NUMBER 13-05-00532-CV

COURT OF APPEALS

THIRTEENTH DISTRICT OF TEXAS

CORPUS CHRISTI - EDINBURG

 

SOUTHERN INSURANCE COMPANY AND

H. M. ADAMS, D/B/A H. M. JR. AUTO SALES, Appellants,

v.

POAL, INC., D/B/A SOUTH TEXAS AUTO AUCTION, Appellee.

 

On appeal from the County Court at Law No. 2 

of Hidalgo County, Texas.

 

MEMORANDUM OPINION

Before Justices Yañez, Rodriguez, and Vela 

Memorandum Opinion by Justice Rodriguez

This summary judgment proceeding arises from three parties claiming a right to

proceeds from a bond. Appellants, Southern Insurance Company (Southern) and H.M.

Adams d/b/a H.M. Jr. Auto Sales (H.M. Adams), contend that the trial court erred in
"The penal sum, which is the face amount of the bond, is the maximum amount the surety can be 1

required to pay in the event of a default by the principal." Pavecon, Inc. v. R-Com, Inc., 159 S.W .3d 219, 221

(Tex. App.–Fort W orth 2005, no pet.) (citing Great Am. Ins. Co. v. N. Austin Mun. Util. Dist. No. 1, 908 S.W .2d

415, 426-27 (Tex. 1995)).

2

granting summary judgment in favor of appellee, POAL, Inc., d/b/a South Texas Auto

Auction (STAA), and in awarding attorney's fees to STAA. Southern also contends that the

trial court erred in denying its counter-motion for summary judgment. We reverse and

remand.

I. Background

Southern, a surety, issued a motor vehicle dealer bond in the amount of $25,000

on behalf of its principal, Darline Jamison d/b/a Karz R Us (Jamison). See TEX. TRANS.

CODE ANN. § 503.033 (Vernon 2007). STAA, H.M. Adams, and San Antonio Auto Auction

obtained default judgments against Jamison and each submitted a written claim against

the bond to Southern; H.M. Adams asserted a claim for $16,390 plus attorney's fees,

STAA a claim for $26,825 plus attorney's fees, and San Antonio Auto Auction a claim for

$15,431.35 plus attorney's fees—the cumulative total of which exceeded the $25,000 penal

sum of the bond. Southern advised the claimants that it would interplead the funds into 1

the court if they could not agree on the distribution of the $25,000 within thirty days of the

notification. Before the thirty days elapsed, STAA filed suit against Southern.

A. Claims and Counterclaims

In its lawsuit against Southern, STAA asserted a breach of contract claim alleging

Southern failed to pay the judgment under the bond and proximately caused STAA's

damages. STAA sought attorney's fees "as allowed by the contracts in breach and

Chapter 38, Texas Civil Practice & Remedies Code." Southern filed a general denial. It
3

also filed an interpleader action bringing H.M. Adams and San Antonio Auto Auction into

the lawsuit because Southern could not determine its liability as between the three

claimants and tendered the disputed $25,000 into the registry of the court. Claiming to be

a disinterested stakeholder, Southern sought to recover its costs and attorney's fees

against STAA. Southern also sought to enjoin all claimants from instituting further suits

against it and from making any effort to collect from Southern any judgments rendered

against Jamison.

H.M. Adams and San Antonio Auto Auction filed counterclaims against Southern

each asserting priority of its respective judgment against the bond proceeds and claiming

that, as a result of Southern's failure to honor its obligation pursuant to the bond, it had

been injured. Each sought recovery of proceeds from the $25,000 bond issued by

Southern. H.M. Adams and San Antonio Auto Auction also generally denied Southern's

request for attorney's fees, claiming Southern had not fulfilled its duty under the bond.

Southern filed a general denial and also requested attorney's fees be awarded against

H.M. Adams and San Antonio Auto Auction.

B. Summary Judgment Motions

1. STAA's Motion for Summary Judgment

STAA filed a traditional motion for summary judgment claiming priority of judgment

as against H.M. Adams and requesting that the proceeds of the bond be released to STAA.

STAA attached the affidavit of Larry Blackwell, STAA's employee, as evidence. The

affidavit set out facts regarding STAA's judgment against Jamison and the bond issued by

Southern. After acknowledging Southern had unconditionally tendered the disputed

$25,000 into the registry of the court, Blackwell stated STAA was "seeking to be the
4

recipient of the Bond." The bond was attached to Blackwell's affidavit as an exhibit. STAA

did not request judgment against Southern. It did not allege grounds or offer authority for

judgment against Southern on its breach of contract claim. It did not offer evidence

supporting its breach of contract claim asserted against Southern. And, although STAA

supplemented its motion with the affidavit of counsel, Charlie J. Cilfone, setting out

professional services rendered in this case and the amount charged, STAA neither urged

nor requested an award of attorney's fees.

Southern responded that STAA had not established as a matter of law that it had

priority to the $25,000 over the other claimants. H.M. Adams also responded that STAA

did not meet its burden, the law did not support its argument, and STAA's pleadings were

defective in that there were discrepancies in the dates pleaded. H.M. Adams presented

authority and evidence in support of its position that H.M. Adams's judgment against

Jamison had priority over STAA's judgment. H.M. Adams also argued that the trial court

should deny STAA's motion because

the only judgment capable of being rendered on [STAA's motion] will not

dispose of all parties and/or claims. Specifically, [STAA] has not addressed

the issue of its own attorney's fees in its motion. Moreover, [STAA's] Motion

for Summary Judgment does not contemplate and/or disprove any element

of H.M. Adams' counterclaim against [Southern] as a matter of law.

2. H.M. Adams's Amended Motion for Summary Judgment

H.M. Adams also filed an amended motion for summary judgment claiming that it

had shown itself to have a superior right to the proceeds of the bond because its judgment

against Jamison allegedly became final before STAA's judgment. It also argued that

although STAA should not be awarded attorney's fees, H.M. Adams was entitled to

reasonable and necessary attorney's fees in defense of this interpleader action and in its
On appeal, Southern does not challenge the trial court's denial, if any, of injunctive relief, and so we 2

do not consider it here. See TEX. R. APP. P. 47.1; Martinez v. El Paso County, 218 S.W .3d 841, 844 (Tex.

App.–El Paso 2007, pet. dism'd) ("W hen reviewing a civil matter, an appellate court has no discretion to

consider an issue not raised in the appellant's brief.").

5

pursuit to recover the proceeds of the bond. Finally, H.M. Adams urged that because of

Southern's alleged failure and/or refusal to fulfill its duty under the bond, attorney's fees

should not be awarded to Southern. In response, Southern challenged H.M. Adams's

request for attorney's fees incurred in this interpleader action as without authority. STAA

filed no response to H.M. Adams's motion for summary judgment.

3. Southern's Counter-Motion for Summary Judgment

Southern filed a traditional counter-motion for summary judgment. Alleging it had

satisfied its obligation under the bond by establishing the three elements of its interpleader

action as a matter of law, Southern sought discharge from further liability and an injunction

on future actions on the bond at issue. As a disinterested stakeholder, Southern also 2

argued its entitlement to attorney's fees and provided the affidavit of Laird E. Lawrence to

establish attorney's fees and expenses totaling $5,671.48; fees and expenses that were

incurred in connection with the interpleader.

STAA's response did not challenge Southern's position that it had satisfied the

elements of its interpleader actions. STAA only responded to Southern's request for

attorney's fees. It objected to Lawrence's affidavit on the ground that the request for

attorney's fees was not reasonable or necessary because "[a]fter Southern interpled

disputed funds into the registry of the Court, [its] involvement in this case was no longer

necessary." Correspondence from STAA's counsel to Southern's counsel, dated

November 24, 2004, and attached as an exhibit to STAA's response, provided as follows:
6

"Please note, I am specifically objecting to any attorney's fees accruing which may diminish

the amount of the judgment owed my client. That is, if you accrue attorney's fees, I expect

those fees to come from sources other than the amount available to satisfy my [client's]

judgment."

4. San Antonio Auto Auction

San Antonio Auto Auction did not file a motion for summary judgment and is not a

party to this appeal.

C. The Judgment

Concluding STAA had established liability against Southern, H.M. Adams, and San

Antonio Auto Auction, the trial court granted STAA's motion, awarded court costs and

attorney's fees against Southern, and denied Southern's request for attorney's fees. After

rendering judgment for STAA and, after acknowledging that all parties appeared by their

counsel of record, the judgment set out the following: "After considering [STAA's] Motion

for Summary Judgment and arguments of counsel, this Court is of the opinion that all

issues of fact and of law in dispute as between the parties of this lawsuit have been

disposed of by summary judgment." The judgment also provided that STAA "had

established liability against the Defendant and Interpleaders." It found that Southern had

failed to pay bank drafts drawn by Jamison for the purchase of motor vehicles from STAA's

place of business, that Jamison had breached her contract for purchase as it relates to

those motor vehicles, and that STAA should recover damages from Southern in the

amount of $31,825, including actual damages of $25,825 and attorney's fees of $5,000.

The judgment also awarded costs of suit against Southern. In addition, Southern's

recovery of attorney's fees requested in its counter-motion for summary judgment based
7

on its alleged status as a disinterested stakeholder in the interpleader action was denied.

Finally, the judgment provided that "[a]ll relief not given is denied."

II. Standard of Review

The standard of review for a traditional summary judgment is well established: the

movant must show there is no genuine issue of material fact and that it is entitled to

judgment as a matter of law. See TEX. R. CIV. P. 166a(c); Sw. Elec. Power Co. v. Grant,

73 S.W.3d 211, 215 (Tex. 2002); Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548 (Tex.

1985); Mercier v. Southwestern Bell Yellow Pages, Inc., 214 S.W.3d 770, 773 (Tex.

App.–Corpus Christi 2007, no pet.). A party moving for traditional summary judgment must

conclusively negate at least one essential element of each of the non-moving party's

causes of action or conclusively establish each element of an affirmative defense. Sci.

Spectrum, Inc. v. Martinez, 941 S.W.2d 910, 911 (Tex. 1997). The propriety of summary

judgment is a question of law, and we thus review the trial court's ruling de novo. Provident

Life & Accident Ins. Co. v. Knott, 128 S.W.3d 211, 215 (Tex. 2003); Ortega v. Nat'l Bank,

97 S.W.3d 765, 771 (Tex. App.–Corpus Christi 2003, no pet.) (op. on reh'g).

When both sides move for summary judgment and the trial court grants one motion

and denies the other, we will review both sides’ summary judgment evidence and

determine all questions presented. Creditwatch, Inc. v. Jackson, 157 S.W.3d 814, 816 n.7

(Tex. 2005) (citing Schneider Nat'l Carriers, Inc. v. Bates, 147 S.W.3d 264, 290 n.137 (Tex.

2004)); FM Props. Oper. Co. v. City of Austin, 22 S.W.3d 868, 872 (Tex. 2000). The

reviewing court should render the judgment that the trial court should have rendered. See

FM Props., 22 S.W.3d at 872. However, before we may reverse summary judgment for
Having brought five issues on appeal, Southern withdrew its first issue complaining of the trial court's 3

finding that Southern failed to pay bank drafts. For convenience, we have renumbered the issues and will

address them as renumbered.

8

one party and render judgment for the other party, both parties must have sought final

judgment relief in their cross-motions for summary judgment. CU Lloyd’s of Tex. v.

Feldman, 977 S.W.2d 568, 569 (Tex. 1998) (per curiam). If the motions are not final

judgment summary judgment motions, we cannot render judgment on them. See id.;

Montgomery v. Blue Cross & Blue Shield of Tex., Inc., 923 S.W.2d 147, 152 (Tex.

App.–Austin 1996, writ denied) (en banc).

III. Scope of Review

The scope of review in an appeal from summary judgment is also limited.

Capitol Indem. Corp. v. Kirby Rest. Equip. & Chem. Supply Co., 170 S.W.3d 144, 146

(Tex. App.–San Antonio 2005, pet. denied). A motion for summary judgment must

expressly present the grounds upon which it is made, and it must stand or fall on these

grounds alone. See TEX.R.CIV.P.166a(c) (requiring the movant's motion to explicitly state

the specific grounds for the summary judgment); Sci. Spectrum, 941 S.W.2d at 912 (citing

McConnell v. Southside Indep. Sch. Dist., 858 S.W.2d 337, 341 (Tex. 1993)).

IV. Analysis

A. STAA's Grounds for Summary Judgment

By its first issue, Southern contends that the trial court erred in entering judgment 3

against Southern for $31,825 plus interest and costs because the only relief requested by

STAA in its motion for summary judgment was the release of the interpled proceeds of
9

Southern's bond. By issue two, Southern contends that the trial court erred in awarding

attorney's fees to STAA because STAA did not ask for fees in its motion. We agree.

In its motion for summary judgment, STAA sought the release of the $25,000

deposited by Southern into the registry of the court. STAA claimed that it should receive

the funds because of its alleged priority of judgment against Jamison. The evidence

offered by STAA presented facts related to its argument that it had priority over H.M.

Adams to interpled funds. STAA's evidence established that Southern deposited the bond

procee2ds into the registry of the court and that STAA was "seeking to be the recipient of

the Bond."

The judgment, however, determined liability against H.M. Adams and San Antonio

Auto Auction, and contractual liability against Southern. The judgment also awarded fees

against Southern. This was not the relief requested by STAA in its motion for summary

judgment.

STAA is not entitled to a summary judgment on a ground not specifically stated in

its motion. See TEX. R. CIV. P.166a(c); Sci. Spectrum, 941 S.W.2d at 912. STAA did

not present Southern's breach of contract liability or its entitlement to attorney's fees as a

ground in its motion for summary judgment. Thus, we conclude that the trial court erred

in granting STAA's summary judgment against Southern and granting STAA attorney's

fees. We sustain Southern's first and second issues.

B. Southern's Counter-Motion for Summary Judgment on Interpleader Action

By its third issue, Southern contends that the trial court erred in denying its countermotion for summary judgment because Southern established that it should be discharged

from the interpleader action as a matter of law. By its fourth issue, Southern contends that
10

the court also erred in denying its motion for attorney's fees because it established its right

to attorney's fees as a disinterested stakeholder and the reasonableness of the amount of

the fees as a matter of law.

Texas Rule of Civil Procedure 43 authorizes a stakeholder who receives multiple

claims to property in its possession to join all claimants in a lawsuit and deposit the

disputed property into the registry of the court. TEX. R. CIV. P. 43; see Olmos v. Pecan

Grove Mun. Util. Dist., 857 S.W.2d 734, 741 (Tex. App.–Houston [14th Dist.] 1993, no writ);

Bryant v. United Shortline Inc., 984 S.W.2d 292, 296 (Tex. App.–Fort Worth), aff'd, 972

S.W.2d 26 (Tex. 1998). In an interpleader action, the interpleading party is entitled to

interpleader relief if: (1) it is either subject to or has reasonable grounds to anticipate rival

claims to the same fund or property; (2) it has not unreasonably delayed in filing its

interpleader action; and, (3) it has unconditionally tendered the fund or property into the

registry of the court. Hanzel v. Herring, 80 S.W.3d 167, 173 (Tex. App.–Fort Worth 2002,

no pet.) (citing Bryant, 984 S.W.2d at 296).

Southern's summary judgment evidence established that Southern received three

claims against the bond issued on behalf of Jamison, the cumulative total of which

exceeded $25,000. The summary judgment evidence also showed that Southern advised

the claimants that it would interplead the funds into the court if they could not agree on the

distribution of the $25,000 within thirty days of the notification. Before the thirty days

elapsed, STAA initiated this lawsuit. After being served, Southern answered the lawsuit

and filed the interpleader action. It is also uncontested that the $25,000 was tendered,

unconditionally, into the registry of the court.
11

From our review of the evidence in this summary judgment proceeding, we conclude

that Southern has shown there is no genuine issue of material fact regarding the three

elements of the interpleader action. We sustain the third issue. However, for reasons set

out below regarding the finality of judgment, we cannot render judgment discharging

Southern. See Lehmann v. Har-Con Corp., 39 S.W.3d 191, 205-06 (Tex. 2001); Feldman,

977 S.W.2d at 569; Montgomery, 923 S.W.2d at 152. We also decline to address

Southern's fourth issue because the award of attorney's fees in the interpleader action is

dependent on the resolution of other claims that remain and is not dispositive of this

appeal. TEX. R. APP. P. 47.1.

V. Finality of Judgment

In this case, it appears by the language of the judgment that the trial court intended

the judgment to be final when it set out "that all issues of fact and of law in dispute as

between the parties of this lawsuit have been disposed of by summary judgment," that

STAA "had established liability against the Defendant and Interpleaders," and that "[a]ll

relief not given is denied." There is no presumption of finality for summary judgment

orders, however, and although the judgment in this case contains unequivocal statements

of finality, the motions did not ask for judgments on all claims and for all parties. See

Lehmann, 39 S.W.3d at 205-06.

Among other things, the priority of the three judgments against Jamison was not

resolved. As between STAA, H.M. Adams, and San Antonio Auto Auction, the resolution

of the priority issue will determine the order in which the judgments are to be paid. This

is important because the three judgments combined exceed the bond's $25,000 penal limit.

Southern, STAA, and H.M. Adams argued priority in their summary judgment motions. The
12

judgment did not address STAA's priority. Neither did the underlying judgment dispose of

H.M. Adams's priority claims when it granted STAA's motion and denied Southern's

request for attorney's fees, even by implication as urged by H.M. Adams.

Also, necessary to concluding the interpleader action is a determination of

Southern's status as an innocent stakeholder, which will affect the award of attorney's fees.

"The Texas rule is that the innocent stakeholder in an interpleader is entitled to

attorney's fees, to be paid out of the impleaded fund." U.S. v. Ray Thomas Gravel Co.,

380 S.W.2d 576, 581 (Tex. 1964). Southern claims that it is undisputed that Southern is

a disinterested stakeholder. STAA, however, asserted breach of contract against

Southern, and H.M. Adams and San Antonio Auto Auction, in their counter-claims, alleged

that Southern failed or refused to permit the parties to recover under the bond. The

contract actions are still pending and their resolution will impact Southern's status as a

disinterested stakeholder and the award of attorney's fees. See, e.g., Union Gas Corp. v.

Gisler, 129 S.W.3d 145, 153 (Tex. App.–Corpus Christi 2003, no pet.) (concluding that a

stakeholder could not recover attorney's fees because it was responsible for the conflicting

claims to the funds and created its own predicament). And, to the extent the claims for

breach of contract may be determined to be independent of the interpleader action, the

issue of attorney's fees remains. Finally, the judgment did not dispose of, or even identify,

San Antonio Auto Auction as a party.

Based on the above, although the trial court intended the judgment to be final, we

conclude that all claims and parties have not been disposed of by the trial court. The

record fails to show adequate motions or other legal basis for the trial court's disposition

regarding all claims and all parties. See Lehmann, 39 S.W.3d at 206; First Nat'l Bank v.
13

De Villagomez, 54 S.W.3d 345, 348 (Tex. App.–Corpus Christi 2001, pet. denied).

Therefore, we will consider the judgment as final—erroneous, but final and appealable.

See Lehmann, 39 S.W.3d at 200. Also, because the parties did not seek final judgment

relief by their motions as to all claims and all parties, we cannot render judgment on them.

See Feldman, 977 S.W.2d at 569; Montgomery, 923 S.W.2d at 152.

VI. Conclusion

Accordingly, we reverse the trial court's order granting STAA's summary judgment

and its order denying Southern attorney's fees and remand this matter to the trial court for

proceedings consistent with this opinion.

NELDA V. RODRIGUEZ

Justice

Memorandum Opinion delivered and

filed this 22nd day of May, 2008.