Allenby, LLC v. Credit Suisse AG
| Decision Date | 01 August 2017 |
| Docket Number | No. 05-16-00253-CV,05-16-00253-CV |
| Parties | ALLENBY, LLC AND HAYGOOD, LLC, Appellants v. CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH, Appellee |
| Court | Texas Court of Appeals |
On Appeal from the 298th Judicial District Court Dallas County, Texas
Before Justices Bridges, Myers, and Brown
Opinion by Justice Myers
This case involves issues of res judicata and choice of law concerning an agreement to toll limitations. Allenby, LLC and Haygood, LLC appeal the summary judgment granted in favor of Credit Suisse AG, Cayman Islands Branch on their claims for breach of contract and promissory estoppel. Appellants bring four issues on appeal contending the trial court erred by granting Credit Suisse's motion for summary judgment and by denying appellants' motion for summary judgment. We affirm the trial court's judgment.
Appellants were investors in credit agreements,1 which were non-recourse real-estate loans put together by Credit Suisse. Appellants provided hundreds of millions of dollars to fund the loans. Because the loans were non-recourse, the value of the collateral as reflected in appraisals was important information in appellants' determination of the investment risk associated with each loan. According to appellants, the appraisals "grossly overstated the value of the underlying collateral," and when the borrowers defaulted, appellants lost hundreds of millions of dollars. Appellants maintained that Credit Suisse had the obligation to check the reasonableness of the appraisals of the collateral. Credit Suisse had claims against appellants for failing to settle their trades concerning commercial loans with Credit Suisse.
Before filing suit against one another, appellants and Credit Suisse engaged in settlement discussions. To keep their claims alive, the parties signed tolling agreements.2 The first tolling agreement provided that time would not accrue for statute-of-limitations purposes between September 24, 2010 and January 24, 2011. The parties amended the first tolling agreement four times by extending the termination of the tolling period to a specific date. In September 2011, Credit Suisse's counsel contacted appellants' counsel and suggested that they sign a second tolling agreement providing that limitations would be tolled until a party gave thirty days' notice of intent to terminate the tolling agreement. Appellants agreed, and the parties signed the second tolling agreement, which contained language to that effect. The second tolling agreement included a promise that the parties would not include the tolling period in any assertion of a limitations defense.
About two years later, appellants gave Credit Suisse notice of intent to terminate the tolling agreement, and after the thirty-day notice period expired, they filed suit in New York state court alleging claims for breach of contract, breach of the duty of good faith and fair dealing, fraud, conspiracy, and unjust enrichment. Credit Suisse filed suit against appellants on its claims.
Credit Suisse obtained a judgment for over $50 million on its claims. Credit Suisse then amended its answer to appellants' complaint and asserted the defense of limitations on appellants' breach-of-contract claims. The same day, Credit Suisse filed its motion for summary judgment arguing that tolling agreements for an indefinite period for breach-of-contract claims are not enforceable under New York law.3 The New York courts agreed that the parties' tolling agreement was not enforceable to prevent the running of limitations on appellants' breach-of-contract claims, and the court dismissed appellants' breach-of-contract claims that had accrued before July 25, 2006. See Allenby, LLC v. Credit Suisse, AG, 25 N.Y.S.3d 1, 3 (N.Y. App. Div. 2015); see also N.Y. GEN. OBLIG. § 17-103 (); Bayridge Air Rights, Inc. v. Blitman Constr. Corp., 599 N.E.2d 673, 674-75 (N.Y. 1992) (). In doing so, the New York courts determined "that the tolling agreement was governed by New York rather than Texas law" and "that equitable estoppel did not apply as a matter of law." Id. The New York courts held that certain of appellants' contract claims were filed within the limitations period, and although the New York trial court dismissed the fraud claims, the appellate division ordered appellants' fraud claims reinstated. Id. at 3-6.
Appellants then filed this suit in Texas alleging Credit Suisse breached its promise in the tolling agreement not to include the tolling period in the calculation of whether limitations barred appellants' claims. Appellants also alleged promissory estoppel. Appellants sought to recover as damages the value of the claims dismissed in New York under the statute of limitations as well as the attorney's fees they incurred as a result of Credit Suisse's violation of the tolling agreement.4 Credit Suisse moved for summary judgment on all of appellants' claims asserting they were barred by res judicata and that they would fail as a matter of law. Credit Suisse asked that they be dismissed with prejudice. Appellants moved for summary judgment and asked that the trial court render a partial summary judgment, ruling that the tolling agreement is governed by Texas law and that Credit Suisse breached the tolling agreement. The trial court signed an order granting Credit Suisse's motion for summary judgment and ordered that appellants take nothing on their claims. The trial court did not expressly rule on appellants' motion for summary judgment.
Appellants' issues contend the trial court erred by granting Credit Suisse's motion for summary judgment. The standard for reviewing a traditional summary judgment is well established. See Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548-49 (Tex. 1985); McAfee, Inc. v. Agilysys, Inc., 316 S.W.3d 820, 825 (Tex. App.—Dallas 2010, no pet.). The movant has the burden of showing that no genuine issue of material fact exists and that it is entitled tojudgment as a matter of law. TEX. R. CIV. P. 166a(c). In deciding whether a disputed material fact issue exists precluding summary judgment, evidence favorable to the nonmovant will be taken as true. Nixon, 690 S.W.2d at 549; In re Estate of Berry, 280 S.W.3d 478, 480 (Tex. App.—Dallas 2009, no pet.). Every reasonable inference must be indulged in favor of the nonmovant and any doubts resolved in its favor. City of Keller v. Wilson, 168 S.W.3d 802, 824 (Tex. 2005). We review a summary judgment de novo to determine whether a party's right to prevail is established as a matter of law. Dickey v. Club Corp., 12 S.W.3d 172, 175 (Tex. App.—Dallas 2000, pet. denied).
In their first issue, appellants contend the trial court erred by applying the doctrine of res judicata to bar appellants' causes of action in this case. The parties agree that the preclusive effect of a prior decision is determined by the law of the state that issued that decision—New York, in this case. See Purcell v. Bellinger, 940 S.W.2d 599, 601 (Tex. 1997) (). Therefore, the question is whether appellants' claims for breach of contract and promissory estoppel would be barred by res judicata if appellants had brought them in New York instead of Texas.
Under the doctrine of res judicata, a party may not litigate a claim where a judgment on the merits exists from a prior action between the same parties involving the same subject matter. The rule applies not only to claims actually litigated but also to claims that could have been raised in the prior litigation. The rationale underlying this principle is that a party who has been given a full and fair opportunity to litigate a claim should not be allowed to do so again.
In re Hunter, 827 N.E.2d 269, 274 (N.Y. 2005).
"The doctrine of res judicata operates to preclude the reconsideration of claims actually litigated and resolved in a prior proceeding, as well as claims for different relief against the same party which arise out of the same factual grouping or transaction, and which should have orcould have been resolved in the prior proceeding." Schwarz v. Schwarz, 2017 WL 1902379, at *2 . "Under New York's transactional approach to the doctrine of res judicata, 'once a claim is brought to a final conclusion, all other claims arising out of the same transaction or series of transactions are barred, even if based upon different theories or if seeking a different remedy.'" Id. (quoting Parolisi v. Slavin, 950 N.Y.S.2d 140, 142 (N.Y. App. Div. 2012) (quoting O'Brien v. Syracuse, 429 N.E.2d 1158, 1159 (N.Y. 1981)). "New York does not have a compulsory counterclaim rule[;] a defendant who fails to assert a counterclaim is not barred by the doctrine of res judicata from subsequently commencing a new action on that claim unless the claim would impair the rights or interests established in the first action." Wax ex rel. Wax v. 716 Realty, LLC, 2017 WL 2562374, at *2 (N.Y. App. Div. June 14, 2017) ().
In New York, res judicata precludes claims that have been dismissed under a statute of limitations from being litigated in a second suit arising from the...
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