Gene C. Steele v. Velma Duke, Independent of the Estate of Floyd Duke, Jr. ( 2012 )

IN THE
TENTH COURT OF APPEALS
No. 10-10-00045-CV
GENE C. STEELE,
Appellant
v.
VELMA DUKE, INDEPENDENT EXECUTRIX
OF THE ESTATE OF FLOYD DUKE, JR., DECEASED,
Appellee
From the 77th District Court
Limestone County, Texas
Trial Court No. 28-013-A1
MEMORANDUM OPINION
This appeal is the latest chapter in litigation spanning more than two decades
regarding title to a 927.822-acre tract of land and its minerals. Our 2007 opinion, Steele
v. McDonald, No. 10-05-00266-CV, 2007 WL 2200008 (Tex. App.—Waco Aug. 1, 2007,
pet. denied) (mem. op.), provides a background of the dispute (the first lawsuit), which
resulted in a settlement in 2005 and entry of a final judgment.
The case underlying this appeal began in May 2006 with Sally Steele and Thomas
E. Simmons suing Floyd Duke, Jr. for fraud in connection with an allegedly forged and
fraudulent 1970 deed by which Floyd claimed title to the subject property in the first
lawsuit (a trespass-to-try-title suit filed in 1986). Floyd asserted res judicata as an
affirmative defense to the fraud claim.
Floyd died in 2007, and in 2009, his wife Velma, as independent executrix of
Floyd’s estate (hereinafter Duke), substituted as the defendant. Duke also asserted a
third-party action against Gene C. Steele, Sally’s husband, alleging against him and also
against Sally and Simmons (in an amended counterclaim), a breach-of-contract claim
pertaining to the 2005 settlement. Gene filed a counterclaim against Duke for fraud in
connection with the allegedly forged and fraudulent 1970 deed.
Duke then moved for partial summary judgment against the fraud claims of
Gene, Sally, and Simmons, asserting that their fraud claims were barred by res judicata.
The trial court granted the motion for partial summary judgment and then severed its
ruling to make it an appealable final judgment. Gene appeals the partial summary
judgment,1 asserting in one issue that the trial court erred in granting summary
judgment on Duke’s affirmative defense of res judicata.
We review a trial court’s summary judgment de novo. Provident Life & Accident
Ins. Co. v. Knott, 128 S.W.3d 211, 215 (Tex. 2003). In reviewing a traditional motion for
summary judgment, we must consider whether reasonable and fair-minded jurors
could differ in their conclusions in light of all of the evidence presented. See Goodyear
Tire & Rubber Co. v. Mayes, 236 S.W.3d 754, 755 (Tex. 2007). We must consider all the
evidence in the light most favorable to the nonmovant, indulging every reasonable
1 Sally and Simmons have not appealed.
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inference in favor of the nonmovant and resolving any doubts against the motion. See
id. at 756.
Gene’s fraud counterclaim alleges that the 1970 deed by which Floyd claimed
title to the subject property in the first lawsuit was forged and that Floyd’s use of it in
the first lawsuit and trial, which ended in the 2005 settlement and final judgment,
fraudulently induced Gene to enter into the settlement. Duke’s res judicata defense
primarily asserts that the allegedly forged 1970 deed and Floyd’s allegedly fraudulent
use of it in the first lawsuit could have been raised by Gene in the first lawsuit through
the use of diligence.
The policies behind res judicata reflect the need to bring all litigation to an end,
to prevent vexatious litigation, to maintain stability of court decisions, to promote
judicial economy, and to prevent double recovery. Barr v. Resolution Trust Corp., 837
S.W.2d 627, 629 (Tex. 1992).
Res judicata bars the relitigation of claims that have been finally
adjudicated or that could have been litigated in the prior action. See Barr
v. Resolution Trust Corp., 837 S.W.2d 627, 628 (Tex. 1992). For res judicata
to apply, the following elements must be present: (1) a prior final
judgment on the merits by a court of competent jurisdiction; (2) the same
parties or those in privity with them; and (3) a second action based on the
same claims as were raised or could have been raised in the first action.
Daccach, 217 S.W.3d at 449. Thus, a party may not pursue a claim
determined by the final judgment of a court of competent jurisdiction in a
prior suit as a ground of recovery in a later suit against the same parties.
Tex. Water Rights Comm’n v. Crow Iron Works, 582 S.W.2d 768, 771-72 (Tex.
1979). In short, res judicata precludes parties from relitigating claims that
have been finally adjudicated by a competent tribunal. See Barr, 837
S.W.2d at 628.
Igal v. Brightstar Info. Tech. Group, Inc., 250 S.W.3d 78, 86 (Tex. 2008).
Steele v. Duke Page 3
In this case, it is undisputed that the first two elements are met. The third
element is at issue in this appeal; for that element, Texas follows the transactional
approach.
Under the transactional approach followed in Texas, a subsequent
suit is barred if it arises out of the same subject matter as the prior suit,
and that subject matter could have been litigated in the prior suit. Barr,
837 S.W.2d at 631. We explained in Barr that “a final judgment on an
action extinguishes the right to bring suit on the transaction, or series of
connected transactions, out of which the action arose.” Id. at 631 (citing
RESTATEMENT (SECOND) OF JUDGMENTS § 24(1) (1982)). Determining the
scope of the “subject matter” or “transaction” of the prior suit requires “an
analysis of the factual matters that make up the gist of the complaint,
without regard to the form of action.” Id. at 630. This should be done
pragmatically, “’giving weight to such considerations as whether the facts
are related in time, space, origin, or motivation, whether they form a
convenient trial unit, and whether their treatment as a trial unit conforms
to the parties’ expectations or business understanding or usage.’’ Id. at
631 (quoting RESTATEMENT (SECOND) OF JUDGMENTS § 24(2) (1982)). “Any
cause of action which arises out of those same facts should, if practicable,
be litigated in the same lawsuit.” Id. at 630.
Citizens Ins. Co. v. Daccach, 217 S.W.3d 430, 449 (Tex. 2007).
Within the third element, the parties agree that the summary-judgment issue is
whether Gene’s claims of the allegedly forged 1970 deed and Floyd’s allegedly
fraudulent use of it in the first lawsuit could (and should) have been raised in the first
lawsuit with the use of diligence. “Res judicata, or claims preclusion, prevents the
relitigation of a claim or cause of action that has been finally adjudicated, as well as
related matters that, with the use of diligence, should have been litigated in the prior suit.”
Barr, 837 S.W.2d at 628 (emphasis added).
In support of her res judicata affirmative defense to Gene’s fraud claim, Duke
filed the following summary-judgment evidence:
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 A “trial abstract” (see TEX. R. CIV. P. 793) that Floyd filed in the first lawsuit on
April 10, 1995;2 it states that Floyd will be relying on the following document
as evidence in his behalf:
Deed dated November 27, 1970, from Floyd F. Duke and
wife M.L. Duke to Floyd Duke, Jr., acknowledged by said
Floyd F. Duke and wife before Mary E. Lindsey, Notary
Public in and for Nueces County, Texas, on November 27,
1970, and recorded in Vol. 909, at pages 49, 50 and 51, of the
Real Property Records of Limestone County, Texas.
 Floyd’s interrogatory answer, filed in the first lawsuit also on April 10, 1995,
identifying the following document giving rise to a claim of title:
Deed dated 27 November 1970, from Floyd F. Duke and wife
M.L. Duke to Floyd Duke, Jr., located now in the law office
of … and having contents as shown by the record thereof in
Vol. 909, at pages 49 et seq., Deed Records of Limestone
County, Texas.
A copy of the 1970 deed was filed by Steele with his summary-judgment
response, and it shows that the deed was filed for record with the County Clerk of
Limestone County on May 12, 1994. As Duke points out, a properly recorded deed is
notice to all persons of its existence. TEX. PROP. CODE ANN. § 13.002 (West 2004); see
Corpus v. Arriaga, 294 S.W.3d 629, 635 (Tex. App.—Houston [1st Dist.] 2009, no pet.)
(“The purpose of recording statutes in Texas is to give notice to all persons of the
existence of the instrument.”).
A trespass-to-try-title action is a procedure by which rival claims to title or right
of possession may be adjudicated. King Ranch, Inc. v. Chapman, 118 S.W.3d 742, 755
2 With the first lawsuit’s trial occurring in January 2005, the parties were on notice of Floyd’s trial abstract
for almost ten years. See Cain v. Roberts, 644 S.W.2d 492, 493 (Tex. App.—Dallas 1982, writ ref’d n.r.e.)
(filing of trial abstract fourteen months before trial gave opponent adequate notice of instruments being
relied on to establish title).
Steele v. Duke Page 5
(Tex. 2003); see Clark v. Snider, 738 S.W.2d 49, 50 (Tex. App.—Texarkana 1987, no writ)
(holding that contention of forgery of deed in chain of title is issue that should have
been made in prior trespass-to-try-title suit); see also Bellaire Kirkpatrick Joint Venture v.
Loots, 826 S.W.2d 205, 209-10 (Tex. App.—Fort Worth 1992, writ denied) (discussing
effect of forged deed in trespass-to-try-title suit).
Gene did not file any summary-judgment evidence directly pertaining to his use
of diligence to discover and raise the forgery issue in the first lawsuit. Instead, the only
summary-judgment evidence that he filed was a 2006 document examiner’s preliminary
report concluding that the 1970 deed was a forgery. From that, Gene argues that he had
no reason to doubt the 1970 deed’s authenticity in the first lawsuit and that he did not
become aware of the alleged forgery until after judgment was entered in the first
lawsuit. This argument begs the use-of-diligence question.
With the use of diligence, the validity of the 1970 deed could have been and
should have been litigated in the first lawsuit. See Clark, 738 S.W.2d at 50 (holding that
contention of forgery of deed in chain of title is issue that should have been made in
prior trespass-to-try-title suit); see also Barr, 837 S.W.2d at 631 (“Modern rules of
procedure obviate the need to give parties two bites at the apple, as was done in Griffin,
to ensure that a claim receives full adjudication. Discovery should put a claimant on
notice of any need for alternative pleading.”); cf. King Ranch, 118 S.W.3d at 752
(“Intrinsic fraud, by contrast, relates to the merits of the issues that were presented and
presumably were or should have been settled in the former action. Within that term are
included such matters as fraudulent instruments, perjured testimony, or any matter
Steele v. Duke Page 6
which was actually presented to and considered by the trial court in rendering the
judgment assailed. Such fraud will not support a bill of review, because each party
must guard against adverse findings on issues directly presented. Issues underlying
the judgment attacked by a bill of review are intrinsic and thus have no probative value
on the fraud necessary to a bill of review.”) (citations omitted); cf. id. at 758 (“[T]o
permit multiple actions leaves an undesirable uncertainty in the economic affairs of
those subject to them. Thus, the social interest in preserving free marketability of
property, recognized in recording and registration acts and in statutes of limitations,
can be undermined by allowing repeated litigation of the same title on various grounds
existing at the time the first action is brought.”) (quoting Developments in the Law—Res
Judicata, 65 HARV. L.REV. 818, 827-28 (March 1952). The trial court properly granted
summary judgment on Duke’s affirmative defense of res judicata.
We overrule Gene’s sole issue and affirm the trial court’s judgment.
REX D. DAVIS
Justice
Before Chief Justice Gray,
Justice Davis, and
Justice Scoggins
Affirmed
Opinion delivered and filed March 28, 2012
[CV06]
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