Affirmed and Opinion filed July 27, 2017.




                                        In The

                     Fourteenth Court of Appeals

                                NO. 14-16-00407-CV

                        CDI CORPORATION, Appellant
                                           V.

                  TOTAL SPECIALTIES USA, INC., Appellee

                     On Appeal from the 11th District Court
                             Harris County, Texas
                       Trial Court Cause No. 2015-64655

                                   OPINION
      This case involves a plaintiff’s failure to file a certificate of merit, as required
under Chapter 150 of the Texas Civil Practice and Remedies Code, in a case arising
at least in part out of the defendant’s provision of professional engineering services.
Appellant CDI Corporation (CDI) contends that the trial court abused its discretion
by denying its request for a dismissal of the case with prejudice when appellee
TOTAL Specialties USA, Inc. (TOTAL) stipulated that the reason it failed to file the
certificate is that TOTAL and its attorneys did not know that a certificate of merit
was required. TOTAL disagrees, and also asserts that this court lacks jurisdiction over
the appeal. Because we have jurisdiction over the appeal and the Supreme Court of
Texas’s recent opinion in Pedernal Energy, LLC v. Bruington Engineering, Ltd.
defeats CDI’s issue, we affirm.

                     FACTUAL AND PROCEDURAL BACKGROUND

      On October 28, 2015, TOTAL filed this lawsuit against CDI in the 11th District
Court in Harris County. TOTAL’s petition included claims for breach of contract,
negligence, gross negligence, and fraud related to the construction of TOTAL’s hydro
de-aromatization unit at TOTAL’s Bayport refinery in Pasadena, Texas.
      It is undisputed that TOTAL sought damages arising at least in part out of the
provision of professional engineering services by CDI. In such a case, section 150.002
of the Texas Civil Practice and Remedies Code requires that a certificate of merit be
filed contemporaneously with the petition. See Tex. Civ. Prac. & Rem. Code
§ 150.002(a). Because TOTAL did not file a certificate of merit contemporaneously with
its petition and the only exception to the statute’s general requirement did not apply, CDI
moved to dismiss TOTAL’s lawsuit on November 30, 2015. See id. § 150.002(c)
(providing good-cause exception if limitations period will expire within 10 days of
filing). In its motion, CDI specifically requested that TOTAL’s petition be dismissed
with prejudice. See id. § 150.002(e).
      The parties then engaged in a series of meetings over several months to discuss
the issues and exchange information in preparation for mediation. However, on March
28, 2016, TOTAL filed a notice of nonsuit and request for dismissal without prejudice.
In the notice of nonsuit, TOTAL explained that it intended to refile a similar case with a
certificate of merit, and attached the 36-page certificate of merit “to catalog CDI’s
pervasive and crippling engineering failures.” TOTAL filed a new lawsuit against CDI
in the 129th District Court of Harris County the next day.

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      On March 31, 2016, the 11th District Court signed an order dismissing TOTAL’s
claims without prejudice. The order recited that the trial court considered only TOTAL’s
notice of nonsuit and ordered the dismissal without prejudice “[p]ursuant to Texas Rule
of Civil Procedure 162.”
      After the dismissal of TOTAL’s petition without prejudice, CDI sought a hearing
on its motion to dismiss with prejudice. TOTAL filed a response to CDI’s motion to
dismiss, attaching another copy of the certificate of merit. CDI moved to strike
TOTAL’s certificate of merit and set both the motion to strike and its motion to dismiss
for hearing. In advance of the hearing, the parties stipulated to the following facts:
      (1) a Certificate of Merit was not filed with the Original Petition in Cause
      No. 2015-64655, TOTAL Specialties USA, Inc. v. CDI Corporation, in the
      11th District Court of Harris County, Texas;

      (2) CDI is a corporation in which registered professional engineers
      practice;
      (3) the Original Petition sought damages arising at least in part out of the
      provision of professional engineering services by CDI;

      (4) no Certificate of Merit had been prepared as of October 28, 2015, the
      date on which the Petition was filed; and
      (5) TOTAL and TOTAL’s attorneys (a) did not know as of October 28,
      2015, that a Certificate of Merit must be filed with a Petition seeking
      damages arising out of the provision of professional services by a
      corporation in which registered professional engineers practice, and (b)
      were not aware of the requirements in that regard under section 150.002 of
      the Texas Practice & Remedies Code.
At the conclusion of the hearing, the trial court ruled that the dismissal of TOTAL’s suit
would remain a dismissal without prejudice.
      On May 2, 2016, the trial court signed an order denying both CDI’s motion to
dismiss with prejudice and its motion to strike. The order noted that the case was
dismissed without prejudice on March 31, 2016. This appeal followed.

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                            APPELLATE JURISDICTION

      As an initial matter, TOTAL contends that this court lacks jurisdiction over
the appeal because CDI’s notice of appeal was untimely. TOTAL previously moved
to dismiss the appeal on this basis, but this court denied TOTAL’s motion without a
written order. Because Total reurges its complaint in its appellate briefing, we will
address it here.

      TOTAL argues that its notice of nonsuit and attached certificate of merit was
both a nonsuit of its claims and a response to CDI’s motion to dismiss with prejudice
that brought CDI’s motion to dismiss directly before the trial court. TOTAL points
out that its notice of nonsuit refers to CDI’s motion and attaches the certificate of
merit in response to the motion.

      According to TOTAL, when the trial court signed the March 31 order
nonsuiting TOTAL’s claims without prejudice, its ruling also implicitly denied
CDI’s motion to dismiss, making the March 31 order an immediately appealable
interlocutory order. See Tex. Civ. Prac. & Rem. Code § 150.002(f) (“An order
granting or denying a motion for dismissal [under this section] is immediately
appealable as an interlocutory order.”). In that case, CDI’s notice of appeal was due
April 20, 2016. See Tex. R. App. P. 26.1; 28.1(a)–(b). CDI did not file a notice of
appeal until May 16, 2016, when it appealed from the trial court’s final order of May
2, 2016. Therefore, TOTAL argues, this court lacks jurisdiction over CDI’s appeal.
See City of Houston v. Estate of Jones, 388 S.W.3d 663, 667 (Tex. 2012) (per
curiam) (holding that an interlocutory order not timely appealed is not reviewable
by an appellate court).

      We reject TOTAL’s argument that the March 31 order implicitly denied
CDI’s motion to dismiss. At the time of the nonsuit order, CDI’s motion to dismiss
with prejudice had not been set for hearing or submission and TOTAL had not yet
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filed a response. Further, TOTAL’s notice of nonsuit did not request denial of CDI’s
motion to dismiss with prejudice, and the trial court’s order makes no mention of
CDI’s motion to dismiss or section 150.002(e). CDI subsequently filed a notice of
hearing on its section 150.002(e) motion to dismiss on April 11; TOTAL filed a
response to the motion later that day. TOTAL’s response describes CDI’s motion as
a request for “death-penalty sanctions against TOTAL for an innocent mistake by its
lawyers”—the death-penalty sanction presumably being a dismissal with prejudice,
since that is the only relief requested in the motion. Thus, neither the record nor the
trial court’s March 31 order of nonsuit—in the form proposed by TOTAL—support
TOTAL’s contention on appeal that the trial court’s order also constituted a ruling
on CDI’s motion to dismiss with prejudice.

      The Supreme Court of Texas considered a case with similar procedural facts
as this one and concluded that the court of appeals had jurisdiction. See
CTL/Thompson Tex., LLC v. Starwood Homeowner’s Ass’n, Inc., 390 S.W.3d 299
(Tex. 2013) (per curiam). In that case, Starwood sued CTL for providing substandard
engineering services and attached a certificate of merit to its petition. Id. at 300. CTL
filed a motion to dismiss with prejudice under section 150.002(e), alleging the
certificate of merit was deficient. The trial court denied the motion. CTL filed an
interlocutory appeal. Before the appeal could be decided, however, Starwood
nonsuited its claims against CTL. The court of appeals held the nonsuit mooted the
appeal and dismissed the appeal for lack of jurisdiction. See id.

      On review, the supreme court explained that while a plaintiff has an absolute
right to nonsuit a claim before resting its case-in-chief, a nonsuit “shall not prejudice
the right of an adverse party to be heard on a pending claim for affirmative relief.”
Id. (quoting Tex. R. Civ. P. 162). The court noted that a motion for sanctions is a
claim for affirmative relief that survives nonsuit “if the nonsuit would defeat the

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purpose of sanctions.” Id. (citing Aetna Cas. & Sur. Co. v. Specia, 849 S.W.2d 805,
806–07 (Tex. 1993)). The court concluded that a dismissal with prejudice under
section 150.002(e) is such a sanction, because the statute’s purpose is “to deter
meritless claims and bring them quickly to an end.” Id at 301. The court thus held
that Starwood’s nonsuit did not moot CTL’s appeal. Id.

      As in Starwood, CDI’s motion to dismiss with prejudice under section
150.002(e) was a request for a sanction that survived TOTAL’s nonsuit. See id.
Because the trial court did not rule on CDI’s motion to dismiss with prejudice until
May 2, CDI’s notice of appeal was timely and this court has jurisdiction over the
appeal.

                             ANALYSIS OF CDI’S ISSUE

      In a single issue, CDI contends that the trial court abused its discretion by
dismissing TOTAL’s claims without prejudice when TOTAL did not file a
certificate of merit with its original petition as required by Chapter 150 of the Texas
Civil Practice and Remedies Code. “A court abuses its discretion if its decision is
arbitrary, unreasonable, or without reference to guiding principles.” In re Gen. Elec.
Co., 271 S.W.3d 681, 685 (Tex. 2008) (orig. proceeding).

      A plaintiff asserting a claim for damages arising out of the provision of
professional services by a licensed professional engineer or any firm in which a
licensed professional engineer practices must file with its “complaint” a statutorily
compliant affidavit by an expert knowledgeable in the defendant’s area of practice,
known as a certificate of merit. See Tex. Civ. Prac. & Rem. Code § 150.002(a);
id. § 150.001(1-a). The plaintiff’s failure to file the certificate of merit as required
“shall result in dismissal of the complaint against the defendant.” Id. § 150.002(e)
(emphasis added). The dismissal “may be with prejudice.” Id. (emphasis added).


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      CDI first contends that when, as here, the plaintiff does not file a required
certificate of merit with the original petition, section 150.002(e) requires dismissal
of the petition with prejudice. Recently, however, the Supreme Court of Texas
rejected arguments similar to those CDI makes in support of its position, holding
that “the statute affords trial courts discretion to dismiss either with or without
prejudice,” even when a party fails to file an affidavit with the first-filed complaint.
See Pedernal Energy, L.L.C. v. Bruington Eng’g, Ltd., ___ S.W.3d ___, No. 15-
0123, 2017 WL 1737920, at *1, *6 (Tex. Apr. 28, 2017). Therefore, the mere fact
that TOTAL did not file the required certificate of merit with its original pleading
does not, without more, require dismissal with prejudice. See id. at *6 (explaining
that the plaintiff’s “failure to file an expert affidavit with its original petition was
not, by itself, evidence that the allegations in its petition lacked merit or mandated
the sanction of dismissal with prejudice”).

      CDI also contends that even if the trial court had discretion to dismiss with or
without prejudice under section 150.002(e) (as Pedernal now holds), the trial court
had no discretion to order dismissal without prejudice given TOTAL’s
acknowledgement that it failed to file a certificate of merit because it did not know
that one must be filed in its case and was not aware of the requirements of section
150.002. CDI argues that the trial court did not meaningfully exercise its discretion,
but merely stated that its reason for denying the motion was its concern about the
potential consequences for TOTAL’s lawyer.

      As Pedernal recognizes, the language of section 150.002 provides no guiding
rules or principles for a trial court’s exercise of discretion. Id. (citing Starwood, 390
S.W.3d at 301). Drawing on the section’s title (“Certificate of Merit”) and the court’s
earlier consideration of the Legislature’s intent in enacting section 150.002, the court
concluded that the Legislature enacted the statute “to deter meritless claims and

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bring them quickly to an end.” Id. (quoting Starwood, 390 S.W.3d at 301). Pedernal
instructs that, in light of the statutory language and its purpose, courts must consider
various factors, taking into account the facts and circumstances of the particular case,
when reviewing the trial court’s exercise of its discretion. Id.; see also
CTL/Thompson Tex., LLC v. Starwood Homeowner’s Ass’n, Inc., 461 S.W.3d 627,
631 (Tex. App.—Fort Worth 2015, pet. denied) (“[W]e agree with [the plaintiff] that
the statutory provision giving trial courts discretion to dismiss without prejudice
reflects the legislature’s intent to allow trial courts to determine when a plaintiff
should be given a second opportunity to comply with the statute.” (quoting TIC N.
Cent. Dall. 3, L.L.C. v. Envirobusiness, Inc., 463 S.W.3d 71, 77 (Tex. App.—Dallas
2014, pet. denied))).

      In this case, CDI stipulated that TOTAL’s counsel was unaware of the
statutory requirements of section 150.002 or its applicability to the case when it filed
the petition, thus conceding that TOTAL’s conduct was not intentional or for an
improper purpose. A certificate of merit was obtained and filed with TOTAL’s
notice of nonsuit within four months after CDI’s motion to dismiss notified
TOTAL’s counsel of the mistake. TOTAL’s notice of nonsuit attached the 36-page
certificate of merit and indicated that TOTAL intended to refile its lawsuit to remedy
the mistake, which is some evidence that the claims have merit. The trial court
denied CDI’s motion to strike the certificate of merit, and CDI has not challenged
that ruling on appeal. Considering the facts and circumstances of this case, we
conclude that the trial court did not abuse its discretion in denying CDI’s motion to
dismiss without prejudice. See Pedernal, 2017 WL 1737920, *6.




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                                  CONCLUSION

      We overrule CDI’s issue and affirm the trial court’s judgment.




                                     /s/       Ken Wise
                                               Justice



Panel consists of Chief Justice Frost and Justices Donovan and Wise.




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