Kenneth L. Haedge, Dale C. Tippit, Denver Tippit, Case S. Jones and Clinton H. Shed, Appellants v. Central Texas Cattlemen's Association, Appellee (2016)

ORDER

Appellee, Central Texas Cattlemen's Association (CTCA), filed a motion to review supersedeas bond and increase bond amount.  The motion requests review of the trial court's decision to allow appellants, Kenneth L. Haedge, Dale C. Tippit, Denver Tippit, Case S. Jones, and Clinton H. Shed, to suspend enforcement of the trial court's judgment by placing a $2,500 bond into the registry of the court.  We will reverse the trial court's order and order the amount of the supersedeas bond increased to $132,400.

Factual and Procedural Background

Appellants formerly held shares in CTCA. CTCA shareholders possess a right to graze 1.6 head of cattle per share on the U.S. Army facility at Ft. Hood, Texas.  Collectively, appellants owned approximately 203 shares, which would allow them to graze about 330 head of cattle on the Ft. Hood property.  Appellants have approximately 300 head of cattle grazing on the Ft. Hood property.

After it was alleged that appellants violated the bylaws and rules of the CTCA, a special meeting of the CTCA Board of Directors was called.  The result of that special meeting was that the Board terminated appellants' memberships in CTCA and cancelled their shares.

As a result of the Board's actions, appellants filed the instant suit for injunctive relief, declaratory judgment, fraud, breach of contract, and conversion.  During the pendency of this action, appellants sought a temporary restraining order allowing them to continue to graze their cattle on the Ft. Hood property.  The trial court granted this temporary restraining order and set a bond for the order at $2,500.¹  Appellants deposited this cash bond into the registry of the court.  After trial, the trial court entered judgment denying all claims asserted by appellants.  Appellants timely filed notice of appeal.

Appellants filed, in the trial court, a motion to suspend enforcement of judgment during the pendency of appeal.  The trial court held a hearing on the motion.  At this hearing, appellants offered evidence that it would cost them $66,200 to graze their cattle on alternative pastures, if they could find alternative pastures.  CTCA offered testimony that generally agreed with the $66,200 per year value of appellants' grazing rights.  Subsequent to this hearing, the trial court entered an order that the judgment would be suspended by carrying forward the $2,500 bond placed into the registry of the court in conjunction with the temporary restraining order.

By its current motion, CTCA contends that the trial court erred in setting supersedeas because supersedeas is not available in a “take-nothing” judgment.  However, if this Court finds that it was appropriate for the trial court to have set supersedeas, CTCA alternatively contends that the trial court abused its discretion in setting the amount of the supersedeas bond.

Standard of Review

A judgment debtor is entitled to supersede and defer payment of the judgment while pursuing an appeal.  Miga v. Jensen, 299 S.W.3d 98, 100 (Tex.2009).  Texas Rule of Appellate Procedure 24.4 authorizes an appellate court to engage in a limited supersedeas review.  See Tex.R.App. P. 24.4.²  On any party's motion, we may review:  (1) the sufficiency or excessiveness of the amount of security, (2) the sureties on a bond, (3) the type of security, (4) the determination whether to permit suspension of enforcement, and (5) the trial court's exercise of discretion in ordering the amount and type of security.  Rule 24.4(a).  We may require that the amount of a bond be increased or decreased and that another bond be provided and approved by the trial court clerk.  See Rule 24.4(d).  We may also require other changes in the trial court order and remand for entry of findings of fact or for the taking of evidence.  Id.

We review trial court rulings pursuant to Rule 24.4 under an abuse of discretion standard.  See EnviroPower, L.L.C. v. Bear, Stearns & Co., 265 S.W.3d 1, 2 (Tex.App.–Houston [1st Dist.] 2008, pet. denied);  Ramco Oil & Gas, Ltd. v. Anglo Dutch (Tenge) L.L.C., 171 S.W.3d 905, 909 (Tex.App.–Houston [14th Dist.] 2005, order);  TransAmerican Natural Gas Corp. v. Finkelstein, 905 S.W.2d 412, 414 (Tex.App.–San Antonio 1995, writ dism'd).  A trial court abuses its discretion when it renders an arbitrary and unreasonable decision lacking support in the facts or circumstances of the case, or when it acts in an arbitrary or unreasonable manner without reference to guiding rules or principles.  Samlowski v. Wooten, 332 S.W.3d 404, 410 (Tex.2011) (citing Goode v. Shoukfeh, 943 S.W.2d 441, 446 (Tex.1997), and Mercedes–Benz Credit Corp. v. Rhyne, 925 S.W.2d 664, 666 (Tex.1996)).

The Law Regarding Suspension of Enforcement

Unless the law or the rules of appellate procedure provide otherwise, a judgment may be superseded and enforcement of the judgment suspended pending appeal.  Rule 24.1(a).  The purpose of supersedeas is to preserve the status quo of the matters in litigation as they existed before the issuance of the 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).

Rule 24.1 sets out the requirements for suspending enforcement of a judgment pending appeal in civil cases.  A supersedeas bond must be in the amount required by Rule 24.2 of the Texas Rules of Appellate Procedure.  See Rule 24.1(b)(1)(A).  Under Rule 24.2, the amount of the bond depends on the type of judgment.  Rule 24.2(a).  Generally, when the judgment is for the recovery of money, the amount of the bond must equal the sum of compensatory damages awarded in the judgment, interest for the estimated duration of the appeal, and costs awarded in the judgment.  Rule 24.2(a)(1);  see Tex. Civ. Prac. & Rem.Code Ann. § 52.006(a) (West 2015).  When the judgment is for the recovery of an interest in real or personal property, the trial court will determine the type of security that the judgment debtor must post;  however, the amount of the security must be at least the value of the real property's rent or revenue or the value of the personal property interest on the date of judgment.  See Rule 24.2(a)(2).  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 that the judgment debtor must post.  Rule 24.2(a)(3).  However, in such cases, the trial court may decline to permit the judgment to be superseded if the judgment creditor posts security ordered in an amount and type that will secure the judgment debtor against any loss or damage caused by the relief granted the judgment creditor if the appellate court reverses.  Id.;  see Klein Indep. Sch. Dist. v. Fourteenth Court of Appeals, 720 S.W.2d 87, 88 (Tex.1986) (orig.proceeding).  Nevertheless, a trial court's discretion to refuse to permit a judgment to be superseded under Rule 24.2(a)(3) does not extend to denying a party its appeal by rendering the appeal moot.  See In re Dallas Area Rapid Transit, 967 S.W.2d 358, 360 (Tex.1998) (orig.proceeding) (per curiam);  Mossman v. Banatex, L.L.C., 440 S.W.3d 835, 839 (Tex.App.–El Paso 2013) (op. on motion);  Hydroscience Techs., Inc. v. Hydroscience, Inc., 358 S.W.3d 759, 761 (Tex.App.–Dallas 2011, no pet.).

Analysis

In the present case, appellants filed suit seeking a judicial order invalidating the CTCA's Board's decision to terminate their memberships and to cancel their shares.  While the issue in the case involves rights to use the Ft. Hood property for grazing, the suit did not directly seek an interest in real property.  As such, the judgment entered in this case is for something other than money or an interest in real property.  Consequently, if the trial court must set the amount and type of security, it must do so under Rule 24.2(a)(3).³

CTCA's first contention is that the trial court could not set supersedeas in this case because enforcement of a take-nothing judgment cannot be suspended because, in such a judgment, there is neither a judgment debtor nor is there is anything to be suspended.  We disagree with CTCA's interpretation of the judgment entered in this case.  Appellants filed suit to reverse the actions taken by CTCA's Board that effectively removed appellants' rights to graze their cattle on the Ft. Hood property.  However, the status quo as it existed immediately before the issuance of the judgment was that appellants' cattle remained on the Ft. Hood property.  The purpose of a supersedeas bond is to preserve this status quo during the pendency of the appeal.  See Smith, 82 S.W.3d at 585.  If CTCA were allowed to enforce the judgment during the pendency of the appeal, it would have the authority to require appellants to herd their cattle and remove them from the Ft. Hood property.  Appellants offered evidence at the supersedeas hearing that it would require a significant investment of time and money to herd the cattle and relocate them, assuming that alternative grazing land could even be located.  The avoidance of these expenses and the affirmation of appellants' rights to graze their cattle on the Ft. Hood property is at the heart of appellants' appeal.  As such, refusing to permit the judgment to be superseded would deny appellants their appeal by rendering it moot.  See In re Dallas Area Rapid Transit, 967 S.W.2d at 360;  Mossman, 440 S.W.3d at 839;  Hydroscience Techs., Inc., 358 S.W.3d at 761.  As such, we conclude that the trial court did not abuse its discretion in setting a supersedeas bond to suspend enforcement of its judgment during the pendency of this appeal.

As an alternative to its contention above, CTCA contends that the trial court abused its discretion in setting the amount of the supersedeas bond at $2,500.  Our review of the record of the supersedeas hearing reflects that there was no evidence offered that would support a $2,500 bond.  As such, it was an abuse of discretion for the trial court to set supersedeas bond at $2,500.  See Rule 24.4(a)(1).

In setting the type and amount of supersedeas, the trial court was tasked with adhering to Rule 24.2(a)(3)'s mandate to set bond in an amount that “adequately protect[s] the judgment creditor against loss or damage that the appeal might cause.”  Rule 24.2(a)(3).  At the supersedeas hearing, one of the appellants, Denver Tippit, testified that it would cost appellants approximately $66,200 per year to lease land upon which they could graze their cattle.  Brandon Belt, President of the CTCA, generally agreed with Tippit's estimate of the annual value of the grazing rights conferred to appellants by their CTCA shares.  Thus, the parties agreed that the value of appellants' use of the Ft. Hood property was approximately $66,200 per year.  As the parties agree that the value of appellants' use of the Ft. Hood property is approximately $66,200 per year, we conclude that this is the amount necessary to adequately protect CTCA against loss or damage that the current appeal might cause.  See Rule 24.2(a)(3).  Thus, by order of this Court, the amount of supersedeas bond that must be posted by appellants to suspend enforcement of the judgment is increased to $132,400.⁴  See Rule 24.4(d).

Conclusion

We reverse the order of the trial court setting supersedeas bond at $2,500 and increase the amount of bond to supersede the judgment to $132,400.⁵

FOOTNOTES

1.   Subsequently, this temporary restraining order was converted to a temporary injunction with the $2,500 cash bond carried forward.

2.   Further reference to Texas Rules of Appellate Procedure will be by reference to “Rule _.”

3.   Even assuming this case were to be construed as a claim for the recovery of an interest in real property, we would reach the same result following an analysis of the amount and type of security under Rule 24.2(a)(2).

4.   We arrive at this amount with the expectation that the appeal of this case will be resolved within two years.  However, should the appeal fail to reach resolution within this time, we note that the trial court maintains continuing jurisdiction to modify the amount of security required to continue suspension of the judgment's execution.  See Rule 24.3(a)(2).

5.   Under Rule 24.4(e), enforcement of the judgment is suspended for twenty days from the date of this order.  If appellants do not post bond within this period, the judgment may be enforced.  See Rule 24.4(e).

Per Curiam