Gorman v. Gorman

966 S.W.2d 858, 1998 Tex. App. LEXIS 2474, 1998 WL 181804
CourtCourt of Appeals of Texas
DecidedApril 16, 1998
Docket01-96-00364-CV
StatusPublished
Cited by78 cases

This text of 966 S.W.2d 858 (Gorman v. Gorman) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Gorman v. Gorman, 966 S.W.2d 858, 1998 Tex. App. LEXIS 2474, 1998 WL 181804 (Tex. Ct. App. 1998).

Opinion

OPINION ON MOTION FOR REHEARING

TAFT, Justice.

The appellant has filed a motion for rehearing in this case. We deny the motion, but withdraw our previous opinion and issue this one in its stead in order to address some of the appellant’s rehearing arguments. The disposition of the case remains the same.

Rodman Edward Gorman, the settlor of the Gorman Children’s Trust (the Trust), a named defendant in the court below and appellant here, appeals from a judgment that:

(1) Granted a summary judgment in favor of the appellee, Sharon Elaine Gorman, his former wife and also a named defendant in the court below, which in essence invalidated the Trust or found that it had been revoked if it ever existed, and awarded her “the cash residue from the bankruptcy court amounting to the funds deposited in the trial court’s registry.”
(2) As a sanction under TexR.Civ.P. 13 and/or pursuant to the declaratory judgment act under which Mrs. Gor-man cross-claimed, awarded attorney’s fees in favor of Mrs. Gorman and against Robert L. Silvers, trustee of the Trust, the Trust, and Mr. Gorman, jointly and severally.
(3) Granted a nonsuit for Mr. Gorman’s trustee in bankruptcy, Gary Knostman, also a named defendant in the court below.

On appeal, Mr. Gorman contends the trial court erred in granting the summary judgment invalidating the Trust and in awarding attorney’s fees against him under either the declaratory judgment act, Tex.Civ.Prac. & Rem.Code Ann. § 37.009 (Vernon 1997), or Tex.R.Civ.P. 13.

*862 Background

On January 10, 1989, Mr. . Gorman established a trust in the amount of $75,000 (naming himself and Mrs. Gorman as settlors) for the welfare, maintenance, and education of their children through college, to be funded with his personal earnings. 1 There was a line for Mrs. Gorman’s signature, but she refused to sign. Three weeks after Mr. Gor-man executed the trust indenture, he filed for divorce from Mrs. Gorman. Approximately eight months later, on September 8, 1989, Mr. Gorman filed for bankruptcy and was listed as the debtor in the bankruptcy proceeding.

On September 28, 1992, Mr. Gorman and the Gorman’s three children filed a motion to intervene on behalf of the Trust in the divorce proceeding. Mrs. Gorman filed a motion to deny the intervention. On October 19, 1992, the trial court granted Mrs. Gor-man’s motion to deny the intervention. The order does not state anything about the children obtaining or seeking relief in the bankruptcy court. The children filed a proof of claim with the bankruptcy court, which designated the Trust as a creditor, for $75,000. Mrs. Gorman filed a motion to dismiss with the bankruptcy court alleging the bankruptcy action and the Trust were shams to deprive her of her property. As a result, the bankruptcy court converted the action from a chapter 11 proceeding to a chapter 7 proceeding and appointed a bankruptcy trustee to investigate preferential transfers and specific claims, including the claims by the Trust. There is nothing in the record indicating any determination by the bankruptcy trustee in regard to the Trust. The Trust thereafter voluntarily withdrew its claim. 2

In the divorce proceeding, Mrs. Gorman listed as community property the $20,000 in the Trust and the $486,000 annuity which was the purported source of funding for the Trust. The divorce decree entered November 3, 1992, does not specifically mention these assets. The divorce decree awarded to Mrs. Gorman as her sole and separate property, “all of the cash residue, if any, to be distributed from [Mr. Gorman’s] bankruptcy proceeding.... Such residue is the portion belonging to debtor that is remaining after debts and costs of administration have been paid. It is ordered and decreed that Sharon Elaine Gorman’s cash residue is to be paid directly to Sharon Elaine Gorman.”

Procedural History

On October 27, 1992, the Trust, by and through Silvers, filed this lawsuit in state district court against Mr. Gorman, Mrs. Gor-man, and Gary Knostman, bankruptcy trustee for Mr. Gorman, as defendants. The Trust sued to recover the $75,000 that Mr. Gorman had pledged to the Trust. Mrs. Gorman answered the suit and filed a cross-claim for (1) a declaratory judgment that the Trust was not valid, (2) damages against the trustee for a frivolous suit, and (3) attorney’s fees. The Trust answered Mrs. Gorman’s cross-claim with a general denial. The trial court granted a nonsuit for Knostman. Knostman deposited the residue of the funds he held as bankruptcy trustee, $93,956.50, in the trial court’s registry, per agreement of the parties entered into in the bankruptcy proceeding.

On June 30, 1994, Mrs. Gorman filed a “1994 Motion for Partial Summary Judgment” against the Trust, alleging: (1) no trust exists, (2) res judicata, and (3) waiver. She also requested a declaratory judgment that “the purported Trust is not a valid Trust *863 and that [Sharon Gorman] has no liability thereunder.” Mr. Gorman, defendant in the case, filed a pro se response to Mrs. Gor-man’s motion for summary judgment which was directed only at the Trust and trustee.

On July 29, 1994, the trial court granted Mrs. Gorman’s motion for partial summary judgment against the Trust and a declaratory judgment that “she was entitled to the cash residue from the bankruptcy court amounting to the funds deposited in the trial court’s registry.” However, it was an interlocutory judgment because it did not dispose of Mrs. Gorman’s attorney’s fees claims, nor did it dispose of the Trust’s claims against Mr. Gorman as a defendant.

On November 21,1994, after the ruling on the partial summary judgment and declaratory judgment against the Trust, Mrs. Gorman filed her first cross-claim against Mr. Gor-man asserting he and the trustee brought a frivolous suit under Tex.R.Civ.P. 13, and requesting attorney’s fees. Mrs. Gorman also requested a declaratory judgment that “the alleged Trust is not a valid Trust; that in the alternative, it has been revoked if it ever existed; and that Sharon Gorman has no liability thereunder....” She also requested attorney’s fees pursuant to Tex.Civ.Prac. & Rem.Code Ann. § 37.009 from Silvers “in his individual capacity and from the nominal defendant [Mr. Gorman] who is the plaintiff.” We note that Mr. Gorman had not filed any pleadings against Mrs. Gorman as of this date, except his response to her motion for partial summary judgment against the Trust. She alleged that Mr. Gorman and Silvers had depleted the bankruptcy estate by $50,000. Both Silvers and Mr. Gorman filed general denials to Mrs. Gorman’s claims. Mr. Gor-man filed a motion for sanctions against Mrs. Gorman and her attorney under Tex.R.Civ.P. 13. Mr. Gorman also filed a cross-claim against Mrs. Gorman requesting indemnity and contribution from Mrs. Gorman for any liability he had to the plaintiff trust, and his attorney’s fees.

The trial court later held a hearing on the motion for sanctions under Tex.R.Civ.P. 13. It entered a final judgment awarding Mrs. Gorman $45,000 in attorney’s fees under the declaratory judgment act and, alternatively, as sanctions under rule 13 against the Trust by and through trustee Silvers and Mr.

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Bluebook (online)
966 S.W.2d 858, 1998 Tex. App. LEXIS 2474, 1998 WL 181804, Counsel Stack Legal Research, https://law.counselstack.com/opinion/gorman-v-gorman-texapp-1998.