Gary C. Evans v. the Frost National Bank

Reverse and Render in part; Affirm in part and Opinion Filed August 11, 2015
S
Court of Appeals
In The
Fifth District of Texas at Dallas
No. 05-12-01491-CV
GARY C. EVANS, Appellant
V.
THE FROST NATIONAL BANK, Appellee
On Appeal from the 162nd Judicial District Court
Dallas County, Texas
Trial Court Cause No. 09-15818
MEMORANDUM OPINION
Before Justices Bridges, Brown, and O'Neill1
Opinion by Justice Bridges
In this consolidated appeal, Gary C. Evans appeals three of the trial court’s orders in the
underlying action to enforce a judgment under the Turnover Statute. Frost appeals the
September 26, 2012 “order granting motion to determine amount owed under agreed judgment;
the November 21, 2012 “order on Frost’s motions for approval of costs and ordering payment by
Gary C. Evans; and the December 10, 2012 “order granting receiver’s motion for discharge.” In
four issues, Evans argues the trial court erred in awarding Frost National Bank attorney’s fees
and costs not recoverable under the Turnover Statute, denying Evans’ request for a jury trial on
the issue of Frost’s attorney’s fees, allowing a court-appointed receiver to retain sales proceeds
as his fee, and attempting to “materially change” an agreed judgment between the parties. We
1
The Hon. Michael J. O'Neill, Justice, Assigned
reverse the trial court’s November 21, 2012 judgment awarding Frost $159,385.98 and render
judgment that Frost take nothing on its claims for post-judgment attorney’s fees, proceeds from
the sale of real estate in conjunction with the bankruptcy proceedings, and post-judgment costs.
In all other respects, we affirm the trial court’s orders.
On November 24, 2009, Frost National Bank filed a lawsuit alleging breach of contract
claims in connection with various loans and promissory notes against Van Hunter Development,
Investment Hunter, Evans, and Corey Van Trease. Evans and Van Trease both personally
guaranteed payment of the notes. Although Frost initially claimed damages in excess of $8
million, Frost and Evans ultimately reached “an agreement on Frost’s entitlement to judgment”
(“agreed judgment”) for $6,795,070.86, plus post-judgment interest on March 22, 2011.
However, by September 20, 2011, Evans had not paid any of the amounts due under the
agreed judgment. In an effort to collect on the judgement, Frost filed an application for turnover
order and appointment of a receiver to enforce the agreed judgment against Evans. The trial
court approved the application for turnover and appointed Dennis Roossien as receiver.
Under the trial court’s receivership order, Roossien was to direct Evans to turnover his
interest in “any and all ownership rights with respect to any and all shares of stock and/or
beneficial interest . . . related to all stock and/or beneficial interest . . . including, but not limited
to, Magnum Hunter and Investment Hunter.” The order provided Roossien would be paid 10%
of the net amount received from any receivership property at the time each sale occurred. Evans
largely ignored Roossien and refused to communicate or provide Roossien any accounts tied to
his non-exempt assets, so on October 12, 2011, the trial court granted Frost’s motion to expand
the scope of the amended order appointing receiver, giving Roossien greater range of non-
exempt assets to draw upon. The court also granted Frost’s motion to order Evans to show cause
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for why he should not be held in contempt for not complying with the receivership appointment
order.
On December 22, 2011, Frost and Evans mediated their dispute and entered into an
agreement whereby the parties stipulated as true a number of facts regarding Evans’s ownership
of certain securities, set out guidelines as to how Evans would handle his various nonexempt
securities, and set out guidelines for how Evans would pay Frost. This agreement was reflected
in the February 23, 2012 “agreed order.” In this agreed order, Frost withdrew the contempt
motion, and Evans’ counterclaim against Frost was dismissed. Despite this agreement between
the parties, Evans continued to neglect his obligations toward Roossien and the agreed judgment,
and Frost consequently filed another motion to hold Evans in contempt on April 12, 2012.
Further, it was discovered that during and shortly after the mediation agreement, Evans
misrepresented the status of his Magnum Hunter Resources shares. In late December 2011,
Evans transferred over two million Magnum Hunter Resources shares from Oppenheimer to
Equities First Holdings without Frost or Roossien knowing or consenting. Evans also
misrepresented his shares by claiming they were restricted and therefore not saleable to the
public. During this time, Roossien learned that there remained 325,000 Magnum Hunter
Resources unrestricted shares in the Oppenheimer account that had been frozen because of past
court orders.
On May 25, 2012, Frost and Roossien “filed their application for turnover order in aid of
judgment, requesting the court specifically order Evans turn over the Oppenheimer shares to
Roossien.” On June 1, 2012, the court granted Roossien the sole discretion to liquidate the
shares. Between June 11 and June 29, 2012, Roossien sold the 325,000 Oppenheimer shares on
the open market for a total of $1,292,812.33, retaining $129,231.25 as fees. Also around this
time, a hearing was held on May 23, 2012 in regards to holding Evans in contempt, but the
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hearing did not finish and was scheduled to continue on June 1, 2012. Evans failed to appear at
the continued hearing on June 1, 2012 and he still refused to satisfy the judgment of
$6,795,070.86 plus interest. Frost consequently filed an application for writ of attachment to
bring Evans before the court to show cause why he should not be held in contempt for violating
[the] Receivership Orders.” The trial court granted Frost’s application for writ of attachment on
June 14, 2012.
Between July and August of 2012, Evans wired three payments directly to Frost, totaling
$3,722,485.14 to help satisfy the agreed judgment. However, Roossien could not account for
these payments because “Evans did not discuss or notify [Roossien] of [Evans’s] intentions to
pay th[ese] amount[s] to Frost, nor did Evans attempt to deliver th[ese] amount[s] to [Roossien],
nor did Evans copy [Roossien] on any correspondence to Frost regarding [these] payment[s].”
On August 29, 2012, Frost filed a motion to determine the amount owed under the agreed
judgment, providing mathematical computations and a record of the accrued interest over time to
come to a final amount of $149,875.12 ($124,874.15 from the agreed judgment and $25,000 in
attorney’s fees). Frost did not include any of Roossien’s activities as receiver in its calculations.
In response, Evans, although claiming his actions were under protest, paid directly to Frost
$150,213.54 (the principal of $149,875.12 plus interest2).
On September 20, 2012, Frost filed a motion for approval of costs and attorney’s fees
totaling $144,255.19, incurred since September 19, 2011. On September 26, 2012, the trial court
signed an order granting Frost’s motion to determine the amount owed under the agreed
judgment. The order determined that, as of September 12, 2012, Evans had satisfied the
principal and interest due under the agreed judgment along with $25,000 of outstanding
attorneys’ fees.
2
In its September 26, 2012 order, the trial court noted this amount included an overpayment of $100, which Frost returned.
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On September 28, 2012, Evans requested a jury trial on the issue of Frost’s reasonable
and necessary post-judgment attorney’s fees. On October 1, 2012, Evans filed an objection to
the trial court proceeding with a hearing on Frost’s motion for approval of costs and argued
Evans paid the jury fee and claimed that a jury trial on the issue of attorney’s fees was already
set for January 14, 2013. On October 9, 2012, the trial court requested that Frost segregate its
fees into categories to better determine which fees were recoverable. On November 15, 2012,
Frost filed a supplemental and amended motion for approval of costs. In the motion, Frost stated
it had not, prior to that time, sought recovery of fees associated with the Van Hunter
Development bankruptcy case or the sale therein of certain real property. Frost stated it was still
not seeking recovery of $57,952.00 associated with the general bankruptcy representation but did
include $46,295.50 in fees associated with the sale of certain real property in connection with the
bankruptcy proceedings. On November 21, 2012, the trial court found that Frost was entitled to
“recovery of its attorney’s fees and costs incurred post-judgment,” in the amount of $159,385.98
and the court specifically found that Frost’s “fees and costs incurred . . . on and after September
19, 2011 to November 13, 2012 in its collection efforts . . . were reasonable, customary and
necessary.” The court also denied Evans’s demand for a jury trial on the attorney’s fees issue.
Evans filed a motion for new trial on December 14, 2012, asking the court to “withdraw
its November 12, 2012 order” that approved Frost’s costs and ordered Evans to pay. Evans
requested a new trial on attorney’s fees before a jury.
Roossien’s final report and motion for discharge were submitted on December 3, 2012.
Roossien indicated that, during the time of sales of the Magnum Hunter Resources stock between
June 11 and June 29, 2012, he withheld 10% of the stock sales, this percentage totaling
$129,231.25, as his fees. The trial court granted Roossien’s final report and motion for discharge
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on December 10, 2012. Evans filed an amended notice of appeal from the trial court’s rulings on
February 20, 2013.
In his first issue, Evans argues the trial court erred in awarding Frost attorney’s fees and
costs not recoverable under the turnover statute. Specifically, Evans argues Frost cannot recover
(1) post-judgment attorney’s fees under the guaranty, (2) fees incurred in relation to bankruptcy
proceedings, and (3) certain costs. Evans argues Frost’s enforcement action can only be based
on the judgment, not the guaranty, and the terms of the guaranty are no longer in effect. Relying
on res judicata, Evans argues the guaranty merged into the judgment and ceased to exist.
In making this argument, Evans relies on Henry v. Ins. Co. of N. Am., 879 S.W.2d 366,
368 (Tex. App—Houston [14th Dist.] 1994, no pet.), in which a plaintiff could not recover
attorney’s fees incurred in a garnishment action to enforce a judgment because the garnishment
action was a separate suit brought to enforce the judgment and was not itself based on a contract.
Evans argues Frost’s enforcement action of the March 22, 2011 agreed judgment was separate
from Frost’s original suit based on the guaranty agreement.
Evans contends that, when the agreed judgment of $6,795,070.86 became final, the
guaranty, including its attorney’s fees provision, merged into the judgment and ceased to exist.
Barr v. Resolution Trust Corp., 837 S.W.2d 627, 628 n.1 (Tex. 1992). Therefore, Evans argues,
the guaranty cannot serve as a contractual basis for post-judgment attorney’s fees.
The doctrine of res judicata operates as a dual system of merger and bar. Jeanes v.
Henderson, 688 S.W.2d 100, 103 (Tex. 1985). If a plaintiff prevails in a lawsuit, his cause of
action merges into the judgment and the cause of action dissolves. Id.
Here, when the trial court entered the agreed judgment on March 22, 2011, Frost’s claims
under the guaranty agreement merged into the agreed judgment and were extinguished. See
Barr, 837 S.W.2d at 628 n.1. No appeal was taken from the March 22, 2011 judgment, and the
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trial court’s plenary power expired thirty days later. On September 20, 2011, Frost filed its
application for a turnover order. That same day, the trial court signed an order appointing a
receiver and ordering Frost to turnover all of his shares of stock and ownership interest in any
publicly traded company. Frost’s recovery of attorney’s fees was thereafter governed by the
turnover statute.
Regarding the recovery of fees under the turnover statute, Evans argues the turnover
statute only allows a party to recover attorney’s fees incurred to collect a final judgment.
Specifically, Evans argues (1) Frost’s attorney’s fees incurred in relation to the Van Hunter
Development bankruptcy proceedings are not recoverable and (2) Frost’s attorney’s fees incurred
after Evans fully paid the judgment are not recoverable.
Generally speaking, the purpose of Section 31.002, otherwise known as the Turnover
Statute, is to aid the collection of final money judgments. Schultz v. Fifth Judicial Dist. Court of
Appeals at Dallas, 810 S.W.2d 738, 739 n. 3 (Tex. 1991). The turnover statute describes the
authority and means by which a judgment creditor may obtain, through the aid of the court, a
judgment debtor’s property to assist in fulfilling the judgment. TEX. CIV. PRAC. & REM. CODE
ANN. § 31.002 (West 2005). In addition to section 31.002, section 31.007 describes the
particular costs parties are to keep track of during a lawsuit so as to correctly determine a final
judgment. TEX. CIV. PRAC. & REM. CODE ANN. § 31.007 (West 2015).
Evans complains of the award of $46,295.50 for fees relating to the sale of certain real
property in connection with the Van Hunter Development bankruptcy proceedings. The trial
court also awarded Frost $24,727.50 in fees relating to actions taken after Evans paid the
judgment in full. Evans contends Frost’s attorney’s fees incurred after the judgment has been
paid cannot be attributed to collection of the judgment and therefore do not fall under the
turnover statute. Evans further complains of the award of certain costs incurred after the agreed
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judgment was paid in full. The apparent purpose of the turnover statute is to aid the collection of
final money judgments. Schultz, 810 S.W.2d at 739 n.3. The turnover order was nothing more
than a vehicle for the collection of the judgment; once the judgment was paid, the turnover order
lost its teeth and was of no further force and effect. Pandozy v. Beaty, 254 S.W.3d 613, 617
(Tex. App.—Texarkana 2008, no pet.). The award of $159,385.98 included post-judgment
attorney’s fees, amounts obtained from the sale of real property in a bankruptcy proceeding, and
post-judgment costs. We conclude this award, entered after Evans paid the judgment in full, was
error. See id. We sustain Evans’ first issue.
In his second issue, Evans argues the trial court erred in denying his request for a jury
trial on the reasonableness and necessity of Frost’s post-judgment attorney’s fees. Because we
have concluded Frost was not entitled to post-judgment attorney’s fees, we need not further
address this argument.
In his third issue, Evans argues the trial court erred in allowing the receiver to unilaterally
retain sales proceeds as his fees. Evans argues that a trial court cannot pre-set a receiver’s fee as
a contingency percentage. See Congleton v. Shoemaker. 2012 WL 1249406, at *4 (Tex. App.—
Beaumont Apr. 12, 2012, pet. denied). Evans further argues that a receiver’s fee must be
measured by the value of the services rendered. See Moyer v. Moyer, 183 S.W.3d 48, 57-58
(Tex. App.—Austin 2005, no pet.).
However, the cases Evans relies on, Congleton and Moyer, both dealt with courts that
pre-set the receiver’s fee but never reconsidered their pre-set fee to confirm that it was
reasonable. See Congleton, 2012 WL 1249406 at *5 (“the record in this case contains no
evidence establishing what percentage or amount constitutes a fair, reasonable, or necessary
fee”); Moyer, 183 S.W.3d at 58 (“in the trial court, no evidence was presented of what would
constitute a fair, reasonable, or necessary fee”). In this case, the trial court held an evidentiary
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hearing at the time of the stock sale and heard evidence to determine whether the 10% fee from
the result of the sales was fair, reasonable, or necessary.
Receiver’s fees are considered court costs and are governed by rules regarding the award
of costs. See Tex. R. Civ. P. 131, 141; Jones v. Strayhorn, 159 Tex. 421, 321 S.W.2d 290, 293
(1959); Hodges v. Peden, 634 S.W.2d 8, 12 (Tex. App.—Houston [14th Dist.] 1982, no writ).
Where a receiver is appointed, taxation of costs of the receivership and the manner of their
collection are matters entirely within the sound discretion of the trial court. Theatres of Am., Inc.
v. State, 577 S.W.2d 542, 547 (Tex. Civ. App.—Tyler 1979, no writ). In this case, Frost
requested and received a court-appointed receiver to assist in the collection of the agreed
judgment. The trial court conducted a hearing and determined Roossien’s fee was fair,
reasonable, and necessary. Under these circumstances, we cannot conclude the trial court abused
its discretion in permitting Roosien to retain 10% of stock sales proceeds as his fee. See id. We
overrule Evans’ third issue.
In his fourth issue, Evans argues the trial court’s September 26, 2012 order is void.
Specifically, Evans argues the trial court lacked jurisdiction to modify its judgment.
Other than a trial court’s inherent power to enforce its judgment, Arndt v. Farris, 633
S.W.2d 497, 499 (Tex. 1982), a trial court loses jurisdiction over an action once its plenary
power expires. See In re Dickason, 987 S.W.2d 570, 571 (Tex. 1998). Assuming no motions are
filed that would increase a trial court’s length of plenary power, the plenary power of a trial court
lasts thirty days. TEX. R. CIV. P. 329(b)(f). The agreed judgment was signed on March 22, 2011,
and no motions were filed that would have extended the trial court’s plenary jurisdiction. The
September 26, 2012 order stated that “Evans has satisfied the principal and interest due under the
agreed judgment on September 12, 2012.”
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Frost argues so long as outstanding issues exist, a court retains jurisdiction over the
receivership proceedings and should wind up the receivership in an orderly way. Humble
Exploration Co., Inc., v. Walker, 641 S.W.2d 941, 945-46 (Tex. App.—Dallas 1982, no writ);
see Bayoud v. Bayoud, 797 S.W.2d 304, 310-11 (Tex. App.—Dallas 1990, writ denied).
However, the September 26, 2012 order provided that, if Evans prevails on his appeal of the
turnover order or any other appeal or claim which decreases the amount Frost has received under
the agreed judgment, then the agreed judgment is revived to represent the new, proper amount;
the trial court would maintain jurisdiction as to any matter relating to disputes with respect to the
agreed judgment; and the plea to the jurisdiction filed by Evans was denied. The order also
contains the trial court’s determination that Frost’s “calculations” of the amounts Evans owed
under the agreed judgment were “in all things, proper and adopted by” the trial court. The order
made no reference to receivership fees or winding up the receivership.
We have already concluded that, once the agreed judgment was paid in full, the turnover
order was of no further effect. See Pandozy, 254 S.W.3d at 617. At that point, the trial court’s
plenary power had long since expired, and so had its powers under the turnover statute. The
complained-of portions of the September 26, 2012 order are attempts to modify the March 22,
2011 agreed judgment. A trial court may not issue an order that is inconsistent with the original
judgment or that otherwise constitutes a material change in the substantive adjudicative portions
of the judgment after its plenary power has expired. Custom Corporates v. Security Storage,
Inc., 207 S.W.3d 835, 839 (Tex. App.—Houston [14th Dist.] 2006, no pet.). In addition, post-
judgment orders may not require performance of obligations in addition to the obligations
imposed by the final judgment. Id. We sustain Evans’ sixth issue to the extent he asserts the
voidness of provisions in the trial court’s September 26, 2012 order adopting Frost’s
“calculations,” providing the agreed judgment would be “revived” if Evans prevailed on appeal
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of the turnover order or “any other appeal or claim that decreases the amount Frost [had]
received” under the agreed judgment, and ordering the trial court would “retain jurisdiction as to
any matter relating to disputes with respect to” the agreed judgment.” Accordingly, we order
stricken those portions of the September 26, 2012 order.
We reverse the trial court’s November 21, 2012 judgment awarding Frost $159,385.98
and render judgment that Frost take nothing on its claims for post-judgment attorney’s fees,
proceeds from the sale of real estate in conjunction with the bankruptcy proceedings, and post-
judgment costs. In all other respects, we affirm the trial court’s orders.
121491F.P05 /David L. Bridges/
DAVID L. BRIDGES
JUSTICE
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S
Court of Appeals
Fifth District of Texas at Dallas
JUDGMENT
GARY C. EVANS, Appellant On Appeal from the 162nd Judicial District
Court, Dallas County, Texas
No. 05-12-01491-CV V. Trial Court Cause No. 09-15818.
Opinion delivered by Justice Bridges.
THE FROST NATIONAL BANK, Appellee Justices Brown and O'Neill participating.
In accordance with this Court’s opinion of this date, the trial court’s November 21, 2012
order on Frost’s motion for approval of costs and ordering payment by Gary C. Evans is
REVERSED and judgment is RENDERED that:
Frost take nothing on its claims for post-judgment attorney’s fees, proceeds from
the sale of real estate in conjunction with the bankruptcy proceedings, and post-
judgment costs.
The provisions in the trial court’s September 26, 2012 order adopting Frost’s
“calculations,” providing the agreed judgment would be “revived” if Evans prevailed on
appeal of the turnover order or “any other appeal or claim that decreases the amount Frost
[had] received” under the agreed judgment, and ordering the trial court would “retain
jurisdiction as to any matter relating to disputes with respect to” the agreed judgment” are
ORDERED stricken.
In all other respects, the trial court’s orders are AFFIRMED.
It is ORDERED that each party bear its own costs of this appeal.
Judgment entered August 11, 2015.
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