DTPA claim has 2-year SoL, tolling of limitations and fraudulement concealment exceptions for such claims are specified by statute

DTPA HAS TWO-YEAR LIMITATIONS PERIOD; STATUTE ALSO CODIFIES THE DISCOVERY RULE AND FRAUDULENT CONCEALMENT EXCEPTIONS. BUT THE LATTER IS LESS GENEROUS THAN THE COMMON-LAW DOCTRINE WHICH IT RENDERS UNAVAILABLE FOR DTPA CLAIMS  

The DTPA provides that suits under the chapter “must be commenced within two years after the date on which the false, misleading, or deceptive act or practice occurred or within two years after the consumer discovered or in the exercise of reasonable diligence should have discovered the occurrence of the false, misleading, or deceptive act or practice.” TEX. BUS. & COM. CODE § 17.565.

In essence, the Legislature codified the discovery rule for DTPA claims. See KPMG Peat Marwick v. Harrison Cnty. Hous. Fin. Corp., 988 S.W.2d 746, 749 (Tex. 1999). We have explained that, “[o]nce a claimant learns of a wrongful injury, the statute of limitations begins to run even if the claimant does not yet know ‘the specific cause of the injury; the party responsible for it; the full extent of it; or the chances of avoiding it.’” Exxon Corp. v. Emerald Oil & Gas Co., 348 S.W.3d 194, 207 (Tex. 2011) (quoting PPG Indus., Inc. v. JMB/Houston Ctrs. Partners Ltd. P’ship, 146 S.W.3d 79, 93 (Tex. 2004)); see also KPMG, 988 S.W.2d at 749 (holding that “accrual occurs when the plaintiff knew or should have known of the wrongfully caused injury,” not when the plaintiff knows “the specific nature of each wrongful act that may have caused the injury”).

Absent the application of an equitable tolling doctrine, the evidence conclusively established that [Consumer-Plaintiff]’s DTPA claims are time barred because she brought them more than two years after discovering her injury. See KPMG, 988 S.W.2d at 750; TEX. BUS. & COM. CODE § 17.565.

SOURCE: TEXAS SUPREME COURT – No. 11-0311 - 3/29/2013  (Gonzales v. Olshan)

[Consumer-Plaintiff] contends that Olshan engaged in fraudulent concealment, making her claim timely. We disagree. The doctrine of fraudulent concealment tolls limitations “because a person cannot be permitted to avoid liability for his actions by deceitfully concealing wrongdoing until limitations has run.” S.V. v. R.V., 933 S.W.2d 1, 6 (Tex. 1996). The DTPA establishes a 180-day limit on tolling for fraudulent concealment. TEX. BUS. & COM. CODE § 17.565 (providing that limitations “may be extended for a period of 180 days if the plaintiff proves that failure timely to commence the action was caused by the defendant’s knowingly engaging in conduct solely calculated to induce the plaintiff to refrain from or postpone the commencement of the action”). Even if limitations were tolled for 180 days on [Consumer-Plaintiff]’s DTPA claims, they would still have been filed at least two months late.

[Consumer-Plaintiff] also argues that the common-law doctrine of fraudulent concealment tolls limitations for DTPA claims and is not limited to 180 days as required by the DTPA limitations statute. We have previously rejected a similar argument. In Underkofler v. Vanasek, the plaintiff brought common-law and DTPA claims for legal malpractice against his law firm. 53 S.W.3d 343, 345 (Tex. 2001). We held that the common-law rule tolling limitations for legal malpractice claims until the underlying litigation concluded does not apply to DTPA claims. Id. at 346. We pronounced that the Legislature crafted only two exceptions to the rule that DTPA limitations begin to run when the injury occurs: the discovery rule and the fraudulent concealment rule (both specified in section 17.565 of the Business and Commerce Code). Id. at 346. Just as section 17.565 forecloses the application of the common-law tolling rule to legal malpractice claims under the DTPA, it forecloses the application of the common-law doctrine of fraudulent concealment to DTPA claims. 
  
The Legislature could have incorporated the common-law doctrine of fraudulent concealment into the DTPA’s limitations provision. Instead, it only incorporated the discovery rule and a version of the fraudulent concealment doctrine limited to 180 days, and “we will not rewrite the statute to add . . . a third” exception. Id. The common-law doctrine of fraudulent concealment does not apply to [Consumer-Plaintiff]’s DTPA claim, and it is time barred.
  

SOURCE: TEXAS SUPREME COURT – No. 11-0311- 3/29/2013 (Gonzales v. Olshan)

Interspousal loans - separate vs. community property (and debt)

Loan from one spouse to the other and community-property presumption. Tricky issue in property division upon divorce.

PROMISSORY NOTE BETWEEN SPOUSES

Husband asserts wife's summary judgment evidence did not overcome the presumption that the note was community property and the debt it evidenced was a "community debt." Property possessed by either spouse during marriage is presumed to be community property. Tex. Fam. Code Ann. § 3.003(a) (West 2006); Fillingim v. Fillingim, 332 S.W.3d 361, 363 (Tex. 2011). This presumption is rebuttable by clear and convincing evidence to the contrary. Tex. Fam. Code Ann. § 3.003 (West 2006).

In the note, husband unequivocally recited the money he borrowed from wife, as evidenced by the note, was her separate property. This recitation sufficiently rebuts the presumption of community property and creates a new presumption that the funds loaned by wife to husband were wife's separate property. Kyles v. Kyles, 832 S.W.2d 194, 196 (Tex.App.-Beaumont 1992, no pet.) (recitations of separate property character in deeds displaced community presumption and created new presumption of separate property) (citing Henry S. Miller Company v. Evans, 452 S.W.2d 426, 430-31 (Tex. 1970)); Licata v. Licata, 11 S.W.3d 269, 274 (Tex.App.-Houston [14th Dist.] 1999, pet. denied) (applying holding regarding new presumption of separate property to settlement proceeds based on recitations in settlement documents); see Henry S. Miller Company, 452 S.W.2d at 430-31 (because of recitals in deed that land was conveyed to wife as her sole and separate property and consideration was from her separate estate, no community presumption existed). The recital in the note of separate property was prima facie evidence that the money loaned, as evidenced by the note, was the separate property of wife. See Licata, 11 S.W.3d at 274 (citing Kyles, 832 S.W.3d at 196); Henry S. Miller Company, 452 S.W.2d at 430 (separate property character recitals in deed to wife established prima facie defense of separate property). Cf. Kahn v. Kahn, 94 Tex. 114, 58 S.W. 825, 825-26 (1900) (absent proof of fraud or mistake husband bound by recitals in his deed to wife regarding payment of consideration by wife from separate funds); Roberts v. Roberts, 999 S.W.2d 424, 432 (Tex.App.-El Paso 1999, no pet.) (similarly stating rule).

With the recitals in his promissory note to wife, the burden then shifted to husband to come forward with more than a scintilla of evidence tending to rebut the separate property presumption. Licata 11 S.W.3d at 274; see Landaverde v. Estate of Abedinzadeh, No. 14-11-0143-CV, 2011 Tex. App. Lexis 8668, at *4-5 (Tex.App.-Houston [14th Dist.] Nov. 1, 2011, no pet.) (on summary judgment party resisting a presumption must produce evidence sufficient to neutralize effect of presumption in order for case to proceed to trial). Absent such evidence, the separate property presumption becomes conclusive. See Licata, 11 S.W.3d at 274 (citing Kyles, 832 S.W.2d at 196). 

The characterization of the note as separate or community property is determined by the inception of title rule. Tex. Fam. Code Ann. § 3.006 (West 2006). As executed and delivered, the note with its recitals raised the presumption that the funds advanced, and thus the note representing those funds, was the separate property of wife. The uses to which husband later put the funds are not pertinent to the note's characterization.

SOURCE: Amarillo Court of Appeals - No. 07-11-00223-CV – 2/21/2013 

Whatever the contract says will likely be what matters

But I thought ... bla, bla.
But it was my understanding ... yada, yada... 

Express contract controls over implied contract claim and claim that terms were orally modified where express contract contained integration clause and barred parol evidence inconsistent with the terms stated in the written (fee) agreement.   

EXPRESS CONTRACT TAKES PRECEDENCE  

"If the parties have expressly stated the terms of their agreement, they have created an express contract and are bound by it to the exclusion of conflicting implied terms." Malallah v. Noble Logistic Servs., Inc., No. 14-08-01030-CV, 2010 WL 343487, at *2, (Tex. App.-Houston [14th Dist.] Feb. 2, 2010, pet. denied) (quoting Emmer v. Phillips Petroleum Co., 668 S.W.2d 487, 490 (Tex. App.-Amarillo 1994, no writ)) (internal quotation marks omitted); see also David J. Sacks, P.C. v. Haden, 266 S.W.3d 447, 450 (Tex. 2008) (per curiam) (declining to hold that a written attorney-fee agreement which specified only hourly rates may be modified by evidence of an oral capping agreement).

SOURCE: HOUSTON COURT OF APPEALS - 14-12-00088-CV – 3/14/2013 

 

 

Prior breach by Plaintiff as excuse for Defendant’s non-performance

But he breached first ...

PRIOR BREACH BY THE OTHER PARTY TO THE CONTRACT AS AN EXCUSE FOR THE DEFENDANT'S NON-PERFORMANCE
 

The argument does not always work. Materiality of the breach, assuming there was a breach, is a key issue. Moreover, if the party resorting to the excuse defense did not treat the contract as terminated as a result of the breach by the opponent, the defense will likely fail.

 
  

A party breaches a contract when it neglects or refuses to perform a contractual obligation. Mays v. Pierce, 203 S.W.3d 564, 575 (Tex. App.-Houston [14th Dist.] 2006, pet. denied). If the breach is material, the other party is excused from further performance of the contract. Mustang Pipeline Co. v. Driver Pipeline Co., 134 S.W.3d 195, 196 (Tex. 2004) (per curiam) (citing Hernandez v. Gulf Grp. Lloyds, 875 S.W.2d 691, 692 (Tex. 1994)). Generally, the issue of whether a breach rises to the level of a material breach that will render the contract unenforceable presents a dispute for resolution by the trier of fact. See Cont'l Dredging, Inc. v. De-Kaizered, Inc., 120 S.W.3d 380, 394-395 (Tex. App.-Texarkana 2003, pet. denied). But the materiality of a breach and the resulting unenforceability of the agreement can present questions for the court to resolve as a matter of law. See Mustang Pipeline Co., 134 S.W.3d at 199-200 (concluding that when contract stated time was of the essence and one party failed to perform, other party was excused from performance as a matter of law); see also Fedgess Shopping Cntrs., Ltd. v. MNC SSP, Inc., No 14-07-00211-CV, 2007 WL 4387337, at *3 (Tex. App.-Houston [14th Dist.] Dec. 18, 2007, no pet.) (concluding appellant raised no issue of material fact concerning prior material breach and affirming summary judgment for appellee).

SOURCE: HOUSTON COURT OF APPEALS - 14-12-00088-CV – 3/14/2013

Because Hiles points to no evidence that Arnie's alleged overbilling and failure to timely bill breached a material element of the contract that would excuse Hiles from all liability for failing to pay Arnie's bills, he was not entitled to the prior-material-breach question he tendered. See Mustang Pipeline Co., 134 S.W.3d at 199; see also Williams v. Jackson, No. 01-07-00850-CV, 2008 WL 4837484, at *4 (Tex. App.-Houston [1st Dist.] Nov. 6, 2008, no pet.) (holding that, as a matter of law, attorney's failure to comply with alleged duty to bill appellant monthly as provided in fee agreement did not discharge appellant's duty to pay attorney); cf. Long Trusts v. Griffin, 222 S.W.3d 412, 415-16 (Tex. 2006) (per curiam) (holding that party who elects to treat a contract as continuing is deprived of any excuse for terminating his own performance).

Promissory Estoppel Theory only applicable outside contract obligations

As is true of other equitable doctrines and remedies, promissory estoppel does not apply when the issue is governed by a formal contract. It may provide a remedy with respect of promises not incorporated into a contract and/or totally independent of a contract.   

ELEMENTS OF PROMISSORY ESTOPPEL

The elements of promissory estoppel are (1) a promise, (2) foreseeability of reliance thereon by the promisor, and (3) substantial reliance by the promisee to his detriment. English v. Fischer, 660 S.W.2d 521, 524 (Tex. 1983); Beverick v. Koch Power, Inc., 186 S.W.3d 145, 152 (Tex. App.-Houston [1st Dist.] 2005, pet. denied).
 
"Promissory estoppel does not apply to a promise covered by a valid contract between the parties; it does apply, however, to a promise outside the contract." Barnett v. Coppell N. Tex. Court, Ltd., 123 S.W.3d 804, 825 (Tex. App.-Dallas 2003, pet. denied); see also Subaru of Am., Inc. v. David McDavid Nissan, Inc., 84 S.W.3d 212, 226 (Tex. 2002) (noting that "the promissory-estoppel doctrine presumes no contract exists"). The promise must be one "which the promisor should reasonably expect to induce action or forbearance of a definite and substantial character on the part of the promisee." CRSS Inc. v. Runion, 992 S.W.2d 1, 6 (Tex. App.-Houston [1st Dist.] 1995, pet. denied) (quoting "Moore" Burger, Inc. v. Phillips Petroleum Co., 492 S.W.2d 934, 937 (Tex. 1972) (quoting RESTATEMENT OF CONTRACTS § 90 (1932))). As a corollary, the promise "must be more than mere speculation concerning future events, a statement of hope, or an expression of opinion, expectation, or assumption." Comiskey v. FH Partners, LLC, 373 S.W.3d 620, 635 (Tex. App.-Houston [14th Dist.] 2012, pet. denied).

SOURCE: HOUSTON COURT OF APPEALS - No. 01-11-00800-CV – 2/28/2013

Waiver of rights as a defense

WAIVER AS A DEFENSE TO ENFORCEMENT OF OTHER PARTY'S ASSERTED RIGHT

"The elements of waiver include (1) an existing right, benefit, or advantage held by a party; (2) the party's actual knowledge of its existence; and (3) the party's actual intent to relinquish the right, or intentional conduct inconsistent with the right." Ulico Cas. Co. v. Allied Pilots Ass'n, 262 S.W.3d 773, 778 (Tex. 2008). "Waiver is ordinarily a question of fact." Tenneco Inc. v. Enter. Prods. Co., 925 S.W.2d 640, 643 (Tex. 1996). "Where the facts and circumstances are admitted or clearly established, however, the question becomes one of law." Id.

SOURCE: HOUSTON COURT OF APPEALS - No. 01-11-00800-CV – 2/28/2013

How courts read contracts when asked to enforce them

CONTRACT CONSTRUCTION – GENERAL PRINCIPLES

When construing a written contract, a court is to determine and give effect to the intent of the parties as expressed in the instrument. See Coker v. Coker, 650 S.W.2d 391, 393 (Tex. 1983). Terms in a written contract are given "their plain, ordinary, and generally accepted meaning unless the instrument shows that the parties used them in a technical or different sense." Heritage Res., Inc. v. NationsBank, 939 S.W.2d 118, 121 (Tex. 1996). "`If the written instrument is so worded that it can be given a certain or definite legal meaning or interpretation, then it is not ambiguous and the court will construe the contract as a matter of law.'" Enter. Leasing Co. of Houston v. Barrios, 156 S.W.3d 547, 549 (Tex. 2004) (quoting Coker, 650 S.W.2d at 393).

SOURCE: BEAUMONT COURT OF APPEALS - No. 09-12-00073-CV - 2/21/2013
 

UNAMBIGUOUS CONTRACT

When a contract is not ambiguous, we construe it according to the plain meaning of its express wording and enforce it as written. Chapman v. Abbot, 251 S.W.3d 612, 616-17 (Tex. App.-Houston [1st Dist.] 2007, no pet.). Extrinsic evidence may not be used to create an ambiguity. See Balandran v. Safeco Ins. Co. of Am., 972 S.W.2d 738, 745. We may, however, examine the contract as a whole in light of the circumstances present when the contract was entered. See Transcontinental Gas Pipeline Corp. v. Texaco, Inc., 35 S.W.3d 658, 666 (Tex. App.-Houston [1st Dist.] 2000, pet. denied).

SOURCE: HOUSTON COURT OF APPEALS - No. 01-11-00460-CV – 2/14/2013

Contract Modification must also be supported by consideration

Modification of contract terms also requires consideration, just as the original contract

CONTRACT MODIFICATION

"A modification must satisfy the elements of a contract: a meeting of the minds supported by consideration." Hathaway v. Gen. Mills, Inc., 711 S.W.2d 227, 228 (Tex. 1986); see also Walden v. Affiliated Computer Servs., Inc., 97 S.W.3d 303, 314 (Tex. App.-Houston [14th Dist.] 2003, pet. denied).

Consideration is defined as "either a benefit to the promisor or a loss or detriment to the promisee." N. Natural Gas Co. v. Conoco, Inc., 986 S.W.2d 603, 607 (Tex. 1998) (quoting Receiver for Citizen's Nat'l Assurance Co. v. Hatley, 852 S.W.2d 68, 71 (Tex. App.-Austin 1993, no writ)).

SOURCE: HOUSTON COURT OF APPEALS - No. 01-11-00800-CV – 2/28/2013
 

To be legally binding, agreement can't be wishy-washy about what is agreed

Agreement to agree (in the future) does not make for a judicially enforceable contract.

ELEMENTS OF CONTRACT - PRECISION IN DEFINING TERMS AND OBLIGATIONS IS REQUIRED

The elements of a valid and enforceable contract are: (1) an offer; (2) an acceptance in strict compliance with the terms of the offer; (3) a meeting of the minds; (4) each party's consent to the terms; and (5) execution and delivery of the contract with the intent that it be mutual and binding. Hubbard v. Shankle, 138 S.W.3d 474, 481 (Tex. App.-Fort Worth 2004, pet. denied).

 

The necessary elements of both written and oral contracts are the same and must be present for a contract to be binding. Id. A contract's material terms must be sufficiently definite and reasonably certain to both parties. Fort Worth Indep. Sch. Dist. v. City of Fort Worth, 22 S.W.3d 831, 846 (Tex. 2000).

 

Accordingly, all essential terms of the agreement must be agreed upon before a contract may be enforced by the courts. T.O. Stanley Boot Co., Inc. v. Bank of El Paso, 847 S.W.2d 218, 221 (Tex. 1992). If the terms of an alleged contract are so indefinite that it is impossible for the courts to determine the rights and obligations of the parties, it is not an enforceable agreement. Shin-Con Dev. Corp. v. I.P. Invs., Ltd., 270 S.W.3d 759, 765 (Tex. App.-Dallas 2008, pet. denied). Parties may agree on some terms sufficient to create a contract, leaving other provisions for later negotiation. See Scott v. Ingle Bros. Pac., Inc., 489 S.W.2d 554, 555 (Tex. 1972); Ski River Dev., Inc. v. McCalla, 167 S.W.3d 121, 133 (Tex. App.-Waco 2005, pet. denied). When an agreement leaves material terms open for future adjustment and agreement that never occur, it is not binding upon the parties and merely constitutes an agreement to agree. See Fort Worth Indep. Sch. Dist., 22 S.W.3d at 846; Ski River, 167 S.W.3d at 134.

SOURCE: DALLAS COURT OF APPEALS - No. 05-12-00653-CV – 2/21/2013

Deficiency claim: Fair Market Value vs. Sales Price at Foreclosures Sale

Statutory right to a judicial determination of the fair market value of the properties sold at foreclosure can be waived; no set-off if sales proceeds are lower than fair market value when waiver applies.
 
DIFFERENCE BETWEEN FAIR MARKET VALUE AND AMOUNT FOR WHICH PROPERTY ACTUALLY SELLS MAY NOT MAKE A DIFFERENCE FOR PURPOSES OF DETERMINING DEFICIENCY AMOUNT

Debtor and Guarantors argue the trial court failed to determine the fair market value of the properties sold at foreclosure and then failed to calculate the deficiency using the fair market value of the properties sold. See Tex. Prop. Code Ann. § 51.003(b), (c) (West 2007).[2]

[2] With respect to a foreclosure involving real property, section 51.003 of the Texas Property Code allows a lender to seek a deficiency judgment calculated by using the foreclosure sales price. See Tex. Prop. Code Ann. § 51.003 (West 2007). In proceedings governed by section 51.003, the borrower may request the trial court to determine the fair market value of the real property as of the date of foreclosure. Id. § 51.003(b). If the fair market value exceeds the sales price at the foreclosure sale, the borrower is entitled to an offset of the excess of the fair market value against the deficiency. Id.§ 51.003(c). If no competent evidence of fair market value is introduced, or if no request to determine the fair market value is made, the sales price at the foreclosure sale shall be used to compute the deficiency. Id.

Lender contends that the loan documents governing the 2009 note contain provisions that waive the right that Debtor and Guarantors claim they had to a statutory fair market value determination and offset of their deficiency.

The February 2009 Deed of Trust[3] includes the following provision:

7.8 WAIVER OF DEFICIENCY STATUTE.

(a) In the event an interest in any of the mortgaged property is foreclosed upon pursuant to a judicial or nonjudicial foreclosure sale, grantor agrees as follows, notwithstanding the provisions of sections 51.003, 51.004, and 51.005 of the Texas Property Code (as the same may be amended from time to time), and to the extent permitted by law, grantor agrees that beneficiary shall be entitled to seek a deficiency judgment from grantor and any other party obligated on the note equal to the difference between the amount owing on the note and the amount for which the mortgaged property was sold pursuant to judicial or nonjudicial foreclosure sale. Grantor expressly recognizes that this section constitutes a waiver of the above-cited provisions of the Texas Property Code which would otherwise permit grantor and other persons against whom recovery of deficiencies is sought or guarantor independently (even absent the initiation of deficiency proceedings against them) to present competent evidence of the fair market value of the mortgaged property as of the date of the foreclosure sale and offset against any deficiency the amount by which the foreclosure sale price is determined to be less than such fair market value. Grantor further recognizes and agrees that this waiver creates an irrebuttable presumption that the foreclosure sale price is equal to the fair market value of the mortgaged property for purposes of calculating deficiencies owed by grantor, guarantor, and others against whom recovery of a deficiency is sought.

The Guaranty Agreements at issue also contain provisions stating that Guarantors waived, "any and all rights under Sections 51.003, 51.004 and 51.005 of the Texas Property Code and any amendments, recodifications, supplements, or any successor statute or law of or to any such statute or law."

In several appeals challenging deficiency judgments, our sister courts have enforced provisions contained in loan documents as a waiver of the debtor's right to a judicial determination of a property's fair market value, a right granted by the Property Code. See Interstate 35/Chisam Rd., L.P. v. Moayedi, 377 S.W.3d 791, 795-802 (Tex. App.-Dallas 2012, pet. filed); Tran v. Compass Bank, No. 02-11-00189-CV, 2012 Tex. App. LEXIS 323, **2-7 (Tex. App.-Fort Worth Jan. 12, 2012, no pet.) (mem. op.); Kelly v. First State Bank Cent. Tex., No. 03-10-00460-CV, 2011 Tex. App. LEXIS 10241, **21-27, *32 (Tex. App.-Austin Dec. 30, 2011, pet. granted, judgm't vacated w.r.m.); Segal v. Emmes Capital, L.L.C., 155 S.W.3d 267, 277-81 (Tex. App.-Houston [1st Dist.] 2004, pet. dism'd).

Although the Debtor's and Guarantors' response to Lender's motion for summary judgment asserts a right to a judicial determination of the fair market value in assessing their deficiency, they do not address the provisions of their respective contracts waiving those rights. Also, Debtor's and Guarantors' brief fails to address why the waiver provisions should not be enforced.

Although Debtor and Guarantors argue the deficiency judgment failed to account for the fair market value of the properties sold at foreclosure, if the sale was legally and fairly made, a claim that the consideration received was inadequate is generally not sufficient to justify a decision to set aside a trustee's sale. See Am. Sav. & Loan Ass'n v. Musick, 531 S.W.2d 581, 587 (Tex. 1975). Neither Debtor nor Guarantors question Lender's power or right to foreclose, nor do they suggest any irregularity in the foreclosure proceedings. Additionally, if the sale is conducted fairly and in accord with the deed of trust, a mortgagee may purchase the property at the sale. See Donaldson v. Mansel, 615 S.W.2d 799, 802 (Tex. Civ. App.-Houston [1st Dist.] 1980, writ ref'd n.r.e.); Skeen v. Glenn Justice Mortg. Co., Inc., 526 S.W.2d 252, 256 (Tex. Civ. App.-Dallas 1975, no writ). The deeds of trust at issue allowed Lender to purchase the properties at issue.

Because Debtor and Guarantors waived their statutory right to a judicial determination of the fair market value of the properties sold at foreclosure, the deficiency "is calculated by subtracting the foreclosure sale price, not the fair market value, from the amount owed under the note." See Provident Nat'l Assurance Co. v. Stephens, 910 S.W.2d 926, 929 (Tex. 1995). Debtor and Guarantors waived their statutory appraisal rights; thus, they were not entitled to a judicial determination of the fair market value of the properties sold at foreclosure. We overrule issue one.

SOURCE: BEAUMONT COURT OF APPEALS - No. 09-12-00073-CV  - 2/21/2013

Texas Property Code addresses deficiency judgments.

Subsection (a) of 51.003 of the Property Code defines a deficiency suit as an "action brought to recover the deficiency" between the bid price at a foreclosure sale and the amount of the debt owed on a note. TEX. PROP. CODE ANN. § 51.003(a) (West 20007). Subsection (b) specifically provides that requesting a court to determine fair market value is a defense for reducing liability for a deficiency judgment, stating:

Any person against whom such a recovery is sought by motion may request that the court in which the action is pending determine the fair market value of the real property as of the date of the foreclosure sale.

Id. 

CASES:

Interstate 35/Chisam Rd., L.P. v. Moayedi, 377 S.W.3d 791, 797 (Tex. App.-Dallas 2012, pet. filed) ("Section 51.003 was designed to protect borrowers and guarantors in deficiency suits brought following the non-judicial foreclosure on realty."); Comiskey v. FH Partners, LLC, 373 S.W.3d 620, 643 (Tex. App.-Houston [14th Dist] 2012, pet. denied) (declining to apply section 51.003 to a declaratory judgment action).

SOURCE: DALLAS COURT OF APPEALS - No. 05-12-00653-CV – 2/21/2013

How to complain of breach of settlement agreement: motion to enforce or pleading complaining of breach?

What if there is a settlement agreement in a pending lawsuit (such as by Rule 11 agreement), and one party fails to comply with it? Does the non-breaching party have to file a new pleading alleging breach of contract, or will a motion to enforce the settlement do?

BREACH OF SETTLEMENT AGREEMENT IS BREACH OF CONTRACT

But does it require an amended pleading asserting a breach of contract claim, or even a separate law suit?

The supreme court has determined that a motion to enforce can be considered as a pleading in a breach of settlement agreement case in certain circumstances. Ford Motor Co. v. Castillo, 279 S.W.3d 656, 663 (Tex. 2009) (motion to enforce sufficient as a pleading to support a judgment for breach of contract); see also Neasbitt v. Warren, 105 S.W.3d 113, 118 (Tex. App.-Fort Worth 2003, no pet.) (same).

SOURCE: HOUSTON COURT OF APPEALS – 14-12-01104-CV – 12/14/2012 (mandamus petition subsequently filed in the Texas Supreme Court)

Relators filed this petition for writ of mandamus complaining of the trial court's June 4, 2012 order. In their petition, relators assert that the dismissal order signed May 27, 2011 was a final order, and that the trial court lost plenary jurisdiction 30 days later. Therefore, they contend that the June 4, 2012 order enforcing the settlement agreement is void for want of subject matter jurisdiction. See Tex. R. Civ. P. 329b. Relators assert that the trial court did not have jurisdiction to grant the Bank's motion, and that the Bank's only remedy was to file a separate lawsuit alleging breach of the settlement agreement.

Relators correctly assert that the party seeking enforcement of the settlement agreement must pursue a separate claim for breach of contract. See Padilla v. LaFrance, 907 S.W.2d 454, 461 (Tex. 1995). However, the fact that the Bank did not file a separate pleading does not necessarily divest the trial court of jurisdiction. The supreme court has determined that a motion to enforce can be considered as a pleading in a breach of settlement agreement case in certain circumstances. Ford Motor Co. v. Castillo, 279 S.W.3d 656, 663 (Tex. 2009) (motion to enforce sufficient as a pleading to support a judgment for breach of contract); see also Neasbitt v. Warren, 105 S.W.3d 113, 118 (Tex. App.-Fort Worth 2003, no pet.) (same).

The issue is whether, under these circumstances, the Bank's motion to enforce can be considered a sufficient pleading in a breach of settlement agreement case. In Neasbitt, the Fort Worth Court of Appeals considered the party's motion to enforce and reviewed it to determine whether it was sufficient to constitute a pleading. 105 S.W.3d at 117-18. We cannot conduct such a review in this case because relators have not provided this court with a copy of the Bank's motion to enforce.

It is relators' responsibility to provide the court with a record supporting their petition for writ of mandamus. See Tex. R. App. P. 52.7. Because relators have not provided this court with a sufficient record showing they are entitled to relief, they have not established entitlement to the extraordinary relief of a writ of mandamus. Accordingly, we deny relators' petition for writ of mandamus. 

Proving revenue loss and lost profits - expert testimony, evidence to aid quantification

LOST PROFITS - HOW DO YOU PROVE THAT?

Since how much a biz would have made $$$-wise [if such and such would not have happend] can hardly be known with perfect certainty, and is almost always somewhat speculative, it's not as simple as quantifying and accounting for lost monthly salary or hourly wages.

Lost profits "must be shown by competent evidence with reasonable certainty." Holt Atherton Indus., Inc. v. Heine, 835 S.W.2d 80, 84 (Tex.1992). "The requirement of `reasonable certainty' in the proof of lost profits is intended to be flexible enough to accommodate the myriad circumstances in which claims for lost profits arise." Texas Instruments, Inc. v. Teletron Energy Mgmt., Inc., 877 S.W.2d 276, 279 (Tex. 1994).
 
Competent evidence consists of "opinions or estimates of lost profits . . . based on objective facts, figures, or data from which the amount of lost profits can be ascertained. Although supporting documentation may affect the weight of the evidence, it is not necessary to produce in court the documents supporting the opinions or estimates." Holt Atherton, 835 S.W.2d at 84 (citations omitted).

Conflicting evidence about the value of property generally falls into two categories: evidence of two distinct options or evidence of a range for value based on certain factors. See, e.g., Waterways on the Intercoastal, Ltd. v. State, 283 S.W.3d 36, 46 (Tex. App.-Houston [14th Dist.] 2009, no pet.); Pleasant v. Bradford, 260 S.W.3d 546, 559-60 (Tex. App.-Austin 2008, pet. denied). When the testimony supports a range for valuation rather than two distinct options, determination of an award within that range is left to the jury's discretion. Waterways, 283 S.W.3d at 46. If the determination is within that range, "a reviewing court is not permitted to speculate on how the jury actually arrived at its award." Drury Sw., Inc. v. Louie Ledeaux #1, Inc., 350 S.W.3d 287, 292 (Tex. App.-San Antonio 2011, pet. denied).

SOURCE: HOUSTON COURT OF APPEALS – No. 01-11-00650-CV – 1/24/2013

The testimony concerning the value of the lost profits was not based on a precise and fixed formula. Instead, Albrecht testified about the maximum Potter could have earned from the billboards. He also acknowledged other factors that could have impacted Potter's ability to reach that maximum, such as prolonged vacancies and not being able to reach as many customers.

None of CBS Outdoor's experts offered competing testimony about the lost profits that Potter could have realized. Instead, CBS Outdoor's experts' testimony consisted of critiques of the reliability of Potter's estimation of costs and Albrecht's estimation of lost revenue. The testimony of all of the experts involved established that the jury was presented with an inexact range for determining Potter's lost profits, not a precise set of competing fixed values. The jury's damage award does not exceed the range presented to the jury. Because the jury's damage award is within the permissible range, the amount awarded was within the jury's discretion, and we cannot speculate on how the jury reached its determination. See id. "[U]ncertainty as to the fact of legal damages is fatal to recovery, but uncertainty as to the amount will not defeat recovery." Sw. Battery Corp. v. Owen, 115 S.W.2d 1097, 1099 (Tex. 1938); see also ERI Consulting Engineers, Inc. v. Swinnea, 318 S.W.3d 867, 877 (Tex. 2010) (citing Sw. Battery and holding "discrepancy between two reasonably certain amounts will not defeat recovery"). Accordingly, we overrule CBS Outdoor's seventh issue.

Proof that one expert testified to the contrary of the opponent's expert is not proof that the opponent's methodology is flawed. Instead, conflicts between the experts' testimony are left to the jury to resolve. See Hous. Lighting & Power Co. v. Dickenson Indep. Sch. Dist., 641 S.W.2d 302, 310 (Tex. App.-Houston [14th Dist.] 1982, writ ref'd n.r.e.) (holding "Texas courts have held that use of any one particular approach as the sole standard from which to derive value is fundamentally wrong" and that it is the jury's duty to weigh conflicting expert testimony on value).

An expert's opinion must be disregarded when it is conclusory or speculative. See Coastal Transp. Co., Inc. v. Crown Cent. Petroleum Corp., 136 S.W.3d 227, 232 (Tex. 2004) (holding conclusory or speculative expert testimony cannot support a judgment). "An expert's opinion might be unreliable, for example, if it is based on assumed facts that vary from the actual facts . . . or it might be conclusory because it is based on tests or data that do not support the conclusions reached." Whirlpool Corp. v. Camacho, 298 S.W.3d 631, 637 (Tex. 2009).

The Supreme Court of Texas held in Texas Instruments, "The fact that a business is new is but one consideration in applying the `reasonable certainty' test." Id. at 280. This does not mean that a new business cannot recover lost profits. Id. Instead, profits are only denied when "profits which might have been made from such businesses are not susceptible of being established by proof to that degree of certainty which the law demands." Id. The determination of lost profits in such a situation focuses on the experience of the persons involved in the enterprise, the nature of the business activity, and the relevant market. Id.

Nothing in Texas Instruments categorically denies using the revenue obtained on CBS Outdoor's billboards to determine the lost profits Potter would have received on those exact same billboards. To the contrary, as Potter points out, profits of one business can be used to estimate the lost profits of another similarly situated business. See Bright v. Addison, 171 S.W.3d 588, 603 (Tex. App.-Dallas 2005, pet. denied) (upholding trial court's consideration of "actual data from an existing business" to determine the lost profits of a similar business).

SOURCE: HOUSTON COURT OF APPEALS – No. 01-11-00650-CV – 1/24/2013

Notice to all: Lis Pendens - and bona fide purchaser defense

  

NOTICE OF LIS PENDENS AND ITS EFFECTS

 

During the pendency of an action involving enforcement of an encumbrance against real property, the party to the action who is seeking affirmative relief may file for record with the county clerk of each county where a part of the property is located a notice that the action is pending. TEX. PROP. CODE ANN. § 12.007(a) (West Supp. 2012).

 

A recorded lis pendens is notice to the world of its contents. Id. § 13.004(a) (West Supp. 2012). The purpose of lis pendens notice is twofold: (1) to protect the alleged rights of the party filing it to the property that is in dispute in the lawsuit, and (2) to put those interested in the property on notice of the lawsuit. Collins v. Tex Mall, L.P., 297 S.W.3d 409, 418 (Tex. App.-Fort Worth 2009, no pet.).

 

The doctrine of lis pendens is based on the public policy that there should be an end to litigation. Cherokee Water v. Advance Oil & Gas, 843 S.W.2d 132, 135 (Tex. App.-Texarkana 1992, writ denied). It accomplishes that policy by preventing alienations that would defeat the litigation and that would deprive the plaintiff of his relief by putting the property beyond the reach of the present action. Id. The doctrine does not void a conveyance of the property during pendency of the suit. Collins, 297 S.W.3d at 418. The interest of the grantor merely passes subject to the determination of the cause. Cherokee Water, 843 S.W.2d at 135.

A recorded lis pendens is notice to the world of its contents. See TEX. PROP. CODE ANN. § 13.004(a). The purpose of a lis pendens includes putting those interested in the property on notice of the lawsuit. See Collins, 297 S.W.3d at 418. Further, as a purchaser of real property, Brent is charged with knowledge of all facts appearing in the chain of title that would place a reasonably prudent person on inquiry as to the rights of other parties in the real property. See Noble Mortg., 340 S.W.3d at 76.

SOURCE: TYLER COURT OF APPEALS - No. 12-12-00029-CV – 1/31/2013

 

Here, the evidence showed that Charlie and Elaine filed and recorded a lis pendens, which stated that a suit was pending to declare a "security instrument" void. Afterwards, but before a judgment in the first suit had been rendered, Charlie and Elaine conveyed the real property to Brent. Because his parents filed a lis pendens before he purchased the real property, Brent had constructive knowledge of the first action involving the deed of trust lien, defeating his status as a bona fide purchaser for value. See id.; Madison, 39 S.W.3d at 606. Thus, Brent failed to raise a fact issue on his affirmative defense.

 

 

Litigating contracts: declaratory judgment vs. contract damages and enforcement

DECLARATORY JUDGMENT INDEPENDENT OF
DAMAGES CAUSED BY BREACH OF CONTRACTUAL OBLIGATION.

 

Different types of lawsuits may be brought relating to a contract. A suit seeking damages for breach is not the only variety.  

"A person interested under a . . . written contract. . . may have determined any question of construction or validity arising under the . . . contract . . . and obtain a declaration of rights, status, or other legal relations thereunder." TEX. CIV. PRAC. & REM. CODE ANN. § 37.004(a) (Vernon 2008). "A contract may be construed either before or after there has been a breach." Id. § 37.004(b).

Accordingly, a person can bring a declaratory judgment action following a breach of contract and have the rights under the contract declared. While such an action has much in common with a breach of contract action, they are distinct from each other. Specifically, a declaratory judgment action has the effect of determining liability without awarding damages, while a breach of contract action seeks both a determination of liability and an award of damages. See Intercontinental Group P'ship v. K.B. Home Lone Star, L.P., 295 S.W.3d 650, 660-61 (Tex. 2009).

"Further relief based on a declaratory judgment or decree may be granted whenever necessary or proper." TEX. CIV. PRAC. & REM. CODE ANN. § 37.011 (emphasis added). "Necessary or proper" is disjunctive, not conjunctive. Additionally, the further relief available is not limited only to actions necessary to enforce the judgment. Instead, further relief is available for anything that "serve[s] to effectuate the underlying judgment." State v. Anderson Courier Service, 222 S.W.3d 62, 65 (Tex. App.-Austin 2005, pet. denied).

When a case is remanded for further proceedings, res judicata does not apply at all because there is no second action. Jay Petroleum, L.L.C. v. EOG Resources, Inc., 332 S.W.3d 534, 540 (Tex. App.-Houston [1st Dist.] 2009, pet. denied). Further relief sought under section 37.011 is not limited to claims brought in the same cause. Valley Oil, 499 S.W.2d at 336. Instead, it "may be sought in the same proceeding or in a later proceeding." Lakeside Realty, 202 S.W.3d at 191.

SOURCE: HOUSTON COURT OF APPEALS – No. 01-11-00650-CV – 1/24/2013 – CBS Outdoor, Inc. v. Potter  

 

Does a prior declaratory judgment action entail res judicata effect?

   
Here is a scenario where the difference between claim and issue preclusion becomes meaningful: a prior suit of declaratory relief, and a second suit seek other type of relief.
  

DECLARATORY JUDGMENT AND RES JUDICATA: THE EXCEPTION
   

The elements for establishing res judicata, or claim preclusion, are "(1) a prior final judgment on the merits by a court of competent jurisdiction; (2) identity of 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." Amstadt v. U.S. Brass Corp., 919 S.W.2d 644, 652 (Tex. 1996).

An exception to the application of res judicata is when the original suit sought only a declaratory judgment. See Valley Oil Co. v. City of Garland, 499 S.W.2d 333, 335 (Tex. Civ. App.-Dallas 1973, writ ref'd n.r.e.). In this situation, the first judgment provides only declaratory relief and does not bar a subsequent proceeding for coercive relief stemming from the declaratory judgment. See id.; TEX. CIV. PRAC. & REM. CODE ANN. § 37.011 (Vernon 2008) (providing "[f]urther relief based on a declaratory judgment or decree may be granted whenever necessary or proper").

The rationale for this apparent departure from the usual rule of res judicata is that the losing party in a declaratory judgment action can normally be expected to recognize the rights declared by the judgment and act accordingly, but that if he fails to do so, the court should have ample power to enforce the judgment by subsequent coercive orders, whether or not such relief was sought in the original action.

Valley Oil, 499 S.W.2d at 336.

Under this exception, the only matters excluded from subsequent litigation are what was actually considered and ruled on in the original action. See Alsheikh v. Arabian Nat'l Shipping Corp., 01-08-00007-CV, 2009 WL 884795, at *2 (Tex. App.-Houston [1st Dist.] 2009, no pet.) (mem. op.). In other words, while issue preclusion (collateral estoppel) applies to prior declaratory judgment actions, claim preclusion (res judicata) does not. See id.; Barr v. Resolution Trust Corp. ex rel. Sunbelt Fed. Sav., 837 S.W.2d 627, 628 (Tex. 1992) (distinguishing between issue preclusion and claim preclusion and defining issue preclusion as preventing relitigation of particular issues already resolved in prior suit).

SOURCE: HOUSTON COURT OF APPEALS – No. 01-11-00650-CV – 1/24/2013 – CBS Outdoor, Inc. v. Potter
 

SNIPPET FROM EARLIER CASE FROM HOUSTON ADDRESSING THE SAME ISSUE:

The doctrine of res judicata bars a second suit by parties on matters actually litigated in an earlier suit, as well as claims "`which, through the exercise of diligence, could have been litigated in a prior suit.'" Getty Oil Co. v. Ins. Co. of N. Am., 845 S.W.2d 794, 799 (Tex.1992) (quoting Barr v. Resolution Trust Corp., 837 S.W.2d 627, 631 (Tex.1992)). Texas follows the transactional approach to res judicata, which requires claims arising out of the same subject matter to be litigated in a single lawsuit. Hallco Tex., Inc. v. McMullen County, 221 S.W.3d 50, 58 (Tex. 2006); Barr, 837 S.W.2d at 631. For res judicata to apply, there must be: (1) a prior final judgment on the merits by a court of competent jurisdiction; (2) identity of parties or those in privity with them; and (3) a second action based on the same claims that were raised or could have been raised in the first action. Amstadt v. U.S. Brass Corp., 919 S.W.2d 644, 652 (Tex. 1996).

Here, the third element of res judicata is not met because there is no second action concerning these claims. The reversal of Jay's motion for summary judgment made the counterclaims live again, which does not constitute res judicata because the matter of attorney's fees was never finally determined. See Tex. Water Rights Comm'n v. Crow Iron Works, 582 S.W.2d 768, 771 (Tex.1979) (stating res judicata requires cause "finally determined, without appeal").

We also note that when we rendered the declaratory judgment in favor of EOG, EOG could seek a subsequent application for relief based on rights declared in the prior judgment, "even though such relief could have been granted in the original action," unless such application was actually considered and denied in the original action. State v. Anderson Courier Serv., 222 S.W.3d 62, 66 (Tex.App.-Austin 2005, pet. denied); Valley Oil Co. v. City of Garland, 499 S.W.2d 333, 335 (Tex.Civ. App-Dallas 1973, no writ). As our sister court explained,

[T]he rationale for this apparent departure from the usual rule of res judicata is that the losing party in a declaratory judgment action can normally be expected to recognize the rights declared by the judgment and act accordingly, but that if he fails to do so, the court should have ample power to enforce the judgment by subsequent coercive orders, whether or not such relief was sought in the original action.

Valley Oil Co., 499 S.W.2d at 336; see also 3 William V. Dorsaneo III, Texas Litigation Guide § 45.03 (2008) ("After a party has obtained a declaratory judgment, a subsequent suit may be brought for further relief if it is necessary or proper. [Citation omitted.] This rule involves a departure from the strict application of res judicata, which would ordinarily bar a subsequent proceeding because coercive relief could have been granted in the original action. It is justified on the theory that the loser may be expected to recognize the rights declared by the judgment, and if not, some form of compulsion should be available."). Because the trial court never had the opportunity to consider EOG's request for attorney's fees following our declaratory judgment in favor of EOG, EOG could not be barred by res judicata to pursue that claim for relief based on rights declared by our judgment.

We hold EOG's counterclaim for attorney's fees is not barred by res judicata. We overrule Jay's second issue.

SOURCE:  Jay Petroleum, L.L.C. v. EOG Resources, Inc., 332 S.W.3d 534, 539 (Tex. App.-Houston [1st Dist.] 2009, pet. denied);

 

Privity for purposes of relitigation preclusion under res judicata doctrice

   
Is someone who was not himself or herself (or itself, in the case of an entity) a party in a prior lawsuit involving the same matter barred from litigating it in a second lawsuit? It depends. The key issue is privity -- or no privty. But what does "in privity" mean for purposes of res judicta? That may depend too. Apparently the (case) law does not give a straight answer, or - to use the apposite metaphor -- the courts of appeals have not established a bright-line rule.
   

RES JUDICATA—APPLICABLE LAW

  

Res judicata precludes relitigation of claims that have been finally adjudicated, or that arise out of the same subject matter and that could have been litigated in the prior action. Amstadt v U.S. Brass Corp., 919 S.W.2d 644, 652 (Tex. 1996). For res judicata to apply, there must be (1) a prior final judgment on the merits by a court of competent jurisdiction; (2) identity of parties or those in privity with them; and (3) a second action based on the same claims that were raised or could have been raised in the first action. Citizens Ins. Co. of Am. v. Daccach, 217 S.W.3d 430, 449 (Tex. 2007). The doctrine seeks to bring an end to litigation, prevent vexatious litigation, maintain stability of court decisions, promote judicial economy and prevent double recovery. Id.

Generally, people are not bound by a judgment in a suit to which they were not parties. Amstadt, 919 S.W.2d at 652. The doctrine of res judicata creates an exception to this rule by forbidding a second suit arising out of the same subject matter of an earlier suit by those in privity with the parties to the original suit. Id. at 652-53. The purposes of the exception are to ensure that a defendant is not twice vexed for the same acts, and to achieve judicial economy by precluding those who have had a fair trial from relitigating claims. Id. at 653.
  

PRIVITY DETERMINATIONS ON A CASE-BY-CASE BASIS

There is no general definition of privity that can be automatically applied in all res judicata cases; the circumstances of each case must be examined. Getty Oil v. Ins. Co. of N. Am., 845 S.W.2d 794, 800 (Tex. 1992). Privity exists if the parties share an identity of interest in the basic legal right that is the subject of the litigation. Caprock Inv. Corp. v. Montgomery, 321 S.W.3d 91, 96 (Tex. App.-Eastland 2010, pet. denied). Those in privity with a party may include persons who exert control over the action, persons whose interests are represented by the party, or successors in interest to the party. Getty Oil, 845 S.W.2d at 800-01.

SOURCE: TYLER COURT OF APPEALS - No. 12-12-00029-CV – 1/31/2013

Claim Preclusion and Issue Preclusion

   
BOTH CLAIM PRECLUSION AND ISSUE PRECLUSION FALL UNDER THE RUBRIC "RES JUDICATA" --BROADLY SPEAKING  
(loosly translated from Latin as "stuff already decided by a judge")
  
But the case law nevertheless makes distinction between res judicata narrowly speaking and collateral estoppel

The term res judicata "is the generic term for a group of related concepts concerning the conclusive effects given final judgments." Barr v. Resolution Trust Corp., 837 S.W.2d 627, 628 (Tex. 1992). "Within this general doctrine, there are two principal categories: (1) claim preclusion (also known as res judicata); and (2) issue preclusion (also known as collateral estoppel)." Id.

 

The category at issue in this case, claim preclusion, "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." Id.

 

Claim preclusion prohibits the "assertion of a claim in a subsequent case when (1) there is a final determination on the merits by a court of competent jurisdiction; (2) the parties in the second action are the same or in privity with those in the first action; and (3) the second action is based on the same claims as were raised or could have been raised in the first action." Pipes v. Hemingway, 358 S.W.3d 438, 448 (Tex. App.-Dallas 2012, no pet.). Accordingly, a second suit asserting "`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'" is precluded by the doctrine of res judicata. Id. (quoting Travelers Ins. Co. v. Joachim, 315 S.W.3d 860, 862 (Tex. 2010)).

Cf. Harris Cnty. v. Sykes, 136 S.W.3d 635, 640 (Tex. 2004) (stating that "a dismissal constitutes a final determination on the merits of the matter actually decided"); Ritchey v. Vasquez, 986 S.W.2d 611, 612 (Tex. 1999) (per curiam) (explaining that dismissal with prejudice qualifies as final determination on merits). 

See Hallco Tex., Inc. v. McMullen Cnty., 221 S.W.3d 50, 58 (Tex. 2006) (explaining that doctrine of res judicata "requires claims arising out of the same subject matter to be litigated in a single lawsuit").

SOURCE: AUSTIN COURT OF APPEAL - No. 03-11-00091-CV – 2/1/2013 – Smith v. City of Blanco

 

In Hallco Tex., Inc. v. McMullen Cnty., 221 S.W.3d 50, 58 (Tex. 2006), the Texas Supreme Court summarized the doctrine, and explained the rationale for it, as follows:

The doctrine of res judicata, or claim preclusion, bars a second action by parties and their privies on matters actually litigated in a previous suit, as well as claims "`which, through the exercise of diligence, could have been litigated in a prior suit.'" Getty Oil Co. v. Ins. Co. of N. Am., 845 S.W.2d 794, 799 (Tex.1992) (quoting Barr v. Resolution Trust Corp., 837 S.W.2d 627, 631 (Tex.1992)).

 

We apply the transactional approach to res judicata, which requires claims arising out of the same subject matter to be litigated in a single lawsuit. Barr, 837 S.W.2d at 631. The res-judicata doctrine "serves vital public interests" by promoting the finality of judgments. San Remo Hotel, L.P. v. San Francisco, 545 U.S. 323, 345, 125 S.Ct. 2491, 162 L.Ed.2d 315 (2005).

 

We have recognized that the doctrine prevents needless, repetitive litigation, John G. and Marie Stella Kenedy Mem'l Found. v. Dewhurst, 90 S.W.3d 268, 288-89 (Tex.2002) (citing Parklane Hosiery Co. v. Shore, 439 U.S. 322, 326, 99 S.Ct. 645, 58 L.Ed.2d 552 (1979)), and in doing so, "advance[s] the interest[s] of the litigants (who must pay for each suit), the courts (who must try each suit), and the public (who must provide jurors and administration for each suit)." Schneider Nat'l Carriers, Inc., v. Bates, 147 S.W.3d 264, 278 (Tex. 2004).