Background
After Winter Storm Uri, residents at Mueller Flats in Austin were left without consistent cold or hot water for weeks, with leaks rendering many units uninhabitable. The City issued notices of violation and in March 2021 required the property to register for its Repeat Offender Program list. FBCC lost an administrative appeal of that designation in May 2021. In June 2021, FBCC sued the Building and Standards Commission in Texas state court challenging the post-storm notices of violation. Final judgment was entered for FBCC in October 2022, vacating those notices and disposing of all parties and claims. FBCC then filed this federal suit against the City and city officials in their official capacities, asserting constitutional challenges to the Repeat Offender Program designation.
The court’s reasoning
The Fifth Circuit said a federal court must apply Texas res judicata law when asked to give preclusive effect to a Texas state judgment. It identified the Texas elements as a prior final judgment on the merits by a court of competent jurisdiction, identity of parties or those in privity, and a second action based on the same claims as were raised or could have been raised in the first action. The court found the first element undisputed because the Texas state court entered a final judgment and no jurisdictional defect was argued. On the second element, the court concluded the City had a convincing argument that the Building and Standards Commission was the City because the commission lacked separate legal existence and FBCC’s earlier pleading showed it sought relief from the City. The court added that, even if they were not identical entities, privity existed because the City’s law department represented the commission and the City’s interests were represented in the first suit. On the third element, the court applied Texas’s transactional approach and held both suits arose from the same factual nucleus: the City’s code-enforcement actions against Mueller Flats following Winter Storm Uri. Because the Repeat Offender Program designation had already occurred and FBCC had already lost its appeal before the first lawsuit was filed, the court held those claims could have been brought in that earlier proceeding.
Therefore, FBCC could have raised claims relating to the ROP in the First Lawsuit, and the claims should have been brought together in one proceeding.
What it means going forward
The decision leaves in place the district court’s judgment for the City and prevents FBCC from pursuing this federal constitutional challenge to the Repeat Offender Program designation because those claims are precluded by the earlier Texas judgment.