Gorman v. Gorman
| Decision Date | 16 April 1998 |
| Docket Number | No. 01-96-00364-CV,01-96-00364-CV |
| Parties | Rodman Edward GORMAN, Appellant, v. Sharon Elaine GORMAN, Appellee. Houston (1st Dist.) |
| Court | Texas Court of Appeals |
Clinard J. Hanby, Woodlands, Houston, for Appellant.
Tom Alexander, Vicki L. Pinak, Houston, for Appellee.
Before MIRABAL, WILSON and TAFT, JJ.
OPINION ON MOTION FOR REHEARING
The appellant has filed a motion for rehearing in this case. We deny the motion, but withdraw our previous opinion and issue this one in its stead in order to address some of the appellant's rehearing arguments. The disposition of the case remains the same.
Rodman Edward Gorman, the settlor of the Gorman Children's Trust (the Trust), a named defendant in the court below and appellant here, appeals from a judgment that:
(1) Granted a summary judgment in favor of the appellee, Sharon Elaine Gorman, his former wife and also a named defendant in the court below, which in essence invalidated the Trust or found that it had been revoked if it ever existed, and awarded her "the cash residue from the bankruptcy court amounting to the funds deposited in the trial court's registry."
(2) As a sanction under TEX.R.CIV.P. 13 and/or pursuant to the declaratory judgment act under which Mrs. Gorman cross-claimed, awarded attorney's fees in favor of Mrs. Gorman and against Robert L. Silvers, trustee of the Trust, the Trust, and Mr. Gorman, jointly and severally.
(3) Granted a nonsuit for Mr. Gorman's trustee in bankruptcy, Gary Knostman, also a named defendant in the court below.
On appeal, Mr. Gorman contends the trial court erred in granting the summary judgment invalidating the Trust and in awarding attorney's fees against him under either the declaratory judgment act, TEX.CIV.PRAC. & REM.CODE ANN. § 37.009 (Vernon 1997), or TEX.R.CIV.P. 13.
On January 10, 1989, Mr. Gorman established a trust in the amount of $75,000 (naming himself and Mrs. Gorman as settlors) for the welfare, maintenance, and education of their children through college, to be funded with his personal earnings. 1 There was a line for Mrs. Gorman's signature, but she refused to sign. Three weeks after Mr. Gorman executed the trust indenture, he filed for divorce from Mrs. Gorman. Approximately eight months later, on September 8, 1989, Mr. Gorman filed for bankruptcy and was listed as the debtor in the bankruptcy proceeding.
On September 28, 1992, Mr. Gorman and the Gorman's three children filed a motion to intervene on behalf of the Trust in the divorce proceeding. Mrs. Gorman filed a motion to deny the intervention. On October 19, 1992, the trial court granted Mrs. Gorman's motion to deny the intervention. The order does not state anything about the children obtaining or seeking relief in the bankruptcy court. The children filed a proof of claim with the bankruptcy court, which designated the Trust as a creditor, for $75,000. Mrs. Gorman filed a motion to dismiss with the bankruptcy court alleging the bankruptcy action and the Trust were shams to deprive her of her property. As a result, the bankruptcy court converted the action from a chapter 11 proceeding to a chapter 7 proceeding and appointed a bankruptcy trustee to investigate preferential transfers and specific claims, including the claims by the Trust. There is nothing in the record indicating any determination by the bankruptcy trustee in regard to the Trust. The Trust thereafter voluntarily withdrew its claim. 2
In the divorce proceeding, Mrs. Gorman listed as community property the $20,000 in the Trust and the $486,000 annuity which was the purported source of funding for the Trust. The divorce decree entered November 3, 1992, does not specifically mention these assets. The divorce decree awarded to Mrs. Gorman as her sole and separate property,
On October 27, 1992, the Trust, by and through Silvers, filed this lawsuit in state district court against Mr. Gorman, Mrs. Gorman, and Gary Knostman, bankruptcy trustee for Mr. Gorman, as defendants. The Trust sued to recover the $75,000 that Mr. Gorman had pledged to the Trust. Mrs. Gorman answered the suit and filed a cross-claim for (1) a declaratory judgment that the Trust was not valid, (2) damages against the trustee for a frivolous suit, and (3) attorney's fees. The Trust answered Mrs. Gorman's cross-claim with a general denial. The trial court granted a nonsuit for Knostman. Knostman deposited the residue of the funds he held as bankruptcy trustee, $93,956.50, in the trial court's registry, per agreement of the parties entered into in the bankruptcy proceeding.
On June 30, 1994, Mrs. Gorman filed a "1994 Motion for Partial Summary Judgment" against the Trust, alleging: (1) no trust exists, (2) res judicata, and (3) waiver. She also requested a declaratory judgment that "the purported Trust is not a valid Trust and that [Sharon Gorman] has no liability thereunder." Mr. Gorman, defendant in the case, filed a pro se response to Mrs. Gorman's motion for summary judgment which was directed only at the Trust and trustee.
On July 29, 1994, the trial court granted Mrs. Gorman's motion for partial summary judgment against the Trust and a declaratory judgment that "she was entitled to the cash residue from the bankruptcy court amounting to the funds deposited in the trial court's registry." However, it was an interlocutory judgment because it did not dispose of Mrs. Gorman's attorney's fees claims, nor did it dispose of the Trust's claims against Mr. Gorman as a defendant.
On November 21, 1994, after the ruling on the partial summary judgment and declaratory judgment against the Trust, Mrs. Gorman filed her first cross-claim against Mr. Gorman asserting he and the trustee brought a frivolous suit under TEX.R.CIV.P. 13, and requesting attorney's fees. Mrs. Gorman also requested a declaratory judgment that "the alleged Trust is not a valid Trust; that in the alternative, it has been revoked if it ever existed; and that Sharon Gorman has no liability thereunder...." She also requested attorney's fees pursuant to TEX.CIV.PRAC. & REM.CODE ANN. § 37.009 from Silvers "in his individual capacity and from the nominal defendant [Mr. Gorman] who is the plaintiff." We note that Mr. Gorman had not filed any pleadings against Mrs. Gorman as of this date, except his response to her motion for partial summary judgment against the Trust. She alleged that Mr. Gorman and Silvers had depleted the bankruptcy estate by $50,000. Both Silvers and Mr. Gorman filed general denials to Mrs. Gorman's claims. Mr. Gorman filed a motion for sanctions against Mrs. Gorman and her attorney under TEX.R.CIV.P. 13. Mr. Gorman also filed a cross-claim against Mrs. Gorman requesting indemnity and contribution from Mrs. Gorman for any liability he had to the plaintiff trust, and his attorney's fees.
The trial court later held a hearing on the motion for sanctions under TEX.R.CIV.P. 13. It entered a final judgment awarding Mrs. Gorman $45,000 in attorney's fees under the declaratory judgment act and, alternatively, as sanctions under rule 13 against the Trust by and through trustee Silvers and Mr. Gorman, jointly and severally.
The trial court filed findings of fact and conclusions of law:
1. The suit was instituted by Robert L. Silvers, acting as trustee but at the specific insistence and request of Defendant Rodman Edward Gorman.
2. Given the relationship of the parties and their history in other forums, which is evident from among other things, the summary judgment evidence and the procedural history of the case, this litigation should have never been brought. The only purpose served by this litigation was to frustrate Defendant Sharon Elaine Gorman's interest and keep her from receiving the benefit of agreements previously made, and the decree of divorce between her and Rodman Edward Gorman, which benefits included the previously determined allocation of the community estate.
3. The litigation was groundless and brought in bad faith.
4. The litigation was groundless and brought for the purpose of harassing Sharon Elaine Gorman.
5. By groundless, in the above two findings, the Court finds that the litigation and the positions taken by the Plaintiff and joined by Defendant Rodman Edward Gorman had no basis in law or fact and were not warranted by good faith arguments for the extension, modification or reversal of existing law.
6. Both the plaintiffs and Rodman Edward Gorman share responsibility for both the institution and continued prosecution of this suit.
7. Rodman Edward Gorman, a lawyer, advised Robert L. Silvers, a client of his, in connection with his role in the lawsuit.
8. Rodman Edward Gorman arranged for the representation of the Plaintiff which appeared as a matter of record and made arrangements for any compensation that would be paid to the Plaintiff's counsel.
9. Rodman Edward Gorman, although ostensibly adverse to Plaintiff, acted at all material times in cooperation with the Plaintiff.
10. The case was unnecessarily extended by the acts of the Plaintiff and Rodman Edward Gorman.
11. The conduct of the Plaintiff and Rodman Edward Gorman is sanctionable pursuant to Rule 13 of the Texas Rules of Civil Procedure.
12. The violation of Rule 13 justifies the award of attorney's fees in the amounts assessed and awarded in the judgment to Sharon Elaine Gorman.
13. The amounts awarded to Sharon Elaine Gorman are the costs and reasonable necessary attorney's fees which the Court finds to be equitable and just under the circumstances of this case pursuant to § 37.009 of the Texas Civil Practice and Remedies Code.
In Mr....
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