Premier Trailer Leasing, Inc. v. GTR Rental L.L.C. F/K/A CitiCapital Trailer Rental, Inc.

Citation: Not availableDocket: 02-09-00449-CV

Court: Court of Appeals of Texas; May 19, 2011; Texas; State Appellate Court

Original Court Document: View Document

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Premier Trailer Leasing, Inc. appeals a turnover order from the 393rd District Court of Denton County, contending that the trial court erred in several respects. Premier argues it is not a judgment debtor and therefore should not be subjected to a turnover order, claims the order violates its stockholders agreement, asserts that it was improperly required to disclose trade secrets, and states that the order lacks clear definitions of its duties. 

The turnover order was reconsidered on November 17, 2009, and mandates Premier to pay or distribute any company distributions owed to John DalCanton, who holds shares in Premier. The court reviews turnover orders under an abuse of discretion standard, which means it will only reverse the order if the trial court acted unreasonably or arbitrarily.

The turnover statute allows creditors to reach nonexempt assets that are difficult to attach through standard legal processes. A judgment creditor can seek to satisfy a judgment by accessing a debtor's property rights, including future rights to distributions. The court concluded that DalCanton's shareholder status grants him future distribution rights, which GTR, as the judgment creditor, is entitled to pursue through Premier. Despite Premier being a non-judgment creditor, the court upheld the turnover order, affirming that the trial court did not abuse its discretion in requiring Premier to turn over any distributions owed to DalCanton to GTR. Thus, Premier's first issue was overruled.

Premier argues that paragraph six of the turnover order lacks the necessary clarity and definiteness required for a mandatory injunction. It cites precedent affirming that turnover orders function as mandatory injunctions and must clearly outline the actions required to comply, as per Texas Rules of Civil Procedure. The specific language of paragraph six mandates Premier to provide GTR with all notices and financial information related to distributions, while excluding certain confidential materials. Premier contends that the term "any financial information" is ambiguous and does not clearly define its obligations. During the hearing, the trial court indicated that GTR should receive financial information of a general nature, similar to what might be disclosed to auditors or banks, but emphasized that confidential trade secrets are not discoverable. Premier expresses concern over the lack of clarity regarding how to handle situations where financial information shared with a bank is also confidential. The provision in question is deemed unclear in its directives and qualifications regarding Premier's obligations.

Premier is required to provide 'any financial information' but is not obliged to disclose 'marketing materials, price lists, customer lists, customer identities, and product identities and availabilities.' This creates ambiguity for Premier regarding which financial documents must be shared, as it could interpret the exceptions to mean that similar documents are also exempt. The lack of clarity in the turnover order leads to uncertainty about Premier's compliance obligations and could result in differing interpretations of what constitutes a failure to comply. The trial court's language was deemed not sufficiently clear or concise, which prompted a modification of the turnover order. The revised order states that Premier must provide GTR with all notices related to company distributions, allowing GTR to determine its entitlement to a distribution. Premier’s first issue was overruled, while its fourth issue was sustained, leading to the modification of the order. The court affirmed the judgment as modified, with no need to address Premier’s second and third issues as they were based on the removed language.