Maltsberger v. Maloney, No. 04-05-00579-CV (Tex. App. 12/20/2006)
| Decision Date | 20 December 2006 |
| Docket Number | No. 04-05-00579-CV.,04-05-00579-CV. |
| Parties | ZANE MALTSBERGER, Appellant, v. JANICE MALONEY AND GEORGE LEGRAND, Appellees. |
| Court | Texas Court of Appeals |
Appeal from the 407th Judicial District Court, Bexar County, Texas, Trial Court No. 2001-CI-11257, Honorable David Berchelmann, Jr., Judge Presiding.
AFFIRMED IN PART; REVERSED AND REMANDED IN PART.
Sitting: Catherine STONE, Justice, Karen ANGELINI, Justice, Rebecca SIMMONS, Justice.
Zane Maltsberger appeals a no-evidence summary judgment granted in favor of Janice Maloney and George LeGrand. Zane presents six issues on appeal asserting that fact issues were raised by the evidence with regard to the liability of Maloney and LeGrand as sureties on a bond and under various tort claims.
The underlying lawsuit arises from the settlement of a personal injury action arising from injuries sustained by Zane Maltsberger when he was a minor. Zane's father, John Maltsberger, brought the suit as Zane's next friend. John retained Maloney and LeGrand as the attorneys on the case. A "friendly suit" was brought after a $60,000.00 settlement was reached, and Michael Jackson was appointed as Zane's guardian ad litem in connection with the trial court's approval of the settlement. In a judgment dated February 28, 1989, the trial court approved the settlement, ordering that $33,042.48 be recovered by John, and $26,957.72 be recovered by Zane. With regard to Zane's recovery, the judgment provided that it would be paid into the registry of the court; however, the judgment further provided:
It is further ORDERED, ADJUDGED and DECREED by the court that upon the execution of a bond as required by law, that money paid into the registry of the Court for the benefit of the minor, Zane Maltsberger, shall be paid over to John Maltsberger, next friend of minor Plaintiff herein, to be used for the benefit of said minor and that when the said minor shall reach his majority, any such money not so used, with lawful interest thereon, will be delivered by said next friend to said minor or to such other person or persons as may be appointed by the Court when ordered by the Court to do so.
On April 28, 1989, a Bond for Withdrawal of Funds was filed with the trial court. Although Zane contends in his brief that a motion was filed by Maloney and LeGrand seeking the release of the funds from the registry of the court, the record does not contain any such motion. The bond states that John "is desirous of withdrawing the sum of $26,957.72 out of the Registry of the Court." The bond further provides:
NOW, THEREFORE, KNOW ALL MEN BY THESE PRESENTS: That I, JOHN MALTSBERGER, as Principal, and GEORGE LeGRAND and JANICE MALONEY as Sureties, acknowledge ourselves bound and liable to pay to the County Judge of Bexar County, Texas, and his successors and offers the sum of $53,915.44 conditioned that the said JOHN MALTSBERGER, will pay over said sum of $26,957.52 [sic] to said Minor-Plaintiff in accordance with the Judgment rendered herein, with interest thereon as and when said Minor-Plaintiff becomes of age, or to such other person or persons as may be appointed by the Court when ORDERED by the Court to do so, or will use and expend said sum for the benefit of the Minor-Plaintiff herein to whom said sum for the benefit of the Minor-Plaintiff herein to whom such sum [sic] was herein awarded. In such event, this obligation shall become null and void, otherwise, to remain in full force and effect.
Zane subsequently sued John for breach of fiduciary duties in misapplying the funds released from the registry, and a default judgment was entered against John on July 25, 2000, for $62,494.02 in monetary damages and $25,000.00 in exemplary damages. On April 30, 2001, Zane filed suit against Maloney and LeGrand, alleging they were liable as sureties on the bond and also were liable for various torts arising from their actions in representing Zane in the original settlement and in seeking the release of the funds from the registry of the court. Maloney and LeGrand moved for a no-evidence summary judgment challenging various elements of Zane's causes of action, and the trial court granted summary judgment in favor of Maloney and LeGrand without specifying the grounds on which the judgment was granted.
"In reviewing a no-evidence summary judgment motion, we examine the record in the light most favorable to the nonmovant; if the nonmovant presents more than a scintilla of evidence supporting the disputed issue, summary judgment is improper."Forbes Inc. v. Granada Biosciences, Inc., 124 S.W.3d 167, 172 (Tex. 2003). "A no-evidence summary judgment is improper if the respondent brings forth more than a scintilla of probative evidence to raise a genuine issue of material fact." Id. Less than a scintilla of evidence exists when the evidence is so weak as to do no more than create a mere surmise or suspicion of a fact. Id. More than a scintilla of evidence exists if it would allow reasonable and fair-minded people to differ in their conclusions. Id.
In their motion, Maloney and LeGrand challenged Zane's standing to sue on the bond. In his first three issues, Zane asserts that he had standing, or, in the alternative, Zane contends that Maloney and LeGrand failed to present this issue before the court through the proper procedure.1 Maloney and LeGrand respond that Zane has no standing because the bond was payable to the county judge and a bond must be strictly construed.
The liability of a surety is determined by the language of the bond itself; however, a statute mandating a bond is made part thereof and is controlling. Geters v. Eagle Ins. Co., 834 S.W.2d 49, 50 (Tex. 1992). Although a surety contract is strictly construed, the surety contract must be construed to carry out the purpose for which it was executed, and the obligation intended by the parties must be gathered from the instrument as a whole. Balboa Ins. Co. v. K & D & Assocs., 589 S.W.2d 752, 758 (Tex. Civ. App.-Dallas 1979, writ ref'd n.r.e.). Only after the court determines the obligation intended by the parties from the entirety of the surety contract does the rule of strict construction apply to prevent extension of the obligation by implication or presumption. Id.; see also Gramercy Ins. Co. v. Auction Finance Program, Inc., 52 S.W.3d 360, 364 (Tex. App.-Dallas 2001, pet. denied).
A third party may enforce and recover on a bond, just as on any other contract made between other parties, only if the contracting parties intend to secure a benefit to that third party, and only if the contracting parties entered into the contract directly for the third party's benefit. Old Republic Surety Co. v. Cross, 27 S.W.3d 35, 37 (Tex. App.-San Antonio 2000, pet. denied); see also Harrison, Walker & Harper,L.P. v. Federated Mut. Ins. Co., No. 2-03-048-CV, 2004 WL 726813, at *2 (Tex. App.-Fort Worth Apr. 1, 2004, no pet.). A third party, however, does not have a right to enforce a contract if he received only an incidental benefit. Harrison, Walker & Harper, L.P., 2004 WL 726813, at *2; Cross, 27 S.W.3d at 37. Because a court will not create a third-party beneficiary contract by implication, the contract must clearly and fully express an intent to confer a direct benefit to the third party. Harrison, Walker & Harper, L.P., 2004 WL 726813, at *2; Cross, 27 S.W.3d at 37.
In Harrison, Walker & Harper, L.P., the court held that the party seeking to recover against the surety was without standing because the bond did not mention the party. 2004 WL 726813, at *2....
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