Superior Oil Co. v. City of Port Arthur, Tex.

• Decision Date: 22 September 1982
• Docket Number: Civ. A. No. B-80-459-CA.
• Citation: 553 F. Supp. 511
• Parties: The SUPERIOR OIL COMPANY v. The CITY OF PORT ARTHUR, TEXAS.
• Court: U.S. District Court — Eastern District of Texas

553 F. Supp. 511

The SUPERIOR OIL COMPANY v. The CITY OF PORT ARTHUR, TEXAS.

Civ. A. No. B-80-459-CA.

United States District Court, E.D. Texas, Beaumont Division.

September 22, 1982.

Thomas H. Lee, Foreman & Dyess, Jesse R. Pierce, Porter & Clements, Houston, Tex., for plaintiff.

George Wikoff, City Atty., George Piazza, Asst. City Atty., City of Port Arthur, Port Arthur, Tex., Robert Q. Keith, Thomas H. Walston, Mehaffy, Weber, Keith & Gonsoulin, Beaumont, Tex., for defendant.

AMENDED MEMORANDUM OPINION

ROBERT M. PARKER, District Judge.

On February 17, 1982, this Court entered an Opinion and Order staying this cause until the termination of a parallel proceeding between the same parties in the state courts of Texas. Superior Oil Co. v. City of Port Arthur, 535 F.Supp. 916 (E.D.Tex. 1982). Although the Court indicated that it was prepared to find that Port Arthur's annexation of Superior Oil's offshore drilling platform and leasehold constituted a taking of property without due process of law in violation of the fourteenth amendment, the Court was of the opinion that the federal doctrine of res judicata would preclude the Court from making such a finding. Rather than dismiss the claim as barred, however, the Court stayed proceedings pending final resolution of the state proceeding, reserving the question of whether a departure from the rigid application of res judicata might be necessary to further an overriding public policy or avoid a manifest injustice. Id. at 921; see Shimman v. Frank, 625 F.2d 80, 89 (6th Cir. 1980); Garner v. Giarrusso, 571 F.2d 1330, 1336 (5th Cir.1978). The Court requested further briefing on this issue and on any other issues pertaining to res judicata that the parties considered appropriate.

On May 12, 1982, the Texas Supreme Court refused Superior Oil's application for writ of error, on the basis that there was no reversible error in the court of civil appeals' decision of December 22, 1981. Superior Oil Co. v. City of Port Arthur, 628 S.W.2d 94 (Tex.Civ.App. — Beaumont 1981, writ ref'd n.r.e.). This has brought the state court proceedings to a close.

The United States Supreme Court has recently held that the res judicata doctrine is not overridden by "public policy" or "manifest injustice" considerations,¹ thereby foreclosing flexibility in its application to this cause. Upon further consideration, however, of the subsequent briefing on the res judicata question in this suit and careful examination of the final opinion issued by the Texas court on this controversy, this Court is now persuaded that res judicata is not technically applicable under either state or federal doctrine.^1(a) Texas' resolution of this conflict does not bar an adjudication in this federal forum; this Court reaches the merits and finds that Port Arthur's annexation of Superior Oil's leasehold is a taking of property without due process of law.

I. RES JUDICATA

The requirements for one adjudication to bar another under the federal doctrine of res judicata as it is applied in this circuit are clearly and succinctly stated in Stevenson v. International Paper Co., 516 F.2d 103 (5th Cir.1975):

For a prior judgment to bar a subsequent action, it is firmly established (1) that the prior judgment must have been rendered by a court of competent jurisdiction; (2) that there must have been a final judgment on the merits; (3) that the parties, or those in privity with them, must be identical in both suits; and (4) that the same cause of action must be involved in both suits. If these elements are established, then the judgment or decree upon the merits in the first case is an absolute bar to the subsequent action or suit, not only in respect of every matter which was actually offered and received to sustain the demand, but also as to every ground of recovery which might have been presented.

Id. at 108-109 (citations omitted).

Texas' approach is strikingly similar.²

Only the second requirement, the existence of a final judgment on the merits in the state court has ever been in serious dispute in this cause. In this Court's February 17 Order the focus of the examination was on the finality of the state court judgment.³ While it was argued that the state district court may not have ruled "on the merits" of the constitutional challenge, no one disputed that the court of civil appeals' opinion addressed the merits of the claim. Because a stay on another basis was entered pending application for writ of error to the Texas Supreme Court, detailed inquiry into whether the lower court opinion was on the merits would have been premature. Now that the Texas Supreme Court has refused to issue a writ of error, the opinion of the court of civil appeals has become the final determination in the state proceeding. It is clear that this is the opinion which must be examined to determine if the doctrine of res judicata is applicable. Although that opinion purports to be on the merits, this Court now holds that the Texas court's ruling that Superior Oil's claim under the Due Process Clause "does not present a justiciable matter under the Fourteenth Amendment," 628 S.W.2d at 96, was not a final judgment "on the merits" for res judicata purposes.

II. JUSTICIABILITY

Federal justiciability is a jurisdictional doctrine,⁴ derived from the article III limitation of federal judicial power to "cases" and "controversies." The requirement of justiciability prohibits federal courts from sitting in judgment over matters not presented in the context of live controversies between parties who have adverse interests or over matters not proper for judicial determination. Four separate criteria of justiciability have been fashioned by the courts: (1) the parties must have standing to present the claim, (2) the case must not be moot, (3) the claim must not present a hypothetical dispute or call for the court to render an advisory opinion, and (4) the claim must not present a "political question." See 6A Moore's Federal Practice § 57.11 (2d ed. 1982).

The Texas court opinion relies on Hunter v. City of Pittsburgh, 207 U.S. 161, 28 S.Ct. 40, 52 L.Ed. 151 (1907), indicating that the court viewed the instant controversy to be non-justiciable because it presented a political question. It is the hallmark of a political question that the matter be constitutionally committed to another branch of government.⁵ In Hunter, the United States Supreme Court refused to hear a claim by citizens and taxpayers of the City of Allegheny that the city's annexation by the City of Pittsburgh had violated their right to due process of law. The Court declared that "the power of municipal incorporations is in the State, and those who legislate for the State are alone responsible for any unjust or oppressive exercise of it." Id. at 179, 28 S.Ct. at 47. Although Hunter does not express its holding in terms of political question non-justiciability, many subsequent lower federal court opinions have cited Hunter in support of the doctrine.⁶

Because the Texas court's holding, that Superior Oil's claim was not justiciable because it presented a political question, was a jurisdictional decision, it was not a judgment "on the merits," and will not serve as a bar under res judicata principles to adjudication of that claim in this Court. The Federal Rules of Civil Procedure explicitly exclude jurisdictional decisions from the definition of dismissals on the merits:

Unless the court in its order for dismissal otherwise specifies, a dismissal under this subdivision and any dismissal not provided for in this rule, other than a dismissal for lack of jurisdiction ... operates as an adjudication upon the merits.

Fed.R.Civ.P. 41(b) (emphasis added). This reflects the common law principle that judgments in which the merits could not be reached would not bar a subsequent action on the same claim, a principle fully explained in Saylor v. Lindsley, 391 F.2d 965 (2d Cir.1968):

The requirement that a judgment, to be res judicata, must be rendered "on the merits" guarantees to every plaintiff the right once to be heard on the substance of his claim. Thus, ordinarily, the doctrine may be invoked only after a judgment has been rendered which reaches and determines "the real or substantial grounds of action or defense as distinguished from matters of practice, procedure, jurisdiction or form, and, at common law, a dismissal on a ground which did not resolve the substantive merit of the complaint was not a bar to a subsequent action on the same claim.

Id. at 968 (citations omitted); see Truvillion v. King's Daughters Hospital, 614 F.2d 520 (5th Cir.1980); Arrowsmith v. United Press International, 320 F.2d 219 (2nd Cir.1963); Vlavianos v. The Cypress, 171 F.2d 435 (4th Cir.1948); Sachs v. Ohio Nat. Life Ins. Co., 148 F.2d 128 (7th Cir.1945). Specifically, dismissals for non-justiciability have been held under this principle not to support res judicata. E.g., Gregory v. Mitchell, 634 F.2d 205 (5th Cir.1981) (standing); Payne v. Panama Canal Company, 607 F.2d 155 (5th Cir.1979) (mootness).

Nor will the doctrine of "direct estoppel" operate to bar the present action. Under direct estoppel, a decision on a jurisdictional issue, while not reaching the merits of the case, nevertheless precludes relitigation of that particular issue. See Restatement of Judgments §§ 49, 195 (1942). Application of direct estoppel in federal cases is limited to cases in which the issue has been previously decided in a federal forum, according to federal law.⁷ In addition, a state court's decision as to its own jurisdiction may preclude relitigation of that issue in federal court.⁸ In contrast, however, Port Arthur relies on the Texas court's construction of the federal jurisdictional doctrine of nonjusticiability of political questions. Because that doctrine is derived from the article III limitation on the power of federal courts, it is a solely federal doctrine. The Texas courts may fashion a Texas justiciability...