Opinion
No. 01-08-00238-CV
Opinion issued March 11, 2010.
On Appeal from the 152nd District Court Harris County, Texas, Trial Court Cause No. 2002-55244.
Panel consists of Chief Justice RADACK and Justices ALCALA and HIGLEY.
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. 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.
John Able, David Monroe, and 402 Main Street, Ltd. are not parties to this appeal.
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 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.
Biggs is not a party to the instant appeal.
Biggs is not a party to the instant appeal.
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 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. 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).
The Open Courts doctrine provides a litigant a specific guaranty of right of access to the courts. Criswell v. Ginsberg Foreman, 843 S.W.2d 304, 306 (Tex.App.-Dallas 1992, no pet.); see TEX. CONST. art. 1, § 13. The doctrine provides a substantial right that cannot be arbitrarily or unreasonably interfered with by legislative action. Criswell, 843 S.W.2d at 306 (citing Nelson v. Krusen, 678 S.W.2d 918, 922 (Tex. 1984)).
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 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 note 2.
See note 2.
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
On appeal, Abco presents a "cross-point," in which it contends that Eastern "failed to timely perfect this appeal" and therefore this court lacks jurisdiction. Abco presented this same contention by motion to this court, dated July 11, 2008. We considered Abco's contention and issued an order denying its motion on August 21, 2008. The record reflects that the trial court issued the turnover order on December 31, 2007, that Eastern filed by mail a motion for new trial, which was timely received on February 5, 2008, and that Eastern filed by mail its notice of appeal, which was timely received on April 2, 2008. See TEX. R. APP. P. 26.1 (providing, in pertinent part, that notice of appeal must be filed within 90 days after judgment is signed when any party timely files a motion for new trial); TEX. R. CIV. P. 5 ("If any document is sent to the proper clerk by first-class United States mail in an envelope or wrapper properly addressed and stamped and is deposited in the mail on or before the last day for filing same, if received by the clerk not more than ten days tardily, shall be filed by the clerk and be deemed filed in time."). Hence, this court has jurisdiction over this appeal.
We affirm the judgment of the trial court.