G. Xavier Montemayor and Franklin T. Graham, Jr. v. Jose Antonio Ortiz Fernandez, Jose Antonio Ortiz Celada, and Wife, Becky Ortiz

COURT OF APPEALS

THIRTEENTH DISTRICT OF TEXAS

CORPUS CHRISTI - EDINBURG

NUMBER 13-04-224-CV

G. XAVIER MONTEMAYOR AND

FRANKLIN T. GRAHAM,

JR., Appellants,

v.

BECKY

ORTIZ, D/B/A SCHORS , Appellee.

NUMBER

13-04-358-CV

G. XAVIER MONTEMAYOR AND

FRANKLIN T. GRAHAM,

JR., Appellants,

v.

JOSE ANTONIO ORTIZ FERNANDEZ,

JOSE ANTONIO ORTIZ CELADA,

AND WIFE, BECKY ORTIZ, Appellees.

On appeal from the 138th

District Court

of Cameron

County, Texas.

O P I N I O N

Before Justices Hinojosa, Yañez, and

Castillo

Opinion by Justice Castillo

These two appeals were

consolidated for the purposes of briefing and argument, and will now be

addressed in a single opinion. Cause

number 13-04-358-CV began as a declaratory judgment action filed on May 15,

2002, by appellants, G. Xavier Montemayor and Franklin T. Graham, Jr.

(collectively "Montemayor"), against appellees Jose Antonio Ortiz

Fernandez ("Fernandez"), his son Jose Antonio Ortiz Celada

("Celada") and Celada's wife, Becky Ortiz ("Ortiz"). Montemayor desired to collect on a monetary

judgment against Fernandez and Celada that issued in 1990, and sought a

declaratory judgment that properties of Schor's, a d/b/a of Ortiz, were

community property of Celada and Ortiz and therefore subject to levy and

execution for payment of the judgment debt.

In conjunction with

the petition for declaratory judgment, and without notice to Ortiz, Montemayor

sought and obtained a temporary restraining order and an ex parte

receivership. Ortiz filed counterclaims

on January 10, 2003, alleging that the ex parte receivership was obtained

wrongfully, based on misrepresentations to the court, and had damaged her and

her business. Causes of action included

abuse of process, malicious prosecution, defamation, and intentional infliction

of emotional distress.

Two partial summary

judgments were entered in favor of Ortiz in 2003 in the declaratory judgment

action reflecting: (1) the 1990 judgment

was for collection of a debt, not a tort; and (2) Schor's was the "special

community property" of Ortiz, at all times subject to her sole management

and control, and not subject to levy or execution by Montemayor. Subsequent to entry of the two summary

judgment orders, the counterclaims of Ortiz were severed (now cause number 13-04-224-CV

on appeal). The severed action dealing

with the damage claims proceeded to trial in August 2003; final judgment

consistent with the jury verdict in favor of Ortiz issued in February

2004. At that point, Ortiz returned to

court in the declaratory judgment action and obtained an award for attorneys'

fees. Final judgment in that case issued

in favor of Ortiz on April 19, 2004.

Appeal is brought from

the orders granting the summary judgments, and from the findings and judgment

in the severed action, concluding that Montemayor engaged in tortious conduct

and awarding damages. We affirm the

trial court's rulings reflected in appeal number 13-04-358-CV. We reverse the trial court's judgment in

appeal number 13-04-224-CV, based upon no evidence to support the

findings, and render.

I. Background

In the mid 1980's,

Fernandez and Celada had done business with the Brownsville Money

Exchange. In 1986, they sought the

immediate exchange of $140,000 in pesos for American dollars to satisfy some

other debts. They received a check from

the exchange; they then contacted it to advise that the check would not clear

soon enough. They requested that

$140,000 be forwarded by wire and they would return the check. The money was wired; the check was also

deposited. After some dispute, but without

litigation, Fernandez and Celada agreed to execute four promissory notes for

the additional $140,000 in favor of the Brownsville Money Exchange. They failed to pay on those notes; litigation

ensued, and in June 1990, a judgment was entered against Fernandez and Celada

for $203,013, with interest at the rate of eighteen percent per year until

paid. That judgment was later assigned

two-thirds to Montemayor (son of the owner of the exchange) and one-third to Graham

(the attorney who handled the matter on behalf of the exchange and retained a

contingency fee interest).

When still a

newly-wed, Ortiz began Schor's in 1977 in partnership with her

sister-in-law. The initial capital

investment was $15,000; Ortiz contributed $7,500 given to her as a gift from

her father. The sister-in-law was not

interested in operating the business, which grew largely due to the efforts of

Ortiz. Schor's expanded into two stores,

operating as a jewelry store and interior decorating business. Ortiz bought out her sister-in-law in the

early 1990s with monies earned from the business. During this time, Celada allegedly had

nothing to do with the Schor's business; he focused on farming operations with

his father in Mexico. Ortiz was aware

that in the late 1980s, Celada and Fernandez started an unsuccessful steel

business. She testified she was aware of

financial difficulties, but not immediately aware of the promissory notes

executed on behalf of the Brownsville Money Exchange. In 1990, Fernandez filed for Chapter 7 protection

in bankruptcy. The principal amount of

the 1990 judgment debt against him for $140,000 was not discharged, based on a

finding by the bankruptcy court that the debt had been incurred through fraud.

Ortiz continued to

reinvest profits from Schor's into the business, which grew to have an

inventory value in excess of one million dollars by 2002. She contended at all times that Schor's was

subject to her sole management and control, as either her separate or special

community property, and that she and Celada separately managed their own

business affairs. By 2002, Celada was

not contributing to maintenance of the family, was absent much of the time,

living in Mexico, and the couple initiated divorce proceedings.

In May 2002, Montemayor

and Graham approached counsel about possibly collecting on the 1990 judgment

against the Schor's property. Various

unsuccessful attempts had been made to collect in the intervening years;

frequently Celada could not be located for service. [1] Graham also testified that they did not

earlier pursue the Schor's assets because the business was not initially big

enough to fight about. By 2002, the 1990

judgment had grown, through accruing interest, to have a value in excess of

$1,450,000. [2]

Montemayor filed a

petition on May 15, 2002, requesting a temporary restraining order to

"preserve the status quo," to prevent Fernandez, Celada or Ortiz from

concealing or hiding assets of Schor's. They also sought and secured an ex parte

appointment of a receiver, based upon affidavits which alleged imminent threat

that the assets would otherwise disappear, and that Schor's was the community

property of Celada and Ortiz and therefore subject to execution to satisfy the

debt. The order appointing the receiver

reflects that, in the petition, Montemayor contended that if emergency relief

were not granted, the "assets and cash of said store [Schor's] will be

concealed, transferred, removed, assigned, sold or hidden and that the Plaintiffs

will be forever and irreparably injured . . . ." The order appointed Rufus Ransome, Jr.,

("Ransome") as "receiver of the inventory (including the

jewelry, antiques, and merchandise), equipment, cash on hand, accounts

receivable, and cash accounts or other depository accounts" of

Schor's.

Ransome appeared at

the store's facility on May 15, 2002, with order in hand. Store employees contacted Ortiz, who was

shocked, but granted admittance and told employees to cooperate. Some other family member contacted Celada,

who then appeared at the store, got into an altercation with Ransome, and told

him to leave. Ransome left. Ortiz contacted an attorney, Dennis Sanchez,

who immediately contacted counsel for Montemayor. An agreed order was negotiated and formally

entered on May 28, 2002. It reflects

that, based on representations that Fernandez and Celada would not be permitted

access to Schor's and that no assets of Schor's will be transferred to them,

Ortiz would be permitted to continue operating her business, buying and selling

merchandise and conducting normal operations. [3] Under the agreement, the receiver would

complete his inventory of all assets, and would have authority to review all

purchases and sales, which he could stop at his own discretion.

At a hearing held June

7, 2002, the temporary restraining order was dissolved and replaced by a

temporary injunction. The parties agreed

the receivership would remain in place: "It is our agreement that Mr. Ransome

will be able to continue to view the books and records, and look at the

inventory, and examine the inventory on a weekly basis. . . . But if he believes something irregular is

occurring such as looting of assets, or something like that, then he would have

the right to come back and advise the Court and counsel." Ortiz was permitted to continue normal

operations of her business. A formal

order to this effect was entered June 24, 2002; however, this order was not

"agreed" as some additional language was included.

In October 2002, Ortiz

moved to dissolve the receivership; it was formally vacated on January 8,

2003. Ortiz also moved for two partial

summary judgments. Partial summary judgment

that the 1990 judgment was an action for debt, and not based in tort, was

entered on February 21, 2003. Partial

summary judgment that Schor's was at all times Ortiz's "special community

property," subject to her sole management and control and not available

for attachment to satisfy the 1990 judgment debt, was entered on May 27,

2003.

On August 11, 2003,

the declaratory judgment action was severed from Ortiz's counterclaims for

damages. Trial on the damage claims

commenced on August 12, 2003. The jury

verdict was entered August 22, 2003, awarding actual damages to Ortiz. The trial was bifurcated; punitive damages

were awarded in an August 26, 2003, verdict.

Final judgment was entered on the damage claims on February 5, 2004. Ortiz then returned to court in the

declaratory judgment action, had a trial on attorneys' fees, and final judgment

in that matter was entered in favor of Ortiz on April 19, 2004.

II. The Declaratory Judgment Case B The Summary Judgments

Montemayor raises four

issues on appeal relating to entry of the summary judgment orders. These orders arise in appeal number

13-04-358-CV. Issues one, two, and three

involve the order concluding Schor's assets were the "special community

property" of Ortiz, and not subject to any liability for the 1990

judgment. Montemayor contends the trial

court erred because (1) they were jointly managed assets of Ortiz and Celada

(issue one), (2) issues of material fact remained as to the nature of the

property (issue two), and (3) issues of fact precluded summary judgment that

the 1990 judgment was not the "joint debt" of Ortiz and Celada (issue

three). In issue four, Montemayor

contends that the trial court erred in finding that the 1990 judgment was based

on contract and not in tort because material fact issues remained that required

resolution by a jury.

A. Summary Judgment B Standard of Review

The function of a summary judgment is to eliminate

patently unmeritorious claims and defenses, not to deprive litigants of

the right to a jury trial. Alaniz v.

Hoyt , 105 S.W.3d 330, 344 (Tex. App. B Corpus Christi 2003, no pet.). The propriety of a summary judgment is a

question of law. See Natividad v.

Alexsis, Inc. , 875 S.W.2d 695, 699 (Tex. 1994). We therefore review de novo a trial court's order

granting a traditional motion for summary judgment. See id .

We review the evidence "in the

light most favorable to the nonmovant, disregarding all contrary evidence

and inferences." See KPMG

Peat Marwick v. Harrison County Hous. Fin. Corp ., 988 S.W.2d 746, 748

(Tex. 1999); Branton v. Wood , 100 S.W.3d 645, 646 (Tex. App. B Corpus Christi 2003, no pet.). The movant bears the burden of showing

both no genuine issue of material fact and entitlement to judgment as

a matter of law. Tex. R.

Civ. P. 166a(c); Hoyt , 105 S.W.3d at 345 . In deciding whether a genuine issue of

material fact exists, we take evidence favorable to the non‑movant as

true. Ortega v. City Nat'l Bank ,

97 S.W.3d 765, 772 (Tex. App. B Corpus Christi 2003, no pet.). We make all reasonable inferences and resolve

all doubts in favor of the non‑movant.

Id . A non‑movant

has the burden to respond to a traditional summary judgment motion if the

movant conclusively (1) establishes each element of its cause of action or

defense, or (2) negates at least one element of the non‑movant's cause of

action or defense. See id.

We affirm a trial court's ruling on a summary

judgment motion if any of the theories advanced in the motion is

meritorious. State Farm Fire

& Cas. Co. v. S.S. , 858 S.W.2d 374, 380 (Tex. 1993); Boren v. Bullen ,

972 S.W.2d 863, 865 (Tex. App. B Corpus Christi 1998, no pet.).

B. Summary Judgment that 1990 Debt is Based in

Contract

Montemayor's fourth

issue challenges the trial court's finding that the underlying 1990 judgment

was for a debt in contract, rather than a judgment in tort. Preliminary resolution of this issue is

crucial because, pursuant to section 3.202 of the Texas Family Code, unless

both spouses are personally liable, [4]

community property that is subject to one spouse's sole management, control,

and disposition is not subject to nontortious liabilities that the other spouse

may incur before or during marriage. Tex. Fam. Code Ann . ' 3.202 (Vernon

1998).

Ortiz moved for

summary judgment, requesting the trial court to declare the 1990 judgment to

have been based on a promissory note and not a judgment in tort. She asserted that any attempt to argue

otherwise was barred by res judicata, collateral estoppel, and statute of

limitations. The judgment itself reads:

The court here finds

that the defendants, JOSE ANTONIO ORTIZ FERNANDEZ and JOSE ANTONIO ORTIZ

CELADA, executed Four (4) Promissory Notes, . . . payable to the order of

Plaintiff [Brownsville Money Exchange] . . . The Court further finds that each

of the Four (4) Notes provided for interest . . . . The Court further finds that the Plaintiff

found it necessary to engage the services of an attorney to effect collection

and that under the terms of said Notes the Defendants . . . are liable for

fifteen percent (15%) of the principal and interest due as an attorneys' fee,

which the Court here finds to be reasonable, and which the Court here finds to

total . . . $26,479.95.

The judgment awarded

$203,013.00 in principal (including accrued interest), interest forward until

the date paid at the rate of eighteen percent (18%), and attorneys' fees.

Graham

testified that the suit on the judgment did not involve Ortiz. He also testified that they did not urge tortious

conduct in the underlying suit because it was not necessary. Montemayor nevertheless contends that the

underlying judgment was based upon tortious, fraudulent conduct committed by

Fernandez and Celada in 1986, and that this was confirmed by the bankruptcy

court when it refused to discharge the debt against Fernandez. Montemayor urged the trial court to defer to

the bankruptcy court's finding, and argued that fact issues remained as to

whether Ortiz was a party to the fraud because she allegedly received $10,000

of the monies from the missing $140,000.

The

1990 judgment clearly sets forth that it was based on the failure to pay

promissory notes. There is no mention of

tortious or fraudulent conduct, despite the fact that tortious conduct was

alleged to have taken place in 1986.

Testimony of Graham confirms that no issues as to fraud were raised in

securing the judgment on the notes.

There is no dispute as to the contentions raised before the court in

securing the 1990 judgment. The judgment

clearly applies only to Fernandez and Celada.

The judgment also awards attorneys' fees, consistent with the terms of

the notes and with an action to collect on either a sworn account or an oral or

written contract. See Tex. Civ. Prac. & Rem. Code Ann . ' 38.001 (Vernon

1997). Attorneys' fees are not

recoverable in an action in tort.

Knebel v. Capital Nat'l Bank , 518 S.W.2d 795, 803-04 (Tex. 1974)

(citing New Amsterdam Cas. Co. v. Tex. Indus., Inc ., 414 S.W.2d 914, 915

(Tex. 1967)).

"Under

res judicata, a final judgment on the merits of an action precludes the parties

or their privies from relitigating issues that were or could have been raised

in that action." John G. &

Marie Stella Kenedy Mem. Found. v. Dewhurst , 90 S.W.3d 268, 287 (Tex. 2002

) (citing Allen v. McCurry , 449 U.S. 90, 94 (1980)). "[W]hen a court of competent

jurisdiction has entered a final judgment on the merits of a cause of action,

the parties to the suit and their privies are thereafter bound 'not only as to

every matter which was offered and received to sustain or defeat the claim or

demand, but as to any other admissible matter which might have been offered for

that purpose.'" Id . Further, while neither res judicata nor

collateral estoppel will bar an action for fraud where such an action could not

have been asserted in the underlying proceedings, such is not the case

here. All facts upon which allegations

of fraud are based were well known at the time judgment was sought on the

notes. [5] Additionally, nearly twelve years passed

between the time of entry of the judgment (June 19, 1990), and Montemayor's

filing of suit seeking to attach assets of Schor's. All time periods within which a judgment

might be reformed, modified, or corrected, whether by motion to modify, a

motion for new trial, or bill of review had expired long before May 2002. See Tex.

R. Civ. P . 329b. Further, no such

efforts to modify the judgment were ever undertaken. See also Murray v. San Jacinto Agency, Inc .,

800 S.W.2d 826, 828 (Tex. 1990) ("The purpose of a statute of limitations

is to establish a point of repose and to terminate stale claims.").

We

conclude that the trial court properly determined in its order for partial

summary judgment, which issued February 21, 2003, that the underlying 1990

judgment "was one for debt and Plaintiffs are barred from claiming it is

for tort by res judicata, collateral estoppel and statute of limitations." We overrule Montemayor's fourth issue on

appeal.

C. Summary Judgment B Special Community

Property

1. The Judgment

Ortiz

filed a separate motion for partial summary judgment in February 2003,

requesting a declaration that Schor's was not community property and was not

subject to attachment for the 1990 judgment debt. As exhibits, Ortiz included (a) affidavits

explaining how Schor's had begun with the gift of $7,500 from her father, with

the intent that it be her property; (b) deposition testimony of her accountant,

Ygnacio Garza, who had handled tax filings for the partnership between Ortiz

and her sister-in-law until it was dissolved, and who testified that Celada

never signed checks, secured loans, or otherwise participated in the business

of Schor's; (c) deposition testimony of Celada reflecting that he considered

Schor's as Ortiz's separate property, always under her management and control,

and that he had no participation in the business whatsoever; (d) copies of the

assumed name certificates for Schor's, reflecting Ortiz as its owner; and (e)

excerpts from Montemayor's deposition reflecting he had no personal knowledge

of Celada's involvement in any of Schor's business affairs, other than hearsay

that he occasionally assisted in hanging window blinds.

Montemayor

countered with Ortiz's admission that profits from Schor's were reinvested into

the business. He urges that, pursuant to

Cockerham v. Cockerham , 527

S.W.2d 162 (Tex. 1975), because community assets (the profits) were reinvested

into Schor's, it lost its separate or special nature and became a community

asset, subject to attachment for the judgment debt. Montemayor also urges that Ortiz and Celada

filed joint tax returns, mutually taking advantage of depreciation or losses as

well as profits from each other's businesses, and that Ortiz used funds of

Schor's to maintain the household and family expenses. Montemayor contends these actions establish

that Schor's is community property.

The

trial court concluded in its order of May 27, 2003, that all assets of Schor's

during the marriage of Celada and Ortiz were the special community property of

Ortiz, subject to her sole management, control and disposition, and were never

subject to the liability of Celada reflected in the 1990 judgment. "The Schor's properties were not, and

are not subject to levy and execution by [Montemayor] based upon the above

judgment debt which this Court has already found to be, as a matter of law, a

nontortious judgment debt based on promissory notes." We further note that, in concluding Schor's

was the separate community property of Ortiz, and that those assets were not

subject to levy and execution for Montemayor's judgment, the trial court

necessarily concluded that Ortiz was not personally liable for the debt along

with Celada. See Tex. Fam. Code Ann. ' 3.202 (Vernon

1998).

2. Analysis

We review the trial court's

granting of the motion for summary judgment de novo, Natividad , 875

S.W.2d at 699 , viewing the evidence "in the light most favorable to the

nonmovant, disregarding all contrary evidence and inferences." KPMG Peat Marwick , 988 S.W.2d at

748 ; Branton , 100 S.W.3d at 646 .

In

his first and second issues, Montemayor challenges the trial court's conclusion

that Schor's was the special community property of Ortiz; in his third issue,

he challenges the conclusion that the 1990 judgment was not a joint debt of

Ortiz and Celada.

Texas

recognizes both sole and joint-managed community property. Tex.

Fam. Code Ann . ' 3.102 (Vernon 1998); Douglas

v. Delp , 987 S.W.2d 879, 883 (Tex. 1999).

Sole-management community property is that property which, though

acquired during the marriage, would have belonged to that spouse if single. Douglas, 987 S.W.2d at 883 . The trial court's decision also rests on

application of family code section 3.202, which provides that marital property

subject to the sole management, control and disposition of one spouse will not

be subject to any nontortious liability of the other spouse. Tex.

Fam. Code Ann . ' 3.202 (Vernon

1998). The court, as noted above,

concluded the judgment in issue was a "nontortious" liability.

There

is no dispute that the business of Schor's began subsequent to the marriage of

Ortiz and Celada and grew during the term of their marriage. It began with a gift of monies from Ortiz's

father to her, and operated as a separate partnership until the early

1990s. Evidence before the trial court

demonstrated that Ortiz did control the business of Schor's, and that Celada

had no input in its management or operations, and no direct access to checks or

other financial aspects of the business.

No evidence other than speculation was tendered to suggest

otherwise.

However,

our analysis does not end here. There is

no dispute that profits from Schor's were reinvested into the business to assist

in its growth. Additionally, it is

undisputed that income from Schor's was used to fund family expenses. Montemayor contends that, pursuant to Cockerham ,

527 S.W.2d 162 , any independent management of the asset does not overcome the

fact that the use of community assets (i.e., the profits of Schor's)

transformed Schor's into a jointly managed community property of Ortiz and

Celada. Montemayor further urges that

the continued investment and reinvestment of business profits resulted in a

commingling making it impossible to trace the value of any separate property,

and the statutory presumption of community property therefore prevails. See Jones v. Jones , 890 S.W.2d 471,

475 (Tex. App. B Corpus Christi 1994,

writ denied).

Ortiz

counters that Cockerham is distinguishable. [6] Section 3.102 of the family code provides

that, during marriage, a spouse has the sole management, control and

disposition of the community property that the spouse would have owned if

single, including "(1) personal earnings; (2) revenue from separate

property; (3) recoveries for personal injuries; and (4) the increase and

mutations of, and the revenue from, all property subject to the spouse's sole

management, control and disposition ."

Tex. Fam. Code Ann. ' 3.102 (Vernon 1998)

(emphasis added).

Cockerham involved a circumstance where the wife had filed for divorce and then

filed for chapter 7 bankruptcy because of her failed dress shop business. Cockerham , 527 S.W.2d at 164 . The bankruptcy trustee intervened in the

divorce to determine whether assets of the husband's dairy business could be

attached to satisfy creditors of the dress shop. Id .

It was undisputed that the dairy business had been operated

independently of Mrs. Cockerham, id . at 168, and her dress shop had

little or no participation from Mr. Cockerham, id . at 171. Analysis centered on whether the dairy business

was accessible community property or whether it had remained under the sole

management, disposition and control of Mr. Cockerham, with no commingling of

its assets, such that it remained "special community property" that

could not be reached by the creditors.

As with Schor's here, the dairy business was a sole proprietorship of

the husband and debts of the dress shop had not been jointly incurred. Id . at 168-70. However, other facts diverge.

In

Cockerham , the husband owned an undivided one-half interest in a

320-acre tract, along with his brother, prior to his marriage. Id . at 167-68. As such, his interest was his separate

property. Cockerham and his wife later

purchased his brother's one-half interest in the property through a convoluted

transaction that ended up with a conveyance to both husband and wife. Id . at 168. The supreme court agreed that at all times,

an undivided one-half interest in the property remained the separate property

of Mr. Cockerham. Id . Testimony reflected no intent to gift the

wife with an interest in the land. The

one-half interest in the property was clearly traced and was adequate to rebut

the presumption that all interest in the property became community at the time

the other one-half interest was purchased.

Id . The trustee therefore

claimed a community interest in the remaining one-half interest, and in the

dairy business.

The

dairy business was located on the 320-acre tract. Mr. Cockerham urged that the dairy business

had at all times been subject to his sole management and control, and relied

upon the predecessor to section 3.102 of the family code, [7]

much as Ortiz does here. Id . at

170. However, facts reflected that Mr.

Cockerham and his wife effectively borrowed the cash necessary to purchase the

community interest in the property, and title transferred into the name of

each. The court considered this

sufficient to establish that the community interest in the undivided one-half

of the 320 acre tract was subject to the joint management of each. Id .

With

respect to the dairy business, it was acquired during the marriage, and its

proceeds were reinvested into the business.

Id . at 170. Again, the

distinction in how the land was acquired meant that proceeds of the dairy

business were acquired not just by the labor of the husband by also by virtue

of capital improvements that were community property. Id .

Therefore, the dairy business was also under the joint management and

control of each, and subject to attachment for debts of the dress shop, whether

those obligations were of only the wife or joint obligations of each. Id . at 171.

We

find Cockerham to be distinguishable from the matter before us. Here, unequivocal evidence reflected not only

that Ortiz maintained full control over management and operations of Schor's,

but also that no community capital assets were used to increase the business of

Schor's. Schor's was initially purchased

with Ortiz's separate property. Profits

from Schor's were directly reinvested into Schor's, without prior commingling

into community bank accounts. No debts

were incurred or monies borrowed by both Ortiz and Celada to finance further

growth of Schor's. Schor's did not grow

by virtue of the infusion of other community funds. Schor's did not rely upon any community-owned

real property. All investments into

Schor's derived from "the increase and mutations of, and the revenue from,

all property subject to the spouse's [Ortiz's] sole management, control, and

disposition." Tex. Fam. Code Ann. ' 3.102(a)(4) (Vernon

1998).

In

construing a statute, our objective is to determine and give effect to the

Legislature's intent first by looking to the statute's plain and common

meaning. Tex. Workers' Comp. Comm'n

v. Patient Advocates of Tex ., 136 S.W.3d 642 , 652 (Tex. 2004).

Because Schor's remained under the sole management and control of Ortiz,

including any profits therefrom (whether or not some other portions of those

profits were then contributed to the community), we conclude that the trial

court properly determined that Schor's was the special community property of

Ortiz, not subject to any nontortious liabilities of Celada, not a joint debt,

and not subject to liability for the 1990 judgment debt. Tex.

Fam. Code Ann . ' ' 3.102, 3.202 (Vernon

1998). We overrule Montemayor's first,

second and third issues on appeal.

III. The Damage Claims

Ortiz

brought counterclaims against Montemayor for allegedly wrongfully pursuing the

business assets of Schor's and for harassing her. After the trial court issued its two rulings

on Ortiz's motions for partial summary judgment, those counterclaims in which

Ortiz sought damages were severed from the declaratory judgment portion of the

suit.

The

claims for damages based on wrongful conduct proceeded to a bifurcated trial in

August 2003. On August 22, 2003, the

jury issued a verdict awarding actual damages to Ortiz in the amount of

$335,000. [8] A supplemental verdict issued August 26,

2003, awarding punitive damages in the amount of $75,000.00 against Montemayor,

individually, and $100,000 against Graham, individually. Final judgment incorporating these jury

verdicts was entered on February 5, 2004.

Findings relating to these claims are appealed under cause number 13-04-0224-CV.

A. Issues on Appeal

In

the consolidated appeal, Montemayor challenges the damages awards. In issues 5-11, he asserts the trial court

erred as follows:

(a) issue 5 B no evidence or legally

insufficient evidence of abuse of process;

(b) issue 6 B no evidence or

insufficient evidence of defamation;

(c) issue 7 B no evidence or

insufficient evidence of intentional infliction of emotional distress;

(d) issue 8 B no evidence or

insufficient evidence of malicious prosecution;

(e) issue 9 B no evidence or

insufficient evidence of malice to support an award of punitive damages;

(f) issue10 B no evidence or insufficient

evidence of mental anguish damages in tort;

(g) issue 11 B no evidence or

insufficient evidence of any causal connection between alleged lost profits and

any act or omission of Montemayor;

(h) issue12 B no evidence or

insufficient evidence to support award for damage to reputation.

The

claims for damages all derive from a central contention that Montemayor acted

wrongfully in securing the ex parte receivership. We note that a trial court is statutorily

authorized to appoint a receiver in certain cases, including an action by a

creditor to subject any property or fund to its claim, on the application of

the plaintiff or any party whose right to or interest in the property or fund

or in the proceeds therefor is probable, and where it is shown that the

property or fund is in danger of being lost, removed or materially

injured. See Tex. Civ. Prac. & Rem. Code Ann .

' 64.001 (Vernon 2005);

B & W Cattle Co. v. First Nat'l Bank of Hereford , 692 S.W.2d 946,

950 (Tex. App. B Amarillo 1985, no

writ). A court may even appoint a

receiver on its own motion and without application of a party where the facts

justify the appointment to preserve and protect property in litigation. Cross v. Cross , 738 S.W.2d 86, 87

(Tex. App. B Corpus Christi 1987,

writ dism'd w.o.j.).

The

parties do not dispute that issuance of an ex parte receivership is a harsh

remedy to be exercised only in extraordinary circumstances. See Indep. Amer. Sav. Ass'n v.

Preston, 753 S.W.2d 749, 750 (Tex. App. B Dallas 1988, no writ); Tex. Consol. Oils v.

Hartwell , 240 S.W.2d 324, 327 (Tex. Civ. App. B Dallas 1951, no writ); Parness v. Parness ,

560 S.W.2d 181, 182 (Tex. Civ. App. B Dallas 1977, no writ)

(each involving interlocutory appeals from the order appointing a receiver). [9] However, even if a receivership were obtained

wrongfully, as is urged in this matter, whether or not a party may recover on

affirmative causes of action depends upon the elements of those causes of

action.

Ortiz

has never contended that the trial court erred or abused its discretion in

ordering the receivership, based upon the information before it. No interlocutory appeal was taken from the

order granting the receivership, and no related issue is raised in this appeal. In fact, Ortiz entered into two agreements to

extend the receivership in exchange for being able to operate her

business. Ortiz contends she

specifically reserved her right to later challenge the receivership. Although there were arguments before the

trial court as to whether any such challenge was waived, we have no such issue

before us on appeal. Instead, we address

the issues raised, as they deal with the evidence tendered to support the

counterclaims raised by Ortiz.

B. Standard of Review

Montemayor claims there is

no evidence to support any of the jury's findings. He challenges the legal sufficiency of the

evidence with respect to the claim for abuse of process . With respect to all counterclaims except

abuse of process, Montemayor contends in the alternative that evidence is

"insufficient" to sustain the jury's findings, without specifying

whether he challenges the legal or the factual sufficiency of the

evidence.

Inasmuch

as Montemayor's prayer requests first that we reverse and render and, in the

alternative, that we reverse and remand, we construe the issues to challenge

the legal and factual sufficiency of the evidence for findings related to

defamation, intentional infliction of emotional distress, malicious

prosecution, punitive damages, and mental anguish. When both legal and factual sufficiency

challenges are raised on appeal, the court must first examine the legal

sufficiency of the evidence. See

Glover v. Tex. Gen. Indem. Co. , 619 S.W.2d 400, 401 (Tex. 1981) (per

curiam).

1 No Evidence B Legal Sufficiency

We

address legal-sufficiency challenges as either "no-evidence" or

"matter-of-law" issues. Gooch v. Am. Sling Co. , 902 S.W.2d 181,

183-84 (Tex. App. B Fort Worth 1995, no

writ). We analyze the issue as a

"no-evidence" challenge when, as here, the party complaining on

appeal did not bear the burden of proof at trial. Id.

In

challenging the legal sufficiency of the evidence to support a finding on which

an adverse party, here Ortiz, bore the burden of proof, the appellant must show

the record presents no evidence to support the adverse finding. Croucher v. Croucher, 660 S.W.2d 55,

58 (Tex. 1983).

The final test for legal sufficiency must always be

whether the evidence at trial would enable reasonable and fair‑minded

people to reach the verdict under review.

Whether a reviewing court begins by considering all the evidence or only

the evidence supporting the verdict, legal‑sufficiency review in the

proper light must credit favorable evidence if reasonable jurors could, and

disregard contrary evidence unless reasonable jurors could not."

City of Keller v. Wilson , 168 S.W.3d 802, 827 (Tex. 2005). We will review the evidence "in the

light most favorable to the verdict, disregarding all contrary evidence that a

reasonable jury could have disbelieved."

Ysleta Indep. Sch. Dist. v. Monarrez , 177 S.W.3d 915, 917 (Tex.

2005) (per curiam). If the evidence

presented at trial would permit reasonable and fair-minded people to differ in

their conclusions, then jurors must be allowed to do so. Keller , 168 S.W.3d at 822 . The trier-of-fact, whether the trial court or

the jury, remains the sole judge of the credibility of the witnesses and the

weight to be given to their testimony. Id. at 819. It may choose to believe one witness and

disbelieve another, and a reviewing court cannot impose its own opinions to the

contrary. Id . "A reviewing

court cannot substitute its judgment for that of the trier-of-fact, so long as

the evidence falls within this zone of reasonable disagreement." Id . at 822. "[T]he court must consider evidence in

the light most favorable to the verdict, and indulge every reasonable inference

that would support it. But if the evidence

allows of only one inference, neither jurors nor the reviewing court may

disregard it." Id .

We

overrule a legal-sufficiency issue if the record reflects any evidence of

probative force to support the finding. ACS

Investors, Inc. v. McLaughlin , 943 S.W.2d 426, 430 (Tex. 1997). We sustain a legal-sufficiency challenge when

(1) the record establishes the complete absence of evidence of a vital fact,

(2) the court is barred by rules of law or of evidence from giving weight to

the only evidence offered to prove a vital fact, (3) the evidence offered to

prove a vital fact is no more than a mere scintilla, or (4) the evidence

conclusively establishes the opposite of a vital fact. Marathon

Corp. v. Pitzner , 106 S.W.3d 724,

727 (Tex. 2003) (per curiam); Merrell Dow Pharms., Inc. v. Havner , 953 S.W.2d 706, 711

(Tex. 1997); Hines v. Comm'n for Lawyer Discipline , 28 S.W.3d 697,

701 (Tex. App. B Corpus Christi 2000,

no pet.). If there is more than a

scintilla of evidence to support the finding, the legal-sufficiency challenge

fails. Formosa Plastics Corp. USA v.

Presidio Eng'rs & Contractors, Inc. , 960 S.W.2d 41, 48 (Tex.

1998).

The

evidence is no more than a scintilla and, in legal effect, is no evidence

"[w]hen the evidence offered to prove a vital fact is so weak as to do no

more than create a mere surmise or suspicion of its existence." Kindred v. Con/Chem, Inc ., 650 S.W.2d

61, 63 (Tex. 1983). Suspicion linked to

other suspicion produces only more suspicion, not some evidence. Pitzner , 106 S.W.3d at 727-28 ; Browning-Ferris, Inc.

v. Reyna ,

865 S.W.2d 925, 928 (Tex. 1993).

Similarly, an inference stacked only on other inferences is not legally

sufficient evidence. Pitzner ,

103 S.W.3d at 728. Conversely, more than

a scintilla exists when the evidence "rises to a level that would enable

reasonable and fair-minded people to differ in their conclusions." Transp. Ins. Co. v. Moriel , 879 S.W.2d

10, 25 (Tex. 1994). We reverse and render judgment

when we sustain a legal-sufficiency point.

Vista Chevrolet, Inc. v. Lewis , 709 S.W.2d 176, 177 (Tex. 1986)

(per curiam); Heritage Res., Inc. v. Hill , 104 S.W.3d 612, 619 (Tex.

App. B El Paso 2003, no pet).

2. Factual Sufficiency

When

reviewing a jury verdict to determine the factual sufficiency of the evidence,

the party attacking a finding on which an adverse party bore the burden of

proof must show that the record presents "insufficient evidence" to

support the finding. Gooch , 902

S.W.2d at 184 . We examine and consider

all the evidence. Maritime Overseas

Corp. v. Ellis , 971 S.W.2d 402 , 406‑07 (Tex. 1998). If we reverse a trial court's judgment on

factual‑sufficiency grounds, we detail all of the evidence relevant to

the issue and articulate why the finding is factually insufficient. Maritime Overseas Corp ., 971 S.W.2d at

407 . We reverse and remand for a new

trial when we sustain a factual‑sufficiency point. Glover , 619 S.W.2d at 401 .

C. Analysis B The Counterclaims

1. Abuse of Process

Montemayor

sought and obtained a temporary restraining order from the trial court to

enjoin Ortiz, Celada, and Fernandez from hiding or secreting assets of Schor's,

pending further ruling by the trial court on the nature of that property. Montemayor also sought and obtained an order

from the trial court ordering the appointment of a receiver for the principal

purpose of doing an inventory of Schor's assets and accounts.

Ortiz

contends that it was the process used in securing the ex parte appointment

of the receiver that was wrongful.

Montemayor proceeded ex parte and is alleged to have submitted false

oaths and fatally defective pleadings reflecting that dissipation of the assets

of Schor's was threatened if quick action were not taken, despite the fact that

Montemayor knew of nothing to suggest risk of immediate dissipation or flight

by Ortiz. [10] Ortiz contends that the alleged

misrepresentations in the affidavits constituted a wrongful use of the court

system and an abuse of process. [11] As noted, no interlocutory appeal was ever

taken and the motion to vacate the receivership was not filed until October 18,

2002. Ortiz raises no allegations that

the receiver acted outside the parameters of the court order or made false or

wrongful comments to customers. The jury

found that by obtaining the ex parte receivership and/or the ex parte temporary

restraining order, Montemayor engaged in abuse of process which proximately

caused damages to Ortiz.

Elements

of a claim for the tort of abuse of process include (1) an illegal, improper,

or perverted use of the process, neither warranted nor authorized by the

process, (2) an ulterior motive or purpose in exercising such use, and (3)

damage as a result of the illegal act. Graham

v. Mary Kay, Inc ., 25 S.W.3d 749, 756 (Tex. App. B Houston [14th Dist.]

2000, pet denied). Montemayor, in issue

5, charges that none of these elements were established by Ortiz at trial.

Abuse

of process is the malicious misuse or misapplication of process in order to

accomplish an ulterior purpose. Baubles

& Beads v. Louis Vuitton, S.A. , 766 S.W.2d 377, 378 (Tex. App. B Texarkana 1989, no

writ) (citing Restatement (Second) of

Torts ' 682 (1977); W. Keeton, Prosser and Keeton on The Law of

Torts ' 6 (5th ed.

1984)). However, the critical aspect of

this tort remains the improper use of the process after it has been

issued. Graham , 25 S.W.3d

at756. Abuse of process exists where the

original process is used to accomplish an end other than that which the writ

was designed to accomplish. Bossin v.

Towber , 894 S.W.2d 25, 33 (Tex. App. B Houston [14th Dist.]

1994, writ denied); see also Baubles & Beads , 766 S.W.2d at 378 ); Martin

v. Trevino , 578 S.W.2d 763, 769 (Tex. Civ. App. B Corpus Christi 1978,

writ ref'd n.r.e.). Therefore, although

the tort of abuse of process requires a showing that Montemayor lacked probable

cause to institute proceedings, the ulterior motive required by that second

element does not supplant, supersede, or substitute for the illegal or improper

use of process required by the first element.

McCall v. Tana Oil and Gas Corp ., 82 S.W.3d 337, 348-49 (Tex.

App. B Austin 2001), rev'd

in part on other grounds , 104 S.W.3d 80 (Tex. 2003). Both elements must be established along with

the third. Id . (citing RRR

Farms, Ltd. v. Am. Horse Prot. Ass'n, Inc. , 957 S.W.2d 121, 134 (Tex. App. B Houston [14th Dist.]

1997, pet. denied)); Baubles & Beads , 766 S.W.2d at 378‑79; Martin ,

578 S.W.2d at 769 .

Where

process is used for the purpose for which it is intended, even though

accomplished by an ulterior motive, no abuse of process has occurred. Baubles & Beads , 766 S.W.2d at 379 . [12] "If wrongful intent or malice caused the

process to be issued initially, the claim is instead one for malicious

prosecution." Bossin , 894

S.W.2d at 33 . [13]

We

conclude there is no evidence of abuse of process and sustain Montemayor's

fifth issue on appeal.

2. Malicious Prosecution

In

his eighth issue, Montemayor alleges that no evidence or insufficient evidence

existed to sustain a jury finding of malicious prosecution. Malicious prosecution is "generally

available against one who maliciously caused process to issue and without

probable or reasonable cause." Martin ,

578 S.W.2d at 769 . To prevail in a suit

alleging malicious prosecution of a civil claim, the plaintiff must establish

(1) the institution or continuation of civil proceedings against the plaintiff,

(2) by or at the insistence of the defendant, (3) malice in the commencement of

the proceeding, (4) lack of probable cause for the proceeding, (5) termination

of the proceeding in plaintiff's favor, and (6) special damages. Tex. Beef Cattle Co. v. Green , 921

S.W.2d 203, 207 (Tex. 1996). Among other

things, Montemayor urges that Ortiz failed to establish that the allegedly

wrongful action had terminated in her favor.

Ortiz argues that the order setting aside the receivership is sufficient

to satisfy this element. [14]

A

judgment can be considered final for purposes of issue and claim preclusion

prior to the taking of an appeal. Id . However, this rule is not extended to the

malicious prosecution context.

Far from relieving

litigants and the judicial system of repetitive lawsuits with the possibility

of inconsistent results, we believe that extension of the Scurlock [15]

rule to malicious prosecution cases would actually promote repetitive and

unnecessary litigation because it would allow the plaintiff to prosecute a

claim only to have it rendered meaningless if later all or part of the appeal

of the underlying action is decided adversely.

Id . at 207-08. Accordingly,"an underlying civil suit

has not terminated in favor of a malicious prosecution plaintiff until the

appeals process for that underlying suit has been exhausted." Id .

Here,

the first order for partial summary judgment (that the claim was for one of

debt) issued on February 21, 2003; the second order for partial summary

judgment (dealing with the nature of the Schor's property) issued on May 27,

2003. On August 11, 2003, an order was

entered severing that portion of the case from Ortiz's claims for damages. The damage claims proceeded to trial in cause

number 2002-08-4040-B. Subsequent to the

jury verdict in that matter, the parties returned to court and Ortiz sought and

obtained attorneys' fees in the declaratory judgment action under the original

cause number, 2002-05-2004-B. Final

judgment in the matter involving the damage claims issued February 5,

2004. No final judgment in the

declaratory judgment action issued until April 19, 2004, following the trial on

the issue of attorneys' fees. Clearly,

the declaratory judgment portion of the suit had not terminated in Ortiz's

favor prior to the jury verdict and judgment awarding her damages for malicious

prosecution. Moreover, both matters are

before this court on appeal simultaneously.

We

conclude that the claim for malicious prosecution is premature, inasmuch as

there is no evidence that the prosecution complained of, and on which the

findings were based, had fully terminated in favor of Ortiz at the time the

matter was presented to the jury. [16] We sustain Montemayor's eighth issue on

appeal.

3. Defamation

To

recover for defamation, a private plaintiff must prove that the defendant (1)

published a statement, (2) that was defamatory to the plaintiff, (3) while

acting negligently as to the truth of the statement. WFAA‑TV, Inc. v. McLemore , 978

S.W.2d 568, 571 (Tex. 1998). A statement

is defamatory if it tends to injure one's reputation, exposing one to public

hatred, contempt, or ridicule, or financial injury or to impeach any person's

honesty, integrity, virtue, or reputation. Tex. Civ. Prac. & Rem. Code Ann . ' 73.001 (Vernon

2005). Libel is defamation expressed in

written form. Id . Slander is a defamatory statement that is

orally communicated or published to a third person without legal excuse. Randall's Food Mkts., Inc. v. Johnson ,

891 S.W.2d 640, 646 (Tex. 1995).

Montemayor, in his sixth issue, complains that Ortiz tendered no

evidence or insufficient evidence that he published any false or defamatory

statements damaging her or her business, Schor's. [17]

The

jury charge inquired whether defendants [Montemayor] "published or caused to

be published, through their acts, statements or conduct, a defamatory Ex Parte

Temporary restraining order and defamatory Ex Parte Receivership over Becky

Ortiz, by engaging in conduct that was a proximate cause of injury to

her." [18] Definitions were included for libel, a

defamatory statement, publication, negligently, and intentionally.

Ortiz

bore the burden to show that Montemayor published the defamatory remarks that

damaged her. WFAA-TV , 978 S.W.2d

at 571 . Ortiz alleges that the appointment

of the receiver itself was defamatory.

Communications made in the due course of a judicial proceeding will not

serve as the basis of a civil action for libel or slander, regardless of the

negligence or malice with which they are made.

James v. Brown , 637 S.W.2d 914, 916 (Tex. 1982). This privilege extends to any statements made

by the judges, jurors, counsel, parties, or witnesses, and attaches to all

aspects of the proceedings, including statements made in open court, pre‑trial

hearings, depositions, affidavits, and any of the pleadings or other papers in

the case. Id. at 916‑17. The privilege extends to statements made in

contemplation of and preliminary to judicial proceedings. Watson v. Kaminski , 51 S.W.3d 825, 827

(Tex. App. B Houston [1st Dist.]

2001, no pet.). The Supreme Court has

also determined that a defense of legal justification will not be nullified

even by a finding of actual malice. Tex.

Beef Cattle , 921 S.W.3d at 205.

"Whatever a man has a legal right to do, he may do with impunity,

regardless of motive, and if in exercising his legal right in a legal way

damage results to another, no cause of action arises against him because of a

bad motive in exercising the right."

Id . at 211. "Improper

motives cannot transform lawful actions into actionable torts." Id .

Consequently, actions taken or statements made in conjunction with

pursuit of a temporary restraining order or appointment of a receiver will not

support a claim for defamation as a matter of law. See James , 637 S.W.2d at 916 .

Ortiz

also alleges a second source of defamation, "general rumors." Montemayor urges that the alleged rumors were

(1) "too vague" to meet the element of "falsity," and (2)

could not be attributed to him. Ortiz

testified:

A: We immediately got calls from people. I mean, customers calling in, if we were

having a sale B if Schor's was

closing. "What will you do if

Schor's is closing? Where will we

buy?" You know B I mean, we had people

that thought that the Montemayors were going to be owning the store. "Oh

Becky the store will never be the same without you owning the store." It was constant. It was people coming, last week. To this day,

people are still, "How's everything going?" . . .

Q: Let's talk about other things that you saw in

the store in the time once Mr. Ransome had come in. Tell us about customers that you B that you've never seen

before that came in after that. Tell us

about that.

A: Well, I noticed B I guess that it was

that week, . . . and I just noticed people that I had never seen before, come

into the store, coming in just to kind of see. "We heard the rumors. Something big was happening at Schor's. Schor's is in trouble." And they would

come in just out of curiosity. . . . We

knew by the way they came in, and the way they were looking to see B okay B "What's this big

thing that is happening at Schor's." I mean, it was just very obvious.

Ortiz also testified

as follows:

Q: And isn't it true, Mrs. Ortiz, that you have

testified before that neither Xavier Montemayor nor Tommy Graham ever said

anything bad about your business?

A: I don't know if they have or not. I don't think that they would say

anything. I can't imagine anything. I don't know.

Q: That you have knowledge of.

A: I have no knowledge that they said anything

to me directly, no.

Q: And what you told this jury, you are not

saying that they went out to the public and said something bad about your

business, or disparage[d] it, or put it down in any form?

A: No. Just

indirectly with the receivership.

Q: And that is just because of the receivership,

but they never said anything to anybody?

A: No.

It's B it's the act of the

receivership.

Q: Now, isn't it true, that you testified that

what you did hear Mr. Montemayor say, was, that he didn't want to harm your

business, he didn't want to take your store, and he didn't want anything to do

wtih that. You did hear that?

A: Yes, I did.

Q: That's what he said?

A: Uh-huh.

Q: Is that accurate?

A: That's accurate, that's what I heard he said.

Q: Do you recall testifying that Mr. Ransome B that you did not know

whether Mr. Ransome had ever said anything false that damaged your business B that damaged you, or

your business?

A: No. I

mean, I know that he told people about what was going on at the store.

Q: But do you recall testifying, that as far as

you knew, you did not know of anything false that he said that damaged you, or

your business?

A: No

Q: Is that accurate?

A: That's accurate.

Q: And isn't it likewise for Mr. Graham that you

did not know of anything that he said false, that damaged your business?

A: I don't.

Q: Is that correct?

A: No.

Except for the receivership.

That's it.

Nothing

in this testimony confirms that Montemayor was the source of any of the alleged

rumors; nothing identifies any defamatory statements that could be attributed

to either Montemayor, Graham, or the receiver.

The fact that a receiver was in the store taking an inventory was not a

rumor, but truth, and therefore communication of that fact could not have

constituted defamation. [19] Further, we have concluded that the claims

for abuse of process and malicious prosecution cannot stand; therefore they

will not support a claim for defamation.

While

we agree that a conditional or qualified privilege can be defeated with a

finding of actual malice at the time of publication, see Randall's Food

Mkts. , 891 S.W.2d at 646 , the privilege in the context of judicial

proceedings is absolute.

Any communication,

oral or written, uttered or published in the due course of a judicial

proceeding is absolutely privileged and cannot constitute the basis of a civil

action in damages for slander or libel. The falsity of the statement or the

malice of the utterer is immaterial, and the rule of nonliability prevails even

though the statement was not relevant, pertinent and material to the issues

involved in the case.

Reagan v. Guardian

Life Ins. Co. , 166 S.W.2d 909, 912 (Tex. 1942).

The privilege extends to pre-trial proceedings, including affidavits

filed with the court. Bird v. W.C.W. ,

868 S.W.2d 767, 771 (Tex. 1994). A

witness is absolutely privileged to publish defamatory matter concerning

another in communications preliminary to a proposed judicial proceeding or as

part of a judicial proceeding in which he is testifying, if it has some

relation to the proceeding. Id . "[A]n absolute privilege confers

immunity regardless of motive whereas a conditional privilege may be lost if

the actions of the defendant are motivated by malice." Hurlbut , 749 S.W.2d at 768.

Here,

all alleged defamatory conduct arises solely in the context of judicial

proceedings, or in conjunction with the appointment or presence of the

receiver. There are no allegations that

the receiver made statements to the public, outside of announcing his

court-appointed role, which would obviate the privilege. Further, in any event, there must still be a

defamatory statement that was published and that is directly attributable to

the defendants. There is no evidence

attributing such a statement to any of the appellants, or to the receiver. Allegations of rumors generated by the

presence of the receiver, that cannot be attributed to a wrongful or defamatory

statement by appellants, will not suffice.

We

conclude the evidence for the claim of defamation is legally insufficient, and

sustain Montemayor's sixth issue on appeal.

4. Intentional Infliction of

Emotional Distress

In

his seventh issue, Montemayor challenges the award of damages for intentional

infliction of emotional distress, contending that Ortiz tendered either no

evidence or insufficient evidence of either "extreme and outrageous"

conduct or "severe emotional distress."

To

recover damages for this type of tort, a plaintiff must establish that (1) the

defendant acted intentionally or recklessly, (2) the defendant's conduct was

extreme and outrageous, (3) the defendant's actions caused the plaintiff

emotional distress, and (4) the resulting emotional distress was severe. Hoffman-LaRoche, Inc. v. Zeltwanger ,

144 S.W.3d 438 , 445 (Tex. 2004) (citing Standard Fruit & Vegetable Co.

v. Johnson , 985 S.W.2d 62, 65 (Tex. 1998)).

This tort is, first and foremost, a "gap‑filler" tort,

judicially created for the limited purpose of allowing recovery in those rare

instances in which a defendant intentionally inflicts severe emotional distress

in a manner so unusual that the victim has no other recognized theory of redress. Creditwatch, Inc. v. Jackson, 157

S.W.3d 814, 816 (Tex. 2005) (citing Zeltwanger, 144 S.W.3d at 447 ). The tort's "clear purpose" is

"to supplement existing forms of recovery by providing a cause of action

for egregious conduct" that might otherwise go unremedied. Id .

However, this "gap‑filler" tort "should not be

extended to circumvent the limitations placed on the recovery of mental anguish

damages under more established tort doctrines." Zeltwanger, 144 S.W.3d at 447 .

Extreme

and outrageous conduct is conduct "so outrageous in character, and so

extreme in degree, as to go beyond all possible bounds of decency, and to be

regarded as atrocious, and utterly intolerable in a civilized

community." Zeltwanger , 144

S.W.3d at 445 (citing Twyman v. Twyman , 855 S.W.2d 619, 621 (Tex. 1993);

Restatement (Second) of Torts ' 46 cmt. d

(1965)). Liability does not extend to

mere insults, indignities, threats, annoyances, petty oppressions, or other

trivialities. Id . (citing GTE

Southwest, Inc. v. Bruce , 998 S.W.2d 605, 612 (Tex. 1999); Restatement (Second) of Torts ' 46 cmt. d (1965)). [20] Emotional distress includes all highly

unpleasant mental reactions such as embarrassment, fright, horror, grief,

shame, humiliation, and worry. GTE

Southwest, Inc., 998 S.W.2d at 618 (citing Washington v. Knight , 887

S.W.2d 211, 216 (Tex. App. B Texarkana 1994, writ

denied); Havens v. Tomball Cmty. Hosp ., 793 S.W.2d 690, 692 (Tex. App. B Houston [1st Dist.]

1990, writ denied)). Severe emotional

distress is distress that is so severe that no reasonable person could be

expected to endure it. Id .

Montemayor

alleges that no extreme or outrageous conduct occurred; instead, he sought only

the appointment of a receiver to inventory Schor's assets and accounts based

upon the legal presumption that all properties held by married persons are

"jointly managed community properties." Montemayor relied upon the advice of counsel

and acted with approval of a state district judge in obtaining the relief. He urges that the filing of suit and the use

of legal process issued by the court do not support a claim for intentional

infliction of emotional distress.

Ortiz

confirmed she had testified that neither Graham nor Montemayor exhibited any

ill will or malice toward her, but that she later "corrected" that

testimony. She believed they engaged in

illegal or unlawful activity specifically to harm her and to force her family

to pay Celada's debt. She agreed

Montemayor told her he didn't want to harm her, but felt she was being used as

a "punching bag" for her husband and father-in-law. She testified this wasn't her debt, and she

never borrowed from Montemayor. Ortiz

confirms in her testimony that it was the act of securing the receivership that

caused her the distress and humiliation.

It has not been enough

that the defendant has acted with an intent which is tortious or even criminal,

or that he has intended to inflict emotional distress, or even that his conduct

has been characterized by 'malice,' or a degree of aggravation which would

entitle the plaintiff to punitive damages for another tort.

Brewerton v.

Dalrymple, 997 S.W.2d 212, 215 (Tex. 1999)

(citing Twyman , 855 S.W.2d at 621-22 ).

"The conduct must be "so outrageous in character, and so

extreme in degree, as to go beyond all possible bounds of decency, and to be

regarded as atrocious, and utterly intolerable in a civilized community." Id .; see also GTE Southwest, Inc. ,

998 S.W.2d at 616 (holding that "it is not enough that the defendant has

acted with an intent that is tortious, malicious, or even criminal, or that he

has intended to inflict emotional distress;" the conduct itself must be

extreme and outrageous).

The

Restatement (Second) of Torts ' 46 cmt. d (1965)

provides some illustrations of the type of conduct that might be considered

sufficiently extreme and outrageous.

These include (a) a practical joke suggesting another's spouse has been

severely injured in an accident; (b) accusations made in front of others that

an employee has violated territorial restrictions, followed by a public demand

to tender all proceeds therefrom or risk being beaten up, having his truck

destroyed, and being put out of business; and (c) giving a woman a bathing suit

known to dissolve in water, causing her extreme embarrassment when she goes

swimming in the presence of new male and female acquaintances. [21] See id. Additional examples of extreme and outrageous

conduct arise where an actor is in a position of actual or apparent authority

over the other: (a) a private detective

presenting himself as a police officer and threatening arrest on charges of

espionage unless certain letters are surrendered; (b) a school principal

accusing a student of immoral conduct, bullying her for an hour, and then

threatening prison and public disgrace; and (c) a creditor trying to collect a

debt by forwarding letters reviling debtor as a deadbeat, dishonest, a

criminal, and threatening lightening strikes, suits (that are never filed),

garnishment of wages, disruption at his job until he is discharged, as well as

physical threats. See id .,

cmt. e. An example of conduct that does

not rise to the level of extreme and outrageous is a creditor seeking to

collect on a debt, calling debtors names, speaking in a rude and insolent

manner, and indicating loss of trust. Id .,

cmt. f.

Here,

we are faced with a situation in which a person was sent into a business to

inventory goods, with the authority to monitor sales and purchases, but who was

never rude, insolent or interfering (other than by his mere presence and

authority). Moreover, the presence of

this individual was court-sanctioned, and he never exceeded the parameters of

his appointment. We are unable to

conclude that the pursuit of a remedy through legal process, however invasive,

or even injurious, constitutes outrageous conduct beyond the bounds of decency,

such as that which must be established to recover for intentional infliction of

emotional distress. A party "must

have latitude to exercise these rights in a permissible way, even though

emotional distress results." City

of Midland v. O'Bryant , 18 S.W.3d 209, 217 (Tex. 2000) (citing GTE

Southwest, Inc ., 988 S.W.2d at 612 ); see also Gaspard v. Beadle , 36

S.W.3d 229, 237-38 (Tex. App. B Houston [1st Dist.]

2001, pet. denied).

The

Supreme Court found no evidence of extreme and outrageous conduct where

university administrators and employees made negative comments in a professor's

tenure file, denied the professor tenure, restricted his speech about his

tenure file, and assigned him an allegedly excessive course load. Brewerton , 997 S.W.2d at 216 . Wrongful

termination alone does not constitute extreme and outrageous conduct. Southwestern Bell Mobile Sys., Inc. v.

Franco , 971 S.W.2d 52, 54 (Tex. 1998).

Ordering an employee to immediately leave the premises, with a security

guard escort, does not rise to the level of extreme and outrageous

conduct. Wornick Co . v. Casas ,

856 S.W.2d 732, 735 (Tex. 1993). A

company investigation, even assuming it used unethical methods, including false

implications that the police believed there may have been criminal activity and

contacts with other competing companies, the resulting termination of the

employee, and his inability to find another job, constituted no evidence of

extreme and outrageous conduct. Tex.

Farm Bureau Mut. Ins. Co. v. Sears , 84 S.W.3d 604, 611 (Tex. 2002).

[A]lthough a

defendant's motive or intent is relevant to an intentional infliction of

emotional distress claim, it is not enough to support liability. Rather,

"the conduct itself must be extreme and outrageous." Accordingly, any punitive intent or personal

vendetta underlying Farm Bureau's post‑termination acts will not,

standing alone, support an extreme and outrageous finding. Instead, we must examine Farm Bureau's conduct.

Id . (citations omitted).

In Sears , evidence reflected that there was a reasonable belief that

Sears was involved in some suspicious dealings; to find the resulting

investigation was extreme or outrageous "would be tantamount to imposing

liability for negligent infliction of emotional distress, a cause of action

that Texas does not recognize." Id . The court concluded there was no evidence of

extreme or outrageous conduct. See

also Creditwatch , 814 S.W.2d at 817 n.20 (citing Sears , 84 S.W.2d at

612 (concluding that even a personal vendetta can be insufficient to constitute

intentional infliction of emotional distress if the act taken was not

outrageous)).

We

reach the same conclusion here. There

was ample evidence before the court that Montemayor, whether or not

incorrectly, held a bona fide belief that the property of Shor's was community

property, and therefore accessible to him as a creditor. There is evidence that Celada had, in the

past, taken steps to evade satisfaction of the outstanding debt. The complained-of conduct, alleged to have

been extreme and outrageous, consisted of a remedy sought through the court

system. The conduct was sanctioned by

court order. There was no allegation of

conduct outside the parameters of that prescribed by the court; instead

argument was solely that the receivership was wrongfully secured.

We

note the supreme court did find extreme and outrageous conduct in GTE

Southwest , Inc. , 998 S.W.2d at 617 , where the supervisor regularly

assaulted, intimidated, and threatened employees, creating a "den of

terror" through a pattern of ongoing harassment and abuse. We find no evidence of such extreme conduct

in the record before us. We conclude

there is no evidence of extreme and outrageous conduct, such that a claim for

intentional infliction of emotional distress cannot be maintained. We sustain Montemayor's seventh issue on

appeal. [22]

5. Malice and Punitive Damages

The

jury determined that harm to Ortiz resulted from malice by both Graham and Montemayor. The charge included a definition of clear and

convincing evidence, and a definition for malice. [23] In the supplemental charge, the jury assessed

exemplary damages for that malicious conduct in the amount of $75,000 against

Montemayor, and $100,000 against Graham.

We

cannot ignore that the finding of malice and the awards for punitive damages

were predicated upon findings of tortious conduct by Montemayor. The purpose of punitive damages is to

"punish the defendant" and "for the added purpose of protecting

the public by [deterring] the defendant and others from doing such wrong in the

future." Moriel , 879 S.W.2d

at 27 (citing Pac. Mut. Life Ins. Co. v. Haslip , 499 U.S. 1, 19

(1991)).

The

jury instruction properly provided that the jury should consider the nature of

the wrong, the character of the conduct, the degree of culpability, the

situation and sensibilities of the parties concerned, and the extent to which

such conduct offends a public sense of justice and propriety. [24] All considerations, however, were predicated

upon a finding of wrongdoing. Inasmuch

as we have sustained Montemayor's issues on appeal relating to abuse of

process, malicious prosecution, defamation, and intentional infliction of

emotional distress, we conclude that there is no basis to award punitive

damages. "Without evidence of

actual damages, punitive damages cannot be recovered." Saenz v. Fid. & Guar. Ins.

Underwriters , 925 S.W.2d 607, 614 (Tex. 1996). Accordingly, we sustain Montemayor's ninth

issue on appeal. [25]

6. Mental Anguish

Mental

anguish damages may not be awarded without either "direct evidence of the

nature, duration, or severity of [plaintiffs'] anguish, thus establishing a

substantial disruption in the plaintiffs' daily routine," or other

evidence of "'a high degree of mental pain and distress' that is 'more

than mere worry, anxiety, vexation, embarrassment, or anger.'" Id. at 614 . These types of damage awards are designed to

compensate non-economic losses. Moore

v. Lillebo , 722 S.W.2d 683, 687 (Tex. 1986). However, being a measure of damages and not a

finding of liability, mental anguish damages must also be predicated upon a

finding of wrongdoing. "Mental

anguish consists of the emotional response of the plaintiff caused by the

tortfeasor's conduct." Birchfield

v. Texarkana Mem. Hosp ., 747 S.W.2d 361, 368 (Tex. 1987). Where there is no tortious conduct, such an

award cannot stand. Accordingly, we

sustain Montemayor's tenth issue on appeal, without reaching whether or not the

evidence was sufficient to support the jury's finding, had an underlying tort

been established.

7. Sufficiency of Evidence B Lost Profits, Damage

to Reputation

Because

of our conclusions with respect to Montemayor's fifth, sixth, seventh, and

eighth issues, we do not reach his eleventh issue, involving sufficiency of the

evidence for any causal connection between alleged lost profits and an act or

omission of Montemayor, or his twelfth issue, involving sufficiency of the

evidence to support an award for damage to reputation. Tex.

R. App. P. 47.1.

IV. Conclusion

We

affirm the trial court's rulings relating to the motions for summary judgment

as reflected in appeal number 13-04-358-CV.

We reverse the trial court's judgment in appeal number 13-04-224-CV,

based upon either no evidence to support the findings, and render that Ortiz

take nothing.

ERRLINDA CASTILLO

Justice

Concurring Opinion by

Justice Linda Reyna

Yañez

Opinion delivered and

filed this

the 20th day of July,

2006.

[1] The trial court was required to

determine that the judgment was still valid and had not lapsed; it found that

sufficient writs of execution were issued during the interim time to maintain

its viability.

[2] Graham testified that he formed a

belief in 1994-1995 that Schor's was community property. He testified that in 1995, the amount of

principal and interest owed on the judgment was approximately $464,000, but he

had no information and made no inquiry as to the value of Schor's inventory at

that time. He did not pursue Schor's at

that time because he "didn't think there was enough value there to get

into a fight about." Ortiz was not

contacted because they did not want to give any warning that they were going to

try to collect against the community property.

[3] Provisions were also included for

Ortiz to pay her staff and take a salary.

The order also included language reflecting that it could not be used as

evidence or referred to in argument except to enforce its terms,

"including the Defendants' agreement to the appointment of the

receiver."

[4] Determination of whether or not

Ortiz was personally liable is addressed below in conjunction with Montemayor's

issue three.

[5] We note that objections to

Fernandez's discharge in bankruptcy based upon alleged fraudulent conduct were

necessarily filed prior to that court's findings that issued in November

1990. We further note that any findings

of the bankruptcy court were limited to Fernandez, the debtor before it.

[6] Cockerham v. Cockerham , 527

S.W.2d 162, 169 (Tex. 1975), involved application of the predecessor statute

which reads essentially the same as the current section 3.202. See Act of June 2, 1969, 61st Leg.,

R.S., ch. 888, ' 1, sec. 5.61, 1969 Tex. Gen. Laws

2730 .

[7] Tex.

Fam. Code Ann . ' 3.102 (Vernon 1998). See Act of June 2, 1969, 61st Leg.,

R.S., ch. 888, ' 1, sec. 5.22, 1969 Tex. Gen. Laws

2727 .

[8] The jury awarded damages as

follows: (a) $225,000 for past physical pain and mental anguish, (b) zero

dollars for future physical pain and mental anguish, (c) $50,000 for past lost

profits, (d) $10,000 for future lost profits, (e) $50,000 for past damage to

reputation, and (f) zero for future damage to reputation.

[9] "The appointment of a receiver

without notice to the adverse party is one of the most drastic remedies

known," and should be exercised only in extreme cases where the rights are

clearly shown in a verified bill or affidavit and based upon facts and

circumstances rather than opinions and conclusions. Allegations must be verified positively and

not upon information and belief. Wilkenfeld

v. State , 189 S.W.2d 80, 82 (Tex. Civ. App. B Galveston 1945, no writ). Immediate remedy is available by

interlocutory appeal. See Tex. Civ. Prac. & Rem. Code Ann . ' 51.014(a)(1) (Vernon Supp.

2005).

[10] Ortiz also contends the affidavits

were defective inasmuch as they were based upon speculation and

"information and belief," rather than fact.

[11] Montemayor argued at all times

that the threat of dissipation by the other two named defendants, Fernandez and

Celada, was very real. Montemayor did

not urge that Ortiz was the type of person to conceal or hide assets, but

instead that Celada could access Schor's since it was community property,

thereby placing its assets at risk.

Throughout all court proceedings, Montemayor maintained he had a

justifiable belief that Schor's was indeed community property.

[12] See also J.C. Penney Co. v.

Gilford , 422 S.W.2d 25, 31 (Tex. Civ. App. B Houston [1st Dist.] 1967, writ

ref'd n.r.e.) ("[A]n action for abuse of process cannot be maintained

where the process was employed to perform no other function than that intended

by law. The mere issuance of process is

not actionable as an abuse of process.").

[13] Case law addressing the wrongful

issuance of an injunction (which was also claimed in this matter) is also

illustrative. A person can bring two

separate types of causes of action for wrongful injunction, one upon the bond

ordinarily filed to obtain the injunction, and the other for malicious

prosecution. The two actions differ in

the kind of wrong which must be shown to establish liability and in the amount

of recovery. DeSantis v. Wackenhut

Corp ., 793 S.W.2d 670, 686 (Tex. 1990) (superseded by statute on other

grounds).

A cause of action upon an

injunction bond is predicated upon a breach of the condition of the bond. That

condition, as prescribed by Rule 684, Texas Rules of Civil Procedure, is

"that the applicant will abide the decision which may be made in the

cause, and that he will pay all sums of money and costs that may be adjudged

against him if the restraining order or temporary injunction shall be dissolved

in whole or in part." To prevail upon this cause of action, the claimant

must prove that the temporary restraining order or temporary injunction was

issued or perpetuated when it should not have been, and that it was later dissolved. The claimant need not prove that the

temporary restraining order or temporary injunction was obtained maliciously or

without probable cause. The purpose of

the bond is to protect the defendant from the harm he may sustain as a result

of temporary relief granted upon the reduced showing required of the injunction

plaintiff, pending full consideration of all issues. . . . The only other cause of action for wrongful

injunction is for malicious prosecution.

"'It is established by the weight of authority that in the absence

of elements of an action for malicious prosecution no action will lie by the

defendant in an injunction suit, independently of a bond or undertaking, for

damages for the wrongful suing out of the injunction.'" To prevail upon this cause of action the

claimant must prove that the injunction suit was prosecuted maliciously and

without probable cause, and was terminated in his favor.

Id. at 685-86 (citations omitted).

[14] On appeal, Ortiz argues that the

receivership was set aside because it was obtained on false or improper

allegations. The record does not reflect

any such finding.

[15] Scurlock Oil Co. v. Smithwick ,

724 S.W.2d 1, 6 (Tex. 1986).

[16] Further, the appeal on the matter

does not conclude until the issuance of this opinion.

[17] An action for injurious falsehood

or business disparagement is similar in many respects to an action for

defamation. Both involve the imposition

of liability for injury sustained through publications to third parties of a

false statement affecting the plaintiff.

"The two torts, however, protect different interests. The action for defamation is to protect the

personal reputation of the injured party, whereas the action for injurious

falsehood or business disparagement is to protect the economic interests of the

injured party against pecuniary loss."

Hurlbut v. Gulf Atl. Life Ins. Co. , 749 S.W.2d 762, 766 (Tex.

1987). The elements of a claim for

business disparagement are publication by the defendant of disparaging words,

falsity, malice, lack of privilege, and special damages. Prudential Ins. Co. v. Fin. Review Servs.,

Inc ., 29 S.W.3d 74, 82 (Tex. 2000).

Regarding damages, the common law required a plaintiff in a defamation

action to prove special damages in only a limited number of situations, whereas

pecuniary loss to the plaintiff must always be proved to establish a cause of

action for business disparagement. Hurlbut ,

749 S.W.2d at 766 . Here, no separate

question was submitted on business disparagement.

[18] Testimony reflected that Mr.

Ransome was appointed receiver for the sole purpose of conducting an inventory

of the assets of the business. That

process took approximately seven to ten days, ended in June 2002, and he never

returned to the store after that. He did

remain in the position of receiver, with authority to overview transactions and

halt anything that seemed outside of normal day-to-day operations until the

receivership was dissolved in December 2002 (the formal order was signed

January 8, 2003).

[19] Truth is a complete defense to

defamation. Randall's Food Mkts. v.

Johnson , 891 S.W.2d 640, 646 (Tex. 1995).

Proving falsity in a defamation case is the plaintiff's burden of proof;

in such a case, the defendant does not have the burden of proving substantial

truth as an affirmative defense. Hearst

Corp. v. Skeen , 159 S.W.3d 633 , 637 n.1 (Tex. 2005) (per curiam) (citing Bentley

v. Bunton , 94 S.W.3d 561 , 586‑87 (Tex. 2002)).

[20] The jury charge inquired whether

Montemayor intentionally inflicted severe emotional distress, and included

definitions of "extreme and outrageous conduct," and intentional or

reckless conduct. It also included an

instruction that the tort only occurs when the emotional distress suffered was

severe, but it did not define"severe" distress.

[21] Other examples of conduct that

qualifies as extreme and outrageous, as to be atrocious and utterly intolerable

in a civilized society, address circumstances where an actor has knowledge of

another's peculiar susceptibility by reason of some physical or mental

condition and takes advantage of that knowledge to cause the distress. Restatement

(Second) of Torts ' 46 cmt. f (1965).

[22] We pause to address the question

of the severity of Ortiz's distress. The receivership happened at about the

same time she was seeking a divorce from Celada. She testified that when she learned of the

receivership, she was stunned, shocked, and could not talk. She was humiliated; many persons approached

her at various events to express concern and support. She worried about her store closing and that

her reputation, which had been impeccable, was harmed. She felt invaded, abused, and scared. She testified she could not sleep, cried at a

moment's notice, got stomach and chest pains, and felt depressed. She did see her doctor (gynecologist),

complaining of stress and marital discord, and he prescribed sleeping pills and

some anti-depressants. On

cross-examination, she conceded she never visited a psychiatrist, and was told

by another doctor (to whom she also complained about stress due to getting a

divorce) to exercise instead of taking anti-depressants.

As noted above, to prevail on this claim, a

plaintiff must establish that emotional distress is severe. GTE Southwest, Inc. , v. Bruce ,

998 S.W.2d 605, 618 (Tex. 1999).

Feelings of anger, depression, and humiliation are insufficient evidence

of severe distress. Regan v. Lee ,

879 S.W.2d 133, 136-37 (Tex. App. B Houston [14th Dist.] 1994, no writ) (per curiam). Ortriz testified that her embarrassment

hindered her business and her relations with customers during the presence of

the receiver in her office; she testified she experienced sleeplessness, and

some depression. However, she did not

testify that her distress was unendurable.

She testified she carried on because she had to be strong for her

children. The record also reflects that

during the time in which she is alleged to have sustained mental anguish damages,

she worked to maintain her business by focusing more on in-home decorating

services rather than on jewelry sales.

There is no testimony that she was unable to perform well in these

one-on-one relations with her clients and, indeed, her skill in personal

relations appears to be one of the strengths of her business. During this period, business revenues

remained relatively constant, despite alleged disruptions in the store, because

she was able to perform these other services.

We conclude that there is legally insufficient evidence that the

distress she sustained constituted "severe distress" as it is

currently defined.

[23] The charge defined malice to mean

"a specific intent" or "an act or omission" by either

Montemayor or Graham which, "when viewed objectively from the standpoint

of at [sic] the time of its occurrence, involved an extreme degree of risk,

considering the probability and magnitude of the potential harm to others; and

of which Montemayor or Graham had actual subjective awareness of the risk

involved, but nevertheless proceeded with conscious indifference to the rights,

safety or welfare of others."

[24] The charge also permitted

consideration of the net worth of Montemayor and Graham. See Tex.

Civ. Prac. & Rem. Code Ann . ' 41.011 (Vernon 1997).

[25] We do not reach whether evidence

was sufficient to sustain the awards for punitive damages, in the event the

underlying foundational tort were found to exist.