D&KW Family, L.P. v. Rampart Capital Corporation

Opinion issued July 18, 2002 In The Court of Appeals For The First District of Texas NO. 01-01-00156-CV D&KW FAMILY, L.P. AND DONALD M. WHITE, Appellants V. RAMPART CAPITAL CORPORATION, Appellee On Appeal from the 333rd District Court Harris County, Texas Trial Court Cause No. 96-03995 O P I N I O N In this fraudulent transfer case, we are asked to decide whether the judgment of the trial court in favor of plaintiff/appellee, Rampart Capital Corporation ("Rampart"), imposing joint and several liability upon defendant/appellant, D&KW Family, L.P. ("D&KW"), for a judgment on a note entered against defendant/appellant, Donald M. White ("White"), in a separate proceeding is supported by the pleadings, and whether it impermissibly adjudicated the rights of parties not properly before the court. We affirm. FACTUAL AND PROCEDURAL BACKGROUND The relevant facts contained in the briefs of the parties and reflected in the record are essentially undisputed. During the late 1980's and early 1990's, White borrowed several hundred thousand dollars from a local bank. Shortly after the bank failed and was taken over by the Federal Deposit Insurance Corporation, Rampart purchased the notes in the fall of 1995. In December 1995, Rampart sent White written notice that it had purchased the notes and advised it wished to work out payment of the debt. In early January 1996, White and his attorney met with Rampart's representative to see if they could work out payment of the debt. Rampart advised White at that time that it intended to file suit to collect the debt if they were not able to work something out. White indicated that Rampart should not file suit, because he intended to find a way to settle the debt. On January 15, 1996, White and his wife, Kathleen M. White, formed D&KW Family, L.P., a Texas limited partnership, and transferred virtually all of their non-exempt property to D&KW. That property consisted of real estate, mineral interests, cash, negotiable instruments, and other property with a total value of approximately 12 million dollars. White owned a 2% general partnership interest and a 48% limited partnership interest in D&KW, and his wife owned the remaining 50% interest as a limited partner. Rampart discovered the transfers of property to D&KW and filed this lawsuit against White and D&KW on January 26, 1996. The portion of the suit against White to establish his liability on the notes was severed and proceeded to trial first. The trial court found White liable to Rampart for approximately $500,000. White appealed, and the trial court's judgment was affirmed. While the appeal in the severed case was pending, the present case against White and D&KW for fraudulent transfer was tried to the court in a two-day trial. The trial court concluded that the transfers of property to D&KW were fraudulent, and ultimately signed a modified final judgment for Rampart against D&KW for all amounts awarded against White in the severed suit, plus interest and costs. DISCUSSION On appeal, appellants do not challenge the trial court's fact findings or conclusion that the transfers were fraudulent. Instead, appellants assert: (1) the judgment erroneously adjudicates the rights of parties not before the court, and (2) no pleadings support the judgment. Because appellants argue their issues in reverse order, so shall we address them. Judgment Must Be Supported By Pleadings In their second issue, appellants argue the judgment against D&KW is not supported by Rampart's pleadings. Specifically, appellants point out that Rampart prayed only for the transfers to be set aside and a receiver appointed, but the trial court instead awarded judgment against D&KW for all amounts awarded against White in the severed case. Rampart responds first that D& KW has waived any error in its pleadings and the trial court's judgment by failing to except or object in the trial court. We agree. In a non-jury case, defects in pleadings must generally be brought to the attention of the trial court in writing before the judgment is signed, or they are waived. Tex. R. Civ. P. 90. Under the circumstances of this case, however, D&KW's complaint that the relief awarded in the judgment is not supported by Rampart's prayer for relief would not have been apparent until a judgment awarding different relief was signed. In other words, Rampart's pleadings were not facially defective, nor were they defective in light of the evidence introduced at trial. Rather, the pleadings only became defective in light of the actual judgment granting relief different from that specifically requested in Rampart's prayer for relief. This is not so much a case of defect in the pleadings as it is a case of a defect in the judgment. In such a case, we do not think Rule 90 is controlling. Still, to preserve error for appellate review, a party must ordinarily (1) present a valid, timely, and specific request, motion or objection to the trial court and give it an opportunity to correct the error, or the error is waived. Tex. R. App. P. 33.1; Till v. Thomas, 10 S.W.3d 730, 734 (Tex. App.--Houston [1st Dist.] 1999, no pet.). Here, the record shows D&FW filed two motions to modify, correct, or reform the judgment--a motion to modify the original judgment, which was granted, and a motion to modify the modified judgment, which was denied. However, in neither of its motions to modify, or anywhere else, did D&KW point out to the trial court that its judgment was not supported by Rampart's prayer for relief. Therefore, we deem that, similar to trial by consent situations, the issue is not preserved for our review. In re D.T.M., 932 S.W.2d at 652; Siegler v. Williams, 658 S.W.2d 236, 240-41 (Tex. App.--Houston [1st Dist.] 1983, no writ). We overrule appellants' second issue. Adjudication of Rights of Parties Not Before the Court In their first issue, appellants assert the trial court's judgment against D&FW adjudicated the rights of Kathleen White in her absence. We disagree. A partnership is an entity legally distinct from its partners. Texas Westheimer Corp. v. 5647 Westheimer Assocs., 68 S.W.3d 15, 21 (Tex. App.--Houston [1st Dist.] 2001, pet. denied). Service of citation authorizes judgment against the partnership entity and the partners actually served. Tex. Civ. Prac. & Rem. Code Ann. § 17.022 (Vernon 1997); Fincher v. B & D Air Conditioning & Heating Co., 816 S.W.2d 509, 512 (Tex. App.--Houston [1st Dist.] 1991, writ denied). The parties have raised no issue that D&FW was not properly before the trial court, and the trial court was authorized to enter judgment against that partnership and White regardless of who the other partners might have been. We also note that D&KW is a limited partnership, and thus, as a limited partner, Kathleen would not ordinarily be liable for the obligations of D&KW. Tex. Rev. Civ. Stat. Ann. art. 6132a-1, § 3.03(a) (Vernon Supp. 2002). Further, we agree with Rampart that, regardless of the character of the property of Kathleen White before she transferred it to D&FW, whether separate, sole management community, or other, once transferred, it became the sole property of D&FW. Kathleen's interest in the partnership might now be property subject to characterization under the Texas Family Code as separate, community, or other, and thus protected from liability under section 3.202 of the Texas Family Code. (2) However, the property she transferred to D&FW lost its marital property characterization once it was no longer owned by either spouse. Because a suit for fraudulent transfer pursues the property rather than the parties, judgment against the current owner of the property is appropriate and does not violate the Texas Family Code. Airflow Houston, Inc. v. Theriot, 849 S.W.2d 928, 934 (Tex. App.--Houston [1st Dist.] 1993, no writ). CONCLUSION We affirm the judgment of the trial court. All pending objections and motions are denied. Margaret Garner Mirabal Justice Panel consists of Justices Mirabal, Taft, and Smith. (3) Do not publish. Tex. R. App. P. 47.4. 1. A narrow exception exists for "fundamental error," but this is not such a case. In re D.T.M., 932 S.W.2d 647, 652 (Tex. App.--Fort Worth 1996, no writ) (holding a pleading defect may not be raised for the first time on appeal because, in a civil case, fundamental error occurs only in rare instances in which record shows on its face that trial court lacked jurisdiction or where a public interest as declared in statutes or the Constitution is directly and adversely affected). 2. Section 3.202 limits the liabilities that may attach to a spouse's separate and sole management property. Tex. Fam. Code Ann. § 3.202 (Vernon 1998). 3. The Honorable Jackson B. Smith, retired Justice, Court of Appeals, First District of Texas at Houston, participating by assignment.