Space Master Intern., Inc. v. Porta-Kamp Mfg. Co., Inc.

• Decision Date: 16 August 1990
• Docket Number: PORTA-KAMP,No. 01-90-00020-CV,01-90-00020-CV
• Parties: SPACE MASTER INTERNATIONAL, INC., Appellant, v.MANUFACTURING COMPANY, INC., Appellee. (1st Dist.)
• Court: Texas Court of Appeals

Page 944

794 S.W.2d 944

SPACE MASTER INTERNATIONAL, INC., Appellant, v. PORTA-KAMP MANUFACTURING COMPANY, INC., Appellee.

No. 01-90-00020-CV.

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

Aug. 16, 1990.

JoAnn Storey, Houston, for appellant.

G. Wesley Urquhart, Houston, for appellee.

Before SAM BASS, COHEN and BISSETT ¹, JJ.

OPINION

BISSETT, Justice (Retired).

This is an appeal from the trial court's order nunc pro tunc dismissing Space Master's suit for declaratory judgment without prejudice. Space Master International Inc., ("Space Master"), in three points of error, contends the trial court erred in dismissing its suit, because the mere pendency of two other actions, in Massachusetts federal court and New Jersey state court, was not a sufficient basis for dismissal. We affirm.

A dispute arose concerning two contracts entered into between Space Master and Porta-Kamp Manufacturing Company, Inc. ("Porta-Kamp"): one for the construction of modular classroom units in Massachusetts, the other for the construction of modular classroom units in New Jersey. Porta-Kamp, a Texas corporation with its principal place of business in Houston, Texas, sued Space Master for breach of contract and sought money damages, in both the New Jersey state court and the Massachusetts state court. The latter suit was removed to a federal court in Massachusetts. Space Master answered both complaints, asserting by affirmative defenses and a counterclaim that Porta-Kamp had violated the Texas usury statute.

While the suits in Massachusetts federal court and New Jersey state court were pending, Space Master filed suit for declaratory judgment in Texas, alleging the contracts at issue should not be enforced because Porta-Kamp had attempted to charge Space Master usurious interest rates. Porta-Kamp filed a motion to dismiss and a plea in abatement, urging the Texas court to either decline to exercise its jurisdiction or abate the cause of action, in order to avoid interference with litigation involving the same parties and issues in Massachusetts federal court.

Space Master responded to Porta-Kamp's motions to dismiss in the Texas court by asserting the trial judge of the Massachusetts federal court had indicated he was unwilling to apply Texas usury law, and attached a portion of the transcript from the proceedings in Massachusetts, sworn to by Space Master's attorney as accurately reflecting the exchange between counsel and the court. When counsel informed the court that Porta-Kamp could forfeit the principal as well as the interest under Texas law, because it had charged an 18 percent interest rate, the trial judge replied:

I mean, it's ludicrous.... I don't see any judge any place applying that law because it's--it's absolutely inherently ludicrous.... [T]o say that they could forfeit three quarters of a million dollars because they charged you interest which you haven't paid is just--I mean, you don't even have to be a Cardoza [sic] to know that it's inherently foolish.

Based on this exchange and the assertion by Space Master that the Massachusetts court might not be able to enforce the usury statute because it was considered punitive, Space Master urged that the Texas court retain jurisdiction over the suit for declaratory judgment.

In its supplemental response in the Texas action, Space Master alleged the New Jersey court would not rule on Porta-Kamp's motion for summary judgment on Space Master's usury defense and counterclaim, until the Texas court had construed the Texas usury statute.

By order and order nunc pro tunc, the trial court granted Porta-Kamp's motion to dismiss, but denied the plea in abatement. The court denied Space Master's motion for rehearing, or in the alternative, motion for new trial, and this appeal followed.

In essence, Space Master, in its points of error, contends first that the mere pendency of this action in federal court involving the same parties and issues was not a valid reason to abate the instant proceeding. Second, it urges that the mere pendency of this suit in another state did not deprive the trial court in this case of jurisdiction to hear the suit for declaratory judgment. Finally, it asserts that the trial court erroneously relied upon Texas Liquor Control Board v. Canyon Creek Land Corp., 456 S.W.2d 891 (Tex.1970), as authority to dismiss the suit. As a practical matter, all points challenge the authority of the trial court to dismiss a suit for declaratory judgment, filed while proceedings involving the same parties and issues are pending in another state court and federal court.

It is well settled that the mere pendency of an action in federal court involving the same parties and the same issues is not a reason for abating the subsequent state court proceeding. Williamson v. Tucker, 615 S.W.2d 881, 885-86 (Tex.Civ.App.--Dallas 1981, writ ref'd n.r.e.); Byrnes v. University of Houston, 507 S.W.2d 815, 816 (Tex.Civ.App.--Houston [14th Dist.] 1974, writ ref'd n.r.e.). However, a motion to stay is directed to the discretion of the court and the granting or denying of such a motion will only be reviewed for abuse of discretion. Williamson, 615 S.W.2d at 886 (trial court did not abuse discretion in refusing to stay state court proceeding, filed after pending federal court proceeding, especially because federal action involved numerous parties that were not parties to state court action, and federal case was instituted by defendant in federal court several years before plaintiff instituted subsequent state court proceeding); Alpine Gulf, Inc. v. Valentino, 563 S.W.2d 358, 359 (Tex.App.--Houston [14th Dist.] 1978, writ ref'd n.r.e.) (trial court abused discretion when it refused to stay suit for temporary injunction filed in Texas, when suit between same parties for same ultimate relief had been filed five days earlier in United States district court in New York; trial court should have, as a matter of comity, stayed the action).

It is equally well settled that the mere pendency of an action in one state will not be grounds for abating a suit in another state between the same parties and involving the same subject matter. Badgett v. Erspan, 476 S.W.2d 381, 382 (Tex.Civ.App.--Fort Worth 1972, no writ); Mills v. Howard, 228 S.W.2d 906, 908 (Tex.Civ.App.--Amarillo 1950, no writ); see also Safeco Ins. Co. of Am. v. J.L. Henson, Inc., 601 S.W.2d 183, 185 (Tex.Civ.App.--Dallas 1980, writ ref'd n.r.e.) (citing Drake v. Brander, 8 Tex. 351, 357 (1852)). As a matter of comity, however, it is the custom for the court in which the later action is instituted to stay proceedings therein until the prior action is determined or, at least, for a reasonable time, and the custom has practically grown into a general rule which strongly urges the duty upon the court in which the subsequent action is instituted to do so. Mills v. Howard, 228 S.W.2d at 908; Evans v. Evans, 186 S.W.2d 277, 279 (Tex.Civ.App.--San Antonio 1945, no writ).

Space Master's points of error do not recognize that a declaratory judgment proceeding is unique. An action for declaratory judgment is neither legal nor equitable, but is sui generis, i.e. the only one of its kind, peculiar. Canyon Creek, 456 S.W.2d at 895; Cobb v. Harrington, 144 Tex. 360, 367, 190 S.W.2d 709, 713 (1945); see also Black's Law Dictionary 1286 (5th Ed.1979).

Section 37.003 of the Texas Civil Practice and Remedies Code authorizes courts of record, acting within their jurisdiction, to grant declaratory relief, where a judgment or decree will terminate the controversy or remove an uncertainty. TEX. CIV.PRAC. & REM.CODE ANN. § 37.003 (Vernon 1986). The entry of a declaratory judgment rests within the sound discretion of the trial court. Uvalde County v. Barrier, 710 S.W.2d 740, 745 (Tex.App.--San Antonio 1986, no writ); K.M.S. Research Laboratories, Inc. v. Willingham, 629 S.W.2d 173, 174 (Tex.App.--Dallas 1982, no writ); Southern Nat'l Bank of Houston v. City of Austin, 582 S.W.2d 229, 237 (Tex.Civ.App.--Tyler 1979, writ ref'd n.r.e.). It is further within the discretion of the trial court to refuse to enter a declaratory judgment or decree if the judgment or decree would not terminate the uncertainty or controversy giving rise to the proceeding. Crawford v. City of Houston, 600 S.W.2d 891, 894 (Tex.Civ.App...