1District Judge of the Northern District of California,

sitting by designation. 

1

United States Court of Appeals,

Fifth Circuit.

No. 95-10513.

Odell JONES, III and Jones Program Management, Inc., PlaintiffsAppellants,

v.

SHEEHAN, YOUNG & CULP, P.C., Defendant-Appellee.

May 20, 1996.

Appeal from the United States District Court for the Northern

District of Texas.

Before HIGGINBOTHAM and DUHÉ, Circuit Judges, and SCHWARZER,1

District Judge.

DUHÉ, Circuit Judge:

Appellants' damages suit against their former attorneys was

dismissed on summary judgment on the basis of collateral estoppel.

We affirm, but do so on the basis of res judicata.

I. BACKGROUND

Jones Program Management, Inc., ("JPM"), acting through its

President, Odell Jones, III, ("Jones"), and Jones, acting as

guarantor for JPM, entered into an agreement for legal services

with Sheehan, Young & Culp, P.C., ("SYC"), to collect sums owed JPM

by Richter's Entertainment Group, Inc., ("REG"). SYC accordingly

filed suit on JPM's behalf against REG in the 134th Judicial

District Court of Dallas County, Texas, (the "REG litigation").

JPM later discharged SYC and retained another law firm to conclude

the REG litigation. Three suits subsequently ensued concerning
2

SYC's claim for unpaid attorney's fees incurred in representing JPM

in the REG litigation.

A. The state court action

SYC intervened in the REG litigation (hereafter the "state

court action") to recover from JPM the balance of unpaid attorney's

fees. JPM moved to strike the intervention, but did not file an

answer or counterclaims against SYC. JPM did answer an

interrogatory propounded by SYC, asserting in its answer a right to

an offset against SYC's attorney's fees claim because of SYC's

alleged "legal malpractice, negligence, gross negligence, fraud,

and deceptive trade practices." SYC's intervention was tried

without a jury in JPM's absence, and the state court awarded SYC a

money judgment against JPM.

B. The county court action

SYC also filed suit in the County Court at Law No. 1, Dallas

County, Texas, (hereafter the "county court action") against Jones,

individually, to enforce his guaranty on the JPM/SYC agreement.

Jones answered and counterclaimed against SYC on grounds of legal

malpractice, negligence, malfeasance, gross negligence, fraud,

conspiracy, and violations of the Texas Deceptive Trade Practices

Act. The county court action was dismissed without prejudice

pursuant to Jones' motion alleging lack of jurisdiction, but was

subsequently reinstated. After a bench trial, at which Jones did

not appear, the county court entered judgment awarding SYC a money

judgment against Jones and ordering that Jones take nothing on his

counterclaims.
3

C. The federal court action

After dismissal of the county court action, but prior to its

reinstatement, Jones sued, on his own behalf, in the United States

District Court for the Northern District of Texas (hereafter the

"federal court action") seeking damages from SYC arising from SYC's

representation of JPM in the REG litigation. Jones' claims include

legal malpractice, negligence, malfeasance, gross negligence,

fraud, conspiracy, and violations of the Texas Deceptive Trade

Practices Act. SYC answered, alleging that Jones, individually,

lacked standing to assert claims based upon SYC's representation of

JPM. SYC also asserted counterclaims for the unpaid legal fees.

SYC moved to dismiss, claiming JPM, and not Jones, was the real

party in interest, or alternatively that JPM was an indispensable

party. In response, Jones amended his complaint to add JPM as a

plaintiff.

After both the county and state court actions had been

concluded, SYC moved for summary judgment in the federal court

action based on claims of res judicata, collateral estoppel, and

the doctrine of sole remedy, alleging that Jones and JPM had had

their opportunity in the earlier suits to litigate the claims and

issues asserted in the federal court action. SYC's motion was

granted on the basis that collateral estoppel precluded Jones and

JPM from relitigating issues settled by the Texas courts. The

judgment ordered that Jones and JPM take nothing on their claims

against SYC and that SYC recover its court costs. Jones and JPM

timely filed a joint notice of appeal.
4

II. DISCUSSION

A. Standard of Review

We review grants of summary judgment de novo, guided, as was

the district court, by the standards of Federal Rule of Civil

Procedure 56. Stults v. Conoco, Inc., 76 F.3d 651, 654 (5th

Cir.1996); Blanchard v. Forrest, 71 F.3d 1163, 1166 (5th

Cir.1996). Accordingly, a party may obtain summary judgment when

"the pleadings, depositions, answers to interrogatories, and

admissions on file, together with the affidavits, if any, show that

there is no genuine issue as to any material fact and that the

moving party is entitled to judgment as a matter of law."

Fed.R.Civ.P. 56(c).

The district court granted SYC's summary judgment motion

based on collateral estoppel, or issue preclusion. SYC's motion,

however, pled collateral estoppel, res judicata, and the doctrine

of sole remedy in the alternative. We may affirm a district

court's ruling on summary judgment based on any legally sufficient

ground, even one not relied upon by the district court. BMG Music

v. Martinez, 74 F.3d 87, 89 (5th Cir.1996); Missouri P. R.R. v.

Harbison-Fischer Mfg. Co., 26 F.3d 531, 538 (5th Cir.1994). Making

use of such latitude, we affirm the district court's granting of

SYC's motion for summary judgment based on the application of the

doctrine of res judicata.

B. Res Judicata

When a federal court is asked to give res judicata effect to

a state court judgment, the federal court must determine the
 

2Although default judgments were entered in both the state

court and county court actions, neither JPM nor Jones contests

their finality. 

5

preclusiveness of that state court judgment under the res judicata

principles of the state from which the judgment originates.

Production Supply Co. v. Fry Steel Inc., 74 F.3d 76, 78 (5th

Cir.1996); Hogue v. Royse City, 939 F.2d 1249, 1252 (5th

Cir.1991). Because SYC interposes the judgments of Texas courts as

bars to JPM's and Jones' current suit, we look to Texas res

judicata law to resolve this dispute.

In Texas, "[r]es judicata, or claims preclusion, prevents the

relitigation of a claim or cause of action that has been finally

adjudicated, as well as related matters that, with the use of

diligence, should have been litigated in the prior suit." Barr v.

Resolution Trust Corp., 837 S.W.2d 627, 628 (Tex.1992). To invoke

the doctrine, the proponent must prove: (1) a prior final judgment

on the merits by a court of competent jurisdiction, (2) identity of

the parties or those in privity with them, and (3) a second action

based on the same claims as were raised or should have been raised

in the first action. See Texas Water Rights Comm'n v. Crow Iron

Works, 582 S.W.2d 768, 771-72 (Tex.1979).

1. Prior final judgment on the merits by a court of competent

jurisdiction

Jones and JPM contend that the county and state courts,

respectively, lacked jurisdiction to issue final, binding judgments

against them.2 At this point, we reiterate that, while Jones and

JPM are co-plaintiffs in the federal court action, only Jones was
6

a party to the county court action, and only JPM was a party to the

state court action.

a. Jones and the county court action

Jones contends that the county court was not a court of

competent jurisdiction. His attacks are numerous; yet, as to

most, his response to SYC's summary judgment fails to point to

evidence in the record sufficient to create an issue as to the

county court's jurisdiction. Once the movant presents a properly

supported motion for summary judgment, the non-movant must "go

beyond the pleadings and by [his] own affidavits, or by the

"depositions, answers to interrogatories, and admissions on file,'

designate "specific facts showing that there is a genuine issue for

trial.' " Celotex Corp. v. Catrett, 477 U.S. 317, 324, 106 S.Ct.

2548, 2553, 91 L.Ed.2d 265 (1986) (quoting Fed.R.Civ.P. 56(e)).

Rule 56, therefore, saddles the non-movant with the duty to

"designate" the specific facts in the record that create genuine

issues precluding summary judgment, and does not impose upon the

district court a duty to survey the entire record in search of

evidence to support a non-movant's opposition. Forsyth v. Barr, 19

F.3d 1527, 1537 (5th Cir.) (quoting Skotak v. Tenneco Resins, Inc.,

953 F.2d 909, 915 n. 7 (5th Cir.), cert. denied, 506 U.S. 832, 113

S.Ct. 98, 121 L.Ed.2d 59 (1992)), cert. denied, --- U.S. ----, 115

S.Ct. 195, 130 L.Ed.2d 127 (1994); Nissho-Iwai Am. Corp. v. Kline,

845 F.2d 1300, 1307 (5th Cir.1988). Nor is it our duty to so
 

3Like the district court, out of an abundance of caution, we

have searched the record for support for Jones' complaints. Our

efforts only confirm that his attacks, for the most part, are

frivolous.

Jones contests the county court's jurisdiction over his

person. Surprisingly, however, in the same breath, Jones

admits that by filing his answer and asserting his

counterclaims in the county court, he "submitt[ed] [himself]

to the jurisdiction of the County Court." Brief for

Appellants at 7. By his own admissions, Jones has foretold

the futility of his attack on the county court's in personam

jurisdiction. See Tex.R.Civ.P.Ann. r. 121 (West 1979); 

Morris v. Morris, 894 S.W.2d 859, 862 (Tex.App.—Fort Worth

1995, n.w.h.) ("Once a party enters an appearance by filing

an answer without challenging jurisdiction, he is before the

court for all purposes.").

Jones also argues that the county court lacked subject

matter jurisdiction over this suit because the requisites

for diversity jurisdiction in the federal court existed. 

Implicitly, Jones' complaint is that the existence of

diversity jurisdiction in a federal court deprives a state

court of general jurisdiction of its authority. Jones is

clearly misguided. Indeed, federal diversity jurisdiction

permits state and federal courts to exercise concurrent

jurisdiction. See Colorado River Conservation Dist. v.

United States, 424 U.S. 800, 809, 96 S.Ct. 1236, 1242, 47

L.Ed.2d 483 (1976) ("There is no irreconcilability in the

existence of concurrent state and federal jurisdiction. 

Such concurrency has ... long existed under federal

diversity jurisdiction.").

Additionally, Jones complains that the county court

divested itself of jurisdiction when it entered the order of

dismissal. As such, Jones' filing of suit in federal court

before the county court granted SYC's motion to reinstate

the county court action provided the federal court with

"dominant" jurisdiction over the matter. Whether the order

of dismissal in fact deprived the county court of

jurisdiction during the interval between dismissal and

reinstatement, and if so the effect of Jones' intervening

filing in federal court, is irrelevant. When two suits are

pending simultaneously in two different courts,

preclusiveness of one as to the other is determined not by

which was filed first, but by which reaches judgment first. 

Mower v. Boyer, 811 S.W.2d 560, 563 (Tex.1991). See also

Hansler v. Mainka (In re Hansler ), 988 F.2d 35, 38 (5th

Cir.1993); Hogue, 939 F.2d at 1256. In this case, the

7

scrutinize the record on appeal.3 Forsyth, 19 F.3d at 1537.
county court action concluded prior to the federal court

action.

Finally, Jones contends that SYC, by receiving service

of summons and citation, filing an answer and counterclaims,

and pursuing discovery in the federal court action,

"evidence[d] their relinquishment of state court

jurisdiction and assent to federal court jurisdiction." 

Brief for Appellant at 17. Accordingly, SYC either waived

the county court's jurisdiction over its claims or is

estopped from asserting that the county court had

jurisdiction over its claims. Jones provides no authority

to support these claims, nor, not surprisingly, have we

uncovered any. Consequently, we find these claims

unavailing, too. 

8

One of Jones' contentions, however, does warrant discussion.

Jones argues that the damages sought in his counterclaims exceeded

the jurisdictional limit of the statutory county court, and thus

the county court lacked jurisdiction to adjudicate those

counterclaims. Counterclaims are treated as separate suits and

must independently comport with the trial court's jurisdiction.

Color Tile, Inc. v. Ramsey, 905 S.W.2d 620, 623 (Tex.App.—Houston

[14th Dist.] 1995, n.w.h.); Tejas Toyota, Inc. v. Griffin, 587

S.W.2d 775, 776 (Tex.Civ.App.—Waco 1979, writ ref'd n.r.e.). See

also Smith v. Clary Corp., 917 S.W.2d 796, 797-98 (Tex.1996) ("A

counterclaim, whether permissive or compulsory, must be within the

court's jurisdiction."); Gimbel v. Gomprecht, 89 Tex. 497, 35 S.W.

470, 470 (1896) ("The plea in reconvention filed by the defendants

in this case was in effect a suit by them against the plaintiffs,

and the amount in controversy was the damages claimed in that

plea...."). A statutory county court has jurisdiction in "civil

cases in which the amount in controversy exceeds $500 but does not

exceed $100,000, excluding interest, statutory or punitive damages
 

4Support for this contention comes from a single statement

in Jones' second amended original answer in the county court

action. Therein, Jones stated: "Jurisdiction is not proper in

this Court because the amount in controversy, exclusive of

interest and costs, exceeds $100,000.00 and the matter in

controversy is between citizens of different states." As this

pleading was not made part of the summary judgment record,

however, we cannot rely on its contents in ruling on SYC's

motion. See Skotak, 953 F.2d at 915; Nissho-Iwai Am. Corp., 845

F.2d at 1307. 

 

5Under Texas law, once jurisdiction attaches it cannot be

defeated by any subsequent fact or event. Flynt v. Garcia, 587

S.W.2d 109, 109-10 (Tex.1979). Accordingly, assuming Jones'

allegations in his second amended original answer are sufficient

to affirmatively plead him out of the jurisdiction of the county

court, and assuming we could consider those allegations in

evaluating the summary judgment, we recognize that a claimant

cannot deprive the court of jurisdiction already properly

obtained simply by amending his pleading to allege damages in

excess of the court's jurisdictional limits. Smith, 570 S.W.2d

9

and penalties, and attorney's fees and costs, as alleged on the

face of the petition." Tex.Gov't Code Ann. § 25.0003(c)(1) (West

Supp.1996) (emphasis added). To determine whether Jones alleged

claims seeking relief beyond the jurisdiction of the county court,

we look to the amount alleged in Jones' pleading. See Kitchen

Designs, Inc. v. Wood, 584 S.W.2d 305, 306 (Tex.Civ.App.—Texarkana

1979, writ ref'd n.r.e.); Tejas Toyota, Inc., 587 S.W.2d at 776

(citing Gimbel, 89 Tex. 497, 35 S.W. 470 (1896)).

Jones argues that his pleadings expressly alerted the county

court that he sought relief on his counterclaims in excess of

$100,000.

4 Jurisdiction, however, is determined by the amount in

controversy at the time the original pleading is filed. Smith v.

Texas Improvement Co., 570 S.W.2d 90, 92 (Tex.Civ.App.—Dallas 1978,

no writ). Jones first raised counterclaims against SYC in his

first amended original answer.5 Def.'s Summ.J.Ex.C. For
at 92; Cook v. Jaynes, 366 S.W.2d 646, 647 (Tex.Civ.App.—Dallas

1963, no writ). Again, Jones' reliance on the allegations of his

second original amended answer is unavailing. 

 

6Jones also alleges that SYC is liable to him for punitive

damages and attorney's fees. Def.'s Summ.J.Ex.C at para. 34, 48,

& 49. Section 25.0003, however, explicitly excludes such items

from the amount-in-controversy determination. Tex.Gov't Code

Ann. § 25.0003(c)(1) (West Supp.1996). 

10

determining jurisdiction, then, we regard Jones' first amended

original answer as the original pleading in his cross action, and

we look to its allegations to determine the amount in controversy.

In his first amended original answer, Jones alleged:

"Jurisdiction is not proper in this Court pursuant to 28 U.S.C. §

1332 because the ... amount actually in controversy, exclusive of

interest and costs, exceeds $50,000." Def.'s Summ.J.Ex.C at para.

11 (emphasis added). Further, Jones repeatedly contended that

SYC's conduct rendered it "liable to [Jones] for an amount in

excess of the minimum jurisdictional limits of this Court." Id. at

para. 33, 47 (emphasis added).6 These allegations are ambiguous,

at best, as to the amount actually in controversy pursuant to

Jones' counterclaims. In this case, such ambiguity works against

Jones.

In cases of doubt, all intendments of the claimant's pleading

will be construed in favor of jurisdiction. Peek v. Equipment

Serv. Co., 779 S.W.2d 802, 804 (Tex.1989); Pecos & N. Tex. Ry. v.

Rayzor, 106 Tex. 544, 172 S.W. 1103, 1105 (1915). Indeed, unless

it is clear from the face of the pleadings that the court lacks

jurisdiction of the amount in controversy, the court should retain

the case. Id.; Taliancich v. Betancourt, 807 S.W.2d 891, 892
11

(Tex.App.—Corpus Christi 1991, no writ). In other words, to avoid

the jurisdiction of the court, the claimant must affirmatively

"plead[ ] himself out of court." Peek, 779 S.W.2d at 804

(discussing Richardson v. First Nat'l Life Ins. Co., 419 S.W.2d 836

(Tex.1967)). See also Pecos & N. Tex. Ry., 172 S.W. at 1105;

Taliancich, 807 S.W.2d at 892. Jones' allegations fall far short

of affirmatively pleading an amount in excess of the county court's

statutory maximum jurisdictional limit, and therefore the county

court properly maintained jurisdiction over Jones' counterclaims.

b. JPM and the state court action

 JPM argues that the state court lacked jurisdiction over it

with respect to SYC's intervention because SYC never served JPM

with citation and process. "Although the plaintiff is charged with

notice of all pleadings filed in defense of his suit, he is

entitled to notice of interventions and cross-actions affirmatively

setting up causes of action against him, and judgments rendered

against him upon such interventions and cross-actions, in the

absence of notice, waiver, or appearance, will be set aside."

Early v. Cornelius, 120 Tex. 335, 39 S.W.2d 6, 8 (1931) (emphasis

added). See also Mallia v. Bousquet, 813 S.W.2d 628, 630

(Tex.App.—Houston [1st Dist.] 1991, no writ). SYC admits on the

face of its intervention petition that no service of process was

made on JPM. Def.'s Summ.J.Ex.G at 1. Thus, JPM's claim has merit

unless it waived service or entered a general appearance in the

intervention.

A party makes a general appearance whenever it invokes the
12

judgment of the court on any question other than jurisdiction. St.

Louis & S.F. R.R. v. Hale, 109 Tex. 251, 206 S.W. 75 (1918); Fridl

v. Cook, 908 S.W.2d 507, 515 (Tex.App.—El Paso 1995, writ

requested); Moore v. Elektro—Mobil Technik GmbH, 874 S.W.2d 324,

327 (Tex.App.—El Paso 1994, writ denied). In determining whether

conduct is sufficient to be considered a general appearance, the

focus is on affirmative action that impliedly recognizes the

court's jurisdiction over the parties. Fridl, 908 S.W.2d at 515.

In response to SYC's intervention petition, JPM filed a Motion to

Strike Intervention. In its motion, JPM asked the court to deny

SYC the right to intervene because to do so would unnecessarily

complicate the REG litigation and because SYC's claims should more

properly be filed as counterclaims in the pending federal court

action. JPM's motion to strike the intervention was an affirmative

act recognizing the court's jurisdiction. See, e.g., Fridl, 908

S.W.2d at 515 (holding that motion to compel arbitration and to

stay litigation was a general appearance). See also National Union

Fire Ins. Co. v. Pennzoil Co., 866 S.W.2d 248, 250 (Tex.App.—Corpus

Christi 1993, no writ) ("We hold a motion to strike a plea in

intervention akin to a special exception or to a motion for summary

judgment, asserting that, as a matter of law, the opposing party

could not have brought the action or would not be able to defeat

recovery."). JPM, accordingly, entered a general appearance in the

intervention, rendering service unnecessary. See Tex.R.Civ.P.Ann.

r. 120 (West 1979). Hence, the state court had jurisdiction over

JPM with respect to SYC's intervention, and its judgment thereon is
13

valid and binding on JPM.

2. Identity of parties

Having determined that both the state court and the county

court were courts of competent jurisdiction, we turn to the second

element of res judicata—identity of parties. That two separate

judgments are interposed by SYC places this case in a novel light.

Nonetheless, the identity of parties element is easily satisfied.

"Identity of parties" requires that both parties to the current

litigation be parties to the prior litigation or in privity with

parties to the prior litigation. See Coalition of Cities for

Affordable Utility Rates v. Public Util. Comm'n, 798 S.W.2d 560,

563 (Tex.1990), cert. denied, 499 U.S. 983, 111 S.Ct. 1641, 113

L.Ed.2d 736 (1991). In the state court action, SYC opposed JPM.

JPM opposes SYC in the federal court action. In the county court

action, SYC opposed Jones. In the federal court action, Jones

opposes SYC. Thus, identity of parties exists with respect to each

of the Texas court judgments.

3. Second action in which parties seek to adjudicate claims that

were, or should have been, raised in prior action

Finally, res judicata applies if there is shown to be a second

action in which the parties seek to adjudicate the same claims that

were, or should have been, raised in the first action.

a. Jones and the county court action

 In the federal court action, Jones is suing SYC on theories

of legal malpractice, negligence, malfeasance, gross negligence,

fraud, conspiracy, and violations of the Texas Deceptive Trade

Practices Act. When the allegations in Jones' first amended
 

7To thwart SYC's claim of res judicata, Jones refers us to §

31.004 of the Texas Civil Practice and Remedies Code. Section

31.004 limits the preclusive effect of judgments from courts of

limited jurisdiction, such as county courts. Tex.Civ.Prac. &

Rem.Code Ann. § 31.004 (West 1986). "[A] judgment rendered in a

[county] court is binding on the parties thereto[, however,] as

to recovery or denial of recovery." Id. (emphasis added). This

language has been interpreted as giving res judicata effect to

claims actually litigated in county court, but not as barring

claims that might have been, but were not, brought in county

court. See Webb v. Persyn, 866 S.W.2d 106 (Tex.App.—San Antonio

1993, no writ); McClendon v. State Farm Mut. Auto. Ins. Co., 796

S.W.2d 229 (Tex.App.—El Paso 1990, writ denied). In this case,

the identical claims raised by Jones in the federal court action

were litigated and determined in the county court action. 

Consequently, § 31.004 poses no impediment to SYC's claim of res

judicata. 

14

complaint in the federal court action are compared with the

allegations in his first amended original answer in the county

court action, we see that the allegations are identical in all

material respects. Further, we note that the county court

specifically addressed Jones' counterclaims in issuing its

judgment, making explicit findings of fact and conclusions of law

adverse to Jones in every respect on the claims he asserted.

Def.'s Summ.J.Ex.E at 8-15. As such, the doctrine of res judicata

precludes Jones from relitigating in the federal court action the

exact claims that were previously decided adversely to him in the

county court action.7

b. JPM and the state court action

Unlike Jones, JPM asserted no counterclaims against SYC in

the state court action. Regardless, res judicata precludes JPM

from pressing claims in the federal court action that, through the

exercise of diligence, should have been litigated in the state

court action. To determine what claims should have been litigated
15

in an earlier suit, Texas courts employ a "transactional approach."

Barr, 837 S.W.2d at 631; Getty Oil Co. v. Insurance Co. of N. Am.,

845 S.W.2d 794, 798 (Tex.1992), cert. denied, --- U.S. ----, 114

S.Ct. 76, 126 L.Ed.2d 45 (1993). This approach dictates that "[a]

subsequent suit will be barred [by res judicata] if it arises out

of the same subject matter of a previous suit." Barr, 837 S.W.2d

at 631 (emphasis added).

A determination of what constitutes the subject matter of

a suit necessarily requires an examination of the factual

basis of the claim or claims in the prior litigation. It

requires an analysis of the factual matters that make up the

gist of the complaint, without regard to the form of action.

Any cause of action which arises out of those same facts

should, if practicable, be litigated in the same lawsuit.

Id. at 630. Borrowing from the Restatement (Second) of Judgments,

which also employs a transactional approach, the Barr court stated

that a "transaction" is not equivalent to a sequence of events;

instead, the determination is to be made pragmatically, giving

weight to whether the facts are related in time, space, origin, or

motivation, whether they form a convenient trial unit, and whether

their treatment as a trial unit conforms to the parties'

expectations or business understanding or usage. Barr, 837 S.W.2d

at 631. The question then is whether JPM's claims in the federal

court action arise out of the same subject matter or transaction

that supported SYC's claims for fees in the state court action.

SYC's petition for intervention sought to recover the unpaid

legal fees incurred by SYC in representing JPM in the REG

litigation pursuant to the JPM/SYC agreement. SYC's recovery was

based on sworn account, breach of contract, and quantum meruit
 

8Only one complaint, joined in by both JPM and Jones, was

filed in the federal court action. Accordingly, the claims

raised by JPM in the federal court action are identical to those

raised therein by Jones, as discussed, supra, in part II.3a of

this opinion. 

16

theories, and in support of its right to recovery SYC asserted that

it "fully and completely performed pursuant to the contract."

Def.'s Summ.J.Ex.G at 5. To such allegations, JPM responded

through interrogatories as follows:

INTERROGATORY NO. 9:

Describe the nature of each category of any type of

offset you [JPM] seek to assess against the monies sought to

be recovered in the Petition in Intervention.

ANSWER:

Legal malpractice, negligence, gross negligence, fraud, and

deceptive trade practices violations.

The state court, thereafter rendering judgment in SYC's favor,

specifically found that SYC properly billed JPM pursuant to the

agreement, and that "SYC fully performed the contract in a good and

workmanlike manner consistent with the written contract and the

expected standard of care for a lawfirm such as SYC." Def.'s

Summ.J.Ex.F at 2.

JPM's complaints in the federal court action8 mirror the

defensive allegations raised by it in the state court action.

Unlike in the state court action, JPM supports those complaints in

the federal court action with factual allegations. Enlightened by

these allegations, we discover that JPM's claims arise out of the

events surrounding the JPM/SYC agreement and SYC's actions in

representing JPM in the REG litigation in fulfillment of the terms
17

of that agreement. More particularly, we learn that JPM's basic

complaint is that the services rendered by SYC in the REG

litigation were substandard. That JPM's complaints of inadequate

performance arise from facts related in time and origin to facts

underlying SYC's allegations of adequate performance and

entitlement to payment is common sense. That these complementary

assertions form a convenient trial unit is likewise undeniable.

That JPM and SYC expected such complementary assertions to be

litigated as a single trial unit is evidenced not only by SYC's

interrogatory and JPM's response, but also by JPM's argument to the

state court that intervention be denied because SYC's claims would

be more appropriately litigated as counterclaims in the federal

court action. Thus, JPM's current complaints in the federal court

action arise out of the same subject matter or transaction that

gave rise to SYC's claims in the state court action. As such,

JPM's claims in the federal court action should have been raised

originally in the state court action. Because JPM failed to raise

these claims in the state court action, it is barred by the

doctrine of res judicata from raising them now in this federal

court action.

III. CONCLUSION

Based on the foregoing discussion, we hold that Jones' and

JPM's claims in the federal court action are barred by the doctrine

of res judicata, and accordingly the district court's granting of

summary judgment in favor of SYC is AFFIRMED.