Turnovers and Receive Texas Creditor's Course... Texas Supreme Court Ancillary Proceedings Task...

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Transcript of Turnovers and Receive Texas Creditor's Course... Texas Supreme Court Ancillary Proceedings Task...

  • © 2017 Mike Bernstein

    NUTS AND BOLTS

    OF

    TURNOVER RECEIVERSHIPS

    MIKE BERNSTEIN

    Michael S. Bernstein, P.C.

    325 Gold Street, Suite 104

    Garland Texas 75042

    Tarrant County Bar Association

    Texas Creditor’s Course

    October 18, 2017

  • i

    Mike Bernstein is a solo attorney in the Dallas area. He first served as a turnover receiver in

    1994. By approximately 1996, serving as receiver had become 100% of his practice.

    Master of Arts, Stephen F. Austin State University 1984

    JD, South Texas College of Law, 1988

    Admitted to the State Bar of Texas 1989

    Texas BarCLE Course Director 2015 Collections and Creditors’ Rights Course

    Texas Supreme Court Ancillary Proceedings Task Force Member 2008 – 2011

    Contributing Author Texas Collection Manual 3d Edition & 4 th Edition

    Fellow of the College of the State Bar of Texas

    Mike Bernstein

    Michael S. Bernstein, P.C.

    325 Gold Street, Suite 104

    Garland Texas 75042-6658

    Telephone 972 / 271-2700 Email info@dallasreceiver.com

  • i

    POP QUIZ The Answers May Not Be What You Think!

    (The answers follow.)

    1. Which of these elements are required to prove up a turnover receivership?

    a. Applicant has an unsatisfied judgment b. 30 days have passed since the judgment c. Applicant has exhausted its remedies d. Other methods of collecting the judgment have failed e. Judgment debtor owns non-exempt property f. Judgment debtor’s non-exempt property is difficult to levy upon by ordinary process g. The property is in danger of being lost, moved or materially injured h. Judgment debtor has notice of the hearing

    2. How much should the Receiver’s Bond be?

    a. As much as the judgment b. $100 or so is fine c. Depends on how much the judge likes the attorney d. No bond is required.

    3. Sam Speculator bought real property from a substitute trustee at a foreclosure sale. Before the sale, a receiver had been appointed over the debtor’s assets. No notice of the receivership was filed in the county’s real property

    records, but the receiver claims that the Substitute Trustee’s Deed from the sale is void, as a matter of law. Is

    that right?

    4. Which of the following are required for a person to qualify as a receiver?

    a. Licensed to practice law in Texas b. Disinterested c. A registered voter d. A resident of the county e. A Texas resident f. Owns real property in Texas

    5. Can you request a jury for a turnover hearing?

    6. Plaintiff got a receiver appointed for its judgment-debtor’s assets ex parte. The receiver seized some assets and now debtor’s counsel is all fired up about notice and his client’s constitutional rights. Was it OK to get ex parte

    relief?

    7. True or False: A turnover proceeding is premature if the judgment is being appealed, because the judgment is not yet final.

    8. True or False: Wages are exempt in Texas. What if they call it “salary” instead wages?

  • ii

    POP QUIZ ANSWERS

    1. The elements are a, e.

    Learn more in sections IV, V, XX, and on page iii. Local practice may differ.

    2. d.

    Learn more in section XX C. No Bond Is Required.

    3. Yes.

    Learn more in section XIII. C.

    4. b. & c. Well, actually, b & c might not be a requirement, either, but those are the established practice.

    Learn more in section XIX B

    5. No.

    Learn more in section V G. No Right to a Jury on Receivership Proceedings.

    6. Yes.

    Learn more in section V.E.

    7. False.

    Learn more in Section X.

    8. Trick Question. Current wages are exempt from seizure.

    It doesn’t matter if they call it salary or wages, but that was a nice try on the part of a creative attorney back

    in 1889.

    Learn more in section III G.

    How well did you do on the Pop Quiz? Hmmm… maybe you ought to read the article, after all!

  • Nuts & Bolts Of Turnover Receiverships Texas Creditor’s Course

    iii

    The Turnover Statute As amended, effective June 2017

    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 ordinary legal process; and

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

    (b) The court may:

    (1) order the judgment debtor to turn over non-exempt property that is in the debtor's

    possession or is subject to the debtor's control, together with all documents or records

    related to the property, to a designated sheriff or constable for execution;

    (2) otherwise apply the property to the satisfaction of the judgment; or

    (3) appoint a receiver with the authority to take possession of the non-exempt property, sell

    it, and pay the proceeds to the judgment creditor to the extent required to satisfy the

    judgment.

    (c) The court may enforce the order by contempt proceedings or by other appropriate means in the

    event of refusal or disobedience.

    (d) The judgment creditor may move for the court's assistance under this section in the same

    proceeding in which the judgment is rendered or in an independent proceeding.

    (e) The judgment creditor is entitled to recover reasonable costs, including attorney's fees.

    (f) A court may not enter or enforce an order under this section that requires the turnover of the

    proceeds of, or the disbursement of, property exempt under any statute, including Section

    42.0021, Property Code. This subsection does not apply to the enforcement of a child support

    obligation or a judgment for past due child support.

    (g) With respect to turnover of property held by a financial institution in the name of or on behalf of

    the judgment debtor as customer of the financial institution, the rights of a receiver appointed

    under Subsection (b)(3) do not attach until the financial institution receives service of a certified

    copy of the order of receivership in the manner specified by Section 59.008, Finance Code.

    (h) A court may enter or enforce an order under this section that requires the turnover of non-exempt

    property without identifying in the order the specific property subject to turnover.

    TEX. CIV. PRAC. & REM. CODE ANN. § 31.002

  • Nuts & Bolts Of Turnover Receiverships Texas Creditor’s Course

    iv

    TABLE OF CONTENTS Pop Quiz .............................................................................................................................................................. i The Turnover Statute ........................................................................................................................................ iii

    I. INTRODUCTION AND SCOPE ...................................................................................................................... 1

    II. HISTORY & 2017 UPDATE ............................................................................................................................ 1

    III. THE TURNOVER STATUTE: CPRC § 31.002 COLLECTION OF JUDGMENT THROUGH COURT PROCEEDING .................................................................................................................................................. 1 A. § 32.001 (a): “Entitled” To Turnover Relief? ............................................................................................ 1

    1. Turnover Relief is Discretionary ........................................................................................................ 1 2. The Creditor Is Entitled… To A Hearing ........................................................................................... 1 3. The Creditor May Be Entitled To Turnover In Dallas ....................................................................... 2

    B. § 31.002 (a): “…Through Injunction Or Other Means…” ........................................................................ 2 C. § 31.002 (b) (1) Turnover to a sheriff or constable .................................................................................... 2 D. §31.002(b) (2) The court may “otherwise apply the property” ................................................................. 2 E. §31.002(b) (3) Turnover Receivership ...................................................................................................... 2 F. § 31.002 (e) Attorney’s Fees ..................................................................................................................... 2 G. Exempt Property § 31.002 (a) (2) ............................................................................................................... 2

    1. Debtor has the burden. ........................................................................................................................ 2 2. §31.002 (f)