Commercial Litigation Firm News

SettlePou Associate Takes Leave for Federal Judicial Clerkship

Kristina Kiik, a member of SettlePou’s Commercial Litigation Section, is on leave until September 2012.  She is serving as a judicial law clerk for the Honorable W. Royal Furgeson, Jr., Senior District Judge, U.S. District Court for the Northern District of Texas, Dallas division.

Kristina attended Southern Methodist University for both her undergraduate and legal education. She received a B.A. in Political Science, International Studies, and Public Policy in 2006, and was a 2010 cum laude law school graduate.  She was also the Casenote and Comment Editor for the SMU Law Review and a member of the Phi Delta Phi legal fraternity.

While federal law clerks have no statutorily defined duties, they regularly conduct legal research, prepare bench memoranda, draft orders and opinions, and confer with the judge on rulings.

Kristina looks forward to returning to SettlePou upon the completion of her clerkship.

Commercial Litigation Firm News

Surface Water: Valuable Resource or Common Enemy?

Water flowing throughout Texas in defined watercourses such as rivers, lakes, and streams belongs to the state. However, much of the water in Texas is surface water that has yet to reach a clearly defined watercourse, and instead flows over and around private property, much to the delight or chagrin of private landowners.

When it comes to commercial or residential property, surface water is never a good thing, and landowners will do almost anything to get rid of it – including sending it next door. This can not only create a strain on neighbor relations, but can wreak havoc on anything from landscaping and signage to foundations and property values.

There are two competing legal theories on the diversion of surface water in the United States: Natural Flow and Common Enemy. The natural flow approach has its roots in the idea that water is a valuable resource, and that each landowner should be entitled to rely on the natural flow of water. Actions taken to divert the natural flow of water subject the diverter to liability for potential damages caused by any such diversion.

The common enemy approach, however, regards surface water as the common enemy of all landowners, and as such, entitles landowners to take any measures necessary to impound or divert water away from their property, including diverting water onto neighboring parcels of land.

In Texas, as in most Western states, the law of the land is natural flow. The Texas Legislature officially adopted this approach when it enacted Section 11.086 of the Texas Water Code. Section 11.086 prohibits a landowner from diverting or impounding the natural flow of surface water in a manner that damages the property of another. This section also provides a private cause of action for any landowner whose property has been damaged by an unlawful diversion or impoundment.

Unlawful diversion under Section 11.086 can result in either temporary or permanent harm to a landowner’s property. Where the harm is temporary; i.e. sporadic and contingent on some irregular force such as rain, the appropriate remedy is an injunction against the person causing the diversion or monetary damages equal to the cost of repairs for anything damaged by the diversion. However, where the diversion causes permanent harm to property, the measure of damages is the difference between the fair market value of the property without the harm and the fair market value of the property as it exists with the harm.

Section 11.086 has largely replaced the common law causes of action for the diversion of water such as nuisance and trespass to real property. This is due to the fact that these common law causes of action require a showing of culpability on the part of the person causing the diversion. For nuisance, a plaintiff has to prove that the diversion was caused negligently, while for trespass, a plaintiff has to prove that the diversion was intentional. Section 11.086 can be utilized in the absence of any such showing of culpability. As such, Section 11.086 represents the most attractive cause of action for a party aggrieved by an unlawful diversion of water.

By J. Allen Smith and Braden M. Wayne

Commercial Litigation

High Standard to Plead, Low Standard to Grant Leave: Ashcroft v. Iqbal’s Limited Impact

In 2009, the U.S. Supreme Court in Ashcroft v. Iqbal adopted a new standard for pleading a cause of action in federal court. The two-step inquiry first identifies allegations that are mere conclusions in order to disregard them. Courts then determine whether the remaining non-conclusory allegations, accepted as true, plausibly suggest an entitlement to relief.

At first blush, the plausibility prong appears to hold plaintiffs to a heightened pleading standard: in order to survive a motion to dismiss, a plaintiff must plead sufficient factual allegations not just to show that it is “possible” that he is entitled to relief, but further that it is “plausible.”

Yet a recent study by the Judicial Conference Committee on Rules of Practice and Procedure reveals that since Iqbal, there has been no dramatic change in the pleading standard. On the contrary, dismissals have increased only slightly, lower courts are eager to grant leave to amend, and it’s impossible to tell how many of the initially dismissed cases were reinstated following a second (and even third) chance at stating a “plausible” claim.

Impact on Pleadings

As noted by Judge Mark Kravitz, Chair of the Judicial Conference, Iqbal has not proven to be “a blockbuster that gets rid of any case that is filed.” In fact, even under Iqbal, courts have denied motions to dismiss in a wide range of cases from civil rights to commercial litigation, and even claims involving government actions taken to defend the nation against terrorism.

Part of the reason behind this result is that Iqbal simply reaffirmed the importance of notice pleading. In other words, any assertion without some factual allegation would have been unlikely to satisfy Fed. R. Civ. P. 8(a)(2)’s “short and plain statement” standard anyway. It should come as no surprise then that Iqbal has become one of the most cited Supreme Court decisions of all time. The case essentially clarified well-settled law.

Another reason for Iqbal’s limited impact is how lower courts have responded to it. Rather than dismissing a complaint outright, it is now four times more likely that a court will allow a plaintiff to cure his defective pleading by amending it. In one instance, a district judge granted the plaintiff leave to amend his complaint three times, even though he had already dismissed it two times before. Consequently, even if the Supreme Court did raise the bar on the plaintiff’s pleading standard, lower courts have been reluctant to hold them hostage to it.


Ashcroft v. Iqbalcertainly had the potential to arm defense attorneys with a more effective tool against unmeritorious claims prior to the summary judgment stage. But lower courts’ quick resort to a liberal standard for granting leave to amend a complaint has limited the case’s impact.

Nevertheless, defendants should generally consider an Iqbal motion. Courts may use them to narrow the scope of the case, even if they do not dismiss entire claims. Or they may repeatedly grant leave to amend until the plaintiff can meet the plausibility standard. And this, in turn, may place a burden on the plaintiff equal to the one attempted by the Supreme Court.

By:   J. Allen Smith with significant contribution to this article by Kristina A. Kiik.