Opinion ID: 2429828
Heading Depth: 3
Heading Rank: 1

Heading: Getty v. NL

Text: We recently clarified that Texas follows the transactional approach to res judicata. See Barr v. Resolution Trust Corp., 837 S.W.2d 627 (Tex. 1992). Under this approach, a judgment in an earlier suit precludes a second action by the parties and their privies not only on matters actually litigated, but also on causes of action or defenses which arise out of the same subject matter and which might have been litigated in the first suit. Id. at 630; Texas Water Rights Comm. v. Crow Iron Works, 582 S.W.2d 768, 771-72 (Tex.1979). We conclude that Getty's present suit arises out of the same subject matter as its earlier cross-claim against NL asserted in the Duncan suit. The Restatement (Second) of Judgments, which recognizes the transactional test, suggests that factors to consider in determining whether facts constitute a single transaction are their relatedness in time, space, origin, or motivation, and whether, taken together, they form a convenient unit for trial purposes. Restatement (Second) of Judgments § 24 cmt. b (1980). Getty's present action against NL arose from the same accident that was adjudicated in the Duncan suit. The present suit also concerns the same contract, HB-5357, and the same section of that contract, the Insurance and Indemnity section. Finally, Getty seeks the same relief against NL here as in its earlier cross-claim: reimbursement for Getty's liability to Duncan's estate and beneficiaries. Thus, both Getty's actions against NL derived from the same transaction. [5] Getty argues that res judicata cannot bar its present claims against NL because these claims did not accrue until judgment was rendered in the Duncan suit. That is, Getty had no liability and hence no need for insurance coverage until liability was assigned. The contingent nature of these claims, however, does not preclude the operation of res judicata. We held in Barr that [a] subsequent suit will be barred if it arises out of the same subject matter of a previous suit and which, through the exercise of diligence, could have been litigated in a prior suit. 837 S.W.2d at 631. Getty could have asserted its present claims in the Duncan suit, with their resolution being contingent on the plaintiffs' claims. Texas Rule of Civil Procedure 51(b) provides: Joinder of Remedies. Whenever a claim is one heretofore cognizable only after another claim has been prosecuted to a conclusion, the two claims may be joined in a single action; but the court shall grant relief in that action only in accordance with the relative substantive rights of the parties. See Parkhill Produce Co. v. Pecos Valley Southern Ry. Co., 348 S.W.2d 208 (Tex. Civ.App.San Antonio 1961, writ ref'd n.r.e.). For example, we have held that an indemnitee may bring a claim against an indemnitor before judgment is assigned against the indemnitee. See Gulf, Colorado & Santa Fe Ry. Co. v. McBride, 159 Tex. 442, 446, 322 S.W.2d 492, 495 (Tex. 1958); Mitchell's, Inc. v. Friedman, 157 Tex. 424, 431, 303 S.W.2d 775, 779 (Tex. 1957); K & S Oil Well Service, Inc. v. Cabot Corp., 491 S.W.2d 733, 739 (Tex.Civ. App.Corpus Christi 1973, writ ref'd n.r.e.). Forcing the indemnity suit to wait for judgment in the liability suit would contravene the policy of the courts to encourage settlements and to minimize litigation. Id. Getty itself took advantage of this rule in its initial cross-action against NL, in which Getty asserted its claim under the indemnity provision of HB-5357. The fact that Getty had no claim for indemnity against NL until the trial court rendered judgment did not preclude this cross-claim. Likewise, Getty could have brought its other contingent cross-claims against NL in the Duncan action. The fact that Getty's claims against NL were contingent on Getty incurring liability in the Duncan suit does not in and of itself preclude operation of res judicata. [6] We do not hold that a defendant must assert a cross-claim against a co-defendant simply because it arises from the same subject matter as plaintiff's claim. Tex.R.Civ.P. 97(e) clearly makes such a cross-claim permissive; the defendant may assert it, but is not required to. Rule 97(e) comports with the principle that res judicata applies only to adverse parties. Where two parties are aligned in the first action and no issues are drawn between them, the judgment in that action does not preclude later claims between those parties. See Smith v. Baker, 380 S.W.2d 725, 726 (Tex. Civ.App.Waco 1964, writ ref'd n.r.e.); Green v. City of San Antonio, 282 S.W.2d 769, 776 (Tex.Civ.App.San Antonio 1955, writ ref'd n.r.e.); Second Nat'l Bank of Houston v. Fuqua, 262 S.W.2d 834, 835 (Tex.Civ.App.Waco 1953, writ ref'd n.r.e.). However, where a defendant does assert a cross-claim against a co-party, they become adverse, and the principles of res judicata apply. The cross-claimant becomes a plaintiff for res judicata purposes, and is required to assert all claims against the cross-defendant arising from the subject matter of the original cross-claim. Cf Restatement (Second) Judgments § 23 (1980) (Where a defendant interposes a claim as a counterclaim and a valid and final judgment is rendered against him on the counterclaim, the rules of bar are applicable to the judgment.). Getty relies on Chandler v. Cashaway Building Materials, Inc., 584 S.W.2d 950, 954 (Tex.App.El Paso 1979, no writ), where the court held that res judicata applies to the cause of action which was actually filed by the plaintiff and not crossactions which might have been filed by a defendant, unless, of course, the compulsory counterclaim rule is applicable. See also Swiss Avenue Bank v. Slivka, 724 S.W.2d 394, 396-97 (Tex.App.Dallas 1986, no writ). These cases merely reiterate the principle of Rule 97(e) that a party is not required to assert a cross-claim against an otherwise non-adverse party. Neither Chandler nor Slivka involved a situation where a party asserted some but not all of its cross-claims. Getty was not required to bring any of its cross-claims against NL in the Duncan suit. Once it chose to bring some of those claims, however, it was required under res judicata to bring them all in the same action. Accordingly, we agree with the court of appeals' holding as to this issue.