David Bagwell and Susan Bagwell v. Broughton Maintenance Association, Inc. Old Grove Maintenance Association, Inc. And Whittier Heights Home Owners Association, Inc.

• Court: Court of Appeals of Texas
• Decided: August 10, 2023
• Docket: 02-23-00001-CV
• Status: Published

Opinion

In the Court of Appeals Second Appellate District of Texas at Fort Worth ___________________________ No. 02-23-00001-CV ___________________________

DAVID BAGWELL AND SUSAN BAGWELL, Appellants

V.

BROUGHTON MAINTENANCE ASSOCIATION, INC.; OLD GROVE MAINTENANCE ASSOCIATION, INC.; AND WHITTIER HEIGHTS HOME OWNERS ASSOCIATION, INC., Appellees

On Appeal from the 67th District Court Tarrant County, Texas Trial Court No. 067-328128-21

Before Kerr, Bassel, and Wallach, JJ. Memorandum Opinion by Justice Wallach MEMORANDUM OPINION

This is the second time the parties to this case have appeared before this court

on this dispute. The first version, Bagwell 1, can be found at Sister Initiative, LLC v.

Broughton Maintenance Association, Inc. (Bagwell 1), No. 02-19-00102-CV,

2020 WL 726785, at *1, *2 (Tex. App.—Fort Worth Feb. 13, 2020, pet. denied)

(mem. op.). Appellees were the prevailing parties in Bagwell 1. After Bagwell 1 was

concluded, Appellants David and Susan Bagwell (the Bagwells) filed this suit, Bagwell

2, in another court seeking indemnity for damages and expenses arising from Bagwell

1. Appellees filed a combined traditional and no-evidence motion for summary

judgment. The trial court granted the motion without specifying the basis of its ruling

and rendered judgment that the Bagwells take nothing. We will affirm the trial court’s

judgment.

I. Background

A. Bagwell 1

The plaintiffs in the first case were The Stonegate Financial Corporation;

Randy Vest; and Sister Initiative, LLC, which was determined by the trial court to be

under the control of the Bagwells. The defendants were Appellees herein, who made

third-party claims against the Bagwells. The judgment and findings of fact by the trial

court were reviewed in Bagwell 1 and were attached as an appendix to that opinion and

provided the details of the matters at issue in that case. Suffice it to say that the

business transactions, relationships, and contractual engagements of the Bagwells and

2 Appellees herein involve the same contractual engagements in both cases except that

the Bagwells did not assert indemnity claims against Appellees in Bagwell 1. We

affirmed the trial court’s judgment in Bagwell 1, the Texas Supreme Court declined to

hear the Bagwells’ petition for review, and our mandate issued thereafter.

B. Bagwell 2

The Bagwells sued Appellees in Bagwell 2 solely under a breach-of-contract

theory. The Bagwells alleged that they were former directors and officers of Appellees;

that Appellees had joined the Bagwells as third-party defendants in Bagwell 1 wherein

Appellees alleged claims of breach of fiduciary duty, civil conspiracy, aiding and

abetting, and fraud related to the Bagwells’ actions and decisions as directors; that the

Bagwells had incurred attorney’s fees and expenses in defending the third-party claims

in Bagwell 1, and that Appellees had refused to indemnify the Bagwells for those

attorney’s fees and expenses as allowed by the governing documents of the

associations. The Bagwells also sought recovery of attorney’s fees for breach of

contract under Texas Civil Practices and Remedies Code Chapter 38. See Tex. Civ.

Prac. & Rem. Code Ann. §§ 38.001–.006. Prior to trial, the Bagwells did not amend

their petition and did not seek recovery of attorney’s fees and expenses under Texas

Business Organizations Code Section 8.052.1 See Tex. Bus. Orgs. Code Ann. § 8.052.

Appellees raised several defenses in their answers, including res judicata.

Although the Bagwells contend that the trial court erred by not considering 1

their claim for recovery of attorney’s fees and expenses under Texas Business

3 Appellees filed a combined traditional and no-evidence motion for summary

judgment. The basis of Appellees’ traditional summary-judgment motion was that the

Bagwells’ indemnity claims were barred under the doctrine of res judicata. Appellees

contended that the Bagwells and Appellees were adverse parties in Bagwell 1; that in

Bagwell 1 the parties entered into a Rule 11 Agreement in which they agreed to waive

their rights to a jury trial and to submit all triable fact issues to the trial court for a

determination on the merits; and that after a four-week bench trial conducted in

compliance with the parties’ Rule 11 agreement, the trial court rendered judgment

against the Bagwells. Appellees contended that under the doctrine of res judicata, the

Bagwells were barred from asserting their indemnity claims in Bagwell 2 because they

had not asserted them in Bagwell 1. The trial court granted the motion for summary

judgment and then rendered judgment that the Bagwells take nothing after Appellees

nonsuited their remaining claims against the Bagwells. This appeal ensued.

Organization Code Section 8.052, this claim was not part of their pleadings prior to trial. Because the Bagwells pleaded a specific ground for recovery of attorney’s fees, they were not entitled to recover them on another unpleaded ground. See Spicer v. Maxus Healthcare Partners, LLC, 616 S.W.3d 59, 128 (Tex. App.—Fort Worth 2020, no pet.); Jones v. Frank Kent Motor Co., No. 02-14-00216-CV, 2015 WL 4965798, at *4 (Tex. App.—Fort Worth Aug. 20, 2015, no pet.) (mem. op.). In their third issue, the Bagwells complain of the trial court’s failure to consider their alleged claims for sanctions under Texas Civil Practice and Remedies Code Section 10.001. The Bagwells failed to adequately brief this point, thereby waiving any appellate error. See Hornbuckle v. Cadillac, No. 02-15-00267-CV, 2016 WL 3157569, at *2 (Tex. App.— Fort Worth June 2, 2016, no pet.) (per curiam) (mem. op.); see also Shetty v. Arconic, Inc., No. 01-19-00158-CV, 2020 WL 2026371, at *2 (Tex. App.—Houston [1st Dist.] Apr. 28, 2020, no pet.) (mem. op.).

4 II. Standards of Review

We review summary judgments de novo. Travelers Ins. v. Joachim, 315 S.W.3d

860, 862 (Tex. 2010); Hobson v. Francis, No. 02-18-00180-CV, 2019 WL 2635562, at

*4 (Tex. App.—Fort Worth June 27, 2019, no pet.) (mem. op.). Generally, we

consider the no-evidence grounds first. Lightning Oil Co. v. Anadarko E&P Onshore,

LLC, 520 S.W.3d 39, 45 (Tex. 2017). However, “if the movant in a traditional motion

challenges a cause of action on an independent ground, we consider that ground first

because it would be unnecessary to address whether a plaintiff met his burden as to

the no-evidence challenge if the cause of action is barred as a matter of law.” Womack

v. Oncor Elec. Delivery Co., No. 11-17-00233-CV, 2019 WL 3023516, at *3 (Tex. App.—

Eastland July 11, 2019, pet. denied) (mem. op.); see also Tex. Petroleum Land Mgt., LLC

v. McMillan, 641 S.W.3d 831, 840 (Tex. App.—Eastland 2022, no pet.). As set forth

below, we hold that the application of the res judicata doctrine is determinative of this

appeal.

III. Applicable Law and Analysis

In their first issue, the Bagwells argue that their claims are not barred by res

judicata or by a Rule 11 agreement that the parties made in the previous litigation. In

their second issue, they argue that they are entitled to indemnification for their

litigation costs from the prior litigation.

The basis of Appellees’ traditional summary-judgment motion was that the

Bagwells’ indemnity claims were barred under the doctrine of res judicata. We agree.

5 In Barr v. Res. Tr. Corp. ex rel. Sunbelt Fed. Sav., 837 S.W.2d 627, 631 (Tex. 1992), our

supreme court set out the fundamental concepts of res judicata, adopting the

transactional approach of the Restatement of Judgments Section 24(1). This approach

continues to be applied. See Reynolds v. Quantlab Trading Partners US, LP, No. 14-21-

00087-CV, 2023 WL 313248, at *4 (Tex. App.—Houston [14th Dist.] Jan. 19, 2023,

pet. denied) (mem. op.).

Under this transactional approach, a final judgment on an action “extinguishes

the right to bring suit on the transaction, or series of connected transactions, out of

which the action arose.” Barr, 837 S.W.2d at 631 (quoting Restatement of Judgments

§ 24(1)). The supreme court further quoted the Restatement, noting that a

“transaction” “is not equivalent to a sequence of events”; instead, “the

determination is to be made pragmatically, ‘giving weight to such considerations

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 to

the parties’ expectations or business understanding or usage.’” Id. (emphasis added).

Res judicata generally encompasses two broad categories of concepts involving

the conclusive effects arising from prior judgments: (1) claim preclusion, or res

judicata, and (2) issue preclusion, or collateral estoppel. Id. at 628. As we recently

noted,

Collateral estoppel and res judicata are related concepts concerning the preclusive effect of final judgments. See Barr . . ., 837 S.W.2d [at] 628 . . . . Collateral estoppel, or issue preclusion, precludes the

6 relitigation of issues resolved in a prior suit. Id. Res judicata, or claim preclusion, bars the relitigation of claims that have been finally adjudicated or 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).

O’Neill v. City of Fort Worth, No. 02-21-00214-CV, 2022 WL 325386, at *6 (Tex.

App.—Fort Worth Feb. 3, 2022, no pet.) (mem. op.). As the supreme court aptly

noted in Barr, “Res judicata, or claims 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.”

837 S.W.2d at 627–28 (emphasis added).

We will refer to the first concept as res judicata, which is the concept involved

in this appeal. It has three elements: (1) a prior final judgment on the merits by a court

of competent jurisdiction, (2) the same 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. Id. at 628; see also O’Neill, 2022 WL 325386, at *6. The well-established

policies behind the doctrine of res judicata “reflect the need to bring all litigation to an

end, prevent vexatious litigation, maintain stability of court decisions, promote judicial

economy, and prevent double recovery.” Barr, 837 S.W.2d at 629.

All three elements are obviously present in this case. Bagwell 1 is the prior

judgment on the merits by a court of competent jurisdiction. The Bagwells—as both

the controlling party for Sister Initiative, LLC in Bagwell 1 and individually as third-

party defendants—and Appellees were the same parties as in Bagwell 1. Finally, Bagwell

7 2 is the second action based on claims that could have been raised in the first action,

i.e., indemnity for the Bagwells from Appellees based on the agreements involved in

both cases. See Gamma Grp, Inc. v. Home State Cnty. Mut. Ins. Co., 342 S.W.3d 762,

766 (Tex. App.—Dallas 2011, pet. denied).

The Bagwells, however, argue that their indemnity claim should not be subject

to the res judicata doctrine because their indemnity claim was not mature and was

only a permissive counterclaim, not a mandatory counterclaim. See Getty Oil Co. v. Ins.

Co. of N. Am., 845 S.W.2d 794, 800 (Tex. 1992) (stating that when two parties are

aligned in the first action and no issues are drawn between them, the judgment in that

action does not preclude later claims between those parties.). However, the Getty court

also noted that simply because an indemnitee’s claim may be contingent does not

necessarily preclude the operation of res judicata. Id. at 799–800. When a party who

has a permissive counterclaim for indemnity asserts one claim for indemnity in the

underlying case, it becomes obligated under the doctrine of res judicata to assert all

other claims arising out of the same subject matter. Id. at 800; Gamma Grp.,

342 S.W.3d at 767.

Here, the Bagwells controlled Sister Initiative, LLC, which was a plaintiff that

sued Appellees in Bagwell 1 but no indemnity claim was brought. Res judicata applies

to parties who control a party to the prior judgment. Getty Oil, 845 S.W.2d at 800;

Caprock Inv. Corp. v. Montgomery First Corp., No. 2-04-155-CV, 2005 WL 3118787, at

8 *4 (Tex. App.—Fort Worth Nov. 23, 2005, no pet.) (per curiam) (mem. op.). Thus,

the Bagwells are barred by res judicata by virtue of that connection.

Additionally, the Bagwells and Appellees entered into a Rule 11 agreement to

submit all triable fact issues to the court in the non-jury trial. The trial court

incorporated that agreement into its judgment. Because a contingent liability claim is a

permissive crossclaim/counterclaim, it was a “triable fact issue” and should have been

brought in Bagwell 1. As stated by the court in Barr, “[a] subsequent suit will be barred

if it arises out of the same subject matter of a previous suit and which through the

exercise of diligence, could have been litigated in a prior suit.” 837 S.W.2d at

631 (emphasis added).

In this instance, the parties were identical and in privity; the dispute arose from

the same business dealings and documents; their treatment as a trial unit conforms to

their Rule 11 understanding; and with the exercise of diligence, the claims could have

been litigated in Bagwell 1. We hold the Bagwells’ claims for indemnity are barred by

the doctrine of res judicata. We overrule the Bagwells’ first and second issues.

IV. Conclusion

Having overruled Bagwells’ first and second issues and having held that their

third issue was not adequately briefed, we affirm the trial court’s judgment.

9 /s/ Mike Wallach Mike Wallach Justice

Delivered: August 10, 2023