Court Opinion

ID: 2992169
Source: CourtListenerOpinion
Date Created: 2015-09-23 04:04:46.999903+00
Date Added: 2024-06-11T18:01:15.954576
License: Public Domain

Reversed and Remanded and Opinion
filed February 15, 2011.
 
 
In
The
Fourteenth
Court of Appeals

NO. 14-09-01055-CV

Simulis, L.L.C., Appellant 
v.
General
Electric CapiTal Corporation, Appellee 

On Appeal from
the 270th District Court
Harris County, Texas
Trial Court
Cause No. 2005-37556

 
OPINION
            In
this appeal after remand, Simulis, L.L.C. complains of the trial court’s final
judgment dismissing all of its claims with prejudice after the court granted the
special exceptions of General Electric Capital Corporation (“GE”) and ordered Simulis
to replead to assert a claim for quantum meruit only, but Simulis instead
amended its pleading to assert numerous other claims.  Simulis contends the
trial court abused its discretion because this court’s remand was a general
remand entitling Simulis to amend its pleadings freely.  In response, GE argues
that this Court remanded a single claim which Simulis abandoned in favor of its
new claims contrary to the trial court’s order, and therefore the trial court
correctly entered a final judgment dismissing Simulis’s claims with prejudice. 
GE also asserts that the trial court’s judgment may be affirmed on other
grounds raised in its special exceptions which Simulis does not challenge on
appeal.  For the reasons explained below, we reverse and remand.
I
            This
appeal concerns the trial court’s judgment after remand following this court’s
memorandum opinion in Simulis, L.L.C. v. General Electric Capital Corp.,
No. 14-06-00701-CV, 2008 WL 1747483 (Tex. App.—Houston [14th Dist.] Apr. 17,
2008, no pet.).  The background of the case is explained in detail in that
opinion; however, we will recount some of the facts to place our post-remand analysis
in context.
            Simulis
is a software-simulation company that provides virtual simulations for various
purposes.  Id. at *1.  GE provides commercial financial services.  In
2000, GE approached Simulis about forming a strategic alliance, and GE eventually
invested $5 million in Simulis in exchange for an ownership interest in the
company.  In 2002, GE provided Simulis with a $100,000 promissory note as
bridge financing.  But Simulis never received any business from the company,
and it stopped paying on the note.  Id.
            In
2005, GE sued Simulis for breach of contract and also asserted a sworn account
claim.  GE moved for summary judgment, and in response, Simulis did not deny
liability but asserted an offset defense and counterclaims for breach of
contract, promissory estoppel, and quantum meruit.  Id.  The trial court
granted an interlocutory summary judgment in favor of GE on the note, and GE then
moved for summary judgment on Simulis’s counterclaims and defenses.  Id. 
The trial court also granted this motion.  Simulis appealed only the summary judgment
on its promissory estoppel and quantum meruit counterclaims.  Id. 
            This
court affirmed the trial court’s grant of summary judgment on Simulis’s
promissory-estoppel claim, holding that Simulis’s reliance on alleged promises
of future business was “unreasonable as a matter of law.”  Id. at *2.  We
also held, however, that Simulis had raised a fact issue on its quantum meruit
claim.  Id. at *3.  As we explained, “the trial court erred in granting
summary judgment as to Simulis’s quantum meruit claim, and we reverse that
portion of the trial court’s judgment and remand for further proceedings
consistent with this opinion.”  Id.  
            On
remand, rather than pursue its quantum meruit claim, Simulis amended its
pleading to add new counterclaims, including claims for unjust enrichment, breach
of various fiduciary duties, fraud, negligent misrepresentation,
misappropriation of trade secrets, violation of the Texas Theft Liability Act,
and unfair competition.[1] 
In response to the new counterclaims, GE filed special exceptions asserting res
judicata, collateral estoppel, and law of the case.  GE also asserted that
Simulis failed to plead essential elements of its claims and to comply with
this court’s mandate.  On February 11, 2009, the trial court granted GE’s
special exceptions and ordered Simulis to amend its pleading within ten days
“to cure the deficiencies as set forth in the Special Exceptions.”  
            The
next day, Simulis filed “Plaintiff’s Third Amended Counterclaim,”[2] which
contained minor changes to the factual allegations supporting its claims, and additional
claims for “detrimental reliance” and “gross negligence.”  Simulis also increased
the maximum amount of damages sought from $25 million to $100 million.  
            In
April 2009, GE moved to dismiss all of Simulis’s claims for failing to comply
with the court’s special-exceptions order.  Simulis objected to the motion,
asserting that it had amended its petition in response to the court’s order and
that GE refused to concede that Simulis “had every right to amend its pleadings
in this case following a general remand of this case for trial.”  The record
contains references to an oral hearing concerning GE’s motion on May 1, 2009,
but our record contains no transcription of any oral hearing.  Then, on May 26,
2009, the trial court signed an order requiring Simulis to “file an amended
petition within ten days, asserting a claim for quantum meruit only.”[3]  
            Contrary
to the order, Simulis instead filed a “Plaintiff’s Fourth Amended Counterclaim”
in which it dropped its unjust-enrichment claim (a claim based on allegations similar
to the quantum meruit claim originally pleaded) and repleaded the numerous
other claims alleged in the third amended petition.  GE again moved to dismiss
all of Simulis’s claims, this time for failing to comply with the trial court’s
order to replead only a quantum meruit claim.[4] 
On August 13, 2009, the trial court signed an order granting GE’s motion and
dismissing all of Simulis’s claims with prejudice.  
            On
September 11, 2009, the trial court signed a final judgment ordering that
Simulis take nothing on any of its claims.  Simulis moved for a new trial, asserting
that the trial court erred by ruling that the appellate mandate prevented
Simulis from amending its pleadings to add causes of action not pleaded before
remand.  Simulis also attached evidence that “was not in the record” when the
trial court first ruled on GE’s motion for summary judgment on Simulis’s
counterclaims.  The motion for new trial was overruled by operation of law, and
this appeal followed.
II
            In
a single issue, Simulis contends that the this Court’s remand for “further
proceedings consistent with this opinion” is a general remand, after which
Simulis was entitled to amend its pleadings as the facts and rules of procedure
allow, and the trial court abused its discretion by refusing to allow Simulis
to amend its pleadings and striking Simulis’s claims.  Within this issue,
Simulis argues that GE improperly used special exceptions procedure to assert
the affirmative defenses of res judicata, collateral estoppel, and law of the
case.
            Initially,
GE responds that Similis has waived its issue because the special exceptions
were properly sustained for reasons that Simulis failed to contest on appeal.  In
its special exceptions, GE argued that Simulis’s newly added claims exceeded
the scope of the appellate mandate and its fraud, fraud-by-nondisclosure, and
negligent-misrepresentation counterclaims were barred by principles of res
judicata, collateral estoppel, and law of the case.[5]  GE also
argued that all of the newly added claims were defectively pleaded for various
reasons.  On appeal, however, Simulis does not challenge the pleading
deficiencies asserted in GE’s special exceptions.  Simulis argues that it has
not waived its issue because it amended its pleading in response to the trial
court’s order granting the special exceptions to address the asserted
deficiencies, and in any event the order Simulis refused to comply with was the
trial court’s order directing Simulis to replead only a quantum meruit claim.  On
these facts, we conclude that Simulis has not waived its issue.
            The
trial court’s February 11 order on GE’s special exceptions—in which the court
ordered Simulis to replead to “cure the deficiencies as set forth” in GE’s
special exceptions—was superseded by the trial court’s later order of May 26,
in which the court ordered Simulis to file an amended petition “asserting a
claim for quantum meruit only.”  By limiting Simulis to that single claim, the
trial court effectively denied Simulis the opportunity to replead its newly
added claims to cure any deficiencies.  The trial court’s May 26 order is
clearly based on the conclusion that our opinion and mandate limited Simulis to
the single claim of quantum meruit, rather than any of the other grounds GE
originally asserted in its special exceptions.  Therefore, Simulis was not
required to address all of the grounds presented in GE’s special exceptions.
            Further,
when Simulis refused to replead only a quantum meruit claim, the trial court
granted GE’s motion to dismiss all of Simulis’s claims with prejudice.[6]  On
September 11, 2009, the trial court entered a final take-nothing judgment
against Simulis.  It is this order from which Simulis correctly appeals.  See
Perry v. Cohen, 272 S.W.3d 585, 587 (Tex. 2008).  Therefore, we conclude
that Simulis has not waived its appellate issue.
III
            Simulis
first argues that this Court’s remand “for further proceedings consistent with
this opinion” was a general remand, and therefore after remand it was entitled
to amend its pleadings freely.  GE responds that the proceedings on remand were
limited to the scope of the mandate, which reversed and remanded Simulis’s
quantum meruit counterclaim only.  Thus, GE argues that the mandate limited
Simulis to its quantum meruit claim only, and the mandate’s language does not
permit Simulis to “litigate a stream of brand new claims, much less claims with
the same already-rejected reliance element.”  We conclude that on remand
Simulis was entitled to amend its pleadings to add new claims or parties except
as to those claims on which we rendered summary judgment in GE’s favor. 
            Generally,
when an appellate court reverses and remands a case for further proceedings,
and the mandate is not limited by special instructions, the effect is to remand
the case to the lower court on all issues of fact, and the case is reopened in
its entirety.  See Hudson v. Wakefield, 711 S.W.2d 628, 630 (Tex. 1986);
Brewer & Pritchard, P.C. v. Johnson, 167 S.W.3d 460, 465 (Tex.
App.—Houston [14th Dist.] 2005, pet. denied); Reynolds v. Murphy, 266
S.W.3d 141, 146–48 (Tex. App.—Fort Worth 2008, pet. denied).  In interpreting
the mandate of an appellate court, courts look not only to the mandate itself
but also to the opinion of the court.  Hudson, 711 S.W.2d at 630.
            This
court’s mandate read as follows:  
We have inspected the record and find the trial court erred
in granting summary judgment on appellant Simulis, L.L.C.’s quantum meruit
counterclaim because there is a fact issue as to whether Simulis, L.L.C.
provided valuable materials or services to General Electric Capital
Corporation.  We therefore order that the counterclaim [is] REVERSED and
ordered severed and REMANDED for proceedings in accordance with this court’s
opinion.
Further, we find no error in the remainder of the judgment
and order it AFFIRMED.
And
this court explained in its opinion: 
The trial court did not err in granting summary judgment as
to Simulis's promissory estoppel claim, and we affirm that portion of the trial
court's judgment.  However, the trial court erred in granting summary judgment
as to Simulis’s quantum meruit claim, and we reverse that portion of the trial
court's judgment and remand for further proceedings consistent with this
opinion.
The
opinion and mandate make clear that two claims were considered on appeal from a
grant of summary judgment, one of which was affirmed and one of which was
reversed and remanded.  The quantum meruit claim was remanded for further
proceedings “consistent with this opinion” because Simulis presented evidence
that created a fact issue on its claim.  See Simulis, 2008 WL 1747483,
at *3.  Contrary to GE’s position, this court did not limit the scope of the
remand to an adjudication of a single claim; it merely addressed the specific
claims presented in the limited summary-judgment record before it.  See
Hudson, 711 S.W.2d at 630–31.  
            Because
our opinion and mandate did not include any language limiting Simulis to a
quantum meruit claim only, Simulis was free to amend its pleadings to add new
claims or parties, except as to those claims on which we rendered summary
judgment in GE’s favor.  See id.; Brewer & Pritchard, P.C.,
167 S.W.3d at 465; Reynolds v. Murphy, 266 S.W.3d at 146–48; see also
Creative Thinking Sources, Inc., v. Creative Thinking, Inc., 74 S.W.3d 504,
511 (Tex. App.—Corpus Christi 2002, no pet.) (holding appellate court’s opinion
and mandate did not prevent appellant from amending its pleadings on remand to
add new causes of action not substantially the same as those originally
considered on appeal from summary judgment).  Therefore, the trial court abused
its discretion in ordering Simulis to amend its petition to allege a quantum
meruit claim only.
            Although
Simulis also contends on appeal that GE used the special exceptions procedure
improperly to assert res judicata, collateral estoppel, and law of the case,[7] we do not
reach that part of its issue because, as discussed above, the trial court’s
order was based on the argument that this Court’s mandate prohibited Simulis
from asserting any claims other than a quantum meruit claim, and the trial
court did not rule on GE’s other special-exceptions grounds in the order from
which Simulis appeals.
*
* *
            We
therefore sustain Simulis’s issue and reverse and remand the trial court’s
judgment for proceedings consistent with this opinion.
 
                                                                                    
                                                                        /s/        Jeffrey
V. Brown
                                                                                    Justice
 
 
 
Panel consists of Justices Frost, Brown,
and Christopher.
 

[1]
Simulis also asserted a third-party petition naming Robert Stefanowski, a GE
employee who also served on Simulis’s board of directors, as a defendant.  It
does not appear from the record that Stefanowski, a resident of Connecticut,
was ever served or appeared, and the parties do not discuss him.

[2]
Although Simulis apparently served GE with a second amended counterclaim, GE
asserts it was never filed with the court, and it does not appear in the record
except as an exhibit to GE’s special exceptions.   

[3] 
This order was signed in response to GE’s unopposed motion for entry of a
proposed order.

[4]
In its motion to dismiss, GE asserted that, at the May 1 hearing, “Simulis
agreed to the Court’s direction to replead only quantum meruit, consistent with
the Court of Appeals’ mandate,” but it did not do so.

[5]
Specifically, GE contended that the fraud, fraud-by-nondisclosure, and
negligent-misrepresentation claims all relied on the same issue of detrimental
reliance on alleged promises of future business, which this Court had already
ruled was unreasonable as a matter of law.  See Simulis, 2008 WL 1747483,
at *2.

[6]
In GE’s “Motion to Dismiss For Failure to Comply with Unopposed Order,” GE
stated in its prayer for relief that “for the foregoing reasons, and for the reasons
set forth in its Unopposed Motion for Entry of Proposed Order and Special
Exceptions pleadings, GE respectfully requests that the Court dismiss Simulis’s
Fourth Amended Counterclaim.”  At oral argument, GE asserted that based on this
language, the trial court impliedly dismissed Simulis’s claims for the reasons
stated in the Unopposed Motion for Entry of Proposed Order and Special
Exceptions, and thus Simulis was required to attack all of those grounds on
appeal.  We disagree.  As stated in GE’s motion to dismiss, the trial court
previously had granted GE’s special exceptions and Unopposed Motion for Entry
of Proposed Order, and Simulis had not complied with the trial court’s orders
granting this relief.  In these prior requests for relief GE sought orders
requiring Simulis to replead, and the trial court granted them.  When Simulis
did not replead as ordered, GE moved to dismiss.  In this context, we conclude
that GE did not incorporate the grounds from these prior requests for relief as
grounds in its motion to dismiss. See Reynolds v. Murphy, 266
S.W.3d 141, 148 n.5 (Tex. App.—Fort Worth 2008, pet. denied).  Therefore,
Simulis did not have to attack these other grounds on appeal.

[7]
We express no opinion on the merit of GE’s assertions, but we agree with
Simulis that res judicata, collateral estoppel, and law of the case should not
be asserted in special exceptions.  Generally, the purpose of special
exceptions is to force clarification of vague pleadings or to question whether
a party’s claims fail to plead a cause of action.  See Baylor Univ. v.
Sonnichsen, 221 S.W.3d 632, 635 (Tex. 2007) (per curiam); Fort Bend
County v. Wilson, 825 S.W.2d 251, 253 (Tex. App.—Houston [14th Dist.] 1992,
no pet.).  A motion to strike that attacks the substance of an amended
pleading, even if based on special exceptions, is an improper procedural
mechanism.  Reynolds, 266 S.W.3d at 146.  We note that in Baylor,
special exceptions were used to allege res judicata, collateral estoppel, and
law of the case, see 221 S.W.3d at 634, and GE points to a few other
cases in which these doctrines were alleged in special exceptions.  But GE does
not direct us to any case, including Baylor, in which a court addressed
the issue of whether the assertion of res judicata, collateral estoppel, and
law of the case in special exceptions is proper.  Further, in Baylor,
the supreme court did not conclude that any of the doctrines applied; instead,
it held that the trial court did not err in dismissing the plaintiff’s amended
breach-of-contract claims following remand, when the plaintiff failed to plead
new facts sufficient to support a legally cognizable claim.  Id. at
635–36.  When a party seeks to dispose of claims barred by res judicata,
collateral estoppel law of the case, and similar theories, it should file a
motion for summary judgment.