The Fifth Court rejected a judgment debtor’s challenge to the appointment of a receiver in Floyd v. MMWKM Advisors, LLC, distinguishing two sources of statutory authority:

The purpose of a [CPRC] Chapter 64 receivership is to preserve assets and resolve issues relating to a business entity’s affairs where there are allegations of fraud or improper activities. Chapter 64 does not apply here. The trial court appointed a receiver in this case [under CPRC Chapter 31] to enforce a monetary judgment that the creditors had difficulty satisfying, not because of concerns regarding fraud or corporate misconduct while litigation was pending. Appellees produced evidence that Floyd owned non-exempt property and that Appellees had an unpaid final judgment against Floyd.

No. 05-23-00638-CV (Feb. 12, 2024) (mem. op.) (citation omitted).

A strong receiver has a lot of influence (see, right). But that general principle does not automatically allow an affected party to supersede an order appointing a receiver, as illustrated by Mexico Foods Holdings, LLC v. Nafal:

At the supersedeas hearing, MFH argued that the receiver is “taking over our billion dollar company.” That is incorrect. The receiver is controlling a minority interest in MFH. MFH did not present any evidence that it will not be able to continue to operate its business during the receivership or that it would otherwise be harmed if it is not allowed to suspend enforcement of the order. In the absence of any evidence that refusal to allow MFH to supersede the order would cause it harm, we conclude the trial court did not abuse its discretion in denying MFH’s request to set a supersedeas bond.

No. 05-23-00108-CV (May 9, 2023) (mem. op., on motion to review supersedeas order).

X Extreme Construction won a $200,000 judgment in Dallas district court against three defendants. One of the defendants then sold his house, after which X Extreme  obtained a receivership over, inter alia, the sales proceeds. After more skirmishing, the Dallas court issued a writ of execution to sell the house; the purchasers filed suit in Denton County to enjoin the sale; and the Dallas court ordered the purchasers to dismiss the Denton case. The resulting standoff led to a petition for writ of mandamus, which the Dallas Court of Appeals conditionally granted in In re Marzwanian, No. 05-18-00485-CV (June 12, 2018) (mem. op.) The Court concluded that the Dallas court lacked jurisdiction over the purchasers, who were not parties to the underlying litigation, and that no statute or common law principle required litigation about the purchasers’ title to occur in the court that appointed the receiver.

A short opinion helps to illustrate the limited reach of an appellate court’s authority over the cases before it. On interlocutory appeal, both litigants agreed that the trial court should have vacated an order appointing a receiver in Texas to serve ancillary to a primary receivership in Minnesota. But in addition to vacting the order appointing the receiver, the appellant also wanted the Court of Appeals to undo all the receiver’s actions. That was beyond the appellate court’s powers however. Pointing to TRAP 43.2, the Court held that it could affirm, modify, reverse and render, reverse and remand, vacate, or dismiss — none of which permitted the Court to grant the additional relief sought by the appellant.

Burlington Resources Oil & Gas Co. LP v. Verde Minerals, LLC, No. 05-15-00014-CV

The Court of Appeals has affirmed summary judgment for Albert G. Hill, Jr. in one part of the long-running legal battle initiated by his son, Albert G. Hill III. The trial court ordered the receiver for Hill 3 Investments, LLC to wind up the company and distribute its assets to Hill Jr. and Hill III. Among other items, the Court of Appeals rejected Hill III’s argument that his accountant’s declaration had demonstrated a fact dispute over the receiver’s calculation of the company’s capital accounts. No fact issue existed, the Court of Appeals held, because the accountant only noted that he could not verify the receiver’s calculation with the records available to him. That statement gave rise to “no more than a surmise or suspicion that the accounting might be different if additional documents were reviewed.”

Full disclosure: Our firm formerly represented Hill Jr., including in the case that originally resulted in the appointment of the receiver for Hill 3 Investments. We were not involved in the case at issue here, however.

Hill v. Hill, No. 05-13-00732-CV

The Dallas Court of Appeals has reversed an order appointing a receiver to wind up the affairs of a business equally owned by two siblings who could not agree on selling the cattle ranch they operated. The opinion serves as a useful primer on the statutory criteria for appointment of a receiver. In this instance, the Court of Appeals held that a receiver could not be justified because there was no evidence that the company was under threat of an irreparable injury if the property was not sold.

Spiritas v. Davidoff, No. 05-14-00068-CV