Martinek Grain & Bins, Inc. v. Bulldog Farms Inc., et al

 
Affirm in part; Reverse and Remand in part; Opinion Filed April 18,
2012.
 
 
 
In The
Court of Appeals
Fifth District of Texas at Dallas
............................
No. 05-10-01392-CV
............................
Martinek Grain & Bins, Inc., Appellant
V.
Bulldog Farms, Inc, C & M Farms, Inc. Double B Ranch, Inc., M & M
Dairies, Inc.,
Jackie Don Miller, Individually and as an Officer of Double B Ranch,
Inc., M & M Dairies,
Inc., and C & M Farms, Inc., Olga Miller, Individually and as an Officer
of Bulldog Farms,
Inc., Tom Weilert, as Attorney in Fact for C.L. Miller and Olga Miller,
and Deanna Miller
Weilert and Gaynell Miller Howey, Co-Trustees of the Miller Children's
Irrevocable Trust, Appellees
 
.............................................................
On Appeal from the 296th District Court
Collin County, Texas
Trial Court Cause No. 296-03978-2009
.............................................................
OPINION
Before Justices Morris, Fillmore, & Myers
Opinion By Justice Myers
 
This is an appeal from a suit to set aside an alleged fraudulent
transfer. Martinek Grain & Bins, Inc. appeals the take-nothing judgment
on its claims against Bulldog Farms, Inc; C & M Farms, Inc.; Double B
Ranch, Inc.; M & M Dairies, Inc.; Jackie Don Miller, individually and as
an officer of Double B Ranch, Inc., M & M Dairies, Inc., and C & M
Farms, Inc.; Olga Miller, individually and as an officer of Bulldog
Farms, Inc.; Tom Weilert, as attorney in fact for C.L. Miller and Olga
 
Miller; and Deanna Miller Weilert and Gaynell Miller Howey, co-trustees
of the Miller Children's Irrevocable Trust. Martinek brings one issue on
appeal asserting the trial court erred in granting appellees' motion for
summary judgment. We affirm the trial court's judgment as to the
appellees who moved for summary judgment, we reverse the judgment as to
the appellees who did not move for summary judgment, and we remand the
cause to the trial court for further proceedings.
BACKGROUND
C.L. Miller and Olga Miller (the Millers) were a husband and
wife who purchased 200 acres in Collin County in 1953. They lived on and
farmed the property from then until they died. They formally designated
the land as their homestead in 1987. They formed several agricultural
entities, including Bulldog Farms, Double B Ranch, M & M Dairies, and C
& M Farms (the farms).
Martinek is an agricultural feed and seed business that provided
goods and services to the farms. In return for those goods and services,
the Millers and their son, Jackie Don Miller, signed four promissory
notes on behalf of the farms payable to Martinek totaling $627,916.41.
All the notes were personally guarantied by C.L. and Jackie Don. None of
the notes was secured by the 200 acres. Olga did not sign any of the
notes in her personal capacity, nor did she guarantee any of the debt.
On March 14, 2003, Martinek notified the Millers that the notes were in
default and demanded payment.
On March 21, 2003, the Millers signed a warranty deed purporting
to transfer the 200 acres to the “Miller Children's Irrevocable Trust.”
 
The Millers continued to live on the property as their homestead.
On December 28, 2006, Martinek brought suit against the farms,
C.L., and Jackie Don for breach of the promissory notes and guaranty
agreements. According to the parties, that case remains pending in the
trial court.
On February 4, 2008, the Millers, through their attorney in
fact, Tom Weilert, signed a “Correction Warranty Deed” listing the
grantee of the 200 acres as “Deanna Miller Weilert and Gaynell Miller
Howley, co-trustees of the Miller Children's Irrevocable Trust.” The
correction warranty deed also expressly reserved a life estate in the
200 acres for the Millers and stated that the Millers had used the
property continuously as their residence and homestead.
C.L. Miller died on March 5, 2008. On March 27, 2008, Tom
Weilert, Olga Miller's attorney in fact, signed a designation of
homestead stating Olga Miller reaffirmed that following C.L.'s death,
“she continues to occupy the Land as her homestead.” Olga Miller died on
January 28, 2010. The record does not show whether either of the
Millers' estates has proceeded to probate.
On October 9, 2009, Martinek brought this suit to set aside the
transfer of the property to the trust as a fraudulent transfer. Martinek
also alleged a conspiracy by appellees to defraud it by making the
fraudulent transfer. On June 10, 2010, Olga Miller, Don and Deanna
Weilert, and Gaynell Howey moved for summary judgment on Martinek's
claims. They asserted the transfer of the property to the Trust did not
 
violate the Fraudulent Transfer Act because the 200 acres was an exempt
asset under Texas homestead law. Martinek then amended its petition to
allege that the warranty deed and correction warranty deed failed to
convey the property to the trust and that the conveyance was void under
the Texas Constitution. Martinek raised these new claims in its response
to the motion for summary judgment. Miller, the Weilerts, and Howey
filed a reply to Martinek's response and argued that even if the
conveyance were void, the property was not subject to Martinek's claims.
On October 6, 2010, the trial court signed an order granting
“Defendants' Motion for Summary Judgment in its entirety.” On October
22, 2010, the trial court signed the “Final Judgment,” which confirmed
the October 6 order granting the motion for summary judgment and ordered
that Martinek “take nothing by its claims herein.” The October 22
judgment also stated, “All other relief not expressly granted in this
Judgment is denied. This Judgment finally disposes of all parties and
claims and is appealable.”
APPELLATE JURISDICTION
Martinek contends this Court lacks jurisdiction over the appeal
because there is no final judgment. Ordinarily, this Court has
jurisdiction over appeals from final judgments only. Jack B. Anglin Co.
v. Tipps, 842 S.W.2d 266, 272 Tex. 1992). “A final judgment is one which
disposes of all legal issues between all parties.” Id. When the judgment
follows a conventional trial on the merits, the judgment is presumed
final. Lehmann v. Har-Con Corp., 39 S.W.3d 191, 198-99 (Tex. 2001); N.E.
 
Indep. Sch. Dist. v. Aldridge, 400 S.W.2d 893, 897-98 (Tex. 1966). This
presumption of finality does not apply to summary judgments because it
is probable “that any judgment rendered prior to a full-blown trial is
intended to dispose of only part of the case.” Lehmann, 39 S.W.3d at
199-200. The language used in an otherwise interlocutory order or
judgment can make it final if the language “expressly disposes of all
claims and all parties” and the intent that the judgment be final is
unequivocally expressed in the words of the order itself. Id. at 200.
In this case, only four of the nine defendants moved for summary
judgment. Yet the trial court's judgment ordered that Martinek “take
nothing by its claims herein” and stated that the judgment “finally
disposes of all parties and claims and is appealable.” The judgment's
words unequivocally express the intent that the judgment be final. We
conclude the judgment is final for purposes of appeal.
Martinek also argues that even if the judgment is final for
jurisdictional purposes, the trial court erred “on the merits” in
rendering a final judgment for those defendants who did not move for
summary judgment. We agree. The trial court errs when it renders summary
judgment for a party that did not move for summary judgment. See Teer v.
Duddlesten, 664 S.W.2d 702, 705 (Tex. 1984) (trial court erred by
including City of Bellaire in summary judgment when the city did not
move for summary judgment). Accordingly, we conclude the trial court
erred by rendering judgment for the parties in this case who did not
 
move for summary judgment or establish a right to judgment under any
other procedure.
TRIAL COURT JURISDICTION
Martinek argues the trial court lacked jurisdiction to render
judgment on the claims against Olga Miller after she died because no
scire facias writ was issued and no appearance was made on her behalf.
In this case, the writ of scire facias issued against Deanna Miller
Weilert as the “executor-administrator-heir of the estate” of Olga
Miller. The service of the writ of scire facias was served on Deanna
Weilert and the return of service was filed in the court. Deanna Weilert
had already appeared as one of the co-trustees of the trust, but she did
not file an appearance as the executor, administrator, or heir of Olga
Miller's estate. Martinek argues that because Ms. Weilert never appeared
on behalf of the estate, the trial court lacked jurisdiction to enter
judgment disposing of the claims against Olga Miller.
Rule 152 of the rules of civil procedure governs this situation.
Rule 152 provides: Where the defendant shall die, upon the suggestion of
death being entered of record in open court, or upon petition of the
plaintiff, the clerk shall issue a scire facias for the administrator or
executor or heir requiring him to appear and defend the suit and upon
the return of such service, the suit shall proceed against such
administrator or executor or heir.
Tex. R. Civ. P. 152. The rule requires the return of service of the writ
before the case may continue; it does not require the administrator,
executor, or heir to appear for the court to have jurisdiction. In this
 
case, the writ was served on Deanna Weilert, “and upon the return of
such service,” the suit could proceed against her. The rule did not
require Deanna Weilert to appear as administrator, executor, or heir for
the court to have jurisdiction to enter judgment on Martinek's claims
against Olga Miller.
Martinek cites Supak v. Zboril, 56 S.W.3d 785 (Tex. App.-Houston
[14th Dist.] 2001, no pet.), in support of his argument. In that case,
the issue was whether the trial court had jurisdiction to impose
liability for attorney's fees against the estate of a deceased defendant
when the writ of scire facias had not been served and the administrator,
executor, or heir had not appeared. Id. at 793. The court of appeals
concluded that the trial lacked jurisdiction to impose liability against
a party who was not before it and held the judgment void to the extent
it imposed such liability. Id. at 794. In this case, Deanna Weilert was
served with the writ, and the trial court's judgment did not impose
liability against Olga Miller's estate, so the Supak opinion does not
apply.
We conclude the failure of a representative of Olga Miller's
estate to appear on behalf of the estate did not deprive the trial court
of jurisdiction over the claims against Olga Miller.
STANDARD OF REVIEW
In its sole issue on appeal, Martinek contends the trial court
erred in granting appellees' motion for summary judgment. The standard
for reviewing a traditional summary judgment is well established. See
Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548-49 (Tex. 1985);
 
McAfee, Inc. v. Agilysys, Inc., 316 S.W.3d 820, 825 (Tex. App.-Dallas
2010, no pet.). The movant has the burden of showing that no genuine
issue of material fact exists and that it is entitled to judgment as a
matter of law. Tex. R. Civ. P. 166a(c). In deciding whether a disputed
material fact issue exists precluding summary judgment, evidence
favorable to the nonmovant will be taken as true. Nixon, 690 S.W.2d at
549; In re Estate of Berry, 280 S.W.3d 478, 480 (Tex. App.-Dallas 2009,
no pet.). Every reasonable inference must be indulged in favor of the
nonmovant and any doubts resolved in its favor. City of Keller v.
Wilson, 168 S.W.3d 802, 824 (Tex. 2005).
We review a summary judgment de novo to determine whether a
party's right to prevail is established as a matter of law. Dickey v.
Club Corp., 12 S.W.3d 172, 175 (Tex. App.-Dallas 2000, pet. denied).
When a trial court's order granting summary judgment does not specify
the grounds relied upon, the reviewing court must affirm the summary
judgment if any of the summary judgment grounds are meritorious. Id.
FRAUDULENT TRANSFER
Martinek alleged that the transfer of the property to the trust
constituted a fraudulent transfer under the Uniform Fraudulent Transfer
Act. See Tex. Bus. & Com. Code Ann. §§ 24.001-.013 (West 2009). The act
declares that any “transfer” “is fraudulent as to a creditor . . . if
the debtor made the transfer . . . with actual intent to hinder, delay,
or defraud any creditor of the debtor.” Id. § 24.005(a)(1). The act
defines “transfer” as “every mode . . . of disposing of or parting with
 
an asset.” Id. § 24.002(12). The act defines “asset” as meaning
“property of a debtor, but the term does not include . . . property to
the extent it is generally exempt under nonbankruptcy law.” Id. §
24.002(2)(B). Real property qualifying as a homestead is property
“generally exempt under nonbankruptcy law.” See Tex. Const. art. XVI, §
50(a); Tex. Prop. Code Ann. § 41.001(a) (West Supp. 2011). It is
undisputed that the property was the homestead of both C.L. and Olga
Miller. Accordingly, the transfer, if any, of the property to the trust
was not a violation of the Uniform Fraudulent Transfer Act.
ERRORS IN THE DEED AND CORRECTION DEED
Martinek contends the 2003 warranty deed conveying the property
to the Miller Children's Irrevocable Trust is void because the deed does
not have a grantee and that the 2008 correction warranty deed is void
because it creates an interest-the Millers' life estate-that was not
present in the 2003 deed. Martinek also contends fact questions exist
concerning whether the trust existed when the deed and correction deed
were signed and whether it was an irrevocable trust. Martinek also
argues the transfer was void for lack of consideration and as a
pretended sale with a condition of defeasance in violation of article
XVI, section 50(c) of the Texas Constitution. See Tex. Const. art. XVI,
§ 50(c). Appellees asserted that even if the conveyance was void, the
homestead passed to Olga Miller and her heirs free of Martinek's claims.
Section 279 of the Probate Code provides, Should the estate,
 
upon final settlement, prove to be insolvent, the title of the surviving
spouse and children to all the property and allowances set apart or paid
to them under the provisions of this Code shall be absolute, and shall
not be taken for any of the debts of the estate except as hereinafter
provided.
Tex. Prob. Code Ann. § 279 (West 2003). The Austin Court of Appeals
summarized the law concerning the rights of creditors and surviving
family members to homestead property: Based on the Constitution,
statutes, and case law of this state, it is well established that title
to the homestead in an insolvent estate, where a constituent member of
the family survives, descends to those entitled to inherit free from
claims of creditors. The touchstone for determining whether the
homestead property is exempt from satisfaction of the decedent's debts
turns upon whether the decedent is survived by a spouse, minor child, or
unmarried adult child residing with the family. If any such constituent
member of the family survives, the heirs of the deceased owner take
title to the homestead property unburdened by the claims of creditors of
the decedent's estate except those specified by the Constitution and
statute, and subject only to the right of occupancy of a surviving
constituent. In contrast, where the decedent leaves no surviving spouse,
minor child, or unmarried adult child residing with the family, the
homestead property descends charged with the debts of the decedent.
Nat'l Union Fire Ins. Co. v. Olson, 920 S.W.2d 458, 461 (Tex.
 
App.-Austin 1996, no writ) (citations omitted). The debts for which the
statutes and constitution provide the homestead may be liable do not
include C.L. Miller's guaranty of the farms' debts to Martinek. See Tex.
Prob. Code Ann. § 270 (West 2003) (listing debts for which homestead may
be liable). See Footnote 1 When C.L. died, his estate was
insolvent. He was survived by his spouse, Olga, and the homestead
descended to Olga and the other heirs free of C.L.'s debt to Martinek.
Thus, on the facts of this case, there are two possibilities: either (1)
the Millers validly transferred the property to the trust, and, as
discussed above, that conveyance cannot be set aside as fraudulent; or
(2) the conveyance was void and the property descended to Olga and the
Millers' heirs free of the debts of C.L.'s estate, including Martinek's
claims. See Footnote 2 Under either scenario, the property was not
subject to execution to pay C.L.'s estate's debt to Martinek.
Martinek concedes that the homestead passed to Olga and her
heirs free of C.L.'s debts, but it asserts for the first time on appeal
that on Olga's death, the homestead was subject to her debts because
there was no surviving spouse, minor child, or unmarried adult child
residing with the family. Martinek asserts, Olga's homestead status died
upon her death, thus making the entire acreage subject to the debts of
C.L. and Olga Miller. Since the homestead was presumably community
property standing in both of their names, it is subject to execution
[for] debts under Tex. Fam. Code Ann. §§ 3.003 and 3.202. Even if Olga
 
did not personally sign the debt instruments, the joint community
property remains liable for 100% of the debt.
 
 
See Tex. Fam. Code Ann. § 3.003 (West 2006), § 3.202 (West Supp. 2011).
Martinek did not raise this issue in its response to appellees'
motion for summary judgment. Texas Rule of Civil Procedure 166a(c)
provides, “Issues not expressly presented to the trial court by written
motion, answer or other response shall not be considered on appeal as
grounds for reversal.” Tex. R. Civ. P. 166a(c); see also Tex. R. App. P.
33.1(a). Accordingly, we may not consider this issue as a ground for
reversal.
Moreover, Martinek's argument depends upon two assertions: (1)
that the property was community property at Olga's death, and (2) that
Olga was personally liable for C.L.'s debt to Martinek. If both
assertions are incorrect, then Martinek's argument lacks merit. In this
case, both assertions are incorrect.
When C.L. died, the marital relationship ceased to exist. The
homestead property Olga received under section 279 of the Probate Code
was neither separate nor community property; it was simply her property.
When Olga died, the 200 acres was not community property. Thus, the
first assertion is incorrect.
The 200 acres of homestead, as Olga's property, was subject to
her debts upon her death. The issue is whether Olga was personally
liable for C.L.'s guaranty of the farms' debt to Martinek. Section
3.201, headed “Spousal Liability,” provides: (a) A person is personally
liable for the acts of the person's spouse only if:
 
(1) the spouse acts as an agent for the person; or
(2) the spouse incurs a debt for necessaries as provided by Subchapter
F, Chapter 2.
. . . .
(c) A spouse does not act as an agent for the other spouse solely
because of the marriage relationship.
Tex. Fam. Code Ann. § 3.201 (West 2006). Under this statute, Olga had no
personal liability for C.L.'s guaranty of the farms' debts unless C.L.
was acting as Olga's agent in guarantying the debt or the debts were for
“necessaries.” Martinek did not assert below or on appeal that C.L.'s
debt was incurred for necessaries or that C.L. acted as Olga's agent in
guarantying the farms' debt. As section 3.201(c) provides, C.L. did not
act as Olga's agent solely because of the marital relationship. Id. §
3.201(c); cf. Nelson v. Citizens Bank & Trust Co., 881 S.W.2d 128,
130-31 (wife not personally liable for husband's guaranty of corporate
note). The second assertion is incorrect.
As a matter of law, the property was not subject to C.L.'s
guaranty of the farms' debt to Martinek, regardless of whether the
conveyance to the trust was valid or void.
We conclude Martinek has failed to show the trial court erred in
granting the motion for summary judgment for the parties who moved for
summary judgment, and we overrule Martinek's issue as to those parties.
DISPOSITION
We affirm the trial court's judgment as to the summary judgment
movants, Olga Miller, individually and as an officer of Bulldog Farms,
Inc.; Tom Weilert, as attorney in fact for C.L. Miller and Olga Miller;
 
and Deanna Miller Weilert and Gaynell Miller Howey, co-trustees of the
Miller Children's Irrevocable Trust. We reverse the trial court's
judgment as to those appellees who did not move for summary judgment,
Bulldog Farms, Inc; C & M Farms, Inc.; Double B Ranch, Inc.;
M & M Dairies, Inc.; Jackie Don Miller, individually and as an officer
of Double B Ranch, Inc., M & M Dairies, Inc., and C & M Farms, Inc., and
we remand the cause for further proceedings.
 
LANA MYERS
JUSTICE
101392F.P05
 
S
Court of Appeals
Fifth District of Texas at Dallas
JUDGMENT
Martinek Grain & Bins, Inc., Appellant
No. 05-10-01392-CVV.
Bulldog Farms, Inc., C & M Farms, Inc., Double B Ranch, Inc., M & M
Dairies, Inc., Jackie Don Miller, Individually and as an Officer of
Double B Ranch, Inc., M & M Dairies, Inc., and C & M Farms, Inc., Olga
Miller, Individually and as an Officer of Bulldog Farms, Inc., Tom
Weilert, as Attorney in Fact for C.L. Miller and Olga Miller, and Deanna
Miller Weilert and Gaynell Miller Howey, Co-Trustees of the Miller
Children's Irrevocable Trust, AppelleesAppeal from the 296th District
Court of Collin County, Texas. (Tr.Ct.No. 296-03987-2009).
Opinion delivered by Justice Myers, Justices Morris and Fillmore
participating.
In accordance with this Court's opinion of this date, we AFFIRM
the trial court's judgment as to Olga Miller, individually and as an
officer of Bulldog Farms, Inc., Tom Weilert, as attorney in fact for
C.L. Miller and Olga Miller, and Deanna Miller Weilert and Gaynell
Miller Howey, co- trustees of the Miller Children's Irrevocable Trust.
 
We REVERSE the trial court's judgment as to Bulldog Farms, Inc., C & M
Farms, Inc., Double B Ranch, Inc., M & M Dairies, Inc., Jackie Don
Miller, individually and as an officer of Double B Ranch, Inc., M & M
Dairies, Inc., and C & M Farms, Inc., and we REMAND the cause to the
trial court for further proceedings consistent with this opinion. It is
ORDERED that appellees Olga Miller, individually and as an officer of
Bulldog Farms, Inc., Tom Weilert, as attorney in fact for C.L. Miller
and Olga Miller, and Deanna Miller Weilert and Gaynell Miller Howey,
co-trustees of the Miller Children's Irrevocable Trust recover their
costs of this appeal from appellant Martinek Grain & Bins, Inc. It is
further ORDERED that appellant Martinek Grain & Bins, Inc. recover its
costs of this appeal from appellees Bulldog Farms, Inc., C & M Farms,
Inc., Double B Ranch, Inc., M & M Dairies, Inc., and Jackie Don Miller,
individually and as an officer of Double B Ranch, Inc., M & M Dairies,
Inc., and C & M Farms, Inc.
Judgment entered April 18, 2012.
/Lana Myers/
LANA MYERS
JUSTICE
 
-------------------
Footnote 1
Section 270 provides:
The homestead shall not be liable for the payment of any of the debts of
the estate, except for:
(1) the purchase money thereof;
(2) the taxes due thereon;
(3) work and material used in constructing improvements thereon if the
requirements of Section 50(a)(5), Article XVI, Texas Constitution, are
met;
(4) an owelty of partition imposed against the entirety of the property
by court order or by a written agreement of the parties to the
 
partition, including a debt of one spouse in favor of the other spouse
resulting from a division or an award of a family homestead in a divorce
proceeding;
(5) the refinance of a lien against a homestead, including a federal
tax lien resulting from the tax debt of both spouses, if the homestead
is a family homestead, or from the tax debt of the decedent;
(6) an extension of credit on the homestead if the requirements of
Section 50(a)(6), Article XVI, Texas Constitution, are met; or
(7) a reverse mortgage.
Tex. Prob. Code Ann. § 270.
-------------------
Footnote 2
In its brief on appeal, Martinek offered a third possibility: the
warranty deed and correction warranty deed were valid, but the property
remained subject to the claims of C.L.'s creditors under the
“spendthrift trust” provisions of Texas Property Code section
112.035(d). However, Martinek did not present this issue in its response
to the motion for summary judgment. Accordingly, the argument cannot
constitute grounds for reversal. See Tex. R. Civ. P. 166a(c); Tex. R.
App. P. 33.1(a).
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