Case Information
*0 FILED IN 1st COURT OF APPEALS HOUSTON, TEXAS 10/2/2015 10:38:19 AM CHRISTOPHER A. PRINE Clerk
*1 ACCEPTED 01-15-00838-CV FIRST COURT OF APPEALS HOUSTON, TEXAS 10/2/2015 10:38:19 AM CHRISTOPHER PRINE
CLERK No. - - - - - - IN THE COURT OF APPEALS FOR HOUSTON, TEXAS INRE: CHARLES STORER, AGENTUNDERAPOwtROFATTORNEYFOR KENNETH COOPER MCAFEE, RELATOR PETITION FOR WRIT OF MANDAMUS Respectfully Submitted, ANDERSON PFEIFFER, PC Esther Anderson SBN: 00792332 Robert Teir (of Counsel) SBN: 00797940 845 FM 517 West, Suite 200 Dickinson, Texas 77539 Telephone: (281) 488-6535 Facsimile: (281) 488-0625 Email: esther@probateguardianship.com Attorneys for Relator, Charles Storer, Power of Attorney for Kenneth Cooper McAfee
*2 IDENTITY OF PARTIES AND COUNSEL Relator, Charles Storer, Agent under a Power of Attorney for Kenneth Cooper McAfee, certifies that the following is a complete list of the parties, the attorneys and any other persons who have any interest in the outcome of this lawsuit. 1. Relator: Charles Storer, Agent under a Power of
Attorney for Kenneth Cooper McAfee Esther Anderson Counsel: Anderson Pfeiffer, PC SBN: 00792332 845 FM 517 West, Suite 200 Dickinson, Texas 77539-2903 Office: 281-488-6535 Facsimile: 281-614-5205 Email: esther@probateguardianship.com
Of Counsel: Robert Teir (of Counsel) SBN: 00797940 845 FM 517 West, Suite 200 Dickinson, Texas 77539 Office: 832-365-1191 Facsimile: 832-550-2700 Email: rob@teirlaw.com
2. Respondent: Honorable Loyd Wright Judge, Probate Court No. 1 Harris County, Texas 201 Caroline, 6th Floor Houston, Texas 77002
ii *3 3. Real Party in Interest: Rosemary Foltyn and Jake Foltyn
Counsel:
Dean M. Blumrosen SBN: 02517900 4615 Southwest Freeway, Suite 850 Houston, Texas 77027 Office: 713-524-2225 Facsimile: 713-524-5570 Email: Dblumrosenlaw@aol.com
4. Real Party in Interest: Rosemary Foltyn, Administratrix of The Estate of Janet F oltyn McAfee, Deceased Counsel: Mary Elizabeth Duff Mitchell & Duff, LLC SBN: 06166880 21 0 Main Street Richmond, Texas77469 Office: 281-341-1718 Facsimile: 281-239-7928 Email :eduff@mitchellandduff.com
iii *4 TABLE OF CONTENTS IDENTITY OF PARTIES AND COUNSEL ................................................................. II, III TABLE OF CONTENTS ............................................................................................... IV, v INDEX OF AUTHORITIES ...................................................................... VI, VII, VIII, IX, X STATEMENT OF THE CASE .......................................................................................... XI STATEMENT OF JURISDICTION ............................................................................... XIII ISSUES PRESENTED ................................................................................................... XIII
1. Does the Probate Court have jurisdiction to act without a pending cause of action? (No.) 2. Without a pending cause of action, are the June 8, 2011 temporary injunction and the May 18, 2015 Orders void? (Yes.)
3. Do the doctrines of collateral estoppel and res judicata bar re-tracing of the W oodforest account? (Yes.)
4. Do the two Orders amount to a violation of K. McAfee's due process rights? (Yes.) 5. Do the two Orders amount to an abuse of discretion? (Yes.) STATEMENTOFFACTS .................................................................................................. 1 SUMMARY OF ARGUMENT ......................................................................................... 11
iv *5
ARGUMENT .................................................................................................................... 13 I. This case warrants mandamus relief.
II.
The Probate Court does not have jurisdiction
to act without a pending cause of action. III. Without a pending cause of action, the temporary injunction and the May 18, 2015 Order are void.
IV. Res Judicata and Collateral Estoppel barre tracing of the W oodforest account. V. The Estate's claims cannot be satisfied from the W oodforest account or assets stemming from the W oodforest account and continued obstruction of these funds violates due process and constitutes an abuse of discretion.
PRAYER ........................................................................................................................... 45 CERTIFICATE OF SERVICE ......................................................................................... 47 CERTIFICATE OF COMPLIANCE ................................................................................. 48 RULE 52.3(1) CERTIFICATION ..................................................................................... .49 APPENDIX ....................................................................................................................... 50
v *6 INDEX OF AUTHORITIES CASES PAGE(S) 360 Degree Commc 'ns Co. v. Grundman,
937 S.W.2d 574 (Tex. App.-Texarkana 1996, no writ) ............................ 22 Amstadt v. US. Brass Corp., 919 S.W.2d 644 (Tex. 1996) ........................................................................ 37 Barr v. Resolution Trust Corp., 837 S.W.2d 627 (Tex. 1992) ..................................................... 25, 26, 38, 42 Benson v. Wanda Petroleum Co., 468 S.W.2d 361 (Tex. 1971) ........................................................................ 37 Big D Props., Inc. v. Foster, 2 S.W.3d 21 (Tex. App.-Fort Worth 1999, no pet.) .................................. 22 Butnaru v. Ford Motor Co., 84 S.W.3d 198 (Tex. 2002) .......................................................................... 21 Crowson v. Wakeham, 897 S.W.2d 779 (Tex. 1995) ........................................................................ 40 Cunningham v. Parkdale Bank, 660 S.W.2d 810 (Tex. 1983) ............................................................. 17, 18,19 Dionne v. Bouley, 757 F.2d 1344 (1st Cir. 1985) ...................................................................... 44 Eagle Props., Ltd. v. Scharbauer, 807 S.W.2d 714 (Tex. 1990) .................................................................. 35,37 Eastern Energy, Inc. v. SBY P'ship, 750 S.W.2d 5 (Tex. App.-Houston [1st Dist.] 1988, no writ) ................... 25 EOG Res., Inc. v. Gutierrez, 75 S.W.3d 50 (Tex. App.-San Antonio 2002, no pet.) .............................. 22 vi *7 Evans v. C. Woods, Inc., 34 S.W.3d 581 (Tex. App.-Tyler 1999, no pet.) ....................................... 22 Goldstein v. Comm 'n for Lawyer Discipline, 109 S.W.3d 810 (Tex. App.-Dallas 2003, pet. denied) ............................. 38 Houtex Ready Mix Concrete & Materials v. Eagle Canst. & Envtl. Servs., L.P., 226 S.W.3d 514 (Tex. App.-Houston [1st Dist.] 2006, no pet.) ............... 38 In re Cerberus Capital Mgmt., L.P. 164 S.W.3d 379 (Tex. 2005) (orig. proceeding) .................................... 14,45 In re Dickason, 987 S.W.2d 570 (Tex. 1998) .................................................................. 13, 15 In re Francis, 186 S. W.3d 534 (Tex. 2006) ........................................................................ 16 In re Mask, 198 S.W.3d 231 (Tex. App.-San Antonio 2006, orig. proceeding) .......... 15 In re Pierce, No. 13-12-00125-CV, 2012 WL 3525638 (Tex. App.-Corpus Christi Aug. 10,2012, orig. proceeding) (mem. op.) .................................................................................. 14, 15, 16, 45
In re Sw. Bell Tel. Co., 35 S.W.3d 602 (Tex. 2000) (orig. proceeding) (per curiam) .................. 13, 15 InterFirst Bank San Felipe v. Paz Constr. Co., 715 S.W.2d 640 (Tex. 1986) (per curiam) ............................................. 13,22 Johnson & Higgins ofTex., Inc. v. Kenneco Energy, Inc., 962 S.W.2d 507 (Tex. 1998) ...................................................... 27, 32, 33,36 Lehmann v. Har-Con Corp., 39 S.W.3d 191 (Tex. 2001) .......................................................................... 40 vii *8 Logan v. McDaniel, 21 S.W.3d 683 (Tex. App.-Austin 2000, pet. denied) ............................... 40 Lozano v. Lozano, 975 S.W.2d 63 (Tex. App.-Houston [14th Dist.] 1998, pet. denied) ........ 28 Lucik v. Taylor, 596 S.W.2d 514 (Tex. 1980) ........................................................................ 18 Murray v. 0 & A Express, Inc., 630 S. W.2d 633 (Tex. 1982) ........................................................................ 18 Parklane Hosiery Co. v. Shore, 439 u.s. 322 (1979) ..................................................................................... 37 Phillips v. Allums, 882 S.W.2d 71 (Tex. App.-Houston [14th Dist.] 1994, writ denied) ........ 37 Quinney Elec., Inc. v. Kondas Entm 't, Inc., 988 S.W.2d 212 (Tex. 1999) (per curiam) ................................................... 26 Qwest Commc 'ns Corp. v. AT&T Corp., 24 S.W.3d 337 (Tex. 2000) (per curiam) ............................................... 13, 22 Rexrode v. Bazar, 37 S.W.2d 614 (Tex. App.-Amarillo 1997, no writ) ........................... 34,41 Roark v. Allen, 633 S.W.2d 804 (Tex. 1982) ........................................................................ 18 Robbins v. HNG Oil Co., 878 S.W.2d 351 (Tex. App -Beaumont 1994, writ dism'd w.o.j.) ............ 37 Scurlock Oil Co. v. Smithwick, 724 S.W.2d 1 (Tex. 1986) ............................................................................ 38 Smith v. Lanier, 998 S.W.2d 324 (Tex. App.-Austin 1999, pet. denied) ........................ 17,18 viii *9 State
&
Cty. Mut. Fire Ins. v. Miller, 52 S.W.3d 693 (Tex. 2001) .......................................................................... 28 State v. Traylor, 374 S.W.2d 203 (Tex. 1963) .................................................................. 17, 19 Sysco Food Servs., Inc. v. Trapnell, 890 S.W.2d 796 (Tex. 1994) ................................................ 26, 27, 32, 37,38 Tankersley v. Durish, 855 S.W.2d 241 (Tex. App.-Austin 1993, writ denied) ............................ 38 Tex. Dep 't of Pub. Safety v. Petta, 44 S.W.3d 575 (Tex. 2001) ............................................................... 27, 28,37 Texas Natural Res. Conservation Comm 'n, 85 S.W.3d 201 (Tex. 2002) (orig. proceeding) ............................................ 15 Walling v. Metcalfe, 863 S.W.2d 56 (Tex. 1993) (per curiam) ..................................................... 24 ix *10 RULES TEX. R. CIV. P.
§
2 ........................................................................................................................... 18
§
22 ......................................................................................................................... 18
§
97 ......................................................................................................................... 42
§
683 ................................................................................................................. 18, 24
STATUTES TEXAS ESTATE CODE
§ 22.029 .................................................................................................................. 24 § 31.001 ............................................................................................................. 17, 18
§
31.002 ............................................................................................................ 17, 18
§
32.001 .................................................................................................................. 17
§
402.001 ............................................................................................................... 17
TEXAS PROP. CODE
§ 42.0021(a) 42 U.S.C. 407 ................................................................................................... 12, 31, 32,44 X *11 STATEMENT OF THE CASE Nature of the Case The Probate Court granted an independent estate administration m one cause number, and heard a wrongful death proceeding in another cause number. The Probate Court issued a temporary injunction in the estate administration. A final judgment was entered in the wrongful death proceeding, but no claims were filed in the estate administration.
Probate Court Probate Court No. 1 of Harris County, Texas Hon. Loyd Wright, Presiding Disposition Below The Probate Court refused to fully lift the temporary injunction and instead ordered that a portion of funds in an account containing only social security benefit proceeds be turned over to the County Clerk's registry.
xi *12 STATEMENT OF JURISDICTION The Court has jurisdiction to issue a writ of mandamus under TEX. Gov'T CODE §22.22l(b)(l). xii *13 ISSUES PRESENTED The Probate Court entered an order declaring Kenneth McAfee's account at Woodforest National Bank ending in -404 exclusively holds his social security benefit proceeds that are exempt from garnishment. Subsequently, the Probate Court refused to fully lift a temporary injunction on this account and ordered a portion of such funds to be turned over to the County Clerk's registry for the benefit of the estate of Janet Foltyn McAfee, Deceased until the nature of two deposits at issue has been determined. 1. Does the Probate Court have jurisdiction to act without a pending cause of
action? (No.) 2. Without a pending cause of action, are the June 8, 2011 temporary injunction and the May 18, 2015 Orders void? (Yes.) 3. Do the doctrines of collateral estoppel and res judicata bar re-tracing of the W oodforest account? (Yes.)
4. Do the two Orders amount to a violation
ofK. McAfee's due process rights? (Yes.) 5. Do the two Orders amount to an abuse of discretion? (Yes.) xiii *14 STATEMENT OF FACTS Kenneth Cooper McAfee ("K. McAfee" herein) was convicted of a criminal offense involving the death of his wife, Janet Foltyn McAfee, and is currently serving his sentence at a Texas correctional institution. Janet McAfee died on May 8, 2010.
On June 8, 2010, Janet McAfee's mother, Rosemary Foltyn, was appointed Independent Administrator of Janet McAfee's estate by the Probate Court No. 1 of Harris County, Texas under Cause no. 396,935. Rosemary Foltyn, in this capacity, will be referred to herein as "the Estate."
On February 23, 2011, Janet McAfee's parents, Rosemary and Jake Foltyn, individually, and the Estate brought a wrongful death action against Kenneth McAfee in the same Court, under the ancillary Cause no. 396,935-401.
On March 31, 2011, the Estate obtained a Temporary Restraining Order in the estate administration under Cause no. 396,935, which was eventually converted to the June 8, 2011 Agreed Order for Temporary Injunction. Tab 1. The
Temporary Injunction
enjoins K. McAfee from the use and control of his assets and assets he shared with Janet McAfee and states that it is to remain in place until the Court makes a determination of what property belongs to the Estate of Janet McAfee or renders a full and final judgment in the wrongful death suit. Tab 1, at p. 9.
PAGE 1
*15 On March 21, 2014, the Probate Court granted a summary judgment in the wrongful death action in favor of the Foltyns and awarded them each $1,000,000.00. Tab 2.
The June 8, 2011 Temporary Injunction remains in place today and affects K. McAfee's Woodforest National Bank account that is the subject of this mandamus proceeding and his 401(k) account at GMS. The Foltyns seek writs of garnishment; two of K. McAfee's accounts are exempt.
On October 9, 2014, the Foltyns sought Writs of Garnishment against K. McAfee's bank accounts at The GMS Group, L.L.C., and Woodforest National Bank under the ancillary wrongful death cause of action no. 396,935-401. Tab 3.
Charles Storer, as agent under a power of attorney for K. McAfee, acted on behalf ofK. McAfee in the 401 garnishment proceedings. On November 19, 2014 Storer filed a Motion to Quash Writs of Garnishment only to the extent that they reached two particular accounts: a GMS account ending in -606 holding only K. McAfee's tax-deferred retirement benefits from his previous employer, and the Woodforest account ending in -404 holding only K. McAfee's Social Security Disability Insurance benefits, claiming both are exempt from judgment creditors. Tab4.
PAGE2 *16 On January 7, 2015, the Estate entered the 401 garnishment proceedings by
filing a
Notice to Court wherein the Estate objected to Storer's Motion to Quash and claimed a community property interest in the two accounts Storer sought to protect from garnishment. Tab 5. The Foltyns, individually, also filed a Response
to Charles Storer's Motion to Quash Writs of Garnishment,
claiming that Charles Storer did not have standing, and seeking a stay pending K. McAfee's compliance with post-judgment discovery. Tab 6. On January 8, 2015, the parties attended a hearing, which was ultimately continued by the Court until the issues of standing and post judgment discovery were addressed. Tab 7. 1
On January 22, 2015, the Court heard arguments of counsel regarding the
writs and Storer's
Motion to Quash. Tab 8. All counsel agreed that the writs on the W oodforest -404 account should be quashed because it held K. McAfee's 401(k) and social security benefits. Tab 8, at p. 4, Ins. 1-9; at p. 8, Ins. 11-15 and at p. 18, Ins. 15-18. All counsel also agreed the Foltyns should receive the balance in all of the remaining accounts. Tab 8. However, there was disagreement over whether the Order should include language to release the temporary injunction, and to what extent. Tab 8. 1 The January 8, 2015 Reporter's Record states Cause No. 396,935, when it should actually state Cause No. 396,935-401.
PAGE3
*17 The Estate did not want to release the temporary injunction on the 401(k) account (GMS -606) because of its alleged verbal claim for Janet McAfee's potential community property interest. Tab 8. The Foltyns did not want to release either of the two accounts, their reason being, "I don't think [the Estate] has had a complete [opportunity] to review and look at everything on the Woodforest account." Tab 8, at p. 3, Ins. 21 through p. 4, ln. 1.
The Court inquired more than once if the Estate had enough information to determine its claims. Tab 8. The Estate's response was that it was "reasonably sure" that the 401(k) was the only issue and that the Woodforest account held only K. McAfee's social security benefits, to which they had no claim. Tab 8, at p. 17, throughp.18, lns.1-25.
The Foltyns and the Estate made no argument contrary to Storer's argument in his Motion to Quash or his oral arguments that the W oodforest -404 account held only K. McAfee's social security benefits and the Court considered the proposed orders. Tab 8, at p. 21, Ins. 6-8.
On January 27, 2015, the Probate Court entered an
Order Partially Granting
Motion to Quash Writs of Garnishment.
Tab 9. The Probate Court found that both the GMS -606 account and the W oodforest -404 account were exempt from garnishment and the writs against these two accounts were quashed. Tab 9, at p. 2. The Probate Court further found that K. McAfee's remaining accounts at GMS
PAGE4 *18 (ending in -008 and -628) remained subject to the writs and that payment from such accounts shall issue to the Foltyns "upon receipt of an order releasing the Agreed Order for Temporary Injunctions in Cause No. 396,935; In the Estate of Janet Foltyn McAfee, Deceased, dated June 8, 2011." Tab 9, at p. 3.
Specific language of the Order, as it relates to the Woodforest social security account, reads: "On this day came to be considered the Motion to Quash Writs of
Garnishment
filed by Charles Storer, Power of Attorney for Kenneth
Cooper McAfee. After review and consideration of said
Motion, the evidence, the responses, and the arguments of counsel, the Court finds the following: 5. The Woodforest account ending in 404 holds, exclusively, social
security benefit proceeds of Kenneth C. McAfee which benefits are exempt from garnishment under 42 U.S.C. 407. 42 U.S.C. provides an absolute exemption and there are no statutory exceptions to same. Because the Woodforest account ending in 404 contains only funds exempted from garnishment, the writ directed at W oodforest as to Kenneth McAfee's account ending in 404 should be quashed."
Tab 9, at p. 2. The parties deal with the temporary injunction in the estate administration. On February 10, 2015, Storer filed a Motion to Partially Release Temporary
Injunction
in the estate administration cause (396,935) regarding the exempt Woodforest social security account and the non-exempt GMS accounts payable to the Foltyns (ending in -008 and -628). Tab 10. On March 6, 2015, the Estate filed
its own
Motion to Partially Release Temporary Injunction, in which it sought
PAGES
*19 release of only the non-exempt GMS accounts payable to the Foltyns (ending in - 008 and -628), and requested the temporary injunction otherwise remain in place, without stating any reason why. Tab 11.
On March 12, 2015, a hearing was held to consider the partial release of the temporary injunction. Tab 12. 2 The Estate now resisted lifting the temporary injunction as to the
Woodforest social security account because it questioned the characterization
of two deposits that were made in the amounts of $25,162.66 on April 23, 2010, and $9,735.92 on May 4, 2010. Tab 12, at p. 3, Ins. 10-24; at p. 8, Ins. 16-25; at p. 9, Ins. 1-7; at p. 10, Ins. 13-21; at p. 15, Ins. 17-24; at p. 17, Ins. 6-10. The Estate claimed it might have an interest of at least 50% in these deposits if they were community property, and that this potential claim should be considered "completely separate" from the garnishment proceedings brought by the Foltyns, individually. Tab 12, at p. 8, Ins 16-25; at p. 9, Ins. 5-7. 2 The March 12, 2015 Reporters Record states Cause No. 396,835-401 when it should actually state Cause No. 396,935 or include both.
PAGE6
*20 The Foltyns' argument to keep the temporary injunction in place was based upon (1) the language in the January 27, 2015 Order was overbroad, and (2) the Court should use its inherent authority to rule for the Estate's claim due to the purported lack of information from K. McAfee. Tab 12, at p. 9, Ins. 21-25; at p. 10, Ins. 1-3; at p. 6lns. 10-25; at p. 7, Ins. 1-6; at p. 13, Ins. 23-25; at p. 14, lns. 1- 8.
The language in the January 27, 2015 Order is not overbroad. It is true that the Estate may have a community property interest inK. McAfee's 401(k) account but the Woodforest social security account is different because it was traced and found to include only K. McAfee's social security benefits, which benefits are his separate property. Tab 9. Additionally, the Estate's own Inventory reveals the Estate has had the information they are now seeking since at least August 26, 2011. Tab 16, at p. 2.
Storer reminded the Court that, under the doctrine of res judicata, it had already found that every dime in the W oodforest account is K. McAfee's social security benefits. Tab 12, at p. 7, Ins. 14-25; at p. 8, Ins. 1-13. In fact, the two deposits in question were specifically traced in Storer's Motion to Quash and they
were shown to have been withdrawn close to the time of the deposits, leaving only
social security benefits in the social security account. Tab 4, at p. 10, ~25, and Exhibit "A" to such Motion; Tab 12, at p. 11, Ins. 18-25. And with no objection or
PAGE? *21 contrary evidence to Storer's tracing, or arguments of counsel, the Estate previously admitted it was reasonably sure the Woodforest account held only K. McAfee's social security benefits. Tab 8, at p. 18, Ins. 13-18. The Woodforest social security account was traced, and that is what the Court found. Tab 9.
That was indeed the purpose of Storer's Motion to Quash Writs of
Garnishment,
to prove that the entire W oodforest account was made up only of his
social security benefits and nothing else. Tab
4. The Estate took the additional step to voluntarily enter the garnishment proceeding, make its claim, and to sit silent as to any of the details regarding the Woodforest social security account. Tab 8, at p. 5, Ins. 5-18; at p. 12, Ins. 10-23; at p. 17, Ins. 18-24; at p. 18, lns. 13.23. Their new challenge to the characterization of two deposits is waived and is ban·ed by collateral estoppel and res judicata.
Nevertheless, on March 16, 2015, the Probate Court granted Rosemary Foltyn's Motion, releasing only the non-exempt GMS accounts that were ordered
to be paid to the Foltyns (ending in
-008 and -628), and continued the temporary injunction. Tab 13. The Probate Court did not release K. McAfee's exempt Woodforest -404 account. Tab 13.
PAGES *22 Storer tries again.
On April 15, 2015, Storer filed a
Motion for Reconsideration ... and Motion
for Entry of Order Releasing Social Security Proceeds from Injunction,
which was amended on May 4, 2015. Tab 14 (First Amended Motion). 3 Storer urged the Court again to release K. McAfee's social security proceeds and reminded the Probate Court that a determination regarding the tracing of the funds in the Woodforest account had already been made. Tab 14.
On May 14, 2015, the Probate Court heard the matter again, and specifically reconsidered the tracing of the two deposits and withdrawals at issue in the Woodforest account. Tab 15, at p. 16, Ins. 15-25; at p. 17, Ins. 1-17. Again, there was no contrary evidence presented against Storer's tracing, just arguments that Storer should have to re-prove his tracing with clear and convincing evidence. Tab 15, at p. 10, Ins. 12-24.
Storer explained some of the lingering questions that had been raised: First, because social security benefits are not community property, any claim
the Estate might have in the two deposits/withdrawals cannot be satisfied from the social security account, but must be satisfied from other assets of K. McAfee. Tab 15, at p. 14, Ins. 6-15; Tab 14, at p. 9, ~iii. 3 Because the parties and discussions had started to comingle between the attorneys involved in the base and ancillary case, the First Amended Motion for Reconsideration was filed in both causes, but the May 18, 2015 Order on same was signed in the wrongful death ancillary case (396,935-401).
PAGE9
*23 Second, the Estate indeed had possession of records showing the source of the deposits since at least the time of filing the Estate inventory on September 26, 2011. Tab 16; Tab 15, at p. 12, Ins. 4-25; at p. 13, Ins. 1-17.
Third, everyone participated in the January 22, 2015 hearing and had the opportunity to propose language for the Court's January 27, 2015 Order that Mr. Blumrosen claims is too broad. Tab 15, at p. 27, Ins. 11-25. The Probate Court releases part of the social security account to K. McAfee, but takes control of the remaining social security proceeds.
On May 18, 2015, the Probate Court signed the Estate's Order on First Amended Motion for Reconsideration ... and Motion for Entry of Order Releasing Social Security Proceeds from lrifunction.... Tab 17. The Court found that Storer did not prove the characterization of the two deposits by clear and convincing evidence and ordered the W oodforest funds be released to K. McAfee, but for $34,898.58 to be made payable to the County Clerk, for the use and benefit of the Estate of Janet F oltyn McAfee, Deceased, until the nature of two deposits at issue has been determined. Tab 17.
PAGE10 *24 The Probate Court not only refuses to lift the temporary injunction as to all of K. McAfee's social security benefits, but now has essentially garnished a large part of the account ($34,898.58) to satisfy the Estate's alleged verbal claim. These acts exceed the Court's authority and discretion over K. McAfee's social security funds.
SUMMARY OF ARGUMENT Mandamus is appropriate to compel a trial court to rescind a void order, to correct a clear abuse of discretion, and to preserve important substantive and procedural rights from impairment and loss when appellate remedy to cure the error is not adequate. These criteria are present here.
The Probate Court does not have jurisdiction to act without a pending cause of action. There are no pleadings filed in the estate administration against K. McAfee, and there are no live pleadings remaining in the wrongful death/garnishment proceedings at all. The Probate Court does not have jurisdiction to handle estate claims sua sponte. Therefore, the temporary injunction should be dissolved and the May 18, 2015 Order should be set aside for lack of jurisdiction.
Additionally, without a pending cause of action, the temporary injunction and the May 18, 2015 Order are void because an order for an injunction must set a cause for trial. This requirement is mandatory and failure to comply makes the temporary injunction and the order void, as they have turned into nothing short of a
PAGE 11 *25 permanent injunction. Therefore, the temporary injunction should be dissolved and the May 18, 2015 Order should be set aside, both for being void.
Furthermore, res judicata and collateral estoppel bar re-tracing of the Woodforest account. Storer previously put on tracing evidence, without question or objection, to show the Woodforest account holds only K. McAfee's social security benefits, and nothing else. The Court heard and decided that this account in fact holds only McAfee's social security benefits and is exempt from creditors, no exception. Any later "questions" the Estate may have that the Woodforest account needs to be traced again are waived and are barred by the doctrines of collateral estoppel and res judicata.
The Probate Court's most recent May 18, 2015 Order ignored Storer's arguments concerning res judicata and invited further litigation. Although the Probate Court released a portion of the Woodforest account to K. McAfee, the Court took a drastic step by ordering Woodforest to turn over $34,898.58 of such account to the County Clerk's registry for the benefit of the Estate of Janet Foltyn McAfee. This was a violation of due process and contrary to the protections provided by 42 U.S.C. 407. Such actions have amounted to an abuse of discretion that needs to be conected.
PAGE 12 *26 ARGUMENT & AUTHORITIES
I.
This case warrants mandamus relief. Mandamus is appropriate to compel a trial court to rescind a void order, to correct a clear abuse of discretion, and to preserve important substantive and procedural rights from impairment and loss when appellate remedy to cure the error is not adequate. See In re Sw. Bell Tel. Co., 35 S.W.3d 602, 605 (Tex. 2000)
(orig. proceeding) (per curiam) (adding that "mandamus
is proper if a trial court
issues an order beyond its jurisdiction") (citing
In re Dickason, 987 S.W.2d 570, 571 (Tex. 1998)).
Void order The June 8, 2011 temporary injunction is void because the Probate Court
does not have jurisdiction, there are no pleadings on file, and there is no cause set for trial. See Qwest Commc 'ns Corp. v. AT&T Corp., 24 S.W.3d 337, 337 (Tex.
2000) (per curiam);
InterFirst Bank San Felipe v. Paz Constr. Co., 715 S.W.2d 640 (Tex. 1986) (per curiam). The requirement for setting a cause for trial is mandatory and must be strictly followed, or else the order is subject to being declared void and dissolved. See Qwest Commc 'ns Corp., 24 S.W.3d at 337;
InterFirst Bank San Felipe,
715 S.W.2d at 641. The temporary injunction should have been rescinded by the trial Court and should be set aside by the Court of Appeals.
PAGE 13 *27 The May 18, 2015 Order directing $34,898.58 from K. McAfee's social security account be deposited into the registry of the court for the benefit of Janet Foltyn McAfee is void for the same reasons: the Probate Court does not have jurisdiction, there are no pleadings on file, and there is no cause set for trial on the determination of to whom the funds belong. This Order should be set aside by the Court of Appeals.
Clear abuse of discretion A court abuses its discretion "if it reaches a decision so arbitrary and
unreasonable as to amount to a clear and prejudicial error of law or if it clearly fails to correctly analyze or apply the law." In re Pierce, No. 13-12-00125-CV, 2012 WL 3525638, at *2 (Tex. App.-Corpus Christi Aug. 10, 2012, orig. proceeding) (mem. op.) (citing In re Cerberus Capital Mgmt., L.P., 164 S.W.3d 379, 382 (Tex. 2005) (orig. proceeding)).
The law was clearly laid out as to why the temporary injunction should be dissolved, at least in regards to the Woodforest account, for lack of jurisdiction - no pleadings being on file and no cause being set for trial. Furthermore, it is clear that the issue of tracing the W oodforest account had already occurred through the Probate Court's January 27, 2015 Order, which determined that 100% of the funds were K. McAfee's social security benefits, and nothing else.
PAGE14 *28 The Probate Court's refusal to lift the temporary injunction, and instead to take control of K. McAfee's funds and to hold them for the use and benefit of the Estate, before it even receives what is being asked for, constitutes an abuse of discretion.
Appellate remedy not adequate Because the June 8, 2011 temporary injunction and the May 18, 2015 Order
are void, Storer need not show lack of an adequate appellate remedy, and
mandamus relief is appropriate.
In re Sw. Bell Tel. Co., 35 S.W.3d 602, 605 (Tex.
2000) (orig. proceeding) (per curiam) (citing
In re Dickason, 987 S.W.2d 570, 571 (Tex. 1998)). 4 Nevertheless, at this point in time, there will never be a final order to appeal on the Probate Com1's seizure of K. McAfee's social security benefits because there are no claims on file by the estate and because Storer can no longer obtain a hearing with the Court. That is also why this proceeding is not subject to an accelerated appeal, because there is no pending claim. See Texas Natural Res.
Conservation Comm
'n, 85 S.W.3d 201, 206-07 (Tex. 2002) ( orig. proceeding) (holding mandamus was available when "a restraint on conduct ... has yet to be subject to a truly adversarial proceeding"); See In re Pierce, 2012 WL 3525638, at 4 See also In re Pierce, No. 13-12-00125-CV, 2012 WL 3525638, at *4 (Tex. App.-Corpus Christi Aug. 10, 2012, orig. proceeding) (mem. op.) ("temporary injunctions which do not comply with 683 are void, and when the trial court's order is void, mandamus relief is available regardless of whether there is an adequate remedy by appeal"); In re Mask, 198 S.W.3d 231,233 (Tex. App.-San Antonio 2006, orig. proceeding) (concluding that when an order is void, then "mandamus relief is available regardless of whether there is an adequate remedy by appeal") .
PAGE 15
*29 *4 (writ of mandamus may be appropriate for reviewing a temporary injunction)
(citing
In re Francis, 186 S.W.3d 534,538 (Tex. 2006)).
There are also significant benefits to mandamus relief in this matter, due to the federally mandated protection provided to K. McAfee's social security benefits, which would be rendered moot absent review by mandamus. 5 The Probate Court has seized money that it had previously declared to be K. McAfee's social security benefits. The United States legislature and Supreme Court have made it painstakingly clear that social security proceeds are prohibited from seizure in the legal process, regardless of the merits of the claim, including community property claims. The Probate Court's rulings defeat the purpose of these laws and place Storer in the position of having to continuously re-litigate the exempt status of his social security benefits. Appellate remedy would be inadequate for K. McAfee to protect his social security funds, even if the Court had seized them with jurisdiction and a proper order. Therefore, mandamus relief is appropriate in this matter. II. The Probate Court does not have jurisdiction to act without a pending
cause of action. According to arguments of the Foltyns and the Estate's counsel, the only
reason they sought to keep the temporary injunction in place was due to alleged 5 See In re Pierce, 2012 WL 3525638, at *4 (discussing the benefits of mandamus relief when there are other claims raised which would be rendered moot if not reviewed by mandamus).
PAGE 16
*30 community property claims the Estate may have against K. McAfee. 6 But without any live pleadings on file, the Probate Court lacks jurisdiction to take any action in this case, including the issuance of injunctive relief or taking control of an individual's assets to hold in the registry of the Court for the benefit of someone else.
Texas Estates Code section 402.001 states that after the inventory has been approved in an independent administration, the Probate Court can take no further action of any nature unless specifically provided for by the Texas Estates Code. See also State v. Traylor, 374 S.W.2d 203, 204 (Tex. 1963) (probate court has only that jurisdiction conferred upon it by the Probate Code).
The probate court is then vested with substantial "potential jurisdiction" to hear almost any issue involving the estate or the personal representative, even matters related to the settlement and partition of an estate. Cunningham v.
Parkdale Bank,
660 S.W.2d 810, 812 (Tex. 1983); TEX. ESTATES CODE§§ 32.001, 31.001, 31.002. The probate court can even have the power to determine community property claims, characterize separate and community property interests, and order the surrender of property held by a party to the suit. Smith v.
Lanier,
998 S.W.2d 324, 332, 336 (Tex. App.-Austin 1999, pet. denied) (probate 6 Tab 8, at p. 3, Ins. 20-25; at p. 4, Ins. 1-7; at p. 5, Ins. 5-l 0; at p. 5, Ins. 14-19; at p. 8, Ins. 2-4; at p. 11, Ins. 4-16; at p. 17, Ins. 18-25; at p. 18, Ins. 1- 24; Tab 12, at p. 3, Ins. 13-22; at p. 6, Ins. 10-25; at p. 7, Ins. 1-6; at p. 8, Ins. 16-25; at p. 9, Ins. 1-7; at p. 9, Ins. 21-25; at p. 10, Ins. 1-21; at p. 12, Ins. 1-25; at p. 13, Ins. 1-6; at p. 15, Ins. 4-25; at p. 16, ln. 1; Tab 15, at p. 10, Ins. 1-21; at p. 10, Ins. 7-24; at p. 11, Ins. 10-16; at p. 14, Ins. 16-25.
PAGE17
*31 court can issue injunction against survivor's separate property pending declaratory
judgment action);
Lucikv. Taylor, 596 S.W.2d 514,516 (Tex. 1980) (probate court can issue injunction over estate property pending contest to administration).
But there is no authority for a court to act on estate issues sua sponte. A probate court's potential jurisdiction is "activated and becomes actual jurisdiction" only after the filing of a petition, the subject matter of which is within the jurisdiction of the court. Cunningham, 660 S.W.2d at 812 (probate court did not have jurisdiction to enter judgment against independent administrator based solely on substance of final account; pleadings required). Just as in any other type case, a party must invoke a probate court's jurisdiction by filing an application, petition, motion, action, claim, cause of action, or request of some nature. See TEX. ESTATES CODE§§ 31.001, 31.002.
Pleadings create the foundation of due process: they defiJ!.e the issues and give the opposing party information sufficient to enable him to prepare a defense. Cunningham, 660 S.W.2d at 812-13 (citing Murray v. 0 & A Express, Inc., 630
S.W.2d 633, 636 (Tex. 1982);
Roark v. Allen, 633 S.W.2d 804, 810 (Tex. 1982)). There is no exception simply because we are in probate court:
"The Texas Rules of Civil Procedure govern proceedings in probate matters except in those instances in which a specific provision has been made to the contrary. Tex.R.Civ.P. 2. In Texas, '[a] civil suit in the district or county court shall be commenced by a petition filed in the office ofthe clerk.' Tex.R.Civ.P. 22." ld.
PAGE18
*32 The Estate has no live pleadings in this case asking the Probate Court to do
anything or decide any matter. In fact, the Estate has never even
asked the Court to determine a marital property claim; it has only alluded throughout the hearings that there may be claims. The Probate Court cannot provide the Estate any relief to which it has not requested in writing. !d. at 813 ("a party may not be granted relief in the absence of pleadings to support that relief').
This is because an independent administration is managed at the direction of the personal representative, not by the probate court. The Texas Supreme Court has explained that a probate court cannot take on duties of the independent executor. In State v. Traylor, the independent executors asked the probate court to order a partition and distribution, giving the decedent's widow a compromised community property distribution, which they had chosen not to trace for economic reasons, and which was opposed by the other beneficiary. 374 S.W.2d 203 (Tex. 1963). While a probate court has statutory authority to order a partition and distribution, the executors were essentially asking for the court's stamp of approval on their decision to not trace the community property interest, instead of just approving the widow's claim (and facing suit) or having the widow's claim established by judgment. !d. The Supreme Court said this was not something the Court could do, even at an executor's request, and the executors must act on the claim before coming to the Court for a partition and distribution.
PAGE 19 *33 In the present case, the independent administrator must first act on its alleged claim by filing a pleading seeking relief. The Probate Court has no power to seize or continue an injunction over K. McAfee's assets until after the Estate has acted.
The fact that the Estate has no pleadings on file was argued by Storer multiple times: 1. January 8, 2015 hearing:" ... there's nothing to intervene in, because there is no pending action." Tab 7, at p. 10, Ins. 7-12. 2. January 22, 2015 hearing: " ... I can't even learn what the base lawsuit is
that the Temporary Injunction was filed for." Tab 8, at p. 7, Ins. 1-5.
3. May 14, 2015 hearing: "this Temporary Injunction that everyone IS talking about and relying on, you know has been going on for a very long time without a cause of action, without a trial date. It's basically an agreement for everyone to have a standstill. And that's fine. We intend to honor it. But it's time to separate these parties." Tab 15, at p. 7, Ins. 3-5.
With no pleadings on file, the injunction should be dissolved entirely. It is however, even more serious that a portion ofK. McAfee's social security benefits were ordered to be turned over to the Clerk for the use and benefit of the Estate of Janet Foltyn McAfee. The Probate Court's taking of the $34,898.58 from K.
PAGE 20 *34 McAfee's social security account IS essentially a further injunction with no pleadings on file and no jurisdiction.
Therefore, the temporary injunction should be dissolved and the May 18, 2015 Order should be set aside for lack of jurisdiction. III. Without a pending cause of action, the June 8, 2011 temporary
injunction and the May 18, 2015 Order are void. The lack of pleadings makes the temporary injunction void in its entirety, as
well as the May 18, 2015 Order that directs Woodforest to turn over $34,898.58 to the registry of the court. The parties can enter an agreement outside of Court to freeze the remaining assets, but the temporary injunction, especially in this new form, has been taken too far.
"A temporary injunction's purpose is to preserve the status quo of the litigation's subject matter pending a trial on the merits." Butnaru v. Ford Motor
Company,
84 S.W.3d 198, 204 (Tex. 2002). "To obtain a temporary injunction, the applicant must plead and prove three specific elements: (1) a cause of action against the defendant; (2) a probable right to the relief sought; and (3) a probable, imminent, and irreparable injury in the interim. Id. The Estate has no cause of action on file against K. McAfee, and, even if it did, there is no probable right to the relief sought because the facts are what they are. The evidence that has already been considered will always yield the same result-that all of the money in the Woodforest account is federally protected social security proceeds.
PAGE 21 *35 Texas Rule of Civil Procedure 683 further states that "every order granting a temporary injunction shall include an order setting the cause for trial on the merits with respect to the ultimate relief sought." This requirement is mandatory and must be strictly followed, or else the order is subject to being declared void and dissolved. Qwest Commc 'ns Corp., 24 S.W.3d at 337 (Tex. 2000); InterFirst Bank
San Felipe,
715 S.W.2d at 641 (Tex. 1986). An error of such kind is so critical
that it has been held by many Texas appellate courts as "fatally defective and void,
whether specifically raised by point of error or not." 7
The Estate sought a temporary restraining order in the estate administration cause (396,935) to preserve its community property interests and anticipated recovery from the wrongful death proceedings pending against K. McAfee in the ancillary cause (396,935-401). Tab 18. The Estate's Application states, "the nature of the lawsuit is Probate, with an additional wrongful death suit pending." Tab 18, at p. 2, ~5. The June 8, 2011 Agreed Order for Temporary Injunction also
states:
7 EOG Res., Inc. v. Gutierrez, 75 S.W.3d 50, 52-53 (Tex. App.-San Antonio 2002); Evans v. C. Woods, Inc., 34 S.W.3d 581, 582-83 (Tex. App.-Tyler 1999, no pet.); Big D Props., Inc. v. Foster, 2 S.W.3d 21, 23 (Tex. App.-Fort Worth 1999, no pet.); 360 Degree Commc'ns Co. v. Grundman, 937 S.W.2d 574, 575 (Tex. App.-Texarkana 1996, no writ).
PAGE22
*36 "this Temporary Injunction Order ... shall continue in force and effect until the Court makes a determination of what property belongs to the Estate or the Court renders a full and final judgment is in the pending wrongful death suit associated with this matter, whichever is later, or by further order of this Court."
Tab 1, at p. 9 of 10. A full and final judgment was entered in the wrongful death suit on March 21, 2014. Tab 2. The Court, however, has made clear that the injunction remains in effect in the estate administration until a determination of what property belongs to the Estate has occurred. Tab 17, last paragraph.
Whether the temporary injunction has ever been effective in the past may be a moot issue. The temporary injunction was filed only in the estate administration, where no pleadings were ever filed. On January 22, 2015, the parties argued over whether the order on the garnishment proceeding (395,835-401) should require a release of the temporary injunction in the estate administration. Tab 8, at p. 3, Ins. 20-25; at p. 4, Ins. 1-7; at p. 8, Ins. 2-4; at p. 9, Ins. 14-17; at p. 11, Ins. 4-16. Storer argued to release the temporary injunction:
"The other thing, Judge, is I don't even think there is a Temporary Injunction in place. I think everyone has honored it because everyone understood what the intent was of the parties and the intent of the Court but I can't even learn what the base lawsuit is that the Temporary Injunction was filed for. It's my understanding also that there is no ending to the Temporary Injunction and the only way one can be valid is if there is a final trial date that says on this date this Temporary Injunction ends and
PAGE 23 *37 will either go away or tum into a Permanent Injunction. So I believe there is not even a Temporary Injunction in place. I will go along with what's been going on but we were here two weeks ago and the issue garnishment was decided. That's over. The only thing that needed to be added was to make the payment to Mr. Blumrosen and/or his client. That's been done. And so this is the Proposed Order that covers both parties and both banks in the garnishment proceeding."
Tab. 8, at p. 6, ln. 25; at p. 7, Ins. 1-16; at p. 14, Ins. 15-19. Regardless of how the estate administration and wrongful death proceedings were intertwined, today there are clearly no actions being pursued in any cause against K. McAfee. This makes the temporary injunction fatally void and it should be dissolved. TEX. R. CIV. P. 683.
Additionally, "Probate" is not a cause of action. Probate is a general description for all matters or proceedings that relate to a decedent's estate. TEX. ESTATES CODE§ 22.029.
The Texas Supreme Court has clarified, "the issue in determining whether an applicant has met the first qualification for a temporary writ of injunction is not whether the prayer seeking the writ and the ultimate cause of action is 'related,' but whether the applicant has a cause of action at all." Walling v. Metcalfe, 863 S.W.2d 56, 58 (Tex. 1993) (per curiam) (considering whether applicant's live pleadings supported the temporary injunction). With no cause of action at all on
PAGE 24
*38 file, there is no matter to set for trial and the injunction in whatever form it has now taken, must be dissolved.
And if there were a cause of action on file, the reason for strict compliance m setting a trial date "is to prevent the temporary injunction from becoming effectively permanent, without a trial having occurred." Eastern Energy, Inc. v.
SBY P'ship,
750 S.W.2d 5, 6 (Tex. App.-Houston [1st Dist.] 1988). Such would
be contrary to the purpose and procedure
of obtaining a temporary injunction, yet this is exactly what has happened in this case, because a determination of all Estate property may never occur.
Therefore, the temporary injunction should be dissolved and the May 18, 2015 Order should be set aside for being void. IV. Collateral Estoppel and Res Judicata bar re-tracing of the Woodforest
account. Even if the Probate Court were to obtain jurisdiction to enjoin or take control
over K. McAfee's assets, the Woodforest account cannot be subject to any further authority of the Probate Court because the funds have already been traced and found to be solely K. McAfee's social security benefits. Tab 9; Tab 14, at p. 6-8. Since the Estate can have no claim against K. McAfee's social security benefits, all of such assets must be released to K. McAfee.
The well-known case of Barr v. Resolution Trust Corp. describes "res
judicata" as a generic term for two types
of conclusive effects given to final
PAGE 25
*39 judgments: res judicata precludes relitigation of claims, and collateral estoppel prevents relitigation of particular issues. 837 S.W.2d 627, 628 (Tex. 1992). This mandamus involves both.
The Estate would like the Court to believe that the garnishment proceedings were completely separate from the Estate's purported community property claims in the estate administration. Tab 12, at p. 8, Ins. 16-25; Tab15, at p. 11, Ins. 22-25; at p. 12, Ins. 1-3. This, however, is not accurate. First, the issue of tracing the Woodforest account was actually litigated in the garnishment proceeding (collateral estoppel). Second, the Estate should have brought its claims against Kenneth McAfee for the funds in the W oodforest account during the garnishment proceedings (res judicata). 1. Collateral Estoppel
The doctrine of collateral estoppel or issue preclusion is designed to promote judicial efficiency, protect parties from multiple lawsuits, and prevent inconsistent judgments by precluding the relitigation of issues a party previously litigated and
lost.
Sysco Food Servs., Inc. v. Trapnell, 890 S.W.2d 796, 801 (Tex. 1994);
Quinney Elec., Inc. v. Kondas Entm 't, Inc.,
988 S.W.2d 212, 213 (Tex. 1999) (per curiam). "A party seeking to assert the bar of collateral estoppel must establish that ( 1) the facts sought to be litigated in the second action were fully and fairly litigated in the first action; (2) those facts were essential to the judgment in the first
PAGE 26 *40 action; and (3) the parties were cast as adversaries in the first action." Sysco Food Servs., Inc., 890 S.W.2d at 801. "Fairness" may also be considered, but it is
narrowly applied in only the most unique circumstances.
!d. at 805.
Collateral estoppel can apply even if the causes of action are different in the first and second proceedings. Tex. Dep't of Pub. Safety v. Petta, 44 S.W.3d 575, 577 (Tex. 2001) (criminal defendant was convicted of fleeing and attempting to elude a police officer; because the issue of whether she faced imminent harm was a fact that was litigated in her criminal trial, she was barred from bringing a civil action for assault against the officer who tried to stop her). "If a cause of action in the second lawsuit involves an element already decided in the first lawsuit, that cause of action is barred" if the issue decided in the first action was actually litigated, essential to that lawsuit's judgment, and is identical to the issue in the pending action. Johnson & Higgins of Tex., Inc. v. Kenneco Energy, Inc., 962 S.W.2d 507, 521 (Tex. 1998).
Element 1: the facts sought to be litigated in the second action are identical to the facts litigated in the first action "Collateral estoppel applies when an issue decided in the first action is
actually litigated." Tex. Dep't of Pub. Safety, 44 S.W.3d at 579. "Actually litigated" means the issue was properly raised (by pleadings), submitted for determination, and determined. Johnson & Higgins of Tex., Inc., 962 S.W.2d at 521. The issues must be identical and must have been fully and fairly litigated.
PAGE 27 *41 State & Cty. Mut. Fire Ins. v. Miller, 52 S.W.3d 693, 696 (Tex. 2001); Tex. Dep't
of Pub. Safety,
44 S.W.3d at 579.
What the Estate is seeking now is identical to what was before the Court in the garnishment proceedings, a tracing of the Woodforest account. The tracing that was necessary to establish protection in the garnishment proceedings is the very same tracing that would be necessary to prove the Woodforest account is solely K. McAfee's social security benefits. Tex. Dep 't of Pub. Safety, 44 S.W.3d at 577 (collateral estoppel applied because same facts were necessary to prove first and second claims).
In the garnishment proceedings, Storer sought to quash two writs the Foltyns had obtained, one against a 401(k) Savings Plan and one against a social security account. Tab 4. Both accounts needed to be established as exempt accounts in order to quash the writs. While the funds in the 401(k) were protected merely by being in a tax-deferred retirement account, 8 the social security funds were held in
an ordinary checking account and Storer had to show that every penny
in the Woodforest account was attributed to his social security benefits. Tab 4, at rs 22- 25 (regarding need to trace comingling of social security benefits). Had there been 8 TEX. PROP. CODE§ 42.0021(a); see also Tab 4, at p. 13, footnote 12: Unlike with social security benefits, it is the account that is exempt; the source of the funds is irrelevant. Lozano v. Lozano, 975 S.W.2d 63, 68 (Tex. App.-Houston [14th Dist.] 1998, pet. denied).
PAGE 28
*42 any funds that were not social security benefits, those funds would have been subject to garnishment. Tab 4, at 'if 23.
The nature of the Woodforest funds was plead in Storer's
Motion to Quash, which also provided copies of the bank statements, and an account detail sheet showing the source of all deposits and withdrawals. Tab 4, at Exhibits A, B. Storer agreed the tracing rules in his Motion, and identified the funds all as coming exclusively from the Social Security Administration. Tab 4, at 'if 25.
At the first hearing on January 8, 2015, the Foltyns did not challenge the protected status of a person's 401(k) or social security benefits, but argued that they did not have sufficient information to determine the character of the funds at issue due to outstanding discovery requests. Tab 7, at p. 4, lns. 1-9; at p. 5, lns. 2- 17; at p. 6, Ins. 9-20; at p. 8, Ins. 12-25; at p. 9, Ins. 1-24. The Probate Court reset the matter for two weeks to specifically allow time for exchanging information. Tab 7, at p. 27, Ins. 5-6.
On January 22, 2015, the parties and the Estate returned. Tab 8. Again, quashing the writs on the two accounts was never challenged. Tab 8; at p. 3, Ins. 5-7. However, because Storer sought to include language in the proposed order to also release the temporary injunction as to the two accounts, the Foltyns and the Estate resisted, in order to preserve the Estate's potential community property claims against the 401(k). Tab 8, at p. 3, Ins. 20-25 through at p. 4, Ins. 1-7; at p.
PAGE29
*43 5, Ins. 5-10; at p. 5, Ins. 14-19; at p. 8, Ins. 2-4; at p. 9, Ins. 14-15; at p. 11, Ins. 4- 16; at p. 14, Ins. 15-19; at p. 17, Ins. 18-25, at p. 18, Ins. 1-24.
At both hearings, no one challenged the character of the funds that made up the Woodforest social security account (see Tab 7 and Tab 8); this was not done
until months after the Court signed the January 27, 2015 Order.
See Tab 12 and Tab 15. Had any contrary evidence been offered, Storer could have orally argued his tracing evidence that was filed in his Motion to Quash Writs of Garnishment because that was the very subject matter of that hearing, to prove that all funds in the Woodforest account were social security benefits. Tab 7, at p. 5, Ins. 12-15. But the F oltyns specifically said that was not necessary (Tab 7, at p. 5, Ins. 16-17) and the Estate raised no issues as to Storer's accounting (Tab 8, at p. 18, Ins. 13- 23).
Based upon the patties' pleadings and arguments, the Probate Court detetmined that the W oodforest account contained only K. McAfee's social security benefits and signed the January 27, 2015 Order:
"On this day came to be considered the
Motion to Quash
Writs of Garnishment
filed by Charles Storer, Power of Attorney for Kenneth Cooper McAfee. After review and consideration of said Motion, the evidence, the responses, and the arguments of counsel, the Court finds the following:
PAGE 30 *44 5. The Woodforest account ending in 404 holds, exclusively, social security benefit proceeds of Kenneth C. McAfee which benefits are exempt from garnishment under 42 U.S.C. 407. 42 U.S.C. 407 provides an absolute exemption and there are no statutory exceptions to same. Because the W oodforest account ending in 404 contains only funds exempted from garnishment, the writ directed at W oodforest as to Kenneth McAfee's account ending in 404 should be quashed."
Tab9. The Estate now questions the characterization of two deposits that were made into the W oodforest social security account and that were identically withdrawn from the account days later, arguing these might be deposits of community property and withdrawals of social security funds that would give the Estate a one-half interest in the deposits of community property depending on what method of tracing is used (first in/first out, or last in/first out). Tab 12, at p. 3, Ins. 13-22; at p. 6, Ins. 14-21; at p. 7, Ins. 1-6; at p. 7, Ins 14-21; at p. 8, Ins. 19-25; at p. 9, Ins. 7-9; at p. 9, Ins. 21-25; at p. 10, Ins. 1-21; at p. 12, Ins. 1-25; at p. 13, Ins. 1- 6; at p. 15, Ins. 4-25; at p. 16, ln.1; Tab 15, at p. 10, Ins. 6-24; at p. 11, Ins. 1-16; at p. 14, Ins. 18-25. This is a tracing issue that has already been litigated and determined by the Court. Tab 9 and Tab 12 at p. 7, Ins. 14-22; at p. 11, Ins. 21-25; Tab 15, at p. 4, Ins. 2-19; at p. 5, Ins. 1-9; at p. 5, Ins. 17-19; at p. 6, Ins. 4-10; at p. 7, Ins. 17-25; at p. 7, Ins. 17-25; at p. 8, Ins. 1-25; at p. 9, Ins. 1-17; at p. 13, lns. 13-17; at p. 15, Ins. 1-9; at p. 16, Ins. 3-25; at p. 17, lns. 1-14.
PAGE 31 *45 Storer does not dispute the 401(k) is funded with some community property. But the social security benefits are federally protected separate property, so there is nothing left to fight over. 42 U.S.C. 407; Tab 15, at p. 15, Ins. 10-14; at p. 15, Ins. 22-25; at p. 16, Ins. 1-25; at p. 17, Ins. 1-17. To have this fight again (to trace the W oodforest social security account) would require an identical trial to the one already had, with the exact same tracing evidence and burden of proof (Sysco Food
Servs., Inc.,
890 S.W.2d at 802 (in considering collateral estoppel, similarity of each action's burden of proof was a factor));it would just be for a different purpose, but with the same result as to the Woodforest assets.
Although Storer's tracing evidence was not challenged in the garnishment proceeding, that does not mean the issue was not actually litigated. "Actually litigated" does not require a contested proceeding, but merely that the issue was pled, considered and decided. Johnson & Higgins ofTex., Inc., 962 S.W.2d at 521. These criteria have all been met. The transcripts show that it was put before the Court by all counsel, repeatedly, and that there was no issue that the Woodforest account contained anything other thanK. McAfee's social security benefits. The Estate specifically said, "the two issues, which one we could see, the Woodforest, is that's all SSI money. My client has no claim to that. We can see that. As long as that's an accurate statement, it's all SSI." Tab 8, at p. 18, Ins. 13-25, at p. 19, line 1; Tab 4, Exhibit A & B.
PAGE 32
*46 In Johnson & Higgins of Tex., Inc. v. Kenneco Energy, Inc., the Supreme Court considered "fully and fairly litigated" and rejected a party's argument that they had no real incentive in the first action to develop their claims in the second action. 962 S.W.2d 507, 525 (Tex. 1998). When the plaintiff lost a significant portion of his profits in oil he was transporting across the Atlantic, he used his insurance agent as a witness to recover from another insurance company based on agreements that had been discussed between multiple insurance companies to insure the cargo. Id. at 511-513. As to at least one claim, the Supreme Court found that the testimony of the plaintiffs insurance agent supported the court's detennination that there were no insurance agreements for the extra loss coverage the plaintiff was seeking. I d. at 524. The plaintiff was later barred from suing his own insurance company because the issue had already been decided that there were no valid insurance agreements for the extra loss coverage. Id. The plaintiff argued that had he known he would be precluded from suing his own insurance company, he would have further developed the testimony to prove his insurance agent represented to him that he was covered. Id. at 525. The Supreme Court said he had missed his chance because he had every incentive in the first suit to establish an agreement since his claims in the first suit depended on that agreement. Id. Likewise, the Estate's purported community property claims to the W oodforest account depend 1 00% on what type funds are in the account. The
PAGE 33 *47 tracing was just as essential to the garnishment proceeding as it is to the Estate's purported community property claims. The Estate's agreement and/or inaction when the issue of tracing was before the Court precludes the Estate's later developed arguments.
Additionally, in Rexrode v. Bazar, collateral estoppel was applied even in a situation where no evidence was ever admitted. 937 S.W.2d 614 (Tex. App. Amarillo 1997, no writ). A plaintiff sued a defendant for negligence and also sued his own insurance company under the uninsured/underinsured motorist provision of his auto insurance policy. Id. at 615-16. When the insurance company failed to answer requests for admissions, the plaintiff nonsuited his case against the defendant and went to trial against the insurance company. ld. at 616. At trial, the
plaintiff offered only the deemed admissions.
ld. at 617-18. The insurance company was granted leave to prepare responses to the requests for admissions. ld. at 618. The plaintiff rested. ld. The insurance company prepared responses,
and the Court withdrew the deemed admissions.
Jd. The Court then issued a
directed verdict against the plaintiff, having rested with no evidence.
Jd. The plaintiff was later bmred from bringing suit against the original defendant because he had "failed to prevent the issue ... from being submitted for determination and determined adversely to him. That being so, the issue was "actually litigated" in
the first suit."
ld. at 620. That is exactly what has happened in this case-the
PAGE 34
*48 Estate's agreement and/or inaction failed to prevent the tracing issue from being submitted for determination and determined adversely to their current purported claims, if any. The opportunity to fully and fairly litigate the issue of tracing existed, but the Estate chose not to act. This opportunity is all that is required. See
Eagle Props., Ltd. v. Scharbauer,
807 S.W.2d 714, 721 (Tex. 1990) (collateral estoppel applies when the party against whom it is asserted had a full and fair opportunity to litigate the issue in the prior suit).
Because the issue of tracing the W oodforest social security account was actually litigated, fully and fairly, and is identical to the claims the Estate makes now, the first element of collateral estoppel has been met.
Element 2: those facts were essential to the judgment in the first action When the Probate Court examined whether or not the W oodforest social
security account should be exempt from garnishment, the sole issue was the nature of the funds in the account. It may be redundant to keep saying that it was already
established and unopposed that the funds were 100%
K. McAfee's social security benefits. Tab 9 and Tab 12 at p. 7, Ins. 14-22; at p. 11, Ins. 21-25; Tab 15, at p. 4, Ins. 2-19; at p. 5, Ins. 1-9; at p. 5, Ins. 17-19; at p. 6, Ins. 4-10; at p. 7, Ins. 17-25; at p. 7, Ins. 17-25; atp. 8, Ins. 1-25; atp. 9, Ins. 1-17; atp. 13, Ins. 13-17; atp. 15, Ins. 1-9; at p. 16, Ins. 3-25; at p. 17, Ins. 1-14. But there was simply no other purpose to the garnishment proceeding in regards to the W oodforest account other than to
PAGE 35 *49 trace the funds, which is exactly what the Estate seeks to do again.
See above,
Johnson & Higgins of Tex., Inc., 962 S.W.2d at 525 (establishment of insurance agreement was essential to first claim against 3rd party insurance company; plaintiff could not bring action against his own insurance company because court already found there was no insurance agreement).
Because the issue of tracing was essential to the Probate Court's January 27, 2015 Order, the second element of collateral estoppel has been met. Element 3: the parties were cast as adversaries in the first action All parties involved today also participated in the garnishment proceeding
that resulted in the January 27, 2015 Order. The parties in the estate administration proceedings are K. McAfee, the Estate, and the Foltyns, individually, who are participating herein as interested parties. Tab 18.
The garnishment proceeding did not originally involve the Estate; it involved only K. McAfee and the Foltyns, individually, who sought to recover on their wrongful death judgment. Tab 3. However, the Estate made a voluntary appearance in the garnishment proceeding by filing a Notice to Court in which the
Estate objected to Storer's
Motion to Quash and claimed an interest in the two
accounts
Storer sought to protect from garnishment. Tab 5; Tab 7, at p. 9, Ins. 1-8. The Estate further participated in the garnishment hearings, not challenging the
PAGE 36 *50 quashing of the writs, but alluding to their community property claims that might exist post-garnishment. Tab 7, at p. 8, Ins. 15-25; at p. 9, Ins. 1-2; Tab 8, at p. 2; at p. 5, Ins. 5-10, Ins. 16-18; at p. 12, Ins. 10-17; at p. 17, Ins. 21-24; at p. 18, Ins. 18- 23.
Regardless of what happened thereafter, it cannot be disputed that all parties involved today actually participated in the garnishment proceedings that (1) considered the tracing of the Woodforest social security account and (2) resulted in the January 27, 2015 Order. 9
Because the same parties were cast as adversaries in the garnishment
proceeding, the third element
of collateral estoppel has been met. Consideration of Fairness The nature of the wrongful death proceeding is not a factor the court can
consider in deciding whether to apply collateral estoppel. Fairness factors involve unique procedural and evidentiary burdens that defeat the design of collateral estoppel, and that are not caused by the party seeking to avoid the preclusive effect 9 Nevertheless, collateral estoppel does not even require direct participation by the Estate, only that the Estate be in privity with the Foltyns. Tex. Dep 't of Pub. Safety, 44 S.W.3d at 577; Sysco Food Servs., Inc., 890 S.W.2d at 801; Eagle Props., Ltd., 807 S.W.2d at 721. Privity cannot be disputed because the Estate and the Foltyns both share interests in the Woodforest account that are directly affected by its tracing. See Benson v. Wanda Petroleum Co., 468 S.W.2d 361, 363 (Tex. 1971). They are merely acting in two different capacities, individually and as beneficiaries of the Estate, to recover the same interests under different theories of recovery. See Robbins v. HNG Oil Co., 878 S.W.2d 351, 357-58 (Tex. App -Beaumont 1994, writ dism'd w.o.j.) (Robbins as attorney-in-fact in second suit was certainly in privity with Robbins, individually, in first suit).
PAGE 37
*51 of a prior judgment.
See Sysco Food Servs., Inc.,
890 S.W.2d at 804-05 (party was prevented from filing all of their claims in one suit by case law that has subsequently been overruled by statute; procedural predicament is not of their own making; then holding is narrow, given the unusual procedural posture of the case); Phillips v. Allums, 882 S.W.2d 71, 75 (Tex. App.-Houston [14th Dist.] 1994, writ denied) (because party was nonsuited, party was deprived of the opportunity to litigate; "Mary Carter" agreements violate public policy). None of these type
• h" .c: 10 1actors are present m t IS case. 2. Res Judicata
Res judicata precludes relitigation of claims that have been finally adjudicated, and claims that arise out of the same subject matter that could have
been litigated in the prior suit.
Barr v. Resolution Trust Corp., 837 S.W.2d 627, 628, 631 (Tex. 1992). The elements of res judicata are: (1) a prior final judgment on the merits by a court of competent jurisdiction; (2) identity of parties or those in privity with them; and (3) a second action based on the same claims as were raised or could have been raised in the first action." Amstadt v. US. Brass Corp., 919
S.W.2d 644, 652 (Tex. 1996);
see also Houtex Ready Mix Concrete & Materials v. 10 See Parklane Hosiery Co. v. Shore, 439 U.S. 322, 330-31 (1979) (noting when offensive collateral estoppel may be unfair); Scurlock Oil Co. v. Smithwick, 724 S.W.2d 1, 7 (Tex. 1986) (holding when fairness factors are applicable); Goldstein v. Comm 'nfor Lawyer Discipline, 109 S.W.3d 810, 813 (Tex. App.-Dallas 2003, pet. denied) (observing the factors when offensive collateral estoppel may be applied); Tankersley v. Durish, 855 S.W.2d 241, 245-46 (Tex. App. Austin 1993, writ denied) (noting applicable fairness factors).
PAGE 38
*52 Eagle Canst.
&
Envtl. Servs., L.P., 226 S.W.3d 514, 519 (Tex. App.-Houston [1st Dist.] 2006, no pet.).
Element 1: there is a final judgment on the merits The January 27, 2015 Order is a final judgment on the merits of tracing the
Woodforest social security account. Tab 15, at p. 6, Ins. 4-10. It specifically and correctly states, "the Woodforest account ending in 404 holds, exclusively, social security benefit proceeds of Kenneth C. McAfee." Tab 9.
The wrongful death and estate administration claims, if any, are and/or will be separate actions. In the wrongful death action, a final judgment was entered against K. McAfee on March 21, 2014, that disposed of all parties and was appealable. Tab 2. The Foltyns' Application for Writ of Garnishment was initiated in the wrongful death proceeding on October 9, 2014 to collect on the judgment. Tab 3. The Probate Court had jurisdiction over the garnishment proceedings because there were garnishment pleadings and notices (Tab 3), not because the wrongful death action was on-going. Thereafter, Storer's Motion to Quash Writs
of Garnishment
was filed in the garnishment proceeding and the Probate Court properly acted on those pleadings after two hearings on the merits. Tab 9.
When the Probate Court signed the January 27, 2015 Order Partially
Granting Motion to Quash Writs of Garnishment,
there were no more issues pending in the garnishment proceeding, however the Court did direct the
PAGE 39 *53 temporary injunction to be lifted as to the GMS accounts in favor of the Foltyns, even though the temporary injunction was in a separate proceeding. Tab 9, at p. 3. (The remaining accounts were still subject to the temporary injunction in the separate estate administration cause, just as they were before the Foltyns' Application for Writ of Garnishment was filed.) On March 16, 2015, the Probate
Court signed its
Order Partially Releasing Temporary Injunction in regards to the GMS accounts in favor of the Foltyns, (Tab 9), and the January 27, 2015 became final as it disposed of all issues and parties in the garnishment proceeding.
This January 27, 2015 judgment was never appealed, and cannot be appealed now. The judgment is also not interlocutory because "a probate order is final if it
adjudicates a substantial right and disposes
of all issues in the phase of the proceeding for which is was brought, even though multiple judgments final for purposes of appeal can be rendered on certain discrete issues." Crowson v.
Wakeham,
897 S.W.2d 779, 781-82 (Tex. 1995); Lehmann v. Har-Con Corp., 39
S.W.3d 191, 192-93 (Tex. 2001);
Logan v. McDaniel, 21 S.W.3d 683, 688 (Tex. App.-Austin 2000, pet. denied) ("An order rendered in a probate proceeding need not finally dispose of the entire proceeding ... A probate proceeding consists of a continuing series of events, in which the probate court may make decisions at various points in the administration of the estate on which later decisions will be based."). Although the Estate Independent Administration is still open (without
PAGE40 *54 Court supervision), the January 27, 2015
Order
resolved all issues and pleadings in the garnishment proceeding, in which it participated. Therefore, even if the garnishment proceeding had been tied to the Estate administration, which it was not, this phase of the garnishment proceeding has been disposed of and is final, even though the Estate independent administration may continue.
Because there is a final judgment on the merits of tracing the Woodforest account, the first element of res judicata has been met. Element 2: same parties As discussed above, the same parties involved today actually participated in
the garnishment proceedings that resulted in the January 27, 2015 Order, and the Estate is "in privity" with the Foltyns. See collateral estoppel, element 3 above.
Because the same parties are involved in both proceedings, the second element of re judicata has been met. Element 3: same claims Res judicata provides broader relief than collateral estoppel since it allows
preclusion of claims that not only were adjudicated, but claims that could have been litigated in the prior suit. Rexrode, 937 S.W.2d at 616 ("unlike the broader res judicata doctrine, collateral estoppel analysis does not focus on what could have been litigated, but what was actually litigated").
PAGE 41 *55 "A subsequent suit will be barred if it arises out of the same subject matter of a previous suit and which through the exercise of diligence, could have been litigated in a prior suit." Barr, 837 S.W.2d at 631. "A determination of what
constitutes the subject matter of a suit necessarily requires an examination of the
factual basis of the claim or claims in the prior litigation. It requires an analysis of the factual matters that make up the gist of the complaint, without regard to the form of action. Any cause of action which arises out of those same facts should, if practicable, be litigated in the same lawsuit." !d. at 630.
The
Barr standard "is substantially similar to the rule of compulsory counterclaims embodied in the rules of civil procedure. A party defending a claim must bring as a counterclaim any claim that "arises out of the transaction or occurrence that is the subject matter of the opposing party's claim." !d.; TEX. R. CIV. P. 97.
While the issue of tracing was actually litigated on more than one occasion, the Estate still has never filed its community property claims. The garnishment proceeding was the proper time to have brought such claims. As discussed above, the issue in the garnishment proceeding was to trace the funds in the W oodforest account as solely K. McAfee's social security benefits in order to protect the entire account from garnishment. The Estate's purported claim seeks to re-trace the funds in the W oodforest account to see if the funds are all K. McAfee's social
PAGE42 *56 security benefits, or if the funds have been comingled with community property. While the purpose for tracing may be different, the issues, facts and evidence that make up both claims are identical-what is the character of the funds in the W oodforest account?
The issue of the Estate's potential community property claims was known and discussed in the garnishment proceedings. Tab 7, at p. 8, lns. 15-25; Tab 8, at p. 4, lns. 1-7; at p. 5, lns. 5-19; at p. 8, lns. 2-4; at p. 9, lns. 14-19; at p. 11, Ins. 4- 16; at p. 12, lns. 10-25; at p. 13, lns. 1-11; at p. 14, lns. 15-19; at p. 17, Ins. 18-25; at p. 18, Ins. 1-24. The Estate argued for the protection of its community property claims against the 401(k) account, yet made no mention of potential claims to the social security account. Tab 8. Knowing that tracing in the garnishment proceeding directly affected the Estate's community property interests, the Estate had the burden to bring its claim at the time the issue of tracing was first before the Court. It is not enough to merely say they want to litigate the claims in the future.
Because the same claims that the Estate alleges now could have been litigated in the prior suit, the third element of res judicata has been met. V. The Estate's claims cannot be satisfied from the Woodforest social
security account and continued obstruction of these funds violates due process and constitutes an abuse of discretion. K. McAfee's social security benefits are his separate, federally protected
property that cannot be used to satisfy the Estate's alleged community property PAGE43 *57 claims. 42 U.S.C. 407 ("none of the moneys paid or payable ... shall be subject to execution, levy, attachment, garnishment, or other legal process .... "). Storer has explained this protection provided by the Social Security Act, and its lack of exceptions, in great detail. 11
The F oltyns and the Estate do not disagree that any funds that are social
security benefits are protected.
See Tab 7, at p. 4, Ins. 1-6; Tab 8, at p. 18, Ins. 13- 18;seeTab 12,atp.3,Ins.15-17;atp.9,lns.1-7;atp.15,lns.ll-13;atp.17,Ins. 6-10; see Tab 15, at p. 14, Ins. 17-19; at p. 24, Ins. 16-18. Since the nature ofthe funds in the W oodforest account have already been traced, and found to be social security benefits, there is nothing left to fight over. If the Estate has claims, they can only be satisfied from other accounts made up of community property assets of Janet and K. McAfee, not from the Woodforest account that holds only K. McAfee's social security benefits. Tab 15, at p. 9, Ins. 18-22; at p. 13, Ins. 1-17; at p. 13, Ins. 2-25; at p. 14, lns.1-15; at p. 17, Ins. 8-11.
The Court's continued obstruction of these funds violates due process rights and the supremacy clause. Dionne v. Bouley, 757 F.2d 1344, 1354 (1st Cir. 1985) (social security account was exempt from attachment, procedural issues that prevented access to the account violated due process right and perhaps even the 11 See Storer's Motion to Quash Writs of Garnishment, Tab 4, ~'s 11-29; Tab 7, at p. 5, Ins. 2-17; at p. 11, Ins. 2-4; at p. 18, Ins. 9-23; Tab 8, at p. 5, Ins. 20-25; at p. 6, Ins. 1-24; Tab 14, at p. 9; Tab 12 and Tab 15.
PAGE44
*58 supremacy clause.) These violations are further reason why the May 18, 2015 Order should be set aside and the temporary injunction dissolved.
Last, the Probate Court has abused its discretion by failing to correctly analyze and apply the law in regards to Storer's arguments of lack of jurisdiction, no pleadings being on file, and no cause being set for trial. See In re Pierce, No. 13-12-00125-CV, 2012 WL 3525638, at *2 (Tex. App.-Corpus Christi Aug. 10, 2012, orig. proceeding) (mem. op.) (citing In re Cerberus Capital Mgmt., L.P., 164 S.W.3d 379, 382 (Tex. 2005) (orig. proceeding)) (court abuses its discretion "if it reaches a decision so arbitrary and unreasonable as to amount to a clear and prejudicial error of law or if it clearly fails to correctly analyze or apply the law.").
PRAYER For the reasons stated above, Relator, respectfully requests that the Court grant his Petition for Writ of Mandamus; direct the Honorable Loyd Wright to set
aside the May 18, 2015
Order on First Amended Motion for Reconsideration of March 16, 2015, Order Partially Releasing Temporary Injunction, First Amended Motion for Entry of Order Releasing Social Security Proceeds from Injunction and Motion for Sanction; direct the Honorable Loyd Wright to dissolve the June 8,
2011
Agreed Order for Temporary Injunction, and grant Relator such other relief, at law or in equity, to which Relator may be justly entitled.
PAGE45 *59 Respectfully Submitted, ANDERSON PFEIFFER, PC Esther Anderson SBN: 00792332 Robert Teir (of Counsel) SBN: 00797940 845 FM 517 West, Suite 200 Dickinson, Texas 77539 Telephone: (281) 488-6535 Facsimile: (281) 488-0625 Email: esther@probateguardianship.com Attorneys for Relator, Charles Storer, Power of Attorney for Kenneth Cooper McAfee PAGE46
*60 CERTIFICATE OF SERVICE I hereby certify that a true and correct copy of the forgoing Petition for Writ
of Mandamus
was delivered via the electronic service provider and/or certified mail, return receipt requested on this 1st day of October, 2015, to all parties/and or counsel of record: cc: Honorable Loyd Wright
Judge, Probate Court No. 1 Harris County, Texas 201 Caroline, 6th Floor Houston, Texas 77002 Dean M. Blumrosen, Esq. 4615 Southwest Freeway, Suite 850 Houston Texas 77027 Counsel for Rosemary Foltyn and Jake Foltyn Mary Elizabeth Duff 21 0 Main Street ~chmond, Texas77469
Counsel
for Rosemary Foltyn, Administratrix of the Estate of Janet Foltyn McAfee, Deceased
Esther Anderson PAGE47
*61 CERTIFICATE OF COMPLIANCE WITH RULE 9.4(i) This brief complies with the word limitation of Tex. R. App. P. 9.4 (i) because the brief contains 10,912 words, excluding the parts of the brief exempted by Tex. R. App. P. 9.4(i)(1).
This brief complies with the typeface requirements of Tex. R. App. P. 9.4(e) because it has been prepared in a proportionally spaced typeface using Microsoft Word 2007 in 14 point Times New Roman font.
Dated: October 1, 20 15. Esther Anderson PAGE48
*62 RULE 52.3(j) CERTIFICATION I have reviewed the petition and concluded that every factual statement in the petition is supported by competent evidence included in the appendix or record. Esther Anderson PAGE49
*63 APPENDIX TO PETITION FOR WRIT OF MANDAMUS 1. Agreed Order for Temporary Injunction 2. Order 3. Application for Writ of Garnishment 4. Motion to Quash Writs of Gmnishment 5. Notice to Court 6. Response to Charles Storer's Motion to Quash Writs of Garnishment
7.
January 18,2015 Transcript
8.
January 22, 2015 Transcript 9. Order Partially Granting Motion to Quash Writs of Garnishment 10. Motion to Partially Release Temporary Injunction 11. Motion to Partially Release Temporary Injunction 12. March 12, 2015 Transcript 13. Order Partially Releasing Temporary Injunction 14. First Amended Motion for Reconsideration of March 16, 2015, Order
Partially Releasing Temporary Injunction, First Amended Motion for Entry of Order Releasing Social Security Proceeds from Injunction and Motion for Sanctions
15. May 14,2015 Transcript 16. Inventory, Appraisement and List of Claims 17. Order on First Amended Motion for Reconsideration of March 16, 2015
Order Partially Releasing Temporary Injunction, First Amended Motion for Entry of Order Releasing Social Security Proceeds from Injunction and Motion for Sanctions
18. Application for Temporary Restraining Order and Temporary Injunction PAGE 50 *64 TABl Agreed Order for Temporary Injunction *65 ~··--"""" 06/08/2011 WBD 9:20 PAX 7132243111 Law Office ~002/0~1 06/07/2011 10:58 Mitchell & Duff Attorneys at Law (FAX)281341S517 P.002/011
D~BATE
COURT 1
·~Jltrli'~Ji;
998~91 No. 396,935 IN THE ESTATE OF IN THE PROBATE COURt § § JANET FOLTYN MCAFEE, § N0.1 § DECEASED § HARRIS COUNTY, TEXAS AGBEED ORDER FOR TEMPORARY :INJUNCTION On Maroh 31, 2011 the Application for a Temporary Restraining Ot·der of Rosemary Foltyn, as Administratrix of the Estate of Janet Foltyn McAfee (the .. Estate"), was beard and granted before this Court.
OnApril14 and May 5, 2011 the Courtultimatelyol·dered the Temporary Restraining Ordet• be extended and Temporary Injunction hearlng be rescheduled to June 9, 2011 at 2:00P.M. On May 18, 2011 the Application for a Supplemental Temporary Restraining Order of Rosemary Foltyn, as Administratrix of the Estate of Janet Foltyn McAfee, was heard and gtanted before this Court. The Temporary Injunction hearing was scheduled for June 1, 2011 at 12:00 PM.
On June 1, 2011 the Cowt ordered the Supplemental Temporary Restraining Order be extended and Temporary Injunction be extended and Temporary Injunction hearing be rescheduled to June 9, 2011 at 2:00P.M.
On June 7, 2011, tho parties agreed to the entry of a Temporary Injunction, andtopasson the hearing on June 9, 2011. This agreement is evidenced by counsels' signatures below. The Court finds that all necessnry prerequisites of the law have been legally satisfied and that the Court has jurisdiction in this case and of all the parties. The Court finds that Rosemary Foltyn, as *66 Adnlinistratrix of the Bstate of JBJI.et Foltyn McAfee, is entitled to a Temporary Injunction. Agreed Temporary JbjUDCI1on
1 Df10 Confidential information may have been redacted from the document in compliance with the Public Information Act. ,,,,,11111111111 A Certified Copy ~''' \ OF /fA,,,/. ~"" "
Attest: 9/29/2015 "'· b L1 '//. §-~v· •••••••• rr,r~~ S" •• •• ~·· •• ;,r ~ Stan Stanart, County Clerk ~,..... .· ·. c~ ·.o::; ::~: :: ...... : - - ~ c::=
Harris County, Texas -o. - . . - ">"&, .··~~ . ... - .
AA-J Q - . • :z- . .... . ~ :u. - . ·~= . ' ... ~. ~ . . ;::
~ 'OJ~···········~~~~
_ _,S.,t""'e urh'"""' n'l:!g'-'G....,_,SUJec.Jni-Uec;uCI.4:h.~ea~I-IJIIa.:..l ______ Deputy ,, ,,, ~ fT,J ~ ~ "' 'Illy ,1- \\""
''''" ""''' ·-···· r ~003/011 . 06/08/2011 WED 9:20 FAX 7132243111 Law Office ' 061071201 1 1 o :sa Mitchell & Duff Attorneys at Law (FAX)281341 5517 ?.003/011 IT IS THEREFORE ORDERED that Kenneth McAfee and all of his officers, agents, servants, employees, agents, servants, successors, assigns, representatives, and attorneys are ordered to immediately cease and desist from the use and control of the following accounts a:od property:
THE GMS GROUP, LLC
1 , Any and all funds in OMS Group, LLC accounts, including but not limited to the following, all of which are pl'esumed to contain community funds and/or funds belonging to the Estate:
a. SSH-004628 b. 55H-OS6008
. ~ c. 551·660606 ~ iW'I d. SSH-003612 JO I ,., e. SSH-034914 *67 f. SSH~850012 ~
I
g. SSH-042479 .;j ~ ql h. SSH-008207
i. 989~03491 j. 996·66060 k. 989-03500
2. Any and all funds in GMS Group, LLC accounts, all of which are presumed to contain commwlity :funds and/or funds belonging to the Estate, (i) in the name of Kenneth McAfee j · i
I
or Janet F. McAfee, Individuallyi (ii) Kenneth McAfee and Janet F. McAfee jointly; (iii) which i i
names one or both of them as a signatory: (iv) which contains fuuds In the care, custody, co.c.trol, for i
I
! i
the bc.mefit, or on behalf of Kenneth McAfee and/or Janet F. McAfee, individually or jointly; and (v) ,\greed 'l"c111porary lnJun~lloll :z. or tO
Confidential information may have been r edacted from the document in compliance with the Public Information Act. A Certified Copy Attest: 9/29/2015 Stan Stanart, County Clerk
:;li::i:d__o ----~S~te~d~i r~lQ~GL~SKe~n~ec~~~~aLII~II~--------Deputy ,....-------··---- 06/08/2Gll WED 9:20 FAX 7132243111 Law Office ~004/.011 06/07/201 1 10:58 Mitchell & Duff Attorneys at Law (f AX)2813415517 P.004/01 1 under any address related to eitherofthem~ such as a previous residence~ relative, representative, or attorney's address, or company which did business on behalf of either Kenne1h McAfee or Janet F. McAfee or which was owned in whole or in part by either Ol' both of them. The addresses include, *68 but are not limited to, the following;
1. PO Box 66352, Houston Texas, 77266 2. PO Box. 460786 Houston, Texas, 77056 3. 6650 Fairfield Street Houston, Texas, 77023 4. 21 I 9 Tangley Houston, TexllB, 77005
WOODFOREST NATIONAL BANK
3. Any and all funds in Woodforest National Bank accounts, all of which are presumed to contain conummity funds and/or funds belonging to the .Estate, (I) :in the name of Kenneth McAfee or Janet F. McAfee, Individually; (il) Kenneth McAfee 11Dd Janet F. McAfee jointly; (iii) which names one or both of them as a signatory; (iv) which contains funds in the care, custody, control, for the benefit, or on behalf of Kenneth McAfee and/or Janet F. McAfee, individually or jointly; and (v) under any address related to either of them, such as a previous residence, relative, representative, or attorney's address, or company which clid business on behalf of either Kenneth McAfee or Janet F. McAfee or which was owned in whole or in part by either or both of them. The adch·esses include, but are not limited to, the following:
a. PO Box 66352, Houston Texas, 77266 b. PO Box 460786 Houston, Texas 1 77056 e. 6650 Faid'ield Street Houston, Texas, 77023 d. 2119 Tangley Houston, Texas, 77005
.Agrulf Temporary Illjuncdoll 3or10 Confidential information may have been redacted from the document in compliance with the Public Information Act. A Certified Copy Attest: 9/29/2015 Stan Stanart, County Clerk
Harris County, Texas
,.,11;_--dd Q
Deputy
Ster11ng G. Senechal II! *69 0~/0812011 WBD 9121 FAX. 7132243111 Law Office ~005/011, P.OOS/011 06/07/2011 10:58 Mitchell & Dutt Attorneys at Law (FAX)281341S517
BANI{ OF AMERICA, N.A.
4. Any and aU funds .in Bank of America, N.A. accounts, all of which are .• presumed to contain community funds and/or funds belonging to the Estate, (i) in the name of Kenneth McAfee or Janet F. McAfee, lndividually; (ii) Kenneth McAfee and Janet F. McAfee jointly; (iii) which names one or both of them as a signatory; (iv) which contains funds in the care, custody, control, for the beoe.fit, or on behalf of Kenneth McAfee and/or Janet F. McAfee, individually or jointly; and (v) under any address related to either of them, such as a previous residence, relative, representative, or attorney's address, or company which rud business on behalf of either Kenneth McAfee o.l' Janet F. McAfee or which was owned in whole or in part by elther or both of them, The addresses include, but are not limited to, the following:
a. PO Box 66352, Houston Texas, 77266 b. PO Box 460786 Houston, Texas) 77056 o. 6650 Fairfield Street Houston, Texas, 77023 d. 2119 Tangtey Houston, Texas, 77005
BBVA COMPASS BANK Any and all funds in BBVA Compass accounts, including Laredo National 5. Bank, including but not limited to the tollowing, all of which are presumed to contain community funds and/or funds belonging to the Estate:
a. 113010547049~023 j b. 00810028023 I I·
6. /uly and all funds in BBVA Compass aooounts, including Laredo National i Bank. all of which are presumed to contBin commwuty funds and/or funds belonging to the Estate, ! j, (i) in the name ofKenneth McAfee or JIUlot F. McAfee, Individually; (ii) Kermeth McAfee and Janet
I·
Asretd Temporary IIIJun~don 4 of 10
J
*70 Confidential information may have been redacted from the document in compliance with the Public Information Act. A Certified Copy Attest: 9/29/2015 Stan Stanart, County Clerk
Har ris County, Texas
.Lf;_A,J___a
Deputy
stenmg G: S8neclial II! ll!D06/01l 06/DS/2011 WBO 9t21 FAX 7132243111 Law Office P.0061011 OS/07/2011 10:SB Mitchell & Duff Attorneys at Law (FAX)281J415517 F. McAfee jointly; (iii) which names one or both ofthllm as a signatory; (iv) which contains funds in the care, custody, control) for the benefit, or on behalf of Kenneth McAfee and/or Janet F. McAfee, individually Ol' jointly; and (v) under any address related to either of them, such as a previous residence) relative, representative, or attorney's address, or company which did business on behalf of either Kermetb.McAfee or Janet F, McAfee or which was owned in whole or in part by either or both of them. The addl'esses include, but are not limited to, the following:
a. PO Box 66352, Houston Texas, 77266 b. PO Box 460786 Houston, Texns, 77056 c. 6650 Fairfield Street Houston, Texas,.77023 d. 2119 Tangley Houston, Texas, 77005
WELLS FARGO BANK, N.A. 7. Any and all fUnds in Wells Fargo Bank, N.A. accounts, all of which are presumed to contain· community funds and/or funds belonging to the Estate, (i) in the name of Kenneth McAfee or Janet F. McAfee, Individually; (ii) Kenneth McAfee and Janet F. McMee jointly; (iii) which names one or both of them as a signatory; (iv) which contains funds in the care, custody, control, for the benefit. or on behalf of Kenneth McAfee and/or Janet F. McAfee, individually or jointly; and (v) under any address related to either of them, such as a :preVious residence, relative, representative, or attomey's address, or ~ompany which did business on behalf of either Kenneth McMee or JanetF. McAfee or which wa~ owned in whole or in part by either or both of them. The addresses include, but arc not limited to, the following:
*71 a. PO Box 66352, Houston Texas, 77266 b. PO Box 460785 Houston, Texas, 77056 c. 6650 Fairfield Street Houston, Texas, 77023
Asrced Temporary Jlljuner!o11 5of10 Confidential information may have been redacted from the document in compliance with the Public Information Act. A Certified Copy Attest: 9/29/2015 Stan Stanart, County Clerk
Harris County, Texas
A-44 £;(
Deputy
Sterling G. Senechal 111 . - - - - - - - - - - - - - - · - · - - - · - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 06/08/2011 WBD 9~21 FAX 71322431ll Law Office fZJO 07/011 06/07/2011 10:58 Mitchell & Duff Attorneys at Law P.007f011
(F~13415517
d. 2119 Tangley Houston, Texas, 77005
CITIZENS FINANCIAL GROUP, INC.
8, Arly and aU funds in Citiz~::mJ Financial Group, Inc. accounts, all of which are presumed to contain community funds and/or funds belonging to tho Estate, (i) in the name of Kenneth McAfee or Janet F. McAfee, Individually; (ii) Kenneth McAfee and Janet F. McAfee jointly; (iii) which names one or both of them as a signatory; (iv) whioh contains funds in the care, custody, control, for the benefit, or on behalf of Kenneth McAfee and/or Janet F. McAfee. individually or jointly; and (v) under any address related to either of them, such as a previous 1·esidence, rela1i ve, representative, or attorney's addtess. or company which did business on behalf of either Kenlleth McAfee or Janet F. McAfee or which was owned in whole or in part by either or both *72 of them. The addresses include, but are not limited to, tho following:
a. PO Box 66352, Houston Texas. 77266 b. PO Box 460786 Houston, Texas, 77056 c. 6650 Fairfield Street Houston, Texas, 77023 d. 2119 Tat~gley Hou.ston, Texas. 77005
PERSHIN_G LLC
9. Any and all funds in Pershing, LLC accowtts, all ofwhlch are presumed to contain community fund& and/or funds belonging to the Estate, (i) in the name of Kenneth McAfee or Janet F. McAfee, Individually; (ii) Kenneth McAfee and Janet F. McAfee jointly; (Ui) which names one Ol' both of them as a signatory; (iv) which contains funds in the care, custody, control, for the benefit, or on behalf ofKenneth McAfee and/or Janet F. McAfee, individually or jointly; and (v)
6 orxo Aerced Temporary Jnjuncrloa Confidential information may have been redacted from the document in compliance with the Public Information Act. A Certified Copy Attest: 9/29/2015 Stan Stanart, County Clerk
Harris County, Texas
A_4d .Q
Deputy
Sterling G. Senechal II! !llo o S/ o 11 06/09/2011 WED 9:21 FAX 7132243111 Law Office (F AX)2S13415S1 7 P.OOSJ01 1 OS/07/2011 10:59 Mitchell & Duff Attorneys at Law under any address ~:elated to either of them, such as a previous residence, relative, representative, or attorney's address, or company which did business on beijalfofeither Kenneth McAfee 01' J8IletF. *73 McAfee or which was owned in whole or in pBlt by either or both of them. The addresses include, but are not limited to, the following:
a. PO Box 66352, Houston Texas, 77266 b. PO Box 460786 Houston, Texas, 77056 c. 6650 Fairfield Street Houston, Texas, 77023 d. 2119 Tangley Houston, Texas, 77005
GRUNT,AL & CO •• INC_. 10. Any and all funds in Gruntal & Co., Inc. accounts, including 8DY Gruntal & Co., lltc. subsidiaries Ol' affiliates, inclucfutg but not limited to the following, all of which al'e presumed to contain community funds and/or funds belonging to the Estate:
a. 989·03491 . b. 989·05600
11, Any and all funds In Gruntal &. Co., Inc. e.ecoun~, , il1cludlng any Gruntal & Co., Inc. subsidiaries or affiliates, all of which are presumed to contain community funds and/or funds belonging to the Estate, (i) in the name ofKenneth McAfee or Janet F. McAfee, Individually; (ii) Kenneth McAfee and Janet F. McAfee jointly; (iii) which names one or both of them as a signatory; (iv) which contains funds In the care, custody, control, for tho benefit, or on behalf of Kenneth McAfee and/or Jooet F. McAfee, individually or jointly; and (v) under any address related to either of them, such as a previous residence, relative, representative, or attomey's address, or company which did business on behalf of either Kenneth McAfee or J anct F. MoAfoe or which was Agrctll 'l'emporar)' Ih)unctlon 7 utlO
Confidential information may have been redacted from the document in compliance with the Public Information Act. A Certified Copy Attest: 9/29/2015 Stan Stanart, County Clerk
Harris County, Texas
..fl;4-d Q
Deputy
Sterling G. Senechal IP *74 !ll009/0ll 06/08/2011 WED 9:21 FAX 7132243111 Law Office f AX)281341 5517 P.009/011 06/07/2011 10:59 Mitchell & Duff Attorneys at Law owned in whole or in part by either or both of them. The addresses include, but are not lhnited to, tbe following:
a. PO Box. 66352, Houston Texas, 77266 · b. PO Box 460786 Houston, Texas, 77056 c. 6650 Fairfield Street Houston, Texas, 77023 d. 2119 Tangley Houston, Texas, 7?005
OTIIER ACCOUNTS
12. A!ly and till accounts presumed to contain community funds and/or funds belonging to the Estate, (i) in the name of Kenneth McAfee or Janet F. McAfee, Individually; (ii) KeMeth McAfee and Janet F. McAfee jointly;. (iii) which name them as a signatory; (iv) which contains funds in the care, custody, control, for the benefit [1] or on behalf of Kenneth McAfee and/or Janet F. McAfee. individually or jointly; and (v) under any address related to either of them, such as a previous residence, relative, representative [1] or attorney's address, or company which did business on behalf of either Kenneth McAfee or Janet F. McAfee, including, but not limited to the following:
a. PO Box 66352, Houston Texas, ?7266 b. PO Box 460786 Houston, Texas, 77056 c. 6650 Fairfield Street Houston, Texas, 77023 d. 2119 Tangley Houston, Texas, 77005
which contain: Funds transfened from 01· that can be traced to the accom1ts described (i) herein, including but limited to accounts at The OMS Group, LLC, Aem~ Tem-porary lnjunetloo BoflO *75 Confidential information may have been redacted from the document in compliance with the Public Information Act. A Certified Copy Attest: 9/29/2015 Stan Stanart, County Clerk
Harris County, Texas
A . .d_f_o
Deputy
Starling G: S8n8Challl! fili010/011 06/08/2011 WED 9:21 FAX 7132243111 Law Office (FAX)2813415517 P.OlOIOt 1 06/0712011 10:59 Mitchell & Duff Attorneys at Law Woodforest National Bank [1] Bank of America. N.A., BBVA Compass Bank [1] Wells Fargo Bank, N.A., Citizens Financial Group, Inc., Pershing LLC, and G.nlt'llal & Co, [1] Inc.; and/or
(ii) Any and all additional funds and assets w,hich arc preswned to contain community funds and/or funds belonging to the Estate. , IT IS THEREFORE ORDERED, AD.nJDGED AND DECREED that any entity or individual, including but not limited to The GMS Group, LLC, Woodforest National Bank, Bank of America, N.A., BBVA Compass Bank, Wells Fargo Bank, N.A., Citizens Financial Group, Inc., Pershing LLC, and Grutnal & Co., Inc., which contains, controls, or possess~s funds presumed to belong to the community and/or Estate, is ordered by the Court to effectuate the terms of tbis Temporary Injunction should Kenneth McAfee, or any officers, agents, servants, employees, agents, servants, successors, assigns, representatives> and/or attorneys acting on ms behalf, attempt to access or obtain accounts or property within that entity or individual's control or possession, which may contain commtmitY funds and/or funds that belong to 'the Estate.
IT IS THEREFORE ORDERED, ADJUDGED AND DECREED that this Temporary Injunction Order is effective immediately and shall continue in force and effect until the Court me.keil a detClmination of what property belongs to the Estate or the Court 1'enders a full and fmaljudgment is in the pending wrongful deatl1 suit associated with this matter, which ever is later, or by further order of this Court. This order shall be binding on Kenneth McAfee, or any officers, employees, *76 agents, servants, successo1·s> assigns, representatives, attorneys acting on his behalf, and on those persons in active concert or participation with him. The bond posted by the Administratrix is required to remain posted. Agreed 'fe111por~ry llljuneclon 9or10
Confidential information may have been redacted from the document in compliance with the Public Information Act. A Certified Copy Attest: 9/29/2015 Stan Stanart, County Clerk
Harris County, Texas
A_Ad .o
Deputy
Sterling G. Senechal II! 06/08/2011 WED 9:22 PAX 7132243111 Law Office ~011/0ll P.011/011 (FAX)2813415517 06/0712011 10:59 Mitchell & Duff Attorneys at Law ':X) t I SIGNEDon~~~ at~m.
APPROVED AS TO FORM:
Duff Texas o.06J66880 21 0 Main Street Richmond, TX 77469 Tel. (281)34IM1718 Fax. (281)34lM5517 *77 Atton1ey for Independent Administratrix Ro~ol~~ By:. ___ ~~~---------------
DEAN M. BLUMROSEN, ESQ.
State Bar No. 02517900 4615 Southwest Freeway, Suite 850 Houston, Texas 77027
- r
7l3.S24.222SM Telephone
713.524.557~ Faoslmil
I
Attomey for Heirs f et Foltyn McAfee .;a ro 0
.CN RECORDER'S MEMORANDUM: At tho time of recordation, lhll Instrument was round to be lnadaqusto for the belt photographic reproduction because of Illegibility, carbon or photo copy, dlacolored paper, etc. AIJ blockoull, 10 of 10 addlllona and changes were pro~~&nt allhe lima
,1\groecl 'romporK., lojuoclloo the Instrument was filed and rucordad. Confidential information may have been redacted from the document in compliance with the Public Information Act. A Certified Copy Attest: 9/29/2015 Stan Stanart, County Clerk
Harris County, Texas
J,t..Jd _Q
Deputy
Sterling G. Senechal II! *78 Tab2
Order
*79 PROBATE COURT I .. NO. 396,935-401 r~ a c r::
ROSEMARY FOLTYN, Individually § (~. And as Independent Administratrix of the§ \_ Estate of Janet Foltyn McAfee, Deceased; § 0 (\J AND JAKE FOLTYN, Individually § o:l Plaintiffs § 0 §
§ I - I C'J ~ § vs.
§
(\j ,., § KENNETH COOPER MCAFEE § N HARRIS COUNTY, TEXAS Defendant § C'l c
ORDER
On this day the Court considered the Plaintiffs' Second Amended Motion for Summary Judgment on Plaintiffs wrongful death claim. The Court, after considering the pleadings, the motion, the response, if any, and the arguments of counsel, is of the opinion that the Plaintiffs' Second Amended Motion for Summary Judgment is hereby GRANTED. Defendan~, Kenneth Cooper McAfee is liable to the individual Plaintiffs for causing the death of their daughter, Janet McAfee.
ORDERED, ADJUDGED and DECREED that Plaintiff, Rosemary Foltyn, Individually, recover from Defendant, Kenneth Cooper McAfee, after all offsets and credits, judgment in the amount of $1,000.000.00 for her
1 *80 Confidential information may have been redacted from the document in compliance with the Public Information Act. A Certified Copy Attest: 9/29/2015 Stan Stanart, County Clerk
Harris County, Texas
A4Lo
Deputy
Ster11ng G. S nechal Ill .I - ..... emotional pain and suffering due to the death of her daughter, Janet McAfee. It is further, ORDERED, ADJUDGED and DECREED that Plaintiff, Jake Foltyn, Individually, recover from Defendant, Kenneth Cooper McAfee, after all offsets and credits, judgment in the amount of $1,000 1 000.00 for his emotional pain and suffering due to the death of his daughter, Janet McAfee. This judgment shall accrue together with interest thereon at the rate of 5% per annum from the date this suit was filed on February 23, 2011, until the date of judgment, post-judgment interest at the rate of 5% per annum, and for all costs of Court expended in this cause, for which let execution issue. This Judgment finally disposes of all parties and is appealable.
SIGNED this ~~ ..rr- day of_---=-/?2-~ar=--=cb~'----' 2014.
JUDGE LOYD WRIGHT
*81 2 Confidential information may have been redacted from the document in compliance with the Public Information Act. A Certified Copy Attest: 9/29/2015 Stan Stanart, County Clerk
Harris County, Texas
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Deputy
Ster11ng G Senech 1111 Tab3 Application for Writ of Garnishment *82 FILED 10/9/2014 10:18:51 AM Stan Slanart
PROBATE COURT 1
County Cieri<
OM
Hams County JANET F. MCAFEE, DECEASED 396935-401
NO. ___ _
*83 0 ROSEMARY FOL TYN, Individually§ IN THE PROBATE COURT AND JAKE FOLTYN, Individually§ ONE
Plaintiffs § § § § § § OF §
, .. vs. § 0 § THE GMS GROUP, L.L.C. AND § WOODFOREST NATIONAL § HAREITSCOUNTY,TEXAS BANK §
Defendants 1 PER WRIT BY CERTIFIED MAILED APPLICATION FOR WRIT OF GARNISHMENT1 PER WRIT IN 10-9-2014
TO THE HONORABLE JUDGE OF SAID COURT:
COMES NOW, Rosemary and Jake Foltyn (hereinafter referred to as "Gamishors") and makes this Application for Writ of Garnishment against The GMS Group, L.L.C., and Woodforest National Bank, (hereinafter referred to as "Garnishees") and, in support hereof, Garnishors would show the Court the following:
I.
1. Plaintiffs/Garnishors are Rosemary and Jake Foltyn ("Garnishors"). Page 1 Application for Writ of Garnishment
C.P!RSONAL OCT 1 3 2014 ·-··--·- ---. ·-· ··· - - - - · - - -- ----- ..... .. ··---- ---- .. - . Confidential information may have bee n redacted from the document in complia nce with the Public Information Act. A Certified Copy Attest: 9/29/2015 Stan Stanart, County Clerk
Harris County, Texas
.A,4d_ .a
Deputy
*84 St rUng G. S n challll 2. Defendant/Garnishee, LGMS Group, L.L.C., is a limited liability company doing business in Texas and may be served by serving its registered agent, via certified mail, return receipt requested, Corporation Service Company, DIBI A CSC -Lawyers Tnco,~E. 7&. Street, Suite 620,
'I:J'
Austin, Texas 78701. Defendant/Garnishee~::dforest National Bank is a privately 3. held bank doing business in Texas and may be served by personally serving its~tered agent, James D. Dreibelbis, 25231 Grogan's Mill Road, Suite 100, The Woodlands, Teas 77380.
4. Venue is appropriate in Harris County, Texas because the Judgment was rendered in Harris County, Texas.
II.
5. On or about March 21,2014, this Court, in case number 396,935- 401 styled Rosemary Foltyn, Individually and as Independent Administratrix of the Estate of Janet Fo/tyn McAfee, Deceased; and Jake Foltyn, Individually v. Kenneth Cooper McAfee entered a Judgment against Defendant, Kenneth Cooper McAfee in the amount of $2,000,000.00, plus pre and post judgment interest, plus costs of Court ("Judgment"). A true and correct copy of the Page 2 Application for Writ of Garnishment
*85 Confidential information may have been redacted from the document in compliance with the Public Information Act. A Certified Copy Attest: 9/29/2015 Stan Stanart, County Clerk
Harris County, Texas
Judgment is attached hereto as Exhibit "A" and incorporated herein by reference for all purposes. This Judgment is just, due, unpaid, and remains unsatisfied.
III.
,~ 6. To the best of Garnishors' knowledge, the debtor, Kenneth Cooper McAfee does not possess property in Texas subject to execution that ,.. is sufficient to satisfy the above-described claim. Plaintiffs served post- Cl , ..
judgment discovery on Mr. McAfee on April 21, 2014. Defendant did not
produce any documents establishing his ownership of property in Texas sufficient to satisfy the judgment against him.
IV.
7. Gamishors have reason to believe, and do believe, that Garnishees, The OMS Group, L.L.C., and Woodforest National Bank, may be indebted to Kenneth Cooper McAfee by maintaining or holding one or more bank accounts. Gamishors believe Kenneth Cooper McAfee's social security number to be 454-82-X:X:XX. Gamishors are not seeking to injure or harass the Garnishees or the Judgment Debtor by sending out a Writ of Garnishment. Rather, Garnishors are attempting to collect on a Judgment. Gamishors request that if Garnishees, The OMS Group, L.L.C., and Woodforest National *86 Application for Wrtt of Garnishment Page 3
Confidential information may have been redacted from the document in compliance with the Public Information Act. A Certified Copy Attest: 9/29/2015 Stan Stanart, County Clerk
Harris County, Texas
Sterling
G.
Senechaf 111 Bank are indebted to Kenneth Cooper McAfee by any account or otherwise, that Garnishees hold and allow Garnishors to garnish said belongings. Garnishors also request that if Garnishees hold possessions in a safety deposit box at any branch that Garnishees hold and allow Gamishors to garnish said belongings as pennitted by law.
v. 8. This Application is supported by the Affidavit of Dean M. Blumrosen attached hereto as Exhibit "8" and incorporated herein by reference for all purposes.
WHEREFORE, PREMISES CONSIDERED, Rosemary and Jake *87 Foltyn, request that a Writ of Garnishment be issued as above described and that Gamishors have judgment to partially satisfy the claim above-mentioned as provided by law, together with all costs of Court incurred in this proceedings, and other such relief to which Garnishors may be justly entitled.
Page 4 Application for Writ of Garnishment - - - - - - -- ··· ···· · · · - -·······-··- - - -- - Confidential information may have been redacted from the document in compliance with the Public Information Act. A Certified Copy Attest: 9/29/2015 Stan Stanart, County Clerk
Harris County, Texas
··------------------------------------------------ *88 R~~t~ C) il.
DEAN M. BLUMROSEN, ESQ.
State Bar No. 02517900 4615 Southwest Freeway, Suite 850 Houston, Texas 77027
~1 ....
713.524.2225- Telephone
0 713.524.5570- Facsimile N Dblumrosenlaw@aol.com
ATTORNEY FOR PLAINTIFFS I'"' Application for Wtit of Garnishment Page 5 . ····- ··· ·-·-···- ··· - ---- - --·· - -· ... ... ... . . ······· .. . Confidential information may have been redacted from the document in compliance with the Public Information Act. A Certified Copy Attest: 9/29/2015 Stan Stanart, County Clerk Harris County, Texas
*89 ('J 1;\j
EXHIBIT A ------------------- -···· *90 Confidential information may have been redacted from the document in compliance with the Public Information Act. A Certified Copy Attest: 9/29/2015 Stan Stanart, County Clerk
Harris County, Texas
Deputy
NO. 396,935-401
ROSEMARY YOLTYN, fndlvlduall)' § IN THE PROBATE COURT ONE And as Independent Adminl~tnltrix of the§ Estate of .Jaaet Foltyn McAfee, Deceased; § AND JAh.'"E FOL TYN, Individually §
, ..... Plaintifft § §
OF
§ § vs.
I"' § 1'", §
1\J
KE!IINETH COOPER MCAFEE § t" .. '••'
Defendant § HARRIS COUNTY, TEXAS , ..
ORDER
On this day the Court considered the Plaintiffs' Second Amended Motion for Summary Judgment on Plaintiffs wrongful death claim. The Court, after considering the pleadings, the motion, the response, if any, and the arguments of counsel, is of the opinion that the Plaintiffs' Second Amended Motion for Summary Judgment is h.ereby GRANTED. Defendant, Kenneth Cooper McAfee is liable to the individual Plaintiffs for causing the death of their daughter, Janet McAfee.
ORDERED, ADJUDGED and DECREED that Plaintiff, Rosemary Foltyn, Individually, recover from Defendant, KeMeth Cooper McAfee, after all offsets and credits, judgment in the amount of $1,000.000.00, for her
*91 1
I
! I I' f I ,.
Confidential information may have been redacted from the document in compliance with the Public Information Act. A Certified Copy Attest: 9/29/2015 Stan Stanart, County Clerk
Harris County, Texas
v •• emotional pain and suffering due to the death of her dau~ter, Janet McAfee. It is further, ORDERED, ADJUDGED and DECREED that Plaintiff, Jake Foltyn, Individually, recover from Defendant, Kenneth Cooper McMee, after all offsets and credits, judgment in the amount of $1,000.000.00, for his emotional pain and suffering due to the death of his daughter, Janet McAfee. This judgment shall accrue together with Interest thereon at the rate of 5% per
,,,
I,_..J
annum from the date this suit was filed on February 23, 2011, until the date of judgment, post-judgment interest at the: rate of 5% per annum, and for all costs of Court expended in this cause, for which let execution issue. This *92 Judgment finally disposes of all parties and is appealable.
SIGNED this ~I ..s-r- day of _ _!.:.../?2__.(:.-~oQ.C~ch..c;....). _ ___,, 2014.
JUDGE LOYD WRIGHT
2 I (, . ---··- -- · - -- - - -
. ....
Confidential information may have been redacted from the document in compliance with the Public Information Act. A Certified Copy Attest: 9/29/2015 Stan Stanart, County Clerk
Harris County, Texas
...... *93 , .. , .. (:)
EXHIBIT B Confidential information may have been redacted from the document in compliance with the Public Information Act. A Certified Copy Attest: 9/29/2015 Stan Stanart, County Clerk
Harris County, Texas
*94
A-<4L o
Deputy
St nino G. Sen chef Ill
AFFIDAVIT OF DEAN M. BLUMROSEN
STATEOFTEXAS § §
COUNTY OF HARRIS §
BEFORE ME, the undersigned official, on this day, personally appeared before me, Dean M. Blumrosen, who after being duly sworn, did depose and state as follows: "My name is Dean M. Blumrosen.l am over 21 years of age, of sound mind, I. have never been convinced of a felony and um capable of making this 1::; allidavit. 2. ';I om nn attorney for Rosemary and Jake Foltyn., Gamishors in this Garnishment. 3. ;'I have personal knowledge of the facts as stated in Garnishors' Application r~ W<h ofGom;•hmom Md '"'' ~ 'hl-lliL
DEAN
M. BLUMROSEN Subscribed and sworn to before me on this~ day of October, 2014 IICHEl.L£ GAIRtli.A fOR$1111 ,)ly c-IIIIGCill!lm \)CIOIItll, 2011 . - - - - - - - - -----------·- -·-- --- ·- .. ...... ___ ·----- -- - -- ... *95 Confidential information may have been redacted from the document in compliance with the Public Information Act. A Certified Copy Attest: 9/29/2015 Stan Stanart, County Clerk
Harris County, Texas
Tab4 Motion to Quash Writs of Garnishment *96 FILED 1111!112014 4:12'2~ PM stan:Stanan Coun1YCIG11<
PraOBATE COURT 1 Hsllf> CouniY 522CAUSE NO. 396935-401 N c §
INRE IN THE PROBATE COURT (). § JANET F. McAFEE, Deceased § NUMBER ONE
§ ROSEMARYFOLYNand § i i .. § JAKEFOLYN
§ I~ § OF ~ 10
§ iN THE GMS GROUP, LLC and § I~ § WOODFOREST NATIONAL BANK, HARRIS COUNTY, TEXAS Defendants § MOTION TO QUASH WRITS OF GARNISHMENT TO THE HONORABLE JUDGE OF SAID COURT: COMES NOW Charles Storer, Power of Attorney for Charles McAfee, Defendant herein, and holder of the accounts Plaintiffs seeks Via the Writs of Garnishment Issued by this Court, who m011es to quash (dissolve} the two Wrfts of Garnishment issued post- judgment in this cause (to Woodforest National Bank and GMS Group}, as the Writs reach accounts andlor assets that are wholly exempt from the reach of judgment creditors (indeed from the reach of all creditors). In support of this Motlon, Mr. storer, would show the following: [1]
I. INTRODUCTION AND SUMMARY
1. This Court Issued two writs of garnishment at the request of Plaintiffs. While a judgment creditor has a right to pursue collection on their judgment, including via garnishment upon depository aocounts, Texas and federal law sharply limit what property of a judgment debtor may be taken. Here, both or the accounts are [1] Mr. McAfee deslgnated a Power of Attorney heta\lse he 1s incarcerated. ..... MOnoN TO QIJ.I.SH WRFT-5 or GAAHISHMEJlf *97 Confidential information mar have been redacted from the document in compliance with the Public Information Act. A Certified Copy Attest: 9/29/2015 Stan Stanart, County Clerk Harris County, Texas
Deputy entirely and undividedly, protected from the reach of all creditors. Because these .-
N
accounts may not be taken by any creditor, with any judgment, the two Writs 0 0.
issued while the Court was unknowing of the exempt status of these accounts, 0 1'1
should and must be quashed.
II. FACTS AND PROCEDURAL HISTORY
<IJ ,... 2. Mr. McAfee was convicted of a criminal offense Involving the death of the 0
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decedent, Janet Foltyn McAfee, and Is currently serving his sentence at a Texas 0
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correctional institution. The underlying claim was a wrongful death action against Mr. McAfee. This Court found for the Plaintiffs In the wrongful death action.
3. Post-judgment, the Plaintiffs sought from this Court, and received, two Writs of Garnishment. The Application for Writs of Garnishment made no mentlon of the exempt status of either account. Rather, the Application simply noted that the garnishees, both Woodforest and GMS, may be indebted to the Defendant 'by maintaining or holding one or more bank accounts." Application for Writ of Garnishment, 117.
4. The first Writ of Garnishment reached Mr. McAfee's depository account at Woodforest National Bank ("Woodforest'). This account, however, is beyond the reach of all creditors, including the judgment creditors in this cause, because the account was opened to receive, received, and Is now holding funds received pursuant to the federal Social Security Disability insurance ('SSDI') system. The account contains no funds other than those received as Social Security benefrts.
5. The second Writ of Garnishment reached Mr. McAfee's depository account held by his former employer, GMS Group, L.L.C. ('GMS'). This account is also , ... ,
MOllOH TO QVASHWfUTS OF GARNISHMENT
*98 Confidential information may have been redacted from the document in compliance with the Public Information Act. A Certified Copy Attest: 9/29/2015 Stan Stanart, County Clerk Harris County, Texas
Deputy m beyond the reach or aH creditors, including the judgment creditors in this cause,
N
0 because the account Is Mr. McAfee's tax-deferred retirement benefit account tl. ..
arising from his employment with GMS •
0 L'1 ,..
6. In lieu of an Answer, GMS reported to this Court that It Is holding depository accounts belonging to Mr. McAfee. See letter from Matthew F. Lipman, Esq. ':" (counsel for GMS Group)to Stan Stanart, County Clerk (Oct. 23, 2014), which is 0
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a part of this Court's file and Is Incorporated herein by reference. See Exhlbl! 0
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·c. • GMS' response indicates that the account In question is a retirement account qualified under IRS rules for tax deferment. ld@ Exhibit "2.'
7. Garnishee Woodforest National Bank has yet to answer its Writ. Ill. ARGUMENT AND AUTHORITIES 8. All social security benefits, including SSDI, are exempt from collection actions, and beyond the reach of debtors, pursuant to a federal statute that was a central component of the original depression-era Social Security Act. See 42 U.S.C. §407; H. R. 7260 (1935); sea also In re Franklin, 506 B.R. 765, 769 (Bankr., C.D. Ill. 2014) ("These proscripUons have been part of the Social Security Act since 1935'). [2]
9. The absolute nature of the social security benefit exemption has been recognized by the United States Supreme Court, which observed that 42 U.S.C. §407(a) "unambiguously rules out any attempt to attach Social Security benefils." Bennett v. Amansas, 485 U.S. 395, 397, 108 S.Ct. 1204, 1205, 909 l.Ed2d 455
'The exempHon reaches Soeial Seeur1ly retirement ineome, dlsablllty benefits, and supplemental security income, amongst other benefits. See TownSJ)/ v. Dish Networl<, 668 F.3<1 967, 968 (7., Clr. 2012). Veterans' benefits are exempt and lreated the same wa!J. Sea Christenssn v. Pack, 122 Nev. 1309, 149 P.3d 40, 48 (Nev. 2006).
*99 Confidential information may have been redacted from the document in compliance with the Public Information Act. A Certified Copy Attest: 9/29/2015 Stan Stanart, County Clerk Harris County, Texas
J!;_4~ Deputy SteHing G sen&Challll 0 l'J (1988).
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0 10. The same complete exemption also reaches accounts that qualify for deferment a.
of federal income tax, Including Mr. McAfee's 401{k) account that Is the subject of the GMS garnishment. IRS qualified retirement accounts are exempt from collection actions, and beyond the reach of debtors, pursuant to Texas law. See Tex. Prop. Code, §2.0021. The legal issue, and exempt nature, regarding· both
0
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accounts is neither cootroverslal nor a close call. 0 [\j
IV. EXEMPTION OF THE WOODFOREST (SOCIAL SECURITY) ACCOUNT A. The Exemption for Social Security Benefits Is Statutory and Contains No Exceptions 11. The federal statute protecting federal social security benefits from the reach of creditors, Including those on deposit, is unequivocal and sweeping In its scope. II is so protective of federal benefits, It goes as far as to prohibit recipients of these benefitS from voluntarily choosing to assign or alienate these benefits, even for valuable consideration. See 42 U.S.C. §407. Indeed, the sole manner these funds can be put Into the hands of others Is through staodard purchases of goods and services after the benefits have been cashed or deposited. These funds may not be assigned to creditors, including by the Involuntary means of garnishment. See Townsel v. Dish Network, 666 F.3d 967, 968 {7"' Clr. 2012) ("A credllor that tried to garnish or attach Social Securlly benefits . ... would encounter a §407 defense). [3] [3] The sllltute creates three separate proteellons for social securlty benefits. II forbids assignments or sueh benefits. See 42 U.S.C. §407(a). Second, it makes these benefits beyond the reach of a bankruptcy trustee. Sea ld. Third, and relevant hare, K exempts these be!l!lfi!s from stale or federal judicial action. See /d. ('none of lhe mooeys paid or payable or rights exlsdng under thi! sub<hapter shall b<
.....
MallON TO QUASH WRITS OF GARNISl1MEHT
*100 Confidential information may have been redacted from the document in compliance with the Public Information Act. A Certified Copy Attest: 9/29/2015 Stan Stanart, County Clerk Harris County, Texas
Deputy . 12. The absolute nature of the exemption is based on Congress' insistence on firm ('J
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~ and secure protection for "beneficiaries and those dependent on beneficiaries
from the claims of creditors.' Reams v. Oklahoma, 411 F.3d 1164, 1172 (10 [111] Cir. 2005); see also In re Greene, 27 B.R. 462, 464 (Bankr., E.D. Va. 1983) (§407 "deals with the rights of social security recipients and seeks to protect their benefits from the reach of creditors").
0
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0 13. In fact, Congress wanted to protect beneficiaries "from seizure In the legal
N
process: lr:J. By doing so, Congress ensured that the underlying purpose of social security benefits, to provide a minimum level of support and financial stability, cannot be hindered by creditors, regardless of the merits of the creditors' claim. See ir:J.; see also In re Buren, 6 B.R. 744, 746 (Bankr., M.D. Tenn, 1980) ("The purpose of the Social Security Act of 1935 was to provide a minimal level of economic security for the unemployed, the elderly, the homeless, and the blind").
14. The Woodforest account that Plaintiffs seek to garnish is funded with social security deposits. See Oeposivrransaclion record of Woodforest National Bank (showing monthly direct deposits as received from "SOC SEC US TREASURY"). [4]
15. While Mr. Afee is disabled, he Is admittedly not homeless, elderly, or blind. The lack of a destitute state, however, as well as !he existence of other means of suppol}, such as the Texas Department of Corrections, does not cause the
subject to execution, levy, aHachment, gamlshmen~ or other legal process, or to the operation of any bankruptcy or insolvency law"). ' A spreadsheet showing all deposits Into the account since December of 2009 Is attached to this pleadif'lll as Exhibit A. The Woodlorest.generated statooment of account activlty Is attached to ltlls pleading as ExhibK B. The account activity ceases In November, 2010 except for ltle exclusive conllnulng Social Security b<lnelils dlreclly deposited and interest on the accounL See ld.
MOTION TO 0\IASH WRITS Of GA.RHtSHMENT .... $ *101 Confidential information may have been redacted from the document in compliance with the Public Information Act. A Certified Copy Attest: 9/29/2015 Stan Stanart, County Clerk Harris County, Texas ~Lt;__.__~_·d/_.......-~=--=· =.;____.Deputy · SterliM G. Senechal Ill
....-
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shedding of the exemption of these funds from garnishment or collections. The N (\J Social Security Act uses absolute language, devoid of any exceptions, for any 0 ll.
circumstances. See Philpott v. Essex County Welfare Board, 409 U.S. 413, 415, " !II 93 S.Cl 590, 34 LEd2d 608 (1973) (because "!he language is al~inclusive,' the Social Security Act prohibits any state from reaching federal disability benefits);
l:j ,. /d., 409 U.S. at416 ('it Imposes a broad bar against the use of any legal process 0
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to reach social security benefits'). [5] There is, therefore, no need-testing for the 0 N ,...
exemption to apply. Cf. Reams v. Oklahoma, 411 F.3d at 1172 ('To tinker with !"" that scheme could open the door lor a loss of protection down the road'). 16. Rather, the exemption Is absolute. The statutory language, the United States Supreme Court noted, 'Is broad enough to reach all security benefrts,' no matter the cause of the benefits or the situation of the beneficiary." Phl1pott v. Essex County Welfare Board, 409 U.S. at417; see a/so In ra Carpanler, 614 F.3d 930, 932 (81h Clr. 2010) (exemption statute is unambiguous, and therefore courts have no need lor legislative history or implied exceptions); accord, In re Ragas, 700 F.3tt220, 222·224 (5 [111] Cir. 2012). [6]
17. The statute, therefore, is an unyielding prohibition on the garnishment sought In this case. See N.L.R.B. v. HH# Trucking, Inc., 755 F.3d 466 (71h Clr. 2014) (•Social Security benefits ... cannot be garnished or otherwise attached after
• Phi/pol was an unanimous declslonloplnlon of the Supreme Court • There was, for a brief, time an lmpfied exception, In just one federal cin:vit, for benef~elaries who d'Jd not need the social security 1\Jnds for !heir SIJII!enan<:s. See Cilltmeffe-MobUe Gelheling v. Watkins, 934 F.2d 1180 (11~ Clr. 1991). Not one of the CilltmsHe court's sister circuit courts adopted the! holding !he absolule language of the staMe. CitroneUe's reach, Ill any event, lermlneted at the hand ollhe Coort See Lew v. Siege/,- U.S.-, 134 S.Cl 111l8, 111l5,188 LEd2d 146. 82 USLW 4140 2014).
MOnON TO OUASHWMS OF OJJ\Hls.HME:NT P•goe *102 Confidential information may have been redacted from the document in compliance with the Public fnformation Act. A Certified Copy Attest: 9/29/2015 Stan Stanart, County Clerk Harris County, Texas
Deputy (') receipt"); NCNB Financial Services v. Shumate, 829 F.Supp. 178, 180 (W.O. Va. ('..!
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0 1993) (statute 'prohibits attachment, levy, or garnishment on such beneflls"); In a.
re Franklin, 506 B.R. 765, 773 (Bankr., C.O. 111.2014) (exemption provision is not 0 d'l
tied to Bankruptcy Code and Is assertable defensibly including against garnishments). In re Miller, 445 B.R. 504, 507 (Bankr., D.S.C. 2011) (the statute 'contains no limiting language' and therefore extends to all social securlly
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0 income): id., ('section 407(a) operates as a complete bar to the forced Inclusion
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of past and future social security proceeds In the bankruptcy estate") [quoting In re Carpenter, 615 F.3d g3o, 946 (au. Cir. 2010)): see also Bennatt v. Arkansas, 485 U.S. 395, 398, 108 S.Ct. 1204, 1205-06, 99 L.Ed2d 455 (state may not attach social security benefits of state prisoners) (per curiam); Marengo v. First Massachusetts Bank, 152 F.Supp.2d 92 (0. Mass. 2001) (efforts to reach account contained benefit deposits violated Social Securlly Act). Judicial interference with these funds, indeed, is so disfavored, H has been held
18. to Implicate the constitutional due process rights of social securHy beneficiaries. See Dionne v. Bouley, 757 F.2d 1344, 1350 (1st Cir. 1985) ("It is also clear that Dionne's Interest in retaining her exempt social security funds free from attachment was the kind of property interest that is entilfed to due process protection').
19. Earlier this year, the United States Supreme Court once again held that the statute means what it says; § 522 does not give courts discretion to grant or withhold exemptions based on whatever considerations they deem appropriate. Rather, the statute exhaustively specifies the criteria that will render property exempt.
.... ,
MOTIOH TO QUASH WRilS OF GA.RNIStodEHT
*103 Confidential information may have been redacted from the document in compliance with the Public Information Act. A Certified Copy Attest: 9/29/2015 Stan Stanart, County Clerk Harris County, Texas
ft4L_a
Deputy
Sterling G: Sanecna! 111 v N N
Lawv. Siegel,- U.S.-, 134 S.Ct. 1188, 1196, 138l.Ed2d 146,82 USLW 4140 0 1).
(March 2014); see also /d. ('courts are not authorized to create additional 0 ul exceptions'); In re Franklin, 506 B.R. at 773 ('Congress has strongly expressed
its policy of protecting social security benefrts, and it is not for the courts to read ';t an Implied exception"lnto the exempting statute). 0 20. N The mountain of precedent and the unambiguous wording of the federal statute 0
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mandate the quashing of the Woodforest writ. Social security funds can never be used to pay creditors, except when received, turned into cash, and become the subject of voluntary spending by the debtor. See In re McFarland, 461 B.R. 242, 250 (Bankr., S.D. Ga. 2012) (social security benefits remain exempt from creditors after they are 'received by the Social Security recipient and deposited Into the bank"); In re Moore, 214 B.R. 623, 630 (Bankr., D. Kan. 1997) (the funds do not lose their exempt status when deposited Into a bank account"); see also S & S Diversified Sa/Vices v. Taylor. 397 F.Supp. 549, 552 (D. Wyo. 1995) (Social Security benefits remain exempt when deposited into joint bank account). [7]
21. These benefrts, and the Woodforest Bank account, are, absolutely and entirely, beyond the reach of any creditors, and therefore an impermissible object of a writ of garnishment. See NCNB Financial Services v. Shumate, 829 F.Supp. at 180 ~.D. Va. 1993) (statute "prohibits attachment, levy, or garnishment on such [7] one creditor can get at soda! security benefits: the government of the Unhed States. Sloe Locl<harl v. Un~ed States, 546 U.S. 142, 145, 126 S.Cl 699, 701, 163 L.Ed2d 557 (2005) (federal government may aHach social securtty benefits of federal student loan deblo!s. Congress, however, explicitly passed an exeeptlon to the no-atlachment provision of the Social Security Act to achieve that resuft. See 31 U.S.C. § 371e(c)(3)(A)(i), The fact that Congress had to tw!ee-amend. the debt conectlon legislation, and specifically override the an!k:redllor provision of the Social Security Act. dem<instrales how slliadfastlhls prolecllon remains.
,..,..
MOTION TOQVA.SHWRITS Of GAANJSHMEHT
*104 Confidential information may have been redacted from the document in compliance with the Public Information Act. A Certified Copy Attest: 9/29/2015 Stan Stanart, County Clerk Harris County, Texas
benefrts"); In re F'ranklin, 506 B.R. at 773 (Bankr., C.D. 111.2014) (eKemption provision Is not lied to Bankruptcy Code and is assertable defensibly Including against garnishments). To ensure that the congressional/statutory protection of social security benefits Is achieved, writs of garnishment Inadvertently issued without the Court's knowledge of the exempt status of these funds, must be quashed. See NCNB F'inanc/a/ Services v. Shumate, 829 F.Supp. at 181
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(quashing writ to the extent it reached exempt funds)." 0 N
B. COMINGLING OF SOCIAL SECURITY BENEFITS DOES NOT AFFECT THEIR EXEMPT STATUS, AND ANY SUCH COMINGUNG IN THE WOODFOREST ACCOUNT CEASED YEARS AGO 22. It may be true that the Woodforest Account was_ occasionally used to hold other assets of Mr. McAfee, unrelated to his social security benefits. This has no bearing on the protected status of the account and of the social security funds within it. See NCNB Financial Services v. Scumate. 829 F.Supp. 178, 180 (W.O. Va. 1993) ("Social security benefrts are protected even If they are commingled In a savings or checking account with funds from other sources'); In re Lichtenberger, 337 B.R. 322, 325 (Bankr., C.D. 1112008) (same).
23. While courts may. differ in the accounting method used to calculate protected funds In a comingled account, no court has questioned the protected status of ' While the federal regulations Insist that banks calculate the •tookback" amount, reaching two months of deposits. that small perlod ol time only eddress!l11 the bank's requiremenls. None of lha deposits of federal benefit funds are reachable by creditors, no mellor how long ago the deposn occwed. See 31. C.F.R. §212.6 (duty to determine an amount that the flnanclallnstftullon must protect from Cfejjilor.;); /d., §212.9 (safe harbor for financial Institutions form liabilty claims). The regulations do no~ and cannot, change the blanket exempllon of fedaral baner~ funds from the reach of Cfejjftors. See /d., §212.8 ('Nothing In this part shall be construed to llmH an Individual's !1ghl under Federal law to assert against a creditor a further exemption from garnishment in excess of the protected amoun~ or to alter the exempt status of funds that may be protected from garnishment under federal law.
-· ~TO QUASH WM$ OF GAAHiSHMENT *105 Confidential information may have been redacted from the document in compliance with the Public Information Act. A Certified Copy Attest: 9/29/2015 Stan Stanart, County Clerk Harris County, Texas
iJ) social security benefits in a comingled account. On the contrary, the protected -N N
status is 'black-letter law: nationally. See Philpott v. Essex County Welfare 0 ii.
Board, 409 U.S. 413, 416-17, 93 S.Ct. 590, 592-93, 34 LEd2d 608 (1973) (funds 0
!!I
exempt so long as they maintain the character of money); In re King, 508 B.R. 71, 78 {Bankr., N.D. Ind. 2014) ("commingfing of an eamed income credit refund with other funds does not affect the ability to claim the statutory earned income
0
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credit exemption•); In re Lantz, 451 B.R. 843, 647 (Bankr .. N.D. Ill. 2011) 0
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{depositing funds into an account that contains other funds does not lose exempt status for social security funds, if the latter can be traced); see generally 2A Soc. Sec. Law & Prac. §34.8 {Sept. 2014).
24. Because the account may have received, and may have com!ngled funds on deposit, this Court can hold a hearing to trace the protected assets, if the Garnishor deems such a hearing worth the time and expense. See Philpott, 409 U.S.a! 416-17, 93 S.Ct. at 592-93; see also Cl!rlstensan v. Peck, 149 P.3d at 48 (it •defies logic" to argue that exempt benefrts lose that status with comingling). [9]
25. in the present case, the Court need not be concerned about choosing the best method, as the bank records for the account show that the funds now on deposit came excluslve!v from the Social Security Administration. See In re Hensley, 393 B.R. 186, 198 (Bankr., E.D. Tenn. 2008) {accepting testimony that entire
• Tracing can be dons lllrough lila lasllnllirst out method (UFO), last !nllast 0\ll (liFO), and other means. All calculations are •an equttable subsb1uta for the Impossibility of specifiC identifiCation." In ro Lantz, 451 B.R. at 848; In ro Lichtenberger, 337 B.R. 322, 325 (Bankr., C.D. m. 2006) (selection of methods should bs guided by !he principle that exemptions are to bs Interpreted liberally, In favor of the deblor). In other Instance•. courts hove chosen e pro-mta basis b~ measuring the percentage of deposita that came from lite exempt source. Sea Nail:son v. McGuire, 2006 Wl1875383, at •4 (D. Nebr. 2006).
MOTlON TO OUAStfWJUTS OF GA.RNIS'HMEHT Pa;e10 *106 Confidential information may have been redacted from the document in compliance with the Public Information Act. A Certified Copy Attest: 9/29/2015 Stan Stanart, County Clerk Harris County, Texas
{'. source of funds in bank account except for one gift were social security -~ N 0 benefils). [10] tl.
V. EXEMPTION OF THE GMS (IRA) ACCOUNT
0 ll'l
26. The exemption for IRS qualified tax-deferred retirement accounts, such as Mr. McAfee's GMS account, comes from stale law. See Tex. Prop. Code, ">! §42.0021 (a) (including within exemptions •a person's right to the assets held In or 0
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0 to receive payments, whether vested or not, under any stock bonus, pension,
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annuity, deferred compensation, profit-sharing, or similar plan"). Such funds and such .accounts are "exempt from attachment. execution, end seizure for the satisfaction of debts• so long as the account Is exempt from immediate federal income taxation. /d.; sea a/so Lozano v. Lozano, 875 S.W.2d 63. 66 {TelC.App. Houston [1411>] 1998). IRAs have been exempt from the reach of creditors in Texas, including judgment creditors, since 1987. See Williams v. Texas Commerce Bank. 766 S.W.2d 344, 346 (Tex.App.- El Paso 1989).
27. The GMS account is, was intended to be, and is set forth by GMS as a tax- deferred rellrement account, and qualifies for exemption under §42.0021(a). See Letter from Matthew E. Lipman (counsel for GMS) to County Clerk (Oct. 23, 2014) (Exhibit 2) (describing garnished account as a 'DLJ Qualified Retirement Plan"); see a/so Summary Plan Description for GMS Group, L.L.C. Salary [10] A spreadsheet showing aH deposits Into the account since December o! 2009 Is attached to !his pleading as Exhibit A.
MOTION [10] QUASH WRfTS OF GARHLSHMENl PotQe'11 *107 Confidential information may have been redacted from the document in compliance with the Public Information Act. A Certified Copy Attest: 9/29/2015 Stan Stanart, County Clerk Harris County, Texas
tJ) N Savings Plan, at p. 3, 1)6 (describing employee contributions as 401(k) tax
(IJ
0
deferred contributions). [11] fl. The GMS account, therefore, may not be turned over to a creditor, including by 28. 0 ""
garnishment. See Bergman v. Bergman, 888 S.W.2d 580, 586 (Tex.App. - El Paso 1994) {reversing turnover order because account was exempt); accord Nu-
'\t ,.. c Way Energy Corp. v. Delp, 205 S.W.3d 667, 679 (Tex.App. -Waco 2006); Kent
1\J
0 v. Holmes, 139 S.W.3d 120, 131 (Tex.App. -Texarkana 2004); Bergman v. (\) ...
Bagmen, 888 S.W.2d 580, 586 (Tex.App.- El Paso 1994); Morgan v. Horton, 675 S.W.2d 602, 604 (Tex.App. - Dallas 1984). The unanimous voice of !he oourts resufts from the clear legislative purpose to 'protect the Interests in the retirement fund from credHors and assignees' Kent v. Holmes, 139 S.W.3d at 131.
29. Like with social security benefits, the exemption for tax-deferred retirement acoounts is read without neither exemptions nor narrowness, to fulfill a state policy favoring debtors that has existed since the nineteenth Century. See Bergmen v. Bergman, 888 S.W.2d 580, 586 (Tex.App.- El Paso 1994) ld., 888 S.W.2d at 585. ('the long standing public policy of Texas has favored debtors over creditors) [citing Be// v. Indian Uve-stock Co., 11 S.W. 344, 346 (Texas 1889)].
30. There can be littte doubt that a firm such as GMS, which represents itself as a full service brokerage house,· and advises people on planning for their retirement, presented their employees w~h anything other than an IRS-qualified plan for their [11] The <:hart of accounls Included In Mr. Lipman's fetter (ExhlbH '2 to ihatletter)ls attached to this pleading as ExhibH C. The Plan Description Is attached to lhls pleading as Exhibit D.
MOTION iO O!JA$H ~ITS OF Q:AAMSHM£NT P1;et2 *108 Confidential information may have been redacted from the document in compliance with the Public Information Act. A Certified Copy Attest: 9/29/2015 Stan Stanart, County Clerk Harris County, Texas
m retirement benefit. See In re Youngblood, 29 F.3d 225, 228 (5 [1] " Cir. 1994) (tax N N
treatment of account is determinative inquiry under §42.0021); see also id., 29 0 !l.
F.3d at 229 ("the legislature intended for its own slate couns ... to defer to the 0 lrl IRS in determining whether a retirement plan is 'qualified' under the Internal
Revenue Code"); Lozano v. Lozano, 975 S.W.2d at 67 ('evidence that an Ill' ,... account ls an Individual retirement annuity is sufficient to establish that it Is 0 exempt"). [12]
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0 N ,..
31. While Mr. Storer has, and can put on evidence showing the tax-exempt nature of the GMS account, that exemption is clear from the facial descriptions of the account Issued by GMS. in any event, garnishment has no basis in Texas' common law, and is purely statutory. Consequently, a pany claiming an entitlement to garnishment has to prove that the property he is after is subject to the procedure. See Del-Phi Engineering Associates v. Texas Commerce Bank, 771 S.W.2d 569, 591 (Tex.App. - Beaumont 1969) (Burgess, J., dissenting) (motion to dissolve writ joins the issue, and then par1y seeking garnishment must put on proof that they are entitled to the funds).
32. That burden cannot be met by the Plaintiffs in this cause, as the GMS account Is, beyond question, a tax-deferred retirement account and beyond the reach of all credilors. [13]
" Moreover, unliKe wilh social seeuriiy benefits, it ts !he account that is exempt; !he source or the funds is lm!levanl Seo id., 975 S.W.2llat 66. " If the burden l• placed on Mr. Storer, •• lhe party claiming the exempllon, he can easily do "" If permitted an evidential)' hearing with sufficient time to subpoena the needed records.
MO'TICIN TO QUASH WFtfTS OF GARNISHMENT
P*13
*109 Confidential information may have been redacted from the document in compliance with the Public Information Act. A Certified Copy Attest: 9/29/2015 Stan Stanart, County Clerk Harris County, Texas
0
PRAYER
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WHEREFORE, PREMISES CONSIDERED, Charles Storer, Power of Attorney 0 !l.
for Defendant, Charles McAfee, respectfully prays that the Court enters an Order 0 1!1
quashing {dissolving) the two Writs of Garnishment Issued in this cause as reaching ...
exempt assets that cannot be garnished, for any reason, and further prays for such
...
other and further relief to which he or Mr. McAfee may be entitled, in law or In equity .
0
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Respectfully submitted, 0 N ,..
ANDERSON PFEIFFER, PC
/s/Xstner ,J!,ndi!rmn By: Esther Anderson
SBN: 00792332
845 FM 517 West, Suite 200 Dickinson, Texas 77539 Office: 281.488.6535 Facsimile: 281.614.5205 EmaH: eslher@probateguarrJianshlp.com Of counsel on the Pleading: lsi 'Ro5ert Teir Robert Teir Robert Teir, PLLC 845 FM 517 West, Suite 200 Dickinson, Texas 77539 Office: 832.365.11g1 Facsimile: 632.550.2700 Email: rob@telrlaw.com Attorneys for Mr. Charles Storer
MOTION TO QUASH WRITS OF GARH1SHMEHT
PB~i.t *110 Confidential information may have been redacted from the document in compliance with the Public Information Act. A Certified Copy Attest: 9/29/2015 Stan Stanart, County Clerk Harris County, Texas CERTIFICATE OF SERVICE
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0 :l. 0
1. Robert Teir. undersigned below, hereby certify that a true and correct copy of u'1 the following has been forwarded to all parties and/or counsel of record through our electronic service provider and/or facsimile on !his 19 [111] day of November, 2014.
r:t .... 0 /s!:Rc6ert 'leir (IJ 0 Robert Teir
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cc: Matthew E. Lipman Faust Oppenheim LLP 488 Madison Avenue Via Electronic Service Provider & . New York. New York 10022 Facsimile 212-371-11410 Dean M. Blumrosen, Esq. 4615 Southwest Freeway. Sui!e 850 tronlc Service Provider & Houston Texas no21 Ia 713-524-5570 Defendant Woodforest National Bank (as counsel Is not known as this party has not yet answered)
MOTJOn TO Qu..\SH YmrTS OF GA.fUilStw£1(f
P~IU
*111 Confidential information may have been redacted from tbc document in compliance with the Public Information Act. A Certified Copy Attest: 9/29/2015 Stan Stanart, County Clerk Harris County, Texas
Deputy ~ -
I
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