Summary
considering whether judgment was in fact suspended by filing of a cash deposit; mandamus, not rule 24, was appropriate review procedure
Summary of this case from In re MittelstedOpinion
No. 04-18-00001-CV
02-07-2018
IN RE SHOPOFF ADVISORS, L.P.
MEMORANDUM OPINION
Original Mandamus Proceeding Opinion by: Marialyn Barnard, Justice Sitting: Marialyn Barnard, Justice Patricia O. Alvarez, Justice Luz Elena D. Chapa, Justice PETITION FOR WRIT OF MANDAMUS AND WRIT OF INJUNCTION CONDITIONALLY GRANTED
This proceeding arises out of Cause No. 2016-CI-04489, styled Shopoff Advisors, L.P. v. Atrium Circle, G.P., et al., pending in the 379th Judicial District Court, Bexar County, Texas, the Honorable Norma Gonzales presiding.
In this original proceeding, we consider whether relator, Shopoff Advisors, L.P., suspended enforcement of the trial court's judgment during the pendency of an appeal from that judgment.
BACKGROUND
The allegations underlying the parties' dispute are not relevant to this original proceeding. We recite the timeline of events in the litigation only as relevant to the issues presented in this original proceeding.
Shopoff agreed to buy properties from Atrium Circle, G.P. and other related business entities, and placed $2.5 million into an escrow account at First American Title. Allegedly, Shopoff later breached the agreement, and Atrium demanded that First American release all escrowed funds to it. Shopoff sued for specific enforcement and filed lis pendens against Atrium's properties. The parties went to arbitration, following which the arbitration panel issued an award that called for (1) release of $2,006,100 of the escrowed funds to Atrium and the balance ($493,900) to Shopoff and (2) release of the lis pendens. On April 12, 2017, the trial court confirmed the arbitration award in a Final Judgment. On April 17, 2017, Shopoff appealed the trial court's judgment to this court in appellate cause number 04-17-00241-CV, but did not, at that time, supersede the judgment.
On October 5, 2017, Atrium filed, in the trial court, a Motion to Enforce and Collect Judgment, for Turnover Order, Motion for Sanctions, and Motion to Require Supersedeas or Cash Deposit in Lieu of Supersedeas ("motion to enforce"). A hearing on the motion was set for November 29, 2017. On November 3, 2017, Atrium sued First American in federal court seeking release of the escrowed money.
On November 29, 2017, Shopoff filed a cash deposit in lieu of a supersedeas bond and an affidavit of net worth. Also on this date, the trial court conducted a hearing on Atrium's motion to enforce. On or about December 6, 2017, Atrium filed a contest, in the trial court, to Shopoff's affidavit of net worth. On December 22, 2017, the trial court signed an order directing Shopoff to release the lis pendens. On December 27, 2017, Atrium filed, in the trial court, a motion for contempt alleging Shopoff has failed to comply with the December 22 order.
On January 2, 2018, Shopoff filed this original proceeding asking this court to stay the trial court's enforcement action (which deals only with the release of the lis pendens and not the escrowed money) and all other trial court proceedings pending further action by this court. On January 3, 2018, this court issued an order staying all proceedings to enforce the trial court's April 12, 2017 Final Judgment.
Also on January 3, a panel of this court issued an opinion in appellate cause number 04-17-00241-CV. One of the issues considered in that appeal was the amount of escrowed money released to Shopoff. The arbitration panel awarded Shopoff $493,900 of the escrowed money, but, when the trial court affirmed the award, it mistakenly awarded Shopoff only $493,000. Following the appeal, the panel issued an opinion modifying the trial court's judgment to correct the amount of escrowed money to be released to Shopoff by changing the amount from $493,000 to $493,900 and affirming the judgment as modified. Our judgment orders release of the cash deposit in lieu of bond to Shopoff.
An appellate court judgment is not enforceable in the lower court before mandate issues. See In re Long, 984 S.W.2d 623, 626 (Tex. 1999) (per curiam) (orig. proceeding). Therefore, our judgment is not final until all appeals are final and we issue mandate.
On January 9, 2018, Atrium filed a response to the petition for writ of mandamus. On January 17, 2018, relator replied.
JURISDICTION
Atrium first argues this court lacks jurisdiction over this original proceeding because, according to Atrium, Shopoff should have sought review of the trial court's ruling on its cash deposit in the underlying appeal. Atrium relies on Texas Rule of Appellate Procedure 24.4, which states as follows: "A party may seek review of the trial court's ruling by motion filed in the court of appeals with jurisdiction or potential jurisdiction over the appeal from the judgment in the case." TEX. R. APP. P. 24.4(a). "Review may be based both on conditions as they existed at the time the trial court signed an order, and on changes in those conditions afterward." Id. 24.4(b).
Atrium's argument is premised on its contention that there exists a trial court ruling on a contest to the cash deposit Shopoff filed. Atrium filed a contest to Shopoff's affidavit of net worth, but has never set the contest for hearing or obtained an express ruling. Instead, Atrium appears to argue the trial court implicitly determined Shopoff failed to suspend the judgment based on arguments heard at the November 29, 2017 hearing. We do not have a transcript of that hearing. The mandamus record contains only a copy of the December 22, 2017 order signed by the trial court after the November 29 hearing. The December 22 order does not address the cash deposit filed by Shopoff or Atrium's contest to Shopoff's affidavit of net worth.
Because there is no ruling on Atrium's contest, we conclude Atrium's jurisdictional argument lacks merit. Therefore, we next address whether Shopoff's cash deposit is invalid to suspend the judgment or is valid despite a possible insufficiency.
SUPERSEDEAS
Atrium next argues Shopoff did not supersede the judgment; therefore, "this appeal is premature." Atrium also argues Shopoff failed to obtain a ruling on its attempt to supersede; therefore, "there is nothing for this Court to review." These arguments are premised on Atrium's contention that "the trial court correctly determined that Shopoff failed to supersede the judgment because it did not comply with" subsections (a)(2) or (a)(3) of Rule 24.2. Again, we have no express ruling by the trial court evidencing such a "determination." Shopoff asserts that, even if the amount of its cash deposit may be insufficient, the legal effect of the deposit is to supersede the judgment. We agree with Shopoff.
Texas Rule of Appellate Procedure 24.1 provides that "[u]nless the law or these rules provide otherwise, a judgment debtor may supersede the judgment by filing with the trial court clerk a good and sufficient bond [or] making a deposit with the trial court clerk in lieu of a bond . . . ." TEX. R. APP. P. 24.1(a)(2),(3). "To be effective a bond must be approved by the trial court clerk." Id. 24.1(b)(2). "On motion of any party, the trial court will review the bond." Id.
The record contains a copy of a "Certificate of District Clerk That Appellant(s) Made Cash Deposit In Lieu of Supersedeas Bond."
"A bond must be . . . in the amount required by [Texas Rule of Appellate Procedure] 24.2." Id. 24.1(b)(1)(A). Under Rule 24.2, the amount of the bond depends on the type of judgment. "When the judgment is for money, the amount of the bond, deposit, or security must equal the sum of compensatory damages awarded in the judgment, interest for the estimated duration of the appeal, and costs awarded in the judgment." Id. 24.2(a)(1). "When the judgment is for the recovery of an interest in real or personal property, the trial court will determine the type of security that the judgment debtor must post." Id. 24.2(a)(2). "When the judgment is for something other than money or an interest in property, the trial court must set the amount and type of security that the judgment debtor must post." Id. 24.2(a)(3).
Shopoff filed a cash deposit in lieu of bond pursuant to subsection (a)(1) of Rule 24.2 and an affidavit of net worth pursuant to subsection (c) of Rule 24.2. Assuming, without deciding, that Shopoff should have superseded under either subsections (a)(2) or (a)(3) of Rule 24.2, the issue is a matter of sufficiency of the bond, rather than its validity. If the supersedeas bond currently in place is insufficient, there is a remedy. The rules provide for modification of the amount of the supersedeas. See id. 24.3. The trial court retains continuing jurisdiction to modify the amount of security "required to continue the suspension of a judgment's execution." Id. at 24.3(a)(2). In this case, the option to seek modification of the amount of the cash deposit in lieu of bond remains available to Atrium.
The issue, therefore, is not whether Shopoff's cash deposit is valid, but whether it is sufficient to adequately protect Atrium. See Delhi Gas Pipeline Corp. v. Hassell, 730 S.W.2d 159, 161 (Tex. App.—Tyler 1987, orig. proceeding) ("It is undisputed that respondent did not file a bond or make a deposit as contemplated by [Rule 24.2(a)(3)]. Hence, the question raised by the record is one of the sufficiency of the bond rather than its validity."); see also Orix Capital Mkts., LLC v. La Villita Motor Inns, J.V., 04-09-00573-CV, 2010 WL 307885, at *4 (Tex. App.—San Antonio Jan. 27, 2010, no pet.) (mem. op.) ("Here, as in Delhi, a supersedeas bond was filed for the monetary portion of the judgment [but not for the entire judgment that was declaratory in nature]. And, as in Delhi, the issue is not a question of the validity of the bond, but its sufficiency to adequately protect La Villita against any loss or damage that might be caused by the appeal."). Neither Shopoff's nor Atrium's failure to ask the trial court to set a sufficient bond under subsections (a)(2) or (a)(3) renders the cash deposit ineffective to supersede the judgment. See Delhi Gas, 730 S.W.2d at 161. Therefore, we conclude Shopoff's cash deposit—even if insufficient—is valid to supersede the trial court's judgment.
Delhi Gas Pipeline and Orix Capital Markets had similar fact patterns. In both cases, the judgment debtor filed a supersedeas bond for the monetary portion of the judgment but not the declaratory portion of the judgment. Both opinions concluded that, although the judgment debtor did not comply with Rule 24.2(a)(3) (requiring trial court to set amount and type of security when a judgment is for something other than money or an interest in property), the bond that was filed operated to suspend the judgment because the issue was not a question of the bond's validity, but its sufficiency.
Finally, Atrium argues Shopoff's affidavit of net worth is insufficient; therefore, this court "must conclude that Shopoff failed to even meet the threshold requirements of Rule 24.2(b)." This is a determination for the trial court to make because there has been no express ruling by the trial court on Atrium's contest to the affidavit.
CONCLUSION
"Enforcement of a judgment must be suspended if the judgment is superseded. Enforcement begun before the judgment is superseded must cease when the judgment is superseded." TEX. R. APP. P. 24.1(f). "Any action in disregard of a supersedeas is contempt of the jurisdiction of the court in which an appeal, with supersedeas, is pending." McDowell v. Hightower, 111 Tex. 585, 242 S.W. 753, 753 (1922) (orig. proceeding). An appellate court may issue a writ of injunction to protect and enforce the rights of a litigant who has superseded a trial court's judgment. In re City of Cresson, 245 S.W.3d 72, 75 (Tex. App.—Fort Worth 2008, no pet.). Because we conclude Shopoff superseded the trial court's judgment, we conditionally grant Shopoff's petition for writ of mandamus and writ of injunction.
Accordingly, until the earlier of the issuance of mandate in appellate cause number 04-17-00241-CV or the issuance of a contrary order or judgment of the Texas Supreme Court, the real parties in interest shall be restrained from seeking enforcement of the trial court's April 12, 2017 Final Judgment. A writ of injunction will issue only if the real parties in interest fail to comply with the order of this court as set forth in this opinion.
We also conditionally grant Shopoff's petition for writ of mandamus and order the trial court to withdraw, within fifteen days, its December 22, 2017 "Order Partially Granting Defendants' Motion to Enforce and Collect Judgment, For Turnover Order, Motion for Sanctions, and Motion to Require Supersedeas or Cash Deposit in Lieu of Supersedeas." The writ of mandamus will issue only if the trial court fails to withdraw its December 22, 2017 order within fifteen days from the date of our opinion and order.
The trial court is not stayed or otherwise prohibited from choosing to modify or not modify the cash deposit in lieu of bond filed by relator. See TEX. R. APP. P. 24.3(a)(2) ("trial court has continuing jurisdiction to . . . if circumstances change, modify the amount or type of security required to continue the suspension of a judgment's execution.").
Marialyn Barnard, Justice