POST JUDGMENT DISCOVERY AND ENFORCEMENT

DANIEL J. GOLDBERGRoss, Banks, May, Cron & Cavin, P.C.

2 Riverway, Suite 700Houston, Texas 77056

Tel: 713-626-1200 / Fax: 713-623-6014Email: dgoldberg@rossbanks.com

State Bar of TexasCOLLECTIONS AND CREDITORS’ RIGHTS COURSE

April 20-21, 2006 San Antonio

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2 Riverway, Suite 700 Houston, Texas 77056-1918Telephone (713) 626-1200 Facsimile (713) 623-6014

R O S S , B A N K S , M A Y , C R O N & C A V I N , P . C .A t t o r n e y s a t L a w

DANIEL JACOB GOLDBERG Shareholder

Current Employer/Title: Ross, Banks, May, Cron & Cavin, P.C. - Attorney, Shareholder.

Profession: Attorney - Arbitration and Mediation, Bankruptcy and Corporate Reorganization, Civil Litigation,Commercial Transactions, Banking Litigation, Collections.

Work History: Attorney/Shareholder, Ross, Banks, May, Cron & Cavin, P.C., 1970 - present.

Experience: Primarily engaged in business law (including debtor-creditor and collections), bankruptcy, real property law(including landlord/tenant) and banking law. Involved in contract drafting and litigation related to debtor/creditormatters, mechanic and materialmen liens, real estate, financial institutions and business related matters; Chapter7 Panel Trustee - Bankruptcy Court, Eastern District of Texas.

Alternative Dispute Resolution Experience: Arbitrator and/or mediator in 400+ cases; AAA panelist arbitrator andlecturer; Mediator for City of Houston Pilot Mediation Project, A.A. White Dispute Resolution Institute; EEOCMediation Pilot Project and Center for Dispute Settlement; Past Chair of the Commercial Law League ofAmerica ADR Committee.

Professional Licenses: Admitted to the Bar: Texas, 1969; U.S. District Court: Southern (1970), Northern (1970),Eastern (1970) and Western (1970) Districts of Texas; U.S. Court of Appeals: Fifth Circuit.

Professional Associations: Board Certified, Creditors’ Rights Specialist; American Board of Certification; CommercialLaw League of America (President 1999-2000); Houston Bar Association; Texas Bar Association; East FortBend County Exchange Club (Past President); Maplewood South/North Community Improvement Association(Past President); Sugar Creek Homes Association (Past Board Member).

Education: University of Virginia (BA-1966); University of Texas at Austin (JD-1969).

Publications and Speaking Engagements: Contributing author, MANUAL OF CREDIT AND COMMERCIALLAWS, 92nd Edition, National Association of Credit Management, 2001; TEXAS COLLECTIONS MANUAL,Third Edition, Chair, Manual committee and contributing author, State Bar of Texas, 2000; “Fighting the LatestFrauds”, COMMERCIAL LAW BULLETIN, Vol. 13 #4, July/August, 2000; Editor and contributing author,TEXAS COLLECTIONS MANUAL, Second Edition, State Bar of Texas, 1987, revised 1996; “ReclamationUnder Section 546(c) of the Bankruptcy Code.” COMMERCIAL LAW BULLETIN, vol. 3, no. 2, 1988;Contributing author, CREDITORS’ RIGHTS IN TEXAS, second edition, State Bar of Texas, 1981; “Writs ofExecution,” TEXAS BAR JOURNAL, vol. 39, p. 139, 1976; “UCC Article II-Sales-Problem Areas andPitfalls,”Texas Tapes Professional Development Program, 1975; Instructor/Lecturer at various associations,institutes and universities including State Bar of Texas, Houston Bar Association, University of Houston BatesCollege of Law; South Texas College of Law, University of Texas School of Law, University of Alabama Schoolof Law; Commercial Law League Fund for Public Education, Continuing Legal Education Satellite Network,Lorman Education Services, National Business Institute, Inc. and Stromar Educational Services, Inc.

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TABLE OF AUTHORITIES

Arbor Holding Company v. The Cadle Company, 2002 WL 1480907 (Tex. App.-Houston [1st Dist.], July 11, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Bullock v. Foster Cathead Co., 631 S.W.2d 208 (Tex. App.-Corpus Christi 1982, no writ) . . . . . . . . . . . . . . . . . . . . 4

Daniels v. E.W. Ross, individually and d/b/a Cash Auto Sales, 2001 WL 1584113 (Tex-App-Austin, December 13, 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Ex Parte Conway, 843 S.W.2d 765 (Tex. App.-Houston [14th Dist.] 1992, no writ) . . . . . . . . . . . . . . . . . . . . . . . . . 2

Ex Parte Hall, 854 S.W.2d 656 (Tex. 1993) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

F.D.I.C. v. LeGrand, 43 F.3d 163(5th Cir. 1995) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Fisher v. P.M. Clinton International Investigations, 81 S.W.3d 484, (Tex. App.-Houston [1st Dist.] 2002, no writ) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Harding v. Lewis, 133 S.W.3d 693 (Tex. App.-Corpus Christi 2003, no writ) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Hatton v. Grigar, 2004 WL 583045 (Tex.App-Houston [14th Dist.], March 25, 2004) . . . . . . . . . . . . . . . . . . . . . . . 1

Howell v. Thompson, 839 S.W.2d 92 (Tex. 1992) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

In re Arbor Holding Company, Inc., 2002 WL 1481045 (Tex.App.- Houston [1st Dist.], July 11, 2002) . . . . . . . . . . . . 2

In re Cary R. Platt, 2001 WL 1352920 (Tex. App.-Dallas, November 5, 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

In re David L. Montgomery, 138 S.W. 3d 569, (CA Beaumont) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

In re Donald H. Smith, 2003 WL 1191408 (Tex. App.- San Antonio, March 12, 2003) . . . . . . . . . . . . . . . . . . . . . . 2

In re Jones, 63 F.3d 411 (5th Cir. 1995) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

In re De La Garza, 159 S.W. 3d 119 (Tex.App.-Corpus Christi, February 17, 2004) . . . . . . . . . . . . . . . . . . . . . . . . . 3

In re Virgil Mott, Sr., 137 S.W. 3d 870 CA Houston (1st Dist.), 2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Jones v. American Airlines, Inc., 131 S.W.3d 261 (Tex. App.-Fort Worth 2004, no writ) . . . . . . . . . . . . . . . . . . . . . 1

Moyer v. Moyer - SW 3d - 2005 WL 1991813 (CA - Austin, 2005) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

National Satellite Sports, Inc. v. Elizondo, 2003 WL 21507362 (N.D. Tex., April 25,003) . . . . . . . . . . . . . . . . . . . . 3

Piratello v. Philips Electronics North America Corporation, 360 F. 3d 506 (5th Cir., March 3, 2004 ) . . . . . . . . . . . . . 3

R.V. Hebisen v. Nassau Development Co., 2002 WL 31890077 (Tex. App.-Houston [14th Dist], March 31, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Santibanez v. Wier McMahon & Co., et al., 105 F.3d 234 (5th Cir. 1997) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

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Shah v. Moss, 67 S.W.3d 836 (Tex.2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

S.V. v. R.V., 933 S.W.2d 1 (Tex. 1996) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Texas Employers’ Ins. Ass’n v. Engelke 790 S.W.2d 93 (Tex. App.-Houston [1st Dist.] 1990, no writ) . . . . . . . . . . . . 1

The Wall Street Journal, October 30, 2003, “ Medical Seizures: Hospitals Try Extreme Measures To Collect Their Overdue Debts –Patients Who Skip Hearings On Bills Are Arrested; It’s a ‘Body Attachment” – Mr. Beans’s Time Behind Bars —” . . . . . . . . . 5

Thomas N. Heap, D.D.S., Inc. and Arne M. Ray v. Val-Pak of Greater Houston, 2001 WL 699944 (Tex. App.-Houston [14th Dist.], June 1, 2001 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Billy Mac Thompson v. United States, 524 U.S. 920, 118 S. Ct. 2307 Ct. 2307 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Travel Music of San Antonio, Inc. v. Mott, 2001 WL 356271 (Tex. App.-San Antonio, April 11, 2001) . . . . . . . . . . . 2

United States v. Billy Mac Thompson, 130 F.3d 676 (5th Cir. 1997) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

World Fuel Services Corporation v. Moorehead, 229 F. Supp.2d 584 (N.D.Tex. 2002) . . . . . . . . . . . . . . . . . . . . . . . 4

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POST JUDGMENT DISCOVERY ANDENFORCEMENT

A number of recent cases have been decideddealing with the issues of post-judgment discovery andthe enforcement of court orders compelling thatdiscovery. Even though many of the opinions areunpublished, a review of the facts of the case and theopinion of the Court are instructive as guidelines forproceeding in this area. (Where the opinion has not beenpublished, the Westlaw cite is given.)

Thomas N. Heap, D.D.S., Inc. and Arne M. Ray v.Val-Pak of Greater Houston 2001 WL 699944 (Tex.App.-Hous.1st Dist.) was decided June 21, 2001. In thiscase the issue was over the jurisdiction of the trial courtwhen the judgment debtor filed an appeal in theunderlying suit and the steps necessary to suspend theenforcement of a judgment pending appeal. The case alsodiscussed the time for issuing a writ of garnishment asopposed to a writ of execution. The Court state that thejudgment creditor is entitled to seek enforcement of ajudgment unless that enforcement is suspended pendingappeal. Citing Texas Rule of Civil Procedure 657 and thecase of Texas Employers’ Ins. Ass’n v. Engelke 790S.W.2d 93 (Tex. App.-Houston [1st Dist.]) the courtruled that unless a supersedeas bond is filed the judgmentcreditor has a statutory right to have execution issue toenforce a judgment pending an appeal. The filing of anappeal bond alone will not stop a creditor from seekingpost-judgment enforcement.

The court also went on to state that unlike a writ ofexecution that requires a 30 day wait after the finaljudgment is signed or the overruling of a motion for newtrial, a writ of garnishment may issue at any timefollowing the entry of a final judgment.

In this context, it is also important to note therequirement for the garnishee in answering a writ ofgarnishment. Rule 661 prescribes the form of the writ ofgarnishment. It requires the garnishee to answer as to notonly what effects of the judgment debtor he may have inhis possession, but in an often overlooked provision itrequires the garnishee to answer as to “what otherpersons, if any, within your knowledge are indebted to thejudgment debtor or have effects belonging to him in theirpossession.” While a financial institution may or may nothave this type of knowledge, a garnishee in the businessarena might be a fountain of information as to other debtsowed to the judgment-debtor.

In re Cary R. Platt , 2001 WL 1352920 (Tex. App.-Dallas), decided November 5, 2001, raised the issue ofwhether the trial court had jurisdiction to determine if an

assignee of the judgment-creditor was entitled to answersto post-judgment discovery from the judgment debtorbecause the plenary jurisdiction of the trial court hadexpired. The rational of the argument as espoused by thejudgment-debtor was that the assignee of the judgment-creditor was not entitled to answers to post judgmentdiscovery since the assignee had failed to prove that hewas the owner of the judgment. By maintaining that thetrial court had no jurisdiction to determine suchownership, the judgment debtor hoped to forestall hisbeing required to respond to the post judgment discovery.

The appellate court determined that the trial courtdid have jurisdiction to determine ownership of thejudgment for the purposes of post judgment discovery. Itfurther went on to use the “abuse of discretion” standardin reviewing the orders of the trial court requiring thejudgment-debtor to respond to post judgment discovery.It also confirmed that in state court matters, unlikebankruptcy court, a party claiming an exemption bearsthe burden of proving that he is entitled to the exemption.

This same “abuse of discretion” standard wasapplied to a review of and order entered in a caseinvolving the turnover statute V.T.C.A. Civ. Prac. &Rem. Code Sec. 31.002. Jones v. American Airlines,Inc., 131 S.W. 3d 261 (Tex.App.-Fort Worth). A ploy toavoid the entry of a contempt order in a post-judgmentinjunction situation was used in Hatton v. Grigar, 204 WL63583 (Tex.App-Hous.14th Dist.) decided January 15,2004. While not involving a collection proceeding, therespondent in a contempt proceeding tried to enter aspecial appearance. Along with deciding other issues, thecourt found that a special appearance was inappropriatein a post-judgment proceeding.

On the other hand, in Daniels v. E.W. Ross,individually and d/b/a Cash Auto Sales, 2001 WL1584113 (Tex-App-Austin), Daniels attempted to file anotice of appeal from a post-judgment contempt order.The contempt order imposed only a fine. Noincarceration was involved. The court found that acontempt order cannot be attacked directly by appeal. Itfurther reasoned that since no restraint was involved, therequirement for a writ of habeas corpus was not present.It stated that a fine-only contempt order was properlyattacked by a writ of mandamus and this was theappropriate method for raising the issue in the appellatecourt.

Another appeal case is Fisher v. P.M. ClintonInternational Investigations, 81 S.W.3d 484, (Tex. App.Hous.- 1st Dist.). Here Fisher challenged a post-judgmentdiscovery order to compel and for sanctions. Fisher wasordered to respond to interrogatories and requests forproduction, to pay $70.00 as discovery costs to plaintiff’s

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attorney and to appear for his deposition. The opinion ofthe court was that a post-judgment discovery order doesnot resolve all disputes between the parties, a Rule 621aorder is not a final and appealable order. The court foundthat orders granting or denying post-judgment discoveryrequests were not appealable orders.

In Arbor Holding Company v. The Cadle Company,2002 WL 1480907 (Tex. App.-Hous. 1st Dist.), Cadlesued to enforce a $375,000 judgment against a JohnRiddle that Cadle purchased from Sunbelt Savings, F.S.B.Cadle registered it with the 189th District Court under theUniform Enforcement of Foreign Judgments Act. Theappeal of a post-judgment discovery order was not anappealable judgment and the court dismissed the appealfor want of jurisdiction. Arbor Holding then came back tothe appellate court with a mandamus proceeding.

To raise the issue of review of a trial court’s post-judgment discovery order, mandamus is the properprocedure. In re Arbor Holding Company, Inc., 2002 WL1481045 (Tex.App.-Houston. 1st Dist.) involved a writ ofmandamus filed by the judgment-debtor to avoidresponding to judgment-creditor’s request for documentproduction after its attempted appeal of the post-judgmentdiscovery order was dismissed by the appellate court.The corporation was the subsidiary of a trust in which thejudgment-debtor was the sole beneficiary. The judgment-debtor was employed by the corporation and could writechecks to himself on the corporation’s account. Thecorporation was not a party to the judgment at issue. Thecorporation also tried to assert affirmative defenses toenforcement of the judgment debt. The court found thatthe corporation had no standing to assert affirmativedefenses to the enforcement of the judgment debt. Itwent on to reaffirm that the rules governing and relatedto pre-trial discovery apply equally to post-judgmentdiscovery. Discovery was to be permitted of anyunprivileged information relevant to the subject a lawsuitas long as it appears reasonably calculated to lead to thediscovery of admissible evidence.

An order requiring turnover as well as a post-judgment discovery were the subjects of the appeal inTravel Music of San Antonio, Inc. v. Mott, 2001 WL356271( Tex. App.-San Antonio). The court determinedthat turnover orders are final, appealable orders but notsubject to the accelerated timetables applicable tointerlocutory orders. With regard to the post-judgmentdiscovery order, the court stated that, generally, ordersentered in aiding the enforcement of a judgment are notappealable and again reiterated that the proper way tochallenge the discovery order was through a writ ofmandamus.

Not only can contempt orders involve fines but theycan also involve imprisonment. In re Donald H. Smith,203 WL 1191408 (Tex. App.- San Antonio) raises anumber of interesting issues. In this case a contemptorder was issued ordering imprisonment for the failure ofa judgment-debtor to pay a prior monetary sanction ofcosts and attorney’s fees. The judgment-creditor,Farmer’s Insurance, had sent the judgment-debtor post-judgment interrogatories. Smith answered the firsttwenty-six and objected to the remainder. They citedTex. R. Civ.P. 190.3(b)(3) as their justification forrefusing to answer the additional interrogatories.Farmers requested a motion to compel and sanctions.The court ordered Smith to answer the interrogatoriesfully and completely and awarded $1,500 attorney’s fees.The court pointed out that the limitations of Rule 190.3(b)as stated in Rule 190.6 do not apply to limitations ondiscovery conducted under Rule 621a. The court heldSmith in contempt for violating its orders to answer theinterrogatories and to pay the $1,500. It ordered (a) “Mr.Donald H. Smith ... incarcerated in the Bexar County Jailuntil payment of the $1,500. Such sentence is orderedprobated so long as Mr. Smith make[s] payments of$75.00 per month to Texas Farmer’s InsuranceCompany, until the $1,500 is fully paid”; (b) if Mr. Smithfails to make the monthly payments timely, “ theprobation is revoked and Mr. Donald H. Smith [is]ordered committed to Bexar County Jail for six months oruntil the remainder of the $1,500 is paid”; (c) “Mr.Donald H. Smith ... to tour the Bexar County Jail”; and(d) “Mr. and Mrs. Smith ... to pay an additional $4,650 tocover attorneys [sic] fees and costs” arising out of thec ontempt. The trial court concluded that based oncredible and sufficient evidence, the Smiths had sufficientnon-exempt property to pay the $1,500. In support of itsposition, Farmers cited Ex Parte Conway, 843 S.W.2d765 (Tex. App.-Houston[14th Dist.] 1992). The HoustonAppeals Court refused to grant a Writ of Habeas Corpusconcluding that a discovery sanction was not a debt. TheSan Antonio Court in this case disagreed citing Ex ParteHall, 854 S.W.2d 656 (Tex. 1993) and ruled the court didnot have the authority to enforce the payment bycontempt proceedings since this would be imprisonmentfor failure to pay a debt.

Another interesting case involved the issue ofwhether or not the trial court exceeded its authority inreviving a dormant judgment and awarded the creditorattorney fees. The Court in R.V. Hebisen v. NassauDevelopment Co., 2002 WL 31890077 (Tex. App.-Hous.14th Dist) revived a judgment in favor of a landlord forrent due under a lease and awarded attorneys fee. Thecourt’s order decreed that “ Judgment dated April 25,

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1986 is hereby and shall be revived and declared fullyenforceable in all respects’ and that Nassau recover “alldamages and award of value, including attorneys fees,costs of court, and any and all additional remedies andentitlements... .”

Counsel for Nassau argued that Nassau was entitledto attorney’s fee under Rules 621a and 215. Theappellate court sustained the trial court’s revival of thejudgment but found that there was no support for theaward of additional attorney’s fees in a revival actionunder 621a and that there had been no discovery abuseunder Rule 215.

Continuing on with revival issues, Section 31.006 ofthe Texas Civil Practices and Remedies Code providesthe basis and procedure for revival of a dormantjudgment. The text of the Rule states “ A dormantjudgment may be revived by scire facias or by an actionof debt brought not later than the second anniversary ofthe date that the judgment becomes dormant.” Thejudgment creditor in Harding v. Lewis , 133 S.W. 3d 693(Tex. App.-Corpus Christi, 2003) waited until after thetwo year period to bring the action to revive thejudgment. Harding, as the judgment-debtor, objected tothe revival of the judgment arguing that it was broughtoutside of the two year window of opportunity. Lewis,the judgment-creditor, responded that there was anequitable exception to the two year period of the dormantjudgment rules. He asserted that the judgment- debtorhad engaged in a series of fraudulent conveyancesdesigned to evade execution. Based on the actions of thejudgment-debtor, he concluded that there was anequitable exception to two year rule. He also argued thathe had used reasonable diligence in attempting to collectthe judgment and was prevented from doing so by theactions of the judgment-debtor. The court, in upholdingthe revival of the judgment cited several Texas SupremeCourt cases. In Shah v. Moss, 67 S.W.3d 836(Tex.2001), the Texas Supreme Court held: “Fraudulentconcealment tolls limitations until the plaintiff discoversthe fraud or could have discovered the fraud withreasonable diligence”. It also looked to the holding in S.V.v. R.V. , 933 S.W.2d 1 (Tex. 1996) in which the courtheld “fraud, we have said, in and of itself preventsrunning of the statute of limitations.” As often happens during the course of collectionlitigation, the debtor will file a bankruptcy proceeding.That was the situation that occurred in the case of In reDe La Garza, 159 S.W. 3d 119 (Tex.App.-Corpus Christi,2004). Judgment was entered in the matter during thependency of the bankruptcy and in violation of theautomatic stay. The bankruptcy however was dismisseda month after the judgment was entered and the

judgment-creditor sent out a notice of post-judgmentdeposition and obtained an order compelling thejudgment-debtor’s appearance. The judgment-debtorobjected, arguing that the judgment was void andtherefore any attempt to collect it was void, even thoughthe bankruptcy had been subsequently dismissed. TheU.S. Court of Appeals for the Fifth Circuit had previouslyruled that actions taken in violation of the automatic staywere not void but voidable. In re Jones, 63 F.3d 411 (5th

Cir. 1995). On the other hand, the appellate court notedthat the Texas Supreme Court in Howell v. Thompson,839 S.W.2d 92 (Tex. 1992) had ruled that such actionstaken in violation of the automatic stay were void. TheTexas Court of Appeals was faced with the issue ofwhether it should follow the ruling of the U.S. FifthCircuit or the Texas Supreme Court. It determined thatwhen such a conflict arose it was obliged to follow onlythe rulings of the U.S. Supreme Court or the higherTexas court. It therefore determined that it was obligedto follow the ruling of the Texas Supreme Court and heldthe judgment void and granted the mandamus request.

These same type of issues arise in federal litigationas well as state litigation. The judgment-creditor has theright to discover information pertaining to the judgment-debtor’s ability to satisfy the judgment. F.D.I.C. v.LeGrand, 43 F.3d 163(5th Cir. 1995). Federal Rule ofCivil Procedure 69(a) allows the normal procedure ofc ompelling discovery in post-judgment discoverysituations. In National Satellite Sports, Inc. v. Elizando,2003 WL 21507362 (N.D. Tex.), the court concluded thatobjections to post-judgment discovery are waived if nottimely raised and compelled a response and consideredthe award of attorney’s fees.

The Fifth Circuit Court of Appeals has enunciated aruling regarding appeals of sanction orders. In Piratellov. Philips Electronics North America Corporation,decided March 3, 2004, 360 F.3 506 (5th Cir. Tex.) thejudgment-debtor claimed that his privilege against self-incrimination had been violated by the discovery order.The court determined that if a judgment-debtor wanted toimmediately appeal a discovery order, he must firstrefuse compliance, be held in contempt, and then appealthe order. A post-judgment order was, in an of itself, nota final order and could not be immediately appealedabsent an imposition of sanctions.

Another interesting federal court case involved theuse of the Turnover statute in federal court. In WorldFuel Services Corporation v. Moorehead, 229 F. Supp.2d584, the court ordered the debtor to turnover his interestin stock even though it had been pledged to third partiesand went on to appoint a receiver for the debtor. Thecourt ruled that even though assets have been pledged to

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third parties does not necessarily mean that they were notowned or subject to the control of the debtor. It supportedits ruling by the determination that a pledgee “ acquiresno interest in the [pledged] property except as securityfor his debt or obligation, and his actual interest is purelycontingent in that it depends for effect on something thatmay or may not occur. Bullock v. Foster Cathead Co.,631 S.W.2d 208 (Tex. App.-Corpus Christi 1982, nowrit), 53 F. 3d 72 (5th Cir 1995).

Billy M. Thompson, a judgment-debtor appealed aturnover order entered by the Hon. Kenneth M.Hoyt.,U.S. Judge for the Southern District of Texas.Santibanez v. Wier McMahon & Co., et al., Defendants,(105 F.3d 234). A receiver was appointed to receive anddispose of judgment-debtor’s property. The debtor wasordered to describe and value his assets, classify eachasset as exempt or non-exempt and give the legal basisfor each exemption. After an evidentiary hearing thecourt held Thompson in contempt for willfully refusing tocomply with the court’s order, sentenced him to 30 daysin jail, and ordered that he be incarcerated indefinitelypending his full compliance. The Fifth Circuit Court ofAppeals determined that it had jurisdiction to hear thedebtor’s appeal from the order appointing a receiver anddirecting the sale and disposition of the debtor’s propertyregardless of whether the decree qualified as a “finaljudgment”. While reiterating that a court may notimprison a debtor for failure to pay a debt, it found in thiscase that the debtor had been informed of what he had todo to purge himself and that the debtor had beenincarcerated for failing to comply with the court’sturnover order. A petition for writ of certiorari to theSupreme Court was denied. Billy Mac Thompson v.United States, 524 U.S. 920, 118 S. Ct. 2307. Notcontent to let the matter end with the United StatesSupreme Court, “While in jail, Thompson solicited inmateStephen Gerber to kill The Honorable Kenneth Hoyt, anable and respected judge of the United States DistrictCourt for the Southern District of Texas. Judge Hoyt hadsent Thompson to jail on a civil contempt charge relatedto a civil case in Judge Hoyt’s court in which Thompsonwas a party. In jail, Thompson had met Gerber and askedhim to hire a hit man. Thompson expressed outrage thatHoyt had sent him to jail and was generally displeasedwith the way his litigation was proceeding in JudgeHoyt’s court. United States of America v. Billy MacThompson, 130 F3d 676. In 2003 the Legislatureamended the Government Code to specifically provide fora limit on civil contempt confinement. Article 21.002 ofthe Code provides that:

(a) Except as provided by Subsection (g), a courtmay punish for contempt.

(b) The punishment for contempt of a court otherthan a justice court or municipal court is a fineof not more than $500 or confinement in thecounty or city jail for not more than 6 months,or both such a fine and confinement in jail.

(c) The punishment for contempt of a justice courtor municipal court is a fine of not more than$100 or confinement to the city or county jailfor not more than three days, or both such afine and confinement in jail.

(d) An officer of a court who is held in contemptby a trial court shall, on proper motion filed inthe offended court, be released on his ownpersonal recognizance pending a determinationof his guilt or innocence. The presiding judge ofthe administrative judicial region in which thealleged contempt occurred shall assign a judgewho is subject to assignment by the presidingjudge other than the judge of the offended courtto determine the guilt or innocence of theofficer of the court.

(e) Except as provided by subsection (h), thissection does not affect a court’s power toconfine a contemner to compel the contemnorto obey a court’s order.

(f) Article 42.033, Code of Criminal Procedure,and Chapter 157, Family Code, apply where aperson is punished by confinement forcontempt of court for disobedience of a courtorder to make periodic payments for thesupport of a child. Subsection (h) does notapply to that person.

(g) A court may not punish by contempt anemployee or an agency or institution of thisstate for failure to initiate any program or toperform a statutory duty related to thatprogram:

(1) if the legislature has not specifically andadequately funded the program; or

(2) until a reasonable time has passed to allowimplementation of a program specificallyand adequately funded by the legislature.

(h) Notwithstanding any other law, a person maynot be confined for contempt of court longerthan:

(1) 18 months, including three or more periodsof confinement for contempt arising out of

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the same matter that equal a cumulativetotal of 18 months, if the confinement isfor criminal contempt; or

(2) the lesser of 18 months or the period fromthe date of the confinement to the date theperson complies with the court order thatw as the basis of the finding of contempt,if the confinement is for civil contempt.

The courts have required that the Contempt Order bevery specific as to the grounds for holding a person incontempt and ordering confinement. In re David L.Montgomery, 138 S.W. 3d 569, (CA Beaumont) decidedJune 17, 2004, involved a turnover order that ordered thejudgment debtor to turn deliver

“[a]ll cash in the control or possession of“judgment debtor to a specified constable at aspecified time was not sufficient to support acontempt finding for failure to turn over$86,926. The turnover order was granted exparte. The appellate court decided that becausethe turnover order did specify a specific sum ofcash to be turned over, it was not sufficientlyspecific to support an order of contempt andconfinement. The court so found because“without reference to a specific sumdetermined to be in his possession or control ..., the relator would not have a ‘reasonableopportunity’ to meet [any subsequentcontempt] charges by way of defense orexplanation.”

In Moyer v. Moyer –SW 3d –, 2005 WL 1991813 (CA -Austin, 2005), the court the court stated that the trialcourt must be specific in both identifying the non-exemptproperty that is susceptible to turnover and in tailoringturnover relief to that property. It then went on to saythat “ the mere fact that general property categories in aturnover order coincide with some actual existingproperty is insufficient to cure the order’s lack ofspecificity.”

The question of specificity in a turnover order hasrecently undergone a radical change. In 2005, theturnover statute was amended to include Subdivision (h).It provides that “ A Court may enter or enforce an orderunder this section that requires the turnover of non-exempt property without identifying in the order thespecific property subject to turnover.” Another recentcase, In re Virgil Mott, Sr., 137 S.W. 3d 870 CAHouston (1st Dist.), 2004, is interesting for severalreasons. First, it enunciated the established rule that a

person held in jail for civil contempt has the burden ofshowing that he has either complied with the court’sorder or is incapable of complying. On December 2,2002, Mott was sued and on December 20, 2002, Mottpledged 2,000 shares in Mott Petroleum to the law firm ofFuqua and Keim to secure payment of their current andfuture legal fees. On April 30, 2003, an Agreed judgmentwas entered by the court for over $260,000 and thecreditor asked for a turnover order for the stock whichwas granted. Mott argued the stock was in Fuqua’spossession and he could not comply. The court orderedthe stock turned over. Fuqua gave notice that a privatesale was to be held of the stock and it was purchased byMott Petroleum as corporate shares. The court was notpersuaded by this mechanism and ordered the stockturned over and when Mott failed to do so, he wasconfined. Mott requested habeas corpus relief and ajury trial. The appellate court stated that a person is notentitled to habeas corpus relief because he was denied ajury trial when the contempt order is civil in nature.

The use of post-judgment discovery andenforcement procedures should go hand -in -hand withthe practice of keeping your client informed of the actionsthat you take and making certain that they understandand approve of them. On Thursday October 30, 2003 TheWall Street Journal published an article titled “ MedicalSeizures: Hospitals Try Extreme Measures To Collec tTheir Overdue Debts –Patients Who Skip Hearings OnBills Are Arrested; It’s a ‘Body Attachment” – Mr.Beans’s Time Behind Bars —”. Quoting from part of thearticle “Some also use one of the harshest and least-known collections tactics of all: seeking the arrest of no-show debtors.” And continuing in another paragraph“The legal tactic of arresting a debtor who fails to appearfor a court hearing – known in some areas as ‘bodyattachment’ – is so extreme that some of the country’sbiggest commercial creditors say they never use it.” Thearticle says that Sears and Ford Motor Credit Companyexpressly prohibit their collections agents from asking forit and state “In many areas of the country, collectionslawyers say, the procedure has been all but abandoned.”

The forms attached to this paper come from theTexas Collections Manual published by the Texas BarAssociation. Generally the post judgment collectionprocedure will begin with written interrogatories to thejudgment or a notice of post-judgment deposition.Assuming that the interrogatories are not answeredsatisfactorily by the debtor or not answered at all, or thatthe debtor fails to appear for his deposition, the next stepwould be a Motion to Compel Answers to Interrogatoriesor to compel the debtor’s appearance for the deposition.

Post Judgment Discovery and Enforcement Chapter 2

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Where the Order is ignored, the next step would be ashow cause why the debtor should not be held incontempt for failure to answer the interrogatories or toappear for his deposition. This motion should be veryspecific as to the reason for the motion and the order forcontempt should be carefully drafted so that it specificallysets out what the failures of the debtor are in respondingto past motions and orders and what the debtor can do topurge himself. I would recommend that the Motion beserved personally on the debtor so there is no questionthat he received it.

Practical considerations must also be taken intoeffect. If the debtor is found in contempt and arrested,what is the mechanism by which he can free himselfpending the next court hearing. Most orders for contemptprovide for the posting of a bond by the debtor. Thepractitioner should always remember that the object hereis to gain information about the debtor’s assets or requirethat they be turned over for levy and not to put the debtorin jail. The actions are not to be considered a substitutefor debtor’s prison. They are used only when the debtorfails to obey an order of the court.