In re Servicios Legales De Mesoamerica S. De R.L.

IN RE SERVICIOS LEGALES DE MESOAMERICA S. DE R.L.

NUMBER 13-12-00466-CV

COURT OF APPEALS THIRTEENTH DISTRICT OF TEXAS CORPUS CHRISTI - EDINBURG

Delivered and filed: March 6, 2014

On appeal from the County Court at Law No. 4

of Nueces County, Texas.

MEMORANDUM OPINION

Before Justices Rodriguez, Benavides, and Perkes

Memorandum Opinion by Justice Benavides

Through a petition for writ of mandamus and writ of prohibition, relator, Servicios Legales de Mesoamerica S. de R.L. ("Servicios"), seeks: (1) a writ of mandamus directing the trial court¹ to abate a Nueces County suit pending the disposition of a suit in Hidalgo County; (2) a writ of mandamus ordering the trial court to vacate any and allorders that actively interfere with the Hidalgo County suit and the exercise of that court's jurisdiction; and (3) a writ of prohibition directing the trial court to take no further action in the Nueces County suit. This Court requested and received a response to the petition from the real party in interest, the Law Offices of Douglas A. Allison ("Allison"). We deny the petition for writ of mandamus and writ of prohibition.

I. BACKGROUND

This case concerns two separate trial court cases: (1) a divorce proceeding filed in Hidalgo County between non-lawyers, and (2) a declaratory judgment action filed in Nueces County regarding the ownership of attorney's fees between law firms and attorneys. We address the history of these cases together.

A. THE HIDALGO COUNTY DIVORCE CASE

In February 2005, Maria de Jesus Garcia filed an original petition for divorce from Wilfrido Rogelio Garcia in Hidalgo County (the "Hidalgo County suit"). Neither Maria nor Wilfrido is an attorney. The original petition for divorce identified Wilfrido as "Respondent" and Grupo Consejero Internacional and Servicios Legales as "Co-Respondents."² Maria identified both co-respondents as alter egos of Wilfrido. Maria alleged that Wilfrido fraudulently transferred assets to the co-respondents to defraud her of community property or her separate property rights in those assets.

On May 14, 2008, the trial court entered an order requiring the deposit of "anyincome or fees received or owed to the parties, Maria De Jesus Garcia and Wilfrido Rogelio Garcia and Servicios Legales De Mesoamerica," from specific entities, including "the Law Office of Baker, Brown and Dixon, or the Law Office of Douglas A. Allison, or the Law Office of Watts Law Firm, or the Law Office of Sico, White and Braugh, LLP, or the Law Office of Podhurst Orseck, or the Law Office of Speiser and Krause, or the Law Office of Fibich, Hampton and Leebron, LLP or the Law Office of Weitz and Luxenburg, or the Law Offices of Haggard, Parks, Haggard and Lewis, or any other entity owing funds," to be placed in the registry of the court.

On March 5, 2009, Law Funder, a legal finance company, intervened in the lawsuit. Law Funder asserted that it had purchased Wilfrido's rights, if any, to receive funds relating to certain lawsuits. Thereafter, Baker, Brown & Dixon, P.C. ("BBD") and John Baker filed an answer and counterclaim to Law Funder's intervention. On September 10, 2009, Wilfrido, Servicios, and Law Funder filed a "joint" motion for appointment of a receiver. According to the motion, some law firms had complied with the May 14, 2008 order requiring them to deposit the disputed funds into the registry of the court, but some had not. Therefore, the movants sought the appointment of a receiver "for the purpose of ascertaining the status of the cases" to which the May 14, 2008 order applied and "to collect the monies due and owing."

On October 1, 2009, the trial court appointed receivers Michael Flanagan, Eloy Sepulveda, and Sean Callagy for "the purpose of securing an accounting and to seek recovery of all claims, income and fees received or owed" to Wilfrido, Servicios, BBD, and Law Funder. The order provided that the receivers would retain Raymond Thomas ofKittleman, Thomas & Gonzalez, LLP to represent the receivers for the purposes stated in the order.

On October 22, 2009, the receivers filed a petition in intervention against Allison and other law firms. The petition in intervention sought an accounting "on all matters referred" to the defendants, and to the extent an accounting showed money was owed by defendants on "matters referred to them by [Servicios] and/or its assignee, [BBD]," the petition sought an order compelling them to deposit the monies into the registry of the court "until such time as the Court adjudicates ownership of said funds."

B. THE NUECES COUNTY DECLARATORY ACTION

On January 25, 2010, Allison filed an original petition for declaratory judgment in Nueces County against Law Funder, BBD, Baker, and Pablo Ruiz Limon (the "Nueces County suit").³ According to the petition, Allison had received the attorney's fees due after concluding four separate lawsuits, but the defendants had claimed an interest in the attorney's fees from those four cases.

C. HIDALGO COUNTY DIVORCE CASE REMOVED TO FEDERAL COURT

On January 26, 2010, the Hidalgo County suit was removed to federal court because the Internal Revenue Service had joined the case through a third party petition filed by two of the intervention defendants. The parties engaged in extensive litigation in federal court. The record before this Court contains some, but not all, of the pleadings and transcripts from the federal court proceeding. On May 14, 2010, the federal courtissued a preliminary injunction preventing Allison from proceeding with the Nueces County suit until further order. Without further delineating the federal court proceedings in any detail, Wilfrido, Baker, BBD, Servicios, and Law Funder settled all claims between each other and dismissed those claims with prejudice.

On March 29, 2012, after a series of hearings, the federal court remanded the case to Hidalgo County. The twenty-six page order of remand is entitled "Order Granting in Part Allison's Motion for Summary Judgment or Alternatively, Motion to Dismiss, Mooting Mrs. Garcia's Motion for Accounting, Mooting Receivers, SLM, Baker, and BBD's Motions to Quash and for Protective Order, Mooting Request for Status Conference, and Granting Receivers' Motion to Remand For Consideration of All Other Pending Motions." The order provides that the federal court was required to remand the case insofar as it could not issue a divorce decree or order a division of the Garcias' marital estate, thus, the case had to be remanded for those purposes. As indicated by its title, the order of remand addressed numerous substantive matters pending in that court.

First, the federal court briefly addressed Allison's motion for summary judgment or, alternatively, for the dismissal of the claims filed against him by the receivers. According to the order, the only claims pending against Allison were those asserted by the receivers in their petition in intervention, that is, the receivers' demand for accounting on all matters referred to Allison by Servicios and/or BBD, and to the extent Allison "owes money" on those matters, the receivers' request that the court order Allison to deposit those funds in the registry of the court until ownership of the funds is adjudicated. In its analysis of the motion, the court discussed: (1) the creation of the receivership pursuantto the family code, which allowed the appointment of receivers "for the preservation and protection of the property of the parties," (2) that the Garcias were non-lawyers and that non-lawyers cannot legally share in attorney's fees, (3) that the record lacked evidence regarding whether Servicios was an entity with whom attorney's fees could be shared; and (4) the court's concern regarding "how attorney's fees owed to SLM and/or BBD and/or Law Funder" impact the "property of the parties" in such a way as to authorize the appointment of the receivers and the duties and authority given them.

The federal court stated that it had insufficient evidence before it to determine the extent to which Wilfrido had acted to diminish the value of the marital estate in order to justify the powers given to the receivers and that Wilfrido had disclaimed his interest in any recovery obtained by the receivers and taken the position that Maria could have any such recovery. Its order set out that: "[i]n such case, the Court cannot discern any need for a receivership, as any interest Garcia may have in fees owed to SLM may be awarded to Mrs. Garcia who may then choose whether to pursue recovery." The court denied Allison's summary judgment contending that the receivership was improper as to Allison because the federal court did not have jurisdiction to make a division of the marital estate, which militated against "reconsidering or in effect vacating a receivership created to preserve and protect property for that purpose." The court remanded the "propriety of the receivership" to the state court "for its careful consideration."

The federal court also addressed Allison's motion to be dismissed as a party on the grounds that Allison had completed the accounting demanded by the receivers and because Allison owed nothing to Servicios or BBD, which had been paid in full by LawFunder on Allison's cases. The court granted Alison's motion for summary judgment and ruled that Allison had completed the accounting demanded by the receivers. However, the court concluded that material fact issues existed regarding whether Servicios and/or BBD retained an interest in the proceeds from Allison's cases, and thus the court could not dismiss Allison on the grounds that Servicios and BBD had been paid by Law Funder. In so holding, the court noted that, given that Allison was challenging the existence of the receivership itself, judicial economy cautioned against proceeding with a final determination and so remanded this issue for the state court to consider "in the event it determines that the creation of the receivership was permissible."

The federal court further discussed...