Jones v. Sheehan, Young & Culp, P.C.

• Decision Date: 20 May 1996
• Docket Number: No. 95-10513,95-10513
• Citation: 82 F.3d 1334
• Parties: Odell JONES, III and Jones Program Management, Inc., Plaintiffs-Appellants, v. SHEEHAN, YOUNG & CULP, P.C., Defendant-Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1334

82 F.3d 1334

Odell JONES, III and Jones Program Management, Inc., Plaintiffs-Appellants, v. SHEEHAN, YOUNG & CULP, P.C., Defendant-Appellee.

No. 95-10513.

United States Court of Appeals, Fifth Circuit.

May 20, 1996.

Odell Jones, III, Detroit, MI, pro se.

Cyril Cornell Hall, Morgan & Hall, Pontiac, MI, for Jones Program Management, Inc., plaintiff-appellant.

Ronald Dee Wren, Bedford, TX, Collen Andrew Clark, Stradley & Wright, Dallas, TX, for Sheehan Young & Culp P.C., defendant-appellee.

Appeal from the United States District Court for the Northern District of Texas.

Before HIGGINBOTHAM and DUHE, Circuit Judges, and SCHWARZER, ¹ District Judge.

DUHE, Circuit Judge:

Appellants' damages suit against their former attorneys was dismissed on summary judgment on the basis of collateral estoppel. We affirm, but do so on the basis of res judicata.

I. BACKGROUND

Jones Program Management, Inc., ("JPM"), acting through its President, Odell Jones, III, ("Jones"), and Jones, acting as guarantor for JPM, entered into an agreement for legal services with Sheehan, Young & Culp, P.C., ("SYC"), to collect sums owed JPM by Richter's Entertainment Group, Inc., ("REG"). SYC accordingly filed suit on JPM's behalf against REG in the 134th Judicial District Court of Dallas County, Texas, (the "REG litigation"). JPM later discharged SYC and retained another law firm to conclude the REG litigation. Three suits subsequently ensued concerning SYC's claim for unpaid attorney's fees incurred in representing JPM in the REG litigation.

A. The state court action

SYC intervened in the REG litigation (hereafter the "state court action") to recover from JPM the balance of unpaid attorney's fees. JPM moved to strike the intervention, but did not file an answer or counterclaims against SYC. JPM did answer an interrogatory propounded by SYC, asserting in its answer a right to an offset against SYC's attorney's fees claim because of SYC's alleged "legal malpractice, negligence, gross negligence, fraud, and deceptive trade practices." SYC's intervention was tried without a jury in JPM's absence, and the state court awarded SYC a money judgment against JPM.

B. The county court action

SYC also filed suit in the County Court at Law No. 1, Dallas County, Texas, (hereafter the "county court action") against Jones, individually, to enforce his guaranty on the JPM/SYC agreement. Jones answered and counterclaimed against SYC on grounds of legal malpractice, negligence, malfeasance, gross negligence, fraud, conspiracy, and violations of the Texas Deceptive Trade Practices Act. The county court action was dismissed without prejudice pursuant to Jones' motion alleging lack of jurisdiction, but was subsequently reinstated. After a bench trial, at which Jones did not appear, the county court entered judgment awarding SYC a money judgment against Jones and ordering that Jones take nothing on his counterclaims.

C. The federal court action

After dismissal of the county court action, but prior to its reinstatement, Jones sued, on his own behalf, in the United States District Court for the Northern District of Texas (hereafter the "federal court action") seeking damages from SYC arising from SYC's representation of JPM in the REG litigation. Jones' claims include legal malpractice, negligence, malfeasance, gross negligence, fraud, conspiracy, and violations of the Texas Deceptive Trade Practices Act. SYC answered, alleging that Jones, individually, lacked standing to assert claims based upon SYC's representation of JPM. SYC also asserted counterclaims for the unpaid legal fees. SYC moved to dismiss, claiming JPM, and not Jones, was the real party in interest, or alternatively that JPM was an indispensable party. In response, Jones amended his complaint to add JPM as a plaintiff.

After both the county and state court actions had been concluded, SYC moved for summary judgment in the federal court action based on claims of res judicata, collateral estoppel, and the doctrine of sole remedy, alleging that Jones and JPM had had their opportunity in the earlier suits to litigate the claims and issues asserted in the federal court action. SYC's motion was granted on the basis that collateral estoppel precluded Jones and JPM from relitigating issues settled by the Texas courts. The judgment ordered that Jones and JPM take nothing on their claims against SYC and that SYC recover its court costs. Jones and JPM timely filed a joint notice of appeal.

II. DISCUSSION

A. Standard of Review

We review grants of summary judgment de novo, guided, as was the district court, by the standards of Federal Rule of Civil Procedure 56. Stults v. Conoco, Inc., 76 F.3d 651, 654 (5th Cir.1996); Blanchard v. Forrest, 71 F.3d 1163, 1166 (5th Cir.1996). Accordingly, a party may obtain summary judgment when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c).

The district court granted SYC's summary judgment motion based on collateral estoppel, or issue preclusion. SYC's motion, however, pled collateral estoppel, res judicata, and the doctrine of sole remedy in the alternative. We may affirm a district court's ruling on summary judgment based on any legally sufficient ground, even one not relied upon by the district court. BMG Music v. Martinez, 74 F.3d 87, 89 (5th Cir.1996); Missouri P. R.R. v. Harbison-Fischer Mfg. Co., 26 F.3d 531, 538 (5th Cir.1994). Making use of such latitude, we affirm the district court's granting of SYC's motion for summary judgment based on the application of the doctrine of res judicata.

B. Res Judicata

When a federal court is asked to give res judicata effect to a state court judgment, the federal court must determine the preclusiveness of that state court judgment under the res judicata principles of the state from which the judgment originates. Production Supply Co. v. Fry Steel Inc., 74 F.3d 76, 78 (5th Cir.1996); Hogue v. Royse City, 939 F.2d 1249, 1252 (5th Cir.1991). Because SYC interposes the judgments of Texas courts as bars to JPM's and Jones' current suit, we look to Texas res judicata law to resolve this dispute.

In Texas, "[r]es judicata, or claims preclusion, prevents the relitigation of a claim or cause of action that has been finally adjudicated, as well as related matters that, with the use of diligence, should have been litigated in the prior suit." Barr v. Resolution Trust Corp., 837 S.W.2d 627, 628 (Tex.1992). To invoke the doctrine, the proponent must prove: (1) a prior final judgment on the merits by a court of competent jurisdiction, (2) identity of the parties or those in privity with them, and (3) a second action based on the same claims as were raised or should have been raised in the first action. See Texas Water Rights Comm'n v. Crow Iron Works, 582 S.W.2d 768, 771-72 (Tex.1979).

1. Prior final judgment on the merits by a court of competent jurisdiction

Jones and JPM contend that the county and state courts, respectively, lacked jurisdiction to issue final, binding judgments against them. ² At this point, we reiterate that, while Jones and JPM are co-plaintiffs in the federal court action, only Jones was a party to the county court action, and only JPM was a party to the state court action.

a. Jones and the county court action

Jones contends that the county court was not a court of competent jurisdiction. His attacks are numerous; yet, as to most, his response to SYC's summary judgment fails to point to evidence in the record sufficient to create an issue as to the county court's jurisdiction. Once the movant presents a properly supported motion for summary judgment, the non-movant must "go beyond the pleadings and by [his] own affidavits, or by the 'depositions, answers to interrogatories, and admissions on file,' designate 'specific facts showing that there is a genuine issue for trial.' " Celotex Corp. v. Catrett, 477 U.S. 317, 324, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986) (quoting Fed.R.Civ.P. 56(e)). Rule 56, therefore, saddles the non-movant with the duty to "designate" the specific facts in the record that create genuine issues precluding summary judgment, and does not impose upon the district court a duty to survey the entire record in search of evidence to support a non-movant's opposition. Forsyth v. Barr, 19 F.3d 1527, 1537 (5th Cir.) (quoting Skotak v. Tenneco Resins, Inc., 953 F.2d 909, 915 n. 7 (5th Cir.), cert. denied, 506 U.S. 832, 113 S.Ct. 98, 121 L.Ed.2d 59 (1992)), cert. denied, --- U.S. ----, 115 S.Ct. 195, 130 L.Ed.2d 127 (1994); Nissho-Iwai Am. Corp. v. Kline, 845 F.2d 1300, 1307 (5th Cir.1988). Nor is it our duty to so scrutinize the record on appeal. ³ Forsyth, 19 F.3d at 1537.

One of Jones' contentions, however, does warrant discussion. Jones argues that the damages sought in his counterclaims exceeded the jurisdictional limit of the statutory county court, and thus the county court lacked jurisdiction to adjudicate those counterclaims. Counterclaims are treated as separate suits and must independently comport with the trial court's jurisdiction. Color Tile, Inc. v. Ramsey, 905 S.W.2d 620, 623 (Tex.App.--Houston [14th Dist.] 1995, n.w.h.); Tejas Toyota, Inc. v. Griffin, 587 S.W.2d 775, 776 (Tex.Civ.App.--Waco 1979, writ ref'd n.r.e.). See also Smith v. Clary Corp., 917 S.W.2d 796, 797-98 (Tex.1996) ("A counterclaim, whether permissive or compulsory, must be within the court's jurisdiction."); Gimbel v. Gomprecht, 89 Tex. 497, 35 S.W. 470, 470 (1896) ("The plea in reconvention filed by the defendants in this case was in effect a suit by them against the plaintiffs, and the amount in controversy was the damages claimed in that plea...."). A statutory county court has jurisdiction in "civil cases in which the amount in controversy exceeds $500 but does not exceed...