Pamela Mehl v. David Stern

ACCEPTED
03-14-00697-CV
6408275
THIRD COURT OF APPEALS
AUSTIN, TEXAS
8/7/2015 2:56:22 PM
JEFFREY D. KYLE
CLERK
CASE NO. 03-14-00697-CV
IN THE THIRD COURT OF APPEALS
STATE OF TEXAS FILED IN
3rd COURT OF APPEALS
AUSTIN, TEXAS
PAMELA MEHL, § 8/7/2015 2:56:22 PM
§ JEFFREY D. KYLE
Clerk
Appellant, §
§
v. §
§
DAVID STERN, §
§
Appellee. §

APPELLANT’S REPLY BRIEF

On Appeal from Cause No. D-1-GN-14-002071
In the 250th Judicial District Court
Travis County, Texas

Respectfully submitted,

THE LEFLER LAW FIRM
1530 Sun City Blvd, Ste 119
Austin, Texas 78633
T (512) 869-2579
F (866) 583-7294

/s/ Sandra M. Lefler
SANDRA M. LEFLER
State Bar No. 12161040
slefler@leflerlegal.com

August 7, 2015 LEAD COUNSEL FOR APPELLANT

NO ORAL ARGUMENT REQUESTED
 IDENTITY OF PARTIES AND COUNSEL

Appellant Counsel
Pamela Mehl Sandra M. Lefler
THE LEFLER LAW FIRM
1530 Sun City Blvd, Ste 119
Austin, Texas 78633
T (512) 869-2579
F (866) 583-7294
slefler@leflerlegal.com

Appellee Counsel
David Stern Brent Allen Devere
DEVERE LAW FIRM
1411 West Avenue, Ste 200
Austin, Texas 78701
T (512) 457-8080
F (512) 457-8060
bdevere@1411west.com

ii
 TABLE OF CONTENTS

Page

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

TABLE OF CONTENTS .................................................................................... iii

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

ARGUMENT AND AUTHORITIES .................................................................. 1

A. CONTRARY TO APPELLEE’S OPENING ARGUMENT,
THE TEXAS SUPREME COURT PRECEDENT
ESTABLISHES THAT THE MERE FILING OF A
MOTION FOR NEW TRIAL DOES NOT DEFEAT
APPELLANT’S RESTRICTED APPEAL .................................... 1

1. The Texas Supreme Court Established that Filing a
Motion for New Trial Does Not Defeat the Filing of a
Restricted Appeal. .................................................................. 1

2. Appellee’s Brief Fails to Provide Supporting
Authorities as Required by Tex. R. App. P. 38.2(a)(1);
Therefore, His Arguments Should Be Disregarded ............ 3

B. APPELLEE IGNORED THE MANDATORY VENUE
STATUTE. HIS ARGUMENT THAT APPELLANT
SHOULD HAVE OBJECTED TO VENUE IS INANE,
GIVEN THAT APPELLANT WAS NOT PRESENT IN
THE TRIAL COURT TO EVEN RAISE AN OBJECTION.
FURTHER, APPELLEE FAILS TO RESPOND TO
APPELLANT’S ARGUMENT THAT RECEIVERSHIPS
MUST BE FILED IN THE COUNTY IN WHICH THE
PROPERTY IS LOCATED; THUS, APPELLEE HAS
WAIVED THIS ISSUE .................................................................... 4

1. No Objection to Venue is Required Where Appellant
Did Not Participate in the Proceedings .................................... 4

iii
 2. Appellee Waived Any Opposition to Appellant’s
Argument that Venue of the Receivership Appointment
was Required in Williamson County ....................................... 5

C. CONTRARY TO APPELLEE’S ARGUMENT, PARTIAL
RESCISSION IS NOT SUPPORTED UNDER TEXAS
LAW AND, THEREFORE, MUST BE REVERSED................... 6

D. THE DAMAGES SOUGHT IN APPELLEE’S PETITION
WERE NOT TIED TO THE AMOUNT OF ALLEGEDLY
DELINQUENT MORTGAGE PAYMENTS;
THEREFORE, EVIDENCE PERTAINING TO ANY
DELINQUENCY DOES NOT SUPPORT THE
JUDGMENT AND THE $20,000 AWARD ON OTHER
CLAIMS OF DAMAGE WAS ARBITRARY. ............................ 8

E. APPELLEE ADMITS THE BASIS OF RESCISSION WAS
HIS VENDOR’S LIEN, SECURED BY THE PROPERTY.
THE COURT ERRONEOUSLY AWARDED BOTH
RESCISSION AND MONEY DAMAGES UNDER THE
SINGLE CLAIM FOR BREACH OF CONTRACT .................. 11

F. THE AFFIDAVIT IN SUPPORT OF ATTORNEY FEES
FAILED TO ESTABLISH REASONABLENESS AND
NECESSITY UNDER THE TEXAS SUPREME COURT’S
FACTORS JUSTIFYING AN ATTORNEY FEE AWARD. ... 12

G. APPELLEE MISSES THE POINT REGARDING HIS
FAILURE TO NAME INDYMAC, THE FIRST
MORTGAGE HOLDER, AS A NECESSARY PARTY –
FAILURE TO NAME INDYMAC HARMED
APPELLANT. . .............................................................................. 14

H. APPELLEE FAILED TO ABIDE BY THE
PROCEDURAL REQUIREMENTS FOR APPOINTMENT
OF A RECEIVER; THEREFORE THE RECEIVERSHIP
APPOINTMENT SHOULD BE REVERSED. . . ....................... 16

CONCLUSION AND PRAYER ........................................................................ 18

iv
CERTIFICATE OF SERVICE ......................................................................... 19

CERTIFICATE OF COMPLIANCE ............................................................... 19

v
 INDEX OF AUTHORITIES

CASES Page

Alexander v. Alexander,
99 S.W.2d 061 (Tex. Comm’n App. Austin 1936, no writ) .................... 6

Arnold Motor Co. v. C.I.T. Corp.,
149 S.W.2d 1056 (Tex. Comm’n App.—Galveston 1941, no writ) ..... 14

Arthur Andersen & Co. v. Perry Equip. Corp.,
945 S.W.2d 812 (Tex. 1997) ..................................................................... 13

Associated Bankers Credit Co. v. Meis,
456 S.W.2d 744 (Tex. Civ. App.—Corpus Christi 1970, no writ) ....... 14

Basley v. Adoni Holdings, LLC,
373 S.W.3d 577 (Tex. App.—Texarkana 2012, no pet.) ....................... 13

Bocquet v. Herring,
972 S.W.2d 19 (Tex. 1998) ....................................................................... 12

Brown v. Ogbolu,
331 S.W.3d 530, 533 (Tex. App.—Dallas 2011, no pet.) ......................... 2

Bonewitz v. Bonewitz,
726 S.W.2d 227, 228-39 (Tex. App.—Austin 1987, writ ref’d n.r.e.) .... 2

Campsey v. Campsey,
111 S.W.3d 767, 770 (Tex. App.—Fort Worth 2003, no pet.) ................ 2

Costley v. State Farm Fire & Cas. Co.,
894 S.W.2d 380, 387 (Tex. App. – Amarillo 1994, writ denied) ............ 7

Dallas Farm Mach. Co. v. Reaves,
158 Tex. 1, 307 S.W.2d 233 (Tex. 1957) ................................................. 11

Demaret v. Bennett,
29 Tex. 262, 269 (Tex. 1867) ...................................................................... 7

vi
Fawcett, Ltd. v. Id. N. & Pac. R.R. Co.,
293 S.W.3d 240, 251 (Tex. App. – Eastland 209, pet. denied) ............... 8

Ferguson v. DRG/Colony N. Ltd.,
764 S.W.2d 874, 886 (Tex. App. – Austin 1989, writ denied) .............. 11

First Dallas Petroleum, Inc. v. Hawkins,
727 S.W.2d 640, 643 (Tex. App. – Dallas 1987) ...................................... 2

Fredonia State Bank v. Gen. Am. Life Ins. Co.,
881 S.W.2d 279, 283-84 (Tex. 1994) ......................................................... 5

Gray v. Phi Res., Ltd.,
710 S.W.2d 566 (Tex. 1986) ..................................................................... 17

Helton v. Kimbell,
621 S.W.2d 675 (Tex. App.—Fort Worth 1981, no writ ) ................ 16,17

Houston Precast, Inc. v. McAllen Constr., Inc.,
Mo. 13-07-135-CV, 2008 WL 4352636, at *1-3 (Tex. App.—Corpus
Christi-Edinburg Sept. 25, 2008, no pet.) ................................................ 2

Johnson v. Barnwell Prod. Co.,
391 S.W.2d 776 (Tex. Civ. App.—Texarkana 1965, writ ref’d n.r.e.) . 17

Krumnow v. Krumnow,
174 S.W.3d 820 (Tex. App.—Waco 2005, pet. denied) ......................... 16

Lawyers Lloyds of Texas v. Webb,
137 Tex. 107, 152 S.W.2d 1096, 1097 (1941) ......................................... 1,2

Marion v. Marion,
205 S.W.2d 426 (Tex. Civ. App.—San Antonio 1947, no writ ........ 16,17

McKnight v. Trogdon-McKnight,
132 S.W.3d 126, 129 (Tex. App.—Houston [14th Dist.] 2004, no pet.) .. 2

Merrell Dow Pharms., Inc. v. Havner,
956 S.W.2d 706 (Tex. 1996) ..................................................................... 10

vii
Nationwide Life Ins. Co. v. Nations,
654 S.W.2d 860 (Tex. App.—Houston [14th Dist.] 1983, no writ) ....... 16

Nat’l Aid Life of Okl. City v. Adams,
157 S.W.2 957, 958 (Tex. Civ. App. – Eastland 1941) ............................ 7

Nelson v. Najm,
127 S.W.3d 170 (Tex. App.—Houston [1st Dist.] 2003........................... 11

Petco Animal Supplies, Inc. v. Schuster,
144 S.W.3d 554 (Tex. App. – Austin 2004) ............................................ 10

Pratt v. Amrex, Inc.,
354 S.W.3d 502 (Tex. App.—San Antonio 2011, pet. denied) ............... 6

Rubenstein & Sons Produce, Inc. v. State,
272 S.W.2d 613, 621 (Tex. Civ. App. – Dallas 1954, writ ref’d
n.r.e.) ........................................................................................................... 5

Sw. Cooperage Co. v. Kivlen,
266 S.W. 826, 829 (Tex. Civ. App. – Dallas 1924, no writ) .................... 7

Texaco, Inc. v. Cent. Power & Light Co.,
925 S.W.2d 586 (Tex. 1996) ....................................................................... 2

Tony Gullo Motors I, L.P. v. Chapa,
212 S.W.3d 299 (Tex. 2006.) .................................................................... 12

STATUTES and OTHER AUTHORITIES

TEX. CIV. PRAC. & REM. CODE § 15.011 .............................................................. 6

TEX. CIV. PRAC. & REM. CODE § 15.064 ........................................................... 4,5

TEX. CIV. PRAC. & REM. CODE § 15.0642 ............................................................ 4

TEX. CIV. PRAC. & REM. CODE § 64.091 ............................................................ 16

TEX. CIV. PRAC. & REM. CODE § 64.092 ............................................................ 16

viii
TEX. R. APP. P. 38.1 ............................................................................................... 3

TEX. R. APP. P. 38.1((i) .......................................................................................... 6

TEX. R. APP. P. 38.2(a) ........................................................................................... 6

TEX. R. APP. P. 38.2(a)(1) ...................................................................................... 3

TEX. R. CIV. P. 39 ................................................................................................. 14

TEX. R. CIV. P. 39(a) ............................................................................................ 14

TEX. R. CIV. P. 39(a)(ii) ....................................................................................... 14

TEX. R. CIV. P. 695 ............................................................................................... 16

ix
 ARGUMENTS AND AUTHORITIES

A. CONTRARY TO APPELLEE’S OPENING ARGUMENT, THE
TEXAS SUPREME COURT PRECEDENT ESTABLISHES THAT
THE MERE FILING OF A MOTION FOR NEW TRIAL DOES NOT
DEFEAT APPELLANT’S RESTRICTED APPEAL.

1. The Texas Supreme Court Established that Filing a Motion for New
Trial Does Not Defeat the Filing of a Restricted Appeal.

Appellee opens its brief with the argument that Appellant’s filing of a motion for

new trial defeats her ability to satisfy the four requisites of a restricted appeal. In

making this conclusory statement, Appellee completely ignores the long-standing

precedent of the Texas Supreme Court on this issue. In Lawyers Lloyds of Texas v.

Webb, 137 Tex. 107, 152 S.W.2d 1096, 1097 (1941), the Texas Supreme Court

directly confirmed that the filing of a post-judgment motion for new trial does not

constitute “participation” in the proceeding so as to prevent pursuit of a restricted

appeal. In explaining its rationale, the Court states:

There was good reason for making a distinction between those
who participate in the hearing in open court, leading up to the
rendition of judgment, and those who do not so participate. The
statute allows a short period of time for the presentation of an appeal
and a longer period for the suing out of a writ of error. Revised Civil
Statutes 1925, Arts. 2253 and 2255. The legislative purpose was to
take away the right of appeal by writ of error from those who should
reasonably use the more speedy method of appeal. Those who
participate in the trial leading up to the rendition of judgment are
familiar with the record, and are therefore in position to prepare for
appeal on short notice; whereas, those who do not so participate in the
actual trial, and are therefore unfamiliar with the record, may need
additional time in which to familiarize themselves with the record. For
example: One who participates in the hearing of the evidence will be

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 familiar with the facts introduced upon the trial and can immediately
begin the preparation of his appeal; whereas, one who does not so
participate may have to wait until the reporter can prepare a statement
of facts before he can properly prepare his appeal for presentation to
the appellate court. A party who did not participate in the hearing
leading up to the rendition of judgment, but merely filed a motion for
new trial, would be no more familiar with the record in most
instances, than one who did not so file a motion for new trial. We hold
that the mere filing of a motion of new trial was not such participation
in the actual trial of the case as to defeat the plaintiffs in error's right
of appeal by writ of error.1

Id. (emphasis added). In addressing the issue of “participation”, several Texas

courts of appeal, including this Third Court of Appeals, subsequently entered

decisions consistent with Lawyers. See Brown v. Ogbolu, 331 S.W.3d 530, 533

(Tex. App.—Dallas 2011, no pet.); Houston Precast, Inc. v. McAllen Constr., Inc.,

No. 13-07-135-CV, 2008 WL 4352636, at *1-3 (Tex. App.—Corpus Christi-

Edinburg Sept. 25, 2008, no pet.); Bonewitz v. Bonewitz, 726 S.W.2d 227, 228-39

(Tex. App.—Austin 1987, writ ref’d n.r.e.) (motion to set aside default not ruled

upon or agreed); First Dallas Petroleum, Inc. v. Hawkins, 727 S.W.2d 640, 643

1
Although a writ of error is referenced in Lawyers rather than a restricted appeal, the restricted
appeal replaced the prior “writ of error” procedures with the promulgation of the new Texas
Rules of Appellate Procedure in 1997. Since the promulgation of the new rules, Texas courts
appear to have followed cases relating to the old writ of error practice in evaluating the
“participation” element of the restricted appeal. Participation in an actual trial is a matter of
degree, and should be construed liberally in favor of the right to appeal. Campsey v. Campsey,
111 S.W.3d 767, 770 (Tex. App.—Fort Worth 2003, no pet.). In Texaco, Inc. v. Central Power
& Light Co., the Texas Supreme Court concluded in a writ of error appeal that “participation”
that would preclude that avenue of appeal constituted participation “in the decision making
event,” i.e., the jury trial of plaintiff’s claims. 925 S.W.2d 586, 589-90 (Tex. 1996); see also
McKnight v. Trogdon-McKnight, 132 S.W.3d 126, 129 (Tex. App.—Houston [14th Dist.] 2004,
no pet.).

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(Tex. App. – Dallas 1987) (filing a motion for new trial does not cause a defendant

to “participate at trial”).

2. Appellee’s Brief Fails to Provide Supporting Authorities as
Required by Tex. R. App. P. 38.2(a)(1); Therefore, His
Arguments Should Be Disregarded.

Rule 38.2(a)(1) sets for the requisites for Appellee’s Brief, stating that the

brief must conform to the requirements of Rule 38.1. Rule 38.1 states that “[t]he

brief must contain a clear and concise argument for the contentions made, with

appropriate citations to authorities and to the record.” (Emphasis added.)

Nowhere does Appellee provide the Court with any legal authorities in support of

its conclusory argument that Appellant’s filing of a motion for new trial defeats the

requirements for a restricted appeal. In fact, as shown above, Appellee’s argument

is contrary to Texas Supreme Court precedent. Accordingly, the Court should

disregard Appellee’s argument.

As established in Appellant’s opening brief, Appellant satisfies the

requirements for a restricted appeal and Appellant’s appeal must be permitted to

stand.

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B. APPELLEE IGNORED THE MANDATORY VENUE STATUTE. HIS
ARGUMENT THAT APPELLANT SHOULD HAVE OBJECTED TO
VENUE IS INANE, GIVEN THAT APPELLANT WAS NOT
PRESENT IN THE TRIAL COURT TO EVEN RAISE AN
OBJECTION. FURTHER, APPELLEE FAILS TO RESPOND TO
APPELLANT’S ARGUMENT THAT RECEIVERSHIPS MUST BE
FILED IN THE COUNTY IN WHICH THE PROPERTY IS
LOCATED; THUS, APPELLEE HAS WAIVED THIS ISSUE.

1. No Objection to Venue is Required Where Appellant Did Not
Participate in the Proceedings.

First, Appellee argues that Appellant should have objected to the venue of

the trial court in a proceeding where Appellant did not otherwise even have an

opportunity to participate (which resulted in the entry of a no-answer default

judgment in the first place). The authorities cited by Appellee strictly apply to

situations where the parties had the opportunity to actively participate in the

proceedings, not where (as here) the defendant did not.

Generally, the review of venue decisions is available only after a final

judgment. Where a party has a fair opportunity to participate in the proceedings,

mandatory venue can be enforced by mandamus proceedings filed no later than 90

days prior to trial or the 10th day after notice of the trial setting. Tex. Civ. Prac. &

Rem. Code, Section 15.0642. If venue was not proper in that county, the error is

not harmless, and the court of appeals must reverse and remand with instructions

to transfer. Tex. Civ. Prac. & Rem. Code, Section 15.064.

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 Mandatory venue statutes compel transfer. Tex. Civ. Prac. & Rem. Code,

Section 15.064. Here, the mandatory venue statute applies to cases involving real

property, which was clearly the subject matter of Appellee’s action. Appellant did

not have the opportunity to challenge venue. The question in this restricted appeal

is whether, on the face of the record, error occurred. Clearly, the established

precedent concludes that mandatory venue was only proper in Williamson County,

not Travis County. Accordingly, this court should at the very least reverse and

remand the action with instructions that the case be transferred to Williamson

County.

2. Appellee Waived Any Opposition to Appellant’s Argument that
Venue of the Receivership Appointment was Required in Williamson
County.

Appellant’s Brief also raised the argument that receivership actions must be

filed in the county where the property is located. (Appellant’s Brief at 30-33).

Appellee failed to respond to this issue. This Court has no duty to make an

independent search of the record to determine whether Appellant’s facts and issues

should be challenged. Appellee carries that burden. Fredonia State Bank v. Gen.

Am. Life Ins. Co., 881 S.W.2d 279, 283-84 (Tex. 1994); Rubenstein & Sons

Produce, Inc. v. State, 272 S.W.2d 613, 621 (Tex. Civ. App. – Dallas 1954, writ

ref’d n.r.e.)(“it is not our duty to search the record for supporting evidence.”).

Appellees are required to respond or provide a clear and concise statement of the

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argument, with authority and citation to the record. Tex. R. App. P. 38.2(a),

38.1(i). Appellee has failed to do so.

In general the usual rules of venue apply to receivership proceedings. See,

e.g., Pratt v. Amrex, Inc., 354 S.W.3d 502, 504–505 (Tex. App.—San Antonio

2011, pet. denied) (venue exception for land determined proper venue in action by

receiver against strange to receivership); Alexander v. Alexander, 99 S.W.2d 1062,

1064 (Tex. Comm’n App.—Austin 1936, no writ) (allegation that underlying

action was for partition of real estate in Brown County was sufficient to show

jurisdiction of Brown County district court). Here, there is no question that the

mandatory venue statute in Section 15.011 applies. Consequently, the receivership

claim is similarly subject to the mandatory venue of Williamson County. The

Travis County court was without authority to issue the receivership order,

constituting reversible error.

C. CONTRARY TO APPELLEE’S ARGUMENT, PARTIAL
RESCISSION IS NOT SUPPORTED UNDER TEXAS LAW AND,
THEREFORE, MUST BE REVERSED.

Underlying the Court’s decision was a Settlement Agreement between the

parties containing numerous conditions and provisions. The parties had a long

history of litigation resulting from a domestic breakup. The Settlement Agreement

effected the resolution of those numerous disputes. (Appellant’s Brief at 22-23; CR

5 – Original Petition, p. 3, ¶¶ 7, 8).

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 The authorities cited by Defendant address only the applicability of

rescission as a remedy, without addressing the true issue here: The impropriety of

partial rescission. Here, the default judgment ordered partial rescission of the

Settlement Agreement. Texas law does not allow partial rescission. See Costley

v. State Farm Fire & Cas. Co., 894 S.W.2d 380, 387 (Tex. App. – Amarillo 1994,

writ denied) (finding it to be the “longstanding general rule in Texas that a

rescission of a contract must be in toto.” (citing Demaret v. Bennett, 29 Tex. 262,

269 (Tex. 1867))); Nat’l Aid Life of Okl. City v. Adams, 157 S.W.2 957, 958 (Tex.

Civ. App. – Eastland 1941) (“The principle, which must rule the judgment in this

case, is, that one cannot enforce an advantage existing only by virtue of a contract,

and at the same time repudiate the contract as one not binding upon him, thereby

avoiding some of its provisions.”); Sw. Cooperage Co. v. Kivlen, 266 S.W. 826,

829 (Tex. Civ. App. – Dallas 1924, no writ) (“[Partial rescission would] permit the

[plaintiffs] to set aside the contract in part for fraud, in so far as against their

interest, and to enforce that part of the contract beneficial to them; in other words

to retain all the benefits of the contract and escape its obligation on account of the

fraud, which would be in direct violation of the fundamental principle governing

the rescission of contracts, to wit, that same must be repudiated as a whole or

affirmed as a whole.” (citations omitted.)). Such a remedy would violate the

principle that a court cannot change the terms of a contract to which the parties

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agreed. See Fawcett, Ltd. v. Id. N. & Pac. R.R. Co., 293 S.W.3d 240, 251 (Tex.

App. – Eastland 209, pet. denied) (“Equity cannot be invoked to create a contract

that the court considers should have been made but was not.”).

Based upon these fundamental principles, the record on its face sought the

erroneous remedy of partial rescission. The default judgment rescinded only a

portion of the parties’ Settlement Agreement in violation of Texas law. Therefore,

the default judgment should be reversed and the case remanded.

D. THE DAMAGES SOUGHT IN APPELLEE’S PETITION WERE NOT
TIED TO THE AMOUNT OF ALLEGEDLY DELINQUENT
MORTGAGE PAYMENTS; THEREFORE, EVIDENCE
PERTAINING TO ANY DELINQUENCY DOES NOT SUPPORT
THE JUDGMENT AND THE $20,000 AWARD ON OTHER CLAIMS
OF DAMAGE WAS ARBITRARY.

In support of the trial court’s award of $20,000 in monetary damages,

Appellee argues the following:

a. “Stern offered evidence of the delinquency of the underlying mortgage

which totaled approximately $16,471.50 (CR 27-29)” (Appellee’s Brief

at 12);

b. “Moreover, Stern specifically alleged in paragraphs #10 and #11 of his

original petition that there was a material default with at least five

delinquent mortgage payments (CR3-12)” (Appellee’s Brief at 12);

c. “Stern further alleged in paragraph #19 of his original petition damages

to his credit, a fact that could easily be supported by the record in light of

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 many months of delinquent payments in the main mortgage (CR-3012

and CR 27-29)” (Appellee’s Brief at 13).

d. “Therefore, an award of $20,000.00 was necessary to address the

significant arrears on the mortgage and/or to compensate Stern for

damages to his credit.” (Appellee’s Brief at 13).

All of these arguments fail for one simple reason: Appellee did not seek damages

for delinquent mortgage payments, and never placed anything in evidence as

to the dollar amount of damages to his credit.

Appellee’s Original Petition sought only:

a. Judgment for 50% equitable and legal title and possession of the Property

based on rescission of the special warranty deed to Defendant;

b. Damages for breach of contract, and any other pertinent cause of action

(and the breach of contract claim sought “rescission of the underlying

conveyance of the Property”, and “monetary damages in connection with

Plaintiff’s credit report and reasonable attorneys’ fees”)(CR 7);

c. Establishment and foreclosure of the vendor’s lien securing the

defendant’s obligations, and for order of sale;

d. A hearing on the application for appointment of receiver; and,

e. Costs, attorney fees, interest, and such other relief to which Plaintiff is

justly entitled.

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(Original Petition – CR-9).

Appellee’s brief attempts to justify the $20,000 damage award by pointing to

an alleged delinquency of the underlying mortgage of $16,471.50 (Appellee’s

Brief at 12-13), and cites to one mortgage statement, unsworn and not

authenticated, filed with the court at 8:10 a.m. on the morning his default judgment

was set for hearing. (CR- 27-29)(Appellee’s Brief at 13). There is no court

reporter’s record admitting the document into evidence or authenticating the

truthfulness of the document. Moreover, the same is irrelevant since Appellee’s

very basis of damages had no bearing on the underlying mortgage. The record is

void of any proof of the alleged damage to Appellee’s credit; thus, the award of

$20,000 is completely unsupported by the record and must be overturned. As

stated in Appellant’s Brief, a “no evidence” point will be sustained when there is a

complete absence of evidence of a vital fact. Merrell Dow Pharms., Inc. v. Havner,

953 S.W.2d 706, 711 (Tex. 1996); see also Petco Animal Supplies, Inc. v. Schuster,

144 S.W.3d 554, 559 (Tex. App. – Austin 2004, no pet.).

Here, there exists no reporter’s record, statement of facts, or evidence of any

kind whatsoever to support the District Court’s $20,000.00 actual damages award

to Appellee. Therefore, the district court’s award of $20,000.00 actual damages

must be reversed.

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E. APPELLEE ADMITS THE BASIS OF RESCISSION WAS HIS
VENDOR’S LIEN, SECURED BY THE PROPERTY. THE COURT
ERRONEOUSLY AWARDED BOTH RESCISSION AND MONEY
DAMAGES UNDER THE SINGLE CLAIM FOR BREACH OF
CONTRACT.

As established above, the partial rescission order and the unsupported

$20,000 award of damages were both erroneous and constituted reversible error.

Appellee argues both awards were necessary because “a rescission of the

conveyance alone would not have remedied the damages to Stern’s credit report

and would not have remedied the significant mortgage arrears.” (Appellee’s Brief

at 13).

Rescission, let alone partial rescission, was simply not appropriate in this

case. Absent fraud or mistake, a party seeking rescission has the burden to show

that monetary damages are an inadequate remedy. Ferguson v. DRG/Colony N.

Ltd., 764 S.W.2d 874, 886 (Tex. App. – Austin 1989, writ denied). Nowhere in the

record of this case has Appellee established any basis for rescission (or partial

rescission). A party establishing grounds for rescission, such as by proof of

fraudulent inducement to make the contract, must choose either to stand on the

contract and recover damages or to rescind. Dallas Farm Mach. Co. v. Reaves, 168

Tex. 1, 307 S.W.2d 233, 238-239 (Tex. 1957); Nelson v. Najm, 127 S.W.3d 170,

176-177 (Tex. App.—Houston [1st Dist.] 2003, pet. denied). Here, the district court

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awarded both, and that double recovery should not be allowed to stand. Therefore,

the award was reversible error and should be corrected by this Court.

F. THE AFFIDAVIT IN SUPPORT OF ATTORNEY FEES FAILED TO
ESTABLISH REASONABLENESS AND NECESSITY UNDER THE
TEXAS SUPREME COURT’S FACTORS JUSTIFYING AN
ATTORNEY FEE AWARD.

Regarding the award of attorney fees to Appellee, the issue on appeal is the

insufficiencies of the proof offered by Appellee in support of those fees.

Generally, attorney’s fees in Texas are not recoverable from an opposing party

unless authorized by statute or contract. Tony Gullo Motors I, L.P. v. Chapa, 212

S.W.3d 299, 310 (Tex. 2006). In awarding attorney’s fees, the amount must be

“reasonable and necessary.” Bocquet v. Herring, 972 S.W.2d 19, 21 (Tex. 1998).

Factors to be considered in determining what is reasonable and necessary include:

(1) the time and labor required, the novelty and difficulty of the questions

involved, and the skill required to perform the legal service properly; (2) the

likelihood that the acceptance of employment precluded other employment by the

lawyer; (3) the fee customarily charged in the locality for similar legal services; (4)

the amount involved and the results obtained; (5) the time limitations imposed by

the client or by the circumstances; (6) the nature and length of the professional

relationship with the client; (7) the experience, reputation, and ability of the lawyer

performing the services; and (8) whether the fee is fixed or contingent on results

obtained, or uncertainty of collection before the legal services have been rendered.

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See Arthur Andersen & Co. v. Perry Equip. Corp., 945 S.W.2d 812, 818 (Tex.

1997); TEX. DISCIPLINARY RULES OF PROF’L CONDUCT § 1.04. Additionally, when

a party is awarded attorney fees without any legally correct basis for the award,

error has occurred, justifying reversal. Basley v. Adoni Holdings, LLC, 373 S.W.3d

577, 588 (Tex. App.—Texarkana 2012, no pet.).

The only proof in the record in support of attorney fees is the Affidavit of

Brent Devere, which made two conclusory statements only: (a) that 10 hours of

time was reasonable in this matter, and (b) that $250 per hour was an acceptable

fee. (See Supplemental Court Record I dated April 9, 2015 (“S.C.R. I”) at 15-

17). No other proof was offered in support of those conclusory statements.

Nowhere did Appellee address the numerous factors set forth in Arthur Andersen.

Moreover, as shown above, these attorney fees assume that a proper judgment

must first have been awarded in favor of Appellee in order to justify a fee award;

yet, as shown herein, the judgment itself was not proper.

Appellee here proffered no arguments, and the record contains insufficient

evidence or statement of facts that supports a finding that $2,500.00 in attorney’s

fees was reasonable and necessary. Further, nowhere in the record is there an

examination by the district court of the eight factors from Arthur Andersen. As a

result, the district court’s award of $2,500.00 for attorney’s fees was arbitrary and

unreasonable, constituting apparent error, and must be reversed.

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G. APPELLEE MISSES THE POINT REGARDING HIS FAILURE TO
NAME INDYMAC, THE FIRST MORTGAGE HOLDER, AS A
NECESSARY PARTY – FAILURE TO NAME INDYMAC HARMED
APPELLANT.

In an application for a receivership, all persons or entities over whose

properties a receiver is to be appointed are parties needed for just adjudication of

the proceeding. Associated Bankers Credit Co. v. Meis, 456 S.W.2d 744, 747

(Tex. Civ. App.—Corpus Christi 1970, no writ) (all such persons held necessary

and indispensable under former Tex. R. Civ. P. 39); see also Tex. R. Civ. P. 39(a);

Arnold Motor Co. v. C. I. T. Corp., 149 S.W.2d 1056, 1059 (Tex. Comm’n App.—

Galveston 1941, no writ) (applying traditional “fundamental error” analysis). All

persons who claim an interest in properties placed in receivership should be joined

if feasible. TEX. R. CIV. P. 39(a).

Here, Appellee’s Petition acknowledges the existence of a first mortgage

lien on the property (C.R. 4-5 - Original Petition, pp. 2-3, ¶ 6), but fails to identify

the lender. Rule 39(a) of the Texas Rules of Civil Procedure notes the importance

of including all parties in interest because their absence may “(ii) leave any of the

persons already parties subject to a substantial risk of incurring double, multiple, or

otherwise inconsistent obligations by reason of his claimed interest.” TEX. R. CIV.

P. 39(a)(ii). Here, Appellant Mehl assumed the first mortgage indebtedness as part

of the settlement agreement (C.R. 5 - Original Petition, p. 3, ¶¶ 7-8), in exchange

for which Appellant received an assignment of 100% of the subject property. This

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conveyance, however, was rescinded by the district court, leaving no ruling,

disposition, or change in Appellant’s assumption of the first mortgage.

Consequently, Appellant is still obligated to pay the underlying indebtedness, yet

she has been stripped of 50% of the ownership in the property itself. Had IndyMac

been made a party to the action, the rights and obligations of all parties would have

been before the Court. Further, it is very unlikely that any default judgment would

have been entered against Appellant, since an interested third party (IndyMac)

would also have been in the picture overseeing the overall disposition of these

proceedings.

In his brief, Appellee passes off the importance of naming all parties in

interest, focusing only upon the harm suffered by the lienholder not named.

However, here Appellee’s failure to comply with his statutory requirement to name

IndyMac renders the proceedings incomplete and enabled Appellee to assume a

position of possession (through the receiver) superior to the rights of the

underlying lienholder, all to Appellant’s detriment. Appellant remains liable on a

mortgage indebtedness, without the benefit of ownership of the very property

securing repayment of the indebtedness.

The Judgment should be reversed, the receivership appointment vacated, and

the Appellee required to replead in order to add IndyMac as a necessary party to

the proceedings.

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H. APPELLEE FAILED TO ABIDE BY THE PROCEDURAL
REQUIREMENTS FOR APPOINTMENT OF A RECEIVER;
THEREFORE THE RECEIVERSHIP APPOINTMENT SHOULD BE
REVERSED.

Appellee, both in the proceedings below and in his brief on appeal, ignores

the statutory notice requirements for appointment of a receiver. The record in the

trial court is void of any notice of the hearing on Appellee’s Petition for the

appointment of a receiver. If the application for receivership concerns property

that is fixed and immovable, the court is required to give notice to the adverse

party unless otherwise provided by statute. TEX. R. CIV. P. 695 (insufficient notice

given when oral request for receivership was made after close of evidence at

conclusion of temporary injunction hearing); Helton v. Kimbell, 621 S.W.2d 675,

678 (Tex. App.—Fort Worth 1981, no writ) (notice requirement applies to mineral

receiverships under predecessor of TEX. CIV. PRAC. & REM. CODE

§§ 64.091, 64.092); see, e.g., Nationwide Life Ins. Co. v. Nations, 654 S.W.2d 860,

861–862 (Tex. App.—Houston [14th Dist.] 1983, no writ) (vacating order of

receivership for lack of notice)].

Under Texas Rules of Civil Procedure 695, the court must set a receivership

application for hearing and serve notice on the adverse party not less than three (3)

days before the hearing. TEX. R. CIV. P. 695; see Krumnow v. Krumnow, 174

S.W.3d 820, 829–830 (Tex. App.—Waco 2005, pet. denied) (notice improper

when court raised issue of appointment of receiver on its own motion); Marion v.

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Marion, 205 S.W.2d 426, 429 (Tex. Civ. App.—San Antonio 1947, no writ) (show

cause order issued at time of original appointment does not constitute notice for

subsequent modified order of appointment). This rule does not confer personal

jurisdiction absent some type of citation or appearance by the named defendant.

Gray v. Phi Res., Ltd., 710 S.W.2d 566, 567 (Tex. 1986) (rule not satisfied by three

days’ posting of petition at courthouse).

Failure to give notice makes the appointment of the receiver voidable, not

void. Johnson v. Barnwell Prod. Co., 391 S.W.2d 776, 785 (Tex. Civ. App.—

Texarkana 1965, writ ref’d n.r.e.); Helton v. Kimbell, 621 S.W.2d 675, 678 (Tex.

App.—Fort Worth 1981, no writ). Thus, as other courts of appeal have noted, any

question of notice should be raised in a direct attack, such as a motion to vacate the

order of appointment or an appeal. An appeal may be preferable because making a

motion to vacate waives any complaint about the absence of notice. Marion v.

Marion, 205 S.W.2d 426, 429 (Tex. Civ. App.—San Antonio 1947, no writ).

The record fails to show that Appellant ever received notice of the

receivership hearing. Nothing in Appellee’s Brief shows that the notice

requirement was fulfilled. Accordingly, Appellant was thereby denied proper due

process and an opportunity to be heard before the receiver was appointed. Thus,

the district court’s Judgment appointing the receiver is VOID, and should be

reversed and this Court order the receiver dismissed from this action.

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 CONCLUSION AND PRAYER

Nothing in Appellee’s Brief overcomes the basis for this Court to reverse the

no-answer default judgment of the district court. It is clear that the district court’s

Judgment is fraught with numerous points of error, all as plainly seen from the face

of the record. Accordingly, Appellant prays that this Court reverse the Judgment

in its entirety and remand the matter with instructions that the receivership is

vacated and that all further proceedings must be transferred to Williamson County,

Texas, where Appellant would be permitted to answer or otherwise plead to

Appellee’s claims; that Appellant be awarded her costs incurred herein, including

all reasonable attorney fees incurred as a result of overturning Appellee’s

unwarranted Judgment; and for such other and further relief as may in the premises

be just and equitable.

Respectfully submitted,

THE LEFLER LAW FIRM
1530 Sun City Blvd, Ste 119
Austin, Texas 78633
T (512) 869-2579
F (866) 583-7294

/s/ Sandra M. Lefler
SANDRA M. LEFLER
State Bar No. 12161040
slefler@leflerlegal.com

LEAD COUNSEL FOR APPELLANT

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 CERTIFICATE OF SERVICE

I hereby certify that on the 7th day of August, 2015, Appellant served
Appellee with a true and correct copy of the foregoing Appellant’s First Amended
Brief via electronic filing service to:

Brent Allen Devere
Devere Law Firm
1411 West Avenue, Ste 200
Austin, Texas 78701
bdevere@1411west.com

/s/ Sandra M. Lefler
SANDRA M. LEFLER

CERTIFICATE OF COMPLIANCE

I certify that this document was produced on a computer using Microsoft
Word 2013 and contains 4,311 words as determined by the computer software
word count function, exclusive of the sections of the document listed in Texas Rule
of Appellate Procedure 9.4(i)(1) that otherwise do not have to be counted.

/s/ Sandra M. Lefler
SANDRA M. LEFLER

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