Stewart A. Feldman, Individually, the Feldman Law Firm LLP, Rapid Settlements, Ltd. v. Joseph K. Watts, Angela M. Watts, and Joseph K. Watts P.C. ( 2019 )

Affirmed and Opinion filed October 24, 2019.
In The
Fourteenth Court of Appeals
NO. 14-17-00851-CV
STEWART A. FELDMAN, INDIVIDUALLY, THE FELDMAN LAW FIRM
LLP, RAPID SETTLEMENTS, LTD., RAPID MANAGEMENT CORP.,
RSL-3B-IL, LTD., RSL-3B-IL MANAGEMENT CORP., RSL-5B-IL
MANAGEMENT CORP., RSL-5B-IL, LTD., RSL SPECIAL
MANAGEMENT CORP., AND RSL-SPECIAL IV, LTD., Appellants
V.
JOSEPH K. WATTS, ANGELA M. WATTS, AND JOSEPH K. WATTS,
P.C., Appellees
On Appeal from the 55th District Court
Harris County, Texas
Trial Court Cause No. 2009-09825
OPINION
In this appeal from a final judgment in a turnover proceeding, the judgment
creditors assert that the trial court erred in denying their request for reasonable
attorney’s fees under section 31.002(e) of the Texas Civil Practice and Remedies
Code. Because the judgment creditors did not seek reasonable attorney’s fees for
any services of their attorneys in successfully prosecuting a request for turnover
relief, we affirm.
I. FACTUAL AND PROCEDURAL BACKGROUND
In May 2009, appellants Stewart A. Feldman, individually, The Feldman
Law Firm LLP, Rapid Settlements, Ltd., Rapid Management Corp., RSL-3B-IL,
Ltd., RSL-3B-IL Management Corp., RSL-5B-IL Management Corp., RSL-5B-IL,
Ltd., RSL Special Management Corp., and RSL-Special IV, Ltd. (collectively the
“Feldman Parties”) obtained a judgment (the “Judgment”) against appellees Joseph
K. Watts, Angela M. Watts, and Joseph K. Watts, P.C. (collectively the “Watts
Parties”).
Several years later, the trial court signed an order, dated March 23, 2015,
granting the Feldman Parties’ application for a turnover order and commanding the
Watts Parties to turn over of all of their property not found by the trial court to be
exempt (the “Turnover Order”). The trial court also ordered the Watts Parties to
continue to turn over certain categories of property immediately upon receiving the
property, until the Judgment was “fully paid [or] settled.” Though the Feldman
Parties had requested attorney’s fees under Texas Civil Practice and Remedies
Code section 31.002(e), the trial court did not award any attorney’s fees in the
Turnover Order. No party appealed the Turnover Order.
A few months after issuing the Turnover Order, the Feldman Parties filed a
“Supplemental Application for Turnover After Judgment,” seeking additional
turnover relief as well as attorney’s fees. The trial court denied this application.
In March 2017, the Feldman Parties filed a motion asserting that the Watts
Parties had failed to comply with various post-judgment, trial-court orders,
including the Turnover Order, and seeking (1) coercive sanctions in the form of the
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detention of Angela Watts and Joseph Watts or per diem monetary sanctions until
they complied with all of these orders, (2) the appointment of a receiver under the
trial court’s equitable powers to supervise and oversee payment of the Judgment in
compliance with the trial court’s orders, (3) an order holding the Watts Parties in
contempt for failure to comply with the trial court’s orders, (4) an award of
$170,000 in attorney’s fees, which, according to affiant Stewart Feldman, were
incurred after rendition of the Turnover Order and in connection with the
enforcement of the Turnover Order, as either “sanctions” or “post judgment
collection costs relating to the [Turnover Order] and application for a receiver”
(the “Motion”). Joseph Watts made a cash payment of $15,000 on the Judgment in
mid-March 2017, and a couple of weeks later, he made a payment by cashier’s
check in the amount of $27,434.72. Joseph Watts testified that loans were the
source of the funds for these payments.
The trial court ruled on different parts of the Motion in three different
orders.1 By the time the trial court rendered the final judgment from which the
Feldman Parties appeal, the trial court had denied the Motion in its entirety.
The Feldman Parties filed a motion for new trial in which they asked the
trial court to reconsider its ruling on their request for attorney’s fees. The trial
court denied this motion.
II. ISSUES AND ANALYSIS
A. Does this court lack jurisdiction over this appeal because the Judgment
is void ab initio?
On appeal, Joseph K. Watts and Joseph K. Watts, P.C. (collectively the
“Joseph Parties”) suggest that the trial court below lacked subject-matter
jurisdiction over this turnover proceeding and that this court lacks jurisdiction over
1
The trial court signed these orders on May 5, 2017, May 16, 2017, and July 28, 2017.
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this appeal because the Judgment is void ab initio. According to the Joseph
Parties, the Judgment is void ab initio because the arbitrator’s award is void, and
the arbitrator’s award is void because there was no dispute for the arbitrator to
resolve after Joseph Watts and Angela Watts nonsuited all of the claims they had
filed in their 2008 lawsuit against the Feldman Parties.
The Judgment was rendered in a separate proceeding to confirm the
arbitration award that the Feldman Parties filed in 2009. We presume, without
deciding, that if the Judgment is void ab initio, then the trial court below and this
court on appeal lack subject-matter jurisdiction. The Judgment would be void and
subject to collateral attack if the record affirmatively demonstrates that the trial
court that rendered the Judgment in the confirmation proceeding lacked subject-
matter jurisdiction. See PNS Stores, Inc. v. Rivera, 379 S.W.3d 267, 273 (Tex.
2012). The record before us does not affirmatively demonstrate this lack of
subject-matter jurisdiction. So, the Joseph Parties have not succeeded in their
collateral attack on the Judgment, and we conclude that we have jurisdiction over
this appeal. See id.
B. Did the trial court abuse its discretion in denying the request for
attorney’s fees under section 31.002(e)?
In two appellate issues, the Feldman Parties assert that the trial court abused
its discretion in denying the part of the Motion in which they requested reasonable
attorney’s fees under Texas Civil Practice and Remedies Code section 31.002(e)
and in denying their motion for new trial as to this request. Though the Feldman
Parties did not cite section 31.002(e) in the Motion, we presume for the sake of
argument that the Feldman Parties based their request for attorney’s fees in the
Motion in part on section 31.002(e). See Tex. Civ. Prac. & Rem. Code Ann. §
31.002(e) (West, Westlaw through 2019 R.S.).
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Under the turnover statute, a judgment creditor is entitled to court aid
through injunction or other means to reach property to obtain satisfaction of the
judgment if the judgment debtor owns property that is not exempt from attachment,
execution, or seizure for the satisfaction of liabilities. Tex. Civ. Prac. & Rem.
Code Ann. § 31.002(a). The trial court may “order the judgment debtor to turn
over nonexempt property that is in the debtor’s possession or is subject to the
debtor’s control, together with all documents or records related to the property.”
Id. § 31.002(b). The court also may appoint a receiver to take possession of the
nonexempt property, sell it, and pay the proceeds to the judgment creditor to the
extent required to satisfy the judgment. Id. The trial court may enforce its order
by contempt proceedings or by other appropriate means in the event of refusal or
disobedience. Id. § 31.002(c).
In the turnover statute, the Legislature provides that “[t]he judgment creditor
is entitled to recover reasonable costs, including attorney’s fees.” Id. § 31.002(e).
Under section 31.002(e)’s plain text, the trial court must award a judgment creditor
reasonable attorney’s fees. See id. The statutory text does not expressly address
(1) the services for which the trial court should award reasonable attorney’s fees,
or (2) the circumstances under which the court must award the judgment creditor
reasonable attorney’s fees. See id.
As to the first question, a judgment creditor may take various steps in its
quest to satisfy the judgment, such as recording abstracts of judgment, seeking
issuance of writs of execution, pursuing post-judgment discovery, instituting
garnishment actions, seeking turnover relief, and filing post-judgment fraudulent-
transfer claims. One might argue that under section 31.002(e), the Legislature
provided that a judgment creditor may recover reasonable attorney’s fees for any
services its attorneys undertake to collect the judgment. But, this court has rejected
this construction by holding that no statute — including section 31.002(e) —
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allows a garnishor to recover attorney’s fees for the successful prosecution of a
garnishment action and by stating that section 31.002(e) provides for the “recovery
of attorneys’ fees in a turnover proceeding.” Henry v. Ins. Co. of No. Am., 879
S.W.2d 366, 368–69 (Tex. App.—Houston [14th Dist.] 1994, no writ). The
Supreme Court of Texas also has stated that a turnover order may include
provisions for costs and attorney’s fees “for the turnover proceedings.” See Schultz
v. Fifth Judicial District Court of Appeals at Dallas, 810 S.W.2d 738, 739 n.3
(Tex. 1991), abrogated on other grounds by, In re Sheshtawy, 154 S.W.3d 114,
124–25 (Tex. 2004). Under these precedents, the reasonable attorney’s fees
awarded under section 31.002(e) must be for services rendered in a turnover
proceeding rather than for services seeking satisfaction of the judgment outside the
context of turnover relief. See Schultz, 810 S.W.2d at 739 n.3; Henry, 879 S.W.2d
at 368–69.
As to the second question, this court recently held that a judgment creditor
cannot recover attorney’s fees under 31.002(e) for the pursuit of turnover relief that
the judgment creditor did not obtain. See Yamin v. Carroll Wayne Conn, L.P., 574
S.W.3d 50, 70 & n.16 (Tex. App.—Houston [14th Dist.] 2018, pet. filed). Accord
Boudreaux Civic Ass’n v. Cox, 882 S.W.2d 543, 550 (Tex. App.—Houston [1st
Dist.] 1994, no writ). Thus, under applicable precedent, a trial court must grant a
judgment creditor’s request under section 31.002(e) for reasonable attorney’s fees
for the successful prosecution of an application or request for relief under the
turnover statute, but section 31.002(e) does not apply to fees for pursuing relief not
provided by the turnover statute or for the unsuccessful pursuit of turnover relief.
See Schultz, 810 S.W.2d at 739 n.3; Yamin, 574 S.W.3d at 70 & n.16; Henry, 879
S.W.2d at 368–69.
Stewart Feldman described the services for which the Feldman Parties
sought to recover $170,000 in attorney’s fees as follows:
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The requested award of attorney’s fees . . . relates to the time period
following the entry of the [Turnover Order] on March 23, 2015 and
also relates to the enforcement of [the Turnover Order]. These fees
span the approximate two-year time period following March 23, 2015
through approximately April 16, 2017. These fees include but are not
limited to seeking the Watts’s compliance with [the Turnover Order],
post-judgment discovery in connection therewith, dealing with the
Watts’s efforts to block and negate the effect of the [Turnover Order]
and efforts related to the Watts’s continuing to block enforcement of
the [Turnover Order], their deliberate and continuing failure to
comply with [the Turnover Order], the [Feldman Parties’] prosecuting
the abstention action and conducting a . . . trial thereon in [Joseph
Watts’s third bankruptcy case], investigating Joseph Watts’s second
bankruptcy, tracing the disposition of the approximately $125,000
received by the [Watts Parties] (only for time after March 23, 2015)
which monies then disappeared, and the filing and prosecuting of an
additional state court action against Joseph and Angela Watts, [and
others] in connection with fraudulent transfers by [Joseph and Angela]
to their adult children. The legal fees involve five different actions
(two bankruptcies and a bankruptcy adversary, the Texas Uniform
Fraudulent Conveyance Act (TUFTA) action, and this action) and
span more than two years. Efforts also include the need to seek a
receiver because of the [Watts Parties’] frustrating the [Turnover
Order] and continuing to hide their assets and sources of monies.
The Feldman Parties sought $170,000 in ostensibly reasonable attorney’s fees for
services rendered after the entry of the Turnover Order and in connection with their
attempts to enforce the Turnover Order.2
In the challenged ruling, the trial court denied a request for reasonable
attorney’s fees for services performed after the rendition of the Turnover Order.
Thus, though the Feldman Parties were entitled to reasonable attorney’s fees for
2
The Joseph Parties assert that the Watts Parties have not timely appealed the trial court’s failure
to award the Feldman Parties attorney’s fees for their successful pursuit of the Turnover Order
because the Feldman Parties did not appeal the final and appealable Turnover Order. Because
the Feldman Parties do not challenge on appeal the trial court’s failure to award them any
attorney’s fees under section 31.002(e) for their successful pursuit of the Turnover Order, we
need not and do not address this argument.
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successfully applying for the Turnover Order, they did not seek these fees in the
request at issue. See Yamin, 574 S.W.3d at 70 & n.16. The Feldman Parties
sought various forms of turnover relief during the period for which they sought
reasonable attorney’s fees. For example, they sought appointment of a receiver,
and they sought an order holding the Watts Parties in contempt for failing to
comply with the Turnover Order. Nonetheless, the Feldman Parties did not obtain
this relief. Because the Feldman Parties were not successful in getting this
turnover relief, they were not entitled to recover attorney’s fees under section
31.002(e) for pursuing this relief. See id. The Feldman Parties also sought fees for
work that did not involve the pursuit of turnover relief, but they were not entitled
to attorney’s fees under section 31.002(e) for this work. See Henry, 879 S.W.2d at
368–69.
On appeal, the Feldman Parties assert that the Turnover Order induced
Joseph Watts to pay down the Judgment and that the Watts Parties complied with
the Turnover Order by providing financial records. Even if these statements are
correct, that would mean that the Feldman Parties obtained a benefit from the
Turnover Order. In the request for attorney’s fees at issue in this appeal, the
Feldman Parties did not seek fees for their successful pursuit of the Turnover
Order. The Feldman Parties assert that a judgment creditor is entitled to reasonable
attorney’s fees under section 31.002(e) if the evidence shows (1) the judgment
creditor was successful in obtaining turnover relief; and (2) the attorney’s fees are
reasonable. Again, in the attorney’s-fees request at issue in this appeal, the
Feldman Parties did not seek fees for their successful pursuit of the Turnover
Order. The Feldman Parties appear to assert that their post-Turnover Order
requests for additional turnover relief were successful because Joseph Watts made
payments on the Judgment. But, success in obtaining payment of the judgment is
not the same as success in the pursuit of the additional turnover relief. The trial
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court denied the Feldman Parties’ requests for the additional relief.
In the challenged ruling, the trial court did not err in denying the Feldman
Parties’ request for attorney’s fees under section 31.002(e) because the Feldman
Parties did not seek reasonable attorney’s fees for any services of their attorneys in
successfully prosecuting an application or request for turnover relief. See Schultz,
810 S.W.2d at 739 n.3; Yamin, 574 S.W.3d at 70 & n.16; Boudreaux Civic Ass’n,
882 S.W.2d at 550; Henry, 879 S.W.2d at 368–69. Nor did the trial court err in
denying the Feldman Parties’ motion for new trial as to this request for attorney’s
fees. See Yamin, 574 S.W.3d at 70 & n.16; Henry, 879 S.W.2d at 368–69.
C. Should this court assess sanctions against the Feldman Parties?
On appeal, the Joseph Parties assert that the Feldman Parties’ application for
turnover relief in the trial court was groundless and worthy of sanctions under
Texas Rule of Civil Procedure 13. See Tex. R. Civ. P. 13. They state that the
Feldman Parties are seeking attorney’s fees in this case in a bad-faith effort to
harass the Watts Parties. According to the Joseph Parties, “[a]ppellants have
perverted the turnover process to wage groundless vexatious litigation against
Watts in a taxpayer sponsored extortion scheme.” The Joseph Parties suggest that
this court should remand this case to the trial court “for the trial court to take
evidence to determine what amount in sanctions [the Feldman Parties] should pay
to [Joseph] for the groundless and bad faith and abusive tactics he has endure[d]
for nearly a decade.” The Joseph Parties ask this court to “sua sponte sanction [the
Feldman Parties] and their attorneys for this appeal that is, at least in part, seeking
to recover attorneys’ fees and costs churned by [the Feldman Parties] in the
commission of a criminal act.”
The trial court did not assess sanctions against the Feldman Parties under
Rule 13 or Chapter 10 of the Civil Practice and Remedies Code. Even presuming
that the trial court denied requests by the Joseph Parties for Rule 13 or Chapter 10
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sanctions, the Joseph Parties have not filed a notice of appeal from the trial court’s
final judgment in this turnover proceeding, and therefore they may not seek to alter
the trial court’s judgment to award them more relief than the trial court granted in
its final judgment. See Lubbock County, Tex. v. Trammel’s Lubbock Bail Bonds, 80
S.W.3d 580, 584 (Tex. 2002); CHCA East, L.P. v. Henderson, D.D.S., 99 S.W.3d
630, 636 (Tex. App.—Houston [14th Dist.] 2003, no pet.).
The Joseph Parties have not specifically requested damages under Texas
Rule of Appellate Procedure 45 based on an allegedly frivolous appeal by the
Feldman Parties. See Tex. R. App. P. 45. Presuming that under a liberal
construction of the Joseph Parties’ appellate brief they have requested damages
under Rule 45, we conclude that the Feldman Parties’ appeal was not frivolous,
and we deny this request. See id; London v. London, 349 S.W.3d 672, 675–76
(Tex. App.—Houston [14th Dist.] 2011, no pet.).
III. CONCLUSION
The Judgment is not void ab initio, and we have jurisdiction over this appeal.
In requesting attorney’s fees under section 31.002(e) for work performed after the
trial court issued the Turnover Order, the Feldman Parties did not seek reasonable
attorney’s fees for any services of their attorneys in successfully prosecuting an
application or request for turnover relief. Therefore, the trial court did not err in
denying this request for reasonable attorney’s fees. We overrule the Feldman
Parties’ two appellate issues, and we affirm the trial court’s judgment.
/s/ Kem Thompson Frost
Chief Justice
Panel consists of Chief Justice Frost and Justices Zimmerer and Hassan.
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