Pjetrovic v.4HG Fannin Investments, LLC
Dallas Court of Appeals, No. 05-12-00471-CV (April 1, 2013)
Although this case arises from a procedural quagmire, its lesson is simple: If a decision of an associate judge has been timely appealed, it is not effective and cannot be relied upon unless and until that decision is affirmed by the referring court, and that rule cannot be skirted by acting before such an appeal is filed. Here, appellees and a receiver took action in reliance upon an associate judge’s decision before the time had run for appellant Pjetrovic to appeal that decision. When Pjetrovic did timely appeal soon thereafter, that rendered the associate judge’s decision “not in full force and effect” and retrospectively eliminated any authority for the actions taken by the appellants and receiver in reliance on that decision.
Pjetrovic suffered a default judgment in one case Eloy and not long thereafter lost another, resulting in a second judgment Schwarz judgment being issued against him. The Schwarz judgment was executed, resulting in two of Pjetrovic’s parcels of real property being seized and sold. Pjetrovic promptly filed suit against the buyers of those parcels—4HG Fannin and Kyle and Mary Payne—seeking to set aside the deeds and to quiet title. It is in this third case, involving 4HG and the Paynes, that this appeal arises.
While the 4HG case was pending, an associate judge in the Eloy case signed a turnover order that appointed a receiver to take possession of all of Pjetrovic’s non-exempt assets, to satisfy that judgment. The receiver took the position that Pjetrovic’s claims in the 4HG case were subject to the turnover order and, three days after Pjetrovic received notice of the associate judge’s order, the receiver entered into a putative settlement with 4HG and the Paynes for a small amount, sufficient to cover the Eloy judgment, and dismissed Pjetrovic’s case against them. Four days later, seven days after receiving notice of the associate judge’s turnover order appointing the receiver, Pjetrovic appealed that order to the referring court in the Eloy case. He then filed a motion to set aside the settlement and dismissal that the receiver had negotiated in the 4HG case (effectively, a motion for new trial), arguing that the receiver lacked authority to compromise or dismiss his claims there. The trial court never ruled on Pjetrovic’s motion, and so it was overruled by operation of law.
A party may appeal the decision of an associate judge “not later than the seventh day after the date the party receives notice of the decision.” Tex. Gov’t Code § 54A.111(b). “An associate judge’s decision has the same force and effect as an order of the referring court unless a party appeals the decision as provided by Subsection (b).” Id. § 54A.111(a) (emphasis added). Appellees 4HG and the Paynes argued that, because Pjetrovic had not appealed as of the date they settled with the receiver appointed under the associate judge’s order, that order was fully effective and the receiver had authority over Pjetrovic’s assets at that time, including the authority to compromise his claims against them. The appeals court rejected this literal reading of the statute, which “could very well make the right to appeal meaningless.” Instead, because the statute gave Pjetrovic seven days to appeal, and because he undisputedly did timely appeal—albeit after the receiver had purported to act in reliance on the associate judge’s order—that order was not in full force and effect when the receiver acted and he therefore lacked authority to compromise Pjetrovic’s claims. The trial court’s dismissal of those claims based on the receiver’s settlement, therefore, was reversed.
