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Strobach v. WesTex Community Credit Union

Court of Appeals of Texas, Eighth District, El Paso

August 14, 2019

JODI STROBACH, Appellant,
v.
WESTEX COMMUNITY CREDIT UNION, Appellee.

          Appeal from the 143rd District Court of Reeves County, Texas (TC # 14-03-20605-CVR)

          Before Rodriguez, J., Palafox, J., and Larsen, J. (Senior Judge)

          OPINION

          GINA M. PALAFOX, Justice

         Appellant Jodi Strobach ("Strobach") appeals from a summary judgment dismissing her lawsuit against WesTex Community Credit Union ("WesTex"), in which she asserted claims of breach of contract, negligence, fraud, and deceptive trade practices against her credit union. Strobach asserted that WesTex released funds from her credit union account in breach of her account agreement based on a garnishment judgment issued not against her but against her father. We reverse and remand in part and affirm in part.

         FACTUAL AND PROCEDURAL BACKGROUND

         The Underlying Lawsuit against Strobach

         In 2008, TransPecos Banks f/k/a Security State Bank of Pecos (the "Bank") sued Appellant Jodi Strobach and her father, Roger Jones, in Cause No. 08-12-19254-CVR, filed in the 143rd District Court of Reeves County, Texas. The Bank alleged it had made a series of loans over the course of several years to Jones individually and to two corporate entities he had formed including a then-defunct corporate entity in which Strobach had served as a corporate officer. Only Roger Jones and the corporate entities were named as borrowers or guarantors on the loans on which the Bank filed its suit. After the loans went into default, the Bank filed suit against Strobach and Jones individually, and against Jones d/b/a/ Jones Farms.[1]

         In April of 2010, the Bank obtained a final judgment against Jones, individually, and Jones d/b/a Jones Farms, awarding damages to the Bank totaling over $260, 000 for amounts owed on two outstanding loans, together with interest and attorney's fees in the amount of $7, 000 (the "April 2010 Judgment"). The April 2010 judgment was signed by Judge Bob Parks, (now deceased), of Reeves County. Because Strobach had not ever been served with citation in the proceeding, no judgment was entered against her in that proceeding. Unfortunately, however, the case-caption of the judgment retained Strobach's name as a named defendant of the suit.

         The Garnishment Judgment

         In December 2011, the Bank filed a series of post-judgment applications with the trial court requesting multiple writs of garnishment against several garnishees. Not having participated in the earlier suit, the applications seeking garnishment were signed by attorney Jody D. Jenkins. Along with the original case caption, each application affirmatively asserted that the Bank had obtained "a valid, subsisting judgment" not only against Roger Jones but also against Strobach. The application included an affidavit from the Bank's attorney (Jenkins), repeating the assertion that the Bank had obtained a judgment against both Jones and Strobach. Significant to this appeal, one of the applications was directed to WesTex, a credit union garnishee with a member account opened by Strobach in 2008. Although Strobach was named as the sole owner on the account agreement, Jones was named as a cosigner, or "convenient" or "authorized signer," and as discussed in more detail below, frequently deposited and withdrew funds from the account.[2]

         The Writ of Garnishment served on WesTex

         On December 13, 2011, the trial court issued a writ of garnishment to WesTex expressly stating that, in cause number 08-12-19254-CVR of the 143rd District Court of Reeves County, the Bank had claimed an indebtedness against "Roger Jones, indv. and d/b/a Jones Farms and Jodi Strobach," and for which it had obtained a "valid and subsisting judgment" in the amount of $316, 496.93, and for which it had applied for a writ of garnishment against WesTex and Roger Jones. The writ commanded WesTex "NOT to pay to defendant any debt or to deliver to him any effect, pending further order of this court," and ordered WesTex to file an answer as the law directs.

         The writ of garnishment was served on WesTex on January 3, 2012, and WesTex timely filed its answer on January 24, 2011. In its answer, WesTex stated that it had held on deposit the amount of $118, 997 in a "share account" in Strobach's name and $454.61 in two accounts in Jones' name. WesTex asked the trial court to determine and adjudicate all claims to those funds, and to thereafter discharge it from all liability. In addition, WesTex made a request for attorney's fees alleging it had retained a law firm to represent it in the garnishment proceedings, and that its attorney had reviewed the pleadings, orders, and writs concerning the garnishment proceeding; had conferences with WesTex and the Bank's counsel concerning the garnishment and the subject accounts; had prepared and filed an answer to the writ on WesTex's behalf; and had performed "other related services," in the amount of $650.

         As explained in more detail below, the parties here agreed that the Bank gave WesTex notice of the garnishment proceedings but did not give notice to Strobach. Consequently, neither Strobach nor Jones entered an appearance in the garnishment proceedings. Thereafter, the attorneys for WesTex and the Bank entered an Agreed Final Judgment, signed on March 23, 2012 by Judge Bob Parks of the 143rd District Court (the "Agreed Garnishment Judgment").

         In the Agreed Garnishment Judgment, the Bank represented that it had given all notices "required by the statutes and rules of the State of Texas and this Court, prior to the entry of this judgment." In turn, WesTex represented that it was "in possession of money on deposit for the benefit of the Debtor," listing the three accounts described above, and stating that it knew of no other claims to the money in those accounts. WesTex also represented that it had been required to employ an attorney to represent it in the garnishment proceeding who filed an answer on its behalf.

         After finding that WesTex was entitled to $750 in attorney's fees to be paid from the garnished accounts, the trial court ruled that the Bank was entitled to recover the remaining $118, 701.61 from the three accounts. Thereafter, WesTex turned over the funds to the Bank in partial satisfaction of the April 2010 Judgment.

         According to Strobach, she did not find out about the garnishment proceeding until over two months later when she went to withdraw money from her account, and then discovered that her funds had been transferred. When she contacted Jones to ask him what he knew about the matter, he informed her that the Bank had garnished the funds but told her not to worry as he would take care of the situation.

         At the hearing on the motions for summary judgment, WesTex's attorney provided certain background information during his argument. He stated that neither Strobach nor Jones filed a direct challenge to the Agreed Garnishment Judgment. However, when the Bank filed a second lawsuit against Jones and Strobach in October of 2012, seeking to collect on other loans made by the Bank to Jones and his various entities (including the JSF Corporation of which Strobach was the president), Strobach filed a counterclaim against the Bank, alleging that it had wrongfully garnished the funds from her account with regard to the earlier garnishment proceeding. The trial court (Judge Parks) dismissed the counterclaim, without prejudice, advising Strobach that she should instead file a Bill of Review to challenge the garnishment judgment. Thereafter, following a bench trial, the trial court entered a judgment against Jones in the second lawsuit, but granted Strobach's motion for a directed verdict, finding that she could not be held personally liable on any of the loans. TransPecos Banks v. Strobach, 487 S.W.3d 722 (Tex. App.-El Paso 2016, no pet.). After the Bank appealed the ruling, we affirmed the trial court's judgment in Strobach's favor. Id.

         The Current Lawsuit

         In the interim, on March 4, 2014, Strobach filed separate lawsuits against the Bank and WesTex, which the trial court later consolidated, alleging that both defendants had acted wrongfully with respect to the earlier garnishment proceedings on two grounds: (1) that Strobach was not a judgment-debtor in the underlying lawsuit, and (2) that she never received notice of the garnishment proceeding before funds were wrongfully taken from her account. Against WesTex, Strobach brought the following four causes of action: (1) a claim for breach of contract for allegedly breaching the account agreement she had with WesTex; (2) a claim of negligence for WesTex's alleged failure to protect her account; and (3) a claim under the Texas Deceptive Trade Practices Act for engaging in misleading, deceptive, and/or unconscionable conduct; and (4) a claim for fraud. The focus of her lawsuit centered on the contention that WesTex owed her a duty-either under her member account agreement or by virtue of statutory provisions-to exercise the standard of care of a reasonably prudent credit union to first determine whether the Bank had made a valid claim to a judgment of indebtedness before entering into an Agreed Garnishment Judgment. Strobach contended that because WesTex failed to fulfill its obligations, she suffered economic damages resulting from the loss of funds from her account, as well as non-economic damages resulting from mental pain and distress which caused her to seek medical treatment and lose time from work.

         In response, WesTex filed a general denial, as well as a third-party petition against the Bank, blaming the Bank for any wrongdoing in the matter, and requesting indemnity and/or contribution from the Bank in the event that the court found WesTex liable on Strobach's claims.[3]

         WesTex's Motion for Summary Judgment

         After a period of discovery, both WesTex and the Bank filed motions for summary judgment, both of which were labeled as "traditional and no-evidence" motions, seeking dismissal of Strobach's lawsuit in its entirety. Shortly thereafter, on June 23, 2017, the trial court held a hearing on the motions. During the summary judgment proceedings, WesTex again blamed the Bank for any wrongdoing in the garnishment proceeding, arguing that it had a right to rely on the Bank's express representations that Strobach had been a judgment-debtor who had been properly served in the earlier proceeding; conversely, WesTex argued that it did not owe any duty, either by terms of the account agreement or other law, to investigate the validity of the Bank's representations. WesTex further contended that it acted in accordance with statutory provisions in releasing funds held in Strobach's account, and it was permitted to act as it did under the parties' account agreement.

         At the close of the hearing, the trial court stated that it believed WesTex was an "innocent bystander," and that it was therefore granting WesTex's motion for summary judgment. However, the trial court denied the Bank's motion for summary judgment at that time. After severing the two cases and granting WesTex's notice of nonsuit with respect to its third-party claim against the Bank, the trial court issued a final judgment dismissing Strobach's claims against WesTex, and this appeal followed.

         DISCUSSION

         In one issue with multiple subparts, Strobach argues that the trial court erred in granting summary judgment on each of her four causes of action asserting that she presented sufficient evidence to raise a question of fact with regard to each of her claims. For the reasons set forth below, we agree with Strobach that a question of fact remained on the issue of whether WesTex breached its contractual duty owed to her when it released her funds to the Bank, and that the trial court therefore erred in granting summary judgment in WesTex's favor on that cause of action. However, we agree with WesTex that the trial court properly granted summary judgment on Strobach's remaining three claims.

         Standard of Review

         On appeal, we review both no-evidence and traditional motions for summary judgment de novo. See Border Demolition & Envtl., Inc. v. Pineda, 535 S.W.3d 140, 151 (Tex. App.-El Paso 2017, no pet.) (citing Valence Operating Company v. Dorsett,164 S.W.3d 656, 661 (Tex. 2005)); see also Travelers Ins. Co. v. Joachim, 315 S.W.3d 860, 862 (Tex. 2010). When, as here, a party has moved for summary judgment on both no-evidence and traditional grounds, we first review the no-evidence grounds. See Cmty. Health Sys. Prof'l Services Corp. v. Hansen, 525 S.W.3d 671, 680 (Tex. 2017); Lightning Oil Co. v. Anadarko E&P Onshore, LLC, 520 S.W.3d 39, 45 (Tex. 2017). If we conclude that the trial court properly granted the no-evidence summary judgment motion, we need not ...


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