Court Opinion

ID: 3086159
Source: CourtListenerOpinion
Date Created: 2015-10-16 02:46:57.693853+00
Date Added: 2024-06-11T11:50:50.516096
License: Public Domain

Conditionally GRANT; and Opinion Filed February 12, 2014.

                                           Court of Appeals
                                                            S     In The

                                    Fifth District of Texas at Dallas
                                                       No. 05-14-00049-CV

                                     IN RE CATHERINE KARLSENG, Relator

                         Original Proceeding from the 192nd Judicial District Court
                                           Dallas County, Texas
                                   Trial Court Cause No. DC-08-14206-K

                                          MEMORANDUM OPINION
                                    Before Justices Bridges, Lang-Miers, and Myers
                                            Opinion by Justice Lang-Miers
           Relator, Catherine Karlseng, filed this mandamus proceeding after the trial court rendered

a turnover order requiring her to turn over certain income that she receives from the law firm

where her husband Robert Karlseng, the judgment debtor, works. We conditionally grant relief.

                                                                  BACKGROUND

           This petition for writ of mandamus arises from a turnover proceeding following the trial

court’s rendition of summary judgment against Robert Karlseng for the unpaid principal, interest,

and charges on a promissory note. Catherine Karlseng was not a party in the case. After

attempting a variety of means to identify executable property owned by Robert Karlseng, Wells

Fargo Bank, N.A. 1, the party seeking to enforce the judgment and real party in this proceeding,

     1
       Catherine Karlseng argues that Wells Fargo is not the proper party to enforce the judgment in this case because the judgment was in favor
of Wachovia Bank, National Association. Because we conclude that the issuance of a turnover order against Catherine Karlseng was improper in
a proceeding in which she was not joined as a party, we need not reach this issue.
filed an application for a turnover order, the appointment of a receiver, and a temporary

restraining order pursuant to Section 31.002(b)(3) of the Texas Civil Practice and Remedies

Code. During the course of the proceedings on the turnover order, Wells Fargo sought to

establish that while Robert Karlseng is nominally an employee of the professional corporation

where he is a named principal and works as a lawyer, he is actually an independent contractor.

Wells Fargo further sought to establish that while Catherine Karlseng is also nominally

employed by the same law firm, she does not do any work for the firm and receives wages only

by virtue of Robert Karlseng’s work at the firm. Wells Fargo argued that the amounts Catherine

Karlseng receives from the firm are actually Robert Karlseng’s income held on his behalf by

Catherine Karlseng. Wells Fargo argued that all of the proceeds that the Karlsengs receive from

the law firm, whether paid to Robert Karlseng or Catherine Karlseng, are not wages, which are

exempt from execution under Texas law, but rather are subject to execution as the proceeds from

Robert Karlseng’s work as an independent contractor.

       After reviewing extensive briefing and argument and conducting several evidentiary

hearings on the application for turnover, the trial court rendered an order requiring Catherine

Karlseng to turn over “all income and other amounts derived by Catherine Karlseng, directly or

indirectly, from Defendant's work as a lawyer and his law firm” and to further turn over a variety

of assets related to that income. Catherine Karlseng then brought this mandamus proceeding.

Robert Karlseng is not a party to the petition for writ of mandamus.

                                AVAILABILITY OF MANDAMUS REVIEW

       Standard of Review

       To obtain mandamus relief, a relator must show both that the trial court has clearly

abused its discretion and that she has no adequate appellate remedy. In re Prudential Ins. Co.,

148 S.W.3d 124, 135-36 (Tex. 2004) (orig. proceeding); Walker v. Packer, 827 S.W.2d 833,

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839-40 (Tex. 1992) (orig. proceeding). A trial court has “no ‘discretion’ in determining what the

law is or applying the law to facts.” In re Prudential, 148 S.W.3d at 135 (quoting Walker, 827
S.W.2d at 840).

       Adequacy of Appeal

       Wells Fargo argues first that Catherine Karlseng is not entitled to relief because she has

an adequate remedy by appeal. As between the judgment debtor and the judgment creditor, a

turnover order is a final, appealable judgment. See Davis v. West, 317 S.W.3d 301, 309 (Tex.

App.—Houston [1st Dist.] 2009, no pet.); Burns v. Miller, Hiersche, Martens & Hayward, P.C.,

909 S.W.2d 505, 506 (Tex. 1995).

       Third parties also have a right to appeal turnover orders to “protect their affected property

interests.” Schultz v. Fifth Judicial Dist. Court of Appeals, 810 S.W.2d 738, 739 n.3 (Tex. 1991)

(dictum), abrogated on other grounds, In re Sheshtawy, 154 S.W.3d 114 (Tex. 2004); see also

Gerjets v. Davila, 116 S.W.3d 864, 869-70 (Tex. App.—Corpus Christi 2003, no pet.). Texas

Courts of Appeals disagree, however, on whether appeal is the only appropriate remedy for

attacking an improvidently granted turnover order rendered against a third party. Compare Plaza

Court, Ltd. v. West, 879 S.W.2d 271, 276-77 (Tex. App.—Houston [14th Dist.] 1994, no writ)

(mandamus appropriate where turnover order authorized receiver to dispose of assets of third

party); Republic Ins. Co. v. Millard, 825 S.W.2d 780, 783 (Tex. App.—Houston [14th Dist.]

1992, no writ) (third party lacked adequate remedy by appeal) with Int'l Paper Co. v. Garza, 872
S.W.2d 18 (Tex. App.—Corpus Christi 1994, no writ) (mandamus denied because third party

had an adequate remedy by appeal).

       Whether an appellate remedy is adequate depends heavily on the circumstances

presented. In re Prudential, 148 S.W.3d at 136–37; In re Estate of Hutchins, 391 S.W.3d 578,

583 (Tex. App.—Dallas 2012, orig. proceeding). Mandamus review is not justified simply

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because an appeal would arguably involve more cost or delay than mandamus. Walker, 827
S.W.2d at 842. But this case does not involve a complaint simply that appeal would involve a

costly delay in the resolution of Catherine Karlseng’s complaints. Rather, in this case she asserts

that the receiver has frozen her bank account and refuses to disclose whether her funds are still

being held in her bank account or whether they have been disposed of in some other fashion. She

contends that she has been unable to pay her living expenses and that checks she has written

from her checking account have been returned for insufficient funds.          A complaint that a

turnover action will permanently impact the rights of a third party is not a complaint about the

delay or expense associated with appeal. Plaza Court, 879 S.W.2d at 276-77.

       Here, Wells Fargo argues that Catherine Karlseng has an adequate remedy on appeal

because she can supersede execution of the judgment against her assets and obtain appellate

review. We disagree.       A judgment debtor can supersede a turnover order to suspend its

enforcement of the judgment. Schultz, 810 S.W.2d at 739 n.3; Elaine A. Carlson, Reshuffling

the Deck: Enforcing and Superseding Civil Judgments on Appeal After House Bill 4, 46 S. TEX.

L. REV. 1035, 1062 (2005). But that does not necessarily mean the same path provides an

adequate remedy in all circumstances for a non-party to the underlying judgment who has been

ordered to turn over property in which the non-party claims an ownership interest.             The

provisions of the Texas Rules of Appellate Procedure and the Texas Civil Practice & Remedies

Code concerning supersedeas bonds apply expressly to judgment debtors. TEX. R. APP. P.

24.1(a); TEX. CIV. PRAC. & REM. CODE ANN. §52.006(b). A supersedeas bond is security for

delay in enforcing the judgment against the judgment debtor. Universe Life Ins. Co. v. Giles, 982
S.W.2d 488, 493 (Tex. App.—Texarkana 1998, pet. denied); Weber v. Walker, 591 S.W.2d 559,

563 (Tex. Civ. App.—Dallas 1979, no writ); Mudd v. Mudd, 665 S.W.2d 128, 130 (Tex. App.—

San Antonio 1983, no writ); see generally Elaine A. Carlson, Mandatory Supersedeas Bond

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Requirements-A Denial of Due Process Rights?, 39 BAYLOR L. REV. 29, 61 (1987). Catherine

Karlseng is not a judgment debtor in this case and cannot be required to supersede the judgment

to prevent execution against her assets. Accordingly, mandamus lies for her to seek relief from

the turnover order that purports to allow execution against assets she claims are hers.

                     ENFORCEMENT OF TURNOVER ORDER AGAINST NON-PARTY

       The legislature's purpose in enacting the turnover statute was to facilitate the collection of

assets from judgment debtors. Republic Ins. Co. v. Millard, 825 S.W.2d 780, 783 (Tex. App.—

Houston [14th Dist.] 1992, no writ). But “Texas courts do not apply the turnover statute to non-

judgment debtors,” Beaumont Bank, N.A. v. Buller, 806 S.W.2d 223, 227 (Tex. 1991)

(representative of estate could not be ordered to turn over property she possessed in her

individual capacity), and we have said that a trial court may not adjudicate third party ownership

claims in a turnover proceeding. Turner Bros. Trucking, L.L.C. v. Baker, 396 S.W.3d 672, 675

(Tex. App.—Dallas 2013, no pet.) (turnover statute was not available to obtain relief from non-

parties in their individual capacities). The turnover statute is purely procedural and does not

allow for the determination of the substantive rights of third parties. Cross, Kieschnick & Co. v.

Johnston, 892 S.W.2d 435, 439 (Tex. App.—San Antonio 1994, no writ) (turnover order could

not be rendered against partners when underlying judgment involved corporation); Republic Ins.,
825 S.W.2d at 783 ( judgment creditor could not use turnover proceeding to force a third party to

litigate a bad faith claim in court issuing turnover order); Cravens, Dargan & Co. v. Peyton L.

Travers Co., 770 S.W.2d 573, 576–77 (Tex. App.—Houston [1st Dist.] 1989, writ denied)

(judgment creditor could not use turnover statute to reach funds held by State Board of

Insurance); United Bank Metro v. Plains Overseas Group, Inc., 670 S.W.2d 281, 284 (Tex.

App.—Houston [1st Dist.] 1983, no writ) (judgment creditor who obtained judgment against

individual was not entitled to turnover order against corporation). But see Dale v. Fin. Am.

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Corp., 929 S.W.2d 495, 498 (Tex. App.—Fort Worth 1996, writ denied) (adjudicating a claim

that a trust was community property in a turnover proceeding); Norsul Oil & Mining Ltd. v.

Commercial Equip. Leasing Co., 703 S.W.2d 345, 349 (Tex. App.—San Antonio 1985, no writ)

(determining whether judgment debtor had actually assigned and conveyed shares of stock to

third party).

        It is undisputed that Catherine Karlseng was not a party before the court in the underlying

litigation and was not a judgment debtor. A judgment may be enforced against a non-party to the

judgment only by bringing a separate suit alleging a basis for enforcing the judgment against that

party. In re Smith, 192 S.W.3d 564, 568 (Tex. 2006) (judgment may not be amended to include

an alter ego or any other nonjudgment debtor that was not named in the suit); see also Custom

Corporates, Inc. v. Sec. Storage, Inc., 207 S.W.3d 835, 840 (Tex. App.—Houston [14th Dist.]

2006, no pet.) (neither a court's inherent authority to enforce a judgment nor the Texas Rules of

Civil Procedure authorize joinder of parties post-judgment). As a result, the trial court could not

order her to turn over property in which she claims an ownership interest without conducting

proceedings in which she was a party and afforded the opportunity to assert her claim to that

property.   Accordingly, we CONDITIONALLY GRANT the relator’s petition for writ of

mandamus. A writ will issue only in the event the trial court fails to vacate its November 21,

2013 Order Granting Plaintiff’s Designation of Assets (Related to Catherine Karlseng Received

Income) for Turnover to Receiver and Granting Powers and Duties of Receiver.

                                                     /Elizabeth Lang-Miers/
                                                     ELIZABETH LANG-MIERS
                                                     JUSTICE

140049F.P05

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