Lozano v. Lozano

• Decision Date: 23 April 1998
• Docket Number: No. 14-97-00560-CV,14-97-00560-CV
• Citation: 975 S.W.2d 63
• Parties: Juan Antonio LOZANO, Sr. and Blanca Suarez Lozano, Appellants, v. Deana Ann LOZANO, Appellee. (14th Dist.)
• Court: Texas Court of Appeals

Page 63

975 S.W.2d 63

Juan Antonio LOZANO, Sr. and Blanca Suarez Lozano, Appellants, v. Deana Ann LOZANO, Appellee.

No. 14-97-00560-CV.

Court of Appeals of Texas,

Houston (14th Dist.).

April 23, 1998.

Ronald J. Restrepo, Christopher Deeves, Roger A. Rider, Houston, for appellants.

Reba Eichelberger, Baytown, for appellee.

Before YATES, EDELMAN and DRAUGHN, JJ.

OPINION

EDELMAN, Justice.

Juan Antonio Lozano, Sr. ("Juan") and Blanca Suarez Lozano ("Blanca") appeal a turnover order granted in favor of Deana Ann Lozano ("Deana") on the grounds that the trial court abused its discretion by: (1) ordering the turnover of a portion of appellants' Individual Retirement Annuity ("IRA") because: (a) it is exempt from execution as a matter of law; (b) Deana had not pleaded that the Exxon thrift plan from which the IRA was funded was not qualified under the Internal Revenue Code (the "IRC"); and (c) even if it was not exempt, the IRA was not subject to turnover because it could be attached or levied upon by garnishment; (2) denying appellants a continuance because they were not on notice that the thrift plan's qualification under the IRC would be a subject of the turnover hearing; (3) refusing to stay enforcement of the turnover order because the IRA was exempt from execution as a matter of law; (4) ordering the turnover of appellants' property in Mexico because it required the determination of title to property outside the court's jurisdiction; (5) ordering the direct transfer of appellants' property interest in Mexico to Deana; and (6) ordering appellants, their relatives, attorneys and representatives not to exercise any rights under Mexican law with regard to the property in Mexico. We affirm as modified.

Background

On February 12 and March 5, 1997, respectively, the trial court entered a turnover order and an order modifying it (collectively, the "turnover order") which provided, in part:

[T]he court finds and concludes that [Juan] has failed to meet the his burden of proof that the properties described by [Deana] are exempt and that ... said property and records are not exempt from attachment, execution, or any other type of seizure for the satisfaction of liabilities. The properties cannot be readily attached or levied on by ordinary legal process.

IT IS THEREFORE ORDERED THAT [appellants] shall execute an authorization to the Minnesota Mutual Fund Trustee ... to release and remit to the constable ... funds in the amount of $ 144,000.00 as part payment on the final judgment signed on August 31, 1994, in this case.

IT IS FURTHER ORDERED THAT [appellants] shall turnover to the constable ... all indicia of ownership of the real property with improvements located at ... Mexico.

IT IS FURTHER ORDERED THAT ... the constable shall ... place the Mexico property in the hands of a receiver for sale, with the sale proceeds distributed to [Deana] to be applied to the judgment debt, and if unsuccessful, the real properties and all titles transferred to [Deana].

ORDERED THAT [appellants], their relatives and agents, including attorneys, are enjoined from attempting to prevent, alter, or in any manner attempt to exercise possession and control of the real properties located in Mexico ... in an effort to prevent this court order from becoming effective.

On June 26, 1997, this court issued a writ of injunction ordering Deana to refrain from executing on the portion of the turnover order requiring turnover of $144,000 from the funds in Juan's individual retirement account at Minnesota Mutual Life Insurance Company until further order of this court.

Timely Filing of Statement of Facts

As a preliminary matter, Deana contends that appellants failed to file a timely statement of facts by July 10, 1997, or request a timely extension by July 25, 1997. This court's records reflect that appellants filed: (1) their appeal bond in this case on May 12, 1997; (2) a petition for writ of injunction concerning the turnover order in a separate original proceeding under cause number 14-97-558-CV and a statement of facts on May 23; and (3) a motion to transfer the statement of facts from the injunction proceeding to this appeal on July 30. That motion was granted on August 14.

Under the Texas Rules of Appellate Procedure previously in effect, a court of appeals had no authority to consider a late-filed statement of facts where a timely motion for extension of time was not filed. See TEX.R.APP. P. 54(a), (c). ¹ Beginning September 1, 1997, no case may be disposed of or issue decided on the ground that the record was not timely filed, before or after that date, except under the amended rules currently in effect. See Texas Supreme Court and Court of Criminal Appeals, Final Approval of Revisions to the Texas Rules of Appellate Procedure (Aug. 15, 1997). Under the current rules, there is no constraint on our consideration of a late-filed statement of facts. Moreover, a party may suffer an adverse result from a failure to file a "reporter's record" only where it results from the party's failure to pay the corresponding fees and only where the party is first given a reasonable opportunity to cure. See TEX.R.APP. P. 37.3(b). Accordingly, the timeliness of the filing of the statement of facts is of no consequence to the disposition of this appeal.

Standard of Review

The issuance of a turnover order is reviewed under an abuse of discretion standard, and, even if predicated on an erroneous conclusion of law, will not be reversed for abuse of discretion if the judgment is sustainable for another reason. See Beaumont Bank, N.A. v. Buller, 806 S.W.2d 223, 226 (Tex.1991). Interpretation of a statute is a pure question of law over which a judge has no discretion. See Mitchell Energy Corp. v. Ashworth, 943 S.W.2d 436, 437 (Tex.1997). Thus, a trial court has no discretion in determining what the law is or applying the law to the facts. See Huie v. DeShazo, 922 S.W.2d 920, 927 (Tex.1996). Consequently, a trial court's erroneous legal conclusion, even in an unsettled area of law, is an abuse of discretion. See id. at 927-28. Similarly, although a turnover order is not reviewed under a sufficiency of the evidence standard, the lack of any evidence to support a turnover order is a relevant factor in determining whether the trial court abused its discretion in entering it. See Beaumont Bank, 806 S.W.2d at 226.

Exempt Status of IRA

The first of appellants' eight points of error argues that the trial court abused its discretion by ordering the turnover of a portion of their IRA because it is exempt from execution as a matter of law: (1) as a qualified individual retirement annuity under subsection 42.0021(a) of the Texas Property Code; and (2) as an exempt rollover account under subsection 42.001(b). Deana responds that the appellants failed to meet their burden to prove that the source of the funds used to establish the IRA account was a qualified plan.

A court may not enter or enforce an order that requires the turnover of the proceeds of, or the disbursement of, property that is exempt under any statute, including section 42.0021 of the Texas Property Code. See TEX. CIV. PRAC. & REM.CODE ANN. § 31.002(f) (Vernon 1997). ² Section 42.0021(a) provides in part:

In addition to the exemption prescribed by Section 42.001, a person's right to the assets held in or to receive payments, whether vested or not, under any stock bonus, pension, profit-sharing, or similar plan, including a retirement plan for self-employed individuals, and under any annuity or similar contract purchased with assets distributed from that type of plan, and under any retirement annuity or account described by Section 403(b) of the Internal Revenue Code of 1986, and under any individual retirement account or any individual retirement annuity ... is exempt from attachment, execution, and seizure for the satisfaction of debts unless the plan, contract or account does not qualify under the applicable provisions of the Internal Revenue Code of 1986. ³

TEX. PROP.CODE ANN. § 42.0021(a) (Vernon Supp.1998) (emphasis added).

It is the burden of the party claiming an exemption under section 42.0021 to prove that he is entitled to it. See Rucker v. Rucker, 810 S.W.2d 793, 795-96 (Tex.App.--Houston [14th Dist.] 1991, writ denied); see also Roosth v. Roosth, 889 S.W.2d 445, 459-60 (Tex.App.--Houston [14th Dist.] 1994, writ denied). However, Texas courts apply a liberal rule of construction to state exemption statutes. See In re Volpe, 943 F.2d 1451, 1453 (5th Cir.1991); see also Hickman v. Hickman, 149 Tex. 439, 234 S.W.2d 410, 414 (1950).

In this case, the trial court held an evidentiary hearing on Deana's application for turnover order and a second hearing on appellants' application for temporary restraining order, temporary injunction, and permanent injunction to stop enforcement of the turnover order. The exhibits admitted into evidence include (1) a variable annuity application in which Juan applied to Minnesota Mutual Life Insurance Company ("Minnesota Mutual") in February of 1996 for an "IRA Rollover" plan; and (2) eleven account confirmations issued during 1996 on the Minnesota Mutual "individual retirement annuity" account. With regard to this account, Juan testified, among other things, that (1) the two "contributions" to the Minnesota Mutual IRA shown in the account confirmations were wire transferred directly from a thrift account and annuity account at Exxon where he had been employed; (2) he understood that the Minnesota Mutual IRA was a qualified plan under IRS Regulations; and (3) that he paid no taxes on the contributions wire transferred into the Minnesota Mutual IRA.

"[A] person's right to the assets held in or to receive payments ... under any ... individual retirement annuity ... is exempt from attachment, execution, and seizure for the satisfaction of debts unless the plan, contract, or account does not qualify under the applicable provisions of the Internal Revenue...