Reversed and Remanded and Opinion Filed October 6, 2014




                                         S    In The
                                Court of Appeals
                         Fifth District of Texas at Dallas
                                      No. 05-13-01095-CV

   R. JEFFREY SCHMIDT, SUCCESSOR TRUSTEE OF THE WARD CHILDREN’S
                           TRUST, Appellant
                                 V.
             TRAVIS WARD AND HUNT OIL COMPANY, Appellees

                       On Appeal from the 44th Judicial District Court
                                   Dallas County, Texas
                           Trial Court Cause No. DC-12-07866-B

                             MEMORANDUM OPINION
                            Before Justices Bridges, Lang, and Evans
                                   Opinion by Justice Bridges
       Appellant R. Jeffrey Schmidt, successor trustee of the Ward children’s trust, appeals the

trial court’s order granting summary judgment in favor of Travis Ward and Hunt Oil Company.

In three issues, Schmidt argues (1) Ward’s failure to prosecute the case as a trespass to try title

suit renders the trial court’s judgment unsupportable; (2) a 1992 Order is void on its face; and (3)

denial of his application for supplemental relief does not preclude his continued assertion of

ownership in certain property. We reverse and remand for further proceedings.

                                           Background

       By trust instrument dated August 4, 1972, Travis Ward and his then-wife Martha, created

an irrevocable trust for the benefit of their children. Property referred to as the Westbrook Lease
was included in the Trust. All parties agree the only property at issue in this appeal is referred to

as the Westbrook Lease.

       In 1980, the trustees filed a declaratory judgment to determine the validity and

construction of the trust. The 1980 Judgment provides in relevant part:

               The Court . . . is of the opinion : . . .

               3. That the Trust Estate Owns, among other things, the following
               property interests: . . .

                     [a list of twenty-five specific items follows, including the
               Westbrook Lease]

               4. That, although questions have been raised about the validity of
               the Trust and Trust’s property rights in the above-described real
               property, . . . , the Court finds that the Trust Agreement was
               validly, knowingly and freely entered into by the settlors and that,
               pursuant to its terms, can neither be changed, revoked, altered,
               amended or terminated by either Travis or Martha;

               5. That the Trust does own all the property interests described in
               this Judgment, which properties were either validly transferred and
               assigned by the settlors of the Trust, or acquired by the Trustees on
               behalf of the Trust from the assets and income of the Trust.

               IT IS, THEREFORE,                 ORDERED,     ADJUDGED          AND
               DECLARED:

               1. That the Trust Agreement was validly and knowingly entered
               into by Defendants Travis and Martha Ward;

               2. That the Trust has title to the property interests described in this
               Judgment, it having acquired the property interests either through
               valid transfer and assignment of the settlors or through acquisition
               by the Trustees in behalf of the Trust from the assets and income
               of the Trust . . .

               4. That all other and further relief not specifically granted herein is
               denied.



       In 1990, one of the original trustees died. After his death, Travis filed a motion in 1992

in Henderson County to terminate the trust and transfer legal title to himself. The Henderson


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County court entered an order terminating the trust and vesting title of the properties, including

the Westbrook Lease, to Travis.

       The first lawsuit involving the trust was filed by Michael Ward, a trust beneficiary, in

2008 in Dallas County (the “Dallas Action”). In that suit, Michael sought damages associated

with alleged conversion of trust assets, breach of various fiduciary duties against the trustees, and

sought certain declarations, including a declaration that the 1992 order was null and void and the

1980 judgment was valid and determined ownership of trust property. The Dallas Action

involved a series of summary judgment motions by both Travis and Michael. One of the

summary judgment orders determined the 1980 judgment “was dormant, void, and of no legal

force and effect.”

       While the Dallas Action was still pending in the trial court, Michael filed the second

action involving the trust—an application for supplemental relief in Henderson County in which

he requested the court to declare and order that (1) the 1980 Judgment was valid and subsisting

and not dormant, void, or of no legal effect; (2) the 1980 Judgment ordered, adjudged, and

declared the Trust to have title to the subject properties; and (3) Travis and all others acting in

concert with him should be enjoined from claiming the 1980 Judgment was dormant and from

claiming any title or interest in the subject properties.       The trial court denied Michael’s

application, and he appealed to the Tyler Court of Appeals. The Tyler Court of Appeals affirmed

the judgment. See Ward v. Ward, No. 12-11-00368-CV, 2012 WL 2513668, at *3 (Tex. App.—

Tyler June 29, 2012, no pet.) (mem. op.) (affirming trial court’s judgment because Michael failed

to attack all of the grounds Travis alleged for denying the application that could, if meritorious,

support the trial court’s judgment).

       Before the Tyler Court of Appeals affirmed the Henderson County’s judgment, Travis

filed a summary judgment motion in the Dallas Action arguing res judicata now applied to

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Michael’s claims regarding the 1980 Judgment. The trial court agreed and incorporated the

Henderson County’s ruling into the final judgment of the Dallas Action. The trial court entered a

final take nothing judgment in favor of Travis on May 23, 2012.            Michael appealed that

judgment to this Court.

       While the Dallas Action was on appeal, Travis sent a letter to Hunt Oil Company

requesting all payments of oil and gas proceeds from the Westbrook Lease be made to him.

Shortly thereafter, Schmidt, as trustee, sent a letter also claiming an ownership interest in the

Westbrook Lease. Hunt Oil indicated it would not distribute proceeds in light of the conflicting

ownership claims. Travis then “was forced to file this declaratory judgment action,” which is the

third lawsuit involving the Trust and the basis for the present appeal now before us.

       In the declaratory judgment action, Travis asked the trial court to declare that he is the

sole party entitled to proceeds from the Westbrook Lease; that any claim by the trust has been

defeated; and that Hunt Oil may distribute the proceeds from the lease to Travis or his designee.

       Travis then filed a motion for summary judgment in which he argued res judicata and

collateral estoppel barred further litigation of the Trust’s claims because the Henderson County

judgment and the Dallas Action resulted in final judgments in which both courts determined

Travis had a superior right to the Westbrook Lease.

       Schmidt filed a response and argued ownership claims were not defeated by res judicata

or collateral estoppel because (1) the 1980 Judgment quieted title to the Westbrook Lease and

Travis used an improper vehicle (declaratory judgment rather than a trespass to try title) to

dispute ownership; (2) the Henderson County action was not a “trial on the merits” such that res

judicata would apply to the denial of his application for supplemental relief; and (3) the 1992

order on which Travis based his ownership was void. After a hearing, the trial court granted

Travis’s motion for summary judgment and ordered that (1) Travis was the sole party entitled to

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the proceeds from the Westbrook Lease; (2) any claim by the Trust to the proceeds of the

Westbrook Lease had been defeated; and (3) Hunt Oil shall distribute all retained net proceeds

and future payments to Travis. This appeal followed.

                                     Standard of Review

       A declaratory judgment decided by summary judgment is reviewed under the same

standard of review that governs summary judgments generally. TEX. CIV. PRAC. & REM. CODE

ANN. 37.010 (West 2008). Here, Travis filed a motion for traditional summary judgment. To

prevail on a motion for summary judgment brought pursuant to Texas Rule of Civil Procedure

166a(c), a movant must show there is no genuine issue of material fact and that he is entitled to

judgment as a matter of law. TEX. R. CIV. P. 166a(c); Little v. Tex. Dep’t of Criminal Justice,

148 S.W.3d 374, 381 (Tex. 2004). We consider all the evidence in the light most favorable to

the nonmovant, crediting evidence favorable to the nonmovant if reasonable jurors could, and

disregarding contrary evidence unless reasonable jurors could not. Mack Trucks, Inc. v. Tamez,

206 S.W.3d 572, 582 (Tex. 2006).

                                          Discussion

       Schmidt first argues summary judgment was inappropriate because Travis failed to

prosecute this case as a trespass to try title, and he presented evidence that ownership of the

Westbrook Lease was conclusively established in the 1980 Judgment. Travis responds Schmidt

only addressed the application of res judicata and collateral estoppel as to the Henderson County

action but failed to address the application of the doctrines to the Dallas Action. Thus, Travis

contends Schmidt’s failure to negate all grounds that could support the judgment requires an

affirmance. See Jarvis v. Rocanville Corp., 298 S.W.3d 305, 313 (Tex. App.—Dallas 2009, pet.

denied) (“If an appellant does not challenge each possible ground on which summary judgment

could have been granted, we must uphold the summary judgment on the unchallenged ground.”).


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       The elements of res judicata are (1) a prior final judgment on the merits by a court of

competent jurisdiction; (2) identity of parties in privity with them; and (2) a second action based

on the same claims that were raised or could have been raised in the first action. Hevey v.

Hundley, No. 05-12-00588-CV, 2013 WL 5782924, at *2 (Tex. App.—Dallas Oct. 25, 2013, pet.

denied) (mem. op.). The elements of collateral estoppel are (1) the facts sought to be litigated in

the second action were fully and fairly litigated; (2) those facts were essential to the judgment in

the prior action; and (3) the issue is identical to an issue in the prior action. Tex. Dep’t of Pub.

Safety v. Petta, 44 S.W.3d 575, 579 (Tex. 2001).

       To support his res judicata and collateral estoppel arguments, Travis relied on the trial

court’s conclusion in the Dallas Action that the 1980 Judgment was dormant and void, and he

relied on the Henderson County’s denial of Michael’s application for supplemental relief, which

the Tyler Court of Appeals affirmed. Thus, Travis argued any claim to the Trust’s ownership

and proceeds “has been litigated ad naseum and to finality in two other cases.” However, we

reversed and remanded the Dallas Action. See Ward v. Stanford, No. 05-12-00855-CV, 2014

WL 3955161, at *16 (Tex. App.—Dallas Aug. 14, 2014, no pet. h.).

       In that opinion, we specifically addressed the parties’ disputes regarding the effect of the

1980 Judgment and the Henderson County judgment. Id. at *15, *17. We concluded the 1980

Judgment was a final judgment, from which no party had appealed. Id. at *16. “Any issue as to

the title to the property in 1980 was finally determined by the 1980 Judgment.” Id. The trial

court’s ruling to the contrary was error. Id. at *17.

       We also concluded the trial court erred by determining the Henderson County judgment

acted as a res judicata bar to Michael’s claims because the Henderson County court could not

relitigate the issues resolved in the 1980 Judgment. Id. at *19 (further noting a party could seek

supplemental relief to enforce the 1980 Judgment, but neither could relitigate the ownership; we

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also refused to construe the Henderson County’s denial of supplemental relief as a judgment

affirmatively declaring the opposite of its 1980 ruling).1 Thus, the arguments and evidence

Travis relies on to prove his right to declaratory judgment as a matter of law in this appeal have

been determined by this Court to be error in the Dallas Action.

           Citing Scurlock Oil Company v. Smithwick, 724 S.W.2d 1 (Tex. 1986), Travis argues this

Court’s reversal of the Dallas Action should not alter the fact that he proved his right to

declaratory judgment as a matter of law because “the binding effect of a final judgment is not

altered by a pending appeal.” We agree with this statement of law; however, Travis ignores the

Scurlock court’s statement shortly thereafter that “A judgment in a second case based on the

preclusive effects of a prior judgment should not stand if the first judgment is reversed.” Id. at 6.

           To establish res judicata, Travis was required to show the earlier judgment was a final

judgment. The earlier judgment upon which Travis relies to support his right to summary

judgment in this appeal is no longer a final judgment. When an appellate court reverses the first

judgment, the finality necessary for claim or issue preclusion is eliminated. See J.J. Gregory

Gourmet Servs., Inc. v. Antone’s Imp. Co., 927 S.W.2d 31, 34 (Tex. App.—Houston [1st Dist.]

1995, no writ); see also Watson v. Houston Indep. Sch. Dist., No. 01-04-01116-CV, 2005 WL

3315254, at *1–2 (Tex. App.—Houston [1st Dist.] Dec. 8, 2005, no pet.) (mem. op.) (concluding

that because the earlier judgment HISD relied upon to support its res judicata argument was

reversed, the summary judgment on appeal must likewise be reversed); Frazin v. Hanley, No. 05-

03-00014-CV, 2004 WL 516168, at *1–2 (Tex. App.—Dallas Mar. 17, 2004, no pet.) (mem. op.)

(“Our reversal of Frazin I means that there was no final judgment, and preclusive defenses that

rely on a final judgment cannot be established as a matter of law.”). Thus, because the earlier



   1
       Our opinion resolved other issues raised by Michael, but they are not relevant to this appeal.



                                                                       –7–
judgment in the Dallas Action, on which Travis relies, has been reversed, the summary judgment

rendered against Schmidt cannot stand.

           In reaching this conclusion, we are unpersuaded by Travis’s argument that Schmidt failed

to challenge the Dallas Action on appeal, and therefore, we should affirm because he failed to

negate all grounds that could possibly support the judgment. Encompassed within Schmidt’s

first issue challenging the “vehicle” through which Travis prosecuted his case, Schmidt argues,

“The 1980 Agreed Judgment quieted title to the subject oil and gas lease exclusively in the

Trust.” He explicitly states that the 1980 Judgment became res judicata and binding on all

parties.     He explains evidence was presented to the trial court conclusively establishing

ownership of the Westbrook Lease in the 1980 Judgment. Accordingly, we construe Schmidt’s

arguments as challenging the Dallas Action, in which the parties disputed the effect of the 1980

Judgment. See Ward, 2014 WL 3955161, at *15 (noting four summary judgments “at issue in

this appeal addressed the parties’ disputes regarding the effect of the 1980 Judgment”). Based

on this conclusion, we need not decide whether Travis incorrectly filed his cause of action as a

declaratory judgment rather than a trespass to try title. See TEX. R. APP. P. 47.1

           Moreover, Schmidt’s second and third issues challenging the validity of the 1992

Henderson County Judgment and the denial of his application for supplemental relief in

Henderson County are moot, and we need not address them. Id.

                                              Conclusion

           We reverse the judgment of the trial court and remand this case for further proceedings.



           131095F.P05

                                                        /David L. Bridges/
                                                        DAVID L. BRIDGES
                                                        JUSTICE

                                                  –8–
                                        S
                               Court of Appeals
                        Fifth District of Texas at Dallas
                                      JUDGMENT

R. JEFFREY SCHMIDT, SUCCESSOR                       On Appeal from the 44th Judicial District
TRUSTEE OF THE WARD CHILDREN’S                      Court, Dallas County, Texas
TRUST, Appellant                                    Trial Court Cause No. DC-12-07866-B.
                                                    Opinion delivered by Justice Bridges.
No. 05-13-01095-CV         V.                       Justices Lang and Evans participating.

TRAVIS WARD AND HUNT OIL
COMPANY, Appellees

        In accordance with this Court’s opinion of this date, the judgment of the trial court is
REVERSED and this cause is REMANDED to the trial court for further proceedings consistent
with this opinion.

     It is ORDERED that appellant R. JEFFREY SCHMIDT, SUCCESSOR TRUSTEE OF
THE WARD CHILDREN’S TRUST recover his costs of this appeal from appellee TRAVIS
WARD AND HUNT OIL COMPANY.


Judgment entered October 6, 2014




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