Hagan v. Pennington

• Court: Texas Court of Appeals
• Writing for the Court: ERIN A. NOWELL JUSTICE.
• Decision Date: 23 August 2021
• Docket Number: 05-20-00269-CV
• Citation: Hagan v. Pennington, 05-20-00269-CV (Tex. App. Aug 23, 2021)
• Parties: JOHN P. HAGAN, Appellant v. JAMES E. PENNINGTON, Appellee

JOHN P. HAGAN, Appellant v. JAMES E. PENNINGTON, Appellee

No. 05-20-00269-CV

Court of Appeals of Texas, Fifth District, Dallas

August 23, 2021

On Appeal from the County Court at Law No. 5 Collin County Texas Trial Court Cause No. 005-03950-2019

Before Justices Osborne, Pedersen, III, and Nowell.

MEMORANDUM OPINION

ERIN A. NOWELL JUSTICE.

In this garnishment proceeding, the debtor, John P. Hagan, appeals the trial court's judgment, which denied his motion contesting the writ of garnishment. In three issues, he argues the trial court abused its discretion by denying the motion because the creditor, James E. Pennington, failed to serve the writ as soon as practicable as required by Rule 663a, failed to serve Hagan with notice of his right to regain the property, and failed to have a sheriff or constable serve Hagan with a copy of the writ. We conclude the trial court did not abuse its discretion by denying the motion and affirm.

Background

Hagan and Pennington are both attorneys. After obtaining a judgment against Hagan, Pennington filed an application for writs of garnishment on December 5, 2019. The writs were directed to Advancial Federal Credit Union and Vantage Bank Texas as garnishees. Advancial was served with a writ of garnishment on December 6, 2019 and Vantage^[1] was served on December 9, 2019. Both timely filed answers to the writs. See TEX. R CIV. P. 665.

Pennington a solo practitioner, testified that he did not receive notice that the writs had been served until several days after December 9, 2019. At the time, Pennington's wife was terminally ill with cancer. On December 9, 2019, Pennington took his wife to the doctor because she could barely walk. One or two days later, he took her to the emergency room. Pennington missed several days of work during the week of December 9, 2019 due to his wife's illness. On December 15, 2019, she was placed on hospice care and died a week later, on December 22, 2019. During this time, Pennington did not go into the office regularly.

The day after his wife's death, December 23, 2019, Pennington emailed Hagan copies of the application, affidavit, and writ of garnishment. See TEX. R. CIV. P. 663a. On December 24, 2019, he filed a Notice of Service on the Judgment Debtor with the court, stating that Hagan had been served with the application, affidavit, and writ of garnishment in accordance with Rule 21a on December 23, 2019 by email and again on December 24, 2019 through the electronic filing manager. See TEX. R. CIV. P 21a(a). Pennington also sent a letter to the clerk of the court requesting issuance of a "Post-Writ of Garnishment Notice" to be served on Hagan. The clerk issued this notice, which contained the legend required by Rule 663a, on December 27, 2019. The officer's return form on the back of the notice is not completed.

On December 24, 2019, Hagan filed a voluntary appearance and motion contesting the writ, complaining he was not given timely notice of the garnishment proceeding. Pennington moved for judgment on January 21, 2020. Following a hearing on February 4, 2020 where Pennington and Hagan argued their pending motions, the trial court implicitly denied Hagan's motion and rendered judgment in favor of Pennington and against Advancial as garnishee. Hagan appeals.

Discussion

We review "a trial court's ruling on a motion to dissolve a writ of garnishment for an abuse of discretion." Wease v. Bank of Am., No 05-14-00867-CV, 2015 WL 4051974, *2 (Tex. App.-Dallas July 2, 2015, no pet.) (mem. op.) (citing Jacobs v. Jacobs, 448 S.W.3d 626, 631 (Tex. App.-Houston [14th Dist.] 2014, no pet.)). "A trial court abuses its discretion if it acts in an arbitrary or unreasonable manner without reference to any guiding rules or principles." Bowie Mem'l Hosp. v. Wright, 79 S.W.3d 49, 52 (Tex. 2002) (citing Downer v. Aquamarine Operators, Inc., 701 S.W.2d 238, 241-42 (Tex. 1985)). A trial court does not abuse its discretion when basing its decision on conflicting evidence. HouseCanary, Inc. v. Title Source, Inc., 622 S.W.3d 254, 259 (Tex. 2021). Failure to analyze or apply the law correctly is an abuse of discretion. Id. We will affirm the trial court on any legal theory that finds support in the record. See Worford v. Stamper, 801 S.W.2d 108, 109 (Tex. 1990) (per curiam).

Garnishment is a statutory proceeding brought by a creditor (the garnishor) against another party (the garnishee) who holds property or funds belonging to the judgment debtor. Bank One, Tex., N.A. v. Sunbelt Sav., F.S.B., 824 S.W.2d 557, 558 (Tex. 1992); Beggs v. Fite, 106 S.W.2d 1039, 1042 (Tex. 1937); See TEX. CIV. PRAC. &REM. CODE §§ 63.001-.008; TEX. R. CIV. P. 657-679. In the garnishment action, the garnishor seeks to have the property or funds held by the garnishee applied to the payment of the debt owed by the debtor to the garnishor. Nat'l City Bank v. Tex. Capital Bank, N.A., 353 S.W.3d 581, 584 (Tex. App.-Dallas 2011, no pet.). Garnishment is a harsh remedy and the proceedings "cannot be sustained unless they are in strict conformity with statutory requirements." Beggs, 106 S.W.2d at 1042. To obtain a valid judgment against the garnishee, the creditor must substantially comply with the statutes and rules governing garnishment procedure. See Merrill, Lynch, Pierce, Fenner &Smith, Inc. v. Allied Bank of Tex., 704 S.W.2d 919, 920 (Tex. App.-Houston [14th Dist.] 1986, writ ref'd).

A. As Soon as Practicable Requirement

In his first issue, Hagan contends Pennington did not serve him with a copy of the writ "as soon as practicable" after service on the garnishee.

Rule 663a provides that "[t]he defendant shall be served in any manner prescribed for service of citation or as provided in Rule 21a with a copy of the writ of garnishment, the application, accompanying affidavits and orders of the court as soon as practicable following the service of the writ." TEX. R. CIV. P. 663a (emphasis added). Because "as soon as practicable" is not defined in the rule, trial judges have discretion to consider the circumstances surrounding service to determine if service was as soon as practicable. See Carlson v. Schellhammer, No. 02-15-00348-CV, 2016 WL 6648754, *5 (Tex. App.-Fort Worth Nov. 10, 2016, no pet.) (mem. op.).

The parties spend significant effort arguing about when service was effected on Hagan. However, we will assume that Hagan was not served until eighteen days after the writ was served on Advancial. The issue then is whether the trial court abused its discretion by concluding eighteen days was as soon as practicable under the circumstances of this case.

Hagan contends that courts have held a fifteen-day delay in serving the debtor fails to comply with Rule 663a. He cites Lease Finance Group v. Childers, 310 S.W.3d 120, 126 (Tex. App.-Fort Worth 2010, no pet.) for the proposition that "a fifteen-day delay before serving the debtor does not satisfy the strict requirements of rule 663a." In Lease Finance, the court rejected the creditor's contention that Rule 663a does not establish a prescribed period in which the garnishor must serve the debtor. Id. We agree that the rule establishes a prescribed period for service on the debtor; that period is "as soon as practicable following service of the writ." TEX. R. CIV. P. 663a. We do not agree, however, that Rule 663a requires service on the debtor within a set time of fifteen days. Had the rulemakers intended an absolute deadline of fifteen days for service on the debtor, as Hagan contends, they would have done so explicitly. They did not. Cf. TEX. R. CIV. P. 663a (requiring service on debtor "as soon as practicable" following service of the writ), with 659 (requiring writ of garnishment to command garnishee to appear before "10 o'clock a.m. of the Monday next following the expiration of twenty days from the date the writ was served"). We reject Hagan's contention that Rule 663a mandates that the debtor be served within fifteen days of service of the writ.

Further, this case is unlike Lease Finance because the record explains the delay in serving Hagan. In Lease Finance, the creditor did not serve the debtor's attorney with a copy of the writ until twenty days after the garnishee was served. Lease Finance, 310 S.W.3d at 127. The court of appeals held the trial court abused its discretion by denying the debtor's motion to set aside the garnishment judgment because the record did not explain the reason for the delay. Id. at 127-28 (noting "nothing in the record explains the twenty-day delay in service").

Hagan also relies on Requena v. Salomon Smith Barney, Inc., No. 01-00-00783-CV, 2002 WL 356696, at *2 (Tex. App.-Houston [1st Dist.] Mar. 7, 2002, no pet.) (not designated for publication). In Requena, the trial court exercised its discretion to dissolve a writ of garnishment where the debtor's attorney was not served with a copy of the writ until nineteen days after the writ was served on the garnishee. Id. The court of appeals concluded the trial court did not abuse its discretion by dissolving the writ. Id. at *4. The record showed that four days after service on the garnishee, the debtor informed the creditor that he was represented by counsel. Id. The court of appeals observed that the creditor could have reasonably mailed a copy of the writ to debtor's counsel the same day and effected service under Rule 21a. Id. (unexplained fifteen-day delay after creditor was informed that debtor was represented by counsel before serving debtor's counsel was not as soon as practicable following service of writ).

In contrast to the facts in Lease Finance and Requena, here there is evidence explaining the delay. After applying for the writ of garnishment Pennington's wife's health declined rapidly. He was not regularly in his office during the time...