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In re A.W.L.

Court of Appeals of Texas, Fifth District, Dallas

January 17, 2018

IN THE INTEREST OF A.W.L., A CHILD

         On Appeal from the 330th Judicial District Court Dallas County, Texas Trial Court Cause No. DF-15-03681

          Before Justices Lang-Miers, Fillmore, and Stoddart

          MEMORANDUM OPINION

          ELIZABETH LANG-MIERS JUSTICE

         This is an appeal involving a divorce and suit affecting the parent-child relationship and the appointment of a receiver. Appellant Man Lin argues that the trial court erred by appointing a receiver, ratifying the receiver's report, and granting the receiver judicial immunity and that there is not sufficient evidence to support the trial court's findings of fact and conclusions of law. We affirm.

         Background

         Appellee Wen Wu filed for divorce against Lin. Subsequently, Lin's attorney moved to withdraw as counsel "based on good cause in that there is an unreasonable financial burden and it is unreasonably difficult to represent" Lin. On February 11, 2016, the court concluded that "good cause has been shown" and permitted his lawyer to withdraw as counsel. The record does not reflect that Lin objected to the motion to withdraw. On the same day, the trial court ordered that, if Lin failed to comply with an order compelling discovery, the court "shall order sanctions" at the next hearing, which the court scheduled to take place eleven days later. The sanctions could include "appointment of a receiver to enable information gathering, valuation, and advice to the court regarding the future profitability and appropriate disposition of the property of Sake Fish restaurant[.]" Also on February 11, 2016, after the hearing, Wu filed a motion for appointment of a receiver. On February 22, 2016, the trial court ordered appointment of a receiver, appellee Kevin Buchanan (Receiver), and in its findings stated that "Man Lin is in sole control of Dongfanghong LLC and Sake Fish and that these entities constitute the entirety of the marital estate[, ]" "the value of the restaurant Sake Fish is being diminished by Man Lin's failure to account for cash or to make its monthly rent payments[, ]" and unless a receiver "is appointed to immediately take charge and control over the management of Sake Fish there is a real danger that the community estate will suffer further irreparable loss, in excess of the losses already caused by" Lin's actions.

         The court authorized the Receiver "forthwith to take any actions necessary to secure payments and to manage, control, and dispose of the property of MAN LIN including any entity in which MAN LIN controls and/or holds an interest in, whether direct, indirect or beneficial, which includes, but is not limited to, the following entities: Dongfanghong, LLC, d/b/a SAKE FISH." The court vested the Receiver with "powers necessary to manage, control, and dispose of the property of MAN LIN, including" (1) to "take control, custody, and possession of the assets of MAN LIN and DONGFANGHONG, LLC[, ]" (2) to "take possession and control of the restaurant doing business as SAKE FISH and/or DONGFANGHONG, LLC to the exclusion of all others[, ]" (3) to "exercise all powers and rights exercisable by MAN LIN in reference to the property described above, " (4) to "hire and fire employees, consultants and professionals for the Restaurant[, ]" and (5) to "perform all such other acts as necessary to preserve the assets of Dongfanghong, LLC and Sake Fish Restaurant pursuant to Texas law."[1] The record does not reflect that Lin objected to the appointment of the Receiver.

         On March 31, 2016, William Chu entered his appearance as retained counsel for Lin. And on April 19, 2016, the court signed a final decree of divorce in which the court approved the agreement of the parties as contained in the final decree. The final agreed decree ordered that "the Receiver Kevin Buchanan shall be discharged and the court-ordered receivership is terminated as of the date of signing this decree."

         On May 4, 2016, the Receiver filed his "Receiver's Report, Motion to Ratify Conduct of Receiver, Motion to Approve Receiver's Compensation, and Motion to Terminate Receivership" (Report). The Report stated that Dongfanghong, LLC (LLC) operated Sake Fish restaurant at the time of the Receiver's appointment, the LLC was created before Lin and Wu married, and Lin held 100% of the membership interest in the LLC in his name. The Report also stated that, after marriage, Lin entered into transactions in connection with the operation of Sake Fish in his own name rather than in the name of the LLC. The Report stated that interviews and analysis of banking records "revealed that the individuals found working at" Sake Fish "were not employees of the LLC but rather members of a joint venture that included MAN LIN." The Report stated that two to three "separate businesses" operated within "the premises of the Restaurant" that used a "joint venture cost sharing arrangement[.]" The Report noted that one purported joint venture partner named Wei Heng Lu (Willy) claimed Lin owed him more than $14, 000 in unremitted credit card receipts under a joint venture arrangement. Lin did not dispute that he owed money to Willy.

          The Report stated that the Receiver operated the restaurant for approximately three weeks and concluded that the restaurant was "hemorrhaging money" and was "not profitable." The Receiver determined that it was in the best interest of the parties and the minor child to shut down the restaurant's operations. In addition, the Receiver entered into a mutual release between "Willy and his entity" and Lin, individually as Lin's attorney in fact and as receiver for the LLC, for the release of all claims asserted by Willy, which-according to the Report-included the release of claims for credit card receipts owed to him. On behalf of Lin and the LLC, the Receiver also entered into a mutual release of claims and termination of the lease agreement with the restaurant's landlord, which-according to the Report-released a debt of more than $50, 000 that Lin owed the landlord individually under the lease.

         After a hearing, the trial court granted the motions to ratify the Receiver's conduct, to approve the Receiver's compensation, and to terminate the receivership. The court also ordered that all funds held by the LLC under control of the Receiver be applied to his compensation and that Lin pay all remaining fees and expenses incurred by the Receiver. The trial court terminated the receivership, discharged the Receiver, and released the Receiver from liability associated with the case or the receivership.[2]

         Lin filed a notice of appeal challenging three orders: the order permitting withdrawal of his attorney, the order appointing the Receiver, and the order on the Receiver's Report, ratifying the conduct of the Receiver, approving the Receiver's compensation, and terminating the receivership. At Lin's request, the trial court made findings of fact and conclusions of law.

          Findings of Fact and Conclusions of Law

         In his first issue, Lin argues that (1) the trial court "mechanically" adopted, "near[ly] verbatim, " the proposed findings of fact and conclusions of law submitted by Wu and the Receiver and (2) several of the findings and conclusions are not supported by legally or factually sufficient evidence.

         Proposed Findings of Fact and Conclusions of Law

         Lin first argues that the trial court's "mechanical" adoption of the findings of fact and conclusions of law submitted by Wu and the Receiver harmed him and should be given little to no credibility.[3] Lin states that, although "Texas courts have not specifically addressed the issues of mechanical adoption of proposed findings and conclusions, " the Fifth Circuit has "voiced its disapproval" of trial courts' "unconditional[] adopt[ion]" of findings and conclusions that one party submitted. See Keystone Plastics, Inc. v. C & P Plastics, Inc., 506 F.2d 960, 962 (5th Cir. 1975).[4] But the standard under Texas law is different and controls here. See Nu-Build & Assocs., Inc. v. Sooners Grp., L.P., No. 05-15-01303-CV, 2017 WL 4927076, at *1 (Tex. App.-Dallas Oct. 31, 2017, no pet.) (mem. op.) ("Nu-Build's first issue first asserts that the trial court improperly adopted Sooners' proposed findings of fact and conclusions of law; but this is not improper."); Warriner v. Warriner, 394 S.W.3d 240, 246 (Tex. App.-El Paso 2012, no pet.) (stating "the trial court has the discretion to prepare and file findings in support of its judgment as it sees fit" and "[c]ertainly, the Texas Rules of Civil Procedure do not prohibit the trial court from adopting a party's proposed findings"); Vickery v. Comm'n for Lawyer Discipline, 5 S.W.3d 241, 253 (Tex. App.-Houston [14th Dist.] 1999, pet. denied) (stating that, when the losing party requests findings of fact and conclusions of law, "the trial court, as a matter of practice, usually invites the prevailing party to prepare proposed findings and conclusions based upon its rulings"). We conclude that the trial court did not err by adopting the proposed findings of fact and conclusions of law submitted by Wu and the Receiver.

         Sufficiency of the Evidence

         Also as part of his first issue, Lin argues that there is not legally or factually sufficient evidence to support certain findings of fact and conclusions of law made by the trial court.

         Findings of Fact

         At the outset, we note that the appellate record does not contain a transcript of the hearing concerning the attorney's motion to withdraw as counsel or the hearing concerning the motion to appoint the Receiver. "[W]hen we are confronted with an incomplete record, we presume the evidence supports the trial court's findings of fact." Travelers Indem. Co. of Rhode Island v. Starkey, 157 S.W.3d 899, 905 (Tex. App.-Dallas 2005, pet. denied). Because we have an incomplete record, we overrule Lin's challenges to the sufficiency of the evidence to support the trial court's findings of fact concerning the attorney's withdrawal as counsel and the appointment of the Receiver.

         Lin also challenges three findings of fact concerning the "Order Terminating Receivership, Ratifying, Approving Compensation."[5] We review the court's findings by the same standards used to review challenges to the sufficiency of the evidence to support jury findings. McLeod v. Gyr, 439 S.W.3d 639, 647 (Tex. App.-Dallas 2014, pet. denied). A legal sufficiency challenge to the findings of fact fails if there is more than a scintilla of evidence to support the findings. Reisler v. Reisler, 439 S.W.3d 615, 620 (Tex. App.-Dallas 2014, no pet.). In conducting a factual sufficiency review, appellate courts may set aside the trial court's finding only if it is so contrary to the overwhelming weight of the evidence as to be clearly wrong or unjust. Id. ...


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