Texas Business Court Decision – November 14, 2025
No. 25-BC08B-0001 CRS Mechanical, Inc., et al. v. Norfolk Cold Storage, LLC, etc., et al. (Division 8, Judge Stagner) 25-bc08b-0001-crs-mechanical-v-norfolk-cold-storage-2025-tex-bus-46.pdf
Declaratory Judgments Act. In this action, plaintiffs alleged they formed a partnership with defendants to renovate and operate a cold-storage facility in Nebraska; under the agreement defendants would purchase the facility at a foreclosure sale, plaintiffs would renovate the facility with defendants paying for the renovations, and plaintiffs would receive an ownership interest in a new entity the parties would form to run the facility; in exchange, plaintiffs refrained from bidding at the foreclosure sale and from enforcing two preexisting mechanic’s liens on the property; plaintiffs alleged that after defendants bought the property they ceased performing under the agreement; plaintiffs brought claims for breach of fiduciary duty, knowing participation and common-law fraud; defendants denied all wrong doing and filed a counterclaim seeking declarations that no partnership had been formed and that plaintiffs’ liens were invalid or had lapsed; they also sought attorneys’ fees under the Declaratory Judgment Act; plaintiffs moved for summary judgment on the counterclaim, arguing the declarations defendants sought merely duplicated issues already before the court and that the counterclaim was an impermissible attempt to recover attorneys’ fees.
Held: Plaintiffs’ motion for summary judgment is granted.
(1) The Declaratory Judgment Act (DJA) is not a procedural backdoor for recovering attorneys’ fees for issues already before the court, and a defendant may not bring a declaratory judgment counterclaim that merely mirrors or repackages its defenses; a DJA counterclaim is only permissible is it seeks affirmative relief; nor may defendant used the DJA as vehicle to obtain attorneys’ fees when the requested declarations add nothing of substance beyond the issues raised in plaintiff’s suit.
(2) The request for a declaration that there was no contract, agreement or partnership is entirely duplicative of the issues subsumed in plaintiffs’ claims for breach of fiduciary duty and knowing participation, because whether the parties formed an agreement is a threshold question the court must answer to decide plaintiffs’ claims.
(3) Declarations Two and Three seek a determination that plaintiffs’ liens were either never valid or became invalid, and the resolution of these declarations overlaps with plaintiffs’ fraud and damages theories; the existence of the liens was critical to plaintiffs’ claims of reliance on defendants’ misrepresentations and its claims of forbearance; these declarations are classic defensive denials rather than requests for affirmative relief, and defendants cannot use the DJA to repackage its defenses as requests for declaratory relief or to obtain attorneys’ fees not otherwise available.
(4) Even if Declarations Two and Three were not subsumed in plaintiffs’ claims, the court lacks subject-matter jurisdiction over real property interests in another state (here, the removal of encumbrances from title to Nebraska property), and this is an independent basis for granting plaintiffs summary judgment on these declaration requests.