Charging Order Is Exclusive Remedy for LLC and Partnership Interests | Gagnon v. Gagnon (2026)

Gagnon v. Gagnon, 12-25-00011-CV, August 19, 2026.

On appeal from 402nd Judicial District Court, Wood County, Texas

Synopsis

A Texas judgment creditor cannot use a turnover order to force the sale of a debtor’s LLC membership interest or partnership interest. Under Texas Business Organizations Code sections 101.112(d) and 153.256(d), a charging order is the exclusive remedy for reaching those interests, and a turnover order that authorizes sale without a charging order is reversible error.

Relevance to Family Law

This opinion matters in post-divorce enforcement, especially where one spouse’s property award, equalization payment, reimbursement claim, or fee award must be collected from a closely held business structure. Family law courts routinely confront obligors whose wealth is concentrated in LLCs, limited partnerships, family partnerships, or informal business ventures. Gagnon is a sharp reminder that even in domestic-relations enforcement, statutory entity protections still govern collection procedure. If the asset to be reached is a membership interest or partnership interest, the practitioner must pursue a charging order rather than a turnover sale of the ownership interest itself. The case also underscores a second appellate lesson for family lawyers: if a party wants to challenge an earlier enforcement order, a later appeal from subsequent contempt or turnover orders will not necessarily revive a missed appellate deadline.

Case Summary

Fact Summary

The case arose out of enforcement in Texas of a California divorce judgment. The California decree dissolved the marriage, addressed conservatorship and support, and awarded Kristina Gagnon an equalization payment of $269,093.29 against Anthony Gagnon. Kristina domesticated that judgment in Wood County under the Uniform Enforcement of Foreign Judgments Act, and once Anthony did not timely challenge the domestication, the foreign judgment became enforceable as a Texas judgment.

The Texas trial court then entered a receivership order and required Anthony to produce financial records. He did not comply, which led to further enforcement proceedings, including a show-cause hearing, contempt findings, fines, a turnover order, and an order addressing storage fees. Meanwhile, Anthony had persuaded the California court to reopen and vacate the property-division portion of the California judgment, while leaving the divorce and child-related rulings intact. He argued in Texas that this development undercut continued enforcement.

The appeal before the Tyler Court of Appeals concerned, among other things, whether the trial court could continue to enforce the domesticated judgment and whether the trial court could authorize the receiver, through a turnover order, to sell Anthony’s interests in an LLC and related partnership interests. The appellate court treated those issues separately. It concluded it lacked jurisdiction to revisit the earlier challenge to enforcement of the domesticated judgment, but it did reach the merits of the turnover order as to the entity interests.

Issues Decided

• Whether the court of appeals had jurisdiction to review Anthony Gagnon’s renewed challenge to enforcement of the domesticated California judgment after his prior appeal was untimely.
• Whether the trial court abused its discretion by authorizing the receiver, through a turnover order, to sell Anthony’s LLC membership interest and partnership interests without first obtaining a charging order.
• Whether Texas Business Organizations Code sections 101.112(d) and 153.256(d) make a charging order the exclusive remedy for a judgment creditor seeking to satisfy a judgment from a debtor’s LLC membership or partnership interest.

Rules Applied

The court relied on two distinct bodies of law.

First, on the foreign-judgment issue, the court applied the Uniform Enforcement of Foreign Judgments Act, Chapter 35 of the Texas Civil Practice and Remedies Code, together with full-faith-and-credit principles. Once an authenticated foreign judgment is properly filed, it becomes enforceable as a Texas judgment unless the judgment debtor proves a recognized basis to deny full faith and credit. The court also emphasized jurisdictional rules governing appellate deadlines, citing authority holding that an untimely notice of appeal deprives the appellate court of jurisdiction.

Second, on the entity-interest issue, the court applied the exclusivity language in the Texas Business Organizations Code:

• Texas Business Organizations Code section 101.112(a), (d) governs charging orders against LLC membership interests and states that a charging order is the exclusive remedy by which a judgment creditor may satisfy a judgment out of the debtor’s membership interest.
• Texas Business Organizations Code section 153.256(d) provides the same exclusivity rule for partnership interests.
• Klinek v. LuxeYard, Inc., 672 S.W.3d 830 (Tex. App.—Houston [14th Dist.] 2023, no pet.), explains that the charging-order mechanism exists to prevent disruption of the business by an execution sale of the owner’s interest.
• Pajooh v. Royal West Inv. LLC, 518 S.W.3d 557 (Tex. App.—Houston [1st Dist.] 2017, no pet.), likewise recognizes that a judgment creditor cannot bypass the charging-order framework to force sale of partnership interests.

Application

The court first separated what it could review from what it could not. Anthony attempted to use this later appeal to attack the continuing enforceability of the domesticated California judgment in light of the California court’s subsequent order vacating the property division. But that fight had already been litigated in Texas, and the resulting ruling had already been the subject of an earlier, untimely appeal. Because the prior notice of appeal was not timely filed, the Tyler court held that appellate jurisdiction never attached to that controversy. In practical terms, that meant Anthony could not relitigate the enforceability issue by reframing it in an appeal from later contempt and turnover orders.

The court then turned to the turnover order. There, the error was straightforward. The January 14 order authorized the receiver to sell Anthony’s interests in an LLC and partnerships as the receiver deemed appropriate. But the order was not a charging order, and the trial court had not invoked the charging-order procedure required by the Business Organizations Code. The appellate court treated that omission as dispositive. Because the statutes declare that a charging order is the exclusive remedy for reaching a debtor’s LLC membership interest or partnership interest, a turnover order authorizing sale of those interests impermissibly exceeded the statutory remedy.

The court’s reasoning is especially important because turnover practice in family law can become expansive once a receiver is appointed and post-judgment collection intensifies. Gagnon makes clear that the turnover statute does not override more specific exclusivity provisions in the Business Organizations Code. If the property sought is an entity ownership interest, the judgment creditor must work within the charging-order framework rather than asking the court to compel a direct sale of the interest itself.

Holding

The court held that it lacked jurisdiction to consider Anthony’s renewed challenge to the enforceability of the domesticated California judgment because that issue related back to an earlier order from which no timely appeal had been perfected. The court therefore overruled his first issue.

On the second issue, the court held that the trial court abused its discretion by authorizing turnover and sale of Anthony’s LLC membership and partnership interests without using the charging-order procedure mandated by Texas Business Organizations Code sections 101.112(d) and 153.256(d). As to those entity interests, the turnover order exceeded the exclusive statutory remedy and was reversed in part.

Practical Application

For Texas family law litigators, Gagnon should immediately change how you draft post-judgment collection requests when business interests are involved. If your client has a money judgment arising from a divorce decree, enforcement order, equalization award, reimbursement claim, sanctions award, or attorney’s fee judgment, do not assume a broad turnover motion can simply sweep in “all ownership interests” in closely held entities. That approach is now a clear appellate target when the asset is an LLC membership interest or partnership interest.

Instead, identify the exact nature of the debtor spouse’s ownership. If the interest is in an LLC, plead and prove for a charging order under section 101.112. If the interest is in a partnership, proceed under section 153.256. If you want the receiver to capture distributions, the charging order is the path. If you ask the court to authorize outright sale of the debtor’s ownership interest through turnover language alone, you are inviting reversal.

The case is equally important from the defense side. When representing the debtor spouse, scrutinize turnover and receivership language for overreach. Family courts often use broad collection language, sometimes without distinguishing among bank accounts, equipment, accounts receivable, entity distributions, and the ownership interests themselves. Gagnon gives debtor’s counsel a clean statutory objection: ownership interests in LLCs and partnerships are protected by an exclusive remedial scheme that a turnover order cannot displace.

The opinion also offers a procedural warning unrelated to charging orders but highly relevant in family litigation. Enforcement proceedings often unfold in layers—domestication, clarification, receivership, contempt, turnover, and ancillary orders. Counsel must identify which orders are appealable and when the deadline runs. A later appeal may not cure the failure to timely challenge an earlier appealable order.

Some practical scenarios where Gagnon will matter include:

• Enforcement of a property division where the obligor spouse holds most wealth through a single-member LLC.
• Collection of an equalization payment from a spouse whose income is routed through family limited partnerships or informal business ventures.
• Post-divorce fee collection where the prevailing spouse seeks appointment of a receiver over ownership interests in operating entities.
• Cases involving efforts to sell business interests to satisfy a support arrearage or judgment for sanctions, where counsel must distinguish between distributions and the ownership interest itself.
• Drafting decrees and enforcement orders in anticipation of collection, so the record clearly identifies entity structure, distributions, management rights, and available remedies.

Checklists

Creditor’s Counsel: Before You Seek Post-Divorce Collection Against Business Interests

• Determine whether the debtor owns:
• an LLC membership interest,
• a partnership interest,
• stock in a corporation,
• a sole proprietorship interest, or
• direct ownership of business assets
• Obtain governing documents, including:
• company agreements,
• partnership agreements,
• certificates of formation,
• assumed name records,
• ownership ledgers, and
• distribution histories
• Confirm whether the judgment seeks to reach:
• distributions,
• accounts receivable,
• management compensation,
• direct business assets, or
• the ownership interest itself
• If the target is an LLC membership or partnership interest, plead specifically for a charging order under the applicable Business Organizations Code section
• Avoid asking for turnover-sale language that authorizes the receiver or sheriff to sell the ownership interest outright absent a charging order
• Build a record showing the existence and value of the interest, the debtor’s ownership percentage, and the history of distributions

Creditor’s Counsel: Drafting the Right Enforcement Order

• Separate entity ownership interests from other non-exempt assets in the proposed order
• Include charging-order language directed to distributions attributable to the debtor’s interest
• Specify the entity and the exact ownership interest being charged
• Serve the entity, if appropriate, so there is clear notice regarding redirection of distributions
• Do not conflate:
• turnover relief as to personal property, bank funds, vehicles, or receivables, with
• charging-order relief as to LLC or partnership interests
• If a receiver is appointed, define the receiver’s authority carefully so it does not exceed the charging-order remedy

Debtor’s Counsel: How to Attack an Overbroad Turnover Motion

• Identify whether the motion seeks sale of:
• an LLC membership interest, or
• a partnership interest
• Cite Texas Business Organizations Code sections 101.112(d) and 153.256(d) as exclusive-remedy provisions
• Argue that a turnover order cannot override a more specific statutory remedial scheme
• Distinguish between:
• distributions from the entity, which may be subject to a charging order, and
• the ownership interest itself, which cannot be sold through turnover alone
• Preserve error by objecting to proposed language authorizing sale, transfer, assignment, or liquidation of the entity interest
• Request modification of the order to limit relief to a proper charging order

Appellate Preservation Checklist in Enforcement Proceedings

• Determine immediately whether the order is final or otherwise appealable
• Calendar all deadlines under the Texas Rules of Appellate Procedure upon signing of the order
• Do not assume a later contempt, turnover, or clarification order will reopen an earlier appellate deadline
• If jurisdiction is uncertain, consider parallel preservation strategies, including notice of appeal and, where appropriate, mandamus
• Make sure the notice of appeal identifies the correct order and is filed on time
• Preserve statutory arguments in the trial court, even where the text appears mandatory

Family Law Trial Strategy When Businesses Are in the Marital Estate

• During the divorce, identify business structures early and accurately
• In the decree, distinguish:
• ownership interests,
• distributions,
• income streams,
• management rights, and
• underlying business assets
• Anticipate collection problems if one spouse’s liquidity is low but entity ownership is substantial
• Consider whether the decree itself should include transfer mechanics, security provisions, liens, or structured payment terms
• In post-judgment practice, choose the remedy that fits the asset rather than relying on generalized turnover language
• Coordinate trial and appellate strategy when enforcement will likely continue across multiple orders

Citation

Gagnon v. Gagnon, No. 12-25-00011-CV, ___ S.W.3d ___ (Tex. App.—Tyler Aug. 19, 2026, no pet.) (mem. op.).

Full Opinion

Read the full opinion here

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