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concluding in part that the trial court abused its discretion by ordering the production of income tax returns and 1099 forms
Summary of this case from Vaughan v. MedinaOpinion
NUMBER 13-18-00541-CV
02-27-2019
IN RE JEFFREY R. VAUGHAN
On Petition for Writ of Mandamus.
MEMORANDUM OPINION
Before Chief Justice Contreras and Justices Benavides and Longoria
Memorandum Opinion by Justice Benavides
See TEX. R. APP. P. 52.8(d) ("When denying relief, the court may hand down an opinion but is not required to do so. When granting relief, the court must hand down an opinion as in any other case."); id. R. 47.4 (distinguishing opinions and memorandum opinions).
Through this original proceeding, relator Jeffrey R. Vaughan seeks to avoid the production of documents pertaining to his net worth in a post-judgment proceeding under Texas Rule of Appellate Procedure 24. See generally TEX. R. APP. P. 24 (governing the suspension of enforcement of judgments pending appeal in civil cases). We conditionally grant the petition for writ of mandamus in part and deny it in part.
I. BACKGROUND
Raul Medina obtained a judgment against Vaughan in a case involving breach of a promissory note. Vaughan appealed that judgment in our pending appellate cause number 13-18-00266-CV, Jeffrey R. Vaughan v. Raul Medina and Law Office of Raul Medina, P.C. Pursuant to Texas Rule of Appellate Procedure 24, Vaughan filed a motion in the trial court to set a bond for the appeal. See generally id. In his motion, Vaughan stated that his net worth was "zero" and requested that the bond be set at the "nominal" amount of $1,000.00. Vaughan asserted that he "owns no real estate, stocks, bonds or assets other than the furniture and equipment of his law office which are tools of his trade as a lawyer." He supported his motion to set bond with a two-page "Personal Financial Statement" and accompanying affidavit stating that the information in the financial statement was "true and correct." See id. R. 24.2(c)(1).
Medina filed a contest to Vaughan's motion to set bond. See id. R. 24.2(c)(2). Medina alleged, inter alia, that Vaughan had paid his trial counsel, George Bishop, more than $100,000 in attorney's fees and that Vaughan was "hiding resources" to "avoid his obligations." Medina requested that the trial court set the contest for hearing after Vaughan had adequately responded to post-judgment discovery.
Medina then propounded post-judgment requests for production and inspection to Vaughan. The requests for production and inspection sought fourteen categories of documents, including the three categories of financial documents that are at issue here: (1) tax returns for Vaughan and his two law firms, Vaughan Law Firm, P.C. and Law Office of Jeffrey R. Vaughan, P.C.; (2) 1099 forms issued by or to these law firms; and (3) Interest on Lawyer Trust Account (IOLTA) bank statements for the two firms. These requests for production or inspection were temporally limited in scope from 2012 to present.
Vaughan filed a response to Medina's requests for production and inspection asserting multiple objections; however, Vaughan did not produce any documents in response to Medina's requests.
The Texas Rules of Civil Procedure required Vaughan to "comply with as much of the request to which the party has made no objection unless it is unreasonable under the circumstances to do so before obtaining a ruling on the objection." TEX. R. CIV. P. 193.2; see also id. R. 193 cmt. 2.
Medina filed a motion to compel responses to his requests for production and inspection. The trial court held a non-evidentiary hearing on Medina's motion to compel. At the hearing, Medina argued that Vaughan was the sole owner of both of his law firms and had control over the law firms' assets. Medina asserted that Vaughan had been in "heavy debt" since 2012. Medina also argued that Bishop testified in deposition that Vaughan had paid Bishop approximately $103,000 for defending him in the underlying lawsuit, and that Medina did not believe that Vaughan was "disclosing all of his assets because nobody goes in and spends over $100,000 on attorney's fees on a $300,000 note." Medina further presented argument that production of the IOLTA statements would indicate the presence of attorney's fees payable to Vaughan. Vaughan argued, in contrast, that the documents were not discoverable and that he had paid Bishop only $58,000.
By order signed on September 9, 2018, the trial court sustained some of Vaughan's objections and overruled others. The trial court sustained Vaughan's objections to requests for production numbered 3-8, which generally sought the production of lists of pending cases and settled cases, including the amount of gross attorney's fees generated in each case, and lists of employees for each law firm. The court overruled in part and sustained in part Vaughan's objections to requests for production numbered 1-2 and 9-14 and ordered Vaughan to respond to these requests in part. The court's order required Vaughan to produce: all federal and state income-reporting documents, including tax returns with all schedules and amendments, whether personal or for the law firms; all 1099 forms issued by or to the law firms; and all IOLTA bank statements for the law firms. The trial court's order limited the scope of production "from January 2015 to the present."
This original proceeding ensued. By one issue, Vaughan argues that the trial court abused its discretion in ordering the production of "confidential and privileged business records that have no bearing on the issue of relator's net worth." In two sub-issues, he specifically asserts that (1) Medina failed to meet his burden to show that Vaughan's tax returns were relevant and material to net worth, and (2) IOLTA bank statements and 1099 forms have no relevance to net worth because they "show funds going out, not assets."
We note that Vaughan raised additional objections in the trial court which are not presented here for our review. For instance, in his responses to the requests for production, Vaughan objected on grounds that the Law Office of Raul Medina, P.C. was not a proper party and did not have standing and capacity to seek discovery from Vaughan because it "never had an affirmative finding or judgment" against him. We do not address objections raised in the trial court that are not presented in this original proceeding.
The Court requested and received a response to the petition from Medina. Medina argued that Vaughan "put his net worth into question" by filing a motion to reduce bond under Rule 24.2(a)(1)(A). See generally id. R. 24.2. Medina further contended that the two law firms were assets owned by Vaughan and that Vaughan generated income from these firms, "thus making them relevant and material to the issue of his net worth." Medina argued that it was "inconceivable how someone who claims [he] has no assets can pay in excess of $100,000 in attorney's fees, excluding expert fees and litigation expenses." In seeking the discovery, Medina emphasized the factual discrepancy between the testimony of Vaughan's lawyer, Bishop, who had testified that Vaughan paid him more than $100,000, and Vaughan's assertions that he had paid Bishop a far less substantial sum.
II. STANDARD FOR MANDAMUS
To obtain relief by writ of mandamus, a relator must establish that an underlying order is void or a clear abuse of discretion and that no adequate appellate remedy exists. In re Nationwide Ins. Co. of Am., 494 S.W.3d 708, 712 (Tex. 2016) (orig. proceeding); In re Prudential Ins. Co. of Am., 148 S.W.3d 124, 135-36 (Tex. 2004) (orig. proceeding); Walker v. Packer, 827 S.W.2d 833, 839-40 (Tex. 1992) (orig. proceeding). An abuse of discretion occurs when a trial court's ruling is arbitrary and unreasonable or is made without regard for guiding legal principles or supporting evidence. In re Nationwide, 494 S.W.3d at 712; Ford Motor Co. v. Garcia, 363 S.W.3d 573, 578 (Tex. 2012). A trial court abuses its discretion when it fails to analyze or apply the law correctly or apply the law correctly to the facts. In re Nationwide, 494 S.W.3d at 712; In re H.E.B. Grocery Co., 492 S.W.3d 300, 302 (Tex. 2016) (orig. proceeding) (per curiam).
We determine the adequacy of an appellate remedy by balancing the benefits of mandamus review against the detriments. In re Essex Ins. Co., 450 S.W.3d 524, 528 (Tex. 2014) (orig. proceeding); In re Prudential Ins. Co. of Am., 148 S.W.3d at 136. In deciding whether the benefits of mandamus outweigh the detriments, we weigh the public and private interests involved, and we look to the facts in each case to determine the adequacy of an appeal. In re United Servs. Auto. Ass'n, 307 S.W.3d 299, 313 (Tex. 2010) (orig. proceeding); In re McAllen Med. Ctr., Inc., 275 S.W.3d 458, 469 (Tex. 2008) (orig. proceeding); In re Prudential Ins. Co. of Am., 148 S.W.3d at 136-37.
A trial court abuses its discretion when it orders discovery that exceeds the scope permitted by the rules of procedure. In re N. Cypress Med. Ctr. Operating Co., Ltd., 559 S.W.3d 128, 130-31 (Tex. 2018) (orig. proceeding); In re CSX Corp., 124 S.W.3d 149, 152 (Tex. 2003) (orig. proceeding) (per curiam). A discovery order that compels production beyond the rules of procedure is an abuse of discretion for which mandamus is the proper remedy. In re Nat'l Lloyds Ins. Co., 507 S.W.3d 219, 223 (Tex. 2016); In re Deere & Co., 299 S.W.3d 819, 820 (Tex. 2009) (orig. proceeding) (per curiam); In re Weekley Homes, L.P., 295 S.W.3d 309, 322 (Tex. 2009) (orig. proceeding).
III. SCOPE OF DISCOVERY
The trial court generally has discretion to determine the scope of discovery. In re Nat'l Lloyds Ins. Co., 532 S.W.3d 794, 802 (Tex. 2017) (orig. proceeding); Dillard Dep't Stores, Inc. v. Hall, 909 S.W.2d 491, 492 (Tex. 1995) (orig. proceeding). Parties may seek discovery regarding any matter that is not privileged and that is relevant to the subject matter of the pending action, even if it would be inadmissible at trial, as long as the information sought is reasonably calculated to lead to the discovery of admissible evidence. See TEX. R. CIV. P. 192.3(a); In re Nat'l Lloyds Ins. Co., 507 S.W.3d at 223-24. Information is relevant if it tends to make the existence of a fact that is of consequence to the determination of the action more or less probable than it would be without the information. TEX. R. EVID. 401. What is "relevant to the subject matter" is to be broadly construed. In re Nat'l Lloyds Ins. Co., 449 S.W.3d 486, 488 (Tex. 2014) (orig. proceeding) (per curiam). Nevertheless, discovery requests must be reasonably customized to include only those matters relevant to the case. In re Nat'l Lloyds Ins. Co., 507 S.W.3d at 223; Texaco, Inc. v. Sanderson, 898 S.W.2d 813, 815 (Tex. 1995) (orig. proceeding).
IV. NET WORTH
As stated previously, Vaughan filed a motion to set a bond for appeal in the nominal amount of $1,000.00 on grounds that his net worth was zero. Medina contested Vaughan's net worth, which entitled him to "conduct reasonable discovery concerning the judgment debtor's net worth." TEX. R. APP. P. 24.2(c)(2); see TEX. R. CIV. P. 621a (addressing the trial court's power to supervise post-judgment discovery); see also In re Univ. Gen. Hosp., LP, No. 14-12-00280-CV, 2012 WL 1205688, at *2 (Tex. App.—Houston [14th Dist.] Apr. 10, 2012, orig. proceeding) (mem. op.). When a judgment debtor is uncooperative with reasonable discovery concerning the judgment debtor's net worth, the trial court may take appropriate steps, such as compelling responses and issuing sanctions, to ensure that discovery is completed before the hearing on the judgment creditor's contest. In re Smith, 192 S.W.3d 564, 569 (Tex. 2006) (orig. proceeding) (per curiam); In re Williams, 328 S.W.3d 103, 112 (Tex. App.—Corpus Christi 2010, orig. proceeding).
Texas Rule of Civil Procedure 621a allows discovery after the rendition of judgment "for the purpose of obtaining information to aid in the enforcement" of a judgment that has not been superseded and "for the purpose of obtaining information relevant to" Rule 24 motions. TEX. R. CIV. P. 621a; see In re Longview Energy Co., 464 S.W.3d 353, 362 (Tex. 2015) (orig. proceeding). Texas Rule of Appellate Procedure 24.1(e) also provides: "The trial court may make any order necessary to adequately protect the judgment creditor against loss or damage that the appeal might cause." TEX. R. APP. P. 24.1(e); see In re Longview Energy Co., 464 S.W.3d at 362.
Net worth is generally calculated as the difference between a party's total assets and total liabilities as determined by generally accepted accounting principles. O.C.T.G., L.L.P v. Laguna Tubular Products Corp., 525 S.W.3d 822, 830 (Tex. App.—Houston [14th Dist.] 2017, no pet.); In re Williams, 328 S.W.3d at 110; Tex. Custom Pools, Inc. v. Clayton, 293 S.W.3d 299, 305 (Tex. App.—El Paso 2009, no pet.). A trial court acts within its discretion by ordering the production of financial documents that are relevant and material to prove net worth but abuses its discretion by ordering the production of financial records "that would not necessarily evidence" net worth. See In re Brewer Leasing, Inc., 255 S.W.3d 708, 712 (Tex. App.—Houston [1st Dist.] 2008, no pet.); In re Garth, 214 S.W.3d 190, 194 (Tex. App.—Beaumont 2007, orig. proceeding). As a general rule, only those financial documents pertaining to current net worth are relevant. In re Jacobs, 300 S.W.3d 35, 44 (Tex. App.—Houston [14th Dist.] 2009, orig. proceeding); In re House of Yahweh, 266 S.W.3d 668, 673 (Tex. App.—Eastland 2008, orig. proceeding). Thus, a trial court abuses its discretion in ordering the production of historical net worth information. See In re Garth, 214 S.W.3d at 192; see also In re Shaw, No. 13-10-00487-CV, 2010 WL 4264796, at *1 (Tex. App.—Corpus Christi Oct. 27, 2010, orig. proceeding [mand. dism'd]) (mem. op.)
A trial court may permit broader discovery in cases in which it is necessary to provide an accurate reflection of the defendant's net worth. See, e.g., In re Brewer Leasing, Inc., 255 S.W.3d 708, 713 (Tex. App.—Houston [1st Dist.] 2008, orig. proceeding [mand. denied]) (permitting additional net worth discovery where trial court implicitly found that previously provided unaudited balance sheets did not adequately represent the net worth of the relator).
III. TAX RETURNS
By his first sub-issue, Vaughan asserts that Medina failed to meet his burden to show that the tax returns were relevant and material to Vaughan's net worth. The trial court ordered Vaughan to respond to requests for production numbered 1 and 2 which sought all federal and state income reporting documents, including tax returns with all schedules and amendments, whether personal or for the two law firms, from January 2015 to present.
The Texas Supreme Court has cautioned us that we must scrupulously examine discovery requests for income tax returns to balance privacy rights and the pursuit of justice:
The protection of privacy is of fundamental—indeed, of constitutional—importance. Subjecting federal income tax returns of our citizens to discovery is sustainable only because the pursuit of justice between the litigants outweighs protection of their privacy. But sacrifices of the latter should be kept to a minimum, and this requires scrupulous limitation of discovery to information furthering justice between the parties which, in turn, can only be information of relevancy and materiality to the matters in controversy.Maresca v. Marks, 362 S.W.2d 299, 301 (Tex. 1962) (orig. proceeding); see Sears, Roebuck & Co. v. Ramirez, 824 S.W.2d 558, 559 (Tex. 1991) (orig. proceeding) (per curiam) (concluding that the issuance of mandamus was "guided by our reluctance to allow uncontrolled and unnecessary discovery of federal income tax returns"). Nevertheless, "[i]ncome tax returns are discoverable to the extent they are relevant and material to the issues presented in the lawsuit." Hall v. Lawlis, 907 S.W.2d 493, 494-95 (Tex. 1995); El Centro del Barrio, Inc. v. Barlow, 894 S.W.2d 775, 779-80 (Tex. App.—San Antonio 1994, no writ); see also In re Namdarkhan, No. 05-16-01410-CV, 2017 WL 1075640, at *3 (Tex. App.—Dallas Mar. 21, 2017, orig. proceeding) (mem. op.). However, because of the privacy interests inherent in these documents, income tax returns may not be discoverable when there are other adequate methods to determine net worth. See In re Williams, 328 S.W.3d at 116-17; In re Brewer Leasing, Inc., 255 S.W.3d at 713-15; In re Garth, 214 S.W.3d at 194. Further, income tax returns may not be subject to discovery when they would be duplicative of other information regarding net worth that has already been produced. Sears, Roebuck & Co., 824 S.W.2d at 559.
It is self-evident that the maximum protection of privacy is unattainable if trial courts do not exercise their discretion to safeguard from discovery those portions of income tax returns which are irrelevant and immaterial, and it is our view that failure to exercise such discretion is arbitrary action. A litigant so subjected to an invasion of his privacy has a clear legal right to an extraordinary remedy since there can be no relief on appeal; privacy once broken by the inspection and copying of income tax returns by an adversary cannot be retrieved.
As applicable to this original proceeding, income tax returns may be relevant to discovering net worth. See, e.g., In re CFWC Religious Ministries, Inc., 143 S.W.3d 891, 896 (Tex. App.—Beaumont 2004, orig. proceeding); see also In re Garth, 214 S.W.3d at 193; Chamberlain v. Cherry, 818 S.W.2d 201, 205-06 (Tex. App.—Amarillo 1991, orig. proceeding). The burden of proof regarding discovery of income tax returns differs from that pertaining to other types of financial records. The general rule is that the burden on the discovery of financial records lies with the party seeking to prevent production. In re Beeson, 378 S.W.3d 8, 11-12 (Tex. App.—Houston [1st Dist.] 2011, orig. proceeding); In re Brewer Leasing, Inc., 255 S.W.3d at 712; In re Patel, 218 S.W.3d 911, 916 (Tex. App.—Corpus Christi 2007, orig. proceeding); see Peeples v. Honorable Fourth Supreme Judicial Dist., 701 S.W.2d 635, 637 (Tex. 1985) (orig. proceeding). In contrast, after a resisting party objects to the production of tax returns, the burden shifts to the party seeking to obtain the documents to show that the tax returns are both relevant and material to the issues in the case. In re Beeson, 378 S.W.3d at 11-12; see In re Sullivan, 214 S.W.3d 622, 624 (Tex. App.—Austin 2006, orig. proceeding); El Centro del Barrio, Inc., 894 S.W.2d at 779; see also Hall, 907 S.W.2d at 494.
Based on our review of the record, we agree with Vaughan that Medina has not met his burden of proof to obtain discovery of the income tax records. See In re Beeson, 378 S.W.3d at 12; In re Patel, 218 S.W.3d at 919; In re Sullivan, 214 S.W.3d at 624-25; El Centro del Barrio, Inc., 894 S.W.2d at 780; Chamberlain, 818 S.W.2d at 207; see also Wal-Mart Stores, Inc. v. Alexander, 868 S.W.2d 322, 331 (Tex. 1993) (Gonzalez, J., concurring) ("[T]rial courts should not allow discovery of private financial records, such as tax returns, when there are other adequate methods to ascertain net worth. . . ."). Medina has shown that Vaughan's net worth is relevant to his claims pertaining to supersedeas. However, Medina has neither argued nor shown that Vaughan's net worth information cannot be discovered through other, less-intrusive means than the income tax returns. See In re Beeson, 378 S.W.3d at 13; In re Patel, 218 S.W.3d at 918; In re Sullivan, 214 S.W.3d at 623; El Centro del Barrio, Inc., 894 S.W.2d at 780; Chamberlain, 818 S.W.2d at 207. Accordingly, Medina has not shown that he is entitled to production of relators' income tax returns. See In re Beeson, 378 S.W.3d at 13; In re Sullivan, 214 S.W.3d at 623; In re Patel, 218 S.W.3d at 918; El Centro del Barrio, Inc., 894 S.W.2d at 780; Chamberlain, 818 S.W.2d at 207. We sustain Vaughan's first sub-issue pertaining to the tax returns.
IV. 1099 FORMS
By his second sub-issue, Vaughan asserts, in part, that the trial court erred in ordering production of the 1099 forms. Vaughan contends that the law firms' 1099 forms have no bearing on the issue of his net worth because "they only show payments made to contractors and vendors." A "1099 form" is a tax form generated by a payer used to report "payments made in the course of a trade or business to a person who's not an employee or to an unincorporated business," "payments of $10 or more in gross royalties or $600 or more in rents or compensation," and "payment information to the IRS and the person or business that received the payment." Internal Revenue Service, Form 1099 MISC & Independent Contractors, https://www.irs.gov/faqs/small-business-self-employed-other-business/form-1099-misc-independent-contractors/form-1099-misc-independent-contractors (last visited February 12, 2019).
Here, the trial court ordered Vaughan to fully respond to requests for production numbered 9-12, which sought copies of all 1099 forms issued by or to the law firms from January 2015 to the present. In his responses to Medina's discovery requests, Vaughan had objected to the production of these documents on grounds that they were not relevant or reasonably calculated to lead to information relevant to net worth and because the requests were overly broad. At the hearing, Medina argued that the 1099 forms were extremely important for discovery and "more critical" than the income tax returns because the forms showed both the receipt and disbursement of money. In this context, Medina argued that Vaughan could conceal income by disbursing money to family or friends. In response, Vaughan re-urged his written objections and argued that the 1099s "have nothing to do with the current assets and liabilities" of the firms.
We conclude that the resolution of this sub-issue is governed by our analysis regarding the discovery of the tax returns. A 1099 form is a constituent part of an income tax return and this form, like an income tax return itself, implicates privacy interests and does not necessarily indicate net worth. See Maresca, 362 S.W.2d at 301; El Centro Del Barrio, Inc., 894 S.W.2d at 779. Here, as with the tax returns, Medina has neither argued nor shown that Vaughan's net worth information cannot be discovered through other, less-intrusive means than the 1099 forms. See In re Beeson, 378 S.W.3d at 13; In re Patel, 218 S.W.3d at 918; In re Sullivan, 214 S.W.3d at 623; El Centro del Barrio, Inc., 894 S.W.2d at 780; Chamberlain, 818 S.W.2d at 207. Accordingly, Medina has not shown that he is entitled to production of the 1099 forms. See In re Beeson, 378 S.W.3d at 13; In re Sullivan, 214 S.W.3d at 623; In re Patel, 218 S.W.3d at 918; El Centro del Barrio, Inc., 894 S.W.2d at 780; Chamberlain, 818 S.W.2d at 207. We sustain Vaughan's second sub-issue pertaining to the 1099 forms.
V. IOLTA STATEMENTS
By his second sub-issue, Vaughan asserts, in remaining part, that the trial court erred in ordering the production of the IOLTA statements. The phrase "IOLTA statements" refers to statements from bank accounts created pursuant to the requirements of the Texas Equal Access to Justice Program which hold "client funds" in trust. See TEX. STATE BAR R. art. XI, reprinted in TEX. GOV'T CODE ANN., tit. 2, subtit. G, app. A (West, Westlaw through 2017 1st C.S.). Interest earned through an attorney's Interest on Lawyer Trust Account (IOLTA) is transferred to the Texas Equal Access to Justice Foundation, a non-profit corporation, which is charged with administering these funds through grants to non-profit organizations that have a primary purpose of delivering legal services to low income persons. Id. art. XI, § 4. Here, the trial court ordered Vaughan to produce, in response to requests numbered 13 and 14, all IOLTA bank statements for the law firms from January 2015 to present.
Vaughan asserts that the IOLTA bank statements "have no relevance" to net worth because "they show funds going out, not assets." In his responses to Medina's discovery requests, Vaughan objected to the production of these documents because they were not relevant or reasonably calculated to lead to information relevant to net worth and because the requests were overly broad. At the hearing in the trial court, Vaughan argued that IOLTA statements were not relevant because they would not show net worth. He argued that the statements would reflect "client's money, vendor's money." He nevertheless conceded that "a small portion of it would be my money" but argued that those monies would be reflected by other financial documents. Medina argued that IOLTA accounts are relevant "because that's where all the attorney's fees goes first in our type of cases." Medina asserted that the IOLTA accounts would show how much Vaughan was paid in attorney's fees and the statements were relevant because Vaughan was "disputing that he doesn't have any money."
In discussing the production of IOLTA statements, the trial court stated that it was concerned with their production because of a potential infringement on the attorney-client privilege and the existence of client privacy rights in the information. Ultimately, however, the trial court ascertained that Vaughan had not objected to this discovery on grounds of privilege or privacy, ordered the production of the IOLTA bank statements, and offered an in camera inspection for the documents to the extent that they contained anything "inappropriate."
Although the issue has not been presented or briefed in this case, we note that, generally, IOLTA banking transactions do not constitute confidential communications between an attorney and his or her client. See, e.g., Pales v. Fedor, 113 N.E.3d 1019, 1035-37 (Ohio Ct. App. May 24, 2018) (collecting cases).
We conclude that Vaughan failed to carry his burden to prevent production of the IOLTA statements. See In re Beeson, 378 S.W.3d at 11-12; In re Brewer Leasing, Inc., 255 S.W.3d at 712; In re Patel, 218 S.W.3d at 916; see also Peeples, 701 S.W.2d at 637. Vaughan's arguments pertaining to relevance concede that the IOLTA bank statements reflect income. Further, Medina's arguments suggest that discovery of these statements may be necessary to provide an accurate reflection of Vaughan's net worth. See, e.g., In re Brewer Leasing, Inc., 255 S.W.3d at 713 (permitting additional net worth discovery where trial court implicitly found that previously provided unaudited balance sheets did not adequately represent the net worth of the relator). Accordingly, we conclude that the trial court, on this record, did not abuse its discretion in ordering their production. We overrule Vaughan's second sub-issue pertaining to the IOLTA bank statements.
V. ADEQUACY OF REMEDY BY APPEAL
Having concluded that the trial court abused its discretion in ordering the production of the income tax returns and the 1099 forms, we next address Vaughan's argument that he lacks an adequate remedy by appeal. According to the Texas Supreme Court, "privacy once broken by the inspection and copying of income tax returns by an adversary cannot be retrieved." Maresca, 362 S.W.2d at 301. Thus, when a trial court erroneously compels production of an individual's tax returns, appeal is an inadequate remedy and mandamus relief is proper. See Hall, 907 S.W.2d at 495; In re Brewer Leasing, Inc., 255 S.W.3d at 714. Further, as stated previously, mandamus relief is available when the trial court compels production beyond the permissible bounds of discovery. In re Weekley Homes, L.P., 295 S.W.3d at 322.
VI. CONCLUSION
The Court, having examined and fully considered the petition for writ of mandamus, the response thereto, the applicable law, and the record provided, is of the opinion that Vaughan has shown himself entitled to relief, in part, with regard to the production of the income tax returns and the 1099 forms. Accordingly, we lift the stay previously imposed by this Court. See TEX. R. APP. P. 52.10(b) ("Unless vacated or modified, an order granting temporary relief is effective until the case is finally decided."). We conditionally grant the petition for writ of mandamus and direct the trial court to withdraw the portion of its September 9, 2018 order requiring the production of these documents. The writ will issue only if the trial court fails to comply. All other relief not granted herein is denied.
In so ruling, we emphasize that our decision here is based solely on the pleadings and evidence that were before the trial court and are before this Court, and we express no opinion herein regarding the resolution of any discovery disputes that might arise during the future proceedings in this case. Specifically, we make no determination regarding whether, after additional proceedings, the financial records not subject to discovery in this proceeding could hereafter be shown to be discoverable, material, or relevant. See In re Patel, 218 S.W.3d at 919; Kern v. Gleason, 840 S.W.2d 730, 737-38 (Tex. App.—Amarillo 1992, orig. proceeding).
GINA M. BENAVIDES,
Justice Delivered and filed the 27th day of February, 2019.