Robert O. Breault v. John Psarovarkas and Eleftheria Psarovarkas

11th Court of Appeals Eastland, Texas Memorandum Opinion Robert O. Breault Appellant Vs. No. 11-03-00341-CV -- Appeal from Harris County John Psarovarkas and Eleftheria Psarovarkas Appellees This is an appeal from a declaratory judgment and a sanctions order. We affirm the declaratory judgment and vacate the sanctions order. Background Facts In 1994, John Psarovarkas and Eleftheria Psarovarkas purchased a business from Robert O. Breault. The Psarovarkases defaulted on the note; and, in 2000, Breault recovered a judgment against the Psarovarkases in the amount of $44,830.24. In 2001, Breault filed an abstract of judgment, and a lien attached to residential property owned by the Psarovarkases. The Psarovarkases attempted to refinance the residence but were denied a home equity loan because of Breault=s judgment lien. In June of 2002, the Psarovarkases sued Breault seeking a declaratory judgment that Breault=s lien was invalid and impermissibly clouded their title to the residence and that Breault=s 2000 judgment could not support a lien against the residence. The Psarovarkases also alleged intentional improper cloud on title, slander of title, and tortious interference with a prospective contract. Breault filed a general denial and alleged several affirmative and special defenses. Breault also counterclaimed for sanctions under TEX.R.APP.P. 13 and for a declaratory judgment that the Psarovarkases were acting in bad faith, that the suit was frivolous, and that the litigation was vexatious. In August of 2002, the Psarovarkases filed a motion for partial summary judgment in which they stated that there was no genuine issue of material fact because the residence in question was their homestead. The Psarovarkases asked the trial court to declare the residence their homestead and clear their title of all judgment liens. The Psarovarkases also filed several motions for protective orders and for sanctions. Breault filed several motions to compel discovery. In early January of 2003, the trial court entered an order allowing Breault to take depositions limited to the issue of whether the residence was the Psarovarkases= homestead. The Psarovarkases responded by filing a motion for a protective order on January 23, 2003. In the January 23 motion, the Psarovarkases asked the trial court to reconsider its discovery order and alleged that the only matter pending before the trial court was their request for attorney=s fees. Two weeks later, Breault filed a motion to dismiss the Psarovarkases= original petition on the grounds that the Psarovarkases had failed to comply with the discovery order, that they had conceded the homestead issue, and that the issue of attorney=s fees could not survive absent the declaratory judgment action. On June 16, 2003, the Psarovarkases filed a ANotice of Dismissal of Claims.@ The Psarovarkases nonsuited all of their claims except for their Adeclaratory judgment, the request for attorney=s fees, and the motions (sic) for partial summary judgment and for sanctions arising from the declaratory judgment action.@ The only substantive legal issues presented to the trial court in the declaratory judgment action and in the motion for partial summary judgment were (1) the validity of Breault=s judgment lien on the residence and (2) whether the residence was the Psarovarkases= homestead. Trial Court=s Actions On June 23, 2003, the trial court conducted a short hearing and determined that the residence was the Psarovarkases= homestead, that Breault=s judgment lien was Anull and void,@ that neither the Psarovarkases nor Breault would recover attorney=s fees, and that Breault would pay the court costs. The trial court entered a written judgment declaring that the residence was the Psarovarkases= homestead and that Breault=s lien was null and void. The judgment also provided that Breault would pay the filing fees. In a sanctions order, the trial court ordered Breault to pay the Psarovarkases A$1800 by way of sanctions.@ Issues on Appeal In his first issue, Breault challenges the granting of sanctions against him. In his second issue, Breault argues that the trial court erred in failing to dismiss the Psarovarkases= suit because their claims were moot. In his third issue, Breault contends that the trial court erred in failing to grant his motion for sanctions. The Psarovarkases have briefed two Across-points of error.@ First, they argue that the trial court=s failure to conduct a separate hearing and to render a ruling on their motion for partial summary judgment earlier deprived them of due process. The essence of their complaint is that the trial court took too long to grant them a declaratory judgment that the residence was their homestead. The Psarovarkases also argue that the trial court erred in denying them an award of attorney=s fees. We will first address Breault=s arguments that the trial court erred in failing to dismiss the Psarovarkases= claims. The Psarovarkases= Claims on the Merits The record before this court reflects that the Alive@ pleadings and allegations before the trial court at its June 23, 2003, hearing on the merits were (1) the Psarovarkases= request for a declaratory judgment and for attorney=s fees and sanctions ancillary to the declaratory relief and (2) their motion for partial summary judgment contending that the residence was their homestead. A. Breault=s Arguments Specifically, Breault contends that the Psarovarkases= claims were moot because he had offered to release his lien; because the Psarovarkases had made a judicial admission in a motion filed on January 23, 2003, that their homestead interest was no longer relevant and was moot; and because the Psarovarkases had eventually obtained a home equity loan on the residence. Breault argues that, when the home equity loan was secured, a justiciable controversy no longer existed because his abstract of judgment did not name the residence in question and because his abstract of judgment did not assert any specific claim upon a homestead. Therefore, Breault contends that the trial court erred in failing to grant his motion to dismiss. B. Breault=s Alleged Offer of Release The record before this court contains a Astipulation@ filed by Breault on September 10, 2002. This stipulation provided: Accordingly, Breault hereby stipulates that he shall, upon request from any bona fide lender, mortgage title insurance company, mortgage broker, buyer, or the Psarovarkases, execute a partial release of the judgment lien effective only against all homestead and other exempt property owned or claimed by the Psarovarkases, and located in Harris County, Texas. This stipulation was not a release of the judgment lien. At best, Breault conditionally stipulated in the document filed on September 10 that at some time in the future if requested he would execute a partial release. C. Allegations in the Psarovarkases= January 23 Motion The Psarovarkases specifically argued in their January 23 motion that the trial court should enter a protective order and sustain their objections to Breault=s request to take their depositions. The Psarovarkases challenged the taking of depositions on the grounds that reasonable notice had not been given; that Breault=s request was overly broad; that Breault=s reason for taking Mrs. Psarovarkas= deposition, as stated in his notice, was that Mr. Psarovarkas had a Apropensity to perjury under oath@; and that Mrs. Psarovarkas= health was a concern. The Psarovarkases stated that they accepted Breault=s conditional stipulation and requested that the trial court award them attorney=s fees. The Psarovarkases also stated that they felt that the subject matter of the depositions B whether the residence was their homestead B was no longer an issue and that the issue before the trial court was their request for attorney=s fees. Contrary to Breault=s assertions, the statements in the January 23 motion did not constitute a judicial admission by the Psarovarkases that the property in question was not their homestead. Nowhere in the January 23 motion did the Psarovarkases make a clear and unequivocal assertion that the residential property was not their homestead. See Holy Cross Church of God in Christ v. Wolf, 44 S.W.3d 562, 568 (Tex.2001). Instead, the January 23 motion requested an award of attorney=s fees and an order preventing the taking of depositions. D. Breault=s Judgment Lien TEX. PROP. CODE ANN. ' 52.001 (Vernon 1995) provides that the filing of an abstract of judgment creates a judgment lien. Olivares v. Nix Trust, 126 S.W.3d 242, 247 (Tex.App. - San Antonio 2003, pet=n den=d), cert. den=d, __ U.S. __, 125 S.Ct. 91, 160 L.Ed.2d 119 (2004). In order to successfully create a judgment lien, the abstract must substantially comply with the requirements of TEX. PROP. CODE ANN. ' 52.003 (Vernon 1995). Olivares v. Nix Trust, supra; Hoffman, McBryde & Co., P.C. v. Heyland, 74 S.W.3d 906, 909 (Tex.App. - Dallas 2002, pet=n den=d). Section 52.003 does not require that the abstract name any property subject to the judgment lien. See Olivares v. Nix Trust, supra; Hoffman, McBryde & Co., P.C. v. Heyland, supra. Breault=s arguments that the Psarovarkases= claims were moot because neither his abstract nor the judgment lien named the property in question are without merit. Likewise, Breault=s claim that any controversy became moot when the Psarovarkases later secured a home equity loan is without merit. Breault=s judgment lien was a cloud on the Psarovarkases= title to the residence, and the controversy was a justiciable one. Tarrant Bank v. Miller, 833 S.W.2d 666, 667 (Tex.App. - Eastland 1992, writ den=d). E. Conclusion The issues of the validity of Breault=s judgment lien and the Psarovarkases= claim that the residence was their homestead were before the trial court. The trial court did not err in failing to grant Breault=s motion to dismiss. Breault=s second issue on appeal is overruled. Challenges to the Trial Court=s Rulings on the Parties= Motions for Sanctions A. Proceedings in the Trial Court On September 10, 2003, the trial court conducted a two-and-a-half-hour sanction hearing. In its September 11, 2003, order, the trial court granted the Psarovarkases= motion for sanctions and denied Breault=s motion for sanctions. The trial court found (1) that the lien filed by Breault was improper, (2) that the Psarovarkases= refusal to provide discovery responses caused a short but significant delay in the proceedings and the Psarovarkases= failure to accept Breault=s offer to remove the cloud on the title and to resolve the issue of attorney=s fees was a significant cause of the contentiousness of the litigation, and (3) that Breault=s refusal to pay attorney=s fees and costs incurred by the Psarovarkases in their suit to remove the cloud on their title was the main reason for the failure to resolve the dispute. The trial court ordered Breault to pay the Psarovarkases A$1800 by way of sanctions.@ B. Trial Court=s Authority and Appellate Review In Texas, trial courts have authority under the Texas Rules of Civil Procedure and the Texas Civil Practice and Remedies Code as well as an inherent authority to sanction a party before the court. TEX.R.CIV.P. 13 & 215; TEX. CIV. PRAC. & REM. CODE ANN. '' 9.001 et seq. & 10.001 et seq. (Vernon 2002); Howell v. Texas Workers= Compensation Commission, 143 S.W.3d 416, 450 (Tex.App. - Austin 2004, pet=n den=d). Absent an abuse of discretion, a trial court=s ruling will not be disturbed on appeal. Brainard v. State, 12 S.W.3d 6, 30 (Tex.1999); Bodnow Corporation v. City of Hondo, 721 S.W.2d 839, 840 (Tex.1986); Howell v. Texas Workers= Compensation Commission, supra; State v. PR Investments, 132 S.W.3d 55, 68 (Tex.App. - Houston [14th Dist.] 2004, no pet=n h.); Spiller v. Spiller, 21 S.W.3d 451, 456 (Tex.App. - San Antonio 2000, no pet=n). B. The Motions for Sanctions Before the Trial Court The Psarovarkases requested that Breault=s counterclaims be stricken and that they be awarded attorney=s fees as sanctions for Avexatious discovery.@ Breault made numerous requests that he be awarded attorney=s fees and other Aappropriate@ sanctions including the striking of the original petition for the Psarovarkases= abuse of discovery and dilatory tactics. C. Breault=s Challenges on Appeal In his first issue, Breault contends that the trial court abused its discretion by granting the Psarovarkases= motion and awarding them $1,800 as sanctions. We agree. The trial court found that Breault=s lien was invalid, that the Psarovarkases contributed to the delay and contentiousness of the suit, and that Breault=s refusal to pay attorney=s fees and court costs was the primary reason this dispute was not resolved. These findings are not sufficient to support an award for sanctions against Breault for Avexatious discovery@ under the trial court=s inherent authority, under the Rules of Civil Procedure, or under statutory authority. Breault=s first issue is sustained; and the September 11, 2003, sanctions order is vacated. In his third issue, Breault argues that the trial court abused its discretion in denying his motion for sanctions. Breault contends that, based on the Psarovarkases= statements in their January 23 motion, the Psarovarkases= repeated motions for protective orders, and the Psarovarkases failure to give their depositions, the trial court=s refusal to sanction the Psarovarkases was arbitrary and unreasonable. We disagree. The record before this court reflects that Breault made numerous discovery requests, that the Psarovarkases sought numerous protective orders from those discovery requests, and that both parties contributed to the delay in the resolution of this dispute. The record does not support Breault=s contentions that the trial court abused its discretion by denying his requests for sanctions. Breault=s third issue is overruled. The Psarovarkases= Cross-Points on Appeal First, the Psarovarkases argue that the trial court erred by failing to conduct a hearing solely on their motion for partial summary judgment. In light of our affirmance of the trial court=s judgment, this argument presents nothing for review. TEX.R.APP.P. 47.1. In their second cross-point, the Psarovarkases contend that the trial court erred in denying their request to recover attorney=s fees. The Psarovarkases argue that they should have recovered attorney=s fees either as a sanction against Breault or as the prevailing party in the declaratory action. As stated above, the findings do not support the sanctions order. Likewise, the findings do not support an award of attorney=s fees as sanctions. TEX. CIV. PRAC. & REM. CODE ANN. ' 37.009 (Vernon 1997) provides that, in a declaratory judgment proceeding, the trial court may award Areasonable and necessary attorney=s fees as are equitable and just.@ The award of attorney=s fees rests within the trial court=s discretion, and a prevailing party is not entitled to attorney=s fees as a matter of law. Section 37.009; Unified Loans, Inc. v. Pettijohn, 955 S.W.2d 649 (Tex.App. - Austin 1997, no pet=n). We note that the only evidence of attorney=s fees presented by the Psarovarkases was testimony at the sanctions hearing that attorney=s fees totaled $9,000 for the Aprosecution of this matter@ and as a Ablend of [the Psarovarkases=] motion for sanctions in addition to striking [Breault=s] counterclaim for frivolous lawsuit.@ The record does not support the Psarovarkases= claim that the trial court abused its discretion in failing to award attorney=s fees in the declaratory judgment action. The second cross-point is overruled. This Court=s Ruling The judgment of the trial court declaring that the real property located at 4727 Royal Dornoch in Pasadena, Texas, was the homestead of John Psarovarkas and Eleftheria Psarovarkas and that Robert O. Breault=s lien against this property was null and void is affirmed. The sanctions order signed on September 11, 2003, is vacated. TERRY McCALL JUSTICE August 31, 2005 Not designated for publication. See TEX.R.APP.P. 47.2(a). Panel consists of: Wright, J., and McCall, J.[1] [1]W. G. Arnot, III, Chief Justice, retired effective July 31, 2005. The chief justice position is vacant.