443 S.W.3d 416
Tex. App.2014Background
- Hill (individual) and his one-person professional association (P.A.) were Tx-An partners; Tx-An contracted with M2 for billing and ABC provided back-office support. A billing software transition beginning in Sept. 2009 produced billing delays and disputes.
- Hill sued Tx-An, M2, and ABC in the 95th Judicial District (First Suit) in May 2010 for breach of contract, breach of fiduciary duty, and fraud; Tx-An, M2, and ABC asserted counterclaims and sanctions. Hill later nonsuited his claims in March 2011; the court’s order stated it did not dispose of all claims or parties.
- P.A. was expelled from the Tx-An partnership on May 26, 2011. Hill filed a Second Suit (192nd Judicial District) in late May/June 2011 asserting claims rooted in the same billing dispute and seeking accounting, damages, and declaratory relief; Hill moved (unsuccessfully) to consolidate the two suits.
- The First Suit proceeded to trial in July 2012; judgment disposing of all parties and claims was entered in August 2012.
- In Jan. 2013 defendants moved for traditional summary judgment in the Second Suit, asserting res judicata/compulsory-counterclaim bars. The trial court granted summary judgment; the court of appeals affirmed, concluding all claims were barred by res judicata/compulsory counterclaim doctrines.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether defendants proved res judicata/claim preclusion | Hill: some defendants (M2, ABC) were not parties to the First Suit; P.A. was not in privity; Second Suit claims were not identical | Defs: final judgment in First Suit; M2 and ABC participated; P.A. in privity with Hill; claims arise from same nucleus of operative facts | Affirmed — res judicata applies; all Second Suit claims could/should have been litigated in First Suit |
| Whether defendants waived or are estopped from asserting res judicata (including laches) | Hill: defendants opposed consolidation, then relied on res judicata; this should bar them by waiver, laches, or collateral estoppel | Defs: affirmative defenses were properly pleaded; no trial-court ruling or record showing waiver, laches, or collateral estoppel; plaintiffs failed to preserve these arguments | Overruled — waiver and laches not preserved; collateral estoppel not applicable |
| Whether P.A. is bound by First Suit judgment (privity) | Hill: P.A. was not a party to the First Suit and thus not bound | Defs: P.A. is Hill’s one-person entity; Hill litigated partnership claims and represented P.A.-interests; privity exists | Held — P.A. in privity with Hill; res judicata binds P.A. |
| Whether expulsion-related claims were compulsory counterclaims or immature/new | Hill: expulsion occurred after nonsuit; expulsion claims matured later and do not arise from same transaction | Defs: expulsion stemmed from same billing dispute and course of conduct; expulsion-related claims were mature and logically related; thus compulsory | Held — claims were mature and logically related; they were compulsory counterclaims barred by res judicata/Rule 97 |
Key Cases Cited
- Travelers Ins. Co. v. Joachim, 315 S.W.3d 860 (Tex. 2010) (standard for reviewing summary judgment and elements of res judicata)
- Citizens Ins. Co. of Am. v. Daccach, 217 S.W.3d 430 (Tex. 2007) (transactional approach to claim preclusion)
- State & Cnty. Mut. Fire Ins. Co. v. Miller, 52 S.W.3d 693 (Tex. 2001) (Texas transactional approach and compulsory counterclaims)
- Barr v. Resolution Trust Corp., 837 S.W.2d 627 (Tex. 1992) (transactional test and claim-preclusion principles)
- Ingersoll–Rand Co. v. Valero Energy Corp., 997 S.W.2d 203 (Tex. 1999) (compulsory counterclaim rule interpretation)
- Moore v. First Fin. Resolution Enters., Inc., 277 S.W.3d 510 (Tex. App.—Dallas 2009) (burden on defendant to prove elements of compulsory counterclaim defense)