral interest owners to take advantage of treated wastewater to hydraulically fracture additional wells or use such wastewater in other oilfield operations so long as it benefits the subject mineral estate and lands pooled therewith. However, the use of treated wastewater would be prohibited and unreasonable to the extent it benefited a tract other than the tract from which it was produced or was used for purposes unrelated to effectuating the mineral lease.30 For many years, this legal framework informed the treatment of produced water as wastewater. But as we have already alluded to, in the last decade, the value and utility of produced water has changed dramatically. The next article in this series will explore how the Texas Legislature and courts have addressed the changing dynamics between surface owners and mineral estate owners.

Bobby Biedrzycki is an associate in the Trial & Appellate Litigation practice of Jackson Walker’s San Antonio office.

His practice spans a broad range of litigation and transactional matters, with a concentration on complex oil and gas disputes. Prior to law school, Bobby founded a company providing alternative power solutions to the oil and gas sector.

Reagan Marble is a partner in the Energy and Trial & Appellate Litigation practice of Jackson Walker’s San Antonio office. Reagan’s practice spans a broad range of litigation and transactional matters, with a concentration on complex energy disputes and deals. Reagan not only represents clients in court, but also advises clients in the development and preservation of both their mineral and surface estates.

P eter Hosey is a partner in the Energy practice of Jackson Walker’s San Antonio office. Peter has more than forty years of experience representing clients in the energy and natural resources area. He has advised clients concerning all aspects of exploration, production, transportation, processing, sale and marketing of oil and gas and other natural resources.

Peter not only advises clients with regard to oil and gas matters, but also has many years’ experience with regard to the exploration, production, transportation and leasing of hard minerals, including coal and uranium.

ENDNOTES Id. at § 36.001(5).

Tex. Water Code § 36.002(a) (“The legislature recognizes that a landowner owns the groundwater below the surface of the landowner’s land as real property.”).

3 See Texas Nat. Res. Code § 122.002 (assigning liability for produced water disposal on operators).

4 Id. 5 For a more thorough examination of correlative rights, the authors recommend Peter E. Hosey & Jesse S. Lotay, Quench My Thirst: Water Rights in the Context of Water Treatment Technologies, 42 Oil, Gas & Energy Res. Law Sec. Report 21 (State Bar of Texas, Fall 2017); and Charles P. Hosey, Yours, Mine, Our Water: Where Correlative Rights End and Taking Begins Following Texas House Bill 3246, 6 Oil & Gas, Nat. Resources & Energy J. 477 (2021).

6 Getty Oil Co. v. Jones, 470 S.W.2d 618, 621 (Tex. 1971).

7 483 S.W.2d at 810 (emphasis added).

8 344 S.W.2d 863 (Tex. 1961).

9 420 S.W.2d 133 (Tex. 1967).

10 Brown, 344 S.W.2d at 865 (emphasis added).

11 Humble Oil, 420 S.W.2d at 134 (emphasis added; citations omitted).

12 369 S.W.3d at 832-33.

13 501 S.W.2d 865 (Tex. 1973).

14 Id at 866.

15 Id. 16 Id. 17 Id. 18 Id at 867–68 (citations omitted).

19 686 S.W.2d 346 (Tex. App.—Eastland 1985).

1 2

Id. at 348.

737 S.W.2d 96 (Tex. App.—Eastland 1987).

22 Id. at 97.

23 Id. 24 Id. at 97-98 (citations omitted).

25 309 S.W.2d 876 (Tex. Civ. App.—Eastland 1958).

26 Id. at 877-78.

27 Id. at 877.

28 Id. at 877.

29 Id. at 878-79. The Crown Central court held: The leases expressly granted lessee the right to pool the two Miller tracts with other land and that production on the pooled acreage should be treated as if it were production from the land covered by leases on the Miller tracts. . . .

Since appellees had the right to pipe salt water across said land, they are not liable to the Millers for damages unless they either took more of the Millers’ surface than was reasonably necessary for carrying out the purposes of the leases, were negligent, or intentionally injured them.

30 In 2013, the Houston First Court of Appeals held that the mineral lessee must prove the existence of production from the non-drill site tract located within the pooled unit, or else it cannot use the surface of the non-producing but unitized tract where the mineral lease covering the non-producing tract is not in the surface estate owner’s chain of title. See Key Operating & Equip., Inc. v. Hegar, 2013 WL 103633 (Tex. App.—Houston [1st Dist.] 2013), rev’d, 435 S.W.3d 794 (Tex. 2014). However, on petition for review, the Supreme Court of Texas reversed the First Court of Appeals’ holding.

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Virginia Jordan Dial

Founding Director of San Antonio College’s m a r g o r P g n ti is s s A l a g e L

By Regina Stone-Harris Ginny, Director of San Antonio College’s Legal Assisting Program

San A ntonio Colle ge. The (https ://texa Range shisto r (San ry.unt texash Anton .edu/a istory io, Te r :/675 .unt.e x.), Vol du; .

31/met . 55, N apth13 o. 8, E 5049 d. 1 Fr 8/m1/ iday, 9/: ac Octob cessed er 31, Decem 1980, ber 7, newsp 2023 aper, ), Uni Octob versity er 31, of Nor 1980; th Texa s Libra ries, T he Po rtal to

Introduction: Several years ago, I began the herculean task of researching the first fifty women law graduates of St. Mary’s University School of Law—an effort I am still working to complete.

During my research, I interviewed the late Judge Preston Hastings Dial. By my count, Judge Dial’s wife—Virginia Jordan Dial—was the 63rd woman law graduate. Although not among the first fifty women law graduates, Virginia Dial’s story is one that needs telling. As the founding director of San Antonio College’s legal assisting program, Virgina played an important role in the history of the San Antonio legal community.

V

irginia Mary “Ginny” Jordan was born October 31, 1947, in Buffalo, New York.1 Ginny’s father—Charles Christopher Jordan, Jr.—was from Scarsdale, New York, and joined the United States Army Air Corps at the outset of World War II. Charles met Ginny’s mother when he was stationed at the former Sheppard Field in Wichita Falls as a production engineer.2 At the time, Ginny’s mother—Mary Belle Block—worked as a secretary for the General Motors Frigidaire Division.3 The couple married in 1942 and began a family. After the war, the family moved to New York.4 The couple had three additional children—Ginny, her second brother, and a sister.

A few years later, the family moved to Dallas, where Ginny’s father first worked as a distribution manager for National Gypsum Company,5 and then as an advertising manager for Flintkote6—a manufacturer of roofing 18 San Antonio Lawyer® | sabar.org

supplies that went bankrupt after asbestos litigation. Although born in New York, Ginny claimed to be a Texan because she grew up in Dallas. She attended Thomas Jefferson High School, where she was a member of the school German Club, World Situation Interests International Club, and Library Service Club.7 She also volunteered as a clinic assistant in the school nurse’s office.8 By the time she graduated from high school, Ginny’s oldest brother was a pilot in the United States Air Force, living in Dallas.

Ginny’s brother encouraged her to go to college and join the United States Air Force as an intelligence officer.9 So, after high school, Ginny attended Lamar University in Beaumont,10 earned an undergraduate degree, and applied for the Air Force’s Officer Training School. She was accepted and was about to graduate when she was diagnosed with Hodgkins Disease11—an illness that prevented her from becoming an Air Force officer. She was medically discharged from the Air Force as a reserve Airman Basic.12 That status would later serve as a source of playful banter with her future husband—an Air Force Reserve Colonel—about who out-ranked whom for household chores.13 Ginny used her veterans’ education benefits to enroll at St. Mary’s University School of Law.14 Ginny met her future husband—Preston Hastings Dial—during law school.15 At the time, Dial presided over the 175th District Court, Bexar County, and taught criminal procedure at the law school. Ginny was one of his students. After graduating in 1974, Ginny

Texas Histo ry,

visited Judge Dial and asked for a letter of recommendation to support her application to take the Texas Bar exam.16 She did not know an attorney to provide a letter, but a letter from a former law professor would satisfy the requirement.17 Judge Dial told her he would provide the letter if she returned the following day and had lunch with him.18 After passing the Texas Bar Exam, Ginny first practiced law with William H. “Red” Ferguson in San Antonio, and then as an attorney for Alamo Title Company.19 At the time, Judge Dial served as the Director of Judge Advocates for Air Training Command.20 That role involved travelling throughout the command’s region to talk with reserve judge advocates.21 According to Judge Dial, he asked Ginny to marry him so she could travel with him,22 but to hear him talk about Ginny, it was clear more was at heart. The couple married in 1977, and Ginny joined her new husband on his trips.

For the next four years, Ginny practiced law in San Antonio with Judge Dial’s nephew, William Michael Murray.23 By 1980, Ginny had grown disillusioned with practicing law.24 Her illness had progressed, necessitating a feeding tube. Tired of working 12-14 hours per day, and working on weekends, Ginny struggled with what to do next.25 She then got the opportunity to teach a legal assisting course at San Antonio College (SAC).26 She began by teaching one course, followed by teaching two courses the next semester.27 Teaching became Ginny’s new career path. According to Judge Dial, Ginny decided that SAC should

teach paralegals, and she set out to make that happen.28 She taught paralegal courses and recruited lawyers to talk to paralegal students about diverse topics.29 By 1981, Ginny became the founding director of SAC’s legal assisting program.30 She was a very popular professor,31 often interviewed by the campus newspaper about a variety of topics.32 Despite a love for teaching, Ginny left teaching in 1984 to practice law in Seguin with classmate Patricia Irvine, class of ’74.33 She and Patricia focused on wills, estates, and probate law until 1993.

The year before Ginny passed, she toured Europe with her husband.34 While at an Italian train station, someone stole Ginny’s brief case that contained her feeding pump and nutrition.35 Judge Dial was able to get Ginny’s nutrition, but no pump, so he manually pumped the nutrition into her feeding tube until they returned home.36 Ginny was known for her love of hunting.

She began hunting when she and Judge Dial were dating.37 Judge Dial first took Ginny to hunt white wing dove. Although she had never fired a shotgun, she was hooked. She loved dove hunting, but also hunted quail, deer, javelinas, turkey, and buffalo.38 The couple had a rule though: you eat whatever

you kill.39 Every year, the couple held a Super Bowl Sunday “game” dinner.40 They served wild game, including a wild boar with an apple in its mouth, chili prepared by Pat Irvine, goose gumbo, and Aoudad sheep dip.41 Ginny and Judge Dial were both born on October 31, and held an annual Halloween party to celebrate.42 Ginny passed away at the Audie Murphy Veterans Hospital on October 27, 1994.43 She wanted her ashes spread over the couple’s ranch in Zavala County and the Guadalupe River.44 Dial did that, but in 2005, he relocated ashes and water from the Guadalupe River to the family plot at the Texas State Cemetery.45 At the time of her death, Ginny was president-elect of the San Antonio Bar Auxiliary.46 The organization has two scholarships in Ginny’s name, one for a paralegal and one for a law student.

Regina Stone-Harris has served as an editor for the SABA Publications Committee since 1994.

Ginny, the avid hunter

San Antonio College. The Ranger (San Antonio, Tex.), Vol. 58, No. 3, Ed. 1 Friday, September 23, 1983, newspap

September 23, 1983; (https://texashistory.unt.edu/ar :/67531/metapth1333694/m1/9/: accessed December 7, 2023) of North Texas Libraries, The Portal to Texas History, texashistory.unt.edu; .

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January–February 2024 | San Antonio Lawyer® 19

ENDNOTES Certificate of Birth Registration, N.Y. Dep’t of Health, # 15427 (on file with author).

2 Ancestor’s Marriage Index (characterizing Ginny’s father as lieutenant working as a production engineer) (on file with author).

3 Ancestor’s Marriage Index (indicating Ginny’s mother worked as a secretary for General Motors Frigidaire Division) (on file with author).

4 Charles C. Jordan, Jr.’s draft registration card (showing address after discharge from Army as Scarsdale, N.Y.) (on file with author).

5 1959 Dallas City Directory at 714.

6 1974 Polk’s Greater Dallas City Directory at 746; 1972 Polk’s Greater Dallas City Directory at 814; 1971 Polk’s Greater Dallas City Directory at 699. Later, Ginny’s father worked as a sales manager for J.I. Case, a company that manufactured farm equipment. 1978 Polk’s Greater Dallas City Directory at 685; 1976 Polk’s Greater Dallas City Directory at 710.

7 1963 The Document, Thomas Jefferson High School Yearbook, at 188, 227 & 242-43.

8 Id. at 297.

9 Interview with Preston Hastings Dial, Ginny’s husband, in San Antonio, Tex. (June 26, 2018).

10 1969 Cardinal, Lamar Univ. Yearbook, at 130 & 279.

11 Obituary, Virginia J. Dial, The Seguin-Gazette1

Enterprise, Oct. 26, 1994, at 2.

12 Interview with Preston Hastings Dial, Ginny’s husband, in San Antonio, Tex. (June 26, 2018).

13 Id. 14 Id. 15 Id. 16 Id. 17 Id. 18 Id. 19 Id. 20 Id. 21 Id. 22 Id. 23 Id. 24 Jean del Castillo, Lawyer enjoys teaching, The Ranger, Oct. 31, 1980, at 9.

25 Id. 26 Id.; Teachers earn promotions, The Ranger, Sept. 19, 1982, at 5 (announcing Ginny as a new professor at SAC).

27 Jean del Castillo, Lawyer enjoys teaching, The Ranger, Oct. 31, 1980, at 9.

28 Interview with Preston Hastings Dial, Ginny’s husband, in San Antonio, Tex. (June 26, 2018).

29 Id. 30 New handbook to set goals, The Ranger, Sept. 11, 1981, at 10 (referring to Ginny as director of legal assisting).

31 Thanks for an Awesome Year, The Ranger, Apr. 29,

1983, at 2 (recognizing Ginny for advising students).

32 See, e.g., Barbara Swinny, Three agree O’Connor will decide fairly, The Ranger, Sept. 11, 1981, at 2 (first female U.S. Supreme Court justice); Tom Orsborn, Dial salutes sky with shotgun; cleans, cooks, serves up game, The Ranger, Sept. 23, 1983, at 9 (hunting); Sue Cotton, Four differ over need for penalty, The Ranger, Nov. 9, 1984, at 11 (death penalty).

33 Wills topic of Golden Fellowship meeting, The Seguin Gazette-Enterprise, Nov. 30, 1989, at 6.

34 Interview with Preston Hastings Dial, Ginny’s husband, in San Antonio, Tex. (June 26, 2018).

35 Id. 36 Id. 37 Tom Orsborn, Dial salutes sky with shotgun; cleans, cooks, serves up game, The Ranger, Sept. 23, 1983, at 9.

38 Id. 39 Id. 40 Interview with Preston Hastings Dial, Ginny’s husband, in San Antonio, Tex. (June 26, 2018).

41 Id. 42 Id. 43 Certificate of Death, San Antonio Metro. Health Dist., # 1474451.

44 Interview with Preston Hastings Dial, Ginny’s husband, in San Antonio, Tex. (June 26, 2018).

45 Id. 46 Id.

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Demystifying Cryptocurrency: A GUIDE FOR LAWYERS, PART II

By Daniel Wood

Introduction

This is the second installment of a three-part series that aims to provide an approachable introduction to cryptocurrency and blockchain technology for attorneys who may have had limited exposure to these concepts, but who want a basic grounding to understand how this complex and evolving technology might affect them and their clients.

The technology behind cryptocurrency and blockchain is likely to continue reaching into new sectors, changing the way people and businesses conduct transactions.

In Part One, we covered some basic concepts about both cryptocurrency and blockchain, including the history of Bitcoin. For purposes of understanding the topics in this article, the key takeaways from Part One are: • Bitcoin was the first implementation of cryptocurrency and blockchain technology.

• A cryptocurrency is a digital token or coin that relies on cryptographic techniques for its security and functionality.

• A blockchain is the underlying technological structure on which most cryptocurrencies are based, serving as a peer-to-peer network and a public ledger that records every transaction involving any coins or tokens on the network.

• Every computer program (often called a client) connecting to the blockchain becomes part of the peer-to-peer network.

• Each token or coin is a unique string of characters that cannot be duplicated or counterfeited and is associated with a unique address (i.e. a wallet) that represents possession of the token. The blockchain records the transactions such that each peer on the network can see the address associated with a particular token.

• The peer-to-peer network collectively performs mathematical calculations to verify the validity of each and every transaction. It is therefore nearly impossible to fake a transaction.

• Transactions are essentially processed automatically by the blockchain protocols, removing the need for a trusted intermediary (such as a bank or payment processor) to perform transfers.

In this article, we will build on these concepts to explain some of the advancements that have developed in the years since Bitcoin was introduced.

Altcoins

In January 2009, the software that created Bitcoin was released under the pseudonym Satoshi Nakamoto. Satoshi Nakamoto uploaded the software to a free, open-source repository, making the code itself available to everyone. This means that anyone who wishes to do so can download a copy and view the code that comprises the Bitcoin software.

Naturally, this eventually led to developers

creating new cryptocurrencies using the Bitcoin code as a blueprint.

As early as September 2010, users on an online Bitcoin forum began discussing a hypothetical new coin based on the Bitcoin source code. In April 2011, this new cryptocurrency was launched as Namecoin.

Among several innovations brought by Namecoin, it gave us the concept of alternative coins—or altcoins. Literally, altcoins are alternative cryptocurrencies to Bitcoin.

Several more altcoins followed closely after Namecoin, but it was not until 2013 that most altcoins began listing on cryptocurrency exchange sites, which caused the most popular ones to gain steam. Today, according to CoinMarketCap.com, there are more than 23,000 cryptocurrencies.

Generally, most viable altcoins are attempts to add new functionality or improve upon some aspect of Bitcoin. For example, one of the main purposes behind the creation of Namecoin was the ability to store data within its blockchain— an absolutely crucial and valuable development in the crypto space. However, because the source code for Bitcoin (and now many altcoins as well) is free and easily available, there is virtually no barrier to entry for creating new altcoins. The result is that we have over 23,000 altcoins—and counting!—zipping around the internet. It is safe to say that many altcoins have no practical purpose for most people, and the majority are quite volatile.

January–February 2024 | San Antonio Lawyer® 21

One particularly amusing example is Dogecoin. In December 2013, two software engineers decided to turn a popular internet meme (the image of a shiba inu known as “doge”) into an altcoin as a “joke” (to use their own words). They intended to poke fun at the volatility rampant in crypto markets and the fact that altcoins were cropping up like weeds, often making sizeable short-term profits for their developers and a lucky few speculators. Ironically, enough people took the joke seriously that Dogecoin became a viable cryptocurrency. The joke never fizzled

out. Currently, Dogecoin is the ninth biggest cryptocurrency in the world, with a market cap (the total value of all a cryptocurrency’s coins in circulation) of approximately $10.5 billion. Who’s laughing now?

Most altcoins are meant to function as cryptocurrencies: they are used as a medium of exchange in transactions and can serve as a store of value and unit of account. As discussed in Part One of this series, these are the core features of money. Some altcoins, though, are meant for more narrow, utilitarian purposes.

Just as the two core components of Bitcoin are

the crypto coin and the blockchain, altcoins generally seek to advance the functionality of either crypto coins or blockchains (or sometimes both).

For example, one early altcoin was Litecoin, conceived as a “lite” version of Bitcoin. The developers who created it viewed Litecoin as the silver to Bitcoin’s gold. Litecoin’s blockchain cut down significantly on the amount of time it takes the network to verify a transaction. In practical terms, where a Bitcoin transfer can take around ten minutes to be verified by the network, Litecoin transactions usually take less than three minutes. Litecoin is a great example of a cryptocurrency being developed to improve on one specific aspect of existing cryptocurrencies.

Coins Versus Tokens • Experienced, having conducted more than 25,000 mediations since 1989 with more than 850 years’ experience practicing law • Committed to the mediation process and devoted to the ethical practice of law • Covered by the AAM Member Insurance Group Policy, an arbitrator and mediator professional liability insurance Areas of Practice Appellate Bankruptcy Business/Commercial Civil Rights Condemnation Construction Consumer Education Employment & Labor Entertainment Family Farm & Ranch Health Care Insurance Intellectual Property International Medical Oil & Gas Personal Injury Professional Liability Real Estate Securities Taxation Title Insurance Wills, Trusts & Estates For more information, contact the local San Antonio Chapter. www.attorney-mediators.org/SanAntonioChapter Gary Javore - gary@jcjclaw.com Recommended by Judges and Attorneys Michael J. Black 210.823.6814 mblack@burnsandblack.com John K. Boyce, III 210.736.2224 jkbiii@boyceadr.com Leslie Byrd 210.229.3460 leslie.byrd@bracewell.com Debbie Cotton 210.338.1034 info@cottonlawfirm.net Michael Curry 512.474.5573 mcmediate@msn.com Aric J. Garza 210.225.2961 aric@sabusinessattorney.com Charles Hanor 210.829.2002 chanor@hanor.com Gary Javore 210.733.6235 gary@jcjclaw.com Daniel Kustoff 210.614.9444 dkustoff@salegal.com

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It may be helpful to take a quick detour to discuss the difference between coins and tokens. Many people use the terms interchangeably, but there are distinctions between the two: Coins are generally cryptocurrencies designed to operate as money. Usually, a coin operates exclusively on a specific blockchain, the way that Bitcoins operate on the Bitcoin blockchain, and cannot be used in their natural form on other blockchains. Most coins are decentralized (operating on a distributed, peer-to-peer network) and dependent on cryptographic protocols. Bitcoin, Litecoin, and Dogecoin are all examples of coins.

Tokens provide functionality or value other than as a form of money. For example, some tokens allow users to access decentralized applications (DApps), perform certain functions, or use certain services of a blockchain. These are usually called utility tokens. Others may give owners the right to vote on governance issues of a particular blockchain or DApp (governance tokens), or represent an ownership stake in, or income stream from, an enterprise (security tokens).

One of the most famous types of token is the non-fungible token or NFT. NFTs are representations of digital items, which may be tied to real-world things. Often, tokens are able to operate on different blockchains. Because tokens are usually created for their utility, rather than as a form of money, they are not necessarily decentralized. Often they are issued and administered by a centralized authority.

Coins and tokens can be thought of as different species of the same genus. They are generally unique strings of characters associated with a unique blockchain address and are transferred from one address to another using similar protocols. Although

this may seem confusing, in most circles both coins and tokens fall under the umbrella term of altcoins.

Stablecoins

Stablecoins are a type of altcoin designed to combat one of the most common cryptocurrency problems: volatility. A stablecoin is a cryptocurrency whose value is stabilized through some mechanism, most commonly by pegging the stablecoin to the value of another asset that is (hopefully) relatively stable. While the majority of stablecoins today gain their stability from being backed by other assets, there is another type of stablecoin that maintains value through algorithmic control of the stablecoins circulation supply. This type of stablecoin is referred to as Seignorage stablecoins. Seignorage coins do not have any assets in reserve as collateral. Instead, they rely on an algorithm to mint more coins when the value is high or remove coins from circulation (called “burning”) when the value is low. It is similar to a central bank that prints or destroys currency to artificially maintain a stable value. Seignorage style coins are heavily disfavored today. Instead, most stablecoins currently in wide use are backed by assets held as collateral.

The first stablecoin was called BitUSD. Released in July 2014, BitUSD runs on the BitShares blockchain. BitUSD was designed to remain stable by pegging to another digital asset, namely the BitShares native token, BTS. The developers designed the platform so that more BTS was locked away on the BitShares blockchain as collateral than the US dollar value needed to keep BitUSD at a value of 1 dollar. In other words, if BTS were valued at 50 cents each, the protocol would lock 4 BTS as collateral for each BitUSD, thereby ensuring that even if the value of BTS fluctuated, the stablecoin BitUSD would remain valued at no less than $1.00. This system was imperfect, and BitUSD eventually ended up dropping below $1.00 sometime in 2018. Today, it still fluctuates around 80 cents, but the underlying concept of a stablecoin proved viable.

The basic concept of stablecoins is simple enough, but there is a confusing array of flavors even among asset-backed stablecoins.

Most commonly, stablecoins can be backed by fiat currency, digital assets (such as other cryptocurrencies), commodities, or a portfolio combining any of the three. A simple example would be a stablecoin pegged to the US dollar by a reserve of actual US currency held by the administrator of the stablecoin in a ratio of 1:1, meaning for

every coin in circulation, the administrator holds one US dollar in reserve. But some stablecoins might use a reserve consisting of multiple global currencies, or a combination of commodities like gold and silver together with fiat currencies.

Critics of many stablecoin issuers have complained about lack of transparency regarding exactly what assets are held in reserve.

When investing in, or dealing with, stablecoins, it is important to research the underlying reserve and understand as much as possible about what assets are held, whether there are independent audits of the reserve available to the public, and how an owner of a coin can redeem the coin for assets from the reserve.

Programmable Blockchains

By contrast to the altcoin projects focused on creating new coins, an example of an altcoin designed mainly to evolve the functionality of the blockchain is Ether, which is the native token that runs on the Ethereum blockchain in the way that Bitcoin is the native coin that runs on the Bitcoin blockchain. Ethereum was originally conceived in 2013 and released in 2015. Where Bitcoin was envisioned as a decentralized and democratized replacement for money, Ethereum was mainly developed to leverage blockchain technology to serve as an operating environment for DApps that go beyond just exchanging value.

Ethereum was created by a non-profit organization called the Ethereum Foundation and provides developers with a toolkit and a programming language to build projects that run on a blockchain. Ethereum was built from the ground up rather than using the Bitcoin source code, but its blockchain and network operate in a somewhat similar manner. This allows developers to leverage the peer-to-peer, decentralized nature of a blockchain to build tokens and applications that benefit from such an operating environment.

For example, Ethereum created a technical standard called ERC-20 that allows a developer to create a token that runs on the Ethereum blockchain. As a result, numerous types of tokens can be created within the same Ethereum ecosystem, each with different features or functionality, which can be exchanged for one another on the same blockchain. Ethereum’s ERC-20 token is also the most common token used for smart contracts. A smart contract is essentially a self-executing, programmable set of terms and conditions that operates on a blockchain.

We will delve into smart contracts and DApps in Part Three of this series. For now, the important point to remember is that just

as cryptocurrencies advanced and proliferated, so did blockchains, offering functionality well beyond simply providing a rail for transferring digital assets.

Initial Coin Offerings

During the period from 2017 through 2018, initial coin offerings or ICOs seemed to be everywhere. This ICO boom brought public awareness to a new use case for crypto assets. ICOs were structured to resemble an initial public offering of securities (which incidentally ran a lot of companies conducting ICOs into trouble with the SEC) and served a similar purpose: to raise capital. One of the main differences is that an ICO is accessible to any individual with the digital savvy to set up a blockchain wallet and use crypto tokens. Another is that the investor does not necessarily receive a share of ownership in the entity. Instead, the buyer would generally receive a utility token.

In its heyday, the ICO was an effective way for a project to raise funds outside of the usual venture capital channels. Despite the use of the word “coin” in the name, ICOs usually involved utility tokens instead of true coins.

In particular, most ICO tokens were created using Ethereum ERC-20 tokens. The enterprise conducting an ICO would offer crypto tokens for sale to the general public and the tokens would entitle buyers to certain rights or privileges. For example, the token might grant access to a particular product or service from the issuing organization, confer a voting right in the governance of the project, or entitle the owner to a share of the profits derived from the project. There was great variety across the types of tokens involved in ICOs. Some ICOs ran afoul of securities law, and the SEC is still prosecuting some of these cases. Other ICOs were fraught with deceptive claims and fraud. But some ICOs successfully launched projects or enterprises.

One key takeaway from the ICO boom is that blockchain technology can be an attractive way to raise capital. It takes very little programming to create a token on a programmable blockchain like Ethereum. The token is then available instantly on a global market that operates 24 hours a day, with little barrier to entry for individuals seeking to get involved. Some entrepreneurs continue to raise capital by selling utility tokens.

NFTs

You may have heard a lot about NFTs from around 2018 through 2021. A lot of news stories focused on ridiculous sums of money that people paid for things like January–February 2024 | San Antonio Lawyer® 23

a digital drawing of an ape. Beyond the sensationalized news stories, NFTs can serve a useful purpose, though. It is relevant here because NFTs are a form of crypto token that evolved from Bitcoin.

An NFT is a form of utility token, similar in concept and technical description to a Bitcoin or an altcoin. However, the most important characteristic of an NFT is that each token is differentiated from other tokens on the blockchain—that is, they are

not fungible. Each NFT is a unit of data on the blockchain that represents a unique item of digital content. The digital content represented by an NFT must be something that was created in a digital medium (such as a digital image) or be a digital representation of a real-world object. Because non-fungibility is the key characteristic of an NFT, a person can create multiple editions of a digital work as multiple NFTs, but each is unique, much like a numbered copy of a limited edition print.

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If you are not already familiar with the idea of fungibility, an object is fungible if it is interchangeable with another of its kind.

For example, dollars are generally fungible: although each might have a unique serial number, there is no aspect of any particular dollar bill that differentiates it from another dollar bill. Gold and other commodities are generally fungible, as well. If a person buys an ounce of gold, that ounce is generally interchangeable with any other ounce of gold.

An object is non-fungible if it has unique qualities that differentiate it from others of its kind in a meaningful way. For example, paintings by Vincent Van Gogh are nonfungible.

The idea of NFTs was first discussed in a whitepaper in 2012. The whitepaper looked at Bitcoin and posed the idea that certain individual Bitcoins could be differentiated from others—the whitepaper used the term “colored coins”—and thereby gain greater utility than simply as a form of currency.

The code creating an NFT is a smart contract. Most of the NFT smart contracts are very simple, sometimes as little as 1020 lines of code, but there is great potential for complexity as the form and use of NFTs evolves. The smart contract code underlying an NFT can include more than just the digital object itself, such as descriptions, features, or traits of the object, financial terms related to it, or specific rights granted to the owner.

An NFT can represent anything that exists as a digital file or can be represented by a digital file. As such, there are very few restrictions on what type of content can be tokenized into an NFT. Some examples include original artwork, trading cards, sports figures, or potentially even financial instruments like mortgages, deeds, or property titles. And because an NFT exists on a blockchain, each transfer of the NFT is indelibly traced and recorded from the moment it is minted.

You may be asking, “Okay, but, like, what do you actually get when you get an NFT?” The answer is one of the most lawyerly answers possible: it depends. It depends on the NFT and the object it represents. The NFT could simply provide a way to authenticate ownership. For example, if the deed to a parcel of real property were recorded as an NFT instead of on paper in the county clerk’s office, the NFT would prove the chain of ownership of that property.

An NFT could also provide certain legal rights.

For example, an artist could raise money by minting an NFT representing a percentage of royalties in a work of art. The owner of the NFT would thus have a right to collect royalties from the artist for reproductions of the

artwork. NFTs can also be used for all manner of recordkeeping, from personal identification to health records. The uses of NFTs are limited mostly by people’s willingness to adopt NFTs.

Conclusion

What started with Bitcoin has expanded and evolved into numerous other use cases.

This article has barely scratched the surface of how blockchain and crypto tokens are being used today. The key takeaways to remember are: • After Bitcoin, came other forms of cryptocurrency, generally called altcoins.

• Blockchain protocols can also create tokens that serve utilitarian purposes rather than functioning as a form of digital currency.

• Stablecoins are a major type of cryptocurrency that are designed to maintain stable value, usually by being backed by other assets with less value fluctuations than non-stablecoin cryptocurrencies.

• There are different methods used to create stablecoins, and caution should be used before investing in, or using, a stablecoin without first investigating how the coin’s value is established and what redemption rights an owner has.

• In addition to developments in crypto coins and tokens, the blockchain has also evolved. Ethereum, in particular, has driven

developments in the uses of a blockchain for more than a rail for transferring cryptocurrency.

• Tokens have been used in numerous ways, such as to raise capital (ICOs) or to create unique objects stored and tracked on a blockchain (NFTs).

In the final part of this series, we will explore other blockchain functionality and use cases, as well as certain aspects of the legal landscape related to these technologies.

Daniel Wood is Counsel with Pillsbury Winthrop Shaw Pittman, LLP, as part of the Fintech, Payments & Blockchain team, advising on matters related to financial services regulation. Prior to joining Pillsbury, he was an Assistant General Counsel for the Texas Department of Banking, where among other things he primarily drafted the agency’s policy memo on cryptocurrency.

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12/1/23 6:14 PM

Fourth Court Update

New Courts on the Horizon

By Justice Lori Valenzuela and Austin Reyna

I

n its recent history, Texas has toyed with the idea of creating something akin to the Delaware Court of Chancery.1 Over the years, numerous bills have been introduced and progressed through the political process without reaching the Governor’s desk.2 That changed in the 88th Legislative Session when the Legislature passed, and the Governor signed, both House Bill 19 (Business Court) and Senate Bill 1045 (15th Court of Appeals) into law. The effective date of the legislation is September 1, 2023, but each court will be created on September 1, 2024. The new trial court and appellate court are broad and expansive in their reach. At the same time, however, the Legislature appears to have kept a keen eye on the purposeful scope of each court: fostering a business-friendly environment in the State.

While we cannot predict the future, we can examine the structure and processes of the new courts.

Jurisdiction There are several ways to get a case into the Business Court and the 15th Court of Appeals. We will outline a few.

The Business Court3 will have concurrent jurisdiction with the district courts in three categories of cases:4 (1) business governance disputes in which the amount in controversy exceeds $5 million5 and which involve at least one of seven causes of action or proceedings enumerated in the statute; (2) actions in which the amount in controversy exceeds $10 million and which meet at least one of three listed criteria; and (3) actions seeking declaratory relief that falls within the scope of the court’s jurisdiction.

• Claims that fall within the jurisdiction of the Business Court may be filed there.

Cases that fall within the jurisdiction of the Business Court but are filed in county court or district court, may be removed to the Business Court.6 • Jury trials will be held in the county where the case could have originally been brought or in the designated county if there is a venue provision in the contract.7 • Appeals from the Business Court will go to the 15th Court of Appeals.8 26 San Antonio Lawyer® | sabar.org

The 15th Court of Appeals will have statewide9 exclusive intermediate appellate jurisdiction over: (1) matters brought by or against the state or board, commission, department, office, or other agency in the executive branch of the state government, including a state university or institution of higher learning, or by or against an officer or employee of the state or board, commission, department, office, or other agency in the executive branch of the state government arising out of that officer’s or employee’s conduct; (2) matters in which a party to the proceeding files a petition, motion, or other pleading challenging the constitutionally or validity of a state statute or rule and the attorney general is a party to the case; and (3) any other matters as provided by law.10 The appellate court does not have jurisdiction over the following matters regardless of whether one of the exclusive jurisdiction provisions applies: (1) matters brought under the Family Code; (2) certain matters brought under the Code of Criminal Procedure, Civil Practices and Remedies Code, Government Code, Local Government Code, Labor Code, or Health and Safety Code; (3) a proceeding brought against a district attorney, a criminal attorney, or a county attorney with criminal jurisdiction; (4) a proceeding relating to a mental health commitment or civil asset forfeiture; and (5) a condemnation proceeding for the acquisition of land or a proceeding related to eminent domain.11

Judges and Location Business Court judges and 15th Court of Appeal justices must be citizens of the United States and residents of Texas, a minimum of thirty-five years old, and Texas-licensed attorneys and/or judges for a minimum of ten years. To sit on the Business Court, there is the additional requirement of prior experience in complex business litigation, experience in business transaction law, service as a judge in a Texas court with civil jurisdiction, or any combination of the three.12 Salaries will remain consistent with current judicial earnings.13 The Business Court will have divisions in the eleven administrative judicial regions.

Effective September 1, 2024, two judges will be appointed in five of the divisions (Dallas,

Austin, San Antonio, Fort Worth, and Houston).14 The remaining six divisions will have one judge appointed in each division, if the legislature appropriates funds for that purpose in the next legislative session.15 Judges will serve two-year gubernatorial appointments with advice and consent from the Senate, with the possibility of reappointment.16 The Fourth Business Court division will serve twenty-two counties, including Bexar.17 The 15th Court of Appeals will be comprised of a chief justice and four associate justices; however, for the first three years, the court will consist of a chief justice and only two associate justices.18 Justices will be elected in statewide races, and the court will be based in Austin.19

Practical Considerations Business Court:

• The business court can issue writs of injunction, mandamus, sequestration, attachment, garnishment, and supersedeas; and grant any relief that a district court can grant.20 • The Chief Justice of the Texas Supreme Court will appoint visiting judges when necessary.21 • The two-year terms may make it difficult to conclude complex civil matters before a single judge unless judges are regularly reappointed.

15th Court of Appeals:

• All cases pending in other courts of appeals filed on or after September 1, 2023, for which the 15th Court of Appeals has exclusive jurisdiction, will be transferred to the new appellate court.

• After September 1, 2023, the docketing statement required by Texas Rule of Appellate Procedure 32 must indicate whether the case is subject to the exclusive jurisdiction of the new 15th Court of Appeals.22 • The 15th Court of Appeals is statutorily exempt from docket equalization.23

Conclusion There are a lot of questions yet to be answered regarding when and how these new laws will be applied, and how they will affect the landscape of the Texas judicial system. Will the new courts be hampered by jurisdictional

questions? Is there an opportunity for consistency and uniformity on complex business cases, as suggested by proponents of the courts? Will there be constitutional challenges because judges and justices will be initially appointed, not elected by the people?24 The Texas Constitution also requires that courts of appeals have appellate jurisdiction co-extensive with the limits of their districts. How will that be reconciled with the justices on the 15th Court of Appeals, who will be elected statewide?25 Will large businesses find Texas to be the new Delaware with a dedicated court system to handle complex business disputes? These and so many other questions and potential challenges remain unanswered, and may not be answered until after September 1, 2024. Although we cannot predict the future, we can say, with reasonable certainty, that this is an exciting time in the development of Texas business law jurisprudence.

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ENDNOTES See 2015 HB 1603.

See 2017 HB 2594; 2019 HB 4149; and 2021 HB 1875.

3 Tex. Gov’t Code § 25A. 4 Additionally, the Business Court “has supplemental jurisdiction over any other claim related to a case or controversy within the court’s jurisdiction that forms part of the same case or controversy. A claim within the business court’s supplemental jurisdiction may proceed in the business court only on the agreement of all parties to the claim and a judge of the division of the court before which the action is pending. If the parties involved in a claim within the business court’s supplemental jurisdiction do not agree on the claim proceeding in the business court, the claim may proceed in a court of original jurisdiction concurrently with any related claims proceeding in the business court.” Id. § 25A.004(f ).

5 Cases involving a publicly traded company are exempted from having to establish the amount in controversy.

6 Id. § 25A.006; see also id. § 25A.020(a)(1) (the Supreme Court shall establish removal and remand procedures).

7 Id. § 25A.015.

1 2

Id. § 25A.007(a).

Id. § 22.201(p).

10 Id. § 22.220(d).

11 Id. 12 Id. § 25A.008.

13 See generally id. § 659.012.

Id. § 25A.003.

Id. 16 Id. § 25A.009.

17 Id. § 22.201(e).

18 Id. § 22.216 (n-1), (n-2).

19 Id. § 22.2151(a).

8

14

9

15

Id. § 25A.004(1), (2); see also id. § 22.221(c–1).

Id. § 25A.014(a).

22 Id. § 22.220(d).

23 Id. § 73.001(b).

24 Tex. Const. art. V. 25 See id. § 6.

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January–February 2024 | San Antonio Lawyer® 27

Federal Court Update

Western District of Texas Court Summaries

By Soledad Valenciano, Melanie Fry, and Jeffrie Lewis If you are aware of a Western District of Texas order that you believe would be of interest to the local bar and should be summarized in this column, please contact Soledad Valenciano (svalenciano@svtxlaw.com, 210-787-4654) or Melanie Fry (mfry@dykema.com, 210-554-5500) with the style and cause number of the case, and the entry date and docket number of the order.

“Apex” Deposition Bautista v. Mpii, Inc., SA-22-CV-00247-XR (Chestney, E., October 30, 2023).

The court denied a motion for protective order filed by the owner of a funeral home who claimed the deposition sought of him was an improper “apex” deposition. The court clarified that while Texas courts recognize a doctrine known as the apex deposition, i.e., the deposition of the person at the apex of a corporate hierarchy, the Fifth Circuit follows the burden-shifting protocol set forth in Salter v. Upjohn Co., 593 F.2d 649 (5th Cir. 1979). Here, the owner was merely a fact witness who allegedly had knowledge of his former employee’s claims of sexual harassment by a co-worker. The court explained that the owner’s declaration stating he had no knowledge or involvement in the claims of sexual harassment did not show he was entitled to any protection. The court was not persuaded that the deposition was inconvenient to the owner due to his family and work obligations.

Costs and Fees; Hague Convention; ICARA Maduhu v. Maduhu, SA-23-CV-00142-XR (Rodriguez, X., October 21, 2023).

A father successfully petitioned for the return of his two minor children to the United Kingdom under the Convention on the Civil Aspects of International Child Abduction (Hague Convention) and the International Child Abduction Remedies Act (ICARA) and sought his attorney’s fees and costs. ICARA provides that a court ordering the return of a child “shall order the respondent to pay necessary expenses incurred by or on behalf of the petitioner, including court costs, legal fees, … and transportation costs related to the return of the child, unless the respondent establishes that such order would be clearly inappropriate.” A petitioner bears the burden of proof 28 San Antonio Lawyer® | sabar.org

on what is necessary for the child’s return. The court applied the lodestar method, an accepted approach under the Hague Convention, and declined to adjust the lodestar by the Johnson factors. The petitioner’s attorney submitted an hourly rate of $275, which is below the State Bar of Texas 2019 median hourly rate and consistent with relevant precedent. Because of the fact-intensive nature of the work at hand, the 69.30 hours submitted was reasonable.

The court therefore awarded all attorney’s fees sought. The court examined costs sought under FRCP 54(d) and ICARA, and awarded costs for filing fees, copies, and service of process and denied requests for postage and wire fees as these latter two costs are non-compensable. Because pre-litigation travel costs are not compensable, reimbursement for the non-refundable airline tickets petitioner originally purchased for his children based on his expectation that they would return to England was denied. The remaining transportation costs, including petitioner’s travel expenses to the United States in furtherance of resolving the dispute and costs directly related to the return of his children to the United Kingdom (airfare and passport), were compensable as respondent did not show such costs to be clearly inappropriate. The court also awarded post-judgment interest.

Diversity Jurisdiction; Citizenship and Domicile Amon v. USAA Life Ins. Co., 23-CV-00005JKP (Pulliam, J., Nov. 2, 2023).

Plaintiff Amon brought an action in federal court on diversity jurisdiction grounds against USAA after a dispute arose as to a life insurance policy where USAA had not tendered the death benefit due to competing claims between Amon (the mother of the decedent) and Altenburg (the ex-wife of the decedent). Amon alleged in her complaint that

she was a citizen of the State of New York.

USAA added Altenburg as a third-party defendant, and Altenburg filed a Rule 12(b)(1) motion to dismiss for lack of diversity jurisdiction, asserting Amon was not a citizen of New York as she alleged and, therefore, there was no diversity of citizenship to support jurisdiction.

The court allowed the parties to conduct jurisdictional discovery to aid in consideration of the motion. The question was whether Amon was a citizen of New York when the action was commenced for the purpose of determining whether the parties are sufficiently diverse to invoke the court’s diversity jurisdiction. The court noted Amon could only be a “citizen” of New York if she is domiciled there, holding a fixed residence with the intent to remain there indefinitely. The evidence demonstrated Amon had only stayed in New York for thirteen days at a friend’s studio apartment, seven months before filing the complaint. The court found evidence of Amon’s New York Public Library card and a Bank of America statement with a New York address unconvincing to establish domicile. Further the court found Amon’s handwritten New York address on a copy of her passport, two years after the passport was issued, demonstrated Amon’s intent to prove her New York domicile for the purpose of establishing the court’s jurisdiction in the lawsuit, not her intent to remain in New York indefinitely. Overall, the court characterized Amon’s evidence of domicile as “flimsy,” noting she originally asserted she was domiciled in the United Kingdom, changing it to New York only after Altenburg’s attorney notified her that she could not bring a suit under section 1332 as a United States citizen living abroad. The court found Amon did not have an intent to remain in New York but was merely passing through on her way to her sister’s home in the United Kingdom. Amon,

therefore, was not domiciled in New York and the court lacked diversity jurisdiction.

Insurance Policy Interpretation; Misrepresentation of Coverage ACE Am. Ins. Co. v. Lerma, SA-23-CV00539-JKP (Pulliam, J., Nov. 13, 2023).

The dispute arose out of a controversy between ACE American Insurance Co. and its insured River Sub, LLC d/b/a Subway, regarding whether ACE had a duty to indemnify River Sub for a judgment in an underlying state court action wherein River Sub was sued by family members (the Lermas) after their daughter was shot and killed by an ex-boyfriend at the Subway restaurant where she worked, which was owned

by River Sub. The court considered River Sub’s motion to dismiss, ACE’s motion for judgment on the pleadings, and ACE’s motion to dismiss River Sub’s counterclaim for policy misrepresentations. At issue on River Sub’s motion to dismiss and ACE’s motion for judgment on the pleadings was Exclusion No. 5, which was based on the typical “personal animosity exception” found in worker’s compensation policies, and stated: No reimbursement will be made for, any loss resulting in whole or in part from, or contributed to by, or as a natural and probable consequence of any of the following: *** 5. An act of a third person intended to injure the Covered Person because of personal reasons and not directed at the Covered Person as an Employee or because of his or her employment with the Policyholder.

Both parties urged the court to apply Texas caselaw interpreting the workers’ compensation personal animosity exception to Exclusion No. 5. The court noted the Exclusion and the animosity exception differed in material ways and was not convinced the authority was controlling, though agreed it had some bearing on the analysis. Both ACE and River Sub offered different interpretations of the caselaw. In summary, ACE contended any personal dispute transported into the place of employment is subject to the personal animosity exception, whereas River Sub suggested even personal disputes may fall outside the exception if the conditions of employment are a contributing factor to the injury. On this issue, River Sub argued the conditions of the deceased were factors in her injury—namely, her supervisor’s refusal to transfer her to a different restaurant, which gave the ex-boyfriend

an opportunity to find and murder her at the location where he knew she worked. The court denied without prejudice both motions, holding neither party thoroughly briefed the issue of whether the precatory language to Exclusion No. 5 is broader than the personal animosity exception. If it is broader, Texas caselaw on the exception was not dispositive. The court held the parties may re-urge their arguments in a summary judgment motion when the court would apply principles of Texas contract law interpreting insurance contracts in rendering its final decision. On ACE’s motion to dismiss River Sub’s counterclaim based on an insurance agent’s alleged misrepresentations about policy coverage over liability for criminal acts resulting in injuries to employees, the court held River Sub, as the insured, had a duty to read the policy and is charged with knowledge of the policy terms and conditions under Texas law. Because the policy included the personal animosity exclusion at the time the alleged misrepresentations were made, the court found River Sub had knowledge of the exclusion as a matter of law and dismissed the counterclaim with prejudice.

Soledad Valenciano practices commercial and real estate litigation with Spivey Valenciano, PLLC.

Melanie Fry practices commercial litigation and appellate law with Dykema Gossett PLLC.

Jeffrie B. Lewis is Assistant General Counsel with Zachry Group.

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