Gregory Daniels v. Balcones Woods Club, Inc. Douglas Huyck John Schexnayder Thomas Terry Bonnie Lockhart And William Dugat III, Individually and as Managing Partner of Bickerstaff, Heath, Smiley, Pollan, Kever & McDaniel, L.L.P.

Opinion

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN

NO. 03-05-00772-CV

Gregory Daniels, Appellant

v.

Balcones Woods Club, Inc.; Douglas Huyck; John Schexnayder; Thomas Terry; Bonnie Lockhart; and William Dugat III, Individually and as Managing Partner of Bickerstaff, Heath, Smiley, Pollan, Kever & McDaniel, L.L.P., Appellees

FROM THE DISTRICT COURT OF TRAVIS COUNTY, 126TH JUDICIAL DISTRICT NO. GN500294, HONORABLE SUZANNE COVINGTION, JUDGE PRESIDING

MEMORANDUM OPINION

Gregory Daniels sued Balcones Woods Club, Inc. (“Balcones Woods Club”), Douglas

Huyck, John Schexnayder, Thomas Terry, Bonnie Lockhart, and William Dugat III, individually and

as managing partner of Bickerstaff, Heath, Smiley, Pollan, Kever & McDaniel, L.L.P. (“Bickerstaff

Heath”) for damages arising out of their conduct in pursuing an earlier lawsuit that resulted in

Daniels’s being permanently enjoined from violating neighborhood association restrictive covenants.

In the current lawsuit, on the defendants’ motions, the district court declared Daniels a vexatious

litigant and ordered him to furnish security totalling $100,000. Daniels failed to furnish the

court-ordered security, and the defendants filed motions to dismiss. The district court dismissed the

case with prejudice as to all defendants. Daniels appeals the orders of the district court declaring him

a vexatious litigant and dismissing his suit. We will affirm the district court’s orders. FACTUAL AND PROCEDURAL BACKGROUND

Balcones Woods Club is a neighborhood association charged with enforcing the

restrictive covenants of the neighborhood in which Daniels owned a home. In March 2002, Balcones

Woods Club sued Daniels (“the 2002 suit”) seeking to enjoin him from parking his car on his lawn

in violation of those restrictive covenants. Lockhart, an attorney with Bickerstaff Heath, represented

Balcones Woods Club in the 2002 suit. After a bench trial, the district court granted a permanent

injunction and assessed attorneys’ fees and costs against Daniels. Daniels appealed, complaining

that the district court was not fair and impartial and challenging the findings of fact and conclusions

of law supporting the injunction. This Court affirmed the district court’s order in February 2006.

See Daniels v. Balcones Woods Club, Inc., No. 03-03-00310-CV, 2006 Tex. App. LEXIS 957

(Tex. App.—Austin Feb. 2, 2006, pet. denied) (mem. op.).

In January 2004, while the appeal of the 2002 suit was pending, Daniels sued

Balcones Woods Club, Huyck, one of Daniels’s neighbors, Balcones Wood Club board members

Schexnayder and Terry, and Balcones Woods Club’s legal counsel Lockhart and Dugat and their law

firm, Bickerstaff Heath (“the 2004 suit”), seeking damages he alleged resulted from prosecution of

the 2002 suit. Daniels alleged that Huyck “pursued a campaign of harassment” by participating in

the 2002 suit and that Huyck, Terry, and Schexnayder made false and misleading statements during

proceedings in the 2002 suit. Daniels claimed that Balcones Woods Club pursued the 2002 suit

against him in order to inflict “emotional and financial harm.”

With respect to Lockhart, Dugat, and Bickerstaff Heath, Daniels alleged that they

made judicial campaign contributions for the purpose of obtaining improper influence over the

2 district judge, then exercised that influence to successfully pursue “false and completely fabricated

cases” against him. He further alleged that Lockhart, Huyck, Terry, and Schexnayder engaged in a

“civil conspiracy to cause intentional emotional and financial harm, with malice, by abuse of

process.”

All defendants in the 2004 suit filed special exceptions. The trial court sustained each

of the defendants’ special exceptions, finding that Daniels’s original petition failed to state a cause

of action. The court ordered that Daniels correct the pleading deficiencies by filing an amended or

supplemental pleading within ten days. Daniels filed an amended petition but failed to cure the

pleading defects. Consequently, the trial court, on the defendants’ motions, dismissed Daniels’s

claims against all defendants. Each of the dismissal orders specifically stated that the dismissal was

without prejudice.1

In 2005, Daniels filed the instant case against the same defendants named in the

2004 suit. Daniels again alleged that Huyck “pursued a campaign of harassment” against him by

participating in the 2002 suit. He again complained that Lockhart, Dugat, and Bickerstaff Heath

used the influence they gained through judicial campaign contributions to successfully pursue a

“fraudulent lawsuit” against him. Daniels also reurged his claim that Lockhart, Huyck, Terry, and

1 Having found that, after amendment, Daniels’s petition failed to state a cause of action, the trial court could have dismissed the case with prejudice. See Lentworth v. Trahan, 981 S.W.2d 720, 722-23 (Tex. App.—Houston [1st Dist.] 1998, no pet.) (citing Hubler v. City of Corpus Christi, 564 S.W.2d 816, 823 (Tex. Civ. App.—Corpus Christi 1978, writ ref’d n.r.e.)); accord Kutch v. Del Mar College, 831 S.W.2d 506 (Tex. App.—Corpus Christi 1970, writ ref’d n.r.e.) (distinguishing between pleadings that state valid cause of action and those that do not and holding trial court cannot dismiss case with prejudice if pleadings state valid cause of action but are vague, overbroad, or otherwise susceptible to valid special exceptions). It is unclear why the dismissal of the 2004 suit was without prejudice.

3 Schexnayder engaged in a “civil conspiracy to fraudulently and maliciously cause intentional

emotional and financial harm.”

Each of the defendants in the instant suit filed motions requesting that the district

court declare Daniels a vexatious litigant and require him to furnish security as a condition of

prosecuting his suit. See Tex. Civ. Prac. & Rem. Code Ann. §§ 11.051-.055 (West 2002). The

district court found that Daniels was a vexatious litigant and ordered him to furnish security in the

aggregate amount of $100,000 within twenty days. See id. § 11.055. Daniels failed to furnish the

security by the court-ordered deadline. In accordance with statutory requirements, the district court

dismissed his suit. See id. § 11.056. Daniels appeals from the order of dismissal, complaining of

the order finding him a vexatious litigant.

STANDARD OF REVIEW

We review the trial court’s determination that a party is a vexatious litigant under an

abuse of discretion standard. Leonard v. Abbott, 171 S.W.3d 451, 459 (Tex. App.—Austin 2005,

pet. denied). A trial court abuses its discretion if it acts arbitrarily, unreasonably, without

regard to guiding legal principles, or without supporting evidence. K-Mart Corp. v. Honeycutt,

24 S.W.3d 357, 360 (Tex. 2000); Bocquet v. Herring, 972 S.W.2d 19, 20 (Tex. 1998). Because a

trial court may exercise its discretion to declare a party a vexatious litigant only after it makes certain

statutorily prescribed evidentiary findings, we also review the trial court’s underlying findings for

legal and factual sufficiency. Leonard, 171 S.W.3d at 459 (citing Bocquet, 972 S.W.2d at 21). In

a legal sufficiency challenge, we must determine whether there is more than a scintilla of evidence

to support the finding. City of Keller v. Wilson, 168 S.W.3d 802, 827 (Tex. 2005). We review the

4 evidence in the light most favorable to the challenged finding, crediting favorable evidence if a

reasonable fact finder could, and disregarding contrary evidence unless a reasonable fact finder could

not. Id. at 821-22, 827. More than a scintilla of evidence exists if the evidence rises to a level that

would enable reasonable and fair-minded people to differ in their conclusions. Ford Motor Co.

v. Ridgway, 135 S.W.3d 598, 601 (Tex. 2004). In reviewing a factual sufficiency challenge, we

consider and weigh all the evidence in the record, both in support of and against the finding, and set

aside a finding only if the evidence that supports it is so weak or against the great weight and

preponderance of the evidence that it is clearly wrong and manifestly unjust. Dow Chem. Co.

v. Francis, 46 S.W.3d 237, 242 (Tex. 2001).

DISCUSSION

Chapter 11 of the civil practice and remedies code provides that, within ninety days

of filing an original answer, a defendant may move for an order declaring the plaintiff a vexatious

litigant and requiring the plaintiff to furnish security. Tex. Civ. Prac. & Rem. Code Ann. § 11.051.

The security is for the benefit of the moving party and serves as an undertaking by the plaintiff to

assure payment of the moving party’s reasonable expenses incurred in or in connection with the

litigation, including costs and attorneys’ fees. Id. § 11.055. On the filing of a motion under section

11.051, the litigation is stayed until the district court rules on the motion. The district court may

determine that the plaintiff is a vexatious litigant if the moving party demonstrates that there is not

a reasonable probability that the plaintiff will prevail in the litigation and:

5 after a litigation has been finally determined against the plaintiff, the plaintiff repeatedly relitigates or attempts to relitigate, in propria persona, either:

(A) the validity of the determination against the same defendant as to whom the litigation was finally determined; or

(B) the cause of action, claim, controversy, or any of the issues of fact or law determined or concluded by the final determination against the same defendant as to whom the litigation was finally determined.

Id. § 11.054(2). If the motion is granted, the district court must order the plaintiff to furnish the

security by a date within its discretion, and if the plaintiff fails to do so, the district court must

dismiss the litigation as to the moving defendant. Id. §§ 11.055-.056.

By one issue on appeal, Daniels “asks the Third Court of Appeals to determine if the

Trial Judge abused her discretion by arbitrarily considering prior orders to dismiss ‘without

prejudice’ equivalent to dismissal ‘with prejudice’ to deem Appellant a vexatious litigant.” In his

brief, Daniels takes issue with two of the district court’s findings supporting the conclusion that he

is a vexatious litigant: (1) that previous litigation between him and the defendants in the present case

has been “finally determined” against him, and (2) that the previous litigation involved the same

cause of action, claim, controversy or any of the issues of fact or law at issue in the present case.

Daniels argues that the district court erred by concluding that the dismissal of the

2004 suit “without prejudice” was a “final determination” within the meaning of chapter 11 of the

civil practice and remedies code. See id. The record evidence establishes that Daniels did not

perfect an appeal of the dismissal of the 2004 suit, and that the district-court judgment became final

by operation of law. Daniels cites no authority for his contention that a dismissal without prejudice

is not a final determination within the meaning of the statute. While there is authority for the

6 proposition that a nonsuit without prejudice is not a final judgment, see, e.g., McGowen v. Huang,

120 S.W.3d 452, 462 (Tex. App.—Texarkana 2003, pet. denied), an order of dismissal

that completely disposes of the case is a final and appealable judgment. Armendaiz v. Ray,

215 S.W.2d 210, 212 (Tex. Civ. App.—San Antonio 1948, no writ); see also Hosey v. County of

Victoria, 832 S.W.2d 701, 703 (Tex. App.—Corpus Christi 1992, no writ) (order of dismissal for

want of prosecution was final judgment); Dilmore v. Russell, 519 S.W.2d 278, 280 (Tex. Civ.

App.—Dallas 1975, no writ) (judgment of dismissal is final in sense that it disposes of pending

action although not adjudicating merits).

By arguing that the dismissal order “without prejudice” is not a final determination

of the prior litigation for purposes of declaring him a vexatious litigant, Daniels asks this Court to

hold that chapter 11 requires there to have been a prior determination on the merits of his claim. The

statute, however, simply requires that the prior determination was “final,” not that it adjudicated the

merits of the claim. Daniels’s apparent concern that application of chapter 11 results in the dismissal

of meritorious claims is unwarranted—a prerequisite to the district court’s determination that a party

is a vexatious litigant is its conclusion that there is not a reasonable probability that the party will

prevail on his claims. See Tex. Civ. Prac. & Rem. Code Ann. § 11.054. The district court’s

determination that Daniels is a vexatious litigant entails a finding that it was not reasonably probable

that Daniels would prevail in this litigation against these defendants. Daniels does not contend on

appeal that there was error in this finding.

The evidence establishes not only that a final judgment had been rendered in the

2002 suit, but also that the 2004 suit was dismissed, no appeal was taken therefrom, and the

7 judgment in that case is final. This evidence is sufficient to support the district court’s finding that

there had been a final determination of both the 2002 suit and the 2004 suit between Daniels and one

or more of the defendants in the instant case. See id. § 11.054(2).

Daniels also complains of the district court’s finding that there was no meaningful

difference between the pleadings in the 2004 suit and the pleadings in the instant suit.2 After

comparing the pleadings in the 2004 suit to the pleadings in this case, we conclude that the evidence

supports the district court’s implied finding that the instant suit is an attempt to relitigate the causes

of action and issues Daniels raised in the 2004 suit. In both cases, Daniels complains of a campaign

of harassment carried out by Huyck, and a civil conspiracy among Lockhart, Huyck, Terry, and

Schexnayder to cause him financial harm. Both suits contain allegations that Lockhart and

Bickerstaff Heath exercised undue influence over the trial judge, and that they derived their influence

through judicial campaign contributions. The only difference between the two suits that Daniels

identifies is “the removal of the malicious prosecution claim, and the inclusion of additional

evidence.” The elimination of a claim in the instant case does not make the remaining claims

different from those made in the 2004 suit. Nor do additional allegations supporting a cause of

action change its nature. The evidence supports the trial court’s finding that there was no meaningful

distinction between Daniels’s claims in the instant case and those stated in the 2004 suit. The statute

2 Although not raised by any discrete issue, we address this argument because Daniels includes it in his brief. Appellate issues are to be construed reasonably, yet liberally, so that the right to appellate review is not lost by waiver. See El Paso Natural Gas v. Minco Oil & Gas, Inc., 8 S.W.3d 309, 316 (Tex. 1999). Appellate courts should reach the merits of an appeal whenever reasonably possible. Perry v. Cohen, 272 S.W.3d 585, 587 (Tex. 2008) (per curiam).

8 requires only a repeated relitigation or attempted relitigation of “any of the issues of fact or law”

previously determined.

Moreover, a determination of the issues raised in this case would also require

relitigating issues of fact or law already decided in the 2002 suit. For example, to demonstrate that

Lockhart and Bickerstaff Heath exercised undue influence over the district judge in the 2002 suit,

as alleged in the present case, Daniels would be required to show that the trial court in the 2002 suit

was not fair or impartial. This Court has already rejected Daniels’s claim that the trial court

in the 2002 suit “made it obvious” that it favored Balcones Woods Club and “effectively

eliminated any possibility of discovering the complete truth behind this matter.” See Daniels,

2006 Tex. App. LEXIS 957, at *6-9. We conclude that the trial court did not act unreasonably in

finding that, in bringing the instant case, Daniels was repeatedly attempting to relitigate causes of

action or issues of fact or law finally determined against him in previous litigation. Therefore, the

trial court did not abuse its discretion in declaring Daniels a vexatious litigant under chapter 11 of

the civil practice and remedies code. See Tex. Civ. Prac. & Rem. Code Ann. §11.054. We overrule

Daniels’s sole issue.

CONCLUSION

Having found no abuse of discretion in the district court’s determination that Daniels

is a vexatious litigant pursuant to chapter 11 of the civil practice and remedies code, we affirm the

district court’s orders of dismissal.

9 __________________________________________

J. Woodfin Jones, Chief Justice

Before Chief Justice Jones, Justices Patterson and Pemberton

Affirmed

Filed: May 19, 2009