in Re Ali Choudhri ( 2014 )

Appeal Dismissed, Petition for Writ of Mandamus Conditionally Granted,
and Memorandum Opinion filed June 3, 2014.
In The
Fourteenth Court of Appeals
NO. 14-14-00235-CV
ALI CHOUDHRI, Appellant
V.
LATIF & COMPANY A/K/A ABDULLATIF & COMPANY, L.L.C.,
OSAMA ABDULLATIF, INDIVIDUALLY, OSAMA ABDULLATIF A/K/A
LATIF & COMPANY, ELBAR INVESTMENTS, INC. AND VINCENT
BUSTAMANTE, Appellees
On Appeal from the 164th District Court
Harris County, Texas
Trial Court Cause No. 2011-27731
NO. 14-14-00236-CV
IN RE ALI CHOUDHRI, Relator
ORIGINAL PROCEEDING
WRIT OF MANDAMUS
164th District Court
Harris County, Texas
Trial Court Cause No. 2011-27731
MEMORANDUM OPINION
On March 24, 2014, relator Ali Choudhri filed a petition for writ of
mandamus in this Court. See Tex. Gov’t Code § 22.221; see also Tex. R. App.
P. 52. In the petition, relator asks this Court to compel the Honorable Alexandra
Smoots-Hogan, presiding judge of the 164th District Court of Harris County, to
vacate an order precluding relator from arguing in litigation pending before the
190th District Court of Harris County that a judgment rendered by the County
Civil Court at Law No. 4 of Harris County operates as res judicata or collateral
estoppel with respect to claims concerning a particular parcel of real property.
Concurrently with the filing of his petition for writ of mandamus, relator also filed
a notice of appeal with respect to the same order. We conditionally grant relator’s
petition for writ of mandamus and dismiss the appeal as moot.
BACKGROUND
Relator Ali Choudhri and real party in interest Osama Abdullatif engaged in
a number of complex business transactions, primarily involving real estate, that
subsequently have become the subject of multiple legal proceedings before
different Harris County trial courts and this Court. This original proceeding and
appeal concerns a discrete issue related to a subset of the litigation between the
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parties—specifically, the intersection of three different trial court cases and a
settlement agreement entered into to resolve a fourth case.
The Settlement Agreement
In January 2011, Choudhri and Abdullatif executed a settlement agreement
(the “Settlement Agreement”) to resolve litigation pending in the County Civil
Court at Law No. 3 of Harris County. The Settlement Agreement set forth a
number of obligations the parties were to take with respect to various real estate
transactions. Only two paragraphs of this agreement are germane to the pending
matter. The first of the two relevant paragraphs (Paragraph 8 of the Settlement
Agreement), concerns property located at 35 E. Rivercrest Drive, Houston, Texas
(the “Rivercrest Property”), and provides: “[Abdullatif] agrees to execute any
documents or deed necessary to complete the conveyance of the 25% interest in
[the Rivercrest Property] to [Choudhri.] [Abdullatif] acknowledges that [Choudhri]
has already provided full consideration for this 25% interest in this property and
owns 25% of this Property.” The second relevant paragraph (Paragraph 10 of the
Settlement Agreement) required Choudhri to pay Abdullatif $1.975 million within
60 days of the execution of the agreement.
The Agreed Final Judgment in the 164th District Court
After the execution of the Settlement Agreement, Choudhri filed suit to
request partition of the Rivercrest Property. That case was assigned to the 164th
District Court of Harris County. Choudhri later amended his suit to include
additional claims. On July 11, 2013, the 164th District Court entered an agreed
final judgment (“Agreed Judgment”) resolving that case. The Agreed Judgment
ordered the purchase by Choudhri of the remaining un-owned percentage of the
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Rivercrest Property, subject to various terms and conditions. The Agreed Judgment
included a paragraph providing for a mutual release by Choudhri and Abdullatif of
all claims relating to the Rivercrest Property. However, the paragraph immediately
following the release language provided limited exceptions to the waiver of claims.
As relevant here, the carve-out paragraph states:
Notwithstanding the foregoing . . . . Choudhri and Abdullatif
expressly reserve to themselves any and all claims they might have
against one another . . . , including, but not limited to, any claims
related to or pertaining to that certain Settlement Agreement dated
January 22, 2011 . . . . For the avoidance of doubt, the dismissal
provided for in this Agreed Final Judgment shall not prevent Choudhri
from contending that Abdullatif breached the Settlement Agreement
dated January 22, 2011 by his conduct regarding the [Rivercrest]
Property; provided however that Choudhri will not assert any claim
for money damages related to the [Rivercrest] Property arising from
such breach.
Summary Judgment in the County Civil Court at Law No. 4
Contemporaneously with the litigation in the 164th District Court, Choudhri
and Abdullatif also were involved in litigation before the County Civil Court at
Law No. 4 of Harris County. The original nature of the litigation in Court No. 4
concerned a dispute regarding a corporate entity known as Erpile, LLC, one of the
many entities affiliated with the parties. Although not originally a party to the
action in his individual capacity, Choudhri subsequently intervened. In an amended
petition in intervention, Choudhri sought a declaratory judgment that the January
2011 Settlement Agreement is “valid and enforceable” and that the Settlement
Agreement was breached by Abdullatif prior to the date Choudhri was obligated to
pay the $1.975 million to Abdullatif under the terms of the Settlement Agreement.
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After the 164th District Court entered the Agreed Final Judgment, Choudhri
filed a motion for summary judgment in Court No. 4, arguing that Abdullatif
committed the first material breach of the Settlement Agreement by failing to
provide Choudhri with a deed representing his 25% ownership interest in the
Rivercrest Property, as provided by Paragraph 8 of the Settlement Agreement. This
alleged breach, Choudhri argued, excused him from having to pay Abdullatif the
$1.975 million owed under Paragraph 10 of the Settlement Agreement. Abdullatif
filed pleadings in response.
The trial court granted summary judgment in Choudhri’s favor in November
2013. In its order, the court stated that the Settlement Agreement is valid and
enforceable, that Abdullatif committed the first material breach of the Settlement
Agreement, and that, as a result of that breach, Choudhri was excused from
performing any further obligations under the Settlement Agreement. In December
2013, the trial court granted final summary judgment in favor of Choudhri (and the
original corporate plaintiff, Erpile, LLC). In that final judgment, the trial court
reiterated its earlier grant of summary judgment in favor of Choudhri.1
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Abdullatif has appealed the final judgment in the Court No. 4 litigation. That appeal is
pending before this Court. We express no opinion on the merits of Abdullatif’s appeal in the
context of this original proceeding and appeal.
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Res Judicata and Collateral Estoppel Arguments in the 190th District Court
The last litigation at issue here is a suit currently pending in the 190th
District Court of Harris County. Among the various claims at issue before the
190th District Court, Abdullatif asserts the Settlement Agreement should be
rescinded because Choudhri materially breached its terms by failing to pay
Abdullatif the $1.975 million required by Paragraph 10, because of fraud by
Choudhri, and because the terms of the agreement are unconscionable. Pleading in
the alternative, Abdullatif argues that the Settlement Agreement is a valid and
binding contract, and that Choudhri breached by failing to pay the amounts due. In
recent pleadings, Choudhri alleges he was excused from the $1.975 million
payment because of Abdullatif’s breach of the Settlement Agreement in failing to
provide financing for certain real estate projects and failing to provide a deed for
the Rivercrest Property. These breaches, Choudhri asserts, caused him damages in
the form of increased financing charges and lost profits.
In January 2014, Choudhri filed a motion for partial summary judgment
based on res judicata and collateral estoppel stemming from the final judgment
entered by the County Civil Court at Law No. 4. Choudhri argues that many of the
issues pending in the 190th District Court are resolved as a result of the Court
No. 4 judgment, thus narrowing the issues in dispute in the pending litigation.
Choudhri’s assertion of res judicata and collateral estoppel also are set forth in
recent pleadings post-dating the Court No. 4 judgment. Choudhri’s summary
judgment motion remains pending with the trial court.
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The Challenged Order
On January 30, 2014, shortly after the filing of Choudhri’s motion for partial
summary judgment in the 190th District Court, and over six months after the
Agreed Judgment was entered, Abdullatif filed a motion for enforcement of the
Agreed Judgment in the 164th District Court. In his motion, Abdullatif argued that
Choudhri intentionally violated the Agreed Judgment by prosecuting a claim in
Court No. 4 that was precluded by the terms of the Agreed Judgment, obtained a
final judgment from Court No. 4, again in contravention of the Agreed Judgment,
and now was seeking to use that ill-gotten final judgment to argue res judicata and
collateral estoppel in the 190th District Court.
Specifically, Abdullatif argued that the terms of the Agreed Judgment only
preserved the ability for Choudhri to make a factual contention about the
Rivercrest Property in a defensive manner, but not to make an affirmative claim.
Abdullatif argued that Choudhri’s argument for summary judgment in Court No. 4
was based on the very assertions he released in the Agreed Judgment. Also,
because the effect of the Court No. 4 judgment was to relieve Choudhri of his
obligation to pay the $1.975 million owed, Abdullatif argued that Choudhri’s
summary judgment motion constituted a claim for monetary damages in violation
of the Agreed Judgment. Abdullatif requested from the trial court, among other
relief, an injunction prohibiting Choudhri from “arguing to the 190th District Court
that the County Court Final Judgment operates as res judicata or collateral estoppel
against [Abdullatif] in any manner whatsoever.”
The trial court held a hearing on Abdullatif’s motion on February 17, 2014.
During the exchange between counsel and the bench, the trial court made
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numerous statements reflecting its understanding that any matters “touching” on
the Rivercrest Property were precluded by the Agreed Judgment. The trial court
concluded that the claims argued by Choudhri in the Court No. 4 case violated the
terms of the Agreed Judgment. The court further rendered its decision to grant
Abdullatif’s request for an injunction prohibiting Choudhri from arguing res
judicata or collateral estoppel based on the Court No. 4 judgment, but limited the
injunction to arguments that relate to the Rivercrest Property.
The trial court followed its oral rendition at the hearing with a written order
dated March 3, 2014. In the order, the court stated that Choudhri “directly and
intentionally breached” the Agreed Judgment by re-litigating in Court No. 4 the
issue of whether Abdullatif breached the Settlement Agreement by failing to tender
a deed for the Rivercrest Property. Thus, “[t]hrough its post-plenary powers,” the
court enjoined Choudhri from “arguing, pleading, or in any manner intimating to
the 190th District Court that the County Court Final Judgment dated December 20,
2013 operates as res judicata and for collateral estoppel against Defendant
Abdullatif with respect to any claim concerning the Rivercrest Property.”
The Mandamus Petition
In his mandamus petition, Choudhri presents four main arguments. First,
Choudhri argues that the trial court’s limited authority to enforce its judgment
following expiration of its plenary power is not applicable here. Moreover,
Choudhri argues that enjoining other lawsuits is not a proper enforcement
mechanism where the second suit merely would involve the re-litigation of claims
but not affect the earlier judgment. Instead, the doctrines of res judicata and
collateral estoppel may be pled in the second action.
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Second, Choudhri argues that a court’s authority to issue an anti-suit
injunction, recognized in Golden Rule Ins. Co. v. Harper, 925 S.W.2d 649 (Tex.
1996) (per curiam), is inapplicable here because Abdullatif sought and obtained an
anti-argument injunction, rather than an anti-suit injunction. Further, Choudhri
asserts the doctrine pertains only to parallel foreign suits or instances where one
Texas court has dominant jurisdiction. Even if the doctrine did apply, Choudhri
asserts the multi-factored test does not weigh in support of the injunction imposed
by the trial court.
Third, Choudhri argues the trial court’s order is void because it was issued
without sworn pleadings or the posting of bond, as required by the Texas Rules of
Civil Procedure.
Fourth, Choudhri asserts that because the injunction prevents him from
making a particular argument, as opposed to precluding a suit entirely, that it
constitutes a gag order—which is unconstitutional absent specific findings not
made by the trial court.
THE MANDAMUS STANDARD
Generally, mandamus relief is appropriate only when the trial court clearly
abused its discretion and the relator has no adequate remedy by appeal. In re
Reece, 341 S.W.3d 360, 364 (Tex. 2011) (orig. proceeding). A trial court abuses its
discretion if it: (1) reaches a decision so arbitrary and unreasonable as to constitute
a clear and prejudicial error of law; (2) clearly fails to correctly analyze or apply
the law; or (3) acts without reference to any guiding rules or principles. In re Park
Mem’l Condo. Ass’n, Inc., 322 S.W.3d 447, 449–50 (Tex. App.—Houston [14th
Dist.] 2010, orig. proceeding). An appellate remedy is adequate when any benefits
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to mandamus review are outweighed by the detriments. In re Prudential Ins. Co. of
Am., 148 S.W.3d 124, 136 (Tex. 2004) (orig. proceeding). As the party seeking
relief, the relator bears the burden of demonstrating entitlement to mandamus
relief. See In re Ford Motor Co., 165 S.W.3d 315, 317 (Tex. 2005) (per curiam)
(orig. proceeding); Walker v. Packer, 827 S.W.2d 833, 837 (Tex. 1992) (orig.
proceeding).
“The issuance of a void order is an abuse of discretion.” Custom Corporates,
Inc. v. Sec. Storage, Inc., 207 S.W.3d 835, 838 (Tex. App.—Houston [14th Dist.]
2006, orig. proceeding). Moreover, “[w]hen the order is adjudged void, it is not
necessary for a relator to additionally show that it lacks an adequate appellate
remedy.” Id. Therefore, “[c]ases involving void orders present a circumstance
warranting mandamus relief.” Id.
ANALYSIS
“The Texas Rules of Civil Procedure limit a trial court’s jurisdiction after it
has entered a final judgment. Rule 329b generally provides that a trial court retains
jurisdiction over a case for a minimum of thirty days, during which time the trial
court has plenary power to change its judgment.” Id. “Certain post-judgment
motions, if filed within the initial thirty day period, extend the trial court’s plenary
jurisdiction over its judgment for up to an additional seventy-five days.” Id. (citing
Tex. R. Civ. P. 329b(c), (e), (g)). Here, the 164th District Court entered the Agreed
Judgment on July 11, 2013. The trial court rendered its decision on Abdullatif’s
injunctive request on February 17, 2014—over 220 days after its judgment in the
case. And the court’s written order followed two weeks later on March 3, 2014.
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Thus, there is no question in the record or dispute among the parties that the trial
court issued its order well after its plenary power over the case had expired.
“After the time set forth in the rules, . . . a court’s plenary power expires and
the actions that it may take with respect to its judgment are limited.” Custom
Corporates, 207 S.W.3d at 839. Among the limited actions a trial court may take
after expiration of its plenary power, “the trial court has both a statutory and an
inherent power to enforce its judgment.” Id.; see also Tex. R. Civ. P. 308 (“The
court shall cause its judgments and decrees to be carried into execution . . . .”).
“The trial court may not, however, issue an order that is inconsistent with the
original judgment or that otherwise constitutes a material change in the substantive
adjudicative portions of the judgment after its plenary power has expired.” Custom
Corporates, 207 S.W.3d at 839 (internal quotations omitted). “In addition, post-
judgment orders may not require performance of obligations in addition to the
obligations imposed by the final judgment.” Id. (internal quotations omitted).
The record indicates that the trial court relied on its continuing authority to
enforce the Agreed Judgment in granting Abdullatif’s request for an injunction. As
an enforcement of its earlier judgment, the trial court’s order would be a
permissible exercise of its continuing authority only if that order was consistent
with the Agreed Judgment and does not require the performance of new
obligations. The trial court’s order, however, is not consistent with its earlier
judgment, and imposes new obligations on Choudhri.
Under the terms of the Agreed Judgment, Choudhri was obligated to
perform certain actions regarding the purchase of the remaining interest in the
Rivercrest Property, and he further relinquished all claims relating to the Rivercrest
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Property save what was preserved by the carve-out paragraph. Choudhri, however,
did not waive in the Agreed Judgment his ability to assert the doctrines of res
judicata or collateral estoppel in any future litigation. Thus, by enjoining Choudhri
from asserting these doctrines in the 190th District Court, the trial court imposed
new obligations on Choudhri and substantively changed the terms of the Agreed
Judgment. This is not a valid exercise of the trial court’s enforcement authority.
See Custom Corporates, 207 S.W.3d at 839; see also Bank One, N.A. v. Wohlfahrt,
193 S.W.3d 190, 195 (Tex. App.—Houston [1st Dist.] 2006, no pet.) (“A post-
judgment enforcement order may properly require performance only of the
obligations imposed by the final judgment.”) (citing Katz v. Bianchi, 848 S.W.2d
372, 374 (Tex. App.—Houston [14th Dist.] 1993, orig. proceeding)).
Even if Choudhri violated the Agreed Judgment by obtaining judgment
against Abdullatif in Court No. 4—an issue we do not address here—the trial court
cannot attempt to negate the effect of that judgment by imposing an obligation
through invocation of its enforcement authority that was not set forth in the Agreed
Judgment. Regardless of what (if any) action by the trial court may have been
appropriate prior to the entry of the final judgment in Court No. 4 as a means of
enforcing the parties’ mutual waiver of claims in the Agreed Judgment, there is
nothing in the Agreed Judgment obligating Choudhri from refraining from
asserting res judicata or collateral estoppel now that the Court No. 4 judgment
exists. Importantly, although the Agreed Judgment provides for the mutual release
of claims by the parties, res judicata and collateral estoppel “are affirmative
defenses.” Calabrian Corp. v. Alliance Specialty Chems., Inc., 418 S.W.3d 154,
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158 (Tex. App.—Houston [14th Dist.] 2013, no pet.). And there is no waiver of
defenses in the Agreed Judgment.
Were we to construe the trial court’s order as an anti-suit injunction, as
Abdullatif argues we should, it would not alter our conclusion. In appropriate
circumstances, an anti-suit injunction may be a suitable method for a court to
enforce its judgment. But in the post-plenary power context, an anti-suit injunction
is still an exercise of a court’s enforcement authority. See, e.g., Rapid Settlements,
Ltd. v. Symetra Life Ins. Co., 234 S.W.3d 788, 796 (Tex. App.—Tyler 2007, no
pet.) (“The trial court possessed the inherent power to enjoin another proceeding
whose prosecution would obstruct or interfere with the proper enforcement of its
judgment.”) (emphasis added); Bridas Corp. v. Unocal Corp., 16 S.W.3d 887,
892–93 (Tex. App.—Houston [14th Dist.] 2000, pet. dism’d w.o.j.) (affirming anti-
suit injunction where “the proof clearly showed that Bridas intended to disregard
the jurisdiction of the court it emphatically insisted upon, and attempt to
circumvent its final judgment”) (emphasis added); see also In re Florance, 377
S.W.3d 837, 839–40 (Tex. App.—Dallas 2012, orig. proceeding) (noting trial
court’s enforcement authority includes anti-suit injunctions); Sanders v.
Blockbuster, Inc., 127 S.W.3d 382, 387 (Tex. App.—Beaumont 2004, pet. denied)
(same). None of the precedent cited by Abdullatif or of which this Court is aware
suggests that a court may expand its post-plenary power enforcement authority to
impose new obligations on a party inconsistent with the court’s judgment merely
by styling the action as an anti-suit injunction.
In sum, a trial court may take action after its plenary power has expired to
enforce an existing judgment. But in so acting, a trial court may not issue an order
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inconsistent with the original judgment or require the performance of obligations
not imposed by the original judgment. Custom Corporates, 207 S.W.3d at 839. By
enjoining Choudhri from asserting arguments of res judicata and collateral estoppel
in the litigation before the 190th District Court, the trial court imposed a new
obligation that is not contained in the Agreed Judgment. This was not a legitimate
exercise of the trial court’s post-plenary power enforcement authority. “Orders
issued outside of a trial court’s plenary power are typically void, because a court
no longer has jurisdiction to act once its plenary power has expired.” Id. at 838.
Therefore, because the challenged order here exceeds the trial court’s authority to
enforce its judgment, it is void. See id. at 838–41.
Because we conclude the challenged order is void, we need not address
Choudhri’s remaining arguments.
CONCLUSION
We conditionally grant relator’s petition for writ of mandamus, and direct
the trial court to vacate its order dated March 3, 2014 precluding relator from
arguing in the 190th District Court res judicata or collateral estoppel based on the
final judgment entered by the County Civil Court at Law No. 4 of Harris County.
We are confident that respondent will act in accordance with this opinion. The writ
will issue only if the trial court fails to do so. Because we have granted mandamus
relief, we dismiss Choudhri’s appeal as moot.
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We also lift our stay granted on March 25, 2014.
/s/ Tracy Christopher
Justice
Panel consists of Justices Christopher, Jamison, and Brown.
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