Thank you for sharing!

Your article was successfully shared with the contacts you provided.
Click here for the full text of this decision FACTS:Jerry Spencer entered into two construction contracts with R&T Sales Co. for the construction of two commercial buildings. Spencer began receiving claims from subcontractors who had not been paid. One of these subcontractors, Alert Synteks, requested payment for $75,346. Spencer had already paid R&T $1.9 million to be held in trust to pay the subcontractors. Therefore, Spencer filed suit to declare how much and to whom he owed payment. He also asked that a receiver be appointed for R&T’s assets. R&T and Alert both filed motions to transfer venue, which were denied. Alert then made a demand for the $75,346, saying that if it was not paid, it would sell certain property owned by Spencer Distributing in its possession. Consequently, Spencer Distributing intervened in the lawsuit, via Spencer’s first supplemental petition, claiming conversion and seeking an injunction against the property’s sale. Spencer’s third amended original petition was filed in April 2002, but did not mention Spencer Distributing or injunctive relief. On April 30, the trial court held a hearing on Spencer Distributing’s request for injunctive relief, and on Spencer’s request to have a receive appointed for R&T’s assets. The trial court granted both motions. Alert and R&T now bring this interlocutory appeal. HOLDING:Reversed in part; dismissed for want of jurisdiction in part. The court first holds that it does not have jurisdiction over the trial court’s order denying Alert’s and R&T’s motions to change venue. The court then turns to review the trial court’s decision to appoint a receiver. The court notes that Spencer sought the appointment of a receiver under Business Corporation Act 7.04, but R&T argues that the trial court really appointed a receiver under 7.05 of that act, which was unsupported by the evidence. A receiver may be appointed over assets under 7.04 under certain circumstances, whereas a receiver can be named under 7.05 over the entire business when deemed necessary by a court to conserve assets. The court in Humble Exploration Co. Inc. v. Fairway Land Co., 641 S.W.2d 934 (Tex.App. – Dallas 1982, writ ref’d n.r.e.), did find that a trial court had in practice, if not word, appointed a receiver over a whole business under 7.05, but the court finds the trial court’s order in this case distinguishable. Here, the trial court’s order does not direct that there be a receiver of R&T’s business. Rather, the trial court’s order is restricted to R&T’s assets. Therefore, the trial court’s order appointing a receiver must conform to the requirements of 7.04. As receiverships are equitable remedies, the court says it will not be disturbed unless there’s an abuse of discretion. In this case, Spencer offered no evidence to support the trial court’s finding that other remedies available either at law or in equity were inadequate. No evidence establishes that other methods to trace the missing funds, such as traditional discovery, had been attempted and failed or were otherwise unavailable. In fact, there is no indication in the record that any discovery had been attempted at the time the trial court granted Spencer’s motion. Moreover, the record is silent as to reasons why injunctive relief could not be employed to preserve assets or why monetary damages would not provide an adequate remedy. “We hold that by granting Spencer’s motion to appoint a receiver where there was no evidence supporting its finding that other remedies available either at law or in equity were inadequate, the trial court abused its discretion.” The court rejects Alert’s argument that Spencer Distributing had been dropped from the lawsuit by the third amended original petition. Consequently, the injunctive action against Alert was not abandoned. The court also finds that the injunctive relief granted was supported by the pleadings. Nonetheless, the court again finds that there was an adequate remedy at law, so injunctive relief was ultimately improper. There was nothing to indicate, for example, that Alert wouldn’t be able to pay Spencer Distributing monetary damages if the property was sold. OPINION:Devasto, J.; Worthen, C.J., Griffith and DeVasto, JJ.

Want to continue reading?
Become a Free ALM Digital Reader.

Benefits of a Digital Membership:

  • Free access to 3 articles* every 30 days
  • Access to the entire ALM network of websites
  • Unlimited access to the ALM suite of newsletters
  • Build custom alerts on any search topic of your choosing
  • Search by a wide range of topics

*May exclude premium content
Already have an account?


ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.