Van Dyke v. Boswell, O'Toole, Davis & Pickering

• Decision Date: 05 June 1985
• Docket Number: No. C-3073,C-3073
• Parties: Theresa VAN DYKE, Petitioner, v. BOSWELL, O'TOOLE, DAVIS & PICKERING, Respondent.
• Court: Texas Supreme Court

Page 381

697 S.W.2d 381

Theresa VAN DYKE, Petitioner, v. BOSWELL, O'TOOLE, DAVIS & PICKERING, Respondent.

No. C-3073.

Supreme Court of Texas.

June 5, 1985.

Rehearing Denied Oct. 23, 1985.

John H. Holloway, Houston, for petitioner.

Haynes and Fullenweider, Donn C. Fullenweider and Clinard J. Hanby, Houston, for respondent.

RAY, Justice.

This cause presents the procedural issue of whether a trial court can grant separate trials for a claim and its counterclaim and then preclude litigation of the counterclaim by implying facts from the facts determined in the trial on the primary claim. The trial court held that it was proper to preclude litigation of the counterclaim in this situation. The court of appeals, in an unpublished opinion, Tex.R.Civ.P. 452, affirmed the judgment of the trial court. We reverse the judgments of the courts below and remand this cause to the trial court for proceedings consistent with this opinion.

The law firm of Boswell, O'Toole, Davis & Pickering (Boswell, O'Toole) represented Theresa Van Dyke during the trial of her divorce case. After trial, but before rendition of judgment, Mrs. Van Dyke dismissed Boswell, O'Toole and retained new counsel. Boswell, O'Toole then intervened in the divorce action to recover its fees. Over four months after the filing of the intervention claim and less than one week before the date set for its trial, Mrs. Van Dyke filed her answer. In her answer, Mrs. Van Dyke generally denied Boswell, O'Toole's claim for fees, contending that the fees were not reasonable and that Boswell O'Toole committed fraud. Also, Mrs. Van Dyke asserted a counterclaim, alleging four acts of malpractice by Boswell, O'Toole: (1) in taking a non-suit in the initial divorce proceeding that allowed Mr. Van Dyke to sell the family's Colorado condominium; ¹ (2) in failing to obtain necessary support and maintenance orders of the trial court; (3) in failing to properly present the divorce evidence to establish Mrs. Van Dyke's right to a larger share of the community and separate estates; and (4) in failing to make the proper motions to prevent Mr. Van Dyke from converting or dissipating any of the community property.

When the intervention claim for fees was called for trial on September 30, 1980, Boswell, O'Toole complained about the surprise created by the timing of the malpractice counterclaim filing. Consequently, Boswell, O'Toole moved in the alternative for either a continuance or a striking of the counterclaim. The trial court, however, rejected Boswell, O'Toole's arguments and it orally granted Mrs. Van Dyke's motion for a severance and/or separate trials for the intervention claim for fees and the malpractice counterclaim.

Immediately thereafter, the trial on the intervention claim for fees began. During the course of that trial, counsel for Mrs. Van Dyke cross-examined Huey O'Toole of Boswell, O'Toole about the propriety of taking a non-suit in the initial divorce action and how that act allowed Mr. Van Dyke to sell the family's Colorado condominium against Mrs. Van Dyke's wishes. This line of questioning prompted a motion for mistrial from Boswell, O'Toole. In the bench conference concerning this matter, Boswell, O'Toole argued that if the court denied the mistrial motion, it would maintain that the malpractice counterclaim should be precluded on the grounds that the malpractice issues were being litigated in the trial on the intervention claim. The trial court denied Boswell, O'Toole's motion for mistrial and counsel for Mrs. Van Dyke further cross-examined Huey O'Toole about this matter.

Upon completion of the trial, the jury returned its verdict awarding Boswell, O'Toole $87,232.91 for its fees in the divorce action and $7,000 for prosecuting the intervention claim. While the jury did not expressly determine whether Boswell, O'Toole committed malpractice, its answer to the special issue determining the reasonable value of Boswell, O'Toole's fees considered the following factors:

1. The time and labor involved, the novelty and difficulty of the questions involved, and the skill requisite to perform the legal services properly.

2. The likelihood, if apparent to the jury, that the acceptance of the particular employment will preclude other employment by the lawyer.

3. The fee customarily charged in the locality for similar legal services.

4. The amount involved and the results obtained.

5. The time limitations imposed by the client or by the circumstances.

6. The nature and length of the professional relationship with the client.

7. The experience, reputation, and ability of the lawyer or lawyers performing the services.

On December 5, 1980, the trial court rendered judgment in the divorce case. In this judgment, the court severed the already litigated intervention claim for fees and the unlitigated malpractice counterclaim from the divorce action. A severance splits a single suit into two or more independent actions, each action resulting in an appealable final judgment. See Hall v. City of Austin, 450 S.W.2d 836, 837-38 (Tex.1970). Thus, the intervention claim for fees and the malpractice counterclaim became its own action, distinct from the divorce action.

Four days later on December 9, 1980, Boswell, O'Toole moved to sever the intervention claim for fees from the malpractice counterclaim and to enter a final judgment for fees based on the jury verdict. The trial court, however, denied this motion. This ruling was significant because it negated the severance portion of the trial court's September 30, 1980 oral order granting a severance and/or separate trials on the intervention claim for fees and the malpractice counterclaim. Thus, the effect of the trial court's rulings was to grant separate trials for the fees and malpractice issues within this severed cause of action. Van Dyke v. Van Dyke, 624 S.W.2d 800, 801 (Tex.App.--Houston [14th Dist.] 1981, no writ). In contrast to a severance, separate trials are interlocutory, and are not final and appealable until all the separated claims and issues in the suit have been litigated. See Hall v. City of Austin, 450 S.W.2d at 837-38. By separating the intervention claim for fees and the malpractice counterclaim, the trial court decided to adjudicate the claim for fees first and then subsequently consider the malpractice counterclaim.

The trial on Mrs. Van Dyke's separated counterclaim for malpractice, however, never took place. Instead, the trial court rendered judgment on the intervention claim for fees for Boswell, O'Toole based on the jury verdict and summary judgment on the malpractice counterclaim for Boswell, O'Toole based on "res judicata and/or collateral estoppel." The court of appeals affirmed the summary judgment, reasoning "[i]t is obvious to us that the jury would not have returned [the fees] verdict if they had been persuaded by the evidence of alleged malpractice on the part of [Boswell, O'Toole]."

In retrospect, it is easy to decide what the trial court could have done to avoid the dilemma we now face. It could have struck the counterclaim as being untimely filed; it could have continued the cause until the parties were ready to litigate the intervention claim and the counterclaim together; or, it could have ordered the counterclaim to be litigated immediately along with the intervention claim. By employing any of these options, the trial court would not have created the need for separate trials on the intervention claim for fees and the malpractice counterclaim. Nonetheless, Rule 174(b), Tex.R.Civ.P., permits a trial court to order separate trials for a claim and its counterclaim in "furtherance of convenience or to avoid prejudice," and the trial court's decision to grant separate trials should not be disturbed on appeal absent an abuse of discretion. Iley v. Hughes, 158 Tex. 362, 311 S.W.2d 648, 650 (1958). The record reflects that the trial court granted separate trials to allow Mrs. Van Dyke an opportunity to prove her case for malpractice, while preventing additional delay in finalizing the divorce. Since this was done in furtherance of convenience and to avoid prejudice, the trial court did not abuse its discretion.

Consequently, we must determine the preclusive effect, if any, of the trial on the intervention claim for fees with respect to the malpractice counterclaim. The notion of precluding litigation based on prior litigation involves the related doctrines of res judicata and collateral estoppel. Res judicata, or claim preclusion, precludes litigation of claims within the same cause of action that were or could have been litigated in the first action. Texas Water Rights Comm'n v. Crow Iron Works, 582 S.W.2d 768, 771-72 (Tex.1979). A logical corollary to this rule is that the res judicata effects of an action cannot preclude litigation of claims that a trial court explicitly separates or severs from that action. See Chandler v. Hendrick Memorial Hospital, 317 S.W.2d 248, 251 (Tex.Civ.App.--Eastland 1958, writ ref'd n.r.e.); Morrison v. St. Anthony Hotel, 295 S.W.2d 246, 249 (Tex.Civ.App.--San Antonio 1956, writ ref'd n.r.e.). Since the trial court granted separate trials for the intervention claim for fees and the malpractice counterclaim, the res judicata effects of the action on the intervention claim for fees cannot preclude the malpractice counterclaim.

Collateral estoppel, or issue preclusion, is more narrow than res judicata in that it only precludes the relitigation of identical issues of facts or law that were actually litigated and essential to the judgment in a prior suit. Once an actually litigated and essential issue is determined, that issue is conclusive in a subsequent action between the same parties. See Bonniwell v. Beech Aircraft Corp., 663 S.W.2d 816, 818 (Tex.1984); Wilhite v. Adams, 640 S.W.2d 875, 876 (Tex.1982); Restatement (Second) of Judgements § 27 (1982). Thus, unlike the broader res judicata doctrine, collateral estoppel analysis does not focus on...