Opinion ID: 6713
Heading Depth: 2
Heading Rank: 3

Heading: Application of Texas Collateral Estoppel to Daniels' Claims

Text: 25 Addressing the third factor first, under Texas collateral estoppel law, there is not a mutuality requirement for the invocation of the doctrine. Rather, it is only necessary that the party against whom the plea of collateral estoppel is being asserted be a party or in privity with a party in the prior litigation. Eagle Properties, Ltd., v. Scharbauer, 807 S.W.2d 714, 721 (Tex.1990); Soto v. Phillips, 836 S.W.2d 266, 270 (Tex.App.--San Antonio 1992, writ denied). In other words, the doctrine applies when a party against whom the doctrine is asserted had a full and fair opportunity to litigate the issue in the prior suit. Id.; Tarter v. Metropolitan Sav. & Loan Ass'n, 744 S.W.2d 926, 927 (Tex.1988). Accordingly, Equitable is not barred from asserting collateral estoppel due to a lack of mutuality or adversarial relationship; it is sufficient that both Equitable and Daniels were both parties in the Kerr County proceeding.
26 Among the causes of action that Daniels has brought against Equitable in this action is his claim that Equitable breached the annuity contract by stopping payment on the $51,000 annuity check. Daniels argues that this issue was not raised or tried in the Kerr County proceeding. Specifically, Daniels claims that Equitable's stop payment on the November 16 check was a breach of the annuity contract because the first writ had been dissolved, and the second writ did not extend back to November 16. 27 As part of its judgment, the Kerr County court held that Equitable properly filed an interpleader. Relevant to this holding, and to Daniels' contentions, the Kerr County court found that Equitable was subject to conflicting claims, one from Daniels and one from Daniels' creditor, Pecan Valley. 2 Further, the court found that Equitable was reasonable in thinking that there were rival claims to the same fund or property. 3 Accordingly, the court found that Equitable had a good faith basis for its refusal to pay either Daniels or Pecan Valley in light of the conflicting claims. 4 Finally, the court also found that Equitable had not become independently liable to any of the claimants, including Daniels. 5 28 The findings on these issues, which were fully litigated and essential to the Kerr County court's judgment, are wholly inconsistent with Daniels' claim that Equitable was contractually obligated to turn those funds over to him on November 16, 1990. 6 Daniels' reply brief correctly admits that the Equitable could have eliminated any liability to Daniels by interpleading the annuity funds on or before November 16, 1990. The San Antonio Court of Appeals in effect held that Equitable did not unreasonably delay in filing the interpleader. Daniels, at 385. The resolution of these issues by the Kerr County court precludes any subsequent argument that Equitable breached a duty to Daniels by stopping payment on the November 16 annuity check.
29 With respect to Daniels conversion claim, the Kerr County Court found that the annuity contract merely created a debt owed by Equitable to Daniels, and to which Daniels had no greater rights than a general creditor. 7 Such a determination forecloses a conversion claim, as Texas law does not support a claim for conversion arising from a failure to pay a debt, nor does Texas law recognize conversion of a non-specified sum of money. See, e.g., Edlund v. Bounds, 842 S.W.2d 719, 727 (Tex.App.--Dallas 1992, writ denied); Eckman v. Centennial Sav. Bank, 757 S.W.2d 392, 398 (Tex.App.--Dallas 1988, writ denied).
30 Daniels also claims Equitable breached its duty to raise certain procedural defenses on his behalf as to the annuity funds' exemption from garnishment by Pecan Valley. In this regard, it should be again noted that Daniels was also a party to the state court proceeding, where he raised his own defenses. More importantly, the Kerr County court determined that the funds were not exempt from garnishment, that they were attached by the writ of garnishment, that the funds were properly interpleaded by Equitable, and that Pecan Valley was entitled to them. Daniels has failed to identify any valid defense that Equitable could have raised that would have enabled Daniels to prevail. 31 Furthermore, under Texas law, an insurance company is entitled to maintain an interpleader suit if there exists a reasonable doubt of either fact or law as to which of the rival claimants is entitled to the proceeds. See, e.g., Cable Communications Network, Inc. v. Aetna Casualty & Surety Co., 838 S.W.2d 947 (Tex.App.--Houston 14th Dist.1992, no writ) (We find no basis for holding (the insurer) acted in bad faith or breached its contract (to the lessee) by turning to the courts to resolve these serious conflicting monetary claims, rather than adjudicating them at its own risk.). Thus, if the state court found that Equitable's interpleader was appropriate, Equitable cannot now be found to have breached a duty to Daniel by interpleading the funds. Because the state court found that Equitable properly filed its interpleader, Daniels is collaterally estopped from asserting these tort claims in the present cause of action. 32
33 Daniels final claim against Equitable is for intentional infliction of emotional distress, based on the fact that Defendant stopped payment on the $51,000 annuity check. 34 Texas courts have recently recognized the tort of intentional infliction of emotional distress, adopting the elements set forth in Restatement (Second) of Torts Sec. 46 (1965). See Twyman v. Twyman, 855 S.W.2d 619 (Tex.1993). To state such a claim, the plaintiff must prove that 35
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39 Id. at 621; Wornick Co. v. Casas, 856 S.W.2d 732, 734 (Tex.1993). 40 Outrageous conduct is that which (goes) beyond all possible bounds of decency and to be regarded as atrocious and utterly intolerable in a civilized community. Wornick, 856 S.W.2d at 734. (citing Restatement (Second) Sec. 46 cmt. d) 9 . Relying further on the Restatement (Second) Sec. 46 and comments contained therein, the Texas Supreme Court has stated: It is for the court to determine, in the first instance, whether the defendant's conduct may be reasonably regarded as so extreme and outrageous as to permit recovery.... Id. (citing Restatement (Second) Sec. 46 cmt. h). 41 The Kerr County court determined that Equitable behaved reasonably and in good faith in not delivering the disputed funds to Daniels. In light of this determination, the court below properly found that Equitable's conduct could not rise to the level of extreme and outrageous conduct to support a claim for intentional infliction of emotional distress. The Kerr County court's findings, which were essential to the outcome, preclude a finding that Equitable's actions were so outrageous or extreme as to go beyond all possible bounds of decency. Accordingly, this Court finds that Daniels' claim for intentional infliction of emotional distress is also barred on collateral estoppel grounds.