in Re: 3-T Exploration, Inc.

NO. 12-06-00244-CV IN THE COURT OF APPEALS TWELFTH COURT OF APPEALS DISTRICT TYLER, TEXAS § IN RE: 3-T EXPLORATION, INC., § ORIGINAL PROCEEDING RELATOR § MEMORANDUM OPINION In this original proceeding, 3-T Exploration, Inc. seeks a writ of mandamus requiring the trial court to (1) vacate its July 12, 2006 order denying 3-T’s plea in abatement, (2) enter an order granting the plea in abatement, and (3) dismiss cause number 06-1668-C styled Greyfox Energy Partners, L.P. v. 3-T Exploration, Inc. now pending in the 241st Judicial District Court of Smith County.1 We deny the petition. Background In July 2005, 3-T sued Greyfox in Denton County, Texas, seeking damages, injunctive relief, and other remedies relating to geological and geophysical data allegedly owned by 3-T and Greyfox as tenants in common.2 Greyfox answered, and by subsequent amended answers asserted various counterclaims against 3-T and sought injunctive relief. In June 2006, Greyfox sued 3-T in Smith County. In its petition, Greyfox alleged claims for breach of contract and for nonpayment of revenues from working interests and overriding royalty interests. Greyfox also requested a temporary injunction. Greyfox had previously alleged these same claims and requested the same injunctive relief in the Denton County suit. The trial court set a hearing for July 5, 2006 on Greyfox’s request for a temporary injunction. The same day, 3-T filed a plea in abatement in the Smith County case advising the trial court that the Denton County suit was filed first and involved the same parties and claims. At the injunction hearing, the trial court learned that 3-T had filed the plea in abatement and reset the hearing for July 12, 2006. On July 10, Greyfox filed a response to 3-T’s plea in abatement alleging in part that it had chosen to nonsuit its counterclaims in the Denton County case “in order to assert those same claims in Smith County, a proper and mandatory venue.” Greyfox further alleged that “[Greyfox’s] claims in this case are no longer part of the Denton County case, therefore, the issues raised in [3-T’s] Plea are now moot.” On July 12, 2006, 3-T filed this original proceeding alleging that the trial court had violated a ministerial duty by failing to rule on the plea in abatement and seeking a stay of the temporary injunction hearing. We denied the stay, and the hearing proceeded as scheduled. At the hearing, the trial court first overruled 3-T’s plea in abatement without hearing evidence and then proceeded to the merits of Greyfox’s request for temporary injunction. Thereafter, 3-T supplemented its mandamus petition urging that the trial court abused its discretion in denying the plea in abatement. Prerequisites to Mandamus Mandamus relief is proper only to correct a clear abuse of discretion when there is no adequate remedy by appeal. In re Prudential Ins. Co. of Am., 148 S.W.3d 124, 135-36 (Tex. 2004); Walker v. Packer, 827 S.W.2d 833, 839 (Tex. 1992). A trial court has no discretion in determining what the law is or applying the law to the facts. Walker, 827 S.W.2d at 840. Thus, a clear failure by the trial court to analyze or apply the law correctly is an abuse of discretion. Id. Abuse of Discretion In this proceeding, 3-T contends that the trial court abused its discretion in denying 3-T’s plea in abatement because the claims Greyfox asserts in the Smith County case are compulsory counterclaims in the Denton County suit. Therefore, 3-T concludes, the trial court had no discretion to deny its plea in abatement. With certain exceptions not applicable here, 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 the other courts. Wyatt v. Shaw Plumbing Co., 760 S.W.2d 245, 248 (Tex. 1988); Curtis v. Gibbs, 511 S.W.2d 263, 267 (Tex. 1974). When the subject matter of the two pending suits is inherently interrelated, a plea in abatement in the second suit is mandatory and the trial court has no discretion to hear the case. Wyatt, 760 S.W.2d at 247. In determining whether an inherent interrelationship exists between the two suits, courts should consider two factors: (1) whether the claims in the second suit are compulsory counterclaims in the first and (2) whether the parties in the second suit are persons to be joined if feasible in the first. See id.; see also Tex. R. Civ. P. 39, 97. The dispute in this proceeding concerns the first factor. A counterclaim is compulsory if (1) it is within the jurisdiction of the court; (2) it is not the subject of a pending action at the time the answer is filed; (3) the action is mature and owned by the pleader at the time of filing the answer; (4) it arises out of the transaction or occurrence that is the subject matter of the opposing party’s claim; (5) it is against an opposing party in the same capacity; (6) and it does not require for its adjudication the presence of third parties over whom the court cannot acquire jurisdiction. Tex. R. Civ. P. 97(a). If the claim meets these requirements, it must be asserted in the initial action. Wyatt, 760 S.W.2d at 247. A defendant’s failure to assert a compulsory counterclaim in the initial action precludes its assertion in a later action. Id. In the instant case, 3-T argues that the claims asserted by Greyfox in the Smith County case meet all six requirements of Rule 97(a). Greyfox counters that its Smith County claims do not arise out of the same transaction or occurrence as 3-T’s Denton County claims and therefore cannot be compulsory counterclaims. Generally, the courts apply a logical relationship test to determine what constitutes a transaction or occurrence. Freeman v. Cherokee Water Co., 11 S.W.3d 480, 483 (Tex. App.–Texarkana 2000, pet. denied). A counterclaim is compulsory under this test if the same essential facts on which the counterclaim is based are significantly and logically relevant to both claims. Id. The issue of whether two lawsuits arise out of the same transaction or occurrence is largely left to the trial court’s discretion. White v. Rupard, 788 S.W.2d 175, 178 (Tex. App.–Houston [14th Dist.] 1990, writ denied). Here, 3-T contends that the two suits are interrelated because the claims asserted by 3-T and Greyfox arise out of a joint venture agreement and the now-dissolved joint venture. However, we see nothing in the record before us to indicate that the trial court had this information before it at the time it ruled on 3-T’s plea in abatement. Because it does not appear from the record that the trial court was aware of the previous joint venture between the parties, we cannot consider this information in our determination of whether the trial court abused its discretion in denying 3-T’s plea in abatement.3 See In re Bristol-Myers Squibb Co., 975 S.W.2d 601, 605 (Tex. 1998) (focus in mandamus is the record before the trial court at the time it made its ruling). Next, 3-T argues in its reply to Greyfox’s response, and also stated at oral argument, that an aspect of the logical relationship between the two suits is 3-T’s potential right of setoff against any recovery obtained by Greyfox in the Smith County suit if the parties obtain mutual judgments. As previously stated, the logical relationship test requires that the same essential facts on which Greyfox’s claims are based be significantly and logically relevant to 3-T’s Denton County claims. See Freeman, 11 S.W.3d at 483. Otherwise, Greyfox’s claims are not compulsory counterclaims. The right to setoff that 3-T anticipates is not one of the facts upon which Greyfox’s Smith County claims are based. Therefore, 3-T’s anticipated right of setoff is not a factor in determining whether Greyfox’s claims are compulsory counterclaims. Finally, 3-T urges that allowing the Smith County suit to proceed creates a risk of inconsistent judgments in the two suits. The risk of inconsistent judgments sometimes occurs when all interested parties are not joined in the same lawsuit. See, e.g., Jones v. Ray, 886 S.W.2d 817, 822 (Tex. App.–Houston [1st Dist.] 1994, orig. proceeding) (severance of claim involving indivisible injury creates risk of inconsistent judgments where facts and issues relating to each defendant’s liability are the same and each defendant in each severed suit could present evidence that other defendants were liable). However, neither 3-T nor Greyfox contends joinder is an issue in this case. Further, 3-T has not developed its argument and therefore does not explain under what circumstances inconsistent judgments could be rendered in the Denton County and Smith County cases. Therefore, we do not address this contention. Conclusion In this proceeding, 3-T had the burden to show that the trial court abused its discretion in denying 3-T’s plea in abatement and that 3-T has no adequate remedy by appeal. Based upon the foregoing analysis, we conclude that 3-T has failed to show that the trial court abused its discretion in denying the plea in abatement. Consequently, we do not address whether appeal is an adequate remedy. The petition for writ of mandamus is denied. BRIAN HOYLE Justice Opinion delivered November 21, 2006. Panel consisted of Worthen, C.J., Griffith, J., and Hoyle, J. (PUBLISH) 1 The respondent is the Honorable Jack Skeen, Jr., Judge of the 241st Judicial District Court, Smith County, Texas. The real party in interest is Greyfox Energy Partners, L.P. 2 Additional parties were named in the Denton County suit, but are not parties to this proceeding. 3 Similarly, we do not consider documents presented in this proceeding that were not before the trial court. Bates v. MTH Homes–Texas, L.P., 177 S.W.3d 419, 423 n.3 (Tex. App.–Houston [1st Dist.] 2005, no pet.) (combined appeal and orig. proceeding).