Assume the worst for a minute: your trial is over, you lost, and now there is a judgment against your client. However, you and your appellate counsel are convinced that the trial court erred and the judgment should be reversed. How can you stop the eager plaintiff (now judgment creditor) from executing on the judgment 30 days after the judgment is finalized? You have three basic options:
- supersede the judgment by posting a bond, or cash deposit, or alternate security (upon request and approval by the court);
- supersede the judgment or delay execution by private agreement with the judgment creditor; or
- file for bankruptcy.
Options 2 and 3 are not always available or desirable. This post focuses on the first, which is available to all parties. Texas Rule of Appellate Procedure 24.1 along with Civil Practice and Remedies Code § 52.006 provide the framework for supersedeas procedures to suspend the enforcement of a judgment. The precise rules depend on the type of judgment, though some general rules apply to all judgments.
In general, a judgment debtor may post:
- a bond signed by a sufficient surety; or
- cash or cashier's check deposited with the court; or
- alternate security in an amount and form approved by the court.
There is no deadline to post a bond or request that the court set an amount. A judgment creditor can, however, start collection efforts 30 days after the judgment becomes final (when this occurs varies depending on post-judgment motions), although a writ of supersedeas will trump a writ of execution that has already been issued.
Money Judgments. For a money judgment, the bond, cash deposit, or alternate security must be equal to the compensatory damages (no exemplary damages or attorneys' fees, unless awarded as damages, are counted), plus post-judgment interest, and costs awarded. This amount is limited, however, to: (i) 50% of judgment debtor's net worth or (ii) $25 million. The judgment debtor must file an affidavit to establish its net worth. The affidavit can be, and often is, contested.
If, after notice and hearing, a judgment debtor proves that posting a bond or other security will likely cause it substantial economic harm, a court must lower the supersedeas amount to a level that will not cause harm. Net-worth limits and mandatory reduction to avoid substantial economic harm apply only to money judgments.
Judgments for Recovery of Property. If a judgment grants recovery of property, the trial court has the discretion to set the bond amount based on:
- the value of property interest's rent or revenue, if the property interest is real; or
- the value of property interest on the date when court rendered judgment, if the property interest is personal.
Other Judgments. If the judgment is not just for money or recovery of property, a judge has discretion to set the amount and type of security to suspend the judgment aslong as the amount adequately protects a judgment creditor against loss or damage that the appeal might cause. Some cases hold that purely declaratory judgments of rights are automatically superseded by an appeal.
Powers of Trial Court. The supersedeas rule provides the court with broad power to "make any order necessary to adequately protect the judgment creditor against loss or damage that the appeal might cause." This includes the power to grant injunctive relief to stop the dissipation assets, so long as this does not disrupt the judgment debtor's use of the assets in the normal course of business.
If you dislikehow the trial court ruled on the amount or type of security, you can ask the court of appeals to review it.
Supersedeas fights often break out after the judgment is finalized. These disputes are just another step in the litigation process as the case moves from the trial court to the court of appeals. Be sure you know how to navigate the way. In addition, don't forget—you can stop execution only if you win the appeal. Otherwise, you are just delaying the inevitable.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
