Court Opinion

ID: 3123619
Source: CourtListenerOpinion
Date Created: 2015-10-16 14:42:08.658315+00
Date Added: 2024-06-11T10:21:45.336167
License: Public Domain

Opinion issued May 3, 2012.

In The
Court of
Appeals
For The
First District
of Texas
————————————
NO. 01-10-01016-CV
———————————
Krobar Drilling, L.L.C., Appellant
V.
Fred
Ormiston, Ormiston Family Properties, L.L.C. and Applied Machinery Corporation, Appellees

 

 
On Appeal from the 113th District Court 
Harris County, Texas

Trial Court Case No. 2009-07097
 

 
O P I N I O N
          In
this appeal, we consider whether a plaintiff who obtains a breach-of-contract
judgment against one defendant is prohibited from later bringing tort claims
against other defendants for the same damage after it is unable to collect on
the breach-of-contract judgment.  On the
facts presented in this case, we reverse and remand.
BACKGROUND
          In an effort to upgrade one
of its oil drilling rigs, Krobar Drilling, L.L.C. [“Krobar”] purchased a
1300-horsepower mud pump from Kenner Manufacting, Inc. [“Kenner”].  The mud pump, which was manufactured in China,
arrived in Texas in April 2007.  Under
the sales agreement, Krobar was responsible for the cost of shipping the mud
pump to its drilling site in Riverton, Wyoming. 
 After the mud pump arrived,
however, Krobar agreed to allow Kenner to keep the mud pump in Texas to be used
for demonstration purposes at the Offshore Trade Conference.  In return, Kenner would pay to ship the mud
pump to Wyoming after the conference.
          During
the time period that Kenner retained control over the mud pump, it was
operating its business out of a warehouse in Katy, Texas, that was owned by
Fred Ormiston.  The mud pump was stored
in Ormiston’s warehouse.  On July 5,
2007, Kenner was evicted from the warehouse for failing to pay rent in accordance
with his lease with Ormiston. 
Thereafter, Ormiston exercised a landlord’s lien and sold the property
in the warehouse at auction.  The mud
pump was included in the seized property and was eventually sold at auction to
Applied Machinery Corporation [“Applied”].
          In
November 2007, Krobar sued Kenner in contract for failing to deliver the mud
pump.  In September 2009, after a trial
on the merits, Krobar recovered a judgment against Kenner for $274,237.24,
which included the $175,000 purchase price of the mud pump, $62,487 for the cost of refurbishing a replacement
pump, and $36,750.24 for expenses incurred by the delay, plus attorneys’ fees.
          After it was unable to collect on the
judgment against Kenner, Krobar filed this suit against Ormiston, Applied, and
Ormiston Family Properties, L.L.C., a corporation to which Ormiston had
conveyed his assets, including the warehouse involved in this suit.  The suit against Ormiston and Applied was
based on tort claims, including conversion and causes of action under the Texas
Theft Liability Act.  See Tex.
Civ. Prac. & Rem. Code Ann. §§ 134.001–.005 (Vernon 2005). 
The suit against Ormiston and
Applied sought to recover damages in the amount of
$274,237.24—the same amount obtained in the Kenner
judgment. 
          The case went to trial before a jury
in June 2010, and, at the close of Krobar’s case, all defendants moved for a
directed verdict based on the doctrine prohibiting a double recovery and the
doctrine of judicial estoppel.  The trial
court granted the motion for directed verdict, and subsequently signed a final
judgment that Krobar take nothing on its claims against Ormison, Ormison,
L.L.C., and Applied.  This appeal
followed.
 
PROPRIETY OF DIRECTED VERDICT
          In three related issues on
appeal, Krobar contends the trial court erred in granting the motions for
directed verdict.  Specifically, Krobar
claims that (1) the doctrine of double
recovery does not apply; (2) defendants waived the affirmative defense of
double recovery; and (3) the doctrine of judicial estoppel does not apply.
Standard
of Review
          When reviewing the grant of a directed verdict, we follow
the usual standard for assessing the legal sufficiency of the evidence. See
Hunter v. PriceKubecka, PLLC, 339 S.W.3d 795, 802 (Tex. App.—Dallas 2011,
no pet.) (citing City of Keller v. Wilson, 168 S.W.3d 802, 821–28 (Tex. 2005)).
We examine the evidence in the light most favorable to the party against whom
the verdict was directed, and we determine whether there is any evidence of
probative value to raise a material fact issue on the question presented. See
Bostrom Seating, Inc. v. Crane Carrier Co., 140 S.W.3d 681, 684 (Tex. 2004).
We credit favorable evidence if reasonable jurors could and disregard contrary
evidence unless reasonable jurors could not. See Hunter, 339 S.W.3d at
802 (citing City of Keller, 168 S.W.3d at 827). A directed verdict in
favor of the defendant is proper when “a plaintiff fails to present evidence
raising a fact issue essential to the plaintiff's right of recovery” or when
the “plaintiff admits or the evidence conclusively establishes a defense to the
plaintiff’s cause of action.” Prudential Ins. Co. of Am. v. Fin. Review
Servs., Inc., 29 S.W.3d 74, 77 (Tex. 2000); see also B & W Supply,
Inc. v. Beckman, 305 S.W.3d 10, 21 (Tex. App.—Houston [1st Dist.] 2009,
pet. denied) (“A directed verdict
is warranted when the evidence is such that no other verdict can be rendered
and the moving party is entitled, as a matter of law, to judgment.”) (quoting Byrd
v. Delasancha, 195 S.W.3d 834, 836 (Tex. App.—Dallas  2006, no pet.)).
Double
Recovery
          In its first issue, Krobar contends
the trial court erred in granting a directed verdict on the basis of the
doctrine prohibiting a double recovery. 
Specifically, Krobar contends that it is permitted to have multiple
judgments, and that only the satisfaction of one judgment will bar further
judgments.
The one-satisfaction rule applies to prevent a plaintiff
from obtaining more than one recovery
for the same injury. Stewart Title Guar. Co. v. Sterling, 822 S.W.2d 1,
7 (Tex. 1991). The rule applies when multiple defendants commit the same act as
well as when defendants commit technically different acts that result in a
single injury. Crown Life Ins. Co v. Casteel, 22 S.W.3d 378, 390 (Tex.
2000).
Here, we clearly have one injury—the loss of the mud pump
and associated expenses—even though Kenner’s liability is based in contract and
Ormiston’s and Applied’s liabilities are alleged in tort.  See
Oyster Creek Fin. Corp. v. Richwood Investments II, Inc., 176 S.W.3d 307,
328 (Tex. App.—Houston [1st Dist.] 2004, pet. denied) (allowing settlement
credit and finding one injury—impairment
of rights under note—even though causes of action against separate defendants
included one for tort and one for contract). 

The question is whether Krobar may bring a second suit to
recover for the single injury when the first judgment remains unsatisfied.  We answer that question affirmatively.  It is well-settled that an injured party may
sue and proceed to judgment against all joint tortfeasors
together, or any number less than all, or each one separately in successive
suits; and that an unsatisfied judgment recovered against
one of them will not operate as a bar to an action
against another; provided, however, the plaintiff may finally satisfy only one judgment. McGehee v.
Shafer, 15 Tex. 198, 203 (1855) (“It is admitted that, though a party may
bring several actions and recover several judgments against joint trespassers,
he can have but one satisfaction.”); Landers
v. E. Tex. Salt Water Disposal Co., 151 Tex. 251, 248 S.W.2d 731, 734
(1952) (“Where the tortious acts of two or more wrongdoers join to produce an
indivisible injury, that is, an injury which from its nature cannot be
apportioned with reasonable certainty to the individual wrongdoers, all of the
wrongdoers will be held jointly and severally liable for the entire damages and
the injured party may proceed to judgment against any one separately or against
all in one suit.”). 
In E. T. James &
Co., Inc. v. Statham, 558 S.W.2d 865 (Tex. 1977), Statham sued South Texas
Independent Milk Producers Association [“STIMPA”] and its employee, Hinojosa,
for damages caused by Hinojosa when he rear-ended Statham’s truck, which was
stopped at a highway construction site.  Id. at 866.  A jury found Hinojosa and STIMPA negligent
and awarded damages of $15,000.  Id. 
In accordance with the trial court’s judgment, Hinojosa and STIMPA paid
$15,000 into the registry of the court in satisfaction of the judgment.  Id.  Statham did not apply to remove the money
from the registry of the court.  Id. Statham then filed suit against the
highway contractor’s alleging negligence in failing to place a flagman at the
highway construction site where the accident occurred.  Id.  The Court held that, because the judgment
against Hinojosa and STIMPA had been satisfied when it was paid into the
registry of the court, the “one-satisfaction rule” prohibited Statham from
prosecuting a second suit against other wrongdoers who contributed to his
injury.  Id. at 868–69.  Thus, Statham supports our conclusion that it
is the satisfaction of a judgment,
not the obtaining of a judgment, that
bars further suits.
Nevertheless, Ormiston argues that the cases cited above are
applicable only to joint tortfeasors, and are not applicable here because the
liability of the alleged wrongdoers arises out of contract and tort.  We disagree. 
As Statham makes clear, the
“one-satisfaction rule” is applied to joint tort-feasors “because of the
fundamental fact that there is but a single injury, in itself and of itself
indivisible, and constituting an indivisible cause of action for which both in
law and good conscience there can be but one satisfaction[.]” Id. at 869. 
          When,
as here, it is alleged that a breach of contract and a tort caused a single
injury, the rationale behind the “one-satisfaction” rule permitting successive
suits against joint-tortfeasors until a judgment is satisfied is equally
applicable.
          We
note that defendants’ motion for directed verdict was based on judicial
estoppel and double recovery or the “one-satisfaction” rule.  However, the gist of their argument on appeal
relies on the “election-of-remedies” doctrine, which differs from the “one
satisfaction rule.”  See Horizon Offshore Contractors, Inc. v. Aon Risk Servs. of Tex., Inc.,
283 S.W.3d 53, 59–60 (Tex. App.—Houston [14th Dist.] 2009, pet. denied).  Ormiston cites several “election-of-remedies”
cases to support its argument that, by electing to proceed to judgment against
Kenner on its breach-of-contract claim, Kromar can no longer pursue its tort
claims against Ormiston and Allied.
An election of remedies is the act of choosing between
two or more inconsistent but coexistent modes of procedure and relief allowed
by law on the same state of facts. When a party thus chooses to exercise one of
them he abandons his right to exercise the other remedy and is precluded from
resorting to it. Custom Leasing, Inc. v. Tex. Bank & Trust Co., 491
S.W.2d 869, 871 (Tex. 1973); City of Glenn Heights v. Sheffield Dev. Co.,
55 S.W.3d 158, 165 (Tex. App.—Dallas 2001, pet. denied). The election doctrine
may constitute a bar to relief when “(1) one successfully exercises an informed
choice (2) between two or more remedies, rights or states of facts (3) which
are so inconsistent as to (4) constitute manifest injustice.” Sheffield,
55 S.W.3d at 164 (quoting Bocanegra v. Aetna Life Ins. Co., 605 S.W.2d
848, 851 (Tex. 1980)). The doctrine is meant “to prevent a party who has
obtained a specific form of remedy from obtaining a different and inconsistent
remedy for the same wrong.” Fina Supply, Inc. v. Abilene Nat’l Bank, 726
S.W.2d 537, 541 (Tex. 1987).  Remedies
are inconsistent when one of the remedies results from affirming the
transaction and the other results from disaffirming the transaction. Foley
v. Parlier, 68 S.W.3d 870, 882 (Tex. App.—Fort Worth 2002, no pet.). 
However,
the election-of-remedies doctrine does not apply to “the assertion of distinct
causes of action against different
parties arising out of independent transactions with such parties. There is no
election where the remedies are neither inconsistent nor repugnant.” Haskell v. Border City Bank, 649 S.W.2d
133, 135–36 (Tex. App.—El Paso 1983, no writ) (citing Lomas & Nettleton Co. v. Huckabee, 558 S.W.2d 863 (Tex. 1977)).
“Where remedies pursued against different persons are repugnant and
inconsistent, the election of one bars the other, but concurrent and consistent
remedies may all be pursued until satisfaction is had. The bar of an election
does not apply to the assertion of distinct causes of action against different
persons arising out of independent transactions with such persons.” Custom Leasing, Inc., 491 S.W.2d at 871
(quoting 28 C.J.S. Election of Remedies § 8).

      An election
between remedies occurs, at the latest, when a party proceeds to final judgment
on one claim with knowledge of an inconsistent claim or remedy. Sheffield,
55 S.W.3d at 165. Generally, it is the obtaining of a judgment on one theory or
state of facts that precludes the ability to pursue other inconsistent
remedies. Id. at 165, 167–68.
      In Sheffield, a case cited by defendants, the
plaintiff sued the city alleging that a zoning change passed by the city was an
unconstitutional taking of his property. 
55 S.W.3d at 164.  He prevailed
and was awarded damages based on the taking caused by the zoning change.  Id.  Sheffield then filed suit seeking a
declaration that, under the zoning existing at the time he sought his permit
would allow him to develop his property, i.e., that the zoning change did not
affect him.  Id.  The court held as
follows:
Sheffield’s claim for permanent damages in Sheffield I is clearly inconsistent with
Sheffield’s . . . claim in this case. 
There, Sheffield obtained a final judgment for permanent damages
resulting from the City’s taking of Sheffield’s property through the passage of
the new zoning ordinance.  In this case,
however, Sheffield claims that chapter 245 allows it to develop the subject
property with the smaller sized lots that were allowed by the older ordinance,
notwithstanding the City’s zoning change.
 
Id. Thus, Sheffield’s two lawsuits were inconsistent because,
in the first he alleged and was awarded damages because the new ordinance was an
unconstitutional taking, and in the second suit he alleged that the new
ordinance had no effect on him and there was no taking.  The court held that “because that remedy [electing
to obtain damages based on a taking claim which resulted from the passage of
the new ordinance] is inconsistent with obtaining declaratory and injunctive
relief from the application of that ordinance, Sheffield’s claims . . . are
barred by the election of remedies doctrine.” 
Id. at 168.
          In B.
L. Nelson & Assocs., Inc. v. City of Argyle, another
election-of-remedies case citied by defendants, the plaintiff sued the
defendant for breach of contract, but did not allege a cause of action for
quantum meruit.  535 S.W.2d 906, 910–11
(Tex. Civ. App.—Fort Worth 1976, writ ref’d n.r.e.). After the court of appeals
held that the contract was void, plaintiff for the first time on appeal sought
recovery of damages for quantum meruit.  Id. The court held that by obtaining a
judgment on breach of contract without pleading quantum meruit, the plaintiff
had elected his remedy and could not seek quantum meruit for the first time on
appeal.  Id.  That is, the plaintiff
could not argue and obtain a judgment based on the existence of a contract,
then, for the first time after judgment, seek damages based on the
non-existence of the same contract.
      No such
inconsistency is presented in this case. In the breach-of-contract case against
Kenner, Krobar was required to prove that it purchased the mud pump from
Kenner, but that Kenner failed to deliver it as promised.  In the present suit against Ormiston and
Allied, Krobar was required to show that it owned the mud pump and that
Ormiston wrongfully seized and sold it to Allied.  The second suit against Ormiston and Allied
does not require repudiation of any facts relied on to prove breach of contract
in the first suit.  In fact, but for the
purchase of the mud pump from Kenner, Krobar would have no claim against
Ormiston and Allied.  Thus, the second
suit does not repudiate a fact necessary to prove the first suit, but in fact
relies on a fact proved in the first suit, i.e., the purchase of the mud pump. 
Defendants argue that it was inconsistent for Krobar to
argue that Kenner was 100% liable for its damages in the first suit and that
they are 100% liable for its damages in the present suit.  We see no inconsistency.  A single injury may be caused by multiple
defendants committing the same act, as well as defendants committing
technically different acts. Crown Life
Ins. Co., 22 S.W.3d at 390.  Here, Krobar’s position is that both Kenner
and defendants are 100% liable for its loss, even though the breach of different
duties—one imposed by contract and one in tort—gives rise to those liabilities.   Different facts and different relationships
give rise to the causes of action asserted against Kenner on the one hand and
Ormisan and Allied on the other.  “The
bar of an election does not apply to the assertion of distinct causes of action
against different persons arising out of independent transactions with such
persons.” Custom Leasing, Inc., 491
S.W.2d at 871 (quoting 28 C.J.S. Election of Remedies § 8). See Am. Savings & Loan Ass’n of Houston
v. Musick,
531 S.W.2d at 581, 588–89 (Tex. 1976) (holding that election of remedies did
not apply because filing a trespass to try title action by the
mortgagee/trustee-deed grantee was not inconsistent with its successful
settlement of claim against the title insurer); Custom Leasing, Inc. v.
Texas Bank & Trust Co. of Dallas, 491 S.W.2d 869, 871–72 (Tex. 1973)
(holding that election of remedies did not apply because finance company’s
obtaining final judgment on contract claims against individual who signed
contracts himself and also allegedly forged execution of company on the
contracts was not inconsistent with suing the bank that was the first victim of
the forger and then allegedly made false representations to finance company so
that it would refinance the forger’s debt with the bank); Liberty Mut. Ins.
Co. v. First Nat’l Bank of Dallas, 151 Tex. 12, 245 S.W.2d 237, 241–43
(1951) (holding that election of remedies did not apply because it was not
inconsistent for company whose dishonest employee cashed company checks made
payable to fictitious payees to recover under an insurance policy and then sue
the bank that allegedly wrongfully honored the checks); Heath v. Herron,
732 S.W.2d 748, 750 (Tex. App.—Houston [14th Dist.] 1987, writ denied) (holding
that election of remedies did not apply because legal-malpractice plaintiff’s
allegations in the underlying partnership dispute were consistent with his
allegations in his malpractice action against his litigation attorney in the
underlying case). 
   We sustain Krobar’s
first issue on appeal.
Judicial Estoppel
          In
issue three, Krobar contends that the trial court erred by granting a directed
verdict based on the doctrine of judicial estoppel.  Specifically, Krobar contends that it has not taken inconsistent positions
in the two lawsuits.
The doctrine of judicial estoppel “precludes a party from
adopting a position inconsistent with one that it maintained successfully in an
earlier proceeding.” Pleasant Glade
Assembly of God v. Schubert, 264 S.W.3d 1, 6 (Tex. 2008) (quoting 2 Roy W. McDonald & Elaine G. Carlson, Texas
Civil Practice § 9.51 at 576 (2d ed. 2003)). The doctrine is not
strictly speaking estoppel, but rather is a rule of procedure based on justice
and sound public policy.  Id.; Long v. Knox, 155 Tex. 581,
291 S.W.2d 292, 295 (1956). Its essential function “is to prevent the use of
intentional self-contradiction as a means of obtaining unfair advantage.” Pleasant Glade Assembly of God, 264
S.W.3d at 6; Andrews v. Diamond, Rash, Leslie & Smith, 959 S.W.2d
646, 650 (Tex. App.—El Paso 1997, writ denied); Hall v. GE Plastic Pac. PTE
Ltd., 327 F.3d 391, 396 (5th Cir. 2003) (noting basis for estoppel is the
assertion of a position clearly inconsistent with a previous position accepted
by the court); Tenneco Chems., Inc. v. William T. Burnett & Co., 691
F.2d 658, 665 (4th Cir.1982) (finding “the determinative factor is whether the
appellant intentionally misled the court to gain an unfair advantage”).  This doctrine requires that: (1) a sworn,
inconsistent statement be made in a prior judicial proceeding; (2) the party
making the statement gained some advantage by it; (3) the statement was not
made inadvertently or because of mistake, fraud, or duress; and (4) the statement
was deliberate, clear, and unequivocal. Galley v. Apollo Associated Servs.,
Ltd., 177 S.W.3d 523, 528–29 (Tex. App.—Houston [1st Dist.] 2005, no pet.);
see also Pagosa Oil & Gas, L.L.C. v. Marrs & Smith P’ship, 323
S.W.3d 203, 218 (Tex. App.—El Paso 2010, pet. denied) (holding same).
      The species of
judicial estoppel alleged in this case is “based on the principle that a party
should not be permitted to abuse the judicial process by obtaining one recovery
based first on affirming a certain state of facts, and then another recovery
based on denying the same set of facts.” 
Metroflight, Inc. v. Shaffer,
581 S.W.2d 704, 709 (Tex. Civ. App.—Dallas 1979, writ ref’d n.r.e).
      Ormiston cites Mosher Mfg. Co. v. Eastland, W.F. & G.R.
Co., 259 S.W. 253, 258 (Tex. Civ. App.—El Paso 1924, writ ref’d), another
election of remedies case, for the propostion that “[t]wo separate lawsuits for
the same injury, one based in contract, the other based in tort, are ipso facto inconsistent.”  In Mosher,
the plaintiff obtained a judgment against a consignee for the purchase price of
three tanks, then sued the shipper for wrongful delivery of the tanks to the
consignee.  Id. at 254.  The court held
that by obtaining a breach-of-contract judgment against the consignee, the
plaintiff had elected its remedy, and could not thereafter sue the shipper in
tort.  Id. at 255.  However, as the
court properly notes, the two suits were inconsistent because the breach of
contract suit for the purchase price required the plaintiff to ratify the
unauthorized delivery, while the tort suit against the shipper was based on the
repudiating the unauthorized delivery.  Id. at 257.
   As discussed in our
analysis of issue one above, there is no such inconsistency in the present
case.  Krobar alleged in its petition in
the Kenner suit that “upon information and belief, Kenner did not instruct its
landlord that the mud pump belong to Krobar and not to Kenner.  If Kenner had relayed this information, the
landlord may not have sold the mud pump pursuant to a purposed landlord’s lien.”  However, this petition was not a sworn
statement.  Further, the allegation was
made in connection with a fraud claim against Kenner, and Krobar did not
recover on its fraud claim; it recovered in breach of contract.  Thus, the allegation in the petition did not
benefit Krobar.  Finally, the statement
in the petition was not unequivocal, but was made upon information and
belief.  Because the statement in
Krobar’s petition in the Kennar suit was not an inconsistent sworn statement,
did not benefit Krobar, and was not unequivocal, the doctrine of judicial
estoppel does not apply. 
We sustain issue three. 
In light of our dispositions of issues one and three, we need not
address issue two, and decline to do so.
CONCLUSION
Because the doctrines of double recovery and judicial
estoppel do not entitle Ormiston and Allied to judgment as a matter of law, the
trial court erred in granting a directed verdict in their favor.  Accordingly, we reverse the judgment of the
trial court and remand for further proceedings.
 
 
                                                                   Sherry
Radack
                                                                    Chief
Justice 
          
Panel
consists of Chief Justice Radack and Justices Higley and Brown.