Juаn 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.
975 S.W.2d 63
EDELMAN, Justice.
City of San Antonio‘s Motion to Dismiss
The City of San Antonio, seeks dismissal of the appeal for want of prosecution. The record on appeal, filed on January 23, 1998, consists only of the clerk‘s record. Appellant‘s civil docketing statement indicates that no reporter‘s record was made of either hearing on the dispositive motions discussed above. Appellant‘s brief was due on February 23, 1998, and has not been filed. No extension of time has been sought.
If an appellant fails to timely file a brief, the appellate court may: (1) dismiss the appeal for want of prosecution, unless the appellant reasonably explains the failure and the appellee is not significantly injured by the appellant‘s failure to timely file a brief.
Ronald J. Restrepo, Christopher Deeves, Roger A. Rider, Houston, for appellants.
Reba Eichelberger, Baytown, for appellee.
Before YATES, EDELMAN and DRAUGHN, JJ.
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 continuanсe because they were not on notice that the thrift plan‘s
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 extensiоn 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
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, evеn 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) аs 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 Proрerty Code. See
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, executiоn, 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
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 accоunt 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 Code of 1986.”
TEX. PROP.CODE ANN. § 42.0021(a) (Vernon Supp.1998) (emphasis added). By the plain meaning of this provision, evidence that an account is an individual retirement annuity is sufficient to establish that it is exempt unless evidence is presented that the IRA does not qualify for such treatment under the IRC.4
In this case, the evidence is uncontroverted, and appellees do not dispute, that Juan‘s account at Minnesota Mutual is an individual retirement annuity. Under
Deana asserts that the dispositive issue is whether appellants proved that the sources of the funds used to establish the IRA were exempt. That factor was pertinent to appellants’ alternative claim under
Appellаnts’ sixth point of error argues that the trial court abused its discretion by ordering the turnover of appellants’ property located in Mexico because Juan‘s mother-in-law, who has lived in a house on one of the properties in Mexico pursuant to an oral grant, may be vested with a life estate in the property or have other rights as a tenant. Therefore, appellants claim that her ownership rights could not be determined in a turnover proceeding, and that the Texas court lacked jurisdiction to determine title to this real property located outside the State.
Texas courts do not apply the turnover statute to non-judgment debtors. See Beaumont Bank, 806 S.W.2d at 227. Nor can the turnover statute be used to determine a party‘s substantive rights or property rights of third parties. See Resolution Trust Corp. v. Smith, 53 F.3d 72, 78, 79 (5th Cir.1995). However, the turnover statute allows a court to reach assets owned by and subject to the control of a judgment debtor, even if those assets are in the hands of a third party. See id. at 78.
In Reeves, the appellees sued the appellаnt in Texas to execute on a Maryland judgment, and the trial court6 ordered the appellant to turn over to a receiver “all indicia of ownership” in certain nonexempt real property in Portugal subject to the appellant‘s control. See Reeves v. Federal Sav. and Loan Ins. Corp., 732 S.W.2d 380, 381 (Tex.App.- Dallas 1987, no writ). The appellant argued that the trial court lacked jurisdiction to adjudicate title to the realty or compel him to turn over foreign realty, that the title could only be determined according to Portuguese law, that a close corporation was the record title holder, and that his mother in law held an undivided one-half interest in the property. See id. In affirming the turnover order, the court of appeals observed that the receiver might have to comply with Portuguese law in order to convey the property to satisfy the judgment, and that it might well be difficult to do so. See id. at 382 (Enoch, C.J.). However, those considerations did not affect the jurisdiction of the trial court over the person of apрellant or its authority under section 31.002 to compel him to turn over any muniment of title he had in his control to the court appointed receiver. See id.7
In this case, appellants had the burden to present in their brief such discussion of the facts and authorities relied upon as are needed to maintain the point at issue. See
Direct Transfer of Assets to Judgment Creditor
Appellants’ seventh рoint of error argues that the trial court abused its discretion by ordering the direct transfer of appellants’ property interest in Mexico to Deana because the turnover statute prohibits the direct transfer of assets to a judgment creditor. Deana responds that the turnover order properly provides for the transfer of the property to a receiver, not directly to Deana.
In this case, the turnover order orders appellants to “turnover to the constable ... all indicia of ownership of the real property with improvements located at ... Mexico” and orders the constable to “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].” (emphasis added). Although the order does not initially require a turnover of property directly from the debtor to the creditor, it allows a subsequent turnover of the property from the receiver to the creditor if the receiver is unsuccessful in selling the property.
Deana has cited and we have found no authority or rationale suggesting that the insertion of such an intermediate step overcomes the legal or practical deficiencies of a direct turnover. Moreover, to the extent that an option to transfer property directly to the creditor could arguably lessen a receiver‘s incentive to achieve a sale and application of proceeds to the judgment, particularly where foreign property or other complications are presented, it would appear to undermine the protection afforded by requiring a receiver. Under these circumstances, we conclude that allowing the property to be transferred in kind to the creditor is not authorized by the turnover statute. We thus sustain appellants’ seventh point of error.
Anti-suit Injunction
Appellants’ eighth point of error argues that the trial court abused its discretion by ordering appellants, their relatives, attorneys and representatives not to exercise any rights under Mexican law with regard to the property in Mexico. Appellants contend that, because the trial court made no inquiry to determine special circumstances justifying such an anti-suit injunction, it abused its discretion in so restricting the rights of appellants and their agents, relatives, and attorneys.9 Deana responds that the turnover order does not enjoin anyone from exercising their rights to the property, but only from committing fraud to avoid paying the obligation.
The turnover order enjoins appellants and their relatives, agents, and attorneys “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.” We interpret this provision to prohibit only attempts to exercise physical control of the property or to transfer possession or control of the property so as to defeat the operation of the order or its execution by a constable, receiver, or any subsequent purchаser. We do not construe the provision to inhibit appellants’ exercise of their legal or administrative rights in any appropriate forum. Therefore, appellants’ eighth point of error is overruled.
YATES, Justice, concurring and dissenting.
I respectfully dissent to the majority‘s resolution of appellant‘s first point of errоr. The exempt status of the Minnesota Mutual IRA is controlled by a prior decision of this court, Rucker v. Rucker, 810 S.W.2d 793, 795-96 (Tex.App. - Houston [14th Dist.] 1991, writ denied). In that case, this court interpreted
In doing so, it has ignored the fundamental principle of stare decisis that requires a continued adherence of a court to its previous decisions. “[I]n the area of statutory construction, the doctrine of stare decisis has its greatest force.” Marmon v. Mustang Aviation, Inc., 430 S.W.2d 182, 186 (Tex.1968). A court‘s adherence to its precedents promotes efficiency, fairness, and legitimacy and is the cornerstone of common law. See Weiner v. Wasson, 900 S.W.2d 316, 320 (Tex.1995). The majority increased the uncertainty of relying on judicial decisions by rejecting the general rule in Texas adhered to by this and other courts that a party claiming an asset has the burden to prove it is exempt. See Santibanez, M.D. v. Wier McMahon Co., 105 F.3d 234, 239 (5th Cir.1997) (citing Roosth v. Roosth, 889 S.W.2d 445, 459-60 (Tex. App.-- Houston [14th Dist.] 1994, writ denied); Jacobs v. Adams, 874 S.W.2d 166, 167 (Tex. App.-Houston [14th Dist.] 1994, no writ); accord Dale v. Finance Am. Corp., 929 S.W.2d 495, 498-99 (Tex.App.-Texarkana 1996, writ denied).
I do realize that courts must be free, at certain times, to overrule their past decisions and in those rare occasions stаre decisis does not prevail. See Dawkins v. Meyer, 825 S.W.2d 444, 454 (Tex.1992) (J. Gonzalez, dissenting) (noting that there are “rare occasions” when “[t]here are justifiable escapes and liberations from the rigidities and inflexibilities of stare decisis“). However, I am not persuaded that this case poses one of those “rare occasions” when stare decisis should be ignored. First, the facts and legal issues presented in this case are substantially the same as those resolved in Rucker. Second, although the majority relies almost exclusively on the “plain meаning” of the statute, a previous panel of this court interpreted the same language in a different manner. Further, the decision in Rucker is neither in conflict with other decisions nor has its rationale been criticized. Finally, if the construction of a statute is unacceptable to the Legislature, a simple remedy is available by the process of legislative amendment. See James v. Vernon Calhoun Packing Co., 498 S.W.2d 160, 162 (Tex.1973); Marmon, 430 S.W.2d at 186; Moss v. Gibbs, 370 S.W.2d 452, 458 (Tex.1963).
Consequently, I would overrule appellant‘s first point of error. I concur in the remainder of the majority‘s opinion.