In re Texas American Exp., Inc.

Decision Date07 December 2005
Docket NumberNo. 05-05-01417-CV.,05-05-01417-CV.
Citation190 S.W.3d 720
CourtTexas Court of Appeals
PartiesIn re TEXAS AMERICAN EXPRESS, INC., Rod Bell & Associates, Inc., and Roderick Bell, Relators.

Ben L. Krage, Charles E. Gale, Eric M. Jaegers, Krage & Janvey, L.L.P., Dallas, for relator.

Gary M. Vodicka, Law Office of Gary M. Vodicka, Andrew R. Korn, David M. Diaz, Korn, Bowdich & Diaz, L.L.P., Dallas, for real party in interest.

Before Justices WRIGHT, O'NEILL, and LANG.

OPINION

Opinion by Justice LANG.

Texas American Express, Inc. (TAXI), Rod Bell & Associates, Inc., and Roderick Bell, individually, relators, seek a writ of mandamus ordering the Honorable John Peyton, Judge, County Court at Law No. 2, Dallas County, Texas to dissolve the prejudgment writ of garnishment, or, in the alternative, to increase the bond for the prejudgment writ of garnishment. Relators' petition for a writ of mandamus is conditionally granted as to the dissolution of the prejudgment writ of garnishment.

I. FACTUAL AND PROCEDURAL BACKGROUND

Roger Martin, the real party in interest, was a driver trainee for TAXI. While riding in a truck driven by James Richard Terry, Martin was injured when Terry fell asleep and the truck left the road. Martin sued TAXI and Terry for his injuries and damages arising out of the trucking accident. After a jury trial, Martin was awarded a judgment for $371,919.92 against TAXI and Terry.

Martin filed the underlying lawsuit against TAXI, Bell & Associates, and Bell, individually. He alleges TAXI fraudulently transferred its assets to Bell & Associates and Bell to prevent Martin from collecting on his judgment against TAXI. Also, Martin sought to impose liability for the judgment against TAXI on Bell & Associates on the theories that TAXI and Bell & Associates are a single business enterprise and Bell & Associates is the alter ego of TAXI.

At the same time Martin filed the underlying lawsuit, he also filed an emergency application for a prejudgment writ of garnishment. The application sought garnishment of any assets of TAXI, Bell & Associates, and Bell at the First State Bank a/k/a First State Bank of Mesquite up to the maximum indebtedness of $371,919.92. The trial court granted the application ex parte. The order to issue the prejudgment writ of garnishment required Martin to execute and file with the clerk a bond in the amount of $1,000. Martin filed the bond, and the writ was issued and served on the bank. First State Bank of Mesquite answered and, pursuant to a rule 11 agreement of the parties, held only $375,000 from Bell's personal savings account. TAXI, Bell & Associates, and Bell filed counterclaims against Martin for wrongful garnishment and a motion to dissolve or, in the alternative, modify the writ of garnishment. The trial court denied their motion to dissolve and they filed this petition for a writ of mandamus.

II. STANDARD FOR MANDAMUS

Traditionally, mandamus will not issue unless: (1) the trial court has committed a clear abuse of discretion; and (2) there is no adequate remedy by appeal. In re Mo. Pac. R.R. Co., 998 S.W.2d 212, (Tex.1999) (orig.proceeding) (citing Walker v. Packer, 827 S.W.2d 833, 840 (Tex.1992) (orig.proceeding)).

A. Abuse of Discretion

A trial court abuses its discretion if it reaches a decision so arbitrary and unreasonable as to amount to a clear and prejudicial error of law or if it clearly fails to correctly analyze or apply the law. In re Cerberus Capital Mgmt., L.P., 164 S.W.3d 379, 382 (Tex.2005) (orig.proceeding). In determining whether the trial court abused its discretion in the resolution of factual matters, the court of appeals may not substitute its judgment for that of the trial court and may not disturb the trial court's decision unless it is shown to be arbitrary and unreasonable. In re Sanders, 153 S.W.3d 54, 56 (Tex.2004) (orig.proceeding). A trial court has no discretion in determining what the law is or in applying the law to the facts. See Walker, 827 S.W.2d at 840. Accordingly, a clear failure by the trial court to analyze or apply the law correctly will constitute an abuse of discretion, and may result in appellate reversal by extraordinary writ. Id. If the trial court did not abuse its discretion, it is error for the court of appeals to grant mandamus relief. In re Sanders, 153 S.W.3d at 56.

B. No Adequate Remedy by Appeal

The second requirement for mandamus relief, that the petitioner has no adequate remedy by appeal, "has no comprehensive definition." See In re Ford Motor Co., 165 S.W.3d 315, 317 (Tex.2005) (orig.proceeding) (citing In re Prudential, 148 S.W.3d 124, 136 (Tex.2004) (orig.proceeding)). Determining whether a party has an adequate remedy by appeal requires a "careful balance of jurisprudential considerations" that "implicate both public and private interests." See id. "When the benefits [of mandamus review] outweigh the detriments, appellate courts must consider whether the appellate remedy is adequate." Id. An appeal is inadequate when the parties are in danger of permanently losing substantial rights. In re Van Waters & Rogers, Inc., 145 S.W.3d 203, 211 (Tex.2004). Such a danger arises when the appellate court would not be able to cure the error, the party's ability to present a viable claim or defense is vitiated, or the error cannot be made part of the appellate record. Id.

III. ANALYSIS OF ABUSE OF DISCRETION

Relators argue the trial court abused its discretion in denying their motion to dissolve the prejudgment writ of garnishment because the judgment against TAXI is not a debt of Bell & Associates or Bell and they have no adequate remedy by appeal. Relators' contend Martin's unliquidated tort claim for fraudulent transfer and his attempt to hold Bell & Associates responsible for TAXI's liability under the theories of single business enterprise and alter ego do not amount to debts under Texas Civil Practice and Remedies Code § 63.001. See TEX. CIV. PRAC. & REM.CODE ANN. § 63.001 (Vernon 1997 & Supp.2005). Martin responds that the debt is liquidated because the amount has already been determined in its judgment against TAXI. It is Martin's position that he is merely trying to collect his judgment against TAXI from Bell & Associates and Bell under the theories pleaded.

A. Applicable Law — Prejudgment Writ of Garnishment

At the commencement of a lawsuit, a plaintiff may file an application for a writ of garnishment. See TEX.R. CIV. P. 658. A writ of garnishment shall not issue before a final judgment, except on order of the court after a hearing, which may be ex parte. Id. A writ of garnishment is available if:

(1) an original attachment has been issued;

(2) a plaintiff sues for a debt and makes an affidavit stating that:

(A) the debt is just, due, and unpaid;

(B) within the plaintiff's knowledge, the defendant does not possess property in Texas subject to execution sufficient to satisfy the debt; and (C) the garnishment is not sought to injure the defendant or the garnishee; or

(3) 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.

TEX. CIV. PRAC. & REM.CODE ANN. § 63.001. A defendant whose property or account has been garnished may seek to have the trial court dissolve or modify the writ of garnishment. See TEX.R. CIV. P. 664a.

A writ of garnishment may be issued only when the demand is not contingent, is capable of ascertainment by the usual means of evidence, and does not rest in the discretion of the jury. See Cleveland v. San Antonio Bldg. & Loan Ass'n, 148 Tex. 211, 215, 223 S.W.2d 226, 228 (1949) (appeal of order quashing writ of garnishment); Fogel v. White, 745 S.W.2d 444, 446 (Tex.App.-Houston [14th Dist.] 1988, orig. proceeding [leave denied]); Cook v. Superior Ins. Co., 476 S.W.2d 363 (Tex.Civ.App.-Beaumont 1972, writ ref'd n.r.e.) (appeal of summary judgment dismissing injured party's application for writ of garnishment against insurer of judgment creditor). When damages are unliquidated and in their nature uncertain, the demand is not subject to garnishment. Fogel, 745 S.W.2d at 446; see also Clapper v. Petrucci, 497 S.W.2d 120, 122 (Tex.Civ.App.-Austin 1973, writ ref'd n.r.e.) (appeal of summary judgment dismissing judgment creditor's application for writ of garnishment against third parties who owed debt to judgment debtor).

It has long been recognized in this state that the remedy of garnishment is summary and harsh, and should not be sustained unless there is strict compliance with the statutory requirements. See e.g., Beggs v. Fite, 130 Tex. 46, 52, 106 S.W.2d 1039, 1042 (1937); Snyder Nat'l Bank v. Pinkston, 219 S.W.2d 606, 608 (Tex.Civ. App.-Dallas 1949, no writ); Mendoza v. Luke Fruia Inv. Inc., 962 S.W.2d 650, 651 (Tex.App.-Corpus Christi 1998, no pet.); Walnut Equip. Leasing Co. v. J-V Dirt & Loam, 907 S.W.2d 912, 915 (Tex.App.-Austin 1995, writ denied); Varner v. Koons, 888 S.W.2d 511, 513 (Tex.App.-El Paso 1994, orig. proceeding); Fogel, 745 S.W.2d at 446; Glenn W. Casey Constr. v. Citizen's Nat'l Bank, 611 S.W.2d 695, 700 (Tex.Civ.App.-Tyler 1980, no writ), disapproved of on other grounds Middleton v. Murff, 689 S.W.2d 212, 213 (Tex.1985); Tom Benson Chevrolet Co., Inc. v. Beall, 567 S.W.2d 857, 859 (Tex.Civ.App.-San Antonio 1978, writ ref'd n.r.e.); Pinkston v. Victoria Bank & Trust Co., 215 S.W.2d 245, 247 (Tex.Civ.App.-Waco 1948, orig. proceeding [leave denied]). A tort action is not subject to garnishment because it is both contingent and unliquidated. See Cleveland, 148 Tex. at 215, 223 S.W.2d at 228; Waples-Platter Grocer Co. v. Tex. & Pac. Ry. Co., 95 Tex. 486, 488, 68 S.W. 265, 266 (1902); Fogel, 745 S.W.2d at 446; Clapper, 497 S.W.2d at 122; Cook, 476 S.W.2d at 364; Stewart v. Forrest, 124 S.W.2d 887 (Tex.Civ.App.-San Antonio 1939, no writ) (appeal of order quashing applications...

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