NUMBER 13-10-00694-CV

COURT OF APPEALS

THIRTEENTH DISTRICT OF TEXAS

CORPUS CHRISTI - EDINBURG 

 

MOHICAN OIL & GAS, LLC, Appellant,

v.

CHAPCO, INC. AND FROST NATIONAL BANK, Appellees.

 

On appeal from the 319th District Court 

of Nueces County, Texas.

 

MEMORANDUM OPINION

Before Chief Justice Valdez and Justices Rodriguez and Garza 

Memorandum Opinion by Justice Rodriguez

Appellant Mohican Oil & Gas, LLC challenges the garnishment judgment entered 

in favor of appellee Chapco, Inc. By four issues, Mohican complains of the trial court's 

entry of judgment without a trial under Texas Rule of Civil Procedure 674, certain

attorney's fees and costs awarded in the garnishment judgment, the evidence supporting 

the trial court's ruling on Mohican's motion to modify Chapco's writ, and the prematurity of 
2

the judgment. We affirm, in part, and reverse and render, in part.

I. Background1

In the underlying breach of contract litigation between the parties, Chapco 

obtained a judgment against Mohican after a jury trial in June 2009.2The judgment 

awarded Chapco $60,000 in damages, $6,657.53 in prejudgment interest, and 

$72,146.89 in attorney's fees and costs incurred during trial. The judgment for Chapco 

totaled $138,804.42.3

In June 2010, Chapco filed an application for writ of garnishment against 

Mohican's operating account held by appellee and garnishee Frost National Bank. See

TEX. R. CIV. P. 658. Chapco alleged that Mohican "does not possess property in Texas 

subject to execution sufficient to satisfy the judgment" and that Frost "has in its 

possession funds belonging to" Mohican. Chapco prayed for a garnishment judgment in 

the amount of $138,763.32 plus post-judgment interest.

Mohican responded by filing a motion to modify the writ of garnishment under rule 

664a. See TEX. R. CIV. P. 664a (providing that a defendant whose property has been 

garnished "may seek to vacate, dissolve or modify the writ"). Mohican attached to its 

 

1

Because this is a memorandum opinion and the parties are familiar with the facts, we will not 

recite them here except as necessary to advise the parties of the Court's decision and the basic reasons for 

it. See TEX. R. APP. P. 47.4.

2

This Court affirmed the trial court's judgment in favor of Chapco and against Mohican on January 

27, 2011. See Mohican Oil & Gas, LLC v. Scorpion Exploration & Prod., Inc., 337 S.W.3d 310, 320-21, 

325 (Tex. App.—Corpus Christi 2011, pet. filed). In a cross-appeal arising out of the same trial but 

unrelated to Mohican's appellate claims against Chapco, Scorpion Exploration and Production Company 

challenged the prevailing party status of Mohican. See id. at 321. We partially sustained and partially 

overruled Scorpion's challenge, see id. at 324, and Scorpion has timely filed a petition for review with the 

supreme court. Mohican did not file a petition for review with the Texas Supreme Court challenging our 

disposition of its appeal against Chapco within the deadline provided by the rules. See TEX. R. APP. P.

53.7(a).

3

The judgment also included contingent appellate legal fees of $15,000 for an appeal to the court 

of appeals and $10,000 for an appeal to the supreme court.
3

motion the affidavit of its accountant and a reconciled bank statement, which showed that 

the balance in its Frost operating account at the time the writ was filed was $148,307.56. 

In its motion, Mohican alleged that all but $15,426.68 of the funds in the account were 

funds "held for payment of expenses of [oil and gas] operations" or funds owed to "royalty 

or mineral interest owners." Mohican argued that these funds, "held for the account of 

third party non-operators" pursuant to a joint operating agreement (JOA), were not 

subject to garnishment. After an evidentiary hearing, the trial court denied Mohican's 

motion to modify. The trial court entered the following findings of fact regarding that 

hearing:

1. On June 6, 2009, after a trial by jury, this Court entered judgment on 

behalf of Chapco against [Mohican]. The judgment rendered by this 

Court against Mohican was in the amount of $60,000.00, trial 

attorneys fees of $72,146.89, appellate attorney fees of $15,000.00 

and court costs (the Judgment).

2. Mohican has appealed the Judgment to the Court of Appeals, but 

has not attempted to supercede the Judgment in accordance with 

TRAP 24.

3. On June 24, 2010, Chapco filed a[n Application for] Writ of 

Garnishment against Frost National Bank.

4. On July 6, 2010, Mohican filed its Motion to Modify the Writ of 

Garnishment [obtained] by Chapco against Frost National Bank and 

intervened in the case.

5. Mohican demanded a hearing and a ruling on its Motion to Modify 

pursuant to TRCP 664(a) [sic].

6. The Court conducted an evidentiary hearing on July 13, 2010, on the 

Motion to Modify and a made a ruling on the Motion on July 16, 2010, 

after hearing witness testimony presented by Mohican.

7. Chapco proved the grounds relied upon for the issuance of the writ of 

garnishment by proving that it had a valid, subsisting judgment, and 

that within its knowledge, Mohican did not possess property in the 
4

state subject to execution sufficient to satisfy the judgment.

8. Mohican contended in the Motion to Modify and argued during the 

hearing on the Motion to Modify that all amounts owed by Frost 

National Bank under Account No. [ending in 094] save and except 

for $15,426.68, was money belonging to parties other than Mohican.

9. Account No. [094] is an account held in the name of Mohican and 

pursuant to the account agreement, no other party other than 

Mohican appears on the account. Further, the authority to withdraw 

money from the account is limited to Marty Thering and John 

Newman, principals of Mohican.

10. Account No. [094] is a general account at Frost National Bank. The 

amount owed by Frost National Bank arising from the account is 

owed to Mohican and not to third parties.

11. The various third party claimants to the account as argued by 

Mohican are merely creditors of Mohican, as is Chapco. Being a 

creditor of Mohican confers no ownership rights to the account or to 

the amount owed to Mohican by Frost National Bank. Furthermore, 

Mohican failed to adequately trace the money allegedly owned by 

these third parties to establish their alleged ownership.

The trial court also filed the following conclusions of law:

1. Mohican filed its Motion to Modify the Writ of Garnishment pursuant 

to TRCP 664(a) [sic]. TRCP 664(a) [sic] requires the Court to 

conduct a hearing and rule on the Motion to Modify within ten (10) 

days after the Motion is filed.

2. TRCP 664(a) [sic] provides that a defendant whose property or 

account has been garnished may, by sworn written motion, seek to 

vacate, dissolve or modify the writ of garnishment for any grounds or 

cause, extrinsic or intrinsic. TRCP 664(a) [sic].

3. Texas law divides bank deposits into "general deposits" and "special 

deposits." Brady [sic] v. First State Bank, Overton, Texas, 835 

S.W.2d 609, 618-19 (Tex. 1992); Hudnall v. Tyler Bank and Trust 

Company, 458 S.W.2d 183, 186 (Tex. 1970). Ordinarily, a general 

deposit of money with a bank creates a creditor-debtor relationship 

between the depositor and the bank. Title to the money passes to 

the bank, subject to the depositor's demand for payment. Brady 

[sic] v. First State Bank, Overton, Texas, supra at 618-19, n.4. The

account held in the name of Mohican created a debtor creditor 
5

relationship with Frost, whereby Frost owed money to Mohican, but 

not to third parties.

4. Based on the evidence presented and arguments of the parties, the 

Court refuses to modify the writ of garnishment filed by Chapco as 

the evidence merely indicates a general account. The monies in 

such account are those of Mohican and not any third party.

One day after the hearing on Mohican's motion to modify, Frost filed its answer 

stating that, as of the date of the answer, it was indebted to Mohican in the amount of 

$174,203.88. In its answer, Frost prayed to recover "its reasonable and necessary 

attorney's fees in an amount of not less than $750.00." Chapco filed a motion to enter 

judgment on Frost's answer. In its motion, Chapco prayed for a judgment in the amount 

of $176,250.32, which represented "the amount . . . owed to Chapco based on the 

[underlying] judgment and the costs incurred in this proceeding." 

Mohican responded to Chapco's motion to enter judgment and filed its answer 

under rule 673, traversing and controverting Frost's answer. See TEX. R. CIV. P. 673. In 

its answer, Mohican denied that Frost was indebted to Mohican in the amount specified, 

arguing again that the "funds in question were funds in which third parties have an 

equitable interest and of which they are the beneficial owners which interest is superior to 

Mohican's legal title as the account holder." Mohican demanded a trial, under rule 674, 

on the issues presented in its answer. See TEX. R. CIV. P. 674. 

Without a hearing, the trial court entered judgment, ordering that Chapco recover 

the sum of $173,453.88 from Frost in satisfaction of the underlying judgment against 

Mohican. The judgment also ordered that Frost recover its attorney's fees by 

withholding $750 from Mohican's funds in Frost's possession. 

Mohican filed a motion to vacate, modify, correct or reform the judgment, arguing 
6

in relevant part that: the amount awarded was wrong in that it exceeded the amount of 

the underlying judgment and recoverable fees and costs; the trial court violated rules 673 

and 674 by entering judgment without holding a trial on Mohican's answer traversing 

Frost's answer, see TEX. R. CIV. P. 673, 674; and the trial court erred under rule 677 in 

ordering Mohican to pay Frost's attorney's fees without a trial on Mohican's answer. See

TEX. R. CIV. P. 677. Mohican prayed that the trial court vacate its judgment and set the 

case for trial or, in the alternative, reform the judgment.

Chapco responded to Mohican's motion to vacate or reform by arguing that: 

Mohican was not entitled to a trial on its answer traversing Frost's answer as it raised no 

new grounds that were not already considered and ruled on at the evidentiary hearing on 

Mohican's rule 664a motion to modify; and the judgment properly entitled Frost to recover 

its attorney's fees from Mohican. In its response, Chapco admitted that the amount of 

the trial court's judgment was incorrect in that it included attorney's fees contingent on an 

unsuccessful appeal by Mohican to the Texas Supreme Court, a contingency which had 

not occurred. Chapco attached as an exhibit the amounts that it proposed for the 

modified judgment, which subtracted the supreme court appellate fees and totaled 

$167,852.53.4

In response to the foregoing motions by Mohican and Chapco, the trial court 

modified its initial judgment and entered judgment in the amount of $167,852.53. The 

 

4 Chapco's proposed modified judgment amount included the following items, totaling 

$167,852.53:

Amount of Judgment: $ 138,763.32

Interest accrued in original proceeding to 9-29-10: $ 8,858.04

Costs in original proceeding: $ 4,082.81

Appellate attorneys fees with accrued interest: $ 15,801.36

Costs in garnishment proceeding: $ 347.00
7

modified judgment ordered that Frost recover its attorney's fees from Mohican. On 

request by Mohican, the trial court filed findings of fact and conclusions of law. The 

findings of fact mirrored the findings from the earlier evidentiary hearing and added the 

following relevant findings:

6. On July 14, 2010, Frost National Bank filed its Answer to the Writ of 

Garnishment and admitted that . . . when the answer was filed, 

$174,203.88 was owed by Frost National Bank to Mohican. Frost's 

answer also [sought] $750.00 in attorneys' fees in answering the writ 

of garnishment.

7. On August 6, 2010, Chapco filed its Motion to Enter Judgment on the 

Writ of Garnishment pursuant to TRCP 668. Chapco's Motion to 

Enter Judgment indicated that it did not contest or traverse the 

answer of Frost.

8. On August 10, 2010, Mohican filed its answer and attempted to 

traverse the answer of Frost by raising the same issues it raised in 

the Motion to Modify the Writ of Garnishment. The Court finds that 

such issues have been previously ruled up by [the trial court] in the 

Rule 664(a) [sic] hearing.

9. This Court . . . entered judgment on the writ of garnishment on 

September 13, 2010, in the amount of $173,453.88. Mohican did 

not object to Frost National Bank's request for $750.00 in attorneys' 

fees.

10. On September 23, 2010, Mohican filed its Motion to Vacate, Modify, 

Correct or Reform Judgment . . . . After hearing the arguments of 

counsel thereon, the Court modified the September 13, 2010[] 

Judgment by entering a Modified Judgment on September 29, 2010.

11. The Court finds that the amount of $167,852.53 is owed to Chapco 

by Mohican which amount consists of the following:

Amount of Judgment: $ 138,763.32

Interest accrued in original proceeding to 9-29-10: $ 8,858.04

Costs in original proceeding: $ 4,082.81

Appellate attorneys fees with accrued interest: $ 15,801.36

Costs in garnishment proceeding: $ 347.00

$ 167,852.53
8

12. Based on the verified answer of Frost National Bank, the Court finds 

that Frost National Bank is indebted to Mohican in the amount of 

$174,203.88.

13. The Court finds that $750.00 is a reasonable fee incurred by Frost 

National Bank in answering and responding to the Writ of 

Garnishment.

The trial court also entered the following conclusions of law:

1. Chapco is entitled to Judgment against Frost National Bank pursuant 

to TRCP 668 as the answer of Frost National Bank establishes that it 

is indebted to Mohican in the amount of $174,203.88. TRCP 668 

provides that the Court shall render Judgment for the Plaintiff against 

the garnishee for the amount so admitted or found to be due to the 

defendant from the Garnishee, unless such amount is in excess of 

the amount of the Plaintiff's judgment against the defendant with 

interest and costs, in which case, judgment shall be rendered 

against the garnishee for the full amount of the judgment already 

rendered against the defendant, together with interest and costs of 

the suit in the original case and also in the garnishment proceedings.

2. For the purposes of the Writ of Garnishment, the Judgment is 

considered final pursuant to TRCP 657 even though the Judgment 

has been appealed by Mohican, as Mohican failed to supersede the 

judgment. Wrigley v. First Nat. Sec. Corp., 104 S.W.3d 259, 264 

(Tex. App.-Beaumont 2003, no pet.).

3. The essential issue in a garnishment proceeding is whether the 

garnishee is indebted to or has in his possession property belonging 

to the judgment debtor. Putman & Putman, Inc. v. Capitol 

Warehouse, Inc., 775 S.W.2d 460, 463 (Tex. App.-Austin 1989, writ 

denied). The only issue to be tried in a garnishment proceeding is 

"who is entitled to the funds involved in the proceeding." Owen 

Elec. Supply v. Brite Day Constr. Inc., 821 S.W.2d 283, 286 (Tex. 

App.-Houston [1st Dist] 1991, writ denied).

4. Based on the prior ruling on the Motion to Modify . . . , it is proper for 

this Court to enter Judgment under TRCP 668 as the indebtedness 

owed by Frost National Bank is owed to Mohican and not to third 

parties. Ferrell v. First Nat. Bank of Bryan, 576 S.W.2d 677 (Tex. 

Civ. App.-Waco 1979, no writ).

5. In a garnishment proceeding, a garnishee who is discharged and is 
9

not a litigant, and is no more than a stakeholder in the writ of 

garnishment proceeding, is entitled to reasonable compensation in 

protecting his interest in the garnishment proceeding. Hofmann 

Paint Mfg. Co. v. Paint Cottage, Inc., 473 S.W.2d 954, 957 (Tex. Civ. 

App. Austin 1971, no writ). When the answer of the garnishee has 

not been controverted and the garnishee is held liable based on the 

answer, such cost shall be taxed against the defendant. TRCP 677.

6. Frost National Bank is discharged of all liability to Mohican to the 

extent of the sums ordered are paid to Chapco.

Mohican then filed a motion to vacate or reform the modified judgment, arguing 

that: the garnishment was improper while the appeal of the underlying judgment was still 

pending; the trial court was required to hold a trial on Mohican's answer traversing Frost's 

answer and Mohican was not bound by the "interlocutory ruling" on its motion to modify; 

the amount of the judgment was erroneous; and the court erred in ordering Mohican to 

pay Frost's attorneys' fees. After a response by Chapco, the trial court denied Mohican's 

motion to vacate or reform. This appeal followed.

II. Was the Garnishment Premature?

By its fourth issue, Mohican argues that entry of the garnishment judgment was 

premature because the appeal is still pending in the underlying breach of contract case. 

As posited by Mohican, it is true that a trial court cannot enter a final garnishment 

judgment until the judgment in the underlying suit is no longer subject to being set aside, 

reversed, or modified on appeal. See Taylor v. Trans-Cont'l Props., Ltd., 670 S.W.2d 

417, 419 (Tex. App.—Tyler 1984, orig. proceeding); see also Thomas N. Heap, D.D.S., 

Inc. v. Val-Pak of Greater Houston, No. 01-00-00756-CV, 2001 WL 699944, at *3 (Tex. 

App.—Houston [1st Dist.] June 21, 2001, pet. denied) (not designated for publication). 

Here, this Court affirmed the underlying judgment on the jury's verdict against Mohican on 
10

Chapco's breach of contract claim before Mohican filed its brief in this appeal, see 

Mohican Oil & Gas, LLC v. Scorpion Exploration & Prod., Inc., 337 S.W.3d 310, 320-21, 

325 (Tex. App.—Corpus Christi 2011, pet. filed), and Mohican did not challenge our 

disposition of its appeal by filing a petition for review with the supreme court within the 

time period prescribed by the rules. See TEX. R. APP. P. 53.7(a). As such, the 

underlying judgment in this case has reached a point where it is no longer subject to being 

reversed, and the garnishment judgment was not premature for this reason.5 Moreover, 

even were we to assume without deciding that garnishment judgment was premature at 

the time it was entered, we conclude that Mohican's complaint about the timing of the 

garnishment judgment is moot given that Chapco's underlying judgment against Mohican 

is no longer subject to reversal and the controversy between the parties has therefore 

ceased to exist. See Allstate Ins. Co. v. Hallman, 159 S.W.3d 640, 642 (Tex. 2005) 

(holding that "a case becomes moot if a controversy ceases to exist" between the parties) 

(citing Bd. of Adjustment of San Antonio v. Wende, 92 S.W.3d 424, 427 (Tex. 2002)). 

Mohican's fourth issue is overruled.

III. Motion to Modify under Rule 664a

In its third issue, Mohican argues that insufficient evidence supported the trial 

court's denial of its rule 664a motion to modify. By this issue, Mohican challenges 

findings of fact 9, 10, and 11 and conclusions of law 3 and 4 entered by the trial court after 

the hearing on the motion to modify. Because we believe the challenged findings of fact 

actually involve mixed questions of law and fact, we review the challenged findings for an 

 

5

See infra Part V regarding the mootness of Mohican's challenge to appellate attorney's fees.
11

abuse of discretion. See Int'l Freight Forwarding, Inc. v. Am. Flange, 993 S.W.2d 262, 

267 (Tex. App.—San Antonio 1999, no pet.). We defer to the court's factual 

determination, if supported by the evidence, and review the legal conclusions de novo. 

Id. "[T]he trial court abuses its discretion when it fails to properly apply the law to the 

undisputed facts, when it acts arbitrarily or unreasonably, or when its ruling is based on 

factual assertions unsupported by the record." Remington Arms Co. v. Luna, 966 

S.W.2d 641, 643 (Tex. App.—San Antonio 1998, pet. denied). We review the 

conclusions of law de novo. Villagomez v. Rockwood Specialties, Inc., 210 S.W.3d 720, 

727 (Tex. App.—Corpus Christi 2006, pet. denied). Conclusions of law will be upheld on 

appeal if the judgment can be sustained on any legal theory supported by the evidence. 

Mack v. Landry, 22 S.W.3d 524, 528 (Tex. App.—Houston [14th Dist.] 2000, no pet.); 

Spiller v. Spiller, 901 S.W.2d 553, 556 (Tex. App.—San Antonio 1995, writ denied).

Having reviewed the record of the rule 664a hearing, it appears undisputed that, at 

the time Chapco filed its writ, Mohican had written checks in the amount of approximately 

$132,000 from its Frost operating account to vendors, lessors, royalty interest owners, 

and working interest partners and that payment on those checks was outstanding.6 In 

findings 9, 10, and 11, the trial court determined, in relevant part, that: the account in 

question was held in the name of Mohican, alone; only Mohican's principals could 

withdraw money from the account; the account is a "general account"; the money Frost 

holds in the account is owed to Mohican, not to third parties; the "third-party claimants" 

are "merely creditors of Mohican, as is Chapco"; these creditors have no ownership rights 

 

6

The evidence at the hearing showed that $123,000 of the $132,000 was owed to MOG 

Producing, L.P., one of Mohican's working interest owners. One of the limited partners in MOG Producing 

is John Newman, who is also a Mohican principal.
12

to the account; and Mohican did not adequately trace the money owed to these creditors 

to establish ownership of the funds. 

Mohican argues that these findings and conclusions were erroneous because the 

recipients of the outstanding checks had an equitable and beneficial ownership interest in 

those funds, which were therefore not subject to garnishment. See Sw. Bank & Trust 

Co. v. Calmark Asset Mgmt., Inc., 694 S.W.2d 199, 200 (Tex. App.—Dallas 1985, writ 

ref'd n.r.e.) ("Neither trust funds nor the funds of another deposited by a defendant into an 

account in his own name is subject to garnishment by the defendant's creditors."); see 

also RepublicBank Dallas v. Nat'l Bank of Daingerfield, 705 S.W.2d 310, 311 (Tex. 

App.—Texarkana 1986, no writ) (holding that in garnishment cases, equitable title to the 

property the garnishing creditor seeks to reach prevails over bare legal title to the 

property). Specifically, Mohican argues that under its JOA with its third party 

non-operator working interest owners, Mohican was obligated to hold the funds of the 

third-party owners; for this reason, Mohican argues that certain funds in the Frost account 

were beneficially owned by the third-party owners and not subject to garnishment. 

However, having reviewed the applicable portion of the JOA on which Mohican 

relies, we disagree that it applies to summarily block the garnishment, as Mohican posits. 

The entire provision, which is contained in the "Rights and Duties of Operator" section of 

the JOA and is titled "Custody of Funds," is as follows: 

Operator shall hold for the account of Non-Operators any funds of 

the Non-Operators advanced or paid to the Operator, either for the conduct 

of operations hereunder or as a result of the sale of production from the 

Contract Area, and such funds shall remain the funds of the Non-Operators 

on whose account they are advanced or paid until used for their intended 

purpose or otherwise delivered to the Non-Operators or applied toward the 

payment of debts . . . . Nothing in this paragraph shall be construed to 
13

establish a fiduciary relationship between Operator and Non-Operator for 

any purpose other than to account for Non-Operator funds as herein 

specifically provided. Nothing in this paragraph shall require maintenance 

by Operator of separate accounts for the funds of Non-Operators unless the 

parties specifically agree.

At the most, this provision protects funds "advanced or paid" to Mohican by its partners, 

the third-party non-operator working interest owners under the JOA. It is undisputed that 

money advanced by Mohican's working interest owners is initially held in Mohican's 

escrow account but is then transferred to the operating account to pay drilling and 

operational costs. It is also undisputed that revenue from all of Mohican's oil and gas 

operations are deposited into the operating account. From the operating account, 

Mohican's working interest owners then receive their allotted portion of the revenues 

minus their portion of the drilling and other operating costs. 

Assuming without deciding that the above provision does create a sort of special 

account not subject to garnishment, see Calmark, 694 S.W.2d at 200 (noting that it is a 

defense to garnishment if the funds sought to be garnished are funds being held in trust 

by the debtor for another party), it does so only for those funds advanced by Mohican's 

partners. In this regard, the trial court found that Mohican did not adequately trace 

ownership of the funds in the operating account. Because we conclude this finding was 

supported by the evidence, we defer to the trial court. See Int'l Freight Forwarding, Inc., 

993 S.W.2d at 267. 

At the hearing, John Newman, one of the principals of Mohican, testified that the 

revenues from all of the oil and gas leases Mohican operates are commingled into its one

operating account at Frost. Newman also testified that Mohican pays royalties, vendors, 

taxes, working interest partners, permits, fees, and surface damages out of this one 
14

operating account. Tricia Guerra, Mohican's contract oil and gas accountant, confirmed 

that all revenues from the leaseholds operated by Mohican come into the one operating 

account. However, based on the bank reconciliation statement admitted at the hearing, 

Guerra could not identify which funds were coming in from which leaseholds. Guerra 

testified that at the time the writ of garnishment was served, all but $15,426.68 of the 

funds in the operating account were owed in outstanding checks to various third parties. 

But in her testimony, Guerra could not link the checks to specific leaseholds. Neither 

could she identify with certainty the nature of the payees; in other words, she could not 

say for certain whether the checks were written to vendors, royalty owners, or working 

interest owners. Crucially, there was no evidence presented at the hearing identifying 

specific, traced funds in the operating account that originated in funds advanced by 

Mohican's working interest owners, which are arguably the only funds protected by the 

"Custody of Funds" JOA provision.

Mohican also argues that Chapco failed to carry its burden at the hearing. 

Mohican argues that Chapco was required "to prove that Frost was actually indebted to 

Mohican in the amount requested" in the writ of garnishment and that Chapco failed to do 

so. Mohican misstates the parties' burdens at a rule 664a hearing. To avoid a rule 

664a motion to dissolve or modify, the garnishor need only prove the grounds relied upon 

for the writ, i.e., whether it has a valid, subsisting judgment and, within its knowledge, the 

judgment debtor does not possess property in Texas subject to execution sufficient to 

satisfy the judgment. See Exterior Bldg. Supply, Inc. v. Bank of Am., N.A., 270 S.W.3d 

769, 771 (Tex. App.—Dallas 2008, no pet.); see also TEX. R. CIV. P. 664a ("The writ shall 

be dissolved unless, at such hearing, the [garnishor] shall prove the grounds relied upon 
15

for its issuance . . . ."). "Apart from proof of the grounds supporting issuance of the writ, 

the party moving to dissolve the writ bears the burden to prove the ground for dissolution." 

Walnut Equip. Leasing Co. v. J–V Dirt & Loam, 907 S.W.2d 912, 915 (Tex. App.—Austin 

1995, writ denied). Specifically, the garnishor does not have to prove that the garnishee 

is indebted to the defendant debtor. Swiderski v. Victoria Bank & Trust Co., 706 S.W.2d 

676, 678 (Tex. App.—Corpus Christi 1986, writ ref'd n.r.e.).

Regardless, as previously discussed, Chapco did produce evidence refuting 

Mohican's claim that the funds in the operating account were beneficially owned by third 

parties. Through its examination of witnesses, Chapco showed that the funds in the 

account were not traced to those funds advanced by Mohican's partners. Chapco 

showed that the account in question is Mohican's general operating account into which all 

revenues are deposited and from which Mohican pays not only working interest owners 

and royalty but also vendors and other creditors. From the account statements admitted 

at the hearing, Mohican's accountant could not trace which funds were coming in from 

which wells. Neither could she pinpoint the nature of the outstanding checks, i.e., 

whether the checks were written to vendors, working interest owners, or royalty owners. 

Finally, Chapco admitted into evidence account documents showing that Mohican was 

the only party on the operating account and that only Mohican's principals had authority to 

withdraw money from the account. See Bank One, Tex., N.A. v. Sunbelt Sav., F.S.B., 

824 S.W.2d 557, 558 (Tex. 1992) ("Funds placed with a bank ordinarily become general 

deposits which create a debtor-creditor relationship between the bank and its 

depositor."). In sum, there was evidence to support the trial court's findings and 

conclusions that the money in the operating account was owed by Frost to Mohican and 
16

not to third-parties and was therefore subject to garnishment.

Mohican's third issue is overruled.

IV. Was Mohican Entitled to a Trial Under Rule 674?

By its first issue, Mohican argues that the trial court erred in refusing to hold a trial 

after Mohican traversed Frost's answer under rule 673. See TEX. R. CIV. P. 673 ("The 

defendant [debtor] may also, [by stating that it has good reason to believe and does 

believe that the the garnishee's answer is incorrect], controvert the answer of the 

garnishee."). Rule 674 provides: "If a garnishee whose answer is controverted, is a 

resident of the county in which the proceeding is pending, an issue shall be formed under 

the direction of the court and tried as in other cases." TEX. R. CIV. P. 674. It is 

undisputed that the garnishee, Frost, is a resident of the county where Chapco's 

application was filed and that Mohican controverted Frost's answer. The question then 

becomes whether Mohican was entitled to a trial under rule 674 on the identical issue it 

raised in its motion to modify and litigated in an evidentiary hearing on that motion. We 

conclude that it was not.

Mohican cites the applicable garnishment rules and one case from this Court, 

Swiderski v. Victoria Bank and Trust, 706 S.W.2d at 678. Like that of Mohican, our 

research has yielded similarly sparse results. We have found little to no legal authority 

on point for the circumstance presented in this case—where a substantive evidentiary 

hearing is held on the defendant debtor's rule 664a motion and, at which, the garnishee's 

indebtedness to the debtor is litigated by the parties.

As noted by Mohican, this Court stated in Swiderski that "[a] Rule 664a hearing is a 

distinct proceeding from the writ of garnishment proceeding between the garnishor and 
17

garnishee." Id. We further noted that "[t]he issue to be determined in a Rule 664a 

hearing is [whether] the plaintiff [judgment creditor] . . . prove[d] the grounds relied upon 

for its (the writ of garnishment's) issuance" and not whether the plaintiff proved that the 

garnishee bank is indebted to the defendant debtor; the defendant does not carry the 

latter burden at a rule 664a hearing. Id. 

Yet, at the rule 664a hearing in this case, whether Chapco had proved the grounds 

relied upon for its writ—i.e., whether it had a valid, subsisting judgment and made an 

affidavit stating that, within its knowledge, Mohican did not possess property in Texas 

subject to execution sufficient to satisfy the judgment—was not at issue. Rather, at the 

hearing, the substantive issue of Frost's indebtedness to Mohican was litigated. 

Mohican presented evidence at the hearing in support of its theory that all but 

approximately $15,000 of the funds in its operating account was beneficially owned by 

third parties and, thus, Frost was not indebted to Mohican in the amount prayed for in 

Chapco's writ. Chapco presented evidence and argument in rebuttal to support its 

theory that Mohican was the owner of the funds in the Frost operating account. In other 

words, we believe that what was procedurally conducted as a rule 664a hearing was in 

actuality an evidentiary hearing that amounted to the garnishor-garnishee proceeding we 

contemplated by our statement in Swiderski. See id. Both parties had the opportunity 

to present evidence and argument—in short, a trial was held on Mohican's third-party 

ownership issue. That Mohican later raised the identical issue in its rule 673 answer 

controverting Frost's answer did not trigger a do-over of the substantive proceeding 

already afforded to the parties. We are not persuaded by Mohican's argument that "strict 

compliance" with the applicable garnishment rules required the trial court to hold what 
18

would have essentially been a second trial in this case. To conclude otherwise would 

exalt form over substance in a case where the parties were given the opportunity to 

present their evidence and argument to the trial court, as contemplated by the rules. The 

trial court did not err in refusing to hold an additional trial for this reason.

Mohican further argues, in relevant part, that it was entitled to a rule 674 trial 

because Frost had not yet filed its answer at the time of the rule 664a hearing and 

"Mohican could not know how the Bank would answer the lawsuit." Mohican argues that 

because the amount referred to in Frost's answer ($174,203.88) was greater than the 

amount litigated at the hearing ($148,307.56), "Mohican had to have the opportunity to 

traverse the Bank's 'incorrect' answer because Mohican was 'not satisfied' with it" and 

form issues that required trial. See TEX. R. CIV. P. 673, 674. In its controverting answer, 

however, the only issue formed by Mohican was whether the amount of indebtedness 

claimed by Frost in its answer was actually beneficially owned by third parties. In other 

words, Mohican was "not satisfied" by Frost's answer for the identical reason proffered in 

its motion to modify and fully litigated in the earlier evidentiary hearing. To the extent 

Frost's answer involved a greater dollar amount than the amount litigated at the hearing, 

we note that Mohican and Chapco engaged in extensive motion practice after the initial 

judgment was entered, in which the exact amount of the garnishment judgment was 

discussed and eventually modified to reflect the amount of the underlying judgment. 

Mohican's rule 673 answer—the answer that would have formed the issues for a rule 674 

trial—did not raise any arguments regarding a discrepancy between the underlying 

judgment and the amount of indebtedness alleged by Frost in its answer. That issue was 

litigated by the parties in their motion practice on Chapco's motion to enter judgment and 
19

the responses that followed. Thus, based on the foregoing, we again cannot conclude 

the trial court erred in refusing to hold a rule 674 trial on Mohican's rule 673 answer. 

In sum, having already determined in our disposition of Mohican's third issue that 

the evidence and law supported the trial court's findings and conclusions regarding 

Mohican's third-party ownership issue, we conclude that there was no error when the trial 

court declined to hold a second trial on the same issue. Mohican's first issue is 

overruled.

V. Attorney's Fees and Costs in the Judgment

By its second issue, Mohican complains of certain fees and costs awarded to 

Chapco in the garnishment judgment. 

First, Mohican argues that the trial court erred in including appellate attorney's fees 

in the amount of $15,801.36. That amount represented the attorney's fees awarded in 

the underlying judgment contingent on an unsuccessful appeal by Mohican to the court of 

appeals. Mohican claims that when the garnishment judgment was entered in 

September 2010, the appeal of the underlying judgment was still pending. This is true. 

However, as discussed previously, this Court handed down its opinion in the underlying 

appeal in January 2011, affirming the verdict in favor of Chapco and overruling Mohican's 

appellate issues against Chapco. Thus, when Mohican filed its brief in this garnishment 

appeal on April 13, 2011, we had already disposed of the appeal. And as discussed 

previously, Mohican did not file a petition for review with the Texas Supreme Court 

contesting our disposition of its appeal against Chapco. Because Mohican was 

unsuccessful in prosecuting its appeal in this Court, the fees awarded in the judgment are 

no longer contingent; Chapco is entitled to the fees enumerated in the underlying 
20

judgment. Mohican's argument challenging the award of appellate attorney's fees is 

therefore moot, and the garnishment judgment is not erroneous in this regard. See 

Allstate Ins. Co., 159 S.W.3d at 642 (citation omitted).

Second, Mohican argues that there was no evidentiary basis to support the award 

of $4,082.81 in court costs from the underlying proceeding being included in the 

garnishment judgment. As a general rule, the successful party to a suit shall recover of 

its adversary all costs incurred in the suit. TEX. R. CIV. P. 131. The allocation of costs is 

within the trial court's discretion and, absent an abuse of discretion, cannot be overturned 

on appeal. Labor v. Warren, 268 S.W.3d 273, 278 (Tex. App.—Amarillo 2008, no pet.) 

(citing Madison v. Williamson, 241 S.W.3d 145, 157 (Tex. App.—Houston [1st Dist.] 2007, 

pet. denied)). Section 31.007(a) of the Texas Civil Practice and Remedies Code 

prescribes that:

Each party to a suit shall be responsible for accurately recording all costs 

and fees incurred during the course of a lawsuit, if the judgment is to provide 

for the adjudication of such costs. If the judgment provides that costs are to 

be borne by the party by whom such costs were incurred, it shall not be 

necessary for any of the parties to present a record of court costs to the 

court in connection with the entry of a judgment.

TEX. CIV. PRAC. & REM. CODE ANN. § 31.007(a) (West 2008). "Although somewhat vague 

as to procedure," section 31.007(a) "clearly does not require a formal presentation of 

evidence of a party's costs during trial." Varner v. Howe, 860 S.W.2d 458, 466 (Tex. 

App.—El Paso 1993, no writ). "All that seems to be required is that the successful party 

present . . . an itemized list of costs and fees incurred during the lawsuit." Id.; see Labor, 

268 S.W.3d at 279.

Here, Chapco asserts in its brief that "the amount of costs was explained to the trial 
21

court who had the authority to grant the recovery of costs." We accept this assertion of 

fact as true because Mohican does not contradict it. See TEX. R. APP. P. 38.1(g) ("In a 

civil case, the court will accept as true facts stated unless another party contradicts 

them."). Because the trial court was provided an explanation regarding the amount of 

court costs in the underlying case, we cannot say the court abused its discretion in 

including those costs in the garnishment judgment. See Labor, 268 S.W.3d at 278-79; 

Varner, 860 S.W.2d at 466. 

Third, Mohican argues that the trial court erred by including in the garnishment 

judgment the $347.00 in costs for the garnishment proceedings. Mohican cites rule 677, 

which provides: "where the answer of the garnishee has not been controverted . . . , 

such costs shall be taxed against the defendant; where the answer is contested, the costs 

shall abide the issue of such contest." TEX. R. CIV. P. 677. Mohican argues that 

because there was no trial of the issues formed, no prevailing party was determined and 

no costs could be assessed. For the same reasons enumerated above in our disposition 

of Mohican's first issue, we are not persuaded. The trial court was not required to hold 

the trial Mohican is referring to in this argument because no issues were formed by 

Mohican's controverting answer other than those already litigated in the earlier 

evidentiary hearing. And Chapco prevailed in that contest, proving that the funds in the 

Frost operating account were owned by Mohican. Moreover, because Mohican did not 

controvert Frost's answer on any ground other than the third-party ownership issue which 

was already disposed of, Mohican's answer was effectively no controversion under rule 

677, which then allowed the costs to be taxed against Mohican, the defendant. See id. 

For these reasons, the trial court did not err in assessing costs from the garnishment 
22

proceeding against Mohican.

Finally, Mohican argues that it was improperly ordered to pay $750 in attorney's 

fees to Frost. Again, Mohican cites rule 677 and part of its argument centers on the trial 

court's decision not to hold a rule 674 trial. Because it controverted Frost's answer, 

Mohican argues that reasonable compensation to Frost, the garnishee, should have 

"abide[d] the issue of such contest." See id. However, again, for the same reasons 

provided in the foregoing paragraph, we are not persuaded that Mohican was entitled to a 

trial on the issue presented in its controverting answer.

Rather, as Mohican further argues, the trial court erred in awarding Frost's 

attorney's fees because there is no evidence in the record supporting the amount of fees 

awarded and Mohican did not stipulate to the amount. In its findings, the trial court 

stated that "$750.00 is a reasonable fee incurred by Frost National Bank in answering and 

responding to the Writ of Garnishment."7 This Court has held that the "reasonableness 

of attorney's fees is a question of fact and must be supported by competent evidence. . . . 

A court does not have authority to adjudicate the reasonableness of attorney's fees on 

judicial knowledge without the benefit of evidence." Bullock v. Foster Cathead Co., 631 

S.W.2d 208, 212 (Tex. App.—Corpus Christi 1982, no writ) (citing Great Am. Reserve Ins. 

Co. v. Britton, 406 S.W.2d 901, 907 (Tex. 1966); Redisco, Inc. v. Laredo Mopac 

Employees Credit Union, 516 S.W.2d 197, 199 (Tex. Civ. App.—San Antonio 1974, no 

writ)). We find no evidence in the record regarding the reasonableness of Frost's 

 

7

The trial court also found that "Mohican did not object to Frost National Bank's request for 

$750.00 in attorney's fees." This finding is not supported by the record. In its motion to vacate, modify, 

correct, or reform the judgment—which preceded the modified judgment that is the subject of this 

appeal—Mohican objected to the award of attorneys' fees to Frost. Mohican did not waive the argument, 

as suggested by the trial court's finding.
23

attorney's fees. Such evidence was required, and the trial court erred in determining that 

$750 was a reasonable amount of fees without such evidence.

We overrule Mohican's second issue to the extent it complains of the appellate 

attorney's fees and court costs awarded in the garnishment judgment. We sustain 

Mohican's second issue to the extent it challenges the assessment of Frost's attorney's 

fees against Mohican as no evidence was presented to the trial court supporting the 

reasonableness of that award.

VI. Conclusion

We reverse the portion of the garnishment judgment ordering Mohican to pay 

Frost's attorney's fees and render judgment that Frost take nothing by its plea for fees. 

We affirm the remainder of the garnishment judgment.

NELDA V. RODRIGUEZ

Justice

Delivered and filed the 1st

day of December, 2011.