Opinion
14-23-00160-CV
10-12-2023
MKM ENGINEERS, INC. AND PIKA INTERNATIONAL, INC., Appellants v. JAL B. GUZDER, Appellee
On Appeal from the 434th Judicial District Court Fort Bend County, Texas Trial Court Cause No. 07-DCV-155803A
Panel Consists of Chief Justice Christopher and Justices Wise and Poissant.
MEMORANDUM OPINION ON MOTION
PER CURIAM
Pursuant to Texas Rule of Appellate Procedure 24.4(a), appellants request that we vacate the trial court's order setting the amount required to supersede the judgment and hold that the amount of security already deposited suffices to supersede the judgment. See Tex. R. App. P. 24.4(a). We grant appellants' motion in part, vacate the trial court's order setting the supersedeas bond at $3,340,000.00, and set the amount required to supersede the judgment at $1,708,037.60, which includes some amounts already posted by appellants.
Background
Appellants appeal a March 2023 amended final judgment granting appellee's cross-motion for partial summary judgment for specific performance. That judgment orders appellants to pay appellee $1,700,000. The judgment further orders that appellee recover from appellants pre and post judgment interest on the $1,700,000 at an annual rate of 7.75% beginning September 6, 2011. That judgment amended a December 2022 judgment which did not provide for pre or post judgment interest. After the trial court signed the December judgment, appellants posted a cash bond in the amount $8,037.60, which covered the amount of costs. After the trial court signed the March amended judgment, appellants posted a second cash bond for $131,750, the amount of post judgment interest on $1,700,000 for one year at 7.75%.
In June 2023, appellee filed an emergency motion in the trial court to set the amount of security required to supersede the amended final judgment and enjoin dissipation or transfer of assets to avoid satisfaction of the amended final judgment. Appellee argued that the $139,787.60 posted by appellants was insufficient to secure the judgment. Appellee further argued that the value of the judgment, taking into account pre and post judgment interest, is in excess of $3,200,000. The trial court agreed and set the amount of security at $3,340,000.
After the trial court signed the order setting the supersedeas amount, appellant filed the current motion in our court to review the supersedeas and an emergency motion to stay the trial court's order. We granted appellants' emergency motion and stayed the trial court's order pending our review of the trial court's order setting the supersedes amount.
Texas Rule of Appellate Procedure 24
Texas Rule of Appellate Procedure 24 addresses suspension of enforcement of a judgment pending appeal in civil cases. See Tex. R. App. P. 24.1. Under rule 24.1, "[u]nless the law or these rules provide otherwise, a judgment debtor may supersede the judgment by:" filing an agreement with the judgment creditor for suspending enforcement of the judgment, posting a bond, making a deposit in lieu of a bond, or providing alternate security as ordered by the court. Tex.R.App.P. 24.1(a). The amount of security depends on the type of judgment. See Tex. R. App. P. 24.2(a).
A money judgment may be superseded by a bond, deposit, or security equal to the sum of compensatory damages awarded in the judgment, interest for the estimated duration of the appeal, and costs awarded in the judgment, subject to certain limitations. See Tex. R. App. P. 24.2(a)(1). To supersede a judgment for the recovery of an interest in real property, the amount of security must be at least the value of the property interest's rent or revenue. Tex.R.App.P. 24.2(a)(2)(A). To supersede a judgment for the recovery of an interest in personal property, the amount of security must be at least the value of the property interest on the date the court rendered judgment. Tex.R.App.P. 24.2(a)(2)(B). 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 the judgment debtor must post to adequately protect the judgment creditor against loss or damage the appeal might cause. Tex.R.App.P. 24.2(a)(3).
Standard of Review
We review the trial court's supersedeas ruling for an abuse of discretion. Abdullatif v. Choudhri, 536 S.W.3d 48, 51 (Tex. App.-Houston [14th Dist] 2017, op. on motion). Generally, the test for an abuse of discretion is whether the trial court acted without reference to any guiding rules and principles or whether the trial court acted arbitrarily and unreasonably. Drake Interiors, Inc. v. Thomas, 531 S.W.3d 325, 328 (Tex. App.-Houston [14th Dist.] 2017, op. on motion). However, a trial court has no discretion in determining what the law is and applying the law to the facts. See Gonzalez v. Reliant Energy, Inc., 159 S.W.3d 615, 623-24 (Tex. 2005). A failure by the trial court to analyze or apply the law correctly is an abuse of discretion. Id. To the extent the ruling turns on a question of law, our review is de novo. Abdullatif, 536 S.W.3d at 51.
Analysis
Type of Judgment?
Appellants contend the amount of security should be determined by Rule 24.2(a)(1) because it is a judgment for money. See Tex. R. App. P. 24.2(a)(1). Following that, appellants argue that because 24.2(a)(1) only includes compensatory damages, post judgment interest, and costs, appellants should not have to secure the $1,700,000 awarded as specific performance because it is not compensatory damages. Neither party disputes that the trial court awarded the $1,700,000 as specific performance. However, appellee responds that the judgment should either be considered a recovery for personal property under 24.2(a)(2) or a judgment for something other than money under 24.2(a)(3). Alternatively, appellee argues that if the award of specific performance is considered a judgment for money, under 24.2(a)(1), an absurd result is reached by not including the $1,700,000 in the amount of security merely because of the specific performance label.
The underlying case involves a long-disputed settlement agreement. Appellants agreed to pay appellee $1,700,000 as settlement of a dispute in exchange for appellee executing releases, dismissing claims, and providing a "side-letter." At the present juncture, the trial court granted appellee's motion for summary judgment for specific performance. The trial court's judgment orders appellants to wire the $1,700,000 settlement agreement amount to appellee's counsel in trust. The funds are not to be disbursed until appellee delivers certain releases and letters to appellants. As stated above, no party disputes that the judgment is for specific performance. Rule 24.2 does not mention specific performance in providing how to determine the amount of bond, deposit, or security required to supersede.
See this court's 2014 opinion MKM Eng'rs, Inc and PIKA Int'l, Inc. v. Jal B. Guzder, 476 S.W.3d 770 (Tex. App.-Houston [14th Dist.] 2014, no pet.) for a detailed history of the dispute.
Appellants cite to a Dallas court decision where the court of appeals affirmed the trial court's supersedeas order in a case involving a judgment for specific performance. See Tex. Soccer Found. v. Sting Soccer Found., No. 05-19-01228-CV, 2020 WL 3445815, (Tex. App.-Dallas June 24, 2020, mem. op. on motion). The judgment in that case awarded specific performance of a contract for sale of property. Id. at *1. The trial court determined the amount of security under Rule 24.4(a)(2)-a judgment for an interest in property. On appeal, the court did not discuss which section of Rule 24.2(a) applied, instead the court discussed whether appellant met its burden of proving substantial economic harm under 24.2(b). Id. at *2. We do not agree that this case is persuasive on the issue before us.
Our sister court of appeals have noted the difficulty in determining an appropriate supersedeas amount where specific performance is the remedy: "[n]o authority discusses what amount of supersedeas bond, if any, is necessary to protect a plaintiff who has won the unique recovery of specific performance." Culbertson v. Brodsky, 775 S.W.2d 451, 454 (Tex. App.-Fort Worth 1989, writ dism'd w.o.j.) (interpreting predecessor rule to Rule 24.2). Specific performance is not a separate cause of action, but rather it is an equitable remedy used as a substitute for monetary damages when such damages would not be adequate. Stafford v. S. Vanity Mag., Inc., 231 S.W.3d 530, 535 (Tex. App.-Dallas 2007, pet. denied). Because specific performance is an equitable remedy applied where monetary damages do not suffice, Rule 24.1(a)(1) does not apply to a judgment of specific performance. Rule 24.2 (a)(1) "only relates to cases involving awards of compensatory damages." EIS Dev. II, LLC v. Buena Vista Area Ass n , 668 S.W.3d 696, 701 (Tex. App.-El Paso 2022, op. on motion).
In this case, the judgment conditions the disbursement of funds upon appellee performing certain actions-signing and providing releases and letters. The judgment is not an award of monetary damages, but for the specific performance of an exchange by the parties. Accordingly, we hold that Rule 24.2(a)(3), "Other Judgment" applies.
Other Judgment - Amount of Security
Rule 24.2(a)(3) provides that the security posted by the judgment debtor must adequately protect the judgment creditor against loss or damage that the appeal may cause. Tex.R.App.P. 24.2(a)(3). Here, the risk of loss to appellee is not being able to recover the settlement amount at the end of the appeal. Appellee argues that it is at risk of losing the value of the entire judgment (settlement amount + pre and post judgment interest + costs). The trial court agreed and set the security amount at the entire value of the judgment. We hold the trial court erred, as a matter of law, in including pre and post judgment interest in the security amount.
The only reference in Rule 24.2 to "interest for the estimated duration of the appeal" is found in the subsection applicable to a judgment "[f]or the recovery of money." Tex. R. P. 24.2(a)(1); Mendell v. Scott, No. 01-20-00578-CV, 2022 WL 2951666 at *6 (Tex. App.-Houston [1st Dist] 2022, mem. op. on motion). In contrast, the subsections applicable to property and other judgments do not expressly include any provision for interest in the amount of security. See Mendell, 2022 WL 2951666 at *6. While it may be true that the "Other Judgment" subsection does not contemplate that there would be a corpus of money for which to calculate interest upon (as in the current situation), the judgment here provides for the transfer of funds in exchange for an act and not as an award of money damages.
The amount of security required under section 24.2(a)(3) must adequately protect the judgment creditor. Tex. R App. P. 24.2(a)(3). The settlement agreement underlying this dispute provides that appellee will receive $1,700,000 in exchange for certain acts. Therefore, $1,700,000 is an appropriate amount to protect appellee, the judgment creditor, pending this appeal.
Accordingly, we hold that the amount of security required to supersede the judgment is the settlement agreement amount: $1,700,000; plus costs: $8,037.60. See Rowe v. Watkins, 324 S.W.3d 111, 114 (Tex. App.-El Paso 2010, op. on motion) (requiring costs in determining amount of security required under "other judgment" subsection).
Conclusion
Appellants are ORDERED to post the sum of $1,708,037.60 with the Fort Bend County Clerk within 20 days from today's date to secure suspension of the judgment. See Tex. R. App. P. 24.4(d),(e). The trial court's order signed August 3, 2023 is VACATED.