information & instructions: seizure of debtor's property ...€¦ · information &...

Information & Instructions: Seizure of debtor's property prior to judgment 1. Texas law provides for sequestration of the defendant's property. Garnishment provides for seizure of the debtor's monies held in banks or financial institutions. 2. The purpose of prejudgment attachment, garnishment, and sequestration is to prevent the debtor from selling, disposing, transferring, wasting, or encumbering the assets which the creditor ultimately seeks to use to satisfy the Judgment. 3. Prejudgment remedies are effective means to preserve assets to satisfy the debt and are very useful negotiating tools to effect settlements. 4. Due to the recent constitutional challenges of prejudgment remedies, courts have taken the position that the remedies are extraordinary measures. Accordingly, the applicant must strictly comply with the terms of the statute authorizing the remedy. 5. In some counties, Writs of Attachment, Sequestration, and Garnishment, as well as the officer's return, are prepared by the clerk of the court. Information & Instructions: Sequestration 1. Sequestration was previously authorized by Tex Rev Civ Stats, Art 6840 and is now codified under the Civil Practice and Remedies Code, Chapter 62, Sequestion. 2. In order to seize the debtor's exempt property in which the creditor holds a security interest, the creditor must comply with the code provisions. 3. The creditor should consider obtaining a sequestration order in the following circumstances: 4. When a person sues for title or possession of realty or foreclosure of the lien on real property and there is a reasonable probability that immediate danger would result by the debtor's continued possession of the property or the debtor intends to convert the same or its rents, revenue, timber, or other proceeds; 5. When a person sues for title or possession of any property from which he or she has been ejected by force or violence; 6. When a person sues to try title to any real property, to remove a cloud on the property, or to foreclose a lien and swears under oath that the defendant is a nonresident; or 7. When a person sues for title or possession of personal property or fixtures or foreclosure of a lien and the court finds immediate danger may exist that the defendant will conceal, waste, dispose, ill-treat, destroy, transfer or secrete the property from the county.

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8. To obtain a Writ of Sequestration on personal property, the creditor must have a security interest in the property. 9. A Writ of Attachment permits a creditor to have the sheriff seize a debtor's nonexempt property to secure payment on a previously unsecured debt. 10. The difference between attachment and sequestration is that a Writ for Sequestration requires the applicant to have a security interest in the property whereas attachment does not. Sequestration may be obtained on the debtor's exempt property, if a proper security interest has been perfected. 11. A Writ of Attachment may issue under the circumstances specified in Civ Prac & Rem Code § 1.001 et seq., 61.21 et seq. as follows:

a. Debtor is a nonresident or foreign corporation, b. Debtor may permanently move from the state and has refused to pay the debt due, c. Debtor is hiding so that process cannot be served upon him, d. Debtor is about to remove his property from the state without leaving sufficient

assets or property to satisfy his obligations, e. Debtor is about to remove his property out of the county where suit is brought

with an intention to defraud his creditors, f. Defendant has disposed or is in all probability about to dispose of his property

with the intent of defrauding his creditors, g. Debtor intends to convert all or part of his property into money and likewise

defraud his creditors by putting it beyond the reach of his creditors, h. The debt is due for property that was obtained under false pretenses or

misrepresentations. 12. The following Texas Rules of Civil Procedure outline the requirements and procedure for attachment of a debtor's property:

TRCP 592 Section Application for writ of attachment and order; TRCP 592a Section Bond for attachment; TRCP 592b Section Form of attachment bond; TRCP 593 Section Requisites for a writ; TRCP 594 Section Form of writ; TRCP 595 Section Several writs; TRCP 596 Section Delivery of writ; TRCP 597 Section Duty of officer;


TRCP 598 Section Levy; how made; TRCP 598a Section Service of writ on defendant; TRCP 599 Section Replevy of defendant; TRCP 600 Section Sale of perishable property; TRCP 601 Section To protect interest; TRCP 602 Section Bond of applicant for sale; TRCP 603 Section Procedure for sale; TRCP 604 Section Return of sale; TRCP 605 Section Judge may make necessary order; TRCP 606 Section Return of writ; TRCP 607 Section Report of disposition; TRCP 608 Section Dissolution or modification of writ of attachment; TRCP 609 Section Amendment.

13. Procedure

a. A suit or recovery of the property sought to be attached or a claim for damages on a breach of contract or sworn account must be filed prior to or simultaneously with the application for the Writ of Attachment.

b. Attachment is ancillary to the underlying suit for recovery of monies owed and therefore bears the same cause number.

c. First prepare and file a lawsuit against the debtor.

d. Prepare and file an Application for Writ of Attachment.

e. Prepare and file the supporting affidavit and the order granting application.

f. Arrange with the court for an ex parte hearing on the application. If the court grants the application, post the required bond.

g. If the court does not grant the application ex parte, set a hearing with the clerk and issue the notice of show cause hearing and obtain service on the defendant. If the court grants the application after the show cause hearing, post a bond with the clerk.

h. The bond should be payable to the defendant and posted with the clerk of the court.

i. Prepare the order granting the Application for Writ of Attachment. The order must state the specific grounds which justify the attachment. It should also state the location, value and description of the items to be attached.

j Have the clerk prepare the Writ of Attachment.


k. Have the sheriff or constable serve the writ on defendant and levy the property stated in the court's order. Form: Plaintiff's application for writ of sequestration

CAUSE NUMBER _____________________

[Name], PLAINTIFF

IN THE [Type of Court] COURT

vs.

[Court number]

[Name], DEFENDANT

OF [NAME], COUNTY, TEXAS

PLAINTIFF'S APPLICATION FOR

WRIT OF SEQUESTRATION

[name of plaintiff], Plaintiff, applies to the Court for an order directing issuance of a Writ of

Sequestration for the property described in this application below and for grounds for this writ

would show the following:

1. PARTIES

1.1 Plaintiff is [name].

1.2 Defendant is [name].

2. ANCILLARY ACTION

2.1 Pursuant to the Petition filed in the above designated Court and captioned as stated above,

Plaintiff seeks [specify relief requested, such as: to recover damages and personal property that it

delivered to Defendant, which property was obtained by Defendant under false pretenses. Plaintiff

therefore seeks return of that property].

2.2 Plaintiff delivered to Defendant [describe goods and/or services delivered], as detailed and

described in Exhibit "A" attached to this application pursuant to the invoices, marked Exhibits ____

through _______, which are incorporated by reference.


3. STATEMENT OF FACTS

3.1 [For Sequestration, insert the facts applicable to the creation of the lien and the facts that entitle

Plaintiff to that relief.]

OR

3.1 [For Attachment, insert the facts that detail how the property was obtained by fraud, or will

be sold, etc.]

4. DEMANDS

4.1 Per Exhibit "C", Plaintiff has made repeated demands upon Defendant to pay the above

stated monies. Notwithstanding those demands, Defendant has refused to pay the sums owed. [If

applicable: Plaintiff informed Defendant that the company planned to pick up and repossess that

equipment; the Defendant has wrongfully refused to allow Plaintiff to retake the equipment.]

5. RELIEF REQUESTED

5.1 Per the Original Petition filed in this cause, Plaintiff seeks damages from Defendant, or

possession of the equipment listed below, or in the alternative, foreclosure of its lien pursuant to

Article XVI, Section 37 of the Texas Constitution in the following property: [describe the

equipment plaintiff is seeking to possess or the property on which foreclose of the lien is sought].

5.2 The value of the property is $[Amount]. At the time of making this application, all of the

above described property is in the Defendant's possession at [address], County, Texas.

5.3 Plaintiff prays the Court enter a Writ of [Sequestration or Attachment] applicable to the

above described property so that Plaintiff may recover its property and the monies due and owed to

Plaintiff.

6. GROUNDS


6.1 Defendant has failed and refused to surrender possession of the above listed property. That

refusal and the nonpayment for the goods, constitutes an intention to conceal the property or an

intention to dispose of it.

The facts justifying the relief requested are [specify in detail]. Accordingly, reasonable

cause exists to believe that Defendant may sell or remove from this jurisdiction all the

property that is the subject of the application.

Per the attached affidavit, Defendant has notified Plaintiff that it has insufficient funds to

pay for the property Plaintiff delivered to Defendant.

Defendant is using the property, and is thereby wasting that property, since continued use

depreciates the property and renders it commercially unfit for resale.

6.2 Plaintiff fears that Defendant may dispose, sell, assign, damage or transfer the property

from [Name of County], Texas without notice of Plaintiff's claim to the third party. Plaintiff has

attached an affidavit stating that the facts contained in this application are true and correct.

Therefore an immediate danger exists that the Defendant may not have the property on hand or that

sufficient assets may not be available to satisfy the judgment in the underlying action.

6.3 Plaintiff is not applying for a Writ of [Sequestration or Attachment] for purposes of injury,

harassment or embarrassment to Defendant but for the sole purpose of recovering its goods.

PRAYER

Plaintiff requests this Court enter its Order granting Plaintiff's application and order the

Clerk of the Court to issue a Writ of [Sequestration or Attachment] for the personal property of

Defendant listed in Exhibit "A" to this application and specifying the maximum value of property

that may be attached and fixing the amount of a bond, if required of Plaintiff, and the amount of


bond required of Defendant to replevy the same. Plaintiff further prays for such other and further

relief to which it may be justly entitled.

Respectfully Submitted, ______________________________ [Law Firm Name]

By ____________________________ ______________________________ [Attorney’s Name] Attorney for Plaintiff [Attorney’s Address] [Telephone Number] [Facsimile Number] [Bar Card Number]

Form: Affidavit of plaintiff's authorized agent

AFFIDAVIT OF PLAINTIFF'S AUTHORIZED AGENT The State of Texas County of ________________ Before me, the undersigned authority, on this day personally appeared [name], authorized agent of [name of plaintiff], Plaintiff, who being by me duly sworn, states on oath that: 1. My name is [Name], and I am the [insert job title] for [name of plaintiff]. I am duly qualified and authorized to make this affidavit. 2. I am employed by [Name], Plaintiff, and I have care, custody and control of the records concerning the accounting of [name of defendant], Defendant. 3. These records show that a total sum of $[Amount], exclusive of interest or other charges, is now due and payable by Defendant to Plaintiff. The total amount is due to Plaintiff by Defendant and all just and lawful offsets, payments and credits have been allowed. 4. I have read this Application for Writ of [Sequestration or Attachment] and the attached Exhibits. The application and exhibits are within my personal knowledge and are just and true. 5. Agents of the Defendant have represented to me that [state the facts that entitled client to the amount].


________________________ [Name of Affiant]

Affiant on oath swears that the statements are true and correct based on his or her personal knowledge and Affiant has: State of Texas County of [County Name] Subscribed and sworn to before me on ____________________ by [Name] ______________________________________________________________.

_____________________________________ Signature of officer _____________________________________ Notary's typed or printed name My commission expires: ______________________ [or Notary's Stamp]

Form: Notice of hearing to show cause

CAUSE NUMBER _____________________

[Name], PLAINTIFF


vs.

[Court number]

[Name], DEFENDANT


NOTICE OF SHOW CAUSE HEARING

To: [name] Address: Registered Agent for: [Name]

Take notice that you or an authorized representative of [Name] is hereby ordered to appear,

in person or by and through your attorney of record, in the [Name] Court, in [Name of County],


Texas at [address], On ______________________at [time], to show cause why an Order for

__________ [Sequestration or Attachment] should not be granted against [name of defendant] for

the levy of merchandise sold to Defendant by Plaintiff.

Signed on ______________________.

________________________

JUDGE PRESIDING Form: Order of attachment or sequestration

CAUSE NUMBER _____________________

[Name], PLAINTIFF


vs.

[Court number]

[Name], DEFENDANT


ORDER

On _______________, the Court heard Plaintiff's application for a Writ of [Sequestration or

Attachment], Plaintiff and Defendant appeared by and through their respective counsel, and the

Court reviewed the application and affidavits on file in this matter.

After considering the pleadings and other papers on file with the Court, the evidence

presented and the argument of counsel, the Court finds and concludes that Plaintiff is entitled to a

Writ of [Sequestration or Attachment] as requested.

The Court finds that the following (exempt) property is held by Defendant in this state, and

that this property is valued as follows and located in [County], Texas: [Set forth property in detail].

The Court further finds that the property will likely be sold and the proceeds dissipated or

removed from the State of Texas prior to the conclusion of this suit.


The Court further finds and concludes that the issuance of this writ is justified in the

circumstances for the reason that the [state specific findings that comply with the statute and which

justify the writ], the same justifying the granting of a Writ of [Name].

It is therefore, ORDERED, ADJUDGED AND DECREED that Plaintiff's Application for

Writ of [Name] is hereby granted and that the writ issue to any sheriff or constable of Texas to seize

the following property located at [address], [Name of County], Texas, and to hold that property in

[his or her] custody until further ordered by this Court or until replevied by Defendant as permitted

by law; it is further ordered that as a condition precedent to the issuing of the Writ of [Name],

Plaintiff file with this Honorable Court a bond in the amount of $[Amount] with good and

sufficient surety conditioned that Plaintiff will prosecute this suit to effect and pay all damages and

costs which may be adjudged against Plaintiff for wrongfully suing out the Writ of [Name].

It is further ORDERED, ADJUDGED AND DECREED that in the event Defendant should

elect to replevy the described property as permitted by law, Defendant shall first file with this

Honorable Court a bond in the amount of $[Amount], or if Defendant so elects, in the amount

provided for under Rule 599 of the Texas Rules of Civil Procedure with good and sufficient surety

to be approved by the officer levying the Writ and conditioned that the Defendant will satisfy, to the

extent of the penal amount of the bond, any judgment which may be rendered against Defendant in

this action.

It is further ORDERED, ADJUDGED AND DECREED that as many writs as Plaintiff

deems necessary shall issue.

Signed on ______________________.

________________________ JUDGE PRESIDING


APPROVED AS TO FORM AND SUBSTANCE: _____________________________ [Law Firm’s or Attorney’s Name] Attorney for Plaintiff [Address] [Telephone & facsimile numbers] Texas Bar no. [Number] APPROVED AS TO FORM ONLY: _____________________________ [Law Firm’s or Attorney’s Name] Attorney for Defendant [Address] [Telephone & facsimile numbers] Texas Bar no. [Number]


Form: Officer's indemnity bond

CAUSE NUMBER _____________________

[Name], PLAINTIFF


vs.

[Court number]

[Name], DEFENDANT


OFFICERS INDEMNITY BOND

On _______________________________, Plaintiff recovered judgment in this cause for

$[Amount], plus Post judgment interest and costs, from [name], Defendant in execution.

The clerk has issued a Writ of Attachment directing the sheriff or any constable of any

county in this state to levy, in satisfaction of the judgment, on such property of Defendant in

execution that is subject to the Writ.

Therefore, in consideration that the officer will levy against Defendant in execution pursuant

to the writ, we, [name], as principal and [name], as surety, acknowledge ourselves bound to pay the

officer all costs, charges and damages that the officer may incur or become liable for in

consequence of levy under the writ, and we shall pay off, discharge and cancel all judgments,

damages, and costs that may be rendered against the officer by reason of the levy, and we shall pay

all reasonable and necessary attorney fees and expenses arising out of or incident to the levy.

Signed on ____________________.

________________________ [Name of principal], Principal

_______________ Surety

By: _____________________

Agent for Surety


________________________ Agent for Surety


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