Opinion
NO. 03-15-00128-CV
02-18-2016
Tedde R. Blunck, Appellant v. Cathy A. Blunck, Appellee
FROM THE DISTRICT COURT OF HAYS COUNTY, 22ND JUDICIAL DISTRICT
NO. 11-1217 , HONORABLE WILLIAM R. HENRY, JUDGE PRESIDING MEMORANDUM OPINION
Tedde R. Blunck appeals from the trial court's order appointing a receiver pursuant to section 31.002 of the Civil Practice and Remedies Code. See Tex. Civ. Prac. & Rem. Code § 31.002 (addressing collection of judgments through court proceedings) (the "turnover statute"). Raising three issues, Tedde challenges the evidence to support the order, the order's specificity regarding the property subject to the order, and the court-appointed receiver's hourly fee. Because we conclude that the trial court acted within its discretion by entering the order, we affirm.
Because the parties have the same last name, we refer to them by their first names.
BACKGROUND
In the underlying proceeding, the trial court signed a final decree of divorce in October 2012. See Blunck v. Blunck, No. 03-13-00074-CV, 2014 Tex. App. LEXIS 7143, at *1 (Tex. App.—Austin July 2, 2014, no pet.) (mem. op.). Among the provisions in the decree, the trial court granted Cathy a judgment against Tedde for over $200,000. Id. Tedde appealed, and this Court dismissed his appeal as moot. Id. at This Court thereafter issued mandate on that appeal in December 2014.
In January 2015, Cathy filed a motion for post-judgment receivership in the underlying proceeding pursuant to the turnover statute. See Tex. Civ. Prac. & Rem. Code § 31.002. She alleged that Tedde had not paid the judgment awarded to her in the divorce decree and sought the appointment of a receiver to collect the debt. The hearing on her motion occurred in February 2015. Tedde filed an "Objection and Special Exception" to the motion, but he did not appear for the hearing. During the hearing, the trial court took judicial notice of the case file and admitted as exhibits a certified copy of "The Tedde R. Blunck Living Trust," dated December 24, 2012, and property schedules from Tedde's Chapter 13 Bankruptcy filed in July 2013 under "penalty of perjury." On the same day as the hearing, the trial court signed its order appointing a receiver pursuant to the turnover statute, approving the receiver's "fees at a rate of $300.00 per hour," and finding that rate "to be the customary and usual fee for a turnover receiver." This appeal followed.
ANALYSIS
Standard of Review and Applicable Law
"The Texas 'turnover' statute [section 31.002 of the Civil Practice and Remedies Code] is a procedural device by which judgment creditors may reach assets of a debtor that are otherwise difficult to attach or levy on by ordinary legal process." Jones v. American Airlines, Inc., 131 S.W.3d 261, 265 (Tex. App.—Fort Worth 2004, no pet.) (quoting Dale v. Finance Am. Corp., 929 S.W.2d 495, 498 (Tex. App.—Fort Worth 1996, writ denied)); see Tex. Civ. Prac. & Rem. Code § 31.002. Subsection (a) of the turnover statute describes the circumstances under which aid from the court is available to assist a judgment creditor; it provides:
(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 § 31.002(a); see Tex. Prop. Code §§ 42.001-.005 (addressing personal property that is exempt from garnishment, attachment, execution, or other seizure). Among the available means for collection of a judgment provided in the turnover statute, the trial court may "appoint a receiver with the authority to take possession of the nonexempt property, sell it, and pay the proceeds to the judgment creditor to the extent required to satisfy the judgment." Tex. Civ. Prac. & Rem. Code § 31.002(b)(3).(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 turnover order for an abuse of discretion. Beaumont Bank, N.A. v. Buller, 806 S.W.2d 223, 226 (Tex. 1991); Moyer v. Moyer, 183 S.W.3d 48, 51-52 (Tex. App.—Austin 2005, no pet.). A trial court abuses its discretion when it acts in an unreasonable or arbitrary manner, without reference to any guiding rules and principles. Buller, 806 S.W.2d at 226. "A trial court will not be reversed for an abuse of discretion so long as there is some evidence of a substantive and probative character to support the decision." Tanner v. McCarthy, 274 S.W.3d 311, 321-22 (Tex. App.—Houston [1st Dist.] 2008, no pet.) (citing Holley v. Holley, 864 S.W.2d 703, 706 (Tex. App.—Houston [1st Dist.] 1993, writ denied)). "Lack of evidence to support a turnover order is a relevant consideration in determining whether a trial court abused its discretion in granting the order." Id. at 322 (citing Buller, 806 S.W.2d at 226).
Evidence to Support Order
In his first issue, Tedde argues that the trial court abused its discretion by entering the order for turnover relief "without any evidence in the record supporting the finding that appellant had any non-exempt property that cannot be readily attached or levied on by ordinary legal process." Tedde argues that the exhibits that were admitted during the hearing amount to no proof because of the absence of an affidavit to authenticate the exhibits. He also argues that the trial court could not take judicial notice of the 2012 final decree of divorce to find that he still possessed the property that was awarded to him in the decree at the time of the hearing in 2015, which was several years later.
To be entitled to aid from the court, a judgment creditor must establish that the judgment debtor owns 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." See Tex. Civ. Prac. & Rem. Code § 31.002(a). The statute, however, "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." Tanner, 274 S.W.3d at 322. The statute also "does not 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." Id. "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." Pillitteri v. Brown, 165 S.W.3d 715, 722 (Tex. App.—Dallas 2004, no pet.) (citing Buller, 806 S.W.2d at 226).
As stated above, the trial court took judicial notice of the case file at the hearing, which included the final decree of divorce. See Bahar v. Lyon Fin. Servs., 330 S.W.3d 379, 386 n.1 (Tex. App.—Austin 2010, pet. denied) (noting that it is "well recognized that a trial court may take judicial notice of its own records in a cause involving the same subject matter between the same, or practically the same, parties" (quoting Sierad v. Barnett, 164 S.W.3d 471, 481 (Tex. App.—Dallas 2005, no pet.) (quoting Gardner v. Martin, 345 S.W.2d 274, 276 (Tex. 1961))); see also Tex. R. Evid. 201 (addressing judicial notice of adjudicative facts). The decree reflects that Tedde was awarded nonexempt assets in the divorce that could not be readily attached or levied on by ordinary legal process, such as outstanding loan proceeds and a note receivable. See Tex. Prop. Code § 42.002 (listing types of personal property that are exempt from seizure); Suttles v. Vestin Realty Mortg. I, Inc., 317 S.W.3d 412, 416-18 (Tex. App.—Houston [1st Dist.] 2010, no pet.) (applying turnover statute and noting that "property that cannot be readily attached or levied on by ordinary legal process includes property such as shares of stock and accounts receivable"); Europa Int'l, Ltd. v. Direct Access Trader Corp., 315 S.W.3d 654, 656-57 (Tex. App.—Dallas 2010, no pet.) (describing types of nonexempt property under the turnover statute that "cannot readily be attached or levied on by ordinary legal process").
During the hearing, the trial court also admitted as exhibits without objection a certified copy of "The Tedde R. Blunck Living Trust" and copies of schedules that Tedde submitted to the bankruptcy court under "penalty of perjury." The trust document and bankruptcy schedules identify nonexempt assets owned by Tedde—such as notes receivable, accounts receivable, and contractual rights regarding property that Tedde transferred to the trust—that cannot be readily attached or levied on by ordinary process. See Tex. Prop. Code § 42.002; Suttles, 317 S.W.3d at 416-18. The foregoing is some evidence of a substantive and probative character to support the trial court's decision to enter the turnover order. See Tanner, 274 S.W.3d at 322; cf. HSM Dev., Inc. v. Barclay Props., Ltd., 392 S.W.3d 749, 752 (Tex. App.—Dallas 2012, no pet.) ("The application for turnover order and the arguments of counsel are not evidence upon which the trial court could have based its order."). And Tedde provided no evidence to the contrary to account for the assets that were traced to him or to rebut the presumption that the assets were in his possession. See Brown, 165 S.W.3d at 722 (shifting burden to judgment debtor to account for assets once judgment creditor traces assets to judgment debtor).
Tedde argues that the trust document and bankruptcy schedules are no proof because they are not self-authenticating, and he questions their authenticity. See Tex. R. Evid. 901 (addressing authenticating evidence), 902 (listing evidence that is self-authenticating). To support his position, Tedde includes an affidavit as an appendix to his reply brief. The affidavit was not before the trial court, and we may not consider the affidavit on appeal. See Tex. R. App. P. 34.1 (describing contents of appellate record); Save Our Springs All., Inc. v. City of Dripping Springs, 304 S.W.3d 871, 892 (Tex. App.—Austin 2010, pet. denied) ("We are limited to the appellate record provided."); Burke v. Insurance Auto Auctions Corp., 169 S.W.3d 771, 775 (Tex. App.—Dallas 2005, pet. denied) (noting that documents that are cited in brief and attached as appendices generally may not be considered by appellate courts if they are not formally included in record on appeal). The turnover statute also does not require the evidence to be in any particular form, and the exhibits were admitted without objection. See Tanner, 274 S.W.3d at 322; see also Tex. R. App. P. 33.1(a) (generally requiring objection to be raised with trial court to preserve complaint on appeal); cf. Avery v. LPP Mortg., Ltd., No. 01-14-01007-CV, 2015 Tex. App. LEXIS 11136, at *7-9 (Tex. App.—Houston [1st Dist.] Oct. 29, 2015, no pet.) (mem. op.) (concluding, in context of summary judgment ruling, that complaint about lack of exhibits' authentication waived by failing to obtain ruling on objection as to form and that trial court could consider exhibits that were not properly authenticated because they were, "in fact, self-authenticating documents").
Because we conclude that there is some evidence of a substantive and probative character to support the trial court's turnover order, we overrule Tedde's first issue.
Specificity of Order
In his second issue, Tedde argues that the trial court abused its discretion by entering the turnover order because the order "is insufficiently specific regarding the property to be turned over and extends to exempt property and property of third parties." As part of this issue, Tedde also argues that the trial court's order does not have a specific time frame in which the property is to be turned over. The turnover order, however, expressly sets out deadlines for Tedde's compliance with the order and states that it does not apply to exempt property or property of third parties. The order states: "Notwithstanding any contrary language herein, this order does not compel turnover of Judgment Debtor's homestead, or checks for current wages or other exempt property." The order also limits the receiver's authority to Tedde's property; the receiver is authorized "to take possession of and sell all leviable property of Judgment Debtor."
Further subsection (h) of the turnover statute expressly allows a court to "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." See Tex. Civ. Prac. & Rem. Code § 31.002(h); Tanner, 274 S.W.3d at 322 (citing subsection (h) of turnover statute and noting that turnover statute does not require trial court "to identify the specific property subject to turnover in its turnover order"). Applying the plain language of subsection (h), we conclude that the trial court was not required to identify the specific property subject to the order.
To support his position that the trial court was required to specify the property subject to the turnover order, Tedde cites Texas appellate court cases, including one from this Court, that were decided prior to or contemporaneous with the addition of subsection (h) to the turnover statute. See Act of May 3, 2005, 79th Leg., R.S., ch. 52, § 1, 2005 Tex. Gen. Laws 68, 69 (effective May 17, 2005); see, e.g., Moyer v. Moyer, 183 S.W.3d 48, 53-55 (Tex. App.—Austin 2005, no pet.) (discussing "specificity requirement" for turnover orders without reference to 2005 amendment to turnover statute). With the enactment of subsection (h), we do not find those cases helpful to our analysis here. See 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.) (citing Tanner v. McCarthy, 274 S.W.3d 311, 321-22 (Tex. App.—Houston [1st Dist.] 2008, no pet.)).
We overrule Tedde's second issue.
Receiver's Fees
In his third issue, Tedde challenges the court-appointed receiver's approved rate of $300 per hour for his fees. He argues that the trial court abused its discretion when it "awarded the receiver, who is an attorney, a fee of $300 per hour for all receiver services, his hourly rate as an attorney, without consideration of a lesser reasonable fee when performing non-attorney functions and when there is no evidence in the record to support that the fees are usual and customary or reasonable and necessary." The order appointing the receiver states that "the Receiver shall be entitled to Receiver's fees at a rate of $300.00 per hour, which the Court finds to be the customary and usual fee for a turnover receiver."
We cannot conclude that the trial court abused its discretion by approving the receiver's hourly rate for his fees in the turnover order. Although the trial court has approved the receiver's hourly rate, the receiver will still have to submit a request and obtain approval of any request for fees in order to be paid. See Moyer, 183 S.W.3d at 57-58 (discussing recovery of receivership fees at time of final accounting and discharge of receiver and noting that "receiver's fee should be measured by the value of the services rendered; the results which are accomplished by the receiver must be considered in determining a reasonable fee").
Further the trial court took judicial notice of the case file. In determining that the rate of $300 per hour was a "customary and usual fee for a turnover receiver," the trial court could have considered its original appointment of the same receiver to take possession and hold certain property during the pendency of Tedde's appeal of the final decree of divorce. In January 2015, the receiver filed a motion as to his original appointment seeking approval of his final report, payment of his fees and expenses, and discharge. In the motion, the receiver stated that the court "has previously approved [his] hourly rate of $300.00 per hour" and detailed the time that he spent on the matter. The trial court heard the receiver's motion at the same hearing in which the trial court heard Cathy's motion for post-judgment receivership. The receiver represented to the trial court that his hourly rate of $300.00 was "a reasonable fee for my services as an attorney with 31 years['] experience and being board certified in consumer and commercial law" and detailed his actions as the original receiver. His final report of activities as to his original appointment also was admitted as an exhibit at the hearing.
On this record, we cannot conclude that the trial court abused its discretion by approving the receiver's hourly rate for his fees in the turnover order. We overrule Tedde's third issue.
CONCLUSION
Having overruled Tedde's issues, we affirm the trial court's order.
/s/_________
Melissa Goodwin, Justice Before Justices Puryear, Goodwin, and Bourland Affirmed Filed: February 18, 2016