                                                                                ACCEPTED
                                                                            13-14-00516-CV
                                                            THIRTEENTH COURT OF APPEALS
                                                                   CORPUS CHRISTI, TEXAS
                      No. 13-14-00516-CV                               4/30/2015 6:00:44 PM
                                                                          DORIAN RAMIREZ
                                                                                     CLERK



                      In the 13TH District
                   Court of Appeals of Texas    FILED IN
                                        13th COURT OF APPEALS
                                     CORPUS CHRISTI/EDINBURG, TEXAS
                                         4/30/2015 6:00:44 PM
            PATRICK HLAVATY AND JEFF STRNADEL,
                                          DORIAN E. RAMIREZ
                             Appellants/Cross-Appellees,
                                                 Clerk

                             VS.

      COMMERCIAL STATE BANK OF EL CAMPO, TEXAS, INC.
                            Appellee/Cross-Appellant.


                      On Appeal from the
             th
          329 District Court of Wharton County, Texas


             CROSS-APPELLEES PATRICK HLAVATY
                AND JEFF STRNADEL’S BRIEF
           ________________________________

                          WALTER JAMES KRONZER, III, P.C.
                          Walter James Kronzer, III
                          State Bar No. 11735001
                          wkronzer@kronzer.com (e-mail)
                          3000 Weslayan, Suite 247
                          Houston, Texas 77027
                          713-622-5766
                          713-622-5445 (fax)

                          THE SINGLETON LAW FIRM
                          Howard H. Singleton
                          State Bar No. 1843620
                          singletonlaw@sbcglobal.net (e-mail)
                          109 East Milam
                          Wharton, TX 77488
                          979-532-9800
                          979-532-9085 (fax)

                          Attorneys for Cross-Appellees Patrick Hlavaty
                          and Jeff Strnadel

Oral Argument Requested
                  STATEMENT REGARDING ORAL ARGUMENT

     As stated in their earlier brief in this appeal, Patrick Hlavaty and Jeff

Strnadel request oral arguments to preserve their right to participate in any

such arguments. But, as stated earlier, they suggest oral arguments are not

necessary. This is simply an appeal involving a question of whether a trial

court mistakenly believed it lacked jurisdiction over Patrick Hlavaty and

Jeff Strnadel’s claims. They believe this Court can reach a decision without

oral arguments.




                                      i
                                          TABLE OF CONTENTS
                                                                                                          page

Statement Regarding Oral Arguments. ........................................................... i

Table of Contents............................................................................................. ii

Index of Authorities. ........................................................................................ v

Statement of Facts............................................................................................ 1

Summary of Argument................................................................................... 10

Standard of Review. ....................................................................................... 11

Argument and Authorities. ............................................................................ 12

I.      THE TRIAL COURT ERRONEOUSLY CONCLUDED IT HAD
        LOST JURISDICTION OVER THIS CASE SINCE NONE OF
        THE PRIOR NONSUIT ORDERS IN THIS CASE AMOUNTED
        TO A FINAL JUDGMENT.................................................................... 12

        A.       The Bank confuses an interlocutory process trapped
                 by claims against other defendants with an
                 interlocutory process where the only remaining trial
                 court issue is a defendant’s sanction claim................................ 13

        B.       The Bank ignores cases such as Unifund CCR
                 Partners v. Villa, 299 S.W.3d 92 (Tex. 2009) (per
                 curiam) and Crites v. Collins, 284 S.W.3d 839 (Tex.
                 2009) (per curiam) in concluding that somehow the
                 trial court had some very limited amount of time to
                 consider a sanctions motion even though the trial
                 court never signed a final judgment disposing of all
                 parties prior to the Final Order on June 3, 2014....................... 16

                 1.       The Agreed Order of Nonsuit for Defendants, The
                          Lending Center and Larry Durwood Tew signed on
                          November 15, 2013 was not a final, appealable
                          judgment in this matter.. .................................................. 17


                                                       ii
             2.      In Unifund CCR Partners v. Villa, 299 S.W.3d 92
                     (Tex. 2009) (per curiam) the Texas Supreme Court
                     held a trial court still had plenary jurisdiction over a
                     sanctions claim some nine months after a dismissal
                     order made it the only claim pending before the trial
                     court................................................................................... 18

             3.      Crites v. Collins, 284 S.W.3d 839 (Tex. 2009) (per
                     curiam) also supports the conclusion the trial court
                     still had jurisdiction in June 2014 when it signed the
                     Order of Sanctions............................................................. 19

             4.      The trial court still had jurisdiction in June 2014 as
                     the trial court did not sign the last order of nonsuit
                     until late 2013, and Hlavaty and Strnadel had
                     asserted claims which prevented that nonsuit order
                     from being a final, appealable judgment.......................... 21

      C.     None of the nonsuit orders in this case expressly
             addressed Hlavaty and Strnadel’s claims in their
             First Amended Counterclaims against the Bank.. .................... 22

II.   ASSUMING THE TRIAL COURT HAD JURISDICTION TO
      ISSUE ITS JUNE 11, 2014 ORDER OF SANCTIONS, THE
      TRIAL COURT DID NOT ABUSE ITS DISCRETION IN
      INVOKING ITS INHERENT POWER TO SANCTION THE
      BANK’S BAD FAITH CONDUCT.. ...................................................... 26

      A.     The Bank waived any complaints about the four
             prior orders against the Bank.................................................... 26

      B.     The trial court did not abuse it discretion in signing
             the June 11, 2014 Order of Sanctions as the trial
             court complied with necessary due process
             requirements.............................................................................. 28




                                                   iii
                  1.       The basis of the trial court’s Order of
                           Sanctions is its inherent power to
                           sanction bad faith conduct, but the Bank
                           focuses on Texas Rule of Civil Procedure
                           13 instead of the stated trial court’s
                           inherent power.. ............................................................... 29

                  2.       The final Order of Sanctions was the
                           fifth order against the Bank following
                           four prior, valid, enforceable despite the
                           Bank arguing to the contrary.. .......................................... 31

                  3.       The trial court’s June 11, 2014 Order of
                           Sanctions complied with necessary due
                           process requirements....................................................... 33

         C.       Any error regarding the evidence supporting the
                  monetary award or lack of particularity in the
                  sanctions order is harmless because the trial court
                  did not obscure its reasoning at the hearing, and the
                  situation is adequately presented to this Court.. ...................... 35

Prayer............................................................................................................. 39

Certificate of Compliance.............................................................................. 40

Certificate of Service. .................................................................................... 40

Appendix                                                                                                        Tab

April 11, 2011 Order as to Jeff Stranadel’s [sic] Motion
to Compel Error & Omissions Policy. (CR Supp __). .................................... A

September 8, 2011 Order granting Counter-Plaintiff Jeff Strnadel
and Patrick Hlavaty’s Motion to Compel (CR Supp __)................................ B

Order Nunc Pro Tunc on Counterplaintiffs Motion to Compel
& For Sanctions & Supplement to Counterplaintiffs Motion
to Compel & for Sanctions (CR 3:541)............................................................ C



                                                         iv
                                   INDEX OF AUTHORITIES

Cases                                                                                        Page

American Heritage Cap., LP v. Gonzalez,
    436 S.W.2d 865 (Tex. App.–Dallas 2014, no pet.). .................. 14, 17, 21

Barr v. Resolution Trust Corp.,
     837 S.W.2d 627 (Tex.1992). ................................................................ 24

Crites v. Collins,
      284 S.W.3d 839 (Tex. 2009) (per curiam). ............................. 10, 14, 19

Cuellar v. Maldonado,
      No. 13-14-00491-CV, 2015 Tex. App. LEXIS 2138 (Tex.
      App.–Corpus Christi - Edninburg Mar. 5, 2015, n.w.h.)
      (memorandum op.). .................................................................. 11, 31-32

CTL/Thompson Tex., LLC v. Starwood Homeowner’s Assoc., Inc.,
    390 S.W.3d 299 (Tex. 2013) (per curiam)..................................... 10, 14

In re A.M.B.V.,
      No. 13-13-00081-CV, 2015 Tex. App. LEXIS 59 (Tex.
      App.–Corpus Christi - Edninburg Jan. 8, 2015, orig.
      proceeding) (memorandum op.)................................................... 10, 30

In re Barnett & Garcia, PLLC,
      No. 09-15-00019-CV, 2015 Tex. App. LEXIS 542 (Tex.
      App.–Beaumont Jan. 22, 2015, orig. proceeding)
      (memorandum op.). ....................................................................... 19-20

In re Bexar Co. Crim. Dist. Atty.’s Office,
      No. 04-14-00804-CV, 2014 Tex. App. LEXIS 13872 (Tex.
      App.–San Antonio Dec. 31, 2014, orig. proceeding). .......................... 14

In re Brookshire Grocery Co.,
      250 S.W.3d 66 (Tex. 2008) (orig. proceeding). ............................ 20-21

In re J.M.B.,
      No. 13-14-00365-CV, 2014 Tex. App. LEXIS 8579 (Tex. App.–
      Corpus Christi-Edinburg, Aug. 7, 2014, no pet.)................................. 15

                                                 v
In re Reynolds,
      No. 14-14-00329-CV, 2014 Tex. App. LEXIS 7105 (Tex.
      App.–Houston [14th Dist.] July 1, 2014, orig. proceeding)
      (memorandum op.). .................................................................. 14, 17, 21

In re Walker & Twenhafel, LLP,
      No. 13-14-00065-CV, 2014 Tex. App. LEXIS 1729 (Tex. App.–
      Corpus Christi-Edinburg, Feb., 14, 2014, orig. proceeding)
      (memorandum op.). ............................................................................ 22

John Kleas Co. Inc. v. Prokop,
     No. 13-13-00401-CV, 2015 Tex. App. LEXIS 3162 (Tex.
     App.–Corpus Christi-Edinburg, Apr. 2, 2015, n.p.h.)............. 11, 27, 35

Kutch v. Del Mar College,
     831 S.W.2d 506 (Tex. App.–Corpus Christi 1992,
     no writ)................................................................................. 10-11, 30-32

Powers v. Palacios,
    771 S.W.2d 716 (Tex. App.--Corpus Christi 1989,
    writ denied)............................................................................... 35, 37-38

Rudisell v. Paquette,
     89 S.W.3d 233 (Tex. App.--Corpus Christi 2002, no pet.). ............... 27

Spohn Hosp. v. Mayer,
     104 S.W.3d 878 (Tex. 2003). ......................................................... 33-34

State & County Mutual Fire Ins. Co. v. Miller,
      52 S.W.3d 693 (Tex.1992). .................................................................. 24

Travelers Ins. Co. v. Joachim,
     315 S.W.3d 860 (Tex. 2010).....................................................................

Unifund CCR Partners v. Villa,
     299 S.W.3d 92 (Tex. 2009) (per curiam). .......................... 10, 14, 17-18




                                                    vi
Univ. of Tex. Med. Branch at Galveston v. Estate of Blackmon
ex rel. Shultz,
       195 S.W.3d 98 (Tex. 2006) (per curiam)............................................. 14

Villafani v. Trejo,
      251 S.W.3d 466 (Tex. 2008)................................................................. 14

Rules

TEX. R. APP. P. 38.1(i). ............................................................................. 28, 30

TEX. R. APP. P. 44.1(a). ............................................................................ 35, 38

TEX. R. CIV. P. 41............................................................................................ 25




                                                       vii
                             STATEMENT OF FACTS

      Cross-Appellees offer their own Statement of Facts as allowed by

Texas Rule of Appellate Procedure 38.2(a)(1)(B) as Cross-Appellees are

dissatisfied with Cross-Appellant’s statement. Cross-Appellant’s Statement

of Facts is inadequate as it does not convey all pertinent procedural facts in

this case. The omitted procedural facts are a necessary to properly help the

Court determine this appeal. Cross-Appellees present these omitted

procedural facts here as part of their Statement of Facts.

                               The beginnings

      On October 23, 2009, Plaintiff Commercial State Bank of El Campo,

Texas (“the Bank”) filed suit against multiple defendants, including Patrick

Hlavaty, Jeff Strnadel, and seven other defendants. CR 1:23. The claims

varied against the various defendants. CR 1:32-49. For example, as to

Defendant Hlavaty, the Bank alleged causes of actions for theft, fraud,

conversion, negligent failure to disclose, breach of fiduciary duties,

constructive trust, conspiracy to defraud, and unjust enrichment. CR 1:32-

39. As to Defendant Strnadel, the Bank alleged causes of action for breach

of fiduciary duty and negligence. CR 1:39-40.

      On March 29, 2010, Hlavaty and Strnadel file their respective

counterclaims, both asserting counterclaims under Texas Civil Practice &

Remedies Code section 37.009, as well as counterclaims for an award of

                                       1
sanctions under Texas Rule of Civil Practice Rule 13. CR 1:61, 64. Hlavaty’s

pleadings stated, “Counterplaintiff would further show that

Counterdefendant's pleadings herein are groundless and were brought in

bad faith. Counterplaintiff is accordingly entitled to an award of sanctions

under Tex.R.Civ.P. Rule 13—which at a minimum should include

reimbursement to Counterplaintiff of his attorneys' fees.” CR 1:61.

Strnadel’s pleading stated, in part, “Counterplaintiff would further show

that Counterdefendant's pleadings herein are groundless and were brought

in bad faith. . . . Counterplaintiff is accordingly entitled to an award of

sanctions under TEx.R.Civ.P. Rule 13—which at a minimum should include

reimbursement to Counterplaintiff of his attorneys' fees.” CR 1:64-65.

                       The first order against the Bank

        Hlavaty filed his Motion for Sanctions against the Bank on March 17,

2010. CR 1:56. Hlavaty requested the trial court order the Bank to produce

certain documents. CR 1:57-58. The trial court signed an order granting

discovery sanctions against the Bank on March 29, 2010. CR 1:60. The

order required the bank to produce the documents by April 12, 2010. CR

1:60.




                                        2
                               The first nonsuit order

      On June 25, 2010, the Bank filed its Notice of Nonsuit against only

defendants Hlavaty and Strnadel. CR 1:96.1 “Plaintiff has decided to

non-suit all claims regarding the above matter against Patrick Hlavaty and

Jeffrey Strnadel, and hereby moves the Court to NON-SUIT all claims as to

the aforesaid specific Defendants Strnadel and Hlavaty named herein

without prejudice. All costs in this matter have been paid.” CR 1:96. The

nonsuit does not address, mention, or seek to adjudicate Hlavaty and

Strnadel’s claims against the Bank. CR 1:96.

      On June 28, 2010, the trial judge signs Order of Non-suit for

Defendants Hlavaty and Strnadel Without Prejudice. CR 1:100.2 The order

states that the Bank’s claims “against Patrick Hlavaty and Jeffrey Sttnadel is

hereby NONSUITED without prejudice.” CR 1:100 (emphasis in original).

The order does not address, mention, or seek to adjudicate Hlavaty and

Strnadel’s claims against the Bank. CR 1:100.

                              The second nonsuit order

      On July 20, 2010 the Bank files its Notice of Nonsuit against only

defendants Mark Waldron, Marshall Waldron, Blake Waldron, Waldron


1
  The certificate of service shows a June 23, 2010 filing date despite the June 25, 2010
file stamp date. CR 1:10.
2
  While the order shows a June 24, 201 signing, the docket sheet shows a June 28, 2010
signing. CR 1:10.

                                            3
Development, and Michael Paul. CR 1:102. The nonsuit did not address,

mention, or seek to adjudicate Hlavaty and Strnadel’s claims against the

Bank. CR 1:102-03. On July 28, 2010, the trial judge signed the Order of

Non-suit for these defendants. CR 1:124. The order did not address,

mention, or seek to adjudicate Hlavaty and Strnadel’s claims against the

Bank. CR 1:124.

                           The last nonsuit is filed

      On September 1, 2010, the Bank had filed its Notice of Nonsuit

against the last remaining defendants The Lending Center and Larry

Durwood Tew. CR 1:126. The nonsuit did not address, mention, or seek to

adjudicate Hlavaty and Strnadel’s claims against the Bank. CR 1:126. The

trial court did not sign an order of nonsuit for these defendants until

November 15, 2013. CR 3:559.

      Plaintiff’s motion for summary judgment and Hlavaty and
      Strnadel’s response

      On March 15, 2011, the Bank filed its Motion for Summary Judgment

regarding the Alleged Declaratory Judgment Counterclaims. CR 1:172. This

motion was directed at Hlavaty and Strnadel’s declaratory judgment action

claim. CR 1:172-73. Hlavaty and Strnadel’s Rule 13 claims were not at issue,

“This Motion is not directed at the Counterclaims which assert a violation

of TRCP 13 (which are essentially Motions for Sanctions). This Motion


                                      4
seeks Summary Judgment on the Declaratory Judgment counterclaims

only.” CR 1:174-75.

      In March 2015 Hlavaty and Strnadel amended their pleadings. CR:

249, 255. Strnadel first filed his First Amended Counterclaim of

Defendant/Counterplaintiff Jeff Strnadel on March 15, 2011. CR 2:249. He

asserted claims against the Bank, in addition to the earlier asserted

declaratory judgment and sanctions claims, claims for breach of

employment contract, quantum meruit, restitution, or unjust enrichment.

CR 2:249-50.

      On March 29, 2011, Hlavaty followed suit and filed his First Amended

Counterclaim of Defendant/Counterplaintiff Patrick Hlavaty. CR 2:255.

Like Strnadel, he asserted claims against the Bank, in addition to the earlier

asserted declaratory judgment and sanctions claims, claims for breach of

employment contract, quantum meruit, restitution, or unjust enrichment.

CR 2:255-57. Hlavaty and Strnadel also filed their Counterplaintiffs’

Summary Judgment Response on March 29, 2011. CR 2:261. The docket

sheet shows a notation, “10/25/11 Bank’s MSJ denied.” CR 1:8.




                                      5
                        The second order against the Bank

      Strnadel filed his Jeff Stranadel’s [sic] Motion to Compel Error &

Omissions Policy on March 31, 2011. CR Supp __.3 On April 11, 2011 the

trial court signed an order as to this motion. CR Supp __ (see Appndx,

Exhibit A). The Docket Sheet reflects the order’s signing that day. CR 1:14.

The order required the Bank produce any effective error and omissions

policy within two weeks. CR Supp __.

                         The third order against the Bank

      Hlavaty and Strnadel filed their Counter Plaintiffa [sic] Motion for

Continuance and to Compel Completion of Discovery on August 23, 2011.

CR Supp __. On September 8, 2011 the trial court signed an order as to this

motion. CR Supp __ (see Appndx, Exhibit B). The Docket Sheet reflects the

order’s signing that day. CR 1:8. The order required the Bank produce (1)

David Melanson for deposition, and (2) any investigative reports as to

Strnadel within forty-five days. CR Supp __.

                        The fourth order against the Bank

      On March 8, 2013 Hlavaty and Strnadel filed their Motion to Compel

and for Sanctions. CR 2:308. Their motion addressed problems with


3
  Hlavaty and Strnadel realized after the Bank filed its Appellant’s Brief that two
discovery motions and their accompanying signed orders not in the appellate record
were necessary to address the Bank’s issue. Hlavaty and Strnadel filed their request for a
Supplemental Clerk’s Record containing these motions and orders with the Wharton
County District Clerk. The Supplemental Clerk’s Record is forthcoming shortly.

                                            6
request for Disclosure, the Bank's Request for Production, requests for

production, the Bank’s compliance with court orders, and depositions as to

Don Zwememann and David Melanson. CR 2:309-21. The prayer in this

motion stated:

      WHEREFORE, Movants/Counterplaintiffs Patrick Hiavaty and
      Jeff Strnadel move the Court for an order of sanctions against
      Counterdefendant Commercial State Bank of El Campo, Texas,
      Inc. Movants pray that whatever the Court orders will be
      sufficient to impress upon the Bank and its counsel the need to
      participate in discovery in good faith; and that the relief granted
      will recompense the Movants for at least some of the time and
      money which have been wasted pursuing what ought to have
      been routine discovery from the Bank.

CR 2:321. On July 22, 2013 the trial court signed an order granting the

motion. CR 3:504. On August 21, 2013 the trial court signed its Order Nunc

Pro Tunc on Counterplaintiffs’ Motion to Compel and for Sanctions and

Supplement to Counterplaintiffs Motion to Compel and for Sanctions. CR

3:541. In that order the trial court ordered the bank to produce various

documents within forty-five days. CR 3:541-42. As to Hlavaty and

Strnadel’s request for sanctions, the order states, “The prayer of

Counterplaintiffs for further Sanctions in the Motion and the Supplement is

neither granted nor denied, but shall be carried with this case.” CR 3:543.

                       The last nonsuit order is signed

      The trial court finally signs an order of nonsuit for the defendants The

Lending Center and Larry Durwood Tew until November 15, 2013. CR

                                       7
3:559. The order simply limits its focus to the Bank and these remaining

defendants, “It is accordingly ORDERED by this Court that the above cause

of action brought by Commercial State Bank of El Campo, Texas, Inc.

against The Lending Center, Inc. and Larry Durwood Tew is hereby

NONSUITED without prejudice.” CR 3:559. The order does not address,

mention, or seek to adjudicate Hlavaty and Strnadel’s claims against the

Bank. CR 3:559.

             The trial court dismisses claims against the Bank

      On April 8, 2014, the Bank files its Commercial State Bank of El

Campo, Texas’s [sic] Motion to Dismiss and Vacate Orders. CR 3:561. On

June 3, 2014, the trial court signed a Final Order in this matter. CR 4:784.

On June 11, 2014, it signed an Order of Sanctions whereby it granted

Hlavaty and Strnadel monetary sanctions against the Bank. CR 4:788.

                      The fifth order against the Bank

      On August 19, 2014, the trial court signed an Agreed Order whereby

the trial court, pursuant to Texas Rule of Civil Procedure 306a(4),

determined that all parties did not receive notice of the June 2014 orders

signing until late July 2014 - July 28 for Hlavaty and Strnadel, July 29 for

The Bank. CR 4:812-13. The Bank filed a Motion to Vacate Order for

Sanctions order on July 31, 2014. CR 4:791. This motion to vacate did not

directly reference the four prior orders nor complain about any prior orders

                                      8
against the Bank beyond implicitly arguing the trial court lack jurisdiction

over certain matters. CR 4:791-93. Hlavaty and Strnadel filed a motion to

set aside the June 3, 2014 Final Order on August 28, 2014. CR 4:814.

Hlavaty and Strnadel filed their Notice of Appeal on September 11, 2014.

CR 4:855.




                                      9
                           SUMMARY OF ARGUMENT

      The trial court just did not “get it” when it came to nonsuits,

sanctions, and plenary jurisdiction. Its holdings in its June 3, 2014 Final

Order reflect a knowledge of, but not an understanding of, cases such as

CTL/Thompson Tex., LLC v. Starwood Homeowner’s Assoc., Inc., 390

S.W.3d 299 (Tex. 2013) (per curiam), Unifund CCR Partners v. Villa, 299

S.W.3d 92 (Tex. 2009) (per curiam), and Crites v. Collins, 284 S.W.3d 839

(Tex. 2009) (per curiam). Patrick Hlavaty and Jeff Strnadel had multiple

pending claims, including a sanctions claim, as well as an employment

breach of contract claim, when the trial court dismissed and struck Hlavaty

and Strnadel’s claims in the June 3, 2014 Final Order. Therefore, the basis

of the trial court’s June 3, 2014 Final Order is faulty and requires a remand

the matter to the trial court for further proceedings.

      As to the June 11, 2014 Order of Sanctions, Texas trial courts have the

inherent power to sanction a party for abusing the judicial process through

bad faith conduct. Kutch v. Del Mar College, 831 S.W.2d 506, 509 (Tex.

App.--Corpus Christi 1992, no writ); see In re A.M.B.V., No. 13-13-00081-

CV, 2015 Tex. App. LEXIS 59 *33 (Tex. App.–Corpus Christi - Edninburg

Jan. 8, 2015, orig. proceeding) (memorandum op.). The Court should

affirm the Order of Sanctions as the order complied with necessary due

process requirements.

                                      10
                             STANDARD OF REVIEW

      The Court reviews the imposition of sanctions using an abuse of

discretion standard. John Kleas Co. Inc. v. Prokop, No. 13-13-00401-CV,

2015 Tex. App. LEXIS 3162 *45 (Tex. App.– Corpus Christi-Edinburg, Apr.

2, 2015, n.p.h.) (citing to Low v. Henry, 221 S.W.3d 609, 614 (Tex. 2007)).

The Court will reverse the trial court's sanctions ruling “only if the trial

court acted without reference to any guiding rules and principles, such that

its ruling was arbitrary or unreasonable.” Id. The Court examines whether

there is a direct nexus between the improper conduct and the sanction

imposed to determine if the sanctions were appropriate or just. Id. The

scope of the Court’s review is not limited to the sanctions hearing - it

includes the entire record that was before the trial court. Cuellar v.

Maldonado, No. 13-14-00491-CV, 2015 Tex. App. LEXIS 2138 *33 (Tex.

App.–Corpus Christi - Edninburg Mar. 5, 2015, n.w.h.) (memorandum op.);

Kutch v. Del Mar College, 831 S.W.2d 506, 508 (Tex. App.--Corpus Christi

1992, no writ).




                                        11
                         ARGUMENTS AND AUTHORITIES

I.    THE TRIAL COURT ERRONEOUSLY CONCLUDED IT HAD LOST
      JURISDICTION OVER THIS CASE SINCE NONE OF THE PRIOR
      NONSUIT ORDERS IN THIS CASE AMOUNTED TO A FINAL
      JUDGMENT.

      Cross-Appellant Commercial State Bank of El Campo, Texas (“the

Bank”) argues that the trial court lacked jurisdiction to issue the June 11,

2014 Order of Sanctions. Cross-Appellant’s Brief at pages 10-17. Thus the

Bank contends the Court should reverse the trial court and strike the

sanctions award against it. As the Bank states:

      However, on June 11, 2014, the same trial court that admitted it
      lost jurisdiction in December of 2013, entered an order of
      sanctions for conduct that allegedly occurred pre-judgment.
      The trial court was without a doubt lacking subject matter
      jurisdiction to enter such order and not only violated the rules
      of civil procedure, but also violated its own order. As a result,
      the trial court erred by taking action after its plenary
      jurisdiction expired.

Cross-Appellant’s Brief at page 17. The Bank’s argument advocates the

theory that as long as a trial court says it is dark outside, it is dark outside . .

. even if the sun is shining bright. However, saying so does not make it true,

and the trial court had jurisdiction over this matter when it said it did not

have such in its June 3, 2014 Final Order. It also had jurisdiction when it

signed the June 11, 2014 Order of Sanctions.

      This Court cannot allow itself to be confused as the trial court was.

This is not an “A sues B, B seeks sanctions, A nonsuits B,” and the question

                                         12
concerns whether the trial court still had jurisdiction over B’s claims long

after the trial court grants the nonsuit. This is an “A sues B-G, B seeks

sanctions, A nonsuits B, A does not nonsuit C-G for several years,” and the

question concerns whether the trial court still had jurisdiction over B’s

claims after the trial court grants the last nonsuit. Stated another way, none

of the nonsuits in this case specifically disposed of Hlavaty and Strnadel’s

sanctions claim. As Hlavaty and Strnadel argue in their own Appellants’

Brief, the trial court got it wrong, and abused its discretion in doing so. This

Court should hold the trial court had jurisdiction over this matter on June

11, 2014 when it granted sanctions against the Bank.

      A.    The Bank confuses an interlocutory process trapped by claims
            against other defendants with an interlocutory process where
            the only remaining trial court issue is a defendant’s sanction
            claim.

      In voicing the phrase “pursuing sanctions under Rule 13 with

reasonable diligence and within a reasonable time after the non-suits were

filed” the trial court echoed the Bank’s arguments in Cross-Appellant’s

Commercial State Bank of El Campo, Texas’s [sic] Motion to Dismiss and

Vacate Orders. CR 3:571-72. In its brief the Bank again argues “pursuing

sanctions within a reasonable amount of time after the nonsuit as to all

defendants was filed.” Cross-Appellant’s Brief at page 14. The concept is

that while a nonsuit order may extinguish the merits of the case between


                                       13
the parties, “a dismissal ‘shall have no effect on any motion for sanctions,

attorney's fees or other costs, pending at the time of dismissal.’” Univ. of

Tex. Med. Branch at Galveston v. Estate of Blackmon ex rel. Shultz, 195

S.W.3d 98, 100 (Tex. 2006) (per curiam) (citing TEX. R. CIV. P. 162). The

line of cases often cited to by appellate courts (and even in part by the Bank

in its trial court filings) deal with a scenario often repeated - whether the

plaintiff’s nonsuit in a case started a trial court’s post judgment plenary

jurisdiction time clock or mooted a permissible accelerated appeal (i.e., it

began an appellate timetable or resolved all issues, including orders on

appeal). CTL/Thompson Tex., LLC v. Starwood Homeowner’s Assoc., Inc.,

390 S.W.3d 299, 300 (Tex. 2013) (per curiam); Unifund CCR Partners v.

Villa, 299 S.W.3d 92, 96-97 (Tex. 2009) (per curiam); Crites v. Collins, 284

S.W.3d 839 (Tex. 2009) (per curiam); Villafani v. Trejo, 251 S.W.3d 466,

468 (Tex. 2008); Estate of Blackmon ex rel. Shultz, 195 S.W.3d at 100-01;

In re Bexar Co. Crim. Dist. Atty.’s Office, No. 04-14-00804-CV, 2014 Tex.

App. LEXIS 13872 *6 (Tex. App.–San Antonio Dec. 31, 2014, orig.

proceeding); In re Reynolds, No. 14-14-00329-CV, 2014 Tex. App. LEXIS

7105 *16-17 (Tex. App.–Houston [14th Dist.] July 1, 2014, orig. proceeding)

(memorandum op.); American Heritage Cap., LP v. Gonzalez, 436 S.W.2d

865 (Tex. App.–Dallas 2014, no pet.).



                                       14
      However, the simple truth is that in this case events occurred that

were interlocutory and unreviewable until years later, at best. The trial

court signed the nonsuit order as to Hlavaty and Strnadel on June 28, 2010.

CR 1:100.4 Without addressing what claims actually survived that nonsuit at

this time, the trial court states some three plus years later, “The notice of

non-suit as to Hlavaty and Strnadel did not prevent them from pursuing

sanctions from the trial court under Rule 13.” CR 4:785. If in October 2010

the trial court had signed an order on the sanctions, such an order was not

appealable at that time as it was merely an interlocutory order. Assuming

the losing party attempted an appeal one can envision the Court stating in

addressing that attempted appeal:

      As a general rule, appeals may be taken only from final
      judgments. . . . Appellate courts have jurisdiction to consider
      immediate appeals of interlocutory orders only if a statute
      explicitly provides such jurisdiction. . . . The Court, having
      examined and fully considered the documents on file, is of the
      opinion that we lack jurisdiction over this attempted appeal.

In re J.M.B., No. 13-14-00365-CV, 2014 Tex. App. LEXIS 8579 *6, 10 (Tex.

App.– Corpus Christi-Edinburg, Aug. 7, 2014, no pet.) (citations omitted)

(dismissing an appeal of an interlocutory sanction order). The case




4
  While the order shows a June 24, 2011 signing, the docket sheet shows a June 28, 2010
signing. CR 1:10.

                                          15
remained pending, and Hlavaty and Strnadel continued to pursue sanctions

and other claims as the Bank pursued orders against them.5

      The Bank did not merely bring suit against just Patrick Hlavaty and

Jeff Strnadel in October 2009, they sued seven other defendants. CR 1:23.

The Bank painstakingly analogizes the time elapsed in the case in

comparison to other cases as if there were only three parties - Hlavaty,

Strnadel, and it. Of course that is a deft sleight of hand that should not

divert the Court’s attention from what was the state of affairs in late 2013,

not 2010. At that time Hlavaty and Strnadel asserted claims that were

pending and valid.

      B.    The Bank ignores cases such as Unifund CCR Partners v. Villa,
            299 S.W.3d 92 (Tex. 2009) (per curiam) and Crites v. Collins,
            284 S.W.3d 839 (Tex. 2009) (per curiam) in concluding that
            somehow the trial court had some very limited amount of time
            to consider a sanctions motion even though the trial court never
            signed a final judgment disposing of all parties prior to the Final
            Order on June 3, 2014.

      In this Court the Bank blatantly argues what it argued to the trial

court - a thirty-day plenary jurisdiction deadline running from November

2013 can apply to this matter. Cross-Appellant’s Brief at 16; CR 3:573. In

arguing such the Bank would want a reviewing court to put blinders on to

post-Estate of Blackmun cases such as Unifund CCR Partners, and Crites.

5
 The Bank filed a motion for summary judgment based on the pleadings in February
2011 (CR 1:172), and then complained when Hlavaty and Strnadel filed amended
pleadings in response to the motion for summary judgment (CR 2:270).

                                        16
But, they stand as logical impediments to the an argument that Hlavaty and

Strnadel’s claims were somehow long dead. That is why the trial court still

had jurisdiction over this matter in June 2014.

            1.     The Agreed Order of Nonsuit for Defendants, The
                   Lending Center and Larry Durwood Tew signed on
                   November 15, 2013 was not a final, appealable judgment
                   in this matter.

      On November 15, 2013 the trial court signed Agreed Order of Nonsuit

for Defendants, The Lending Center and Larry Durwood Tew. CR 3:559.

The Texas Supreme Court has held “that an order of dismissal pursuant to

nonsuit is not a final, appealable order when the order does not

"unequivocally express an intent to dispose of all claims and all parties . . ..”

Unifund CCR Partners, 299 S.W.3d at 96.“Unless the motion (for

sanctions) was specifically referenced as having been disposed of by the

dismissal order, the order did not necessarily dispose of (the sanctions)

motion.” Id. “And if a sanctions request is a ‘claim’ that survives a nonsuit, a

judgment is not final and appealable until the sanctions request is

specifically disposed of by the trial court, or until the trial court issues an

order with sufficient finality language.” In re Reynolds, No. 14-14-00329-

CV, 2014 Tex. App. LEXIS 7105 *13; see also American Heritage Cap., LP,

436 S.W.2d at 871. Despite any Cross-Appellant arguments to the contrary,

the trial court had never ruled on, one way or the other, Hlavaty and


                                        17
Strnadel’s pre-nonsuit sanctions claim. Consequently, the sanctions claim

still existed after November 15, 2003. Unifund CCR Partners, 299 S.W.3d

at 96.

              2.    In Unifund CCR Partners v. Villa the Texas Supreme
                    Court held a trial court still had plenary jurisdiction over a
                    sanctions claim some nine months after a dismissal order
                    made it the only claim pending before the trial court.

         In Unifund CCR Partners, the Texas Supreme Court considered

whether a trial court still had plenary jurisdiction to consider a sanctions

motion some nine months after a dismissal order made the sanctions claim

the sole remaining issue before the trial court. As the Court noted, “[W]e

address Unifund's claim that the sanctions order is void because the trial

court's plenary power expired before it signed the order nine months after

the order dismissing Unifund's suit.” Id. at 95. The Court rejected the lack

of jurisdiction argument finding, “We explained that the trial court had

power to grant sanctions so long as its plenary authority had not expired

and whether the trial court acted within its plenary power depended on

whether the order of dismissal was a final judgment.” Id. at 96.

         A nine-month period after a dismissal order was still timely in

Unifund CCR Partners. Here, the trial court signed a sanctions order and

dismissed Hlavaty and Strnadel’s sanctions claim less than seven months

after the non-final nonsuit order. The trial court’s Final Order of June 3,


                                        18
2014 is contrary to Unifund CCR Partners. Consequently, the trial court

still had jurisdiction when it signed the June 11, 2014 sanctions order.

            3.    Crites v. Collins also supports the conclusion the trial
                  court still had jurisdiction in June 2014 when it signed the
                  Order of Sanctions.

      In Crites the defendant sought sanctions after the plaintiff filed their

nonsuit, but before the trial court signed the order on the nonsuit. It was a

medical malpractice case. Crites, 284 S.W.3d at 841. The plaintiff filed a

motion for nonsuit, and the defendant filed a motion for sanctions before

the trial court signed the order of nonsuit. Id. The trial court signed the

order on January 19, 2006 but did not hold a hearing on the motion to

sanctions until February 24, 2006 - more than thirty-days after the order of

nonsuit. Id. Ultimately the Texas Supreme Court remanded the matter to

the court of appeals to consider the sanctions motion. Id. at 843.

      A recent mandamus action also illustrates the hole in the “lost

jurisdiction three and a half years ago” logic. See In re Barnett & Garcia,

PLLC, No. 09-15-00019-CV, 2015 Tex. App. LEXIS 542 (Tex.

App.–Beaumont Jan. 22, 2015, orig. proceeding) (memorandum op.). In

this case the relator argued that the trial court lost plenary jurisdiction over

the real party in interest’s motion for sanctions. As the Beaumont Court of

Appeals stated:



                                       19
      The real parties in interest . . . filed a motion for sanctions
      before the trial court signed an order of dismissal. . . . The order
      of dismissal, which stated that the cause was dismissed on the
      plaintiff's notice of non-suit without mentioning the opposing
      party's motion for sanctions, did not dispose of the motion for
      sanctions. . . . Relators have not shown that the trial court
      signed orders in the case after the expiration of its plenary
      power. Accordingly, we deny the petition for writ of mandamus.

Id. at 2015 Tex. App. LEXIS 542 at *1-2. To determine the actual dates

involved you have to go behind the scenes and examine that court of

appeals’ website records. As the petition for mandamus in that case sets

out: (1) the plaintiffs filed a notice of nonsuit on September 11, 2014; (2) the

defendants file a motion for sanctions on September 12, 2014; (3) the trial

court signs a dismissal order on September 15, 2014; and (4) the trial court

signs an order withdrawing the dismissal order on December 17, 2014.

Petition for Writ of Mandamus, Appdnx P, Id.,

http://www.search.txcourts.gov/SearchMedia.aspx?MediaVersionID=07b6

4ec4-3c95-4061-bab3-f933ff52f4ee&coa=coa09&DT=Brief&MediaID=f29f

dc1d-b4f3-4b5a-a65c-d35ade7a9b9d. The Bank would argue that the trial

court’s order signed approximately ninety days later was undoubtably void.

Yet, the Beaumont Court of Appeals do not grant mandamus relief. In re

Barnett & Garcia, PLLC, No. 09-15-00019-CV, 2015 Tex. App. LEXIS 542

at *2.6

6
 Mandamus would be appropriate where a trial court has issued an order after the
expiration of its plenary power because such orders are void. In re Brookshire Grocery

                                          20
             4.     The trial court still had jurisdiction in June 2014 as the
                    trial court did not sign the last order of nonsuit until late
                    2013, and Hlavaty and Strnadel had asserted claims which
                    prevented that nonsuit order from being a final,
                    appealable judgment.

      The Bank, like the trial court, misunderstands how a sanctions claim

interacts with a trial court’s jurisdiction. Both the Bank and the trial court’s

mindset is pre-Unifund CCR Partners, pre-Crites, pre-every other case that

would say a nonsuit order is not the be-all and end-all of plenary

jurisdiction. On June 3, 2014 the trial court’s Final Order states, in

referring to the December 2013 nonsuit, “This event finally triggered the

expiration of this court's plenary jurisdiction in this case on December 15,

2013, thirty days later. No pleading has been filed which would operate to

extend this court's plenary jurisdiction.” CR 4:786. As has been detailed in

this brief, the December 2013 order was not a final, appealable judgment as

Hlavaty and Strnadel’s pending sanction claims, if nothing else, prevented

the nonsuit order from being final since “a judgment is not final and

appealable until the sanctions request is specifically disposed of by the trial

court, or until the trial court issues an order with sufficient finality

language.” In re Reynolds, No. 14-14-00329-CV, 2014 Tex. App. LEXIS

7105 *13; see also American Heritage Cap., LP, 436 S.W.2d at 871.



Co., 250 S.W.3d 66, 68 (Tex. 2008) (orig. proceeding) (citing In re Sw. Bell Tel. Co., 35
S.W.3d 602, 605 (Tex. 2000) (orig. proceeding)).

                                            21
     The trial court’s fixture, like the Bank’s fixture, on refusing to accept

that the December 2013 nonsuit order was not a final judgment “clearly

fails to correctly analyze or apply the law.” In re Walker & Twenhafel, LLP,

No. 13-14-00065-CV, 2014 Tex. App. LEXIS 1729 *2 (Tex. App.– Corpus

Christi-Edinburg, Feb., 14, 2014, orig. proceeding) (memorandum op.).

Unifund CCR Partners would say the trial court’s conclusion incorrectly

analyzes or misapplies Texas law. Crites would say such a conclusion

incorrectly analyzes or misapplies Texas law. This Court should say such a

conclusion incorrectly analyzes or misapplies Texas law. Therefore, the

Court should affirm the trial court’s grant of sanctions against CR0ss-

Appellant.

     C.      None of the nonsuit orders in this case expressly addressed
             Hlavaty and Strnadel’s claims in their First Amended
             Counterclaims against the Bank.

     The nonsuit orders first signed as to Hlavaty and Strnadel were

simply interlocutory, non-appealable orders that did not dispose of their

pending claims against the Bank. Even the Bank conceded such in the trial

court as can be shown when it filed its Motion for Summary Judgment

regarding the Alleged Declaratory Judgment Counterclaims on March 15,

2011 - some eight plus months after the trial court signed the nonsuit order.

CR 1:172. This motion was directed at Hlavaty and Strnadel’s respective

declaratory judgment action claims. CR 1:172-73. As the Bank states, “This

                                      22
Motion is not directed at the Counterclaims which assert a violation of

TRCP 13 (which are essentially Motions for Sanctions). This Motion seeks

Summary Judgment on the Declaratory Judgment counterclaims only.” CR

1:174-75.7 The thrust was only directed to whether Hlavaty and Strnadel

had a viable declaratory judgment action. CR 1:175-80.

         In the face of this motion for summary judgment Hlavaty and

Strnadel did more then simply stand on their current pleadings. In March

2015 Hlavaty and Strnadel amended their pleadings. CR: 249, 255. Those

amended claims were viable, stand alone claims made in a pending case. In

its June 3, 2014 Final Order the trial court held, “This court concludes that

the amended counterclaims filed by Hlavaty and Strnadel on March 15 and

29, 2011, are a nullity, and to the extent this court has the authority to do

so, they are hereby STRICKEN.” CR 4:786 (emphasis in original). The trial

court abused its discretion in making such a ruling.

         Strnadel first filed his First Amended Counterclaim of

Defendant/Counterplaintiff Jeff Strnadel on March 15, 2011. CR 2:249. The

first claim in the amended pleading concerned a breach of an employment

agreement. CR 2:249. He stated:

         Counterdefendant Commercial State Bank has breached its
         employment contract and agreement with Jeff Strnadel. It was
         promised to Jeff Strnadel that the Bank would carry error and

7
    The docket sheet shows a notation, “10/25/11 Bank’s MSJ denied.” CR 1:8.

                                            23
      omission type insurance to cover any attorneys' fees and
      expenses Jeff Strnadel may incur due to any allegations related
      to his employment with the Bank. In addition to providing a
      defense, the insurance was to provide coverage for any liability.
      Jeff Strnadel has incurred attorney's fees, court cost and
      expenses related to a lawsuit and allegations the promised "E &
      0" insurance policy was to being paying and providing coverage.

CR 2:249. He also asserted claims against the Bank, in addition to the

earlier asserted declaratory judgment and sanctions claims, for quantum

meruit, restitution, or unjust enrichment. CR 2:249-50.

      On March 29, 2011, Hlavaty followed suit and filed his First Amended

Counterclaim of Defendant/Counterplaintiff Patrick Hlavaty. CR 2:255.

Like Strnadel, he also raised a similar breach of an employment agreement.

CR 2:255. Like Strnadel, he also asserted claims against Plaintiff, in

addition to the earlier asserted declaratory judgment and sanctions claims,

a claim for quantum meruit, restitution, or unjust enrichment. CR 2:255-57.

Hlavaty and Strnadel also filed their Counterplaintiffs’ Summary Judgment

Response on March 29, 2011. CR 2:261.

      These are matters involving the same parties that were before the trial

court. Assuming the Bank had not nonsuited its claims Hlavaty and

Strnadel would have been required to bring these claims in the case lest

they be barred by res judicata. State & County Mutual Fire Ins. Co. v.

Miller, 52 S.W.3d 693, 696 (Tex.1992); Barr v. Resolution Trust Corp., 837

S.W.2d 627, 630 (Tex.1992). If Hlavaty and Strnadel had filed these as a

                                      24
separate lawsuit in March 2011 it would have been proper to consolidate

their lawsuit with this lawsuit and their pending claims against the same

party.

        Hlavaty and Strnadel asserted these claims.8 This Court should say

that these independent claims translated to the trial court continuing to

have subject matter jursdiction over this case in June 2014. Therefore, the

argument that the trial court’s belief it lacked jurisdiction could form the

basis for reversing the June 11, 2014 Order of Sanctions should fall on deaf

ears.




8
  It may be that the Bank would have had a right to seek severance of these additional
claims. TEX. R. CIV. P. 41. But, the Bank never sought such relief.

                                           25
II.   ASSUMING THE TRIAL COURT HAD JURISDICTION TO ISSUE
      ITS JUNE 11, 2014 ORDER OF SANCTIONS, THE TRIAL COURT
      DID NOT ABUSE ITS DISCRETION IN INVOKING ITS INHERENT
      POWER TO SANCTION THE BANK’S BAD FAITH CONDUCT.

      Hlavaty and Strnadel concede the Court must reverse the trial court’s

decision to grant sanctions against the Bank if the trial court did not have

jurisdiction at the time it issued the sanctions order. However, in the event

the Court finds the trial court abused its discretion in dismissing Hlavaty

and Strnadel’s claims as they contend, the Court should affirm the trial

court’s sanctions order against the Bank. The record in this case supports

the trial court’s use of its inherent power to sanction bad faith conduct on

the Bank’s part.

      A.    The Bank waived any complaints about the four prior orders
            against the Bank.

      Regardless of whether the bank preserved its right to complain about

the non-jurisdictional aspects of the June 11, 2014 Order of Sanctions, it

waived any complaints about the four prior orders against it other than the

argument the trial court lacked jurisdiction to issue any prior order. CR

4:792. The trial court had previously signed four orders against the Bank:

      March 29, 2010 - CR 1:60;

      April 11, 2011 - CR Supp __, CR 1:14

      September 8, 2011 - CR Supp __, CR 1:8; and



                                      26
      August 21, 2013 - CR 3:541.9

The Bank filed a Motion to Vacate Order for Sanctions order on July 31,

2014. CR 4:791. This motion to vacate did not directly reference the four

prior orders nor complain about any prior orders against the Bank beyond

implicitly arguing the trial court lack jurisdiction over certain matters. CR

4:791-93. The Bank has not preserved for appellate review any complaints

against these prior orders beyond its “lacks jurisdiction” argument. John

Kleas Co. Inc. v. Prokop, No. 13-13-00401-CV, 2015 Tex. App. LEXIS 3162

*34 (Tex. App.– Corpus Christi-Edinburg, Apr. 2, 2015, n.p.h.); Rudisell v.

Paquette, 89 S.W.3d 233, 236 (Tex. App.--Corpus Christi 2002, no pet.).

      Further, the Bank does not specifically mention or reference the first

three orders in its brief. Cross-Appellant’s Brief at page 18-23. As to the last

order it merely argues that the trial court vacated the order on the basis that

the trial court contending it had lacked jurisdiction to sign it - maybe this is

also an implicit jurisdictional argument against the non-referenced earlier

orders. Cross-Appellant’s Brief at page 22-23. The Bank makes no other

appellate complaints about those orders. It does not argue that the trial

court abused its discretion in granting the relief in those orders.

Consequently, the Bank waives any arguments it might have that the trial

9
 The trial court actually signed an order on July 22, 2013. CR 3:504. However, as the
August 2013 order was nunc pro tunc, the early July order is not necessary to resolve the
question.

                                           27
court committed reversible error in signing those earlier orders. TEX. R.

APP. P. 38.1(i). Therefore, assuming the trial court did in fact have

jurisdiction to issue those orders, the Court is faced with the reality that the

Bank’s conduct required the trial court to repetitively order it to comply

with Hlavaty and Strnadel’s valid discovery requests.

      B.    The trial court did not abuse it discretion in signing the June 11,
            2014 Order of Sanctions as the trial court complied with
            necessary due process requirements.

      Jurisdictional arguments aside, the Bank’s arguments amount to (1)

the trial court did not follow proper procedures, and (2) no evidence

supported the monetary award. Cross-Appellant’s Brief at page 18-22.

These arguments are either simple boiler plate complaints or fail to

consider this Court’s dictates to look beyond the four corners of the order.

There is also the question of whether the Bank waived any arguments

beyond jurisdictional arguments as it never focuses on the basis of the trial

court’s action - the inherent power to punish a party’s bad conduct. But,

regardless of the Bank’s arguments, the trail court did not abuse its

discretion in awarding sanctions. Therefore, the Court should affirm the

June 11, 2014 Order of Sanctions.




                                       28
            1.    The basis of the trial court’s Order of Sanctions is its
                  inherent power to sanction bad faith conduct, but the
                  Bank focuses on Texas Rule of Civil Procedure 13 instead
                  of the stated trial court’s inherent power.

      To read the Bank’s brief one is hard pressed to know what was the

basis of the trial court’s Order of Sanctions. The one reference is,

“Furthermore, sanctions awarded under Texas Rule of Civil Procedure 13

must be based on good cause and must describe the conduct giving rise to

good cause.” Cross-Appellant’s Brief at page 19, 20 (the Bank repeats the

exact sentence agin on the following page). But, while the Bank cites to Rule

13, the trial court’s Order of Sanctions unequivocally states:

      It has become clear to the Court that (the Bank) has repeatedly
      conducted itself in the course of this case without due regard for
      the authority of this Court as a court. Such persistent disrespect
      has been an affront to the dignity of this and all courts. This
      Court accordingly recognizes a need for it to exercise its
      inherent authority pursuant to Willy v. Coastal Corp., 503 U.S.
      131 (1992), to sanction this litigant for deliberate misbehavior in
      the course of these proceedings.

CR 4:788. The order never mentions Rule 13. Hlavaty and Strnadel’s

motion seeking sanctions was not limited to a specific Texas Rule of Civil

Procedure. CR 3:634-37. It asked the trial court to enforce its earlier order,

sanctions, “and for such other and further releif for which (Hlavaty and

Strnadel) may be justly entitled.” CR 3:636. Frankly, Hlavaty and Strnadel

suggest the Bank the Bank waived any arguments it might have that the



                                      29
trial court lacked the inherent power to sanction the Bank. TEX. R. APP. P.

38.1(i).

      But, even if the Court does not agree the Bank waived any arguments

against the basis for order by not briefing or addressing the question of

inherent power to sanction, this Court adheres to the proposition the

inherent power to sanction conduct is an available trial court power, “We

hold Texas courts have inherent power to sanction for bad faith conduct

during litigation.” Kutch v. Del Mar College, 831 S.W.2d 506, 509 (Tex.

App.--Corpus Christi 1992, no writ); see In re A.M.B.V., No. 13-13-00081-

CV, 2015 Tex. App. LEXIS 59 *33 (Tex. App.–Corpus Christi - Edninburg

Jan. 8, 2015, orig. proceeding) (memorandum op.).

      The Court held “that Texas Courts have the inherent power to

sanction for abuse of the judicial process which may not be covered by rule

or statute. This power includes the power to sanction appropriately for

failure to comply with a valid court order incident to one of the core

functions of the judiciary.” Kutch v. Del Mar College, 831 S.W.2d at 510.

The trial court’s power is limited by due process. Id. at 511. A review of the

proceedings in this case demonstrate the trial court’s order satisfies due

process.




                                      30
             2.     The final Order of Sanctions was the fifth order against
                    the Bank following four prior, valid, enforceable despite
                    the Bank arguing to the contrary.

      In reviewing the Order of Sanctions the Court should remember that

this was the fifth order against the Bank. The scope of the Court’s review is

not limited to the sanctions hearing - it includes the entire record that was

before the trial court. Cuellar v. Maldonado, No. 13-14-00491-CV, 2015

Tex. App. LEXIS 2138 *33 (Tex. App.–Corpus Christi - Edninburg Mar. 5,

2015, n.w.h.) (memorandum op.); Kutch, 831 S.W.2d at 508. But, despite

this Court’s pronouncement that review goes beyond the Order of

Sanctions, the Bank wants the Court to only focus on two of the trial court’s

prior orders, if that:

      Specifically, in the order of sanctions, the trial court states that
      “the [c]ourt has considered that prior orders designed to
      require (the Bank) to participate in the litigation process in
      good faith and in compliance with court orders were
      ineffective.. . . The prior orders in the record10 — referenced in
      the order of sanctions—are an order on a motion to compel,
      entered on July 22, 2013, and an order nunc pro tunc, entered
      on August 21, 2013. These discovery orders were clearly entered
      after September 1, 2010. Meaning, per the trial court’s final
      order, cited supra, the discovery orders were vacated.”




10
   The Bank plays it a bit tricky with the “record” reference. The Bank never mentions in
its brief the March 29, 2010 discovery order against it even though it is in the Clerk’s
Record. CR 1:60. Also, while at that time the April 11, 2011 and September 8, 2011
orders were not part of the appellate record, the bank has the burden of proof and chose
not to bring these prior orders to the Court’s attention despite Docket Sheet references.
CR 1:8 (September 8, 2011 order); 14 (April 11, 2011 order).

                                           31
Cross-Appellant’s Brief at page 22 (emphasis in original). As discussed

earlier, the trial court had previously signed four orders against the Bank:

      March 29, 2010 - CR 1:60;

      April 11, 2011 - CR Supp __, CR 1:14;

      September 8, 2011 - CR Supp __, CR 1:8; and

      August 21, 2013 - CR 3:541.

The question of sanctions had been considered earlier, even though the trial

court had not granted monetary sanctions earlier. An example of where the

trial court carried along a prayer for sanctions is shown in its Aprill 11, 2011

order where it struck out the sanctions language with the hand-written

notation “under advisement.” Supp. CR __. The trial court also stated in

the August 21, 2013 order, “The prayer of Counterplaintiffs for further

Sanctions in the Motion and the Supplement is neither granted nor denied,

but shall be carried with this case.” CR 3:543.

      The trial court signed years worth of orders against the Bank. The

Court should consider the whole record, not simply what the Bank says is

the record. Cuellar, No. 13-14-00491-CV, 2015 Tex. App. LEXIS 2138 *33;

Kutch, 831 S.W.2d at 508. A review of the entire record demonstrates the

trial court followed due process in imposing sanctions through its inherent

power to sanction bad faith conduct.



                                       32
            3.    The trial court’s June 11, 2014 Order of Sanctions
                  complied with necessary due process requirements.

      While the Bank may argue that the trial court somehow did not

provide a basis for its decision, everything that should be there is there for

the Court to review the sanctions order. Hlavaty and Strnadel take little

issue with the cases the bank cites supporting its general statements

concerning applicable standards but, as is often the case with “abuse of

discretion” determinations, the devil lies in the details of those cases as well

as this case. Take for instance one of the cited cases, Spohn Hosp. v. Mayer,

104 S.W.3d 878 (Tex. 2003) - a case appealed from this Court. The Texas

Supreme Court held that the trial court’s sanctions were excessive.

      In Spohn Hosp., the Texas Supreme Court correctly outlined the need

that “[a] just sanction must be directed against the abuse and toward

remedying the prejudice caused to the innocent party, and the sanction

should be visited upon the offender.” Id. at 882. But, as the Court noted,

one could not tell in Spohn Hosp. who the sanctions were against.

“Although the sanctions were generally ‘directed against’ the alleged abuse,

the record contains no evidence that the sanctions were ‘visited on the

offender.’ In fact, neither the trial court nor the court of appeals discusses

whether counsel or their clients were responsible for the discovery abuse.”

Id. at 883-84.


                                       33
      Contrast that to the sanctions order in this case. Here, the trial court

states, “The Court has also considered that the recalcitrant behavior has

occurred while (the Bank) has been represented by a succession of different

attorneys of record, indicating that the disrespect for the judicial process is

not a product of poor representation by counsel but of an underlying

attitude on the part of the (the Bank) itself.” CR 4:789. It is the bank who is

expressly ordered to pay the monetary sanctions. CR 4: 789. Consequently,

unlike in Spohn Hosp., we know who the sanctions are directed against -

the Bank (i.e., the party).

      Also, the sanctions in Spohn Hosp. were severe - a jury instruction

that certain facts were established. Spohn Hosp., 104 S.W.3d at 881. Unlike

this case, where Hlavarty and Strnadel had pursued numerous motions to

compel, the plaintiffs in Spohn Hosp. went straight for the sanctions

without ever having tried less stringent or severe options. Id. at 880. The

Court detailed alternative sanctions that implictly delineate, if not expressly

state, lesser sanctions that would have been proper. Id. at 883.

      Here, unlike in Spohn Hosp., Hlavaty and Strnadel pursued lesser

sanctions first - four prior court orders. Yet, those less sever efforts did not

dissuade the bank’s conduct and achieve the results the trial court intended.

Faced with a recalcitrant litigant, the trial court ordered monetary

sanctions. CR 789. The Spohn Hosp. Court would have seen this as a logical

                                       34
progression as the earlier orders were ineffective against the Bank.

Therefore, the trial court’s June 11, 2013 Order of Sanctions did not violate

due process requirements.

      C.    Any error regarding the evidence supporting the monetary
            award or lack of particularity in the sanctions order is harmless
            because the trial court did not obscure its reasoning at the
            hearing, and the situation is adequately presented to this Court.

      The Bank attacks the sanctions order, arguing, “In this case, the

sanctions order the court entered was void of facts justifying the sanction. .

. . Because sufficient facts showing good cause were not stated in the order,

there is no way to determine whether a direct relationship exists between

the conduct and the sanctions.” Cross-Appellant’s Brief at 19. However, it

would not matter in this case if the order lacked the necessary particularity

as the transcripts of the hearings in this case adequately present the case to

this Court. John Kleas Co. Inc., No. 13-13-00401-CV, 2015 Tex. App. LEXIS

3162 at *36; see TEX. R. APP. P. 44.1(a).

      As this Court stated, “In 1989, this Court held that the failure of a

sanctions order to comply with the particularity requirements was harmless

because ‘[t]he trial court did not obscure its reasoning at the hearing, and

the situation has been adequately presented to us.’” Id. (citing to Powers v.

Palacios, 771 S.W.2d 716, 719 (Tex. App.--Corpus Christi 1989, writ

denied)). This Court has before it the transcripts of two hearings: (1) March


                                       35
22, 2013 - RR 2; and (2) May 21, 2014 - RR 3 and 4. The Bank complains

that no evidence of fees was introduced at the May 21, 2014 hearing, but

does not make any reference to the earlier hearing. Cross-Appellant’s Brief

at pages 20-21. The fees were part of the March 22, 2013 hearing:

      It should be remembered that the June 11, 2014 Order of Sanctions

awarded Hlavaty $12,113.50, and Strnadel $6,151.00 CR 4:789. Hlavaty and

strnadel’s counsel sent a letter to the trial court on June 6, 2014 about eh

amount of fees in this matter. CR 4:787. In it, their counsel states:

      At our last hearing on May 21, 2014, you asked what was the
      original attorney's fees demand by Counterplaintiffs made prior
      to the non-suit of the Bank's claims against Counterplaintiffs. I
      could not remember the exact figure at the time but I have now
      looked it up and the amount is as follows: $6,151.00 for Jeff
      Strnadel and $12,113.50 for Patrick Hlavaty. These figures were
      conveyed in a letter to Donald Zwernemann dated April 14,
      2010.

CR 4:787. The letter shows it being faxed to the Bank’s counsel. CR 4:787.

The appellate record does not reflect any response from the bank’s counsel,

and the Bank does not reference any response in its brief. The trial court

signed the Order of Sanctions five days later. CR 4:790. However, this was

not the only word on fees in this matter.

      At the March 22, 2013 hearing Howard Singleton, Hlavaty and

Strnadel’s counsel, argued to recover specific costs that had been expended

in this matter relating to representing his clients, including pursuing


                                      36
repeated discovery. RR 2:26-28. He delineated fees and costs expended in

this matter that far exceeded the awarded amounts. For instance he states,

“And releated to my efforts to get the Melanson deposition scheduled on my

- - some of which is documented on my Exodus scroll here. I had - - I had in

excess of 80 hours which would equal $225 an hour at $18,000.” RR 2:27.

He delineates Hlavaty’s prior counsel’s work in this case and states,

“(Hlavaty’s previous counsel) has spent in excess of 48 hours at $300 an

hour which equals $14,400, which also includes at least four different trips

to the 23rd District Court seeking Motions to Compel and/or overcoming

the bank’s objections to producing the items, which still today haven’t been

produced.” RR 2:27-28. Frankly, when adding up the dollar amounts Mr.

Singleton lays out for fees and expenses, the math comes to a total in excess

of $39,000. RR 2:26-28. Yet, the trial court only awarded a total of

$18,264.50. CR 4:789.

      The amounts were out there for the trial court. No, Mr. Singleton was

not sworn in as a witness. RR 2:28. But, he threw himself out there as an

officer of the Court. RR 2:28. The Bank’s counsel did not address the

amount of the fees or make any type of objection before or after Mr.

Singleton delineated the amounts. RR 2:1-54.

      What happened here is similar to what happened in Powers v.

Palacios, 771 S.W.2d 716 (Tex. App.--Corpus Christi 1989, writ denied). The

                                      37
appellee’s attorney had been awarded $2,500, but had asked for $4,500. Id.

at 719. The Court will recall that the attorney seeking sanctions in that case

was not sworn in. Id. Interestingly, when faced with the question of the

basis of the fee amount, the attorney instead “explained the legal authority

for the sanction” - he did not answer the question asked. Id. Opposing

counsel did not ask any questions or make any objections. Id. This Court

stated, “The trial court was aware of the numerous hearings and pleadings

and the discovery in the case. We find the evidence sufficient to sustain the

$ 2,500 figure.” Id.

      The Court looked beyond the sanctions order in determining that the

trial court in Powers had not abused its discretion. Like the trial court in

Powers, when the Court looks beyond the Order of Sanctions it can also see

a trial court was aware of the numerous hearings and pleadings and the

discovery in this case. The trial did not abuse its discretion in only awarding

a total of $18,264.50 as a monetary sanction against a bad faith litigant.

Any error here is harmless. TEX. R. APP. P. 44.1(a). Therefore, the Court

should affirm the trial court’s Order of Sanctions.




                                      38
                                   PRAYER

      The trial court improperly dismissed Cross-Appellees’ claims against

Cross-Appellant. However, the trial court properly awarded Cross-

Appellees monetary sanctions against Cross-Appellant. While the Court

should reverse the trial court’s June 3, 2014 Final Order and remand the

matter to the trial court for further proceedings, the Court should affirm the

June 11, 2014 Order of Sanctions against Cross-Appellant. Cross-Appellees

also pray for any further relief to which they may be entitled.

                              Respectfully submitted,

                              WALTER JAMES KRONZER, III, P.C.
                                /s/ Walter James Kronzer, III
                              Walter James Kronzer, III
                              State Bar No. 11735001
                              wkronzer@kronzer.com
                              3000 Weslayan, Suite 247
                              Houston, Texas 77027-5753
                              713-622-5766
                              713-622-5445 (fax)
                              wkronzer@kronzer.com (e-mail)

                              THE SINGLETON LAW FIRM
                              Howard H. Singleton
                              State Bar No. 1843620
                              109 East Milam
                              Wharton, TX 77488
                              979-532-9800
                              979-532-9085 (fax)
                              singletonlaw@sbcglobal.net (e-mail)

                              ATTORNEYS FOR CROSS-APPELLEES PATRICK
                              HLAVATY AND JEFF STRNADEL


                                      39
                        CERTIFICATE OF COMPLIANCE

      Pursuant to TEX. R. APP. P. 9.4, I hereby certify that this Cross-
Appellees Patrick Hlavaty and Jeff Strnadel’ Brief contains 9,042 words.
This is a computer-generated document created in Corel WordPerfect X7,
using 14-point typeface for all text, except for footnotes which are in
12-point typeface. In making this certificate of compliance, I am relying on
the word count provided by the software used to prepare the document.


                                       /s/ Walter James Kronzer, III
                                         Walter James Kronzer, III




                          CERTIFICATE OF SERVICE

      I certify that on April 30, 2015 a copy of Cross-Appellee Patrick
Hlavaty and Jeff Strnadel’s Brief has been served via electronic service
or fax to:

Dawn S. Holiday
Gregg S. Weinberg
Mia B. Lorick
Roberts Markel Weinberg Butler Hailey PC
2800 Post Oak Blvd. 57th Floor
Houston, TX 77056
713-840-9404 (fax)
dholiday@rmwbhlaw.com
gweinberg@rmwbhlaw.com


                                 /s/ Walter James Kronzer, III
                                    Walter James Kronzer, III



                                     40
  Exhibit A
April 11, 2011 Order as to Jeff Stranadel’s [sic] Motion
 to Compel Error & Omissions Policy (CR Supp __)
                                          Cause No. 44,081

COMMERCIAL STATE BANK                              §             IN THE DISTRICT COURT
OF EL CAMPO, TEXAS, INC.,                          §
Plaintiff/Counter-Defendant,                       §
                                                   §
v.                                                 §          WHARTON COUNTY, TEXAS .
                                                   §
PATRICK HLAVATY, et al.,                           §
Defendants/Counter-Plaintiffs .                    §               23rct JUDICIAL DISTRICT


                                                ORDER

ON THIS DAY, came on for consideration the Defendant/Counter-Plaintiff's Motion to Compel

Error & Omission Insurance PolicY. and fer other ralisf B:ftd the Co'tll't, ttfter "HaYing re • ie wed tfte,

am;rropriate pleadings on file, evidence contained thareiR, mtd ha..,ing eeRsieered the argmnents ..

o£.cauasel, if any, believes tlaat said motion is meritorious and should ht all    thing~   be gramed. It




        ORDERED, AJ)U IDGFD aad D~CREBD tftt.tt tfte metieR is gFanted,

        ORDERED, ADITTDGED and DECRE@ that Counter-Defendant Commercial State                                  ,
              dL-                                        ,..:..,~~~~ ~
Bank produc~ ~e Error & Omission insurance policy(s),within the next 2 weeks.                     ~

        ORDERED, ADUIDGFD <md DECREEB that Counter-Defendant Commercial State

Bank produce any reports on Jeff Strnadel that were relied upon by Don Zwememann in filing

suit against Strnadel or referred to by Don Zwememann in his deposition dated February 17,

2011 within the next 2 weeks ..

                                         and DECREED that as sanctions Counter-Defendant

Commercia

amo                                                 related to

requested and                       elanson depos'ltion and                                       Motion.
Atto                          e Singleton Law Firm at 109 E. Milam Wharton Texas within

14 d




       SIGNED this the l \   day of   ~                   '2011.



                                              PRESIDING JUDGE

       APPROVED & ENTRY REQUESTED:

       SINGLETON LAW FIRM


By:~~~
       SBN 18436200
       109 East Milam Street
       Wharton, Texas .77488
       (979) 532-9800
       (979) 532~9805 FAX
       ATTORNEY FOR DEFENDANT !COUNTER-PLAINTIFF
       JEFF STRNADEL
        Exhibit B
September 8, 2011 Order granting Counter-Plaintiff Jeff Strnadel
     and Patrick Hlavaty’s Motion to Compel (CR Supp __)
                                       Cause No. 44,081

COMMERCIAL STATE BANK                                                  THE DISTRICT COURT
OF EL CAMPO, TEXAS, lNC.,
Plaintiff/Counter-Defendant,

v.                                                            WHARTON COUNTY , TEXAS

PATR!CKHLAVATY,eta/. and
JEFF STRNADEL
                                                                 329TH JUDlCIAL DlSTRICT


        DER GRANTING COUNTER-PLAINTIFF JEFF STRNADEL AND PATRJCK
                                 HLAVATY'S MOTION TO COMPEL



        ON August 26, 2011 . came on for con ideration the Counter-Plaintiffs' [Jeff Strnadel and

Patrick Hlavaty] Motion for Continuance and to Compel Completion of Discovery and the Court,

after having revi ewed the appropriate pleadings on file, evidence contained therein, and having

considered the arguments of counsel, if any, believe · that said motion is meritorious and should

be granted . It is, therefore,

        ORDERED that the Bank, Counter-Defendant, 1s to produce David Melanson for

Deposition.

        ORDERED that the Bank, Co unter-Defendant, is to produt:e any investigations or reports

by anyone hired by the Bank, Counter-Defendant, to inve tigate possible wrong doings at the

Bank , which men lions JeffStrnadel within 45 days   f'rom~~~te.t)ftltis
                                                           /' ,
                                                                         ltcm ill!t""

        SIGNED this the    --'i::_ <lay or______;;?
                                                 ~, 20I I.


                                                                                FilLED
        APPROVED & E1 TRY REQUESTED:                                           S: (57) o'clock   f!- M.
        SfNGLETON l..A W riRM                                                     SEP 0 8 2011
                                                                                 NERlSiA~tuHOUSE
                                                                         ~tsnucr ru"{f70!rrON co.. =
By :
       HOWARD H. SINGLETON
       SBN 18436200
       109 East Milam Street
       Wharton, Texas 77488
       (979) 5''2-9XOO
       (979) 532-9805 FAX
       ATTORNEY FOR
       COUNTER-PLA INTIFFS JEFF STRNA DEL
       AND PATRICK HLAVATY
      Exhibit C
Order Nunc Pro Tunc on Counterplaintiffs Motion to Compel
 & For Sanctions & Supplement to Counterplaintiffs Motion
           to Compel & for Sanctions (CR 3:541)
                                      Cause No. 44,081 ,
                                                       !
COMMERCIAL STATE BANK                       §       IN    ~HE DISTRICT COURT
OF EL CAMPO, TEXAS, INC.,                   §
             Counterdefendant,              §
                                                          I
                                            §
v.                                          §       OF ~RTON COUNTY, TEXAS
                                            §
PATRICK HLAVATY, etal.,
            Counterplaintiffs.
                                            §
                                            §       32~th iI
                                                                JUDICIAL DISTRICT


             ORDER NUNC PRO TUNC ON COUNfrERPLAINTIFFS'
              MOTION TO COMPEL AND FOR Sk\.NCTIONS AND
                 SUPPLEMENT TO COUNTERJl LAINTIFFS'
                MOTION TO COMPEL AND FOJl SANCTIONS

      The Court, on March 22, 2013, having       consid~red       Counterplaintiffs' Motion to

Compel and for Sanctions (the "Motion") and Suppleient to Counterplaintiffs' Motion

to Compel and for Sanctions (the "Supplement"),                e Response, the Reply and the
                       .
arguments of counsel, 1f any, hereby orders as follows:
                                                          I                   F:rLED
                                                                        at 5 :D0 o'dock _£_ M.
      IT IS ORDERED that Counterdefendant Com ercial State Bank                 Ma t:•o,
Texas, Inc. ("CSB") shall produce within thirty (30) d ys after th~~

following documents:

1.    Strnadel "Fraudulent" Inspections. All inspe ion reports or similar documents
      unredacted which CSB has ever claimed were · any way fraudulent or otherwise
      formed the basis of any claim it ever made cone ming Jeff Stmadel; ~geth:er with
                           .      .                                    .              .
2.




                                                                                                 541
      3.       Bond Claims. Any and all documents and thi s unredacted submitted by CSB
               (or anyone, including any attorney, acting on b half of CSB) as part of any bond
               or insurance notice, proof of loss, or claim pert ining in any way to Jeff Stmadel,
               Patrick Hlavaty                                ·                                ·
               together with any and all documents unredact d sent or received by CSB or any
               such bond or insurance company in connection ith any such notice, proof of loss,
                m~~


                                                            Err~ & Omissions or similar policy of
                                                                   1




      4.        E&O Policies. Unredaeted copies of any
                insurance providing coverage for any period o time covered by any of the claims
                originally made by CSB herein, including ut not limited to the policy(ies)
                referenced in the CSB Board minutes for June 0, 2007.

      5.        Loan Files. Unredacted copies of each and e ery complete loan file as to which
                CSB has ever made any claim (in this lawsuit, o any bond or insurance company,
                or otherwise) that CSB suffered any loss du to any action or inaction of Jeff
                Stmadel, Patrick Hlavaty, or any original Defe dant herein.

       6.


                 If this Court has entered any sort of confide1iality order which would apply to

       any of the production called for hereby, such produ4tion shall be made consistent with

       such order. In any event, the production called for hJreby shall be made at the offices of

       Howard Singleton in Wharton, Texas during regular! business hours (9:00 a.m. - 12:00
r

;                                                           thirti~th (30 h) day following this Order.
                                                                                1



                                                                   t
           p.m. and 1:00 p.m.-5:00p.m.) no later than the
'1
.,;
                 Thereafter, Counterplaintiffs shall be entitled           reconvene the deposition of David

           Melanson.                                                   I




                                                        2




                                                                                                               542
            The prayer of Counterplaintiffs for further       anctions in the Motion and the

      Supplement is neither granted nor denied, but shall be arried with this case.

            This is an Order Nunc Pro Tunc and superseres any prior order this Court has

      made regarding the same subject matter, to wit, Coun rplaintiffs' Motion to Compel and

      for Sanctions and Supplement to Counterplaintiffs' M tion to Compel and For Sanctions.


             Signed this   62.. {



                                                JUDGERA


      APPROVED AND ENTRY REQUESTED:




      TBA No. 18436200
      Singleton Law Firm
      109 East Milam Street
      Wharton, Texas 77488
      Tel: (979) 532-9800
      Fax: (979) 532-9805

       Attorney for Counterplaintiffs
       Jeff Strnadel and Patrick Hlavaty




                                                    3
.;

1·'
                                                                                               543
