Opinion
14-21-00087-CV
01-19-2023
WILMA REYNOLDS AND CARL GORDON, Appellants v. QUANTLAB TRADING PARTNERS US, LP; QUANTLAB INCENTIVE PARTNERS I, LLC; QUANTLAB FINANCIAL, LLC; AND DAVID REYNOLDS, Appellees
On Appeal from the 152nd District Court Harris County, Texas Trial Court Cause No. 2017-83411
Panel consists of Chief Justice Christopher and Justices Spain and Poissant.
MEMORANDUM OPINION
Margaret "Meg" Poissant Justice.
The trial court granted summary judgment in favor of appellees Quantlab Trading Partners US, LP ("QTP"), Quantlab Incentive Partners I, LLC ("QIP"), Quantlab Financial, LLC ("QFL"), and David Reynolds ("David"). The trial court also granted appellees' motion for sanctions against appellants Wilma Reynolds ("Wilma") and her counsel, Carl Gordon ("Gordon"). In three issues, appellants argue that the trial court erred by (1) granting appellees' motion for summary judgment; (2) sanctioning Wilma and Gordon, and awarding attorney's fees to appellees; and (3) denying Wilma's motion to compel discovery. We affirm.
I. Background
The parties have appeared before us numerous times. Over the past fourteen years, Wilma Gordon have filed twenty-one appellate and mandamus proceedings in this court related to the underlying divorce proceeding, docketed as case Nos. 14-09-00720-CV, 14-10-00535-CV, 14-10-00951-CV, 14-11-00002-CV, 14-11-00174-CV, 14-11-00626-CV, 14-11-01097-CV, 14-12-00379-CV, 14-13-00323-CV, 14-13-00589-CV, 14-13-00871-CV, 14-13-00924-CV, 14-13-01029-CV, 14-14-00329-CV, 14-14-00624-CV, 14-14-00875-CV, 14-14-00423-CV, 14-14-00080-CV, 14-15-00990-CV, 14-17-00614-CV, 14-18-00746-CV. Accordingly, because our court has detailed the underlying facts multiple times over the years, we will summarily state the facts and background necessary for this appeal.
The facts of this case, as well as its procedural history, are well known to the parties, especially given the number of appeals related to the underlying issues; therefore, we will discuss the facts of the case only to the extent they are relevant to the issues on appeal. See Tex. R. App. P. 47.1 ("The court of appeals must hand down a written opinion that is as brief as practicable but that addresses every issue raised and necessary to final disposition of the appeal.").
David is the chief technology officer of QFL, for which he is paid a base salary and substantial bonuses. See Reynolds v. Reynolds, No. 14-09-00720-CV, 2010 WL 3418209 at *1 (Tex. App.-Houston [14th Dist.] Aug. 31, 2010, pet. denied) (mem. op.). He also participates with QFL in two related entities: QTP and QIP. According to David, he is a limited partner in QTP and receives monthly income and the majority of his bonuses from that entity. See id. Additionally, he is entitled to receive a share of QTP's profits and he receives income from QIP.
Prior Litigation
After eleven years of marriage, Wilma and David filed for divorce in July 2008. The property division was contested, during which Wilma disputed the value of David's interest in QFL, QIP, and QTL, and the division of this property. During the divorce proceedings, Wilma propounded numerous discovery requests to appellees seeking information about David's QFL, QTP, and QIP bonuses. David produced information relating to the QFL bonuses he received, his income, and produced the agreements concerning QIP. However, appellees objected and filed motions for protection in response to Wilma's discovery requests relating to David's QTP bonuses, QIP bonuses, and accrued Quantlab bonuses. Wilma filed a motion to compel discovery, but the trial court sustained appellees' objections to discovery and granted their motions for protection. Reynolds v. Quantlab Trading Partners US, LP, 608 S.W.3d 549, 554 (Tex. App.-Houston [14th Dist] 2020, no pet.).
In April 2009, the trial court conducted the property-division trial without the QTP partnership agreements, QTP financial statements, QIP financial statements, and other material financial information about the marital property estate's bonuses being produced to Wilma. See id. At the conclusion of the trial, the trial court awarded David the estate's entire interest in QTP and QIP, which includes the estate's interest in investment accounts that held the estate's accrued bonuses/funds. Id. The trial court also awarded David the estate's accrued QFL, QTP, and QIP bonuses. See id.
In May 2009, the trial court signed the final decree of divorce, which included a division of the parties' marital property. After the divorce decree was signed in 2009, financial information relating to the estate's QTP bonuses was produced in camera to Judge Hufstetler for inspection, specifically: (1) "David Reynolds' (Unredacted) Limited Partnership Agreement for Quantlab Trading Partners US, LP"; (2) "Written Agreement between Quantlab Trading Partners US, LP and Quantlab Trading Partners, LP"; and (3) the "2009 and 2010 Audited Financial Statements for Quantlab Trading Partners US, LP and Quantlab Trading Partners, LP." Judge Hufstetler ruled that these documents contained "no relevant' information relating to David's QTP interest, income, or bonuses. Id.
Wilma appealed the division of property, but our court affirmed, concluding that Wilma was estopped from appealing the division of property because she had accepted the benefits of the trial court's division of the property: the record reflected that Wilma was awarded $3,220,874.74 and that within ten days of the funds being transferred to Wilma, she had spent approximately $1.7 million of those funds. See Reynolds, 2010 WL 3418209 at *4.
In 2012, Wilma filed a bill of review, alleging in part that if she were allowed to obtain additional discovery, it would be revealed that David had concealed documents, given false testimony, and introduced false evidence concerning the division of property. The trial court denied her bill of review, and we affirmed. See Reynolds v. Reynolds, No. 14-14-00080-CV, 2015 WL 4504626, at *2 (Tex. App.- Houston [14th Dist] July 23, 2015, no pet.) (memo op.). We noted that Wilma had already unsuccessfully appealed the question of "how to divide Wilma and David's marital estate." Id. at *3. Additionally, we concluded that a "divorce judgment may not be set aside by a bill of review when the complainant voluntarily accepted the benefits of the divorce judgment." Id. at *4. Furthermore, this court observed that Wilma's bill of review failed because she did not present prima facie evidence that the property division was affected by extrinsic fraud. See id. We noted that Wilma's accusations regarding David's allegedly false testimony and David's concealment of documents-even if we assumed they were true-"would constitute only intrinsic fraud because they concern matters at issue in the divorce proceeding." Id. at *5. As stated in the opinion, bills of review can only be supported by extrinsic fraud. Id.
In 2015, Wilma filed a petition for a post-divorce division of community property, alleging that the community estate's earned income from QTP and QIP had been left undivided. Wilma served discovery requests on David; David filed a motion for protection from Wilma's requests. Reynolds v. Reynolds, No. 14-15-00990-CV, 2017 WL 1366680, at *2 (Tex. App.-Houston [14th Dist] Apr. 13, 2017, pet. denied) (mem. op.). Wilma then filed a motion to compel David to respond. Id. David filed a traditional motion for summary judgment based on three affirmative defenses: (1) statute of limitations; (2) res judicata; and (3) collateral estoppel. Id. The trial court denied Wilma's motion to compel and granted David's motion for protection and motion for summary judgment. Id. Wilma appealed, and this court concluded that the summary judgment evidence established David's collateral estoppel defense as a matter of law. Id. at *4. Specifically, we concluded: "(1) the facts sought to be litigated in the second action-division of the estate's interest in QTP and QIP and other financial accounts-were fully and fairly litigated in the first action; (2) those facts were essential to the judgment in the first action; and (3) David and Wilma were cast as adversaries in the first action." Id. Accordingly, we affirmed the trial court's summary judgment. Id.
Present Lawsuit
In December 2017, Wilma filed the present lawsuit against David, QTP, QIP, and QFL for fraud, negligent misrepresentation, conversion, damages under the Theft Liability Act, money had and received, and conspiracy for acts and omissions related to the trial in which their marital property was divided. Wilma alleged that David, QTP, QIP, and QFL made fraudulent statements, causing the trial court to award David an unfair amount of the community's interest in his QTP, QIP, and QFL bonuses. Wilma sought more than One Billion dollars, and served discovery requests on appellees.
QTP, QIP, and QFL filed an answer and a motion for protective order, arguing that Wilma's discovery requests were "unreasonably duplicative of discovery that was exchanged before the bench trial between Plaintiff and Defendant David Reynolds in 2009, which settled all issues that Plaintiff now seeks to relitigate" and "a further example of Plaintiff and her attorney's 'abusive litigation conduct' and 'gamesmanship.'" The trial court signed an order prohibiting Wilma from obtaining responses to her discovery until the trial court ordered QTP, QIP, and QFL to respond.
QTP, QIP, and QFL also filed a motion to dismiss all of Wilma's claims pursuant to Rule 91a, which David joined. See Tex. R. Civ. P. 91a.1. On August 21, 2018, the trial court signed an interlocutory order dismissing all of Wilma's claims against David with prejudice and ordering Wilma to pay attorney's fees and costs in the total amount of $36,757.87 to QTP, QIP, and QFL. Wilma appealed the dismissal to this court, which observed that "[a] party may not rely on judicial notice in a Rule 91a proceeding because judicial notice is a matter of evidence." Id. (internal quotation omitted). This court concluded that the trial court could not have properly granted the 91 a motion to dismiss based on res judicata or collateral estoppel because that would have required taking judicial notice. Id. at 560. Accordingly, we reversed the trial court's dismissal and remanded for further proceedings. Id.
Several months after this court issued its opinion, QTP, QIP, and QFL filed a traditional motion for summary judgment and a motion for sanctions in the trial court. David joined in the motions. The movants argued that they were entitled to summary judgment based on res judicata, collateral estoppel, and statute of limitations. Wilma filed an amended petition, pleading fraudulent concealment and the discovery rule in response to the statute of limitations defense.
On January 19, 2021, the trial court signed orders granting motion for summary judgment filed by David and the motion for summary judgment filed by QTP, QIL, and QFL. In addition, the trial court found that Wilma and Gordon "have filed and prosecuted this lawsuit for an improper purpose, without legal support, in bad faith, and with the intention to harass." Accordingly, the trial court ruled that appellees were entitled to recover their attorney's fees. Appellees submitted their provision of attorney's fees, asserting that they had incurred $148,517.00 in attorney's fees. David claimed he had incurred $28,637.92 in attorney's fees.
On February 16, 2021, the trial court signed a final judgment denying all relief to Wilma. The trial court ordered Wilma and Gordon to pay $103,212.57 to QTP, QIP, and QFL for their reasonable attorney's fees and $20,987.92 to David for his reasonable attorney's fees. Wilma filed a timely notice of appeal.
II. Analysis
Wilma argues on appeal that the trial court erred by (1) granting appellees' motions for summary judgment; (2) sanctioning Wilma and her counsel and awarding attorney's fees to appellees; and (3) denying Wilma's motion to compel discovery.
A. Summary Judgment
1. Standard of Review & Applicable Law
We review a trial court's order granting a traditional summary judgment de novo. Mid-Century Ins. Co. v. Ademaj, 243 S.W.3d 618, 621 (Tex. 2007). To prevail on a traditional motion for summary judgment, a movant must prove entitlement to judgment as a matter of law on the issues set out in the motion. Tex.R.Civ.P. 166a(c); Masterson v. Diocese of Nw. Tex., 422 S.W.3d 594, 607 (Tex. 2013). When the movant is a defendant, a trial court should grant summary judgment only if the defendant (1) negates at least one element of each of the plaintiffs causes of action, or (2) conclusively establishes each element of an affirmative defense. Clark v. ConocoPhillips Co., 465 S.W.3d 720, 724 (Tex. App.-Houston [14th Dist] 2015, no pet.). When the trial court's order granting a summary judgment does not specify the grounds relied on for the ruling, the summary judgment will be affirmed if any of the theories advanced are meritorious. Dow Chem. Co. v. Francis, 46 S.W.3d 237, 242 (Tex. 2001); Olmstead v. Napoli, 383 S.W.3d 650, 652 (Tex. App.-Houston [14th Dist] 2012, no pet).
"Res judicata, or claims preclusion, prevents the re-litigation 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 v. Resolution Tr. Corp. ex rel. Sunbelt Fed. Sav., 837 S.W.2d 627, 628 (Tex. 1992). "The doctrine of res judicata in Texas holds that 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.'" Compania Financiara Libano, S.A. v. Simmons, 53 S.W.3d 365, 367 (Tex. 2001) (quoting Barr, 837 S.W.2d at 630). "For res judicata to apply, there must be: (1) a prior final judgment on the merits by a court of competent jurisdiction; (2) identity of parties or those in privity with them; and (3) a second action based on the same claims that were raised or could have been raised in the first action." Citizens Ins. Co. of Am. v. Daccach, 217 S.W.3d 430, 449 (Tex. 2007).
"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." Id. (citing Barr, 837 S.W.2d at 631). 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. See Daccach, 217 S.W.3d at 449 . "A determination of what constitutes the subject matter of a suit necessarily requires an examination of the factual basis of the claim or claims in the prior litigation. It requires an analysis of the factual matters that make up the gist of the complaint, without regard to the form of action. Any cause of action which arises out of those same facts should, if practicable, be litigated in the same lawsuit." Barr, 837 S.W.2d at 629. "Claim preclusion prevents splitting a cause of action." Id. Joinder of tort claims with a divorce suit is encouraged, when feasible. Twyman v. Twyman, 855 S.W.2d 619, 625 (Tex. 1993). Tort claims in divorce cases, like other civil actions, are subject to the principles of res judicata. Id. at 624.
Res judicata applies to the property division in a final divorce decree, just as it does to any other final judgment, barring subsequent collateral attack even if the divorce decree improperly divided the property. See Baxter v. Ruddle, 794 S.W.2d 761, 762 (Tex. 1990); DeAcetis v. Whitley, No 14-08-00429-CV, 2010 WL 1077904, at *3 (Tex. App.-Houston [14th Dist] Mar. 25, 2010, pet. denied) (mem. op.) (concluding that appellant's claims of fraud, conspiracy, and conversion which related to the determination of ownership of certain real property were barred by res judicata because such property was awarded to the defendant in the final divorce decree and appellant either did or could have asserted her claims in the divorce proceeding); see also Nelson v. Williams, 135 S.W.3d 202, 206 (Tex. App.-Waco 2004, pet. denied) (mem. op.) (holding res judicata barred claims for breach of fiduciary duty, fraud, civil conspiracy, and negligence because the underlying matter, i.e., fraud concerning the value of the community estate, could have been litigated in the divorce case).
However, this court has recognized that "the inquiry [for res judicata] is whether the claim, through exercise of reasonable diligence, should have been litigated in the previous case." Whitmire v. Greenridge Place Apartments, No. 14-09-01002-CV, 2011 WL 1413412, at *4 (Tex. App.-Houston [14th Dist] Apr. 14, 2011, no pet.) (mem. op.) (citing Barr, 837 S.W.2d at 628). Thus, res judicata does not bar a claim of which the plaintiff was unaware and which could not have discovered through the exercise of due diligence in the first action. See Reynolds, 608 S.W.3d at 558-59.
2. Does the summary judgment evidence establish David's res judicata affirmative defense as a matter of law?
In our 2020 Reynolds opinion, we concluded that "Wilma's petition, standing alone, does [not] establish that her claims [, including claims for fraud and conspiracy,] against David and the Quantlab Defendants are barred by res judicata." Id. at 559 (emphasis added). But the procedural context of that decision was a review of the trial court's order granting appellees' Rule 91a motion to dismiss. In reviewing a Rule 91a motion to dismiss, "[w]e look solely to the pleading and any attachments to determine whether the dismissal standard is satisfied." In re Estate of Savana, 529 S.W.3d 587, 592 (Tex. App.-Houston [14th Dist.] 2017, no pet.); Wooley v. Schaffer, 447 S.W.3d 71, 76 (Tex. App.-Houston [14th Dist.] 2014, pet. denied). Additionally, we construe the pleadings liberally in favor of the plaintiff, look to the pleader's intent, and accept as true the factual allegations in the pleadings. Wooley, 447 S.W.3d at 76. Thus, under the standard applicable to Rule 91a motions to dismiss and referring only to Wilma's pleadings, we concluded that David's res judicata affirmative defense was not established as a matter of law. Here, we review the trial court's summary judgment, and in doing so, consider the appellees' summary judgment evidence in addition to Wilma's pleadings.
a. Was there a prior final judgment on the merits by a court of competent jurisdiction?
The appellees' summary judgment evidence included several separate final judgments on the merits. The first final judgment was signed in 2009, when the divorce court rendered a final decree, awarding to David the full value of the estate's interest in both QTP and QIP, with the exception of the one-half interest Wilma received in David's 2008 income from QIP. Reynolds, 2010 WL 3418209, at *1. This was a prior final judgment on the merits of the parties' respective interests in the marital property. See Barr, 837 S.W.2d at 629.
b. Is there an identity of parties or those in privity with them?
QTP, QIP, and QFL were not parties to the 2009 divorce proceeding, but assert that they are in privity with David because he was a party to the action and he represented their interest. We agree with appellees.
"Privity exists if the parties share an identity of interests in the basic legal right that is the subject of the litigation." Espeche v. Ritzell, 123 S.W.3d 657, 667 (Tex. App.-Houston [14th Dist] 2003, pet. denied). David was an employee of QFL, and Wilma raises the same claims of misrepresenting and concealing David's financial interest in QTP, QIP, and QFL against David and QTP, QIP, and QFL. Thus, David and the Quantlab appellees' interests align against Wilma. The Quantlab appellees had an interest in the outcome of the divorce proceedings to ensure both Wilma and David's interest in QTP, QIP, and QFL were properly classified and divided. QTP, QIP, and QFL seek to avoid potential legal repercussions by incorrectly distributing funds. Further, QTP, QIP, and QFL have an interest in ensuring that Wilma does not seek an amount greater than the total amount that David himself would be entitled to. Ultimately, David, QTP, QIP, and QFL all share an interest in the same basic legal right that is the subject of the litigation: the proper division of the community estate's interest in the QTP, QIP, and QFL. See id.
We note that in our 2020 opinion, we concluded that "[t]he allegations in Wilma's petition do not establish that the Quantlab Defendants were parties to the divorce action between Wilma or David or that they were in privity with either Wilma or David." Reynolds, 608 S.W.3d at 560. But again, our analysis was restricted in that appeal because of the standard applicable to review of the Rule 91a motion to dismiss.
In that appeal, the Quantlab Defendants were Quantlab Trading Partners, U.S., LP; Quantlab Incentive Partners I, LLC; and Quantlab Financial, LLC.
For the same reasons that QTP, QIP, and QFL are in privity with David in the divorce proceeding, we conclude that they are also in privity with David as to the bill of review and the post-divorce division of property proceedings. QTP, QIP, and QFL were interested in the outcome to avoid potential legal repercussions by incorrectly distributing funds. Their interests are also aligned against Wilma because her claims are brought against appellees collectively, and the appellees share an interest in the division of the marital property. Espeche, 123 S.W.3d at 667.
c. Does Wilma's pleading constitute a second action based on the same claims that were raised or could have been raised in the first action?
The appellees argue that the present proceeding is yet another action based on the same claims that were, or could have been, raised in the original 2009 divorce proceeding. We agree with appellees. Although Wilma raises different claims here than those alleged in the 2009 proceeding, her claims arise out of the same facts and could have been litigated in the prior proceeding. See Barr, 837 S.W.2d at 631. Our conclusion in DeAcetis is instructive. See 2010 WL 1077904, at *3. DeAcetis concerned the division of a marital estate in a divorce proceeding. See id. The plaintiff sought declaratory relief in regard to the ownership of real property, asserting claims of fraud, trespass to try title, conversion, and conspiracy. The defendant argued that res judicata barred the claims. The trial court agreed and granted summary judgment. Our court affirmed, observing:
Division of the property of the marital estate was the subject matter of Marianne and appellant's divorce proceeding. Thus, (1) appellant's claims to [the property] arise out of the same subject matter as his divorce proceeding, (2) appellant either did or could have asserted claims to [the property] during the divorce proceeding, and (3) there is a final judgment in appellant's divorce proceeding. All claims alleged against Marianne, including claims of fraud, conspiracy, and conversion, are related to the determination of ownership of [the property] and consequently are barred by res judicata.Id. (internal citations omitted). Here, the division of the marital estate was the subject matter of David and Wilma's divorce proceeding. Wilma's subsequent claims arise out of the same subject matter, the claims could have been asserted during the divorce proceedings, and there is a final judgment in the divorce proceeding. See id. Any additional claims that are related to the same subject matter and could have been brought in the divorce proceeding, including claims for fraud, negligent misrepresentation, conversion, damages under the Theft Liability Act, money had and received, and conspiracy, and thus, are barred by res judicata. See id. Accordingly, we conclude that the trial court did not err in granting summary judgment. See Clark, 465 S.W.3d at 724.
Wilma argues on appeal that res judicata is inapplicable because she exercised diligence in attempting to discover the documents necessary to verify the value of the marital estate's Quantlab bonuses. See Reynolds, 608 S.W.3d at 558-59 ("[R]es judicata does not bar a claim of which the plaintiff was unaware and which could not have discovered through the exercise of due diligence in the first action."). However, the test is not-as Wilma implies-whether she exercised due diligence in seeking the documents. The test is whether Wilma was unaware of the claims she raises in the present case and, if she was unaware, whether she could have discovered the availability of these claims had she exercised due diligence. See id. In 2012, when Wilma filed her bill of review, her allegations included that David had given false testimony, concealed documents, and introduced false evidence concerning the division of property. See Reynolds, 2015 WL 4504626, at *2. In the original divorce proceeding, Wilma continually sought discovery because she suspected that David and the other defendants were concealing assets from her, and she was entitled to a greater portion of the marital property. Stated differently, Wilma was aware of her potential claim for fraud since the original divorce proceeding. Thus, Wilma was previously aware of, or could have discovered through the exercise of due diligence, the same claims she raises in the present suit. See id. Accordingly, we conclude that res judicata is not negated by Wilma's due diligence in seeking discovery.
Because the trial court did not specify on which ground the summary judgment was granted, and we have concluded that appellees established res judicata as a matter of law, we do not need to address other summary judgment grounds asserted by the appellees. See Dow, 383 S.W.3d at 652. We overrule Wilma's first issue.
B. Motion for Sanctions
In her second issue, Wilma argues that the trial court erred by granting appellees' cross-motions for sanctions.
1. Standard of Review & Applicable Law
A trial court's ruling on a motion for sanctions is reviewed under an abuse of discretion standard. See Cire v. Cummings, 134 S.W.3d 835, 838 (Tex. 2004); Thottumkal v. McDougal, 251 S.W.3d 715, 717 (Tex. App.-Houston [14th Dist.] 2008, pet. denied). The test for abuse of discretion is not whether, in the opinion of the reviewing court, the facts present an appropriate case for the trial court's action, but whether the court acted without reference to any guiding rules and principles. Cire, 134 S.W.3d . at 838-39. When determining if the trial court abused its discretion, we engage in a two-part inquiry. First, we determine whether the punishment was imposed on the true offender and tailored to remedy any prejudice caused. Thottumkal, 251 S.W.3d at 717. Second, we must make certain that less severe sanctions would not have been sufficient. Id.
We will not conclude that a trial court abused its discretion in levying sanctions if some evidence supports its decision. Nath v. Tex. Children's Hosp., 446 S.W.3d 355, 361 (Tex. 2014). Generally, courts presume that pleadings and other papers are filed in good faith. Low v. Henry, 221 S.W.3d 609, 614 (Tex. 2007); Commc'ns Sys. Corp. v. Tanner, 856 S.W.2d 725, 730 (Tex. 1993). The party seeking sanctions bears the burden of overcoming this presumption of good faith. Low, 221 S.W.3d at 614.
Section 10.004(a) of the Texas Civil Practice and Remedies Code states "[a] court that determines that a person has signed a pleading or motion in violation of [s]ection 10.001 may impose a sanction on the person, a party represented by the person, or both." Tex. Civ. Prac. & Rem. Code Ann. § 10.004(a). Section 10.001 provides:
The signing of a pleading or motion as required by the Texas Rules of Civil Procedure constitutes a certificate by the signatory that to the signatory's best knowledge, information, and belief, formed after reasonable inquiry:
(1) the pleading or motion is not being presented for any improper purpose, including to harass or to cause unnecessary delay or needless increase in the cost of litigation;
(2) each claim, defense, or other legal contention in the pleading or motion is warranted by existing law or by a nonfrivolous argument for the extension, modification, or reversal of existing law or the establishment of new law;
(3)each allegation or other factual contention in the pleading or motion has evidentiary support or, for a specifically identified allegation or factual contention, is likely to have evidentiary support after a reasonable opportunity for further investigation or discovery; and
(4) each denial in the pleading or motion of a factual contention is warranted on the evidence or, for a specifically identified denial, is reasonably based on a lack of information or belief.Id. § 10.001.
Rule 13 of the Texas Rules of Civil Procedure provides that pleadings that are groundless and made in bad faith, are made for the purposes of harassment, or were false when made are also sanctionable:
The signatures of attorneys or parties constitute a certificate by them that they have read the pleading, motion, or other paper; that to the best of their knowledge, information, and belief formed after reasonable inquiry the instrument is not groundless and brought in bad faith or groundless and brought for the purpose of harassment. Attorneys or parties who . . . make statements in pleading which they know to be groundless and false, for the purpose of securing a delay of the trial of the cause, shall be held guilty of a contempt. . . . Courts shall presume that pleadings, motions, and other papers are filed in good faith. No sanctions under this rule may be imposed except for good cause, the particulars of which must be stated in the sanction order. "Groundless" for purposes of this rule means no basis in law or fact and not warranted by good faith argument for the extension, modification, or reversal of existing law. . . .Tex. R. Civ. P. 13. "Importantly, Rule 13 does not permit sanctions on the issue of groundlessness alone. Rather, the filing in question must be groundless and also either brought in bad faith, brought for the purpose of harassment, or false when made." Nath, 446 S.W.3d at 362-63. A pleading or motion is not groundless merely because it is not a winner, lacks legal merit, or because we disagree with the factual and legal assertions. Mattox v. Grimes Cnty. Comm 'rs Court, 305 S.W.3d 375, 386 (Tex. App.-Houston [14th Dist] 2010, pet. denied).
2. Did the trial court err in granting the motions for sanctions?
In the trial court's orders granting appellees' motions for summary judgment, the court also found that "Plaintiff Wilma Reynolds and her attorney, Carl Gordon, have filed and prosecuted this lawsuit for an improper purpose, without legal support, in bad faith, and with intention to harass." Accordingly, under § 10 of the Texas Civil Practice and Remedies Code and Texas Rule of Civil Procedure 13, the trial court ordered that QTP, QIP, QFL, and David were entitled to recover their attorney's fees.
We cannot conclude that the trial court abused its discretion in awarding sanctions. As briefly summarized above, Wilma and Gordon have repeatedly attacked the underlying division of marital property. Wilma appealed the original divorce judgment, which our court affirmed. See Reynolds, 2010 WL 3418209 at *4. We concluded that by accepting the benefits of the property division, she was estopped from challenging the division of the marital property. See id. Subsequently, the trial court denied Wilma's petition for bill of review, the denial of which was affirmed on appeal, concluding that Wilma had already appealed the division of marital property unsuccessfully. Reynolds, 2015 WL 4504626, at *3.
Finally, the trial court denied Wilma's petition for post-divorce division of property and granted appellees' motion for summary judgment. See Reynolds, 2017 WL 1366680, at *2. We affirmed, concluding that Wilma's claims were barred by collateral estoppel. Id. Because we have previously concluded that Wilma's claims were barred by collateral estoppel, the trial court could have concluded that Wilma's current claims have no basis in law or fact. See Tex. R. Civ. P. 13; see also Mattox, 305 S.W.3d at 386.
The trial court could have also concluded that Wilma's pleadings were brought for the purpose of harassment or in bad faith because Wilma and Gordon have already been admonished by the trial court regarding the filing of frivolous pleadings. In 2015, when the trial court granted appellees' motion for summary judgment on Wilma's petition for post-divorce division of community property, the trial court also ordered Gordon "to refrain from filing any frivolous and/or groundless pleadings in any forum in connection with this cause number." Despite the trial court's admonition, Wilma and Gordon filed the present lawsuit against David and the Quantlab entities, once again asserting claims related to the division of Wilma and David's community property. Wilma and Gordon have now filed, combined, twenty-two appeals and petitions for writs of mandamus related to the same underlying issues. Accordingly, the trial court could have concluded that the present litigation was brought in bad faith or for the purpose of harassment. See Tex. R. Civ. P. 13; Interest of D.Z., 583 S.W.3d 284, 296 (Tex. App.-Houston [14th Dist] 2019, no pet.) (concluding that the trial court did not abuse its discretion in awarding sanctions when plaintiff filed numerous pleadings and motions that were "not factually well grounded"); see also Campos v. Ysleta Gen. Hosp., Inc., 879 S.W.2d 67, 73 (Tex. App.-El Paso 1994, writ denied) (affirming the trial court's finding of bad faith where the plaintiff filed suit despite the "doctrine of res judicata clearly applying] to the facts of this situation").
The trial court also sanctioned Wilma for moving to compel QTP, QIP, and QFL's payment of appellate costs. In its order granting sanctions against Wilma and Gordon, the trial court noted that "[b]efore Plaintiff moved to compel, Quantlab offered to repay her costs voluntarily. The Court therefore sees no need to compel repayment of those costs when Quantlab will pay them willingly." Thus, the trial court could have reasonably concluded that Wilma had only filed the motion to compel to harass appellees. Additionally, we do not find the sanctions to be excessive because the sanctions awarded by the trial court are directly related to the offensive conduct; the trial court awarded sanctions in accordance with the appellees' attorneys' fees in litigating against the bad faith claim. Nath, 446 S.W.3d at 365 (concluding that sanction fees were not excessive when there was a "direct nexus between this portion of the trial court's sanctions and the offensive conduct").
We conclude that the sanctions are aimed at the true offenders, the sanctions remedy the prejudice caused, and a lesser sanction would not have sufficed. See Cire, 134 S.W.3d at 839. The trial court levied sanctions against both Wilma and Gordon, her attorney. By filing numerous lawsuits and appeals in conjunction with the divorce, the sanctions attempt to remedy the prejudice suffered by appellees by awarding appellees' their costs in defending against these suits. Due to the number of lawsuits and appeals filed and the cost involved in defending against them, a lesser sanction would not have sufficed to deter Wilma and Gordon. Therefore, we conclude that the trial court did not abuse its discretion in the award of sanctions. See id. We overrule Wilma's second issue.
C. Motion to Compel Discovery
In her third issue, Wilma argues that the trial court erred by failing to grant her motion to compel discovery.
1. Standard of Review
We review a trial court's order denying a motion to compel discovery for an abuse of discretion. Ford Motor Co. v. Castillo, 279 S.W.3d 656, 661 (Tex. 2009); see Reynolds v. Reynolds, No. 14-14-00624-CV, 2015 WL 7456059, at *3 (Tex. App.-Houston [14th Dist] Nov. 24, 2015, no pet.) (mem. op.). Trial courts have broad discretion in matters of discovery. Reynolds, 2015 WL 7456059, at *3. "A trial court abuses its discretion if it misinterprets or misapplies the law or acts arbitrarily or unreasonably." Tanglewood Homes Ass'n, Inc. v. Feldman, 436 S.W.3d 48, 69 (Tex. App.-Houston [14th Dist] 2014, pet. denied). To establish that the trial court abused its discretion when it denied her motion to compel, Wilma must demonstrate that none of David's objections support the trial court's action. Id.
2. Did the trial court abuse its discretion in denying Wilma's motions to compel discovery?
Throughout the history of this case, the trial court has repeatedly denied Wilma's requests to compel discovery. And we have previously concluded that the trial court did not abuse its discretion in denying her various motions to compel discovery. See Reynolds, 2017 WL 1366680, at *2 ("Because the divorce decree addressed and divided 100 percent of the marital estate's interest in QTP and QIP, which would include any bonuses deposited in accounts controlled by QTP and QIP, we hold that the trial court reasonably could have concluded that Wilma's discovery requests sought documents and information that were not relevant."); Reynolds, 2015 WL 7456059, at *3 ("Because David had provided Wilma with his 2008 QIP Schedule K-1 filed with the Internal Revenue Service, we conclude that the trial court did not abuse its discretion when it denied Wilma's motion to compel because the trial court reasonably could have decided that Wilma had all the information she needed to veri[f]y the accuracy of David's proffered payment."); In re Reynolds, No. 14-11-01097-CV, 2012 WL 51028, at *1 (Tex. App.-Houston [14th Dist] Jan. 10, 2012, orig. proceeding) ("On this record, Wilma has not established that the trial court abused its discretion in its December 7, 2011 order denying discovery of the QTP documents described therein.").
Stated differently, this court has affirmed on multiple occasions that the trial court did not err in denying Wilma's motions to compel based on the trial's court findings that the documents sought were duplicative and irrelevant. In their response to Wilma's motion to compel discovery, appellees argued that discovery requests were unreasonably duplicative of discovery already exchanged between the parties in 2009, in addition to asserting that the "discovery requests are patently overbroad, seek irrelevant information, and impose an undue burden that outweighs any benefit to the [Wilma]." In their motion for protective order, QTP, QIP, and QFL argued that the discovery requests were overly broad, burdensome, and seek irrelevant information because Wilma sought:
We note that appellees never raised any issue preclusion affirmative defenses below as it relates to the discovery requests, and Wilma did not object. Tex.R.App.P. 33.1(a).
with respect to all accounts reflecting funds . . . on deposit with domestic banks . . . or other financial institutions, for all statements of account reflecting account balances, copies of all canceled checks, all deposit slips, all withdrawal slips, and all documents evidencing transfer into or withdrawals from the account over a 12 year period, from May 1997 to April 2009. Plaintiff requests the same materials for the same time period for all offshore accounts.
The trial court did not misinterpret or misapply the law or act arbitrarily in denying Wilma's motions to compel discovery. See Tanglewood Homes, 436 S.W.3d at 69. Accordingly, we conclude that the trial court did not abuse its discretion in denying Wilma's motions to compel discovery. See Castillo, 279 S.W.3d at 661.
We overrule Wilma's third issue.
III. Conclusion
We affirm the judgment of the trial court.