Fletcher v. National Bank of Commerce

825 S.W.2d 176, 1992 Tex. App. LEXIS 295, 1992 WL 17793
CourtCourt of Appeals of Texas
DecidedFebruary 5, 1992
Docket07-91-0227-CV
StatusPublished
Cited by20 cases

This text of 825 S.W.2d 176 (Fletcher v. National Bank of Commerce) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Fletcher v. National Bank of Commerce, 825 S.W.2d 176, 1992 Tex. App. LEXIS 295, 1992 WL 17793 (Tex. Ct. App. 1992).

Opinion

BOYD, Justice.

Appellant Glenda I. Fletcher (Fletcher) appeals from a partial summary judgment in favor of appellee National Bank of Commerce (Bank). The judgment decrees that Fletcher and her ex-husband, Charles C. Fletcher, are jointly and severally liable on a promissory note payable to the Bank. Charles C. Fletcher has not appealed from that judgment.

Fletcher and Charles C. Fletcher were divorced in September of 1989. In the judgment dissolving that marriage, Fletcher was adjudged jointly liable with her ex-husband on the note in question here. That judgment was appealed to, and affirmed by, this court.

The basis of the Bank’s successful motion for summary judgment in this case, insofar as Fletcher is concerned, was that she was collaterally estopped from relit-igating the issue of her joint liability on the note. Both the judgment of the trial court dissolving the Fletcher marriage and the opinion of this court affirming that judgment were included as exhibits to the motion.

This case involves the offensive use of collateral estoppel, i.e., a plaintiff is seeking to estop a defendant from relitigating an issue which the defendant previously litigated and lost in a suit involving another party. This, of course, is different from a case involving the defensive use of collateral estoppel, i.e., one where estoppel is claimed because a plaintiff has previously litigated and lost an issue against another defendant. Parklane Hosiery Co. v. Shore, 439 U.S. 322, 329, 99 S.Ct. 645, 650, 58 L.Ed.2d 552, 561 (1979).

In the Parklane case, the Court explicated several reasons why the two situations should be treated differently. Initially, the Court noted offensive use of collateral es-toppel does not promote judicial economy in the same manner as does defensive use of the doctrine. Defensive use precludes a plaintiff from relitigating identical issues by merely switching adversaries and thus gives a plaintiff a strong incentive to join potential defendants in the first action if possible. Id. 439 U.S. at 329, 99 S.Ct. at 650.

However, offensive use creates precisely the opposite incentive. Since a plaintiff will be able to rely on a previous judgment against a defendant but will not be bound by the judgment if the defendant wins, the Court commented, the plaintiff has every incentive to adopt a “wait and see” attitude, in the hope that the first action by another plaintiff will result in a favorable judgment. Thus, it concluded, offensive use of the doctrine will likely increase rather than decrease litigation since potential plaintiffs will have everything to gain and nothing to lose by intervening in the first action. Id. 439 U.S. at 330, 99 S.Ct. at 651.

The Court also noted that a second argument against the offensive use of the doctrine was that it might be unfair to a defendant and noted three specific instances in which that might be the case. First, if a defendant in the first action was sued for small or nominal damages, the defendant might have little or no incentive to defend vigorously, particularly if future suits were not foreseeable. Second, it might be unfair to a defendant if the judg *178 ment relied upon as a basis for the estoppel was itself inconsistent with one or more judgments in favor of the defendant. Third, its application might be unfair where the second action affords the defendant procedural opportunities unavailable in the first action that could readily cause a different result. Id. 439 U.S. at 330-31, 99 S.Ct. at 651.

In considering all of these factors, the Court concluded that the preferable approach in the federal courts was not to preclude the use of offensive collateral es-toppel, but to grant trial courts broad discretion to determine when it should be applied. The general rule it explicated was that in instances where the plaintiff could easily have joined in the earlier action or where, either for the reasons discussed above or, for other reasons, the application of offensive estoppel would be unfair to a defendant, a trial judge should not allow the use of offensive estoppel. Id. 439 U.S. at 331, 99 S.Ct. at 651.

The Parklane decision concerned a federal question tried in federal courts and the Court explicated that the rule it created was to be applied in federal courts. However, its reasoning was so persuasive that in Scurlock Oil Co. v. Smithwick, 724 S.W.2d 1, 7 (Tex.1986), the Court stated:

As to whether to allow collateral estoppel and issue preclusion based upon findings in a prior trial when a “Mary Carter” type agreement was present, we would leave to the trial court discretion in this area. Parklane Hosiery Co., Inc. v. Shore, 439 U.S. 322, 331, 99 S.Ct. 645, 651-52, 58 L.Ed.2d 552 (1979). But in exercising that discretion, the trial court should consider certain fairness factors as outlined in Parklane Hosiery.

While the Scurlock Court, in its specific terminology, seemed to limit application of the Parklane rule to cases involving application of offensive collateral estoppel based upon findings in a prior trial where a “Mary Carter” type agreement was present, the clear implication of the case is that the rule should be applied in all cases involving the application of offensive collateral estoppel, whether or not a “Mary Carter” type agreement is involved, and we so hold.

In stating the general rule when the use of offensive collateral estoppel should not be allowed, the Parklane Court referred to situations where the party seeking its application could easily have joined in the earlier action or for other reasons, its use might be unfair. In that connection, it might be argued that the Parklane Court, by its use of the disjunctive in stating the rule, intended an instruction that the doctrine not be applied in cases where the plaintiff could easily have joined in the earlier action. However, we do not agree with that interpretation.

Rather, we believe the Court intended ease of joinder to be merely one of the factors to be considered by a trial court in determining the basic question whether it would be fair to a defendant to apply offensive collateral estoppel. Our conviction that this is particularly true in Texas is strengthened by the Scurlock Court’s admonition to consider the “fairness factors” outlined by the Parklane Court.

In Scurlock Oil Co. v. Smithwick, 787 S.W.2d 560, 563 (Tex.App.—Corpus Christi 1990, no writ), a retrial of the matter considered by the Supreme Court in the first Scurlock case, the court well summarized the rules and principles which should govern a trial court in deciding the applicability of the offensive use of collateral es-toppel. In doing so, it listed them as:

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825 S.W.2d 176, 1992 Tex. App. LEXIS 295, 1992 WL 17793, Counsel Stack Legal Research, https://law.counselstack.com/opinion/fletcher-v-national-bank-of-commerce-texapp-1992.