Opinion filed May 27, 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

This case involves a promissory note signed by Elton Montgomery and others no longer 

involved in the suit. The original petition in this case was filed in 1989, and this is the fourth 

appeal.

1

The note is owned by Caprock Investment Corp. In its sixth amended petition, Caprock 

alleged both fraud and breach of contract causes of action against Montgomery. Both parties 

 

1

See Caprock Investment Corp. v. FDIC, 17 S.W.3d 707 (Tex. App.—Eastland 2000, pet. denied) (Caprock I); 

Montgomery First Corp. v. Caprock Investment Corp., 89 S.W.3d 179 (Tex. App.—Eastland 2002, no pet.) (Caprock II); and 

Caprock Investment Corp. v. Montgomery First Corp., No. 02-04-00155-CV, 2005 WL 3118787 (Tex. App.—Fort Worth 

Nov. 23, 2005, no pet.) (mem. op.) (Caprock III), for more details regarding the parties and the history of this case. 
2

moved for summary judgment. The trial court granted Montgomery’s motion, denied Caprock’s 

motion, and entered a take-nothing summary judgment. We reverse in part and affirm in part. 

I. Issues

Caprock presents two issues for review. In these issues, Caprock argues that the trial 

court erred in granting Montgomery’s motion for summary judgment and in denying Caprock’s. 

Montgomery moved for summary judgment on the bases that res judicata barred Caprock’s claim 

for breach of the note, that collateral estoppel barred Caprock’s claim for breach of the note, that 

the note had been satisfied by the bankruptcy of a cosigner (Al Jonietz),

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and that there was no 

evidence to support various elements of Caprock’s fraud claim. The trial court granted 

Montgomery’s motion in its entirety. Caprock moved for summary judgment on its breach of 

contract cause of action for the amount due under the note and also on Montgomery’s 

counterclaims. 

We review summary judgments de novo. Valence Operating Co. v. Dorsett, 164 S.W.3d 

656, 661 (Tex. 2005). When both sides move for summary judgment on the same issue and the 

trial court grants one motion and denies the other, the appellate court considers the summary

judgment evidence presented by both sides, determines all questions presented, and may render 

the judgment the trial court should have rendered on that issue. Id. In this case, both parties 

moved for summary judgment on breach of contract claims. 

II. Montgomery’s Motion

A. Promissory Note – Defenses.

With respect to the affirmative defenses urged by Montgomery in his motion, 

Montgomery had the burden to establish his right to summary judgment by conclusively proving 

each element of any of the defenses as a matter of law. See TEX. R. CIV. P. 166a(c); Havlen v. 

McDougall, 22 S.W.3d 343, 345 (Tex. 2000); Rhône-Poulenc, Inc. v. Steel, 997 S.W.2d 217, 

222-23 (Tex. 1999); Walker v. Harris, 924 S.W.2d 375, 377 (Tex. 1996). A defendant moving 

for summary judgment on an affirmative defense has the burden to conclusively establish that 

defense. Rhône-Poulenc, 997 S.W.2d at 223. On appeal, the movant bears the burden of 

 

2We disagree with Montgomery’s contention that Caprock waived this issue; Caprock addressed the issue in its brief in 

the argument regarding collateral estoppel. Furthermore, any failure by Caprock to address the issue in its response to 

Montgomery’s motion for summary judgment did not waive the issue because Montgomery had the burden to establish its 

defense as a matter of law. A nonmovant has no burden to respond unless the movant conclusively establishes its cause of action 

or defense. Rhône-Poulenc, Inc. v. Steel, 997 S.W.2d 217, 222-23 (Tex. 1999). A nonmovant need not have answered or 

responded to the motion in the trial court to contend on appeal that the movant’s summary judgment proof is insufficient as a 

matter of law. Id. at 223. 
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showing that there is no genuine issue of material fact and that the movant is entitled to judgment 

as a matter of law. Id. 

1. Res Judicata.

Res judicata bars the relitigation of claims that have been finally adjudicated or that could 

have been litigated in the prior action. Montgomery asserted in his motion that he was entitled to 

summary judgment because res judicata barred Caprock’s suit on the note. Montgomery relied 

upon the judgments of the trial court and the court of appeals in Caprock III, a suit filed by 

Caprock against Montgomery First Corporation (MFC) in Young County, as the basis for his res 

judicata defense. To establish the defense of res judicata, Montgomery must have proven each 

of these elements: (1) a prior final judgment on the merits by a court of competent jurisdiction; 

(2) identity of 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.3 Citizens Ins. Co. of Am. v. 

Daccach, 217 S.W.3d 430, 449 (Tex. 2007); Caprock II, 89 S.W.3d at 185. 

After this court’s decision in Caprock II and while this case was pending on remand to 

the trial court in Nolan County, Caprock brought a separate suit against MFC in Young County, 

seeking judicial foreclosure on the deeds of trust, damages for breach of contract on the deeds of 

trust for failing to maintain the oil and gas properties, and the excess due under the note. Upon 

motion by Montgomery, the trial court in Nolan County abated the present case pending the final 

resolution of the Young County suit. The district court in the Young County suit entered a takenothing summary judgment in favor of MFC against Caprock based upon MFC’s defenses of res 

judicata, collateral estoppel, and satisfaction of the note via the Jonietz bankruptcy. The

Fort Worth Court of Appeals in Caprock III affirmed the Young County summary judgment in 

favor of MFC on the ground of res judicata only: the same rationale used by this court to reverse 

the summary judgment against MFC in Caprock II.

In his motion for summary judgment in the present case, Montgomery relied upon the 

Young County summary judgment and the decision of the Fort Worth Court of Appeals in 

Caprock III as the basis for his entitlement to summary judgment based upon res judicata. With 

respect to the second element of res judicata, Montgomery does not contend that he was a party 

to the Young County suit, but he argues that he is a person in privity with a party because he is 

 

3We note that Caprock does not challenge the first element or otherwise argue on appeal that the judgment from the 

Young County suit or the Fort Worth Court of Appeals in Caprock III is not a prior final judgment on the merits. Accordingly, 

we do not address that issue.
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the president of MFC, shares an identity of interests in the lawsuits, and is the person who 

controlled the litigation in Young County. We cannot agree that Montgomery met his burden of

establishing this element of res judicata as a matter of law. 

There is no general definition of privity that can be automatically applied in all res 

judicata cases; the circumstances of each case must be examined. Getty Oil Co. v. Ins. Co. of N. 

Am., 845 S.W.2d 794, 800 (Tex. 1992). Privity exists if the parties share an identity of interests 

in the basic legal right that is the subject of litigation. Amstadt v. U.S. Brass Corp., 919 S.W.2d 

644, 653 (Tex. 1996). Those in privity with a party may include persons who exert control over 

the action, persons whose interests are represented by the party, or successors in interest to the 

party. Getty Oil, 845 S.W.2d at 800-01. 

The summary judgment evidence, the law of this case, and the prior assertions by 

Montgomery lead us to conclude that res judicata does not bar the claims against Montgomery. 

The summary judgment evidence establishes that MFC and others (but not Montgomery)

acquired oil and gas leases with the money borrowed from Caprock’s predecessor and that they

executed deeds of trust to secure payment of the note. Montgomery signed the deeds of trust in 

his capacity as president of MFC. However, Montgomery signed the note in his individual 

capacity. Montgomery did not establish as a matter of law his privity with MFC because the 

summary judgment evidence indicates that their interests may not be identical in this litigation. 

See Hammonds v. Holmes, 559 S.W.2d 345, 347 (Tex. 1977) (res judicata did not bar action 

against employee of defendant in earlier suit where employee was sued in separate capacity in 

subsequent suit). 

Moreover, this court previously held, upon the urging of Montgomery and MFC in 

Caprock II, that Caprock’s claims against MFC were barred by res judicata based upon an earlier 

summary judgment in favor of MFC that constituted a final judgment because Caprock had not 

challenged that summary judgment with respect to MFC in Caprock I. 89 S.W.3d at 185-86. In 

Caprock II, the claims against Montgomery were thereby severed from those against MFC and 

were remanded to the trial court for further proceedings. 89 S.W.3d at 185-87. Having 

previously asserted such a position of separateness of MFC and Montgomery, which was relied 

upon by this court in Caprock II, Montgomery may not now assert in this case that he is actually 

in privity with MFC. See Brown v. Lanier Worldwide, Inc., 124 S.W.3d 883, 905 (Tex. App.—

Houston [14th Dist.] 2004, no pet.) (judicial estoppel may prevent a party from asserting 
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defenses of res judicata or collateral estoppel); Goldman v. White Rose Distrib. Co., 936 S.W.2d 

393, 398 (Tex. App.—Fort Worth 1996), vacated pursuant to settlement agreement, 949 S.W.2d 

707 (Tex. 1997) (applying judicial estoppel as a trump to defense of res judicata); see also

Pleasant Glade Assembly of God v. Schubert, 264 S.W.3d 1, 6 (Tex. 2008) (judicial estoppel, 

which is actually a rule of procedure based on justice and sound public policy, precludes a party 

from adopting a position inconsistent with one that it maintained successfully in an earlier 

proceeding); Briscoe v. Goodmark Corp., 102 S.W.3d 714, 716 (Tex. 2003) (law of the case 

doctrine); Hudson v. Wakefield, 711 S.W.2d 628, 630 (Tex. 1986) (law of the case doctrine); 

Long v. Knox, 291 S.W.2d 292 (Tex. 1956) (judicial estoppel). Because Montgomery did not 

establish his affirmative defense of res judicata as a matter of law, the trial court erred in granting 

summary judgment in favor of Montgomery on that basis. 

2. Collateral Estoppel and Satisfaction.

Montgomery also asserted the defense of collateral estoppel, based upon the Young 

County suit, in his motion for summary judgment. Collateral estoppel, or issue preclusion, bars 

the relitigation of an issue of fact or law that was actually litigated, was determined by a valid 

and final judgment, and was essential to the judgment. Tex. Dep’t of Pub. Safety v. Petta, 44 

S.W.3d 575, 579 (Tex. 2001); Eagle Props., Ltd. v. Scharbauer, 807 S.W.2d 714, 721 (Tex. 

1990). Collateral estoppel applies when the parties were adversaries in the prior action and the 

party against whom collateral estoppel is asserted had a full and fair opportunity to litigate the 

issue in the prior suit. Petta, 44 S.W.3d at 579; Eagle Props., 807 S.W.2d at 721.

Montgomery argued in his summary judgment that collateral estoppel constituted a bar in 

this case because the issue regarding payment of the note was previously decided by the district 

court in Young County, which held that the note had been paid and satisfied by the Jonietz 

bankruptcy. Caprock argues on appeal that the only issue determined by a valid and final 

judgment with respect to the Young County suit is that of res judicata as addressed by the court 

of appeals. We agree. 

The general rule is that there cannot be estoppel by alternative holdings. Johnson & 

Higgins of Tex., Inc. v. Kenneco Energy, Inc., 962 S.W.2d 507, 522 (Tex. 1998). The supreme 

court has quoted with approval the following excerpt from the RESTATEMENT (SECOND) OF 

JUDGMENTS § 27, cmt. i (1982): “If a judgment of a court of first instance is based on 

determinations of two issues, either of which standing independently would be sufficient to 
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support the result, the judgment is not conclusive with respect to either issue standing alone.” Id.

at 522; Eagle Props., 807 S.W.2d at 722. The district court in Young County made three 

separate and independent determinations that would support its judgment. Thus, the alternative 

holdings in the judgment of the district court in Young County are not conclusive for purposes of 

collateral estoppel. 

Via the judgment of the Fort Worth Court of Appeals, the Young County suit became 

conclusive as to res judicata only. Comment “o” to Section 27 of the Restatement cited above 

provides in relevant part that, when the judgment of a trial court is based on a determination of 

two issues either of which would be independently sufficient to support the judgment and the 

appellate court upholds one of these determinations as sufficient and refuses to consider whether 

or not the other is sufficient and accordingly affirms the judgment, the judgment is conclusive

only as to the first determination. The supreme court relied upon a different part of comment “o” 

for its ruling in Kenneco. 962 S.W.2d at 522 (alternative findings that are actually reviewed and 

affirmed by an appellate court may have preclusive effect). We hold that the judgments 

stemming from the Young County suit were not conclusive as to the issue regarding payment or 

satisfaction of the note by the Jonietz bankruptcy.

With respect to the collateral estoppel effect of the Jonietz bankruptcy on Caprock’s 

claim against Montgomery, this court previously held in Caprock I that “the discharge of a 

debtor’s obligation by operation of the Bankruptcy Code does not discharge or affect in any way 

a co-maker’s liability on his obligation” and that “the issue in the bankruptcy court was the 

discharge of Jonietz’ liability on the note, not that of his comakers.” 17 S.W.3d at 712, 714. Our 

previous holding constitutes the law of this case, and there is nothing in the summary judgment 

evidence indicating that our previous ruling was erroneous. Caprock is not estopped by the 

Jonietz bankruptcy. See Quinney Elec., Inc. v. Kondos Entm’t, Inc., 988 S.W.2d 212 (Tex. 

1999).

4

 Neither the issue of the collateral’s value nor the issue of satisfaction of the debt is

barred by collateral estoppel in this suit against Montgomery to collect on the note. The trial 

court erred in granting Montgomery’s summary judgment on the grounds of collateral estoppel 

and satisfaction. 

 

4

See also RESTATEMENT (SECOND) OF JUDGMENTS §§ 49, 50 (1982). Section 49 provides that a judgment against one 

person liable for a loss does not terminate a claim that the injured party may have against another person who may be liable 

therefor. Section 50 provides that a satisfaction or release of judgment or other agreement terminating a judgment debtor’s 

obligation does not discharge the liability of any other person liable for the loss, unless otherwise agreed, except as to any amount 

actually received by the judgment creditor. 
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B. Fraud.

Montgomery also asserted in his motion for summary judgment that there was no 

evidence as to various elements of Caprock’s claim for fraud, including the making of a

misrepresentation with knowledge of its falsity at the time it was made. The elements of fraud 

are (1) that a material representation was made; (2) the representation was false; (3) when the 

representation was made, the speaker knew it was false or made it recklessly without any 

knowledge of the truth and as a positive assertion; (4) the speaker made the representation with 

the intent that the other party should act upon it; (5) the party acted in reliance on the 

representation; and (6) the party thereby suffered injury. Aquaplex, Inc. v. Rancho La Valencia, 

Inc., 297 S.W.3d 768, 774 (Tex. 2009). In response to Montgomery’s motion, Caprock 

presented no summary judgment evidence showing that the representation regarding the value of

the collateral as being $180,000 was false at the time of the representation or that Montgomery 

knew it was false at that time. Caprock’s summary judgment evidence merely indicated that 

Montgomery was aware over fifteen months after he signed the promissory note that “the 

specific properties pledged with the bank do not have enough value to come anywhere close to 

equaling the liabilities to the bank.” This is no evidence of the collateral’s value at the time of 

the loan or of a misrepresentation made by Montgomery at that time. Caprock, therefore, failed 

to present more than a scintilla of summary judgment evidence on these elements of fraud in 

response to Montgomery’s no-evidence motion. Consequently, the trial court properly granted 

the motion on this basis. TEX. R. CIV. P. 166a(i). 

Caprock’s first issue is sustained as to the grant of summary judgment in favor of 

Montgomery on his defenses to liability on the promissory note; however, it is overruled as to 

the grant of a take-nothing summary judgment in favor of Montgomery on Caprock’s fraud 

claim. 

III. Caprock’s Motion

In its second issue on appeal, Caprock argues that the trial court erred in denying

Caprock’s motion for summary judgment. Caprock urged in its traditional motion for summary 

judgment that it was entitled to summary judgment on its breach of contract claim and that it was 

also entitled to summary judgment on Montgomery’s counterclaims, which were “defensive”

counterclaims asserted for purposes of offset to negate any recovery by Caprock on its suit on the 

note. 
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To prevail on a breach of contract claim, a party must establish the following elements: 

(1) the existence of a valid contract; (2) performance or tendered performance by the plaintiff; 

(3) breach of the contract by the defendant; and (4) damages to the plaintiff as a result of the 

defendant’s breach. Eaves v. Unifund CCR Partners, 301 S.W.3d 402, 407 (Tex. App.—El Paso

2009, no pet.). Caprock presented summary judgment evidence in support of these elements. In 

his response, Montgomery contended that Caprock was not entitled to summary judgment for the 

following reasons: res judicata, collateral estoppel, satisfaction of the note via the Jonietz 

bankruptcy, fact issues as to control and possession of the collateral, fact issues as to the amount 

due on the note, and fact issues regarding Montgomery’s counterclaims. As addressed above, 

Montgomery’s assertions of res judicata, collateral estoppel, and satisfaction via the Jonietz 

bankruptcy fail as a matter of law. Montgomery does not otherwise contest the elements of 

breach of the promissory note establishing his liability, but he does contest the amount owed. 

The summary judgment evidence shows the existence of a valid promissory note signed by 

Montgomery, performance by Caprock’s predecessor, and breach by Montgomery. The 

summary judgment evidence is disputed as to the amount actually owed, the reasonableness of 

the substituted interest rate, the amount of setoff (if any) available for the alleged 

mismanagement and waste of the collateral by Caprock and its predecessors, and attorney’s fees. 

The summary judgment evidence established that, except as to the amount of damages, no 

genuine issue of material fact existed on Caprock’s claim for breach of contract. Thus, the trial 

court should have entered summary judgment in favor of Caprock as to Montgomery’s liability 

for breach of contract but not the amount of damages. Rule 166a(c) provides in part: “The 

judgment sought shall be rendered forthwith if [the summary judgment evidence, pleadings, 

motions, and responses] show that, except as to the amount of damages, there is no genuine issue 

as to any material fact and the moving party is entitled to judgment as a matter of law” (emphasis 

added). Caprock’s second issue is sustained with respect to the trial court’s failure to grant its 

summary judgment motion regarding liability and is otherwise overruled. 

The judgment of the trial court is affirmed as to the take-nothing judgment rendered

against Caprock on its claim for fraud. The judgment of the trial court is otherwise reversed. 

Because both parties moved for summary judgment on the breach of contract claim, we render 

judgment that Montgomery is liable for breach of the promissory note and that Caprock’s claim 

for breach of the note is not barred by res judicata, collateral estoppel, or satisfaction. Because 
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issues of fact exist regarding damages -- the amount still due and owing under the note, the 

amount of any offset that Montgomery may be entitled to, and attorney’s fees -- we remand the 

cause to the trial court for a determination of these issues. 

JIM R. WRIGHT

CHIEF JUSTICE

May 27, 2010

Panel consists of: Wright, C.J.,

McCall, J., and Strange, J.