Prejudgment Remedies in Texas
This article addresses four prejudgment remedies available to a creditor in Texas: (1) injunctive relief; (2) sequestration; (3) attachment; and (4) garnishment. Prejudgment remedies allow a creditor to secure money or property before obtaining a judgment, which can oftentimes take a while. Johnsen Law advises both creditors and debtors with respect to prejudgment remedies. To learn more, contact us now.
Injunctive relief is intended to preserve the status quo pending resolution of the litigation. Preliminary injunctive relief is typically obtained in two steps. First, the creditor requests a temporary restraining order, which is typically sought without notice to the debtor so as to prevent the debtor from dissipating or transferring assets. Second, the creditor requests a temporary injunction, which the court will set for evidentiary hearing no more than 14 days after the temporary restraining order is entered. Unlike with the hearing on the temporary restraining order, the debtor must be given notice of the temporary-injunction hearing. The elements of injunctive relief are: (1) a cause of action against the debtor; (2) a probable right to the relief sought; and (3) a probable, imminent, and irreparable injury.
A creditor can use sequestration to secure the debtor’s property that is subject to the creditor’s security interest. This property must be in immediate danger of being concealed, disposed-of, ill-treated, wasted, destroyed, or removed from the court’s jurisdiction. The creditor typically requests the sequestration without notice to the debtor so as to protect the property from the debtor. If the court issues a writ of sequestration, it will command the sheriff or constable to seize and preserve the property subject to further order of the court. In certain circumstances, the debtor or the creditor may be able to take possession of the seized property. If the property is perishable, it may be subject to sale prior to final judgment.
A creditor can use attachment to secure the debtor’s property. Unlike with sequestration, such property does not need to be subject to the creditor’s security interest. The creditor must show:
(1) the debtor is justly indebted to the creditor;
(2) the creditor is not seeking the attachment to injure or harass the debtor;
(3) the creditor will probably lose the debt unless a writ of attachment is issued; and
(4) any of the following specific grounds exist:
a. the debtor is a nonresident or foreign corporation;
b. the debtor is about to move from Texas permanently and has refused to pay or secure the debt;
c. the debtor is in hiding so that service of process cannot be obtained;
d. the debtor has hidden or is about to hide property to defraud creditors;
e. the debtor is about to remove property from Texas without leaving a sufficient amount to pay debts;
f. the debtor is about to remove property from the county in which the suit is brought with the intent to defraud creditors;
g. the debtor has disposed of or is about to dispose of property with the intent to defraud creditors;
h. the debtor is about to convert property into money to place it beyond the reach of creditors; or
i. the debtor owes the creditor for property obtained by the debtor under false pretenses.
The creditor typically requests the attachment without notice to the debtor so as to protect the property from the debtor. If the court issues a writ of attachment, it will command the sheriff or constable to seize the property in the same manner as a postjudgment execution. In certain circumstances, the debtor may be able to take possession of the seized property. If the property is perishable, it may be subject to sale prior to final judgment.
A creditor can use garnishment to secure the debtor’s property that is held by a third party, the garnishee. Typically this involves the debtor’s funds held in a bank account. The creditor typically requests the garnishment without notice to the debtor so as to prevent the debtor from moving the funds. The creditor must generally show that: (1) the debt is just, due, and unpaid; (2) within the creditor’s knowledge, the debtor does not possess property in Texas subject to execution sufficient to satisfy the debt; and (3) the garnishment is not sought to injure the debtor or the garnishee. If served with a writ of garnishment, the garnishee must freeze all funds or property of the debtor up to the amount set forth by the court. The garnishee is entitled to its costs and reasonable attorneys’ fees in addressing the writ of garnishment.