Motion Granted in Part and Denied in Part, and Opinion on Motion issued July 26, 2022.
In The
Court of Appeals For The
First District of Texas ———————————— NO. 01-20-00578-CV ——————————— JOAN GOTTLIEB MENDELL, Appellant V. LAURENCE SCOTT AND RACHEL CHAPUT, Appellees
On Appeal from the Probate Court No. 1 Harris County, Texas Trial Court Case No. 475348
OPINION ON MOTION Pursuant to Texas Rule of Appellate Procedure 24.4(a), appellant Joan
Gottlieb Mendell asks this Court to set aside the trial court’s order requiring her to
post a $435,666.46 bond to supersede part of a permanent injunction entered in favor
of appellees Laurence Scott and Rachel Chaput (collectively, “appellees”) and against appellant individually and in her representative capacity as the trustee of a
family trust. We grant appellant’s motion in part, order the exclusion of interest from
the amount of security, and remand to the trial court for the taking of evidence and
a determination of whether the reduced amount of security is likely to cause
appellant substantial economic harm. We deny appellant’s motion in all other
respects.
Background
Appellant is the trustee of the MK Trust No. 2 (“Trust”). In April 2019,
appellees filed suit against appellant in her individual and representative capacities,
alleging that they were the beneficiaries of the Trust, the Trust had terminated by its
own terms, and appellant had failed to wind-up the Trust and distribute the Trust
assets to them. The Trust assets included four accounts: (1) a checking account at
Iberiabank (“Checking Account”); (2) a money market account at Iberiabank
(“Iberia Money Market”); (3) a money market account at UBS Financial Services
Inc.(“UBS Money Market”); and (4) stocks held with UBS Financial Services Inc.
(“Stocks”). Appellees sought actual and exemplary damages for appellant’s alleged
breaches of fiduciary duties, declaratory and injunctive relief, and attorney’s fees.
A jury returned a verdict in favor of appellees, and the trial court signed a final
judgment declaring appellees beneficiaries of the Trust, which had terminated, and
awarding $715,792.21 in damages and attorney’s fees against appellant in her
2 individual capacity. The trial court also entered permanent injunctive relief against
appellant in her individual and representative capacities. See TEX. PROP. CODE
§ 114.008(a)(3) (listing remedies for breach of trust, including injunctive relief). The
injunction on review is the modified permanent injunction entered by the trial court
on January 20, 2021.1 The modified permanent injunction ordered that:
i. [Appellant], in her capacity as trustee of the [Trust], shall wind-up the [Trust] within thirty (30) days of this Order and shall distribute all assets of the [Trust] to [appellees], in equal shares, in accordance with the Trust’s terms.
ii. [Appellant], individually, and in her capacity as trustee of the [Trust] shall be enjoined from selling, spending, or otherwise dissipating in any way any assets belonging to the Trust, including but not limited to reimbursement or further payment of attorney’s fees that may have been incurred by [appellant] during the pendency of this litigation[.]
iii. [Appellant] shall be denied compensation for serving as the trustee of the Trust and shall return to the [Trust] any trustee compensation which she paid herself from funds or property belonging to the [Trust.]
iv. Any attorney’s fees that were paid with funds or property belonging to the [Trust] shall be restored and returned to the Trust. This shall not be construed in a manner that would lead to [appellees] receiving a “double recovery” of the $200,000.00 awarded in actual damages against [appellant] at the October 22, 2020, jury trial in this matter.
1 The trial court first entered permanent injunctive relief against appellant on the final day of trial in October 2020. On January 20, 2021, after post-trial proceedings and rendition of the final judgment, the trial court modified the permanent injunction. Accordingly, the provisions quoted and discussed herein are from the January 20 modified permanent injunction. 3 v. [Appellant] shall provide a final accounting to [appellees] within thirty (30) days. Appellant sought to suspend enforcement of the final judgment and the
modified permanent injunction pending her appeal. To supersede the final judgment
for money, appellant made a cash deposit into the registry of the trial court in lieu of
posting a supersedeas bond. To determine the amount and type of security to
supersede the modified permanent injunction—specifically, paragraphs (i) and (v)—
appellant filed a motion in the trial court.
Relevant here, the trial court determined as to injunction paragraph (i), which
required the winding-up and distribution of the Trust assets, that:
• “[I]t is a judgment for the recovery of personal property under Texas Rule of Appellate Procedure 24.2(a)(2)(B).”
• The value of the personal property on the date of the injunction was: (1) Checking Account, $51,347.73; (2) Iberia Money Market, $102,712.18; (3) UBS Money Market, $89,223.25; and (4) Stocks, $395,162.32.
• To supersede paragraph (i) as to the Checking Account, the Iberia Money Market, and the UBS Money Market, appellant must “close the [accounts] and deposit into the Registry of the Court [their] balance.”
• To supersede paragraph (i) as to the Stocks, appellant “must post a good and sufficient bond with the Clerk of the Court under Texas Rule of Appellate Procedure 24.1(a)(2), (b) in the amount of $435,666.46, which represents the $395,162.32 in value of the Stocks . . . plus $40,504.14 in interest at the rate of 5% for two years for the estimated duration of the appeal.”
4 As to injunction paragraph (v), which required a final accounting, the trial
court determined:
• “[I]t is a judgment for something other than money or an interest in . . . property under Texas Rule of Appellate Procedure 24.2(a)(3).”
• No additional security was required to suspend enforcement of paragraph (v) because the amount to supersede paragraph (i) would “adequately protect [appellees] from loss or damage that the appeal might cause.”
In ordering this security, the trial court rejected appellant’s request that she be
permitted to post alternative security in the form of (1) an order requiring UBS to
freeze the Trust’s account in which the Stocks are held (“freeze order”), or (2) an
order allowing her to liquidate the Stocks for deposit into the trial court’s registry.2
Appellant argued these alternative forms of security were necessary because a surety
would not accept the Stocks as collateral and the Trust lacked sufficient other assets
to fully collateralize a bond.3 And consequently, she could not obtain a supersedes
2 Appellant argued a freeze order would both keep the Stocks secure pending the appeal and avoid the creation of tax liability that would result from liquidating the Stocks for deposit into the trial court’s registry. 3 Appellant attached to her motion seeking to clarify the supersedeas requirements correspondence received by her counsel in response to his request for information about obtaining an appeal bond from SureTec Insurance Company (“SureTec”). The responsive letter from SureTec’s representative stated: “SureTec requires 100% collateral for an appeal bond, and will only accept cash collateral (wire transfer or a cashier’s check) or an irrevocable letter of credit on an acceptable, preapproved bank.” Appellant also attached her own affidavit averring that she was informed by a “Wealth Strategy Associate” at a UBS branch office that UBS would not issue “an irrevocable letter of credit using the Stocks as collateral.” 5 bond in the amount required to suspend enforcement of injunction paragraphs (i) and
(v). Alternatively, appellant requested that the amount of security be reduced to an
amount that would not cause her or the Trust substantial economic harm.
Legal Standards
“A judgment debtor is entitled to supersede the judgment while pursuing an
appeal[.]” Miga v. Jensen, 299 S.W.3d 98, 100 (Tex. 2009); see also In re Longview
Energy Co., 464 S.W.3d 353, 359 (Tex. 2015) (orig. proceeding) (observing
supersedeas rules “respect[] the importance of the right to a meaningful appeal”).
“Supersedeas preserves the status quo of the matters in litigation as they existed
before the issuance of the order or judgment from which an appeal is taken.” Smith
v. Tex. Farmers Ins. Co., 82 S.W.3d 580, 585 (Tex. App.—San Antonio 2002, pet.
denied).
Texas Rule of Appellate Procedure 24 sets out the requirements for
suspending enforcement of a judgment pending appeal in civil cases. See TEX. R.
APP. P. 24.1–.4. Unless the law or the appellate rules provide otherwise, the
judgment debtor may supersede the judgment by:
(1) filing with the trial court clerk a written agreement with the judgment creditor for suspending enforcement of the judgment;
(2) filing with the trial court clerk a good and sufficient bond;
6 (3) making a deposit with the trial court clerk in lieu of a bond; or
(4) providing alternate security ordered by the court.
TEX. R. APP. P. 24.1(a).
The amount of security required 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. TEX. R. APP. P. 24.2(a)(1). To supersede a judgment
“for the recovery of an interest in real or personal property,” the amount of security
must be at least the value of the property interest on the date the trial court rendered
judgment. TEX. R. APP. P. 24.2(a)(2). Finally, 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. TEX. R. APP. P. 24.2(a)(3). The trial
court may decline to permit the judgment debtor to supersede the judgment,
however, if the judgment creditor posts “security ordered by the trial court in an
amount and type that will secure the judgment debtor against any loss or damage
caused by the relief granted” should an appellate court determine that the relief was
improper. Id.
Rule 24.4 authorizes an appellate court to engage in a limited supersedeas
review. See TEX. R. APP. P. 24.4. On any party’s motion, we may review: (1) the
7 sufficiency or excessiveness of the amount of security, (2) the sureties on a bond,
(3) the type of security, (4) the decision whether to permit suspension of
enforcement, and (5) the trial court’s exercise of discretion in ordering the amount
and type of security. TEX. R. APP. P. 24.4(a). We may require that the amount of the
“bond, deposit, or other security be increased or decreased” and that “another bond,
deposit, or security be provided and approved by the trial court clerk.” TEX. R. APP.
P. 24.4(d). We may also require other changes in the trial court order and remand
for entry of findings of fact or the taking of evidence. Id.
We generally review the trial court’s supersedeas rulings for an abuse of
discretion. See EnviroPower, L.L.C. v. Bear, Stearns & Co., 265 S.W.3d 1, 2 (Tex.
App.—Houston [1st Dist.] 2008, pet. denied). The test for abuse of discretion is
whether the trial court acted arbitrarily or unreasonably considering all the
circumstances of the case. See Samlowski v. Wooten, 332 S.W.3d 404, 410 (Tex.
2011); EnviroPower, 265 S.W.3d at 1. But to the extent the ruling turns on a question
of law, our review is de novo. Abdullatif v. Choudhri, 536 S.W.3d 48, 51 (Tex.
App.—Houston [14th Dist.] 2017, op. on motion); Mansik & Young Plaza LLC v.
K-Town Mgmt., LLC, 470 S.W.3d 840, 841 (Tex. App.—Dallas 2015, op. on
motion).
8 Analysis
Appellant argues that the effect of the trial court’s supersedeas order is to deny
the Trust the ability to supersede parts of the modified permanent injunction pending
an appeal. She contends the trial court abused its discretion in the three respects:
• by improperly ordering her, individually, to post supersedeas on behalf of the Trust, the true judgment debtor;
• by improperly applying the Finance Code provisions applicable only to “money judgments” to a judgment for the recovery of property; and
• by effectively preventing the true judgment debtor—the Trust— from superseding paragraphs (i) and (v) of the modified permanent injunction.
In addition, appellant complains the trial court failed to determine whether posting
a bond in the amount required is likely to cause the Trust substantial economic harm.
A. Judgment debtor
Appellant first contends the trial court abused its discretion by ordering her,
individually, to suspend enforcement of paragraphs (i) and (v) of the modified
permanent injunction as to the Stocks by posting a supersedeas bond on behalf of
the Trust. Appellant argues that because the Trust is the “true judgment debtor,” the
trial court could not order her to “use her own personal funds” to supersede the
modified permanent injunction as to the Stocks. We disagree that the trial court’s
supersedeas rulings require appellant to supersede the modified permanent
injunction in her individual capacity, using “her own personal funds.”
9 In Texas, “[a] trust is not a legal entity.” Ditta v. Conte, 298 S.W.3d 187, 191
(Tex. 2009); Tomlinson v. Khoury, 624 S.W.3d 601, 608 (Tex. App.—Houston [1st
Dist.] 2020, pet. denied). Rather, it is a “fiduciary relationship with respect to
property.” Ditta, 298 S.W.3d at 191 (quoting TEX. PROP. CODE § 111.004(4)).
Consequently, appellant’s argument that the Trust is the “true judgment debtor” for
the purpose of supersedeas misses the mark. The trial court did not enter the modified
permanent injunction against the Trust; it ordered the injunctive relief against
appellant, both individually and as trustee. The provisions that are the subject of
appellant’s Rule 24.4 motion—paragraph (i), compelling the winding-up and
distribution of trust assets, and paragraph (v), requiring a final accounting—either
expressly apply against appellant in “her capacity as trustee” or regard actions that
can be taken by her only as trustee. But neither the trial court’s oral statements at the
supersedeas hearings nor its written order, entered after the supersedeas hearings,
require appellant to secure a supersedeas bond using “her own personal funds.”
Appellant’s contention that the trial court is requiring her individually to
supersede the modified permanent injunction is based on the trial court’s oral
statements at the February 22, 2021, hearing on her motion to set the amount and
type of security. There, the trial court noted the security calculation for the Stocks
required some “give and take” because of their nonliquidity, stating:
[I]t seems to me that if [appellant] wants to maintain this appeal and she wants to supersede this injunction, then some of this needs to rest 10 on her in her individual capacity because the permanent injunction was placed on her in her individual capacity in general. . . . ...
I would not permit [appellant] to use the trust funds to purchase the surety. She’s going to have to dip into her own - - she’s going to have to get some skin in the game for herself, and I don’t think that [is] . . . too punitive and it allows her to do what she’s asking and requesting to do, which is supersede the enforcement of this injunction.
Read in isolation, this statement appears to contemplate appellant’s personal funds
as collateral for a supersedeas bond. But later in the same hearing, the trial court
clarified that it would allow appellant to use the Stocks—rather than her own
funds—as collateral, noting that so long as any supersedeas bond was for the
requisite amount, it was within the surety’s purview to decide whether the Stocks
were sufficient collateral.
After appellant learned that a surety would not accept the Stocks as collateral,
she asked the trial court to clarify the bond requirements. The transcript of the April
15, 2021 hearing on appellant’s motion to clarify shows that the trial court, again,
did not mandate that appellant use “her own personal funds” as collateral. The trial
court observed that “[t]here are all kinds of ways to get a surety bond,” and posited
that while appellant could elect to “put up her own cash[,]” she could also “get a
surety bond that uses other collateral.”
Likewise, the written supersedeas order issued by the trial court three months
later, on July 20, 2021, did not require appellant to use “her own personal funds” to
11 collateralize a supersedeas bond. As to the Stocks, the supersedeas order provides
only that appellant “must post a good and sufficient bond . . . in the amount of
$435,666.46, which represents the $395,162.32 in value of the Stocks . . . plus
$40,504.14 in interest at the rate of 5% for two years of the estimated duration of the
appeal.” It says nothing with respect to the mechanics of securing a supersedeas
bond. Consequently, we conclude a bond collateralized by appellant’s “own personal
funds” is not a requirement of the supersedeas order, and thus appellant has not
demonstrated an abuse of the trial court’s discretion in this regard.
B. Interest
Appellant also contends that the trial court abused its discretion by including
interest in the amount of security required to suspend enforcement of paragraphs (i)
and (v) of the modified permanent injunction as to the Stocks. We agree.
As stated, the amount of security depends on the type of judgment. See TEX.
R. APP. P. 24.2(a). The modified permanent injunction’s language compelling
appellant to wind-up the Trust and distribute the Trust assets, including the Stocks,
to appellees establishes that appellees’ “recovery” includes “interest[s] in personal
property.” TEX. R. APP. P. 24.2(a)(2). An interest in stocks is personal property. See,
e.g., Brosseau v. Ranzau, 81 S.W.3d 381, 387 (Tex. App.—Beaumont 2002, pet.
denied) (“In Texas, stock is considered personal property[.]”); Griffith v. Jones, 518
S.W.2d 435, 437 (Tex. App.—Tyler 1974, writ ref’d n.r.e.) (“Shares of corporate
12 stock are personal property in the nature of choses in action.”). Consequently, Rule
24.2(a)(2) governs how appellant may supersede the challenged portions of the
modified permanent injunction. See TEX. R. APP. P. 24.2(a)(2); see also Abdullatif,
536 S.W.3d at 55 (applying Rule 24.2(a)(2) to declaratory judgment and noting rule
“does not say that a judgment for recovery of an interest in property must take a
particular form or result from a suit asserting a certain cause of action”).
Rule 24.2(a)(2) “restricts the trial court’s discretion to determine the security
necessary to supersede a judgment for recovery of property.” Id. at 56. It sets the
amount of security. Id. For personal property, the amount of security must be “at
least . . . the value of the property interest on the date when the court rendered
judgment[.]” TEX. R. APP. P. 24.2(a)(2)(B).
Well-settled principles guide us in determining the meaning of this directive:
the same rules of construction apply to rules of procedure and to statutes. Ford Motor
Co. v. Garcia, 363 S.W.3d 573, 579 (Tex. 2012); BASF Fina Petrochemicals Ltd.
P’ship v. H.B. Zachry Co., 168 S.W.3d 867, 871 (Tex. App.—Houston [1st Dist.]
2004, pet. denied). “When a rule of procedure is clear, unambiguous, and specific,
we construe its language according to its literal meaning.” Bradt v. Sebek, 14 S.W.3d
756, 762 (Tex. App.—Houston [1st Dist.] 2000, pet. denied). “The Code
Construction Act applies and, among other things, permits our consideration of the
object sought to be attained, the circumstances under which the rule was enacted,
13 and the consequences of a particular construction.” Huston v. U.S. Bank Nat’l Ass’n,
359 S.W.3d 679, 681 (Tex. App.—Houston [1st Dist.] 2011, no pet.) (citing TEX.
GOV’T CODE §§ 311.002(a)(4), 311.023(1)–(3), (5)). The interpretation of
procedural rules is a legal question and subject to de novo review. In re Christus
Spohn Hosp. Kleberg, 222 S.W.3d 434, 437 (Tex. 2007) (orig. proceeding).
Here, the trial court determined that the value of the Stocks was $395,162.32,
a sum no party disputes. However, in addition to this amount, the trial court required
any supersedeas bond to also include “$40,504.14 in interest at the rate of 5% for
two years for the estimated duration of the appeal.” Citing Rule 24.2 and the Texas
Finance Code, appellant argues that interest may be included in the amount of
security only for money judgments. See TEX. FIN. CODE § 304.003(a) (“A money
judgment of a court of this state . . . earns postjudgment interest at the rate
determined under this section”); TEX. R. APP. P. 24.2(a)(1) (providing when
judgment is for recovery of money, amount of bond must equal sum of compensatory
damages, interest for estimated duration of appeal, and costs). Appellees, on the
other hand, defend the inclusion of interest as serving one purpose of supersedeas
by protecting them against loss or damage the appeal might cause. Referencing Rule
24.2(a)(2)(B)’s language requiring the amount of the security to be “at least . . . the
value of the property interest,” see TEX. R. APP. P. 24.2(a)(2)(B) (emphasis added),
they argue the “fair market value of the Trust securities on the date of the [modified
14 permanent injunction] is only a starting point” from which the trial court could
reasonably require additional amounts to protect against any loss of Stock value
during the appeal.
The only reference in Rule 24.2 to “interest for the estimated duration of the
appeal” is found in the subsection applicable to judgments “[f]or the recovery of
money.” TEX. R. APP. P. 24.2(a)(1). Rule 24.2(a)(1) provides that, “[w]hen the
judgment is for money, the amount of the bond . . . must equal the sum of
compensatory damages awarded in the judgment [and] interest for the estimated
duration of the appeal[.]” Id. (emphasis added). In contrast, the subsection
applicable to judgments “[f]or recovery of property,” which the trial court correctly
determined applies, does not expressly include any provision for interest in the
amount of security. See TEX. R. APP. P. 24.2(a)(2). We must view the omission as
intentional. See, e.g., Fredericksburg Care Co. v. Perez, 461 S.W.3d 513, 520 (Tex.
2015) (noting in statutory construction context that courts should presume legislature
included words intentionally and omitted words purposefully); Huston, 359 S.W.3d
at 681 (instructing rule of procedure must be “read as a whole to ascertain its intent”).
Even assuming without deciding that the phrase “at least” in Rule 24.2(a)(2)
confers the trial court with discretion to require security greater than the value of the
property, the interest required by the trial court here essentially serves as a guarantee
of the Stocks’ performance for the estimated duration of the appeal, or stated
15 differently, security against market volatility. Nothing in Rule 24.2 suggests it is
intended to provide such security for the speculative performance of stock. Cf.
Culbertson v. Brodsky, 775 S.W.2d 451, 454 (Tex. App.—Fort Worth 1989, order)
(construing predecessor to TEX. R. APP. P. 24.2(a)(3) and concluding it was “not the
intent of any part of [the rule] to provide security for speculative damages such as
the potential lost profits claimed by [the judgment creditor]”). To the contrary, such
a construction would be counter to supersedeas’s purpose in maintaining the status
quo, which is the value of the Stocks at the time the trial court entered the modified
permanent injunction. See Smith, 82 S.W.3d at 585 (supersedeas preserves status
quo of matters in litigation as they existed before issuance of judgment from which
appeal is taken). Consequently, we conclude the trial court abused its discretion by
including interest in the amount of security to suspend enforcement of the modified
permanent injunction as to the Stocks.
C. Alternate Security
Appellant also contends the trial court abused its discretion when it refused to
suspend the modified permanent injunction, as to the Stocks, based upon alternate
security. See TEX. R. APP. P. 24.1(a)(4). Appellant proposed two forms of alternate
security: (1) a freeze order and (2) the liquidation of the Stocks and deposit of the
proceeds into the trial court’s registry.
16 Appellant concedes there is no case law addressing its alternate security
proposals, and we have found none. On the issue of the trial court’s discretion to
order security other than that prescribed in Rule 24.2(a)(2) for judgments for
recovery of property, however, we find our sister court’s opinion in Abdullatif
instructive. See 536 S.W.3d at 54–56. There, the underlying litigation concerned
ownership interests in a limited partnership and a limited liability company which
was the limited partnership’s general partner. Id. at 49–50. The judgment awarded
Ali Choudhri damages and declared his respective ownership interests in the two
entities and the dates on which he obtained the ownership interests. Id. The trial court
signed a supersedeas order, permitting the appellants “to supersede the judgment [in
Choudhri’s favor] with a cash deposit equal to the amount of damages plus
applicable interest.” Id. The order also appointed a Master in Chancery and
“prohibited certain activities by the business entities as further security for Choudhri
pending appeal.” Id. at 50. The prohibited acts included making partnership
distributions to any partner or purported partner, paying or incurring any expenditure
outside the normal course of business without advance approval by the Master in
Chancery, and paying or incurring any capital expenditure of more than $25,000
without the advance approval by the Master in Chancery. Id. at 56. Choudhri filed a
motion with the appellate court arguing that the trial court’s supersedeas order did
not provide sufficient security for the declaratory portion of the judgment. Id.
17 The Fourteenth Court of Appeals, noting that an interest in a partnership and
a membership interest in a limited liability company are personal property,
concluded that Rule 24.2(a)(2) governed how the appellants could supersede the
declarations. Id. The court also concluded that the appointment of the Master in
Chancery and the prohibitions in the trial court’s supersedeas order were not relevant
to the supersedeas analysis because Rule 24.2(a)(2) “restricts the trial court’s
discretion to determine the security necessary to supersede a judgment for recovery
of property.” Id. The court held: “Under Rule 24.2(a)(2)(B), the trial court abused
its discretion by not determining the value of the property interests it declared had
been assigned to Choudhri and using that value to set the security appellants must
post to supersede the [d]eclarations.” Id.
With the Abdullatif reasoning in mind, we conclude the trial court did not
abuse its discretion by rejecting a freeze order as alternate security. Here, except for
its error in requiring interest to suspend enforcement of the modified permanent
injunction as to the Stocks under Rule 24.2(a)(2)(B), the trial court complied with
the prescribed formula by determining that the value of the Stocks was $395,162.32
on the date it entered the modified permanent injunction. See TEX. R. APP. P.
24.2(a)(2)(B). Considering the potential for the Stocks’ value to change according
to the performance of the stock market—a factor for which the trial court reasonably
expressed concern—a freeze order may or may not provide the minimum security
18 contemplated by Rule 24.2(a)(2). Accordingly, we cannot conclude the trial court
was compelled to order a freeze of the UBS account in which the Stocks are held as
alternate security. See Walker v. Packer, 827 S.W.2d 833, 839–40 (Tex. 1992) (orig.
proceeding) (no abuse of discretion unless trial court could reasonably have reached
only one decision); EnviroPower, 265 S.W.3d at 1 (abuse-of-discretion test depends
on arbitrary or unreasonable action by trial court).
We further conclude the trial court did not abuse its discretion by refusing to
permit the liquidation of the Stocks as alternate security. Such an order would be
inconsistent with paragraph (ii) of the modified permanent injunction, which
prohibits appellant, “individually, and in her capacity as trustee” from “selling,
spending, or otherwise dissipating in any way any assets belonging to the Trust,” a
provision appellant has not addressed in her Rule 24.4 motion.
Still, we are mindful that the real gist of appellant’s complaint is that there is
insufficient collateral to obtain a supersedeas bond in the amount required by the
trial court, thereby prohibiting suspension of enforcement of the modified permanent
injunction as to the Stocks. We construe this complaint as including a challenge to
the bond amount based on substantial economic harm under Rule 24.2(b), which
appellant raised in the trial court and provides:
The trial court must lower the amount of security required by [Rule 24.2](a) to an amount that will not cause the judgment debtor substantial economic harm if, after notice to all parties and a hearing, the court finds that posting a bond, deposit, or security in the amount 19 required by [Rule 24.2](a) is likely to cause the debtor substantial economic harm. TEX. R. APP. P. 24.2(b).
Appellant had the burden to prove she would suffer substantial economic
harm if the supersedeas amount was not decreased. In re Nalle Plastics Family Ltd.
P’ship, 406 S.W.3d 168, 170 (Tex. 2013); Drake Interiors, Inc. v. Thomas, 531
S.W.3d 325, 328 (Tex. App.—Houston [14th Dist.] 2017, order). Whether appellant
is likely to suffer substantial economic harm is a question of fact, “which require[s]
a showing both of irreparable harm to [appellant] and that a lesser amount would not
substantially impair [appellees’] ability to recover under the judgment after appellate
remedies [are] exhausted.” In re Nalle Plastics Family Ltd. P’ship, 406 S.W.3d at
170; see also O.C.T.G., L.L.P. v. Laguna Tubular Prods. Corp., 525 S.W.3d 822,
831 (Tex. App.—Houston [14th Dist.] 2017, orig. proceeding) (noting question of
fact). Appellant presented at least some evidence that she could not obtain the bond
ordered by the trial court in the affidavits attached to her motion seeking to clarify
the supersedeas requirement. Because no finding has been made as to whether a
lesser amount of security will avoid substantial economic harm to appellant without
substantially impairing appellees’ ability to recover under the judgment after the
20 appeal is resolved, we will remand for the trial court to take evidence, make findings
under Rule 24.2(b), and enter an appropriate order based on its findings.4
Conclusion
In sum, we conclude the trial court abused its discretion by including in the
amount of security “$40,504.14 in interest at the rate of 5% for two years for the
estimated duration of the appeal.” We therefore grant appellant’s Rule 24.4(a)
motion in part and order that the amount of security be reduced to no more than
$395,162.32, which represents the amount required by Rule 24.2(a)(2) as the
undisputed value of the Stocks at the time the trial court entered the modified
permanent injunction. Because there remains a question on whether the amount of
security required by Rule 24.2(a)(2) is likely to cause appellant substantial economic
harm, we further remand for the trial court take evidence, make findings under Rule
24.2(b), and enter an appropriate order based on its findings. This Court’s stay of
enforcement of the modified permanent injunction will be lifted upon the filing in
this Court of a supplemental clerk’s record containing the order entered by the trial
4 We note the trial court has continuing jurisdiction to handle these matters during the pendency of the appeal. See TEX. R. APP. P. 24.3(a). In addition, this opinion should not be read as preventing the parties from reaching an agreement for suspending enforcement of the modified permanent injunction as to the Stocks. See TEX. R. APP. P. 24.1(a)(1). 21 court, consistent with our opinion. Appellant’s Rule 24.4(a) motion is denied in all
other respects.
Amparo Guerra Justice
Panel consists of Justices Landau, Guerra, and Farris.
Publish.