Citgo Refining and Marketing, Inc. v. Garza

• Decision Date: 12 December 2002
• Docket Number: No. 13-02-330-CV.,13-02-330-CV.
• Citation: 94 S.W.3d 322
• Parties: CITGO REFINING AND MARKETING, INC. and Citgo Petroleum Corporation, Appellants, v. Amelia GARZA, et al., Appellees.
• Court: Texas Court of Appeals

94 S.W.3d 322

CITGO REFINING AND MARKETING, INC. and Citgo Petroleum Corporation, Appellants, v. Amelia GARZA, et al., Appellees.

No. 13-02-330-CV.

Court of Appeals of Texas, Corpus Christi-Edinburg.

December 12, 2002.

COPYRIGHT MATERIAL OMITTED

J. Stephen Barrick, James S.E. Cowan, Jason B. Kinzel, Akin, Gump, Strauss, Hauer & Feld, Houston, Jeffrey K. Sherwood, Akin, Gump, Strauss, Hauer & Feld, McLean, VA, Jaime L. Capelo, Chaves, Gonzales & Hoblit, Corpus Christi, for appellants.

H. Lee Godfrey, Susman, Godfrey & Mcgowan, Dennis Craig Reich, Shari A. Wright, Reich & Binstock, J. Hoke Peacock III, William R. Merrill, Houston, Steve T. Hastings, Hastings & Alfaro, Alberto R. Huerta, Huerta, Hastings, Allison, L.L.P., Corpus Christi, for appellees.

Before Justices HINOJOSA, CASTILLO, and CHAVEZ.¹

OPINION

Opinion by Justice CASTILLO.

This is an attempted appeal from an interlocutory order of the trial court following a non jury trial on the merits in a class action. The challenged order approved notice to two previously certified subclasses of a damages award in the plaintiffs' favor, of class counsel's request for expenses and attorneys' fees, and of a proposed distribution of the anticipated judgment. Appellants, Citgo Refining and Marketing, Inc. and Citgo Petroleum Corporation (jointly, "Citgo"), contend in two issues that: (1) the order either certified a new class or fundamentally altered the nature of the class, making it subject to interlocutory appeal and conferring jurisdiction on this Court; and (2) the trial court abused its discretion in certifying or fundamentally altering the nature of the class. We dismiss for want of jurisdiction.

PROCEDURAL BACKGROUND

Although this lawsuit has been through complicated consolidations, settlements, and severances, for purposes of this attempted appeal it is procedurally fairly simple. Litigation began in 1993 with the filing of claims by commercial and residential property owners for property damage from alleged long-term emissions of contaminants by several chemical manufacturers and owners of commercial facilities in Corpus Christi's "refinery row" area. Other suits ensued, which ultimately were consolidated into one proceeding. The following is a simplified chronology, in the most general terms, of events relevant to an understanding of this appeal.

On November 14, 1995, the trial court certified the case as a class action.² Broadly speaking, the certification order divided the class into subclasses that included, among other subclasses, three residential areas: (1) the "Oak Park Triangle"; (2) the "1-37 South" properties; and (3) the "1-37 North" properties. On September 28, 1997, the class entered into a settlement agreement with Citgo, which was filed with the trial court. The Citgo settlement agreement provided, among other terms, for Citgo to buy out homeowners in the Oak Park Triangle and pay $1,450,000 to the 1-37 South subclass and $3,550,000 to the 1-37 North subclass. In mid-January of 1998, the trial court appointed a guardian ad litem in response to class concerns about several proposed settlements. Following extended discussions between the settling parties and the court, Citgo began to buy out the Oak Park Triangle subclass, although under terms different from those recited in the Citgo settlement agreement. On November 22, 1999, Citgo filed a motion for decertification, which was denied by the trial court on November 24, 1999. On January 12-14, 2000, the trial court heard plaintiffs' motion for preliminary approval of proposed settlements with several of the defendants, including the settlement with Citgo. Citgo opposed approval of the settlement agreement, objecting that it was no longer enforceable. On January 23, 2000, the trial court severed the plaintiffs' claims against three groups of defendants and granted preliminary approval of those settlements. On January 25, 2000, over Citgo's objections, the trial court granted preliminary approval of the Citgo settlement. By separate order that same date, the trial court severed "all claims and causes of action brought by the plaintiffs against" Citgo from the class claims against the only other remaining defendant, Coastal Corporation, and the class proceeded to trial on the claims against Coastal.

Meanwhile, Citgo completed its buy-out of the Oak Park Triangle subclass, obtaining releases from each of the homeowners. Still asserting a number of defenses to enforceability of the settlement agreement, Citgo did not fund the $5,000,000 that the settlement agreement obligated it to pay to the 1-37 South and 1-37 North subclasses. On March 29, 2000, plaintiffs filed an amended class-action petition containing an "alternative claim against Citgo for breach of contract" for its alleged breach of the settlement agreement, which they amended again on June 27, 2001. On July 6, 2001, Citgo filed a supplemental motion to decertify the class action and vacate the November 14, 1995 certification order. Both sides filed motions for summary judgment on the plaintiffs' breach-of-contract claim against Citgo. The parties agreed to submit the merits of the breachof-contract claim and defenses to the trial court instead of pursuing the cross motions for summary judgment. They waived a jury trial, and on August 13 and 14, 2001, the trial court conducted a bench trial on the breach-of-contract claim. Plaintiffs did not adjudicate their class tort claims against Citgo.

By written order signed on October 17, 2001, the trial court found in relevant part that: (1) Citgo entered into a valid and enforceable settlement with the plaintiff class that remained valid and enforceable at all times prior to Citgo's breach; (2) Citgo breached its settlement agreement with the plaintiff class; and (3) the plaintiff class was damaged in the amount of $5 million by Citgo's breach. The order set an evidentiary hearing on the issue of attorneys' fees, which the trial court conducted on February 22, 2002. On March 15, 2002, the trial court awarded the class $700,000 in attorneys' fees on the breachof-contract claim.

With resolution by trial, settlement, or dismissal of all class claims against Citgo's co-defendants and on finalization of Citgo's buy-out of the Oak Park Triangle subclass, only the 1-37 South and 1-37 North subclasses were still in active litigation in the severed claims against Citgo at the time of trial on the breach-of-contract claim. On April 30, 2002, class counsel submitted for approval a proposed notice to the remaining class (expressly excluding members of the Oak Park Triangle subclass who had participated in the buy-out of their properties by Citgo) of an anticipated judgment on the breach-of-contract claim. The proposed notice also informed the class of each member's right to opt out of the class and notified the class of class counsel's request for reimbursement of expenses and, in addition to the $700,000 awarded on the breach-of-contract claim, for $1.5 million in attorneys' fees under a common fund theory for counsel's work with regard to the class tort claims.

On May 14, 2002, the trial court conducted a hearing on the motion to approve the notice. Citgo objected to the notice, claiming that it effectively certified a new class because it excluded the Oak Park Triangle subclass and because the breach-of-contract cause of action had not existed at the time the class was originally certified in 1995. Citgo also argued that the notice certified an impermissible one-way intervention or "fail safe" class because recovery was assured under the anticipated judgment on the breach-of-contract claim. Objecting that class counsel was not entitled to attorneys' fees both for prosecuting the underlying tort claim and as awarded in the breach-of-contract Citgo contended that counsel's fee request created a conflict of interest between counsel and the class. Also, Citgo asserted that omission of the Oak Park Triangle subclass and the proposed distribution of the $5 million only to the 1-37 South and 1-37 North subclasses created a conflict of interest between the three subclasses.

On May 16, 2002, the trial court signed an order approving the proposed notice, a copy of which was attached to the order (the "May 2002 Order"). It is from the May 2002 Order that Citgo seeks an interlocutory appeal. Appellees moved for dismissal of the appeal, arguing that we have no jurisdiction to consider Citgo's challenges to the May 2002 Order. After Citgo filed its notice of appeal, the trial court signed an amended order approving notice to the class that set a fairness hearing on September 20, 2002 "to address any issues raised by class members in relation to the judgment on the settlement." In response, Citgo moved for emergency relief in this Court and asked that we stay entry of any final judgment by the trial court pending the outcome of this interlocutory appeal. By per curiam order dated September 10, 2002, we denied Citgo's request. Class counsel filed a proposed allocation of the anticipated judgment on September 17, 2002, and the trial court conducted the fairness hearing on September 20, 2002.

INTERLOCUTORY APPELLATE JURISDICTION

The Texas Supreme Court has adhered steadfastly through the years to the rule that an appeal may be prosecuted only from a final judgment and that to be final a judgment must dispose of all issues and parties in a case. N.E. Indep. Sch. Dist. v. Aldridge, 400 S.W.2d 893, 895 (Tex.1966). Accordingly, except as expressly authorized by statute, no appeal lies from an interlocutory order. Cherokee Water Co. v. Ross, 698 S.W.2d 363, 365 (Tex.1985) (orig.proceeding) (per curiam); Aldridge, 400 S.W.2d at 895.

Section 51.014 of the Texas Civil Practice and Remedies Code allows appeal from certain interlocutory orders, including one that "certifies or refuses to certify a class in a suit brought under Rule 42 of the Texas Rules of Civil Procedure." TEX. PRAC. & REM.CODE ANN. § 51.014...