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Control Works, Inc. v. Seeman

Court of Appeals of Texas, First District

June 28, 2018

CONTROL WORKS, INC., ELSA CANTU-RIOS, AND MYLA CANTU, Appellants
v.
JACK PHILLIP SEEMAN, Appellee

          On Appeal from the 269th District Court Harris County, Texas Trial Court Case No. 2010-10404

          Panel consists of Chief Justice Radack and Justices Massengale and Brown.

          MEMORANDUM OPINION

          Sherry Radack Chief Justice

         After a jury trial, the trial court entered judgment in favor of Jack Phillip Seeman on his claims that Tony Cantu, individually and through his alter-ego, Control Works, Inc., fraudulently transferred assets to his wife, Elsa Cantu-Rios, and mother, Myla Cantu, to prevent Seeman from collecting a $300, 000 judgment awarded to him in a previous suit between the parties. In five issues on appeal, the appellants, Control Works, Elsa Cantu-Rios, and Myla Cantu, challenge (1) the jury's findings on alter-ego and fraudulent transfer, (2) the exemplary damages assessed against Control Works and Elsa, and (3) the jury's finding that the property subject to the fraudulent transfer claim was not Elsa's homestead.

         BACKGROUND

         The following is this Court's recitation of facts in a previous suit between Tony Cantu and Jack Seeman:

On March 9, 2007, Tony Cantu filed suit in County Court against his neighbor, Jack Seeman, alleging intentional infliction of emotional distress, libel and slander, sexual harassment, stalking, assault, conspiracy, and malicious prosecution. The crux of Cantu's allegations against Seeman was that Seeman was obsessed with Cantu's wife, Elsa, that he stalked her, harassed her by giving her gifts, and spied on her. Cantu further alleged that as a result of this obsession, Seeman hated Cantu and made false reports to the police about him, threatened him, and damaged his property.

Cantu v. Seeman, No. 01-09-00545-CV, 2012 WL 1564536, at *1 (Tex. App.- Houston [1st Dist.] May 3, 2012, pet. denied). On February 11, 2009, the jury returned a verdict in favor of Seeman, and the trial court entered a $300, 000 judgment in Seeman's favor.

         On February 12, 2009, one day after the jury verdict referenced above, Elsa, purportedly acting on behalf of Control Works, transferred real property titled in Control Works's name and located at 1314 Longdraw Drive, Katy, Texas ["the Katy Property"], to herself, individually. A few days later, Elsa filed a "corrected deed" that was backdated two years; she also filed a designation of homestead that was backdated two years. Elsa testified that the deeds were not an attempt to defraud Tony's creditors, but were to reduce her tax burden by designating the Katy Property as her homestead.

         In 2009, Seeman sought to execute on the judgment by obtaining orders for Tony to turnover all stock ownership in Control Works. This Court affirmed the turnover order. Id. at *4.

         On February 17, 2010, Control Works brought the present lawsuit, seeking to enjoin Seeman from obtaining the shares of stock that he was awarded in the turnover order. Seeman counterclaimed against Control Works and filed a third-party petition against Elsa and Myla, contending that Tony, acting through his alter ego, Control Works, had fraudulently transferred property to them to avoid paying Seeman his $300, 000 judgment. Control Works did not pursue its injunctive relief, and the case went to trial on Seeman's claims.

         At trial, Elsa claimed that she and Tony were not the owners of Control Works, but that, since the time of its incorporation in 1997, its shares were owned by Tony's parents, who gave him $20, 000 to start the consulting firm, and that he and Elsa were merely employees of Control Works. No such stock certificates were admitted at trial. In contrast, Seeman presented evidence that, during years of previous litigation, Tony had claimed to own Control Works.

         After a four-day jury trial, the jury returned a verdict finding that: (1) Tony fraudulently transferred his ownership interest in Control Works to his mother, Myla, (2) the value of the fraudulently transferred interest in Control Works was $236, 020, and (3) Control Works was responsible for the conduct of Tony. The jury also found that (4) Control Works fraudulently transferred the Katy Property to Elsa, and (5) the value of the fraudulently transferred Katy Property was $235, 020. The jury further determined that (6) the Katy Property was not the homestead of Elsa. Finally, the jury found that (7) harm to Seeman was caused by Control Works' and Elsa's malice and (8) assessed $225, 000 in exemplary damages against both Control Works and Elsa.

         Based on the jury's verdict, the trial court entered a final judgment that:

(1) ordered that the transfer of the Katy Property from Control Works to Elsa was null and void;
(2) ordered that the corrected warranty deeds purporting to transfer the Katy Property from Control Works to Elsa were null and void;
(3) ordered that the transfer of the ownership interest in Control Works from Cantu to his mother, Myla, was null and void;
(4) ordered that the ownership interest in Control Works, Inc. was vested in Seeman and his attorneys;
(5) ordered Elsa to deliver to Seeman's attorneys all of Control Works' books and records;
(6) ordered that all transfers of assets made by Control Works after January 12, 2017 [the date of the trial court's verdict] were null and void;
(7) ordered that the District Clerk issue a writ of possession to Control Works and its transferees, Seeman and his attorneys;
(8) ordered that Control Works is jointly and severally liable to Seeman for the $300, 000 judgment in the previous lawsuit;
(9) ordered that Control Works was permanently enjoined from transferring any of its assets to anyone other than Seeman; and
(10) awarded Seeman $225, 000 in exemplary damages from both Elsa and Control Works, plus pre- and post-judgment interest and costs.

         Control Works, Elsa, and Myla timely filed notices of appeal. Seeman did not file a notice of appeal.

         ISSUES

         Appellants bring five issues on appeal, many with sub-points, which we will attempt to discuss respectively.

         1. "The Judgment Cannot Stand Because Appellants Were Not Debtors to Appellee Seeman."

         In their first issue, appellants argue that "[t]he Texas turnover statute cannot be used as a vehicle to hold Control Works liable for the debts of Tony Cantu." Appellants also argue that Elsa and Myla "were never judgment debtors to Appellee" and that "a turnover order is inappropriate where a judgment creditor attempts to relieve a third party corporation of property without first successfully piercing the corporate veil in a separate trial."

         The verdict in this case, however, was not based on the Texas turnover statute. Instead, Seeman obtained jury findings that Control Works was the alter- ego for Tony, and that Control Works, as Tony's alter-ego, fraudulently transferred corporate property to his wife and mother.

         Because the turnover statute had nothing to do with the judgment entered in this case, we overrule ...


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