Marlene W. Mitchell v. Wilmington Savings Fund Society, FSB D/B/A Christiana Trust as Trustee of the American Mortgage Investment Partners Fund I Trust and Wilmington Savings Fund Society, FSB D/B/A Christiana Trust as Owner Trustee of the Residential Credit Opportunities Trust III ( 2019 )

In the
Court of Appeals
Second Appellate District of Texas
at Fort Worth
___________________________
No. 02-18-00325-CV
___________________________
MARLENE W. MITCHELL, Appellant
V.
WILMINGTON SAVINGS FUND SOCIETY, FSB D/B/A CHRISTIANA TRUST
AS TRUSTEE OF THE AMERICAN MORTGAGE INVESTMENT PARTNERS
FUND I TRUST AND WILMINGTON SAVINGS FUND SOCIETY, FSB D/B/A
CHRISTIANA TRUST AS OWNER TRUSTEE OF THE RESIDENTIAL CREDIT
OPPORTUNITIES TRUST III, Appellee
On Appeal from the 17th District Court
Tarrant County, Texas
Trial Court No. 017-291827-17
Before Kerr, Birdwell, and Bassel, JJ.
Memorandum Opinion by Justice Birdwell
MEMORANDUM OPINION
This appeal is from the trial court’s final summary judgment for Wilmington
Savings Fund Society, in its trustee capacity, in Marlene Mitchell’s second suit
attempting to challenge the judicial foreclosure sale of her residence. Because her
second suit is barred by res judicata, we affirm.
Background
Mitchell’s home was sold in September 2016 pursuant to a judicial foreclosure
order. See Mitchell v. Wilmington Sav. Funds Soc., FSB, No. 02-18-00089-CV, 2019 WL
150262, at *1 (Tex. App.––Fort Worth Jan. 10, 2019, no pet.) (mem. op.). After the
buyer filed a forcible detainer suit, Mitchell filed two bankruptcy petitions in federal
court. Id. After dismissal of the first bankruptcy petition, Mitchell filed an adversary
proceeding in the second bankruptcy against Wilmington in its trustee capacities,
bringing claims for wrongful foreclosure, for injunctive relief, and to quiet title. A little
over a week later, Mitchell filed this suit in the 17th District Court, bringing claims to
quiet title, for relief from wrongful foreclosure, and for injunctive relief.
On June 13, 2017, Mitchell filed a Joint Stipulation of Dismissal With Prejudice
of the adversary proceeding in the bankruptcy court. In that filing, Mitchell agreed
that she “no longer wishe[d] to pursue the claims she . . . asserted in [the] adversary
proceeding,” and, in agreement with Wilmington, she sought dismissal of “all of her
claims in [the] adversary proceeding” with prejudice. This effected a dismissal of the
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proceeding with prejudice. See Fed. R. Civ. P. 41(a)(1)(A)(ii); Fed. R. Bankr. P. 7041;
McVay v. Perez (In re Perez), 411 B.R. 386, 397 (Bankr. D. Colo. 2009).
In February 2018, the county court at law rendered a judgment of possession
for Wilmington in the forcible detainer case; Mitchell appealed that judgment, which
this court affirmed and which is now final. See Mitchell, 2019 WL 150262, at *4.
Meanwhile, Wilmington filed a traditional and no-evidence motion for summary
judgment in the 17th District Court case, arguing in part that res judicata applied to
bar Mitchell’s claims against it because they had already been resolved in the
bankruptcy adversary proceeding. The trial court granted Wilmington’s traditional
motion and rendered a final, take-nothing judgment on all of Mitchell’s claims.
Standard of Review
We review a summary judgment de novo. Travelers Ins. v. Joachim, 315 S.W.3d
860, 862 (Tex. 2010). We consider the evidence presented in the light most favorable
to the nonmovant, crediting evidence favorable to the nonmovant if reasonable jurors
could, and disregarding evidence contrary to the nonmovant unless reasonable jurors
could not. Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 289 S.W.3d 844, 848
(Tex. 2009). We indulge every reasonable inference and resolve any doubts in the
nonmovant’s favor. 20801, Inc. v. Parker, 249 S.W.3d 392, 399 (Tex. 2008). A
defendant is entitled to summary judgment on an affirmative defense if the defendant
conclusively proves all elements of that defense. Frost Nat’l Bank v. Fernandez, 315
S.W.3d 494, 508–09 (Tex. 2010); see Tex. R. Civ. P. 166a(b), (c). To accomplish this,
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the defendant must present summary-judgment evidence that conclusively establishes
each element of the affirmative defense as a matter of law. See Chau v. Riddle, 254
S.W.3d 453, 455 (Tex. 2008).
Mitchell’s Claims Barred by Res Judicata
In her first issue, Mitchell claims the trial court erred by granting summary
judgment for Wilmington, claiming in part that the trial court refused to hear critical
evidence1 and that res judicata does not apply. 2 The trial court did not specify in its
order whether it granted summary judgment on traditional or no-evidence grounds.
Because our review of the traditional grounds makes a review of Mitchell’s second
issue regarding evidentiary exclusion unnecessary, we consider the propriety of
granting the traditional motion first. See Reynolds v. Murphy, 188 S.W.3d 252, 258 (Tex.
App.––Fort Worth 2006, pet. denied) (op. on reh’g).
Res judicata bars litigation of a second suit when (1) a court of competent
jurisdiction has rendered a prior final judgment on the merits, (2) the prior suit
involved the same parties or those in privity with them, and (3) the second suit’s
claims are the same as those raised in the prior suit or the claims in the second suit
could have been raised in the first suit. Amstadt v. U.S. Brass Corp., 919 S.W.2d 644,
1
The majority of her argument relates to the no-evidence motion, but she also
argues that summary judgment was improper on res judicata grounds.
2
Arguably, Mitchell failed to adequately brief her res judicata complaint for
failure to cite authority. See Tex. R. App. P. 38.1(i). We nevertheless address the
argument because Mitchell clearly raises it as a ground for reversal. See Perry v. Cohen,
272 S.W.3d 585, 587–88 (Tex. 2008).
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652 (Tex. 1996); New Talk, Inc. v. Sw. Bell Tel. Co., 520 S.W.3d 637, 645 (Tex. App.—
Fort Worth 2017, no pet.). Mitchell does not dispute that the parties in the adversary
proceeding were the same, but she does contend that the bankruptcy court did not
adjudicate the complaints she raised in the 17th District Court.
We must look to federal law to determine whether the disposition of Mitchell’s
claims in the second bankruptcy proceeding bars this state-court suit. See San Antonio
ISD v. McKinney, 936 S.W.2d 279, 281 (Tex. 1996); Hill v. Fed. Nat’l Mortg. Ass’n, No.
14-15-00388-CV, 2016 WL 1660392, at *2 (Tex. App.—Houston [14th Dist.] Apr. 26,
2016, no pet.) (mem. op.); see also, e.g., Aerojet-Gen. Corp. v. Askew, 511 F.2d 710, 715
(5th Cir. 1975) (explaining reasons for applying federal res judicata law when federal
judgment was rendered first); cf. Ellis v. Amex Life Ins. Co., 211 F.3d 935, 937–38 (5th
Cir. 2000) (holding that when two cases are pending, first-rendered judgment is
entitled to preclusive effect even if suit in which second judgment was rendered was
filed first). Under federal law, a dismissal or nonsuit with prejudice is “tantamount to
a judgment on the merits” for res judicata purposes because it “works a permanent,
inalterable change in the parties’ legal relationship to the defendant’s benefit: the
defendant can never again be sued by the plaintiff or its privies for claims arising out
of the same subject matter.” Epps v. Fowler, 351 S.W.3d 862, 868–69 (Tex. 2011)
(citing Dean v. Riser, 240 F.3d 505, 509 (5th Cir. 2001)); see, e.g., Matter of W. Tex. Mktg.
Corp., 12 F.3d 497, 501 (5th Cir. 1994) (noting that parties’ filing of stipulations of
dismissal in bankruptcy proceeding barred relitigation of any of the issues raised in the
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dismissed proceeding); Matlock Realty Enter., Inc. v. Crown Fin., LLC, No. 02-15-00189-
CV, 2016 WL 438381, at *4 (Tex. App.—Fort Worth Feb. 4, 2016, no pet.) (mem.
op.) (noting that it is well settled in the Fifth Circuit that a dismissal with prejudice,
including in a bankruptcy proceeding, is a final judgment on the merits for res judicata
purposes).
Mitchell contends that the bankruptcy court never adjudicated her 17th District
Court claim that Wilmington lacked standing to file the 2016 judicial foreclosure suit.
But she raised those complaints in the adversary proceeding, seeking to have the
foreclosure sale declared void because “neither the original mortgagee, subsequent
holders of the note or Deed of Trust, their trustees or any successor trustees held a
beneficial interest under the deed of trust.” And even if her 17th District Court title
and wrongful foreclosure complaints based on a lack of standing are not identical to
the standing complaints she raised in the adversary proceeding, 3 they are similar
enough that she could have raised them in the adversary proceeding; Mitchell’s goal in
both the adversary proceeding and this suit was the same: to have the 2016 judicial
foreclosure order and sale declared void. See Petro-Hunt, L.L.C. v. United States, 365
F.3d 385, 395–96 (5th Cir. 2004) (explaining that Fifth Circuit has adopted
transactional test for determining whether claims are the same for res judicata
3
In a first amended petition in the 17th District Court, Mitchell more expressly
argued that in the 2016 foreclosure suit, Wilmington failed to provide sufficient
evidence of all of the transfers by which it had obtained its interest in the debt; thus, it
had failed to show standing.
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purposes, under which the critical question is whether the claims arise from the same
nucleus of operative facts).
Finally, the bankruptcy court had jurisdiction to adjudicate Mitchell’s adversary
proceeding claims. See 11 U.S.C.A. § 541, 28 U.S.C.A. §§ 157(b)(1), (2)(E), 1334;
Matlock v. Lomas Mortg. U.S.A., Inc. (In re Matlock), 154 B.R. 721, 721–22 (Bankr. E.D.
Ark. 1993); cf. Ger. Am. Capital Corp. v. Oxley Dev. Co. (In re Oxley Dev. Co.), 493 B.R.
275, 283–84, 286–87 (Bankr. N.D. Ga. 2013) (holding that creditor’s suit to quiet title
and declare foreclosure valid was a core proceeding over which bankruptcy court had
jurisdiction even if bankruptcy court would have to refer to state law to determine at
least part of claim).
Accordingly, we hold (1) that Wilmington conclusively proved that the
dismissal of Mitchell’s bankruptcy adversary proceeding with prejudice was a final
judgment adjudicating Mitchell’s claims in this suit for res judicata purposes and,
therefore, (2) that the 17th District Court did not err by granting Wilmington’s
traditional summary judgment. We overrule Mitchell’s first issue. Because her second
issue challenges the trial court’s decision to exclude her evidence that is unrelated to
Wilmington’s affirmative defense––and thus could not raise a fact issue defeating
Wilmington’s proof––we need not address the issue. See Tex. R. App. P. 47.1.
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Conclusion
Having overruled Mitchell’s dispositive issue, we affirm the trial court’s
judgment. We also deny any pending motions in this court.
/s/ Wade Birdwell
Wade Birdwell
Justice
Delivered: May 2, 2019
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