In the Interest of P.R., J.R., B.R. and V.R., Children--Appeal from 81st Judicial District Court of Wilson County

MEMORANDUM OPINION

No. 04-05-00509-CV

IN THE INTEREST OF P.R., J.R., B.R., and V.R., Children

From the 81st Judicial District Court, Wilson County, Texas

Trial Court No. 10237

Honorable Stella Saxon , Judge Presiding

Opinion by: Alma L. L pez, Chief Justice

Sitting: Alma L. L pez, Chief Justice

Catherine Stone , Justice

Sarah B. Duncan , Justice

Delivered and Filed: September 6, 2006

REVERSED AND RENDERED

Bank of America, N.A. appeals the trial court's order requiring it to pay $161,769.61 in child support arrearages owed by Jesse Rodriguez to Juanita Rodriguez based on the trial court's findings that Bank of America failed to comply with a child support lien and notice of child support levy. Bank of America was also ordered to pay attorney's fees to Juanita's attorneys and the Attorney General of Texas. We conclude that the evidence is legally insufficient to support the trial court's findings that Bank of America knowingly disposed of property subject to a child support lien or failed to comply with a notice of child support levy. Accordingly, we do not address the remaining issues presented by Bank of America. We reverse the trial court's judgment and render a take nothing judgment in favor of Bank of America.

Background

On November 19, 2003, Juanita obtained an order finding that Jesse had failed to pay child support and awarding Juanita a cumulative money judgment against Jesse for $161,769.67 in child support arrearages. Wanda is Jesse's current wife.

On November 21, 2003, Juanita faxed a Notice of Child Support Lien to Bank of America. Bank of America received the notice of lien by certified mail on November 24, 2003. The notice of lien lists the obligor as Jesse E. Rodriguez and/or Wanda Rodriguez. Upon receipt of the notice of lien, Bank of America placed a hold on Wanda's account. At the time the hold was placed, the account balance was $2,397.27. On December 3, 2003, an automatic deposit of Wanda's social security check increased the account balance to $3,412.27. On December 4, 2003, the $3,412.27 previously placed "on hold" was transferred from Wanda's account into a holding or suspense account, and Wanda's account was closed.

On December 8, 2003, Bank of America sent a letter to Juanita's attorney reporting that $3,412.27 had been seized from Wanda's account. No further action was taken with regard to the seized amount. On January 14, 2005, Bank of America sent a reminder letter to Juanita's attorney regarding the amount that had been seized from Wanda's account and requesting information as to the status of the account "so that we can either remit the assets to your office or release them to the obligor and close the file."

On January 20, 2005, Bank of America received a Notice of Child Support Levy from Juanita's attorneys requesting payment from Wanda's account. The notice of levy also listed the obligor as Jesse E. Rodriguez and/or Wanda Rodriguez. The same day, Bank of America sent a letter to Juanita's attorney stating that the notice of levy was being returned because Wanda's account had been closed.

In March of 2005, Juanita filed a "Motion for Financial Institution to Pay All Child Support Arrearages for Failure to Timely Honor Levy." The motion stated that Bank of America had failed to comply with the notice of lien and notice of levy and was strictly liable under section 157.324 of the Texas Family Code for the full amount of the child support arrearages. After a two day hearing, the trial court entered an order granting Juanita's motion. The trial court subsequently entered findings of fact and conclusions of law.

Standard of Review

A trial court's findings of fact carry the same force and dignity as a jury's verdict. M.D. Anderson v. City of Seven Points, 806 S.W.2d 791, 794 (Tex. 1991); McLaughlin, Inc. v. Northstar Drilling Technologies, Inc., 138 S.W.3d 24, 27 (Tex. App.--San Antonio 2004, no pet.). We review the trial court's fact findings the same way we review the legal and factual sufficiency of the evidence supporting a jury's verdict. (1) M.D. Anderson, 806 S.W.2d at 794, McLaughlin, Inc., 138 S.W.3d at 27.

When a party not bearing the burden of proof on an issue challenges the legal sufficiency of the evidence, we review the evidence in the light most favorable to the verdict giving "credit [to] favorable evidence if reasonable jurors could, and disregard[ing] contrary evidence unless reasonable jurors could not." City of Keller v. Wilson, 168 S.W.3d 802, 827-28 (Tex. 2005). Evidence is legally insufficient when the record discloses: (1) a complete absence of evidence of a vital fact; (2) the court is barred by rules of law from giving weight to the only evidence offered to prove a vital fact; (3) the evidence offered to prove a vital fact is no more than a mere scintilla; or (4) the evidence establishes conclusively the opposite of the vital fact. Id. at 810.

Section 157.324 of the Texas Family Code provides as follows:

A person who knowingly disposes of property subject to a child support lien, who, after a foreclosure hearing, fails to surrender on demand nonexempt personal property as directed by a court or administrative order under this subchapter, or who fails to comply with a notice of levy under this subchapter is liable to the claimant in an amount equal to the arrearages for which the lien, notice of levy, or foreclosure judgment was issued.

Tex. Fam. Code Ann. 157.234 (Vernon 2002). Accordingly, in order for Bank of America to be subject to liability under section 157.324 in relation to a child support lien in this case, it must have knowingly disposed of property subject to the child support lien.

Section 157.317 of the Code sets forth the property to which a child support lien attaches and provides in pertinent part:

A child support lien attaches to all real and personal property not exempt under the Texas Constitution or other law, including (1) an account in a financial institution . . . from the date the lien notice is filed with [a third party in possession or control of property of the obligor].

Tex. Fam. Code Ann. 157.317 (Vernon Supp. 2005). The term "account" is defined to include any type of checking account "in which an individual has a beneficial ownership either in its entirety or on a shared or multiple party basis." Tex. Fam. Code Ann. 157.311(1)(A) (Vernon Supp. 2005). Reading section 157.317 in conjunction with section 157.311(1)(A), a child support lien could attach to Wanda's account only if Jesse had beneficial ownership of the account and the account was Jesse's property.

In his opening remarks to the court, Juanita's attorney stated:

It relates to an account that you ruled on, Judge, if I may refresh your memory. You may very well remember it. We had an issue of a $55,000 dollar check floating around. It ended up in that account, and you absolutely identified it as an account to [sic] Jesse Rodriguez as an account that could be liened [sic] and we liened [sic] it, and there was money in it.

The record contains a bid sheet from Jesse's Welding & Backhoe Services to Herschap Ditching and Backhoe, with the bid amount of $57,705.19. The record further contains a check from Herschap to Jesse in the amount of $55,396.99, which the endorsements and bank statements show was deposited into Wanda's account. Finally, the record contains a Rule 11 agreement in which Jesse agrees to pay the sum of $20,733.08 into the trust account of Juanita's attorneys, stating this sum represents the proceeds from Jesse's job with Herschap. The Rule 11 agreement further provides that Wanda is to provide an accounting of the Bank of America account into which the Herschap check was deposited by 5:00 p.m. on November 20, 2003.

Despite the argument made by Juanita's attorney, none of the foregoing evidence establishes that Jesse had an ownership interest in Wanda's account as required for a child support lien to attach to that account. The record contains the signature card for the account reflecting that Wanda was the sole signatory on the account. See Bank One, Texas, N.A. v. Sunbelt Savings, F.S.B., 824 S.W.2d 557, 557 (Tex. 1992) (holding bank served with writ of garnishment may rely on its deposit agreement when determining to whom it is indebted). Even accepting that funds that were the separate property of Jesse were deposited into Wanda's account, such a deposit would not give Jesse an ownership interest in the account or otherwise make the account his property. While Juanita might have recourse to trace and demand payment of those funds through a garnishment or other enforcement proceeding, the filing of the notice of lien did not subject Bank of America to any liability to Juanita because Wanda's account was not subject to a child support lien. (2) See Bank One, Texas, N.A., 824 S.W.2d at 558 (holding creditor wanting to challenge title to funds held by a third party should seek a writ of garnishment naming the nominal owner not the true owner allowing court to determine true ownership).

Juanita contends that because Wanda was listed as an obligor on the notice of lien and neither Jesse nor Wanda contested ownership under section 157.326, Bank of America has no statutory standing to contest the ownership. (3) Although section 157.326 provides a specific procedure that may be followed by a spouse or another person having an ownership interest in property that is subject to a child support lien, no provision in Chapter 157 precludes a financial institution from defending against liability for a violation of a child support lien by asserting that the lien never attached to an account at that institution. Because section 157.324 imposes statutory penalties, it is a penal statute that must be strictly construed. Flores v. Millennium Interests, Ltd., 185 S.W.3d 427, 433 (Tex. 2005); Ballin v. Poston Home Care Center Co., 749 S.W.2d 164, 167 (Tex. App.--San Antonio 1988, writ denied). Accordingly, Juanita, who sought to recover the penalty, was required to bring herself clearly within the terms of the statute. Ballin, 749 S.W.2d at 167. Therefore, Bank of America is not precluded from challenging the sufficiency of the evidence to support a finding of liability under section 157.324 by arguing that the lien never attached to Wanda's account.

Furthermore, the term "obligor" is defined by the Code as "a person required to make payments under a support order for a child." Tex. Fam. Code Ann. 101.022 (Vernon 2002). Although the record clearly establishes that Jesse is the obligor, the record contains no evidence that Wanda is an obligor, and Juanita's listing of Wanda's name on the notice of lien or notice of levy does not make Wanda an obligor. Neither Bank of America's placement of a hold on Wanda's account nor the testimony of one of its employees that she believed the account balance should have been paid to Juanita is a judicial admission of liability, and neither the actions of Bank of America nor the testimony of its employee preclude Bank of America from challenging the sufficiency of the evidence to establish its liability on appeal. Laredo Medical Group Corp. v. Mireles, 155 S.W.3d 417, 430 (Tex. App.--San Antonio 2004, pet. denied) (testimony regarding subjective belief is not a judicial admission).

Juanita's efforts to impose liability on Bank of America for failing to comply with her notice of levy fail for similar reasons. Section 157.327 provides that "a claimant may deliver a notice of levy to any financial institution possessing or controlling assets or funds owned by, or owed to, an obligor and subject to a child support lien." Tex. Fam. Code Ann. 157.237(a) (Vernon 2002). We have previously concluded that the evidence is legally insufficient to establish that Wanda's account was owned by Jesse or was subject to a child support lien. Accordingly, the statute did not authorize Juanita to deliver a notice of levy to Bank of America. Furthermore, a notice of levy only requires a financial institution to pay the claimant "an amount from the assets of the obligor or from funds due to the obligor that are held or controlled by the institution." Tex. Fam. Code Ann. 157.327(b)(2) (Vernon 2002). The record in this case contains no evidence that Wanda's account was an asset of Jesse or that the funds in that account were due to Jesse. Accordingly, the evidence is legally insufficient to establish that Bank of America failed to comply with a notice of levy.

Conclusion

The trial court's judgment is reversed and judgment is rendered that Juanita take nothing in relation to her motion for financial institution to pay all child support arrearages for failure to timely honor levy.

Alma L. L pez, Chief Justice

1. Bank of America contends that Juanita was required to prove her entitlement to recovery by clear and convincing evidence. Neither of the cases cited by Bank of America supports this contention, and no provision in Chapter 157 refers to a clear and convincing burden. Compare Tex. Fam. Code Ann. 157.001, et seq. (Vernon 2002 & Supp. 2005) with Tex. Fam. Code Ann. 161.001 (Vernon Supp. 2005) (requiring proof by clear and convincing evidence in parental termination cases); Tex. Health & Safety Code Ann. 574.034 (Vernon 2003) (requiring proof by clear and convincing evidence in court-ordered temporary mental health services' cases). Because the evidence is legally insufficient under the preponderance of the evidence burden, however, we do not decide in this case whether a heightened burden is applicable.

2. Juanita misreads the factual background in Dryden v. Dryden to support her contention that a child support judgment reaches the personal property of the obligor and his second spouse. 97 S.W.3d 863 (Tex. App.--Corpus Christi 2003, pet. denied). In reciting the facts, the court noted, "appellant's personal property was seized from his home by the Nueces County Sheriff. The sheriff also seized other personal property of appellant's at the residence of Margaret Dryden, appellant's wife at the time." Id. at 865. Accordingly, it was only the obligor's personal property that was seized from two locations, not the personal property of the obligor's wife.

3. Juanita also asserts that Bank of America waived its right to contest the validity of the lien and levy by failing to timely contest them; however, the two cases Juanita cites to support this assertion relate to an obligor's failure to timely contest a judicial writ of withholding which is statutorily required to be filed within ten days after the date the notice of application for judicial writ of withholding is received by the obligor. See Attorney General's Office v. Mitchell, 819 S.W.2d 556 (Tex. App.--Dallas 1991, no writ); Effner v. Moore, No. 04-01-00294-CV, 2002 WL 269116 (Tex. App.--San Antonio Feb. 27, 2002, no pet.). No similar statutory deadline exists for a financial institution to challenge a notice of lien or notice of levy.