flojo-trading-corporation-herman-jaehne-and-bennie-c-jaehne-v-jane-h ( 1992 )

IN THE COURT OF APPEALS, THIRD DISTRICT OF TEXAS,

AT AUSTIN





NO. 3-91-256-CV





FLOJO TRADING CORPORATION, HERMAN JAEHNE AND BENNIE C. JAEHNE,

APPELLANTS

vs.





JANE H. BROWNING, INDIVIDUALLY AND AS CO-INDEPENDENT EXECUTRIX OF THE ESTATE OF WILLIAM W. BROWNING, JR., DECEASED, AND AS TRUSTEE FOR THE BROWNING CHILDREN'S TRUST AND AS SPECIAL TRUSTEE; KATHERINE AGNES LAND STARNES, ET AL.,

APPELLEES

FROM THE DISTRICT COURT OF LEE COUNTY, 21ST JUDICIAL DISTRICT

NO. 8066/8076, HONORABLE HAROLD TOWSLEE, JUDGE PRESIDING



PROCEDURAL BACKGROUND

This appeal springs from the unrelenting battle between the Holloways and the Brownings, which began in 1979. Although the complicated facts of this case and related cases already fill many pages of the state and federal reporters, ⁽¹⁾

for the sake of clarity, we recount only the pertinent events leading to this appeal.

On September 12, 1979, the Browning family (Brownings) initiated a suit against Pat Holloway, Humble Exploration Company (Humble), and others in the 193rd Judicial District Court of Dallas County, Texas. In that suit for fraud and breach of fiduciary duties, the Brownings claimed they were the equitable owners of substantially all of Humble's and Holloway's assets and sought to impose a constructive trust on those assets, as well as to collect actual and exemplary damages.

On May 26, 1982, a group of investors sued Holloway and Humble in the 162nd Judicial District Court of Dallas County, claiming that the defendants wrongfully "shut in" oil and gas wells jointly owned by the investors and Humble. Because the Brownings claimed ownership in the Humble and Holloway assets, the Brownings were named as defendants in that case.

These two cases were consolidated and transferred to the 162nd Judicial District. Judge Dee Brown Walker then granted the Brownings' request for a separate and expedited trial of the 1979 case (the Browning case). After a month-long trial, Judge Walker rendered judgment non obstante veredicto in favor of the Brownings (the Walker judgment), imposing a constructive trust on Humble's and Holloway's assets and awarding the Brownings $72,000,000 in actual damages and $10,000,000 in exemplary damages.

In addition to judgment against Humble and Holloway, the Walker judgment awarded the Brownings judgment against a separate entity, Flojo Trading Corporation (Flojo), one of the appellants in this cause. It is uncontested that Flojo was not named as a party in the Browning case, was never served with any pleadings in that case, and never appeared before Judge Walker. The Walker judgment nevertheless contained findings of fact that Flojo was the alter-ego of Pat Holloway, and that Flojo was formed and operated in bad faith to defraud the Brownings. ⁽²⁾ The Walker judgment then imposed a constructive trust on one hundred percent of Flojo's stock and ordered that Flojo, along with Pat Holloway, Humble, Holloway Exploration Company, and Sterling Pipeline Company, was jointly and severally liable for $70,000,000 of the total judgment awarded the Brownings. Holloway appealed the Walker judgment and also pursued collateral attacks and bill of review proceedings in several courts. The present appeal originates from a 1985 collateral attack on the Walker judgment, brought in Lee County by Pat Holloway, Flojo, Bennie and Herman Jaehne (the Jaehnes), and several Holloway family members. The Lee County district court initially declared the Walker judgment void on the grounds that certain indispensable parties were not joined in that suit. The Texas Supreme Court overruled that action by a conditional grant of writ of mandamus which held that the failure to join indispensable parties does not render a judgment void. See Browning v. Placke, 698 S.W.2d 362 (Tex. 1985). After vacating the order that declared the Walker judgment void, the Lee County district court then entered another order dismissing the cause for want of jurisdiction. This Court, in a 1987 unpublished opinion, held that the Lee County district court erred in dismissing the cause for want of jurisdiction and remanded the matter to the trial court for a disposition of all of the causes of action pleaded by the parties. Jaehne v. Starnes, No. 14,693 (Tex. App., Sept. 23, 1987, no writ).

On remand to the Lee County District Court, both Flojo and the Brownings filed motions for partial summary judgment in 1991. ⁽³⁾ The trial court granted the Brownings' motion, and Flojo and the Jaehnes (Appellants) now appeal.

ANALYSIS

A. The Brownings' 1991 Motion for Partial Summary Judgment.

In their 1991 motion, the Brownings moved for partial summary judgment against Flojo and the Jaehnes on their claims attacking the validity of the Walker judgment, asserting the following grounds: (1) the doctrines of res judicata, collateral estoppel, or law of the case bar all of the plaintiffs' collateral attacks on the Walker judgment; (2) the judgment in Holloway v. Starnes, No. 86-07704-I, in the Dallas County district court permanently enjoined Pat Holloway and all persons acting in concert with him from pursuing any claims attacking the validity of the Walker judgment; (3) the judgment of the United States district court in Browning v. Navarro, No. 83-0380-H, enjoined Pat Holloway and all persons acting in concert with him from attempting to re-litigate any claim or legal issues which could have been asserted in Holloway v. Walker or in Browning v. Navarro; (4) the plaintiffs' allegations include non-jurisdictional matters which do not support a collateral attack; (5) the jurisdictional recital in the Walker judgment is conclusive and cannot be contradicted in this collateral attack; and (6) Flojo cannot sue or defend a suit in state court because its charter was revoked for failure to pay franchise taxes.

Flojo did not respond to the Brownings' motion for summary judgment. The Jaehnes opposed the Brownings' motion only on the basis that neither Flojo nor any of its legal or beneficial stockholders was named as a defendant, served with process, or appeared in the original Browning case that resulted in the Walker judgment. Thus, appellants presented to the trial court no rebuttal to the Brownings' grounds for summary judgment and established no fact issues regarding any of the Brownings' grounds for summary judgment. Without indicating the specific grounds for granting summary judgment, the trial court ordered that Flojo and the Jaehnes take nothing on any of their claims attacking the validity of the Walker judgment.

On appeal, appellants assert in their first point of error that the trial court erred in granting the Brownings' motion for partial summary judgment because appellants were not named as defendants or served with process in the original Browning case in which Judge Walker entered judgment against Flojo. Although this assertion is uncontested and would normally support a collateral attack on a judgment, it cannot now serve as a basis for this Court to reverse this summary judgment. We will explain.

We acknowledge that a judgment may not properly be entered against a party who is not before the trial court. Mapco, Inc. v. Carter, 817 S.W.2d 686, 686 (Tex. 1991). When a court has no jurisdiction over the parties or property, no jurisdiction over the subject matter, or no jurisdiction to enter the particular judgment entered, that court's judgment is void and subject to collateral attack in another court of equal jurisdiction. See Browning v. Placke, 698 S.W.2d 362, 363 (Tex. 1985); Austin Indep. Sch. Dist. v. Sierra Club, 495 S.W.2d 878, 881 (Tex. 1973); see generally Gus M. Hodges, Collateral Attacks on Judgments, 41 Tex. L. Rev. 163 (1962).

Because lack of jurisdiction is a fundamental error which may be raised for the first time on appeal, this Court could normally consider appellants' assertion that judgment against them was void because they were not parties to the original Browning case. See Mapco, 817 S.W.2d at 687. But we may not now review whether the Walker judgment is void as to appellants, since one of the stated grounds in the Brownings' motion for summary judgment was that all of Flojo's and the Jaehnes' grounds for this collateral attack on the Walker judgment have been litigated in other cases; thus, the doctrines of res judicata, collateral estoppel, and law of the case bar the present collateral attack.

Because appellants have litigated these same issues before another court in a collateral attack and bill-of-review proceeding and the issues have been decided against appellants, they may not continue to re-urge the same matters in other courts of equal jurisdiction until they obtain a result favorable to them. Once parties litigate issues in a fair forum, that result should be binding. Scurlock Oil Co. v. Smithwick, 724 S.W.2d 1, 6 (Tex. 1986). Yet appellants made no effort to challenge in a response to the Brownings' motion the contention that their collateral attack is barred. Appellants' failure to challenge the Brownings' grounds for partial summary judgment at the trial level, combined with the single point of error appellants now assert regarding the trial court's granting of summary judgment, leaves this Court unable to look behind the summary judgment and fully determine whether the doctrines of res judicata, collateral estoppel, and law of the case are in fact a bar to this collateral attack.

Appellants could have cured their failure to respond to the Brownings' asserted grounds for summary judgment by urging this Court to reverse the summary judgment on the basis that the Brownings' motion was insufficient as a matter of law to support summary judgment. See City of Houston v. Clear Creek Basin Auth., 589 S.W.2d 671, 679 (Tex. 1979). Appellants did not do so.

Appellants also could have asserted a general point of error that the trial court erred in granting summary judgment, allowing argument as to all possible grounds upon which the trial court should have denied summary judgment. See Malooly Bros., Inc. v. Napier, 461 S.W.2d 119, 121 (Tex. 1970). As noted, appellants did not pursue this option, but merely re-urged on appeal their original position that the Walker judgment is void as to them because appellants were not named as defendants or served with process in the original Browning case.

Mindful of the need to construe a point of error broadly to favor a just and equitable result, we have reviewed appellants' brief for arguments which are not framed as points of error but which could defeat the Brownings' summary judgment. See Holley v. Watts, 629 S.W.2d 694, 696 (Tex. 1982). Appellants offer a partial response to the Brownings' assertions that res judicata, collateral estoppel, and law of the case bar the present collateral attack. Specifically, appellants contend that the judgment in Holloway v. Starnes, No. 86-07704-I, in the Dallas District Court of Dallas County, 162nd Judicial District (the Dallas Bill of Review) does not preclude the present collateral attack. The judgment in the Dallas Bill of Review denied all of plaintiffs' claims and permanently enjoined Pat Holloway and all persons acting in concert with him from pursuing any claims attacking the validity of the Walker judgment. Flojo was a plaintiff in the Dallas Bill of Review.

Appellants now argue that Flojo could not have participated in the Dallas Bill of Review because Flojo's charter had been revoked for failure to pay franchise taxes. Appellants note that if corporate privileges are forfeited, a corporation loses the right to sue or defend in a court of this state. See Tex. Tax Code Ann. § 171.252 (1982). Because Flojo had forfeited its charter and corporate privileges, appellants argue that Flojo did not have a full and fair opportunity to litigate its claims in the Dallas Bill of Review. They contend that the judgment in that suit therefore cannot operate as a bar to the present cause.

We believe that Flojo is estopped to make this argument. The record reflects that Flojo forfeited its identification number in September 1982, and its charter in February 1984, for failure to pay its franchise taxes. This forfeiture does not appear to be the Brownings' fault, as appellants claim in their brief, because the Brownings did not obtain control of Flojo's records until September 1986. Holloway, along with Flojo and the Jaehnes, filed the Lee County collateral attack in 1985. Then Holloway filed Holloway v. Starnes, the Dallas Bill of Review, in 1986 in the Dallas district court. As noted, Flojo was a named plaintiff in that suit. Thus, these two suits were essentially parallel attacks on the validity of the Walker judgment, and both were initiated at a time when Flojo's charter was revoked.

Nothing in the record suggests that Flojo attempted to remove itself as a party in the Dallas Bill of Review. Further, nothing in the record suggests that Flojo or the Jaehnes attempted to revive Flojo's charter during the entire time the Dallas Bill of Review was pending before the 162nd District Court. Only after the Dallas district court rendered a judgment on January 10, 1991, which permanently enjoined any further attacks on the validity of the Walker judgment, did Flojo assert its inability to participate in the Dallas Bill of Review. At that time, Joe Holt, Flojo's president, paid the overdue fees, taxes, and penalties, and had Flojo's charter reinstated on March 4, 1991. Four days later Flojo filed its motion for partial summary judgment in the present cause.

Flojo is estopped from taking inconsistent positions in these judicial proceedings. Cf. Smith v. Chipley, 42 S.W.2d 645, 647 (Tex. Civ. App. 1941, writ ref'd n.r.e.). We do not believe that Flojo should be allowed to participate as a plaintiff in the Lee County collateral attack from 1985 until 1991, and in the Dallas Bill of Review from 1986 until 1991, and then, one month before the suit is resolved in Lee County, pay the franchise tax, claim that Flojo heretofore had not been a plaintiff in either suit, and attempt to escape the effects of the Dallas judgment. The record does not reflect why Flojo made no move to reinstate its charter at an earlier time. But allowing Flojo to switch its position at the eleventh hour would permit this corporate plaintiff to escape the res judicata effects of an unfavorable judgment on the basis of its own failure to pay its franchise-tax obligation. Cf. Hardwick v. Austin Galleries, 779 S.W.2d 438, 441 (Tex. App. 1989, writ denied).

We therefore reject appellants' argument that the judgment in the Dallas Bill of Review is not a bar to the present collateral attack. Moreover, we note that appellants did not respond in full to the argument in the Brownings' motion for partial summary judgment that res judicata, collateral estoppel, and law of the case bar the present collateral attack.

Appellants' failure to assert a general assignment of error or specifically challenge all of the grounds for summary judgment is fatal to their appeal. An examination of the Brownings' motion reveals several possible bases for the trial court's judgment, only one of which is that res judicata, collateral estoppel, and law of the case bar the present collateral attack. This summary judgment must stand, since it may have been based on a ground appellants did not specifically challenge and since there was no general assignment that the trial court erred in granting summary judgment. See Malooly Bros., 461 S.W.2d at 121. Accordingly, we overrule this point of error.

B. Flojo's 1991 Motion for Summary Judgment.

In their second point of error, appellants assert that the trial court erred in denying Flojo's 1991 motion for partial summary judgment. However, nothing in the record reflects that the trial court ever denied -- or even heard -- Flojo's motion. In fact, the record reflects that the trial court rendered judgment on the Brownings' motion even before the date set for the hearing on Flojo's motion.

Appellants contend, however, that the district court denied their motion for partial summary judgment in that same judgment granting the Brownings' motion. That judgment ordered that appellants take nothing on any of their claims attacking the validity of the Walker judgment and dismissed those claims with prejudice. The judgment then severed all of appellants' undecided issues into a new cause of action. We cannot agree with appellants that the trial court's action overruled appellants' motion for summary judgment by implication. See Starnes v. Holloway, 779 S.W.2d S.W.2d 86, 98 (Tex. App. 1989, writ denied).

The judgment granting the Brownings' motion states that the court considered the following in reaching its decision:

[T]he Browning Interests Motion for Partial Summary Judgment, the opposition of Bennie C. Jaehne and Herman Jaehne to Motion for Partial Summary Judgment of the Browning Interests, the Reply of the Browning Interests to the Opposition of Bennie C. Jaehne and Herman Jaehne to Motion for Partial Summary Judgment, the summary judgment evidence, the pleadings, the record and written and oral arguments of counsel . . . .

Nowhere does the judgment address Flojo's motion for partial summary judgment. Given the trial court's specificity in listing the motions and pleadings it considered in rendering judgment, we conclude that the trial court did not hear or rule on Flojo's motion.

The record does not reflect that appellants objected to the trial court's failure to rule on their motion. Where there is no ruling on a motion and no objection to the trial court's refusal to rule, the error, if any, is not preserved. Tex. R. App. P. Ann. 52(a) (Pamph. 1992); see also Starnes, 779 S.W.2d at 98; Lynch v. Bank of Dallas, 746 S.W.2d 24, 24-25 (Tex. App. 1988, writ denied). Further, the trial court's refusal to hear a motion for summary judgment is not an error that can be cured on direct appeal. See Starnes, 779 S.W.2d at 98.

We note that the facts in this cause are distinguishable from a situation in which both parties moved for summary judgment and one motion was granted, but the other denied. In that case, the appellate court should determine all questions presented and, if it finds reversible error in the judgment, reverse the trial court and render such judgment as the trial court should have rendered, including judgment for the other movant. See Jones v. Strauss, 745 S.W.2d 898, 900 (Tex. 1988).

Because appellants failed to obtain a ruling on their motion and failed to preserve error, this Court cannot consider issues related to Flojo's motion for partial summary judgment. Accordingly, we overrule this second point of error.

C. The 1985 Motions for Partial Summary Judgment.

In points of error three through six, appellants complain that the trial court erred in denying four motions for partial summary judgment that Holloway filed in 1985 when the parties first brought this collateral attack in the Lee County district court. The trial court heard these motions in 1985, along with a number of other pleadings and motions, and rendered judgment dismissing the cause for want of jurisdiction one year later.

As noted, this Court ruled in a 1987 unpublished opinion that the Lee County district court erred in dismissing the cause for want of jurisdiction and remanded the matter to the trial court. That opinion did not address the denial of any of appellants' 1985 motions for summary judgment.

On remand, the parties filed in 1991 the motions for partial summary judgment that form the basis of the first two points of error in this appeal. Nothing in the record reflects that appellants re-urged the 1985 motions complained of in points of error three through six. Thus, the trial court could not have considered the 1985 motions in the 1991 judgment that led to the current appeal.

We believe that appellants, having failed to re-urge these four motions after remand, may not resurrect them now on appeal. Appellants provide us with no authority to the contrary. For the reasons set forth in our second point of error, these issues have not been properly preserved on this appeal. Accordingly, we overrule these points of error.

CONCLUSION

We will affirm the judgment of the trial court.

Mack Kidd, Justice

[Before Justices Jones, Kidd and B. A. Smith; Justice Smith not participating]

Affirmed

Filed: July 1, 1992

[Do Not Publish]

1. See Browning v. Navarro, 826 F.2d 335 (5th Cir. 1987); Holloway v. Walker, 784 F.2d 1287, reh'g denied, 790 F.2d 1170 (5th Cir. 1986); Holloway v. Walker, 765 F.2d 517 (5th Cir. 1985); Browning v. Navarro, 743 F.2d 1069 (5th Cir. 1984), rev'g 37 B.R. 201 (N.D. Tex. 1983); Holloway v. Fifth Court of Appeals, 767 S.W.2d 680 (Tex. 1989); Browning v. Placke, 698 S.W.2d 362 (Tex. 1985); Starnes v. Holloway, 779 S.W.2d 86 (Tex. App. 1989, writ denied); Browning v. Ryan, 756 S.W.2d 379 (Tex. App. 1988, orig. proceeding); Humble Exploration Co. v. Browning, 677 S.W.2d 111 (Tex. App. 1984), en banc op. on motion to reinstate, 690 S.W.2d 321 (Tex. App. 1985, writ ref'd n.r.e.), cert. denied 475 U.S. 1065 (1986); Humble Exploration Co. v. Walker, 641 S.W.2d 941 (Tex. App. 1982, orig. proceeding); Humble Exploration Co. v. Fairway Land Co., 641 S.W.2d 934 (Tex. App. 1982, writ ref'd n.r.e.); Browning v. Holloway, 620 S.W.2d 611 (Tex. App.), writ ref'd n.r.e. per curiam, 626 S.W.2d 485 (Tex. 1981).

2. Because the record in this present appeal does not contain the pleadings or statement of facts from the Browning case, we must presume that they would support the trial court's judgment. See Haynes v. McIntosh, 776 S.W.2d 784, 785 (Tex. App. 1989, writ denied).

3. In a bill of review proceeding, the Dallas district court enjoined Holloway and all persons acting in concert with Holloway from instituting or pursuing any further collateral attacks on the Walker judgment in any court. Holloway and his family members therefore non-suited themselves in this cause in February 1991. The remaining parties, Flojo and the Jaehnes, who own approximately thirty-seven percent of Flojo's stock, continue to press their claims that the Walker judgment is void as to Flojo, the Jaehnes, Holloway, and Humble.