Opinion
No. 01-09-00758-CV
Opinion issued April 7, 2011.
On Appeal from the County Court at Law No. 1 Probate Court, Brazoria County, Texas, Trial Court Case No. 26,222.
Panel consists of Justices JENNINGS, HIGLEY, and BROWN.
MEMORANDUM OPINION
This appeal arises from an ongoing dispute between two brothers, Marvin Harry Dace, Jr., ("Harry") and Tommy Dace ("Tommy"), over the estate of their deceased father, Marvin Harry Dace, Sr. ("Marvin"). On July 31, 2008, this Court issued its opinion in an earlier appeal involving the brothers and also arising from the dispute over their father's estate.
See Dace. v. Dace, No. 01-05-00832-CV, 2008 WL 2930092 (Tex. App.-Houston [1st Dist.] July 31, 2008, pet. denied) (mem. op.).
The current appeal arises from a second action brought by Tommy as independent executor of Marvin's estate against Harry. In the second action, Harry filed a motion for summary judgment based on the affirmative defenses of res judicata and collateral estoppel. The trial court granted Harry's motion. Here, Tommy, as appellant, raises two issues challenging the trial court's order granting summary judgment in Harry's favor.
We affirm.
Background
For purposes of developing the background, we take judicial notice of our memorandum opinion in Dace v. Dace, No. 01-05-00832-CV, 2008 WL 2930092 (Tex. App.-Houston [1st Dist.] July 31, 2008, pet. denied) (mem. op.). The memorandum opinion is also contained in the record of this appeal. In addition, a more detailed discussion of the background facts underlying the dispute can be found in that opinion.
Following the deaths of Ernestine and Marvin Dace, Tommy, as independent executor of Marvin's estate, pursued a lawsuit against Harry that had originally been filed by Marvin and Ernestine against their son, Harry. See Dace v. Dace, No. 01-05-00832-CV, 2008 WL 2930092, at *1-2 (Tex. App.-Houston [1st Dist.] July 31, 2008, pet. denied) (mem. op.). Initially, Tommy alleged, as his parents had earlier claimed, that Harry had orally agreed to pay his parents 50 per cent of the net proceeds earned from the family business, Dace Manufacturing, a business started by Marvin and which, by the time of the suit, Harry was operating. See id. at *1.
Tommy alleged that Harry had agreed to pay the proceeds in exchange for renting the equipment and the property used to run the business. See id. In other words, Tommy alleged that Harry had a lease agreement with Marvin and Ernestine with regard to operating the business. See id. Tommy also pursued a challenge originally brought by his parents to the validity of a deed transferring his parents' homestead to Harry. See id. Tommy, as independent executor, also challenged the validity of Marvin's last will and testament.
When the case went to trial, Tommy requested a trial amendment with regard to his breach-of-contract claim. See id. at *2. Specifically, Tommy changed his claim to assert that Harry had breached a written contract, rather than an oral one as pled, with Ernestine and Marvin, and that the contract had been for the purchase, rather than lease, of the business. See id.
At the conclusion of trial, the jury found the following: (1) Ernestine and Marvin had entered into a written agreement with Harry for the sale of the family business, Dace Manufacturing; (2) Harry intended to bind himself to an agreement with Ernestine and Marvin that included the following term: "The parties agreed to a 50/50 split of the net profits from the business to be paid on a yearly basis, with 50% net profit to Marvin H. Dace, Sr. and Ernestine Dace;" (3) Harry breached that agreement; and (4) Harry's breach resulted in $246,058.50 in damages. See id. Tommy also prevailed with regard to his challenges to the validity of Marvin's last will and testament and with regard to the validity of the deed transferring his parents' homestead to Harry.
On July 7, 2005, the trial signed a judgment on the jury's findings. See id. With regard to Tommy's breach of contract claim, the trial court ordered as follows: "Tommy Dace, Independent Executor of the Estate of Marvin H. Dace, Sr., Deceased, shall have and recover from Marvin Harry Dace, Jr., the sum of Two Hundred Forty Eight Thousand Fifty Eight and 50/100's Dollars ($248,058.50) as damages herein, together with prejudgment interest of $55,008.65." See id. The trial court also awarded attorney's fees to Tommy in the amount of $34,000.00.
Harry filed an appeal in which he challenged, inter alia, the legal sufficiency of the evidence to support the jury's findings that he had entered into a written contract with his parents for the sale of the business and that, as part of the agreement, Harry agreed "to a 50/50 split of the net profits from the business to be paid on a yearly basis" to his parents. See id.
In our July 31, 2008 opinion, we agreed with Harry. We analyzed the evidence as follows:
No written contract between Harry and his parents was offered at trial. Instead, to establish the existence of a written contract, Tommy testified that, in 1993, Marvin showed him a handwritten contract drafted by Marvin and signed by Harry. Tommy testified that, under the terms of the written contract, Harry agreed to pay his parents 50 percent of the business's net profits. Tommy also testified that the written agreement was a lease agreement between Harry and his parents. Tommy did not testify that he saw a written agreement regarding the sale of the business to Harry. While some evidence was presented at trial indicating that Harry had purchased the business from his parents, rather than leasing it, no evidence was presented that Harry had entered into a written contract with his parents for the purchase of the business. To the contrary, Tommy testified that the written contract he saw was a rental agreement between Harry and his parents.
Id. at *3.
We concluded that legally insufficient evidence supported the jury's finding that Harry had entered into a written agreement with his parents to purchase Dace Manufacturing. See id. We held that Tommy, as independent executor of Marvin's estate, should take nothing by his breach-of-contract claim against Harry. See id. We reversed the portions of the judgment awarding $248,058.50 in damages, $55,008.65 in prejudgment interest, and $34,000 in attorney's fees against Harry and rendered judgment that Tommy, as independent executor of Marvin's estate, take nothing by the breach-of-contract claim. See id. at *8. After overruling the other dispositive issues raised by Harry, we affirmed the remaining portions of the trial court's judgment. See id.
Harry filed a petition for review with the Texas Supreme Court, which the court denied on January 9, 2009. We issued our mandate on April 14, 2009.
In his capacity as independent executor of Marvin's estate, Tommy filed a "Motion for Accounting," which was in essence a new suit against Harry. Tommy alleged that, since Marvin's death in 2002, Harry "has been in possession of certain property belonging to the estate under a lease agreement between [Harry] and [Marvin]." Tommy further asserts, "The property leased is the business, equipment, and inventory of Dace Manufacturing. The agreed-upon lease amount was to be the sum of 1/2 of the net profit of the business to the lessee, [Harry], and 1/2 to the Decedent, Marvin Harry Dace, Sr."
We recognize that there can be but one judgment in a cause, but we regard the assignment of the number of a completed cause to a new dispute as an administrative error insignificant to the disposition of the merits. Burns v. Bishop, 48 S.W.3d 459, 461 n. 1 (Tex. App.-Houston [14th Dist.] 2001, no pet.). Moreover, as discussed infra, this dispute involves a claim to monies held in the registry of the trial court. A court retains jurisdiction to disburse money held in its registry. See Kenseth v. Dallas County, 126 S.W.3d 584, 598 Tex. App.-Dallas 2004, pet. denied); see also In re Phillips, 296 S.W.3d 682, 685 (Tex. App.-El Paso, 2009 orig. proceeding). Similarly, post-judgment orders embodying awards to claimants or enforcing the court's judgment itself are appealable orders; they function like judgments. Kenseth, 126 S.W.3d at 600.
Tommy averred that, "[p]rior to the death of [Marvin], there was a default in the lease payments. . . ." Tommy asserted that the balance due for the period preceding Marvin's death is $636,696.86. He further alleged that "since the date of [Marvin's] death[,] it is the belief of [Tommy] that an additional amount is owed to the Estate up to and including December 31, 2008." Tommy estimated that the amount owed for the period after Marvin's death under the lease agreement was $654,047.60. Tommy asserted that the "grand total" owed by Harry for both time periods under the lease was $1,290,744.46.
Tommy requested "an accounting of all money received by Dace Manufacturing from the year 2004 until 2008." Tommy also requested that Harry be required to pay the sums owed under the agreement. Tommy further laid claim to monies Harry had paid into the registry of the court relating to the earlier July 7, 2005 judgment and which remained in the registry of the trial court.
Harry filed a motion for summary judgment based on the affirmative defenses of res judicata and collateral estoppel. With respect to res judicata, Harry asserted the following in support of his request for summary judgment: "Tommy's second action . . . is not just what could have been litigated in the first action. It is exactly what was pled, litigated, merged in the judgment in the first action and involves the same parties."
As summary judgment evidence, Harry offered (1) Tommy's earlier petitions, in which Tommy had asserted that Harry had breached a lease agreement with their parents, (2) the jury charge and verdict in the first action, the trial court's July 7, 2005 judgment, (3) this Court's July 31, 2008 memorandum opinion, and (4) our mandate. Harry also requested that the trial court release the funds that he had previously deposited into the court's registry.
In his response to the motion for summary judgment, Tommy asserted, "Res judicata cannot bar litigation of a claim in Suit 2 that arose after Suit 1." He contended, "Tommy's claims for accounting for the years 2005-2009 could not — obviously — have been raised in the trial in Suit 1 which ended in . . . mid-2005." Tommy further asserted that the claims in each action were not "identical" because Tommy's "current claims for an accounting involve the lease years 2005, 2006, 2007, 2008, and 2009, they are identical — and could not be identical — with issues raised in Suit 1, which ended in a unanimous Jury Verdict and Judgment in Tommy's favor in mid-2005."
The trial court granted Harry's motion for summary judgment without identifying the basis for its ruling. The court also ruled that the money in the registry of the court should be returned to Harry. Tommy now appeals the trial court's summary judgment.
Summary Judgment
Tommy contends in two issues that the trial court erred when it granted Harry's motion for summary judgment.
A. Legal Principles: Traditional Summary Judgment
We review a trial court's summary judgment de novo. Provident Life Accident Ins. Co. v. Knott, 128 S.W.3d 211, 215 (Tex. 2003). A party moving for "traditional" summary judgment must prove (1) there is no genuine issue as to any material fact and (2) it is entitled to judgment as a matter of law. See TEX. R. CIV. P. 166a(c); Little v. Texas Dep't of Criminal Justice, 148 S.W.3d 374, 381 (Tex. 2004). In our review, we take the nonmovant's competent evidence as true, indulge every reasonable inference in favor of the nonmovant, and resolve all doubts in favor of the nonmovant. Yancy v. United Surgical Partners Int'l, Inc., 236 S.W.3d 778, 782 (Tex. 2007).
A defendant seeking summary judgment based on an affirmative defense must establish all elements of the affirmative defense as a matter of law. Roark v. Stallworth Oil Gas, Inc., 813 S.W.2d 492, 495 (Tex. 1991). Res judicata is an affirmative defense. See TEX. R. CIV. P. 94. If the movant conclusively establishes that the action is barred by res judicata, the non-movant must then adduce summary-judgment proof raising a fact issue in avoidance of that affirmative defense. See Motient Corp. v. Dondero, 269 S.W.3d 78, 82 (Tex. App.-Dallas 2008, no pet.); see also KPMG Peat Marwick v. Harrison County Hous. Fin. Corp., 988 S.W.2d 746, 748 (Tex. 1999). When, as here, the trial court's order granting summary judgment does not specify the grounds on which it was granted, we will affirm the judgment if any of the theories advanced are meritorious. See Knott, 128 S.W.3d at 216.
B. Tommy's Claim is Barred by Res Judicata
Legal Principles of Res Judicata
Essentially, the doctrine of res judicata gives a plaintiff one bite at the cause-of-action apple. Weiman v. Addicks-Fairbanks Road Sand Co., 846 S.W.2d 414, 418 (Tex. App.-Houston [14th Dist.] 1992, writ denied). The doctrine of res judicata prevents the relitigation of a claim or cause of action that has been finally adjudicated, as well as related matters that, with the use of diligence, should have been litigated in the prior suit. Kizer v. Meyer, Lytton, Alen Whitaker, Inc., 228 S.W.3d 384, 391 (Tex. App.-Dallas 2007, no pet.). The doctrine effectively requires that all theories of liability be brought in one suit. Id. The policies behind the doctrine reflect the need to bring all litigation to an end, prevent vexatious litigation, maintain stability of court decisions, promote judicial economy, and prevent double recovery. Id.
To be entitled to summary judgment on the affirmative defense of res judicata, the movant must establish (1) a prior final judgment on the merits by a court of competent jurisdiction; (2) the same parties or those in privity with them; and (3) a second action based on the same claims as were raised or could have been raised in the first action. Travelers Ins. Co. v. Joachim, 315 S.W.3d 860, 862 (Tex. 2010); Amstadt v. U.S. Brass Corp., 919 S.W.2d 644, 652 (Tex. 1996). "The judgment in the first suit precludes a second action by the parties and their privies on matters actually litigated and on causes of action or defenses arising out of the same subject matter that might have been litigated in the first suit." Joachim, 315 S.W.3d at 862 (quoting Gracia v. RC Cola-7-Up Bottling Co., 667 S.W.2d 517, 519 (Tex. 1984)). In short, the doctrine of res judicata bars the relitigation of claims that have been finally adjudicated or that could have been litigated in the prior action. See Igal v. Brightstar Info. Tech. Group, Inc., 250 S.W.3d 78, 86 (Tex. 2008).
When there is a legal relationship, such as under a lease, a contract, or a marriage, all claims arising from that relationship will arise from the same subject matter and be subject to res judicata. See Pinebrook Props., Ltd. v. Brookhaven Lake Prop. Owners Ass'n, 77 S.W.3d 487, 497 (Tex. App.-Texarkana 2002, pet. denied). Claims in a business relationship should be combined when they involve common core facts. Id. When the same facts are involved, two trials should be avoided by combining all of the matter existing between the parties into one suit. See Twyman v. Twyman, 855 S.W.2d 619, 625 (Tex. 1993).
Analysis
The summary judgment evidence presented by Harry conclusively established each of the elements of the affirmative defense of res judicata. The third amended petition filed in the first action by Tommy is contained in the summary judgment record and conclusively establishes that the parties in the two actions are identical: Tommy, as independent executor of Marvin's estate, and Harry. See Parsons v. Turley, No. 02-09-00381-CV, 2010 WL 5187704, at *2 (Tex. App.-Fort Worth Dec. 23, 2010, no pet.) (mem. op.).
The judgment signed by the trial court on July 7, 2005 and our opinion and mandate from the earlier action are contained in the summary judgment record. Thus, the fact that a final judgment on the merits was rendered by a court of competent jurisdiction in the prior action is conclusively established. See id.
Finally, a comparison of Tommy's current pleading with his third amended petition in the first action shows that Tommy seeks to recover damages based on the same operative core facts involved in the first action. In his third amended petition, Tommy sued Harry for "an accounting and damages" asserting that Harry had entered into a lease agreement with his parents in which Harry had "agreed to pay [his parents] 50% of the net proceeds from the operation of the business as rental for the property and business." The record shows that Tommy ultimately abandoned this claim at trial and instead asserted that Harry had an agreement with his parents to purchase Dace Manufacturing. Tommy continued to assert that Harry had agreed to "a 50/50 split of the net profits from the business to be paid on a yearly basis, with 50% of the net profits to Harry Dace and 50% net profit to Marvin H. Dace and Ernestine Dace," as shown in the jury charge from the first action.
The record shows that Tommy is now asserting the same claim that he pled and then abandoned in the first action. Specifically, Tommy is seeking to litigate the issue of whether Harry had a lease agreement with his parents and had agreed to pay his parents 50 percent of the business's net profits. Tommy could have litigated this claim in the first action. Indeed, Tommy testified at trial that his parents had a lease agreement with Harry. Nonetheless, at trial, Tommy chose to abandon this theory of recovery. Tommy instead pursued a breach of contract claim against Harry on the theory that Harry had agreed to a 50/50 split of the net profits based on an agreement to purchase the business rather than an agreement to lease it. Tommy chose to pursue his breach of contract claim to final judgment in the first action based on the alternate agreement-to-purchase theory. This theory arises from the same operative, core facts as his current claim. Thus, Harry has conclusively shown the judgment in the first action precludes the second action. Tommy's claim in the second action arises out of the same subject matter as the claim actually litigated in the first action and could have been litigated in the first suit. See Barr v. Resolution Trust Corp., 837 S.W.2d 627, 630 (Tex. 1992).
We reject Tommy's assertion that his current claim for an accounting under the lease agreement for the years 2005 through 2008 could not have been litigated in the first action. Tommy contends that his claim for an accounting arose in the second action only after judgment was rendered in the first action. He asserts that his claim for an accounting under the lease agreement for the years 2005 through 2008 was not "mature" when the judgment was rendered in the first action. Tommy also asserts, "Suit 1 revolved around an alleged `contract for sale of the business to Harry' and ended in Judgment signed 7/7/05, whereas Suit 2 revolve[s] around a request for an `accounting' for Lease years that arose after the 7/7/05 judgment (i.e., 2005 through 12/31/08)."
Tommy points to the legal precept that a judgment in one suit will not operate as res judicata to a subsequent suit on the same question between the same parties when, in the interval, the facts have changed, or new facts have occurred which may alter the legal rights or relations of the parties. See Marino v. State Farm Fire Cas. Ins. Co., 787 S.W.2d 948, 949-50 (Tex. 1990). However, a claim that a plaintiff has incurred additional damages arising from the same operative facts underlying the first action because of the passage of time is not the same as asserting a claim based on new facts occurring after final judgment was rendered in the first action. There has been no allegation that facts underlying Tommy's present claim are based on facts that have changed or arisen since the rendition of final judgment in the first action. To the contrary, the accounting claim in this case, for the years 2005-2008, arises from the same core facts and issues underlying the breach-of-contract claim in the first action, namely, the issue of whether Marvin and Ernestine had an agreement with Harry to split the net profits of Dace Manufacturing.
Moreover, Tommy's assertion that res judicata does not apply because he is seeking an accounting in the second action rather than seeking damages as he did in the first action is without merit. Again, the question is not whether the same remedy is sought; it is whether the claim being asserted arises out of the same subject matter and could have been litigated in the first action. See Joachim, 315 S.W.3d at 862. As discussed, here, the answer to that question is yes.
Tommy also asserts that this Court, in its July 31, 2008 opinion, "determined" that Harry had a lease agreement with his parents. In support of this assertion, Tommy points to the sufficiency-of-the evidence analysis in our opinion in which we stated that Tommy testified that he saw a lease agreement between Harry and his parents. See Dace, 2008 WL 2930092, at *3. Contrary to Tommy's assertion, we made no "determination" that Harry had a lease agreement with his parents. In the portion of our opinion cited by Tommy, we were discussing the evidence submitted at trial as part of our determination that Tommy had offered legally insufficient evidence to support the jury's breach-of-contract finding. See id. As the Texas Supreme Court has explained, a court of appeals cannot make original findings of fact; it can only "unfind" facts. Tex. Nat'l Bank v. Karnes, 717 S.W.2d 901, 903 (Tex. 1986).
Lastly, we address Tommy's contention that Harry did not meet his summary-judgment burden to conclusively establish that res judicata precludes Tommy's second action because Harry failed to establish that he owns the family business, Dace Manufacturing. Aside from the bare assertion, Tommy does not show why Harry had to show that he owned the business to establish the elements of res judicata.
We conclude that Harry's summary judgment evidence presented to the trial court conclusively established every element of the affirmative defense of res judicata. After Harry met his summary-judgment burden, Tommy, as non-movant, failed to meet his burden to adduce summary-judgment evidence raising a fact issue in avoidance of res judicata. We hold that the trial court did not err by granting summary judgment for Harry based on res judicata.
We need not determine whether Harry was entitled to summary judgment based on the defense of collateral estoppel.
We overrule Tommy's two issues.
Conclusion
We affirm the judgment of the trial court.