Court Opinion

ID: 8205480
Source: CourtListenerOpinion
Date Created: 2022-09-12 00:10:52.485923+00
Date Added: 2024-06-11T16:41:08.316105
License: Public Domain

Opinion filed September 8, 2022

                                              In The

           Eleventh Court of Appeals
                                           __________

                                    No. 11-21-00059-CV
                                        __________
  WILLIAM SCOTT FEAGAN, AS INDEPENDENT EXECUTOR
  OF THE ESTATE OF PATTY LOU FEAGAN, DECEASED, ET
                    AL., Appellants 1
                                                  V.
       PATRICIA DIANNE WILSON AND STEPHEN WYNNE
                   FEAGAN, JR., Appellees

                        On Appeal from the 259th District Court
                                Jones County, Texas
                            Trial Court Cause No. 023710

                         MEMORANDUM OPINION
       In this permissive interlocutory appeal, see TEX. CIV. PRAC. & REM. CODE
ANN. § 51.014(d) (West Supp. 2021), we are tasked with deciding whether res
judicata precludes Appellants from claiming the nonexistence of an alleged entity
known as the Feagan Brothers partnership (Feagan Bros.). We hold that res judicata

       1
         Appellants are William Scott Feagan, as independent executor of the Estate of Patty Lou Feagan,
deceased; William Scott Feagan, as co-trustee of the Charles Bruce Feagan Trust; William Scott Feagan,
as successor administrator with will annexed of the Estate of Elmer Clyde Feagan, Jr., deceased; William
Scott Feagan, individually; and Charles Bruce Feagan, individually.
is inapplicable because Appellants were neither parties nor in privity with any parties
to the prior lawsuit in which the existence and ownership of Feagan Bros. was
established.
                                              Background
        According to Appellees, in the early 1950s, Elmer Clyde Feagan (Elmer) and
Richard Feagan (Richard) entered into an oral partnership agreement to form Feagan
Bros. The purpose of the partnership was to purchase oil, gas, and mineral properties
in Texas and divide the royalties equally. To that end, Feagan Bros. created a bank
account at Anson National Bank in 1958. From 1959 onward, Elmer purchased
mineral and nonparticipating royalty interests throughout Texas. Though these
properties were titled in Elmer’s name, they were purchased on behalf of and for the
benefit of Feagan Bros. The royalties were deposited in the Feagan Bros. bank
account and split evenly between the two partners.
        Elmer died testate in 1984, devising his property equally to his four children:
Patricia Dianne Wilson (Wilson), Stephen Wynne Feagan Sr. (Stephen Sr.), William
Scott Feagan (William), and Charles Bruce Feagan (Charles). He named his wife,
Patty Lou Feagan (Patty), as independent executrix of his estate, and she continued
depositing royalties into the Feagan Bros. bank account until her death in 1995.
Wilson and Stephen Sr. became independent co-executors of Elmer’s estate and also
continued depositing royalties into the Feagan Bros. bank account.2 Then, in 1999,
Wilson purchased Richard’s one-half interest in Feagan Bros. After the purported
purchase, the royalties were divided as follows: five-eighths to Wilson, one-eighth
to Stephen Sr., one-eighth to William, and one-eighth to Charles.

        2
          In November of 2016, the 259th District Court of Jones County, removed Wilson from her role as
executrix of Elmer’s estate because she, inter alia, “embezzled all or part of the estate[,]” “misapplied all
or part of the estate[,]” and “failed to make the required accounting of the estate[.]” William was appointed
as successor executor of Elmer’s estate. In March of the same year, the trial court also removed Wilson
and Stephen Jr. from their roles as independent co-executors of Patty’s estate, leaving William as its sole
executor.
                                                     2
      Appellants depart from Appellees’ account in that Appellants deny that any
Feagan Bros. partnership ever existed. Appellants claim that all of the properties
that Elmer allegedly purchased on behalf of that partnership were actually purchased
solely by Elmer for himself.      They emphasize that the properties that Elmer
purchased were all titled in his name alone. They claim that Wilson fraudulently
used the guise of a nonexistent partnership in order to enrich herself at the expense
of the beneficiaries of Elmer’s estate.
               The Original Suits – Cause Nos. 20,244 and 20,244-B
      In 2003, Wilson, William, and Jack Willingham, as then-Trustee of the
Charles Bruce Feagan Trust (the CBF Trust), sued Jeanette Feagan (Jeanette) and
her son, Stephen Feagan Jr. (Stephen Jr.), in the 259th District Court of Jones
County, to partition some real property. Jeanette and Stephen Jr. counterclaimed,
inter alia, that in 1999 their late husband and father, Stephen Sr., had purchased,
alongside Wilson, Richard’s one-half interest in the putative Feagan Bros. Wilson
and William answered, asserting the affirmative defenses of statute of frauds and
lack of consideration.
      Jeanette moved for partial summary judgment on her counterclaim, arguing
that there were no genuine issues of material fact as to Stephen Sr.’s purchase of
one-half of Feagan Bros. from Richard. Wilson then moved for no-evidence partial
summary judgment on the ground that Jeanette failed to present any evidence of
consideration given by Stephen Sr. in exchange for Richard’s interest in Feagan
Bros. The trial court denied both motions. The trial court then severed Wilson’s
and Jeanette’s claims regarding Feagan Bros. from the original partition suit. The
original partition suit became Cause No. 20,244-B, while the severed Feagan Bros.
suit became Cause No. 20,244. Stephen Jr. gave notice of nonsuit in Cause
No. 20,244, leaving Jeanette and Wilson as the sole parties to that lawsuit.

                                          3
        On December 6, 2006, after a jury found that Stephen Sr. had never purchased
any interest in Feagan Bros. from Richard, the trial court entered a final judgment in
Cause No. 20,244, declaring that “Wilson own[ed] a five-eighths interest in the
entity known as Feagan Bro[s].”
                              The Present Suit – Cause No. 023710
        In November of 2017, Appellants sued Appellees in the 259th District Court
of Jones County, arguing that Wilson breached her fiduciary duties to the
beneficiaries of the estates she formerly oversaw 3—before being removed for
cause—by creating a fictional partnership in order to “launder royalty checks
payable to the Estate of [Elmer]” and thereby “take one-half of the minerals and
royalties owned by the Estate.” Among other things, Appellants sought actual and
exemplary damages of $1,000,000, respectively. In their answer, Appellees asserted
various affirmative defenses, including res judicata.
        Appellees moved for partial summary judgment, arguing that Appellants are
barred by res judicata from claiming that Wilson fabricated Feagan Bros. in order to
defraud the estates of Elmer and Patty, and their beneficiaries, because the trial court
had already declared that the partnership existed in Cause No. 20,244 and that
Wilson owned five-eighths of it by virtue of her purchase of Richard’s one-half
interest in 1999. The trial court granted Appellees’ motion “on the ground of res
judicata,”4 but gave permission for Appellants to file an interlocutory appeal from
the order.

        3
         Supra note 2.
        4
          Appellees argued five bases for partial summary judgment: (1) res judicata; (2) judicial admission;
(3) collateral estoppel; (4) estoppel; and (5) quasi-estoppel. For purposes of this interlocutory appeal, as a
controlling question of law, the trial court granted partial summary judgment only on the affirmative
defense of res judicata. Accordingly, we express no opinions on the merits of the alternate bases (2) through
(5) above.
                                                      4
                  Jurisdiction – Permissive Interlocutory Appeals
      “Appellate courts have jurisdiction to consider immediate appeals of
interlocutory orders only if a statute explicitly provides such jurisdiction.” Tex.
A & M Univ. Sys. v. Koseoglu, 233 S.W.3d 835, 840 (Tex. 2007).                   Under
Section 51.014(d) of the Civil Practice and Remedies Code, trial courts may permit
parties to appeal from an interlocutory order that is not otherwise appealable if
(1) the order “involves a controlling question of law as to which there is a substantial
ground for difference of opinion,” and (2) “an immediate appeal from the order may
materially advance the ultimate termination of the litigation.” Indus. Specialists,
LLC v. Blanchard Ref. Co., No. 20-0174, 2022 WL 2082236, at *2 (Tex. June 10,
2022) (quoting CIV. PRAC. & REM. § 51.014(d)); see also TEX. R. CIV. P. 168. And
under subsection (f), appellate courts may accept the appeal if it is timely filed and
explains why it is warranted under subsection (d). Id. When these conditions have
been satisfied, courts have “vast—indeed, unfettered—discretion” in choosing
whether to “accept or permit the appeal.” Indus. Specialists, 2022 WL 2082236, at
*3. A controlling question of law is one that (1) deeply affects the ongoing process
of litigation, and (2) the resolution of which will considerably shorten the time,
effort, and expense of fully litigating the case. Gulf Coast Asphalt Co. v. Lloyd, 457
S.W.3d 539, 544–45 (Tex. App.—Houston [14th Dist.] 2015, no pet.).
      The trial court gave Appellants permission to file an interlocutory appeal. The
trial court identified res judicata as a controlling question of law about which there
is substantial ground for disagreement. The trial court also found that an immediate
appeal would materially advance the resolution of the case because “[t]he existence
and ownership of Feagan Bro[s.] . . . is a central question to [Appellants’] various
causes of action for breach of fiduciary duty, self-dealing, fraud, and negligence[.]”
In the exercise of our discretion, we elected to accept the appeal.

                                           5
                                    Discussion

      I. The trial court erred in granting partial summary judgment to
      Appellees; res judicata does not preclude Appellants’ claims.
             A. Standard of Review
      We review a trial court’s grant of summary judgment de novo. Nall v.
Plunkett, 404 S.W.3d 552, 555 (Tex. 2013). A party moving for traditional summary
judgment has the burden of establishing that there is no genuine issue of material
fact and that it is entitled to judgment as a matter of law. TEX. R. CIV. P. 166a(c).
“[A] defendant who . . . conclusively establishes all the elements of an affirmative
defense is entitled to summary judgment.” KCM Fin. LLC v. Bradshaw, 457 S.W.3d
70, 79 (Tex. 2015). “We review the summary judgment record in the light most
favorable to the nonmovant, indulging every reasonable inference and resolving any
doubts against the motion.” Eagle Oil & Gas Co. v. TRO-X, L.P., 619 S.W.3d 699,
705 (Tex. 2021).
             B. Applicable Law
      The doctrine of res judicata, or claim preclusion, “bars causes of action that
have already been fully adjudicated or that, with the use of diligence, could have
been brought in the prior suit.” Rosetta Res. Operating, LP v. Martin, 645 S.W.3d
212, 225 (Tex. 2022) (citing Eagle Oil & Gas Co., 619 S.W.3d at 705). A “logical
corollary” to this rule is that “the res judicata effects of an action cannot preclude
litigation of claims that a trial court explicitly separates or severs from that action.”
Rosetta Res. Operating, LP, 645 S.W.3d at 225–26 (quoting Van Dyke v. Boswell,
O’Toole, Davis & Pickering, 697 S.W.2d 381, 384 (Tex. 1985)). Res judicata
requires proof of three elements: “(1) a prior final judgment on the merits by a court
of competent jurisdiction; (2) identity of parties or those in privity with them; and
(3) a second action based on the same claims that were raised or could have been
raised in the first action.” Id. at 225 (quoting Amstadt v. U.S. Brass Corp., 919
                                           6
S.W.2d 644, 652 (Tex. 1996)). “Parties may be in privity if (1) they ‘control an
action,’ (2) ‘their interests can be represented by a party to the action,’ or (3) they
are ‘successors in interest.’” Id. (quoting Amstadt, 919 S.W.2d at 653).
                C. Analysis
        Res judicata cannot be used to preclude litigation of claims in a subsequent
suit when the trial court is responsible for severing or separating those claims from
the prior suit. Van Dyke, 697 S.W.2d at 384. All but one of the appellants5 were
parties to the original partition suit before it was severed from Cause No. 20,244 into
Cause No. 20,244-B. Claims regarding the existence and ownership of Feagan Bros.
were litigated and finally decided in Cause No. 20,244; however, those claims had
been severed and separated from the original partition suit to which Appellants were
actual parties. Thus, none of the appellants was a party to Cause No. 20,244 when
the trial court entered its final judgment in that case. As such, Appellants were not
parties to the claims that were litigated and finally disposed in Cause No. 20,244 for
purposes of res judicata. Res judicata, therefore, would not preclude Appellants’
claims in the matter before us unless they were in privity with one of the parties to
Cause No. 20,244.
        The only parties to Cause No. 20,244, post-severance, were Appellees (as
plaintiffs) and Jeanette (as the sole defendant). Crucially, each of these parties
claimed that Feagan Bros. existed, though they disputed whether Wilson alone
purchased half of the partnership from Richard or whether Stephen Sr. had
contributed to that purchase. The positions taken by the parties to Cause No. 20,244,
in other words, were wholly inconsistent with Appellants’ position that Feagan Bros.

        5
          Based on the appellate record before us, it appears that William Feagan, in his capacity as
successor administrator with will annexed of Elmer’s estate, was a party to neither Cause No. 20,244 nor
20,244-B. See Gracia v. RC Cola-7-Up Bottling Co., 667 S.W.2d 517, 519 (Tex. 1984) (explaining that
“[a] party appearing in an action in one capacity, individual or representative, is not thereby bound by or
entitled to the benefits of the rules of res judicata in a subsequent action in which he appears in another
capacity” (quoting the Restatement (Second) of Judgments § 36(2) (1982))).
                                                    7
never existed. Thus, we cannot say that Appellants are “so connected with a party
to the judgment [in Cause No. 20,244] as to have such an identity of interest[s] that
the party to the judgment represented the same legal right.” Fiallos v. Pagan-Lewis
Motors, Inc., 147 S.W.3d 578, 585 (Tex. App.—Corpus Christi–Edinburg 2004, pet.
denied). Rather, Appellants’ position is in conflict with the positions taken by the
parties in Cause No. 20,244, and privity cannot exist where the parties hold
conflicting positions. See id.
      Thus, we hold that Appellants were not in privity with any of the parties to
Cause No. 20,244. As such, res judicata does not bar Appellants from litigating their
claim that Wilson fraudulently enriched herself by purporting to purchase a one-half
interest in a nonexistent partnership. Because we hold that the trial court erred in
granting partial summary judgment to Appellees on the ground of res judicata, we
sustain Appellants’ sole issue on appeal.
                                   This Court’s Ruling
      Having decided the controlling question of law in Appellants’ favor, we
reverse the trial court’s order granting partial summary judgment, and we remand
the cause for further proceedings.

                                                W. BRUCE WILLIAMS
                                                JUSTICE

September 8, 2022
Panel consists of: Bailey, C.J.,
Trotter, J., and Williams, J.

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