Case 6:16-cv-00482-KNM Document 48 Filed 08/09/17 Page 1 of 10 PageID #: 631
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF TEXAS
`TYLER DIVISION
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`TARECO PROPERTIES, INC.
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`v.
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`L&S MINERALS, LLC, et al.
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`§ CIVIL ACTION NO. 6:16-CV-482
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`MEMORANDUM OPINION AND ORDER
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`Before the Court are Defendant Steve Morriss and Karen Morriss’ Motion for Summary
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`Judgment (ECF 31), Plaintiff Tareco Properties, Inc.’s Motion for Summary Judgment (ECF 36),
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`Plaintiff Tareco Properties, Inc.’s Motion to Strike Defendants’ Reply (ECF 39), and Plaintiff’s
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`Second Motion for Summary Judgment on Defendants’ Newly Asserted Affirmative Defenses
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`(ECF 45). The Court conducted a hearing on the motions on June 22, 2017. At the hearing, L&S
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`Minerals stated that it does not take a position on the pending motions. Having considered the
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`briefing and arguments of counsel, Defendants’ Motion for Summary Judgment is DENIED and
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`Plaintiff’s Motions for Summary Judgment are GRANTED.
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`BACKGROUND
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`Plaintiff initiated this lawsuit by filing an Application for Turnover Order on June 1, 2016.
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`In the Application for Turnover Order, Plaintiff asserts that it is the judgment creditor for two
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`judgments registered in this Court: (1) Civil Action No. 6:00-mc-24, Tareco Properties, Inc. v.
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`Steve Morriss, et al. (referred to as “the Steve judgment”); and (2) Civil Action No. 6:07-mc-6,
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`Tareco Properties, Inc. v. Karen Morriss, et al. (referred to as “the Karen judgment”). As of
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`1
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`Case 6:16-cv-00482-KNM Document 48 Filed 08/09/17 Page 2 of 10 PageID #: 632
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`January 10, 2017, the amount due on the Steve judgment is $4,431,666.88 and the amount due on
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`the Karen judgment is $856,561.96. No payments have been made on the Steve judgment and
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`only $95.49 has been paid on the Karen judgment.
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`The Steve judgment arises out of a promissory note that was guaranteed by Steve Morriss.
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`FDIC acquired the promissory note when the lender failed. Judgment on the note was originally
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`entered in the Southern District of Texas, Laredo Division. The judgment was assigned by FDIC
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`to Plaintiff on September 30, 1999. The Karen judgment arises out of a judgment obtained by
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`Plaintiff against Karen Morriss in the Middle District of Tennessee, Nashville Division, dated
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`September 30, 2004.
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`Plaintiff argues that Defendants Steve and Karen Morriss have failed to make payments on
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`the judgments and have avoided payment on the judgments by way of property transfers to hinder
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`collection. On June 16, 2014, Steve and Karen Morriss executed a quitclaim deed of 92.71 acres
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`of property in Smith County to Defendant L&S Minerals. As a result, Plaintiff seeks to use the
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`identified property to satisfy the judgments pursuant to TEX. CIV. PRACT. & REM. CODE § 31.002.
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`According to Plaintiff, Defendants admitted that they transferred the land in Smith County to L&S
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`only to “hold” it for them and no consideration was exchanged. L&S Minerals was established to
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`hold mineral interests owned by Lisa Ray and Steve Morriss. The Morrisses have allegedly asked
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`L&S Minerals to pay a bonus of $41,719.50 and to quitclaim deed the property back to them.
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`Defendants Steve and Karen Morriss (“the Morrisses”) filed a motion for summary
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`judgment asserting that the identified property is not in their possession and is not subject to their
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`control. In addition, the Morrisses submit that the Steve judgment has lapsed and is no longer
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`valid or subsisting. The Morrisses state that they transferred the property to L&S Minerals via
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`quitclaim deed on June 16, 2014, effective June 2, 2014. They assert that they subsequently
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`2
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`Case 6:16-cv-00482-KNM Document 48 Filed 08/09/17 Page 3 of 10 PageID #: 633
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`requested a return of the property on September 18, 2015, but L&S Minerals refused to return the
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`property. According to the Morrisses, the transfer ended their ownership interest in the property
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`and they have no control over the property. L&S Minerals is a Limited Liability Corporation with
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`one member—Lisa J. Ray as trustee of the Bud Morriss Family Trust. In addition, the Morrisses
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`argue that the Steve Judgment has lapsed because it was originally entered on June 23, 1993. The
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`Morrisses submit that the judgment was only effective for 20 years pursuant to 28 U.S.C. §
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`3201(c)(1). The Morrisses assert that Plaintiff has not provided any evidence that it obtained a
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`valid lien and/or renewed that lien.
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`In response, Plaintiff notes that the Morrisses do not contest that Tareco Properties, Inc.
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`owns the judgments at issue. Even though the Morrisses are not the current owners of the property
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`at issue, Plaintiff contends that they have a claim to the property because the transaction to transfer
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`the property lacked consideration. To evidence that claim, Plaintiff submitted a copy of a letter
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`dated September 18, 2015 that was sent by the Morrisses’ attorney to counsel for Lisa Ray. Among
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`other things, the letter states that the agreement between the Morrisses and L&S Minerals at the
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`time of the quitclaim deed was that the Morrisses would be paid a bonus, valued at $41, 719.50,
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`in exchange for the donation of the property.1 The Morrisses sought payment for their share of the
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`1 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:
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`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.
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`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.
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`3
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`Case 6:16-cv-00482-KNM Document 48 Filed 08/09/17 Page 4 of 10 PageID #: 634
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`bonus and the return of the property.2 Plaintiff submits that a debtor cannot assert a claim to
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`property and then seek to protect that claim from creditors at the same time. The Morrisses’ claim
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`to the property is an unadjudicated cause of action that is “property” as contemplated by the
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`turnover statute. Plaintiff argues that the Morrisses’ claim to the property is subject to turnover.
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`In addition, Plaintiff submits that the statute relied on by the Morrisses to argue that the Steve
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`judgment lapsed—28 U.S.C. § 3201—only applies to procedures for the United States to collect
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`its debts. Plaintiff argues that a writ of execution every ten years maintains a judgment under
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`Texas law.
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`The Morrisses filed a reply adding a new allegation that they signed a release of any claim
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`they may have to the property that was transferred to L&S Minerals. The release was to resolve
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`issues during probate of the estate of Ima Jean Morriss. The release is dated November 16, 2016.
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`The Morrisses argue that the release shows that they do not have any claim to the property.
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`Plaintiff filed a Motion to Strike Defendants’ Reply. Plaintiff asserts that the reply
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`improperly raises a defense concerning the release that was not previously disclosed. The
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`Morrisses did not file a response to the motion to strike. Instead, the Morrisses filed an Amended
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`Answer adding a defense concerning the release.
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`Plaintiff filed its own Motion for Summary Judgment against L&S Minerals and the
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`Morrisses. For the same reasons previously raised in response to the Morrisses’ motion for
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`summary judgment, Plaintiff seeks a summary judgment for immediate turnover of the property.
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`In response to the Amended Answer, Plaintiff also filed a Second Motion for Summary Judgment
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`on Defendants’ Newly asserted Affirmative Defenses. Defendants L&S Minerals and the
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`Morrisses did not file a response to either motion for summary judgment filed by Plaintiff.
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`2 Id. (“Accordingly, Steve and Karen want to be paid for their share of the bonus and have the minerals quitclaimed
`back to them”).
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`4
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`Case 6:16-cv-00482-KNM Document 48 Filed 08/09/17 Page 5 of 10 PageID #: 635
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`Pursuant to Local Rule CV-7(d), “[a] party’s failure to oppose a motion in the manner prescribed
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`[] creates a presumption that the party does not controvert the facts set out by the movant and has
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`no evidence to offer in opposition to the motion.”
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`At the hearing on the motions, L&S Minerals stated that it did not respond to the motions
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`because it does not take a position and it will do whatever the Court tells it to do with the property.
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`L&S Minerals also stated that, due to the tense relationship between Steve Morriss and Lisa Ray,
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`it did not believe anything was actually transferred by the quitclaim deed at the time of the transfer
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`and it does not have a problem turning over the property.
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`SUMMARY JUDGMENT STANDARD
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`The Court may only grant a motion for summary judgment when there is no genuine
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`dispute of material fact and the moving party is entitled to summary judgment as a matter of law.
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`FED. R. CIV. P. 56(a). A genuine dispute as to a material fact exists “if the evidence is such that a
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`reasonable jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc.,
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`477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A “material fact” is one that might
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`affect the outcome of the suit under governing law. Id. The party seeking summary judgment
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`always bears the initial responsibility of informing the district court of the basis for its motion and
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`identifying those portions of the pleadings, depositions, answers to interrogatories, and admissions
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`on file, together with the affidavits, if any, which it believes demonstrate the absence of a genuine
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`issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 2553, 91
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`L.Ed.2d 265 (1986).
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`The moving party, however, “need not negate the elements of the nonmovant’s case.”
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`Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (en banc). The movant’s burden is
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`only to point out the absence of evidence supporting the nonmoving party’s case. Stults v. Conoco,
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`5
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`Case 6:16-cv-00482-KNM Document 48 Filed 08/09/17 Page 6 of 10 PageID #: 636
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`Inc., 76 F.3d 651, 655 (5th Cir. 1996). Once the moving party makes a properly supported motion
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`for summary judgment, the nonmoving party must look beyond the pleadings and designate
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`specific facts in the record showing that there is a genuine issue for trial. Id. All facts and
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`inferences are viewed “in the light most favorable to the nonmoving party.” McFaul v. Valenzuela,
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`684 F.3d 564, 571 (5th Cir. 2012). “Summary judgment may not be thwarted by conclusional
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`allegations, unsupported assertions, or presentation of only a scintilla of evidence.” Id.
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`ANALYSIS
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`The turnover statute provides that a judgment creditor is entitled to aid from the Court to
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`reach property that the judgment debtor owns, including present or future rights to property, “that:
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`(1) cannot readily be attached or levied on by ordinary legal process; and (2) is not exempt from
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`attachment, execution, or seizure for the satisfaction of liabilities.” TEX. CIV. PRACT. & REM.
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`CODE § 31.002. “An unadjudicated cause of action is generally considered ‘property’ that may
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`be the subject of an order under the turnover statute.” See Assoc. Ready Mix, Inc. v. Douglas, 843
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`S.W.2d 758, 762 (Tex.App.—Waco 1992, orig. proceeding). An unadjudicated cause of action
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`cannot be readily attached or levied. As a result, the Court can order turnover of a judgment
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`debtor’s claim in another proceeding. See Franch v. HP Locate, LLC, 2017 WL 507398, at *2
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`(N.D.Tex. Jan. 19, 2017) (Report and Recommendation adopted in 2017 WL 495954 (N.D.Tex.
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`Feb. 7, 2017)); see also Colorado Meadowlark Corp. v. Sage Physician Partners, Inc., 2013 WL
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`3196434, at *2 (N.D.Tex. June 25, 2013) (granting turnover of defendant’s claims and interest in
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`a bankruptcy proceeding). The Morrisses have not disputed that their claim for the return of the
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`subject property from L&S Minerals is not exempt and cannot be readily attached or levied on, as
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`required for the turnover statute to apply.
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`6
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`Case 6:16-cv-00482-KNM Document 48 Filed 08/09/17 Page 7 of 10 PageID #: 637
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`Instead, in their reply brief the Morrisses raised a new defense concerning the releases they
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`signed on November 16, 2016. Notably, the releases are dated nearly two-and-one-half years after
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`the property was transferred and five months after this lawsuit was filed. Plaintiff seeks to strike
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`the reply brief because the defense was not raised in the Morrisses’ pleadings. The Morrisses
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`subsequently amended their answer to include a defense concerning the releases. The releases,
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`however, are not sufficient to release the claim the Morrisses have against L&S Minerals regarding
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`the property at issue.
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`The releases at issue were executed in conjunction with the settlement of the estate of Ima
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`Jean Morriss. The releases state:
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`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.
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`See Defendant Steve Morriss and Karen Morriss’ Reply to Tareco Properties, Inc.’s Response to
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`Defendants’ Motion for Summary Judgment and Brief in Support Thereof, Exhibits A and B, ECF
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`38-1 and 38-2. Claims in existence at the time of the execution of a release are not discharged
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`unless they are clearly within the subject matter of the release. Victoria Bank & Trust Co. v. Brady,
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`811 S.W.2d 931, 938 (Tex. 1991). To be legally enforceable, the release must “mention” the claim
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`or claims being released. Memorial Medical Center v. Keszler, 943 S.W. 2d 433, 434 (Tex. 1997).
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`The Fifth Circuit has interpreted the requirement for the release to “mention” the claim to “not
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`require particularized enumeration or detailed description, only that the claim being released come
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`within the express contemplation of the release provision when viewed in context of the contract
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`in which the release provision is contained.” Stinnett v. Colorado Interstate Gas Co., 227 F.3d
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`247, 255 (5th Cir. 2000).
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`Here, the releases, executed more than two years after the property transfer, accompanied
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`a settlement agreement concerning the resolution of an estate. The settlement agreement is
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`unrelated to the property transfer to L&S Minerals. No evidence has been proffered showing that
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`the Morrisses’ claim to the subject property due to a lack of consideration was within the express
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`contemplation of the release provision when viewed in context of the agreement to settle Ima Jean
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`Morriss’ estate. This claim is not clearly within the subject matter of the releases and is not
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`discharged by the releases.
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`The Morrisses additionally argue that the Steve judgment lapsed pursuant to 28 U.S.C. §
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`3201 of the FDCPA. The FDCPA “provides the exclusive civil procedures for the United States
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`to recover a judgment on a debt.” 28 U.S.C. § 3001(a)(1). In this case, the Steve judgment is a
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`judgment on a promissory note that was acquired by the FDIC when the lender failed. Where, as
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`here, a private party assignee of the FDIC seeks to execute on a judgment entered in favor of the
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`FDIC against a private borrower, where the FDIC acquired the loan through the failure of the
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`private lender, the loan is not a “debt” as defined in the Federal Debt Collection Procedure’s Act.
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`Sobranes Recovery Pool I, LLC v. Todd & Hughes Construction Corp., 509 F.3d 216, 223–26 (5th
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`Cir. 2007). As a result, § 3201 is not applicable here.
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`State law supplies the procedure for judgment execution if a federal statute is not
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`applicable. FED. R. CIV. P. 69(a). Pursuant to TEX. CIV. P. PRACT. & REM. CODE § 34.001, a
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`judgment becomes dormant after ten years unless a writ of execution is issued within ten years
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`after rendition of a judgment. Plaintiff submitted uncontroverted summary judgment evidence
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`8
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`Case 6:16-cv-00482-KNM Document 48 Filed 08/09/17 Page 9 of 10 PageID #: 639
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`showing that the Steve judgment was originally filed on June 23, 1993 in the Southern District of
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`Texas, Laredo Division. It was then filed in this Court on January 24, 2001. Writs of execution
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`issued on January 24, 2001, February 23, 2007, May 30, 2007 and February 17, 2017. Here, a writ
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`of execution was entered within ten years after the entry of judgment and was renewed within
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`every ten years thereafter.
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`CONCLUSION
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`There are no genuine issues of material fact in this case. By way of uncontroverted
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`summary judgment evidence, Plaintiff has shown that the Morrisses have a claim to the identified
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`property and that claim is subject to turnover. Plaintiff is entitled to judgment as a matter of law,
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`and Plaintiff’s application for turnover should be granted. Plaintiff’s motions for summary
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`judgment should be granted, and Defendants’ motion for summary judgment should be denied. It
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`is therefore
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`ORDERED that Plaintiff Tareco Properties, Inc.’s Motion for Summary Judgment (ECF
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`36) and Plaintiff’s Second Motion for Summary Judgment on Defendants’ Newly Asserted
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`Affirmative Defenses (ECF 45) are GRANTED. Defendant Steve Morriss and Karen Morriss’
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`Motion for Summary Judgment (ECF 31) is DENIED. It is further
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`ORDERED that the Pretrial Conference scheduled for August 28, 2017, Jury Selection
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`scheduled for September 18, 2017 and Jury Trial scheduled for September 25, 2017 are
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`CANCELED. It is further
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`ORDERED that Defendants Steve and Karen Morriss shall immediately turnover their
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`claim to the property, described as 92.71 acres of land, more or less, situated in Section 23 of the
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`Don Thomas Quevado Survey, A-18, Smith County, Texas being the same land described in that
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`certain Warranty Deed dated October 20, 1917 from J.H. Herndon, Executor of the Estate of W.S.
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`9
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`Case 6:16-cv-00482-KNM Document 48 Filed 08/09/17 Page 10 of 10 PageID #: 640
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`Herndon to Juddie Parks, recorded in Volume 133, Page 441 of the Deed Records of Smith County,
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`Texas. It is further
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`ORDERED that Defendants shall turn over to Plaintiff all documents or records in their
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`possession or control relevant to the claim. It is finally
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`ORDERED that Plaintiff may file a motion seeking to recover attorney’s fees and costs
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`supported by appropriate documentation.
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`10
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`So ORDERED and SIGNED this 9th day of August, 2017.
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