Court: Court of Appeals of Texas; January 26, 2012; Texas; State Appellate Court
S.P.M. Husband appeals the trial court's order appointing a receiver in his divorce case with N.S.M. Wife. He raises three issues: (1) the trial court allegedly used an incorrect standard for appointing the receiver, (2) his due process rights were violated due to the receiver's appointment without prior notice and hearing, and (3) he was not allowed to present evidence to segregate his separate property from the receiver's control. The court affirms the trial court's order.
The background reveals that Husband filed for divorce on February 12, 2009, and temporary orders were established on June 8, 2009. The case became contentious, leading Wife to file a motion for a receiver on June 30, 2010, citing Husband's non-compliance with various court orders, including support payments. Testimony indicated Husband was liquidating assets for personal expenses and transferring funds to inaccessible accounts.
After multiple hearings, including one where Husband was found in contempt, the trial court deferred its decision on the receiver's appointment. During a subsequent hearing, the court indicated it would appoint a receiver if Husband did not meet his payment obligations. Despite Husband becoming current on some payments by March 2011, he had not cleared all outstanding amounts, leading to the appointment of Howard Spector as receiver on March 21, 2011. Following Husband's appeal, Wife moved for reconsideration, presenting new evidence of unpaid obligations and Husband's alleged incapacity to manage his affairs, which the court considered in its deliberation.
The trial court has appointed a receiver, Spector, after finding sufficient grounds due to the Husband's noncompliance with child and spousal support orders, as well as interim attorney’s fees for the Wife. The court determined that the Husband repeatedly failed to adhere to discovery orders, misrepresented his financial situation, and was not a credible witness regarding his ability to pay support. Key reasons for appointing the receiver included the Husband's refusal to disclose asset information, admissions of selling or transferring property, inability to account for his possessions, mismanagement of property, dishonesty in court, and the resulting delays and costs from his actions. The court concluded that the appointment was necessary and equitable to protect the parties' property, and the Husband did not challenge these findings.
In response to the Husband's argument that the trial court lacked authority to appoint a receiver, the court referenced the Family Code, which allows for the appointment of a receiver during divorce proceedings to preserve and protect property as deemed necessary. The statute grants the trial court broad discretion in such decisions, which includes appointing a receiver to ensure compliance with its orders. The appellate review of the trial court's order will only occur if there is a clear abuse of discretion.
The trial court's appointment of a receiver was deemed appropriate under Texas Family Code § 6.502 if it was necessary and equitable to protect the parties and their property. The court's findings indicated a focus on protecting both Wife and the children, particularly given Husband's repeated failures to comply with court support orders and his sole control over significant financial assets exceeding seven million dollars. Evidence showed Husband had been declared incompetent to manage his affairs, further justifying the receivership for his protection. The court noted that Husband's noncompliance had unnecessarily delayed proceedings and increased litigation costs. Although Husband objected to the attorney fees awarded to Wife, the court found these fees were largely due to enforcement actions stemming from his refusal to meet obligations. A receiver would ensure timely payments of support and legal fees, preventing the need for further enforcement actions. The court addressed concerns regarding Husband's claims that the receiver was appointed to punish him, reaffirming its authority to appoint a receiver to enforce compliance with its orders.
Husband's assertion that the trial court lacked authority to include his separate property in the receivership was rejected. The court found he did not provide clear evidence of separate property, and Texas law does not restrict receiverships to community assets. The statute references "the property of the parties" without distinguishing between separate and community property. Furthermore, any transfer of community property made with the intent to harm the other spouse's rights during a divorce proceeding is void.
No limitation on receivership funds will be imposed as the legislature has not mandated such a restriction. The trial court's decision to place all property under the control of a receiver is upheld, with no abuse of discretion found in the appointment. Regarding due process, Husband claimed he was denied notice and a hearing prior to the receivership order; however, the court held multiple evidentiary hearings where both parties presented evidence. The trial court did not deny the motion but deferred its decision, indicating it would appoint a receiver if Husband failed to meet payment obligations. The court demonstrated restraint by allowing Husband several opportunities to comply before appointing the receiver, thus satisfying due process requirements. Even if an additional hearing had been held, any potential error would be deemed harmless as Husband did not indicate any new evidence that could influence the decision.
On the matter of segregating community from separate property, the court found no need for such segregation prior to the receiver's appointment, affirming that the receiver's responsibilities are not limited to community property. All of Husband's issues were rejected, leading to the affirmation of the trial court's order. Furthermore, although Husband argued that appointing a receiver is a severe measure reserved for emergencies, his counsel acknowledged that the family code does not require less severe remedies to be attempted first.
In Norem v. Norem, 105 S.W.3d 213, 216 (Tex.App.-Dallas 2003, no pet.), the court highlighted that the Texas Family Code does not provide the necessary foundation for a receivership order, unlike the Texas Civil Practice and Remedies Code. The Husband failed to present clear and convincing tracing evidence to prove that the assets he controls are his separate property, resulting in a presumption that these assets are community property. The only asset claimed by the Wife is an IRA valued at $192,000. The definition of "separate property" includes assets owned before marriage, gifts received during marriage, and personal injury recoveries, excluding lost earning capacity, as per Tex. Fam. Code Ann. 3.001. Conversely, "community property" encompasses all property acquired during marriage that is not classified as separate property under Id. 3.002. The trial court addressed the Wife's motions for enforcement and contempt during an August 2 hearing, leading to the Husband's contempt finding on August 4. The court indicated it would issue a receivership order if the Husband did not settle the contempt obligations within two weeks, noting that the August 4 hearing was not evidentiary.
