in Re: Cynthia Banigan ( 2023 )

GRANT in part; DISMISS and Opinion Filed January 12, 2023
S In The
Court of Appeals
Fifth District of Texas at Dallas
No. 05-22-01084-CV
IN RE CYNTHIA BANIGAN, Relator
Original Proceeding from the 417th Judicial District Court
Collin County, Texas
Trial Court Cause No. 417-05910-2021
OPINION
Before Chief Justice Burns, Justice Partida-Kipness, and Justice Smith
Opinion by Justice Smith
Relator Cynthia Banigan (Wife) filed a petition for writ of mandamus seeking
relief from (1) a 2015 declaratory judgment establishing that the parties’ partition of
community property agreement is valid and enforceable, and (2) an order referring
to arbitration Wife’s bill of review proceeding to set aside the declaratory judgment.
Wife also filed an emergency motion to stay an order compelling arbitration in the
bill of review proceeding. Because we conclude the declaratory judgment is void,
we partially grant the writ instanter and vacate the declaratory judgment. We
otherwise dismiss as moot the petition for writ of mandamus and emergency motion.
Background
A. Declaratory Judgment Regarding Partition Agreement
On October 14, 2015, real party in interest Michael Banigan (Husband) and
Wife signed a Partition or Exchange Agreement, agreeing to divide their community
property and recharacterize the divided community property as their respective
separate property. The parties also agreed to submit to binding arbitration “any
dispute or controversy regarding the validity, interpretation, or enforceability of this
agreement, as well as all issues involving its enforcement in connection with a
dissolution proceeding between the parties as the sole and exclusive remedial
proceeding.” The arbitration clause stated that “[e]ach party expressly waives any
right to trial by a court or trial by jury,” and that “[i]f a dissolution proceeding or
declaratory judgment proceeding is filed in Texas, the arbitrator appointed under this
agreement will simultaneously be designated as special master under the Texas
Rules of Civil Procedure.”
On the same day that they signed the partition agreement, Husband and Wife
signed a waiver of disclosure of financial information executed in accordance with
section 4.102 of the Texas Family Code. In that waiver, they each agreed that they
(1) were provided a fair and reasonable disclosure of the property and financial
obligations, (2) did not desire a complete accounting of the property and financial
obligations of the other spouse, and (3) waived the opportunity for further
investigation.
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Later that day, Husband filed a petition for declaratory judgment under the
Uniform Declaratory Judgment Act, seeking to establish the validity and
enforceability of the partition agreement. The proceeding was filed in the 417th
Judicial District Court of Collin County. In her response to the petition, Wife simply
confirmed the facts set forth in the petition and expressed her consent to the entry of
orders declaring the validity of the partition agreement.
The declaratory judgment proceeding was heard by Judge Benjamin Smith of
the 380th Judicial District Court, who was sitting for Judge Cynthia Wheless of the
417th Judicial District Court. At the hearing, Husband testified that he was of sound
mind and body when he signed the partition agreement and disclosure agreement,
both parties executed the documents voluntarily, he made a complete disclosure of
his assets to Wife as much as he possibly could, he was comfortable with the
disclosure that Wife had given him with respect to her assets, and he waived further
disclosure of her assets in conjunction with the execution of the agreements. He also
testified that he negotiated the partition agreement freely and willingly and was not
under any duress. Wife testified that her responses were the same as Husband’s
responses.
After the hearing, Judge Smith issued a declaratory judgment granting
Husband’s request for relief. Judge Smith found that the partition agreement
contained all the requisite terms and formalities to ensure enforceability; the
agreement was unambiguous and expressed fully and completely the intent and
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agreement of both parties; both parties acted willingly and freely in making the
agreement; and neither Husband nor Wife negotiated or executed the agreement
under duress, constraint, or compulsion of any kind whatsoever. Judge Smith
accordingly ordered that the partition agreement was enforceable, valid and binding
in its entirety.
B. Divorce Action
On January 15, 2021, Husband filed a petition for divorce in the 468th Judicial
District Court of Collin County. On May 25, 2021, Wife filed a counter-petition for
divorce. Challenging the validity of the partition agreement, she complained that
she did not voluntarily sign it and it was unconscionable.
On June 9, 2021, Husband filed a Motion for Appointment of Master in
Chancery and For Referral to Arbitration. In his motion, Husband requested that the
court appoint a special master and compel arbitration by enforcing the provision in
the partition agreement requiring the parties to arbitrate certain disputes and utilize
a special master in the event of a dissolution proceeding related to their marriage.
On September 13, 2021, Husband filed a Supplemental Motion for Orders Regarding
Appointment of Master in Chancery, Referral to Arbitration, and Abatement.
Meanwhile, Wife filed a brief arguing that, under section 6.6015 of the Texas Family
Code, the court was required to give her a trial on the issue of the enforceability of
the arbitration provision in the partition agreement before referring the matter to
arbitration.
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On September 16, 2021, the court held a hearing on the motion to refer the
action to arbitration. Wife argued that the court needed to determine the validity and
enforceability of the agreement before compelling arbitration. Husband argued that
family code section 6.6015 does not apply to court orders and agreements approved
by the court. On September 28, 2021, the court signed an order granting the motion
to refer the divorce action to arbitration. The court ordered that the pending dispute
between Husband and Wife be arbitrated according to the terms and provisions of
the partition agreement.
C. Bill of Review Proceeding to Set Aside Declaratory Judgment
On October 25, 2021, Wife filed a petition for bill of review in the 429th
Judicial District Court. She requested that the trial court set aside and vacate the
declaratory judgment, arguing that the partition agreement was signed involuntarily
and there was no existing justiciable claim or controversy when the trial court issued
the declaratory judgment. On December 27, 2021, the bill of review suit was
transferred to the 417th Judicial District Court (where the declaratory judgment was
issued).
Meanwhile, Husband filed a motion for referral of the bill of review
proceeding to arbitration. On October 11, 2022, Judge Cynthia Wheless signed an
Order Compelling Arbitration and Appointing Arbitrator, which ordered arbitration
for all matters filed in the trial court, subject to the arbitrator’s “gateway”
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determination regarding whether the declaratory judgment cause of action was
arbitrable under the partition agreement.
D. This Original Proceeding
Wife filed this petition for writ of mandamus, arguing that (1) the declaratory
judgment is void and (2) the trial court erred by referring the bill of review
proceeding to arbitration. Husband filed a response to the petition, arguing that
(1) Wife’s adequate remedy by appeal precludes mandamus review, (2) the
declaratory judgment is not void, (3) the trial court properly determined that the
declaratory judgment is res judicata of Wife’s attack, (4) Wife cannot establish
procedural unconscionability, and (5) the trial court properly rejected Wife’s
argument that Husband waived arbitration by commencing the declaratory judgment
action.
Mandamus Standards
Ordinarily, to be entitled to a writ of mandamus, a relator must show that the
trial court clearly abused its discretion and the relator lacks an adequate remedy by
appeal. In re Turner, 591 S.W.3d 121, 124 (Tex. 2019) (orig. proceeding). A trial
court clearly abuses its discretion if it reaches a decision so arbitrary and
unreasonable as to amount to a clear and prejudicial error of law or clearly fails to
analyze the law correctly or apply the law correctly to the facts. In re H.E.B. Grocery
Co., L.P., 492 S.W.3d 300, 302–03 (Tex. 2016) (orig. proceeding) (per curiam); In
re Cerberus Capital Mgmt., L.P., 164 S.W.3d 379, 382 (Tex. 2005) (orig.
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proceeding) (per curiam). A relator need not show that it does not have an adequate
remedy by appeal when the complained-of order is void. In re Sw. Bell Tel. Co., 35
S.W.3d 602, 605 (Tex. 2000) (orig. proceeding) (per curiam).
Declaratory Judgment
Wife asserts that the 2015 declaratory judgment is void because there was no
existing justiciable controversy when the court issued it.1 We agree.
The Uniform Declaratory Judgments Act (UDJA) allows a person interested
under a written contract to have determined any question of construction or validity
arising under the contract and obtain a declaration of “rights, status, or other legal
relations.” TEX. CIV. PRAC. & REM. CODE ANN. §§ 37.003(a), 37.004(a). The
UDJA, however, does not create or augment a trial court’s subject matter
jurisdiction—it is “merely a procedural device for deciding cases already within a
court’s jurisdiction.” Tex. Ass’n of Bus. v. Tex. Air Control Bd., 852 S.W.2d 440,
444 (Tex. 1993). The requirement that a ripe, justiciable controversy exists applies
to declaratory judgment actions. Sw. Elec. Power Co. v. Lynch, 595 S.W.3d 678,
685 (Tex. 2020); Bonham State Bank v. Beadle, 907 S.W.2d 465, 467 (Tex. 1995)
(“[d]eclaratory judgment is appropriate only if a justiciable controversy exists as to
the rights and status of the parties and the controversy will be resolved by the
declaration sought”). If a justiciable controversy does not exist, the trial court lacks
1
In his response, Husband claims that, in this mandamus proceeding, Wife challenges only the
order compelling arbitration. Her petition for writ of mandamus, however, clearly challenges the
declaratory judgment as well as the trial court order referring the bill of review to arbitration.
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subject matter jurisdiction. Transp. Ins. Co. v. WH Cleaners, Inc., 372 S.W.3d 223,
227 (Tex. App.—Dallas 2012, no pet.).
“To constitute a justiciable controversy, there must exist a real and substantial
controversy involving a genuine conflict of tangible interests and not merely a
theoretical dispute.” Beadle, 907 S.W.2d at 467 (citations omitted). A justiciable
controversy need not be a “fully ripened cause of action” to support a declaratory
judgment proceeding. Noell v. Air Park Homeowners Ass’n, Inc., 246 S.W.3d 827,
832 (Tex. App.—Dallas 2008, pet. denied) (citing Tex. Dep’t of Pub. Safety v.
Moore, 985 S.W.2d 149, 153 (Tex. App.—Austin 1998, no pet.)). But, to confer
jurisdiction onto the court, the fact situation must manifest the “ripening seeds of a
controversy” such that it indicates “threatened litigation in the immediate future
which seems unavoidable.” Moore, 985 S.W.2d at 153–54 (citation omitted). The
UDJA does not give courts the power to rule on hypothetical situations or determine
questions that are not essential to the decision of an actual controversy, even though
the questions may require adjudication in the future. Firemen’s Ins. Co. v. Burch,
442 S.W.2d 331, 333 (Tex. 1968), superseded on other grounds by constitutional
amendment as recognized in Farmers Tex. Cty. Mut. Ins. Co. v. Griffin, 955 S.W.2d
81 (Tex. 1997).
Here, the allegations and the evidence adduced at the hearing in the
declaratory judgment proceeding do not show, as required, either a pending cause of
action between the parties or a clear indication of the extent of the parties’
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differences such that a court may presume one is imminent. See Noell, 246 S.W.3d
at 834–36. To the contrary, in her response to Husband’s petition for declaratory
judgment, Wife expressly confirmed the facts set forth in the petition and consented
to the entry of orders declaring the validity of the partition agreement. At the
hearing, she agreed with Husband’s position entirely. Thus, because the declaratory
judgment did not resolve any live controversy between the parties, we conclude that
the trial court lacked subject matter jurisdiction to issue it. See, e.g., id. (trial court
lacked subject matter jurisdiction where evidence showed only a theoretical dispute,
rather than a real and substantial controversy or the ripening seeds of a controversy).
Husband nevertheless argues that the declaratory judgment’s recital that the
trial court possessed subject matter jurisdiction is preclusive. Quoting from
Engelman Irrigation District v. Shields Bros., Inc., Husband asserts that, once a trial
court determines it has subject matter jurisdiction, that determination “precludes the
parties from litigating the question of the court’s subject-matter jurisdiction in
subsequent litigation.” 514 S.W.3d 746, 752 (Tex. 2017). In Engelman, however,
the supreme court was quoting from Section 12 of the Second Restatement of
Judgments to make certain observations about the modern trend favoring finality;
the supreme court did not adopt the Restatement provision as law. See Harris Cty.
Hosp. Dist. v. Pub. Util. Comm’n of Tex., 577 S.W.3d 370, 378 (Tex. App.—Austin
2019, pet. denied) (noting that the supreme court in Engelman did not rest its holding
on Section 12 but instead merely acknowledged the modern trend favoring finality
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and certainty). Engelman also addressed a different issue regarding the preclusive
effect of sovereign immunity determinations. It is well-established Texas law that
“[a] judgment rendered without subject-matter jurisdiction is void,” Engelman, 514
S.W.3d at 750, and we may examine the record to determine if subject matter
jurisdiction is negated in spite of recitals in the judgment. See In re D.L.S., No. 05-
08-00173-CV, 2009 WL 1875579, at *3 n.2 (Tex. App.—Dallas July 1, 2009, no
pet.) (mem. op.) (citing Alfonso v. Skadden, 251 S.W.3d 52, 55 (Tex. 2008) (per
curiam)).
Husband next argues that Wife’s agreement to the declaratory judgment
estops her from attacking it now. We conclude this argument lacks merit, too,
because a party cannot by its own conduct confer jurisdiction on a court when none
exists. Wilmer-Hutchins Indep. Sch. Dist. v. Sullivan, 51 S.W.3d 293, 294–95 (Tex.
2001) (per curiam). Indeed, it is well-established that subject matter jurisdiction
cannot be waived or conferred by consent, estoppel, or agreement. See Dubai
Petroleum Co. v. Kazi, 12 S.W.3d 71, 76 (Tex. 2000) (citing Fed. Underwriters
Exch. v. Pugh, 174 S.W.2d 598, 600 (Tex. 1943)).
Husband also contends that Wife lacks any affirmative evidence disproving
the existence of a controversy or dispute between the parties when Husband filed his
petition for declaratory judgment. The absence of any allegations or evidence
demonstrating the existence of a justiciable controversy, however, is a sufficient
basis upon which to conclude that an order is void. See City of El Paso v. Arditti,
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378 S.W.3d 661, 665 (Tex. App.—El Paso 2012, no pet.) (declaring order void for
lack of subject matter jurisdiction based on the absence of evidence in the record
showing that any of the municipal court judge appellees had before him or her any
party having standing to bring suit, a live controversy existing between parties, and
a case that was justiciable).
This Court must construe the petition in favor of the pleader and, if necessary,
review the entire record to determine if any evidence supports the trial court’s
jurisdiction to hear the case. See Tex. Ass’n of Bus., 852 S.W.2d at 446. Because
the allegations and the evidence adduced at the hearing in the declaratory judgment
proceeding do not show either a pending cause of action between the parties or a
clear indication of the extent of the parties’ differences such that a trial court may
presume one is imminent, we conclude the declaratory judgment is void.
The declaratory judgment was issued by Judge Smith, who was sitting by
assignment for Judge Wheless and is no longer participating in the case. Under these
circumstances, we normally abate the mandamus proceeding to allow the successor
judge to reconsider the ruling. See In re Baylor Med. Ctr. at Garland, 280 S.W.3d
227, 228 (Tex. 2008) (orig. proceeding); TEX. R. APP. P. 7.2(b) (“If the case is an
original proceeding under Rule 52, the court must abate the proceeding to allow the
successor to reconsider the original party’s decision.”). However, because we have
concluded that the declaratory judgment is void, there is no decision for Judge
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Wheless to reconsider and abatement is unnecessary.2 See In re Ortega, No. 05-18-
01499-CV, 2019 WL 244556, at *3 n.2 (Tex. App.—Dallas Jan. 17, 2019, orig.
proceeding) (mem. op.). Accordingly, we order a writ of mandamus issue instanter
and vacate the declaratory judgment as void. See id. at *3.
Referral of Bill of Review Proceeding to Arbitration
In her remaining issue, Wife asserts the trial court’s referral of the bill of
review proceeding to arbitration is an abuse of discretion and requests that this Court
grant a writ of mandamus to correct it.3 In her petition for bill of review, Wife
requested that the trial court set aside and vacate the declaratory judgment. Because
this Court now vacates the declaratory judgment, Wife has obtained the relief sought
in the bill of review proceeding, rendering moot the related issue of whether the trial
court abused its discretion by referring that proceeding to arbitration. See generally
In re Tex. State Univ., No. 03-19-00364-CV, 2019 WL 2707971, at *1 (Tex. App.—
Austin June 27, 2019, orig. proceeding) (mem. op.); In re Int’l Agencies Co., Ltd.,
No. 01-16-00383-CV, 2016 WL 6462199, at *1 (Tex. App.—Houston [1st Dist.]
Nov. 1, 2016, orig. proceeding) (per curiam) (mem. op.) (dismissing mandamus
2
Judge Wheless presently presides over the bill of review proceeding, but it is separate from the
declaratory judgment proceeding. See Ross v. Nat’l Ctr. for the Emp’t of the Disabled, 197 S.W.3d 795,
798 (Tex. 2006) (per curiam) (“[A] bill of review is a separate proceeding from the underlying suit . . .”);
In re J.J., 394 S.W.3d 76, 81 (Tex. App.—El Paso 2012, no pet.) (“Although a bill of review directly attacks
a judgment rendered in a particular case, it is nonetheless an independent, separate suit filed under a
different cause number.”).
3
Although the court presiding over the divorce action also entered an order compelling arbitration,
Wife’s mandamus petition challenges only Judge Wheless’s October 11, 2022 order compelling arbitration
in the bill of review proceeding.
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petition as moot after relator received relief requested). Accordingly, we dismiss as
moot the remaining portion of Wife’s mandamus petition seeking relief with respect
to the trial court’s order compelling arbitration in the bill of review proceeding. We
also dismiss as moot Wife’s emergency motion to stay that order.
Conclusion
Having concluded the declaratory judgment is void for lack of subject-matter
jurisdiction, we partially grant Wife’s petition and order that a writ of mandamus
issue instanter vacating the trial court’s October 16, 2015 declaratory judgment as
void. We order the remaining portion of Wife’s mandamus petition and Wife’s
emergency motion to stay the trial court’s October 11, 2022 order compelling
arbitration in the bill of review proceeding dismissed as moot.
/Craig Smith/
CRAIG SMITH
JUSTICE
221084F.P05
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