Leo Roger Dugas v. Lance W. Dreyer ( 2004 )

Affirmed and Memorandum Opinion filed March 11, 2004

Affirmed and Memorandum Opinion filed March 11, 2004.

In The

Fourteenth Court of Appeals

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NO. 14-96-00336-CV

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LEO ROGER DUGAS, Appellant

V.

LANCE W. DREYER, Appellee

On Appeal from the 344th District Court

Chambers County, Texas

Trial Court Cause No. 15162

M E M O R A N D U M   O P I N I O N

This is an appeal from a judgment finding Claron Corporation holds a greater right to possession of a gas compressor than Leo Roger Dugas.  In twelve points of error, Dugas challenges the trial court=s findings.  We affirm.

Background

In 1989, Lance W. Dreyer bought a gas compressor on behalf of United Texas Corporation, also known as Clamont Energy.  The compressor was placed on an oil and gas lease named the 18-19D lease, which was owned by United Texas.  A few years later, Clamont Energy declared bankruptcy.  Stuart Collins was appointed the bankruptcy trustee.  As trustee, Collins attempted to sell items to Dugas and Dugas=s relatives without the consent of the bankruptcy court.  The United States Trustee=s Office filed criminal charges against Collins and ordered him removed as trustee.  Collins pleaded guilty to one of the charges against him and fled the country.  At the time of trial, Collins remained a fugitive. One of the items Collins attempted to sell to Dugas was the gas compressor at issue here.

After Collins=s removal, Jason Searcy was appointed bankruptcy trustee.  On January 10, 1993, Searcy filed an original complaint on behalf of Clamont Energy in the United States Bankruptcy Court for the Eastern District of Texas. Searcy converted the Chapter 11 bankruptcy to a Chapter 7 liquidation and filed an adversary proceeding against several people to recover assets of the bankruptcy estate.  Dreyer, Dugas, and two of Dugas=s corporations were defendants in that adversary proceeding.  On November 22, 1993, Dugas filed a complaint in justice court in Chambers County alleging he had a greater right to possess the gas compressor.  On January 6, 1994, Dreyer filed a bankruptcy plea in abatement contending the justice court lacked jurisdiction due to the pending bankruptcy. On January 11, 1994, trial was set in justice court for 10:00 a.m.  Dreyer received permission from the clerk of the justice court to appear at 11:00 a.m.  Trial was held at 10:00 a.m. and because Dreyer did not appear, the justice court awarded Dugas possession of the gas compressor. 

On January 29, 1994, Dreyer filed a petition for writ of certiorari in the county court seeking to appeal the decision of the justice court.  In the meantime, the parties settled the bankruptcy adversary proceeding and, on February 23, 1994, as part of the settlement agreement, the assets from the adversary proceeding were assigned to Claron. On the same day, the settlement agreement was approved by the bankruptcy judge and a final judgment was entered. Appellant did not appeal the judgment. One of the assets assigned to Claron was the gas compressor.  On March 21, 1994, the county court issued writ of certiorari in favor of Dreyer because the justice court was without jurisdiction due to the pending plea in abatement, and Dreyer=s failure to appear was the result of actions of court personnel.  On January 12, 1996, after a bench trial, the district court^[1] issued a judgment giving greater right of possession of the gas compressor to Claron Corporation and imposing sanctions against Dugas.  Dugas appeals that judgment.

Res Judicata

In nine of his twelve issues, appellant challenges the trial court=s ruling on possession of the gas compressor. Appellee contends, however, that because the bankruptcy court=s judgment awarding the compressor to Claron was final, that judgment acts to bar any further decision on the issue of the compressor. 

Trial by Consent

Initially, we acknowledge that appellees did not plead res judicata in the trial court.  Generally, res judicata must be pleaded or it is waived.  Tex. R. Civ. P. 67. However, when issues not raised by the pleadings are tried by express or implied consent of the parties, they shall be treated in all respects as if they had been raised in the pleadings.  Id; Born v. Virginia City Dance Hall & Saloon, 857 S.W.2d 951, 956 (Tex. App.CHouston [14th Dist.] 1993, writ denied).  Trial by consent is intended to cover the exceptional case where it clearly appears from the record as a whole that the parties tried the unpleaded issue.  Mastin v. Mastin, 70 S.W.3d 148, 154 (Tex. App.CSan Antonio 2001, no pet.).  To determine whether the issue was tried by consent, the court must examine the record not for evidence of the issue, but rather for evidence of trial of the issue. Id. 

Here, appellee=s defense was res judicata.  Appellee introduced the bankruptcy court=s judgment as proof of its ownership of the compressor.  The county court, when it issued writ of certiorari, found that the justice court was without authority because of the pending bankruptcy.  The district court, in its judgment, found that Claron was entitled to possession of the compressor due to the sale ordered by the bankruptcy court in its February 23, 1994 judgment.  Based on the record as a whole, we conclude the issue of res judicata was tried by implied consent. 

Federal Res Judicata

Because we are determining the res judicata effect of a bankruptcy court order, the federal law of res judicata applies.  Eagle Properties Ltd. v. Scharbauer, 807 S.W.2d 714, 718 (Tex. 1990).  For a prior judgment to bar an action based on res judicata the following requirements must be shown:  (1) the parties must be identical in both suits; (2) the prior judgment must have been rendered by a court of competent jurisdiction; (3) there must have been a final judgment on the merits and (4) the same cause of action must be involved in both cases.  Southmark Properties v. Charles House Corp., 742 F.2d 862, 869 (5th Cir. 1984).  Res judicata applies to bankruptcy court orders even if the order does not close the bankrupt=s estate or dispose of any claim.  Matter of Baudoin, 981 F.2d 736, 742 (5th Cir. 1993).

The record reflects that appellant was named as a party in the adversary proceeding in the bankruptcy court.  Dugas was named as a party in the motion to approve the settlement agreement and in the order approving the agreement.  The bankruptcy court=s decision was never appealed and therefore became final as to the issue of possession of the compressor.  See In re Murray, 116 B.R. 6, 7 (Bankr. Mass. 1990).  Further, we conclude the same cause of action was involved in both suits.  The adversary proceeding was filed in bankruptcy court to recover assets, including the gas compressor, that were improperly sold by Stuart Collins.  Appellant filed suit in justice court to recover possession of the gas compressor sold to him by Stuart Collins.  Res judicata barred relitigation of Dugas=s claim to recover the compressor.

Res judicata also bars claims that could and should have been brought in the earlier litigation.  D-I Enters. Inc. v. Commercial State Bank, 864 F.2d 36, 38 (5th Cir. 1989).  Here, not only could the dispute over the gas compressor be brought in the earlier litigation, it actually was litigated in the adversary proceeding.  We conclude appellees established appellant=s cause of action is barred by res judicata. Issues one through six, nine, eleven, and twelve are overruled.

Sanctions

In issues seven, eight, and ten, appellant challenges the trial court=s assessment of sanctions.  Sanctioning counsel is not a judgment on the merits, but requires the determination of a collateral issue, i.e., whether the attorney or party has abused the judicial process and, if so, what sanction would be appropriate.  Id. A pro se litigant is held to the same standards as licensed attorneys and must comply with applicable laws and rules of procedure.  See Holt v. F.F. Enters., 990 S.W.2d 756, 759 (Tex. App.CAmarillo 1998, no pet.).  If pro se litigants were not required to comply with applicable rules of procedure, they would be given an unfair advantage over those represented by counsel.  Greenstreet v. Heiskell, 940 S.W.2d 831, 835 (Tex. App.CAmarillo 1997, no writ). 

In issue seven, appellant contends the trial court erred in stating that Claron had expended money to prosecute the writ because Dreyer was the named defendant, and in awarding attorney=s fees to Claron.  To preserve a complaint for appellate review, a party must present to the trial court a timely motion stating the specific grounds therefor.  Tex. R. App. P. 33.1.  A motion for new trial is an appropriate method of preserving error regarding an alleged defect in the final judgment.  Luna v. Southern Pacific Transp. Co., 724 S.W.2d 383, 384 (Tex. 1987).  Appellant filed no post-trial motions; therefore, he has failed to preserve error with regard to the award of attorney=s fees.  Appellant=s seventh issue is overruled.

In issue ten, appellant contends the trial court erred in awarding sanctions under Texas Rule of Civil Procedure 13 because the trial court did not hold a hearing on appellee=s motion for sanctions.  Before sanctions may be imposed, the trial court must hold an evidentiary hearing to make necessary factual determinations about the motives and credibility of the person signing the alleged groundless petition.  Bisby v. Dow Chemical Co., 931 S.W.2d 18, 21 (Tex. App.CHouston [1st Dist.] 1996, no writ). 

At the conclusion of appellee=s evidence in the trial court, appellee=s attorney sought to present evidence of his attorney=s fees pursuant to his rule 13 motion. Appellant cross-examined appellee=s attorney and specifically asked about the rule 13 motion.  Appellant did not request a hearing pursuant to rule 13, nor did he object to the trial court=s failure to hold a hearing.  Appellant filed no post-trial motions.  By failing to object to the trial court=s failure to hold a hearing or file a post-trial motion complaining of the error, appellant waived any error.  See Appleton v. Appleton, 76 S.W.3d 78, 87 (Tex. App.CHouston [14th Dist.] 2002, no pet.).  Appellant=s tenth issue is overruled.

In issue eight, appellant contends the trial court erred in finding Dugas=s claim was wholly frivolous and without merit. The motion for sanctions alleged that appellant filed his action in justice court after the bankruptcy court awarded the compressor to Claron in a contested court proceeding.  The motion alleged that appellant knew of the proceeding because he was a defendant in that proceeding and was represented by counsel. The motion alleged Dugas, at the time of the justice court hearing, had been served with Claron=s bankruptcy plea in abatement.  The trial court found that Dugas was a defendant in the bankruptcy proceeding and that the compressor was an asset of the bankrupt estate.  The trial court further found that Dugas, at the time he filed in justice court, was aware that Searcy had proposed a sale to Claron and that the bankruptcy plan filed by Collins did not permit the sale of any assets to Dugas or his company.

Rule 13 sanctions may be imposed against an attorney or party who files a pleading that is groundless and brought in bad faith or groundless and brought for the purpose of harassment.  Schnexnider v. Scott & White Memorial Hosp., 953 S.W.2d 439, 440 (Tex. App.CAustin 1997, no writ).  If a pleading, motion, or other paper is signed in violation of Rule 13, the court, upon motion or upon its own initiative, after notice and hearing, shall impose an appropriate sanction.  Tex. R. Civ. P. 13. This court reviews a trial court=s rule 13 sanctions order under an abuse of discretion standard.  Randolph v. Walker, 29 S.W.3d 271, 276 (Tex. App.CHouston [14th Dist.] 2000, pet. denied).  The trial court=s discretion is limited only by the requirement that its order be just and that the sanctions imposed be directly related to the harm done by the sanctioned conduct.  Bradt v. Sebek, 14 S.W.3d 756, 761 (Tex. App.CHouston [1st Dist.] 2000, pet. denied).  A trial court=s rule 13 sanction order must be upheld if any of the facts set forth by the court support the sanctions.  Sebek, 14 S.W.3d at 764.  Here, the record supports the facts found by the trial court. Therefore, the trial court did not abuse its discretion in assessing sanctions.  Appellant=s eighth issue is overruled.

The judgment of the trial court is affirmed.

/s/        John S. Anderson

Justice

Judgment rendered and Memorandum Opinion filed March 11, 2004.

Panel consists of Justices Yates, Anderson, and Hudson.

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^[1]  On June 8, 1994, the case was administratively transferred from the county court to the district court.