the-jack-m-sanders-family-limited-partnership-v-roger-t-fridholm ( 2014 )

Opinion issued April 22, 2014
In The
Court of Appeals
For The
First District of Texas
————————————
NO. 01-13-00576-CV
———————————
THE JACK M. SANDERS FAMILY LIMITED PARTNERSHIP, Appellant
V.
ROGER T. FRIDHOLM REVOCABLE, LIVING TRUST, IPG SERVICES
CORP., ELIZABETH SANDERS MOORE, AND JESS R. MOORE,
Appellees
On Appeal from the 234th District Court
Harris County, Texas
Trial Court Case No. 2010-42559
OPINION
The Jack M. Sanders Family Limited Partnership appeals from the trial
court’s order denying its motion to discharge and release a charging order entered
in favor of appellees Roger T. Fridholm Revocable, Living Trust and IPG Services
Corporation. See TEX. BUS. ORGS. CODE ANN. § 153.256 (West 2012). We hold
that the order denying the motion was neither a final judgment nor an appealable
interlocutory order. We therefore dismiss the appeal for lack of jurisdiction.
Background
In 2005 and 2006, Elizabeth Sanders Moore and Jess Moore guaranteed a
pair of notes, one of which was held by the Roger T. Fridholm Revocable, Living
Trust and one of which was held by IPG Services Corporation. The Moores
defaulted on both notes, and the Fridholm Trust and IPG sued them in 2010 on the
respective balances, which totaled more than $600,000. The Moores were served
with process, but they failed to appear. Consequently, in October 2010, the trial
court entered a default judgment in favor of the Fridholm Trust and IPG for the
unpaid principal of the notes, plus pre-judgment and post-judgment interest.
Meanwhile, the Internal Revenue Service filed three notices of federal tax
liens in the Harris County property records, seeking to recover more than $600,000
in unpaid federal taxes from Elizabeth.
By late 2011, the Fridholm Trust and IPG had been unable to recover on
their default judgment. Elizabeth, however, held an interest in the Jack M. Sanders
Family Limited Partnership (“FLP”). The Fridholm Trust and IPG therefore sought
a charging order from the trial court, compelling FLP to pay them any amounts that
the partnership otherwise would have paid to Elizabeth. The trial court ultimately
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entered an agreed charging order signed by counsel for all parties and by counsel
for FLP, which was not then a party, in November 2011. The order states:
The Partnership shall not distribute to [Elizabeth] Moore any
partnership distributions, profits, cash, assets, or other monies due or
that shall become due to Moore, by virtue of Moore’s interest in the
Partnership, but instead shall pay to the [Fridholm] Trust and IPG all
funds and assets whatsoever which, by virtue of Moore’s interest in
the Partnership would have been distributed to Moore, until the
Judgments, . . . have been fully paid.
In September 2012, in separate litigation among FLP, the Fridholm Trust,
and IPG, the county court at law of Harrison County, Texas, issued a final
declaratory judgment in which it determined that Elizabeth’s interest in FLP at that
time was 2.07 percent and that the total value of FLP was $1,272,190.
In November 2012, the IRS issued an Amended Conditional Commitment
setting the value of Elizabeth’s 2.07 percent interest in FLP at $18,434. In
December 2012, the Jones Lancaster Irrevocable Living Trust (“Jones Trust”)
issued a cashier’s check to the IRS in the amount of $18,434, in exchange for
Elizabeth’s 2.07 percent interest in FLP. The IRS then issued a Certificate of
Discharge in which it acknowledged the payment of $18,434 by the Jones Trust
and released FLP from the tax liens on Elizabeth’s assets. Elizabeth, in turn, issued
an Assignment and Bill of Sale to the Jones Trust in which she assigned her entire
interest in FLP in consideration for the Jones Trust’s payment to the IRS.
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In May 2013, FLP filed a motion seeking discharge and release of the agreed
charging order. The Fridholm Trust and IPG responded by filing an application for
a turnover order and appointment of a receiver to facilitate their attempts to collect
on the default judgment. At that point, FLP intervened in the lawsuit, asking the
trial court to reject the application for turnover order and receiver or, if the
application were granted, to limit the powers of the receiver and prevent the
receiver, the Fridholm Trust, and IPG from directing any post-judgment discovery
or subpoenas to FLP or otherwise “interfering with FLP’s business.”
Eight days after FLP filed its plea in intervention in this proceeding, the trial
court denied its motion for discharge and release from the agreed charging order.
The order did not explain the court’s reasoning and made no mention of the plea in
intervention, nor did it mention any requests for affirmative relief or defenses
raised by any party. The order did not contain any language indicating that it
disposed of all claims and parties in the suit. FLP filed a notice of appeal from this
order.
On appeal, FLP argues, first, that the order denying its request to discharge
the agreed charging order is a final judgment and therefore appealable, and,
second, that the trial court abused its discretion in entering that order because
Elizabeth no longer owns any interest in FLP. The Fridholm Trust and IPG agree
that the order denying FLP’s motion was a final judgment, but they argue that the
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trial court did not abuse its discretion and that FLP lacks standing to seek discharge
of the charging order.
Analysis
Appellate courts generally have jurisdiction only over final judgments,
although specific types of interlocutory appeals are authorized by statute. CMH
Homes v. Perez, 340 S.W.3d 444, 447 (Tex. 2011); see, e.g., TEX. CIV. PRAC. &
REM. CODE ANN. § 51.014 (West Supp. 2013) (authorizing appeals from certain
interlocutory orders). There can be only one final judgment in a case, except in
certain special proceedings. See, e.g., Huston v. F.D.I.C., 800 S.W.2d 845, 847
(Tex. 1990) (state bank receiverships); Kelley v. Barnhill, 188 S.W.2d 385, 386
(Tex. 1945) (probate proceedings); Christensen v. Harkins, 740 S.W.2d 69, 72
(Tex. App.—Fort Worth 1987, no writ) (severed cases). Even in such cases, the
order must conclusively adjudicate some right or interest between the parties
involved in that portion of the proceeding governed by the order in question. E.g.,
Huston, 800 S.W.2d at 847; Kelley, 188 S.W.2d at 386; Christensen, 740 S.W.2d
at 72–73. In cases in which only one final judgment is possible, “when there has
not been a conventional trial on the merits, an order or judgment is not final for
purposes of appeal unless it actually disposes of every pending claim and party or
unless it clearly and unequivocally states that it finally disposes of all claims and
all parties.” Lehmann v. Har-Con Corp., 39 S.W.3d 191, 205 (Tex. 2001). Finality
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requires that “there must be some . . . clear indication that the trial court intended
the order to completely dispose of the entire case.” Id. “To determine whether an
order disposes of all pending claims and parties, it may of course be necessary for
the appellate court to look to the record in the case.” Id. at 205–06. “For anything
other than what could properly be characterized as a final judgment, mandamus is
the proper form to obtain review of a trial court’s post-judgment orders.” Transam.
Life Ins. Co. v. Rapid Settlements, Ltd., No. 01–11–00240–CV, 2011 WL 5428974,
at *2 (Tex. App.—Houston [1st Dist.] Nov. 10, 2011, no pet.) (mem. op.).
A final judgment or other appealable interlocutory order is a prerequisite of
this court’s jurisdiction, and the question whether appellate jurisdiction exists
cannot be waived or settled by agreement of the parties. See, e.g., Stine v. State,
908 S.W.2d 429, 431 (Tex. 1995) (“It is . . . fundamental that the parties of a suit
can neither confer nor waive jurisdiction by agreement or consent.”); Tex. Ass’n of
Bus. v. Tex. Air Control Bd., 852 S.W.2d 440, 445–46 (Tex. 1993) (subject-matter
jurisdiction cannot be conferred by agreement or waived). “Appellate jurisdiction
is never presumed. Unless the record affirmatively shows the propriety of appellate
jurisdiction, we must dismiss.” Brashear v. Victoria Gardens of McKinney, L.L.C.,
302 S.W.3d 542, 546 (Tex. App.—Dallas 2009, no pet.). Thus, we have the
obligation to determine our jurisdiction when either the parties or circumstances of
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the appeal call it into question. Glass v. Sponsel, 916 S.W.2d 25, 26 (Tex. App.—
Houston [1st Dist.] 1995, no writ).
Because jurisdiction is a threshold issue, we must address it first. Douglas v.
Delp, 987 S.W.2d 879, 883 (Tex. 1999). When faced with multiple jurisdictional
questions, this court need not address them in a particular order. Cf. Ruhrgas AG v.
Marathon Oil Co., 526 U.S. 574, 575, 119 S. Ct. 1563, 1565 (1999). We therefore
consider whether the trial court’s order was a final judgment first, and we can only
reach the remaining issues in this case if we hold that it was.
A charging order is a creation of statute in Texas, and its sole purpose is to
facilitate collection of a judgment from a judgment debtor who owns an interest in
a business entity. See TEX. BUS. ORGS. CODE ANN. § 153.256. The charging order
statute applicable to limited partnerships provides, in relevant part,
(a) On application by a judgment creditor of a partner or of any
other owner of a partnership interest, a court having jurisdiction
may charge the partnership interest of the judgment debtor to
satisfy the judgment.
(b) To the extent that the partnership interest is charged in the
manner provided by Subsection (a), the judgment creditor has
only the right to receive any distribution to which the judgment
debtor would otherwise be entitled in respect of the partnership
interest.
(c) A charging order constitutes a lien on the judgment debtor’s
partnership interest. The charging order lien may not be
foreclosed on under this code or any other law.
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(d) The entry of a charging order is the exclusive remedy by which
a judgment creditor of a partner or of any other owner of a
partnership interest may satisfy a judgment out of the judgment
debtor’s partnership interest.
Id. § 153.256(a)–(d).
Texas appellate courts have had relatively few opportunities to review
charging orders, and some of these have been in the context of mandamus
proceedings.1 When presented as an appeal, most decisions have involved orders
or judgments granting or denying both a charging order and other forms of relief.2
1
See In re CMP Family L.P., No. 05–12–00487–CV, 2012 WL 2359889, at
*1 (Tex. App.—Dallas Jun. 21, 2012, no pet.) (mem. op.) (denying writ of
mandamus in connection with charging order without reasoned opinion); In
re McWilliams, No. 05–99–01720–CV, 1999 WL 959527, at *1 (Tex.
App.—Dallas Oct. 21, 1999, no pet.) (mem. op.) (denying petition for writ
of mandamus in connection with charging order for lack of ripeness due to
motions pending in trial court); Rosedale Partners, Ltd. v. 131st Jud. Dist.
Ct., 869 S.W.2d 643, 649 (Tex. App.—San Antonio 1994, orig. proceeding)
(holding that a default judgment including charging order was interlocutory
because it did not dispose of all claims and parties).
2
See TCAP Corp. v. Gervin, 320 S.W.3d 549, 552 (Tex. App.—Dallas 2010,
no pet.) (affirming order denying application for turnover order and for
charging order or enforcement of prior charging order); Dispensa v. Univ.
State Bank, 951 S.W.2d 797, 799–801 (Tex. App.—Texarkana 1997, pet.
denied) (holding that order denying charging order, but silent as to other
relief requested, was not appealable final judgment); Kocurek v. Dwyer-
Sanders Gp. Partners, No. 03–95–00112–CV, 1996 WL 515546, at *1–2
(Tex. App.—Austin Sep. 11, 1996, no writ) (affirming order granting
application for turnover order and for charging order); Commerce Sav. Ass’n
v. Welch, 783 S.W.2d 668, 670–71 (Tex. App.—San Antonio 1989, no writ)
(affirming order denying application for turnover order and for charging
order); Fuller v. Fuller, 518 S.W.2d 250, 250–52 (Tex. App.—Beaumont
1974, writ ref’d n.r.e.) (affirming entry of charging order); see also Huetten
8
For example, the Dallas court of appeals found no jurisdictional hurdles to
affirming an order denying an application for both a charging order and a turnover
order. TCAP Corp. v. Gervin, 320 S.W.3d 549, 552 (Tex. App.—Dallas 2010, no
pet.); see also Tanner v. McCarthy, 274 S.W.3d 311 (Tex. App.—Houston [1st
Dist.] 2008, no pet.) (turnover orders are appealable). By contrast, only one Texas
court has expressly considered whether an order that relates solely to a charging
order is final for purposes of appeal.
In Dispensa v. University State Bank, 951 S.W.2d 797 (Tex. App.—
Texarkana 1997, pet. denied), the court of appeals considered a charging order and
held that the order was interlocutory in nature and not appealable. Id. at 801. In
that case, the bank obtained a default judgment against Dispensa. Id. at 798. In its
efforts to collect on the judgment, the bank also obtained a charging order against
Dispensa’s interest in a partnership, from which Dispensa appealed. Id. The
charging order did not address the bank’s requests for a turnover order,
appointment of a receiver, and an accounting. Id. at 800. It did not contain a
v. San Diego Nat’l Bank, No. 02–09–053–CV, 2009 WL 2138933, at *1
(Tex. App.—Fort Worth July 16, 2009, no pet.) (mem. op.) (dismissing
judgment debtor’s appeal from charging order as moot when property levied
in connection with order had been sold during pendency of appeal);
Clearview Props., L.P. v. T. REIT, L.P., No. 14–08–00827–CV, 2009 WL
1886140, at *1 (Tex. App.—Houston [14th Dist.] July 2, 2009, no pet.)
(mem. op.) (reversing turnover order and charging order on grounds that
underlying judgment had been reversed).
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“Mother Hubbard” clause stating that all relief not expressly granted was denied or
any other language implying the trial court’s intent to render a final judgment as to
all claims and all parties. Id. at 801.3 As the court explained, “Without the
requested accounting there is no way to conclusively determine how much [the
partnership] owes [the bank].” Id. “Orders that require further proceedings with
regard to the very issue being decided are interlocutory and cannot be appealed.”
Id. (citing Meek v. Hart, 611 S.W.2d 162, 163 (Tex. App.—El Paso 1981, no
writ)).
The Dispensa court rejected two arguments that the charging order in
question was final by its nature. Dispensa first argued “that collecting a judgment
is a process similar to probating a will or managing the administration of a
receivership, and as long as the order conclusively disposes of the issue or question
associated with that part of the process, it is final and appealable.” Id. at 800. The
court of appeals explained that the trial court’s order did not actually dispose of all
issues raised at that stage of the proceeding, including specifically the bank’s
3
The Supreme Court of Texas has since held that even the inclusion of a
Mother Hubbard clause “does not indicate that a judgment rendered without
a conventional trial is final for purposes of appeal.” Lehmann v. Har-Con
Corp., 39 S.W.3d 191, 203–04 (Tex. 2001). Lehmann thus reinforced the
requirement that “there must be some . . . clear indication that the trial court
intended the order to completely dispose of the entire case.” Id. at 205.
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requests for a turnover order, appointment of a receiver, and an accounting. Id. at
800–01. Thus, the charging order was not a final judgment. Id. at 801.
Second, Dispensa argued “that a charging order, like a turnover order, acts
as a mandatory injunction.” Id. “A mandatory injunction, issued pursuant to a
request to a court for aid in collecting on a judgment, resolves property rights and
orders the affected party to engage in some form of affirmative action to
accomplish a specific objective. It is a final and appealable order.” Id. The court of
appeals also rejected this argument, noting that “the charging order here fails as a
mandatory injunction [because it] does not fully determine the substantive property
rights of the parties involved, nor does it inform [the partnership] with sufficient
clarity how it can comply with the order.” Id. Further, “[t]he charging order . . .
merely states the objective to be achieved without determining to what extent the
objective exists or the means of achieving that objective.” Id.
In this appeal, FLP first argues that a charging order is similar to a
garnishment action or turnover order, and thus it is independent of the underlying
matter and appealable. This is effectively the same as the second argument in
Dispensa, and we will reject it for the same reasons. Id. According to FLP, the
purpose of a charging order, like other post-judgment orders, is to give full effect
to the underlying judgment. This alone, however, does not make an order
appealable. “Most post-judgment orders made for the purpose of enforcing or
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carrying into effect an already-entered judgment are not subject to an appeal
because an appeal is typically not statutorily authorized from such an order and
because such orders are typically not final judgments or decrees.” In re Doe, 397
S.W.3d 847, 849 (Tex. App.—Fort Worth 2013, no pet.). Thus, for example,
“orders that grant or deny post-judgment discovery requests are not appealable
until a final judgment is rendered that disposes of all issues between the parties.”
Fisher v. P.M. Clinton Int’l Investigations, 81 S.W.3d 484, 485–86 (Tex. App.—
Houston [1st Dist.] 2002, no pet.) (citing Arndt v. Farris, 633 S.W.2d 497, 500 n.5
(Tex. 1982)). A post-judgment order, however, may be appealable if an appeal is
statutorily authorized or if the order has the nature of a mandatory injunction that
resolves property rights. In re Doe, 397 S.W.3d at 849. There is no statutory
authorization for appeals of charging orders, so the trial court’s order is only
appealable if it operates as a mandatory injunction.
A post-judgment order operates as a mandatory injunction when it resolves
property rights and imposes obligations on the judgment creditor or interested third
parties. See Schultz v. Fifth Jud. Dist. Ct. App. at Dall., 810 S.W.2d 738, 740 (Tex.
1991) (orig. proceeding), abrogated on other grounds by In re Sheshtawy, 154
S.W.3d 114, 124–25 (Tex. 2004). By contrast, “the usual writs and orders to aid in
execution to collect a final money judgment are not, in general, appealable orders.”
Id. (citation omitted); Dispensa, 951 S.W.2d at 801 n.7.
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As in Dispensa, the trial court’s order at issue here “does not fully determine
the substantive property rights of the parties involved, nor does it inform [the
partnership] with sufficient clarity how it can comply with the order.” 951 S.W.2d
at 801. It did not determine what ownership interest, if any, Elizabeth still
possesses in FLP. It does not specifically declare any obligations of FLP in light of
the alleged transfer of Elizabeth’s interest in FLP to a third party. Without findings
as to these facts, the trial court’s order denying FLP’s motion did not resolve any
property rights or impose any obligations on anyone. See id.; see also Schultz, 810
S.W.2d at 740; Qualia v. Qualia, 37 S.W.3d 128, 129 (Tex. App.—San Antonio
2001, no pet.) (holding that a “request for international judicial assistance” was
more analogous to a writ of execution than to a mandatory injunction due to the
lack of findings of fact regarding the property rights involved). We therefore hold
that the trial court’s order denying FLP’s motion to discharge and release the
agreed charging order did not operate as a mandatory injunction, and it is not
appealable as one.
The order is thus appealable only if it actually disposed of all issues and
parties before the court. See Lehmann, 39 S.W.3d at 205. As FLP acknowledges,
Dispensa is the only Texas case directly addressing whether a charging order
satisfies this test; because no cases address an order denying a motion to discharge
a charging order, the Dispensa opinion is the only decision shedding significant
13
light on this dispute. FLP therefore attempts to distinguish Dispensa, arguing that
“all of the issues raised with regard to the charging order were determined in the
order denying the discharge.” We reject this argument for three reasons.
First, FLP’s argument is incorrect on its face. The order from which FLP
appeals left in place the charging order; it therefore did not resolve all issues with
respect to the charging order, which remains in effect and is subject to the trial
court’s discharge or revision at a later date. Nothing in the trial court’s order
indicated that the trial court had made a final determination as to either the effect
of Elizabeth’s sale of her interest in FLP or any other issues in the case.
Second, FLP’s argument is precisely the same as the first argument rejected
by the Dispensa court, and we agree with the reasoning therein. “Even assuming
arguendo that . . . collecting a judgment is a process, the charging order here fails
to resolve all of the issues raised” by the Fridholm Trust and IPG, Dispensa, 951
S.W.2d at 800, as explained more fully below.
Third, to be a final judgment, the order must have “actually dispose[d] of
every pending claim and party or . . . clearly and unequivocally state[d] that it
finally dispose[d] of all claims and all parties.” Lehmann, 39 S.W.3d at 205. The
order here neither disposed of all pending claims and parties nor stated any intent
to do so. Even a charging order contained in a default judgment is non-appealable
unless it meets this standard. See Rosedale Partners, Ltd. v. 131st Jud. Dist. Ct.,
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869 S.W.2d 643, 649 (Tex. App.—San Antonio 1994, orig. proceeding) (default
judgment including charging order was interlocutory and not appealable because it
did not dispose of all claims and parties).
The gravamen of FLP’s argument that the order is appealable is that there
was nothing left for the trial court to determine when it entered its order, other than
whether the charging order should be discharged due to changed circumstances.
Thus, according to FLP, the order effectively resolved all open issues between the
Fridholm Trust, IPG, and FLP. The record, however, does not support this
argument. As a preliminary matter, the charging order was silent about the nature
of Elizabeth’s interest in FLP other than to state that she was a limited partner; the
order on FLP’s motion to discharge the charging order is completely silent on the
matter. Just as in Dispensa, then, neither the charging order nor the order denying
the motion to discharge provides a method for determining FLP’s current
obligations, if any, toward the Fridholm Trust and IPG. Dispensa, 951 S.W.2d at
801. Further, the charging order itself merely ordered FLP to pay any “partnership
distributions, profits, cash, assets or other monies due or that shall become due to
[Elizabeth] Moore, by virtue of Moore’s interest in the partnership . . . to the Trust
and IPG.” It did not make any findings as to what, if anything, was actually due to
Elizabeth, how FLP was to make such payments, or how the payments were to be
15
allocated between the Fridholm Trust and IPG. 4 Thus, both the charging order and
the order denying FLP’s motion to discharge the charging order left open
numerous questions regarding FLP’s responsibilities to the Fridholm Trust and
IPG.
More importantly, the record contradicts FLP’s construction of the trial
court’s orders. At the time that the trial court entered its order denying the motion
to discharge, the Fridholm Trust and IPG had applied for a turnover order and
appointment of receiver, and FLP had filed its plea in intervention to oppose that
application. The record contains no indication that the trial court ever ruled on
these disputes. But FLP’s plea in intervention asserts that it has “interests which
appear to fall within the broad ambit of the [proposed order appointing receiver
and turnover] Order.” Because these disputes between FLP, the Fridholm Trust,
and IPG have not been resolved by the trial court in the record before us, we
cannot agree with FLP that the order denying the motion to discharge disposed of
all outstanding claims and parties. See id. at 800 (finding charging order to be
interlocutory and unappealable because it did not dispose of all issues “raised at
4
The fact that the Harrison County court had previously determined the
ownership interest in FLP that Elizabeth held at one point in time is
irrelevant to our analysis. As the parties all acknowledge, that interest has
changed, and the record does not include any findings by the trial court or
stipulations by the parties as to FLP’s current obligations to the Fridholm
Trust or IPG, if any.
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that particular stage of the proceeding,” including unaddressed requests for
turnover and appointment of receiver).
Because we hold that we do not have jurisdiction over this appeal due to the
absence of a final judgment, we do not reach either the standing issue raised by the
Fridholm Trust and IPG or the parties’ arguments on the merits.
Conclusion
The trial court’s order giving rise to this appeal was not a final judgment or
appealable interlocutory order. We therefore dismiss the appeal for want of
jurisdiction. See TEX. R. APP. P. 42.3(a).
Michael Massengale
Justice
Panel consists of Chief Justice Radack and Justices Massengale and Huddle.
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