Texas Divorce Attorney Blog
Pursuant to Chapter 9 of the Texas Family Code, a party may file suit to enforce the property division in a divorce decree. If a party’s “rights, duties, powers, or liabilities may be affected” by the enforcement action, they must receive notice by citation. Tex. Fam. Code § 9.001.
A former husband recently challenged court orders resulting from the ex-wife’s enforcement action. The former wife petitioned for enforcement and applied for a turnover order and appointment of a receiver. She alleged she had learned that certain property on Highway 105 owned by a limited liability company was to be sold and was concerned she would not get the share of the net proceeds that had been awarded to her. She asked the court to appoint a receiver to obtain possession of the ex-husband’s property to satisfy the $5,000 judgment for attorney’s fees and to hold the property pending orders of the court distributing the limited liability company ownership or the ex-husbands ownership of any other limited liability company. She also requested a turnover order and related attorney’s fees.
The ex-husband moved for a continuance the day of the hearing. His attorney argued he was served less than ten days before the hearing and the company had not been served. He argued he was not served with a citation for the business and judgment could not be entered without service on the company. He also argued the ex-wife had filed a lis pendens against the company and that the company needed to be served to make an appearance.
The ex-wife’s attorney argued the company was not a party and would not be affected by the requested remedies.
The court denied the continuance. Both parties, the ex-wife’s attorney, and a managing member of the company testified.
The ex-wife testified the ex-husband had not paid her $5,000 that had been awarded to her for attorney’s fees and she was seeking a turnover order for his personal bank account. She also said she was awarded half of his share of the proceeds from the company’s property on Highway 105. She was seeking an order clarifying the decree by more specifically describing the property. She testified the property had been up for sale for a couple of years and had been listed for more than $600,000. She was concerned the ex-husband was trying to avoid paying her based on his previous actions. She testified they filed the lis pendens to give potential buyers notice the property was involved in litigation.
The ex-husband testified there were three managing members of the company. He was a managing member and the registered agent. He testified the property on Highway 105 had been taken off the market recently because the contract with the realtor ended. He did not think it was still listed for sale but did not know if there was still a “for sale” sign up. He also said he did not think there had been an offer on it in the past six months. He testified each member paid $800 per month for the mortgage and he did not know the balance. He said someone else was paying his share and he had not paid on the mortgage for a couple of years. He said the property was the company’s only source of income.
The ex-husband acknowledged he had not paid the $5,000 that had been awarded to the wife. He also testified that the other members of the company had threatened litigation against him due to the lis pendens.
One of the company’s other managing members testified the company had not rejected any offers and one offer fell through due to the buyer’s financing issues. He said the market had not been favorable. He testified that the lis pendens would make it hard to sell the property and he and he other managing member had considered litigation against the ex-husband.
The ex-husband’s attorney argued the case had escalated quickly, without any demands, post-judgment discovery, or writs of execution. He also argued that there would be a commission associated with a receiver and a receiver should only be appointed after the exhaustion of other efforts. He argued for post-judgment discovery before the court ordered “drastic action[].”
The court stated it had been “an extreme case” and that it had “been so frustrating for almost four years.” The court signed an order clarifying the divorce decree to more specifically describe the property, a turnover order requiring the ex-husband to turn over checking and/or savings accounts at two banks and not to transfer or withdraw funds from those accounts, and an order appointing a receiver to take charge and possession of proceeds from the sale of the property.
No Prejudice to Ex-Husband
The ex-husband appealed arguing the court erred in hearing the enforcement petition because the ex-wife had not served him with sufficient notice and failed to serve the limited liability company.
Tex. Fam. Code Ann. § 157.062 requires notice of hearing on an enforcement motion to be given no later than ten days before the hearing date. The appeals court noted, however, that failure to give the required notice does not necessarily render the proceeding void if the failure does not constitute a denial of due process. The ex-husband was represented by an attorney, was able to cross-examine witnesses, and presented his own case. His motion for continuance was based on the lack of service to the company and did not claim he had not had time to prepare on his own behalf. He argued on appeal that the lack of proper notice prejudiced his ability to prepare but did not offer specific details. The appeals court determined the ex-husband had not shown he had been denied due process.
Company Was Not a Necessary Party
The ex-husband also argued the company was a necessary party because of the pleadings, the lis pendens against it, “and the appointment of a receiver to take property owned by this third party.” He argued that the receivership prejudiced the company’s rights and the ex-husband’s rights.
The appeals court pointed out that § 157.062 requires notice to the “respondent” and the company was not the respondent. The ex-husband was.
Pursuant to Tex. R. Civ. P. 39(a), a person subject to service shall be joined as a party if complete relief could not be accorded in their absence or if they claim an interest relating to the subject of the action and the disposition of the action may impair or impede their ability to protect their interest or leave any of the parties subject to a substantial risk of inconsistent or multiple obligations due to that claimed interest.
The divorce decree had awarded the wife half of the husband’s share of the net proceeds of the sale of the company’s property. The appeals court concluded the company did not claim an interest in the enforcement proceeding and that the proceeding did not impair its ability to protect its interest or sell the property. The receiver was ordered to take possession of and distribute the husband’s share of the proceeds after the sale of the property, not to take charge or possession of the company’s assets.
The appeals court concluded the trial court had not abused its discretion and affirmed the orders.
Seek Legal Advice
This case illustrates how business interests can complicate property division, even after the divorce. If you are facing a divorce involving complex business interests, a knowledgeable Texas business divorce attorney can advise you of your rights and advocate for a favorable outcome. Call McClure Law Group at 214.692.8200 to schedule a consultation.