Republic Ins. Co. v. Millard

• Decision Date: 27 February 1992
• Docket Number: No. C14-91-00570-CV,C14-91-00570-CV
• Citation: 825 S.W.2d 780
• Parties: REPUBLIC INSURANCE COMPANY, Relator, v. The Honorable Richard W. MILLARD, Judge, Respondent. (14th Dist.)
• Court: Texas Court of Appeals

Page 780

825 S.W.2d 780

REPUBLIC INSURANCE COMPANY, Relator, v. The Honorable Richard W. MILLARD, Judge, Respondent.

No. C14-91-00570-CV.

Court of Appeals of Texas,

Houston (14th Dist.).

Feb. 27, 1992.

Jerry V. Walker, Houston, Terry O. Tottenham, Austin, for relator.

David W. Williams, W. Richard Ellis, III, Stephanie Nelson and Mark Wham, Houston, for respondent.

Before ROBERTSON, SEARS and DRAUGHN, JJ.

OPINION

DRAUGHN, Justice.

This mandamus action evolves from the trial court's application of the Texas "turnover" statute. We are presented with the following issues of first impression concerning the scope of this statute: 1) whether a third party may be included as a party defendant for the first time in a post-judgment turnover petition; and 2) whether a trial court can order a separate trial to determine the merits alleged in bad faith claims against that third party as part of a turnover order.

Relator, Republic Insurance Company, (Relator or Republic) petitions this court for writ of mandamus to order respondent, the Honorable Richard W. Millard, to rescind his order entered on June 5, 1991, in Cause No. 85-46145-A, a turnover action, pending in the 189th Judicial District Court of Harris County. Respondent incorporated relator, a non-party to the underlying original lawsuit, into a post-judgment turnover procedure and ordered a separate trial to litigate the merits of alleged bad faith and other causes of action against relator. Respondent also denied relator's plea in abatement to suspend the present proceedings because Travis County has dominant jurisdiction on the rights and claims to the reinsurance policy which was issued by relator to National County Life Insurance Company, the primary insurer. (National County.)

For the reasons hereinafter set out, we conditionally grant the writ as to the inclusion of relator both as a party to the turnover procedure and as a litigant in the separate trial ordered in respondent's court. We also direct the trial court to grant the plea in abatement so that all claims against relator can be litigated in Travis County.

The main case which spawned this turnover action is Trevino, et al. v. Culver Concrete Co., Inc., et al. In that case, the Trevinos recovered a judgment in respondent's court against Reginald Davis (Davis) and Culver Concrete Co., Inc. (Culver), his employer, for the wrongful death of their father who was killed in a truck collision. As stated, the primary insurance carrier for Culver and Davis was National County. It had a policy limit of $500,000.00. Relator, Republic, reinsured the first $50,000.00 for National County and Lincoln National Reinsurance Company reinsured the remaining $450,000.00.

During the pendency of the Trevinos' primary lawsuit, the State of Texas instituted insolvency proceedings against National County, pursuant to Article 21.28, et seq., Texas Insurance Code, and a receiver was appointed by the 201st Judicial District of Travis County, Texas. In conjunction with the receivership proceedings, the court issued a permanent injunction prohibiting disbursement of National County's assets which included the reinsurance policy between National County and relator.

After the Trevinos obtained the judgment against Culver and Davis, the involved parties requested relator to pay the reinsurance policy proceeds directly to them. Concerned with conflicting claims between these parties and those of the receiver, relator filed a declaratory judgment suit on June 14, 1990, in the 261st District Court of Travis County, Texas, where exclusive statutory venue existed for the receivership proceedings of National County.

Nine months later, on March 15, 1991, the Trevinos filed a turnover petition pursuant to section 31.002 of the Texas Civil Practice and Remedies Code, commonly referred to as the "turnover" statute. This petition named Republic as a party defendant and sought title to Culver and Davis' alleged causes of action against relator for failure to defend them, failure to provide insurance coverage, and for other bad faith acts in the wrongful death suit. Shortly thereafter, Culver and Davis each filed separate cross-action suits in the turnover proceedings against Republic for refusing to settle the Trevinos' lawsuit within the reinsurance policy limits and for various other bad faith acts in connection with the lawsuit.

Respondent's order of June 5, 1991, turned over Culver and Davis' causes of action against Republic to the extent of the current judgment indebtedness owed to the Trevinos. This order also consolidated Culver and Davis' cross-actions with the Trevinos' turnover proceedings so that any excess recovery against Republic could be reserved for Culver and Davis. Respondent further mandated a separate trial in his court on the merits of all suits filed by these parties against Republic.

To issue writs of mandamus, we are guided by specific and narrow standards. We may issue all writs of mandamus which are agreeable to the principles of law regulating those writs. TEX. GOV'T CODE ANN. § 22.221(b) (Vernon 1988). Mandamus will issue to correct trial court actions only when there has been a clear abuse of discretion, particularly where remedy by way of appeal is inadequate. Ayres v. Canales, 790 S.W.2d 554, 556 (Tex.1990). Here, we have determined respondent abused his discretion by expanding the scope of the turnover statute beyond its purpose as a purely procedural device to assist judgment creditors in post-judgment collections.

The Texas turnover statute provides in pertinent part:

(a) a judgment creditor is entitled to aid from a court of appropriate jurisdiction through injunction or other means in order to reach property to obtain satisfaction on the judgment if the judgment debtor owns property, including present or future rights to property, that:

(1) cannot readily be attached or levied on by ordinary legal process ...

(b) 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 ...

(d) The judgment creditor may move for the court's assistance under this section in the same proceeding in which the judgment is rendered or in an independent proceeding.

TEX.CIV.PRAC. & REM.CODE ANN. § 31.002 (Vernon 1986 & Supp.1991).

Texas courts do not apply the turnover statute to non-judgment debtors. Beaumont Bank, N.A. v. Buller, 806 S.W.2d 223, 227 (Tex.1991). In Beaumont Bank, the supreme court recognized that the turnover statute could only reach Mrs. Buller's assets in her capacity as representative of her husband's estate. Since the bank's judgment only applied to assets owned by her deceased husband's estate, the trial court improperly imposed liability on her individually in the turnover order. Here, relator, Republic, was not a party to the original wrongful death suit, yet it was added as a party defendant in the post-judgment turnover proceedings. Relator is neither a judgment creditor nor a judgment debtor and, therefore, is not an appropriate party to the turnover procedure.

The Trevinos, Culver and Davis maintain that the trial court's order is not only proper, but distinguishable from Cravens, Dargan & Co. v. Travers Co., Inc., 770 S.W.2d 573 (Tex.App.--Houston [1st Dist.] 1989, writ denied) and United Bank Metro v. Plains Overseas Group, Inc., 670 S.W.2d 281 (Tex.App.--Houston [1st Dist.] 1983, no writ). In Cravens, the court concluded that the turnover statute was an improper vehicle to determine whether the judgment debtor owned funds deposited with the State Board of Insurance. The judgment creditor was not permitted to bypass the statutory administrative remedies that would determine the ownership interests in the funds. Similarl...