Court Opinion

ID: 4436447
Source: CourtListenerOpinion
Date Created: 2019-09-07 06:09:38.749607+00
Date Added: 2024-06-11T14:51:18.798804
License: Public Domain

In the
        Court of Appeals
Second Appellate District of Texas
         at Fort Worth
     ___________________________
          No. 02-19-00026-CV
     ___________________________

      ADAM I. BARROW, Appellant

                      V.

 WELLS FARGO BANK, N.A., Appellee

  On Appeal from the 431st District Court
         Denton County, Texas
      Trial Court No. 18-8946-431

 Before Sudderth, C.J.; Kerr and Birdwell, JJ.
     Opinion by Chief Justice Sudderth
                                       OPINION

       Appellee Wells Fargo Bank, N.A., garnishor, filed an application for writ of

garnishment against itself as garnishee, on September 25, 2018, to collect on its

judgment against Appellant Adam I. Barrow, the judgment debtor. The writ of

garnishment issued the following day, and on October 17, Wells Fargo as garnishee

filed an answer. On November 16, Wells Fargo entered into an agreed final judgment

with itself, awarding $6,751.44 from Barrow’s Wells Fargo account to Wells Fargo,

awarding $650.00 in attorney’s fees against Barrow’s account in favor of Wells Fargo,

and assessing filing fees and court costs in the action against Barrow. On December

14, Barrow filed a motion for new trial, challenging the sufficiency of the affidavit

supporting the application and agreed judgment and asserting that some of the seized

money belonged to his 11-year-old son.

       At the time the judgment was signed, no proof of service on Barrow was on

file. See Tex. R. Civ. P. 663a (providing that the judgment debtor—the “defendant”—

in a garnishment action “shall be served in any manner . . . provided in Rule 21a”); see

also Tex. R. Civ. P. 21a(a)(2) (providing that “[e]very notice required by these rules . . .

may be served by delivering a copy to the party to be served . . . in person, mail, by

commercial delivery service, by fax, by email, or by such other manner as the court in

its discretion may direct”). But in an affidavit attached to its response to Barrow’s

motion for new trial, Thomas Sellers, attorney for Wells Fargo, as garnishor, averred

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that in compliance with rule 663a,1 Wells Fargo had sent Barrow the required notices

and documents by first class mail and certified mail, return receipt requested on

October 12, 2018. In its response to Barrow’s motion, Wells Fargo argued that

because Barrow was not a party to the case, he lacked standing to bring a motion for

new trial.

       On January 25, 2019, after hearing argument on Barrow’s motion for new trial,

the trial court found that Barrow did not have standing. In its written order denying

the motion, which was signed on the same day, the trial court ruled, “After reviewing

the evidence,[2] the court concludes that the Motion should be denied, as Adam

Barrow does not have standing.”

       In two issues, Barrow complains that he had standing to file the motion for

new trial and that the evidence was legally and factually insufficient to grant a

judgment of garnishment to Wells Fargo.

       1
        On January 24, 2019, Wells Fargo filed a supplemental affidavit by Sellers,
again attesting to Rule 663a service.
       2
        Notwithstanding this recitation in the written order, the trial court did not
consider evidence at the hearing. After hearing only argument, the court made its oral
ruling as follows,

       After considering the authorities you both cited in your oral arguments
       as well as your responsive brief, the Court finds that, based upon the
       procedural posture of this case and the capacity in which the motion for
       new trial was brought in Mr. Barrow’s name, that he does not have
       standing and the motion for new trial is denied.

                                          3
      Garnishment is a statutory proceeding governed by civil practice and remedies

code chapter 63 and rules of civil procedure 657–679. See Tex. Civ. Prac. & Rem.

Code Ann. §§ 63.001–.008; Tex. R. Civ. P. 657–679. A post-judgment garnishment

proceeding is a quasi in rem action brought by a judgment creditor (the garnishor)

against another party (the garnishee) who holds property or funds belonging to the

judgment debtor. Bank One, Tex., N.A. v. Sunbelt Sav., F.S.B., 824 S.W.2d 557, 558

(Tex. 1992); Zeecon Wireless Internet, LLC v. Am. Bank of Tex., N.A., 305 S.W.3d 813,

816 (Tex. App.—Austin 2010, no pet.). In the garnishment action, the garnishor

seeks to have the property or funds held by the garnishee applied toward payment of

the underlying judgment against the debtor. Zeecon, 305 S.W.3d at 816.

      Because garnishment was unknown at common law and is “purely a creature of

statute,” id., the Texas Supreme Court has held that garnishment proceedings “cannot

be sustained unless they are in strict conformity with statutory requirements.” Beggs v.

Fite, 106 S.W.2d 1039, 1042 (Tex. 1937); see also Zeecon, 305 S.W.3d at 816 (observing

that the supreme court has held that garnishment proceedings cannot be sustained

without strictly conforming to the statutory requirements and related rules governing

such proceedings). This is because the remedy of garnishment is “summary and

harsh.” Beggs, 106 S.W.2d at 1042.

      To ensure a debtor’s due process right to not be deprived of his property

without notice and opportunity to be heard, rule 663a requires a garnishor to serve the

debtor with notice of the garnishment and of his rights to regain his property. Tex. R.
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Civ. P. 663a; see also Hering v. Norbanco Austin I, Ltd., 735 S.W.2d 638, 639–41 (Tex.

App.—Austin 1987, writ denied) (noting that in 1978, the Texas Rules of Civil

Procedure relating to garnishment actions were amended in response to prejudgment

garnishment procedures that were declared unconstitutional based on U.S. Supreme

Court holdings in Sniadach v. Family Fin. Corp., 394 U.S. 337, 89 S. Ct. 1820 (1969), and

Fuentes v. Shevin, 407 U.S. 67, 92 S. Ct. 1983 (1972)). Thus, a garnishor’s failure to

strictly conform with rule 663a’s notice requirement will result in a void judgment. See

Zeecon, 305 S.W.3d at 818–20 (holding that “failure to properly serve the debtor

deprived the trial court of jurisdiction over the debtor’s property—the res,” but

pointing out that a “mere irregularity” is waivable and will not render the garnishment

judgment void).

      The supreme court has identified “three parties” to a garnishment action: (1) a

creditor (the garnishor), (2) a debtor (also referred to as “the defendant”), and (3) a

third person who possesses the debtor’s funds or owes money to the debtor (the

garnishee).3 Orange Cty. v. Ware, 819 S.W.2d 472, 474 (Tex. 1991) (op. on reh’g).

Thus, while the judgment debtor (the defendant) is not a “necessary party”4 to the

      3
        Although the rules of civil procedure provide that the garnishment action is
docketed with the garnishor as plaintiff and the garnishee as defendant, see Tex. R. Civ.
P. 659, in the rules, the term “the defendant” refers to the debtor, and the garnishee is
referred to as “the garnishee.” See Tex. R. Civ. P. 658–679.
      4
       Rule of civil procedure 39, the “necessary party” rule, describes the necessary
party and the circumstances for joinder of a necessary party as follows:

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proceeding, he is nevertheless a party to the proceeding who has rights in the process.

Hering, 735 S.W.2d at 642; see also Tex. R. Civ. P. 663a (providing the right to notice),

664 (providing the right to replevy), 664a (providing the right to have the writ of

garnishment vacated, dissolved, or modified).5

       As the judgment debtor, or “defendant” in the garnishment action, Barrow had

standing to participate in the proceeding. He had standing to replevy or to file a

motion seeking to have the garnishment vacated, dissolved, or modified. See Tex. R.

Civ. P. 664–664a.        But first and foremost, he had the right to notice of the

       A person who is subject to service of process shall be joined as a party in
       the action if (1) in his absence complete relief cannot be accorded
       among those already parties, or (2) he claims an interest relating to the
       subject of the action and is so situated that the disposition of the action
       in his absence may (i) as a practical matter impair or impede his ability to
       protect that interest, or (ii) leave any of the persons already parties
       subject to a substantial risk of incurring double, multiple, or otherwise
       inconsistent obligations by reason of his claimed interest. If he has not
       been so joined, the court shall order that he be made a party. If he
       should join as a plaintiff but refuses to do so, he may be made a
       defendant, or, in a proper case, an involuntary plaintiff.

Tex. R. Civ. P. 39(a).
       5
        Wells Fargo cites to Missouri Pacific Railway Co. v. Whipker, 13 S.W. 639, 639
(Tex. 1890), as “well-established” authority for the proposition that a judgment debtor
is not a party to a garnishment proceeding. We note that Whipker predates the
enactment of the rules of civil procedure and the civil practice and remedies code,
which govern modern-day garnishment actions, and it predates Orange County by
almost a hundred years. Because the law has changed in the intervening century, we
decline to follow Whipker. We also decline to follow our sister court’s holding in
Mullins v. Main Bank & Trust, 592 S.W.2d 24, 26 (Tex. App.—Beaumont 1979, no
writ)—also cited by Wells Fargo in support of its position that Barrow was not a party
to the garnishment proceeding—because it, too, predates Orange County.

                                            6
garnishment action. See Tex. R. Civ. P. 663a; see also Hering, 735 S.W.2d at 641 & n.3

(considering, without deciding, whether a defendant in a post-judgment garnishment

action has a due process right or merely a rule-created right to notice). On appeal,

Barrow complains of defects in service of the garnishment action.

      Wells Fargo makes an interesting argument: that Barrow was required to

intervene in the garnishment proceeding to acquire standing but that it was too late

for Barrow to intervene once the agreed judgment had been signed. Whether Wells

Fargo’s approach is correct appears to be a matter of first impression. But as we see

it, Wells Fargo’s position, were we to adopt it, would create a quintessential catch-22

for defendants in garnishment actions.

      In considering Wells Fargo’s argument, we note as a practical matter that

complaints regarding defective service normally occur postjudgment because that is

when a judgment debtor who has not been properly served would become aware of

the consequences of the garnishment action. To require a garnishment defendant to

intervene in a garnishment action at a time prior to acquiring proper notice of the

proceeding would render meaningless the right to notice of the proceedings in the

first place because most garnishment-action defendants would learn of improper

service only after it was too late to complain. Such a paradox in the law should be

avoided. See Whittlesey v. Miller, 572 S.W.2d 665, 668 (Tex. 1978) (explaining that its

holding “corrects a paradox in the law of this state”).

                                            7
          We are not inclined to create such a catch-22 for garnishment defendants, and

Wells Fargo cites no authority directing us to do so.6 Consequently, we hold that

Barrow had standing to file a motion for new trial, to be heard on the matter, and to

offer evidence in support thereof. The trial court erred by holding otherwise.

      Having sustained Barrow’s first issue, we need not reach Barrow’s second issue

challenging the sufficiency of the evidence to support the judgment. Accordingly, we

reverse the trial court’s judgment and remand the case to the trial court to hear and

consider Barrow’s motion for new trial.

                                                      /s/ Bonnie Sudderth
                                                      Bonnie Sudderth
                                                      Chief Justice

Delivered: September 5, 2019

      6
        Wells Fargo cites to Bechem v. Reliant Energy Retail Services, LLC, 441 S.W.3d
839, 844 (Tex. App.—Houston [14th Dist.] 2014, no pet.), as authority for the
proposition that as a nonparty, Barrow was required to intervene in the garnishment
action to acquire standing. Wells Fargo’s position appears to be based upon a
misreading of one sentence in the case. In Bechem, our sister court states, “A debtor
may controvert the garnishee’s answer, however, or a third party may intervene
claiming an interest in the garnished property.” Id. Couched in the disjunctive, Bechem
does not support the proposition that a debtor must intervene in a garnishment action
to acquire standing. Furthermore, as explained above, the supreme court has
identified the judgment debtor as a party to a garnishment action. See Orange Cty., 819
S.W.2d at 474.

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