OPINION Appellant Wilma Reynolds (“Wilma”) appeals the trial court’s final judgment dismissing all of Wilma’s claims, signed on August 21, 2018, which incorporates previous orders (1) granting the Rule 91a motions to dismiss of appellees Quantlab Trading Partners, U.S., LP; Quantlab Incentive Partners I, LLC; Quantlab Financial, LLC (the “Quantlab Defendants”), and David Reynolds (“David”) and (2) awarding the Quantlab Defendants attorney’s fees and costs. See Tex. R. Civ. P. 91a.1 (authorizing party to seek dismissal of cause of action on ground that it has no basis in law or fact and requiring the award of attorney’s fees and costs to the prevailing party). Wilma also appeals the trial court’s denial of her motions to compel discovery from the Quantlab Defendants and David. We reverse the judgment and remand this case to the trial court for further proceedings. FACTUAL BACKGROUND AND PROCEDURAL HISTORY PLEADING ALLEGATIONS In reviewing a motion to dismiss under Rule 91a, a trial court is required take the allegations in the plaintiff’s petition as true. See Tex. R. Civ. P. 91a.1. Wilma’s original petition (“Wilma’s Petition”) alleges the following facts, which for purposes of this appeal of the dismissal under Rule 91a, we take as true. Wilma and David were married in 1997, and during their marriage David began employment with Quantlab Financial, LLC (“QFL”), which paid David a base salary and substantial bonuses. As a benefit of his QFL employment, David participates with QFL in two bonus-generating entities, (1) Quantlab Trading Partners US, LP (“QTP”) and (2) Quantlab Incentive Partners I, LLC (“QIP”). David petitioned for divorce in 2008. During the divorce proceedings, Wilma propounded numerous discovery requests to David and QFL seeking information about David’s QTP, QIP, and QFL bonuses. David produced information relating to the QFL bonuses he received, his income, and produced the agreements concerning QIP. However, David and QFL objected and filed motions for protection in response to Wilma’s discovery requests relating to David’s QTP bonuses, QIP bonuses, and accrued QFL bonuses. The trial court sustained David’s and QFL’s objections to discovery and granted their motions for protection. On April 22, 2009, the trial court conducted the property-division trial without the QTP partnership agreements, QTP financial statements, QIP financial statements, and other material financial information about the estate’s bonuses being produced to Wilma. At the trial, David testified to the extent and value of certain marital assets, but omitted the value of the estate’s QTP bonuses, QIP bonuses, and QFL accrued bonuses. Likewise, Tim Mclnturf, counsel for Quantlab, testified at the trial, but failed to disclose the value, nature, location or extent of the estate’s QTP bonuses, QIP bonuses, and QFL accrued bonuses. Both David’s and Quantlab’s position at trial was that David’s interest, including bonuses in QTP and QIP, is only equal to his capital contribution of $600,000 in QTP and his capital contribution of $5,274.50 in QIP because those interests have yet to vest. David and Quantlab grossly misrepresented the value of David’s QTP, QIP and/or QFL accrued bonuses by concealing material financial information (e.g., balance sheets and other financial statements) in connection with providing false and misleading testimony. At the conclusion of the trial, the trial court awarded David the estate’s entire interest in QTP and QIP, which includes the estate’s interest in investment accounts that held the estate’s accrued bonuses/funds. The trial court also awarded David the estate’s accrued QFL bonuses. After the divorce decree was signed in 2009,[1] financial information relating to the estate’s QTP bonuses was produced in camera to Judge Hufstetler for inspection. The following documents were filed in camera: (1) David Reynolds’s (Unredacted) Limited Partnership Agreement for Quantlab Trading Partners US, LP; (2) the written Agreement between Quantlab Trading Partners US, LP and Quantlab Trading Partners, LP; and (3) the 2009 and 2010 Audited Financial Statements for Quantlab Trading Partners US, LP and Quantlab Trading Partners, LP. Judge Hufstetler ruled that these documents contained “no relevant’ information relating to David’s QTP interest, income, or bonuses. After the divorce decree was signed, certain QIP account information was produced that evidences that the estate had an interest in a QIP account. Upon information and/or belief, on April 22, 2009 there was a significant amount of estate funds on deposit in accounts controlled by QIP and the value of those estate funds have not been disclosed to Wilma. Upon information and/or belief, David has deferred his accrued QFL bonuses and concealed the value of those bonuses from Wilma. In sum, the estate’s QTP, QIP, and QFL bonuses—which Wilma believes is substantial—were awarded entirely to David because of fraud and wrongful acts by David and the Quantlab Defendants. Wilma’s inability to prevent the bonuses awarded to David was not a result of any fault or negligence of Wilma. Wilma was forced to rely on David and Quantlab’s valuation of the estate’s bonuses because she continues to have no access to the financial information necessary to verify the value of the estate’s bonuses. David and the Quantlab Defendants have engaged in an ongoing conspiracy or activity to conceal the true value of the estate’s bonuses and defraud Wilma of her share of the estate’s bonuses. This activity includes liquidating approximately $700 million of funds that QTP had invested in the Master Fund and transferring those funds to Quantlab Capital Management, Ltd. to further conceal the estate’s QTP bonuses. Wilma’s petition asserts tort causes of action against David and the Quantlab Defendants for common-law fraud, fraud by nondisclosure, negligent misrepresentation, violations of the Theft Liability Act, conversion, money had and received, and civil conspiracy. She seeks actual, liquidated, and exemplary damages. PROCEDURAL HISTORY Wilma served written discovery with her petition seeking information about the community estates’ bonuses and other community-estate assets. David and the Quantlab Defendants filed motions for a protective order. Wilma filed motions to compel discovery from David and the Quantlab Defendants. The trial court signed an order denying Wilma’s motions to compel on August 21, 2018. The Quantlab Defendants filed a motion to dismiss all of Wilma’s claims pursuant to Rule 91a, which David joined. Tex. R. Civ. P. 91a.1. On June 21, 2018, the trial court signed an interlocutory order dismissing all of Wilma’s claims against the Quantlab Defendants with prejudice. The Quantlab Defendants filed a motion for award of their attorney’s fees, with evidence attached to prove the amount of attorney’s fees. On July 10, 2018, David sought a hearing on his joinder of the Quantlab Defendants’ motion to dismiss by filing a “Motion for Consideration and Entry of Order on Rule 91A Motion to Dismiss.” On July 24, 2018, the trial court signed interlocutory orders dismissing all of Wilma’s claims against David with prejudice and ordering Wilma to pay the Quantlab Defendants’ attorney’s fees and costs in the amount of $36,757.87. On August 21, 2018, the trial court signed a final judgment that Wilma take nothing. STANDARD OF REVIEW Under Texas Rule of Civil Procedure 91a, “a party may move to dismiss a cause of action on the grounds that it has no basis in law or fact.” Tex. R. Civ. P. 91a.1. As specified in the rule, a cause of action has no basis in law if the allegations, taken as true, together with inferences reasonably drawn from them, do not entitle the claimant to the relief sought. Id. A cause of action has no basis in fact if “no reasonable person could believe the facts pleaded.” Id. A motion to dismiss must identify each cause of action to which it is addressed and must state specifically the reasons the cause of action has no basis in law, no basis in fact, or both. Tex. R. Civ. P. 91a.2. We review the trial court’s rulings on the Rule 91a motions de novo. City of Dallas v. Sanchez, 494 S.W.3d 722, 724 (Tex. 2016) (per curiam) (quoting Tex. R. Civ. P. 91a.6); see also Tony’s Barbeque & Steakhouse, Inc. v. Three Points Invs., Ltd., 527 S.W.3d 686, 695 (Tex. App.—Houston [14th Dist.] 2017, no pet.). We look solely to the pleading and any attachments to determine whether the dismissal standard is satisfied. Estate of Savana, 529 S.W.3d 587, 592 (Tex. App.—Houston [14th Dist.] 2017, no pet.); Wooley v. Schaffer, 447 S.W.3d 71, 76 (Tex. App.— Houston [14th Dist.] 2014, pet. denied). To determine if the cause of action has a basis in law or fact, we construe the pleadings liberally in favor of the plaintiff, look to the pleader’s intent, and accept as true the factual allegations in the pleadings. Wooley, 447 S.W.3d at 76. Rule 91a permits motions to dismiss based on affirmative defenses “if the allegations, taken as true, together with inferences reasonably drawn from them, do not entitle the claimant to the relief sought.” Bethel v. Quilling, Selander, Lownds, Winslett & Moser, P.C., 595 S.W.3d 651, 656 (Tex. 2020) (quoting Tex. R. Civ. P. 91a.1). “Of course, some affirmative defenses will not be conclusively established by the facts in a plaintiff’s petition. Because Rule 91a does not allow consideration of evidence, such defenses are not a proper basis for a motion to dismiss.” Id. Evidence is usually required to prove a collateral estoppel or res judicata defense. See Calabrian Corp. v. All. Specialty Chems., Inc., 418 S.W.3d 154, 160 (Tex. App.—Houston [14th Dist. 2013, no pet.) (recognizing that "courts typically require that the party advocating collateral estoppel introduce at least the pleadings and judgment from the prior case"); Fed. Home Loan Mortg. Corp. v. Pham, 449 S.W.3d 230, 237 (Tex. App.---Houston [14th Dist.] 2014, no pet.) (“To prevail on a motion for summary judgment asserting res judicata, the movant must produce summary judgment evidence, including verified or certified copies of the judgment and pleadings from the earlier suit, sufficient to establish the applicability of res judicata as a matter of law”). ANALYSIS Wilma’s brief presents four issues for review, namely: (1) whether the trial court erred in granting the Quantlab Defendants’ motion to dismiss; (2) whether the trial court erred by awarding the Quantlab Defendants attorney’s fees and costs pursuant to the version of Rule 91a.7 then in effect;[2] (3) whether the trial court erred in granting David’s motion for consideration and entry of order on his motion to dismiss; and (4) whether the trial court erred in denying Wilma’s motions to compel discovery. MOTIONS TO DISMISS David and the Quantlab Defendants moved for dismissal on two grounds, collateral estoppel and res judicata. The trial court judgment does not state the ground on which it granted dismissal, so we must determine if the trial court judgment may be upheld on either ground. As discussed below, we conclude that the facts alleged in Wilma’s petition, when taken as true and construed liberally in Wilma’s favor, do not establish that her claims are barred by collateral estoppel or res judicata. Therefore, the trial court erred in dismissing Wilma’s claims under Rule 91a. COLLATERAL ESTOPPEL The doctrine of collateral estoppel, also known as issue preclusion, prevents a party from relitigating an issue that it previously litigated unsuccessfully. Calabrian Corp, 418 S.W.3d at 158. The doctrine “serve[s] the vital functions of bringing litigation to an end, maintaining stability of court decisions, avoiding inconsistent results, and promoting judicial economy.” Id. at 157–58. Collateral estoppel is an affirmative defense, and the party asserting it bears the burden of proving that (1) the facts sought to be litigated in the second action were fully and fairly litigated in the first action; (2) those facts were essential to the judgment in the first action; and (3) the parties were cast as adversaries in the first action. Id. at 158. Whether collateral estoppel applies is a question of law. Id. An issue decided in the first action must be identical to an issue in the second action. State & Cty. Mut. Fire Ins. Co. v. Miller, 52 S.W.3d 693, 697 (Tex. 2001) (per curiam). However, although the issue must be identical, the cause of action may be different in the second action. Johnson & Higgins of Tex., Inc. v. Kenneco Energy, Inc., 962 S.W.2d 507, 521 (Tex. 1998). “To satisfy the requirements of due process, it is only necessary that the party against whom the doctrine is asserted was a party or in privity with a party in the first action.” Sysco Food Servs., Inc. v. Trapnell, 890 S.W.2d 796, 802 (Tex. 1994). Wilma’s fraud and conspiracy and other related claims are predicated on her pleading allegation that David and QTP, in the divorce action, “grossly misrepresented the value of David’s QTP, QIP and/or QFL accrued bonuses by concealing material financial information . . . in connection with providing false and misleading testimony.” According to Wilma’s petition, the value of David’s interest in QTP and QIP were litigated in the divorce action, but Wilma’s claims for David’s and QTP’s alleged fraudulent concealment of the bonuses were not litigated. Because the allegations stated in Wilma’s petition do not establish that her fraud and conspiracy and other related claims were “fully and fairly litigated” in the divorce action, the trial court could not have properly dismissed her claims under Rule 91a based on collateral estoppel. The Quantlab Defendants argue that collateral estoppel and res judicata apply based on our decision in Reynolds v. Reynolds, No. 14-15-00990-CV, 2017 WL 1366680 (Tex. App.—Houston [14th Dist.] Apr. 13, 2017, pet. denied) (mem. op.). David also argues that collateral estoppel and res judicata bar Wilma’s claims in the underlying action because Wilma’s claims against David and the Quantlab Defendants for theft of property, conversion, money had and received, and civil conspiracy allegedly were litigated in prior proceedings, citing, among others, No. 14-10-00564-CV, In re Wilma Reynolds. We need not consider the Quantlab Defendants’ and David’s allegations regarding what was litigated in prior proceedings because doing so would require us to improperly take judicial notice of these proceedings. Generally, our court may take judicial notice of its opinions and records in related proceedings involving the same parties.[3] But Rule 91a.6 expressly prohibits the consideration of evidence and requires that the motion be decided based solely on the pleading of the cause of action. See Tex. R. Civ. P. 91a.6. A party may not rely on judicial notice in a Rule 91a proceeding because judicial notice is “a matter of evidence.” See Harper v. Killion, 162 Tex. 481, 484, 348 S.W.2d 521, 523 (1961) (quoting Burtis v. Butler Bros., 148 Tex. 543, 551, 226 S.W.2d 825, 830 (1950)). For this reason, the First Court of Appeals declined to take judicial notice of certain evidence in reviewing a Rule 91a dismissal. See San Jacinto River Auth. v. Burney, 570 S.W.3d 820, 830 (Tex. App.—Houston [1st Dist.] 2018, pet. granted) (“Because Rule 91a expressly prohibits a court’s consideration of evidence, and it expressly requires that the motion to dismiss be decided based solely on the pleadings, we decline to take judicial notice of the River Authority’s proffered evidence”). We, likewise, decline to take judicial notice of the opinions and records in the related proceedings referenced by appellees in reviewing the trial court’s orders of dismissal under Rule 91a. RES JUDICATA “Res judicata, or claims preclusion, prevents the re-litigation of a claim or cause of action that has been finally adjudicated, as well as related matters that, with the use of diligence, should have been litigated in the prior suit.” Barr v. Resolution Tr. Corp. ex rel. Sunbelt Fed Sav., 837 S.W.2d 627, 628 (Tex. 1992). “The doctrine of res judicata in Texas holds that a final judgment in an action bars the parties and their privies from bringing a second suit ‘not only on matters actually litigated, but also on causes of action or defenses which arise out of the same subject matter and which might have been litigated in the first suit.’” Compania Financiara Libano, S.A. v. Simmons, 53 S.W.3d 365, 367 (Tex. 2001) (quoting Barr, 837 S.W.2d at 630). “For res judicata to apply, there must be: (1) a prior final judgment on the merits by a court of competent jurisdiction; (2) identity of parties or those in privity with them; and (3) a second action based on the same claims that were raised or could have been raised in the first action.” Citizens Ins. Co. of Am. v. Daccach, 217 S.W.3d 430, 449 (Tex. 2007).” Under the transactional approach followed in Texas, a subsequent suit is barred if it arises out of the same subject matter as the prior suit, and that subject matter could have been litigated in the prior suit.” Id. (citing Barr, 837 S.W.2d at 631). A final judgment on an action extinguishes the right to bring suit on the transaction, or series of connected transactions, out of which the action arose. Id. “A determination of what constitutes the subject matter of a suit necessarily requires an examination of the factual basis of the claim or claims in the prior litigation. It requires an analysis of the factual matters that make up the gist of the complaint, without regard to the form of action. Any cause of action which arises out of those same facts should, if practicable, be litigated in the same lawsuit.” Barr, 837 S.W.2d at 629. “Claim preclusion prevents splitting a cause of action.” Id. Joinder of tort claims with a divorce suit is encouraged, when feasible. Twyman v. Twyman, 855 S.W.2d 619, 625 (Tex. 1993). Tort claims in divorce cases, like other civil actions, are subject to the principles of res judicata. Id. at 624. Res judicata applies to the property division in a final divorce decree, just as it does to any other final judgment, barring subsequent collateral attack even if the divorce decree improperly divided the property. Baxter v. Ruddle, 794 S.W.2d 761, 762 (Tex. 1990) (“Res judicata applies even if the divorce decree improperly divided the property”); DeAcetis v. Whitley, No 14-08-00429-CV, 2010 WL 1077904, at *3 (Tex. App.—Houston [14th Dist.] Mar. 25, 2010, pet. denied) (mem. op.) (appellant’s claims of fraud, conspiracy, and conversion which related to the determination of ownership of certain real property were barred by res judicata because such property was awarded to the defendant in the final divorce decree and appellant either did or could have asserted her claims in the divorce proceeding); Nelson v. Williams, 135 S.W.3d 202, 206 (Tex. App.—Waco 2004, pet. denied) (mem. op.) (holding res judicata barred claims for breach of fiduciary duty, fraud, civil conspiracy, and negligence because the underlying matter, i.e., fraud concerning the value of the community estate, could have been litigated in the divorce case). However, our court has recognized that “the inquiry [for res judicata] is whether the claim, through exercise of reasonable diligence, should have been litigated in the previous case.” Whitmire v. Greenridge Place Apartments, No. 14- 09-01002-CV, 2011 WL 1413412, at *4 (Tex. App.—Houston [14th Dist.] Apr. 14, 2011, no pet.) (mem. op.) (citing Barr, 837 S.W.2d at 628). Thus, res judicata does not bar a claim of which the plaintiff was unaware and which could not have discovered through the exercise of due diligence in the first action. For example, in Rangel v. Rangel, No. 02-05-411-CV, 2007 WL 291389, at *1 (Tex. App.—Fort Worth Feb. 1, 2007, no pet.) (mem. op.), the trial court approved the sale of a marital asset, the Northlake Supply Company, in a 2001 divorce proceeding between Susan Rangel and Gustavo Rangel and denied Susan’s motion to set aside that sale; Susan did not appeal any part of the divorce decree. In July 2004, Susan filed an action alleging she was deceived and defrauded by the sale of Northlake. Susan argued that res judicata does not apply because material facts have come to light that were unknown to her at the time of the motion to set aside the sale and thus could not have been pled or brought before the court in the divorce proceeding. Susan testified she was unaware of Gustavo’s use of Northlake’s funds for personal expenses, the source of the funds Zimmerman used to purchase Northlake, Zimmerman’s insider relationship and financial ability, Tatum’s and Lennon’s failure to audit and account for Northlake’s expenses, and that no transfer of Northlake ever occurred. Id. at 4. The court of appeals held that res judicata did apply because: Reasonable diligence by Susan at the time of the sale and prior to the October 2002 hearing would have revealed the facts upon which she relied for her claims against Appellees. By October 2002, Susan, had she sought discovery, could have determined any facts relating to the alleged impropriety surrounding the sale. The fact that Susan failed to avail herself of all appropriate discovery methods cannot now be the reason why Appellees must defend against claims that should have already been brought. Id. Wilma’s petition, standing alone, does that establish that her claims against David and the Quantlab Defendants are barred by res judicata. In particular, her petition does not establish the existence of a prior final judgment on the merits by a court of competent jurisdiction and of a second action based on the same claims that were raised or could have been raised in the first action. See Daccach, 217 S.W.3d at 449. As discussed above, we may not take judicial notice of prior proceedings between Wilma and David in this appeal of a Rule 91a dismissal. Additionally, the party relying on the affirmative defense of res judicata must prove “identity of parties or those in privity with them.” Travelers Ins. Co. v. Joachim, 315 S.W.3d 860, 862 (Tex. 2010). Parties can be in privity in three ways: (1) they can control an action even if they are not parties to it; (2) their interest can be represented by a party to the action; or (3) they can be successors in interest, deriving their claims through a party to the prior action. Mayes v. Stewart, 11 S.W.3d 440, 449 (Tex. App.—Houston [14th Dist.] 2000, pet. denied), disapproved of on other grounds by Agar Corp., Inc. v. Electro Circuits Int’l, LLC, 580 S.W.3d 136 (Tex. 2019). Privity exists if the parties share an identity of interests in the basic legal right that is the subject of the litigation. Espeche v. Ritzell, 123 S.W.3d 657, 667 (Tex. App.—Houston [14th Dist.] 2003, pet. denied). Privity is not established by the mere fact that the persons may happen to be interested in the same question or in proving the same facts. Ayre v. J.D. Bucky Allshouse, P.C., 942 S.W.2d 24, 27 (Tex. App.—Houston [14th Dist.] 1996, writ denied). For example, in Mayes, our court held that Ms. Mayes could not properly assert a res judicata defense because: “We fail to see how, Ms. Mayes, as an unrelated third party, can be in privity with either Mr. Stewart or Mrs. Stewart in so far as the divorce itself is concerned. Privity is not established by the mere fact that the persons may happen to be interested in the same question or in proving the same facts.” Mayes, 11 S.W.3d at 449. The allegations in Wilma’s petition do not establish that the Quantlab Defendants were parties to the divorce action between Wilma or David or that they were in privity with either Wilma or David. Wilma’s Petition alleges that David was an employee of QFL and that as a benefit of that employment, he was entitled to participate with QFL in two bonus generating entities, QTP and QIP. These allegations are not sufficient to establish privity because they do not show that the Quantlab Defendants controlled the divorce action, that their interests were represented by David, or that they are successors to David’s interest. See Mayes, 11 S.W.3d at 449. For these reasons, the trial court could not have properly dismissed Wilma’s claims under Rule 91a based on res judicata. Therefore, the trial court erred by (1) dismissing Wilma’s claims under Rule 91a and (2) awarding the Quantlab Defendants attorney’s fees and costs under Rule 91a. MOTIONS TO COMPEL The record shows that the trial court signed an order denying Wilma’s motions to compel on August 21, 2018, after the trial court had dismissed Wilma’s claims against the Quantlab Defendants on June 21, 2018 and against David on July 24, 2018. The trial court’s order does not specify its reasons for denying the motions to compel, but we assume that the trial court did so because it had already signed orders dismissing all of Wilma’s claims. Because we are reversing the dismissal of Wilma’s claims, we also reverse the order denying Wilma’s motions to compel and remand the motions to compel for further proceedings. CONCLUSION Because the allegations stated in Wilma’s Petition do not establish that her claims are barred by collateral estoppel or res judicata, we reverse the trial court’s final judgment dismissing all of Wilma’s claims, which incorporates previous orders (1) granting the Rule 91a motions to dismiss of the Quantlab Defendants and David and (2) awarding the Quantlab Defendants attorney’s fees and costs, and we reverse the trial court’s order denying the motions to compel. We remand the case for further proceedings.[4] /s/ Margaret “Meg” Poissant Justice Panel consists of Justices Christopher, Spain and Poissant. (Spain, J., concurring and dissenting).
