John L. Stephens v. Dyck O'Neal, Inc

• Court: Court of Appeals of Texas
• Decided: February 16, 2012
• Docket: 01-10-00512-CV
• Status: Published

Opinion

Opinion issued February 16, 2012.

In The

Court of Appeals

For The

First District of Texas

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NO. 01-10-00512-CV

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John L. Stephens, Appellant

V.

Dyck O'Neal, Inc., Appellee

On Appeal from the 400th District Court

Fort Bend County, Texas

Trial Court Case No. 09DCV176743

MEMORANDUM OPINION

          John Stephens appeals the trial court’s denial of his motion to dissolve a post-judgment writ of garnishment.  He contends that the trial court abused its discretion in doing so because the funds subject to the writ are current wages and therefore exempt from garnishment.  Finding no error, we affirm.

Background

          Stephens defaulted on a second mortgage held by Dyck O’Neal, Inc., the mortgage holder.  Dyck O’Neal obtained a judgment against Stephens in excess of $50,000, from which Stephens did not appeal, and Dyck O’Neal obtained a writ of execution on the judgment.  It was returned unpaid. 

Dyck O’Neal learned through post-judgment discovery that Stephens had accounts at JSC Federal Credit Union (JSC).  Dyck O’Neal applied for a post-judgment writ of garnishment against JSC seeking to satisfy at least part of the judgment debt through funds in Stephens’s accounts.  JSC answered, and Stephens appeared pro se, protesting the garnishment.  The parties entered into an agreed final judgment providing that Dyck O’Neal recover $4,515.78 “from the funds of [Stephens] currently being held by [JSC] from [Stephens’s] credit union accounts, and/or the garnished funds.”  The judgment also discharges JSC of liability beyond that amount. 

          The day after the trial court signed the agreed final judgment, Stephens moved to dissolve the writ of garnishment, alleging that the funds on deposit in his JSC accounts were current wages exempt from garnishment.  After an evidentiary hearing, during which Stephens did not present any evidence that the garnished funds were wages, the trial court denied the motion.

Discussion

The Texas Rules of Civil Procedure provide that a defendant whose property or account has been garnished may seek to vacate, dissolve, or modify a writ of garnishment by sworn written motion that admits or denies “each finding of the order directing the issuance of the writ except where the movant is unable to admit or deny the finding, in which case movant shall set forth the reasons why he cannot admit or deny.”  Tex. R. Civ. P. 664a.  The movant bears the burden to prove the asserted ground for dissolution.  See id.  We review a trial court’s ruling on a motion to dissolve a writ of garnishment for abuse of discretion.  Simulis, L.L.C. v. G.E. Capital Corp., 276 S.W.3d 109, 112 (Tex. App.—Houston [1st Dist.] 2008, no pet.) (citing Gen. Elec. Capital Corp. v. ICO, Inc., 230 S.W.3d 702, 705 (Tex. App.—Houston [14th Dist.] 2007, pet. denied)).  A trial court abuses its discretion if it acts without reference to guiding rules and principles or in an arbitrary or unreasonable manner.  Id. (citing Downer v. Aquamarine Operators, Inc., 701 S.W.2d 238, 241–42 (Tex. 1985)).

Relying on General Electric Capital Corp. v. ICO, Inc., Stephens contends that his electronically deposited paycheck retained its exempt status as current wages even after its deposit into his credit union account.  See 230 S.W.3d at 705.  Current wages are not subject to garnishment in Texas.  See Tex. Const. art. XVI, § 28; Tex. Civ. Prac. & Rem. Code Ann. § 63.004 (West 2008); Simulis, L.L.C. 276 S.W.3d at 116–17.  But “[t]he protection of the constitutional exemption may be lost when the wages are under the control of the employee and the employee voluntarily leaves them with his employer or collects and deposits them with someone else.”  ICO, 230 S.W.3d at 707. 

In ICO, the judgment creditor obtained a writ to garnish severance payments that the judgment debtor’s former employer owed him after failing to renew his employment contract.  Id. at 704.  At the hearing on his motion to dissolve the writ, the judgment debtor presented evidence that his employment contract provided that he would receive a severance payment equivalent to one year’s salary if the employer chose not to renew it.  Id.  When the parties were unable to reach an agreement concerning the contract’s renewal, they disputed whether the severance should be paid out in a lump sum or in installments over a full year, and ultimately compromised that it would be paid out over a six-month period.  Id.

The judgment creditor contended that the debtor’s severance lost its exempt status when the he agreed to have it paid over a six-month period.  Id. at 707.  The court of appeals disagreed, observing that the debtor’s inability to collect the severance in a lump sum was not of his own choosing.  Id. at 708.  Addressing the element of voluntariness, the court noted “that an employee does not voluntarily leave money with an employer when the employee negotiates . . . to force the employer to pay the wages owed.”  Id. at 709.  The court of appeals thus concluded that the trial court did not abuse its discretion by dissolving the writ of garnishment.  Id.

In contrast, Stephens contends that his wages retained their exempt status on deposit into his credit union account because they were deposited by electronic transfer.  The Tyler Court of Appeals rejected a similar contention in Fitzpatrick v. Leasecomm Corp.  See No. 12-07-00487-CV, 2008 WL 4225973, at *3 (Tex. App.—Tyler Sept. 17, 2008, pet. denied) (mem. op.).  Relying on a well-settled line of authority that stops the constitutional safe harbor for wages once a debtor deposits them into a bank, the court of appeals observed that the legal effect of a deposit is the same whether the funds are deposited in person at a teller’s window or by electronic transfer.  Id.  Like the judgment debtor in Fitzpatrick, Stephens did not show that he had not authorized his employer to make an electronic transfer to the account, or even prove that the account consisted entirely of wages.  We hold that Stephens did not prove a current-wages exemption to defend against the writ of garnishment.  Accordingly, the trial court was within its discretion to deny Stephen’s motion to dissolve the writ of garnishment.

Conclusion

          We affirm the judgment of the trial court.

                                                                      Jane Bland

                                                                      Justice

Panel consists of Chief Justice Radack and Justices Bland and Huddle.