Martin Phipps, Individually and Phipps LLP v. Cord Largo

• Court: Texas Court of Appeals, 1st District (Houston)
• Decided: February 12, 2026
• Docket: 01-25-00307-CV
• Status: Published

Opinion

Opinion issued February 12, 2026

In The

Court of Appeals For The

First District of Texas ———————————— NO. 01-25-00307-CV ——————————— MARTIN PHIPPS, INDIVIDUALLY, AND PHIPPS LLP, Appellants V. CORD LARGO, Appellee

On Appeal from the 215th District Court Harris County, Texas Trial Court Case No. 2024-72828

OPINION ON MOTION TO DECREASE SECURITY

Pending before the Court is appellant Martin Phipps’ motion to decrease the

amount of security set by the trial court. Together with this motion, Phipps filed an

emergency motion for temporary relief requesting that the Court stay the trial court’s

order compelling post-judgment discovery responses until we resolve the motion to decrease security. See TEX. R. APP. P. 24.4(c). We granted the emergency motion

and stayed the discovery order.

In an issue of first impression, we hold that arbitration fees are not “costs

awarded in the judgment” which a judgment debtor must supersede to suspend

enforcement of the judgment pending appeal. See TEX. R. APP. P. 24.2(a)(1); TEX.

CIV. PRAC. & REM. CODE § 52.006(a)(3). Accordingly, we grant the motion to

decrease security and vacate the discovery order.

BACKGROUND

Appellee Cord Largo initiated arbitration proceedings against Phipps and

several other attorneys and law firms alleging they had breached a written

agreement.1 Largo obtained a favorable final arbitration award determining that he

shall recover from Phipps $8,837.52 in compensatory damages for breach of

contract, $85,569 in arbitration fees, $590,697.50 in attorney’s fees, and pre- and

post-award interest.2

1 The details of the agreement are irrelevant with one minor exception: We note that the agreement is silent about whether arbitration fees must be superseded if litigation ensues to confirm an arbitration award. The parties do not assert the agreement as a basis to support their arguments either way, and we do not consider the agreement further in this regard. 2 The award determined that Largo established separate damages, attorney’s fees, and costs from appellant Phipps LLP. As Phipps points out, the award does not provide for joint and several liability between Phipps and Phipps LLP. Phipps LLP did not join the motion to decrease security. 2 Phipps did not satisfy the arbitration award, so Largo filed an application in

district court to confirm it. The trial court signed a final judgment in March 2025

confirming the arbitration award against Phipps in the amount of $687,385.19. The

same day, Phipps deposited $9,500.33 with the trial court clerk to suspend

enforcement of the judgment pending this appeal. See TEX. R. APP. P. 24.1(a)(3),

(c)(1)(A), (f), 24.2(a)(1). Phipps later asserted that this amount was for the

compensatory damages portion of the award and estimated post-judgment interest

on this portion pending appeal.

In July 2025, Largo moved the trial court to increase the amount of security

under Texas Rule of Appellate Procedure 24. See TEX. R. APP. P. 24.3(a) (granting

continuing jurisdiction to trial court to order and modify amount of security even

after court’s plenary power expires). Largo argued that arbitration fees are

considered “costs awarded in the judgment” that must be superseded to suspend

enforcement of the judgment, see TEX. R. APP. P. 24.2(a)(1), and therefore Phipps

was required to post $109,098.54 as security rather than $9,500.33. Largo followed

this motion with a motion to compel post-judgment discovery responses, arguing

that Phipps was required to respond to the discovery because he did not properly

supersede the judgment. See TEX. R. CIV. P. 621a (authorizing party to obtain post-

judgment discovery to aid in enforcing judgment “so long as said judgment has not

been suspended by a supersedeas bond or by order of a proper court”). The trial court

3 granted both motions. Phipps then moved this Court for emergency temporary relief

from the discovery order and to decrease the amount of security ordered by the trial

court. We previously granted the emergency motion and stayed the discovery order.

STANDARD OF REVIEW

“A judgment debtor is entitled to supersede the judgment while pursuing an

appeal.” Miga v. Jensen, 299 S.W.3d 98, 100 (Tex. 2009). “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). “Enforcement of

a judgment must be suspended if the judgment is superseded.” TEX. R. APP. P.

24.1(f).

Rule of Appellate Procedure 24 provides the requirements for suspending

enforcement of a judgment pending appeal in civil cases. A judgment debtor may

supersede a judgment by several methods, including by making a cash deposit with

the trial court clerk, as Phipps did here. See TEX. R. APP. P. 24.1(a)(3), (c)(1)(A).

The amount of security required to supersede a judgment pending appeal

depends on the type of judgment. See TEX. R. APP. P. 24.2(a). When, as here, the

judgment is for money, the amount of security “must equal the sum of compensatory

damages awarded in the judgment, interest for the estimated duration of the appeal,

4 and costs awarded in the judgment.”3 TEX. R. APP. P. 24.2(a)(1); see TEX. CIV. PRAC.

& REM. CODE § 52.006(a). The trial court retains jurisdiction after its plenary power

expires to order or modify the amount of security required to suspend execution of

a judgment. TEX. R. APP. P. 24.3(a)(1)–(2).

On any party’s motion, an appellate court may engage in a limited review of

a trial court’s supersedeas order. TEX. R. APP. P. 24.4(a). This review includes the

sufficiency or excessiveness of the amount of security. TEX. R. APP. P. 24.4(a)(1);

see also TEX. R. APP. P. 24.4(b) (authorizing appellate review “based both on

conditions as they existed at the time the trial court signed an order and on changes

in those conditions afterward”). The appellate court may require that the amount of

security be increased or decreased, and it may make other modifications to the trial

court’s order. TEX. R. APP. P. 24.4(d).

We generally review the trial court’s supersedeas ruling for an abuse of

discretion. Senior Care Living VI, LLC v. Preston Hollow Cap., LLC, 695 S.W.3d

446, 455 (Tex. App.—Houston [1st Dist.] 2023, order). A trial court abuses its

discretion if it acts arbitrarily or unreasonably considering all circumstances of the

case. Id. If the ruling turns on a question of law, such as the interpretation of a statute

3 Rule 24 caps the amount of security, but these caps are not relevant here. See TEX. R. APP. P. 24.2(a)(1)(A)–(B), (b). 5 or rule of procedure, our review is de novo. Id.; see Long v. Castle Tex. Prod. Ltd.

P’ship, 426 S.W.3d 73, 78 (Tex. 2014).

SUPERSEDEAS

The parties’ dispute raises an issue of first impression: whether arbitration

fees are “costs awarded in the judgment” which must be superseded to suspend

enforcement of the judgment pending appeal. See TEX. R. APP. P. 24.2(a)(1); TEX.

CIV. PRAC. & REM. CODE § 52.006(a)(3). We conclude that they are not.

“Costs awarded in the judgment” is not defined by statute or the rules.4 See In

re Nalle Plastics Fam. Ltd. P’ship, 406 S.W.3d 168, 175 (Tex. 2013) (orig.

proceeding). But as Phipps points out, the supreme court has construed this phrase

to mean “the fees or compensation fixed by law collectible by the officers of court,

witnesses, and such like items,” and the phrase “does not ordinarily include

attorney’s fees which are recoverable only by virtue of contract or statute.” Id.

(quoting Johnson v. Universal Life & Accident Ins. Co., 94 S.W.2d 1145, 1146 (Tex.

1936)). The phrase does not “include[] anything other than what it ordinarily means:

4 As Phipps points out, Rule of Civil Procedure 145 defines “[c]osts” as “any fee charged by the court or an officer of the court, including, but not limited to, filing fees, fees for issuance and service of process, fees for copies, fees for a court- appointed professional, and fees charged by the clerk or court reporter for preparation of the appellate record.” TEX. R. CIV. P. 145(a). Rule 145 governs statements of inability to afford payment of court costs and is not directly on point. We agree with Phipps, however, that the rule generally supports his position. 6 court costs.” Id. The court held that attorney’s fees were not costs that must be

superseded. Id. at 175–76.

Although the opinion addressed attorney’s fees rather than arbitration fees, In

re Nalle Plastics supports Phipps’ contention that arbitration fees need not be

superseded under Rule 24 to suspend enforcement of a judgment. Arbitration is a

private dispute resolution process based on an agreement to forego the legal process

in favor of private arbitration. See Nafta Traders, Inc. v. Quinn, 339 S.W.3d 84, 90

(Tex. 2011) (quoting Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp., 559 U.S. 662,

682 (2010) (“[A]n arbitrator derives his or her powers from the parties’ agreement

to forgo the legal process and submit their disputes to private dispute resolution.”)).

Arbitrators are private arbiters of disputes rather than “officers of court,” and

arbitration fees “are recoverable only by virtue of contract[.]” See In re Nalle

Plastics, 406 S.W.3d at 175 (explaining general understanding of meaning of “costs”

and noting that meaning does not ordinarily include attorney’s fees). We agree with

Phipps that under the reasoning of In re Nalle Plastics, arbitration fees fall outside

the scope of Rule 24’s “costs awarded in the judgment.”

Largo relies on Civil Practice and Remedies Code section 154.054(b) to assert

that the trial court was required to tax the arbitration fees as costs because the parties

did not agree about payment of the fees. Section 154.054(b) provides, “Unless the

parties agree to a method of payment, the court shall tax the fee for the services of

7 an impartial third party as other costs of suit.” TEX. CIV. PRAC. & REM. CODE

§ 154.054(b). While initially availing, we ultimately reject this contention.

Section 154.054 is part of the Texas Alternative Dispute Resolution Act (ADR

Act), which “only deals with court-ordered referrals of pending litigation to

alternative dispute resolution procedures.” Porter & Clements, L.L.P. v. Stone, 935

S.W.2d 217, 220 (Tex. App.—Houston [1st Dist.] 1996, no pet.). If a court orders

parties in a pending dispute to participate in alternative dispute resolution, the court

may appoint an impartial third party to facilitate the procedure. TEX. CIV. PRAC. &

REM. CODE § 154.051(a). The court may also set a reasonable fee for the impartial

third party’s services. Id. § 154.054(a). And as Largo points out, the court may then

tax the impartial third party’s fee as costs unless the parties agree to a method of

payment. See id. § 154.054(b).

But this case concerns contractual arbitration, not an ADR procedure under

the ADR Act. This Court has previously held that the Texas Arbitration Act

(TAA)—not the ADR Act—governs contractual arbitration disputes:

The present case does not involve court-ordered referral of pending litigation to an ADR procedure. Rather, the parties contractually agreed to arbitration before the current dispute ever arose. As such, the current dispute is governed by the Texas Arbitration Act, not the ADR Act.

Porter & Clements, 935 S.W.2d at 220; see also In re Cartwright, 104 S.W.3d 706,

711 (Tex. App.—Houston [1st Dist.] 2003, orig. proceeding) (op. on reh’g)

(“Chapter 154 applies to court-ordered referrals to alternative methods of dispute

8 resolution, not to private, contractual agreements to resolve disputes.”). Here, Largo

initiated arbitration pursuant to a written agreement between the parties, obtained a

final arbitration award, and then applied to the district court to confirm the award.

This case thus involves a pre-dispute agreement to arbitrate rather than a court-

ordered referral of pending litigation to an ADR procedure. Under our prior

precedent, section 154.054(b) of the ADR Act does not apply to this dispute over

arbitration fees.

The TAA—which does apply to contractual arbitration—addresses court

costs and arbitration fees in two relevant sections. First, section 171.055 provides

that absent a different agreement between the parties, “the arbitrators’ expenses and

fees, with other expenses incurred in conducting the arbitration, shall be paid as

provided in the award.” TEX. CIV. PRAC. & REM. CODE § 171.055. Unlike section

154.054(b), which expressly permits court-ordered ADR fees to be taxed as costs,

section 171.055 requires that arbitration fees “shall be paid as provided in the

award.” See id.; see also TGS-NOPEC Geophysical Co. v. Combs, 340 S.W.3d 432,

439 (Tex. 2011) (“We presume that the Legislature chooses a statute’s language with

care, including each word chosen for a purpose, while purposefully omitting words

not chosen.”). Section 171.055 therefore does not authorize a court to tax arbitration

fees as costs.

9 Second, section 171.092 permits a judgment to award “(1) costs of the

application and of the proceedings subsequent to the application; and

(2) disbursements.” TEX. CIV. PRAC. & REM. CODE § 171.092(b). “[T]he

application” refers to an application to the court for an order under the TAA, such

as an order confirming an arbitration award. See id. §§ 171.082(a) (“The filing with

the clerk of the court of an application for an order under this chapter, including a

judgment or decree, invokes the jurisdiction of the court.”), 171.083 (permitting

party to file “application . . . subject to this chapter, at or after the conclusion of the

arbitration”), 171.087 (stating that absent ground to vacate, correct, or modify award,

“the court, on application of a party, shall confirm the award”). Section 171.092 does

not permit a court to tax as costs arbitration fees which were incurred before a party

filed an application to confirm the arbitration award.

We conclude that the trial court abused its discretion by ordering Phipps to

post security for the amount of arbitration fees awarded in the final arbitration award.

Following In re Nalle Plastics and the TAA, we hold that arbitration fees are not

“costs awarded in the judgment” that must be superseded to suspend enforcement of

the judgment pending appeal under Rule 24.

Based on this holding, we must vacate the trial court’s discovery order, which

we previously stayed pending resolution of the motion to decrease security. The

discovery order granted Largo’s motion to compel post-judgment discovery

10 responses from Phipps and ordered Phipps to immediately respond to the discovery

requests. But this order is inconsistent with Phipps’ deposit of sufficient security to

suspend enforcement of the judgment. Rule of Civil Procedure 621a permits a

judgment creditor to seek post-judgment discovery from a judgment debtor to obtain

information to aid in the enforcement of a judgment only “so long as said judgment

has not been suspended by a supersedeas bond or by order of a proper court[.]” TEX.

R. CIV. P. 621a; see also TEX. R. APP. P. 24.1(f) (“Enforcement of a judgment must

be suspended if the judgment is superseded.”). The trial court abused its discretion

by ordering Phipps to respond to post-judgment discovery even though he provided

sufficient security to supersede the judgment.

Conclusion

We grant Phipps’ motion and decrease the amount of security required to

suspend enforcement of the final judgment to $9,500.33, and we vacate the trial

court’s November 20, 2025 post-judgment discovery order.5

David Gunn Justice

Panel consists of Chief Justice Adams and Justices Gunn and Johnson.

5 Phipps’ motion states that he calculated the “estimated interest for the appeal’s duration” at $663.01. This opinion is without prejudice to Largo seeking relief in the trial court to recalculate the estimated interest pending appeal should any party file a petition for review in the Texas Supreme Court. 11