Mitch Garrett
You have a judgment from another state but need to enforce it in Texas. Now what? If you’re like many civil litigators, the process of collecting a judgment may be surprisingly unfamiliar. So here is a quick primer.
- Locate the Judgment Debtor’s Assets.
If you must domesticate a foreign judgment, it is likely because the judgment debtor did not (and will not) voluntarily pay. Thus, time is of the essence. You must find out where your judgment debtor’s assets are (or were) as quickly as possible and with as much detail as possible. This means more than just knowing their office location, it means knowing where they bank, what vehicles or equipment they own, real estate holdings, stocks, etc. There are many experts out there who can help with these searches, and they may be cheaper for the client than attorney hours.
- Domesticate the Judgment.
While the asset location search is underway, you need to get a valid Texas judgment. Thanks to the full faith and credit clause of the United States Constitution, this is relatively easy.
In Texas, there are two methods to domesticate a judgment. The quickest and easiest is to follow the Uniform Enforcement of Judgments Act (“UEFJA”).[1] Under the UEFJA, all a creditor must do is file an authenticated copy of the judgment in a Texas court. The filing of the judgment both initiates the enforcement proceeding and creates a Texas judgment.[2] It has the same effect and is subject to the same procedures and defenses as any other judgment from that court, including the deadlines for the judgment debtor to challenge the judgment.
The second method is to file a lawsuit to enforce the judgment. Just like any other lawsuit, the judgment debtor can assert defenses, the parties can go through discovery, and eventually the court will render a judgment. While the judgment creditor may quickly obtain a default or summary judgment, the common law procedure necessarily takes more time. However, it may be advantageous for if you want to add defendants for a fraudulent transfer.
- Conduct Post-Judgment Discovery.
If your asset search did not find sufficient assets to satisfy the judgment, you need to conduct post-judgment discovery. Rule 621a allows discovery using the same methods as pre-trial matters. But when collecting a judgment, the breadth is likely much wider. While you may not have had a good reason to depose an affiliated entity in the underlying litigation, discovering where assets have gone makes those witnesses or entities much more relevant. Of course, don’t forget to depose the actual judgment debtor. And if the judgment debtor does not show up to the deposition, you can still get an order compelling attendance, plus your fees.
- Collect!
Once you have located the assets and domesticated the judgment, it is time to collect. Generally, you must wait thirty days after the judgment is entered to collect. This gives the judgment debtor time to appeal the judgment. But if you have reason to believe that the judgment debtor will use those thirty days to move assets, you can request that collections begin before thirty days.
While details for each procedure are beyond what can be covered here, there are two types of collection proceedings generally: (1) execution; and (2) garnishment. Execution is an order on the judgment debtor to turn over assets or have them sold.[3] Garnishment is an order requiring a third party to turn over property of the debtor in satisfaction of the judgment.[4] The vast majority of garnishments are served on banks. If it is a Texas bank, make sure to file in the county where the bank resides. The garnishee (i.e., the bank) may file an answer, and the judgment debtor may claim exemptions. Either procedure must be applied for by the judgment creditor and—once issued by the Court—served by a sheriff or constable.
[1] Tex. Civ. Prac. & Rem. Code § 35.001, et seq.
[2] Walnut Equip. Leasing Co. v. Wu, 920 S.W.2d 285, 286 (Tex.1996).
[3] Tex. R. Civ. P. 621–656.
[4] See Tex. Civ. Prac. & Rem. Code § 63.001, et seq.; Tex. R. Civ. P. 657–679b.
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Mitch Garrett is a Senior Associate at Ryan Law Partners LLP where his practice focuses on commercial and financial fraud litigation. He can be reached at mitch@ryanlawpartners.com.
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