Spates v. Office of Attorney General
485 S.W.3d 546
| Tex. App. | 2016Background
- Christopher Spates is sole member/owner of Prodigy Services, LLC; Prodigy sued Eni in Harris County and settled for $257,600 deposited to the court registry.
- The Texas OAG, as assignee of three mothers, held three child‑support judgments against Spates and filed child‑support lien notices against any proceeds of Prodigy’s suit.
- OAG applied in the 234th District Court (where Prodigy v. Eni was pending) for a charging order under Tex. Bus. Orgs. Code § 101.112 to charge Spates’s membership interest for $94,376.54. Spates was not made a party to the underlying suit and did not intervene.
- The trial court granted the charging order directing Prodigy to remit distributions otherwise payable to Spates to the Texas State Disbursement Unit until the judgments are satisfied.
- On appeal, Spates and Prodigy argued lack of personal and subject‑matter jurisdiction and asserted procedural defects (notice/service) in obtaining the charging order. The court dismissed Spates’s appeal for lack of standing and affirmed as to Prodigy.
Issues
| Issue | Plaintiff's Argument (OAG) | Defendant's Argument (Prodigy/Spates) | Held |
|---|---|---|---|
| 1. Appellate standing | N/A (OAG is judgment creditor pursuing enforcement) | Spates lacks standing to appeal because he was not a party of record | Dismissed Spates’s appeal for lack of standing |
| 2. Appealability of charging order | Charging order resolves property rights and imposes obligations on Prodigy, so appealable | Charging order is a post‑judgment enforcement order and not final/appealable | Court exercised jurisdiction over Prodigy’s appeal because order resolved property rights and imposed obligations |
| 3. Subject‑matter & personal jurisdiction to enter charging order | A court of competent jurisdiction may enter a charging order; Family Code judgments are enforceable as money judgments and OAG may pursue remedies in court with jurisdiction over the LLC | Only the family courts (which issued the underlying child‑support judgments) have continuing, exclusive jurisdiction; trial court lacked jurisdiction over child‑support enforcement and over Spates | Court held trial court had subject‑matter jurisdiction to enter the charging order against Spates’s membership interest; did not need Spates as a party |
| 4. Procedural/notice defects in obtaining charging order | OAG followed statutory charging‑order procedure; Business Orgs. Code does not require serving the judgment debtor with the application | OAG failed to serve Spates or give notice of the charging‑order application/hearing | Court rejected Prodigy’s procedural challenge (did not reach Spates’s personal‑notice complaints because Spates lacked appellate standing) |
Key Cases Cited
- M.O. Dental Lab. v. Rape, 139 S.W.3d 671 (Tex. 2004) (appellate courts must independently determine jurisdiction)
- Lehmann v. Har‑Con Corp., 39 S.W.3d 191 (Tex. 2001) (final‑judgment standard for appealability)
- CMH Homes v. Perez, 340 S.W.3d 444 (Tex. 2011) (finality and appellate jurisdiction principles)
- State v. Naylor, 466 S.W.3d 783 (Tex. 2015) (appellate standing tied to party of record)
- Jack M. Sanders Family Ltd. P’ship v. Fridholm Revocable Living Trust, 434 S.W.3d 236 (Tex. App.—Houston [1st Dist.] 2014) (charging‑order post‑judgment orders may not be appealable when they fail to resolve property rights or impose definite obligations)
- Dispensa v. Univ. State Bank, 951 S.W.2d 797 (Tex. App.—Texarkana 1997) (charging order lacking certainty is not a final, appealable order)
- Office of the Attorney Gen. of Tex. v. Scholer, 403 S.W.3d 859 (Tex. 2013) (OAG authority to enforce child support and collect payments)
- Endicott‑Johnson Corp. v. Encyclopedia Press, Inc., 266 U.S. 285 (U.S. 1924) (post‑judgment process may issue without additional notice to judgment debtor)