During a Texas divorce case, the court may appoint a receiver to preserve and protect the parties’ property. Tex. Fam. Code § 6.502(a)(5). The receiver’s role is to receive and preserve property for all of the parties, not just the party who applied for a receiver. Protecting assets can be particularly important in a complex estate involving business interests, real property and other assets under the control of one spouse. A husband recently appealed appointment of a receiver in his divorce case.
According to the appeals court’s opinion, the parties had been married for about 12 years when the wife petitioned for divorce. The wife requested appointment of a receiver, alleging the husband had transferred community assets. The husband argued that some of the assets were his separate property and that a receiver should not be appointment when there was another available remedy. He argued the wife had filed a lis pendens on the real property.
The Hearing
At the hearing, the wife’s attorney argued the husband was a successful doctor who had transferred assets worth millions to Lebanon and Syria. She argued he had cancelled the credit card and closed the joint bank account. She stated they did not know where the money went because the husband did not answer discovery. The attorney argued the hearing was urgent because it would be hard to enforce the orders once the funds were in Syria or Lebanon, noting there had been previous injunctions against transfers of money and sales of property.
The husband testified he had planned to take the family to Lebanon and had listed his medical practice for sale before the wife filed her petition. He testified about a number of bank accounts, two for the medical clinic, one for a company he said the parties founded in 2016, an account in just his name, and a joint account he said he closed “because it was overdrafted.” He testified he owned the medical clinic and surrounding land and four houses. He said he gave a house to his brother in January 2022 but the deed was recorded in March. He said his brother had lived there for 20 years and that he transferred the house to pay off a debt he owed his brother from before the marriage.
The husband testified he transferred another house to the brother in January with the deed recorded in March 2022. He later testified he had not transferred that house to his brother but had instead sold it to an investment company. He also said he had transferred two other tracts of land to the brother in March 2022.
He testified he gave the brother $60,000 in November 2021. He also transferred him $140,000 from one of the clinic accounts, $75,000 from the other clinic account, $20,000 from the joint account, and $40,000 from his personal account. His sister owned a pharmacy and he gave her a check for several thousand dollars, which he claimed was payment for supplies. He also gave his other sister $20,000 in October 2021 and $20,000 in March 2022, which he said was for taking care of his mother. He said he shared the $149,000 he received from a PPP loan with the wife and his brother.
He testified he had a bank account at the Bank of Beirut with $650,000 and $128,000 in a joint account with the wife in another Lebanese bank. He said these accounts were frozen. He testified he had an account with another Lebanese bank worth $1.8 million plus an additional $20,000 to use for an apartment. He said this was “premarital money.”
He said he had $704,000 in a Swiss bank account in March 2022 which he used to invest in a Syrian resort. He said he told the wife he had withdrawn that money. He said that account was only worth $700 at the time of the hearing. He testified he owned around 20 properties in Syria and he and the wife owned land in Lebanon.
The husband testified he was worth $8.6 million before the marriage and had invested most of it in overseas properties during the marriage. He said he had $1.8 million in cash in a Lebanese bank, but it was frozen. He said he had “about $41,000” and a credit card debt of $50,000 that was due the next day. He also testified he had spent $300,000 from a line of credit for attorney’s fees. He claimed his business suffered because of the stress from the divorce.
He said he was opposed to a receiver being appointed because then the bank could immediately call the notes. He said it would harm his medical practice and bankrupt him.
The wife testified she moved to the U.S. from Lebanon to marry the husband. She had not worked outside the home since. She had access to the credit card and joint account during the marriage and said she had not been aware of any other bank accounts.
She said she requested a forensic accountant and a receiver because she did not have control over the assets and the husband had been making transfers to his brothers and to Lebanon and Syria. She expressed concerns he would transfer all of the assets to Syria. She testified he had gone to Syria and Lebanon two months earlier.
The Trial Court’s Orders
The trial court appointed a receiver, finding it necessary to protect community assets. The husband appealed. The trial court signed another order appointing a receiving, finding doing so was necessary to “preserve and protect the parties’ property” while the case was pending. The following property was subject to receivership: the marital estate, four houses in Kingwood, any other real property owned individually or as community property, and the medical clinic.
The Husband’s Appeal
The husband appealed.
The appeals court noted that some other appeals courts have held that a receiver may be appointed without proof the property is at risk of being removed, loss or materially injured or that there is no less harsh remedy available. The First Court of Appeals, however, has held that proof of both is required. To show there was no less harsh remedy available, the record must show the options that could be or were considered by the court.
Separate Property
The husband argued the trial court did not have the authority to put his separate property under the receiver’s control. The appeals court noted there had not yet been a final determination on the characterization of the property. The appealed order was just an interlocutory temporary order. Furthermore, a receiver is not limited to community assets under Texas law. The appeals court concluded the trial court had not abused its discretion by putting all of the parties’ property under the receiver’s control.
Less Harsh Remedies
The husband also argued the court abused its discretion by not considering less harsh remedies. He argued there was no evidence that injunctive relief would not be adequate.
The appeals court noted that it must consider whether the record showed the trial court had considered less harsh remedies, but the trial court is not required to specifically consider a temporary injunction. The husband had argued to the trial court that a receiver was unnecessary and too harsh when a lis pendens on the real property was available. The wife had already filed a lis pendens and her attorney argued the husband had failed to respond to discovery requests and had not obeyed other court orders.
The appeals court concluded the trial court had considered the less harsh remedies the parties raised and concluded they were not sufficient to protect the parties’ property. The appeals court found no abuse of discretion in the appointment of a receiver.
The appeals court affirmed the order appointing the receiver.
Call McClure Law Group
The court determined that a receiver was appropriate in this complex estate, with international assets, a medical practice, and transfers to the husband’s family. If you also have a complex estate with a spouse who has control over most of the assets, a skilled Texas divorce attorney can help you fight to protect your rights and assets, including seeking appointment of a receiver if appropriate for your case. Set up a consultation with McClure Law Group at 214.692.8200.