Opinion
No. 14-02-00481-CV
Memorandum Opinion filed November 13, 2003.
On Appeal from the 308th District Court, Harris County, Texas, Trial Court Cause No. 96-18979
Affirmed
Panel consists of Chief Justice BRISTER and Justices FOWLER and EDELMAN.
MEMORANDUM OPINION
This is a second appeal of a judgment dividing property in a divorce proceeding between Byron Walter Rusk and Sheila Spencer Rusk. In the first appeal, we held that the trial court improperly characterized some of Byron's separate property as community and abused its discretion in appointing a receiver over the community property, including the improperly characterized separate property. We also reversed the property division. On remand, the parties settled the property division, but before final judgment, the receiver, Barbara Runge, intervened, requesting payment of her fees incurred during the receivership. The court held trial on the receiver's request, and at the conclusion of the trial, awarded Runge $32,079.22 in fees, plus prejudgment interest and costs, against Byron and Sheila, jointly and severally. At Byron's request, the trial court entered findings of fact and conclusions of law.
Sheila Rusk does not appeal from the judgment.
In five issues on appeal, Byron attacks the award of fees to the receiver, claiming the following: (1) the trial court lacked jurisdiction to adjudicate Runge's claim for fees; (2) the trial court exceeded this Court's mandate in awarding the fees; (3) Runge was not entitled to receiver's fees because her appointment was vacated; (4) the trial court erred in awarding fees against Byron individually rather than against the property held in custodia legis; and (5) the trial court contravened Texas Rules of Civil Procedure 131 and 141 in awarding the fees as costs against Byron. We affirm.
DISCUSSION The Trial Court's Jurisdiction and the Scope of the Mandate
In his first two issues, Byron contends that, on remand, this court's mandate limited the trial court's jurisdiction so that it could consider only the just and right division of the property existing as of the date of divorce. Thus, he claims, the trial court lacked jurisdiction to adjudicate Runge's claim for fees. Byron contends the trial court's award of fees to Runge amounts to an impermissible collateral attack on this Court's prior judgment. We disagree.
The mandate issued in Rusk provided as follows:
We therefore order the judgment of the court below REVERSED and REMAND the judgment to the trial court for a new trial on the characterization and division of the parties' separate and community property. We therefore VACATE the trial court's order appointing a receiver without prejudice to possible hearing in accordance with the court's opinion.
This language vacating the appointment of the receiver "without prejudice to possible hearing in accordance with the . . . opinion" contemplates a hearing on the receiver. Having already vacated the receivership, this language could not contemplate a hearing to vacate; it must have contemplated some other hearing. The only other type of hearing it could have contemplated, or certainly one of the types of hearings it contemplated, was a hearing to determine fees for the receiver. Nothing in the opinion or mandate states or implies that Runge was not entitled to fees for duties performed following her appointment as receiver.
As we recently explained, trial courts have jurisdiction to do many things that are not ordinarily mentioned in appellate mandates. See Madeksho v. Abraham, Watkins, Nichols Friend, 112 S.W.3d 679, 685 (Tex.App.-Houston [14th Dist.] 2003, pet. filed) (en banc plurality). A trial court has a duty to perform all ancillary acts necessary to implement the judgment of the appellate court and dispose of all matters still pending in the case. See Bayoud v. Bayoud, 797 S.W.2d 304, 310 (Tex.App.-Dallas 1990, writ denied). Even when an appellate court remands a cause for limited action, the trial court is given a reasonable amount of discretion to comply with the mandate. Austin Transp. Study Policy Advisory Comm. v. Sierra Club, 843 S.W.2d 683, 690 (Tex.App.-Austin 1992, writ denied). And, even if the trial court exceeds an appellate mandate, it may abuse its discretion, but it does not lose jurisdiction. Madeksho, 112 S.W.3d at 685.
Here, the trial court did not exceed its jurisdiction or abuse its discretion in awarding receiver's fees to Runge. When an appellate court vacates a receivership, our courts have held that the trial court is still empowered to conduct the necessary proceedings to conclude the receivership, including setting the receiver's fees and ordering them paid. See Humble Exploration Co., Inc. v. Walker, 641 S.W.2d 941, 945-46 (Tex.App.-Dallas 1982, no writ); Shell Petroleum Corp. v. Grays, 87 S.W.2d 289, 292 (Tex.App.-Waco 1935), writ dism'd, 114 S.W.2d 869 (Tex. 1938); see also Rogers v. S. Pine Lumber Co., 51 S.W. 26, 33 (Tex.Civ.App. 1899, no writ) (vacating order appointing receiver and ordering trial court to "make all necessary orders closing up the administration and adjudging the costs incurred therein").
We overrule Byron's first two issues.
Award of Fees when Receivership Vacated
In Byron's third issue, he contends that Runge is not entitled to fees for her services rendered before the receivership was vacated. He relies on Hayes v. Gardner, 40 S.W.2d 917, 919 (Tex.Civ.App.-Dallas 1931, no writ). There, the court stated that, by vacating the trial court's order appointing a receiver, the appellate court "effectively terminated the situation produced by that appointment as if the same had never been made." Extrapolating from this, Byron argues the appointment was a "complete nullity" and, therefore, Runge is not entitled to any fees. However, the Gardner court did not say that, and the case did not concern receivership fees on remand.
In any event, numerous courts have recognized that, when a trial court has jurisdiction, a receiver is entitled to reasonable compensation for services rendered even if the trial court's appointment of the receiver was in error. See Wiley v. Sclafani, 943 S.W.2d 107, 111 (Tex.App.-Houston [1st Dist.] 1997, no writ); Kuteman v. Ratliff, 154 S.W.2d 864, 866 (Tex.Civ.App. — Amarillo 1941, no writ); Grays, 87 S.W.2d at 293; Espuella Land Cattle Co. v. Bindle, 32 S.W. 582, 582-83 (Tex.Civ.App. 1895, no writ). In fact, even when a trial court lacks jurisdiction to appoint a receiver, and the order is void ab initio, the receiver may still be entitled to payment for services rendered. See Wiley, 943 S.W.2d at 107; Kuteman, 154 S.W.2d at 866-67. Therefore, we reject Byron's assertion that Runge is not entitled to receiver's fees merely because we vacated her receivership.
In connection with this issue, Byron also contends that part of the fees were impermissible because they included fees for legal services Runge, a licensed attorney, provided while acting as court-appointed receiver. He argues that attorney's fees are not recoverable absent statutory authority or contractual agreement, and neither applies here. However, Byron does not contend that Runge charged the legal fees for services not connected with the receivership. Fees for a receiver, her attorney, and her accountant are all included in the expenses of a receivership. See Bayoud, 797 S.W.2d at 317; see also Kuteman, 154 S.W.2d at 866 ("The law is well settled that, in a case of which the court has jurisdiction, if a receiver is appointed and takes charge and custody of property and administers the same under orders of the court, he is entitled to his fees and to reasonable fees for his counsel, to be paid out of the corpus of the property in his hands regardless of whether the receiver was providently or improvidently appointed."). A receiver may serve not only as a receiver, but as her own attorney; however, her compensation as receiver and as attorney should be determined separately. See Hodges v. Peden, 634 S.W.2d 8, 12 (Tex.App.-Houston [14th Dist.] 1982, no writ); see also Bergeron v. Sessions, 561 S.W.2d 551, 554-55 (Tex.Civ.App.-Dallas 1977, no writ) (recognizing situation in which receiver also acts as attorney and providing standards by which to measure reasonableness of fees for legal and nonlegal work on behalf of receivership). Here, Runge's fees for legal and non-legal work in connection with the receivership were segregated, and — other than not wanting to pay them himself — Byron does not complain about the amount of the fees.
We overrule Byron's third issue.
The Assessment of Fees as Costs against Byron Individually
In Byron's fourth issue, he contends that the trial court erred in assessing the costs against him individually. In support of his argument, he cites Texas Civil Practice and Remedies Code section 64.051 as standing for the proposition that a receiver's fees are to be generated from the property held in custodia legis. See Tex. Civ. Prac. Rem. Code Ann. § 64.051. He also cites Hayes v. Gardner as holding that the assessment of receiver's fees against anything other than the property held in custodia legis is reversible error. See Hayes v. Gardner, 40 S.W.2d at 918-19. However, we find his authority inapplicable.
As an initial matter, we note that receiver's fees are considered court costs. See Jones v. Strayhorn, 159 Tex. 421, 425, 321 S.W.2d 290, 293 (1959); Peden, 634 S.W.2d at 12. A trial judge has the discretionary authority to adjudge costs, and on appeal the controlling question is whether the judge abused her discretion. Strayhorn, 159 Tex. at 426, 321 S.W. at 294; Peden, 634 S.W.2d at 12.
Section 64.051 of the Civil Practice and Remedies Code provides as follows:
(a) A receiver shall apply the earnings of property held in receivership to the payment of the following claims in the order listed:
(1) court costs of suit;
(2) wages of employees due by the receiver;
(3) debts owed for materials and supplies purchased by the receiver for the improvement of the property held as receiver;
(4) debts due for improvements made during the receivership to the property held as receiver;
(5) claims and accounts against the receiver on contracts made by the receiver, personal injury claims and claims for stock against the receiver accruing during the receivership, and judgments rendered against the receiver for personal injuries and for stock killed; and
(6) judgments recovered in suits brought before the receiver was appointed.
(b) Claims listed in this section have a preference lien on the earnings of the property held by the receiver.
(c) The court shall ensure that the earnings are paid in the order of preference listed in this section.
Tex. Civ. Prac. Rem. Code Ann. § 64.051 (Vernon 1997). This provision sets out the order of priority governing a receiver's payment of claims out of "the earnings of property held in receivership." Court costs, which would include a receiver's fees, are given first priority. However, in the present case, Byron does not allege that there were earnings of the receivership from which Runge could be paid, nor does he contend that any claim has priority over other claims. Therefore, section 64.051 does not apply.
Moreover, Gardner does not compel a different result. In that case, the trial court appointed a receiver over an amusement company, and on appeal, intervening lienholders who were not parties to the appointment of the receiver objected to the trial court's order that the receiver be paid with the company's "funds now on hand," arguing that their first lien had priority over payment to the receiver. See Gardner, 40 S.W.2d at 918. The Gardner court agreed, but held that their interests were protected because the trial court's wording could be read to order that the receiver be paid out of the earnings of the business during the receivership or proceeds arising from the sale of the company's property. Id. at 919. Contrary to Byron's assertion, Gardner does not stand for the proposition that the assessment of receiver's fees against anything other than the property held in custodia legis is reversible error. It merely addresses a question of the priority of a receiver's payment over other claims, and therefore does not apply here.
We overrule Byron's fourth issue.
The Application of Rules 131 and 141 to the Assessment of Receiver's Fees
In Byron's fifth issue, he contends that the trial court erred in taxing the receiver's fees against him as court costs in contravention of Texas Rules of Civil Procedure 131 and 141. Again, we disagree.
Rule 131 provides that "[t]he successful party to a suit shall recover of his adversary all costs incurred therein, except where otherwise provided." Tex.R.Civ.P. 131. Rule 141 provides that the trial court "may, for good cause, to be stated on the record, adjudge the costs otherwise than as provided by law or these rules." The apportionment of costs should be controlled by equitable principles and the ultimate success or failure of the party who requests the appointment of a receiver is not in itself controlling, but is a prime factor in determining who shall ultimately pay the costs of the receivership. See State v. B L Landfill, Inc., 758 S.W.2d 297, 300 (Tex.App.-Houston [1st Dist.] 1988, no writ); Peden, 634 S.W.2d at 12. It has also been stated that the fees and expenses of a receivership are to be paid by the party whose wrongful act brought about the appointment of the receiver. See Bayoud, 797 S.W.2d at 317. Thus, with these guidelines in mind, the overarching guideline on appeal is, Byron argues, that he was the successful party because Sheila sought the appointment of a receiver, and that appointment was vacated by his appeal. He argues, therefore, any fees must be assessed solely against Sheila, unless there was a showing of good cause on the face of the record. Even though the Rusks settled their property division disputes after remand of the appeal, we agree with Byron that he was the successful party on the receivership issue and therefore we will apply the admonition of Rule 141 that any assessment of costs other than as stated in Rule 131 should be supported by good cause. However, in determining whether good cause existed, "[u]nless the record demonstrates an abuse of discretion, the trial judge's assessment of costs for good cause should not be disturbed on appeal." Rogers v. Walmart Stores, 686 S.W.2d 599, 601 (Tex. 1985).
First, the trial court specifically found that "it would be just and equitable to require both Byron Walter Rusk and Sheila Ann Spencer Rusk to be jointly and severally liable to pay the aforementioned fees and expenses to the Receiver" and that both Byron and Sheila "benefitted by the Receiver's work in this proceeding." The record showed the following in support of this finding, both as to benefits received by both parties and actions taken by Byron that increased fees:
were not dissipated. Runge tried to protect the assets so that they jurisdictions on several properties. These properties included property of Byron.
private note holders who were owed in excess of $300,000 on Byron's business property. Additionally, Runge had to deal with an intervenor/creditor of Byron's car repair business.
more difficult; for example, at one point, he cashed in a life insurance policy that was property in the receivership without Runge's knowledge or approval.
on behalf of the receivership: prepared pleadings, prepared correspondence, appeared in court, responded o pleadings that were filed, appeared in bankruptcy court, worked with the lawyers in the case as well as with the creditor's lawyers, and with Byron's bankruptcy trustee.
During the pendency of the divorce, Byron filed chapter 11 bankruptcy proceedings in connection with his business.
he used it "as a shield" to protect assets against various creditors and taxing districts and to prevent foreclosure on several properties by two creditors and school districts.
by HISD and AISD "on Byron's behalf."s in abatement in suits filed
by creditors and went to a mediation on the intervention for both parties.
We find this evidence sufficient to support the trial court's findings. See Laughlin v. Aectra Tradings Transp., Inc., No. 14-98-00368, 1999 WL 740440 at *3 (Tex.App.-Houston [14th Dist.] Sept. 23, 1999, no pet) (not designated for publication); Wiley, 943 S.W.2d at 110. Among other things, this evidence shows that the property in receivership was safe from foreclosure by various taxing authorities and by other creditors while it was held in custodia legis. Accordingly, we find that the trial court did not abuse its discretion in allocating the receiver's fees and expenses to both Byron and Sheila, jointly and severally. We overrule Byron's fifth issue and affirm the trial court's judgment.