DENY; and Opinion Filed June 26, 2015.

S

In The

Court of Appeals

Fifth District of Texas at Dallas

No. 05-14-00852-CV

PAYSON PETROLEUM, INC. AND MATTHEW CARL GRIFFIN, Appellants

V.

J. MICHAEL WHEELER AND JMW BROWN #1, LLC, Appellees

On Appeal from the 192nd Judicial District Court

Dallas County, Texas

Trial Court Cause No. DC-12-06306

MEMORANDUM OPINION ON MOTION TO REVIEW TRIAL 

COURT’S SUPERSEDEAS ORDER

Before Chief Justice Wright and Justices Lang-Miers and Stoddart 

Opinion by Chief Justice Wright

Before the Court is the motion of Payson Petroleum, Inc. and Matthew Carl Griffin 

asking this Court to review the supersedeas bond. We affirm the trial court’s order setting the 

supersedeas bond.

Following a jury trial, the trial court awarded judgment in favor of J. Michael Wheeler 

and JMW Brown #1 (collectively JMW) for $2,383,741 against both Payson and Griffin, jointly 

and severally, along with attorney’s fees, exemplary damages, prejudgment interest, and 

statutory damages for Griffin’s wiretap violation. To supersede the judgment, Payson and 

Griffin deposited $595,920.39 with the district clerk along with an affidavit stating that Payson’s 

net worth was $1,089,853 and Griffin’s net worth was $1,191,840.78. 
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JMW challenged the net worth claim and months of discovery ensued. Following a 

hearing, the trial court set the supersedeas bond at $2,643,829. This amount included the full 

amount of compensatory damages plus post-judgment interest for two years. 

A judgment debtor may supersede a judgment by posting “a good and sufficient bond.” 

See TEX. R. APP. P. 24.1(a)(2). When the judgment is for money, the amount of the bond must 

equal the sum of compensatory damages awarded, interest for the estimated duration of the 

appeal, and costs awarded in the judgment. See TEX. CIV. PRAC. & REM. CODE ANN. § 52.006(a)

(West 2015); TEX. R. APP. P. 24.2(a)(1). The amount, however, cannot exceed the lesser of fifty 

percent of the judgment debtor’s current net worth or $25,000,000. See TEX. CIV. PRAC. & REM.

CODE ANN. § 52.006(b); TEX. R. APP. P. 24.2(a)(1). 

Rule 24.2(c) sets forth the procedure for determining net worth. A judgment debtor who 

provides security under 24.2(a)(1) in an amount based on its net worth, must file with the 

security an affidavit that states its net worth with complete, detailed information concerning the 

debtor’s assets and liabilities. See TEX. R. APP. P. 24.2(c)(1). A judgment creditor then has the 

opportunity to file a contest to the debtor’s affidavit and conduct reasonable discovery 

concerning the judgment debtor’s net worth. See TEX. R. APP. P. 24.2(c)(2). The judgment 

debtor has the burden of proving net worth at the hearing on the contest. See TEX. R. APP. P.

24.2(2)(c)(3). Net worth is calculated as the difference between total assets and total liabilities 

as determined by generally accepted accounting principles. See G.M. Houser, Inc. v. Rodgers, 

204 S.W.3d 836, 840 (Tex. App.—Dallas 2006, no pet.).

On a showing by the judgment debtor that the judgment debtor is likely to suffer 

substantial economic harm if required to post security in the amount required for money 

judgments, the trial court shall lower the amount of security to an amount that will not cause the 

judgment debtor substantial economic harm. See TEX. CIV. PRAC. & REM. CODE ANN.
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§ 52.006(c). Whether or not an appellant is likely to suffer substantial economic harm is a 

question of fact that we review for abuse of discretion. Ramco Oil & Gas, Ltd. v. Anglo Dutch 

(Tenge) L.L.C., 171 S.W.3d 905, 918 (Tex. App.—Houston [14th Dist.] 2005, no pet.). Factors 

to consider in assessing whether posting a bond will result in substantial economic harm include: 

(1) the cost of obtaining the bond; (2) the availability of sufficient assets to cover that cost; (3) 

the availability of other sources from which the judgment debtor could secure funds to obtain the 

bond; (4) the judgment debtor’s ability to borrow the funds; (5) the impact on the judgment 

debtor arising from the sale of assets sufficient to obtain the bond; and (6) the likelihood that 

selling assets to obtain the bond will result in the insolvency of the judgment debtor. See id. at 

917.

On the motion of a party, we may review the sufficiency or excessiveness of security. 

See TEX. R. APP. P. 24.2(a). We review a trial court’s ruling for an abuse of discretion. See 

G.M. Houser, 204 S.W.3d at 840. A trial court abuses its discretion if the evidence is legally or 

factually insufficient to support its findings. Id. The trial court, as fact finder, is the sole judge 

of the credibility of the witnesses and the weight to be given their testimony. Id. Testimony 

from interested witnesses may establish a fact as a matter of law only if the testimony could 

readily be contradicted if untrue, is clear, direct, and positive, and there are no circumstances 

tending to discredit it. See Lofton v. Tex. Brine Corp., 777 S.W.2d 384, 386 (Tex. 1989).

At the hearing, Payson and Griffin offered into evidence a December 31, 2013 Audited 

Financial Statement and a June 30, 2014 Reviewed Consolidated Financial Statement of Payson. 

The December statement showed a negative net worth of $2,750,840. The June statement 

showed a positive net worth of $1,138,383. 

Jack Lamkin, a CPA, performed the 2013 audit and the June 2014 statement. On crossexamination, Lamkin stated that at the time he prepared the financial statements, he was unaware 
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that Payson and Griffin had been found liable for fraud in the amount of $2.3 million. He 

admitted the information would have been relevant in conducting the audit. He also admitted 

that it would have been helpful to know that Payson had spent investor’s money to pay personal 

credit cards, fitness memberships, and trips to resorts because how management conducts itself is 

important. Lamkin also testified that Payson did not provide him with any information showing 

that Payson had a 17% interest in a four-well project offering.

Payson and Griffin also introduced a Balance Sheet dated September 30, 2014 prepared 

by Brett Pederson, in-house controller for Payson. This Balance Sheet shows a positive net 

worth of $509,851.96.

Dan Griffin (Dan) is the Chief Administrative Officer of Payson. Dan oversees the 

preparation of the financial statements. He testified that Payson drills well and sells interests in 

wells. Payson raises money from investors for drilling projects. The audit was performed to 

give assurances to the broker community and to investors. Payson has drilled and completed five

wells and it is currently drilling a sixth well. Dan testified that Payson has raised about $42 

million for all six wells. Dan also testified that as of January 12, 2015, Payson had between $1.5 

and $1.9 million in its bank account. As of that same date, Payson Operating, a wholly-owned 

subsidiary of Payson, had $3.6 million in its bank account.

Matthew Griffin, the owner of Payson, testified at the hearing. He testified that he earned 

an annual salary of $120,000 and had no personal debt. He rents a house for $6,000 a month. 

He testified that he did not own any real estate or securities. His personal household items are 

worth $9,000. He owns five vehicles worth $91,114. He has two bank accounts for a total of 

$11,567.34. He has an ownership interest in several companies in addition to his 100% 

ownership of Payson. These additional ownership interests are: 

1. Prescott Capital Group - Matt Griffin (100%); 
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2. Payson Oil & Gas Properties - Prescott Capital (99%) / Matt Griffin (1%);

3. Maricopa Resources - Prescott Capital (99%) / Matt Griffin (1%);

4. Payson Petroleum Grayson - Matt Griffin (1%) / Bill Griffin (99%); and

5. Payson Petroleum Management Partners - Matt Griffin(51%) / Dan (25%) / 

Emily Epperson (24%).

Griffin testified that Maricopa is an investment company. It purchases leases and sells them for 

a profit. It purchased an interest in a Dallas Cowboys suite for $1.1 million. Maricopa profits 

about $10,000 when it leases the suite to Payson for $25,000. Payson is one of Maricopa’s 

biggest clients. Griffin testified that he would suffer economic harm if he had to pay thousands 

more to supersede the judgment. 

In a verified key man life insurance application signed on February 17, 2014, Griffin 

stated his net worth was $6 million, his annual salary was $72,000, and his gross annual 

unearned income was $12,600,000. As to Payson, its assets are listed on the application as 

$15,000,000 and its liabilities at zero. The application also shows gross sales of $54,800,000. 

Griffin signed the verified application individually and on behalf of Payson. The insurance 

company issued a $3 million policy. 

At the hearing, Griffin testified the net worths listed in the insurance application were 

“forward looking” and do not accurately reflect the current net worths of himself or Payson. He 

testified that he was not currently worth $6 million as stated on the policy. Paul French, JMW’s 

expert, testified that the sworn insurance application should be considered as evidence of 

Payson’s and Griffin’s net worths. 

Based on the testimony, the trial court found, among other things, that:

• Defendants’ financial statements are outdated and are not credible or 

reliable evidence of Payson’s current net worth.
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• Defendant Matthew Griffin’s testimony and statements attempting to limit 

his net worth are inconsistent and lacking in credibility.

• Payson’s Balance Sheet for September 30, 2014 is not credible or reliable 

evidence of Payson’s current net worth.

• The Balance Sheet was not prepared in accordance with GAAP, as the 

letter accompanying the Balance Sheet explains and as Plaintiff’s expert, 

Paul French testified.

• Evidence of Payson’s current cash on hand, through testimony at the 

hearing, shows that Payson has far in excess of $704,639.16 in cash 

reflected on this Balance Sheet.

• The Balance Sheet does not contain other assets that Payson admittedly 

owns, including oil and gas interests/assets Payson owns such as “carries” 

in other wells.

• The Balance Sheet is not “consolidated” - thus it does not include the 

assets of its wholly-owned company, Payson Operating, LLC.

• Payson’s June 30, 2014 Reviewed Consolidated Financial Statement is not 

credible or reliable evidence of Payson’s current net worth for many 

reasons, including:

a. the Financial Statement is a review and not an audit. The preparer 

relied on the company to provide all of the information and the 

preparer did not verify the numbers in the financial. Payson and its 

owner lack credibility as witnesses.

b. the Financial Statement omits valuable holdings and assets of 

Payson.

• Payson’s December 31, 2013 Audited Financial Statement is not credible 

or reliable evidence of Payson’s current net worth for the same reasons 

expressed above.

• The Court finds the expert testimony of Plaintiff’s accounting and 

valuation expert, Paul French, III, credible.

• Defendants applied for a $3,000,000 key man life insurance policy and in 

doing so, Matthew Griffin, on behalf of himself and Payson signed a 

verified declaration and application stating that his personal net worth is 6 

million dollars and Payson’s net worth is 15 million dollars. The verified 

application was signed by Griffin individually, and on behalf of Payson. 

The Court finds this to be credible and reliable evidence of Griffin and 

Payson’s net worth.
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• Griffin did not present credible evidence of the net worth or value of his 

ownership interests in his other companies. Although he testified he owns 

interests in various companies which own interests in producing oil and 

gas wells, leasehold, and other property, he failed to include any of these 

assets in the calculation of net worth.

• Griffin has no personal debt, lives in an 8700 square foot home on a golf 

course which he rents for $6,000 a month that has a guest house and pool. 

He owns 5 cars and owns at least one company that has the licensing 

rights for a Dallas Cowboys football stadium suite that is worth 1.1 

million dollars.

• Defendants have not met their burden of proving Griffin and Payson’s net 

worth.

• Defendant Payson Petroleum, Inc.’s current net worth is $15,000,000, 

based on the verified life insurance application.

• Defendant Griffin’s current net worth is $6,000,000 based on the verified 

life insurance application.

Payson and Griffin raise several arguments. First, they contend the trial court erred in 

relying on market value as opposed to book value in determining net worth. Second, they 

contend it was error for the trial court to rely on the key man life insurance application because 

there is no evidence to support that Payson’s assets minus liabilities equaled $15 million or that 

Griffin’s assets minus liabilities equaled $6 million. Third, they contend the trial court failed to 

consider the key inquiry as to whether it had the ability to post the bond. Finally, they contend 

the trial court erred in finding that Payson and Griffin each has to post a bond for the full 

amount. 

Payson and Griffin argue the trial court erred in relying on market value and improperly 

disregarded the only evidence of the proper measure of net worth - assets minus liabilities as set 

forth in the financial statements submitted at the hearing. The trial court did not find any of 

these financial statements credible. They claim the trial court “shirked” the well-established 

definition of net worth using instead a definition that encompasses market value at which a 

company or its assets could be sold. Although testimony was presented regarding the value of 
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certain assets, the trial court’s findings show that valuation of assets did not factor into its 

determination of the net worths.

Rather, the trial court found Payson’s current net worth was $15,000,000 and Griffin’s 

current net worth was $6,000,000, both based on the verified life insurance application. Payson 

and Griffin contend the trial court abused its discretion by basing its net worth determination on 

the key man life insurance application. They contend the application and Griffin’s testimony 

showed that these were “forward-looking estimates called for by the insurance policy’s projected 

20-year term.” There is nothing in the application to indicate that the insurance company was 

seeking “forward-looking estimates.” On the application, Payson’s assets are listed at 

$15,000,000 and its liabilities at zero. Using the net worth formula advocated in their motion 

before this Court (assets minus liabilities), Payson’s net worth is $15,000,000. In the 

application, Griffin stated his net worth was $6,000,000. Despite Griffin’s testimony that that 

amount was “forward-looking,” the application did not ask for a projected net worth. Moreover, 

this is the only testimony to that effect and it comes from, Griffin, an interested witness whose 

testimony the trial court found not credible. The insurance application was signed by Griffin on 

his own behalf and on the behalf of Payson. JMW’s expert, French, testified the verified 

application was reliable evidence of net worth. The trial court found French’s testimony 

credible. 

Payson and Griffin also argue that, in relying on the insurance application, the trial court 

ignored the central inquiry in setting a bond - the judgment debtor’s actual ability to post the 

security. As set out above, there are six factors to consider in determining whether posting a 

bond will cause a judgment debtor substantial economic harm. The only evidence regarding 

these factors in this case was Griffin’s conclusory statement that it would cause “economic 

harm” if he had to pay thousands of dollars more to supersede the judgment. Payson and Griffin 
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did not present any evidence as to the cost of obtaining a bond, the availability of other sources 

from which it could secure funds to obtain the bond, its ability to borrow funds, or the impact on 

them arising from the sale of assets sufficient to obtain the bond. See Ramco Oil, 171 S.W.3d at 

917. We conclude Payson and Griffin failed in their burden to show posting the bond in the 

amount of $2,643,829 will result in substantial economic harm.

The trial court heard conflicting testimony as to net worth. As the fact finder, the trial 

court was the sole judge of the witnesses’ credibility and was free to accept or reject the 

proffered testimony. See G.M. Houser, 204 S.W.3d at 840. This is exactly what the trial court 

did with respect to the testimony regarding net worth. These are findings this Court cannot 

disturb. Id.

Finally, Payson and Griffin argue that the trial court abused its discretion to the extent the 

trial court is attempting to preclude them from posting joint security. They rely on the trial 

court’s finding that each defendant must post a separate bond. However, the trial court’s order 

setting supersedeas security correctly requires “Judgment Debtors Matthew Carl Griffin and 

Payson Petroleum, Inc.” to post security in the amount of $2,643,829. The order does not 

require that Griffin and Payson each post security in the full amount of the bond.

The evidence supports the trial court’s findings on the net worths of Payson and Griffin, 

and the bond set by the trial court did not exceed the limits set forth in the rules. See TEX. R.

APP. P. 24.2(a); TEX. CIV. PRAC. & REM. CODE ANN. § 52.006(b). Accordingly, we conclude the 

trial court did not abuse its discretion in setting the bond. We affirm the trial court’s order.

140852F.P05

/Carolyn Wright/

CAROLYN WRIGHT

CHIEF JUSTICE