Leslie Wm. Adam & Associates v. AMOCO Federal Credit Union

COURT OF APPEALS FOR THE
FIRST DISTRICT OF TEXAS AT HOUSTON
ORDER
Appellate case name: Leslie Wm. Adam & Associates v. AMOCO Federal Credit Union
Appellate case number: 01-15-00879-CV
Trial court case number: 1026220-801
Trial court: County Civil Court at Law No. 4 of Harris County
By order dated March 9, 2017, this court forwarded a copy of the appellate record, a
blank docketing statement, and a copy of the Pro Bono Program Pamphlet to appellee, Terence
Martinez. We also stated that a briefing deadline would be set once Martinez had sufficient time
to retain counsel. Martinez has not responded. We issue the following order.
Appellee Martinez’s brief in response to appellant’s brief (enclosed with this order) is
due 30 days from the date of this order. Martinez already has been served with a copy of the
brief of appellee, Amoco Federal Credit Union.
It is so ORDERED.
Judge’s signature: /s/ Michael Massengale
 Acting individually
Date: April 27, 2017
ACCEPTED
01-15-00879-CV
FIRST COURT OF APPEALS
HOUSTON, TEXAS
7/22/2016 3:10:46 PM
CHRISTOPHER PRINE
CLERK
NO. 01-15-00879-CV
____________________________________ FILED IN
1st COURT OF APPEALS
HOUSTON, TEXAS
7/22/2016 3:10:46 PM
IN THE COURT OF APPEALS CHRISTOPHER A. PRINE
FOR THE FIRST JUDICIAL DISTRICT Clerk
OF TEXAS AT HOUSTON
______________________________________
LESLIE WM. ADAMS & ASSOCIATES
Appellant,
v.
AMOCO FEDERAL CREDIT UNION
Appellee.
_______________________________________
ON APPEAL FROM THE HARRIS COUNTY
CIVIL COURT AT LAW NO. 4, HARRIS COUNTY, TEXAS
TRIAL COURT CASE NO. 1026220-801
______________________________________
APPELLANT’S BRIEF
LESLIE WM. ADAMS & ASSOCIATES
_______________________________________
LESLIE WM. ADAMS & ASSOCIATES
Leslie Wm. Adams
State Bar No. 00869810
Lingling E. Dai
State Bar No. 24074104
3700 Buffalo Speedway, Suite 420
Houston, Texas 77098
Tel: (713) 728-6360
Fax: (713) 728-6366
LWA@LeslieWmAdams.com
ATTORNEYS FOR APPELLANT
IDENTITIES OF PARTIES AND COUNSEL
Pursuant to the Texas Rules of Appellate Procedure, Appellant herewith
states that the name of all parties and counsel to this appeal are:
NAME OF PARTY: Leslie Wm. Adams & Associates
Representing Appellant on Appeal: Representing Appellant at Trial:
Leslie Wm. Adams Leslie Wm. Adams
State Bar No. 00869810 State Bar No. 00869810
Angelle M. Adams Angelle M. Adams
State Bar No. 24055081 State Bar No. 24055081
3700 Buffalo Speedway, Suite 420 3700 Buffalo Speedway, Suite 420
Houston, Texas 77098 Houston, Texas 77098
Telephone: (713) 728-6360 Telephone: (713) 728-6360
Facsimile: (713) 728-6366 Facsimile: (713) 728-6366
NAME OF PARTY: Amoco Federal Credit Union
Representing Appellee on Appeal: Representing Appellee on Appeal:
Thomas Cain Thomas Cain
State Bar No. 03606300 State Bar No. 03606300
711 Sixth Street North 711 Sixth Street North
Post Office Drawer 872 Post Office Drawer 872
Texas City, Texas 77592-0872 Texas City, Texas 77592-0872
Telephone: (409) 948-4466 or Telephone: (409) 948-4466 or
Telephone: (713) 488-6344 Telephone: (713) 488-6344
Facsimile: (409) 948-4766 Facsimile: (713) 948-5766
ii
RECORD REFERENCES
CLERK’S RECORD:
The pleading records consist of two (2) Clerk’s Records. The Clerk’s
Record is referred to herein as (R.), followed by a page reference. The
Supplemental Clerk’s Record is referred to herein as (SR.), followed by a
page reference.
REPORTER’S RECORD:
The Reporter’s Record consists of one (1) Reporter’s Record in one (1)
volume. The Reporter’s Record is referred to herein as (Tr.), followed by
a page reference.
iii
TABLE OF CONTENTS
IDENTITIES OF PARTIES AND COUNSEL…………………………………….ii
RECORD REFERENCES……………………………………………………....…iii
TABLE OF CONTENTS……………………………………………………….....iv
INDEX OF AUTHORITIES…………………………………………………........vi
INTRODUCTION…………………………………………..………..…..………...1
STATEMENT OF THE CASE………………………………………………..…...1
STATEMENT REGARDING ORAL ARGUMENT……………………………...5
ISSUES PRESENTED FOR REVIEW…………………………………….............5
ISSUE 1: The trial court erred by granting Judgment-Debtor’s Motion to
Dissolve, in part………………………………………….…………………..5
ISSUE 2: The trial court erred in finding that $33,000 of the garnished
funds were exempt……………………………………………………….….5
ISSUE 3: Judgment-Debtor failed to meet his burden of proof………..…5
ISSUE 4: The trial court’s abuse of discretion damages the Garnishee..5
STATEMENT OF FACTS…………………………………………………………6
SUMMARY OF THE ARGUMENTS……………………………………………..7
STANDARD OF REVIEW………………………………………………………...7
ARGUMENT
ARGUMENT FOR ISSUE 1:
The trial court erred by granting Judgment-Debtor’s Motion to Dissolve in
part………………………………………………………………...................8
iv
ARGUMENT FOR ISSUE 2:
The trial court erred in finding that $33,000 of the garnished funds were
exempt………………………………………………………………….…..11
ARGUMENT FOR ISSUE 3:
Judgment-Debtor failed to meet his burden of proof……………...……….13
ARGUMENT FOR ISSUE 4:
The trial court’s abuse of discretion damages the Garnishee…………........15
CONCLUSION …………………………………………………………………..16
PRAYER………………………………………………………….………………18
CERTIFICATION……………………………………………………………...…20
CERTIFICATE OF SERVICE …………………………………………………...20
CERTIFICATE OF COMPLIANCE ………………………………………….….20
CLERK’S RECORD……………………………………..…………..……ON FILE
REPORTER’S RECORD………………………………...…………….….ON FILE
v
INDEX OF AUTHORITIES
CASES
Am. Express Travel Related Servs. v. Harris,
831 S.W.2d 531, 533 (Tex.App.—Houston [14th Dist] 1992, no writ)……8, 11, 12
Amergy Bank, N.A. v. Southern Crushed Concrete, Inc.,
NO. 01-07-00359-CV, 2009 WL 94375 (Tex.App.—Houston
[1st Dist] 2009 pet. den.)……………………………………….…………12, 15, 16
Art & Frame Direct, Inc. v. Dallas Mkt. Ctr. Oper., L.P.,
380 S.W.3d 325, 329 (Tex.App.—Dallas 2012, no pet.)………………………......9
Bank One Texas v. Sunbelt Savings,
824 S.W.2d 557, 558 (Tex.1992)………………………………………………..…9
Beggs v. Fite,
130 Tex. 46, 106 S.W.2d 1039, 1042 (1937)………………………………………9
Chandler v. El Paso National Bank,
589 S.W.2d 832 (Tex.App.—El Paso 1979)……………………………………...18
Downer v. Aquamarine Operators, Inc.,
701 S.W.2d 238, 241 (Tex.1985)…………………………………………………..8
Fitzpatrick v. Leasecomm Corp.,
No. 12-07-00487-CV (Tex.App.—Tyler 2008), 2008 WL 4225973……………12
General Electric Capital Corporation v. ICO, Inc.,
230 S.W.3d 702, 705 (Tex.App.—Houston [14th Dist] 2007, pet. denied...8, 10, 13
Intercontinental Terminals v. Hollywood Marine,
630 S.W.2d 861, 832 (Tex.App.—Houston [1st Dist] 1982 pet. denied)………...16
Moody National Bank v. Riebschlager,
946 S.W.2d 521, 523 (Tex.App.—Houston [14th Dist] 1997……………….…9, 17
Provident Life & Accident, Inc. Co. v. Knott,
128 S.W.3d 211, 215 (Tex.2003)………………………………………………….8
vi
Simulus, LLC v. G.E. Capital Corporation,
276 S.W.3d 109 (Tex.App.—Houston [1st Dist] 2008)…………..8, 10, 11, 13, 15
Valence Operating Co. v. Dorsett,
164 S.W.3d 656, 661 (Tex. 2005)………………………………………………….8
Walnut Equip. Leasing Co. v. J-V Dirt & Loam,
907 S.W.2d 912, 915 (Tex.App.—Austin 1995, writ denied)…………………….13
STATUTES
Tex. Civ. Prac. & Rem. Code §63.003 ……………...……………………………...2
31 CFR 212…………………………………………………………………..........12
Tex. Civ. Prac. & Rem. Code §63.001-005………………………………...9, 10, 11
Texas Constitution, Art. XVI §28………………………………………………...11
Tex. Civ. Prac. & Rem. Code §63.003(b)……………………………………...…16
Tex. Civ. Prac. & Rem. Code Chapter 63………………………………………….8
31 C.F.R. §§ 212.7-8……………………………………………………………13
RULES
Tex. R. Civ. P. 664a..………………………………………3, 9, 10, 11, 13, 17, 18
Tex. R. Civ. P. 329b(g)……………………………………………………………..4
Tex. R. Civ. P. 657-679……………………………………………………..…8, 9
Tex. R. Civ. P. 668………………………………………………………10, 11, 18
vii
A. Introduction
1. Appellant is Leslie Wm. Adams Attorney At Law PLLC, dba Leslie
Wm. Adams & Associates (“Appellant”). Appellee is AMOCO Federal Credit
Union (“Appellee” or “AMOCO”). Appellant is appealing a decision in Leslie
Wm. Adams & Associates v. AMOCO Federal Credit Union, Cause No. 1026220-
801, County Civil Court at Law No. 4, Harris County Texas, granting in part the
Motion to Dissolve Writ of Garnishment granted in favor of Judgment-Debtor
Terence Martinez (“Judgment-Debtor” or “Martinez”).
B. Statement Of The Case
2. This appeal addresses a modification of the writ of garnishment over
Appellant’s objection. Appellant presented expert testimony to support the
Garnishee’s finding that more than sufficient nonexempt funds were available to
satisfy the judgment. The court’s decision to reduce the amount allowed under
garnishment was an abuse of discretion and against the weight of the evidence.
3. Appellant obtained a final judgment against Judgment-Debtor
Martinez on March 18, 2014, in the County Civil Court at Law No. 4 of Harris
County, Texas, in Cause No. 1026220 styled Leslie Wm. Adams & Associates v.
Terence Martinez for $41,235.20 in actual damages, $2,858.50 in attorney’s fees,
$248.00 in Court costs, including pre-judgment at the rate of 5% per annum and
1
post-judgment interest at the rate 5% per annum.1 (R. 10)2.
4. On July 2, 2014, Appellant filed an Application for Writ of
Garnishment in County Court of Law 4. (R.4-10). The writ was granted and
served on Appellee AMOCO Federal Credit Union on July 29, 2014. (SR. 112).
5. Appellee filed a verified Answer on August 14, 2014, indicating that
One Hundred Eight Thousand Six Hundred One and 56/100 Dollars ($108,601.56)
in exempt funds from Judgment-Debtor’s savings and checking accounts were
available, in addition to an Independent Retirement Account that was exempt from
garnishment. (R.13-15). On July 29, 2015, Appellee determined to release funds in
excess of $46,748.03 to Judgment-Debtor without leave of court. (R.61-63). See
Civ. Prac. & Rem. Code §63.003, Amended Answer of Appellee filed January 15,
2015. (R.61 – 64).
6. Judgment-Debtor was properly notified of the Writ of Garnishment
(R.7) and filed his Motion to Dissolve the Writ of Garnishment on or about July
30, 2014 claiming that the funds sought were exempt from garnishment because:
“All monies held at the AMOCO FCU came from disability payments from the
following: Department of Veteran Affairs; Social Security Disability and CIGNA
Group, Disability Management Solutions.” (R.11-12). On November 26, 2014,
April 6, 2015, and June 3, 2015 Judgment-Debtor filed amended Motions to
1
The total amount identified in the writ of garnishment was $46,748.03, which includes the actual damages,
attorneys’ fees, costs of court, and pre-judgment interest totaling $2,406.33.
2
Due to omissions in the clerk’s record, a supplemental record was filed. References are to R and SR, respectively.
2
Dissolve, with a fourth and live Amended Motion to Dissolve filed on August 3,
2015. (R.118). None of the motions contained any exhibits, data or calculations to
support the repeated allegation that “All monies held” by Appellee came from
disability payments. None of the motions were verified or contained affidavits as
required by Tex.R.Civ.P. 664a: “A defendant whose property or account has been
garnished or any intervening party who claims an interest in such property or
account, may by sworn written motion, seek to vacate, dissolve or modify the writ
of garnishment, and the order directing its issuance, for any grounds or cause,
extrinsic or intrinsic.” (Emphasis added.) Judgment-Debtor did file numerous
documents regarding his health and benefits. See R.27-60; 65-85.
7. Appellee was served with a business records subpoena to obtain
Judgment-Debtor’s bank account records for the purpose of confirming which
funds held by Appellee are exempt from garnishment as alleged, if any. (SR.5).
The return of the subpoena was filed with the Court. Id. Appellant delivered the
documents produced to a forensic accountant for analysis. See SR.24.
8. On October 12, 2015, a hearing on Judgment-Debtor’s motion was
held and the Court3 found that only Twelve Thousand Eight Hundred Sixty-nine
and 64/100 Dollars ($12,869.64) of the $106,482 in funds in the AMOCO accounts
could be classified as non-exempt. (R.87, Transcript (“Tr.”) 38-42). Despite the
3
Senior Judge Sharolyn Wood presiding, sitting for Judge Roberta Lloyd.
3
Judgment-Debtor’s statement in his Fourth Amended Motion to Dissolve that he is
“not mentally or emotionally competent to stand trial or participate in a court
hearing,” he appeared, argued and gave testimony. (Tr. 23). Based on Judgment-
Debtor’s unsupported testimony that he had deposited $33,0004 in insurance
proceeds in an unspecified AMOCO account, (Tr.26:3-5), the Court found that
amount exempt. (Tr. 38-42). The Court reduced the funds to be disbursed to
Appellant under the writ of garnishment to $12,869.64 without considering either
the amount calculated to be nonexempt by the forensic accountant of $106,482, or
the amounts already released by Appellee of Sixty-one Thousand Eight Hundred
Sixty and 15/100 Dollars ($61,860.15).
9. Appellant filed a motion for reconsideration within 30 days after the
Court signed the judgment. TEX. R. CIV. P. 329b(g); (R.42). Appellant
demonstrated that $33,075.00 was paid in cash. (SR.75). Appellant argued that
because the prior ruling of the trial court was contrary to controlling law and not
supported by the facts, the court should reconsider its prior ruling, and on
reconsideration, order disbursement of the full amount of the judgment, plus costs
of opposing Judgment-Debtor’s motions, including the costs of the Forensic
Accountant and Business Records Subpoena.
4
As noted below, the deposit to which judgment creditor refers was in the amount$33,075. However, the amount
deducted by the trial court was $33,976.75. The amount is not material to the analysis. For convenience, $33,000 is
used to refer to the amount of judgment debtor’s claim.
4
10. The trial court declined to revisit the decision of the presiding judge
(R.106).5 Appellant filed a notice of appeal. (R.89). No funds have been disbursed
by Garnishee Appellee.
C. Statement Regarding Oral Argument
11. The Court should grant oral argument because it would give the Court
a more complete understanding of the facts presented in this appeal. Appellant
argues that the trial court’s decision is not supported by the record or controlling
law. Because this appeal concerns the interaction of three parties (garnishor,
garnishee and judgment debtor), oral argument will permit questions from the
panel to resolve ambiguities in the record.
D. Issues Presented For Review
Issue 1: The Trial Court Erred By Granting Judgment-Debtor’s
Motion To Dissolve In Part
Issue 2: The Trial Court Erred In Finding That $33,000 Of The
Garnished Funds Were Exempt.6
Issue 3: Judgment-Debtor Failed To Meet His Burden Of Proof.
Issue 4: The Trial Court’s Abuse Of Discretion Damages The
Garnishee
E. Statement Of Facts
5
No explanation for Judge Wood’s appearance appears in the record.
6
The final judgment reflects a reduction of $33,976.75, awarding Appellant $12,869.64 in nonexempt funds. The
court’s calculation is not in the record and is unexplained.
5
12. Appellant represented the Judgment-Debtor in a suit in Galveston
County alleging fraud by a contractor hired to perform repairs after Hurricane Ike
in 2008. [[footnote] The matter was complicated by apparent fraud in representing
the existence of liability insurance held by the contractor. Suit was brought against
the contractor and insurance broker when damage occurred during reconstruction
and insurance coverage failed.
13. The case was tried to a jury and a verdict was returned awarding
Judgment-Debtor $39,670.00.
14. Judgment-Debtor refused to pay his legal fees to Appellant, resulting
in demand letters, suit and the judgment that is the subject of the writ of
garnishment. (R.10).
15. Appellant garnished funds from Garnishee AMOCO Federal Credit
Union in the amount of $108,601.50 (r.13) following the necessary formalities,
including citation on the Garnishee, Appellee here, and service on the Judgment-
Debtor. Judgment-Debtor, representing himself, filed multiple motions to dissolve
the writ that did not comply with the Civil Practice and Remedies Code or the
Texas Rules of Civil Procedure.
16. Appellant obtained business records and sought the analysis of a
forensic accountant. At trial on the merits, the forensic accountant submitted
expert testimony confirming the finding of Appellee that $106,482 in funds were
6
available to satisfy the $44,093.70 plus costs and interest specified in the writ of
garnishment. Notwithstanding the evidence, the trial court found that $33,000 in
Judgment-Debtor’s funds were exempt, reduced the garnished funds to $12,869.64,
ignored the exempt funds in excess of that amount and entered a final Order For
Disbursement of Garnished Funds and Release (R.87, Tr.38-42) from which
Appellant appeals.
F. Summary Of The Arguments
17. The trial court abused its discretion in failing to follow rules and
statutory authority governing garnishments, finding that all but $12000 of the
garnished funds were exempt, against the great weight of the evidence. The trial
court further abused its discretion in accepting Judgment-Debtor’s defective
pleadings. These errors resulted in reversible error. As a result, Judgment-Debtor
obtained relief from the garnishment to which he was not entitled, injuring
Appellant, and potentially Garnishee AMOCO Federal Credit Union. The order of
garnishment should be remanded to the trial court to correct the error and order
disbursement of the garnished funds, and to consider additional issues raised by
this appeal.
G. Standard Of Review.
18. In reviewing the trial court’s application of the law, the reviewing
court is not bound to the trial court’s decision except as to the applicable facts,
7
because the trial court is not in a superior position to ascertain or apply the relevant
legal principles. Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex.
2005); Provident Life & Accident Inc. Co. v. Knott, 128 S.W.3d 211, 215 (Tex.
2003).
19. From this Court regarding review of garnishment:
We review a trial court’s ruling on a motion to dissolve a writ of
garnishment for abuse of discretion. See Gen Elec. Capital Corp v.
ICO, Inc. 230 S.W.3d 702, 705 (Tex.App.-Houston [14th Dist] 2007,
pet. denied). A trial court abuses its discretion if it acts without
reference to guiding rules and principles or in an arbitrary or
unreasonable manner. Downer v. Aquamarine Operators, Inc. 701
S.W.2d 238, 241 (Tex. 1985).
Simulis, LLC v. G.E. Capital Corporation, 276 S.W.3d 109, 112 (Tex.App.-
Houston [1st Dist.] 2008. “Precedent from this court dictates that we apply an
abuse of discretion standard to resolve whether the dissolution of a writ of
garnishment was improvidently granted. See Am. Express Travel Related Servs. v.
Harris, 831 S.W.2d 531, 533 (Tex.App-Houston [14th Dist] 1992, no writ.” Gen.
Elec. Capital Corp v. ICO, Inc. 230 S.W.3d 702, 705 (Tex.App.-Houston [14th
Dist.] 2007, pet. denied).
H. Argument
Issue 1: The Trial Court Erred By Granting Judgment-Debtor’s
Motion To Dissolve In Part
20. Garnishment is governed by the Civil Practice and Remedies Code,
Chapter 63, and the Texas Rules of Civil Procedure. 657 – 679. A writ of
8
garnishment is available if:
[A] plaintiff has a valid, subsisting judgment and makes an affidavit
stating that, within the plaintiff’s knowledge, the defendant does not
possess property in Texas subject to execution sufficient to satisfy the
judgment.
Civ. Prac. & Rem. Code §63.001(3). Rule 664a provides:
A defendant whose property or account has been garnished or any
intervening party who claims an interest in such property or account,
may by sworn written motion, seek to vacate, dissolve or modify the
writ of garnishment, and the order directing its issuance, for any
grounds or cause, extrinsic or intrinsic.
21. In Moody National Bank v. Riebschlager, the Fourteenth Court of
Appeals stated:
The writ of garnishment affords a harsh remedy that is provided
purely by statute. Beggs. v. Fite 130 Tex. 46, 106 S.W.2d 1039, 1042
(1937); see Tex Civ Prac & Rem Code §§ 63.001 – 005. (Vernon
1986 & Supp. 1996); Tex. R. Civ. P. 657 – 679. For this reason,
garnishment proceedings cannot be sustained unless they strictly
conform to the statutory requirements and related Rules.
946 S.W.2d 521, 523 (Tex.App.-Houston [14th Dist.] 1997). When properly
issued, a writ of garnishment “impounds funds in the hands of the Appellee at the
time the writ is served through the date the Appellee is required to answer.” Art &
Frame Direct, Inc. v. Dallas Mkt. Ctr. Oper. L.P. 380 S.W.3d 325, 329 (Tex.App-
Dallas 2012, no pet.)
22. While a garnishment is between the judgment creditor and a third
party garnishee in possession of the judgment debtor’s property, Bank One Texas
9
v. Sunbelt Savings, 824 S.W.2d 557, 558 (Tex.1992), the judgment debtor must be
given notice of the proceeding and is provided an opportunity to contest the
proceeding. Simulis v. G.E. Capital supra at 114. Under Rule of Civil Procedure
664a, a defendant whose property or account has been garnished may seek to
vacate, dissolve, or modify the writ of garnishment for any grounds or cause,
extrinsic or intrinsic. General Electric Capital Corporation v. ICO, Inc., 230
S.W.3d 702, 705 (Tex.App.-Houston [14th Dist.] 2007, pet. den.)
23. Texas Rule of Civil Procedure 668 provides:
Should it appear from the answer of the garnishee or should it be
otherwise made to appear and be found by the court that the garnishee
is indebted to the defendant in an amount, or was so indebted when
the writ of garnishment was served, the court shall render judgment
for the plaintiff against the garnishee for the amount so admitted or
found to be due to the defendant from the garnishee, unless such
amount is in excess of the plaintiff’s judgment against the defendant
with interest and costs, in which case, judgment shall be rendered
against the garnishee for the full amount of the judgment already
rendered against the defendant , together with interest and costs of the
suit in the original case and also in the garnishment proceedings.
(Emphasis added.)
24. In its answer, garnishee admitted that funds were available in excess of
the amount of Appellant’s judgment against judgment creditor. (R.13). Judgment
creditor attempted to vacate and dismiss the writ without presenting good grounds,
intrinsic or extrinsic, and failed to carry his burden as movant. Tex. R. Civ. P. 668.
Because Appellant proved the amount available and held by garnishee was in
excess of the amount of the judgment, Tex. R. Civ. P. 668, and because the
10
judgment debtor did not prove “any grounds or cause” to vacate, dissolve or
modify the writ, Tex. R. Civ. P. 664a, it was an abuse of discretion by the trial
court to refuse to enter judgment on the writ for the amount of the judgment held
by appellant. Tex. R. Civ. P. 668; see Simulis, supra.
Issue 2: The Trial Court’s Finding That $33,000
Was Exempt Was Incorrect
25. The trial court found approximately $33,000 in garnished funds held
by Appellee were exempt funds based on Judgment-Debtor’s testimony. (Tr.38-
42). Judgment-Debtor did not provide any authority regarding the nature of the
claim or a basis for its exemption. There is no statutory exemption for the
proceeds of settlement from garnishment. Furthermore, the records of the
Appellee indicate that the deposit of $33,075 was made in cash. (SR.75-76).
There is no exemption for cash deposits. If the funds had been exempt, the funds
received by a debtor lost their classification as exempt by the act of using the
exempt funds in a financial transaction. Even funds invested from payroll lose
their status. Am. Express Travel Related Servs. v. Harris, 831 S.W.2d 531
(Tex.App.-Houston [14th Dist] 2008). Only in the limited cases of certain federal
benefits explicitly protected by statute do exempt funds retain that status after use
or commingling. Otherwise, exempt funds, including pay protected by the Texas
Constitution, are available for garnishment once a judgment debtor moves the
funds from the protected class into commerce, investments, or cash. Id.
11
26. This principle is confirmed in the Texas appellate courts:
A long line of garnishment cases has consistently held that wages
cease to be “current” and are no longer exempt when they are received
by the wage earner or become subject to wage earner’s control. See
Am. Express Travel Related Servs. v. Harris, 831 S.W.2d 531
(Tex.App.-Houston [14th Dist] 2008). If the wage earner deposits
them with another, they are subject to garnishment.
Fitzpatrick v. Leasecomm Corp., No.12-07-00487-CV (Tex.App.-Tyler 2008),
2008 WL 4225973. Four unpublished cases, appended, were provided to the trial
court. See SR.77-105.
27. The identified funds, $33,075.00, were deposited as a cash deposit on
December 20, 2013. (R.75-76). As a cash deposit, they are not exempt from
garnishment. Am. Express, supra at 533. Furthermore, the funds were deposited
seven months prior to the date of garnishment, and were not subject to
identification as exempt because they were received outside the “lookback period”
to which the Appellee was subject under federal law. See 31 CFR 212. Finally,
there is no evidence whatsoever, and no legal theory suggested, that would
substantiate Judgment-Debtor’s bald claim that the funds are exempt. The only
evidence submitted to the court indicates that debtor made a cash deposit of funds
without reference to source. Accordingly, it was an abuse of discretion for the trial
court to order the funds paid to the Judgment-Debtor by the Appellee. See Amegy
Bank N.A. v. Southern Crushed Concrete, Inc. No. 01-07-00359-CV, 2009 WL
943758, (Tex.App.-Houston [1st Dist.] 2009, pet. den.) (SR. 78).
12
Issue 3: Judgment-Debtor Failed to Meet His Burden of Proof
28. When the defendant/judgment creditor moves to “vacate, dissolve or
modify” under Texas Rule of Civil Procedure 664a, the burden is on the Appellant:
“The writ shall be dissolved unless, at such hearing, the plaintiff shall prove the
grounds relied upon for [the writ’s] issuance . . . . The movant shall, however, have
the burden to prove that the reasonable value of the property garnished exceeds
the amount necessary to secure the debt.” Id., emphasis added. Simulis, like
General Electric, considered the exemption of current wages from garnishment. In
Simulis, the First Court of Appeals found that the trial court did not abuse its
discretion in denying the motion to dissolve because the exemption did not apply
to the garnished funds. In General Electric, the Fourteenth Court of Appeals
affirmed the granting of the motion to dissolve because the severance pay of the
judgement debtor did not “lose” its status as exempt under the circumstances of
that case.
29. The burden is on the Judgment-Debtor to demonstrate the
applicability of exemptions. Tex. R. Civ. P. 664a; see 31 C.F.R §§ 212.7 – 8; see
also Walnut Equip. Leasing Co. v. J-V Dirt & Loam, 907 S.W.2d 912, 915 (Tex.
App. – Austin 1995, writ denied). Here, Judgment-Debtor presented no legal or
factual basis to support his claim that all the money held in his AMOCO bank
accounts was exempt from garnishment. The burden of proof is on Judgment-
13
Debtor to provide proper evidence of the characterization of any exempt and non-
exempt funds in his accounts, and he has failed to do so.
30. At the hearing on the merits of this garnishment matter, Appellant
introduced expert testimony from Certified Public Accountant and Certified Fraud
Examiner, Lara A. Carter.7 Ms. Carter conducted an independent analysis of
Judgment-Debtor’s AMOCO bank records and submitted a detailed report of her
analysis and conclusions regarding the status of the funds held in the AMOCO
bank accounts. (R. __; Expert Report of Lara A. Carter dated July 20, 2015,
admitted as evidence without objection). Ms. Carter testified that of the total funds
held in the bank account, $106,482.00 was non-exempt. (Tr.12-13). As reflected
in her expert report, Ms. Carter conducted a comprehensive analysis and erred on
the side of caution with regard to any deposits where the payer could not be
identified or confirmed based on the documents provided. Id. at 5, Tr.10-11)
Those unknown deposits were not included in the non-exempt category. Id. Her
conservative analysis of Judgment-Debtor’s AMOCO bank accounts concluded
that there were sufficient non-exempt funds in the accounts to satisfy the judgment;
however, the Court only allowed for the release of $12,869.64, plus attorneys’ fees
for the Appellee.8
7
A complete description of her thorough analysis and conclusions can be found in her expert report, which was
admitted into evidence without objection.
8
This “tracing” of funds has been found to be the appropriate means to determine whether funds are exempt or
nonexempt where funds are commingled. See Charles F. Williamson v. State of Texas, Nos 03-11-00786-CV, 03-
14
31. The only evidence presented in response to Ms. Carter’s expert
testimony was the oral testimony of Judgment-Debtor. The Appellee did not
challenge her findings, which were identical to that presented in Appellee’s
answer. Judgment-Debtor did not submit any documents or evidence to support
his claims, nor did he have any witness evaluate the legal status of the money, nor
did he attempt to trace the funds to exempt sources; he only gave self-serving
testimony that all of the money was exempt. Judgment-Debtor’s testimony was
general, vague and conclusory, and failed to provide specific evidence or support
to corroborate his broad claim that all money in his credit union accounts was
exempt from garnishment. He failed to meet his burden of proof and further failed
to provide credible evidence to contradict Appellant’s expert witness testimony.
Simulis, supra.
Issue 4: The Trial Court’s Abuse Of Discretion Damages The Garnishee
32. The court’s order incorrectly withholding nonexempt funds creates a
new issue for Appellee AMOCO. Appellee released $60,699 to Judgment-Debtor
from the garnished funds without leave of court. Appellee’s Amended Answer
filed January 1, 2015. Under Amegy Bank N.A. v. Southern Crushed Concrete, Inc.,
No. 01-07-00359-CV, 2009 WL 943758 (Tex.App.-Houston [1st Dist] 2009 pet.
den.) (Appended). Appellee will be liable to Appellant for improperly releasing
11-00344-CV, 2013 WL 3336869 (Tex.App.-Austin 2013, pet, den.)(SR.87); Mohican Oil & Gas LLC v. Chapco,
Inc., No. 13-10-00694-CV 2011WL 5999605 (Tex.App.-Edinburg 2011) (SR.93).
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funds without this Court’s order, notwithstanding that: (1) Appellee agrees that
over $106,000 was nonexempt; (2) Appellee impounded sufficient funds to satisfy
the judgment; and (3) Appellee does not oppose the garnishment. In Amegy Bank
N.A, the Court stated:
Because transfers that violate the freeze or impoundment effected by
the writ [of garnishment] are void by statute, Tex. Civ Prac. & Rem.
Code §63.003(b), a Appellee “acts at his peril” if it releases to the
judgment debtor funds or assets impounded or frozen by the writ. See
Intercontinental Terminals c. [v. Hollywood Marine] 630 S.W.2d
861, 863 (Tex.App.-Houston [1st Dist] 1982 pet.den.)
Accordingly, the incorrect finding that the $33,000 was exempt would result in the
Judgment-Debtor retaining nonexempt funds pursuant to the judgment of this
Court; denying Appellant the benefit of this Court’s judgment; and making the
Appellee liable to pay the $33,000 from the assets of the Credit Union rather than
from the property of the Judgment-Debtor. Id.
33. The trial court’s abuse of discretion has consequences beyond
Appellant and Judgment-Debtor in Appellant’s motion for reconsideration. The
trial court stated she would not reconsider the decision of the sitting judge. This
Court should accept the credible testimony and conclusions of the expert witness,
and reverse the decision of the trial court.
I. CONCLUSION
34. To be clear, Appellant did not and does not seek to attach exempt
funds, but no legal basis was presented to the trial court to support the reduced
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findings in the Final Order for Disbursement of Garnished Funds and Release. At
the hearing on Judgment Creditor’s motion to dissolve, Appellant produced ample
evidence and expert opinion to establish its legal right to garnishment and refute
the unsupported arguments of Judgment-Debtor. Although the burden to prove
that certain funds are exempt from garnishment shifted to Judgment-Debtor, he
produced absolutely no evidence, other than his own self-serving statements, to
support his blanket assertion that all the funds are exempt. To the contrary, the
expert testimony elicited by Appellant along with the supporting bank records of
Appellee, prove conclusively, as a matter of law, that the AMOCO bank accounts
contained sufficient non-exempt funds to satisfy the underlying judgment.
35. Garnishment is a remedy only available through statutory authority
and a procedure that requires strict adherence to the rules. Moody National, supra.
Appellant has complied with the procedures, obtained the writ, properly served
Appellee and noticed Judgment-Debtor, and documented the existence of $106,482
in exempt funds to satisfy the $46,748.03 due under the judgment. Appellee
responded properly by sworn answer, impounded the funds and confirmed that at
least $106,482 were nonexempt.
36. Judgment-Debtor, on the other hand, filed five motions to dissolve
that the trial court treated as motions under Tex. R. Civ. P. 664a; submitted no
affidavit or verification as required by that Rule; and offered no evidence to
17
contradict the determinations by Appellant and Appellee that over $106,000 in
exempt funds were available to satisfy the judgment. It appears that the trial court
offered a pro se Judgment-Debtor multiple opportunities to support his position
without requiring him to comply with the applicable rules. As a result, Judgment-
Debtor remains liable for the judgment and growing interest; Appellee faces the
loss of $33,000 in credit union funds for having released nonexempt funds
correctly impounded by Appellee to Judgment-Debtor; and Appellant will be
penalized for having complied with the Rules. The trial court should have denied
Judgment-Debtor’s motion under Rule 644a. Instead, it committed reversible error.
Chandler v. El Paso National Bank, 589 S.W.2d 832 (Tex.App.-El Paso 1979).
PRAYER
Appellant prays that this Honorable Court will set aside the judgment of the
trial court and remand this case for consideration consistent with the order of this
court. That order should provide that the evidence and record supports the finding
that Garnishee had $106,482 in exempt funds belonging to Judgment-Debtor
available for garnishment at the date of service of the writ, and accordingly,
Garnishee should be ordered to disburse the amount of judgement, interest, costs
and fees to Appellant Garnishor, including costs and fees pursuant to Texas Rule
of Civil Procedure 668.
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Resspectfully S
Submitted,,
LESSLIE WM. ADAMS & ASSOCIAT
TES
LESSLIE WM. ADAMS
TEXXAS BAR NO. 00869810
ANG GELLE M. ADAMS
TEXXAS BAR NO. 240550 081
LIN
NG E. DAI
TEXXAS BAR NO. 24074104
BENNJAMIN E. FELTNER
TEXXAS BAR NO. 240900 094
37000 Buffalo Speedwayy, Suite 4200
Houuston, TX 77098
7133-728-63600 (Voice)
7133-728-63666(Facsimilee)
LW
WA@LeslieeWmAdam ms.com
(Em
mail)
ATTTORNEYS FFOR APPEL LLANT
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CERTIFICATION
I certify that I have reviewed the foregoing pleading and concluded that
every factual statement in the pleading is supported by competent evidence to be
included in the record as required by TRAP 38.1
/s/ Leslie Wm. Adams
Leslie Wm. Adams
CERTIFICATE OF COMPLIANCE
The undersigned certifies pursuant to Texas Rule of Appellate Procedure
9.4(i)(3) that this computer generated brief contains 4416 words in 14-point, Times
New Roman typeface, according to the word count calculated by Word 2013, the
software used to create the document.
/s/ Leslie Wm. Adams
Leslie Wm. Adams
CERTIFICATE OF SERVICE
Pursuant to Tex. R. App. P. 9.5(d), I certify that on the 22nd of July, 2016, a
copy of this pleading has been served on lead counsel for Appellee and interested
parties by delivery by electronic service, mail or facsimile addressed as follows:
MABRY, HERBECK & ROBERTS
Thomas Cain
711 Sixth Street North
Post Office Drawer 872
Texas City, Texas 77592-0872
Fax: (409) 948-4766
ATTORNEY FOR APPELLEE
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