in Re Morley & Morley, P.C., Ajmlaw P.C., Arden J. Morley, Elaine Morley and Lookout Services, Inc.

Petition for Writ of Mandamus Denied, Motion for Emergency Stay Denied as Moot, and Memorandum Opinion filed November 25, 2008

Petition for Writ of Mandamus Denied, Motion for Emergency Stay Denied as Moot, and Memorandum Opinion filed November 25, 2008.

In The

Fourteenth Court of Appeals

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NO. 14-08-01062-CV

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IN RE MORLEY & MORLEY, P.C., AJMLAW, P.C., ARDEN J. MORLEY, ELAINE MORLEY, and LOOKOUT SERVICES, INC., Relators

ORIGINAL PROCEEDING

WRIT OF MANDAMUS

M E M O R A N D U M   O P I N I O N

On November 21, 2008, relators filed a petition for writ of mandamus and a motion for emergency stay with this court.  See Tex. Gov=t Code Ann. ' 22.221(b) (Vernon 2004); Tex. R. App. P. 52.  Relators contend the respondent^[1] abused her discretion by denying their consolidation motion.  Because we hold relators= appellate remedy is adequate, we deny the petition for writ of mandamus and deny as moot relators= motion for emergency stay.

                                                               BACKGROUND

Relators, which consist of Morley & Morley, P.C., AJMLAW, P.C., Arden J. Morley, Elaine Morley, and Lookout Services, Inc., are the defendants in a lawsuit brought in county court by the real party in interest, John Anderson & Co., L.L.C. d/b/a Houston Computer Consulting, L.L.C. (AHCC@).  Pursuant to a written contract, HCC provided computer consulting services to relators.  HCC brought suit in county court, contending relators failed to pay several of HCC=s invoices totaling $19,842.52.  In its suit, HCC also has requested an award of attorney=s fees, and pre-judgment and post-judgment interest.  The county court has scheduled a December 1, 2008 trial date.

Relators contend they were fraudulently induced to enter into the computer-services contract, however, and claim to have suffered damages in excess of the jurisdictional limits permitted for the county court.  Therefore, on October 17, 2008, relators brought a separate suit in district court, in which they assert a counter-claim against John Anderson and John Anderson & Co., L.L.C.  On November 3, relators asked the county court to consolidate the two lawsuits and then transfer the consolidated suit to district court.  The county court denied relators= motion on November 7. 

On November 21, relators filed a petition for writ of mandamus, contending the county court abused its discretion by denying their consolidation and transfer motion.  In the interim, relators ask us to issue an emergency order staying the county court=s December 1 trial setting.  We conclude relators have an adequate appellate remedy.  Therefore, we deny the mandamus petition and further deny, as moot, relators= motion for emergency stay.

                                                       STANDARD OF REVIEW

To be entitled to mandamus relief, a relator must demonstrate that the trial court clearly abused its discretion, and that relators has no adequate remedy by appeal.  In re Sw. Bell Tel. Co., 226 S.W.3d 400, 403 (Tex. 2007) (orig. proceeding).  A trial court abuses its discretion if it renders a decision that is arbitrary, unreasonable, or lacking in basis or reference to guiding legal principles.  See Walker v. Packer, 827 S.W.2d 833, 839 (Tex. 1992) (orig. proceeding); Johnson v. Fourth Court of Appeals, 700 S.W.2d 916, 917 (Tex. 1985) (orig. proceeding).  With respect to the resolution of factual issues, we will not substitute our judgment for the trial court=s; therefore, the relator must establish the trial court reasonably could have reached only one decision.  Walker, 827 S.W.2d at 839B40.  On the other hand, a trial court has no discretion in determining what the law is or applying the law to the facts.  See id. at 840.  Accordingly, a clear failure by the trial court to analyze or apply the law correctly constitutes an abuse of discretion.  Id.

                            ADEQUACY OF RELATORS= APPELLATE REMEDY

Whether a mandamus petitioner=s appellate remedy is adequate Ahas no comprehensive definition.@  In re Prudential Ins. Co. of Am., 148 S.W.3d 124, 136 (Tex. 2004) (orig. proceeding).  In deciding the adequacy of relators= appellate remedy, we must carefully balance jurisprudential considerations implicating both public and private interests.  See id. In determining whether appeal is an adequate remedy from an order denying consolidation, we consider whether the benefits outweigh the detriments of mandamus review.  See id.  An appeal is inadequate when a litigant is in danger of permanently losing substantial rights.  In re Van Waters & Rogers, Inc., 145 S.W.3d 203, 211 (Tex. 2004) (orig. proceeding).  That scenario may arise if an appellate court would not be able to cure the error, the litigant=s ability to present a viable claim or defense is vitiated, or the error cannot be made part of the appellate record.  Id.

None of these scenarios is present in this case.  Relators contend its fraudulent-inducement counterclaim cannot be presented in county court because the amount in controversy exceeds $100,000.  See Tex. Gov=t Code Ann. ' 25.0003(c)(1) (Vernon 2004). However, its counterclaim may be tried separately in district court; therefore, relators= ability to sue HCC for fraudulent inducement is preserved.  See Van Waters & Rogers, 145 S.W.3d at 211.  Relators respond that their counterclaim, which cannot be presented in the county-court trial, may be barred in the district court under the doctrines of collateral estoppel and/or res judicata.  We disagree.

Within the general doctrine of res judicata, there are two principal categories: (1) claim preclusion, also known as res judicata, and (2) issue preclusion, otherwise known as collateral estoppel.  Barr v. Resolution Trust Corp., 837 S.W.2d 627, 628 (Tex. 1992).  Res judicata prevents a party from re-litigating a claim that either has been finally adjudicated or, through the use of diligence, should have been litigated in the previous suit.  See id. By contrast, collateral estoppel prevents the re-litigation of particular issues that already were resolved in an earlier suit.  See id. at 628B29.  

Initially, we note that the Legislature has limited the application of res judicata when a county-court trial will precede a trial in district court.  See Tex. Civ. Prac. & Rem. Code Ann. ' 31.004(a) (Vernon 2008); C/S Solutions, Inc. v. Energy Maint. Servs. Group LLC, ___ S.W.3d ___, 2008 WL 4757003, at *8 (Tex. App.CHouston [1st Dist.] Oct. 30, 2008, no pet. h.).  We further conclude that neither doctrine applies in this case, because the county court lacks subject-matter jurisdiction to hear relators= fraudulent-inducement counterclaim. See Kitchen Designs, Inc. v. Wood, 584 S.W.2d 305, 307 (Tex. Civ. App.CTexarkana 1979, writ ref=d n.r.e.) (requiring dismissal of counterclaim exceeding county court=s jurisdictional limit).  Res judicata presumes that the prior judgment was rendered by a court of competent jurisdiction.  See Igal v. Brightstar Info. Tech. Group, Inc., 250 S.W.3d 78, 86 (Tex. 2008).  Thus, res judicata does not bar the subsequent litigation of a counterclaim over which the prior court lacked jurisdiction.  See id.; Texas A&M Univ. Sys. v. Luxemburg, 93 S.W.3d 410, 418 (Tex. App.CHouston [14th Dist.] 2002, pet. denied).  Similarly, collateral estoppel does not apply if the previous trial court lacks the jurisdiction to make a full and final adjudication of the defendant=s counterclaim.  See SWEPI, L.P. v. Camden Res., Inc., 139 S.W.3d 332, 340 (Tex. App.CSan Antonio 2004, pet. denied).

Relators have not shown that they stand to permanently lose substantial rights.  See Van Waters & Rogers, 145 S.W.3d at 211.  Although separate trials in county court and district court may be more expensive and less efficient than a consolidated trial in district court, an appellate remedy is not inadequate merely because it may involve more expense or delay than mandamus.  See Walker, 827 S.W.2d at 842.  We conclude relators have not demonstrated their entitlement to a writ of mandamus.

Accordingly, we deny the petition for writ of mandamus.  Because of our resolution of this matter, we need not decide whether relators have demonstrated an abuse of discretion by the trial court.  We also deny as moot relators= motion for emergency stay.

PER CURIAM

Petition Denied, Motion for Emergency Stay Denied as Moot, and Memorandum Opinion filed, November 25, 2008.

Panel consists of Chief Justice Hedges, and Justices Yates and Boyce.

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            ^[1]  The respondent is the Honorable Roberta A. Lloyd, presiding judge of County Court at Law #4, Harris County.