Petrello v. Prucka

• Decision Date: 24 September 2013
• Docket Number: No. 01–11–00749–CV.,01–11–00749–CV.
• Citation: 415 S.W.3d 420
• Parties: Anthony G. PETRELLO, Appellant v. Matthew W. PRUCKA, Sheryl S. Prucka, Rahul Nath, and Usha Nath, Appellees.
• Court: Texas Court of Appeals

415 S.W.3d 420

Anthony G. PETRELLO, Appellant

v.Matthew W. PRUCKA, Sheryl S. Prucka, Rahul Nath, and Usha Nath, Appellees.

No. 01–11–00749–CV.

Court of Appeals of Texas, Houston (1st Dist.).

Sept. 24, 2013.

David Berg, Christopher L. Gadoury, Berg & Androphy, George R. Gibson, Marvin D. Nathan, Nathan Sommers Jacobs, Lynne Liberato, Jeffery T. Nobles, Haynes and Boone, LLP, Houston, TX, for Appellee.

Thomas M. Fulkerson, Wesley G. Lotz, Fulkerson Lotz LLP, John Wesley Raley, Raley & Bowick, LLP, Houston, TX, for Appellant.

Panel consists of Justices KEYES, MASSENGALE, and BROWN.

OPINION

MICHAEL MASSENGALE, Justice.

This appeal arises from extensive litigation over Anthony Petrello's attempt to buy a house from his former next-door neighbor, Matthew Prucka. After a federal district court decided that his discrimination and conspiracy claims failed as a matter of law, Petrello asserted other claims in state court related to the same real-estate transaction. The state trial court granted summary judgment against Petrello, holding that his claims were precluded by the final judgment in the federal case and that they failed to satisfy the statute of frauds.

Because Petrello's state-law claims arise from the same nucleus of operative facts that gave rise to his federal suit—the same real-estate transaction—the doctrine of res judicata bars him from relitigating his claims in state court. We affirm.

Background

In 2007, Prucka, who lived on 8 Remington Lane in Houston, decided to sell his house. Petrello lived at 10 Remington Lane, and he contends that he sought to buy Prucka's house to provide his severely disabled daughter Carena a place to live with her caretakers. Petrello called Prucka and offered to pay $6.5 million for the house. Petrello alleges that Prucka declined the offer but orally granted him a right of first refusal with respect to future offers. Prucka contends that he agreed only to keep Petrello informed so that he could submit an equal or higher offer if he chose.

After declining Petrello's $6.5 million offer, Prucka listed the property for sale at the price of $8.3 million. Rahul Nath submitted a $7.6 million offer that included contingencies. Prucka declined Nath's offer and informed Petrello that a higher offer had been made. In response, Petrello increased his offer to $8.2 million. Because Petrello's offer was not subject to a brokerage fee, it would have netted Prucka more than an offer of the listed price from someone else. Prucka then called Nath, who agreed to pay the full listed price of $8.3 million. Despite the fact that the transaction included a fee for his broker, Prucka signed a written contract on December 5, 2007 to sell to Nath for that price. With no knowledge of Petrello's offer, Nath paid Prucka $75,000 in earnest money.

Two days after the contract was signed, Petrello contacted Nath. Petrello attempted to convince Nath not to go through with purchase or else to allow Petrello to buy the house from him. Nath refused. Four days later, Petrello sued Prucka in state court. He alleged various state-law claims for failing to give him the right of first refusal, including breach of contract and unjust enrichment. Petrello also filed a notice of lis pendens against 8 Remington Lane in the Harris County Clerk's office.

In light of Petrello's pending lawsuit, Prucka and Nath signed an agreement with respect to the litigation, including the contingency that Petrello might prevail. The sale of 8 Remington Lane closed on January 16, 2008. Eight days later, Nath intervened in Petrello's state-court suit.

Petrello had told Prucka that he intended to make major architectural modifications of 8 Remington Lane to accommodate his daughter, such as the installation of an elevator or an accessible bathroom. Prucka testified in a deposition that neither he nor his wife wanted the house to be renovated in that way, preferring to sell to someone who would instead preserve its historic architectural integrity. After the deposition, Petrello amended his petition to allege discrimination claims under the Fair Housing Act, 42 U.S.C. §§ 3601–3619 (2006). Petrello alleged that Prucka did not want the house altered to accommodate Carena, that he accordingly refused to sell the house to him, and that Nath conspired with and assisted in the discrimination against Carena after closing the sale of the property. Petrello also asserted violations of state and municipal fair housing laws. Altogether, Petrello alleged 14 causes of action, including: (1) discrimination under the Federal Fair Housing Act, (2) discrimination under the Texas Fair Housing Act, (3) discrimination under the Houston Fair Housing Act, (4) civil conspiracy to discriminate, (5) aiding and abetting discrimination, (6) conspiracy to deprive him equal protection of laws under 42 U.S.C. §§ 1981–1988, (7) breach of oral contract to provide the right of first refusal, (8) breach of oral contract to sell the house, (9) estoppel, (10) constructive trust, (11) tortious interference with contract, (12) tortious interference with business relations, (13) breach of auction, and (14) a request for a declaratory judgment.

The case was removed to federal court. Once there, Petrello obtained an injunction that prevented Nath from making any improvements or major changes to the home pending the legal proceedings, which the Fifth Circuit vacated on interlocutory appeal. See Petrello v. Nath, 350 Fed.Appx. 887 (5th Cir.2009). In its opinion, the Fifth Circuit suggested that the record raised “a serious question under 28 U.S.C. § 1367(a) whether federal supplemental jurisdiction over the plaintiff's state law claims is appropriate.” Id. at 889 n. 1. The court stated that it was “not clear” whether Petrello's state-law claims were so related to the federal-law claims as to form part of the same case or controversy, allowing for supplemental federal jurisdiction over the related claims. Id. Nevertheless, the Fifth Circuit also expressly acknowledged that it “need not examine federal jurisdiction over the state law claims” in the interlocutory appeal, and thus the court did not actually decide that issue. Id.

A lengthy discovery process ensued. Then, at a pretrial conference on the eve of trial, Petrello orally moved to nonsuit most of his claims against the defendants, leaving only claims related to violations of the federal, state, and municipal fair housing laws. The federal district judge specifically asked: “what are you going ahead on, what causes of action?” Petrello's attorney responded that the only remaining claims before that court were the “Fair Housing Act claims ... state and federal.” His attorney further stated that Petrello wished to avoid “any potential problem that might have been hinted by the Fifth Circuit about [the district court's] jurisdiction,” explaining, “We don't want to try it in state court and it removes that issue.” The defendants did not object to Petrello's motion for leave to amend his complaint and to nonsuit his other claims, and the district court orally granted the motion. In his subsequent final pleading filed in federal court, his “Sixth Amended Complaint,” Petrello listed only six causes of action: (1) a federal Fair Housing Act claim, (2) a Texas Fair Housing Act claim, (3) a Houston Fair Housing Act claim, (4) civil conspiracy to discriminate in housing sales, (5) aiding and abetting such discrimination, and (6) conspiracy to deprive the Petrellos the equal protection of the laws under 42 U.S.C. §§ 1981–1988.

At the time of trial Nath also had a live counterclaim before the federal district court. Nath requested a declaration under the Texas Declaratory Judgment Act, Tex. Civ. Prac. & Rem.Code Ann. §§ 37.001–.011 (West 2008), that (1) the Naths had title to 8 Remington Lane, (2) Petrello had no rights to the house, (3) Petrello's lis pendens was void and the title to the house was clear, and (4) the Naths were entitled to attorney's fees.

The case was tried to a jury which was unable to reach a verdict, and a mistrial was declared. After the mistrial, the original federal district judge recused himself, and the case was transferred to another judge. The federal district court then granted judgment as a matter of law in favor of the defendants. SeeFed.R.Civ.P. 50(a). Reasoning that the alleged oral agreement for the purchase and sale of the house was unenforceable under the statute of frauds, the court held that even after a trial Petrello had not established a prima facie case for a violation of the federal Fair Housing Act, the Texas Fair Housing Act, or the Houston Fair Housing Ordinance. Petrello v. Prucka, No. H–08–1933, 2011 WL 305444 (S.D.Tex. Jan.27, 2011); see McDonnell Douglas Corp. v. Green, 411 U.S. 792, 802, 93 S.Ct. 1817, 1824, 36 L.Ed.2d 668 (1973) (requiring discrimination claimants to meet the burden of proving that they qualify under anti-discrimination statutes); see also42 U.S.C. § 3603(b)(1) (exempting the sale of housing without the services of brokers or any person in the business of selling houses from the Fair Housing Act). The judge signed a document titled “Final Judgment” which stated that “the plaintiffs shall take nothing by their federal, state and city discrimination and conspiracy claims.” The Fifth Circuit later affirmed the district court's judgment. Petrello v. Prucka, 484 Fed.Appx. 939 (5th Cir.2012), cert. denied,––– U.S. ––––, 133 S.Ct. 1723, 185 L.Ed.2d 785 (2013).

The final judgment entered by the federal district court also stated: “State common law claims are remanded.” Similarly, the memorandum opinion and order accompanying the final judgment stated in its conclusion that the “remaining state law claims and any counterclaims, including the Naths' claim to clear the title to their house, are remanded ... pursuant to 28 U.S.C. § 1447(c).” Although the memorandum opinion and order made passing reference to Petrello's claims for breach of contract, tortious...