Court Opinion

ID: 2986353
Source: CourtListenerOpinion
Date Created: 2015-09-23 00:31:19.152126+00
Date Added: 2024-06-11T15:02:09.370280
License: Public Domain

Petition for Writ of Mandamus Denied and Memorandum Opinion filed July
25, 2013.

                                      In The

                    Fourteenth Court of Appeals

                                NO. 14-13-00500-CV

  IN RE COOPER INDUSTRIES, LLC AND COOPER US, INC., Relators

                         ORIGINAL PROCEEDING
                           WRIT OF MANDAMUS
                              80th District Court
                             Harris County, Texas
                       Trial Court Cause No. 2011-77606

                       MEMORANDUM OPINION

      Relators Cooper Industries, LLC and Cooper US, Inc. filed a petition for
writ of mandamus in this court. See Tex. Gov’t Code §22.221; see also Tex. R.
App. P. 52. In the petition, relators ask this court to compel the Honorable Larry
Weiman, presiding judge of the 80th District Court of Harris County, to set aside
his May 23, 2013, order denying their plea to the jurisdiction and to dismiss the
underlying suit. Relators’ plea raised the principle of comity, asserting that a New
York state court should maintain jurisdiction over the underlying case.1 Relators
also filed a motion for a temporary stay of discovery pending this proceeding,
which this court denied.

        The real party-in-interest, Pepsi-Cola Metropolitan Bottling Co., Inc.
(Pepsi), filed suit in Texas in December of 2011, to challenge a February 1, 2011
settlement agreement, which resulted in a trust approved by a New York court
providing “hundreds of millions of dollars” for the defense and payment of
asbestos claims.2 At issue in the underlying case are the funds for claims against
Pneumo Abex LLC, which has indemnity obligations to Pepsi.3 Cooper’s
indemnity obligations to Pneumo Abex were released in the settlement agreement.
Pepsi alleges that the settlement constitutes tortious interference with its indemnity
contract, conversion of its property rights, and a fraudulent transfer. Pepsi claims
that the settlement fund was the result of a collusive agreement, and it was created
to terminate indemnity obligations, including those that benefit Pepsi. It asserts that
the fund was intentionally underfunded to defraud Pepsi. Relators argue that the
relief Pepsi seeks contradicts the terms of the settlement and would effectively
terminate it.

1
  A plea to the jurisdiction is not the proper pleading in which to raise comity. We must give
effect to the substance of a pleading, rather than its title or form. In re S.A.M., 321 S.W.3d 785,
788 (Tex. App.—Houston [14th Dist.] 2010, no pet.). Relators raised comity before the trial
court, albeit as part of plea requesting dismissal based alternatively on New York’s exclusive
jurisdiction and forum non conveniens; accordingly, we consider their comity arguments in this
proceeding.
2
 See Pepsi-Cola Metro. Bottling Co. v. Cooper Indus., LLC, et al, Cause No. 2011-77606 in the
80th District Court in Harris County, Texas.
3
  This brief summary of the indemnity obligations at issue in the litigation provides only general facts
relevant to the comity analysis. We recognize that this opinion does not address all the claims between the
parties or the “complicated series of corporate sales, mergers, and name changes” at issue in the court
below.

                                                    2
      To be entitled to the extraordinary relief of a writ of mandamus, relators
must show that the trial court abused its discretion and there is no adequate remedy
by appeal. In re Laibe Corp., 307 S.W.3d 314, 316 (Tex. 2010). A trial court
abuses its discretion if it reaches a decision so arbitrary and unreasonable as to
constitute a clear and prejudicial error of law, or if it clearly fails to correctly
analyze or apply the law. In re Columbia Med. Ctr. of Las Colinas, 306 S.W.3d
246, 248 (Tex. 2010); In re Cerberus Capital Mgmt., LP., 164 S.W.3d 379, 382
(Tex. 2005). In determining whether appeal is an adequate remedy, we consider
whether the benefits outweigh the detriments of mandamus review. In re BP
Prods. N. Am., Inc., 244 S.W.3d 840, 845 (Tex. 2008). Mandamus is appropriate to
preserve the principles of comity. See In re BP Oil Supply Co., 317 S.W.3d 915,
922 (Tex. App.—Houston [14th Dist.] 2010, orig. proceeding) (granting
mandamus to stay Texas suit pending resolution of first-filed suit in Delaware).

      The principle of comity generally requires the abatement of the later-filed
suit of two similar suits pending in different states. VE Corp. v. Ernst & Young,
800 S.W.2d 83, 84 (Tex. 1993). Once stayed, the later action remains pending until
the judgment in the prior action becomes final. Id.; see also In re AutoNation, Inc.,
228 S.W.3d 663, 670 (Tex. 2007) (stating doctrine of comity is not a constitutional
obligation or matter of right, but is a “principle of mutual convenience” recognized
by Texas courts).

      We must compare the two pending actions in order to determine whether the
trial court abused its discretion in failing to stay the Texas proceeding based on
comity. See In re State Farm Mut. Auto. Ins. Co., 192 S.W.3d 897, 901 (Tex.
App.—Tyler 2006, orig. proceeding). To obtain a stay of a subsequent suit, it is
generally necessary that the two suits involve the same cause of action, concern the
same subject matter, involve the same issues, and seek the same relief. Id. In

                                         3
addition, a court may consider which action was filed first, whether the parties are
the same in both actions, and the effect of a judgment in the later action on any
order or judgment entered in the prior action. Id.

       Consideration of these factors weighs against staying the Texas suit. The
suits involve different causes of action, different issues, and seek different relief.
Pepsi was not a party to the New York suit. Pepsi alleges tortious acts orchestrated
in Houston, including tortious interference, conversion, and fraudulent transfer;
none of these claims were at issue in the New York suit. Pepsi seeks injunctive
relief and damages, and it asserts that it is not attacking the validity of the
settlement agreement.

       Moreover, the New York litigation has concluded. This court’s BP Oil
Supply Co. mandamus case, cited by relators, concerned two pending suits in
different states. See In re BP Oil Supply Co., 317 S.W.3d at 917-18 (stating
competing suits were filed the same day). Likewise, in the State Farm mandamus
case, also cited by relators, the court addressed two pending suits. See In re State
Farm, 192 S.W.3d at 899. The settlement agreement in the New York litigation
was signed February 1, 2011, and approved by the New York court on February
17, 2011.4 Relators assert that the New York court maintains jurisdiction over the
settlement funds. See 26 C.F.R. § 1.468B-1(c). At the hearing approving the
settlement, the New York trial judge stated that his court would “continue to have
jurisdiction over this action and settling parties with respect to any further matters

4
  Relators allege in their mandamus petition that Pepsi’s counsel knew about the settlement and
was present at the hearing, yet he remained silent and chose not to intervene. The record
indicates that Pepsi learned of the settlement agreement on February 7, 2011, after its execution,
from public SEC filings. The record further indicates that Pepsi immediately objected to the
settlement and requested information necessary to understand the financial impact of the
proposed transaction. The parties disagree about the potential impact of the settlement on Pepsi.
We do not consider disputed facts on mandamus review. See In re Angelini, 186 S.W.3d 558,
560 (Tex. 2006). Moreover, resolution of this dispute is not necessary to our comity review.

                                                4
that might arise out of the settlement agreement . . . .” (emphasis supplied). As we
have discussed, Pepsi was not a party to the New York action. Accordingly,
Pepsi’s suit is not required to be litigated in the New York court.

      Under the facts presented, comity does not require abatement of the Texas
suit. See Bryant v. United Shortline Inc. Assur. Services, N.A., 972 S.W.2d 26, 30-
31 (Tex. 1998) (holding that Texas court was not required, under the comity
doctrine, to defer to Tennessee court with exclusive jurisdiction over assets of an
insolvent insurer because there had been no adjudication that assets at issue
belonged to the insolvent insurer). Relators have not established that the trial court
abused its discretion in denying their request for dismissal of the underlying suit
based on principles of comity. Accordingly, we deny the petition.

                                   PER CURIAM

Panel consists of Chief Justice Hedges and Justices Frost and Donovan.

                                          5