PARADISE LIVING, INC. AND MARY ARTHUR, Appellants
BLACKBURNE & BROWN MORTGAGE FUND I, Appellee
Appeal from the 11th District Court Harris County, Texas
Trial Court Case No. 2017-56890
consists of Justices Lloyd, Landau, and Countiss.
Beth Landau Justice.
trial court entered a take-nothing summary judgment against
Paradise Living, Inc. and Mary Arthur, holding that their
claims against Blackburne & Brown Mortgage Fund I were
barred by res judicata. The trial court also imposed
sanctions against their attorneys, Ike Okorafor and Larry
issues, Paradise Living, Inc. and Mary Arthur contend the
trial court erred in granting summary judgment against them,
erred in sanctioning their attorneys, and did not have
plenary power to enter an amended order for summary judgment
and sanctions more than 75 days after its original order for
summary judgment and sanctions.
Living operated an assisted living facility in Houston in a
multi-unit complex originally purchased by Mary Arthur and
James Arthur. The Arthurs wished to renovate their property
and, in 2006, one of their limited partnerships borrowed
$774, 000 from Blackburne & Brown Mortgage Fund I. The
Arthurs guaranteed the note and deed of trust. By 2016,
Blackburn began taking action against the Arthurs and their
related entities, claiming the loan payments were delinquent.
Blackburne sought to foreclose on the property.
facing pre-foreclosure demands for payment, Paradise Living
and Arthur Holdings, L.P.-an entity related to the Arthurs in
a way the record does not make clear-sued Blackburne for
conversion of mortgage payments, tortious interference with
business relationship, an accounting, injury to business
reputation, breach of the duty of good faith and fair
dealing, and breach of contract. Their suit was filed in
Harris County District Court and assigned Cause Number
2016-12403. They sought damages, declaratory relief, and an
injunction. Their second amended petition removed Paradise
Living from the list of plaintiffs and added James P. Arthur.
answered the lawsuit with a general denial. In the same
pleading, Blackburne asserted a counterclaim for breach of
contract against Arthur J. Holdings, Inc., Legonite, Inc.,
James Arthur, Mary Arthur, "and any other owner or
partner of Arthur LP or Legonite."
settlement agreement was reached in May 2016 that established
new payment deadlines for mortgage payments. The settlement
agreement lists all parties to the agreement. The parties to
the agreement are, on the one side, "Arthur Holdings,
LP; Arthur P. Holdings, LP; Legonite, Inc.; Arthur J.
Holdings, Inc.; Paradise Living, Inc. d/b/a The Cottage
Health Services; James Arthur; and Mary Arthur; including the
principals, partners, directors, officers, assignees, or
agents of the aforementioned," and, on the other side,
"Blackburne & Brown Mortgage Fund I; including its
principals, partners, directors, officers, assignees, or
settlement agreement states that it "disposes of all
Parties and all claims. Such disposal includes but is not
limited to claims or defenses that were filed in this lawsuit
or could or should have been filed in this lawsuit, as well
as claims or defenses associated" with various Property
Code provisions. The agreement is signed as "approved as
to form and substance" by James O. Okorafor, who is
listed as "counsel for Arthur Holdings, LP; Arthur P,
Holdings, LP; James Arthur; Mary Arthur; Arthur J. Holdings,
Inc.; Legonite, Inc; and Paradise Living Inc. d/b/a The
Cottage Health Services."
with the settlement agreement, the parties entered into an
agreed final judgment. The agreed final judgment lists the
same parties and recounts the same terms as the settlement
agreement. It also states that the agreed final judgment
"finally disposes of all Parties and all claims. Such
disposal includes but is not limited to claims or defenses
that were filed in this lawsuit or could or should have been
filed in this lawsuit." Like the settlement agreement,
the agreed final judgment is signed as "approved as to
form and substance" by James O. Okorafor, who is listed
as "counsel for Arthur Holdings, LP; Arthur P, Holdings,
LP; James Arthur; Mary Arthur; Arthur J. Holdings, Inc.;
Legonite, Inc; and Paradise Living Inc. d/b/a The Cottage
Health Services." The agreed final judgment was entered
August 24, 2017.
same day the judgment was entered, three of the parties to
the settlement agreement and to the agreed final judgment
filed suit against Blackburne in another Harris County
District Court, which was assigned Cause Number 2017-56890.
Paradise Living, Inc., Legonite, Inc., and Mary Arthur
asserted claims against Blackburne for wrongful foreclosure,
conversion, breach of contract, unjust enrichment, and other
causes of action. The plaintiffs sought damages, declaratory
relief, an injunction, and attorney's fees.
answered; sought transfer to the district court that entered
the agreed final judgment; asserted defenses, including res
judicata; and asserted a counterclaim for breach of contract,
specifically the settlement agreement.
the motion to transfer was granted, Blackburne moved for
summary judgment on all plaintiff claims, arguing that they
are barred by res judicata because the plaintiffs were
parties to the earlier agreed final judgment. Blackburne also
sought sanctions for filing a groundless pleading in bad
plaintiffs amended their petition to drop Legonite, Inc. from
the list of plaintiffs, leaving only Paradise Living, Inc.
and Mary Arthur. The amended petition asserted only two
causes of action: (1) tortious interference with an existing
contract with "government agencies" related to the
placement and funding of individuals in the assisted living
facility and (2) business ...