Harry Sargeant III and BTB Refining, LLC v. Mohammad Anwar Farid Al-Saleh
13-15-00327-CV
| Tex. App. | Sep 28, 2015Background
- Al-Saleh holds domesticated Florida fraud judgments against Harry Sargeant and related parties totaling over $32 million.
- Sargeant controls BTB Refining, LLC; evidence and a prior federal ruling supported finding BTB is Sargeant’s alter ego.
- Sargeant/BTB attempted to transfer roughly $52 million (with ~$21.8M enjoined) offshore via a Bahamian entity and a purported “Zero Coupon Promissory Note.”
- After a two-day evidentiary hearing the trial court entered a temporary injunction barring transfer/dissipation of the identified funds to protect enforcement of the existing judgments.
- BTB appealed, arguing (inter alia) the injunction functioned as an impermissible prejudgment attachment; Al‑Saleh responds the injunction is proper equitable relief and authorized by the Texas Uniform Fraudulent Transfers Act and alter‑ego principles.
Issues
| Issue | Plaintiff's Argument (Al‑Saleh) | Defendant's Argument (BTB) | Held |
|---|---|---|---|
| Whether a court may enjoin transfer of assets to prevent dissipation in aid of enforcing preexisting judgments | Injunctive relief is proper equity to prevent fraudulent avoidance of judgments and preserve assets for enforcement | Injunction is effectively a prejudgment writ of attachment and thus impermissible here | Court affirmed injunctive relief is proper to prevent fraudulent dissipation where judgment exists and alter‑ego is alleged/found |
| Whether the Texas Uniform Fraudulent Transfers Act authorizes provisional remedies (injunction/attachment) against transferees | The Act expressly authorizes provisional remedies, injunctions, and “any other relief the circumstances require,” including against transferees/alter egos | Statutory remedies are limited and do not permit freezing/nonjudgmental seizure of non‑debtors’ assets | Held the UFATA authorizes provisional equitable relief (injunction/attachment) to prevent fraudulent transfers; Metra United controls |
| Applicability of prejudgment seizure/Grupo Mexicano line of cases | Grupo Mexicano does not bar injunctions here because plaintiff already holds judgments; equity and statute permit preservation of assets for enforcement | Grupo Mexicano and related authorities prohibit pre‑judgment asset freezes absent clear authorization | Held Grupo Mexicano is distinguishable; where a judgment exists (or statute authorizes relief) equitable measures to preserve assets are permitted |
| Whether alter‑ego/veil piercing claims are tantamount to seeking to satisfy a judgment only through a charging order against an LLC membership interest | Alter‑ego doctrine makes BTB directly liable (not merely a charging‑order remedy) and supports equitable relief to reach assets | Charging order under Business Organizations Code is the exclusive remedy for membership interests | Held alter‑ego principles can pierce an LLC veil; charging order is not exclusive where LLC is the debtor/alter ego and equitable grounds exist |
Key Cases Cited
- Deckert v. Independence Shares Corp., 311 U.S. 282 (1940) (statutory remedies may permit equitable procedures to make rights effective).
- Grupo Mexicano de Desarrollo S.A. v. Alliance Bond Fund, Inc., 527 U.S. 308 (1999) (general rule limiting prejudgment freezes when no judgment exists; distinguishable where statute or existing judgment authorizes relief).
- Metra United Escalante, L.P. v. Lynd Co., 158 S.W.3d 535 (Tex. App.—San Antonio 2004) (upholding temporary injunction under Texas UFATA to prevent transfer that would render judgment ineffectual).
- Butnaru v. Ford Motor Co., 84 S.W.3d 198 (Tex. 2002) (standard for appellate review of injunctive relief; trial court abuses discretion only if decision is arbitrary).
- Stuart v. Spademan, 772 F.2d 1185 (5th Cir. 1985) (fiduciary‑shield/alter‑ego discussion explaining when corporate form can be disregarded).