Fourth Court of Appeals
San Antonio, Texas
MEMORANDUM OPINION
No. 04-13-00136-CV
Ronnie PACE,
Appellant
v.
Chester B. Whatley and Alice
Chester B. WHATLEY and Alice Faye Whatley,
Appellees
From the 198th Judicial District Court, Kerr County, Texas
Trial Court No. 10697B
Honorable Stephen B. Ables, Judge Presiding
Opinion by: Marialyn Barnard, Justice
Sitting: Catherine Stone, Chief Justice
Marialyn Barnard, Justice
Patricia O. Alvarez, Justice
Delivered and Filed: March 12, 2014
AFFIRMED
This is an appeal from the trial court’s order granting summary judgment in favor of
appellees Chester B. Whatley and Alice Faye Whatley. On appeal, appellant Ronnie Pace contends
the trial court erred in granting summary judgment because: (1) a “Mother Hubbard” clause in a
bankruptcy court order precluded the Whatleys from re-asserting their claims in state court; and
(2) there was no evidence of damages. We affirm the trial court’s judgment.
04-13-00136-CV
BACKGROUND
The Whatleys initially sued Pace in the trial court to recover balances due on a promissory
note and lease agreement entered into by the parties. Before the action could reach trial on the
merits, Pace filed a petition for Chapter 7 bankruptcy in the United States Bankruptcy Court for
the Western District of Texas. Pace’s Chapter 7 bankruptcy case stayed the action brought by the
Whatleys in the trial court.
The Whatleys then filed an adversarial proceeding in the bankruptcy court against Pace,
seeking to deny the discharge of his debts based on sections 727 and 523 of the United States
Bankruptcy Code. The bankruptcy court granted the Whatleys’ request and denied Pace’s
requested discharge.
After the eventual closure of Pace’s Chapter 7 bankruptcy case, the Whatleys continued
their action in the trial court and moved for summary judgment against Pace. The trial court
granted summary judgment in favor of the Whatleys and ordered they recover the remaining
balance owed on their promissory note and lease agreement with Pace. Pace subsequently
perfected this appeal.
On appeal, the Whatleys have asked the court to take judicial notice of court materials
related to Pace’s federal bankruptcy case. The Whatleys have attached the relevant federal court
documents to their brief. Accordingly, we grant the Whatleys’ request and take judicial notice of
the documents. See Freedom Commc’ns Inc. v. Coronado, 372 S.W.3d 621, 623 (Tex. 2012) (per
curiam); TEX. R. EVID. 201(b), (d).
ANALYSIS
As noted above, Pace raises two issues on appeal, contending: (1) the trial court erred in
granting summary judgment because a “Mother Hubbard” clause in the earlier bankruptcy court
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judgment precluded the Whatleys from pursuing their claims in state court; and (2) there is no
evidence of damages.
“Mother Hubbard” Clause
Pace contends the trial court erred by granting summary judgment for the Whatleys because
a prior order from the bankruptcy court included the following “Mother Hubbard” clause: “[a]ll
relief requested in this case not expressly granted is denied.” In essence, Pace contends the
Whatleys sought to recover damages in the bankruptcy court based on the promissory note and
lease, but the bankruptcy court declined to award them any damages. According to Pace, the
bankruptcy court’s inclusion of a standard “Mother Hubbard” clause denied the Whatleys’ damage
claim and this ruling precludes further action in state court. As stated by Pace in his brief, the
Whatleys “requested that the Bankruptcy court determine the damages owed to Whatley by Pace”
on the promissory note and “[t]hese specific issues were properly before the Bankruptcy Court,
and in its ruling, the Bankruptcy Court specifically declined to render any monetary judgment
against Pace in favor of Whatley.” Although he directs this court to Texas case law on the finality
of judgments, we interpret Pace’s contention as one based on res judicata. In other words, Pace
attempts to overturn the summary judgment by invoking the doctrine of claim preclusion,
otherwise known as res judicata, arguing the Whatleys’ decision to ask the bankruptcy court to
determine damages, the bankruptcy court’s failure to determine such damages, and the bankruptcy
court’s use of a “Mother Hubbard” clause preclude any further attempt by the Whatleys to recover
based on the promissory note. 1 We disagree the doctrine applies to the Whatleys’ claims before
the state trial court.
1
Pace directs this court to the cases of Schlipf v. Exxon Corp., 644 S.W.2d 453 (Tex. 1982), and N.E. Indep. Sch. Dist.
v. Aldridge, 400 S.W.2d 893 (Tex. 1966). The cases cited by Pace concern the use of a “Mother Hubbard” clause in
determining whether a trial court’s judgment is final for purposes of appeal. See Aldridge, 400 S.W.2d at 898; Schlipf,
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Because Pace is arguing the preclusive effect of a federal judgment, federal law controls
our determination of whether the bankruptcy judgment precluded the Whatleys’ Texas law claims
before the trial court. See John G. & Marie Stella Kenedy Mem’l Found. v. Dewhurst, 90 S.W.3d
268, 287 (Tex. 2002) (“In Texas, the preclusive effect of a federal judgment is determined by
federal law.”); Eagle Props., Ltd. v. Scharbauer, 807 S.W.2d 714, 718 (Tex. 1990). Under federal
law, the doctrine of res judicata applies where: (1) the parties are identical in both suits; (2) the
prior judgment is rendered in a court of competent jurisdiction; (3) there is a final judgment on the
merits; and (4) the same cause of action is involved in both cases. In re Paige, 610 F.3d 865, 870
(5th Cir. 2010) (quoting Nilsen v. City of Moss Point, Miss., 701 F.2d 556, 559 (5th Cir. 1983) (en
banc)). Here, the doctrine of res judicata does not preclude the Whatleys from seeking relief based
on the promissory note and the lease because this was not the relief sought by the Whatleys in the
bankruptcy court.
The Whatleys’ adversarial proceeding in the bankruptcy court sought to deny Pace the
ability to discharge his debts. In their petition in the bankruptcy court, the Whatleys relied upon
section 727 of the Bankruptcy Code to support their request that the bankruptcy court universally
deny Pace’s request for discharge of debts. See 11 U.S.C.A. 727(a) (denying discharge of debts
where certain enumerated reasons exist). Alternatively, pursuant to section 523(a) of the
Bankruptcy Code, the Whatleys sought to prevent Pace from discharging the debt owed directly
to them. See 11 U.S.C.A. 523(a) (excluding specific types of debt from discharge). In their state
court claim, the Whatleys sought to recover damages under a promissory note and lease. We hold
that filing a claim seeking to have the bankruptcy court refuse to discharge debts under the
Bankruptcy Code is not the same as a claim seeking to collect on an outstanding promissory note.
644 S.W.2d at 454; see also Lehmann v. Har-Con Corp., 39 S.W.3d 191, 203–04 (Tex. 2001). These cases are
irrelevant to the preclusion argument Pace actually asserts in his brief.
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See Wise v. Luke Dev., LLC, No. 04-12-00477-CV, 2013 WL 4483381, at *2 (Tex. App.—San
Antonio Aug. 21, 2013, no pet.) (mem. op.) (setting out elements plaintiff must prove to recover
on promissory note); Hudspeth v. Investor Collection Servs. Ltd. P’Ship, 985 S.W.2d 477, 479
(Tex. App.—San Antonio 1998, no pet.) (same). Accordingly, we hold the trial court did not err
in granting the Whatleys’ motion for summary judgment against Pace based on Pace’s contention
that the Whatleys’ claim was precluded by the bankruptcy court’s inclusion of a “Mother Hubbard”
clause in its order denying the discharge of Pace’s debts. See Paige, 610 F.3d at 870. We therefore
overrule Pace’s first issue.
Insufficient Evidence
In his second issue, Pace’s claims the trial court erred in granting summary judgment in
favor of the Whatleys because there was no evidence of damages. We review the trial court’s
decision to grant summary judgment de novo. Valence Operating CO. v. Dorsett, 164 S.W.3d
656, 661 (Tex. 2005). When reviewing a summary judgment, we take as true all evidence
favorable to the nonmovant, and we indulge every reasonable inference and resolve any doubts in
the nonmovant’s favor. Id. As movants for summary judgment, the Whatleys must prove their
entitlement to summary judgment on each element of their cause of action as a matter of law. See
TEX. R. CIV. P. 166a(c).
Here, the Whatleys were trying to recover from Pace the deficiency on a promissory note,
which required proof: (1) of the note in question; (2) that Pace signed the note; (3) that the
Whatleys were the legal owners and holders of the note; and (4) that a certain balance was due and
owing under the note. See Wise, 2013 WL 4483381, at *2. In support of these elements, the
Whatleys provided the trial court: (1) a copy of the promissory note to the Whatleys signed by
Pace; (2) a copy of the corresponding security agreement signed by Pace; (3) a signed copy of the
commercial lease agreement; (4) a copy of the bankruptcy court’s order denying the discharge of
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Pace’s debts; (5) the Whatleys’ proof of claim against Pace’s bankruptcy estate; (6) the notice of
trustee’s final report for Pace’s bankruptcy estate: and (7) an affidavit by Chester B. Whatley in
support of the evidence, as well as other less relevant documents. Pace does not contest the
Whatleys’ satisfaction of the first three elements required to recover on the promissory note and
we see no defects in the evidence to find otherwise. However, Pace does contend the Whatleys
did not meet their burden to establish as a matter of law the balance due and owing under the note.
We disagree.
The Whatleys’ signed proof of claim form against Pace’s bankruptcy estate reflects they
were owed over $617,000.00 on the promissory note. The trustee’s plan, which was part of the
Whatleys’ summary judgment evidence, confirms the balance owed as stated in the proof of claim,
and reflects a proposed payment to the Whatleys from the bankruptcy estate in the amount of
roughly $130,000.00. The difference between the two amounts, approximately $486,000.00, is
the amount the Whatleys sought to recover as the certain amount due and owing on the note. We
hold the documents produced by the Whatleys conclusively established the required damage
element. See id. Accordingly, the burden shifted to Pace to produce evidence creating a genuine
issue of material fact as to the amount owed on the note in order to defeat summary judgment. See
Walker v. Harris, 924 S.W.2d 375, 377 (Tex. 1996) (emphasis added); Wise, 2013 WL 4483381,
at *2.
Pace did not produce any evidence to create a genuine issue of material fact as to the
amount owed on the note. Instead, without directing the court to any legal authority, Pace merely
references the evidence presented by the Whatleys and asserts it does not support “what the correct
claim amount actually is.” Pace’s conclusory argument without any supporting evidence does not
raise a genuine issue of material fact as to the amount owed. Therefore, we overrule Pace’s second
issue because the Whatleys have established as a matter of law the certain balance due and owing
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under the promissory note they sued on and Pace has not produced any evidence to defeat summary
judgment on this contested element. See Walker, 924 S.W.2d at 377.
CONCLUSION
Based on the foregoing, we overrule Pace’s issues and affirm the trial court’s judgment.
Marialyn Barnard, Justice
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