Fourteenth Court of Appeals: The Doctrine of Res Judicata Does Not Apply to Claims Made for the First Time

M E M O R A N D U M    O P I N I O N

Appellant Kelvin Williams sued appellee the Houston Housing Authority for possession of certain real property.

The trial court dismissed Williams’ claims and granted summary judgment on the Housing Authority’s declaratory judgment counterclaim.

We affirm the dismissal of Williams’ claim for wrongful eviction.

We reverse the dismissal of Williams’ claims for quiet title and fraudulent claim to property and remand for further proceedings.

Finally, we reverse the summary judgment and render judgment that the Housing Authority take nothing on its declaratory judgment claim.

Background

Background Facts

Kelvin Williams, Danica Vassigh, and two other individuals owned an L- shaped tract of land in north Houston.

Vassigh filed for bankruptcy and listed the property in her schedule of assets.

The bankruptcy trustee filed an application to sell the property, and Williams objected, asserting that he owned a 50% interest in it.

The bankruptcy court signed an order giving Williams the option to purchase the bankruptcy estate’s interest in the property.

Williams did not exercise this option, and the property was listed for sale.

The Housing Authority agreed to buy the property subject to the bankruptcy court’s approval of the sale.

The bankruptcy court entered an order terminating Williams’ option to purchase and approving the property’s sale “free and clear of liens, claims, interests and encumbrances.”

The order also required Williams to execute any documents necessary to complete the sale.

Williams refused to sign the necessary closing documents.

The bankruptcy court held Williams in contempt of court and issued sanctions against him, but he still refused.

The bankruptcy court then issued an order authorizing the trustee to execute the closing documents on Williams’ behalf.

The Housing Authority closed on its purchase of the property, and a special warranty deed was executed by or on behalf of all the property’s owners.

The Housing Authority then obtained a final judgment from the bankruptcy court evicting Williams from the property.

Procedural History

Williams sued the Housing Authority and asserted claims for quiet title, fraudulent claim against real property, and wrongful eviction.

In response, the Housing Authority requested a declaratory judgment that it is the fee simple owner of the property and an injunction preventing Williams from occupying the property.

The Housing Authority moved to dismiss Williams’ three claims, which the trial court granted.

See Tex. R. Civ. P. 91a.

The Housing Authority then filed a first amended counterclaim.

It alleged that, since the lawsuit’s inception, Williams had filed a certificate of formation for an entity called the “Houston Housing Authority Corporation” that was “actively holding [itself] out as the HHA, calling the HHA a fraudulent entity, and has even demanded the HHA cease operations.”

It requested that Williams and his entity, the Houston Housing Authority Corporation, be enjoined from holding themselves out as or claiming any affiliation with the Housing Authority.

The trial court granted both a temporary injunction and summary judgment in the Housing Authority’s favor on its declaratory judgment claim.

Williams timely appealed.

Analysis

I.               Motion to Dismiss

Williams first asserts that the trial court erred when it granted the Housing Authority’s rule 91a motion and dismissed his three claims.

We sustain this issue in part.

A.             Governing Law and Standard of Review

A party may move for dismissal under rule 91a if a cause of action has no basis in law or fact.

Tex. R. Civ. P. 91a.1; see In re Farmers Tex. Cnty. Mut. Ins. Co., 621 S.W.3d 261, 266 (Tex. 2021) (orig. proceeding).

A rule 91a motion must identify each cause of action it challenges and state specifically the reasons why it has no basis in law, in fact, or in both.

Tex. R. Civ. P. 91a.2.

“A cause of action has no basis in law if the allegations, taken as true, together with inferences reasonably drawn from them, do not entitle the claimant to the relief sought.”

Tex. R. Civ. P. 91a.1.

A cause of action has no basis in fact if “no reasonable person could believe the facts pleaded.”

Tex. R. Civ. P. 91a.1.

We apply a de novo standard of review to the trial court’s ruling on a rule 91a motion.

San Jacinto River Auth. v. Medina, 627 S.W.3d 618, 628 (Tex. 2021).

We accept the factual allegations in the pleadings as true and liberally construe the pleadings in the plaintiff’s favor.

Sanchez v. Striever, 614 S.W.3d 233, 239 (Tex. App.—Houston [14th Dist.] 2020, no pet.).

B.             Application

The Housing Authority asserted four grounds in its motion to dismiss, which we consider individually. See Tex. R. Civ. P. 91a.2.

1.              Res Judicata

The Housing Authority first asserted all of Williams’ claims were barred by res judicata because “the Bankruptcy Court previously adjudicated the issues of ownership and possession of the Property.”

The doctrine of res judicata bars claims that have been fully adjudicated or that, with diligence, could have been brought in a prior suit.

Rosetta Res. Operating, LP v. Martin, 645 S.W.3d 212, 225 (Tex. 2022).

It requires proof of three elements:

(1) a prior final judgment on the merits 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 that were raised or could have been raised in the first action.

Id.

For a defendant to be entitled to a rule 91a dismissal on res judicata grounds, the plaintiff’s petition must allege facts supporting the three elements.

See, e.g., Reynolds v. Quantlab Trading Partners US, LP, 608 S.W.3d 549, 559-60 (Tex. App.—Houston [14th Dist.] 2020, no pet.).

Here, the bare allegations in Williams’ petition do not show that he raised or could have raised his claims before the bankruptcy court.

He alleged only:

·                 The bankruptcy court ordered that the property be sold.

·                 Williams “objected to the sale” and “refused to sign a deed granting away or alienating his interest in the property.”

·                 Over Williams’ objections, the Housing Authority “acquired a Special Warranty Deed, which was signed by the Bankruptcy Court Trustee ‘on behalf’ of [Williams] and which purported to grant HHA all of [Williams’] interests in the property.”

We do not see how Williams’ wrongful eviction claim could have been brought in a proceeding that, for the first time, determined that the Housing Authority owned and had a right to possess the property.

The same is true of his claim for quiet title and fraudulent claim to property.

Although Williams asserted that he “objected” to the special warranty deed’s execution, he did not state whether the bankruptcy court fully adjudicated the interplay between his deed and the special warranty deed or whether those types of claims may even be properly heard as part of another party’s bankruptcy proceeding.

The Housing Authority points to the bankruptcy court’s order to show that ownership and possession were fully litigated.

But that order was not attached to Williams’ petition or the Housing Authority’s answer and, as such, cannot be considered in deciding a rule 91a motion.

In re Farmers Tex. Cnty. Mut. Ins. Co., 621 S.W.3d at 276; see also Reynolds, 608 S.W.3d at 556

(“Evidence is usually required to prove a collateral estoppel or res judicata defense.”).

Nor may we take judicial notice of it.

Reynolds, 608 S.W.3d at 559.

Therefore, Williams’ allegations—standing alone and construed in his favor—do not demonstrate the Housing Authority’s entitlement to dismissal under the doctrine of res judicata.

2.              Quiet Title Action

To prevail on a quiet title claim, a plaintiff must establish that

(1) he has an interest in specific property,

(2) his property interest is affected by a claim from the defendant,

and

(3) the defendant’s claim, although facially valid, is invalid or unenforceable.

Edry-TX-II, GP v. CCND-Main ST Shopping Ctr., LP, 683 S.W.3d 450, 455 (Tex. App.—Houston [14th Dist.] 2023, pet. denied).

In its rule 91a motion, the Housing Authority argued that Williams’ quiet title claim should be dismissed because he could not prove the first element, pointing to the bankruptcy court’s orders and the Housing Authority’s special warranty deed.

The Housing Authority’s evidence cannot be considered at this stage of the proceedings.

See Tex. R. Civ. P. 91a.6; City of Houston v. Boodoosingh, 693 S.W.3d 894, 897 (Tex. App.—Houston [14th Dist.] 2024, no pet.).

The allegations in Williams’ petition—that he is “the owner of the Property” and “owns a 50% fee simple interest in the property”—are sufficient to meet his burden on the first element at this stage of the proceeding.

See Tex. R. Civ. P. 91a.1.

Dismissal was not proper.

3.              Fraudulent Claim to Property

A chapter 12 cause of action for fraudulent claim to property requires a plaintiff to show that the defendant

(1) made, presented, or used a document with knowledge that it was a fraudulent claim against real property,

(2) intended the document to be given legal effect,

and

(3) intended to cause financial injuries.

Tex. Civ. Prac. & Rem. Code § 12.002(a);

Brewer v. Green Lizard Holdings, L.L.C. Series SR, 406 S.W.3d 399, 403-04 (Tex. App.—Fort Worth 2013, no pet.).

The Housing Authority asserted that this claim should be dismissed because Williams lacked standing to pursue it and because it was barred by limitations.

We disagree with both contentions.

Standing to bring a chapter 12 action for fraudulent claim to property is established if the plaintiff shows that he “own[s] an interest in the real [] property.”

Tex. Civ. Prac. & Rem. Code § 12.003(a)(8);

see, e.g., Abraham v. Acton, 697 S.W.3d 201, 210-11 (Tex. App.—El Paso 2023, no pet.).

Williams alleged in his petition that he owns a 50% interest in the property.

This allegation is sufficient to plead standing to pursue the challenged claim.

See Tex. R. Civ. P. 91a.1.

The Housing Authority also asserted that Williams’ chapter 12 claim was barred by the applicable statute of limitations and pointed to the relevant dates on the special warranty deed.

But again, because this argument relies on evidence, it does not warrant dismissal under rule 91a.

See Tex. R. Civ. P. 91a.6; City of Houston, 693 S.W.3d at 897;

see also, e.g., Davis v. Homeowners of Am. Ins. Co., 700 S.W.3d 837, 846-47 (Tex. App.—Dallas 2023, no pet.)

(concluding it was error for the trial court to grant a rule 91a dismissal on limitations because the argument rested on evidence attached to the defendant’s motion).

4.              Wrongful Eviction

The elements for wrongful eviction include

(1) the existence of an unexpired lease,

(2) the tenant’s occupancy of the premises,

(3) the landlord’s eviction of the tenant,

and

(4) damages suffered by the tenant due to the eviction.

St. Anthony’s Minor Emergency Ctr., L.L.C. v. Ross Nicholson 2000 Separate Prop. Tr., 567 S.W.3d 792, 797 n.4 (Tex. App.—Houston [14th Dist.] 2018, pet. denied).

In its rule 91a motion, the Housing Authority argued it was entitled to dismissal because Williams failed to plead that he was a tenant under an unexpired lease.

We agree.

Williams alleged in his petition that he is the owner of the property.

Williams did not allege that he had a lease or that he occupied the property as a tenant.

Accordingly, Williams did not allege a basis in fact to support his claim for wrongful eviction.

See Tex. R. Civ. P. 91a.1; St. Anthony’s Minor Emergency Ctr., L.L.C., 567 S.W.3d at 797 n.4.

*                  *                  *

In sum, we sustain Williams’ first issue in part and conclude the trial court

(1) properly granted the Housing Authority’s rule 91a motion to dismiss with respect to Williams’ wrongful eviction claim,

and

(2) erred when it granted the motion with respect to Williams’ quiet title and chapter 12 claims.

II.            The Housing Authority’s Capacity

In his second issue, Williams asserts the trial court erred by denying his challenge to the Housing Authority’s capacity to litigate.1

Capacity is a party’s legal authority to go into court to prosecute or defend against a suit.

Garden Oaks Maint. Org. v. Chang, 542 S.W.3d 117, 137 (Tex. App.—Houston [14th Dist.] 2017, no pet.).

Whether a party has capacity is a question of law we review de novo.

YHR Mason Rd. Partners, LP v. 7-7 Cleaners, Inc., No. 01-18-00849-CV, 2020 WL 716732, at *5 (Tex. App.—Houston [1st Dist.] Feb. 13, 2020, no pet.) (mem. op.).

In the trial court, Williams filed a verified motion arguing the Housing Authority lacked legal capacity because it failed to file reports with the Texas Secretary of State that, he alleged, were necessary to maintain its corporate status.

He supported this contention with a 1995 letter from the Secretary of State stating that the “Houston Housing Authority Corporation” failed to file a required report and was therefore “involuntarily dissolved” and forfeited its “right to conduct affairs.”

1 Although the trial court did not expressly rule on Williams’ capacity challenge, it did so impliedly when it enjoined him from continuing to operate the “Houston Housing Authority Corporation.”

See YHR Mason Rd. Partners, LP v. 7-7 Cleaners, Inc., No. 01-18-00849-CV, 2020 WL 716732, at *6 (Tex. App.—Houston [1st Dist.] Feb. 13, 2020, no pet.) (mem. op.)

(holding that a trial court may impliedly overrule a challenge to capacity).

Williams also filed as an exhibit a business organizations inquiry from the Texas Secretary of State website showing that the entity named the “Houston Housing Authority Corporation” was “involuntarily terminated.”

The evidence at the temporary injunction hearing showed that the Housing Authority is a governmental entity that is not required to register as a corporation.

A 1938 resolution passed by the Houston City Council authorized the creation of the “Housing Authority of the City of Houston” to address the “shortage of safe and sanitary dwelling accommodations in the City of Houston,” and a 1986 bylaws amendment changed the entity’s name to the “Houston Housing Authority.”

The Housing Authority’s general counsel testified that the Housing Authority formed an entity called the “Houston Housing Authority Corporation” in 1987 to obtain financing to purchase real property and that, once the property was purchased, the Housing Authority dissolved that entity.

Williams acknowledged at the hearing that he formed an entity called the “Houston Housing Authority Corporation” because he “wanted to take over” the Housing Authority, which he described as a “hostile takeover.”

Reviewing this evidence, we conclude the trial court did not err in overruling Williams’ challenge to the Housing Authority’s capacity to litigate.

The creation and operation of municipal housing authorities are governed by the Texas Local Government Code chapter 392, which provides that “a housing authority is a unit of government.”

Tex. Loc. Gov’t Code § 392.006.

Rather than requiring registration with the Texas Secretary of State, this chapter provides only that a “municipal housing authority may not transact business or exercise its powers until the governing body of the municipality declares by resolution that there is a need for the authority.”

Id. § 392.011(c).

Chapter 392 does not require that housing authorities maintain their corporate status with the Texas Secretary of State.

Williams did not cite any statutes or other authority to the contrary.

Therefore, we conclude the Housing Authority had capacity to litigate its claims, and we overrule Williams’ second issue.

III.         Summary Judgment

Williams asserts in his third issue that the trial court erred in granting summary judgment that the Housing Authority is the fee simple owner of the property—and Williams is not—because the Declaratory Judgments Act cannot be used to adjudicate title.

We agree.

The Act allows a person interested under a deed to have a court determine “any question of construction or validity” that arises out of the deed and to “obtain a declaration of rights, status, or other legal relations thereunder.”

Tex. Civ. Prac. & Rem. Code § 37.004(a).

But the Act does not apply to a claim for legal title; “[b]y statute, a trespass-to-try-title action is the method of determining title to lands” and “is the exclusive remedy for resolving overarching claims to legal title.”

Brumley v. McDuff, 616 S.W.3d 826, 831 (Tex. 2021);

see Tex. Prop. Code § 22.001.

When the trespass-to-try-title statute governs a party’s substantive claim, the party may not alternatively proceed under the Act for a determination of possessory rights to property.

Coinmach Corp. v. Aspenwood Apartment Corp., 417 S.W.3d 909, 926 (Tex. 2013).

The substance of a party’s pleadings determines whether a claim sounds in trespass to try title.

Brumley, 616 S.W.3d at 833.

In its amended pleading, the Housing Authority sought a declaration that “it is the fee simple owner of the Property” and that Williams has “no right, title, or interest in and to the Property.”

Because the Housing Authority’s claim seeks to adjudicate title to land, it is governed exclusively by the trespass-to-try-title statute.

See, e.g., Mundy v. ENE, Inc., No. 14-21-00146-CV, 2022 WL 7278288, at *3-4 (Tex. App.—Houston [14th Dist.] Oct. 13, 2022, no pet.) (mem. op.)

(“Because [the plaintiff] sought to negate [the defendant’s] purported title to the 3.57 Property, its claim sounds as a trespass-to-try-title claim, not one for declaratory relief.”);

Jinkins v. Jinkins, 522 S.W.3d 771, 786 (Tex. App.—Houston [1st Dist.] 2017, no pet.)

(“Because [the plaintiff] sought title to and possession of the disputed property interests, his claims fell within the category of claims required to be brought as trespass-to-try-title actions.”);

Shelton v. Kalbow, 489 S.W.3d 32, 55 (Tex. App.—Houston [14th Dist.] 2016, pet. denied)

(“A trespass-to-try-title lawsuit is an action generally used to clear problems in chains of title.”).

The trial court therefore erred in granting summary judgment on the Housing Authority’s declaratory judgment claim.

See Coinmach Corp., 417 S.W.3d at 926.

We sustain Williams’ third issue.

IV.          Disposition of Remaining Issues

Williams also asserts that the trial court erred by striking his amended pleading and that this Court “should issue a ruling that Williams is fee simple owner of an undivided 50% in The Property.”

Because we remand two of Williams’ three claims for further proceedings, we need not address these issues.

Conclusion

We reverse and render judgment that the Housing Authority take nothing on its declaratory judgment claim.

We affirm the dismissal of Williams’ claim for wrongful eviction.

Finally, we reverse and remand for further proceedings as to Williams’ claims for quiet title and fraudulent claim to property.

/s/       Katy Boatman Justice

Panel consists of Justices Wilson, Hart, and Boatman.