Margaret Landen Saks v. Heinrichs & De Gennaro, P.C

ACCEPTED
04-15-00727-CV
FOURTH COURT OF APPEALS
SAN ANTONIO, TEXAS
12/29/2015 5:19:45 PM
KEITH HOTTLE
CLERK

No. 04-15-00727-CV

FILED IN
4th COURT OF APPEALS
IN THE COURT OF APPEALS FOR SAN ANTONIO, TEXAS
THE FOURTH DISTRICT OF TEXAS 12/29/2015 5:19:45 PM
SITTING AT SAN ANTONIO KEITH E. HOTTLE
Clerk

LAUREN SAKS a/k/a GLORIA
LAUREN NICOLE SAKS,

V

DIANE M. FLORES and SANDRA
GARZA DAVIS f/k/a SANDRA C. SAKS

On Appeal from
Probate Court No. One, Bexar County, Texas
Honorable Kelly Cross, presiding
Trial Court Cause No. 2011-PC-3466

APPELLANT'S BRIEF

Respectfully submitted,

Philip M. Ross
ORAL ARGUMENT REQUESTED State Bar No. 017304200
1006 Holbrook Road
San Antonio, Texas 78218
Phone: 210/326-2100
Email: ross_law@hotmail.com

By: /s/ Philip M. Ross
Philip M. Ross
Attorney for Appellant
Margaret Landen Saks
 IDENTITY OF PARTIES AND COUNSEL

Party: Counsel:

Margaret Landen Saks Philip M. Ross
State Bar No. 17304200
Appellant 1006 Holbrook Road
San Antonio, Texas 78218
Phone: 210-326-2100
Email: ross_law@hotmail.com

Heinrichs & De Gennaro, P.C. Jonathan Yedor
State Bar No. 22151400
Appellee 100 N.E. Loop 410, Suite 1075
San Antonio, Texas 78216
Phone: 210-366-0900
Email: JonathanY@heinrichslaw.com

ii
 TABLE OF CONTENTS

Page

IDENTITY OF PARTIES AND COUNSEL ..………………………… ii

TABLE OF CONTENTS ……………………………………………… iii

INDEX OF AUTHORITIES ………………………………………….. vi

STATEMENT OF THE CASE ……………………………… ………. 2

STATEMENT OF JURISDICTION ………………………………….. 3

STATEMENT REGARDING THE RECORD….……………………… 4

ISSUES PRESENTED …………………………………………………. 4

ISSUE NO. 1 Issue No. 1 Whether the trial court erred by

granting Heinrichs' second amended motion to

strike Landen's plea in intervention.

ISSUE NO. 2 Whether the trial court erred by granting Judgment

Creditor's Motion to Order Disbursement of Funds

from the Registry of the Court in Payment of

Judgment.

STATEMENT OF FACTS AND PROCEDURAL BACKGROUND .. 4

SUMMARY OF ARGUMENT ……………………………………….. 9

STANDARD OF REVIEW ….....................................................………. 11

iii
ARGUMENT AND AUTHORITY ……………...…………………….. 11

ISSUE NO. 1 Whether the trial court erred by granting Heinrichs'
second amended motion to strike Landen's plea in
intervention.
…................. 11

ISSUE NO. 2 Whether the trial court erred by granting Judgment
Creditor's Motion to Order Disbursement of Funds
from the Registry of the Court in Payment of
Judgment
................... 16

CONCLUSION and PRAYER……………………….……………...... 23

CERTIFICATION ……………………...…………………………..… 25

CERTIFICATE OF COMPLIANCE ..…………………….…....…..... 25

CERTIFICATE OF SERVICE …………………………….…...…..... 25

v
 INDEX OF AUTHORITIES

CASES PAGE(S)

Apparel Contractors, Inc. v. Vantage Properties, Inc.
620 S.W.2d 666
(Tex. Civ. App.-Dallas 1981, writ ref'd n.r.e.) …............................ 13

Austin Nursing Center, Inc. v. Lovato
171 S.W.3d 845 (Tex. 2005) …........................................................ 17

Beall v. Helm
50 S.W.2d 460 (Tex. Civ. App.-Fort Worth 1932, writ dism'd) ….. 12

Beutel v. Dallas County Flood Control Dist., No. 1
916 S.W.2d 685 (Tex. App.-Waco 1996, writ denied) …............... 12

Barr v. Resolution Trust Corp.
837 S.W.2d 627 (Tex.1992) …........................................................ 20

Cross, Kieschnick & Co. v. Johnston
892 S.W.2d 435 (Tex.App.-San Antonio, 1994) …...................... 20, 21

Downer v. Aquamarine Operators, Inc.
701 S.W.2d 238 (Tex.1985)) …................................................... 11, 21

Estate of Harley D. Webb, Jr., Deceased.
266 S.W.3d 544 (Civ. App. - Fort Worth 2008) ….......................... 11

Evan's World Travel, Inc. v. Adams
978 S.W.2d 225 (Tex. App.-Texarkana 1998, no pet.) …............... 12

Ginther v. Bank of America, N.A.
No. 01-08-00430-CV (Civ.App.-Houston 1st Dist. 2010,
pet. denied) …........................................................................ 22

Guaranty Fed. Sav. Bank v. Horseshoe Operating Co.
793 S.W.2d 652 (Tex. 1990) …........................................... 12, 14

vi
 CASES PAGE(S)

Huie v. DeShazo
922 S.W.2d 920 (Tex.1996) …............................................... 16

Gibson v. Shaver
434 S.W.2d 462 (Tex. Civ. App.—Tyler 1968, no writ) ….. 35, 36

In re Webb
266 S.W.3d 544 (Tex. App.-Fort Worth 2008, pet. denied) … 14

Intermarque Automotive Products, Inc. v. Stewart Feldman and Marla
Matz
21 S.W.3d 544 (Tex.App.-Texarkana 2000) …........................ 12

Inter-Continental Corp. v. Moody
411 S.W.2d 578 (Tex. Civ. App.-Houston 1966,
writ ref'd n.r.e.) ….................................................................. 13

Interfirst Bank-Houston, N.A. v. Quintana Petroleum Corp.
699 S.W.2d 864 (Tex. App.-Houston [1st Dist.] 1985,
writ ref'd n.r.e.) …......................................................................... 14, 22

Law Offices of Windle Turley, P.C. v. Ghiasinejad
109 S.W.3d 68 (Tex.App.-Fort Worth 2003, no pet.) …................. 11

Mendez v. Brewer
626 S.W.2d 4989 (Tex. 1982) …. 12

Miami Indep. Sch. Dist. v. Moses
989 S.W.2d 871 (Tex. App.-Austin 1999, pet. Denied) …............... 12

Mower v. Boyer
811 S.W.2d 560 (Tex.1991) ….................................................. 20

Rogers v. Searle
533 S.W.2d 440 (Tex. App.-Corpus Christi 1976, no writ) …... 12

vii
 CASES PAGE(S)

Ray Malooly Trust v. Juhl
186 S.W.3d 568 (Tex., 2006) …................................................. 16, 18

Slay v. Burnett Trust
187 S.W.2d 377 (1945) …............................................................... 16

Smith v. Wayman
224 S.W.2d 211 (1949) …............................................................... 16

Wilson v. County of Calhoun
489 S.W.2d 393 (Tex. Civ. App.-Corpus Christi 1972,
writ ref'd n.r.e.) …............................................................................ 13

STATE STATUTES AND RULES PAGE(S)

TEX. CIV. PRAC. & REM. CODE ANN. § 15.0642 …................... 3

TEX. CIV. PRAC. & REM. CODE ANN. § 31.002(b)(1) …........... 21

TEX. CONST. Art. 5, § 6 ….............................................................. 3

TEX. R. APP. P. 25.1(b) …................................................................ 3

TEX. GOV'T CODE § 311.005(2) …................................................. 17

TEX. PROP. CODE § 111.004(4) …............................................... 17, 18

viii
 No. 04-15-00727-CV

IN THE COURT OF APPEALS FOR
THE FOURTH DISTRICT OF TEXAS
SITTING AT SAN ANTONIO

LAUREN SAKS a/k/a GLORIA
LAUREN NICOLE SAKS,

V

DIANE M. FLORES and SANDRA
GARZA DAVIS f/k/a SANDRA C. SAKS

On Appeal from
Probate Court No. One, Bexar County, Texas
Honorable Kelly Cross, presiding
Trial Court Cause No. 2011-PC-3466

APPELLANT'S BRIEF

TO THE HONORABLE JUSTICES OF THE FOURTH COURT OF APPEALS:

COMES NOW, MARGARET LANDEN SAKS ("Landen"), by and through

undersigned counsel, and files this Appellant's Brief and in support thereof would

show:

1
 STATEMENT OF CASE

This case initially arose as a dispute involving alleged mismanagement of

the Saks Children Family Trust (“Trust”), which was filed by Lauren Saks

Merriman (“Lauren”) against her mother Sandra Saks, who was the Settlor, and

her aunt Diane Flores, who was the Trustee. The case was settled in mediation

according to a mediated settlement agreement (“MSA”), which contained an

arbitration clause. When a dispute arose among the parties to the MSA, the trial

court ordered the parties including the three named parties to the suit as well as

Landen and Marcus Rogers, as interim trustee (“Interim Trustee”), to arbitrate the

dispute. Lauren's attorneys A. Chris Heinrichs, J. Barrett Shipp and Heinrichs &

De Gennaro, P.C. (“Heinrichs”) were not parties to the MSA or the arbitration, but

they were awarded fees to be paid by the Trust according to the agreement of the

parties.

The arbitration award was confirmed by the trial court, and Landen filed an

appeal claiming that the Trust had been terminated prior to the MSA and that she

was not a party to the MSA. The Order Confirming the Arbitration Award was

affirmed on appeal. Then, when Heinrichs filed a Judgment Creditor's Motion to

Order Disbursement of Funds from the Registry of the Court in Payment of

Judgment and the Interim Trustee did not object, Landen filed a plea in
2
intervention and objected to payment of Heinrichs' fees by the Trust. Landen's

objection claimed that the Trust was not a party to the MSA or arbitration and

lacked capacity to pay a judgment. Alternatively, the Trust was a spendthrift trust,

which had not been amended, and the Trustee lacked authority to pay a judgment

pursuant to the MSA.

On September 25, 2015, after hearing argument of counsel for the parties,

the trial court struck Landen's plea in intervention and Ordered payment of

Heinrichs' judgment from the registry of the court. Landen submits that the trial

court abused its discretion by striking her intervention and ordering payment of

Heinrichs' fees from the registry of the court. Landen claimed standing and

capacity on behalf of the trustee to object to payment of an unenforceable

judgment by the Trust. Landen timely filed a notice of appeal.

STATEMENT OF JURISDICTION

Appellant files this appeal pursuant to Article V, Section 6 of the Texas

Constitution and TEX. CIV. PRAC. & REM. CODE ANN. § 15.0642. TEX. R.

APP. P. 25.1(b) requires the filing of a notice of appeal, which invokes the

appellate court's jurisdiction. Appellant submits that she has complied with all

conditions precedent to invoking the jurisdiction of the Fourth Court of Appeals.

3
 STATEMENT REGARDING THE RECORD

The Clerk’s Record consisting of one volume plus two supplemental

volumes has been requested and filed. The Reporter's Record consisting of one

volume including transcript of one hearing has been filed.

ISSUE PRESENTED

1 Whether the trial court erred by granting Heinrichs' second amended motion

to strike Landen's plea in intervention.

2 Whether the trial court erred by granting Judgment Creditor's Motion to

Order Disbursement of Funds from the Registry of the Court in Payment of

Judgment.

STATEMENT OF FACTS AND PROCEDURAL BACKGROUND

On January 2, 1991, Sandra Saks (“Sandra”), acting in her capacity as

settlor, created the Saks Children Family Trust a/k/a ATFL&L (“Trust”) for the

benefit of her children including daughters Gloria Lauren Nicole Saks (“Lauren”),

Margaret Landen Corina Saks (“Landen”), and any other children later born to or

legally adopted by Sandra through court proceedings. (CR page 222-252).

Sandra's sister Diane M. Flores (“Diane”) was appointed as Trustee.

Twenty years later, on August 17, 2011, Lauren sued Sandra and Diana in

Cause No. 2011-PC-3466 alleging mismanagement of the Trust and other claims
4
and seeking to remove Diana as Trustee. (CR page 5-13). Lauren was represented

by attorneys A. Chris Heinrichs, J. Barrett Shipp and Heinrichs & DeGennaro,

P.C. (“Heinrichs”).

Diane served as trustee until December 21, 2011, when she gave notice of

termination of the Trust. A few days later, Marcus Rogers (“Interim Trustee”) was

appointed by the trial court to investigate what assets were owned by the Trust and

he was given a nominal title as “Interim Trustee”. (CR page 14-16). Cause No.

2011-PC-3466 was resolved according to a mediated settlement agreement

(“MSA”) on April 2, 2012. (CR page 17; TAB 5).

The MSA included an agreement to pay Heinrichs and Marcus. (CR page

33). However, that agreement was not enforceable against the Trust, which is an

irrevocable spendthrift trust, which has not been amended. (CR page 235, ¶ 4.5).

However, the Interim Trustee neither agreed nor objected to payment of Heinrichs'

fees. (CR page 173). The Trust prohibits both voluntary and involuntary

distributions by or on behalf of the beneficiaries. (CR page 235, ¶ 4.5). Therefore,

Landen submits that neither the trustee nor the trial court has discretion to pay

Heinrichs, and the trustee would be breaching his fiduciary duty to the

beneficiaries if he pays Heinrichs' claim, which is not legally enforceable against

the Trust.
5
 The MSA was approved by an Order of the trial court signed and filed on

May 8, 2012. (CR page 17).

The MSA provided at ¶7 that if one or more disputes arose, the parties

agreed that the dispute would be referred to arbitration in accordance with the

applicable United States Arbitration and Mediation Rules of Arbitration. (Tab 5,

page 3). When a dispute arose between Lauren and Sandra, Lauren requested the

trial court to issue an order waiving the parties' agreement to follow the USA&M

Rules of Arbitration and compelling the parties to attend mediation and

arbitration.

An arbitration hearing was conducted on October 18, 2012 purportedly

pursuant to the provisions of the MSA, and the arbitrator signed an award on

October 18, 2012. (CR page 37). Landen submits that the Arbitration Award was

unenforceable as to the order that the Trust pay attorney's fees to Heinrichs & De

Gennaro, P.C. in the amount of $285,000.00 plus expenses of $12,358.85.00

because the Trust is not an entity, the Trust was not a party, and the Trust is an

irrevocable spendthrift trust. Therefore, Landen submits that Heinrichs' claim for

payment of attorney's fees relating to his contract for legal services as attorney for

Lauren, who is a beneficiary of the Trust, is not collectable against the Trust

because the Trust does not have the capacity to be a judgment debtor.
6
 On May 7, 2013, the trial court signed an Order Confirming Award of

Arbitrator and Final Judgment. (CR page 24-25). Landen submits that the Order

Confirming Award of Arbitrator and Final Judgment was final as to the order that

the Trust pay attorney's fees to Heinrichs & De Gennaro, P.C., but that the Trust

does not have the capacity to be a judgment debtor because it is not a person or

thing, and it is a spendthrift trust. Now, it is too late for Heinrichs to appeal the

final Judgment to change the identity of the judgment debtor.

On July 23, 2015, Heinrichs filed a Judgment Creditor's Motion to Order

Disbursement of Funds from the Registry of the Court in Payment of Judgment.

Heinrichs claims a Judgment against the Trust for $297,358.85 plus accrued

postjudgment interest (through August 5, 2015) in the amount of $34,521.12.(CR

Supplement, page 11). Heinrichs filed an Amended Judgment Creditor's Motion

to Order Disbursement of Funds from the Registry of the Court in Payment of

Judgment on August 24, 2015. (CR pages 128-134). Landen filed her Verified

Plea in Intervention on August 24, 2015. (CR pages 135-144). Heinrichs filed a

Second Amended Judgment Creditor's Motion to Order Disbursement of Funds

from the Registry of the Court in Payment of Judgment on September 17, 2015.

(CR pages 169-175). Heinrichs filed a Motion to Strike Landen Saks' Intervention

on August 28, 2015. (CR pages 149-163).
7
 Landen alleges and would prove that the Trust was not legally obligated to

pay Heinrichs' judgment, which was not legally enforceable against the Trust, but

that Marcus failed or refused to intervene and object to Heinrichs' claim. The

Trust provides as follows:

“4.7 Spendthrift Restriction. Each trust created hereunder is a

spendthrift trust. Accordingly, no beneficiary shall have the power to

anticipate, encumber, or transfer his interest in any trust estate in any

manner. No part of any trust estate shall be liable for or charged with

any debts, contracts, liabilities, or torts of a beneficiary, or subject to

seizure or other process by any creditor of a beneficiary.”

(CR page 235 ¶ 4.7).

Landen alleges and would prove that the trustee breached his fiduciary duty

to the beneficiaries of the Trust by not intervening and objecting to Heinrichs'

claim because the claim was not legally enforceable against the Trust.

Furthermore, payment of such unenforceable claim would reduce the principal of

the Trust, which would also adversely affect the income-producing capacity of the

Trust and corresponding distributions to the beneficiaries.

Therefore, Landen claims a justiciable interest in the Trust, and her

intervention on behalf of the trustee was essential to protecting her interest in the
8
Trust from being dissipated or diluted by the improper payment of an

unenforceable judgment against the Trust. Landen claims a justiciable interest in

protecting the Trust from mismanagement, and her intervention on behalf of the

interim trustee was necessary to protect her interests as a beneficiary because the

interim trustee failed or refused to intervene and object to Heinrichs' claim

The trial court, after considering the pleadings and argument of counsel for

the parties, signed the Order Striking Intervention (CR supplement, pages 4-5) and

Order to Disburse Funds from the Registry of the Court in Payment of Judgment

(CR Supplement, page 6) on September 25, 2015. Landen timely filed her notice

of appeal on the same day.

SUMMARY OF ARGUMENT

Landen submits that the trial court abused its discretion when it signed the

Orders granting Heinrichs' amended motion to strike Landen's plea in intervention.

Landen submits that she was deemed to be a party to the MSA, arbitration award

and judgment confirming the award although she contested these findings on

appeal. Landen also contested the existence of the trust, which she argued had

been terminated prior to the MSA, on appeal. Landen is not contesting these

findings or appealing the prior Judgment Confirming Award of Arbitrator and

Final Judgment, dated May 7, 2013.
9
 Landen submits that she had a right to intervene, when Heinrichs filed his

motion to order disbursement of funds from the registry of the Court to pay his

judgment against the Trust. Landen is a beneficiary of the Trust, and she was

found to be a party to the Judgment Confirming Award of Arbitrator and Final

Judgment, dated May 7, 2013. (CR page 24-25). Landen claimed that disbursing

funds belonging to the Trust would reduce the principal and earning capacity of

the Trust, which would directly and indirectly affect Landen's beneficial interests.

Secondly, Landen submits that the trial court erred by granting Judgment

Creditor's Motion to Order Disbursement of Funds from the Registry of the Court

in Payment of Judgment. Landen submits that Heinrichs was not a party to the

MSA; the interim trustee was not a judgment debtor; the Trust was not amended to

allow payment of a debt incurred by a beneficiary despite the spendthrift

protection; and Heinrichs' judgment against the Trust was not enforceable,

notwithstanding the parties', (not including Rogers as interim trustee), agreement

to pay Heinrichs' and Rogers' fees from the Trust pursuant to the MSA. Landen

also claimed that Heinrichs' claim against the Trust was unenforceable because the

Trust lacks capacity to be a judgment debtor, i.e., the Trust cannot pay a judgment,

and Heinrichs did not get a judgment against the Interim Trustee. Therefore,

Heinrichs lacked standing or capacity to demand payment from the registry of the
10
court.

STANDARD OF REVIEW

Appellate courts review for an abuse of discretion a trial court's

determination on a motion to strike a plea in intervention. Estate of Harley D.

Webb, Jr., Deceased., 266 S.W.3d 544 (Civ. App. - Fort Worth 2008) citing Law

Offices of Windle Turley, P.C. v. Ghiasinejad, 109 S.W.3d 68, 70 (Tex.App.-Fort

Worth 2003, no pet.). To determine whether a trial court abused its discretion, an

appellate court must decide whether the trial court acted without reference to any

guiding rules or principles; in other words, the appellate court must decide

whether the act was arbitrary or unreasonable. Downer v. Aquamarine Operators,

Inc., 701 S.W.2d 238, 241-42 (Tex. 1985), cert. denied, 476 U.S. 1159 (1986).

Merely because a trial court may decide a matter within its discretion in a different

manner than an appellate court would in a similar circumstance does not

demonstrate that an abuse of discretion has occurred. Id.

ARGUMENT AND AUTHORITY

Issue No. 1: Whether the trial court erred by granting Heinrichs'

swcond amended motion to strike Landen's plea in intervention.

The Texas Rules of Civil Procedure provide that "[a]ny party may intervene

Page 549. . . subject to being stricken out by the court for sufficient cause on the
11
motion of any party." TEX. R. CIV. P. 60. Thus, an intervenor is not required to

secure the trial court's permission to intervene; but instead, any party who opposes

the intervention has the burden to challenge it by a motion to strike. Intermarque

Automotive Products, Inc. v. Stewart Feldman and Marla Matz, 21 S.W.3d 544

(Tex.App.-Texarkana 2000) citing Guaranty Fed. Sav. Bank v. Horseshoe

Operating Co., 793 S.W.2d 652, 657 (Tex. 1990).

Once the motion to strike has been filed, the burden then shifts to the

intervenor to show a justiciable interest in the lawsuit. Mendez v. Brewer, 626

S.W.2d 498, 499 (Tex. 1982). The interest asserted by the intervenor may be legal

or equitable in nature, id.; but it must be "greater than a mere contingent or remote

interest." Rogers v. Searle, 533 S.W.2d 440, 442 (Tex. App.-Corpus Christi 1976,

no writ), citing Beall v. Helm, 50 S.W.2d 460 (Tex. Civ. App.-Fort Worth 1932,

writ dism'd). A party has a justiciable interest in a lawsuit, and thus a right to

intervene, when his interests will be affected by the litigation. See Miami Indep.

Sch. Dist. v. Moses, 989 S.W.2d 871, 879 (Tex. App.-Austin 1999, pet. denied);

Evan's World Travel, Inc. v. Adams, 978 S.W.2d 225, 234-35 (Tex. App.-

Texarkana 1998, no pet.). If a party cannot show a justiciable interest in the

lawsuit, the trial court has sufficient cause to strike his plea in intervention. See

Beutel v. Dallas County Flood Control Dist., No. 1, 916 S.W.2d 685, 691 (Tex.
12
App.-Waco 1996, writ denied) (stating that party may intervene if "he has

justiciable interest in the subject matter that makes it necessary or proper for him

to come into the case for his self-protection"); Wilson v. County of Calhoun, 489

S.W.2d 393 (Tex. Civ. App.-Corpus Christi 1972, writ ref'd n.r.e.).

Landen submits that she had a right to intervene in order to protect her

beneficial interests in the Trust, when Heinrichs filed his motion to order

disbursement of funds from the registry of the Court to pay his judgment against

the Trust. Landen is a beneficiary of the Trust, and the trial court confirmed the

arbitrator's finding that Landen was a party to the Judgment Confirming Award of

Arbitrator and Final Judgment, dated May 7, 2013. (CR page 24-25). Landen

claimed that disbursing funds belonging to the Trust would reduce the principal

and earning capacity of the Trust, which would affect Landen's beneficial interest.

Furthermore, even if a party has a justiciable interest, and thus a right to

intervene in a lawsuit, the trial court will still have broad discretion in determining

whether his plea in intervention should be struck. Rogers, 533 S.W.2d at 442;

Inter-Continental Corp. v. Moody, 411 S.W.2d 578, 589 (Tex. Civ. App.-Houston

1966, writ ref'd n.r.e.). The trial court's discretion, however, is not unbridled.

Apparel Contractors, Inc. v. Vantage Properties, Inc., 620 S.W.2d 666, 668 (Tex.

Civ. App.-Dallas 1981, writ ref'd n.r.e.); Inter-Continental Corp., 411 S.W.2d at
13
589. The Texas Supreme Court has held that it is an abuse of discretion to strike a

plea in intervention if (1) the intervenor could have brought the same action, or

any part thereof, in his own name, or if the action had been brought against him,

he would be able to defeat recovery, or some part thereof, (2) the intervention will

not complicate the case by an excessive multiplication of the issues, and (3) the

intervention is almost essential to effectively protect the intervenor's interest.

Guaranty Fed. Sav. Bank, 793 S.W.2d at 657.

The Trust Code provides that in an action by or against a trustee and in all

proceedings concerning trusts, the trustee is a necessary party "if a trustee is

serving at the time the action is filed." In re Webb, 266 S.W.3d 544, 548-49 (Tex.

App.-Fort Worth 2008, pet. denied); see Tex. Prop. Code Ann. §§ 111.004,

115.011. This court has held that, because legal title to trust property is vested in

the trustee, the trustee is the proper party to bring an action on behalf of a trust.

Interfirst Bank-Houston, N.A. v. Quintana Petroleum Corp., 699 S.W.2d 864, 874

(Tex. App.-Houston [1st Dist.] 1985, writ ref'd n.r.e.). There is an exception,

however. When the trustee cannot or will not enforce the cause of action that it has

against a third person, a beneficiary may enforce it. Id. In such a case, the

beneficiary is not acting on a cause of action vested in him, but he is acting for the

trustee. Id.
14
 Landen submits that Rogers was appointed interim trustee with limited

powers pursuant to the Order Appointing Interim Trustee, Marcus Rogers on

December 28, 2011. (CR pages 14-16). Although, Rogers approved the MSA as

to form only, he approved the Order Approving Settlement Agreement on May 8,

2012. (CR page 17). The Interim Trustee, did not object to Heinrichs' motion to

order disbursement of funds from the registry of the Court to pay his judgment

against the Trust. Landen submits that the Interim Trustee's failure to object to

Heinrichs' claim against the Trust was a breach of fiduciary duty in violation of the

spendthrift clause at ¶ 4.7. (TAB 5, page 3). So, Landen timely filed her plea in

intervention in order to object to Heinrichs' motion on behalf of the Interim

Trustee before the trial court signed the Order to Disburse Funds from the Registry

of the Court in Payment of Judgment.

Therefore, Landen submits that it was an abuse of discretion for the trial

court to strike her plea in intervention because (1) she could have been able to

defeat Heinrichs' claim, or some part thereof, acting for the Interim Trustee, (2) her

intervention would not complicate the case by an excessive multiplication of the

issues because the Interim Trustee did not file any opposition to Heinrichs' claim,

and (3) her intervention was almost essential to effectively protect her interest as a

beneficiary of the Trust. Guaranty Fed. Sav. Bank, 793 S.W.2d at 657.
15
 Issue No. 2: Whether the trial court erred by granting Judgment

Creditor's Motion to Order Disbursement of Funds from the Registry of the Court

in Payment of Judgment.

As a preliminary matter, the Court must decide whether the postjudgment

order enforcing the court's judgment in this case is a final and appealable order.

Kenseth v. Dallas County, 126 S.W.3d 584 (Tex. App., 2004). Postjudgment

orders embodying awards to claimants or enforcing the court's judgment itself are

appealable orders; they function like judgments. Id., at 600.

The Texas Supreme Court has held that "[t]he term `trust' refers not to a

separate legal entity but rather to the fiduciary relationship governing the trustee

with respect to the trust property." Ray Malooly Trust v. Juhl, 186 S.W.3d 568

(Tex., 2006), citing Huie v. DeShazo , 922 S.W.2d 920, 926 (Tex.1996) (holding

that treating trust rather than trustee as attorney's client "is inconsistent with the

law of trusts"). The general rule in Texas (and elsewhere) has long been that suits

against a trust must be brought against its legal representative, the trustee. See

Werner v. Colwell, 909 S.W.2d 866, 870 (Tex.1995); Smith v. Wayman, 148 Tex.

318, 224 S.W.2d 211, 218 (1949); Slay v. Burnett Trust, 143 Tex. 621, 187

S.W.2d 377, 382 (1945). Landen's attorney made this argument to the trial court

at the hearing on September 25, 2015. (RR pages 12-13, TAB 5).
16
 According to the Judgment Confirming Arbitration Award in this case,

neither Heinrichs, Shipp, Heinrichs & De Gennaro nor the trust were parties the

MSA. (CR Vol. 1, page 36, ¶ 6). Rogers, as Interim Trustee, did not approve the

substance of the MSA; he and Heinrichs only approved the form of the agreement

of the parties.

According to the Code Construction Act specifies that "person" includes a ".

. . business trust, estate, trust, partnership, association, and any other legal entity."

TEX. GOV'T CODE § 311.005(2). But the Code Construction Act addresses the

construction of state codes, not the capacity to sue or be sued. Id. at § 311.002. For

example, the Act includes estates as statutory "persons," but an estate is

nonetheless "not a legal entity and may not properly sue or be sued as such."

Austin Nursing Center, Inc. v. Lovato, 171 S.W.3d 845, 849 (Tex. 2005).

Moreover, the definitions in the Code Construction Act apply unless other

statutes or contexts require a different definition. TEX. GOV'T CODE §

311.005(2). The most relevant code — the Texas Trust Code — explicitly defines

a trust as a relationship rather than a legal entity. See TEX. PROP. CODE §

111.004(4). It states that trustees "may compromise, contest, arbitrate, or settle

claims" against a trust. Id. § 113.019. It validates payments to and conveyances

from a trustee, even if the trustee absconds with the proceeds. Id. §§ 114.081,
17
114.082. And since the trustee is "the person holding the property in trust," id. §

111.004(18), a judgment against that property must be brought against the person

who holds it. Ray Malooly Trust v. Juhl, 186 S.W.3d 568 (Tex., 2006).

Heinrichs claims a right to seek collection of its purported judgment against

the Trust as to funds on deposit through a court proceeding if the Trust owns

property that: (1) cannot readily be attached or levied by ordinary legal process;

and (2) is not exempt from attachment, execution or seizure for the satisfaction of

liabilities pursuant to TCP&RC Section 31.002(a). However, Heinrichs' claim of a

right to collect his purported judgment against the Trust fails because the Texas

Trust Code explicitly defines a trust as a relationship rather than a legal entity. See

TEX. PROP. CODE § 111.004(4).

The Trust cannot be a judgment debtor because it is not an entity, since it is

neither a “person” nor “property”, and therefore, does not have the capacity to sue

or be sued. Heinrichs pleaded for judgment against the Trust although he knew or

should have known that the Trust was not a party to the MSA and did not have the

capacity to be sued. Inexplicably, Heinrichs chose not to sue the interim trustee,

who, according to the Judgment Affirming Arbitration Award, was a party to the

MSA even though he only signed approval as to form. Landen submits that

neither Heinrichs nor the Interim Trustee agreed to the terms of the MSA
18
including the provision for payment of his fees and Heinrichs' fees.

Additionally and alternatively, none of the parties to the MSA had authority

to agree to terms that would breach the spendthrift terms of the Trust, which was

not amended to allow payment of a beneficiary's debts. Therefore, Heinrichs knew

or should have known that getting a judgment against a non-entity would be

uncollectable. Additionally and alternatively, getting a judgment a spendthrift

trust would be uncollectable.

Heinrichs knew or should have known that his judgment against the Trust

was unenforceable because he did not contract with the Trust or the interim

trustee, and the Trust did not have the capacity to be sued. Nevertheless,

Heinrichs obtained an Abstract of Judgment identifying himself as judgment

creditor and the Trust as judgment debtor on October 30, 2013. (CR Supplement,

pages 32-34).

Landen appealed the Judgment Affirming Arbitration Award, which was a

final, appealable judgment. Heinrichs did not appeal the Judgment Affirming

Arbitration Award, and now it is too late to alter or amend the judgment.

Likewise, Heinrichs cannot relitigate the issue regarding the identity of a judgment

debtor because his judgment against the Trust became final, and he didn't file an

appeal.
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 Relitigation of an issue will be barred by collateral estoppel if "(1) the facts

sought to be litigated in the first action were fully and fairly litigated in the prior

action; (2) those facts were essential to the judgment in the first action; and (3)

the parties were cast as adversaries in the first action." Cross, Kieschnick & Co. v.

Johnston, 892 S.W.2d 435, 439 (Tex.App.-San Antonio, 1994) For collateral

estoppel to be invoked, it is only necessary that the party against whom the plea of

collateral estoppel is being asserted be a party or in privity with a party in the prior

litigation. Id., citing Mower v. Boyer, 811 S.W.2d 560, 563 (Tex.1991) (citation

omitted); see also Barr v. Resolution Trust Corp., 837 S.W.2d 627, 628

(Tex.1992).

All collateral estoppel requirements have been met in the present case. First,

the issue of the proper judgment debtor and the applicability of the misnomer

doctrine was fully and fairly litigated in the prior action. Second, those facts were

essential to the amended judgment. Third, Heinrichs was not a plaintiff in the first

action. Consequently, Heinrichs is precluded by collateral estoppel from

relitigating the issue of the proper judgment debtor through the issue of misnomer

in a subsequent turnover proceeding.

In conclusion, Heinrichs was not diligent in amending its pleadings in the

trial court to cure the misnomer. The trial judgment became final. The turnover
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statute may not be used to cure a misnomer once the trial judgment has become

final. It was improper as a matter of law to issue a turnover order against non-

judgment debtors. The trial court abused its discretion. The Court of Appeals

should render the turnover order void. Cross, Kieschnick & Co. v. Johnston, 892

S.W.2d 435 (Tex.App.-San Antonio, 1994).

The Order to Disburse Funds from the Registry of the Court in Payment of

Judgment, was signed in error on September 25, 2015. Landen submits that the

trial court abused its discretion because it acted without reference to any guiding

rules or principles. Downer v. Aquamarine Operators, Inc., 701 S.W.2d 238, 241-

42 (Tex. 1985), cert. denied, 476 U.S. 1159 (1986). To wit, the Order did not

contain reference to any guiding rules or principles as a basis for ordering a check

to be issued by the County Clerk from the Registry of the Court payable to

Heinrichs in satisfaction of his judgment against the Trust.

So, Heinrichs' assertion that the TCP&RC Section 31.002(b)(1) authorizes

the Court to order the Trust to turn over non-exempt property is false. Likewise,

Heinrichs' assertion that the Court may also grant turnover relief against the clerk

of the court as a third party in possession of the Trust's property is also false

because the Trust is not an entity; it was not a party to this case; and it could not

be a judgment debtor. Additionally and alternatively, even though Heinrichs
21
requested, and the trial court agreed, to name the Trust as a judgment debtor, the

judgment is not collectable because the final Judgment named a non-entity, which

owns no assets, as judgment debtor.

Heinrichs' argument that “[T]he entire amount of the funds on deposit with

the clerk of the court, as property in custodia legis, is subject to turnover relief and

can be applied toward payment of the Law Firm's Judgment[.]” should not be

relied on because it invites error. A judgment against a trust without joining the

trustee is unenforceable. The Trust Code provides that in an action by or against a

trustee and in all proceedings concerning trusts, the trustee is a necessary party "if

a trustee is serving at the time the action is filed." In re Webb, 266 S.W.3d 544,

548-49 (Tex. App.-Fort Worth 2008, pet. denied); see Tex. Prop. Code Ann. §§

111.004, 115.011. The First Court of Appeals – Houston has held that, because

legal title to trust property is vested in the trustee, the trustee is the proper party to

bring an action on behalf of a trust. Ginther v. Bank of America, N.A., No. 01-08-

00430-CV (Civ.App.-Houston 1st Dist. 2010, pet. denied) citing Interfirst Bank-

Houston, N.A. v. Quintana Petroleum Corp., 699 S.W.2d 864, 874 (Tex. App.-

Houston [1st Dist.] 1985, writ ref'd n.r.e.).

There is an exception, when the trustee cannot or will not enforce the cause

of action that it has against a third person, a beneficiary may enforce it. Id. In such
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a case, the beneficiary is not acting on a cause of action vested in him, but he is

acting for the trustee. Id. When Rogers' attorney stipulated that Rogers, as interim

trustee, did not object to Heinrichs' claim on or about July 23, 2015, the failure or

refusal of the interim trustee to intervene and object triggered the exception, which

allowed Landen, as a beneficiary of the Trust, to act for the trustee to protect her

interest in the Trust. Id.

Hienrichs argues that “[A] further compelling reason to order payment of

the Law Firm's Judgment from the funds on deposit is the restricted nature of the

Law Firm's right to pursue collection of the Judgment by other means.” However,

this argument fails for the same reasons that his other arguments fail. The Trust

cannot be a judgment debtor because (1) the Trust is not an entity, (2) the Trust is

not a party to this case, (3) the trustee of the Trust is not a party to this case; (4)

Heinrichs' judgment is not against the trustee of the Trust, and (5) the other

beneficiaries of the Trust are not parties, and (6) the Trust is an irrevocable

spendthrift trust.

CONCLUSION AND PRAYER

WHEREFORE, Appellant Landen Saks requests the Court to reverse the

trial court's Order Striking Intervention and Order to Disburse Funds from the

Registry of the Court in Payment of Judgment and render judgment dismissing
23
Heinrichs' claims. Alternatively, Landen Saks requests the Court to reverse the

trial court's Order Striking Intervention and Order to Disburse Funds from the

Registry of the Court in Payment of Judgment and remand the case to Probate

Court No. Two, Bexar County, Texas for dismissal. Appellant also requests the

Court to grant her all additional relief to which she may be justly entitled.

Respectfully submitted,

/s/ Philip M. Ross
Philip M. Ross
State Bar No. 17304200
1006 Holbrook Road
San Antonio, Texas 78218
Phone: 210/326-2100
Email: ross_law@hotmail.com
ATTORNEY FOR APPELLANT
LANDEN SAKS

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 CERTIFICATION

I hereby certify that every factual statement in the petition is supported by
competent evidence included in the appendix or record.

/s/ Philip M. Ross
Philip M. Ross

CERTIFICATE OF COMPLIANCE

I hereby certify that this brief is in compliance with Texas Rule of Appellate
Procedure Rule 9. It contains 5,334 words, 24 pages, 14 point typeface.

/s/ Philip M. Ross
Philip M. Ross

CERTIFICATE OF SERVICE

I hereby certify that a true and correct copy of the above document was e-
filed and sent by email or electronic delivery to: Jonathan Yedor and Royal Lea,
III on December 29, 2015.

/s/ Philip M. Ross
Philip M. Ross

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