James R. Schmidt and Helen Schmidt v. Bastrop County, Texas

IN THE COURT OF APPEALS, THIRD DISTRICT OF TEXAS, AT AUSTIN NO. 3-93-041-CV JAMES R. SCHMIDT AND HELEN SCHMIDT, APPELLANTS vs. BASTROP COUNTY, TEXAS, APPELLEE FROM THE DISTRICT COURT OF BASTROP COUNTY, 335TH JUDICIAL DISTRICT NO. 18,933, HONORABLE HAROLD R. TOWSLEE, JUDGE PRESIDING James R. Schmidt and Helen M. Schmidt appeal from a trial-court judgment dismissing their suit against Bastrop County. We will reverse the trial-court judgment and remand the cause to that court. THE CONTROVERSY We cannot avoid describing at length the various pleadings and pleas upon which the judgment of dismissal rests. In a third amended original petition, the Schmidts brought against the County alternative causes of action for conversion and inverse condemnation based on the following allegations: The Schmidts obtained and delivered to the County a cashier's check in the amount of $15,080 "in connection with" the County's purchase of "certain computer hardware and/or software" from ADM Systems, Inc. The equipment was "protected" by a one-year warranty, but more than a year had passed since delivery of the equipment; and the County had never revoked its acceptance of the equipment nor had the County complained to the Schmidts about a breach of warranty. When the Schmidts demanded return of the check, the County negotiated it. The Schmidts prayed for judgment in the amount of $15,080 together with costs. As indicated by the foregoing summary, the particulars of any connection between the Schmidts, ADM, and the County were left unexplained. In a first amended original answer, the County gave its view of that connection. The County averred, in addition to a general denial, that the Schmidts delivered the cashier's check to secure the performance of ADM System's obligations regarding certain equipment the corporation sold to the County. The equipment had failed, according to the County's answer, entitling the County to an offset in an amount greater than the Schmidts' $15,080 demand. In addition, the County's answer included a counterclaim against the Schmidts in the amount of $30,000--the amount the County had allegedly paid ADM for the equipment. Contemporaneously with its first amended original answer, but in an independent instrument filed in the cause, the County filed a plea in abatement. The plea asserted a defect in parties based on ADM's absence from the litigation. Since our system of pleading in district court contemplates only a petition and an answer, the County's plea in abatement should have been included as a plea in the County's answer, and should not have been filed as an independent instrument. See Tex. R. Civ. P. 45(a). A plea in abatement is a "plea" properly included in a defendant's answer, but it is not a "pleading" contemplated by the rules. See Tex. R. Civ. P. 85. We should, of course, construe the rules liberally to achieve their salutary objectives. See Tex. R. Civ. P. 1. Accordingly, we might treat the County's plea in abatement as a supplemental answer by the County. See Tex. R. Civ. P. 69, 71. This is made somewhat difficult by the text of the instrument, which declares expressly that it is a supplement to the County's plea in abatement contained in an original answer filed in the cause about three and one-half years earlier. The original answer, of course, had passed entirely from the case by the County's filing a first amended original answer. Stated another way, the County explicitly purported to supplement a plea in abatement that could "no longer be regarded as a part of the pleading in the record of the cause" because it had been superseded. Tex. R. Civ. P. 65. On October 2, 1991, well within the thirty days mentioned in the court's order of September 13th, the Schmidts filed in the cause an instrument designated "Pleading to Comply with Order Granting Defendant's Plea in Abatement." In the instrument, the Schmidts averred as follows: 1. The County had declined to cause the joinder of ADM Systems in the suit. 2. To avoid dismissal of their suit, the Schmidts filed the instrument in order to comply with the court's order that ADM Systems be "brought in" and "made a party" to the lawsuit. 3. The registered agent of ADM Systems was Gary Peterson and the registered office of the corporation was 1603 Shotwell, Round Rock, Texas. 4. The Schmidts requested service of citation upon ADM Systems. The instrument averred no claim for relief against ADM Systems or anyone else, nor did the instrument purport to resist any claim for relief. When a counterclaim is asserted against a plaintiff, as here, he may cause a third party to be brought in under circumstances that would entitle a defendant to do so. See Tex. R. Civ. P. 38(b). At least one such circumstance appears applicable here: when the absent person may be liable for all or part of the counterclaim. See Tex. R. Civ. P. 38(a). It is difficult to conceive of this instrument as being either an answer or petition of any kind. See Tex. R. Civ. P. 45(a), 47, 79, 84, 85. We might, however, treat the instrument as either an amended petition or a supplemental petition, because the plaintiffs in the cause, against whom a counterclaim had been made, filed the instrument. If we consider the instrument to be an amended petition, however, we eliminate from the suit any cause of action against the County whatever because the amended petition would substitute entirely for the Schmidts' third amended original petition, their live pleading at the time. See Tex. R. Civ. P. 65. This will not occur, of course, if we consider the instrument to be a supplemental petition. This is difficult, however, owing to the text of the instrument which makes no claims of any kind and does not purport to be "a response to the last preceding pleading by the other party." Tex. R. Civ. P. 69. The record reveals that on October 16, 1991, ADM Systems was served with citation containing the Schmidts' "Pleading to Comply with Order Granting Defendant's Plea in Abatement." The corporation arguably appeared in the cause by filing a letter, signed by Peterson, the registered agent, and addressed "To the Honorable Judge of Said Court." The letter declares: I am Gary L. Peterson who once owned the Texas corporation "ADM Systems, Inc.," and am currently listed as this corporation's registered agent. On my personal income tax return for 1989 I took a "worthless stock deduction" in the amount of my original basis in ADM stock. My laymen's [sic] understanding of this deduction is that I am thereafter prohibited from acting as a corporate officer, owning stock, or otherwise acting on behalf of, or for ADM. It is my testimony that I was both President and registered agent for ADM Systems, Inc. until December 31st. of 1989. What I recall is that this suit came about in 1986. ADM was "in existence" for about 3 years after this matter arose, and no request was made to "bring in" ADM until I received this service on October 16th, 1991, nearly 5 years later. To the best of my knowledge, no other officers or stockholders exist today. Respectfully yours, [signature] Gary L. Peterson. 1024091 The letter was filed in the cause November 4, 1991. THE PRE-DISMISSAL HEARING On October 26, 1992, approximately one year after the filing of the letter just described, the court convened a hearing in which the County urged dismissal of the Schmidts' suit on the ground that they had not complied with the court's order of September 13, 1991, requiring that ADM Systems be made a party with dismissal to follow if ADM were not made a party. At the hearing, the County argued that the Schmidts' "Pleading to Comply with Order Granting Defendant's Plea in Abatement" did not have the legal effect of making ADM Systems a party because it averred no claim against the corporation and demanded no remedy; and because the Schmidts had previously admitted giving the cashier's check as a performance bond securing ADM System's contact obligations, the litigation should not go forward without the corporation as a party. The Schmidts' counsel rejoined that the terms of the court's order of September 13, 1991, had only required that ADM Systems be made a "party," not a party defendant; and, the corporation had in fact become a party by filing an "answer" (Peterson's letter). Hence, ADM Systems was now in court and the County could assert against the corporation any claims it wished. When queried by the court on whether the cashier's check was given as a performance bond, the Schmidts' counsel thrice replied that he did not wish to divulge the Schmidts' position because revealing that information would benefit the County. This reply was, of course, not very helpful to the trial court. At the conclusion of the hearing, the trial court ordered the cause dismissed and signed the same day an order to that effect. This appeal ensued, in which the Schmidts bring six points of error. DISCUSSION AND HOLDINGS The parties have created a first-class procedural snarl, consuming unnecessarily a considerable amount of judicial resources, by flagrantly disregarding the rules of pleading. In a previous appeal taken by the Schmidts, we reversed a trial-court judgment dismissing the cause after the court sustained the County's plea in abatement. We did so chiefly because the plea was not verified, a defect the Schmidts also urge against the County's plea in the present appeal. See Schmidt v. Bastrop County, Tex., No. 3-89-071-CV (Tex. App.--Austin Mar. 28, 1990, no writ) (not designated for publication). We will attempt to bring some order to the pleadings and the case. We hold firstly that the County's instrument entitled "Plea in Abatement" is a supplemental answer urging a plea in abatement. We hold secondly that the Schmidts' instrument entitled "Pleading to Comply with Order Granting Defendant's Plea in Abatement" is a supplemental petition joining ADM Systems as a defendant. See 1 McDonald Texas Civil Practice § 5.38 at 534 (1992 ed.). We realize fully that this does some violence to the language of the two instruments, but we believe our constructions remain within the "liberal construction" that we should give the rules in order "to obtain a just, fair, equitable and impartial adjudication of the rights of litigants under established principles of substantive law." Tex. R. Civ. P. 1 (emphasis added). With these preliminary holdings, we need consider only the Schmidts' fourth and sixth points of error in which they assert that dismissal of the suit was erroneous because they literally complied with the trial-court order that ADM Systems be made a "party." The proper method of joining new parties is by an amended pleading and not by a supplemental pleading, but "[a]n exception to this rule exists if the necessity for adding a new party arises from facts pled in the defendant's answer." Moody-Rambin Interests v. Moore, 722 S.W.2d 790, 792 (Tex. App.--Houston [14th Dist.] 1987, no writ). See Tex. R. Civ. P. 98. Will the Schmidts' "Pleading to Comply with Order Granting Defendant's Plea in Abatement" fit within this exception if considered as a supplemental petition, as we have held it is? That is to say, did the necessity of adding ADM Systems arise from facts pled in the County's third amended original answer supplemented by the instrument entitled "Plea in Abatement?" While the contents of the Schmidts' "Pleading to Comply with Order Granting Defendant's Plea in Abatement" declare expressly that the instrument is in response to the court's order of September 13, 1991, we conclude that the necessity for filing the Schmidts' instrument arose from the County's "Plea in Abatement." Therefore, we hold, the effect of the "Pleading to Comply with Order Granting Defendant's Plea in Abatement" was to join ADM Systems as a party. No issue is raised concerning the sufficiency of the citation or its service. (The record does not indicate whether the citation was affixed to a copy of the Schmidts' Third Amended Original Petition as well as a copy of the "Pleading to Comply with Order Granting Defendant's Plea in Abatement." See Tex. R. Civ. P. 38(a), 99(d)). We do not purport to address whether Peterson's letter constitutes an appearance in the cause by Peterson or by ADM Systems. We conclude the Schmidts did comply with the trial-court order and sustain points of error four and six. We urge the parties and the trial court to bring the pre-trial element of the litigation to a conclusion under the rules of procedure, which provide in explicit terms for repleader, special exceptions, and other matters that might be useful following our remand. See Tex. R. Civ. P. 68, 85. Accordingly, we reverse the trial-court judgment of dismissal and remand the cause to that court for proceedings not inconsistent with our opinion. John Powers, Justice Before Justices Powers, Jones and Kidd Reversed and Remanded Filed: February 23, 1994 Do Not Publish