In re Old Am. Cnty. Mut. Fire Ins. Co.

Decision Date25 September 2014
Docket NumberNUMBER 13-14-00231-CV
PartiesIN RE OLD AMERICAN COUNTY MUTUAL FIRE INSURANCE COMPANY
CourtTexas Court of Appeals

On Petition for Writ of Mandamus.

MEMORANDUM OPINION

Before Justices Garza, Benavides, and Perkes

Memorandum Opinion by Justice Perkes1

Relator, Old American County Mutual Fire Insurance Company ("Old American"), filed a petition for writ of mandamus in the above cause on April 21, 2014 contending that the trial court2 abused its discretion in denying Old American's plea to the jurisdiction.Specifically, Old American asserts that the trial court's plenary power expired before Melissa Rosales, the real party in interest, attempted to add Old American as a defendant to the underlying turnover proceedings, and the trial court may not adjudicate Old American's substantive rights in the turnover proceeding. See TEX. CIV. PRAC. & REM. CODE ANN. § 31.002 (West, Westlaw through 2013 3d C.S.). We conditionally grant the petition for writ of mandamus.

I. BACKGROUND

Rosales was involved in an automobile accident with Maria Elide Moreno and Alfredo Moreno. Lindsay General Insurance Agency, LLC ("Lindsay General") issued the Morenos' automobile insurance policy as a managing general agent for Old American. Rosales filed suit against the Morenos in County Court at Law No. Four of Hidalgo County, Texas. The Morenos failed to answer or appear. On February 5, 2009, Rosales obtained a default judgment against the Morenos for $749,000 for the personal injuries that she sustained in the accident.

On or about February 1, 2010, Rosales filed an application for turnover relief seeking turnover of any and all causes of action owned by the Morenos against Lindsay General. According to the application for turnover relief, "although duly notified of the lawsuit," Lindsay General failed to provide a defense for the Morenos by failing to answer the lawsuit, failing to file a motion for new trial, and allowing the judgment against the Morenos to become final.

On or about August 11, 2010, Rosales filed a first amended application for turnover relief, again seeking turnover of the Morenos' causes of action against Lindsay General, but also seeking turnover of any and all causes of action owned by the Morenos againstOld American. In her amended application, Rosales asserted that the trial court "possesses jurisdiction pursuant to its inherent authority to enforce its judgment and pursuant to the Turnover Statute," and "[o]nce assignment is granted, [Rosales] is also stating a cause of action against Respondents Lindsay General and Old American." The amended application includes specific causes of action against Lindsay General and Old American for, inter alia, breach of contract, negligence, and breach of the duty to defend. The amended application includes a request for citation and service on Old American.

In response to the amended application, Old American and Lindsay General filed an "Original Answer, Special Exceptions, and Response." This pleading included the specific denial that Old American and Lindsay General "are not proper parties" to the turnover proceeding. According to the answer, the turnover statute does not grant the trial court jurisdiction over third parties, authorize the trial court to require a third party to act, or allow for a determination of the merits of any actual or potential claims against third parties or the substantive rights and obligations of third parties. Old American asserted that the trial court lacked jurisdiction over it and Rosales was required to file a new and separate lawsuit against it if the trial court granted turnover relief in her favor.

On October 25, 2010, the trial court signed an order granting Rosales's first amended application for turnover relief and ordered that "any and all causes of action which Maria Elide Moreno and/or Alfredo Moreno possess [against Old American], including any cause of action for failure to defend and Stowers cause of action" are assigned to Rosales "who can prosecute such claims." See G.A. Stowers Furniture Co. v. Am. Indem. Co., 15 S.W.2d 544, 547 (Tex. Comm'n App. 1929, holding approved); see also Tex. Farmers Ins. Co. v. Soriano, 881 S.W.2d 312, 314 (Tex. 1994).

On March 15, 2013, Rosales filed a motion for summary judgment against Old American on her Stowers cause of action. On April 24, 2013, Old American filed a response to the motion for summary judgment reiterating its claims that the trial court lacked jurisdiction over it as a non-party to the turnover proceeding.

On or about April 25, 2013, Old American filed a plea to the jurisdiction in which it contended, inter alia, that the trial court lacked jurisdiction because "a plaintiff cannot use a turnover proceeding to assert causes of action against a non-party to the underlying proceeding" after the trial court has lost plenary jurisdiction. On July 10, 2013, Rosales filed a response to the plea in which she asserted that the trial court had jurisdiction to enforce its judgment and the lawsuit "is merely part of the collection efforts, which it is expressly authorized to adjudicate." Rosales asserted that her amended application for turnover relief, which she referred to as a "petition," "clearly seeks adjudication of such assigned claims in a separate trial, and not as part of [her] requested turnover relief."

On July 10, 2013, the trial court held a hearing on Rosales's motion for summary judgment and Old American's plea to the jurisdiction. On July 29, 2013, the trial court denied Rosales's motion for summary judgment, but did not immediately rule on Old American's plea to the jurisdiction. Rosales thereafter propounded written discovery requests to Old American. On November 27, 2013, Old American filed a motion for protective order regarding the discovery requests.

On December 16, 2013, the trial court held a hearing on Old American's motion for protective order and an additional hearing on its plea to the jurisdiction. By order signed on April 4, 2014, the trial court denied Old American's plea to the jurisdiction, butgranted the motion for protective order for the purpose of allowing Old American to seek review regarding the denial of its plea to the jurisdiction.

This original proceeding ensued. By two issues, Old American asserts that the trial court clearly abused its discretion in denying the plea to the jurisdiction and that it lacks an adequate remedy by appeal. This Court requested and received a response to the petition for writ of mandamus from Rosales, and has also received a reply thereto from Old American.

II. STANDARD OF REVIEW

Mandamus is appropriate when the relator demonstrates that the trial court clearly abused its discretion and the relator has no adequate remedy by appeal. In re Reece, 341 S.W.3d 360, 364 (Tex. 2011) (orig. proceeding); In re Prudential Ins. Co. of Am., 148 S.W.3d 124, 135-36 (Tex. 2004) (orig. proceeding). The relator has the burden of establishing both prerequisites to mandamus relief, and this burden is a heavy one. In re CSX Corp., 124 S.W.3d 149, 151 (Tex. 2003) (orig. proceeding).

A trial court clearly abuses its discretion if it reaches a decision that is so arbitrary and unreasonable that it amounts to a clear and prejudicial error of law or if it clearly fails to analyze the law correctly or apply the law correctly to the facts. In re Cerberus Capital Mgmt., L.P., 164 S.W.3d 379, 382 (Tex. 2005) (orig. proceeding) (per curiam). The adequacy of an appellate remedy must be determined by balancing the benefits of mandamus review against the detriments. In re Team Rocket, L.P., 256 S.W.3d 257, 262 (Tex. 2008) (orig. proceeding). Because this balance depends heavily on circumstances, it must be guided by the analysis of principles rather than the application of simple rules that treat cases as categories. In re McAllen Med. Ctr., Inc., 275 S.W.3d 458, 464 (Tex.2008) (orig. proceeding). We evaluate the benefits and detriments of mandamus review and consider whether mandamus will preserve important substantive and procedural rights from impairment or loss. In re Prudential Ins. Co. of Am., 148 S.W.3d at 136.

III. ANALYSIS

As stated previously, Old American contends that the trial court committed a clear abuse of discretion by denying the plea to the jurisdiction. In connection with this issue, Old American asserts that the trial court's plenary power expired before Rosales attempted to add Old American as a defendant in the underlying turnover proceedings and a trial court may not adjudicate a third party's substantive rights in a turnover proceeding. In contrast, Rosales asserts that the trial court has the jurisdiction to enforce its own judgments and to adjudicate claims; that Texas policy favors the liberal joinder of claims; and that she is allowed to join her turnover action and assertion of the claims subject to turnover in one cause of action.3 Rosales asserts that even if the joinder of these claims was improper, the error would be procedural in nature rather than jurisdictional.

A. PLENARY JURISDICTION AND THE ENFORCEMENT OF JUDGMENTS

A trial court retains plenary jurisdiction for a minimum of thirty days after signing a final judgment. TEX. R. CIV. P. 329b(d)-(f); see Lane Bank Equip. Co. v. Smith S. Equip., Inc., 10 S.W.3d 308, 310 (Tex. 2000). During this period of time, the trial court's plenary jurisdiction may be extended by the timely filing of an appropriate post-judgment motion, such as a motion for new trial or a motion to modify, correct, or reform the judgment. See TEX. R. CIV. P. 329b(e),(g); Lane Bank Equip. Co., 10 S.W.3d at 310. In any event, the court's plenary power may not be extended more than 105 days after the judgment was signed. Lane Bank Equip. Co., 10 S.W.3d at 310. Outside its plenary power, the actions that a trial court may take with respect to its judgment are limited. Custom Corporates, Inc. v. Sec. Storage, Inc., 207 S.W.3d 835, 839 (Tex. App.—Houston [...

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