RANDEE HIGGINBOTHAM, CHRIS L. HIGGINBOTHAM, and BARBARA ALLEN, Plaintiffs-Respondents vs. PENNY DIANNE HIGGINBOTHAM (now ALLEN), Defendant-Appellant

  5$1'((+,**,1%27+$0   &+5,6/+,**,1%27+$0DQG   %$5%$5$$//(1    3ODLQWLIIV5HVSRQGHQWV   Y1R6'  3(11<',$11(+,**,1%27+$0  )LOHG0DUFK QRZ$//(1    'HIHQGDQW$SSHOODQW   $33($/)5207+(&,5&8,7&28572)1(:721&2817<  +RQRUDEOH.HYLQ/6HOE\$VVRFLDWH&LUFXLW-XGJH  5(9(56('$1'5(0$1'('   5DQGHH+LJJLQERWKDP³'DXJKWHU ́&KULV/+LJJLQERWKDP³)DWKHU ́DQG %DUEDUD$OOHQ³*UDQGPRWKHU ́  EURXJKWDQDFWLRQDJDLQVW3HQQ\'LDQH+LJJLQERWKDP QRZ$OOHQ³0RWKHU ́IRUWKH$VVHVVPHQWRI'HOLQTXHQW&KLOG6XSSRUWDQG1RQ &RYHUHG0HGLFDO'HQWDO2SWLFDODQG2UWKRGRQWLF([SHQVHVFODLPLQJ0RWKHUKDGIDLOHG WRSD\FKLOGVXSSRUWDVRUGHUHG)DWKHUDQG0RWKHU¶VPDUULDJHZDVGLVVROYHGLQ DQG)DWKHUZDVRUGHUHGWRSD\FKLOGVXSSRUWIRUWKHWZRFKLOGUHQERUQRIWKHPDUULDJH,Q    'DXJKWHU)DWKHUDQG*UDQGPRWKHUZLOOEHUHIHUUHGWRFROOHFWLYHO\DV5HVSRQGHQWV

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³)UDQNO\ZLWKZKDW¶VEHHQSUHVHQWHGWKHUH¶VQRZD\IRUPHWR NQRZ ́'HVSLWHWKDWWKHWULDOFRXUWRUGHUHG0RWKHUWRSD\WR'DXJKWHUZKLFK HTXDOHGWKHVXPRISHUPRQWKIURPWKHWLPH'DXJKWHUWXUQHGHLJKWHHQXQWLOVKH UHDFKHGWKHDJHRIWZHQW\RQH   0RWKHU¶VILUVWSRLQWRQDSSHDOKDVPHULWVKHFODLPVWKDWWKHWULDOFRXUWHUUHGLQ HQWHULQJDMXGJPHQWLQIDYRURI'DXJKWHUEHFDXVH'DXJKWHUGLGQRWKDYHVWDQGLQJWRVXH IRURUFROOHFWDFKLOGVXSSRUWDUUHDUDJHWKDWZDVQRWRZHGWRKHU0RWKHULVFRUUHFW,Q DFKLOGVXSSRUWRUGHUZDVHQWHUHGLQIDYRURI*UDQGPRWKHU0RWKHUZDVWRSD\WR *UDQGPRWKHUWKHVXPRISHUPRQWKDVDQGIRUVXSSRUWRIWZRFKLOGUHQDVRI    $QDZDUGRI³SULPDU\SK\VLFDOFXVWRG\ ́LVQRWDUHFRJQL]DEOHFXVWRGLDOGHWHUPLQDWLRQLQ0LVVRXUL+DOO Y+DOO6:GQ0R$SS6'   0RWKHU¶VWKLUGSRLQWLVWKDWWKHFRXUWHUUHGLQWKHGHWHUPLQDWLRQRIDVRZLQJLQWKDWWKHUHDUH RQO\WKLUW\VL[PRQWKVEHWZHHQ'DXJKWHU¶VHLJKWHHQWKDQGWZHQW\ILUVWELUWKGD\VIRUDWRWDORI 5HVSRQGHQWVFRQFHGHWKHSRLQWDQGDVNWKHFRXUWWRDZDUG:HGRQRWDGGUHVVWKHSRLQWEHFDXVH 0RWKHU¶VILUVWSRLQWPDNHVWKLVSRLQWPRRW 

 0RWKHUZDVWRSD\*UDQGPRWKHUSHUPRQWKIRU'DXJKWHUDQGWRSD\)DWKHU SHUPRQWKIRUWKHFDUHRIKHURWKHUFKLOG ³$SDUW\VHHNLQJUHOLHIPXVWKDYHDOHJDOO\FRJQL]DEOHLQWHUHVWLQWKHVXEMHFW PDWWHUDQGDWKUHDWHQHGRUDFWXDOLQMXU\WRKDYHVWDQGLQJ ́0H\HUY0H\HU6:G 0R$SS('7KHUHIRUHWKHSDUW\PXVWVKRZVKHLVVXIILFLHQWO\DIIHFWHG E\WKHFKDOOHQJHGDFWLRQWRMXVWLI\WKHFRXUW¶VFRQVLGHUDWLRQRIWKHYDOLGLW\RIKHUDFWLRQ DQGWKDWWKHDFWLRQYLRODWHVWKHULJKWVRIWKHDWWDFNLQJSDUW\DQGQRWRIDWKLUGSDUW\,G ³:KHQDSDUW\ODFNVVWDQGLQJVXIILFLHQWWRPDLQWDLQWKHDFWLRQDQGFRQVHTXHQWO\KDVQR ULJKWWRUHOLHIWKHFRXUWQHFHVVDULO\GRHVQRWKDYHMXULVGLFWLRQRIWKHTXHVWLRQSUHVHQWHG DQGPD\QRWHQWHUDMXGJPHQWRQWKHPDWWHU ́,GDW 'DXJKWHUFODLPVWKDWVHFWLRQ  SURYLGHVWKDWFKLOGVXSSRUWPD\EHSDLG GLUHFWO\WRDFKLOGHQUROOHGLQKLJKHUHGXFDWLRQ7KDWLVWUXHKRZHYHUWKHVWDWXWH SURYLGHV³>L@IWKHFKLOGLVHQUROOHGLQVXFKDQLQVWLWXWLRQWKHFKLOGRUSDUHQWREOLJDWHGWR SD\VXSSRUWPD\SHWLWLRQWKHFRXUWWRDPHQGWKHRUGHUWRGLUHFWWKHREOLJDWHGSDUHQWWR PDNHWKHSD\PHQWVGLUHFWO\WRWKHFKLOG ́6HFWLRQ1RVXFKUHTXHVWZDVPDGH E\'DXJKWHURUE\0RWKHU7KHUHIRUHWKHSUHYLRXVDZDUGLQJRIFKLOGVXSSRUWRUGHUVLV YDOLG*UDQGPRWKHUZDVRZHGSHUPRQWKDVFKLOGVXSSRUWDVORQJDVWKH UHPDLQLQJSURYLVLRQVRIVHFWLRQZHUHFRPSOLHGZLWK6HFWLRQGRHV    $OOUHIHUHQFHVWRVWDWXWHVDUHWR560R&XP6XSSDQGDOOUXOHUHIHUHQFHVDUHWR0LVVRXUL&RXUW 5XOHVXQOHVVRWKHUZLVHVSHFLILHG

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³&KLOGVXSSRUWLVWREHXVHGWRDLGWKHFXVWRGLDOSDUHQWWRSD\WKH UHDVRQDEOHH[SHQVHVRIDFKLOG ́0DVRQY0DVRQ6:G0R$SS(' $FFRUGLQJO\LQDFDVHLQZKLFKDFKLOGOLYHVLQKLVKHUSDUHQW¶VKRPHWKHSDUHQWVKRXOGGLUHFWO\UHFHLYHDW OHDVWDSRUWLRQRIWKHFKLOGVXSSRUW,G   6HH.UHXW]HUY.UHXW]HU6:G0R$SS6'KROGLQJWKDWGDXJKWHUKDG VWDQGLQJDVDQLQWHUYHQRUDQGUHLQVWDWLQJPRWKHU¶VFKLOGVXSSRUWREOLJDWLRQVWREHSDLGGLUHFWO\WRGDXJKWHU ZKHUHDIWHUGHDWKRIIDWKHUPRWKHUREWDLQHGDQRUGHUWHUPLQDWLQJKHUFKLOGVXSSRUWREOLJDWLRQWRGDXJKWHU ZKRZDVGXO\HQUROOHGLQFROOHJHDQGGDXJKWHUILOHGPRWLRQVWRVHWDVLGHDQRUGHUWHUPLQDWLQJKHU PRWKHU¶VFKLOGVXSSRUWREOLJDWLRQWRDPHQGWKHRUGHUWRSD\VXSSRUWGLUHFWO\WRGDXJKWHUDQGIRU IRUPDOLQWHUYHQWLRQLQFKLOGVXSSRUWSURFHHGLQJVXQGHU5XOH   3RLQW,,FODLPVWULDOFRXUWHUURULQWKHGHQLDORIWKHDGPLVVLRQRIDGRFXPHQWSXUSRUWLQJWREHDSULQWRXWRI FKLOGVXSSRUWSDLGE\0RWKHUIURPWKH'LYLVLRQRI&KLOG6XSSRUW(QIRUFHPHQW%HFDXVHZHDUHUHYHUVLQJ WKHMXGJPHQWZHGRQRWDGGUHVV0RWKHU¶VVHFRQGSRLQW5HVSRQGHQWV¶REMHFWLRQWRWKHGHSRVLWLQJRI ([KLELWV$DQG%WKHSXUSRUWHGFKLOGVXSSRUWGRFXPHQWVZKLFKZDVILOHGZLWKWKLV&RXUWDQGWDNHQZLWK WKHFDVHLVGHQLHG

  0RWKHU¶VILQDOSRLQWLVWKDWWKHWULDOFRXUWHUUHGLQDZDUGLQJDWWRUQH\IHHVLQIDYRU RI³SODLQWLII¶V ́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¶ILQDQFLDOUHVRXUFHV:KHQGHFLGLQJDUHTXHVWIRUDWWRUQH\IHHVDFRXUWLV DOZD\VUHTXLUHGWRFRQVLGHUWKHILQDQFLDOUHVRXUFHVRIERWKSDUWLHV$OEHUVZHUWKY $OEHUVZHUWK6:G0R$SS:':LWKRXWHYLGHQFHRIWKH ILQDQFLDOUHVRXUFHVRIHDFKSDUW\DQDZDUGRIDWWRUQH\IHHVFDQQRWEHVXSSRUWHG,G ³'HWDLOHGRUH[WHQVLYHLQIRUPDWLRQUHJDUGLQJWKHSDUWLHV ILQDQFLDOUHVRXUFHVLVQRW UHTXLUHGLQIRUPDWLRQDGGXFHGIURPWHVWLPRQ\DVRSSRVHGWRIRUPDOVWDWHPHQWVILOHGZLWK WKHFRXUWLVVXIILFLHQW ́,G+RZHYHUWKHSDUWLHVPXVWSUHVHQWVRPHIRUPRIHYLGHQFHIRU WKHFRXUWWRXVHZKHQFRQVLGHULQJWKHUHOHYDQWIDFWRUV,G$FFRUGLQJO\WKHWULDOFRXUW HUUHGLQRUGHULQJDWWRUQH\IHHVXQGHUVHFWLRQ  7KHUHLVDQRWKHUSURYLVLRQLQVHFWLRQZKLFKSURYLGHVIRUWKHSD\PHQWRI DWWRUQH\IHHVLQDQDFWLRQWRFROOHFWSDVWGXHFKLOGVXSSRUW6HFWLRQSURYLGHV LQSDUW    :HFRQFOXGHIURPUHDGLQJWKHWUDQVFULSWWKDWWKHGHQRPLQDWLRQRI³SODLQWLII¶V ́LQWKHVLQJXODUZDVD VFULYHQHU¶VHUURUGXHWRWKHIDFWWKDWRQO\RQHDWWRUQH\ZDVXVHGE\DOORIWKHSODLQWLIIVDQG'DXJKWHUDQG )DWKHUWHVWLILHGWKDWWKH\VKDUHGWKHFRVWRIWKHDWWRUQH\

  ,QDQ\SURFHHGLQJLQZKLFKWKHIDLOXUHWRSD\FKLOGVXSSRUWSXUVXDQWWRD WHPSRUDU\RUGHURUILQDOMXGJPHQWLVDQLVVXHLIWKHFRXUWILQGVWKDWWKH REOLJRU KDV IDLOHG ZLWKRXW JRRG FDXVH WR FRPSO\ ZLWK VXFK RUGHU RU GHFUHH WR SD\ WKH FKLOG VXSSRUW WKH FRXUW VKDOO RUGHU WKH REOLJRU LI UHTXHVWHGDQGIRUJRRGFDXVHVKRZQWRSD\DUHDVRQDEOHDPRXQWIRUWKH FRVWRIWKHVXLWWRWKHREOLJHHLQFOXGLQJUHDVRQDEOHVXPVIRUOHJDOVHUYLFHV   7KHSXUSRUWHGREOLJHHVLQWKLVDFWLRQLQFOXGHG)DWKHU'DXJKWHUDQG *UDQGPRWKHUHDFKFODLPLQJVXSSRUWZDVRZHGWRWKHP6HHVHFWLRQ³>$@Q μREOLJHH¶LVDSHUVRQWRZKRPDGXW\RIVXSSRUWLVRZHG ́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