Cap Rock Electric Cooperative, Inc. v. Rayburn County Electric Cooperative, Inc.

Criminal Case Template COURT OF APPEALS EIGHTH DISTRICT OF TEXAS EL PASO, TEXAS CAP ROCK ELECTRIC COOPERATIVE, INC., Appellant, v. RAYBURN COUNTRY ELECTRIC COOPERATIVE, INC., Appellee. § § § § § No. 08-01-00347-CV Appeal from the 238th District Court of Midland County, Texas (TC#CV-43,387) M E M O R A N D U M O P I N I O N This is an appeal from a permanent injunction and the granting of summary judgment. For the reasons stated, we reverse and remand. I. SUMMARY OF THE EVIDENCE Appellee, Rayburn Country Electric Cooperative, Inc. ("Rayburn"), is a non-profit corporation organized under the Texas Electric Cooperative Corporation Act. Rayburn procures power through long-term power contracts with generators, and re-sells that power at wholesale to its Member-cooperatives, who then provide that electricity to individual consumers and business. Lamar County Electric Cooperative Association ("Lamar") is a Member-cooperative of Rayburn. Appellant, Cap Rock Electric Cooperative, Inc. ("Cap Rock") is a non-profit corporation organized under the Texas Electric Cooperative Corporation Act. In October, 1999, Lamar and Cap Rock signed an agreement to combine. Rayburn opposed the combination and argued there were contractual prohibitions on the proposed combination stemming from several contracts, including a "First Refusal Agreement". In November, 1999, Lamar filed a declaratory judgment action against Rayburn in Lamar County, seeking to have the First Refusal Agreement declared unenforceable, or in the alternative, requesting that the court construe the parties' rights and remedies under the First Refusal Agreement. Rayburn then filed an original petition for temporary and permanent injunctive relief against Lamar and Cap Rock in Midland County on December 7, 1999. The Midland court granted Rayburn's request for a temporary restraining order ("TRO") and set the bond at $15,000. Rayburn posted the bond on December 8, 1999. On December 9, 1999, the 6th Judicial District Court in Lamar County entered an order in which it confirmed that Lamar County Electric Cooperative Association v. Rayburn Country Electric Cooperative, Inc., et al., No. 67,121, was properly filed in and would remain on the docket of the District Court, despite the fact the District Clerk's office inadvertently placed the County Court at Law designation on the suit. Also on December 9, 1999, Cap Rock filed its "Motion to Transfer Venue and Subject Thereto Plea in Abatement, Motion to Dissolve the Temporary Restraining Order, Motion to Deny Temporary Injunctive Relief, Plea in Abatement, and Alternatively Motion to Increase Bond." On December 13, 1999, the Midland court denied Cap Rock's and Lamar's Pleas in Abatement and Motions to Sever and refused to dissolve the TRO. On December 22, 1999, the Midland court entered an Agreed Order Extending the Temporary Restraining Order in which he ordered the TRO remain in effect until the conclusion of the hearing on Rayburn's Application for Temporary Injunction and Cap Rock's and Lamar's Motions to Transfer Venue. The hearing was set for January 27, 2000. The order noted that the bond previously posted by Rayburn would remain in effect until further order of the court. Finally, the order stated that by agreeing to the extension of the TRO, no party waived and all parties preserved any rights, arguments, and relief that would otherwise be available to them if the injunction hearing had gone forward as originally scheduled for December 21, 1999. On December 23, 1999, Rayburn filed its First Amended Petition in which it added counts 12, 13, and 14. These additional causes of action sought a declaratory judgment with regard to the Settlement Agreement Rayburn and Cap Rock entered into on February 14, 1996. After the January 27, 2000 hearing on Rayburn's Application for Temporary Injunction and Appellants' Motion to Transfer Venue, the Midland court entered its Agreed Order for Temporary Injunction for the purpose of preserving the status quo pending final adjudication of the issues. A trial date of June 19, 2000 was set and the order stated that it would not be effective unless and until Rayburn executed and filed with the clerk a bond in the amount of $15,000. On January 31, 2000, Rayburn filed a motion for partial summary judgment against Cap Rock. Also on January 31, 2000, Cap Rock filed a Motion to Intervene in the Lamar County proceedings. Cap Rock filed several briefs in opposition to Rayburn's motion. The summary judgment hearing was held on March 23, 2000, and on May 24, 2000, the Midland court signed its Order granting Rayburn's motion for partial summary judgment. In November, 2000, Lamar and Cap Rock moved to dissolve the Order Granting Temporary Injunction because Rayburn never filed the required bond. Upon learning of the motions to dissolve, Rayburn filed the required bond on November 27, 2000. Thereafter, the District Clerk issued the writs of injunction. The Midland court denied the motions to dissolve. On June 4, 2001, the Midland court entered its Final Judgment and Permanent Injunction against Cap Rock. The Final Judgment includes a declaratory judgment that there is a conflict between the 1996 Settlement Agreement and Cap Rock and Lamar's Agreement to Combine. It is from this judgment that Cap Rock appeals. II. DISCUSSION Cap Rock presents five issues on appeal. We will first address the jurisdictional issue. In Issue No. One, Cap Rock argues that the court erred in refusing to abate because the court lacked jurisdiction due to a previously filed case. The supreme court has provided guidance on when courts with jurisdiction should abate consideration of actions before them in deference to other courts considering similar suits. Wyatt v. Shaw Plumbing Co., 760 S.W.2d 245, 247-48 (Tex. 1988). The supreme court wrote that, [w]hen an inherent interrelation of the subject matter exists in two pending lawsuits, a plea in abatement in the second action must be granted. It is not required that the exact issues and all the parties be included in the first action before the second is filed, provided that the claim in the first suit may be amended to bring in all necessary and proper parties and issues. In determining whether an inherent interrelationship exists, courts should be guided by the rule governing persons to be joined if feasible and the compulsory counterclaim rule. Id. at 247 (citations omitted). It is well-settled that when suit would be proper in more than one county, the court in which suit is first filed acquires dominant jurisdiction to the exclusion of other courts. Curtis v. Gibbs, 511 S.W.2d 263, 267 (Tex.1974); V.D. Anderson Co. v. Young, 128 Tex. 631, 636, 101 S.W.2d 798, 800 (1937); Cleveland v. Ward, 116 Tex. 1, 19, 285 S.W. 1063, 1070 (1926). As long as the forum is a proper one, it is the plaintiff's privilege to choose the forum. Mutual Sav. & Loan Ass'n v. Earnest, 582 S.W.2d 534, 535 (Tex. Civ. App.--Texarkana 1979, no writ). Defendants are simply not at liberty to decline to do battle in the forum chosen by the plaintiff. The first court will not, however, have dominant jurisdiction if it is established that: (1) a party is estopped from asserting the first court's jurisdiction; (2) necessary parties cannot be joined in the first suit, or the court lacks power to bring the parties before it; or (3) the plaintiff in the first court lacks the intent to prosecute the first lawsuit. Wyatt, 760 S.W.2d at 247-48. We review the record to determine whether the Midland court abused its discretion by declining to abate its proceeding. Id. A trial court abuses its discretion when it acts in an unreasonable and arbitrary manner, or without reference to any guiding rules or principles. Downer v. Aquamarine Operators, Inc., 701 S.W.2d 238, 241-42 (Tex. 1985). Lamar filed its action against Rayburn in Lamar County on November 24, 1999. Rayburn then filed suit in Midland County on December 7, 1999. Thus, it is undisputed that Lamar filed first. Rayburn argues that the Lamar County court did not obtain dominant jurisdiction because the suit was first filed in the Lamar County Court at Law. However, it is clear from Lamar's petition that the suit was to be filed in the District Court of Lamar County. The District Court later entered an order in which it confirmed that the District Clerk's office had inadvertently placed the County Court at Law designation on the suit and that the suit was properly filed in and would remain on the docket of the District Court. Rayburn next argues that the claims in its Original Petition were not compulsory counterclaims in the Lamar County action because those claims involved a broader subject matter and different parties. Rayburn notes that at the time it filed its suit in Midland County, Cap Rock was not a party to the Lamar County action. While it is true that Cap Rock did not intervene in the Lamar County suit until January, 2000, the Wyatt exceptions state that the first court will not have dominant jurisdiction if it is established that the necessary parties cannot be joined in the first suit or the court lacks power to bring the parties before it. Wyatt, 760 S.W.2d at 248. Wyatt does not require that all necessary parties be before the court at the time the original petition is filed. The Lamar County court had the power to bring the necessary parties before it and there is no showing that Cap Rock, or any other necessary party, could not be joined in the Lamar County suit. Furthermore, Rayburn's arguments that its claims involved broader subject matter are unpersuasive. Both the Lamar County action and the Midland County action arose out of the same controversy: Lamar and Cap Rock's agreement to combine. Rayburn's original petition in Midland County was for temporary and permanent injunctive relief against Lamar and Cap Rock. Rayburn could have sought injunctive relief against Lamar and Cap Rock in the Lamar County suit. Finally, we note that there is no showing that any party is estopped from asserting the Lamar County court's jurisdiction, nor is there any proof that Lamar, the plaintiff in the first court, lacks the intent to prosecute the first lawsuit. Wyatt, 760 S.W.2d at 248. Cap Rock argues that Rayburn's filing suit in Midland County was "flagrant forum shopping" and such behavior should not be rewarded. We agree. As the supreme court has commented with regard to the first-filed rule, "[a] further justification is simple fairness: in a race to the courthouse, the winner's suit should have dominant jurisdiction." Perry v. Del Rio, 66 S.W.3d 239, 252 (Tex. 2001). We find that the Midland court should have abated the action because it lacked jurisdiction due to a previously filed case. Accordingly, we sustain Issue No. One. Given our disposition of the jurisdiction issue, we need not address Cap Rock's remaining issues. We reverse and remand to the trial court with instructions to dissolve the injunction and dismiss the suit for want of jurisdiction. February 10, 2004 __________________________________________ RICHARD BARAJAS, Chief Justice Before Panel No. 2 Barajas, C.J., McClure, and Chew, JJ.