May 20, 2015 Article

Eviction: Not the End of the Road for Landlords and Tenants

Given the limited scope of proceedings, all parties must be aware that a suit may only be one part of the process in lease litigation

by Karen L. Hart

Eviction can be a powerful tool for dealing with a defaulting tenant, and an eviction suit is certainly one way to try to sever ties with a problem tenant.  Landlords, tenants, and their counsel must be aware, however, that eviction may not be the end of the road. In many states, eviction suits are extremely limited in scope and jurisdiction as a matter of law. Commonly, the only issue that may be adjudicated is the right to actual possession of the disputed premises.  

Eviction can be a powerful tool for dealing with a defaulting tenant, and an eviction suit is certainly one way to try to sever ties with a problem tenant. Landlords, tenants, and their counsel must be aware, however, that eviction may not be the end of the road. In many states, eviction suits are extremely limited in scope and jurisdiction as a matter of law. Commonly, the only issue that may be adjudicated is the right to actual possession of the disputed premises.

Eviction courts typically lack jurisdiction to adjudicate title claims, and counterclaims or third-party claims may not even be permitted.  For example, Texas Rule of Civil Procedure 510.3, governing eviction proceedings before Texas justice courts, provides that “[t]he court must adjudicate the right to actual possession and not title. Counterclaims and the joinder of suits against third parties are not permitted in eviction cases.  A claim that is not asserted because of this rule can be brought in a separate suit . . . .”

Because of the narrow scope of eviction actions, res judicata typically has limited application to post-eviction claims, although it may be applied in certain circumstances and/or states. Accordingly, even though a landlord has previously secured a judgment of eviction against a tenant, the evicted tenant may bring a subsequent action seeking relief under the lease or applicable statutory or other law for wrongful eviction or other claims.  

A recent case perfectly illustrates the limitations of res judicata in commercial eviction proceedings. AAA Free Move Ministorage LLC v. OIS Investments, Inc., 419 S.W.3d 522 (Tex. App. – San Antonio 2013, pet. denied) involved a ground lease dispute.  In 2009, AAA purchased the premises that OIS had leased since the 1990s, and AAA sent OIS a six-month notice of termination pursuant to the lease. OIS then filed a declaratory judgment action seeking a declaration that termination by AAA would be wrongful and that OIS was in proper possession of the leased premises. AAA countered with its own declaratory claims concerning its rights to terminate the lease, along with other contract and tort claims against OIS.  

In a separate court, known as “justice court” in Texas, AAA then filed a forcible detainer action (also known as eviction action) asserting it had properly terminated the lease and was entitled to immediate possession.  The justice court ruled in favor of OIS, and this decision was confirmed on appeal to the county court, where evictions are appealed pursuant to Texas procedure. OIS then moved for summary judgment in the declaratory judgment action based on the res judicata effect of the ruling in the forcible detainer action. The trial court agreed and granted OIS’s motion, which AAA appealed. The court of appeals reversed the trial court’s application of res judicata to the detainer action.

The court of appeals concluded that, based on the limited nature and scope of the detainer suit, the ruling in the detainer action had no preclusive effect on the declaratory judgment proceeding. The appellate court found that a forcible detainer suit is a special proceeding designed to provide a speedy, summary, and inexpensive determination of the right to immediate possession of real property, noting that the justice court may only adjudicate the right to actual immediate possession of the premises to facilitate the purpose of the detainer action. The appeals court held that

the right of immediate possession is not an issue in this [declaratory judgment] case. Rather, the issues in this case involve the validity and terms of the renewal and extension of the lease, the parties' ultimate rights under the lease, and the damages, if any, AAA suffered as a result of any wrongful possession by OIS. These issues are distinct from the right of immediate possession that was adjudicated by the county court [in the detainer action]. Accordingly, the judgment in the detainer action is not res judicata of any of the claims asserted in this cause.... 

AAA Free Move Ministorage LLC, 419 S.W.3d at 530. 

Oddly, AAA started out by filing the detainer action to bolster its claims in declaratory judgment action by asserting superior possession based on its right to terminate the lease, a claim that seems to overlap with the issues raised in the declaratory judgment action.  Nevertheless, the ruling in the eviction court could not be applied beyond who should possess the premises. Therefore, the ruling could not, as a matter of law, influence the outcome of the declaratory and other claims related to the ground lease at issue in the district court case, despite the apparent overlapping of issues involved in the two suits. 

The moral of the story: Deciding possession will not necessarily determine the final outcome in lease-based litigation, and the eviction suit is only one component of a landlord-tenant dispute. Practitioners must be cognizant and wary of the inherent limitations of evictions proceedings and watch their flanks accordingly.  

Karen L. Hart is a litigation partner at Bell Nunnally & Martin LLP in Dallas, Texas.


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