Orix Capital Mkts., LLC v. American Realty Trust, Inc.

• Decision Date: 14 December 2011
• Docket Number: No. 05–10–01005–CV.,05–10–01005–CV.
• Citation: 356 S.W.3d 748
• Parties: ORIX CAPITAL MARKETS, LLC, Appellant, v. AMERICAN REALTY TRUST, INC., Appellee.
• Court: Texas Court of Appeals

356 S.W.3d 748

ORIX CAPITAL MARKETS, LLC, Appellant,

v.AMERICAN REALTY TRUST, INC., Appellee.

No. 05–10–01005–CV.

Court of Appeals of Texas, Dallas.

Dec. 14, 2011.

Lindsey Eubank Simmons, Jeffrey Joyce, Joyce, McFarland & McFarland LLP, William G. Arnot, III, Houston, TX, Gregory D. May, Dallas, TX, for Appellant.

Lawrence J. Friedman, Ryan Lurich, Friedman & Feiger, L.L.P., Dallas, TX, for Appellee.

Before Justices FITZGERALD, FRANCIS, and LANG–MIERS.

OPINION

Opinion By Justice LANG–MIERS.

Appellant Orix Capital Markets, LLC filed this action seeking to vacate the amended judgment in a prior lawsuit between it and appellee American Realty Trust, Inc. The core issue is whether the amended judgment is void because the trial judge allegedly did not meet the constitutional requirements to hold the office of district court judge when he was elected. The parties filed cross-motions for summary judgment, and the trial court granted American Realty's motion and denied Orix's motion. Orix appeals. We affirm the trial court's judgment.

Background

In 2004, Orix sued American Realty over a commercial loan indemnity agreement. After a bench trial, the district judge awarded Orix over $6 million in damages. U.S. Bank v. Am. Realty Trust, Inc., 275 S.W.3d 647, 648–50 (Tex.App.-Dallas 2009, pet. denied). Subsequently, the district judge lost his re-election bid, and American Realty's post-judgment motions were heard by the new district judge. See id. The new judge concluded that Orix had not established causation on its fraud claim, amended the original judge's findings of fact and conclusions of law, and amended the judgment to award Orix only nominal damages. Id. Orix appealed. We reversed the amended judgment on the fraud claim and rendered judgment in favor of Orix in the amount of approximately $370,000 plus attorney's fees. Id. at 655. Both parties filed motions for rehearing.

While the motions for rehearing in the earlier appeal were pending, Orix moved for leave to supplement its motion to raise a new issue. Orix contended for the first time that the amended judgment was void because the new judge was not constitutionally qualified to hold the office of district judge. Orix argued that the new judge did not meet the constitutional requirements of being licensed to practice law and a practicing lawyer in Texas for the four years preceding his election because his license had been suspended for about fourteen days during those four years for failure to pay bar dues and attorney occupation taxes and failure to comply with continuing legal education requirements. Orix argued that the amended judgment should be vacated and the original judgment should be reinstated. We denied leave to supplement the motion for rehearing and overruled the motion. Orix appealed to the Texas Supreme Court and raised the issue concerning the judge's qualifications in its petition for review. The supreme court denied review.

Orix then filed this lawsuit. In its original petition, Orix sought a declaration that the amended judgment in the earlier lawsuit is void. Alternatively, Orix sought a bill of review asking the court to set aside the amended judgment as void. The parties filed cross-motions for summary judgment. The district court ¹ denied Orix's motion and granted American Realty's motion without stating a basis for its rulings. Orix appeals both the grant of American Realty's motion and the denial of its own motion.

Standard of Review

We review a traditional summary judgment de novo to determine whether a party's right to prevail is established as a matter of law. Dallas Cnty. Tax Collector v. Andolina, 303 S.W.3d 926, 929 (Tex.App.-Dallas 2010, no pet.). A party moving for traditional summary judgment under rule of civil procedure 166a(c) must establish that no genuine issue of material fact exists and that it is entitled to judgment as a matter of law. Tex.R. Civ. P. 166a(c); Ysasaga v. Nationwide Mut. Ins. Co., 279 S.W.3d 858, 864–65 (Tex.App.-Dallas 2009, pet. denied). When both parties move for traditional summary judgment and the trial court grants one motion and denies the other, the non-prevailing party may appeal both of those rulings. See Certain Underwriters at Lloyd's v. LM Ericsson Telefon, AB, 272 S.W.3d 691, 694 (Tex.App.-Dallas 2008, pet. denied). We review the summary judgment evidence presented by both parties and determine all questions presented. Id. When the trial court's order granting summary judgment does not specify the grounds upon which it was granted, we will affirm the judgment if any of the theories advanced are meritorious. Carr v. Brasher, 776 S.W.2d 567, 567 (Tex.1989).

Discussion

In this lawsuit, Orix seeks to avoid the effects of the amended judgment in the prior lawsuit by challenging the qualifications of the district judge who rendered the amended judgment in that earlier lawsuit. Orix sought a declaration that the amended judgment in the earlier case is void and that the final judgment rendered by the original judge is the controlling judgment.

The Parties' Arguments

Orix argued in its motion for summary judgment that the new judge was not qualified to hold the office of district judge under the state constitution, which states that a district judge must be “licensed to practice law in this State” and must have “been a practicing lawyer or a Judge of a Court in this State, or both combined, for four (4) years next preceding his election....” Tex. Const. art. V, § 7. Orix offered evidence that the new judge's license to practice law was suspended for fourteen days in the four years before he took office. It argued that the judge did not satisfy these constitutionally mandated requirements and that, as a result, the amended judgment in the earlier case is void because the judge did not have jurisdiction to render the amended judgment.

American Realty argued in its motion for summary judgment that Orix does not have standing to challenge the new judge's qualifications to hold the office of district court judge and, as a result, the trial court did not have jurisdiction to entertain Orix's claim. American Realty argued that only the State may challenge a judge's qualifications to hold office in a proceeding in the nature of quo warranto. It also argued that even if the new judge was not constitutionally qualified when he was elected to the district court bench, his judicial acts are not void because he was the de facto judge of the court having been elected, sworn into office, and exercising the powers of the office under color of law. We agree with American Realty.

Orix's Standing to Challenge Judge's Qualifications

Standing is a necessary component of subject matter jurisdiction and a constitutional prerequisite to maintaining a suit under Texas law. Douglas v. Delp, 987 S.W.2d 879, 882 (Tex.1999); OAIC Commercial Assets, L.L.C. v. Stonegate Vill., L.P., 234 S.W.3d 726, 735 (Tex.App.-Dallas 2007, pet. denied). The plaintiff has the initial burden to allege facts demonstrating it has standing to bring the action and the trial court's jurisdiction to hear the cause. OAIC, 234 S.W.3d at 735–36. If the court does not have subject matter jurisdiction, it may not consider the merits of the case. Delp, 987 S.W.2d at 882. Whether a party has standing to pursue a particular remedy is a question of law, which we review de novo. OAIC, 234 S.W.3d at 735.

The jurisprudence of our state is “settled that the right of a judge to the office in which he functions may not be attacked collaterally.” Snow v. State, 134 Tex.Crim. 263, 114 S.W.2d 898, 900–01 (Tex.Crim.App.1938) (op. on reh'g) (collecting cases). The mechanism by which to challenge a public official's right to hold the office is in a proceeding in the nature of quo warranto. Snow, 114 S.W.2d at 901; see State ex rel. McKie v. Bullock, 491 S.W.2d 659, 660–61 (Tex.1973) (per curiam) (stating only remedy available to challenge elected candidate's qualifications to hold office is quo warranto proceeding); Walker v. State, 146 Tex.Crim. 138, 171 S.W.2d 887, 888 (Tex.Crim.App.1943) (holding that defendant could not seek to quash information on ground that county attorney and his assistants were holding office without authority of law because “quo warranto proceeding is the exclusive remedy to test the right of an officer to hold office”); Rosell v. Cent. W. Motor Stages, Inc., 89 S.W.3d 643, 650–52 (Tex.App.-Dallas 2002, pet. denied) (stating “contesting an elected judge's authority to act in a case is a collateral attack on a judge's ability to hold office that is proper only in a direct quo warranto proceeding”); Vick v. City of Waco, 614 S.W.2d 861, 864 (Tex.Civ.App.-Waco 1981, writ ref'd n.r.e.) (stating “[a] quo warranto proceeding is the exclusive remedy to test the right of an officer to hold office. It may not be done by ... a litigant upon the trial of a case”); Toyah Indep. Sch. Dist. v. Pecos–Barstow Consol. Indep. Sch. Dist., 497 S.W.2d 455, 456–57 (Tex.Civ.App.-El Paso 1973, writ ref'd n.r.e.), cert. denied, 415 U.S. 991, 94 S.Ct. 1590, 39 L.Ed.2d 887 (1974) (stating school board member's “qualification to hold office could not be determined in this collateral proceeding”).

This rule applies regardless of whether “the person acting as judge is incapable of holding the office, and irrespective of the question whether he was properly elected.” Snow, 114 S.W.2d at 901.

Proceedings in the nature of quo warranto have been authorized by statute since 1879. Norville v. Parnell, 118 S.W.3d 503, 505 (Tex.App.-Dallas 2003, pet. denied). The statute in effect here provides in relevant part:

§ 66.001. Grounds

An action in the nature of quo warranto is available if:

(1) a person usurps, intrudes into, or unlawfully holds or executes a franchise or an office ...

...

§ 66.002. Initiation of Suit

(a) If grounds for the remedy exist, the attorney general or the county or district attorney of the proper county may petition the district court of...