Tareco Properties, Inc. v. L&S Minerals, LLC et al
MEMORANDUM OPINION and ORDER. IT IS ORDERED that 36 Plaintiff Tareco Properties, Inc.s Motion for Summary Judgment and 45 Plaintiff's Second Motion for Summary Judgment on Defendants' Newly Asserted Affirmative Defenses are GRANTED. [ 31] Defendant Steve Morriss and Karen Morriss' Motion for Summary Judgment is DENIED. It is further ORDERED that the Pretrial Conference scheduled for August 28, 2017, Jury Selection scheduled for September 18, 2017 and Jury Trial sch eduled for September 25, 2017 are CANCELED. It is further ORDERED that Defendants Steve and Karen Morriss shall immediately turnover their claim to the property, described as 92.71 acres of land, more or less, situated in Section 23 of the D on Thomas Quevado Survey, A-18, Smith County, Texas being the same land described in that certain Warranty Deed dated October 20, 1917 from J.H. Herndon, Executor of the Estate of W.S. Herndon to Juddie Parks, recorded in Volume 133, Page 441 of the Deed Records of Smith County, Texas. It is further ORDERED that Defendants shall turn over to Plaintiff all documents or records in their possession or control relevant to the claim. It is finally ORDERED that Plaintiff may file a motion seeking to recover attorneys fees and costs supported by appropriate documentation. Signed by Magistrate Judge K. Nicole Mitchell on 8/9/2017. (rlf)
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF TEXAS
TARECO PROPERTIES, INC.
L&S MINERALS, LLC, et al.
CIVIL ACTION NO. 6:16-CV-482
MEMORANDUM OPINION AND ORDER
Before the Court are Defendant Steve Morriss and Karen Morriss’ Motion for Summary
Judgment (ECF 31), Plaintiff Tareco Properties, Inc.’s Motion for Summary Judgment (ECF 36),
Plaintiff Tareco Properties, Inc.’s Motion to Strike Defendants’ Reply (ECF 39), and Plaintiff’s
Second Motion for Summary Judgment on Defendants’ Newly Asserted Affirmative Defenses
(ECF 45). The Court conducted a hearing on the motions on June 22, 2017. At the hearing, L&S
Minerals stated that it does not take a position on the pending motions. Having considered the
briefing and arguments of counsel, Defendants’ Motion for Summary Judgment is DENIED and
Plaintiff’s Motions for Summary Judgment are GRANTED.
Plaintiff initiated this lawsuit by filing an Application for Turnover Order on June 1, 2016.
In the Application for Turnover Order, Plaintiff asserts that it is the judgment creditor for two
judgments registered in this Court: (1) Civil Action No. 6:00-mc-24, Tareco Properties, Inc. v.
Steve Morriss, et al. (referred to as “the Steve judgment”); and (2) Civil Action No. 6:07-mc-6,
Tareco Properties, Inc. v. Karen Morriss, et al. (referred to as “the Karen judgment”). As of
January 10, 2017, the amount due on the Steve judgment is $4,431,666.88 and the amount due on
the Karen judgment is $856,561.96. No payments have been made on the Steve judgment and
only $95.49 has been paid on the Karen judgment.
The Steve judgment arises out of a promissory note that was guaranteed by Steve Morriss.
FDIC acquired the promissory note when the lender failed. Judgment on the note was originally
entered in the Southern District of Texas, Laredo Division. The judgment was assigned by FDIC
to Plaintiff on September 30, 1999. The Karen judgment arises out of a judgment obtained by
Plaintiff against Karen Morriss in the Middle District of Tennessee, Nashville Division, dated
September 30, 2004.
Plaintiff argues that Defendants Steve and Karen Morriss have failed to make payments on
the judgments and have avoided payment on the judgments by way of property transfers to hinder
collection. On June 16, 2014, Steve and Karen Morriss executed a quitclaim deed of 92.71 acres
of property in Smith County to Defendant L&S Minerals. As a result, Plaintiff seeks to use the
identified property to satisfy the judgments pursuant to TEX. CIV. PRACT. & REM. CODE § 31.002.
According to Plaintiff, Defendants admitted that they transferred the land in Smith County to L&S
only to “hold” it for them and no consideration was exchanged. L&S Minerals was established to
hold mineral interests owned by Lisa Ray and Steve Morriss. The Morrisses have allegedly asked
L&S Minerals to pay a bonus of $41,719.50 and to quitclaim deed the property back to them.
Defendants Steve and Karen Morriss (“the Morrisses”) filed a motion for summary
judgment asserting that the identified property is not in their possession and is not subject to their
control. In addition, the Morrisses submit that the Steve judgment has lapsed and is no longer
valid or subsisting. The Morrisses state that they transferred the property to L&S Minerals via
quitclaim deed on June 16, 2014, effective June 2, 2014. They assert that they subsequently
requested a return of the property on September 18, 2015, but L&S Minerals refused to return the
property. According to the Morrisses, the transfer ended their ownership interest in the property
and they have no control over the property. L&S Minerals is a Limited Liability Corporation with
one member—Lisa J. Ray as trustee of the Bud Morriss Family Trust. In addition, the Morrisses
argue that the Steve Judgment has lapsed because it was originally entered on June 23, 1993. The
Morrisses submit that the judgment was only effective for 20 years pursuant to 28 U.S.C. §
3201(c)(1). The Morrisses assert that Plaintiff has not provided any evidence that it obtained a
valid lien and/or renewed that lien.
In response, Plaintiff notes that the Morrisses do not contest that Tareco Properties, Inc.
owns the judgments at issue. Even though the Morrisses are not the current owners of the property
at issue, Plaintiff contends that they have a claim to the property because the transaction to transfer
the property lacked consideration. To evidence that claim, Plaintiff submitted a copy of a letter
dated September 18, 2015 that was sent by the Morrisses’ attorney to counsel for Lisa Ray. Among
other things, the letter states that the agreement between the Morrisses and L&S Minerals at the
time of the quitclaim deed was that the Morrisses would be paid a bonus, valued at $41, 719.50,
in exchange for the donation of the property.1 The Morrisses sought payment for their share of the
See Plaintiff, Tareco Properties, Inc.’s, Response to Steve Morriss and Karen Morriss’ Motion for Summary
Judgment and Brief in Support Thereof, ECF 34-17, Exhibit 18, at *3. The letter states in relevant part:
As you know, Lisa and Steve have established L&S Minerals, LLC to hold their joint mineral
interests. In order to simplify some of these mineral holdings and payment of bonus’ [sic], Steve
and Karen quitclaimed some mineral interests, which they owned individually outside of either
Lisa and Steve’s father’s or mother’s estate to L&S. Subsequently, Carrizo Oil & Gas, Inc. paid a
bonus for mineral interests in L&S Minerals, LLC which included the 92.71 acres which had been
quitclaimed by Steve and Karen. I have attached the relevant documentation of this transaction.
Steve and Karen were willing to donate the mineral interests themselves to L&S but, consistent
with the agreement Steve and Lisa had at the time of the Quitclaim deed, did need to be paid the
bonus money. Keith Dollahite reviewed this and notified Lisa that Steve and Karen were entitled
to the $41,719.50 in bonus.
bonus and the return of the property.2 Plaintiff submits that a debtor cannot assert a claim to
property and then seek to protect that claim from creditors at the same time. The Morrisses’ claim
to the property is an unadjudicated cause of action that is “property” as contemplated by the
turnover statute. Plaintiff argues that the Morrisses’ claim to the property is subject to turnover.
In addition, Plaintiff submits that the statute relied on by the Morrisses to argue that the Steve
judgment lapsed—28 U.S.C. § 3201—only applies to procedures for the United States to collect
its debts. Plaintiff argues that a writ of execution every ten years maintains a judgment under
The Morrisses filed a reply adding a new allegation that they signed a release of any claim
they may have to the property that was transferred to L&S Minerals. The release was to resolve
issues during probate of the estate of Ima Jean Morriss. The release is dated November 16, 2016.
The Morrisses argue that the release shows that they do not have any claim to the property.
Plaintiff filed a Motion to Strike Defendants’ Reply. Plaintiff asserts that the reply
improperly raises a defense concerning the release that was not previously disclosed. The
Morrisses did not file a response to the motion to strike. Instead, the Morrisses filed an Amended
Answer adding a defense concerning the release.
Plaintiff filed its own Motion for Summary Judgment against L&S Minerals and the
Morrisses. For the same reasons previously raised in response to the Morrisses’ motion for
summary judgment, Plaintiff seeks a summary judgment for immediate turnover of the property.
In response to the Amended Answer, Plaintiff also filed a Second Motion for Summary Judgment
on Defendants’ Newly asserted Affirmative Defenses.
Defendants L&S Minerals and the
Morrisses did not file a response to either motion for summary judgment filed by Plaintiff.
Id. (“Accordingly, Steve and Karen want to be paid for their share of the bonus and have the minerals quitclaimed
back to them”).
Pursuant to Local Rule CV-7(d), “[a] party’s failure to oppose a motion in the manner prescribed
 creates a presumption that the party does not controvert the facts set out by the movant and has
no evidence to offer in opposition to the motion.”
At the hearing on the motions, L&S Minerals stated that it did not respond to the motions
because it does not take a position and it will do whatever the Court tells it to do with the property.
L&S Minerals also stated that, due to the tense relationship between Steve Morriss and Lisa Ray,
it did not believe anything was actually transferred by the quitclaim deed at the time of the transfer
and it does not have a problem turning over the property.
SUMMARY JUDGMENT STANDARD
The Court may only grant a motion for summary judgment when there is no genuine
dispute of material fact and the moving party is entitled to summary judgment as a matter of law.
FED. R. CIV. P. 56(a). A genuine dispute as to a material fact exists “if the evidence is such that a
reasonable jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A “material fact” is one that might
affect the outcome of the suit under governing law. Id. The party seeking summary judgment
always bears the initial responsibility of informing the district court of the basis for its motion and
identifying those portions of the pleadings, depositions, answers to interrogatories, and admissions
on file, together with the affidavits, if any, which it believes demonstrate the absence of a genuine
issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 2553, 91
L.Ed.2d 265 (1986).
The moving party, however, “need not negate the elements of the nonmovant’s case.”
Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (en banc). The movant’s burden is
only to point out the absence of evidence supporting the nonmoving party’s case. Stults v. Conoco,
Inc., 76 F.3d 651, 655 (5th Cir. 1996). Once the moving party makes a properly supported motion
for summary judgment, the nonmoving party must look beyond the pleadings and designate
specific facts in the record showing that there is a genuine issue for trial. Id. All facts and
inferences are viewed “in the light most favorable to the nonmoving party.” McFaul v. Valenzuela,
684 F.3d 564, 571 (5th Cir. 2012). “Summary judgment may not be thwarted by conclusional
allegations, unsupported assertions, or presentation of only a scintilla of evidence.” Id.
The turnover statute provides that a judgment creditor is entitled to aid from the Court to
reach property that the judgment debtor owns, including present or future rights to property, “that:
(1) cannot readily be attached or levied on by ordinary legal process; and (2) is not exempt from
attachment, execution, or seizure for the satisfaction of liabilities.” TEX. CIV. PRACT. & REM.
CODE § 31.002. “An unadjudicated cause of action is generally considered ‘property’ that may
be the subject of an order under the turnover statute.” See Assoc. Ready Mix, Inc. v. Douglas, 843
S.W.2d 758, 762 (Tex.App.—Waco 1992, orig. proceeding). An unadjudicated cause of action
cannot be readily attached or levied. As a result, the Court can order turnover of a judgment
debtor’s claim in another proceeding. See Franch v. HP Locate, LLC, 2017 WL 507398, at *2
(N.D.Tex. Jan. 19, 2017) (Report and Recommendation adopted in 2017 WL 495954 (N.D.Tex.
Feb. 7, 2017)); see also Colorado Meadowlark Corp. v. Sage Physician Partners, Inc., 2013 WL
3196434, at *2 (N.D.Tex. June 25, 2013) (granting turnover of defendant’s claims and interest in
a bankruptcy proceeding). The Morrisses have not disputed that their claim for the return of the
subject property from L&S Minerals is not exempt and cannot be readily attached or levied on, as
required for the turnover statute to apply.
Instead, in their reply brief the Morrisses raised a new defense concerning the releases they
signed on November 16, 2016. Notably, the releases are dated nearly two-and-one-half years after
the property was transferred and five months after this lawsuit was filed. Plaintiff seeks to strike
the reply brief because the defense was not raised in the Morrisses’ pleadings. The Morrisses
subsequently amended their answer to include a defense concerning the releases. The releases,
however, are not sufficient to release the claim the Morrisses have against L&S Minerals regarding
the property at issue.
The releases at issue were executed in conjunction with the settlement of the estate of Ima
Jean Morriss. The releases state:
Steve Morriss [Karen Morriss], Individually and in all relevant capacities, hereby
fully and finally RELEASES, ACQUITS, AND FOREVER DISCHARGES Lisa
Ray, Karen Morriss [Steve Morriss], Tom Koehler, Ken Calvert, L&S Minerals,
LLC, The Consortium Firm, C&M Meats, Inc., and the Estates of Ima Jean Morriss
and T.M. Morriss. This release shall apply to beneficiaries, assigns, and related
entities. Steve Morriss [Karen Morriss] further covenants not to assert in any
manner against any of such persons or entities released hereby, any and all actual
or potential claims held by Steve Morriss [Karen Morriss] against said persons or
entities released hereby, whether known or unknown, and/or any suits, demands,
causes of action, charges or grievances of any kind or character whatsoever,
heretofore or hereafter accruing for or because of any matter done, omitted or
suffered to be done by any such party hereto prior to and including the date hereof.
See Defendant Steve Morriss and Karen Morriss’ Reply to Tareco Properties, Inc.’s Response to
Defendants’ Motion for Summary Judgment and Brief in Support Thereof, Exhibits A and B, ECF
38-1 and 38-2. Claims in existence at the time of the execution of a release are not discharged
unless they are clearly within the subject matter of the release. Victoria Bank & Trust Co. v. Brady,
811 S.W.2d 931, 938 (Tex. 1991). To be legally enforceable, the release must “mention” the claim
or claims being released. Memorial Medical Center v. Keszler, 943 S.W. 2d 433, 434 (Tex. 1997).
The Fifth Circuit has interpreted the requirement for the release to “mention” the claim to “not
require particularized enumeration or detailed description, only that the claim being released come
within the express contemplation of the release provision when viewed in context of the contract
in which the release provision is contained.” Stinnett v. Colorado Interstate Gas Co., 227 F.3d
247, 255 (5th Cir. 2000).
Here, the releases, executed more than two years after the property transfer, accompanied
a settlement agreement concerning the resolution of an estate.
The settlement agreement is
unrelated to the property transfer to L&S Minerals. No evidence has been proffered showing that
the Morrisses’ claim to the subject property due to a lack of consideration was within the express
contemplation of the release provision when viewed in context of the agreement to settle Ima Jean
Morriss’ estate. This claim is not clearly within the subject matter of the releases and is not
discharged by the releases.
The Morrisses additionally argue that the Steve judgment lapsed pursuant to 28 U.S.C. §
3201 of the FDCPA. The FDCPA “provides the exclusive civil procedures for the United States
to recover a judgment on a debt.” 28 U.S.C. § 3001(a)(1). In this case, the Steve judgment is a
judgment on a promissory note that was acquired by the FDIC when the lender failed. Where, as
here, a private party assignee of the FDIC seeks to execute on a judgment entered in favor of the
FDIC against a private borrower, where the FDIC acquired the loan through the failure of the
private lender, the loan is not a “debt” as defined in the Federal Debt Collection Procedure’s Act.
Sobranes Recovery Pool I, LLC v. Todd & Hughes Construction Corp., 509 F.3d 216, 223–26 (5th
Cir. 2007). As a result, § 3201 is not applicable here.
State law supplies the procedure for judgment execution if a federal statute is not
applicable. FED. R. CIV. P. 69(a). Pursuant to TEX. CIV. P. PRACT. & REM. CODE § 34.001, a
judgment becomes dormant after ten years unless a writ of execution is issued within ten years
after rendition of a judgment. Plaintiff submitted uncontroverted summary judgment evidence
showing that the Steve judgment was originally filed on June 23, 1993 in the Southern District of
Texas, Laredo Division. It was then filed in this Court on January 24, 2001. Writs of execution
issued on January 24, 2001, February 23, 2007, May 30, 2007 and February 17, 2017. Here, a writ
of execution was entered within ten years after the entry of judgment and was renewed within
every ten years thereafter.
There are no genuine issues of material fact in this case. By way of uncontroverted
summary judgment evidence, Plaintiff has shown that the Morrisses have a claim to the identified
property and that claim is subject to turnover. Plaintiff is entitled to judgment as a matter of law,
and Plaintiff’s application for turnover should be granted. Plaintiff’s motions for summary
judgment should be granted, and Defendants’ motion for summary judgment should be denied. It
ORDERED that Plaintiff Tareco Properties, Inc.’s Motion for Summary Judgment (ECF
36) and Plaintiff’s Second Motion for Summary Judgment on Defendants’ Newly Asserted
Affirmative Defenses (ECF 45) are GRANTED. Defendant Steve Morriss and Karen Morriss’
Motion for Summary Judgment (ECF 31) is DENIED. It is further
ORDERED that the Pretrial Conference scheduled for August 28, 2017, Jury Selection
scheduled for September 18, 2017 and Jury Trial scheduled for September 25, 2017 are
CANCELED. It is further
ORDERED that Defendants Steve and Karen Morriss shall immediately turnover their
claim to the property, described as 92.71 acres of land, more or less, situated in Section 23 of the
Don Thomas Quevado Survey, A-18, Smith County, Texas being the same land described in that
certain Warranty Deed dated October 20, 1917 from J.H. Herndon, Executor of the Estate of W.S.
Herndon to Juddie Parks, recorded in Volume 133, Page 441 of the Deed Records of Smith County,
Texas. It is further
ORDERED that Defendants shall turn over to Plaintiff all documents or records in their
possession or control relevant to the claim. It is finally
ORDERED that Plaintiff may file a motion seeking to recover attorney’s fees and costs
supported by appropriate documentation.
So ORDERED and SIGNED this 9th day of August, 2017.
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