Kennedy v. Hudnall

• Decision Date: 28 March 2008
• Docket Number: No. 06-07-00100-CV.,06-07-00100-CV.
• Citation: 249 S.W.3d 520
• Parties: Major KENNEDY, Jr., and Wesley Moore, Intervenor, Appellants, v. Ogden S. HUDNALL, Trustee for Ogden S. Hudnall Trust # 2, et al., Appellees.
• Court: Texas Court of Appeals

249 S.W.3d 520

Major KENNEDY, Jr., and Wesley Moore, Intervenor, Appellants, v. Ogden S. HUDNALL, Trustee for Ogden S. Hudnall Trust # 2, et al., Appellees.

No. 06-07-00100-CV.

Court of Appeals of Texas, Texarkana.

Date Submitted: February 13, 2008.

Date Decided: March 28, 2008.

On Appeal from the 4th Judicial District Court, Rusk County, Texas, Trial Court No. 2005-410.

J. Paul Nelson, Law Office of J. Paul Nelson, Henderson, for Major Kennedy, Jr.

Michael W. Minton, Michael W. Minton, PLLC, Irving, Robert M. Minton, Minton & Brown, PLLC, Henderson, for Wesley Moore.

Alan D. Wharton, Wharton Law Firm, Tyler, for appellees.

Before MORRISS, C.J., CARTER and MOSELEY, JJ.

OPINION

Opinion by Justice MOSELEY.

This is an attempt to appeal from a post-judgment order. The plaintiffs below were several trusts¹ (collectively, the Trusts) who, on February 14, 2007, had obtained a final judgment of just over $300,000.00 against Major Kennedy, Jr., for theft of timber.² One month after that judgment, on March 15, 2007, Kennedy filed a deed dated March 14, 2007, purporting to transfer his interest in 1,704 acres of property to his good friend, Wesley Moore.³ The next week, on March 21, 2007, the Trusts filed their abstract of judgment and the clerk issued a writ of execution.

The Trusts believed Kennedy's conveyance of the 1,704 acres was fraudulent and sought to enforce or satisfy their judgment via a post-judgment "Motion for Turnover Relief"⁴ filed under the theft of timber cause of action.⁵ The motion pled certain facts required for turnover, but actually requested that the sheriff seize and sell the allegedly fraudulently transferred property pursuant to the Fraudulent Transfer Act (FTA).⁶

After a two-day hearing,⁷ the court issued an order titled "Order for Turnover Relief," from which Moore and Kennedy attempt to appeal. The difficulty of the determination of the issues in this case is compounded by the fact of inartful pleading and drafting. In addition, although the Trusts maintain that their sole purpose was to pursue the issuance of execution pursuant to Section 24.008(b) of the Texas Business and Commerce Code, it is clear that the parties believed that they were litigating the issue of fraudulent transfer in the same suit which had previously been a suit for damages for the theft of timber—something which is not permitted under Section 24.008(a), which requires a separate lawsuit for that purpose. See TEX. BUS. & COM.CODE ANN. § 24.008(b). We have determined that this order is not a final judgment or an order susceptible to appeal and, accordingly, that we lack jurisdiction to consider the appeal.

A. Appellate Jurisdiction

Even if not raised by the parties, we may not ignore a lack of appellate jurisdiction. See New York Underwriters Ins. Co. v. Sanchez, 799 S.W.2d 677, 679 (Tex.1990); McCauley v. Consol. Underwriters, 157 Tex. 475, 478, 304 S.W.2d 265, 266 (1957). "Courts always have jurisdiction to determine their own jurisdiction." Houston Mun. Employees Pension Sys. v. Ferrell, 248 S.W.3d 151, 152 (Tex.2007); see also Wagner v. Warnasch, 156 Tex. 334, 339, 295 S.W.2d 890, 893 (1956) (no question of the authority of the courts of appeals to address the fundamental error of lack of jurisdiction).

The failure of a jurisdictional requirement deprives the court of the power to act (other than to determine that it has no jurisdiction). Univ. of Tex. Sw. Med. Ctr. at Dallas v. Loutzenhiser, 140 S.W.3d 351, 359 (Tex.2004). If we conclude that we do not have jurisdiction, we must recognize that and dismiss the attempted appeal. See Kilroy v. Kilroy, 137 S.W.3d 780, 783 (Tex.App.-Houston [1st Dist.] 2004, no pet.).

B. Post-Judgment Orders

The general rule is that a court has the inherent power to enforce its judgments, even after the expiration of its plenary power, and the court may employ suitable methods in doing so. See TEX.R. CIV. P. 308; Arndt v. Farris, 633 S.W.2d 497, 499 (Tex.1982); Ex parte Gorena, 595 S.W.2d 841, 844 (Tex.1979); see also In re Crow-Billingsley Air Park, Ltd., 98 S.W.3d 178, 179 (Tex.2003) ("trial court has an affirmative duty to enforce its judgment" under Rule 308). Generally, an order made for the purpose of carrying into effect an already-entered judgment is not a final judgment or decree and cannot be appealed as such. Wagner, 295 S.W.2d at 893; see also TEX. CIV. PRAC. & REM.CODE ANN. § 51.012 (Vernon 1997) (final judgments of trial courts are appealable).⁸ The "usual writs and orders to aid in execution to collect a final money judgment are not, in general, appealable orders." Schultz v. 5th Jud. Dist. Court of Appeals of Dallas, 810 S.W.2d 738, 740 (Tex.1991). If the order is not an appealable one, jurisdiction does not attach in the court of appeals. Id. at n. 6. On the other hand, some post-judgment orders are appealable. Id. at 740 (finding turnover order in that case, which resolved property rights and acted "in the nature of a mandatory injunction," to be appealable).

We look to the substance of the order to determine whether it is appealable. See, e.g., Wagner, 295 S.W.2d at 892 (looking to nature of post-judgment relief granted in order over relief actually requested in motion); cf. Surgitek, Bristol-Myers Corp. v. Abel, 997 S.W.2d 598, 601 (Tex.1999) (order's necessary predicate findings provided jurisdictional basis, despite title to contrary); accord Burke v. Union Pac. Res. Co., 138 S.W.3d 46, 60 (Tex.App.-Texarkana 2004, pet. denied, pet. dism'd [2 pets.]) ("A motion should be construed by its substance to determine the relief sought, not merely by its form or caption.").

C. The "Turnover" Motion and Order

After the Trusts' motion set forth the fact of the timber theft judgment and facts alleging fraudulent transfer, section three of the motion, titled "Property Subject to Turnover," asserted that the property at issue "cannot readily be attached or levied on by ordinary legal process. This property is not exempt under any statute from attachment, execution, or seizure for the satisfaction of liabilities." This language tracks the statutory prerequisites for the issuance of a turnover order. See TEX. CIV. PRAC. & REM.CODE ANN. § 31.002(a).

Section four of the Trusts' motion sets forth the allegedly applicable law as the FTA, emphasizing that a judgment creditor may request that the court order execution against a fraudulently transferred asset. See TEX. BUS. & COM.CODE ANN. § 24.008(b) ("subsection (b)"); section five of the motion, though titled "Motion for Turnover," requests that the court "pursuant to Section 24.008(b) of the Texas and [sic] Business & Commerce Code to order the Rusk County Sheriff to seize and sale [sic] the above described property." This, together with costs and attorney's fees, is the only relief sought.

The court's order is titled "Order for Turnover Relief." It recites that "the property in question is not exempt under any statute from attachment, execution, or seizure" and that "the property in question cannot readily be attached or levied on by ordinary legal process." The title and these recitations track the turnover statute. However, the only relief actually ordered is, in addition to an award of costs and attorney's fees, that the sheriff "seize and sale [sic] the property." While the court's order recited that Kennedy "is the owner of" part of the 1,704-acre property described in the deed filed in the March 15, 2007, property records, the court order did not include any explicit findings or orders regarding fraudulent conveyance.⁹ To sort out what kind of an order was actually entered, we first determine what it is not.

Turnover

A turnover order is a "procedural device by which judgment creditors may reach assets of a debtor that are otherwise difficult to attach or levy on by ordinary legal process." Beaumont Bank N.A. v. Buller, 806 S.W.2d 223, 224 (Tex.1991); see also TEX. CIV. PRAC. & REM.CODE ANN. § 31.002(a). To accomplish turnover, the court may

(1) order the judgment debtor to turn over nonexempt property that is in the debtor's possession or is subject to the debtor's control . . . to a designated sheriff or constable for execution;

(2) otherwise apply the property to the satisfaction of the judgment; or

(3) appoint a receiver with the authority to take possession of the nonexempt property, sell it, and pay the proceeds. . . .

TEX. CIV. PRAC. & REM.CODE ANN. § 31.002(b). A turnover order may be enforced by contempt proceedings. TEX. CIV. PRAC. & REM.CODE ANN. § 31.002(c).

A turnover order "requires the debtor to bring to the court all documents or property used to satisfy a judgment. The actual effect of the bill is to require the burden of production of property which is subject to execution to be placed with the debtor instead of a creditor attempting to satisfy his judgment." Buller, 806 S.W.2d at 226. It is this aspect of a turnover order (i.e., that it acts "in the nature of a mandatory injunction") which makes it appealable. See Schultz, 810 S.W.2d at 740.

At oral argument, all parties conceded this is not a turnover order. We agree. The substance of the order requires no affirmative action by either Kennedy or Moore. It does not order anything collected or turned over and cannot be read to act as a mandatory injunction as to the judgment debtor or transferee. The order directs affirmative action of only the sheriff himself to seize and sell the property the subject of the motion.¹⁰

Fraudulent Transfer Act

The Trusts assert that relief was granted under the FTA, which provides for several creditors' remedies against a fraudulent transfer, most applicable to all creditors¹¹ and one particular to judgment creditors.

There are remedies which are available to creditors for alleged fraudulent transfers pursuant to Section 24.008(a) of the Texas Business and Commerce Code. However, that section is applicable to "an action for relief against a transfer or obligation"; since no action for...