Patrick D. Mahoney v. Janice Pouncy Slaughter and Samori Diallo ( 2015 )

Opinion issued May 7, 2015
In The
Court of Appeals
For The
First District of Texas
————————————
NO. 01-14-00471-CV
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PATRICK D. MAHONEY, Appellant
V.
JANICE POUNCY SLAUGHTER AND SAMORI DIALLO, Appellees
On Appeal from the 270th District Court
Harris County, Texas
Trial Court Case No. 2011-30537
MEMORANDUM OPINION
Appellant, Patrick Mahoney, appeals the trial court’s order granting
summary judgment in favor of appellees, Janice Pouncy Slaughter and Samori
Diallo, on Mahoney’s suit brought under the Texas Uniform Fraudulent Transfer
Act (“TUFTA” or “the Act”). 1 In his sole issue, Mahoney contends that the trial
court erred in granting appellees summary judgment and denying him summary
judgment because he raised a genuine issue of material fact regarding whether he is
a judgment creditor under TUFTA, and he conclusively proved all of the elements
of his fraudulent transfer claim. Appellees seek an award of attorney’s fees and
sanctions against Mahoney for filing a frivolous appeal. We deny the request for
attorney’s fees and sanctions and affirm the trial court’s judgment.
Background
On November 8, 2006, Slaughter filed suit to quiet title to real property
located at 3605 McGowen Street, in Houston, Texas (“McGowen property”).
Following service by publication, the trial court appointed Mahoney as the attorney
ad litem for the absent defendants.2 The appointment order contained the
following language: “The fees and expenses of the attorney ad litem shall be paid
by the plaintiff and taxed as costs in this case.” On January 29, 2008, the trial
court granted Mahoney’s motion for costs and ordered Slaughter to deposit $50 per
1
See TEX. BUS. & COMM. CODE ANN. §§ 24.001–.013 (West 2015).
2
See TEX. R. CIV. P. 244 (requiring court to appoint attorney ad litem on behalf of
defendants when service is by publication).
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month into the registry of the court during the pendency of the suit to secure
payment of the ad litem fees. 3
Following a bench trial, the court signed a final judgment on April 13, 2009,
in which it voided the defendants’ deeds to the McGowen property and determined
Mahoney’s reasonable and necessary attorney’s fees to be $7,500. The judgment,
however, did not order any party to pay these fees and did not assess costs against
any party. The defendants filed motions requesting that the court increase its
determination of reasonable attorney ad litem fees and assess the fees as costs to be
paid by Slaughter. On May 28, 2009, the trial court entered an amended final
judgment in which it assessed $7,500 in attorney ad litem fees “to be taxed as
costs” but did not specify which party was to pay them. The trial court
subsequently signed an order permitting Slaughter to withdraw the money she had
deposited in the court’s registry.
On April 17, 2009, Slaughter executed a general warranty deed conveying
the McGowen property to Diallo, her grandson. The deed was recorded on June
15, 2009.
Mahoney subsequently appealed from the amended final judgment,
contending that the evidence was insufficient to support the trial court’s
determination of $7,500 as reasonable attorney ad litem fees and that the court
3
The order also denied Slaughter’s motion requesting that Mahoney be dismissed
as attorney ad litem in the case.
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erred by refusing to assess attorney ad litem fees as costs to be paid by Slaughter.
On April 15, 2011, the Fourteenth Court of Appeals issued a judgment reforming
the trial court’s amended final judgment and ordering Slaughter to pay “the $7,500
in ad litem’s fees assessed as costs,” and affirmed the judgment as modified.4
On May 20, 2011, Mahoney filed suit against Slaughter alleging that she
fraudulently transferred the McGowen property to Diallo and conspired with
Diallo and her son, Wayne Slaughter, Jr., to defraud Mahoney, in violation of
TUFTA. On February 27, 2013, Slaughter deposited in the registry of the court the
$7,500 that had been assessed as costs in the underlying suit. The receipt issued to
Slaughter reflects that the $7,500 was a “payment per court order.”
The parties thereafter filed cross-motions for summary judgment: Mahoney
asserted that Slaughter fraudulently transferred the McGowen property to Diallo,
and appellees argued that Mahoney was not a creditor under TUFTA. On May 13,
2014, the trial court granted appellees’ summary judgment motion. This appeal
ensued.
Standard of Review
We review a trial court’s decision to grant or to deny a motion for summary
judgment de novo. See Tex. Mun. Power Agency v. Pub. Util. Comm’n of Tex.,
253 S.W.3d 184, 192, 199 (Tex. 2007) (citing rule for review of grant of summary
4
Garza v. Slaughter, 331 S.W.3d 43, 49 (Tex. App.—Houston [14th Dist.] 2010, no
pet.).
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judgment and reviewing denied cross-motion for summary judgment under same
standard). Although a denial of summary judgment is not normally reviewable, we
may review such a denial when both parties move for summary judgment and the
trial court grants one motion and denies the other. Id. at 192. When the trial
court’s ruling granting one summary judgment motion necessarily denies another
pending summary judgment motion on the same issue, such as here, we imply the
ruling of denial. See Frank’s Int’l, Inc. v. Smith Int’l, Inc., 249 S.W.3d 557, 559
n.2 (Tex. App.—Houston [1st Dist.] 2008, no pet.). In our review of such
cross-motions, we review the summary judgment evidence presented by each
party, determine all questions presented, and render the judgment that the trial
court should have rendered. Tex. Mun. Power Agency, 253 S.W.3d at 192 (citing
Comm’rs Court v. Agan, 940 S.W.2d 77, 81 (Tex. 1997)). If we determine that a
fact issue precludes summary judgment for either party, we remand the cause for
trial. See Univ. of Tex. Health Sci. Ctr. at Houston v. Big Train Carpet of El
Campo, Inc., 739 S.W.2d 792, 792 (Tex. 1987) (per curiam).
To prevail on a summary judgment motion, a movant has the burden of
proving that it is entitled to judgment as a matter of law and there is no genuine
issue of material fact. TEX. R. CIV. P. 166a(c); Cathey v. Booth, 900 S.W.2d 339,
341 (Tex. 1995). When a plaintiff moves for summary judgment on its claim, it
must establish its right to summary judgment by conclusively proving all the
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elements of its cause of action as a matter of law. Rhone-Poulenc, Inc. v. Steel,
997 S.W.2d 217, 223 (Tex. 1999); Anglo-Dutch Petroleum Int’l, Inc. v. Haskell,
193 S.W.3d 87, 95 (Tex. App.—Houston [1st Dist.] 2006, pet. denied). A
defendant moving for summary judgment must either disprove at least one element
of each of the plaintiff’s causes of action, or plead and conclusively establish each
essential element of its affirmative defense, thereby rebutting the plaintiff’s causes
of action. Cathey, 900 S.W.2d at 341; Rangel v. Lapin, 177 S.W.3d 17, 20 (Tex.
App.—Houston [1st Dist.] 2005, pet. denied). When deciding whether there is a
disputed, material fact issue precluding summary judgment, evidence favorable to
the non-movant will be taken as true. Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d
546, 548–49 (Tex. 1985). Every reasonable inference must be indulged in favor of
the non-movant and any doubts must be resolved in its favor. Id. at 549.
Discussion
A. Fraudulent Transfer Claim
On appeal, Mahoney contends that the trial court erred in granting appellees’
motion for summary judgment because Mahoney presented evidence raising a
genuine issue of material fact regarding whether he is Slaughter’s creditor under
TUFTA. He also argues that the trial court erred in denying his summary
judgment motion because he conclusively proved all of the elements of his
fraudulent transfer claim as a matter of law.
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The purpose of TUFTA is to prevent debtors from defrauding creditors by
placing assets beyond their reach. Corpus v. Arriaga, 294 S.W.3d 629, 634 (Tex.
App.—Houston [1st Dist.] 2009, no pet.); Tel. Equip. Network, Inc. v.
TA/Westchase Place, Ltd., 80 S.W.3d 601, 607 (Tex. App.—Houston [1st Dist.]
2002, no pet.). TUFTA creates a statutory cause of action through which a creditor
may seek recourse against a fraudulent conveyance.5 See TEX. BUS. & COMM.
CODE ANN. §§ 24.001–.013 (West 2015); Connell v. Connell, 889 S.W.2d 534, 542
(Tex. App.—San Antonio 1994, writ denied). Under TUFTA, a “debtor” is a
5
Section 24.005(a) of the Act provides:
(a) A transfer made or obligation incurred by a debtor is fraudulent as to a
creditor, whether the creditor’s claim arose before or within a reasonable
time after the transfer was made or the obligation was incurred, if the
debtor made the transfer or incurred the obligation:
(1) with actual intent to hinder, delay, or defraud any creditor of the
debtor; or
(2) without receiving a reasonably equivalent value in exchange for
the transfer or obligation, and the debtor:
(A) was engaged or was about to engage in a business
or a transaction for which the remaining assets of the
debtor were unreasonably small in relation to the
business or transaction; or
(B) intended to incur, or believed or reasonably should
have believed that the debtor would incur, debts
beyond the debtor’s ability to pay as they became due.
TEX. BUS. & COMM. CODE ANN. § 24.005 (West 2015).
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person who is liable on a claim. TEX. BUS. & COMM. CODE ANN. § 24.002(6) (West
2015). A “creditor” is a person who has a claim. Id. § 24.002(4) (West 2015). A
“claim” means a right to payment or property, whether or not the right is reduced
to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured,
disputed, undisputed, legal, equitable, secured, or unsecured. Id. § 24.002(3)
(West 2015).
In their summary judgment motion, appellees argued that Mahoney did not
have a claim against Slaughter at any time; in other words, no debtor-creditor
relationship existed between them. Similarly, in their response to Mahoney’s
summary judgment motion, appellees contended that Slaughter was not a debtor
and Mahoney was not a creditor under TUFTA. As evidentiary support for their
summary judgment motion and response to Mahoney’s motion, appellees relied on,
among other things, the trial court’s order granting Mahoney’s motion for costs,
the trial court’s amended final judgment, and the Fourteenth Court’s judgment and
mandate.
In its order granting Mahoney’s motion for costs, the trial court ordered
Slaughter to deposit $50 per month into the court’s registry during the pendency of
the underlying suit to secure payment of the ad litem’s fees. In its May 28, 2009
amended final judgment, the trial court “determined [Mahoney’s] reasonable and
necessary attorney fees to be $7,500 to be taxed as costs” and marked through the
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proposed language stating “[t]he costs are to be taxed against Plaintiff.” The
Fourteenth Court’s judgment reformed the trial court’s amended judgment and
ordered Slaughter “to pay the $7500 in ad litem’s fees assessed as costs.” Thus,
although it is clear that Slaughter was required to pay the ad litem fees assessed as
costs, there is nothing in the summary judgment record reflecting that Slaughter
was ever ordered to pay any sum of money to Mahoney. Under these
circumstances, Slaughter was not a debtor as defined by TUFTA, and Mahoney
was not a creditor as to Slaughter. See Beal Bank v. Gilbert, 417 S.W.3d 704, 711
(Tex. App.—Dallas 2013, no pet.) (concluding where bank obtained judgment
against husband only and did not have right to payment from wife’s separate
property or sole management community property, wife was not debtor and bank
was not creditor as defined under TUFTA).
Moreover, it is undisputed that Slaughter fully complied with the order to
pay the ad litem fees assessed as costs. On February 27, 2013, Slaughter deposited
$7,500 with the Harris County Clerk’s Office, and the receipt issued to her reflects
that $7,500 was a “payment per court order.” Appellees assert—and Mahoney
does not dispute—that those funds remain in an account in the District Clerk’s
office awaiting the court’s distribution.
Because no debtor-credit relationship existed between Slaughter and
Mahoney, we conclude that the trial court properly granted summary judgment in
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favor of appellees and denied summary judgment to Mahoney on his fraudulent
transfer claim brought under TUFTA. We overrule Mahoney’s issue.
B. Appellees’ Request for Damages
Appellees seek an award of attorney’s fees and sanctions against Mahoney
for filing a frivolous appeal. Under Rule of Appellate Procedure 45, we may
award “just damages” to a prevailing party in an appeal if we determine it is
frivolous after considering the record, briefs, or other papers filed. See TEX. R.
APP. P. 45; Smith v. Brown, 51 S.W.3d 376, 381 (Tex. App.—Houston [1st Dist.]
2001, pet. denied). Recovery is authorized if an appeal is objectively frivolous and
injures an appellee. In re A.W.P., 200 S.W.3d 242, 245 (Tex. App.—Dallas 2006,
no pet.). An appeal is frivolous if when it is brought there were no reasonable
grounds to believe the judgment would be reversed or when it is pursued in bad
faith. Id. On review of the record and briefs, we deny appellees’ request for
attorney’s fees and sanctions.
Conclusion
We deny the request for attorney’s fees and sanctions on appeal and affirm
the trial court’s judgment.
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Russell Lloyd
Justice
Panel consists of Chief Justice Radack and Justices Brown and Lloyd.
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