author: KEM THOMPSON FROST, Justice. J. HARVEY HUDSON, Justice,

text:
    Afuah BOATENG, Johnell Sanders Fernandez, Sharon Long Gay, Joel S. Hochman, Rosalind Hull, Gloria Ann Tucker, and Missy L. Walker, Appellants v. TRAILBLAZER HEALTH ENTERPRISES, L.L.C. and United States of America, Appellees.
    No. 14-03-01442-CV.
    Court of Appeals of Texas, Houston (14th Dist.).
    July 26, 2005.

      Harry Herzog and David A. Carp, Houston, TX, for appellants.

      David J. Schenek, David Lawrence Hor-an, John H. McDowell, Jr., Matthew Griffith Nielsen, Dallas, Larry Lndka, John A. Smith III, Corpus Christi, TX, for appel-lees.
    Panel consists of Justices ANDERSON, HUDSON, and FROST.
   MAJORITY OPINION

KEM THOMPSON FROST, Justice.

At issue in this case is the propriety of the trial court’s granting of a bill of review and dismissal of the underlying case for lack of jurisdiction at the preliminary hearing stage of the bill-of-review proceeding. Appellants, a group of judgment creditors, filed a garnishment suit and obtained a default judgment against a privately owned Texas limited liability company. Though not apparent from the face of the garnishment judgment, the garnishee is a fiscal intermediary of the federal government with respect to certain Medicare funds in its possession. More than a year after the garnishment judgment was signed, the United States and the garnishee sought a bill of review, asserting sovereign immunity. The trial court held a preliminary hearing under Baker v. Goldsmith, 582 S.W.2d 404 (Tex.1979), to determine whether the United States and the garnishee had presented prima facie proof of a meritorious defense. After completing the preliminary hearing and taking the matter under consideration, the trial court, without notice, summarily granted the bill of review, declared the garnishment judgment void based on sovereign immunity, and dismissed the underlying garnishment action for lack of jurisdiction. We reverse and remand.

I. Factual and ProceduRal Background

On December 21, 2001, appellants Af-uah Boateng, Johnell Sanders Fernandez, Sharon Long Gay, Joel S. Hochman, Rosalind Hull, Gloria Ann Tucker, and Missy L. Walker (collectively the “Boateng Parties”) obtained a judgment in the amount of $838,466.63 against Rosa Also-brooks and three of her entities, J & L Community Center, Inc., Houston Southwest Health Services, Inc., and Houston Northeast Health Services, Inc., (collectively the “Alsobrooks Entities”) for failure to pay wages and independent contractor fees. Realizing that Alsobrooks and the Alsobrooks Entities could not pay the judgment, on that same day, the Boa-teng Parties, as judgment creditors, filed a garnishment action against appellee TrailBlazer Health Enterprise, L.L.C. (“TrailBlazer”), alleging that it “is indebted or has in hand effects belonging to one or more of the above described Defendant debtors or the parties named above.” On December 21, 2001, the Boateng Parties also sent a fax to TrailBlazer stating that they had filed a garnishment action against TrailBlazer.

The garnishee, TrailBlazer, is a privately owned limited liability company that serves as a fiscal intermediary for the Medicare program. In the simplest terms, a fiscal intermediary acts as a conduit between the government and Medicare providers by determining the amounts to be paid on Medicare claims and disbursing funds provided by the government. Although the Secretary of the United States Department of Health and Human Services (“HHS”) is officially charged with the administration of the Medicare Act, the Secretary delegates that task to the Centers for Medicare and Medicaid Services (“CMS”). Marsaw v. Trailblazer Health Enters., L.L.C., 192 F.Supp.2d 737, 740 (S.D.Tex.2002). The Secretary authorizes CMS to contract with private insurance companies to act as fiscal intermediaries or “carriers” by administering certain Medicare reimbursements. Id. (citing 42 C.F.R. § 421.5); see also Matranga v. Travelers Ins. Co., 563 F.2d 677 (5th Cir.1977). CMS contracted with TrailBlazer to administer the Medicare program. At the time of the garnishment, the United States was TrailBlazer’s primary customer and most of the funds TrailBlazer handled were Medicare funds. According to the record, however, TrailBlazer also maintained bank accounts containing other funds and held assets owned exclusively by TrailBlazer.

The Alsobrooks Entities, as Medicare providers, regularly presented claims and sought remuneration from TrailBlazer, which processed those claims for payment. Believing that TrailBlazer owed the Also-brooks Entities funds or had other effects belonging to them in its possession, the Boateng Parties, as judgment creditors, sought to garnish funds owed by TrailBlazer, together with any effects in TrailBlazer’s possession belonging to Alsobrooks or the Alsobrooks Entities.

TrailBlazer’s Failure to Answer the Writ of Garnishment

TrailBlazer was formally served with process in the garnishment action on January 7, 2002, and its answer date was January 28, 2002. Nonetheless, TrailBlazer did not file an answer to the garnishment action nor did it file any motions with the trial court in response to the writ of garnishment. Instead, TrailBlazer forwarded the garnishment papers to Kendall Walker, Assistant General Counsel at Blue Cross and Blue Shield of South Carolina, TrailBlazer’s parent corporation. Because of TrailBlazer’s status as a fiscal intermediary with respect to Medicare funds, Walker, in turn, forwarded the garnishment application to Mark Forcier, Assistant Regional Counsel in the Office of the General Counsel of the HHS. Walker informed the Boateng Parties’ counsel, Harry Herzog, that he had referred the matter to the United States, and that the United States would be providing TrailBlazer’s defense. The United States, however, did not file an answer to the garnishment action nor did it file any motions with the trial court in response to the garnishment suit.

In late January 2002, Forcier spoke to Herzog. According to Forcier, Herzog informed him that his clients, the Boateng Parties, as garnishors, were seeking all receivables that would normally flow from Medicare to Alsobrooks or to the Also-brooks Entities, the judgment debtors. Forcier shared with Herzog his belief that garnishment was not the correct method by which to obtain Medicare receivables from a Medicare contractor such as TrailBlazer. Forcier described the process, statutes, and regulations that he deemed applicable and appropriate and explained that the United States was the real party in interest in any action involving the administration of the Medicare program. On that same day, Forcier sent an e-mail to Herzog, stating that not only had no money been going to the Alsobrooks Entities “for some time,” but that the Alsobrooks Entities owed CMS in excess of three million dollars for overpayments. The e-mail also stated there was an ongoing investigation regarding the extent of possible fraud in prior claims that led to the “huge overpayment.” Forcier made no mention of any non-Medicare funds, administrative monies, or effects of Alsobrooks or the Alsobrooks Entities that might be in TrailBlazer’s possession.

In the trial court below, Forcier and Herzog proffered different accounts of what transpired as a result of their dialogue about the garnishment action. For-cier understood that the Boateng Parties would use the process set forth in federal regulations rather than the writ of garnishment. Herzog disputes this account and emphasizes that even if Forcier’s advice as to the proper procedure to seek Medicare payments were correct, the Boa-teng Parties were also seeking to obtain other funds and effects in the garnishment action, including administrative funds that allegedly were not payments from Medicare.

Default Judgment Against TrailBlazer

Neither TrailBlazer nor anyone acting or purporting to act on its behalf moved to dismiss or dissolve the garnishment action, obtained any written agreement concerning filing an answer to the suit, or took any other action vis-a-vis the garnishment proceeding. In late June 2002, the Boateng Parties moved for a default judgment against TrailBlazer, and in mid-July 2002, the trial court granted the default judgment.

The default judgment against TrailBlazer makes no mention of TrailBlazer’s status as a Medicare fiscal intermediary or that the United States is a real party in interest. The judgment does not mention the United States at all. Instead, the judgment merely sets forth the amounts the Boateng Parties are entitled to recover from TrailBlazer.

After their discussion in late January 2002, Foreier and Herzog had no further communication until October 2002, when Foreier, who apparently was not aware that a default judgment had been taken against TrailBlazer, attempted to contact Herzog about the dismissal of the garnishment action. Herzog responded to Foreier that it was “never [his] intent, understanding, or agreement” that the garnishment action would be dismissed. During October and November 2002, Foreier and Her-zog communicated several more times concerning TrailBlazer’s status as a Medicare fiscal intermediary, the United States’s status as the purported real party in interest in the garnishment action, and the application of sovereign immunity as an alleged bar to the Boateng Parties’ action. Herzog, however, made no mention of the default judgment to Foreier or to anyone at TrailBlazer, and, again, neither Foreier nor anyone else acting for TrailBlazer or the United States took any action in the garnishment proceeding.

In early August 2003, an attempt was made to execute on TrailBlazer’s property to satisfy the Boateng Parties’ judgment against TrailBlazer. According to TrailBlazer, this was the first time that either TrailBlazer or the United States learned that a default judgment had been entered against TrailBlazer based on its failure to answer in the garnishment action.

The Bill-of-Review Proceeding

About three weeks after learning of the default judgment, the United States, identifying itself as the real party in interest and on behalf of TrailBlazer, filed a petition for bill of review alleging the following, among other things:

• Because TrailBlazer is a Medicare carrier administering funds for the Medicare program, the United States was a real party in interest in the garnishment action, and the district court had no subject matter jurisdiction to render that judgment under the doctrine of sovereign immunity.
• Despite having had conversations with lawyers acting on behalf of both TrailBlazer and the United States and despite having contact information for these lawyers, the Boateng Parties’ counsel filed a motion for default judgment and obtained a default judgment in the garnishment action without giving any notice to TrailBlazer or the United States.
• TrailBlazer and the United States had no knowledge of the existence of the default judgment until August 6, 2003, when a constable arrived at TrailBlazer’s office seeking to execute upon some of TrailBlazer’s property to satisfy the default judgment.
• The trial court should grant a bill of review to vacate the default judgment as void for lack of subject matter jurisdiction based on sovereign immunity-
• The default judgment is void and subject to collateral attack.
• The trial court should set aside the default judgment under traditional bill-of-review standards.
• The trial court should grant a temporary and then a permanent injunction against the Boateng Parties precluding them from executing upon the default judgment.

Within a week, TrailBlazer filed a plea in intervention substantially similar to the United States’s petition for bill of review and containing all of the allegations listed above.

On October 8, 2003, the trial court issued a docket control order with an April 5, 2004 trial setting. The next day, the trial court signed an order setting a preliminary bill-of-review hearing for November 3, 2003, for the stated purpose of determining whether the bill-of-review case would proceed to trial. Both the United States and TrailBlazer filed motions for summary judgment, and TrailBlazer sent out a notice of oral hearing on its motion for the same time as the preliminary hearing. On October 30, 2003, the trial court sent a letter to all parties stating that the bill-of-review preliminary hearing and the hearing on TrailBlazer’s motion for summary judgment had been rescheduled to November 5, 2003. On that date, however, the trial court commenced the hearing and stated that the hearing was not a hearing on TrailBlazer’s motion for summary judgment and that it was not a temporary-injunction hearing. At the beginning of the November 5, 2003 hearing, the trial court noted that it was conducting a preliminary hearing. The trial court indicated that the hearing was for the sole purpose of determining whether the United States and TrailBlazer — the bill-of-review plaintiffs (hereinafter “plaintiffs”) — could present prima facie proof of a meritorious defense.

After hearing some evidence, the court continued the preliminary hearing over to November 17, 2003. After the parties reconvened for the hearing and finished presenting evidence and after hearing argument from counsel, the trial court stated that the plaintiffs had shown a meritorious defense. The trial court further stated that, because TrailBlazer and the United States intentionally failed to answer the application for writ of garnishment after being properly served, these plaintiffs could not satisfy the other elements for a direct attack of a judgment by bill of review. The trial court then indicated that, if it decided that the default judgment was void for lack of subject matter jurisdiction under the doctrine of sovereign immunity, then it was thinking of granting the petitions for bill of review and setting aside the default judgment as being void, without any further procedure. Counsel for the Boateng Parties stated that taking such action would not be procedurally appropriate, noting that the proper procedure for disposition on the merits would be for the court to have a hearing on cross-motions for summary judgment after the Boateng Parties filed their motion for summary judgment.

The day after the hearing ended, the trial court signed an order that contains the following recitations and rulings:

• The trial court held a hearing on November 5 and November 17, 2003, on the merits of the petitions for bill of review.
• The trial court has determined that TrailBlazer’s sovereign immunity extends to the administrative funds the Boateng Parties seek to garnish.
• The trial court grants the petitions for bill of review, sets aside the default judgment in the garnishment action, and grants a new trial.
• The trial court finds that the default judgment is void for lack of jurisdiction. No new trial is needed and the garnishment action is dismissed for lack of jurisdiction.
• All other relief requested is denied and the order disposes of all parties and all claims.

The trial court did not grant the plaintiffs’ motions for summary judgment.

II. Issue Presented

The Boateng Parties present the following issue for appellate review:

After properly conducting a preliminary evidentiary hearing solely to determine if the plaintiffs would be allowed to proceed with their case, by then suddenly rendering a final judgment for the plaintiffs on the merits[,] the trial court violated the fundamental principles of procedural due process of law and Texas Rule of Civil Procedure 245.

The Boateng Parties assert the trial court erred when, following a preliminary hearing for the sole purpose of determining whether the plaintiffs had presented prima facie proof of a meritorious defense, the trial court, without notice, rendered a final judgment on the merits of the petitions for bill of review. Although it is evident that the Boateng Parties disagree with the trial court’s ruling on the merits of the petitions for bill of review, on appeal, they do not assert error based on the merits of the trial court’s ruling, and they do not seek a rendition of judgment in their favor. Rather, they assert procedural error and seek reversal and remand so that proper procedures may be followed. The Boateng Parties assert that the trial court’s procedural error is not subject to a harm analysis; however, in the alternative and out of an abundance of caution, they brief issues relating to a harm analysis of this procedural error. Although these issues involve the merits of the trial court’s ruling, TrailBlazer briefs these issues only as alternative arguments regarding the harm analysis, if this court were to determine that it needs to perform a harm analysis.

III. Analysis

A bill of review is an independent, equitable action brought by a party to a previous action seeking to set aside a judgment which is no longer appealable or subject to a motion for new trial. Baker v. Goldsmith 582 S.W.2d 404, 406 (Tex.1979). In a bill-of-review proceeding involving a direct attack not based on lack of service of process of the petition in the prior case, the bill-of-review procedure is ordinarily a two-step process:

(1) First, the trial court makes a determination, often based on a preliminary hearing, as to whether the bill-of-review plaintiff has presented pri-ma facie proof of a meritorious defense. This requirement is satisfied if the court determines that the alleged meritorious defense is not barred as a matter of law and that the bill-of-review plaintiff will be entitled to judgment on retrial if no evidence to the contrary is offered. If not, then the trial court should dismiss the petition for bill of review.
(2) Second, if the plaintiff has presented such proof, then the trial court may proceed with discovery and trial regarding the merits of the bill-of-review petition.

See Baker, 582 S.W.2d at 408-09 (outlining two-step process); Orbmann v. Ortmann, 999 S.W.2d 85, 87-88 (Tex.App.-Houston [14th Dist.] 1999, pet. denied) (holding that in a bill-of-review proceeding, while Baker requires a pretrial determination that the petitioner has presented prima facie proof of a meritorious defense, this does not prevent the trial court from granting summary judgment in favor of the bill-of-review defendants without holding a separate hearing to determine whether plaintiff has presented prima facie proof of a meritorious defense).

A. What type of hearing did the trial court hold?

The Boateng Parties allege that, at the time the trial court granted the bill of review, the case was not in a procedural posture to be resolved on the merits, and for this reason, the case should be reversed. To rule on this contention, we first must determine the nature of the hearing that the trial court noticed and conducted on November 5 and 17, 2003. In the trial court’s final judgment, it stated that it held this hearing to determine the merits of the case — whether bill-of-review relief should be granted. After reviewing the record, we conclude that this characterization is inaccurate. The day after it gave notice to the parties that the deadline to change the pleadings was January 6, 2004, and that trial was set for April 5, 2004, the trial court signed an order setting the hearing in question and stating that it would be “a Bill of Review hearing ... at which time the court will determine whether this case will proceed to trial.” This order gives notice to the parties of a Baker v. Goldsmith preliminary hearing (hereinafter “Baker hearing”) rather than a trial on the merits of the petitions for bill of review. See Baker, 582 S.W.2d at 408-09. After the trial court signed this order, TrailBlazer noticed its motion for summary judgment for hearing at the same time. In a subsequent letter, the trial court stated that this hearing had been rescheduled to November 5, but it did not indicate any change in the nature of the hearing. The trial court did state in the letter that it would hear TrailBlazer’s “Motion for Partial Summary Judgment” on November 5. Although TrailBlazer’s motion for summary judgment sought full relief on its petition for bill of review and did not have the word “partial” in its title, the trial court was apparently referring to the fact that even if it granted TrailBlazer’s motion, the United States’s petition for review would remain. There is no indication in the record that the United States ever set its motion for summary judgment for hearing on November 5.

On appeal, TrailBlazer admits that the hearing in question was not a summary-judgment hearing, and any confusion as to whether TrailBlazer’s motion for summary judgment was being heard on November 5 was dispelled by the trial court near the beginning of the hearing:

[counsel for TrailBlazer]: ... I’ve got a notebook for Your Honor of all of the cases that I cited in the summary judgment and—
[trial court]: You are — okay. I’m not hearing a summary judgment. I’m here on an oral hearing.
[counsel for TrailBlazer]: ... he didn’t respond to our motion for summary judgment. There’s no response on file to it.
[trial court]: Well, I don’t really care because I’m not hearing a summary judgment.

The trial court started the hearing by stating that “we are here for a hearing on the bill of review and normally the plaintiffs would be expected to make a showing of bill of review requirements, although they have pled that they don’t have to because the order complained of is absolutely void. So either I expect you to show me that it’s void or to show me the requirements that you need to show under bill of review procedure.... ” Though the trial court’s statement in this regard may be somewhat ambiguous and arguably could be viewed as a statement of intent to inquire into the merits of the bill-of-review petitions, this statement is also consistent with a Baker hearing at which the trial court intended to determine if the plaintiffs could present prima facie proof of a meritorious defense — the alleged lack of subject matter jurisdiction in the garnishment action based on alleged sovereign immunity.

Shortly after this initial statement, the trial court more clearly indicated that it was conducting a Baker hearing, stating that “what I’m looking for is for them [the plaintiffs] to show that they get to trial.... So, I mean, we may do something else after they show that. We may have a summary judgment. We may have a temporary injunction hearing or whatever but right now, all I want to do is see if they go forward or if I dismiss it right now.” After some discussion with counsel and just before it began to hear evidence, the trial court stated, “it’s time for that proof we were talking about.”

During the hearing, the trial court heard evidence concerning potential meritorious defenses, such as TrailBlazer’s proffered sovereign-immunity defense and its defense that it allegedly was not indebted to any of the judgment debtors named in the garnishment application at the time it was served in the garnishment action. After offering evidence on behalf of the Boateng Parties, their counsel stated, ‘Tour Honor, you have all the evidence I want to present to you for purposes of this preliminary hearing and my seven clients rest,” to which the trial court responded, “Okay.”

At the end of the hearing, the trial court stated that the bill-of-review plaintiffs had shown a meritorious defense. The trial court further stated that, because TrailBlazer and the United States intentionally failed to answer the application for writ of garnishment after being properly served, these plaintiffs could not satisfy the other elements for a direct attack of a judgment by bill of review. The trial court then indicated that, if it decided that the default judgment was void for lack of subject matter jurisdiction under the doctrine of sovereign immunity, it was thinking of granting the petitions for bill of review and setting aside the default judgment as being void, without any further procedure. Counsel for the Boateng Parties stated that any such action would not be proee-durally appropriate, explaining that the proper procedure would be for the trial court to hear cross-motions for summary judgment after the Boateng Parties filed their motion for summary judgment. Counsel for the Boateng Parties noted that there had been no hearing on the plaintiffs’ motions for summary judgment, that pending discovery requests for information needed for the Boateng Parties’ summary-judgment motion had not yet been answered by the plaintiffs, and that the Boa-teng Parties still needed to file a response to the plaintiffs’ motions for summary judgment and file a cross-motion for summary judgment of their own.

Based on this record, we conclude that the trial court noticed and conducted a preliminary hearing under Baker v. Goldsmith. See Baker, 582 S.W.2d at 408-09; Jones v. Texas Dept, of Protective and Regulatory Sews., 85 S.W.3d 488, 488-89 (Tex.App.-Austin 2002, pet. denied) (holding that record revealed hearing in trial court was a Baker hearing rather than trial on the merits of the petition for bill of review, despite confusion among the parties as to the nature of the hearing).

B. Did the Boateng Parties preserve error as to their appellate challenge to the trial court’s ruling on the merits of the petitions for bill of review following the Baker hearing?

TrailBlazer asserts that the Boateng Parties did not preserve error in the trial court on their sole issue on appeal for the following reasons:

(1) The trial court stated at the beginning of the hearing that it wanted to consider the issue of whether the garnishment judgment was void for lack of subject matter jurisdiction, and the Boateng Parties did not object to the court’s consideration of this issue.
(2) The Boateng Parties admitted in their bench brief during the hearing that the trial court had properly used its inherent powers and Texas Rule of Civil Procedure 166 to conduct a preliminary evidentiary investigation into this case.
(3) The Boateng Parties did not object or move for a continuance at the outset of the hearing, when “it was clear” that the trial court intended to proceed with a trial on the merits rather than hold a preliminary hearing.
(4) The Boateng Parties voluntarily participated in the hearing after the trial court announced its intention to address the issue of whether the garnishment judgment was void for lack of subject matter jurisdiction, and they filed a bench brief on this issue, thus waiving any procedural error.

On appeal, TrailBlazer emphasizes its collateral attack on the garnishment judgment; however, TrailBlazer and the United States also sought bill-of-review relief based on the traditional requirements needed for a direct attack. If, as the record shows, the trial court noticed and conducted a Baker hearing, then a legitimate issue at this hearing was TrailBlazer’s assertion that the garnishment judgment was void for lack of subject matter jurisdiction based on sovereign immunity, which was the main meritorious defense asserted in this direct attack. Therefore, TrailBlazer’s first argument regarding preservation of error fails because consideration of this issue at the hearing was consistent with holding a Baker hearing, so there was no need for the Boateng Parties to object.

As to TrailBlazer’s second argument, the Boateng Parties’ bench brief is consistent with a Baker hearing and does not waive error. Although the bench brief does contain a discussion of the second and third elements for a direct attack, the trial court allowed the parties to go into these issues at the hearing, and no party objected. The main issue addressed at the hearing was TrailBlazer’s claimed entitlement to immunity in the garnishment action. The fact that a preliminary Baker hearing at times addresses irrelevant issues does not convert this preliminary hearing into a trial on the merits. Further, the Boateng Parties’ bench brief states that the hearing is preliminary and that the proper procedure to address the merits following the hearing would be to hear cross-motions for summary judgment. Therefore, this bench brief does not waive the Boateng Parties’ issue on appeal.

TrailBlazer also asserts that the Boateng Parties did not preserve error under the Lemons case because they did not object or move for a continuance once “it was clear” that the trial court intended to proceed with trial. See Lemons v. EMW Mfg. Co., 747 S.W.2d 372, 372-73 (Tex.1988). In Lemons, the Texas Supreme Court determined that the trial court had conducted a trial on the merits in the bill-of-review proceeding rather than a Baker hearing. See id. The Lemons court further held that the appellant in the court of appeals did not preserve error as to the trial court’s changing of the Baker hearing into a trial on the merits because the appellant did not object or move for a continuance once it became clear that the tidal court intended to conduct a trial. See id. We conclude that the Boateng Parties have preserved error. The record in this case shows that, unlike the facts in Lemons, the trial court conducted a Baker hearing rather than a trial on the merits. Furthermore, unlike the facts in Lemons, it did not become clear that the trial court intended to rule on the merits until the day after the hearing ended, when the trial court signed its final judgment. Once the trial court, by its judgment, made it clear that the court was retroactively converting the Baker hearing into a trial on the merits, the Boateng Parties timely preserved error on their appellate issue in their motion for new trial, which the trial court denied after a hearing. See id.

We disagree with TrailBlazer’s assertion that the trial court clearly stated at the beginning of the hearing that it was about to conduct a trial on the merits of the petitions for bill of review. We also disagree that the trial court made this clear during its final comments at the end of the hearing. Although the trial court did informally indicate that it was thinking of ruling on the merits of the petitions for bill of review without any further procedure, counsel for the Boateng Parties promptly stated that taking such action would not be proeedurally proper and that, to reach the merits, the court should hear cross-motions for summary judgment. TrailBlazer makes much of the fact that the Boateng Parties did not formally object and obtain a ruling as to these comments of the trial court; however, they did not need to do so because the trial court only stated a possibility that it was contemplating. The trial court did not formally give notice or unequivocally state an intention to rule on the merits, contrary to the purposes of the Baker hearing. This is another key factual distinction from the Lemons case, in which the trial court ruled on the merits at the conclusion of the hearing, with no objection from the appealing party. See EMW Mfg. Co. v. Lemons, 741 S.W.2d 212, 215 (Tex.App.-Fort Worth 1987), rev’d, 747 S.W.2d 372 (Tex.1988). Further, the Boa-teng Parties did not waive error by participating in a proceeding that the court later characterized as a trial on the merits because the trial court did not make it clear that it would rule on the merits until it did so the day after the hearing, when the parties were not present. We conclude that under the legal standard set forth in Lemons, the Boateng Parties preserved error as to their appellate issue.

C. Did the trial court err in ruling on the merits of the petitions for bill of review following its Baker hearing?

The trial court had discretion to entertain cross-motions for summary judgment before conducting a Baker hearing. See Orbmann, 999 S.W.2d at 87-88. The trial court, however, chose to notice and conduct a Baker hearing. See Baker, 582 S.W.2d at 408-09. The trial court conducts such a hearing solely to determine whether the plaintiffs have presented pri-ma facie proof of a meritorious defense. See Baker, 582 S.W.2d at 408-09; Jones, 85 S.W.3d at 493. In making this determination, the trial court examines (1) whether the plaintiffs’ defense or defenses are barred as a matter of law, and (2) whether the plaintiffs will be entitled to judgment on retrial if no evidence to the contrary is offered. See Baker, 582 S.W.2d at 408-09.

After stating at the close of the hearing its conclusion that the plaintiffs had shown a meritorious defense and without any notice of a trial on the merits, the trial court signed an order granting the plaintiffs relief on the merits. The trial court erred in doing so because, after determining that the plaintiffs had presented prima facie proof of a meritorious defense, the trial court should have proceeded with discovery and trial (whether by summary judgment or by a trial of the fact issues) regarding the merits of the bill-of-review petition. See Beck v. Beck, 771 S.W.2d 141, 142 (Tex.1989) (holding court of appeals erroneously converted the trial court’s Baker hearing into a summary-judgment hearing by affirming trial court’s dismissal following Baker hearing based on appellate court’s conclusion that bill-of-review plaintiff was negligent); Baker, 582 S.W.2d at 408-09 (stating that only issue at Baker hearing is whether plaintiff has presented prima facie proof of a meritorious defense); Jones, 85 S.W.3d at 493-95 (holding that only question before trial court in Baker hearing is whether plaintiff has presented prima facie proof of a meritorious defense and that plaintiffs diligence and the merits of the petition for bill of review are not at issue).

Due process requires that a party receive “reasonable notice” of trial. See Peralta v. Heights Med. Ctr., Inc., 485 U.S. 80, 84, 108 S.Ct. 896, 899, 99 L.Ed.2d 75 (1988). In addition to showing that the trial court failed to follow proper bill-of-review procedures, the Boateng Parties also have affirmatively shown that the trial court ruled on the merits of the bill-of-review petitions with no notice that it would hold a trial on November 5 and 17, 2003. Although the record reflects that the parties had notice and an opportunity to be heard as to a preliminary Baker hearing, the record does not show that the parties received notice and an opportunity to be heard as to a trial on the merits. And though the record shows that the trial court conscientiously endeavored to follow and apply the complexities of bill-of-review procedure, we nevertheless conclude that the trial court erred by converting the Baker hearing to a trial on the merits after the hearing had ended. This error deprived the Boateng Parties of due process because they received no notice of trial and no opportunity to be heard at what later became, by the court’s declaration, the trial on the merits. See Mocega v. Bradford Urquhart M.D., 79 S.W.3d 61, 64-65 (Tex.App.-Houston [14th Dist.] 2002, pet. denied) (reversing dismissal of medical malpractice action because trial court did not give notice of hearing on motion to dismiss); Green v. McAdams, 857 S.W.2d 816, 819 (Tex.App.-Houston [1st Dist.] 1993, no writ) (holding trial court erred in rendering post-answer default judgment after party failed to appear at trial because trial court gave defaulting party no notice of trial setting); Seckers v. Ocean Chems., Inc., 845 S.W.2d 317, 318-319 (Tex.App.-Houston [1st Dist.] 1992, no writ) (holding trial court erred in dismissing case as a discovery sanction because trial court gave no notice of sanctions hearing to the sanctioned party); Palmer v. Cantrell, 747 S.W.2d 39, 41 (Tex.App.-Houston [1st Dist.] 1988, no writ) (same as Seekers).

In response to the Boateng Parties’ argument that the trial court erred in converting the preliminary healing into a final trial on the bill of review, after the fact and without proper notice, TrailBlazer argues, and our dissenting colleague agrees, that the trial court’s judgment on jurisdictional grounds did not require any notice, hearing, or trial. TrailBlazer and our dissenting colleague assert that, even if the trial court gave no notice or opportunity to be heard on the merits of the bill-of-review proceeding, this action was not error because the trial court may dismiss a case over which it lacks jurisdiction at any time and without notice and opportunity to be heard on the jurisdictional issue. In support of this argument, TrailBlazer and our dissenting colleague cite various cases for the proposition that a court should dismiss sua sponte cases over which it determines that it lacks subject matter jurisdiction. In those cases, the trial court lacked subject matter jurisdiction over the case pending before the court. The bill-of-review proceeding that is before this court is an action that is separate from the case in which the challenged garnishment judgment was rendered. See Baker, 582 S.W.2d at 406; Schwartz v. Jefferson, 520 S.W.2d 881, 889 (Tex.1975). Accordingly, in the judgment below, the trial court exercised its equitable jurisdiction in cause number 03-49088 to grant TrailBlazer and the United States equitable relief — the dismissal for lack of subject matter jurisdiction of the garnishment judgment in cause number 01-05070-A. The trial court did not dismiss the bill-of-review action for lack of subject matter jurisdiction. Therefore, the cases cited by TrailBlazer and our dissenting colleague are not on point. The trial court had equitable jurisdiction over the petitions filed by the United States and TrailBlazer. Presuming for the sake of argument that the trial court lacked subject matter jurisdiction in the garnishment action, that would not allow the trial court to summarily grant the petitions for bill-of-review relief without giving the Boateng Parties any notice or opportunity to be heard on the merits. The Boateng Parties were judgment creditors under a final Texas judgment against TrailBlazer, and they had due process rights to notice and an opportunity to be heard on the merits of the bill-of-review petitions. The trial court erred in depriving them of those rights.

D. Is the trial court’s procedural error subject to a harm analysis?

TrailBlazer devotes much of its brief to its argument that, even if the trial court procedurally erred as alleged by the Boateng Parties, this error was harmless because, they claim, the trial court’s granting of the relief sought by the plaintiffs was correct. This argument presumes that the error in question is subject to a harm analysis. TrailBlazer cites no cases holding that a harm analysis applies to such error. The cases we have found hold that this error is not subject to a harm analysis. See Beck, 771 S.W.2d at 142 (reversing court of appeals’s erroneous re-view of the merits of bill-of-review petition on appeal from trial court’s Baker hearing ruling, without inquiring into whether such error was harmful); Jones, 85 S.W.3d at 494 (rejecting appellee’s argument on appeal from Baker hearing dismissal that the petitions for bill of review failed based on lack of due diligence because that issue was not before the trial court in the Baker hearing); Mocega, 79 S.W.3d at 64-65 (reversing dismissal of medical malpractice action because trial court did not give notice of hearing on motion to dismiss, without performing harm analysis); Green, 857 S.W.2d at 819 (reversing for lack of notice of trial, without performing a harm analysis); Seckers, 845 S.W.2d at 318-319 (reversing death-penalty discovery sanctions for lack of notice of sanctions hearing, performing no harm analysis, and refusing to hold that error was harmless on the ground that sanctioned party was given hearing as to appropriateness of sanctions during motion-for-new-trial hearing); Palmer, 747 S.W.2d at 41(same as Seekers ). Because no harm analysis applies, the arguments of the parties as to the merits of the petitions for bill-of-review relief are not relevant. And because the trial court erred in converting the preliminary Baker hearing into a final trial on the merits after the fact, we sustain the Boa-teng Parties’ sole issue on appeal. We reverse the trial court’s judgment and remand the case for the trial court to issue a proper Baker hearing order and for further proceedings in accordance with this opinion.

IV. Conclusion

The trial court erred in converting the preliminary hearing on a bill of review into a final trial on the merits after its Baker hearing and without notice to the parties. Because of this procedural error, the trial court also erred in dismissing the underlying garnishment suit for lack of jurisdiction. Accordingly, we reverse the trial court’s judgment, reinstate the garnishment judgment, and remand this case to the trial court for further proceedings consistent with this opinion.

HUDSON, J., dissenting.

J. HARVEY HUDSON, Justice,

dissenting.

The majority reverses the judgment of the court below on the theory that the court did not give “reasonable notice” to appellants of its intention to dismiss the cause of action for want of subject matter jurisdiction at a preliminary hearing. Because I believe the trial court (1) lacked subject matter jurisdiction, (2) had the authority to sua sponte raise and decide the issue of its subject matter jurisdiction, and (3) afforded “reasonable notice” to the parties that its subject matter jurisdiction was at the heart of the issue to be decided at the preliminary hearing, I respectfully dissent.

Appellants obtained a default judgment on a writ of garnishment against TrailBlazer Health Enterprises, LLC. TrailBlazer is a wholly-owned subsidiary of Blue Cross Blue Shield created solely for the purpose of processing Medicare claims on behalf of the federal government. Because any recovery would come from the federal treasury, the United States is the real party in interest when a suit is brought against a Medicare carrier. Anderson v. Occidental Life Ins. Co. of Cal, 727 F.2d 855, 856 (9th Cir.1984); see also Dugan v. Rank, 372 U.S. 609, 620, 83 S.Ct. 999, 10 L.Ed.2d 15 (1963) (holding a suit is considered to be against the sovereign if the judgment sought would expend itself on the public treasury or domain); Matranga v. Travelers Ins. Co., 563 F.2d 677 (5th Cir.1977) (per curiam).

Sovereign immunity, however, is a jurisdictional bar to suits brought against the United States. Federal Deposit Ins. Corp. v. Meyer, 510 U.S. 471, 475, 114 S.Ct. 996, 127 L.Ed.2d 308 (1994); United States v. Mitchell, 463 U.S. 206, 212, 103 S.Ct. 2961, 77 L.Ed.2d 580 (1983). The doctrine protects the United States from being sued unless Congress has expressly waived the government’s immunity. Kaffenberger v. United States, 314 F.3d 944, 950 (8th Cir.2003). Therefore, any waiver of the federal government’s sovereign immunity cannot be implied, but must be unequivocally expressed in statutory text. Lane v. Pena, 518 U.S. 187, 192, 116 S.Ct. 2092, 135 L.Ed.2d 486 (1996). Such is the case even if the United States is not named as a party in the original action. Bank One, Tex., N.A. v. Taylor, 970 F.2d 16, 33 (5th Cir.1992). Accordingly, federal sovereign immunity is not waived simply by an appearance in a forum because officers of the United States possess no power through their actions to waive immunity of the United States or to confer jurisdiction on a court in the absence of some express provision of Congress. Department of Army v. Federal Labor Relations Auth., 56 F.3d 273, 275 (D.C.Cir.1995). Even when Congress has expressly waived sovereign immunity, such waiver must be strictly construed, in terms of its scope, in favor of the sovereign. Lane, 518 U.S. at 192, 116 S.Ct. 2092.

Appellants contend, however, that the trial court violated fundamental principles of procedural due process and Texas Rule of Civil Procedure 245 when it rendered a final judgment at what was supposed to be a preliminary evidentiary hearing. Rule 245 provides that a court may schedule a trial in contested cases with reasonable notice of not less than forty-five days unless the parties agree. Tex.R. Civ. P. 245. Thus, appellants claim the trial court erred when it entered a final judgment of dismissal with prejudice for want of jurisdiction without providing reasonable notice that the case would be tried “on the merits.”

The record reflects the order of dismissal was entered after a preliminary hearing regarding the propriety of appellees’ bill of review. The purpose of the hearing was to determine whether the United States could show “sufficient cause” that it had (1) a meritorious defense to the cause of action alleged to support the judgment, (2) which it was prevented from making by the fraud, accident or wrongful act of the opposite party, (3) unmixed with any fault or negligence of its own. Baker v. Goldsmith, 582 S.W.2d 404, 406-07 (Tex.1979). The “meritorious defense” at issue was whether sovereign immunity denied the trial court of any subject matter jurisdiction. Thus, subject matter jurisdiction was at the heart of the issue to be decided at the hearing.

While the trial court could have been clearer in announcing its intentions, the court stated it was considering whether its original order was “absolutely void,” i.e., rendered without the benefit of subject matter jurisdiction. It should have come as no surprise to appellants that if the trial court discovered it lacked subject matter jurisdiction, the only order it could then issue would be to dismiss the case. See Duncan v. Texas Dept. of Pub. Safety, 6 S.W.3d 756, 758 (Tex.App.-Tyler 1999, no pet.).

Undoubtedly, a fundamental requirement of due process is an opportunity to be heard upon such notice and proceedings as are adequate to safeguard the right for which the constitutional protection is invoked. Anderson Nat’l Bank v. Luckett, 321 U.S. 233, 246, 64 S.Ct. 599, 88 L.Ed. 692 (1944). But this does not mean that every order entered without notice and a preliminary adversary hearing offends due process. Link v. Wabash R.R. Co., 370 U.S. 626, 632, 82 S.Ct. 1386, 8 L.Ed.2d 734 (1962). While a party is entitled to notice and an opportunity to respond when a court contemplates dismissing a claim on the merits, it is not so when the dismissal is for lack of subject matter jurisdiction. Scholastic Entm’t, Inc. v. Fox Entm’t Group, Inc., 336 F.3d 982, 985 (9th Cir.2003).

Once a trial court learns that it lacks jurisdiction, it becomes the duty of the court to dismiss the cause, and when a suit is barred by sovereign immunity the cause should ordinarily be dismissed with prejudice. See Martin v. Texas Bd. of Criminal Justice, 60 S.W.3d 226, 231 (TexApp.-Corpus Christi 2001, no pet.) (holding when a lawsuit is barred by sovereign immunity, dismissal with prejudice is proper); City of Cleburne v. Trussell, 10 S.W.3d 407, 409 (Tex.App.-Waco 2000, no pet.) (same); City of Houston v. Rushing, 7 S.W.3d 909, 914 (Tex.App.-Houston [1st Dist.] 1999, pet. denied) (same); University of Tex. Med. Branch at Galveston v. Hohman, 6 S.W.3d 767, 771 (TexApp.-Houston [1st Disk] 1999, pet. dism’d w.o.j.) (same); Lamar Univ. v. Doe, 971 S.W.2d 191, 196 (Tex.App.-Beaumont 1998, no pet.) (same); Liberty Mut. Ins. Co. v. Sharp, 874 S.W.2d 736, 739 (Tex.App.-Austin 1994, writ denied) (same).

The United States is not subject to Texas statutes, executive orders, or judicial decisions. Absent a Congressional waiver of sovereign immunity, Texas courts do not have even potential jurisdiction. Here, the appellants have not cited, and we have not found, any waiver of sovereign immunity by Congress that would authorize a Texas court to garnish Medicare funds. When, as here, a Texas court has no potential jurisdiction over a defendant, the defendant may collaterally attack the court’s judgment with extrinsic evidence. Ponsart v. Citicorp Vendor Fin., Inc., 89 S.W.3d 285, 290 (TexApp.-Texarkana 2002, no pet.) (citing Dispensa v. Univ. State Bank, 987 S.W.2d 923, 930 (Tex. App.-Houston [14th Dist.] 1999, no pet.)); 5 Roy W. McDonald & Elaine A. Carlson, Texas Civil PRACTICE § 29:27 (2004). Likewise, when, as here, there has been no waiver of sovereign immunity, the trial court lacks subject matter jurisdiction, and dismissal with prejudice is proper. Se-pulveda v. County of El Paso, 170 S.W.3d 605, 610, No. 08-03-00514-CV, 2005 WL 850416, at *2 (Tex.App.-El Paso Apr.12, 2005, no pet. h.).

Perceiving no error in the trial court’s dismissal, I respectfully dissent.

      . The United States and TrailBlazer also sought, at first, attorney's fees and a declaratory judgment stating that the default judgment in the garnishment was void for lack of subject matter jurisdiction based on sovereign immunity. However, both parties later withdrew their requests for this relief.

      . Rule 245, entitled, "Assignment of Cases for Trial,” provides that a court may schedule a trial in contested cases with a reasonable notice of not fewer than forty-five days unless the parties agree. Tex.R. Civ. P. 245.

      . TrailBlazer adopted by reference the United States's motion for summary judgment.

      . As a preliminary matter, we note that we presume the trial court heard a case only after proper notice to the parties, and the Boateng Parties have the burden to affirmatively show that they were not given notice that the trial court intended the hearing as a trial on the merits of the petitions for bill of review. See Jones v. Texas Dept. of Pub. Safety, 803 S.W.2d 760, 761 (Tex. App.-Houston [14th Dist.] 1991, no writ). The Boateng Parties are required to attach competent evidence to their motion for new trial showing that they had no notice that the hearing would be a trial on the merits. See id. We conclude that the Boateng Parties satisfied this procedural requirement, by attaching competent evidence to their motion for new trial showing lack of notice of a trial on the merits. See id.

      . The record also shows that the patties did not receive notice and an opportunity to be heard at a summary-judgment hearing, although this is not relevant because the trial court did not grant any summary-judgment relief.

      . The cases cited by TrailBlazer and our dissenting colleague state that a court can summarily dismiss a case pending before it upon determining that the court lacks subject matter jurisdiction over the pending case. However, none of these cases state that this legal principle allows or requires a trial court to summarily grant, without notice and an opportunity to be heard, an equitable bill of review over which the court has subject matter jurisdiction, simply because the plaintiffs seek bill-of-review relief based on an alleged lack of subject matter jurisdiction in another case.

      . For this reason, we respectfully disagree with our dissenting colleague’s statement that the Boateng Parties should not have been surprised when the trial court ruled on the merits of the bills of review. See post, op. at p. 497.

      . As to the issue of whether the trial court lacked subject matter jurisdiction in the garnishment action, we respectfully disagree with our dissenting colleague's analysis of the facts and the law and his determination that the trial court lacked subject matter jurisdiction under the doctrine of sovereign immunity. Nonetheless, we do not detail the reasons for that disagreement because the merits of the trial court's determination regarding sovereign immunity are not before us.

      .Our dissenting colleague states that we reverse the trial court’s judgment because the trial court did not give the Boateng Parties reasonable notice of its intention to dismiss the garnishment action for lack of subject matter jurisdiction. It would be more accurate to say that we reverse the trial court's judgment because the trial court erred in converting the preliminary Baker hearing into a final trial on the merits after the fact, thus depriving the Boateng Parties of notice and an opportunity to be heard on the merits of the bill-of-review petitions.

      . The doctrine of sovereign immunity has been extended to garnishment proceedings brought against the United States where there has been no consent to be sued. Federal Hous. Admin, v. Burr, 309 U.S. 242, 244, 60 S.Ct. 488, 84 L.Ed. 724 (1940); Buchanan v. Alexander, 45 U.S. (4 How.) 20, 20-21, 11 L.Ed. 857 (1846); see also Veterans Admin, v. Kee, 706 S.W.2d 101 (Tex.1986) ("As a general rule, government entities are immune from garnishment.”). Sovereign immunity from garnishment proceedings also applies to federal funds disbursed by non-governmental entities to the extent that those funds have not been spent for their federally authorized purpose. Palmiter v. Action, Inc., 733 F.2d 1244, 1247-48 (7th Cir.1984).

      . A dismissal with prejudice functions as a final disposition on the merits. Mossier v. Shields, 818 S.W.2d 752, 754 (Tex.1991).

      . A bill of review is an equitable, independent action to set aside a judgment that is not void on the face of the record, but is no longer appealable or subject to challenge by a motion for new trial. King Ranch, Inc. v. Chapman, 118 S.W.3d 742, 751 (Tex.2003), cert. denied, 541 U.S. 1030, 124 S.Ct. 2097, 158 L.Ed.2d 711 (2004); Wembley Inv. Co. v. Herrera, 11 S.W.3d 924, 926-27 (Tex.1999).

      . Some exceptions exist, however. For example, in Mullins v. Estelle High Sec. Unit, a prison inmate sued the Institutional Division of the Texas Department of Criminal Justice for injuries allegedly sustained when prison officials denied him needed medical supplies. Ill S.W.3d 268, 270 (Tex.App.-Texarkana 2003, no pet.). While the court found the suit did not fall within the parameters of the Texas Tort Claims Act and, thus, was barred by sovereign immunity, it was reluctant to hold that the inmate had “no other possible cause of action against [TDCJ] arising out of the same facts.” Id. at 274. Accordingly, the court held the trial court erred in dismissing the suit with prejudice.
      Likewise, in Li v. University of Tex. Health Sci. Ctr., 984 S.W.2d 647 (Tex.App.-Houston [14th Dist.] 1998, pet. denied), the plaintiff’s breach of contract suit was barred by sovereign immunity, and the trial court dismissed with prejudice. However, the legislature subsequently granted the plaintiff express permission to sue the state on her breach of contract claim by a resolution that passed both legislative bodies and was signed by the governor. Id. at 653. Thus, this court modified the trial court’s judgment by deleting from it the words “with prejudice” and substituting therefor the words "without prejudice.” Id. at 654.
      Thus, if there is no possibility that any Texas court will acquire jurisdiction or that appellants will ever prevail in a Texas court, the proper remedy is to dismiss with prejudice. See Dahl ex rel. Dahl v. State, 92 S.W.3d 856, 862 (Tex.App.-Houston [14th Dist.] 2002, no pet.).

      . For example, "public policy concerns allow inquiry into the larger record when the judgment is entered against a foreign defendant,” and, therefore, the court is not bound by the recitations in the judgment in a collateral attack, but may consider the entire record to determine the existence of jurisdiction. Pellow v. Cade, 990 S.W.2d 307, 312 (Tex.App.-Texarkana 1999, no pet.) (citing Hicks v. Sias, 102 S.W.2d 460, 464 (Tex.Civ.App.-Beaumont 1937, writ ref’d)). Also, a Texas court that is asked to enforce the judgment of a court of another state may collaterally inquire into matters concerning the jurisdiction of the other state’s court when the party attacking the judgment did not appear in the prior proceeding. Kellogg v. Kellogg, 559 S.W.2d 126, 128 (Tex.Civ.App.-Texarkana 1977, no writ); Layton v. Layton, 538 S.W.2d 642, 647 (Tex.Civ. App.-San Antonio 1976, writ ref’d n.r.e.).


source: Caselaw Access Project

author: FELIPE REYNA, Justice. TOM GRAY, Chief Justice,

license: Public Domain

text:
    In the Matter of the GUARDIANSHIP OF Jewel W. KELLER, an Incapacitated Person.
    No. 10-04-00118-CV.
    Court of Appeals of Texas, Waco.
    July 27, 2005.

      David J. Patton, Ft. Worth, for appellant/relator.
    Scott D. Allen, Wayne S. Weaver, Ste-phenville, for appellee/respondent.
    Connie White, Crouch & White, Hamilton, for other.
    Before Chief Justice GRAY, Justice VANCE, and Justice REYNA.
   OPINION

FELIPE REYNA, Justice.

Cynthia Zipp perfected this appeal from an order removing her as guardian of the person of Jewel W. Keller, an incapacitated person. Because Keller has since passed away, we will dismiss the appeal as moot.

Several months after Zipp timely perfected this appeal, Keller’s attorney ad-litem filed a suggestion of death advising that Keller had passed away. Zipp filed a reply to the suggestion of death, opposing dismissal of this appeal because: (1) it “would deprive Appellant from seeking relief to which she would otherwise be entitled”; (2) this Court’s assessment of costs “could result in the reversal of the District Court’s payment of attorney’s fees to the Appellee’s attorney, thus returning Appel-lee’s attorney’s fees to the estate of the Ward”; and (3) this Court can make any “appropriate order that the law and the nature of the case require.”

The successor guardian/appellee Alisa Wuemling responded to Zipp’s pleading with a motion to dismiss this appeal as moot. Wuemling contends that the appeal is now moot because the death of the ward effectively terminates the authority of the guardian, whose only remaining duty is to file a final accounting to settle the guardianship. Wuemling further contends that dismissal is appropriate because the three issues presented in Zipp’s appellant’s brief do not address the issue of attorney’s fees paid to Wuemling’s counsel from Keller’s estate and the record does not reflect that the court has ordered the payment of such attorney’s fees.

It is axiomatic that ... this Court does not have jurisdiction to address issues which have been rendered moot. Gen. Land Office v. OXY U.S.A., Inc., 789 S.W.2d 569, 570 (Tex.1990); Tex. Dept. of Pub. Safety v. Ackerman, 31 S.W.3d 672, 675 (Tex.App.-Waco 2000, pet. denied). Thus, “a controversy must exist between the parties at every stage of the legal proceedings, including the appeal.” Williams v. Lara, 52 S.W.3d 171, 184 (Tex.2001).

Natl. Cafe Sens., Ltd. v. Podaras, 148 S.W.3d 194, 197 (Tex.App.-Waco 2004, pet. denied).

Texas courts have recognized three exceptions to the mootness doctrine: (1) the capable-of-repetition-yet-evading-review exception; (2) the collateral consequences exception; and (3) the public interest exception. See FDIC v. Nueces County, 886 S.W.2d 766, 767 (Tex.1994); Natl. Cafe Servs., 148 S.W.3d at 197 n. 4; Ngo v. Ngo, 133 S.W.3d 688, 691 (Tex.App.-Corpus Christi 2003, no pet.); Securtec, Inc. v. County of Gregg, 106 S.W.3d 803, 810-11 (Tex.App.-Texarkana 2003, pet. denied).

[The capable-of-repetition] exception applies only in rare circumstances. To invoke the exception, a [complaining party] must prove that: (1) the challenged action was too short in duration to be litigated fully before the action ceased or expired; and (2) a reasonable expectation exists that the same complaining party will be subjected to the same action again.

Williams, 52 S.W.3d at 184 (citations omitted). Zipp’s appeal does not satisfy this test.

The collateral consequences exception has been applied when “prejudicial events have occurred ‘whose effects continued to stigmatize helpless or hated individuals long after the unconstitutional judgment had ceased to operate. Such effects were not absolved by mere dismissal of the cause as moot.’ ” OXY U.S.A., 789 S.W.2d at 571 (quoting Spring Branch Indep. Sch. Dist. v. Reynolds, 764 S.W.2d 16, 19 (Tex.App.-Houston [1st Dist.] 1988, no writ)); accord Ngo, 133 S.W.3d at 691. As examples:

(1) the Supreme Court has determined that the effects of an order for temporary inpatient mental health services continued to stigmatize the subject of the order even though the commitment order had expired on its own terms; State v. Lodge, 608 S.W.2d 910, 912 (Tex.1980); see also Campbell v. State, 68 S.W.3d 747, 753-54 (Tex.App.-Houston [14th Dist.] 2001), aff'd, 85 S.W.3d 176 (Tex.2002) (applying Lodge to order for extended mental health services);
(2) the Supreme Court has determined that the effects of a juvenile delinquency adjudication continued to stigmatize the person adjudicated even though the person had served his sentence and had reached the age of majority; Carrillo v. State, 480 S.W.2d 612, 616-18 (Tex.1972);
(3) several intermediate courts of appeals have determined that the effects of a protective order carry significant collateral legal repercussions and a social stigma even though the protective order has expired. See In re Salgado, 53 S.W.3d 752, 757-58 (Tex.App.-El Paso 2001, orig. proceeding); James v. Hubbard, 21 S.W.3d 558, 560-61 (Tex.App.-San Antonio 2000, no pet.); In re Cummings, 13 S.W.3d 472, 475 (Tex.App.-Corpus Christi 2000, no pet.); and
(4) two courts have determined that the subject of a contempt order in a child support proceeding may still suffer “collateral consequences” after his release from custody. In re M.E.G., 48 S.W.3d 204, 208 n. 5 (Tex.App.-Corpus Christi 2000, no pet.); Ex parte Young, 724 S.W.2d 423, 425 (Tex.App.-Beaumont 1987, orig. proceeding) (per curiam).

Conversely, courts have concluded that the “collateral consequences” exception does not apply:

(1) in a child custody dispute in which the child reached the age of majority during the appeal, because a custody dispute between parents does not involve legally cognizable “collateral consequences”; Ngo, 133 S.W.3d at 691-92;
(2) in a dispute with a school district in which a child was permitted to participate in a high school track meet over the district’s objections and then graduated during the appeal, because “[t]he consequences of not receiving a track medal are trivial compared with the consequences of being wrongfully convicted of a crime, wrongfully declared a juvenile delinquent, or wrongfully committed to a mental institution.” Spring Branch Indep. Sch. Dist, 764 S.W.2d at 19.

We do not suggest that the dispute between Zipp and Wumerling may be characterized as “trivial” as the court in the Spring Branch Independent School District case characterized the consequences of that dispute. However, the issues Zipp raises in her appellant’s brief do not involve the type of stigmatizing consequences inherent in involuntary mental commitments, juvenile adjudications, protective orders, and contempt orders. Therefore, we conclude that the collateral consequences exception does not apply.

“The public-interest exception allows appellate review of an issue of considerable public importance if that issue is capable of repetition between either the same parties or other members of the public, but for some reason evades appellate review.” Ngo, 133 S.W.3d at 692; accord Securtec, 106 S.W.3d at 810-11; see also FDIC, 886 S.W.2d at 767. An issue does not “evade appellate review” if it has been addressed on the merits by appellate courts. See FDIC, 886 S.W.2d at 767; Ngo, 133 S.W.3d at 692. Our research has disclosed (and the parties have cited) numerous cases addressing the issues presented in Zipp’s appellant’s brief. Thus, it cannot be said that the types of issues presented in this case will “evade appellate review” in other cases involving similar issues. Therefore, we conclude that the public interest exception does not apply.

Accordingly, we dismiss the appeal as moot.

Chief Justice GRAY dissents.

TOM GRAY, Chief Justice,

dissenting.

The result of Zipp’s third issue on appeal, whether the trial court erred in removing her as guardian of the estate of Jewel Keller, will decide who has the duty to wrap up the affairs of Keller’s guardianship estate, including the delivery and accounting for the assets of that estate to the personal representative of the decedent’s estate. The duly appointed guardian will have to decide questions related to the propriety of payment of various expenses and make an accounting. The question to be decided by this appeal is, in part, who is the duly appointed guardian with that responsibility? This issue is not moot. See Pinnacle Gas Treating, Inc. v. Read, 104 S.W.3d 544 (Tex.2003). A guardian is appointed to make decisions on behalf of the guardianship estate. The current dispute is; who is the proper person to make these decisions and wind up the affairs of the guardianship estate? That dispute did not die with Ms. Keller. See Weatherly v. Byrd, 552 S.W.2d 573, 574 (Tex.Civ.App.-Port Worth 1977), rev’d on the merits, 566 S.W.2d 292 (Tex.1978).

I dissent.

      . Those 3 issues are: (1) "Whether the district court erred in accepting the transfer of the entire cause from the County Court of Hamilton County, Texas and County Court not transferring case to a statutory probate court”; (2) “Whether the district court erred in denying Appellant discovery, thus denying Appellant adequate preparation for trial”; and (3) “Whether the district court erred in removing Appellant as Guardian of the Ward without evidence of cause as set out in § 761 of the Texas Probate Code.”

      . To date, the Supreme Court has declined to endorse the public interest exception. See FDIC v. Nueces County, 886 S.W.2d 766, 767 (Tex.1994) (finding it unnecessary to decide the viability of the public interest exception).


author: TOM GRAY, Chief Justice. BILL VANCE, Justice,

text:
    In the Interest of K.G.M. and W.F.M., Children.
    No. 10-04-00162-CV.
    Court of Appeals of Texas, Waco.
    July 27, 2005.

      Robert Daniel Freisner, Waxahahie, Da-mara H. Watkins, Corsicana, for appellant/relator.
    James E. Lagomarsino, Navarro County Dist. Atty., Corsicana, Lana Shadwick, Texas Dept, of Pro. & Reg. Ser., Houston, for appellee/respondent.
    Kelly R. Myers, Corsicana, for other.
    Before Chief Justice GRAY, Justice VANCE, and Justice REYNA.
   OPINION

TOM GRAY, Chief Justice.

Appellant appeals the termination of the parent-child relationship between Appellant and two of her children, K.G.M. and W.F.M. In two issues, Appellant contends that the evidence that she knowingly placed or knowingly allowed the children to remain in conditions or surroundings, or engaged in conduct or knowingly placed the children with persons who engaged in conduct, that endangered their well-being, and that termination was in the children’s best interest, was legally and factually insufficient. See Tex. Fam.Code Ann. § 161.001 (Vernon 2002). Trial was before a jury, which made its findings by the concurrence of eleven members. Applying the standard of review for the legal sufficiency of the evidence established by the Texas Supreme Court in In the Interest of J.F.C., we have determined that the evidence is legally sufficient. See In re J.F.C., 96 S.W.3d 256 (Tex.2002). Likewise, applying the standard of review for the factual sufficiency of the evidence established by the Texas Supreme Court in In the Interest of C.H., we have determined that the evidence was factually sufficient. See In re C.H., 89 S.W.3d 17 (Tex.2002). We affirm.

I. K.G.M. In Appellant’s first issue, she contends that the evidence was insufficient as to K.G.M. We will overrule Appellant’s issue.

I. A. Endangerment. Appellant argues that there was no evidence that she endangered K.G.M. Appellee, the Department of Family and Protective Services, points primarily to the following evidence. Appellant had used heroin, cocaine, meth-amphetamines, and marijuana from the age of twelve until the time of trial. Appellant had not been able to complete the drug rehabilitation programs in which she had participated, including the one she had been in immediately before her felony community supervision was last revoked. Appellant used drugs to the degree that Appellant was not able to care for K.G.M. At the time of trial, Appellant was in prison for burglary. She had previously served two years for robbery.

I. A. 1. Legal Sufficiency. We have viewed this evidence in the light most favorable to the jury’s finding. Pursuant to J.F.C., we have assumed that the fact-finder resolved disputed facts in favor of the finding if a reasonable factfinder could have so resolved the facts. Under this standard of review we have determined that the jury could reasonably have formed a firm belief or conviction that Appellant endangered K.G.M. See Tex. Fam.Code Ann. § 101.007 (Vernon 2002), § 161.001(1)(D)-(E); J.F.C., 96 S.W.3d at 266.

I. A. 2. Factual Sufficiency. Pursuant to C.H. and J.F.C., we have not assumed that the factfinder resolved disputed facts in favor of the finding, but have given due consideration to evidence that the jury could reasonably have found to be clear and convincing. Under this standard of review we have determined that the jury could reasonably have formed a firm belief or conviction that Appellant endangered K.G.M. See Tex. Fam.Code Ann. §§ 101.007, 161.001(1)(D)-(E); J.F.C., 96 S.W.3d at 266-67; C.H., 89 S.W.3d at 25.

I. B. Best Interest. Appellant argues that there was no evidence that termination was in K.G. M.’s best interest, except that Appellant concedes that her “drug and criminal history mitigate in favor of termination,” and that her “incarceration has led to instability.” Appellee points, too, primarily to the following evidence. Appellant had contacted K.G.M. only seven times in the seventeen months before trial. Appellant had no relatives who were willing or able to take K.G.M.K.G.M. was adoptable.

I. B. 1. Legal Sufficiency.

We have viewed this evidence in the light most favorable to the jury’s finding. Pursuant to J.F.C., we have assumed that the factfinder resolved disputed facts in favor of the finding if a reasonable factfin-der could have so resolved the facts. Under this standard of review we have determined that the jury could reasonably have formed a firm belief or conviction that termination of the parent-child relationship between Appellant and K.G.M. was in KG.M.’s best interest. See Tex. Fam.Code Ann. §§ 101.007, 161.001(2); J.F.C., 96 S.W.3d at 266; Holley v. Adams, 544 S.W.2d 367, 371-73 (Tex.1976).

I. B. 2. Factual Sufficiency. Pursuant to C.H. and J.F.C., we have not assumed that the factfinder resolved disputed facts in favor of the finding, but have given due consideration to evidence that the jury could reasonably have found to be clear and convincing. Under this standard of review, we have determined that the jury could reasonably have formed a firm belief or conviction that termination of the parent-child relationship between Appellant and K.G.M. was in K.G. M.’s best interest. See Tex. Fam.Code Ann. §§ 101.007, 161.001(2); J.F.C., 96 S.W.3d at 266-67; C.H., 89 S.W.3d at 25; Holley, 544 S.W.2d at 371-73.

Accordingly, we overrule Appellant’s first issue.

II. W.F.M. In Appellant’s second issue, she contends that the evidence was insufficient as to W.F.M. We will overrule Appellant’s issue.

II. A. Endangerment. Appellant argues that there was no evidence that she endangered W.F.M. Appellee, the Department of Family and Protective Services, points primarily to the following evidence. Appellant had used heroin, cocaine, meth-amphetamines, and marijuana from the age of twelve until the time of trial. Appellant knew that she should not use drugs while pregnant, but could not help it. Appellant used cocaine and marijuana while pregnant with W.F.M. and one of her other children, not the subject of the suit, so that W.F.M. had cocaine and marijuana in his body at birth. W.F.M. had medical problems, including breathing problems, as a result of Appellant’s drug use during pregnancy. Appellant continued to smoke, although smoking was harmful to W.F.M.’s health.

II. A. 1. Legal Sufficiency. We have viewed this evidence in the light most favorable to the jury’s finding. Pursuant to J.F.C., we have assumed that the fact-finder resolved disputed facts in favor of the finding if a reasonable factfinder could have so resolved the facts. Under this standard of review we have determined that the jury could reasonably have formed a firm belief or conviction that Appellant endangered W.F.M. See Tex. Fam.Code Ann. §§ 101.007, 161.001(1)(D)-(E); J.F.C., 96 S.W.3d at 266.

II. A. 2. Factual Sufficiency. Pursuant to C.H. and J.F.C., we have not assumed that the factfinder resolved disputed facts in favor of the finding, but have given due consideration to evidence that the jury could reasonably have found to be clear and convincing. Under this standard of review we have determined that the jury could reasonably have formed a firm belief or conviction that Appellant endangered W.F.M. See Tex. Fam.Code Ann. §§ 101.007, 161.001(1)(D)-(E); J.F.C., 96 S.W.3d at 266-67; C.H, 89 S.W.3d at 25.

II. B. Best Interest. Appellant argues that there was no evidence that termination was in W.F.M.’s best interest, except that Appellant concedes that her drug use during pregnancy “may be considered conduct which endangers the well-being of the child,” that her “drug and criminal history mitigate in favor of termination,” and that her “incarceration has led to instability.” Appellee points, too, primarily to the following evidence. Appellant had contacted W.F.M. only seven times in the seventeen months before trial. Appellant had no relatives who were willing or able to take W.F.M. W.F.M. was adoptable.

II. B. 1. Legal Sufficiency. We have viewed this evidence in the light most favorable to the jury’s finding. Pursuant to J.F.C., we have assumed that the fact-finder resolved disputed facts in favor of the finding if a reasonable factfinder could have so resolved the facts. Under this standard of review we have determined that the jury could reasonably have formed a firm belief or conviction that termination of the parent-child relationship between Appellant and W.F.M. was in W.F. M.’s best interest. See Tex. Fam.Code Ann. §§ 101.007, 161.001(2); J.F.C., 96 S.W.3d at 266; Holley, 544 S.W.2d at 371-73.

II. B. 2. Factual Sufficiency. Pursuant to C.H. and J.F.C., we have not assumed that the factfinder resolved disputed facts in favor of the finding, but have given due consideration to evidence that the jury could reasonably have found to be clear and convincing. Under this standard of review, we have determined that the jury could reasonably have formed a firm belief or conviction that termination of the parent-child relationship between Appellant and W.F.M. was in W.F. M.’s best interest. See Tex. Fam.Code Ann. §§ 101.007, 161.001(2); J.F.C., 96 S.W.3d at 266-67; C.H., 89 S.W.3d at 25; Holley, 544 S.W.2d at 371-73.

Accordingly, we overrule Appellant’s second issue.

Having overruled Appellant’s issues, we affirm the judgment.

Justice VANCE concurs.

BILL VANCE, Justice,

concurring.

Termination-of-parental-rights cases are the “death penalty” cases of civil law. Termination is final and irrevocable, and lasts a lifetime. A parent is given one chance at overturning an adverse judgment on direct appeal. There is no post-termination collateral challenge available to a parent whose rights have been terminated after a short six-month statutory period, after which such judgments are final and unchallengeable. See Tex. Fam. Code Ann. § 161.211 (Vernon 2002).

The natural right that exists between parents and their children is one of constitutional dimension. In re J.W.T., 872 S.W.2d 189, 194-95 (Tex.1994). A parent’s right to “the companionship, care, custody and management” of his or her children is a constitutional interest “far more precious than any property right.” Santosky v. Kramer, 455 U.S. 745, 758-59, 102 S.Ct. 1388, 1397, 71 L.Ed.2d 599 (1982) (quoting Stanley v. Illinois, 405 U.S. 645, 651, 92 S.Ct. 1208, 1212, 31 L.Ed.2d 551 (1972)). Therefore, in a case terminating parental rights, the proceedings should be strictly scrutinized and the involuntary termination statutes strictly construed in favor of the parent. Holick v. Smith, 685 S.W.2d 18, 20 (Tex.1985); cf. Ray v. Burns, 832 S.W.2d 431, 434 (Tex.App.-Waco 1992, no writ) (in reviewing sufficiency of the evidence, “close .calls” go to the parent, citing Lewelling v. Lewelling, 796 S.W.2d 164, 168 (Tex.1990)). Termination is a drastic remedy and is of such weight and gravity that due process requires the petitioner to justify termination by “clear and convincing evidence.” Spangler v. Texas Dept. of Prot. & Reg. Servs., 962 S.W.2d 253, 256 (Tex.App.-Waco 1998, no pet.).

And yet, in the face of requirements of clear and convincing evidence and strict scrutiny on a matter of constitutional dimension, the opinion in this case consists of conclusory statements that the evidence is legally and factually sufficient to support the findings of grounds for termination and that termination is in the best interest of Appellant’s two children. What this opinion does is give the appearance that we have not carefully reviewed the evidence. Even worse, it makes it appear that the Appellant’s attorney, a competent appellate attorney who has appeared and argued before us on many occasions, has not filed a brief raising issues worthy of our careful consideration. In fact, her twenty-nine page brief and reply brief contain a detailed discussion of the evidence, or lack thereof, in support of the issues on appeal. The Department’s reply brief consists of twenty-three pages of evidentiary discussion in support of the judgment. Yet, the best this opinion can muster is four sentences on the evidence about endangerment and three about best interest concerning K.G.M. and five sentences on the evidence about endangerment and the same three sentences about best interest concerning W.F.M. The recitations about the standards of review are much longer than the discussions of the evidence. This opinion, in my view, does not demonstrate that this parent has been given a meaningful appeal of findings that she must live with for the rest of her life. We can and ought to do better.

If the United States Supreme Court means what it says about parental rights being of constitutional dimension and an interest “far more precious than any property right,” the courts should accord parents whose rights are subject to court-ordered termination the same “quasi-criminal” protections provided to juveniles whose liberty interests are threatened by “civil” juvenile proceedings and provided in some contempt and other proceedings. See, e.g., In re M.A.F., 966 S.W.2d 448, 450 (Tex.1998) (recognizing that juvenile cases are quasi-criminal in nature); Holick v. Smith, 685 S.W.2d 18, 20 (Tex.1985) (the involuntary termination of parental rights implicates fundamental constitutional rights); In re L.D.T., 161 S.W.3d 728, 730 (Tex.App.-Beaumont 2005, no pet. h.) (comparing termination case to juvenile proceeding for Anders-brief purposes); In re J.H., 150 S.W.3d 477, 485 (Tex.App.Austin 2004, pet. denied) (applying criminal harm analysis to juvenile proceeding because “quasi-criminal” in nature); In re Boyo, 143 S.W.3d 472, 476 (Tex.App.-Beaumont 2004, orig. proceeding) (“Contempt proceedings are quasi-criminal in nature, and the contemner is entitled to procedural due process throughout the proceedings.”); In re A.J.G., 131 S.W.3d 687, 694 (Tex.App.-Corpus Christi 2004, pet. denied) (criminal rules of procedure are utilized by civil courts in juvenile proceedings because of their serious, quasi-criminal nature); In re Dooley, 129 S.W.3d 277, 278 (Tex.App.-Corpus Christi 2004, orig. proceeding) (contempt proceedings in Texas have been characterized as quasi-criminal proceedings which should conform as nearly as practicable to those in criminal cases); Striedel v. Striedel, 15 S.W.3d 163, 166 (Tex.App.-Corpus Christi 2000, no pet.) (a hearing for protective order in a divorce case involves liberty issues because a person’s freedom of movement is restricted — a quasi-criminal proceeding implicating due process); Ex parte McIntyre, 730 S.W.2d 411, 415 (Tex.App.-San Antonio 1987, orig. proceeding) (a contempt proceeding is unlike a civil suit, has some of the incidents of a trial for crime, and is quasi-criminal in nature; accordingly, proceedings in contempt cases should conform as nearly as practicable to those in criminal cases) (citing Ex parte Cardwell, 416 S.W.2d 382, 384 (Tex.1967)).

I realize that the Texas Supreme Court has largely rejected this argument. See In re B.L.D. 113 S.W.3d 340 (Tex.2003). The rationale there was that because civil evidentiary and procedural rules apply to termination cases, they are unlike other “quasi-criminal” civil cases. That analysis seems contrary to statutory interpretations that have resulted in “quasi-criminal” designations because the statutes impose on fundamental constitutionally-protected interests. What is more fundamental than a parent’s interest in continuing the parent-child relationship? Furthermore, one can justifiably question how, as the Texas Supreme Court found, the state’s interest in its error-preservation rules could outweigh a parent’s due-process rights under the Fourteenth Amendment (B.L.D., 113 S.W.3d at 354), particularly when termination proceedings have been characterized by the United States Supreme Court as “endeavoring to defend against the State’s destruction of [ ] family bonds,” “to resist the brand associated with a parental unfitness adjudication,” and a parent, “like a defendant resisting criminal conviction, [] seeks to be spared from the State’s devastatingly adverse action.” M.L.B. v. S.L.J., 519 U.S. 102, 136, 117 S.Ct. 555, 574, 136 L.Ed.2d 473 (1996).

Although I concur in the judgment affirming the trial court’s judgment, I cannot join an opinion that does not provide to the litigants (particularly the parent whose rights have been irrevocably terminated), the higher courts, the bench and bar, and the public more of the facts and the analysis necessary to understand why the Appellant brought the issues or our reasons for rejecting them.

      . There is an apparent conflict in Texas Rule of Appellate Procedure 47.4. See Tex.R.App. P. 47.4. Because the author of the Concurring Opinion has opposed the designation of this memorandum opinion as a memorandum opinion, it must be designated as an opinion. "An opinion may not be designated a memorandum opinion if the author of a concurrence or dissent opposes that designation.” Id. The same rule, however, limits what opinions can be designated non-memorandum opinions:
      An opinion must be designated a memorandum opinion unless it does any of the following:
      (a)establishes a new rule of law, alters or modifies an existing rule, or applies an existing rule to a novel fact situation likely . to recur in future cases;
      (b) involves issues of constitutional law or other legal issues important to the jurisprudence of Texas;
      (c) criticizes existing law; or
      (d) resolves an apparent conflict of authority.

        Id. This Opinion does not do any of those things, and thus "must” be designated a memorandum opinion. Id. We have, nevertheless, designated it as an opinion because the sentence of the rule regarding the opposition by the author of a concurrence or dissent is more specific, and less subject to interpretation, than the latter portion of the rule. See id.


author: BILL VANCE, Justice. TOM GRAY, Chief Justice,

text:
    UNITED STATES FIRE INSURANCE COMPANY, Appellant, v. Tammy FUGATE, Appellee.
    No. 10-04-00260-CV.
    Court of Appeals of Texas, Waco.
    July 27, 2005.
    Rehearing Overruled Aug. 30, 2005.
    Jeffery A. Addicks, Hays, McConn, Rice & Pickering, Houston, for appellant.
    Mark D. Haas, Haas & Goleman LLP, Conroe, for appellee.
    Before Chief Justice GRAY, Justice VANCE, and Justice REYNA.
   OPINION

BILL VANCE, Justice.

Appellee Tammy Fugate obtained a summary judgment against Appellant United States Fire Insurance Company (US Fire) on her Texas Insurance Code Article 21.55 claim for penalties and attorney’s fees. US Fire appeals, raising five issues. Because US Fire is entitled to summary judgment on its res judicata defense, we will reverse and render.

Background

On June 5, 1998, Fugate and her family were injured in a motor vehicle collision with a vehicle operated by William Heintz. After filing suit against Heintz, Fugate settled with him for his remaining policy limits of $15,200.

Fugate had an employer automobile insurance policy with US Fire, and that policy provided underinsured and uninsured motorist (UIM) coverage for her. In a letter dated January 6, 1999, Fugate’s attorney notified US Fire of her intent to seek UIM benefits. But prior to that, in a letter dated November 4, 1998, US Fire wrote Fugate’s attorney, responding to her letter of representation and stating US Fire’s understanding that Fugate intended to make a claim for UIM benefits.

On June 30, 2000, Fugate filed suit (the First Suit) against US Fire for UIM benefits under her US Fire policy. Fugate did not assert an Article 21.55 claim against US Fire in the First Suit. After a jury trial, the trial court in the First Suit entered a judgment on March 22, 2002 in favor of Fugate on her claim for UIM benefits in the amount of $209,677.69 plus court costs of $1,021.50. US Fire paid this judgment.

Fugate sued US Fire a second time (the Second Suit) on January 21, 2003, asserting a claim under Article 21.55 and seeking its statutory penalty of 18% of the amount of her UIM claim and attorney’s fees. US Fire filed a motion for summary judgment, asserting that Fugate’s claim in the Second Suit for Article 21.55 damages was barred by res judicata because that claim could have been litigated in the First Suit. Fugate also moved for summary judgment in the Second Suit, asserting that, because US Fire did not timely acknowledge her UIM claim, she was entitled to damages under Article 21.55. US Fire’s summary-judgment response asserted that its November 4, 1998 letter was an acknowledgment of Fugate’s UIM claim and that Fu-gate’s claim was barred by res judicata.

The trial court granted Fugate’s motion for summary judgment and entered a judgment awarding her the statutory 18% per year penalty of $119,119.74 and attorney’s fees of $39,935.37. The trial court did not rule on US Fire’s summary-judgment motion. US Fire filed a motion for new trial, requesting the trial court to rule on its motion for summary judgment. The motion for new trial was overruled by operation of law.

In this appeal, US Fire asserts five issues. In its fourth issue, US Fire asserts that the trial court erred in granting Fu-gate’s summary-judgment motion because her Article 21.55 claim was barred by res judicata.

Standard of Review

We review the decision to grant a summary judgment de novo. Rucker v. Bank One, 36 S.W.3d 649, 652-53 (Tex.App.-Waco 2000, pet. denied). The well established standards for reviewing a summary judgment are:

(1) The movant for summary judgment has the burden of showing that there is no genuine issue of material fact and that the movant is entitled to judgment as a matter of law.
(2) In deciding whether there is a disputed material fact issue precluding summary judgment, evidence favorable to the nonmovant will be taken as true.
(3) Every reasonable inference must be indulged in favor of the nonmovant and any doubts resolved in his favor.

Nixon v. Mr. Prop. Management Co., 690 S.W.2d 546, 548-49 (Tex.1985). When both sides move for summary judgment and the trial court grants one motion and denies the other, we review the summary judgment evidence presented by both sides and determine all questions presented. Comm’rs Court v. Agan, 940 S.W.2d 77, 81 (Tex.1997).

Article 21.55

Article 21.55 of the Texas Insurance Code, the Prompt Payment of Claims Act, requires an insurer to follow certain procedures and meet certain deadlines .when it receives, accepts, rejects, or pays an insurance claim. See Tex. Ins.Code Ann. art. 21.55 § 2(a) (Vernon Supp.2004-05). The elements of an Article 21.55, section 6 claim are: (1) a claim under an insurance policy; (2) the insurer is hable for the claim; and (3) the insurer has failed to follow one or more sections of Article 21.55 with respect to the claim. Allstate Ins. Co. v. Bonner, 51 S.W.3d 289, 291 (Tex.2001). If an insurer violates one or more sections of this article, the insurer shall pay damages of, in addition to the amount of the claim, 18% per annum on the claim amount and reasonable attorney’s fees. Tex. Ins.Code Ann. art. 21.55 §§ 3(f), 6 (Vernon Supp.2004-05).

Res Judicata

The doctrine of res judicata precludes relitigation of claims that have been finally adjudicated or litigation of claims that arise out of the same subject matter and could have been litigated in a prior action. Amstadt v. United States Brass Corp., 919 S.W.2d 644, 652 (Tex.1996). “The policies behind the doctrine reflect the need to bring all litigation to an end, prevent vexatious litigation, maintain stability of court decisions, promote judicial economy, and prevent double recovery.” Barr v. Resolution Trust Corp., 837 S.W.2d 627, 629 (Tex.1992) (citing Zollie Steakley & Weldon U. Howell, Jr., Ruminations on Res Judicata, 28 Sw.L.J. 355, 358-59 (1974)).

The successful application of res judicata requires proof that (1) a prior judgment on the merits was issued by a court of competent jurisdiction; (2) the parties in the first suit are the same as those in the second suit or are in privity with them; and (3) the second suit is based on the same claims as those that were raised or that could have been raised in the first suit. Amstadt, 919 S.W.2d at 652. “A subsequent suit will be barred if it arises out of the same subject matter of a previous suit and which through the exercise of diligence, could have been litigated in a prior suit.” Barr, 837 S.W.2d at 631.

third element is the only ele-eleat issue here. In the First Suit, Fugate alleged only a claim for UIM bene-beneunder her US Fire policy. Her UIM claim was a breach-of-contract claim. See Allstate Ins. Co. v. Lincoln, 976 S.W.2d 873, 875 (Tex.App.-Waco 1998, no pet.) (holding that UIM claimant could recover attorney’s fees for breach of contract). In many of the Article 21.55 cases cited by both parties, the plaintiff asserted both a breach-of-contract claim and an Article 21.55 claim in the same suit. See Wellisch v. United Servs. Auto. Ass’n, 75 S.W.3d 53, 55-56 (Tex.App.-San Antonio 2002, pet. de-de(plaintiff asserted breach-of-contract claim for UIM benefits along with Art. 21.55 claim and claim for breach of duty of good faith and fair dealing in same suit); Bonner v. Allstate Ins. Co., 43 S.W.3d 532, 533 (Tex.App.-Austin 2000), rev’d, 51 S.W.3d 289, 291 (Tex.2001) (plaintiff asserted breach-of-contract claim for UIM benefits and Art. 21.55 claim in same suit); Northwestern Nat’l County Mut. Ins. Co. v. Rodriguez, 18 S.W.3d 718, 720 (Tex.App.-San Antonio 2000, pet. denied) (plaintiff asserted breach-of-contract claim for UIM benefits and Art. 21.55 claim in same suit); Dunn v. Southern Farm Bureau Cas. Ins. Co., 991 S.W.2d 467, 470 (Tex.App.-Tyler 1999, pet. denied) (plaintiff asserted breach-of-contract claim for UIM benefits and Art. 21.55 claim in same suit); see also Lincoln, 976 S.W.2d at 874 (plaintiff asserted breach-of-contract claim for UIM benefits and Art. 21.55 claim in same suit).

Plainly, Fugate’s Article 21.55 claim for untimely acknowledgment of her UIM claim relates to the same subject matter as her breach-of-contract claim for UIM benefits, and similarly situated plaintiffs routinely assert both claims in the same suit. Additionally, a judicial determination of the amount of UIM damages is not a condition precedent to a UIM breach-of-contract claim, much less an Article 21.55 claim. See Lincoln, 976 S.W.2d at 875-76 (holding that plaintiff entitled to attorney’s fees on breach-of-contract claim for UIM benefits without prior judicial determination of damages). Because Fugate could have raised her Article 21.55 claim in the First Suit, res judicata bars her from asserting it in the Second Suit. The trial court erred in granting Fugate’s motion for summary judgment, and US Fire was entitled to summary judgment on its res judicata defense. We sustain US Fire’s fourth issue.

Conclusion

Having sustained US Fire’s fourth issue, we reverse the trial court’s judgment and render judgment that Fugate take nothing from US Fire.

Chief Justice Gray concurs.

TOM GRAY, Chief Justice,

concurring.

The issue in this appeal is whether Fu-gate was required to bring her claim under article 21.55 of the Texas Insurance Code in the same proceeding as her claim for breach of contract for failure to pay UIM coverage. See Act of 1991, 72nd Leg., ch. 242, § 11.03(a), repealed by Act of 2003, 78th Leg., ch. 1274, § 26(a)(1) (current version at Tex. Ins.Code Ann. § 542.060 (Vernon Pamp.2004-2005)).

The Texas case which provides the most guidance on this issue is Lusk v. Puryear, 896 S.W.2d 377 (Tex.App.-Amarillo 1995, orig. proceeding). In Lusk, the court held that it was error to sever a claim for nonpayment of UIM benefits from an article 21.55 claim. The court held, based on the language of the statute, that there was only one cause of action, “the claim under article 21.55 is not a separate cause of action” from the claim under the UIM provision of the policy. Id. at 380. A suit under the contract puts the entire liability of the insurer, “both on the insurance policy and under article 21.55” in issue. Id. See Hartman v. St. Paul Fire and Marine Ins. Co., 55 F.Supp.2d 600 (N.D.Tex.1998).

Because a claim under article 21.55 is not an independent claim that will support a separate cause of action, it follows that an article 21.55 claim is barred by res judicata if it is not brought in the same proceeding with the underlying breach of contract claim. In this regard, it is more in the nature of additional damages, though the timing of certain events must be proven, than an independent cause of action.

Thus, I concur in the Court’s judgment to reverse the judgment of the trial court and render judgment in favor of United States Fire Insurance Co.