Court: District Court, E.D. Texas; October 2, 2014; Federal District Court
Defendants’ Motion for Summary Judgment has been partially granted and partially denied by the Court. Plaintiffs Mark and Gail Hillman initially filed their suit on March 22, 2011, claiming violations of their constitutional rights under 42 U.S.C. § 1983, along with trespass, conversion, unjust enrichment, unlawful lockout, negligence, and tortious interference with a contract. The claims arose from events related to their operation of The Zone McKinney, a family entertainment business located at 448 N. Custer Road, McKinney, Texas, which was owned by McKinney Zone, L.P., with a security interest held by First International Bank (FIB).
Following FIB's foreclosure of the property in February 2009, the Hillmans entered a month-to-month rental agreement with FIB, with plans to continue operating the business through March 29, 2009. The end date of the lease is disputed, but both parties agree it was to terminate at the end of March 2009. There is contention regarding the status of the personal property within the building at the time of foreclosure. Plaintiffs allege that a "Commercial Building For Sale" sign posted by FIB led to a loss of business, prompting them to notify FIB that they would not renew the lease for April 2009.
On March 22 and 23, 2009, discussions with prospective buyers, including Defendants Michael Ray Costa and William A. McCrorey, took place. The Hillmans refused to allow access to certain areas of the property and set a meeting for March 24, 2009, which Defendants failed to attend. Disputes exist over whether Costa and McCrorey entered into a lease agreement with FIB and whether the Hillmans were evicted or removed from the property without prior notice before the lease's termination.
After 8:00 p.m. on March 24, 2009, Costa contacted the McKinney Police Department to request assistance in taking possession of a building he claimed to own. Officer Brent W. Shropshire responded and was informed by Costa that he had legal documentation from FIB to access the property, although Shropshire did not verify this information. He characterized the situation as a civil matter and indicated he could not intervene. Costa requested Shropshire accompany him to ensure peace during the takeover, which Shropshire agreed to do.
Upon arrival at The Zone, Costa informed the on-duty manager, Lisa Egnew, of his ownership and showed documentation, though Egnew was uncertain if she directly spoke with Shropshire. She believed she may have allowed entry due to Shropshire's presence. Once inside, Costa and his associates announced their ownership to the employees. Shortly after, the original owners, the Plaintiffs, were informed of the takeover and arrived to find Costa and his associates changing locks and preventing them from retrieving their belongings.
Both parties called the police again, and Officer Shropshire returned to the scene. He spoke with both Costa and the Plaintiffs, who claimed they had a lease and requested entry to retrieve proof of ownership. Shropshire reiterated that the matter was civil and instructed the Plaintiffs to leave, as Costa and McCrorey appeared to control the premises. The Plaintiffs subsequently filed a lawsuit under 42 U.S.C. § 1983, alleging violations of their constitutional rights and various claims including trespass, conversion, and negligence. Defendants filed a Motion for Summary Judgment on April 1, 2014, to which the Plaintiffs responded, and subsequent filings followed.
Summary judgment aims to eliminate claims or defenses lacking factual support. It is granted when the evidence, including pleadings, discovery materials, and affidavits, demonstrates no genuine issue of material fact, allowing judgment as a matter of law. A genuine dispute exists if reasonable evidence could lead a jury to favor the nonmoving party, with all reasonable doubts resolved in their favor. The moving party must demonstrate the absence of genuine issues and entitlement to judgment. If they bear the burden of proof, they must establish all essential elements of the claim. Conversely, if the nonmovant bears the burden, the movant can satisfy their obligation by showing a lack of supporting evidence for the nonmovant's case. Once the movant meets their burden, the nonmovant must present specific facts indicating a genuine issue for trial, providing affirmative evidence. The court must review all evidence without making credibility assessments.
In this case, various defendants, including individuals and corporations, seek summary judgment on all claims except for the plaintiffs' claim regarding constitutionally protected liberty interests. Plaintiffs concede they did not suffer goodwill loss and are not seeking damages related to it, leading to the defendants' entitlement to summary judgment on that claim. Defendants argue that the plaintiffs are barred from claiming conversion and unjust enrichment due to res judicata, collateral estoppel, and judicial estoppel, as these claims were previously filed against FIB in a state court. Res judicata encompasses claim preclusion and issue preclusion, ensuring judgment finality, conserving judicial resources, and preventing multiple lawsuits.
Texas law requires three elements for res judicata to apply: (1) a final judgment on the merits by a competent court; (2) identity of parties or their privies; and (3) the second action must involve the same claims as those raised or that could have been raised in the first action. If these conditions are met, res judicata bars any claims or defenses related to the prior action. In contrast, issue preclusion, or collateral estoppel, applies when four conditions are satisfied: (1) the issue in the subsequent action must be identical to that litigated previously; (2) the issue must have been fully litigated; (3) it must have been necessary for the judgment in the prior case; and (4) no special circumstances should render preclusion unfair. Judicial estoppel protects the integrity of the judicial process by preventing a party from asserting a position contrary to one taken in earlier proceedings. It requires that (1) the current position is inconsistent with a prior one, and (2) the prior position was accepted by the court. In the plaintiffs' earlier lawsuit against FIB, they asserted claims of conversion and unjust enrichment based on the same facts as the current case. However, the previous lawsuit was dismissed with prejudice through an agreed order, meaning judicial estoppel does not apply since the court did not accept the plaintiffs’ position. Additionally, collateral estoppel is inapplicable because the issues were not fully litigated in the prior action.
The Court examines whether Plaintiffs' claims for conversion and unjust enrichment are barred by res judicata. Plaintiffs contend their claims are not barred due to the absence of a final judgment, differences in parties, and distinct claims. However, a dismissal with prejudice constitutes a final judgment on the merits, as established in Brooks v. Raymond Dugat Co. In prior state court litigation, these claims were dismissed with prejudice, satisfying this criterion. While the parties are not identical—FIB was the sole defendant in the state court—privity may still exist if parties share a legal interest in the claims. Privity can arise if parties control an action, their interests are represented, or they are successors in interest. FIB initially owned the property, and McCrorey Family Partnership, LP, appears to have purchased it from FIB, indicating privity between them. However, the Court lacks sufficient information on the remaining defendants' relationship to FIB or McCrorey Family Partnership, LP. The Court concludes that claims against McCrorey Family Partnership, LP, are barred, granting summary judgment in favor of Defendants on those claims while denying it for other defendants.
Additionally, Defendants seek summary judgment on Plaintiffs' claims under 42 U.S.C. § 1983, alleging that McCrorey and Thibodeaux violated Plaintiffs' constitutional rights by barring them from their property. To succeed under § 1983, Plaintiffs must show a constitutional violation by someone acting under state law. McCrorey and Thibodeaux are not state actors, and while private actions may sometimes be considered state actions if they fulfill a traditional state function or have a sufficient connection to the state, the Court finds no such circumstances here.
A finding of state action requires that the state either directly conducts or significantly encourages the conduct of a private party. Private parties can also be liable if they conspire with state officials. To establish liability under conspiracy claims, plaintiffs must prove five elements: (1) a combination of two or more people, (2) an unlawful purpose or lawful purpose achieved through unlawful means, (3) an agreement on the actions to be taken, (4) one or more unlawful acts, and (5) resultant damages. For liability, it must be shown that the defendant agreed on the illegal objective and intended for it to occur.
In the context of the case, defendants McCrorey and Thibodeaux assert that there is no evidence linking their actions to Shropshire or that they conspired with him, thus claiming they cannot be liable under 42 U.S.C. § 1983. Thibodeaux, who was not present during the alleged incident, cannot be held liable as there is no evidence he engaged in unlawful acts. Conversely, there is sufficient evidence against McCrorey suggesting a connection to Shropshire's actions, including allowing McCrorey access to the building and enabling him to change locks, which creates a genuine issue of material fact. Therefore, summary judgment is denied for McCrorey but granted for Thibodeaux regarding the deprivation of constitutional property interests.
Additionally, the plaintiffs allege trespass against McCrorey and Thibodeaux, claiming their entry onto the property on March 24, 2009, was unauthorized, as the plaintiffs held exclusive rights to the property.
Trespass is defined as the unauthorized physical entry onto someone's property, which can occur through direct entry or by causing another to enter without permission. To establish a claim for trespass, a plaintiff must prove three elements: ownership or legal right of possession of the property, that the defendant physically and intentionally entered the property, and that this entry resulted in injury to the plaintiff. If a person's right to enter is exceeded, they are considered a trespasser from the moment of entry. Additionally, if a person remains on the property after being asked to leave, they become a trespasser ab initio.
In the case at hand, Defendants argue McCrorey cannot be liable for trespass as he did not physically enter the property. However, evidence suggests that McCrorey did intentionally enter the property and caused damages, creating a factual dispute regarding the legal right to possess the property. McCrorey claims he was invited by Egnew, but this right ceased when Plaintiffs requested his departure. Consequently, the Court denied the motion for summary judgment regarding McCrorey’s trespass claim.
Regarding Defendant Thibodeaux, the evidence indicates he was not present at the property during the alleged trespass. While encouragement or assistance in trespass can lead to liability, there was no evidence that Thibodeaux engaged in any such conduct. His involvement in a business meeting does not constitute trespass. Therefore, the Court granted the motion for summary judgment on the trespass claim against Thibodeaux. Furthermore, Defendants sought summary judgment on the unlawful lockout claim, arguing that judicial and collateral estoppel preclude Plaintiffs' claims.
Defendants argue there is insufficient evidence to support the unlawful lockout claim. The Court agrees that collateral estoppel bars this claim against Defendant McCrorey Family Partnership, LP, as it could have been raised in earlier litigation involving FIB, with which McCrorey is in privity. However, the Court finds that the Plaintiffs are not barred from pursuing this claim against other defendants due to collateral or judicial estoppel, as the issue of unlawful lockout was not addressed in the previous case. Under Texas law, a landlord cannot prevent a tenant from accessing leased premises without judicial process, except in specific circumstances, and tenants may recover damages if this law is violated. The question of a landlord-tenant relationship is factual and should be considered by a jury. Only McCrorey is suggested as having landlord authority by changing locks, indicating a material fact dispute regarding the landlord-tenant relationship. Thus, the motion for summary judgment on the unlawful lockout claim against McCrorey is denied, while the claim against other defendants is dismissed.
Regarding the negligence claim against McCrorey, Thibodeaux, and McCrorey Family Partnership, LP, Defendants assert they owe no duty to Plaintiffs, have not breached any duty, and that no damages occurred. To prove negligence, a party must establish a legal duty, a breach of that duty, and damages caused by the breach. The existence of a duty is a legal question for the court, while the breach of that duty is a factual question. Under the doctrine of respondeat superior, employers can be liable for employees' negligent actions if they occur within the scope of employment, evaluated by the right to control standard.
A special relationship, which creates a duty to control another's conduct, can arise from a joint enterprise, characterized by an agreement for a common purpose, shared financial interest, and equal control. In the case presented, Defendants argue they have no duty to Plaintiffs, while Plaintiffs assert that Defendants were negligent by damaging their business and property during a takeover. The standard of care in a bailment requires a bailee to protect the bailor's property as a reasonable person would. Regarding Thibodeaux, there is no evidence he entered or took control of the property, leading to the granting of summary judgment in his favor and dismissal of Plaintiffs' negligence claim against him.
Conversely, there is sufficient evidence suggesting McCrorey entered the property and attempted to take control, potentially establishing a bailment relationship. Therefore, the court denies summary judgment against McCrorey and the McCrorey Family Partnership, L.P., allowing the negligence claim to proceed. Additionally, Plaintiffs allege tortious interference with their lease contract with FIB, asserting that Defendants intentionally interfered with this contract. To succeed, Plaintiffs must demonstrate the existence of a contract, intentional interference, proximate causation of damages, and actual damages. Defendants contend they did not interfere with the lease and that Thibodeaux was not present during the relevant events. However, evidence suggests McCrorey interfered with Plaintiffs' lease by signing a subsequent agreement with FIB before the expiration of Plaintiffs' lease, despite knowing of Plaintiffs' occupancy and plans, thus creating a factual dispute to be resolved.
Plaintiffs have established sufficient evidence to raise a factual question about McCrorey's tortious interference with their contract with FIB, leading to a denial of the Defendants’ motion for summary judgment regarding this claim. Conversely, there is no evidence linking Thibodeaux to any conspiracy or interference related to the contract, resulting in a granted motion for summary judgment against him. Plaintiffs claim that actions on March 24, 2009, harmed their reputations and caused embarrassment, particularly affecting their children at school due to financial issues. However, the Court finds that the evidence does not substantiate claims of pecuniary loss or damage to reputation, leading to the dismissal of claims for loss-of-goodwill and loss-of-reputation damages against all Defendants. The Court partially grants the Defendants’ motion for summary judgment, dismissing Plaintiffs’ claims for conversion, unjust enrichment, and unlawful lockout against the McCrorey Family Partnership, leaving only a negligence claim. All claims against Thibodeaux, including those under 42 U.S.C. § 1983 and for trespass, are dismissed except for claims of conversion, unjust enrichment, and constitutional deprivation of liberty interests. All claims against William A. McCrorey are retained, encompassing conversion, unjust enrichment, and constitutional violations.
Plaintiffs' claim for unlawful lockout against Defendants McCrorey Development Corporation and associated entities is dismissed, while claims for conversion and unjust enrichment are permitted to proceed. The motion for summary judgment was filed by several Defendants, although not all participated. The Court has overruled Plaintiffs’ objections to the summary judgment evidence and also overruled Defendants’ objections to Plaintiffs' statements regarding reputation damages. Importantly, the Court did not grant summary judgment on the claim concerning violation of a constitutionally protected liberty interest, which remains active against Defendants McCrorey and Thibodeaux.
