Frank Keathley, Individually and Dba Top Shelf Antiques v. J.J. Investment Company, L.T.D. ( 2015 )

ACCEPTED
06-14-00036-CV
SIXTH COURT OF APPEALS
TEXARKANA, TEXAS
2/12/2015 6:02:10 PM
DEBBIE AUTREY
CLERK
APPELLATE CASE NO. 06-14-00036-CV
TRIAL COURT CASE NUMBER 10,072
FILED IN
6th COURT OF APPEALS
TEXARKANA, TEXAS
IN THE COURT OF APPEALS FOR THE SIXTH JUDICIAL2/13/2015
DISTRICT 8:57:00 AM
OF TEXAS AT TEXARKANA, TEXAS DEBBIE AUTREY
Clerk
FRANK KEATHLEY, INDIVIDUALLY, AND DOING BUSINESS AS TOP
SHELF ANTIQUES, APPELLANT
VS.
J.J. INVESTMENTS COMPANY, L.L.P., ELLEN JAGGERS, DISTRICT CLERK OF
FRANKLIN COUNTY, TEXAS, FRANKLIN COUNTY CONSTABLE RANDY
GREEN APPELLEES
AND
CORBITT BAKER, APPELLEE AND PARTY AT INTEREST
Appeal from Cause No. 10,072 in the District Court of Franklin County, Texas,
62nd Judicial District
The Honorable Will Baird, District Judge
APPELLANT'S BRIEF
ORAL ARGUMENT WAIVED, SUBJECT TO COURT APPROVAL
Larry R. Wright
State Bar No. 22048000
P.O. Box 144
406 South Main Street
Winnsboro, Texas 75494
Telephone 903-342-1089
Fax 903-342-1088
E-mail lawyerwright@msn.com
Attorney for Appellant
TABLE OF CONTENTS
DESCRIPTION PAGE
IDENTITY OF THE PARTIES AND COUNSEL iv
INDEX OF AUTHORITIES vi
STATEMENT OF THE CASE 1
STATEMENT OF THE JURISDICTION 3
STATEMENT REGARDING ORAL ARGUMENT 3
POINTS OF ERROR ON ISSUES PRESENTED 3
POINT OF ERROR NO. ONE: 3
The trial court erred in ordering the Clerk to disburse $30,000 from
registry funds to Travis Clardy based on the writ of execution levied under
Corbitt Baker's judgment against Frank Keathley because a writ of
execution is not a proper legal remedy for enforcement of a judgment
against a judgment debtor's funds in the possession of a third party and
because the funds were in legal custody of the Court.
POINT OF ERROR NO. TWO: 3
The trial court erred in ordering the Clerk to disburse $30,000 from
registry funds to Travis Clardy based on the writ of execution levied under
Corbitt Baker's judgment against Frank Keathley because the levy on the
Clerk's funds failed to comply with the requirements of Rule 637 of Tex.
R. Civ. P. and Tex. Prop. Code Sec. 42.003.
POINT OF ERROR NO. THREE: 4
The trial court erred in ordering the Clerk to disburse $30,000 from
registry funds to Travis Clardy based on Corbitt Baker's instruction to the
Constable to levy the writ of execution against all of the $41,763.50
because Frank Keathley did not own all the funds and the levy was
wrongful as to the other parties who did own an interest in the funds.
Appellant’s Brief ii
DESCRIPTION PAGE
POINT OF ERROR NO. FOUR: 4
The trial court erred in ordering the Clerk to disburse $30,000 from the
registry funds to Travis Clardy based on levy of the writ of execution
issued under the Corbitt Baker judgment against Frank Keathley because
the judgment debtor's ownership interest in the registry funds was exempt
from execution under Property Code Sec. 42.001 and Sec. 42.002.
POINT OF ERROR NO. FIVE: 4
The trial court erred in ordering the Clerk to disburse $30,000 from the
registry funds to Travis Clardy based on levy of the writ of execution
issued under Corbitt Baker's judgment against Frank Keathley as entered
March 8, 2011, because the judgment was not a final judgment as required
by Rule 622, Tex. R. Civ. P. and because the writ was voided when the
judgment was revoked by the judgment entered April 12, 2011, reinstated
by the Order entered April 18, 2011, appealed and reformed and affirmed
by the Twelfth Court of Appeals Opinion delivered April 3, 2013 and
Judgment dated April 24, 2011.
STATEMENT OF FACTS 4
SUMMARY OF THE ARGUMENT 8
SUMMARY OF THE ARGUMENT AND SUPPORT OF POINTS
OF ERROR NO. ONE 8
SUMMARY OF THE ARGUMENT AND SUPPORT OF POINTS
OF ERROR NO. TWO 9
SUMMARY OF THE ARGUMENT AND SUPPORT OF POINTS
OF ERROR NO. THREE 10
SUMMARY OF THE ARGUMENT AND SUPPORT OF POINTS
OF ERROR NO. FOUR 11
SUMMARY OF THE ARGUMENT AND SUPPORT OF POINTS
OF ERROR NO. ONE 12
ARGUMENT AND BRIEF IN SUPPORT OF POINTS OF ERROR 13
ARGUMENT AND BRIEF IN SUPPORT OF POINT OF ERROR NO. ONE 13
Appellant’s Brief iii
ARGUMENT AND BRIEF IN SUPPORT OF POINT OF ERROR NO. TWO 21
ARGUMENT AND BRIEF IN SUPPORT OF POINT OF ERROR NO. THREE 23
ARGUMENT AND BRIEF IN SUPPORT OF POINT OF ERROR NO. FOUR 24
ARGUMENT AND BRIEF IN SUPPORT OF POINT OF ERROR NO. FIVE 27
PRAYER 30
CERTIFICATE OF WORD COUNT 32
CERTIFICATE OF SERVICE 32
APPENDIX
IDENTITY OF THE PARTIES AND COUNSEL
APPELLANT:
FRANK KEATHLEY, INDIVIDUALLY AND DOING BUSINESS
AS TOP SHELF ANTIQUES
COUNSEL FOR APPELLANT:
LARRY R. WRIGHT
STATE BAR NO. 22048000
P.O. BOX 144
406 SOUTH MAIN STREET
WINNSBORO, TEXAS 75494
TELEPHONE 903-342-1089
FAX 903-342-1088
E-MAIL lawyerwright@msn.com
APPELLEE:
J.J. INVESTMENTS COMPANY, L.T.D.
Appellant’s Brief iv
COUNSEL FOR J.J. INVESTMENTS COMPANY, L.T.D.
LARRY BLOUNT
POWERS & BLOUNT, L.L.P.
STATE BAR NO. 02506450
200 JACKSON ST.
P.O. BOX 877
SULPHUR SPRINGS, TX 75483
TELEPHONE 903-885-6506
FAX 903-885-1199
E-MAIL lblount@ymail.com
APPELLEES:
ELLEN JAGGERS, DISTRICT CLERK, FRANKLIN COUNTY, TEXAS
FRANKLIN COUNTY CONSTABLE RANDY GREEN
COUNSEL FOR FRANKLIN COUNTY APPELLEES
GENE STUMP
STATE BAR NO. 24048824
P.O. BOX 606
MOUNT VERNON, TX 75457
TELEPHONE 903-305-9079
FAX 903-388-2272
E-MAIL genestump@yahoo.com
APPELLEE (PARTY AT INTEREST):
CORBITT BAKER
COUNSEL FOR APPELLEE (PARTY AT INTEREST)
TRAVIS P. CLARDY
STATE BAR NO. 04268020
CLARDY LAW OFFICES
P.O. BOX 635426
NACOGDOCHES, TX 75961
TELEPHONE 936-564-2500
FAX 936-564-2507
E-MAIL travis@clardy-law.com
Appellant’s Brief v
INDEX OF AUTHORITIES
CASES: PAGE
TEXAS SUPREME COURT:
Bank One, Texas, N.A. vs. Sunbelt Savings, F.S.B., 824 S.W.2d 557(Tex. 1992) 15,20
21,24
First Southern Properties, Inc. v. Vallone, 533 S.W.2d 339, 342 (Tex. 1976) 17
Flanary v. Wade, 102 Tex. 63, 113 S.W. 3 (1908) 29
Hood v. Amarillo National Bank, 815 /s,/w,2d 545m 548 (Tex. 1991) 28
In Re: Burlington Coat Factory Warehouse of McAllen, Inc., 167 S.W.3d 827,
831 (Tex. 2006) 28
Sellers v. Harris County, 483 S.W.2d 242 (Tex.Sup. 1972) 19
Underwoof v. Brown, 29 Tex. 163, 168,(1902) 29
TEXAS COURT OF APPEALS:
Collum v. DeLaughter, 535 S.W.2d 390, 393 (Tex.App.--Texarkana, 1976,
writ ref'd n.r.e.) 22
Daniels v. Pecan Valley Ranch, Inc., 831 S.W.2d 372, 382 (Tex.App.--
San Antonio, 1992, writ denied) 17,18
Hardy v. Construction Systems, Inc., 556 S.W.2d 843 (Tex.Civ.App,--
Houston (14 Dist.) 1977, writ ref'd n.r.e.) 19
Houston Drywall, Inc. v. Const. Systems, Inc., 541 S.W.2d 220 (Tex.Civ.App.--
Houston(1st Dist.) 1976, no writ) 18
In Re: Edward B. Elmer, M.D.P.A.,158 S.W.3d 603, 605 (Tex.App.--San Antonio
2005, orig. mandamus proceeding) 28
Overton Bank & Trust, N.A. v. PaineWebber, Inc.,922 S.W.2d 311 (Tex.Civ.App.--
Fort Worth, 1996, no writ) 20
Appellant’s Brief vi
Pantaze v. Slocum, 518 S.W.2d 407, 411 (Tex.Civ.App.--Fort Worth, 1974,
writ ref'd n.r.e.) 22
Appellant’s Brief vi
CASES: PAGE
Pace v. McEwen, 617 S.W.2d 816, 819 (Tex.Civ.App.--Houston (14th Dist.)
1981, no writ) 20
Reyes v. Barrasa,___ S.W.2d ___, No. 04-12-00673, Tex.App.--
San Antonio, September 11, 2013, ___ 22
Southwestern Bell Telephone Company vs. Watson, 413 S.W.2d 845(Tex.Civ.App.--Corpus Christi 1967, no writ) 18
TEXAS CIVIL PRACTICE & REMEDIES CODE
Section 63.001 15
TEXAS RULES OF CIVIL PROCEDURE:
Rule 329b 18
Rule 621a 28
Rule 622 12,28
Rule 627 28,30
Rule 628 28
Rule 630 14
Rule 637 9,14,15
20,21
22,24
Rule 657 15
TEXAS PROPERTY CODE
Section 42.001 11,24
25,26
Appellant’s Brief vii
Section 42.002 11,24
25
Section 42.0021 26
Section 42.003 7,9,10
21,25
OTHER
Black's Law Dictionary 17
Appellant’s Brief viii
STATEMENT OF THE CASE
This case originated in the District Court of Franklin County, 62nd District, as a
dispute over a commission sales agreement between J.J. Investment Company, LLC and
its members (CR 5;CR29) with Frank Keathley ("Keathley"), (CR9;CR19)) and involved,
among other things, determination of ownership of $41,763.50 of sales proceeds paid into
the registry of the Clerk of the Court (CR17). The case was settled by an order of
dismissal (CR34) and an order to distribute funds (CR36) under which Keathley was to
receive $40,000. This appeal results from post settlement actions by Baker against
Keathley and the $40,000.
On the date of the order to distribute funds (March 25, 2011), Corbitt Baker
("Baker") levied a writ of execution issued under Rule 628 TRCP on an interlocutory
judgment dated March 8, 2011 in favor of Baker against Keathley entered by County
Court at Law, No. 3 in Smith County, Texas (CR37). The writ was levied Constable,
Randy Green on Ellen Jaggers, District Clerk (CR39) seeking to recover the $41,763.50
in the District Court registry (CR40). On April 12, 2011, the Smith County Court at Law
reversed its March 25, 2011 judgment and entered a new judgment in favor of Keathley
and against Baker (CR 58). Then again, on April 18, 2011, the Smith County Court at
Law reversed itself and entered an order reversing its April 18, 2011 judgment and
reinstating its March 25, 2011 judgment for Baker and against Keathley. The Smith
County case was appealed to the Twelfth District Court of Appeals in Tyler where the
Order reinstating the original March 25, 2011 judgment was affirmed (See Appendix for
Opinion).
Appellant’s Brief 1
After the levy, Keathley filed an application for injunctive relief and declaratory
judgment (CR42;CR54) and was granted a temporary restraining order against Baker, the
District Clerk and the Constable (CR64) which was continued as a temporary injunction
(CR91). Keathley obtained and filed a writ of supersedeas of the Smith County judgment
(CR76). Baker filed a motion to dissolve the temporary injunction (CR102). Keathley
filed a second supplemental original application for injunctive relief and declaratory
judgment on the issues of garnishment and execution (CR130); a motion for summary
judgment on levy of the writ of execution (CR154) which were denied (CR304;CR305);
Keathley filed a motion to modify injunction and release fund (CR205) and a supporting
designation of exempt property (CR270). All of Keathley's motions and applications for
declaratory relief were disposed of by the Court (CR305). Keathley filed his request for
findings of fact and conclusions of law, motion for reconsideration; motion for new trial
and notice of appeal (CR308).
Proceedings in the trial court were stayed by Keathley's bankruptcy (CR310) until
Keathley's discharge (CR328;CR333) and the stay lifted (CR319). The trial court entered
its order disposing of all remaining issues (CR321) under which the $40,000 originally
ordered distributed to Keathley under the settlement was modified and the Clerk directed
to distribute $10,000 to Larry R. Wright, Keathley's attorney, under assignment of an
interest in the settlement (CR269) and to distribute $30,000 to Travis Clardy as attorney
for Baker on Baker's judgment for attorneys' fees awarded against Keathley in the Smith
CountyCourt at Law (CR351). All of Keathley's request for findings of fact and other
motions and requests were denied (CR351). After the appeal was reinstated by this Court
having filed his notice of appeal (CR316), Keathley requested the Clerk's Record
(CR340) and Reporter's Record (345), paid all required fees and submits this appellant's
brief in support of his appeal.
Appellant’s Brief 2
STATEMENT OF JURISDICTION
Jurisdiction over the case on appeal from the 62nd District Court of Franklin
County, Texas involving an amount in controversy over $100 and coming from a Court
within the Sixth Judicial District of Texas is proper under Section 22.20(g) and Section
22.22(a) of the Government.
STATEMENT REGARDING ORAL ARGUMENT
Unless the Court deems oral argument would assist in reviewing the details of
events related to the issues presented in this case, particularly with respect to the issues of
exempt or nonexempt property, Appellant does not request Oral Argument.
POINTS OF ERROR ON ISSUES PRESENTED
POINT OF ERROR NO. ONE:
The trial court erred in ordering the Clerk to disburse $30,000 from registry funds
to Travis Clardy based on the writ of execution levied under Corbitt Baker's judgment
against Frank Keathley because a writ of execution is not a proper legal remedy for
enforcement of a judgment against a judgment debtor's funds in the possession of a third
party and because the funds were in legal custody of the Court.
POINT OF ERROR NO. TWO:
The trial court erred in ordering the Clerk to disburse $30,000 from registry funds
to Travis Clardy based on the writ of execution levied under Corbitt Baker's judgment
against Frank Keathley because the levy on the Clerk's funds failed to comply with the
requirements of Rule 637 of Tex. R. Civ. P. and Tex. Prop. Code Sec. 42.003.
Appellant’s Brief 3
POINT OF ERROR NO. THREE:
The trial court erred in ordering the Clerk to disburse $30,000 from registry funds
to Travis Clardy based on Corbitt Baker's instruction to the Constable to levy the writ of
execution against all of the $41,763.50 because Frank Keathley did not own all the funds
and the levy was wrongful as to the other parties who did own an interest in the funds.
POINT OF ERROR NO. FOUR:
The trial court erred in ordering the Clerk to disburse $30,000 from the registry
funds to Travis Clardy based on levy of the writ of execution issued under the Corbitt
Baker judgment against Frank Keathley because the judgment debtor's ownership interest
in the registry funds was exempt from execution under Property Code Sec. 42.001 and
Sec. 42.002.
POINT OF ERROR NO. FIVE:
The trial court erred in ordering the Clerk to disburse $30,000 from the registry
funds to Travis Clardy based on levy of the writ of execution issued under Corbitt Baker's
judgment against Frank Keathley as entered March 8, 2011, because the judgment was
not a final judgment as required by Rule 622, Tex. R. Civ. P. and because the writ was
voided when the judgment was revoked by the judgment entered April 12, 2011,
reinstated by the Order entered April 18, 2011, appealed and reformed and affirmed by
the Twelfth Court of Appeals Opinion delivered April 3, 2013 and Judgment dated April
24, 2011.
STATEMENT OF FACTS
This appeal arises as the result of post judgment events involving two lawsuits in
which Frank Keathley ("Keathley") was a party. This lawsuit in the 62nd District Court
of Franklin County, Texas, was filed as a commission sales contract dispute by J.J.
Investments Company, LTD ("JJ Investments") (CR6) against Keathley (CR9) in which
Keathley filed a counterclaim (CR19) which was answered by JJ Investments (CR29) .
On March 25, 2011, the Franklin County District Court case was settled (CR34) and the
Appellant’s Brief 4
trial court entered its Order to Distribute Funds (CR36) totaling $41,763.50 which had
been paid into the registry of the Clerk of the Court (CR17). Under the Order to
Distribute, Keathley was to receive $40,000, Larry R. Wright was to receive $845.00 (for
costs) and JJ Investments was to receive $918.50 from the Court's registry funds.
On the date the Order to Distribute Funds was entered, Franklin County Constable
Randy Green levied a writ of execution against all of the registry funds held by Franklin
County District Clerk, Ellen Jaggers (CR37). The writ was issued under an interlocutory
judgment for Corbitt Baker ("Baker") against Keathley and his wife, Melissa Keathley, in
a real estate contract lawsuit filed by Keathley and wife against Baker in the County
Court at Law, No. Three of Smith County, Texas. The first judgment in the Smith
County case was entered March 8, 2011 in favor of Corbitt for his attorneys' fees and
costs and against Keathley and wife (CR37). On April 12, 2011, the Smith County case
had a second judgment entered reversing the March 8, 2011 judgment and granting
judgment for Keathley and wife against Baker (CR60). Then, on April 18, 2011, the
Smith County judge signed an Order Vacating Final Judgment Erroneously Entered April
12, 2011 in which the March 8, 2011 judgment was declared to be the final judgment of
the court. The Smith County case was appealed to the Twelfth Court of Appeals in Tyler.
The opinion of the Court of Appeals affirmed the action of the trial court and held that
the April 18, 2011 order properly established the March 8, 2011 judgment as the final
judgment in the case (CR112;CR124). The March 8, 2011 judgment became a final
judgment by mandate of the Court of Appeals (CR110) and awarded Baker judgment
against Keathley and wife for attorneys' fees, costs and interest.
Appellant’s Brief 5
Baker obtained his writ of execution from the Smith County Clerk before the
Smith County judgment was final under the special provisions of Rule 628 Tex. R. Civ.
P. (CR37). At the specific request of Baker's attorney, Constable Green was instructed to
levy Baker's writ of execution against all the funds held in the registry and instructed to
not contact Keathley regarding the levy (CR40). As shown by the Officer's Return,
Constable Green levied on all the funds held by the District Clerk (CR39).
When informed of the levy, Keathley obtained a writ of supersedeas from the
County Clerk of Smith County, Texas and filed it with the District Clerk in Franklin
County, Texas (CR79). Keathley filed his application for injunctive relief and
declaratory judgment (CR42;CR54;CR130) and received issuance of a temporary
restraining order stopping the levy (CR64) which was continued as a temporary
injunction (CR91). Keathley sought to have the levy quashed by a motion for summary
judgment (CR154) that was denied (CR304). Keathley sought to have the injunction
modified and his funds released (CR205) that was denied (CR305). Baker filed a motion
to dissolve the temporary injunction (CR167) that was granted (CR305).
By a motion for release of registry funds ordered distributed to Larry R. Wright
(CR67) the $845.00 for court costs was released from the registry by agreed order
(CR97). JJ Investments did not file any request for release of the funds ordered distribute
to it under the original order (CR36).
Keathley filed the Agreement between Larry R. Wright and Frank Keathley dated
March 15, 2011 as documentation of assignment of an interest in the $40,000 settlement
Appellant’s Brief 6
proceeds in exchange for a reduction of the attorney's fee in the original lawsuit to
$10,000 (CR269).
In compliance with Section 42.003 of the Tex. Prop. Code, Keathley a
Designation of Exempt Property declaring and designating the property owned by him
and his wife which qualified for exemption under Section 42.001 and 42.002 of the Tex.
Prop. Code. Baker did not file any objection to the designation and did not file any
controverting evidence to such designation. Under the designation, Keathley claimed the
$40,000 in the Court's registry was exempt under the family exemption (Sec. 42.001).
Following entry of the orders shown at CR305, Keathley filed his Request for
Findings of Fact and Conclusions of Law, Motion for Reconsideration and/or Motion for
New Trial and Notice of Appeal (CR308). The trial court entered its Order Denying
Frank Keathley's Request for Findings of Fact and Conclusions of Law, Motion for
Reconsideration and/or Motion for New Trial and Notice of Appeal (CR351).
On April 28, 2014, Keathley filed his Notice of Bankruptcy Case Filing (CR310)
and on May 7, 2014, he filed his Notice of Bankruptcy (CR314). On September 16,
2014, an Order Granting Relief from Automatic Stay was filed with respect to resolution
of issues related to the ownership and distribution of the registry funds (CR319). On
October 9, 2014, Frank Keathley's Notice of Discharge in Bankruptcy was filed (CR328).
As shown by the file of the Clerk of this Court, the appeal was reinstated and has
proceeded.
Keathley filed his Request for Clerk's Record (CR340) and Request for Reporter's
Record (CR345) and perfected his appeal.
Appellant’s Brief 7
SUMMARY OF THE ARGUMENT
SUMMARY OF THE ARGUMENT IN SUPPORT OF
POINT OF ERROR NO. ONE
POINT OF ERROR NO. ONE (RESTATED):
The trial court erred in ordering the Clerk to disburse $30,000 from registry funds
to Travis Clardy based on the writ of execution levied under Corbitt Baker's
judgment against Frank Keathley because a writ of execution is not a proper legal
remedy for enforcement of a judgment against a judgment debtor's funds in the
possession of a third party and because the funds were in legal custody of the
Court.
The proper remedy for Corbitt Baker to enforce his judgment against registry
funds held by the Clerk of the Court would have been service of a writ of garnishment on
the Clerk rather than levy of a writ of execution. By definition, the distinction between a
writ of execution and a writ of garnishment is that a writ of execution is directed toward
property in the possession or control of the judgment debtor and a writ of garnishment is
directed toward property belonging to the judgment debtor but in the possession or
control of a third party.
Garnishment is a statutory proceeding whereby the property of a judgment debtor
that is in the possession of a third party and not otherwise exempt from execution, may be
reached by the judgment creditor and applied to payment of the debt. A writ of execution
to collect a money judgment is a statutory process requiring the Sheriff to satisfy the
judgment out of property of the judgment debtor subject to execution and requiring the
Sheriff to contact the judgment debtor to have him identify property subject execution.
The levy must first be made on the judgment debtor against property, which is not
Applicant’s Brief 8
exempt. Under both a writ of execution and a writ of garnishment, the judgment creditor
is first required to attempt collection directly from the judgment debtor.
In this case the funds in question were being held by the Court in its legal custody
and as such, were not subject to levy of a writ of execution and could only be claimed by
service of a writ of garnishment. The purpose of this rule is to preserve the jurisdiction of
the court holding legal custody and to avoid conflicts of jurisdiction with other courts.
Because the writ of execution was not the proper legal remedy and because the levy done
improperly and because the funds were held in legal custody by the Clerk, the trial court
erred by directing payment of $30,000 of registry funds to Corbitt Baker's attorney under
levy of the writ of execution.
SUMMARY OF THE ARGUMENT IN SUPPORT OF
POINT OF ERROR NO. TWO
POINT OF ERROR NO. TWO (RESTATED):
The trial court erred in ordering the Clerk to disburse $30,000 from registry funds
to Travis Clardy based on the writ of execution levied under Corbitt Baker's
judgment against Frank Keathley because the levy on the Clerk's funds failed to
comply with the requirements of Rule 637 of Tex. R. Civ. P. and Tex. Prop. Code
Sec. 42.003.
As state in Point of Error No. One, the writ of execution was not the proper legal
remedy and the registry funds were not subject to execution. Even if the writ of
execution had been a proper legal remedy, the levy failed to comply with the
requirements of the law to be an enforceable levy. The proper process for levy of a writ
of execution under a money judgment is established by Rule 637 Tex. R. Civ. P., subject
Applicant’s Brief 9
to the requirements for determination of exempt property under Section 42.003 of the
Tex. Prop. Code. In this case the Constable upon the direct instructions of Corbitt
Baker's attorney, failed to follow the process required by law. The facts of the manner in
which the levy was executed are undisputed and show that the levy was improper because
there had been no attempt to levy directly against the judgment debtor and because there
was no effort made to permit the judgment debtor to make a designation of exempt and
nonexempt property. The designation of exempt property filed with the Court by Frank
Keathley following the levy on the registry funds was undisputed and established that his
interest in the registry funds was exempt from execution. For these reasons the trial court
erred in ordering distribution of $30,000 from the registry funds to Corbitt Baker's
attorney under the improper levy.
SUMMARY OF THE ARGUMENT IN SUPPORT OF
POINT OF ERROR NO. THREE
POINT OF ERROR NO. THREE (RESTATED)
:
The trial court erred in ordering the Clerk to disburse $30,000 from registry funds
to Travis Clardy based on Corbitt Baker's instruction to the Constable to levy the
writ of execution against all of the $41,763.50 because Frank Keathley did not
own all the funds and the levy was wrongful as to the other parties who did own
an interest in the funds.
It is undisputed that $41,637.50 was held in the Court's registry by the Clerk and
that the Order for Distribution declared Frank Keathley owner of $40,000 of the funds.
On the instructions of Baker's attorney, the Constable's levy was for all monies held in
the registry and was not limited to those owned by Keathley. Enforcement of a judgment
Applicant’s Brief 10
can only be against property owned by a judgment debtor that is not exempt. Baker's
levy seeking to recover property owned by third parties and not limited to Keathley's
property was unlawful. The proper remedy to raise an ownership issue was a writ of
garnishment, not a writ of execution. Since Baker's levy was unlawful it should have
been quashed and the funds release under the original Order for Distribution. It was error
for the trial court to retain the funds in its legal custody pending further orders to declare
ownership. The trial court erred by enforcing an unlawful levy and ordering funds
distributed to Baker's attorney.
SUMMARY OF THE ARGUMENT IN SUPPORT OF
POINT OF ERROR NO. FOUR
POINT OF ERROR NO. FOUR (RESTATED)
:
The trial court erred in ordering the Clerk to disburse $30,000 from the registry
funds to Travis Clardy based on levy of the writ of execution issued under the
Corbitt Baker judgment against Frank Keathley because the judgment debtor's
ownership interest in the registry funds was exempt from execution under
Property Code Sec. 42.001 and Sec. 42.002.
Regardless of whether Baker's levy of a writ of execution was the proper remedy
and whether the levy complied with the requirements for a lawful levy and whether the
levy against all the registry funds was wrongful, the undisputed evidence proved, as a
matter of law, that any interest in the registry funds held by Keathley was exempt from
execution or garnishment to enforce Baker's judgment. It is undisputed Baker made no
Applicant’s Brief 11
effort to follow the legal requirements for enforcement of a judgment by first levying a
writ of execution on the judgment debtor to reach any nonexempt property subject to
execution. Keathley exercised his constitutional and statutory right to claim his exempt
property by filing a verified claim with the Court. His designation of exempt property
was not disputed and included his interest in the registry funds as exempt as part of his
$60,000 family exemption, whether classified as commission income or as an asset not
covered by a specific exemption. The trial court erred by ordering $30,000 paid from the
registry funds to Baker's attorney because it was undisputed the funds were exempt and
there was no evidence that it was not exempt.
ARGUMENT AND BRIEF IN SUPPORT OF
POINT OF ERROR NO. FIVE
POINT OF ERROR NO. FIVE (RESTATED):
The trial court erred in ordering the Clerk to disburse $30,000 from the registry
funds to Travis Clardy based on levy of the writ of execution issued under Corbitt Baker's
judgment against Frank Keathley as entered March 8, 2011, because the judgment was
not a final judgment as required by Rule 622, Tex. R. Civ. P. and because the writ was
voided when the judgment was revoked by the judgment entered April 12, 2011,
reinstated by the Order entered April 18, 2011, appealed and reformed and affirmed by
the Twelfth Court of Appeals Opinion delivered April 3, 2013 and Judgment dated April
24, 2011.
The writ of execution levied against the registry funds was issued under the
Corbitt Baker judgment against Frank Keathley before it became a final judgment. The
March 8, 2011 judgment was reversed and a new judgment against Baker was entered
April 12, 2011 and then it was reinstated by Order dated April 18, 2011. After appeal of
Applicant’s Brief 12
the case to the Twelfth Court of Appeals, the appellate court held the April 18, 2011
reinstatement made the March 8, 2011 judgment the judgment in the case. However, the
Court of Appeals opinion affirmed the trial court's judgment, subject to a remittitur by
Baker. The appellate judgment modified and affirmed the March 8, 2011 judgment. The
Court of Appeals judgment became final. Because a writ of execution issued under an
interlocutory judgment that is reversed is a void writ and a subsequent reinstatement of
the judgment does not reactivate the writ. In this case, the original judgment under which
the writ was issued was not affirmed on appeal, it was modified, which meant that the
actual judgment for Baker was the March 8, 2011 judgment, as modified.
ARGUMENTS AND BRIEFS IN SUPPORT
OF
POINTS OF ERROR ON ISSUES PRESENTED
ARGUMENT AND BRIEF IN SUPPORT OF
POINT OF ERROR NO. ONE
POINT OF ERROR NO. ONE:
The trial court erred in ordering the Clerk to disburse $30,000 from registry funds
to Travis Clardy based on the writ of execution levied under Corbitt Baker's
judgment against Frank Keathley because a writ of execution is not a proper legal
remedy for enforcement of a judgment against a judgment debtor's funds in the
possession of a third party and because the funds were in legal custody of the
Court.
Levy of a writ of execution against judgment debtor's assets in the possession of a
third party is not the proper legal remedy and is invalid and void. The proper legal
remedy to enforce a judgment against judgment debtor funds in the possession of a third
Applicant’s Brief 13
party is a writ of garnishment. Even if levy of the writ of execution had been the proper
legal remedy, Baker's levy of his writ of execution was made against all the monies held
in the Court's registry (CR37;CR39) and was not limited to Keathley's interest in the
registry funds. Baker's specific instructions to the Constable directed the levy be made
against the $41,763.50 (CR40) As a result of the levy, Baker placed the Clerk in a
position of peril by having to make a decision of whether to obey the Writ from the Smith
County Court at Law or whether to obey this Court's Order for Distribution.
Under Rule 630 Tex. R. Civ. P., a writ of execution to collect a money judgment
is a statutory process requiring the Sheriff to satisfy the judgment out of the property of
the judgment debtor subject to execution. Rule 637 Tex. R. Civ. P. requires the Sheriff to
levy a writ of execution against any property of the judgment debtor and directs him to
contact the judgment debtor to have him identify property subject to execution. The levy
is to be first made against the property not designated as exempt by the judgment debtor.
In the present case, it is undisputed the Constable was specifically instructed by Baker's
counsel not to contact Keathley and was directed to levy against all the money held by
the Clerk in the registry of this Court without any determination that such funds were
subject to execution or collection and were all Keathley's funds (CR40). Baker's levy on
all the registry funds also created issues of ownership of the funds because of competing
claims which required them to remain in the Court's registry pending determination of
ownership for the purposes of the levy. Baker's levy ignored the rights of Keathley to
establish his exemptions under the Property Code. In the context of the facts in this case
Applicant’s Brief 14
it is clear Baker's attempted levy of a writ of execution against the registry funds was not
appropriate and was a legal nullity and void.
Garnishment is a statutory proceeding established under Section 63.001 Tex. Civ.
Prac. & Rem. Code and implemented by Rule 657, Tex. R. Civ. P. It is a proceeding
whereby the property, money or credits of a judgment debtor that are in the possession of
a third party and not otherwise exempt from execution under the Property Code, may be
reached by the judgment creditor and applied to payment of the debt. See, Bank One,
Texas, N.A. vs. Sunbelt Savings, F.S.B., 824 S.W.2d 557 (Tex. 1992). The basis for
issuance of a writ of garnishment in a case such as this case is set by Section 63.001(3)
Tex. Civ. Prac. & Rem. C. in which the plaintiff must have ". . . a valid subsisting,
judgment and makes an affidavit stating that, within the plaintiff's knowledge, the
defendant does not posses property in Texas subject to execution sufficient to satisfy the
judgment." The facts are undisputed that Baker made no effort to allow Keathley any
opportunity to declare his exempt property. To the contrary, Baker's counsel made it
clear to the Constable that Keathley was not to be contacted.
By definition, the distinction to be made between a writ of execution and a writ of
garnishment is that a writ of execution is directed toward property in the possession or
control of the judgment debtor (Rule 637) and a writ of garnishment is directed toward
property belonging to the judgment debtor but in the possession or control of a third party
(Rule 657). As stated in the Bank One case, "When a creditor wants to challenge title to
funds held by a third party, the creditor should seek a writ of garnishment naming the
Applicant’s Brief 15
nominal owner not the true owner. The court is then responsible for determining true
ownership." In this case, at the time of Baker's levy, Keathley was not in possession of
the funds in question since they were held by the Clerk in custodia legis.
Property is held in custodia legis, or "in the custody or keeping of the law," when
an arm or instrumentality of the court holds possession of the property on behalf of the
court. See, Black's Law Dictionary. Texas law recognizes that property in custodia legis
is not generally subject to levy and sale under execution or garnishment. See, First
Southern Properties, Inc. v. Vallone, 533 S.W.2d 339, 343 (Tex. 1976) (execution);
Daniels vs. Pecan Valley Ranch, Inc., 831 S.W.2d 372, 382 (Tex.App.--San Antonio
1992, writ denied) (garnishment). Property held in legal custody of the court is held
pending orders of the court administering the property and the disallowance of execution
or garnishment is intended to preserve the jurisdiction of that court and avoid conflicts of
jurisdiction with other courts. See Daniels, above. The reason for the rule prohibiting
interference by one court with property in legal custody of another court is derived from
the exclusive jurisdiction which arises out of possession of the thing (funds). Nowhere is
the doctrine enforced more stringently than when other courts attempt to interfere. See
Vallone, above. The reason for the rule as between courts of concurrent jurisdiction, like
we have in this case, has been stated as follows:
The possession of the Res vests the court which has first acquired jurisdiction
with the power to hear and determine all controversies relating thereto, and for the
time being disables other courts of co-ordinate jurisdiction from exercising a like
power. This rule is essential to the orderly administration of justice, and to
prevent unseemly conflicts between courts whose jurisdictions embrace the same
subjects and persons. . .. See, Vallone, above.
Applicant’s Brief 17
Under this rule, the writ of execution issued by the Smith County Court at Law, No. 3
could not be lawfully levied against the funds held by The Franklin County District Court
since the issuing court had no jurisdiction to issue writs for funds in the legal custody of
another Court. The same would have been true if the Smith County court had issued a
writ of garnishment. See Daniels, above.
There is an exception to the rule prohibiting levy or garnishment of funds held in
legal custody by a court. The exemption from levy or garnishment ceases when a court
has entered a judgment determining ownership of the funds and ordering the distribution
of the funds and the judgment is final for all purposes with nothing remaining for the
custodian to do but make delivery or payment to the person entitled to such funds. See,
Houston Drywall, Inc. v. Const. Systems, Inc., 541 S.W.2d 220 (Tex.Civ.App.--Houston
(1st Dist.) 1976, no writ); Southwestern Bell Telephone Company vs. Watson, 413
S.W.2d 845 (Tex.Civ.App.-- Corpus Christi 1967, no writ). The Court's Order of
Dismissal was signed on March 25, 2011 (CR34). The Order to Distribute Funds was
signed March 30, 2011 (CR36). The Smith County writ of execution was levied March
30, 2011 (CR37). For purposes of this appeal, the Order of Dismissal was the final
judgment and was signed March 25, 2011. The judgment would have become final April
25, 2011, at which point the trial court would have lost its plenary power to revoke,
modify or amend the judgment under Rule 329b Tex. R. Civ. P. On April 25, 2011, the
funds held by the Clerk would no longer have been held in legal custody of the Court, but
would have been held in trust for the persons designated by the Order for Distribution.
Only at the point in time when this Court's judgment became final, did Keathley's portion
Applicant’s Brief 18
of the funds become his and subject to enforcement of a judgment against him. This
conclusion is supported by the case of Hardy v. Construction Systems, Inc., 556 S.W.2d
843 (Tex.Civ.App.--Houston (14 Dist.) 1977, writ ref'd n.r.e.) in which the Court stated,
as follows:
When, as here, a court has entered a judgment ordering the distribution of funds in
its registry and time has passed sufficient to render the judgment beyond the
court's power to set aside, modify, or amend, then the court has lost subject matter
jurisdiction over the funds, and the justification for the rule precluding
garnishment no longer exists. Moreover, it would seem to be inappropriate to
describe funds in the registry of the court as being in custodia legis after subject
matter jurisdiction has ceased. Instead, they should be viewed as being held by
the clerk in trust for the one found to be entitled to them. See, Sellers v. Harris
County, 483 S.W.2d 242 (Tex.Sup. 1972).
The attempted levy of the Smith County writ of execution on March 30, 2011 was
invalid in this case because (1) the issuing court had no jurisdiction over this Court's
registry funds since there was no final judgment in this case and this Court retained
jurisdiction protected from interference from other courts; and (2) the funds remained in
legal custody of this Court and were not subject to execution or garnishment until after
this Court lost plenary power April 25, 2011; and (3) the Judgment and Order
establishing Keathley's ownership interests in the funds was not final and the attempted
levy was premature and void. The effect of a premature collection effort against registry
funds under a writ of garnishment is the subject of the opinion in the Houston Drywall,
Inc. (above), where the writ of garnishment was held premature and quashed when served
before the judgment was final. In the current case, in addition to being the inappropriate
enforcement action, Baker's writ of execution levied prior to the time this Court's
Applicant’s Brief 19
judgment became final was premature and invalid as a levy against funds in custodia
legis.
Because Baker's attempted levy sought to reach all the funds held by the Clerk
and was not limited to just Keathley's portion, the sole effect was to put the ownership of
all the funds in question and place the Clerk in a conflict as to which court order to obey.
This Court retains jurisdiction to enter orders in aid of enforcement of its judgment and to
resolve the conflict created by Baker's invalid levy against the funds held in its registry.
See, Bank One, above, and Pace v. McEwen, 617 S.W.2d 816, 819 (Tex.Civ.App.--
Houston (14th Dist.) 1981, no writ). Under Rule 637, Tex. R. Civ. P. it was the
Constable's duty to levy the Writ ". . . upon the property of the defendant (Keathley)
found within this county not exempt from execution, unless otherwise directed by the
plaintiff (Baker) his agent or attorney." In this case, Baker's attorney directed the
Constable to levy against the funds in the registry of the Court by serving the District
Clerk (CR40). Those directions were given without any attempt to determine if the funds
were exempt from execution and without specifically designating the portion belonging
to Keathley. In this case, Baker was in a position similar to PaineWebber (a garnishor)
whose writ of garnishment was quashed because it failed in its duty to specify the proper
party and proper account to be garnished. See, Overton Bank & Trust, N.A. v.
PaineWebber, Inc., 922 S.W.2d 311 (Tex.Civ.App.--Fort Worth, 1996, no writ). The
Pace and Overton Bank cases rely on Bank One, to hold that, in a case such as this one, it
is the trial court's job to determine whether a judgment creditor's writ is properly
Applicant’s Brief 20
executed and to establish ownership of property and to determine whether property is
exempt. The statement of the rule in Bank One, above, that applies to the current case is
as follows:
When a creditor wants to challenge title to funds held by a third party, the creditor
should seek a writ of garnishment naming the nominal owner not the true owner.
The court is then responsible for determining true ownership. Requiring a
garnishee bank to determine true ownership of its deposits improperly shifts a
judicial responsibility to the garnishee.
By following the rule stated in Bank One the same result should apply for Baker's writ of
execution because it was Baker's responsibility to properly identify the funds to be levied
against and to determine that such funds were subject to levy by the Constable since
Baker was directing the Constable's actions. By claiming all the funds held by the Clerk,
Baker interjected the issue of ownership and attempted to ignore the issue of exempt
status. As a result of the levy on all the funds, it became the trial court's responsibility to
retain the funds in its legal custody and to determine all ownership and exemption issues.
The trial court erred by not voiding the levy and requiring Baker to proceed under a
proper legal remedy (writ of garnishment) and comply with controlling enforcement
rules.
Applicant’s Brief 21
ARGUMENT AND BRIEF IN SUPPORT OF
POINT OF ERROR NO. TWO
POINT OF ERROR NO. TWO:
The trial court erred in ordering the Clerk to disburse $30,000 from registry funds
to Travis Clardy based on the writ of execution levied under Corbitt Baker's
judgment against Frank Keathley because the levy on the Clerk's funds failed to
comply with the requirements of Rule 637 of Tex. R. Civ. P. and Tex. Prop. Code
Sec. 42.003.
The March 30, 2011 letter of instructions from Baker's attorney given to
Constable Green with the writ of execution specifically instructed the Constable not to
contact Keathley regarding the attempted levy on all of the funds in the Court's registry
(CR40). As shown by the Officer's Return, the levy was made on all the monies held in
the registry and was not limited to Keathley's interest or ownership (CR39). There is no
evidence that Baker or the Constable ever made any attempt to contact Keathley
regarding enforcement of the judgment. There was no attempt or effort made to comply
with Rule 637 Tex. R. Civ. P. which required Keathley be contacted for the purpose of
enforcing the judgment and having Keathley identify designate their exempt and
nonexempt property. To the contrary, beginning with the Original Application for
Equitable Relief and Declaratory Judgment dated April 8, 2011 (CR42), Keathley
claimed his interest in the registry funds were exempt and alleged Baker failed to comply
with the requirements of Rule 637. There is no evidence that Baker gave the required
notice or made the required demand for designation in compliance with Rule 637. There
is nothing in the writ of execution or any of the paperwork related to the writ of execution
or in any of Baker's pleadings that discloses any effort to comply with the notice and
Applicant’s Brief 21
demand requirements of Rule 637. Any claim by Baker that the Smith County Court
ruled that his writ was properly issued is not relevant and has no bearing on how the writ
was levied or executed. The manner in which the writ was levied or enforced was within
the exclusive jurisdiction of the trial court. The effect of Baker's failure to follow the
procedures required by Rule 637 in enforcement of judgments is shown by the opinion of
the Texarkana Court of Appeals in Collum v. DeLoughter, 535 S.W.2d 390, 393
(Tex.App.--Texarkana 1976, writ ref'd. n.r.e.) in which the Court held that Rule 637
requires the sheriff to call upon the judgment debtor to "point out property to be levied
upon, and the levy shall first be made upon the property designated by " the judgment
debtor. The sheriff's failure to afford the judgment debtor the opportunity to designate
the property upon which the sheriff should first levy constituted an irregularity in the
execution sale and the sale was vacated. To the same effect, see also, Pantaze v. Slocum,
518 S.W.2d 407, 411 (Tex.Civ.App.-Fort Worth, 1974, writ ref'd n.r.e.). The case of
Reyes v. Barrasa, ___ S.W.3d ___, No. 04-12-00673, Tex.App.--San Antonio, September
11, 2013, ____, was also a case that applied the Collum rule to set aside an invalid levy
because the judgment debtor was never asked to designate the property upon which the
sheriff should levy. Under these cases, because Baker's attempted levy was not preceded
by compliance with the requirements of Rule 637 and because it is undisputed Baker
specifically instructed the Constable not to comply the levy was invalid and should have
been quashed by the trial court. It is undisputed that Baker failed to make demand on
Keathley to declare his exempt property and designate nonexempt property against which
Applicant’s Brief 22
Baker's judgment could be enforced. The trial court erred for not holding the levy to be
invalid and of no effect and for ordering distribution of registry funds to Baker's lawyer.
ARGUMENT AND BRIEF IN SUPPORT OF
POINT OF ERROR NO. THREE
POINT OF ERROR NO. THREE:
The trial court erred in ordering the Clerk to disburse $30,000 from registry funds
to Travis Clardy based on Corbitt Baker's instruction to the Constable to levy the
writ of execution against all of the $41,763.50 because Frank Keathley did not
own all the funds and the levy was wrongful as to the other parties who did own
an interest in the funds.
The evidence is undisputed that the Clerk held $41,637.50 in the registry of this
Court under the Order for Distribution signed March 30, 2011. It is also undisputed that
Baker's instructions to the Constable did not specify a levy on Keathley's $40,000
declared to belong to him and held by the Clerk. The Constable's levy specifically
designated the "monies held in the registry" and was not limited to the $40,000 owned by
Keathley. Enforcement of a judgment can only be against property owned by a judgment
debtor and only that is nonexempt. Although Keathley's claim in the underlying lawsuit
was for ownership of the entire $41,637.50 interplead into this Court, the final Order for
Distribution only designated $40,000 to belong to him. Baker's levy overreached and
sought to claim property declared by the Court to belong to third parties. Baker's levy
raised issues as to ownership of the funds held by the Clerk. Determination of ownership
is exclusively for this Court when presented with an application for a writ of
Applicant’s Brief 23
garnishment. It was Baker's duty to specify which funds it sought to reach. The proper
remedy for him to seek enforcement of his judgment was by writ of garnishment from
this Court, not a writ of execution from Smith County. See, Bank One Texas, N.A.
(above). There is no genuine issue of any material fact regarding the Constable's levy
under Baker's instructions and such attempted levy was invalid, as a matter of law.
Therefore, the Court should grant summary judgment in favor of Keathley on this issue,
declare the attempted levy invalid, direct the District Clerk to release the funds to
Keathley as originally ordered and enjoin Baker and Constable Green as requested.
ARGUMENT AND BRIEF IN SUPPORT OF
POINT OF ERROR NO. FOUR
POINT OF ERROR NO. FOUR:
The trial court erred in ordering the Clerk to disburse $30,000 from the registry
funds to Travis Clardy based on levy of the writ of execution issued under the
Corbitt Baker judgment against Frank Keathley because the judgment debtor's
ownership interest in the registry funds was exempt from execution under
Property Code Sec. 42.001 and Sec. 42.002.
Although Baker never requested Keathley declare his exempt property as required
by Rule 637 Tex. R. Civ. P. and Section 42.003 Tex. Prop. Code, a judgment debtor has a
reasonable time to make a designation of exempt property. In this case, Keathley's
claimed his exemption rights in his original application for equitable relief filed in this
Court in response to Baker's attempted levy (CR42). At the direction of the trial court
Applicant’s Brief 24
(RRVol.3,Pg.9,Line20) and pursuant to the provisions of the Texas Property Code, Frank
Keathley and wife, Melissa Keathley, ("Keathleys") filed their designation of property
exempt from execution (CR270).
Personal Property
As required by Section 42.003 Tex. Prop. Code, the Keathleys made their
designation of personal property exempt from execution under Sec. 42.001(a) and Sec.
42.002, Tex. Prop. Code, as follows:
Personal property:
Personal property with a fair market value of less than $60,000, including items
described by categories under Sec. 42.002(a), including:
1. TPC 42.002(a)(1) home furnishings and family heirlooms
2. TPC 42.002(a)(2) provisions for consumption
3. TPC 42.002(a)(3) farming/ranching vehicles and implements
4. TPC 42.002(a)(5) wearing apparel
5. TPC 42.002(a)(6) jewelry with a value of less than $15,000
6. TPC 42.002(a)(7) two firearms
7. TPC 42.002.(a)(8) athletic and sporting equipment, including bicycles
8. TPC 42.002(a)(9) Two vehicles, including a pickup and a car
9. TPC 42.002(a)(10) livestock and pets, saddles and tack
Total Fair Market Value $45,000.00
10. TPC 42.001(d) unpaid commissions $15,000.00
TOTAL FAMILY EXEMPTION $60,000.00
3. Specific Personal Property
Pursuant to Sec. 42.001(b) Tex. Prop. Code, the Keathleys designated as exempt,
the following items:
1. Current wages, including disability payments covered by TPC 42.001(b)(1).
Applicant’s Brief 25
2. Professionally prescribed health aids (TPC 42.001(b)(2). Frank Keathley has
been blinded in one eye and is disabled. Melissa Keathley has been diagnosed with a rare
and frequently terminal nerve and sleep disorder and is disabled.
3. The family Bible (TPC 42.001(b)(4).
4. Unpaid commissions for personal services, $15,000.00 of which has been
included in the Family Exemption as shown in Item 2, Personal Property, above. The
total commissions were $40,000, of which $10,000 was previously assigned to Larry R.
Wright as attorneys' fees for recovering the money. After deducting the attorney's
$10,000 and the exempt $15,000 under Sec. 42.001(d), the remaining balance of $15,000
would be exempt as part of the family exemption.
Under Sec. 42.0021 Tex. Prop. Code, the following items were designated as
exempt:
Life Insurance (cash value) 16,000 Savings plan exemption TPC
42.0021.
Retirement Funds (IRA/401k) 98,050 Savings plan exemption TPC
42.0021
Regardless of the issues of enforcement and procedure discussed above, it is
undisputed that the funds placed in the registry of the Clerk of this Court were interplead
by Keathley and claimed by him as unpaid commissions to which he was entitled under
the contract dispute made the subject of the underlying lawsuit in this case (CR11;CR19).
Unpaid commissions for personal services are exempt under Section 42.001(d) Tex. Prop.
Code, which states as follows:
(d) Unpaid commissions for personal services not to exceed 25 percent of
the aggregate limitations prescribed by Subsection (a) are exempt from
seizure and are included in the aggregate.
Section 41.001(a) provides as follows:
Applicant’s Brief 26
(a) Personal property, as described in Section 42.002, is exempt from
garnishment, attachment, execution or other seizure if:
(1) the property is provided for a family and has an aggregate fair
market value of not more than $60,000 exclusive of the amount of any
liens, security interests, or other charges encumbering the property;
In connection with showing his financial net worth for issuance of his Writ of
Supersedeas in Smith County, Keathley filed the personal financial statement for Frank
and Melissa Keathley dated May 9, 2011 which supports his claim that the registry funds
were exempt at that time (CR83). As a matter of law and undisputed fact Keathley is
entitled to summary judgment that all his interest in the registry funds was and are
exempt under the Property Code. The evidence before the trial court on Keathley's
exempt property was undisputed and was never objected to by Baker. The trial court
erred in ordering the exempt funds paid to Baker.
ARGUMENT AND BRIEF IN SUPPORT OF
POINT OF ERROR NO. FIVE
POINT OF ERROR NO. FIVE:
The trial court erred in ordering the Clerk to disburse $30,000 from the registry
funds to Travis Clardy based on levy of the writ of execution issued under Corbitt
Baker's judgment against Frank Keathley as entered March 8, 2011, because the
judgment was not a final judgment as required by Rule 622, Tex. R. Civ. P. and
because the writ was voided when the judgment was revoked by the judgment
entered April 12, 2011, reinstated by the Order entered April 18, 2011, appealed
and reformed and affirmed by the Twelfth Court of Appeals Opinion delivered
April 3, 2013 and Judgment dated April 24, 2011.
Baker's writ of execution levied on the registry funds was issued March 30, 2011
under the interlocutory judgment entered in the Smith County case dated March 8, 2011.
Applicant’s Brief 27
On April 12, 2011, the March 8, 2011 judgment was reversed and a judgment entered in
favor of Keathley and against Baker. On April 18, 2011, the Smith County trial court
entered its Order setting aside the April 12, 2011 judgment and reinstating the March 8,
2011 judgment. The history of the Smith County trial court's changes to its judgment are
discussed in detail by the Twelfth Court of Appeals opinion in the appeal of the case. A
copy of the Opinion and Judgment are shown in the Appendix. When the Court of
Appeals judgment became final, the end result was that the March 8, 2011 judgment was
modified by a remittitur of attorneys' fees and affirmed as modified.
An interlocutory judgment may not be enforced by execution because Rule 622
Tex. R. Civ. P. requires a "final" judgment. See: In Re Burlington Coat Factory
Warehouse of McAllen, Inc., 167 S.W.3d 827, 831 (Tex. 2006). The same applies to
Rule 627 Tex. R. Civ. P. which provides that a writ of execution will not issue until after
a final and appealable judgment is signed. See: Hood v. Amarillo National Bank, 815
S.W.2d 545, 548 (Tex. 1991). The same is true under Rule 621a Tex. R. Civ. P.
regarding discovery in aid of enforcement of a judgment, there must be a final judgment.
See: In Re: Edward B. Elmer, M.D.P.A. 158 S.W.3d 603, 605 (Tex.App.--San Antonio,
2005, orig. mandamus proceeding).
Baker obtained his writ of execution under Rule 628 Tex. R. Civ. P. which
permits issuance before thirty days have expired from the date of judgment. However,
given the reasoning applied to executions as discussed in the cased cited above, Keathley
contends that the same would apply to Rule 628. Although Rule 628 allows issuance of a
writ prior to expiration of thirty days from the date of the judgment, the same reasoning
Applicant’s Brief 28
applied to the other Rules on execution would presuppose that the judgment under which
the writ is issued will become a final judgment. In Baker's case, that did not happen since
a new judgment was signed April 12, 2011. Therefore, Baker's writ became invalid and
the levy should have been set aside as void. The trial court erred in failing to void the
writ and levy when it ordered disbursement to Baker's lawyer based on the levy.
The rule in Texas is that a writ of execution issued on a judgment that was
canceled became void and any levy made by virtue of that writ is invalid. See: Flanary
v. Wade, 102 Tex. 63, 113 S.W. 3 (1908). To the same effect is the holding in
Underwood v. Brown, 29 Tex. 163, 168 (1902) where a judgment in excess of the court's
jurisdiction was entered and property seized under a writ of execution. The trial court
subsequently entered an order amending the judgment. In holding that the writ of
execution was invalid and a legal nullity, the Court stated:
If the amendment were valid, it would show a different judgment from the one on
which the execution was issued, and would furnish no foundation for the writ, and
it would be absolutely void. If it were invalid, the judgment upon which the
execution was issued was void, and consequently all proceedings under it invalid.
So in either event, the execution would be a nullity, and seizure of property under
it tortuous and illegal.
The Court of Appeal's opinion discusses Rule 329(b) Tex. R. Civ. P. as it applied
to the Smith County judgment, including a discussion of which judgment was the final
judgment for purposes of appeal and the extent of the trial court's authority to amend or
modify its judgments. In the end, the Court of Appeals held that all the trial court's
actions were taken during the period of time it had plenary power over the case and that
the April 18, 2011 order reinstating the March 8, 2011 judgment was valid. However, the
Applicant’s Brief 29
March 8, 2011 judgment was not "affirmed" on appeal, it was "modified and affirmed"
conditioned on remittitur of a portion of the attorneys' fees on appeal. For enforcement
purposes and for Rule 627, at what point was the Smith County judgment "final"? Based
on the longstanding rule that neither an interlocutory judgment nor an invalid judgment
will support an enforcement action, the trial court erred by failing to recognize that
Baker's writ was voided when the April 12, 2011 judgment was entered.
PRAYER
WHEREFORE, Appellant, Frank Keathley, prays that this Court hear and
consider his points of appeal and enter its opinion sustaining his points of error and
reverse the orders of the 62nd District Court of Franklin County, Texas entered in this
case, as follows:
(i) Order on Frank Keathley's Motion for Summary Judgment on Levy of Writ of
Execution dated March 25, 2014;
(ii) Order on Corbitt Baker's Motion to Dissolve Temporary Injunction, Frank
Keathley's Motion to Modify Injunction and Release Funds And Frank Keathley's
Motion to Modify Injunction and Release Funds And Frank Keathley's Motion for
Summary Judgment on Levy of Writ of Execution dated March 25, 2014; and
(iii) Order Denying Frank Keathley's Request for Findings of Fact and
Conclusions of Law, Motion for Reconsideration and/or Motion for New Trial
and Notice of Appeal dated November 3, 2014;
and render judgment modifying the trial court's original Order to Distribute Funds dated
March 25, 2011 by declaring ownership of the funds and directing the Clerk of the Court
to distribute the funds remaining in the registry of the Court as follows:
Applicant’s Brief 30
1. To Frank Keathley, the sum of $30,000;
2. To Larry R. Wright, the sum of $10,000; and
3. To J.J. Investments Company, LTD, the sum of $918.50;
and taxing all costs of court, including fees accrued under the Court's Order Allowing
Clerk to Retain A Fee of Office dated April 11, 2014, against Corbitt Baker, Appellee;
and entering a permanent injunction against Appellee, Corbitt Baker, his agents and
attorneys and Constable Randy Green and his successors in office and District Clerk
Ellen Jaggers and her successors in office from taking any enforcement action to collect
under Corbitt Baker's Smith County judgment against Frank Keathley, his wife, Melissa
Keathley, their heirs or assigns.
Alternatively, if necessary, Appellant, Frank Keathley, prays that this Court enter
its opinion and affirm and reinstate the original Order To Distribute Funds as entered by
the trial court March 25, 2011 and direct the Clerk to disburse the remaining registry
funds to J.J. Investments Company, LTD in the amount of $918.50 with $10,000 paid to
Larry R. Wright under the assignment by Frank Keathley in 2011 and the remaining
$30,000 paid to Frank Keathley and reverse all the orders of the trial court entered March
25, 2014 and November 3, 2014, with all costs of court and Clerk's fees taxed to
Appellee, Corbitt Baker.
Applicant’s Brief 31
Appellant prays for such other relief to which he may be justly entitled.
Respectfully submitted this 12th day of February, 2015.
/s/ Larry R. Wright
Larry R. Wright
State Bar No. 22048000
P.O. Box 144
`` 406 South Main Street
Winnsboro, Texas 75494
Telephone 903-342-1089
Fax 903-342-1088
Email lawyerwright@msn.com
CERTIFICATE OF WORD COUNT
This is to certify that to the word count from Statement of the Case through the Prayer in
Applicant’s Brief is 8,538.
Signed February 12, 2015
/s/ Larry R. Wright
Larry R. Wright
CERTIFICATE OF SERVICE
This is to certify that a copy of the foregoing has been served by e-mail to each counsel
of record at their e-mail address on this 12th day of February, 2015.
/s/ Larry R. Wright
Larry R. Wright
Applicant’s Brief 32
APPENDIX
Item No.
1. Order of Dismissal
2. Order To Distribute Funds
3. Writ of Execution
4. Final Judgment of Smith County Court at Law
5. Order Granting Temporary Restraining Order
6. Order Granting Temporary Injunction
7. Agreed Order on Motion for Release of Registry Funds Paid To Larry R.
Wright
8. Agreement Between Larry R. Wright and Frank Keathley dated March 15,
2011
9. Designation of Exempt Property by Frank Keathley and Melissa Keathley
10. Order on Frank Keathley’s Motion for Summary Judgment on Levy of Writ of
Execution
11. Order on Corbitt Baker’s Motion To Dissolve Temporary Injunction, Frank
Keathley’s Motion to Modify Injunction and Release Funds And Frank
Keathley’s Motion to Modify Injunction and Release Funds And Frank
Keathley’s Motion for Summary Judgment on Levy Of Writ of Execution
12. Frank Keathley’s Request for Findings of Fact and Conclusions of Law,
Motion for Reconsideration and/or Motion for New Trail and Notice of
Appeal
13. Notice of Bankruptcy Case Filing
14. Notice of Bankruptcy
15. Order Granting Relief From Automatic Stay
16. Frank Keathley’s Notice of Discharge in Bankruptcy
17. Orders from Bankruptcy Court
18. Order Denying Frank Keathley’s Request for Findings of Fact and
Conclusions of Law, Motion for Reconsideration and/or Motion for New Trial
and Notice of Appeal
19. Rule 329b Tex. R. Civ. P.
20. Rule 621a Tex. R. Civ. P.
21. Rule 622 Tex. R. Civ. P.
21a. Rule 627 Tex. R. Civ. P.
22. Rule 628 Tex. R. Civ. P.
23. Rule 630 Tex. R. Civ. P.
24. Rule 637 Tex. R. Civ. P.
25. Rule 657 Tex. R. Civ. P.
26. Chapter 42.001 Texas Property Code
27. Chapter 42.002 Texas Property Code
28. Chapter 42.0021 Texas Property Code
29. Chapter 42.003 Texas Property Code
30. Chapter 44.002 Texas Property Code
31. Section 63.001 Texas Civil Practice & Remedies Code
32. Keathley v. Baker, Twelfth Court of Appeals, Tyler District
33. Keathley v. Baker Judgment of Twelfth Court of Appeals, Tyler District
APPENDIX ITEM NO. 1
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APPENDIX ITEM NO. 18
RULE 329b. TIME FOR FILING MOTIONS
The following rules shall be applicable to motions
for new trial and motions to modify, correct, or reform judgments
(other than motions to correct the record under Rule 316) in all
district and county courts:
(a) A motion for new trial, if filed, shall be filed prior to or within
thirty days after the judgment or other order complained of is
signed.
(b) One or more amended motions for new trial may be filed
without leave of court before any preceding motion for new trial
filed by the movant is overruled and within thirty days after the
judgment or other order complained of is signed.
(c) In the event an original or amended motion for new trial or a
motion to modify, correct or reform a judgment is not determined
by written order signed within seventy-five days after the judgment
was signed, it shall be considered overruled by operation of law on
expiration of that period.
(d) The trial court, regardless of whether an appeal has been
perfected, has plenary power to grant a new trial or to vacate,
modify, correct, or reform the judgment within thirty days after the
judgment is signed.
(e) If a motion for new trial is timely filed by any party, the trial
court, regardless of whether an appeal has been perfected, has
plenary power to grant a new trial or to vacate, modify, correct, or
reform the judgment until thirty days after all such timely-filed
motions are overruled, either by a written and signed order or by
operation of law, whichever occurs first.
(f) On expiration of the time within which the
trial court has plenary power, a judgment cannot be set aside by the
trial court except by bill of review for sufficient cause, filed within
the time allowed by law; provided that the court may at any time
correct a clerical error in the record of a judgment and render
judgment nunc pro tunc under Rule 316, and may also sign an
order declaring a previous judgment or order to be void because
signed after the court's plenary power had expired.
(g) A motion to modify, correct, or reform a judgment (as
distinguished from motion to correct the record of a judgment
under Rule 316), if filed, shall be filed and determined within the
time prescribed by this rule for a motion for new trial and shall
extend the trial court's plenary power and the time for perfecting an
appeal in the same manner as a motion for new trial. Each such
motion shall be in writing and signed by the party or his attorney
and shall specify the respects in which the judgment should be
modified, corrected, or reformed. The overruling of such a motion
shall not preclude the filing of a motion for new trial, nor shall the
overruling of a motion for new trial preclude the filing of a motion
to modify, correct, or reform.
(h) If a judgment is modified, corrected or reformed in any respect,
the time for appeal shall run from the time the modified, corrected,
or reformed judgment is signed, but if a correction is made
pursuant to Rule 316 after expiration of the period of plenary
power provided by this rule, no complaint shall be heard on appeal
that could have been presented in an appeal from the original
judgment.
APPENDIX ITEM NO. 19
RULE 621a. DISCOVERY AND ENFORCEMENT OF
JUDGMENT
At any time after rendition of judgment, and so long as said
judgment has not been suspended by a supersedeas bond or by
order of a proper court and has not become dormant as provided by
Article 3773, V.A.T.S., the successful party may, for the purpose
of obtaining information to aid in the enforcement of such
judgment, initiate and maintain in the trial court in the same suit in
which said judgment was rendered any discovery proceeding
authorized by these rules for pre-trial matters. Also, at any time
after rendition of judgment, either party may, for the purpose of
obtaining information relevant to motions allowed by Texas Rules
of Appellate Procedure 47 and 49 initiate and maintain in the trial
court in the same suit in which said judgment was rendered any
discovery proceeding authorized by these rules for pre-trial
matters. The rules governing and related to such pre-trial discovery
proceedings shall apply in like manner to discovery proceedings
after judgment. The rights herein granted to the parties shall inure
to their successors or assignees, in whole or in part. Judicial
supervision of such discovery proceedings after judgment shall be
the same as that provided by law or these rules for pre-trial
discovery and proceedings insofar as applicable.
APPENDIX ITEM NO. 20
RULE 622. EXECUTION
An execution is a process of the court from which it is issued. The
clerk of the district or county court or the justice of the peace, as
the case may be, shall tax the costs in every case in which a final
judgment has been rendered and shall issue execution to enforce
such judgment and collect such costs. The execution and
subsequent executions shall not be addressed to a particular
county, but shall be addressed to any sheriff or any constable
within the State of Texas.
RULE 627. TIME FOR ISSUANCE
If no supersedeas bond or notice of appeal, as required of agencies
exempt from filing bonds, has been filed and approved, the clerk of
the court or justice of the peace shall issue the execution upon such
judgment upon application of the successful party or his attorney
after the expiration of thirty days from the time a final judgment is
signed. If a timely motion for new trial or in arrest of judgment is
filed, the clerk shall issue the execution upon the judgment on
application of the party or his attorney after the expiration of thirty
days from the time the order overruling the motion is signed or
from the time the motion is overruled by operation of law.
APPENDIX ITEM NO. 21/21a
RULE 628. EXECUTION WITHIN THIRTY DAYS
Such execution may be issued at any time before the thirtieth day
upon the filing of an affidavit by the plaintiff in the judgment or
his agent or attorney that the defendant is about to remove his
personal property subject to execution by law out of the county, or
is about to transfer or secrete such personal property for the
purpose of defrauding his creditors.
APPENDIX ITEM NO. 22
RULE 630. EXECUTION ON JUDGMENT FOR
MONEY
When an execution is issued upon a judgment for a sum of money,
or directing the payment simply of a sum of money, it must specify
in the body thereof the sum recovered or directed to be paid and
the sum actually due when it is issued and the rate of interest upon
the sum due. It must require the officer to satisfy the judgment and
costs out of the property of the judgment debtor subject to
execution by law.
APPENDIX ITEM NO. 23
RULE 637. LEVY OF EXECUTION
When an execution is delivered to an officer he shall proceed
without delay to levy the same upon the property of the defendant
found within his county not exempt from execution, unless
otherwise directed by the plaintiff, his agent or attorney.
The officer shall first call upon the defendant, if he can be found,
or, if absent, upon his agent within the county, if known, to point
out property to be levied upon, and the levy shall first be made
upon the property designated by the defendant, or his agent. If in
the opinion of the officer the property so designated will not sell
for enough to satisfy the execution and costs of sale, he shall
require an additional designation by the defendant. If no property
be thus designated by the defendant, the officer shall levy the
execution upon any property of the defendant subject to execution.
APPENDIX ITEM NO. 24
RULE 657. JUDGMENT FINAL FOR GARNISHMENT
In the case mentioned in subsection 3, section 63.001, Civil
Practice and Remedies Code, the judgment whether based upon a
liquidated demand or an unliquidated demand, shall be deemed
final and subsisting for the purpose of garnishment from and after
the date it is signed, unless a supersedeas bond shall have been
approved and filed in accordance with Texas Rule of Appellate
Procedure 47.
APPENDIX ITEM NO. 25
CHAPTER 42. PERSONAL PROPERTY
Sec. 42.001. PERSONAL PROPERTY EXEMPTION. (a)
Personal property, as described in Section 42.002, is
exempt from garnishment, attachment, execution, or other
seizure if:
(1) the property is provided for a family and
has an aggregate fair market value of not more than
$60,000, exclusive of the amount of any liens, security
interests, or other charges encumbering the property; or
(2) the property is owned by a single adult, who
is not a member of a family, and has an aggregate fair
market value of not more than $30,000, exclusive of the
amount of any liens, security interests, or other charges
encumbering the property.
(b) The following personal property is exempt from
seizure and is not included in the aggregate limitations
prescribed by Subsection (a):
(1) current wages for personal services, except
for the enforcement of court-ordered child support
payments;
(2) professionally prescribed health aids of a
debtor or a dependent of a debtor;
(3) alimony, support, or separate maintenance
received or to be received by the debtor for the support of
the debtor or a dependent of the debtor; and
(4) a religious bible or other book containing
sacred writings of a religion that is seized by a creditor
other than a lessor of real property who is exercising the
lessor's contractual or statutory right to seize personal
property after a tenant breaches a lease agreement for or
abandons the real property.
(c) Except as provided by Subsection (b)(4), this
section does not prevent seizure by a secured creditor with
a contractual landlord's lien or other security in the
property to be seized.
(d) Unpaid commissions for personal services not to
exceed 25 percent of the aggregate limitations prescribed
by Subsection (a) are exempt from seizure and are included
in the aggregate.
(e) A religious bible or other book described by
Subsection (b)(4) that is seized by a lessor of real
property in the exercise of the lessor's contractual or
statutory right to seize personal property after a tenant
breaches a lease agreement for the real property or
abandons the real property may not be included in the
aggregate limitations prescribed by Subsection (a).
Acts 1983, 68th Leg., p. 3522, ch. 576, Sec. 1, eff. Jan.
1, 1984. Amended by Acts 1991, 72nd Leg., ch. 175, Sec. 1,
eff. May 24, 1991; Acts 1997, 75th Leg., ch. 1046, Sec. 1,
eff. Sept. 1, 1997.
Amended by:
Acts 2007, 80th Leg., R.S., Ch. 444 (H.B. 167), Sec.
1, eff. September 1, 2007.
APPENDIX ITEM NO. 26
CHAPTER 42. PERSONAL PROPERTY
Sec. 42.002. PERSONAL PROPERTY. (a) The following
personal property is exempt under Section 42.001(a):
(1) home furnishings, including family
heirlooms;
(2) provisions for consumption;
(3) farming or ranching vehicles and implements;
(4) tools, equipment, books, and apparatus,
including boats and motor vehicles used in a trade or
profession;
(5) wearing apparel;
(6) jewelry not to exceed 25 percent of the
aggregate limitations prescribed by Section 42.001(a);
(7) two firearms;
(8) athletic and sporting equipment, including
bicycles;
(9) a two-wheeled, three-wheeled, or four-
wheeled motor vehicle for each member of a family or single
adult who holds a driver's license or who does not hold a
driver's license but who relies on another person to
operate the vehicle for the benefit of the nonlicensed
person;
(10) the following animals and forage on hand
for their consumption:
(A) two horses, mules, or donkeys and a
saddle, blanket, and bridle for each;
(B) 12 head of cattle;
(C) 60 head of other types of livestock;
and
(D) 120 fowl; and
(11) household pets.
(b) Personal property, unless precluded from being
encumbered by other law, may be encumbered by a security
interest under Subchapter B, Chapter 9, Business & Commerce
Code, or Subchapter F, Chapter 501, Transportation Code, or
by a lien fixed by other law, and the security interest or
lien may not be avoided on the ground that the property is
exempt under this chapter.
Acts 1983, 68th Leg., p. 3522, ch. 576, Sec. 1, eff. Jan.
1, 1984. Amended by Acts 1991, 72nd Leg., ch. 175, Sec. 1,
eff. May 24, 1991; Acts 1993, 73rd Leg., ch. 216, Sec. 1,
eff. May, 17, 1993; Acts 1997, 75th Leg., ch. 165, Sec.
30.245, eff. Sept. 1, 1997; Acts 1999, 76th Leg., ch. 414,
Sec. 2.36, eff. July 1, 2001; Acts 1999, 76th Leg., ch.
846, Sec. 1, eff. Aug. 30, 1999.
APPENDIX ITEM NO. 27
CHAPTER 42. PERSONAL PROPERTY
Sec. 42.0021. ADDITIONAL EXEMPTION FOR CERTAIN
SAVINGS PLANS. (a) In addition to the exemption
prescribed by Section 42.001, a person's right to the
assets held in or to receive payments, whether vested or
not, under any stock bonus, pension, annuity, deferred
compensation, profit-sharing, or similar plan, including a
retirement plan for self-employed individuals, or a
simplified employee pension plan, an individual retirement
account or individual retirement annuity, including an
inherited individual retirement account, individual
retirement annuity,Roth IRA, or inherited Roth IRA, or a
health savings account, and under any annuity or similar
contract purchased with assets distributed from that type
of plan or account, is exempt from attachment, execution,
and seizure for the satisfaction of debts to the extent the
plan, contract, annuity, or account is exempt from federal
income tax, or to the extent federal income tax on the
person's interest is deferred until actual payment of
benefits to the person under Section 223, 401(a), 403(a),
403(b), 408(a), 408A, 457(b), or 501(a), Internal Revenue
Code of 1986, including a government plan or church plan
described by Section 414(d) or (e), Internal Revenue Code
of 1986. For purposes of this subsection, the interest of
a person in a plan, annuity, account, or contract acquired
by reason of the death of another person, whether as an
owner, participant, beneficiary, survivor, coannuitant,
heir, or legatee, is exempt to the same extent that the
interest of the person from whom the plan, annuity,
account, or contract was acquired was exempt on the date of
the person's death. If this subsection is held invalid or
preempted by federal law in whole or in part or in certain
circumstances, the subsection remains in effect in all
other respects to the maximum extent permitted by law.
(b) Contributions to an individual retirement account
that exceed the amounts permitted under the applicable
provisions of the Internal Revenue Code of 1986 and any
accrued earnings on such contributions are not exempt under
this section unless otherwise exempt by law. Amounts
qualifying as nontaxable rollover contributions under
Section 402(a)(5), 403(a)(4), 403(b)(8), or 408(d)(3) of
the Internal Revenue Code of 1986 before January 1, 1993,
are treated as exempt amounts under Subsection (a).
Amounts treated as qualified rollover contributions under
Section 408A, Internal Revenue Code of 1986, are treated as
exempt amounts under Subsection (a). In addition, amounts
qualifying as nontaxable rollover contributions under
Section 402(c), 402(e)(6), 402(f), 403(a)(4), 403(a)(5),
403(b)(8), 403(b)(10), 408(d)(3), or 408A of the Internal
Revenue Code of 1986 on or after January 1, 1993, are
treated as exempt amounts under Subsection (a). Amounts
qualifying as nontaxable rollover contributions under
Section 223(f)(5) of the Internal Revenue Code of 1986 on
or after January 1, 2004, are treated as exempt amounts
under Subsection (a).
(c) Amounts distributed from a plan, annuity,
account, or contract entitled to an exemption under
Subsection (a) are not subject to seizure for a creditor's
claim for 60 days after the date of distribution if the
amounts qualify as a nontaxable rollover contribution under
Subsection (b).
(d) A participant or beneficiary of a plan, annuity,
account, or contract entitled to an exemption under
Subsection (a), other than an individual retirement account
or individual retirement annuity, is not prohibited from
granting a valid and enforceable security interest in the
participant's or beneficiary's right to the assets held in
or to receive payments under the exempt plan, annuity,
account, or contract to secure a loan to the participant or
beneficiary from the exempt plan, annuity, account, or
contract, and the right to the assets held in or to receive
payments from the plan, annuity, account, or contract is
subject to attachment, execution, and seizure for the
satisfaction of the security interest or lien granted by
the participant or beneficiary to secure the loan.
(e) If Subsection (a) is declared invalid or
preempted by federal law, in whole or in part or in certain
circumstances, as applied to a person who has not brought a
proceeding under Title 11, United States Code, the
subsection remains in effect, to the maximum extent
permitted by law, as to any person who has filed that type
of proceeding.
(f) A reference in this section to a specific
provision of the Internal Revenue Code of 1986 includes a
subsequent amendment of the substance of that provision.
Added by Acts 1987, 70th Leg., ch. 376, Sec. 1, eff. Sept.
1, 1987. Amended by Acts 1989, 71st Leg., ch. 1122, Sec.
1, eff. Sept. 1, 1989; Acts 1995, 74th Leg., ch. 963, Sec.
1, eff. Aug. 28, 1995; Acts 1999, 76th Leg., ch. 106, Sec.
1, eff. Sept. 1, 1999.
Amended by:
Acts 2005, 79th Leg., Ch. 130 (H.B. 330), Sec. 1, eff.
May 24, 2005.
Acts 2005, 79th Leg., Ch. 130 (H.B. 330), Sec. 2, eff.
May 24, 2005.
Acts 2011, 82nd Leg., R.S., Ch. 933 (S.B. 1810), Sec.
1, eff. June 17, 2011.
Acts 2013, 83rd Leg., R.S., Ch. 91 (S.B. 649), Sec. 2,
eff. September 1, 2013.
APPENDIX ITEM NO. 28
CHAPTER 42. PERSONAL PROPERTY
Sec. 42.003. DESIGNATION OF EXEMPT PROPERTY. (a) If
the number or amount of a type of personal property owned
by a debtor exceeds the exemption allowed by Section 42.002
and the debtor can be found in the county where the
property is located, the officer making a levy on the
property shall ask the debtor to designate the personal
property to be levied on. If the debtor cannot be found in
the county or the debtor fails to make a designation within
a reasonable time after the officer's request, the officer
shall make the designation.
(b) If the aggregate value of a debtor's personal
property exceeds the amount exempt from seizure under
Section 42.001(a), the debtor may designate the portion of
the property to be levied on. If, after a court's request,
the debtor fails to make a designation within a reasonable
time or if for any reason a creditor contests that the
property is exempt, the court shall make the designation.
Acts 1983, 68th Leg., p. 3524, ch. 576, Sec. 1, eff. Jan.
1, 1984. Amended by Acts 1991, 72nd Leg., ch. 175, Sec. 1,
eff. May 24, 1991.
APPENDIX ITEM NO. 29
CHAPTER 44. TAXATION OF RETIREMENT BENEFITS BY ANOTHER
STATE
Sec. 44.002. PROPERTY EXEMPT. All property in this
state is exempt from attachment, execution, and seizure for
the satisfaction of a judgment or claim in favor of another
state or political subdivision of another state for failure
to pay that state's or that political subdivision's income
tax on benefits received from a pension or other retirement
plan.
Added by Acts 1993, 73rd Leg., ch. 95, Sec. 1, eff. May 7,
1993.
APPENDIX ITEM NO. 30
CHAPTER 63. GARNISHMENT
Sec. 63.001. GROUNDS. A writ of garnishment is available
if:
(1) an original attachment has been issued;
(2) a plaintiff sues for a debt and makes an affidavit
stating that:
(A) the debt is just, due, and unpaid;
(B) within the plaintiff's knowledge, the defendant
does not possess property in Texas subject to execution
sufficient to
satisfy the debt; and
(C) the garnishment is not sought to injure the
defendant or the garnishee; or
(3) a plaintiff has a valid, subsisting judgment and makes
an affidavit stating that, within the plaintiff's
knowledge, the
defendant does not possess property in Texas subject to
execution
sufficient to satisfy the judgment.
Acts 1985, 69th Leg., ch. 959, Sec. 1, eff. Sept. 1, 1985.
APPENDIX ITEM NO. 31
FRANK KEATHLEY AND MELISSA KEATHLEY, APPELLANTS
v.
CORBITT BAKER, APPELLEE
NO. 12-11-00151-CV
COURT OF APPEALS TWELFTH COURT OF APPEALS DISTRICT TYLER,
TEXAS
Opinion delivered: April 3, 2013
APPEAL FROM THE
COUNTY COURT AT LAW #3
SMITH COUNTY, TEXAS
MEMORANDUM OPINION
Frank and Melissa Keathley appeal from an adverse judgment rendered on the jury's
verdict in favor of Corbitt Baker in the Keathleys' suit arising from a real estate contract.
In six issues, the Keathleys contend the trial court erroneously vacated a prior judgment,
awarded attorney's fees to Baker, failed to award attorney's fees to the Keathleys,
submitted certain jury questions, and directed a verdict against them on their fraud
claims. We suggest a partial remittitur of attorney's fees and otherwise affirm the trial
court's judgment.
BACKGROUND
In 2003, Baker's mother, Ruth, entered into a residential real estate listing agreement
with Carroll and Molly Bobo, doing business as United Country Bobo Realty, to sell her
home. After her death in early 2004, Baker agreed to sell the home to the Keathleys and
entered into a residential real estate contract with them. The title policy commitment
revealed that title to the home was held by The Bobby H. Baker and Ruth E. Baker
Revocable Living Trust. The title company would not issue a title policy on the house
unless Baker's father and brother signed the deed conveying the house to the Keathleys.
Baker's father and brother refused to sign. The Keathleys, unaware that Baker was having
trouble obtaining clear title, sold their home, secured
Page 2
financing, and notified Baker that they were ready to close by the June 1, 2004 deadline
stated in the sales contract. The closing did not occur, and the Keathleys purchased a
different home in September 2004. On January 5, 2005, the Keathleys sent Baker notice
of their Deceptive Trade Practices Act (DTPA) claim against him, alleging $45,000.00 in
APPENDIX ITEM NO. 32
damages resulting from the fact that the sale did not close. They requested settlement of
the dispute but alluded to their option of filing a lawsuit.
Baker filed a declaratory judgment action to establish his title to the property and, on
September 16, 2005, he obtained a judgment establishing that he had clear title. On
January 31, 2006, Baker informed the Keathleys that he had cured the objections in the
title commitment and was prepared to close on the contract for the sale of the home in
seven days.
On February 3, 2006, the Keathleys filed suit against Baker and the Bobos, alleging
violations of the DTPA, breach of contract, common law fraud, statutory fraud, and
negligent misrepresentation. Baker filed a counterclaim against the Keathleys, alleging
breach of contract for failing or refusing to close in accordance with the contract once he
had cured the title objections. Baker and the Bobos filed motions for summary judgment,
which were granted. On September 20, 2007, the trial court rendered a take nothing
judgment against the Keathleys, and awarded Baker and the Bobos their attorney's fees.1
The Keathleys appealed that judgment. On appeal, we affirmed the judgment that the
Keathleys take nothing against Baker and the Bobos on their DTPA and negligent
misrepresentation causes of action. We reversed the trial court's judgment regarding the
Keathleys' breach of contract, common law fraud, and statutory fraud causes of action
against Baker and the Bobos, and its award of attorney's fees, and remanded the case to
the trial court for further proceedings. Keathley v. Baker, No. 12-07-477-CV, 2009 Tex.
App. LEXIS 4957 (Tex. App.-Tyler June 30, 2009, no pet.).
On remand, the Keathleys elected not to pursue their common law fraud claim, and
the trial court directed a verdict in favor of Baker and the Bobos on the Keathleys'
statutory fraud claim. The breach of contract claim was submitted to the jury. Based on
the jury's verdict, on March 8, 2011, the trial court rendered a take nothing judgment in
favor of Baker and the Bobos and awarded attorney's fees to Baker. On April 12, 2011,
the trial court signed a second final
Page 3
judgment, purportedly incorporating the jury verdict, but rendering judgment for the
Keathleys and awarding them attorney's fees. On April 18, 2011, the court signed an
order vacating the final judgment erroneously entered on April 12, 2011. The April 18
order provides that the March 8, 2011 judgment correctly reflects the judgment of the
court based upon the jury's verdict. The trial court later severed the Keathleys' case
against the Bobos from their case against Baker. This appeal involves only the claims
against Baker.
FINAL JUDGMENT
In their first and second issues, the Keathleys assert that the trial court erred in
signing the April 18, 2011 order vacating the April 12 judgment. They contend the April
12 judgment was proper because they were the prevailing parties "under the pleadings,
the nature of the case, the evidence and the verdict pursuant to Rule 301." The Keathleys
argue that they are the prevailing parties because the jury found that Baker breached the
contract and they were entitled, as a matter of law, to judgment for the $2,000.00 in
earnest money they had deposited with Landmark Title as damages for the breach. They
further argue that the April 18 order cannot reinstate the March 8 judgment because the
March 8 judgment had been vacated under Texas Rule of Civil Procedure 329b. The
Keathleys concede that the trial court signed each of the documents while it had plenary
power over the case. They assert that the April 18 judgment is the final judgment to be
addressed in this appeal. However, they contend, that judgment should be reversed and
judgment should be rendered reflecting the terms of the April 12 judgment.
Prevailing Party
The Keathleys begin by arguing that the April 12 judgment in their favor should
stand because they were the prevailing parties. We disagree. A plaintiff must receive
some relief on the merits on his claim before he can be said to prevail. Intercontinental
Group P'ship v. KB Home Lone Star L.P., 295 S.W.3d 650, 654 (Tex. 2009). Whatever
relief the plaintiff secures must directly benefit him at the time of the judgment. Id. A
plaintiff "prevails" when actual relief on the merits of his claim materially alters the legal
relationship between the parties by modifying the defendant's behavior in a way that
directly benefits the plaintiff. Id. The jury determined that Baker failed to comply with
the contract. It also determined, however, that, pursuant to the terms of the contract, the
contract terminated because the property did not satisfy the lender's underwriting
requirements for the loan and objections to defects to title were not
Page 4
cured within fifteen days after Baker received the objections. Accordingly, the jury was
instructed that, based on those findings, they were not to address the question of
compensation to the Keathleys for damages. Even if the jury's finding is equivalent to a
finding of breach, a stand-alone finding on breach confers no benefit whatsoever. Id. at
655. The Keathleys recovered no damages, and secured no declaratory or injunctive
relief. They received nothing of value of any kind. See id.We are also not persuaded by the Keathleys' earnest money argument. Earnest
money is a deposit made by the buyer with an escrow agent to bind a sale of real
property. See Cowman v. Allen Monuments, Inc., 500 S.W.2d 223, 225 (Tex. Civ. App.-
Texarkana 1973, no writ). If the buyer breaches the contract, the seller may retain this
earnest money as liquidated damages. Id. Here, the contract provided that, if objections to
title defects are not cured within the fifteen day period, the contract would terminate and
the Keathleys' earnest money would be refunded. There is no question that the Keathleys
were entitled to a refund of their earnest money based on the terms of the contract.
However, there is no showing that the Keathleys asked for the return of their earnest
money or that Baker unlawfully withheld it. Presumably, had the Keathleys asked
Landmark Title to return their earnest money, the title company would have done so.
Moreover, the contract provides that, if the seller defaults, the buyer may "(a) enforce
specific performance, seek such other relief as may be provided by law, or both, or (b)
terminate this contract and receive the earnest money, thereby releasing both parties from
this contract." Frank Keathley testified that, by filing this lawsuit, he is seeking other
remedies. As the contract gave him the option of seeking the return of his earnest money
or seeking other remedies, the Keathleys' failure to obtain the return of their earnest
money was their choice under the terms of the contract. The earnest money does not
constitute breach of contract damages. Accordingly, the Keathleys are not the prevailing
parties and the April 12 judgment is not an accurate reflection of the evidence and the
verdict. See Intercontinental Group P'ship, 295 S.W.3d at 655.
Validity of April 18 Order
The Keathleys' argument that the March 8 judgment cannot be reinstated because it
was vacated is essentially a complaint about the form of the April 18 order. While it has
plenary power, the trial court can vacate, modify, correct, or reform its judgment. See
TEX. R. CIV. P.
Page 5
329b(d), (e). The April 18 order is entitled "Order Vacating Final Judgment Erroneously
Entered April 12, 2011." The body of the order states in its entirety:
On this _____ day of 4-13, 2011 came to be considered by the Court the mistaken signing
and entry of a second "Final Judgment" in this case on or about April 12, 2011. The
Court had previously entered a Final Judgment in this case on March 8, 2011.
On the 12th day of April, 2011, the Court erroneously entered a second "Final Judgment"
that substantially differed from the one entered on March 8, 2011.
The Court finds that it is in the interest of justice that the Final Judgment entered April
12, 2011 be and is hereby VACATED in its entirety.
The Final Judgment entered by this Court on March 8, 2011 (attached hereto as Exhibit
"A") correctly reflects the judgment of this Court based upon the verdict of the jury
received and accepted by the Court at the conclusion of the trial.
Generally speaking, if a judgment is set aside, the cause stands as if there has been
no final judgment. McCauley v. Consol. Underwriters, 304 S.W.2d 265, 265 (Tex. 1957)
(per curiam). When a judgment has been set aside, neither that judgment nor any other
former judgment in the case ever again becomes the judgment of the court unless the trial
court expressly reinstates it and, in effect, renders a new judgment on the later date. P.V.
Internat'l Corp. v. Turner, Mason, and Solomon, 700 S.W.2d 21, 22 (Tex. App.-Dallas
1985, writ denied). Here, the April 18 order states that the March 8 judgment "correctly
reflects the judgment of this Court." We conclude that the language used in the April 18
order, together with the court's act of physically attaching the March 8 judgment to the
order and referencing the attachment, has the same effect as use of the word "reinstate" in
the new order. See Curry v. Bank of Am., N.A., 232 S.W.3d 345, 351 (Tex. App.-Dallas
2007, pet. denied) (where trial court's order did not explicitly reinstate prior order,
appellate court interpreted language in order to conclude trial court had done so); Consol.
Underwriters v. McCauley, 320 S.W.2d 60, 63-64 (Tex. Civ. App.-Beaumont 1959, writ
ref'd n.r.e.) (holding trial court's September 27, 1957 order vacating a July 3, 1956 order
revived the December 5, 1955 judgment when trial court ordered "that final judgment
entered in this cause on December 5, 1955, be, and the same is hereby in all things held
to be valid, subsisting and unsatisfied"). We conclude that the April 18 order reinstated
the March 8 judgment. We overrule the Keathleys' first and second issues.
Page 6
ATTORNEY'S FEES
In their third and fourth issues, the Keathleys complain of the attorney's fee awarded
to Baker and the failure to award attorney's fees to them. They assert that there was no
legal or factual basis for an award of attorney's fees to Baker. Specifically, they argue that
there is no basis for awarding attorney's fees to Baker on the noncontract issues because
the Texas Civil Practice and Remedies Code does not allow a party to recover attorney's
fees for defending against a contract claim. Further, they argue that the jury's answer was
not supported by the evidence and was against the great weight and preponderance of the
evidence with respect to the contract claims. Additionally, they assert that the jury found
that Baker breached the contract and therefore he cannot be the prevailing party. Finally,
they assert that the trial court erred in failing to grant judgment in their favor for
attorney's fees because they were the prevailing parties and the jury's answer to Question
5, finding that the Keathleys were not entitled to any award for attorney's fees, was
against the great weight and preponderance of the evidence.
Standard of Review
When a party is attacking the legal sufficiency of the evidence supporting a finding
on an issue for which he did not have the burden of proof, he must show that no evidence
supports the finding. Exxon Corp. v. Emerald Oil & Gas Co., 348 S.W.3d 194, 215 (Tex.
2011). Evidence is legally sufficient if it would enable reasonable and fair-minded people
to reach the verdict under review. Id. We credit favorable evidence if reasonable jurors
could, and disregard contrary evidence unless reasonable jurors could not. Id.If a party is attacking the factual sufficiency of the evidence to support an adverse
finding on an issue on which the other party had the burden of proof, the attacking party
must demonstrate that there is insufficient evidence to support the adverse finding. Capps
v. Nexion Health at Southwood, Inc., 349 S.W.3d 849, 855 (Tex. App.-Tyler 2011, no
pet). The verdict should be set aside only if it is so contrary to the overwhelming weight
of the evidence as to be clearly wrong and unjust. Cain v. Bain, 709 S.W.2d 175, 176
(Tex. 1986) (per curiam). The reviewing court may not substitute its opinion for that of
the jury, as it is the jury's role to judge the credibility of witnesses, to assign the weight
afforded their testimony, and to resolve inconsistencies within or conflicts among the
witnesses' testimony. Golden Eagle Archery, Inc. v. Jackson, 116 S.W.3d 757, 761
(Tex. 2003); Ford v. Panhandle & Santa Fe Ry. Co., 252 S.W.2d 561, 563 (Tex. 1952).
Page 7
Applicable Law
Texas law allows recovery of attorney's fees if authorized by statute or contract.
Tony Gullo Motors I, L.P. v. Chapa, 212 S.W.3d 299, 311 (Tex. 2006). The legislature
has provided that a party who prevails on a breach of contract claim may recover his
reasonable attorney's fees. TEX. CIV. PRAC. & REM. CODE ANN. § 38.001(8) (West
2008). The reasonableness of an attorney's fee award is a question of fact and must be
supported by competent evidence. In re M.A.N.M., 231 S.W.3d 562, 567 (Tex. App.-
Dallas 2007, no pet.). There should be evidence of time spent by the attorney on the case,
the nature of the preparation, the complexity of the case, the experience of the attorney,
and the prevailing hourly rates. Id. The court may also consider the entire record and the
common knowledge of the lawyers and judges. Id.Discussion
Baker agrees that Section 38.001 of the Texas Civil Practice and Remedies Code
does not apply here as authority for his attorney's fee award. He relies on the terms of the
contract, and we agree that the contract controls. The contract states that "[t]he prevailing
party in any legal proceeding related to this contract is entitled to recover reasonable
attorney's fees and all costs of such proceeding incurred by the prevailing party." As
explained above, Baker was the prevailing party. Accordingly, the jury's finding in
answer to Question 5 that the Keathleys were entitled to an award of zero for attorney's
fees was correct because they were not the prevailing parties. See Intercontinental
Group P'ship, 295 S.W.3d at 662. We overrule the Keathleys' fourth issue.
Accordingly, Baker, as the prevailing party, is entitled to recover his reasonable
attorney's fees incurred "in any legal proceeding related to [the] contract." All of the
Keathleys' claims against Baker related to the contract. Therefore, he is entitled to proven
reasonable attorney's fees. See Robbins v. Capozzi, 100 S.W.3d 18, 27 (Tex. App.-Tyler
2002, no pet.).
Baker's counsel testified that he is familiar with the reasonable and necessary
charges for legal services in Smith County. He testified as to his experience, the nature of
his work on the case, the time he spent working on the case, and his hourly rates. He
testified that the total amount of legal fees incurred for representing Baker up through the
trial of this matter is $65,344.00. Additionally, he specified that, out of that total,
$23,240.00 is attributable to work on the DTPA claims, $38,073.00 for work on the
negligent misrepresentation claim, $17,204.00 for work on the fraud claims, and
$21,027.00 for work on the breach of contract claim. He also testified that out of pocket
expenses were $2,209.00. He further testified that a fair fee for an
Page 8
appeal to the intermediate court of appeals is $7,000.00 and the cost for an appeal to the
supreme court would be $10,000.00. The jury awarded Baker $70,000.00 in attorney's
fees for "preparation and trial," $10,000.00 for an appeal to this court, and $15,000.00 for
an appeal to the Texas Supreme Court.
Although the sum of the specific amounts identified for each claim far exceeds the
"total" testified to by counsel, it was the jury's duty to resolve that conflict within his
testimony. Ford, 252 S.W.2d at 563. There is sufficient evidence to support the award of
$70,000.00 in attorney's fees for "preparation and trial." See In re M.A.N.M., 231 S.W.3d
at 567. However, the amounts awarded for appeals exceed the amounts testified to as
necessary for the appeals. Thus, the evidence is not factually sufficient to support the
awards for appeals to this court or the Texas Supreme Court. We sustain the Keathleys'
third issue in part and overrule it in part.
THE JURY CHARGE
In their fifth issue, the Keathleys attack the jury charge as follows:
The trial court erred by submitting Jury Question No. 4 conditioned on a "Yes" answer to
Jury Question No. 1 and a "No" answer to Jury Question No. 2 and Jury Question No. 3
because the conditional submission informed the jury of the effect of its answers, because
Jury Questions No. 2 and No. 3 were comments on the weight of the evidence and were
questions of law not of fact and because there was sufficient evidence to raise a question
of fact for the jury and because Frank Keathley and Melissa Keathley were entitled to the
return of their escrow deposit under the Contract, as a matter of law.
The Keathleys have not properly briefed this issue. An appellate brief must contain a
clear and concise argument for the contentions made, with appropriate citations to
authorities and to the record. TEX. R. APP. P. 38.1(i). Rule 38 requires a party to provide
such a discussion of the facts and the authorities relied upon as may be requisite to
maintain the point at issue. Tesoro Petroleum Corp. v. Nabors Drilling USA, Inc., 106
S.W.3d 118, 128 (Tex. App.-Houston [1st Dist.] 2002, pet. denied). "This is not done by
merely uttering brief conclusory statements, unsupported by legal citations." Id. The
Keathleys refer generally to Pattern Jury Charge 101.21 as the only authority in support
of the five arguments they allude to in the two paragraphs in which they present this
issue. This is insufficient to comply with Rule 38.1(i). The Keathleys have waived any
error, and we overrule issue five.
Page 9
DIRECTED VERDICT
In their sixth issue, the Keathleys contend the trial court erred in directing a verdict
against them on their fraud claims because there was evidence raising an issue of fact and
the claims should have been submitted to the jury.2 They assert that Baker gave them only
limited information regarding the extent of the problems with the property's title and that
they presented evidence that Baker committed fraud by nondisclosure. Therefore, they
argue, "there were issues of fact relating to the nature of the disclosures by Baker and
whether he failed to correct or add to those disclosures to let Keathley know the
seriousness of the title problems and his family dispute that resulted in Baker's breach of
the Contract."
Standard of Review
A directed verdict is warranted when the evidence is such that no other verdict can
be rendered and the moving party is entitled, as a matter of law, to judgment. White v.
White, 172 S.W.2d 295, 296 (Tex. 1943). A defendant establishes a right to a directed
verdict when a plaintiff fails to present evidence raising a fact issue essential to the
plaintiff's right of recovery or when the plaintiff admits, or the evidence conclusively
establishes, a defense to the plaintiff's cause of action. Prudential Ins. Co. v. Fin. Review
Servs., Inc., 29 S.W.3d 74, 77 (Tex. 2000).
In reviewing a trial court's directed verdict, an appellate court follows the standards
for assessing the legal sufficiency of the evidence. City of Keller v. Wilson, 168 S.W.3d
802, 823-827 (Tex. 2005). We examine the evidence in the light most favorable to the
person suffering an adverse judgment and decide whether there is any evidence of
probative value to raise an issue of material fact on the question presented. Exxon Corp.,
348 S.W.3d at 217. We credit favorable evidence if a reasonable factfinder could and
disregard evidence contrary to the finding unless a reasonable factfinder could not. City
of Keller, 168 S.W.3d at 807.
Applicable Law
Statutory fraud in a transaction involving real estate consists of a (1) false
representation of a past or existing material fact, when the false representation is made to
a person for the purpose of inducing that person to enter into a contract and relied on by
that person in entering into that contract; or (2) a false promise to do an act, when the
false promise is material, made
Page 10
with the intention of not fulfilling it, made to a person for the purpose of inducing that
person to enter into a contract, and relied on by that person in entering into that contract.
TEX. BUS. & COM. CODE ANN. § 27.01(a) (West 2009). Silence is equivalent to a
false representation where circumstances impose a duty to speak and one nevertheless
deliberately remains silent. Lesikar v. Rappeport, 33 S.W.3d 282, 299 (Tex. App.-
Texarkana 2000, pet. denied). In other words, for there to be fraud by nondisclosure,
there must be a duty to disclose. Id. A duty to disclose may arise in four situations: (1)
where there is a special or fiduciary relationship; (2) where one voluntarily discloses
partial information, but fails to disclose the whole truth; (3) where one makes a
representation and fails to disclose new information that makes the earlier representation
misleading or untrue; or (4) where one makes a partial disclosure and conveys a false
impression. Id.Discussion
The Keathleys admit that they knew there was a probate issue with a family trust
involved and that other Baker family members had retained legal counsel. They assert,
however, that they did not know the nature of the dispute or that it would cause a problem
with closing. They argue that the issue is whether Baker should have informed them of
changes that presented more serious problems for closing than what had been indicated.
In spite of a duty to disclose, they argue, Baker failed to disclose the title dispute or new
information regarding the title dispute that made the earlier representations misleading or
untrue. In making their argument, the Keathleys ignore some of the elements of statutory
fraud.
The record shows that Ruth Baker owned the home, the Keathleys made their initial
offer on the home after Ruth Baker died, and they were aware of her death. According to
Frank Keathley, Baker told the Keathleys that he would inherit the property and acted as
if he had the authority to sell the house. The Keathleys suggested leasing the house until
Baker could obtain legal title. However, they did not pursue leasing because the
Keathleys and Baker agreed that the Keathleys would be able to sell their home and
Baker "would be through with whatever he needed to do to be ready to close by the
closing date." Their offer included a provision stating that the transaction would close
when the home sells and "subject property is out of probate." The offer also provided for
monetary compensation to the Keathleys in the event "closing is extended to probate." On
February 10, 2004, Baker responded as "seller," rejecting that offer, and the Keathleys
presented a second offer that Baker agreed to as "seller." The agreed upon
Page 11
closing date was June 1, 2004. Thus, although Baker presented himself as one with
authority to sell, he disclosed the fact that he would not have legal title until after
conclusion of the appropriate legal proceedings. The Keathleys understood that process
might extend beyond June 1, 2004.
The contract was signed in mid-February, and the receipt for the earnest money is
dated February 18, 2004. The parties received the preliminary title commitment on
February 27, which was when all parties learned of the trust. It was later verified that
Baker was to receive the house at issue under the terms of the trust. Since Baker did not
know about the trust at the time they entered into the contract, he could not have
knowingly misrepresented the effect the trust would have on his ability to close on time.
Accordingly, there is no evidence of a false representation regarding Baker's claim that he
was to get the house after his mother died or that he would be able to close on June 1,
2004. And thus there is no evidence of a false representation prior to entering into the
contract. Further, if Baker had said he would be able to close on June 1, 2004, that would
not be a representation of a past or existing material fact as required by Section
27.01(a)(1).
Likewise, there is no evidence that Baker did not intend to fulfill his promise to
obtain title and close on June 1, 2004. Consequently, such a statement, if made, does not
violate Section 27.01(a)(2)'s requirement of a false promise made with the intention of
not fulfilling it. Therefore, there is no evidence that Baker fraudulently induced the
Keathleys to agree to buy the property, and no evidence that the Keathleys relied on a
false representation in entering into the contract.
Next, we address the Keathleys' assertion that Baker failed to disclose the title
dispute or new information regarding the title dispute that made the earlier representation
that closing would take place on June 1 misleading or untrue. For purposes of our
discussion, we will assume without deciding that Baker had a duty to disclose new
information relating to his ability to close on June 1, 2004. To the extent the law requires
disclosure, it is fact, not speculation as to the future, that must be disclosed. See Allen v.
Devon Energy Holdings, L.L.C., 367 S.W.3d 355, 370-71 (Tex. App.-Houston [1st Dist.]
2012) (op on reh'g), pet. granted, judgm't set aside, remanded by agr., 2013 Tex. LEXIS
20 (Jan. 11, 2013). Even if Baker told the Keathleys that, in his opinion, he could quickly
clear up the title problems, his opinion cannot support an action for fraud. See Transp.
Ins. Co. v. Faircloth, 898 S.W.2d 269, 276 (Tex. 1995). Finally, even if
Page 12
Baker came into possession of information after they entered the contract that should
have been disclosed, that information cannot form the basis of a statutory fraud claim
because it could not have been used for the purpose of inducing the Keathleys to enter
into the contract. Tex. Bus. & Com. Code Ann. § 27.01; see also Marcontell v. Jacoby,
260 S.W.3d 686, 691 (Tex. App.-Dallas 2008, no pet.) (alleged misrepresentations
occurring after contract is signed, but before closing, could not have induced contract).
The Keathleys failed to raise a fact issue on their claim for statutory fraud.
Therefore, the trial court did not err in granting Baker's motion for directed verdict on
that claim. See Prudential Ins. Co., 29 S.W.3d at 77. We overrule the Keathleys' sixth
issue.
DISPOSITION
We affirm the trial court's judgment with respect to attorney's fees in the amount of
$70,000.00 for preparation and trial. Because the evidence does not support the
$25,000.00 award for appellate attorney's fees, we suggest a remittitur of $8,000.000. If
within fifteen days after this court's opinion, Baker files in this court a remittitur of
$8,000.00 of the appellate attorney's fees awarded in the trial court's judgment, then the
trial court's judgment will be reformed and affirmed as to $17,000.00 in appellate
attorney's fees. If the suggested remittitur is not timely filed, the part of the trial court's
judgment awarding appellate attorney's fees will be reversed and the issue of attorney's
fees will be remanded to the trial court for a new trial. See TEX. R. APP. P. 46.3; Stukes
v. Bachmeyer, 249 S.W.3d 461, 470 (Tex. App.-Eastland 2007, no pet.).
In all other respects, we affirm the trial court's judgment.
BRIAN HOYLE
Justice
Opinion delivered April 3, 2013.
Panel consisted of Worthen, C.J., Griffith, J., and Hoyle, J.
(PUBLISH)
Page 13
NO. 12-11-00151-CV
FRANK KEATHLEY AND MELISSA KEATHLEY, Appellants
V.
CORBITT BAKER, Appellee
Appeal from the County Court at Law #3
of Smith County, Texas. (Tr.Ct.No. 51,959-B)
THIS CAUSE came to be heard on the oral arguments, appellate record and briefs
filed herein, and the same being considered, it is the opinion of this court that there was
error in the judgment of the trial court below.
It is therefore ORDERED, ADJUDGED, AND DECREED that the award of
$25,000.00 in appellate attorney's fees to Corbitt Baker was excessive, and in order to
obtain an affirmance of the appellate attorney's fee award, Appellee Corbitt Baker must
file a remittitur in the amount of $8,000.00 within fifteen days of the date of this
judgment; otherwise, the trial court's judgment as to appellate attorney's fees will be
reversed and the issue of attorney's fees will be remanded for a new trial.
It is further ORDERED, ADJUDGED and DECREED that, in all other respects, the
trial court's judgment is affirmed; all costs of this appeal are hereby assessed
Page 14
against the Appellants, FRANK KEATHLEY AND MELISSA KEATHLEY, for
which execution may issue; and that this decision be certified to the court below for
observance.
Brian Hoyle, Justice.
Panel consisted of Worthen, C.J., Griffith, J., and Hoyle, J.
--------
Notes:
1.
Although the judgment does not specifically mention Baker's counterclaim for breach of contract, the
judgment contains a Mother Hubbard clause denying all relief not expressly granted. Further, the judgment
includes language that indicates finality by stating that "[t]his judgment finally disposes of all parties'
claims and is appealable."
2.
The Keathleys reference "their fraud claims" and assert that the trial court granted Baker's directed
verdict on their common law and statutory fraud claims. However, the record shows that they elected not to
pursue their common law fraud claim during the course of the trial. The trial court directed a verdict against
the Keathleys on their statutory fraud claim only.
--------
FRANK KEATHLEY AND MELISSA KEATHLEY, Appellants
v.
CORBITT BAKER, Appellee
NO. 12-11-00151-CV
COURT OF APPEALS TWELFTH COURT OF APPEALS DISTRICT OF TEXAS
APRIL 24, 2013
JUDGMENT
Appeal from the County Court at Law #3
of Smith County, Texas. (Tr.Ct.No. 51,959-B)
THIS CAUSE came to be heard on the oral arguments, appellate record and briefs
filed herein, and the same being considered, it is the opinion of this court that there was
error in the judgment of the trial court below insofar as the award of $25,000.00 in
appellate attorney's fees to Corbitt Baker was excessive, and that in order to obtain an
affirmance of the appellate attorney's fee award, Appellee Corbitt Baker must file a
remittitur in the amount of $8,000.00; and it appearing that Appellee has timely filed such
remittitur, it is the opinion of this court that the portion of the trial court's judgment
awarding appellate attorney's fees, as reduced by $8,000.00, be MODIFIED AND, AS
MODIFIED, AFFIRMED.
It is further ORDERED, ADJUDGED and DECREED that, in all other respects, the
trial court's judgment is affirmed; all costs of this appeal are hereby assessed against the
Appellants, FRANK KEATHLEY AND MELISSA KEATHLEY, for which execution
may issue; and that this decision be certified to the court below for observance.
Brian Hoyle, Justice.
Panel consisted of Worthen, C.J., Griffith, J., and Hoyle, J.
APPENDIX ITEM NO. 33