Five Star Global, LLC, Five Star Global Holdings, LLC, Five Star Global Investment Holdings, LLC, Calidant Capital, LLC A/K/A CCP Wolf Holdings, LLC, Drew N. Bagot v. Mark Hulme and Five Points Holdings, LLC
05-20-00940-CV
| Tex. App. | Jul 26, 2021Background
- Five Star Global, LLC (FSG) runs trade shows/events in the mortgage/real‑estate industry; in May 2018 FSG acquired assets from Five Points Holdings, LLC (FPH) and hired FPH owner Mark Hulme.
- Hulme alleges wrongful termination (Apr 2019); FSG says it fired him for cause (Jan 2020). Hulme and FPH sued in June 2020 and applied for a receiver in August 2020.
- Hulme/FPH alleged preferential insider payments, mismanagement, withheld records, loan defaults, operating losses, and insolvency; sought a receiver to protect assets and inspect books.
- FSG rebutted that business declines were industry‑wide and pandemic‑driven, that management acted reasonably (including virtual events), and that projections showed positive cash/EBITDA—so a receiver would harm FSG and was unnecessary.
- The trial court, uncertain which side to believe and noting conflicting information, appointed Kevin Buchanan as a "limited receiver" to take possession of books/records, investigate, interview witnesses, and report whether receiver powers should be expanded; the order also prohibited changes to day‑to‑day management.
- On appeal, the court analyzed whether the order in substance created a receiver (versus an auditor or master), whether appointment of a receiver over books/records was justified, and whether the interlocutory appeal was proper.
Issues
| Issue | Plaintiff's Argument (Hulme/FPH) | Defendant's Argument (FSG parties) | Held |
|---|---|---|---|
| Appealable jurisdiction: can this interlocutory order be reviewed? | Order appointed a receiver; §51.014(a)(1) permits interlocutory appeal. | Only the portion that actually appoints a receiver is appealable; other functions are not. | Court has jurisdiction only to review the order to the extent it appoints a receiver; other parts of the appeal dismissed. |
| Did the order in substance appoint a receiver (vs. auditor/master)? | The order called Buchanan a receiver and gave power to take possession of records. | Order mainly authorized audit/investigation and recommendations; it expressly preserved management control. | The order conflated roles but in substance appointed an auditor/master; only limited receiver power was possession of records. |
| Was appointing a receiver over FSG’s books/records justified? | Mismanagement, preferential payments, withheld records, insolvency and imminent danger of great loss warranted a receiver. | Business decline and pandemic explain losses; records not in danger; discovery would suffice; receiver would cause harm. | No evidence books/records were in danger or would be lost; appointment of a receiver over books/records was an abuse of discretion and reversed. |
| Remedy and further relief | (Implicit) Continued receivership or expanded powers requested. | Appeal to reverse receiver appointment; other challenges should be mandamus. | Reversed in part (receiver appointment over books/records) and remanded; remainder of appeal dismissed for lack of jurisdiction; other challenges should be pursued by mandamus. |
Key Cases Cited
- Spiritas v. Davidoff, 459 S.W.3d 224 (Tex. App.—Dallas 2015) (appellate review of receiver appointment is for abuse of discretion)
- Stevenson v. Ford Motor Co., 608 S.W.3d 109 (Tex. App.—Dallas 2020) (appellate courts must review sua sponte jurisdictional defects)
- CMH Homes v. Perez, 340 S.W.3d 444 (Tex. 2011) (interlocutory appeals are narrow exceptions and strictly construed)
- Del Valle Indep. Sch. Dist. v. Lopez, 845 S.W.2d 808 (Tex. 1992) (substance and function control classification of orders for appealability)
- Diana Rivera & Assocs., P.C. v. Calvillo, 986 S.W.2d 795 (Tex. App.—Corpus Christi 1999) (describes auditor roles under Tex. R. Civ. P.)
- Simpson v. Canales, 806 S.W.2d 802 (Tex. 1991) (requirements and mandamus as remedy for master/receiver appointment disputes)
- Mallou v. Payne & Vendig, 750 S.W.2d 251 (Tex. App.—Dallas 1988) (receiver is disfavored and only when property is in danger and no less harsh remedy exists)
- Parness v. Parness, 560 S.W.2d 181 (Tex. Civ. App.—Dallas 1977) (receiver should be appointed only where property is in present danger of loss and no adequate alternative exists)
- Arkoma Basin Exploration Co. v. FMF Assocs., 249 S.W.3d 380 (Tex. 2008) (distinguishing substantive Delaware law and Texas procedural law on choice‑of‑law issues)
- Dallas Symphony Ass'n, Inc. v. Reyes, 571 S.W.3d 753 (Tex. 2019) (noting limits and exceptions in appealability analyses)
- Drob v. Natl'l Mem'l Park, 41 A.2d 589 (Del. Ch. 1945) (Delaware standard: receiver in cases of fraud or gross mismanagement causing imminent danger of great loss)