Kurt W. Thompson and Kay Alyson Thompson v. Florida Wood Treaters, Inc. ( 2016 )

AFFIRM; and Opinion Filed June 6, 2016.
S In The
Court of Appeals
Fifth District of Texas at Dallas
No. 05-15-00417-CV
KURT W. THOMPSON AND KAY ALYSON THOMPSON, Appellants
V.
FLORIDA WOOD TREATERS, INC., Appellee
On Appeal from the 160th Judicial District Court
Dallas County, Texas
Trial Court Cause No. DC-14-14993
MEMORANDUM OPINION
Before Justices Francis, Fillmore, and Schenck
Opinion by Justice Schenck
This case involves questions about the finality of a foreign judgment and the authority of
a non-Article III federal court to exercise jurisdiction over non-administrative claims. Appellee
Florida Wood Treaters, Inc. (“Wood Treaters”) initiated this proceeding under the Uniform
Enforcement of Foreign Judgments Act (“UEFJA”) seeking to enforce orders of the United
States District Court of the Virgin Islands (“District Court”) against appellants Kurt W.
Thompson and Kaye Alyson Thompson (the “Thompsons”). The Thompsons opposed the trial
court’s enforcement of the orders without success. We conclude that there is a final judgment
subject to enforcement and that the District Court did not exceed its authority in awarding
monetary damages for the deficiency on an indebtedness remaining after a foreclosure sale.
Accordingly, we affirm the trial court decision. Because the dispositive issues in this case are
settled in law, we issue this memorandum opinion. TEX. R. APP. P. 47.4.
BACKGROUND
The Thompsons, along with Richard O. Thompson (“Richard”), who is not a party to this
proceeding or appeal, owned real property located in the Virgin Islands (the “Property”). The
Property was encumbered by liens of Wood Treaters and Coastal Supply, Inc. (“Coastal
Supply”). 1 Anticipating a foreclosure proceeding, the Thompsons and Richard filed suit against
Wood Treaters in the District Court seeking to extinguish Wood Treaters’s lien and to enjoin
Wood Treaters from claiming any interest in the Property. They also sought damages for slander
of title and for lost rental income based on their inability to rent the Property due to the
threatened foreclosure. Wood Treaters filed a counterclaim seeking foreclosure of the Property.
Wood Treaters brought Coastal Supply into the lawsuit to establish the priority of their
respective liens. Coastal Supply, like Wood Treaters, requested that its lien be foreclosed.
Wood Treaters and Coastal Supply moved for summary judgment on their foreclosure
claims. Wood Treaters also moved for summary judgment on all of the Thompsons and
Richard’s claims. By memorandum opinion and order dated December 6, 2009, the District
Court granted summary judgment in favor of Wood Treaters and Coastal Supply and against the
Thompsons and Richard. In doing so, the District Court awarded Wood Treaters “a final
judgment” against the Thompsons and Richard for a total indebtedness in the amount of
$892,431.81, plus interest on a portion of the debt. The District Court further ordered that Wood
Treaters and Coastal Supply’s liens on the Property be foreclosed and that the Property be sold
by the United States Marshal. The order set forth the manner in which the proceeds of the sale
would be applied. The District Court further ordered that the Thompsons and Richard would be
liable for any deficiency remaining after the sale of the Property.
1
Coastal Supply was a junior lienholder.
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On June 23, 2011, the Marshal sold the Property to Wood Treaters for $800,000, leaving
a deficiency of $192,431.84. On March 18, 2012, the District Court entered an order approving
the sale and setting forth the deficiency amount. The Thompsons and Richard appealed. The
United States Court of Appeals for the Third Circuit (“Third Circuit”) affirmed. Wood Treaters
then sought an award of attorney’s fees and costs. On November 1, 2012, the District Court
entered an order awarding Wood Treaters a portion of the attorney’s fees and costs requested.
On December 30, 2014, Wood Treaters filed an Affidavit of Filing of Foreign Judgment
pursuant to the UEFJA in the district court of Dallas County, Texas, seeking recognition of three
orders of the District Court. TEX. CIV. PRAC. & REM. CODE ANN. § 35.001 et seq. (West 2015).
These orders are: the order granting summary judgment, the order confirming the sale of the
Property and setting the deficiency amount, and the order awarding attorney’s fees and costs.
The Thompsons objected to the recognition of the orders as a final judgment and, in the
alternative, moved to vacate the judgment for lack of subject-matter jurisdiction. The
Thompson’s objection and motion were overruled by operation of law. This appeal followed.
DISCUSSION
A. UEFJA and Final Judgments
When a final foreign judgment is properly filed under the UEFJA, the filing has the effect
of initiating an enforcement proceeding and the foreign judgment instantly becomes a final
judgment in Texas. Moncrief v. Harvey, 805 S.W.2d 20, 23 (Tex. App.—Dallas 1991, no writ).
Pursuant to the UEFJA, only final judgments are entitled to recognition by the State of Texas.
Dear v. Russo, 973 S.W.2d 445,446 (Tex. App.—Dallas 1998, no pet.). In their first issue, the
Thompsons argue the orders of the District Court are not final because they do not dispose of all
parties and claims. More particularly, they claim the orders do not dispose of the claims
concerning Coastal Supply. We disagree.
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When, as is the case here, an action presents more than one claim for relief—whether as a
claim, counterclaim, crossclaim, or third-party claim—or when multiple parties are involved, the
court may direct entry of a final judgment as to one or more, but fewer than all, claims or parties
only if the court expressly determines that there is no just reason for delay. FED. R. CIV. P. 54(b).
Otherwise, any order or other decision, however designated, that adjudicates fewer than all the
claims or the rights and liabilities of fewer than all the parties does not end the action as to any of
the claims or parties and may be revised at any time before the entry of a judgment adjudicating
all the claims and all the parties’ rights and liabilities. Id.
In this case, the District Court’s summary judgment order does not contain an expression
“that there is no just reason for delay.” Therefore, the question presented to this Court is whether
the summary judgment order disposes of all claims and all parties. We conclude that it does.
The parties to the underlying case are the Thompsons, Richard, Wood Treaters, and
Coastal Supply. The Thompsons and Richard asserted claims against Wood Treaters only.
Those claims were disposed of by the District Court’s summary judgment in favor of Wood
Treaters. As to Wood Treaters’s claims against the Thompsons and Richard, those claims were
disposed of by the District Court ordering foreclosure of the Property and awarding Wood
Treaters the deficiency judgment it sought. As to Wood Treater’s claim against Coastal Supply,
that claim was disposed of by the summary judgment’s directive that proceeds from the sale of
the Property would be paid to Wood Treaters after the payment of certain administrative
expenses associated with the sale of the Property. As to Coastal Supply’s claim for foreclosure,
it was disposed of by the District Court order foreclosing Coastal Supply’s lien. Thus, contrary
to the Thompson’s contention, the summary judgment order disposed of all of the parties and
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claims asserted, including, but not limited to, claims concerning Coastal Supply. 2 The
subsequent orders confirming the sale of the Property, recognizing the quantum of the deficiency
amount, and awarding attorney’s fees and costs, were post-judgment orders. See id. 54(d); Soly
v. Warlick, Civ. Nos. 1991/212, 1995/84, 2011 WL 3625393, at *3 (D.V.I. Aug. 17, 2011).
We overrule the Thompson’s first issue.
B. Subject-Matter Jurisdiction
In their second issue, the Thompsons argue that if a final judgment exists, it is void
because (1) it includes relief that was not requested and (2) the District Court of the Virgin
Islands is a non-Article III court and therefore lacks constitutional authority to enter final
judgments other than in certain administrative proceedings.
1. Monetary Damages
It is undisputed that Wood Treaters did not specifically ask for a monetary judgment
against the Thompsons and Richard in its foreclosure counterclaim. Under the federal rules of
civil procedure, except in cases of default judgments, every other judgment “should grant the
relief to which each party is entitled, even if the party has not demanded that relief in its
pleading.” FED. R. CIV. P. 54(c). A lienholder is entitled to recover a deficiency from persons
personally obligated on the underlying debt. See Syracuse Engineering Co. v. Haight, 110 F.2d
468, 470 (2nd Cir. 1948).
Moreover, “In an action for foreclosure in the Virgin Islands, a court is required to
address the outstanding debt, if any, in the judgment of foreclosure.” U.S. Dept. of Agric. Rural
Hous. v. Phillips, 1:08–cv–00032, 2010 WL 1529297, at *4 (D.V.I. Apr. 15, 2010) (citing 28
V.I.C. § 531). This procedure was followed in this case; Wood Treaters has both a judgment of
2
The Third Circuit recognized the summary judgment order as being final when it entertained the Thompsons’ appeal. None of the
circumstances authorizing an interlocutory appeal existed in this case. 28 U.S.C. §1292.
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foreclosure on the Property and a debt judgment against the Thompsons and Richard personally.
Section 531 of Title 28 of the Virgin Islands Code provides that in addition to the judgment of
foreclosure and sale, if it appears there is a personal obligation for the payment of the debt, the
court shall also adjudge a recovery of the amount of such debt against such person or persons, as
the case may be, as in the case of an ordinary judgment for the recovery of money. 28 V.I.C.
§ 531(a). Therefore, the District Court was required to award monetary damages against the
Thompsons and Richard for the deficiency following the sale of the Property under both the
governing law and rule 54.
2. Authority of the U.S. Virgin Island’s District Court
As to the authority of the District Court to enter a final judgment, Congress established
the jurisdiction of the District Court of the Virgin Islands in “The Revised Organic Act” (the
“ROA”), 18 U.S.C. §§ 1541–1645. In 1984, Congress amended the ROA to provide the District
Court of the Virgin Islands the entire jurisdiction of a District Court of the United States, and
general original jurisdiction in all causes in the Virgin Islands not vested by law in the local
courts. 48 U.S.C. §§ 1612(a), (b). In 1991, the Virgin Islands Legislature exercised its power to
vest local civil actions in the Territorial Courts, 4 V.I.C. § 76(a), and thereby divested the
District Court of jurisdiction over all local civil suits. H&O Food Warehouse, Inc. v. Virgin
Islands Pub. Fin. Auth., 70 F.App’x 611, 613 (3rd Cir. 2003) (citing Brow v. Farrelly, 994 F.2d
1028, 1034 (3rd Cir. 1993); Estate Thomas Mall, Inc. v. Territorial Court of Virgin Islands, 923
F.2d 258, 261 (3rd Cir. 1991).
With the enactment of 4 V.I.C. § 76(a), the District Court of the Virgin Islands exercises
exclusive jurisdiction over all purely federal matters, and concurrent federal question and
diversity jurisdiction. Local civil actions, in contrast, are within the exclusive jurisdiction of the
Territorial Courts. Club Comanche, Inc. v. Gov’t of the Virgin Islands, 278 F.3d 250, 256 (3rd
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Cir. 2002). The Thompsons invoked the District Court’s diversity jurisdiction in the underlying
suit. The District Court of the Virgin Islands had jurisdiction over this case under 48 U.S.C. §
1612(a) (general jurisdiction of district courts) and 28 U.S.C. § 1332 (diversity jurisdiction).
Accordingly, we overrule the Thompson’s second issue.
CONCLUSION
We affirm the trial court’s implied rulings on the Thompson’s objection to recognition of
the orders as a final judgment and their motion to vacate the judgment.
/David J. Schenck/
DAVID J. SCHENCK
JUSTICE
150417F.P05
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S
Court of Appeals
Fifth District of Texas at Dallas
JUDGMENT
KURT W. THOMPSON AND KAY On Appeal from the 160th Judicial District
ALYSON THOMPSON, Appellant Court, Dallas County, Texas
Trial Court Cause No. DC-14-14993.
No. 05-15-00417-CV V. Opinion delivered by Justice Schenck.
Justices Francis and Fillmore participating.
FLORIDA WOOD TREATERS, INC.,
Appellee
In accordance with this Court’s opinion of this date, the judgment of the trial court is
AFFIRMED.
It is ORDERED that appellee FLORIDA WOOD TREATERS, INC. recover its costs of
this appeal from appellant KURT W. THOMPSON AND KAY ALYSON THOMPSON.
Judgment entered this 6th day of June, 2016.
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