Articles & Helpful Handouts
by Mike Bernstein
Don’t have the time or resources to do a good prove-up? Read about this horror story.
Two receiverships. Receiver 1 demands that Receiver 2, who was appointed well after R1, stop selling debtor’s real property and to turnover sales proceeds. R1 gets a TRO against R2. R1 makes the usual and correct custodia legis arguments. R2 files a motion to vacate- no evidence to support turnover relief in case 1. Trial Court 1 denies R2’s motion and orders Plaintiff 2 to turnover the money they’ve gotten so far. Dallas Court of Appeals on writ of mandamus says trial court abused its discretion in granting turnover without evidence and reminds everyone that we don’t use turnover against third parties like the plaintiff in case two - a totally different case.
The first receivership was vacated (abuse of discretion). The order against P2 was reversed; the rest was remanded. Upon remand, the trial court vacated its order against P2. The rest is set on the DWOP docket for April 2024. The second receivership prevailed because the folks on the first case didn’t prove the elements. Diaz Fisher & Fisher v sms Financial Small Cap LLC, 05-21-00696-CV (Civ.App.—Dallas, Aug 20, 2023 Dallas, orig. proceeding.).
Folks, deemed admissions support turnover relief. Troutman v. Nasa Federal Credit Union, 02-21-00412-CV (Tex.App.—Fort Worth, August 18, 2022, no pet.); Copeland v. Bluebonnet Financial Assets, 05-21-00714-CV (Tex.App.—Dallas, June 7, 2023, no pet.).
No Bond is Required for Turnover Receiverships
The case law makes it clear that no bond is required for a turnover receivership. The statute does not mention a bond. Although many more judges have become aware that no bond is required, some are not familiar with the remedy and many debtors’ counsel still argue that there should have been a bond. The article provides authorities and arguments for creditor’s counsel.
Receiverships Under Attack!
The Turnover Receivership is not a harsh or drastic remedy. The article Receiverships Under Attack! provides the arguments and authorities you need to combat the Harsh / Drastic Remedy argument, as well as other arguments being made against the turnover receivership.
A Turnover Receivership may be obtained ex parte.
The United States Supreme Court has ruled that obtaining a turnover receivership ex parte does not violate due process. The defendant has already had its day in court. The judgment debtor is considered to be on notice that the creditor will make all lawful attempts to collect. The article provides authorities and arguments for creditor’s counsel.
CPRC Chapter 64 Does Not Apply To Turnover Receiverships
Attorneys and judges often confuse the two receiverships. The meat of Chapter 64 dates from the late 1880s and early 1900s. There is not anything in Chapter 64 indicating that the legislature was thinking about §31.002 in 1985, when it codified the general receivership articles into Chapter 64.
The Turnover Receivership vs Garnishment
Is it better to use the turnover receivership or a garnishment when you know where your debtor banks? In general, a receiver’s levy is the best solution, but there are some situations where a garnishment makes more sense. The handout explains the differences between the receivership and a garnishment.