RECIPROCITY HOLDINGS LLC v. RECENS INC (2026)

OPINION

Reciprocity Holdings, LLC appeals the trial court's order appointing a receiver. In two issues, Reciprocity challenges the trial court's jurisdiction and the ex parte nature of the appointment. We reverse and render.

Background

Reciprocity, a consulting group that serves companies in the medical industry, contracted to provide Appellee Recens, Inc. with services related to the launch of Recens's new medical device. A dispute arose wherein each party alleged the other breached the parties' agreements. The parties' claims were submitted to arbitration and an evidentiary hearing occurred on multiple dates in May, June, and July 2025. On July 18, 2025, the arbitrator issued a final award in favor of Recens, including $5,638,301.30 in actual damages, $533,789.72 in attorneys' fees, $99,114.20 in costs, and pre-and post-judgment interest. The arbitrator's award also required Reciprocity to deliver certain property in its possession belonging to Recens.

Thereafter, Recens moved to confirm the arbitration award in a Travis County district court, while Reciprocity moved to vacate the award. On October 1, the district court granted Recens's motion and denied Reciprocity's. On November 12, the district court issued a final judgment confirming the arbitration award and awarding additional attorneys' fees for the confirmation proceeding. Reciprocity timely appealed, and that appeal remains pending. However, Reciprocity did not seek to supersede enforcement of the judgment and did not pay the judgment.

On February 2, 2026, Recens filed a verified application for post-judgment receivership (the Application) in a Smith County district court, citing as the basis for its request Sections 31.002 and 64.001 of the Texas Civil Practice and Remedies Code. On February 3, the trial court appointed attorney James W. Volberding as receiver, set bond in the amount of $100.00, and ordered Reciprocity to turn over documents, information, books and records, and specified items of real and personal property (the Order). The Order further stated:

The Court takes judicial notice of its file and the underlying proceedings. Based on the pleadings and the evidence before this Court, the Court finds:

a. The Court has subject matter jurisdiction over this action and personal jurisdiction over the parties to this case.

b. The Judgment Debtor owns substantial non-exempt property which is not exempt from execution;

c. There exists an unpaid final judgment against the Judgment Debtor.

d. The property of the Judgment Debtor is in danger of being lost, concealed, transferred, removed, or materially injured.

e. The Judgment Debtor is aware of the Judgment but refuses to pay it.

f. All other legal and equitable remedies are inadequate to protect the nonexempt property of the Judgment Debtor and to satisfy the judgment.

g. All other requirements of law have been complied with.

h. The appointment of a Receiver is necessary to conserve the non-exempt property and business of the Judgment Debtor and avoid damage to interested parties.

i. Irreparable damage will ensue to the Judgment Creditors as subject to the Receivership Estate unless there is an immediate liquidation of the property of the Judgment Debtor.

j. This Order of appointment of a Receiver is necessary, appropriate, and authorized pursuant to:

i. Texas Civil Practice and Remedies Code, chapter 31;

ii. Texas Civil Practice and Remedies. Code, chapter 64;

iii. Texas Business Organizations Code, chapter 11;

iv. Texas common law.

This proceeding followed.

Jurisdiction

In its first issue, Reciprocity argues that the trial court lacked jurisdiction to order a receivership of Reciprocity's property.

Standard of Review

“Jurisdiction” refers to the power of a court, under the Constitution and laws, to determine the merits of an action between parties and to render a judgment. Gordon v. Jones, 196 S.W.3d 376, 382 (Tex. App.—Houston [1st Dist.] 2006, no pet.). Subject matter jurisdiction refers to the court's power to hear a particular type of suit. Id. Whether a court has subject matter jurisdiction is a question of law, which we review de novo. Wagner v. D'Lorm, 315 S.W.3d 188, 191 (Tex. App.–Austin 2010, no pet.). Subject matter jurisdiction is essential to the authority of a court to decide a case, is never presumed, and cannot be waived. See Texas Ass'n of Bus. v. Tex. Air Control Bd., 852 S.W.2d 440, 443-44 (Tex. 1993). When a court lacks subject-matter jurisdiction, the appropriate disposition is dismissal. Tex. Dep't of Transp. v. Callaway, 720 S.W.3d 206, 216 (Tex. App.—Houston [14th Dist.] 2025, no pet.).

“A challenge to a trial court's subject-matter jurisdiction is fundamental and may be raised for the first time on appeal from a final judgment—i.e., challenges to subject-matter jurisdiction are exempt from the preservation-of-error requirement.” Garcia v. Kubosh, 377 S.W.3d 89, 106 (Tex. App.—Houston [1st Dist.] 2012, no pet.) (citing Tex. Air Control Bd., 852 S.W.2d at 445). When subject matter jurisdiction is raised for the first time on appeal, it is reviewed similarly to a plea to the jurisdiction. Green Tree Servicing, LLC v. Woods, 388 S.W.3d 785, 794 (Tex. App.–Houston [1st Dist.] 2012, no pet.). Additionally, the Texas Supreme Court has recognized that, when reviewing subject-matter jurisdiction for the first time on appeal, there is no opportunity to cure the defect. Id. (citing Tex. Air Control Bd., 852 S.W.2d at 446. Accordingly, we must construe the pleadings in favor of the pleading party, and if necessary, review the entire record to determine if any evidence supports jurisdiction. Id.

Applicable Law

Chapter 11 of the Texas Business Organizations Code is entitled “Winding Up and Termination of Domestic Entity.” Under Section 11.401, “[a] receiver may be appointed for a domestic entity or for a domestic entity's property or business only as provided for and on the conditions set forth in this code.” Tex. Bus. Orgs. Code Ann. § 11.401. Section 11.402(b) provides:

A district court in the county in which the registered office or principal place of business of a domestic entity is located has jurisdiction to:

(1) appoint a receiver for the property and business of a domestic entity for the purpose of rehabilitating the entity as provided by Section 11.404; or

(2) order the liquidation of the property and business of a domestic entity and appoint a receiver to effect that liquidation as provided by Section 11.405.

Id. § 11.402(b). However, Sections 11.402(a) and 11.403 provide that any court “that has jurisdiction over specific property of a domestic or foreign entity” may appoint a receiver in an action by a creditor to subject the property to the creditor's claim if certain other requirements are met. Id. § 11.403.

Section 31.002 of the Texas Civil Practice and Remedies Code entitles a judgment creditor to “aid from a court of appropriate jurisdiction, including a justice court,” to reach nonexempt property belonging to the judgment debtor to obtain satisfaction on the judgment. Tex. Civ. Prac. & Rem. Code Ann. § 31.002. Such aid may include, but is not limited to, the issuance of a turnover order and the appointment of a receiver. Id.; see also Remote Control Hobbies, L.L.C. v. Airborne Freight Corp., No. 14-12-01088-CV, 2014 WL 1267073, at *3 (Tex. App.—Houston [14th Dist.] Mar. 27, 2014, no pet.) (mem. op.). The statute does not define “court of appropriate jurisdiction,” but at least one Texas court ruled that, before a bankruptcy proceeding commenced, the court of appropriate jurisdiction for a turnover proceeding was the trial court that rendered the underlying judgment. Haden v. David J. Sacks, P.C., 332 S.W.3d 523, 531 (Tex. App.—Houston [1st Dist.] 2009, pet. denied). This finding comports with axiomatic principles of Texas law—although a Texas court's jurisdiction over the subject matter of and the parties to a suit is generally exhausted after a judgment becomes final, that trial court has an affirmative duty to enforce its judgment, and the court retains statutory and inherent authority to do so. See Tex. R. Civ. P. 308; In re Crow–Billingsley Air Park, Ltd., 98 S.W.3d 178, 179 (Tex. 2003); BancorpSouth Bank v. Prevot, 256 S.W.3d 719, 724 (Tex. App.—Houston [14th Dist.] 2008, no pet.). “The court's post-judgment power to enforce its judgment and to aid the judgment creditor in his efforts to collect on that judgment can last until the judgment is satisfied.” Mitchell v. Turbine Res. Unlimited, Inc., 523 S.W.3d 189, 197 (Tex. App.—Houston [14th Dist.] 2017, pet. denied). And a post-judgment receivership is an ongoing proceeding to enforce a judgment. Id.; see also Gutman v. De Giulio, No. 05-20-00735-CV, 2022 WL 574968, at *3 (Tex. App.—Dallas Feb. 25, 2022, no pet.) (mem. op.).

We review issues of statutory construction de novo. Lippincott v. Whisenhunt, 462 S.W.3d 507, 509 (Tex. 2015). Our objective in construing a statute is to give effect to the legislature's intent, which requires us to first look to the statute's plain language. Id. If that language is unambiguous, we interpret the statute according to its plain meaning. Id. We apply the common meaning of the words of a statute “unless a different meaning is apparent from the context or the plain meaning leads to absurd or nonsensical results.” Tex. Tech Univ. Health Scis. Ctr. - El Paso v. Niehay, 671 S.W.3d 929, 939 (Tex. 2023) (quoting KMS Retail Rowlett, LP v. City of Rowlett, 593 S.W.3d 175, 183 (Tex. 2019)). We “presume the Legislature chose the statute's language with care, purposefully choosing each word, while purposefully omitting words not chosen.” In re CenterPoint Energy Hous. Elec., LLC, 629 S.W.3d 149, 158–59 (Tex. 2021) (orig. proceeding). Only if the text of a statute is ambiguous, or the plain meaning leads to absurd results, may we consult extratextual factors. Tex. Mut. Ins. Co. v. Ruttiger, 381 S.W.3d 430, 452 (Tex. 2012).

When deciding whether overlapping provisions of two different statutes can concurrently operate, we will construe the different provisions in a way that harmonizes rather than conflicts. Tex. Gov't Code Ann. § 311.026(a); In re Mem'l Hermann Hosp. Sys., 464 S.W.3d 686, 716 (Tex. 2015). When the provisions are irreconcilable, the general rule is that the terms of the later-enacted statute should control. In re Mem'l Hermann Hosp. Sys., 464 S.W.3d at 716. If two statutes irreconcilably conflict, and one statute is a general provision and the other is more specific, the specific statute prevails as an exception to the general provision, unless (1) the Legislature enacted the general provision later than the specific statute, and (2) the Legislature manifestly intended that the general provision prevail. Tex. Gov't Code Ann. § 311.026(b).

Analysis

The parties do not dispute that Reciprocity is a “domestic entity” as set forth in the Texas Business Organizations Code. Tex. Bus. Orgs. Code Ann. § 1.002(18). Reciprocity argues that Section 11.402(b) of the Texas Business Organizations Code “places exclusive jurisdiction over a receivership of Reciprocity's property in Travis County.” We note that Recens is not seeking to effect rehabilitation or liquidation of Reciprocity but seeks to obtain satisfaction on a judgment.

Our sister court addressed an argument similar to Reciprocity's in Remote Control Hobbies, wherein the judgment debtor alleged that the judgment creditor brought its turnover application in the wrong county and court. 2014 WL 1267073, at *3. In that case, Airborne Freight filed its application in the same county court at law of Harris County that rendered the underlying judgment, but Remote Control argued that Section 11.402(b) required the application to be filed in a district court in Jefferson County, where Remote Control's registered office or principal place of business was purportedly located. Id. The appellate court disagreed, stating, “These statutes apply to the winding up and termination of Texas entities, not a trial court's jurisdiction to appoint receivers regarding the trial court's own judgments.” Id.

In this Court's previous opinion, Custom Coils, Inc. v. Nash, we affirmed the trial court's order appointing a receiver on the basis that the appellants failed to preserve error; further, in that case, the trial court had subject matter jurisdiction. No. 12-25-00164-CV, 2026 WL 308270, at *4 (Tex. App.—Tyler Feb. 4, 2026, no pet.) (mem. op.). Moreover, in that case, similar to Remote Control Hobbies, the appellee moved for appointment of a receiver in the same trial court that rendered the underlying judgment, implicating the trial court's authority to enforce its own judgment. Neither of these circumstances are present here; in particular, the court in which Reciprocity sought appointment of a receiver was not the court which rendered the underlying judgment.

Section 31.002 of the Texas Civil Practice and Remedies Code generally addresses a judgment creditor's ability to seek a receivership from any court of “appropriate jurisdiction” to reach nonexempt property belonging to a judgment debtor. But Section 11.401 of the Texas Business Organizations Code is specific to receiverships over “a domestic entity or for a domestic entity's property or business,” and states that such receiverships are permissible “only as provided for and on the conditions set forth in this code.” Tex. Civ. Prac. & Rem. Code Ann. § 31.002; Tex. Bus. Orgs. Code Ann. § 11.401 (emphasis added). We are cognizant that “[t]he seminal rule of statutory construction is to presume that the legislature meant what it said. ․ In adhering to this rule, we show our respect for the legislature and recognize that if it enacted into law something different from what it intended, it should amend the statute to conform to its intent.” Armstrong v. State, 713 S.W.3d 893, 897 (Tex. Crim. App. 2025). And we conclude that the statutory provisions at issue can be construed in a way that harmonizes, rather than conflicts. As written, Section 11.401 would set forth a narrower definition of “court of appropriate jurisdiction” to appoint a receiver when the subject of a receivership is a domestic entity (or its property or business), but we cannot conclude that Section 11.401 is ambiguous or that applying its plain meaning would lead to an absurd result.¹ Tex. Gov't Code Ann. § 311.026(a); Ruttiger, 381 S.W.3d at 452 (stating that “[o]nly when statutory text is susceptible of more than one reasonable interpretation is it appropriate to look beyond its language for assistance in determining legislative intent”).² However, to the extent that these statutes conflict in an irreconcilable manner, Sections 11.401 and 11.402 are both the more specific provisions, as well as enacted later in time, and therefore must prevail. Tex. Gov't Code Ann. § 311.026(b).

A pleader (here, Recens) has the burden to allege facts affirmatively demonstrating that the trial court has subject matter jurisdiction. Town of Shady Shores v. Swanson, 590 S.W.3d 544, 550 (Tex. 2019); Harris Cnty. v. Annab, 547 S.W.3d 609, 612 (Tex. 2018). In Recens's Application, it (1) stated that “[t]his Court has both appropriate and competent jurisdiction over the parties[,]” with no citation to any legal authority, and (2) cited Section 31.002 in claiming that “the court has jurisdiction over the controversy because the damages are within the jurisdictional limits of the court and because a judgment creditor has the option to move for the court's assistance in either ‘the same proceeding in which the judgment is rendered or in an independent proceeding.’ ” On appeal, Recens states that the trial court is a court of “competent” and “appropriate” jurisdiction for a turnover proceeding but does not elaborate further upon these claims. Recens claims neither that the 114th Judicial District Court of Smith County has “subject matter jurisdiction over specific property of” Reciprocity, nor that Reciprocity's “registered office or principal place of business” is located in Smith County. See Tex. Bus. Orgs. Code Ann. § 11.402. Even accepting Recens's allegations in the Application as true, it failed to allege facts that affirmatively demonstrated the trial court's jurisdiction over this matter. Generally, the proper remedy when a plaintiff does not allege sufficient facts to affirmatively establish a trial court's subject-matter jurisdiction is to dismiss the case without prejudice. See Tex. Parks & Wildlife Dept. v. Garland, 313 S.W.3d 920, 926 (Tex. App.—Tyler 2010, no pet.).

Accordingly, we conclude that the trial court was without subject matter jurisdiction to issue the Order, and sustain Reciprocity's first issue.³

Disposition

Having sustained Reciprocity's first issue, we reverse the trial court's Order Appointing Receiver dated February 3, 2026, and render judgment dismissing this case, without prejudice, for lack of subject matter jurisdiction.

FOOTNOTES

1.   Similarly, Section 64.001 of the Texas Civil Practice and Remedies Code (also referenced by Recens as a basis for receivership) states generally that a court of “competent jurisdiction” may appoint a receiver thereunder and was enacted before Sections 11.401 and 11.402 of the Texas Business Organizations Code. Tex. Civ. Prac. & Rem. Code Ann. § 64.001; Tex. Bus. Orgs. Code Ann. §§ 11.401, 11.402.

2.   Although Recens contends that Chapter 11 of the Texas Business Organizations Code is entitled “Winding Up and Termination of Domestic Entity,” and the provisions therein do not apply in this case of postjudgment receivership, the Legislature directed that “[t]he heading of a title, subtitle, chapter, subchapter, or section does not limit or expand the meaning of a statute.” Tex. Gov't Code Ann. § 311.024. We do not consult such extratextual factors unless the text of a statute is ambiguous, or the plain meaning leads to absurd results. See NuStar Energy, L.P. v. Hancock, 731 S.W.3d 288, 298 (Tex. 2026); Baumgart v. State, 512 S.W.3d 335, 339 (Tex. Crim. App. 2017).

3.   Because this issue is dispositive, we do not address Reciprocity's second issue. See Tex. R. App. P. 47.1. (noting an appellate court must hand down a written opinion that is “as brief as practicable but that addresses every issue raised and necessary to final disposition of the appeal”).

C. Michael Davis, Justice