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What is the property and the value of the property that is being held by the ex-employer?
It is a tool box and tools valued at about $3500 that we purchased ourselves
Legally speaking, no, they cannot do this, unless there is a mechanics or materialmans' lien on it (which there almost certainly is not). Otherwise, them retaining your personal property would constitute "conversion" (civil theft) and would be actionable. Now whether or not you can get the police involved depends on their willingness to be a part of it. In my experience, 99% of the time, the police will say it's a civil matter and that they're not going to get involved.
Do a search on the web for your county and "small claims court." You should find either a website or phone number to the small claims clerk. Ask them what you need to do to bring such a lawsuit. The small claims clerk will give you guidance on how to file this suit and how to get the other party served with notice. You will receive a hearing date, at which you should present your evidence and ask for a judgment for the return of the tools, plus your fees and costs.
Since this is a tort, Texas law does not allow for the recovery of attorney's fees should you use an attorney, which is why I would suggest filing this on your own.
You can, in an attempt to avoid going to court, send a demand letter hoping they'll return the tools to you. Send a demand letter demanding payment within 30 days, otherwise you will pursue legal action against him, seeking that amount plus any additional damages as allowed by law. Send this letter certified, return receipt requested, as well as a copy sent regular mail. Keep a copy for yourself, as well as the return receipt number so that you can show the court that you made a demand for the unreturned tools.
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