in Re MTGLQ Investors L.P.

In The
Court of Appeals
Ninth District of Texas at Beaumont
__________________
NO. 09-19-00157-CV
__________________
NEW PENN FINANCIAL LLC D/B/A SHELLPOINT MORTGAGE
SERVICING AND MTGLQ INVESTORS, L.P., Appellants
V.
BEVERLY SALVAGIO AND JAMES DAVID SALVAGIO, Appellees
________________________________________________________________________
On Appeal from the 58th District Court
Jefferson County, Texas
Trial Cause No. A-201,268
________________________________________________________________________
__________________
NO. 09-19-00254-CV
__________________
IN RE MTGLQ INVESTORS, L.P.
________________________________________________________________________
Original Proceeding – Writ of Injunction
From the 58th District Court of Jefferson County, Texas
Trial Cause No. A-201,268
__________________________________________________
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MEMORANDUM OPINION ON CONTEMPT
Background and Procedural Posture
In appeal number 09-19-00157-CV in this Court, MTGLQ Investors, L.P.
(MTGLQ) and Shellpoint Mortgage Servicing (Shellpoint) appeal the trial court’s
summary judgment orders in the parties’ underlying litigation. 1 During the pendency
of the appeal, MTGLQ filed an original proceeding petitioning for a writ of
injunction to prohibit James David Salvagio from transferring or otherwise disposing
of the subject real property, which was assigned cause number 09-19-00254-CV. On
August 21, 2019, this Court issued the following writ of injunction:
TO: JAMES DAVID SALVAGIO, INDIVIDUALLY AND AS
INDEPENDENT EXECUTOR OF THE ESTATE OF BEVERLY
SALVAGIO, DECEASED, AND AS BENEFICIARY AND
TRUSTEE OF THE JAMES DAVID SALVAGIO LIVING ESTATE
TRUST
Whereas MTGLQ Investors[,] L.P. (“MTGLQ”), relator in this
cause, has filed a petition for injunctive relief, and a majority of the
Justices of the Ninth Court of Appeals, upon presentation by MTGLQ
of its request for injunctive relief, issued an opinion that granted the
petition for writ of injunction.
THEREFORE, you, James David Salvagio, individually and as
independent executor of the Estate of Beverly Salvagio, Deceased, and
as beneficiary and trustee of the James David Salvagio Living Estate
Trust, are ENJOINED from directly or indirectly selling, conveying, or
otherwise disposing of the following property located in Jefferson,
County, Texas: Lot Number sixteen (16), in Block Number five (5) of
1
The issues raised in the underlying appeal are being addressed in a separate
memorandum opinion of this Court.
2
Helena Park, section three (3) addition to the City of Nederland,
Jefferson County, Texas, according to the map or plat of record in
volume 11, page 4, map records in the office of the County Clerk of
said county and state, commonly known as 3119 Nashville, Nederland,
Texas 77627.
The injunction issues without bond and shall continue in effect
until this Court’s mandate has issued in the underlying appeal, appeal
number 09-19-00157-CV, styled New Penn Financial LLC d/b/a
Shellpoint Mortgage Servicing and MTGLQ Investors[,] L.P. v. Beverly
Salvagio and James David Salvagio, or until further order of this Court.
ISSUED under my hand and seal August 21, 2019.
_________________________
CAROL ANNE HARLEY
Clerk of the Court
James David Salvagio did not challenge this injunction.
Upon receiving notice that on or about August 19, 2020, James David
Salvagio violated this Court’s August 21, 2019 writ of injunction by executing a
warranty deed as trustee of James David Salvagio Living Estate Trust to Julianne
Salvagio and John Salvagio, and that the grantees of the warranty deed, Julianne
Salvagio and John Salvagio, purported to grant a first lien in the property to Quicken
Loans, LLC to secure a note in the amount of $164,000, we ordered the trial court
to conduct a hearing, as follows:
ORDER
On August 21, 2019, this Court granted a writ of injunction
enjoining James David Salvagio, individually and in any of his
representative capacities, including as the independent executor of the
Estate of Beverly Salvagio, Deceased, and as beneficiary and trustee
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of the James David Salvagio Living Estate Trust, (“Salvagio”) from
directly or indirectly selling, conveying, or otherwise disposing of the
following property located in Jefferson[] County, Texas: Lot Number
sixteen (16), in Block Number five (5) of Helena Park, section three (3)
addition to the City of Nederland, Jefferson County, Texas, according
to the map or plat of record in volume 11, page 4, map records in the
office of the County Clerk of said county and state, commonly known
as 3119 Nashville, Nederland, Texas 77627.
On November 12, 2020, this Court received notice that Salvagio
violated the writ of injunction by conveying the property to Julianne
Salvagio and John Salvagio on August 19, 2020, by warranty deed
subject to a deed of trust granting a first lien to Quicken Loans, LLC to
secure a note in the amount of $164,000. It appears that James David
Salvagio has violated this Court’s August 21, 2019 writ of injunction
and that he is in contempt of an order of the Court of Appeals. An
appellate court has limited ability to develop evidence, however, the
parties should have the opportunity to develop evidence and testimony
and to cross-examine witnesses. A Court of Appeals may refer
contempt proceedings to the trial court for hearing and factfinding. In
re Sheshtawy, 154 S.W.3d 114, 124 (Tex. 2004).
We refer the notice of injunction violation to the trial court and
instruct the trial court to hold an evidentiary hearing and make findings
of fact on whether James David Salvagio, individually and in any of
his representative capacities, including as the independent executor of
the Estate of Beverly Salvagio, Deceased, and as beneficiary and
trustee of the James David Salvagio Living Estate Trust, (“Salvagio”)
directly or indirectly sold, conveyed or otherwise disposed of the
following property located in Jefferson[] County, Texas: Lot Number
sixteen (16), in Block Number five (5) of Helena Park, section three (3)
addition to the City of Nederland, Jefferson County, Texas, according
to the map or plat of record in volume 11, page 4, map records in
the office of the County Clerk of said county and state, commonly
known as 3119 Nashville, Nederland, Texas 77627.
We direct the trial court to issue a notice for a show cause hearing
on a date and time certain for James David Salvagio to appear in
person and answer the allegations made by MTGLQ Investors[,] L.P.
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in its notice of injunction violation and any motion for contempt that
may be filed at least ten days before the hearing, to make findings of
fact and to make recommendations regarding coercive, curative, or
punitive measures to address any violation of our writ of injunction of
August 21, 2019. A reporter’s record of any hearing conducted by the
trial court, together with a clerk’s record containing any motions and
responses filed by the parties and the findings and recommendations of
the trial court, shall be filed with the Court of Appeals by January 22,
2021.
ORDER ENTERED November 23, 2020.
PER CURIAM
Before Kreger, Horton and Johnson, JJ.
On December 10, 2020, Shellpoint and MTGLQ Investors, L.P. filed a motion
for contempt and requested a show cause hearing. On January 6, 2021, Salvagio, as
Trustee and Beneficiary of the James David Salvagio Living Estate Trust, filed a
“NOTICE OF APPEARANCE OF TRUSTEE & BENEFICIARY OF TRUST
THAT THIS IS A COURT OF EQUITY AND I REQUIRE THE EXCLUSIVE TO
ADJUDICATE THE RIGHTS OF THE TRUST” in which he requested a protective
order from a subpoena duces tecum. On January 6, 2021, the trial court held the
evidentiary hearing that we ordered on November 23, 2020.
On January 13, 2021, the trial court issued findings of fact, as follows:
FINDINGS OF FACT
On August 21, 2019, the Court of Appeals, Ninth District of
Texas at Beaumont issued a writ of injunction enjoining James David
Salvagio, individually and as independent executor of the Estate of
Beverly Salvagio, Deceased, and as beneficiary and trustee of the James
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David Salvagio Living Estate Trust from directly or indirectly selling,
conveying or otherwise disposing of property at 3119 Nashville,
Nederland, Texas 77627.
On November 23, 2020, after MTGLQ[] Investors, LP. notified
the court of appeals Mr. Salvagio violated the writ of injunction, the
court of appeals issued an order directing this court issue a notice for
show cause hearing ordering James David Salvagio to appear in person
and answer the allegations made by MTGLQ’s notice of injunction
violation. The order further directed this court to hold an evidentiary
hearing and make findings of fact on whether James David Salvagio,
individually and in any of his representative capacities, including as
independent executor of the Estate of Beverly Salvagio, Deceased, and
as beneficiary and trustee of the James David Salvagio Living Estate
Trust, directly or indirectly sold, conveyed or otherwise disposed of
property at 3119 Nashville, Nederland, Texas 77627 and to make
recommendations regarding coercive, curative, or punitive measures to
address any violation of the writ of injunction.
On the 6th day of January 2021, came on for hearing Shellpoint
and MTGLQ’s motion for contempt. Upon consideration of the motion,
evidence, including testimony from James David Salvagio, responses,
and the arguments presented, THE COURT FINDS James David
Salvagio knowingly violated the writ of injunction by conveying the
property as trustee of the James David Salvagio Living Estate Trust on
August 14, 2020 to John and Julianne Salvagio. THIS COURT
THEREFORE recommends that James David Salvagio be found in
contempt of court for violating the writ of injunction.
SIGNED this 13th day of January, 2021.
/S/____________________________
HONORABLE W. KENT WALSTON
The supplemental clerk’s and reporter’s records containing the matters
addressed by the trial court have been filed with the appellate court. Based on the
trial court’s findings and recommendation, it appears that James David Salvagio is
6
in willful violation of the writ of injunction issued by the Ninth Court of Appeals on
August 21, 2019, in that on August 19, 2020, he conveyed to Julianne Salvagio and
John Salvagio the real property known as Lot Number sixteen (16), in Block Number
five (5) of Helena Park, section three (3) addition to the City of Nederland, Jefferson
County, Texas, according to the map or plat of record in volume 11, page 4, map
records in the office of the County Clerk of said county and state, commonly known
as 3119 Nashville, Nederland, Texas 77627, by signing, in his capacity as “Trustee
of the James David Salvagio Living Estate Trust dated November 11, 2011, and any
amendments thereto” a warranty deed with vendor’s lien from James David Salvagio
Living Estate Trust, as grantor, to Julianne Salvagio and John Salvagio, subject to a
deed of trust granting a lien to Quicken Loans, LLC to secure a note in the amount
of $164,000.
We allowed the parties to file briefs with this Court regarding whether the
evidence adduced at the hearing before the trial court supports the trial court’s
findings, whether the trial court’s findings support a judgment of contempt, and the
appropriate punitive or coercive contempt in the event the Court finds a willful
violation of the Court’s writ of injunction.
Salvagio’s Arguments
Salvagio as an individual person was, he concedes, before this Court in the
appeal and in the injunction proceeding when we enjoined Salvagio, a person, from
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conveying the property in any capacity, specifically including in his capacity as a
trustee. Salvagio clearly had notice of our injunction, as he was represented by
counsel in the proceeding and admits that after we issued our injunction he
personally drafted and filed a response in his capacity as Trustee.
Salvagio argues that he cannot be held in contempt as an individual because
“Salvagio, individually, did not transfer the property[.]” He adds that “Salvagio, as
the Trustee, does not contest the facts related to the transfer itself. It clearly
happened.” However, he cites no supporting authority for his argument.
In the hearing before the trial court, which was held on January 6, 2021,
Salvagio testified that the net proceeds from the sale were paid into an account in
the name of the trust. Salvagio argues he cannot be subject to coercive civil contempt
because his testimony established impossibility of performance, as follows:
Q. [By Counsel for Salvagio]: All right. Now, with respect to the
sales proceeds, I think you answered this; but I just want to be clear. I
think what your testimony was, if you were say confined to jail until
you unwound the transaction paying off the Quicken Loans lien, you
don’t have the means or the ability to do that?
A. [By Salvagio] Correct.
This argument assumes that the only way to remedy Salvagio’s contemptuous act of
conveying the property in violation of this Court’s injunction is to return the same
funds that were received in the transaction. There is no evidence in the record that it
would be impossible to obtain a re-conveyance of the property. Therefore,
Salvagio’s conclusory assertion that he could not unwind the Quicken Loans
8
transaction if he were confined in jail does not establish that any order of civil
contempt this Court might issue would be void.
Salvagio suggests this Court cannot order Salvagio to be confined in jail
before an opinion issues in the appeal of the trial court’s judgment. We need not
address this argument, as we issue our opinion and judgment in the appeal
contemporaneously with the issuance of our opinion and judgment of contempt.
Analysis
Because Salvagio violated a writ of injunction issued by our court, our court
must be the one to hold him in contempt if it is to be done. Courts possess the
inherent power to enforce their own orders through contempt proceedings. In re
Gabbai, 968 S.W.2d 929, 931 (Tex. 1998). While on appeal, the appellate court has
exclusive jurisdiction to enforce the orders at issue in the appeal, regardless of
whether contempt occurred before or after the appellate court acquired jurisdiction.
Id. The trial court has no authority to punish a relator for violating requirements only
found in an appellate court’s order. See id. When evidence is required in such a
determination, it is appropriate for the appellate court (while retaining jurisdiction)
to refer the matter to the district court for hearing the evidence, then the district court
may forward the transcript to the appellate court. See Ex parte Werblud, 536 S.W.2d
542, 544–45 (Tex. 1976) (orig. proceeding); see also In re Sheshtawy, 154 S.W.3d
114, 123-24 (Tex. 2004) (orig. proceeding). The matter here was referred to the trial
9
court for evidentiary findings, the trial court has no power to enforce our orders. See
Gabbai, 968 S.W.2d at 931. The trial court found that Salvagio knowingly violated
this Court’s writ of injunction “by conveying the property as trustee of the James
David Salvagio Living Estate Trust on August 14, 2020 to John and Julianne
Salvagio.” The trial court further recommended that Salvagio be found in contempt.
There are two types of contempt, criminal and civil, and the distinction
between them hinges on the nature and purpose of the sentence. Werblud, 536
S.W.2d at 545; Cadle Co. v. Lobingier, 50 S.W.3d 662, 667 (Tex. App.—Fort Worth
2001, pet. denied); see also Shillitani v. United States, 384 U.S. 364, 369–70 (1966).
“The purpose of civil contempt is remedial and coercive in nature.” Werblud, 536
S.W.2d at 545. With a judgment of civil contempt, the court exerts its judicial
authority to persuade a contemnor to obey a court’s order where such obedience
benefits an opposing litigant. Id. On the other hand, criminal contempt is punitive in
nature. Id. The punishment is not dependent on future performance, rather the
contemnor is punished for “some completed act which affronted the dignity and
authority of the court.” Id. (citations omitted); see also Cadle Co., 50 S.W.3d at 667(noting in criminal contempt proceedings “no subsequent voluntary compliance can
enable the contemnor to avoid punishment.”). A hybrid order assessing sanctions for
both civil and criminal contempt is allowed. See Ex parte Sanchez, 703 S.W.2d 955,
957 (Tex. 1986) (orig. proceeding); Cadle Co., 50 S.W.3d at 667—68.
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Based upon the findings of fact made by the trial court in the trial court’s order
dated January 13, 2021, we have determined James David Salvagio willfully
violated this Court’s writ of injunction and is in contempt. As punishment for this
contempt, we assess a $500 fine against Salvagio. See Tex. Gov’t Code Ann. §
21.002(b) (setting out maximum punishment for criminal contempt as not more than
$500 or confinement in the county jail for not more than six months or both).
“Civil contempt is coercive and is based on the notion that the contemnor
‘carries the keys of [his] prison in [his] own pocket.’” Ex parte Rojo, 925 S.W.2d
654, 655 (Tex. 1996) (quoting Werblud, 536 S.W.2d at 545). Ex parte Johns outlined
a court’s available remedies for coercive contempt. 807 S.W.2d 768 (Tex. App.—
Dallas 1991, orig. proceeding). “In these matters, a judge can impose either a fine or
imprisonment, or both, so long as the imprisonment is conditional.” Id. at 770
(emphasis added); see also Ex parte Perry, No. 04-14-00567-CV, 2014 WL
4347740, at *3 (Tex. App.—San Antonio Sept. 3, 2014, orig. proceeding) (mem.
op.). A daily coercive fine is not limited by section 21.002(b), which governs
criminal contempt fines. See Cadle Co., 50 S.W.3d at 668.
In re Chaumette addressed a similar fact scenario and involved the transfer of
real estate in violation of a trial court’s injunction. 439 S.W.3d 412, 414 (Tex.
App.—Houston [1st Dist.] 2014, orig. proceeding). There, the trial court found that
the relator violated the trial court’s order by conducting a trustee’s sale, then by
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executing and recording a substitute trustee’s deed. See id. The trial court ordered
that the relator “shall be confined in the Brazoria County Jail until he purges himself
of contempt by executing and recording a document in form acceptable to the Court,
vacating the said substitute trustee’s deed, effective September 6, 2011[.]” Id. The
relator tried to purge himself of the contempt by filing a “Rescission of Foreclosure
Sale” in the real property records, but the trial court found this unsatisfactory. See
id. The trial court then tried to have relator sign an “Order and Declaratory Judgment
on Amended Motion to Vacate Substitute Trustee’s Deed,” and execute a
“Rescission of Deed” document to reverse the transaction, but the documents were
returned to the trial court unsigned. See id at 415. The relator said he could not sign
them since they contained inaccuracies. See id. The relator attempted to execute the
documents in a form he was comfortable with, but the trial court apparently found
the relator’s attempts insufficient. See id. The trial court then issued a capias for the
relator’s arrest based on the prior civil contempt order. See id. Ultimately, the First
Court of Appeals granted habeas relief, holding “that the purging provision of the
contempt order does not ‘spell out exactly’ in clear and unambiguous language what
relator must do to purge the contempt.” Id. at 416; see also In re Houston, 92 S.W.3d
870, 877 (Tex. App.—Houston [14th Dist.] 2002, orig. proceeding). (order must tell
contemnor in “clear, specific, and unambiguous terms” how to purge himself of
contempt); Ex parte Rosser, 899 S.W.2d 382, 387 (Tex. App.—Houston [14th Dist.]
12
1995, orig. proceeding) (order not clearly specifying action relator must take is
void). An order of contempt must describe in specific terms the exact documents the
contemnor needs to obtain to purge himself of contempt. See Chaumette, 439 S.W.3d
at 416.
In addition to a punitive fine in the amount of $500.00, as a condition of his
release or to purge himself from the contempt, we order James David Salvagio to
obtain an executed general warranty deed from John Salvagio and Julianne Salvagio,
as grantors, to James David Salvagio “as trustee of the James David Salvagio Living
Estate Trust,” conveying the real property described as Lot Number sixteen (16), in
Block Number five (5) of Helena Park, section three (3) addition to the City of
Nederland, Jefferson County, Texas, according to the map or plat of record in
volume 11, page 4, map records in the office of the County Clerk of said county and
state, commonly known as 3119 Nashville, Nederland, Texas 77627. James David
Salvagio is further ordered to file the properly executed general warranty deed with
the Jefferson County Clerk’s Office, 1085 Pearl Street, First Floor, Beaumont, Texas
77701, for recording in the real property records of Jefferson County, Texas,
instanter. James David Salvagio shall file notice with this Court concurrently with
the filing of the documents with the County Clerk’s office. We further order James
David Salvagio shall be fined the amount of $500 per day for each and every day
13
until such properly executed document is filed in the real property records of
Jefferson County, Texas, beginning on the first day after the issuance of this order.
Conclusion
Having determined James David Salvagio willfully violated this court’s writ
of injunction after providing notice and an opportunity to show cause in the trial
court, we hold James David Salvagio in contempt. We assess a $500 punitive fine
for his willful violation of this Court’s writ of injunction. Additionally, James David
Salvagio is ordered to obtain a properly executed general warranty deed as described
in our judgment of contempt and is assessed a coercive fine of $500 per day until
such time as the properly executed general warranty deed is filed with the Jefferson
County Clerk’s office.
PER CURIAM
Opinion Delivered April 8, 2021
Before Kreger, Horton, and Johnson, JJ.
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