In re Orsak

• Court: Texas Court of Appeals
• Writing for the Court: April Farris, Justice
• Citation: In re Orsak, 695 S.W.3d 331 (Tex. App. 2022)
• Docket Number: 01-21-00481-CV
• Decision Date: 25 August 2022
• Parties: IN RE Brian Christopher ORSAK, Relator

695 S.W.3d 331

IN RE Brian Christopher ORSAK, Relator

NO. 01-21-00481-CV

Court of Appeals of Texas, Houston (1st Dist.).

Opinion issued August 25, 2022

Original Proceeding on Petition for Writ of Mandamus

Meredith Bishop Parenti, Houston, Marcela Halmagean, Elissa Ballew, Emily Fisher, Galveston, for Relator.

Dennis Marston Slate, Robert Kuehm, Houston, Karlene Dunn Poll, for Real party in interest Mary Margaret Orsak.

Darrell A. Apffel, Galveston, D. Blake Apffel, Jessica Clark, for Real party in interest Daniel Hartman.

Stephanie Denton, Dustin Fessler, Houston, for Real party in interest 4010 Facility Holdings, LLC, 23330 Emergency Center, LLC, BO2 Investments, LLC, Beaumont Elite Emergency Center, Elite Medical Center, LLC, Facilities Management Group, LLC, Las Vegas Facility Holdings, LLC, Madrid Family Holdings, LLC, O-2 Holdings, LLC.

Panel consists of Justices Landau, Guerra, and Farris.

OPINION

April Farris, Justice

Texas Rule of Civil Procedure 171 authorizes a trial court to appoint a master in chancery only in "exceptional cases," lest the court saddle litigants with the costs of "referring matters which the judge might easily hear and determine for himself." Simpson v. Candles, 806 S.W.2d 802, 808 (Tex. 1991) (internal quotations omitted). The Texas Supreme Court has held that the congestion status of a trial court’s calendar cannot transform an otherwise unexceptional case into a case warranting the appointment and expense of a special master. Simpson, 806 S.W.2d at 811.

Relator Brian Christopher Orsak’s mandamus petition presents the question whether the trial court abused its discretion in appointing a master to hear discovery disputes regarding the "value and character of the community and separate estates" in the underlying divorce case, in light of the court’s congested docket, exacerbated by the Covid-19 pandemic and a fire in the Galveston County courthouse. We hold that these circumstances did not transform this divorce proceeding into an exceptional case warranting the appointment of a Rule 171 master in chancery. We further hold that the Texas Supreme Court’s Fortieth Emergency Order Regarding the Covid-19 State of Disaster did not authorize the trial court to disregard Rule 171’s criteria for appointing a master in chancery. We therefore conditionally grant Brian’s petition for writ of mandamus.¹

Background

The underlying case involves a divorce and custody suit between relator Brian Christopher Orsak and real party in interest Mary Margaret Orsak. In that divorce case, Mary sought discovery from Brian regarding several corporate entities for purposes of characterizing separate and community property and valuating the interests in such property. Those entities include the following: (1) O-2 Holdings, LLC, a Texas limited liability company, (2) 4010 Facility Holdings, LLC, a Texas limited liability company, (3) 23330 Emergency Center, LLC, a Texas limited liability company, (4) BO2 Investments, LLC, an Illinois limited liability company, (5) Beaumont Elite Emergency Center, (6) Elite Medical Center, LLC, a Nevada limited liability company, (7) Facilities Management Group, LLC, a Texas limited liability company, (8) Inception Fertility Ventures, (9) Las Vegas Facility Holdings, LLC, a Nevada limited liability company, (10) St. Michael’s Emergency Center, LLC, a Texas limited liability company, (11) St. Michael’s Medical Hospital, LLC, a Texas limited liability company, (12) Texas Gun Club, LLC, a Texas limited liability company, (13) TGC Properties, LLC, a Texas limited liability company, (14) Triple Tap Alamo League City – Holdings, LLC, a Texas limited liability company, (15) Triple Tap Ventures, LLC, a Texas limited liability company, and (16) The Woodlands FEC, LLC, a Texas limited liability company (collectively referred to as the "Nonparty Entities").

Brian responded to these discovery requests by asserting that he did not have any documents responsive to Mary’s requests in his possession, custody, or control. Mary then sought the requested documents directly from the Nonparty Entities, serving them with subpoenas and depositions on written questions. Mary ultimately entered into an agreement with the Non-party Entities pertaining to the scope of discovery, including the production of responsive documents.

Dissatisfied with the Nonparty Entities’ discovery responses, Mary filed motions to compel against the Nonparty Entities and Brian. She also filed a "Motion to Appoint Master in Chancery/Discovery Master," requesting appointment of a discovery master on the grounds that the "divorce action involve[ed] a large and complex marital estate," and that Mary and Brian "own an interest in a number of complex business entities." Mary further asserted that Brian and the Nonparty Entities had "been uncooperative with discovery requests," leading to the filing of these motions with the trial court to resolve the various discovery disputes. Reasoning that "it would take significant time on [the trial court’s] docket to resolve the outstanding discovery disputes and any future discovery disputes with respect to the documents and information needed with respect to the business entities," Mary requested that the trial court "refer all discovery disputes involving documents or information requested regarding any business entity in which [ ] either party owns an interest to a Master in Chancery/Discovery Master."

Brian objected to Mary’s master-appointment as "baseless," arguing that Mary had not established good cause or the existence of exceptional circumstances as required by Texas Rule of Civil Procedure 171. On August 19, 2021, the trial court held a hearing on Mary’s motion. Over Brian’s objection, the trial court considered the motion without evidence presentation or witness testimony, relying on the arguments of counsel.

On August 20, 2021, the trial court entered its "Order of Reference on Appointment of Master in Chancery" (the "appointment order"). In the appointment order, the trial court concluded "that good cause ha[d] been shown for the appointment of a master in chancery, as the matters and issues in this case are exceptional and complicated." The trial court also found that the "appointment of [a] Master in Chancery will aid the performance of this court’s duty to timely rule on discovery issues related to the value and character of the community and separate estates, which have been delayed as a result of [the trial court’s] docket, the ongoing [Covid-19] pandemic, and the recent fire in the Galveston County Courthouse." The trial court appointed "retired Senior District Judge the Honorable David Farr" as master in chancery and outlined the scope of his authority to act.

The appointment order limited the master in chancery’s authority to "discovery disputes existing between the parties and any non-party so long as [the] discovery dispute is related to the characterization of the separate and community property of the parties and valuation of those interests." The trial court, however, further vested him with power to "authorize, approve, limit and/or order any and all other forms of discovery permitted by the Texas Rules of Civil Procedure," as well as with the authority to "subpoena, sua sponte, any witness to a hearing, including the parties to order the production of any documents from the parties and to subpoena any documents from third parties." In addition, the trial court authorized him to award attorney fees and find parties in contempt "for failure to comply with any decision and to issue sanctions regarding any finding of contempt." Finally, the trial court authorized him to "charge for his services rendered at the rate of $350.00 per hour," and further "ORDERED] that BRIAN ORSAK deposit the sum of $10,000.00 to the Master in Chancery," as "security for costs for reasonable and necessary fees and expenses."

Brian requested a stay of the appointment order "while he pursued his appellate remedies," but the trial court denied the request. Brian subsequently filed his mandamus petition, and we stayed the enforcement of the appointment order pending the resolution of the mandamus petition.²

Standard of Review

[1, 2] Mandamus is an extraordinary remedy that is only available in limited circumstances. See Walker v. Packer, 827 S.W.2d 833, 839–40 (Tex. 1992). Mandamus relief is appropriate only where the relator establishes that the trial court has abused its discretion, and the relator has no adequate remedy by appeal. See In re CSX Corp., 124 S.W.3d 149, 151 (Tex. 2003). A trial court abuses its discretion where "it reaches a decision so arbitrary and unreasonable as to amount to a clear and prejudicial error of law." Id.

[3–5] Texas Rule of Civil Procedure 171 governs the appointments of masters in chancery. Tex R. Civ P. 171. A trial court’s order appointing a master in chancery or special discovery master is reviewable by mandamus because requiring parties "to reserve their complaint for appeal would be to deny them any effective relief from the trial court’s order." See Simpson, 806 S.W.2d at 812. The "appointment of a master lies within the sound discretion of the trial court and should not be reversed except for a clear abuse of discretion." Id. at 810. Rule 171’s requirements set boundaries on the trial court’s discretion, however. Unless the parties agree to the appointment of a master in chancery, "every referral to a master in chancery must comply with [R]ule 171." In re Coastal Nejapa, Ltd, No. 14-09-00239-CV, 2009 WL 2476555, at *3 (Tex. App.—Houston [14th Dist.] Aug. 13, 2009, orig. proceeding) (mem. op.).

Abuse of Discretion

Brian argues that mandamus relief is warranted to correct three abuses of the trial court’s discretion. First, Brian contends that the trial court abused its discretion by appointing the master in chancery without any evidence that this is an "exceptional case," as required by Texas Rule of Civil Procedure 171. Second, Brian argues that ...