Eastern Bloc Entertainment, Ltd. v. ABCO Properties, Inc. (pdf)
(
Tex.App.- Houston [1st Dist.] Mar. 11, 2010)(Higley) (appeal of turnover order, judicial notice of court's
own records)
Appellants, Eastern Bloc Entertainment, Ltd., Altar Boys Management Company, L.L.C., Robert W.
Thomas, and John S. “Skip” Woods (collectively, “Eastern”), appeal from a turnover order granted in favor
of appellee, Abco Properties, Inc., Trustee.
In three issues, Eastern contends that the trial court abused its discretion because (1) there was no
evidence to support the order, (2) the judgment has been satisfied, and (3) the order violates public policy.
We hold that the evidence supports the turnover order and that the trial court did not
abuse its discretion. See Buller, 806 S.W.2d at 226 (stating that whether evidence
supports turnover order is relevant consideration in determining whether trial court
abused its discretion); Tanner, 274 S.W.3d at 322 (recognizing that section 31.002
(a) 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 court
may grant aid under section 31.002.”).
AFFIRM TRIAL COURT JUDGMENT: Opinion by Justice Higley     
Before Chief Justice Radack, Justices Alcala and Higley   
01-08-00238-CV  Eastern Bloc Entertainment, Ltd., Altar Boys Management Company, L.L.C., Robert W.
Thomas and John S. "Skip" Woods v. ABCO Properties, Inc., Trustee    
Appeal from 152nd District Court of Harris County  
Trial Court Judge:
Hon. Kenneth P. Wise

MEMORANDUM OPINION

Appellants, Eastern Bloc Entertainment, Ltd., Altar Boys Management Company, L.L.C., Robert W.
Thomas, and John S. “Skip” Woods (collectively, “Eastern”), appeal from a turnover order granted in favor
of appellee, Abco Properties, Inc., Trustee.

In three issues, Eastern contends that the trial court abused its discretion because (1) there was no
evidence to support the order, (2) the judgment has been satisfied, and (3) the order violates public policy.

We affirm.

Background

According to Eastern, Abco managed a building, located at 402 Main Street in downtown Houston. The
building was owned by 402 Main Street, Ltd., of which John Able and David Monroe were principals.
Footnote Eastern asserts that Abco was acting as trustee for Able and Monroe. In 1998, Eastern leased
space in the building from Abco for use as a nightclub, which required extensive renovations to the
property. After various issues and construction delays, Eastern considered scaling back the project.

Abco disputes that it managed the building and that it was acting as trustee for Able or Monroe. It is
undisputed, however, that Abco transferred (as investments, loans, or both) certain sums to Eastern. The
parties executed a series of agreements, and Eastern pledged certain security interests to Abco. Ultimately,
Eastern defaulted on the agreements. Abco sued to recover sums owed and to foreclose on its security
interests.

In the trial court, summary judgment was granted in favor of Abco. Eastern appealed, and the trial court’s
judgment was affirmed as modified. See George Biggs, Eastern Bloc Entertainment, Ltd., Altar Boys
Management Company, L.L.C., Robert W. Thomas, and John S. Woods v. Abco Properties, Inc., No. 13-03-
00398-CV, 2006 WL 414919 (Tex. App.—Corpus Christi Feb. 23, 2006, pet. denied). The court held as
follows:

We modify the trial court’s judgment to reflect that Eastern Bloc Entertainment, Ltd., Altar Boys
Management Company, L.L.C., Robert W. Thomas, and John S. Woods and George Biggs Footnote are
jointly and severally liable to [ABCO] in the amount of $167,605.12, plus interest . . . . We further modify the
judgment to reflect that Eastern Bloc Entertainment, Ltd., Altar Boys Management Company, L.L.C., Robert
W. Thomas, and John S. Woods are jointly and severally liable to [ABCO] in the amount of $373,816.24,
plus interest . . . . As modified, the trial court’s judgment is affirmed.

Concomitantly, in an independent action, Eastern sued Able and 402 Main Street, Ltd., in a lease dispute,
currently pending as Eastern Bloc Entertainment, Ltd. v. John W. Able and 402 Main Street, Ltd., Cause
No. 2002-58319, 234th District Court, Harris County, Texas (referred to herein as “the lease dispute”).

On July 9, 2007, Abco filed an application for a turnover order, seeking Eastern’s interest in the lease
dispute. Abco also filed a writ of execution and constable’s return. The trial court conducted a hearing in
the matter on August 10, 2007. The proceedings were not recorded. Eastern asserts that, at the hearing,
the trial court said that the type of relief Abco requested was not available, and Abco asked that it be
granted time to provide authority to support its request. According to Eastern, no evidence was taken.

On December 31, 2007, the trial court entered a turnover order granting to Abco

[a]ll choses in action, claims, defenses, rights and causes of action asserted and which could be asserted
by Eastern Bloc Entertainment, Ltd., in Cause No. 2002-58319, styled Eastern Bloc Entertainment, Ltd. v.
John W. Able and Main Street, Ltd., pending in the 234th District Court, Harris County, Texas.

Eastern’s motion for new trial was overruled by operation of law.

Standard of Review

We review the granting or denial of a turnover order for an abuse of discretion. Beaumont Bank, N.A. v.
Buller, 806 S.W.2d 223, 226 (Tex. 1991); Tanner v. McCarthy, 274 S.W.3d 311, 320 (Tex. App.—Houston
[1st Dist.] 2008, no pet.). A trial court abuses its discretion if it acts in an unreasonable or arbitrary manner.
See Buller, 806 S.W.2d at 226. A trial court’s issuance of a turnover order, even if predicated on an
erroneous conclusion of law, will not be reversed for an abuse of discretion if the judgment is sustainable
for any reason. Id. A trial court does not abuse its discretion if there is some evidence of a substantive and
probative character to support the decision. Tanner, 274 S.W.3d at 321–22.

The Turnover Statute

Texas Civil Practice and Remedies Code section 31.002 governs a trial court’s entry of a turnover order.
See Tex. Civ. Prac. & Rem. Code Ann. § 31.002 (Vernon 2008) (the “turnover statute”). Pursuant to
section 31.002(a), a judgment creditor is entitled to receive aid from a court to reach property to obtain
satisfaction on a 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, execution, or seizure for the satisfaction of liabilities.” Id. § 31.002(a). The turnover
statute applies to property within the judgment debtor’s possession or subject to his control. Id. § 31.002(b)
(1). The court may order the judgment debtor to turn over non-exempt property to a designated sheriff or
constable for execution, may otherwise apply the property to the satisfaction of the judgment, or may
appoint a receiver with the authority to take possession of the non-exempt property, to sell it, and to pay
the proceeds to the judgment creditor to satisfy the judgment. Id. § 31.002(b).

Public Policy

In its third issue, Eastern contends that the trial court’s turnover order violates public policy because it
extinguishes Eastern’s suit against Able and 402 Main Street, Ltd.

Generally, a cause of action is property to which the turnover statute applies. Main Place Custom Homes,
Inc. v. Honaker, 192 S.W.3d 604, 627 (Tex. App.—Fort Worth 2006, pet. denied). Courts have held,
however, that the turnover statute does not apply if the order contravenes public policy. See Criswell v.
Ginsberg & Foreman, 843 S.W.2d 304, 306–07 (Tex. App.—Dallas 1992, no pet.); Assoc. Ready Mix, Inc.
v. Douglas, 843 S.W.2d 758, 762 (Tex. App.—Waco 1992, orig. proceeding). Specifically, a creditor may
not use the statute to obtain turnover of a cause of action against itself. Criswell, 843 S.W.2d at 306–07;
Douglas, 843 S.W.2d at 762.

When the judgment debtor’s cause of action against his judgment creditor is turned over to the judgment
creditor, the creditor becomes the holder of a cause of action against itself. Criswell, 843 S.W.2d at 306.
The controversy is extinguished and the judgment debtor is deprived of his day in court. Footnote Id.
Further, without a fixed value, the suit might be worthless or might be worth considerably in excess of the
judgment and, if the turnover order stands, the value might never be determined. Douglas, 843 S.W.2d at
762. In sum, a turnover order should not preclude a determination of the merits and value of a party’s
claim. Id. (concluding that such application does not accomplish purpose of section 31.002); see Criswell,
843 S.W.2d at 307 (concluding that such application of section 31.002 is unconstitutional).

Here, Eastern bears the burden to show that it has a cognizable common law cause of action that the
application of section 31.002 is restricting. See Criswell, 843 S.W.2d at 306. Eastern contends that Abco is
a creditor seeking turnover of a suit against itself. Eastern contends that Abco is trustee for Able and 402
Main Street, Ltd. and, therefore, the trial court’s order that Eastern’s suit against Able and 402 Main Street,
Ltd. be turned over to Abco effectively extinguishes Eastern’s suit. Abco disputes that it is trustee for Able
or Main Street, Ltd.

As its evidence, Eastern directs us to the appendix of its brief, wherein it has attached an excerpt from Abco’
s brief to the Thirteenth Court of Appeals. We cannot, however, consider documents filed as appendices to
briefs that do not appear in the official clerk’s record. See Tanner, 274 S.W.3d at 323 n.22–23. Eastern
does not point to anything else as evidence to support its contention. Hence, Eastern has not established
that, by the trial court’s turnover order, Abco has obtained a suit against itself or that the order restricts
Eastern’s common law cause of action.

Accordingly, we overrule Eastern’s third issue.

No Evidence

In its first issue, Eastern contends that there is no evidence to support the turnover order.

Section 31.002 does not require notice or a hearing. Tanner, 274 S.W.3d at 321; Honaker, 192 S.W.3d at
628. However, section 31.002 authorizes a turnover order only upon proof of the necessary facts. Tanner,
274 S.W.3d at 322; Honaker, 192 S.W.3d at 628. The judgment creditor must prove that (1) the judgment
debtor owns the property, (2) the judgment creditor cannot readily attach or levy on the property by
ordinary legal process, and (3) that the property is not exempt from attachment, execution, or seizure for
the satisfaction of liabilities. See Tex. Civ. Prac. & Rem. Code Ann. § 31.002(a)(1),(2); Tanner, 274 S.W.3d
at 322; Criswell, 843 S.W.2d at 306. Section 31.002(a) 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 court may grant aid under section 31.002.”
Tanner, 274 S.W.3d at 322. Under an abuse of discretion standard, a legal sufficiency challenge does not
constitute an independent ground of error. Jones v. Am. Airlines, Inc., 131 S.W.3d 261, 266 (Tex. App.—
Fort Worth 2004, no pet.). Rather, whether the evidence supports the turnover order is a relevant
consideration in determining whether the trial court abused its discretion by granting the order. Buller, 806
S.W.2d at 226.

Here, Abco’s application for turnover states, in relevant part:

1.       Plaintiff Abco is a judgment creditor of [Eastern]. [Abco] has a valid subsisting judgment against
[Eastern] in the above styled and numbered cause totaling $541,421.36 [and delineating specific liability of
certain defendants], plus prejudgment interest, attorney’s fees, post judgment interest and costs. To date,
the unpaid amount of the judgment due from [Eastern] exceeds $844,000.00.

2.       Since the date of judgment, there have been no payments received thereupon. Writ of execution has
been returned nulla bona.

3.       Judgment Debtor [Eastern] owns certain nonexempt rights and choses in action, which cannot be
readily attached or levied on by ordinary legal process, specifically:

[a]ll choses in action, claims, defenses, rights and causes of action asserted and which could be asserted
by Eastern Bloc Entertainment, Ltd., in Cause No. 2002-58319, styled Eastern Bloc Entertainment, Ltd. v.
John W. Able and Main Street, Ltd., pending in the 234th District Court, Harris County, Texas.

4.       Pursuant to Civ. Prac. & Rem. Code Chapter 21.002(a)(1) and (2) and (b)(1) and (2), all remedies
available at law or in equity to [Abco] are inadequate and this Court has authority to order [Eastern] to turn
over the non-exempt property above.

The writ of execution and constable’s return support Abco’s application. The writ states, in relevant part,
that, on March 17, 2003, Abco recovered a judgment against Eastern in the 152nd District Court and that,
on appeal, the judgment was affirmed, as modified to reflect that

Eastern Bloc Entertainment, Ltd., Altar Boys Management Company, L.L.C., Robert W. Thomas, and John
S. Woods and George Biggs Footnote are jointly and severally liable to [ABCO] in the amount of
$167,605.12, plus interest . . . . [and] that Eastern Bloc Entertainment, Ltd., Altar Boys Management
Company, L.L.C., Robert W. Thomas, and John S. Woods are jointly and severally liable to [ABCO] in the
amount of $373,816.24, plus interest . . . .”

See Abco Properties, Inc., 2006 WL 414919, at *4.

The constable’s return states that the constable attempted, unsuccessfully, to execute the writ by mail and
in person, and that the constable spoke with Eastern’s attorney, David Cragle, who stated that Eastern “is
no longer in business and has no assets.”

The trial court’s turnover order states that

. . . based upon the Court’s review of its file in this cause, the testimony and exhibits admitted, [the court] is
of the opinion that [Abco] holds and is entitled to collect upon a true, final, valid and subsisting judgment
against [Eastern] previously entered in this case.

The Court finds that [Eastern] owns or controls, including present or future rights, the property made the
subject of this order, which property cannot readily attached or levied on by ordinary legal process, that
said property is not exempt from attachment, execution and or seizure for satisfaction of the Judgment, and
that Applicant is entitled to aid from this Court to obtain satisfaction of the Judgment.

(Emphasis added.)

A trial court may take judicial notice of its own files. See Tex. R. Evid. 201. Applying section 31.002, that
Eastern “owns” its cause of action (the lease dispute it filed), that its cause of action cannot be readily
attached or levied on by ordinary legal process, and that its cause of action is not exempt from attachment,
execution, or seizure for the satisfaction of liabilities are facts readily susceptible to judicial notice. See Tex.
Civ. Prac. & Rem. Code Ann. § 31.002(a); Tex. R. Evid. 201 (providing that, at any stage of proceedings,
court may, sua sponte, take notice of any fact “that is either (1) generally known within the territorial
jurisdiction of the trial court or (2) capable of accurate and ready determination by resort to sources whose
accuracy cannot reasonably be questioned.”).

We hold that the evidence supports the turnover order and that the trial court did not abuse its discretion.
See Buller, 806 S.W.2d at 226 (stating that whether evidence supports turnover order is relevant
consideration in determining whether trial court abused its discretion); Tanner, 274 S.W.3d at 322
(recognizing that section 31.002(a) 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 court may grant aid under section 31.002.”).

Accordingly, we overrule Eastern’s first issue.

Satisfaction

In its second issue, Eastern contends that the judgment has been satisfied. Eastern does not, however,
direct us to any place in the record in which it presented this contention in the trial court. Hence, nothing is
presented for our review. See Tex. R. App. P. 33.1.

Accordingly, we overrule Eastern’s second issue.

Conclusion Footnote

We affirm the judgment of the trial court.

Laura Carter Higley

Justice