in Re William Gregory Holt ( 2006 )

Opinion issued June 8, 2006

In The  

Court of Appeals

For The  

First District of Texas

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NO. 01-06-00290-CV

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IN RE WILLIAM GREGORY HOLT, Relator

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Original Proceeding on Petition for Writ of Mandamus

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MEMORANDUM OPINION

             This is a suit to enforce a judgment. Relator, William Gregory Holt, has filed a petition for writ of mandamus challenging the trial court’s January 19, 2006 order appointing a master in chancery to investigate Holt’s assets. In his sole issue, Holt contends that the trial court abused its discretion, under Texas Rule of Civil Procedure 171, by sua sponte appointing “a ‘debt collector’ as a master in chancery to conduct post-judgment discovery in aid of a purported judgment creditor.” See Tex. R. Civ. P. 171.

          We conditionally grant mandamus relief. BackgroundIn November 1988, Sakowitz, Inc., not a party to this suit, was awarded a judgment against Holt in the amount of $9700.00, plus costs and interest. If there was any execution of the judgment by Sakowitz, it proved unsuccessful. In October 2005, real party in interest, Cedyco Corp., appeared and filed an “Application for Turnover After Judgment and for Appointment of Receiver” (“Application”), referring to itself as “Assignee of Sakowitz” and requesting that Ray Crain, an individual with whom Cedyco had worked in prior matters, be appointed as receiver to take possession of and to sell Holt’s assets. Holt answered, contending that Cedyco (1) lacked capacity to enforce the judgment because it had not proved that it owned the judgment; (2) was attempting to collect a 17-year-old judgment that had become dormant and had not been revived; (3) failed to show that it was a judgment creditor and that Holt had non-exempt property that could not readily be attached or levied upon by ordinary legal process; and (4) did not met the requirements for appointment of a receiver.

          After a hearing on November 28, 2005, the trial court granted Cedyco’s Application, appointing Ray Crain as receiver and ordering that he “take possession of and sell the non-exempt property, real and personal, of [Holt and his wife], including, but not limited to: [an extensive list].” Holt moved to set aside the order, contending that the trial court had conducted the hearing in the absence of his counsel, E.M. Schulze.

          Holt contends that, at the time that the November 28, 2005 hearing was scheduled, Schulze had moved for a continuance on the basis that he was set to be in trial on that date. The trial court denied the motion, opting to see if Schulze was actually called to trial. On November 28, contends Holt, Schulze informed the trial court that he had in fact been reached for trial and could not attend the hearing. Holt contends that, although the trial court assured Schulze that the hearing would be reset, the hearing was, nonetheless, conducted that day. No record of the hearing appears in the record before us. Holt states that “no evidence was offered by Cedyco on this date . . . [and] the proceedings were not reported.” On December 14, 2005, the trial court granted a hearing on the motion to set aside the appointment of the receiver. Cedyco did not offer any evidence at the hearing.

          On January 19, 2006, the trial court (1) denied Holt’s motion to set aside the appointment of Ray Crain as receiver; (2) ordered that all activities of the receiver “temporarily cease pending an investigation into the extent of [Holt’s] non-exempt property”; and (3) appointed Reicke Baumann as master in chancery to depose Holt to determine the “extent, nature, and location of non-exempt property” and to report such findings to the court. It is from the January 19 order that Holt seeks mandamus relief.  

Standard of Review

          A party is entitled to mandamus relief if a trial court abuses its discretion or violates a legal duty and the party has no adequate remedy by appeal. Walker v. Packer, 827 S.W.2d 833, 839–40 (Tex. 1992); In re Taylor, 113 S.W.3d 385, 389 (Tex. App.—Houston [1st Dist.] 2003, orig. proceeding). A trial court abuses its discretion if “it reaches a decision so arbitrary and unreasonable as to amount to a clear and prejudicial error of law.” Walker, 827 S.W.2d at 839; see In re Taylor, 113 S.W.3d at 389. With respect to factual issues, matters are committed to the trial court’s discretion, and the reviewing court may not substitute its judgment for that of the trial court. Walker, 827 S.W.2d at 839. The relator must establish that the trial court reasonably could have reached only one decision. Id. at 840. With respect to a trial court’s determination of legal principles, however, review is less deferential. Id. A trial court has no discretion to incorrectly determine what the law is or to improperly apply the law to the facts.  Id.   Appointment of Master in ChanceryIn his sole issue, Holt complains that the trial court abused its discretion, under Texas Rule of Civil Procedure 171, by sua sponte appointing “a ‘debt collector’ as a master in chancery to conduct post-judgment discovery in aid of a purported judgment creditor.” See Tex. R. Civ. P. 171. Cedyco did not file a response in this proceeding.

          The appointment of a master lies within the sound discretion of the trial court and should not be disturbed unless a clear abuse of that discretion is found. Simpson v. Canales, 806 S.W.2d 802, 811 (Tex. 1991). The Texas Supreme Court has held that “Rule 171 is the exclusive authority for appointment of masters in our state courts” and “every referral to a master, unless authorized by statute or consented to by the parties, must comply with Rule 171.” Id. at 810 & n.12 (giving non-exhaustive listing of matters authorized by statute). Here, because there does not appear to be an applicable statute and because Holt did not consent to the appointment, the issue is whether the trial court had the authority to compel Holt to submit matters to the master under Rule 171. See id. at 810–11 & n.12.

          Rule 171 provides as follows, in pertinent part:

The court may, in exceptional cases, for good cause appoint a master in chancery, who shall be a citizen of this State, and not an attorney for either party to the action, nor related to either party, who shall perform all of the duties required of him by the court, and shall be under orders of the court, and have such power as the master in chancery has in a court of equity.

Tex. R. Civ. P. 171. Hence, Rule 171 permits a trial court to appoint a master “in exceptional cases, for good cause.” Id. The “exceptional case” and “good cause” standards are “not susceptible [to] precise definition.” Simpson, 806 S.W.2d at 811. Although the trial court may consider the complexity of the case, the rule’s standards may not be satisfied merely by showing that a case is time-consuming or complicated. Id.

          In Simpson, the trial court appointed a master based on the complexity of the toxic-tort case before it, which involved one plaintiff and 18 defendants. Id. Over the course of 10 months, 8 discovery motions were filed, but the trial court did not hear any of the pending discovery disputes before appointing the master. Id. The supreme court concluded that the appointment of the master constituted a clear abuse of discretion by the trial court because, although the case may have been more complicated than others on the trial court’s docket, “it can hardly be said to be exceptional, at least at this point in its development.” Id. The supreme court explained that “[e]ven if this were an exceptional case, based upon the allegations in the pleadings, the number of parties, or the amount of activity it generated, we would be reluctant to approve the trial court’s delegation of the supervision of all discovery to be conducted in the case to the master.” Id. at 811–12.

          As in Simpson, there is nothing in the record before us that suggests that this is an “exceptional case” that cannot be handled in the trial court or that “good cause” exists for supervision by a master. There are two parties involved, and the only issue before the trial court at this time is the discovery of non-exempt assets. There was no evidence taken at the December 14 hearing before the trial court appointed Baumann, and, although Holt objected to the appointment, Cedyco offered no explanation.

Conclusion

          We hold that the trial court abused its discretion in appointing a master, conditionally grant Holt’s petition for writ of mandamus, and direct the trial court to vacate its January 19, 2006 order appointing a master and any other orders ancillary thereto. We lift our order of March 28, 2006 staying the proceedings below. We are confident that the trial court will promptly comply, and our writ will issue only if it does not.  

                                                                        Tim Taft

                                                                        Justice

Panel consists of Justices Taft, Higley, and Bland.