Full Opinion

In the Court of Appeals Second Appellate District of Texas at Fort Worth ___________________________ No. 02-26-00264-CV ___________________________ PROSPERITY BANK, Appellant V. CHRISTINA MARIE STEED AND ROBERT DALE STEED, Appellees On Appeal from the 43rd District Court Parker County, Texas Trial Court No. CV25-1256 Before Birdwell, Wallach, and Walker, JJ. Memorandum Opinion by Justice Birdwell MEMORANDUM OPINION During the underlying divorce proceeding between Appellees Christina Marie Steed (Wife) and Robert Dale Steed (Husband), the trial court appointed a receiver to sell certain real property belonging to an entity owned by Husband and Wife. Appellant Prosperity Bank—who had a lien on that real property—later moved to dissolve the receivership, arguing, among other things, that it was not given notice prior to the appointment of the receiver as required by Texas Rule of Civil Procedure 695. See Tex. R. Civ. P. 695. Following a hearing, the trial court denied Prosperity Bank’s motion. In a single issue on appeal from that ruling, Prosperity Bank argues that the trial court abused its discretion by denying the motion to dissolve the receivership. 1 We will hold that Prosperity Bank did not receive the notice required by Rule 695 prior to the appointment of the receiver. We will thus sustain Prosperity Bank’s sole issue, reverse the trial court’s order denying the motion to dissolve the receivership, and render an order dissolving the receivership. I. Background In December 2024, Bronco Property Group, LLC—an entity owned by Husband and Wife—signed a promissory note (the Note) through which it agreed to pay $1,000,000 plus interest to Prosperity Bank. The principal and all unpaid accrued interest on the Note were due and payable in full in December 2025. In December 2024, Husband and Wife each signed guaranty agreements through which they 1 Neither Husband nor Wife filed an appellee’s brief in this matter. 2 guaranteed the punctual payment of Bronco’s indebtedness to Prosperity Bank. That same month, Bronco signed a deed of trust pledging two tracts of real estate in Palo Pinto County (the Properties) as collateral for the Note. In August 2025, Wife filed a petition for divorce from Husband. Husband answered Wife’s petition and filed a counter-petition. In January 2026, Prosperity Bank notified Bronco, Husband, and Wife that they were each in default of the Note and the guarantees.2 Prosperity Bank warned that it could foreclose on the Properties if it did not receive payment on the Note. In February 2026, Husband filed a motion to appoint a receiver to manage the Properties and to take any steps necessary to avoid foreclosure. In March 2026, without any prior notice being given to Prosperity Bank, the trial court signed an order appointing Brooke Ladouceur (the Receiver) as a receiver charged with selling the Properties. The day after she was appointed, the Receiver filed an original petition and application for temporary restraining order and temporary injunction against Prosperity Bank. Through that petition, the Receiver asked that Prosperity Bank be restrained from foreclosing on and selling the Properties. Prosperity Bank answered the Receiver’s lawsuit, and it later filed a motion to dissolve the receivership. Among other arguments, Prosperity Bank contended that the Receiver had been appointed without notice in violation of Rule 695. Following a hearing, the trial court signed an In that correspondence, Prosperity Bank stated that $995,518.45 was owed on 2 the Note as of January 21, 2026. 3 order denying Prosperity Bank’s motion to dissolve the receivership. This interlocutory appeal followed. See Tex. Civ. Prac. & Rem. Code § 51.014(a)(2) (authorizing an appeal from an interlocutory order overruling a motion to vacate an order appointing a receiver). II. Discussion In a single issue, Prosperity Bank argues that the trial court abused its discretion by denying the motion to dissolve the receivership. A. Applicable Law and Standard of Review Family Code Section 6.502(a)(5) authorizes a trial court to appoint a receiver for the preservation and protection of property belonging to parties in a suit for the dissolution of a marriage. See Tex. Fam. Code § 6.502(a)(5). A trial court may also appoint a receiver under the rules of equity. See Tex. Civ. Prac. & Rem. Code § 64.001(a)(7); Krumnow v. Krumnow, 174 S.W.3d 820, 828 (Tex. App.—Waco 2005, pet. denied). A receiver is appointed to receive and preserve property for the benefit of all parties interested in the property. Krumnow, 174 S.W.3d at 828. While the law authorizes a receivership in certain situations, a receivership is an extraordinarily harsh remedy that must be cautiously applied and that courts are particularly loathe to utilize. Elliott v. Weatherman, 396 S.W.3d 224, 228 (Tex. App.— Austin 2013, no pet.); Krumnow, 174 S.W.3d at 828. Even when a statute authorizes a receivership, a trial court should not appoint a receiver if another adequate and complete remedy exists at law or in equity. Elliott, 396 S.W.3d at 228. Indeed, 4 “[j]udicial seizure and court management of any asset should be a last resort.” Rusk v. Rusk, 5 S.W.3d 299, 306 (Tex. App.—Houston [14th Dist.] 1999, pet. denied). Moreover, the appointment of a receiver without notice to adverse parties is an especially drastic action that should be exercised with extreme caution and only when great emergency or imperative necessity requires it. Krumnow, 174 S.W.3d at 828. Texas Rule of Civil Procedure 695 places additional restraints on the appointment of a receiver over property that is “fixed and immovable.” See Tex. R. Civ. P. 695. Rule 695 provides, in pertinent part, Except where otherwise provided by statute, no receiver shall be appointed without notice to take charge of property which is fixed and immovable. When an application for appointment of a receiver to take possession of property of this type is filed, the judge or court shall set the same down for hearing and notice of such hearing shall be given to the adverse party by serving notice thereof not less than three days prior to such hearing. Id. We review a trial court’s denial of a motion to dissolve a receivership for an abuse of discretion. Chandy v. Kerala Christian Adult Homes, LLC, 618 S.W.3d 880, 886 (Tex. App.—Dallas 2021, no pet.); Wells Fargo Home Mortg., Inc. v. Alford, No. 2-08- 355-CV, 2010 WL 144397, at *1 (Tex. App.—Fort Worth Jan. 14, 2010, no pet.). A trial court abuses its discretion when it acts without reference to any guiding rules or principles or when it acts in an arbitrary or unreasonable manner. Low v. Henry, 221 S.W.3d 609, 614 (Tex. 2007); Cire v. Cummings, 134 S.W.3d 835, 838–39 (Tex. 2004). 5 B. Analysis Prosperity Bank argues that the receivership should be dissolved because it did not receive the notice required by Rule 695 prior to the appointment of the Receiver. We begin our analysis of that complaint by addressing whether Prosperity Bank was entitled to notice prior to the appointment of the Receiver. 3 Because the Properties are real estate, they are “fixed and immovable property” within the meaning of Rule 695. See Krumnow, 174 S.W.3d at 829 (“Real estate is ‘fixed and immovable property’ within the meaning of Rule 695.”); Indep. Am. Sav. Ass’n v. Preston 117 Joint Venture, 753 S.W.2d 749, 750 (Tex. App.—Dallas 1988, no writ) (“It is settled that ‘fixed and immovable property’ under Rule 695 refers to real property.”). Thus, prior to the appointment of the Receiver, notice must have been given to any “adverse party.” Tex. R. Civ. P. 695. Courts have held that a lienholder, like Prosperity Bank, is an “adverse party” within the meaning of Rule 695. See, e.g., Indep. Am. Sav. Ass’n, 753 S.W.2d at 750 (“It is the opinion of this court that Independent American is entitled to notice under Texas Rule of Civil Procedure 695 as a creditor because of its lien on immovable property.”); N. Side Bank v. Wachendorfer, 585 S.W.2d 789, 792 (Tex. App.—Houston 3 The Receiver contended in her application that the trial court could appoint a receiver to take control of property owned by Bronco because it is an alter ego of Husband and Wife and had acquired its interest with community credit. See, e.g., Vallone v. Vallone, 644 S.W.2d 455, 458 (Tex. 1982); Gleich v. Bongio, 99 S.W.2d 881, 883 (Tex. [Comm’n Op.] 1937); Mandell v. Mandell, 310 S.W.3d 531, 539 (Tex. App.— Fort Worth 2010, pet. denied); Glover v. Henry, 749 S.W.2d 502, 503 (Tex. App.— Eastland 1988, no writ). 6 [1st Dist.] 1979, no writ) (holding that lienholder was entitled to notice under Rule 695 prior to appointment of receiver because security involved fixed and immovable property). Courts have also held that Rule 695 applies to the appointment of a receiver in a divorce case despite other laws authorizing a trial court to appoint a receiver to preserve and protect the marital estate. See Rusk, 5 S.W.3d at 309 (“We would hold that Rule 695 is applicable to the appointment of receivers in marriage[-]dissolution cases involving fixed and immovable property.”); Nationwide Life Ins. v. Nations, 654 S.W.2d 860, 861–62 (Tex. App.—Houston [14th Dist.] 1983, no writ) (holding that Rule 695 applies in divorce cases despite law authorizing the appointment of a receiver over the marital estate); see also 64 Tex. Jur. 3d Receivers § 33 (2026) (discussing the law authorizing the appointment of a receiver in a divorce case and stating that “[u]nder the procedural rule prohibiting the appointment without notice of a receiver to take charge of property that is fixed and immovable [i.e., Rule 695], the court, in a divorce proceeding, lacks the authority to sell real property owned by the spouses where no notice of the appointment is given to a creditor who holds a valid lien on the property” (footnote omitted)). In its brief, Prosperity Bank points us to Nationwide Life Insurance to support its argument that the appointment of the Receiver violated Rule 695 because it was done without notice to Prosperity Bank. In Nationwide Life Insurance, the trial court appointed a receiver in a divorce action to sell certain real property owned by the marital estate. 654 S.W.2d at 861. No notice was given to Nationwide, an entity that 7 had a valid lien on the property, prior to the court’s appointing the receiver. Id. Nationwide moved to vacate the receivership, and the trial court denied Nationwide’s motion. Id. On appeal, Nationwide argued that the receivership should be vacated because the receiver had been appointed in violation of Rule 695. Id. The Houston Fourteenth Court of Appeals agreed. Id. at 861–62. While recognizing that Texas courts have the power to grant a receivership over the marital estate when it is necessary, the court held that “[a]ppointment of a receiver without notice is expressly forbidden where immovable property is involved.” Id. (first citing Tex. R. Civ. P. 695; and then citing Wachendorfer, 585 S.W.2d at 791–92). Here, like the lienholder in Nationwide Life Insurance, Prosperity Bank was not given notice prior to the appointment of the Receiver despite its possessing a lien on fixed and immovable property subject to the receivership. Accordingly, we hold that the trial court abused its discretion by denying Prosperity Bank’s motion to dissolve the receivership. 4 See id.; see also Krumnow, 174 S.W.3d at 829 (“Appointment of a 4 Even without the strictures of Rule 695, we fail to see how Husband’s and Wife’s rights could not have been protected by less drastic means—such as the granting of a temporary restraining order—without the trial court’s resorting to appointing a receiver without notice to Prosperity Bank. See Krumnow, 174 S.W.3d at 830 (holding that trial court abused its discretion by appointing a receiver without notice when the rights of the interested parties could have been protected by “a restraining order or temporary injunction or less drastic remedy”); Wachendorfer, 585 S.W.2d at 792 (“The allegations set forth in [the] application for appointment of a receiver complained that a trustee sale was imminent . . . . A temporary restraining order would have effectively prevented the trustee’s sale until notice could have been given and a hearing conducted giving appellant an opportunity to be heard. This would have been a less drastic measure . . . .”). 8 receiver without giving notice to adverse parties to be heard on the application is reversible error.” (emphasis removed)); Indep. Am. Sav. Ass’n, 753 S.W.2d at 750 (reversing trial court and ordering dissolution of receivership when lienholder did not receive notice required by Rule 695); Wachendorfer, 585 S.W.2d at 792 (“We find no authority [that] would alleviate appellee’s obligation to give appellant notice of the right to be heard on her application before the receiver was appointed as required by Rule 695. Appointment of a receiver without notice is expressly forbidden where immovable property is involved.”); cf. Mussina v. Morton, 657 S.W.2d 871, 874 (Tex. App.—Houston [1st Dist.] 1983, no writ) (“The pendency of a divorce does not diminish or limit a creditor’s right to proceed against either or both spouses for payment of community debts incurred prior to the divorce decree.”). We sustain Prosperity Bank’s sole issue. III. Conclusion Having sustained Prosperity Bank’s sole issue, we reverse the trial court’s order denying the motion to dissolve the receivership, and we render an order dissolving the receivership. /s/ Wade Birdwell Wade Birdwell Justice Delivered: November 5, 2026 9