National Football League Players Association v. Blake's Bar-B-Q, Inc.

Opinion issued July 21, 2011. In The Court of Appeals For The First District of Texas ———————————— NO. 01-10-00149-CV ——————————— National Football League Players Association, Appellant V. Blake’s Bar-B-Q, Inc., Appellee And Blake’s Bar-B-Q, Inc., Appellant V. National Football League Players Association, Appellee On Appeal from the County Civil Court at Law No. 4 Harris County, Texas Trial Court Case No. 823,708 MEMORANDUM OPINION Blake’s Bar-B-Q, Inc. (Blake’s) appeals from the summary judgment granted in favor of National Football League Players Association (“NFLPA”). In five issues, Blake’s argues that the trial court erred in granting NFLPA’s traditional and no-evidence motions for summary judgment. We affirm. Background In connection with the 2004 Super Bowl, Blake’s signed an agreement with the Houston chapter of the “National Football League Players Association, Inc.” to cater “officially sanctioned” Super Bowl events. Blake’s agreed to invest $30,000 with the Houston chapter to fund various unspecified “recreational activities” that the organization was planning for the days leading up the Super Bowl. In exchange for its investment, Blake’s would be able to cater some of these “officially sanctioned” Super Bowl events. The agreement further provided that Blake’s was to be repaid its initial investment plus additional amounts, depending upon the total gross receipts from such events. When Blake’s was not paid, it sued and obtained a default judgment for $50,000 from National Football League Players Incorporated (“Players”). After the NFLPA was notified that the default judgment had been entered against Players (its wholly owned marketing and licensing subsidiary), both the NFLPA and Players filed bills of review seeking to set aside the default judgment. Blake’s counterclaimed in that bill of review proceeding against both entities, asserting claims for, among other things, breach of contract and common law fraud.[1] Blake’s also filed traditional and no-evidence motions for summary judgment on the contract claim and the bill of review. On September 1, 2006 the trial court denied NFLPA’s bill of review, dismissed Players with prejudice, and granted Blake’s motion for summary judgment on its breach of contract counterclaim against NFLPA. Both NFLPA and Players appealed and on March 6, 2008, this Court issued a memorandum opinion in which we affirmed the portion of the judgment that dismissed Players with prejudice, denied all relief requested by NFLPA, reversed the portion of the judgment that granted summary judgment on Blake’s breach of contract counterclaim against NFLPA, and remanded the case for “further proceedings limited to Blake’s counterclaims against” NFLPA. See Nat’l Football League Players Ass’n v. Blake’s Bar-B-Q, Inc., No. 01-06-01106-CV, 2008 WL 597605, (Tex. App. —Houston [1st Dist.] Mar. 6, 2008, pet. denied) (mem. op.).[2] Following remand to the trial court, Blake’s recovered more than $94,000 in funds and interest which Players and NFLPA had deposited into the registry of the County Clerk in satisfaction of the default judgment against Players. Blake’s then proceeded against NFLPA on its fraud claim and request for exemplary damages. In October 2009, following the denial of its motion to compel arbitration, NFLPA filed an interlocutory appeal with this Court. During the pendency of that interlocutory appeal (late April, 2010), NFLPA filed both no-evidence and traditional summary judgment motions based upon several contentions: no evidence of fraud damages separate and apart from Blake’s alleged contract damages; absence of Blake’s “consumer” status pursuant to the DTPA; Blake’s claim for damages arising from the Participation Agreement, including attorney’s fees and interest, had all been fully paid; and Blake’s fraud claim was barred by the “one satisfaction rule,” res judicata, and by merger and bar.[3] On May 28, 2010, the trial court granted both NFLPA’s summary judgment motions on all of the grounds asserted. Blake’s subsequently filed a motion for new trial that was denied. Blake’s now appeals the grant of NFLPA’s traditional and no-evidence summary judgment motions. As we have consolidated Blake’s appeal with the NFLPA’s appeal of the denial of its motion to compel arbitration under the same cause number, we will consider NFLPA’s conditional cross-issue regarding arbitration only if we reverse the trial court’s grant of summary judgment.[4] Discussion Blake’s contends that the trial court erred in finding (1) “no evidence that Blake’s sustained any fraud damages, separate and apart from its alleged contract damages, relating to the August, 2003, Participation Agreement as the basis of Blake’s claims against NFLPA”, (2) “no evidence that Blake’s is a ‘consumer’ under the Texas Deceptive Trade Practices Act” because Blake’s abandoned its Texas DTPA claim, (3) “all of Blake’s damages arising out of the Participation Agreement made the basis of its claims have been paid in full, including attorney’s fees and interest at the legal rate,” (4) “Blake’s claims arising out of the Participation Agreement of August 2003, are barred by the ‘One Satisfaction Rule,’” and (5) “all of Blake’s claims arising out of the Participation Agreement of August 2003, are barred by Res Judicata and by Merger and Bar.” NFLPA’s Motion for Summary Judgment Our review of a trial court’s grant of summary judgment is de novo. Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex. 2005); Provident Life & Accid. Ins. Co. v. Knott, 128 S.W.3d 211, 215 (Tex. 2003). When summary judgment is sought and granted on multiple grounds, we will affirm the judgment if any of the grounds are meritorious. See Joe v. Two Thirty Nine Joint Venture, 145 S.W.3d 150, 157 (Tex. 2004); see also O’Donnell v. Smith, 234 S.W.3d 135, 140 (Tex. App.—San Antonio 2007), aff’d, 288 S.W.3d 417 (Tex. 2009). In its motion for summary judgment, NFLPA asserted, inter alia, that Blake’s fraud claim was barred by the affirmative defense of res judicata. Tex. R. Civ. P. 94; W. Dow Hamm III Corp. v. Millennium Income Fund, L.L.C., 237 S.W.3d 745, 755 (Tex. App.—Houston [1st Dist.] 2007, no pet.). A defendant is entitled to summary judgment based upon an affirmative defense when the defendant proves all elements of the defense. Henry v. Masson, 333 S.W.3d 825, 843 (Tex. App.—Houston [1st Dist.] 2010, no pet.) (citing Havlen v. McDougall, 22 S.W.3d 343, 345 (Tex. 2000)). If the movant conclusively establishes that the action is barred by res judicata, the non-movant must then adduce summary-judgment proof raising a fact issue in avoidance of that affirmative defense. See Motient Corp. v. Dondero, 269 S.W.3d 78, 82 (Tex. App.—Dallas 2008, no pet.); see also KPMG Peat Marwick v. Harrison Cnty. Hous. Fin. Corp., 988 S.W.2d 746, 748 (Tex. 1999). NFLPA argues that Blake’s fraud claim is barred by the doctrine of res judicata, or claim preclusion, which bars parties and their privies from re-litigating matters addressed in a previous suit, as well as claims “‘which, through the exercise of diligence, could have been litigated in a prior suit.’” Getty Oil Co. v. Ins. Co. of N. Am., 845 S.W.2d 794, 799 (Tex. 1992) (quoting Barr v. Resolution Trust Corp., 837 S.W.2d 627, 631 (Tex. 1992)). We apply the transactional approach to res judicata, which requires that claims arising from the same subject matter to be litigated in a single lawsuit. Barr, 837 S.W.2d at 631. To be entitled to summary judgment on the affirmative defense of res judicata, the movant must establish (1) a prior final judgment on the merits by a court of competent jurisdiction; (2) the same parties or those in privity with them; and (3) a second action based on the same claims as were raised or could have been raised in the first action. Travelers Ins. Co. v. Joachim, 315 S.W.3d 860, 862 (Tex. 2010); Amstadt v. U.S. Brass Corp., 919 S.W.2d 644, 652 (Tex. 1996). “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.” Joachim, 315 S.W.3d at 862 (quoting Gracia v. RC Cola–7–Up Bottling Co., 667 S.W.2d 517, 519 (Tex. 1984)). In short, the doctrine of res judicata bars the re-litigation of claims that have been finally adjudicated or that could have been litigated in the prior action. See Igal v. Brightstar Info. Tech. Grp., Inc., 250 S.W.3d 78, 86 (Tex. 2008). The summary judgment evidence presented by NFLPA conclusively established each of the elements of the affirmative defense of res judicata. The default judgment signed by the trial court, the court of appeals’ opinion affirming the trial court’s judgment, and proof of payment in satisfaction of the default judgment are contained in the summary judgment record. Thus, the fact that a final judgment on the merits was rendered by a court of competent jurisdiction against Players and in favor of Blake’s in the prior action is conclusively established. The summary judgment record also contains the affidavits of Douglas F. Allen, the Assistant Executive Director of the NFLPA, and Pat Allen, the Executive Vice President and Chief Operating Officer of Players, which were filed in the bill of review proceeding. These affidavits establish the necessary privity between Players (the party against whom the default judgment was rendered in the prior action) and NFLPA (the party against whom Blake’s is now asserting a claim for fraud). Finally, comparing Blake’s counterclaim for fraud against NFLPA in the current proceeding with its original petition in the prior action—both of which are included in the summary judgment record—it is clear that Blake’s fraud claims in the current action arise out of the same subject matter—the Participation Agreement—and could have been litigated in the prior proceeding. Because NFLPA conclusively established that the action is barred by res judicata, Blake’s had to adduce summary-judgment proof raising a fact issue in avoidance of that affirmative defense. See Motient Corp., 269 S.W.3d at 82. Blake’s argues that NFLPA failed to establish its entitlement to summary judgment on this affirmative defense because res judicata does not apply to its fraud claim. Relying upon Griffin v. Holiday Inns of America, 496 S.W.2d 535 (Tex. 1973) and Voskamp v. Arnoldy, 749 S.W.2d 113 (Tex. App.—Houston [1st Dist.] 1987, writ denied), Blake’s argues that in order for res judicata to apply, the cause of action asserted in the subsequent action must be “substantially similar” to the issues presented in the prior action and his current action for fraud is not “substantially similar” to his prior breach of contract claim. This, however, is no longer the test for res judicata. See Barr, 837 S.W.2d at 631 (adopting transactional approach to res judicata, which requires claims arising out of same subject matter to be litigated in single lawsuit). Blake’s further argued that it could not have brought its fraud claim in the prior proceeding because it did not learn that a fraud had been perpetrated against it until after the default judgment was entered. Blake’s, however, adduced no summary-judgment proof in support of this argument and thus, failed to raise a fact issue on this point. Accordingly, we affirm the trial court’s grant of NFLPA’s motion for summary judgment on the affirmative defense of res judicata. Having affirmed the trial court’s grant of NFLPA’s motion for summary judgment on the affirmative defense of res judicata, we need not address whether the court’s grant of NFLPA’s motion for summary judgment on the remaining grounds was also proper. Conclusion We affirm the judgment of the trial court. Jim Sharp Justice Panel consists of Chief Justice Radack and Justices Higley and Sharp. [1] Blake’s later filed an amended counterclaim in which it (1) abandoned its claims against third-party defendant Charles W. Taylor, and (2) asserted a claim for breach of contract and corresponding attorney’s fees, as well as a claim for treble damages under the Texas Deceptive Trade Practices Act (“DTPA”) against NFLPA—all of which were subsequently abandoned. Blake’s also asserted a claim for common law fraud and corresponding exemplary damages against NFLPA. These are the only remaining claims in this case. [2] In our opinion we stated that the effect of the 2006 final judgment was that all relief requested in the bill of review was denied and that neither NFLPA nor Players objected in the trial court to denial of their bill of review, but instead filed a motion for reconsideration challenging the award of the counterclaim on the grounds that it was an impermissible double recovery and the evidence was legally and factually insufficient to support the summary judgment. As these are the only complaints preserved for appellate review, we restricted our consideration of NFLPA’s issues accordingly. [3] In its response, Blake’s acknowledged that it abandoned its DTPA claim and was proceeding solely on its claims against NFLPA for fraud and exemplary damages. Nevertheless, the trial court granted summary judgment on all of the grounds asserted by NFLPA including this one. [4] If this Court affirms the trial court’s grant of summary judgment, NFLPA’s conditional cross-issue regarding arbitration will be moot, and there will be no reason to address the issue.