A JUDGMENT IS FINAL FOR RES JUDICATA AND COLLATERAL ESTOPPEL EVEN IF ON APPEAL, UNTIL IT ISN’T

Schmidt v. Ward
Dallas Court of Appeals, No. 05-13-01095-CV (October 6, 2014)
Justices Bridges (Opinion), Lang, and Evans
After suffering a take-nothing final judgment on claims relating to ownership of certain mineral leases, the representative of a Trust continued to assert rights to those interests while appealing that judgment, causing the well operator to withhold royalty funds. Ward therefore filed a declaratory judgment action to force the Trust and the operator to abide by the prior judgment. The trial court granted summary judgment to Ward in accordance with Texas Supreme Court precedent that a judgment is final for res judicata and collateral estoppel purposes even if that judgment is on appeal. The Trust appealed that declaratory judgment, as well, and while that appeal was pending, the Dallas Court of Appeals reversed the prior take-nothing judgment on which the summary judgment had been predicated. Noting that a judgment is final while an appeal is pending, the Court nevertheless concluded that reversal removed that finality, requiring the reversal of the second judgment, as well: “When an appellate court reverses the first judgment, the finality necessary for claim or issue preclusion is eliminated.”

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