Face Challenges Confidently

696 Fitzgerald v. Cadle Co., No. 12-16-00338-CV, 2017 WL 4675513 (Tex. App.—Tyler Oct. 18, 2017, no pet. h.)

Monday, August 27th, 2018

Richard F. Brown

The following is not a legal opinion. You should consult your attorney if the case may be of significance to you.

Fitzgerald v. Cadle Co., No. 12-16-00338-CV, 2017 WL 4675513 (Tex. App.—Tyler Oct. 18, 2017, no pet. h.) (mem. op.), held that royalty payments originating from a mineral lease on homestead property are exempt property for purposes of a turnover order. Judgment Creditor obtained a turnover order requiring judgment Debtor to turn over royalty payments paid to Debtor under a mineral lease and requiring Debtor to make financial disclosures. It was stipulated that the mineral interests were homestead and there was no evidence that Debtor held any other property. Debtor appealed arguing that the royalty payments were protected proceeds from homestead property and that the disclosure requirements contained in the order exceeded the scope of the turnover statute.

The parties stipulated that the property and mineral interests were on Debtor’s homestead property. As a general rule, only stipulations that are ambiguous or unclear should be disregarded by the trial court. Here, the court found that the stipulation was clear and not ambiguous and the trial court was bound by it. Homestead property is exempt from turnover. The homestead exemption extends to the minerals owned by the homestead claimant under the claimed land and to proceeds. Therefore, it was an abuse of discretion for the trial court to deny Debtor’s motion to vacate the turnover order.

As to that part of the order requiring financial disclosures, the court held that the turnover statute does not specifically provide that a trial court can compel a judgment debtor to execute documents, but the phrase or other means (as used in the statute) gave the trial court authority to do so. However, this authority only extended to non-exempt property. Because the order in this case required disclosures as to exempt homestead property and no other property, the court held that the trial court could not order disclosures and periodic accounting.

The significance of the case is the holding that royalty payments from homestead property are exempt property not subject to a turnover order.