Court Opinion

ID: 4425367
Source: CourtListenerOpinion
Date Created: 2019-08-14 14:51:57.499674+00
Date Added: 2024-06-11T14:49:20.363889
License: Public Domain

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN

                                        NO. 03-18-00837-CV

                                  City of Lakeway, Texas, Appellant

                                                 v.

                                    Cherry Knoll, LLC, Appellee

             FROM THE 353RD DISTRICT COURT OF TRAVIS COUNTY
                            NO. D-1-GN-17-002896
           THE HONORABLE AMY CLARK MEACHUM, JUDGE PRESIDING

                              MEMORANDUM OPINION

PER CURIAM

                Appellee Cherry Knoll, LLC (Cherry Knoll) filed a motion to stay this appeal

pending resolution of a federal lawsuit concerning the same parties and subject matter. The federal

district court had dismissed Cherry Knoll’s federal lawsuit, but the Fifth Circuit reversed and

reinstated the lawsuit. In applying the doctrine of comity, we find that the facts support granting

Cherry Knoll’s motion. Therefore, we grant the motion to stay and abate proceedings pending

litigation of the federal suit.

                                          BACKGROUND

                On August 17, 2016, Cherry Knoll filed a federal civil rights suit against the City

of Lakeway (the City) and others in the U.S. District Court for the Western District of Texas. That

lawsuit arises out of the City’s effort to acquire a portion of Cherry Knoll’s land for a roadway
expansion, which culminated in a 2015 settlement agreement between the City and Cherry Knoll.

The claims asserted against the City in the federal lawsuit include federal constitutional claims

under 42 U.S.C. § 1983, a claim for equitable rescission of the 2015 settlement agreement, and

other claims arising under Texas law.

                 On June 23, 2017, the City filed the instant breach of contract action in Travis

County District Court. In this lawsuit, the City seeks to recover its attorney fees and other costs

of litigation in the federal lawsuit on the theory that Cherry Knoll’s filing and prosecution of the

federal lawsuit violates the 2015 settlement agreement. Cherry Knoll moved for a stay of the

Travis County litigation so that the federal lawsuit could proceed, which the Travis County district

court granted.

                 On May 16, 2018, the federal district court dismissed Cherry Knoll’s complaint.

The Section 1983 claims were dismissed for substantive reasons and the state-law claims were

dismissed for lack of subject-matter jurisdiction. Under the terms of the stay granted by the state

district court, the federal district court’s dismissal triggered an end to the stay of the Travis County

litigation, and the parties began litigating in Travis County. Cherry Knoll filed an amended answer

in which it asserted, as counterclaims, the same state-law claims that the federal court had

dismissed for lack of federal subject-matter jurisdiction. The City filed a plea to the jurisdiction,

seeking dismissal of Cherry Knoll’s state-law claims on grounds of sovereign immunity and

mootness. The state district court denied the City’s plea to the jurisdiction, and this interlocutory

appeal followed. See Tex. Civ. Prac. & Rem. Code § 51.014(a)(8) (authorizing interlocutory

appeal of order that grants or denies plea to jurisdiction filed by governmental unit).

                 On April 22, 2019, the Fifth Circuit reversed the federal district court and reinstated

the federal lawsuit, including Cherry Knoll’s state and federal claims. Cherry Knoll, L.L.C.

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v. Jones, 922 F.3d 309 (5th Cir. 2019). Cherry Knoll now requests that this Court stay this appeal

before this Court pending adjudication of the federal lawsuit.

                                           DISCUSSION

               When an action is pending in a federal court, a party can move to stay a later-filed

state-court case under the doctrine of comity.             In re Old Am. Cty. Mut. Fire Ins.,

No. 03-12-00588-CV, 2012 WL 6699052, at *2 (Tex. App.—Austin, Dec. 20, 2012, orig.

proceeding) (mem. op.) (citing Ashton Grove L.C. v. Jackson Walker, L.L.P., 366 S.W.3d 790, 794

(Tex. App.—Dallas 2012, no pet.)). In applying the doctrine of comity, the Texas court in which

the subsequent action is instituted will generally stay the proceedings pending adjudication of the

federal suit. See Griffith v. Griffith, 341 S.W.3d 43, 54 (Tex. App.—San Antonio 2011, no pet.).

However, staying a proceeding under the doctrine of comity rests within the sound discretion of

the court. Ashton Grove, 366 S.W.3d at 794.

               To obtain a stay of a later-filed case under the doctrine of comity, it is generally

necessary that the two suits concern the same subject matter, involve the same issues, seek the

same relief, and involve the same causes of action. Griffith, 341 S.W.3d at 54 (citing In re State

Farm Mut. Auto. Ins., 192 S.W.3d 897, 901 (Tex. App.—Tyler 2006, orig. proceeding)). “One

test to determine whether the causes of action are identical is to ascertain whether the parties could

obtain all the relief in the prior suit that they would be entitled to in the subsequent action.” Nowell

v. Nowell, 408 S.W.2d 550, 553 (Tex. App.—Dallas 1966, writ dism’d). Courts may also consider

additional factors such as which action was filed first, whether the parties are the same in both

actions, and the effect of a judgment in a later action on any order or judgment entered in the prior

action. In re BP Oil Supply Co., 317 S.W.3d 915, 919 (Tex. App.—Houston [14th Dist.] 2010,

orig. proceeding).

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               We conclude that these factors weigh in favor of granting Cherry Knoll’s motion

to stay the proceedings before our Court. The suit filed in federal court and the suit filed in state

court concern the same subject matter, involve the same issues, and seek the same relief. In its

brief before this Court the City acknowledges as much, stating that “Cherry Knoll asserted these

same [state law claims] … in its federal lawsuit.” The City has also asserted its state-law claims

as counterclaims in the federal lawsuit. Further, Cherry Knoll and the City could obtain all relief

in the federal suit to which they would be entitled in the state-court suit, and the federal court is

fully competent to address the City’s jurisdictional issues.         See, e.g., GLF Constr. Corp.

v. LAN/STV, 414 F.3d 553, 556–58 (5th Cir. 2005) (applying governmental immunity under

Texas law).

               Additional factors weigh in favor of granting Cherry Knoll’s motion to stay the

proceedings before our Court. The federal lawsuit is the first-filed suit. Further, a decision from

our Court regarding the City’s plea to the jurisdiction could impact the first-filed federal lawsuit.

As we have noted, the state-court suit is merely a subset of the federal lawsuit. A resolution of the

state-court suit would not fully resolve the federal suit but would leave room for inconsistencies

and conflict between the two suits. See In re BP Oil Supply, 317 S.W.3d at 919.

                                          CONCLUSION

               For these reasons, we grant Cherry Knoll’s motion to stay the appeal and we abate

the appeal pending litigation of the federal lawsuit. We further instruct the parties to file a motion

to reinstate no later than three months after the resolution of the federal lawsuit.

                                                  4
Before Chief Justice Rose, Justices Kelly and Smith

Abated

Filed: August 14, 2019

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