Barr v. Resolution Trust Corp. ex rel. Sunbelt Federal Sav., D-2082

• Decision Date: 23 September 1992
• Docket Number: No. D-2082,D-2082
• Citation: 837 S.W.2d 627
• Parties: George J. BARR, Petitioner, v. RESOLUTION TRUST CORP., ex rel. SUNBELT FEDERAL SAVINGS, Respondent.
• Court: Texas Supreme Court

Page 627

837 S.W.2d 627

George J. BARR, Petitioner, v. RESOLUTION TRUST CORP., ex rel. SUNBELT FEDERAL SAVINGS, Respondent.

No. D-2082.

Supeme Court of Texas.

Sept. 23, 1992.

Albert B. Greco, Jr., Barbara L. Wohlrabe, Dallas, for petitioner.

Jack N. Ross, II, Dallas, for respondent.

OPINION

GONZALEZ, Justice.

The issue in this case is whether a claim by Sunbelt Federal Savings against George Barr based on a partnership promissory note and guarantee agreement is barred by the doctrine of res judicata. The trial court granted Barr's motion for summary judgment based on res judicata. The court of appeals, with one Justice dissenting, reversed the trial court's judgment, holding that the doctrine did not apply. 824 S.W.2d 600. We reverse the judgment of the court of appeals and affirm the trial court's judgment.

In 1985, Barr and Ron Knott were partners in the Bar III Venture. On March 14, 1985 Bar III executed a promissory note for $369,750 in favor of Sunbelt's predecessor in interest. The same day, Barr and Knott executed a personal guarantee of the note. In March 1987, Bar III defaulted on the note.

On May 24, 1988, Sunbelt filed two separate lawsuits on the note. In one suit, Sunbelt alleged liability against the partnership as maker of the note and against Knott as guarantor of the note. In the other, Sunbelt alleged that Barr was personally liable because of his unconditional guarantee of the note.

Barr moved for summary judgment in the latter lawsuit on the grounds that the terms of the guaranty agreement were too uncertain to be enforceable. Barr argued that the agreement, a standard form containing a number of options to choose and blanks to complete, was not sufficiently completed to ascertain his liability. The trial court granted the motion, and rendered a final take-nothing judgment. Sunbelt did not appeal the judgment.

Thereafter, Sunbelt amended its pleadings in the suit against the partnership and Knott by adding Barr as a defendant, alleging that his status as a partner created liability for the note. Barr's answer asserted res judicata, among other defenses.

Barr moved for summary judgment on the grounds that the take-nothing judgment in the first lawsuit barred litigation of the claims against him in the second lawsuit. Sunbelt also moved for summary judgment, requesting a judgment on the note. The trial court granted Barr's motion and denied Sunbelt's. This interlocutory judgment became final when the court rendered judgment for Sunbelt on its claims against the partnership and Knott for the full amount of the note.

Sunbelt appealed, arguing that the trial court should have granted its summary judgment instead of Barr's. The court of appeals, with one justice dissenting, determined that the first suit did not bar the second. However, the court concluded that questions of fact prevented rendition in Sunbelt's favor, and thus remanded the case to the trial court. Both Barr and Sunbelt sought review in our court.

Much of the difficulty associated with the doctrine of res judicata is due to the confusion of several related theories. Broadly speaking, res judicata is the generic term for a group of related concepts concerning the conclusive effects given final judgments. Puga v. Donna Fruit Co., 634 S.W.2d 677, 679 (Tex.1982). Within this general doctrine, there are two principal categories: (1) claim preclusion (also known as res judicata); and (2) issue preclusion (also known as collateral estoppel). ¹ Res 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. Gracia v. RC Cola-7-Up Bottling Co., 667 S.W.2d 517, 519 (Tex.1984); Bonniwell v. Beech Aircraft Corp., 663 S.W.2d 816, 818 (Tex.1984). Issue preclusion, or collateral estoppel, prevents relitigation of particular issues already resolved in a prior suit. ² Bonniwell, 663 S.W.2d at 818. Barr's argument, that Sunbelt should have brought all theories of liability in one suit, is the defense of claim preclusion.

Claim preclusion prevents splitting a cause of action. Jeanes v. Henderson, 688 S.W.2d 100, 103 (Tex.1985). The policies behind the doctrine reflect the need to bring all litigation to an end, prevent vexatious litigation, maintain stability of court decisions, promote judicial economy, and prevent double recovery. Zollie Steakley & Weldon U. Howell, Jr., Ruminations on Res Judicata, 28 Sw.L.J. 355, 358-59 (1974).

The question that has given courts the most difficulty is determining what claims should have been litigated in the prior suit. Early on, this Court held that res judicata "is not only final as to the matter actually determined, but as to every other matter which the parties might litigate in the cause, and which they might have decided." Foster v. Wells, 4 Tex. 101, 104 (1849). We have never repudiated this definition of claim preclusion, and it appears in some form in most definitions of res judicata. See, e.g., Jeanes v. Henderson, 688 S.W.2d 100, 103 (Tex.1985) (res judicata bars not only what was actually litigated but also claims that could have been litigated in the original cause of action). If taken literally, this definition of the rule would require that all disputes existing between parties be joined, regardless of whether the disputes have anything in common. This court has resorted to a wide variety of theories and tests to give res judicata a more restrictive application. ³ See generally 5 WILLIAM V. DORSANEO III, TEXAS LITIGATION GUIDE § 131.06[b][ii] (1991); Steakley, 28 Sw.L.J. 355.

Even if only cases from more recent times are considered, our holdings with respect to res judicata are difficult to reconcile. In Griffin v. Holiday Inns of America, 496 S.W.2d 535 (Tex.1973) the court determined that a take-nothing judgment in a suit to recover in contract for services and materials did not preclude a subsequent suit to be compensated in quantum meruit. The court rejected the view that a judgment as to one claim is res judicata of all claims or causes of action arising out of the same transaction, and stated that, "[a]s a general rule a judgment on the merits in a suit on one cause of action is not conclusive of a subsequent suit on a different cause of action except as to issues of fact actually litigated and determined in the first suit." Id. at 538. The court acknowledged, however, that alternative theories of recovery for the same "claim" may not be brought in different lawsuits. ⁴

Thus, in Griffin, the court determined that a "cause of action" for res judicata purposes is something more than the set of facts necessary to establish a single theory of recovery but not necessarily the entire transaction between the parties. Id. at 537-38. The court gave no guidance on the question of how to make this fine distinction between a mere alternative theory of recovery and a different cause of action. Every theory of recovery has its unique elements of proof. As the Griffin case illustrates, only slight variations of the facts to support different theories of the same incident can result in a court finding different causes of action, thus thwarting the purposes of res judicata. See Steakley, 28 Sw.L.J. at 361-62.

The court took an entirely different approach in Westinghouse Credit Corp. v. Kownslar, 496 S.W.2d 531 (Tex.1973). In that case Kownslar had guaranteed all promissory notes by the maker. The issue was whether res judicata required that Westinghouse bring in one suit its claims for all notes guaranteed by Kownslar that were then in default. Rather than decide whether there was more than one cause of action involved, the court decided the case solely on whether it appeared that the policies of res judicata required such a result. ⁵

This pure policy approach as exemplified by Westinghouse makes it virtually impossible to determine in advance what policy will win out in any given case. Without any objective standards, each case is decided ad hoc, and therefore the doctrine is "inherently unpredictable" and "affords little basis for consistency and formulation of precedent." Steakley, 28 Sw.L.J. at 362-63. Westinghouse is the only case we have decided solely on policy grounds.

Then, in Texas Water Rights Comm. v. Crow Iron Works, 582 S.W.2d 768 (Tex.1979), the court shifted the focus from the cause of action to the subject matter of the litigation. The question was whether a major lawsuit instigated to sort out water rights to the lower Rio Grande river precluded a subsequent suit based on the claim that during the pendency of that suit the plaintiff had purchased additional rights. The court concluded that the subsequent claim was barred, noting that:

The scope of res judicata is not limited to matters actually litigated; the judgment in the first suit precludes a second action by the parties and their privies not only on matters actually litigated, but also on causes of action or defenses which arise out of the same subject matter and which might have been litigated in the first suit.

Id. at 771-72 (emphasis added). Accord, Gracia, 667 S.W.2d at 519. Thus this definition is not consistent with earlier formulations of the rule, such as in Griffin, that only issues related to a single cause of action are barred in a subsequent suit. While we did not expressly overrule the Griffin test in either Crow Iron Works or Gracia we do so now.

A determination of what constitutes the subject matter of a suit necessarily requires an examination of the factual basis of the claim or claims in the prior litigation. It requires an analysis of the factual matters that make up the gist of the complaint, without regard to the form of action. Any cause of action which arises out of those same facts should, if practicable, be litigated in the same lawsuit. Gracia, 667 S.W.2d at 519; Crow Iron Works, 582 S.W.2d at 772.

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