Santibanez v. Wier McMahon & Co.
| Decision Date | 12 February 1997 |
| Docket Number | No. 95-20312,95-20312 |
| Citation | 105 F.3d 234 |
| Parties | Bankr. L. Rep. P 77,291, 46 Fed. R. Evid. Serv. 517 Alfredo L. SANTIBANEZ, M.D.; Guadalupe G. Santibanez; Latin American Medical and Surgical Clinic, P.A., Plaintiffs-Appellees, v. WIER McMAHON & CO., et al., Defendants, Billy M. Thompson, Defendant-Appellant. |
| Court | U.S. Court of Appeals — Fifth Circuit |
Don K. Leufven, Christie Gunter Adams, Alonso & Cersonsky, Houston, TX, for plaintiffs-appellees.
Thomas Franklin Coleman, Jr., Houston, TX, for Wier McMahon & Co. and Donald J. McMahon, defendants.
Kerry L. Neves, Galveston, TX, for Thomas P. Wier, III, and Thomas P. Wier & Associates, defendants.
George M. Bishop, Houston, TX, for Bill Thompson, defendant-appellant.
David P. Griffith, Mayor, Day, Caldwell & Keeton, Houston, TX, Charles D. Sindel, Clayton, MO, for Irving K. Breslauer, defendant.
John Parker Benz, Houston, TX, for the Fleischmanns, defendants.
Andrew A. Rimmel, St. Louis, MO, for Ira Fleischmann.
Appeal from the United States District Court for the Southern District of Texas.
Before BENAVIDES, STEWART and DENNIS, Circuit Judges.
In this case, Defendant-Appellant Billy M. Thompson, a judgment debtor, appeals from the District Court's "turnover" order requiring him to describe and value all his assets; claim exemptions by stating the character of the exempt property and the legal basis for each exemption; and deliver to a receiver his nonexempt assets. Thompson also appeals from the District Court's order holding him in contempt for failure to comply with the court's decree. The orders appealed from arose from actions by the Plaintiffs-Appellees as judgment creditors to enforce a money judgment against Thompson for damage caused them by Thompson's fraud and breach of fiduciary duties violative of the Employee Retirement Income Security Act ("ERISA"). 29 U.S.C. §§ 1001, et seq. We affirm, holding that: (1) we have jurisdiction of the appeal, and (2) the trial court had jurisdiction to hold defendant in contempt. Further, we conclude that the trial court did not abuse its discretion in determining that: (3) plaintiffs proved that defendant owned or controlled present or future rights to property; (4) defendant failed to carry his burden of pleading and producing evidence to show that his property was exempt from seizure; and, (5) defendant intentionally and willfully refused to comply with the court's order and placed himself in contempt of court.
The District Court, after a bench trial, rendered a judgment in favor of the Plaintiffs-Appellees, Alfredo L. Santibanez, Guadalupe G. Santibanez, and the Latin American Medical and Surgical Clinic, P.A. (collectively: "Santibanez"), on July 14, 1994, against Billy M. Thompson and others for the principal sum of $618,881.36. The judgment was based on the District Court's findings that Thompson and other defendants had caused Santibanez financial losses by their ERISA violations involving fraud and breaches of fiduciary duties.
Seven months later on February 23, 1995, Santibanez, claiming to have been frustrated in attempts to collect on the judgment, applied to the District Court for post-judgment relief. Santibanez asserted that garnishment had netted only $42.36 and that Thompson held nonexempt property which could not be obtained through ordinary legal means. Following a hearing on April 3, 1995, at which Thompson was represented by counsel but did not personally appear, the court issued a "turnover" order on April 7 requiring Thompson to describe and value his assets, classify each asset as exempt or nonexempt, and give the legal basis for each exemption by April 11. The court also appointed a receiver to take possession and sell the nonexempt assets.
Thompson failed to meet the April 11 deadline and indicated through his attorney, in a letter to the receiver, that he considered the court's order "unenforceable." On June 14, 1995, the receiver moved the court to hold Thompson in contempt for violating the court's order. The court directed the receiver to submit a report by October 23 compiling evidence of the alleged violations of the April 7 order. On October 23, the receiver filed a report which delineated numerous violations of the order, including: failure to provide information and failure to adequately describe and disclose the location of assets; additionally, it alleged that Thompson had transferred assets to circumvent the court's order. Thompson filed a written response to the report simply denying all allegations.
On October 30, a hearing was held on the receiver's motion to hold Thompson in contempt or to impose other sanctions. Thompson was present, represented by retained counsel, and was afforded an opportunity to testify, present evidence, and cross-examine the receiver. Thompson and his attorney did not take advantage of this opportunity but chose to present only argument by counsel. In the absence of any evidentiary showing by Thompson, the court accepted the receiver's presentation as establishing that the judgment debtor owned or controlled substantial nonexempt property that he had concealed; deliberately failed to describe, value, or turn over; and/or, fraudulently transferred. Based on these findings, the court held Thompson in contempt for willfully refusing to comply with the court's order, sentenced him to 30 days in jail, and ordered that he be incarcerated indefinitely pending his full compliance.
Thompson appealed and makes a number of arguments questioning the validity of both the "turnover" order and the subsequent finding of contempt. Santibanez argues that this court lacks jurisdiction to entertain Thompson's appeal. We conclude that both parties' arguments are without merit.
Santibanez contends that we do not have jurisdiction of Thompson's appeal from the "turnover" decree because it is not a final judgment. However, the courts of appeals have jurisdiction of appeals from "[i]nterlocutory orders appointing receivers, or refusing orders to wind up receiverships or to take steps to accomplish the purposes thereof, such as directing sales or other disposals of property." 28 U.S.C. § 1292(a)(2). In its decree, the court appointed a receiver to, inter alia, "take possession of and sell the non-exempt assets of [Thompson] to apply the proceeds to the judgment...." Consequently, because the order appointed a receiver and directed the sale and disposal of property, it is appealable. Resolution Trust Corp. v. Smith, 53 F.3d 72, 77 n. 2 (5th Cir.1995); 7 James Moore et al., Moore's Federal Practice p 66.04(2d. ed.1996)(citing Gulf Refining Co. v. Vincent Oil Co., 185 F. 87 (5th Cir.1911)).
Thompson argues that the contempt order is invalid because the District Court lost jurisdiction over enforcement of its judgment when Thompson appealed. This argument is without merit. A district court has continuing jurisdiction in support of its judgment, R.T.C. v. Smith, 53 F.3d at 76, and "[u]ntil the judgment has been properly stayed or superseded, the district court may enforce it through contempt sanctions." Id. (quoting Alberti v. Klevenhagen, 46 F.3d 1347, 1358 (5th Cir.1995)(quoting United States v. Revie, 834 F.2d 1198, 1205 (5th Cir.1987), cert. denied, 487 U.S. 1205, 108 S.Ct. 2845, 101 L.Ed.2d 882 (1988)))(internal quotations omitted).
Thompson contends in interrelated arguments that the District Court erred in entering the "turnover" order of April 7, 1995, because: (i) there was no evidence that he owned property on that date that was not exempt from attachment and which could not readily be attached; and, (ii) it required him to turn over to the receiver commissions and earnings which were exempt. The arguments are without merit.
The Texas "Turnover" Statute, Tex. Civ. Prac. & Rem.Code Ann. § 31.002, in pertinent part, provides:
(a) A judgment creditor is entitled to aid from a court of appropriate jurisdiction through injunction or other means in order to reach property to obtain satisfaction on the judgment if the judgment debtor owns property, including present or future rights to property, that:
(1) cannot readily be attached or levied on by ordinary legal process; and
(2) is not exempt from attachment, execution, or seizure for the satisfaction of liabilities.
(b) The court may:
(1) order the judgment debtor to turn over 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;
* * *
(3) appoint a receiver with the authority to take possession of the nonexempt property, sell it, and pay the proceeds to the judgment creditor to the extent required to satisfy the judgment.
The statute is the procedural device " 'by which judgment creditors may reach assets of a debtor that are otherwise difficult to attach or levy on by ordinary legal process.' " R.T.C. v. Smith, 53 F.3d at 77 (quoting Beaumont Bank, N.A. v. Buller, 806 S.W.2d 223, 224 (Tex.1991)). It allows the court to reach assets owned and subject to the control of a judgment debtor, even if those assets are in the hands of a third party. Norsul Oil & Mining Ltd. v. Commercial Equip. Leasing Co., 703 S.W.2d 345, 349 (Tex.Ct.App.1985). A trial court's judgment as to whether issuance of a turnover order was justified is reviewed under an abuse of discretion standard and may be reversed only if the court has acted in an unreasonable or arbitrary manner. Beaumont Bank, N.A. v. Buller, 806 S.W.2d 223, 226 (Tex.1991). 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." Id. (citing Buttles v. Navarro, 766 S.W.2d 893, 894-95 (Tex.Ct.App.1989)).
There does not appear to be any Texas statute specifically providing standards for pleadings and proof in...
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