Introduction & History of Turnover Receivership
The turnover receivership is a powerful, flexible tool for collecting your client’s Texas judgments. Getting a turnover receiver appointed is easy—it is just motion practice. You may proceed ex parte. All you have to show is that your client has an unsatisfied judgment and that the debtor owns non-exempt property. Because most turnover receivers work on a contingent fee basis, the receivership is a good fit for judgments in justice court as well as for your larger ones in county and district court.
History of the Turnover Statute: CPRC §31.002
Known as Texas’ "Turnover Statute", Tex. Rev. Civ. Stat. Ann. art. 3827a was enacted in 1979. The statute was codified in 1985, as § 31.002 of the Texas Civil Practice and Remedies Code. Tex. Civ. Prac. & Rem. Code Ann. § 31.002 (West 2015). It has been amended in 1989, 1999, 2005, 2017 and 2019. Under § 31.002 (b) (3), the court may appoint a turnover receiver to take possession of the nonexempt property, sell it, and pay the proceeds to the judgment creditor to the extent required to satisfy the judgment.
Prior to the turnover statute, it was too easy for a defendant to conceal property such as stock certificates and negotiable instruments from a levying officer. The traditional collection methods were inadequate for collecting intangibles such as accounts receivable and the debtor’s interest in a cause of action.
Under the statute, the burden is placed on the defendant to identify and produce its leviable property and related documents. Ex parte Johnson, 654 S.W. 2d 415, 418 (Tex. 1983); Cross, Kieschnick & Co. v. Johnston, 892 S.W.2d 435, 438 (Tex. App.—San Antonio 1994, no writ); David Hittner, Texas Post-Judgment Turnover & Receivership Statutes, 45 Tex. Bar J. 417, 417-18 (1982) (citing House and Senate committee reports).
The statute allows the court to order the defendant to identify and turn over its non-exempt assets, along with any related documents. Before the statute, if a creditor discovered an undisclosed asset that could be liquidated towards satisfaction of its judgment, the creditor would have to go back to court for permission to do the liquidation. Under a comprehensive turnover receivership order, the receiver will be able to liquidate the asset when it is found without further court orders. The debtor could be held in contempt for failing to identify and turn over the property.
The 2017 Amendment
The 2017 amendment removed the requirement that an applicant for turnover relief show that the defendant owns some (non-exempt) property that is not readily leviable by ordinary process.
Much of the turnover case law has been concerned with whether the applicant had proved the elements. There is case law where the debtor failed to answer discovery, failed to show up for a deposition, had hidden assets in other companies or moved them out of state, and so forth. The point of that evidence was to help show that the assets were not readily leviable.
None of that is relevant now. The elements are simply that the creditor has won its judgment, the judgment has not been satisfied, and that the debtor owns at least one piece of non-exempt property.
The 2019 Amendment
Justice of the Peace courts have been appointing turnover receivers since the statute was first enacted. However, from time to time debtor’s counsel would argue that a Justice Court did not have the authority to appoint a turnover receiver. The 2019 amendment makes it clear that it does.