Sidney v. Pinter v. Asafi Law Firm as Next Friend and Assignee of Anthony Majano

Opinion issued November 8, 2012.
In The
Court of Appeals
For The
First District of Texas
————————————
NO. 01-12-00048-CV
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SIDNEY V. PINTER, Appellant
V.
ASAFI LAW FIRM AS NEXT FRIEND AND ASSIGNEE OF ANTHONY
MAJANO, Appellee
On Appeal from the 334th Judicial District Court
Harris County, Texas
Trial Court Case No. 2011-35186
MEMORANDUM OPINION
Sidney V. Pinter brings this restricted appeal from a no-answer default
judgment granted in favor of Asafi Law Firm, as next friend and assignee of
Anthony Majano. See TEX. R. APP. P. 30; TEX. BUS. & COM. CODE ANN. § 24.005
(West 2009). Pinter contends that there is error on the face of the record and,
accordingly, the default judgment should be reversed. We reverse and remand.
Background
Anthony Majano was injured on property owned by the Shmuel Pinter
Irrevocable Trust, of which Sidney Pinter is trustee. Iris Calderon, individually
and as next friend of Anthony Majano, filed suit against Pinter, in his capacity as
trustee of the Shmuel Pinter Irrevocable Trust, to recover for the injuries sustained
by Majano. Following a jury trial, Majano obtained a judgment against the trust
and assigned the right to enforce the judgment to the Asafi Law Firm. Asafi, as
next friend and assignee of Majano, later filed the underlying suit against Pinter
individually. Asafi’s petition alleged the following:
3. On December 4, 2009, a judgment was obtained against the
Shmuel Pinter Irrevocable Trust, which entitled Plaintiff to
recover property from the Shmuel Pinter Irrevocable Trust,
equal to the value of $110,205.81 plus five percent interest on
the $110,205.81 beginning December 4, 2009 and thereafter
until Plaintiff is paid in full.
4. The only asset Plaintiff is aware the Shmuel Pinter Irrevocable
Trust owned was the real property and associated
improvements at 3405 N. Shepherd Dr., Houston, Texas 77018
(hereinafter “property”), which was valued at more than
$2,000,000.
5. When Plaintiff attempted to collect Plaintiff’s interest in the
property, Plaintiff discovered that Defendant, the trustee of the
Shmuel Pinter Irrevocable Trust, had sold the property for his
personal benefit.
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6. In doing so, Defendant willfully, maliciously, and fraudulently,
tortiously interfered with property Plaintiff is entitled to.
7. Further, Defendant operated the Shmuel Pinter Irrevocable
Trust as his alter ego.
After Pinter failed to answer, Asafi moved for default judgment. At the
hearing on that motion, Asafi explained that the underlying suit was one for
tortious interference. The trial court asked whether it was Asafi’s intent to allege
that Pinter fraudulently transferred the property rather than tortiously interfered
with property rights. Asafi agreed that was his intent and the trial court granted a
trial amendment to include fraudulent transfer as a cause of action.
To prove damages, Asafi introduced several exhibits, including the final
judgment entered against the trust, an affidavit signed by Pinter showing that the
trust owned the Houston property, and an article detailing Pinter’s alleged
involvement in several fraud cases. Asafi’s counsel then testified that he was
seeking $119,294.01 in damages, five percent interest beginning December 4,
2009, $453.38 in costs, and $5 million in punitive damages based on Pinter’s
fraudulent activities. Specifically, counsel testified that Pinter had been involved
in numerous fraud cases, that the City of Houston had revoked a certificate of
occupancy against him, and that he was being investigated by the Attorneys
General of Oklahoma and New York for similar actions. Counsel concluded his
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testimony by alleging that the trust itself was fraudulent and that it was Pinter’s
alter ego.
Following this testimony, the trial court entered a default judgment against
Pinter and in favor of Asafi in the amount of $119,294.01 in actual damages,
$453.38 in costs, and $250,000 in punitive damages. This appeal followed.
Discussion
On appeal, Pinter contends that the default judgment must be reversed
because: (1) the pleadings fail to state a valid cause of action under Texas law;
(2) the granting of a trial amendment to construe an unpleaded cause of action
resulted in him being denied fair notice of the claim; and (3) there is no evidence to
support the award of exemplary damages.
A. Standard of Review
A restricted appeal is a type of direct attack on a default judgment. TEX. R.
APP. P. 30; Barker CATV Const., Inc. v. Ampro, Inc., 989 S.W.2d 789, 792 (Tex.
App.—Houston [1st Dist.] 1999, no pet.). As the party filing a restricted appeal,
Pinter must show that (1) he brought the appeal within six months after the trial
court signed the judgment; (2) he was a party to the suit; (3) he did not participate
in the hearing that resulted in the complained-of judgment and did not timely file
any postjudgment motions or requests for findings of fact and conclusions of law;
and (4) error is apparent from the face of the record. See Alexander v. Lynda’s
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Boutique, 134 S.W.3d 845, 848 (Tex. 2004); Invesco Inv. Servs., Inc. v. Fidelity
Deposit & Discount Bank, 355 S.W.3d 257, 259 (Tex. App.—Houston [1st Dist.]
2011, no pet.). Only the fourth element, whether error is apparent from the face of
the record, is in dispute here.
“The face of the record consists of all the papers on file in the appeal,
including any reporter’s record.” Invesco, 355 S.W.3d at 259. When reviewing a
restricted appeal, we evaluate the legal and factual sufficiency of the evidence,
including the evidence of damages. Id. A plaintiff may take a default judgment
against a defendant if the defendant has not previously answered, as long as the
citation and return of service have been on file with the clerk for ten days. TEX. R.
CIV. P. 239.
A no-answer default judgment is properly granted if (1) the plaintiff files a
petition that states a cause of action; (2) the petition invokes the trial court’s
jurisdiction; (3) the petition gives fair notice to the defendant; and (4) the petition
does not disclose any invalidity of the claim on its face. Paramount Pipe & Supply
Co. v. Muhr, 749 S.W.2d 491, 494 (Tex 1988). In cases where a no-answer default
judgment is rendered, all facts properly pleaded in the plaintiff’s petition are
deemed admitted, except the amount of unliquidated damages, and the defendant’s
liability for all causes of action pleaded is conclusively established. Lucas v.
Clark, 347 S.W.3d 800, 803 (Tex. App—Austin 2011, pet. denied) (citing
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Dolgencorp of Tex., Inc. v. Lerma, 288 S.W.3d 922, 930 (Tex. 2009)). However,
“the fact that [a defendant] has defaulted by failing to file an answer cannot create
liability” when he is not liable as a matter of law on the facts alleged by the
plaintiff. Doubletree Hotels Corp. v. Person, 122 S.W.3d 917, 919 (Tex. App.—
Corpus Christi 2003, no pet.) (citing First Dallas Petroleum, Inc. v. Hawkins, 727
S.W.2d 640, 645 (Tex. App.—Dallas 1987, no writ)).
B. Did the petition state a valid cause of action?
Pinter contends the judgment must be reversed because the pleading failed to
state a cause of action cognizable under Texas law, either for tortious interference
or fraudulent transfer. In determining whether a cause of action was pleaded, the
court must be able, from an examination of the plaintiff’s pleadings alone, to
ascertain with reasonable certainty the elements of the plaintiff’s cause of action
and the relief sought with sufficient information upon which to base a judgment.
Stoner v. Thompson, 578 S.W.2d 679, 683 (Tex. 1979).
Texas Rule of Civil Procedure 45(b) requires a “statement in plain and
concise language of the plaintiff’s cause of action” that gives “fair notice to the
opponent . . . [of] the allegations as a whole.” TEX. R. CIV. P. 45(b). Rule 47(a)
also mandates that a pleading contain “a short statement of the cause of action
sufficient to give fair notice of the claim involved.” TEX. R. CIV. P. 47(a). “Mere
formalities, minor defects, and technical insufficiencies will not invalidate a
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default judgment where the petition states a cause of action and gives ‘fair notice’
to the opposing party of the relief sought.” Stoner, 578 S.W.2d at 683.
The purpose of a pleading is to provide the defendant with fair notice of the
cause of action and character of evidence that will be raised at trial as well as
define the issues that will be heard. Wilson v. Bloys, 169 S.W.3d 364, 369 (Tex.
App.—Austin 2005, pet. denied). When determining whether a cause of action has
been pleaded, we must be able to ascertain the elements of the cause of action from
the pleadings alone. Id. (citing Fairdale Ltd. v. Sellers, 651 S.W.2d 725, 725 (Tex.
1982)). However, a petition is sufficient if a cause of action reasonably may be
inferred from what is stated in the petition, even if an element of the action is not
specifically alleged. Westcliffe, Inc. v. Bear Creek Const., Ltd., 105 S.W.3d 286,
292 (Tex. App.—Dallas 2003, no pet.); see also TEX. R. CIV. P. 45(b) (“That an
allegation be evidentiary or be of legal conclusion shall not be grounds for
objection when fair notice to the opponent is given by the allegations as a whole.”);
Paramount Pipe & Supply Co., 749 S.W.2d at 494–95 (citing Stoner, 578 S.W.2d
at 683) (stating that plaintiff is not required to set out in his pleadings all evidence
upon which he relies to establish his cause of action; rather, default judgment will
stand if plaintiff has alleged claim upon which substantive law will give relief, and
has done so with sufficient particularity to give fair notice to defendant of basis of
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his complaint, even though he has stated some element or elements in form of legal
conclusions).
1. Tortious Interference
First, Pinter asserts that, under Texas law, a cause of action exists for
tortious interference with current or prospective contract rights, but not for tortious
interference with property. Pinter also maintains that, because Asafi only had a
judgment from the previous lawsuit, he did not have a property right in the
Houston property. Asafi responds that tortious interference with a property right is
a valid cause of action under Texas law and, thus, the petition stated a valid cause
of action.
It is well settled in Texas that “[a]ny intentional invasion of, or interference
with, property, property rights, personal rights or personal liberties causing injury
without just cause or excuse is an actionable tort.” King v. Acker, 725 S.W.2d 750,
754 (Tex. App.—Houston [1st Dist.] 1987, no pet.) (citing Cooper v. Steen, 318
S.W.2d 750, 757 (Tex. Civ. App.—Dallas 1958, no writ)). A cause of action for
tortious interference with the peaceful use and enjoyment of property is a claim for
intentional interference with property rights. Ski River Dev., Inc. v. McCalla, 167
S.W.3d 121, 140 (Tex. App.—Waco 2005, pet. denied). To prevail, a plaintiff
must show that the defendant intentionally interfered with plaintiff’s property
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rights. Marrs & Smith P’ship v. D.K. Boyd Oil & Gas, 223 S.W.3d 1, 21 (Tex.
App.—El Paso 2005, pet. denied).
Although tortious interference with property rights is a valid cause of action
in Texas, it is self-evident that in order to maintain such an action, the plaintiff
must first have a valid property right. In Texas, the mere rendition of a judgment
does not create a lien or other property right. See Citicorp Real Estate, Inc., v.
Banque Arabe Internationale D’Investissement, 747 S.W.2d 926, 929 (Tex.
App.—Dallas 1988, writ denied).
A money judgment, unsecured by any lien, is simply an adjudication,
between the plaintiff and the defendant, that the defendant owes
plaintiff [a certain amount of money]. Such a judgment has no rank,
superior or inferior, to other claimants. His only superior position is
against his judgment debtor, against whom he has litigated.
Schumann v. Breedlove & Bensey, 983 S.W.2d 333, 334 (Tex. App.—Houston [1st
Dist.] 1998, no pet.) (quoting Fore v. United States, 339 F.2d 70, 72 (5th Cir.
1964)). The judgment creditor must comply with the statutory mechanisms
providing for the creation of judgment liens to acquire a lien on real property
owned by the judgment debtor. See TEX. PROP. CODE ANN. § 52.001 (West Supp.
2012). The judgment creditor must first obtain an abstract of the judgment, the
purpose of which is “to create a lien against the debtor’s property and to provide
notice to subsequent purchasers of the existence of the judgment and the lien.”
Citicorp, 747 S.W.2d at 929.
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In this case, Asafi alleged in its petition that it obtained a judgment against
the trust; that when it attempted to collect its “interest in the property,” it
discovered that Pinter had sold the property for his personal benefit; and that, in
doing so, Pinter “willfully, maliciously, and fraudulently, tortiously interfered with
property” to which it was entitled. Although Asafi obtained a judgment against the
trust, nothing in its petition alleges the existence of a valid property right in the
Houston property; the petition does not allege that Asafi complied with the
statutory requirements to create a lien on the property. As noted above, a money
judgment not secured by any lien is simply an adjudication that the defendant owes
the plaintiff a certain amount of money, not a property right. Schumann, 983
S.W.2d at 334 (citing Fore, 339 F.2d at 72). Because Asafi’s petition failed to
allege that Asafi had a valid property right in the Houston property, the petition
does not contain sufficient factual allegations to state a cause of action for tortious
interference with property rights.
We sustain Pinter’s first issue.
2. Fraudulent Transfer
Pinter next contends that the trial court erred in granting a trial amendment
to include fraudulent transfer as a cause of action because the pleadings alone
cannot be construed to state a cause of action for fraudulent transfer. Pinter also
asserts that by granting this trial amendment, the trial court required him to answer
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for a cause of action of which he had no notice. In response, Asafi maintains that
there is nothing in the record that indicates the trial court entered the default
judgment based on a cause of action for fraudulent transfer. Asafi concedes that
the trial court discussed fraudulent transfer, but argues that the court had the right
to and could have changed its mind and entered judgment based on tortious
interference, the cause of action pleaded in the petition.
“A transfer made or obligation incurred by a debtor is fraudulent as to a
creditor, whether the creditor’s claim arose before or within a reasonable time after
the transfer was made or the obligation was incurred, if the debtor made the
transfer or incurred the obligation . . . with actual intent to hinder, delay, or defraud
any creditor of the debtor.” TEX. BUS. & COM. CODE ANN. § 24.005(a)(1) (West
2009); see also Hahn v. Love, 321 S.W.3d 517, 524–25 (Tex. App.—Houston [1st
Dist.] 2009, pet. denied) (“A fraudulent transfer is a transfer by a debtor with the
intent to hinder, delay, or defraud his creditors by placing the debtor’s property
beyond the creditor’s reach”). When determining whether actual intent to defraud
has been shown, a court may consider, among other things, evidence that (1) the
transfer was made to an insider; (2) the transfer was concealed; (3) the debtor was
sued or threatened with suit before the transfer; (4) the value of the consideration
received by the debtor was reasonably equivalent to the value of the asset
transferred; (5) the debtor was insolvent; and (6) the transfer occurred shortly
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before or after a substantial debt was incurred. TEX. BUS. & COM. CODE ANN.
§ 24.005(b); Hahn, 321 S.W.3d at 525.
Asafi’s petition alleges only the following facts: (1) a judgment was
obtained against the trust; (2) the only asset owned by the trust that Asafi was
aware of was the Houston property; (3) when Asafi attempted to collect its
judgment against the trust, it discovered that Pinter had sold the Houston property
for his personal benefit; and (4) Pinter willfully, maliciously, and fraudulently,
tortiously interfered with property to which Asafi is entitled. Asafi includes no
allegation in its petition that its claim arose before or within a reasonable time after
the transfer was made. See TEX. BUS. & COM. CODE ANN. § 24.005(b). The
petition, in fact, says nothing with respect to the timing of the transfer.
Furthermore, there is no allegation in the petition that the transfer was made with
the “actual intent to hinder, delay, or defraud any creditor.” TEX. BUS. & COM.
CODE ANN. § 24.005(a)(1); see also Hahn, 321 S.W.3d at 525. The only
statements in the petition that could be construed as alleging any kind of fraud are:
(1) Asafi’s assertion that Pinter “sold the property for his personal benefit,” and
(2) “willfully, maliciously, and fraudulently, tortiously interfered with property
Plaintiff is entitled to.”
Although a default judgment may stand even if some elements are stated in
the form of legal conclusions, the pleading must still provide the defendant with
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fair notice of the cause of action being brought against him. See TEX. R. CIV. P.
45(b) (“That an allegation be evidentiary or be of legal conclusion shall not be
grounds for objection when fair notice to the opponent is given by the allegations
as a whole.”) (emphasis added); Paramount Pipe & Supply Co., 749 S.W.2d at 495
(quoting Stoner, 578 S.W.2d at 683) (stating that, “default judgment will stand if
the plaintiff has alleged a claim upon which the substantive law will give relief,
and has done so with sufficient particularity to give fair notice to defendant of the
basis of his complaint, even though he has stated some element or elements in the
form of legal conclusions”) (emphasis added).
Here, Asafi has failed to make factual allegations relating to the key
elements of a fraudulent transfer claim. Absent allegations of the timing of the
entry of the judgment versus the time of the transfer of the Houston property, or
any other factual allegation of fraud, or of reference to Pinter’s intent to hinder,
delay, or defraud creditors, Asafi’s conclusory allegation that Pinter “willfully,
maliciously, and fraudulently, tortiously interfered with property” to which he was
entitled is insufficient to support a cause of action for fraudulent transfer. See
Sellers, 651 S.W.2d at 726 (reversing default judgment and concluding that
plaintiff’s petition failed to state cause of action where petition contained no
allegations of any duty owed to plaintiff by defendant or any allegation of breach
of any duty); Calderoni v. Vasquez, No. 03-11-00537-CV, 2012 WL 2509802, at *
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6 (Tex. App.—Austin 2012, no pet.) (mem. op., not designated for publication)
(reversing default judgment where petition lacked any specific allegations of
wrongdoing against defendant and holding that plaintiff’s general allegations that
unspecified defendants defrauded him were insufficient to state cause of action);
Vill. Square, Ltd. v. Barton, 660 S.W.2d 556, 559 (Tex. Civ. App.—San Antonio
1983, writ ref’d) (reversing default judgment on DTPA claim when pleadings did
“not in any way designate or state with particularity which acts or events were
relied upon as a basis for liability” or “show that any act or acts of the defendants
were a producing cause of an injury”).
Asafi’s petition cannot be construed to state a cause of action against Pinter
for fraudulent transfer and, therefore, the trial court erred in granting a default
judgment based on a fraudulent transfer cause of action. We sustain Pinter’s
second issue and, accordingly, do not address Pinter’s third issue which relates to
damages.
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Conclusion
We hold there is error on the face of the record because Asafi’s petition does
not contain sufficient factual allegations to state a cause of action against Pinter for
either tortious interference with property rights or fraudulent transfer. We reverse
the default judgment and remand for further proceedings.
Rebeca Huddle
Justice
Panel consists of Chief Justice Radack and Justices Bland and Huddle.
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