Eagle Supply & Manufacturing L.P. F/K/A Eagle Construction & Environmental Services, L.P. and Metex Demolition, LLC v. Landmark American Insurance Co. and Seneca Specialty Insurance Co. ( 2021 )

Opinion filed January 29, 2021
In The
Eleventh Court of Appeals
__________
No. 11-19-00016-CV
__________
EAGLE SUPPLY & MANUFACTURING L.P. F/K/A EAGLE
CONSTRUCTION & ENVIRONMENTAL SERVICES, L.P. AND
METEX DEMOLITION, LLC, Appellants
V.
LANDMARK AMERICAN INSURANCE CO. AND SENECA
SPECIALTY INSURANCE CO., Appellees
On Appeal from the 91st District Court
Eastland County, Texas
Trial Court Cause No. CV-1242617A
OPINION
This is the second appeal from the underlying lawsuit. Appellants, Eagle
Supply & Manufacturing L.P. f/k/a Eagle Construction & Environmental Services,
L.P. (Eagle) and Metex Demolition, LLC (Metex) sued Metex’s liability insurers,
Appellees Landmark American Insurance Company (Landmark) and Seneca
Specialty Insurance Company (Seneca). See Landmark Am. Ins. Co. v. Eagle Supply
& Mfg. L.P., 530 S.W.3d 761 (Tex. App.—Eastland 2017, no pet.). The previous
appeal involved a permissive appeal from the denial of two motions for summary
judgment brought by Landmark and Seneca with respect to Eagle’s claims. As
liability insurers, Landmark and Seneca asserted that the trial court did not have
subject-matter jurisdiction to adjudicate claims brought directly against them by the
injured party (Eagle) to access liability insurance coverage. As explained below, we
agreed with Landmark and Seneca that the trial court did not have subject-matter
jurisdiction to adjudicate Eagle’s direct claims against them. However, we
remanded the case for the consideration of Metex’s claims against Landmark and
Seneca that remained pending in the trial court.
Following the remand, Landmark and Seneca filed motions to dismiss the
claims that remained pending in the trial court. Relying upon our prior opinion,
Landmark and Seneca asserted that a dismissal with prejudice was required. The
trial court agreed by entering orders that granted Landmark’s and Seneca’s motions
to dismiss with prejudice all remaining claims brought by Eagle and Metex.
Eagle and Metex raise four issues on appeal. They assert that (1) the trial
court’s failure to make written findings of fact and conclusions of law was reversible
error, (2) dismissal with prejudice was error, (3) Eagle is a real party in interest as to
Metex’s claims against its insurers (Landmark and Seneca), and (4) the law-of-the-
case doctrine does not preclude Metex’s claims. We reverse and remand.
Background Facts
The underlying lawsuit arises from damage claims that Eagle originally
asserted against Metex for demolition, cleanup, and remediation work that Metex
contracted to perform at three power plants in Texas that Eagle owns. Metex’s
contracts with Eagle required Metex to obtain liability insurance for the demolition
2
work. Landmark issued a pollution liability policy to Metex, and Seneca issued a
general commercial liability insurance policy to Metex.
Metex filed a Chapter 11 bankruptcy proceeding on March 30, 2012. Eagle
soon filed the underlying suit in state court against an affiliate and principals of
Metex, asserting claims against them for breach of contract and fraud. Eagle
subsequently asserted claims for property damage and breach of contract against
Metex in the bankruptcy court. Eagle asserted a liquidated claim under various
contracts totaling $2,309,830.01. Eagle also asserted an unliquidated claim for
property damages in its proof of claim. Eagle did not list an amount that it claimed
in unliquidated damages for property damages in its proof of claim.
While the bankruptcy proceeding was pending, Eagle added Landmark and
Seneca as parties to the underlying action. Eagle initially asserted that Landmark
and Seneca owed contractual obligations to Eagle under the policies to remedy the
property damages caused by Metex. Accordingly, Eagle asserted that it had a “direct
cause of action” against Landmark and Seneca for breach of contract. Landmark
and Seneca each filed a plea to the jurisdiction in their initial pleadings asserting that
the trial court lacked subject-matter jurisdiction because Eagle did not have standing
to bring a direct cause of action against them.
A settlement agreement was subsequently filed in the bankruptcy proceeding.
A recital at the beginning of the settlement agreement listed the parties to it as being
Eagle and the “Eastland County Affiliated Parties.” However, the settlement
agreement contained language binding Metex to the terms of the agreement.
Additionally, Metex was a signatory to the agreement because someone signed the
agreement on behalf of Metex.
The settlement agreement referenced the underlying proceeding as “the
Eastland County Litigation.” In the agreement, the parties agreed “to enter into a
full and complete compromise and settlement of the claims asserted in the Eastland
3
County Litigation (except as specifically excluded from this Agreement).” The
parties additionally agreed “that Eagle will proceed in the Eastland County
Litigation and may name Metex as a defendant with the Eastland County Affiliated
Parties in order to access insurance coverage and policy proceeds.” The settlement
agreement further provided that Metex damaged Eagle’s property and that “Metex
and the Eastland County Affiliated Parties will, upon confirmation of the Plan [of
reorganization], take such actions as are necessary to assert, diligently pursue, and
effectuate a claim (or claims), to and against each of the insurance carriers that
provide insurance coverage for the damages.”
Metex subsequently filed a plan of reorganization in the bankruptcy
proceeding. It referred to the settlement agreement as the “Eagle Claim CSA.” The
plan of reorganization recited that, “without the Eagle Claim CSA, it is unlikely that
the Plan could be confirmed.” The bankruptcy court entered an order confirming
this plan of reorganization on April 5, 2013. The bankruptcy court also entered an
order granting Eagle’s unsecured claim in the amount of $2,603,284.80. Lastly, the
bankruptcy court entered a “Consent Order of Dismissal with Prejudice” with
respect to Eagle’s claim that provided as follows: “This cause came on to be heard
by and through the consent of the parties from all of which it appears to the Court
that the matters and issues herein have been resolved and that this case may be, and
the same is hereby, dismissed with prejudice.”
Eagle subsequently added Metex as a party to the underlying action on
April 23, 2013. Metex pleaded a general denial of Eagle’s claim against it. Metex
also asserted causes of action against Landmark and Seneca. Metex alleged in its
pleadings that “Eagle incurred significant damages to its power plant properties” that
“consisted of both environmental damages and physical property damages.” Metex
alleged that it put Landmark and Seneca on notice of Eagle’s claims and that they
“individually and collectively, failed to indemnify Metex, failed to provide
4
coverage, and failed to provide a defense in the forum in which the claims were
asserted against Metex.” Metex asserted that Eagle’s claims were vigorously
contested in several bankruptcy proceedings and that the bankruptcy court ruled in
favor of Eagle against Metex. Metex also alleged that it entered into the settlement
agreement based upon the rulings of the bankruptcy court.
Eagle subsequently filed a motion for summary judgment against Metex in
the underlying action. At the hearing on the motion, Eagle’s counsel advised the
trial court that Metex did not oppose the motion. Metex did not file a response to
the motion. In that regard, Metex responded to Eagle’s requests for admissions by
admitting to every request for admission made by Eagle, including requests
pertaining to liability and damages for the property damage that is the subject of
Eagle’s claims against Landmark and Seneca. The trial court ultimately granted
Eagle’s motion for summary judgment against Metex.
After the trial court granted Eagle’s motion for summary judgment against
Metex, the parties filed a joint motion to consolidate claims and to realign the parties.
The motion sought to consolidate Metex’s claims against the insurers with Eagle’s
claims against the insurers. Eagle subsequently filed an amended petition alleging
that its damage claims against Metex were litigated in the bankruptcy proceedings
and that Landmark and Seneca “failed and refused to participate in the bankruptcy
proceedings, failed to provide a defense to Metex, and wholly failed to provide the
insurance coverage” that they agreed to provide. Eagle further alleged that it
“diligently and properly pursued its underlying claims against Metex, and Metex
vigorously defended the claims” in the bankruptcy court. Eagle asserted that it had
obtained a “Final Non-appealable Order” against Metex, that Landmark was liable
to Eagle in the amount of $523,360, and that Seneca was liable to Eagle in the
amount of $577,703 under the terms of the bankruptcy court’s orders. Eagle asserted
claims against Landmark and Seneca for unfair settlement practices, breach of the
5
duty of good faith and fair dealing, failure to comply with the prompt payment
statute, violations of the DTPA, and breach of contract.
Landmark and Seneca subsequently filed motions for summary judgment.
Landmark actually filed two motions for summary judgment. One motion sought
summary judgment on Eagle’s claims against Landmark, and the other motion
sought summary judgment on Metex’s claims against Landmark. Seneca only filed
one motion for summary judgment. However, it only sought summary judgment on
Eagle’s claims against Seneca. With respect to Landmark, the record did not indicate
that the trial court acted on Landmark’s motion for summary judgment brought on
Metex’s claims against Landmark.
The summary judgment orders that gave rise to the previous appeal only
concerned Landmark’s and Seneca’s motions for summary judgment pertaining to
Eagle’s claims. However, Metex was an appellee in the previous appeal because its
claims against Landmark and Seneca remained pending at the time the summary
judgment orders were entered. Additionally, Metex’s attorneys (who were the same
attorneys representing Eagle) listed Metex as a party joining Eagle in its filings in
the previous appeal.
Landmark asserted in its motion for summary judgment that Eagle lacked
standing as a matter of law to assert claims against Landmark. Landmark
additionally alleged that Eagle’s claims were barred because Metex breached
conditions in the Landmark insurance policy. Seneca asserted that it was entitled to
summary judgment because Metex breached conditions precedent in the Seneca
policy that prejudiced Seneca as a matter of law. Seneca also asserted that Eagle did
not have a cause of action against it either directly or as assignee of Metex.
In the previous appeal, we held that, as a matter of law, Eagle was not a first-
party claimant and thus could not sue Landmark for breach of contract under the
policy. See Landmark, 530 S.W.3d at 769 (“[W]e agree with Landmark that Eagle
6
is not an insured under the Landmark policy and that it cannot sue Landmark for
breach of contract under the policy as a first-party claimant.”). For the same reason,
we held that Eagle could not maintain its extra-contractual claims against Landmark.
Id. (“Eagle’s status as third-party claimant also precludes it from asserting [its] extra-
contractual claims.”). We further held that, because the underlying judgments
against Metex were not binding on Landmark, Eagle did not have a ripe claim as a
third-party claimant. Id. at 772 (“[W]ithout a sufficient judgment against Metex,
Eagle does not have a ripe claim under the no-direct-action rule to pursue a breach
of contract claim as a judgment creditor against Landmark.”).
We also held that the same analysis applied with respect to Eagle’s claims
against Seneca. Id. at 773 (“Eagle’s status as a third-party claimant under the Seneca
policy for Eagle’s claims against Metex for property damage leads to the same
analysis and result as with Eagle’s claims under the Landmark policy.”). Thus,
because Eagle could not maintain its suit against Landmark and Seneca on any of its
pleaded claims, we reversed the judgment of the trial court and rendered judgment
against Eagle. Id. at 773–74.
We noted in the previous appeal that Eagle referenced an assignment that it
had “recently received” from Metex. Id. at 772. We further noted that the
assignment was not before the trial court and that it was not a part of the record on
appeal. Id. For those reasons, we specifically excepted the alleged assignment as a
basis for rendering judgment against Eagle. Id. We also remanded the case with
respect to Metex’s claims against Landmark and Seneca because those claims were
still pending in the trial court and we did not address them in the previous appeal.
Id. at 774.
According to the record now before us, Metex signed the assignment to Eagle
on July 25, 2014, and Eagle signed it on August 4, 2014. Landmark filed a copy of
7
the assignment as an exhibit to its motion to dismiss. The assignment provided that
Metex assigned the following to Eagle:
[A]ll of [Metex’s] right, title, and interest in and to any and all sums of
money now due or to become due to Metex . . . . [Metex] further grants
and conveys to [Eagle] all of its right, title and interest in and to all of
[Metex’s] causes of action against [Landmark] and [Seneca], including
but not limited to breach of contract, violations of the Texas Insurance
Code, negligence, and property damage . . . .
This assignment conveys to [Eagle] the full right and power to
maintain an action against [Landmark] and [Seneca] . . . .1
The following timeline places the assignment’s execution in the context of the
litigation that led to the previous appeal:
• Seneca and Landmark filed motions for summary judgment against
Metex and Eagle on May 6, 2014, and May 13, 2014, respectively.
• Eagle and Metex filed responses to the motions on June 2, 2014, and
the trial court denied the motions on June 24, 2014.
• On July 21, 2014, and July 24, 2014, respectively, Landmark and
Seneca filed motions for reconsideration and, in the alternative,
motions for permission to file an interlocutory appeal.
• On July 25, 2014, Metex signed the assignment that is the subject of
this appeal, which assigned all claims and causes of action against
Landmark and Seneca to Eagle.
• On August 4, 2014, Eagle executed the assignment.
• On August 25, 2014, Eagle filed responses to Landmark’s and Seneca’s
motions for reconsideration of the denial of their motions for summary
judgment. Eagle did not refer to the assignment in its responses.2
1
Metex asserted claims against Landmark and Seneca for breach of contract, unfair claim settlement
practices, breach of the duty of good faith and fair dealing, failure to comply with the prompt payment
statute, and violations of the Deceptive Trade Practices Act.
2
Landmark asserts that Eagle provided a copy of the assignment to it in September 2014.
8
• In briefs filed in the previous appeal on January 12, 2015, and February
11, 2015, Eagle and Metex made reference to the assignment. They
referred to the assignment in the following terms: (1) “Eagle has also
recently received an assignment from Metex for all causes of action
against Seneca,” and (2) “As stated previously, Eagle has also recently
received an assignment from Metex for all causes of action against
Landmark.”
Eagle and Metex now rely on the assignment as a basis for Eagle’s ability to sue on
the policies.
This appeal concerns the proceedings that occurred in the trial court upon
remand. We issued mandate in the previous appeal on November 3, 2017. It
provided in relevant part as follows:
Therefore, in accordance with this court’s opinion, the orders of the trial
court are reversed, and judgment is rendered in favor of Landmark
American Insurance Co. and Seneca Specialty Insurance Co. on the
claims filed against them by Eagle Supply & Manufacturing L.P. f/k/a
Eagle Construction and Environmental Services, L.P. The remainder
of the cause is remanded to the trial court for further proceedings.
None of the parties filed any amended pleadings upon remand. The case remained
inactive at the trial court level until the trial court granted Landmark’s motion to lift
a stay imposed after the institution of the permissive appeal. Approximately three
months later, Seneca and Landmark filed motions to dismiss with prejudice based
upon our prior opinion.3
Landmark and Seneca alleged in their motions to dismiss that Eagle was no
longer a party in the case as a result of our judgment in the previous appeal. They
further asserted that, because Metex had previously assigned all of its claims and
3
Seneca also filed a motion for summary judgment in the alternative. However, the trial court did
not rule on the motion for summary judgment.
9
causes of action to Eagle, Metex no longer had any claims to assert and therefore
lacked standing in the trial court.
In response, Eagle and Metex asserted that, because Metex assigned all claims
and causes of action to Eagle, Eagle is a real party in interest to Metex’s claims, and
therefore Eagle has standing to pursue those claims in the trial court. Specifically,
they argue that, because we explicitly did not consider the assignment in the previous
appeal and we remanded for consideration of Metex’s claims in the trial court, our
judgment neither precluded Metex’s claims nor did it preclude Eagle’s ability to
pursue claims as Metex’s assignee.
The trial court granted Landmark’s and Seneca’s motions by dismissing the
claims of both Eagle and Metex with prejudice. Eagle and Metex filed a request for
the trial court to prepare written findings of fact and conclusions of law. The trial
court did not enter the requested findings. Eagle and Metex also filed a motion to
reinstate the case and a motion for new trial seeking to set aside the orders dismissing
the case. The motion for new trial was overruled by operation of law. See TEX. R.
CIV. P. 329b. This appeal followed.
Analysis
We begin our analysis by noting that this case arrives to us in an unusual
procedural posture in at least two respects. First, the previous appeal was a
permissive appeal from the denial of motions for summary judgment. An order
denying a summary judgment motion is generally not appealable because it is an
interlocutory order and not a final judgment. Humphreys v. Caldwell, 888 S.W.2d
469, 470 (Tex. 1994). Second, the case is back before us on orders that granted
motions to dismiss. The use of a motion to dismiss as a procedural vehicle for a
summary adjudication of a case is generally not available. Centennial Ins. Co. v.
Commercial Union Ins. Cos., 803 S.W.2d 479, 482 (Tex. App.—Houston [14th
Dist.] 1991, no writ). Landmark and Seneca assert that their motions to dismiss were
10
proper because they asserted a lack of subject-matter jurisdiction by challenging
Eagle’s and Metex’s standing. Courts have recognized that the use of a motion to
dismiss based upon jurisdictional grounds is proper. See AC Interests, L.P. v. Tex.
Comm’n on Envtl. Quality, 543 S.W.3d 703, 706 (Tex. 2018) (citing Bland Indep.
Sch. Dist. v. Blue, 34 S.W.3d 547, 554 (Tex. 2000)).
As noted above, little activity occurred in the trial court after we remanded
the case. None of the parties amended their pleadings. Thus, Eagle did not have a
pleading asserting a claim as Metex’s assignee. Landmark and Seneca filed their
motions to dismiss primarily based on our prior disposition of the case in the
previous appeal. Landmark and Seneca asserted that a dismissal with prejudice was
required by our prior opinion, judgment, and mandate. They presented this
contention even though we remanded the case to the trial court for the consideration
of claims that were not before us. As specified in our prior opinion, we did not
address Metex’s claims against Seneca and Landmark, and we did not address any
claims related to the assignment of claims that Eagle asserted that it had received
from Metex. The only additional matter of substance before the trial court at the
hearing on the motions to dismiss was the written assignment between Metex and
Eagle.
The contentions of Landmark and Seneca can be summarized as follows:
(1) as a result of the prior appeal, Eagle is no longer a party to the suit and therefore
lacks standing; (2) Eagle cannot now assert a claim as an assignee of Metex because
Eagle did not plead such a claim previously; (3) Metex does not have standing
because it assigned all of its claims to Eagle; and (4) alternatively, as a result of our
disposition of the prior appeal, neither Metex nor Eagle can rely on the previous
judgments rendered against Metex.
Eagle and Metex assert in their second issue that the trial court erred by
entering a dismissal with prejudice. In presenting this issue, Eagle and Metex are
11
essentially asserting that the trial court should have given Eagle an opportunity to
amend its pleadings so that Eagle could assert Metex’s claims as an assignee. Their
third issue is related to the second issue because Eagle and Metex assert that Metex’s
claims remain viable after remand and that Eagle can assert them as Metex’s
assignee.
Eagle’s and Metex’s second and third issues, as well as Landmark’s and
Seneca’s responses thereto, present a question of standing because standing was the
basis for Landmark’s and Seneca’s motions to dismiss. As we noted in our prior
opinion, “[s]tanding is a matter that concerns the jurisdiction of a court to afford the
relief requested, rather than the right of a plaintiff to maintain a suit for the relief
requested.” Landmark, 530 S.W.3d at 766 (citing Sneed v. Webre, 465 S.W.3d 169,
186 (Tex. 2015)). “A plaintiff has standing when it is personally aggrieved,
regardless of whether it is acting with legal authority; a party has capacity when it
has the legal authority to act, regardless of whether it has a justiciable interest in the
controversy.” Nootsie, Ltd. v. Williamson Cty. Appraisal Dist., 925 S.W.2d 659,
661 (Tex. 1996). “A plaintiff must have both standing and capacity to bring a
lawsuit.” Austin Nursing Ctr., Inc. v. Lovato, 171 S.W.3d 845, 848 (Tex. 2005).
Standing is an issue that cannot be waived, but capacity can be waived. Coastal
Liquids Transp., L.P. v. Harris Cty. Appraisal Dist., 46 S.W.3d 880, 884 (Tex.
2001); see Lovato, 171 S.W.3d at 849 (A challenge to a party’s capacity must be
raised by a verified pleading in the trial court. (citing TEX. R. CIV. P. 93(1)-(2))).
Because standing is a requirement of subject-matter jurisdiction, we review a
trial court’s determination of standing de novo. Frost Nat’l Bank v. Fernandez, 315
S.W.3d 494, 502 (Tex. 2010). Eagle and Metex assert in their reply brief that Eagle
is not trying to bring any claims that were rendered against Eagle in the previous
appeal. Instead, Eagle is attempting to assert claims that it would have as Metex’s
assignee. Thus, we focus on Eagle’s standing as Metex’s assignee.
12
As a party to the express contract of assignment, we conclude that Eagle has
standing to assert Metex’s causes of action that Metex assigned to Eagle. An
assignment is a contract between the assignor of a right and an assignee, who
receives the authority to assert that right. Univ. of Tex. Med. Branch at Galveston v.
Allan, 777 S.W.2d 450, 453 (Tex. App.—Houston [14th Dist.] 1989, no writ). We
noted in Bans Properties, L.L.C. v. Housing Authority of Odessa that a party to a
contract generally has standing to maintain a suit on the contract. 327 S.W.3d 310,
314 (Tex. App.—Eastland 2010, no pet.) (citing Interstate Contracting Corp. v. City
of Dallas, 135 S.W.3d 605, 618 (Tex. 2004)). Whether a party is entitled to sue on
a contract is not truly a standing issue because it does not affect the jurisdiction of
the court. Transcon. Realty Inv’rs, Inc. v. Wicks, 442 S.W.3d 676, 679 (Tex. App.—
Dallas 2014, pet. denied).
Rather than standing, Landmark’s and Seneca’s contentions concern capacity
because they concern whether Eagle or Metex has the legal authority to pursue
Metex’s claims.4 See Pike v. Tex. EMC Mgmt., LLC, 610 S.W.3d 763, 775 (Tex.
2020). When a cause of action is assigned or transferred, the assignee becomes the
real party in interest with the authority to prosecute the suit to judgment. Tex. Mach.
& Equip. Co. v. Gordon Knox Oil & Expl. Co., 442 S.W.2d 315, 317 (Tex. 1969);
Flagstar Bank, FSB v. Walker, 451 S.W.3d 490, 497 (Tex. App.—Dallas 2014, no
pet.). Furthermore, the assignee of a cause of action can sue in the name of his
assignor. Gordon Knox, 442 S.W.2d at 317; see Kerlin v. Sauceda, 263 S.W.3d 920,
932 (Tex. 2008) (Brister, J. concurring). Thus, whether Metex’s claims against
Landmark and Seneca are prosecuted in Metex’s name or Eagle’s name, the trial
court had subject-matter jurisdiction to consider Metex’s claims. See Tex. Dep’t of
4
Because the trial court has not considered the question of capacity, we express no opinion on
Metex’s or Eagle’s capacity to bring suit.
13
Parks & Wildlife v. Miranda, 133 S.W.3d 217, 226 (Tex. 2004) (discussing a plea
to the jurisdiction that challenges the jurisdictional facts alleged by the plaintiff). In
this regard, Metex had a pleading on file asserting Metex’s claims.
Conversely, Eagle did not have a pleading on file asserting a right to recover
as an assignee of Metex. Eagle asserts that it should have the opportunity to amend
its pleading to assert claims as Metex’s assignee.5 Landmark and Seneca assert that
Eagle should not be allowed to amend its pleadings because Eagle is now out of the
case after the prior appeal and that, since Metex has assigned all of its claims to
Eagle—which is now a non-party, there is no plaintiff left to assert Metex’s claims.
In making these contentions, Landmark and Seneca are essentially asserting that,
under the doctrine of res judicata, Eagle should have asserted its claims as an
assignee of Metex prior to the issuance of our prior opinion and that its failure to do
so should preclude it from doing so now. We disagree.
Under the doctrine of res judicata, a final judgment in an action bars the parties
and their privies from bringing a second suit “not only on matters actually litigated,
but also on causes of action or defenses which arise out of the same subject matter
and which might have been litigated in the first suit.” Barr v. Resolution Trust Corp.
ex rel. Sunbelt Fed. Sav., 837 S.W.2d 627, 630 (Tex. 1992) (emphasis omitted)
(quoting Tex. Water Rights Comm. v. Crow Iron Works, 582 S.W.2d 768, 771–72
(Tex. 1979)).6 The application of res judicata is predicated on the existence of a
final judgment in a separate lawsuit. Creative Thinking Sources, Inc. v. Creative
Thinking, Inc., 74 S.W.3d 504, 512 (Tex. App.—Corpus Christi 2002, no pet.); see
5
Eagle and Metex presented a request to the trial court to amend their pleadings; this request was
presented in their motion to reinstate and motion for new trial.
6
Seneca cites Barr v. Resolution Trust Corp. on appeal. When a party seeks to dispose of a case on
the ground of res judicata, a motion for summary judgment is the usual procedural vehicle. Simulis,
L.L.C. v. Gen. Elec. Capital Corp., 392 S.W.3d 729, 735 n.7 (Tex. App.—Houston [14th Dist.] 2011, pet.
denied).
14
Caprock Inv. Corp. v. Montgomery, 321 S.W.3d 91, 100–01 (Tex. App.—Eastland
2010, pet. denied) (citing Creative Thinking).
Res judicata does not preclude Eagle from amending its pleadings to assert
Metex’s claims as an assignee after remand. Res judicata is inapplicable because
our prior opinion, judgment, and mandate did not occur in a separate lawsuit. See
Montgomery, 321 S.W.3d at 100. From a practical standpoint, Eagle had no reason
to amend its pleadings prior to the issuance of our prior opinion because it prevailed
in the trial court on Landmark’s and Seneca’s motions for summary judgment. See
6 ROY W. MCDONALD & ELAINE A. GRAFTON CARLSON, TEXAS CIVIL PRACTICE
§ 34:4 (2d ed.) (“If a motion for summary judgment is not successful, the parties are
free to amend their pleadings, add or delete claims or defenses, and join additional
parties, among other things.”).
Rather than res judicata, the applicable rule governing Eagle’s ability to
amend its pleadings is the one set out in Hudson v. Wakefield, 711 S.W.2d 628 (Tex.
1986). “Generally, when an appellate court reverses and remands a case for further
proceedings, and the mandate is not limited by special instructions, the effect is to
remand the case to the lower court on all issues of fact, and the case is reopened in
its entirety.” Simulis, L.L.C. v. Gen. Elec. Capital Corp., 392 S.W.3d 729, 734 (Tex.
App.—Houston [14th Dist.] 2011, pet. denied) (citing Hudson, 711 S.W.2d at 630).
This principle is particularly applicable in the context of an appeal involving a
summary judgment because the appellate court is limited in its consideration of the
relevant issues and facts. Hudson, 711 S.W.2d at 630–31; see MCDONALD &
CARLSON § 34:4 (citing Hudson for the suggestion that a limited remand is not
appropriate in an appeal involving a summary judgment).
“When an appellate court . . . renders the judgment a trial court should have
rendered, the judgment of the appellate court becomes the judgment of both courts,
as to those issues.” Bramlett v. Phillips, 359 S.W.3d 304, 310 (Tex. App.—Amarillo
15
2012), aff’d, 407 S.W.3d 229 (Tex. 2013) (citing Cook v. Cameron, 733 S.W.2d 137,
139 (Tex. 1987) (op. on rehearing)). “The mandate is the appellate court’s directive
commanding the lower court to comply with the appellate court’s judgment.” Id.The scope of an appellate court’s mandate is determined with reference to both the
appellate court’s opinion and the mandate itself. Id.; Cessna Aircraft Co. v. Aircraft
Network, LLC, 345 S.W.3d 139, 144 (Tex. App.—Dallas 2011, no pet.).
The issues that we rendered judgment on in the previous appeal were only the
claims that Eagle had previously asserted. We specifically excepted from our
decision Metex’s claims and any claims related to the assignment that Eagle asserted
it had received from Metex. Thus, our opinion, judgment, and mandate did not
preclude Metex’s claims—whether they were asserted by Metex or Eagle.
Accordingly, Landmark and Seneca were not entitled to a dismissal with prejudice
based upon our disposition of the prior appeal. We sustain Eagle’s and Metex’s
second and third issues.
Eagle’s and Metex’s fourth issue presents another matter over which the
parties disagree. This matter concerns a dispute over the effect of our prior ruling
on Metex’s claims. Because this dispute will affect the subsequent proceedings in
the trial court and involves conflicting interpretations of our prior disposition, we
consider it in the interest of judicial economy.
A Texas liability insurance policy imposes two distinct duties: the duty to
defend and the duty to indemnify. Farmers Tex. Cty. Mut. Ins. Co. v. Griffin, 955
S.W.2d 81, 82 (Tex. 1997); Trinity Universal Ins. Co. v. Cowan, 945 S.W.2d 819,
821–22 (Tex. 1997). Metex pleaded a cause of action against Landmark and Seneca
to the effect that they had failed to defend Metex in the bankruptcy proceeding
against Eagle’s damage claims and that Landmark and Seneca had failed to
indemnify Metex for the judgments that Eagle had obtained against Metex.
16
In the prior appeal, we determined that Eagle could not recover as a third-
party claimant against Landmark and Seneca on the judgments Eagle had obtained
against Metex because the judgments were not the result of a fully adversarial trial
as required by Great American Insurance Co. v. Hamel, 525 S.W.3d 655, 661–67
(Tex. 2017), and State Farm Fire & Casualty Co. v. Gandy, 925 S.W.2d 696, 714
(Tex. 1996). Landmark, 530 S.W.3d at 770–73. In this appeal, Eagle and Metex
assert that, if they establish that Landmark and Seneca breached their duty to defend
Metex, then Landmark and Seneca are barred from attacking the judgments rendered
against Metex in the bankruptcy court and the underlying suit. Conversely,
Landmark and Seneca contend that, under the law-of-the-case doctrine,7 our
determination that the judgments against Metex were not the result of a fully
adversarial trial under Hamel and Gandy preclude either Metex or Eagle, as Metex’s
assignee, from relying on the judgments against Metex irrespective of whether
Landmark and Seneca breached a duty to defend Metex.
Under the law-of-the-case doctrine, questions of law decided on appeal will
govern the case throughout its subsequent stages. Hudson, 711 S.W.2d at 630.
Functionally, the doctrine narrows the issues in subsequent stages of the litigation,
thus achieving uniformity of decision and judicial economy and efficiency. Id. We
determined in the prior appeal that the judgments that Eagle obtained against Metex
in the bankruptcy court and in the trial court below were not the result of a fully
adversarial trial under Hamel and Gandy. This was a question of law that we
determined in the prior appeal. We further conclude that this determination is
binding on Metex’s claims, whether they are asserted by Metex or by Eagle as
Metex’s assignee, irrespective of whether Landmark or Seneca breached their duty
7
As noted in Simulis, when a party seeks to dispose of a case under the law-of-the-case doctrine, a
motion for summary judgment is the usual procedural vehicle. 392 S.W.3d at 735 n.7.
17
to defend Metex. This holding is mandated by the holding in Hamel and Gandy.
Hamel, 525 S.W.3d at 668. Because the judgments that Eagle obtained against
Metex were not the result of a fully adversarial trial, they are not binding on
Landmark and Seneca under any circumstances. See id.
The court’s holding in Hamel also dictates the manner in which Metex’s
claims are to be resolved upon remand. The judgments that Eagle obtained against
Metex are not binding on Landmark and Seneca. See id. at 668–69. However, the
parties are permitted to litigate the underlying liability and damage issues in a
subsequent suit, including whether Landmark and Seneca breached a duty to defend
Metex.8 See id. at 669–71. In laymen’s terms, the parties are “back to square one”
on the question of Landmark’s and Seneca’s liability under the insurance policies
because the prior judgments are not binding on Landmark and Seneca as a matter of
law.9 See id. Furthermore, the judgments are not admissible as evidence in a
subsequent trial. See id. at 670–71. Accordingly, we overrule Eagle’s and Metex’s
fourth issue to the extent that it asserts that Landmark and Seneca can be bound by
the prior judgments that Eagle obtained against Metex. We do not reach the
remainder of Eagle’s and Metex’s fourth issue or their first issue because they are
unnecessary to the disposition of this appeal. See TEX. R. APP. P. 47.1.
8
We express no opinion on whether either Landmark or Seneca breached a duty to defend Metex
or on the viability of those claims. We also express no opinion on the validity of the assignment between
Metex and Eagle. As noted in the briefing both in this appeal and the previous appeal, there are legal and
factual disputes concerning these claims.
9
As noted in Hamel, the doctrine of collateral estoppel does not preclude adjudication of liability
and damages in a subsequent suit. 525 S.W.3d at 669 n.10.
18
This Court’s Ruling
We reverse the orders of the trial court granting Landmark’s and Seneca’s
motions to dismiss with prejudice, and we remand the cause for further proceedings
consistent with this opinion.
JOHN M. BAILEY
CHIEF JUSTICE
January 29, 2021
Panel consists of: Bailey, C.J.,
Trotter, J., and Wright, S.C.J.10
Williams, J., not participating.
10
Jim R. Wright, Senior Chief Justice (Retired), Court of Appeals, 11th District of Texas at
Eastland, sitting by assignment.
19