SUE WALKER, JUSTICE.
In this original proceeding, Relators Amanda Hayward and TWCS Operations Pty Ltd. seek a writ of mandamus compelling Respondent to vacate a September 15, 2015 order imposing a constructive trust that requires them to deposit $10 million in U.S. dollars into the registry of the court.
Pedroza sued Relators claiming that she was a partner in The Writer's Coffee Shop (Coffee Shop), a publishing house run by Hayward.
After the jury returned its verdict for Pedroza, she filed a motion for application of equitable remedies, seeking imposition of a constructive trust. Respondent signed a May 29, 2015 order requiring that an upcoming royalty payment from Random House be placed in an interest-bearing escrow account by Random House and requiring that Relators
After entry of the partial judgment and while the parties were ascertaining Coffee Shop's net profits in an effort to convert Pedroza's twenty-five percent interest into a dollar figure to be utilized in the final judgment, Pedroza filed a second motion for application of equitable remedies. Respondent conducted a hearing on August 7, 2015, and signed the September 15, 2015 order creating a constructive trust over $10 million in cash and ordering that amount paid into the registry of the court.
Respondent's order provides, in pertinent part:
Relators filed this original proceeding, asserting that Respondent abused her discretion by ordering them to deposit $10 million in cash into the registry of the court.
Mandamus relief may be available if the relator establishes a clear abuse
A party seeking to impose a constructive trust must establish (1) breach of a special trust or fiduciary relationship or actual or constructive fraud, (2) unjust enrichment of the wrongdoer, and (3) an identifiable res that can be traced back to the original property. KCM Fin. LLC v. Bradshaw, 457 S.W.3d 70, 87 (Tex.2015). The proponent of a constructive trust must strictly prove these elements. Hubbard v. Shankle, 138 S.W.3d 474, 485 (Tex.App. — Fort Worth 2004, pet. denied). To prove an identifiable res, the proponent of the constructive trust must show that the specific property that is subject to the constructive trust is the same property — or the proceeds from the sale thereof or revenues therefrom — that was somehow wrongfully taken. Wheeler v. Blacklands Prod. Credit Ass'n, 627 S.W.2d 846, 851 (Tex.App. — Fort Worth 1982, no writ). When the property sought to be recovered or its proceeds have been dissipated so that no product remains, the constructive-trust-seeking proponent's only claim is that of a general creditor. See Great-W. Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204, 214, 122 S.Ct. 708, 714, 151 L.Ed.2d 635 (2002). A constructive trust on unidentifiable cash proceeds is inappropriate. Meadows v. Bierschwale, 516 S.W.2d 125, 131 (Tex.1974).
Pedroza failed to establish the third constructive trust element; she failed to show that the $10-million-cash res of Respondent's constructive trust was the same property — or the proceeds from the sale thereof or revenues therefrom — that was wrongfully taken from her. See Wheeler, 627 S.W.2d at 851. Pedroza presented no evidence at the August 7 hearing that Hayward possessed $10 million cash in royalties that were paid to Coffee Shop.
Pedroza's failure to meet her burden of strictly proving an identifiable res constituting the same property — or the proceeds from the sale thereof or revenues therefrom — that was wrongfully taken from her (royalties paid to Coffee Shop) is demonstrated by Respondent's order itself. The order states that "[t]his Court does not specify which asset or assets Defendant should use to satisfy this Order (whether property, cash, investments[,] or otherwise) other than the fact that it is to be paid out of the funds traceable to the royalties from the Fifty Shades trilogy." [Emphasis added.] A constructive trust cannot attach to unidentified assets; "[d]efinitive, designated property, wrongfully withheld from another, is the very heart and soul of the constructive trust theory." Wheeler, 627 S.W.2d at 851. In order to fasten a constructive trust on property owned by the defendant, some particular property must be identified. KCM Fin. LLC, 457 S.W.3d at 88; see also Wheeler, 627 S.W.2d at 852 (reversing constructive trust imposed on all assets of defendant). Without the requirement that the res be strictly traced back to the original property wrongfully withheld from the movant for a constructive trust or to proceeds from that property, "any suit on a debt or obligation could be used to impress a constructive trust on the assets of the defendant." See KCM Fin. LLC, 457 S.W.3d at 88. The order states that Relators are to deposit $10 million "from the funds traceable to any royalties paid at any time by Random House ... or any other funds received in connection with the business of [Coffee Shop]." But the party seeking imposition of a constructive trust — not the party opposing it — bears the burden of strictly tracing the property to be placed into a constructive trust to property wrongfully withheld from the party seeking the trust. See, e.g., id. at 87 (recognizing party seeking constructive trust "must establish ... an identifiable res that can be traced back to the original property"); Hubbard, 138 S.W.3d at 485 (same). Because Pedroza failed to strictly prove an identifiable res, Respondent's order erroneously placed the tracing burden on Relators, requiring Relators to trace royalties paid to Coffee Shop to $10 million cash allegedly in their possession.
The lack of a specifically identifiable res is further evidenced by the following argument made by Pedroza in her response to Relators' petition for writ of mandamus:
Pedroza's argument that "various options" are available to Hayward to "come up with the funds" shows that a res of $10 million in cash has not been specifically identified. A party cannot be forced to take out a loan to create a res; a loan is not definitive, designated property or proceeds therefrom wrongfully withheld from Pedroza that can constitute the res of a constructive trust. See KCM Fin. LLC, 457 S.W.3d at 88. And Respondent's order places a constructive trust specifically on $10 million in
Pedroza argues that Respondent's order is nonetheless proper under the line of cases holding that when ownership of a fund of monies is disputed and the monies are in danger of being lost or depleted, a trial court may order the monies deposited into the registry of the court. See Castilleja v. Camero, 414 S.W.2d 431, 433 (Tex. 1967); In re Reveille Res. (Tex.), Inc., 347 S.W.3d 301, 304-05 (Tex.App. — San Antonio 2011, orig. proceeding) (recognizing general rule but holding trial court abused its discretion by ordering $455,377.91 deposited into registry); Cypress Med. Ctr. Operating Co. v. St. Laurent, 296 S.W.3d 171, 179-80 (Tex.App. — Houston [14th Dist.] 2009, orig. proceeding) (recognizing general rule but holding trial court abused its discretion by ordering partnership to deposit future distributions allegedly owed to partner into the court's registry).
In Castilleja, the party seeking deposit of monies into the registry of the court had obtained a judgment awarding him an ownership interest in the amount of $17,000 in a specific fund held by the defendant. 414 S.W.2d at 433. The defendant perfected an appeal; the party seeking deposit of monies into the registry obtained a writ of execution on the judgment that was returned nulla bona, alleged that the defendant was insolvent, and alleged that "the specific fund in which [the plaintiff] was awarded an interest [by the judgment] was in Mexico and out of the jurisdiction of the court." Id. Thus, the disputed fund in danger of being depleted in Castilleja was a "specific sum of money in the Banco Longoria Reynosa, Mexico, $17,000.00 of which belonged [per the judgment] to [the party seeking deposit into the registry]." Id. The Texas Supreme Court held that "[u]nder such circumstances[,] a court can order payment of the disputed funds into its registry until ownership is determined" under the rationale that "[t]he entry of orders, after appeal, which are not inconsistent with the original judgment may be made to conserve the property which is the subject of appeal." Id.
This line of cases is inapplicable to the present facts. The facts here do not present the issue of whether Hayward owns or whether Pedroza owns a specific account containing $10 million that would justify deposit of the "disputed funds into [the court's] registry until its ownership is determined" as in Castilleja.
Because Pedroza did not strictly prove the third element necessary to the establishment of a constructive trust, we sustain Relators' second issue claiming that Respondent abused her discretion by ordering $10 million deposited into the registry of the court. Because no final judgment exists and because Respondent's order will require Relators to create a res that Pedroza did not prove exists, we likewise sustain Relators' fifth issue claiming they have no adequate remedy by appeal. See, e.g., Reveille Res. (Tex.), Inc., 347 S.W.3d at 304-05 (granting mandamus relief from order requiring funds to be deposited into registry); Cypress Med., 296 S.W.3d at 179-80 (same).
Having sustained Relators' second and fifth issues, we need not address their first, third, or fourth issues. See Tex. R.App. P. 47.1. Having determined that Respondent's September 15, 2015 order imposing a constructive trust on $10 million in U.S. currency and ordering that amount deposited into the registry of the court constitutes an abuse of discretion and having determined that Relators have no adequate remedy by appeal, we conditionally grant a writ of mandamus. Respondent is ordered to immediately sign an order vacating her September 15, 2015 order.
[Respondent]: But what I really want, and I'm very serious about it, is to make sure, out of all of that money, there is money left to collect the judgment. Which I haven't heard the testimony, I haven't heard the evidence, but it sounds like it's somewhere between roughly $10.5 million. So I have yet for anyone to stand up and say, Judge, don't worry about it, there will be plenty of money to satisfy the judgment.
[Pedroza's Counsel]: I haven't heard that either. Our thinking is on that unaccounted for money, if you take the money that Random House is holding, you take the investment account —
[Respondent]: That we don't know how much is in?
[Pedroza's Counsel]: — that we don't know how much is in. But then whatever that number is, the question is is that unaccounted for 12 million somewhere in a liquid account to where that can be supplemented then to bring it up to the 10.5 or 10.7 million.
[Respondent]: Well, if that was true, then there would be some failure to disclose, which I just I don't see — I don't have a belief that someone is failing to disclose an entire account. I just don't think that that's likely.