Andrew J. Lannie v. Emmons & Jackson, P.C.; Donald Harvey; and Steve Hebert--Appeal from 113th District Court of Harris County

Opinion issued July 20, 2006

In The

Court of Appeals

For The

First District of Texas

NO. 01-05-01170-CV

____________

ANDREW J. LANNIE, Appellant

V.

EMMONS & JACKSON, P.C., DONALD HARVEY, and STEVE HEBERT,Appellees

On Appeal from the 113th Judicial District Court

Harris County, Texas

Trial Court Cause No. 2004-50703

MEMORANDUM OPINION

Appellant, Andrew J. Lannie, challenges the trial court s rendition of summary judgment in favor of appellees, Emmons & Jackson P.C., Donald Harvey, and Steve Hebert, in his declaratory judgment action to establish the current indebtdness owed to appellees under a prior judgment. In three issues, Lannie contends that the trial court erred in granting appellees motion for summary judgment, in awarding attorney s fees to appellees, and in granting summary judgment on a separate claim for affirmative relief not addressed.

We affirm.

Factual and Procedural BackgroundIn 1993, Harvey asked Hebert, an attorney, to represent him in connection with a personal injury claim. Hebert, unable to accept the representation because of an extended trip, referred the matter to Lannie, who filed suit on behalf of Harvey. The parties agreed that Harvey would receive two-thirds of all proceeds recovered by trial or settlement of the matter and Hebert and Lannie would split the remaining one-third of the proceeds. On January 23, 1996, Lannie settled the lawsuit on behalf of Harvey for $100,000, with $50,000 to be paid at once, and the remaining $50,000 to be paid out at $833.33 per month for sixty months. Thereafter, Hebert and Harvey alleged that Lannie pocketed the proceeds of the settlement, neither distributing Hebert s referral fee nor Harvey s personal injury award.

In 1997, Harvey and Hebert sued Lannie for breach of contract and fraud in regard to his failure to disburse payments that Lannie had received on account of the settlement. // On August 27, 1997, Harvey also obtained from the court in which his personal injury case had previously been filed an order requiring that the settlement payments from his personal injury case be sent directly to his new counsel, William Emmons, as trustee. Emmons was to disburse the settlement payments at a rate of 67% to Harvey and 33% to Hebert. On March 24, 1998, Harvey and Hebert, in their breach of contract and fraud action, obtained a judgment against Lannie. The trial court awarded Harvey $26,666.63 and Hebert $9,375 in damages for Lannie s breach and also awarded Hebert $4,621.26 for attorney s fees, all compounded by 10% post-judgment interest.

In 2002, after Lannie filed a Chapter 7 bankruptcy proceeding, Harvey and Hebert filed a claim against Lannie s estate in the amount of the 1998 judgment. // During the bankruptcy proceedings, Harvey testified that Lannie still owed him around $9,000 of the settlement proceeds and Hebert testified that Lannie owed him probably $10,000 or $11,000 of the agreed referral fee. Lannie asserts that, despite this testimony, by a letter dated July 21, 2004, Emmons & Jackson, P.C., as counsel for Harvey and Hebert, subsequently made a demand upon Lannie for the total sum of $61,000.00.

On September 15, 2004, Lannie filed the instant declaratory judgment action seeking a judgment declaring the remaining obligations or indebtedness, if any, owed by [Lannie] under the 1998 judgment and an accounting of all sums recovered by appellees. Appellees filed a summary judgment motion asserting that Lannie s suit constituted an impermissible collateral attack on a prior judgment. On August 16, 2005, the trial court granted appellees motion, dismissing Lannie s declaratory judgment suit and ordering Lannie to pay appellees attorney s fees of $1,815.

Standard of Review

To prevail on a rule 166a(c)summary judgment motion, a movant has the burden of proving that it is entitled to judgment as a matter of law and that there is no genuine issue of material fact. Tex. R. Civ. P. 166a(c); Black v. Victoria Lloyds Ins. Co., 797 S.W.2d 20, 23 (Tex. 1990); Farah v. Mafrige & Kormanik, P.C., 927 S.W.2d 663, 670 (Tex. App. Houston [1st Dist.] 1996, no writ). We may affirm a summary judgment only when the record shows that a movant has disproved at least one element of each of the plaintiff s claims or has established all of the elements of an affirmative defense as to each claim. Am. Tobacco Co. v. Grinnell, 951 S.W.2d 420, 425 (Tex. 1997); Farah, 927 S.W.2d at 670. In deciding whether there is a disputed material fact issue precluding summary judgment, proof favorable to the non-movant is taken as true, and the court must indulge every reasonable inference and resolve any doubts in favor of the non-movant. Randall s Food Mkts., Inc. v. Johnson, 891 S.W.2d 640, 644 (Tex. 1995); Lawson v. B Four Corp., 888 S.W.2d 31, 33 34 (Tex. App. Houston [1st Dist.] 1994, writ denied).

When a summary judgment does not specify the grounds on which the trial court granted it, the reviewing court will affirm the judgment if any theory included in the motion is meritorious. Harwell v. State Farm Mut. Auto. Ins. Co., 896 S.W.2d 170, 173 (Tex. 1995); Summers v. Fort Crockett Hotel, Ltd., 902 S.W.2d 20, 25 (Tex. App. Houston [1st Dist.] 1995, writ denied).

Declaratory Judgment Action

In his first issue, Lannie argues that the trial court erred in rendering summary judgment in favor of appellees because his action for declaratory relief was predicated upon events both subsequent and extrinsic to the previous judgment. Appellees counter that summary judgment was appropriate because Lannie s declaratory action constitutes an impermissible collateral attack that seeks to modify or interpret a final judgment.

The purpose of a declaratory action is to establish existing rights, status, or other legal relations. Bonham State Bank v. Beadle, 907 S.W.2d 465, 467 (Tex. 1995); see Tex. Civ. Prac. & Rem. Code Ann. 37.002(b) (Vernon 1997). A declaratory judgment is appropriate only if there is a justiciable controversy about the rights and status of the parties and the declaration will resolve the controversy. Beadle, 907 S.W.2d at 467. A trial court has discretion to enter a declaratory judgment so long as it will serve a useful purpose or will terminate the controversy between the parties. Id. at 468.

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 on final judgments are generally disallowed because it is the policy of the law to give finality to the judgments of the courts. Tice v. City of Pasadena, 767 S.W.2d 700, 702 03 (Tex. 1989) (quoting Crouch v. McGaw, 134 Tex. 633, 138 S.W.2d 94, 96 (1940)). Only a void judgment may be collaterally attacked. Browning v. Placke, 698 S.W.2d 362, 363 (Tex. 1985). A judgment is void only when it is apparent that the court rendering 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.

Here, Lannie does not contend that the judgment is void. Instead, he asserts that [b]y demanding monies far in excess of the amounts established by their subsequent testimony in the bankruptcy proceedings, Harvey and Hebert directly created [] uncertainty and insecurity in the respective rights of the parties. Lannie, relying in part upon these judicial admissions of appellees, contends that he is entitled to pursue declaratory relief in order to establish an offset on the previous judgment and thus resolve the uncertainty created by the appellees as to [the] amount of [Lannie s] current indebtedness. Lannie also notes that appellees have in fact received settlement funds transferred to Emmons under the August 27, 1997 order. He asserts that he is seeking an accounting of funds received by appellees that would constitute an offset or credit towards the 1998 judgment.

In support of his argument that his claim for declaratory judgment is not an impermissible collateral attack on the previous judgment, Lannie relies on Bonham State Bank v. Beadle. 907 S.W.2d at 468. In Beadle, a bank obtained a judgment against several parties, including Beadle, for $1,650,000. 907 S.W.2d at 466. However, in a separate legal proceeding, Beadle and another party obtained a judgment against the bank for $75,000. Id. at 466. In light of the two judgments, the bank filed a declaratory judgment action in order to treat the $75,000 adverse judgment obtained by Beadle as an offset from the bank s $1,650,000 judgment obtained against Beadle. Id. at 466 67. The court of appeals characterized the bank s declaratory judgment action as an attempt to interpret the previous judgments rendered between the parties and dismissed the action. Id. at 468. The Texas Supreme Court reversed, holding that the bank s attempt to establish an offset on the previous judgment constituted a bona fide, concrete controversy ripe for resolution by way of declaratory judgment. Id. at 467. In support of its analysis, the court cited numerous authorities from other jurisdictions in which declaratory relief was utilized to establish offsets on previous judgments. Id. at 468 69.

Beadle applies to situations in which there are two previous, final judgments, held by each party against the other. Here, however, Lannie holds no judgment against appellees nor does he assert that he is entitled to recover any amount from appellees. Also, Lannie s contention that Harvey s and Hebert s testimony in the bankruptcy proceeding judicially estopped them from claiming that Lannie owes more than the stated amount cannot be properly understood as a request for an offset toward the previous judgment. Moreover, Lannie cannot now raise, by way of his declaratory judgment action, the issue of an offset on the underlying judgment based on any amounts sent to Emmons because the August 27, 1997 order was entered prior to the March 24, 1998 judgment. See Barr v. Resolution Trust Corp., 837 S.W.2d 627, 628 (Tex.1992) (holding res judicata precludes relitigation of claims that have been finally adjudicated or that arise out of same subject matter and that could have been litigated in prior action). The August 27, 1997 order and any payments tendered as a result were neither subsequent nor extrinsic to the judgment such as to entitle Lannie to establish an offset through a declaratory action. See Beadle, 907 S.W.2d at 466 67.

Lannie, in support of his arguments, also relies on our recent decision in Fort Bend County v. Martin-Simon, 177 S.W.3d 479 (Tex. App. Houston [1st Dist.] 2005, no pet.). In Martin-Simon, Martin-Simon s father deeded to her a one-fourth interest in certain property. Id. at 482. Taxing entities then sued Martin-Simon s father and any unknown heirs for delinquent taxes due on the property. Id. On the same date, in a separate cause, the taxing entities sued Martin-Simon for delinquent taxes on her undivided one-fourth interest in the same property. Id. In response to the second cause, Martin-Simon paid the delinquent taxes on the undivided one-fourth interest in the property, and the taxing entities dismissed the suit. Id. Martin-Simon then filed an answer and counterclaim for declaratory judgment in the lawsuit against her father and any unknown heirs, alleging the affirmative defenses of payment, accord and satisfaction, and release. Id. The trial court entered a declaratory judgment in favor of Martin-Simon, stating that she had paid the taxes on her one-fourth undivided interest in the property conveyed to her by her father. Id. In affirming the trial court s judgment, we explained that Martin-Simon s declaratory judgment did not seek to interpret[] or clarify the previous judgment. Id. at 483 We held that a justiciable controversy existed in the first lawsuit regarding Martin-Simon s liability for delinquent taxes and that a declaratory action was appropriate to resolve the dispute. See id at 483 84.

Martin-Simon is substantively distinguishable from the instant case. It is not clear from the limited transcript of the bankruptcy proceedings provided in the record whether Harvey and Hebert, in testifying regarding the amount still owed by Lannie, were referring to all amounts due under the 1998 judgment (including damages for breach of contract and post judgment interest) or simply the amounts due under the parties original agreement. Nevertheless, Lannie may not use this testimony as a basis to modify or interpret the amount owed under the March 24, 1998 judgment because such action would constitute an impermissible collateral attack. See Speaker v. Lawler, 463 S.W.2d 741, 742 43 (Tex. Civ. App. Beaumont 1971, writ ref d n.r.e.) .

Again, a review of the record reveals that the August 27, 1997 order required that settlement payments be sent directly to Emmons. Thus, Lannie had an opportunity to argue for any appropriate offset prior to the rendition of the March 24, 1998 judgment. In seeking an offset for any payments made pursuant to the August 27, 1997 order, Lannie, in effect, seeks a recalculation of what is owed under the March 24, 1998 judgment, which constitutes an impermissible collateral attack. See Prostok, 165 S.W.3d at 346 47. Lannie has not asserted in his petition for declaratory judgment or in his briefing that he has made previous, uncredited payments toward the 1998 judgment. Instead, Lannie s declaratory action focuses on the testimony of Harvey and Hebert at the bankruptcy proceeding and the subsequent settlement demand made by Emmons & Jackson, P.C. However, any attempt to re-litigate the claims in a new lawsuit, even if based on new information, constitutes a collateral attack on the prior judgment. See id. The amount of Lannie s liability to Harvey and Hebert under the March 24, 1998 judgment was fully and finally litigated in the underlying cause and may not now be challenged in Lannie s declaratory judgment action.

Given the summary judgment evidence, the record does not support a finding that the current indebtedness of Lannie under the March 24, 1998 judgment is a justiciable controversy that would appropriately be the subject of a declaratory judgment action. Because Lannie seeks to modify or recalculate the amount of the March 24, 1998 judgment, we conclude that his declaratory judgment action constitutes an impermissible collateral attack on that judgment. See id. at 346 47. Accordingly, we hold that the trial court did not err in granting summary judgment in favor of appellees.

We overrule Lannie s first issue.

Attorney s Fees and Accounting

Having held that the trial court did not err in granting summary judgment in favor of appellees, we further hold that the trial court did not err in its award of attorney s fees to appellees. Moreover, having held that Lannie s declaratory action to be an impermissible collateral attack, we conclude that the trial court did not abuse its discretion in dismissing his action for an accounting premised upon the same grounds.

We overrule Lannie s second and third issues.

Conclusion

We affirm the judgment of the trial court.

Terry Jennings

Justice

Panel consists of Justices Jennings, Hanks, and Higley.