in Re Quadvest, L.P. and Woodland Oaks Utility, L.P.

• Court: Court of Appeals of Texas
• Decided: April 28, 2022
• Docket: 09-21-00181-CV
• Status: Published

Opinion

In The

Court of Appeals

Ninth District of Texas at Beaumont

NO. 09-21-00181-CV

IN RE QUADVEST, L.P. AND WOODLAND OAKS UTILITY, L.P.

Original Proceeding 284th District Court of Montgomery County, Texas Trial Cause No. 20-08-10189-CV

MEMORANDUM OPINION

In this original proceeding, Quadvest, L.P. and Woodland Oaks Utility, L.P.,

Relators, complain that the trial court abused its discretion by denying their pleas in

abatement. According to Relators, the trial court violated the doctrine of dominant

jurisdiction by allowing the San Jacinto River Authority’s suit to proceed even

though they had sued the San Jacinto River Authority (SJRA) in 2019 in a case that

was still pending on claims the SJRA breached its contract. The issues in both the

1 suits filed by the SJRA against Relators and the suit filed by the Relators against the

SJRA involve the same contracts. And while the first suit involves more parties and

other claims, both of the suits at issue here involve the parties’ breach of contract

claims. The first suit, filed in 2019 by Relators, alleges that the SJRA breached

groundwater reduction contracts that the SJRA has with the Relators. The second

suit, filed in 2020 by the SJRA, alleges the Relators breached these same contracts

when they failed to pay the SJRA what the SJRA alleges the Relators owed it under

their respective contracts. According to Relators, the claims in the suits are

intertwined.

In response to the petition, the SJRA notes the suits in both trial court causes

are pending before the 284th District Court. For that reason, the SJRA contends the

doctrine of dominant jurisdiction and the policy reasons supporting the doctrine do

not apply to the SJRA’s second suit, meaning the suit it filed in 2020 against the

Relators.

For the reasons explained below, we conclude Relators have not shown the

trial court clearly abused its discretion in denying their pleas to abate the SJRA’s

suit. And we conclude the Relators have not shown an ordinary appellate remedy is

inadequate to correct the trial court’s alleged error.

2 Background

In September 2019, Relators sued the SJRA for breaching the parties’ written

agreements to provide water at agreed rates under groundwater reduction contracts

between the parties. The clerk assigned the first suit Trial Court Cause Number 19-

09-12611-CV, and that suit is pending in the 284th District Court. Later, Relators

amended their petition in Trial Court Cause Number 19-09-12611-CV to add claims

for fraud and to rescind the groundwater reduction contracts they signed with the

SJRA. The SJRA filed counterclaims in the same cause, asking the trial court to

declare the SJRA’s rates and fees valid. The SJRA also filed a crossclaim in that

cause against the City of Conroe and the City of Magnolia (the Cities), alleging the

Cities breached their groundwater reduction contracts with the SJRA.

When the Cities responded to the SJRA’s crossclaims, they filed pleas to the

jurisdiction and alleged they were immune from the SJRA’s suit. Following a

hearing, the trial court granted the Cities’ pleas. The SJRA challenged the trial

court’s ruling on the Cities’ pleas by filing an accelerated appeal, which was heard

in this Court, but the trial court’s orders as to those pleas were recently affirmed.1

1 See San Jacinto River Auth. v. City of Conroe, No. 09-20-00180-CV, 2022 WL , at *1 (Tex. App.—Beaumont Apr. 21, 2022, no pet. h.) (mem. op.). 3 Shortly after the SJRA appealed, the SJRA sued the Relators in October 2020

in a separate suit, a suit the clerk assigned Trial Court Cause Number 20-08-10189-

CV. In the second suit, the SJRA alleged the Relators breached their contracts with

the SJRA by failing to pay the SJRA what they owed the SJRA under the contracts

for the water they agreed to buy from the SJRA under the water district’s

groundwater reduction plan. In response to the suit, Relators filed pleas in

abatement, asking the trial court to place the SJRA’s suit on hold. Even so, Relators

wanted the trial court to allow their suit, which they filed first, to proceed in face of

a stay order by this Court pending the resolution of the trial court’s ruling on the

Cities’ jurisdictional pleas. In the pleas to abate, the Relators argued the two suits

involve overlapping issues and claims, suggesting the claims the SJRA brought

against the Relators in the second and later-filed suit alleging the Relators breached

the contracts by nonpayment were compulsory counterclaims that the SJRA had to

file in the first case, Trial Court Cause Number 19-09-12611-CV.

In the trial court, the SJRA opposed the motion to abate. In part, the SJRA

asked that the trial court allow it to proceed because the first suit had been stayed

following the Cities appeal from the trial court’s rulings on the pleas to the

jurisdiction in Trial Court Cause Number 19-09-12611-CV. The SJRA suggested

that ruling stayed the proceedings in Trial Court Cause Number 19-09-12611-CV,

4 yet it also wanted to pursue its own breach of contract claims against Relators for

nonpayment.

The trial court conducted a hearing before ruling on Relators’ motion to abate.

During the hearing, the SJRA argued that Relators would suffer no prejudice should

the court allow the second suit to proceed while awaiting the outcome of the appeal.

According to the SJRA, Relators could assert their complaint that the SJRA was the

party that breached the contracts as a defense to the SJRA’s breach of contract

claims. Relators also complained that, by permitting the SJRA to file a second suit,

the SJRA had unfairly changed its posture in the case from that of a defendant to

that of a plaintiff. According to Relators, by going forward with the second suit, the

trial court was risking having factfinders in the two suits reach different results that

could lead to inconsistent judgments. In response to the Relators’ argument that

allowing the second suit to proceed risked inconsistent judgments, the SJRA argued

the chances the outcomes would differ were slight since both cases would be tried

before the same judge.

Analysis

Relators argue the law of dominant jurisdiction, a concept described in In re

J.B. Hunt Transport, Inc., applies to both to the suits. In J.B. Hunt, the Texas

5 Supreme Court explained “[t]he general common law rule in Texas is that the court

in which suit is first filed acquires dominant jurisdiction to the exclusion of other

coordinate courts.”2 Relators contend the claims the SJRA filed in the second suit

are inherently interrelated with the claims that Relators filed when, in September

2019, they filed the first suit. Relators conclude that no exceptions to the rule of

dominant jurisdiction apply to the second suit.

We disagree that a question of dominant jurisdiction is present when the case

is pending in the same court and before the same judge. A dominant jurisdiction

analysis requires a court to ask three questions: (1) does an inherent interrelationship

exist between the subject matter of the two suits; (2) if so, did the trial court abuse

its discretion in denying a party’s plea to abate the second suit; and (3) if so, is the

party that filed the plea to abate entitled to mandamus relief.3

The compulsory counterclaim rule guides whether an inherent

interrelationship exists between two actions.4 In part, Rule 97(a) provides:

A pleading shall state as a counterclaim any claim within the jurisdiction of the court, not the subject of a pending action, which at the time of filing the pleading the pleader has against any opposing

2 In re J.B. Hunt Transport, Inc., 492 S.W.3d 287, 294 (Tex. 2016) (orig. proceeding). 3 Id. at 292. 4 Id. 6 party, if it arises out of the transaction or occurrence that is the subject matter of the opposing party’s claim and does not require for its adjudication the presence of third parties of whom the court cannot acquire jurisdiction[.]5

In J.B. Hunt, the Texas Supreme Court explained “a counterclaim is compulsory if,

in addition to Rule 97(a)’s other requirements, it was not the subject of a pending

action when the original suit was commenced.”6

The SJRA argues its claims, as they are pleaded in the second of the two suits,

are neither compulsory counterclaims, nor are they claims inherently interrelated to

the claims the Relators filed against it. That’s so, the SJRA argues, because the

claims it filed against Relators for nonpayment accrued against Relators after

Relators filed their suit, not before. Even if that’s true, “[a] claim which either

matured or was acquired by the pleader after filing his pleading may be presented

as a counterclaim by amended pleading.”7 We conclude the SJRA’s claims for

nonpayment, whether the claims were matured or acquired after Relators sued the

SJRA in 2019, are compulsory counterclaims. As compulsory counterclaims, the

claims are inherently interrelated to the claims Relators filed against the SJRA over

alleged breaches of the groundwater reduction contracts at issue here.

5 Tex. R. Civ. P. 97(a). 6 In re J.B. Hunt Transport, Inc., 492 S.W.3d at 293. 7 Tex. R. Civ. P. 97(d). 7 Second, we ask whether the trial court abused its discretion in denying the

pleas the Relators filed asking the trial court to abate the suit filed by the SJRA.

Generally, to avoid prejudice, to do justice, and to increase the convenience to the

trial court in handling its docket, the trial court has an inherent right to control its

docket.8 Both the suit filed in 2019 and the suit filed in 2020 are pending in the 284th

District Court. And Rule 41 of the Texas Rules of Civil Procedure allows trial courts

with broad flexibility in severing claims against a party, even when the claims are

filed in the same suit and allowing those claims to proceed separately should the trial

court, in the exercise of its discretion, decide to try the claims piecemeal rather than

trying the claims together.9 At this point, we cannot know whether the trial court

might order Trial Court Cause Number 19-09-12611-CV and Trial Court Cause

Number 20-08-10189-CV joined, or whether the trial court might sever the claims

Relators have against the SJRA in Trial Court Causse Number 19-09-12611-CV and

order them joined to Trial Court Cause Number 20-08-10189-CV. Relators have not

argued or explained how the trial court violated the joinder and severance rules when

the parties have not asked and the trial court has not ruled on any motions that might

8 See Dow Chem. Co. v. Francis, 46 S.W.3d 237, 240 (Tex. 2001); Villarreal v. San Antonio Truck & Equip., 994 S.W.2d 628, 631 (Tex. 1999). 9 See Tex. R. Civ. P. 41; F.F.P. Operating Partners, L.P. v. Duenez, 237 S.W.3d 680, 693 (Tex. 2007). 8 cure the very prejudice the Relators complain might result to them in the mandamus

petition they filed here.

Last, we address whether Relators have established they have no remedy

through the filing of an ordinary appeal, meaning an appeal they could file after the

trial court signs a final judgment in Trial Court Cause Number 20-08-10189-CV.

According to the SJRA, the policy reasons for having a rule requiring a trial court to

defer to the court that acquires dominant jurisdiction over a suit do not apply here.

Here, no risk exists that the cases will be tried in the wrong venue since both suits

are filed in Montgomery County. And no risk exists for forum shopping since both

suits are filed in the same court and are pending before the same judge. And the

SJRA did not race to the courthouse to file its claims before they matured; instead,

the SJRA filed its claims only after its claims matured and found itself a party to a

suit that had been stayed, pending the outcome of an appeal, an appeal the SJRA did

not file.

In mandamus proceedings, the party filing the mandamus must establish the

trial court abused its discretion and establish the party has no other remedy to correct

the trial court’s alleged error through an ordinary appeal.10 Even though the word

10 In re Prudential Ins. Co. of Am., 148 S.W.3d 124, 135-36 (Tex. 2004). 9 adequate “has no comprehensive definition[,]” it is no more than “a proxy for the

careful balance of jurisprudential considerations that determine when appellate

courts will use original mandamus proceedings to review the actions of lower

courts.”11 “We determine whether an adequate appellate remedy exists by weighing

the benefits of mandamus review against the detriments.”12 The flexible balancing

test differs from the rigidity of the active-interference standard, which is the standard

the Texas Supreme Court formerly used but abandoned when addressing orders

denying a party’s plea in abatement.13 The Prudential “balancing test is necessarily

a fact-specific inquiry that resists categorization.”14 Of course, we recognize that had

the trial court violated the principle of dominant jurisdiction in exercising

jurisdiction over the second and later-filed case, the Relators burden is reduced to

showing only that the trial court abused its discretion before they would be entitled

to mandamus relief.15 But we conclude the trial court did not violate the principle of

dominant jurisdiction under the circumstances presented here.

11 Id. at 136. 12 In re Academy, Ltd., 625 S.W.3d 19, 32 (Tex. 2021) (orig. proceeding). 13 In re J.B. Hunt, 492 S.W.3d at 299. 14 In re Prudential, 148 S.W.3d at 136 (cleaned up). 15 In re J.B. Hunt, 492 S.W.3d at 299-300. 10 We have found no cases in which the dominant jurisdiction rule was applied

when the cases before the appellate court both involved cases filed and pending in

the same District Court. Relators argue the fact the cases were filed in the same court

doesn’t matter to deciding whether the dominant jurisdiction rule applies. We don’t

agree since the court in which both cases are pending is the same court and the cases

are pending before the same judge. If the trial court makes an error in denying a

motion to sever or to join the cases together when and if those motions are filed, the

Relators or the SJRA will have the right to complain and seek a remedy for that error

in an ordinary appeal.

The Texas Supreme Court explained the first-filed rule “flows from principles

of comity, convenience, and the necessity for an orderly procedure in the trial of

contested issues.”16 Yet that principle has little if any weight when the suits are

before and pending in the same court. That’s because it makes no sense to say that

a trial court judge has interfered with himself or herself. Nor will these cases burden

multiple counties or multiple District Courts. Instead, it appears the same judge will

preside, coordinate, or consolidate the two causes as the need to do so may arise. By

allowing the suit filed in 2020 to proceed, the trial court did nothing more than allow

16 Id. at 294. 11 the breach of contract claims filed by the SJRA to proceed while the claims in the

first suit, a suit that involves more than just breach of contract claims and the parties

before us here, was stayed on jurisdictional grounds awaiting the outcome of an

interlocutory appeal.

So while Relators argue it’s unfair for them to now be cast as defendants when

they chose to sue first so they could be plaintiffs, it’s unclear how the parties might

be aligned when the case is tried given the discretion courts have under the Rules of

Civil Procedure to join and consolidate suits and to realign the parties according to

their positions at trial. Simply put, Relators have not shown why the alleged error

they complain about in their petition must be addressed now through a mandamus

proceeding rather than following a trial.17

We conclude Relators have neither established the trial court abused its

discretion by denying the SJRA’s plea in abatement, nor have they shown no

adequate remedy exists through the filing of an ordinary appeal. Accordingly, we

hold that Relators are not entitled to relief.18 We lift the temporary stay that we

granted in the appeal, which stayed the proceedings in Trial Court Cause Number

17 See Tex. R. Civ. P. 40, 41. 18 See In re Prudential, 148 S.W.3d at 135-36. 1

12 20-08-10189-CV pending the outcome of this proceeding. And because the Relators

have not shown they are entitled to relief, their petition for mandamus is denied.19

PETITION DENIED.

PER CURIAM

Submitted on August 9, 2021 Opinion Delivered April 28, 2022

Before Golemon, C.J., Horton and Johnson, JJ.

19 See Tex. R. App. P. 52.8(a).