in Re Reassure America Life Insurance Company , 421 S.W.3d 165 ( 2013 )

NUMBER 13-13-00431-CV
COURT OF APPEALS
THIRTEENTH DISTRICT OF TEXAS
CORPUS CHRISTI - EDINBURG
IN RE REASSURE AMERICA LIFE INSURANCE COMPANY
On Petition for Writ of Mandamus
OPINION
Before Justices Rodriguez, Benavides, and Longoria
Opinion by Justice Rodriguez1
By petition for writ of mandamus, Reassure America Life Insurance Company
(“Reassure”) seeks to compel the trial court2 to vacate its order granting presuit
depositions under Texas Rule of Civil Procedure 202. See TEX. R. CIV. P. 202. We
conditionally grant relief.
1
See TEX. R. APP. P. 52.8(d) (“When denying relief, the court may hand down an opinion but is
not required to do so. When granting relief, the court must hand down an opinion as in any other case.”);
id. R. 47.4 (distinguishing opinions and memorandum opinions).
2
The respondent in this original proceeding is the Honorable Albert Garcia, the Presiding Judge
of County Court at Law No. 6 of Hidalgo County, Texas. See TEX. R. APP. P. 52.2.
I. BACKGROUND
Real party in interest, Rene A. Garcia, filed a petition in his county of residence
seeking to take presuit depositions. The petition, entitled “Petition Requesting Oral
Depositions and Subpoena Duces Tecum (for documents) to Investigate Potential Claim
or Suit,” is filed against Reassure and states in relevant part:
[Garcia] . . . asks the court for permission to take depositions by
oral examination to obtain testimony to investigate a potential claim as
allowed by Texas Rule of Civil Procedure 202.
1. [Garcia] . . . is an individual who resides in Hidalgo County, Texas.
2. The person(s) that are sought to be deposed are the person(s) with
knowledge regarding the following:
a. The entire file regarding the policy number MP0153991, and
the policy number MP0153991;
b. All aspects of the agreement between [Garcia] and
[Reassure] including but not limited to any negotiations
leading up to its execution, the obligations of [Reassure],
and the insurance policy;
c. All aspects of [Reassure’s] policy, procedures, and manual;
d. Knowledge about the agreement also referred to as delivery
agent services agreement;
e. Knowledge about the sale of policy number MP0153391;
and
f. Knowledge about the corporate structure of [Reassure].
Garcia further alleged that he sought to obtain the depositions “for use in an
anticipated suit in which [he] may be a party,” the “subject matter of the anticipated suit
is with regard to the policy number MP0153991 belonging to [Garcia],” and [his] “interest
in the anticipated suit is that he holds potential legal causes of action.” Garcia alleged
that the “substance of the information and testimony [he] expects to elicit from the
2
persons involves business records, and any and all information regarding the names of
employees who were working at the time of the incident, and any information pertaining
to the incident made the basis of this cause.” Garcia stated that the requested
depositions “may prevent a failure or delay of justice in an anticipated suit.” Garcia
further requested the court to order the persons with knowledge to produce documents
as follows:
1). The entire file regarding the policy number MP0153991, and the
policy number MP0153991;
2). The company procedure underwriting manual of [Reassure];
3). The life insurance policy belonging to [Garcia], referenced policy
number MP0153991; and
4). Detailed explanation of the cash value and face value that applies
to [Garcia’s] policy.
Reassure filed an objection to the petition in which it asserted, inter alia, that the
petition fails to comply with Texas Rule of Civil Procedure 202 because it fails to provide
any factual background or the reasons for the requested depositions and documents;
the significant burden and expense of the requested depositions outweigh any likely
benefits; there is no injustice or possible delay that would require the requested
depositions; the request for depositions is not reasonably tailored to include only
relevant matters; and its current underwriting policy is a confidential and proprietary
trade secret.
After a non-evidentiary hearing, the trial court granted the petition. The trial
court’s order provides in pertinent part as follows:
[T]his Court . . . finds: 1) that allowing the requested discovery may
prevent a failure or delay of justice in the anticipated suit, and/or; 2) that
the likely benefit of allowing [Garcia] to take the requested depositions to
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investigate a potential claim outweighs the burden or expense of the
procedure.
IT IS THEREFORE ORDERED that [Garcia] may take the
depositions by oral examinations of the person(s) with knowledge and that
they produce documents 30 days prior to the taking of the first scheduled
deposition.
IT IS ORDERED that the persons with knowledge regarding the
following subjects be deposed:
a. The entire file regarding the policy number MP0153991, and the
policy number MP0153991;
b. All aspects of the agreement between [Garcia] and [Reassure] and
the predecessor entities that consummated or owned the policy in
question, including but not limited to any negotiations leading up to
its execution, and the obligations of [Reassure] and the
predecessor entities that consummated or owned the policy in
question;
c. All aspects of [Reassure’s] (and the predecessor entities that
consummated the contract) policies, procedures, and manual that
existed at the time of the consummation of the policies at issue and
today;
d. Knowledge about the agreement also referred to as delivery agent
services agreement;
e. Knowledge about the sale of policy number MP0153391 to [Garcia];
f. Knowledge about the sale of policy number MP0153391 by the
predecessor entity that consummated the contract to [Reassure].
Note, this is knowledge about the sale on the secondary markets of
the policy in question;
g. Knowledge about the corporate structure of [Reassure] and the
predecessor entities that consumed [sic] or owned the policy in
question;
h. Knowledge about the mergers and acquisitions of the predecessor
entities in question and by [Reassure]; and
i. Knowledge about the liability [Reassure] incurred from its
predecessor entities that owned policy number MP0153991.
4
....
IT IS ORDERED that the following documents be produced 30 days
from the signing of this order:
a. The entire file regarding the policy number MP0153991, and the
policy number MP0153991;
b. All collateral agreements (contracts) to the agreement between
[Garcia] and [Reassure] and the predecessor entities that
consummated or owned the policy in question, including but not
limited to any negotiations leading up to its execution, evaluations
by risk management and the obligations of [Reassure] and the
predecessor entities that consummated or owned the policy in
question;
c. All [Reassure’s] (and the predecessor entities that consummated
the contract) policies, procedures, and manuals that existed at the
time of the consummation of the policies at issue and today with
respect to sales, underwriting and insured rights to access to their
policies and policy information;
d. The delivery agent services agreement;
e. The sales policy and procedural manual of policy number
MP0153391 to [Garcia];
f. The documents reflecting the sale of policy number MP0153391 by
the predecessor entity that consummated the contract to
[Reassure]. Note, these are documents about the sale on the
secondary markets of the policy in question;
g. Documents with regard to the corporate structure and the changes
of [Reassure] and the predecessor entities that consumed or
owned the policy in question;
h. Documents reflecting the mergers and acquisitions of the
predecessor entities in question and by [Reassure] . . . .
i. Documents reflecting the liability [Reassure] incurred from its
predecessor entities that owned policy number MP0153991. If
there is an Asset/Purchase agreement or similar document it must
be produced[; and]
j. The underwriting manuals of [Reassure] and the predecessor
entities that consummated the contract/policy in question.
5
This original proceeding ensued. By one issue, Reassure contends that the trial
court abused its discretion in granting the petition for presuit depositions. The Court
requested and received a response to the petition for writ of mandamus from Garcia,
and received a reply from Reassure.
II. STANDARD FOR MANDAMUS REVIEW
Mandamus relief is proper to correct a clear abuse of discretion when there is no
adequate remedy by appeal. In re Frank Motor Co., 361 S.W.3d 628, 630–31 (Tex.
2012) (orig. proceeding); In re Prudential Ins. Co. of Am., 148 S.W.3d 124, 135–36
(Tex. 2004) (orig. proceeding). “A trial court has no discretion in applying the law to the
facts or determining what the law is.” In re Prudential Ins. Co. of Am., 148 S.W.3d at
135. We assess the adequacy of an appellate remedy by balancing the benefits of
mandamus review against the detriments. In re State, 355 S.W.3d 611, 614–15 (Tex.
2011) (orig. proceeding); In re Team Rocket, L.P., 256 S.W.3d 257, 262 (Tex. 2008)
(orig. proceeding). In performing this balancing, we look at a number of factors
including whether mandamus review “will spare litigants and the public ‘the time and
money utterly wasted enduring eventual reversal of improperly conducted
proceedings.’” In re State, 355 S.W.3d at 615 (quoting In re Prudential Ins. Co. of Am.,
148 S.W.3d at 136).
An improper order under Rule 202 may be set aside by mandamus. In re Wolfe,
341 S.W.3d 932, 933 (Tex. 2011) (orig. proceeding); In re Jorden, 249 S.W.3d 416, 420
(Tex. 2008) (orig. proceeding); In re Emergency Consultants, Inc., 292 S.W.3d 78, 80
(Tex. App.—Houston [14th Dist.] 2007, orig. proceeding); In re Hewlett Packard, 212
6
S.W.3d 356, 360 (Tex. App.—Austin 2006, orig. proceeding)).3 In this regard, we note
that depositions, once taken, cannot be “untaken,” see In re Jorden, 249 S.W.3d at 419,
and mandamus has historically issued for discovery that is “well outside the proper
bounds.” In re Am. Optical Corp., 988 S.W.2d 711, 713 (Tex. 1998) (orig. proceeding);
see also In re Chernov, 399 S.W.3d 234, 235 (Tex. App.—San Antonio 2012, orig.
proceeding) (holding that a party to a Rule 202 proceeding has no adequate remedy by
appeal if the trial court abused its discretion in ordering discovery that would
compromise procedural or substantive rights)). We review the trial court’s order
granting the verified petition to take depositions before suit under an abuse of discretion
standard. Patton Boggs LLP v. Mosely, 394 S.W.3d 565, 568–69 (Tex. App.—Dallas
2011, no pet.); In re Hewlett Packard, 212 S.W.3d 356, 360 (Tex. App.—Austin 2006,
orig. proceeding [mand. denied]).
III. APPLICABLE LAW
Texas Rule of Civil Procedure 202 permits a person to petition the court for
authorization to take a deposition before suit is filed in two circumstances: (1) to
perpetuate or obtain the person’s own testimony or that of any other person for use in
an anticipated suit; or (2) to investigate a potential claim or suit. TEX. R. CIV. P.
202.1(a), (b). A Rule 202 petition must, in summary:
(1) be verified;
3
The Texas Supreme Court has explained that presuit deposition orders are appealable only if
sought from someone against whom suit is not anticipated. See In re Jorden, 249 S.W.3d 416, 419 (Tex.
2008) (orig. proceeding) (citing Ross Stores, Inc. v. Redken Labs., Inc., 810 S.W.2d 741, 742 (Tex.
1991)). In contrast, when presuit depositions are sought from an anticipated defendant, as in this case,
such orders have been considered ancillary to the subsequent suit, and thus are neither final nor
appealable. In re Jorden, 249 S.W.3d at 419 (citing Office Emp. Int’l Union Local 277 v. Sw. Drug Corp.,
391 S.W.2d 404, 406 (Tex. 1965)) (“The taking of depositions to perpetuate testimony is ancillary to the
anticipated suit.”); see also Cognata v. Down Hole Injection, Inc., 375 S.W.3d 370, 381–82 (Tex. App.—
Houston [14th Dist.] 2012, pet. denied) (“Mandamus is the proper vehicle to challenge a Rule 202 order
when the order seeks discovery from a party against whom suit is anticipated.”).
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(2) be filed in the proper court of any county where venue of an
anticipated suit may lie or where the witness resides, if no suit is
anticipated;
(3) be in the name of the petitioner;
(4) state either that the petitioner anticipates the institution of suit in
which the petitioner may be a party or that the petitioner seeks to
investigate a potential claim;
(5) state the subject matter of the anticipated action, if any, and the
petitioner’s interest therein;
(6) if suit is anticipated, state the names, addresses, and telephone
numbers of the persons petitioner expects to have interests
adverse to petitioner’s, or state that this information cannot be
ascertained through diligent inquiry and describe those persons;
(7) state the names, addresses, and telephone number of the persons
to be deposed, the substance of the expected testimony, and the
petitioner’s reasons for wanting the testimony; and
(8) request an order authorizing the petitioner to take the depositions of
the persons named in the petition.
See generally id. R. 202.2(a)–(h). The trial court “must” order the deposition to be taken
“if, but only if,” it finds that: (1) allowing the petitioner to take the requested deposition
may prevent a failure or delay of justice in an anticipated suit; or (2) the likely benefit of
allowing the petitioner to take the requested deposition to investigate a potential claim
outweighs the burden or expense of the procedure. Id. R. 202.4(a). The Texas
Supreme Court has expressly held that these findings may not be implied from support
in the record. In re Does, 337 S.W.3d 862, 865 (Tex. 2011) (orig. proceeding).
“Rule 202 depositions are not now and never have been intended for routine use.
There are practical as well as due process problems with demanding discovery from
someone before telling them what the issues are.” In re Jorden, 249 S.W.3d at 423.
8
Accordingly, courts must strictly limit and carefully supervise pre-suit discovery to
prevent abuse of the rule. In re Wolfe, 341 S.W.3d at 933. Rule 202 was not intended
as a means of obtaining otherwise unobtainable discovery. See id. (noting that
petitioner “cannot obtain by Rule 202 what it would be denied in the anticipated action”).
Rule 202 expressly limits the scope of discovery in depositions to “the same as if the
anticipated suit or potential claim had been filed.” Id. (citing TEX. R. CIV. P. 202.5). Rule
202, like all the rules of civil procedure, was fashioned by the Texas Supreme Court as
a means of “obtain[ing] a just, fair, equitable and impartial adjudication of the rights of
litigants under established principles of substantive law.” City of Dallas v. Dallas Black
Fire Fighters Ass’n, 353 S.W.3d 547, 554 (Tex. App.—Dallas 2011, no pet.) (citing TEX.
R. CIV. P. 1); see Combs v. Tex. Civil Rights Project, No. 03-11-00538-CV, 2013 WL
4820176, at *4 (Tex. App.—Austin Aug. 29, 2013, no pet.).
IV. ANALYSIS
As stated previously, Reassure contends that the petition fails to meet the
requirements of Rule 202.4 See generally TEX. R. CIV. P. 202.2. Reassure specifically
contends, inter alia, that the petition failed to identify the persons with interests adverse
to Garcia’s, failed to identify the substance of the testimony being sought, and failed to
give any reason for Garcia’s desire to obtain the documents and testimony. Rule 202
expressly requires the petition to state the “substance of the testimony that the
petitioner expects to elicit from each and the petitioner’s reasons for desiring to obtain
the testimony of each.” Id. R. 202.2(g).
4
Some of Reassure’s many contentions relate solely to those portions of Rule 202 that apply to
presuit depositions in which suit is anticipated, rather than those pertaining to the investigation of a
potential claim or suit. See, e.g., TEX. R. CIV. P. 202(f)(2). However, the petition and order in this case
expressly reference both rationales for presuit depositions because they expressly seek and order
depositions for use in an anticipated suit and to investigate a potential claim or suit.
9
The petition in this case states that the “subject matter of the anticipated suit is
with regard to the policy number MP0153991 belonging to [Garcia],” and that Garcia’s
“interest in the anticipated suit is that he holds potential legal causes of action.” Garcia
alleged that the “substance of the information and testimony [he] expects to elicit from
the persons involves business records, and any and all information regarding the names
of employees who were working at the time of the incident, and any information
pertaining to the incident made the basis of this cause.”
In examining Reassure’s contention that Garcia’s petition is insufficient, we are
mindful that Rule 202 does not require a petitioner to plead a specific cause of action;
instead, it requires only that the petitioner state the subject matter of the anticipated
action, if any, and the petitioner’s interest therein. See In re Emergency Consultants,
Inc., 292 S.W.3d 78, 79 (Tex. App.—Houston [14th Dist.] 2007, orig. proceeding)
(noting that requiring a Rule 202 petitioner to plead a viable claim “would eviscerate the
investigatory purpose of Rule 202 and essentially require one to file suit before
determining whether a claim exists” and would place “counsel in a quandary,
considering counsel’s ethical duty of candor to the court and the requirements of [rule
13]”); see also City of Houston v. U.S. Filter Wastewater Grp., Inc., 190 S.W.3d 242,
245 n.2 (Tex. App.—Houston [1st Dist.] 2006, no pet.) (“Rule 202 does not require a
petitioner to plead a specific cause of action.”). In other words, the nature of Rule 202
as an investigatory tool necessitates some breadth of pleading and dictates that we
liberally construe the petition.
We nevertheless agree with Reassure that Garcia’s petition does not comply with
the requirements of Rule 202. The petition only states that the depositions are sought
10
“for use in an anticipated suit in which [Garcia] may be a party,” the “subject matter of
the anticipated suit is with regard to the policy number MP0153991,” and Garcia’s
“interest in the anticipated suit is that he holds potential legal causes of action.” Garcia
alleged that the “substance of the information and testimony” expected “involves
business records, and any and all information regarding the names of employees who
were working at the time of the incident, and any information pertaining to the incident
made the basis of this cause.”
The petition does not otherwise describe the “incident made the basis of this
cause,” identify the date or dates that the “incident” occurred, the anticipated suit, or the
potential claim or suit. See TEX. R. CIV. P. 202.2. The petition does not name any
adverse parties or state that they cannot be identified through diligent inquiry. See id.
Further, the petition does not state why the depositions would prevent a failure or delay
of justice in an anticipated suit or why the likely benefit of the depositions outweighs
their burden or expense. See id.; R. 202.1, 202.4. In this regard, we note that the
scope of discovery is delineated by the subject matter of the anticipated action. See
TEX. R. CIV. P. 192.3(a); see also In re CSX Corp., 124 S.W.3d 149, 152 (Tex. 2003)
(orig. proceeding). A petition that merely tracks the language of Rule 202 in averring
the necessity of a presuit deposition, without including any explanatory facts regarding
the anticipated suit or the potential claim, is insufficient to meet the petitioner’s burden.
Cf. In re Does, 337 S.W.3d at 865 (concluding that Rule 202’s required findings cannot
be implied from support in the record and noting that the petitioner “made no effort to
present the trial court with a basis for the [Rule 202] findings. Not only are the
allegations in its petition and motion to compel sketchy, they mostly concern possible
11
causes of action by Klein, who is not a party to the proceeding.”). There is nothing in
Garcia’s petition which provides the trial court or Reassure with any facts regarding the
alleged “incident made the basis of this case” other than the bare identification of the
insurance policy at issue.
The arguments advanced by Garcia’s counsel at the hearing on the petition do
not further elucidate these matters. Counsel asserted that the suit involves Reassure’s
sale of a funeral policy and the “chain of custody” regarding the corporate structure and
responsibilities for the policy. Garcia’s counsel argued that Reassure “ha[d] done some
wrong not only to [Garcia] but to a whole litany of elderly people that [Reassure has]
taken advantage of.” Counsel asserted that the information sought was necessary to
“give us a foot inside of the door to all of the, you know, skeletons, knives and, you
know, pistols that they have inside of there.” The deficiencies in the petition were not
alleviated by any evidence adduced at the hearing on the petition. In the instant case,
Garcia did not offer his verified petition into evidence at the hearing and offered no
supporting evidence or testimony.5
As the petitioner, Garcia had the burden to show either that allowing him to take
the depositions would prevent a failure or delay of justice in an anticipated suit, or that
the likely benefit of allowing him to take the requested depositions to investigate a
potential claim or suit outweighs the burden or expense of the procedure. See In re
5
Given our holding, we need not address the evidentiary requirements for an order granting a
petition for presuit depositions. See, e.g., In re Hochheim Prairie Farm Mut. Ins. Ass'n, 115 S.W.3d 793,
796 (Tex. App.—Beaumont 2003, orig. proceeding) (“Given that the real parties in interest adduced no
evidence of imminent loss of the witnesses' testimony, the prejudice to the insurance company in having
to submit its employees for deposition far outweighs any benefit to the real parties in interest.”); see also
In re Contractor’s Supplies, Inc., No. 12-09-00231-CV, 2009 WL 2488374, at *5 (Tex. App.—Tyler Aug.
17, 2009, orig. proceeding) (mem. op.) (holding that the Rule 202 petition itself does not constitute
evidence for purposes of supporting the required findings).
12
Hewlett Packard, 212 S.W.3d at 363–64; In re Hochheim Prairie Farm Mut. Ins. Ass’n,
115 S.W.3d 793, 796 (Tex. App.—Beaumont 2003, orig. proceeding); see also In re
Contractor’s Supplies, Inc., No. 12-09-00231-CV, 2009 WL 2488374, at *5 (Tex. App.—
Tyler Aug. 17, 2009, orig. proceeding) (mem. op.); In re Campos, No. 02-07-00197-CV,
2007 WL 2013057, at *4 (Tex. App.—Fort Worth July 12, 2007, orig. proceeding [mand.
denied]) (mem. op. per curiam). To obtain an order authorizing presuit depositions, the
petitioner must make some effort to present the trial court with a basis for one of these
required findings. See In re Does, 337 S.W.3d at 865. As stated by the Texas
Supreme Court, the allegations in the petition must be more than “sketchy.” See id. We
conclude that Garcia’s petition in this case is insufficient to meet the requirements of
Rule 202.
We finally turn to Reassure’s ultimate complaint that the order at issue exceeds
the scope of permissible discovery. The rules of procedure provide that the scope of
discovery includes any unprivileged information that is relevant to the subject matter of
the action, even if it would be inadmissible at trial, as long as the information sought
appears “reasonably calculated to lead to the discovery of admissible evidence.” TEX.
R. CIV. P. 192.3(a); see also In re CSX Corp., 124 S.W.3d at 152. Information is
relevant if it tends to make the existence of a fact that is of consequence to the
determination of the action more or less probable than it would be without the
information. TEX. R. EVID. 401. The phrases “relevant to the subject matter” and
“reasonably calculated to lead to admissible evidence” are liberally construed to allow
litigants to obtain the fullest knowledge of the facts and issues prior to trial. Axelson v.
McIlhany, 798 S.W.2d 550, 553 (Tex. 1990) (orig. proceeding); In re Exmark Mfg. Co.,
13
Inc., 299 S.W.3d 519, 526 (Tex. App.—Corpus Christi 2009, orig. proceeding [mand.
dism’d]); see also TEX. R. CIV. P. 1.
Reassure contends, among other arguments, that the trial court’s order requires
discovery on subjects and documents that were not requested in the petition. For
instance, Garcia’s petition does not request discovery from persons knowledgeable
regarding Reassure’s predecessor entities, but the order requires the deposition of
persons knowledgeable regarding Reassure’s predecessor entities, including the
predecessors’ policies, procedures, and manuals, their corporate structure, their
mergers and acquisitions, and the liability they transferred to Reassure. Garcia’s
petition requests the production of four categories of documents; whereas the order
requires the production of ten categories of documents. We agree that a party cannot
be compelled to produce discovery that has not been requested. See In re Exmark Mfg.
Co., Inc., 299 S.W.3d at 531; In re Lowe’s Companies, Inc., 134 S.W.3d 876, 880 n.1
(Tex. App.—Houston [14th Dist.] 2004, orig. proceeding). Accordingly, the trial court
abused its discretion to the extent that it ordered the production of discovery that was
not requested.
Finally, Reassure contends that the requested discovery goes well beyond the
scope of permissible discovery and constitutes an impermissible fishing expedition.
While Reassure invites us to determine the appropriate scope of discovery in this
matter, we decline to do so. Given our holdings in this matter, any such analysis would
be unnecessary. See TEX. R. APP. P. 47.1. Moreover, the proper scope of discovery is
delineated by reference to the subject matter of the action, and we have already held
that Garcia’s petition insufficiently identified any “anticipated suit” or “potential claim or
14
suit,” and thus, any such inquiry would fail at the inception. See TEX. R. CIV. P.
192.3(a), 202.1, 202.4; see also In re CSX Corp., 124 S.W.3d at 152.
V. CONCLUSION
The trial court’s order of July 11, 2013 granting Garcia’s petition for presuit
depositions constituted an abuse of discretion because Garcia failed to meet the
requirements of Texas Rule of Civil Procedure 202. See TEX. R. APP. P. 202; In re
Hewlett Packard, 212 S.W.3d at 363–64. Moreover, Reassure lacks an adequate
remedy by appeal. See In re Wolfe, 341 S.W.3d at 933.
The Court, having examined and fully considered the petition for writ of
mandamus, the response, and the reply, is of the opinion that Reassure has met its
burden to obtain mandamus relief. See id. Accordingly, the stay previously imposed by
this Court is lifted. See TEX. R. APP. P. 52.10(b) (“Unless vacated or modified, an order
granting temporary relief is effective until the case is finally decided.”). We conditionally
grant Reassure’s petition for writ of mandamus. We are confident that the trial court will
withdraw its order. The writ will issue only if the trial court fails to comply with this
opinion.
NELDA V. RODRIGUEZ
Justice
Delivered and filed the 13th
day of November, 2013.
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