ZEECON WIRELESS v. AMERICAN BANK OF TEXAS
| Decision Date | 20 January 2010 |
| Docket Number | No. 03-06-00395-CV.,03-06-00395-CV. |
| Citation | 305 SW 3d 813 |
| Parties | ZEECON WIRELESS INTERNET, LLC, Appellant, v. AMERICAN BANK OF TEXAS, N.A. and Joanna McEwen, Appellees. |
| Court | Texas Court of Appeals |
Thomas F. Ryan, Horseshoe Bay, TX, for Appellant.
Neal A. Kennedy, Kennedy Law Office PLLC, Marble Falls, TX, for Appellee.
H. Bryan Hicks, H. Bryan Hicks, PLC, Marble Falls, TX, for Interested Party.
Before Chief Justice JONES, Justices PATTERSON and PURYEAR.
This appeal arises from a garnishment proceeding. Joanna McEwen (the judgment creditor and garnishor) sought to satisfy, by writ of garnishment, a judgment she had obtained against Zeecon Wireless Internet, LLC in a suit for breach of contract. McEwen initiated a proceeding to garnish funds belonging to Zeecon on deposit at American Bank of Texas, N.A. (the garnishee). The garnishment writ was issued and served on American Bank, but garnishment documents were never served on Zeecon. The district court dissolved the writ but ordered a portion of Zeecon's funds disbursed to American Bank and McEwen to compensate them for their attorney's fees and costs incurred in connection with the garnishment proceeding. By one issue, Zeecon contends that the garnishment order was invalid to the extent it disbursed funds because McEwen failed to serve Zeecon with the garnishment documents as required by Texas Rule of Civil Procedure 663a and because the affidavit supporting the writ was insufficient. We conclude that, because McEwen failed to strictly comply with the statute and rules requiring service on the debtor in a garnishment proceeding, the portion of the district court's order purporting to distribute some of Zeecon's funds is void. Accordingly, we vacate that portion of the judgment.
In the underlying suit, McEwen sued Zeecon for breach of a lease agreement in which Zeecon agreed to build and maintain a radio tower on McEwen's property.1 Zeecon began digging a seven-foot hole for the installation of the tower but stopped when the presence of "blue stone" rock two feet below the surface prevented it from digging any deeper. Zeecon offered McEwen $200 for cancellation of the agreement. McEwen refused this offer and filed suit for breach of contract. After a bench trial, the district court awarded McEwen $4,800 in damages for breach of contract plus pre- and postjudgment interest, attorney's fees, and costs. Zeecon filed a notice of appeal but did not immediately take action to supersede the judgment. McEwen filed an application for writ of garnishment, pursuant to which the district clerk issued a writ of garnishment to American Bank, a financial institution where Zeecon maintained an account. McEwen had American Bank served with the writ of garnishment. McEwen sent Zeecon's counsel a "notice of garnishment" stating simply that certain unidentified property owned by Zeecon had been garnished and that Zeecon had a right to seek to regain possession of the property by filing a replevy bond or moving to dissolve the writ. That notice, however, was not accompanied by a copy of the writ of garnishment itself, nor by the application for writ of garnishment, nor by accompanying affidavits, nor by any orders of the court, all of which are required by Texas Rule of Civil Procedure 663a to be served on the debtor. McEwen did not serve Zeecon directly with any such documents.
After the garnishment proceeding was initiated, Zeecon filed a supersedeas bond to suspend enforcement of the underlying judgment. McEwen then filed a motion to abate the garnishment proceeding pending finality of the underlying judgment. The record does not indicate how, if at all, the court disposed of this motion.
Several months later Zeecon moved to "dismiss and dissolve the writ of garnishment and suspend collection or enforcement of the judgment." Zeecon contended in its motion that (1) McEwen had failed to serve it with the application for writ of garnishment, the accompanying affidavits, and a copy of the writ of garnishment as required by rule 663a of the Texas Rules of Civil Procedure; (2) the affidavit supporting the application for the writ of garnishment was insufficient to meet the requirements of the garnishment statute; and (3) the supersedeas bond suspended enforcement of the judgment. Zeecon requested that the court suspend enforcement of the underlying judgment, "dismiss and dissolve" the writ of garnishment, and release to Zeecon the funds that were the subject of the garnishment proceeding. After a hearing on Zeecon's motion, the district court signed an order that dissolved the writ of garnishment but directed the garnishee, American Bank, to disburse the funds in the following manner:
Pursuant to the order, American Bank reduced the balance of Zeecon's funds on deposit with the bank by $1,330, paying that amount to McEwen and to its own attorneys, then released the remainder to Zeecon. Zeecon contends on appeal that the garnishment was invalid due to (1) McEwen's failure to comply with the service requirements of the garnishment statute, and (2) insufficiency of the affidavit supporting the application for writ of garnishment. On these bases, Zeecon argues that the district court had no authority to order the funds disbursed to any party but Zeecon.
Garnishment is a statutory proceeding brought by a judgment creditor (the garnishor) whereby the property, money, or credits of the judgment debtor (the debtor) in the possession of another (the garnishee) may be applied to payment of the final judgment against the debtor. See Bank One Tex., N.A. v. Sunbelt Sav., F.S.B., 824 S.W.2d 557, 558 (Tex.1992); Beggs v. Fite, 130 Tex. 46, 106 S.W.2d 1039, 1042 (1939). A garnishment proceeding is a proceeding quasi in rem, and the garnishee effectively becomes the receiver of the court, holding the property until it is determined who is entitled to it. Cockrum v. Cal-Zona Corp., 373 S.W.2d 572, 574 (Tex.Civ.App.-Dallas 1963, no writ).
The remedy of garnishment is purely a creature of statute and was unknown at common law. Beggs, 106 S.W.2d at 1042; Walnut Equip. Leasing Co. v. J-V Dirt & Loam, 907 S.W.2d 912, 915 (Tex.App.-Austin 1995, writ denied). Consequently, both the Texas Supreme Court and this Court have held that garnishment proceedings cannot be sustained unless they strictly conform to the statutory requirements and related rules governing such proceedings. Beggs, 106 S.W.2d at 1042; Walnut Equip. Leasing Co., 907 S.W.2d at 915; Hering v. Norbanco Austin I, Ltd., 735 S.W.2d 638, 641 (Tex.App.-Austin 1987, writ denied) (). If any of the statutory requirements are not met, the right to have a garnishment judgment rendered against the property of the debtor fails. See St. Louis, Brownsville & Mexico R.R. v. Dallas Cooperage & Woodenware Co., 268 S.W. 769, 771 (Tex.Civ.App.-Dallas 1925, no writ); see also Hanson v. Guardian Trust Co., 150 S.W.2d 465, 467 (Tex. Civ.App.-Galveston 1941, writ dism'd) (). This principle is broadly adhered to by our sister states.3
Garnishment proceedings in Texas are governed by chapter 63 of the civil practice and remedies code and rules 657 through 679 of the Texas Rules of Civil Procedure. See Tex.R. Civ. P. 657-79; Tex. Civ. Prac. & Rem.Code Ann. §§ 63.001-.008 (West 2008). The Texas Rules of Civil Procedure have the same force and effect as statutes. In re City of Georgetown, 53 S.W.3d 328, 332 (Tex. 2001).
Rule 663a of the rules of civil procedure requires that the judgment debtor be served with specified garnishment documents, and the service must be carried out in a precise way:
Rule 663a was added to the rules of civil procedure relating to garnishment actions as part of a 1978 amendment of the rules in response to several prejudgment-seizure cases decided by the United States Supreme Court. The Supreme Court had held that statutes permitting prejudgment deprivation of a person's property without notice and an opportunity to be heard violated due process. See Fuentes v. Shevin, 407 U.S. 67, 92 S.Ct. 1983, 32 L.Ed.2d 556 (1972); Sniadach v. Family Fin. Corp., 395 U.S. 337, 89 S.Ct. 1820, 23 L.Ed.2d 349 (1969). Based on these cases, the Texas Supreme Court added rule 663a requiring the garnishor to serve the debtor with "a copy of the writ of garnishment, the application, accompanying affidavits and orders of the court." Tex.R. Civ. P. 663a; see Southwest Metal Fabricators, Inc. v. Internacional De Aceros, 503 F.Supp. 76, 78 ...
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