Opinion
03-23-00064-CV
06-19-2024
Elizabeth Weston, Appellant v. Graham Weston; James Irwine, Individually and as CPA; Irwine Pruitt Associates, PLLC; and BKD, LLP, Appellees
FROM THE 22ND DISTRICT COURT OF COMAL COUNTY NO. C2022-0414A, THE HONORABLE DIB WALDRIP, JUDGE PRESIDING
Before Chief Justice Byrne, Justices Kelly and Theofanis
MEMORANDUM OPINION
Chari L. Kelly, Justice
Elizabeth Weston appeals from the trial court's order dismissing the underlying proceeding with prejudice. The court determined that, because of an assignment of the cause of action to Graham Weston, Elizabeth's former spouse, Graham had the sole authority to prosecute the suit. The court granted Graham's motion to dismiss the suit with prejudice. On appeal, Elizabeth asserts that the trial court abused its discretion by granting the motion to dismiss. Elizabeth also raises complaints about a previous venue transfer order that transferred this suit from Bexar County to Comal County. We will affirm.
Because Elizabeth Weston and Graham Weston share a surname, we refer to them by their given names for clarity.
BACKGROUND
Elizabeth filed a petition for divorce in Comal County district court seeking dissolution of her marriage to Graham. In her divorce petition, Elizabeth alleged that Graham had defrauded her by transferring community assets without her knowledge and had breached fiduciary duties to her by diverting community assets through "various methods, including but not limited to, estate planning, trusts, and various entities to effectuate his scheme." While the divorce proceeding was pending, Elizabeth brought the underlying suit in Bexar County district court against James Irwine; Irwine Pruitt Associates, PLLC; and BKD, LLP; accountants who had performed services for her and Graham. Elizabeth alleged that Irwine and his firm, Irwine Pruitt Associates, LLC (collectively, "Irwine") conspired with Graham to divert community assets without her knowledge. Elizabeth alleged that BKD defrauded her by filing "numerous 709 U.S. Gift gift-tax returns that were used to transfer substantial sums of Elizabeth's property" without her authority.
Irwine and BKD filed motions to transfer venue from Bexar County to Comal County pursuant to Tex. Civil Practices and Remedies Code § 15.002(b). See Tex. Civ. Prac. & Rem. Code § 15.002(b) (providing authority for court to transfer case from county of proper venue to any other county of proper venue for convenience of parties and interest of justice). Irwine and BKD also filed pleas in abatement, arguing that the Comal County district court maintained dominant jurisdiction over all issues regarding the characterization and division of Elizabeth and Graham's property along with all related accounting of income, expenses, assets, and debts, including Elizabeth's assertions that Graham and the accountants had conspired to defraud her by diverting community assets. Elizabeth opposed the motions to transfer venue and the pleas in abatement.
The Bexar County district court held a hearing on the motions and determined that the motions to transfer venue should be granted. The court ordered that venue of the underlying proceeding be transferred to Comal County district court. At the hearing, the court stated that it was not ruling on the motion to abate but that the "motion to abate is carried with the motion to transfer. It will be up to the trial court in Comal County." The underlying proceeding was transferred to Comal County in January 2022, but it was not abated.
In September 2022, Elizabeth and Graham's divorce action was tried to a jury and, on October 21, 2022, the court rendered a final decree of divorce. In relevant part, the divorce decree awarded to Graham certain "contingent assets," including the claims asserted in the underlying proceeding, which is described in the decree as "Cause No. C2022-0414; Elizabeth Weston v. Mountain Nest, LLC, James Irwine, Individually and as CPA, and Irwine Pruitt Associates, PLLC, and BKD, LLP, in the 22nd District Court of Comal County, Texas."The divorce decree also made specific determinations regarding Elizabeth's separate property, and the list of her "Confirmed Separate Property" did not include the claims against the accountants asserted in the underlying proceeding. On November 14, 2022, Graham filed a motion to dismiss the underlying proceeding with prejudice. In the motion, Graham explained that, pursuant to the divorce decree, the suit was awarded to Graham, "who now stands in the place of Elizabeth Weston as the plaintiff with authority to dismiss the lawsuit." Graham stated that he no longer wished to pursue the suit and desired to dismiss all claims with prejudice. The court granted the motion to dismiss, stating in its order that:
Although Mountain Nest, LLC, was originally named as a defendant, Elizabeth amended her petition and dropped that entity as a defendant in the suit.
Elizabeth appealed from the final divorce decree, and that appeal is pending in this Court as Cause No. 03-23-00039-CV; Elizabeth Weston v. Graham Weston.
Elizabeth Weston, Graham Weston's former spouse, is the original plaintiff in this lawsuit. Pursuant to the Final Decree of Divorce entered on October 21, 2022, in Cause No. C2020-1814A; In the Matter of the Marriage of E.W. and G.M.W.; in the 22nd Judicial District Court of Comal County, Texas, this lawsuit was awarded to Graham Weston who now stands in place of Elizabeth Weston as the plaintiff.
Elizabeth then perfected this appeal. In her first issue, Elizabeth asserts that the district court abused its discretion by granting the motion to dismiss. In her second issue, Elizabeth argues that this Court should review the Bexar County district court's venue transfer order despite Texas Civil Practice and Remedies Code section 15.002(c), which provides that "a court's ruling or decision to grant or deny a transfer under Subsection (b) is not grounds for appeal or mandamus and is not reversible error." See Tex. Civ. Prac. & Rem. Code § 15.002(c); see also id. (b) (providing court authority to transfer venue from county of proper venue to another county of proper venue "[f]or convenience of the parties and witnesses and in the interest of justice"). Elizabeth maintains that this section's limit on appellate review of a venue transfer for convenience violates the Texas and United States Constitutions.
DISCUSSION
In her first issue, Elizabeth challenges the district court's order arguing that (1) the trial court erred in determining that Graham, to the exclusion of Elizabeth, had the authority to move to dismiss the case; (2) she was not provided notice of the motion required by Texas Rule of Civil Procedure 21, which deprived her of an opportunity to respond to the motion and challenge the dismissal of the case, see Tex. R. Civ. P. 21; and (3) the district court's dismissal without providing her notice and a meaningful opportunity for her response to be heard violated the open courts and due process clauses of the Texas Constitution, see Tex. Const. art. I, §§ 13, 19.
The divorce decree awarded all rights in and to the underlying proceeding to Graham. After the assignment of some right or interest from one person to another, the assignor loses all control over the right or interest and can do nothing to defeat the rights of the assignee. Johnson v. Structured Asset Servs., LLC, 148 S.W.3d 711, 722 (Tex. App-Dallas 2004, no pet.). An assignor of a cause of action who has not retained some right or interest in the cause of action is precluded from bringing or prosecuting the cause of action. River Consulting, Inc. v. Sullivan, 848 S.W.2d 165, 169 (Tex. App-Houston [1st Dist] 1992, writ denied), disapproved of on other grounds by Formosa Plastics Corp. USA v. Presidio Eng'rs & Contractors, Inc., 960 S.W.2d 41, 46 (Tex. 1998). The assignor's rights are extinguished and pass to the assignee. See Commercial Structures & Interiors, Inc. v. Liberty Educ. Ministries, Inc., 192 S.W.3d 827, 833 (Tex. App-Fort Worth 2006, no pet.). A cause of action that is assigned after the filing of suit no longer belongs to the assignor. See River Consulting, 848 S.W.2d at 169; Duke v. Brookshire Grocery Co., 568 S.W.2d 470, 472 (Tex. App -Texarkana 1978, no writ) (when owner assigns all interest in cause of action, parting with both legal and equitable title, he cannot bring suit, except with authority from owner of claim, as assignor no longer owns any part of claim and lacks justiciable interest necessary to maintain any action). The assignee may maintain the lawsuit in his own name or in the name of the assignor. Texas Mach. & Equip. Co. v. Gordon Knox Oil & Expl. Co., 442 S.W.2d 315, 317 (Tex. 1969). After the claims in the underlying proceeding were awarded to Graham, they no longer belonged to Elizabeth, all right to maintain the proceeding passed to Graham, and he had the authority, exclusive of Elizabeth, to prosecute or move to dismiss the suit. See Eagle Supply & Mfg. L.P. v. Landmark Am. Ins., 630 S.W.3d 342, 351 (Tex. App-Eastland 2021, pet. denied) ("When a cause of action is assigned or transferred, the assignee becomes the real party in interest with the authority to prosecute the suit to judgment."). The district court properly dismissed the suit on Graham's motion, noting that "this lawsuit was awarded to Graham Weston who now stands in the place of Elizabeth Weston as the plaintiff."
Elizabeth's challenges to the dismissal order on the grounds that she did not receive adequate notice of the motion and did not have an opportunity to meaningfully respond to it are premised on the assumption that she was still a party to the suit entitled to such notice. However, as explained above, after the suit was transferred to Graham, Elizabeth was no longer a real party in interest to the suit and had no justiciable interest in it. As such, she was not entitled to the notice requirements applicable to parties under the Texas Rules of Civil Procedure, nor did she have any constitutionally protected property interest in the proceeding. See Nelson v. Clements, 831 S.W.2d 587, 591 (Tex. App-Austin 1992, writ denied) (noting that due course of law provision exists to prevent government from depriving person of liberty and property without notice and hearing).
Elizabeth also argues in her brief that the district court erred in granting Graham's motion to dismiss because he filed no verified pleading asserting that Elizabeth lacked capacity to maintain the suit. See Tex. R. Civ. P. 93(1) (requiring verified pleading when asserting that "the plaintiff has not legal capacity to sue"). She also maintains that "[a] challenge to a plaintiffs legal capacity to sue is properly raised by a verified plea in abatement and not by a motion to dismiss." Although Graham states in his motion to dismiss that Elizabeth lacked "capacity" to act as a party, he also asserted that she lacked "authority to act as a party." In doing so, Graham was explaining to the court why he, as opposed to Elizabeth (the original named plaintiff), was entitled to move to dismiss the suit. Elizabeth correctly points out that Graham's filing was not the appropriate vehicle for challenging her capacity to sue, which would have been by a verified plea in abatement. However, Graham did not challenge Elizabeth's capacity to prosecute the claim but, rather, moved to dismiss the case in his capacity as the real party in interest with the authority to do so. As previously explained, after the cause of action was transferred to Graham, Elizabeth had no justiciable interest and, consequently, lacked standing to maintain it. The district court did not err in dismissing the case on Graham's motion, regardless of whether the dismissal was couched in terms of capacity or standing.
Finally, Elizabeth asserts that the district court erred in dismissing the underlying proceeding without "taking judicial notice of its docket in both the divorce and [the underlying proceeding]" and permitting her to file a "plea to the jurisdiction to collaterally attack" the divorce decree in which she would have argued that the award of the underlying proceeding to Graham in the divorce decree was improper because, among other things, it was her separate property. See Eggemeyer v. Eggemeyer, 554 S.W.2d 137, 139 (Tex. 1977) (separate property is not subject to division in divorce). "A collateral attack is an attempt to avoid the binding force of a judgment in a proceeding not instituted for the purpose of correcting, modifying, or vacating the judgment, but in order to obtain some specific relief which the judgment currently stands as a bar against." Browning v. Prostok, 165 S.W.3d 336, 346 (Tex. 2005). Collateral attacks are "generally disallowed because it is the policy of the law to give finality to the judgments of the courts." Id. at 345. Thus, "[o]nly a void judgment may be collaterally attacked." Id. at 346. A judgment is void "only when it is apparent that the court rendering the judgment had no jurisdiction of the parties or property, no jurisdiction of the subject matter, no jurisdiction to enter the particular judgment, or no capacity to act." Id. And, "[a] collateral attack fails if the judgment contains jurisdictional recitals, even if other parts of the record show a lack of jurisdiction." In re A.G.G., 267 S.W.3d 165, 169 (Tex. App -San Antonio 2008, pet. denied).
Here, Elizabeth argues that this collateral attack against the divorce decree is proper because the divorce court lacked jurisdiction to award the claims in the underlying proceeding to either party to the divorce proceedings. The relevant inquiry, however, is whether the court had jurisdiction over the parties-which is undisputed-and jurisdiction to divide their property. Texas Family Code section 7.001 provides that "[i]n a decree of divorce, the court shall order a division of the estate of the parties in a manner that the court deems just and right, having due regard for the rights of each party and any children of the marriage." Tex. Fam. Code § 7.001. Elizabeth's argument that the court erred by awarding the underlying proceeding to Graham because it was her separate property does not establish that the court lacked jurisdiction to divide the parties' property but instead simply challenges the propriety of the property division. See Reiss v. Reiss, 118 S.W.3d 439, 442-43 (Tex. 2003) (rejecting argument that divorce decree was void because it divested husband of separate property even though the divorce court had "incorrectly characterized" the assets at issue as community property subject to division). Treating separate property as community property may constitute error by a divorce court, but it does not render the decree void, entirely or in part. See id. The proper method for Elizabeth to challenge the divorce court's award of the underlying proceeding to Graham is by an appeal of the divorce decree. See id. at 443 (holding that errors that render judgment voidable, rather than void, may be corrected through ordinary appellate process). We overrule Elizabeth's first issue challenging the district court's order of dismissal.
In her second issue, Elizabeth argues that this Court should conclude that Texas Civil Practice and Remedies Code section 15.002(c)'s limitation on appellate review of venue transfers for convenience is unconstitutional and should consider her assertion that the Bexar County district court erred in transferring the underlying proceeding to Comal County district court. We decline to do so. As Elizabeth concedes, the doctrine of stare decisis compels that we follow Texas Supreme Court precedent that has confirmed the constitutionality of Texas Civil Practice and Remedies Code section 15.002(c). See Mitschke v. Borromeo, 645 S.W.3d 251, 263 (Tex. 2022) ("Departures from precedent must be carefully considered and should be rare."). When considering a challenge to a venue transfer based on convenience of the parties pursuant to Texas Civil Practice and Remedies Code section 15.002(b), the supreme court stated:
While appellate justices may chafe at restrictions on appellate review, the Texas Constitution generally allows the Legislature to expand or limit such review as it sees fit. Nor is the restriction here unreasonable under these circumstances. Debates in the Legislature indicate the transfer for convenience statute was intended "to make sure that venue is not a game any longer" by giving trial judges some power to ensure cases were tried where they sensibly belonged, but without adding reversible error or additional delays. This case was tried four years ago, and has been on appeal ever since. The Legislature might reasonably have concluded that discretionary transfers would make litigation more convenient only if they did not have to be re-fought on appeal. Accordingly, we hold the court of appeals erred by reversing the venue order here.Garcia v. Garza, 137 S.W.3d 36, 40 (Tex. 2004) (citations omitted). In her brief, Elizabeth argues that, contrary to the Texas Supreme Court's holding in Garcia, the Legislature's limitation on appellate review of venue transfers for convenience is arbitrary and unreasonable. But, by her own admission, she does so "for the purposes of preserving further appeal," which she intends to do "[i]f this Court must abide by stare decisis." Under principles of vertical stare decisis, Texas intermediate appellate courts and trial courts are bound by the decisions of the Texas Supreme Court. See Penrod Drilling Corp. v. Williams, 868 S.W.2d 294, 296 (Tex. 1993). Bound by the Texas Supreme Court's holding in Garcia, we overrule Elizabeth's challenge to the constitutionality of Texas Civil Practice and Remedies Code section 15.002(c).
CONCLUSION
Having overruled Elizabeth's two issues on appeal, we affirm the district court's order of dismissal with prejudice.