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IN RE: HPGM, LLC, et al.
“When two inherently interrelated suits are brought in different counties, the first-filed suit ordinarily acquires dominant jurisdiction and the second-filed suit should be abated.” In re Red Dot Bldg. Sys., Inc., 504 S.W.3d 320, 321 (Tex. 2016) (orig. proceeding). The exceptions are limited. In this contingency-fee agreement dispute, HPGM, LLC (HPGM),1 seeks mandamus relief from the trial court order in the second-filed suit, in Titus County, denying its plea in abatement on estoppel grounds. We conclude that the first-filed rule applies, because the claimed exception has not been established. We conditionally grant the requested relief.
When country music legend Ray Price died in 2013, his widow, Janie Price, hired attorneys Mark Haney and Kelly Puls of Puls & Haney, P.L.L.C., and Ross Griffith and Thomas Michel of Griffith, Jay & Michel, LLP, to represent her in a will contest. After that lawsuit was concluded in her favor, Price conveyed certain rights to musical recordings and related intellectual property, among other things, to HPGM 2 in accordance with a contingency fee agreement (the Fee Agreement).
After a dispute arose over the Fee Agreement, HPGM filed a declaratory judgment action against Price in the County Court at Law No. 3 of Tarrant County on August 2, 2019. Three days later, Price sued HPGM in the district court in Titus County.3 HPGM filed a motion to abate the later-filed Titus County lawsuit under the dominant-jurisdiction doctrine. Price responded and claimed that, although she did not dispute that all of the elements of dominant jurisdiction in Tarrant County were satisfied, HPGM had fraudulently represented that it would consider settlement and thereby had caused her to delay filing the Titus County lawsuit. Price, therefore, claimed that HPGM was estopped to assert the prior active jurisdiction of the Tarrant County court.
The trial court conducted a hearing on the plea in abatement at which HPGM introduced file-marked copies of its Tarrant County petition and Price's Titus County petition as evidence of the earlier-filed Tarrant County lawsuit. Price went on record and claimed only an equitable exception to dominant jurisdiction.4 Price's verified response to the plea in abatement was admitted into evidence by the trial court without objection. The verified response 5 alleged,
On March 24, 2019, counsel for Mrs. Price wrote a letter to Defendants asking that Defendants agree to the relief sought in this suit. No response was received. After telephone conferences with Defendants' representatives, and exchanges of messages, a meeting was set for June 17, 2019. Defendants did not appear at this meeting. A second meeting was set for July 1, 2019. Kelly Puls appeared at the offices of Price's attorneys, and was unable to answer the question: “Do you still represent Mrs. Price?”
When asked for a proposal to resolve the dispute, Mr. Puls stated he would have a response in a week. Nine days later, on July 10, the undersigned had a telephone call with Mark Haney. Mr. Haney said that they would have a response by the end of the week (July 12). No response was received on July 12. No response has ever been received.
Price's response then claimed,
If Defendants had no intention of resolving this case—as is evident by their failure to make even a single counter-offer—and if Defendants had communicated this fact to Price, then Price would have been able to file this suit before August 2. Price's suit in Titus County would have had dominant jurisdiction, and Defendants' inequitable conduct would not have caused the unnecessary delay in filing the suit.
The trial court expressed concern that
the defendants ․ did perpetuate for months the idea that they were considering settlement. That's even noted in Mr. Haney's exhibit, in his affidavit. ․ And they went so far as to have a meeting in July and tell them they would get them a settlement offer within a week or within two weeks but never did.
At the conclusion of the hearing, the trial court found, based on the evidence, that there was fraudulent inducement of delay. The trial court, thereafter, denied the motion to abate the Titus County lawsuit. HPGM asked the trial court to reconsider its denial of the plea in abatement. The trial court held a hearing on the motion to reconsider—at which no evidence was offered—and denied the motion. The trial court's written order following the hearing denied the motion to reconsider “on the basis of inequitable conduct by the Defendants.”
“In instances where inherently interrelated suits are pending in two counties, and venue is proper in either county, the court in which suit was first filed acquires dominant jurisdiction.” Red Dot Bldg. Sys., Inc., 504 S.W.3d at 322; see In re J.B. Hunt Transp., Inc., 492 S.W.3d 287, 294 (Tex. 2016) (orig. proceeding); Gonzalez v. Reliant Energy, Inc., 159 S.W.3d 615, 622 (Tex. 2005). “Abatement of a suit due to the pendency of a prior suit is based on the principles of comity, convenience, and the necessity for an orderly procedure in the trial of contested issues.” In re CTMI, LLC, No. 05-16-01078-CV, 2016 WL 7163830, at *2 (Tex. App.—Dallas Dec. 8, 2016, orig. proceeding) (mem. op.) (citing Miles v. Ford Motor Co., 914 S.W.2d 135, 138 (Tex. 1995) (per curiam)).
“The first-filed rule admits of exceptions when its justifications fail, as when ․ the race to the courthouse was unfairly run.” Perry v. Del Rio, 66 S.W.3d 239, 252 (Tex. 2001) (orig. proceeding). This exception provides that “the plaintiff in the first suit may be guilty of such inequitable conduct as will estop him from relying on that suit to abate a subsequent proceeding brought by his adversary.” J.B. Hunt Transp., Inc., 492 S.W.3d at 294 (quoting Curtis v. Gibbs, 511 S.W.2d 263, 267 (Tex. 1974) (orig. proceeding)). “The purpose of this exception is to prevent a first-filer from unjustly claiming dominant jurisdiction in the first court when that priority was obtained through underhanded means.” Id. (citing Perry, 66 S.W.3d at 252).
This exception is satisfied when there is a “fact issue as to whether the first-filer[ ] [is] ‘guilty of certain acts of fraud and deceit’ that caused the second-filer to delay filing the second suit.” Id. at 294–95 (quoting V.D. Anderson Co. v. Young, 128 Tex. 631, 101 S.W.2d 798, 799 (1937) (orig. proceeding)). “By contrast ․ this exception [is] not satisfied where the party opposed to abatement ‘fail[s] to raise any fact issues’ as to bad faith and fraud.” Id. at 295 (quoting Wheeler v. Williams, 158 Tex. 383, 312 S.W.2d 221, 228 (1958) (orig. proceeding)). “Our caselaw requires alleged ‘facts which, if established, would estop the plaintiff in the prior action from asserting his plea in abatement.’ ” Id. at 298 (quoting Curtis v. Gibbs, 511 S.W.2d 263, 267 (Tex. 1974) (orig. proceeding)).
When dealing with a plea in abatement in a dominant-jurisdiction case, to get mandamus relief, a party needs to show an abuse of discretion. Id. at 294. “[I]f the court in the second action abuses its discretion by not abating the action, no additional showing is required for mandamus relief.” Red Dot Bldg. Sys., Inc., 504 S.W.3d at 322. We, therefore, must determine whether there was a clear abuse of discretion in the denial of HPGM's plea in abatement based on dominant jurisdiction. But first, we must deal with a threshold issue.
(1) HPGM Acquiesced in the Trial Court's Consideration of Price's Verified Response as Evidence
The parties join issue on whether HPGM is estopped from asserting the prior, active jurisdiction of the Tarrant County court based on HPGM's alleged inequitable conduct.7 HPGM claims the estoppel exception does not apply here because, among other things, no evidence supports Price's inequitable-conduct defense. HPGM contends that Price relied solely on her verified response to the plea in abatement and that that response was not evidence. We must, therefore, initially determine whether the trial court properly considered the response to the plea in abatement as evidence.
It is well established that a party seeking abatement must prove the allegations in its plea by a preponderance of the evidence. Flowers v. Steelcraft Corp., 406 S.W.2d 199, 199 (Tex. 1966). As stated by our sister court, “[A] party who urges a plea in abatement has the burden of proving by a preponderance of the evidence at the hearing on such plea the facts that are alleged in the plea as grounds for abating and dismissing the plaintiff's case.” Brazos Elec. Power Co-op., Inc. v. Weatherford Indep. Sch. Dist., 453 S.W.2d 185, 188 (Tex. App.—Fort Worth 1970, writ ref'd n.r.e.); see S. Cty. Mut. Ins. Co. v. Ochoa, 19 S.W.3d 452, 469 (Tex. App.—Texarkana 2000, no pet.) (proponent of plea has burden of proof to establish allegations in motion); Lopez v. Tex. Workers' Comp. Ins. Fund, 11 S.W.3d 490, 493 (Tex. App.—Austin 2000, pet. denied) (“The proponent of a motion to abate has the burden of proving by a preponderance of the evidence at the hearing on the motion the facts that are alleged in the motion as grounds for abating the case.”); Bernal v. Garrison, 818 S.W.2d 79, 82 (Tex. App.—Corpus Christi 1991, writ denied); Seth v. Meyer, 730 S.W.2d 884, 885 (Tex. App.—Fort Worth 1987, no writ).8 “A defendant who merely presents its plea in abatement without offering evidence to prove the grounds urged waives the plea unless it can demonstrate that the plaintiff's petition establishes the grounds urged in the plea.” In re Truck Ins. Exch., No. 12-12-00183-CV, 2013 WL 1760793, at *2 (Tex. App.—Tyler Apr. 24, 2013, orig. proceeding) (mem. op.) (citing Brazos Elec. Power Co-op., 453 S.W.2d at 189).
Moreover, “[t]he verification of a plea does not do away with the requirement that the one urging the plea prove the grounds by a preponderance of the evidence at the time the plea is presented to the court.” Brazos Elec. Power Co-op., 453 S.W.2d at 189 (citing Sinclair Pipe Line Co. v. Peters, 323 S.W.2d 651 (Tex. App.—Beaumont 1959, no writ); R.R. Comm'n v. Shell Oil Co., Inc., 164 S.W.2d 773 (Tex. App.—Austin 1942, writ ref'd); Street v. J.I. Case Threshing Mach. Co., 188 S.W. 725 (Tex. App.—Amarillo 1916, writ ref'd)); see Truck Ins. Exch., 2013 WL 1760793, at *2; In re Old Am. Cty. Mut. Fire Ins. Co., No. 03-12-00588-CV, 2012 WL 6699052, at *2 n.5 (Tex. App.—Austin Dec. 20, 2012, orig. proceeding) (mem. op.); Tex. Emp. Ins. Ass'n v. Baeza, 584 S.W.2d 317, 321 (Tex. App.—Amarillo 1979, no pet.).
Just as the proponent of a sworn plea in abatement has the burden of proving dominant jurisdiction, a party asserting the inequitable-conduct exception to the dominant-jurisdiction doctrine has the burden of proving that exception. See J.B. Hunt Transp., Inc., 492 S.W.3d at 294 (“[A]ll of the Real Parties' evidence—even assuming the disputed evidence in the Real Parties' favor—falls well below the legal standards for these exceptions.”); Curtis v. Gibbs, 511 S.W.2d 263, 267 (Tex. 1974) (orig. proceeding) (inequitable-conduct exception requires party asserting exception to allege “facts which, if established, would estop the plaintiff in the prior action from asserting his plea in abatement” (emphasis added)). Consequently, Price bore the burden of proving this exception. The question is whether Price's verified response to the plea in abatement is evidence of the facts alleged in the response. In the context of proving dominant jurisdiction, the proponent must offer evidence at the abatement hearing to support its claims. Flowers v. Steelcraft Corp., 406 S.W.2d 199, 199 (Tex. 1966). A verified plea, in this context, is not evidence. Brazos Elec. Power Co-op., 453 S.W.2d at 189.
Indeed, it is well established that pleadings are generally not competent evidence, even if sworn or verified. Hidalgo v. Surety Sav. & Loan Ass'n, 462 S.W.2d 540, 545 (Tex. 1971). The court reasoned:
[We] are convinced that orderly judicial administration will be better served in the long run if we refuse to regard pleadings, even if sworn, as summary judgment evidence․ If we took the opposite course, we would be confronted with constant problems concerning whether there was an adequate showing that the person making the oath was personally acquainted with the facts and was competent to testify to the facts alleged.
Id. This rule was again stated in Laidlaw Waste Systems, Inc. v. City of Wilmer, 904 S.W.2d 656, 660 (Tex. 1995). In that case, Laidlaw attached a copy of its verified original petition in response to the City's motion for summary judgment. Laidlaw argued that the specific facts set out in the petition that was verified by two sworn statements were competent summary judgment evidence. The court rejected this argument. Id. at 660–61. Numerous Texas courts have applied this rule beyond the summary judgment context.9
Despite this precedent, Price claims that, because her verified response was offered and admitted into evidence without objection, it is competent evidentiary support of her inequitable-conduct defense to dominant jurisdiction.10 This argument was rejected in a different setting by our sister court in Waxahachie National Bank v. Sigmond Rothschild Co., 235 S.W. 633, 635 (Tex. App.—Dallas 1921, no writ). Waxahachie National Bank involved a venue dispute in which Sigmond introduced its original petition into evidence and read its allegations into the record. Id. The court determined,
[T]he allegations [in the petition] cannot be considered as evidence for any purpose in behalf of said appellee in discharging the burden of proof resting on said appellee to establish the existence of the exception to exclusive venue in the county of appellants' residence. Such a rule governing the production of testimony would be to substitute self-serving declarations for the production of evidence from original source to establish a controverted issue.
Id.11 Likewise, in Neyland v. Benson, 292 S.W. 251 (Tex. App.—Dallas 1927, no writ), another venue dispute, Neyland filed a plea of privilege to be sued in Hunt County while Benson filed a controverting plea seeking to retain venue in Dallas county. Id. at 252. To sustain her controverting plea, Benson was required to show that a statement regarding the value of certain stock was false. Id. at 254. Benson claimed that, because Neyland offered Benson's petition in evidence without limitation at the hearing, she satisfied her proof requirement. The court disagreed, citing Waxahachie National Bank. Id.
The same rule was applied in Kroger Co. v. Warren, 410 S.W.2d 194 (Tex. App.—Tyler 1966, no writ). In that case, Warren sued Kroger for false imprisonment, among other things. Id. at 194–95. Kroger filed a plea of privilege to be sued in the county of its residence, and Warren filed a controverting plea. Id. at 195. At the venue hearing, Warren introduced her amended petition into evidence without objection. Warren then testified that she was familiar with the petition, that she had read the petition, that she understood the allegations in the petition, that she had personal knowledge of the facts stated in the petition, and that those facts were true and correct, to her best knowledge and belief. Id. The court held that the petition was not admissible to prove the alleged facts it contained, even if it had been properly verified. Id. at 196. Further, Warren's testimony “that she adopted the allegations of fact in her petition as evidence just could not give life to the instrument as evidence which was otherwise inadmissible to prove her case.” Id.
On the other hand, more recent cases have more readily found waiver in similar situations. Indeed, Price contends that HPGM waived its right to complain about the trial court's consideration of its verified response as evidence because it did not make this argument in the trial court and because it failed to object to the offer of Price's response into evidence. In support of this contention, Price relies on In re K.T.P., No. 05-17-00922-CV, 2018 WL 6716934, at *3 (Tex. App.—Dallas Dec. 21, 2018, no pet.) (mem. op.). There, Father challenged the sufficiency of the evidence to support the trial court's order granting Mother's motion to decline jurisdiction. Id. at *1. The trial court ultimately declined to exercise jurisdiction. Id. at *2. Father filed a motion for new trial in which he claimed the evidence was legally and factually insufficient to support the court's order. This motion was overruled by operation of law. Id.
On appeal, Father argued that the trial court erred in granting Mother's motion to decline jurisdiction because no evidence was offered or admitted at the hearing that would support the court's decision. Id. Citing Rule 33.1 of the Texas Rules of Appellate Procedure, the appellate court declined to address that argument. See Tex. R. App. P. 33.1; K.T.P., 2018 WL 6716934, at *3. K.T.P. was governed by Section 152.207 of the Texas Family Code, which allows trial courts to make a forum determination on submitted information. Mother's motion does not compare with Price's obligation to carry the burden of proving the inequitable-conduct exception to the dominant-jurisdiction doctrine. See Tex. Fam. Code Ann. § 152.207; Lesem v. Mouradian, 445 S.W.3d 366, 376 (Tex. App.—Houston [1st Dist.] 2013, no pet.) (Section 152.207 does not require the trial court to hold an evidentiary hearing before making a determination that Texas is an inconvenient forum); In re C.H., 595 S.W.3d 272, 279 n.7 (Tex. App.—Amarillo 2019, no pet.) (recognizing that Section 152.207 does not explicitly require the trial court to hold an evidentiary hearing before making a determination that Texas is an inconvenient forum.).
Although K.P.T. does not directly support Price's argument, Texas courts have recognized the proposition that the implicit acquiescence in a procedure in the trial court precludes a complaint about that procedure on appeal. See Ahmed v. Shimi Ventures, L.P., 99 S.W.3d 682 (Tex. App.—Houston [1st Dist.] 2003, no pet.). In that case, the trial court granted Shimi's petition for a temporary injunction enjoining Ahmed from removing or transferring commissions from any insurer, or any other funds belonging to Shimi. Id. at 686. On appeal, Ahmed argued that the appellate court could not consider affidavits attached to Shimi's petition because they were not evidence. Id. at 684 n.2. The court recognized that, absent the parties' agreement to treat the affidavits as evidence, affidavits attached to pleadings and not admitted into evidence do not constitute evidence. Id. (citing Millwrights Local Union No. 2484, 433 S.W.2d at 685–86). In determining that the affidavits could be properly considered, however, the court reviewed the trial court proceedings in which “the trial court announced during the hearing that it could base its decision on the exhibits and testimony from the hearing and also on ‘affidavits filed with the petition’ and on ‘evidence [sic] provided in [Ahmed's] answer.’ ” Id. (alterations in original). No one objected to this procedure. The court stated that, because the trial court was the fact-finder, “its declaring during the evidentiary hearing that it could consider the affidavits was tantamount to its having—rightly or wrongly—admitted those affidavits into evidence.” Id. The court found that Ahmed “implicitly acquiesced in this procedure below when, after the trial court's quoted statement, he questioned his client based on the affidavits” attached to Shimi's petition. Id.
As a result, Ahmed was precluded from complaining about the trial court's treatment of the affidavits as evidence when, after he was aware the trial court would do so, he failed to object. Id. (citing Tex. R. App. P. 33.1(a)(1); Tigua Gen. Hosp., Inc. v. Feuerberg, 645 S.W.2d 575, 576 (Tex. App.—El Paso 1982, writ dism'd) (treating affidavits as sufficient temporary injunction proof when opposing party failed to complain of affidavits' deficiency on appeal)); see Richard v. Towery, No. 01-11-00132-CV, 2013 WL 1694861, at *17 (Tex. App.—Houston [1st Dist.] Apr. 18, 2013, no pet.) (mem. op.) (participation in procedure adopted by the trial court without objection resulted in failure to preserve issue for appeal); Carroll v. Carroll, No. 04-08-00063-CV, 2009 WL 89704, at *4 (Tex. App.—San Antonio Jan. 14, 2009, no pet.) (mem. op.) (appellate complaint invited alleged error in modification of divorce decree requiring him to maintain life insurance in favor of ex-wife when husband previously advised the trial court that he would do so); Hudson v. City of Houston, No. 14-03-00565-CV, 2005 WL 3995160, at *6 (Tex. App.—Houston [14th Dist.] Jan. 6, 2005, no pet.) (mem. op.) (rejecting argument that trial was fundamentally unfair because appellant was prohibited from offering evidence of driver's negligence because appellant acquiesced in the proceedings leading to that result); Nesmith v. Berger, 64 S.W.3d 110, 119 (Tex. App.—Austin 2001, pet. denied) (party who advised trial court of type of relief requested cannot complain on appeal that different relief was not given); Baptist Mem'l Hosp. Sys. v. Smith, 822 S.W.2d 67, 73 (Tex. App.—San Antonio 1991, writ ref'd n.r.e.) (holding that a litigant cannot take one position in trial and an inconsistent position on appeal).
HPGM contends that its lack of objection to the verified response's admission into evidence did not amount to a waiver or a failure to preserve this issue for appellate review because it is permitted to challenge the sufficiency of the evidence for the first time on appeal. In re Zimmer, Inc., 451 S.W.3d 893, 903–04 (Tex. App.—Dallas 2014, orig. proceeding), involved a similar issue. There, the trial court granted Gustafson's motion for new trial. Zimmer filed a petition for writ of mandamus claiming that the trial court's grant of the motion amounted to an abuse of discretion. Id. at 897. Although Gustafson was required to support the motion for new trial with testimony or other evidence at the new trial hearing, he maintained that this failure was cured by Zimmer's failure to object to the consideration of the issue based on affidavits and on its failure to seek a ruling on its evidentiary objections to the affidavits. Id. at 902. The appellate court concluded that Zimmer had no obligation to object that Gustafson had not carried his burden of proof. Id. at 903; see Tex. R. App. P. 33.1(d) (“In a nonjury case, a complaint regarding the legal or factual insufficiency of the evidence ․ may be made for the first time on appeal in the complaining party's brief.”); In re Sartain, No. 01-07-00920-CV, 2008 WL 920664, at *2 n.2 (Tex. App.—Houston [1st Dist.] Apr. 3, 2008, orig. proceeding) (mem. op.) (relator did not waive complaint about lack of evidence; requesting to proceed without testimony not tantamount to stipulating to real party in interest's factual account).
At the hearing in this case, HPGM discussed the law, discussed the substance of Price's response, and argued the merits of the inequitable-conduct exception based on the statements contained in the response. HPGM then introduced evidence in support of dominant jurisdiction in Tarrant County, together with Haney's affidavit attached to HPGM's reply. HPGM further explained to the court why it believed the fraud theory was not applicable based on the allegations included in Price's response and discussed the allegations in Haney's affidavit.
Price then stated, “Your Honor, I would like to offer our response. I did a verification of that and would like that admitted into evidence.” HPGM stated that it had “[n]o objection to offering for verification.” The trial court then admitted the verified response into evidence. Price's argument was primarily based on the allegations in the response; HPGM's response to that argument was merit-based. HPGM did not advise the trial court at any point during the hearing that it believed the factual allegations in the verified response were not evidence. At the conclusion of the argument, the trial court stated,
Let the record reflect the Court is making its decision on more than just the immediate arguments today of Counsel. There was a motion filed, there was a response filed and there was a reply to that filed, in addition to the exhibits that were presented to the Court at this time.
At this point, it seemed clear that the trial court considered the factual assertions in the response as evidence and that its ruling would take those assertions into account. Yet, HPGM did not object to this procedure. If the trial court's intention was not already clear, it became more so when the trial court expressed concern that “the defendants, the movant in this case, did perpetuate for months the idea that they were considering settlement.” The trial court continued, “That's even noted in Mr. Haney's exhibit, in his affidavit․ They told them they were going to get a proposal, and then they never did.” Yet, HPGM failed to apprise the trial court of its concerns that the factual assertions in Price's response were not evidence. The trial court then made its ruling.
Although HPGM had many opportunities to apprise the trial court of its complaint that the factual assertions in Price's verified response were not evidence in this context, it failed to do so. HPGM acquiesced in the procedure that resulted in the trial court's consideration of the factual assertions in Price's response as evidence. HPGM now complains about the trial court's having considered the factual allegations in the verified response as evidence after it was admitted into evidence at trial and when, after having been advised that the trial court was relying on the verified response—which included factual assertions—as evidence, it did not protest or object. In this context, we must conclude that HPGM's acquiescence in the procedure below precludes it from complaining on appeal that the factual allegations in Price's response are not evidence. See Tex. R. App. P. 33.1(a)(1); Ahmed, 99 S.W.3d at 684; see Richard, 2013 WL 1694861, at *17.
(2) Price's Inequitable Conduct Theory Fails on its Merits
Following the initial hearing, the trial court issued its order denying the motion to abate. The trial court issued a second order following the hearing on HPGM's motion to reconsider, in which it denied the motion “on the basis of inequitable conduct by the Defendants.”
Texas courts have applied the estoppel exception to the first-filed rule when the first-filer did so merely to obtain priority, with no intention of prosecuting the suit, or when the first-filer prevented its adversary from filing the subsequent suit more promptly by fraudulently representing that they would settle. See In re CTMI, LLC, No. 05-16-01078-CV, 2016 WL 7163830, at *2–3 (Tex. App.—Dallas Dec. 8, 2016, orig. proceeding) (mem. op.) (citing In re Henry, 274 S.W.3d 185, 191 (Tex. App.—Houston [1st Dist.] 2008, pet. denied); Russell v. Taylor, 121 Tex. 450, 49 S.W.2d 733, 736 (1932)). Here, Price claims that HPGM's conduct was inequitable because it fraudulently represented that it would settle, thereby causing Price to delay filing suit.
In support of this assertion, Price points to the following: (1) On March 24, 2019, counsel for Price wrote a letter to HPGM proposing a settlement to which HPGM did not respond; (2) after telephone conferences and exchanges of messages, a meeting was set for June 17, 2019; (3) HPGM did not attend the June 17 meeting; (4) a second meeting was set for July 1, 2019, at which Puls met with counsel for Price and told him that he would have a response within a week; (5) on July 10, counsel for Price telephoned Haney, who said they would have a response by the end of the week; and (6) no response was received on July 12. HPGM, thereafter, sued Price on August 2, 2019.
Even assuming this conduct was inequitable, the Texas Supreme Court has stated that “establishing inequitable conduct alone is insufficient ․ because the inequitable-conduct exception functions as a remedy for a second-filer who is delayed—that is, prejudiced—by inequitable conduct.” J.B. Hunt Transp., Inc., 492 S.W.3d at 294–95. The J.B. Hunt case illustrates a lack of prejudice resulting from alleged inequitable conduct.
In that case, competing lawsuits were filed following a collision between a J.B. Hunt tractor-trailer and a vehicle. Id. at 289. While the injured parties were still in the hospital, J.B. Hunt's claims manager visited them and told a family member, “[W]e figure we are liable,” and that J.B. Hunt had “internal insurance that [could] handle this.” Id. at 290. The injured parties and J.B. Hunt both retained counsel, who worked together to coordinate examinations of the damaged vehicles. A December 11 email from J.B. Hunt's counsel had as its subject line, “Williams v. JB Hunt.” Id. The following day, J.B. Hunt sued Williams for property damage. Ten days later, Williams sued J.B. Hunt in a different court. Id. Williams's plea in abatement alleged, among other things, that J.B. Hunt engaged in inequitable conduct that estopped it from claiming dominant jurisdiction.
In support of this claim, Williams relied on the fact that J.B. Hunt's claims manager told Williams's family that it was liable, offered to cover hotel room expenses for the family, and said that their insurance could “handle this.” Id. at 295. In addition, J.B. Hunt's employees never mentioned a property-damage claim to Williams, and J.B. Hunt's email entitled “Williams v. JB Hunt” implied that J.B. Hunt was defending against a personal-injury claim and not prosecuting its own claim. Id. The Texas Supreme Court stated that, “even assuming this conduct is inequitable, these claims fail to satisfy the inequitable-conduct standard” because Williams did not claim that the purported inequitable conduct caused a delay in filing suit. Id.
The Dallas Court of Appeals, in reliance on In re J.B. Hunt Transportation, Inc., recently held that the inequitable-conduct exception to the first-filed rule did not apply in In re Texas Christian University, 571 S.W.3d 384 (Tex. App.—Dallas 2019, orig. proceeding). In that case, Listenbee was injured playing football for Texas Christian University (TCU) in 2015. Id. at 387. On September 7, 2017, Listenbee informed TCU via letter of his intent to file a lawsuit against it because he was allegedly harassed and pressured to prematurely return to the field before his injury healed. Id. Six days later, Listenbee sent TCU a second letter expressing his desire to settle the matter. The parties thereafter engaged in an unsuccessful mediation. Id. at 388. On January 30, 2018, TCU filed a declaratory judgment action against Listenbee in Tarrant County. The following day, Listenbee sued TCU and the Big 12 Conference, Inc., in Dallas County. Id.
Listenbee filed a plea in abatement claiming that the inequitable-conduct exception to the first-filed rule applied because TCU's declaratory judgment action violated the prohibition against seeking declarations of non-liability in tort and that it, therefore, had “unclean hands.” Id. at 392. The Dallas court noted that, regardless of whether TCU's claims were frivolous, Listenbee was required to establish that TCU's inequitable conduct caused a delay in filing suit. Id. (citing J.B. Hunt Transp., Inc., 492 S.W.3d at 295). Because Listenbee did not present evidence that TCU fraudulently induced him to wait to file suit or that it took any action to prevent him from filing suit, the inequitable-conduct exception did not apply. Id.
The rule announced anew in J.B. Hunt Transportation, Inc., and followed in Texas Christian University has long been the law in Texas. See Russell, 49 S.W.2d at 736. In Russell, the Texas Cotton Growers' Finance Corporation demanded payment of certain notes and chattel mortgages executed by Russell. Id. at 735. In response, Russell “gave assurances of payment [and] asked for an itemization of the indebtedness.” Id. Texas Cotton Growers provided Russell with the itemization on November 16. Russell asked for additional time to check the itemization and again made assurances of payment. On November 21 and again on November 23, Russell made additional assurances of payment. The record showed that Texas Cotton Growers “continued to rely on such assurances of payment, postponing the suit which would have been filed in Dallas County,” and that “having induced such reliance” Russell filed suit in Red River County seeking cancellation of the notes and mortgages on November 24. Id. The court concluded that the first-filed suit should be abated. Id. at 737. It reasoned,
If a proposed plaintiff contemplates bringing suit immediately in a given court in which he has the right to bring it, and the proposed defendant, knowing of such intention of the proposed plaintiff, fraudulently induces him to postpone the filing of his suit--the proposed defendant purposing at the time to take advantage of the delay thus fraudulently obtained to forestall the plaintiff's contemplated suit by another suit in different county--the plainest principles of equity and fair dealing require that such defendant be estopped from asserting, as ground for abatement, the pendency of the suit so filed by him in consummation of his fraud. “In such a case, when the proposed plaintiff files his suit in the court in which he so contemplated bringing it, such court takes and holds the dominant jurisdiction over the parties and subject-matter of the suit, for the reason the defendant will not be permitted to defraud the plaintiff of the benefits” of the full and unhampered jurisdiction of that court which, in good conscience, he is entitled to enjoy.
Id. at 737–38 (quoting Mitchell v. Allis-Chalmers Mfg. Co., 291 S.W. 1099, 1100 (Tex. Comm'n App. 1927, judgm't adopted)). Consequently, to prove entitlement to the inequitable-conduct exception, Price must establish that HPGM's alleged inequitable conduct—the fraudulent representation of intent to settle—caused a delay in filing suit that allowed HPGM to file first. J.B. Hunt Transp., Inc., 492 S.W.3d at 295; see Curtis, 511 S.W.2d at 267.
Here—even assuming inequitable conduct 12 — the record does not support Price's claim that such conduct caused her loss in the race to the courthouse. The evidence showed that Price initially broached the subject of settlement by letter dated March 24, 2019. The substance of the settlement proposal asked HPGM to agree “to the relief sought in this suit.” When Price did not receive a response to the March 24 letter, the parties scheduled a meeting date of June 17, 2019. HPGM did not show up for the meeting. Puls appeared at a second meeting on July 1, 2019, but had no proposal to resolve the parties' dispute. He indicated, however, that he would have a response by the end of the week. Price did not receive a response by the end of the week—July 12—and never received such a response. The July 12 deadline came and went and neither party filed suit that week or for the following two weeks. In fact, three weeks passed before HPGM filed suit on August 2. The following Monday, August 5, Price filed suit.
This timeline demonstrates that any inequitable conduct on the part of HPGM occurred on or before July 12, when it failed to come forward with a response to Price's settlement proposal. Yet, Price had every opportunity to file suit for three weeks after the July 12 deadline and did not do so. These facts do not demonstrate an inequitably induced delay in filing suit after July 12, the key time period that determined the dominant case. See J.B. Hunt Trans., Inc., 492 S.W.3d at 294–95.
Because Price did not prove entitlement to the inequitable-conduct exception to the dominant-jurisdiction doctrine, we conditionally grant HPGM's petition for writ of mandamus.13 A writ will issue only in the event the trial court fails to (1) vacate its order denying HPGM's plea in abatement and (2) enter an order granting HPGM's plea in abatement.
1. Relators Mark A. Haney, W. Kelly Puls, Ross P. Griffith, Thomas M. Michel, Puls & Haney, P.L.L.C., Griffith, Jay & Michel, LLP, and HPGM, LLC, are collectively referenced in this opinion as HPGM.
2. Haney, Puls, Griffith, and Michel formed HPGM, LLC, for the purpose of holding the property interests conveyed pursuant to the contingency fee agreement.
3. Price's lawsuit named Mark A. Haney, W. Kelly Puls, Thomas M. Michel, Ross P. Griffith, Puls & Haney, P.L.L.C., Griffith, Jay & Michel, LLP, and HPGM, LLC, as defendants.
4. In her verified response to the plea in abatement, Price stated that she[did] not dispute that all the elements of dominant jurisdiction in Tarrant County have been met. It is beyond argument that the Tarrant County suit was commenced first, by one business day. It is clearly still pending, and the suit could be amended to bring in all of the members of HPGM, and the law firms that represented Price. Finally, it cannot be denied that the controversies in the two cases are the same.At the abatement hearing, counsel stated, “[W]e do not dispute the dominant jurisdiction. They beat us to the courthouse by one business day. But we do dispute the fraudulent efforts to convey settlement, to work on settlement, to discuss settlement, and then file a lawsuit.”
5. Price's attorney, by affidavit, stated that he had read the response and added, “I hereby verify that the factual statements in that Response are true and correct.”
6. HPGM introduced the affidavit of Haney into evidence at the hearing without objection. Haney's affidavit indicated that, on March 24, 2019, he and his co-defendants received a demand letter from Price generally requesting the relief set forth in Price's lawsuit. According to Haney, he, Puls, and Michel were preparing for a multi-week jury trial in Dallas when they received the March 24 letter, and the time constraints imposed by the trial impeded their ability to confer and decide on a unified response from all potential defendants. Following the Dallas trial, Haney underwent a full hip-replacement surgery in late May 2019. Haney testified that, because of the surgery, he was out of the office for three weeks and was only able to work half days through late July. Haney further testified that he and his co-defendants were unable to decide on a suitable counter proposal to Price's demand. Haney testified, “This lack of a consensus, combined with our busy schedules and my health problems,” “resulted in Defendants not making a counter-proposal to Price.” He continued, “The fact that we did not reach a concrete settlement proposal was not out of a lack of desire to resolve this dispute.” Finally, Haney testified that he did not “falsely convey[ ] interest in settling this dispute in order to cause Price to delay filing suit”; “[d]efendants never promised Price that any payment would be made,” and they “never requested Price delay in filing any claims ․ [and] never promised that they would refrain from filing suit.” Although the trial court clearly considered this affidavit as evidence, the issue of whether it erred in so doing is not before us.
7. Price does not contend that the two lawsuits are not inherently interrelated for purposes of the dominant-jurisdiction doctrine and concedes dominant jurisdiction lies in the Tarrant County court. We, therefore, need not decide this issue for our analysis and will presume the two suits are inherently interrelated and that Tarrant County acquired dominant jurisdiction. We note that HPGM's declaratory judgment lawsuit against Price seeks a declaration of the legal rights of the parties to the various property and assets transferred to it in connection with the Fee Agreement. Price's lawsuit against HPGM alleges fraud and breach of fiduciary duty, among other things, in connection with the execution of, and transfers made pursuant to the Fee Agreement.
8. “A plea in abatement is sustainable without proof only when the truth of the matters alleged in the defendant's plea in abatement appears on the face of the plaintiff's pleadings.” Bernal, 818 S.W.2d at 82 (citing Lake Country Estates, Inc. v. Toman, 624 S.W.2d 677, 679 (Tex. App.—Fort Worth 1981, writ ref'd n.r.e.)).
9. See Chowdhury v. Kingdom Grp. Invs., No. 05-18-00716-CV, 2019 WL 1856683, at *2 (Tex. App.—Dallas Apr. 25, 2019, pet. denied) (mem. op.) (in forcible detainer action, motion to dismiss, plea to abate, and plea to jurisdiction not evidence to support assertions that county court lacked jurisdiction); In re AP Gulf States, Inc., No. 10-19-00081-CV, 2019 WL 1561575, at *2 (Tex. App.—Waco Apr. 10, 2019, no pet.) (mem. op.) (verified petition not evidence in support of trial court's order placing funds into registry of court); In re Estate of Martinez, No. 01-18-00217-CV, 2019 WL 1442100, at *4 (Tex. App.—Houston [1st Dist.] Apr. 2, 2019, no pet.) (mem. op.) (factual assertions in pleadings and motions not evidence that property was in danger of being lost or destroyed for purposes of appointing receiver); Turman v. POS Partners, LLC, 541 S.W.3d 895, 903 (Tex. App.—Houston [14th Dist.] 2018, no pet.) (in special appearance case, statements in verified petition are not evidence); OZO Capital, Inc. v. Syphers, No. 02-17-00131-CV, 2018 WL 1531444, at *8 (Tex. App.—Fort Worth Mar. 29, 2018, no pet.) (mem. op.) (rejecting pleadings as evidence in special appearance case); In re A.K., No. 12-17-00331-CV, 2018 WL 1181055, at *2 (Tex. App.—Tyler Mar. 7, 2018, no pet.) (mem. op.) (court would not consider pleadings, such as the application, as evidence that the statutory standard had been met); In re Pickrell, No. 10-17-00091-CV, 2017 WL 1452851, at *4 (Tex. App.—Waco Apr. 19, 2017, orig. proceeding) (mem. op.) (petitioner seeking pre-suit deposition must present evidence to meet its burden; verified pleadings are not competent evidence to prove facts asserted in the pleading); Prochaska v. Barnes, No. 01-15-01044-CV, 2016 WL 4055642, at *6 (Tex. App.—Houston [1st Dist.] July 28, 2016, no pet.) (mem. op.) (petition not evidentiary support in special appearance case); Atom Nanoelectronics, Inc. v. Applied NanoFluorescence, LLC, No. 01-15-00952-CV, 2016 WL 3223670, at *5 (Tex. App.—Houston [1st Dist.] June 9, 2016, no pet.) (mem. op.) (rejecting verified special appearance as evidence); Ebert v. Strada Capital, Inc., 2014 WL 4915046, at *2 n.19 (Tex. App.—Austin Oct. 1, 2014, no pet.) (mem. op.) (pleadings not evidence in forcible detainer action); Jaimes v. Fed. Nat'l Mortg. Ass'n, No. 03-13-00290-CV, 2013 WL 7809741, at *5 (Tex. App.—Austin Dec. 4, 2013, no pet.) (mem. op.) (statements in motion to dismiss, plea in abatement, and reply brief were not evidence in forcible detainer action); Hall v. Parks, No. 07-08-0321-CV, 2009 WL 1393280, at *4 n.7 (Tex. App.—Amarillo May 19, 2009, no pet.) (mem. op.) (statements by counsel at trial or in pleadings not competent evidence); Arsenault v. Orthopedics Specialist of Texarkana, No. 06-07-00022-CV, 2007 WL 3353730, at *3 (Tex. App.—Texarkana Nov. 14, 2007, no pet.) (mem. op.) (pleadings not evidence of alter ego); Ex parte Myers, 24 S.W.3d 477, 481 (Tex. App.—Texarkana 2000, no pet.) (verified petition not evidence in expunction case); Millwrights Local Union No. 2484 v. Rust Eng'g Co., 433 S.W.2d 683, 686–87 (Tex. 1968) (sworn petition does not constitute evidence supporting judgment issuing temporary injunction); Neyland v. Benson, 292 S.W. 251, 254 (Tex. App.—Dallas 1927, no writ) (petition offered into evidence, without limitation, in venue case not evidence);Waxahachie Nat'l Bank v. Sigmond Rothschild Co., 235 S.W. 633, 635 (Tex. App.—Dallas 1921, no pet.) (although original petition introduced into evidence in venue case and read into record, such allegations were not evidence).
10. In support of her claim that her verified response was competent evidence to prove inequitable conduct, Price also relies on French v. Gilbert, No. 01-07-00186-CV, 2008 WL 5003740 (Tex. App.—Houston [1st Dist.] 2008, no pet.) (mem. op.). In that case, Gilbert and two co-defendants filed a verified motion to abate based on dominant jurisdiction. Id. at *1. Gilbert attached his own affidavit as an exhibit to the motion, which itself included attachments, including a certified copy of the first-filed Montgomery County petition and a file-stamped copy of the later-filed Harris County petition. Id. at *2. French did not file a response to the motion or to the brief in support of the motion. Id. A second defendant, Wonderly, then filed a verified motion to abate the Harris County action, asserting, among other things, the dominant-jurisdiction issue. Id. French filed a response to Wonderly's motion to abate, which included affidavits setting forth facts, dates, and events relevant to the two actions. Id. The trial court thereafter signed an order dismissing the Harris County case without prejudice in response to “Defendant's Motion to Abate.” Id. at *3.On appeal, French argued that there was no proper evidence to support the motion to abate because Wonderly's verification to the motion to abate was not evidence of the facts stated in the motion. Id. Gilbert claimed that there was ample evidence to support the trial court's order even though none was attached to Wonderly's motion because the order stated that it considered Gilbert's motion that did include attached evidence. Id. The appellate court recognized that the trial court's order specifically stated that it considered Gilbert's motion to abate, Wonderly's motion to abate, and French's response to Wonderly's motion. Id. at *5. It determined that because French did not respond or object to Gilbert's motion to abate, French failed to preserve error as to the granting of Gilbert's motion to abate. Id. The court further reasoned that, even if French's objection to Wonderly's motion to abate was sufficient to preserve their complaint regarding the trial court's grant of both motions, the trial court nevertheless did not abuse its discretion in granting the motions. The court summarily dismissed French's contention that the trial court did not have admissible evidence before it to consider in making its ruling, stating that the trial court had “the evidence attached to the motion to abate, as well as that attached to Frenches' own response.” Id. at *5 n.14.
11. The court recognized, however, that the petition introduced into evidence could be used only “for the purpose of ascertaining and identifying the parties defendant, the basis of plaintiff's cause of action as therein alleged against such defendants, but not for the purpose of establishing the existence of such cause of action or any other fact necessary to prove the ground of venue․”
12. There is no evidence in the record that demonstrates that HPGM promised Price that any settlement payment would be made. See In re Henry, 274 S.W.3d 185, 191 (Tex. App.—Houston [1st Dist.] 2008, orig. proceeding) (recognizing estoppel exception when first-filers prevent adversaries from filing subsequent suit more promptly by fraudulently representing that they would settle and holding that exception did not apply based on other facts). Henry relied on Russell for the cited proposition. But Russell, as previously discussed, involved a promise to pay. Additionally, there is no evidence that HPGM requested that Price delay in filing any claims or that it made any promise to refrain from filing suit.
13. In view of this disposition, we need not address the remaining issue in HPGM's petition for writ of mandamus.
Opinion by Chief Justice Morriss
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Docket No: No. 06-20-00019-CV
Decided: September 25, 2020
Court: Court of Appeals of Texas, Texarkana.
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