Opinion
NO. 14-17-00151-CV
03-01-2018
JENNIFER MITCHELL AND TCSM, LLC, Appellants v. TURBINE RESOURCES UNLIMITED, INC., Appellee
On Appeal from the 61st District Court Harris County, Texas
Trial Court Cause No. 2015-50593
MEMORANDUM OPINION
In this appeal from the dismissal of a bill of review in a post-judgment turnover and receivership proceeding, appellants contend that the trial court erred in dismissing their bill of review for want of subject matter jurisdiction based on the appellants' pending appeal in this court. Appellants also contend that the trial court erred in dismissing the appellant corporation for lack of standing based on the corporation's forfeiture of its charter. We affirm on the first issue and do not reach the second.
I. FACTUAL AND PROCEDURAL BACKGROUND
This case has a lengthy procedural history which is described in detail in this court's opinion in the underlying consolidated appeal and petition for mandamus in Mitchell v. Turbine Resources Unlimited, Inc., 523 S.W.3d 189 (Tex. App.—Houston [14th Dist.] 2017, pet. denied) (Mitchell I). We recount the relevant facts from the opinion to place the appellants' arguments in context.
A. The Underlying Receivership Proceeding and Consolidated Appeal
In 2006, Turbine Resources Unlimited, Inc. (Turbine) obtained a judgment in its favor against International A, Inc. and Tom George. Id. at 191. To aid in executing the judgment, the trial court appointed Riecke Baumann as master and receiver to take possession of all non-exempt property in any defendant's actual or constructive possession, and to order all defendants and third parties to produce and turn over assets, evidence, and documents pertaining to compliance with the trial court's order. Id. at 191-92.
Between November 2013 and September 2014, Baumann filed two master's reports, which the trial court adopted in orders signed January 2, 2014, and September 24, 2014. See id. at 192-94. In the order of September 24, 2014, the trial court authorized the sale of certain property "subject to third parties' rights." Id. at 194. During this time, appellant Jennifer Mitchell was not a party to the receivership proceeding. Id. In October 2014, however, Mitchell filed several motions as an "interested third party" to protect alleged interests in property subject to the receivership and to attack several of Baumann's findings in the first and second master's reports. Id. at 194.
Mitchell, however, had appeared before the court after being served with a subpoena by the receiver, and later was deposed concerning any ownership interest she may have had in the subject property and the legal status of Mitchell and George's relationship. See Mitchell I, 523 S.W.3d at 193.
In January 2015, Baumann filed a third master's report. Id. Mitchell filed additional motions challenging all three master's reports, as well as a fourth motion to modify the trial court's orders. Id. at 194-95. The trial court signed an order acknowledging receipt of the third master's report, but the court did not adopt its findings. Id. at 194.
In March 2015, Mitchell and appellant TCSM, LLC (collectively, the Mitchell Parties) filed a plea in intervention claiming that Baumann wrongfully had taken possession of the Mitchell Parties' property in his attempt to satisfy the judgment against George and International A. Id. at 195. Additional motions and objections followed, in which the Mitchell Parties argued that Baumann unlawfully had confiscated assets based on findings made without the benefit of a separate judicial process, and had exceeded the scope of his authority by including in the receivership property that George did not own. Id.
Rather than treat the findings in the first two master's reports as conclusive, the trial court held an evidentiary hearing in which Mitchell provided testimony about each of the disputed findings. Id. at 195, 201. On April 14, 2015, the trial court denied Mitchell's fourth motion to modify the court's orders. Id. at 195. On June 2, 2015, the trial court signed an order approving the sale of assets the Mitchell Parties contended were owned by TCSM. Id. The Mitchell Parties appealed to this court, challenging the trial court's April 14, 2015 order denying Mitchell's motion to modify and the June 2, 2015 order approving the sale of assets. See id.
The Mitchell Parties appealed the trial court's April 14, 2015 order as an accelerated, interlocutory appeal, and separately appealed the June 2, 2015 order about two months later. The related appeals were combined under a single cause number.
After perfecting their appeal, the Mitchell Parties filed in the trial court a motion to set aside the first and second master's reports as void. Id. The trial court denied the motion. Id. The Mitchell Parties subsequently filed in this court a petition for mandamus alleging that the trial court's January 2, 2014 and September 5, 2014 orders adopting the first and second master's reports were void and therefore the trial court erred in refusing to set aside the master's reports. Id. at 195, 202. This court consolidated the Mitchell Parties' appeal and mandamus proceedings. See id. at 191.
On March 30, 2017, this court overruled the Mitchell Parties' appeal, affirming the trial court's orders of April 14 and June 2, 2015. Id. at 203. This court also denied the Mitchell Parties' petition for mandamus, holding that the trial court's orders adopting the first and second master's reports were not void. Id. at 201-03.
B. The Bill of Review
In August 2015, while their appeal was pending, the Mitchell Parties filed in the trial court the bill of review proceeding that is the subject of this appeal. Turbine responded with a "Motion to Dismiss Plaintiffs' Bill of Review for Lack of Jurisdiction."
The trial court considered Turbine's motion to dismiss by submission. On December 28, 2016, the trial court signed an order dismissing the Mitchell Parties' bill of review. The Mitchell Parties appealed the dismissal of their bill of review to this court.
II. THE MITCHELL PARTIES' ISSUES
The Mitchell Parties raise two issues on appeal. In their first issue, the Mitchell Parties contend that the trial court erred by dismissing their bill of review for lack of subject matter jurisdiction on the basis that in the bill of review the Mitchell Parties requested the same relief they sought in the then-pending appeal. In their second issue, the Mitchell Parties contend that the trial court erred by dismissing their bill of review for lack of subject matter jurisdiction on the basis that TCSM lacked standing because TCSM had forfeited its corporate charter.
We conclude that the Mitchell Parties raised the same issues and sought the same relief in their bill of review as they did in the consolidated appeal in Mitchell I, and therefore the trial court did not err by dismissing the Mitchell Parties' bill of review for lack of jurisdiction while the appeal was pending. Consequently, we affirm the trial court's order on this ground and do not reach the Mitchell Parties' second issue.
Lack of Jurisdiction
We construe Turbine's motion to dismiss for lack of jurisdiction as a plea to the jurisdiction. See Erazo v. Sanchez, 502 S.W.3d 894, 897 (Tex. App.—Houston [14th Dist.] 2016, no pet.); Lone Star Coll. Sys. v. Immigration Reform Coal. of Tex. (IRCOT), 418 S.W.3d 263, 267 (Tex. App.—Houston [14th Dist.] 2013, pet. denied). When considering a plea to the jurisdiction, we first determine if the pleader has alleged facts that affirmatively demonstrate the court's jurisdiction to hear the cause. Tex. Dep't. of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 226 (Tex. 2004). We construe the pleadings liberally in favor of the plaintiff, and unless challenged with evidence, we accept all allegations as true. Id. at 226-27. The plea must be granted if the plaintiff's pleadings affirmatively negate the existence of jurisdiction or if the defendant presents undisputed evidence that negates the existence of the court's jurisdiction. Heckman v. Williamson Cty., 369 S.W.3d 137, 150 (Tex. 2012).
"A bill of review is brought as a direct attack on a judgment that is no longer appealable or subject to a motion for new trial." Valdez v. Hollenbeck, 465 S.W.3d 217, 226 (Tex. 2015) (quoting Frost Nat'l Bank v. Fernandez, 315 S.W.3d 494, 504 (Tex. 2010)). Courts do not readily grant equitable bills of review because of the fundamental importance to the administration of justice that some finality be accorded to judgments. Id. Although there may be instances in which a bill of review may proceed at the same time as a direct appeal or restricted appeal, the matters raised on appeal must differ from those urged in the bill of review. See, e.g., Tri-Steel Structures, Inc. v. Hackman, 883 S.W.2d 391, 395 n.2 (Tex. App.—Fort Worth 1994, writ denied); Am. Motorists Ins. Co. v. Box, 531 S.W.2d 407, 410 (Tex. Civ. App.—Tyler 1975, writ ref'd n.r.e.); Winters Mut. Aid Ass'n Circle No. 2 v. Reddin, 49 S.W.2d 1095, 1096-97 (Tex. Comm'n App. 1932, holding approved).
A bill of review must be filed in the court that rendered the original judgment, and only that court may exercise jurisdiction over the bill. Valdez, 465 S.W.3d at 226. Inherent in a court's jurisdiction is the authority to determine whether it can exercise subject matter jurisdiction over the case. Frost Nat'l Bank, 315 S.W.3d at 502. Whether a court has subject matter jurisdiction is a question of law reviewed de novo. Id. at 504; Miranda, 133 S.W.3d at 226.
In their bill of review, the Mitchell Parties requested that the trial court set aside its prior orders and the findings in the first and second master's reports. The Mitchell Parties argued that they were never sued, served with process, or made parties to the underlying suit giving rise to the turnover proceedings by Turbine; therefore, the first and second master's reports were void, as were all subsequent orders relying on the findings and conclusions of the master's reports. The Mitchell Parties also argued that the trial court's orders were void because Mitchell and TCSM were denied due process and their property was seized without proper legal proceedings.
Turbine argued that the bill of review must be dismissed for lack of subject matter jurisdiction because the Mitchell Parties' pending appeal sought the same relief requested in their bill of review. In support of its assertion, Turbine presented the following evidence: the Mitchell Parties' notices of appeal; a trial court filing in which Mitchell acknowledged that "[t]he issue of whether the Master's Reports bind Mitchell are also on appeal"; the Mitchell Parties' motion for a stay in this court, in which they acknowledged that the master's reports and other orders were currently on appeal and stated that "[a]t the heart of the underlying appeal is whether the Receiver/Master had the authority (and whether the trial court had jurisdiction) to determine the substantive property rights of Jennifer Mitchell and TCSM, LLC"; and a copy of the Mitchell Parties' appellate brief, in which the Mitchell Parties requested, among other things, that the trial court vacate "[t]he Master's Report and Second Master's Report as adopted by the trial court."
In addition, Turbine asserted that the Mitchell Parties did not meet the elements for a bill of review, but this issue goes to the merits of the bill of review rather than whether the trial court has jurisdiction to hear the bill of review; therefore, we need not consider it.
"The filing of a notice of appeal by any party invokes the appellate court's jurisdiction over all parties to the trial court's judgment or order appealed from." Tex. R. App. P. 25.1. Once a case has been appealed, the appellate court has plenary jurisdiction over the subject matter of the appeal and, in the absence of express authorization by rule or statute, the trial court generally has no jurisdiction to change or modify its judgment during the pendency of the appeal. See Robertson v. Ranger Ins. Co., 689 S.W.2d 209, 210 (Tex. 1985) (per curiam); Carrillo v. State, 480 S.W.2d 612, 616 (Tex. 1972); Ammex Warehouse Co. v. Archer, 381 S.W.2d 478, 482 (Tex. 1964); see also Stubbs v. Stubbs, 657 S.W.2d 10, 11-12 (Tex. App.—Dallas 1983, no writ) (recognizing that district court had no jurisdiction to consider a motion to modify an order on appeal because a trial court "generally has no jurisdiction to vacate or change a judgment once the case has been appealed"). Because both the bill of review and the appeal challenged the first and second master's reports and the subsequent trial court orders, as well as the authority of the master and the trial court to adjudicate the ownership of property belonging to Mitchell or TCSM, the trial court did not err by dismissing the Mitchell Parties' bill of review for lack of jurisdiction.
The Mitchell Parties contend, however, that they filed their bill of review as a direct attack against the trial court's orders in the post-judgment proceedings, and therefore the trial court that rendered those orders is the only court that has jurisdiction over the bill of review. See Frost Nat'l Bank, 315 S.W.3d at 504. The Mitchell Parties also assert that the then-pending appeal in Mitchell I did not deprive the trial court of jurisdiction because "the orders being attacked were different and the legal arguments were unique to those orders." The Mitchell Parties make no attempt to distinguish among the various orders or explain how the issues differed.
Though the Mitchell Parties' argument is not entirely clear, the Mitchell Parties appear to be arguing that the appeal attacked the trial court's authority to order the sale of the disputed property, while the bill of review attacks the validity of the findings in the first and second master's reports (as well as the orders adopting them). This argument fails, however, because a comparison of the bill of review and the Mitchell Parties' complaints in Mitchell I reveals that the issues concerning the master's reports and the trial court's orders adopting the findings in the master's reports are substantively the same. Likewise, the ultimate relief requested is the same in both proceedings—that the master's reports as adopted by the trial court and the orders ultimately authorizing the sale of the disputed property are vacated.
To the extent the Mitchell Parties contend that the master's reports are themselves appealable judgments, they are incorrect. See Tex. R. Civ. P. 171; Hansen v. Sullivan, 886 S.W.2d 467, 469 (Tex. App.—Houston [1st Dist.] 1994, no writ) ("[M]asters do not have the power to render judgment.").
Moreover, because this court has issued its opinion in Mitchell I and the supreme court has denied the Mitchell Parties' petition for review, the trial court's orders are now final. "[A] bill of review may not be used as an additional remedy after one . . . has made a timely but unsuccessful appeal" of issues previously litigated. Rizk v. Mayad, 603 S.W.2d 773, 776 (Tex. 1980).
In addition to Turbine's evidence discussed above, we note that the Mitchell Parties emphasized in their bill of review that the master's reports and all subsequent orders were void because the Mitchell Parties were never sued, served with process, or made parties to the underlying suit; Mitchell and TCSM were denied due process; and their property was seized without proper legal proceedings. Accordingly, the Mitchell Parties requested the trial court to "declare void all orders" issued in the receivership proceeding "which purport to dispose or otherwise seize assets or other property of Jennifer Mitchell and TCSM, LLC."
Similarly, the issues in the Mitchell Parties' appellate brief in Mitchell I included the following: "The trial court lacked jurisdiction to order the sale of Appellants' property because Appellants were not served with citation or legal process before the trial court adversely affected their property interests"; and "The Master's Reports are void and subject to collateral attack because they adversely affect Appellants' interests, yet Appellants were not served with process before the trial court adopted the Master's Reports as final orders." Further, in their prayer for relief, the Mitchell Parties requested that this court vacate the following orders, among others: the trial court's order approving the sale of the disputed property, the denial of Mitchell's motion to modify the trial court's orders, and the first and second master's reports as adopted by the trial court.
Acknowledging that they argued "similar positions" in both the bill of review and on appeal by arguing that the master's reports were void, the Mitchell Parties next argue that, to the extent the appeal in Mitchell I addressed the master's reports, those issues were collateral attacks, whereas the bill of review is a direct attack. See Frost Nat'l Bank, 315 S.W.3d at 504 (a bill of review is a direct attack on a judgment). "A direct attack—such as an appeal, a motion for new trial, or a bill of review—attempts to correct, amend, modify or vacate a judgment . . . ." PNS Stores, Inc. v. Rivera, 379 S.W.3d 267, 271 (Tex. 2012). In contrast, a collateral attack "seeks to avoid the binding effect of a judgment in order to obtain specific relief that the judgment currently impedes." Id. at 272. We understand the Mitchell Parties to be arguing that any complaints raised in the Mitchell I appeal about the findings in the two master's reports were collateral attacks because the Mitchell Parties did not appeal from the master's first and second reports or the trial court's orders adopting them. Consequently, they urge, the bill of review "is a distinguishable proceeding which the trial court has subject matter jurisdiction to consider."
In Mitchell I, this court noted that "Mitchell and TCSM did not timely appeal the trial court's orders adopting the first and second master's reports, which is not surprising given that they had not yet filed any motions or intervened at the time those orders were signed." 523 S.W.3d at 202. Those orders were the subject of the Mitchell Parties' petition for mandamus. See id.
The Mitchell Parties provide no additional argument and cite no authorities to support their conclusion that a trial court may retain jurisdiction over a bill of review making a direct challenge to allegedly void findings or orders even though a pending appeal seeks the same relief by a collateral attack. Further, PNS Stores, on which the Mitchell Parties rely, undercuts this argument. In PNS Stores, the supreme court discussed the difference between direct and collateral attacks in the context of explaining the importance of determining whether a judgment is void or merely voidable. See id. at 271. The supreme court explained that "a litigant may attack a void judgment directly or collaterally, but a voidable judgment may only be attacked directly." Id. In contrast, a void judgment "can be collaterally attacked at any time." Id. at 272. Thus, after the time to bring a direct attack has expired, a litigant may only attack a judgment collaterally. Id. More to the point here, the supreme court clarified that while the need to distinguish between void and voidable judgments is "critical" when the time for a direct attack has expired, it is less important before the time for a direct attack has expired "because—whether the judgment is void or voidable—the result is the same: the judgment is vacated." Id.
Whether by collateral or direct attack, the Mitchell Parties' bill of review and the then-pending appeal raised the same issues and sought the same relief—namely, judgments vacating the orders adopting the two master's reports and the trial court's subsequent judgments, including the June 2, 2015 order approving the sale of the disputed property. Therefore, the trial court had no jurisdiction to change or modify its judgment during the pendency of the Mitchell I appeal. See Robertson, 689 S.W.2d at 210; Carrillo, 480 S.W.2d at 616; Ammex Warehouse, 381 S.W.2d at 482; see also Winters Mut. Aid Ass'n Circle No. 2, 49 S.W.2d at 1097 ("[L]itigants will not be permitted to review in the suit in equity to vacate the original judgment any matters involved in the appeal, or that could have been brought up by appeal in the original proceedings."). On this record, we conclude that the trial court did not err by dismissing the Mitchell Parties' bill of review.
III. CONCLUSION
We overrule the Mitchell Parties' first issue and do not reach their second issue. We affirm the trial court's judgment.
/s/ Ken Wise
Justice Panel consists of Chief Justice Frost and Justices Busby and Wise.