NEW JUSTICE OF THE PEACE RULES RELATING

NEW JUSTICE OF THE PEACE RULES RELATING TO
DEBT COLLECTION ISSUES
Justice of the Peace Courts Section
Riecke Baumann
The Baumann Law Firm
Houston
Michael Scott
Michael J. Scott, P.C.
Carrollton
Hon. Mike Yarbrough
Justice of the Peace, Precinct 4
Frisco
Thursday, June 26, 2014
2:30 p.m. – 3:30 p.m.
The Baumann Law Firm
Riecke Baumann
Attorney at Law
Box 131647, Houston, Texas 77219
(713) 529-1600
Fax: (713) 588-8896
[email protected]
Board Certified in Consumer Bankruptcy Law by the
Texas Board of Legal Specialization
And American Bankruptcy Institute
Martindale-Hubbell rating: "AV”
Riecke Baumann graduated from L.S.U., in the bottom 98% of his class, in 1973, has been
licensed by the Bar Associations of both Texas and Louisiana since 1974, and certified as a
specialist in consumer bankruptcy law by the Texas Board Legal Specialization since 1985. He
has served on various committees of the American Bar Association, the Texas Bar Association,
and the Houston Bar Association, in the areas of bankruptcy, collections law, and
computerization and serves on various computerization and bankruptcy committees. He is a
frequent lecturer for Continuing Legal Education courses for the State Bar of Texas, University
of Houston, and Texas Bail Bond Board, National Association of Collection Managers, and the
National Association of Retail Collection Attorneys.
Historically, Mr. Baumann represented primarily consumer creditors, in state and bankruptcy
courts, throughout all of Texas, filing 200 plus suits, per month.
Mr. Baumann has served as Receiver and Master in over 300 cases, statewide, and has had
that many more Receivers appointed, to collect judgments that he obtained. Riecke’s practice
is now limited to appointments as Receiver, Master, Attorney, ad litem, and Special
Commissioner.
Memberships and Honors.
Director, Past and Present:
Texas Creditors’ Bar Association;
Houston Branch, NAACP;
Houston Safari Club.
Member:
African-American Chamber of Commerce of Greater Houston;
Acres Homes Chamber of Commerce.
Michael J. Scott
Scott, Parnell and Associates, P.C.
1120 Metrocrest Dr., Suite 100
Carrollton, TX 75006
phone: (214) 234-8456
[email protected]
BACKGROUND, EDUCATION AND PRACTICE
Michael Scott is a founding partner of Scott, Parnell and Associates, P.C., a Texas
volume litigation law firm with offices in six states. Scott|Parnell focuses on the
collection of consumer debt – primarily credit card and student loan debt – for
both original credit grantors and debt purchasers. His firm is one of the largest
debt collection law firms in the State of Texas.
Michael’s background includes a B.S. in Biology from the University of
California, San Diego, a Masters of Science in Bioinformatics from the University
of Texas, Arlington, and a J.D. from Southern Methodist University.
Michael is a founding member of Texas Creditor’s Bar Association (TXCBA) and
is its current president. Through the TXCBA (txcba.org), he has served as
chairman for the executive committee for modification of the justice court rules.
Michael has served as an officer of the Board of Directors of the National
Association of Retail Collection Attorneys and is currently a Texas representatives
to its state governmental affairs committee.
In addition to his law practice, Michael is a founding member of The Next Step,
Transitional Housing Program, a non-profit organization working to address the
needs of the homeless and displaced in Denton County, Texas.
Judge W.M. “Mike” Yarbrough received his B.A. from the University of New Mexico, and his J.D. from
California Western School of Law. He was admitted to the Texas Bar in 1983. He served in the U.S.
Marine Corps for twenty years (10 years as a JAG officer). He has served as an Assistant U.S. Attorney
for the Central District of California, an adjunct Professor of Law at the University of Oklahoma, an
Assistant D.A. in Dallas County, a Municipal Judge, and he has served as a Justice of the Peace in Collin
County for the past 15 years. While in private practice, he was certified by the Texas Court of Criminal
Appeals to represent capital defendants in writ of habeas corpus proceedings. Judge Yarbrough is a past
director of the Frisco Bar Association, and he currently is a Director of the Justice of the Peace section of
the State Bar. He is a member of the Metroplex Marine Corps Coordinating Council, and a current
member and past director of the Frisco Rotary Club. He has been married to Nancy for 30 years. They
have 2 children: Tanya and Travis, and 2 grandchildren.
Turnover Orders, Receiverships, and
Appointments of Masters
Practically Speaking:
Why We Do What We Do, How We Do It, and
The Language Required To Do It.
By: Riecke Baumann, Chris Gillett, and
Preston Towber, and
Thanks to Justin C. Adkins, Law Clerk
State Bar of Texas
Justice of the Peace Courts Section
New Justice of
the Peace Rules Relating to Debt Collection Issues
Austin, Texas
July 2014
1
S. Christopher Gillett
Ashby LLP, 1010 Lamar, Suite 1200, Houston, Texas 77002, (713) 739-1100
WORK EXPERIENCE
Sept. 2005 – Present
Ashby LLP, Houston, Texas
• Private practice in State and Federal commercial litigation
including commercial collections and judgment
enforcement
• Service as a receiver and master in chancery
Jan. 2010 – Present
University of Houston Law Center
• Adjunct Professor of Law
EDUCATION
A.A. White Dispute Resolution Center, University of Houston Law CenterAug.
2007
Mediation Training
South Texas College of Law, Houston, Texas
1993-1996
Juris Doctor, May 1996
Admitted State Bar of Texas
Admitted U.S. District Court, Southern District of Texas
Admitted U.S. District Court, District of Colorado
Member Houston Bar Association
Austin College, Sherman, Texas
1990-1993
B.A. Biology
The University of Texas at Austin, Austin, Texas
The Kinkaid School, Houston, Texas
1986-1988
1973-1986
PUBLICATIONS
Co-author Judgment Enforcement - Third Edition for Chapter 14 on the Texas
Law of Judgment Enforcement, Aspen Publishers
Co-author Turnover Orders and Receiverships, Practically Speaking. Why We Do
What We Do, How We Do It, and The Language Required To Do It; Harris County
Judicial Education Conference, August 2010
Co-author Locating Defendants and Assets Using the Internet; Collecting Debts
and Judgments CLE; University of Houston Law Foundation; September 2008,
May 2009
HONORS
“AV” Peer Review Rated by Martindale Hubbell
2
Member College of the State Bar of Texas
3
The Baumann Law Firm
Riecke Baumann
Attorney at Law
Box 131647, Houston, Texas 77219
(713) 529-1600
Fax: (713) 588-8896
[email protected]
Board Certified in Consumer Bankruptcy Law by the
Texas Board of Legal Specialization
And American Bankruptcy Institute
Martindale-Hubbell rating: "AV”
Riecke Baumann graduated from L.S.U., in the bottom 98% of his class, in 1973,
has been licensed by the Bar Associations of both Texas and Louisiana since 1974,
and certified as a specialist in consumer bankruptcy law by the Texas Board Legal
Specialization since 1985. He has served on various committees of the American
Bar Association, the Texas Bar Association, and the Houston Bar Association, in
the areas of bankruptcy, collections law, and computerization and serves on
various computerization and bankruptcy committees. He is a frequent lecturer for
Continuing Legal Education courses for the State Bar of Texas, University of
Houston, and Texas Bail Bond Board, National Association of Collection Managers,
and the National Association of Retail Collection Attorneys.
Historically, Mr. Baumann represented primarily consumer creditors, in state and
bankruptcy courts, throughout all of Texas, filing 200 plus suits, per month.
Mr. Baumann has served as Receiver and Master in over 300 cases, statewide, and
has had that many more Receivers appointed, to collect judgments that he
obtained. Riecke’s practice is now limited to appointments as Receiver, Master,
Attorney, ad litem, and Special Commissioner.
Memberships and Honors.
Director, Past and Present:
Texas Creditors’ Bar Association;
Houston Branch, NAACP;
Houston Safari Club.
Member:
African-American Chamber of Commerce of Greater Houston;
4
Acres Homes Chamber of Commerce.
5
Papers and Presentations:
Databases for the Law Office, Louisiana Bar Association, 1982 and in Monroe,
Louisiana Bar Association, 1984
Using Legal Remedies to Collect Debts, Houston Association of Credit Managers,
1984
Using Legal Remedies to Collect Debts and Judgments in Texas, National
Association of Collection Attorneys, May 2005
Using Legal Remedies to Collect Debts, National Business Institute, June 2006
Using Legal Remedies to Collect Debts and Locate Defendants, Bail bondsmen’s
continuing education seminars, 2001 through 2008
Domesticating Foreign Judgments, Houston Bar Association, July 2002
Collecting the Judgment: Receivers and Other Post Judgment Remedies, Houston
Bar Association, November 2, 2007
Sworn Accounts and Judgment Collection, Beirne, Maynard, & Parsons internal
CLE, May 2005
Co-author, Judgment Enforcement - Third Edition for Chapter 14 on the Texas Law
of Judgment Enforcement, Aspen Publishers, 2008, 2009, 2010
Co-author, Turnover Orders and Receiverships, Practically Speaking. Why We Do
What We Do, How We Do It, and The Language Required To Do It; Harris County
Judicial Education Conference, August 2010
Co-author, Locating Defendants and Assets Using the Internet; Collecting Debts and
Judgments CLE; University of Houston Law Foundation; September 2007, 2008,
2009
Presenter and Co-author, Receiverships and Turnover Orders, Practically Speaking,
Montgomery County Bar Association, April 2011
Presenter and Co-author, Receiverships and Their Affects on Bankruptcy Debtors,
Houston Association of Bankruptcy Attorneys, April 2011
Presenter and Co-author, Receiverships and Turnover Orders, Practically Speaking,
Fort Bend County Justices of the Peace Association, October 2013
Presenter and Co-author, Receiverships and Turnover Orders, Practically Speaking,
State Bar of Texas Justices of the Peace Association, July 2014
Presenter and Co-author, Receiverships and Turnover Orders, Practically Speaking,
Houston Bar Association, September 2014
6
Purpose:
To Explain What Turnover Receivers and Masters Do, Why, and
Why the Extremely Detailed Paragraphs are Needed
Ex:
“The order only says that we have to turn over the checks and statements.
The order doesn’t say we have to give you the checkbooks, so we ain’t.”
1.
There are several excellent papers about the turnover statute, beginning
with Judge Hittner’s 1982 article1 (He was involved in the passage of the
statute.), as well as the more recent papers of Mike Bernstein, Peter Pratt,
and James M. McGee.2
This paper’s goal is to explain the significance and necessity of the typical
turnover order and the standard language needed, to provide case law to
support the courts’ findings, and provide insight into the proof required to
survive appeal.
Harris County courts have long recognized the powers and benefits of
employing turnover orders, Receivers and Masters.3 The recent spate of
appeals and mandamus petitions is proof of Receivers’ effectiveness: after
years of debtors’ pre-judgment stalling, then refusing to answer asset
discovery, the Receivers’ turnover powers have finally cornered the beguiling
debtors, seized assets, and left debtors no escape but appeal and
mandamus petitions. (They wouldn’t be screamin’ if we hadn’t caught ‘em
out.)
If you remember three things from this paper, they are:

1
The turnover Receiver is appointed pursuant to Chapter 31 of the
Texas Civil Practice and Remedies Code, not Chapter 64, which does
not apply;4
Hittner, Texas Post-Judgment Turnover and Receivership Statutes, 45 Tex. Bar J. 417 (1982).
2
Bernstein, Turnover Receiverships & The Turnover Statute; Pratt, Turnover Receiverships “101”;
McGee “Collecting Debts and Judgments”.
3
About ten Houston attorneys focus their practices around handling receiverships, whereas Dallas
and Travis counties have only one, and no other county has such specialists.
4
Tex. Civ. Prac. & Rem. Code § 64.001, et seq.; Childre v. Great Sw. Life Ins. Co., 700 S.W. 2d
284, 288 (Tex. App.—Dallas 1985, no writ); Schultz v. Cadle Co., 825 S.W.2d 151, 155-55
(Tex.App—Dallas 1992, writ denied).
7
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The bankruptcy court cannot reverse or ignore a state court order.
Orders deeming facts admitted or approving Masters’ reports, for
example, cannot be set aside by bankruptcy courts;
Sales and transfers made after the state court takes the appointment
of a Receiver under consideration, are void (not voidable—void), and
plaintiffs and Receivers hold judicial liens on the property.
(Honorable mention: Receivers are very powerful.)
Important introductory points:
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The court has an affirmative duty to enforce its judgments. In re
Sheshtawy, 154 S.W.3d 114, 118 (Tex.2004) (quoting In re CrowBillingsley Air Park, Ltd., 98 S.W.3d 178, 179 (Tex.2003)).
Chapter 31 only applies to final judgments. See Section 31.001(b)(1).
The judgment and turnover order can be prosecuted, even while the
judgment is being appealed, as long as no supersedeas bond is on file.
Chapter 31 receiverships are typically referred to as “turnover
receiverships.”
Plaintiffs occasionally seek turnover orders, without Receivers, when a
specific asset can be easily identified and its sale will pay the entire
judgment.
If a net worth supersedeas bond is filed, the creditor contesting the
bond may pursue discovery in the prosecution of the contest, making
the appeal somewhat meaningless. The typical scenario is that
judgment is taken, then either ignored or appealed without a bond. A
Receiver is appointed and begins searching for undisclosed assets,
then debtor files a de minimus net worth affidavit with his supersedeas
bond. Discovery continues, but assets (probably) cannot be seized.5 If
assets are found, the debtor faces contempt and perjury charges for
falsely swearing about his assets.
The Receiver’s bond may be nominal, or waived;6
Flaws in the bond process, like forgetting to file the bond, or paying
only $100 of the $200 cash bond, can be cured;7
5
Tex. R. App. P. 24 is not very clear. See Scott Dyer’s excellent Supersedeas—The Trials and
Tribulations of Suspending Enforcement of a Money Judgment Under the New Rules, in The
Houston Lawyer, July/August 2009.
6
Childre, 700 S.W.2d at 289.
7
O & G Carriers, Inc. v. Smith Energy 1986-A Partnership, 826 S.W.2d 703 (Tex.App.-Hous. [1
Dist.] 1992).
8
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Unlike Chapter 64 receiverships, the Chapter 31 Receiver’s bond is
designed to protect the Receiver, not the parties,8 which seems odd,
but the cases are clear;
The order may be granted, ex parte.9 Since judgment Defendants have
already received due process and notice of the suit—and lost—advance
notice of enforcement efforts is not required.10 After all, no advance
notice is required before serving writs of execution or garnishment;
Although there is no requirement that a creditor first exhaust other
remedies before seeking turnover relief,11 having done so provides
more weight to the application for granting the order when other
remedies have been pursued;
The order appointing may be appealed, within 20 days, on an
interlocutory basis;12
The order appointing a Rule 171 Master in Chancery may not be
appealed: a petition for mandamus is required;13
A Receiver is the agent of the court,14 “the medium through which the
Court acts,”15 and shares the court’s immunity;16
Post-judgment discovery is not limited (e.g. 25 interrogatories), as in
pre-judgment cases.17 An excellent bankruptcy judge’s turnover order
(in an adversary) ordered that Receiver could employ either the
federal or state rules of civil procedure, thereby eliminating any federal
discovery limitations and allowing a state court practitioner an
expanded comort zone. The order also allows Receiver to choose those
rules that are most favorable;
8
Unless the judgment debtor shows extraordinary circumstances,
in an amount that would act as a prohibitive cost or make it
judgment creditor to use the remedies provided in the turnover
judgments. Childre, 700 S.W.2d at 289 (quoting Hittner, supra, at
9
any bond required should not be
economically impossible for the
statute for even the smallest of
420).
Ross v. 3D Tower Ltd., 824 S.W.2d 270 (Tex. App.—Houston [14th Dist.] 1992, writ denied).
10
Sivley v. Sivley and Sivley, 972 S.W.2d 850 (Tex.App.—Tyler, 1998, no pet.).
11
The Universe Life Ins. Co. v. Giles, 982 S.W. 2d 488, 493 (Tex. App.- Texarkana 1998, pet.
Denied).
12
Stubbs v. Thomason, 244 S.W.2d 844, 845 (Tex. Civ. App. 1951).
13
Tanner v. McCarthy, 274 S.W.3d 311, 324 (Tex. App. Houston [1 Dist.] 2008).
14
Spigener v. Wallis, 80 S.W.3d 174, 183 (Tex.App.– Waco 2002).
15
Akin, Gump, Strauss, Hauer and Feld, L.L.P. v. E-Court, Inc., 2003 Tex. App. LEXIS 3966 (Tex.
App. Austin May 8, 2003).
16
Veronica L. Davis v. James West, Henry Radoff and Prosperity Bank, No. 01-08-01006-CV
(Tex.App.– Houston [1st Dist.] 2009).
17
Tex. R. Civ. P §190.6.
9
Once a Receiver has been appointed to recover the non-exempt
property, the Receiver is not limited by the rules of civil procedure for
discovery (30 days, etc.) for incidental discovery conducted in the
course of the Receiver’s efforts. For example, Receiver may demand
defendant’s responses within a week, or subpoena records without
notice to defendant;

Turnover orders typically require turnover within 5 to 10 days, not 30,
as in production. The production rules only require defendant to make
the records available at defendant’s attorneys’ offices—which may be
200 miles away—but the turnover requires delivery to the Receiver’s
office—a huge difference.
Receivers may also require that the documents be collated in a particular
manner, with indices, and in Word© format.
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2.
3.
The process begins with the Plaintiff’s application. The proposed Receiver
often drafts the pleadings for counsel to tweak before filing, insuring that the
pleadings are both properly drawn and tailored to the facts of the case.
“Frequent Flyers,” like collection attorneys, usually have favorite Receivers
because they have worked together on many past judgments and
consequently work together more efficiently. Others, like personal injury
lawyers, often are unaware of post-judgment procedures. They are
accustomed to having insurance on the other side, so prospective Receivers
often must spend hours educating Plaintiff’s counsel before the application is
filed. It is common for the prospective Receiver to have invested 3-4 hours
of time into the case before the hearing. Consequently, having someone else
appointed is disappointing.
4.
Very little proof is needed to support the turnover order on appeal, but the
Tanner18 and Suttles19 cases require “some evidence of a substantive and
probative character to support the decision” finding that there are nonexempt assets that cannot be readily attached or levied upon by ordinary
legal process. The only “ordinary legal process” is a writ of execution. The
cases discount the 2005 paragraph h amendment20 that was intended to
delete the requirement to prove and list specific assets that are to be seized.
Instead, Tanner and Suttles found that the amendment only affects the
order, not the proof required. The best practice is to supply some proof that
the debtor maintains some sort of non-exempt property, and thereafter
simply list examples of defendant’s non-exempt property that are not
“readily attachable through ordinary legal process”—like bank accounts,
18
Tanner v. McCarthy, 274 S.W.3d 311 (Tex.Civ.App.– Houston [1st Dist.] 2009, no petition).
19
Suttles v. Vestin Realty Mortg. I, Inc., 2010 Tex. App. LEXIS 2964 (Tex. App. Houston 1st Dist.
Apr. 22, 2010).
20
Tex. Civ. Prac. & Rem. Code §31.002(h).
10
stocks, causes of action, partnership interests, out of state real property,
patents, telephone numbers, trade names, and websites. It is helpful to
explain, on the record, why defendant’s real property cannot be readily
levied upon. For instance, all of Mr. Suttles’ properties were heavily
mortgaged, so selling them was not a viable option. Holt had a property in
Maine. While Mr. Suttles repeatedly swore that all of the properties had been
foreclosed upon, it was not until after a Receiver was able to investigate that
the truth could be discerned: he was receiving significant Section 8 housing
rental payments that he denied and hid from the plaintiff, Receiver, and
court. Plaintiff’s introduction of Suttles’ ownership of the properties was the
ground for the reversal: the appellate court found that the properties could
be readily levied upon. Suttles’ misstatements and refusal to answer
discovery created the appellate flaws that he relied upon, i.e., plaintiff could
not prove, at the time, that the properties were underwater with mortgages
and liens, so plaintiff would not show that levying would be uselss.
Mr. Tanner, a helicopter broker, left his fees in the title companies’ trust
accounts until he needed money, at which time he had $9,000 payments
wired to his (undisclosed) accounts. The funds were totally hidden, until the
Receiver re-directed defendant’s mail, opened the bank statements,
obtained the last year’s statements, and then interviewed the sources of the
checks (the title companies, etc.). Tanner gave his attorney $220,000 after
the turnover order was granted, that the attorney disbursed, including
paying himself $44,000 as a non-refundable retainer. Both Tanner and the
attorney were held in contempt, but only because the order allowed the
Receiver to discover Tanner’s contemptible actions, by redirecting the mail.
Tanner had denied the accounts, on the witness stand.
This is the Catch-22 of the case law: Plaintiff often cannot list the assets,
because defendant has hidden them, and the assets can’t be discovered until
after the Receiver has taken office and started digging. The back and forth of
post-judgment motions to compel takes months, during which time the
assets are often sold, spent, or hidden, without recourse.
Problems presented by the cases:
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Debtors are often not forthcoming with information about their assets;
The assets are seldom known until after the Receiver has worked his
magic;
Standard post-judgment discovery is slow, cumbersome, and lends
itself to months of delay by debtors, placing the burden to act (and
costs) on plaintiffs, not defendants;
11
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5.
Benefits of turnover orders and Receiverships:
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6.
Turnover orders shift the burden from requiring Plaintiffs to prosecute
judgment enforcement to requiring defendants to turnover assets and
information. This is huge;
Receivers may seize assets or subpoena information and documents
without notice—then back track the paper trails to assets, bank
accounts, additional information, and witnesses;
Receivers’ powers, combined with the turnover order, often extend
beyond the state,21 and even the country,22 since Receivers stand in
the debtors’ shoes, and the turnover order requires debtors to deliver
deeds, titles, and personal property, as well as signing the documents
needed to obtain and transfer ownership;
The time limits of the rules of procedure do not apply, since Receivers
are not parties. As the judges’ agents, Receivers may set reasonable
time limits for discovery responses;
Receivers and Masters save court time by obtaining information
directly from third parties, eliminating motions to compel;
As neutral third parties, Receivers are able to soften some of the
venom among the parties. With such powers, Receivers can obtain
results in much gentler manners and keep aggressive plaintiffs off
defendant’s backs.
Custodia legis begins when the judge sets the hearing.23 A debtor who
hides or sells assets during the post-judgment discovery process is
free to do so, and the sales are valid, but the same tactics are
sanctionable as contempt if taken after the application for turnover is
set for hearing. More importantly, the sales are void. Period. Big, big
difference.
Benefits to appointing Masters:
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21
Post-judgment Plaintiffs do not have the same powers as Receivers or
Masters, and do not have the immunity;
Plaintiffs must give notice of most of their actions. Receivers are
allowed to act without notice, i.e., before assets can be moved.
Masters may rule on objections to discovery requests, eliminating
many motions;
Reeves v. Fed. Sav. & Loan Ins. Corp., 732 S.W.2d 380 (Tex. App.—Dallas 1987, no writ).
22
Koehler v. Bank of Bermuda Limited, 2009 NY Slip Op 04297, No. 82, 2009 N.Y. LEXIS 1751
(June 4, 2009).
23
Huffmeyer v. Mann, 49 S.W.3d 554, 560 (Tex. App. Corpus Christi 2001).
12
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7.
Masters’ reports save court time. If uncontested, the reports’ findings
are like deemed admissions. If a Master makes ten findings, and a
party disputes three, the court’s time has been shortened.
Additionally, the objecting defendant has been forced to clearly specify
his position, before the hearing;
Masters can hold hearings, interview witnesses, and review
documents, at a moment’s notice, “on the fly,” as events and
opportunities arise, especially outside the court’s 150 mile subpoena
jurisdiction. Examples: a truck driver who hauled assets or toxic
waste; a disgruntled former employee; an ex-spouse or partner; a
bank officer or records custodian; anyone whom the Master bumps
into while investigating, especially those who are transient, like truck
drivers;
Standard traps run by Receivers:
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Freeze bank and financial institution accounts;24
Freeze funds from merchant service providers (credit card charges);
Obtain records from third parties, like vendors and other creditors,
including other judgment creditors;25
Obtain and review credit bureau reports;26
Redirect mail;27 (Receiver’s best source of information, by far.)
Check addresses with postmasters;
Backtrack county tax assessors’ records to determine which bank
accounts were used to pay past taxes;
Determine how cable television and cell phone bills are paid (check,
credit card), and obtain service and billing addresses;
Examine debtors and witnesses;
Set motions to compel;
24
Schultz v. Cadle Co., 825 S.W.2d 151, 153-54 (Tex. App—Dallas 1992, writ denied). Tex. Civ.
Prac. & Rem. Code §31.002(g); Tex. Fin. Code §59.006(a)(5)(records request from a duly
appointed receiver).
25
Because the Receiver possesses the Defendant’s contractual rights and the right to documents
relating to the Defendant’s property, the Receiver may demand copies of the Defendant’s financial
documents.
26
Id.
27
The United States Postal Service’s Postal Operations Manual §616.3, authorizes the Receiver to
re-direct each Respondent’s mail to the Receiver’s office; see also The United States Postal
Service’s Domestic Mail Manual 508, Recipient Services; see also Diamond Steel Highway Sign Co.
v. Commercial Trust Co., 298 S.W. 456, 1927, Dallas, and Zimmerman, Receiver, v. B&V
Enterprises, 68 Mass.App.Ct. 1114, 863 N.E.2d 582, 2007 WL 865628 (Mass.App.Ct.). Since the
issue regards federal law, the Massachusetts case is very persuasive and current.
13
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8.
Benefits to Defendants. Yes, receiverships are occasionally very beneficial to
debtors, if there is a friendly judgment creditor.
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9.
28
Run Google, Accurint, Merlin, PublicData, FaceBook, and other
computer searches;
Obtain defendant’s photographs from DPS;
Serve writs of turnover;
Whatever else Receiver dreams up, late at night.
Any foreclosure or forced sale is void, unless the court grants prior
permission.28 A receivership sometimes serves as a cheap Chapter 11
or 13, allowing the defendant to negotiate with other creditors and
allowing statutes of limitations to run before filing bankruptcy (like IRS
statutes or the residency rule for claiming exemptions in bankruptcy);
The Receiver serves as a buffer between a stressed, good faith debtor
and an unreasonable creditor who just wants to punish the defendant.
Bankruptcy issues.
a.
Sections 101(11)(a) and (c) define a receiver appointed prior to the
bankruptcy case as a “custodian.”29 Section 54330 requires a a receiver
with knowledge of a bankruptcy to refrain from taking any action to
administer the property (either of the debtor or of the estate) or
disbursing proceeds, other than to preserve the property. The receiver
is required to deliver all property held by the receiver or in his
possession, custody, or control to the bankruptcy trustee and to file an
accounting of all the property with the bankruptcy court. The court,
after notice and hearing, is required to (a) protect all persons that the
receiver becomes obligated to with respect to the property and provide
for the reasonable compensation for services rendered and costs and
expenses incurred by the custodian.
b.
The Court may surcharge the receiver, if in place more than 120 days
before filing, for any improper or excessive disbursement, unless made
in accordance with applicable law or approved by a court of competent
First Southern Properties, Inc. v. Vallone, 533 S.W.2d 339, 341 (Tex 1976).
29
Section 101(11)(A) defines a custodian as a “receiver or trustee of any property of the debtor,
appointed in a case or proceeding not under this title” and 101(11)(C) as “trustee, receiver or
agent appointed under applicable law, or under a contract, that is appointed or authorized to take
charge of property of the debtor for the purpose of enforcing a lien against such property, or for
the purpose of general administration of such property for the benefit of the debtor’s creditors.”
30
See attached for text of section 543.
14
jurisdiction before the bankruptcy filing.31 The Court may excuse the
turnover of property and the compliance by the receiver if it is in the
best interests of creditors, or if the debtor is solvent, in best interests
of shareholders, or can excuse the turnover provisions and prohibition
on taking action if receiver is an assignee of the benefit of creditors
and appointed more than 120 days before the bankruptcy filing.32
c.
Upon the bankruptcy filing, unless the Court excuses turnover and
allows the receiver to stay in place under the limited exceptions set
forth in section 543(d), the trustee (or debtor in possession) owns all
property of the debtor upon the bankruptcy filing and the receiver is
referred to as a “superseded custodian.” Section 503(b)(3)(E) and
(b)(4)33 provide administrative priority status for the actual necessary
expenses of a receiver for his prepetition efforts and any attorney or
professional person assisting the receiver in the discharge of his prepetition duties. Trustee takes over on the filing date, so receiver
should turnover all property, file an accounting and file a request for
fees and expenses. To recover, receiver must keep detailed time
records. After notice and hearing, the Court will approve the fees and
expenses that are actual and necessary. Approved, fees are entitled to
administrative priority payment, meaning that receiver will be paid at
the same time as the Chapter 7 trustee and his professionals. Pointer:
KEEP DETAILED TIME RECORDS SO CAN FILE YOUR REQUEST FOR
FEES.
d.
You may ask, “Why do I need to keep time and billing records if my
order says that I receive 25% of any asset I administer?” That
argument should be made. Nevertheless, at least two bankruptcy
courts have ruled that the bankruptcy court determines the
reasonableness of the fee requests under its standards and not state
court standards, See In re Youngquist, 501 BR 877, 890 (Bankr.
Kansas 2013)(“The Bankruptcy Code requires the Court to determine
reasonableness, not to adopt the compensation standard approved by
the state court.”); In re Sevitski, 161 BR 847, 855 (Bankr. N.D. Okla.
1993)(“It is the duty of this Court, and none other, to determine
whether and to what extent [the receiver] deserves to be paid out of
the pocket of less deserving creditors. This Court proceeds to do its
31
We typically disburse funds, without a hearing, because the turnover so allows. This provision
suggests that holding a hearing might be wise.
32
This only applies to pre-judgment receivers; turnover receivers are only assisting the named
judgment creditor(s).
33
See attached for text of section 503(b).
15
duty.”) Be prepared to prove your fees up with detailed time records
showing the benefit of your services.34
e.
The preferred order provides that “all nonexempt property of the
debtor is deemed to be in custodia legis wherever it may be,” even if
not in the Receiver’s actual possession. So, what happens if the
bankruptcy estate recovers property that debtor was hiding from
Receiver prior to the bankruptcy? Which rights does Receiver hold?
When we freeze a bank account, Receiver’s rights immediately attach.
Tex Civ Practice & Rem Code section 31.002(g). The court may set
aside, as a preference, a freeze that occurs within 90 days of
bankruptcy and require return of the funds to trustee.
f.
In Flooring Systems, Inc. v Chow, 2013 U.S. Dist. 123825, *14 (ED
Tex. Aug. 29, 2013) the district court held that “in custodial legis” just
means “in the custody of the court”: it does not determine who is
entitled to the funds. See also, In re Chestnutt, 422 F3d 298, 301(5th
Cir. 2005). If Receiver takes custody of property within the 90 days,
he might be ordered to return the property, as preference. If Receiver
never takes custody of receivership property, but trustee locates and
recovers property that debtor was hiding, trustee will argue that he is
entitled to all of the property. We believe that plaintiff and Receiver
have judicial liens on the property.35 There are really no cases that we
could locate that award a receiver an interest in funds the debtor hid
from the receivership prior to the bankruptcy filing. The law is still
developing in this area.
g.
Another practice pointer is to have your order give you a judicial lien
on all nonexempt assets rather than just a statutory line. A Receiver’s
statutory lien, may be avoided by the bankruptcy trustee. See 11 USC
section 545.
h.
What can Receiver do? He can seek to have his debt declared nondischargeable under section 523 of the Code. While Receiver is a party
in interest in the bankruptcy case, he must be a creditor to have
standing to sue.
i.
receiver has standing by virtue of his fees that are awarded under
section 543. A receiver also has standing if the state court awards him
34
We believe that our preferred form of order is more specific and binds the bankruptcy court,
under the Reinauer and Camp cases that are discussed, elsewhere in the paper. Unless plaintiff
obtains our preferred order, we typically move to supplement the order so that it will contain the
“bells and whistles” that we need.
35
See First Southern Properties v. Vallone and Huffmeyer v. Mann, discussed below.
16
fees and damages in his/her own name, not just the judgment
plaintiff. For example, if Court awards Receiver fees and expenses for
discovery sanctions or contempt, and these amounts are unpaid,
Receiver may assert these amounts as non-dischargeable. To prevail
requires proof of fraud, breach of fiduciary duty, or willful and
malicious injury to Receiver.36
10.
j.
Since Receiver is often also a Master, he has the right to assert the
fees earned in the role of Master.
k.
A debtor who was held in contempt by the state court, with factual
findings that are clear enough to satisfy the willful and malicious injury
standard for nondischargeable debts, Receiver or Master may prevail.
See In re Shcolnick, 670 F3d 624 (5th Cir. 2012); In re Keaty, 397 F3d
264 (5th Cir. 2005); and In re Williams, 337 F3d 504(5th Cir. 2003). If
the state court orders provide sufficient detail on the 523(a)(6)
required findings, the bankruptcy court may find these findings to be
binding under collateral estoppel principles.
These are issues on which little or no case law was found.
a.
May trustee assert claims held by Receiver? Ex:, during the
receivership, defendant paid attorneys, with non-exempt assets, to
handle his divorce. May trustee require turnover of the fees from the
attorneys?
b.
May the stay be lifted to allow Receiver to seek the disgorgement, in
state court, of the fees and to sanction defendant and his attorneys for
knowingly violating the turnover order?
c.
Are those violations grounds for exempting part of the debt from
discharge, pursuant to §§524a4, 524a6, grounds for denial of the
entire discharge, pursuant to § 727, or dismissal of the petition?
d.
Is Master a creditor?
e.
Is Receiver a creditor?
f.
Are Receiver’s rights to be paid limited to §543?
g.
Judgment is three years old when turnover order is granted and
Receiver is appointed. His fee is a 25% contingency fee.
36
There is nothing on this issue. We are presently in the midst of such a dispute over the right to file a proof of claim, to file
a complaint contesting dischargeability, and Receiver’s right to object to exemptions.
17
h.
First
scenario.
Twenty
days
after
appointment,
Receiver
captures/freezes $12,000 in bank account.
Receiver receives $12,000 check on the 29th day, and disburses on
31st day.
Eighty-nine days after appointment, receiver freezes $16,000.
i.
Second scenario. Receiver receives $16,000 check on 91st day, and
disburses on 93rd day.
Ninety-one days after appointment, Receiver freezes $40,000.
j.
Third scenario. Receiver receives $40,000 check on 93rd day, and
disburses on 95th day.
Questions:
Which seizures are preferential?
Which payments are preferential?
Can there be a preferential payment to plaintiff, but the
payment to Receiver be non-preferential, because it was
made contemporaneously with the recovery/right to
payment?
Are the payments to Receiver non-preferential, since his
right to be paid (debt/claim) only arose on the date of
appointment?
Does his preference period begin when he is appointed, or
on the date that he seizes an asset? (Has a right to
payment.)
I.
Turnover Receiver is appointed. Defendant has non-exempt assets,
real and personal. Creation of the receivership places all non-exempt
assets into custodia legis. Is there a judicial lien on all of defendant’s
non-exempt assets, or just those that he actually seizes?
(That is, is Receiver’s claim for section 543 fees secured by items that
he has not taken actual possession of.)
II.
(Same vein) State court turnover order sets Receiver’s fee at 25% of
recoveries. Receiver seizes assets, so defendant immediately files
bankruptcy. Section 543 allows receiver certain rights.
Does Receiver have a lien, for his fees, in the seized
assets?
18
If so, does Receiver lose the lien if he turns the money
over to the trustee without first obtaining an order that
establishes his rights/lien?
Does Rooker-Feldman require the bankruptcy court to
honor the state court’s order to pay Receiver 25% of
recovery, or can the bankruptcy court require Receiver to
prove up his fees, on an hourly basis? (Hard to do, if he
worked the file for a year without keeping time and billing,
because the fee was contingent)
To get paid, does Receiver file an application for fees, a
motion pursuant to section 543, or a combination?
III.
If trustee abandons an asset, and discharge is granted, can Receiver
then seize/sell the asset?
IV.
If state court defendant is attached, for refusing to answer discovery,
does filing bankruptcy end the attachment?
V.
If so, who is responsible for preparing the orders releasing? What are
the creditor’s duties?
VI.
Is the refusal to answer discovery a ground for dismissal of the
bankruptcy, as a bad faith filing?
Is the state court attachment order relevant to a motion to dismiss
bankruptcy, if debtor does not fully answer the schedules?
VII.
If a pro se debtor has no mailbox, how do you serve motions on him?
19
Note to readers: We tweak the boilerplate application and order, every couple of
weeks, as new “defenses” pop up, so please ask us for the newest version before
drafting a set of pleadings. We merge from Excel, as foing so is faster and reduces
typographical errors.
«Cause»
«Plaintiff»
Versus
«Defendant»



In The «inthecourt» Court
«Courtnumber»
«Countyofcourt» County, Texas
Application for Post Judgment Turnover Order,
And Appointment of a Receiver and Master
1.
Parties. Applicant, «Plaintiff», judgment-Plaintiff, requests the appointment
of a Receiver and turnover of the non-exempt property of every judgment
defendant, «Defendant», (“defendant”), pursuant to Sec. 31.002 of the
Texas Civil Practices and Remedies Code (the "Statute"), and appointment of
a Master pursuant to Rule 171, Texas Rules of Civil Procedure (the "Rule").
2.
Certificate of Service. Copies of the application for turnover, affidavits,
proposed order, and notice of hearing were served on defendant,
«Defendant», by certified and first class mail, at «DefAddress1»,
«DefCityStateZip1»,
«DefAddress2»,
«DefCityStateZip2»
on
___________________, 2013.
Courtesy copies were faxed to attorney, «oppoattyname», at «oppoattyfax».
 Whom to serve is often a problem, because defense counsel tends to
fade after judgment is entered, without formally seeking an order of
withdrawal. We usually send a short fax asking if the attorney still
represents defendant.
 Individuals’ mail is often returned, marked, “Unable to Deliver,”
which means that the person does not have a mailbox, which
presents a problem: how do you serve such a person?. (This problem
also arises when the mail is being forwarded to Receiver.)
3.
Hearing Date. This matter will be heard at _____ a.m., on ________, 2013.
4.
Judgment Amount. Applicant owns an unpaid final judgment against
defendant in the principal amount of $«originalbalance», plus $«attysfees»
in attorneys’ fees, together with interest and court costs. No credit is due.
The following credits are due $_____.
20
5.
Relief Requested. Applicant requests a Turnover Order, and the appointment
of a Receiver and Master in Chancery, with the powers granted in the
statute, the order, and that defendant be ordered to turn over to the
Receiver and Master all documents and property listed in Exhibit “A” to the
order.
6.
Turnover Order. A trial court's entry of a turnover order is governed by the
Texas Civil Practice and Remedies Code section 31.002. Tanner v McCarthy,
274 S.W. 3d 311, 320 (Tex. App. Houston [1 Dtist.] 2008). See Tex. Civ.
Prac. & Rem.Code Ann. § 31.002(a) (Vernon 2008). Under that section, a
judgment creditor is entitled to receive aid from a court to reach property to
obtain satisfaction on a judgment “if the judgment debtor owns 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.” Id. The trial court must have “some” evidence
before it that establishes that the necessary conditions for the application of
Tex. Civ. Prac. & Rem. Code section 31.002 exist. Id at 322. However, the
trial court is not required to identify in the order the specific property subject
to turnover. Id at 321. See § 31.002(h) (Vernon 2008). The Tanner court
reversed the trial court’s turnover order on the basis that the application
adduced no evidence, by affidavit or otherwise, which would have provided
the trial court a basis to conclude that defendant owned any such property
subject to turnover under section 31.002(a). Id at 323.The court held that
Section 31.002 does not specify, or restrict, the manner in which evidence
may be received in order for a trial court to determine whether the
conditions of section 31.002(a) exist, nor does it require that such evidence
be in any particular form, that it be at any particular level of specificity, or
that it reach any particular quantum before the court may grant aid under
section 31.002. Id at 322. However, a trial court must nonetheless
determine that the request for aid pending before the court falls within the
scope of section 31.002 before it enters an order granting relief under that
section. Id. In making this determination, the trial court must have some
evidence before it that establishes that the necessary conditions for the
application of 31.002 exist. Id. The facts in this case, as shown below, can
be distinguished from those in Tanner and provide a significant basis for the
turnover order.
 Present the facts as required by Tanner. Prove that there is a nonexempt asset that cannot be readily levied upon by ordinary legal
process, and that there are not enough non-exempt assets that can
be readily levied upon to satisfy the judgment.
7.
Property. Applicant has good faith reasons to believe that defendant owns
non-exempt rights to present or future property that cannot be attached or
levied upon by ordinary legal process, like bank accounts that are easily
21
moved and constantly changing in balance. . A cash sum that is in the
judgment debtor’s possession or control is the proper subject of a turnover
order. Beaumont Bank, N.A. v. Buller, 806 S.W. 2d 223, 337 (Tex. 1991).
The burden of proof shifts to the judgment debtor to account for the funds
once the creditor traces a specific sum to the debtor, and the simple
assertion the it was spent is unacceptable. Id. at 226. The property made
the basis of this application is not readily attachable by ordinary legal
process. Garnishment is an extraordinary remedy. See Chapter 62 of the
Texas Civil Procedures and Remedies Code.
Each defendant owns and has, or will possess or control property interests
and documents relating to such property which are not exempt from
attachment, execution, or any other type of seizure for the satisfaction of
liabilities, and which cannot be readily attached or levied on by ordinary
legal process.The facts illustrate that Applicant has attempted to satisfy this
judgment by ordinary legal process to no avail. Plaintiff has unsuccessfully
attempted to collect the judgment, by taking these actions:
Applicant is entitled to receive aid from a court to reach property to obtain
satisfaction on a judgment
 Proving that businesses have non-exempt assets “not readily levied
upon by ordinary process” is not difficult, since businesses tend to
have bank accounts, accounts receivable, and credit card accounts
receivable from credit card processing providers. The business’
name and telephone number are assets that cannot be readily levied
upon by ordinary legal process. Businesses that are not sole
proprietorships do not have exempt property.
 Dealing with individuals is not as easy as with businesses, since
individuals tend to have fewer non-exempt assets and seldom own
accounts or notes receivable. Individuals’ assets are less visible and
less typical, but most debtors have bank accounts, unlike 30 years
ago, and a Receiver can eventually find them. Plaintiff’s problem is
that even if the debtors disclose the accounts, the debtors
immediately close the accounts, then open new accounts elsewhere,
or operate on cash bases.
On the other hand, individuals can’t dissolve or go out of business,
unless they die.
 Post-judgment, pre-application discovery helps make the order
bullet-proof, especially with the proper admissions. Many counsel
set a motion to compel concurrently with the application for
turnover. Pre-judgment discovery is often useful. Sadly, many
22
plaintiffs’ attorneys forget to ask basic identification questions
during pre-judgment discovery, like where defendant or witness
lives, telephone numbers and contact information, etc. That witness
might be laid off, have an axe to grind, and soon be your best
witness.
 Receivers also send their own discovery, and enforce compliance
with sanctions.
 Some orders contain paragraphs listing the collection activities that
were attempted before turnover was sought. This information might
be better set out in the record than in the order, if only to reduce the
size of the order.
 Making a record allows the judge to ask questions, and builds a
strong record for appeal. However, the lack of a record is sometimes
better, because appellant has no way to pick apart the evidence.37
 We are delighted when defendants appear at the hearing, because
we not only have a chance to discuss settlement, but get to put them
on the stand and ask about assets. Defendants are in a Catch-22: if
they don’t appear, they lose by default; if they appear, plaintiff will
almost certainly be able to force them to admit, through
interrogation, that they have some non-exempt assets, etc.
 If the judge grants the turnover order, be sure to give the debtor a
copy, swear him in, then set a compliance hearing, two weeks later,
to reappear and prove compliance. If defendant does not comply,
ask for sanctions, swear him in, and reset the third hearing for a
specific day.
8.
Receiver. Applicant requests the appointment of a Receiver with the powers
granted in the statute and the attached order, and that every defendant be
ordered to turn over to the Receiver all documents and property listed in
exhibit A. (“property”). The Court may order the judgment debtor to turn
over nonexempt property to a designated sheriff or constable for execution,
may otherwise apply the property to the satisfaction of the judgment, or
may appoint a receiver with the authority to take possession of nonexempt
property, to sell it, and to pay the proceeds to the judgment creditor as
required to satisfy the judgment. See § 31.002(b) (Vernon 2008). In a
37
See In re Marriage of Lizama, not reported in S.W.3d, 2003 WL 253294 (Tex.App.-Amarillo);
Ross v. 3D Tower Ltd., 824 S.W.2d 270, 272 (Tex.App.–Hous. [14 Dist.],1992) (a turnover case
with no testimony); In re Marriage of Spiegel, 6 S.W.3d 643, Tex.App.–Amarillo,1999.
23
turnover proceeding governed by Tex. Civ. Prac. & Rem. Code section
31.002, the traditional requirements for the appointment of a receiver do not
need to be satisfied. Childre v. Great Southwest Life Ins. Co, 700 S.W. 2d at
288 (Tex. App. - Dallas 1985). The courts in Childre and Schults found that if
the Texas legislature had intended for the appointment of receivers in
turnover proceedings to meet the requirements of the receivership statutes,
it would have provided for or at least referred to these requirements in the
turnover statute. Since the turnover statute does not provide specific
requirements for the appointment of a receiver, this decision falls within the
trial court’s discretion. Schultz v. Cadle Co., S.W. 2d 151, 155 (Tex. App. Dallas 1992, writ denied).
 The Receiver’s bond may be nominal or waived. See Childre, supra.
The powers of a constable or sheriff, a receiver, and a master,
combined with the turnover order, often extend beyond the state.
Reeves v. Fed. Sav. & Loan Ins. Corp., 732 S.W. 2d 380 (Tex. App. – Dallas
1987, no writ).
It is the Applicant’s undertaking to encourage this Court to appoint a
Receiver to carry out its powers and duties to assist the Applicant, and the
Court, in satisfying its judgment. Applicant believes that every defendant
owns or has rights to non-exempt personal property, but applicant needs the
assistance of a Receiver and master to discover, seize, administer, and sell
the assets.
9.
The statute authorizes applicant to recover its reasonable attorneys’ fees for
preparing and urging this application. Fees typically vary from $350 to
$1,500, depending on the court and how much pre-hearing opposition
occurred. The authors believe that Plaintiff’s right to turnover attorneys’ fees
includes fees for prosecuting the turnover order, until paid, not just for
obtaining the order, but no reported opinion considers the question.Powers
of the Receiver. With limited exceptions, a receiver has only the powers
conferred by the order appointing the receiver. Ex Parte Hodges, 625 S.W.2d
304, 306 (Tex.1981). The court has broad discretion in defining the powers
of the receiver. Id. A receiver may, subject to the control of the court, (a)
take charge and keep possession of the nonexempt property, (b) to sell the
property, receive rents, collect and compromise demands, make transfers of
the property, pay the proceeds to the judgment creditor as required to
satisfy the judgment, and (c) perform other acts in regard to the property as
authorized by the court. See § 31.002(b) (Vernon 2008) and Tex. Civ. Prac.
& Rem. Code Section 64.031. A receiver may freeze bank and financial
institution accounts Schultz v. Cadle Co., S.W. 2d 151, 153-154 (Tex. App. -
24
Dallas 1992, writ denied) and redirect mail38. A receiver’s powers should be
as broad as needed to accomplish the objective for which the receiver was
appointed. While these powers certainly provide assistance in the
satisfaction of the judgment, Applicant believes that the additional
appointment and bestowment of the powers of a Master in Chancery is
critical in this case.
10.
Master in Chancery. The appointment of a master is governed by Rule 171 of
the Texas Rules of Civil Procedure. See Tex. R. Civ. P. 171. Appointment of a
master is appropriate “in exceptional cases, for good cause”. See Tex. R.
Civ. P. 171 and Simpson v. Canales, 806 S.W. 2d 802 (Tex 1991). The
“exceptional case/good cause” criterion of Rule 171 is not susceptible of
precise definition Id at 811. However, the rule’s standards may not be
satisfied merely by showing that a case is time consuming or complicated.
Id. The appointment lies within the sound discretion of the trial court and
should not be reversed except for a clear abuse of that discretion. Id.
The Simpson court found that the trial court erred in appointing the master,
and stated that “although the case may have been one of the more
complicated on the docket, that it could hardly be said to be exceptional”.
Id. That case involved a toxic tort action consisting of 18 defendants and
months of discovery. The court found error not in the complexity aspect of
the case, but in the courts failure to hear any of the discovery disputes. The
trial court erred by appointing the master to hear all discovery disputes
without good cause or an exceptional reason for the court not to perform its
function and hear the disputes before it. On the other hand, in Moore, the
court found the appointment of a Master to be appropriate where money and
property had come into the possession of defendant at different times, and
had been held by or expended in part by defendant at various times and for
different purposes, over a period of approximately six years. Texas Bank &
Trust Co. v. Moore, 595 S.W. 2d 502 (Tex. 1980). In addition, the court in
Mancias found the appointment of a master to be appropriate where the
discovery questions, regarding the property, required extensive examination
of highly technical and complex documents by a person having both a
technical and legal background. TransAmerican Natural Gas Corp. v.
Mancias, 877 S.W. 2d 840 (Tex. App. – Corpus Christi 1994).
Master in Chancery is needed. The appointment of a master is justified to aid
the Court in the performance of specific duties which a sitting court cannot
undertake, like “running” writs, levying on property, traveling throughout
the state to locate and inspect assets, delivering the property to sales lots,
and advertising for an locating prospective buyers, among other tasks.
38
See footnote 27, supra.
25
A master will conserve the resources of the Court on specific post judgment
matters, including locating and liquidating property. Since the Court cannot
order a witness to travel more than 150 miles, a master is needed to travel
to interview witnesses. Appointment of a master will result in the need for
fewer hearings, lower attorneys’ fees, and protect the economic interests of
both the debtor and creditor. The master’s fees will be included in the
Receiver’s fees, so no extra cost will be incurred, and the master’s report will
be useful to the Court.
 The Holt39 case is the only reported post judgment opinion dealing
with the appointment of masters in turnover orders. Unfortunately,
Plaintiff did not respond to the mandamus petition, even though the
supporting facts were substantial, and the case was easily
distinguished from the most cited case, Canales.40
 Judge Canales appointed a pre-judgment Master to hear all
discovery matters, and to perform, at great expense, the duties for
which the judge was elected and paid. Nothing unique was involved,
just a lot of work for a busy judge. Both parties objected to the
Master’s appointment.
 Holt was granted a mandamus order because Plaintiff introduced no
evidence at the hearing. This could have been cured by simply filing
and hearing a motion to modify the order pursuant to T.R.A.P. 27.3,
then sending the modified order, with record, up to the appellate
court. Plaintiff did not support its judge.
 The Holt Master, Mr. Baumann, was appointed to determine which of
Holt’s four homes (one in Maine, three in Montgomery County) were
exempt and non-exempt. A proper record would have sustained the
appointment.41
 Turnover Masters’ appointments are distinguishable from Canales, in
many ways:
o Turnover proceedings are post-judgment, so the appointment
is limited to locating non-exempt assets;
39
Holt v. Sakowitz, 2007 Tex. App. LEXIS 3403 (Tex. App. Houston 1st Dist. Apr. 27, 2007).
40
Simpson v. Canales, 806 S.W.2d 802 (Tex. 1991).
41
It is noteworthy that the Holt appellate decision was withdrawn the day after an amicus brief
revealed that the appellees and 1st Court of Appeals did not mention the 2005 amendment, adding
paragraph h to Tex. Civ. Prac. & Rem. Code §31.002. This case was snake bitten by poor
prosecution.
26
o If the fees are contingent, there is no cost to Plaintiff; and
o Masters can travel the surrounding counties, searching records
and interviewing witnesses, or immediately drop what they are
doing to chase leads, unlike sitting courts.
11.
Master in Chancery Powers. The court may submit to the master whichever
matters it deems necessary and proper in the circumstances.42 The order of
reference to the master may specify or limit his powers. See Tex. R. Civ. P.
171. Subject to the limitations and specifications stated in the order, the
master has and shall exercise the power to regulate all proceedings in every
hearing before him and to do all acts and take all measures necessary or
proper for the efficient performance of his duties under the order. Id.
Master may require the production before him of evidence upon all matters
embraced in the reference, including the production of books, papers,
vouchers, documents and other writings applicable thereto. Id. He may rule
upon the admissibility of evidence, unless otherwise directed by the order of
reference and has the authority to put witnesses on oath, and may, himself,
examine them, and may call the parties to the action and examine them
upon oath. Id.
A master is able to immediately issue orders, rather than incurring the
delays required for the opportunity to be heard in open court. Otherwise,
property, evidence, and witnesses can easily disappear before a hearing can
be held.
Appointment of a master will result in the need for fewer hearings, lower
attorneys’ fees, and protect the economic interests of both the debtor and
creditor. Master’s report will be useful to the Court.
As a post-judgment case, the Master’s duties will be limited to locating nonexempt assets and the records that determine the ownership of the assets,
their value, and the liens against the assets.
Appointing a Master allows submission of a formal report of the facts (subject to the
Court’s review) that were discovered. Defendants may object to the report, but if
defendants do not object, the facts set out in the report are binding. This procedure
saves the Court a great deal of time by limiting the factual disputes to those facts
that are disputed.
This is an exceptional case due to the circumstances and the intensity
needed to locate, assess, and value the assets that can be located and
seized to enforce the judgment. Good cause exists to appoint a master. The
master appointed should be familiar with post judgment enforcement.
42
Edinburg Irr. Co. v. Paschen, 235 S.W. 1088 (Tex. Comm’n App. 1922); Arlington Heights Realty
Co. v. Citizen’s’ Ry. & Light Co., 160 S.W. 1109 (Tex. Civ. App. Amarillo 1913).
27
This being a post-judgment case, the Master’s duties will be limited to locating nonexempt assets and the records that determine the ownership of the assets, their
value, and the liens against the assets.
In Lesikar v. Moon, the court lays out the time at which a master’s
report becomes conclusive on the issues it addresses: “If no proper
objection is made to the master’s report before the trial court adopts
it, the report becomes conclusive on the issue considered by the
master. Lesikar v. Moon, 237 S.W.3d 361, 371 (Tex.App.—Houston
[14th Dist.] 2007; Owens–Corning Fiberglas Corp. v. Caldwell, 830
S.W.2d 622, 625 (Tex.App.—Houston [1st Dist.] 1991, orig.
proceeding); Martin v. Martin, 797 S.W.2d 347, 350 (Tex.App.—
Texarkana 1990, no writ); McCrory & Co. v. Avery Mays Constr. Co.,
690 S.W.2d 333, 334 (Tex.App.—Dallas 1985, writ ref'd n.r.e.);
Novotny v. Novotny, 665 S.W.2d 171, 173 (Tex.App.—Houston [1st
Dist.] 1983, writ ref'd n.r.e.); Cameron v. Cameron, 601 S.W.2d 814,
815 (Tex.Civ.App.—Dallas 1980, no writ. An adopted master’s report
will dispose of all issues being considered by the master and is
“tantamount to a rendition of judgment by the court. Novotny at
173.
If proper objections are made to the master’s report before it is
adopted, these objections will delay the time at which the report will
be considered final. The master’s report is not binding, and therefore
not final, to the extent that it is challenged by exceptions. The
contested fact issues are each tried de novo before either the court,
if a jury has not been requested, or before a jury if one has been
requested. Minnich v. Jones, 799 S.W.2d 327; Mann v. Mann, 607
S.W.2d 243 (Tex. 1980; Cameron v. Cameron, supra; Housing
Authority of City of Dallas v. Hubbell, 325 S.W.2d 880, 908
(Tex.Civ.App.—Dallas 1959, writ ref'd n.r.e.); Arlington Heights
Realty Co. v. Citizens' Ry. & Light Co., 160 S.W. 1109, 1118
(Tex.Civ.App.—Amarillo 1913, no writ; 3 R. McDonald, Texas Civil
Practice in District and County Courts § 10.17.3 (rev. 1983). The
report will become final following a de novo hearing after a final,
appealable order is signed. Hebisen at 535.
A party objecting a master’s report may appeal the findings only if
the specific objections made to the report are filed prior to the trial
court’s adoption of the report. Martin at 350. To perfect an appeal,
the objecting party must file notice of the appeal by the deadlines
laid out in Rule 26.1 of the Texas Rules of Appellate Procedure. TEX.
R. APP. P. 26.1. The appellate timetable will begin on the date that the
trial court enters final judgment on the report, and is generally 30
days. Zarate v. Sun Operating Ltd., Inc., 40 S.W.3d 617,619
(Tex.App.—San Antonio 2001, no pet. The objecting party must offer
28
to show evidence or expressly request the court to hear evidence
that supports the specific objections. Cameron at 815.
The court has the power to “confirm, modify, correct, reject, reverse,
or recommit the report, after it is filed, as the court may deem
proper and necessary in the particular circumstances of the case.”
Tex. R. Civ. P. 171. A court may choose to abstain from confirming or
adopting the special master’s report, and supersede the master’s
findings with its own order. Hyundai Motor America v. O’Neill, 839
S.W.2d 474 (Tex.App.—Dallas 1992. However, this provision has
been interpreted to contain a limitation that the court have some
basis in evidence upon which it seeks to make any modifications and
corrections. Martin at 350.
12.
Injunction. Plaintiff moves that every defendant be enjoined from
encumbering or transferring property to anyone but the Receiver and that
every defendant be enjoined from concealing property, including through the
use of third parties, relatives, companies, trusts, agents, attorneys,
pseudonyms or assumed names. The Receiver’s bond should also serve as
the bond for injunction.
 The injunction may be redundant, since placing the property in
custodia legis accomplishes the task, but a formal injunction
supports contempt orders and slows third parties who are tempted
to assist a rascally defendant. Third parties may not understand a
turnover order, but they understand the concept of an injunction.
The third party may well be the sole shareholder of the defendant
corporation.
 The person in charge of the business may be held in contempt, and
ordered to pay sanctions, even though he is not the defendant, if
defendant had the ability to comply, but the person in charge
blocked compliance, including answering discovery requests. Ex
parte Chambers, 898 S.W.2d 257, 38 Tex. Sup. Ct. J. 448, (1995).
 When dealing with a small corporation that is owned or managed by
just one or two non-defendant individuals, properly crafted
sanctions might eliminate the need to pierce the corporate veil and
also make the subsequent liability non-dischargeable in bankruptcy.
See bankruptcy sections 523a4 and 523a6.
 Sanctions granted for not answering Receivers’ discovery can be
final, appealable orders. Bahar v. Lyon Financial Services, Inc., 330
S.W.3d 379, Tex.App.-Austin, November 05, 2010.
29
13.
Receiver is entitled to a fee equal to twenty-five percent of all proceeds of
assets that come into his possession, as well as all recoveries and credits
against the judgment, not to exceed 25% of the balance due on the
judgment, including post-judgment attorney’s fees, Receiver’s fees and
expenses, which the Court finds is fair, reasonable, customary, and
necessary fee for the Receiver. A contingency fee is the only way that
plaintiff can afford a receiver. The costs of proving an hourly fee could easily
exceed the original judgment. Receiver is directed and authorized to pay
plaintiff’s attorney, as trustee for the plaintiff, the remaining 75% of all
proceeds coming into the Receiver’s possession, after deducting the
Receiver’s costs and payment of liens or set offs as Receiver deems
reasonable. No receiver’s fee exceeding 25% of all proceeds coming into the
Receiver’s possession shall be paid to the Receiver unless an order is
granted, after with notice and opportunity for hearing to all parties. If the
defendant files bankruptcy, the Receiver's fee shall be equal to 25 percent of
the debt owed at the time the bankruptcy is filed. All Receiver’s fees will be
taxed as costs and shall be added to the cost docket of this Court.
 A contingency fee is the best fee scheme, since plaintiffs tend to be
tapped out by the time that the judgment is entered. Requiring
exhausted plaintiffs to pay hourly to enforce judgments is actually
punitive, helps defendants by making the Receivers and plaintiffs
cost conscious, and encourages defendants to stall, even more. Bad
faith defendants gain a benefit if Receivers’ fees are hourly, since
delay runs up the tab and discourages Plaintiffs from enforcing the
judgment to collection.
Requiring hourly Receivers’ fees easily doubles or triples the fees.
Especially in small cases. If a $20,000 judgment is fully collected,
Receiver is paid $5,000. The assessment of the fees is simple:
$20,000 x .25 -= $5,000. If Receiver must prove his hourly fees, he
will spend 5-10 hours computing the fees and preparing for the
hearing. In a contested case, Receiver may need to be represented—
another 10-15 hours, resulting in a total prove-up cost of 15-20
hours—well in excess of the $5,000 contingency fee, for a total
payoff of $20,000, plus ten prove-up hours for Receiver and another
15 for counsel—and this is before Receiver proves his hours—which
could easily be 60 hours. The payoff figure for a $20,000 judgment
could easily exceed $40,000.
 Chapter 64 cases are poor cases to apply when analyzing post
judgment Receivers’ fees because Chapter 64 Receivers are typically
appointed to run businesses and marshal assets in amounts not yet
30
determined. Childre points out that Chapter 64’s constraints do not
apply to Chapter 31 turnover Receivers. The cases requiring hourly
fees tend to be Chapter 64 cases, in which the worth of the
Receivers’ work cannot be easily determined and certainly not in
advance. The value of a post-judgment Receiver’s efforts is easily
established by his results: how much he recovered for the estate. As
with all contingency fee work, Receiver often spends more time than
can justify an hourly fee.
14.
Bond. Being a post-judgment matter, Plaintiff moves that a nominal bond for
the Receiver be required, which may be in cash, or that bond be set.
 The bond in a turnover Receivership is meaningless, since it is
designed to protect the Receiver,43 not the parties. Requiring a large
bond puts a bulls-eye on the Receiver that says, “Sue Me,” and also
discourages exhausted plaintiffs, since they usually pay for the
bond. A nominal bond, in smaller cases, discourages plaintiffs who
have poor cases and just want a free receiver to harass
defendants.44
15.
Attorneys’ Fees. Plaintiff has been required to employ counsel to file this
application and is entitled to recover reasonable costs, including attorneys’
fees and expenses.
 Chapter 31 is one of the few remedies that allows plaintiffs to
receive post judgment attorneys’ fees.
16.
43
Prayer. Plaintiff requests an order granting this application, and ordering
that:
a.
A Turnover Order be entered
b.
A Receiver and Master in Chancery be appointed and the Receiver's
bond be set.
c.
Defendant be ordered to deliver all non-exempt property, with
necessary documents, properly endorsed for transfer to the Receiver.
d.
After ten days the property be liquidated by the Receiver or Receiver's
agent, and that the proceeds and all the cash on hand be delivered to
Hittner, supra, at 420.
44
We have all received cases in which the Defendant was misnamed, with no valid address, social
security number, or driver’s license number, requiring inordinate amounts of work just to locate a
Defendant, much less collect the first penny.
31
Plaintiff, after offset of the Receiver’s fee and costs, in reduction of the
judgment and all amounts awarded since judgment.
e.
Plaintiff have judgment against defendant for all costs incurred,
including reasonable attorneys’ and Receiver's fees.
f.
Defendant and every third party be enjoined from concealing or
transferring any property until the Receivership is closed and the
judgment paid.
g.
The Court grant all appropriate relief, at law or in equity.
Respectfully submitted,
«Plaintattyname»
Attorney at Law
«Plaintattyadd»
«Plaintattycitystatezip»
T/P «Plaintattytelephone»
Fax «Plaintattyfax»
SBOT «PlaintiffattyBar»
32
«Cause»
«Plaintiff»
In The «inthecourt» Court
«Courtnumber»
«Countyofcourt» County, Texas



Versus
«Defendant»
Order Requiring Turnover and Appointing Receiver and Master
The Court considered Plaintiff’s post-judgment Application for Turnover
Order and Appointment of Receiver and Master in Chancery, has reviewed the
documents on file, the evidence, and all arguments, and finds that Plaintiff is
entitled to aid from this Court.
Defined Terms. As used in this order, the terms below are defined as follows:
Term
Definition
“Plaintiff” refers «Plaintiff»
to:
“Defendant”
refers to:
«Defendant»
“Receiver” and Name:
Master”
refer
Address:
to:
«ReceiversName»
«ReceiversAddress», «ReceiversCityStateZip»
Tel. No.:
«ReceiversTP»
Fax No.: «ReceiversFax»
E-Mail:
«Receivers_email»
SBOT: «ReceiversBar»
“Judgment”
Date:
«Judgment_date»
refers to the
judgment
in Principal Amount: $ «originalbalance»
$«attysfees»
this case.
Bond Amount:
Attorney’s
Fees:
$200
 Clearly listing the names of the subjects of the receivership is
particularly useful when multiple parties were sued and were listed
in the style, since some of the defendants are often dismissed, filed
bankruptcy, or settled. If the order merely states that a “Receiver is
appointed in this cause,” debtors will argue that the order is too
vague to enforce, because it does not specify who is in receivership
and which assets (“the non-exempt assets of the named persons”)
are subject to the receivership. Default judgments often misname
33
defendants, especially businesses (“Inc.” versus “LLC” versus
“Corp.” versus “Co.”) and names are often misspelled. (Is the name
“Theresa” or “Teresa”?).
Factual findings. The Court finds that:
1.
Plaintiff owns an unsatisfied final judgment against;
 Placing the judgment amounts in the order is critical to the banks
when funds are frozen. If the judgment is for $10,000, and the
account holds $50,000, the bank will release the excess.
2.
Plaintiff has good faith reasons to believe that defendant owns non-exempt
rights to present or future property that cannot be readily attached or levied
upon by ordinary legal process, like bank accounts that are easily moved
and constantly changing in balance. The appointment of a Receiver to locate,
marshal, and administer assets is justified because the Court believes that
non-exempt assets exist, since virtually everyone has a bank account or
other non-exempt asset, which Plaintiff believes that defendant will hide.
Defendant owns non-exempt property that is not readily attachable through
ordinary legal, process as required by the standard set forth in Tanner v.
McCarthy, 274 S.W.3d 311 (Tex.App.–Houston [1st Dist.] 2009, no pet.), so
Plaintiff is entitled to a turnover order which does not identify specific
property. See Tex. Civ. Prac. & Rem. Code §31.002(h).
3.
Plaintiff has attempted to collect the judgment, without success, by taking
these actions:
Description
Date Attempted
Result
Writ of execution
Writ of garnishment
Abstract recorded
Written Discovery
Deposition
Motion compel/deem
Other:
TLO,
Accurint,
Google,
PublicData, CAD
34
4.
Defendant has not responded to the Plaintiff’s discovery requests.
Defendant’s avoidance of collection efforts and failure to cooperate justify
this order.
 Specifying assets in the order is not required,45 but makes a better record,
especially if plaintiff holds a lien against collateral or a specific asset is
known, like an 18 wheeler or a boat.
 Readers will note that the order limits Receiver’s powers to non-exempt
assets, six times. Nevertheless, the author recently defended two appeals
in which the debtors complained that the orders were not limited to nonexempt assets. This is why the orders are so long: when we catch assets or
paint debtors into corners, defendants will claim anything. A lengthy,
detailed order protects the court from appeal and is worth the extra time
needed to read the entire order.
 What to do, if appealed: As soon as defendant’s brief is filed, plaintiff
should move the trial court to amend or modify the order, then introduce
testimony to plug the alleged holes in the record, using appellant’s brief as
the checklist. Supplementing is better than amending, because amending
eliminates the first order and begins a new appellate time line. If the
supplementation is reversed, Receiver still has the original order to rely
upon.
 As soon as the order is supplemented or modified, the appellate record
should be supplemented, as allowed by the appellate rules.46 Since the
supplemental record addresses and cures every issue appellate issue,
plaintiff should prevail in the appeal.
 If plaintiff cannot create a solid record, it should file a motion to dissolve
the receivership and turnover order. Dissolving the receivership protects
the court from reversal (and the creation of bad case law), and keeps
Receiver from wasting time on a loser case. If Receiver seizes and sells
assets during the receivership, plaintiff may be liable for damages.
Receiver has immunity; plaintiff does not.
Orders. The Court orders the relief set out below.
5.
Appointment of Receiver and Master. After considering the propriety of
Receivers and Masters whom the Court has appointed in other cases, and
the Plaintiff’s recommendations, the Court appoints «ReceiversName» as
Receiver and Master over each Defendant’s non-exempt assets, pursuant to
Sec. 31.002 of the Civil Practice and Remedies Code of Texas, to serve after
45
Tex. Civ. Prac. & Rem. Code §31.002(h).
46
Tex. R. App. P. 27.3.
35
posting the bond and taking the oath of office. This being a post-judgment
case, the Master’s duties will be limited to locating non-exempt assets and
the records that determine the ownership of the assets, their value, and the
liens against the assets
6.
Effect of order on Defendant and third parties. The unique power of the
Receivership derives from the doctrine of custodia legis. Once a turnover
order containing an appointment of a Receiver is signed, all of the Judgment
Debtor’s non-exempt property becomes property in custodia legis, or “in the
custody of the law.” First Southern Properties, Inc. v. Vallone, 533 S.W.2d
339, 343 (Tex. 1976). The judgment debtor’s property is considered to be in
the constructive possession of the court. During the pendency of a
receivership, the receiver has exclusive possession and custody of the
judgment debtor’s property to which the receivership relates. First S. Props.,
533 S.W.2d at 343; Ellis v. Vernon Ice Co. & Water Co., 86 Tex. 109, S.W.
858 (1893). No one, not even a lien holder with a prior filed deed of trust,
can sell property held in custodia legis by a duly appointed receiver without
first obtaining approval from the Court in which the Receivership is pending.
First S. Props. at 533 S.W.2d at 341; Huffmeyer v. Mann, 49 S.W.3d 554,
560 (Tex.Civ.App.–Corpus Christi, 2001). Any unauthorized transfer of
property in the custody of a receiver is not merely voidable, it is void. First
S. Props., 533 S.W.2d at 341. Any conveyance of property in the custody of
a receiver without approval by the court has no effect upon the receivership
and the accomplishment of its purposes. T.H. Neel v. W.L. Fuller, 557 S.W2d
73, 76 (Tex. 1977). In short, any attempt by a judgment defendant to
transfer any of his non-exempt property after the turnover order has been
signed is void and can be called back by the Receiver or subsequent suit to
set aside the transfer brought by the Receiver.
Defendant is enjoined from selling non-exempt property, but must report all
sales of exempt property to Receiver, within 15 days.
7.
Definition and purpose of the Receiver. The Receiver/Master is the agent of
this Court (not the attorney for any party), and is to be treated with the
same courtesy accorded to the Court.
“Once an individual is cloaked with derived judicial immunity
because of a particular function being performed for a court,
every action taken with regard to that function-whether good or
bad, honest or dishonest, well-intentioned or not-is immune
from suit. Once applied to the function, the cloak of immunity
covers all acts, both good and bad.” Davis v. Radoff, 317 S.W.3d
301, (Tex.App-Hou 1st 2009), (citing Ramirez v. Burnside &
Rishebarger, L.L.C., No. 04-04-00160-CV, 2005 WL 1812595
(Tex. App .-San Antonio Aug. 3, 2005, no pet.) (mem.op.)).
36
 Receiver/Master is not to be treated like opposing counsel. Some
attorneys don’t seem to understand this distinction. He is to receive
the same cooperation and courtesy as the judge.
8.
Defendant’s Responsibilities to the Receiver and the Court. Each defendant is
ordered, within the time periods set out in this order and the attached
Exhibit A, to:
a.
Deliver to the Receiver, at the address provided by Receiver, the items
described in Exhibit A, and all documents and records requested by the
Receiver, within ten days, then from time to time, in the manners and
formats requested;
b. Turnover to the Receiver all non-exempt funds to the extent
required to satisfy the Judgment. No defendant may spend nonexempt funds, or sell, transfer or encumber non-exempt assets,
without the Receiver’s prior written consent.
c. Make a complete disclosure to the Receiver of all assets of each
defendant, and to neither directly nor indirectly interfere with nor
impede the Receiver in the performance of his duties. Defendant
must disclose all exempt and non-exempt assets, so that the
exempt status of each asset can be determined. Defendant’s
disclosure must provide sufficient specificity to permit a constable
to identify and levy upon the assets.
d.
Supplement all disclosures, in writing, within five days of knowledge of
information required to be disclosed, without being prompted;
e.
Organize and collate the disclosed information and documents in the
formats and manners required by the Receiver.
 Debtors tend to either address the receivership promptly, or hide
their heads in the sand. With evasive debtors, the path to progress is
paved with motions to compel and for sanctions, including sanctions
against the corporate officers who directed the non-compliance. See
Ex parte Chambers, 898 S.W.2d 257, 38 Tex. Sup. Ct. J. 448, (1995).
 The author has had attorneys refuse to comply with the Receiver’s
and Master’s requests for documents, until specifically ordered by
the judge. This paragraph was added to address the problem.
 The Receiver’s authority to move for sanctions is affirmed in Bahar
v. Lyon Financial Services, Inc., 330 S.W.3d 379, Tex.App.-Austin,
November 05, 2010.
 The author has recently found that holding status conferences can
be more effective than motions to compel, and much more easily
37
pled. There are two options: a) a simple notice that sets a status
conference and invites everyone to attend;
and b) an order
requiring defendant to appear, with documents and proof of
compliance with the turnover order. A precept can be issued, or a
subpoena, duces tecum. If timely served, a defendant who does not
appear may be attached. If defendant appears without the ordered
documents, the court will reset the hearing for a couple of weeks, to
allow defendant time to comply (He “didn’t understand.”)
The benefit to a status conference is simple: whether defendant
complied with the court’s orders is now between the court and
defendant: Receiver and plaintiff just sit back and watch.
9.
Receiver’s Powers. The Receiver is authorized to:
a.
Take possession of all of defendant’s non-exempt property that is in
defendant’s actual or constructive possession, custody, or control,
including the items described in Exhibit “A”.
 Some courts allow defendants enough money to keep a business
operating. Even if not required by the statute, keeping the golden
goose alive is usually the best way to collect the judgment and to
avoid bankruptcy.
b.
Secure control over all non-exempt property, and engage in presale
activities, including appraisals, evaluations, listing agreements and
advertising agreements. Receiver may transfer title into the
receivership or place a hold on the title of personal and intangible
property, including patents, trademarks, servicemarks, copyrights,
websites and domain names;
c.
Disable or remove any non-exempt property belonging to defendant or
to place the property into storage; insure any property taken into his
possession; obtain such writs as Receiver deems necessary to obtain
possession; and change the locks to premises belonging to defendant.
However, the Receiver has no duty to take these actions, or to
maintain, guard, or insure property taken into custodia legis, or to
maintain or pay any lease, nor shall Receiver be required to pay any
mortgage, lien or assessment, defend against any lawsuit, pay any tax
or fee, file any tax returns, maintain any insurance coverage or have
any obligation except as specifically ordered;
d.
Hire any person, firm, or company as needed to further any remedies
available to Receiver, including hiring any person to: change locks to
any premises belonging to defendant so as to exclude any person
interfering with the Receiver’s custody of the premises; moving and/or
38
storing any property belonging to defendant; collecting all accounts
receivable, or selling the non-exempt property of defendant;
e.
Freeze bank and financial institution accounts;
f.
Redirect every Defendant’s mail to the office of the Receiver, whether
electronic, paper, facsimile, or otherwise, and whether sent to a street
address, phone line, P.O. Box, or via the internet, prior to and
exclusive of receipt. If a unrepresented defendant’s mail is redirected,
or cannot be delivered, Receiver and parties may serve that defendant
by placing the documents to be delivered or served in defendant’s
mailbox or securely affixing the items to defendant’s door, gate, or
other obvious place.
g.
Endorse and cash all checks and negotiable instruments payable to a
Defendant;
h.
Assume that property is not exempt, until the person claiming the
exemption claims the exemption, in writing, the legal and factual
grounds for the exemption, and describes the property with sufficient
specificity that a constable can levy upon it. If there is any dispute
whether an asset is exempt, or property of a Defendant, the Receiver
is authorized to take custody of the asset until the Court determines
the rights of those claiming an interest in the asset;
 This paragraph reinforces that defendant has the burden of proof,
and places a specific burden on debtor to list his exempt assets, so
that Receiver does not waste time and money seizing assets that
defendant later claims to be exempt. Immediate disclosure protects
defendant from the temporary loss of possession of assets and the
costs of wrecker and storage companies that are incurred when
exempt assets are seized, then returned.
 Defendants must be required to list all of their assets, including
exempt assets. Otherwise, if a bad faith defendant claims a million
dollar painting as exempt, as a $500 household good, the Receiver
will not have the opportunity to dispute the exemption claim,
because he would not know that the items exist. The same goes for
claiming a truck as farm equipment, or a backhoe as tools of the
trade for a café. (We recently had a debtor claim a coin collection
and stamp collection as exempt.)
 This keeps the burden on defendant, prevents loss of the asset, and
protects plaintiff and Receiver.
39
10.
i.
Take all actions necessary to gain access to, and enter all real
property, leased premises, storage facilities and safe deposit boxes
where any non-exempt property or records of a defendant may be
situated, and to seize the contents;
j.
Conduct and Disposition of Entities: If defendant is an individual, all
legal right, title and ownership of any limited partnership interest,
partnership interest, stock or membership interest it has in any entity
and business entity of that defendant is divested from said individual
and placed in custodia legis with the Receiver. Chitex Communication
v. Kramer, 168 B.R. 587, 590 (S.D. Tex. 1994) (“the president of an
insolvent corporation had no authority to affect the corporation’s
property interests once a state court had placed it into receivership”)
To the extent that the debtor is the sole owner of that entity or
business, all management authority is vested in the Receiver as if
Receiver were the Receiver over that entity. If the Respondent is a
business entity, all authority and power of defendant in the
management of the entity is vested in the Receiver and no decision
may be made or carried out without the express approval of the
Receiver. (“Texas law asserts that the receiver has the full rights that
the corporation had”). Id. This order entirely supersedes the authority
of any officers, directors or managers of the business entity debtor.
k.
Sell property, receive rents, collect and compromise demands, make
transfers of property, pay the proceeds to the judgment creditor as
required to satisfy the judgment.
l.
Certify copies.
Masters Powers:
a.
Require the attendance of third parties and issue subpoenas to third
parties, or those who may be in possession of knowledge or
information concerning defendant’s non-exempt assets. A subpoena is
not required to compel attendance. Master is authorized to require the
attendance of and issue subpoenas to defendants, third parties, and
witnesses. The Master is permitted to schedule and issue notices for
stenographic or non-stenographic examinations of anyone who may
have knowledge of relevant facts concerning a defendant’s nonexempt assets; Ex Parte Odom, 271 S.W. 2d 796 (Tex. 1954).
b.
Obtain credit reports, bank searches, and other reports to aid in
locating non-exempt assets. The Master may order any Consumer
Reporting Agency, as defined by the Fair Credit Reporting Act (“FCRA”)
16 USC §1681b(f) to provide consumer reports on defendants and
witnesses as allowed under FCRA 16 USC §1681b(a)(1);
40
c.
Order providers of utilities, telecommunications, telephone, cell phone,
cable, internet, data services, internet website hosts, email hosts,
iCANN providers, satellite television services, and all similar services
(including ComCast, AT&T, Verizon, Sprint, and Direct TV), and
financial institutions to turnover information that the Master believes
may prove or lead to the discovery of the existence or location of
defendant’s whereabouts or non-exempt assets, including account
information, telephone numbers, names, service addresses, telephone
numbers, payment records, and bank and credit card information.
i. Such orders shall be directed to the entity from which the
information is sought and describe, as specifically as possible, the
precise information requested with the dates for which the
information is required, which shall not be more than one year
before the issuance of the Master’s request, unless specifically
stated in the request or attached letters.
ii. This order specifically defines the Master as a state official, acting in
an official capacity, as defined in section 182.054(1) of the Texas
Utility Code.
iii. This order specifically serves as the court order required by 47 USC
§ 551, and Tex.Fin.Code §59.001, and satisfies all obligations of the
responding party to obtain or receive a court order prior to
disclosing material containing personally identifiable information of
the subscriber and/or customer;
iv. The disclosure of information pursuant to this Order is not a
violation of PUC Substantive Rule 25.272. This Order satisfies the
law, regulation, or legal process exception to the Proprietary
Customer Information Safeguards found in PUC Substantive Rule
25.272 (g)(1);
d.
Certify copies.
e.
Propound discovery, pursuant to the rules of civil procedure. He is
authorized to shorten the time periods.
11.
Duties of Peace Officers. Every constable, deputy constable, sheriff,
deputy sheriff, and other peace officer is authorized to accompany Receiver
pursuant to a writ to locations designated by Receiver where Receiver
believes defendant’s assets may be located. The peace officers are ordered
to prevent every person from interfering with the Receiver’s carrying out any
duty under this order or interfering with property that is in the Receiver’s
control or subject to this order.
12.
Duties of Third Parties. Every person with actual notice of this order,
including ________ , is ordered not to interfere with property in the
41
Receiver’s control or subject to this order, and is ordered not to interfere
with the Receiver in the performance of his duties. Third parties are notified
that the Receiver, to the exclusion of defendant, is the party entitled to
possess, sell, liquidate and otherwise deal with defendant’s non-exempt
property and once any third party receives notice of this order, the third
party may be subject to liability if the third party releases property, unless
directed by the Receiver or the Court;
a.
All third parties who hold defendant’s property are ordered to
immediately notify the Receiver, and to deliver the property within ten
working days of demand from the Receiver.
b.
All third parties with knowledge of this order, including _____ , are
ordered to immediately notify the Receiver if they discover the
existence of property, or of facts which might lead to the discovery of
property in which defendant has any interest;
c.
Any witness or person resisting an order or request of the Receiver,
based on legal or other advice, is ordered to give the full name,
address, fax number, e-mail address, cell phone number, and direct
telephone number for each person giving that advice and to instruct
each person to immediately contact the Receiver. Doing so does not
waive any attorney-client communication privilege.
 Spouses, officers and employees of corporations, landlords, etc., are
specifically ordered to cooperate. This paragraph is usually well
received, as the landlord feels protected when information is
released. Listing, by name, spouses and owners of small defendant
corporations increases cooperation.
13.
Receiver is entitled to a fee equal to twenty-five percent of all proceeds of
assets that come into his actual or legal possession, as well as all recoveries
and credits against the judgment, not to exceed 25% of the balance due on
the judgment, including post-judgment attorney’s fees, Receiver’s fees and
expenses, which the Court finds is fair, reasonable, customary, and
necessary fee for the Receiver. A contingency fee is the only way that
Plaintiff can afford a receiver. The costs of proving an hourly fee could easily
exceed the original judgment. Receiver is directed and authorized to pay
Plaintiff’s attorney, as trustee for the Plaintiff, the remaining 75% of all
proceeds coming into the Receiver’s possession, after deducting the
Receiver’s costs and payment of liens or set offs as Receiver deems
reasonable. No Receiver’s fee exceeding 25% of all proceeds coming into the
Receiver’s possession shall be paid to the Receiver unless an order is
granted, after with notice and opportunity for hearing to all parties. If
defendant files bankruptcy, the Receiver's fee shall be equal to 25 percent of
42
the debt owed at the time the bankruptcy is filed. All Receiver’s fees are
taxed as costs and shall be added to the cost docket of this Court.
14.
All real property sales must be individually ordered, after notice and
opportunity for hearing.
15.
Time for objections to the order. All objections to (i) this order, (ii) the bond,
including its sufficiency, (iii) all affidavits that support or relate to this order,
(iv) the Receiver’s qualifications, (v) every other issue relating to this order,
and (vi) the Master’s report, are irrevocably waived if they are not made in
writing and filed with the Court within twenty days of the service on or
notice of this order by defendant or his counsel.
16.
Writs of turnover, issued pursuant to this order, shall not be limited in time
or have an expiration date. Those serving the writs shall return them to the
receiver, not the clerk, unless otherwise instructed. More than one writ of
turnover may be issued and outstanding at any time.
17.
The Receiver may collect all unclaimed funds belonging to defendant,
including from the Texas Comptroller’s Office, and may collect, sell, or
assign the defendant’s rights to all air miles and rewards programs
belonging to defendant.
18.
Attorney’s fees. The Court takes judicial notice of the time that is reasonable
and necessary for the preparation and prosecution of this motion, and
«Defendant» is ordered to pay «Plaintiff» $750 in attorney’s fees.
In the case of an appeal or petition for writ of mandamus regarding this
order, the Receiver is awarded $7,500 in fees for successfully defending,
plus $3,500 for responding each motion in those actions, and «Plaintiff» is
awarded $7,500 in fees for successfully defending, plus $3,500 for
responding each motion in those actions.
 This text implements Section 38.004 of the Texas Civil Practices and
Remedies Code, which allows the judge to take judicial notice of
which appellate Receiver’s and attorneys’ fees are reasonable,
without taking testimony.47
19.
Receiver is not required to defend or prosecute any litigation regarding the
defendant.
47 § 38.004. JUDICIAL NOTICE. The court may take judicial notice of the usual and customary
attorney's fees and of the contents of the case file without receiving further evidence in:
(1) a proceeding before the court; or
(2) a jury case in which the amount of attorney's fees is submitted to the court by
agreement.
43
20.
The Receiver may propound discovery, pursuant to the rules of civil
procedure. He is authorized to shorten the time periods. He may obtain
discovery by simply requesting the information or documents from
defendants.
21.
All parties are ordered to serve Receiver with copies of all motions, notices,
discovery responses, correspondence, and communications among them.
22.
Special Master. «ReceiversName» is appointed as Special Master in
Chancery. The appointment of a Special Master is justified to aid the Court in
the performance of specific duties which a sitting court cannot undertake,
like serving writs, traveling throughout the state to locate and inspect assets
throughout the state, delivering the property to sales lots, and advertising
for and locating prospective buyers and appraisers, among other tasks. A
master will conserve the resources of the Court on post judgment matters,
including locating and liquidating property. Since the Court cannot order a
witness to travel more than 150 miles, a master is needed to travel to
interview witnesses.
Appointment of a master will result in the need for fewer hearings, lower
attorneys’ fees, and will protect the economic interests of both the debtor
and creditor.
A master is able to immediately issue orders, rather than incurring the
delays required for the opportunity to be heard in open court. Otherwise,
property, evidence, and witnesses can easily disappear before a hearing can
be held. Plaintiff requests that the Receiver be appointed Master in
Chancery, to have the broadest powers allowed by the rules. This is an
exceptional case due to its complexity and the intensity needed to enforce
the judgment. Good cause exists to appoint a master. The master should be
familiar with post judgment enforcement, and is.
All uses of the terms, “Receiver,” and “Master,” include the other term, as
allowed by law.
23.
The Master’s duties are limited to locating non-exempt assets and the records that
determine the ownership of the assets, their value, and the liens against the assets,
and reporting his findings to the Court. If approved, the Master’s findings will be
binding.
24.
The Master may propound discovery, pursuant to the rules of civil procedure. He is
authorized to shorten the time periods. He may obtain discovery by simply
requesting the information or documents from defendants.
25.
«ReceiversName» is appointed as Special Master in Chancery.
Notice: An order has been entered against you. You have the right to hire an
attorney to assist you in compliance with this Turnover Order.
44
 This text copies wording that is contained in original citations. The
notice is not required, but some judges want it, and inclusion does
not hurt.
If you believe that the Receiver’s demands are inappropriate, you must
either comply or seek protection from the Court.
 The notice is not required, but helps reduce the chances that
defendants and witnesses will thumb their noses at Receiver.
Persons seeking protection must set the matter for the earliest possible
hearing date, after giving full notice to the Receiver and attempting to
resolve the issues. (This does not mean merely send a fax or e-mail.)
 The notice is not required, but helps reduce the chances that
defendants and witnesses will file motions for protection, never set
them for hearing, place the burden on Receiver or plaintiff to set the
hearing, then insist that Receiver and plaintiff cannot set
defendant’s motion for hearing. (We have faced this argument.)
Signed ______________, 2014.
_______________________
Judge «Judge»
Approved:
_________________________
«Plaintattyname»
Attorney for Plaintiff
SBOT «PlaintiffattyBar»
«Plaintattyadd»
«Plaintattycitystatezip»
«Plaintattytelephone»
Fax: «Plaintattyfax»
45
Exhibit A
Documents Ordered to be Delivered to the Receiver, at His Office,
Within Ten Days of Receipt of the Order
Requiring Turnover and Appointing Receiver
Definitions and instructions.
1)
Time Periods. All time periods are for the three years before this order was
signed, unless otherwise stated.
2)
Continuing duty to supplement. The turnover order is continuing in nature
and must be supplemented. Should a defendant or witness come into
possession, custody, or control of anything that was ordered turned over or
produced, that person must turn over the item within ten (10) days.
3)
Definitions.
a)
“Order” means the turnover order in this case.
b)
“Account Information” means the login, username or other account
identifier along with all passwords associated with accessing the
accounts.
c)
“Contact Information,” “telephone number,” and “address,” mean that
person’s full name, nick names, d/b/a’s, and all addresses (including
work and residence), all telephone numbers (including home, office, fax,
pager, and cell numbers), as well as e-mail, Facebook, social
networking, and web site addresses. If any of the information is lacking,
provide the Contact Information for every person believed to be able to
provide the missing information.
d)
“Defendant” includes every judgment defendant and every spouse or
ex-spouse of the judgment Defendant within three years of the signing
of the order.
e)
“Copies” means complete, legible copies. Illegible copies are to be
provided, with a notation showing where legible copies can be found.
f)
“Entity” includes all business organizations, whatever their form,
including public or private corporations, limited liability companies,
partnerships, joint ventures, unincorporated associations, and individual
proprietorships.
g)
“Manager” refers collectively to anyone who is an officer, director,
manager, or supervisor of an Entity, or who makes business decisions
for an Entity.
h)
“Produce,” means to deliver. If an item is not listed in this exhibit, the
Defendant or witness must turn over the item in the time period
46
specified by the demand.
4)
i)
“Records” and “Documents” are mutually inclusive, and include the
records, documents, and items formally ordered turned over, or
requested by the Receiver. Requests regarding property or Documents
owned or possessed by a Defendant also apply to Defendant’s spouse,
ex-spouse, brother sister, child, step-child, mother, father, sister,
brother, partner, or co-owner of a small business, if the requests involve
documents that a Defendant would be required to turnover if the
Defendant had possessed or controlled the item.
j)
“Shareholder” includes the owners, members, partners and others who
have ownership rights any Entity.
k)
“Turnover” includes to create a list or report, if no list or report currently
exists. “Turnover” also means to convey the information that is available
to you, not merely the information that is of your present knowledge,
including providing information, Documents or Records that are known
by you, or that is in your possession, or the possession of your family,
employees, co-workers, co-owners or agents, including your attorney or
any agent or investigator of your attorney.
l)
“Witness” means any person who is not a Defendant but who may have
information, records or documents relating to the Defendant.
Document labeling and identification.
a)
“All” is presumed to apply to every item. If a type of item is listed, this
Order means all similar items.
b)
Each turned over Document, file, or photograph must be given a
consecutive identification number and produced in the condition and
order of arrangement in which it existed when the application for this
Order was filed, including all file labels, dividers, or associated
identifying markers. An index must be provided, if the documents are
large, or if the Receiver requests.
c)
Creating lists and compilations. To the extent that the Order or this
exhibit requires a Defendant to compile or create a list or document,
each Defendant is ordered to do so.
d)
Lost Document, Records, or tangible things. If a Defendant, or a
Defendant’s attorneys, agents or representatives, had possession or
control of a document, record, or tangible thing ordered turned over
which has been lost, destroyed, purged, or is not presently in their
possession or control, identify the item and describe in detail the
circumstances surrounding the loss, destruction, purging, or separation
from your possession or control, indicating the dates that the
circumstances occurred.
47
e)
No Document, file or photograph requested may be altered, changed,
modified, disposed of or destroyed.
f)
Clearly indicate to which paragraph of the order the document, record or
tangible thing applies. When producing data or information that is in
electronic or magnetic form, make a paper copy. If it is not reasonably
possible to make a hard copy print-out of the data or information, copy
the data or information and provide it in WordPerfect, Microsoft Word,
Microsoft Excel, Rich Text Format, JPEG, Adobe, or other format
acceptable to the Receiver.
Items, data, and records ordered turned over.
1.
2.
3.
4.
5.
A letter authorizing the Receiver to obtain all records and assets to which the
Defendant is entitled;
Contact information for every Defendant and witness controlling or having
knowledge of relevant documents information.
For every Entity in which a Defendant is an owner, Shareholder, or Manager, or has
authority over accounts in financial institutions:
a. The Entity’s Contact Information;
b. The Contact Information for every owner, Shareholder, or Manager of
each Entity for the last three years;
The Contact Information for the accountants and bookkeepers for each
Entity and every owner, Shareholder, or Manager for the last three years;
For each Defendant, Entity, and owner, Shareholder, or Manager of the Entity in
the last three years, turn over all:
a. Copies of all personal and business federal income tax returns filed by or
prepared for Defendant for the current year and for the last three years
prior to the current year, together with all schedules, attachments, W-2
forms, 1099 forms and all similar federal income summary forms for the
same years;
b. Statements, canceled checks and deposit slips for all checking accounts,
savings accounts, merchant service agreements, credit union accounts or
other depository accounts, held either separately or jointly, for the
current calendar year and for the last three years prior to the current
calendar year for all accounts in which Defendant’s name is on the printed
checks, in which Defendant has an interest or on which Defendant has
signatory authority;
c. All checks, cash, securities (stocks and bonds), promissory notes, deeds,
deeds of trust, documents of title, contracts, accounts receivable, escrow
agreements, retainage agreements, records and all documents that
identify all property in which Defendant has an interest and that which is
collateral or security for any obligation or contingent obligation of
Defendant, along with all documents indicating any interest of the
48
d.
e.
f.
g.
h.
i.
j.
Defendant in rental agreements, royalty agreements, licenses, bailment
agreements, filings pursuant to the Uniform Commercial Code, security
agreements, assignments, all filed or recorded liens, lis pendens,
lawsuits, recorded mechanics and materialmen's lien affidavits,
judgments, abstracts, partnership agreements, employment agreements,
as well as all documents indicating each Defendant’s present and
prospective heirship, beneficial interest in trusts, beneficial interest in
insurance policies and insurance coverage and right to any insurance
policy's cash surrender value or ownership in which Defendant or
Defendant’s spouse has any interest;
A copy of the Defendant’s driver’s license, social security card, and other
items used to identify the witness, like an identification card issued by the
Texas Department of Public Service or Department of Public Safety,
corporate franchise certificate, or other licensing authority (ex: city health
department);
Copies of all financial statements prepared on Defendant’s behalf,
including statements presented to financial institutions or other parties to
guarantee, secure or attempt to secure a loan or financial assistance;
All booklets, annual statements and other documents evidencing the
nature and extent of Defendant’s rights under any stock option plan,
retirement plan, pension or profit sharing plan, employee stock ownership
plan, company savings plan, thrift fund matching plan and all other
similar plans prepared or received during the last three years;
The Contact Information of everyone with knowledge of the status of
assets and income in which Defendant has an interest, whether being
community or separate property, the Defendant’s liabilities or the location
and value of Defendant’s assets, including banks, savings and loan
associations, mortgagees, merchants, credit providers, brokers, credit
unions, financial institutions, security dealers, people and organizations
dealing with mineral interests who have received information from
Defendant regarding Defendant’s assets, income, liabilities;
All records that would indicate the cost basis of Defendant’s assets;
The most recent statements, deposit confirmation slips, and documents
evidencing the balance, term and interest rates for money and assets in
which Defendant has any interest, whether separately or jointly, invested
by or for the Defendant in any cash management funds, certificates of
deposit, money market funds, treasury bills, bonds, debentures or any
other type investment and acquisition paying or promising to pay a return
on Defendant’s monies invested during the past three years;
All certificates of stock and brokerage house statements evidencing
ownership and the purchase, sale, assignment or transfer of stocks,
bonds, debentures or other securities (whether in privately held or
49
publicly traded companies or institutions) owned by Defendant or in which
Defendant has an interest;
k. Documents and records showing all business holdings, partnerships
(general, limited or otherwise), sole proprietorships, trusts, corporations,
joint ventures and any other business organizations in which Defendant is
a Manager, Shareholder or to which Defendant has an interest;
l. Assumed name certificates under which Defendant has done or is doing
business;
m. Insurance policies, active or terminated, including life, health, auto,
disability, homeowners, or personalty, of which Defendant is the owner,
beneficiary, insured, heir to the proceeds, beneficiary of an existing or
identified trust funded by insurance proceeds. This includes policies that
were sought, but not obtained;
n. All deeds, deeds of trust, land installment contracts, contracts for deeds,
syndications, real estate investment trusts, partnership agreements,
easements, rights of way, leases, rental agreements, documents
involving mineral interests, mortgages, notes and closing statements
relating to all real property in which Defendant has had an interest;
o. The leases for, and addresses for all storage facilities, or places where
Defendant’s assets are stored, including the contact information for the
facility;
p. Certificates of title, current licenses, receipts, bills of sale and loan
documents for all motor vehicles and farm equipment, including but not
limited to automobiles, trucks, motorcycles, recreational vehicles, boats,
trailers, airplanes and other motorized vehicles and equipment owned by
Defendant or in which Defendant has and had any interest;
q. For every trust of which Defendant is a trustee, joint trustee, beneficiary,
settlor or trustor which conveyed, transferred, assigned, created any
options to purchase, or disposed of any interest in real property or
personal property, turnover documents evidencing the manner of
disposition and the consideration. Documents showing all evaluations of
Defendant’s interest, share of principal and income, and showing the
principal and income allocated to Defendant;
r. All documents and records of safe deposit boxes maintained by Defendant
(including spouse) or to which Defendant (including spouse) has had
access, or has a claim, right or interest in, including all lists of all contents
therein in the last three years. Identify the location of all the safe deposit
boxes, the contents, and deliver the keys to the Receiver;
s. Documents constituting or describing Defendant’s accounts receivable, for
the past three years, including documents identifying the accounts
receivable of the ongoing businesses which Defendant owns or has had
50
an interest, and copies of all collected, offset, credited, uncollected,
discounted, assigned, pledged and exchanged accounts receivable;
t. Appraisals for assets owned in the past three years;
u. All documents, notes, bills, statements and invoices evidencing all current
indebtedness payable by Defendant or paid off by Defendant, and all
assignments of promissory notes made by Defendant;
v. A current inventory and all past inventories, accounts receivable of all
ongoing businesses which Defendant owns and had an interest and copies
of all collected, offset, credited, uncollected discounted, assigned, pledged
and exchanged accounts receivable of all businesses owned by Defendant
and in which Defendant has and had an interest;
w. Lease agreements for personal and real property, whether as lessee,
lessor, sublessee, sublessor, assignee or assignor, including mineral
interest leases;
x. All lease agreements for personal or real property executed by
Defendant, whether as lessee, lessor, sublessee, sublessor, assignee or
assignor, including any mineral interest leases;
y. Records of all travelers checks, cashier's checks, money orders, draft and
draws purchased or cashed;
z. All deeds, deeds of trust, land installment contracts, contracts for deeds,
syndications, real estate investment trusts, partnership agreements,
easements, rights of way, leases, rental agreements, documents
involving mineral interests, mortgages, notes and closing statements
relating to all real property in which any Defendant has or in which
Defendant (including spouse) had an interest during the last three years;
aa. All certificates of title, firearms, deer stands, atv’s, boats, trailers, and
motors, documentation regarding hunting or fishing leases or rights or
the rights to time share units or the use of property, tickets to events,
like ballet or sporting events, proof of spa or club memberships, current
licenses, receipts, bills of sale and loan documents for all motor vehicles
and farm equipment, including automobiles, trucks, motorcycles,
recreational vehicles, boats, trailers, airplanes and other motorized
vehicles and equipment owned by Defendant (including spouse) or in
which Defendant (including spouse) has and had any interest;
bb. All contracts in which Defendant is a party or has or had a beneficial
interest, including earnest money contracts, construction contracts and
sales agreements in which Defendant is due a commission or other
remuneration for the last three years. If Defendant is presently under the
terms of any written employment contract or agreement or is due any
remuneration under any past contract or agreement, furnish a copy of the
contract or agreement;
51
6.
7.
cc. All documents identifying or explaining every gift, bailment, loan,
gratuitous holding, assignment, sale, hypothecation, discounted transfer,
transfer into lock box payment, or transfer of Defendant’s property;
dd. All employment records or pay records to indicate every business for
which Defendant was employed, provided services, was an independent
contractor, general contractor, superintendent, agent or subcontractor
during the last three years;
ee. A listing of all air miles and rewards programs, with the last year’s
statements.
Regarding entities in which a Defendant has an interest, turnover:
a. Articles of Incorporation;
b. Bylaws and all amendments;
c. Shareholders Agreement and amendments;
d. A specimen of the corporation’s Share Holder Certificate including stock
transfer restrictions noted on the face of the certificate or referred to
thereon;
e. All records of the original issuance of shares issued by the corporation
and a record of each transfer of those shares that have been presented
to the corporation for registration of transfer;
f.
The names and current addresses of all past and current shareholders of
the corporation and the number and class or series of shares issued by
the corporation held by each of them.;
g. A copy of the current share transfer ledger of the corporation showing
the certificate number, date of issuance, shareholder name and number
of shares represented to be held by the shareholders;
h. Any financial statements of the corporation prepared for or issued by
the corporation in the previous two years;
i.
The books and records of accounts of the corporation for the last fiscal
year;
j.
The corporation’s annual statements for its last fiscal year showing in
reasonable detail its assets and liabilities and the results of its
operations and the most recent interim statements, if any, which have
been filed in a public record or otherwise published;
k. The minutes of the proceedings of the owners or members or governing
authority of the corporation and committees of the owners or members
or governing authority of the corporation;
l.
The corporation’s federal, state, and local information or income tax
returns and franchise tax returns for each of the corporation's six most
recent tax years.
Provide all of the following documents for any limited liability company
(“Company”) in which Defendant has an interest:
52
a.
b.
c.
d.
e.
f.
g.
h.
i.
j.
k.
l.
The Articles of Organization;
The Operating Agreement or Company Agreement and all amendments
and modifications;
The Regulations, if any, and all amendments and restatements;
The Company’s books and records of accounts for the last three years;
The Company’s minutes of the proceedings of the owners or members
or governing authority of the Company and committees of the owners or
members or governing authority of the Company;
The current list of each member’s name, mailing address, percentage or
other interest in the Company owned by each member, and if one or
more classes or groups are established in or under the articles of
organization or regulations, the names of the members who are
members of each specified class or group;
Copies of the federal, state and local information or income tax returns
and franchise tax returns for each of the Company’s six most recent tax
years;
Copies of any document that creates, in the manner provided by the
articles of organization or regulations, classes or groups of members;
Unless contained in the Articles of Organization or regulation, a written
statement of:
(1) the amount of a cash contribution and a description and statement
of the agreed value of any other contribution made or agreed to be
made by each member;
(2) the dates any additional contributions are to be made by a
member;
(3) any event the occurrence of which requires a member to make
additional contributions;
(4) any event the occurrence of which requires the winding up of the
Company; and
(5) the date each member became a member of the Company.
A specimen of the Company’s Member Unit or Share Certificate including
any transfer restrictions noted on the face of the certificate or referred
to thereon.
The current unit or share transfer ledger of the Company showing the
certificate number, date of issuance, unit holder or shareholder name
and number of shares represented to be held by any owner of the
Company.
The income and expense statement for the Company for the past three
years if they are not contemplated under No. 4 above.
53
8.
m. Any financial statements of the Company prepared for or issued by the
Company in the previous two years.
Provide all of these documents for any limited partnership in which
Defendant has an interest:
a. A current list that states:
(1) the name and mailing address of each partner, separately
identifying in alphabetical order the general partners and the
limited partners;
(2) the last known street address of the business or residence of each
general partner;
(3) the percentage or other interest in the partnership owned by each
partner; and
(4) if one or more classes or groups are established under the
partnership agreement, the names of the partners who are
members of each specified class or group;
b. A copy of:
(1) the limited partnership's federal, state, and local information or
income tax returns and franchise tax returns for each of the
partnership's six most recent tax years;
(2) the partnership agreement and certificate of formation; and
(3) all amendments or restatements;
c. Copies of any document that creates, in the manner provided by the
partnership agreement, classes or groups of partners;
d. An executed copy of any powers of attorney under which the
partnership agreement, certificate of formation, and all amendments or
restatements to the agreement and certificate have been executed;
e. Unless contained in the written partnership agreement, a written
statement of:
(1) the amount of the cash contribution and a description and
statement of the agreed value of any other contribution made by
each partner;
(2) the amount of the cash contribution and a description and
statement of the agreed value of any other contribution that the
partner has agreed to make in the future as an additional
contribution;
(3) the date on which additional contributions are to be made or the
date of events requiring additional contributions to be made;
(4) events requiring the limited partnership to be dissolved and its
affairs wound up; and
54
(5) the date on which each partner in the limited partnership became a
partner;
f.
The records of the accounts of the limited partnership;
g. The income and expense statement for the limited partnership for the
past three years if they are not contemplated under No. 6 above;
h. Any financial statements of the limited partnership prepared for or
issued by the limited partnership in the previous two years.
End of Document
55
TABLE OF CONTENTS
I.
Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
A.
Scope of This Article. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
B.
A Perspective on the Rule Making Process. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
II.
The Tour. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
A.
A Brief Orientation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
B.
The Justice Court Rules. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
III.
Rules of Practice in Justice Courts.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Rule 500. General Rules. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Rule 501. Citation and Service. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Rule 502. Institution of Suit.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Rule 503. Default Judgment; Pre-Trial Matters; Trial.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Rule 504. Jury. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Rule 505. Judgment; New Trial. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Rule 506. Appeal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Rule 507. Administrative Rules for Judges and Court Personnel. . . . . . . . . . . . . . . . . . . . . . . . . 21
Rule 508. Debt Claim Cases. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Rule 509. Proceedings to Enforce Landlord’s Duty to Repair or Remedy Residential Rental
Property. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Rule 510. Eviction Cases. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
New Justice Court Rules
tour, all were the result of statutory requirements
imposed upon the Supreme Court of Texas through
legislative enactments. 1
An Overview of New
Texas Rules of Civil Procedure
(A Tour)
Generally, You Start With a Task Force
I. Introduction
It is the practice of the Supreme Court of Texas
to appoint a task force to advise the Supreme Court
regarding rules to be adopted or revised, and to
charge such task force with the promulgation of
proposed rules in compliance with the statutory
mandate. That was done with regard to each of the
rules discussed herein. Ultimately, each of the task
forces created for the respective rules tendered to
the Supreme Court a Task Force Report detailing
its work effort and final recommendations. In the
event that an irreconcilable split of opinion
developed on the task force, the Report could also
describe the differing perspectives and contain
alternative recommendations.
A. Scope of This Article
Actually, to describe this document as an
“Article” is somewhat misleading; it is more akin
to a tour. The 82nd Texas legislative session
resulted in a variety of statutory mandates to the
Supreme Court of Texas for the formulation of
new rules and the restructuring of the Texas court
system as it relates to the justice and small claims
courts. Most of this is entirely new; meaning there
is a dearth of case law. In fact, “dearth” is too
generous. For the most part, there is none.
Therefore, this is a “tour;” to call it anything other
than that would be to exaggerate the treatment.
The rules addressed in this “tour” can generally
be categorized into four groups:
The Supreme Court Advisory Committee
While a task force technically owes its work
product to the Supreme Court, they are not the only
body which will have input into the rule making
process. The Supreme Court maintains an advisory
body, the Supreme Court Advisory Committee,
which the Supreme Court relies upon for guidance
in reaching a final rule. 2
1) Dismissal for Baseless Causes of Action
2) Expedited Actions and related Pleading
Rule
3) Level 1 Discovery Control Plan
4) Justice Court Rules
While the formulation of some of these rules may
look to other jurisdictions for inspiration and
guidance, none of them adopt foreign
jurisprudence as the basis for understanding and
applying the rules. As such, what Texas courts
will begin with is a clean slate. The rule says what
it says . . . for now. Any uncertainties or
ambiguities in language, any unintended
consequences, any failure of foresight are yet to be
addressed by the courts. In many respects, it is a
brave new world . . . and attorneys beware.
The Supreme Court Advisory Committee, was
first created in 1940 and periodically reconstituted
since then to assist the Supreme Court in the
continuing study, review, and development of rules
of administration and procedure for Texas courts
The Committee drafts rules as directed by the
Court; solicits, summarizes, and reports to the
Court the views of the bar and the public on court
[1]
The Rules for Dismissal and Expedited Trials were
mandated by an Act of May 25, 2011, 82 nd Leg., R.S. ch. 203,
§§ 1.01 and 2.01 (HB274). The Rules for Justice Court were
mandated by an Act of June 29, 2011, 82 nd Leg., 1 st C.S. ch.
3, §§ 5.02 and 5.07 (HB79).
B. A Perspective on the Rule Making Process
Changes to the Texas Rules of Civil Procedure
are technically initiated by the Supreme Court of
Texas; either on its own volition or at the
urging/mandate of the Texas legislature. With
respect to the four rule categories addressed in this
[2]
The current Supreme Court Advisory Committee was
created by the Court’s Order issued in M isc. Docket No. 119259. The current committee members serve until December
31, 2014.
1
New Justice Court Rules
rules and procedures; and makes recommendations
for change.
Court and presented to the public for comment.
The comment period is generally 60 days, unless
exigent circumstances would require swifter action.
While the Committee may occasionally take a
vote on a particular rule or formulation for the rule,
such votes are solely for informational purposes.
The Committee's discussions and
recommendations are advisory and are not binding
on the Supreme Court. Committee meetings are
held after public notice and are open to the public.
A record is made of all Committee proceedings.
Public Comment is not the place for substantive
change, though unanticipated hues and cries have
been known to cause a proposed rule to be
withdrawn. Generally, the Public Comment Period
is about clarification; the question being: Are there
unnecessary issues being raised which could be
avoided through refinement of the language of the
rule.
The Supreme Court Advisory Committee has
approximately 50 members and is comprised of a
wide variety of persons, including: sitting and
retired appellate judges, notable law professors,
distinguished trial judges and prominent attorneys.
In the context of the rules being discussed in this
tour, the role of the Committee was to provide a
multi-dimensional dialogue regarding the rules.
Final Approval
Once the Public Comment Period has closed,
the Supreme Court, with the assistance of the Rules
Attorney, will develop a final version of the rule as
well as determine the applicability of the rule in
terms of present or future litigation.
The Supreme Court Rules Attorney
II. The Tour
The Supreme Court Rules Attorney works at
the direction of the Supreme Court, generally
interacting at length with the particular Supreme
Court Justice charged with overseeing the rule
making process. It is the job of the Rules
Attorney, at the direction and in consultation with
the responsible Justice, to distill the Task Force
Report and the observations, comments and, were
available, the recommendations of the Supreme
Court Advisory Committee, into a rule to be
promulgated by the Supreme Court.
A. A Brief Orientation
This tour is intended to highlight the key
features of each of the new rules. The text of the
rule will be presented in parallel with specific
highlighted points.
B. The Justice Court Rules
The new Justice Court Rules came about as the
result of an Act of June 29, 2011, 82nd Leg., 1st C.S.
ch. 3, §§ 5.02 and 5.07 (HB79). As of the writing
of this “tour”, the justices of the peach oversee two
distinct court systems, mandated by the
Government Code. Chapter 27 pertains to Justice
Courts and Chapter 28 pertains to Small Claims
Courts . . . one justice, two courts. As of May 1,
2013, the Small Claims Courts are dissolved and
those cases are effectively transferred to the Justice
Courts. Specifically, the legislature instructed to
Supreme Court to handle small claim matters in
Justice Court (Gov. Code §27.060) and to
promulgate rules to “define cases that constitute
small claims cases” (HB79, Sec. 5.06) so as to
ensure “the fair, expeditious, and inexpensive
The Supreme Court Promulgates the Rule
Once the language of the rule is agreed to, the
Supreme Court promulgates the rule by way of a
miscellaneous order. In addition to providing the
text of the rule, the order provides for the effective
date, the terms of enactment and the public
comment period.
Public Comment
In the rule making process, there is one last
process. Once the Supreme Court has formulated
a rule, that rule is promulgate by an Order of the
2
New Justice Court Rules
resolution” of these cases (Gov. Code §27.060(a)).
The legislation also required the Supreme
Court to provide specific procedures for an action
by:
(1) an assignee of a claim or other person
seeking to bring an action on an assigned
claim;
(2) a person primarily engaged in the business
of lending money at interest; or
(3) a collection agency or collection agent.
(Gov. Code §27.060(c)). These cases are
collectively described as Debt Claim Cases and are
ultimately the object of two specific rules.
Finally, the legislature wanted these new rules
to be understandable to a lay person. To this end,
the statute provides:
“The rules adopted by the supreme court
may not:
(1) require that a party in a case be
represented by an attorney;
(2) be so complex that a reasonable person
without legal training would have difficulty
understanding or applying the rules; or
(3) require that discovery rules adopted
under the Texas Rules of Civil
Procedure or the Texas Rules of
Evidence be applied except to the extent
the justice of the peace hearing the case
determines that the rules must be followed
to ensure that the proceeding is fair to all
parties.”
[emphasis added], Gov. Code §27.060(d). In
essence, the Supreme Court was to write an
entirely new set of rules of civil procedure . . .
but keep it simple.
The new Justice Court Rules are in their public
comment period as of this writing and any
significant changes will be updated as of the course
date.
TEXAS RULES OF CIVIL PROCEDURE
3
New Justice Court Rules
PART V. RULES OF PRACTICE IN JUSTICE COURTS
Effective Date:
Applies to:
May 1, 2013
Pending Case, but does not contravene existing obligations and rights
Text of Rule of Civil Procedure
Summary of Rule Elements
RULE 500. GENERAL RULES
RULE 500.1. CONSTRUCTION OF RULES
Housekeeping Language
Unless otherwise expressly provided, in Part V of these Rules of Civil Procedure:
(a) the past, present, and future tense each includes the other;
(b) the term “it” includes a person of either gender or an entity; and
(c) the singular and plural each includes the other.
RULE 500.2. DEFINITIONS
Included to help guide pro se
parties
In Part V of these Rules of Civil Procedure:
(a) “Answer” is the written response that someone who is sued must file with the court
after being served with a citation.
(b) “Citation” is the court-prepared document required to be served upon a party to
inform the party that it has been sued.
(c) “Claim” is the legal theory and alleged facts that, if proven, entitle a party to relief
against another party in court.
(d) “Clerk” is a person designated by the judge as a justice court clerk, or the judge if
there is no clerk available.
(e) “Counterclaim” is a claim brought by a party who has been sued against the party
who filed suit, for example, a defendant suing a plaintiff.
(f) “County court” is the county court, statutory county court, or district court in a
particular county with jurisdiction over appeals of civil cases from justice court.
(g) “Cross-claim” is a claim brought by one party against another party on the same
side of a lawsuit. For example, if a plaintiff sues two defendants, A and B, A can seek
relief against B by means of a cross-claim.
(h) “Default judgment” is a judgment awarded to a plaintiff when the defendant fails
to answer and dispute the plaintiff’s claims in the lawsuit.
(i) “Defendant” is someone who is sued, including a plaintiff against whom a
counterclaim is filed.
(j) “Defense” is an assertion by a defendant that the plaintiff is not entitled to relief
from the court.
(k) “Discovery” is the process through which parties obtain information from each
other in order to prepare for trial or enforce a judgment. The term does not refer to any
information that a party is entitled to under applicable law.
(l) “Dismissed without prejudice” means a case has been dismissed but has not been
finally decided and may be refiled.
(m) “Dismissed with prejudice” means a case has been dismissed and finally decided
and may not be refiled.
(n) “Judge” is a justice of the peace.
(o) “Judgment” is a final order by the court that states the relief, if any, a party is
4
New Justice Court Rules
Text of Rule of Civil Procedure
Summary of Rule Elements
entitled to or must provide.
(p) “Jurisdiction” is the authority of the court to hear and decide a case.
(q) “Motion” is a request that the court make a specified ruling or order.
(r) “Notice” is a document prepared and delivered by the court or a party stating that
something is required of the party receiving the notice.
(s) “Party” is a person involved in the case that is either suing or being sued, including
all plaintiffs, defendants, and third parties that have been joined in the case.
(t) “Petition” is a formal written application stating a party’s claims and requesting
relief from the court. It is the first document filed with the court to begin a lawsuit.
(u) “Plaintiff” is someone who sues, including a defendant who files a counterclaim.
(v) “Pleading” is a written document filed by a party, including a petition and an
answer, that states a claim or defense and outlines the relief sought.
(w) “Relief” is the remedy a party requests from the court, such as the recovery of
money or the return of property.
(x) “Serve” and “service” are delivery of citation as required by Rule 501.2, or of a
document as required by Rule 501.4.
(y) “Sworn” means signed in front of someone authorized to take oaths, such as a
notary, or signed under penalty of perjury. Filing a false sworn document can result in
criminal prosecution.
(z) “Third party claim” is a claim brought by a party being sued against someone who
is not yet a party to the case.
RULE 500.3. APPLICATION OF RULES IN JUSTICE COURT CASES
(a) Small Claims Case. A small claims case is a lawsuit brought for the recovery of
money damages, civil penalties, or personal property. The claim can be for no more
than $10,000 excluding statutory interest and court costs but including attorney fees, if
any. Small claims cases are governed by Rules 500-507 of Part V of the Rules of Civil
Procedure.
(b) Debt Claim Case. A debt claim case is a lawsuit brought to recover a debt by an
assignee of a claim, a debt collector or collection agency, a financial institution, or a
person or entity primarily engaged in the business of lending money at interest. The
claim can be for no more than $10,000 in damages, excluding statutory interest and
court costs but including attorney fees, if any. Debt claim cases in justice court are
governed by Rules 500-507 and 508 of Part V of the Rules of Civil Procedure. To the
extent of any conflict between Rule 508 and the rest of Part V, Rule 508 applies.
(c) Repair and Remedy Case. A repair and remedy case is a lawsuit brought to seek
judicial remedy for the alleged failure of a landlord to remedy or repair a condition as
required by Chapter 92 of the Texas Property Code. The relief sought can be no more
than $10,000, excluding statutory interest and court costs but including attorney fees,
if any. Repair and remedy cases are governed by Rules 500-507 and 509 of Part V of
the Rules of Civil Procedure. To the extent of any conflict between Rule 509 and the
rest of Part V, Rule 509 applies.
(d) Eviction Case. An eviction case is a lawsuit brought to recover possession of real
property, often by a landlord against a tenant. A claim for rent may be joined with an
eviction case if the amount of rent due and unpaid is not more than $10,000, including
costs and attorney fees, if any. Eviction cases are governed by Rules 500-507 and 510
of Part V of the Rules of Civil Procedure. To the extent of any conflict between Rule
510 and the rest of Part V, Rule 510 applies. (e) Application of Other Rules. The other
Rules of Civil Procedure and the Rules of Evidence do not apply except:
5
Jurisdictional Limit of $10,000
<
Includes:
– Damages
– Penalties
– Property
– Attorneys Fees
<
Excludes:
– Statutory Interest
– Court Cost
Debt Claim Case Defined
<
Assignee of a Claim
<
A Financial Institution
<
A Debt Collector or Collection
Agency
<
A person or entity primarily
engaged in the business of
lending money at interest
Repair and Remedy Case Defined
<
Alleged failure of a landlord to
remedy or repair a condition as
required by Chapter 92 of the
Texas Property Code
Eviction Cases
<
lawsuit brought to recover
possession of real property
<
May include a claim for rent
New Justice Court Rules
Text of Rule of Civil Procedure
Summary of Rule Elements
(1) when the judge hearing the case determines that a particular rule must be
followed to ensure that the proceedings are fair to all parties; or
(2) when otherwise specifically provided by law or these rules.
(f) Examination of Rules. The court must make the Rules of Civil Procedure and the
Rules of Evidence available for examination, either in paper form or electronically,
during the court’s business hours.
RULE 500.4. REPRESENTATION IN JUSTICE COURT CASES
(a) Representation of an Individual. An individual may:
No Substantive Change from
Prior Rules
(1) represent himself or herself;
(2) be represented by someone who is not an attorney and is not being
compensated for the representation; or
(3) be represented by an attorney.
(b) Representation of a Corporation or Other Entity. A corporation or other entity
may:
(1) be represented by an employee, owner, member, officer, or partner of the
entity who is not an attorney;
(2) be represented by a property manager in an eviction case; or
(3) be represented by an attorney.
RULE 500.5. COM PUTATION OF TIM E; TIM ELY FILING
Follows District Court Rules
(a) Computation of Time. To compute a time period in these rules:
(1) exclude the day of the event that triggers the period;
(2) count every day, including Saturdays, Sundays, and legal holidays; and
(3) include the last day of the period, but
(A) if the last day is a Saturday, Sunday, or legal holiday, the time period is
extended to the next day that is not a Saturday, Sunday, or legal holiday; or
(B) if the last day for filing falls on a day during which the court is closed
before 5:00 p.m., the time period is extended to the court’s next business day.
(b) Timely Filing by Mail. Any document required to be filed by a given date is
considered timely filed if deposited in the U.S. mail on or before that date, and
received within 10 days of the due date. A legible postmark affixed by the United
States Postal Service is evidence of the date of mailing.
(c) Extensions. The judge may, for good cause shown, extend any time period under
these rules except those relating to new trial and appeal.
RULE 500.6. JUDGE TO DEVELOP THE CASE
In order to develop the facts of the case, a judge may question a witness or party and
may summon any person or party to appear as a witness when the judge considers it
necessary to ensure a correct judgment and a speedy disposition.
RULE 500.7. EXCLUSION OF W ITNESSES
Applies to All Cases - This
substantially changes the role of
the judge
Follows District Court Rules
At a party’s request, or on its own initiative, the court must order witnesses excluded
so that they cannot hear the testimony of other witnesses. This rule does not authorize
the exclusion of:
(a) a party who is a natural person or the spouse of such natural person;
(b) an officer or employee designated as a representative of a party who is not a
natural person; or
(c) a person whose presence is shown by a party to be essential to the presentation of
the party’s case.
6
New Justice Court Rules
Text of Rule of Civil Procedure
Summary of Rule Elements
RULE 500.8. SUBPOENAS
Follows District Court Rules
(a) Use. A subpoena may be used by a party or the judge to command a person or
entity to attend and give testimony at a hearing or trial. A person may not be required
by subpoena to appear in a county that is more than 150 miles from where the person
resides or is served.
(b) W ho Can Issue. A subpoena may be issued by the clerk of the justice court or an
attorney authorized to practice in the State of Texas, as an officer of the court.
(c) Form. Every subpoena must be issued in the name of the “State of Texas” and
must:
(1) state the style of the suit and its case number;
(2) state the court in which the suit is pending;
(3) state the date on which the subpoena is issued;
(4) identify the person to whom the subpoena is directed;
(5) state the time, place, and nature of the action required by the person to whom
the subpoena is directed;
(6) identify the party at whose instance the subpoena is issued, and the party’s
attorney of record, if any;
(7) state that “Failure by any person without adequate excuse to obey a subpoena
served upon that person may be deemed a contempt of court from which the
subpoena is issued and may be punished by fine or confinement, or both”; and
(8) be signed by the person issuing the subpoena.
(d) Service: W here, By W hom, How. A subpoena may be served at any place within
the State of Texas by any sheriff or constable of the State of Texas, or by any person
who is not a party and is 18 years of age or older. A subpoena must be served by
delivering a copy to the witness and tendering to that person any fees required by law.
If the witness is a party and is represented by an attorney of record in the proceeding,
the subpoena may be served on the witness’s attorney of record.
(e) Compliance Required. A person commanded by subpoena to appear and give
testimony must remain at the hearing or trial from day to day until discharged by the
court or by the party summoning the witness. If a subpoena commanding testimony is
directed to a corporation, partnership, association, governmental agency, or other
organization, and the matters on which examination is requested are described with
reasonable particularity, the organization must designate one or more persons to testify
on its behalf as to matters known or reasonably available to the organization.
(f) Objection. A person commanded to attend and give testimony at a hearing or trial
may object or move for a protective order before the court at or before the time and
place specified for compliance. A party causing a subpoena to issue must take
reasonable steps to avoid imposing undue burden or expense on the person served. In
ruling on objections or motions for protection, the court must provide a person served
with a subpoena an adequate time for compliance and protection from undue burden
or expense. The court may impose reasonable conditions on compliance with a
subpoena, including compensating the witness for undue hardship.
(g) Enforcement. Failure by any person without adequate excuse to obey a subpoena
served upon that person may be deemed a contempt of the court from which the
subpoena is issued or of a district court in the county in which the subpoena is served,
and may be punished by fine or confinement, or both. A fine may not be imposed, nor
a person served with a subpoena attached, for failure to comply with a subpoena
without proof by affidavit of the party requesting the subpoena or the party’s attorney
of record that all fees due the witness by law were paid or tendered. Proof of service
must be made by filing either:
(1) the witness’s signed written memorandum attached to the subpoena showing
that the witness accepted the subpoena; or
(2) a statement by the person who made the service stating the date, time, and
manner of service, and the name of the person served.
7
New Justice Court Rules
Text of Rule of Civil Procedure
Summary of Rule Elements
RULE 500.9. DISCOVERY
No Automatic Right to Discovery
(a) Pretrial Discovery. Pretrial discovery is limited to that which the judge considers
reasonable and necessary. Any requests for pretrial discovery must be presented to
the court for approval by written motion. The motion must be served on the
responding party. The discovery request must not be served on the responding party
unless the judge issues a signed order approving the request after notice to the
responding party and a hearing. Failure to comply with a discovery order can result in
sanctions, including dismissal of the case or an order to pay the other party’s
discovery expenses.
Discovery only available after
court order
(b) Post-judgment Discovery. Post-judgment discovery is not required to be filed with
the court. The party requesting discovery must give the responding party at least 30
days to respond to a post-judgment discovery request. The responding party may file a
written objection with the court within 30 days of receiving the request. If an objection
is filed, the judge must hold a hearing to determine if the request is valid. If the
objection is denied, the judge must order the party to respond to the request. If the
objection is upheld, the judge may reform the request or dismiss it entirely.
<
Request presented by written
motion, served on all parties
<
Requires signed order
<
Limited to what is reasonable
and necessary
Discovery Order enforceable by
sanctions
Post-Judgment Discovery allowed
without necessity of Court Order
RULE 501. CITATION AND SERVICE
RULE 501.1. CITATION
(a) Issuance. W hen a petition is filed with a justice court to initiate a suit, the clerk
must promptly issue a citation and deliver the citation as directed by the plaintiff. The
plaintiff is responsible for obtaining service on the defendant of the citation and a
copy of the petition with any documents filed with the petition. Upon request, separate
or additional citations must be issued by the clerk. The clerk must retain a copy of the
citation in the court’s file.
(b) Form. The citation must:
(1) be styled “The State of Texas”;
(2) be signed by the clerk under seal of court or by the judge;
(3) contain the name, location, and address of the court;
(4) show the date of filing of the petition;
(5) show the date of issuance of the citation;
(6) show the file number and names of parties;
(7) state the plaintiff’s cause of action and relief sought;
(8) be directed to the defendant;
(9) show the name and address of attorney for plaintiff, or if the plaintiff does not
have an attorney, the address of plaintiff;
(10) state the date by which the defendant is required to file a written answer with
the court issuing citation; and
(11) notify defendant that if the defendant fails to file an answer, judgment by
default may be rendered for the relief demanded in the petition.
(c) Notice. The citation must include the following notice to the defendant in boldface
type:
“You have been sued. You may employ an attorney to help you in defending
against this lawsuit. But you are not required to employ an attorney. You or
your attorney must file an answer with the court. Your answer is due by the
end of the 14th day after the day you were served with these papers. If the
14th day is a Saturday, Sunday, or legal holiday, your answer is due by the
end of the first day following the 14th day that is not a Saturday, Sunday, or
legal holiday. Do not ignore these papers. If you do not file an answer by the
due date, a default judgment may be taken against you. For further
information, consult Part V of the Texas Rules of Civil Procedure, which is
available online and also at the court listed on this citation.”
(d) Copies. The plaintiff must provide enough copies to be served on each defendant.
If the party fails to do so, the clerk may make copies and charge the plaintiff the
allowable copying cost.
8
Generally follows District Court
rules, except <
Answer Date is 14 days from
service date
New Justice Court Rules
Text of Rule of Civil Procedure
Summary of Rule Elements
RULE 501.2. SERVICE OF CITATION
Generally follows District Court
rules, except -
(a) W ho May Serve. No person who is a party to or interested in the outcome of the
suit may serve citation in that suit, and, unless otherwise authorized by written court
order, a citation in an eviction proceeding and writs and notices of attachment,
execution, garnishment, sequestration, possession, re-entry and restoration of utility
service, and turnover must be served by a sheriff or constable. Other citations may be
served by:
(1)
(2)
(3)
(4)
<
Request for Alternative Service
may come from the constable,
sheriff or process server
a sheriff or constable;
a process server certified under order of the Supreme Court;
the clerk of the court, if the citation is served by registered or certified mail; or
a person authorized by court order who is 18 years of age or older.
(b) Method of Service. Citation must be served by:
(1) delivering a copy of the citation with a copy of the petition attached to the
defendant in person, after endorsing the date of delivery on the citation; or
(2) mailing a copy of the citation with a copy of the petition attached to the
defendant by registered or certified mail, restricted delivery, with return receipt or
electronic return receipt requested.
(c) Service Fees. A plaintiff must pay all fees for service unless the plaintiff has filed a
sworn statement of inability to pay the fees with the court. If the plaintiff has filed a
sworn statement of inability to pay, the plaintiff must arrange for the citation to be
served by a sheriff, constable, or court clerk.
(d) Service on Sunday. A citation cannot be served on a Sunday except in attachment,
garnishment, sequestration, or distress proceedings.
(e) Alternative Service of Citation. If the methods under (b) are insufficient to serve
the defendant, the plaintiff, or the constable, sheriff, process server certified under
order of the Supreme Court, or other person authorized to serve process, may make a
request for alternative service. This request must include a sworn statement describing
the methods attempted under (b). The court may authorize the following types of
alternative service:
(1) mailing a copy of the citation with a copy of the petition attached by first class
mail to the defendant at a specified address, and also leaving a copy of the
citation with petition attached at the defendant’s residence or other place where
the defendant can probably be found with any person found there who is at least
16 years of age; or
(2) mailing a copy of the citation with a copy of the petition attached by first class
mail to the defendant at a specified address, and also serving by any other method
that the court finds is reasonably likely to provide the defendant with notice of the
suit.
(f) Service by Publication. In the event that service of citation by publication is
necessary, the process is governed by the rules in county and district court.
RULE 501.3. DUTIES OF OFFICER OR PERSON RECEIVING CITATION
(a) Endorsement; Execution; Return. The officer or authorized person to whom
process is delivered must:
(1) endorse on the process the date and hour on which he or she received it;
(2) execute and return the same without delay; and
(3) complete a return of service, which may, but need not, be endorsed on or
attached to the citation.
(b) Contents of Return. The return, together with any document to which it is attached,
must include the following information:
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Summary of Rule Elements
(1) the case number and case name;
(2) the court in which the case is filed;
(3) a description of what was served;
(4) the date and time the process was received for service;
(5) the person or entity served;
(6) the address served;
(7) the date of service or attempted service;
(8) the manner of delivery of service or attempted service;
(9) the name of the person who served or attempted service;
(10) if the person named in (9) is a process server certified under Supreme Court
Order, his or her identification number and the expiration date of his or her
certification; and
(11) any other information required by rule or law.
(c) Citation by Mail. W hen the citation is served by registered or certified mail as
authorized by Rule 501.2(b)(2), the return by the officer or authorized person must
also contain the receipt with the addressee’s signature.
(d) Failure to Serve. W hen the officer or authorized person has not served the citation,
the return must show the diligence used by the officer or authorized person to execute
the same and the cause of failure to execute it, and where the defendant is to be found,
if ascertainable.
(e) Signature. The officer or authorized person who serves or attempts to serve a
citation must sign the return. If the return is signed by a person other than a sheriff,
constable, or clerk of the court, the return must either be verified or be signed under
penalty of perjury. A return signed under penalty of perjury must contain the statement
below in substantially the following form:
“My name is (First) (Middle) (Last) , my date of birth is (Month) (Day), (Year) , and
my address is (Street), (City), (State) (Zip Code), (County) . I declare under penalty of
perjury that the foregoing is true and correct.
Executed in County, State of , on the day of (Month) , (Year) .
Declarant
(f) Alternative Service. W here citation is executed by an alternative method as
authorized by 501.2(e), proof of service must be made in the manner ordered by the
court.
(g) Filing Return. The return and any document to which it is attached must be filed
with the court and may be filed electronically or by fax, if those methods of filing are
available.
(h) Prerequisite for Default Judgment. No default judgment may be granted in any
case until proof of service as provided by this rule, or as ordered by the court in the
event citation is executed by an alternative method under 501.2(e), has been on file
with the clerk of the court 3 days, exclusive of the day of filing and the day of
judgment.
RULE 501.4. SERVICE OF PAPERS OTHER THAN CITATION
(a) Method of Service. Other than a citation or oral motions made during trial or when
all parties are present, every notice required by these rules, and every pleading, plea,
motion, application to the court for an order, or other form of request, must be served
on all other parties in one of the following ways.
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(1) In person. A copy may be delivered to the party to be served, or the party’s
duly authorized agent or attorney of record, in person or by agent.
(2) Mail or courier. A copy may be sent by courier-receipted delivery or by
certified or registered mail, to the party’s last known address. Service by certified
or registered mail is complete when the document is properly addressed and
deposited in the United States mail, postage prepaid.
(3) Fax. A copy may be faxed to the recipient’s current fax number. Service by
fax after 5:00 p.m. local time of the recipient will be deemed to have been served
on the following day.
(4) Email. A copy may be sent to an email address expressly provided by the
receiving party, if the party has consented to email service in writing. Service by
email after 5:00 p.m. local time of the recipient will be deemed to have been
served on the following day.
(5) Other. A copy may be delivered in any other manner directed by the court. (b)
Timing. If a document is served by mail, 3 days will be added to the length of
time a party has to respond to the document. Notice of any hearing requested by a
party must be served on all other parties not less than 3 days before the time
specified for the hearing.
(c) W ho May Serve. Documents other than a citation may be served by a party to the
suit, an attorney of record, a sheriff or constable, or by any other person competent to
testify.
(d) Certificate of Service. The party or the party’s attorney of record must include in
writing on all documents filed a signed statement describing the manner in which the
document was served on the other party or parties and the date of service. A certificate
by a party or the party’s attorney of record, or the return of the officer, or the sworn
statement of any other person showing service of a notice is proof of service.
(e) Failure to Serve. A party may offer evidence or testimony that a notice or
document was not received, or, if service was by mail, that it was not received within
3 days from the date of mailing, and upon so finding, the court may extend the time
for taking the action required of the party or grant other relief as it deems just.
RULE 502. INSTITUTION OF SUIT
RULE 502.1. PLEADINGS AND M OTIONS M UST BE W RITTEN, SIGNED,
AND FILED
Pleading to be In W riting
Except for oral motions made during trial or when all parties are present, every
pleading, plea, motion, application to the court for an order, or other form of request
must be written and signed by the party or its attorney and must be filed with the court.
A document may be filed with the court by personal or commercial delivery, by mail,
or electronically, if the court allows electronic filing.
RULE 502.2. PETITION
Contents of Petition Described
(a) Contents. To initiate a suit, a petition must be filed with the court. A petition must
contain:
Pleading Requirement
<
Name, address, telephone
number, and fax number, if any,
of the plaintiff and the
plaintiff’s attorney, if
applicable;
<
Name, address, and telephone
number, if known, of the
defendant;
<
amount of money, if any, the
plaintiff seeks;
(1) the name, address, telephone number, and fax number, if any, of the plaintiff
and the plaintiff’s attorney, if applicable;
(2) the name, address, and telephone number, if known, of the defendant;
(3) the amount of money, if any, the plaintiff seeks;
(4) a description and claimed value of any personal property the plaintiff seeks;
(5) the basis for the plaintiff’s claim against the defendant; and
(6) if the plaintiff consents to email service of the answer and any other motions
or pleadings, a statement consenting to email service and email contact
information.
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(b) Justice Court Civil Case Information Sheet. A justice court civil case information
sheet, in the form promulgated by the Supreme Court of Texas, must accompany the
filing of a petition and must be signed by the plaintiff or the plaintiff’s attorney. The
justice court civil case information sheet is for data collection for statistical and
administrative purposes and does not affect any substantive right. The court may not
reject a pleading because the pleading is not accompanied by a justice court civil case
information sheet.
<
<
<
description and claimed value of
any personal property the
plaintiff seeks;
the basis for the plaintiff’s claim
against the defendant; and
the plaintiff ‘s email address, if
consenting to service via email
Civil Information Sheet Required
RULE 502.3. FEES; INABILITY TO PAY
(a) Fees and Statement of Inability to Pay. On filing the petition, the plaintiff must pay
the appropriate filing fee and service fees, if any, with the court. A plaintiff who is
unable to afford to pay the fees must file a sworn statement of inability to pay. Upon
filing the statement, the clerk must docket the action, issue citation, and provide any
other customary services.
Generally follows District Court
rules
(b) Contents of Statement of Inability to Pay.
(1) The statement must contain complete information as to the party’s identity,
nature and amount of governmental entitlement income, nature and amount of
employment income, other income (interest, dividends, etc.), spouse’s income if
available to the party, property owned (other than homestead), cash or checking
account, dependents, debts, and monthly expenses.
(2) The statement must contain the following: “I am unable to pay court fees. I
verify that the statements made in this statement are true and correct.” The
statement must be sworn before a notary public or other officer authorized to
administer oaths or be signed under penalty of perjury.
(c) IOLTA Certificate. If the party is represented by an attorney who is providing free
legal services because of the party’s indigence, without contingency, and the attorney
is providing services either directly or by referral from a program funded by the
Interest on Lawyers Trust Accounts (IOLTA) program, the attorney may file an
IOLTA certificate confirming that the IOLTA funded program screened the party for
income eligibility under the IOLTA income guidelines. A party’s statement of
inability to pay accompanied by an attorney’s IOLTA certificate may not be contested
under (d).
(d) Contest. The defendant may file a contest of the statement of inability to pay at any
time within 7 days after the day the defendant’s answer is due. If the statement attests
to receipt of government entitlement based on indigence, the statement may only be
contested with regard to the veracity of the attestation. If contested, the judge must
hold a hearing to determine the plaintiff’s ability to pay. At the hearing, the burden is
on the party who filed the statement to prove its inability to pay. The judge may,
regardless of whether the defendant contests the statement, examine the statement and
conduct a hearing to determine the plaintiff’s ability to pay. If the judge determines
that the plaintiff is able to afford the fees, the judge must enter a written order listing
the reasons for the determination, and the plaintiff must pay the fees in the time
specified in the order or the case will be dismissed without prejudice.
RULE 502.4. VENUE — W HERE A LAW SUIT M AY BE BROUGHT
(a) Applicable Law. Laws specifying the venue – the county and precinct where a
lawsuit may be brought – are found in Chapter 15, Subchapter E of the Texas Civil
Practice and Remedies Code, which is available online and for examination during the
court’s business hours.
(b) General Rule. Generally, a defendant in a small claims case as described in Rule
500.3(a) or a debt claim case as described in Rule 500.3(b) is entitled to be sued in
one of the following venues:
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The rule makes it clear that it
does not replace CPRC Chapter
15; merely summarizes the basic
venue issues for purposes of a
pro se litigant
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(1) the county and precinct where the
(2) the county and precinct where the
gave rise to the claim occurred;
(3) the county and precinct where the
to the claim was to be performed; or
(4) the county and precinct where the
personal property.
Summary of Rule Elements
defendant resides;
incident, or the majority of incidents, that
contract or agreement, if any, that gave rise
property is located, in a suit to recover
(c) Non-Resident Defendant; Defendant’s Residence Unknown. If the defendant is a
non-resident of Texas, or if defendant’s residence is unknown, the plaintiff may file
the suit in the county and precinct where the plaintiff resides. (d) Motion to Transfer
Venue. If a plaintiff files suit in an improper venue, a defendant may challenge the
venue selected by filing a motion to transfer venue. The motion must be filed before
trial, no later than 21 days after the day the defendant’s answer is filed, and must
contain a sworn statement that the venue chosen by the plaintiff is improper and a
specific county and precinct of proper venue to which transfer is sought. If the
defendant fails to name a county and precinct, the court must instruct the defendant to
do so and allow the defendant 7 days to cure the defect. If the defendant fails to
correct the defect, the motion will be denied, and the case will proceed in the county
and precinct where it was originally filed.
No Substantial Change from prior
venue process
(1) Procedure.
(A) Judge to Set Hearing. If a defendant files a motion to transfer venue, the
judge must set a hearing at which the motion will be considered.
(B) Response to Motion. A plaintiff may file a response to a defendant’s
motion to transfer venue.
(C) Evidence and Argument. The parties may present evidence and make
legal arguments at the hearing. The defendant presents evidence and
argument first. A witness may testify at a hearing, either in person or, with
permission of the court, by means of telephone or an electronic
communication system. W ritten documents offered by the parties may also be
considered by the judge at the hearing.
(D) Judge’s Decision. The judge must either grant or deny the motion to
transfer venue. If the motion is granted, the judge must sign an order
designating the court to which the case will be transferred. If the motion is
denied, the case will be heard in the court in which the plaintiff initially filed
suit.
(E) Review. Motions for rehearing and interlocutory appeals of the judge’s
ruling on venue are not permitted.
(F) Time for Trial of the Case. No trial may be held until at least the 14th day
after the judge’s ruling on the motion to transfer venue.
(G) Order. If the motion to transfer venue is granted, the court must issue an
order of transfer stating the reason for the transfer and the name of the court
to which the transfer is made. W hen such an order of transfer is made, the
judge who issued the order must immediately make out a true and correct
transcript of all the entries made on the docket in the case, certify the
transcript, and send the transcript, with a certified copy of the bill of costs
and the original papers in the case, to the court in the precinct to which the
case has been transferred. The court receiving the case must then notify the
plaintiff that the case has been received and, if the case is transferred to a
different county, that the plaintiff has 14 days after receiving the notice to
pay the filing fee in the new court, or file a sworn statement of inability to
pay. The plaintiff is not entitled to a refund of any fees already paid. Failure
to pay the fee or file a sworn statement of inability to pay will result in
dismissal of the case without prejudice.
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(e) Fair Trial Venue Change. If a party believes it cannot get a fair trial in a specific
precinct or before a specific judge, the party may file a sworn motion stating such,
supported by the sworn statements of two other credible persons, and specifying if the
party is requesting a change of location or a change of judge. Except for good cause
shown, this motion must be filed no less than 7 days before trial. If the party seeks a
change of judge, the judge must exchange benches with another qualified justice of the
peace, or if no judge is available to exchange benches, the county judge must appoint
a visiting judge to hear the case. If the party seeks a change in location, the case must
be transferred to the nearest justice court in the county that is not subject to the same
or some other disqualification. If there is only one justice of the peace precinct in the
county, then the judge must exchange benches with another qualified justice of the
peace, or if no judge is available to exchange benches, the county judge must appoint
a visiting judge to hear the case. In cases where exclusive jurisdiction is within a
specific precinct, as in eviction cases, the only remedy available is a change of judge.
A party may apply for relief under this rule only one time in any given lawsuit.
(f) Transfer of Venue by Consent. On the written consent of all parties or their
attorneys, filed with the court, venue must be transferred to the court of any other
justice of the peace of the county, or any other county.
RULE 502.5. ANSW ER
Defendant’s Answer
(a) Requirements. A defendant must file with the court a written answer to a lawsuit as
directed by the citation and must also serve a copy of the answer on the plaintiff. The
answer must contain:
<
Due 14 days from date of
service
<
Must be in writing
<
Rule allows for a general denial
(1) the name, address, telephone number, and fax number, if any, of the defendant
and the defendant’s attorney, if applicable; and
(2) if the defendant consents to email service, a statement consenting to email
service and email contact information.
(b) General Denial. An answer that denies all of the plaintiff’s allegations and
demands that they be proven without specifying the reasons is sufficient to constitute
an answer or appearance and does not bar the defendant from raising any defense at
trial.
W hat is Not Required
<
Affirmative Defenses need not
be pled
(c) Answer Docketed. The defendant’s appearance must be noted on the court’s
docket.
(d) Due Date. Unless the defendant is served by publication, the defendant’s answer is
due by the end of the 14th day after the day the defendant was served with the citation
and petition, but
(1) if the 14th day is a Saturday, Sunday, or legal holiday, the answer is due on
the next day that is not a Saturday, Sunday, or legal holiday; or
(2) if the 14th day falls on a day during which the court is closed before 5:00 PM,
the answer is due on the court’s next business day.
(e) Due Date W hen Defendant Served by Publication. If a defendant is served by
publication, the defendant’s answer is due by the end of the 42nd day after the day the
citation was issued, but
(1) if the 42nd day is a Saturday, Sunday, or legal holiday, the answer is due on
the next day that is not a Saturday, Sunday, or legal holiday; or
(2) if the 42nd day falls on a day during which the court is closed before 5:00 PM,
the answer is due on the court’s next business day.
RULE 502.6. COUNTERCLAIM ; CROSS-CLAIM ; THIRD-PARTY CLAIM
(a) Counterclaim. A defendant may file a petition stating as a counterclaim any claim
against a plaintiff that is within the jurisdiction of the justice court, whether or not
related to the claims in the plaintiff’s petition. The defendant must file a counterclaim
petition as provided in Rule 502.2, and must pay a filing fee or provide a sworn
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Counterclaims
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Must follow pleading
requirements set forth in 502.2
<
Must pay a fee or file an sworn
statement of inability to pay
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Summary of Rule Elements
statement of inability to pay the fees. The court need not generate a citation for a
counterclaim and no answer to the counterclaim need be filed. The defendant must
serve a copy of the counterclaim as provided by Rule 501.4.
(b) Cross-Claim. A plaintiff seeking relief against another plaintiff, or a defendant
seeking relief against another defendant may file a cross-claim. The filing party must
file a crossclaim petition as provided in Rule 502.2, and must pay a filing fee or
provide a sworn statement of inability to pay the fees. A citation must be issued and
served as provided by Rule 501.2 on any party that has not yet filed a petition or an
answer, as appropriate. If the party filed against has filed a petition or an answer, the
filing party must serve the cross-claim as provided by Rule 501.4.
(c) Third Party Claim. A defendant seeking to bring another party into a suit who may
be liable for all or part of the plaintiff’s claim against the defendant may file a petition
as provided in Rule 502.2, and must pay a filing fee or provide a sworn statement of
inability to pay the fees. A citation must be issued and served as provided by Rule
501.2.
RULE 502.7. AM ENDING AND CLARIFYING PLEADINGS
Pleading Amendments
(a) Amending Pleadings. A party may withdraw something from or add something to a
pleading, as long as the amended pleading is filed and served as provided by Rule
501.4 not less than 7 days before trial. The court may allow a pleading to be amended
less than 7 days before trial if the amendment will not operate as a surprise to the
opposing party.
<
Up until 7 days before trial
without leave of Court
<
7 days before trial or sooner,
upon a showing that the
amendment would not operate
as a surprise
(b) Insufficient Pleadings. A party may file a motion with the court asking that another
party be required to clarify a pleading. The court must determine if the pleading is
sufficient to place all parties on notice of the issues in the lawsuit, and may hold a
hearing to make that determination. If the court determines a pleading is insufficient,
the court must order the party to amend the pleading and set a date by which the party
must amend. If a party fails to comply with the court’s order, the pleading may be
stricken.
Special Exception
<
The issue is the sufficiency of
pleading to place all parties on
notice of the issues
<
A hearing is not required
RULE 503. DEFAULT JUDGM ENT; PRE-TRIAL M ATTERS; TRIAL
RULE 503.1. IF DEFENDANT FAILS TO ANSW ER
(a) Default Judgment. If the defendant fails to file an answer by the date stated in Rule
502.5, the judge must ensure that service was proper, and may hold a hearing for this
purpose. If it is determined that service was proper, the judge must render a default
judgment in the following manner:
(1) Claim Based on W ritten Document. If the claim is based on a written
document signed by the defendant, and a copy of the document has been filed
with the court and served on the defendant, along with a sworn statement from the
plaintiff that this is a true and accurate copy of the document and the relief sought
is owed, and all payments, offsets or credits due to the defendant have been
accounted for, the judge must render judgment for the plaintiff in the requested
amount, without any necessity for a hearing. The plaintiff’s attorney may also
submit affidavits supporting an award of attorney fees to which the plaintiff is
entitled, if any.
(2) Other Cases. Except as provided in (1) and (2), a plaintiff who seeks a default
judgment against a defendant must request a hearing, orally or in writing. The
plaintiff must appear at the hearing and provide evidence of its damages. If the
plaintiff proves its damages, the judge must render judgment for the plaintiff in
the amount proven. If the plaintiff is unable to prove its damages, the judge must
render judgment in favor of the defendant. W ith the permission of the court, a
party may appear at a hearing by means of telephone or an electronic
communication system.
15
Default Judgment
<
Judge must determine
sufficiency of service and may
hold hearing
<
Appearance may be by
telephonic or electronic
communication, at the judge’s
discretion
Sworn Account/Liquidated
Damage Cases
<
Requires Sworn Statement
<
May be granted on submission
Non-Sworn Accounts/
Unliquidated Damage Cases
<
Requires request for hearing
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May not be granted on
submission
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(b) Appearance. If a defendant files an answer or otherwise appears in a case before a
default judgment is signed by the judge, the judge must not enter a default judgment
and the case must be set for trial as described in Rule 503.3.
Judge M ust Render Judgment
<
(c) Post-Answer Default. If a defendant who has answered fails to appear for trial, the
court may proceed to hear evidence on liability and damages and render judgment
accordingly.
(d) Notice. The plaintiff requesting a default judgment must provide to the clerk in
writing the last known mailing address of the defendant at or before the time the
judgment is signed. W hen a default judgment is signed, the clerk must immediately
mail written notice of the judgment to the defendant at the address provided by the
plaintiff, and note the fact of such mailing on the docket. The notice must state the
number and style of the case, the court in which the case is pending, the names of the
parties in whose favor and against whom the judgment was rendered, and the date the
judgment was signed. Failure to comply with the provisions of this rule does not affect
the finality of the judgment.
RULE 503.2. SUM M ARY DISPOSITION
(a) Motion. A party may file a sworn motion for summary disposition of all or part of
a claim or defense without a trial. The motion must set out all supporting facts. All
documents on which the motion relies must be attached. The motion must be granted
if it shows that:
(1) there are no genuinely disputed facts that would prevent a judgment in favor
of the party;
(2) there is no evidence of one or more essential elements of a defense which the
defendant must prove to defeat the plaintiff’s claim; or
(3) there is no evidence of one or more essential elements of the plaintiff’s claim.
(b) Response. The party opposing the motion may file a sworn written response to the
motion.
(c) Hearing. The court must not consider a motion for summary disposition until it has
been on file for at least 14 days. By agreement of the parties, the court may decide the
motion and response without a hearing.
(d) Order. The court may enter judgment as to the entire case or may specify the facts
that are established and direct such further proceedings in the case as are just.
RULE 503.3. SETTINGS AND NOTICE; POSTPONING TRIAL
(a) Settings and Notice. After the defendant answers, the case will be set on a pretrial
docket or a trial docket at the discretion of the judge. The court must send a notice of
the date, time, and place of this setting to all parties at their address of record no less
than 45 days before the setting date, unless the judge determines that an earlier setting
is required in the interest of justice. Reasonable notice of all subsequent settings must
be sent to all parties at their addresses of record.
(b) Postponing Trial. A party may file a sworn motion requesting that the trial be
postponed. The motion must state why a postponement is necessary. The judge, for
good cause, may postpone any suit for a reasonable time.
Rule makes no allowances for
curing a deficiency in plaintiff’s
proof of damages
Clerk to M ail Notice of Judgment
Summary Judgment Procedure
<
Requires “sworn motion”
<
Requires evidence be attached
<
Provides for “sworn written
response”
Hearing
<
After Motion on file for 14 days
<
Response time line not stated,
only required prior to hearing
<
May be on submission if agreed
to by the parties
M otion to be Granted if:
<
There are no “genuinely
disputed facts”
<
There is “no evidence” of more
or more essential elements of a
defense
<
There is “no evidence” of more
or more essential elements of a
plaintiff’s claim
Notice of Trial Date Required
<
Requires 45 day notice
<
Resetting of trial date only
requires “reasonable notice”
Continuances
<
Requires sworn motion
<
Requires showing of “good
cause”
RULE 503.4. PRETRIAL CONFERENCE
Pre-Trial Conference
(a) Conference Set; Issues. If all parties have appeared in a suit, the court, at any
party’s request or on its own, may set a case for a pretrial conference. Appropriate
issues for the pretrial conference include:
<
(1) discovery;
(2) the amendment or clarification of pleadings;
Conference Topic List
<
16
Court may set on own motion or
that of a party
(See Rule)
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Summary of Rule Elements
(3) the admission of facts and documents to streamline the trial process;
(4) a limitation on the number of witnesses at trial;
(5) the identification of facts, if any, which are not in dispute between the parties;
(6) mediation or other alternative dispute resolution services;
(7) the possibility of settlement;
(8) trial setting dates that are amenable to the court and all parties;
(9) the appointment of interpreters, if needed;
(10) the application of a Rule of Civil Procedure not in Part V or a Rule of
Evidence; and
(11) any other issue that the court deems appropriate.
(b) Eviction Cases. The court must not schedule a pretrial conference in an eviction
case if it would delay trial.
RULE 503.5. ALTERNATIVE DISPUTE RESOLUTION
Alternative Dispute Resolution
(a) State Policy. The policy of this state is to encourage the peaceable resolution of
disputes through alternative dispute resolution, including mediation, and the early
settlement of pending litigation through voluntary settlement procedures. Judges and
court administrators are responsible for carrying out this policy and developing an
alternative dispute resolution system to encourage peaceable resolution in all justice
court suits. For that purpose, the judge may order any case to mediation or another
appropriate and generally accepted alternative dispute resolution process.
<
Court may order ADR
(b) Eviction Cases. The court must not order mediation or any other alternative
dispute resolution process in an eviction case if it would delay trial.
RULE 503.6. TRIAL
Failure to Appear
(a) Docket Called. On the day of the trial setting, the judge must call all of the cases
set for trial that day.
<
Court may continue the case
<
Court may proceed and call the
case to trial
(b) If Plaintiff Fails to Appear. If the plaintiff fails to appear when the case is called
for trial, the judge may postpone or dismiss the suit.
(c) If Defendant Fails to Appear. If the defendant fails to appear when the case is
called for trial, the judge may postpone the case, or may proceed to take evidence. If
the plaintiff proves its case, judgment must be awarded for the relief proven. If the
plaintiff fails to prove its case, judgment must be rendered against the plaintiff.
– If plaintiff fails to prove
its case, the Court must
enter a take-nothing
judgment
RULE 504. JURY
RULE 504.1. JURY TRIAL DEM ANDED
(a) Demand. Any party is entitled to a trial by jury. A written demand for a jury must
be filed no later than 14 days before the date a case is set for trial. If the demand is not
timely, the right to a jury is waived unless the late filing is excused by the judge for
good cause.
(b) Jury Fee. Unless otherwise provided by law, a party demanding a jury must pay a
fee of $22.00 or must file a sworn statement of inability to pay the fee at or before the
time the party files a written request for a jury.
(c) W ithdrawal of Demand. If a party who demands a jury and pay the fee withdraws
the demand, the case will remain on the jury docket unless all other parties present
agree to try the case without a jury. A party that withdraws its jury demand is not
entitled to a refund of the jury fee.
(d) No Demand. If no party timely demands a jury and pays the fee, the judge will try
the case without a jury.
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No Substantive Change from
Prior Rules
New Justice Court Rules
Text of Rule of Civil Procedure
Summary of Rule Elements
RULE 504.2. EM PANELING THE JURY
No Substantive Change from
Prior Rules
(a) Drawing Jury and Oath. If no method of electronic draw has been implemented,
the judge must write the names of all prospective jurors present on separate slips of
paper as nearly alike as may be, place them in a box, mix them well, and then draw the
names one by one from the box. The judge must list the names drawn and deliver a
copy to each of the parties or their attorneys.
(b) Oath. After the draw, the judge must swear the panel as follows: “You solemnly
swear or affirm that you will give true and correct answers to all questions asked of
you concerning your qualifications as a juror.”
(c) Questioning the Jury. The parties or their attorneys will be allowed to question
jurors as to their ability to serve impartially in the trial but may not ask the jurors how
they will rule in the case. The judge will have discretion to allow or disallow specific
questions and determine the amount of time each side will have for this process.
(d) Challenge for Cause. A party may challenge any juror for cause. The challenge
must be made during jury questioning. The party must explain to the judge why the
juror will be prejudiced or biased and must therefore be excluded from the jury. The
judge must evaluate the questions and answers given and either grant or deny the
challenge. W hen a challenge for cause has been sustained, the juror must be excused.
(e) Challenges Not for Cause. After the judge determines any challenges for cause,
each party may select up to 3 jurors to excuse for any reason or no reason at all. But
no prospective juror may be excused for membership in a constitutionally protected
class.
(f) The Jury. After all challenges, the first 6 prospective jurors remaining on the list
constitute the jury to try the case.
(g) If Jury Is Incomplete. If challenges reduce the number of prospective jurors below
6, the judge must direct the sheriff or constable to summon others and allow them to
be questioned and challenged by the parties as before, until at least 6 remain.
(h) Jury Sworn. W hen the jury has been selected, the judge must require them to take
substantially the following oath: “You solemnly swear or affirm that you will render a
true verdict according to the law and the evidence presented.”
RULE 504.3. JURY NOT CHARGED
No Substantive Change from
Prior Rules
The judge must not charge the jury.
RULE 504.4. JURY VERDICT FOR SPECIFIC ARTICLES
W hen the suit is for the recovery of specific articles and the jury finds for the plaintiff,
the jury must assess the value of each article separately, according to the evidence
presented at trial.
No Substantive Change from
Prior Rules
RULE 505. JUDGM ENT; NEW TRIAL
RULE 505.1. JUDGM ENT
(a) Judgment Upon Jury Verdict. W here a jury has returned a verdict, the judge must
announce the verdict in open court, note it in the court’s docket, and render judgment
accordingly.
(b) Case Tried by Judge. W hen a case has been tried before the judge without a jury,
the judge must announce the decision in open court, note the decision in the court’s
docket, and render judgment accordingly.
(c) Form. A judgment must:
(1) clearly state the determination of the parties’s rights in the case;
(2) state who must pay the costs;
18
No Substantive Change from
Prior Rules
New Justice Court Rules
Text of Rule of Civil Procedure
Summary of Rule Elements
(3) direct the issuance of process necessary for enforcement;
(4) be signed by the judge; and
(5) be dated the date of the judge’s signature.
(d) Costs. The judge must award costs allowed by law to the successful party.
(e) Judgment for Specific Articles. W here the judgment is for the recovery of specific
articles, the judgment must order that the plaintiff recover such specific articles, if they
can be found, and if not, then their value as assessed by the judge or jury with interest
at the prevailing post-judgment interest rate.
RULE 505.2. ENFORCEM ENT OF JUDGM ENT
Justice court judgments are enforceable in the same method as in county and district
court, except as provided by law. W hen the judgment is for personal property, the
court may award a special writ for the seizure and delivery of such property to the
plaintiff, and may, in addition to the other relief granted in such cases, enforce its
judgment by attachment or fine.
No Substantive Change from
Prior Rules
RULE 505.3. M OTION TO SET ASIDE; M OTION TO REINSTATE; M OTION
FOR NEW TRIAL
No Substantive Change from
Prior Rules, Except
(a) Motion to Reinstate after Dismissal. A plaintiff whose case is dismissed may file a
motion to reinstate the case no later than 14 days after the dismissal order is signed.
The plaintiff must serve the defendant with a copy of the motion no later than the next
business day using a method approved under Rule 501.4 The court may reinstate the
case for good cause shown.
<
(b) Motion to Set Aside Default. A defendant against whom a default judgment is
granted may file a motion to set aside the judgment no later than 14 days after the
judgment is signed. The defendant must serve the plaintiff with a copy of the motion
no later than the next business day using a method approved under Rule 501.4. The
court may set aside the judgment and set the case for trial for good cause shown.
Enlarges time period for request
to 14 days
M otion Denied as a M atter of Law
if no Order is signed within 21
days after the Judgment was
signed
(c) Motion for New Trial. A party may file a motion for a new trial no later than 14
days after the judgment is signed. The party must serve all other parties with a copy of
the motion no later than the next business day using a method approved under Rule
501.4. The judge may grant a new trial upon a showing that justice was not done in
the trial of the case. Only one new trial may be granted to either party.
(d) Motion Not Required. Failure to file a motion under this rule does not affect a
party’s right to appeal the underlying judgment.
(e) Motion Denied as a Matter of Law. If the judge has not ruled on a motion to set
aside, motion to reinstate, or motion for new trial, the motion is automatically denied
at 5:00 p.m. on the 21st day after the day the judgment was signed.
RULE 506. APPEAL
RULE 506.1. APPEAL
Timetable for Appeal is Enlarged
(a) How Taken; Time. A party may appeal a judgment by filing a bond, making a cash
deposit, or filing a sworn statement of inability to pay with the justice court within 21
days after the judgment is signed or the motion to reinstate, motion to set aside, or
motion for new trial, if any, is denied.
<
(b) Amount of Bond; Sureties; Terms. A plaintiff must file a $500 bond. A defendant
must file a bond in an amount equal to twice the amount of the judgment. The bond
must be supported by a surety or sureties approved by the judge. The bond must be
payable to the appellee and must be conditioned on the appellant’s prosecution of its
appeal to effect and payment of any judgment and all costs rendered against it on
appeal.
19
W ithin 21 days after the
judgment is signed
Bond Requirements for Appeal
<
Plaintiff: $500
<
Defendant: Twice the amount of
the judgment
<
Payable to Appellee
<
Pauper’s Bond described
New Justice Court Rules
Text of Rule of Civil Procedure
Summary of Rule Elements
(c) Cash Deposit in Lieu of Bond. In lieu of filing a bond, an appellant may deposit
with the clerk of the court cash in the amount required of the bond.
(d) Sworn Statement of Inability to Pay.
(1) Filing; contest. An appellant who cannot furnish a bond or pay a cash deposit
in the amount required may instead file a sworn statement of inability to pay. The
statement must meet the requirements of Rule 502.3 and may be the same one that
was filed with the petition.
(2) Contest. The statement may be contested as provided in Rule 502.3(d) within
7 days after the opposing party receives notice that the statement was filed.
(3) Appeal If Contest Sustained. If the contest is sustained, the appellant may
appeal that decision by filing notice with the justice court within 7 days of that
court’s written order. The justice court must then forward all related documents to
the county court for resolution. The county court must set the matter for hearing
within 14 days and hear the contest de novo, as if there had been no previous
hearing, and if the appeal is granted, must direct the justice court to transmit to
the clerk of the county court the transcript, records, and papers of the case, as
provided in these rules.
(4) If No Appeal or If Appeal Overruled. If the appellant does not appeal the
ruling sustaining the contest, or if the county court denies the appeal, the appellant
may, within five days, post an appeal bond or make a cash deposit in compliance
with this rule.
(e) Notice to Other Parties Required. If a statement of inability to pay is filed, the
court must provide notice to all other parties that the statement was filed no later than
the next business day. W ithin 7 days of filing a bond or making a cash deposit, an
appellant must serve written notice of the appeal on all other parties using a method
approved under Rule 501.4.
(f) No Default on Appeal W ithout Compliance W ith Rule. The county court to which
an appeal is taken must not render default judgment against any party without first
determining that the appellant has fully complied with this rule.
(g) No Dismissal of Appeal W ithout Opportunity for Correction. An appeal must not
be dismissed for defects or irregularities in procedure, either of form or substance,
without allowing the appellant, after 7 days’ notice from the court, the opportunity to
correct such defect.
(h) Appeal Perfected. An appeal is perfected when a bond, cash deposit, or statement
of inability to pay is filed in accordance with this rule.
(i) Costs. The appellant must pay the costs on appeal to a county court in accordance
with Rule 143a.
RULE 506.2. RECORD ON APPEAL
W hen an appeal has been perfected from the justice court, the judge must immediately
send to the clerk of the county court a certified copy of all docket entries, a certified
copy of the bill of costs, and the original papers in the case.
RULE 506.3. TRIAL DE NOVO
The case must be tried de novo in the county court. A trial de novo is a new trial in
which the entire case is presented as if there had been no previous trial.
RULE 506.4. W RIT OF CERTIORARI
(a) Application. Except in eviction cases, after final judgment in a case tried in justice
court, a party may apply to the county court for a writ of certiorari.
20
No Substantive Change from
Prior Rules
No Substantive Change from
Prior Rules
No Substantive Change from
Prior Rules
New Justice Court Rules
Text of Rule of Civil Procedure
Summary of Rule Elements
(b) Grounds. An application must be granted only if it contains a sworn statement
setting forth facts showing that either:
(1) the justice court did not have jurisdiction; or
(2) the final determination of the suit worked an injustice to the applicant that was
not caused by the applicant’s own inexcusable neglect.
(c) Bond, Cash Deposit, or Sworn Statement of Indigency to Pay Required. If the
application is granted, a writ of certiorari must not issue until the applicant has filed a
bond, made a cash deposit, or filed a sworn statement of indigency that with Rule 145.
(d) Time for Filing. An application for writ of certiorari must be filed within 90 days
after the date the final judgment is signed.
(e) Contents of W rit. The writ of certiorari must command the justice court to
immediately make and certify a copy of the entries in the case on the docket, and
immediately transmit the transcript of the proceedings in the justice court, together
with the original papers and a bill of costs, to the proper court.
(f) Clerk to Issue W rit and Citation. W hen the application is granted and the bond,
cash deposit, or sworn statement of indigency have been filed, the clerk must issue a
writ of certiorari to the justice court and citation to the adverse party.
(g) Stay of Proceedings. W hen the writ of certiorari is served on the justice court, the
court must stay further proceedings on the judgment and comply with the writ.
(h) Cause Docketed. The action must be docketed in the name of the original plaintiff,
as plaintiff, and of the original defendant, as defendant.
(i) Motion to Dismiss. W ithin 30 days after the service of citation on the writ of
certiorari, the adverse party may move to dismiss the certiorari for want of sufficient
cause appearing in the affidavit, or for want of sufficient bond. If the certiorari is
dismissed, the judgment must direct the justice court to proceed with the execution of
the judgment below.
(j) Amendment of Bond or Oath. The affidavit or bond may be amended at the
discretion of the court in which it is filed.
(j) Trial De Novo. The case must be tried de novo in the county court and judgment
must be rendered as in cases appealed from justice courts. A trial de novo is a new
trial in which the entire case is presented as if there had been no previous trial.
RULE 507. ADM INISTRATIVE RULES FOR JUDGES AND COURT
PERSONNEL
RULE 507.1. PLENARY POW ER
Expanded Plenary Powers
A justice court loses plenary power over a case when an appeal is perfected or if no
appeal is perfected, 21 days after the later of the date judgment is signed or the date a
motion to set aside, motion to reinstate, or motion for new trial, if any, is denied. In an
eviction case for nonpayment of rent that is appealed by filing a statement of inability
to pay, the court’s plenary power is extended for 7 days beyond the date the appeal is
perfected.
<
RULE 507.2. FORM S
No Substantive Change from
Prior Rules
The court may provide blank forms to enable a party to file documents that comply
with these rules. No party may be forced to use the court’s forms.
RULE 507.3. DOCKET AND OTHER RECORDS
(a) Docket. Each judge must keep a civil docket, which may be maintained
electronically, containing the following information:
(1) the title of all suits commenced before the court;
21
Plenary Power enlarged to
21 days, consistent with
enlarged appeal time frame
No Substantive Change from
Prior Rules
New Justice Court Rules
Text of Rule of Civil Procedure
Summary of Rule Elements
(2) the time when the first process was issued against the defendant, when
returnable, and the nature of that process;
(3) the time when the parties, or either of them, appeared before the court, either
with or without a citation;
(4) a copy of the petition filed by plaintiff, and any documents filed with the
petition;
(5) every adjournment, stating at whose request and to what time;
(6) the time when the trial was had, stating whether the same was by a jury or by
the judge;
(7) the verdict of the jury, if any;
(8) the judgment signed by the judge and the time of signing same;
(9) all applications for setting aside judgments or granting new trials and the
orders of the judge thereon, with the date;
(10) the time of issuing execution, to whom directed and delivered, and the
amount of debt, damages and costs and, when any execution is returned, the date
of the return and the manner in which it was executed; and
(11) all stays and appeals that may be taken, and the time when taken, the amount
of the bond and the names of the sureties.
(b) Other Records. The judge must also keep such other dockets, books and records as
may be required by law or these rules, and must keep a fee book in which all costs
accruing in every suit commenced before the court are taxed.
RULE 507.4. ISSUANCE OF W RITS
Every writ from the justice courts must be in writing and be issued and signed by the
judge officially. The style thereof must be “The State of Texas.” It must, except where
otherwise specially provided by law or these rules, be directed to the person or party
upon whom it is to be served, be made returnable to the court, and note the date of its
issuance.
22
No Substantive Change from
Prior Rules
New Justice Court Rules
Text of Rule of Civil Procedure
Summary of Rule Elements
RULE 508. DEBT CLAIM CASES
RULE 508.1. APPLICATION
Rule 508 applies to a claim for the recovery of a debt brought by an assignee of a
claim, a financial institution, a debt collector or collection agency, or a person or
entity primarily engaged in the business of lending money at interest.
RULE 508.2. PETITION
(a) Contents. In addition to the information required by Rule 502.2, a petition filed in
a suit governed by this rule must contain the following information:
(1) Credit Accounts. In a claim based upon a credit card, revolving credit, or
open account, the petition must state:
(A) the account or card name;
(B) the account number (which may be masked);
(C) the date of issue or origination of the account, if known;
(D) the date of charge-off or breach of the account, if known;
(E) the amount owed as of a date certain; and
(F) whether the plaintiff seeks ongoing interest.
(2) Personal and Business Loans. In a claim based upon a promissory note or
other promise to pay a specific amount as of a date certain, the petition must state:
(A) the date and amount of the original loan;
(B) whether the repayment of the debt was accelerated;
(C) the date final payment was due;
(D) the amount due as of the final payment date;
(E) the amount owed as of a date certain; and
(F) whether plaintiff seeks ongoing interest.
(3) Ongoing Interest. If a plaintiff seeks ongoing interest, the petition must state:
(A) the effective interest rate claimed;
(B) whether the interest rate is based upon contract or statute; and
(C) the dollar amount of interest claimed as of a date certain.
(4) Assigned Debt. If the debt that is the subject of the claim has been assigned or
transferred, the petition must state:
(A) that the debt claim has been transferred or assigned;
(B) the date of the transfer or assignment;
(C) the name of any prior holders of the debt; and
(D) the name or a description of the original creditor.
RULE 508.3. DEFAULT JUDGM ENT
(a) Generally. If the defendant does not file an answer to a claim by the answer date
or otherwise appear in the case, the judge must promptly render a default judgment
upon the plaintiff’s proof of the amount of damages.
(b) Proof of the Amount of Damages.
(1) Evidence Must Be Served or Submitted. Evidence of plaintiff’s damages must
either be attached to the petition and served on the defendant or submitted to the
court after defendant’s failure to answer by the answer date.
23
Debt Claim Case Defined
<
Assignee of a Claim
<
A Financial Institution
<
A Debt Collector or Collection
Agency
<
A person or entity primarily
engaged in the business of
lending money at interest
All Pleadings to Include the
Requires All of the Information
Described in Rule 502.2
Pleading Standards (Credit Acct)
<
Account or card name;
<
Account number (masked)
<
Date of issue (if known)
<
Date of charge-off (if known)
<
Amount owed on date certain;
and
<
W hether plaintiff seeks interest
Pleading Standard (Loan)
<
Date and amount of original
loan;
<
W hether loan was accelerated;
<
Date final payment was due;
<
Amount due on payment date;
<
Amount owed on date certain;
and
<
W hether plaintiff seeks interest
Ongoing Interest
<
The effective interest rate;
<
W hether interest rate is based
upon contract or statute; and
<
The dollar amount of interest
claimed as of a date certain
Assigned Debt Cases
<
Statement that debt claim has
been transferred or assigned;
<
Date of the transfer/assignment;
<
Names of any prior holders; and
<
Name or description of the
original creditor
Requires the court to “promptly
render a default judgment”
Requires that Proof of Damage
Amount be either:
<
Served on the Defendant
<
Submitted to the Court
New Justice Court Rules
Text of Rule of Civil Procedure
Summary of Rule Elements
(2) Form of Evidence. Evidence of plaintiff’s damages may be offered in a sworn
statement or in live testimony.
(3) Establishment of the Amount of Damages. The amount of damages is
established by evidence:
(A) that the account or loan was issued to the defendant and the defendant is
obligated to pay it;
(B) that the account was closed or the defendant breached the terms of the
account or loan agreement;
(C) of the amount due on the account or loan as of a date certain after all
payment credits and offsets have been applied; and
(D) that the plaintiff owns the account or loan and, if applicable, how the
plaintiff acquired the account or loan.
(4) Documentary Evidence Offered By Sworn Statement. Documentary
evidence may be considered if it is attached to a sworn statement made by the
plaintiff or its representative, a prior holder of the debt or its representative, or the
original creditor or its representative, that attests to the following:
(A) the documents were kept in the regular course of business;
(B) it was the regular course of business for an employee or representative
with knowledge of the act recorded to make the record or to transmit
information to be included in such record;
(C) the documents were created at or near the time or reasonably soon
thereafter; and
(D) the documents attached are the original or exact duplicates of the
original.
(5) Consideration of Sworn Statement. A judge is not required to accept a
sworn statement if the source of information or the method or circumstances of
preparation indicate lack of trustworthiness. But a judge may not reject a sworn
statement only because it is not made by the original creditor.
(c) Hearing. The judge may enter a default judgment without a hearing if the plaintiff
submits sufficient written evidence of its damages and should do so to avoid undue
expense and delay. Otherwise, the plaintiff may request a default judgment hearing at
which the plaintiff must appear, in person or by telephonic or electronic means, and
prove its damages. If the plaintiff proves its damages, the judge must render judgment
for the plaintiff in the amount proven. If the plaintiff is unable to prove its damages,
the judge must render judgment in favor of the defendant.
(d) Appearance. If the defendant files an answer or otherwise appears in a case
before a default judgment is signed by the judge, the judge must not render a default
judgment and must set the case for trial.
(e) Post-Answer Default. If a defendant who has answered fails to appear for trial,
the court may proceed to hear evidence on liability and damages and render judgment
accordingly.
Forms of Evidence
<
Sworn Statement
<
Live W itness
<
Documents
Requirements of Proof
<
Defendant’s Account and
obligation to pay
<
Breach
<
Amount Due
<
Plaintiff if Owner of the
Account
– If Acquired, then How
If Proof Relies on Documents
<
Requires a Business Records
Affidavit (BRA)
Requirements of a BRA
<
Affidavit may be made by
person other than the original
issuer
<
Attests to:
– Documents kept in regular
course of business
– Employee obligation to make
the record
– Records created at or near the
time of the event
– Documents attached are
originals or exact duplicates of
the original.
Sworn Statements
<
Judge is not required to accept
if source of information or
method/circumstance of
preparation indicates lack of
trustworthiness
<
Judge cannot reject simply
because the sworn statement is
not made by the original
creditor
Hearing M ay Be by Submission,
but Court Is Not Required to Do
So
Plaintiff M ay Request a Hearing
<
May be telephonic (Court is
encouraged to minimize cost)
<
Hearing must result in a
judgment (No Continuance??)
RULE 509. PROCEEDINGS TO ENFORCE LANDLORD’S DUTY TO
REPAIR OR REM EDY RESIDENTIAL RENTAL PROPERTY
NOT COVERED BY THIS TOUR
RULE 510. EVICTION CASES
NOT COVERED BY THIS TOUR
24
New Justice Court Rules
JUSTICE COURT CIVIL CASE INFORMATION SHEET
Effective Date:
Applies to:
May 1, 2013
Cases Filed On or After Effective Date
25
THE NEW RULES
MICHAEL J. SCOTT
A Tour
A TALE OF TWO STATUTES
It was the best of times, it was the worst of times,
It was the age of wisdom, it was the age of foolishness,
It was the epoch of belief, it was the epoch of incredulity,
It was the season of Light, it was the season of Darkness,
It was the spring of hope, it was the winter of despair,
We had everything before us, we had nothing before us,
We were all going direct to Heaven, . . .
- Charles Dickens
RULE MAKING IN TEXAS
SMALL CLAIM CASE RULES
RULE 505. JUDGMENT/NEW TRIAL
505.1 Judgment
505.2 Enforcement Of
Judgment
505.3 Motion To Set Aside;
Motion To Reinstate;
Motion For New Trial
- Follows Prior Rule
- Follows Prior Rule
- Enlarges time to 14 days
- Overruled as a matter
of law 21 days after
judgment signed
SMALL CLAIM CASE RULES
RULE 506. APPEAL
506.4 WRIT OF CERTIORARI 506.1 APPEAL
506.2 RECORD ON APPEAL
506.3 TRIAL DE NOVO
Major Change
Follows Prior Rule
Follows Prior Rule
Follows Prior Rule
SMALL CLAIM CASE RULES
RULE 506. MAJOR CHANGES
Rule 506.1 – Appeal
 Time Table – Within 21 days after,
 Judgment is signed, or
 Motion to reinstate, motion to set aside or motion for new
trial is denied
 Bond
 Plaintiff - $500 “payable to the appellee”
 Defendant – Twice the amount of the judgment
SMALL CLAIM CASE RULES
RULE 507. APPEAL
507.1 Plenary Power
507.2 Forms
507.3 Docket and Other
Records
507.4 Issuance Of Writs
- Enlarged to 21 days
(See Appeals)
- Follows Prior Rule
- Follows Prior Rule
- Follows Prior Rule
PLASTIC IS EVERYWHERE YOU LOOK
 58.6 Billion
Debt/Credit Card
Transactions per
Year in the US
 15% in Texas
 45% are Credit
 5-10 Million
Credit Card
Transactions per
day in Texas
AND, MORE OFTEN THAN NOT
SOMEBODY OWES SOMEBODY MONEY
 $800 Billion in
Credit Card Debt
 ~4% Default Rate
 $32 Billion in
Defaults
 TX = $4.8 Billion
YOU DON’T ALWAYS GET WHAT YOU WANT,
. . . BUT YOU GET WHAT YOU NEED!!
 Initial Creditor Proposal
 Proof filed with Petition
 Default on Submission
 Mandator y Disclosures
 Initial Task Force Recommendation
 Business Records Af fidavit from
Original Issuer to Obtain Citation
 Final Task Force Recommendation
 Business Records Af fidavit from
Original Issuer to Obtain Default
 Supreme Cour t Rule
 Default on Submission
 No Special Proof Rules
 No Discover y
SMALL CLAIM CASE RULES
RULE 508. DEBT CLAIM CASES
500.1 Application
500.2 Petition
500.3 Default Judgment
- Tracks HB79 Requirement
- New Rule
- New Rule
[See also Rule 500.3(b)]
- Rules 500-507 Apply
SMALL CLAIM CASE RULES
RULE 508.2 - PETITIONS
 Pleading Requirements – Credit Accounts






Account or card name;
Account number (masked)
Date of issue (if known)
Date of charge-off (if known)
Amount owed on date certain; and
Whether plaintiff seeks interest
 Pleading Requirements - Per sonal and Business Loans






Date and amount of original loan;
Whether loan was accelerated;
Date final payment was due;
Amount due on payment date;
Amount owed on date certain; and
Whether plaintiff seeks interest
SMALL CLAIM CASE RULES
RULE 508.2 - PETITIONS
 Pleading Requirements - Ongoing Interest
 The effective interest rate;
 Whether interest rate is based upon contract or statute; and
 The dollar amount of interest claimed as of a date certain
 Pleading Requirements - Assigned Debt Claims




Statement that debt claim has been transferred or assigned;
Date of the transfer/assignment;
Names of any prior holders; and
Name or description of the original creditor
SMALL CLAIM CASE RULES
RULE 508.3 – DEFAULT JUDGMENTS
 Rule 508.3(a) - Requires that the judge “ must promptly render a
default judgment” upon proof of damages
 Rule 508.3(b) – Proof of Amount of Damages
 May be served on defendant or submitted
 Proof by sworn statement, testimony or documentary evidence
 Proof must include:




Existence of debt,
Breach,
Amount due as of a date certain, after all payments credits and offsets, and
Claim of ownership and, if applicable, how the account was acquired
 Documentary Evidence must be in the form of a Bus. Records Affidavit
 Judge not required to accept sworn statement, if the source of
information or the method or circumstances of preparation indicate lack
of trustworthiness; but –
 Cannot reject simply because it is from a debt purchasers
 Cannot reject because documents were created by a third -party (Simien)
SMALL CLAIM CASE RULES
RULE 508.3 – DEFAULT JUDGMENTS
 Rule 508.3(c) – Hearing
 Judge may enter default judgment without a hearing if plaintiff
submits sufficient written evidence of its damages . . . and should do
so to avoid undue expense and delay
 Plaintiff may request a default judgment hearing . . . At which
plaintiff must “appear” . . . in person or by telephonic or electronic
means, and prove its damages.
 Q: Does Court have authority to set a prove -up hearing??
 If plaintiff “proves” its damages, judge must render judgment for
plaintiff, otherwise, the court must render a take-nothing judgment.
SMALL CLAIM CASE RULES
DEBT CLAIM CASES
 Rule 500.3(b) – Application of Rules in Justice Court Cases
“Debt claim cases in justice court are governed by
Rules 500-507 and 508 of Part V of the Rules of Civil
Procedure. To the extent of any conflict between Rule
508 and the rest of Part V, Rule 508 applies.”
A TALE OF TWO STATUTES
It was the best of times, it was the worst of times,
It was the age of wisdom, it was the age of foolishness,
It was the epoch of belief, it was the epoch of incredulity,
It was the season of Light, it was the season of Darkness,
It was the spring of hope, it was the winter of despair,
We had everything before us, we had nothing before us,
We were all going direct to Heaven, . . .
- Charles Dickens
Apparently an Aspiring Attorney
. . . Who Knew?
THANK YOU
Michael Scott
1120 Metrocrest Dr., Ste 100
Carrollton, TX 75006
DID (972) 248-3599
michael.scott@scott -pc.com
www.TXCBA.org