Slidedeck from D. Todd Smith's presentation on current issues in Texas supersedeas law at the 2012 Advanced Civil Appellate Practice Course.

1. Current Issues in Supersedeas Law
D. Todd Smith September 6, 2012
www.appealsplus.com

2. Back to Basics: Why, What, and How?
• Why supersede?
To prevent the judgment creditor from enforcing the
judgment while the case is on appeal
9/30/2012 Copyright © 2012 Smith Law Group, P.C.
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3. Back to Basics: Why, What, and How?
• What supersede? TRAP 24.2(a)(1) (via CPRC ch. 52)
– Compensatory damages awarded in the judgment
– Interest for the estimated duration of the appeal
– Costs awarded in the judgment
• But the amount must not exceed the lesser of
– 50% of the judgment debtor’s current net worth, or
– $25 million
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4. Back to Basics: Why, What, and How?
• How supersede? TRAP 24.1(a) (via CPRC ch. 52)
– Bond or cash deposit
– Written agreement
– Alternate security as ordered by the court
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5. Overview of Issues Covered
• Are attorney fees ―compensatory damages
awarded in the judgment‖?
• What is ―the estimated duration of the appeal‖?
• What is included in the net-worth calculation?
• Do judgment-debtor-friendly state supersedeas
rules apply to federal judgments?
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6. Attorney Fees as “Compensatory Damages”?
• Beware of the Shook/Fairways split
• Shook v. Walden (3CA 2010)
– Ch. 52 does not define ―compensatory damages‖
– 3CA looked to definition in CPRC ch. 41 (―Damages‖),
which shares ―common origins‖ with ch. 52 (HB4)
– Attorney fees for breach of contract are not ―economic
damages‖ under ch. 41
– Therefore, attorney fees are not ―compensatory
damages‖ that must be superseded (at least not in
breach-of-contract cases)
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7. Attorney Fees as “Compensatory Damages”?
• Fairways Offshore v. Patterson (1CA 2011)
– Declined to follow Shook and held that fees are
―compensatory damages‖ that must be superseded
– Nothing in HB4’s plain language evidences intent to
change law requiring security of fees or to exclude
fees from ―compensatory damages‖
– Legislature could have defined term that way in ch. 52
if that’s what it meant to do
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8. Attorney Fees as “Compensatory Damages”?
• SCOTX has scheduled oral argument in a
mandamus expected to resolve the split
• In re Nalle Plastics (No. 11-0903)
– Mandamus from unpublished order out of 13CA
– Set for argument November 7, 2012
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9. Other Exclusions from Compensatories?
• Exemplary damages are excluded by definition
• Pre-judgment interest?
– Generally must be superseded
– But Shook suggests exception for ―negligence award
for property damage‖
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10. Other Exclusions from Compensatories?
• Post-judgment interest on trial attorney fees?
– Generally must be superseded
• Post-judgment interest on exemplary damages?
– Must be superseded per Texas Standard Oil & Gas,
L.P. v. Frankel Offshore Energy, Inc. (14CA 2011)
– Dissent would have held otherwise
– SCOTX denied mandamus
• All subject to the net-worth cap
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11. What Is the “Estimated Duration of Appeal”?
• Look to Office of Court Administration data
• Shook v. Walden (3CA 2010)
– Issue was whether one or two years was reasonable
– 3CA held that security for one year of post-judgment
interest would comply with CPRC § 52.006(a)(2)
– Court stated parties could go back to trial court if
appeal lasted more than one year
• Trial court’s determination will most likely stand
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12. What Goes Into the Net-Worth Calculation?
• Assets less liabilities, as determined by GAAP,
when security is set
• Is the underlying judgment included as a liability?
– No: McCullough v. Scarbrough Medlin & Assoc. (5CA
2012) and others
• Homestead may also be excluded
– Montelongo v. Exit Stage Left, Inc. (8CA 2009)
– No abuse of discretion—judgment was a contingent
liability and homestead could not be levied
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13. Effect of Negative Net Worth?
• A judgment debtor with a negative net worth is
excused from posting supersedeas
– In re Smith (SCOTX 2006)
– G.M. Houser, Inc. v. Rodgers (5CA 2006)
• But subject to contest under TRAP 24.2(c)
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14. Chapter 52 in Federal Court?
• Surprisingly few cases address whether
defendants get benefit of friendly state rules
• FRCP 62(f)
– State supersedeas rules apply if a judgment is a lien
on the judgment debtor’s property under state law
– So, is a Texas judgment a lien under FRCP 62?
9/30/2012 Copyright © 2012 Smith Law Group, P.C.
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15. Chapter 52 in Federal Court?
• For judgment debtors, problem is the additional
step of abstracting judgment to create lien
• No 5th Circuit authority; district courts are split on
whether TX meets ―judgment as lien‖ standard
– Yes: Umbrella Bank, FSB v. Jamison, 341 B.R. 835
(W.D. Tex. 2006) (Yeakel, J.) and one other
– No: EEOC v. Service Temps, Inc., 782 F. Supp. 2d
288 (N.D. Tex. 2011) (Fitzwater, J.) and a few others
9/30/2012 Copyright © 2012 Smith Law Group, P.C.
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16. Parting Practice Tip
• Travis County District Clerk has a handy form
available online (Google ―travis county supersedeas xls‖)
9/30/2012 Copyright © 2012 Smith Law Group, P.C.
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17. Current Issues in Supersedeas Law
D. Todd Smith September 6, 2012
www.appealsplus.com