Opinion
No. 01-10-00476-CV
Opinion issued June 30, 2011.
On Appeal from the 152nd District Court, Harris County, Texas, Trial Court Case No. 2008-40075-B.
Panel consists of Justices KEYES, HIGLEY, and BLAND.
MEMORANDUM OPINION
Appellant, Adrienne A. Henny, appeals the trial court's judgment dismissing her third-party claim against appellee, JPMorgan Chase Bank, N.A. ("Chase") with prejudice. Henny raises two issues challenging the dismissal judgment.
We reverse and remand.
Background
Henny created and operated a restaurant business known as Coozan's Hot Wings Bayou Cafe ("Coozan's"). Henny managed the business with Oscar and Denise Taylor. The business had three restaurant locations.
In September 2006, Chase loaned Coozan's $108,000.00. One year later, Chase loaned Coozan's $146,974.76. Henny signed an agreement with Chase personally guaranteeing repayment of the funds.
A conflict arose between Henny and the Taylors. As a result, the business was divided between the two interests.
On February 1, 2008, Chase sued Coozan's and Henny to recover the unpaid funds that Chase had loaned to Coozan's and which were guaranteed by Henny. Four days after Chase filed suit, on February 5, 2008, Henny sold her portion of the business to Martha and Bruce Pollock. The Pollocks signed an asset purchase agreement evidencing the sale.
On May 22, 2008, Chase obtained a summary judgment against Coozan's and Henny. The judgment awarded Chase the outstanding principal on the loans, totaling $237,160.91, plus interest, fees, court costs, and attorney's fees.
On July 1, 2008, AdvanceMe, Inc. filed suit against Coozan's and Henny. It alleged that Coozan's had contracted "to sell certain accounts and/or payment intangibles to [AdvanceMe]." AdvanceMe asserted that it had entered into three separate merchant agreements with Coozan's requiring Coozan's "to direct its credit card processor to remit to [AdvanceMe] a percentage of the cash realized from [Coozan's credit card] receivables." AdvanceMe alleged that it had paid Coozan's in full for the receivables. AdvanceMe claimed that pursuant to each merchant agreement, it became the owner of the receivables. The merchant agreements also required Coozan's "[to] process the receivables with a credit card processor acceptable to AdvanceMe." AdvanceMe claimed that Coozan's breached the merchant agreements by changing credit card processing companies without AdvanceMe's approval. It further claimed that the new, unapproved credit card processor had failed to remit the receivables, totaling $56,229.09, to AdvanceMe. The receiveable were due for remittance in October 2007 and January 2008.
AdvanceMe also alleged that Henny had signed a provision guaranteeing Coozan's performance under the merchant agreements. It asserted that Henny had failed to perform her contractual duty.
On June 19, 2009, Henny filed a third-party petition in the AdvanceMe suit, adding the Taylors, the Pollocks, and Chase as third-party defendants. The only cause of action asserted by Henny against Chase was a conspiracy claim. Henny alleged that the Pollocks and Chase had "conspired to harm [Henny] by using the money loaned by Chase and continu[ing] to use the funds without the knowledge of [Henny]."
Chase filed a "Motion to Dismiss, Special Exceptions, and Subject Thereto Answer, Affirmative Defenses and Counter-Claim." The filing contained a motion to dismiss. Chase argued that Henny's third-party claim against it should be dismissed for non-compliance with Rule of Civil Procedure 38, which governs third-party actions. Chase asserted,
A third party action is only proper if the third-party claim is for contribution and indemnity of the defendant for the Plaintiff's claims. . . . Henny's alleged conspiracy claim against Chase is not such an indemnity or contribution claim as the alleged conspiracy is related to the unpaid credit card charges asserted by the Plaintiff in this lawsuit, which arose in 2007.
The filing also contained a general denial to the third-party claim and asserted a number of affirmative defenses. Specifically, Chase listed, without elaboration, the following affirmative defenses: "res judicata, collateral estoppel, statute of frauds, statute of limitations, consent (express and implied), ratification, waiver, unclean hands and estoppel." These defenses were expressly asserted subject to the motion to dismiss.
Henny defended against the motion to dismiss by asserting as follows:
A defendant, as a third-party plaintiff, may bring into the suit any third party who is or may be liable to it or to the plaintiff for all or part of the plaintiff's claim. . . . Henny has alleged in their Original Petition that Chase conspired with other parties to misappropriate Henny's funds. This alleged cause of action fits [sic] directly relates to the alleged liability of Henny in the suit between Henny and AdvanceMe, Inc. Therefore, a third-party action is appropriate and required under Texas law in this matter.
A hearing was conducted on the motion to dismiss, but no record was made of the hearing. The trial court signed an interlocutory order dismissing Henny's third-party claim against Chase with prejudice. In support of dismissal, the order provided that "any claims or defenses relating to the loans made by Chase to [Coozan's], guaranteed by [Henny] should have been raised in the lawsuit" brought by Chase against Coozan's and Henny "in which Chase was awarded final summary judgment, on May 22, 2008, against [Henny]." In other words, the trial court dismissed Henny's claim with prejudice based on the affirmative defenses of res judicata and compulsory joinder of a counter-claim.
Henny moved to sever the claims between Henny and Chase from the remaining claims. The trial court signed an order granting the motion to sever, making the order dismissing Henny's claim against Chase final.
Henny filed a motion for new trial, which the trial court denied. This appeal followed.
In two issues, Henny asserts that the trial court erred by granting Chase's motion to dismiss her third-party conspiracy claim based on the affirmative defenses of res judicata and compulsory joinder of a counter-claim. In its response brief, Chase raises an additional issue in which it contends that the trial court properly dismissed Henny's claim because it was not a "proper third-party claim under Texas Rule of Civil Procedure 38(a)."
Procedural Posture
As a preliminary matter, we address the procedural posture of this case. The compulsory counterclaim rule and the doctrine of res judicata are affirmative defenses. Commint Technical Services, Inc. v. Quickel, 314 S.W.3d 646, 651 (Tex. App.-Houston [14th Dist.] 2010, no pet.). An affirmative defense, or "plea in bar," operates to prohibit the assertion of a cause of action and involves the final disposition of a case. Tex. Underground, Inc. v. Texas Workforce Comm'n 335 S.W.3d 670, 675 (Tex. App.-Dallas 2011, no pet.) (citing Martin v. Dosohs I, Ltd., 2 S.W.3d 350, 354 (Tex. App.-San Antonio 1999, pet. denied); In re A.M., 936 S.W.2d 59, 62 (Tex. App.-San Antonio 1996, no writ)). An affirmative defense is not typically disposed of in a preliminary hearing, such as a motion to dismiss. Tex. Underground, 335 S.W.3d at 675 (citing Martin, 2 S.W.3d at 354). Rather, an affirmative defense should be raised through a motion for summary judgment or proven at trial. Id. at 676; In re D.K.M., 242 S.W.3d 863, 865 (Tex. App.-Austin 2007, no pet.); see Montgomery Cnty. v. Fuqua, 22 S.W.3d 662, 669 (Tex. App.-Beaumont 2000, pet. denied) ("Affirmative defenses are `pleas in bar,' and do not provide a justification for summary dismissal on the pleadings.").
Although the trial court's order here indicates that it dismissed Henny's third-party claim against Chase with prejudice based on the doctrine of res judicata and the compulsory counterclaim rule, Chase did not advance these theories as grounds in a summary judgment motion. Complicating matters, Henny has not complained about the lack of a summary judgment motion on appeal.
Courts have held that "a speedy and final judgment may be obtained on the basis of matters in bar and without formality of trial on [the] merits, if the parties so agree or if summary judgment procedure is utilized." Tex. Underground, 335 S.W.3d at 675 (citing Martin, 2 S.W.3d at 354; Walker v. Sharpe, 807 S.W.2d 442, 446-47 n. 2 (Tex. App.-Corpus Christi 1991, no writ)); see Briggs v. Toyota Mfg. of Tex., No. 04-09-00516-CV, 2010 WL 5099519, at *3 (Tex. App.-San Antonio Dec. 15, 2010, no pet.). Here, there is no indication that the parties agreed to dispose of the case without trial, nor does the record show that summary judgment procedure was utilized. Nonetheless, Henny's claim against Chase was dismissed with prejudice, indicating a final disposition of the claim.
If a summary judgment procedure is not utilized when a plea in bar is asserted, the reviewing court may treat a dismissal as a summary judgment because such dismissal has the same effect as entry of a take-nothing judgment. Briggs, 2010 WL 5099519, at *3 (citing Martin, 2 S.W.3d at 353-54; Walker v. Sharpe, 807 S.W.2d 442, 446-47 n. 2 (Tex. App.-Corpus Christi 1991, no writ)). In such case, the reviewing court will evaluate the record as if summary judgment was granted to determine whether the movant satisfied its summary-judgment burden. Martin, 2 S.W.3d at 354; see Briggs, 2010 WL 5099519, at *3.
Applying this standard, Chase did not establish that it was entitled to summary judgment on its affirmative defenses of res judicata and joinder of compulsory counterclaim. In its motion to dismiss, Chase did not seek dismissal of Henny's third-party conspiracy claim based on the doctrines of res judicata or compulsory counterclaim. Rather, Chase expressly sought dismissal on the ground that Henny's third-party claim did not comply with Rule of Civil Procedure 38(a). See TEX. R. CIV. P. 38(a). A summary judgment cannot be affirmed on grounds not expressly set out in the motion for summary judgment. See Ken Petroleum v. Questor Drilling, 24 S.W.3d 344, 357 (Tex. 2000); see also TEX. R. CIV. P. 166a(c) ("The motion for summary judgment shall state the specific grounds therefor."); Davis v. City of Grapevine, 188 S.W.3d 748, 765 (Tex. App.-Fort Worth 2006, pet. denied) (concluding that affirmative defense not raised in summary judgment motion cannot be considered on appeal). Thus, because they were not raised in the motion to dismiss, we cannot consider the affirmative defenses of res judicata and joinder of compulsory counterclaim in reviewing the propriety of the order dismissing with prejudice Henny's third-party claims against Chase. See Davis, 188 S.W.3d at 765. Henny's contention, albeit based on different grounds, is correct that the trial court's judgment cannot be upheld based on these affirmative defenses. See id.
Chase's reply to Henny's response to Chase's motion to dismiss could possibly be broadly construed to assert the affirmative defenses of res judicata and joinder of compulsory counterclaim. However, a summary-judgment movant is not entitled to use its reply to amend its motion for summary judgment or to raise new and independent summary-judgment grounds. Reliance Ins. Co. v. Hibdon, 333 S.W.3d 364, 378 (Tex. App.-Houston [14th Dist.] 2011, pet. filed) (citing Garcia v. Garza, 311 S.W.3d 28, 36 (Tex. App.-San Antonio 2010, pet. denied)). "A motion [for summary judgment] must stand or fall on the grounds expressly presented in the motion." Id. (quoting McConnell v. Southside Indep. Sch. Dist., 858 S.W.2d 337, 341 (Tex. 1993)).
Chase also asserted that Henny's claim should be dismissed because Henny had not complied with a deadline in the docket control order. However, this is not of significance to the appeal.
We sustain Henny's two issues to the extent and for the reasons discussed supra.
Dismissal with Prejudice for Non-Compliance with Rule 38(a)
Resolution of Henny's issues, however, does not end our inquiry regarding whether the trial court erred in dismissing with prejudice Henny's third-party claim against Chase. We also consider Chase's assertion that the trial court's judgment dismissing Henny's third-party claim with prejudice is sustainable because Henny's claim does not comply with the requirements of Rule of Civil Procedure 38(a). Chase made this assertion in its motion to dismiss in the trial court and re-asserts it on appeal.
Even though the trial court's order expressly indicates that dismissal was based on res judicata and compulsory joinder principles, we can uphold the trial court's ruling if it is otherwise supported by the record. In short, we will uphold a correct result reached by the trial court even if it was reached for the wrong reason. See Hawthorne v. Guenther, 917 S.W.2d 924, 931 (Tex. App.-Beaumont 1996, writ denied); City of Corsicana v. Herod, 768 S.W.2d 805, 814 (Tex. App.-Waco 1989, no writ); see also Cincinnati Life Ins. Co. v. Cates, 927 S.W.2d 623, 625 (Tex. 1996) (holding that when trial court expressly states ground on which it granted summary judgment, court of appeals must consider that ground and may consider other grounds trial court did not rule on in interest of judicial economy). Hence, we can determine whether a failure by Henny to comply with Rule of Civil Procedure 38, which sets forth the procedural requirements for third-party practice, is a proper basis to uphold the trial court's judgment dismissing Henny's claim with prejudice.
Dismissal with prejudice constitutes adjudication on the merits and operates as if the case had been fully tried and decided. Mullins v. Estelle High Security Unit, 111 S.W.3d 268, 273 (Tex. App.-Texarkana 2003, no pet.) (citing Mossler v. Shields, 818 S.W.2d 752, 754 (Tex. 1991)). An order dismissing a case with prejudice has full res judicata and collateral estoppel effect, barring subsequent relitigation of the same causes of action or issues between the same parties. See Barr v. Resolution Trust Corp., 837 S.W.2d 627, 630-31 (Tex. 1992). Thus, the trial court's dismissal with prejudice of Henny's claim against Chase operates as an adjudication on the merits with full res judicata and collateral estoppel effects.
Here, Chase asserts that, pursuant to Rule of Civil Procedure 38(a), the trial court correctly dismissed Henny's conspiracy claim because, procedurally, Chase was not properly joined as a third-party defendant in the AdvanceMe suit. See TEX. R. CIV. P. 38(a) (providing that defendant may bring third-party action to join party who may be liable to the defendant or to the plaintiff for all or part of the plaintiff's claims against the defendant). Dismissal for failure to comply with the procedural requirements of Rule 38(a) is not a dismissal on the merits, but rather an exercise of the trial court's discretion in a procedural matter. See Oistad v. Baker Hostetler, L.L.P., No. 01-05-00493-CV, 2006 WL 488594, at *3 (Tex. App.-Houston [1st Dist.] Mar. 2, 2006, no pet.). Stated differently, dismissal of a claim, because it is not a proper third-party claim, is a determination only that the merits of the claim could not be brought in the lawsuit for procedural reasons; it is not a determination on the merits of the claim. See Deep Water Slender Wells, Ltd. v. Shell Int'l Exploration Prod., Inc., 234 S.W.3d 679, 695 (Tex. App.-Houston [14th Dist.] 2007, pet. denied) (holding that dismissal of claims to enforce clause requiring litigation in another forum is determination that merits of claims should be determined elsewhere; therefore, enforcement of forum-selection clause is nonmerits basis for dismissal); Dick Poe Motors, Inc. v. DaimlerChrysler Corp., 169 S.W.3d 478, 485 (Tex. App.-El Paso 2005, no pet.) (concluding that dismissal for want of prosecution is not trial on the merits, and therefore dismissal with prejudice is improper). Thus, we conclude that the trial court's judgment dismissing Henny's claim with prejudice cannot be upheld on the ground that the claim is not a proper third-party claim in the AdvanceMe suit.
Conclusion
We reverse the judgment of the trial court and remand the case for further proceedings.