Caprock Investment Corp. v. Elton Montgomery

Opinion filed July 8, 2010 In The Eleventh Court of Appeals __________ No. 11-08-00138-CV __________ CAPROCK INVESTMENT CORP., Appellant V. ELTON MONTGOMERY, Appellee On Appeal from the 32nd District Court Nolan County, Texas Trial Court Cause No. 16,785 O P I N I O N   O N   M O T I O N   F O R   R E H E A R I N G Elton Montgomery has filed in this court a motion for rehearing. We deny that motion, but write to clarify our previous opinion. Montgomery first contends that we erroneously held that Montgomery cannot raise the defense of payment or seek credit for payments made. Our opinion is not to be construed to contain any such prohibition. We held that Caprock was entitled to judgment as a matter of law as to liability only and that Montgomery had not established his affirmative defenses as a matter of law, but we remanded the cause to the trial court for a determination of the factual issues related to the amount of damages – including the amount owed on the note (if any) – which necessarily allows for credits for any payments made on the note, whether made by Montgomery or others. We specifically recognized that Montgomery’s liability would be discharged “as to any amount actually received” by Caprock and its predecessors. The amount actually received by Caprock and its predecessors is a question of fact for the trier of fact to determine on remand. Next, Montgomery asserts that this court “has misconstrued” his argument concerning collateral estoppel and that his argument is not based upon Jonietz’s discharge in bankruptcy but upon the 1996 summary judgment in favor of MFC, in which it was determined that Caprock had been paid in full by Jonietz pursuant to his bankruptcy. We do not believe that we misconstrued Montgomery’s argument. In his brief, Montgomery asserted that “he is not liable on the Note because it has been satisfied pursuant to the credit on the Note resulting from the surrender of collateral valued in excess of the debt in Jonietz’s bankruptcy” and that the “Young County Judgment conclusively proves that the Suit on the Note is barred by collateral estoppel” because it “directly addressed the issue of whether the Note was paid and fully satisfied as a result of the Jonietz bankruptcy.” Furthermore, in his motion for summary judgment, Montgomery specifically asserted the following: · “The Summary Judgment in favor of MFC in Young County has preclusive effect against Caprock’s Suit on the Note.” · “The Young County summary judgment is a final judgment on the merits that bars relitigation in the Nolan County Suit.” · “It has been judicially determined that the Note has been paid. . . . The Young County Judgment conclusively proves that the Suit on the Note is barred by collateral estoppel.” · “[T]he Young County court directly addressed the issue of whether the Note was paid and fully satisfied as a result of the Jonietz bankruptcy. . . . [T]he Young County court held that ‘the note at issue in this proceeding was fully paid and satisfied as a result of the bankruptcy proceeding of Albert Jonietz.’” Nowhere in his motion for summary judgment did Montgomery argue that the 1996 summary judgment in favor of MFC entitled Montgomery to summary judgment based upon collateral estoppel. Moreover, in response to the current argument, the 1996 summary judgment in favor of MFC does not collaterally estop Caprock from seeking payment on the note from Montgomery. This court previously reversed a summary judgment that was granted in favor of Montgomery and was based upon the same ground as MFC’s 1996 summary judgment. 17 S.W.3d 707. Both summary judgments are earlier proceedings in this case. Because the 1996 summary judgment in favor of MFC is not a final judgment from “a separate lawsuit,” the doctrines of res judicata and collateral estoppel do not apply. Creative Thinking Sources, Inc. v. Creative Thinking, Inc., 74 S.W.3d 504, 512 (Tex. App.—Corpus Christi 2002, no pet.). The issue upon which MFC moved for, and was granted, summary judgment was determined adversely to Montgomery by this court in Caprock I. The “law of the case” doctrine mandates that the ruling of an appellate court on a question of law raised on appeal will govern throughout the subsequent proceedings of the same case unless clearly erroneous. Briscoe v. Goodmark Corp., 102 S.W.3d 714, 716 (Tex. 2003). The law of this case as determined in Caprock I is that the Jonietz bankruptcy does not as a matter of law discharge Montgomery’s liability on the note or prove that the indebtedness was fully satisfied based upon the valuation of the collateral in the bankruptcy. 17 S.W.3d at 712, 714. The issue presented in this appeal with respect to the Jonietz bankruptcy is substantially the same as the issue we addressed in Caprock I. Montgomery next takes issue with this court’s rendition of judgment, rather than remand, based upon our holding that Montgomery’s res judicata defense fails as a matter of law. Had this court merely determined that Montgomery did not establish as a matter of law that he was in privity with MFC and that an issue of fact existed as to privity, we would have remanded the cause with respect to the issue of res judicata. However, Caprock asserted that there was “no privity” between Montgomery and MFC and that this suit is not a “separate” lawsuit from the earlier judgment in favor of MFC but is part of the same lawsuit. We agreed, determining as a matter of law that res judicata does not preclude Caprock’s claims against Montgomery in this suit. In an earlier proceeding in this same case, Montgomery and MFC presented this court with a question of law concerning res judicata and the finality of the judgment as to MFC. Caprock II, 89 S.W.3d 179. We determined that judgment as to MFC, but not Montgomery, had become final and that res judicata barred further claims against MFC. Id. at 185-86. The cause was remanded for further proceedings on the claims against Montgomery. Thus, the law of this case is that the claims against MFC became final and were thereby severed from those against Montgomery, whereas the claims against Montgomery remained pending as live claims in this suit. Under such circumstances, Montgomery and MFC cannot be in privity for purposes of this suit. In Caprock III, the Young County suit, it was also determined that res judicata barred further claims against MFC. 2005 WL 3118787. Though res judicata barred the claims asserted in the Young County suit against MFC, res judicata would not have barred claims against Montgomery in that suit as there were live claims pending against Montgomery in Nolan County. Montgomery and MFC, therefore, did not share an identity of interest in the Young County suit. As to estoppel, our holding was based upon prior assertions made by Montgomery and MFC and relied upon by this court in Caprock II. Our records from Caprock I show, contrary to Montgomery’s contention in his motion for rehearing, that an appeal of the 1996 summary judgment in favor of MFC had been perfected. MFC was named as an appellee in this court and was represented by counsel. In its brief in Caprock I, however, Caprock did not raise any points of error relating to MFC, but it did raise points relating to Montgomery, who had also been granted summary judgment. See Caprock II, 89 S.W.3d at 183. Consequently, at the urging of Montgomery and MFC in Caprock II, we held that, “absent properly assigned error” in Caprock I, the earlier summary judgment in favor of MFC was final and that any further claims by Caprock against MFC were barred. Id. at 185-86. We note that, when Montgomery and MFC urged their defense of res judicata in Caprock II, they did so only as to MFC. Indeed, had they at that point urged privity between the two and res judicata with respect to Montgomery as well as MFC, it is unlikely that this court would have held in Caprock II that res judicata barred the action against MFC. The appeal in Caprock I stemmed from the granting of Montgomery’s and MFC’s motions for summary judgment that were, as stated in MFC’s motion, based upon an “identical position.” If Montgomery and MFC had been in privity, the points of error relating to Montgomery would have applied to MFC. Montgomery may not now argue that he is in privity with MFC when he and MFC previously asserted successfully in this court a position inconsistent with that of privity. Montgomery’s motion for rehearing is denied. July 8, 2010 JIM R. WRIGHT Panel consists of: Wright, C.J., CHIEF JUSTICE McCall, J., and Strange, J.