Yigal Bosch v. Braes Woods Condominium Association ( 2013 )

Opinion issued July 11, 2013
In The
Court of Appeals
For The
First District of Texas
————————————
NO. 01-12-01114-CV
———————————
YIGAL BOSCH, APPELLANT
V.
BRAES WOODS CONDOMINIUM ASSOCIATION, APPELLEE
On Appeal from the 295th Judicial District Court
Harris County, Texas
Trial Court Cause No. 2011-14592
MEMORANDUM OPINION
This suit arises from the foreclosure of eighteen condominium units in the
Braes Woods Condominium complex. Yigal Bosch sued the Braes Woods
Condominium Association for wrongful foreclosure. Braes Woods moved for
summary judgment, contending, among other things, that res judicata bars Bosch’s
suit. The trial court granted the motion. Bosch appeals that ruling, and the trial
court’s denial of his request for findings of fact and conclusions of law. Finding no
error, we affirm.
Background
Bosch-controlled entities, denominated as RKI International, Inc.,
Transamerica of Houston, LTD, and the Bradford Hills Realty Corp., purchased a
total of eighteen condominium units in the Braes Woods Condominium complex.
The 2646 South Loop West Limited Partnership (the “2646 Partnership”) and its
predecessor, the 2646 Atrium Realty Corp., funded these purchases. Bosch is the
president of 2646 Atrium Realty Corp., which in turn is the general partner of the
2646 Partnership.
In June 2009, two weeks before the 2646 Partnership declared bankruptcy,
Bosch assigned the assets and liabilities of RKI International, Transamerica of
Houston, and Bradford Hills Realty to the 2646 Partnership. Braes Woods sought
to foreclose on the condominiums due to unpaid maintenance assessments, and the
bankruptcy court lifted its stay to permit those proceedings to advance. In April,
May, and June of 2010, Braes Woods foreclosed on the eighteen units. It notified
the record owners of each unit, RKI International, Bradford Hills Realty, and
Transamerica of Houston.
Before the foreclosure sales, Bradford Hills Realty and RKI International
had sued Braes Woods in a civil case for damages to the foundation of four of the
2
condominiums. See Bradford Hills Realty Corp. v. Board of Directors of Braes
Woods Condominium Association, No. 2010-13954, in the 269th District Court,
Harris County, Texas. In August 2010, Bradford Hills Realty and RKI
International added 2646 Atrium Realty as a party, and added claims against Braes
Woods for wrongful foreclosure on the eighteen condominiums. The Bradford
Hills lawsuit resulted in a judgment favorable to Braes Woods. Relying on the
judgment, Braes Woods moved in this case for summary judgment, contending that
res judicata bars Bosch’s claims against it in this case.
Discussion
Standard of Review
We review de novo the trial court’s ruling on a motion for summary
judgment. Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 289 S.W.3d
844, 848 (Tex. 2009). In a traditional motion for summary judgment, the movant
must establish that no genuine issue of material fact exists and the movant is thus
entitled to judgment as a matter of law. TEX. R. CIV. P. 166a(c). When reviewing a
summary judgment, we take as true all evidence favorable to the nonmovant and
indulge every reasonable inference and resolve any doubts in the nonmovant’s
favor. Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex. 2005);
Provident Life & Accid. Ins. Co. v. Knott, 128 S.W.3d 211, 215 (Tex. 2003). A
genuine issue of material fact exists if the non-movant produces more than a
3
scintilla of probative evidence regarding the challenged element. See Ford Motor
Co. v. Ridgway, 135 S.W.3d 598, 600 (Tex. 2004). A defendant moving for
traditional summary judgment must conclusively establish each element of an
affirmative defense. Sci. Spectrum, Inc. v. Martinez, 941 S.W.2d 910, 911 (Tex.
1997).
Res Judicata
Res judicata bars claims that were brought, or could have been brought, in
an earlier lawsuit that resulted in a final judgment on the merits. Igal v. Brightstar
Info. Tech. Grp., Inc., 250 S.W.3d 78, 86 (Tex. 2008). To prevail on the defense, a
party must show that (1) in a previous action, a court of competent jurisdiction
rendered a final determination on the merits of a claim, (2) the parties in the earlier
action are identical to, or in privity with, the present parties, and (3) the pending
claim (a) is identical to the prior claim or (b) arises out of the same subject matter
as the prior claim and could have been litigated in the previous action. Travelers
Ins. Co. v. Joachim, 315 S.W.3d 860, 862 (Tex. 2010).
We note at the outset that Braes Woods moved for summary judgment based
on res judicata, but it did not plead res judicata as an affirmative defense in its
answer. Bosch, however, did not object to the lack of a supporting plea. A party
may obtain summary judgment based on an affirmative defense that it did not
plead, if the nonmoving party does not object to its absence in the moving party’s
4
response to the motion. See Roark v. Stallworth Oil and Gas, Inc., 813 S.W.2d
492, 494–95 (Tex. 1991). We thus consider whether the record supports summary
judgment against Bosch’s claims based on the affirmative defense of res judicata.
Parties are “in privity” with each other for purposes of res judicata if they
have an identity of legal interest in the earlier and present suits. Benson v. Wanda
Petroleum Co., 468 S.W.2d 361, 363 (Tex. 1971); Getty Oil Co. v. Insurance Co.
of N. Am., 845 S.W.2d 794, 800 (Tex.1992). We examine the circumstances of
each case to determine if privity exists between the parties. Benson, 468 S.W.2d at
363. In a wrongful foreclosure case, if the property itself, or the money damages
that were potentially recoverable in a previous lawsuit would have reverted to the
benefit of the plaintiff in the later lawsuit, then plaintiff in the second case
generally is in privity with the original plaintiff and may be subject to a res judicata
defense. Grimm v. Rizk, 640 S.W.2d 711, 715 (Tex. App.—Houston [14th Dist.]
1982, writ ref’d n.r.e.).
In the earlier action, RKI International, Bradford Hills, and 2646 Atrium
Realty sued for the wrongful foreclosure of the eighteen condominiums. Bosch
sues for the wrongful foreclosure of the same eighteen units, based on the same
foreclosure sales. The current claim thus is identical to the claim in the earlier suit
and involves the same underlying subject matter. See Joachim, 315 S.W.3d at 862.
Because the trial court granted a final summary judgment in the previous case as to
5
all claims and all parties, the claim resulted in a final judgment. See id. We thus
turn to whether Bosch is in privity with the plaintiffs in the earlier case such that he
is subject to a res judicata defense. See id.
Bosch responds that no privity relationship existed between him and RKI
International, Bradford Hills, and 2646 Atrium Realty, because these entities did
not represent Bosch’s rights in the first case; nor, he contends were they authorized
to maintain the earlier suit on his behalf. Bosch, however, brought this later-filed
suit as the successor in interest to the 2646 Partnership, for which 2646 Atrium
Realty was the general partner. In the first case, Bosch averred in an affidavit that
he had purchased the condominiums on behalf of the 2646 Partnership. He
contended then, as now, that the 2646 Partnership held equitable title to the
condominiums, while RKI International, Bradford Hills, and Transamerica of
Houston held legal title. Bosch thus asserts the same legal rights in this case as he
did in the first case. See Benson, 468 S.W.2d at 363. As the holder of equitable title
to the condominiums and full participants in the earlier action, the 2646
Partnership, and Bosch as its successor, are bound by the judgment against the
legal owners of the property. See Slay v. Burnett Trust, 187 S.W.2d 377 (Tex.
1945) (holding that beneficiaries, as equitable owners, were barred by res judicata
from litigating action already litigated by trustee, the legal owner). We hold that
Bosch has privity with the plaintiffs in the first case. As the wrongful foreclosure
6
claim in this case is identical to the claim the Bosch parties brought against Braes
Woods in the earlier action and that claim was fully litigated and decided on the
merits, the trial court properly ruled that Bosch’s wrongful foreclosure claim is
barred by res judicata.
Bosch complains that the trial court did not consider some of his exhibits as
summary judgment evidence, but he points to no trial court ruling excluding them.
Finally, Bosch contends that the trial court erred in failing to make written findings
of fact and conclusions of law. Summary judgment proceedings, however do not
call for findings of fact and conclusions. Linwood v. NCNB Tex., 885 S.W.2d 102,
103 (Tex. 1994). Accordingly, the trial court did not err in that respect.
Conclusion
We hold that res judicata bars this suit; the trial court therefore properly
granted summary judgment. We affirm the judgment of the trial court.
Jane Bland
Justice
Panel consists of Justices Keyes, Higley, and, Bland.
7