Supersedeas Advanced 2012


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

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  • I was going to name this talk “Hot Topics in Supersedeas Law,” but “hot topics” and “supersedeas” just didn’t seem to go together.We’ve included in your materials the latest version of Professor Carlson’s paper—the most comprehensive writing on the subject.Assuming a money judgment. Special rules apply for judgment for recovery of property and non-monetary judgments. Those are laid out in the paper.Marketing tip: This may be a dry topic, but practical knowledge and experience applying the supersedeas rules can make you invaluable to trial lawyers. You may be consulted regarding calculation of the appropriate security amount, post-judgment discovery, and various legal issues that are surprising undeveloped, even though the rules were re-written 9 years ago. There are several opportunities for advocacy, both oral and written, surrounding supersedeas practice.
  • Quickly review some basic supersedeas concepts to put all this in context
  • Form follows Shook approach, excludes attorney fees from what has to be superseded, but is a handy reference whatever court you’re inContains the elements of what has to be supersededOnce you have the basic numbers (i.e. interest), adds them up for youGet it by Google search, or I will post a link to it on my blog, which you can access through
  • Supersedeas Advanced 2012

    1. 1. Current Issues in Supersedeas LawD. Todd Smith September 6,
    2. 2. Back to Basics: Why, What, and How? • Why supersede? To prevent the judgment creditor from enforcing the judgment while the case is on appeal9/30/2012 Copyright © 2012 Smith Law Group, P.C. 2
    3. 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 million9/30/2012 Copyright © 2012 Smith Law Group, P.C. 3
    4. 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 court9/30/2012 Copyright © 2012 Smith Law Group, P.C. 4
    5. 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?9/30/2012 Copyright © 2012 Smith Law Group, P.C. 5
    6. 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)9/30/2012 Copyright © 2012 Smith Law Group, P.C. 6
    7. 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 do9/30/2012 Copyright © 2012 Smith Law Group, P.C. 7
    8. 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, 20129/30/2012 Copyright © 2012 Smith Law Group, P.C. 8
    9. 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‖9/30/2012 Copyright © 2012 Smith Law Group, P.C. 9
    10. 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 cap9/30/2012 Copyright © 2012 Smith Law Group, P.C. 10
    11. 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 stand9/30/2012 Copyright © 2012 Smith Law Group, P.C. 11
    12. 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 levied9/30/2012 Copyright © 2012 Smith Law Group, P.C. 12
    13. 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)9/30/2012 Copyright © 2012 Smith Law Group, P.C. 13
    14. 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. 14
    15. 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 others9/30/2012 Copyright © 2012 Smith Law Group, P.C. 15
    16. 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. 16
    17. 17. Current Issues in Supersedeas LawD. Todd Smith September 6,