Court Opinion

ID: 4675884
Source: CourtListenerOpinion
Date Created: 2021-04-09 06:14:55.149902+00
Date Added: 2024-06-11T08:03:29.111101
License: Public Domain

In The

                          Court of Appeals

                 Ninth District of Texas at Beaumont

                          __________________

                          NO. 09-19-00157-CV
                          __________________

   NEW PENN FINANCIAL LLC D/B/A SHELLPOINT MORTGAGE
      SERVICING AND MTGLQ INVESTORS, L.P., Appellants

                                  V.

   BEVERLY SALVAGIO AND JAMES DAVID SALVAGIO, Appellees
________________________________________________________________________

                 On Appeal from the 58th District Court
                       Jefferson County, Texas
                      Trial Cause No. A-201,268
________________________________________________________________________

                          __________________

                          NO. 09-19-00254-CV
                          __________________

                   IN RE MTGLQ INVESTORS, L.P.
________________________________________________________________________

                   Original Proceeding – Writ of Injunction
            From the 58th District Court of Jefferson County, Texas
                          Trial Cause No. A-201,268
           __________________________________________________

                                   1
                MEMORANDUM OPINION ON CONTEMPT

                      Background and Procedural Posture

      In appeal number 09-19-00157-CV in this Court, MTGLQ Investors, L.P.

(MTGLQ) and Shellpoint Mortgage Servicing (Shellpoint) appeal the trial court’s

summary judgment orders in the parties’ underlying litigation. 1 During the pendency

of the appeal, MTGLQ filed an original proceeding petitioning for a writ of

injunction to prohibit James David Salvagio from transferring or otherwise disposing

of the subject real property, which was assigned cause number 09-19-00254-CV. On

August 21, 2019, this Court issued the following writ of injunction:

          TO: JAMES DAVID SALVAGIO, INDIVIDUALLY AND AS
      INDEPENDENT EXECUTOR OF THE ESTATE OF BEVERLY
      SALVAGIO, DECEASED, AND AS BENEFICIARY AND
      TRUSTEE OF THE JAMES DAVID SALVAGIO LIVING ESTATE
      TRUST

             Whereas MTGLQ Investors[,] L.P. (“MTGLQ”), relator in this
      cause, has filed a petition for injunctive relief, and a majority of the
      Justices of the Ninth Court of Appeals, upon presentation by MTGLQ
      of its request for injunctive relief, issued an opinion that granted the
      petition for writ of injunction.

            THEREFORE, you, James David Salvagio, individually and as
      independent executor of the Estate of Beverly Salvagio, Deceased, and
      as beneficiary and trustee of the James David Salvagio Living Estate
      Trust, are ENJOINED from directly or indirectly selling, conveying, or
      otherwise disposing of the following property located in Jefferson,
      County, Texas: Lot Number sixteen (16), in Block Number five (5) of
      1
     The issues raised in the underlying appeal are being addressed in a separate
memorandum opinion of this Court.
                                         2
      Helena Park, section three (3) addition to the City of Nederland,
      Jefferson County, Texas, according to the map or plat of record in
      volume 11, page 4, map records in the office of the County Clerk of
      said county and state, commonly known as 3119 Nashville, Nederland,
      Texas 77627.

             The injunction issues without bond and shall continue in effect
      until this Court’s mandate has issued in the underlying appeal, appeal
      number 09-19-00157-CV, styled New Penn Financial LLC d/b/a
      Shellpoint Mortgage Servicing and MTGLQ Investors[,] L.P. v. Beverly
      Salvagio and James David Salvagio, or until further order of this Court.

             ISSUED under my hand and seal August 21, 2019.

                                              _________________________
                                                 CAROL ANNE HARLEY
                                                        Clerk of the Court

      James David Salvagio did not challenge this injunction.

      Upon receiving notice that on or about August 19, 2020, James David

Salvagio violated this Court’s August 21, 2019 writ of injunction by executing a

warranty deed as trustee of James David Salvagio Living Estate Trust to Julianne

Salvagio and John Salvagio, and that the grantees of the warranty deed, Julianne

Salvagio and John Salvagio, purported to grant a first lien in the property to Quicken

Loans, LLC to secure a note in the amount of $164,000, we ordered the trial court

to conduct a hearing, as follows:

                                      ORDER

            On August 21, 2019, this Court granted a writ of injunction
      enjoining James David Salvagio, individually and in any of his
      representative capacities, including as the independent executor of the
      Estate of Beverly Salvagio, Deceased, and as beneficiary and trustee
                                          3
of the James David Salvagio Living Estate Trust, (“Salvagio”) from
directly or indirectly selling, conveying, or otherwise disposing of the
following property located in Jefferson[] County, Texas: Lot Number
sixteen (16), in Block Number five (5) of Helena Park, section three (3)
addition to the City of Nederland, Jefferson County, Texas, according
to the map or plat of record in volume 11, page 4, map records in the
office of the County Clerk of said county and state, commonly known
as 3119 Nashville, Nederland, Texas 77627.

      On November 12, 2020, this Court received notice that Salvagio
violated the writ of injunction by conveying the property to Julianne
Salvagio and John Salvagio on August 19, 2020, by warranty deed
subject to a deed of trust granting a first lien to Quicken Loans, LLC to
secure a note in the amount of $164,000. It appears that James David
Salvagio has violated this Court’s August 21, 2019 writ of injunction
and that he is in contempt of an order of the Court of Appeals. An
appellate court has limited ability to develop evidence, however, the
parties should have the opportunity to develop evidence and testimony
and to cross-examine witnesses. A Court of Appeals may refer
contempt proceedings to the trial court for hearing and factfinding. In
re Sheshtawy, 154 S.W.3d 114, 124 (Tex. 2004).

       We refer the notice of injunction violation to the trial court and
instruct the trial court to hold an evidentiary hearing and make findings
of fact on whether James David Salvagio, individually and in any of
his representative capacities, including as the independent executor of
the Estate of Beverly Salvagio, Deceased, and as beneficiary and
trustee of the James David Salvagio Living Estate Trust, (“Salvagio”)
directly or indirectly sold, conveyed or otherwise disposed of the
following property located in Jefferson[] County, Texas: Lot Number
sixteen (16), in Block Number five (5) of Helena Park, section three (3)
addition to the City of Nederland, Jefferson County, Texas, according
to the map or plat of record in volume 11, page 4, map records in
the office of the County Clerk of said county and state, commonly
known as 3119 Nashville, Nederland, Texas 77627.

      We direct the trial court to issue a notice for a show cause hearing
on a date and time certain for James David Salvagio to appear in
person and answer the allegations made by MTGLQ Investors[,] L.P.

                                    4
      in its notice of injunction violation and any motion for contempt that
      may be filed at least ten days before the hearing, to make findings of
      fact and to make recommendations regarding coercive, curative, or
      punitive measures to address any violation of our writ of injunction of
      August 21, 2019. A reporter’s record of any hearing conducted by the
      trial court, together with a clerk’s record containing any motions and
      responses filed by the parties and the findings and recommendations of
      the trial court, shall be filed with the Court of Appeals by January 22,
      2021.

            ORDER ENTERED November 23, 2020.

                                                              PER CURIAM

      Before Kreger, Horton and Johnson, JJ.

      On December 10, 2020, Shellpoint and MTGLQ Investors, L.P. filed a motion

for contempt and requested a show cause hearing. On January 6, 2021, Salvagio, as

Trustee and Beneficiary of the James David Salvagio Living Estate Trust, filed a

“NOTICE OF APPEARANCE OF TRUSTEE & BENEFICIARY OF TRUST

THAT THIS IS A COURT OF EQUITY AND I REQUIRE THE EXCLUSIVE TO

ADJUDICATE THE RIGHTS OF THE TRUST” in which he requested a protective

order from a subpoena duces tecum. On January 6, 2021, the trial court held the

evidentiary hearing that we ordered on November 23, 2020.

      On January 13, 2021, the trial court issued findings of fact, as follows:

                              FINDINGS OF FACT

           On August 21, 2019, the Court of Appeals, Ninth District of
      Texas at Beaumont issued a writ of injunction enjoining James David
      Salvagio, individually and as independent executor of the Estate of
      Beverly Salvagio, Deceased, and as beneficiary and trustee of the James
                                         5
      David Salvagio Living Estate Trust from directly or indirectly selling,
      conveying or otherwise disposing of property at 3119 Nashville,
      Nederland, Texas 77627.

             On November 23, 2020, after MTGLQ[] Investors, LP. notified
      the court of appeals Mr. Salvagio violated the writ of injunction, the
      court of appeals issued an order directing this court issue a notice for
      show cause hearing ordering James David Salvagio to appear in person
      and answer the allegations made by MTGLQ’s notice of injunction
      violation. The order further directed this court to hold an evidentiary
      hearing and make findings of fact on whether James David Salvagio,
      individually and in any of his representative capacities, including as
      independent executor of the Estate of Beverly Salvagio, Deceased, and
      as beneficiary and trustee of the James David Salvagio Living Estate
      Trust, directly or indirectly sold, conveyed or otherwise disposed of
      property at 3119 Nashville, Nederland, Texas 77627 and to make
      recommendations regarding coercive, curative, or punitive measures to
      address any violation of the writ of injunction.

            On the 6th day of January 2021, came on for hearing Shellpoint
      and MTGLQ’s motion for contempt. Upon consideration of the motion,
      evidence, including testimony from James David Salvagio, responses,
      and the arguments presented, THE COURT FINDS James David
      Salvagio knowingly violated the writ of injunction by conveying the
      property as trustee of the James David Salvagio Living Estate Trust on
      August 14, 2020 to John and Julianne Salvagio. THIS COURT
      THEREFORE recommends that James David Salvagio be found in
      contempt of court for violating the writ of injunction.

            SIGNED this 13th day of January, 2021.

                                     /S/____________________________
                                     HONORABLE W. KENT WALSTON

      The supplemental clerk’s and reporter’s records containing the matters

addressed by the trial court have been filed with the appellate court. Based on the

trial court’s findings and recommendation, it appears that James David Salvagio is

                                         6
in willful violation of the writ of injunction issued by the Ninth Court of Appeals on

August 21, 2019, in that on August 19, 2020, he conveyed to Julianne Salvagio and

John Salvagio the real property known as Lot Number sixteen (16), in Block Number

five (5) of Helena Park, section three (3) addition to the City of Nederland, Jefferson

County, Texas, according to the map or plat of record in volume 11, page 4, map

records in the office of the County Clerk of said county and state, commonly known

as 3119 Nashville, Nederland, Texas 77627, by signing, in his capacity as “Trustee

of the James David Salvagio Living Estate Trust dated November 11, 2011, and any

amendments thereto” a warranty deed with vendor’s lien from James David Salvagio

Living Estate Trust, as grantor, to Julianne Salvagio and John Salvagio, subject to a

deed of trust granting a lien to Quicken Loans, LLC to secure a note in the amount

of $164,000.

      We allowed the parties to file briefs with this Court regarding whether the

evidence adduced at the hearing before the trial court supports the trial court’s

findings, whether the trial court’s findings support a judgment of contempt, and the

appropriate punitive or coercive contempt in the event the Court finds a willful

violation of the Court’s writ of injunction.

                               Salvagio’s Arguments

      Salvagio as an individual person was, he concedes, before this Court in the

appeal and in the injunction proceeding when we enjoined Salvagio, a person, from

                                          7
conveying the property in any capacity, specifically including in his capacity as a

trustee. Salvagio clearly had notice of our injunction, as he was represented by

counsel in the proceeding and admits that after we issued our injunction he

personally drafted and filed a response in his capacity as Trustee.

      Salvagio argues that he cannot be held in contempt as an individual because

“Salvagio, individually, did not transfer the property[.]” He adds that “Salvagio, as

the Trustee, does not contest the facts related to the transfer itself. It clearly

happened.” However, he cites no supporting authority for his argument.

      In the hearing before the trial court, which was held on January 6, 2021,

Salvagio testified that the net proceeds from the sale were paid into an account in

the name of the trust. Salvagio argues he cannot be subject to coercive civil contempt

because his testimony established impossibility of performance, as follows:

             Q. [By Counsel for Salvagio]: All right. Now, with respect to the
      sales proceeds, I think you answered this; but I just want to be clear. I
      think what your testimony was, if you were say confined to jail until
      you unwound the transaction paying off the Quicken Loans lien, you
      don’t have the means or the ability to do that?
             A. [By Salvagio] Correct.

This argument assumes that the only way to remedy Salvagio’s contemptuous act of

conveying the property in violation of this Court’s injunction is to return the same

funds that were received in the transaction. There is no evidence in the record that it

would be impossible to obtain a re-conveyance of the property. Therefore,

Salvagio’s conclusory assertion that he could not unwind the Quicken Loans
                                          8
transaction if he were confined in jail does not establish that any order of civil

contempt this Court might issue would be void.

      Salvagio suggests this Court cannot order Salvagio to be confined in jail

before an opinion issues in the appeal of the trial court’s judgment. We need not

address this argument, as we issue our opinion and judgment in the appeal

contemporaneously with the issuance of our opinion and judgment of contempt.

                                        Analysis

      Because Salvagio violated a writ of injunction issued by our court, our court

must be the one to hold him in contempt if it is to be done. Courts possess the

inherent power to enforce their own orders through contempt proceedings. In re

Gabbai, 968 S.W.2d 929, 931 (Tex. 1998). While on appeal, the appellate court has

exclusive jurisdiction to enforce the orders at issue in the appeal, regardless of

whether contempt occurred before or after the appellate court acquired jurisdiction.

Id. The trial court has no authority to punish a relator for violating requirements only

found in an appellate court’s order. See id. When evidence is required in such a

determination, it is appropriate for the appellate court (while retaining jurisdiction)

to refer the matter to the district court for hearing the evidence, then the district court

may forward the transcript to the appellate court. See Ex parte Werblud, 536 S.W.2d

542, 544–45 (Tex. 1976) (orig. proceeding); see also In re Sheshtawy, 154 S.W.3d

114, 123-24 (Tex. 2004) (orig. proceeding). The matter here was referred to the trial

                                            9
court for evidentiary findings, the trial court has no power to enforce our orders. See

Gabbai, 968 S.W.2d at 931. The trial court found that Salvagio knowingly violated

this Court’s writ of injunction “by conveying the property as trustee of the James

David Salvagio Living Estate Trust on August 14, 2020 to John and Julianne

Salvagio.” The trial court further recommended that Salvagio be found in contempt.

      There are two types of contempt, criminal and civil, and the distinction

between them hinges on the nature and purpose of the sentence. Werblud, 536

S.W.2d at 545; Cadle Co. v. Lobingier, 50 S.W.3d 662, 667 (Tex. App.—Fort Worth

2001, pet. denied); see also Shillitani v. United States, 384 U.S. 364, 369–70 (1966).

“The purpose of civil contempt is remedial and coercive in nature.” Werblud, 536

S.W.2d at 545. With a judgment of civil contempt, the court exerts its judicial

authority to persuade a contemnor to obey a court’s order where such obedience

benefits an opposing litigant. Id. On the other hand, criminal contempt is punitive in

nature. Id. The punishment is not dependent on future performance, rather the

contemnor is punished for “some completed act which affronted the dignity and

authority of the court.” Id. (citations omitted); see also Cadle Co., 50 S.W.3d at 667

(noting in criminal contempt proceedings “no subsequent voluntary compliance can

enable the contemnor to avoid punishment.”). A hybrid order assessing sanctions for

both civil and criminal contempt is allowed. See Ex parte Sanchez, 703 S.W.2d 955,

957 (Tex. 1986) (orig. proceeding); Cadle Co., 50 S.W.3d at 667—68.

                                          10
      Based upon the findings of fact made by the trial court in the trial court’s order

dated January 13, 2021, we have determined James David Salvagio willfully

violated this Court’s writ of injunction and is in contempt. As punishment for this

contempt, we assess a $500 fine against Salvagio. See Tex. Gov’t Code Ann. §

21.002(b) (setting out maximum punishment for criminal contempt as not more than

$500 or confinement in the county jail for not more than six months or both).

      “Civil contempt is coercive and is based on the notion that the contemnor

‘carries the keys of [his] prison in [his] own pocket.’” Ex parte Rojo, 925 S.W.2d

654, 655 (Tex. 1996) (quoting Werblud, 536 S.W.2d at 545). Ex parte Johns outlined

a court’s available remedies for coercive contempt. 807 S.W.2d 768 (Tex. App.—

Dallas 1991, orig. proceeding). “In these matters, a judge can impose either a fine or

imprisonment, or both, so long as the imprisonment is conditional.” Id. at 770

(emphasis added); see also Ex parte Perry, No. 04-14-00567-CV, 2014 WL

4347740, at *3 (Tex. App.—San Antonio Sept. 3, 2014, orig. proceeding) (mem.

op.). A daily coercive fine is not limited by section 21.002(b), which governs

criminal contempt fines. See Cadle Co., 50 S.W.3d at 668.

      In re Chaumette addressed a similar fact scenario and involved the transfer of

real estate in violation of a trial court’s injunction. 439 S.W.3d 412, 414 (Tex.

App.—Houston [1st Dist.] 2014, orig. proceeding). There, the trial court found that

the relator violated the trial court’s order by conducting a trustee’s sale, then by

                                          11
executing and recording a substitute trustee’s deed. See id. The trial court ordered

that the relator “shall be confined in the Brazoria County Jail until he purges himself

of contempt by executing and recording a document in form acceptable to the Court,

vacating the said substitute trustee’s deed, effective September 6, 2011[.]” Id. The

relator tried to purge himself of the contempt by filing a “Rescission of Foreclosure

Sale” in the real property records, but the trial court found this unsatisfactory. See

id. The trial court then tried to have relator sign an “Order and Declaratory Judgment

on Amended Motion to Vacate Substitute Trustee’s Deed,” and execute a

“Rescission of Deed” document to reverse the transaction, but the documents were

returned to the trial court unsigned. See id at 415. The relator said he could not sign

them since they contained inaccuracies. See id. The relator attempted to execute the

documents in a form he was comfortable with, but the trial court apparently found

the relator’s attempts insufficient. See id. The trial court then issued a capias for the

relator’s arrest based on the prior civil contempt order. See id. Ultimately, the First

Court of Appeals granted habeas relief, holding “that the purging provision of the

contempt order does not ‘spell out exactly’ in clear and unambiguous language what

relator must do to purge the contempt.” Id. at 416; see also In re Houston, 92 S.W.3d

870, 877 (Tex. App.—Houston [14th Dist.] 2002, orig. proceeding). (order must tell

contemnor in “clear, specific, and unambiguous terms” how to purge himself of

contempt); Ex parte Rosser, 899 S.W.2d 382, 387 (Tex. App.—Houston [14th Dist.]

                                           12
1995, orig. proceeding) (order not clearly specifying action relator must take is

void). An order of contempt must describe in specific terms the exact documents the

contemnor needs to obtain to purge himself of contempt. See Chaumette, 439 S.W.3d

at 416.

      In addition to a punitive fine in the amount of $500.00, as a condition of his

release or to purge himself from the contempt, we order James David Salvagio to

obtain an executed general warranty deed from John Salvagio and Julianne Salvagio,

as grantors, to James David Salvagio “as trustee of the James David Salvagio Living

Estate Trust,” conveying the real property described as Lot Number sixteen (16), in

Block Number five (5) of Helena Park, section three (3) addition to the City of

Nederland, Jefferson County, Texas, according to the map or plat of record in

volume 11, page 4, map records in the office of the County Clerk of said county and

state, commonly known as 3119 Nashville, Nederland, Texas 77627. James David

Salvagio is further ordered to file the properly executed general warranty deed with

the Jefferson County Clerk’s Office, 1085 Pearl Street, First Floor, Beaumont, Texas

77701, for recording in the real property records of Jefferson County, Texas,

instanter. James David Salvagio shall file notice with this Court concurrently with

the filing of the documents with the County Clerk’s office. We further order James

David Salvagio shall be fined the amount of $500 per day for each and every day

                                        13
until such properly executed document is filed in the real property records of

Jefferson County, Texas, beginning on the first day after the issuance of this order.

                                     Conclusion

      Having determined James David Salvagio willfully violated this court’s writ

of injunction after providing notice and an opportunity to show cause in the trial

court, we hold James David Salvagio in contempt. We assess a $500 punitive fine

for his willful violation of this Court’s writ of injunction. Additionally, James David

Salvagio is ordered to obtain a properly executed general warranty deed as described

in our judgment of contempt and is assessed a coercive fine of $500 per day until

such time as the properly executed general warranty deed is filed with the Jefferson

County Clerk’s office.

                                                                  PER CURIAM

Opinion Delivered April 8, 2021

Before Kreger, Horton, and Johnson, JJ.

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