A Dispatch From the Surprisingly Litigious World of Movie Poster Collecting

Heritage Auctions held a number of items owned by Movie Poster House, Inc. and one of its owners, William Hughes. Hughes owed Kenneth Mauer over $600,000 that was secured by Hughes’ collectibles, and Mauer filed an application for writ of garnishment against Heritage. While that case was pending, Movie Poster House intervened, seeking an accounting to determine which items were owned by Hughes personally and which were owned by MPH. Because MPH’s consignment agreement contained an arbitration provision, the matter was compelled to arbitration. MPH later sought to amend its statement of claims to add additional causes of action for damages, but the arbitrator denied leave to file on the basis that the filing was untimely. The arbitrator ruled in favor of MPH on the original claims, and the trial court subsequently granted summary judgment for Heritage when MPH sought to re-file its additional claims in court. The Court of Appeals affirmed. Because MPH failed to appeal the arbitration award directly, it could not complain about the arbitrator’s decision to deny leave to amend. And because those additional claims arose out of the same set of facts as the claims that were addressed in arbitration, they were barred by res judicata.

Movie Poster House, Inc. v. Heritage Austions, Inc., No. 05-14-01260-CV

Grantor’s Remorse

The grantor to a trust apparently changed his mind and sought to undo the trust.  After litigation on several fronts spanning several decades, the grantor filed a declaratory action seeking a declaration that he is the owner of an oil and gas lease called the Westbrook Lease, which was previously property of the trust he created.  The trustee opposed the grantor’s efforts, arguing that the trust was still intact and that the trust still owned the rights to the Westbrook Lease.

The main issue in the case was the effect of several judgments, dating as far back as 1980.  Specifically, the grantor moved for summary judgment, claiming that res judicata applied in his favor based on one of the prior orders.  The trial court agreed and granted summary judgment.  The Court of Appeals, however, reversed because the judgment upon which the trial court relied had been reversed on appeal.

Schmidt v. Ward

Res Judicata Bars Second Lawsuit

In this decision, the Court of Appeals found that the plaintiffs’ claims were barred by the doctrine of res judicata because those claims should have been litigated in a prior lawsuit brought by one of the plaintiff against the same defendants.  Although one of the plaintiffs in the second suit was not a party to the initial litigation, the Court nevertheless applied res judicata to both plaintiffs because the “new” plaintiff was a one person professional association populated entirely by the previous plaintiff.  Thus, the parties were in privity with one another, and res judicata barred the claim.

Hill v. Tx-An Anesthesia Mgmt. P.A.

A Case of Mistaken Paternity

In 1977, Bullough married Hundley because she told him she was pregnant with his child – Dale Jr. – who was born the following year.  In 2004, the parties divorced after a two-day trial, and the trial court made a division of the parties’ marital estate.  More than six years later, Bullough learned that Dale Jr. was not his biological son through DNA testing.  A few months later, the Will Slip 2011 Trust was created for the benefit of Bullough and the children of Dale Jr.  Bullough then assigned his claims against Hundley to the Trust, and seventeen days later, the Trust filed suit.

The essence of the Trust’s claims was that Hundley deceived Bullough into marrying her by lying about the paternity of Dale Jr., and continued to lie throughout the marriage.  As damages, the Trust sought the value of the support Bullough provided Hundley during more than 20 years of marriage, the value of the assets Hundley received as part of the divorce, and the parties’ art collection.  The trial court found that the 2004 final divorce decree barred the Trust’s claims and granted Hundley’s motion to dismiss and motion for summary judgment.  The Court of Appeals affirmed, holding that because the Trust’s claims arise out of facts that could have been litigated in the divorce, they were barred by res judicata.

Hevey v. Hundley

Claim Preclusion Precludes Lawsuit Against Trustee

Orr is the trustee of a trust of which Wall is a beneficiary.  Wall sued Orr in Kentucky for actions he took as trustee.  The case was sent to arbitration, and the arbitrators Wall’s claim that the trust must distribute $63,000 to her.  But the arbitrators did grant Orr’s counter motion to permit him to give a cashier’s check for $63,000 made out to Wall to the arbitrators until Wall signed a release.  A Kentucky trial court confirmed the order.  Several years later, Wall filed suit in Collin County, Texas, claiming she is still owed the $63,000 despite the fact that she never signed the release.  The Court of Appeals upheld the trial court’s conclusion that Orr wins on the affirmative defense of claim preclusion because the transactional nucleus of facts between the two cases were essentially identical.  Wall argued that her claim in this suit was that the requirement that she sign a release constitutes a breach of fiduciary duty, which was not litigated in the prior suit.  The court rejected this argument.

Wall v. Orr

Wrongful Termination Suit Barred by Res Judicata

Defendant Lafayette Escadrill Inc. lost on summary judgment for its breach of contract claim of wrongful termination against its former contract counterparty, CCU.  The Court of Appeals upheld the trial court’s decision on res judicata grounds because Lafayette previously had the opportunity to raise the wrongful termination as a counterclaim in a prior litigation (which it also lost) in which CCU sued Lafayette for breach of contract.  According to the Court, the wrongful termination counterclaim should have been raised in the earlier suit because it was “fully mature” as soon as CCU terminated the contract in accordance with the contract’s provisions.

Lafayette Escadrille Inc v City Credit Union