No CV. In the Court of Appeals for the Fourth District of Texas at San Antonio. Estate of Shirley L. Benson

Transcription

1 No CV In the Court of Appeals for the Fourth District of Texas at San Antonio Estate of Shirley L. Benson Thomas Milton Benson, Jr., as Trustee of the Shirley L. Benson Testamentary Trust Appellant, v. Renee Benson, Appellee. Appeal from Probate Court No. 2, Bexar County, Texas Cause Numbers 155,572 and 155,572-A Emergency Motion to Expedite Appeal To the Honorable Court of Appeals: Trustee Thomas Milton Benson, Jr. a loving father and grandfather, successful entrepreneur, and faithful trustee requests that the Court expedite its submission and decision of this cause. See In re Tex. Natural Res. Conservation Comm n, 85 S.W.3d 201, 207 (Tex. 2002) ( Certainly, a court of appeals may expedite an accelerated appeal even further. ); see also TEX. R. APP. P. 2 ( On a party s motion or on its own initiative an appellate court may to expedite a decision or for other good cause suspend a rule s operation in a particular case and order a different procedure.... ); TEX. R. APP. P. 40 (order of decision).

2 The trial court s unusual Amended Order Granting Injunction, Suspending Trustee & Appointing Limited Temporary Co-Receivers with Restrictions ( Order ) (Ex. 1) in this already highly-publicized case contains significant errors that render it void as a matter of law. Although Mr. Benson would be justified in seeking a stay under these specific facts a right he reserves if it becomes necessary later in the litigation he does not seek that extreme form of relief here. Instead, he merely seeks to have the Court decide this appeal with utmost expediency by expediting its submission and decision as follows: 1. The record is due on March 2, The Reporter s Record has already been transcribed and payment has been arranged. The Court should not grant any request for extensions on filing the record. 2. Appellant s Brief should be due seven days after the record is filed. 3. Appellee s Brief should be due seven days after Appellant s Brief. 4. Oral argument should be set within seven days after Appellee s Brief, and Appellant s Reply Brief shall be filed within that time. PROCEDURAL HISTORY This litigation began with the extraordinary grant of an ex parte TRO against Mr. Benson. Although the facts alleged in the Original Petition (Ex. 2) indicated at the very most minor and easily remedied oversights in Trust management, the trial court entered an expansive TRO suspending Mr. Benson from taking any actions related to the Trust he has administered competently and loyally for almost thirty-five years. The ex parte TRO contained a notice of hearing, which provided: 2

3 Ex. 3 at 5. It is further ORDERED that a hearing on Petitioner s request for temporary injunction be and hereby is set for the 4th day of February, 2015, at 9:30 o clock a.m., in Probate Court No. 2, Bexar County, Texas. This was the only notice of hearing contained in the TRO, and the first and only notice of a hearing received by Mr. Benson in this case. On February 4th and 5th, Mr. Benson s attorneys appeared in Bexar County Probate Court No. 2, as required by the TRO, and presented evidence and argument opposing the imposition of a temporary injunction. After the close of evidence on February 5, the trial court called the parties into chambers and informed them that it would be appointing co-receivers to administer the Trust during the pendency of the litigation, even though the court specifically found that it was not going to find that Mr. Benson is incapacitated. Ex. 4 at 167: When the trial court announced its decision on the record, the court declined to state the reasons for its decision and said he would enter an order the next Monday, February 9, At the February 9 hearing, Mr. Benson s attorneys again objected to the lack of prior notice on the issue of appointing a receiver, as well as the form of the receivership order which had only been provided to Mr. Benson late that same morning. The court overruled the objections and entered an order titled: Order Suspending Trustee & Appointing Temporary Co-Receivers with Restrictions. 3

4 On February 9, the court entered an Addendum to Order ( Addendum ), which provided some rationale for its decision. However, on February 18, 2015 without notice, hearing, or explanation the court entered a new order, titled: Amended Order Granting Injunction, Suspending Trustee & Appointing Limited Temporary Co-Receivers with Restrictions ( Order ). Implicitly recognizing that a hearing had never been held on whether to appoint a receiver, the trial court restyled the February 9 Order as a grant of injunctive relief. In doing so, however, the court failed to comply with the basic requirements for a temporary injunction, rendering the order void on its face. ARGUMENT Beyond the facial invalidity of the temporary injunction order, this appeal raises serious issues of great importance. Texas law is clear that [r]eceivership is an extraordinarily harsh remedy and one that courts are particularly loathe to utilize. Indep. Am. Sav. Ass n v. Preston 117 Joint Venture, 753 S.W.2d 749, 750 (Tex. App. Dallas 1988, no writ). Indeed, a trial court should not appoint a receiver if another remedy exists at law or in equity that is adequate and complete. Elliott v. Weatherman, 396 S.W.3d 224, 228 (Tex. App. Austin 2013, no pet.). This reluctance stems from the understanding that the power to appoint a receiver is in derogation of a fundamental property right of a legal owner to possession and enjoyment of his or her property. 65 Am. Jur. 2d Receivers 10. 4

5 The trial court disagrees, casting receivership as a kindly, intermediate measure to assist Mr. Benson in his duties by preventing him from taking-on more than he can bear. Ex. 5 at 4-5. Neither Texas law nor Mr. Benson share the trial court s rosy view of this drastic action, particularly without prior notice or consideration of less-invasive remedies. Expedited review of the trial court s Order is essential. I. The Trust stands to lose hundreds of thousands of dollars that will never be recovered if the appeal is not expedited. The rationale for expedited consideration is simple: Even under an accelerated briefing deadline, the trial court s decision to appoint co-receivers is likely to cost the Trust more than $500,000 the amount covered by Petitioner s applicant bond before Trustee files his reply brief. The co-receivers have stated that they would charge a rate of $600/hour. See Ex. 6 at 7. Even if only the two co-receivers work on the case and each works only 8 hours per day both generous assumptions, given that the Court has ordered the firms to surrender other law firm work in order to intensify the first month efforts, Ex. 5 at 4 the receivership will cost the Trust $9,600 per day. Typically, accelerated appeals take 60 days for briefing. See TEX. R. APP. P By the time Trustee files his reply, the co-receivers will have charged at least $576,000 to the Trust. There will be additional costs as well. And this figure does not account for either oral argument or the time needed for this Court to render its decision. 5

6 These expenses exceed the amount of the bond and therefore will never be recovered by the Trust, even if Mr. Benson wins the appeal. When compared with Mr. Benson s historical management fee $0 this is a monstrous depletion of Trust assets that cannot be justified under a facially invalid order. If nothing is done to expedite this appeal, the trust stands to be out of pocket thousands of dollars once the amount of the bond has been exceeded, which is likely to be on day 52 after the Order was signed. The need for an expedited appellate schedule is further demonstrated by the unrestrained actions of the co-receivers, who prior to posting the required bond rushed headlong into their task. Without waiting for the conditions of their appointment to be satisfied, the co-receivers not only demanded access to Trust assets and employees, but also Mr. Benson s related assets that are not controlled by the Trust. The Petitioner favored this course of action and cannot protest against expedited review, since she sought expedited relief herself via a TRO and urged the trial court to set a relatively low amount for the applicant s bond. II. There are serious legal problems with the Order. It is not necessary to decide now whether Mr. Benson will prevail on the merits of the appeal and the Court need not read any further to grant this motion. But Mr. Benson believes it is important for the Court to recognize there are serious legal problems with the Order that further support expedited review. 6

7 A. The injunction is void under TEX. R. CIV. P. 683 & 684. The trial court s Order is facially void for failure to meet the requirements of Texas Rules of Civil Procedure 683 and 684. Rule 683 governs the form of a temporary injunction. The rule is mandatory and must be strictly followed. InterFirst Bank San Felipe, N.A. v. Paz Const. Co., 715 S.W.2d 640, 641 (Tex. 1986). Where a temporary injunction is issued and does not conform to Rule 683, the nonconformity constitutes an abuse of discretion and mandates reversal. Univ. Interscholastic League v. Torres, 616 S.W.2d 355, 358 (Tex. Civ. App. San Antonio 1981, no writ). First, the temporary injunction suspending Mr. Benson as Trustee fails to include an order setting the cause for trial on the merits with respect to the ultimate relief sought. TEX. R. CIV. P An injunction that does not satisfy this requirement must be declared void and dissolved. InterFirst Bank, 715 S.W.2d at 641. Here, the error is especially acute because the trial court not only failed to set the case for trial at the earliest possible opportunity, but failed to set a trial date at all. See EOG Res., Inc. v. Gutierrez, 75 S.W.3d 50, 52 (Tex. App. San Antonio 2002, no pet.) ( The order in the instant case, however, does not set the case for trial. The requirements of rule 683 are mandatory, and an order granting a temporary injunction that does not meet them is subject to being declared void and dissolved. ). This is an abuse of discretion. 7

8 Second, a temporary injunction order must set forth the reasons for its issuance. TEX. R. CIV. P Because probable injury subsumes the elements of irreparable injury and no adequate remedy at law, a valid injunction must articulate the reasons why the identified probable injury is an irreparable one for which applicant[] ha[s] no adequate legal remedy. Int l Broth. of Elec. Workers Local Union 479 v. Becon Const. Co., Inc., 104 S.W.3d 239, 244 (Tex. App. Beaumont 2003, no pet.). [T]he mere recital of no adequate remedy at law and irreparable harm in the order lacks the specificity required by Rule 683. Tuma v. Kerr County, 336 S.W.3d 277, 280 (Tex. App. San Antonio 2010, no pet.); Torres, 616 S.W.2d at 358. Neither the Addendum nor the Order provides any discussion of the specific reasons Petitioner has no adequate legal remedy or why the asserted injuries would be irreparable. Indeed, the Addendum fails to even make the conclusory finding that the harm is irreparable or that there is no adequate legal remedy. The Order is void for failure to comply with Rule 683. Finally, the temporary injunction is void because it does not require Petitioner to post separate bond as required by Texas Rule of Civil Procedure 684. As the Supreme Court of Texas held in Ex parte Jordan, the bonds posted by Petitioner and the co-receivers under the Texas Civil Practice & Remedies Code are insufficient to satisfy the separate bonding requirements of Rule

9 787 S.W.2d 367, 368 (Tex. 1990) (finding temporary restraining order void, despite receivership bonds, because it does not require a separate bond as required by TEX. R. CIV. P. 684 ); see also Hawkins v. Hutchison, CV, 2005 WL , at *1 (Tex. App. Eastland July 14, 2005, no pet.) (requiring bond for both temporary injunction and appointment of receiver); Nationwide Life Ins. Co. v. Nations, 654 S.W.2d 860, 861 (Tex. App. Houston [14th Dist.] 1983, no writ) (finding temporary injunction void for lack of bond, despite appointment of receiver which was separately vacated for lack of notice). Absent a separate bond from Petitioner to secure the damages caused by suspending Mr. Benson distinct from damages caused by the wrongful appointment of the co-receivers the temporary injunction is void. Because the Order suspending Mr. Benson is void, accelerated consideration is necessary to prevent the unwarranted expenses and unauthorized actions imposed by the trial court s order. Further, because the co-receivers appointment is predicated upon the trial court s invalid suspension of Mr. Benson as Trustee, any actions taken by the co-receivers are without legal authority or effect. See Ex parte Jordan, 787 S.W.2d at 368. Mr. Benson requests expedited review of this appeal to resolve these issues before significant expenses and irreparable harm are incurred by the Trust. 9

10 B. The co-receivers were appointed without prior notice or a hearing. The trial court abused its discretion by appointing the co-receivers without prior notice and a hearing, an act which is expressly forbidden. Elliott v. Weatherman, 396 S.W.3d 224, 229 (Tex. App. Austin 2013, no pet.) ( [A]ppointment of a receiver over real property without notice is expressly forbidden. ). Appointing a receiver without prior notice is an especially drastic remedy and should be exercised with extreme caution and only where great emergency or imperative necessity requires it. Id. (quotation marks omitted). The only prior notice of hearing in this case was issued as part of the ex parte order granting a TRO. Nothing in the TRO indicated that the trial court was considering the appointment of a receiver, which is a distinct application requiring distinct notice. 1 It was not until after the close of evidence on February 5th that the trial court announced it would be appointing a receiver, so no evidence was presented on the necessity of that action or the inadequacy of alternative remedies. See Ritchie v. Rupe, 443 S.W.3d 856, 876 (Tex. 2014) (receivership only proper in extraordinary circumstances when lesser remedies are inadequate ). Appointing a receiver without prior notice or a hearing is an abuse of discretion. 1 See Elliott, 396 S.W.3d at 229 ( Weatherman did not make his oral request [to appoint receiver] until after the close of evidence at the [temporary injunction] hearing, and the record does not show that his request for receivership was ever separately set for hearing. ). 10

11 In addition to being deprived of prior notice of a hearing on receivership, 2 Mr. Benson was denied prior notice of the grounds upon which the receivership was sought. This violates Mr. Benson s right to due process. See Gonzales v. Tex. Employment Com n, 653 S.W.2d 308, 310 (Tex. App. San Antonio 1983, writ refused n.r.e.) ( These basic rights mandate that parties receive adequate notice detailing the reasons giving rise to the hearing so they might have the opportunity to prepare their side of the controversy. ) (emphasis added). Although it was never noticed for a hearing, the Original Petition 3 requested a temporary receivership pursuant to section of the Texas Property Code. However, the Order appointing co-receivers is also based on Texas Civil Practice and Remedies Code (a), which was never mentioned in the Original Petition or at the hearing. Appointing co-receivers over the Trust under a statutory provision that was neither pled nor argued violates the most basic rules of due process and is an abuse of discretion. 2 To be clear, Mr. Benson does not object to the trial court s failure to provide three-days notice as required by Texas Rule of Civil Procedure 695. Rather, he objects to the utter lack of any notice that receivership was at issue until after the close of evidence. It is this complete lack of notice not the timing before appointment that forms the basis for Mr. Benson s objection. 3 Although a receivership along with other remedies such as an accounting was mentioned in Petitioner s application for a temporary injunction, the trial court never set that issue for hearing, so simply mentioning an alternative form of relief remains insufficient to satisfy Mr. Benson s right to notice. 11

12 As with the temporary injunction suspending Mr. Benson, the trial court also abused its discretion by failing to consider less intrusive remedies before appointing a receiver. Rather than consider the effectiveness of lesser remedies such as a limited injunction to prevent specific actions or threats to the Trust the trial court jumped immediately to receivership. While the Addendum makes it clear that the trial court views receivership as a way to assist Mr. Benson by preventing him from taking-on more than he can bear, neither the law nor Mr. Benson share the trial court s rosy view of that action. Receivership is an extreme infringement on Mr. Benson s rights that should be utilized only when absolutely necessary. Appointing the co-receiver without considering less-intrusive alternatives is an abuse of discretion. Finally and without diving too far into the merits underlying this appeal Petitioner presented no evidence at all to support a receivership as a matter of law. Even accepting all of the Original Application s allegations as true, there is no evidence that the Trust suffered any harm, much less the material harm required to establish a breach of trust. Nor was there any evidence demonstrating that such harm would either be irreparable or incapable of redress by less-intrusive remedies. These errors will be fully developed in the briefs. 4 4 In an effort to aid the Court in expediting this appeal, this motion highlights only those errors that are fatal and facially apparent from the order. Appellant will address the trial court s abuse of discretion on the merits of the temporary injunction in its forthcoming brief. 12

13 Prayer Mr. Benson requests that the Court grant his motion and expedite submission and decision. Specifically, he requests the following actions: 1. The record is due on March 2, The Reporter s Record has already been transcribed and payment has been arranged. The Court should not grant any request for extensions on filing the record. 2. Appellant s Brief should be due seven days after the record is filed. 3. Appellee s Brief should be due seven days after Appellant s Brief. 4. Oral argument should be set within seven days after Appellee s Brief, and Appellant s Reply Brief shall be filed within that time. February 23, 2015 Respectfully submitted, BECK By: /s/ David J. Beck David J. Beck State Bar No Russell S. Post State Bar No Troy Ford State Bar No Owen J. McGovern State Bar No McKinney Street, Suite 4500 Houston, Texas Telephone: (713) Telecopier: (713) And 13

14 STONE PIGMAN WALTHER WITTMANN L.L.C. Phillip A. Wittmann (Admitted pro hoc vice) 546 Carondelet Street New Orleans, Louisiana Telephone: (504) Telecopier: (504) ATTORNEYS FOR TRUSTEE THOMAS MILTON BENSON, JR. As Trustee of the SHIRLEY L. BENSON TESTAMENTARY TRUST 14

15 CERTIFICATE OF CONFERENCE I hereby certify that I conferred with appellate counsel for the Petitioner, Harriet O Neill. Petitioner does not oppose expediting the appeal, but does oppose the proposed schedule set forth in this motion. /s/ Russell S. Post RUSSELL S. POST CERTIFICATE OF SERVICE I hereby certify that a true and correct copy of foregoing document was served in compliance with the Texas Rules of Civil Procedure on February 23, 2015, on the following: Bennett L. Stahl CURL STAHL GEIS A PROFESSIONAL CORPORATION One Riverwalk Place 700 North St. Mary s Street, Suite 1800 San Antonio, Texas Telephone: (210) Telecopier: (210) blstahl@csg-law.com Emily Harrison Liljenwall SCHOENBAUM, CURPHY & SCANLAN, P.C. 112 E. Pecan, Suite 3000 San Antonio, Texas Telephone: (210) Telecopier: (210) eliljenwall@scs-law.com 15

16 Harriet O Neill LAW OFFICE OF HARRIET O NEILL, P.C. 919 Congress Avenue, Suite 1400 Austin, Texas Telephone: (512) Telecopier: (512) honeill@harrietoneilllaw.com Douglas Alexander ALEXANDER, DUBOSE, JEFFERSON & TOWNSEND LLP 515 Congress Ave., Suite 2350 Austin, Texas Telephone: (512) Telecopier: (512) dalexander@adjtlaw.com ATTORNEYS FOR PETITIONER RENEE BENSON /s/ David J. Beck DAVID J. BECK 16