Send this document to a colleague    Close This Window



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 (1)



V.



SAKOWITZ, INC., Appellee (2)




On Appeal from County Civil Court at Law No. 1

Harris County, Texas

Trial Court Cause No. 507833




O P I N I O N

Appellant, William Gregory Holt, appeals from a post-judgment turnover order, signed November 28, 2005, entered in favor of "Cedyco Corporation assignee of Sakowitz. Inc.," appellee. We determine (1) whether we have jurisdiction over the appeal; (2) whether Cedyco Corporation ("Cedyco") proved that it had standing to enforce a judgment in Sakowitz, Inc.'s favor; (3) whether Cedyco proved that the judgment was not dormant; and (4) whether the turnover order was worded too broadly and was not supported by evidence of the substantive and probative character of the property listed in it. We reverse the order, in part, and remand the cause with instructions for the trial court to vacate its turnover order signed November 28, 2005 to the extent that it concerns William Gregory Holt.

Facts

On October 24, 2005, Cedyco filed an application for a turnover order to enforce a judgment that Cedyco had purchased from Claron Corporation ("Claron") and that Claron had purchased from the original judgment creditor, Sakowitz, Inc. ("Sakowitz"). The judgment was in the principal amount of $7,250.50 against Holt and his former wife, Gay Holt. That judgment was rendered in the county civil court at law number one in Harris County, Texas on March 17, 1988. (3) On September 16, 2005 and September 19, 2005, Cedyco filed in the trial court two records of assignment, which evidenced that Claron and Cedyco were assignees of the Sakowitz final judgment.

On November 28, 2005, the trial court conducted a hearing and signed an order granting Cedyco's application for turnover. Holt's counsel was not present at the hearing because he was in trial in another county. (4) The November 28 turnover order appointed Ray Cain as the receiver and gave him the power and authority to "take possession of and sell the nonexempt property, real and personal, of [Holt] . . . ." It was ordered that the receiver have at his discretion the fullest and broadest powers, which included (1) ordering the production before him of evidence upon all matters pertaining to Holt's compliance with the November 28 turnover order, the assets, the location of assets, the value of assets, and all other financial matters pertaining to Holt; (2) scheduling hearings and directing all parties and witnesses to give testimony at such hearings and to rule upon the admissibility of evidence at such hearings; and (3) placing witnesses under oath and examining them himself. (5)

Holt was ordered to turn over to the receiver all checks, cash securities, promissory notes, documents of title, and contracts that he owned; however, the order did not list any specific assets that Holt was required to turn over. The order decreed that the receiver was "authorized to take all action necessary to gain access to all storage facilities, safety deposit boxes, real property and leased premises and personal property wherein any property may be situated" and had the following "rights, authority and power with respect to" Holt's property: (1) to collect all accounts receivable, royalties, rents, franchise fees, returns on securities, note payments, and contractual payments and to enter into compromise and settlement agreements to effectuate the collection thereof; (2) to change locks to all premises at which any property was situated or likely to be situated and to all real or personal property leased or owned by Holt, including his place of residence; (3) to open all mail directed to Holt, together with the right to redirect his mail to the receiver's address; (4) to hire a real-estate broker to sell or to lease any real property or mineral interest belonging to Holt; (5) to endorse and to cash all checks and negotiable instruments payable to or belonging to Holt; (6) to hire a business broker to sell Holt's businesses; (7) to insure any property belonging to Holt; (8) to obtain from any financial institution, bank, credit union, or savings and loan association any financial records belonging to or pertaining to Holt; (9) to hire any person or company to move and to store Holt's property; (10) to hire any person or company to accomplish any right or power under the November 28 turnover order; (11) to settle or to direct any litigation leading to the potential recovery of money or assets; (12) to disable equipment or other assets belonging to, leased by, or owned by Holt; (13) to initiate and to conduct the course of litigation to recover any debts, damages, or property belonging to Holt; (14) to withdraw funds from Holt's financial accounts; and (15) to take complete control and possession of Holt's assets to the exclusion of all persons, including Holt.

On December 5, 2005, Holt filed a "Motion to Set Aside Order of November 28, 2005." On December 14, 2005, the trial court held a hearing on Holt's motion to reconsider. No evidence was introduced at this hearing. On January 19, 2006, the trial court denied Holt's motion to reconsider, appointed a master-in-chancery, and ordered that all activities of the receiver temporarily cease pending the master-in-chancery's investigation into the extent of Holt's non-exempt property. (6) In response, Holt filed a petition for writ of mandamus in this Court. On June 8, 2006, this Court conditionally granted Holt's petition for writ of mandamus, holding that the trial court abused its discretion by appointing a master-in-chancery. See In re William Gregory Holt, No., 01-06-00290-CV, 2006 WL 1549968, at *3 (Tex. App.--Houston [1st Dist.] June 8, 2006, orig. proceeding) (memo. op.). This Court directed the trial court to vacate its January 19 order appointing a master-in-chancery and any other ancillary orders. (7) On December 22, 2005, Holt filed a notice of appeal from the November 28 turnover order, which is the matter now before this Court. (8) Standard of Review

We review a turnover order and an appointment of a receiver under an abuse-of-discretion standard of review. See Beaumont Bank, N.A. v. Buller, 806 S.W.2d 223, 226 (Tex. 1991) (stating that abuse of discretion is standard of review for turnover order); Matz v. Bennion, 961 S.W.2d 445, 452 (Tex. App.--Houston [1st Dist.] 1997, pet. denied) (stating that abuse of discretion is standard of review for appointment of receiver). We reverse a trial court for abusing its discretion only if we find that the court acted in an unreasonable or arbitrary manner. Buller, 806 S.W.2d at 226. That is, an abuse of discretion occurs when a trial court acts "without reference to any guiding rules and principles." Downer v. Aquamarine Operators, Inc., 701 S.W.2d 238, 241-42 (Tex. 1985). A corollary principle is that we may not reverse for abuse of discretion merely because we disagree with a decision of the trial court, if that decision was within the trial court's discretionary authority. Id. at 242. A trial court's issuance of a turnover order, even if predicated on an erroneous conclusion of law, will not be reversed for abuse of discretion if the judgment is otherwise sustainable for any reason.

Jurisdiction

Initially, Cedyco challenges this Court's jurisdiction, alleging that the November 28 turnover order, titled "Order Appointing Receiver and Order of Turnover," was not final and thus could not have been appealed because it did not dispose of all issues between the parties.

The trial court appointed a receiver "with the power and authority to take possession of and sell the nonexempt property, real and personal, of [Holt]" and ordered Holt to produce documents to that receiver. The trial court ordered Holt "to turnover to the Receiver . . . all checks, cash securities, promissory notes documents of title and contracts owned by or in the name of [Holt]." Cedyco contends that the effect of the November 28 turnover order was "stayed" as a result of the January 19 order appointing a master-in-chancery. Cedyco argues, "In the instant case, no property issues were resolved by the Turnover Order as it merely required Holt to turn over financial records to a receiver."

Turnover orders are final, appealable orders. Burns v. Miller, Hiersche, Martens & Hayward, P.C., 909 S.W.2d 505, 506 (Tex. 1995). This is because turnover orders dispose of "all the parties and all the issues, leaving nothing for further decision except as necessary to carry the decree into effect." Starr v. Starr, 690 S.W.2d 86, 88 (Tex. App.--Dallas 1985, no writ) (citing Hargrove v. Ins. Inv. Corp., 176 S.W.2d 744, 747 (Tex. 1944)); see Wilkins v. State Farm Mut. Auto. Ins. Co., 58 S.W.3d 176, 180 (Tex. App.--Houston [14th Dist.] 2001, no pet.).

Despite this general rule, Cedyco relies on Arndt v. Farris and Fisher v. P.M. Clinton for its appellate jurisdictional challenge. See Arndt v. Farris, 633 S.W.2d 497, 500 n.5 (Tex. 1982) (stating, "Trial court orders granting or denying particular post judgment discovery requests are not appealable until a final judgment is rendered disposing of all issues between the parties."); Fisher v. P.M. Clinton Int'l Investigations, 81 S.W.3d 484, 485 (Tex. App.--Houston [1st Dist.] 2002, no pet.) (dismissing for want of jurisdiction because trial court's post-judgment discovery order was not final and appealable order; moreover, other motions were still pending in trial court). These cases are distinguishable from this case because the orders being appealed in Fisher and Arndt were post-judgment discovery orders, not post-judgment turnover orders requiring that the debtors turn over property to a receiver with the authority to take possession of property, to sell it, and to pay the proceeds to the judgment creditor. See Arndt, 633 S.W.2d at 500 n.5; Fisher, 81 S.W.3d at 485.

Accordingly, the November 28 turnover order was final, and this Court has jurisdiction to hear this appeal.

Standing

In his first point of error, Holt contends that the trial court erred because Cedyco had no standing to file an application for turnover. He claims that Cedyco provided no support for its allegation that it was the current owner and holder of the judgment that it sought to execute as assignee of Sakowitz.

The Texas Constitution requires the presence of a proper party to raise issues before a court; therefore, standing is a threshold inquiry. M.D. Anderson Cancer Ctr. v. Novak, 52 S.W.3d 704, 708 (Tex. 2001). Cedyco had to prove that it was a successor-in-interest to the judgment. See First Nat'l Bank v. Sheffield, 475 S.W.2d 820, 821 (Tex. Civ. App.--Austin 1972, no writ) (recognizing that assignee attempting to collect sworn account had to prove assignment); see also Norris v. Lancaster, 280 S.W. 574, 576 (Tex. Comm'n App. 1926) (stating that to maintain action, assignee is required to make actual proof of assignment); cf. Delaney v. Davis, 81 S.W.3d 445, 448-49 (Tex. App.--Houston [14th Dist.] 2002, no pet.) (stating that to recover on assigned cause of action, party claiming assigned rights must prove that cause of action was in fact assigned to it).

On November 28, 2005, the trial court conducted a hearing and signed an order granting Cedyco's application for turnover. (9) At the December 14 hearing, Holt called Cedyco to put on evidence of standing, i.e., that it was the current owner and holder of the judgment. At that hearing, Cedyco requested that the trial court take judicial notice of "the pleadings on file, the judgment on file" which, Cedyco contends on appeal, included the records of assignment as proof that it was the assignee of the judgment at issue. Cedyco explained to the trial court that those documents would "settle the issue on whether there is a judgment, whether it's valid, whether it's been assigned." The trial court did not take judicial notice of those documents, however.

And, although the records of assignment were filed in the trial court on September 16, 2005 and September 19, 2005, they were not presented to the court as evidence. See Vanscot Concrete Co. v. Bailey, 862 S.W.2d 781, 783 (Tex. App.--Fort Worth 1993), aff'd, 894 S.W.2d 7557 (Tex. 1995) (holding that documents not introduced into evidence at trial are not properly included in record and cannot be considered on appeal); City of Galveston v. Shu, 607 S.W.2d 942, 945 (Tex. Civ. App.--Houston [1st Dist.] 1980, no writ); see also Reyes v. Reyes, 946 S.W.2d 627, 630 (Tex. App.--Waco 1997, no writ) (holding that document filed in trial court, but not admitted into evidence, could not be considered by appellate court in deciding whether trial court abused its discretion in issuing its child-support order). Cedyco neither attached the records of assignment to its turnover application as evidence, or put on evidence in any hearing that it was a successor-in-interest to the judgment at issue. We hold that the trial court abused its discretion by entering the turnover order because Cedyco did not carry its evidentiary burden that it was a successor in interest.

We sustain Holt's first point of error.

We have already determined that we must reverse the order, in part, and remand the cause with instructions for the trial court to vacate the turnover order signed November 28, 2005 to the extent that it concerns William Gregory Holt because Cedyco did not carry its evidentiary burden that it was a successor-in-interest. However, we consider Holt's remaining arguments because they are likely to recur. Cf. Wachendorfer v. Wachendorfer, 615 S.W.2d 852,854 (Tex. Civ. App.--Houston [1stDist.] 1981, no writ) (despite having sustained point of error requiring remand, considering matters that could likely occur on remand).

Dormant Judgment

In his second point of error, Holt contends that "[t]he trial court abused its discretion by granting turnover relief on a dormant judgment." As he did in the argument under his first point of error, Holt argues that Cedyco did not carry its evidentiary burden to prove that the judgment signed March 17, 1988 was not dormant.

If a writ of execution is not issued within 10 years after the rendition of a judgment, the judgment is dormant, and execution may not be issued on the judgment unless it is revived. Tex. Civ. Prac. & Rem. Code Ann. 34.001 (Vernon 1997). A dormant judgment may be revived by writ of scire facias or by an action of debt brought not later than the second anniversary of the date that the judgment becomes dormant. Tex. Civ. Prac. & Rem. Code Ann. 31.006 (Vernon 1997). "The judgment creditor carries the burden of proving not only clerical preparation of the writ within the statutory time period, but also either actual delivery to the appropriate officer within the period or, if actual delivery is made after expiration of the statutory period, then reasonable diligence in making delivery from the date shown on the writ until actual delivery to the officer." Rollins v. Am. Exp. Travel Related Serv. Co., No. 01-04-00765-CV, 2006 WL 1550004, at *2 (Tex. App.--Houston [1st Dist.], June 8, 2006, no pet.)(memo. op.) (citing Williams v. Short, 730 S.W.2d 98, 100 (Tex. Civ. App.--Houston [14th Dist.] 1987, writ ref'd n.r.e.)).

Here, Cedyco filed its application for turnover on October 24, 2005--17 years after the underlying judgment was signed. (10) At the December 14 hearing, Holt called Cedyco to put on evidence that the judgment was not dormant. Cedyco did not put on evidence that a writ of execution was issued within 10 years after the rendition of the underlying judgment or that the judgment had been revived. On appeal, Cedyco alleges in its fact section that the judgment was "renewed" by writs of execution filed September 25, 1996, September 22, 1998, May 20, 2005, July 22, 2005, and December 2, 2005. However, no evidence of these "renewals" was presented to the trial court. See Vanscot Concrete Co., 862 S.W.2d at 783 (stating documents not introduced into evidence at trial are not properly included in record and cannot be considered on appeal); see also Reyes, 946 S.W.2d at 630 (stating document filed in trial court, but not admitted into evidence, could not be considered by appellate court in deciding whether trial court abused its discretion in issuing its child-support order). We hold that the trial court abused its discretion by entering the turnover order because Cedyco did not carry its evidentiary burden of showing that the judgment was not dormant.

We overrule Holt's second point of error.

Propriety of the Turnover Order

In point of error three, Holt argues that "[t]he trial court abused its discretion by granting turnover relief because there is no evidence of the existence of the predicates to such relief." (11) Because Holt relies on Burns v. Miller, Hiersche, Martens & Hayward, P.C., we construe his argument to be that the trial court abused its discretion because the November 28 turnover order was worded too broadly and there was no evidence of a substantive and probative character to support it. See id., 948 S.W.2d 317, 324 (Tex. App.--Dallas 1997, pet. denied).

Section 31.002 of the Texas Civil Practice and Remedies Code confers authority on the trial court to grant turnover relief when the following requirements are met: (1) the applicant is a judgment creditor; (2) the judgment debtor owns property that cannot be readily attached or levied on by ordinary legal process; (3) the judgment debtor's property is not exempt from attachment, execution, or seizure for the satisfaction of liabilities; and (4) the property, including present or future rights to the property, is in the judgment debtor's possession or is subject to his control. Tex. Civ. Prac. & Rem. Code Ann. 31.002 (Vernon 2005); see Burns, 948 S.W.2d at 324-27; see also Buller, 806 S.W.2d at 227 (stating that purpose of turnover proceeding is to ascertain whether asset is in possession of judgment debtor or subject to his control); Lozano v. Lozano, 975 S.W.2d 63, 68 (Tex. App.--Houston [14th Dist.] 1998, pet. denied) (stating that section 31.002 allows trial court to order judgment debtor to turn over non-exempt property in judgment debtor's possession or control); Jacobs v. Adams, 874 S.W.2d 166, 167 (Tex. App.--Houston [14th Dist.] 1994, no writ) (stating that section 31.002 permits trial court to sign turnover order only if judgment creditor establishes that judgment debtor owns non-exempt property that cannot be readily attached by ordinary legal process).

To meet the requirements of section 31.002, the trial court's order must be specific both in identifying the non-exempt property that is susceptible to turnover relief and in tailoring the turnover relief to that property. Roebuck v. Horn, 74 S.W.3d 160, 163 (Tex. App.--Beaumont 2002, no pet); see Tex. Civ. Prac. & Rem. Code Ann. 31.002. The turnover order must be definite, clear, and concise, leaving no doubt to the debtor about his duty. Burns, 948 S.W.2d at 324. The trial court may not allow a turnover order to be worded so broadly as to encompass any property that the judgment debtor may ever own now or in the future, including currently non-existent property, without identifying the source of that property and showing the present or future right of the judgment debtor to that property. Id. The trial court abuses its discretion if it signs a turnover order that does not identify specific, non-exempt property subject to the order. Id.; Ex parte Prado, 911 S.W.2d 849, 850 (Tex. App.--Austin 1995, orig. proceeding); Jacobs v. Adams, 874 S.W.2d 166, 167 (Tex. App.--Houston [14th Dist.] 1994, no writ); Bergman v. Bergman, 828 S.W.2d 555, 557 (Tex. App.--El Paso 1992, no writ). The trial court abuses its discretion if there is no evidence of a substantive and probative character that supports the trial court's decision. Burns, 948 S.W.2d at 327.

The turnover order in this case does not comply with section 31.002. See Tex. Civ. Prac. & Rem. Code Ann. 31.002. In its November 28 turnover order, the trial court did not identify specific, non-exempt property subject to the order; rather, it included a laundry list of possible assets stated in broad categories. See Moyer v. Moyer, 183 S.W.3d 48, 54-55 (Tex. App.--Austin 2005, no pet.) (holding that broad-form order providing for laundry list of possible assets is not sufficient); Roebuck, 74 S.W.3d at 163. In addition, there is no evidence in the record of the substantive and probative character of the property subject to the November 28 turnover order. There is no reporter's record of the turnover hearing. The November 28 turnover order suggests that no evidence was considered at that hearing because it recites that the trial court considered "the pleadings on file and the arguments of counsel." (12) The January 19 order also suggests that there was no evidence of specific, non-exempt property owned by Holt because the trial court stayed the powers appointed the master-in-chancery to conduct "an investigation into the extent of [Holt's] non-exempt property" and to "file a report with the [trial court] detailing the results of the investigation."

We hold that the trial court abused its discretion because the turnover order did not identify specific, non-exempt property subject to the order and because there was no evidence of the substantive and probative character of the property listed in the turnover order to support the trial court's decision. Therefore, we sustain Holt's third point of error. Conclusion

We reverse the order, in part, and remand the cause with instructions for the trial court to vacate its turnover order signed November 28, 2005 to the extent that it concerns William Gregory Holt.



Holt's "Second Motion for Emergency Stay," filed April 18, 2007, in which he requests this Court to stay execution on his property pursuant to a writ of execution issued by the clerk of the trial court on February 8, 2007, is denied. (13)



Tim Taft

Justice

Panel consists of Justices Taft, Keyes, and Hanks.

Justice Keyes, dissenting.

1. Gay Holt was also a party in the underlying suit against whom Sakowitz, Inc. received a judgment. The turnover order that is the subject of this appeal was entered against both William Gregory Holt and Gay Holt. Gay Holt did not participate in the turnover proceedings and does not appeal the turnover order.

2.

Cedyco Corporation, an alleged assignee of Sakowitz, Inc., filed an application for turnover in Sakowitz, Inc.'s name. See Tex. Mach. & Equip. Co. v. Gordon Knox Oil & Exploration Co., 442 S.W.2d 315, 317 (Tex. 1969) (holding that assignee may file suit and recover either in his own name or in name of assignor).

3. The trial court cause number for the final judgment was 514,083.

4. On November 10, 2005, Holt's counsel filed a motion for continuance to reset the November 28, 2005 hearing because he had a trial set in another county. The trial court informed the parties that the matter would be reset if Holt's counsel actually had trial in another county on November 28, 2005.

5. In addition to any documents and records requested by the receiver, Holt was ordered to turn over the following documents: (1) the most recent bank statements from any and all banks, savings and loan associations, credit unions, and other financial institutions; (2) title and bills of sale to all automobiles, airplanes, boats, motorcycles, trailers, trucks, and other vehicles owned by Holt from 2000 to date; (3) stock certificates, bonds, or other securities owned by Holt in privately held or publicly traded companies or institutions from 2000 to date; (4) receipts for office furniture and all other personal property owned by Holt from 2000 to date; (5) all deeds for real estate in which Holt owned or had owned any interest from 2000 to date; (6) all residential and commercial leases to which Holt was a party or had been a party; (7) statement of any and all pension, profit-sharing, or annuity plans to which Holt was or had been a participant; (8) any and all certificates of deposit or money-market certificates owned by Holt from 2000 to date; (9) any and all promissory notes payable in whole or in part to Holt from 2000 to date; (10) any and all minute books, ledgers, corporate records, and resolutions pertaining to Holt; (11) Holt's federal tax returns for the years 2000 through 2004; (12) any and all assumed-name certificates under which Holt did business; (13) Holt's most recent balance sheet; (14) Holt's most recent financial statement; (15) all documents evidencing a transfer of Holt's property from 2000 to date; and (16) any and all contracts to which Holt was a party or under which Holt had any present or future rights.

6. At the December 14 hearing, the trial court agreed with Holt's argument that there had not been findings of specific, non-exempt assets. The trial court concluded, "Before the Court can enter into a full appointment of a trustee over the entire estate, there must first be the finding that there are none [sic] exempt assets. That there needs to be some preliminary discovery that's done in that regard. It's a two-step process. And with regard to the two-step process, what this Court is going to do is I'm going to appoint a master to conduct the first step to determine whether or not there are sufficient assets." However, in its January 19, 2006 order, the trial court did not expressly rule on Holt's "Motion to Set Aside Order of November 28, 2005."

7. On February 24, 2006, the trial court had ordered that the master-in-chancery could re-direct Holt's mail, open it, and hold it. Because this order was ancillary to the trial court's appointment of a master, for which we granted mandamus relief, we directed the trial court to vacate the February 24 order, as well.

8.

On July 24, 2006, Holt filed a "Motion for Emergency Stay" in this Court. This Court granted the motion in part, staying only the proceedings in this underlying cause that concerned the dissolution, dismissal, withdrawal, vacating, or invalidation of the November 28 turnover order.

9. Neither of the parties argue that the November 28 hearing was evidentiary. Although there is no reporter's record of the November 28 hearing, there is a reporter's record of the December 14 hearing.

10. The underlying judgment was signed on March 17, 1988.

11. In the appeal of a turnover order, legal insufficiency is not an independent ground of error, but is a factor in determining whether the trial court abused its discretion. See Beaumont Bank, N.A. v. Buller, 806 S.W.2d 223, 227 (Tex. 1991) (holding that court of appeals should have reviewed trial court's turnover order under abuse-of-discretion standard and stating that issue of whether there was no evidence to support the turnover award would be relevant to determining whether trial court abused its discretion in issuing turnover order).

12. Additionally, in his brief on appeal, Holt asserts that no evidence was offered at the November 28 turnover hearing. Cedyco does not dispute Holt's assertion.

See Tex. R. App. P. 38.1(f) (stating that in civil case, appellate court will accept as true facts stated unless another party contradicts them).

13. Justice Keyes dissents from the denial of Holt's referenced motion and would have granted the motion for emergency stay to prevent any premature execution on Holt's property and any potential for irreparable harm through wrongful foreclosure. See Tex. Civ. Prac. & Rem. Code Ann. 34.002(a) (Vernon 1997) ("A person is entitled to recover from the judgment creditor the market value of the person's property that has been seized through execution of a writ issued by a court if the judgment on which execution is issued is reversed or set aside but the property has been sold at execution.").