Stowell, Richard B. v. Stowell, Joy J. and Johnson, Neva March, Individually and as Co-Trustees of The Johnson Trust A.--Appeal from 125th District Court of Harris County

Reversed and Remanded and Memorandum Opinion filed January 23, 2003

Reversed and Remanded and Memorandum Opinion filed January 23, 2003.

In The

Fourteenth Court of Appeals

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NO. 14-02-00293-CV

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RICHARD B. STOWELL, Appellant

V.

JOY J. STOWELL and NEVA MARCH JOHNSON,

INDIVIDUALLY and AS CO-TRUSTEES

OF THE JOHNSON TRUST A, Appellees

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On Appeal from the 125th District Court

Harris County, Texas

Trial Court Cause No. 98-15787-A

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M E M O R A N D U M O P I N I O N

In this suit for misappropriation of trust assets, Richard Stowell appeals a summary judgment in favor of Joy J. Stowell and Neva March Johnson ( Johnson ), individually and as co-trustees of the Johnson Trust A ( Trust A ), on the grounds that: (1) there was no evidence that Trust A was entitled to judgment for the amount awarded to it; and (2) punitive damages could not be awarded to Johnson without an award of actual damages to her. We reverse and remand.


Background

After suing Stowell for conversion, fraud, and breach of fiduciary duty for misappropriation of funds held in trust accounts, appellees moved for summary judgment. The trial court granted their motion and awarded Trust A $418,870.87 in actual damages and awarded Trust A and Johnson, individually, $800,000 in punitive damages. Stowell appeals this judgment by restricted appeal. See Tex. R. App. P. 30.

Standard of Review

A restricted appeal: (1) must be brought within six months of the date of judgment; (2) by a party to the suit; (3) who did not participate in the hearing that resulted in the judgment complained of; and (4) the error must be apparent from the face of the record. Id.; Quaestor Invs., Inc. v. State of Chiapas, 997 S.W.2d 226, 227 (Tex. 1999) (per curiam). Review by restricted appeal entitles the appellant to the same scope of review as an ordinary appeal, except that the error must appear on the face of the record, which for purposes of a restricted appeal consists of all the documents on file. Norman Communications v. Tex. Eastman Co., 955 S.W.2d 269, 270 (Tex. 1997) (per curiam). In this case, it is undisputed that Stowell satisfied the first three elements of a restricted appeal.[1] Therefore, we address only whether he has shown error on the face of the record.

A summary judgment may be granted if the motion and summary judgment evidence show that there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law on those issues expressly set out in the motion or response. Tex. R. Civ. P. 166a(c). A nonmovant need not respond to a motion for summary judgment to contend on appeal that the movant s summary judgment proof is legally insufficient to support the summary judgment. M.D. Anderson Hosp. & Tumor Inst. v. Willrich, 28 S.W.3d 22, 23 (Tex. 2000). In reviewing a summary judgment, we take as true all evidence favorable to the nonmovant, and indulge every reasonable inference, and resolve any doubts, in the nonmovant s favor. Southwestern Elec. Power Co. v. Grant, 73 S.W.3d 211, 215 (Tex. 2002).

The foregoing legal sufficiency standard of review for a traditional summary judgment, which requires conclusive proof in favor of the movant, differs considerably from the legal sufficiency standard applied to a fact finding in the trial court, where only a scintilla of evidence supporting the disputed fact is required.[2] Appellees contend that in a restricted appeal, the requirement that error appear on the face of the record changes the standard of review of a summary judgment to that otherwise applicable to a fact finding in the trial court. Therefore, according to appellees, in reviewing a summary judgment on a restricted appeal, the evidence is viewed in favor of the finding and is legally sufficient as to any fact sought to be proved by the movant if that fact can be inferred from the summary judgment evidence. However, none of the cases appellees cite to support this proposition involve a restricted appeal or a summary judgment;[3] and the cases we have found have applied the summary judgment standard of review in restricted appeals.[4] We are therefore without authority to depart from the summary judgment standard of review in order to draw inferences in appellees favor from the summary judgment evidence.

Actual Damages

Stowell s first issue contends there is no evidence to support the award of $418,870.87 to Trust A because it was based on the affidavit of Joy Stowell, which states that: (1) there were two trusts, Trust A and Johnson Trust B ( Trust B ); and (2) the funds Stowell misappropriated came from accounts belonging to both Trust A and Trust B, (i.e., without specifying the amounts taken from accounts belonging to each trust). Therefore, Stowell claims the evidence establishes that some portion of the amount awarded to Trust A was instead owed to Trust B so that there is no evidence to support the amount awarded to Trust A. We agree.

The record is ambiguous, if not contradictory, regarding the status of Trust A and Trust B relative to one another. Appellees sixth amended petition describes the trust that is the plaintiff as the JOHNSON TRUST A (also known as the Johnson Trust and/or the Johnson Trust B . . . . whereas appellees motion for summary judgment describes it as the JOHNSON TRUST (also known as the Johnson Trust A and/or the Johnson Trust B . . . . (emphases added). Similarly, the only evidence supporting the actual damage award was the following portions of the affidavit of Joy Stowell:

My father established the Johnson Trust during his life . . . . After my father s death, the Johnson Trust was divided into two subparts, the Johnson Trust A and the Johnson Trust B. My mother and I are co-trustees on both trusts. . . .

During the mid 1990s, the Johnson Trust A and Johnson Trust B held various accounts at banks and financial institutions. . . . Richard Stowell basically wiped out the various accounts of the Johnson Trust A and the Johnson Trust B. . . . Once I learned what had occurred, Richard Stowell paid some sums back to the trusts. The balance of the funds misappropriated from these accounts is $418,870.87. . . .

In Richard Stowell s depositions during the divorce proceedings, he has admitted that he took the money without my authorization and owes the money to the Trust.

(emphases added). Therefore, the summary judgment record: (1) is inconsistent with regard to whether Trust A and Trust B are two subparts of a single trust or are each a legally distinct trust; (2) is ambiguous as to whether the trust accounts were held by Trust A and Trust B separately or jointly; (3) provides no information regarding how much money was taken from, or returned to, Trust A as distinguished from Trust B; and (4) to the extent Trust A and Trust B are legally distinct, provides no basis to conclude that Trust A had standing to recover any amounts taken from Trust B. Because the summary judgment evidence thus fails to prove as a matter of law that Trust A was entitled to recover the $418,870.87 it was awarded, we sustain Stowell s first issue.

Exemplary Damages

Stowell s second issue contends that appellee, Neva Johnson, could not be awarded exemplary damages in that she did not recover actual damages. See Schlueter v. Schlueter, 975 S.W.2d 584, 589 (Tex. 1998) (holding that recovery of punitive damages requires a finding of an independent tort with accompanying actual damages). However, because our sustaining of Stowell s first issue leaves no award of actual damages, the award of exemplary damages cannot be affirmed in favor of either Johnson or Trust A for this reason.

Accordingly, Stowell s second issue is sustained, the judgment of the trial court is reversed,[5] and the case is remanded to the trial court for further proceedings.

/s/ Richard H. Edelman

Justice

Judgment rendered and Memorandum Opinion filed January 23, 2003.

Panel consists of Justices Edelman, Seymore, and Guzman.


[1] A restricted appeal is permissible where, as here, an appellant neither filed a summary judgment response nor appeared at the hearing on the motion. Havens v. Ayers, 886 S.W.2d 506, 509 (Tex. App. Houston [1st Dist.] 1994, no writ); see Stubbs v. Stubbs, 685 S.W.2d 643, 645 (Tex. 1985).

[2] See, e.g., Minyard Food Stores, Inc. v. Goodman, 80 S.W.3d 573, 577 (Tex. 2002) (noting that, in reviewing a legal sufficiency challenge to a jury finding, the appeals court views the evidence in the light that supports the finding and disregards all evidence and inferences to the contrary; and that the evidence is legally sufficient if more than a scintilla of evidence exists).

[3] See Lewelling v. Lewelling, 796 S.W.2d 164, 165-66 (Tex. 1990) (ordinary appeal of a child custody determination); Tate v. Tate, 55 S.W.3d 1, 3-5 (Tex. App. El Paso 2000, no pet.) (ordinary appeal of a property division in a divorce); Knoll v. Neblett, 966 S.W.2d 622, 626 (Tex. App. Houston [14th Dist.] 1998, pet. denied) (ordinary appeal of a take-nothing judgment following a medical malpractice jury trial).

[4] See Ridgeline, Inc. v. Crow-Gottesman-Shafer No. 1, 734 S.W.2d 114, 116-17 (Tex. App. Austin 1987, no writ) (applying traditional standard of review to reverse summary judgment in appeal by writ of error); Davis v. Hughes Drilling Co., 667 S.W.2d 183, 184 (Tex. App. Texarkana 1983, no writ) (same); Tex. R. App. P. 30 (statutes pertaining to former writ of error appeals to the courts of appeals apply equally to restricted appeals).

[5] If an error affects part, but not all, of a matter in controversy, and that part is separable without unfairness to the parties, the judgment must be reversed and a new trial ordered as to only the part affected by the error. Tex. R. App. P. 44.1(b). However, the court may not order a separate trial solely on unliquidated damages if liability is also contested. Id. In this case, even though Stowell has contested only damages and not liability, it is not possible to affirm the judgment, in part, as to liability because the summary judgment record creates confusion regarding what Trust A consists of and, thus, to what trust(s) any liability would be owed.