DANESH PAJOOH AND U.S. CAPITAL INVESTMENTS LLC, Appellants
ROYAL WEST INVESTMENTS LLC, SERIES E, Appellee
Appeal from the 11th District Court Harris County, Texas
Trial Court Case No. 2014-56530
consists of Justices Bland, Massengale, and Lloyd.
Michael Massengale Justice
debtors Danesh Pajooh and U.S. Capital Investments LLC appeal
from the trial court's imposition of a receivership and
grant of a turnover order on the request of their judgment
creditor, appellee Royal West Investments LLC, Series E.
Appellants Pajooh and U.S. Capital Investments contend that
the trial court abused its discretion by appointing a
receiver over a limited partnership jointly owned by them. In
particular, they argue that the trial court's order
conflicts with provisions of the Business Organizations Code
which establish charging orders as the exclusive remedy for
accessing a judgment debtor's interest in a limited
partnership or a limited liability company. See Tex.
Bus. Orgs. Code §§ 101.112(d), 153.256(d).
appellants also contend that the trial court abused its
discretion for the following reasons: (1) they owned no
interest in the property owned by the limited partnership;
(2) the order imposed a receivership on a third-party
entity-County Investment, LP-which was not a party to the
underlying judgment; (3) there was no evidence that they
owned any nonexempt property that could not be readily
attached or levied on by ordinary legal process; and (4)
Royal West failed to prove that it was entitled to equitable
turnover or receivership relief.
affirm the imposition of a receivership over Pajooh and U.S.
Capital Investments. But because the trial court erred to the
extent it imposed a receivership over the assets of County
Investment and Pajooh's membership interest in U.S.
Capital Investments, we reverse that aspect of the order.
Pajooh is a commercial real estate developer and investor.
County Investment, LP, is a limited partnership comprised of
Pajooh (a 99% limited partner) and U.S. Capital Investments
LLC (a 1% general partner). The members of U.S. Capital
Investments are Pajooh (99% owner) and his sister, Jila
Mesgarpouran (1% owner).
U.S. Capital Investments, and Royal West Investments LLC,
Series E entered into several real-estate transactions,
including a purchase-and-sale agreement and a lease
agreement. Disputes among the parties led to litigation and,
in 2012, a judgment in favor of Royal West in the amount of
$352, 380 plus approximately $165, 000 in attorneys'
fees. Pajooh and U.S. Capital Investments were jointly and
severally liable on this judgment, which was affirmed on
appeal. U.S. Capital Invs., LLC v. Shabazi, No.
02-12-00417-CV, 2014 WL 1713464 (Tex. App.-Fort Worth May 1,
2014, no pet.) (mem. op.).
West's attempts to collect the judgment were nearly
entirely fruitless. Two years after entry of judgment, Royal
West had obtained property-a rental house owned by
Pajooh-which sold for $7, 500 through a writ of execution.
Through discovery Royal West learned that Pajooh,
individually and as 99% controlling member of U.S. Capital
Investments, claimed that there were no nonexempt assets that
could be used to satisfy the judgment. County Investment,
however, owned real and personal property valued at
approximately $4 million, such as commercial real estate, the
Lexus SUV that Pajooh drives, antique automobiles, antique
rugs, oil paintings, furniture, and other investments.
West applied for a post-judgment turnover order and
appointment of a receiver, but the trial court denied this
motion when Pajooh and U.S. Capital Investments argued that
the Business Organizations Code provides that a charging
order is the exclusive remedy by which a judgment creditor
may satisfy a judgment from the membership or partnership
interest of a judgment debtor. Tex. Bus. Orgs. Code
§§ 101.112(d), 153.256(d). Royal West then sought
and obtained a charging order against Pajooh's membership
interest in U.S. Capital Investments, prohibiting it from
distributing to Pajooh "any membership distributions,
profits, cash, assets, or other monies due or that shall
become due" to him "by virtue of his membership
interest." Instead, U.S. Capital Investments was
required to "pay to Royal West Investment LLC, Series E
all funds and assets whatsoever, which by virtue of the
membership interest" would "have been
distributed" to Pajooh. A similar charging order was
entered the same day encumbering the partnership interests of
Pajooh and U.S. Capital Investments in County Investment.
November 2015, the trial court entered another order,
requiring turnover and appointing a receiver under Sections
31.002 and 64.001 of the Civil Practice and Remedies Code.
This order placed the two judgment debtors, Pajooh and U.S.
Capital Investments, under receivership. It granted the
receiver broad powers over the judgment debtors'
nonexempt assets, expressly excluding their partnership
interests in County Investment and Pajooh's membership
interest in U.S. Capital Investments. The order specifically
acknowledged that a charging order was the "exclusive
remedy" to satisfy the judgment from the debtors'
partnership interests in County Investment.
and U.S. Capital Investments moved to vacate the turnover and
receivership order and for a new trial. Despite the limiting
language in the order, Pajooh and U.S. Capital Investments
objected to the relief granted against nonparty County
Investment as contrary to the exclusivity of the
charging-order remedy pursuant to Section 153.256 of the
Texas Business Organizations Code. Pajooh made a similar
argument under Section 101.112 regarding his membership
interest in U.S. Capital Investments.
judgment debtors also argued that the order should be vacated
because there was no evidence that they owned valuable
nonexempt property that could not be readily attached or
levied upon by ordinary legal process as required by Chapter
31 of the Civil Practice and Remedies Code. See Tex.
Civ. Prac. & Rem. Code § 31.002(a)(2). Meanwhile,
Royal West suspected that distributions of money from County
Investment to Pajooh were being improperly transmitted in
violation of the charging order, so it also sought
modification of the turnover and receivership order.
trial court amended its order, entirely replacing the prior
turnover and receivership order. The court appointed a
receiver over "the nonexempt assets" of Pajooh and
U.S. Capital Investments, "including (but not limited
to) their interest in County Investment L.P." The
amended receivership order directed the receiver to:
1. Take immediate possession of all nonexempt property,
assets and estates of every kind of Defendants, whatsoever
and wheresoever located, belonging to or in their possession,
including, but not limited to, all offices maintained by
Defendants (including those offices at U.S. Capital
Investments, LLC and County Investment LP), rights of action,
books, papers, data processing records, evidences of debt,
bank accounts (including nonexempt bank accounts belonging to
Massood Danesh Pajooh, U.S. Capital Investments, LLC and
County Investment L.P.), savings accounts, certificates of
deposit, stocks, bonds, debentures and other securities,
mortgages, furniture, fixtures, office supplies and
equipment, and all real property wherever situated, and to
administer such nonexempt assets as is required in order to
comply with the directions contained in this Order, and to
hold all other assets pending further order of this Court;
2. Investigate the manner in which the affairs of Defendants
were conducted and, with leave of this court, institute such
actions and legal proceedings, for its benefit and for the
benefit of creditors, as the Receiver deems necessary against
those individuals, corporations, partnerships, associations
and/or unincorporated organizations, which the Receiver may
claim have wrongfully, illegally or otherwise improperly
misappropriated or transferred monies or other proceeds
directly or indirectly traceable from Defendants . . . .;
3. Appoint one or more special agents, employ legal counsel,
actuaries, accountants, Clerks, consultants and assistants as
the Receiver deems necessary . . . .;
4. Engage persons . . . to assist . . . in carrying out the
Receiver's duties and responsibilities, including, but
not limited to constables, deputy constables, sheriffs,
deputy sheriffs, or a private security firm;
5. Defend, compromise or settle legal actions in which
Defendants, or the Receiver is a party, commenced either
prior to or subsequent to this Order, ...