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Paradise Living, Inc. v. Blackburne & Brown Mortgage Fund I

Court of Appeals of Texas, First District

June 11, 2019

PARADISE LIVING, INC. AND MARY ARTHUR, Appellants
v.
BLACKBURNE & BROWN MORTGAGE FUND I, Appellee

          On Appeal from the 11th District Court Harris County, Texas Trial Court Case No. 2017-56890

          Panel consists of Justices Lloyd, Landau, and Countiss.

          MEMORANDUM OPINION

          Sarah Beth Landau Justice.

         The 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 Boje.

         In five 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.

         We affirm.

         Background

         Paradise 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.

         While 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.

         Blackburne 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."

         A 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 agents."

         The 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."

         Along 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.

         The 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.

         Blackburne 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.

         After 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 faith.

         The 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 ...


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