Joseph Chandy v. Kerala Christian Adult Homes, LLC, F/K/A Kerala Christian Adult Homes I, LLC, F/K/A Kerala Christian Adult Homes, I, L.P. ( 2021 )

DISMISSED in part; AFFIRMED in part; and Opinion Filed February 1,
2021
S In The
Court of Appeals
Fifth District of Texas at Dallas
No. 05-20-00510-CV
JOSEPH CHANDY,
THOMAS KOOVALLOOR, MATHEW JACOB, RAJU P. ABRAHAM,
JOHN VARGHESE, JOHNSON PAULOSE, JAMES KADAVUNKAL,
AMMINI MATHEW, ANNIE ABRAHAM, BABY KURIAKOSE,
PAILY K. SCARIA, FR. RAJAN PETER, JAMES JOSEPH,
GEORGE NIRAPPUKANDATHIL, ALICE VALSAMMA,
ABRAHAM CHERIAN, VARGHESE P. KUNNATH,
MARY M. KUNNATH, KOSHY M. THOMAS, ABRAHAM VARGHESE,
THOMAS CHACKO, LEELAMMA THOMAS, VILAYIL STEPHEN,
LUKOSE CHACKO, ANNAMMA CHACKO, GEORGE VARGHESE,
JACOB KURIAKOSE, BABY THOTTUKADAVIL,
PAULOSE KURIAKOSE, MOLLY KURIAKOSE,
CHINNAMMA PAULOSE, AND PAULOSE VARKEY, Appellants
V.
KERALA CHRISTIAN ADULT HOMES, LLC,
F/K/A KERALA CHRISTIAN ADULT HOMES I, LLC,
F/K/A KERALA CHRISTIAN ADULT HOMES, I, L.P., Appellee
On Appeal from the 471st Judicial District Court
Collin County, Texas
Trial Court Cause No. 471-05907-2017
OPINION
Before Justices Myers, Osborne, and Carlyle
Opinion by Justice Osborne
This is a dispute about the continuation of a receivership. Appellant Joseph
Chandy and certain intervenors appeal the trial court’s order denying a motion to
dissolve the receivership. The receiver, Kevin D. McCullough, has moved to dismiss
Chandy’s appeal for lack of jurisdiction. We grant the receiver’s motion to dismiss
Chandy’s appeal. In the intervenors’ appeal, we affirm the trial court’s order.
BACKGROUND
Chandy is one of the defendants in a lawsuit filed by Kerala Christian Adult
Homes, LLC (“KCAH”) arising from an unsuccessful venture to develop a
retirement community in Royse City. In 2005, KCAH purchased over 400 acres of
land in Royse City for the venture. KCAH bought the land with investment money
from 150 individuals and couples who purchased membership interests in KCAH at
a stated price of $25,000.00 per person.
In the years following, Chandy loaned over $2 million to KCAH in connection
with the venture and later recorded deeds of trust to secure the loans with KCAH’s
Royce City property. On August 1, 2017, Chandy foreclosed on more than 200 acres
of the secured property.
KCAH sued Chandy two weeks later, alleging breach of contract, fraud,
breach of fiduciary duty, and other claims. That suit was later consolidated with
KCAH’s suit against another of its lenders, Joshy Abraham, in which Kevin D.
McCullough had already been appointed as receiver (“Receiver”). After the
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Receiver negotiated a settlement with Abraham, a group of KCAH’s members1
(“Objecting Members”) intervened by motion (1) to object to the proposed
settlement and (2) in KCAH’s name, to vacate the order appointing the receiver or
to dissolve the receivership. Chandy filed motions to concur with the Objecting
Members’ motions. By order dated April 2, 2020, the trial court denied the motion
to vacate the Receiver’s appointment or dissolve the receivership (the “Receivership
Order”). On the same date, the trial court signed a separate order granting the
Receiver’s motion to approve the settlement with Abraham. In this appeal, Chandy
and the Objecting Members challenge only the Receivership Order.
Chandy filed a notice of appeal on May 1, 2020, followed by a motion to
extend the time to file the notice. We granted Chandy’s motion and deemed his
notice of appeal timely for jurisdictional purposes. The Objecting Members filed a
notice of appeal in the trial court on May 15, 2020, and in this Court on May 19,
2020, but did not request an extension of time. The Receiver moved to dismiss
Chandy’s appeal for lack of jurisdiction and the Objecting Members’ appeal as
untimely. By order of July 22, 2020, we denied the Receiver’s motion to dismiss the
1
As listed in their brief, these members are Thomas Koovalloor, Mathew Jacob, Raju P. Abraham,
John Varghese, Johnson Poulose [other record references show this surname as “Paulose”], James
Kadavunkal, Ammini Mathew, Annie Abraham, Baby Kuriakosek [other record references show this
surname as “Kuriakose”], Paily K. Scaria, Fr. Rajan Peter, James Joseph, George Nirappukandathil, Alice
Valsamma, Abraham Cherian, Varghese P. Kunnath, Mary M. Kunnath, Koshy M. Thomas, Abraham
Varghese, Thomas Chacko, Leelamma Thomas, Vilayil Stephen, Lukose Chacko, Annamma Chacko,
George Varghese, Jacob Kuriakose, Baby Thottukadavil, Paulosf Kuriakose [other record references show
this first name as “Paulose”], Molly Kuriakose, Chinnamma Paulose, and Paulose Varkey (collectively, the
“Objecting Members”). The Objecting Members also stated they were objecting on KCAH’s behalf, but
McCullough disputes their authority to do so.
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Objecting Members’ appeal and deferred the motion to dismiss Chandy’s appeal to
the submissions panel.
In one issue, Chandy contends the trial court erred by refusing to dissolve the
receivership. The Objecting Members make the same contention in their appeal, but
rely solely on Chandy’s brief. They filed a “Joinder in and Adoption of Brief of
Appellant Joseph Chandy” under appellate procedure rule 9.7 without substantive
content. See TEX. R. APP. P. 9.7 (any party may join in or adopt by reference all or
any part of a brief filed in an appellate court by another party in the same case).
We first address the deferred jurisdictional question of Chandy’s standing
before considering the challenge to the Receivership Order.
DISCUSSION
A. Chandy’s standing
The Receiver has filed a motion to dismiss this appeal for lack of subject
matter jurisdiction, arguing that Chandy “has no justiciable interest in the
[Receivership] Order, [and] thus lacks standing to appeal.” “Subject matter
jurisdiction is essential to the authority of a court to decide a case.” Tex. Ass’n of
Bus. v. Tex. Air Control Bd., 852 S.W.2d 440, 443 (Tex. 1993). “Standing is implicit
in the concept of subject matter jurisdiction.” Id. “Subject matter jurisdiction is never
presumed and cannot be waived.” Id. at 443–44.
Because standing is a component of subject matter jurisdiction, we consider
Chandy’s standing under the same standard by which we review subject matter
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jurisdiction generally. See id. at 446. “That standard requires the pleader to allege
facts that affirmatively demonstrate the court’s jurisdiction to hear the cause.” Id. In
our review, we construe the pleadings in favor of the pleader, looking to the pleader’s
intent, and, if necessary, review the entire record to determine if any evidence
supports standing. Id. A party of record is normally entitled to appeal; however, that
party’s own interest must be prejudiced before it has standing to appeal. Reynolds v.
Reynolds, 860 S.W.2d 568, 570 (Tex. App.—Dallas 1993, writ denied). An appellant
has the burden of making a prima facie showing of prejudice. Gorman v. Gorman,
966 S.W.2d 858, 864 (Tex. App.—Houston [1st Dist.] 1998, pet. denied).
The Receiver argues that Chandy has no legally cognizable interest in the
outcome of the settlement with Abraham or the dissolution of the receivership. He
contends that Chandy has not “articulated any particularized harm that would befall
him” as a result of the Receiver’s continued management and control of KCAH. He
argues that Chandy’s “hidden motive” was to hinder or preclude KCAH’s claims
under the Texas Uniform Fraudulent Transfer Act that can be best raised by a
receiver. See TEX. BUS. & COM. CODE §§ 24.001–24.013 (“TUFTA”); Magaraci v.
Espinosa, Nos. 03-14-00515-CV and 03-14-00518-CV, 2016 WL 858989, at *8
(Tex. App.—Austin Mar. 4, 2016, no pet.) (mem. op.) (receiver has standing to sue
under TUFTA as representative of corporation and corporation’s creditors to
preserve and recover corporation’s assets) (citing and discussing Cotten v. Republic
Nat’l Bank, 395 S.W.2d 930, 941 (Tex. App.—Dallas 1965, writ ref’d n.r.e.)). As
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explained in Akin, Gump, Strauss, Hauer & Feld, L.L.P. v. E Court, Inc., No.
03-02-00714-CV, 2003 WL 21025030, at *5 (Tex. App.—Austin May 8, 2003, no
pet.) (mem. op.):
Generally, a receiver has no greater powers than the corporation had as
of the date of the receivership. However, when the receiver acts to
protect innocent creditors of insolvent corporations . . . the receiver acts
in a dual capacity, as a trustee for both the stockholders and the
creditors, and as trustee for the creditors he can maintain and defend
actions done in fraud of creditors even though the corporation would
not be permitted to do so.
Id. (internal quotations and citations omitted).
Chandy argues that he is a secured creditor and has standing in that capacity
to protect his “economic and legal interest,” citing civil practice and remedies code
section 64.001(a)(2). See TEX. CIV. PRAC. & REM. CODE § 64.001(a)(2) (availability
of receivership remedy; court may appoint receiver “in an action by a creditor to
subject any property or fund to his claim”). The Receiver responds that after
Chandy’s nonjudicial foreclosure, Chandy is no longer a secured creditor and is not
asserting a deficiency claim.
As the Receiver argues, “a creditor, to be entitled to a receivership, must be a
secured creditor.” See, e.g., Jay & VMK, Corp. v. Lopez, 572 S.W.3d 698, 704 (Tex.
App.—Houston [14th Dist.] 2019, no pet.) (collecting cases for proposition that
since 1890, courts have “uniformly held” that “creditor” as used in receivership
statute means “secured creditor”). The Receiver explains that when Chandy
“exercised a self-help remedy of non-judicial foreclosure in 2017,” any deficiency
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was “merely an unsecured claim,” and in any event, Chandy is not claiming any
deficiency. See Cha v. Branch Banking & Tr. Co., No. 05-14-00926-CV, 2015 WL
5013700, at *4 (Tex. App.—Dallas Aug. 25, 2015, pet. denied) (mem. op.) (“If, after
a foreclosure sale has been conducted, there is a deficiency, the deficiency amount
may be considered unsecured.”). Consequently, the Receiver argues, Chandy
“cannot claim creditor status at all, secured or unsecured.”
Chandy also argues that his “economic and legal interest is the same” as if he
were seeking appointment of a receiver rather than removal, so section 64.001(a)(2)
applies equally to an action to remove a receiver. See TEX. CIV. PRAC. & REM. CODE
§ 64.001(a)(2) (receiver may be appointed “in an action by a creditor to subject any
property or fund to his claim”). But as the Receiver argues, a creditor applying for
appointment of a receiver (1) “must have a probable interest in or right to the
property or fund,” and (2) “the property or fund must be in danger of being lost,
removed, or materially injured.” Id. § 64.001(b). Post-foreclosure, Chandy’s
“economic and legal interest” is no longer to preserve property or a fund that is in
danger of being lost or materially injured.
As the Receiver argues, Chandy “does not have a justiciable interest in
whether the trial court’s upholding of the receivership was a proper exercise of
judicial discretion or not.” Consequently, we conclude that Chandy lacks standing
to appeal the Receivership Order. See Reynolds, 860 S.W.2d at 570 (party’s own
interest must be prejudiced before it has standing to appeal). We dismiss Chandy’s
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appeal for lack of jurisdiction. See, e.g., Brashear v. Victoria Gardens of McKinney,
L.L.C., 302 S.W.3d 542, 546 (Tex. App.—Dallas 2009, no pet.) (“Unless the record
affirmatively shows the propriety of appellate jurisdiction, we must dismiss.”).
B. Objecting Members’ appeal
1. Jurisdiction
We first note that we have jurisdiction over the Objecting Members’ appeal
even though its timeliness was dependent on Chandy’s. As we have discussed, we
granted Chandy’s motion for extension of time to file his notice of appeal and
deemed his notice timely for jurisdictional purposes. See TEX. R. APP. P. 26.3
(requirements to obtain extension of time to file notice of appeal). “The filing of a
notice of appeal by any party invokes the appellate court’s jurisdiction over all
parties to the trial court’s judgment or order appealed from.” TEX. R. APP. P. 25.1(b).
Objecting Members’ notice of appeal, filed in the trial court 14 days after
Chandy’s, was timely under rule 26.1(d). See TEX. R. APP. P. 26.1(d) (providing in
part that if any party timely files a notice of appeal, another party may file a notice
14 days after the first-filed notice). Our lack of jurisdiction over Chandy’s appeal
does not divest jurisdiction over Objecting Members’ appeal. “[W]here jurisdiction
is once lawfully and properly acquired, no subsequent fact or event in the particular
case serves to defeat the jurisdiction.” Flynt v. Garcia, 587 S.W.2d 109, 109–10
(Tex. 1979) (per curiam).
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2. Review of trial court’s ruling
Objecting Members2 argue that a receivership “may be vacated or dissolved
at any time upon proper showing that the allegations upon which the receiver was
appointed are no[ ] longer true,” citing Massey v. Greenwood, 56 S.W.2d 1103, 1105
(Tex. App.—Texarkana 1932, no writ). They further argue “the record must show
that the pleadings and evidence are sufficient to justify” the receivership’s
continuation, citing Estate of Price, 528 S.W.3d 591, 594 (Tex. App.—Texarkana
2017, no pet.).
We review the trial court’s decision whether to terminate a receivership under
an abuse of discretion standard. E Court, Inc., 2003 WL 21025030, at *3. We may
not substitute our judgment for that of the trial court, and may reverse only when the
court acted arbitrarily, unreasonably or without regard for any guiding rules or
principles. Id.Objecting Members argue the receivership is no longer justified because:
 “the Receiver was settling KCAH’s claims against Abraham for an
insufficient amount and without adequate explanation,”
 “while the Receiver was appointed in order to get around conflicts of
interest on KCAH’s board, that circumstance no longer exist[s],”
2
As noted, Objecting Members did not independently brief their issue. The only argument challenging
the trial court’s ruling was made by Chandy and adopted by Objecting Members. See TEX. R. APP. P. 9.7.
For clarity, however, we address the issue and supporting arguments as if they were made by Objecting
Members in the first instance.
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 Objecting Members “are adults with sufficient assets to have each
invested at least $25,000 in KCAH,” “not minors in need of a trustee,”
 the Receiver’s authority is limited to pursuing claims on behalf of
KCAH itself, not KCAH’s creditors, who could assert claims on their
own behalf,
 KCAH’s insolvency alone is not sufficient reason to continue the
“harsh remedy” of receivership, and
 Only three of KCAH’s 150 members originally requested appointment
of the receiver in 2018, and now more than 50 members have requested
that the receivership be dissolved, while no member has requested its
continuation.
In the trial court, the Objecting Members combined their request to remove
the Receiver with their objections to the settlement with Abraham, and their
arguments for removal were premised on their disagreement with the proposed
settlement. They argued they “believed that the Receiver was doing an effective job
at presenting his case and proceeding towards trial,” “[b]ut then, out of nowhere, the
Receiver filed its Settlement Motion” that “not only discontinues prosecution of
Abraham’s egregious conduct, but it rewards Abraham quite handsomely for his
apparent fraud.”
Objecting Members explained that they “are not looking to take control,” and
conceded that if they did take control, their effective prosecution of the case against
Abraham “would largely be on the back of the Receiver, who built the case.” They
contended that they “would prefer that the Receiver prosecute his case” against
Abraham, but if the Receiver would not, they would “rather terminate the Receiver
so that somebody will prosecute claims against Joshy Abraham.” They concluded:
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Contrary to the suggestion of the Receiver, [Objecting Members] are
not “attack[ing] the professionalism of the Receiver and the
appropriateness of the Receivership as a whole.” The [Objecting
Members] are suggesting that the Abraham Settlement Agreement is
not a good one—that it unduly rewards a bad actor without benefitting
those that were truly harmed. [Objecting Members] believe that the
Receiver did a good job of building his case, but then bailed out of fear.
There is always the possibility of receiving a negative jury verdict, but
in this case, it is worth the risk. The Receiver has not met his burden. If
the Receiver is not willing to complete the job, then [Objecting
Members] want to install someone that will.
(Emphasis added). The trial court decided against these arguments, approving the
Abraham settlement in an order that has not been challenged in this appeal.
In its original “Order Granting Plaintiffs’ Emergency Application for
Appointment of a Receiver,” the trial court made fact findings that “As of October
31, 2017, KCAH was balance sheet insolvent by nearly $1 million,” and “Faced with
no revenues, no prospects for developing the land it owned, and ongoing litigation
between and among members of the Board of Directors and former Board of
Directors, KCAH does not appear capable of paying its debts as they come due or
have the ability to continue as a going concern.” In his response to Objecting
Members’ motion to dissolve the receivership supported by his affidavit, the
Receiver stated that all of the factors supporting the original receivership order “are
still present to this day.”
Further, although KCAH’s claims against Abraham have been settled, its
claims against Chandy remain pending. See TEX. CIV. PRAC. & REM. CODE § 64.033
(receiver may bring suit in his official capacity without permission of appointing
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court). “A receiver has a duty to pursue a corporation’s claims, including
unliquidated claims and causes of action belonging to the corporation, and may not
abandon assets because litigation is required to secure them.” E Court, Inc., 2003
WL 21025030, at *5 (internal quotation and citation omitted). “The civil practice
and remedies code expressly contemplates the need for extension of a receivership
in case of litigation.” Id. at *6 (citing TEX. CIV. PRAC. & REM. CODE § 64.072 that
allows extension of receivership past three years if “litigation prevents the court from
winding up the affairs of the corporation”).
On this record, we conclude the trial court did not abuse its discretion by
denying the motion to vacate the Receiver’s appointment or to dissolve the
receivership. We decide Objecting Members’ sole issue against them, and affirm the
trial court’s Receivership Order.
CONCLUSION
We dismiss Joseph Chandy’s appeal for lack of jurisdiction.
In the Objecting Members’ appeal, we affirm the trial court’s April 2, 2020,
“Order on Motion to Vacate Order Appointing Receiver or to Dissolve
Receivership.”
/Leslie Osborne/
LESLIE OSBORNE
JUSTICE
200510F.P05
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S
Court of Appeals
Fifth District of Texas at Dallas
JUDGMENT
JOSEPH CHANDY, THOMAS On Appeal from the 471st Judicial
KOOVALLOOR, MATHEW District Court, Collin County, Texas
JACOB, RAJU P. ABRAHAM, Trial Court Cause No. 471-05907-
JOHN VARGHESE, JOHNSON 2017.
PAULOSE, JAMES Opinion delivered by Justice
KADAVUNKAL, AMMINI Osborne. Justices Myers and Carlyle
MATHEW, ANNIE ABRAHAM, participating.
BABY KURIAKOSE, PAILY K.
SCARIA, FR. RAJAN PETER,
JAMES JOSEPH, GEORGE
NIRAPPUKANDATHIL, ALICE
VALSAMMA, ABRAHAM
CHERIAN, VARGHESE P.
KUNNATH, MARY M.
KUNNATH, KOSHY M. THOMAS,
ABRAHAM VARGHESE,
THOAMS CHACKO, LEELAMMA
THOMAS, VILAYIL STEPHEN,
LUKOSE CHACKO, ANNAMMA
CHACKO, GEORGE VARGHESE,
JACOB KURIAKOSE, BABY
THOTTUKAVAVIL, PAULOSE
KURIAKOSE, MOLLY
KURIAKOSE, CHINNAMMA
PAULOSE, AND PAULOSE
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VARKEY, Appellants
No. 05-20-00510-CV V.
KERALA CHRISTIAN ADULT
HOMES, LLC, F/K/A KERALA
CHRISTIAN ADULT HOMES I,
LLC, F/K/A KERALA CHRISTIAN
ADULT HOMES, I, L.P., Appellee
In accordance with this Court’s opinion of this date, appellant Joseph
Chandy’s appeal is DISMISSED for want of jurisdiction.
In all other respects, the trial court’s April 2, 2020 “Order on Motion to Vacate
Order Appointing Receiver or to Dissolve Receivership” is AFFIRMED.
It is ORDERED that appellee Kerala Christian Adult Homes, LLC, f/k/a
Kerala Christian Adult Homes I, LLC, f/k/a Kerala Christian Adult Homes, I, L.P.
recover its costs of this appeal from appellants Joseph Chandy, Thomas Koovalloor,
Mathew Jacob, Raju P. Abraham, John Varghese, Johnson Paulose, James
Kadavunkal, Ammini Mathew, Annie Abraham, Baby Kuriakose, Paily K. Scaria,
Fr. Rajan Peter, James Joseph, George Nirappukandathil, Alice Valsamma,
Abraham Cherian, Varghese P. Kunnath, Mary M. Kunnath, Koshy M. Thomas,
Abraham Varghese, Thomas Chacko, Leelamma Thomas, Vilayil Stephen, Lukose
Chacko, Annamma Chacko, George Varghese, Jacob Kuriakose, Baby
Thottukadavil, Paulose Kuriakose, Molly Kuriakose, Chinnamma Paulose, and
Paulose Varkey.
Judgment entered February 1, 2021
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