Travelers Ins. Co. v. Joachim

• Decision Date: 14 May 2010
• Docket Number: No. 08-0941.,08-0941.
• Citation: 315 S.W.3d 860
• Parties: The TRAVELERS INSURANCE COMPANY (The Automobile Insurance Company of Hartford Connecticut), Petitioner, v. Barry JOACHIM, Respondent.
• Court: Texas Supreme Court

315 S.W.3d 860

The TRAVELERS INSURANCE COMPANY (The Automobile Insurance Company of Hartford Connecticut), Petitioner, v. Barry JOACHIM, Respondent.

No. 08-0941.

Supreme Court of Texas.

Argued February 17, 2010.

Decided May 14, 2010.

Rehearing Denied August 27, 2010.

Jeffrey B. Jones, Christopher Bradley Slayton, Jones Flygare Brown & Wharton, Lubbock, for Petitioner.

Stace Lawrence Williams, The Stace Williams Law Firm, P.C., Lubbock, for Respondent.

Justice GREEN delivered the opinion of the Court.

In this procedural dispute, we must decide whether a trial court's erroneous dismissal of a suit with prejudice, following the plaintiff's filing of a nonsuit, operates to bar a later suit because of res judicata. We conclude that it does. Therefore, we reverse the court of appeals' judgment and order the case dismissed.

I

Barry Joachim sued his insurer, The Travelers Insurance Company,¹ alleging he was entitled to benefits from Travelers for damages caused by Joachim's accident with an underinsured driver. On the day before trial, Joachim filed a "Notice of Non-Suit" stating that he "no longer wishes to pursue his claims against Defendants,"² and therefore "gives notice to all parties that his claims against the same are hereby dismissed without prejudice." No motions or counterclaims were pending at that time. Several months later, the trial court sent notice that if a final order was not filed within 10 days of the notice, the court would dismiss the case for want of prosecution. Joachim asserts he did not receive this notice. The trial court then entered an order that the case "is hereby dismissed in full with prejudice for want of prosecution." Joachim claims he did not receive a copy of that order either. Unaware of the dismissal order, Joachim neither contested it while the court retained plenary power, see TEX.R. CIV. P. 329b, nor perfected an appeal.

Joachim later refiled the same cause of action, and the case was assigned to a different trial court. Travelers filed a motion for summary judgment based on res judicata. The second trial court granted Travelers' motion and ordered that Joachim take nothing by his suit. Joachim appealed that judgment. The court of appeals reversed, holding that a nonsuit removes a trial court's jurisdiction to enter a dismissal with prejudice. 279 S.W.3d 812, 817 (Tex.App.-Amarillo 2008). The court of appeals therefore determined that the first trial court's order was void, not merely voidable. Id. at 818. Thus, it concluded that Travelers failed to establish the defense of res judicata. Id.

II

We review a trial court's summary judgment de novo. Provident Life & Accident Ins. Co. v. Knott, 128 S.W.3d 211, 215 (Tex.2003). The party relying on the affirmative defense of res judicata must prove (1) a prior final determination on the merits by a court of competent jurisdiction; (2) identity of parties or those in privity with them; and (3) a second action based on the same claims as were or could have been raised in the first action. Amstadt v. U.S. Brass Corp., 919 S.W.2d 644, 652 (Tex.1996); see TEX.R. CIV. P. 94 (identifying res judicata as an affirmative defense). "The judgment in the first suit precludes a second action by the parties and their privies on matters actually litigated and on causes of action or defenses arising out of the same subject matter that might have been litigated in the first suit." Gracia v. RC Cola-7-Up Bottling Co., 667 S.W.2d 517, 519 (Tex.1984). Only the first element—prior final determination on the merits—is contested in this appeal.

"At any time before the plaintiff has introduced all of his evidence other than rebuttal evidence, the plaintiff may... take a non-suit, which shall be entered in the minutes. Notice of the ... non-suit shall be served ... on any party who has answered or who has been served with process without necessity of court order." TEX.R. CIV. P. 162. A party has an absolute right to file a nonsuit, and a trial court is without discretion to refuse an order dismissing a case because of a nonsuit unless collateral matters remain. See Villafani v. Trejo, 251 S.W.3d 466, 468-69 (Tex.2008); In re Bennett, 960 S.W.2d 35, 38 (Tex.1997) (per curiam); Hooks v. Fourth Court of Appeals, 808 S.W.2d 56, 59 (Tex.1991). A nonsuit "extinguishes a case or controversy from `the moment the motion is filed' or an oral motion is made in open court; the only requirement is `the mere filing of the motion with the clerk of the court.'" Univ. of Tex. Med. Branch at Galveston v. Estate of Blackmon ex rel. Shultz, 195 S.W.3d 98, 100 (Tex.2006) (per curiam) (quoting Shadowbrook Apts. v. Abu-Ahmad, 783 S.W.2d 210, 211 (Tex. 1990) (per curiam)). It renders the merits of the nonsuited case moot. See Villafani, 251 S.W.3d at 469 ("One unique effect of a nonsuit is that it can vitiate certain interlocutory orders, rendering them moot and unappealable."); Shultz, 195 S.W.3d at 101 ("Although Rule 162 permits motions for costs, attorney's fees, and sanctions to remain viable in the trial court, it does not forestall the nonsuit's effect of rendering the merits of the case moot."); Gen. Land Office v. OXY U.S.A., Inc., 789 S.W.2d 569, 571 (Tex.1990) ("As a consequence of the trial court's granting the nonsuit, the temporary injunction ceased to exist and the appeal became moot.... It was not necessary for the trial court to enter such a separate order because when the underlying action was dismissed, the temporary injunction dissolved automatically.") (citation omitted).

The parties agree that the first trial court's order, which dismissed the case with prejudice, was erroneous because Joachim's nonsuit was without prejudice to refiling. See generally TEX.R. CIV. P. 301 ("The judgment of the court shall conform to the pleadings, the nature of the case proved and the verdict, if any, and shall be so framed as to give the party all the relief to which he may be entitled either in law or equity."). The question of whether Travelers established its res judicata defense turns on the issue of whether the trial court's erroneous order was void, or merely voidable. "A judgment is void only when it is apparent that the court rendering judgment had no jurisdiction of the parties or property, no jurisdiction of the subject matter, no jurisdiction to enter the particular judgment, or no capacity to act." Browning v. Prostok, 165 S.W.3d 336, 346 (Tex.2005) (internal quotation omitted). A void order is subject to collateral attack in a new lawsuit, while a voidable order must be corrected by direct attack; unless successfully attacked, a voidable judgment becomes final. See Browning v. Placke, 698 S.W.2d 362, 363 (Tex.1985). After a nonsuit, a trial court retains jurisdiction to address collateral matters, such as motions for sanctions, even when such motions are filed after the nonsuit, as well as jurisdiction over any remaining counter-claims. See Scott & White Mem'l Hosp. v. Schexnider, 940 S.W.2d 594, 596 (Tex. 1996) (per curiam) (holding that a trial court has authority to decide a motion for sanctions while it retains plenary power, even after a nonsuit is taken); TEX.R. CIV. P. 162 ("Any dismissal pursuant to this rule shall not prejudice the right of an adverse party to be heard on a pending claim for affirmative relief or excuse the payment of all costs taxed by the clerk."). We must determine, then, whether filing a nonsuit strips a trial court of jurisdiction to dismiss a case with prejudice.

We have held that an order dismissing a case with prejudice for want of prosecution, though mistaken, is merely voidable and must be attacked directly in order to prevent the order from becoming final for purposes of establishing res judicata. See El Paso Pipe & Supply Co. v. Mountain States Leasing, Inc., 617 S.W.2d 189, 190 (Tex.1981) (per curiam). That the order happens to follow a nonsuit does not make it void. Many litigants use a nonsuit as a procedural device to effectuate a settlement agreement, intentionally dismissing claims with prejudice. Indeed, in this case Joachim had taken a nonsuit with the first trial court "dismissing with prejudice all of Plaintiff's claims" against another defendant with whom Joachim had settled, before he filed the nonsuit as to Travelers. Just as the trial court has jurisdiction to enter a dismissal with prejudice upon the filing of a nonsuit to effectuate a settlement agreement, it must also have jurisdiction to enter a dismissal with prejudice in other nonsuit situations. See Wilmer-Hutchins Indep. Sch. Dist. v. Sullivan, 51 S.W.3d 293, 294-95 (Tex.2001) (per curiam) ("A party cannot by his own conduct confer jurisdiction on a court when none exists otherwise."). Such an order, even if erroneous, is not necessarily void. See Berry v. Berry, 786 S.W.2d 672, 673 (Tex.1990) (per curiam) ("Although a final judgment may be erroneous or voidable, it is not void and thus subject to collateral attack if the court had jurisdiction of the parties and the subject matter."). Accordingly, we conclude that the trial court's order in this case was voidable, not void. Therefore, the order was subject only to direct attack to avoid becoming a final judgment. See Placke, 698 S.W.2d at 363.

The court of appeals held that because a nonsuit renders the merits of the case moot, the second trial court lacked jurisdiction to render judgment for lack of justiciability. 279 S.W.3d at 816-17. The court stated that a nonsuit "returns the litigants to the positions they occupied before the plaintiff invoked the court's jurisdiction." Id. at 816.³ This conclusion is in tension with the trial court's authority to address proper matters after a nonsuit is entered, as the court of appeals recognized. See id. at 818 (observing that the trial court "retained the power to address the `collateral' matters listed in Rule 162"); TEX.R. Civ. P. 162 (allowing the trial court to consider motions for sanctions, attorney's fees, or other costs "pending at...