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TEXAS JUSTICE COURT JUDGES ASSOCIATION

Professional DevelopmentRound Rock, Texas

ChangeseffectiveJune15,2017:� TEX. CIV. PRAC. & REM. CODE § 31.002:� Sec. 31.002. COLLECTION OF JUDGMENT

THROUGH COURT PROCEEDING.� (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:

� (1) cannot readily be attached or levied on by ordinarylegal process; and

� (2) is not exempt from attachment, execution, or seizurefor the satisfaction of liabilities.

“No, there is nothing wrong with my debit card!! We got paid today – run it again!!”

Garnishmentvs.TurnoverFILING

New suit Motion practiceEXPENSES

Filing, service & bank fees NoneAPPLICABILITY

One bank at a time All non-exempt propertyLONGEVITY

One and done Forever??NOTICE

TRCP 663a None required!!

Garnishmentvs.Turnover

Filing a new lawsuit- Different parties- Citation to bank- Service by constable

Filing a motion - Same parties- Parties are in court- Notice from receiver


Expenses of a lawsuit- Filing fee $200 or more- Constable fee $100 or so- Bank lawyer gets paid

(usually)

Expenses of a motion- Zip, zero, nada- Postage or fax- No payment to bank’s

lawyer


Applies to:- One institution at a time- Wages are not exempt- Commissions are not

exempt

Applies to:- All non-exempt property- Wages ARE exempt- Commissions are NOT

exempt


Lasts until:- Determination of any

motion to dissolve; agreement of the parties; or agreed judgment

Lasts until:- Judgment is satisfied; the

receivership is closed; or any metaphor for ‘forever’


Notice is required- TRCP 663a – “as soon as

practicable” but 15 days is too long

- Writ can be dissolved for tardy service

- Writ can be dissolved for non-compliance with TRCP 663a

Notice is NOT required

An Overview of The Turnover Process

Discretionary – CPRC 31.002(b)(1)-(3) uses “may”Operates as an injunction – analogous to mandatory injunctions requiring a debtor to ‘turnover’ propertyTurned Over to who? – sheriff or constable; registry of the court; or an appointed receiverNon-exempt property – subject to turnover; exempt property and proceeds of exempt property are notsubject to turnoverAttorney’s fees – yes, allowed to judgment creditor

An Injunction? What About Justice Courts?

“A justice of the peace may issue writs of attachment, garnishment, and sequestration within the justice’s jurisdiction in the same manner as judges and clerks of the district and county courts.” TEX. GOV’T CODE §27.032. There is no statutory authority that permits a justice court to appoint a receiver and issue a turnover order.

Voidable – Corpus Christi & Houston Appellate Courts

An Injunction? What About Justice Courts?

Proof of facts is required- The application for turnover order and the arguments

of counsel are not evidence upon which the trial court could have based its order.

- When there is no indication the trial court was presented with or considered any evidence to support the requirements of section 31.002 of the Texas Civil Practice and Remedies Code when it made its ruling, a reviewing court will conclude the trial court abused its discretion in granting the turnover order.

The Application for TurnoverWhat the Application should include:-Facts concerning the original judgment- An itemization of the property, documents or records to be turned over- A suggestion of where and how the property, documents or records should be stored- If a receiver is to be appointed, the application may suggest the appointment of a certain receiver and include a statement of his/her qualifications in light of the nature of the judgment debtor’s business or assets.

The Application for TurnoverSilly things in Applications for Turnover:- Affidavits that swear to the nonexempt status of bank

accounts (that contain proceeds of exempt property)- Applications that specify the receiver AND the hourly rate

at which the creditor’s attorney will be paid by the receiver- Applications which claim that the receiver is employed by

the creditor’s attorney- Applications and affidavits that claim the debtor owns

nonexempt property but fails to identify any- Applications and affidavits that claim the debtor never

answered post-judgment discovery, when no post-judgment discovery was ever sent

The Turnover Hearing

Four things must be shown:1. Must be a judgment creditor2. Must be a court of appropriate jurisdiction3. To reach property to obtain satisfaction of a judgment4. The property is not exempt from attachment, execution

or seizure for the satisfaction of liabilities

The trial court “must have some evidence before it that establishes that the necessary conditions for the application of 31.002 exist.”

Must be a judgment creditor


A agreed judgment supported by an affidavit that said the judgment was “in all things final, valid, subsisting, unpaid, and is unsatisfied” was determined to be “some evidence.”

The Turnover HearingMust be a court of appropriate jurisdiction

- The Court that rendered the judgment (courts have inherent power to enforce their own judgments. TRCP 308).

- The bankruptcy court (the only court that could enforce an obligation of a debtor in bankruptcy).

- An independent proceeding (*but there must be jurisdiction over the parties and subject matter; post-judgment discovery limited to the court where the judgment was rendered. TRCP 621a).


To reach property to obtain satisfaction of a judgment

- This requires a factual showing that the debtor owns assets.

- Evidence of nonexempt assets must be admitted into evidence before the trial court can enter a turnover order. - BUT – the order does NOT have to list any assets

- Motions and arguments of counsel are not evidence.

The Turnover HearingThe property is not exempt from attachment, execution or seizure for the satisfaction of liabilities

� This requires a factual showing that the assets that the debtor owns are not exempt property, or proceeds of exempt property. In 1991, the Texas Supreme Court interpreted CPRC § 31.002(f) in Caulley v. Caulley, 806 S.W.2d 795 (Tex. 1991):

� “By prohibiting the turnover of the proceeds of property exempt under any statute, this section necessarily prohibits the turnover of the proceeds of current wages. TEX. PROP. CODE § 42.002(8) (listing current wages as one of the personal property items exempt from attachment, execution, and seizure by creditors).” Id. at 798.

� The 1989 amendment was intended, in part, to prevent turnovers of paychecks, retirement checks, and other similar types of assets after a judgment debtor received them. HOUSE COMM. ON THE JUDICIARY, BILL ANALYSIS, Tex. H.B. 1029, 71st Leg., R.S. (1989). Thus, even when property is no longer exempt under any other statute, if it represents proceeds or disbursements of exempt property, it is not subject to a turnover order. See Caulley v. Caulley, 806 S.W.2d 795, 798 (Tex.1991); Bergman v. Bergman, 888 S.W.2d 580, 586 (Tex. App. - El Paso 1994, no writ).

� Wages can be seized in a garnishment….

Beating the Turnover OrderDepending on when the opportunity to beat the turnover order arises, determines what can be done about it:Attend the turnover hearing – this means that the judgment debtor had notice of the hearing (which is not required to be given)Motion for new trial – within 14 days of the orderAppeal – within 21 days of the order or if the MNT is denied, 21 days thereafter.Bill of review – within 4 years (or more?) of the orderMandamus – the order is void, or where trial court’s actions show such disregard for guiding principles of law that resulting harm is irreparable

What the judge sees at the hearing on the motion for new trial

HowtheJudgmentDebtorFeelsWhenFightingtheTurnover…

Beating the Turnover Order� Challenge the underlying judgment

� Plea to the jurisdiction – outside the jurisdictional limits? Pleadings negate jurisdiction? Improper assignment of original judgment?

� Defective service� Due process violations – lack of notice of trial or

hearing?� Post answer default without proof of damages?� Default entered as a sanction

Beating the Turnover Order� Challenge the turnover order itself

� Is the order entered by the court that entered the judgment?� If not, is the court of “appropriate jurisdiction?”� Is there evidence to support the order?

� Is there a reporter’s record? It is an abuse of discretion for a trial court to enter a turnover order without any evidence to support the order (unless there is evidence otherwise in the record).

� Is there evidence of a judgment?� Is the judgment creditor the same as the creditor seeking

turnover?� Is there evidence of non-exempt property?

Getting Paid for Beating the Turnover Order

� There are three sources of revenue:� The receiver (often the most difficult)� The lawyer for the judgment creditor (mostly in

consumer cases)� The judgment creditor

Getting Paid for Beating the Turnover Order� The Receiver – generally has derived judicial immunity, which is lost when the court

officer acts in the clear absence of all jurisdiction and outside the scope of his authority.

� A real example: Please allow this Receivership Payment and Distribution Agreement to reflect the agreement the Receiver, XXX and Judgment Defendant , XXX have reached concerning the resolution of the Judgment and Receivership in the above-referenced case. Receiver and Judgment Defendant acknowledge, stipulate, and agree to the following: Plaintiff has authorized Receiver to accept, and Judgment Defendant agrees to pay, $$$$ as settlement in full of the Judgment and the Receivership provided all payments are timely made…recovery of the Receiver’s expenses and the reasonable, customary, and usual Receiver fee of 25% of all proceeds recovered during the Receivership. Judgment Defendant agrees that no attack will be made on the Receivership, the Receiver’s actions, or the face of the Receivership Order…Judgment Defendant authorizes regularly scheduled charges to the checking or savings account set forth below for the agreed monthly payment…As long as timely payments are made and the other terms of this Agreement are fully complied with in all respects by Judgment Defendant, Receiver agrees to not levy upon or take possession of the Judgment Defendant’s non-exempt assets, other than the funds currently captured at Judgment Defendant’s bank(s). This Agreement shall be enforced by the appointing Court.

� Notice: As Receiver, I am an officer of the Court appointed by the Judge. I do not represent plaintiff(s), defendant(s), or their counsel. Nothing in this document should be considered as providing legal advice to the recipient(s).

Getting Paid for Beating the Turnover Order� The Creditor’s Lawyer – for a consumer debt, liability pursuant to the FDCPA, TDCA,

DTPA & CPRC ch. 12.� Real examples (from pleadings): “There was no evidence before the Court showing

the money sitting in various checking accounts owned by Debtor was otherwise exempt under any other legal theory.”

� “The amendment to Section 31.002(a) went into effect as of June 15, 2017, but it applies to the collection of any judgment, even if it was entered before that date. Thus, even if a garnishment suit could have been filed against one or more third-party financial institutions holding money owed to a debtor, this has no effect on judgment creditors entitlement to relief under the Turnover Order and Texas statutory law.” [order signed before 6-15-2017].

� “The trial court considered evidence properly presented before it in the judgment below, and given the lack of any record, court's judgment is presumed to be supported by evidence in the Turnover Order it issued.

� “The funds in the XXXs' various accounts are not themselves exempt property under Texas law .. .. Funds in the XXXs' accounts, whether from wages, retirement, or proceeds thereof, are non-exempt prope1ty under both the Texas Property Code and the Texas Civil Practice and Remedies Code.”

Statutes Which Permit Recovery� Fair Debt Collection Practices Act [15 USC 1692]

� Applies only to consumer debt� The creditor’s lawyer, if he/she regularly engages in the collection of consumer debt� The judgment creditor, if he/she/it acquires consumer debt after default for the

purposes of collection� Statutory (maximum $1,000); actual; declaratory relief; costs; fees.

� Texas Finance Code [section 392]� Applies only to consumer debt

� The creditor’s lawyer� The judgment creditor

� Statutory (minimum $100); actual; declaratory relief; injunctive relief; costs; fees.� CPRC Chapter 12

� Applies to anyone who signed a false affidavit� Statutory ($10,000); costs; fees.

� Deceptive Trade Practices Act� As a tie-in statute for Finance Code violations� For unconscionable actions or course of actions

� Economic; enhanced (knowing or intentional conduct); injunctive relief; costs; fees

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