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Manning v. Jones

Court of Appeals of Texas, Fifth District, Dallas

December 4, 2019


          On Appeal from the 301st Judicial District Court Dallas County, Texas Trial Court Cause No. DF-17-15897

          Before Justices Pedersen, III, Reichek, and Carlyle



         This case arose from the appointment of a receiver to maintain, and to sell, a marital asset in connection with a divorce proceeding. The husband of the divorcing couple sued the receiver, alleging (i) breach of a management agreement between the husband and the receiver, and (ii) quantum meruit. The receiver filed a motion for summary judgment based on the doctrine of derived judicial immunity, and the district court granted the motion and rendered a take-nothing judgment against the husband. We affirm.


         Zachariah Manning (Manning) and Monica Fletcher (Fletcher) divorced in 2015.[1] Their divorce case was tried in Dallas County District Court. The trial focused, among other issues, on the disposal of a multi-use building located at 110 E. Main St., Grand Prairie, Texas (the Property). The Property was acquired during the couple's marriage through Trans Financial, LLC, a company that Manning started, also during the marriage.

         Jones's Appointment as Receiver

         The district court determined the Property was community property and ordered that it be sold. On June 13, 2015, Manning, on behalf of Trans Financial, hired Berkshire Hathaway Homeservices, a real estate brokerage firm, to sell the Property. Manning refers to Berkshire Hathaway as Penfed Realty, LLC d/b/a Prudential Penfed Realty (Penfed), and we, too, will adopt this nomenclature. Gloria Jones, a real estate agent sponsored by Penfed, signed the listing agreement on its behalf.[2] The agreement required Penfed to list the Property at a gross sales price of $795, 000 and to sell the Property at this price or at any other price acceptable to Trans Financial.

         Fletcher filed a motion for the appointment of a receiver to take charge and possession of the Property. In connection with this motion, Manning allegedly asked Jones if she were qualified to serve as, and had an interest in serving as, the receiver. He claims that Jones materially misrepresented her qualifications, thereby inducing him and Fletcher to agree that Jones should serve as the receiver. On June 17, the district court signed an order appointing Jones as receiver to take charge and possession of the Property. See Tex. Fam. Code Ann. § 6.502(a)(5) (permitting court, during pendency of suit for dissolution of marriage, to render an appropriate order appointing receiver for preservation and protection of property of parties); Shultz v. Shultz, No. 05-18-00876-CV, 2019 WL 2511245, at *2 (Tex. App.-Dallas June 18, 2019, no pet.) (mem. op.) (noting that a trial court's "broad authority" to divide martial property upon dissolution of marriage "sometimes includes the power to enlist the aid of a receiver to effectuate the . . . court's orders and judgments" (citing, inter alia, Fam. Code § 7.001)). The order states that "Jones is qualified to serve as Receiver." It also vests her with "full power and authority" to (i) manage and maintain the Property; (ii) collect rents; (iii) pay expenses; and (iv) take any other action that, in her judgment, is necessary for carrying out and discharging her duties. In addition, the order notes that "the receiver may designate Mr. Manning as the person responsible for the day to day management of the Property." Finally, the order requires Jones to list the Property as soon as practicable, empowers her to sell the Property, and mandates that she distribute the net sales proceeds "in accordance with the provisions therefor" in the divorce decree.

         Efforts to Maintain, and to Sell, the Property

         Pursuant to the court's order, Jones listed the Property on the multiple listing service (MLS). The parties focus on different aspects of the steps that Jones took, or did not take, to sell the Property. Manning alleges that he, not Jones, handled showings and provided access to the Property. In contrast, Jones avers that she showed the Property to buyers on several occasions but that no one was interested in purchasing it at the price at which it was listed.

         Jones and Manning also signed an agreement, pursuant to which Manning would carry out Jones's powers under the June 17 order to manage the Property. Under the terms of the agreement, referred to herein as the Management Agreement, Jones would compensate Manning $1, 050 per month from the Property's monthly rents when collected. Manning claims that, in accordance with the Agreement, he managed and maintained the Property, collected rents, paid expenses, loaned the Property money, and took other actions necessary for carrying out the Agreement.

         According to Jones, the Property's operating income was insufficient to pay Manning's management fee. She attributes this lack of income to the Property's substandard condition and its limited available parking, which prompted tenants to leave. On May 5, 2016, Jones accepted a $360, 000 purchase offer for the Property, and the Property sold on or about July 29 of the same year. Manning submitted his expense receipts and compensation invoices for payment pursuant to the Management Agreement. He alleges that Jones sent an e-mail to him dated July 27, 2016, copying Fletcher's attorney, in which Jones agreed with the compensation and reimbursement sought by Manning under the Agreement. Moreover, in an August 17, 2016 telegram, Jones agreed that Manning should be reimbursed and compensated, but she also stated that there might not be "enough funds to cover all expense[s]" given that "the rental rates declined from December 2015." Thereafter, in response to an objection by Fletcher, Jones purportedly retracted her agreement with respect to the amount that Manning was owed, though she continued to acknowledge that Manning was entitled to compensation. Manning claims that Jones then became distant and refused to return his phone calls or text messages. After closing, Jones deducted a six percent broker's commission and deposited the balance of the sales proceeds into the court's registry. In other words, she deducted her commission but did not pay Manning. Following a hearing at which Jones testified, the district court distributed the proceeds.

         Manning's Lawsuit

         In February 2017, Manning sued (i) Jones; (ii) Penfed; and (iii) an officer of Penfed, Richard Ray Wylie. Manning asserted three causes of action against all defendants, [3] one against Jones, [4] and one against Penfed.[5] These claims sounded in tort and arose from, among other acts or omissions, Jones's alleged misrepresentations that she was qualified to serve as receiver, the defendants' sale of the Property for less than its fair market value, and their failure to refrain from engaging in conflicts of interest.

         In September 2017, Manning filed a no evidence and traditional motion for partial summary judgment. The motion urged that Wylie and Jones, as a matter of law, breached fiduciary duties owed to Manning. Following a hearing, the court denied the motion on November 10, 2017.

         In March of the following year, Manning filed a second amended petition that asserted claims for breach of the Management Agreement and for quantum meruit in lieu of the tort claims that he had previously alleged. Manning's contract and quantum meruit claims ...

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