I Gotcha, Inc. v. Wanda Holzer and Texas Workforce Commission ( 2010 )

COURT OF APPEALS
SECOND DISTRICT OF TEXAS
FORT WORTH
NO. 2-09-236-CV
I GOTCHA, INC. APPELLANT
V.
W ANDA HOLZER AND TEXAS APPELLEES
W ORKFORCE COMMISSION
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FROM THE 43RD DISTRICT COURT OF PARKER COUNTY
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MEMORANDUM OPINION 1
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I Gotcha, Inc. appeals from the trial court’s summary judgment in favor of
W anda Holzer and the Texas W orkforce Commission (TW C) on I Gotcha’s suit for
judicial review of TW C’s decision to award unemployment compensation benefits
(UCB) to Holzer. In one issue, I Gotcha argues that the trial court erred by granting
summary judgment because Holzer was terminated for cause. I Gotcha has not
1
 See Tex. R. App. P. 47.4.
shown that the trial court erred by granting summary judgment, and, accordingly, we
affirm.
In 2006, Holzer was an employee of I Gotcha. In February 2006, Holzer filed
an Equal Employment Opportunity Commission (EEOC) charge against I Gotcha.
After I Gotcha terminated her employment in December 2006, Holzer filed a claim
for UCB with TW C.
On February 1, 2007, TW C approved Holzer’s claim for UCB after the TW C
examiner determined that she had been terminated for reasons other than work-
connected misconduct. This determination was affirmed by TW C’s Appeals Tribunal
in April 2007. I Gotcha appealed that determination to the TW C Commission
Appeals, which in June 2007 adopted the findings of fact and conclusions of law of
the Tribunal and affirmed the Tribunal’s decision in all respects. That same month,
Holzer received right to sue notices from the EEOC.
On June 25, 2007, I Gotcha filed suit in Tarrant County against Holzer and
TW C for judicial review of TW C’s determination to grant Holzer UCB. I Gotcha
alleged that Holzer had been discharged for work-connected misconduct under
section 207.044 of the labor code 2 and that therefore no UCB were due to her.
2
 Tex. Lab. Code Ann. § 207.044(a) (Vernon 2006) (providing that an
individual is disqualified for benefits if the person was discharged for misconduct
connected with the person’s last work); see id. § 201.012(a) (defining the term
“misconduct”).
2
In October 2007, while I Gotcha’s suit was pending, Holzer filed suit against
I Gotcha in federal district court. She asserted claims of discrimination based on her
age, gender, and race; sexual harassment; and retaliation. On February 25, 2009,
after a jury trial, the trial court signed a take nothing judgment on Holzer’s claims.
In the state court action, TW C and Holzer filed a joint motion for summary
judgment. They asserted that there was substantial evidence to support TW C’s
decision, and, therefore, as a matter of law, TW C’s decision should be affirmed. The
trial court granted the motion and entered a final judgment affirming TW C’s decision
on Holzer’s claim for unemployment benefits. I Gotcha now appeals.
In one issue, I Gotcha argues that the trial court erred by granting summary
judgment for Holzer because Holzer was terminated for cause. I Gotcha makes two
arguments in support of this issue: (1) Holzer failed to show or illustrate as a matter
of law the basis for her discharge or that the reason was not work-connected
misconduct “and more importantly why the decision of the Texas W orkforce
Commission should be affirmed” and (2) Holzer is barred by the doctrine of res
judicata from asserting a case for wrongful termination.
Judicial review of a TW C determination is by trial de novo based on the
substantial evidence rule. 3 The trial court conducts an evidentiary trial to “determine
whether the agency’s ruling is free of the taint of any illegality and is reasonably
3
 Id. § 212.202(a) (Vernon 2006).
3
supported by substantial evidence.” 4 In making this determination, “the issue is
whether the evidence introduced before the trial court shows facts in existence at the
time of the [agency’s] decision that reasonably support the decision,” 5 that is,
whether reasonable minds could have reached the same conclusion. 6 The reviewing
court may not substitute its judgment for TW C’s on controverted fact issues. 7
W e first consider I Gotcha’s argument that the trial court erred by granting
summary judgment under the doctrine of res judicata. Res judicata is an affirmative
defense that must be pled and proven in the trial court. 8 Thus, I Gotcha had the
burden of pleading res judicata and proving the elements of that affirmative
defense. 9 The entirety of I Gotcha’s pleadings on res judicata in the trial court as
they appeared in its response to Appellees’ motion for summary judgment are as
follows:
B. The Federal Court judgment is a bar.
W hen Movant sued Respondent in her Federal suit, Movant
specifically sought damages for termination without cause among other
allegations.
4
 Edwards v. Tex. Employment Comm’n, 936 S.W .2d 462, 465 (Tex.
App.—Fort W orth 1996, no writ).
5
 Collingsworth Gen. Hosp. v. Hunnicutt, 988 S.W .2d 706, 708 (Tex. 1998).
6
 Edwards, 936 S.W .2d at 465.
7
 Id.
8
 Tex. R. Civ. P. 94; Worldpeace v. Comm’n for Lawyer Discipline, 183
S.W .3d 451, 458–59 (Tex. App.—Houston [14th Dist.] 2005, pet. denied).
9
 See Tex. R. Civ. P. 94.
4
The jury in the federal case found for Respondent in a “take
nothing judgment”, on all Movant’s claims and causes of action which
was signed by the Federal Judge on February 25, 2009.
W hen a court denies all relief not expressly granted, the court
necessarily rules on and denies all the pleaded causes of action,
including any claim for wrongful termination. Thus, when the Judge in
the aforementioned Federal Case entered an order denying all relief,
he made the decision that Movant had no right to the benefits of a
wrongful termination. Movant cannot, therefore, come into this Court
and now assert, after the denial of her claims and causes of actions
that she has a legal right to present a case for wrongful termination.
Such a claim is barred by the judgment in the Federal Court Case.
Movant is therefore not entitled to summary judgment against
Respondent as to compensation for wrongful termination. [citation
omitted]
I Gotcha did not use the terms “res judicata,” “collateral estoppel,” “issue preclusion,”
or “claim preclusion” in its response in the trial court. 10 Assuming the preceding
language was enough to apprise the trial court that I Gotcha asserted claim
preclusion (res judicata), as opposed to issue preclusion (collateral estoppel), 11 I
Gotcha failed to prove all of the elements of res judicata.
10
 See In re M.K.R., 216 S.W .3d 58, 62–63 (Tex. App.—Fort W orth 2007,
no pet.) (noting that “res judicata” is a generic term for concepts concerning the
conclusive effects of final judgments and that the term includes the doctrine of “claim
preclusion,” or res judicata, which prevents the relitigation of a claim that has been
finally adjudicated, “as well as related matters that, with the use of diligence, should
have been litigated in the prior suit” and the doctrine of “issue preclusion,” or
“collateral estoppel,” which prevents relitigation of particular issues resolved in a
prior suit).
11
 See Tex. R. App. P. 33.1(a) (stating that in order to preserve a complaint
for appellate review, the record must show that the complaint was made to the trial
court).
5
W e determine the preclusive effect of a prior federal judgment by applying
federal law.12 Under federal law, res judicata applies if: “(1) the parties are identical
in both suits; (2) the prior judgment is rendered by a court of competent jurisdiction;
(3) there is a final judgment on the merits; and (4) the same cause of action is
involved in both cases.” 13 A subsequent action based on state claims is not
precluded if the federal court did not possess jurisdiction over the state claims or
“would clearly have declined to exercise that jurisdiction as a matter of discretion.” 14
W e first note that because the federal case had not been concluded (or even
filed) at the time that Holzer filed for UCB or at the time that TW C determined
Holzer’s right to UCB, the federal case obviously could not be res judicata to TW C’s
initial determination of Holzer’s claim for UCB. The federal court entered judgment
on Holzer’s federal claims while I Gotcha’s suit for judicial review was pending, and
I Gotcha then sought to use res judicata offensively to prevent Holzer from claiming
UCB. Even assuming that the federal judgment could serve to bar Holzer from
asserting wrongful termination or that she was not discharged for work-connected
misconduct, 15 I Gotcha failed to meet its burden to establish the affirmative defense
12
 Eagle Props., Ltd. v. Scharbauer, 807 S.W .2d 714, 718 (Tex. 1990).
13
 Id.
14
 Id.
15
 We note that TW C’s determination was made prior to the federal court’s
judgment. See Igal v. Brightstar Info. Tech. Group, Inc., 250 S.W .3d 78, 87 (Tex.
2008) (noting that when TW C acts in a judicial capacity, res judicata will generally
6
of res judicata. I Gotcha did not show that TW C was a party to the federal lawsuit
(and it could do not do so because TW C was not a party to that suit), and it therefore
failed to prove that TW C should be bound by the judgment in the federal case. I
Gotcha also failed to plead or show any basis on which the federal court would have
had jurisdiction over Holzer’s UCB claim. 16 I Gotcha thus did not carry its burden of
proof on its affirmative defense of res judicata. Accordingly, we reject I Gotcha’s
argument that the trial court erred by granting summary judgment because Holzer’s
UCB claim was barred by res judicata.
Although its brief and its response to the summary judgment motion appeared
to assert claim preclusion, because I Gotcha focused on the issue of wrongful
termination, I Gotcha may have been attempting to assert offensively the doctrine
of collateral estoppel. But whether to allow a party to use collateral estoppel
offensively is within the trial court’s discretion, 17 and I Gotcha makes no argument
about why the trial court abused its discretion by not allowing it to do so in this
apply to final TW C orders); Scurlock Oil Co. v. Smithwick, 724 S.W .2d 1, 6 (Tex.
1986) (holding that “a judgment is final for the purposes of issue and claim
preclusion ‘despite the taking of an appeal unless what is called an appeal actually
consists of a trial de novo’”).
16
 Eagle Props., 807 S.W .2d at 718–19, 721 (noting that there was no basis
of federal jurisdiction over the state court causes of action subsequently brought by
the appellants, and therefore, res judicata did not apply to those claims).
17
 Parklane Hosiery Co. v. Shore, 439 U.S. 322, 331, 99 S. Ct. 645, 652
(1979); Goldstein v. Comm’n for Lawyer Discipline, 109 S.W .3d 810, 812–13 (Tex.
App.—Dallas 2003, pet. denied).
7
case.18 To the extent that I Gotcha argues collateral estoppel applies, we overrule
that argument.
W e next consider I Gotcha’s argument that the trial court erred by granting
summary judgment because TW C’s determination was not supported by substantial
evidence. Specifically, I Gotcha claims that Holzer failed to show as a matter of law
the basis for her discharge and that the reason was not work-connected misconduct.
W hen Holzer filed her claim for UCB, she did not have to establish that she
was not discharged for work-connected misconduct. 19 That was not her burden.
Instead, once TW C notified I Gotcha of Holzer’s claim for benefits, I Gotcha had the
burden to notify TW C of any facts that may have adversely affected Holzer’s right
to benefits, and I Gotcha’s failure to do so would have resulted in I Gotcha’s waiver
of all rights in connection with Holzer’s claim. 20 After TW C made a determination
that Holzer was entitled to UCB, I Gotcha had the right to appeal that determination
through administrative proceedings with TW C and, after exhausting its administrative
remedies, to file a claim for judicial review in the trial court. 21 W hen I Gotcha filed
18
 See Goldstein, 109 S.W .3d at 813 (listing factors that a trial court must
consider in determining whether to apply collateral estoppel offensively and
concluding that the trial court did not abuse its discretion by giving collateral estoppel
effect to findings in a prior suit).
19
 See Tex. Lab. Code Ann. § 207.021 (providing that an unemployed
individual is eligible to receive UCB if the individual meets the listed requirements).
20
 See id. § 208.004.
21
 See id. §§ 212.053, 212.151, 212.203.
8
its claim for judicial review, it again had the burden, this time, to establish that TW C’s
determination was unreasonable. 22 Thus, we reject I Gotcha’s assertion that Holzer
had any burden in the trial court to establish the grounds for her discharge.
On appeal, the extent of I Gotcha’s argument on the grounds for Holzer’s
discharge and whether TW C’s decision was unreasonable is this sentence: “The
affidavit of W alt Duncan, majority shareholder, director and President of [I Gotcha]
list [sic] the exhibits introduced in the aformentioned federal case which pertain to
the issue whether [I Gotcha] had cause to terminate [Holzer’s] employment.” These
exhibits take up fifty-seven pages of the record. I Gotcha does not direct this court
to any specific evidence in the record, nor does it make any argument as to how any
evidence in the record points to the conclusion that TW C’s decision was
unreasonable. 23 Accordingly, we overrule this argument and I Gotcha’s sole issue
on appeal.
22
 See id. § 212.202 (applying the substantial evidence rule to judicial review
of TW C’s decision); Edwards, 936 S.W .2d at 465.
23
 See Tex. R. App. P. 38.1(i) (stating that the appellant’s brief must contain
a clear and concise argument for the contentions made with appropriate citations to
the record); Shelton v. Sargent, 144 S.W .3d 113, 128–29 (Tex. App.—Fort W orth
2004, pet. denied) (noting that “[a]n appellate contention must be supported by
argument and authorities to be properly before this court” and that “[w]e do not have
a duty to perform an independent review of the record and applicable law to
determine whether the error complained of occurred”).
9
Having overruled I Gotcha’s sole issue, we affirm the trial court’s judgment.
LEE ANN DAUPHINOT
JUSTICE
PANEL: LIVINGSTON, C.J.; DAUPHINOT and MEIER, JJ.
DELIVERED: July 1, 2010
10