Gerdes v. Kennamer

• Decision Date: 06 December 2004
• Docket Number: No. 13-03-046-CV.,13-03-046-CV.
• Parties: Roger GERDES, Jr. and Carolyn Gerdes, Appellants, v. John KENNAMER and Mora Kennamer, Appellees.
• Court: Texas Court of Appeals

155 S.W.3d 541

Roger GERDES, Jr. and Carolyn Gerdes, Appellants, v. John KENNAMER and Mora Kennamer, Appellees.

No. 13-03-046-CV.

Court of Appeals of Texas, Corpus Christi-Edinburg.

December 6, 2004.

Rehearing En Banc Overruled February 3, 2005.

Cynthia T. Sheppard, Cuero, Robert P. Houston, Linda C. Reese, Houston Marek & Griffin, Victoria, for appellants.

Murray Fogler, McDade Fogler Maines, L.L.P., Houston, for appellee.

Before Justices HINOJOSA, YANEZ, and CASTILLO.

OPINION

Opinion by Justice CASTILLO.

Appellants Roger Gerdes ("Gerdes") and Carolyn Gerdes (collectively, the "Gerdeses") appeal the terms of a turnover order issued pursuant to section 31.002 of the civil practice and remedies code¹ as well as the trial court's finding of Gerdes' noncompliance with two earlier turnover orders. In seven issues, the Gerdeses challenge the trial court's exercise of discretion: (1) in ordering the Gerdeses to sign and turn over "nonexistent documents"; (2) in determining that the judgment creditors, appellees John Kennamer ("Kennamer") and Mora Kennamer (collectively, the "Kennamers"), established that the property could not be attached readily or levied on by ordinary legal process; (3) in ordering the Gerdeses to execute documents that violate the articles of incorporation of a Mexican entity owned by the Gerdeses; (4) in ordering the Gerdeses to execute and turn over documents that appoint Kennamer as their agent; (5) in ordering Carolyn Gerdes, a non-debtor third party, to execute and turn over documents; (6) in adjudicating the Gerdeses' substantive property rights during the turnover proceeding; and (7) in finding that Gerdes failed to comply with the first two turnover orders. We affirm.

I. FACTS AND PROCEDURAL HISTORY

Gerdes is a judgment debtor of Kennamer. Pursuant to section 31.002 of the civil practice and remedies code, the trial court issued three turnover orders to assist Kennamer in collecting the judgment. Tex. Civ. Prac. & Rem.Code Ann. § 31.002 (Vernon 1997). On evidence that the Gerdeses each own fifty per cent of a Mexican entity called Inmobiliaria Don Rogelio ("Don Rogelio"), the trial court issued orders that would effect a turnover of their interest in Don Rogelio. Don Rogelio is valuable because it holds title to a large plot of land in Mexico and represents Kennamer's only avenue to collect on a $915,392.65 judgment against Gerdes. On October 14, 2002, on Kennamer's motion, the trial court signed the first turnover order, requiring Gerdes to turn over to the Matagorda County Sheriff's Department within seven days, "the original stock certificates or any other physical evidence of ownership for all of the shares of stock of (a) Inmobiliaria Don Rogelio S. de RL. de C.V., (b) Hacienda de Aves Inc., and (c) Hacienda de Aves S.A. de C.V. so the same may be sold under execution."

Gerdes produced no documents. On October 28, 2002, the trial court ordered Gerdes to appear on December 2, 2002 to "show cause why he should not be held in contempt for violation of this Court's Turnover Order of October 14, 2002." After the trial court ordered the show-cause hearing but before the hearing took place, Gerdes turned over a stock certificate for 500 shares of Hacienda de Aves, Inc. He turned over nothing else. At the show-cause hearing, Gerdes argued that he complied with the order to the best of his ability in that he turned over everything he had. Gerdes claimed that no stock certificates were ever issued for the Don Rogelio stock and, therefore, he could not turn over any stock certificates. The trial judge, after commenting that he did not think he could hold Gerdes in contempt, stated that the first turnover order was a "continuing order and it applies — it's not excused." The trial judge then suggested that the Kennamers' counsel "do some more digging to see what these — who owns these assets." The trial court expressly declined to issue a contempt ruling and recessed the hearing.

On the same day, the trial court signed the second turnover order, requiring Gerdes to "turn over ... any original evidence of ownership of property in the name of Inmobiliaria Don Rogelio S. de R.L. de C.V., including but not limited to [a specific plot of land] so the same may be sold under execution." The trial court then recessed the hearing until January 8, 2003.

When the hearing reconvened, the Kennamers' counsel presented seven documents which, if executed by the Gerdeses, would effect the issuance of the Don Rogelio stock Gerdes claimed was never issued. Also, the documents would authorize the transfer of that stock to the sheriff's office and then to the final purchaser. Over Gerdes's objection that he could not force his wife to sign the documents, the trial court issued a third turnover order requiring Gerdes to deliver originals of the seven documents, executed by both him and his wife, to the Sheriff's office. The order also states "Roger Gerdes, Jr. has failed to comply with the Court's Turnover Order dated October 14, 2002, and the Second Turnover Order dated December 2, 2002." The trial court recessed the hearing until February 4, 2003, when Gerdes was "to appear and show compliance with this order."

Gerdes appeals the third turnover order, arguing that it is beyond the scope of the turnover statute. See Tex. Civ. Prac. & Rem.Code Ann. § 31.002 (Vernon 1997). Also, Gerdes argues that the trial court erred in finding that he failed to comply with the first two turnover orders. At the time of this appeal, the trial court had not found Gerdes in contempt.

II. STANDARD OF REVIEW

Issuance of a turnover order is a statutory remedy grounded in equity. See Ex parte Johnson, 654 S.W.2d 415, 417 (Tex.1983) (orig.proceeding). We review a trial court's decisions when sitting as a court of equity under an abuse-of-discretion standard. See Welder v. Green, 985 S.W.2d 170, 180 (Tex.App. — Corpus Christi 1998, pet. denied) ("Matters of equity are addressed to the trial court's discretion."); see also Thomas v. McNair, 882 S.W.2d 870, 881 (Tex.App. — Corpus Christi 1994, no writ) (finding no abuse of discretion in trial court's order of sale and partition). Accordingly, we review a trial court's decision to issue a turnover order under the abuse-of-discretion standard. Beaumont Bank, N.A. v. Buller, 806 S.W.2d 223, 226 (Tex.1991). In matters of equity, we find abuse of discretion only if the trial court ruled arbitrarily, unreasonably, or without regard to guiding legal principles. Id.; Welder, 985 S.W.2d at 180. A trial court abuses its discretion in determining the legal principles that control its ruling if the court clearly fails to analyze or apply the law correctly. Walker v. Packer, 827 S.W.2d 833, 840 (Tex. 1992) (orig.proceeding). We may not reverse a turnover order for abuse of discretion merely because we disagree with the trial court's decision, if that decision was within the trial court's discretionary authority. Buller, 806 S.W.2d at 226.

III. ANALYSIS

A. Execution by Carolyn Gerdes

In their fifth issue, the Gerdeses assert that the trial court abused its discretion in issuing the third turnover order (the "Order") by compelling Carolyn Gerdes, a non-debtor third-party, to execute and turn over documents. The Order states "[i]t is accordingly ordered that Roger Gerdes, Jr. shall, on or before 14 days from the date of this order deliver to the Matagorda County Sheriff's office, Department 2323 Ave. E, Bay City, Texas 77414, originals of the ownership and transfer documents, executed by Roger Gerdes, Jr. and Carolyn Gerdes." The trial court ordered Gerdes to turn over interest in Don Rogelio by delivering executed originals of the documents.

A trial court has the authority to order the turnover of property "subject to the debtor's control." Tex. Civ. Prac. & Rem.Code Ann. § 31.002(b)(1) (Vernon 1997). We take judicial notice of the record in cause number 13-02-657-CV, styled "Roger Gerdes, Jr. and Carolyn Gerdes v. John Kennamer," 155 S.W.3d 523, 2004 WL 2786078 (Tex.App. — Corpus Christi 2004, no pet. h.), which is an appeal of the underlying judgment. See In re Estate of York, 934 S.W.2d 848, 851 (Tex.App.-Corpus Christi 1996, writ denied) (holding that appellate court may take judicial notice of its own files involving the same subject matter between the same parties). Evidence introduced during the trial that resulted in the underlying judgment here showed that the Gerdeses also each owned fifty per cent of Hacienda de Aves, the Texas corporation whose 500 shares Gerdes turned over.² Gerdes presented no evidence in response to the turnover order that Carolyn Gerdes's interest in Don Rogelio was not subject to his control. Nor did he tender the documents with his signature only. Accordingly, on these facts we find that the trial court's order that Gerdes deliver originals of documents executed by both himself and his wife to effect a turnover of ownership in Don Rogelio is not beyond the scope of the turnover statute. See Tex. Civ. Prac. & Rem.Code Ann. § 31.002(b)(1) (Vernon 1997). We hold that the trial court did not abuse its discretion in issuing a turnover order that required Gerdes to turn over documents signed by both himself and Carolyn Gerdes. See Buller, 806 S.W.2d at 226. We overrule the Gerdeses' fifth issue.

B. Nonexistent Documents

In their first issue, the Gerdeses contend the trial court abused its discretion by ordering them to sign and turn over nonexistent documents. They argue that the Order orders them to turn over "nonexistent documents that were simply made up by the Appellee." They also argue that forcing them to sign the documents is beyond the scope of the trial court's power under the turnover statute.

The evidence before the trial court is undisputed that Roger and Carolyn Gerdes are the sole owners of Don Rogelio, each owning fifty per cent of the company. Contrary to the Gerdeses' assertions, the documents, and the property interest that the documents...