Richard Pamplin and Networth Cashflow Systems, LLC v. Kelly Stephenson, Trustee of the Coffee Time, Inc. 40 I K (PSP)
04-21-00208-CV
Tex. App.Mar 29, 2023Background
- In 2011 a Kansas court entered default judgment against Richard Pamplin and Networth Cashflow Systems, LLC for about $99,000; the judgment was domesticated in Bexar County, Texas.
- The Texas trial court entered a turnover order and appointed a receiver (2014); a substitute receiver was later appointed.
- The receiver seized commission payments payable to Pamplin from LifeVantage, a multilevel-marketing company that pays distributors via a Sales Compensation Plan.
- LifeVantage reported payments to Pamplin on Form 1099 and Pamplin reported the receipts on Schedule C as business income; he did not receive a W-2.
- In January 2021 the receiver moved to approve distribution of the seized LifeVantage funds to judgment creditor Kelly Stephenson; Pamplin objected and appealed after the trial court approved the distribution.
- The court of appeals held it had jurisdiction (the distribution order operated as a mandatory injunction resolving property rights) and affirmed that the LifeVantage payments were not exempt as wages or commissions for personal services.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Appealability: whether the post-judgment distribution order is an appealable mandatory injunction | Pamplin: the distribution order determined his property rights and functioned as a mandatory injunction, so it is final and appealable | Receiver/Stephenson: the order merely enforced the prior turnover order and was administrative/nonadjudicative, not appealable | Court: order was the first judicial determination of competing ownership rights, operated as a mandatory injunction, and was appealable |
| Exemption: whether LifeVantage payments were exempt as wages or unpaid commissions for personal services under Tex. Prop. Code § 42.001 | Pamplin: payments are current wages or unpaid commissions for personal services and therefore exempt | Receiver/Stephenson: Pamplin was an independent contractor; payments are business/commercial commissions, not personal-service wages or exempt commissions | Court: evidence supports that payments were commissions to an independent distributor, not compensation for personal services; thus not exempt |
Key Cases Cited
- Alexander Dubose Jefferson & Townsend LLP v. Chevron Phillips Chem. Co., L.P., 540 S.W.3d 577 (Tex. 2018) (post-judgment turnover that first determines ownership rights can be appealable as a mandatory injunction)
- Transcon. Realty Inv’rs, Inc. v. Orix Capital Markets LLC, 470 S.W.3d 844 (Tex. App.—Dallas 2015) (portion of post-judgment turnover resolving property rights and imposing third-party obligations is appealable)
- Schultz v. Fifth Judicial Dist. Court of Appeals at Dallas, 810 S.W.2d 738 (Tex. 1991) (denial of appellate review would leave affected property interests unprotected)
- Beaumont Bank, N.A. v. Buller, 806 S.W.2d 223 (Tex. 1991) (abuse-of-discretion standard for turnover/injunctive relief review)
- Campbell v. Stucki, 220 S.W.3d 562 (Tex. App.—Tyler 2007) (‘‘current wages for personal service’’ implies employer-employee relationship; excludes independent contractors)
- Leibman v. Grand, 981 S.W.2d 426 (Tex. App.—El Paso 1998) (unpaid commissions exempt only if for personal services)
- Brasher v. Carnation Co. of Tex., 92 S.W.2d 573 (Tex. App.—Austin 1936) (same: exemption requires master-servant relationship)
- Goebel v. Brandley, 174 S.W.3d 359 (Tex. App.—Houston [14th Dist.] 2005) (Property Code § 42.001 exempts current wages for personal services)
