Brown v. Zimmerman
| Decision Date | 20 April 2005 |
| Docket Number | No. 05-04-00285-CV.,05-04-00285-CV. |
| Citation | 160 S.W.3d 695 |
| Parties | Medina Evelina Littlejohn BROWN, Appellant, v. Samuel Mort ZIMMERMAN and Interfederal Capital, Inc., Appellees. |
| Court | Texas Supreme Court |
Irwin Lightstone, Law Office of Irwin Lightstone, P.C., Dallas for Appellant.
George S. Henry, Law Office of George S. Henry, Dallas, for Appellee.
Before Justices WRIGHT, FITZGERALD, and LANG-MIERS.
Medina Evelina Littlejohn Brown1 is the ex-wife of Samuel Mort Zimmerman who is the founder and President of Interfederal Capital, Inc. She appeals the judgment rendered by the trial court on the jury verdict awarding Interfederal recovery against her on its claims for unjust enrichment and equitable subrogation. Littlejohn also appeals the trial court's failure to award attorney's fees for her successful declaratory judgment action against Zimmerman. We affirm.
This case is before us for the second time. It essentially began as a divorce case.2 Prior to their marriage, Zimmerman helped Littlejohn borrow the money to buy a house at 4223 High Summit in Dallas, Texas (the High Summit property). Littlejohn borrowed $88,000.00 from the predecessors of Flagstar Bank, FSB, signing a note (the First Note) for that amount secured by a deed of trust on the High Summit property. Zimmerman arranged a $55,194.66 loan for her from Interfederal for the down payment on the High Summit property. She signed a second note for that amount secured by a deed of trust on the High Summit property in Interfederal's favor (the Second Note).
Less than a year later, Littlejohn expressed a desire to end the marriage and moved to Minnesota. In an effort to reconcile, Zimmerman agreed to have Interfederal purchase the First Note, to refinance Littlejohn's obligations under both the First Note and the Second Note, and to defer her repayment obligations so that Littlejohn would not have to make the monthly payments. On February 20, 1997, Interfederal purchased the First Note from Flagstar Bank. Zimmerman and Littlejohn signed an agreement referred to as the High Summit Agreement3 agreeing that they would repay Interfederal from proceeds of policies insuring the lives of Zimmerman and Littlejohn. But the reconciliation did not last and Zimmerman sued Littlejohn for divorce in July 1997. A final decree of divorce was entered September 29, 1997.
As part of the property division, the divorce decree awarded the High Summit property to Littlejohn as her sole and separate property and declared null and void all agreements in the parties' premarital agreement and any amendments or modifications, which included the High Summit Agreement. Zimmerman, on behalf of Interfederal, forgave the $55,000 owed by Littlejohn to Interfederal under the Second Note, but the decree did not specifically address the $87,658.99 liability under the First Note.
After the divorce was final, Littlejohn attempted to sell the High Summit property and learned that Interfederal had placed a lien on the property. Littlejohn filed a declaratory judgment action against Zimmerman and Interfederal seeking to quiet title to the property. The trial court granted summary judgment declaring title to the High Summit property quieted in Littlejohn against Interfederal and dismissing Interfederal and Zimmerman's counterclaims for subrogation, breach of contract, fraud, and unjust enrichment. Zimmerman and Interfederal appealed.
We affirmed the summary judgment in favor of Littlejohn against Zimmerman to quiet title to the High Summit property but remanded the issue of attorney's fees. We also affirmed the summary judgment in favor of Littlejohn dismissing Interfederal's counterclaims for breach of contract and fraud. We reversed the summary judgment in favor of Littlejohn dismissing Interfederal's counterclaims for unjust enrichment and equitable subrogation and remanded those issues to the trial court.
On remand, Littlejohn raised affirmative defenses of limitations and res judicata as a bar to Interfederal's counterclaims. The parties tried these claims to a jury, which found in favor of Interfederal against Littlejohn. At the conclusion of the trial, Littlejohn moved for instructed verdict on the issue of limitations which the trial court denied. Littlejohn then filed a motion for judgment non obstante veredicto (nov) reurging her limitations and res judicata defenses and requesting attorney's fees against Zimmerman in the declaratory judgment action. Without ruling on the motion for judgment nov, the trial court rendered judgment on the jury verdict for Interfederal and awarded Interfederal $229,042.22, plus attorney's fees and costs. Littlejohn filed a motion for new trial, reurging her defenses of limitations and res judicata and her request for attorney's fees against Zimmerman on her declaratory judgment claim. The trial court denied the motion.
Littlejohn raises three issues on appeal: (1) Interfederal's counterclaims of unjust enrichment and equitable subrogation are barred by the two-year statute of limitations, (2) Interfederal's counterclaims are barred by the doctrine of res judicata, and (3) the trial court failed to award her attorney's fees for her successful appeal of the declaratory judgment action against Zimmerman.
In her first issue, Littlejohn contends Interfederal's equitable subrogation and unjust enrichment counterclaims are barred by limitations. Littlejohn moved for instructed verdict and a new trial raising this issue. The trial court denied both motions but did not state the specific limitations provision on which it relied.
The doctrine of equitable subrogation allows a person, not acting voluntarily, who pays the debt owed by another to seek repayment of that debt by the person who in equity and good conscience should have paid it. Matagorda County v. Texas Ass'n of Counties County Gov't Risk Mgmt. Pool, 975 S.W.2d 782, 785 (Tex.App.-Corpus Christi 1998), aff'd, 52 S.W.3d 128 (Tex.2000). There is no specific statute of limitations for subrogation actions. Instead, these actions generally are subject to the same statute which would apply had the action been brought by the subrogee. See Guillot v. Hix, 838 S.W.2d 230, 233 (Tex.1992) (); Lusk v. Parmer, 114 S.W.2d 677, 681 (Tex.Civ. App.-Amarillo 1938, writ dism'd) ().
Littlejohn argues that Interfederal's claim is governed by the two-year statute of limitations for actions for the detention of personal property because the claim is that she retained the benefit of Interfederal's purchase of the First Note. See TEX. CIV. PRAC. & REM.CODE ANN. § 16.003(a) (Vernon 2002).4 She also argues that the claim is barred because Interfederal failed to file its counterclaim within two years of purchasing the First Note from Flagstar Bank.
We disagree. The final judgment holds that Interfederal is the equitable owner of the First Note for $88,000, the beneficiary of the deed of trust securing the Note, that it has all rights as the holder and owner of the Notes, and as the beneficiary of the deed of trust. Because Interfederal's action was based on the claim the prior note and lien holder would have had, Interfederal's equitable subrogation claim is an action on a debt, not a claim for detention of personal property.
Section 16.004(a)(3) establishes a four-year limitations period for actions on a debt and has been construed to apply to debts whether or not in writing.5 See TEX. CIV. PRAC. & REM.CODE ANN. § 16.004(a)(3) (Vernon 2002). To the extent it is a suit for the recovery of real property under a real property lien, it is governed by the four-year statute of limitations. See TEX. CIV. PRAC. & REM.CODE ANN. § 16.035(a) (Vernon 2002). Additionally, because Interfederal's counterclaim seeks equitable relief which is not covered specifically by another limitations provision, the trial court could have based its ruling on the four-year residual limitations period. See TEX. CIV. PRAC. & REM.CODE ANN. § 16.051 (Vernon 2002). Interfederal's counterclaim was filed on May 7, 1999, well within four years of the payment to Flagstar Bank. As a result, Interfederal's counterclaim for equitable subrogation is not barred by limitations.
Because we conclude that Interfederal's claim for equitable subrogation is also not barred by res judicata, as discussed below, and because the judgment does not distinguish between equitable subrogation and unjust enrichment as the basis for the recovery, we need not address the remaining subpart of Littlejohn's first issue which argues that Interfederal's counterclaim for unjust enrichment is barred by limitations. We decide Littlejohn's first issue against her.
In her second issue, Littlejohn contends that the doctrine of res judicata bars Interfederal's claims. Specifically, she argues that the divorce decree awarded her the High Summit property "as her sole and separate property, and the husband is divested of all right, title, interest and claim in and to that property." She contends that Interfederal was in privity with Zimmerman and was, by the decree's language, also divested of claims to the property including the claims made below. Interfederal responds that res judicata does not apply because Zimmerman and Interfederal were not in privity in the divorce action for purposes of the First Note and because the divorce action did not involve the First Note, which is the subject of this action.
Res judicata precludes relitigation of claims that have been finally adjudicated, or that arise out of the same subject matter and that could have been litigated in the prior action. Amstadt v. United States Brass Corp., 919 S.W.2d...
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