Memorandum Opinion by Justice Barbare, 05-24-00804-CV, February 05, 2026.
On appeal from the 397th Judicial District Court of Grayson County
Synopsis
The Dallas Court of Appeals held that a materialman’s lien filed to collect a legitimate, unpaid debt for materials actually provided does not constitute a “fraudulent lien” under Texas Civil Practice and Remedies Code Section 12.002, even if the lien is procedurally defective or untimely. To prevail on a fraudulent lien claim, the movant must provide evidence that the filer had actual knowledge the lien was fraudulent at the time of filing; a mere showing that the lien is legally unenforceable is insufficient to establish fraudulent intent.
Relevance to Family Law
In the heat of high-net-worth divorce litigation, it is not uncommon for one spouse—or a closely held family entity—to record a lien against community real property to secure a purported debt, often as a strategic maneuver to cloud title or impede a sale. Family law practitioners frequently reach for Chapter 12 of the Civil Practice and Remedies Code as a “hammer” to seek statutory damages and attorney’s fees for these “spite liens.” This ruling clarifies the high evidentiary threshold for such claims: simply proving that a lien is void or filed in violation of a standing order may not be enough to trigger Chapter 12 liability if there is an underlying, bona fide debt. It shields parties from the severe penalties of the fraudulent lien statute when the dispute is over the legality of the lien rather than the fact of the debt.
Case Summary
Fact Summary
The dispute arose after Preferred Materials, LLC (“Preferred”) delivered approximately $17,000 worth of ready-mix concrete to a construction project on property owned by EarnhartBuilt, LLC. EarnhartBuilt had paid its general contractor, J. Earnhart, Inc., in full for the materials, but the contractor failed to remit payment to Preferred. Preferred subsequently notified EarnhartBuilt of its intent to file a materialman’s lien. EarnhartBuilt countered via email, asserting that any lien would be procedurally untimely and thus “fraudulent.” Despite this warning, Preferred proceeded to file the lien.
EarnhartBuilt sued Preferred under Section 12.002, alleging that the lien was fraudulent because it was filed after the statutory deadline. Preferred eventually released the lien and moved for summary judgment, arguing that it lacked the “intent to defraud” required by the statute. Preferred’s corporate representative testified that the lien was filed as part of a standard internal process to collect an actual, unpaid debt for materials delivered. The trial court granted summary judgment in favor of Preferred, dismissing the fraudulent lien claim and associated tort claims.
Issues Decided
The central issue was whether filing a lien that is procedurally untimely or legally unenforceable constitutes the “making, presenting, or use” of a fraudulent lien under Chapter 12 of the Texas Civil Practice and Remedies Code when the underlying debt is legitimate. Secondarily, the court addressed whether the plaintiff raised a genuine issue of material fact regarding the filer’s actual knowledge of the lien’s fraudulent nature at the time of filing.
Rules Applied
The court applied Texas Civil Practice and Remedies Code § 12.002(a), which requires a plaintiff to prove the defendant: (1) made, presented, or used a document with knowledge that it was a fraudulent lien; (2) intended the document to be given legal effect; and (3) intended to cause physical injury, financial injury, or mental anguish.
The court relied on Aland v. Martin and MFG Fin., Inc. v. Hamlin to define “fraudulent” in this context as a “knowing misrepresentation of the truth or concealment of a material fact.” Crucially, the court emphasized that the filer must possess actual knowledge that the lien is fraudulent at the time of filing.
Application
In a narrative analysis of the evidence, the court focused on the distinction between a “legally invalid” lien and a “fraudulent” one. Preferred’s representative, Smith, testified that the company’s motivation was purely the collection of a $17,000 receivable for concrete actually delivered to the site. Even though EarnhartBuilt had emailed Preferred to warn them the lien was “untimely,” the court found this did not equate to Preferred having “knowledge” that the lien was fraudulent.
The court reasoned that a disagreement over the statutory deadlines or the enforceability of a lien is a legal dispute, not a factual misrepresentation. Because Preferred actually provided the concrete and was not paid, the lien was based on a truthful underlying claim. The court noted that if every procedurally defective lien were considered “fraudulent” under Chapter 12, it would create a hair-trigger for massive statutory penalties in routine commercial disputes. Since EarnhartBuilt failed to provide evidence that Preferred knew the lien was a “misrepresentation of the truth,” the “knowledge” element of the statute remained unsatisfied.
Holding
The Court of Appeals affirmed the trial court’s summary judgment. The court held that a document is not “fraudulent” for the purposes of Section 12.002 merely because it may be or is eventually found to be invalid or unenforceable.
Furthermore, the court held that because the lien was based on materials actually delivered and a debt actually owed, the act of filing—even if procedurally flawed—lacked the requisite fraudulent intent. The court concluded that EarnhartBuilt failed to raise a fact issue regarding Preferred’s knowledge of fraudulence at the inception of the filing.
Practical Application
For the family law litigator, this case serves as a defensive shield when a client has recorded a lien or an abstract of judgment that is later challenged as procedurally deficient. If your client can demonstrate a bona fide underlying debt (e.g., a promissory note between spouses or an entity debt), the fact that the lien might be voidable under the Texas Family Code or technically untimely under the Property Code does not automatically expose the client to the $10,000 statutory penalty or the attorney’s fee shifts of Chapter 12.
Strategically, when facing a Chapter 12 claim, practitioners should immediately focus discovery on the “knowledge” element. Depositions should center on the filer’s belief in the validity of the debt rather than the technicalities of the lien’s perfection. If the debt is real, the “fraud” is likely non-existent in the eyes of the Fifth Court.
Checklists
Defending a Chapter 12 Fraudulent Lien Claim
- Establish the Bona Fides of the Debt
- Gather invoices, delivery receipts, or promissory notes that prove the underlying obligation.
- Document any “actual use” of the materials or funds on the property in question.
- Negate the “Knowledge” Element
- Prepare the client/representative to testify that the filing was a good-faith attempt to secure payment.
- Show that any legal defects (untimeliness, improper notice) were unknown to the filer at the moment of recording.
- Distinguish between “legal invalidity” and “factual misrepresentation.”
- Evidentiary Timing
- Ensure all evidence of the debt pre-dates the filing of the lien.
- Review all correspondence (emails/demand letters) sent prior to filing to ensure they reflect a demand for a legitimate debt.
Perfecting a Chapter 12 Offensive Strategy
- Prove Factual Falsity
- Look for evidence that the debt claimed in the lien never existed or was already paid in full.
- Identify specific “misrepresentations of truth” within the four corners of the lien affidavit.
- Establish Intent to Injure
- Document timing of the lien (e.g., filed 24 hours before a scheduled closing on the marital home).
- Gather communications showing the filer used the lien as leverage for unrelated concessions in the divorce.
Citation
EarnhartBuilt, LLC v. Preferred Materials, LLC, et al., No. 05-24-00804-CV (Tex. App.—Dallas Feb. 5, 2026, no pet. h.).
Full Opinion
Family Law Crossover
This ruling can be weaponized in a Texas divorce when one spouse attempts to use a Section 12.002 claim to gain leverage over the other regarding “family debts.” For example, if a Husband’s separate property business files a lien against the community residence for “unpaid management fees,” the Wife may argue the lien is fraudulent because it violates the standing order or the business is a mere alter ego. Under EarnhartBuilt, the Husband can argue that as long as the “management fees” were actually billed—even if the lien is ultimately vacated by the family court as a violation of the temporary injunction—it is not “fraudulent” under the Civil Practice and Remedies Code. This significantly limits the availability of the “Chapter 12 Hammer” in property division disputes, shifting the focus back to traditional reimbursement or waste claims rather than statutory fraud penalties.
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