Opinion
No. 07-99-0095-CV
June 21, 1999 Modified Opinion July 20, 1999
Appeal from the 47th District Court of Potter County; No. 81,085-A; Honorable David L. Gleason, Judge.
Deborah R. Smith, Carr, Hunt, Wolfe Joy; Jimmy Williamson, Williamson Sears, L.L.P. for plaintiff.
Mr. Scot Chase, Matthiesen, Chase Erwin; Mr. John Smithee, Templeton, Smithee, Hayes, Fields, Young Heinrich, L.L.P. for defendant.
Panel A: Before BOYD, C.J., and REAVIS and JOHNSON, JJ.
ON MOTION FOR REVIEW OF AMOUNT OF APPELLATE BOND, DEPOSIT, OR SECURITY
Comprehensive Health Care Associates, Inc. (CHC) and Amarillo Health Care Properties, Inc. (AHCP), appellants, filed a motion for temporary emergency relief and review. By their motion for review, appellants challenge the trial court's order denying their motion to lessen amount of supersedeas bond, and in the alternative, appellants request this court to set a supersedeas bond in an amount lower than the amount required by TEX. R. APP. P. 24.2 (a). We deny appellants' motion.
References to the Texas Rules of Appellate Procedure will hereinafter be noted as "Rule."
On December 22, 1998, the trial court rendered judgment on a jury verdict in favor of Inez Trostle and Winston Trostle (the Trostles), and against CHC and AHP. Including actual damages of $2,500,000.00, exemplary damages of $10,000,000.00, and prejudgment interest, the trial court awarded the Trostles $13,397,942.72 plus court costs. Appellants filed a motion for new trial which was ultimately denied. Appellants then filed a notice of appeal and a motion requesting the trial court to lower the supersedeas bond amount. See Rule 24.2 (b).
By their motion to lower supersedeas bond amount, appellants requested the trial court to allow them to post a supersedeas bond in an amount less than the full amount of the judgment, and specifically requested the trial court to authorize the judgment to be superseded by posting a bond in the amount of the actual damages, interest, and taxable court costs. The bond amount would have been slightly less than four million dollars. Appellants asserted that their insurance carrier, Scottsdale Insurance Company, would not post a bond in the entire amount of the judgment. Instead, Scottsdale offered to post a bond for the amount of the actual damages plus interest and costs. Appellants further asserted that (1) they attempted to secure a supersedeas bond in the full amount of the judgment but were unsuccessful, and (2) if a bond in an amount less than the amount required by Rule 24.2 (a) were not allowed, the Trostles could execute on the judgment pending appeal, and that CHC and AHCP would be forced into bankruptcy. After notice and hearing, the trial court denied appellants' motion.
Appellants next filed a motion for temporary emergency relief and review in this court pursuant to Rule 24.4. Appellants asserted that the trial court abused its discretion in failing to order a supersedeas amount less than the amount required by Rule 24.2 (a). Appellants also asserted that appellees had secured a writ of execution and intended to levy execution on April 15, 1999. We granted appellants' motion for emergency temporary stay of the writ of execution pursuant to Rule 24.4 (c).
The issue raised by appellants' motion for emergency review is in the vein of a request for extraordinary relief, although it is not a petition for writ of mandamus. Under the Texas Rules of Appellate Procedure, courts of appeals have been given authority, on a party's motion, to review the sufficiency or excessiveness of the amount of security for an appeal. TEX. R. APP. P. 24.4 (a)(1). The motion must be heard at the earliest practicable time. The appellate court may require that the amount of the security be increased or decreased, require other changes to the trial court's order, or remand the matter to the trial court for entry of findings of fact or the taking of evidence. TEX. R. APP. P. 24.4 (d).
REVIEW OF TRIAL COURT ACTION
We review the trial court's refusal to lower the supersedeas amount under an abuse of discretion standard. See Isern v. Ninth Court of Appeals, 925 S.W.2d 604, 606 (Tex. 1996), cert. denied, ___ U.S. ___, 117 S.Ct. 612, 136 L.Ed.2d 537 (1996). A trial court abuses its discretion when it acts without reference to any guiding rules and principles. Downer v. Aquamarine Operators, Inc., 701 S.W.2d 238, 241-42 (Tex. 1985), cert. denied, 476 U.S. 1159, 106 S.Ct. 2279, 90 L.Ed.2d 721 (1986). The fact that a trial judge decided a matter within the judge's discretionary authority differently than an appellate court might decide the matter under the same circumstances does not establish abuse of discretion. Id.
Enforcement of a judgment must be suspended if the judgment is superseded. Rule 24.1 (f). A judgment debtor may supersede a judgment by filing with the trial court clerk: (1) an agreement with the judgment creditor to suspend enforcement of the judgment; (2) a good and sufficient bond; (3) by making a deposit in lieu of the bond; or (4) by providing alternate security ordered by the court. Rule 24.1 (a). When the judgment is for money, the amount of the bond, deposit, or security must be for at least the amount of the judgment, interest for the estimated duration of the appeal, and costs. Rule 24.2 (a)(1). However, the trial court may order a lesser amount if, after notice and hearing, the court finds that (1) posting a bond, deposit, or security in the amount required will irreparably harm the judgment debtor; and (2) posting a bond, deposit, or security in a lesser amount will not substantially impair the judgment creditor's ability to recover under the judgment after all appellate remedies are exhausted. Rule 24.2 (b)(3).
Neither party asserts in this court that there is currently an agreement to suspend the enforcement of the judgment in this case. Likewise, appellants' assertion is that they have been unable to secure a bond in the amount required by the rules, and that they cannot make a deposit in the amount of the judgment.
The only testimony offerred at the hearing on appellants' motion to reduce supersedeas was the deposition testimony of Richard Kistler. Kistler testified that he was knowledgeable about the financial condition of CHC and AHCP. Kistler stated that aside from one application for a bond, he was not aware of any efforts by CHC and AHCP to obtain bonds, that he did not know how much of a bond the companies could procure, and that it would be impossible for appellants to get bonds in amounts that, together with the bond agreed to be provided by the insurance carrier, would meet the full amount required by Rule 24.2 (a)(1). Kistler indicated that to his knowledge getting such a bond was an impossibility. He stated that the companies would be harmed if the trial court did not lower the bond amount and if appellees attempted to execute on the judgement in that "jilt would probably put [the companies] out of business."
Appellants rely heavily on Isern v. Ninth Court of Appeals, 925 S.W.2d 604 (Tex. 1996). In Isern, the Texas Supreme Court affirmed the trial court's action in reducing a supersedeas bond when the trial court found that the full bond would be $3.1 million. The insurance carrier would only post a $500,000 bond; the judgment debtor had assets worth approximately $500,000; the judgment debtor would be forced to file bankruptcy if alternate security was not allowed; and if the judgment debtor filed bankruptcy, the judgment creditors would be left with a bankrupt judgment debtor and no security posted for any part of the judgment. Id. at 606. Appellants assert that the instant case is factually similar to Isern because the judgment far exceeds the bond that their liability insurance carrier will post and their own assets are worth less than the full amount of the judgment. Further, appellants assert that if a lower bond amount is not allowed, appellants must either file bankruptcy or be subjected to execution, and that if appellants become bankrupt or subjected to execution, the appellees will be left with judgment debtors without any ability to pay the judgment.
As noted above, we review the trial court's decision in this case under the abuse of discretion standard. While the facts inIsern resulted in appellate determination that the trial court did not abuse its discretion in lowering a bond, existence of a similar fact pattern is not determinative of whether another trial court abused its discretion in refusing to lower the amount for a bond.
The trial court may reduce the required amount of the bond if it finds that posting a bond in the full amount will irreparably harm the judgment debtor, and the court finds that posting a bond in a lesser amount will not substantially impair the judgment creditors ability to recover under the judgment after all appellate remedies are exhausted. Rule 24.2 (b). Texas case law is sparse as to what constitutes irreparable harm under Rule 24.2 (b)(1), but there is authority regarding what is not irreparable harm. Irreparable harm is not merely showing financial inability to post the full bond amount. Harvey v. Stanley, 783 S.W.2d 217, 219 (Tex.App.-Fort Worth 1989, no writ). In Harvey, the Fort Worth Court of Appeals determined that irreparable harm was not shown where the judgment debtor had no ability to post bond beyond the amount of insurance coverage, had no assets, and was heavily in debt.
In the instant case, the evidence before the trial court was that CHC and AHCP could not post bonds which, together with a bond from Scottsdale in the amount Scottsdale agreed to post, would supersede the full judgment as required by Rule 24.2 (a)(1). CHC and AHCP were shown to have substantial debt. By affidavit it is shown that the patient census of AHCP, and revenues and profits of both companies are decreasing. The companies' assets are subject to various liens. The companies did not offer proof in the trial court of efforts to obtain a bond in any amount lower than the full amount to supersede the judgment. The testimony regarding harm to appellants if the amount of the bond was not reduced did not prove the type of harm contemplated by Rule 24.2 (b)(1). The fact that the companies would "probably be put out of business" if the Trostles executed on the judgment does not address how appellants would be harmed if they were required to post the full supersedeas bond. Harvey, 783 S.W.2d at 219. Rule 24.2 (b)(1) does not allow the trial court to lower the bond or security amount of the supersedeas based on whether the judgment debtor will be harmed if execution is levied. Appellants have not shown that posting a bond in the full amount would irreparably harm, them. Id. Appellants have proved only that they cannot post the full amount of the bond. The trial court did not abuse its discretion in refusing to lessen the supersedeas bond.
APPELLATE COURT ACTION
Appellants have requested this court to exercise authority under Rule 24.4 (d) to reduce the amount of the supersedeas to an amount less than the amount required by Rule 24.2 (a)(1). In the alternative appellants request that we remand the matter to the trial court with instructions that the court set a supersedeas amount less than the amount required by Rule 24.2 (a)(1) or hear more evidence in regard to the amount which should be set for a supersedeas.
The provisions of Rule 24.2 (a)(1) are mandatory in regard to the amount of the bond, deposit, or security required to supersede a money judgment: "When the judgment is for money, the amount of the bond, deposit, or security must be at least the amount of the judgment, interest for the estimated duration of the appeal, and costs." (emphasis added). Rule 24.2 (b) provides that the trial court may order a lesser amount than the minimum amount required by Rule 24.2 (a)(1) to supersede a money judgment if the appropriate findings are made.
Upon motion of a party, the actions of the trial court in setting the amount of supersedeas may be reviewed on appeal. Rule 24.4 (a). Among other matters specified by Rule 24.4 (a), and as relates to the matter before us, the sufficiency or excessiveness of the amount of security may be reviewed. Rule 24.4 (a)(1). Appellate review may be based on conditions as they existed at the time the trial court signed its order, as well as on changes in conditions after the signing of the trial court order. Rule 24.4 (b). Rule 24.4 (d) specifies the action that the appellate court may take following its review of the trial court actions. Among the actions authorized are requiring the amount of a bond, deposit or security be increased or decreased; requiring changes in the trial court order; or remanding to the trial court for entry of findings of fact or for the taking of evidence. Rule 24.4 (d).
Nothing in the language of Rule 24.4 indicates intent to change the standard of review which we apply under Rules 24.4 (a) and 24.4 (b) from an "abuse of discretion" standard. See Isern, supra. Accordingly, before we take any action authorized by Rule 24.4 (d), we must find, on review pursuant to Rule 24.4 (a) or Rule 24.4 (b) that the trial court abused its discretion in the matter asserted on appeal, or that conditions have so changed after the trial court signed its order that the trial court order, considered in light of the record before the trial court together with the changed conditions, result in the existing trial court order in effect being an abuse of discretion by the trial court. To use any lesser standard would usurp the provisions of Rule 24.3 that gives the trial court continuing jurisdiction to supervise the amount and type of security required to suspend execution of a judgment, and effectively result in the appellate courts taking over the direct supervision of the amount and type of supersedeas security and motions to consider altering supersedeas amounts based on changed conditions.
Additionally, the language of Rules 24.1 and 24.2 is clear: unless a written agreement with the judgment creditor for suspending enforcement of the judgment is filed, the amount of the bond, deposit, or security to supersede a money judgment must be in at least the amount of the judgment, interest for the estimated duration of the appeal, and costs. Rules 24.1 (a), (b), (c), and 24.2 (a)(1). The language of Rule 24.4 (d) authorizes the appellate court to increase or decrease the amount of a bond, deposit or other security for superseding a judgment. We do not believe, however, that Rule 24.4 (d) was intended to vest the appellate court with discretion to review, de novo, the amount of the bond, deposit, or other security required to supersede a judgment and without regard to the structure provided by the other provisions of Rule 24. Rule 24.4 (d) cannot be read separately and apart from the remaining provisions of Rule 24. The language of Rule 24.4 (d) does not clearly negate the other provisions of Rule 24 which are carefully crafted to provide a comprehensive framework for protection of the interests of judgment creditors and debtors alike. If we were to read Rule 24.4 (d) to give the reviewing appellate court unbridled discretion to set the amount of the bond, deposit or other security, then every dissatisfied judgment debtor seeking a supersedeas amount less than the amount required by Rule 24.2 (a) could appeal a trial court determination that failed to reduce the supersedeas amount. Judgment debtors would have little reason not to seek, in substance, review by an appellate court which would not have as standards the dictates of Rule 24.2 (a), 24.2 (b), 24.3, and the judgment of the trial court.
Because we do not believe the intent of Rule 24.4 was to allow the appellate reviewing court to set the amount of supersedeas based solely on its own discretion, we look for standards which apply to setting the amount of bond, deposit or other security to suspend execution of a judgment. The rules clearly require the amount of supersedeas for a money judgment to be at least the amount of the judgment, interest for the estimated time of appeal, and costs. Rules 24.1 (a), (b), (c), and 24.2 (a)(1). Rule 24.2 is entitled "Amount of Bond, Deposit or Security." Rule 24.2 (b) is entitled "Lesser Amount," and in clear language provides that following notice and hearing, the trial court may set the amount of supersedeas bond, deposit or security to be less than the minimum 24.2 (a)(1) amount. After its plenary power expires, the trial court maintains continuing jurisdiction to order the amount or type of security and to modify the amount or type of security required to continue the suspension of a judgment's execution in the event of changed circumstances.
The actions which an appellate reviewing court may take under Rule 24.4 (d), then, are predicated upon a finding that the trial court abused its discretion in its actions or rulings, or that changed conditions make the order of the trial court, in effect, an abuse of discretion. If such an abuse of discretion is determined, then we read Rule 24.4 (d) to provide that the appellate court may increase or decrease the amount of a bond, deposit, or other security with the limitation that the appellate court may not decrease the amount below the amount required by Rule 24.2 (a). Only the trial court, after notice and hearing, may decrease the amount to a level below the minimum amount required by Rule 24.2 (a).
CONCLUSION
We deny appellants' request that we reduce the amount of security required to suspend execution on the judgment against them for two reasons. First, we have not found that the trial court abused its discretion in failing to set a supersedeas amount less than the minimum amount required by Rule 24.2 (a)(1). Absent such a finding, Rule 24.4 (d) does not authorize us to take action to alter the amount of security. Second, because the supersedeas amount required of appellants is now the minimum required by Rule 24.2 (a)(1), we do not have authority to reduce the amount because we do not have authority to reduce a supersedeas amount to less than the minimum amount required by Rule 24.2 (a)(1), even if the trial court abused its discretion. Further, we do not have authority to remand this matter to the trial court with instructions that the trial court do something which we do not have the power to do ourselves, i.e., set a supersedeas amount lower than the required amount of Rule 24.2 (a).
The trial court has continuing jurisdiction to supervise the amount and type of security and to modify the required security if changed conditions so warrant. Rule 24.3. In light of our determination of appellants' motion, we see no benefit under this record to remand the case to the trial court with instructions for the taking of further evidence. Appellants, of course, have the right at any appropriate time to seek relief from the trial court under provisions of Rule 24.3 and to present any further evidence in such proceeding.
Accordingly, appellants' motion, to the extent it requests this court to set a lower supersedeas or to alter the security required, is denied. Since we conclude that the trial court did not abuse its discretion in denying appellants' motion to reduce supersedeas, we further deny appellants' motion for emergency relief to the extent that it requests this court to remand the matter to the trial court with instructions or to take further evidence. We extend the stay on appellees' writ of execution for fifteen days from the date of this opinion, at which time the stay will expire.
Appellant's motion to withdraw opinion as moot, granted.
We withdraw our opinion of June 21, 1999. Opinion Per Curiam.