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In re Topletz

Court of Appeals of Texas, Fifth District, Dallas

August 27, 2019

IN RE STEVEN K. TOPLETZ AND HARPER BATES & CHAMPION LLP, Relators

          On Appeal from the 416th Judicial District Court Collin County, Texas Trial Court Cause No. 416-02273-2019

          Before Justices Brown, Schenck, and Reichek

          MEMORANDUM OPINION

          ADA BROWN JUSTICE

         In this original proceeding, relators Stephen K. Topletz and Harper Bates & Champion LLP (HBC) seek relief from a turnover order requiring them to (1) deposit into the trial court's registry unearned funds in HBC's Interest on Lawyers Trust Accounts (IOLTA accounts) "owned by and/or for the benefit of" Topletz and "accounts receivable, present or future, earned or unearned fees" due from Topletz and (2) produce billing statements, invoices, and other documents reflecting fee agreements, payments, and accounting related to HBC's representation of Topletz. We requested real party in interest Raygan Bryce Wadle, Independent Administrator of the Estate of Lynda Carroll Willis, Deceased, Individually and on Behalf of Lancaster Bluegrove L.P., (the Estate) and respondent file their responses, if any, to relators' petition for writ of mandamus. The Estate filed a response, and relators filed a reply. After reviewing the petition, the response, the reply, and the sworn record, we conditionally grant the writ of mandamus.

         Background

         Following a June 2015 bench trial, the trial court entered a judgment against Topletz in favor of Willis, individually and on behalf of Lancaster Bluegrove, L.P. The Estate[1] served Topletz with post-judgment discovery, which included requests for production seeking attorney fee agreements, checks or drafts paid to attorneys, and attorney billing statements. Topletz provided information about payments to attorneys, but also objected that responsive documents were privileged. The Estate filed a motion to compel, and, in June 2018, the trial court entered an order requiring Topletz to submit in camera and produce certain documents related to the Steven Topletz 2011 Family Trust (the trust).[2] The order did not address production of documents related to attorney fee agreements, payments or billing statements.

         The Estate subsequently filed a motion for contempt and, following a February 2019 hearing, the trial court ordered Topletz to produce responsive documents by March 11, 2019 and appear at a show cause hearing on March 18, 2019. The Estate then served Topletz's attorney, Austin Champion of HBC, with a subpoena duces tecum to appear at the March 18 hearing and produce documents, including fee agreements, billing statements, invoices, and statements and documents reflecting monies paid by Topletz, or any person on his behalf, into any IOLTA account. Champion and Topletz responded, objecting that the requests sought information outside the limited scope of the contempt motion. They further objected that, to the extent the subpoena duces tecum sought documents within HBC's possession, HBC was withholding responsive documents containing privileged and confidential information and revealing information protected from disclosure by the work-product doctrine.

         After the March 18 hearing, the trial court entered a judgment ordering Topletz to be held in contempt of court and confined in the county jail until he served "full and/or proper responses" to the requests seeking documents related to the trust. Although testimony at the hearing was largely confined to issues related to the trust, the Estate's counsel asked Topletz if he had paid attorneys to represent him at the hearing. Topletz testified that he had paid HBC a retainer fee, which he believed was $5000. There also was some discussion about the subpoena duces tecum and, specifically, the fact that the required witness fee had not been tendered, preventing the trial court from enforcing it. See Tex. Civ. Prac. & Rem. Code Ann. § 22.004; Tex.R.Civ.P. 176.8(b).

         In April, the Estate filed an application for turnover order in a new proceeding in the trial court. The application sought an ex parte turnover order requiring Topletz, HBC, and any other attorney representing Topletz to deposit into the trial court's registry: (1) all unearned funds on deposit, including IOLTA account funds, owned by and/or for the benefit of Topletz; (2) attorney "accounts receivable, present or future, earned or unearned fees" due from Topletz; and (3) any funds to be paid to such attorneys in the future by Topletz or on his behalf. The application also sought production of documents related to fee agreements, billing statements and invoices regarding work done for Topletz, and statements and documents reflecting monies paid by Topletz, or any person on his behalf, into any IOLTA account.

         As evidentiary support for its application, the Estate relied on Topletz's testimony that he paid a $5000 retainer to HBC. According to an affidavit by the Estate's counsel attached to the application, Champion represented at the February contempt hearing that his retainers for taking a case range between $5, 000 and $25, 000 but did not recall the amount of retainer he received to represent Topletz or the hourly rate he was charging Topletz. The Estate's counsel opined, based on his experience, "funds paid by a client as a retainer are placed in the lawyer's or law firm's IOLTA," the lawyer will bill the time spent against the retainer paid as the lawyer performs work, and "as this litigation continues, [Topletz's] counsel will receive payments from and/or for the benefit of [Topletz] to continue their representation of [Topletz]."

         On May 1, 2019, the trial court entered an ex parte order granting turnover relief. According to the order, the trial court found Topletz "owns, controls and/or is the beneficiary of non-exempt property, including funds maintained in the IOLTA(s) of [his] attorneys (including [HBC] and/or Austin Champion) and funds to be received in the future by [Topletz's] attorneys' accounts receivables due from [Topletz] to his attorneys." The order required Topletz, HBC, and any other attorney representing Topletz to deposit into the trial court's registry all unearned funds paid and/or held in attorney IOLTA accounts owned by and/or for the benefit of Topletz and "accounts receivable, present or future, earned or unearned fees" due from Topletz "in order to satisfy the judgment against" Topletz. The order further required them to file with the trial court, and serve on the Estate, documents reflecting payments made by or on behalf of Topletz, billing statements/invoices for work performed on behalf of Topletz, fee agreements between Topletz and HBC and/or Champion, a list of accounts receivable owed by Topletz, and documents identifying any parties making payments to Topletz or third parties on his behalf. The order required compliance within three days from the date the order was served. The order further provided the parties had thirty days from the date of service to file a motion to vacate establishing why the funds are not subject to turnover relief to satisfy the Estate's judgment.

         One week later, HBC and Topletz filed this original proceeding requesting a writ of mandamus ordering the trial court to vacate its turnover order.[3] They contend the trial court abused its discretion in ordering (1) current and future attorneys of a judgment debtor to turn over accounts receivable, IOLTA account funds, and future fees in satisfaction of a judgment and (2) production of attorney billing records and other related materials in connection with a turnover order. We stayed the order pending resolution of the issues presented.

         Standard of Review

         Generally, mandamus relief lies when the trial court has abused its discretion and the relator has no adequate remedy by appeal. In re Prudential Ins. Co., 148 S.W.3d 124, 135-36 (Tex. 2004)(orig. proceeding). A trial court clearly abuses its discretion if "it reaches a decision so arbitrary and unreasonable as to amount to a clear and prejudicial error of law" or clearly fails to analyze or apply the law correctly. In re Cerberus Capital Mgmt. L.P., 164 S.W.3d 379, 382 (Tex. 2005)(orig. proceeding) (per curiam) (quoting Walker v. Packer, 827 S.W.2d 833, 839-40 (Tex. 1992) (orig. proceeding)). Whether an appellate remedy is adequate depends heavily on the circumstances presented. In re Prudential ...


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