Sargeant v. Al Saleh
512 S.W.3d 399
| Tex. App. | 2016Background
- Al Saleh obtained a $28.8M jury judgment in Florida against Harry Sargeant III and domesticated that judgment in Texas; additional post-judgment amounts were later entered.
- BTB Refining LLC is wholly owned by Sargeant; its principal asset was a promissory note for ~ $29M and it received significant settlement proceeds (~$52M) in a family settlement that Al Saleh alleges was structured to frustrate collection.
- Al Saleh sued in Texas asserting turnover on the foreign judgment, fraudulent transfers under the Texas Uniform Fraudulent Transfer Act (TUFTA), alter-ego theories, and sought injunctive relief and a receiver to preserve assets.
- The trial court issued a temporary injunction restraining Sargeant, BTB, and related persons from using or transferring $21,828,446.65 or transferring that amount out of the court’s jurisdiction. The injunction found probable right and likely fraudulent intent and treated BTB as Sargeant’s alter ego.
- BTB filed both an interlocutory appeal and a mandamus petition arguing the injunction improperly freezes assets as security for a money judgment (invoking Grupo Mexicano) and that TUFTA does not apply because Al Saleh is not a creditor of BTB.
- The appellate court dismissed the mandamus petition (adequate remedy by appeal) and affirmed the temporary injunction, concluding TUFTA permits pretrial equitable relief for alleged fraudulent transfers and that the record supported the injunction.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the trial court abused discretion by freezing BTB assets via temporary injunction | Al Saleh: TUFTA authorizes injunctions to prevent fraudulent transfers; equitable relief (injunction/receiver) is proper to preserve assets for satisfaction of creditor claims | BTB: Grupo Mexicano forbids prejudgment asset freezes in actions for money damages; Al Saleh has no judgment against BTB so TUFTA doesn’t apply to him as a creditor of BTB | Court: No abuse — TUFTA permits equitable relief for fraudulent transfers (and Grupo’s bar doesn’t apply here); record supported probable right and imminent harm, so injunction affirmed |
| Whether Al Saleh is a “creditor” under TUFTA with standing to seek injunction against BTB | Al Saleh: TUFTA defines “creditor” broadly as anyone with a claim; claim need not be against the transferor only and can be equitable or unliquidated | BTB: Al Saleh is not a creditor of BTB (no judgment against BTB) so TUFTA remedies against BTB are improper | Court: Al Saleh is a “creditor” under TUFTA because he has a claim; TUFTA expressly allows remedies against transferees or persons for whose benefit transfers were made |
| Whether Grupo Mexicano precludes the injunction here | BTB: Grupo prohibits prejudgment freezes to secure legal money judgments | Al Saleh: Exceptions apply — equitable remedies and fraudulent-transfer claims fall outside Grupo’s prohibition | Court: Grupo does not control; fraudulent-transfer exception and equitable relief render asset-freeze permissible under TUFTA |
| Whether procedural prerequisites for temporary injunction were met | Al Saleh: Trial court held evidentiary hearing, found probable right and irreparable harm; injunction tailored to preserve assets | BTB: Challenged substantive authority to freeze assets absent a judgment against BTB | Court: Procedural requirements satisfied; interlocutory injunction within court’s discretion and supported by record |
Key Cases Cited
- Grupo Mexicano de Desarrollo v. Alliance Bond Fund, 527 U.S. 308 (1999) (preliminary asset-freeze unavailable where plaintiff seeks only legal damages; court noted exception for fraudulent conveyances and equitable claims)
- Deckert v. Independence Shares Corp., 311 U.S. 282 (1940) (upheld equitable injunctive relief in aid of restitution and receivership where equitable claims were pleaded)
- Butnaru v. Ford Motor Co., 84 S.W.3d 198 (Tex. 2002) (temporary injunction is extraordinary relief; applicant must show cause of action, probable right, and probable, imminent, irreparable injury)
- In re Prudential Ins. Co. of America, 148 S.W.3d 124 (Tex. 2004) (mandamus appropriate to correct clear abuse of discretion when no adequate appellate remedy exists)