In the Matter of K.C., An Incapacitated Person--Appeal from Probate Court No 1 of Bexar County

MEMORANDUM OPINION
No. 04-03-00012-CV
IN THE MATTER OF K.C., AN INCAPACITATED PERSON
From the Probate Court No. 1, Bexar County, Texas
Trial Court No. 2002-PC-2040
Honorable Polly Jackson Spencer, Judge Presiding

Opinion by: Phylis J. Speedlin, Justice

Sitting: Alma L. L pez, Chief Justice

Karen Angelini, Justice

Phylis J. Speedlin, Justice

Delivered and Filed: December 17, 2003

AFFIRMED

Katherine Senkbeil ("Senkbeil") filed a pro se appeal from the trial court's order granting San Antonio Federal Credit Union ("SACU") the right to interplead funds and awarding SACU attorney's fees. Senkbeil contends that SACU was not entitled to interplead funds held in trust for K.C. and that there is no evidence to support the trial court's award of attorney's fees. We overrule Senkbeil's issues and affirm the judgment of the trial court; however, we deny SACU's Motion For Damages for Frivolous Appeal.

Background

On May 3, 2003, SACU filed a Petition for Interpleader in the 228th Judicial District Court in Bexar County to deposit the amount of $26,959.22 into the registry of the court. According to its petition, in March 2002, Virginia Snell Frye ("Frye") opened an irrevocable trust account with SACU naming herself as trustee and K.C. as the beneficiary. The majority of the funds in the trust account were obtained as a result of a civil judgment awarded in favor of K.C. On April 30, 2002, SACU received a letter from Senkbeil asserting that she held a durable power of attorney enabling her to act on K.C.'s behalf and that an account agreement had been signed by K.C. without capacity. Senkbeil demanded that the trust account be terminated and the sums be forwarded to K.C. in care of Senkbeil. On or about May 2, 2002, Frye's attorney contacted SACU and informed it that the trust account should remain open and available to Frye until a judgment was entered indicating otherwise.

The interpleader action was eventually transferred to the probate court where guardianship proceedings for K.C. were pending. SACU filed a Request for Discharge and Attorney's Fees asserting that it was an innocent stakeholder with no claim in the trust account and that it was faced with rival claims. SACU sought the recovery of reasonable attorney's fees from the interpleaded funds. Neither Frye nor Senkbeil responded to SACU's motion. After a hearing, the trial court granted SACU's request and awarded it $6,000 in reasonable attorney's fees. Subsequently, SACU deposited the amount of $21,172.09 into the registry of the probate court.

Interpleader and Attorney's Fees

Rule 43 of Texas Rules of Civil Procedure authorizes a defendant, who receives multiple claims to property in its possession, to join all claimants in a lawsuit and deposit the disputed property into the registry of the court. Tex. R. Civ. P. 43. An interpleading party is entitled to relief if: (1) he is either subject to or has reasonable grounds to anticipate rival claims to the same fund or property, (2) he has not unreasonably delayed in filing his interpleader action, and (3) he has unconditionally tendered the fund or property into the court's registry. Hanzel v. Herring, 80 S.W.3d 167, 173 (Tex. App.--Fort Worth 2002, no pet.); Daniels v. Pecan Valley Ranch, Inc., 831 S.W.2d 372, 385 (Tex. App.--San Antonio 1992, writ denied). An innocent, disinterested stakeholder who has reasonable doubts as to the party entitled to property in its possession, and who in good faith interpleads the funds, is entitled to the recovery of attorney's fees. Daniels, 831 S.W.2d at 385.

Granting a party the right to interplead is within the sound discretion of the trial court. Bryant v. United Shoreline Inc. Assurance Servs., 972 S.W.2d 26, 31 (Tex. 1998). Every reasonable doubt should be resolved in favor of the stakeholder's right to interplead. Id.; Petro Source Partners, Ltd. v. 3-B Rattlesnake Refin., Ltd., 905 S.W.2d 371, 375 (Tex. App.--El Paso 1995, writ denied). The award of attorney's fees is also within the trial court's sound discretion. Olmos v. Pecan Grove Mun. Util. Dist., 857 S.W.2d 734, 741 (Tex. App.--Houston [14th Dist.] 1993, writ ref'd).

The undisputed evidence reflects that as of May 2, 2002, SACU was subject to rival claims to the trust account funds. In support of its petition, SACU presented the account signature card signed by Frye on March 22, 2002. SACU provided a copy of Senkbeil's letter, received by SACU on April 30, 2002, demanding that the account be closed. Attached to Senkbeil's letter was a copy of the statutory durable power of attorney. SACU's petition was also supported by a May 2, 2002, fax communication from Frye's attorney informing SACU that it should not freeze the account. The record from the hearing reflects that the trial court was provided a copy of these documents. Additionally, at the hearing, Senkbeil admitted that there were two claimants to the trust account funds.

The record also establishes that SACU did not unreasonably delay in filing its interpleader action. SACU received notice of Senkbeil's claims to the trust account funds on April 30, 2002. Two days later, on May 2, 2002, it received notice of Frye's claim to the same funds. SACU filed its petition on May 3, 2002. Senkbeil failed to present any evidence to contradict these facts.

Finally, the record establishes that SACU in its petition unconditionally tendered the trust account funds into the probate court's registry. The record also contains the probate court's receipt reflecting that the trust account funds, less the amount awarded to SACU in attorney's fees, were deposited.

Because the record reflects that SACU was presented with rival claims to the trust fund account, that it did not unreasonably delay in bringing its interpleader action, and that it unconditionally tendered the trust account funds into the registry of the probate court, we hold that the probate court did not abuse its discretion in granting SACU interpleader relief. See Bryant, 972 S.W.2d at 31.

In addition to challenging SACU's entitlement to interpleader relief, Senkbeil also contends that SACU failed to present evidence in support of the award of attorney's fees. When an interpleading party is responsible for the conflicting claims over subject funds or property, the party is not entitled to attorney's fees. Olmos, 857 S.W.2d at 742. On appeal, Senkbeil appears to suggest that SACU was responsible for the rival claims to the trust account funds because at the time the trust account was opened SACU failed to obtain K.C.'s identification, failed to obtain K.C.'s proper endorsement, and failed to obtain a copy of a legal document granting Frye the right to open an account as trustee. Senkbeil made these same assertions in a motion for summary judgment she filed in the probate court. (1) Senkbeil, however, failed to present any evidence to support her contentions. Furthermore, on appeal, Senkbeil fails to cite to any authority to support her assertion that SACU is responsible for the competing claims. See Tex. R. App. P. 38.1(h).

Senkbeil also contends that there is no expert testimony to support the probate court's award of attorney's fees. An affidavit of an attorney representing a party constitutes expert testimony that will support a trial court's award of attorney's fees. See Knighton v. Int'l Bus. Machs. Corp., 856 S.W.2d 206, 210 (Tex. App.--Houston [1st Dist.] 1993, writ denied) (addressing the award of attorney's fees based on affidavit filed in summary judgment proceeding).

Here, the record reflects that SACU's attorney filed an affidavit in support of its Request for Discharge and Attorney's Fees. In the affidavit, SACU's counsel detailed the work conducted by his law firm in the interpleader action. He averred that approximately thirty-five hours were spent, and that the hourly rates charged were reasonable for matters of this nature and for attorneys in Bexar County. Based upon the hours spent and the billing rates of the attorneys, SACU sought attorney's fees in the amount of $7,900. At the hearing on SACU's Request for Discharge, counsel for SACU explained to the court some of the work conducted by his law firm.

No evidence was presented by Senkbeil contradicting the work conducted by SACU's counsel, the time spent on the interpleader action, or the reasonableness of the rates charged. Nevertheless, the trial court did not award the $7,900 being sought but instead awarded SACU $6,000 in attorney's fees.

In Texas, the innocent stakeholder in an interpleader is entitled to attorney's fees to be paid out of interpleaded funds. See Hanzel, 80 S.W.3d at 173; Beneficial Standard Life Ins. Co. v. Trinity Nat'l Bank, 763 S.W.2d 52, 56 (Tex. App.--Dallas 1988, writ denied). Here, the record contains evidence in support of the probate court's award of attorney's fees to SACU. Cf. Taliaferro v. Texas Commerce Bank-Hurst, 669 S.W.2d 172, 174 (Tex. App.--Fort Worth 1984, no writ) (stating no evidence offered to support award of attorney's fees and reversing trial court's order). Accordingly, we cannot say the trial court abused its discretion in awarding SACU attorney's fees in the amount of $6000. We overrule Senkbeil's issues on appeal.

SACU filed a Motion for Damages for a Frivolous Appeal. We are authorized to award "just damages" if we determine "an appeal is frivolous" from consideration of "the record, briefs, or other papers filed in the court of appeals." Tex. R. App. P. 45. Just damages are permitted if an appeal is objectively frivolous and injures the appellee. Mid-Continent Cas. Co. v. Safe Tire Disposal Corp., 2 S.W.3d 393, 397 (Tex. App.--San Antonio 1999, no pet.) (stating bad faith is no longer dispositive or necessarily material). In determining whether damages should be imposed for bringing a frivolous appeal, we review the case from the appellant's point of view at the time appeal was taken, and decide whether he had any reasonable grounds to believe the case would be reversed. See Campos v. Invest. Mgmt. Props., Inc., 917 S.W.2d 351, 356 (Tex. App.--San Antonio 1996, writ denied) (construing former Tex. R. App. P. 84). Whether to grant sanctions is a matter of discretion that we exercise with prudence and caution, and only after careful deliberation. Conseco Fin. Servs. v. Klein Ind. Sch. Dist., 78 S.W.3d 666, 676 (Tex. App.--Houston [14th Dist.] 2002, no pet.). Although imposing sanctions is within our discretion, we will do so only in circumstances that are truly egregious. Id.

In response to SACU's motion, Senkbeil reasserts her argument that the trial court erred in awarding attorney's fees without proper expert testimony and evidence. Trial counsel's affidavit provided the evidence for the trial court's award of attorney's fees. At the hearing, in arguing SACU's motion, SACU's counsel referenced his affidavit and explained some of the work outlined in the affidavit. SACU's counsel, however, did not testify in detail regarding the attorney's fees at the hearing nor was there other testimony on the issue of attorney's fees presented at the hearing. Thus, Senkbeil, as a pro se litigant, may have believed that the trial court had not considered expert testimony regarding attorney's fees. Reviewing the case from Senkbeil's standpoint, she may have believed the absence of expert testimony at the hearing was a reasonable ground on which to challenge the attorney's fees awarded to SACU. Accordingly we conclude that Senkbeil's appeal does not warrant sanctions. Therefore, we deny SACU's Motion for Damages for Frivolous Appeal.

We affirm the judgment of the trial court.

Phylis J. Speedlin, Justice

1. The record does not reflect that a hearing was conducted on the motion for summary judgment or that the probate court ruled on the motion.