Opinion issued April 27, 2007

In The

Court of Appeals

For The

First District of Texas

NO. 01-05-01194-CV

WILLIAM GREGORY HOLT, Appellant,

V.

SAKOWITZ, INC., Appellee

On Appeal from County Civil Court at Law No. 1

Harris County, Texas

Trial Court Cause No. 507833

DISSENTING OPINION

I respectfully dissent. In this case, Cedyco Corporation, a purported successor-in-interest to judgment creditor Sakowitz, Inc., sought a turnover order against appellant, William Gregory Holt, and appointment of a receiver in connection with Cedyco's attempt to execute on a 17-year-old judgment against Holt in favor of Sakowitz. In his answer, Holt denied under oath Cedyco's capacity to pursue collection of the judgment, asserted the dormancy of the judgment, and pled that Cedyco had failed to fulfill necessary predicates to turnover relief and the appointment of a receiver. I would hold that Cedyco failed to bear its burden of proof either as to its capacity to execute the judgment or as to the preservation of the judgment in the evidentiary hearings on its turnover application and that any further attempts to execute the 17-year-old Sakowitz judgment against Holt are, therefore, forever barred.

I would reverse the order and render an order dismissing Cedyco's turnover application with prejudice to any further attempt to execute the judgment.

Cedyco's Capacity

In his first issue, Holt argues that, in the trial court, he denied under oath that Cedyco had the capacity to execute the judgment as a successor in interest to Sakowitz, thereby putting Cedyco to the proof that it owned the judgment and had the legal authority to execute it. Holt argues that Cedyco failed to prove its capacity to execute the judgment and that, therefore, the trial court abused its discretion in issuing a turnover order.

The trial court heard and granted Cedyco's application for a turnover order without receiving evidence on November 28, 2005. On December 14, 2005, the trial court heard and denied Holt's motion to set aside the November 28 order and dissolve the receivership. Although Holt demanded proof that Cedyco had the capacity to collect the judgment and that it had preserved the judgment, it is undisputed that Cedyco failed to present any evidence when expressly offered the opportunity to do so. Cedyco did ask the court "to take judicial notice of the pleadings on file, the judgment on file," but it did not request that the court take judicial notice of the assignments of the judgment or the writs of execution issued against Holt. The court did not take judicial notice of any records. Holt now appeals the November 18, 2005 order as modified by the December 14, 2005 order.

If a verified denial of the plaintiff's capacity to sue is filed, the plaintiff bears the burden of proving at trial that it is entitled to recover in the capacity in which it has filed suit; otherwise the matter is taken as admitted. See Bossier Chrysler Dodge II, Inc. v. Rauschenberg, 201 S.W.3d 787, 798 (Tex. App.--Waco, 2006, pet. filed); Heldt Bros. Trucks v. Silva, 464 S.W.2d 931, 934-35 (Tex. Civ. App.--Corpus Christi 1971, no writ). I would hold that Cedyco's failure to prove its capacity to execute the Sakowitz judgment, i.e., its legal authority to execute the judgment, must be deemed an admission that it did not have the legal authority to execute it, which is a condition precedent to a turnover order. Because Cedyco failed to bear its burden of proof, I would hold that is barred by res judicata from asserting its ownership of the Sakowitz judgment in any future turnover proceeding against Holt. See Hallco Texas, Inc. v. McMullen County, No. 02-1176, 2006 WL 3825298, at *6 (Tex. Dec. 29, 2006) (holding that doctrine of res judicata, or claim preclusion, bars second action by parties on matters actually litigated in previous suit, as well as claims that, through exercise of diligence, could have been litigated in prior suit).

Preservation of Judgments

Even had Cedyco proved its capacity to execute the 17-year-old Sakowitz judgment, however, I would hold that Cedyco's application for a turnover order should have been dismissed with prejudice to any further attempts to execute the judgment because, when faced with a dormancy challenge, Cedyco also failed to prove that it had preserved the judgment.

The dormancy of judgments is controlled by section 34.001 of the Texas Civil Practice and Remedies Code. Section 34.001 provides:

(a) If a writ of execution is not issued within 10 years after the rendition of a judgment of a court of record or a justice court, the judgment is dormant and execution may not be issued on the judgment unless it is revived.

(b) If a writ of execution is issued within 10 years after rendition of a judgment but a second writ is not issued within 10 years after issuance of the first writ, the judgment becomes dormant. A second writ may be issued at any time within 10 years after issuance of the first writ.

Tex. Civ. Prac. & Rem. Code Ann. § 34.001(a)-(b) (Vernon 1997). "A dormant judgment may be revived by scire facias or by an action of debt brought not later than the second anniversary of the date that the judgment becomes dormant." Id. § 31.006 (Vernon 1997).

The burden is on the judgment creditor to prove that execution has been issued on the judgment within the statutory period. Ross v. American Radiator & Standard Sanitary Corp., 507 S.W.2d 806, 809 (Tex. Civ. App.--Dallas 1974, writ ref'd n.r.e.). Otherwise, the statute of limitations is not tolled. See id. "The judgment creditor must carry the burden, in establishing 'issuance' within the statutory period, to prove not only a clerical preparation within the time period, but also either actual delivery to the appropriate officer within the period or, if actual delivery is made after expiration of the period, then reasonable diligence in making delivery from the date shown on the writ until actual delivery to the officer." Williams v. Short, 730 S.W.2d 98, 99-100 (Tex. App.--Houston [14th Dist.] 1987, writ ref'd n.r.e.); see Ross, 507 S.W.2d at 809.

Here, Cedyco attempted to execute the judgment by filing an application for turnover 17 years after the judgment was signed--well outside the 10-year statutory limitation on the execution of judgments--without proving that the judgment had been preserved. Holt pleaded the affirmative defense of dormancy, putting Cedyco to the proof that the judgment was still live.

At the December 14 hearing, Holt called on Cedyco to offer evidence that the judgment was live. To show that it had preserved the judgment, Cedyco had to prove that it had fully complied with section 34.001. See Williams, 730 S.W.2d at 99-100. As the majority acknowledges, Cedyco did not put on any evidence. Thus, it failed to prove either (1) that a writ of execution had been issued within 10 years after the rendition of the underlying judgment and delivered to the appropriate officer, and that a second writ had issued within 10 years after the first writ (assuming the first writ issued within 7 years of the judgment) and likewise delivered, so that the judgment was not dormant, or (2) that the writ was not issued within 10 years after the judgment, but was revived by scire facias or an action on the debt within 2 years after it had become dormant.

Cedyco presented absolutely no proof that it had preserved the judgment, whose execution was barred on its face. Therefore, there was nothing in the record to dispute Holt's evidence that execution of the judgment was time-barred. In the absence of proof that the judgment had been revived in the method prescribed by statute, the judgment was not only dormant, but forever barred. See Williams, 730 S.W.2d at 100 (when neither first nor second writ was sufficient to preserve judgment, judgment was forever barred). Moreover, having failed to prove its capacity to collect the judgment or its preservation of the judgment in this proceeding, when both were challenged, Cedyco is barred by the doctrine of res judicata from attempting to prove either in a subsequent proceeding. See Hallco, 2006 WL 3825298, at *6. Nevertheless, the majority, after acknowledging Cedyco's failure to present any proof that it had preserved the judgment and was entitled to execute upon it, inexplicably remands this case for Cedyco to continue its efforts at execution.

I would reverse the order of the trial court and render judgment dismissing Cedyco's turnover application with prejudice to any further attempts to execute the judgment. See Tex. R. App. P. 43.2(c).

Evelyn V. Keyes

Justice

Panel consists of Justices Taft, Keyes, and Hanks.

Justice Keyes, dissenting.