Compania Financiara Libano v. Simmons, 00-0465

• Decision Date: 21 June 2001
• Docket Number: No. 00-0465,00-0465
• Citation: 53 S.W.3d 365
• Parties: (Tex. 2001) Compania Financiara Libano, S.A. and Armando Fong Najarro, Petitioners v. William H. Simmons and Mary Simmons Hensley, individually and as trustee, Respondents
• Court: Texas Supreme Court

Page 365

53 S.W.3d 365 (Tex. 2001)

Compania Financiara Libano, S.A. and Armando Fong Najarro, Petitioners v. William H. Simmons and Mary Simmons Hensley, individually and as trustee, Respondents

No. 00-0465

SUPREME COURT OF TEXAS

June 21, 2001.

Rehearing Overruled Sept. 20, 2001

On Petition for Review from the Court of Appeals for the Fourteenth District of Texas

PER CURIAM

The court of appeals held that a suit to enforce provisions of an agreement settling prior litigation that were not included in the final, agreed judgment in that case is an impermissible collateral attack on the agreed judgment. 14 S.W.3d 338. We disagree.

Compania Financiera Libano, S.A. and Armando Fong Najarro (collectively, "Compania") sued William H. Simmons and Mary Simmons Hensley (collectively, "Simmons"), as well as others, alleging the fraudulent transfer of certain property interests. The parties settled by written agreement calling for Simmons to transfer certain property interests to Compania, for an agreed judgment to be rendered that Compania recover $25,000 from Simmons and that Simmons take nothing against Compania, and for the parties to execute mutual releases. The parties filed their agreement with the trial court pursuant to Rule 11, Tex. R. Civ. P., and the court signed the agreed judgment. The judgment did not refer to the property transfers or releases called for in the agreement, and contained a Mother Hubbard clause stating that "all relief not expressly granted herein by way of claim or counterclaim is denied." Compania filed a timely motion to modify the judgment to include other provisions of the settlement agreement. The court never ruled on the motion, and it was denied by operation of law.

Less than a year later, Compania sued Simmons to compel performance of the settlement agreement, asserting claims for breach of contract, fraud, tortious interference, and specific performance. The trial court granted partial summary judgment for Compania on the breach of contract claim and after a bench trial rendered judgment for Compania on its other claims, ordering specific performance and awarding attorney fees. A divided court of appeals reversed, holding that Compania's suit was an impermissible collateral attack on the agreed judgment in the earlier case. 14 S.W.3d 338 (Tex. App.--Houston [14th Dist.] 2000). The court concluded that "the prior agreed judgment barred the subsequent action in this case under the doctrine of res judicata", 14 S.W.3d at 341 and that the settlement had been merged into the agreed judgment, especially in view of the Mother Hubbard clause, id.

The doctrine of res judicata in Texas holds that a final judgment in an action bars the parties and their privies from bringing a second suit "'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.'" Barr v. Resolution Trust Corp., 837 S.W.2d 627, 630 (Tex. 1992 (quoting Texas Water Rights Comm. v. Crow Iron Works, 582 S.W.2d 768, 771-772 (Tex. 1979) (emphasis omitted)). Compania's causes of action in the instant case could not have been brought in the prior suit because Simmons had not yet breached their settlement agreement. The Mother Hubbard clause in the agreed judgment could not dispose of claims that did not exist. Accordingly, the court of appeals erred in concluding that Compania's suit is barred by res judicata.

The court of appeals did not explain what it intended by referring to "the doctrine of merger". It may have meant one of the principles underlying res judicata. See Jeanes v. Henderson, 688 S.W.2d 100, 103 (Tex. 1985) ("Res judicata,...