BEAUMONT – A trial court discharged the account of a wife who was improperly named in a lawsuit against her ex-husband, according to a recent appeals court ruling.
An opinion delivered March 30 by the 9th District Appeals Court in Beaumont by Chief Justice Steve McKeithen and Justices Charles Kreger and Hollis Horton ruled Karen deShetler should not have been included in a trial court order to turnover funds in a lawsuit involving her husband’s registered investment advisory firm deShetler & Co., and was not responsible for confiscating funds from the estate of Gene Sponsler.
“We hold that the trial court abused its discretion by including a turnover order in default judgement that does not dispose of every pending claim and party,” the opinion stated.
The original suit filed by the estate of Gene Sponsler alleged Karen deShetler's then-husband Lawrence, the principal with deShetler & Co. and CLA Estate Services Inc., misappropriated and ultimately stole funds from a $700,000 Ohio National Life Insurance policy. The trial court ordered that money in the account be given over to the estate.
The estate claimed deShetler & Co. gave substandard asset assistance and “absconded money rather than hold in safekeeping and interest.” Though the estate alleged wrongdoing on the part of deShetler & Co., Karen deShetler was not an official representative of the estate like her husband.
Not only did deShetler & Co. deny deceiving the Sponslers, she claimed 64.75 percent of the account in question, which was being held by Merrill Lynch, was from a pension plan her and her husband, Lawrence, began in 2013, at least one year before the couple began investing on behalf of the Sponsler estate. She claimed the percentage was set forth in a Qualified Domestic Relations Order in August 2016 when she divorced her husband.
In November 2016, the trial court granted the default judgment to the Sponsler estate and ordered both Merrill Lynch and deShetler to release all funds. Before releasing any funds, Merrill Lynch filed a motion to clarify if the monies were rightfully the property of deShetler, saying court orders were inconsistent as to who owns the account, how it’s distributed and who is entitled to it.
The Sponslers filed a restraining order and sought to enjoin the funds so they could not be spent until the matter was clarified and filed a default judgment against Karen deShetler. She claimed the account was started with her hard-earned money and the Sponslers could not prove any deposits in the account were theirs and not hers. Additionally, counsel for Karen deShetler argued her due process rights were violated because part of the account was rightfully hers.
Ultimately, the trial courts denied Merrill Lynch’s motion for clarification and the panel of appeal judges said the trial court didn’t give deShetler a chance to prove the accounts belonged to her.
Once able to prove she was wrongfully named in the suit, the appeals panel also concluded the mandamus relief was sufficient “since there is no final judgment to support the turnover order due to the court’s improper inclusion of deShetler in the turnover.” All monies not exceeding judgment are to be returned to Karen deShetler.