NO. 06-15-00037-CV

IN THE COURT OF APPEALS FOR THE

SIXTH DISTRICT OF TEXAS

AT TEXARKANA

MICHAEL D. LEE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . APPELLANT

V.

THE ROGERS AGENCY, C. MICHAEL ROGERS 

& NEW YORK LIFE INSURANCE COMPANY.. . . . . . . . . . . . . . . APPELLEES

On Appeal from the 124th Judicial District Court

of Gregg County, Texas

Honorable Alfonso Charles Presiding

BRIEF OF APPELLANT

John R. Mercy

Texas State Bar No. 13947200

MERCY p CARTER p TIDWELL, L.L.P.

1724 Galleria Oaks Drive

Texarkana, TX 75503

Telephone: (903) 794-9419

Facsimile: (903) 794-1268

E-mail: jmercy@texarkanalawyers.com

James A. Holmes

Texas State Bar No. 00784290

THE LAW OFFICE OF JAMES HOLMES, PC

212 South Marshall

Henderson, TX 75654

Telephone: (903) 657-2800

Facsimile: (903) 657-2855

Email: jh@JamesHolmesLaw.com

ATTORNEYS FOR APPELLANT

Oral Argument Requested

ACCEPTED

06-15-00037-CV

SIXTH COURT OF APPEALS

TEXARKANA, TEXAS

11/9/2015 11:10:06 AM

DEBBIE AUTREY

CLERK

 FILED IN 6th COURT OF APPEALS TEXARKANA, TEXAS 11/9/2015 11:10:06 AM DEBBIE AUTREY Clerk
IDENTITY OF PARTIES AND COUNSEL

Pursuant to Rule 38.1(a) of the Texas Rules of Appellate Procedure, Appellant

lists below the names and addresses of all parties to the trial court’s final judgment

together with their counsel in the trial court. This list is provided so that the justices

of this Court may evaluate possible disqualification and recusal, and so that the Clerk

of the Court of Appeals may notify all parties of this Court’s final judgment.

Michael D. Lee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Appellant

James A. Holmes

Texas State Bar No. 00784290

THE LAW OFFICE OF JAMES HOLMES, PC

212 South Marshall

Henderson, TX 75654. . . . . . . . . . . . . . . . . . . . . . . . . . Trial Counsel for Appellant

John R. Mercy

MERCY p CARTER p TIDWELL, L.L.P.

1724 Galleria Oaks Drive

Texarkana, TX 75503. . . . . . . . . . . . . . . . . . . . . . Appellate Counsel for Appellant

The Rogers Agency

C. Michael Rogers.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Appellees

LaToyia Pierce

WILSON, ELSER, MOSKOWITZ,

EDLEMAN & DICKER LLP

4800 Bank of America Plaza

901 Main Street

Dallas, TX 75202.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Attorney for Appellees,

The Rogers Agency and C. Michael Rogers

New York Life Insurance Company... . . . . . . . . . . . . . . . . . . . . . . . . . . . . Appellee

i
Andrew Jubinsky

Ryan McComber

FIGARI & DAVENPORT, LLP

3400 Bank of America Plaza

901 Main Street

Dallas, TX 75202.. . . . . . . . . . . . . . . . . . Trial and Appellate Counsel for Appellee,

New York Life Insurance Company

ii
TABLE OF CONTENTS

Page

Identity of Parties and Counsel. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i

Table of Contents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iii

Index of Authorities.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . v

Statement of the Case. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Statement of Oral Argument. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Issue Presented. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Statement of Facts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Summary of the Argument. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Argument and Authorities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Res Judicata.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Standard of Review. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Undisputed Facts.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Lee’s Extra-Contractual Claims. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

New York Life’s Motion for Summary Judgment. . . . . . . . . . . . . . . . . . . . 12

Not a Class Member. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Not in Privity.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

No Notice. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

The Notice Was Not Adequate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

iii
Conclusion.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Prayer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Certificate of Service.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Certificate of Compliance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Appendix:

A - Order Granting Defendants’ Motion for Summary Judgment 

 (CR 1074 and SCR 1065)

B - Class Member Definition (CR 319)

iv
INDEX OF AUTHORITIES

Cases: Page

All American Siding & Windows, Inc. v. 

Bank of America National Association, 

367 S.W.3d 490 (Tex. App. – Texarkana 2012, pet. denied). . . . . . . . . . . . . . . . . . 9

Bailey v. Kemper Casualty Ins. Co., 

83 S.W.3d 840 (Tex. 2002). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Barr v. Resolution Trust Corp., 

837 S.W.2d 627 (Tex. 1992). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Bogard v. Cook, 

586 F.2d 399 (5th Cir. 1978). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Celtic Life Ins. Co. v. Coats, 

885 S.W.2d 96 (Tex. 1994). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

City of San Antonio v. Cortes, 

468 S.W.3d 580 (Tex. App. – San Antonio 2015, pet. filed). . . . . . . . . . . . . . . . . . 8

FM Props Operating Co. v. City of Austin, 

22 S.W.3d 868 (Tex. 2000). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Ford Motor Co. v. Sheldon, 

22 S.W.3d 445 (Tex. 2000). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Getty Oil Co. v. Ins. Co. of N. Am., 

845 S.W. 2d 794 (Tex. 1992). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Hill v. Tx An Anesthesia Mgmt. LLP, 

443 S.W.3d 416 (Tex. App. – Dallas 2014, no pet.).. . . . . . . . . . . . . . . . . . . . . . . 14

In Re Allstate County Mutual Ins. Co., 

447 S.W.3d 497 (Tex. App. – Houston [1st Dist.] 2014, orig. proceeding). . . . . . 11

v
In Re ER, 

385 S.W.3d 552 fn. 18 (Tex. 2012).. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

In re: Nissan Motor Corp. Antitrust Litig., 

552 F.2d 1088 (5th

 Cir. 1977). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Intratex Gas Co. v. Beeson,

22 S.W.3d 398 (Tex. 2000). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Ison v. Carlile & Jacquelin, 

417 U.S. 156 (1974). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Johnson v. General Motors Corp., 

598 F.2d 432 (5th Cir. 1979). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Peter G. Milne, P.C. v. Ryan,

2015 WL 5999898 at 10 (Tex. App. – Texarkana, October 15, 2015).. . . . . . . . . 13

Pinson v. Terminal Transport Co., 

634 F.2d 989 (5th Cir. 1981). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Provident Life & Accident Ins. Co. v. Knott, 

128 S.W.3d 211 (Tex. 2003). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Royal Globe Ins. Co. v. Bar Consultants, Inc., 

577 S.W.2d 688 (Tex. 1979). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Strather v. Dolgen Corp. of Texas, Inc., 

96 S.W.3d 420 (Tex. App. – Texarkana 2002, no pet.). . . . . . . . . . . . . . . . . . . . . . 9

Travelers Ins. Co. v. Joachin,

315 S.W.3d 860 (Tex. 2010). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Truck Ins. Exchange v. Mid-Continent Cas. Co., 

320 S.W.3d 613 (Tex. App. – Austin 2010, no pet.). . . . . . . . . . . . . . . . . . . . . . . 14

Union Pacific R. Co. v. Ameriton Properties, Inc., 

448 S.W.3d 671 (Tex. App. – Houston [1st

 Dist.] 2014, pet. denied).. . . . . . . . . . . 8

vi
Viles v. Sec. Int’l Ins. Co., 

788 S.W.2d 566 (Tex. 1990). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Willson v. New York Life Ins. Co., et al, 

Index No. 94/127804 (Sup. Ct. N.Y. Co.).. . . . . . . . . . . . . . . . . . . . 5, 10, 13 passim

Rules:

TEX. R. CIV. P. 166a(c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Statutes:

TEX. BUS. COM. CODE

 § 17.46. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

 § 17.50. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11, 12

TEX. INS. CODE

 § 541.060(a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

 § 541.151. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

 § 542.003(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

 § 542.058. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

vii
NO. 06-15-00037-CV

IN THE COURT OF APPEALS FOR THE

SIXTH DISTRICT OF TEXAS

AT TEXARKANA

MICHAEL D. LEE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . APPELLANT

V.

THE ROGERS AGENCY, C. MICHAEL ROGERS 

& NEW YORK LIFE INS. CO.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . APPELLEES

BRIEF OF APPELLANT

TO THE HONORABLE COURT OF APPEALS:

COMES NOW Appellant, MICHAEL D. LEE, and appeals the trial court’s

June 26, 2015 summary judgment, and would show unto the Court the following

Statement of the Case

Nature of the Case This is a suit by Lee for negligence, deceptive trade

practices, insurance code violations, declaratory

relief and breach of contract against his insurance

agent, agency, and NY Life. 1

 

1 Appellant, Michael D. Lee, will be referred to as “Lee”; Appellee, The Rogers Agency,

will be referred to as “ The Agency)”; Appellee, C. Michael Rogers, will be referred to as “Rogers”;

and Appellee, New York Life Ins. Co., will be referred to individually as “NY Life.” With reference

to the Motion for Summary Judgment and arguments to it the Appellees collectivelywill be referred

to as “New York Life.” The Clerk’s Record will be cited as “CR ___” ; and the Supplemental

Clerk’s Record as “SCR ___; and the Reporter’s Record will be cited as “ RR __.” 

1
Trial Court: The Honorable Alfonso Charles, 

124

th

 District Court, Gregg County

Parties: Plaintiff – Michael D. Lee

Defendants – The Rogers Agency, 

 C. Michael Rogers

 New York Life Ins. Co.

Course of Proceedings: Suit was filed by Lee against Rogers, The Rogers

Agency, and NYLife for negligence, deceptive trade

practices, violations of the Insurance Code,

declaratory relief, and breach of contract. (CR 5, 13,

717). Defendants denied the allegations. (CR 796,

800, 809). Defendants removed the case to federal

court. (CR 24). The federal court remanded the case

to the 124th District Court, Gregg County, Texas.

(CR 36). New York Life moved for summary

judgment based upon res judicata.(CR 50, 703, 706,

714, 726). Lee filed a brief in response pointing out

that res judicata did not apply.

Trial Court Disposition: The trial court granted the summary judgment

motion based on res judicata. (CR 1074). This

appeal ensued. (CR 1075).

2
STATEMENT OF ORAL ARGUMENT

This case presents unique factual issues regarding class notification and

whether res judicata applies to non-class members. Therefore oral argument may be

helpful to the Court in understanding the issues as presented.

3
ISSUE PRESENTED

Issue No. 1

Res judicata based on a prior class action does not apply to Lee for

three specific reasons:

a. Res judicata does not apply because Lee was not a

member of the Willson class;

b. Res judicata does not apply because Lee was not in

privity with the Willson class;

c. Res judicata does not apply because even if Lee were a

member of the Willson class Lee did not receive proper

notice; and

d. Res judicata does not apply because even if Lee were a

member of the class and received notice, the notice was

not adequate to apprise Lee that his extra-contractual

claims would be barred by the class judgment.

Therefore it was error by the court to grant summary judgment based on res

judicata.

4
STATEMENT OF FACTS

On July 28, 1995, NY York Life settled a two billion dollar class action with

certain defined class members. (CR 55). In the case styled Willson v. New York Life

Ins. Co., et al, Index No. 94/127804 (Sup. Ct. N.Y. Co.) (CR 55), the judgment

approving the settlement specifically defined the class as “. . . all persons or entities

who have, or had, at the time of the policy’stermination, an ownership interest in one

or more policies issued by New York Life at any time during the class period, . . . 

(CR 319). Under the Willson class definition to be a member of the class a person

or entity had to have an ownership interest at (1) the time of the settlement of the

Willson case, or (2) at the time of the policy’s termination. (CR 319). In Lee’s case

to be a member of the class Lee would have had to own the policy on July 28, 1995

or in May of 2012 when the settlement was approved or the policies in question were

terminated. (CR 751).

Between 1985 and 1987 Lee purchased three whole-life policies from New

York Life Insurance Company through its local agent, Rogers, of The Rogers

Agency. (CR 54). Each policy provided that Lee could “shorten the premium paying

period for this policy by having it made fully paid up with no more premiums due”. 

(CR 737, 750). In 1989, based upon Rogers’ representations, Lee paid $238,188.15

to fully pay up the policies so no more premiums would be due. (CR 55, 738, 750).

5
Based upon Rogers’ representations Lee paid no further premiums on the policies.

(CR 738, 750).

On June 10, 1991 Lee transferred ownership of the policies to the Michael D.

Lee Irrevocable Insurance Trust using NY Life’s provided documents. (CR 738). By

the terms of the NY Life forms, the owner of the policies became Richard A. Dial, the

trustee of the irrevocable insurance trust. (CR 738). NY Life even confirmed to Dial

that he had all the rights of ownership of the policies. (CR 739). After June 10, 1991

Lee had no further ownership interest in the policies. (CR 739). 

In May of 2012, NY Life notified Lee that the policies had lapsed due to

unpaid premiums. (CR 751). Lee filed suit in March of 2014 asserting his individual

extra-contractual claims for negligence, deceptive trade practices, violations of the

insurance code, declaratory relief, and under contract. (CR 5, 13, 717). Defendants

attempted to remove the case to federal court. (CR 24). The case wasremanded to the

124

th District Court of Gregg County. (CR 36). Defendants then immediately filed a

motion for summary judgment claiming that because of the Willson case res judicata

applied to Lee’s claims. (CR 50, 703, 706, 714, 726). The court granted Defendants’

summary judgment motion, dismissing all of Lee’s claims. (CR 1074).

6
SUMMARY OF THE ARGUMENT

For res judicata to apply this Court must make sure that it complies with due

process requirements. Here it does not because Lee was not a member of the prior

class or in privity with the prior class, did not receive notice of the class settlement,

and the notice was not sufficient even had he received it. As this Court is aware, res

judicata can only apply in very specific instances, none of which are met in this case. 

It was therefore error to grant summary judgment based upon it.

7
ARGUMENT AND AUTHORITIES

The resjudicata effect of a classsettlement does not apply when a person is not

a member of the class, not in privity with the class, does not receive notice of the

class settlement, or notice is inadequate. Here the trial court erred by granting

summary judgment based on res judicata where none of these existed. 

Res Judicata

Res judicata is the generic term for a group of related concepts concerning the

conclusive effects given to final judgments. Barr v. Resolution Trust Corp., 837

S.W.2d 627, 628 (Tex. 1992); City of San Antonio v. Cortes, 468 S.W.3d 580 (Tex.

App. – San Antonio 2015, pet. filed). Claims preclusion under res judicata prevents

the relitigation of a claim or cause of action that has been fully adjudicated or should

have been adjudicated in a prior suit. Union Pacific R. Co. v. Ameriton Properties,

Inc., 448 S.W.3d 671, 680 (Tex. App. – Houston [1st Dist.] 2014, pet. denied); Barr,

837 S.W.2d at 628. To prevail on a res judicata defense a party must show that (1)

in a previous action, a court of competent jurisdiction rendered a final determination

on the merits; (2) the parties in the earlier action are identical to, or in privity with,

the present parties; and (3) the pending claim is identical to the prior claim or arises

out of the same subject matter as the prior claim and could have been litigated in the

previous action. Travelers Ins. Co. v. Joachin, 315 S.W.3d 860, 862 (Tex. 2010).

8
Standard of Review

Whether summary judgment is proper is a question of law that is reviewed de

novo. FM Props Operating Co. v. City of Austin, 22 S.W.3d 868, 872 (Tex. 2000). 

The standard for reviewing a traditional summary judgment is well established. All

American Siding & Windows, Inc. v. Bank of America National Association, 367

S.W.3d 490, 497 (Tex. App. – Texarkana 2012, pet. denied). Traditional summary

judgment is proper if (1) there is no genuine issue of material fact, and (2) the movant

is entitled to judgment as a matter of law. Tex. R. Civ. P. 166a(c). When reviewing

a summary judgment the court of appeals must take as true all evidence favorable to

the non-movant, and indulge every reasonable inference and resolve all doubts in

non-movant’s favor. Provident Life & Accident Ins. Co. v. Knott, 128 S.W.3d 211,

215-16 (Tex. 2003). When the trial court does not specify on what basis it granted

summary judgment, the appellant must argue that every ground in the summary

judgment motion is erroneous. Strather v. Dolgen Corp. of Texas, Inc., 96 S.W.3d

420, 422-23 (Tex. App. – Texarkana 2002, no pet.).

Undisputed Facts

! NY Life issued three (3) one million dollar life insurance policiesto Lee

between 1985 and 1987. (CR 49, 54). 

! Lee claimed that Rogers misrepresented to himin 1989 that (1) he could

fully pay the premiums on the policies for $238,188.15; and (2) after he

9
made such payment the policies would remain in effect for his lifetime.

(CR 750).

! On June 10, 1991 he transferred ownership of all three policies to the

Michael D. Lee Irrevocable Insurance Trust. (CR 750).

! On February 1, 1996 the court approved a final judgment in Willson v.

New York Life Insurance Co., et al, Index No. 94/127804 (Supreme

Court New York County).(CR 56).

! The Willson judgment defined class members as “all persons or entities

who have or had at the time of the policies’ termination an ownership

interest in one or more policies issued by New York Life at any time

during the class period, . . .” (CR 319).

! The Willson judgment defined class period as the period from January

1, 1982 through December 31, 1994, inclusive. (CR 320).

! Lee did not have an ownership interest in the policies on February 1,

1996. (CR 751).

! Lee did not have an ownership in the policiesin May of 2012. (CR 751).

! Notice was not sent specifically to Lee. (CR 751).

! Notice concerning the policies was only sent to Richard Dial, the trustee

for the Michael D. Lee Irrevocable Insurance Trust. (CR 822).

10
Lee’s Extra-Contractual Claims

Claims for violation of the Texas Insurance Code and the common law duty of

good faith and fair dealing are separate and independent from claims for contractual

benefits. See In Re Allstate County Mutual Ins. Co., 447 S.W.3d 497, 500 (Tex. App.

– Houston [1st Dist.] 2014, orig. proceeding); Viles v. Sec. Int’l Ins. Co., 788 S.W.2d

566, 567 (Tex. 1990). The supreme court has held that an insurer or its agents may

be liable under the Texas Insurance Code and/or the DTPA for misrepresenting a

policy even without a claim under the contract itself. Celtic Life Ins. Co. v. Coats,

885 S.W.2d 96, 99 (Tex. 1994); In Re Allstate, 447 S.W.3d at 500.

In this case, Lee asserts extra-contractual claims under the Texas Insurance

Code and the DTPA for misrepresentation of the policy. In particular, he complains

that his agent misrepresented the nature of the policy and the amount of premiums to

“make it fully paid up.” He asserts causes of action under Sections 541.060(a),

542.003(b) and 542.058 of the Texas Insurance Code and Sections 17.46 and 17.50

of the Texas Business & Commerce Code. These causes of action arise in favor of

any “person” and any “consumer” damaged by the misrepresentations. E.g.,TEX.INS.

CODE § 541.151 (West 2015); TEX.BUS. COM.CODE § 17.50 (West 2015). They are

not reserved for policy owners or even insureds. See id.

These claims are separate and independent from any claims for contractual

benefits. In Re Allstate, 447 S.W.3d at 500. They can be asserted even in the absence

11
of a claim for benefits under the policies. Royal Globe Ins. Co. v. Bar Consultants,

Inc., 577 S.W.2d 688, 694 (Tex. 1979). They arose in favor of Lee when his agent

misrepresented the terms of his policy to him in 1989. While Lee could have

transferred these claims to the Trust, he did not. As New York Life concedes, the

plain language of the Trust instrument conveys only Lee’s “right, title and interest in

the policies. (CR 815). The fact that the Trust became the “absolute owner” of the

policies does not foreclose Lee’s right to assert his claim as a “person” and

“consumer” under the Texas Insurance Code and the DTPA. E.g., TEX.INS. CODE §

541.151; TEX. BUS. COM. CODE § 17.50.

New York Life’s Motion for Summary Judgment

The sole basis, and “threshold issue”, for New York Life’s motion for summary

judgment was that the final judgment in the Willson case barred Lee’s claims by res

judicata.2(CR 54). In analyzing the elements of res judicata, in the context of the

Willson case, res judicata clearly does not apply to Lee’s claims. 

Not a Class Member

In the context of a class action, for the Willson judgment to have preclusive

effect Lee must have been a member of the class. The definition of a class member

must be precise and presently ascertainable by reference to object to the criteria.

2

 Rogers and The Agency joined in the motion for summary judgment. (CR 703, 704).

12
Intratex Gas Co. v. Beeson, 22 S.W.3d 398, 403 (Tex. 2000); Peter G. Milne, P.C. v.

Ryan, 2015 WL 5999898 at 10 (Tex. App. – Texarkana, October 15, 2015). A proper

class definition determines who is entitled to notice, who is entitled to relief, and

what relief can be awarded. Intratex, 22 S.W.3d at 403. It also determines which

parties will be bound by the judgment. Id. Ford Motor Co. v. Sheldon, 22 S.W.3d

445, 453 (Tex. 2000). Bailey v. Kemper Casualty Ins. Co., 83 S.W.3d 840, 851 (Tex. 

2002). For the class action settlement to apply to Lee the must have been a member

of the class. It is undisputed that he was not. 

To determine whether Lee was a member of the class this Court must simply

look at the definition of class members set forth in the Willson case, and the

undisputed facts with regard to Lee. Willson defined the class as “. . . all persons or

entities who have, or had at the time of the policy’stermination an ownership interest

in one or more policies issued by New York Life at any time during the class period.” 

(CR 319). In doing so it is apparent that Lee did not have an ownership interest either

when the Willson judgment was signed on July 28,1995, or when the policies were

terminated in May 2012. (CR 751). Thus by definition he was not a member of the

Willson class. This should end this Court’s inquiry and the summary judgment

should be reversed.

13
Not in Privity

New York Life argued to the trial court that on the one hand thatsomehow Lee

was in privity with the trust while admitting that all ownership of the trust as

transferred to the Irrevocable Insurance Trust on June 10, 1991. (CR 817, 820). 

These positions are mutually exclusive.

New York Life claims privity on three bases: (1) that Lee and the trust were

preceding and succeeding owners of the policies; (2) Lee’s extra-contractual claims

were represented by the trust and other named plaintiffs; and (3) the trust designated

the trustee as having the power to bind “those interested in the trust.” (CR 820).

None of these are supported by the summary judgment evidence and required the trial

court to improperly presume they were correct.

There is no specific definition of privity that can be applied in res judicata

cases. Truck Ins. Exchange v. Mid-Continent Cas. Co., 320 S.W.3d 613, 618 (Tex.

App. – Austin 2010, no pet.); Hill v. Tx An Anesthesia Mgmt. LLP, 443 S.W.3d 416,

424-25 (Tex. App. – Dallas 2014, no pet.). Each case requires an examination of the

particular facts and circumstances of the case . Getty Oil Co. v. Ins. Co. of N. Am.,

845 S.W. 2d 794, 800 (Tex. 1992). A person can only be in privity in three ways: (1)

he can control the action even though not a party to it; (2) his interests can be

represented by a party to the action; and (3) he can be a successor in interest deriving

his claim through a party to the prior action. Hill, 443 S.W.2d at 425. Lee does not

14
fall into any of these three categories. He could not control the action because he was

not an owner of the policies on the two relevant dates. His interests were not

represented. Finally, he did not derive his extra-contractual claims from the trust. 

Based on Lee’s affidavit alone there is a disputed fact issue that must be decided to

find privity. (CR 751). New York Life’s arguments for privity stretch the concepts

of due process sought to be protected by the very specific class member definition. 

This should end this Court’s inquiry and the summary judgment should be

reversed.

No Notice

For argument’s sake, even if this Court assumes that Lee was a member of the

class due process requires that he receive some notice that the class action is pending

and that his claims may be adjudicated as part of it. Johnson v. General Motors

Corp., 598 F.2d 432, 438 (5th Cir. 1979). Adequate notice and opportunity to be

heard are fundamental requisites of the constitutional guarantee of procedural due

process. Ison v. Carlile & Jacquelin, 417 U.S. 156, 174 (1974). In Re ER, 385

S.W.3d 552 fn. 18 (Tex. 2012). For a class member to be forever barred from

pursuing an individual damage claim due processrequiresthat he receive some form

of notice that the class action is pending and his damage claims may be adjudicated

as part of it. Johnson v. General Motors Corp., 598 F.2d at 438. Here the evidence

is undisputed that Lee did not receive a notice of the Willson case or its settlement.

15
(CR 822). Defendants attempt to argue that because the trust received a notice it was

good notice to Lee. That is simply not correct. Again, this should end this Court’s

inquiry and the summary judgment should be reversed.

The Notice Was Not Adequate

Assuming for argument’ssake that Lee was a member of the class, and that the

notice to the trust was notice to him, the notice itself was still inadequate to inform

Lee that his rights could be precluded by the settlement. Res judicata will not bar a

subsequent suit for damages if the notice does not adequately inform an absent class

member of his rights under the settlement. e.g. Pinson v. Terminal TransportCo., 634

F.2d 989, 995 (5th Cir. 1981); Bogard v. Cook, 586 F.2d 399 (5th Cir. 1978). The

notice must contain an adequate description of the proceeding written in an objective,

neutral termsthat insofar as possible may be understood by the average absentee class

member. In re: Nissan Motor Corp. Antitrust Litig., 552 F.2d 1088 (5th Cir. 1977). 

In essence, the content of the notice must meet due process requirements in giving

notice that the settlement class can use to determine whether they are included. The

notice here described the settlement class asthose who “have or had at the time of the

Policies’ termination an ownership interest in one or more Policies.” Had Lee

received a notice, the notice did not alert him that his claims were being settled,

merely those owned by the trust. Such a notice did not adequately inform Lee that

16
his claims were being settled by the class settlement. This should finally end this

Court’s inquiry and the summary judgment should be reversed.

CONCLUSION

Based upon the undisputed evidence, the trial court erred in granting summary

judgment based on res judicata against Lee. He was not a member of the class, did

not receive notice, and the notice would not have apprised him of the loss of his

claims. Therefore summary judgment was improper.

PRAYER

WHEREFORE, PREMISES CONSIDERED, Appellant, MICHAEL D. LEE,

praysthat the Court reverse the trial court judgment, remand the case for trial, and for

such other and further relief to which he may show himself to be entitled.

Respectfully submitted,

 /s/ John R. Mercy 

John R. Mercy

Texas State Bar No. 13947200

MERCYp CARTER p TIDWELL, L.L.P.

1724 Galleria Oaks Drive

Texarkana, TX 75503

Telephone: (903) 794-9419

Facsimile: (903) 794-1268

Email: jmercy@texarkanalawyers.com

17
James A. Holmes

Texas State Bar No. 00784290

THE LAW OFFICE OF JAMES HOLMES, PC

212 South Marshall

Henderson, TX 75654

Telephone: (903) 657-2800

Facsimile: (903) 657-2855

Email: jh@JamesHolmesLaw.com

ATTORNEYS FOR APPELLANT

CERTIFICATE OF SERVICE

I hereby certify that on November 9, 2015, a true and correct copy of the

foregoing Brief of Appellant was served on all counsel of record for Appellees by the

Electronic Service Provider as follows:

Ms. LaToyia Pierce

WILSON, ELSER, MOSKOWITZ,

EDLEMAN & DICKER LLP

4800 Bank of America Plaza

901 Main Street

Dallas, TX 75202

Email: latoyia.pierce@wilsonelser.com

Mr. Andrew Jubinsky

Email: andy.jubinsky@figdav.com

Mr. Ryan McComber

Email: ryan.mccomber@figdav.com

FIGARI & DAVENPORT, LLP

3400 Bank of America Plaza

901 Main Street

Dallas, TX 75202

 /s/ John R. Mercy 

John R. Mercy

18
CERTIFICATE OF COMPLIANCE

Pursuant to Tex. R. App. P. 9.4, I hereby certify that the foregoing Brief of

Appellant contains 2,907 words. This is a computer-generated document created in

WordPerfect using 14-point typeface. In making this certificate I am relying on the

word count provided by the software used to prepare the document.

 /s/ John R. Mercy 

John R. Mercy

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APPENDIX

A - Order Granting Defendants’ Motion for Summary Judgment

 (CR 1074 and SCR 1065)

B - Class Member Definition (CR 319)