IN RE DE LA GARZA

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Docket Number

No. 13-03-753-CV.

Attorney(S)

Anne Vandewalle, San Antonio, for relator. Tom Harmon, San Antonio, A. Peter Thaddeus, Jr., McAllen, for real party in interest.

Acts

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Smart Summary

Factual and Procedural Background

This mandamus proceeding arises from a suit filed by National Investors, L.P. against relator Robert E. De La Garza to collect on a note, initiated on August 18, 1992. Relator filed a voluntary bankruptcy petition on March 1, 1994, in the United States Bankruptcy Court for the Southern District of Texas, McAllen Division. On March 28, 1994, the real party in interest obtained a final judgment against relator. Shortly thereafter, on April 21, 1994, relator's bankruptcy petition was dismissed. Approximately nine years later, in spring 2003, the real party in interest noticed a deposition to obtain discovery in aid of judgment, scheduled for April 1, 2003, which relator did not attend. The real party then filed a motion to compel discovery, granted by the trial court on November 18, 2003. Relator filed a petition for writ of mandamus requesting this Court to direct the trial court to vacate the order compelling the deposition, arguing the post-judgment discovery order was void because the underlying judgment was void.

Legal Issues Presented

Whether the trial court's post-judgment discovery order compelling relator to attend a deposition is void due to the alleged voidness of the underlying judgment.
Whether state court actions taken in violation of the bankruptcy code's automatic stay are void or merely voidable.
Whether dismissal of a bankruptcy petition after a state court judgment can retroactively validate a judgment taken in violation of the automatic stay.

Arguments of the Parties

Relator's Arguments

The post-judgment discovery order is void because the underlying judgment was obtained in violation of the bankruptcy code's automatic stay.
Cites Texas Supreme Court authority holding that state court actions taken in violation of the automatic stay are void.

Real Party in Interest's Arguments

The discovery order is not void because relator's bankruptcy proceeding was not successfully completed.
Actions taken in violation of the automatic stay are voidable, not void, relying on Fifth Circuit federal court decisions.
Requests retroactive validation of the judgment based on the dismissal of relator's bankruptcy petition.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Walker v. Packer, 827 S.W.2d 833 (Tex. 1992)	Mandamus issues only to correct clear abuse of discretion not remediable on appeal.	Established the standard for issuing mandamus in this case.
In re Steiger, 55 S.W.3d 168 (Tex.App.-Corpus Christi 2001)	Mandamus appropriate for post-judgment discovery orders.	Supported mandamus as proper remedy to challenge the discovery order.
Collier Servs. Corp. v. Salinas, 812 S.W.2d 372 (Tex.App.-Corpus Christi 1991)	Mandamus as a remedy for judicial review of post-judgment discovery orders.	Reinforced appropriateness of mandamus review.
Arndt v. Farris, 633 S.W.2d 497 (Tex. 1982)	Trial court’s inherent power to enforce its judgments.	Recognized trial court authority to enforce judgments unless void.
Enis v. Smith, 883 S.W.2d 662 (Tex. 1994)	Void judgments cannot support enforcement orders.	Supported conclusion that void judgment cannot be enforced.
Howell v. Thompson, 839 S.W.2d 92 (Tex. 1992)	State court actions taken in violation of automatic stay are void.	Texas Supreme Court authority supporting voidness of judgment in this context.
Cont'l Casing Corp. v. Samedan Oil Corp., 751 S.W.2d 499 (Tex. 1988)	Similar principle regarding violation of automatic stay.	Reinforced voidness of actions taken in violation of stay.
In re Jones, 63 F.3d 411 (5th Cir. 1995)	Actions violating automatic stay are voidable, not void.	Relied upon by real party in interest; court declined to follow.
Penrod Drilling Corp. v. Williams, 868 S.W.2d 294 (Tex. 1993)	Texas courts must follow Texas Supreme Court and U.S. Supreme Court precedents.	Guided court to follow Texas Supreme Court precedent over Fifth Circuit.
In re Sensitive Care, Inc., 28 S.W.3d 35 (Tex.App.-Fort Worth 2000)	State court actions violating automatic stay are void.	Followed as controlling authority consistent with Texas Supreme Court.
Paine v. Sealey, 956 S.W.2d 803 (Tex.App.-Houston [14th Dist.] 1997)	Rejected reliance on Fifth Circuit decisions regarding stay violations.	Supported court’s rejection of voidable argument.
In re S.W. Bell Tel. Co., 6 S.W.3d 753 (Tex.App.-Corpus Christi 1999)	State court actions against debtor in violation of automatic stay are void.	Prior opinion of this Court affirming voidness principle.
Graham v. Pazos De La Torre, 821 S.W.2d 162 (Tex.App.-Corpus Christi 1991)	Consistent with voidness of judgments violating stay.	Supported the court’s holding.
In re S.W. Bell Tel. Co., 35 S.W.3d 602 (Tex. 2000)	Reaffirmed voidness of state court actions violating automatic stay.	Texas Supreme Court precedent confirming the principle.
Padrino Maritime, Inc. v. Rizo, 130 S.W.3d 243 (Corpus Christi 2004)	Memorandum opinion supporting voidness of judgment violating stay.	Recent authority from this Court consistent with holding.
In re Guardianship of B.A.G., 794 S.W.2d 510 (Tex.App.-Corpus Christi 1990)	Void judgment is null and cannot be ratified or waived.	Supported conclusion that void judgment cannot be resurrected after bankruptcy dismissal.

Court's Reasoning and Analysis

The Court began by recognizing that mandamus is an extraordinary remedy to correct a clear abuse of discretion not remediable on appeal and that it is appropriate to review post-judgment discovery orders via mandamus. The trial court has inherent authority to enforce its judgments, but this authority does not extend to enforcing void judgments. The relator argued the judgment was void because it was obtained in violation of the automatic stay imposed by the bankruptcy code. The real party contended such actions are voidable rather than void, relying on Fifth Circuit authority.

The Court analyzed the conflict between Texas Supreme Court precedent and Fifth Circuit decisions, concluding it must follow the Texas Supreme Court's rulings. The Court cited Texas Supreme Court and Texas appellate court cases holding that state court actions taken in violation of the automatic stay are void. The Court rejected the real party's argument that dismissal of the bankruptcy petition retroactively validates the judgment, emphasizing that a void judgment is a nullity that cannot be resurrected or ratified.

Based on this analysis, the Court held that the judgment against relator is void and that the post-judgment discovery order based on that judgment is likewise void. Consequently, the Court conditionally granted the writ of mandamus directing the trial court to vacate its order.

Holding and Implications

The Court conditionally granted the writ of mandamus directing the respondent judge to vacate the November 18, 2003 order compelling relator to attend a post-judgment deposition.

The direct effect is that the trial court's order compelling discovery is nullified due to the underlying judgment being void for violation of the bankruptcy automatic stay. The Court emphasized that a void judgment cannot be ratified or revived by subsequent dismissal of the bankruptcy petition. No new precedent was set; rather, the Court reaffirmed existing Texas Supreme Court authority on the voidness of state court actions violating the automatic stay.

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In re Robert E. DE LA GARZA.

OPINION

Opinion by Justice GARZA.

On December 22, 2003, relator, Robert E. De La Garza, filed a petition for writ of mandamus asking this Court to direct respondent, Judge Noe Gonzalez of the 370th District Court of Hidalgo County, to rescind or vacate his order of November 18, 2003 compelling relator to attend a post-judgment deposition noticed by the real party in interest, National Investors, L.P. Relator argues that the post-judgment discovery order at issue is void because the underlying judgment is void. On January 9, 2004, the real party in interest filed a response to relator's petition, in which it argued, inter alia, that the discovery order was not void because relator's bankruptcy proceeding was not successfully completed. Having reviewed and considered the arguments and authorities presented by each side, we conditionally grant a writ of mandamus directing respondent to vacate his order of November 18, 2003.

Background

This mandamus proceeding arises from a suit to collect on a note, which was filed by the real party in interest against relator on August 18, 1992. On March 1, 1994, relator filed a voluntary bankruptcy petition in the United States Bankruptcy Court for the Southern District of Texas, McAllen Division. On March 28, 1994, the real party in interest was awarded a final judgment against relator on its suit. Subsequently, on April 21, 1994, relator's bankruptcy petition was ordered dismissed.

Approximately nine years later, in the spring of 2003, the real party in interest noticed relator to appear at a deposition to obtain discovery in aid of judgment. The deposition was scheduled for April 1, 2003, but relator did not appear. On April 8, 2003, the real party in interest filed a motion to compel discovery, which was granted by respondent on November 18, 2003. This mandamus proceeding ensued.

Analysis

Mandamus is an extraordinary writ and will issue only to correct a clear abuse of discretion that cannot be remedied on appeal. Walker v. Packer, 827 S.W.2d 833, 839-40 (Tex. 1992, orig. proceeding); In re Steiger, 55 S.W.3d 168, 170 (Tex.App.-Corpus Christi 2001, orig. proceeding). Mandamus is appropriate to obtain judicial review of a trial court's post-judgment discovery order. See Collier Servs. Corp. v. Salinas, 812 S.W.2d 372, 375 (Tex.App.-Corpus Christi 1991, orig. proceeding); see also In re Amaya, 34 S.W.3d 354, 356 (Tex.App.-Waco 2001, orig. proceeding).

A trial court has inherent power and authority to enforce its judgments. Arndt v. Farris, 633 S.W.2d 497, 499 (Tex. 1982, orig. proceeding); see also Tex Gov't Code Ann. § 21.001(a) (Vernon Supp. 2004); Tex.R. Civ. P. 308, 621a; Ex parte Gorena, 595 S.W.2d 841, 844 (Tex. 1979, orig. proceeding); S.W. Bell Mobile Sys. v. Franco, No. 13-99-186-CV, 2000 Tex.App. LEXIS 8073, at *3 (Corpus Christi Nov. 30, 2000, no pet.) (not designated for publication). But if the judgment is void, the trial court has no ability to enforce it. Cf. Enis v. Smith, 883 S.W.2d 662, 663 (Tex. 1994, orig. proceeding) ("A void judgment will not support a turnover order.").

Relator argues that the judgment in this case is void because it was taken in violation of the bankruptcy code's automatic stay. See 11 U.S.C. § 362 (2003). Relator cites Howell v. Thompson, 839 S.W.2d 92, 92 (Tex. 1992) and Cont'l Casing Corp. v. Samedan Oil Corp., 751 S.W.2d 499, 501 (Tex. 1988) as direct Texas Supreme Court authority on this issue. According to the real party in interest, however, actions taken in derogation of the automatic stay are not void but merely voidable. The real party in interest relies on In re Jones, 63 F.3d 411, 412 (5th Cir. 1995), Picco v. Global Marine Drilling Co., 900 F.2d 846, 850 (5th Cir. 1990), and Sikes v. Global Marine, Inc., 881 F.2d 176, 178 (5th Cir. 1989).

The issue, then, is whether this Court should follow the United States Court of Appeals for the Fifth Circuit or the Texas Supreme Court in determining the effect of the bankruptcy code's automatic stay on a state court judgment. In Penrod Drilling Corp. v. Williams, 868 S.W.2d 294, 296 (Tex. 1993), the Texas Supreme Court explained: "While Texas courts may certainly draw upon the precedents of the Fifth Circuit, or any other federal or state court, in determining the appropriate federal rule of decision, they are obligated to follow only higher Texas courts and the United States Supreme Court." Thus, when faced with the very issue posed to us today, the Fort Worth Court of Appeals decided to "follow . . . Howell and hold that state court actions taken in violation of the automatic stay are void." In re Sensitive Care, Inc., 28 S.W.3d 35, 39 (Tex.App.-Fort Worth 2000, orig. proceeding); see also Paine v. Sealey, 956 S.W.2d 803, 806 (Tex.App.-Houston [14th Dist.] 1997, no writ) ("[W]e are not bound by Sikes.").

In light of the aforementioned precedent, as well as our own Court's prior opinions, we hold that all state court actions taken against a debtor in violation of an automatic stay pursuant to the bankruptcy code are void. See In re S.W. Bell Tel. Co., 6 S.W.3d 753, 754 (Tex.App.-Corpus Christi 1999, orig. proceeding); Graham v. Pazos De La Torre, 821 S.W.2d 162, 164 (Tex.App.-Corpus Christi 1991, no writ); see also In re S.W. Bell Tel. Co., 35 S.W.3d 602, 604 (Tex. 2000, orig. proceeding); Padrino Maritime, Inc. v. Rizo, 130 S.W.3d 243, 247 (Corpus Christi 2004, no pet. h.) (memorandum opinion).

The real party in interest, however, points out that no opinions from Texas courts discuss the effect of the dismissal of a bankruptcy case on actions taken against a debtor during the stay. In this case, relator's bankruptcy petition was dismissed less than a month after the real party in interest secured a final judgment in state court. The real party asks that we retroactively validate the void judgment based on the bankruptcy court's dismissal of relator's bankruptcy petition. Although the real party correctly asserts that dismissal of a bankruptcy action prior to discharge has the effect of undoing the bankruptcy insofar as is practical, see 11 U.S.C. § 349 (2003), a void judgment is a nullity and cannot be resurrected. See In re Guardianship of B.A.G., 794 S.W.2d 510, 511 (Tex.App.-Corpus Christi 1990, orig. proceeding) ("A void judgment is one entirely null within itself, and which is not susceptible of ratification or confirmation, and its nullity cannot be waived.").

Accordingly, we hold that the judgment rendered against relator is void and that the post-judgment discovery order is likewise void. On this basis, we conditionally grant a writ of mandamus compelling respondent to vacate his order of November 18, 2003. The writ will issue only upon respondent's refusal to act in accordance with the direction given by this opinion.