Court Opinion

ID: 4075136
Source: CourtListenerOpinion
Date Created: 2016-09-30 05:47:22.734738+00
Date Added: 2024-06-11T14:32:21.703158
License: Public Domain

DISMISS; and Opinion Filed November 9, 2015.

                                          S   In The
                                Court of Appeals
                         Fifth District of Texas at Dallas
                                       No. 05-15-00489-CV

                        JOHN O'BRIEN, Appellant
                                 V.
   CARA BAKER, AS THE EXECUTRIX OF THE ESTATE OF KENNETH BAKER,
                               Appellee

                           On Appeal from the County Court at Law
                                  Rockwall County, Texas
                              Trial Court Cause No. PR14-10A

                              MEMORANDUM OPINION
                           Before Justices Bridges, Francis, and Myers
                                   Opinion by Justice Francis
       In this petition for writ of mandamus and interlocutory appeal, John O’Brien challenges

the trial court’s April 7, 2015 order requiring he pay $4 million into the registry of the court. For

the reasons that follow, we conditionally grant the writ of mandamus and dismiss the

interlocutory appeal.

       In 1993, O’Brien and Kenneth Baker founded Baker & O’Brien, an independent energy

consulting firm providing strategic consulting, industry advisory, and litigation support systems.

The following year, the firm and the two men entered into a written shareholders’ agreement

which provided, among other things, that upon the death of either O’Brien and Baker, the

surviving founder would purchase the common shares held by the deceased cofounder’s estate.

To “assure the availability of funds,” the company purchased a life insurance policy on each
founding shareholder with the other founding shareholder named as beneficiary. O’Brien’s and

Baker’s spouses acknowledged the terms of the shareholders’ agreement, and each wife agreed

to be bound by its terms.

       In December 2013, Baker died of cancer.          On December 20, Baker’s widow Cara

formally notified O’Brien of Baker’s death and requested, among other things, a copy of the

stock valuation.   In response, O’Brien requested copies of Cara’s letters testamentary and

Baker’s death certificate (the latter in order to present his claim for the life insurance proceeds)

and sent a confidentiality agreement to be signed and returned before release of the stock

valuation. On January 28, 2014, Cara filed an application to have Baker’s will probated. Upon

learning of the application, O’Brien scheduled a closing for the purchase of Baker’s shares for

February 14, 2014 and notified Cara. In anticipation of the closing, O’Brien provided Cara with

the December 31, 2012 stock valuation figure which reflected a purchase price of $2,271,307.50

for Baker’s shares. O’Brien again requested the confidentiality agreement be signed and said the

complete valuation report would be provided once the signed confidentiality agreement was

returned. Four days before closing, O’Brien learned that Baker’s two daughters had filed a

formal will contest and the closing could not proceed. Because the will contest did not involve

O’Brien, he contacted Cara and suggested that they, along with Baker’s daughters, sign an

agreement that would authorize him to deposit the funds into the registry of the court in

exchange for an instruction to Baker & O’Brien to cancel the shares of stock in Baker’s name

and reissue the same in O’Brien’s name. O’Brien did not receive a response to his proposal. In

March and April, O’Brien again communicated with Cara and expressed his desire to purchase

the stock.

       In April, O’Brien learned Cara had been issued letters testamentary. He wrote her,

indicating he was prepared to purchase the stock and suggested a closing date of April 17. When

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she did not appear for the closing, O’Brien sent a registered letter with a $2,271,307.50 check for

the stock. Cara returned the check and sued for, among other things, a declaratory judgment that,

under the terms of the shareholder agreement, she could sell Baker’s shares to “any transferee”

because O’Brien failed to purchase Baker’s shares within the 60 days set out in the shareholder

agreement. Cara also filed an unverified “Motion to Require Funds to be Deposited into the

Registry of the Court.” The motion alleged the proceeds of the life insurance policy constituted

“an asset of the estate” and asked that the trial court order O’Brien to deposit the funds into the

registry of the court to “ensure that the funds remain available to fund the buyout,” although

Cara did not cite any statutory authority for such action nor did she attach any evidence in

support of the motion. At the hearing, no witnesses testified, and no evidence was admitted. On

April 7, 2015, the trial court granted the motion and ordered O’Brien to “place the sum of

$4,000,000.00 (four million dollars) into the registry of the Court by May 1, 2015 at 5:00 p.m.”

The trial court did not state a legal basis for doing so.

        O’Brien filed a notice of interlocutory appeal in the event the order was an injunction,

along with a petition for writ of mandamus and a motion for emergency relief in the event it was

an attachment or issued under the court’s “inherent authority.” We granted the motion for

emergency relief and stayed the trial court’s April 7 order pending further review. On the

Court’s own motion, we then consolidated the petition for writ of mandamus and the

interlocutory appeal into cause number 05-15-00489-CV.

        O’Brien contends the trial court erred by granting Cara’s motion and ordering him to pay

the insurance policy proceeds into the registry of the court. In his appellate brief, he claims the

order should be dissolved because it failed to comply with applicable statutes and rules

pertaining to temporary injunctions and Cara failed to show she was entitled to injunctive relief.

In his petition for writ of mandamus, O’Brien argues the trial court abused its discretion because

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Cara failed to establish the ownership of the funds was disputed and failed to present evidence

that the proceeds were at risk of loss or depletion. O’Brien also contends he has no adequate

remedy at law. In response, Cara claims the trial court had inherent authority to protect Baker’s

estate and that this Court “is without jurisdiction to consider” O’Brien’s interlocutory appeal

because the trial court’s order “does not constitute a mandatory injunction or a writ of

attachment.”

       Whether the order is an injunction, an attachment, or issued under its inherent authority,

we review the trial court’s decision under an abuse of discretion standard. Butnaru v. Ford

Motor Co., 84 S.W.3d 198, 204 (Tex. 2002) (interlocutory appeal available to determine whether

trial court’s decision to grant or deny temporary injunction was abuse of discretion); In re Argyll

Equities, LLC., 227 S.W.3d 268, 273 (Tex. App.―San Antonio 2007, orig. proceeding)

(mandamus relief appropriate when trial court abuses its discretion by granting writ of

attachment); N. Cypress Med. Ctr. Operating Co. v. St. Laurent, 296 S.W.3d 171, 178 (Tex.

App.―Houston [14th Dist.] 2009, orig. proceeding) (mandamus available if trial court, acting

through inherent authority, orders party to pay disputed funds into court’s registry without

evidence funds in danger of being “lost or depleted”). A trial court abuses its discretion if it

reaches a decision so arbitrary and unreasonable as to amount to a clear and prejudicial error of

law or if it clearly fails to correctly analyze or apply the law. In re Cerberus Capital Mgmt.,

L.P., 164 S.W.3d 379, 382 (Tex. 2005) (per curiam) (orig. proceeding).

       A temporary injunction is an extraordinary remedy. Butnaru, 84 S.W.3d at 204. To be

entitled to a temporary injunction, the applicant must plead and prove (1) a cause of action

against the defendant; (2) a probable right to the relief sought; and (3) a probable, imminent, and

irreparable injury in the interim. Id. “An injury is irreparable if the injured party cannot be

adequately compensated in damages or if the damages cannot be measured by any certain

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pecuniary standard.” Id. The Texas Rules of Civil Procedure require that an order granting a

temporary injunction set the cause for trial on the merits and fix the amount of security to be

given by the applicant. See TEX. R. CIV. P. 683, 684. These procedural requirements are

mandatory, and an order granting a temporary injunction that does not meet them is subject to

being declared void and dissolved. Qwest Commc’n Corp. v. AT&T Corp., 24 S.W.3d 334, 337

(Tex. 2000).

       In her motion, Cara did not plead or attach proof of any of the three elements required to

establish entitlement to a temporary injunction, nor did she request injunctive relief. See TEX. R.

CIV. P. 682; see Butnaru, 84 S.W.3d at 204 (party must plead and prove right to injunctive

relief); Funes v. Villatoro, 352 S.W.3d 200, 214 (Tex. App.―Houston [14th Dist.] 2011, pet

denied) (trial court erred by granting injunctive relief because such “relief was neither requested

nor proper”). Furthermore, the order did not meet the “traditional requirements” of a temporary

injunction because it did not preserve the status quo, require a bond, set a trial date, require the

clerk to issue a writ of injunction, or have a duration limited until final judgment or further order

of the court. See TEX. R. CIV. P. 683, 684. While the supreme court has stated these missing

features “do not necessarily control the classification of this order,” the order in this case requires

payment of the funds into the registry but does not otherwise place restrictions on O’Brien

during the pendency of Cara’s suit. See Qwest, 24 S.W.3d at 336. Under these circumstances,

we conclude the order is not a temporary injunction. We dismiss O’Brien’s interlocutory appeal

for want of jurisdiction.

       In his petition for writ of mandamus, O’Brien argues that the trial court abused its

discretion because the order is not an attachment nor should it have been issued under the trial

court’s inherent authority. He also argues he has no adequate remedy at law.

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       Mandamus will issue only to correct a clear abuse of discretion for which the relator has

no adequate remedy at law. In re Prudential Ins. Co. of Am., 148 S.W.3d 124, 135 (Tex. 2004)

(orig. proceeding); Walker v. Packer, 827 S.W.2d 833, 839–40 (Tex. 1992) (orig. proceeding).

“A trial court has no ‘discretion’ in determining what the law is or applying the law to the facts,”

and “a clear failure by the trial court to analyze or apply the law correctly will constitute an

abuse of discretion.” Walker, 827 S.W.2d at 840.

       A writ of attachment allows a plaintiff to secure a debt by seizure of property before or

after judgment.    In re Argyll Equities, LLC, 227 S.W.3d at 271.            Because prejudgment

attachment is a harsh, oppressive remedy, the statutes and rules governing this remedy must be

strictly followed. Carpenter v. Carpenter, 476 S.W.2d 469, 470 (Tex. Civ. App.―Dallas 1972,

no writ); S.R.S. World Wheels v. Enlow, 946 S.W.2d 574, 575 (Tex. App.―Fort Worth 1997,

orig. proceeding). An application for a writ of attachment must be supported by the affidavit of a

person having knowledge of relevant facts; the “application and any affidavits shall be made on

personal knowledge and shall set forth such facts as would be admissible in evidence.” TEX. R.

CIV. P. 592. A writ of attachment is available to a plaintiff in a suit if she files an appropriate

affidavit and bond and proves: (1) the defendant is justly indebted to the plaintiff; (2) the

attachment is not sought for the purpose of injuring or harassing the defendant; (3) the plaintiff

will probably lose her debt unless the writ of attachment is issued; and (4) specific grounds for

the writ exist under section 61.002 of the civil practices and remedies code. TEX. CIV. PRAC. &

REM. CODE ANN. §§ 61.001, .002, .022, & .023 (West 2008 & Supp. 2014).

       Here, Cara did not establish the requirements to show she was entitled to an attachment

nor did she file any affidavits in support of her motion. The trial court’s order does not recite

that O’Brien is indebted to Cara nor does it specify any of the other requirements set out in

                                                –6–
sections 61.001 and 61.002.     Under these circumstances, we conclude the order is not an

attachment.

       We now turn to the whether the trial court could have ordered the funds deposited into

the registry under its inherent authority. A trial court can order disputed funds paid into the

registry of the court if there is evidence the funds are in danger of being lost or depleted.

Castilleja v. Camero, 414 S.W.2d 431, 433 (Tex. 1967) (orig. proceeding) (when disputed funds

are in danger of being lost or depleted, court can order payment of disputed funds into registry

until ownership is determined); N. Cypress Med. Ctr. Operating Co., 296 S.W.3d at 178 (same).

Thus, Cara was required to present evidence that (1) ownership of the insurance proceeds was

disputed and (2) the funds were in danger of being lost or depleted. The record shows she

presented no evidence of either. To the extent she relied on her allegations in the motion, her

motion was not verified and no affidavits were attached. We conclude the trial court abused its

discretion by ordering O’Brien to deposit the insurance proceeds into the registry of the court.

See In re Deponte Invs., Inc., No. 05-04-01781-CV, 2005 WL 248664, at *2 (Tex. App.―Dallas

Feb. 3, 2005, orig. proceeding) (mem.op.) (absent evidence, trial court abused discretion by

ordering funds paid into registry); In re Reville Res. (Tex.), Inc., 347 S.W.3d 301, 304−05 (Tex.

App.―San Antonio 2011, orig. proceeding) (when record devoid of evidence, trial court abuses

its discretion by ordering funds into court’s registry). We further conclude O’Brien has no

adequate remedy at law. See In re Deponte Invs., Inc., 2005 WL 248664, at *2 (citing In re

Prudential Ins Co. of Am., 148 S.W.3d at 135−40); see also N. Cypress Med. Ctr. Operating Co.,
296 S.W.3d at 179−80 (relator, deprived of use of money without opponent showing either

liability or intent to hide assets from possible judgment has no adequate remedy by appeal).

       We conditionally grant the writ of mandamus. We order the trial court to vacate its order

of April 7, 2015 directing O’Brien to place $4 million into the registry of the court. The trial

                                               –7–
court is ordered to file a certified copy of its order in the compliance with this opinion with this

Court within thirty days of the date of this opinion. Should the trial court fail to comply, the writ

will issue.

                                                      /Molly Francis/
                                                      MOLLY FRANCIS
                                                      JUSTICE

150489F.P05

                                                –8–
                                        S
                               Court of Appeals
                        Fifth District of Texas at Dallas
                                      JUDGMENT

JOHN O'BRIEN, Appellant                            On Appeal from the County Court at Law,
                                                   Rockwall County, Texas
No. 05-15-00489-CV         V.                      Trial Court Cause No. PR14-10A.
                                                   Opinion delivered by Justice Francis,
CARA BAKER, AS THE EXECUTRIX OF                    Justices Bridges and Myers participating.
THE ESTATE OF KENNETH BAKER,
Appellee

       In accordance with this Court’s opinion of this date, we DISMISS this interlocutory
appeal for want of jurisdiction.

Judgment entered this 9th day of November, 2015.

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