William Walter Pyle, Jr. v. First National Bank in Cameron

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN

NO. 03-98-00008-CV

William Walter Pyle, Jr., Appellant

v.

First National Bank in Cameron, Appellee

FROM THE DISTRICT COURT OF MILAM COUNTY, 20TH JUDICIAL DISTRICT

NO. 22,885, HONORABLE CHARLES E. LANCE, JUDGE PRESIDING

William Walter Pyle, Jr. appeals from the trial court judgment rendered against him

in First National Bank's (the Bank) suit to set aside a transfer of land as fraudulent. We will

modify and affirm the judgment.

Factual and Procedural History

This suit arises out of loans the Bank made to Pyle, which he did not repay when

due. The Bank filed suit in cause number 22,428, First National Bank in Cameron v. Pyle , 20th

Judicial District Court of Milam County. On September 18, 1991, the trial court rendered

summary judgment against Pyle in that suit for $164,465.38, $163.00 in court costs, post-judgment interest, and attorneys' fees. Pyle did not appeal that judgment, which therefore became

final October 18, 1991. (1)

On September 17, 1991, Pyle transferred the disputed property to a partnership

called Pyco Joint Venture. Pyco had four general partners: Karen Pyle, Lee Allen Pyle, William

Walter Pyle III, and appellant Pyle. The three other partners are Pyle's children. The transfer

to the partnership consisted of three tracts of land including Pyle's 64% undivided interest in

1,419 acres and fee simple interest in 272.71 acres, and also all of his non-exempt equipment and

vehicles. Each child's undivided interest in the 1,419 acres was transferred to Pyco as well. The

partnership agreement creating Pyco allowed the other partners to buy out Pyle's interest in the

partnership for $100.00.

Shortly after the transfer, the Bank filed the current suit. The final judgment in this

suit consists of several partial summary judgments and a jury verdict on attorneys' fees. All trial-court parties other than Pyle have settled and are no longer parties to this appeal. On appeal, Pyle

presents six issues contending that the trial court erred in: granting a judgment for attorneys' fees

when the party recovering those fees did not request or receive relief under the statute asserted

as the basis for the fee recovery; granting summary judgment based on superseded pleadings;

granting summary judgment when that judgment adjudicated issues of fact regarding intent,

solvency of a debtor, and value of property; rendering a final judgment that granted two

inconsistent forms of relief; striking pleadings without a written request to do so; and striking

pleadings for alleged misconduct, unrelated to the merits of that party's claims, which had been

separately punished. We begin with appellant's second issue.

Amended Pleadings

In his second issue, Pyle contends that the court erred in rendering a final judgment

based in part upon a partial summary judgment because the pleadings upon which the partial

summary judgment was based were superseded. Although the Bank amended its pleadings after

the partial summary judgment disposing of the fraudulent transfer issue, the final judgment could

rely on the partial summary judgment.

Pyle relies upon cases which present the issue of omission of claims or parties

through amendment. For example, in Sosa v. Central Power & Light , 909 S.W.2d 893, 894

(Tex. 1995), the defendant moved for summary judgment based on facts in the plaintiff's

pleadings that showed limitations barred the suit. Before the hearing on summary judgment,

however, plaintiff amended his pleadings to delete those factual allegations. The trial court struck

the second petition as untimely and granted summary judgment for defendant. See id . at 895.

The supreme court held the amended pleadings had been timely. Therefore, the summary

judgment based on the omitted judicial admissions was improper. See id.

In Radelow-Gittens Real Property Management v. Pamex Foods , 735 S.W.2d 558,

559 (Tex. App.--Dallas 1987, writ ref'd n.r.e.), the court dealt with the effect on the ability to

appeal when a party was omitted from amended pleadings. The court granted a partial summary

judgment in Pamex's favor. Radelow-Gittens then filed second and third amended petitions,

neither of which contained any claim against Pamex. See id. After entry of final judgment,

Radelow-Gittens attempted to appeal the partial summary judgment in favor of Pamex. The court

held that Radelow-Gittens could not appeal because it had abandoned its claim against Pamex by

the time of the final judgment. See id . at 560. The court noted that Radelow-Gittens could have

appealed if it had not abandoned its claims against Pamex. See id.; see also Frias v. Atlantic

Richfield Co. , 999 S.W.2d 97, 102 (Tex. App.--Houston [14th Dist.] 1999, pet. filed) (second

amended motion for summary judgment did not incorporate grounds in first amended motion for

summary judgment; appeal could not review denial of first motion because those grounds not

before it due to amendment).

In contrast, all grounds upon which the partial summary judgment was based

remained before the court after the Bank amended its pleading, and the final judgment could rely

on the partial summary judgment. We overrule issue two.

Fraudulent Transfer

In issue three, Pyle contends that the partial summary judgment in the Bank's favor

voiding the transfer as fraudulent was improper because there were material disputed fact issues

concerning his intentions, his financial condition at the time of the transfers, and the value

received in exchange for the transfers. Pyle contends that any or all of these three issues are

unlikely candidates for determination by summary judgment, citing Quinn v. Dupree , 303 S.W.2d

769, 774 (Tex. 1957) (intent to defraud creditors is ordinarily a question for the jury); In re

Fairchild Aircraft Corporation , 6 F.3d 1119 , 1125 n.5 (5th Cir. 1993) (reasonably equivalent

value is inherently fact laden); and Sunbelt Savings, F.S.B v. Bank One Texas, N.A. , 816 S.W.2d

106, 111 (Tex. App.--Dallas 1991) (summary judgment on insolvency improper), rev'd on other

grounds , 824 S.W.2d 557 (Tex. 1992). That certain issues are not usually amenable to summary

judgment, however, does not mean that summary judgment is always inappropriate.

Summary judgment is properly granted only when a movant establishes there are

no genuine issues of material fact to be decided and that it is entitled to judgment as a matter of

law. See Tex. R. Civ. P. 166a(c); Memorial Med. Ctr. v. Howard , 975 S.W.2d 691, 692 (Tex.

App.--Austin 1998, pet. denied). In reviewing the grant of summary judgment, we view the

evidence in the light most favorable to the non-movant and make every reasonable inference and

resolve all doubts in favor of the non-movant. See Nixon v. Mr. Property Management Co. , 690

S.W.2d 546, 548-49 (Tex. 1985); Howard , 975 S.W.2d at 693 . When the trial court's order

granting summary judgment does not specify the grounds relied upon, we will affirm the judgment

if it is supported by any of the grounds put forth by the movant. See Bradley v. State ex rel.

White , 990 S.W.2d 245, 247 (Tex. 1999); Howard , 957 S.W.2d at 693.

A transfer may be fraudulent if the debtor made the transfer without receiving a

reasonably equivalent value in exchange and the debtor was insolvent or became insolvent because

of the transaction. See Tex. Bus. & Com. Code Ann. § 24.006 (West 1987). (2) Pyle estimated the

value of the land at $900 per acre. He had a 64% undivided interest in 1419 acres; and sole

ownership in 272 acres. The evidence concerning the value of Pyle's interest in Pyco, the

transferee, was the $100.00 buyout provision in the joint venture agreement. The evidence

presented shows a significant disparity between the valuation of the land per acre, that is, the asset

transferred, and the price for which his share of the joint venture could be purchased, that is, the

value received. (3) In our opinion, the Bank has established this element of a fraudulent transfer

as a matter of law.

The other element of a fraudulent transfer that the Bank needed to establish was

Pyle's insolvency at the relevant time. Within ninety days of the transfer to Pyco, Pyle filed for

bankruptcy. (4) A bankrupt debtor is judicially estopped from refuting statements made in

bankruptcy at a later time. See Stewart v. Hardie , 978 S.W.2d 203, 208 (Tex. App.--Fort Worth

1998, pet. denied). In general, pleadings in a particular case are regarded as formal judicial

admissions. See Dowelanco v. Benitez , 4 S.W.3d 866, 871 (Tex. App.--Corpus Christi 1999, no

pet.); Cameron County v. Velasquez , 668 S.W.2d 776, 782-83 (Tex. App.--Corpus Christi 1984,

writ ref'd n.r.e.). Pleadings in another case that are inconsistent with a party's position in a

present action are quasi-admissions. See Dowelanco , 4 S.W.3d at 871 ; Velasquez , 668 S.W.2d

at 782-83 . Quasi-admissions are treated as judicial admissions when it appears: (1) the

declaration was made during the course of a judicial proceeding; (2) the statement is contrary to

an essential fact embraced in the declarant's theory of recovery or defense; (3) the statement is

clear, deliberate, and not a mistake; (4) giving conclusive effect to the admission will not be

contrary to the public policy on which the rule is based; and (5) the statement is not destructive

of the offering party's theory of recovery. See Mendoza v. Fidelity & Guar. Ins. Underwriters,

Inc. , 606 S.W.2d 692, 694 (Tex. 1980); Dowelanco , 4 S.W.3d at 871 .

Any transfer of an interest in property that benefits a creditor may be avoided if

the transfer is made within ninety days before the date of the filing of the bankruptcy petition.

See 11 U.S.C. § 547 (b) (1988). For purposes of such avoidance, the bankruptcy code presumes

insolvency during that period. See id. at § 547(f). Pyle's bankruptcy filing stated that any claims,

liens or abstracts of judgment held by the Bank that were based on the judgment on the note were

voidable preferences. By asserting that the Bank's claims would be voidable, Pyle invoked the

presumption that he was insolvent during this period, which was the period of the transfers to

Pyco. Pyle's bankruptcy statement fits the test for a judicial admission: it was made during the

course of a judicial proceeding; it is contrary to an essential fact in his theory of defense (the

claim of solvency as a defense to fraudulent transfer); giving conclusive effect to the statement

fits the policy behind the rule; and, the statement was clear and deliberate and does not destroy

the Bank's theory of recovery. Accordingly, we hold that Pyle conclusively admitted insolvency

based on his prior bankruptcy pleadings.

Additionally, one definition for insolvency under Texas law is "generally not being

able to pay debts as they come due." Tex. Bus. & Com. Code Ann. § 24.003 (b) (West Supp.

2000). Pyle, in response to a question during his deposition about whether he was paying debts,

answered he was not because he "just ha[s]n't had the money." When asked about the land, he

replied, "haven't got the land." Pyle asserted that he was solvent and that his assets and liabilities

were "about the same." However, those assertions find no evidentiary support because his

bankruptcy pleadings showed he was not paying his creditors.

Pyle asserts that intent is not amenable to summary judgment, but intent is not an

element of fraudulent transfer under section 24.006. Compare Tex. Bus. & Com. Code Ann.

§ 24.006 with Tex. Bus. & Com. Code Ann. § 24.005 (a) (actual intent to defraud or hinder

creditor required). The Bank pleaded more than one fraudulent transfer theory, and has offered

proof of a fraudulent transfer upon which the court could properly have granted summary

judgment. We overrule the third issue presented.

"Double Recovery"

In his fourth issue, Pyle complains that the judgment is fatally inconsistent because

it both voids the real estate transfer from Pyle to Pyco and awards the Bank monetary relief. He

argues that setting aside the allegedly fraudulent transfer was one form of relief potentially

available to the Bank under the fraudulent transfer statute. See Tex. Bus. & Com. Code Ann.

§ 24.008 (a)(1) (West 1987). He contends that judgment against the transferee for the value of the

asset transferred (or the amount of the Bank's claim, whichever is less) was a second form of

relief potentially available to the Bank, but only as an alternative to voiding the transfer. See id .

at § 24.009(b). (5)

Pyle is attempting to invoke the doctrine of election of remedies. The election of

remedies doctrine bars relief only when (1) one has made an informed choice (2) between two or

more remedies, rights, or states of facts (3) which are so inconsistent as to (4) constitute manifest

injustice. See Bocanegra v. Aetna Life Ins. Co ., 605 S.W.2d 848, 851 (Tex. 1980). The purpose

of the election of remedies doctrine is to prevent double recovery for a single wrong. See Green

Oaks, Ltd. v. Cannan , 749 S.W.2d 128, 131 (Tex. App.--San Antonio 1987), writ denied per

curiam , 758 S.W.2d 753 (Tex. 1988). A plaintiff is entitled to only one satisfaction for injuries

sustained. See Stewart Title Guar. Co. v. Sterling , 822 S.W.2d 1, 7 (Tex. 1992). The "one

satisfaction" rule applies to prevent a plaintiff from obtaining more than one recovery for the same

injury. See id. That a judgment awards more than one form of relief does not automatically mean

a "double recovery" has occurred.

In Green Oaks, Ltd., the plaintiff sought to void an illegal foreclosure and to

recover monetary damages caused as a result of the foreclosure. 749 S.W.2d at 129 . The

plaintiff was successful in having the foreclosure declared void. See id. The defendant contended

that by voiding the sale the plaintiff had elected his remedy and was precluded from seeking

money damages. See id. at 131 . The court held that no election of remedies was required

because there was no inconsistency between allowing a plaintiff to recover a title taken wrongfully

and for the damages suffered while the property was wrongfully withheld. See id.

One problem with Pyle's argument is that he has misinterpreted the judgment. The

judgment set aside the transfer with regard to the Bank's claim. It did not, however, attempt to

award the land to the Bank; it simply returned the land to the status of an asset of Mr. Pyle.

Merely setting aside the transfer did not satisfy the Bank's claim. The monetary relief awarded

in this judgment was not an award of the value of the asset transferred. The Bank brought this

suit to enforce an existing judgment. The judgment in this second suit basically "incorporated"

that first judgment, added the accrued interest, and awarded that monetary relief to the Bank.

Accordingly, the judgment in this cause does not award a double recovery. We overrule the

fourth issue presented.

Attorneys' Fees

In his first issue presented, Pyle complains that no basis exists for the award of

attorneys' fees. The Bank responds that attorneys' fees are authorized because this is a suit to

collect a judgment. See Tex. Civ. Prac. & Rem. Code Ann. § 31.002 (West Supp. 2000) (the

turnover statute). Although section 31.002(e) authorizes attorneys' fees, its scope is not broad

enough to do so in this cause because this is not a proceeding under the turnover statute. See

§ 31.002 (e). (6)

Section 31.002, the "turnover" statute, is not a general authorization for attorneys'

fees in any proceeding to collect a judgment. The turnover statute is a purely procedural statute

whose purpose is to ascertain whether an asset is in either the judgment debtor's possession or

subject to the debtor's control. See Beaumont Bank, N. A. v. Buller , 806 S.W.2d 223, 227 (Tex.

1991). It does not allow for a determination of the substantive rights of involved parties. See

Cross, Kieschnick & Co. v. Johnston , 892 S.W.2d 435, 439 (Tex. App.--San Antonio 1994, no

writ); Republic Ins. Co. v. Millard , 825 S.W.2d 780, 783 (Tex. App.--Houston [14th Dist.] 1992,

orig. proceeding); Craven, Dargan & Co. v. Travers Co., Inc. , 770 S.W.2d 573, 576 (Tex.

App.--Houston [1st Dist.] 1989, writ denied) (turnover statute improper vehicle to determine

whether debtor owned funds deposited with State Board of Insurance); see also RTC v. Smith , 53

F.3d 72, 77 (5th Cir. 1995) (applying Texas law). In order to obtain attorneys' fees under this

section, the creditor must be successful in obtaining turnover relief. See Boudreax Civic Ass'n

v. Cox , 882 S.W.2d 543, 550 (Tex. App.--Houston [1st Dist.] 1994, no writ); Daniels v. Pecan

Valley Ranch, Inc. , 831 S.W.2d 372, 386 (Tex. App.--San Antonio 1992, writ denied).

Although the Bank's pleadings asked for attorneys' fees in reliance on section

31.002, we cannot construe the judgment in this cause as awarding turnover relief to the Bank.

As we have discussed, the judgment set aside the transfer of Pyle's assets to Pyco to the extent

necessary to satisfy the Bank's judgment against Pyle. (7) The substance of this action is a

fraudulent transfer action, not a turnover action. Perhaps in theory, the setting aside of the

transfer could be viewed as "otherwise applying the property to the satisfaction of the judgment"

as provided for in section 31.002(2), but that theory runs afoul of the caselaw that prohibits a

turnover action from being used to determine substantive property rights. Accordingly, as the

Bank claims no other basis for an award of attorneys' fees and we find none, we sustain Pyle's

first issue presented, and modify the judgment to eliminate the award of attorneys' fees in this

cause.

Remaining Points

In issue five, Pyle contends that the trial court improperly struck his pleadings

because there was no written request to strike the pleadings. In issue six, he claims that the trial

court improperly struck his pleadings for alleged misconduct unrelated to the merits of his claim.

These events occurred after rendition of judgment in this cause and were based on Pyle's violation

of an injunction against the transfer of certain assets. Because we will modify and affirm the trial

court judgment based on the entire record of the case as it existed before the court struck Pyle's

pleadings, we need not consider whether there was any error in post-judgment events.

Accordingly, we overrule issues five and six without further discussion.

Conclusion

We have overruled all of Pyle's issues presented, except for the issue concerning

attorneys' fees, which we have sustained. Accordingly, we modify the judgment to delete the

award of $158,000 in attorneys' fees, and, as modified, affirm.

Mack Kidd, Justice

Before Chief Justice Aboussie, Justices Kidd and Smith

Modified and, as Modified, Affirmed

Filed: April 20, 2000

Do Not Publish

1. The trial court in the current cause took judicial notice of all of the papers and pleadings

contained within cause number 22,428.

2. There is no dispute that the Bank was a creditor or that the claim arose before the transfer

was made, other elements of this provision.

3. Pyle also transferred some farm equipment to the joint venture, which would increase the

value transferred to Pyco.

4. Pyle's bankruptcy case terminated before the final judgment in this cause. During the

pendency of this appeal, Pyco, while still a party to the appeal, filed bankruptcy, causing an

abatement of this appeal. Pyco has since settled with the Bank.

5. However, this section concerns a judgment against a transfer ee . Mr. Pyle is not a transferee

against whom relief has been awarded. Pyco, the transferee, has settled with the Bank and is not

an appellant.

6. This issue concerns the award of $158,000 in attorneys' fees in trial court cause 22,885, the

cause on appeal. It does not concern any award of attorneys' fees in cause 22,428, the suit to

collect on the note.

7. Because all other parties have settled, we do not address any issues about the judgment's

assessment of liability against Pyle and the others in their capacity as joint venturers in Pyco.

App.--San Antonio 1994, no

writ); Republic Ins. Co. v. Millard , 825 S.W.2d 780, 783 (Tex. App.--Houston [14th Dist.] 1992,

orig. proceeding); Craven, Dargan & Co. v. Travers Co., Inc. , 770 S.W.2d 573, 576 (Tex.

App.--Houston [1st Dist.] 1989, writ denied) (turnover statute improper vehicle to determine

whether debtor owned funds deposited with State Board of Insurance); see also RTC v. Smith , 53

F.3d 72, 77 (5th Cir. 1995) (applying Texas law). In order to obtain attorneys' fees under this

section, the creditor must be successful in obtaining turnover relief. See Boudreax Civic Ass'n

v. Cox , 882 S.W.2d 543, 550 (Tex. App.--Houston [1st Dist.] 1994, no writ); Daniels v. Pecan

Valley Ranch, Inc. , 831 S.W.2d 372, 386 (Tex. App.--San Antonio 1992, writ denied).

Although the Bank's pleadings asked for attorneys' fees in reliance on section

31.002, we cannot construe the judgment in this cause as awarding turnover relief to the Bank.

As we have discussed, the judgment set aside the transfer of Pyle's assets to Pyco to the extent

necessary to satisfy the Bank's judgment against Pyle. (7) The substance of this action is a

fraudulent transfer action, not a turnover action. Perhaps in theory, the setting aside of the

transfer could be viewed