By Corte H.B. No. 18
77R1258 DAK-D
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to disclosure of assets by certain judgment debtors.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Subtitle C, Title 2, Civil Practice and Remedies
1-5 Code, is amended by adding Chapter 40 to read as follows:
1-6 CHAPTER 40. DISCLOSURE OF ASSETS BY JUDGMENT DEBTORS
1-7 Sec. 40.001. DEFINITION. In this chapter, "judgment debtor"
1-8 means a person to whom this chapter applies as described by Section
1-9 40.002.
1-10 Sec. 40.002. APPLICABILITY. (a) This chapter applies to a
1-11 person against whom a statutory county court, district court, or
1-12 statutory probate court has entered a final judgment in an amount,
1-13 subject to Subsection (d), equal to or greater than $10,000 for:
1-14 (1) fraud;
1-15 (2) constructive fraud;
1-16 (3) fraud in real estate and stock transactions under
1-17 Section 27.01, Business & Commerce Code;
1-18 (4) fraud or misrepresentation in connection with the
1-19 sale of securities;
1-20 (5) conversion;
1-21 (6) breach of fiduciary duty;
1-22 (7) conspiracy to defraud; or
1-23 (8) conspiracy to convert.
1-24 (b) This chapter applies to an attorney against whom any
2-1 unpaid sanctions have been awarded under:
2-2 (1) Rule 13 or 215, Texas Rules of Civil Procedure; or
2-3 (2) Chapter 9 or 10 of this code.
2-4 (c) This chapter does not apply to a governmental entity,
2-5 including the federal government, the state, a county, a
2-6 municipality, or a school district.
2-7 (d) The amount of the final judgment in Subsection (a):
2-8 (1) includes any actual or exemplary damages,
2-9 attorney's fees awarded for work done before entry of the final
2-10 judgment, costs, sanctions, and prejudgment interest; and
2-11 (2) does not include postjudgment interest and
2-12 attorney's fees awarded for work in relation to an appeal.
2-13 Sec. 40.003. EXEMPTION FOR INSURED JUDGMENT DEBTOR. This
2-14 chapter does not apply to a judgment debtor if:
2-15 (1) the judgment debtor is insured under a policy that
2-16 will pay the amount awarded in the final judgment; and
2-17 (2) the company carrying the insurance policy files
2-18 with the trial court in which the final judgment was rendered and
2-19 serves on the judgment creditor notice that the judgment debtor's
2-20 insurance policy will pay the amount awarded under the final
2-21 judgment:
2-22 (A) if the final judgment is not appealed, on or
2-23 before the 30th day after the date the company files the notice; or
2-24 (B) if the final judgment is appealed, on or
2-25 before the 30th day after the date that the judgment debtor
2-26 exhausts all appeals applicable to the final judgment.
2-27 Sec. 40.004. REQUIRED INITIAL DISCLOSURE. (a) Not later
3-1 than the 30th day after the date the final judgment is entered
3-2 against a judgment debtor, the judgment debtor shall serve on the
3-3 party in whose favor the final judgment is entered and file with
3-4 the court that entered the judgment:
3-5 (1) an asset disclosure that complies with Section
3-6 40.005;
3-7 (2) a copy of the judgment debtor's federal income tax
3-8 returns for the preceding two completed tax years or, if tax
3-9 returns are not available for the last completed tax year, for the
3-10 two tax years preceding the last completed tax year; and
3-11 (3) if the judgment debtor is a business or an
3-12 unincorporated sole proprietor, a copy of the last property tax
3-13 rendition or notice of appraised value received by the judgment
3-14 debtor for personal property used in connection with the business.
3-15 (b) A judgment debtor may, instead of the asset disclosure,
3-16 serve and file its current Form 10-K and 10-Q reports that it files
3-17 with the federal Securities and Exchange Commission if the judgment
3-18 debtor:
3-19 (1) is a reporting entity with the commission;
3-20 (2) is current in filing all required quarterly and
3-21 annual reports on Forms 10-K and 10-Q as required by the
3-22 commission; and
3-23 (3) has an amount of shareholders' equity that is
3-24 equal to or greater than three times the total amount that it is
3-25 required to pay under the final judgment.
3-26 Sec. 40.005. ASSET DISCLOSURE. (a) The asset disclosure
3-27 must list all assets located anywhere in the world in which the
4-1 judgment debtor has any equitable or legal title, right to
4-2 possession, or right to control, without regard to whether the
4-3 asset:
4-4 (1) is held directly in the name of the judgment
4-5 debtor, an agent, a "straw man," or a trustee; or
4-6 (2) is in bearer form.
4-7 (b) The information in the asset disclosure must be current
4-8 as of 30 days or less before the date it is served or filed.
4-9 (c) The asset disclosure must include, for those assets
4-10 described by Subsection (a):
4-11 (1) the name, account number, amount, and name and
4-12 address of the depository or holder of any fund or account,
4-13 including a fund or account with a financial institution or broker
4-14 or brokerage organization, for which the judgment debtor is a
4-15 signatory or party entitled to make withdrawals, whether in an
4-16 individual capacity or as a trustee or guardian;
4-17 (2) for stock owned or held of record wholly or
4-18 partially by the judgment debtor, or through a brokerage company or
4-19 depository institution for the benefit of the judgment debtor, the
4-20 certificate numbers, share totals, and the corporation's name and
4-21 address;
4-22 (3) for any entity that is not a corporation and in
4-23 which the judgment debtor owns an equity or voting interest,
4-24 directly or as trustee or guardian, or through a brokerage company
4-25 or depository institution for the benefit of the judgment debtor,
4-26 the ownership form, number of units, and the name and principal
4-27 business address;
5-1 (4) for each real property interest in which the
5-2 judgment debtor owns any interest, directly or as trustee or
5-3 guardian, or trust beneficiary, the street address and lot and
5-4 block number or other legal description;
5-5 (5) for each item of personal property, other than
5-6 clothing, food, and perishables, owned wholly or partially by the
5-7 judgment debtor that the judgment debtor or the spouse of the
5-8 judgment debtor originally purchased for an amount equal to or
5-9 greater than $1,000, the type, brand, and location;
5-10 (6) a description of the contents of any collection of
5-11 coins, stamps, sports cards, antique or classic automobiles,
5-12 artwork, or any other collectible or antique items owned wholly or
5-13 partially by the judgment debtor;
5-14 (7) for each person obligated to pay the judgment
5-15 debtor any money under a contract, promissory note, or judgment,
5-16 the name, address, phone number, the amount owed, and the name,
5-17 date, and any other information that identifies the contract, note,
5-18 or judgment;
5-19 (8) for each safe deposit box to which the judgment
5-20 debtor has a key or is entitled to access, the location, box
5-21 number, and a description of the contents; and
5-22 (9) if the judgment debtor is a business entity, the
5-23 date, amount, and type of stock or other consideration received by
5-24 the entity and each owner of the entity for any reorganization,
5-25 merger, disposition, or distribution of assets completed or
5-26 contracted for at any time after the 90th day before the asset
5-27 disclosure is served or filed.
6-1 (d) The asset disclosure must include, for those assets
6-2 described by Subsections (c)(1)-(7):
6-3 (1) the amount of any loan or other obligation secured
6-4 by a lien or security interest in the asset; and
6-5 (2) the name, address, and phone number of the
6-6 creditor that has the lien or security interest.
6-7 (e) The asset disclosure must include information that
6-8 identifies any transfer, assignment, sale, mortgage, pledge of
6-9 collateral, or gift of an asset described by Subsections (c) and
6-10 (d):
6-11 (1) involving an amount of money or property with an
6-12 original purchase price or current market value equal to or greater
6-13 than $1,000; and
6-14 (2) executed after the 90th day before the asset
6-15 disclosure is served or filed.
6-16 (f) The asset disclosure must include the following
6-17 statement:
6-18 "I swear under penalty of perjury that this asset disclosure
6-19 is correct and complete. I understand that if this asset
6-20 disclosure misrepresents the true value of the assets held by me at
6-21 the time I file or serve this disclosure by an amount that exceeds
6-22 five percent of that true value, a court shall conclude that this
6-23 disclosure is not correct and complete."
6-24 Sec. 40.006. SUBSEQUENT ASSET DISCLOSURES. (a) On or after
6-25 the 75th day and on or before the 90th day after the date an
6-26 initial asset disclosure is served or filed, the judgment debtor
6-27 shall file an amended asset disclosure.
7-1 (b) The amended asset disclosure must:
7-2 (1) include every item described by Section 40.005;
7-3 and
7-4 (2) specifically identify any change in an amount
7-5 equal to or greater than $1,000 to any asset.
7-6 (c) On or after the 75th day and on or before the 90th day
7-7 after the date an amended asset disclosure is served or filed, the
7-8 judgment debtor shall file a subsequent amended asset disclosure.
7-9 (d) The judgment debtor shall continue to serve or file
7-10 amended asset disclosures without regard to whether the final
7-11 judgment is being appealed.
7-12 (e) The judgment debtor shall continue to serve or file
7-13 amended asset disclosures until:
7-14 (1) the judgment debtor obtains a reversal of the
7-15 final judgment on appeal that:
7-16 (A) is not subject to further appeal; and
7-17 (B) does not affirm portions of the final trial
7-18 court judgment requiring the judgment debtor to pay an amount, as
7-19 described by Section 40.002(d), equal to or greater than $5,000; or
7-20 (2) the amount of the final judgment for which the
7-21 judgment debtor is liable, including any postjudgment interest and
7-22 attorney's fees for appeal, is paid.
7-23 Sec. 40.007. ENFORCEMENT. (a) A court may enforce this
7-24 chapter by contempt or by other appropriate sanctions.
7-25 (b) In a proceeding for perjury or aggravated perjury in
7-26 connection with information in or missing from an asset or an
7-27 amended asset disclosure, the trier of fact shall find that the
8-1 disclosure is not correct and complete if the trier of fact finds
8-2 that the asset disclosure misrepresents the true value of the
8-3 assets held by the judgment debtor at the time the judgment debtor
8-4 filed or served the disclosure by an amount that exceeds five
8-5 percent of the true value of the assets of the judgment debtor.
8-6 Sec. 40.008. ASSET DISCLOSURE NOT EXCLUSIVE. This chapter
8-7 does not prevent a judgment creditor from conducting any other
8-8 postjudgment discovery to obtain information not required by the
8-9 asset disclosure under this chapter.
8-10 Sec. 40.009. USE OF ASSET DISCLOSURE LIMITED TO THIS
8-11 CHAPTER. An asset disclosure filed or served under this chapter
8-12 may not be used as evidence against the judgment debtor who filed
8-13 or served it in any grand jury proceeding or criminal prosecution
8-14 unless the proceeding or prosecution is for perjury or aggravated
8-15 perjury in connection with information in or missing from the asset
8-16 disclosure.
8-17 SECTION 2. (a) This Act takes effect September 1, 2001, and
8-18 applies only to a final judgment:
8-19 (1) entered by a trial court on or after that date; or
8-20 (2) entered by a trial court before the effective date
8-21 of this Act if:
8-22 (A) the judgment:
8-23 (i) has not been reversed on appeal; or
8-24 (ii) has been partially reversed on appeal
8-25 and a judgment against the judgment debtor in an amount equal to or
8-26 greater than $10,000 remains affirmed; and
8-27 (B) the judgment creditor files a motion with
9-1 the court to require disclosure under Chapter 40, Civil Practice
9-2 and Remedies Code, as added by this Act.
9-3 (b) A court with which a motion is filed under Subsection
9-4 (a)(2) of this section shall order the judgment debtor to make the
9-5 disclosures required under Chapter 40, Civil Practice and Remedies
9-6 Code, as added by this Act, beginning on or before the 30th day
9-7 after the date the motion is filed.