PENNZOIL CO. V. TEXACO INC. 481 U.S. 1 (1987) CASE BRIEF

PENNZOIL CO. V. TEXACO INC.

481 U.S. 1 (1987)

NATURE OF THE CASE: Pennzoil (P) appealed an order affirming the district court's entry of a preliminary injunction against enforcement of a state court judgment entered against Texaco (D).

FACTS: Getty Oil Co. and P negotiated an agreement was P was to purchase about three-sevenths of Getty's outstanding shares for $110 a share. D eventually purchased the shares for $128 a share. P filed a complaint against D in Texas, the site of P's corporate headquarters. P alleged that D tortiously induced Getty to breach a contract to sell its shares to P. A jury returned a verdict in favor of P found actual damages of $7.53 billion and punitive damages of $3 billion. By recording an abstract of a judgment in the real property records of any of the 254 counties in Texas, a judgment creditor can secure a lien on all of a judgment debtor's real property located in that county. A judgment creditor may secure a writ of execution from the clerk of the court that issued the judgment. Such a writ usually can be obtained 'after the expiration of thirty days from the time a final judgment is signed.' A judgment debtor 'may suspend the execution of the judgment by filing a good and sufficient bond to be approved by the clerk.' For a money judgment, 'the amount of the bond . . . shall be at least the amount of the judgment, interest, and costs.' It was clear D could not post a bond of $13 billion. D did not argue to the trial court that the judgment, or execution of the judgment, conflicted with federal law. Before the Texas court entered judgment, D filed this action in the United States District Court for the Southern District of New York alleging that the Texas proceedings violated rights secured to D by the Constitution and various federal statutes. It asked the District Court to enjoin P from taking any action to enforce the judgment. The court found Younger abstention unwarranted because it did not believe issuance of an injunction would 'interfere with a state official's pursuit of a fundamental state interest.' As to the Rooker-Feldman doctrine, the court noted only that it was not 'attempting to sit as a final or intermediate appellate state court as to the merits of the Texas action. . . . Our only intention is to assure D its constitutional right to raise claims that we view as having a good chance of success.' The District Court evaluated the prospects of D's succeeding in its appeal in the Texas state courts. It concluded that these challenges 'present generally fair grounds for litigation.' In applying Matthews v. Eldridge, it concluded that application of the lien and bond provisions would deny D a right to appeal. The court found the risk of erroneous deprivation 'quite severe.' The court issued a preliminary injunction. The Court of Appeals affirmed; The due process and equal protection claims, not presented by D to the Texas courts, were within the District Court's jurisdiction because they were not ''inextricably intertwined'' with the state-court action. It held abstention was unnecessary in that 'the mere possibility that the Texas courts would find Rule 364 [concerning the supersedeas bond requirements] unconstitutional as applied does not call for Pullman abstention and that Texas had failed to 'provide adequate procedures for adjudication of D's federal claims.' The Supreme Court granted certiorari.

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