Shore Chan Depumpo LLP v. Thrasher

Dallas Court of Appeals, No. 05-14-0697-CV (January 13, 2016)

Justices Fillmore, Stoddart (Opinion), and O’Neill

Ken Carroll

In a case with a labyrinthine procedural history—spanning several years, cases, and courts—the Dallas Court of Appeals affirmed dismissal for lack of jurisdiction on two separate grounds. A law firm, SCD, entered into a settlement with Thrasher that purported to release claims against SCD’s clients, as well; that release presumably extended to Mandel, a client of SCD, although he was not expressly named in the agreement. In May 2013, the 298th District Court entered a judgment finding the settlement agreement binding and enforceable. Meanwhile, in the midst of an ongoing series of state-court claims and counterclaims between Mandel and Thrasher, Mandel filed for Chapter 11 bankruptcy protection, and a trustee was later appointed and the matter converted to a Chapter 7. As Thrasher continued to press his claims in Mandel’s bankruptcy, Mandel and SCD filed suit in the 193d District Court, seeking a declaration that the prior judgment of the 298th District Court regarding the settlement agreement barred Thrasher’s pursuit of his claims against Mandel. The trial court dismissed for lack of jurisdiction, and the court of appeals affirmed.

First, the Court said, because Mandel had filed for Chapter 11 protection, any claims belonged to his bankruptcy estate—even those that accrued post-petition—and therefore only the trustee, and not Mandel, had standing to pursue those claims. Second, “[a] declaratory judgment action may not be used to collaterally attack, modify, or interpret a prior judgment.” Consequently, suits, like this one, “seeking to interpret judgments of another court are barred even when the claimants … merely [seek] to clarify their rights under it.”