City of Lakeway, Texas v. Cherry Knoll, LLC
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Opinion
TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN
NO. 03-18-00837-CV
City of Lakeway, Texas, Appellant
v.
Cherry Knoll, LLC, Appellee
FROM THE 353RD DISTRICT COURT OF TRAVIS COUNTY NO. D-1-GN-17-002896 THE HONORABLE AMY CLARK MEACHUM, JUDGE PRESIDING
MEMORANDUM OPINION
PER CURIAM
Appellee Cherry Knoll, LLC (Cherry Knoll) filed a motion to stay this appeal
pending resolution of a federal lawsuit concerning the same parties and subject matter. The federal
district court had dismissed Cherry Knoll’s federal lawsuit, but the Fifth Circuit reversed and
reinstated the lawsuit. In applying the doctrine of comity, we find that the facts support granting
Cherry Knoll’s motion. Therefore, we grant the motion to stay and abate proceedings pending
litigation of the federal suit.
BACKGROUND
On August 17, 2016, Cherry Knoll filed a federal civil rights suit against the City
of Lakeway (the City) and others in the U.S. District Court for the Western District of Texas. That
lawsuit arises out of the City’s effort to acquire a portion of Cherry Knoll’s land for a roadway expansion, which culminated in a 2015 settlement agreement between the City and Cherry Knoll.
The claims asserted against the City in the federal lawsuit include federal constitutional claims
under 42 U.S.C. § 1983, a claim for equitable rescission of the 2015 settlement agreement, and
other claims arising under Texas law.
On June 23, 2017, the City filed the instant breach of contract action in Travis
County District Court. In this lawsuit, the City seeks to recover its attorney fees and other costs
of litigation in the federal lawsuit on the theory that Cherry Knoll’s filing and prosecution of the
federal lawsuit violates the 2015 settlement agreement. Cherry Knoll moved for a stay of the
Travis County litigation so that the federal lawsuit could proceed, which the Travis County district
court granted.
On May 16, 2018, the federal district court dismissed Cherry Knoll’s complaint.
The Section 1983 claims were dismissed for substantive reasons and the state-law claims were
dismissed for lack of subject-matter jurisdiction. Under the terms of the stay granted by the state
district court, the federal district court’s dismissal triggered an end to the stay of the Travis County
litigation, and the parties began litigating in Travis County. Cherry Knoll filed an amended answer
in which it asserted, as counterclaims, the same state-law claims that the federal court had
dismissed for lack of federal subject-matter jurisdiction. The City filed a plea to the jurisdiction,
seeking dismissal of Cherry Knoll’s state-law claims on grounds of sovereign immunity and
mootness. The state district court denied the City’s plea to the jurisdiction, and this interlocutory
appeal followed. See Tex. Civ. Prac. & Rem. Code § 51.014(a)(8) (authorizing interlocutory
appeal of order that grants or denies plea to jurisdiction filed by governmental unit).
On April 22, 2019, the Fifth Circuit reversed the federal district court and reinstated
the federal lawsuit, including Cherry Knoll’s state and federal claims. Cherry Knoll, L.L.C.
2 v. Jones, 922 F.3d 309 (5th Cir. 2019). Cherry Knoll now requests that this Court stay this appeal
before this Court pending adjudication of the federal lawsuit.
DISCUSSION
When an action is pending in a federal court, a party can move to stay a later-filed
state-court case under the doctrine of comity. In re Old Am. Cty. Mut. Fire Ins.,
No. 03-12-00588-CV, 2012 WL 6699052, at *2 (Tex. App.—Austin, Dec. 20, 2012, orig.
proceeding) (mem. op.) (citing Ashton Grove L.C. v. Jackson Walker, L.L.P., 366 S.W.3d 790, 794
(Tex. App.—Dallas 2012, no pet.)). In applying the doctrine of comity, the Texas court in which
the subsequent action is instituted will generally stay the proceedings pending adjudication of the
federal suit. See Griffith v. Griffith, 341 S.W.3d 43, 54 (Tex. App.—San Antonio 2011, no pet.).
However, staying a proceeding under the doctrine of comity rests within the sound discretion of
the court. Ashton Grove, 366 S.W.3d at 794.
To obtain a stay of a later-filed case under the doctrine of comity, it is generally
necessary that the two suits concern the same subject matter, involve the same issues, seek the
same relief, and involve the same causes of action. Griffith, 341 S.W.3d at 54 (citing In re State
Farm Mut. Auto. Ins., 192 S.W.3d 897, 901 (Tex. App.—Tyler 2006, orig. proceeding)). “One
test to determine whether the causes of action are identical is to ascertain whether the parties could
obtain all the relief in the prior suit that they would be entitled to in the subsequent action.” Nowell
v. Nowell, 408 S.W.2d 550, 553 (Tex. App.—Dallas 1966, writ dism’d). Courts may also consider
additional factors such as which action was filed first, whether the parties are the same in both
actions, and the effect of a judgment in a later action on any order or judgment entered in the prior
action. In re BP Oil Supply Co., 317 S.W.3d 915, 919 (Tex. App.—Houston [14th Dist.] 2010,
orig. proceeding).
3 We conclude that these factors weigh in favor of granting Cherry Knoll’s motion
to stay the proceedings before our Court. The suit filed in federal court and the suit filed in state
court concern the same subject matter, involve the same issues, and seek the same relief. In its
brief before this Court the City acknowledges as much, stating that “Cherry Knoll asserted these
same [state law claims] … in its federal lawsuit.” The City has also asserted its state-law claims
as counterclaims in the federal lawsuit. Further, Cherry Knoll and the City could obtain all relief
in the federal suit to which they would be entitled in the state-court suit, and the federal court is
fully competent to address the City’s jurisdictional issues. See, e.g., GLF Constr. Corp.
v. LAN/STV, 414 F.3d 553, 556–58 (5th Cir. 2005) (applying governmental immunity under
Texas law).
Additional factors weigh in favor of granting Cherry Knoll’s motion to stay the
proceedings before our Court. The federal lawsuit is the first-filed suit. Further, a decision from
our Court regarding the City’s plea to the jurisdiction could impact the first-filed federal lawsuit.
As we have noted, the state-court suit is merely a subset of the federal lawsuit. A resolution of the
state-court suit would not fully resolve the federal suit but would leave room for inconsistencies
and conflict between the two suits. See In re BP Oil Supply, 317 S.W.3d at 919.
CONCLUSION
For these reasons, we grant Cherry Knoll’s motion to stay the appeal and we abate
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