Opinion
CIVIL ACITON NO. 3:99-CV-2796-G.
August 22, 2000.
MEMORANDUM ORDER
Before the court are the emergency motion of the defendant/counterclaim plaintiff Stasan, Inc. ("Stasan") for appointment of a receiver and its motion for a hearing on that motion, as well as the motion of the plaintiffs Michael P. Logal, Deborah v. Logal (collectively, "the Logals"), and Network Staffing Services, Inc. ("NSSI") (collectively, "the plaintiffs") to strike the affidavit of Richard Blumberg offered in support of Stasan's motions. For the following reasons, all of these motions are denied.
Stasan is currently in a dispute with the Logals and NSSI over Stasan's claimed ownership of 300 shares (or 30% of the outstanding stock) of NSSI. See Defendant/Counterclaim Plaintiff Stasan, Inc.'s Brief in Support of Emergency Motion for Appointment of Receiver ("Stasan Brief")at 1-4. Stasan seeks the appointment of a receiver under article 7.05(A) of the Business Corporation Act, which provides for the appointment of a receiver "to conserve the assets and business of the corporation." Id. at 4-5; also Rowe v. Rowe, 887 S.W.2d 191, 200 (Tex.App.-Fort Worth 1994, writ denied) (citing TEX. Bus. CORP. ACT ANN § 7.05(a)) (Vernon 1980). According to Stasan, this court must appoint a receiver to take control of the assets and business of NSSI as the Logals' actions currently, and in the past, indicate an intent to control the assets and business of NSSI and to manage NSSI for their own benefit and to the detriment and exclusion of Stasan and other shareholders. Stasan Brief at 8. Stasan also argues that the Logals are misapplying and wasting NSSI's assets, and that they have improperly delayed this litigation through various procedural tactics so that they might gain complete control of NSSI. Id. at 11-18.
"Receivership is an extraordinarily harsh remedy and one that courts are particularly loathe to utilize." Rusk v. Rusk, 5 S.W.3d 299, 306 (Tex.App.-Houston [14th Dist.] 1999, pet. denied). "`In recognition of the fact that appointment of a receiver without notice is one of the most drastic actions known to law or equity and should be exercised with extreme caution and only where great emergency or imperative necessity requires it, [Texas] courts have uniformly been reluctant to grant such harsh relief.'" Id. (quoting Independent American Savings Association v. Preston 117 Joint Venture, 753 S.W.2d 749, 750 (Tex.App. — Dallas 1988, no writ)). Therefore, a party seeking a rehabilitative receiver must convince the trial court that "all other remedies available either at law or in equity" are inadequate. Rowe, 887 S.W.2d at 200 (quoting Balias v. Balias, 748 S.W.2d 253, 257 (Tex.App.-Houston [14th Dist.] 1988, writ denied)).
Here, Stasan has not made that showing. As the plaintiffs point out, if Stasan were truly concerned that the Logals were mismanaging NSSI and adversely affecting the value of NSSI stock, it would not have waited more than seven months to request that this court appoint a receiver. See Plaintiffs' Motion to Strike Affidavit of Richard Blumberg and Response to Defendant's Emergency Motion to Appoint Receiver ("Response") at 2. Stasan's actions, if not its words, indicate that there is (in the language of Rusk quoted above) no "great emergency or imperative necessity" requiring the appointment of a receiver in this case. Stasan has failed to show that other remedies will be inadequate to protect its rights in this case.
For the above reasons, Stasan's emergency motion for the appointment of a receiver is DENIED, Stasan's motion for a hearing on this motion is DENIED as moot, and the plaintiffs' motion to strike is DENIED as moot.
SO ORDERED.