Opinion issued June 11, 2019

In The

Court of Appeals 

For The 

First District of Texas 

————————————

NO. 01-18-00194-CV

———————————

PARADISE LIVING, INC. AND MARY ARTHUR, Appellants

V.

BLACKBURNE & BROWN MORTGAGE FUND I, Appellee

On Appeal from the 11th District Court

Harris County, Texas

Trial Court Case No. 2017-56890

MEMORANDUM OPINION

The trial court entered a take-nothing summary judgment against Paradise 

Living, Inc. and Mary Arthur, holding that their claims against Blackburne & 

Brown Mortgage Fund I were barred by res judicata. The trial court also imposed 

sanctions against their attorneys, Ike Okorafor and Larry Boje. 
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In five issues, Paradise Living, Inc. and Mary Arthur contend the trial court 

erred in granting summary judgment against them, erred in sanctioning their 

attorneys, and did not have plenary power to enter an amended order for summary 

judgment and sanctions more than 75 days after its original order for summary 

judgment and sanctions.

We affirm.

Background

Paradise Living operated an assisted living facility in Houston in a multi-unit 

complex originally purchased by Mary Arthur and James Arthur. The Arthurs 

wished to renovate their property and, in 2006, one of their limited partnerships 

borrowed $774,000 from Blackburne & Brown Mortgage Fund I. The Arthurs 

guaranteed the note and deed of trust. By 2016, Blackburn began taking action 

against the Arthurs and their related entities, claiming the loan payments were 

delinquent. Blackburne sought to foreclose on the property.

While facing pre-foreclosure demands for payment, Paradise Living and 

Arthur Holdings, L.P.—an entity related to the Arthurs in a way the record does 

not make clear—sued Blackburne for conversion of mortgage payments, tortious 

interference with business relationship, an accounting, injury to business 

reputation, breach of the duty of good faith and fair dealing, and breach of contract. 

Their suit was filed in Harris County District Court and assigned Cause Number 
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2016-12403. They sought damages, declaratory relief, and an injunction. Their

second amended petition removed Paradise Living from the list of plaintiffs and 

added James P. Arthur.

Blackburne answered the lawsuit with a general denial. In the same 

pleading, Blackburne asserted a counterclaim for breach of contract against Arthur 

J. Holdings, Inc., Legonite, Inc., James Arthur, Mary Arthur, “and any other owner 

or partner of Arthur LP or Legonite.” 

A settlement agreement was reached in May 2016 that established new 

payment deadlines for mortgage payments. The settlement agreement lists all 

parties to the agreement. The parties to the agreement are, on the one side, “Arthur 

Holdings, LP; Arthur P. Holdings, LP; Legonite, Inc.; Arthur J. Holdings, Inc.; 

Paradise Living, Inc. d/b/a The Cottage Health Services; James Arthur; and Mary 

Arthur; including the principals, partners, directors, officers, assignees, or agents of 

the aforementioned,” and, on the other side, “Blackburne & Brown Mortgage Fund 

I; including its principals, partners, directors, officers, assignees, or agents.”

The settlement agreement states that it “disposes of all Parties and all claims. 

Such disposal includes but is not limited to claims or defenses that were filed in 

this lawsuit or could or should have been filed in this lawsuit, as well as claims or 

defenses associated” with various Property Code provisions. The agreement is 

signed as “approved as to form and substance” by James O. Okorafor, who is listed 
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as “counsel for Arthur Holdings, LP; Arthur P, Holdings, LP; James Arthur; Mary 

Arthur; Arthur J. Holdings, Inc.; Legonite, Inc; and Paradise Living Inc. d/b/a The 

Cottage Health Services.”

Along with the settlement agreement, the parties entered into an agreed final 

judgment. The agreed final judgment lists the same parties and recounts the same

terms as the settlement agreement. It also states that the agreed final judgment 

“finally disposes of all Parties and all claims. Such disposal includes but is not 

limited to claims or defenses that were filed in this lawsuit or could or should have 

been filed in this lawsuit.” Like the settlement agreement, the agreed final 

judgment is signed as “approved as to form and substance” by James O. Okorafor, 

who is listed as “counsel for Arthur Holdings, LP; Arthur P, Holdings, LP; James 

Arthur; Mary Arthur; Arthur J. Holdings, Inc.; Legonite, Inc; and Paradise Living 

Inc. d/b/a The Cottage Health Services.” The agreed final judgment was entered 

August 24, 2017.

The same day the judgment was entered, three of the parties to the 

settlement agreement and to the agreed final judgment filed suit against 

Blackburne in another Harris County District Court, which was assigned Cause 

Number 2017-56890. Paradise Living, Inc., Legonite, Inc., and Mary Arthur 

asserted claims against Blackburne for wrongful foreclosure, conversion, breach of 
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contract, unjust enrichment, and other causes of action. The plaintiffs sought 

damages, declaratory relief, an injunction, and attorney’s fees.

Blackburne answered; sought transfer to the district court that entered the 

agreed final judgment; asserted defenses, including res judicata; and asserted a 

counterclaim for breach of contract, specifically the settlement agreement. 

After the motion to transfer was granted, Blackburne moved for summary 

judgment on all plaintiff claims, arguing that they are barred by res judicata 

because the plaintiffs were parties to the earlier agreed final judgment. Blackburne 

also sought sanctions for filing a groundless pleading in bad faith.

The plaintiffs amended their petition to drop Legonite, Inc. from the list of 

plaintiffs, leaving only Paradise Living, Inc. and Mary Arthur. The amended 

petition asserted only two causes of action: (1) tortious interference with an 

existing contract with “government agencies” related to the placement and funding 

of individuals in the assisted living facility and (2) business disparagement. The 

plaintiffs sought actual and exemplary damages, plus attorney’s fees.

Blackburne filed an amended motion for summary judgment and sanctions.

The trial court granted Blackburne’s summary-judgment motion; rendered 

judgment for Blackburne; sanctioned Mary Arthur, Paradise Living, Inc., and 

Legonite, Inc., $3,000; and ordered their attorneys, Ike Okorafor and Larry Boje, to 

attend 2.5 hours of continuing legal education ethics courses.
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Paradise Living, Inc. and Mary Arthur (hereafter referred to collectively as 

PL/MA) filed a motion to reconsider. Blackburne filed a responsive pleading in 

which it requested that the trial court deny the motion for reconsideration and grant 

Blackburne attorney’s fees “as sanctions for Plaintiffs’ continued violations of 

Texas Rule of Civil Procedure 13 and §§ 9.011 and 10.001 of the Texas Civil 

Practice & Remedies Code.” The record does not contain an order ruling on 

PL/MA’s motion for reconsideration or Blackburne’s request for attorney’s fees as 

sanction. 

On March 9, 2018, Blackburne filed a motion for damages and additional 

fees, arguing that the amount of sanctions imposed earlier was considerably less 

than the expense to respond to ongoing frivolous filings and would not sufficiently 

deter such filings in the future. 

James Arthur and “entities in his name” filed a “nonparty response” to 

Blackburne’s motion, arguing, first, that the court already lost plenary power 

before Blackburne filed its motion for damages and additional fees, and second, in 

the alternative, that the trial court should sanction Blackburne.

On March 28, 2018, the trial court entered an amended summary-judgment 

and sanctions order. Among other rulings, the order grants Blackburne’s amended 

summary-judgment motion; renders judgment for Blackburne on PL/MA’s claims; 

grants Blackburne summary judgment on its breach-of-contract claim and awards
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attorney’s fees on that claim; finds that PL/MA and their attorneys, Larry Boje and 

Ike Okorafor failed to comply with Chapter 10 of the Texas Civil Practice and 

Remedies Code and Texas Rule of Civil Procedure 13; and orders Boje and 

Okorafor to attend 2.5 hours of continuing legal education on ethics as a sanction.

PL/MA appeal.

Trial Court’s Plenary Power

In their third issue, PL/MA argue that the “trial court erred in granting 

defendant’s motion for new trial more than 75 days after judgment,” citing Civil 

Procedure Rule 329b. We understand their argument to be that plenary power 

expired following the trial court’s entry of its first summary judgment order, 

making its subsequent amended summary-judgment and sanction order void. 

The trial court initially granted Blackburne summary judgment on December 

20, 2017. That order states that it is a final judgment. The trial court retained 

jurisdiction for 30 days after signing the final judgment. TEX. R. CIV. P. 329b(d). 

PL/MA extended plenary power by timely filing a motion for reconsideration. TEX.

R. CIV. P. 329b(e), (g); In re T.G., 68 S.W.3d 171, 176–77 (Tex. App.—Houston 

[1st Dist.] 2002, pet. denied) (orig. proceeding). Their filing extended the trial 

court’s plenary power until 30 days after their motion was overruled. TEX. R. CIV.

P. 329b(e); In re T.G., 68 S.W.3d at 176–77. Because the trial court did not 

expressly rule on their 329b motion, their motion was overruled as a matter of law 
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75 days after the judgment was signed. TEX. R. CIV. P. 329b(c); see In re T.G., 68 

S.W.3d at 176–77.

Under these facts, the trial court’s plenary power extended 105 days after the 

December 20, 2017 final judgment was signed; thus, plenary power extended to 

early April 2018. The trial court signed the judgment granting Blackburne’s 

amended summary-judgment motion and ordering sanctions on March 28 while it 

retained plenary power. 

We overrule issue three.

 Take-Nothing Judgment on PL/MA’s Two Causes of Action

In their first and fifth issues, PL/MA contend the trial court erred in granting 

summary judgment to Blackburne on their two causes of action and entering a 

take-nothing judgment against them. PL/MA argue they were two of several 

plaintiffs asserting a variety of claims against Blackburne in the 2016 suit, they had 

a right to nonsuit their claims at any time, they nonsuited their claims before the 

remaining parties attended mediation and settled, they were not parties to the 

settlement, their claims are not the same as those that did settle, and, as a result, res 

judicata does not apply to bar their second suit against Blackburne. PL/MA’s 

argument fails for several reasons. 

First, it is immaterial that PL/MA nonsuited their affirmative claims for 

relief before the settlement. Because the nonsuit was without prejudice, PL/MA 
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had the ability to reassert their claims at any time so long as the limitations period 

had not expired. See Aetna Cas. & Sur. Co. v. Specia, 849 S.W.2d 805, 806 (Tex.

1993) (“Subject to certain conditions, a plaintiff who takes a nonsuit is not 

precluded from filing a subsequent suit seeking the same relief.”). A person or 

entity with a legal claim does not have to have a lawsuit pending to settle its 

claims. See Banda v. Garcia, 955 S.W.2d 270 (Tex. 1997) (affirming judgment 

enforcing presuit settlement). 

Second, PL/MA’s claims against Blackburne were not the only claims for 

affirmative relief between those three parties. Blackburne filed its original answer

and, in it, asserted a counterclaim against PL/MA for breach of contract based on 

assertions that they had failed to tender payments due under the terms of the 

settlement agreement. Blackburne asserted its counterclaim before PL/MA 

nonsuited their claims. While PL/MA had the right to nonsuit their claims when 

they did so, their nonsuit did not also extinguish Blackburne’s pending claim for 

affirmative relief. See Villafani v. Trejo, 251 S.W.3d 466, 469 (Tex. 2008). PL/MA 

were still parties to the litigation even after they nonsuited their claims: they were 

counter-defendants. 

Third, PL/MA were named as parties to the settlement agreement and the 

agreed final judgment. Their attorney approved both pleadings “as to form and 

substance” on their behalf. The agreed final judgment specifically lists PL/MA as 
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parties and states that it “finally disposes of all Parties and all claims. Such 

disposal includes but is not limited to claims or defenses that were filed in this 

lawsuit or could or should have been filed in this lawsuit.” 

Thus, at the time of settlement and rendition of judgment, PL/MA had

unlitigated claims against Blackburne, Blackburne had pending claims against 

them, and all parties had agreed to dispose of their “claims or defenses that were 

filed . . . or could or should have been filed” and to rendition of an agreed final 

judgment. PL/MA’s assertion that they were no longer litigants and therefore could 

not have been parties to the settlement is unavailing. 

The parties settled their claims and agreed to entry of a final judgment. Any 

future efforts to reassert the same adjudicated claims or related matters that should 

have been litigated in the prior suit would be barred by res judicata. See Barr v. 

Resolution Tr. Corp., 837 S.W.2d 627, 628 (Tex. 1992) (“Res 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.”).

The elements of res judicata are (1) a final prior judgment on the merits by a 

court of competent jurisdiction, (2) identity of the parties or those in privity with 

them, and (3) a subsequent action based on the same claims raised or those that 

could have been raised in the first action. Amstadt v. United States Brass Co., 919 
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S.W.2d 644, 652 (Tex. 1996). Here, Blackburne established there was a prior 

judgment, PL/MA were parties to the agreed final judgment, and the claims 

asserted in their 2017 suit could have been (and were, earlier on) raised in the first 

action. PL/MA’s claims are barred by res judicata. The trial court did not err in 

granting Blackburne’s summary-judgment motion and entering a take-nothing 

judgment against PL/MA on their two causes of action.

We overrule issues one and five.

Sanctions

In their final two issues, PL/MA argue the trial court erred by imposing 

sanctions on their attorneys for filing their second lawsuit. They contend it was not 

groundless or in bad faith to refile their suit because they had a right to nonsuit 

their claims in the first suit. 

A. Standard of review and applicable law

We review the imposition of sanctions for an abuse of discretion. Low v. 

Henry, 221 S.W.3d 609, 614 (Tex. 2007). We may reverse the trial court’s ruling 

only if it acted without reference to any guiding rules and principles, such that its 

ruling was arbitrary or unreasonable. Id. To determine if the sanctions were 

appropriate or just, we must ensure there is a direct nexus between the improper 

conduct and the sanction imposed. Id. We generally presume that pleadings and 
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other papers are filed in good faith, and the party seeking sanctions bears the 

burden of overcoming this presumption of good faith. Id.

There are several sources of authority for a trial court to impose sanctions on 

a party or a party’s attorney. See, e.g., TEX. R. CIV. P. 13; TEX. CIV. PRAC. & REM.

CODE ch. 9, 10. Chapter 10 provides that the signing of a pleading or motion 

constitutes a certificate by the signatory that, to the signatory’s best knowledge, 

information, and belief—formed after reasonable inquiry—the pleading or motion 

is not being presented for any improper purpose, including to harass or to cause 

unnecessary delay or needless increase in the cost of litigation, and, among other 

things, each claim, defense, or other legal contention is warranted by existing law 

or by a nonfrivolous argument for the extension, modification, or reversal of 

existing law or the establishment of a new law. TEX. CIV. PRAC. & REM. CODE 

§ 10.001. A court that determines a signatory violated Section 10.001 may impose 

sanctions on the signatory, a party represented by the signatory, or both. Id. 

§ 10.004(a). The sanction may include a directive to perform or refrain from an act, 

an order to pay a penalty into the court, and an order to pay the opposing litigant

the amount of reasonable expenses incurred because of the filing, including 

reasonable attorney’s fees. Id. § 10.004(c).
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B. Trial court did not abuse discretion in ordering sanctions

The trial court found that PL/MA filed their second suit while aware of the 

proceedings and pleadings in the first suit and did so for purposes of harassment 

and to delay enforcement of the agreed final judgment. The trial court found that 

PL/MA’s attorneys, Larry Boje and Ike Okorafor, failed to comply with Chapter 

10 of the Civil Practice and Remedies Code and with Rule 13 of the Rules of Civil 

Procedure. The trial court found that good cause existed to assess sanctions against 

them and ordered Boje and Okorafor to attend 2.5 hours of continuing legal 

education on ethics. The trial court did not impose any monetary sanctions on 

PL/MA or their attorneys, and it did not sanction PL/MA at all.

As discussed above, PL/MA had unlitigated claims against Blackburne that 

they settled. And Blackburne had a pending claim against PL/MA that it settled. 

All parties agreed to rendition of an agreed final judgment disposing of their 

claims. On the same day that judgment was entered, PL/MA filed a second suit 

asserting the same claims they settled. This required Blackburne to incur additional 

attorney’s fees and expenses to enforce its rights under the settlement agreement 

and the terms of the agreed final judgment. 

Blackburne established the amount of attorney’s fees incurred in litigating 

already settled claims and moving for and obtaining judgment on res judicata 

grounds. Blackburne provided summary judgment evidence of $57,286 in 
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attorney’s fees and $1,437.21 in expenses through entry of judgment in the second 

suit. Blackburne’s counsel, John Michael Raborn, averred that the time spent and 

fees charged were reasonable and necessary.

Section 10.004(a) permits a trial court to impose sanction against a signatory 

whom the trial court determines has, after reasonable inquiry, signed a pleading for 

any improper purpose (including to harass or to cause unnecessary delay) or to 

raise a claim or defense that is not warranted by existing law or a nonfrivolous 

argument for change in existing law or the establishment of a new law. TEX. CIV.

PRAC. & REM. CODE §§ 10.001, 10.004(a).

The underlying suit involved a foreclosure for nonpayment of mortgage 

payments. The settlement agreement established new deadlines for the mortgage 

payments. When those payments were not made and Blackburne took steps to

foreclose on the property as permitted under the terms of the agreed final 

judgment, PL/MA filed a second lawsuit asserting the same claims they just 

settled. At the sanctions hearing, counsel argued that it was seeking to have the 

court in the second lawsuit review the merits of the first lawsuit. There is no basis 

in law to do so.1 Counsel also stated, at the sanctions hearing, “I have yet to see 

any counterclaim the defendant is referring to.” But the original answer contained 

 

1 Further, Blackburne pointed to counsel’s affidavit that is not in the record but is 

described by Blackburne’s counsel as stating a desire to pursue additional 

litigation to delay foreclosure. Whether this affidavit is in the trial court’s file, we 

do not know. We do not find it in the appellate record.
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Blackburne’s counterclaim. Blackburne argued there was no other purpose for the 

second suit than harassment and delay of foreclosure.

We conclude the trial court did not err in concluding that Boje and Okorafor 

violated Section 10.001. The trial court reasonably could have concluded that a 

reasonable inquiry by counsel would have revealed the plaintiffs’ claims were 

barred by res judicata because they were parties to the agreed final judgment. The 

trial court reasonably could have concluded further that, without any nonfrivolous 

basis for relitigating settled claims, those claims were pursued for an improper 

purpose, such as to harass or delay. The trial court was within its discretion to infer 

that the second suit was filed to harass and delay. See Ketterman v. Texas Dep’t of 

Family & Protective Servs., No. 01-12-00883-CV, 2014 WL 7473881, at *13 (Tex. 

App.—Houston [1st Dist.] Dec. 30, 2014, no pet.) (mem. op.) (stating that “trial 

court could reasonably infer from this testimony and evidence that [the attorney] 

filed the second amended petition in bad faith or with the intent to harass”). The 

trial court did not abuse its discretion in imposing sanctions under Section 

10.004(a).

Pl/MA do not challenge the type of sanction imposed, only the propriety of a 

sanction order. Because we have held that the trial court did not abuse its discretion 

in issuing a sanction order under Chapter 10, we do not reach the other bases for 

sanctions listed in the trial court’s order. See Zeifman v. Nowlin, 322 S.W.3d 804, 
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809 (Tex. App.—Austin 2010, no pet.) (stating trial court’s imposition of sanctions 

can be affirmed on any legal basis relied upon by court).

We overrule issues two and four.

Conclusion

We affirm.

Sarah Beth Landau

Justice

Panel consists of Justices Lloyd, Landau, and Countiss.