Michael Robert Tedder v. Gardner Aldrich, Llp

IN THE SUPREME COURT OF TEXAS
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NO . 11-0767
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MICHAEL ROBERT TEDDER, PETITIONER,
v.
GARDNER ALDRICH, LLP, RESPONDENT
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ON PETITION FOR REVIEW FROM THE
COURT OF APPEALS FOR THE SECOND DISTRICT OF TEXAS
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Argued November 7, 2012
JUSTICE HECHT delivered the opinion of the Court.
JUSTICE LEHRMANN did not participate in the decision.
The principal question in this case is whether legal services provided to one spouse in a
divorce proceeding are necessaries for which the other spouse is statutorily liable to pay the attorney.
We answer no and therefore reverse the court of appeals’ judgment1 and affirm the trial court’s
judgment.
Michael Tedder sued his wife, Stacy Tedder, for divorce and custody of their two children.
After nearly two years of contentious litigation, a jury found that the couple should be joint
1
S.W .3d (Tex. App.–Fort W orth 2011) (mem. op.).
managing conservators of their children, and the parties then settled all the other issues between
them.
Stacy hired Gardner Aldrich, LLP to represent her in the proceedings. Her contract with the
firm provided that it would “seek to have the court order your husband to pay for all legal fees
incurred by you, but . . . this is a matter in the Court’s discretion and . . . you remain directly liable
to the firm for payment for legal services rendered.” After the jury verdict, Gardner Aldrich
withdrew as Stacy’s counsel and then intervened in the case, suing both Stacy and Michael for its
fees.2 The firm had already been paid $50,000 from the community estate and claimed an additional
$151,747.28. Gardner Aldrich couched its claim in part as a sworn account.3 Michael and Stacy
denied the firm’s claim, but not under oath.
After a hearing, the trial court indicated that it would allow Gardner Aldrich to recover only
against Stacy and would order Michael to pay Stacy $190,000 for her attorney fees. It was then that
Michael and Stacy settled, agreeing, among other things, that the final decree would award Gardner
Aldrich attorney fees against Stacy only and would not award Stacy attorney fees against Michael.
2
The intervention was improper. A person may intervene in an action if (1) he could have brought the action
himself, or it could have been brought against him; (2) “the intervention will not complicate the case by an excessive
multiplication of the issues”; and (3) “intervention is almost essential to effectively protect the intervenor’s interest.”
Guar. Fed. Sav. Bank v. Horseshoe Operating Co., 793 S.W .2d 652, 657 (Tex. 1990). Gardner Aldrich certainly did
not meet the first requirement. It probably did not meet the second, since the interjection of its claim added issues to the
divorce proceeding and delayed its final resolution. And it did not meet the third, inasmuch as it could have sued
Michael and Stacy in a separate action. But Rule 60 of the Texas Rules of Civil Procedure provides that “[a]ny party
may intervene by filing a pleading, subject to being stricken out by the court for sufficient cause on the motion of any
party”, and neither Michael nor Stacy moved to strike the intervention.
3
See T EX . R. C IV . P. 185.
2
The trial court rendered judgment in accordance with their agreement. Not long afterward, Stacy
sought the protection of the bankruptcy court and was eventually discharged.
Gardner Aldrich appealed. As a procedural matter, the court of appeals held that Michael’s
failure to deny Gardner Aldrich’s claim under oath did not entitle the firm to judgment.4 On the
substance of the firm’s claim, the court held that Michael was liable for Stacy’s legal fees for two
reasons: the obligation was a “community debt” for which both spouses were jointly and severally
liable,5 and the legal fees were “necessaries” for which Michael was liable to the firm under Section
2.501 of the Texas Family Code.6 Accordingly, the court rendered judgment for Gardner Aldrich
against Michael and Stacy jointly and severally.7
We granted Michael’s petition for review.8
Gardner Aldrich argues, as it did in the court of appeals, that Michael is precluded from
defending against its claim because it is supported by affidavit and not denied under oath. The firm
bases its argument on Rule 185 of the Texas Rules of Civil Procedure, which provides in pertinent
part:
When any action . . . is founded upon a[] . . . claim . . . for personal service rendered,
. . . and is supported by the affidavit of the party, . . . the same shall be taken as prima
facie evidence thereof, unless the party resisting such claim shall file a written denial,
4
___ S.W .3d at ___.
5
Id. at ___.
6
Id. at ___.
7
Id. at ___.
8
55 Tex. Sup. Ct. J. 664 (May 11, 2012).
3
under oath. A party resisting such a sworn claim . . . [who] does not timely file a
written denial, under oath, . . . shall not be permitted to deny the claim . . .
But Rule 185 contemplates that the defendant has personal knowledge of the basis of the claim, as
our 1883 decision in McCamant v. Batsell9 makes clear.
In that case, Batsell sued McCamant for reimbursement of amounts he had paid others acting
as McCamant’s surety.10 Though Rule 185 had not been adopted, the same procedure was prescribed
by statute.11 We held that because a suretyship could exist only by contract, Batsell’s action was for
breach of contract, not on a sworn account.12 And as for whether McCamant was required to file a
sworn denial disputing Batsell’s payments to McCamant’s creditors, we said:
The law does not permit, much less encourage, guesswork in swearing; and to require
a defendant to swear that a transaction between a plaintiff and a third person, of
which he may have no personal knowledge whatever, either did or did not occur in
whole or in part, before he will be permitted to controvert the ex parte affidavit of his
adversary, would be to encourage swearing without knowledge, which is morally
perjury, or in some cases to forego a just defense, which might be clearly established
under the well settled rules of evidence.13
9
59 Tex. 363 (1883).
10
Id. at 366.
11
Tex. Rev. Civ. Stat. art. 2266 (1879) (“W hen any action . . . is founded upon an open account, supported by
. . . affidavit . . . , the same shall be taken as prima facie evidence thereof, unless the defendant shall . . . file a written
denial under oath . . . . W here he fails to file such affidavit he shall not be permitted to deny the account . . . .”),
recodifying Act approved April 2, 1874, 14th Leg., R.S., ch. 53, § 1, 1874 Tex. Gen. Laws 52, reprinted in 8 H.P.N.
G AM M EL , T H E L AW S O F T EXAS 1822-1897, at 52 (Austin, Gammel Book Co. 1898).
12
Id.
13
Id. at 371.
4
Gardner Aldrich dismisses this statement as dicta and seeks support from Rizk v. Financial
Guardian Insurance Agency.14 There, a defendant filed a sworn denial of the verified claim,
asserting among other things that he had neither requested nor agreed to pay for the items made the
basis of the claim.15 The issue was not whether a sworn denial was necessary but whether it was too
general or inconsistent with other asserted defenses.16 We held it was not.17
Our statement in McCamant was sound. When it appears from the plaintiff’s account itself
that the defendant was a stranger to the account, the defendant need not file a sworn denial to contest
liability.18 Michael had no agreement with Gardner Aldrich, never promised to pay for its
representation of Stacy, and because of the attorney-client privilege, had no way of knowing what
charges had been made or what had been paid (other than the $50,000 paid from the community
estate). Rule 185 does not require a party to swear to what he does not and cannot know. We thus
agree with the court of appeals that Michael was not required to deny Gardner Aldrich’s claim under
oath in order to contest his liability for its fees.
The court of appeals held that Michael is liable to Gardner Aldrich for Stacy’s attorney fees
because they were a “community debt”, a concept often misused to impose liability on a spouse who
14
584 S.W .2d 860 (Tex. 1979).
15
Id. at 862.
16
Id. at 861.
17
Id. at 863.
18
Sundance Oil Co. v. Aztec Pipe & Supply Co., 576 S.W .2d 780, 781 (Tex. 1978) (per curiam) (“There being
a fact question as to whether the defendant was a party to the transaction . . . the sworn account is not considered as prima
facie proof of the debt. Therefore, a sworn denial is not required in order for the respondent to controvert or disprove
the account.”).
5
did not incur the debt. Confusion over the significance of “community debt” has been ascribed to
our opinion in Cockerham v. Cockerham, where we said that “debts contracted during marriage are
presumed to be on the credit of the community and thus are joint community obligations, unless it
is shown the creditor agreed to look solely to the separate estate of the contracting spouse for
satisfaction.”19 We immediately added: “[T]he fact that the debts are community liabilities would
not, without more, necessarily lead to the conclusion they were joint liabilities. Characterization of
the debts as community liabilities is only one aspect of the circumstances to be considered in
determining whether the debts are joint.”20 But the first statement, and the entire analysis, has proved
misleading. As Professor Joseph McKnight explained thirty years ago:
Much of the judicial discussion of “community debt” is based on the
erroneous supposition that all “community debts” are equally shared by the spouses
whether they are both makers of the debt or not. That supposition is not warranted
by the basic principles of Texas law. Apart from the context of acquiring
necessaries, debt incurred by only one spouse does not affect the other spouse at all
except that it makes the nonobligated spouse's share of community property liable for
payment if the property sought for payment is subject to the sole or joint management
of the spouse who incurs the debt.
* * *
It is high time that the community debt argument be put to rest. The phrase
“community debt” has long been useful in characterizing borrowed money or
property that a spouse buys on credit. If the lender or seller does not specifically look
to the borrower's or buyer's separate property for payment, it is clear that a
community debt has been incurred, and thus that the money borrowed or property
bought is community property. But to take the phrase out of this context, as well as
to say that the designation of such a debt as “community” makes both spouses liable
for it (when only one of them has contracted it), is clearly contrary to the express
19
527 S.W .2d 162, 171 (Tex. 1975).
20
Id.
6
terms of section 5.61 [of the Family Code, currently Section 3.202]. Under Texas
law as amended and recodified in 1969, a community debt means nothing more than
that some community property is liable for its satisfaction.21
Professor Featherston has succinctly observed, “[m]arriage itself does not create joint and
several liability.”22 These and other commentators agree that one spouse’s liability for debts incurred
by or for the other is determined by statute.23 We agree.
Section 3.201(a) states:
A person is personally liable for the acts of the person’s spouse only if:
(1) the spouse acts as an agent for the person; or
(2) the spouse incurs a debt for necessaries as provided by
[Section 2.501].24
21
Joseph W . McKnight, Family Law: Husband and Wife, 37 S W . L.J. 65, 76-77 (1983). Gardner Aldrich’s
argument based on Section 3.202(c) suffers the same flaw as the court of appeals’ community debt rationale. Section
3.202(c) provides only that “[t]he community property subject to a spouse’s sole or joint management, control, and
disposition is subject to the liabilities incurred by the spouse before or during marriage.” T EX . F AM . C O D E § 3.202(c).
The effect of the provision is that Stacy’s legal fees might have been paid from community property. It does not impose
liability on Michael.
22
Tom Featherston & Allison Dickson, Marital Property Liabilities: Dispelling the Myth of Community Debt,
73 T EX . B AR J. 16, 19 (2010).
23
See, e.g., J O H N J. S AM PSO N ET AL ., S AM PSO N & T IN D ALL ’S T EXAS F AM ILY C O D E A N N O TATED 35 (21st ed.
2011) (“Section 3.201, regarding personal liability of the spouses, is specifically intended to clarify the misleading and
confusing discussion in Cockerham v. Cockerham.”); James W . Paulsen, Acquiring Separate Property on Credit: A
Review and Proposed Revision of Texas Marital Property Doctrine, 37 S T . M ARY ’S L.J. 675, 715 n.191 (2006)
(“[Section 3.201] is widely regarded as a legislative reaction to, and repudiation of Cockerham’s reasoning.”) (citing,
inter alia, an earlier edition of S AM PSO N & T IN D ALL ); Thomas Featherston, Jr. & Lynda S. Still, Marital Liability in
Texas . . . Till Death, Divorce, or Bankruptcy Do They Part, 44 B AY LO R L. R EV . 1, 16 (1992) ("Recent legislation should
be interpreted as putting an end to the Cockerham test. [Section 3.201's predecessor] provides that one spouse will not
be personally liable for the acts of the other spouse by reason of the marital relationship. Instead a spouse is liable only
if the other spouse acts at the agent of the otherwise innocent spouse or if the other spouse incurs a debt for ‘necessaries.'
This ‘anti-Cockerham’ statement appears to clarify the previously murky waters regarding the personal liability of one
spouse for debts of the other."); McKnight, 37 S W . LJ. at 77.
24
T EX . F AM . C O D E § 3.201(a).
7
Section 2.501 states:
(a) Each spouse has the duty to support the other spouse.
(b) A spouse who fails to discharge the duty of support is liable to any
person who provides necessaries to the spouse to whom support is owed.25
Thus, one spouse is not liable for the other’s debt unless the other incurred it as the one’s agent or
the one failed to support the other and the debt is for necessaries. Applied to this case, Michael is
not liable to pay Gardner Aldrich for legal services it rendered to Stacy unless those services were
necessaries.26
We have suggested that a spouse’s necessaries are things like food, clothing, and habitation27
— that is, sustenance — and we have squarely rejected the view that a spouse’s legal fees in a
divorce proceeding fall into this category. In Carle v. Carle we stated:
[I]t is not a correct approach . . . to classify the wife’s attorney’s fees as a necessity,
and then apply the rule that necessities are primarily the obligations of the community
and secondarily of the husband’s separate estate. . . . [T]he trial court [has discretion]
in determining the proper division of the community estate of the parties. . . . The
attorney’s fee is but a factor to be considered by the court in making an equitable
division of the estate, considering the conditions and needs of the parties and all of
the surrounding circumstances.28
25
Id. § 2.501.
26
Gardner Aldrich argues that M ichael failed to support Stacy because he did not provide her funds to pay its
fees. W e need not consider this argument.
27
Francis v. Francis, 412 S.W .2d 29, 31 (Tex. 1967) .
28
234 S.W .2d 1002, 1005 (Tex. 1950).
8
The court of appeals overlooked Carle, as have others. To the extent those opinions are inconsistent
with today’s decision, we disapprove them.29
The trial court would have done as Carle instructed, requiring Michael to pay Stacy for her
attorney fees, but the parties then agreed on a different result. The trial court was correct in
rendering the decree on which Michael and Stacy agreed and refusing to order Michael to pay
Stacy’s attorney fees. Accordingly, we reverse the judgment of the court of appeals and render
judgment that Gardner Aldrich take nothing.
Nathan L. Hecht
Justice
Opinion delivered: May 17, 2013.
29
Section 106.002 of the Family Code authorizes a trial court in a suit affecting the parent-child relationship
to “render judgment for reasonable attorney’s fees and expenses and order the judgment and postjudgment interest to
be paid directly to an attorney”, and provides that “[a] judgment for attorney’s fees and expenses may be enforced in the
attorney’s name by any means available for the enforcement of a judgment for debt.” Gardner Aldrich does not claim
under this provision, and we do not consider its application. Nor do we consider whether legal services can be
considered necessaries for a child.
9