Jerron C. HILL, M.D., individually, and Jerron C. Hill, M.D., P.A., Appellants v. TX-AN ANESTHESIA MANAGEMENT, LLP, M2 Healthcare Services, LP, and Anesthesia Business Consultants, Appellees.
No. 05-13-00641-CV.
Court of Appeals of Texas, Dallas.
Aug. 25, 2014.
427 S.W.3d 418
W. Stephen Cockerham, Christopher D. Kratovil, Dallas, for Appellees.
Before Justices FILLMORE, EVANS, and LEWIS.
OPINION
Opinion by Justice LEWIS.
Appellants Jerron C. Hill, M.D., individually, and Jerron C. Hill, M.D., P.A. appeal the trial court‘s grant of summary judgment in favor of Tx-An Anesthesia Management, LLP, M2 Healthcare Services, LP, and Anesthesia Business Consultants. Appellants complain, in three issues, that the trial court erred in granting summary judgment because appellees failed to prove that all of appellants’ claims were compulsory counterclaims barred by res judicаta. Appellants also complain that appellees waived the right to assert res judicata. Because we determine that all of appellants’ claims are barred, we affirm the trial court‘s judgments.
I. FACTUAL AND PROCEDURAL BACKGROUND
Appellant Jerron C. Hill, M.D. (Hill) is an anesthesiologist who practices under the professional association name of Jerron C. Hill, M.D., P.A. (P.A.). Appellee Tx-An Anesthesia Management, LLP (Tx-An) provides practice management services to its anesthesiologist partners and other anesthesiologists who contract with Tx-An. These services include scheduling, billing, collection, and other manаgement services. In 2001, Tx-An entered into a contract with M2 Healthcare Services, LP (M2) to provide billing and collection services to Tx-An partners. Anesthesia Business Consultants (ABC) provides back-room billing and administrative support to M2 and other related companies.
Hill became associated with Tx-An in 2002; P.A. became a partner of Tx-An in 2005. Pursuant to the terms of the Tx-An partnership agreement, P.A. agreed to have its billing and collections performed by M2. In 2008, ABC began implementing a new billing and collection software system to bill and collect charges for its various clients, including Tx-An. Each Tx-An physician was transitioned to the new system individually. In September 2009, M2 began P.A.‘s transition and experienced computer difficulties. Hill complained that his billings were not being timely processed by Tx-An and M2. Although efforts were made to resolve P.A.‘s billing issues, Hill was not satisfied and did not want to continue using M2 for billing and collection services.
On May 27, 2010, Hill filed suit against Tx-An, M2, and ABC, alleging claims for breach of contract against all defendants for failing to process Hill‘s billings in a
On May 26, 2011, P.A. was expelled from the Tx-An partnership. Approximately one weеk later, Hill filed a second lawsuit against Tx-An, M2, and ABC, alleging the following claims: (1) breach of partnership agreement against Tx-An for failing to allow Hill to inspect financial documents of the partnership; (2) breach of fiduciary duty against Tx-An for failing to allow a proper accounting, failing to disclose agreements with M2, and entering into a civil conspiracy with M2 to deny Hill‘s right to an accounting associated with Hill‘s billings; (3) civil conspiracy and fraud against all defendants for making false statements about billing problems; (4) breach of contract against Tx-An for illegally terminating Hill‘s partnership rights and expelling Hill from the partnership; (5) breach of contract against M2 and ABC for breaching their duty to properly and timely submit Hill‘s billings and resolve complaints; (6) violation of public policy against all defendants because the contract between Tx-An and M2 assigned away Hill‘s rights and compelled Hill to use M2 to do his billing; and (7) disparate treatment against Tx-An for terminating Hill‘s partnership rights because Hill was the only African-American in the partnership and the only partner expelled for complaining about billing problems. Hill sought actual and exemplary damages, a partnership accounting, and declaratory judgments1 that Hill wаs entitled to inspect the books and papers relating to billing done on his behalf, and that certain provisions of the contract between Tx-An and M2 violated public policy. This suit was filed in the 192nd Judicial District Court for Dallas County (Second Suit). Hill then filed a motion with the 192nd Judicial District Court to consolidate the First and Second Suits for further proceedings in that court. Hill did not file the motion to consolidate with 95th Judicial District Court. The motion was never scheduled for hearing by the 192nd Judicial District Court, and that court did not rule on it.
On July 1, 2011, Hill filed a first amended petition with the 192nd Judicial District Court, adding P.A. as a plaintiff. The first amended petition also rеvised the civil conspiracy claim against all defendants by deleting the allegations of fraud and adding allegations of tortious interference in appellants’ business relationship with insurance companies, Medicare, and Medicaid, and their fiduciary relationship with Tx-An. The first amended petition also deleted the disparate treatment claim
On July 9, 2012, over a year after the Second Suit was filed, the First Suit was tried to a jury, and the jury found in favor of Tx-An on its breach of fiduciary duty claim against Hill. The trial court heard Hill‘s motion for judgment notwithstanding the verdict and granted the motion, setting aside the jury‘s verdict in favor of Tx-An, and denying all other relief requested and not specifically granted or denied. On August 7, 2012, the trial court signed a final judgment which disposed of all parties and all claims.
On January 10, 2013, Tx-An filed a traditionаl and no evidence motion for summary judgment in the Second Suit. M2 and ABC also filed traditional and no evidence motions for summary judgment. In their traditional motions for summary judgment, Tx-An, M2, and ABC asserted that all of the claims alleged by Hill and P.A. in the Second Suit were barred by res judicata or the compulsory counterclaim rule because the trial court in the First Suit made a final determination on the merits with respect to the same claims between the same parties. Hill and P.A. filed their response and the trial court conducted a hearing. On February 15, 2013, the trial court signed an order granting Tx-An‘s traditional motion for summary judgment, and a sеparate order granting M2 and ABC‘s traditional motion for summary judgment. Hill and P.A. filed a motion to modify final judgments which was overruled by operation of law. Hill and P.A. now appeal.
II. STANDARD OF REVIEW
We review the granting of a summary judgment de novo. See Travelers Ins. Co. v. Joachim, 315 S.W.3d 860, 862 (Tex. 2010); Beesley v. Hydrocarbon Separation, Inc., 358 S.W.3d 415, 418 (Tex.App.-Dallas 2012, no pet.). In a traditional motion for summary judgment, the moving party has the burden of showing there is no genuine issue of material fact and it is entitled to judgment as a matter of law.
III. ANALYSIS
On appeal, appellants first contend the trial court erred when it granted the motions for summary judgment filed by Tx-An, M2, and ABC because appellants’ claims were not compulsory counterclaims barred by res judicata. Specifically, appellants assert that M2 and ABC were not parties to the First Suit, P.A. was not a party or in privity with a party to the First Suit, and the claims asserted in the Second Suit were not identical to the claims adjudicated in the First Suit. In their second issue, appellants contend appellees are barred by waiver, laches and collateral estoppel from asserting their affirmative defenses of res judicata and the compulsory counterclaim rule. In their third issue, appellants contend that even if res judicata applies to some of their claims, their claims for breach of the partnership agreement and breach of contract for expelling P.A. from the Tx-An partnership should survive.
WAIVER, LACHES, AND COLLATERAL ESTOPPEL
We begin with appellants’ second issue in which we are asked to determine whether Tx-An, M2, and ABC waived their affirmative defenses of res judicata and failure to assert compulsory counterclaims, or are otherwise barred by laches or collateral estoppel from asserting such defenses. Waiver, laches, and estoppel are affirmative defenses, and must be pled in order to be asserted by a party. See
According to the record, appellants’ third amended petition was filed on February 13, 2013, one day before the hearing on appellees’ motions for summary judgment. Pursuant to
In their third amended petition, appellants complain that by opposing appellants’ motion to consolidate the First and Second Suits, appellees waived their right to raise the affirmative defense of res judicata in the Second Suit. Appellants also argue it was not fair that appellees’ counsel opposed the motion to consolidate, proceeded with a trial in the First Suit, and then later asserted res judicata in the Second Suit. Appellants contend that because of the unreasonable delay caused by appellees’ opposition to appellants’ motion to consolidate, the doctrine of laches should apply. To preserve a complaint for appellate review, a party generally must present it to the trial court by timely request, motion, or objection, stating the specific grounds, and obtain a ruling.
Apрellants’ third amended complaint alleges “collateral estoppel with regards to the affirmative defense asserted by Defendants with regards to res judicata and/or compulsory counterclaim.” On appeal, appellants argue that appellees’ lawyers should be “collaterally estopped as officers of the Court for holding out one position to the 95th and 192nd Judicial District and then subsequently taking a legal position contrary to the statements to the Court.” Appellants do not explain how collateral estoppel has application to the facts before us. Collateral estoppel applies when “(1) the facts sought to be litigated in the second action were fully and fairly litigated in the first action, (2) those facts were essential to the judgment in the first action, and (3) the parties were cast as adversaries in the first action.” Indem. Ins. Co. v. City of Garland, 258 S.W.3d 262, 271 (Tex.App.-Dallas 2008, no pet.) (citing John G. and Marie Stella Kenedy Mem‘l Found. v. Dewhurst, 90 S.W.3d 268, 288 (Tex.2002)). Here, appellants complain that because appellees’ counsel opposed appellants’ motion to consolidate, appellees should be collaterally estopped from raising their res judicata and compulsory counterclaim affirmativе defenses. During the summary judgment hearing, appellants’ counsel argued that it was not fair, equitable, or ethical for appellees to oppose the motion to consolidate and then turn around and assert res judi-
Res Judicata
Res judicata, also known as claim preclusion, prevents the relitigation of a claim or cause of action that was adjudicated and resolved by a final judgment, as well as all related matters that with the use of diligence could or should have been litigated in the prior suit. Citizens Ins. Co. of Am. v. Daccach, 217 S.W.3d 430, 449 (Tex.2007); State & Cnty. Mut. Fire Ins. Co. v. Miller, 52 S.W.3d 693, 696 (Tex.2001); MGA Ins. Co. v. Charles R. Chesnutt, P.C., 358 S.W.3d 808, 816 (Tex.App.-Dallas 2012, no pet.). Texas follows the transactional approach to res judicata. See Miller, 52 S.W.3d at 696; Barr v. Resolution Trust Corp., 837 S.W.2d 627, 630-31 (Tex.1992). The transactional approach results in claim preclusion if a defendant does not bring as a counterclaim any claim arising out of the transaction or ocсurrence that is the subject matter of the opposing party‘s suit. Miller, 52 S.W.3d at 696; Barr, 837 S.W.2d at 630.
Res judicata is an affirmative defense.
Appellants argue that M2 and ABC werе not parties to the First Suit because they did not have pending counterclaims against Hill at the time of the nonsuit. However, summary judgment evidence established that M2 and ABC were named defendants in the First Suit with counterclaims for sanctions and attorney‘s fees pending at the time of Hill‘s nonsuit. Counsel for M2 and ABC participated in the pretrial of the First Suit. The evidence further reflects that M2 and ABC participated to some extent in the trial of the First Suit. The final judgment in the First Suit states that M2 and ABC appeared through their attorneys and announced ready for trial, and awards M2 and ABC monetary sanctions against Hill. Based on the summаry judgment evidence, the trial court did not err in determining that M2 and ABC were parties to the First Suit.
P.A. was not a party to the First Suit. Generally a person is not bound by a judgment in a suit to which he was not a party. See
In this case, P.A. is Hill‘s one-person professional association. In their third amended petition, Hill and P.A. describe themselves as a single entity: “Plaintiff is and remains a resident of Collin County, Texas and/or a legal entity under Texas law.” The record reflects that P.A. was the Tx-An pаrtner, not Hill individually. However, in the First Suit, Hill individually asserted claims against Tx-An on behalf of P.A. for breach of the partnership agreement and breach of fiduciary duty. Although Hill ultimately nonsuited his claims, Hill individually continued to defend against Tx-An‘s counterclaim for breach of fiduciary duty. In the Second Suit, Hill and P.A. sued for breach of that same partnership agreement.2 “Privity exists if the parties share an identity of interests in the basic legal right that is the subject of litigation.” Truck Ins. Exchange, 320 S.W.3d at 618. Clearly, P.A.‘s interests can be represented by Hill as evidenced by the First Suit, and Hill and P.A. share an identity of interests in the basic legal rights that were the subject of litigation. Based on the summary judgment evidence, the trial court did not err in determining that P.A. was in privity with Hill. The second element of res judicata is met.
Appellants also argue that the claims alleged in the Second Suit were not identical to the claims litigated in the First Suit because Hill‘s expulsion from the Tx-An partnership occurred after Hill filed his motion for nonsuit in the First Suit. Appellants assert that in the Second Suit, they alleged new claims for breach of contract, breach of fiduciary duty, and civil conspiracy, all arising out of appellees’ failure to allow an inspection of financial records, to produce doсuments, and to provide an accounting of funds due and owing to appellants. In response, appellees contend that the facts giving rise to both the First and Second Suits are essentially identical, and the issues raised in both the First and Second Suits share the same nucleus of operative facts: Hill‘s relationship with Tx-An, Tx-An‘s relationship with M2, Hill‘s complaints about M2‘s billing process, and the actions taken by Hill and Tx-An in response to the billing dispute.
Under the transactional approach followed in Texas, whether the claims arise from the same transaction is determined pragmatically, “giving weight to such cоnsiderations as whether the facts are related in time, space, origin, or motivation, whether they form a convenient trial unit, and whether their treatment as a trial unit conforms with the parties’ expectations or business understanding or usage.” Citizens Ins., 217 S.W.3d at 449 (quoting
Compulsory Counterclaims
In addition tо their claims against Tx-An for breach of partnership agreement and breach of fiduciary duty, appellants alleged a separate breach of contract claim against Tx-An for expelling P.A. from the partnership. Appellants also asserted a civil conspiracy and tortious interference claim against Tx-An, M2, and ABC, claiming that Tx-An, M2, and ABC purportedly conspired to refuse appellants’ requests for an accounting, ultimately resulting in P.A.‘s expulsion from the Tx-An partnership. Appellants argue their breach of contract and conspiracy claims are not compulsоry counterclaims because they purportedly did not arise from the same transaction or occurrence, and the claims had not matured at the time the answer was due in the First Suit.
According to
Appellants argue their breach of contract and civil conspiracy claims are not compulsory counterclaims because the claims had not matured at the time the answer was due in the First Suit.
Hill and P.A. also argue that their expulsion-related claims did not arise out of the same transaction or occurrence as did Tx-An‘s counterclaim in the First Suit. Appellate courts apply a “logical relationship” test to determine whether counterclaims arise out of the same transaction or occurrence under
In support of their argument, appellants argue P.A. was expelled from the Tx-An partnership, not because of the billing dispute, but because “the Partners found that Hill had engaged in personal misconduct and willful breach of the Partnership Agreement of such a serious nature as to render his continued presence in the Partnership personally and professionally detrimental to the other Partners of the Partnership.” The language quoted above was taken from the resolution of the Tx-An partnership in which the partners voted to expel P.A. from the partnership. Other than the Tx-An рartnership resolution, Hill and P.A. do not cite to summary judgment evidence in support of their assertion that the expulsion did not arise out of the billing dispute.
Appellants did not raise a genuine issue of material fact as to the application of appellees’ affirmative defenses of res judicata and the compulsory counterclaim rule. The trial court did not err when it granted the motions for summary judgment filed by Tx-An, M2, and ABC because all of appellants’ claims werе compulsory counterclaims barred by res judicata. We overrule appellants’ first and third issues.
IV. CONCLUSION
Having overruled all of appellants’ issues, we affirm the judgments of the trial court.
LANA MYERS
JUSTICE