Opinion
Civil Action No. 3:98-CV-1052-D.
August 17, 2000.
MEMORANDUN OPINION AND ORDER
In this action for breach of contract, defendants San Francisco French Bread Co. ("SFFB"), Interstate Brands Corp. ("Interstate"), and Specialty Foods Corporation ("SEC") move for summary judgment, contending that plaintiff Transportation Concepts, Inc.'s ("TCI's") claim is barred by res judicata. Because the claim is foreclosed by that doctrine, the court enters summary judgment dismissing this case.
I
On June 13, 1994 TCI entered into a contract ("the Agreement") with SFC under which TCI received a commission for negotiating trucking leases. SFFB was at the time a wholly-owned subsidiary of SFC. Under the terms of the Agreement, TCI's commission was based on a percentage of the "actual savings" realized as of the result of the leases negotiated.
Until April 1997 SFFB was a wholly-owned subsidiary of SFC.
In December 1995 TCI negotiated a written vehicle maintenance agreement ("the Penske Lease") between Penske Truck Leasing Co., L.P. ("Penske") and SFFB. Under the contract, from January 1996 to March 1997 SFFB paid commissions to TCI based on an estimate of the actual savings from the Penske Lease. In April 1997 Interstate purchased SFFB and assumed liability for the TCI contract. Interstate canceled the Penske Lease.
TCI brought suit ("the First Lawsuit") in Texas state court against SFC and Alpha Baking Co. ("Alpha"), a wholly-owned subsidiary of SFC. In the First Lawsuit, TCI sought to recover commissions allegedly due under the Agreement. It argued that the Agreement had been modified to provide for a flat monthlypayment for ten years. The state court granted summary judgment against TCI.
TCI filed this separate suit against SFFB, Interstate, and SFC in state court. Defendants removed the case to this court and later moved for summary judgment. The court denied the motion in part and denied the motion in part without prejudice while awaiting the outcome of a pending appeal in the First Lawsuit. After the Texas court of appeals affirmed that ruling, defendants filed the instant motion for summary judgment, urging the res judicata defense.
II
Defendants maintain that TCI's breach of contract claim is barred by res judicata and collateral estoppel. As the court stated in its April 20, 2000 order, res judicata is an affirmative defense as to which defendants will have the burden of proof at trial. See Rivet v. Regions Bank, 522 U.S. 470, 478 (1998); 18 CHARLES ALAN WRIGHT, ET AL., FEDERAL PRACTICE AND PROCEDURE § 4405 (1981). Therefore, to obtain summary judgment, they "must establish 'beyond peradventure all of the essential elements of the. . . defense.''' Bank One, Tex., N.A. v. Prudential Ins. Co. of Am., 878 F. Supp. 943, 962 (N.D. Tex. 1995) ( Fitzwater, J.) (quoting Fontenot v. Upjohn Co., 780 F.2d 1190, 1194 (5th Cir. 1986)).
The court need not address defendants' motion for summary judgment on the issue of collateral estoppel.
Res judicata, in contrast to the narrower doctrine of issue preclusion, bars all claims that were or could have been advanced in support of a cause of action on the occasion of its former adjudication. Nilsen v. City of Moss Point, Miss., 701 F.2d 556, 560 (5th Cir. 1983) (en banc). In determining whether the present suit is barred by the state court judgment in the First Lawsuit, the court applies state law. Sid Richardson Carbon Gasoline Co. v. Interenergy Resources, Ltd, 99 F.3d 746, 756 (5th Cir. 1996). Texas courts follow the transactional approach in determining claim preclusion. "A subsequent suit will be barred if it arises out of the same subject matter of a previous suit and which through the exercise of dilingence, could have been litigated in a prior suit." Barr v. Resolution Trust Corp., 837 S.W.2d 627, 631 (Tex. 1992). To establish that a claim is barred by res judicata, a party must show the following elements: (1) a prior final judgment on the merits rendered 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 as were raised or could have been raised in the first action. See Amstadt v. US. Brass Corp., 919 S.W.2d 644, 652 (Tex. 1996) (citing Texas Water Rights Comm'n v. Crow Iron Works, 582 S.W.2d 768, 771-72 (Tex. 1979)); see also Getty Oil Co. v. Insurance Co. of N. Am., 845 S.W.2d 794, 800 (Tex. 1992). To decide whether TCL's present suit involves the same cause of action as the First Lawsuit, the court examines whether the "plaintiff bases the two actions on the same nucleus of operative facts." Travelers Ins. Co. v. St. Jude Hosp., 37 F.3d 193, 195 (5th Cir. 1994).
TCI argues that res judicata should not apply because the present case involves a different subsidiary of SFC. The court disagrees. Privity connotes those who are in law so connected with a party to a judgment as to have such an identity of interest that the party to the judgment represented the same legal right. Benson v. Wanda Petroleum Co., 468 S.W.2d 361, 363 (Tex. 1971). Under Texas law, there is no specific definition of privity that applies to all res judicata cases. Instead, the circumstances of each case must be carefully examined. Getty Oil, 845 S.W.2d at 800; see also Mohamed v. Exxon Corp., 796 S.W.2d 751, 755 (Tex.App. 1990, writ denied) (applying federal res judicata rules) ("[Although] res judicata requires identity of parties, that does not mean identity in the usual sense. It means rather a relationship so close that a court may justifiably deny the plaintiff a second bite at the apple."). TCI sued SFC in both lawsuits. Although SFFB and Interstate were not parties to the First Lawsuit, they were in privity with SFC because they were bound by TCI's contract with SFC as subsidiary and assignee, respectively, of the Agreement. The court therefore concludes that the requirement of identity of parties has been met. See Pollard v. Cockrell, 578 F.2d 1002, 1008-09 (5th Cir. 1978) (suggesting relationships that might indicate identity for res judicata purposes, including parent corporation and subsidiary).
TCI also opposes application of res judicata on the ground that the instant case involves a separate negotiated lease and a different amount of damages. The court disagrees. In the First Lawsuit, TCI sued for breach of contract against SFC, National Baking Company ("National") (SFC's former subsidiary), and Alpha Baking Company ("Alpha"), which had acquired National. TCI alleged that these parties owed it commissions under the Agreement for negotiating the Penske Lease. TCI alleged in the First Lawsuit that SFC and TCI had modified the Agreement to change the basis for calculating the commission from a percentage of actual savings to a fixed amount for a period of ten years. In the First Lawsuit, TCI alleged that "Alpha. SFC and others thought they had devised a plan to simply avoid payments to TCI" by canceling the Penske Lease. Ds. App. at 8. TCI concedes that in both lawsuits, its basis for recovery is the allegedly-modified Agreement with SFC, which applied to its subsidiaries. Thus the subject matter of both cases is the Agreement and whether it was modified, as TCI alleges. TCI could have brought its claims against SEC. SFFB, and Interstate in the First Lawsuit.
From a comparison of TCI's petition in the First Lawsuit, the decision of the Texas court of appeals, and TCI's state court petition in the present case, it is clear that (1) the parties are identical or in privity with parties to both suits, (2) the judgment in the First Lawsuit was a final judgment on the merits rendered by a court of competent jurisdiction, and (3) the same cause of action is involved in both cases, in that the instant suit alleges breach of contract arising out of the same set of facts as were alleged in the First Lawsuit, and TCI could have brought in the First Lawsuit the breach of contract claim it now asserts in the instant ease.
Accordingly, the court holds that TCI's suit is barred by res judicata.
* * *
Defendants' motion for summary judgment is granted and this case is dismissed by judgment filed today.
SO ORDERED.