Margie Morris v. Alan H. Minter ( 1993 )

IN THE COURT OF APPEALS, THIRD DISTRICT OF TEXAS,

AT AUSTIN





NO. 3-92-250-CV



MARGIE MORRIS,

APPELLANT

vs.





ALAN H. MINTER,

APPELLEE

NO. 3-92-382-CV



MARGIE MORRIS AND TOM L. RAGLAND,

APPELLANTS

vs.





ALAN H. MINTER,

APPELLEE

FROM THE DISTRICT COURT OF TRAVIS COUNTY, 147TH JUDICIAL DISTRICT

NOS. 475,697-B & 475,697-D,

HONORABLE F. SCOTT McCOWN & HONORABLE PAUL R. DAVIS, JR., JUDGES PRESIDING

In cause number 3-92-250-CV, Margie Morris appeals from a summary judgment that she take nothing in her suit for damages against Alan Minter. We will affirm the judgment. In cause number 3-92-382-CV, Morris and her attorney, Tom L. Ragland, appeal from a trial-court order imposing money sanctions against them at Minter's request. We will modify the order and affirm it as modified.

THE CONTROVERSY

Morris stored articles of personal property in Pivot Mini Storage, a self-storage facility. When she failed to pay the rent, Pivot sold the personal property to satisfy its lien. Morris sued Pivot and others on various claims. In the course of the suit, Morris took the deposition of Minter, Pivot's attorney, and then joined him as a defendant, alleging against him causes of action for civil conspiracy, conversion, negligence, and gross negligence. Minter moved for and obtained summary judgment that Morris take nothing by her claims against him. The trial court severed Morris's claims against Minter from those against other defendants. Morris appeals, in cause number 3-92-250-CV, from the summary judgment.

Minter moved also for sanctions against Morris and her attorney, Tom L. Ragland, based on Minter's allegations that the actions pleaded against him violated Texas Rule of Civil Procedure 13 and entitled him to the sanctions authorized by that rule. See Tex. R. Civ. P. 13. The trial court assessed money sanctions against Morris and Ragland, jointly and severally, and severed the order from the balance of the suit. Morris and Ragland appeal in cause number 3-92-382-CV.

The two appeals were consolidated for oral argument; we will discuss each separately in the paragraphs that follow.

THE SUMMARY JUDGMENT

Minter moved for summary judgment on the following grounds: (1) he did not participate in any decision to sell Morris's property; (2) he was unaware of that sale; (3) he never exercised dominion or control over Morris's property; and (4) he owed Morris no duty of care upon which an action could be founded. He supported his motion by reference to his attached affidavit, his own deposition, and the deposition of Janet Mayhew, Pivot's manager. Tex. R. Civ. P. 166a. Morris assails the summary judgment by various points of error.

In point of error one, Morris contends (1) Minter's knowledge of the sale was not essential for her to prevail on her conspiracy claim; and (2) Minter's supporting affidavit did not justify the summary judgment because he is an interested witness.

In his affidavit, Minter stated he had not advised Pivot with regard to the sale of Morris's property and had no knowledge of it. Janet Mayhew corroborated these statements in her deposition. Edwin Priesmeyer, another defendant and a partner in Pivot, stated in his affidavit, however, "When we had that sale, we were following [Minter's] advice." Morris argues that Priesmeyer's contrary statement created a "fact issue" precluding summary judgment. Minter argues that Priesmeyer's statement could refer to other occasions when Minter acted as Pivot's attorney in similar circumstances or, possibly, to speeches that Minter had given at seminars involving the conduct of storage-lien sales. We hold there is no material fact issue created by the apparent conflict between the two statements.

A civil conspiracy is a combination by two or more persons to accomplish an unlawful purpose or to accomplish a lawful purpose by unlawful means. Schlumberger Well Surveying Corp. v. Nortex Oil & Gas Corp., 435 S.W.2d 854, 856 (Tex. 1969). "There must be an agreement or understanding between the conspirators to inflict a wrong against . . . another, a meeting of minds on the object or course of action, and some mental action coupled with an intent to commit the act which results in injury . . . ." Id. at 857 (quoting 15A C.J.S. Conspiracy § 2, at 600 (1967)) (emphasis added). If we assume Minter knew of the sale and advised Pivot in that regard, this does not necessarily mean that Minter knew that the sale was for the purpose of inflicting a wrong against Morris or that he acted toward that end in an agreement or understanding with others. Indeed, Minter specifically denied as much in his affidavit when he stated, "At no time did I ever exercise dominion and control over the Morris property, nor did I intend to commit theft, conspire with anyone to damage [Morris], or convert [Morris's] property." "To be liable as a conspirator a person must have participated intentionally in the conspiracy with a view to the furtherance of the common design." 15A C.J.S. Conspiracy § 17, at 651-52 (1967) (emphasis added). Stated another way, the summary-judgment record shows without dispute that Minter did not share with anyone an unlawful intent to perpetrate a wrong against Morris, even if he knew of the sale and advised Pivot about it. See Switzer v. Joseph, 442 S.W.2d 845, 848 (Tex. Civ. App.--Austin 1969, no writ). Knowledge of the sale is not the same thing as knowledge of an agreement to inflict a wrong against another by means of the sale. Schlumberger, 435 S.W.2d at 857.

Under her first point of error, Morris also assails the sufficiency of Minter's affidavit on the ground that he is an interested party. The summary-judgment rule permits the granting of summary judgment on the basis of an interested witness's affidavit if the matters stated therein can be "readily controverted" or countered by opposing "evidence." Tex. R. Civ. P. 166a(c); Casso v. Brand, 776 S.W.2d 551, 558 (Tex. 1989).

Morris refers to the statements in Minter's affidavit that he had not advised Pivot with regard to the sale and had not known of the sale until after it had taken place. These were factual matters open to attack by appropriate documentation or opposing statements in depositions or affidavits if Morris had any evidence that Minter's statements were untrue. More importantly, however, we believe the issue immaterial for the reasons stated above. We overrule Morris's first point of error and hold that Minter was entitled to summary judgment on Morris's cause of action for conspiracy.

We hold as well that the trial court properly granted summary judgment on Morris's cause of action for conversion. To recover on such a cause of action, it would be necessary for Morris to establish that Minter acted with an intent wrongfully to exercise dominion and control over Morris's property. See Fox v. American Propane, Inc., 508 S.W.2d 426, 428 (Tex. Civ. App.--Austin 1974, writ ref'd n.r.e.). The summary-judgment record negates the essential element of intent insofar as Minter is concerned. We overrule Morris's second point of error.

In her points of error four and five, Morris contends that "fact issues" precluded summary judgment on her negligence claim against Minter. She argues that her negligence claim rests upon a common-law duty that Minter owed her, which he breached by the procedures he established for Pivot to follow in enforcing its storage liens.

The record established as a matter of law that Morris was not Minter's client. We hold that Minter's duty of ordinary care, in his advice to Pivot, was a duty owed to Pivot exclusively. See, e.g., Wavell v. Roberts, 818 S.W.2d 462, 465 (Tex. App.--Corpus Christi 1991, writ denied); see generally, John Teshima, Annotation, Attorney's Liability, to One Other than Immediate Client, for Negligence in Connection with Legal Duties, 61 A.L.R. 4th 615 (1988). We therefore overrule points of error four and five.

In her eighth point of error, Morris complains the trial court erred in refusing to rule on her objections to Minter's summary-judgment affidavit, which had the effect of preventing Morris from making a complete presentation of her case to this Court. The record reveals that Morris, contemporaneously with filing her response to Minter's motion for summary judgment and accompanying affidavit, filed a pleading styled "Plaintiff's Objections and Exceptions to Minter's Summary Judgment Affidavit and Attachments." In this pleading, Morris raised ten objections or exceptions to parts of Minter's affidavit; in addition, she requested that the trial court conduct a hearing thereon and strike all improper or inadmissible parts of the affidavit. Seven days later, Morris filed a motion requesting that the trial court rule on her objections and exceptions before hearing Minter's motion for summary judgment. The parties agree that the trial judge declined to rule expressly on Minter's objections and exceptions.

We hold any error was harmless, if error there was. Apparently, the trial court's inaction did not preclude Morris from arguing in this Court that summary judgment was erroneous because of some defect in Minter's affidavit. The issue before this Court and the issue in the trial court are the same: does the summary-judgment record justify judgment as a matter of law? See Tex. R. Civ. P. 166a. This issue includes the sub-issue of whether any affidavits should be denied legal effect in the summary-judgment decision because they fail to comply with subsection (f) of Rule 166a. We have independently reviewed each of the ten complaints Morris directed at Minter's affidavit. We find them to be without merit in this regard: had the trial court sustained any of them, the action would not have precluded judgment as a matter of law on Minter's motion. We therefore overrule Morris's eighth point of error.

Because of our decision on the preceding points of error, it is not necessary that we address Morris's remaining points of error.

SANCTIONS

Minter moved that the trial court impose sanctions against Morris and her attorney, alleging they had brought a groundless claim against Minter in bad faith or for the purpose of harassment. Tex. R. Civ. P. 13. "Groundless" is defined as "having no basis in law or fact and not warranted by good faith argument for the extension, modification, or reversal of existing law." Id. If a trial court finds a claim is brought in bad faith, it may for good cause impose sanctions available under Texas Rule of Civil Procedure 215-2b. Id. The scope of appellate review in such cases is whether the trial court abused its discretion. Home Owners Funding Corp. v. Scheppler, 815 S.W.2d 884, 889 (Tex. App.--Corpus Christi 1991, no writ).

After an evidentiary hearing, the trial court imposed against Morris and her attorney a sanction in the amount of $13,200, a sum equal to Minter's attorney's fees in the cause. The sanction order declares the trial court's conclusions of law: (1) the claims alleged against Minter in Morris's third amended original petition, which added Minter as a defendant in the cause, were groundless and brought in bad faith; (2) when the petition was filed, no basis in law or fact existed for the claims against Minter, thus establishing good cause for imposing the sanction. Findings of fact and conclusions of law filed by the trial court augmented these conclusions.

In their first point of error, Morris and her attorney contend the trial court mistakenly placed upon them the burden of proof, as evidenced by the trial court's request that they explain their reasonable basis for adding Minter as a defendant. We overrule the point because the face of the order reveals that the trial court did not misplace the burden of proof. The relief ordered rests on the trial court's affirmative conclusions from the evidence recited above. Moreover, as we understand the statement of facts, the trial court merely invited Morris and her attorney to explain their positions in light of the evidence previously adduced by Minter's counsel.

In their twelfth point of error, Morris and her attorney attack the trial court's finding of fact that Minter did not provide any legal advice, in connection with the sale of Morris's property, as being based upon evidence not properly before the trial court. This sanction proceeding, although presently severed from the summary-judgment proceeding, was a direct result of the latter. As such, the file before the trial court in this proceeding contained the summary-judgment motion, response, and supporting "evidence." The summary-judgment "evidence" duplicates, in part, deposition excerpts the trial court received in evidence at the sanction hearing. These excerpts were later stricken by this Court based on a motion by Morris and her attorney that the deposition transcripts had not been properly served on opposing counsel and offered into "evidence" at the sanction hearing. However, the same excerpts, save for two pages, are part of the summary-judgment record as sworn attachments to the summary-judgment motion and response.

In reviewing the imposition of sanctions, an appellate court is not limited to the evidence that supports the trial court's findings; rather, the court "make[s] an independent inquiry of the entire record to determine if the court abused its discretion in imposing the sanction." U.S. Fidelity & Guar. Co. v. Rossa, 830 S.W.2d 668, 672 (Tex. App.--Waco 1992, writ denied). Although our review of the record in this cause may not include examination of the "evidence" that this Court has stricken, we may consider any evidence that was before the trial court, written discovery on file, arguments of counsel, and the circumstances surrounding the alleged sanctionable act. See id. Therefore, to the extent that the same "evidence" as that which was stricken is included within the record in a form not previously objected to, it is properly before us for consideration in determining if the trial court abused its discretion.

With this in mind, we look to the record to determine if the trial court's finding was supported by evidence in the record that was before the trial court. We presume that a trial court is familiar with the entire record of a case up to and including the motion under consideration. Downer v. Aquamarine Operators, Inc., 701 S.W.2d 238, 241 (Tex. 1985), cert. denied, 476 U.S. 1159 (1986). The record contained the same "evidence" we discussed above in relation to the summary judgment, which conclusively established, we believe, that Morris was not in an attorney-client relationship with Minter. We overrule point of error twelve.

In point of error twenty-four, Morris and her attorney contend the trial court did not indicate, with the particularity required by Rule 13, its reasons for imposing sanctions. In support of this contention, appellants rely on Zarsky v. Zurich Management Inc., 829 S.W.2d 398 (Tex. App.--Houston [14th Dist.] 1992, no writ), in which an appellate court found a trial-court sanction order, stating that the lawsuit was frivolous and without merit, insufficiently particular to meet Rule 13's requirement. In this cause, however, unlike Zarsky, the trial court listed in its extensive findings of fact and conclusions of law its specific reasons for imposing sanctions. We hold these are sufficiently particular to apprise an appellant of the conduct involved, present findings for appellate review, and meet the requirements of rule 13. See Cloughly v. NBC Bank-Seguin, N.A., 773 S.W.2d 652, 656-57 (Tex. App.--San Antonio 1989, writ denied); Powers v. Palacios, 771 S.W.2d 716, 719 (Tex. App.--Corpus Christi 1989, writ denied). We overrule point of error twenty-four.

In point of error twenty-one, Morris and her attorney contend the trial court erred in adopting Texas Disciplinary Rule of Professional Conduct 3.01 as the standard for imposing sanctions. They base this contention on the fact that, at the close of the sanction hearing, the trial court read into the record the disciplinary rule and selected comments from it. However, the court then went on to discuss Rule 13 and 215-2b and recent case law on sanctions. Furthermore, in its findings of fact and conclusions of law, the trial court expressly based its statements on Rules 13 and 215-2b without mention or reference to the disciplinary rules. Because we find no indication that the trial court relied upon an improper factor in imposing sanctions, we overrule point of error twenty-one.

In points of error twenty-two and twenty-three, Morris and her attorney argue that Rule 13 violates Tex. Const. art. I, § 19 and U.S. Const. amends. V, XIV, in that it fails adequately to apprise attorneys and clients of the meaning of "bad faith" and "harassment." Because appellants did not raise this complaint in the trial court, it is waived on appeal unless the error is "fundamental." Fundamental error occurs in civil matters only in limited circumstances, such as when the public interest is directly and adversely affected or the record indicates on its face the trial court was without subject-matter jurisdiction. Smiley v. Johnson, 763 S.W.2d 1, 4 (Tex. App.--Dallas 1988, writ denied); see also 5 Texas Civil Practice § 28.8, at 180 (Diane M. Allen et al. eds., 1992 ed.). Because these factors are not involved here, the points of error are not properly before this Court and, accordingly, are overruled.

In points of error three through five, Morris and her attorney contend there is no evidence or insufficient evidence to support the trial court's findings of fact that pertain to Minter's lack of involvement in the underlying suit and the reasons he was made a defendant therein.

The summary-judgment record, as we mentioned above, established as a matter of law that Minter was not aware of Morris's property, was not involved in the sale of Morris's property, and provided no legal advice in connection with the sale of Morris's property. The record further established as a matter of law that Minter did not provide legal advice to Morris and was never in an attorney-client relationship with Morris. At the sanction hearing, Morris's attorney conceded no case law supported the negligence claim against Minter and the attorney was not contending for new law in that regard. Accordingly, we conclude the evidence is legally and factually sufficient to support the trial court's findings. We overrule points of error three through five.

In points of error six through eight, Morris and her attorney assail the legal and factual sufficiency of the evidence supporting the trial court's conclusions of law that the claims against Minter were groundless and made without reasonable inquiry into the facts and law. They incorrectly refer to these conclusions as findings. Because Morris and her attorney properly attack these same "findings" as conclusions in the points of error we discuss next, we will consider them with those points of error.

Morris and her attorney contend, in points of error thirteen through twenty, that the trial court erred as a matter of law in its conclusions of law that (1) Minter did not provide legal advice to Morris; (2) the claims were groundless, brought in bad faith, and for the purpose of harassment; (3) good cause existed to impose sanctions; (4) Morris's attorney violated Rule 13 by signing the plaintiff's third amended original petition; (5) there was no basis in law or fact for the claims, which were filed without reasonable inquiry; and (6) the foreclosure was the basis for Morris's claim.

Morris and her attorney argue primarily that the trial court considered improper evidence and erroneously placed upon them the burden of proof. ⁽¹⁾ To the extent we have addressed these arguments above, we need not repeat our previous comments.

An appellate court reviews legal conclusions, drawn from facts found by the trial court, to determine their correctness in light of the record. The appellate court must, however, sustain the judgment if the legal conclusions can be sustained on any legal theory supported by the evidence. Nelkin v. Panzer, 833 S.W.2d 267, 268 (Tex. App.--Houston [1st Dist.] 1992, writ dism'd w.o.j.). We believe, based on the record, that the trial court could reasonably conclude that the claims against Minter were groundless and brought in bad faith or for purposes of harassment because the record shows that Morris's attorney did not make a reasonable inquiry that revealed any factual and legal grounds for liability on Minter's part. See Tex. R. Civ. P. 13. Accordingly, we overrule points of error six through eight and thirteen through twenty.

In points of error nine and ten, Morris and her attorney attack the $22,200 in attorney's fees awarded as sanctions. Specifically, they contend there was no evidence or insufficient evidence that the fees were necessary or reasonable. In point of error eleven, they contend the contingent portion ($9,000) of the $22,200 sanction, conditioned upon their taking unsuccessful appeals, is not authorized by Rule 13 or Rule 215-2b and is within the exclusive jurisdiction of the appellate court under Tex. R. App. P. 84.

When attorney's fees are assessed as sanctions, proof of the necessity and reasonableness of the fees is not required. Glass v. Glass, 826 S.W.2d 683, 688 (Tex. App.--Texarkana 1992, writ denied). Nonetheless, Minter's counsel provided detailed testimony that Minter had incurred fees of $13,200 in defending the suit filed against him and an additional $4,400 in preparation for the sanction proceeding. Minter's counsel further testified that if the appellants appealed to the court of appeals and, ultimately, the Supreme Court of Texas, Minter would incur an additional $9,000 in attorney's fees.

The trial court, in awarding the monetary sanction, excluded the amount expended on the sanction proceeding and awarded attorney's fees of $13,200. The trial court added $9,000 more as sanctions, contingent upon the appellants taking unsuccessful appeals.

As to the $13,200 award, we find no abuse of discretion by the trial court; the court could reasonably conclude the award is not excessive based on the evidence and bears a reasonable relationship to the harm done. See TransAmerican Natural Gas v. Powell, 811 S.W.2d 913, 917 (Tex. 1991).

The $9,000 award contingent upon appeal, however, cannot stand. We believe it is an abuse of a trial court's discretion to structure an order in a manner that has a chilling effect on a party's right to appellate review of the trial court's decision. See In re Kidd, 812 S.W.2d 356, 360 (Tex. App.--Amarillo 1991, writ denied). Unless a record establishes that, at the time the appeal was perfected, the appellant had no reasonable grounds to believe the judgment should be reversed, the appellant should not be penalized for exercising the right of appeal. Id. Under the Texas rules, this determination properly is left to the appellate court, not the trial court. See Tex. R. App. P. 84. We therefore overrule appellants' points of error nine and ten as to the $13,200 award, but sustain them as to the contingent $9,000 award. We sustain point of error eleven.

In their second point of error, Morris and her attorney contend the evidence was legally and factually insufficient to support the imposition of sanctions against Morris. We agree.

There is no evidence in the record of any wrongdoing by Morris; all of the alleged wrongdoing is that of her counsel. Minter argues, however, that Morris has waived any complaint about the trial court's imposition of sanctions against her because she failed to raise the complaint in the trial court. See Powers, 771 S.W.2d at 718. We do not agree.

In the findings of fact and conclusions of law filed by the trial court, the court concluded good cause existed to impose sanctions against both Morris and her attorney, yet the court made no express finding of any specific act by Morris to support the conclusion. The only findings the court made regarding Morris relate to her attorney's actions in her behalf. See Glass, 826 S.W.2d at 687. Morris should not be punished for her counsel's actions unless she is implicated apart from having entrusted her legal representation to counsel. See TransAmerican, 811 S.W.2d at 917. Here, as in Glass, the punishment is for counsel's action in filing a pleading in violation of Rule 13.

The trial court's judgment must conform to the trial court's findings of fact. Wirth, Ltd. v. Panhandle Pipe & Steel, 580 S.W.2d 58, 62 (Tex. Civ. App.--Tyler 1979, no writ). When the findings do not support a judgment, the judgment should be reformed to conform to the findings or it should be reversed. 6 Texas Civil Practice § 18.14, at 405 (Diane M. Allen et al. eds., 1992 ed.). In this instance, the findings do not support the imposition of sanctions against Morris, nor is there sufficient evidence in the record to support such a finding. The record reflects no evidence that Morris did anything except rely on her counsel's advice, and the imposition of sanctions against her under these circumstances is unjust. See Glass, 826 S.W.2d at 687-88. Accordingly, we sustain point of error two.

CONCLUSION

Under the undisputed facts as disclosed by the record, the trial court was correct in holding as a matter of law that there was an absence of a genuine issue of any material fact and that Minter was entitled to summary judgment. Accordingly, in cause number 3-92-250-CV, we affirm the summary judgment.

In cause number 3-92-382-CV, we reform the trial-court order to delete the imposition of sanctions against Morris and the award to Minter of $9,000 in attorney's fees contingent upon appellants' unsuccessful appeal. As reformed, we affirm the trial-court judgment in cause number 3-92-382-CV.

John Powers, Justice

[Before Justices Powers, Aboussie and B. A. Smith]

No. 3-92-250-CV--Affirmed

No. 3-92-382-CV--Reformed and, as Reformed, Affirmed

Filed: July 7, 1993

[Do Not Publish]

1.   The trial court stated that in making its ruling, it took into account the deposition excerpts of Minter, Priesmeyer, and Mayhew. We again note that the major, relevant portions of these excerpts, although not properly introduced at the sanction hearing and, therefore, stricken by this Court as "evidence," were attached to the summary-judgment motion and response in the record before the trial court.