In a 5-4 decision, the Texas Supreme Court has held that the $25 million cap on the amount of a supersedeas bond applies on a per judgment debtor basis. TCJL filed an amicus curiae brief in the case arguing that the statute, § 52.006, CPRC, establishes an aggregate, hard cap of $25 million, as we and other advocates for supersedeas reform thought we had achieved in 2003 after hard-fought negotiations with legislators.
As you may recall from our prior reports on the case, In re Greystar Development & Construction, LP; Gabriella Tower, LLC; and Greystar Development & Construction, LP—Gabriella Tower Contractor Series (No. 24-0293) involves 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 debtors. The court of appeals, however, affirmed the trial court. SCOTX granted Greystar’s petition for writ of mandamus and affirmed the court of appeals’ reading of the statute.
As you no doubt recall, the revision to § 52.006(b) capping the amount of the bond constituted a fundamental part of HB 4, the 2003 tort reform legislation. Our brief argued that not only does the plain language of the statute impose a total cap of $25 million, regardless of how many judgment debtors there may be, but that is the only interpretation of the statute that makes any sense. As we stated in our brief:
The court of appeals makes much of the language of Subsection (b)(1), which does tie the amount of a security to “the judgment debtor’s net worth.” This option makes perfect sense because the purpose of Subsection (b)(1) was to permit a lesser amount of security than a one-size-fits-all $25 million cap would provide. It goes without saying that when it enacted § 52.006 the Legislature knew very well that litigation regularly produces more than one judgment debtor. It also knew that in order to make the statute as effective as possible in preserving a judgment debtor’s right to appellate review, it needed a dual approach, one that provided a cap based on an individual judgment debtor’s net worth and the other a straightforward cap based on the amount of the judgment itself. To put it another way, as far as the statute is concerned, it doesn’t matter what resources a judgment debtor may or may not have to put as security. What matters is that the statute gives judgment debtors the choice to limit their liability for the bond so that they may continue to do business pending the outcome of their case. In a case in which one or more judgment debtors have low net worth, it may make sense to pick option (1). In such a case the total amount of security may even reach $25 million, depending on how much each individual debtor owed to the pot. But in cases involving one or more debtors with higher net worth, the judgment-based cap is the better option because it both lowers the debtor’s liability and avoids a slew of expensive and time-wasting satellite litigation to determine what a judgment debtor’s net worth actually is and how much of the security each judgment debtor is responsible for. Section 52.006(b)(2) relies on two easy-to-ascertain numbers: the amount of the judgment and $25 million. That’s the end of the inquiry, as the Legislature intended.
Justice Huddle, joined by Justices Bland, Young, and Sullivan, vigorously dissented. Her opinion is attached below and explains what we believe to be the correct interpretation of the statute much better than we can. In any event, to our knowledge the decision marks the first time that a major piece of the 2003 reform legislation has been significantly weakened by a decision from the court of last resort.
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