Court Opinion

ID: 4647264
Source: CourtListenerOpinion
Date Created: 2020-12-29 10:12:56.856762+00
Date Added: 2024-06-11T08:01:04.640286
License: Public Domain

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN

                                      NO. 03-20-00126-CV

                              Francesca Scanio Stacey, Appellant

                                                 v.

                                     Selina Shadd, Appellee

          FROM THE COUNTY COURT AT LAW NO. 1 OF CALDWELL COUNTY
           NO. 182, THE HONORABLE BARBARA MOLINA, JUDGE PRESIDING

                            MEMORANDUM OPINION

               This appeal arises from a dispute involving three sisters—Dana Anderson,

Leslie Collier, and Selina Shadd—and competing petitions for the appointment of a guardian for

their mother, Juliet Spreen. Ad litem attorney Francesca Scanio Stacey, whom the county court

at law had appointed to represent Spreen’s interests in the proceedings, challenges an order

sealing certain financial records and sanctioning her for publicly filing those records with the

court’s clerk instead of privately serving the records on the parties. She disputes the order’s

provisions imposing the sanctions but not the provisions sealing the records. Shadd, as appellee,

argues that this Court has no jurisdiction to reach Stacey’s challenge and, in the alternative, that

the trial court did not abuse its discretion by imposing sanctions. Having concluded that Stacey

has invoked our jurisdiction and that the trial court abused its discretion by imposing sanctions,

we will redact the order’s provisions imposing the sanctions and affirm the order as modified.
                                        BACKGROUND

               In 1996, Spreen and her husband created the Spreen Living Trust (the Trust) with

the couple serving as its sole beneficiaries and its first trustees. Spreen’s husband died in 2010,

leaving Spreen as the sole beneficiary and trustee. In 2017, Spreen suffered a debilitating stroke,

eventually leaving her unable to manage the Trust. By 2019, Spreen had moved in with Collier,

and Shadd had succeeded as trustee pursuant to certain arrangements not at issue here.

               Also in 2019, Anderson filed an application for the appointment of a guardian to

manage Spreen’s person and estate, apparently having become concerned that her sisters might

be misappropriating their mother’s personal assets and the assets in the Trust. Shadd contested

Anderson’s guardianship application and later filed her own application for the appointment of a

guardian to manage their mother’s person and estate.        The trial court appointed Stacey to

represent Spreen’s interests in the ensuing proceedings.

               Although the Trust was not party to the case, Shadd filed a motion to dismiss the

Trust from the suit, asking that all “matters relating to the [Trust] be dismissed” because “a

County Court At Law lacks jurisdiction to intervene in the administration of the trust.” See Tex.

Prop. Code § 115.001(a) (vesting district courts with “original and exclusive jurisdiction” over

“all proceedings concerning trusts”), (d) (delineating certain exceptions). The trial court held a

hearing on the motion and entered an order indicating that “all claims regarding [the Trust] . . .

are hereby dismissed.”

               In preparation for trial, but before any trial date had been set, Stacey filed over

1600 pages of redacted financial records regarding certain assets owned by Spreen and the Trust.

The records reflect five years of deposits, withdrawals, and expenditures from seven accounts,

and Stacey deemed the records relevant to the guardianship determination insofar as they reveal

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possible “misappropriation of the [proposed] ward’s assets and negligence in handling the

proposed ward’s estate by Shadd and . . . Collier.” Stacey apparently thought she was required

to file these records with the clerk of court and did not realize that a recent amendment to the

governing rule instead provides that such records must be served directly on the parties. See

Tex. R. Evid. 902(10) (“The proponent of a record must serve the record and the accompanying

affidavit on each other party to the case at least 14 days before trial.”); Act of May 17, 2013,

83rd Leg., R.S., ch. 560, § 3, 2013 Tex. Gen. Laws 1509, 1510 (instructing Supreme Court to

amend rule 902(10) to eliminate requirement that litigants file certain business records with court

clerk); Tex. R. Evid. 902(10) cmt. to 2014 change (“At the direction of the Legislature, the

requirement that records be filed with the court before trial has been removed.”). Stacey then

requested reimbursement of, inter alia, the time and expense incurred in preparing the filing.

               In response to the filing, Shadd filed a “motion to seal and for sanctions,” seeking

an order sealing the redacted financial records and imposing sanctions upon Stacey, who

purportedly “ha[d] violated the Texas Rules of Evidence, ha[d] committed breaches of her duty

to her client regarding her client’s confidential financial information, ha[d] violated this Court’s

order dated December 6, 2019, regarding [the Trust], and ha[d] published confidential financial

information belonging to [the Trust].”      The motion also asked that Stacey bear any costs

associated with obtaining, redacting, and filing the disputed records. Although Shadd’s motion

outlined the grievances for which she sought an imposition of sanctions, it did not set forth the

authority allowing for the requested imposition. Stacey filed a response in opposition, and the

trial court held a hearing on the motion.

               At the hearing, the parties presented argument but offered no evidence on the

question of sanctions. The court then granted Shadd’s motion, sealing the financial records and

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imposing a $500.00 sanction on Stacey, explaining that “confidential records have been filed in

the public records in contravention of the Court’s previous order excluding [the Trust] from this

cause” and that “the filing of these and other private records is in contravention of the Texas

Rules of Evidence 902(10).” The trial court also ordered Stacey to attend continuing legal

education courses “with a minimum of 4 hours [of] emphasis on the Texas Rules of Evidence on

or before August 30, 2020.” In addition, the trial court removed Stacey as attorney ad litem,

explaining that she had “violated the duty owed her client by filing such information; that she

[had] failed to follow the Texas Rules of Evidence governing the filing of business records[;] and

that she [had] violated this Court’s order of December 6, 2019[,] excluding [the Trust] from

this cause.”

               On Stacey’s motion, the trial court filed findings of fact and conclusions of law.

As relevant here, the court’s findings include:

           •   On January 2, 2020 and January 3, 2020, Francesca Scanio Stacey,
               Attorney Ad Litem for Juliet Spreen, filed Business Records Affidavits
               and Statements of financial records of the Proposed Ward and financial
               records of [the Trust] . . . .

           •   Francesca Scanio Stacey violated the Court’s Order of December 6,
               2019[,] excluding the [the Trust] from this cause.

           •   Confidential records were filed in the public records in contravention of
               the Court’s previous Order excluding the [the Trust] from this cause.

           •   Francesca Scanio Stacey, Attorney Ad Litem, violated the duty owed to
               her client by filing such information.

The court then concluded that “[t]he filings of these confidential records and other private

records filed on January 2, 2020 and January 3, 2020 by Francesca Scanio Stacey were in

contravention of the Texas Rules of Evidence 902(10)” and that her “actions are sanctionable for

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violating the Court’s Order dated December 6, 2019 by publishing confidential financial

information belonging to [the Trust], which the court had previously excluded from this cause.”

               Stacey timely perfected this appeal, challenging the sanctions but not the sealing

itself. In response, Shadd filed a motion to dismiss the appeal, arguing that the disputed order “is

not final and appealable as it remains a part of the pending proceeding.”

               After Stacey filed notice of appeal, the proceedings continued below, and the

parties tried the question of guardianship to the bench. The county court at law ultimately issued

an order denying the competing guardianship applications, finding, inter alia, that “it is not

necessary for the Appointment of a Guardian.” That order is not challenged in this appeal.

                                          DISCUSSION

               As a threshold matter, Shadd contests our jurisdiction over Stacey’s arguments,

asserting that the trial court’s imposition of sanctions is not part of any appealable order or

judgment. We will begin with jurisdiction before proceeding to Stacey’s appeal.

Shadd’s Motion to Dismiss

               Ours is a court of limited jurisdiction. See Tex. Const. art. V, § 6(a); Branch L.

Firm L.L.P. v. Osborn, 532 S.W.3d 1, 10 (Tex. App.—Houston [14th Dist.] 2016, pet. denied).

Our jurisdiction is invoked by the timely filed notice of appeal of an appealable judgment or

order. See Tex. R. App. P. 25.1. As a general rule, appeal may only be taken from final

judgment. See Lehmann v. Har-Con Corp., 39 S.W.3d 191, 195 (Tex. 2001). Interlocutory

orders are appealable only if made appealable by statute and only to the extent jurisdiction is

conferred by statute. See Osborn, 532 S.W.3d at 10 (citing Jack B. Anglin Co. v. Tipps,

842 S.W.2d 266, 272 (Tex. 1992) (orig. proceeding)). We construe any source of interlocutory

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jurisdiction by looking first to its plain language. Sabre Travel Int’l, Ltd. v. Deutsche Lufthansa

AG, 567 S.W.3d 725, 727 (Tex. 2019). Where ambiguity exists, we will “strictly construe[]” any

exceptions to the general rule that litigants may only appeal final judgment. See id. at 736 (citing

CMH Homes v. Perez, 340 S.W.3d 444, 447 (Tex. 2011); In re McAllen Med. Ctr., Inc.,

275 S.W.3d 458, 461 (Tex. 2008)).

               Shadd urges this Court to dismiss Stacey’s appeal, arguing that “there is no final

judgment and appellate jurisdiction has not attached.”         In her motion to dismiss, Shadd

complains that Stacey “filed her Notice of Appeal even before trial” and that “the Sanctions

Order does not contain any of the language required to denote finality.”

               We need not address Shadd’s arguments regarding finality because this Court

may exercise jurisdiction under Rule 76a of the Texas Rules of Civil Procedure.

               Rule 76a provides:

       Any order (or portion of an order or judgment) relating to sealing or unsealing
       court records shall be deemed to be severed from the case and a final judgment
       which may be appealed by any party or intervenor who participated in the
       hearing preceding issuance of such order. The appellate court may abate the
       appeal and order the trial court to direct that further public notice be given, or to
       hold further hearings, or to make additional findings.

Tex. R. Civ. P. 76a(8) (emphasis added). In other words, we may exercise jurisdiction pursuant

to this rule if: (1) the attempted appeal is from an order “relating to sealing or unsealing court

records,” and (2) the would-be appellant “participated in the hearing preceding the issuance of

such order.” Stacey’s appeal satisfies both criteria.

               First, the challenged order operates in part to seal the disputed financial records,

thereby making it an order “relating to sealing.” Shadd, however, observes that the order’s

provisions sealing those records are unchallenged on appeal and argues that because Stacey does
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not challenge the sealing itself, Stacey may not avail herself of the interlocutory review afforded

by Rule 76a. We disagree, as even the challenged provisions “relat[e] to” sealing. The record

reveals that the trial court granted the motion for sanctions in part because Stacey had

erroneously filed unsealed documents that (1) should not have been filed, and (2) if filed, should

have been accompanied by a motion to seal. Moreover, the court calculated the monetary

sanction by looking to the “costs to prosecute the motion to seal.” Thus, Stacey challenges an

order “relating to sealing or unsealing court records,” thereby bringing her challenge within the

purview of Rule 76a.

               Second, Stacey participated in the hearing on Shadd’s “motion to seal and for

sanctions,” presenting argument on her own behalf and on behalf of Ms. Spreen. She therefore

satisfies both crtieria established by Rule 76a, and we may exercise jurisdiction over her appeal.

               Shadd offers two cases as ostensible support for her position that we lack

jurisdiction over this appeal, but those cases—Title Source, Inc. v. HouseCanary, Inc.,

603 S.W.3d 829 (Tex. App.—San Antonio 2019, pet. granted), and Cortez v. Johnston,

No. 06-13-00120-CV, 2014 WL 1513306 (Tex. App.—Texarkana Apr. 16, 2014, no pet.) (mem.

op.)—do not facilitate her argument.

               Title Source involved a challenge to an assertion of jurisdiction under Rule 76a

where the trial court’s order made no mention of that rule and where appellee argued that any

interlocutory review otherwise available under Rule 76a would be preempted by federal trade-

secrets law. See 603 S.W.3d at 834. The court of appeals found no conflict between state and

federal law, see id. at 835, and rejected appellee’s remaining arguments, explaining, “While it is

true that the court’s order to seal does not mention Rule 76a, this fact alone does not remove the

order from the ambit of appealable orders specified by Rule 76a(8)—i.e., ‘any order . . . relating

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to sealing or unsealing court records,’” see id. at 834 (quoting Tex. R. Civ. P. 76a(8)). The court

continued, “The plain language of Rule 76a provides for appellate jurisdiction.” See id. Here, as

in Title Source, the rule’s language provides appellate jurisdiction over the disputed order.

               Cortez, meanwhile, involved a litigant’s attempt to bring a second Rule 76a

appeal from a single dispute over public access to certain documents. See 2014 WL 1513306, at

*1.   After unsuccessfully arguing in his first appeal that the disputed documents did not

constitute “court records” for the purposes of Rule 76a’s provisions regarding public access, see

Cortez v. Johnston, 378 S.W.3d 468, 475 (Tex. App.—Texarkana 2012, pet. denied), Cortez

returned to the trial court, raising new arguments regarding sealing and then attempting to appeal

the resulting adverse ruling, see 2014 WL 1513306, at *1. The court of appeals held, inter alia,

that the appellant should have brought all his arguments regarding the documents in a single

Rule 76a motion and appeal. Id. at *2. The court explained, “We, therefore, conclude that the

proper nature of an appeal in a Rule 76a proceeding is not a piecemeal appeal, but a single

appeal from the final determination on sealing.” Id. Here, the county court at law has made a

“final determination on sealing,” and this is Stacey’s first attempt to appeal from the order

rendering that determination. Thus, even assuming Cortez was correctly decided—a question we

need not reach today—its holding does not undermine our jurisdiction over the dispute. Because

we conclude that the plain language of Rule 76a affords this Court with jurisdiction over the

challenged order, and because Shadd offers no authority suggesting otherwise, we overrule

Shadd’s arguments on the jurisdictional inquiry and deny her motion to dismiss.

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Stacey’s Appeal

               Having confirmed our jurisdiction over the dispute, we turn to Stacey’s appeal of

the sanctions. Stacey argues that, under the circumstances present here, the county court at law

had no discretion to impose sanctions against her. We agree. While Stacey presents seven

arguments in support of her contention that the trial court abused its discretion by imposing

sanctions, we will address those arguments only to the extent necessary to dispose of this appeal.

See Tex. R. App. P. 47.1; Gunnarson v. State, No. 03-18-00738-CV, 2020 WL 913050, at *4

(Tex. App.—Austin Feb. 26, 2020, pet. filed) (mem. op.) (“To facilitate this discussion, we will

consolidate and summarize these arguments into three broad issues on appeal.”

(citations omitted)).

               “Various rules and statutes imbue courts with authority to sanction attorneys

for professional lapses of one kind or another.”        Brewer v. Lennox Hearth Prods., LLC,

601 S.W.3d 704, 717–18 (Tex. 2020) (citing Goode v. Shoukfeh, 943 S.W.2d 441, 446 (Tex.

1997)). “Courts also possess inherent powers that aid the exercise of their jurisdiction, facilitate

the administration of justice, and preserve the independence and integrity of the judicial system.”

Id. at 718 (citing Tex. Civ. Prac. & Rem. Code §§ 9.001–.014, 10.001–.006; Tex. Gov’t Code

§ 21.002; Tex. R. Civ. P. 13, 18a(h), 215; In re Bennett, 960 S.W.2d 35, 40 (Tex. 1997);

Remington Arms Co. v. Caldwell, 850 S.W.2d 167, 172 (Tex. 1993)). A court’s authority to

sanction is broad but not without limit, see id., because the imposition of “any sanction at all is a

serious matter that impugns counsel’s professional judgment and ethical standing,” see id. at

722–23.

               “We review a trial court’s sanctions order for abuse of discretion.” Id. at 717

(citing Cire v. Cummings, 134 S.W.3d 835, 838–39 (Tex. 2004)). “A trial court abuses its

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discretion if it acts without reference to guiding rules and principles such that the ruling is

arbitrary or unreasonable,” and “a decision lacking factual support is arbitrary and unreasonable

and must be set aside.” See id. (citing Cire, 134 S.W.3d at 838–39; Goode, 943 S.W.2d at 446).

“In reviewing sanctions orders, the appellate courts are not bound by a trial court’s findings of

fact and conclusions of law; rather, appellate courts must independently review the entire record

to determine whether the trial court abused its discretion.” American Flood Rsch., Inc. v. Jones,

192 S.W.3d 581, 583 (Tex. 2006) (citing Chrysler Corp. v. Blackmon, 841 S.W.2d 844, 852

(Tex. 1992); United States Fid. & Guar. Co. v. Rossa, 830 S.W.2d 668, 672 (Tex. App.—Waco

1992, writ denied)).

               The county court at law sanctioned Stacey because it concluded she had:

(1) violated the court’s order dismissing Trust-related issues from the case, (2) violated Rule of

Evidence 902(10), and (3) violated the duty of confidence she owed to Spreen. The court did not

indicate, either at the hearing or in its order, under which statutory or common law authority it

imposed those sanctions, but Shadd, as the movant, bore the burden of establishing the propriety

of sanctions. See Low v. Henry, 221 S.W.3d 609, 614 (Tex. 2007). Shadd argues that the court

had discretion to impose sanctions under: (1) its authority to sanction for bad-faith or groundless

pleadings under Rule 13, see Tex. R. Civ. P. 13; (2) its authority to sanction for discovery abuses

under Rule 215, see id. R. 215.1–.6; or (3) its inherent authority to impose sanctions where

appropriate, see Brewer, 601 S.W.3d at 708. On this record, none of the proffered sources

supports the imposition of sanctions.

               Shadd first contends the county court had discretion to impose sanctions under

Rule 13 because Stacey “groundlessly filed confidential documents of record with the Court

Clerk.” We disagree with Shadd’s interpretation of the rule. Rule 13 states:

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       The signatures of attorneys or parties constitute a certificate by them that they
       have read the pleading, motion, or other paper; that to the best of their knowledge,
       information, and belief formed after reasonable inquiry the instrument is not
       groundless and brought in bad faith or groundless and brought for the purpose of
       harassment. . . . If a pleading, motion or other paper is signed in violation of this
       rule, the court, upon motion or upon its own initiative, after notice and hearing,
       shall impose an appropriate sanction . . . .

Tex. R. Civ. P. 13. This rule provides no authority for the imposition of sanctions against Stacey

for the simple reason that the financial documents and affidavits at issue here, as they appear in

the record on appeal, do not include “the signature of attorneys or parties.” See id.; GTE

Commc’ns Sys. Corp. v. Tanner, 856 S.W.2d 725, 730 (Tex. 1993) (“Since the Zimmerman and

Jiminez affidavits were not signed by GCSC’s attorneys, it was a clear abuse of discretion for the

district court to base an imposition of sanctions under Rule 13 on them.”); Yuen v. Gerson,

342 S.W.3d 824, 828 (Tex. App.—Houston [14th Dist.] 2011, pet. denied) (“[W]e hold the

evidence is legally insufficient to support sanctions against Yuen under Rule 13 . . . because he

did not sign the objectionable pleadings and was not a party to those pleadings.”). Instead, each

financial record is accompanied by an affidavit signed by an employee of the financial institution

in possession of the records. Thus, even assuming the financial records constitute the kind of

“pleading, motion, or other paper” contemplated by the rule, those records were not “signed in

violation of this rule,” and sanctions are therefore unavailable under Rule 13.

               Shadd next contends that the court had discretion to grant her motion for

sanctions pursuant to the authority set forth in Rule 215. See Tex. R. Civ. P. 215.1–.6. Again,

we disagree. Rule 215’s subparts delineate the sanctions available for what the high court

describes as “various discovery abuses.”       See TransAmerican Nat. Gas Corp. v. Powell,

811 S.W.2d 913, 916 (Tex. 1991).        The sanctions set forth in Rule 215 “serve to secure

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compliance with the discovery rules, deter other litigants from violating the discovery rules, and

punish those who violate the rules.” Gunn v. Fuqua, 397 S.W.3d 358, 366 (Tex. App.—Dallas

2013, pet. denied) (citing 5 Star Diamond, LLC v. Singh, 369 S.W.3d 572, 577 (Tex. App.—

Dallas 2012, no pet.); Texas Integrated Conv. Sys., Inc. v. Innovative Conv. Concepts, Inc.,

300 S.W.3d 348, 384 (Tex. App.—Dallas 2009, pet. denied)).            In this case, sanctions are

unavailable under Rule 215 because the record is devoid of any evidence that Stacey abused the

discovery process. See Pedraza v. Peters, 826 S.W.2d 741, 745 (Tex. App.—Houston [14th

Dist. 1992, no writ) (reversing imposition of sanctions where conduct complained of was “not an

abuse of the discovery process”). Shadd did not mention discovery in her motion, did not

present evidence of discovery abuse at the hearing, and has not identified an abuse of discovery

on appeal. The conduct Shadd complains of—Stacey’s alleged violation of the court’s dismissal

order, her purported failure to comply with Rule 902(10), and her ostensible breach of

confidence—is unrelated to discovery.       See Abuse of Discovery, Black’s Law Dictionary

(defining such abuse as “the misuse of the pretrial discovery process, esp. by making overbroad

requests for information that is unnecessary or beyond the scope of permissible disclosure or by

conducting discovery for an improper purpose” or “[t]he failure to respond adequately to proper

discovery requests”). In absence of evidence of a discovery abuse, the trial court had no

discretion to impose sanctions under Rule 215.

               Finally, we agree with Stacey that, on this record, the county court at law had no

discretion to impose sanctions under its inherent authority.       The Supreme Court of Texas

recently clarified the scope of the inherent authority to impose sanctions on litigants and their

attorneys, emphasizing that such a sanction requires a predicate finding of bad faith:

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       Inherent powers must be exercised with restraint, discretion, and great caution.
       To that end, invocation of the court’s inherent power to sanction necessitates a
       finding of bad faith. . . . Bad faith is not just intentional conduct but intent to
       engage in conduct for an impermissible reason, willful noncompliance, or willful
       ignorance of the facts. Bad faith includes conscious doing of a wrong for a
       dishonest, discriminatory, or malicious purpose. Errors in judgment, lack of
       diligence, unreasonableness, negligence, or even gross negligence—without
       more—do not equate to bad faith. Improper motive, not perfection, is the
       touchstone.      Bad faith can be established with direct or circumstantial
       evidence . . . .

Brewer, 601 S.W.3d at 718–19 (cleaned up) (footnotes omitted). Here, the county court at law

made no finding of bad faith or of any other “improper motive” described by the Brewer court.

Nor did the parties present any evidence that might support such a finding. The trial court

therefore had no discretion under its inherent authority to impose sanctions for those

alleged violations.

               Yet Shadd, while conceding that she presented no evidence in support of her

motion for sanctions, urges us to infer the requisite finding of bad faith from the undisputed fact

that Stacey filed the redacted financial documents and from the possibility that she violated a

court order, evidentiary rule, or ethical duty in doing so. But the Brewer analysis precludes such

an inference in this case. The high court explained, “[M]ere violation of a rule, statute, or ethical

standard does not ipso facto constitute bad faith.” Id. at 716. It continued, “An error, without

more, is no evidence of improper motive, unless the conduct could not have occurred without

conscious wrongdoing.”      Id. (citing McWhorter v. Sheller, 993 S.W.2d 781 (Tex. App.—

Houston [14th Dist.] 1999, pet. denied); Onwuteaka v. Gill, 908 S.W.2d 276, 280 (Tex. App.—

Houston [1st Dist.] 1995, no writ)). Viewing the record before us under the applicable standard,

we cannot conclude that Stacey’s conduct “could not have occurred without conscious

wrongdoing.” As a consequence, the trial court had no discretion under its inherent authority to

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impose sanctions on Stacey. See id. Moreover, having undertaken an independent review of the

record, see Jones, 192 S.W.3d at 583, we find no other basis for the imposition of sanctions, see

Brewer, 601 S.W.3d at 717; Polansky v. Berenji, 393 S.W.3d 362, 369 (Tex. App.—Austin

2012, no pet.) (gathering authorities and explaining that “a trial court may not award sanctions

on a basis not asserted in the motion” (citations omitted)), and conclude the district court abused

its discretion by granting Shadd the requested sanctions. We therefore sustain Stacey’s challenge

and reform the court’s order to reflect a disposition denying Shadd’s motion to the extent it

requested sanctions and granting that motion to the extent it requested sealing of the disputed

financial documents. We affirm the order as modified.

                                        CONCLUSION

               Because the district court abused its discretion by imposing sanctions on Stacey,

we revise its order dated January 30, 2020, to eliminate the imposition of sanctions. Because the

provisions of the order sealing the disputed records are unchallenged on appeal, we affirm the

order as modified herein.

                                             __________________________________________
                                             Edward Smith, Justice

Before Justices Goodwin, Triana, and Smith

Modified and, as Modified, Affirmed

Filed: December 23, 2020

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