Chandler v. Cashway Building Materials, Inc.
1979 Tex. App. LEXIS 3994, 584 S.W.2d 950 (1979)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
A claim for wrongful garnishment is a separate cause of action that is not a compulsory counterclaim to the original debt suit. Consequently, a settlement or agreed judgment in the underlying debt and garnishment proceeding does not bar a subsequent suit for wrongful garnishment under the doctrine of res judicata, especially where the wrongfulness of the garnishment itself was never litigated.
Facts:
- Cashway Building Materials, Inc. obtained a default judgment against Richard L. Chandler for a debt of $1,276.24, which with fees and interest totaled $1,583.75.
- Cashway later filed an application for a writ of garnishment to seize funds from Chandler's account at El Paso National Bank.
- The sworn affidavit for the garnishment incorrectly stated the judgment was for $1,833.75 and that the remaining balance was $1,333.75 after a partial payment.
- The affidavit also stated that Chandler lacked sufficient non-exempt property to satisfy the judgment, a fact Chandler alleged was false, claiming Cashway's attorney had been told otherwise by a deputy sheriff.
- Pursuant to the writ, El Paso National Bank froze Chandler's account, which contained a balance of $5,945.35.
- The parties subsequently entered into an 'Agreed Judgment' to settle the original debt, whereby Cashway received $1,000 and Chandler received $150 from the garnished funds.
Procedural Posture:
- Cashway Building Materials, Inc. sued Richard L. Chandler in County Court at Law No. 1 of El Paso County for an unpaid debt.
- The trial court entered a default judgment in favor of Cashway.
- Cashway then filed an Application for a Writ of Garnishment in the same court, naming El Paso National Bank as garnishee.
- Chandler appeared in the garnishment action and filed a 'Motion to Dismiss Garnishment.'
- The parties entered an 'Agreed Judgment' which settled the underlying debt claim and disbursed the garnished funds.
- Chandler then filed a new, separate lawsuit against Cashway, seeking damages for wrongful garnishment.
- In the wrongful garnishment suit, Cashway filed a motion for summary judgment, arguing the claim was barred by res judicata and estoppel.
- The trial court granted Cashway's motion for summary judgment and dismissed Chandler's case.
- Chandler, as Appellant, appealed the summary judgment to the Court of Appeals of Texas.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Does an agreed judgment that settles an underlying debt and resolves a related garnishment proceeding bar a subsequent lawsuit for wrongful garnishment under the doctrines of res judicata or collateral estoppel?
Opinions:
Majority - Osborn, Justice
No, an agreed judgment settling the underlying debt and garnishment proceeding does not bar a subsequent lawsuit for wrongful garnishment. A cause of action for wrongful garnishment is a distinct legal claim that does not arise from the same transaction or occurrence as the original debt. The wrongfulness of a garnishment depends on the truthfulness of the affidavit submitted to obtain the writ, not on the outcome of the underlying case. The court reasoned that the prior agreed judgment only settled the debt dispute and did not litigate or resolve any issues regarding the propriety of the garnishment itself. Because the wrongfulness of the garnishment was never an issue before the court in the prior proceeding, the doctrine of res judicata does not apply. Furthermore, the court held that a wrongful garnishment claim is not a compulsory counterclaim to the original debt action, meaning Chandler was not required to bring his claim in the earlier case.
Analysis:
This decision clarifies that ancillary collection proceedings, like garnishment, can give rise to independent tort actions that are not merged into the judgment of the underlying suit. It establishes that settling a debt does not automatically waive a party's right to sue for damages caused by improper legal tactics used during the collection process. The ruling protects debtors by ensuring that creditors can be held accountable for making false statements in affidavits to seize assets, preserving wrongful garnishment as a separate and viable cause of action. This prevents a creditor from using the settlement of the primary debt as a shield against liability for abuses of process.
