Empire Equipment International and Robert Russell v. Pipeline MacHinery International, L.P. ( 2011 )

COURT OF APPEALS
SECOND DISTRICT OF TEXAS
FORT WORTH
NO. 02-09-00124-CV
EMPIRE EQUIPMENT APPELLANTS
INTERNATIONAL AND ROBERT AND APPELLEES
RUSSELL
V.
PIPELINE MACHINERY APPELLEE
INTERNATIONAL, L.P. AND APPELLANT
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FROM 141ST DISTRICT COURT OF TARRANT COUNTY
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MEMORANDUM OPINION1
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I. Introduction
Appellants Empire Equipment International, Inc. and Robert Russell 2
(collectively, Empire) appeal from the trial court‘s take nothing judgment in favor
of Appellee Pipeline Machinery International, L.P. (Pipeline). Empire contends in
1
See Tex. R. App. P. 47.4.
2
Russell is the sole shareholder of Empire.
five issues that the trial court erred by refusing to set aside the execution, levy,
bill of sale, and sale of its property; by striking its second amended petition in
intervention for a declaratory judgment that the execution and sale were void; by
denying leave to join two subsequent purchasers as parties; and by granting two
summary judgments for Pipeline. By cross-appeal, Pipeline contends that this
court lacks jurisdiction over Empire‘s appeal because Empire did not timely file its
notice of appeal. We affirm.
II. Background
Alan Bell loaned approximately $1.2 million to Russell and Empire for the
purchase of heavy equipment used in the pipeline industry (the Equipment). In
September 2005, Bell was unable to locate Russell, who was hospitalized for
treatment of a severe bipolar condition. Bell sued Russell contending Russell
failed to repay the loan and seeking recovery of actual and punitive damages and
attorneys‘ fees and a prejudgment writ of attachment on the Equipment. Bell
thereafter sought service on Russell by publication. The trial court authorized
service by publication and entered an ―Order for Issuance of Writ of
Attachment.‖3
Russell did not answer the lawsuit, and the trial court signed an
interlocutory default judgment in December 2005. Bell subsequently filed an
3
See Tex. Civ. Prac. & Rem. Code Ann. §§ 61.001–.002 (Vernon 2008);
.0021 (Vernon Supp. 2010); .003–.021 (Vernon 2008); .022 (Vernon Supp.
2010); .023–.063 (Vernon 2008). The order for writ of attachment also required
the placement of GPS tracking devices on the Equipment.
2
amended petition, and the trial court signed a second interlocutory default
judgment on January 27, 2006. The January 27, 2006 judgment awarded Bell
actual damages of $1,155,000 and stated that the amount of punitive damages
would ―be determined in future proceedings.‖ It also foreclosed Bell‘s attachment
lien against the Equipment, ordered that the Equipment be delivered to Bell, and
stated that an order of sale pursuant to rule of civil procedure 309 would issue
upon request by Bell.4 The Equipment was sold at a public auction on March 15,
2006, and Pipeline placed the highest bid—$1,230,000.
Seven days after the sale to Pipeline, Russell appeared in the lawsuit and
filed a motion for reconsideration and to set aside the interlocutory default
judgments, contending that he had not been properly served.5 In May 2006, after
being informed that Bell and Russell had agreed that the trial court should set
aside the interlocutory judgments, the trial court entered an order setting aside
the default judgments and declaring them ―void ab initio, and of no force and
4
See Tex. R. Civ. P. 309 (providing that judgments foreclosing liens ―shall
be that the plaintiff recover his debt, damages and costs, with a foreclosure of the
plaintiff‘s lien on the property subject thereto, and, . . . that an order of sale shall
issue to any sherriff or any constable . . . directing him to seize and sell the same
as under execution‖).
5
In a subsequent hearing, Russell testified that he had received a copy of
the original petition by early December 2005 and that he hired his attorney
―immediately.‖ Russell‘s attorney testified that he also knew about the lawsuit,
that he called the clerk‘s office periodically to check for a return of service, but
that he ―dropped the ball‖ and did not file an answer to the lawsuit.
3
effect at any time.‖ The trial court also ordered that the proceeds from the sale to
Pipeline be deposited into the registry of the court.
In July 2006, Empire filed a petition in intervention and a third-party petition
against Pipeline. In the third-party petition, Empire contended, among other
things, that the sale to Pipeline was void because there was no final judgment to
support it, that the Equipment belonged to Empire, and that Pipeline should
return the Equipment to Empire and pay damages for Empire‘s ―loss of the
reasonable rental value of the [E]quipment.‖ Pipeline answered the third-party
petition in August 2006 and later asserted counter-claims against Empire for,
among other things, a declaratory judgment that the sale to Pipeline was valid
and that Pipeline acquired good title to the Equipment. By April 2007, Pipeline
had sold or leased all of the Equipment to Challenger Services and Gregory &
Cook, Inc. (collectively, the Subsequent Purchasers).
Empire and Russell eventually settled with Bell, and the trial court entered
an order releasing the funds in the registry of the court to Bell‘s attorney. Both
before and after Pipeline answered the third-party petition, Empire filed several
motions and pleadings seeking the return of the Equipment and to set aside the
sale to Pipeline. Empire‘s filings included: (1) a motion for immediate return of
the Equipment under civil practice and remedies code section 34.021; 6 (2) an
6
See Tex. Civ. Prac. & Rem. Code Ann. § 34.021 (Vernon 2008) (―A
person is entitled to recover his property that has been seized through execution
of a writ issued by a court if the judgment on which execution is issued is
4
application for injunctive relief; (3) a motion for leave to add the Subsequent
Purchasers as third-party defendants; (4) a third-party petition against the
Subsequent Purchasers; (5) a second amended petition for declaratory relief
against Pipeline; (6) a motion to have the sale to Pipeline invalidated as void ab
initio; and (7) a supplemental petition against Pipeline seeking equitable relief.
The trial court denied each of Empire‘s motions, struck Empire‘s pleading against
the Subsequent Purchasers, struck Empire‘s pleading for declaratory relief
against Pipeline, and entered summary judgment for Pipeline on all of Empire‘s
causes of action. The trial court also sanctioned Empire because Empire filed
the third-party petition against the Subsequent Purchasers after the trial court
had denied Empire leave to file it. After granting the second summary judgment
for Pipeline, the trial court severed Empire‘s claims against Pipeline, and this
appeal followed.
III. Jurisdiction Over Empire’s Appeal
We address Pipeline‘s cross appeal first because it concerns our
jurisdiction over Empire‘s appeal. At the February 12, 2009 hearing on Pipeline‘s
second motion for summary judgment, the trial court granted summary judgment
against Empire and stated, ―I will sever the claims that exist and have been
asserted between Pipeline and [Empire] into a new cause of action.‖ The trial
court also stated that ―[o]nce the severance order is signed[,] this case will be
reversed or set aside and the property has not been sold at execution.‖
(emphasis added)).
5
final.‖7 The trial court then signed the severance order on February 13, 2009.
However, although Empire was present at the February 12, 2009 hearing and
agreed to sever its claims against Pipeline, Empire did not receive notice from
the trial court clerk or acquire actual knowledge that the February 13, 2009
severance order had been signed until March 23, 2009.8
By its cross-issue, Pipeline argues that we do not have jurisdiction over
Empire‘s appeal because Empire had actual knowledge of the trial court‘s oral
rendition of severance at the February 12, 2009 hearing but did not file a notice
of appeal within thirty days of the February 13, 2009 severance order. 9 See Tex.
7
The severance order is the final judgment in this case because the
summary judgment was interlocutory until Empire‘s claims against Pipeline were
severed from the existing lawsuit. See Diversified Fin. Sys, Inc. v. Hill, Heard,
O’Neal, Gilstrap & Goetz, P.C., 63 S.W.3d 795, 795 (Tex. 2001).
8
We abated this appeal for the trial court to determine the date on which
Empire ―received notice or acquired actual knowledge that the February 13, 2009
judgment had been signed.‖ See Tex. R. App. P. 4.2(c); Tex. R. Civ. P. 306a(5).
The trial court had previously conducted a hearing pursuant to rule 306a(5) on
Empire‘s motion to determine the date on which appellate deadlines began, but
the trial court did not make a finding as to the date Empire acquired actual
knowledge of the signing. After we abated the appeal, the trial court made a
finding of fact that ―the date on which [Empire] received notice or acquired actual
knowledge that the February 13, 2009 Judgment had been signed was March 23,
2009.‖
9
Pipeline‘s issue on cross appeal is that the trial court erred by failing to
make findings of fact that (1) the trial court rendered final judgment on February
12, 2009, when it orally severed Empire‘s claims into a new cause number; (2)
Empire had actual knowledge of the trial court‘s February 12, 2009 oral order of
severance; (3) Empire agreed to the severance in open court at the February 12,
2009 hearing; and (4) the trial court signed a written order granting the severance
on February 13, 2009. Building on its contention that the trial court should have
made these findings, Pipeline argues that Empire should have filed its notice of
6
R. App. P. 26.1(a) (providing that ―a notice of appeal must be filed within 30 days
after the judgment is signed‖ unless the party timely files a request for findings of
fact and conclusions of law or a plenary power extending motion). Empire
responds that it did not receive notice or acquire actual knowledge that the
severance order had been signed until March 23, 2009, and that it timely filed its
notice of appeal within thirty days of acquiring that knowledge. See Tex. R. Civ.
P. 306a(4)–(5) (providing that if a party does not receive notice from the trial
court clerk that an order has been signed within twenty days of the signing, the
applicable deadlines run from the date the party receives notice or actual
knowledge of the signing of the order); Tex. R. App. P. 4.2(a)(1) (same).
Pipeline is correct in its contention that a judgment is rendered at the time
the trial court announces its decision in open court. See Samples Exterminators
v. Samples, 640 S.W.2d 873, 875 (Tex. 1982). However, Pipeline‘s cross appeal
is based entirely on the incorrect premise that appellate timetables run from the
date that judgment is rendered rather than the date that the judgment is signed. 10
For purposes of appellate timetables, such as the appellate timetable involved
here for filing a notice of appeal, the critical date is the date on which the
appeal within thirty days of the February 13, 2009 severance order because
Empire had actual knowledge of the trial court‘s oral rendition of severance at the
February 12, 2009 hearing.
10
The case on which Pipeline bases its cross-issue says as much. See
Tex. Life Ins. Co. v. Tex. Bldg. Co., 307 S.W.2d 149, 154 (Tex. Civ. App.—Fort
Worth 1957, no writ). For purposes of deadlines other than the timetables for
appeal, the controlling date is the date that judgment is rendered. See id.
7
judgment or appealable order is signed. Farmer v. Ben E. Keith Co., 907 S.W.2d
495, 496 (Tex. 1995) (providing that ―appellate timetable runs from the signing
date of whatever order that makes a judgment final and appealable,‖ such as an
order of severance); see Tex. R. App. P. 26.1(a) (providing that ―a notice of
appeal must be filed within 30 days after the judgment is signed‖ (emphasis
added)); see also Cont’l Cas. Co. v. Davilla, 139 S.W.3d 374, 379 (Tex. App.—
Fort Worth 2004, pet. denied) (citing Tex. R. Civ. P. 306a(4), and stating that
―[t]he party adversely affected by the ruling of the trial court must prove in the trial
court, on sworn motion and notice, the date he or his attorney first received
notice or acquired actual knowledge of the signing‖ (emphasis added)).
Pipeline does not dispute that Empire first received notice or acquired
actual knowledge on March 23, 2009, that the severance order had been signed
on February 13, 2009; that March 23, 2009, was a date more than twenty but
less than ninety-one days after the trial court signed the February 13, 2009
severance order; or that Empire filed its notice of appeal within thirty days of
March 23, 2009. See Tex. R. Civ. P. 306a(4), (5); Tex. R. App. P. 4.2(a)(1).
Thus, even if the trial court had made each of the findings of fact that Pipeline
contends it should have made, the findings would be immaterial to our
jurisdictional analysis because Empire first received notice or acquired actual
knowledge of the signing more than twenty but less than ninety-one days after
the severance order was signed, and Empire filed its notice of appeal within thirty
days of receiving notice of the signing. See Tex. R. Civ. P. 306a(4), (5); Tex. R.
8
App. P. 4.2(a)(1), 26.1(a). We hold that Empire timely filed its notice of appeal
and that we have jurisdiction over Empire‘s appeal. See Tex. R. Civ. P. 306a(4),
(5); Tex. R. App. P. 4.2(a)(1), 26.1(a). We therefore overrule Pipeline‘s sole
cross-issue.
IV. Empire’s Appeal
A. Empire Has Exclusive Remedy Against Judgment Creditor
Empire contends in its first and fourth issues that the trial court erred by
granting summary judgment to Pipeline and by refusing to set aside the sale and
order the Equipment returned to Empire. Empire asserts in its third issue that the
trial court erred by denying it leave to join the Subsequent Purchasers as third-
party defendants.
Empire argues that because the January 26, 2007 default judgment was
interlocutory, the execution, order of sale, sale, and any titles passing as a result
of the sale are void. Therefore, according to Empire, it may seek the return of
the Equipment from Pipeline or the Subsequent Purchasers. Pipeline responds
that civil practice and remedies code section 34.022—which permits a judgment
debtor such as Empire to recover the market value of seized property from a
judgment creditor such as Bell if the judgment upon which an execution sale is
based is later set aside or reversed—sets forth Empire‘s exclusive remedy. See
Tex. Civ. Prac. & Rem. Code Ann. § 34.022 (Vernon 2008). Thus, according to
Pipeline, even though the January 26, 2007 default judgment was set aside,
9
section 34.022 bars Empire from asserting claims against Pipeline or any entity
that purchased or leased the Equipment from Pipeline.
1. Execution on Interlocutory Judgment
―[A]n interlocutory judgment may not be enforced through execution.‖ In re
Burlington Coat Factory Warehouse of McAllen, Inc., 167 S.W.3d 827, 831 (Tex.
2005) (citing Tex. R. Civ. P. 622; Nalle v. Harrell, 118 Tex. 149, 12 S.W.2d 550, 551
(1929)). The January 26, 2007 judgment in this case was interlocutory because it
reserved a determination of punitive damages for a later time. See id. at 828, 830–
31. And because the January 26, 2007 judgment was interlocutory, the trial court
abused its discretion by authorizing execution on that judgment. Id. at 831; see also
In re Discount Rental, Inc., 216 S.W.3d 831, 832 (Tex. 2007) (holding that default
judgment and subsequent execution were void when default judgment was obtained
without proper service on the plaintiff). Our inquiry does not end here, however,
because we must still determine whether Empire can seek recovery of the
Equipment from Pipeline (or an entity to which Pipeline sold or leased the
Equipment) or whether Empire is limited to the recovery from Bell of the market
value of the Equipment at the time of the sale.11
2. Civil Practice & Remedies Code Sections 34.021 and 34.022
Civil practice and remedies code section 34.021 states: ―A person is entitled
to recover his property that has been seized through execution of a writ issued by a
11
Empire has already pursued a claim against Bell for the market value of
the Equipment and reached a settlement with him.
10
court if the judgment on which execution is issued is reversed or set aside and the
property has not been sold at execution.‖ Tex. Civ. Prac. & Rem. Code Ann. §
34.021 (emphasis added). In addition, civil practice and remedies code section
34.022 provides:
(a) A person is entitled to recover from the judgment creditor the
market value of the person‘s property that has been seized through
execution of a writ issued by a court if the judgment on which execution
is issued is reversed or set aside but the property has been sold at
execution.
(b) The amount of recovery is determined by the market value at the
time of sale of the property sold.
Id. § 34.022 (emphasis added). Relying on section 34.022, Pipeline argues that
because the Equipment was sold at execution before the January 26, 2007
judgment was set aside, Empire has an exclusive remedy against Bell—the
judgment creditor—and that Empire is precluded from recovering the Equipment
from Pipeline or the Subsequent Purchasers.
The meaning of a statute is a legal question, which we review de novo.
Entergy Gulf States, Inc. v. Summers, 282 S.W.3d 433, 437 (Tex. 2009); F.F.P.
Operating Partners., L.P. v. Duenez, 237 S.W.3d 680, 683 (Tex. 2007). We
begin by examining the exact wording and apply the tenet that the legislature
chooses its words carefully and means what it says. See In re M.N., 262 S.W.3d
799, 802 (Tex. 2008); Cameron v. Terrell & Garrett, Inc., 618 S.W.2d 535, 540
(Tex. 1981); Benish v. Grottie, 281 S.W.3d 184, 192–93 (Tex. App.—Fort Worth
2009, pet. denied).
11
Applying these rules of statutory construction to section 34.022, we note that
Empire‘s claims against Pipeline are common law claims for trespass to chattels12
and conversion, that Pipeline is not the judgment creditor, and that Empire pursued
and settled its claims against Bell—the judgment creditor. Had the Equipment not
been sold when the trial court set aside the default judgments, Empire could have,
pursuant to section 34.021, sought the return of the Equipment. See Tex. Civ. Prac.
& Rem. Code Ann. § 34.021; see also In re Discount Rental, 216 S.W.3d at 832
(ordering return of property held by constable). Indeed, section 34.021 does not on
its face prohibit a judgment debtor from seeking the return of its property so long as
the property has not been sold. See Tex. Civ. Prac. & Rem. Code Ann. § 34.021.
But Empire‘s property was sold, and section 34.022 therefore applies. See id. §
34.022(a). And unlike section 34.021, section 34.022 limits Empire‘s claim to one
against the judgment creditor. See id. Therefore, because the Equipment had been
sold before the trial court set aside the default judgments, we hold that Empire‘s
exclusive remedy was against Bell—the judgment creditor. See id.; Waffle House v.
Williams, 313 S.W.3d 796, 802–04, 809 (Tex. 2010) (holding common law claim
abrogated by impliedly exclusive statutory scheme). We hold that the trial court did
not abuse its discretion by refusing to set aside the execution sale to Pipeline or by
denying leave for Empire to join the Subsequent Purchasers as third-party
12
Empire‘s pleading actually alleges an ―action sounding in replevin,‖ but
Empire‘s responses to Pipeline‘s special exceptions and motion for summary
judgment clarified that its ―action sounding in replevin‖ is a cause of action for
trespass to chattels.
12
defendants.13 We further hold that the trial court properly granted Pipeline‘s first
motion for summary judgment. We overrule Empire‘s first, third, and fourth issues.
B. Empire’s Pleading for Declaratory Relief Against Pipeline
Empire contends in its second issue that the trial court erred by striking its
pleading for declaratory relief against Pipeline in which Empire sought a declaration
that the execution, levy, sale, and bill of sale were void. Empire argues that the trial
court‘s order was a ―partial death penalty‖ and that the striking of the pleading was
not a just sanction against Empire.
At the time that Empire filed its pleading for declaratory relief against Pipeline,
Empire had pending claims against Pipeline for trespass to chattels, conversion,
and wrongful execution, levy, and seizure—all of which sought the return of the
Equipment based on the alleged invalidity of the sale. In addition, Pipeline had a
pending counterclaim for declaratory relief that Empire‘s ―remedies, if any, are
limited to recovery of damages from parties other than [Pipeline].‖ In its brief in this
13
Empire relies on Burlington Coat Factory to support its contention that
the trial court should have ordered the return of its Equipment. But Burlington
Coat Factory was a mandamus proceeding, a sale had not yet occurred, and the
trial court had already set aside the default judgment before refusing to set aside
the order of sale. See, 167 S.W.3d at 831. None of those facts are present
here. Moreover, Empire‘s reliance on Ferris v. Security Savings & Loan
Association, 545 S.W.2d 208, 213 (Tex. Civ. App.—Eastland 1976, no writ), and
York Division, Borg-Warner Corp. v. Security Savings & Loan Association, 485
S.W.2d 327, 330–31 (Tex. Civ. App.—Houston [1st Dist.] 1972, writ ref‘d n.r.e.), is
unconvincing because those cases were decided before the enactment of civil
practice and remedies code section 34.022. See Act of June 16, 1981, 67th Leg.,
R.S., ch. 714 § 3(a), 1981 Tex. Gen. Laws (1981) (current version at Tex. Civ. Prac.
& Rem. Code Ann. §§ 34.021-.022).
13
court, Empire asserts that it filed its pleading for declaratory relief against Pipeline
because it ―sought to meet [Pipeline‘s] counter-claim with [its] pleading for a
declaratory judgment that the constable‘s sale was void.‖ However, ―[t]he
Declaratory Judgments Act is ‗not available to settle disputes already pending
before a court.‘‖ BHP Petroleum Co. Inc. v. Millard, 800 S.W.2d 838, 841 (Tex.
1990) (quoting Heritage Life v. Heritage Grp. Holding, 751 S.W.2d 229, 235 (Tex.
App.—Dallas 1988, writ denied)). Thus, because the issue of the validity of
Pipeline‘s title to the Equipment was already pending before the court at the time
Empire filed its pleading for declaratory relief against Pipeline, the trial court
could have validly stricken Empire‘s pleading for declaratory relief on this ground.
See Sanchez v. AmeriCredit Fin. Servs., Inc., 308 S.W.3d 521, 524 (Tex. App.—
Dallas 2010, no pet.) (―A counterclaim for declaratory judgment is improper if it is
nothing more than a mere denial of the plaintiff‘s claims and the counterclaim
fails to have greater ramifications than the original suit.‖). And because we are
bound to uphold the trial court‘s ruling if it reached the correct result, we hold that
the trial court did not abuse its discretion by striking Empire‘s pleading for
declaratory relief against Pipeline. See Markel Ins. Co. v. Muzyka, 293 S.W.3d
380, 385 (Tex. App.—Fort Worth 2009, no pet.) (―[R]egardless of the reasoning
employed by the trial court . . . , if the trial court reached the correct result, we will
affirm its ruling.‖).14 We overrule Empire‘s second issue.
14
The trial court‘s order striking Empire‘s pleading for declaratory relief
against Pipeline does not give the reason for the trial court‘s ruling. Empire
14
C. Pipeline’s Second Motion for Summary Judgment
In its fifth issue, Empire argues that the trial court erred by granting Pipeline‘s
second motion for summary judgment. After the trial court granted Pipeline‘s first
motion for summary judgment, Empire filed a supplemental pleading in which it
alleged that the sale to Pipeline should be set aside in equity because irregularities
in the sale led to the Equipment being sold for a grossly inadequate price. Pipeline
then filed its second motion for summary judgment and requested summary
judgment on three grounds: (1) res judicata based on the trial court‘s prior
interlocutory rulings; (2) mootness because Pipeline no longer possessed the
Equipment; and (3) no evidence of alleged irregularities in the execution sale that
led to a grossly inadequate price. Empire responded to Pipeline‘s second motion
for summary judgment and presented argument and evidence that its equitable
claim differed from the claims on which the trial court had previously ruled or
granted summary judgment and that irregularities in the execution sale caused a
grossly inadequate price. However, Empire presented no argument or evidence
concerning the mootness ground raised in Pipeline‘s second motion for summary
judgment. Empire also does not brief this court as to why its claim for equitable
relief against Pipeline is not moot.
argues on appeal that the striking of its pleading was an inappropriate sanction,
and Pipeline responds that the sanction was appropriate because Empire‘s
pleading was groundless and brought in bad faith. We express no opinion on the
validity of the trial court‘s ruling on those grounds and simply hold that the trial
court had a different basis for which it could have validly stricken Empire‘s
pleading for declaratory relief against Pipeline. See Markel, 293 S.W.3d at 385.
15
When the trial court‘s judgment rests upon more than one independent
ground or defense, the aggrieved party must assign error to each ground, or the
judgment will be affirmed on the ground to which no complaint is made. Scott v.
Galusha, 890 S.W.2d 945, 948 (Tex. App.—Fort Worth 1994, writ denied). One of
the grounds asserted by Pipeline in its second motion for summary judgment was
mootness, but Empire did not respond to this ground in the trial court and does not
challenge this ground on appeal. Therefore, we must affirm the summary judgment.
See id.; see also Pat Baker Co., Inc. v. Wilson, 971 S.W.2d 447, 450 (Tex. 1998);
Torres v. Johnson, 91 S.W.3d 905, 908 n.3 (Tex. App.—Fort Worth 2002, no pet.)
(affirming summary judgment on unchallenged ground); King v. Tex. Employers’ Ins.
Ass’n, 716 S.W.2d 181, 182–83 (Tex. App.—Fort Worth 1986, no writ) (affirming
summary judgment ―because summary judgment may have been granted, properly
or improperly,‖ on the ground set out in the motion, and the appellant did not
challenge that ground). We overrule Empire‘s fifth issue.
V. Conclusion
Having overruled Pipeline‘s sole cross-issue and each of Empire‘s issues,
we affirm the trial court‘s judgment.
ANNE GARDNER
JUSTICE
PANEL: DAUPHINOT, GARDNER, and WALKER, JJ.
DELIVERED: March 3, 2011
16