Carl Blankenship, Individually and as Independent Administrator of the Estate of Rosalind Blankenship, Deceased v. Jackson Wightman--Appeal from County Court at Law of Hunt County

In The

Court of Appeals

Sixth Appellate District of Texas at Texarkana

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No. 06-06-00015-CV

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CARL BLANKENSHIP, INDIVIDUALLY AND AS INDEPENDENT

ADMINISTRATOR OF THE ESTATE OF

ROSALIND BLANKENSHIP, DECEASED, Appellant

V.

JACKSON WIGHTMAN, Appellee

On Appeal from the County Court at Law

Lamar County, Texas

Trial Court No. 15,247

Before Morriss, C.J., Ross and Carter, JJ.

Memorandum Opinion by Chief Justice Morriss

MEMORANDUM OPINION

In 1991, Carl and Rosalind Blankenship agreed to purchase, under a single executory contract for deed, two separate residences in Hunt County. The Blankenships began living in one of those residences (the Blankenship residence). In 2002, by a second contract for deed, the Blankenships agreed to sell to Jackson Wightman the other house (the Wightman residence). In that contract, Wightman agreed to pay for the fire insurance on the Wightman residence. After both contracts were partially performed, but remained outstanding, the Wightman residence was destroyed in a fire; and, not long thereafter, both Rosalind Blankenship and the Blankenships' original vendor, Christine Caldwell, died. The issues before this Court spring from how the fire insurance proceeds were applied.

Because of the way the fire insurance policy on the Wightman residence was issued, the $34,000.00 in loss payment proceeds were payable to Rosalind Blankenship and Christine Caldwell. Before Caldwell died, she received the proceeds and applied them to the balance owed on the Blankenship residence. That application of the insurance proceeds, plus a subsequent payment by Blankenship to Caldwell, completely paid the balance owing on the Blankenship residence. At the time of the fire, $18,500.00 remained owing on the Wightman residence.

Wightman sued Carl Blankenship, both individually and as Independent Administrator of the Estate of Rosalind Blankenship, seeking application of the insurance proceeds to the balance owed on the Wightman residence, judgment for the remaining balance of the proceeds and attorney's fees, and an equitable lien on the Blankenship residence. The trial court granted Wightman summary judgment that his contract was paid in full, that Blankenship owed him the remaining balance of the insurance proceeds in the amount of $15,500.00, plus attorney's fees in the amount of $9,485.96, and that Wightman had an equitable lien in the sum of $24,985.96 in Blankenship's interest in the Blankenship residence.

In three points of error, Blankenship claims that the equitable lien violated homestead rights, that the required parties had not been joined, and that the attorney's fees judgment was not supported by legally or factually sufficient evidence. We modify the judgment of the trial court, and affirm it as modified, because (1) granting an equitable lien in Blankenship's rights in his residence did not violate homestead rights to the extent the insurance proceeds were paid toward the purchase money for the Blankenship residence, (2) there was no defect in parties, and (3) sufficient evidence supported the judgment for attorney's fees.

(1) Granting an Equitable Lien in Blankenship's Rights in His Residence Did Not Violate Homestead Rights to the Extent the Insurance Proceeds Were Paid Toward the Purchase Money for the Blankenship Residence

It is without dispute that the Blankenship residence that is, the property Blankenship purchased from Caldwell and retained is Blankenship's homestead, and there is no claim that it has been abandoned. Blankenship asserts that the trial court erred in granting Wightman an equitable lien in the Blankenship homestead. He appropriately argues that a lien can be created on a homestead only for purchase money, improvements, or taxes. See Tex. Const. art. XVI, 50. But he also cites Hruska v. First State Bank of Deanville, 747 S.W.2d 783 (Tex. 1988), for the proposition that, before any equitable lien can be created in a homestead, there must be an express or implied agreement between the parties that would support creation of that lien. Blankenship reasons that, because there was no express or implied contract between Blankenship and Wightman that would support a lien on Blankenship's homestead, the equitable lien ordered by the trial court was invalid. We disagree with the reasoning and conclusion.

Hruska is not as broad as Blankenship would have it. The Hruskas were homeowners who sought and obtained bank financing for improvements to their homestead. All appeared to be in order until the bank reviewed their loan papers after the improvements had been completed and discovered that no improvements contract had ever been signed. Though the trial court and the court of appeals both agreed the bank should have an equitable lien on the Hruskas' homestead for the loan proceeds used to improve the homestead, the Texas Supreme Court invalidated the lien, because there was no written preimprovement contract to support the lien. See id. Hruska is distinguishable from the facts before us. In Hruska, no preimprovement written contract existed as is required before an improvement lien is created on homestead property. Here, a contract existed between Caldwell and Blankenship providing for purchase of the Blankenship residential property and for the payment of purchase money. Wightman's insurance proceeds were used to pay on Blankenship's purchase money obligation on that very contract.

Constructive trusts, being remedial in nature, have the very broad function of redressing wrongs or unjust enrichment in accordance with basic principles of equity and justice. There is no unyielding formula to which a court of equity is bound; the equity of the transaction will shape the relief granted. [T]he homestead protection afforded by the Texas Constitution was never intended to protect stolen funds. Stolen funds used for the purchase of a homestead or improvement of an existing homestead can never acquire homestead rights as they are held in trust for the rightful owners of the funds. Appellant cites no authority for the proposition that we should distinguish between funds used to purchase outright or improve a homestead and those used to pay for the home incrementally over a period of time. We decline to make the distinction. . . . Such a distinction can only lead to unjust, inequitable, and absurd results.

Bransom v. Standard Hardware, 874 S.W.2d 919, 928 (Tex. App. Fort Worth 1994, writ denied) (citations omitted).

Since it is established in the summary judgment evidence that the insurance proceeds, to which Wightman was entitled, were credited to the balance of the purchase money owed on the Blankenship residence, Wightman is entitled to be subrogated to the rights of Caldwell, the vendor who received those funds rights equivalent to those held by a purchase money lienholder, to secure repayment of purchase money. See Heggen v. Pemelton, 836 S.W.2d 145, 147 48 (Tex. 1992); Eggemeyer v. Eggemeyer, 623 S.W.2d 462, 466 (Tex. App. Waco 1981, writ dism'd w.o.j.).

But we note that the equitable lien was awarded, not only for the amount of the purchase money paid with the insurance proceeds, $15,500.00, but also the attorney's fees awarded by the trial court, $9,485.96. While we have held the equitable lien valid in the amount of the $15,500.00 applied to the purchase money obligation, we find the lien invalid as to the attorney's fees, since those attorney's fees were not incurred as purchase money for the homestead, improvements to the homestead, nor taxes on the homestead. See Heggen, 836 S.W.2d at 147 48.

The equitable lien on Blankenship's rights in the homestead was valid as to the purchase money portion, but not as to the attorney's fees portion.

(2) There Was No Defect in Parties

Blankenship also asserts a defect in parties in that heirs of Rosalind Blankenship namely Justin Arrington and Ashley Arrington, allegedly her children by a prior marriage were not joined as parties. Blankenship cites Sections 17.002 and 37.006(a) of the Texas Civil Practice and Remedies Code and Rule 39(a) of the Texas Rules of Civil Procedure to support this point of error. Blankenship's argument rests on his assertion that those two unjoined heirs own an interest in the Blankenship residence, which was affected by the trial court's judgment.

When a suit against a decedent's estate involves the title to real property, not only must the executor or administrator be joined, the heirs of the decedent must also be joined as defendants. Tex. Civ. Prac. & Rem. Code Ann. 17.002 (Vernon 1997). But Section 17.002 has been interpreted to exclude suits seeking to establish just a lien on the property. See Migura v. Dukes, 770 S.W.2d 568, 569 (Tex. 1989). Since this suit merely affected the real property by establishing a lien on Blankenship's interest in the property, Section 17.002 does not apply.

When declaratory relief is requested, all persons whose interests will be affected by the declaratory relief should be made parties; otherwise, their interests cannot be affected. Tex. Civ. Prac. & Rem. Code Ann. 37.006(a) (Vernon 1997). Here, the relief granted by the trial court affecting the Blankenship residence was a lien against only the interest of Blankenship in the property. Blankenship was a party to the lawsuit. Therefore, Section 37.006(a) requires no change to the judgment.

The same is true of Rule 39(a) of the Texas Rules of Civil Procedure. Rule 39(a) requires joinder of all persons the presence of whom in the lawsuit is necessary in order to render complete relief. See Tex. R. Civ. P. 39(a). Because the relief granted by the trial court was limited to a lien in Blankenship's interest in the Blankenship residence, Rule 39(a) requires joinder of no additional person.

Because the trial court's judgment affects the Blankenship residence only by establishing a lien, and because that lien applies only to Blankenship's interest in the Blankenship property, the nonjoinder of Rosalind's children by a previous marriage was not error. Thus, we overrule this point of error.

(3) Sufficient Evidence Supported the Judgment for Attorney's Fees

Blankenship finally asserts that the attorney's fee award was not supported by legally or factually sufficient evidence, because the $9,485.96 awarded was for legal fees and expenses incurred in Wightman's legal representation before Wightman filed his third amended original petition in which he pled, for the first time, a cause of action under the Texas Declaratory Judgment Act. See Tex. Civ. Prac. & Rem. Code 37.009 (Vernon 1997).

An affidavit by Wightman's attorney, and an attachment to that affidavit, provides summary judgment evidence as to attorney's fees and expenses. The attachment sets out fees and expenses totaling $10,235.96, $750.00 of which came from handwritten additions to a printed or typed statement. Without the handwritten additions, the statement totals $9,485.96, the amount the trial court awarded. Clearly, the numbers and the detail in the attached statement provide support for amount of the trial court's judgment for attorney's fees and expenses.

The only question raised by Blankenship is whether there is sufficient summary judgment evidence tying those fees and expenses incurred before the declaratory judgment cause of action was pled to the declaratory judgment cause of action, the cause of action which statutorily can support an award for attorney's fees. We believe the evidence is sufficient. In the summary judgment affidavit, counsel states that the statement for those fees and expenses sets forth "the work performed that was performed that was reasonable and necessary to prosecute the claim thus far." That affidavit was dated October 26, 2005, and does not indicate that the various causes of action are severable from "the claim." We conclude this constitutes legally and factually sufficient evidence to support the award for attorney's fees and expenses for pursuing Wightman's claim, no matter what causes of action were asserted or when.

We modify the judgment by reducing the lien against Blankenship's interest in the Blankenship property to $15,500.00 and, as modified, affirm the judgment.

Josh R. Morriss, III

Chief Justice

Date Submitted: June 5, 2006

Dated Decided: July 7, 2006