the Gore Family Limited Partnership v. Wright Gore, Jr., Raymond Gore and Gary Gore ( 2022 )

Affirmed and Memorandum Opinion filed November 10, 2022.
In The
Fourteenth Court of Appeals
NO. 14-22-00064-CV
THE GORE FAMILY LIMITED PARTNERSHIP, Appellant
V.
WRIGHT GORE, JR., RAYMOND GORE AND GARY GORE, Appellees
On Appeal from the 239th District Court
Brazoria County, Texas
Trial Court Cause No. 111192-CV
MEMORANDUM OPINION
The Gore Family Limited Partnership (GFLP) appeals a summary judgment
granted in favor of Raymond and Gary Gore.1 In a single issue on appeal GFLP
asserts the trial court erred in finding that res judicata precluded its claims. We
affirm.
1
In GFLP’s original petition it named Wright Gore, Jr. as a defendant but Wright Jr. joined
GFLP’s claims in the petition. Because Wright Jr. was a defendant in the trial court, we include
him as an appellee in this appeal but note that his interests are aligned with GFLP.
BACKGROUND
In 1991, the shareholders of Western Seafood were Wright and Isabel Gore
(the Gore Parents) and their three sons: Wright Gore, Jr., Gary Gore and Raymond
Gore (collectively, the Gore Brothers). A 1991 Stockholders Agreement restricted
the Gores’ ability to transfer any stock. The shareholders agreed that no gift of stock
could be made to anyone except a spouse, child, grandchild or family trust, and no
stock could be conveyed to a third party without the consent of all shareholders. Any
purported transfer of stock in violation of the agreement would be “void and
ineffectual, and shall not operate to transfer any interest or title.”
In 2000, the Gore Parents created GFLP as part of their estate planning. The
Gore Parents attempted to fund GFLP with 11,546 shares of Western Seafood, which
constituted just over 54% of the company. Wright Jr. asserted that the funding of
GFLP with shares in the company did not contravene the Stockholders Agreement
because it should be considered a gift to the family since GFLP would eventually be
owned in equal share by the Gore Brothers.
After the deaths of the Gore Parents, the percentage ownership of Western
Seafood corresponding to each of the Gore Brothers was: Wright Jr. 36%, Raymond
33%, and Gary 31%. Disputes arose among the Gore Brothers over the operations
of Western Seafood. In 2014, Raymond and Gary, as 64% shareholders together,
claimed to constitute the majority ownership of Western Seafood. In response,
Wright Jr. contended the majority owner of Western Seafood was GFLP, which
purportedly held just over 54% of the company. Gary and Raymond challenged this
claim by asserting that the transfer of stock by the Gore Parents to GFLP was in
contravention of the Stockholders Agreement, rendering the transfer void.
The history of the litigation between the parties encompasses two former
actions in two different Brazoria County District Courts.
2
Cause No. 73301
In July 2013, Western Seafood and Wright, Jr. were sued in the 412th District
Court in Brazoria County on a guarantee that Wright, Jr. allegedly entered into in
Western Seafood’s name (Cause no. 73301). See Gore Family Ltd. P’ship, Ltd. v.
Gore, No. 01-17-00165-CV, 2018 WL 3384554, at *1 (Tex. App.—Houston [1st
Dist.] July 12, 2018, no pet.) (mem. op.). Raymond and Gary intervened in that suit
and alleged that the Gore Parents’ attempt to transfer stock to GFLP was void. Id.On September 18, 2015, Raymond and Gary moved for partial summary
judgment against Wright Jr. on their declaratory judgment claim as to ownership of
Western Seafood. They argued that the stock transfer was void under the
Stockholders Agreement, which prohibited (subject to two inapplicable exceptions)
and declared void the transfer of shares outside the family or a family trust. Id.On October 12, 2015, Raymond and Gary filed a seventh amended petition in
cause no. 73301 in which they sought declaratory judgment, and temporary and
permanent injunctions. The seventh amended petition named GFLP as a party.
Raymond and Gary asserted claims against Wright Jr. for breach of fiduciary duty
and breach of a settlement agreement. Raymond and Gary further sought a
declaratory judgment to establish the rights of the parties to Western Seafood.
On October 13, 2015, trial commenced on the other claims in the case. Several
days in, all parties except GFLP reached a settlement releasing all claims asserted in
this action, except claims against GFLP. Gore Family Ltd. P’ship, Ltd., 2018 WL
3384554, at *1. On October 29, 2015, the parties filed notice of their settlement
agreement. In the settlement agreement the parties agreed to appoint a “Liquidating
Manager” to “dissolve the above Companies [including Western Seafood] as soon
as practicable[.]” The parties agreed that the Liquidating Manager would distribute
all proceeds of Western Seafood (in addition to other companies) in the following
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percentages:
• 38% –Wright Gore, Jr.;
• 62% – Raymond and Gary Gore collectively
The settlement agreement further provided for the dismissal of “all causes of
action, claims, counterclaims and cross claims by, between and among them in the
consolidated lawsuit pending under cause no. 73301, Raymond Gore and Gary Gore,
individually and in their derivative capacity on behalf of Western Seafood Company,
Plaintiffs, vs. Western Seafood Company, Wright W Gore, Jr., and Gore Family
Limited Partnership, Defendants[.]” (emphasis added) The trial court subsequently
appointed Lynn Klement as Liquidating Manager for the purpose of winding down
and liquidating Western Seafood.
On January 3, 2017, GFLP filed a motion for entry of judgment and motion
for severance in which it alleged that the trial court’s partial summary judgment
declaring the stock transfer void was not final. GFLP asked the trial court to sever
the issue of the validity of the stock transfer into a separate cause of action to permit
GFLP to appeal the trial court’s ruling. On February 3, 2017, the trial court signed
an “Order of Severance and Final Judgment” in which it noted that Raymond and
Gary’s motion for partial summary judgment was heard on October 12, 2015. The
order stated that the settlement agreement “released all claims asserted in this action
against the other parties to the action except the claims against the Gore Family
Limited Partnership which was not a party to the settlement.” The trial court
“officially granted” partial summary judgment declaring the stock transfer that
created GFLP void. The court further ordered that “the cause of action stated herein
between the Gore Family Limited Partnership and Intervenors be severed from the
remaining cause of action alleged herein and from the issues resolved in the
settlement agreement[.]” The severed claim was given the cause no. 90228.
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Cause no. 90228
GFLP appealed the partial summary judgment ruling (now final after
severance) to the First Court of Appeals. The First Court of Appeals dismissed
GFLP’s appeal because at the time the summary judgment was granted GFLP was
not a party to the underlying action, nor did Raymond and Gary move for summary
judgment against GFLP. Gore Family Ltd. P’ship, Ltd., 2018 WL 3384554, at *3.
The court held that GFLP lacked standing to pursue an appeal because Raymond and
Gary had not moved for summary judgment against the partnership. Id. The record
does not reflect any further activity in cause no. 90228.
Cause no. 98063
On September 7, 2018, GFLP filed another suit against Lynn Klement,
liquidating manager, Freeport Economic Development Corporation, and Raymond
and Gary Gore. GFLP again alleged it acquired 54.28302% of the shares of Western
Seafood through the stock transfer that had been declared void in cause no. 73301.
Raymond and Gary Gore filed a motion for summary judgment and motion to
expunge notice of lis pendens in that case, which the trial court granted on January
24, 2019.
In a letter to the parties noting the court’s ruling, the trial court explained the
bases of its ruling. The trial court disagreed with the First Court of Appeals and
determined that GFLP was indeed a party at the time the partial summary judgment
in Cause no. 73301 was granted. The trial court further found that GFLP acquiesced
in the settlement agreement understanding that it had no stock interest in Western
Seafood based on the previous court’s summary-judgment ruling. The trial court
found that the issue of the stock transfer had been decided and that res judicata
precluded GFLP from relitigating the claim. The trial court also found that even if
GFLP was not a party to the original cause, GFLP was in privity with a party before
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the court in Cause no. 73301 and res judicata applied. The trial court determined that
Wright Jr. and GFLP shared an interest in showing the validity of the stock transfer
into the partnership. The trial court therefore granted summary judgment on res
judicata grounds. On February 27, 2019 the claims in Cause no. 98063 were
nonsuited.
Cause no. 111192–the underlying cause on appeal
On December 31, 2020, the trial court signed an order in cause no. 73301
approving plans for final distribution of Western Seafood’s assets.
On January 15, 2021, GFLP filed the underlying suit naming the Gore
Brothers as defendants. GFLP again alleged it owned 54.28302% of Western
Seafood by virtue of the stock transfer from the Gore Parents. GFLP also claimed
the First Court of Appeals, in its opinion dismissing GFLP’s appeal, declared GFLP
the “equitable owner” of Western Seafood. GFLP further filed a notice of lis pendens
in which it sought to quiet the title purported to be conveyed by Lynn Klement.
On October 1, 2021, Raymond and Gary Gore filed a combined motion for
traditional summary judgment and motion to expunge lis pendens in which they
alleged that the doctrine of res judicata prohibited GFLP’s claim because two final
judgments had been rendered declaring the stock transfer void.
GFLP filed a response to the motion for summary judgment in which it alleged
that it was not a party in Cause no. 73301, and, therefore, not bound by the trial
court’s order approving plans for final distribution. GFLP further argued that the
first summary judgment in Cause no. 73301 did not bind GFLP because it was not a
party. GFLP further asserted that the Uniform Declaratory Judgment Act contains a
provision that prevents the application of res judicata to a non-party. GFLP further
asserted that the summary judgment in Cause no. 98063 was not final and did not
6
involve the same issues before the court.
On January 24, 2022, the trial court signed an order granting Raymond and
Gary’s motion for summary judgment and expunging the notice of lis pendens. This
appeal followed.
ANALYSIS
In a single issue on appeal GFLP contends that Raymond and Gary Gore failed
to present summary judgment evidence proving conclusively their claim that GFLP
did not own a majority share of Western Seafood. Because the trial court’s order was
based on Raymond and Gary’s motion for summary judgment alleging res judicata,
we review whether Raymond and Gary conclusively established that res judicata
barred GFLP’s claims.
I. Standard of Review and Applicable Law
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 nonmovant produces more than a 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,
7
941 S.W.2d 910, 911 (Tex. 1997).
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), superseded by statute, Tex. Lab.
Code § 61.051(c). 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).
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. 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 v. Wanda
Petroleum Co., 468 S.W.2d 361, 363 (Tex. 1971). The application of res judicata to
suits by those in privity with a prior party exists to “ensure that a defendant is not
twice vexed for the same acts, and to achieve judicial economy by precluding those
who have had a fair trial from relitigating claims.” Amstadt v. U.S. Brass Corp., 919
S.W.2d 644, 653 (Tex. 1996). There are at least three ways in which parties can be
in privity under Texas law: “(1) they can control an action even if they are not parties
to it; (2) their interests can be represented by a party to the action; or (3) they can be
successors in interest, deriving their claims through a party to the prior action.” Id.The touchstone of the representation-of-interests inquiry is whether “the parties
share an identity of interests in the basic legal right that is the subject of litigation.
To determine whether a prior and later lawsuit involve the same basic subject matter,
8
we focus on the factual basis of the complaint.” Id. (internal citation omitted). Privity
for res judicata purposes will exist under the representation-of-interests when the
circumstances are such as to allow a court to conclude that the non-party had notice
and an opportunity to be heard in the former litigation. See Taylor v. Sturgell, 553
U.S. 880, 894 (2008).
II. The doctrine of res judicata bars GFLP’s claim of majority ownership of
Western Seafood.
GFLP asserts that Raymond and Gary failed to conclusively establish all
elements of res judicata. We address each element in turn.
A. In a previous action, a court of competent jurisdiction rendered a
final determination on the merits of a claim.
The parties agree that, on February 3, 2017, the trial court in the 412th District
Court of Brazoria County, in Cause no. 73301, signed a final judgment stating, inter
alia, “the stock transfer to the Gore Family Limited Partnership is declared to be
void.”
GFLP asserts that Raymond and Gary’s summary judgment proof fell short
because there was no final judgment in Cause no. 98063 or in Cause no. 90228.
While there is room to discuss whether the judgment in Cause no. 98063 was final,
this element does not require final judgments in all litigation between the parties.
This element requires that a court of competent jurisdiction rendered a final
determination on the merits of a claim. See Travelers Ins. Co., 315 S.W.3d at 862.
There is no dispute that the 412th District Court—a court of competent
jurisdiction—rendered a final determination in Cause no. 73301 that the stock
transfer to GFLP was void. This issue was not appealed by any party to the judgment
and, is therefore, final.
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B. The parties in the earlier action are identical to, or in privity with,
the present parties.
The parties in Cause no. 73301 were not identical to the parties in the
underlying dispute. After the trial court signed a final judgment and a severance
order in Cause no. 73301, GFLP appealed the court’s ruling that the stock power
signed in 2000 did not effect any transfer of Western stock to GFLP. In dismissing
the appeal, the First Court of Appeals held that GFLP lacked standing to appeal the
ruling because no summary judgment was entered against the partnership. See Gore
Family P’ship v. Gore, 2018 WL 3384554, at *3. Raymond and Gary had moved for
summary judgment seeking to declare the stock transfer void only against Wright Jr.
At the time the summary judgment motion was filed, GFLP was not a party to the
action, thought it agreed to become a party, and in fact it filed an appearance in the
action, before the trial court’s summary judgment ruling.2 The court of appeals held
that GFLP had no standing to complain about a summary judgment entered against
Wright Gore, Jr. Further, the court observed that the ruling against Wright Jr. would
not prejudice the right of GFLP to “defend the validity of the stock transfer in its
severed cause of action.” Id. at *3. After the appeal was dismissed, however, GFLP
did not take any action toward defending the validity of the stock transfer in the
severed proceeding. Rather, it filed a new, independent proceeding.
The question, therefore, is whether GFLP was in privity with Wright Jr.
against whom summary judgment was granted in Cause no. 73301. The issue of
privity as it relates to claim preclusion usually arises with respect to plaintiffs; that
is, the question is whether the plaintiff in a subsequent action against a particular
defendant is in privity with the plaintiff in an earlier action against the same
2
In its amended motion for entry of judgment and motion for severance in Cause no. 73301,
GFLP asserted, “it filed an appearance in this case as a Defendant shortly before the granting of
the Partial Summary Judgment in October, 2015.”
10
defendant. See Amstadt, 919 S.W.2d at 653. The doctrine of res judicata is meant “to
ensure that a defendant is not twice vexed for the same acts” and “to achieve judicial
economy by precluding those who have had a fair trial from relitigating claims.” Id.
In other words, res judicata exists both to protect defendants from repetitive
litigation and to limit plaintiffs to one bite at the apple. The latter objective supports
extending res judicata to defendants who are in privity with an original party, and
indeed courts have done so. See, e.g., Samuel v. Fed. Home Loan Mortg. Corp., 434
S.W.3d 230, 234–35 (Tex. App.—Houston [1st Dist.] 2014, no pet.).
In their summary judgment motion, Raymond and Gary invoked the
“adequate representation” basis for privity. “Privity connotes those who are so
connected with a party to the judgment in the law such that the party to the judgment
represented the same legal right.” Id. at 234. In this case, both Wright Jr. and GFLP
assert that GFLP has majority ownership of Western Seafood arising out of the same
stock transaction in which the Gore Parents attempted to transfer over 54% of the
stock in Western Seafood to GFLP. This is exactly the same argument that Wright
Jr. asserted in Cause no. 73301. The final judgment in Cause no. 73301
unequivocally determined that stock transfer to be void. There also exists a
substantive legal relationship between Wright Jr. and GFLP—Wright Jr. is GFLP’s
general partner. While the record indicates that Wright Jr. did not appear in the prior
proceeding in his capacity as GFLP’s general partner, it is true nonetheless that
GFLP’s interest is identical to Wright Jr.’s interest and both of them would benefit
from a ruling that the stock transfer was valid. Moreover, in GFLP’s original petition
in Cause no. 111192, GFLP clearly equates its interest in the issue at hand with
Wright Jr.’s interest: “Wright Gore, Jr. individually and as General Partner of GFLP
supports the contentions expressed in this pleading and confesses judgment to the
claims herein by GFLP.” We also note that GFLP has not advanced any argument
11
in support of the stock transfer’s purported validity that was not advanced by Wright
Jr.; thus, GFLP has not asserted that Wright Jr.’s arguments in the prior proceeding
failed to adequately represent GFLP’s interests. Finally, the ultimate point in this
inquiry is to ensure that the circumstances are such so that we may conclude that the
non-party had notice and an opportunity to be heard in the former litigation. See
Taylor, 553 U.S. at 894. The record before us establishes conclusively that GFLP
received sufficient notice and opportunity as a matter of law. Not only has it
acknowledged that it appeared in Cause no. 73301 before the trial court ruled on the
validity of the stock transfer, it caused the court to enter a final judgment by
severance, it attempted an appeal, and was informed by the court of appeals that it
retained the right to assert the stock transfer’s validity in the severed action. But it
did not do so. Thus, we conclude that GFLP’s sole interest in the stock transfer was
sufficiently represented by Wright Jr. in Cause no. 73301. GFLP is therefore in
privity with Wright Jr. for res judicata purposes. See id. at 235 (parties representing
interests of another party were in privity).
In support of its contention that the principles of res judicata do not apply to
GFLP, GFLP relies on Valley Oil Co. v. City of Garland, 499 S.W.2d 333, 336 (Tex.
Civ. App.—Dallas 1973, no writ). In Valley Oil, the City of Garland sought an
injunction against a gasoline station that was operating in an area prohibited by a
zoning ordinance. Id. at 335. Valley Oil Company defeated Garland’s request for an
injunction. On appeal, the Dallas Court of Appeals reversed and rendered judgment
for Garland, stating that Valley Oil Company was violating the zoning ordinance.
Id. In its request for relief in the court of appeals, Garland did not seek to have the
court issue an injunction against Valley Oil Company. After the court of appeals’
mandate issued, Garland filed a “Petition for Injunction to Enforce the Judgment” in
the trial court. The trial court granted the injunction and Valley Oil Company
12
appealed. Id. Valley Oil Company answered with a plea of res judicata. The Dallas
Court of Appeals determined that the injunction, granted by the trial court after its
mandate had been issued, was not barred but was rather a proper means of giving
the court of appeals’ first judgment full effect. Id. at 336. The court of appeals
determined that the police power to regulate the use of property was appropriate in
that case although it went against the usual rule of res judicata. Id. The court held
that “a judgment granting declaratory relief only does not bar a subsequent
application for supplemental coercive relief unless such application was actually
considered and denied in the original proceeding.” Id. at 335.
GFLP asserts that the decision in Valley Oil defines an exception for res
judicata when the original suit sought only declaratory judgment. We disagree.
Valley Oil addressed the very specific scenario of a political subdivision’s exercise
of coercive orders to enforce its judgment. Id. Neither party here is a political
subdivision with the use of coercive police powers; accordingly, Valley Oil does not
apply to this case.
Because GFLP, through Wright Jr., now seeks to assert the validity of the
stock transfer, which was declared void in prior litigation, we conclude that GFLP
and Wright Jr. are in privity for res judicata purposes.
C. The pending claim is identical to the prior claim or arises out of the
same subject matter as the prior claim and could have been litigated in
the previous action.
“To determine whether a prior and later lawsuit involve the same basic subject
matter, [courts] focus on the factual basis of the complaint.” Amstadt, 919 S.W.2d at
653. 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.” Barr v. Resolution Trust Corp. ex rel. Sunbelt
13
Fed. Sav., 837 S.W.2d 627, 630 (Tex. 1992). Factors relevant to this determination
include (1) “whether the facts are related in time, space, origin, or motivation,” (2)
“whether they form a convenient trial unit,” and (3) “whether their treatment as a
trial unit conforms to the parties’ expectations or business understanding or usage.”
Id. at 631.
In Cause no. 73301, the trial court stated on the record:
I heard the arguments concerning the motion for summary judgment as
it pertained to the transfer of stock of Western Seafood by Mr. and Mrs.
Gore which purportedly took place sometime in the year 2000. The
Court was asked to find as a matter of law that there was no ambiguity
in a stockholders agreement which was signed on February 2nd, 1991,
and was Exhibit B to the then Intervenors’ motion for summary
judgment.
The Court was asked to find as a matter of law that there is a difference
between a trust and a family limited partnership and the Court was
asked to find as a matter of law that a stock power—
*****
that was Exhibit L to Intervenors’ traditional motion for summary
judgment was itself void.
After hearing the arguments and based upon caselaw that I have found
I will hold that the stock restriction agreement in 1991 is not
ambiguous, that a limited partnership is not a trust. I will not hold the
stock power itself is void. But my ruling is that the effect of the stock
power is void in that the stock power did not affect any transfer, as I
had no evidence before me that there was consent of all of the
shareholders to the transfer of the stock from Mr. and Mrs. Gore to the
Gore Family Limited Partnership.
The trial court later signed a final judgment documenting its ruling that “the stock
transfer to the Gore Family Limited Partnership is declared to be void.”
In GFLP’s live pleading in the underlying action, it sought declaratory
judgment as follows:
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GFLP seeks declaratory judgment of its rights under the Stock Power
of 2000 in which the parents of the Gore brothers transferred a majority
of the stock in Western to GFLP[.]
In comparing the trial court’s oral ruling and written judgment in Cause no.
73301 to the relief sought by GFLP in the underlying action, we conclude the
pending claim is identical to the claim already adjudicated.
The facts underlying both actions are thus “related in time, space, and origin,”
and the claims in each pertain to the same ultimate question—whether the stock
transfer that created GFLP was void. As a result, we hold that GFLP’s underlying
claim arises from the “same basic subject matter” as Wright Jr.’s claims in Cause
no. 73301.
Having determined that Raymond and Gary conclusively established each
element of res judicata, we overrule GFLP’s sole issue on appeal.
CONCLUSION
We affirm the trial court’s judgment.
/s/ Jerry Zimmerer
Justice
Panel consists of Justices Jewell, Bourliot, and Zimmerer.
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