Panel Discussion of Receivership Issues
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1 Texas State University 1701 Directors Blvd, Suite 530 Austin, Texas Tel (512) or (800) Fax (512) FY2018 Program West TX JPCA Panel Discussion of Receivership Issues An Educational Endeavor of the Justices of the Peace and Constables Association, Inc. Funded by a grant from the Texas Court of Criminal Appeals
2 COPYRIGHT 2018 Texas Justice Court Training Center. All rights reserved. No part of this work may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying and recording, or by any information storage or retrieval system without the prior written permission of the Texas Justice Court Training Center unless such copying is expressly permitted by federal copyright law. Address inquiries to: Permissions, Texas Justice Court Training Center, 1701 Directors Blvd, Suite 530, Austin, TX 78744
3 Panel Discussion of receivership issues WTJPCA Lubbock April 11, 2018 Randall L. Sarosdy Michael Scott Jerry Jarzombek The Starting Point: A judgment creditor is entitled to receive aid from a court in order to reach property to obtain satisfaction on a judgment if: the judgment debtor owns property that is not exempt from attachment, execution or seizure for the satisfaction of liabilities. -- Section , Civil Practice and Remedies Code; Tanner v. McCarthy, 274 S.W.3d 311, 320 (Tex. App. Houston [1 st Dist.] 2008, no pet.) 1
4 Hb 1066: It is no longer a requirement that the property subject to the Turnover Order cannot be readily attached or levied on by ordinary legal process. We can all agree? Before a court may grant a turnover order, the conditions of Section (a) must exist: The entity that is to receive aid from the court must be a judgment creditor. The court that would grant aid must be one of appropriate jurisdiction. The aid to be given must be in order to reach property to obtain satisfaction on the judgment; and the judgment debtor must own property (including present or future rights to property) that is not exempt from attachment, execution, or seizure for the satisfaction of liabilities. -- Tanner v. McCarthy, 274 S.W.3d 311, 322 (Tex. App. Houston [1 st Dist.] 2008, no pet.); Black v. Shor, 443 S.W.3d 170, 175 (Tex. App. Edinburg 2013, no pet.) 2
5 Notice to the debtor is not required: It is up to the court to decide whether or not to hold a hearing. The court may grant an order ex parte. -- Henderson v. Chrisman, 2016 WL , at *3 (Tex. App. Dallas Apr. 27, 2016, no pet.) Must the trial court have some evidence? Section authorizes a turnover order only upon proof of the necessary facts; therefore, the trial court must have some evidence before it that establishes that the necessary conditions for the application of exist. -- Henderson v. Chrisman, 2016 WL , at *3 (Tex. App. Dallas Apr. 27, 2016, no pet.) What evidence is that? 3
6 What is a Court of Appropriate Jurisdiction? The court that issued the judgment or A court in which a judgment issued by another court was domesticated under the Uniform Enforcement of Foreign Judgments Act -- Tanner v. McCarthy, 274 S.W.3d 311, 322 (Tex. App. Houston [1 st Dist.] 2008, no pet.) Is a turnover order injunctive relief? A Turnover Order is directed to the debtor. But a Justice Court has authority to enforce its judgments under Rule
7 What are the court s options in granting a turnover order? Order the judgment debtor to turn over the designated nonexempt property that is in the debtor s possession, or subject to its control, to a designated sheriff or constable for execution; Otherwise apply the property to the satisfaction of the judgment; or Appoint a receiver with authority to take possession of nonexempt property, sell it and pay the proceeds to the judgment creditor as required to satisfy the judgment. -- Section (b); Williams Farms Produce Sales, Inc. v. R & G Produce Co., 443 S.W.3d 250, 255 (Tex. App. Corpus Christi 2014, no pet.) Sheriff or constable: Court has discretion to order debtor to turn over property to the sheriff or constable? When should the court do this rather than appoint a receiver? 5
8 Otherwise apply the property to the satisfaction of the judgment What does this mean in practice? When should the court use this, if ever? Appointment of a receiver Is appointment of a receiver discretionary? If so, when should the court exercise that discretion and appoint a receiver? 6
9 Court May Not: Order the judgment debtor to turn the property over directly to the judgment creditor. -- Black v. Shor, 443 S.W.3d 170, 175 (Tex. App. Edinburg 2013, no pet.) The order does not: Have to identify specific property to be turned over. But the property must be non-exempt. -- Section (h), Civil Practice and Remedies Code; Black v. Shor, 443 S.W.3d 170, 175 (Tex. App. Edinburg 2013, no pet.) How can the court enforce such an order by contempt? 7
10 Bond: The court may require the receiver to post a bond. Should it do so in all cases? How much should the bond be? Cash on hand: Should court restrict receiver s authority to take cash on hand? Or prohibit this? Potential for violence? -- Moyer v. Moyer, 183 S.W.3d 48, (Tex. App. Austin 2005, no pet.) 8
11 Receiver s fee: Can it be determined in advance? Or must the results be considered in determining a reasonable fee? -- Congleton v. Shoemaker, 2012 WL , at *5 (Tex. App. Beaumont Apr. 12, 2012, pet. denied) Recent application: See handout 9
12 Additional issues: Other legal issues identified by creditors or debtors? Other practical problems? perspective of creditors Further comments, issues or suggested approach from the perspective of creditors 10
13 perspective of debtors Further comments, issues or suggested approach from the perspective of debtors Final comments Areas of agreement? Areas of disagreement? Issues for further discussion? 11
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