Stroud v. VBFSB Holding Corp.

901 S.W.2d 657, 1995 Tex. App. LEXIS 1525, 1995 WL 254399

• Court: Court of Appeals of Texas
• Decided: May 3, 1995
• Docket: 04-94-00434-CV
• Status: Published

Opinions

OPINION

CHAPA, Chief Justice.

DISMISSED FOR LACK OF JURISDICTION

Appellant Terry L. Stroud appeals a summary judgment granted in favor of appellees First Federal Savings Bank (FFSB), VBFSB Holding Corporation (VBFSB), Kevin A. Garcia, Hugo E. Pimienta, and Wilson Fletcher.

The dispositive issue is whether the trial court committed reversible error in granting a severance of appellees FFSB’s and Kevin Garcia’s counterclaims brought under Rule 13 of the Texas Rules of Civil Procedure. See Tex.R.Civ.P. 13¹; Tex.R.App.P. 90.

Appellant brought suit against appellees, jointly and severally, for wrongful termination, civil conspiracy, intentional infliction of emotional distress, slander, and intentional interference with appellant’s contractual employment agreement with appellee FFSB. All appellees filed answers, and appellees FFSB, VBFSB, Pimienta, and Garcia filed counterclaims for Rule 13 sanctions, based on identical allegations that the suit was groundless and brought in bad faith or groundless and brought for the purposes of harassment.² All appellees filed motions for summary judgments. Interlocutory summary judgments were granted on February 22,1994, to appellees FFSB, VBFSB, Pimienta, and Fletcher. The trial court held a hearing on VBFSB’s and Pimienta’s Rule 13 motions on March 29, 1994, and denied them in an order signed April 12, 1994. The interlocutory summary judgments and the denial of the Rule 13 counterclaims of appellees VBFSB and Pimienta were all incorporated in the final judgment of April 6, 1994, which also granted summary judgment to appellee Kevin Garcia. The judgment failed to dispose of the two Rule 13 counterclaims of FFSB and Garcia, however, and instead severed them into a separate cause of action. The severance was granted over the objections of appellant.

It is evident from the final judgment before this court that the trial court did not purport to dispose of all claims, but instead relied on the severance to make the judgment final and appealable. Therefore, if the severance was improper under the Texas Rules of Civil Procedure and case law, this judgment is “interlocutory and non-appeal-able [and] this Court would be without jurisdiction and dismissal of the appeal would be the appropriate disposition.” Cass v. Stephens, 823 S.W.2d 731, 733 (Tex.App. — El Paso 1992, no writ) (citing Baker v. Hansen, 679 S.W.2d 480 (Tex.1984).

We note at the outset that a claim for Rule 13 sanctions fits within the definition of a compulsory counterclaim.

A counterclaim is compulsory if: (1) it is within the jurisdiction of the court; (2) it is not at the time of filing the answer the subject of a pending action; (3) the action is mature and owned by the pleader at the time of filing the answer; (4) it arises out of the transaction or occurrence that is the subject matter of the opposing party’s claim; (5) it is against an opposing party in the same capacity; and (6) it does not require for its adjudication the presence of third parties over whom the court cannot acquire jurisdiction.

Wyatt v. Shaw Plumbing Co., 760 S.W.2d 246, 247 (Tex.1988). Rule 97 of the Texas Rules of Civil Procedure makes it mandatory that any counterclaim arising under the above criteria be raised during the initial trial involving the same transaction or occurrence. Tex.R.Civ.P. 97; see Barr v. Resolution Trust Corp., 837 S.W.2d 627, 630 (Tex.1992). Therefore, “[although the trial court has broad discretion in ordering severances, the severance of a compulsory counterclaim which arises out of the same contract or issue that is the subject of the suit, constitutes an abuse of discretion and is reversible error.” Mathis v. Bill De La Garza & Assocs., 778 S.W.2d 105, 106 (Tex.App. — Texarkana 1989, no writ) (citing Ryland Group, Inc. v. White, 723 S.W.2d 160 (Tex.App. — Houston [1st Dist.] 1986, no writ); see Bohart v. First Nat’l Bank, 536 S.W.2d 234, 236 (Tex.Civ.App. — Eastland 1976, writ ref'd n.r.e.). “The trial court should not sever the plaintiffs claim from the defendant’s compulsory counterclaim, or a cross-claim between defendants, arising out of and turning on the same facts.” 3 McDonald, Texas Civil Practice § 17.25 (1992); Bohart, 536 S.W.2d at 236. A compulsory counterclaim and a claim involving “identical facts, issues, and subject matter, are so interwoven a severance would occasion unnecessary litigation and a multiplicity of suits.” Id. Because a compulsory counterclaim argument was not raised in this appeal, Rule 97 is not dispositive of the issue before us. Nonetheless, the analysis is instructive, and the severance was improper for the following reasons.

In Guaranty Fed. Sav. Bank v. Horseshoe Operating Co., 793 S.W.2d 652 (Tex.1990), the court elaborated on Rule 41 of the Texas Rules of Civil Procedure:

Rule 41 of the Texas Rules of Civil Procedure provides that “[a]ny claim against a party may be severed and proceeded with separately.” This rule grants the trial court broad discretion in the matter of severance and consolidation of causes. McGuire v. Commercial Union Ins. Co., 431 S.W.2d 347 (Tex.1968). The trial court’s decision to grant a severance will not be reversed unless it has abused its discretion. Saxer v. Nash Phillips-Copus Co. Real Estate, 678 S.W.2d 736 (Tex.App. — Tyler 1984, writ ref'd n.r.e.). A claim is properly severable if (1) the controversy involves more than one cause of action, (2) the severed claim is one that would be the proper subject of a lawsuit if independently asserted, and (3) the severed claim is not so interwoven with the remaining action that they involve the same facts and issues. Id.; Weaver v. Jock, 717 S.W.2d 654 (Tex.App. — Waco 1986, writ ref'd n.r.e.). The controlling reasons for a severance are to do justice, avoid prejudice and further convenience. St. Paul Ins. Co. v. McPeak, 641 S.W.2d 284 (Tex.App. — Houston [1st Dist.] 1982, writ ref'd n.r.e.).

Guaranty Fed. Sav., 793 S.W.2d at 658. “Severance is proper, however, only where the suit involves two or more separate and distinct causes of action” and results in reversal if the “order of severance fragments the case instead of splitting it along a proper line of cleavage.” Kansas Univ. Endowment Ass’n v. King, 162 Tex. 599, 350 S.W.2d 11, 19 (1961). “Each of [the severed] causes must be such that it could be properly tried and determined as if it were the only claim in controversy[;] ... [t]he severed causes of action should not be so interwoven as to require the introduction of evidence on the same facts and issues[;] ... [and] severance should not be used merely as a device to save a party from failure to prepare properly for trial or to present adequate evidence.” Coalition of Cities for Affordable Util. Rates v. Public Util. Comm’n, 798 S.W.2d 560, 564 (Tex.1990), cert. denied sub nom. Gulf States Util. Co. v. Coalition of Cities for Affordable Util. Rates, 499 U.S. 983, 111 S.Ct. 1641, 113 L.Ed.2d 736 (1991).

“[I]n determining whether Rule 13 has been violated, a trial court must examine the facts available to the litigant and the circumstances existing at the time the pleading is filed.” Home Owners Funding Corp. v. Scheppler, 815 S.W.2d 884, 889 (Tex.App.— Corpus Christi 1991, no writ). In the instant case, the two severed Rule 13 claims fail to meet the third criterion set out by the Texas Supreme Court in Guaranty Federal Savings in that the claims are completely interwoven with the remaining causes of action because they involve the same facts and issues. Guaranty Fed. Sav., 793 S.W.2d at 658. The severed Rule 13 counterclaims were those filed by FFSB and Garcia. The “remaining causes of action” consisted of the appellant’s original cause of action against all appellees, along with the two other Rule 13 counterclaims filed by appellees VBFSB and Pimienta. The two severed Rule 13 counterclaims of appellees FFSB and Garcia require the trial court to “examine the facts available to the litigant and the circumstances existing at the time the pleading is filed.” Home Owners Funding Corp., 815 S.W.2d at 889. Examining the facts available to the litigants and the circumstances existing at the time the pleadings were filed as to the two severed Rule 13 counterclaims would necessarily require the court to review the same facts and circumstances involved not only in the appellant’s original cause of action, but also in the other two Rule 13 counterclaims.

Moreover, the controlling reasons for a severance are to do justice, avoid prejudice, and further convenience. Guaranty Fed. Sav., 793 S.W.2d at 658. We fail to see how, under these circumstances, severing the two counterclaims would accomplish the foregoing goals. If the trial court was justified in severing two of the four Rule 13 counterclaims, it would have been justified in severing all four Rule 13 counterclaims into four separate trials, although each would involve an identical review. This piecemeal approach would certainly not do justice, avoid prejudice, or further convenience to a party who would be required to prosecute its own cause of action and then defend four times over the same identical claim involving the same identical circumstances and facts. Simply because here the party is required to defend only two, rather than four, Rule 13 counterclaims does not make the situation more just, nor does it avoid prejudice or further convenience, especially when the record reflects that the trial court found sufficient justification for denying two of the four identical Rule 13 counterclaims. The severance was improper, and the trial court abused its discretion.

Appellees rely on McAllister v. Samuels, 857 S.W.2d 768 (Tex.App. — Houston [14th Dist.] 1993, no writ), as authority for sustaining the severance. However, McAllister is distinguishable from the case before this court. In McAllister, the trial court severed the issue of attorneys’ fees, which were claimed by both a declaratory judgment counterclaim and a Rule 13 counterclaim. Because the court failed to consider the consequences of the compulsory counterclaim requirements, we must assume that the argument was never raised in McAllister, as is also true of the case before us. Nonetheless, in addressing the severed attorneys’ fees counterclaim, the McAllister court failed to address adequately the three criteria of a permissible severance outlined in Guaranty Federal Savings by neglecting to explain how the three-pronged test was met by the severed claims. See Guaranty Fed. Sav., 793 S.W.2d at 658. Instead, the court based its decision on the authority that a Rule 13 action was a “claim for affirmative relief’ and stated that it did not “find it unreasonable for the trial court to have desired to deal with all attorneys’ fees issues together.” McAllister, 857 S.W.2d at 779. Clearly, this is an entirely different situation from the one before this court, which requires a different result.

Since this judgment does not purport to dispose of all the causes of action, but instead depends on the improper severance to make it a final and appealable judgment, it is thus rendered interlocutory and nonap-pealable by the improper severance. See Cass, 823 S.W.2d at 733. This court is left ■without jurisdiction in the matter, and the only appropriate disposition is to dismiss the appeal. Id.3

The appeal is dismissed for lack of jurisdiction.

1 . Rule 13 provides in pertinent part:

Attorneys or parties who shall bring a fictitious suit as an experiment to get an opinion of the court, or who shall file any fictitious pleading in a cause for such a purpose, or shall make statements in pleading which they know to be groundless and false, for the purpose of securing a delay of the trial of the cause, shall be held guilty of a contempt. If a pleading, motion or other paper is signed in violation of this rule, the court, upon motion or upon its own initiative, after notice and hearing, shall impose an appropriate sanction available under Rule 215-2b, upon the person who signed it, a represented party, or both.

TEX.R.CIV.P. 13.

2 . Although only the Rule 13 claims of Garcia and VBFSB appear in the record, we accept as true appellant’s contention that all four claims are identical. TEX.R.APP.P. 74(f).

3 . Although we recognize the holding in Mafrige v. Ross, 866 S.W.2d 590 (Tex.1993), we are also mindful of a significant distinction between the judgment there and the judgment before this court. In Mafrige, the judgment purported to dispose of all causes of action and all issues, id. at 592, whereas the judgment before this court does not. The judgment in the instant case explicitly severs the two Rule 13 counterclaims, and thus does not purport to dispose of all causes of action and all issues in the case. However, the severance was improper.