Bryan L. Walter v. Donald E. Teller, Jr. and Sonya Dee Jennings ( 2013 )

COURT OF APPEALS
SECOND DISTRICT OF TEXAS
FORT WORTH
NO. 02-12-00028-CV
BRYAN L. WALTER APPELLANT
V.
DONALD E. TELLER, JR. AND APPELLEES
SONYA DEE JENNINGS
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FROM THE 325TH DISTRICT COURT OF TARRANT COUNTY
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MEMORANDUM OPINION ON REHEARING1
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Appellant Bryan L. Walter filed a motion for rehearing of our opinion issued
June 27, 2013. We grant the motion in part, withdraw our previous opinion and
judgment of June 27, 2013, and substitute the following.
I. INTRODUCTION
In four issues, Walter appeals the trial court’s January 3, 2012 order
imposing sanctions against him for violating chapters 9 and 10 of the civil
1
See Tex. R. App. P. 47.4.
practice and remedies code. Because we hold that the trial court abused its
discretion by sanctioning Walter under chapter 9 but did not abuse its discretion
by imposing sanctions under chapter 10 of the civil practice and remedies code,
we will reverse the trial court’s order and remand the case to the trial court to
reconsider the amount of sanctions to be ordered against Walter, if any, under
chapter 10.
II. BACKGROUND
The trial court signed an agreed final decree of divorce in July 2008 that
dissolved the marriage between David Jennings and Appellee Sonya Jennings.
As part of the division of the marital estate, Sonya was awarded, among other
things, a 2007 Jeep Compass and the responsibility for paying the ―balance due
. . . on the promissory note payable to Capital One Auto Loans[] and given as
part of the purchase price of and secured by a lien on the‖ Jeep. The decree
also included a section entitled, ―Contractual Alimony,‖ pursuant to which David
agreed to pay Sonya $600 per month for sixty months.
Sonya made the Jeep payments, but after losing her job, she had difficulty
making the payments timely—she paid in the middle of the month instead of at
the beginning—and she missed one payment. Because the financing for the
Jeep was in David’s name, Sonya could not get Capital One to ―work‖ with her,
and David would call and ―harass [her about the late payments] every month.‖
Eventually, Sonya learned through her divorce lawyer’s office that David’s
attorney was going to begin proceedings ―to take the car away‖ from her. So
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Sonya, who was ―tired of [David] bullying [her]‖ and ―could not afford to legally
fight him,‖ told David that if he wanted the Jeep, he should let her know where to
take it. David left Sonya a voicemail instructing her to leave the Jeep at her
apartment complex and explaining that he had insurance on it and would ―deal
with Capital One.‖ David picked up the Jeep shortly thereafter, Sonya quit
making the loan payments (although she tried to pay for the deficiency owed),
and although David paid approximately $1,900 towards the loan, Capital One
eventually repossessed the Jeep. Up to that point, according to Sonya, there
had been no mention of David’s contractual alimony responsibility.
In August 2010, David filed an original petition, request for equitable relief,
and request for disclosure in which he alleged a claim against Sonya for breach
of contract. Referencing the divorce decree, David alleged that he and Sonya
had agreed that he would pay contractual alimony to Sonya and that she would
pay the Jeep loan. David claimed that he had upheld his end of the bargain but
that Sonya had breached the contract by ―ceasing to meet her obligation to make
payments [on the Jeep].‖ David pleaded for rescission of the decree and,
alternatively, damages for, among other things, ―As of July 1, 2010, $15,000 in
contractual alimony payments‖ and ―$21,000 obligation for remaining contractual
alimony payments.‖
In November 2010, Sonya filed a motion for sanctions against David and
his attorney, Walter, arguing that they had violated chapter 10 of the civil practice
and remedies code for, among other things, filing a claim that was not supported
3
by existing law. David later filed a notice of nonsuit, and the trial court signed an
order granting the nonsuit on May 24, 2011.
Between June 2011 and November 2011, the trial court conducted three
hearings on Sonya’s motion for sanctions, which she amended to include a
violation of chapter 9 of the civil practice and remedies code. On January 3,
2012, the trial court signed the sanctions order that is the subject of this appeal,
finding that both David and Walter had violated chapters 9 and 10 of the civil
practice and remedies code and ordering David to pay Sonya’s attorney’s fees in
the amount of $6,830.00 and Walter to pay Sonya’s attorney’s fees of
$13,657.50.2 Walter, but not David, appeals the sanctions order.
III. VOID SANCTIONS ORDER
In his first issue, Walter argues that the January 3, 2012 sanctions order is
void because the trial court signed it months after the court’s plenary jurisdiction
had expired. According to Walter, the May 24, 2011 order granting David’s
nonsuit ―had the effect of dismissing the entire case and the date of that order
was the starting point for determining when the trial court’s plenary jurisdiction
expired.‖
The expiration date for a trial court’s plenary power is calculated from the
date the court enters a final order disposing of all the claims and parties. Unifund
CCR Partners v. Villa, 299 S.W.3d 92, 95–97 (Tex. 2009). ―A judgment
2
The sanctions order also directed Walter to pay Sonya’s attorney $15,000
in the event Walter unsuccessfully appealed the order to the court of appeals and
$20,000 in the event of an unsuccessful appeal to the supreme court.
4
dismissing all of a plaintiff’s claims against a defendant, such as an order of
nonsuit, does not necessarily dispose of any cross-actions, such as a motion for
sanctions, unless specifically stated within the order.‖ Crites v. Collins, 284
S.W.3d 839, 840 (Tex. 2009). Thus, an order of dismissal pursuant to nonsuit is
not a final, appealable order when the order does not ―unequivocally express an
intent to dispose of all claims and all parties.‖ Id. at 841; see Unifund CCR
Partners, 299 S.W.3d at 95–97 (reasoning that sanctions order was not void
because motion for sanctions was (1) pending when trial court signed dismissal
order and (2) not specifically referenced by dismissal order); see also Tex. R.
Civ. P. 162 (―A dismissal under this rule shall have no effect on any motion for
sanctions, attorney’s fees or other costs, pending at the time of dismissal, as
determined by the court.‖).
Here, Sonya filed her original motion for sanctions in November 2010, and
the trial court signed the order granting David a nonsuit in May 2011. The motion
for sanctions was therefore pending when the trial court signed the dismissal
order. As for the finality of the dismissal order, it is entitled, ―Order Granting
Nonsuit,‖ and states, ―On May 24, 2011, the Court received the Notice of Nonsuit
of DAVID LYNN JENNINGS and ORDERS this case dismissed without prejudice
to DAVID LYNN JENNINGS’s right to refile it. All costs incurred are taxed
against DAVID LYNN JENNINGS, for which let execution issue if not paid.‖ The
dismissal order did not specifically reference Sonya’s motion for sanctions or
otherwise unequivocally express any intent to dispose of the motion; therefore,
5
the order was not a final order that disposed of the motion for sanctions. See
Unifund CCR Partners, 299 S.W.3d at 96–97 (conducting similar analysis); In re
Anderson, No. 01-10-00182-CV, 2010 WL 1612309, at *2 (Tex. App.—Houston
[1st Dist.] Apr. 19, 2010, orig. proceeding) (mem. op.) (same). Accordingly, the
trial court’s plenary power had not expired before it entered the January 3, 2012
sanctions order. We overrule Walter’s first issue.
IV. MERITS OF SANCTIONS ORDER
In his fourth issue, Walter argues that the trial court abused its discretion
by imposing sanctions against him under chapters 9 and 10 of the civil practice
and remedies code because the original petition ―was not groundless and without
evidentiary support when it was filed and was not filed for an improper purpose.‖
We limit our analysis to the propriety of ordering sanctions under chapter 10.
We review a trial court’s ruling on a motion for sanctions under an abuse-
of-discretion standard. Cire v. Cummings, 134 S.W.3d 835, 838 (Tex. 2004). A
trial court abuses its discretion if the court acts without reference to any guiding
rules or principles, that is, if the act is arbitrary or unreasonable. Low v. Henry,
221 S.W.3d 609, 614 (Tex. 2007); Cire, 134 S.W.3d at 838–39.
Chapter 10 of the civil practice and remedies code permits sanctions for
the filing of frivolous pleadings and motions. See Tex. Civ. Prac. & Rem. Code
Ann. §§ 10.001–.006 (West 2002). Specifically, section 10.001 provides in
relevant part as follows:
The signing of a pleading or motion as required by the Texas
Rules of Civil Procedure constitutes a certificate by the signatory that
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to the signatory’s best knowledge, information, and belief, formed
after reasonably inquiry:
....
(2) each claim, defense, or other legal contention in the
pleading or motion is warranted by existing law or by a nonfrivolous
argument for the extension, modification, or reversal of existing law
or the establishment of new law[.] . . .
Id. § 10.001(2). A court that determines that a person has signed a pleading or
motion in violation of section 10.001 may impose a sanction against the person
who signed the pleading. Id. § 10.004(a).
Sonya argued in her original motion for sanctions that Walter should be
sanctioned for filing the original petition because, in violation of civil practice and
remedies code section 10, the petition contained a ―claim, defense or other legal
contention that is not warranted by existing law or by a nonfrivolous argument for
the extension, modification or reversal of existing law or the establishment of new
law.‖3 Sonya outlined the specific offending conduct as follows:
a. Plaintiff’s Petition seeks rescission of the parties’ divorce
decree (including rescission of $21,000.00 in remaining contractual
alimony payments) . . . .
....
c. Plaintiff’s Petition seeks damages and attorney’s fees that
have not been incurred and that are not reasonably related to this
suit.
d. Plaintiff’s Petition seeks to use this lawsuit as a
sledgehammer to release Plaintiff from a $21,000.00 contractual
alimony obligation.
3
The amended motion for sanctions contained much of the same language
and allegations.
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At the hearing on the motion for sanctions, David agreed that his damages claim
included a request that he be awarded $15,000 for contractual alimony payments
that he had already made and that he be released from paying the remaining
$21,000 in contractual alimony payments owed.
The trial court was well within its discretion to sanction Walter for violating
civil practice and remedies code section 10.001(2) because the damages
allegations contained in the original petition included two contentions that are not
warranted by existing law. Specifically, the record demonstrates that the conduct
for which David sought to hold Sonya accountable was her alleged failure to
continue making the Jeep payments. Instead of filing a motion to enforce
Sonya’s responsibility to make the Jeep payments, Walter, on behalf of David,
chose to sue Sonya under a breach-of-contract theory.4 Walter alleged that
4
Contractual alimony agreements are enforceable as contracts and are
governed by contract law, see Heller v. Heller, 359 S.W.3d 902, 903 (Tex. App.—
Beaumont 2012, no pet.), but Walter argues that the entire divorce decree (not
just the alimony agreement) is enforceable as a contract, in part because the
decree contains the following statement under a heading that says ―Agreement of
Parties‖: ―To the extent permitted by law, the parties stipulate the agreement is
enforceable as a contract.‖ For purposes of this analysis, we will assume without
deciding that David had the option to bring a breach-of-contract claim against
Sonya for her alleged failure to continue making the Jeep payments.
Walter complains about this footnote in his motion for rehearing. He says
it is ―misleading‖ because it ―seems to suggest that only the contractual alimony
agreement is governed by contract law and that the remainder of the divorce
settlement agreement is not.‖ The footnote makes no such suggestion. It merely
indicates, in unambiguous terms, what it states—that in performing our analysis,
we will assume without deciding that a breach-of-contract claim was permissible
under these circumstances.
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Sonya had breached the contract by ―ceasing to meet her obligation to make
payments [on the Jeep],‖ and he claimed that David’s damages included, among
other things, ―$15,000 in contractual alimony payments‖ and ―$21,000 obligation
for remaining contractual alimony payments.‖ Thus, David alleged that his
damages for Sonya’s alleged failure to continue making Jeep payments included
reimbursement of contractual alimony payments and termination of his future
contractual alimony obligation.
It is well established that to recover damages for breach of contract, a
plaintiff must show that the damages sought were the natural, probable, and
foreseeable consequence of the defendant’s conduct. Mead v. Johnson Grp.,
Inc., 615 S.W.2d 685, 687–88 (Tex. 1981). The absence of this causal
connection between the alleged breach and the alleged damages will preclude
recovery. Abraxas Petroleum Corp. v. Hornburg, 20 S.W.3d 741, 758 (Tex.
App.—El Paso 2000, no pet.).
To the extent that Sonya’s responsibility to make the Jeep payments was
enforceable as a contractual obligation, there is nothing in the record to indicate
that David’s damages for Sonya’s alleged breach of that obligation could have
included reimbursing David for contractual alimony payments already made,
termination of his future contractual alimony obligation, or both. Indeed, there is
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a complete lack of any causal connection between the alleged breach and the
alleged damages.5
Walter attempts to establish a connection between the allegations by
stating that Sonya specifically agreed to make the Jeep payments in exchange
for David’s agreement to make contractual alimony payments, but the rules of
contract construction, as applied to the decree, belie this argument. See Coker
v. Coker, 650 S.W.2d 391, 393 (Tex. 1983). Walter makes no attempt—even in
his motion for rehearing—to explain how, in light of the specific language of the
divorce decree, reimbursing David for contractual alimony payments already
made or terminating his future contractual alimony obligation would be a natural,
probable, and foreseeable consequence of Sonya’s alleged failure to continue
making Jeep payments.
In his motion for rehearing, Walter argues, ―It is uncontroverted that the
contract incorporated into the divorce decree required Sonya to pay all of the
Jeep debt . . . , that she failed to pay the debt, and that her failure to pay resulted
in monetary damages to David. How can it be said that David’s claim was
groundless?‖ He also states that ―one cannot say that the claim as a whole is
without legal basis.‖ We do not hold that ―David’s claim was groundless‖ or that
―the claim as a whole is without legal basis.‖ Indeed, had David not nonsuited his
5
Walter points out in his brief that as a result of Sonya’s alleged breach,
David ―incurred damages resulting from payments that he made to Capital One
Auto Finance, harm to his credit, and liability to Capital One Auto Finance after
the Jeep was repossessed.‖ He does not mention the damages allegations that
were the subject of the motion for, and order imposing, sanctions.
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claims, he may very well have been entitled to recover the damages that are
mentioned in footnote five, but those matters are not before us, nor may we
speculate about them. Instead, the very narrow issue here is whether the trial
court abused its discretion by sanctioning Walter for seeking reimbursement for
contractual alimony payments already made and termination of his future
contractual alimony obligation as ―damages‖ for Sonya’s alleged failure to
continue making the Jeep payments. We express no opinion about any other
claims alleged by David, and we decline to conflate the issue in this appeal with
the other bases for recovery that were alleged but that are not part of this appeal.
Walter further argues on rehearing that our holding conflicts with other
cases that recognize ―that an offset against future alimony payments is an
appropriate remedy.‖ He contends that there is no reason that the doctrine of
setoff should not be applied ―to competing claims between ex-spouses which
arise from the same contractual divorce agreement.‖ [Emphasis added.] We do
not hold that an offset is inappropriately applied to ―competing claims between
ex-spouses which arise from the same contractual divorce agreement‖ because
this case did not involve competing claims between Sonya and David. For
example, if in addition to David seeking to recover damages against Sonya for
her failure to continue making Jeep payments, Sonya had sought to recover
past-due alimony payments from David, then the trial court would have been in a
position to offset any damages that David recovered on his breach-of-contract
claim against any amount of past-due child support that Sonya recovered under
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her competing claim for past-due alimony. But Sonya did not allege any claims
against David. The only claims were those alleged by David against Sonya.
Thus, to the extent that David could have recovered against Sonya for breach of
contract, the trial court would have had no competing claim and damages against
which to offset David’s would-be damages.
Walter directs us to Bandy v. First State Bank, but that case actually
reinforces our point. See 835 S.W.2d 609 (Tex. 1992). There, the supreme
court observed, ―The doctrine of setoff is ancient, having its roots in early
bankruptcy law in England. The effect of setoff was to allow a defendant in a suit
for a debt to raise a debt owed by the plaintiff to the defendant as a defense or
counterclaim.‖ Id. at 618 (citations deleted, emphasis added). The supreme
court cited an opinion issued by the Supreme Court of Alabama and noted in a
parenthetical, ―It is generally held that where parties have cross-demands against
each other, the real indebtedness is the excess of one debt over the other.‖ Id.
(citing Norris v. Commercial Nat’l Bank of Anniston, 163 So. 798, 801 (Ala.
1935)) (emphasis added). As explained, Sonya alleged no claims against David.
The supreme court has also confirmed that ―[t]he right of offset is an
affirmative defense. The burden of pleading offset and of proving facts
necessary to support it are on the party making the assertion.‖ Brown v. Am.
Transfer & Storage Co., 601 S.W.2d 931, 936 (Tex.), cert. denied, 449 U.S. 1015
(1980) (emphasis added). That the supreme court describes the right of offset as
an affirmative defense also supports our conclusion that an offset under these
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circumstances would not have been feasible. Not only was there no pleading for
an offset, but Walter’s argument does not utilize his purported ability to seek an
offset as an affirmative defense to any claim alleged by Sonya.
Walter directs us to Jenkins v. Jenkins, 991 S.W.2d 440 (Tex. App.—Fort
Worth 1999, pet. denied), but in that case, the trial court awarded a bankruptcy
trustee $107,000 in past-due alimony payments, less a $28,000 offset to
appellant for damages that he sustained to his home. Id. at 443. Thus, unlike
here, the case involved competing claims and damages that the trial court was
able to offset.
Walter has cited no authority demonstrating that the trial court could have
offset any damages that David recovered from Sonya against David’s contractual
obligation to make alimony payments, nor does the divorce decree contain any
language indicating that David’s alimony obligation would be suspended if Sonya
failed to make the Jeep payments. See Coker, 650 S.W.2d at 393 (―In
construing a written contract, the primary concern of the court is to ascertain the
true intentions of the parties as expressed in the instrument.‖).
Walter additionally complains in his motion for rehearing that we place too
much emphasis on Sonya’s testimony at the sanctions hearing because ―much of
that testimony was controverted by David Jennings and the documentary
evidence.‖ He argues that we are improperly accepting her testimony over
David’s testimony. This argument appears to advocate that we not properly
13
apply the abuse-of-discretion standard of review. We therefore summarily reject
it.
Walter also argues in his motion for rehearing that he had no opportunity to
amend his original petition because David nonsuited his case prior to the
sanctions hearing. The record reflects that the trial court signed the order
granting the nonsuit on May 24, 2011. Sonya’s attorney filed a motion for
sanctions approximately six months earlier, on November 12, 2010. There is
nothing in the record to show that Walter could not have filed an amended
petition between those dates.
Accordingly, we hold that the trial court did not abuse its discretion by
sanctioning Walter for violating civil practice and remedies code section
10.001(2). We overrule Walter’s fourth issue.
V. SANCTIONS ORDER DESCRIPTION
In his third issue, Walter argues that the order imposing sanctions
inadequately describes the conduct that the trial court found to be in violation of
civil practice and remedies code section 10.001(2).
Section 10.005 provides that ―[a] court shall describe in an order imposing
a sanction under this chapter the conduct the court has determined violated
Section 10.001 and explain the basis for the sanction imposed.‖ Tex. Civ. Prac.
& Rem. Code Ann. § 10.005. Merely tracking the language of the statute is
insufficient. Law Offices of Windle Turley, P.C. v. French, 164 S.W.3d 487, 492
(Tex. App.—Dallas 2005, no pet.).
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The order imposing sanctions stated in relevant part as follows:
Plaintiff’s Original Petition, Request for Equitable Relief, and
Request for Disclosure filed on August 6, 2010, was groundless
when filed, filed for an improper purpose and includes a claim that is
not warranted by existing law, and each factual claim did not have
evidentiary support even after a reasonable opportunity for discovery
and further investigation, in that: Plaintiff alleged that contractual[]
alimony payments may be repaid to Plaintiff or terminated although
such a claim was groundless and not warranted by existing law.
[Emphasis added.]
Although concise, the order specifically identifies the conduct underlying the trial
court’s decision to sanction Walter—that the damages allegations for Sonya’s
alleged failure to continue making Jeep payments included reimbursement for
contractual alimony payments already made, termination of the future contractual
alimony obligation, or both. We hold that the conduct portion of the sanctions
order is sufficient to meet section 10.005’s specificity requirement, and we
overrule Walter’s third issue.
VI. CHAPTER 9
Walter argues in his second issue that the trial court abused its discretion
by additionally imposing sanctions under chapter 9 of the civil practice and
remedies code.6 Section 9.012(h) states, ―This section does not apply to any
proceeding to which Section 10.004 . . . applies.‖ Tex. Civ. Prac. & Rem. Code
Ann. § 9.012(h) (West 2002). Having determined that the trial court did not
abuse its discretion by sanctioning Walter under chapter 10, we hold that the trial
6
Sonya concedes that sanctions under chapter 9 ―would become
inapplicable‖ if we affirm the sanctions order under chapter 10.
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court abused its discretion by also sanctioning Walter under chapter 9. We
sustain his second issue.
VII. CONCLUSION
Walter argues on rehearing that ―the trial court should be given an
opportunity to reconsider its sanctions award in [] light of this Court’s ruling that
sanctions under Chapter 9 were an abuse of discretion.‖ We agree. Having
sustained Walter’s second issue, we reverse the trial court’s order and remand
this case to the trial court to reconsider the amount of sanctions to be ordered
against Walter, if any, under only chapter 10 of the civil practice and remedies
code. See Tex. R. App. P. 43.2(d); Howell v. Tex. Workers’ Comp. Comm’n, 143
S.W.3d 416, 449 (Tex. App.—Austin 2004, pets. denied) (remanding case for
recalculation of sanctions).
BILL MEIER
JUSTICE
PANEL: DAUPHINOT, WALKER, and MEIER, JJ.
DELIVERED: November 7, 2013
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