Paul Yoder Shultz, Jr. v. Jennifer Royal Shultz ( 2022 )

AFFIRMED as MODIFIED; REVERSE and REMAND in part; and Opinion
Filed February 4, 2022
S In The
Court of Appeals
Fifth District of Texas at Dallas
No. 05-20-00819-CV
PAUL YODER SHULTZ, JR., Appellant
V.
JENNIFER ROYAL SHULTZ, Appellee
On Appeal from the 301st Judicial District Court
Dallas County, Texas
Trial Court Cause No. DF-16-13529
MEMORANDUM OPINION
Before Justices Pedersen, III, Goldstein, and Smith
Opinion by Justice Smith
This is the second appeal between appellant Paul Yoder Shultz, Jr. and
appellee Jennifer Royal Shultz regarding their marital residence after the trial court
entered a Final Decree of Divorce on November 29, 2017.1
In this appeal, the parties dispute whether the trial court’s October 1, 2020,
post-divorce order (October 2020 Order) dividing the net proceeds from the sale of
the marital residence improperly altered, modified, or changed the Final Decree.
1
Shultz v. Shultz, No. 05-18-00876-CV, 2019 WL 2511245, at *3 (Tex. App.—Dallas June 18, 2019,
no pet.) (mem. op.).
Appellant also challenges the trial court’s award of attorney’s fees as sanctions, and
its award of costs to the receiver who did not ultimately sell the home.
We conclude the trial court abused its discretion by dividing the net proceeds
from the sale of the marital residence in a manner contrary to the plain language of
the Final Decree, the trial court abused its discretion by awarding attorney’s fees as
sanctions, and the record is sufficient to support the award of costs to the receiver.
Accordingly, we reverse the trial court’s October 2020 Order, in part, and
render judgment that each party receive $209,744.97, which is a 50/50 split of the
net sale proceeds ($430,433.37) from the sale of the marital residence after
subtracting the receiver’s costs ($10,943.43)2 (($430,433.37-$10,943.43)/2).
Additionally, we reverse the trial court’s award of attorney’s fees as sanctions and,
therefore, modify the judgment to delete $46,853.00. We reverse and remand this
cause to the trial court for consideration of appellate attorney’s fees, if any, that
should be awarded to appellant for partially prevailing on appeal. In all other
respects, the October 2020 Order is affirmed.
Background
The underlying facts leading to the second appeal between these parties are
well-known; therefore, we include only a brief recitation of the background facts and
the facts necessary to the disposition of this appeal. TEX. R. APP. P. 47.1.
2
The Final Decree requires the receiver’s costs be split 50/50 between the parties; therefore, each party
is responsible for $5,471.715.
–2–
The trial court signed the Final Decree on November 29, 2017. When the
parties could not agree on a sales price for their marital residence, the trial court
appointed Joe Amberson as receiver. Amberson subsequently asked the trial court
to confirm the sale of the residence to appellee for $900,000. Appellant objected to
the confirmation. Nevertheless, the trial court confirmed the sale, and appellant
appealed.
In the first appeal, appellant argued the trial court abused its discretion by
appointing a receiver and giving him the authority to set the sales price of the
maritalresidence because the Final Decree required appellant and appellee to
mutually agree to the sales price. See Shultz v. Shultz, No. 05-18-00876-CV, 2019
WL 2511245, at *3 (Tex. App.—Dallas June 18, 2019, no pet.) (mem. op.). We
agreed with appellant and vacated the orders appointing a receiver and confirming
the sale of the marital residence. Id. We remanded to the trial court for further
proceedings. Id. On remand, the trial court removed Amberson as receiver and
appointed Craig Penfold.
On June 15, 2020, appellee filed her motion to reconcile expenses incurred
on the residence post-divorce. In the motion, she requested that upon closing of the
sale of the home, the closing agent divide the net proceeds 50/50 as stated in the
Final Decree and “then from [Appellant’s] portion pay to [Appellee] One Hundred
Nine Thousand Forty-Four and 29/100 Dollars ($109,044.29) to equalize expenses
paid on the residence and for recovery of attorney’s fees incurred since August 1,
–3–
2018.” In her subsequent amended motion to reconcile expenses, appellee sought
reimbursement for the mortgage, taxes, and insurance she paid on the home prior to
its sale. Two days later, appellant filed a motion to distribute the net sales proceeds
in which he asked the court to distribute the funds pursuant to the Final Decree. He
subsequently filed a special exception and motion to strike appellee’s motion to
reconcile expenses because the Final Decree did not contemplate the expense
equalization she requested.
On July 9, 2020, the trial court signed a decree confirming the sale for
$1,050,000.00. On July 30, 2020, the trial court signed an interlocutory order
regarding funds deposited in the registry of the court, in part, “in an effort to narrow
the issues between the parties and bring this matter to closure.” In relevant part, the
trial court found that $430,433.43, the net sale proceeds from the marital residence,
was deposited in the court’s registry. It concluded there was no dispute between the
parties about the distribution of $271,085.00; thus, it divided this amount 50/50 and
ordered each party receive $135,542.00. The court then took under advisement its
ruling on the amended motion to reconcile expenses incurred on the marital
residence post-divorce and Amberson’s motion to recover his costs as receiver.
On October 1, 2020, the trial court signed another order recognizing the
money previously disbursed and ordering disbursement of an additional $24,025.16
to appellant, $124,380.78 to appellee, and $10,943.43 to Amberson. It further
–4–
awarded $46,853.00 in attorney’s fees to appellee as sanctions against appellant.
This appeal followed.
Sufficiency of Evidence Supporting Receiver’s Costs
In his third issue, appellant argues the evidence is factually insufficient to
support the trial court’s award of costs incurred by Amberson while acting as
receiver. Appellee responds the evidence supports the award. We address this
argument first because it is relevant to appellant’s first issue regarding distribution
of the net sales proceeds of the marital residence.
When a party attacks the factual sufficiency of the evidence pertaining to a
finding on which the party did not have the burden of proof, we may set aside the
finding only if, after considering all the evidence, it is so contrary to the
overwhelming weight of the evidence as to be clearly wrong and unjust. Cain v.
Bain, 709 S.W.2d 175, 176 (Tex. 1986) (per curiam); Harris Cty. v. Coats, 607
S.W.3d 359, 380–81 (Tex. App.—Houston [14th Dist.] 2020, no pet.). The amount
of evidence necessary to affirm is far less than the amount necessary to reverse a
judgment. Coats, 607 S.W.3d at 381.
We apply this standard mindful that this Court is not a factfinder. Maritime
Overseas Corp. v. Ellis, 971 S.W.2d 402, 407 (Tex. 1998). The trier of fact is the
sole judge of witness credibility and the weight afforded their testimony. City of
Keller v. Wilson, 168 S.W.3d 802, 819–20 (Tex. 2005). Therefore, we may not pass
–5–
upon the witnesses’ credibility or substitute our judgment for that of the factfinder,
even if the evidence would also support a different result. Coats, 607 S.W.3d at 381.
Appellant first complains that because Amberson did not file his bond or take
his receiver oath before hiring an appraiser, inspector, and lawyer, Amberson
incurred costs as an individual and not pursuant to the trial court’s mandate as
receiver. However, our review of the extensive record fails to show appellant timely
objected or filed a motion challenging Amberson’s failure to file the bond or his oath
before performing certain duties as receiver. See TEX. CIV. PRAC. & REM. CODE
ANN. §§ 64.022–.023.
Instead, the record indicates he raised these complaints months after
Amberson’s receiver appointment, and appellant’s references were not specific
objections or arguments that would have put the trial court on notice that appellant
was complaining about the arguments he now raises on appeal. Thus, we conclude
appellant has not preserved these arguments for review and, therefore, cannot
support his sufficiency challenge. See TEX. R. APP. P. 33.1; see also In re Marriage
of Davis, 418 S.W.3d 684, 689 (Tex. App.—Texarkana 2012, no pet.) (concluding
appellant waived argument challenging receiver’s failure to take oath prior to
performing duties when he waited four months to complain to trial court).
We next consider the sufficiency of the evidence regarding Amberson’s costs.
The Final Decree provided that “If the Marital Residence is not listed within the
prescribed period of time, Joe Amberson is appointed the receiver to sell the home
–6–
and Paul Yoder Shultz Jr. and Jennifer Royal Shultz shall split such costs 50/50.”
On July 17, 2020, Amberson filed a motion to recover costs. In the motion, he
requested reimbursement for the following costs incurred:
A. Appraisal Fees-Hagan Appraisal Services, Inc. $600.00
B. Inspection Fees-Will Hodges Inspections $845.00
C. Legal Fees-Addison Wilson III, DFW Law Offices PLLC $9,500.00
Total Expenses $10,945.00
He attached a statement for the legal services rendered from July 1, 2019 through
July 31, 2019; however, he did not provide an itemized bill.
Amberson testified without objection during the July 21, 2020 hearing that he
incurred costs for the appraisal service, $845.00 for an inspection, and $9,500.00 in
legal fees for a real estate attorney who assisted in his attempt to close the marital
residence for sale. He testified his costs totaled $10,945.00. He emphasized that
this amount did not include any charges for his time expended trying to sell the
marital residence because he was not successful; however, he requested
reimbursement for his out-of-pocket costs for the professionals he engaged to help
him in his capacity as receiver.
We recognize Amberson did not include the invoice for Hagan’s appraisal at
the July 21, 2020 hearing; however, the invoice was introduced in prior proceedings
without objection. The invoice noted the $600.00 full appraisal fee. Appellant did
–7–
not provide any evidence disputing the amount. Thus, the evidence was factually
sufficient to support Amberson’s recovery of this cost.
Similarly, the inspection report was repeatedly admitted into evidence in prior
hearings. Although the report does not indicate the cost of the inspection, Amberson
testified it cost $845.00. Appellant neither objected to Amberson’s testimony nor
presented any evidence disputing the amount. The trial court, as the judge of witness
credibility and the weight afforded his testimony, was free to believe Amberson’s
testimony regarding the cost of the inspection. City of Keller, 168 S.W.3d at 819–
20. Therefore, we conclude the evidence was factually sufficient to support this cost.
Lastly, appellant argues the “document [Amberson] attached to his filing had
no breakdown of the attorney’s fees, but merely shows a balance due”; therefore, the
evidence is factually insufficient. He further asserts that Amberson’s testimony was
self-serving and conclusory.
Amberson testified without objection that he incurred legal fees from Adison
Wilson, Esq, “a noted real estate lawyer,” who assisted him in his attempt to close
on the marital residence. He explained it was necessary to hire an attorney after it
got “gummed up by the fact that Mr. Shultz filed a lis pendens.” He testified he
needed help “negotiating and/or dealing with the title company, trying to navigate
that to close the property.”
Amberson attached a “statement for legal services rendered 7/01/2019
through 7/31/2019” to his motion to recover costs. It indicated the firm charged
–8–
$400.00 per hour for attorney services and $100.00 for paralegal hours. The amount
incurred totaled $9,500.00. The statement did not, however, detail the legal work
performed, the reason for it, or when it was performed.
After reviewing the evidence that supports and is contrary to the trial court’s
ruling, we cannot conclude the evidence is so weak “as to be clearly wrong and
unjust.” See Cain, 709 S.W.2d at 176. Amberson testified to his costs incurred,
explained the reasons for them, and provided supporting documentation. Appellant
did not present any evidence challenging these costs.
In reaching this conclusion, we are mindful of recent supreme court case law
clarifying a party’s burden and the necessary evidence needed to survive a
sufficiency challenge to an attorney’s fee award. See Rohrmoos Venture v. UTSW
DVA Healthcare, LLP, 578 S.W.3d 469, 498, 501–02 (Tex. 2019). However, the
trial court awarded Amberson $9,500.00 as costs incurred in his role as receiver and
not as an award of attorney’s fees. Therefore, we need not engage in the more
stringent Rohrmoos analysis when considering the sufficiency of evidence to support
costs.
Finally, we are likewise unpersuaded by appellant’s argument that the
evidence is otherwise factually insufficient because Amberson’s testimony was
internally inconsistent and unclear. The trial court was the judge of Amberson’s
credibility and the weight to give his testimony. See City of Keller, 168 S.W.3d at
–9–
819–20. We may not substitute our judgment regarding witness credibility even if
the evidence would support a different result. Coats, 607 S.W.3d at 381.
Accordingly, after considering all the evidence, the trial court’s award of
$10,943.43 in costs is not so contrary to the overwhelming weight of the evidence
as to be clearly wrong and unjust.3 Cain, 709 S.W.2d at 176; Coats, 607 S.W.3d at
380–81. We overrule appellant’s first issue.
Post-Divorce Order
In his first issue, appellant argues the trial court erred because it improperly
deducted (1) appellee’s mortgage, taxes, and insurance expenses during the time
appellee lived in the residence, (2) appellant’s mortgage and repair costs, and (3)
Amberson’s incurred costs prior to dividing the net sale proceeds per the Final
Decree. He contends none of these deductions fit within the Final Decree’s
definition of “net sales proceeds”; therefore, the trial court’s October 2020 Order
improperly modified or altered the Final Decree. Appellee responds “net proceeds,”
as defined in the Final Decree, expressly contemplates such deductions.
We review post-divorce orders, including orders by which the trial court
purportedly modifies a decree, for an abuse of discretion. In re Marriage of Pyrtle,
433 S.W.3d 152, 159 (Tex. App.—Dallas 2014, pet. denied); see Interest of C.S.B.,
No. 05-19-00627-CV, 2020 WL 2715188, at *2 (Tex. App.—Dallas May 26, 2020,
3
Appellee testified during the hearing that she did not oppose Amberson’s recovery of his costs.
–10–
no pet.) (mem. op.). A trial court abuses its discretion if it acts without reference to
any guiding rules and principles or acts arbitrarily or unreasonably. Cire v.
Cummings, 134 S.W.3d 835, 838–39 (Tex. 2004).
Section 9.006 of the family code allows a trial court to render further orders
to enforce the division of property made or approved in the divorce decree to assist
in the implementation of or to clarify the prior order. See TEX. FAM. CODE ANN.
§ 9.006(a). The court may specify more precisely the manner of effecting the
property division previously made or approved. Id. § 9.006(b). However, a trial
court “may not amend, modify, alter, or change the division of property made or
approved in the decree of divorce.” Id. § 9.007(a).
An agreement between parties as to property division is treated as a contract,
and we construe it as a whole to harmonize and give effect to the entire decree.
Shanks v. Treadway, 110 S.W.3d 444, 447 (Tex. 2003). If the decree, when read as
a whole, is unambiguous as to the property’s disposition, the court must effectuate
the decree in light of the literal language used. Id.Here, neither party pleaded ambiguity, and this Court previously concluded
the Final Decree was unambiguous. See Shultz, 2019 WL 2511245, at *3 (“Neither
party claims that the decree is ambiguous, and we agree that it is not.”). Thus, we
must consider the plain, literal language used in the Final Decree to determine
whether the trial court’s October 2020 Order clarified or instead improperly
amended, modified, altered, or changed the property division per the Final Decree.
–11–
The Final Decree included the following provision regarding the marital
residence:
6. The net sale proceeds (defined as the gross sales price less cost
of sale and full payment of any mortgage indebtedness or liens
on the property) shall be distributed as follows: Each party is to
receive fifty percent of the net sale proceeds.
On July 9, 2020, the trial court held a hearing on appellee’s motion to reconcile
expenses and appellant’s motion to distribute net sale proceeds. During the hearing,
appellee introduced an exhibit titled, “House Payments Made by Jennifer Shultz,”
detailing the dates of payments for the mortgage, homeowners insurance/repairs, and
property tax/adjustments. The exhibit indicated she spent $124,377.84 from
November 1, 2017 to January 31, 2020.4
The trial court’s October 2020 Order states that “the expenses incurred by the
parties that enured to the benefit of the property shall be deducted from the sale
proceeds received.” The court then ordered disbursement of the funds as follows:
$26,025.16 to appellant; $124,380.78 to appellee; and $10,943.43 to Amberson. It
then ordered the remaining funds from the sale of the residence split 50/50.
The language of the Final Decree is clear and unambiguous. It likewise
provides a specific definition of “net sale proceeds.” Appellee’s payments for
homeowner’s insurance, repairs, and property taxes, were not “costs of sale” or
4
Appellant acknowledges this number is slightly less than the trial court’s $124,380.78 award but has
not made a separate argument regarding the discrepancy, and it is inconsequential for disposition of this
appeal.
–12–
“payment of any mortgage indebtedness or liens on the property.” Appellee’s
testimony during the hearing that she “believed” property taxes are costs of sale is
irrelevant to our review of an unambiguous document, which is limited to its plain
language.
Reimbursement for her mortgage payments were not “costs of sale.” They
likewise were not “full payment of any mortgage indebtedness or a property lien.”
Although appellee lived in the residence during the time she paid the mortgage, the
language of the Final Decree does not provide for reimbursement of her expenses.
In fact, the trial court crossed out the section stating that she “shall continue to make
all payments of principal, interest, taxes and insurance on the property during
pendency of the sale.” Thus, there was no order requiring her to make mortgage
payments. Moreover, during the hearing, appellee testified there was not a lien or a
mortgage owed to her as a mortgagor. She admitted there was nothing in the real
property record that clouded the title in her name. Thus, she was not entitled to any
reimbursement for her mortgage payments. Similarly, appellant was not entitled to
reimbursement for any of his mortgage payments because they were not “costs of
sale.”
In reaching this conclusion, we reject appellee’s reliance on the general
definition of “net sales proceeds,” which she describes as “represent[ing] the
difference between gross income or proceeds and expenses.” See Baylor Miraca
Genetics Labs., LLC v. Perthuis, No. 01-19-00095-CV, 2020 WL 7062321, at *5
–13–
(Tex. App.—Houston [1st Dist.] Dec. 3, 2020 pet. granted) (mem. op.); see also Net
Sales, MERRIAM-WEBSTER ONLINE DICTIONARY, www.merriam-
webster.com/dictionary/net%20sales (last visited February 2, 2022). We do not look
to an alternate definition when the Final Decree provides a clear and unambiguous
definition. See Hagen v. Hagen, 282 S.W.3d 899, 901 (Tex. 2009) (“If the decree is
unambiguous, the Court must adhere to the literal language used.”). To the extent
appellee argues the Final Decree lacked clarity as to who was responsible for the
mortgage and taxes prior to sale, appellee did not appeal the Final Decree
challenging lack of clarity, and we reject her invitation to now read such language
into the Final Decree.
Finally, the trial court incorrectly deducted appellant’s repair costs. Although
these costs certainly prepared the marital residence for sale, they were not
themselves “costs of sale.”
We conclude the trial court reallocated the net sales proceeds of the marital
residence in contradiction to the plain language of the Final Decree. This
reallocation impermissibly deducted appellant’s expenses for mortgage and repairs
and appellees’ payments towards the mortgage, taxes, and insurance prior to splitting
the net sales proceeds 50/50. Accordingly, the trial court abused its discretion by
violating section 9.007. See TEX. FAM. CODE ANN. § 9.007 (trial court “may not
amend, modify, alter, or change the division of property made or approved in the
decree of divorce”). We sustain, in part, appellant’s first issue.
–14–
Finally, appellant argues the trial court abused its discretion by deducting
Amberson’s receiver costs as part of the “costs of sale” because Amberson did not
sell the residence. We disagree. The Final Decree provided that Amberson was
“appointed as receiver to sell the home,” and appellant and appellee “shall split such
costs 50/50.” The recovery of his costs was not contingent on successfully selling
the marital residence. Because the Final Decree is unambiguous, we must defer to
the literal language used and not read language into it. See Shanks, 110 S.W.3d at
447. As such, his incurred costs for the inspection, appraisal, and attorney’s fees
prior to the sale are “costs of sale,” as these actions and related costs were necessary
to carrying out his receivership duties and attempting to sell the marital residence.
Because the Final Decree allowed Amberson to recover his costs regardless of
whether he sold the marital residence, such costs are split 50/50, and we previously
concluded his evidence is factually sufficient to support the trial court’s cost award,
the trial court acted within its discretion by deducting these “costs of sale” per the
Final Decree. We overrule, in part, appellant’s first issue.
Award of Attorney’s Fees as a Sanction
In his second issue, appellant argues the trial court abused its discretion by
awarding $46,853.00 in attorney’s fees as a sanction. Appellee responds the record
indicates appellant engaged in harassing behavior; therefore, the trial court acted
within its discretion by awarding attorney’s fees as a sanction.
–15–
We review the imposition of sanctions under an abuse of discretion standard.
See Low v. Henry, 221 S.W.3d 609, 614 (Tex. 2007); see also Owen v. Jim Allee
Imports, Inc., 380 S.W.3d 276, 282 (Tex. App.—Dallas 2012, no pet.). An appellate
court may reverse the trial court’s ruling only if the trial court acted without
reference to any guiding rules and principles, such that its ruling was arbitrary or
unreasonable. Cire, 134 S.W.3d at 838–39. To determine if the sanctions were
appropriate or just, we must ensure that there is a direct nexus between the improper
conduct and the sanction imposed. Spohn Hosp. v. Mayer, 104 S.W.3d 878, 882
(Tex. 2003); Owen, 380 S.W.3d at 282.
On July 3, 2018, appellee filed a motion for sanctions pursuant to rule of civil
procedure 13 and civil practice and remedies code section 10. She alleged that
appellant continued to file frivolous pleadings in bad faith and with no basis in law
or fact. She further alleged it was appellant’s “sole purpose of pursuing this course
[] to harass Movant, needlessly drive up her litigation expenses and to significantly
interfere with the Court’s legitimate exercise of one of its core functions, the
disposition of the marital asset under the current receivership order.” However, on
July 8, 2019, appellee filed a motion to withdraw her July 3, 2018 sanctions motion
in part. Her withdrawal occurred after appellant succeeded in the first appeal.
On December 27, 2019, despite no pending motion for sanctions, the trial
court entered an interim order that included, in relevant part, a finding that appellant
“intentionally harassed, pestered, bullied and frustrated [appellee] until she left the
–16–
[marital residence].” It further found that appellant “knowingly and with malice
thwarted the ability of the receiver to conduct his duties and responsibilities as set
forth in the agreed order appointing receiver.”
On January 23, 2020, appellee filed a second motion for sanctions. In the
motion, appellee referenced the trial court’s finding of harassing behavior in the
interim order. Specifically, she alleged the following:
Based upon the Court’s findings in its Interim Orders, it is clear that the
sole purpose of [Appellant] and his counsel in continuing to
unreasonably withhold consent to sale of the Marital Residence is to
needlessly drive up [Appellee’s] litigation expenses, harass, pester, and
bully [Appellee], and to interfere with the Court’s legitimate exercise
of its duty to dispose of the Marital Residence.
She further alleged she incurred additional expenses she would not have incurred
“had the Marital residence closed on July 30, 2018.” She then sought sanctions and
an award of attorney’s fees against appellant and his attorney under chapter 10 of
the civil practice and remedies code and the trial court’s inherent power. Appellant
filed special exceptions and a motion to strike her motion. The trial court
subsequently ordered $46,853.00 in attorney’s fees as a sanction.
Texas Civil Practice and Remedies Code chapter 10 permits sanctions upon a
showing that the pleading or motion (1) lacked a reasonable basis in law or fact or
(2) was brought for an improper purpose, including to harass, cause unnecessary
delay, or cause needless increase in litigation costs. See TEX. CIV. PRAC. & REM.
CODE ANN. § 10.001; see also Daniels v. Indem. Ins. Co. of N. Am., 345 S.W.3d 736,
741 (Tex. App.—Dallas 2011, no pet.). Section 10.005 provides that a court “shall
–17–
describe in an order imposing a sanction under this chapter the conduct the court has
determined violated Section 10.001 and explain the basis for the sanction imposed.”
See TEX. CIV. PRAC. & REM. CODE ANN. § 10.005. It was appellee’s burden to
overcome the presumption that appellant filed his pleadings in good faith. Malouf
v. Elana Spitzberg Trust, No. 05-15-00824-CV, 2016 WL 4158890, at *2 (Tex.
App.—Dallas Aug. 5, 2016, no pet.) (mem. op.).
Although the October 2020 Order is silent as to whether the trial court
imposed the sanction per chapter 10 or its inherent power, we conclude the record
does not support a sanction under either option.
Chapter 10 applies only to frivolous pleadings and motions. TEX. CIV. PRAC.
& REM. CODE ANN. § 10.001; see R.M. Dudley Const. Co. v. Dawson, 258 S.W.3d
694, 709 (Tex. App.—Waco 2008, pet. denied). Appellee’s second sanctions motion
does not describe with any particularity the motions or pleadings that appellant
allegedly filed for an improper purpose or to harass her. Further, the trial court’s
order imposing a sanction under chapter 10 must describe the conduct that violated
section 10.001 and explain the basis for the sanction imposed. TEX. CIV. PRAC. &
REM. CODE ANN. § 10.005. Here, the final judgment fails to provide the necessary
findings and explanations
To the extent appellee relies on the interim order, her reliance is misplaced.
The trial court entered that interim order after appellee withdrew her first motion for
sanctions; therefore, the trial court had no sanctions motion on file at the time of the
–18–
interim order. Further, the trial court’s interim order did not specify any particular
motion or pleading appellant allegedly filed for an improper purpose or to harass
appellee.
Sanctions under chapter 10 fail for another reason. A trial court must hold an
evidentiary hearing to make the necessary factual determinations about the party’s
and attorney’s motives and credibility. R.M. Dudley Const. Co., Inc., 258 S.W.3d at
709. Without an evidentiary hearing, the trial court has no evidence before it to
determine that a pleading was filed in bad faith or to harass. Id. The pleading alone
cannot establish that the represented party or his attorney filed it in bad faith or to
harass. Id. Rather, the party moving for sanctions must prove the pleading party’s
subjective state of mind. Id.The record here contains no such evidence. Although appellee testified during
the July 9, 2020 hearing that the interim order included a finding of appellant’s
harassing behavior, her testimony is not competent evidence of appellant’s
subjective state of mind. Moreover, she did not testify during a sanctions hearing,
but instead during the hearing on the motions to reconcile expenses and to distribute
net sales proceeds.
We conclude appellee failed to carry her burden to show that appellant or his
attorney violated chapter 10. Therefore, to the extent the trial court awarded
attorney’s fees as sanctions pursuant to chapter 10, it abused its discretion.
–19–
Courts have inherent power to sanction “where necessary to deter, alleviate,
and counteract bad faith abuse of the judicial process.” In re Estate of Powell, No.
05-19-00689-CV, 2020 WL 4462666, at *7 (Tex. App.—Dallas Aug. 4, 2020, no
pet.) (mem. op.). This includes “any significant interference with the traditional core
functions of the court.” Union Carbide Corp. v. Martin, 349 S.W.3d 137, 147 (Tex.
App.—Dallas 2011, no pet.). These core functions include hearing evidence,
deciding issues of fact raised by the pleadings, deciding questions of law, rendering
final judgments, and enforcing judgments. Id.When assessing sanctions under its inherent power, the trial court must make
factual findings, based on evidence, that the conduct complained of significantly
interfered with the court’s legitimate exercise of its core functions. Id. at 148. The
supreme court recently emphasized that “[b]ecause inherent powers are shielded
from direct democratic controls, and because of their very potency, inherent powers
must be exercised with restraint, discretion, and great caution.” Brewer v. Lennox
Hearth Prods., LLC, 601 S.W.3d 704, 718 (Tex. 2020) (internal quotations and
footnotes omitted). “To that end, invocation of the court’s inherent power to
sanction necessitates a finding of bad faith.” Id. The court explained:
Bad faith is not just intentional conduct but intent to engage in conduct
for an impermissible reason, willful noncompliance, or willful
ignorance of the facts. “Bad faith” includes conscious doing of a wrong
for a dishonest, discriminatory, or malicious purpose. Errors in
judgment, lack of diligence, unreasonableness, negligence, or even
gross negligence—without more—do not equate to bad faith. Improper
motive, not perfection, is the touchstone.
–20–
Id. The record contains no finding of bad faith by the trial court for appellant’s
alleged sanctionable conduct. As previously stated, appellee’s reliance on the trial
court’s sua sponte interim order is misplaced as there was no pending sanctions
motion at the time the court signed the order.
However, even if we considered the trial court’s interim findings, they do not
support sanctions under the trial court’s inherent power. The interim order was
signed after appellant successfully appealed Amberson’s actions as receiver;
therefore, to the extent the trial court found that appellant “knowingly and with
malice thwarted” Amberson’s ability to conduct his duties as receiver, the trial court
essentially punished appellant for taking a successful appeal. A trial court may not
penalize a party for taking a successful appeal by taxing him with attorney’s fees
should he take such action.5 See Rittgers v. Rittgers, 802 S.W.2d 109, 115 (Tex.
App.—Corpus Christi-Edinburg 1990, writ denied); see also Ortiz v. O.J. Beck &
Sons, Inc., 611 S.W.2d 860, 867 (Tex. App.—Corpus Christi 1980, no writ).
Similarly, appellee’s motion also asked for fees as sanctions because appellant
unreasonably withheld consent to sell the marital residence and needlessly drove up
litigation costs. Again, appellant was successful in his appeal that challenged the
sale based on Amberson’s improper actions; therefore, appellant’s withheld consent
5
Appellee’s attorney testified during a hearing that he was requesting fees for work from August 1,
2018 through June of 2020 as it related to the sales of the residence, which “[i]ncluded in those attorney
fees [] fees incurred for the appeal, fees incurred for the various motions that were filed to remove Ms.
Shultz from the residence.”
–21–
was not unreasonable. The trial court could not rely on this “evidence” to support
sanctions.
Appellee has not otherwise directed the Court to any evidence, and we have
found none, supporting any bad faith actions by appellant that interfered with the
core functions of the trial court. Accordingly, there is no direct nexus between any
alleged improper conduct and the sanctions imposed. See Spohn Hosp., 104 S.W.3d
at 882; Owen, 380 S.W.3d at 282. Thus, to the extent the trial court awarded
attorney’s fees as a sanction based on its inherent power, it abused its discretion.
Because there is no basis in the record supporting sanctions under either
chapter 10 or the trial court’s inherent power, we sustain appellant’s second issue.
Appellate Attorney’s Fees
In his prayer for relief, appellant requests we remand for the trial court to
award appellate attorney’s fees. Texas Family Code section 9.014 provides that a
court “may award reasonable attorney’s fees” in a post-divorce proceeding. See TEX.
FAM. CODE ANN. § 9.014 (emphasis added). This statute does not entitle either party
to attorney’s fees; rather, it merely permits the court to award them. See Schneider
v. Schneider, 5 S.W.3d 925, 930 (Tex. App.—Austin 1999, no pet.).
“In order to be entitled to a discretionary award of attorney’s fees, the
requesting party must file a pleading making that affirmative request.” Thomas v.
Daniel, No. 02-12-00397-CV, 2013 WL 3771321, at *2 (Tex. App.—Fort Worth
July 18, 2013, no pet.) (mem. op.). Appellant requested attorney’s fees through trial
–22–
and appeal in his first amended special exceptions and motion to strike filed on June
22, 2020.
Because appellant has partially succeeded on his appeal and affirmatively
requested appellate fees in a filed pleading, we agree appellant is entitled to a remand
for consideration of appellate attorney’s fees. We emphasize the award of such fees
on remand is discretionary. See TEX. FAM. CODE ANN. § 9.014; see also Schneider,
5 S.W.3d at 930.
Accordingly, we remand to the trial court for a determination of the reasonable
amount of appellate attorney’s fees, if any, to be awarded appellant in light of the
fact he partially succeeded on appeal. TEX. R. APP. P. 43.2 (d).
Conclusion
We reverse the trial court’s October 2020 Order, in part, and render judgment
that each party receive $209,744.97, which is a 50/50 division of the net sale
proceeds ($430,433.37) from the sale of the marital residence after subtracting the
receiver’s costs of sale ($10,943.43) (($430,433.37 - $10,943.43) / 2). TEX. R. APP.
P. 43.2(c). We further reverse the award of attorney’s fees as sanctions and,
therefore, modify the judgment to delete $46,853.00. TEX. R. APP. P. 43.2(b).
We reverse and remand to the trial court for consideration of appellate
attorney’s fees, if any, that should be awarded to appellant for partially prevailing
on appeal. TEX. R. APP. P. 43.2(c).
–23–
In all other respects, the October 2020 Order is affirmed.
/Craig Smith/
CRAIG SMITH
JUSTICE
200819F.P05
–24–
S
Court of Appeals
Fifth District of Texas at Dallas
JUDGMENT
PAUL YODER SHULTZ, JR., On Appeal from the 301st Judicial
Appellant District Court, Dallas County, Texas
Trial Court Cause No. DF-16-13529.
No. 05-20-00819-CV V. Opinion delivered by Justice Smith.
Justices Pedersen, III and Goldstein
JENNIFER ROYAL SHULTZ, participating.
Appellee
In accordance with this Court’s opinion of this date, the October 1, 2020 order
of the trial court is MODIFIED as follows:
We REVERSE the award of attorney’s fees as sanctions and DELETE the
$46,853.00 award of attorney’s fees as sanctions.
We REVERSE, in part, and RENDER judgment that Paul Yoder Shultz, Jr.
and Jennifer Royal Shultz each receive $209,744.97 from the net sales proceeds of
the marital residence.
We REVERSE and REMAND to the trial court for consideration of Paul
Yoder Shultz, Jr.’s appellate attorney’s fees, if any.
In all other respects, the October 1, 2020 order is AFFIRMED.
We ORDER that each party bear their own cost of this appeal.
–25–
After the judgment and all costs have been paid, we DIRECT the Dallas County
District Clerk to release the balance, if any, of any remaining cash bond paid by Paul
Yoder Shultz, Jr.
Judgment entered February 4, 2022.
–26–