Central Bank of Houston (Correctly named Central Bank) v. Robert Neblett, Successor Guardian of K.C.N., Minor, Universal Surety of America--Appeal from Probate Court No 1 of Harris County

Opinion issued December 7, 2006

In The

Court of Appeals

For The

First District of Texas

NO. 01-05-01075-CV

CENTRAL BANK OF HOUSTON, Appellant

V.

Guardianship of KIARAH C. NEBLETT, a Minor by and through her guardian ROBERT NEBLETT and UNIVERSAL SURETY OF AMERICA, Appellees

On Appeal from Probate Court No. 1

Harris County, Texas

Trial Court Cause No. 305447-403

NO. 01-05-00811-CV

In re CENTRAL BANK OF HOUSTON

Original Proceeding on Petition for Writ of Mandamus

MEMORANDUM OPINION

In cause number 01-05-01075-CV, appellant, Central Bank of Houston, appeals from the trial court's grant of a turnover order in favor of appellee, Universal Surety of America, and the estate of appellee, Kiarah C. Neblett. In cause number 01-05-00811-CV, Central Bank filed a petition for writ of mandamus seeking to have the turnover order set aside as void. Central Bank asserts on appeal that the trial court's order was an impermissible collateral attack on a final judgment from another court, that there was no legal or equitable basis for the order, that there was insufficient evidence in support of the order, and that the trial court failed to respond to appellant's requests for findings of fact and conclusions of law. We conclude that the judgment is void. We vacate the trial court's judgment and dismiss the appeal in cause number 01-05-01075-CV. Tex. R. App. P. 43.2(e). We also dismiss the petition for mandamus in cause number 01-05-00811-CV as moot due to the resolution of the companion appeal.

BACKGROUND

In 2001, Evelyn M. Edison, the prior guardian of Kiarah Neblett's estate, illegally withdrew $41,114.16 in estate assets from Central Bank of Houston. Robert Neblett, successor guardian of the estate, sued Central Bank for conversion of the funds in Harris County Probate Court No. 1. Central Bank joined Universal Surety of America as a third party defendant. Universal Surety had executed a $10,000 bond with Edison after a court-approved "safekeeping agreement" was reached under which Central Bank promised not to release estate funds without the Probate Court's approval.

Central Bank, Universal Surety and the estate entered into a settlement agreement, which was approved by the trial court, under which the estate would receive $50,000 from Central Bank and $10,000 from Universal Surety. (1) As part of the agreement, all parties signed a "Mutual Global Release" by which each relinquished any claims against the others "arising out of or in connection with or that could have arisen out of or in connection with any transaction made the basis of" the underlying cause of action. In addition, the estate expressly nonsuited with prejudice its causes of action against Central Bank and Universal Surety. Central Bank and Universal Surety fully paid their obligations under the settlement agreement.

After the settlement was entered, Edison was arrested. In March 2005, in accordance with a plea agreement, Edison pleaded guilty to theft before the 180th District Court of Harris County and was sentenced to community supervision. The District Court ordered Edison to pay restitution of $27,762.78 to Central Bank and $13,381.38 to the estate, a total of $41,114.16. Edison made large initial payments to Central Bank and to the estate, and was ordered to continue making monthly payments during the term of her supervision.

In July 2005, the estate and Universal Surety filed an "Application for Turnover of Funds" in the Probate Court requesting an order that the first $10,000 of any restitution which might be paid to Central Bank by Edison should instead be paid to Universal Surety. Central Bank opposed the application, asserting that any claims that Universal Surety or the estate may have had against Central Bank had been dismissed with prejudice under the settlement agreement.

The Probate Court granted the turnover order, under which (1) the bank would remit $7,000 to Universal Surety and $1,360.16 to the estate from restitution funds already received, (2) the estate would remit the $3,000 restitution payment that it received to Universal Surety, and (3) Central Bank would be treated as sole claimant to the remainder of the restitution payments.

TURNOVER ORDER

A turnover order is a final, appealable judgment. Burns v. Miller, Hiersche, Martens & Hayward, P.C., 909 S.W.2d 505, 506 (Tex. 1995). Turnover relief is a statutory remedy under which "[a] judgment creditor is entitled to aid from a court of appropriate jurisdiction[,]" which may "order the judgment debtor to turn over . . . property that is in the debtor's possession[.]" Tex. Civ. Prac. & Rem. Code Ann 31.002(a), (b)(1) (Vernon Supp. 2006) (emphasis added). "Texas courts do not apply the turnover statute to non-judgment debtors." Beaumont Bank, N.A. v. Buller, 806 S.W.2d 223, 227 (Tex. 1991); see also Bay City Plastics, Inc. v. McEntire, 106 S.W.3d at 321, 324 (Tex. App.--Houston [1st Dist.] 2003, no pet.).

Because all claims between Central Bank, Universal Surety, and the estate were released, and because the estate's underlying cause of action was nonsuited with prejudice, Universal Surety and the estate have no judgment against Central Bank upon which to execute and to seek a turnover of assets. Additionally, since all obligations under the settlement agreement have been fully paid, Central Bank is not a debtor. Because Central Bank is not a judgment debtor, the turnover statute is inapplicable. See Beaumont Bank, 806 S.W.2d at 227. The trial court had no power to render the turnover order because there was no underlying judgment to be enforced against a judgment debtor. See Ex parte Johnson, 654 S.W.2d 415, 417 (Tex. 1983) (noting that turnover order is designed to secure "satisfaction of a final judgment"). An order is void when a court has no power or jurisdiction to enter it. Urbish v. 127th Jud. Dist. Ct., 708 S.W.2d 429, 431 (Tex. 1986). Because the trial court lacked power to enter the turnover order, we hold that the order is void, and therefore vacate the order.

Conclusion

We vacate the order of the trial court, dismiss the appeal, and dismiss the companion petition for writ of mandamus.

Elsa Alcala

Justice

Panel consists of Chief Justice Radack, Justice Alcala, and Justice Bland.

1. The total amount received by the estate was $39,784, due to the estate's attorneys' fees.