Section 52.006, CPRC, governs the amount of a security for a money judgment that a judgment debtor must post in order to pursue an appeal. Generally the amount of this “supersedeas” bond equals the sum of the amount of compensatory damages awarded, interest for the estimated duration of the appeal, and costs awarded in the judgment. This amount, however, may not exceed the lesser of (1) 50% of the judgment debtor’s net worth, or (2) $25 million. Texas Rule of Appellate Procedure 24.3 gives a trial court continuing jurisdiction determine the sufficiency of the bond and order specific action to remedy an insufficient bond, as well as to modify the amount of the security if circumstances change. A party may challenge a trial court’s supersedeas ruling by filing a motion pursuant to Rule 24.4, which allows an appellate court to review the sufficiency or excessiveness of the amount of security, as long as it does not modify the amount of security to exceed the statutory limits.
Greystar Development & Construction, LP; Gabriella Tower, LLC; and Greystar Development & Construction, LP—Gabriella Tower Contractor Series v. Michele Williams, James Kirkwood, and Bigge Crane & Riggins, Co. (No. 05-23-01168-CV; April 10, 2024) involved a dispute between judgment debtors and judgment creditors over whether the joint bond in the amount of $25 million posted by the debtors suspended enforcement of the judgment as to all judgment debtors or whether each debtor had to post security separately. The trial court ruled that each debtor had to post a separate bond. The judgment debtors filed a Rule 24.4 motion requesting the court of appeals to reverse the trial court and confirm the sufficiency of the $25 million joint bond as to all all debtors.
In an opinion by Justice Breedlove, the court of appeals affirmed the trial court’s ruling. The court observed that there is a “split of authority on whether the $25 million statutory cap in § 52.006 . . . applies per individual judgment debtor or per judgment,” with the judgment debtors relying on a San Antonio Court of Appeals decision and the judgment creditors leaning on a contrary opinion by the Tyler Court of Appeals. The Dallas court sided with Tyler, which concluded that when read as a whole, Chapter 52, CPRC, refers to security posted by a judgment debtor, not judgment debtors as a collective group. This choice of the singular in the plain language, the court concluded, indicated the Legislature’s intention “that the $25 million limitation be applied per judgment debtor rather than per judgment.” The court noted further that the San Antonio court itself split on the issue, with (now) Chief Justice Martinez in dissent. Justice Martinez’s dissenting opinion took the Tyler court’s view of the statute as well.
The judgment debtors argued that § 52.006(b)(1), which refers to the judgment debtor’s net worth, constitutes a separate cap than the $25 million cap in (b)(2). The court didn’t think that this reading made any sense because § 52.006(b) constructs the cap as the lesser of two amounts and nothing in the statute indicates that multiple judgment debtors can file an aggregate bond. It also pointed out that debtors can seek modification of the amount (although this process might not be as easy as the statute and rules suggest). Nevertheless, the fact that the statute erects some guardrails to protect against excessive bonds strengthens the conclusion that it applies on a per judgment debtor basis.
Having determined that the statute applies per judgment debtor, the court turned to the question of whether the trial court abused its discretion by declaring the joint bond invalid and execution of the final judgment not suspended for the two judgment debtors who filed it. The debtors argued that the trial court’s plenary authority had expired by the time the trial court signed the bond order because they had already perfected their appeal and that Rule 24.3 did not permit the trial court to invalidate a non-compliant bond, just to modify it. The court of appeals didn’t go for this argument, either. While the joint bond was sufficient to suspend enforcement of the judgment as soon as the court clerk approved it for filing, a subsequent decision by the trial court as to the sufficiency of the bond pursuant to a Rule 24 motion by the judgment creditors comes under the continuing jurisdiction of the trial court. When asked to do so, the trial court was bound to apply the statute, direct each judgment debtor to post a sufficient bond, and rule that until a “good and sufficient bond” was filed the final judgment was not suspended. And while Rule 24.4 authorizes a judgment debtor to seek review of a trial court order increasing the amount of security, “enforcement of the judgment is not suspended unless the judgment debtor also requests and obtains a stay of enforcement of the judgment pending the appellate court’s determination of the rule 24.4 motion” (citations omitted). The trial court thus did not abuse its discretion when it acted within its authority under rule 24 and instructed the judgment debtors “needed to do to adequately protect the judgment creditors under rule 24.1.”
Given the split in the intermediate appellate courts and the (apparently) sizable amount of the supersedeas amount in this case, one might expect the judgment debtors to seek SCOTX review. It is interesting to note that last session TCJL led an effort to reform Chapter 52 for the first time since 2003 to ease the supersedeas burden for small and mid-sized businesses. While that of course has nothing directly to do with this case, it nevertheless points to the continuing dilemma that judgment debtors face when attempting to suspend enforcement of a judgment so that they can pursue an appeal. There can be very significant cost and liability associated with posting sufficient security, as this case demonstrates, and we wonder if more fine-tuning might be necessary to better balance the statute.
