The Austin Court of Appeals has affirmed a trial court order sanctioning Austin developer Natin Paul for violations of court orders concerning post-judgment asset reporting requirements in connection with an arbitration award against him.
Natin Paul v. The Roy F. and Joann Coal Mitte Foundation (No. 03-23-00166-CV; March 13, 2025) arose from a lawsuit between the parties in which an arbitrator found Paul and two corporate entities he controls to be jointly and severally liable to Mitte for about $1.9 million. The district court affirmed the award and entered a TRO and post-judgment injunction prohibiting Paul and the entities from transferring any assets at less than market value. The injunction further required Paul to submit sworn reports each month listing the disposition of any assets exceeding $25,000. Mitte moved for sanctions after Paul did not file the first sworn report, and he didn’t file the second one either. The court eventually granted Mitte’s motion for contempt and motion for sanctions. Prior to a scheduled hearing, Paul submitted the required reports that testified that he made no transfers subject to the order. But Mitte introduced bank records showing that Paul wired $100,000 from his personal account to an NBA basketball player. At a subsequent hearing, Paul admitted the transfer and claimed he didn’t know it violated the injunction. Mitte, however, introduced evidence of other bank accounts that showed much larger transactions. An unamused trial court subsequently issued an order of contempt and commitment, finding both civil and criminal contempt. In a separate order, the court granted sanctions in the amount of $181,760. Paul appealed.
In an opinion by Justice Triana, the court of appeals affirmed. Paul first argued that he could not be ordered to pay a fine for criminal contempt to a private litigant, only to the sovereign. As the court noted, Paul didn’t raise the argument below, so he waived it on appeal. In any event, the trial court awarded sanctions, not a fine for contempt. The purpose of the sanctions was “to compensate the litigant for the expenses incurred in responding to the opposing party’s sanctionable conduct or to deter the opposing party from engaging in future sanctionable conduct,” not to “coerce compliance with a court order or to punish past disobedience of a court order” (citations omitted). Paul next argued that because he was not served with a writ of injunction, the sanctions order should be reversed. The question then became whether a failure to follow the mandatory procedural requirements for a writ of injunction was harmless because the enjoined party already had notice of the injunction. Here the court determined from the record that Paul both had notice and filed responses at each step of the way, including filing an interlocutory appeal challenging the post-judgment injunction. No harm, no foul.
Paul’s third issue involved segregation of attorney’s fees. He asserted that the sanctions order should be reversed because Mitte did not segregate attorney’s fees between those incurred to prosecute the contempt motion and those incurred to prosecute the sanctions motion. He also recycled his criminal fine argument as it applied to attorney’s fees. Once again, Paul never made this argument below and failed to preserve it for review. But even if he had, the trial court didn’t award attorney’s fees to Mitte as a prevailing party on the merits, but as a consequence of Paul’s post-judgment conduct and the fees Mitte incurred as a result of that conduct. In short, there was no requirement for fee segregation under these circumstances. Finally, Paul argued that the sanctions order violated his due process. This argument didn’t fly, either, because Paul had notice of Mitte’s request for sanctions four months in advance of the hearing, appeared at the hearing represented by counsel, and had the opportunity to be heard. Additionally, the fact that Paul belatedly filed the missing reports didn’t excuse his violation of the court’s order to make monthly filings.
This case is part of a long-running feud arising from the Mitte Foundation’s 2011 investment of millions of dollars in Paul’s companies. When things went bad, Mitte sought an accounting and filed suit to get its money back. The parties settled in 2019, but an FBI raid of Paul’s office and the subsequent federal indictment of Paul in a different matter wrecked the settlement. The Mitte case went to arbitration, which resulted in a $1.9 million damages award. Paul contested the arbitration award all the way up to SCOTX, which denied his appeal. Given the history of this case, it seems unlikely that the case will end here.
