Receivership Deadlocks: Third-Party Claimants Blocked from Interlocutory Appeals When Turnover is Denied
Memorandum Opinion by Justice Crump, 03-25-00233-CV, February 03, 2026.
Synopsis
The Third Court of Appeals held that an order denying a third-party claimant’s motion for turnover of assets held within a receivership is interlocutory and non-appealable if it does not finally adjudicate the underlying validity of the claimant’s interest or serve as a mandatory injunction. Because the trial court’s denial did not conclusively dispose of a discrete issue or a substantial right under the specialized finality standards for receivership proceedings, the appellate court lacked subject-matter jurisdiction and dismissed the appeal.
Relevance to Family Law
In complex marital estates where a receiver is appointed to manage or liquidate community businesses, third-party creditors or business partners often intervene to assert priority liens or ownership over specific assets. This ruling signals to family law litigators that a “loss” at the trial court level regarding a third-party turnover request may lead to a strategic deadlock; if the trial court simply denies the turnover without making specific findings on the validity of the security interest or lien, the claimant is barred from seeking immediate appellate review. This allows the receivership—and the underlying divorce or enforcement action—to proceed while keeping the disputed assets in custodia legis, effectively neutralizing the third party’s ability to disrupt the proceeding via interlocutory appeal.
Case Summary
Fact Summary
This dispute arose from a post-judgment collection proceeding. Marcy and Jorge Barba domesticated a foreign judgment in Texas against Healthpointe Solutions, Inc. and successfully moved for the appointment of a receiver to take possession of and sell Healthpointe’s assets. After several years of the receiver managing the business—which included the development of artificial-intelligence patents—a third party, Cove Funding, LP, intervened. Cove Funding alleged that it had loaned money to Healthpointe to keep its operations afloat and, in exchange, had been granted a security interest in all of Healthpointe’s assets, including the patents.
Cove Funding filed a motion for turnover, requesting that the trial court grant it ownership of the assets and direct the receiver to turn them over, arguing that its security interest was perfected and had priority. The Barbas opposed the motion, arguing that the assets were in custodia legis (under court supervision) and that Cove Funding could not have obtained a valid security interest without prior court approval. The trial court denied Cove Funding’s motion in its entirety but did not issue findings of fact or conclusions of law regarding the validity of the underlying lien. Cove Funding attempted to appeal this denial.
Issues Decided
The primary issue was whether the Court of Appeals had jurisdiction to hear an appeal from a trial court’s order denying a third-party claimant’s motion for turnover of assets within a receivership when the order did not contain finality language or adjudicate the validity of the claimant’s security interest.
Rules Applied
The court relied on the general rule that only final judgments are appealable, as articulated in Alexander Dubose Jefferson & Townsend LLP v. Chevron Phillips Chem. Co. and Lehmann v. Har-Con Corp. However, the court also analyzed the specialized “discrete issue” finality rule for receiverships found in Huston v. Federal Deposit Ins., which provides that an order in a receivership is appealable if it “finally adjudicates a substantial right” or “conclusively disposes of and is decisive of the issue… for which that particular part of the proceeding was brought.” Additionally, the court examined whether the order functioned as a mandatory injunction under the standards set by the Texas Supreme Court, which would render it appealable even if interlocutory.
Application
The court’s analysis focused on the nature of the trial court’s order. While some turnover orders are appealable—specifically those that act as mandatory injunctions resolving ownership disputes—the order in this case was a simple denial. The Third Court of Appeals noted that the trial court made no specific findings regarding the validity of Cove Funding’s security interest or its priority status. Instead, the trial court merely refused to grant Cove Funding ownership and refused to compel the receiver to hand over the assets.
The court compared this to previous precedents where orders denying the disbursement of funds or setting aside prior disbursement orders were found to be interlocutory. The court reasoned that because the order did not “finally adjudicate” Cove Funding’s rights to the property, but rather left the parties in their current positions within the receivership, it did not meet the Huston standard for finality. The legal story here is one of “not yet”—the trial court did not say Cove Funding’s lien was void; it simply said “no” to the immediate turnover, which is insufficient to trigger appellate jurisdiction.
Holding
The Court of Appeals held that it lacked jurisdiction over the appeal because the order denying the turnover was interlocutory. The court emphasized that the order did not resolve all issues between the parties, nor did it meet any statutory or common-law exception allowing for an interlocutory appeal.
Because the order did not finally adjudicate a substantial right or serve as a mandatory injunction, the court determined that the appeal must be dismissed. The holding underscores that in the context of a receivership, a denial of a third party’s claim to assets is generally not a final, appealable event unless the order explicitly and conclusively disposes of the underlying ownership or lien validity issue.
Practical Application
For family law practitioners, this case serves as a roadmap for both offensive and defensive receivership strategy. If you are representing the party who successfully obtained the receiver, you can use this ruling to “freeze” third-party claimants. By ensuring the trial court’s order is a simple denial rather than a formal adjudication of the lien’s validity, you effectively prevent the third party from clogging the appellate courts and delaying the overall property division. Conversely, if you represent a third party (or a spouse with a separate property interest) trying to extract assets from a receivership, you must insist on an order that “finally adjudicates” the substantial right or includes mandatory injunctive language to ensure you have a path to the Court of Appeals.
Checklists
Determining Appealability of a Receivership Order
- Identify the Nature of the Relief: Is the order a “grant” or a “denial”? Grants of turnover are more likely to be appealable as mandatory injunctions.
- Check for Substantial Rights: Does the order explicitly state that a lien is “valid” or “invalid,” or does it merely deny the request for possession?
- Assess Discrete Issues: Does the order conclusively end a specific phase of the receivership, such as the adjudication of a specific creditor’s claim?
- Look for Mandatory Language: Does the order command a party or the receiver to perform a specific act (turnover) or merely maintain the status quo (denial)?
Protecting the Receivership from Third-Party Interruption
- Oppose Detailed Findings: When defending against a third-party claim, seek a general denial of the motion rather than a specific finding on the merits of their security interest to prevent an interlocutory appeal.
- Invoke In Custodia Legis: Argue that any security interest obtained after the receiver was appointed is void without court approval, further complicating the claimant’s “substantial right” argument.
- Request Severance (if applicable): If the court is inclined to rule on the merits, ensure the issue is not severed if you want to delay appellate review until the entire case is final.
Citation
Cove Funding, LP and its Subsidiary HPS Admin, LLC v. Marcy Barba and Jorge Barba, No. 03-25-00233-CV, 2026 WL ______ (Tex. App.—Austin Feb. 3, 2026, no pet. h.) (mem. op.).
Full Opinion
Family Law Crossover
In Texas divorce litigation, this ruling can be weaponized to maintain control over business assets during a protracted property dispute. If a spouse attempts to “friendly” encumber community assets by granting a security interest to a family member or business associate during a receivership, the other spouse can use this case to block that third party’s exit strategy. By obtaining a trial court order that simply denies the third party’s motion to take the assets, the “creditor” is stuck in the trial court without the ability to appeal. This keeps the assets under the receiver’s control—and the trial court’s jurisdiction—until the final decree, preventing a “run on the bank” by outside interests that could deplete the community estate before the final division.
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