Caprock Investment Corp. v. Montgomery

CAPROCK INVESTMENT See also 17 S.W.3d CORP., Appellant, 2005 WL 3118787. MONTGOMERY, Appellee.

Elton

No. 11-08-00138-CV. Texas,

Court of Appeals

Eastland.

May 2010.

Opinion Denying Rehearing

July affirm in part

ment. reverse part.

I. Issues re two for Caprock presents issues issues, argues these view. Keefe, Long, Jennifer Robert Patrick D. granting trial erred in L.L.P., Dallas, Hawkins, Boggs, Patton A. judg for Montgomery’s motion appellant. Caprock’s. Mont denying ment and moved gomery for Enoch, Melissa Prentice Lor- Craig T. that res barred Ca- bases PC, Austin, D. ber, Andrew Winstead note, prock’s claim for breach Harris, Barton, Sims, Finley & R. Russell claim Caprock’s barred Worth, appellee. P.C., for Bogle, Fort note, that the note had for breach a co by been satisfied WRIGHT, C.J., of: Panel consists (AI Jonietz),2 signer and that there was no STRANGE, J„ J. McCALL, and to elements of support evidence various Caprock’s claim. The trial court fraud OPINION in its en granted Montgomery’s motion WRIGHT, R. Chief Justice. JIM summary Caprock judg moved for tirety. ment on its breach of contract cause of note promissory involves a This case the note action for the amount due under and others Elton signed Montgomery’s and also on counterclaims. origi- longer the suit. no involved 1989, filed in in this case was petition nal summary judgments We review The note is appeal.1 this the fourth and v. Dor Operating de novo. Co. Valence (Tex.2005). In Corp. by Caprock sett, 656, owned Investment 164 S.W.3d petition, Caprock al- summary judg its sixth amended for When both sides move and fraud breach contract trial court leged both ment on the same issue other, against Montgomery. grants causes of action one motion and denies judg- summary parties appellate moved for court considers the Both by both granted Montgom- presented evidence ment. The trial motion, sides, motion, questions presented, all determines ery’s Caprock’s denied may the trial judg- render take-nothing entered a FDIC, any Caprock to the issue in Corp. v. failure address Caprock Investment See (Tex.App.-Eastland pet. de- response Montgomery's S.W.3d 707 to motion for its nied) I); Montgomery Corp. First v. (Caprock summary judgment did not waive the issue Caprock Corp., 89 S.W.3d 179 Investment because had the burden es pet.) (Caprock (Tex.App.-Eastland no A non- as a matter of law. tablish defense II); Corp. Mont- Caprock Investment v. respond has no unless the movant burden 02-04-00155-CV, Corp., gomery No. First conclusively its cause of movant establishes (Tex.App.-Fort Worth Nov. 2005 WL 3118787 23, 2005, Rhône-Poulenc, Inc. action or defense. v. III), (mem. op.) (Caprock pet.) 1999). Steel, (Tex. A 997 S.W.2d 222-23 regarding parties and the more details or re need not answered nonmovant history case. of this sponded to in the trial court to the motion that the sum contend on movant's disagree Montgomery’s 2. We contention mary judgment proof as a mat is insufficient issue; Caprock ad waived this of law. Id. at 223. ter argument dressed the issue its brief Furthermore, regarding estoppel. (1) on that issue. these prior court should have rendered elements: final judgment case, parties moved for Id. both on the merits a court competent (2) summary judgment on breach of contract jurisdiction; identity parties or those claims. them; (3) in privity with a second action based on the same claims as were

II. Motion raised or could have been raised in the Promissory A. first action.3 Citizens Ins. Am. Co. Note—Defenses. Daccach, (Tex.2007); With to the affirmative de 89 S.W.3d at 185. urged by Montgomery fenses in his mo tion, Montgomery had the burden to estab After this court’s decision in II right judgment by lish his pending and while this case was on re- each conclusively proving any element of mand to the trial County, court Nolan of the defenses as a matter of law. See Caprock brought separate suit 166a(c); P. Crv. Havlen v. McDou Tex.R. MFC in County, seeking judicial (Tex.2000); 22 gall, 345 trust, foreclosure on the of damages deeds Rhône-Poulenc, Steel, Inc. v. 997 S.W.2d for breach of contract on the of deeds trust (Tex.1999); Harris, 222-23 Walker failing for to maintain gas the oil and (Tex.1996). 924 S.W.2d A defen properties, and the excess due under the moving dant for on judgment an Upon note. motion Montgomery, the affirmative the defense has burden to con trial court in Nolan County abated the clusively establish that defense. Rhône- present case pending the final resolution of Poidenc, appeal, 997 S.W.2d at 223. On the Young County suit. The district court the movant bears the showing burden of Young in the County suit entered a take- that there no genuine issue of material nothing summary judgment in favor of fact and that the movant is entitled to against Caprock upon MFC based MFC’s judgment as a matter of law. Id. judicata, defenses res collateral estop- pel, and satisfaction of the note via the 1. Res Judicata. Jonietz bankruptcy. The Fort Worth judicata relitigation Res bars the in Appeals Caprock Court of Ill affirmed of claims that finally adjudicat have been Young County the summary judgment in litigated ed or that could have been in the favor of ground judica- MFC on the of res prior Montgomery action. in asserted his only: ta the same rationale used motion that he was entitled to summary judgment court to reverse the judgment judicata because res barred Ca- against Caprock in II. MFC prock’s Montgomery suit the note. re upon judgments lied the of the trial summary judgment his motion for in III, appeals case, and the court of in Caprock present the Montgomery upon relied by Caprock against suit filed Montgomery Young County summary judgment and (MFC) Corporation Young First in Coun decision of the Fort Worth Court of ty, judicata as the basis for his res Appeals Caprock defense. in III as the basis To judicata, establish defense of res judgment entitlement based Montgomery must have proven upon judicata. each of res With to the Caprock challenge prock 3. We note that prior does not III is not a final on the argue first element or otherwise Accordingly, merits. we do not address that Young County that the from the suit issue. Appeals or the Fort Worth Court of in Ca- judicata, Montgom- against employee of res did not bar action second element party that he was a in earlier ery employee does not contend defendant suit where suit, County argues but he separate capacity to the was sued in in subse- suit). party person privity that he is a quent MFC, president he is the because Moreover, held, previously this court identity shares an of interests law- upon urging and MFC suits, person who and is controlled II, Caprock Caprock’s that claims Young County. cannot litigation against judicata MFC were barred res met agree his burden of summary judgment an earlier judicata element establishing this a final favor of MFC that constituted a matter of law. because had not chal general There definition of is no lenged with re automatically applied that can privity be spect to MFC I. 89 S.W.3d at cases; all res the circumstances of against 185-86. In the claims Getty examined. each case must be Oil Montgomery thereby were severed from Am., N. v. Ins. Co. Co. of those and were remanded to MFC (Tex.1992). Privity if par exists proceedings. the trial court for further identity of ties share an interests Having previously S.W.3d at 185-87. as legal right subject is the basic a position separateness serted such litigation. Corp., Amstadt v. Brass U.S. Montgomery, which was relied (Tex.1996). 644, 919 653 Those S.W.2d by this court in upon Caprock Mont may privity party persons with a include gomery may not now assert in this case action, persons who exert control over the actually in privity that he is with MFC. represented by are whose interests Worldwide, Inc., See Brown v. Lanier 124 party, par or successors in interest to the 883, (Tex.App.-Houston S.W.3d 905 [14th Oil, ty. Getty 845 S.W.2d at 800-01. 2004, pet.) (judicial may estoppel Dist.] evidence, prevent party asserting The a from defenses of case, prior judicata estoppel); law of this and the assertions res or collateral Gold Co., v. by Montgomery lead us to conclude man White Rose Distrib. 936 393, judicata (Tex.App.-Fort res does not bar the claims S.W.2d 398 Worth 1996), against Montgomery. summary judg- pursuant vacated to settlement (Tex.1997) 707 agreement, (ap ment evidence establishes that MFC and 949 S.W.2d (but acquired judicial trump as a to de Montgomery) plying estoppel others oil gas money judicata); with the borrowed fense of res see also Pleasant leases Schubert, Caprock’s predecessor they Assembly from and that Glade v. 264 God of (Tex.2008) 1, (judicial estoppel, of trust to secure 6 payment executed deeds S.W.3d Montgomery signed actually procedure of the note. the which is a rule of based capacity president justice public policy, pre deeds of trust in his and sound However, Montgomery signed party adopting position cludes from MFC. one that it maintained capacity. the note his individual Mont- inconsistent with successfully proceeding); in an earlier gomery did not establish as a matter of privity Corp., law his because the sum- Briscoe v. Goodmark 102 S.W.3d (Tex.2003) (law 714, mary judgment 716 of the case doc evidence indicates trine); Wakefield, v. 711 may their interests not be identical in this Hudson S.W.2d (Tex.1986) (law Holmes, of the case doc litigation. See Hammonds v. 559 630 (Tex.1977) (res Knox, trine); 291 judicata Long v. 155 Tex. S.W.2d 347

97 (1956) (1982): estoppel). i (judicial Be cmt. “If a of a judgment court of did not establish first cause instance is based on determinations of issues, judicata affirmative defense as a two either of standing which inde law, the trial pendently matter court erred in be would sufficient to support result, granting judgment favor of is not conclusive Montgomery on that with respect basis. to either issue standing 522; alone.” Id. at Eagle Props., 807 Estoppel 2. Collateral and Satisfaction. S.W.2d at 722. The district court Montgomery also asserted the Young County separate made three estoppel, defense independent determinations would suit, Young County in his motion for Thus, support judgment. the alterna summary judgment. estoppel, Collateral tive in the holdings judgment of the dis preclusion, issue relitigation or bars the trict court Young County are not conclu issue or law actually an of fact that was sive for purposes of estoppel. litigated, was determined a valid and Via the the Fort judgment,

final and was essential to the Worth Appeals, Court Coun judgment. Dep’t Safety Tex. Pub. ty suit became conclusive as to res Petta, (Tex.2001); 44 S.W.3d Ea only. Comment “o” to Section Scharbauer, gle Props., Ltd. v. Restatement cited above provides rele (Tex.1990). 714, 721 estoppel Collateral that, part vant when the of a applies parties when the were adversaries trial court is based on a determination of prior party against action and the two issues either of which would be inde whom collateral is asserted had a pendently support sufficient to the judg opportunity litigate full and fair appellate ment and upholds one Petta, prior suit. 44 S.W.3d at of these determinations as sufficient and 579; Eagle Props., S.W.2d at refuses to consider or whether not the Montgomery argued in his accordingly other is sufficient affirms judgment that collateral constitut- estoppel judgment, the the is conclusive a bar in case ed this because the issue only as to the first determination. The regarding of payment previ- the note was supreme relied part court a different ously by decided the district court Kenneco, of comment “o” its ruling Young County, which the held that note (alternative 962 S.W.2d at 522 findings paid had been the by satisfied Jonietz actually that are by reviewed affirmed bankruptcy. Caprock on argues appellate may an preclusive have the only that determined valid effect). that judgments hold the stem We and final judgment respect with to the ming Young County from the suit were not Young County suit that of res regarding pay conclusive as to the issue as addressed the court appeals. ment or note by satisfaction the the agree. bankruptcy. Jonietz general rule is that there can estoppel by not be holdings. alternative the With to Tex., Higgins & estoppel Johnson Inc. Kenne effect the Jonietz Inc., (Tex. Energy, co Caprock’s against Montgomery, on claim 1998). The supreme quoted court has with court previously this I held approval following the from excerpt discharge the that “the of a obligation debtor’s Judgments § by operation (Second) Bankruptcy Code does Restatement 2009). Montgomery’s mo way response a co any affect in or discharge tion, liability obligation” Caprock presented on his maker’s the bankruptcy court was showing rep that the “the issue evidence note, on the liability discharge of Jonietz’ regarding the value of the col resentation at of his comakers.” not that $180,000 false at the being lateral as was holding constitutes previous 714. Our or that Mont representation time of the case, nothing there is law of this the at that time. knew it was false gomery indicating summary judgment the evidence evidence summary judgment Caprock’s erroneous. ruling that our was previous was merely indicated by the Jonietz estopped is not signed fifteen months after he aware over Elec., Quinney Inc. v. bankruptcy. See specific note that “the promissory (Tex. Entm’t, Inc., S.W.2d 212 Rondos do not pledged with bank properties 1999).4 of the collater Neither the issue anywhere close enough value to come value nor the issue of satisfaction al’s the liabilities to the bank.” equaling the debt is barred value is no evidence of the collateral’s This to collect on against Montgomery suit misrepre of the loan or of a at the time granting The trial court erred in the note. at that by Montgomery sentation made summary judgment on the therefore, Caprock, pres failed to time. estoppel and satisfac grounds of collateral summary judg than a scintilla of ent more tion. elements of fraud ment evidence on these B. Fraud. no-evidence response Montgomery’s trial court Consequently, motion. Montgomery also asserted the motion on this basis. properly granted motion for 166a(i). P. Tex.R. Civ. various ele was no evidence as to there fraud, claim for includ Caprock’s ments of as to Caprock’s first issue is sustained misrepresentation ing making summary judgment in favor of grant falsity at the time it knowledge of liability on his defenses to (1) are The elements of fraud was made. however, note; it is over- promissory made; representation material was that a take-nothing grant to the of a ruled as (3) (2) false; when representation was Montgom- in favor of made, speaker was representation claim. ery Caprock’s fraud recklessly false or made it knew was any knowledge of the truth and as without Caprock’s III. Motion (4) assertion; speaker the made positive a appeal, In its second issue on Ca- with the intent that the representation that the trial court erred in prock argues (5) it; act party other should summary motion for denying Caprock’s party representa acted in reliance on the (6) judgment. Caprock urged its tradition tion; thereby suffered party and summary judgment al motion for injury. Aquaplex, Inc. v. Rancho La Va (Tex. lencia, Inc., summary judgment to on its was entitled agreement terminating judgment Judgments a other (Second) See also Restatement (1982). provides discharge §§ that a obligation Section 49 the lia- debtor’s does loss, judgment against person one liable for loss bility any person liable for the other injured does not terminate a claim that the any agreed, except to otherwise as unless party may against person who another by judgment actually amount received may provides be liable therefor. Section 50 creditor. judgment that a or satisfaction or release of that, and that it judgment breach of contract claim was evidence established ex summary judgment cept also entitled to on as to the of damages, amount no counterclaims, Montgomery’s which were genuine issue of material fact existed on Caprock’s “defensive” asserted counterclaims claim for breach contract. Thus, purposes negate any recovery offset to the trial court should have entered by on the Caprock summary its suit note. favor judgment to Montgomery’s liability as for breach of To prevail on breach of con contract but not the amount of damages. claim, tract a party must establish the 166a(c) Rule provides part: judg “The (1) the following elements: existence of a ment sought shall be rendered forthwith contract; (2) performance valid or ten summary judgment evidence, [the if (3) by performance plaintiff; dered motions, pleadings, responses] show defendant; breach of the contract that, except as to the amount damages, (4) damages plaintiff to the as a re genuine any there is no as mate sult of the breach. defendant’s Eaves v. fact moving party rial and the is entitled Partners, CCR Unifund as a of law” (empha matter 407 (Tex.App.-El pet.). Paso Ca added). Caprock’s sis second issue is sus prock presented summary judgment evi tained with trial court’s support dence in of these elements. failure to grant his response, Montgomery contended that liability motion regarding and is otherwise was not entitled to overruled. following for the reasons: res The judgment of the trial court is af- judicata, estoppel, collateral satisfaction of firmed as to the take-nothing judgment bankruptcy, the note via the Jonietz fact rendered its claim for possession as to issues control and of the fraud. The judgment of trial court is collateral, fact issues to the amount parties otherwise reversed. Because both note, due on the regarding and fact issues moved for judgment on the counterclaims. As ad claim, we breach contract render judg- above, Montgomery’s dressed assertions ment that is liable for breach judicata, of res estoppel, the promissory Caprock’s note and that satisfaction via the Jonietz fail claim for breach of the note is not barred as a matter of law. does judicata, estoppel, or sat- not otherwise contest elements of isfaction. Because of fact exist re- issues breach promissory note establish garding damages amount still due —the ing liability, he does but contest the note, owing under the the amount of amount owed. any may offset that Montgomery be enti- evidence shows the existence of a valid to, attorney’s tled fees—we remand promissory signed Montgomery, note the cause to the for a trial court determi- performance by Caprock’s predecessor, nation of these issues. and by breach The Montgomery. sum mary judgment is disputed evidence as to OPINION ON MOTION owed, actually amount the reasonable FOR REHEARING rate,

ness of the substituted interest (if amount any) of setoff Montgomery available for the Elton has filed in this court alleged mismanagement deny waste of the a motion for We rehearing. that motion, collateral predeces clarify its but our previous write to sors, and attorney’s opinion. fees. The spe- judgment, Montgomery that first contends

Montgomery cifically following: can asserted erroneously Montgomery that held we payment or seek the defense not raise (cid:127) in favor of Summary Judgment “The opinion Our is made. payments credit for Young County preclusive has any to contain such be construed not to on the against Caprock’s Suit effect was held that We prohibition. Note.” matter of law as as a judgment entitled to (cid:127) summary judg- Young County “The that had liability only and merits a final on the ment is as his affirmative defenses not established Nolan relitigation in the that bars law, but we remanded matter of County Suit.” court for a determination to the trial cause (cid:127) that judicially “It has been determined to the amount issues related of the factual paid.... been the Note has the amount owed damages including — County Judgment conclusively Young (if necessarily any) on the note —which that the Suit on the Note is proves made any payments credits for allows for estoppel.” barred collateral note, by Montgom made whether (cid:127) County directly Young court “[T]he recognized specifically ery or others. the issue of whether addressed liability would be dis Montgomery’s as a paid fully was satisfied Note actually re any amount charged “as to bankruptcy.... result of the Jonietz predecessors. its by Caprock and ceived” County court held that [T]he actually by Caprock received The amount proceeding at in this ‘the note of fact question is a predecessors fully paid and satisfied as a result was on re trier of fact to determine for the Albert bankruptcy proceeding mand. ” Jonietz.’ Next, Montgomery asserts summary judg- Nowhere in his motion for argument “has misconstrued” Montgomery argue that ment did that his collateral concerning in favor of MFC enti- summary judgment upon Jonietz’s dis- argument is based summary judgment Montgomery to tled upon but the 1996 charge estoppel. upon based MFC, in in favor of Moreover, response to the cur had determined that which was summary judg argument, rent the 1996 pursuant in full Jonietz to his paid been collaterally does not that we ment favor of MFC We do not believe bankruptcy. seeking payment from estop Caprock argument. misconstrued This court brief, Montgomery. “he the note from Montgomery asserted that In his reversed a previously the Note because it has not liable on granted that was favor of pursuant to the credit on been satisfied ground the same the surrender of col- and was resulting Note from summary judgment. of the debt MFC’s 1996 lateral valued excess summary judgments “Young that the S.W.3d 707. Both bankruptcy” and Jonietz’s Be in this case. conclusively proves proceedings are earlier County Judgment summary judgment in favor by cause the 1996 the Note is barred the Suit on not a final from “a “directly of MFC is because it addressed estoppel” lawsuit,” judi- the doctrines of paid separate the Note was the issue of whether apply. not cata do a result of the Jonietz fully satisfied as Sources, Furthermore, Inc. v. Crea- Thinking in his motion Creative bankruptcy.”

101 Inc., 504, Thinking, Caprock II, tive 74 512 as S.W.3d to MFC. 89 (Tex.App.-Corpus pet.). Christi S.W.3d 179. determined judg- that MFC, ment as to but Montgomery, not upon The issue which MFC moved had become final judicata and that res for, granted, summary was barred further claims against at MFC. Id. adversely Montgomery was determined to 185-86. The cause was remanded fur- for Caprock court in I. The of this “law ther proceedings the claims against that the case” doctrine mandates the rul Thus, Montgomery. of the law this case is a ing appellate question of an court on of against that the claims MFC became final law will appeal govern through raised thereby and were severed from those out subsequent proceedings the against Montgomery, whereas the claims clearly same case Bris- unless erroneous. against Montgomery remained pending as Corp., coe v. Goodmark live claims in this suit. Under such cir- (Tex.2003). 716 The law this as of case cumstances, Montgomery and MFC cannot determined in I Caprock is that Jonietz be in privity purposes for of this suit. bankruptcy does not as a matter of law discharge Montgomery’s liability on the III, Young suit, In County prove note or that the indebtedness was also judicata was determined that res fully upon of satisfied based the valuation further against barred claims MFC. bankruptcy. the collateral Though WL 3118787. judicata res barred at presented 714. The issue the claims asserted in the Young County in respect this with Jonietz MFC, against suit judicata res not would as substantially is same against barred claims Montgomery we I. addressed that as pending suit there were live claims against County. Nolan Montgomery next takes issue with MFC, therefore, Montgomery and did this court’s rendition of rather judgment, an of identity share interest remand, than upon holding our County suit. judicata res defense fails merely Had matter law. this court to estoppel, holding As our was based determined that Montgomery did not es upon prior assertions Montgom- made tablish as matter of that he law was ery MFC and relied this court privity with and that an issue MFC of fact in Caprock II. Our from Caprock records privity, existed as to we would have re show, I contrary to Montgomery’s conten- manded the cause the issue tion in his an rehearing, motion However, judicata. res Caprock assert appeal of the ed that there “no privity” was between favor MFC had been perfected. MFC and MFC and that this suit was named appellee as an in this court and “separate” not a lawsuit from earlier represented by was counsel. its brief part favor but is MFC I, however, Caprock in Caprock did not agreed, same lawsuit. We determin MFC, any points raise relating of error ing judicata as a matter law res points relating but it did raise to Mont- preclude Caprock’s does not claims gomery, granted who had also been sum- Montgomery in suit. this II, mary judgment. See

In an earlier at proceeding Consequently, urg- in this same S.W.3d at the case, Montgomery presented ing Montgomery in Caprock and MFC that, court with a question of law concern- we held “absent properly assigned ing finality and the in Caprock error” the earlier was final and favor MFC against by Caprock claims any further Id. at 185-86. barred. were and MFC that, Montgomery when

note in Ca- judicata of res their defense

urged only as to MFC. they did so

prock privi-

Indeed, they point urged at that had with judicata the two and res

ty between MFC, Montgomery as well as have would held unlikely

is that res barred II Ca- MFC. The

action granting from the

prock I stemmed and MFC’s motions

Montgomery’s were, as stated in motion, an “identical

MFC’s MFC had

position.” If points relating of error privity,

been in applied Montgomery would argue may not now

MFC. privity with MFC when he

that he is successfully previously asserted

and MFC position inconsistent

in this court privity.

that of rehearing motion for

denied. SERVICES,

ESCONDIDO

LLC, Appellant, HOLDINGS, LP; Chesapeake

VKM Inc.; Chesapeake

Operating, L.L.C.,

Exploration, Appellees.

No. 11-09-00034-CV. Texas, Appeals

Court

Eastland.

June

Case Details

Case Name: Caprock Investment Corp. v. Montgomery

Court Name: Court of Appeals of Texas

Date Published: Jul 8, 2010

Citation: 321 S.W.3d 91

Docket Number: 11-08-00138-CV

Court Abbreviation: Tex. App.