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affirming order requiring turnover of property that included present and future rights to proceeds from limited partnerships, LLCs, and other corporate entities
Summary of this case from WC 4Th & Rio Grande, LP v. La Zona Rio, LLCOpinion
No. 05-15-00812-CV
08-03-2016
STEPHEN L. GOODMAN, Appellant v. COMPASS BANK, Appellee
On Appeal from the 44th Judicial District Court Dallas County, Texas
Trial Court Cause No. DC-10-02082-B
MEMORANDUM OPINION
Before Justices Lang-Miers, Fillmore, and Brown
Opinion by Justice Fillmore
Appellant Stephen L. Goodman raises twelve points of error in this appeal of post-judgment orders. Goodman contends the trial court erred in entering a turnover order because: appellee Compass Bank (Compass) failed to present competent evidence Goodman had nonexempt property subject to turnover; the turnover order fails to specify or identify property subject to turnover; Goodman was ordered to turn over documents unrelated to property subject to the turnover statute; the turnover order improperly requires Goodman to turn over later-acquired property; Goodman was ordered to provide an accounting which is not a permitted remedy under the turnover statute and the relief granted was not specifically prayed for by Compass; the turnover order fails to segregate "non-exempt property subject to turnover" from "non-exempt property not subject to turnover"; and the award of attorney's fees to Compass is not supported by evidence and Compass failed to segregate recoverable and non-recoverable attorney's fees. Goodman further contends the trial court erred by entering the turnover order because it does not comply with the exclusive remedy provisions of the charging statutes and by entering a charging order because the charging statutes require a separate cause of action be brought against the party subject to a charging order. Goodman also contends the trial court erred by entering a temporary injunction because Compass failed to post bond or provide Goodman an opportunity to present a defense.
We reverse the portion of the trial court's August 5, 2015 Amended Order for Turnover and Injunctive Relief awarding Compass attorney's fees in the amount of $1650, and we affirm that order in all other respects. We affirm the trial court's June 12, 2015 Charging Order. We dismiss the appeal of the trial court's June 5, 2015 Order for Temporary Injunction as moot.
Background
In the underlying lawsuit, lender Compass sued Goodman, as guarantor, to collect the deficiency remaining after Compass foreclosed on two pieces of real property securing the repayment of two promissory notes. This Court rendered judgment for Compass in the amount of $582,623.07, plus prejudgment and post-judgment interest. Compass Bank v. Goodman, 416 S.W.3d 715, 720 (Tex. App.—Dallas 2013, pet. denied). On June 4, 2015, Compass filed an Application for Turnover Order, Injunctive Relief and Charging Orders (Application for Turnover Order) in aid of enforcement of the judgment against Goodman. The trial court signed an Order for Temporary Injunction on June 5, 2015. Following a hearing, the trial court signed an Order for Turnover and Injunctive Relief (Turnover Order) and a Charging Order on June 12, 2015. On June 23, 2015, Compass filed a Supplemental Application for Amendment of Turnover Order. Following a July 2, 2015 hearing on Compass's Supplemental Application for Amendment of Turnover Order, the trial court signed an Amended Order for Turnover and Injunctive Relief (Amended Turnover Order) on August 5, 2015.
Goodman filed his notice of appeal of the Turnover Order and the Charging Order on July 6, 2015.
Goodman filed his notice of appeal from the Amended Turnover Order on August 11, 2015.
The Amended Turnover Order provides in part:
2. [Goodman] is in possession or has custody or control of present and future rights to property that are not exempt under the laws of the State of Texas and that cannot readily be attached, levied upon by ordinary legal process, and are not exempt from attachment, execution, or seizure for the satisfaction of liabilities, to-wit: the proceeds from all limited partnerships, limited liability companies, and any other corporate entity in which [Goodman] holds an interest, the stock/ownership dividend rights of Fair Meadow Development, Inc. in the name of [Goodman], or in [Compass]'s possession, custody or control, all nonexempt funds in bank accounts in the name of [Goodman], the proceeds from accounts receivable, domestic and from any foreign investment, and any other stocks, bonds, certificates of deposit and mutual funds, any and all cash in [Goodman]'s possession or owed to [Goodman] and/or subject to his control, all collections on accounts receivable, all income of any kind from income producing property, all shares of stock owned in whole or in part by [Goodman] in which [Goodman] has an interest, all promissory notes held by [Goodman], and all certificates of deposit or mutual funds owned by [Goodman], all dividends of any kind, as well as all other nonexempt property in [Goodman]'s possession, custody or control (collectively the "Property").
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IT IS FURTHER ORDERED that [Goodman] shall deliver to Collin County Chief Deputy Mike Missildine, Constable Precinct 4, Collin County, Texas, . . . on or before August 14, 2015, all Property as defined in paragraph 2 above.
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IT IS FURTHER ORDERED that on or before 12 o'clock noon on the second Wednesday after entry of this Order, and similarly on each succeeding second Wednesday, [Goodman] shall deliver to Collin County Chief Deputy Mike Missildine, Constable Precinct 4, Collin County, Texas, . . . for execution all nonexempt Property of [Goodman] later acquired as shown by the accountings ordered herein, together with all documents or records related to the Property. [Goodman] shall also within five (5) days after each delivery of Property to the Constable, serve upon [Compass]'s attorney a written accounting of the identity and amount of Property received by [Goodman], the identity and amount of Property turned over to the Constable, and those respective dates of receipt and turnover. Said notice shall be delivered to [Compass's attorney of record].
Amended Turnover Order
Goodman's first through sixth and ninth through twelfth points of error concern the Amended Turnover Order. Section 31.002(a) of the civil practice and remedies code, commonly referred to as the "turnover statute," Beaumont Bank, N.A. v. Buller, 806 S.W.2d 223, 224 n.1 (Tex. 1991), provides:
In Goodman's first, second, third, sixth, ninth, and tenth points of error, he asserts error with regard to the Turnover Order and the Amended Turnover Order. The Amended Turnover Order provides that the Turnover Order "is amended as reflected herein, and that the turnover obligations of [Goodman] as reflected in this order are continuing in nature until the judgment is satisfied or until further order of this Court." A trial court may render a number of amended turnover orders, all of which could be appealable judgments if they act as mandatory injunctions against the judgment debtor. Bahar v. Lyon Fin. Servs., Inc., 330 S.W.3d 379, 386-87 (Tex. App.—Austin 2010, pet. denied) (citing Schultz v. Fifth Judicial Dist. Court of Appeals, 810 S.W.2d 738, 740 (Tex. 1991)). The rule that an amended order supersedes the order it amends applies to appealable orders rendered in aid of enforcing a judgment. Id. at 386 (when trial court signs amended order, original order becomes a "nullity") (quoting Old Republic Ins. Co. v. Scott, 846 S.W.2d 832, 833 n.2 (Tex. 1993)).
Goodman acknowledges that an amended order renders the superseded order moot. However, Goodman argues this Court should decide the validity of the Turnover Order because he released "over $1,500.00 in property" pursuant to the Turnover Order prior to the Amended Turnover Order taking effect, and if the Amended Turnover Order and the original Turnover Order are void, he is entitled to return of the "over $1,500 in property" released pursuant to the Turnover Order. Goodman does not assert the property he released pursuant to the Turnover Order would not have been subject to release under the provisions of the Amended Turnover Order. The record contains a June 22, 2015 "Inventory" signed by Chief Deputy Mike Missildine, Collin County Constable, that includes receipt from Goodman on June 22, 2015, of $1,421.00 in currency and a check in the amount of $100.00 made payable to Chief Deputy Mike Missildine, and the Amended Turnover Order recites that Goodman is credited for the $1,521 payment he made.
Since the original Turnover Order was superseded by the Amended Turnover Order, our consideration of Goodman's first, second, third, sixth, ninth, and tenth points of error is confined to his arguments regarding the Amended Turnover Order. To the extent he argues error with regard to the original Turnover Order in his first, second, third, sixth, ninth, and tenth points of error, we need not consider those complaints.
(a) A judgment creditor is entitled to aid from a court of appropriate jurisdiction through injunction or other means in order to reach property to obtain satisfaction on the judgment if the judgment debtor owns property, including present or future rights to property, that:
TEX. CIV. PRAC. & REM. CODE ANN. § 31.002(a) (West 2015). The purpose of the turnover statute is to assist a judgment creditor in reaching certain property of a judgment debtor to obtain satisfaction of a judgment. Pilliterri v. Brown, 165 S.W.3d 715, 721 (Tex. App.—Dallas 2004, no pet.). The turnover statute is purely procedural; its purpose is to ascertain whether an asset is either in the judgment debtor's possession or subject to his control. Henderson v. Chrisman, No. 05-14-01507-CV, 2016 WL 1702221, at *2 (Tex. App.—Dallas Apr. 27, 2016, no pet.) (mem. op.).(1) cannot readily be attached or levied on by ordinary legal process; and
(2) is not exempt from attachment, execution, or seizure for the satisfaction of liabilities.
We review a trial court's post judgment turnover order under an abuse of discretion standard. Buller, 806 S.W.2d at 226; Stanley v. Reef Secs., Inc., 314 S.W.3d 659, 663 (Tex. App.—Dallas 2010, no pet.). Under an abuse of discretion standard, challenges to the legal and factual sufficiency of the evidence do not constitute independent grounds of error, but are factors we examine in assessing whether the trial court abused its discretion. Jones v. Am. Airlines, Inc., 131 S.W.3d 261, 266 (Tex. App.—Fort Worth 2004, no pet.). We will reverse a trial court's order only if we conclude that the court acted in an unreasonable or arbitrary manner, that is, without reference to any guiding rules and principles. Buller, 806 S.W.2d at 226.
Evidence of Nonexempt Property
Issuance of a turnover order requires a factual showing that the judgment debtor has nonexempt property that is not readily subject to ordinary execution. See Black v. Shor, 443 S.W.3d 170, 181 (Tex. App.—Corpus Christi 2013, pet. denied). In his first point of error, Goodman asserts the trial court erred in entering the Amended Turnover Order because Compass failed to present competent evidence Goodman had nonexempt property subject to turnover. Goodman contends documents attached to Compass's Application for Turnover Order were not authenticated and appear to be incomplete, and Compass's counsel failed to state a basis for personal knowledge sufficient to "prove up" any of those documents and his verification of Compass's Application for Turnover Order is not competent evidence. Compass responds that the record contains substantial competent evidence that Goodman had nonexempt property subject to turnover.
The turnover statute does not require notice and a hearing prior to entry of a trial court order granting relief. TEX. CIV. PRAC. & REM. CODE ANN. § 31.002(a); Tanner v. McCarthy, 274 S.W.3d 311, 322 n.21 (Tex. App.—Houston [1st Dist.] 2008, no pet.) (no requirement under section 31.002 that trial court conduct hearing to receive evidence on each specific asset subject to turnover prior to granting relief under section 31.002(b)). Section 31.002 "does not specify or restrict the manner in which evidence may be received in order for a trial court to determine whether the conditions of [section] 31.002(a) exist, nor does it require that such evidence be in any particular form, that it be at any particular level of specificity, or that it reach any particular quantum before the trial court may grant relief under section 31.002." Chrisman, 2016 WL 1702221, at *3.
Goodman asserts there is no evidence or legally insufficient evidence of nonexempt property subject to turnover. In determining a "no-evidence" issue, "we must view the evidence in a light that tends to support the finding of the disputed fact and disregard all evidence and inferences to the contrary." Bradford v. Vento, 48 S.W.3d 749, 754 (Tex. 2001). Anything more than a scintilla of evidence is legally sufficient to support a challenged finding. Fritz Mgmt., LLC v. Huge Am. Real Estate, Inc., No 05-14-00681-CV, 2015 WL 3958292, at *1 (Tex. App.—Dallas June 30, 2015, pet. dism'd w.o.j.) (mem. op.) (citing Formosa Plastics Corp. USA v. Presidio Eng'rs & Contractors, 960 S.W.2d 41, 48 (Tex. 1998)). More than a scintilla of evidence exists if the evidence furnishes some reasonable basis for differing conclusions by reasonable minds about the existence of a vital fact. Rocor Int'l, Inc. v. Nat'l Union Fire Ins. Co., 77 S.W.3d 253, 262 (Tex. 2002).
Compass filed a verified Application for Turnover Order. Cf. Shor, 443 S.W.3d at 181 (judgment creditors did not support their applications for turnover relief by verification or affidavit). Included in the documents attached to that Application for Turnover Order are "Goodman's Balance Sheet As of December 31, 2014," bearing Bates numbers Goodman_PJ_000548-549, which lists bank accounts, including at least one checking account, two money market accounts, and investments in at least one limited liability company; Goodman's "Statement of Revenues and Expenses for the Year ended December 31, 2014," bearing Bates Numbers Goodman_PJ_000550-551, which included a category for partnership distribution income and interest income from a checking account; and a portion of Goodman's 2013 federal income tax return, bearing Bates number Goodman_PJ_000564, which references income from business entities, including partnerships.
In a footnote without citation to authority, Goodman states Compass "does provide unauthenticated documents, of unknown provenance" which were attached to the Application for Turnover Order. Contrary to his statement that the "provenance" of the documents is unknown, in Goodman's special exception and objections to Compass's Application for Turnover Order, he acknowledged production of documents with Bates numbers Goodman_PJ_000104-374, 000502-512, and 000548-709 in response to post-judgment requests for production. Further, with regard to the statement in the footnote that the documents are unauthenticated and contain hearsay, Goodman fails to support the statement with citation to the record or authority. The Texas Rules of Appellate Procedure control the required contents and organization of an appellant's brief. See TEX. R. APP. P. 38.1; ERI Consulting Eng'rs, Inc. v. Swinnea, 318 S.W.3d 867, 880 (Tex. 2010). An appellant's brief must contain, among other things, a clear concise argument for the contentions made, with appropriate citations to authorities and to the record. TEX. R. APP. P. 38.1(i). An appellant's failure to cite legal authority or provide substantive analysis of a legal issue results in waiver of the complaint. Fredonia State Bank v. Gen. Am. Life Ins. Co., 881 S.W.2d 279, 284 (Tex. 1994) (observing error may be waived by inadequate briefing); Huey v. Huey, 200 S.W.3d 851, 854 (Tex. App.—Dallas 2006, no pet.)..
The Amended Turnover Order states that the trial court considered evidence. The Amended Turnover Order indicated Goodman's nonexempt property subject to turnover included the proceeds from all limited partnerships, limited liability companies, or other corporate entity in which Goodman holds an interest; stock or ownership dividend rights of Fair Meadow Development, Inc. in Goodman's name; nonexempt funds in bank accounts in Goodman's name; and cash in Goodman's possession or owed to him. Because there is some evidence of a substantive and probative character that Goodman had nonexempt property subject to turnover, we conclude the trial court did not abuse its discretion by entering the Amended Turnover Order on that basis. See Tanner, 274 S.W.3d at 321 (trial court will not be reversed for abuse of discretion so long as there is some evidence of a substantive and probative character to support the decision). We resolve Goodman's first point of error against him.
Property Subject to Turnover
In his second point of error, Goodman asserts the trial court erred in entering the Amended Turnover Order because Compass failed to specify or identify property that was subject to turnover. Compass responds that the Amended Turnover Order adequately specifies and identifies property subject to turnover.
Section 31.002(h) of the turnover statute, as enacted in 2005, provides that "[a] court may enter or enforce an order under this section that requires the turnover of nonexempt property without identifying in the order the specific property subject to turnover." TEX. CIV. PRAC. & REM. CODE ANN. § 31.002(h); see In re Estate of Hutchins, 391 S.W.3d 578, 584 (Tex. App.—Dallas 2012, orig. proceeding). "Subsection (h) of section 31.002 governs the language of the [turnover] order, providing a trial court the discretion to enter or to enforce an order requiring turnover of nonexempt property without identifying in the order the specific property subject to turnover." Tanner, 274 S.W.3d at 321; see also Blunck v. Blunck, No. 03-15-00128-CV, 2016 WL 690669, at *4 (Tex. App.—Austin Feb. 18, 2016, no pet. h.) (mem. op.) (turnover statute section 31.002(h) expressly allows trial court to enter or enforce turnover order without identifying in the order the specific property subject to turnover); W.T.J. v. S.L.S., No. 03-10-00335-CV, 2012 WL 3793333, at *3 (Tex. App.—Austin Aug. 29, 2012, no pet.) (mem. op.) (turnover order itself need not specify the property subject to turnover).
Applying the plain language of subsection (h) of section 31.002, we conclude the trial court was not required to identify the specific property subject to the turnover order. See In re Estate of Hutchins, 391 S.W.3d at 584. The Amended Turnover Order was sufficiently specific with respect to the categories and types of nonexempt property in Goodman's possession, custody, or control that were subject to turnover. We conclude the trial court did not abuse its discretion by entering the Amended Turnover Order on the basis that it failed to sufficiently identify the specific property subject to the turnover order. See Buller, 806 S.W.2d at 226. We resolve Goodman's second point of error against him.
Segregation of Nonexempt Property from Exempt Property
In his eleventh point of error, Goodman contends the trial court erred in entering the Amended Turnover Order because it fails to segregate "non-exempt property subject to turnover" from "non-exempt property not subject to turnover." Compass responds that Goodman has the burden to show that property is exempt from execution, and the Amended Turnover Order specifically excludes exempt property.
Property may be subject to turnover if it is owned by the judgment debtor, cannot be readily attached or levied on by ordinary legal process, and is not exempt from attachment, execution, or seizure for the satisfaction of liabilities. See TEX. CIV. PRAC. & REM. CODE ANN. § 31.002(a). "Once a judgment creditor traces the assets to the judgment debtor, a presumption arises that those assets are in the debtor's possession and the burden then shifts to the debtor to account for those assets." Pilliteri 165 S.W.3d at 722. "Similarly, if a judgment debtor claims that an asset is exempt, it is the debtor's burden to prove the exemption [from turnover]." Id. at 722-23; see Reef Secs., Inc., 314 S.W.3d at 667; see also TEX. CIV. PRAC. & REM. CODE ANN. § 31.002(f) (under turnover statute, court may not enter or enforce turnover order that requires turnover of proceeds of, or disbursement of, exempt property).
Compass put forth evidence of assets in Goodman's possession. If Goodman claimed an asset was exempt, it was his burden to prove the exemption. See Pilliteri, 165 S.W.3d at 722-23. In Goodman's June 12, 2015 Motion for Continuance, he stated he needed "time to research and demonstrate which property is exempt and/or seek an [sic] Rule 11 agreement as to specific property that is exempt." The record contains no further proof by Goodman of the existence of exempt assets. At the June 12, 2015 hearing on Compass's Application for Turnover Order, Goodman's counsel argued there were exempt assets in the form of Goodman's Social Security retirement payments, an individual retirement account (IRA), personal wages, and a generation-skipping trust. On the record, Compass's counsel clarified that Compass was not pursuing a turnover of, and stipulated it was specifically excluding from nonexempt property for which it sought a turnover order, Goodman's Social Security retirement payments, IRA assets, personal wages, and a generation-skipping trust. The Amended Turnover Order specifically provides that it "covers only nonexempt property of [Goodman] and is not intended to cover any exempt property, including any trust determined to be exempt."
The Record does not contain a transcript of the July 2, 2015 hearing of Compass's Supplemental Application for Amendment of Turnover Order. At oral submission, Goodman's counsel stated there was no evidence admitted at that hearing and Compass's counsel stated there was no live testimony at that hearing.
In light of Goodman's lack of proof of exempt property, the acknowledgment and stipulation by Compass's counsel that Compass was not seeking turnover of the assets Goodman's counsel asserted were exempt, and the language of the Amended Turnover Order specifically limiting its application to nonexempt property only, we conclude the trial court did not abuse its discretion by entering the Amended Turnover Order for the reason it allegedly fails to segregate "non-exempt property subject to turnover" from "non-exempt property not subject to turnover." We resolve Goodman's eleventh point of error against him.
Turnover of Documents
The Amended Turnover Order provides Goodman is to deliver copies of all personal bank statements not already delivered within five days after receipt by Goodman on an ongoing basis. In his third point of error, Goodman argues the trial court erred in entering the Amended Turnover Order because it ordered him to turn over documents unrelated to property subject to the turnover statute. In his fifth point of error, Goodman contends the trial court erred in entering the Amended Turnover Order because it requires him to continuously produce documents unrelated to any property subject to turnover. Goodman argues that, because Compass has not demonstrated Goodman's bank accounts contain any nonexempt property, the trial court abused its discretion by ordering him to turn over personal bank statements and by ordering him to turn over those statements on an ongoing basis until the judgment is satisfied.
With regard to Goodman's argument the trial court erred by ordering in the Amended Turnover Order that he provide bank statements for any IRA, we have previously addressed this argument in connection with Goodman's eleventh point of error. Compass's counsel stipulated it was specifically excluding Goodman's IRA assets from nonexempt property for which it sought a turnover order, and the Amended Turnover Order specifically provides that it "covers only nonexempt property of [Goodman] and is not intended to cover any exempt property . . . ."
Goodman's third and fifth points of error ignore his "Statement of Revenues and Expenses for the Year ended December 31, 2014," produced in response to post-judgment discovery, which included a reference to nonexempt checking account interest income. Section 31.002(b)(1) of the turnover statute provides that the court may order the judgment debtor "to turn over nonexempt property that is in the debtor's possession or is subject to the debtor's control, together with all documents or records related to the property . . . ." TEX. CIV. PRAC. & REM. CODE ANN. § 31.002(b)(1); see also Europa Int'l, Ltd. v. Direct Access Trader Corp., 315 S.W.3d 654, 657, n.3 (Tex. App.—Dallas 2010, no pet.) (evidence was insufficient to support trial court's findings that ordering judgment debtor to deliver its corporate documents and paperwork would not result in identifying any assets subject to turnover; trial court overlooked fact that turnover statute specifically allows for turnover of corporate documents and other papers (citing TEX. CIV. PRAC. & REM. CODE ANN. § 31.002(b)).
On this record, the trial court could reasonably conclude that ordering Goodman to provide bank statements was necessary to effectuate turnover of nonexempt interest income. See TEX. CIV. PRAC. & REM. CODE ANN. § 31.002(a). Further, the trial court could reasonably conclude that ordering Goodman to provide bank statements on an ongoing basis was necessary to effectuate turnover of nonexempt interest income to which Goodman had a future right. See id. § 31.002(b)(1). Accordingly, we conclude the trial court acted in conformity with guiding rules and principles and did not abuse its discretion by ordering Goodman to provide his personal bank statements and to do so on an ongoing basis. See Buller, 806 S.W.2d at 226. We resolve Goodman's third and fifth points of error against him.
Later-Acquired Property
Goodman asserts in his fourth point of error that the trial court erred in entering the Amended Turnover Order because it requires Goodman to turn over later-acquired property to which Goodman had no current or future right at the time that order was signed. Specifically, Goodman's complaint relates to the provision of the Amended Turnover Order which provides that he shall deliver to Collin County Chief Deputy Mike Missildine "for execution all nonexempt Property of [Goodman] later acquired as shown by the accountings ordered herein, together with all documents or records related to the Property."
"The Texas Turnover Statute allows a creditor to seek aid from a court of appropriate jurisdiction through injunction or other means to reach nonexempt property (including present or future rights to such property) owned by a judgment debtor, when the property cannot readily be attached or levied on by ordinary legal process." Ex parte Prado, 911 S.W.2d 849, 849 (Tex. App.—Austin 1995, orig. proceeding); see Daniels v. Pecan Valley Ranch, Inc., 831 S.W.2d 372, 384 (Tex. App.—San Antonio 1992, writ denied) (court had jurisdiction to issue turnover order with regard to debtor's future right to annuity payments because annuity was subject to possession or control of judgment debtor).
The nonexempt Property in Goodman's possession, custody, or control, or in which he holds a present or future right, is identified in the Amended Turnover Order. Contrary to Goodman's contention, we do not construe the complained-of provision of the Amended Turnover Order to require Goodman to turn over nonexempt property in which he held no present or future right at the time the Amended Turnover Order was signed. See TEX. CIV. PRAC. & REM. CODE ANN. § 31.002(a). Accordingly, we conclude the trial court acted in conformity with guiding rules and principles and did not abuse its discretion by ordering Goodman to turn over nonexempt property in which he held a present or future right at the time the Amended Turnover Order was signed. See Buller, 806 S.W.2d at 226. We resolve Goodman's fourth point of error against him.
Accounting and Relief Requested
Goodman's ninth and tenth points of error are related. In his ninth point of error, Goodman argues the trial court erred in entering the Amended Turnover Order because it grants relief not specifically prayed for by Compass in its Application for Turnover Order and Supplemental Application for Amendment of Turnover Order. In his tenth point of error, Goodman contends the trial court erred because the Amended Turnover Order requires him to provide an accounting which is not a permitted remedy under the turnover statute.
Accounting
The Amended Turnover Order provides in pertinent part:
IT IS FURTHER ORDERED that on or before 12 o'clock noon on the second Wednesday after entry of this Order, and similarly on each succeeding second Wednesday, [Goodman] shall deliver to Collin County Chief Deputy Mike Missildine, Constable Precinct 4, Collin County, Texas, . . . for execution all nonexempt Property of [Goodman] later acquired as shown by the accountings ordered herein, together with all documents or records related to the Property. [Goodman] shall also within five (5) days after each delivery of Property to the Constable, serve upon [Compass]'s attorney a written accounting of the identity and amount of Property received by [Goodman], the identity and amount of Property turned over to the Constable, and those respective dates of receipt and turnover.
With regard to his tenth point of error, Goodman contends the trial court erred by ordering an accounting of the identity and amount of Property received by him, the identity and amount of Property turned over to the Constable, and the respective dates of receipt and turnover, because the turnover statute permits only three specified actions by a trial court and does not permit a trial court to compel a debtor to prepare an accounting of any kind. Therefore, Goodman asserts, the trial court erred by ordering relief not permitted by the turnover statute. Compass responds that the trial court's order requiring Goodman to provide a written description of the identity and amount of property coming into his possession is not contrary to language of the turnover statute or case authority interpreting relevant language of the turnover statute.
Section 31.002(a) of the turnover statute provides that "[a] judgment creditor is entitled to aid from a court of appropriate jurisdiction through injunction or other means in order to reach property to obtain satisfaction of the judgment if the judgment debtor owns property, including present or future rights to property" that cannot readily be attached or levied on by ordinary legal process and is not exempt from attachment. TEX. CIV. PRAC. & REM. CODE ANN. § 31.002(a). "Although the turnover statute does not specifically provide that a trial court can compel a judgment debtor to execute documents, the statute does not limit the trial court's powers to ordering the turnover of property and documents. Rather, the statute provides that a judgment creditor is entitled to aid from a court through injunction 'or other means' to reach the debtor's property." Burns v. Miller, Hiersche, Martens & Hayward, P.C., 948 S.W.2d 317, 328 (Tex. App.—Dallas 1997, writ denied) (quoting TEX. CIV. PRAC. & REM. CODE ANN. § 31.002(a)); see Newman v. Toy, 926 S.W.2d 629, 632 (Tex. App.—Austin 1996, writ denied) (trial court's order that judgment debtor file monthly accounting of income and expenses and existence of any deferred or unpaid income to which he was entitled did not exceed scope of relief allowed by turnover statute because trial court could reasonably conclude requirement was necessary to effectuate other provisions of turnover order); see also Ex parte Johnson, 654 S.W.2d 415, 419 (Tex. 1983) (orig. proceeding) (turnover order required a complete accounting and return of items, with cash assets to be deposited in registry of court, and non-monetary items turned over to judgment creditors). We conclude a trial court has the authority under the turnover statute to require a judgment debtor to provide an accounting of property within his possession, custody, or control as a means to effectuate other provisions of a turnover order. See Burns, 948 S.W.2d at 328 ("We conclude a trial court has authority to compel a debtor to execute documents that will aid in collecting a judgment debt.").
On this record, the trial court could reasonably conclude that ordering Goodman to provide the accounting as set out in the Amended Turnover Order was necessary to effectuate provisions of that order. Accordingly, we conclude the trial court acted in conformity with guiding rules and principles and did not abuse its discretion by ordering Goodman to provide an accounting as set out in the Amended Turnover Order. See Buller, 806 S.W.2d at 226. We resolve Goodman's tenth point of error against him.
Relief Requested by Compass
With regard to his ninth point of error, Goodman contends the Amended Turnover Order requires him to provide an accounting to Compass of later-acquired property although Compass did not request that Goodman provide an accounting. Compass responds that Goodman's complaint that the Amended Turnover Order requires him to identify the type and amount of property received by him and turned over to the Constable and the respective dates of receipt and turnover is ill-founded because Compass requested such relief in its Application for Turnover Order and Supplemental Application for Amendment of Turnover Order.
In its Supplemental Application for Amendment of Turnover Order, Compass specifically pleaded that the trial court amend the Turnover Order to reflect the order continues until satisfaction of the underlying judgment or until further order of the trial court, and Compass requested, among other things, the following relief:
Turnover relief be granted as described above and that all assets and documentation be delivered to Chief Deputy Mike Missildine as described above;Compass based those requests for relief on section 31.002(a) of the turnover statute entitling a judgment creditor to aid from the trial court in obtaining satisfaction of a judgment against a judgment debtor. See TEX. CIV. PRAC. & REM. CODE ANN. § 31.002(a).
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[Goodman] be ordered to disclose the full nature, extent, valuation and location of all property rights wherever situated, whether held in [Goodman]'s name or in the name of others, to the extent not already disclosed or which may accrue or occur in the future.
Compass also requested this relief in its Application for Turnover Order.
On this record, the trial court could reasonably conclude that ordering Goodman to provide the accounting as set out in the Amended Turnover Order was relief sought by Compass's request that Goodman be ordered to disclose the nature, extent, valuation and location of property rights to the extent not already disclosed or which may accrue or occur in the future. See id.; see also Ex parte Johnson, 654 S.W.2d at 419; Toy, 926 S.W.2d at 632. Accordingly, we resolve Goodman's ninth point of error against him.
Attorney's Fees
In the Amended Turnover Order, the trial court awarded Compass $1650 as reasonable and necessary attorney's fees. In his twelfth point of error, Goodman asserts the trial court erred in awarding attorney's fees because the amount of fees awarded is not supported by evidence and Compass failed to segregate recoverable and non-recoverable attorney's fees. At oral submission of this appeal, Compass's counsel stated Compass waives any claim for the $1650 attorney's fees awarded in the Amended Turnover Order.
Accordingly, we resolve Goodman's twelfth point of error in his favor.
Charging Order
Sections 101.112 and 153.256 of the Texas Business Organizations Code (the charging statutes) address the authority of a trial court to issue orders charging a judgment debtor's membership interest in a limited liability company or partnership interest, respectively. See TEX. BUS. ORGS. CODE ANN. §§ 101.112, 153.256 (West 2012). In a charging order, a court "charges" a membership or partnership interest such that distributions to which the judgment debtor would otherwise be entitled are made as directed by the court. See id. §§ 101.112(a), 153.256(a). On June 12 2015, the trial court signed a Charging Order against the limited partnerships Steve & Dee Investments, Ltd., Goodman Land Advisors, Ltd., and J.D. Goodman, Jr. Family Partners, Ltd., and the limited liability companies Bronson Holdings, L.L.C., and J.D. Goodman, Jr. Management, L.C. The Amended Turnover Order provides the Property subject to turnover by Goodman includes Goodman's present and future rights to the proceeds from limited partnerships, limited liability companies, and any other corporate entity in which he holds an interest.
Section 101.112 provides:
(a) On application by a judgment creditor of a member of a limited liability company or of any other owner of a membership interest in a limited liability company, a court having jurisdiction may charge the membership interest of the judgment debtor to satisfy the judgment.TEX. BUS. ORGS. CODE ANN. § 101.112.
(b) If a court charges a membership interest with payment of a judgment as provided by Subsection (a), the judgment creditor has only the right to receive any distribution to which the judgment debtor would otherwise be entitled in respect of the membership interest.
(c) A charging order constitutes a lien on the judgment debtor's membership interest. The charging order lien may not be foreclosed on under this code or any other law.
(d) The entry of a charging order is the exclusive remedy by which a judgment creditor of a member or any other owner of a membership interest may satisfy a judgment out of the judgment debtor's membership interest.
(e) This section may not be construed to deprive a member of a limited liability company or any other owner of a membership interest in a limited liability company of the benefit of any exemption laws applicable to the membership interest of the member or owner.
(f) A creditor of a member or of any other owner of a membership interest does not have the right to obtain possession of, or otherwise exercise legal or equitable remedies with respect to, the property of the limited liability company.
Section 153.256 provides:
(a) On application by a judgment creditor of a partner or of any other owner of a partnership interest, a court having jurisdiction may charge the partnership interest of the judgment debtor to satisfy the judgment.TEX. BUS. ORGS. CODE ANN. § 153.256.
(b) To the extent that the partnership interest is charged in the manner provided by Subsection (a), the judgment creditor has only the right to receive any distribution to which the judgment debtor would otherwise be entitled in respect of the partnership interest.
(c) A charging order constitutes a lien on the judgment debtor's partnership interest. The charging order lien may not be foreclosed on under this code or any other law.
(d) The entry of a charging order is the exclusive remedy by which a judgment creditor of a partner or of any other owner of a partnership interest may satisfy a judgment out of a judgment debtor's partnership interest.
(e) This section does not deprive a partner or other owner of a partnership interest of a right under exemption laws with respect to the judgment debtor's partnership interest.
(f) A creditor of a partner or of any other owner of a partnership interest does not have the right to obtain possession of, or otherwise exercise legal or equitable remedies with respect to, the property of the limited partnership.
Exclusive Remedy Provision of Charging Statutes
In his sixth point of error, Goodman argues the trial court erred in entering the Amended Turnover Order because it fails to comply with the exclusive-remedy provisions of the charging statutes. More specifically, Goodman argues that the portion of the Amended Turnover Order requiring him to turn over "the proceeds from all limited partnerships, limited liability companies, and any other corporate entity in which [he] holds an interest" is improper because the exclusive remedy for satisfying a judgment out of a partnership interest or membership interest in a limited liability company is to obtain a charging order. Compass responds the Turnover Order and Amended Turnover Order do not fail to comply with the exclusive-remedy provision of the charging statutes. We review a trial court's post-judgment charging order under an abuse of discretion standard. See TCAP Corp. v. Gervin, 320 S.W.3d 549, 553 (Tex. App.—Dallas 2010, no pet.); Spates v. Office of Attorney Gen., No. 14-14-00741-CV, 2016 WL 354417, at *8 (Tex. App.—Houston [14th Dist.] Jan. 28, 2016, no pet.).
"A charging order is a creation of statute in Texas, and its sole purpose is to facilitate collection of a judgment from a judgment debtor who owns an interest in a business entity." Jack M. Sanders Family Ltd. P'ship v. Roger T. Fridholm Revocable Living Trust, 434 S.W.3d 236, 240 (Tex. App.—Houston [1st Dist.] 2014, no pet.). Entry of a charging order is the exclusive remedy by which a judgment creditor may satisfy a judgment out of the judgment debtor's membership interest in a limited liability company or partnership interest. TEX. BUS. ORGS. CODE ANN. §§ 101.112, 153.256. A charging order entitles a judgment creditor to receive any distribution from a limited liability company or partnership, to which the judgment debtor is entitled, directly from the limited liability company or partnership when distributed. Id. §§ 101.112(b), 153.256(b); see also Reef Secs., 314 S.W.3d at 665; Spates, 2016 WL 354417, at *8 (only if, and when, limited liability company makes a distribution, will distributed funds become debtor's nonexempt personal property subject to a charging order).
"A member of a limited liability company or an assignee of a membership interest in a limited liability company does not have an interest in any specific property of the company." Id. § 101.106(b) (West 2012). Likewise, "[p]artnership property is not property of the partners. A partner or partner's spouse does not have an interest in partnership property." Id. § 152.101 (West 2012); see also Reef Secs., Inc., 314 S.W.3d at 664 ("A 'partnership interest' is not an interest in any specific partnership property. Instead, it is the partner's right to receive his distributive share of the profits and surpluses of the partnership.") (internal citation omitted).
Nothing in the plain language of sections 101.112 and 153.256 precludes a judgment creditor from seeking the turnover of proceeds from a limited liability company or partnership distribution after that distribution has been made and the proceeds are in the judgment debtor's possession. See TEX. BUS. ORGS. CODE ANN. §§ 101.112, 153.256; Reef Secs., Inc., 314 S.W.3d at 665. This Court has previously concluded a judgment creditor is not precluded from seeking a turnover order requiring a debtor partner to turn over the proceeds of a partnership distribution after the debtor has received those proceeds. Reef Secs., Inc., 314 S.W.3d at 665. Further, in Chrisman, we noted the language of section 101.112 mirrors the language of section 153.256, and we applied the reasoning of Reef Secs., Inc. in concluding there is nothing in the plain language of section 101.112 that precludes a judgment creditor from seeking the turnover of proceeds from a limited liability company membership distribution if, and when, such a distribution is made and in the judgment debtor's possession. Chrisman, 2016 WL 1702221, at *2.
Having previously concluded a judgment creditor is not precluded from seeking a turnover order requiring a judgment debtor member of a limited liability company or partner to turn over the proceeds of a distribution from a limited liability company or partnership after the debtor has received those proceeds, we conclude the trial court did not abuse its discretion by ordering in the Amended Turnover Order that Property subject to turnover by Goodman includes his present and future rights to "the proceeds from all limited partnerships, limited liability companies, and any other corporate entity in which [he] holds an interest." We resolve Goodman's sixth point of error against him.
Charging Order Obtained in Case Where Judgment Rendered
In his seventh point of error, Goodman argues the trial court erred in entering the charging order against his present and future rights to the proceeds of a distribution from a limited liability company or partnership in the same action in which the original judgment was entered. Compass responds that it is unnecessary to institute an independent cause of action against an entity subject to a charging order.
In connection with this issue, Goodman argues that because "charging orders compel a non-party to the litigation to undertake certain actions, much like a writ of garnishment, it makes sense that a separate action must be brought against the charged entity." Goodman claims that only through an independent action will a charged party be afforded proper notice and have an opportunity to challenge the jurisdiction of the trial court.
Compass responds to Goodman's arguments by arguing that the charging statutes do not require any process or independent proceeding against the charged party; to the extent a writ of garnishment is, as Goodman claims, comparable to the procedure for issuance of a charging order, rule of civil procedure 658 provides that an application for the writ may be brought in the underlying lawsuit; and no due process principles are implicated by issuance of a charging order in the underlying proceeding. See TEX. R. CIV. P. 658.
Section 101.112 (a) of the business and commerce code provides as follows:
On application by a judgment creditor of a member of a limited liability company . . . a court having jurisdiction may charge the membership interest of the judgment debtor to satisfy the judgment.TEX. BUS. ORG. CODE § 101.112 (a). In substantively identical language, section 153.256(a) of the business organization code provides as follows:
On application by a judgment creditor of a partner . . . a court having jurisdiction may charge the partnership interest of the judgment debtor to satisfy the judgment.TEX. BUS. ORG. CODE § 153.256 (a).
These statutory provisions indicate a charging order may be obtained "on application." We find no requirement that an independent lawsuit must be initiated by the judgment creditor against the limited liability company or partnership to be charged. The absence of such a requirement is not surprising, because a judgment creditor seeking a charging order has no justiciable cause of action against the entity to be charged. Further, no due process principles are implicated by issuance of a charging order in the absence of an independent proceeding against the entity to be charged because the practical effect of the charging order is that the charged entity must deliver to the judgment creditor only those distributions, if any, otherwise due to the judgment debtor. If no distribution is authorized to be made to limited liability company members or partners, the charged entity has no obligation under the charging order.
We will not read into the charging statutes a limitation not expressly imposed by the legislature. See Lippincott v. Whisenhunt, 462 S.W.3d 507, 509 (Tex. 2015) (we interpret unambiguous statutory language according to its plain meaning); see also Cole v. Gwendolyn Parker, Inc., No. 05-13-01655-CV, 2015 WL 4626750, at *5 (Tex. App.—Dallas Aug. 4, 2015, no pet.) (mem. op.). We conclude the charging statutes do not require an independent lawsuit against the limited liability company or partnership sought to be charged. See Gervin, 320 S.W.3d at 553 (this Court found no jurisdictional impediment to affirming order denying application for both turnover order and charging order in same proceeding); Chrisman, 2016 WL 1702221, at *3 (this Court recognized turnover order was a proper mechanism for reaching proceeds of limited liability company distribution in judgment debtor's possession, and charging order was not sole means of reaching those proceeds, thus impliedly recognizing remedy available through charging order could be sought in same proceeding); see also Spates, 2016 WL 354417, at *7 ("In the usual case, a judgment [creditor] would seek a charging order in the same court in which the underlying judgment was obtained, either during the original suit or in a subsequent ancillary proceeding.").
We conclude the trial court did not err by signing the charging order in the action in which the original judgment against Goodman had been rendered. We resolve Goodman's seventh point of error against him.
Temporary Injunction
In his eighth point of error, Goodman contends the trial court erred in entering the June 5, 2015 Order for Temporary Injunction because Compass failed to post a bond or provide him an opportunity to present a defense. Compass responds that this issue is moot because the temporary injunction by its own terms expired upon the entry of the Turnover Order which included injunctive relief.
The Temporary Injunction provided:
Counsel for [Goodman] was unable to attend the hearing which was rescheduled for June 12, 2015 at 2:30 p.m. In order to protect the interest of [Compass] and to maintain the status quo, this Court enters the below Temporary Injunction pending the rescheduled hearing on [Compass]'s Application [for Turnover Order, Injunctive Relief, and Charging Order].
IT IS THEREFORE ORDERED that [Goodman] and his agents, servants, employees, attorneys, and those persons in act or consort or participation with him, be and hereby are immediately enjoined and restrained from conveying, secreting, moving, disposing or transferring any of the following described Property until further hearing by or order of the Court[.]
"A temporary injunction's purpose is to preserve the status quo of the litigation's subject matter pending a trial on the merits." Butnaru v. Ford Motor Co., 84 S.W.3d 198, 204 (Tex. 2002); see also Graham Mortg. Corp. v. Hall, 307 S.W.3d 472, 477 (Tex. App.—Dallas 2010, no pet.) (at hearing upon request for temporary injunction, only question before trial court is whether applicant is entitled to preservation of status quo of subject matter of suit pending trial on the merits). Thus, a temporary injunction generally expires upon rendition of a final judgment by the trial court. Perry Bros. v. Perry, 734 S.W.2d 211, 212 (Tex. App.—Dallas 1987, no writ). The condition or contingency which marks the duration of a temporary injunction is ordinarily set by the trial court in the injunction itself. Id.
"A temporary injunction becomes moot when it becomes inoperative due to a change in status of the parties or the passage of time, or because it has expired." Wolf v. Starr, 456 S.W.3d 307, 309 (Tex. App.—El Paso 2015, no pet.) (quoting Faddoul, Glasheen & Valles, P.C. v. Oaxaca, 52 S.W.3d 209, 212 (Tex. App.—El Paso 2001, no pet.)). "Appellate courts are prohibited from reviewing an injunction that has become moot." Id.
Here, the Temporary Injunction terminated as a result of further hearing by the trial court and by the trial court's signing the Turnover Order, including injunctive relief, which was then superseded by the Amended Turnover Order, also including injunctive relief. Therefore, Goodman's appeal relating to the granting of the temporary injunction is moot.
In his reply brief on appeal, Goodman raises an issue regarding injunctive relief contained in the trial court's Turnover Order and Amended Turnover Order. However, Goodman raised no issue in his appellate brief regarding injunctive relief other than his point of error addressing the Temporary Injunction. In general, an issue raised for the first time in a reply brief may not be considered. See The Burrescia Family Revocable Living Trust v. City of Dallas, No. 05-14-01311-CV, 2016 WL 1393989, at *4 n.6 (Tex. App.—Dallas April 7, 2016, pet. denied) (mem. op.); Humphries v. Advanced Print Media, 339 S.W.3d 206, 208 (Tex. App.—Dallas 2011, no pet.); Dallas Cty. v. Gonzales, 183 S.W.3d 94, 104 (Tex. App.—Dallas 2006, pets. denied) ("The Texas Rules of Appellate Procedure do not allow an appellant to include in a reply brief a new issue in response to some matter pointed out in the appellee's briefs but not raised by the appellant's original brief."). --------
We conclude we lack jurisdiction to consider the trial court's Order for Temporary Injunction, and we dismiss the portion of the appeal challenging the Order for Temporary Injunction as moot. See City of Dallas v. Brown, 373 S.W.3d 204, 210-11 (Tex. App.—Dallas 2012, pet. denied).
Conclusion
We reverse the portion of the August 15, 2015 Amended Turnover Order awarding Compass attorney's fees in the amount of $1650, and we affirm the Amended Turnover Order in all other respects. We affirm the trial court's June 12, 2015 Charging Order. We dismiss the appeal of the June 5, 2015 Order for Temporary Injunction as moot.
/Robert M. Fillmore/
ROBERT M. FILLMORE
JUSTICE 150812F.P05
JUDGMENT
On Appeal from the 44th Judicial District Court, Dallas County, Texas, Trial Court Cause No. DC-10-02082-B.
Opinion delivered by Justice Fillmore, Justices Lang-Miers and Brown participating.
In accordance with this Court's opinion of this date, the August 15, 2015 Amended Order for Turnover and Injunctive Relief is AFFIRMED in part and REVERSED in part. We REVERSE that portion of the Amended Order for Turnover and Injunctive Relief awarding appellee Compass Bank attorney's fees of $1650. In all other respects, the Amended Order for Turnover and Injunctive Relief is AFFIRMED. We AFFIRM the June 12, 2015 Charging Order. We DISMISS the appeal of the June 5, 2015 Order for Temporary Injunction as moot.
It is ORDERED that each party bear its own costs of this appeal. Judgment entered this 3rd day of August, 2016.