Robert v. Holland, Jr. Individually and D/B/A Holland & Associates, and Robert v. Holland, Jr., P.C. v. Gustav Alker, Jr., and Robert Alker

Opinion issued April 20, 2006

In The

Court of Appeals

For The

First District of Texas

NO. 01-05-00666-CV

ROBERT V. HOLLAND JR., INDIVIDUALLY, and ROBERT V.

HOLLAND JR., P.C., D/B/A HOLLAND & ASSOCIATES, Appellants

V.

GUSTAV ALKER JR. and ROBERT ALKER, Appellees

On Appeal from the 113th District Court

Harris County, Texas

Trial Court Cause No. 2001-41044

MEMORANDUM OPINION

Appellants, Robert V. Holland Jr., individually (“Holland”), and Robert V.

Holland Jr., P.C., d/b/a Holland & Associates (“the professional corporation”)

(hereinafter collectively referred to as “appellants”), appeal from a post-judgment

turnover order entered in favor of Gustav Alker Jr. and Robert Alker (together

“appellees”). We determine whether the trial court erred (1) by finding that Holland’s

one-ninth interest in 606.39 acres in Coke County (“the Coke County property”) was

not entitled to a homestead exemption pursuant to section 41.001 of the Property

Code,

( 2) by finding that the property owned by the professional corporation was not

exempt as Holland’s own personal property pursuant to sections 42.001 and

42.002(a)(4) of the Property Code,

(3) by allegedly ruling on appellees’ supplemental

request for turnover without notice and hearing, (4) by allegedly issuing an order that

was unenforceable because it was vague and conflicting, (5) by appointing a receiver,

and (6) by requiring a bond of one hundred dollars. We affirm the judgment of the

trial court.

Facts

Holland’s mother, Pauline Holland (“Pauline), died on March 6, 2001.

Pauline’s will designated the Holland Family Limited Partnership as her sole

beneficiary “unless, for any reason, it ceases or fails to be in existence, then to my son,

[Holland]. If my son, [Holland], should not survive me then I bequeath and devise all

of my said property unto any living issue of my son, [Holland], per stirpes. ” The

assets of Pauline’s estate were an eight-ninths interest in the Coke County property,

seven acres on Dam Road with two houses on it, a one-third interest in a 360-acre tract

pending in Pauline’s mother’s estate, three parcels of land in Taos County, New

Mexico, and 1040 Heights Boulevard, Houston Texas (“the Heights property”).

Holland individually owned a one-ninth interest in the Coke County property. In his

deposition, Holland testified that he lived and worked at the Heights property and did

not pay rent. Victor Driscoll rented office space at the Heights property for $1,000 per

month. Driscoll paid Holland, who had cashed the checks from Driscoll and had used

the money to pay his bills.

The Coke County property also had generated rental

income from deer leases. Pauline’s estate did not have a bank account.

On June 24, 2002, the trial court entered a judgment of $265,000 in favor of

appellees. On February 13, 2003, appellees filed an application for turnover order and

appointment of receiver to enforce the judgment. On October 6, 2003, the trial court

granted the application and entered a turnover order. The October 6 turnover order

authorized appellees “to proceed with execution upon all real property interest owned

by Robert V. Holland, Jr. in Coke County, even though such interests may have been

the subject of deeds, assignments, or other transfer instruments to the Holland Family

Limited Partnership.”

A deputy constable attempted to enforce appellees’ writ of execution twice, but

did not find non-exempt property. On April 27, 2004, Holland completed a homestead

designation, contending that his ownership interest in an undivided one-ninth interest

in the Coke County property was his homestead. On December 1, 2004, appellees

filed a supplemental request for turnover order. On January 3, 2005, the trial court

held a hearing on appellees’ supplemental request for turnover order . On January 19,

2005 and February 24, 2005, appellees submitted correspondence to the trial court,

urging it to approve and to sign the supplemental request for turnover order. On

March 17, 2005, appellees filed a motion to enter a court order, requesting that the trial

court rule on their supplemental request for a turnover order and set a hearing for April

11, 2005. On April 2, 2005, appellants filed a response to appellees’ motion to enter

a court order. On April 6, 2005, the trial court signed an order granting appellees’

supplemental request for turnover order (“the April 6 turnover order”). The April 6

turnover order (1) recited that Holland had not met his burden to prove the homestead

character of his one-ninth interest in the Coke County property; (2) appointed a

receiver to take possession of all non-exempt property of appellants;

and (3) recited

that Holland’s beneficial interest in the estate of Pauline was a non-exempt asset.

On April 18, 2005, appellants filed a motion to reconsider. On June 27, 2005,

the trial court held a hearing on appellants’ motion to reconsider. On July 1, 2005, the

trial court denied appellants’ motion to reconsider, expressly declining to modify or

to vacate the April 6 turnover order. Standard of Review

The purpose of the turnover statute is to assist a judgment creditor in reaching

certain property of a judgment debtor to obtain satisfaction on a judgment. See Tex.

Civ. Prac. & Rem. Code Ann. § 31.002(a)(1) & (2) (Vernon Supp. 2005); Commerce

Sav. Ass’n v. Welch , 783 S.W.2d 668, 671 (Tex. App.—San Antonio 1989, no writ).

Property may be subject to turnover if it (1) is owned by the judgment debtor; (2)

cannot be readily attached or levied by ordinary legal process; and (3) is not exempt

from attachment, execution, or seizure for the satisfaction of liabilities. Tex. Civ.

Prac. & Rem. Code Ann. § 31.002(a)(1) & (2).

We review a turnover order and an appointment of a receiver under an

abuse-of-discretion standard of review . See Beaumont Bank, N.A. v. Buller , 806

S.W.2d 223, 226 (Tex. 1991) (stating that abuse of discretion is standard of review for

turnover order); Matz v. Bennion , 961 S.W.2d 445, 452 (Tex. App.—Houston [1st

Dist.] 1997, pet. denied) (stating that abuse of discretion is standard of review for

appointment of receiver). We reverse a trial court for abusing its discretion only if we

find that the court acted in an unreasonable or arbitrary manner. Buller , 806 S.W.2d

at 226 . That is, an abuse of discretion occurs when a trial court acts “without reference

to any guiding rules and principles.” Downer v. Aquamarine Operators, Inc. , 701

S.W.2d 238 , 241–42 (Tex. 1985). A corollary principle is that we may not reverse for

abuse of discretion merely because we disagree with a decision of the trial court, if that

decision was within the trial court’s discretionary authority. Id. at 242 . A trial court’s

issuance of a turnover order, even if predicated on an erroneous conclusion of law, will

not be reversed for abuse of discretion if the judgment is sustainable for any reason.

Buller , 806 S.W.2d at 226 .

Designation of Homestead Property

In their first point of error, appellants argue that “[t]he trial court erred in its

determination that [Holland’s] 1/9 interest in [the Coke County property] was not

protected by his homestead exemption.”

The turnover statute provides that

[a] judgment creditor is entitled to aid from a court of

appropriate jurisdiction through injunction or other means in

order to reach property to obtain satisfaction on the judgment

if the judgment debtor owns property, including present or

future rights to property, that: (1) cannot readily be attached

or levied on by ordinary legal process; and (2) is not exempt

from attachment, execution, or seizure for the satisfaction of

liabilities.

Tex. Civ. Prac. & Rem. Code Ann. § 31.002(a). However, “[a] court may not enter

or enforce an order under this section that requires the turnover of the proceeds of, or

the disbursement of, property exempt under any statute, including Section 42.0021,

Property Code.” Id. § 31.002(f).

Section 41.001 provides that a homestead is exempt from seizure for the claims

of creditors. See Tex. Prop. Code Ann. § 41.001(a) (Vernon 2000); Tex. Const. art.

XVI, § 50 . A party claiming homestead protection has the burden to establish that the

property is a homestead. Burk Royalty Co. v. Riley , 475 S.W.2d 566, 568 (Tex. 1972);

Lifemark Corp. v. Merritt , 655 S.W.2d 310, 314 (Tex. App.—Houston [14th Dist.]

1983, writ ref’d n.r.e.). A homestead is the dwelling house constituting the family

residence, together with the land on which it is situated and the appurtenances

connected therewith. Farrington v. First Nat’l Bank of Bellville, 753 S.W.2d 248, 250

(Tex. App.—Houston [1st Dist.] 1988, writ denied). However , a homestead exemption

may be established upon unoccupied land if the owner presently intends to occupy and

to use the premises in a reasonable and definite time in the future and has made such

preparations toward actual occupancy and use that are of such character, and to such

an extent, as to manifest beyond doubt the intention to complete the improvements and

to reside upon the place as a home. Id . Two specific elements are required in order to

establish homestead rights on unoccupied land: (1) the intention on the part of the

owner to claim the land as a homestead and (2) an overt act of homestead usage .

Merritt , 655 S.W.2d at 314 .

On April 27, 2004, Holland filed a designation of homestead for his one-ninth

interest in the Coke County property . Holland contends that his homestead property

exemption was a common-law claim before that designation. Holland’s filing of a

homestead designation in Coke County did not prove as a matter of law that the Coke

County property was his homestead . See Farrington 753 S.W.2d at 251 (holding that

application for residential homestead exemption with tax assessor does not prove as

matter of law that property constituted homestead) .

Holland contends that the Coke County property was his homestead because he

grew up on the Coke County property during the first 22 years of his life and because

that was the only property that he had eligible for designation as a homestead.

However, appellant admitted that he previously had claimed another property as his

homestead while he was married and that, at the time that the turnover orders were

issued,

had been living and working at the Heights property for two years. Holland

did not present any evidence of an intent to occupy the Coke County property in a

reasonable and definite time in the future, and he did not make any overt act to

establish the Coke County property as a homestead before then. Neither is there

evidence in the record that Holland had taken any sort of action to use, to improve, or

to occupy the alleged homestead before that date. Accordingly , we hold that the trial

court did not abuse its discretion in finding that Holland’s one-ninth interest in the

Coke County property was not protected by a homestead exemption .

We overrule appellants’ first point of error.

Personal Property Exemption

In their second point of error, appellants argue that the trial court erred by

finding that Holland’s professional corporation was not a tool of the trade under

sections 42.001(a) and 42.002(a)(4). See Tex. Prop. Code Ann. §§ 42.001(a) , 42.002

(a)(4) (Vernon 2000). Appellant specifically contends that “the [professional

corporation] was solely used as a vehicle for [Holland’s] law practice, that he is the

sole shareholder, sole officer, director, and has always been the only owner/operator

of the [professional corporation]” and that, therefore, the property owned by the

professional corporation should have been exempt as Holland’s own personal property

pursuant to section 42.002(a)(4) of the Property Code .

Section 42.001(a) of the Property Code provides that personal property is exempt

from seizure if the property is owned by a single adult or family. See Tex. Prop. Code

Ann. § 42.001(a). S ection 42.002(a)(4) provides that, for an individual, “tools,

equipment, books, and apparatus, including boats and motor vehicles used in a trade

or profession” are personal property exempt from seizure. See id. §42.002(a)(4).

Section 42.002(a) applies to tangible property. See id.

A professional corporation is a separate and distinct entity from an attorney who

practices as a member of the corporation, even if he is the sole shareholder of the

corporation. Cf. Sun Towers v. Heckler , 725 F.2d 315 , 331 (5th Cir. 1984); United

Bank Metro v. Plains Overseas Group, Inc. , 670 S.W.2d 281, 284 (Tex.

App.—Houston [1st Dist.] 1983, no writ). By trying to claim as his own personal

property that which was owned by his professional corporation, Holland, in effect, was

attempting to pierce his own corporate veil. Holland could not do this. See id.

Accordingly, the trial court did not abuse its discretion in concluding that the

property owned by the professional corporation was not exempt as Holland’s own

personal property pursuant to sections 42.001 and 42.002(a)(4).

We overrule appellants’ second point of error.

Notice and Hearing

In their third point of error, appellants argue that “[t]he trial court erred by

proceeding to judgment without notice and hearing.” Specifically, appellants complain

that the trial court erred by ruling on appellees’ supplemental request for a turnover

order, signed April 6, without notice or hearing.

The record reflects that, on January 3, 2005 , the trial court in fact held a hearing

on appellees’ supplemental request for turnover order. Appellants received notice of

the January 3, 2005 hearing, and their counsel participated in it. The trial court also

held a hearing on appellants’ motion to reconsider on June 27, 2005 and denied

appellants’ motion to reconsider, expressly declining to modify or to vacate the April

6 turnover order. In their reply brief, appellants concede that the June 27 hearing, at

which they were present and introduced evidence, rendered harmless their complaint

of lack of notice and hearing prior to the entry of the April 6 turnover order.

Section 31.002 allows a trial court to enforce a prior order that has been refused

or disobeyed. See Tex. Civ. Prac. & Rem. Code Ann. § 31.002 . The judgment

against appellants was entered on June 24, 2002. Appellants did not appeal that

judgment and do not now complain about it on appeal. Appellants knew that the

judgment was subject to collection, and the judgment afforded them “with notice that

post-judgment proceedings would follow.” See Merritt v. Harris County , 775 S.W.2d

17, 21 (Tex. App.—Houston [14th Dist.] 1989, writ denied) (concluding that because

eviction proceedings in justice courts were not challenged by appellant either at trial

or on appeal, judgments were final and afforded appellant with notice that

post-judgment proceedings would follow).

Assuming without deciding that notice and hearing were required before the

issuance of a turnover order, we hold that the trial court did not violate appellants’ due

process rights by ruling on appellees’ supplemental request for turnover because,

among other things, the trial court held a hearing on appellants’ motion to reconsider.

We overrule appellants’ third point of error.

Enforceability of April 6 Turnover Order

In their fourth point of error, appellants argue that “[t]he trial court’s order is

vague and conflicting and therefore unenforceable.” Specifically, appellants contend

that (1) the trial court usurped the jurisdiction of the probate court in which Pauline’s

probate was pending by ordering Holland to turn over assets that would be distributed

to him under Pauline’s will, in alleged conflict with unspecified orders of the probate

court and (2) the trial court’s crossing out, in the turnover order, language that Holland,

as executor, controlled property that he would receive under Pauline’s will made the

turnover order vague and unenforceable. Concluding that the two arguments are

related, we address them together.

The Texas Civil Practice and Remedies Code sets forth procedures that enable

parties to seek aid from courts in reaching property of a judgment debtor. See Tex.

Civ. Prac. & Rem. Code Ann. § 31.002. The court may order the judgment debtor:

to turn over nonexempt property that is in the debtor’s possession or is subject to the

debtor’s control, together with all documents or records related to the property, to a

designated sheriff or constable for execution or otherwise apply the property to the

satisfaction of the judgment; alternatively the court may appoint a receiver. Tex. Civ.

Prac. & Rem. Code Ann. § 31.002(b).

Texas courts do not apply the turnover statute to non-judgment debtors. See,

e.g. , Detox Industries, Inc. v. Gullett , 770 S.W.2d 954, 956 (Tex. App.—Houston [1st

Dist.] 1989, no writ) (holding that turnover action against non-debtor corporation to

cancel stock in judgment debtor’s name and to reissue in creditor’s name was

improper); Cravens, Dargan & Co. v. Travers Co. , 770 S.W.2d 573, 576 (Tex.

App.—Houston [1st Dist.] 1989, writ denied) (holding that turnover action against

State Board of Insurance for judgment debtor’s licensing deposit was improper); United

Bank Metro , 670 S.W.2d at 284 (holding that turnover action against corporate alter

ego of judgment debtor was improper).

The April 6 turnover order recited, in part, that

[t]he property that shall be turned over to the Receiver shall

include, but it is not limited to, the following:

(1) all right, title and interest of [Holland] as

a beneficiary of the Estate of Pauline

Holland;

(2) all right, title and interest, if any, of [the

professional corporation] in the alleged

partnership, the Holland Family Limited

Partnership;

(3) all right, title and interest, if any, of

[Holland] in the alleged partnership, the

Holland Family Limited Partnership;

(4) all cash, checks, payments or income of

any kind that may be received henceforth

by [appellants], other than current wages.

(5) all rent, lease payments or other fees that

may be received henceforth by

[appellants]; this specifically includes

payments by [Driscoll] for office rent at

[the Heights property], deer lease

payments, or other payments;

(6) all property and assets of [appellants].

It is further ORDERED ADJUDGED AND DECREED that

[Holland’s] beneficial interest in the Estate of Pauline

Holland is a non-exempt asset, intangible in nature, and the

proper subject of this Turnover Order. The Court finds that

[Holland], as the executor of Pauline Holland’s Estate, has

control over the property he has inherited or stands to inherit

from Pauline Holland under the terms of her Last Will &

Testament. Since the assets of the Estate of Pauline Holland

are subject to the control of [Holland] (who is the executor

and beneficiary of Pauline Holland’s Will), and since this

Court has the authority to enforce its own jurisdiction, this

Court retains the right to order third parties who possess

[appellants] property to turn it over to the Receiver.

Beaumont Bank, N.A. v. Buller , 806 S.W.2d 223, 227 (Tex.

1991).

(Stuck-though text is the complained-of language struck by trial court.)

Appellants’ argument that the trial court usurped the probate court’s jurisdiction

appears to be premised on the view that the portion of the turnorder order mandating

that Holland, in his individual capacity , turn over any assets that he received as

beneficiary under Pauline’s will was tantamount to an order mandating that he, as the

will’s executor , distribute Pauline’s assets in a certain way. Appellant’s view is

mistaken. The April 6 turnover order specifically provided that Holland turn over “all

cash, checks, payments or income of any kind that may be received henceforth by

[Holland, among others], other than current wages” and “all rent, lease payments or

other fees that may be received henceforth by [Holland, among others], including

payments by [Driscoll] for office rent at [the Heights property], deer lease payments,

or other payments.” (Emphasis added.) The turnover order further provided that

Holland turn over “all right, title and interest of [Holland] as beneficiary of the Estate

of Pauline Holland” and “all right, title and interest, if any, of [Holland] in the alleged

partnership, the Holland Family Limited Partnership,” which was also a named

beneficiary under Pauline’s will (although the trial court, in the October 6 turnover

order, had declared that that family partnership did not exist). Thus, the trial court’s

April 6 turnover order did not order Holland in his capacity as executor to distribute

anything from Pauline’s estate, but instead provided what Holland, as an estate

beneficiary, was to do with the assets after he received them. Accordingly, even if a

turnover order could be invalid for ordering an estate’s executor to distribute assets so

that they might be used to satisfy a judgment—a matter that we need not decide—the

turnover order here did not do that. Finally, although appellants also argue, under this

issue, that the turnover order was invalid or unenforceable for conflicting with an order

of the probate court, appellants identify no such order, and the record does not reveal

any such order.

Appellants further argue that the language that the trial court struck from its

April 6 turnover order rendered that order conflicting, vague, and unenforceable . In

their reply brief, appellants specifically contend that the portion of the April 6 turnover

order that states “whatever interest Holland may have as a beneficiary” fails to identify

anything because “‘whatever’ is sufficiently vague, alone.” Appellant also argues that

“[i]t is impossible to determine what that means or how to convey ‘it’.” We disagree.

The struck portions of the April 6 turnover order were those that declared that Holland,

as independent executor, had current control over the estate property that he would

inherit as an estate beneficiary. The remainder of the April 6 turnover order, in

contrast, concerned, in regard to Holland, the assets that he would receive personally

as a beneficiary of the estate. The deletion of the struck portion was thus consistent

with the rest of the turnover order’s provisions concerning Holland individually. In

fact, the language that the trial court struck made it clear that the April 6 turnover order

did not concern Holland as executor of Pauline’s estate—a conclusion that further

undermines appellants’ contention that the order somehow usurped the probate court’s

jurisdiction by requiring the executor to distribute various assets.

We hold that the trial court’s April 6 turnover order was not void or

unenforceable for the reasons that appellants argue.

We overrule appellants’ fourth point of error.

Appointment of Receiver

In their fifth point of error, appellants argue that “[t]he trial court erred in the

appointment of a receiver.” Specifically, appellants argue that the right to appoint a

receiver falls within the jurisdiction of a probate court and not the trial court and that

there was no proof that a receiver was proper or necessary.

Section 31.002(b)(3) of the Civil Practice and Remedies Code allows the trial

court to appoint a receiver with the authority to take possession of non-exempt

property, to sell it, and to pay the proceeds to the judgment creditor. Tex. Civ. Prac.

& Rem. Code Ann § 31.002(b)(3). The “traditional requirements” for the appointment

of a receiver are inapplicable in a post-judgment turnover proceeding. Childre v. Great

Southwest Life Ins. Co., 700 S.W.2d 284, 288 (Tex. App.—Dallas 1985, no writ).

Indeed, 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. See

Tex. Civ. Prac. & Rem. Code Ann. §§ 31 , 64 (Vernon Supp. 2005). Because the

turnover statute does not provide specific requirements for the appointment of a

receiver, this decision falls within the trial court’s discretion.

Here, for more than two years

after the trial court first entered the default

judgment that created the debt, appellees were still not able to collect on the judgment.

On January 3, 2005, appellees filed an application for supplemental turnover relief and

for appointment of a receiver. See Tex. Civ. Prac. & Rem. Code Ann. § 31.002(b );

see also Newman v. Toy , 926 S.W.2d 629, 630 (Tex. App.—Austin 1996, writ denied).

Appellants do not cite any authority to support their claim that the trial court could not

appoint a receiver. Because the trial court appointed a receiver to take possession of

appellants’ non-exempt property, to sell it, and to pay the proceeds to appellees, the

trial court was the proper place to seek receivership. See Tex. Civ. Prac. & Rem.

Code Ann § 31.002(b)(3). Given these circumstances, we hold that the trial court

acted within its discretion in appointing a receiver.

We overrule appellants’ fifth point of error.

Amount of Bond

In their sixth point of error, appellants argue that “[t]he trial court erred in

requiring a bond in the amount of only one hundred dollars ($100).” Specifically,

appellants argue that the $100 bond was not reasonable because the amount of property

for which the receiver would be responsible was disproportionate to the bond amount. Because the underlying obligation has been determined by final judgment, the

judgment debtor will not be harmed if no bond is required. Childre , 700 S.W.2d at 289

(quoting Hittner, David, Texas Post-Judgment Turnover & Receivership Statutes , 45

Tex. Bar J. , 417, 420 (Apr. 1982)). The only possible rationale for requiring a

receiver’s bond in a post-judgment turnover proceeding is to indemnify the receiver

against possible claims. Id. Consequently, appellants cannot assert that they were

prejudiced by the trial court’s appointment of a receiver with only a $100 bond. See

id.

We hold that the trial court did not abuse its discretion in setting a $100 bond for

the appointed receiver.

We overrule appellants’ sixth point of error.

Conclusion

We affirm the judgment of the trial court.

Tim Taft

Justice

Panel consists of Justices Taft, Higley, and Bland .