Petition for Writ of Mandamus Conditionally Granted; Appeal Dismissed; and
Opinion filed September25, 2012.




                                   In The

                  Fourteenth Court of Appeals

                            NO. 14-11-00765-CV

  IN RE HEREWEAREAGAIN, INC.; VINCENT CABELLA; THE PREMISES
    LOCATED AT 2618 WINROCK BLVD., HARRIS COUNTY, HOUSTON,
                TEXAS; AND VINCENT CABELLA JR.


                           ORIGINAL PRCEEDING
                           WRIT OF MANDAMUS



                            NO. 14-11-00687-CV

HEREWEAREAGAIN, INC. AND VINCENT CABELLA, INDIVIDUALLY AND
    ON BEHALF OF THE PREMISES LOCATED AT 2618 WINROCK
  BOULEVARD IN THE CITY OF HOUSTON, HARRIS COUNTY, TEXAS,
                         Appellants

                                     V.

                       CITY OF HOUSTON, Appellee


                   On Appeal from the 151st District Court
                                 Harris County, Texas
                           Trial Court Cause No. 2007-29734


                                    OPINION


       In this consolidated appeal and petition for a writ of mandamus, we are asked to
determine whether the trial court abused its discretion when, in response to the City of
Houston’s motion to hold a corporation, an individual, and the individual’s premises in
contempt for violating a permanent injunction, the trial court ordered the alleged
contemnors and the corporation’s representative to pay the City $47,000 in unrequested
sanctions. In addition, the trial court ordered these entities and individuals to (a) install
video cameras at their own expense inside the nightclub operated on the premises;
(b) make continuous 360-degree video recordings of every part of the building that is
accessible to customers, excepting only the bathrooms; and (c) turn over the recordings to
the City’s designated agent every two weeks. Because the trial court clearly abused its
discretion in entering such an order, for which there is no adequate remedy by appeal, we
conditionally grant the writ ordering the trial court to vacate the order, and we dismiss the
appeal.

                     I. FACTUAL AND PROCEDURAL BACKGROUND

       In 2007, a business known as The Penthouse Club was operating in Houston as an
adult cabaret without a permit from the City to do so. An adult cabaret is among the
sexually oriented businesses defined as an “enterprise” in the Houston Municipal Code,
and under the Code, it is “unlawful for any person to own, operate or conduct any
business in an enterprise located within the city unless there is a permit for the
enterprise.”   See HOUS., TEX., CODE     OF   ORDINANCES §§ 28-121, 28-122.        By local
ordinance, a permit may not be issued to an enterprise that is located in a predominantly
residential neighborhood or within 1,500 feet of a church or school. Id. § 28-125(b). The
Penthouse Club was operated on premises in a predominantly residential area and within


                                              2
1,500 feet of two churches and a school; thus, the City sought both a declaratory
judgment that “the Premises” were ineligible for a permit, and a permanent injunction
preventing the continued operation of the enterprise. The City’s claims for relief were
asserted against the Premises in rem and against Hereweareagain, Inc., the company that
operated The Penthouse Club. The owner of the premises, Vincent Cabella a/k/a Vincent
Cabella Sr., was joined as an interested party.

        In its final judgment of December 31, 2008, the trial court declared that “the
Premises are not eligible for a permit to operate an enterprise, as that term is defined in
Section 28-121 of the Code of Ordinances of the City of Houston.” The trial court
accordingly enjoined Hereweareagain, Cabella, “and the Premises and their respective
agents, employees, representatives and all persons acting in concert with any one or more
of them . . . from operating or allowing to operate any enterprise at the Premises, as the
term ‘enterprise’ is defined in Section 28-121” of Houston’s municipal code.1

        In August 2010, the City filed a “motion for contempt and to show cause for
violation of permanent injunction.”2            The City alleged that it conducted undercover
operations at The Penthouse Club on December 2, 2009, on February 27, 2010, and on
July 22, 2010, and observed multiple violations of the injunction. The City asked for the
trial court to order

        (a)     “that respondent Hereweareagain, Inc. be assessed a fine of $500 for
                the violation of the permanent injunction on December 3, 2009”;
        (b)     “that any individual agent, employee, representative, or other person
                acting in concert with Hereweareagain, Inc., Vincent Cabella, and/or
                the Premises in connection with the violation of the permanent

1
  The City further asserted that Hereweareagain and Cabella maintained a common nuisance by
knowingly allowing the habitual use of the Premises for prostitution and the delivery of controlled
substances. The trial court issued findings of fact agreeing that the Premises were maintained as a
common nuisance, and ordered that no business of any kind could be conducted on the Premises from
September 10, 2008 through September 10, 2009. In addition, the trial court held Herewearegain,
Cabella, and the Premises jointly and severally liable to the City for attorney’s fees of $42,000, together
with the costs of court.
2
  In the particular proceedings under review here, the City has not alleged that any provisions of the 2008
final judgment were violated except the injunction against the operation of an enterprise on the Premises.

                                                    3
             injunction on December 3, 2009, be assessed a fine of $500 and
             sentenced to confinement in the county jail for six months”;
      (c)    “that the Court exercise its inherent power to compel
             respondents . . . and all persons acting in concert with anyone or
             more of them, to obey the permanent injunction. This inherent
             power can include confinement of any individuals until they comply
             with the permanent injunction. Tex. Gov’t Code § 21.002(e)”; and
      (d)    “that the Court exercise its inherent power to order Hereweareagain,
             Inc., Vincent Cabella, and the Premises to be further confined in the
             Harris County jail by order of the Court until the Court is satisfied
             that The Penthouse Club will no longer be operated as an
             enterprise . . . .”
      The City also made the following request to the trial court to appoint a receiver to
operate The Penthouse Club:

      Because of the nature of the business of [T]he Penthouse Club, it should not
      be necessary to conduct undercover investigations in order to obtain
      evidence of whether or not the permanent injunction is being violated.
      Under these special circumstances, where evidence of compliance is within
      the control of respondents and their respective agents, employees,
      representatives and all persons acting in concert with anyone or more of
      them, the City respectfully requests that compliance with the permanent
      injunction will only be effectively obtained if the Court exercises it[s]
      inherent power and appoints a receiver to take control of [T]he Penthouse
      Club so that it is operated in a manner that does not violate the permanent
      injunction.
      Over the course of two days, the trial court held a hearing on the motion for
contempt. Cabella’s son Vincent Cabella Jr. appeared as the corporate representative of
Hereweareagain, Inc.; to distinguish between the father and son, we refer to Vincent
Cabella Sr. as “Cabella” and to Vincent Cabella Jr. as “Vincent.” Because Cabella was
incarcerated, he was not present at the hearing, and the parties agreed that the contempt
proceeding against him could not continue in his absence. The trial court accordingly
stated, “We will not proceed against Mr. Cabella, Sr.”; however, the trial court rejected
the argument that, in Cabella’s absence, it could not proceed against the Premises, which
Cabella owns.

      Three months after the hearing, the trial court issued its ruling, and none of the

                                           4
Penthouse Parties was held in contempt. Instead, the trial court issued a “sanctions
order,” which the trial court stated was rendered “[i]n the exercise of its inherent power to
enforce its own orders,” namely, the 2008 permanent injunction. In its sanctions order,
the trial court required Hereweareagain, Cabella, Vincent, and the Premises (collectively,
“the Penthouse Parties”) jointly and severally to perform the following actions at their
own cost and expense:

       (a)    Pay the City $47,000 in accordance with the City’s instructions within
              thirty days.
       (b)    Install a closed-circuit video monitoring system at the Premises within sixty
              days. “Said system shall view, monitor and record a 360[-]degree area in
              all public areas of the Premises inside in the building” with the exception of
              bathrooms, the employees’ changing areas, and food preparation areas. The
              cameras were to “be of such quality as to be able to record in full light as
              well as the dim lighting of the Premises,” and “shall record digitally all
              areas continuously during all times when the Premises is open for
              business.” The recordings were to be stored on DVDs or in a format
              specified by the City in writing.
       (c)    Label the recordings by date and make them available for pickup by the
              City’s designee every two weeks.
In addition, the attorney for the Penthouse Parties was ordered to designate in writing “an
individual responsible for securing the recordings and making them available to the
City,” and provide the written designation to the City’s attorney. The Penthouse Parties
further were ordered to provide updated information to the City promptly if there was a
change in the identity of the person designated to fulfill this responsibility.

       Hereweareagain, Cabella, and the Premises filed a motion for new trial and a
motion to modify, correct, reform and arrest the sanctions order, but the trial court did not
rule on either motion. They filed a notice of appeal, and about a month later, the
Penthouse Parties filed a petition for writ of mandamus for relief from the sanctions
order. The City then filed a motion asking the trial court to enforce the sanctions order
against Hereweareagain, Cabella, and the Premises. The trial court granted the motion
and issued an order against each of the Penthouse Parties; they have included a challenge


                                               5
to that order in the issues presented in their appeal.3

                                      II. ISSUES PRESENTED

       In their petition for a writ of mandamus, the Penthouse Parties argue that the trial
court abused its discretion by (a) sanctioning them without notice and in violation of their
fundamental right to due process, and (b) substantially modifying the final judgment of
December 2008 after expiration of its plenary jurisdiction. In their appellate brief, the
Penthouse Parties present the same two arguments, and additionally contend that the trial
court abused its discretion by (c) relying upon its inherent power to sanction,
(d) awarding the City monetary damages as “sanctions,” and (e) sanctioning them based
on insufficient evidence.

                                           III. ANALYSIS

       We review a trial court’s imposition of sanctions for abuse of discretion. Unifund
CCR Partners v. Villa, 299 S.W.3d 92, 97 (Tex. 2009) (per curiam). We will reverse the
sanctions order only if the trial court acted without reference to any guiding rules and
principles, such that its ruling was arbitrary or unreasonable. Id. We agree with the
Penthouse Parties that the trial court clearly abused its discretion in sanctioning them
without notice and an opportunity to be heard. These errors were particularly apparent in
their application to Vincent and Cabella.

       Vincent was not a party to the original suit. He was not named in the permanent
injunction in 2008, or even in the City’s motion for contempt. Through counsel, he
appeared at the contempt proceedings solely in his capacity as the corporate
representative of Hereweareagain, Inc. With no notice or opportunity to be heard, he was
then held jointly and severally liable, in an individual capacity, for $47,000 in monetary
3
  “Vincent Cabella Jr.” was not named in the notice of appeal, but the following appellants were named:
“Hereweareagain, Inc. and Vincent Cabella, individually and on behalf of the Premises Located at 2618
Winrock Boulevard . . . .” The opening and reply briefs in the appeal ostensibly were filed on behalf of
all of the Penthouse Parties. In light of our discussion below regarding mandamus and the absence of an
adequate remedy by appeal, we need not determine whether there was a a bona fide attempt to perfect an
appeal as to “Vincent Cabella Jr.” See Warwick Towers Council of Co-Owners v. Park Warwick, L.P.,
244 S.W.3d 838, 839–40 (Tex. 2008) (per curiam).

                                                   6
sanctions, together with the costs of installing video cameras, recording all interactions
with patrons inside the Premises, and preserving the recordings.

       Cabella did not appear at the contempt proceedings in any capacity. Moreover,
the trial court asked the City’s attorney, “[D]o you agree that it’s the law that we cannot
proceed against Vincent Cabella, Sr., in his individual capacity or not?” The City’s
attorney answered, “I think we agree with that, Your Honor.” The trial court then stated,
“All right.   Here’s my decision.      We will not proceed against Mr. Cabella, Sr.”
Nevertheless, more than three months after announcing this ruling on the record in open
court, the trial court held Cabella jointly and severally liable, in an individual capacity,
for the sanctions described above.

       “Notice is essential for the proper imposition of sanctions.” Zep Mfg. Co. v.
Anthony, 752 S.W.2d 687, 690 (Tex. App.—Houston [1st Dist.] 1988, no writ).
Although a trial court has the inherent authority to impose sanctions, and may do so sua
sponte, the trial court is not permitted to sanction out-of-court conduct without first
providing notice and an opportunity to be heard. See, e.g., Greene v. Young, 174 S.W.3d
291, 299–300 & n.4 (Tex. App.—Houston [1st Dist.] 2005, pet. denied); Shockey v.
A.F.P., Inc., 905 S.W.2d 629, 630 (Tex. App.—Houston [14th Dist.] 1995, no writ).

       Here, the Penthouse Parties received no prior notice that the court was considering
sanctioning them, or that such sanctions might include obligations such as those imposed
here. They received notice only that, based on the specific violations alleged in the
City’s motion, the trial court had been asked to fine and confine them for contempt and to
appoint a receiver to take control of the Penthouse Club. See Ex parte Green, 603
S.W.2d 216, 218 & n.3 (Tex. 1980) (orig. proceeding) (“Where one is required to defend
against a motion for contempt, or show cause order, he is entitled to fair notice of the
matters alleged against him as the basis of the contempt proceeding.”).

       The City contends that the Penthouse Parties had adequate notice of the potential
sanctions because in its motion, the City asked the district court to “exercise its inherent
power . . . to enforce the permanent injunction.” But, trial courts have more than one

                                             7
inherent power.         To name just a few, each trial court has the inherent power to
(a) manage its docket;4 (b) dismiss a case for failure to prosecute;5 (c) render judgment
nunc pro tunc;6 (d) determine that a party is a vexatious litigant;7 (e) determine whether
particular activities constitute the unauthorized practice of law;8 (f) appoint a receiver,9
and (g) enforce its judgments.10 In particular, trial courts have the inherent power to
enforce their judgments through the use of contempt proceedings.11                       See Ex parte
Gorena, 595 S.W.2d 841, 843–44 (Tex. 1979) (“[T]he power to punish for contempt is an
inherent power of a court. . . . This power enables courts to persuade parties to obey a
prior order or decree of the court so that such prior order will not be rendered ineffectual
by recalcitrant litigants.”).

          In the City’s motion, the trial court’s “inherent power” is mentioned just three
times, but never in connection with sanctions. First, the City invoked the trial court’s
inherent power to coerce the Penthouse Parties into obeying the permanent injunction by
holding them in civil contempt of court. Although the City has paraphrased a portion of
one sentence from this section to suggest that it asked the trial court to enforce the
injunction by using any inherent power it possessed, the City actually wrote as follows:


4
    Villarreal v. San Antonio Truck & Equip., 994 S.W.2d 628, 630 (Tex. 1999).
5
    Id.
6
    Collins v. State, 240 S.W.3d 925, 928 (Tex. Crim. App. 2007).
7
 Although this formerly was described as an inherent power, this power now is authorized by statute. See
TEX. CIV. PRAC. & REM. CODE §§ 11.001–.104 (West 2002 & Supp. 2012).
8
    Unauthorized Practice Comm., State Bar of Tex. v. Cortez, 692 S.W.2d 47, 51 (Tex. 1985).
9
 Aubin v. Territorial Mortgage Co. of Am., Inc., 640 S.W.2d 737 (Tex. App.—Houston [14th Dist.] 1982,
no writ) (“Courts of equity have inherent power to appoint receivers independently of statutory
authority . . . .” (quoting Berkshire Petroleum Corp. v. Moore, 268 S.W. 484, 487 (Tex. Civ. App.—San
Antonio 1924, no writ) (op. on denial of reh’g))). This power is now statutory. See TEX. CIV. PRAC. &
REM. CODE § 64.001(a)(6) (West 2008) (“A court of competent jurisdiction may appoint a receiver . . . in
any other case in which a receiver may be appointed under the rules of equity.”).
10
   Arndt v. Farris, 633 S.W.2d 497, 499 (Tex. 1982) (“The general rule is that every court having
jurisdiction to render a judgment has the inherent power to enforce its judgments.”).
11
  Galtex Prop. Investors, Inc. v. City of Galveston, 113 S.W.3d 922, 927 (Tex. App.—Houston [14th
Dist.] 2003, no pet.) (citing Ex parte Gorena, 595 S.W.2d 841, 845 & n.2 (Tex. 1979)).

                                                     8
          Upon a hearing and a finding that they are in civil contempt of court, the
          City moves and prays that the Court exercise its inherent power to compel
          respondents, and their respective agents, employees, representatives, and all
          persons acting in concert with anyone or more of them, to obey the
          permanent injunction. This inherent power can include confinement of any
          individuals until they comply with the permanent injunction. Tex. Gov’t
          Code § 21.002(e).
(emphasis added). Coercive confinement to compel obedience is an example of civil
contempt. See Ex parte Werblud, 536 S.W.2d 542, 545 (Tex. 1976). The statute cited by
the City is called, “Contempt of Court.” See TEX. GOV’T CODE ANN. § 21.002 (West
2004).

          The City referred to the same inherent power a second time when it asked the trial
court to “exercise its inherent power to order [Hereweareagain, Cabella,] and the
Premises to be further confined in the Harris County jail by order of the Court until the
Court is satisfied that The Penthouse Club will no longer be operated as an enterprise.”
Such coercive confinement would be an exercise of the trial court’s contempt powers.
See id.

          The City’s only other reference to the trial court’s inherent power is its statement,
“[T]he City respectfully requests that compliance with the permanent injunction will only
be effectively obtained if the Court exercises it[s] inherent power and appoints a receiver
to take control of the Penthouse Club so that it is operated in a manner that does not
violate the permanent injunction.” Nowhere in its motion did the City ask the trial court
to impose any sanctions, award the City any compensation, or require the Penthouse
Parties to continuously record, preserve, and produce a visual record of “all areas where
customers interact in any way with all personnel employed or otherwise working at the
Premises.”

          In sanctioning the Penthouse Parties, the trial court did not grant any relief
requested in the City’s motion, and did not simply enforce its judgment; it instead
imposed additional obligations to punish past violations in ways that it could not do using



                                                9
its contempt powers.12 But, the trial court’s “inherent power to punish without prior
notice and meaningful hearing exists only with respect to ‘direct’ contempt,” that is, to
contempt that occurs in the court’s presence. In re Acceptance Ins. Co., 33 S.W.3d 443,
449 (Tex. App.—Fort Worth 2000, no pet.). “Like contempt proceedings, proceedings
for sanctions must comport with due process, affording a party an adequate opportunity
to be heard.” Id. at 451. By sanctioning the Penthouse Parties without notice and an
opportunity to be heard, the trial court violated their due-process rights and clearly
abused its discretion. See In re Bennett, 960 S.W.2d 35, 40 (Tex. 1997) (per curiam)
(noting that the right to due process limits a court’s power to sanction); In re Park Mem’l
Condo. Ass’n, 322 S.W.3d 447, 450 (Tex. App.—Houston [14th Dist.] 2010, orig.
proceeding) (“Due process, on a fundamental level, requires notice and a fair opportunity
to be heard.”); Kugle v. DaimlerChrysler Corp., 88 S.W.3d 355, 361 (Tex. App.—San
Antonio 2002, pet. denied) (“A trial court abuses its discretion if it violates due process
by imposing sanctions without notice or a meaningful hearing.”).

        We therefore sustain the Penthouse Parties’ first issue.

                                             IV. REMEDY

        Having concluded that the trial court clearly abused its discretion, we must
consider the more difficult question of whether the appropriate avenue of relief lies
through mandamus or appeal. A writ of mandamus is appropriate if the Penthouse
Parties have “no adequate remedy by appeal.” See In re Prudential Ins. Co. of Am., 148
S.W.3d 124, 135–36 (Tex. 2004) (orig. proceeding). “An appellate remedy is ‘adequate’
when any benefits to mandamus review are outweighed by the detriments.” Id. at 136.
Moreover, “[m]andamus review of significant rulings in exceptional cases may be
essential to preserve important substantive and procedural rights from impairment or loss,

12
   See, e.g., Cannan v. Green Oaks Apartments, 758 S.W.2d 753, 754 (Tex. 1988) (per curiam) (“This
court has earlier held that in a contempt proceeding a private party cannot recover damages for a violation
of a court order.”) (citing Edrington v. Pridham, 65 Tex. 612, 617 (1886)); Cadle Co. v. Lobingier, 50
S.W.3d 662, 668–69 (Tex. App.—Fort Worth 2001, pet. denied) (“A contempt fine is not payable to a
private litigant.”).

                                                    10
[and] allow the appellate courts to give needed and helpful direction to the law that would
otherwise prove elusive in appeals from final judgments . . . .” Id.

           The Penthouse Parties argue that they lack an adequate remedy by appeal because
the trial court issued its final judgment in December 2008. Thus, they contend that the
trial court lacked jurisdiction to render the sanctions order because it had long since lost
its plenary power over the case. They additionally reason that if a final judgment was
rendered in December 2008, then the sanctions order cannot be a final judgment; hence, it
cannot be challenged through an appeal. See Cherokee Water Co. v. Ross, 698 S.W.2d
363, 365 (Tex.1985) (orig. proceeding) (per curiam) (“Unless there is a statute
specifically authorizing an interlocutory appeal, the Texas appellate courts have
jurisdiction only over final judgments.”).13

           It is true that “[o]nly one final judgment shall be rendered in any cause except
where it is otherwise specially provided by law,” TEX. R. CIV. P. 301, and in this case, a
final judgment was rendered in December 2008, when the trial court rendered the
permanent injunction. We therefore agree that the sanctions order was not a final and
appealable order. We disagree, however, with the Penthouse Parties’ contention that the
error was jurisdictional. “Trial courts undoubtedly have jurisdiction to modify or vacate
their judgments granting permanent injunctions because of changed conditions”;14 thus,
to the extent that the trial court’s sanctions order can be construed as a modification of
the permanent injunction, then it was an order that was within the trial court’s
jurisdiction. It nevertheless was erroneous, because there have been no allegations,
evidence, or findings of changed conditions since the trial court’s final judgment four
years ago. To the contrary, the trial court specifically found that “the same type of
conduct that required entry of the permanent injunction in 2008 is continuing today,” and
there is “no meaningful distinction between the testimony and documentary evidence”
offered at the trial in 2008 and at the contempt hearing in 2011. But, because the

13
     This is not a statutorily authorized interlocutory appeal.
14
     City of Tyler v. St. Louis Sw. Ry. Co. of Tex., 405 S.W.2d 330, 333 (Tex. 1966).

                                                        11
sanctions order is not a final, appealable judgment, we conclude that the Penthouse
Parties have no adequate remedy by appeal.          We therefore conditionally grant the
requested writ of mandamus, and dismiss the appeal.

       Finally, we note that there has been no ruling on the City’s motion for contempt,
and the Penthouse Parties have raised meritorious challenges to a number of the trial
court’s evidentiary and procedural rulings at the contempt hearing. Here, the City asked
the trial court to hold Cabella, Hereweareagain, and the Premises in both civil and
criminal contempt, but at the contempt hearing, the City dropped its request for criminal-
contempt remedies, and all of its charges against Cabella. This left only the City’s
allegations of constructive civil contempt against Hereweareagain and the Premises, and
the only constructive-civil-contempt remedy the City sought through its contempt motion
was confinement. As a practical matter, the Premises could not be confined even if it
violated the permanent injunction,15 and its owner—Cabella—could not be confined in
the absence of a meaningful opportunity for a hearing without violating his due-process
rights. See In re Reece, 341 S.W.3d 360, 365 (Tex. 2011) (explaining that one accused of
constructive contempt, i.e., violating a court order outside of the court’s presence, “is
always entitled to notice and a hearing in order to defend or explain the charges.”)
(emphasis added). The trial court also overruled the objections to evidence of conduct
that allegedly violated the permanent injunction but that was not mentioned in the City’s
contempt motion. But see Ex parte Gordon, 584 S.W.2d 686, 688 (Tex. 1979) (“Due
process of law requires that the constructive contemnor be given ‘full and complete
notification’ and a reasonable opportunity to meet the charges by way of defense or
explanation.”).

       Although the proceedings conducted thus far do not support sanctions or contempt
findings, our disposition of this case does not foreclose the trial court from rehearing the
City’s motion to hold Cabella, Hereweareagain, and the Premises in contempt as

15
  But see Estate of Korzekwa v. Prudential Ins. Co. of Am., 669 S.W.2d 775, 778 (Tex. App.—San
Antonio 1984, no writ) (“An injunction operates in personam . . . .”).

                                             12
permitted under section 21.002 of the Texas Government Code.

                                        V. CONCLUSION

       We conclude that the trial court clearly abused its discretion by sanctioning the
Penthouse Parties in violation of their due-process rights.      We therefore direct the
respondent, the Honorable Mike Engelhart, to vacate his sanctions order of May 11, 2011
and any orders enforcing it. We are confident that he will promptly comply, and our writ
will issue only if he fails to do so.




                                           /s/    Tracy Christopher
                                                  Justice



Panel consists of Justices Boyce, Christopher, and Jamison.




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