John R. Smith v. Barbara Ann Smith ( 2004 )

                                                                                    NO. 12-03-00137-CV

IN THE COURT OF APPEALS

TWELFTH COURT OF APPEALS DISTRICT

TYLER, TEXAS

JOHN R. SMITH,                                              §                 APPEAL FROM THE 123RD

APPELLANT

V.                                                                         §                 JUDICIAL DISTRICT COURT OF

BARBARA ANN SMITH SANDERSON,

APPELLEE                                                        §                 SHELBY COUNTY, TEXAS

MEMORANDUM OPINION

            Appellant John R. Smith (“John”) appeals from a judgment granted in favor of Appellee Barbara Ann Smith Sanderson (“Barbara”). John presents three issues contending that the trial court erred in finding Barbara’s pleadings adequate to warrant a judgment, in entering a judgment in Barbara’s favor when she failed to plead or prove certain remedies, and in ordering a severance of the cause of action after its submission to the trial court. Further, Barbara presents two counter points arguing that the trial court erred in failing to enter a judgment in her favor for unpaid amounts due under the divorce decree and in ordering a severance and separate trials of certain issues. We reverse the judgment of the trial court and remand the case for further proceedings.

Background

            John and Barbara were married on or about February 2, 1963 and divorced on or about February 16, 1996. In the divorce decree, as part of the division of the estate, John was ordered to pay the balance due, including principal, interest, and escrow for taxes and insurance, on a promissory note in the original principal sum of $63,000 secured by a deed of trust on real property awarded to Barbara. The real property awarded to Barbara was the parties’ homestead in Center, Shelby County, Texas. Moreover, John agreed to indemnify and hold Barbara and her property harmless from any failure to discharge this debt. At the time of the decree, the payoff was $62,674.34.

            In a subsection of the divorce decree entitled “alimony,” John agreed to pay the mortgage balance of $62,674.34 and any past-due monthly installments on the residence awarded to Barbara. Payment was to be directly to the mortgagee, as alimony, in monthly installments of $674.26 until the sum was paid in full, the home was sold, or ten years from January 22, 1996 had passed, whichever occurred first. If Barbara sold the house before the expiration of the full ten-year term, John was, according to the decree, “obligated” to pay the remaining balance in monthly installments of $674.26 to Barbara under the terms of the mortgage during the ten-year alimony “obligation” and pay any balance then remaining after expiration of the ten-year term directly to Barbara. On November 30, 2000, Barbara sold the residence and, according to Barbara, approximately $57,238.76 was paid to the mortgagee to discharge the promissory note. After the sale of the residence, John sent two more payments on the promissory note. However, after discovering that the house had been sold, John stopped payment on both checks and refused to make further payments on the promissory note. According to Barbara, she never cashed the checks.

            On July 12, 2001, Barbara filed a motion for enforcement of judgment alleging, in part, that John failed to pay the balance due on the promissory note for the required escrow amounts for taxes and insurance and failed to pay monies due Barbara according to the court’s judgment and parties’ agreement after payment and discharge of the promissory note. John filed a pro se answer and counterclaim. On February 27, 2002, the trial court conducted a hearing on the motion. Barbara testified that, although she asked John to make further payments on the promissory note, he refused. On cross-examination, Barbara stated that she made a demand to John for payment after the house was sold, but was unable to provide a copy of a document requesting payment. According to John, he made no further payments on the promissory note because the provisions for payment in the decree of divorce had been fully performed, i.e, the house was sold. After the close of evidence and closing arguments, the hearing concluded. On February 27, the trial court signed a document entitled “Findings and Draft Order,” that, for the first time, ordered a severance of Barbara’s claims. On April 2, John filed a request for findings of fact and conclusions of law and also contended that no final judgment or order had been entered. Approximately a year later, on March 8, 2003, a judgment was signed by the trial court.

            In the judgment, the trial court ordered that Barbara recover from John certain escrow deposits and insurance in connection with the discharge of the mortgage and certain other payments she had made in connection with the mortgage. Further, the trial court ordered severance of all other causes of action Barbara asserted against John and also ordered a separate trial. In the findings of fact and conclusions of law filed the same date, the trial court found that Barbara “has not pled or proved that all conditions precedent to the collection of the Note from John R. Smith under the provisions of the Decree have occurred.” The trial court concluded that the divorce decree required John to pay, and Barbara to recover, the balance due on the note, together with all taxes and insurance paid under the terms of the note up to the date of the sale of the property. Moreover, the trial court determined that alimony provisions of the decree were not enforceable in this proceeding. Further, the trial court concluded that Barbara “may be entitled in a proper suit to a judgment against John R. Smith for the actual principal due on the Note which was not paid by John R. Smith, less such credits as may be proven for recognizable offsets.” Finally, the trial court determined that a severance of Barbara’s “claim for recovery for the balance of the principal due on the note would be in the interest of justice.” This appeal followed.

Issues Presented

            In his first issue, John argues that the trial court erred in finding that Barbara’s pleadings were legally or procedurally adequate to warrant judgment. Barbara contends that John did not preserve error because he failed to plead the affirmative defenses of election of remedies and statute of limitations. In his second issue, John contends that the trial court erred in entering a judgment in favor of Barbara when she failed to plead or prove remedies under the law of contracts. Barbara argues that her pleadings were sufficient to raise the issue of John’s breach of contract. Further, in her first counter point, Barbara contends that the trial court erred in failing to award her the unpaid installment payments due between December 1, 2001 and the date of trial because John’s breach of contract was established as a matter of law. In his third issue, John argues that the trial court erred, and abused its discretion, in entering a judgment that severed a cause of action in favor of Barbara subsequent to submission of the case to the trial court. In her second counter point, Barbara agrees. We will first determine whether the severance was proper.

Severance

            Texas Rule of Civil Procedure 41 provides that actions which have been improperly joined may be severed by order of the court on motion of any party or on its own initiative at any stage of the action, before the time of submission to the jury or to the court if trial is without a jury, on such terms as are just. Tex. R. Civ. P. 41. Further, any claim against a party may be severed and proceeded with separately. Tex. R. Civ. P. 41. However, Rule 41 does not “permit a trial court to sever a case after it has been submitted to the trier of fact.” State Dep’t of Highways and Pub. Transp. v. Cotner, 845 S.W.2d 818, 819 (Tex. 1993) (quoting Coalition of Cities for Affordable Util. Rates v. Public Util. Comm’n, 798 S.W.2d 560, 564 (Tex. 1990)). A case is submitted when all factors to be considered are before the decision maker and, without question, when all parties request a resolution. In re El Paso County Hosp. Dist., 979 S.W.2d 10, 12 (Tex. App.–El Paso 1998, no pet.). A trial court has broad discretion in severing and proceeding separately with any claim against a party. Nicor Exploration Co. v. Florida Gas Transmission Co., 911 S.W.2d 479, 481 (Tex. App.–Corpus Christi 1995, writ denied).

            The standard of review for determining whether a trial court erred in ordering a severance is abuse of discretion. Pilgrim Enters., Inc. v. Maryland Cas. Co., 24 S.W.3d 488, 491 (Tex. App.–Houston [1st Dist.] 2000, no pet.) (citing Guaranty Fed. Sav. Bank v. Horseshoe Operating Co., 793 S.W.2d 652, 658 (Tex. 1990)); Nicor Exploration Co., 911 S.W.2d at 481. Further, an improper severance is trial court error and does not prevent an appellate court from considering the case on appeal. Nicor Exploration Co., 911 S.W.2d at 482-83.

            In this case, after the close of evidence, closing arguments, and conclusion of the hearing, the trial court severed all other causes of action Barbara asserted against John and, more specifically, determined that Barbara may be entitled in a proper suit to a judgment against John for the actual principal due on the promissory note. However, contrary to Texas Rule of Civil Procedure 41, the trial court severed these causes of action after the case was submitted to the trial court as the trier of fact. See Cotner, 845 S.W.2d at 819. Therefore, the severance is improper and constitutes reversible error. See Nicor Exploration Co., 911 S.W.2d at 483. Accordingly, we reverse the judgment of the trial court and remand the case for further proceedings. Tex. R. App. P. 43.2(d). The trial court is free to render a final judgment or to grant all parties a new trial and to take other actions not inconsistent with this opinion. Cotner, 845 S.W.2d at 819.

Disposition

            We reverse the judgment of the trial court and remand the case to the district court for further proceedings. Having determined that we must reverse and remand, we do not address John’s remaining two issues or Barbara’s remaining counter point. See Tex. R. App. P. 47.1.

                                                                                                    DIANE DEVASTO

                                                                                                                 Justice

Opinion delivered October 29, 2004.

Panel consisted of Worthen, C.J., Griffith, J., and DeVasto, J.

(PUBLISH)