Reverse and Render : Texas Appellate Lawyer & Attorney : Cowles & Thompson Law Firm : Court of Appeals, Texas Supreme Court

The Dallas Court of Appeals, in an opinion by Chief Justice Carolyn Wright (left), recently held that attorney's fees awarded in a judgment need not be superseded on appeal.  In an opinion last year also by Chief Justice Wright, the Dallas Court held that attorney's fees awarded in a breach of contract case were not "compensatory damages," and, therefore, were not required to be superseded on appeal.  Here, attorney's fees were awarded under Chapter 134 of the CPRC, otherwise known as the Texas Theft Liability Act.  The Court held that Chapter 38 (regarding breach of contract) and Chapter 134 of the CPRC were basically indistinguishable noting that attorney's fees were mandatory under  both provisions.  The Court refused to follow the rationale of the Houston (1st) Court of Appeals, which had previously held that attorney's fees constitute compensatory damages and must be superseded on appeal. Consequently, the Dallas Court denied the Appellee's request to increase the supersedeas bond to secure the award of attorney's fees.  This creates a spilt of authority between Dallas and Austin, both holding attorney's fees need not be superseded, and Houston (1st), holding attorney's fees must be superseded, making it ripe for review by the Texas Supreme Court.   The Court's opinion in Imagine Automotive Group, Inc. v. Boardwalk Motor Cars, LLC can be found here.  

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The Dallas Court of Appeals has held that a trial court did not abuse its discretion by excluding the amount of the judgment appealed from the judgment debtor's net worth calculation for purposes of a supersedeas bond.  What is different from this opinion than from a prior opinion we blogged about is that in this case there was expert testimony on both sides of the issue.

In Anderton v. Cawley, Anderton sought to reduce the amount of supersedeas required of him.  He filed an affidavit of net worth with a negative net worth and showing the amount of the trial court's judgment against him as a liability.  One Appellee objected to the affidavit and a hearing was held to determine the debtor's net worth.  Anderton presented expert testimony showing why the judgment should be treated as a liability under generally accepted accounting principles (GAAP).   The Appellee also presented expert testimony.  Its expert testified that not including the judgment in the net worth calculation is consistent with GAAP.  The trial court rejected inclusion of the judgment as a liability, determining that it would be "illogical" to do so.

On motion to review the trial court's ruling, the court of appeals holds that the trial court did not abuse its discretion in excluding the judgment.  The reasoning for the decision is limited.  The court noted that supersedeas requires calculation of net worth and observed that the statute regarding supersedeas does not include a "contingent money judgment" as a liability.  The court's opinion may be found here.

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Once again, a court of appeals has weighed in on the question of calculating net worth for purposes of supersedeas.  The Dallas Court of Appeals recently held that a trial court did not abuse its discretion by refusing to include the judgment as a liability in calculating the judgment debtor's net worth.  The court relied on the fact that there was expert testimony that the judgment should not be included under generally accepted accounting principles.  Noting the standard of review was abuse of discretion, the court of appeals held that the trial court did not abuse its discretion in excluding the judgment from the net worth calculation because evidence was presented that supported the trial court's ruling.  The opinion does not answer the question of whether a trial court has discretion to include the judgment amount as a liability.  It seems the answer turns on the evidence presented to the trial court.  The court of appeals' opinion in Anderton v. Cawley can be found here.     

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Supersedeas aficionados will want to take a look at the Austin Court of Appeals' opinion in Shook v. Walden.  The opinion gives a very thorough treatment of the parties' arguments and analysis of the law relating to elements of damages that must be superseded.  To summarize, the court of appeals makes the following holdings:

• Attorney's fees awarded under Civil Practice and Remedies Code Chapter 38 are not compensatory damages that must be superseded under Civil Practice and Remedies Code Section 52.006.  The court distinguishes the Houston Fourteenth Court of Appeals decision in Clearview Props., L.P. v. Property Tex. SC One Corp., 228 S.W.3d 262 (Tex. App.--Houston [14th Dist.] 2007, pet. denied)
• Prejudgment interest is a form of compensatory damages that must be superseded under Civil Practice and Remedies Code Section 52.006.
• The clerk's record for an appeal is not a cost awarded in the judgment and does not have to be superseded under Civil Practice and Remedies Code Section 52.006.
• Post-judgment interest, including the post-judgment interest awarded on prejudgment interest, trial and post-judgment attorney's fees, and costs must be superseded under Civil Practice and Remedies Code Section 52.006.
• Post-judgment interest for one year's estimated is adequate since the trial court has continuing jurisdiction to revisit the matter after a year has passed.

The court's opinion may be found here.  The court's opinion that post-judgment interest on post-judgment attorney's fees must be superseded is interesting in light of the Fourteenth Court's holding that post-judgment interest on post-judgment attorney's fees should not begin to run until the appeals court judgment is final.  Protechnics Int'l, Inc. v. True-Tag Sys., Inc., 843 S.W.2d 734, 736 (Tex. App.-- Houston [14th Dist.] 1992, no writ).

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The San Antonio Court of Appeals has issued an interesting opinion in a mandamus proceeding involving what is described as an unsuperseded judgment.  In In re Romero, Gonzalez & Benavides, L.L.P., there was a dispute between the law firm of Romero, Gonzalez & Benavides (RG&B) and attorney Mark Cantu regarding the right to a portion of a settlement recovery.  The funds in question were placed into the registry of the court and the trial court subsequently ruled that the funds belonged to RG&B and signed a final judgment to that effect. 

After Cantu appealed, RG&B filed a motion seeking the release of the funds.  The trial court ruled that it would not release the funds while Cantu's appeal was pending.  RG&B filed a petition for writ of mandamus seeking to force the release of the funds.

The court of appeals holds that the trial court abused its discretion because Cantu had filed no supersedeas bond to suspend execution on the judgment.  Appellate Rule 24.1 allows for the filing of a cash deposit in lieu of a bond.   Cantu could have deposited one year's worth of post-judgment interest and court costs to be added to the existing funds on deposit with the court and arguably the judgment is fully suspended.   Or, the trial court could have ordered alternate or lesser security and held that the funds on deposit were sufficient to supersede the judgment.  I have not read the parties' mandamus briefs to know of any of this was tried or argued, but from the court of appeals opinion, it does not appear as the trial court treated its order as an order regarding supersedeas (reviewable by motion rather than mandamus) and it does not appear that the parties asserted that the trial court's order was an order relating to supersedeas.  Nonetheless, it seems as though Rule 24 provides a simple avenue for relief for Cantu.  The Court's opinion may be found here.

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The Austin Court of Appeals has held that a court of appeals judgment that affirms the trial court's judgment is the equivalent of a judgment rendered against the appellants.  In Kleas v. BMC West Corp., the Court construes TRAP 43.5 regarding judgments against sureties and holds that its judgment affirming the trial court's judgment is the same as a judgment against the appellants.  The Court's supplemental opinion may be found at this link.

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