Yigal Bosch v. Braes Woods Condominium Association

Opinion issued July 11, 2013

In The

Court of Appeals
For The

First District of Texas
————————————
NO. 01-12-01114-CV
———————————
YIGAL BOSCH, APPELLANT
V.
BRAES WOODS CONDOMINIUM ASSOCIATION, APPELLEE

On Appeal from the 295th Judicial District Court
Harris County, Texas
Trial Court Cause No. 2011-14592

MEMORANDUM OPINION

This suit arises from the foreclosure of eighteen condominium units in the

Braes Woods Condominium complex. Yigal Bosch sued the Braes Woods

Condominium Association for wrongful foreclosure. Braes Woods moved for

summary judgment, contending, among other things, that res judicata bars Bosch’s

suit. The trial court granted the motion. Bosch appeals that ruling, and the trial
court’s denial of his request for findings of fact and conclusions of law. Finding no

error, we affirm.

Background

Bosch-controlled entities, denominated as RKI International, Inc.,

Transamerica of Houston, LTD, and the Bradford Hills Realty Corp., purchased a

total of eighteen condominium units in the Braes Woods Condominium complex.

The 2646 South Loop West Limited Partnership (the “2646 Partnership”) and its

predecessor, the 2646 Atrium Realty Corp., funded these purchases. Bosch is the

president of 2646 Atrium Realty Corp., which in turn is the general partner of the

2646 Partnership.

In June 2009, two weeks before the 2646 Partnership declared bankruptcy,

Bosch assigned the assets and liabilities of RKI International, Transamerica of

Houston, and Bradford Hills Realty to the 2646 Partnership. Braes Woods sought

to foreclose on the condominiums due to unpaid maintenance assessments, and the

bankruptcy court lifted its stay to permit those proceedings to advance. In April,

May, and June of 2010, Braes Woods foreclosed on the eighteen units. It notified

the record owners of each unit, RKI International, Bradford Hills Realty, and

Transamerica of Houston.

Before the foreclosure sales, Bradford Hills Realty and RKI International

had sued Braes Woods in a civil case for damages to the foundation of four of the

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condominiums. See Bradford Hills Realty Corp. v. Board of Directors of Braes

Woods Condominium Association, No. 2010-13954, in the 269th District Court,

Harris County, Texas. In August 2010, Bradford Hills Realty and RKI

International added 2646 Atrium Realty as a party, and added claims against Braes

Woods for wrongful foreclosure on the eighteen condominiums. The Bradford

Hills lawsuit resulted in a judgment favorable to Braes Woods. Relying on the

judgment, Braes Woods moved in this case for summary judgment, contending that

res judicata bars Bosch’s claims against it in this case.

Discussion

Standard of Review

We review de novo the trial court’s ruling on a motion for summary

judgment. Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 289 S.W.3d

844, 848 (Tex. 2009). In a traditional motion for summary judgment, the movant

must establish that no genuine issue of material fact exists and the movant is thus

entitled to judgment as a matter of law. TEX. R. CIV. P. 166a(c). When reviewing a

summary judgment, we take as true all evidence favorable to the nonmovant and

indulge every reasonable inference and resolve any doubts in the nonmovant’s

favor. Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex. 2005);

Provident Life & Accid. Ins. Co. v. Knott, 128 S.W.3d 211, 215 (Tex. 2003). A

genuine issue of material fact exists if the non-movant produces more than a

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scintilla of probative evidence regarding the challenged element. See Ford Motor

Co. v. Ridgway, 135 S.W.3d 598, 600 (Tex. 2004). A defendant moving for

traditional summary judgment must conclusively establish each element of an

affirmative defense. Sci. Spectrum, Inc. v. Martinez, 941 S.W.2d 910, 911 (Tex.

1997).

Res Judicata

Res judicata bars claims that were brought, or could have been brought, in

an earlier lawsuit that resulted in a final judgment on the merits. Igal v. Brightstar

Info. Tech. Grp., Inc., 250 S.W.3d 78, 86 (Tex. 2008). To prevail on the defense, a

party must show that (1) in a previous action, a court of competent jurisdiction

rendered a final determination on the merits of a claim, (2) the parties in the earlier

action are identical to, or in privity with, the present parties, and (3) the pending

claim (a) is identical to the prior claim or (b) arises out of the same subject matter

as the prior claim and could have been litigated in the previous action. Travelers

Ins. Co. v. Joachim, 315 S.W.3d 860, 862 (Tex. 2010).

We note at the outset that Braes Woods moved for summary judgment based

on res judicata, but it did not plead res judicata as an affirmative defense in its

answer. Bosch, however, did not object to the lack of a supporting plea. A party

may obtain summary judgment based on an affirmative defense that it did not

plead, if the nonmoving party does not object to its absence in the moving party’s

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response to the motion. See Roark v. Stallworth Oil and Gas, Inc., 813 S.W.2d

492, 494–95 (Tex. 1991). We thus consider whether the record supports summary

judgment against Bosch’s claims based on the affirmative defense of res judicata.

Parties are “in privity” with each other for purposes of res judicata if they

have an identity of legal interest in the earlier and present suits. Benson v. Wanda

Petroleum Co., 468 S.W.2d 361, 363 (Tex. 1971); Getty Oil Co. v. Insurance Co.

of N. Am., 845 S.W.2d 794, 800 (Tex.1992). We examine the circumstances of

each case to determine if privity exists between the parties. Benson, 468 S.W.2d at

363. In a wrongful foreclosure case, if the property itself, or the money damages

that were potentially recoverable in a previous lawsuit would have reverted to the

benefit of the plaintiff in the later lawsuit, then plaintiff in the second case

generally is in privity with the original plaintiff and may be subject to a res judicata

defense. Grimm v. Rizk, 640 S.W.2d 711, 715 (Tex. App.—Houston [14th Dist.]

1982, writ ref’d n.r.e.).

In the earlier action, RKI International, Bradford Hills, and 2646 Atrium

Realty sued for the wrongful foreclosure of the eighteen condominiums. Bosch

sues for the wrongful foreclosure of the same eighteen units, based on the same

foreclosure sales. The current claim thus is identical to the claim in the earlier suit

and involves the same underlying subject matter. See Joachim, 315 S.W.3d at 862.

Because the trial court granted a final summary judgment in the previous case as to

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all claims and all parties, the claim resulted in a final judgment. See id. We thus

turn to whether Bosch is in privity with the plaintiffs in the earlier case such that he

is subject to a res judicata defense. See id.

Bosch responds that no privity relationship existed between him and RKI

International, Bradford Hills, and 2646 Atrium Realty, because these entities did

not represent Bosch’s rights in the first case; nor, he contends were they authorized

to maintain the earlier suit on his behalf. Bosch, however, brought this later-filed

suit as the successor in interest to the 2646 Partnership, for which 2646 Atrium

Realty was the general partner. In the first case, Bosch averred in an affidavit that

he had purchased the condominiums on behalf of the 2646 Partnership. He

contended then, as now, that the 2646 Partnership held equitable title to the

condominiums, while RKI International, Bradford Hills, and Transamerica of

Houston held legal title. Bosch thus asserts the same legal rights in this case as he

did in the first case. See Benson, 468 S.W.2d at 363. As the holder of equitable title

to the condominiums and full participants in the earlier action, the 2646

Partnership, and Bosch as its successor, are bound by the judgment against the

legal owners of the property. See Slay v. Burnett Trust, 187 S.W.2d 377 (Tex.

1945) (holding that beneficiaries, as equitable owners, were barred by res judicata

from litigating action already litigated by trustee, the legal owner). We hold that

Bosch has privity with the plaintiffs in the first case. As the wrongful foreclosure

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claim in this case is identical to the claim the Bosch parties brought against Braes

Woods in the earlier action and that claim was fully litigated and decided on the

merits, the trial court properly ruled that Bosch’s wrongful foreclosure claim is

barred by res judicata.

Bosch complains that the trial court did not consider some of his exhibits as

summary judgment evidence, but he points to no trial court ruling excluding them.

Finally, Bosch contends that the trial court erred in failing to make written findings

of fact and conclusions of law. Summary judgment proceedings, however do not

call for findings of fact and conclusions. Linwood v. NCNB Tex., 885 S.W.2d 102,

103 (Tex. 1994). Accordingly, the trial court did not err in that respect.

Conclusion

We hold that res judicata bars this suit; the trial court therefore properly

granted summary judgment. We affirm the judgment of the trial court.

Jane Bland
Justice

Panel consists of Justices Keyes, Higley, and, Bland.

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