Affirmed and Opinion Filed January 11, 2023
S In The Court of Appeals Fifth District of Texas at Dallas No. 05-21-00047-CV
STEVEN K. TOPLETZ, Appellant V. RAYGAN WADLE, AS INDEPENDENT EXECUTOR OF THE ESTATE OF LYNDA WILLIS, Appellee
On Appeal from the 416th Judicial District Court Collin County, Texas Trial Court Cause No. 416-03100-2020
MEMORANDUM OPINION Before Justices Partida-Kipness, Pedersen, III, and Nowell Opinion by Justice Partida-Kipness Appellant Steven K. Topletz appeals the trial court’s orders granting
appellee’s motion for summary judgment on Topletz’s bill of review and ordering
sanctions against his counsel. We affirm.
BACKGROUND
Although this appeal relates to the denial of a bill of review filed in 2020 by
Topletz, the origins of the dispute go back to 2004 with the formation of a limited
partnership to engage in real estate development. Topletz’s actions and omissions
within that enterprise ultimately led to a 2012 lawsuit filed by Lynda Willis on behalf of herself and the limited partnership. An adverse judgment was rendered against
Topletz in 2015. Willis’s efforts to collect on that judgment and Topletz’s resistance
to those efforts ultimately brought the underlying case to where it is today. A brief
history of the parties’ interactions prior to the 2012 Lawsuit is necessary to properly
address the parties’ appellate arguments. We, therefore, begin there before providing
the procedural background of the dispute that is the subject of this appeal.
A. The parties’ business relationships
Lancaster Bluegrove, L.P. (the Partnership) was formed on February 28, 2004,
to purchase and develop real property for resale. Andante Development, Inc.
(Andante) was the general partner and owned 1% of the Partnership. Lynda Willis
and Andante Development of Nevada, Inc. (Andante Nevada) were limited partners
who each owned 49.5% of the Partnership. Topletz was the president and sole
shareholder of Andante and Andante Nevada.
The Partnership acquired approximately 454 acres in Lancaster, Texas (the
Bluegrove Property) to develop for resale. In 2004, Willis wired Topletz
$304,475.93 to purchase the first tract in the Bluegrove Property. When purchased,
the Bluegrove Property was owned free and clear of any liens or encumbrances.
Unbeknownst to Willis, Topletz took several actions beginning in July 2005 that
encumbered the Bluegrove Property and, by extension, Willis’s investment in the
property and potential profits from its future sale. Those encumbrances included two
loans obtained by the Partnership through Andante and Topletz totaling
–2– $567,805.00. The loans were obtained in July 2005 and July 2006 and secured by
liens against the Bluegrove Property. Andante did not inform or otherwise notify
Willis of either of the loans.
Lancaster Cub Creek, L.P. (Cub Creek) was formed on December 22, 2005.
Like the Partnership, Cub Creek was formed to purchase and develop real property
for resale. Willis was not a partner in Cub Creek. Andante was the general partner
owning 1% of Cub Creek, and Andante Nevada was the sole limited partner owning
99%. Prior to 2007, Cub Creek purchased approximately 289 acres in Lancaster,
Texas (the Cub Creek Property). To make the purchase, however, Cub Creek
borrowed money from Inwood Bank secured by a lien and deed of trust in favor of
Inwood Bank.
When Cub Creek sought to obtain an extension and refinance of the Cub
Creek Property, Andante caused the Partnership to pledge the Bluegrove Property
and the Partnership’s equity in the Bluegrove Property as security for a loan
refinance from Inwood Bank to Cub Creek. Again, Andante did not inform or
otherwise notify Willis of those transactions.
Then, in 2009, Topletz marketed and sold the Bluestone Property and Cub
Creek Property in a single transaction that closed on September 1, 2009. Like the
prior transactions, Andante did not inform or otherwise notify Willis of the sale.
At the time of the sale, the Bluegrove Property was encumbered by two loans
totaling $523,016.85 (the Bluegrove Loans), and Cub Creek was encumbered by
–3– four loans totaling $3,398,990.88 (the Cub Creek Loans). After the sale, there was a
net due from seller of $941,595.37 which was paid by Topletz. The Partnership’s
equity was then used to pay down the Cub Creek loan to the benefit of Cub Creek,
Andante, Andante Nevada, and Topletz. The portion of the sales price attributable
to the Bluegrove Property was $911,978.16. Willis’s share of the proceeds should
have been 49.5% of Bluegrove’s net proceeds. Unfortunately, the Partnership did
not realize any money from the sale and Willis received no distributions from the
sale despite considerable equity in the Bluegrove Property.
B. The 2012 Lawsuit
On October 25, 2012, Willis sued Topletz1 for breach of fiduciary duty, fraud,
and breach of contract in the 416th District Court of Collin County (the 2012
Lawsuit). She sued in her individual capacity and derivatively for the Partnership.
Willis’s individual fraud and breach of fiduciary duty claims were based on
Topletz’s use of the Bluegrove Property as collateral for the Cub Creek loan, sale of
the Bluegrove Property in combination with the Cub Creek property, and failure to
disclose those acts. Willis alleged those actions benefited Topletz and Cub Creek to
the detriment of both Willis and the Partnership.
The Collin County trial court held a bench trial and rendered judgment against
Topletz on August 10, 2015 (the 2015 Judgment). The court awarded the Partnership
$344,951.58 in damages plus prejudgment interest and awarded Willis individually
1 Willis also brought claims against other parties who are not involved in this appeal. –4– $304,475.93 in damages plus prejudgment interest, $100,000 in exemplary damages,
attorney’s fees of $280,713.34, and conditional appellate fees. The 2015 Judgment
included the trial court’s determination that the trial court had jurisdiction over the
parties and the subject matter of the case.
The trial court also issued findings of fact and conclusions of law. The trial
court concluded Topletz made several misrepresentations regarding the Bluegrove
Property. The court also concluded Willis joined the partnership, invested significant
funds, and continued in the partnership in reliance on Topletz’s misrepresentations
and failure to disclose material information. Those misrepresentations included that
the land was to be purchased in cash and kept free of encumbrances or debts, and
the Bluegrove Property was in good financial condition because its loan to value
ratio was desirable compared to that of Cub Creek. Similarly, the trial court
concluded Adante failed to disclose material information to Willis, including the
intention to encumber the Bluegrove Property, that loans were obtained and secured
by the Bluegrove Property, the purpose of the loans or what the funds were to be
used for, and Andante’s intention to pledge the Bluegrove Property for Cub Creek
loans and sell the property and use the proceeds of the sale to pay off the Bluegrove
Loans and the Cub Creek Loans. The trial court concluded Willis relied on Andante
and Topletz’s representations and failures to disclose material information
concerning the partnership and was damaged as a result. That damage included out-
–5– of-pocket damages of the $304,475.93 Willis invested to purchase the first tract of
the Bluegrove Property.2
C. Post-judgment collection efforts
Topletz did not appeal the 2015 Judgment and did not pay the damages
awarded to Willis. Willis hired counsel to begin collection efforts against Topletz
for the damages awarded to her individually. Willis’s counsel served extensive post
judgment discovery on Topletz and filed a motion to compel Topletz to respond to
the discovery and produce responsive documents. Willis passed away before the
motion to compel hearing. After her estate was probated, the independent executor
of her estate, appellee Raygan Wadle, continued Willis’s efforts to collect on the
portions of the 2015 Judgment rendered in favor of Willis individually.
The trial court heard the motion to compel and ordered Topletz to produce
various documents. When Topletz did not comply with the order compelling
production, Wadle filed a motion for contempt against Topletz. The trial court heard
the motion for contempt and signed a Judgment for Contempt on March 18, 2019
(the 2019 Contempt Judgment). The trial court ordered Topletz be held in contempt
of court and confined to the county jail of Collin County until he complied with the
discovery order. Topletz sought relief from the 2019 Contempt Judgment by filing
petitions for writs of habeas corpus in this Court, the Texas Supreme Court, and the
2 As to the Partnership, the trial court concluded Topletz reduced his liability under his guaranty of the Cub Creek loans by the equity and value of the Bluegrove Property. The court calculated that unwarranted benefit as totaling $344,951.58, which is the amount awarded to the Partnership in the 2015 Judgment. –6– United States District Court for the Eastern District of Texas. Although the habeas
petitions were denied, Topletz still did not comply with the order compelling
production.
D. Topletz’s bill of review
On February 28, 2020, Topletz filed a bill of review in the 193rd Judicial
District Court of Dallas County challenging the 2015 Judgment. He argued the 2015
Judgment was void because the trial court did not have subject matter jurisdiction
over the Partnership. Topletz alleged the Texas Secretary of State cancelled the
Partnership’s existence as a legal entity on July 15, 2009. He maintained the
Partnership lacked standing to bring the 2012 Lawsuit, and the Collin County court
lacked subject matter jurisdiction over the Partnership because more than three years
had elapsed between the cancellation of the Partnership’s existence and the filing of
the 2012 Lawsuit. See TEX. BUS. ORG. CODE § 11.356(a)(1) (“the terminated filing
entity continues in existence until the third anniversary of the effective date of the
entity’s termination only for purposes of: (1) prosecuting or defending in the
terminated filing entity’s name an action or proceeding brought by or against the
terminated entity; . . .”). Topletz had not previously raised the issue of jurisdiction
in his post-judgment or appellate filings following the 2015 Judgment.
Wadle moved to transfer the bill of review action from Dallas County to the
416th Judicial District Court of Collin County. Wadle included a request for
sanctions against Topletz and his counsel within the motion to transfer. The Dallas
–7– County court granted the motion to transfer on June 10, 2020, and ordered the case
transferred to the 416th Judicial District Court of Collin County. Once back in Collin
County, Wadle filed a motion for summary judgment on Topletz’s bill of review,
and Topletz filed a competing motion for summary judgment. Wadle also
supplemented the request for sanctions previously included in his motion to transfer.
On March 11, 2021, the trial court signed an order denying Topletz’s motion
for summary judgment, granting Wadle’s motion for summary judgment and
denying Topletz’s bill of review, and ordering Topletz to take nothing on his claims
against Wadle. On April 13, 2021, the trial court signed an eight-page order granting
Wadle’s request for sanctions and rendering sanctions against Topletz’s counsel,
Austin Champion. Those orders are the subject of this appeal.
STANDARDS OF REVIEW
We review orders granting summary judgment de novo. Lujan v. Navistar,
Inc., 555 S.W.3d 79, 84 (Tex. 2018). A party moving for traditional summary
judgment bears the burden of showing that no genuine issue of material fact exists
and that she is entitled to judgment as a matter of law. TEX. R. CIV. P. 166a(c). To
determine if the non-movant raises a fact issue, we review the evidence in the light
most favorable to the non-movant, crediting favorable evidence if reasonable jurors
could do so, and disregarding contrary evidence unless reasonable jurors could not.
Gonzalez v. Gonzalez, No. 05-16-00238-CV, 2017 WL 3599773, at *1 (Tex. App.—
–8– Dallas Aug. 22, 2017, no pet.) (mem. op.) (citing Mann Frankfort Stein & Lipp
Advisors, Inc. v. Fielding, 289 S.W.3d 844, 848 (Tex. 2009)).
We review a sanctions order for abuse of discretion. Low v. Henry, 221
S.W.3d 609, 614 (Tex. 2007). We will overturn a trial court’s imposition of sanctions
only when it is based on an erroneous view of the law or a clearly erroneous
assessment of the evidence. Home Owners Funding Corp. of Am. v. Scheppler, 815
S.W.2d 884, 889 (Tex. App.—Corpus Christi–Edinburg 1991, no writ); see also
Cooter & Gell v. Hartmax Corp., 496 U.S. 384, 405 (1990). We must indulge every
legal presumption in favor of the trial court’s ruling and view the evidence in the
light most favorable to that ruling. Hatteberg v. Hatteberg, 993 S.W.2d 522, 526
(Tex. App.—Houston [1st Dist.] 1994, no writ). A mere error in judgment by the
trial court does not constitute an abuse of discretion. Bradt v. Sebek, 14 S.W.3d 756,
761 (Tex. App.—Houston [1st Dist.] 2000, pet. denied). Further, “[t]he mere fact
that a trial judge may decide a matter within his discretionary authority in a different
manner than an appellate judge in a similar circumstance does not demonstrate that
an abuse of discretion has occurred.” Downer v. Aquamarine Operators, Inc., 701
S.W.2d 238, 242 (Tex. 1985).
ANALYSIS
In two issues, Topletz challenges the March 11, 2021 summary judgment
order denying his bill of review and the April 13, 2021 sanctions order.
–9– I. The Summary Judgment Order Denying the Bill of Review
In his bill of review, Topletz argued the 2015 Judgment was void because the
2012 Lawsuit was filed more than three years after the Texas Secretary of State
terminated the Partnership’s existence. According to Topletz, the trial court was
without jurisdiction to render judgment for the Partnership as a result of its
termination. Topletz also contended the Partnership’s termination status deprived
the trial court of jurisdiction over Willis’s individual claims because those claims
and damages were merely derivative claims arising from and interwoven with the
Partnership and its claims. Central to Topletz’s bill of review was evidence of the
date of the Partnership’s termination. That evidence was not before the trial court at
the time it rendered the 2015 Judgment.
In the motion for summary judgment, Wadle asserted several bases for
denying the bill of review as a matter of law. First, Wadle argued the bill of review
was time-barred as a direct attack because it was filed more than four years after
rendition of the 2015 Judgment, and Topletz did not plead or prove the required
element of extrinsic fraud. Next, Wadle contended a collateral attack on the 2015
Judgment failed as a matter of law because the jurisdictional recitals in the 2015
Judgment showed the trial court had jurisdiction over the claims and parties, and
extrinsic evidence could not be reviewed to contradict those jurisdictional recitals.
Further, Wadle maintained the 2015 Judgment was not void as to Willis because she
asserted claims against Topletz for fraud and breach of fiduciary duty that were not
–10– interconnected with the Partnership’s claims because she suffered harm in her
individual capacity and separate from her interest in the Partnership. Wadle also
asserted that Topletz’s arguments were barred by principles of estoppel and res
judicata because he failed to raise the issue of lack of jurisdiction in any post-
judgment proceeding or in documents filed in connection with Wadle’s efforts to
collect on the 2015 Judgment. Similarly, Wadle argued Topletz could not maintain
a bill of review because he participated in the 2015 trial.
On appeal, Topletz insists none of the grounds asserted by Wadle supported
the trial court’s summary judgment order. As in the bill of review, Topletz relies on
the extrinsic evidence of the Partnership’s termination date to support his arguments
that the 2015 Judgment was void. Wadle, in response, maintains we may not look to
that extrinsic evidence because the bill of review was a collateral attack on the 2015
Judgment and extrinsic evidence may not be used to declare a judgment void that
facially shows the trial court’s jurisdiction over the claims and parties. We agree
with Wadle.
A. The bill of review was a collateral attack on the 2015 Judgment.
A bill of review is an equitable proceeding brought by a party seeking to set
aside a prior judgment that no longer remains subject to challenge by a motion for
new trial or appeal. Caldwell v Barnes, 154 S.W.3d 93, 96 (Tex. 2004) (per curiam).
A bill of review, when properly brought, is a direct attack on a judgment. Fender v.
Moss, 696 S.W.2d 410, 412 (Tex. App.—Dallas 1985, writ ref’d n.r.e.). A direct –11– attack seeks to change a former judgment and secure a corrected one. Austin Indep.
Sch. Dist. v. Sierra Club, 495 S.W.2d 878, 881 (Tex. 1973). But when a bill of review
fails as a direct attack, it may instead constitute a collateral attack. Fender, 696
S.W.2d at 412; Pursley v. Ussery, 937 S.W.2d 566, 568 (Tex. App.—San Antonio
1996, no writ).
A collateral attack does not attempt to secure a corrected judgment. Browning
v. Prostok, 165 S.W.3d 336, 346 (Tex. 2005). Instead, it seeks to avoid the effect of
the former judgment. PNS Stores, Inc. v. Rivera, 379 S.W.3d 267, 272 (Tex. 2012).
Only a void judgment may be attacked collaterally. Browning, 165 S.W.3d at 346.
A judgment is void when “the court rendering judgment had no jurisdiction of the
parties or property, no jurisdiction of the subject matter, no jurisdiction to enter the
particular judgment, or no capacity to act.” PNS Stores, 379 S.W.3d at 272 (citation
omitted).
A judgment may be challenged as void through a direct attack or a collateral
attack. PNS Stores, Inc. v. Rivera, 379 S.W.3d 267, 271 (Tex. 2012). Generally,
absent a showing of extrinsic fraud, a petition for bill of review must be filed within
four years of the judgment or order sought to be set aside. Id. at 275. “After the time
to bring a direct attack has expired, a litigant may only attack a judgment
collaterally.” Id. at 271–72. Here, Topletz filed the bill of review more than four
years after the 2015 Judgment. Accordingly, his only means for attacking the 2015
–12– Judgment as void was a collateral attack. See id. at 271. We conclude the bill of
review action constituted a collateral attack of the 2015 Judgment.3
B. Consideration of extrinsic evidence
Having concluded the bill of review was a collateral attack, we must next
decide what evidence may be considered to determine whether the 2015 Judgment
was void. This is the crux of the parties’ dispute on appeal. Topletz insists the trial
court erred by refusing to consider the July 15, 2009, cancellation of the
Partnership’s registration when deciding whether the 2015 Judgment was void.
Wadle maintains the cancellation date constitutes extrinsic evidence the trial court
was not permitted to consider when analyzing the bill of review. Our resolution of
this question will determine how we must proceed in our analysis and is dispositive.
This Court’s review of a collateral attack is limited to whether the record
affirmatively and conclusively negates the existence of jurisdiction—not whether
the trial court otherwise erred in reaching its judgment. In re Blankenship, 392
S.W.3d 249, 255 (Tex. App.—San Antonio 2012, no pet.). This Court presumes the
judgment is valid. PNS Stores, 379 S.W.3d at 273. But a jurisdictional defect
displaces that presumption. Alfonso v. Skadden, 251 S.W.3d 52, 55 (Tex. 2008) (per
curiam). The record affirmatively demonstrates a jurisdictional defect sufficient to
void a judgment when it establishes the trial court lacked subject-matter jurisdiction
3 Topletz’s counsel conceded at oral argument that his bill of review action was a collateral attack of the 2015 Judgment. –13– over the suit. PNS Stores, 379 S.W.3d at 273. The “record” to be reviewed in a
collateral attack is limited to the record before the trial court at the time the trial court
rendered the challenged judgment. See Crown Bay Mgmt., LLC v. Surface Works,
Inc., No. 02-21-00025-CV, 2022 WL 247569, at *3 (Tex. App.—Fort Worth Jan.
27, 2022, no pet.) (mem. op.) (“Crown Bay must establish that the default judgment
was void based on the record as it stood at the time the default judgment was
rendered. Accordingly, any evidence adduced in Crown Bay’s collateral attack—in
connection with its postjudgment motion to dissolve the writ as an intervenor—is
not considered.”). It is unsurprising that extrinsic evidence may generally not be
considered when a party collaterally attacks a judgment as void. Holloway v.
Starnes, 840 S.W.2d 14, 18 (Tex. App.—Dallas 1992, writ denied) (“In a collateral
attack, extrinsic evidence may not be used to establish a lack of jurisdiction.”);
Crown Bay Mgmt., 2022 WL 247569, at *2 (“We may not consider extrinsic
evidence in determining the affirmative presence of a jurisdictional defect.”).
Because extrinsic evidence generally cannot be considered, “[a] collateral
attack fails if the judgment contains jurisdictional recitals, even if other parts of the
record show a lack of jurisdiction.” In re D.L.S., No. 05-08-00173-CV, 2009 WL
1875579, at *2 (Tex. App.—Dallas July 1, 2009, no pet.) (mem. op.). Indeed,
“jurisdictional recitals in a judgment that is regular on its face import absolute verity
and can be attacked only directly, not collaterally.” Id.
–14– Here, the 2015 Judgment explicitly states the trial court found it had
jurisdiction over the parties and subject matter of the case. To challenge that recital,
Topletz was required to bring a direct attack of the 2015 Judgment. See In re D.L.S.,
at *2. As we concluded above, however, Topletz’s bill of review is a collateral attack
of the 2015 Judgment because it was filed more than four years after the judgment
was signed. We conclude the 2015 Judgment shows on its face that the trial court
had jurisdiction of the parties and claims. We are, therefore, barred from considering
extrinsic evidence adduced by Topletz in his collateral attack. Id.
Despite his concession that the bill of review was a collateral attack on the
2015 Judgment and the jurisdictional recitals in the 2015 Judgment, Topletz
nonetheless urges us to consider extrinsic evidence presented by him in the bill of
review. Namely, he insists evidence that the Partnership was terminated more than
three years before the 2015 Judgment renders the judgment void. Topletz argues we
can look to that extrinsic evidence here because this case falls under the “no possible
power to act” exception to the no-extrinsic-evidence rule and allows review of
extrinsic evidence. In support of that argument, Topletz first cites In re D.S., 555
S.W.3d 301, 317 (Tex. App.—Dallas 2018), rev’d sub nom, Interest of D.S., 602
S.W.3d 504 (Tex. 2020). In D.S., this Court explained the exception as follows:
Void judgments may be attacked collaterally with extrinsic evidence when the court “under the very law of its creation,” does not have “any possible power” to decide the case. Extrinsic evidence also may be used to collaterally attack a judgment when a statute terminating a court’s jurisdiction “firmly established ... the public policy of this state.”
–15– In re D.S., 555 S.W.3d at 317 (internal citations omitted). D.S. involved review of a
bill of review seeking to overturn an agreed order terminating a father’s parental
rights. Id. at 308. Father signed an affidavit for voluntary relinquishment of his
parental rights to his daughter, D.S., and, based on the affidavit, the trial court signed
an agreed order terminating Father’s parental rights to D.S. Id. Father subsequently
filed two petitions for bill of review, challenging the agreed order of termination and
the property division in the agreed final decree of divorce. Id. In an amended petition
for bill of review in the termination case, Father asserted the termination order was
void because Massachusetts was D.S.’s home state on the date her mother
commenced the divorce action and, therefore, the UCCJEA deprived the Texas trial
court of jurisdiction to make an initial child custody determination regarding D.S.
Id. The trial court denied both petitions for bill of review, and father appealed. Id.
On appeal, father argued in part that the order terminating his parental rights to D.S.
is void, and the trial court erred by determining it could not consider extrinsic
evidence in considering whether it had jurisdiction over the termination proceeding.
Id. at 306.
In its analysis, the panel that decided D.S. noted the record of the termination
proceeding did not affirmatively demonstrate the trial court’s lack of subject matter
jurisdiction under the UCCJEA. D.S., 555 S.W.3d at 318. As such, the panel
recognized it “must presume the judgment is valid, and, absent an applicable
exception to the no-extrinsic-evidence rule, Father may not rely on extrinsic
–16– evidence to prove otherwise.” Id. (first citing York v. State, 373 S.W.3d 32, 41 (Tex.
2012); then citing Alfonso v. Skadden, 251 S.W.3d 52, 55 (Tex. 2008) (per curiam)).
The Court concluded, however, that the case fell under an exception to the no-
extrinsic-evidence rule known as the “no possible power to act” exception to the no-
extrinsic-evidence rule. Id. Under that exception, extrinsic evidence may be used to
collaterally attack a judgment when a statute terminating a court’s jurisdiction is
firmly established policy of state. See York, 373 S.W.3d at 42 (extrinsic evidence of
bankruptcy stay considered); see also Cline v. Niblo, 8 S.W.2d 633 (Tex. 1928)
(evidence of whether the property was a homestead could be considered in collateral
proceedings because homestead property had been statutorily withdrawn from the
jurisdiction of the probate court).
For example, in York, the Texas Supreme Court held the no-extrinsic-
evidence rule did not bar the court from considering extrinsic evidence that a
bankruptcy stay was in place at the time the court rendered judgment. Id. at 35, 42.
The York court held the extrinsic evidence should have been considered because
“[a]s a matter of Texas law, a state court has no power to render a judgment in
violation of the automatic stay under fundamental, constitutional law, . . .” Id. at 42.
Similarly, in Cline, the supreme court permitted extrinsic evidence to be used
in the collateral attack of an order of the probate court authorizing the sale of a
homestead. 8 S.W.2d at 638. The court noted Texas had statutorily withdrawn
“homestead property from the jurisdiction of the probate court and deny it power to
–17– administer the homestead estate except where debts exist for which such an estate is
constitutionally liable.” Id. at 636. Accordingly, “in the absence of an affirmative
showing in the decree that the question was adjudicated in the judgment leading up
to the sale,” the issue of whether the property was homestead or the debts involved
were chargeable against a homestead could “be inquired into and declared a nullity
in collateral proceedings.” Id. The supreme court characterized this as a “declination
on the part of the courts to conclusively presume” the homestead issue had been
determined absent an affirmative showing in the record. Id. at 638. “[W]here the vice
in the decree does not appear on its face, and the judgment does not show that the
homestead question has been adjudicated, the courts permit the true facts to be
shown and the invalidity of the decree to be established aliunde the record.” Id.
In D.S., the court reasoned there was “no material difference” between the
UCCJEA’s home state requirement and the statutes at issue in York and Cline
because each statute withdrew from the trial court its jurisdiction to act in certain
situations. 555 S.W.3d at 318. The UCCJEA withdrew a trial court’s jurisdiction to
make an initial child custody determination if Texas is not the child’s home state and
does not have jurisdiction of the child under the other provisions of section
152.201(a) of the family code. Id. (citing TEX. FAM. CODE § 152.201(a)). The D.S.
court concluded the trial court erred by determining it could not consider extrinsic
evidence to decide whether it had subject matter jurisdiction to make the initial child
custody determination. Id.
–18– Here, in contrast, Topletz does not challenge the trial court’s determination
that it had jurisdiction over the claims in the 2012 Lawsuit. Rather, he challenges the
Partnership’s standing to assert claims in the 2012 Lawsuit. Moreover, the statute at
issue here does not implicate subject matter. See TEX. BUS. ORG. CODE § 11.356.
Although the statute may deprive the Partnership of the legal right to assert its causes
of action in court, the statute does not deprive the trial court of jurisdiction to decide
those claims because such claims could be brought derivatively by Willis following
the Partnership’s termination. See, e.g., Gonzalez v. Gonzalez, No. 05-16-00238-CV,
2017 WL 3599773, at *2 (Tex. App.—Dallas Aug. 22, 2017, no pet.) (mem. op.)
(shareholders held beneficial title to corporation’s causes of action following
termination of charter and had standing to assert those causes of action as
corporation’s representatives or to defend their individual property rights); see also
Pike v. Tex. EMC Mgmt., LLC, 610 S.W.3d 763, 778 (Tex. 2020) (concluding
“statutory provisions that define and limit a stakeholder’s ability to recover certain
measures of damages, which protect the organization's status as a separate and
independent entity . . . go to the merits of the claim; they do not strip a court of
subject-matter jurisdiction to render a take-nothing judgment if the stakeholder fails
to meet the statutory requirements.”). For these reasons, we conclude D.S. is
inapplicable here and this case does not fall under the “no possible power to act”
exception to the no-extrinsic-evidence rule.
–19– In post-submission briefing, Topletz points the Court to the Texas Supreme
Court’s May 13, 2022 opinion in Mitchell v. Map Resources, Inc., 649 S.W.3d 180
(Tex. 2022). Topletz maintains the Mitchell opinion supports his contention that
extrinsic evidence should have been considered here under what he terms “the
entrenched exception to the no-extrinsic-evidence rule.” We disagree.
As a preliminary matter, Mitchell is distinguishable from this case. Mitchell
involved questions concerning whether service by posting met due process
requirements. In December 1998, the Pecos-Barstow-Toyah Independent School
District, Reeves County Hospital District, and Reeves County (collectively the
Taxing Authorities) sued approximately 500 owners of more than 1600 parcels of
mineral property who had failed to pay their property taxes. Mitchell, 649 S.W.3d at
184. Elizabeth Mitchell owned 320 acres of the subject property and was one of the
defendants sued by the Taxing Authorities. Id. None of the defendants, however,
were personally served with the lawsuit. Id. Rather, the Taxing Authorities posted
citations on the door of the Reeves County Courthouse to notify the defendants they
had been sued. Id. In early 1999, the Taxing Authorities obtained a default judgment
foreclosing tax liens on all 1600 parcels, including Elizabeth’s mineral interests. Id.
(“Roughly one month, two attorneys ad litem, and a five-minute bench trial later, the
court signed a default judgment foreclosing tax liens on all 1600 parcels, including
mineral interests in 320 acres owned by Elizabeth S. Mitchell.”). Sixteen years later,
–20– Elizabeth’s heirs (the Mitchells) sued to have the 1999 judgment and subsequent sale
set aside for constitutional due process violations. Id. at 185.
The Mitchells argued the default judgment was void because Elizabeth
Mitchell was not personally served in compliance with constitutional due process
requirement and, as a result, the trial court did not acquire personal jurisdiction over
her. Mitchell, 649 S.W.3d at 185. The parties disputed what evidence a court could
consider in deciding whether Elizabeth was properly served by posting. Id. at 188.
The Mitchell court held that public deed records and tax records could be considered
in a collateral attack because “the Constitution and Rule 117a require a plaintiff to
consult” those records to comply with “the constitutional demands of due process.”
Id. at 191. In so holding, however, the Court reaffirmed the general rule that
“extrinsic evidence cannot be considered in a collateral attack to set aside a final
judgment.” Id. at 190–91. The Court explained that the question presented in
Mitchell fell within the exception applied in York because proper service is a
constitutional prerequisite for a trial court’s jurisdiction to proceed. Id. (noting the
no-extrinsic-evidence rule “does not extend to cases over which a court ‘has not,
under the very law of its creation, any possible power.’”) (internal citation omitted).
The exception relied on in Mitchell and D.S. applies when the trial court had
no authority to act by virtue of a statute or the Constitution. Here, section 11.356 did
not deprive the trial court of jurisdiction or prohibit the trial court from hearing the
claims. See TEX. BUS. ORG. CODE § 11.356. No constitutional requirements or
–21– prerequisites are implicated here. On the contrary, the trial court had jurisdiction to
hear Willis’s individual and derivative claims. Whether the trial court erred by
awarding the Partnership relief, or whether the Partnership may legally collect the
judgment, are matters concerning the merits of the claims, not the trial court’s
jurisdiction to hear those claims. We conclude no exception to the no-extrinsic-
evidence rule applied here. As such, the trial court did not err by refusing to consider
the extrinsic evidence presented by Topletz in his collateral attack. The collateral
attack, therefore, failed as a matter of law. We affirm the trial court’s summary
judgment on that basis.
In their appellate briefs, the parties focus much of their arguments on
questions surrounding the Partnership’s standing and capacity to sue and the
derivative versus direct nature of Willis’s claims and damages. We need not address
any of those questions, however, because the 2015 Judgment shows on its face that
the trial court had jurisdiction over the parties and claims, and we are prohibited
from looking to extrinsic evidence to show the contrary. Under this record, we
conclude the 2015 Judgment was not void based on the record as it stood at the time
those judgments were rendered. The trial court, thus, did not err by granting Wadle’s
summary judgment on those grounds. We overrule Topletz’s first issue.
II. The Sanctions Order
In his second issue, Topletz challenges the trial court’s assessment of
sanctions against his counsel. The trial court awarded Wadle $17,000 as attorney’s
–22– fees through the date of the order and conditional appellate fees.4 The trial court
assessed the sanctions award against Topletz’s counsel, Austin Champion. Topletz
does not contest the evidence supporting the amount of sanctions awarded. Rather,
Topletz maintains his counsel’s conduct in filing the bill of review did not warrant
any sanction by the trial court.
A. Applicable Law
The trial court ordered sanctions against Champion pursuant to Chapter 10 of
the Texas Civil Practice and Remedies Code, Rule 13 of the Texas Rules of Civil
Procedure, and the court’s inherent authority.
A trial court may sanction an attorney or represented party under rule 13 if a
pleading, motion, or other filing is “groundless” and brought either in bad faith or
for purposes of harassment. TEX. R. CIV. P. 13. The trial court must “presume that
pleadings, motions, and other papers are filed in good faith.” Id. The party seeking
sanctions bears the burden of overcoming that presumption. Nath v. Tex. Children’s
Hosp., 446 S.W.3d 355, 361 (Tex. 2014). A filing is “groundless” for purposes of
Rule 13 if it has “no basis in law or fact and [is] not warranted by good faith argument
for the extension, modification, or reversal of existing law.” TEX. R. CIV. P. 13. In
determining whether a filing is groundless, the trial court must objectively consider
whether the party and counsel made a reasonable inquiry into the legal and factual
4 Topletz challenges the sanctions award of $17,000 in attorney’s fees. In his reply brief to this Court and during oral argument, however, he withdrew his challenge to the award of conditional appellate fees. –23– basis of the claim at the time of the filing. Allstate Prop. & Cas. Ins. Co. v. Ford,
No. 05-20-00463-CV, 2021 WL 4810358, at *2 (Tex. App.—Dallas Oct. 15, 2021,
pet. denied) (mem. op.). In addition to being groundless, a sanctionable filing under
Rule 13 must also be false when made, brought in bad faith, or brought for purposes
of harassment. Id. “Rule 13 requires the trial court to hold an evidentiary hearing to
make the necessary factual determinations about motives and credibility of the
person signing the alleged groundless [pleading].” Id. at *3 (quoting McCain v. NME
Hosps., Inc., 856 S.W.2d 751, 757 (Tex. App.—Dallas 1993, no writ)).
A trial court may also award sanctions under civil practices and remedies code
chapter 10 if a pleading or motion is filed for an improper purpose or if it lacks legal
or factual support. See TEX. CIV. PRAC. & REM. CODE §§ 10.001, 10.004. Section
10.001 provides:
The signing of a pleading or motion as required by the Texas Rules of Civil Procedure constitutes a certificate by the signatory that to the signatory's best knowledge, information, and belief, formed after reasonable inquiry:
(1) the pleading or motion is not being presented for any improper purpose, including to harass or to cause unnecessary delay or needless increase in the cost of litigation;
(2) each claim, defense, or other legal contention in the pleading or motion is warranted by existing law or by a nonfrivolous argument for the extension, modification, or reversal of existing law or the establishment of new law; [and]
(3) each allegation or other factual contention in the pleading or motion has evidentiary support or, for a –24– specifically identified allegation or factual contention, is likely to have evidentiary support after a reasonable opportunity for further investigation or discovery.
TEX. CIV. PRAC. & REM. CODE § 10.001(1)–(3). Like Rule 13, Chapter 10 generally
requires an “evidentiary hearing to make necessary factual determinations about the
motives and credibility of the person signing the allegedly groundless pleading.”
Ford, 2021 WL 48010358, at *3. Unlike Rule 13, however, the trial court may award
sanctions based solely on a claim being made without a legal or factual basis. See
Nath, 446 S.W.3d at 369. But the trial court may not assess a monetary sanction
against a represented party based on legal contentions in a pleading. Id.; see also
TEX. CIV. PRAC. & REM. CODE § 10.004.
Whether under rule 13 or chapter 10, the trial court’s order must specify the
reasons for awarding sanctions. TEX. R. CIV. P. 13; TEX. CIV. PRAC. & REM. CODE §
10.005. This requirement is mandatory and failing to explain the basis for a sanctions
award is reversible error. See Burleson v. Collin Cty. Cmty. Coll. Dist., No. 05-21-
00088-CV, 2022 WL 17817965, at *4–5 (Tex. App.—Dallas Dec. 20, 2022, no pet.
h.) (mem. op.) (citing Graman v. Graman, No. 05-14-01254-CV, 2016 WL 235055,
at *6 (Tex. App.—Dallas Jan. 20, 2016, no pet.) (mem. op.)).
A court’s inherent authority includes the “power to discipline an attorney’s
behavior.” Brewer v. Lennox Hearth Products, LLC, 601 S.W.3d 704, 718 (Tex.
2020) (quoting In re Bennett, 960 S.W.2d 35, 40 (Tex. 1997)). Courts are
empowered to punish an attorney’s behavior “even when the offensive conduct is
–25– not explicitly prohibited by statute, rule, or other authority.” Id. “The inherent
authority to sanction is limited by due process, so sanctions must be just and not
excessive.” Id. Invocation of the court’s inherent power to sanction, therefore, must
be used sparingly and requires a finding of bad faith. Id. Accordingly, a court’s
inherent power to sanction “exists to the extent necessary to deter, alleviate, and
counteract bad faith abuse of the judicial process . . . .” Id. As the Brewer court
explained “[b]ad faith is not just intentional conduct but intent to engage in conduct
for an impermissible reason, willful noncompliance, or willful ignorance of the
facts” and includes
conscious doing of a wrong for a dishonest, discriminatory, or malicious purpose. Errors in judgment, lack of diligence, unreasonableness, negligence, or even gross negligence—without more—do not equate to bad faith. Improper motive, not perfection, is the touchstone. Bad faith can be established with direct or circumstantial evidence, but absent direct evidence, the record must reasonably give rise to an inference of intent or willfulness.
Id. at 719.
B. The trial court’s findings
In support of its decision to sanction Champion, the trial court made multiple
findings, which we summarize below:
Topletz’s lawsuit was without merit, groundless, filed in bad faith, brought for the purpose of harassment and needlessly increased the costs of litigation between the parties in violation of Chapter 10 and Rule 13;
Topletz’s Petition for Bill of Review and Motion for Summary Judgment were frivolous and lacked legal and factual support.
–26– Topletz’s Petition for Bill of Review and Motion for Summary Judgment were filed for an improper and malicious purpose and suit was maintained by Topletz’s counsel, “including to harass [Wadle] and to cause [Wadle] to incur needless costs of defending suit.”
Topletz “(through his counsel)” filed the bill of review action “to needlessly run up [Wadle’s] legal bills and costs” and to “prevent [Wadle] from making further attempts to collect on the [2015 Judgment].”
Topletz “(through his counsel) intentionally filed his bill of review suit in a court other than in this Court and was improperly filed in Dallas County, Texas.”
Champion, knew or should have known that the bill of review suit should have been filed in the Collin County court.
Champion initially brought this suit in Dallas County in bad faith with the improper purpose of forum shopping, for the specific, improper purpose of avoiding compliance with rulings made by the Collin County court, including the 2019 Contempt Judgment, and to harass and cause Wadle to needlessly incur legal expenses and costs.
Champion attempted to mislead the Dallas County court by filing the bill of review “without clearly or adequately pleading [sic] the basis of the case stems from Collin County and failing to advise the Dallas District Court of the existing contempt order against [Topletz]” and the denial of the petition for writ of habeas corpus, and failing to disclose “the existence of ongoing litigation between the parties before” the Collin County court.
The relief sought by Topletz is unavailable to him and had no basis in law or fact.
Champion brought this suit without a proper legal basis.
The Collin County court had jurisdiction to render the 2015 judgment, and such jurisdiction appeared on the face of the record. Champion knew or should have known those facts.
–27– The statute of limitations to challenge the 2015 Judgment had expired at the time the bill of review action was filed. Champion knew or should have known that fact.
Topletz’s lawsuit and “all other documents filed with [the Collin County court] lacked merit and lacked any factual or legal support when filed.” Such filings were groundless when filed, in bad faith, for the sole purpose to harass Wadle and increase litigation costs, and were not warranted by any good faith argument for the extension, modification, or reversal of existing law, and were brought to discourage Wadle from engaging in further efforts to enforce the 2015 Judgment.
Champion’s conduct “is the primary basis for the filing and maintenance of meritless pleadings and conduct to perpetrate harm to [Wadle].”
Champion never took any position before the Collin County court that the 2015 Judgment was void until filing such claims in Dallas County. The court concluded Champion filed in Dallas County to “improperly undermine [its] jurisdiction over [the 2015 Judgment].”
Topletz maintains the trial court abused its discretion by sanctioning
Champion. We disagree.
C. Application of law to facts
Under this record, we cannot say the trial court abused its discretion by finding
that Topletz brought the bill of review action for an improper purpose or that the bill
of review lacked legal or factual support. See TEX. CIV. PRAC. & REM. CODE §§
10.001, 10.004. In its order, the trial court described Champion’s conduct that was
subject to sanction, which began with Champion’s efforts over the course of three
years to avoid complying with the trial court’s order compelling Topletz to produce
documents in post-judgment discovery and escalated to the filing of a bill of review
–28– in Dallas County to overturn a judgment rendered in Collin County five years earlier.
Even if Champion’s efforts to avoid post-judgment discovery were in good faith, his
continued effort to overturn the contempt judgment without complying with the
order compelling production after failing to obtain habeas relief from three courts
illustrated an improper purpose. The record is replete with examples of delay tactics,
forum shopping, and gamesmanship by Champion. An obvious example is
Champion’s decision to file the bill of review in a county other than the county in
which judgment was rendered. The record shows that the decision needlessly
delayed the proceedings and increased the costs to Wadle.
Further, the bill of review itself lacked legal and factual support. As discussed
above, the 2015 Judgment included binding jurisdictional recitals. Moreover,
Champion filed the bill of review without raising jurisdictional questions in any post-
judgment or appellate filing. Those decisions infer an intent to file pleadings for
harassment or other improper purposes. Topletz implies the trial court sanctioned
Champion solely for filing the bill of review in the Dallas County court. The
sanctions order belies this proposition. The trial court’s order explains the reasons
for the sanctions against Champion, and the record supports those findings. We
conclude the evidence supports the sanctions under Chapter 10 of the civil practice
and remedies code as well as under the trial court’s inherent authority to sanction.
TEX. CIV. PRAC. & REM. CODE § 10.001; Brewer, 601 S.W.3d at 718. Because we
uphold the sanctions under Chapter 10, we do not address the propriety of the
–29– sanctions imposed under Rule 13. See TEX. R. APP. P. 47.1; see also Jordan v. Elrod,
No. 05-98-02046-CV, 2001 WL 856238, at *4 (Tex. App.—Dallas July 30, 2001,
no pet.) (mem. op.). Indulging every legal presumption in favor of the trial court’s
ruling and viewing the evidence in the light most favorable to that ruling, we cannot
conclude the trial court abused its discretion in imposing sanctions on Champion in
this case. We overrule Topletz’s second issue.
CONCLUSION
We conclude the trial court properly denied Topletz’s bill of review and did
not abuse its discretion by ordering sanctions against Champion. Accordingly, we
affirm the trial court’s March 11, 2021 judgment and April 13, 2021 sanctions order.
/Robbie Partida-Kipness/ ROBBIE PARTIDA-KIPNESS JUSTICE
210047F.P05
–30– S Court of Appeals Fifth District of Texas at Dallas JUDGMENT
STEVEN K. TOPLETZ, Appellant On Appeal from the 416th Judicial District Court, Collin County, Texas No. 05-21-00047-CV V. Trial Court Cause No. 416-03100- 2020. RAYGAN WADLE, AS Opinion delivered by Justice Partida- INDEPENDENT EXECUTOR OF Kipness. Justices Pedersen, III and THE ESTATE OF LYNDA WILLIS, Nowell participating. Appellee
In accordance with this Court’s opinion of this date, the trial court’s March 11, 2021 judgment and April 13, 2021 sanctions order are AFFIRMED.
It is ORDERED that appellee RAYGAN WADLE, AS INDEPENDENT EXECUTOR OF THE ESTATE OF LYNDA WILLIS recover his costs of this appeal from appellant RAYGAN WADLE, AS INDEPENDENT EXECUTOR OF THE ESTATE OF LYNDA WILLIS.
Judgment entered this 11th day of January 2023.
–31–