Court Opinion

ID: 9372676
Source: CourtListenerOpinion
Date Created: 2023-02-22 07:09:19.58136+00
Date Added: 2024-06-11T17:16:36.713978
License: Public Domain

REVERSE, RENDER and REMAND and Opinion Filed February 14, 2023

                                           S   In The
                                 Court of Appeals
                          Fifth District of Texas at Dallas
                                      No. 05-21-00649-CV

     CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH AND CREDIT
                   SUISSE (USA) LLC, Appellants
                               V.
               CLAYMORE HOLDINGS, LLC, Appellee

                   On Appeal from the 134th Judicial District Court
                                Dallas County, Texas
                        Trial Court Cause No. DC-13-07858

                              MEMORANDUM OPINION
                              Before Justices Nowell and Smith1
                                 Opinion by Justice Nowell
        This case arises from the inflated appraisal of a residential real estate project

near Las Vegas shortly before the 2007 housing financial crisis. We affirmed the

original underlying judgment awarding appellee Claymore Holdings, LLC

$211,863,998.56 in equitable rescissory damages, $74,644,154.22 in prejudgment

interest, court costs, and post-judgment interest. See Credit Suisse AG v. Claymore

Holdings, LLC, 584 S.W.3d 18, 24 (Tex. App.—Dallas 2018), rev’d, 610 S.W.3d

1
 The Honorable Leslie L. Osborne participated in the submission of this case; however, she did not
participate in the issuance of this memorandum opinion due to her resignation on October 24, 2022.
808 (Tex. 2020). The Texas Supreme Court reversed and remanded to the trial court

for reconsideration of damages in light of its opinion. Id. On remand, the trial court

awarded $40 million in fraudulent inducement damages determined by the jury, plus

pre- and post-verdict interest, less allocable settlement credits. The trial court also

awarded an additional $23,235,910.61 in damages. The final judgment totaled

$121,132,984.48.

      Credit Suisse now raises three issues on appeal with multiple sub-issues

relating to the trial court’s damages award on remand. Broadly stated, Credit Suisse

challenges (1) the damage award for Claymore’s secondary market purchases

because Claymore failed to seek a jury finding that Credit Suisse was liable for

fraudulently inducing any secondary market purchases; (2) the trial court erred in

allocating certain settlement credits; and (3) the trial court erred in calculating

prejudgment interest under applicable New York law on the net verdict after

deducting applicable settlement credits.

      We reverse the $23,235,910.61 damages award for Claymore’s secondary

market purchases and render a take-nothing judgment on this claim. We conclude

the trial court erred by failing to allocate certain settlement credits to the jury’s $40

million award for fraudulent inducement. Because the trial court did not have an

opportunity to consider prejudgment interest under the new damages award

calculation, we remand to the trial court for further proceedings.

                                           –2–
                                            Background2

        In 2007, Highland, a group specializing in distressed debt, invested $250

million in a refinancing of real property in the Lake Las Vegas residential

community. Credit Suisse arranged the refinancing using an appraisal Credit Suisse

knew to be unreasonable and inflated resulting in Highland losing millions of dollars

in its investment.

        On July 12, 2013, Highland formed Claymore for the express purpose of “the

pursuit of all claims against Credit Suisse . . . related to the loans made and losses

suffered . . . in connection with the Lake Las Vegas Residential Community and

Golf Courses.” It is undisputed Claymore3 is the valid and effective assignee of

several funds that were lenders under a credit agreement either as initial investors in

the refinancing or as a result of purchases on the secondary market of debt.

        Claymore sued Credit Suisse for legal and equitable damages for fraudulent

inducement, breach of contract, aiding and abetting fraud, civil conspiracy, breach

of the implied duty of good faith and fair dealing, and unjust enrichment. Highland

eventually recovered settlements related to its refinancing losses from the LLV

    2
      The facts of this case are well-known to the parties and extensively documented in the 55-volume
reporter’s record, the trial court’s comprehensive findings, the original appeal from this Court, and the
Supreme Court of Texas’s opinion. We summarize only those facts necessary to provide a brief context of
the underlying lawsuit and to resolve the parties’ issues in this second appeal. TEX. R. APP. P. 47.1.
    3
      In this Court’s first opinion and the Texas Supreme court opinion, the courts both referred to
“Claymore” throughout the opinions even though Highland had not made the assignment at the time of the
2007 refinancing transaction. For clarity in addressing the issues in this appeal, we refer to the parties
separately.
                                                  –3–
Developers ($23,275,710), C&W ($12 million), the company hired to appraise the

development, and CBRE ($21 million), the company hired to prepare the appraisal.

Highland received all three settlements prior to Claymore going to trial against

Credit Suisse.

      The trial court bifurcated Claymore’s claims: (1) a jury trial in December 2014

on Claymore’s fraudulent inducement claim based on its initial investment in

refinancing; and (2) a bench trial in May 2015 on liability and damages for

Claymore’s remaining claims, including a request for rescissory damages on the

fraudulent inducement claim.

      The jury found Credit Suisse liable for fraudulent inducement and awarded

$40 million in damages. After the bench trial, the trial court found Credit Suisse

liable on Claymore’s remaining claims and after accounting for offsets, it awarded

Claymore in equitable relief the price it paid for its initial investment

($215,773,287.95) and the price paid for its secondary market purchases

($23,235,910.61). This Court affirmed the judgment. See Credit Suisse AG, 584

S.W.3d at 18.

      The Texas Supreme Court concluded an adequate remedy at law existed

precluding equitable rescissory damages and remanded to the trial court for “entry

of judgment consistent with the opinion” regarding Claymore’s fraudulent

inducement claim, the only claim tried to the jury in the bifurcated trial. 610 S.W.3d

at 830. It reversed and rendered judgment on all remaining claims tried to the bench.

                                         –4–
Id. In footnote 18 of the opinion, the supreme court explained “because there may

be certain matters still in dispute” such as “questions about the availability of and

amount of prejudgment interest on [the fraud] claim, the treatment of settlement

credits in relation to the jury’s allocation of fault, and damages for secondary market

purchases,” the supreme court refused to render judgment on the jury’s fraudulent

inducement finding and award the $40 million in damages determined by the jury.

       On remand, the trial court awarded $40 million in fraud damages, plus pre-

and post-verdict interest, less allocable settlement credits. The trial court also

awarded an additional $23,235,910.61 in damages, which equaled the price

Claymore paid for the secondary market purchases, plus pre- and post-verdict

interest,   less   allocable    settlement    credits.   The   final   judgment   totaled

$121,132,984.48.

       The trial court’s interpretation of footnote 18’s directive from the supreme

court in entering judgment, among other things, brings the parties before this Court

once again.

                               Secondary Market Purchases

       The supreme court remanded for rendition of judgment on the jury’s

fraudulent inducement finding and rendered a take nothing judgment on all of

Claymore’s remaining claims tried to the bench. On remand, the trial court awarded

an additional $23,235,910.61 for secondary market purchases in addition to the $40

million in damages for fraudulent inducement.

                                             –5–
       In its first issue, Credit Suisse argues the trial court erred by awarding

damages for the secondary market purchases because the jury was not asked and did

not make any liability finding regarding Credit Suisse’s fraudulent inducement of

any secondary market purchases. Credit Suisse also contends Claymore failed to

challenge the trial court’s decision to exclude the secondary market purchases from

the jury charge in its first appeal thereby waiving the issue in this second appeal.

Alternatively, despite these procedural shortcomings, Credit Suisse asserts the

record lacks clear and convincing evidence, as required under New York law,4 to

support the essential elements of fraudulent inducement.

       Claymore responds the trial court properly awarded damages for fraudulent

inducement on the secondary market purchases because Credit Suisse never

challenged the amended findings of fact and conclusions of law from the original

bifurcated trial, which included findings and conclusions on the secondary market

purchases; therefore, Credit Suisse waived its argument. Alternatively, to the extent

Credit Suisse did not waive its argument, Claymore contends the evidence is

sufficient to support the award.

       It is well established no recovery is allowed unless liability is established. See

Mitchell v. Bank of Am., N.A., 156 S.W.3d 622, 627 (Tex. App.—Dallas 2004, pet.

denied); see also Miller v. Baer, 189 N.Y.S. 149, 150 (N.Y. App. Term 1921) (noting

   4
      It is undisputed New York law applies to substantive claims. Procedural issues, however, are
governed by Texas law. See McAfee, Inc. v. Agilysys, Inc., 316 S.W.3d 820, 824 (Tex. App.—Dallas 2010,
no pet.). Procedure includes standards of review. Id.; see also Credit Suisse, 584 S.W.3d at 26.
                                                –6–
damage from the act complained of must be proven). In the absence of liability, the

question of damages becomes immaterial. Id. Here, the jury was asked only whether

Credit Suisse “fraudulently induce[d] Plaintiff to participate in the 2007 Lake Las

Vegas Refinancing by making affirmative representations[.]” (Emphasis added).

The jury was not asked to determine liability as to the secondary market purchases;

therefore, the record contains no liability or causation finding to support damages

for the fraudulent inducement of secondary market purchases. Further, Claymore’s

proposed jury charge did not include a question on fraudulent inducement of

secondary market purchases, and Claymore did not object to the absence of the

question. The rules of civil procedure require an objection to the charge; otherwise,

“[a]ll objections not so presented shall be considered as waived.” TEX. R. CIV. P.

272; see also TEX. R. CIV. P. 274 (“A party objecting to a charge must point out

distinctly the objectionable matter and the grounds of the objection.”).

      To overcome these glaring procedural defaults, Claymore relies on the trial

court’s amended findings of fact/conclusions of law from the bench trial and

footnote 18 of the supreme court’s opinion. We conclude neither supports the trial

court’s award of damages for secondary market purchases.

      Under New York law, a cause of action based on fraud must assert “a

misrepresentation or a material omission of fact which was false and known to be

false by defendant, made for the purpose of inducing the other party to rely upon it,

justifiable reliance of the other party on the misrepresentation or material omission,

                                         –7–
and injury.” Connaughton v. Chipotle Mexican Grill, Inc., 29 N.Y.3d 137, 142, 75

N.E.3d 1159, 1163 (2017). Claymore had the burden to prove these elements by

clear and convincing evidence. See Hidden Pond Schodack, LLC v. Hidden Pond

Homes, Inc., 189 A.D.3d 1792, 1795 (N.Y. App. Div. 2020).

       Claymore repeatedly references the trial court’s “liability finding” on the

secondary market purchases.              Its repeated reference to any such finding is

unsupported. The trial court made no such findings or conclusions on any fraudulent

inducement element.5 The trial court did, however, enter specific findings and

conclusions as to each cause of action tried to the bench. Each cause of action is

discussed separately in a bolded and underlined heading. There is not a separate

section for fraudulent inducement of secondary market purchases.

       To the extent Claymore relies on conclusion of law 81 (under the heading

“Damages for Fraudulent Inducement”), it reads words into the sentence that do not

exist. Conclusion of law 81, in relevant part, states “Plaintiff is entitled to recover

$23,235,910.61 as an assignee in connection with the Plaintiff Funds’ secondary

market purchases.”          The court’s conclusion does not establish “all of the

prerequisites for Claymore’s secondary market claim,” and we refuse Claymore’s

   5
      The introduction paragraph to the findings of fact/conclusions of law states, “After a jury was
impaneled and sworn, it heard the evidence and arguments of counsel on Plaintiff’s claim for fraudulent
inducement.”
                                                 –8–
invitation to conclude the trial court made an implicit finding and conclusion.

Instead, the court merely found rescissory damages were appropriate.6

        Moreover, in conclusions of law 76 and 77, the trial court stated that under

New York law, the applicability of rescissory damages was a question for the court

and not the jury; therefore, the jury did not and could not consider them. The court

reiterated the damages for fraudulent inducement were found by the jury as it related

to “investing in the Refinancing.” Accordingly, the trial court’s findings and

conclusions do not support Claymore’s position regarding secondary market

purchases.

        The supreme court vacated the trial court’s equitable award, which included

the $23,235,910.61 Claymore paid for secondary market purchases. Credit Suisse

AG, 610 S.W.3d at 830. By awarding the same amount of damages on remand, the

trial court allowed recovery of damages despite the absence of liability.                                  See

Mitchell, 156 S.W.3d at 627.

        In reaching this conclusion, we reject Claymore’s interpretation of footnote

18 in the supreme court’s opinion as a directive to the trial court to award damages

on the secondary market purchases. When an appellate court remands a case with

specific instructions, the trial court is limited to complying with the instructions and

    6
      Finding of fact 81 states in its entirety, “As a result, Plaintiff is entitled to rescissory damages based
on the Plaintiff Funds’ primary purchases in the amount of $215,773,287.95 (see PX2385), for which
Defendants are jointly and severally liable. Moreover, Plaintiff is entitled to recover $23,235,l910.61 as an
assignee in connection with Plaintiff Funds’ secondary market purchases (see PX2386).”
                                                     –9–
cannot relitigate issues settled at the former trial. See Denton Cty. v. Tarrant Cty.,

139 S.W.3d 22, 23 (Tex. App.—Fort Worth 2004, pet. denied); see also Lancaster

v. St. Yves, No. 01-17-00250-CV, 2018 WL 6175311, at *6 (Tex. App.—Houston

[1st Dist.] Nov. 27, 2018, pet. denied). To the extent the judgment of the trial court

exceeds that limited scope of authority, it does so without jurisdictional authority.

Bramlett v. Phillips, 359 S.W.3d 304, 311 (Tex. App.—Amarillo 2012), aff’d, 407

S.W.3d 229 (Tex. 2013).

      Here, nothing within footnote 18 required the trial court to resurrect the

secondary market claims and award damages. Instead, the supreme court indicated

there “may be questions about the availability of . . . damages for secondary market

purchases.” Credit Suisse AG, 610 S.W.3d 830 n.18 (emphasis added). Thus, the

trial court did not exceed its limited scope of authority per se, but instead incorrectly

resolved whether there were still matters in dispute regarding damages for secondary

market purchases.

      Finally, we reject Claymore’s assertion that Credit Suisse waived its argument

by “strategically” choosing not to appeal the liability finding in the first appeal. The

jury made no liability finding on the secondary market purchases; therefore, there

was nothing for Credit Suisse to appeal at that stage in the proceedings.

      We sustain Credit Suisse’s first issue.          Accordingly, we reverse the

$23,235,910.61 damages awarded for the secondary market purchases and render

judgment against Claymore.

                                         –10–
                                 Settlement Credits

      In its second issue, Credit Suisse argues the trial court erred by failing to

award settlement credits for the full amounts Highland received from the

$23,275,710 LLV settlement, the $21 million CBRE settlement, and the $6,145,200

C&W settlement. Claymore responds Credit Suisse’s arguments distort New York

law regarding settlements credits, and the trial court correctly apportioned the

applicable settlement credits.

      After the first trial, the court concluded that pursuant to New York General

Obligations Law § 15-108, Credit Suisse was entitled to settlement credits as

follows: $21 million from CBRE and $6,145,200 from C&W. It concluded Credit

Suisse was not entitled to any settlement credits from LLV because “the Plaintiff

Funds were not releasors and the underlying lawsuit did not involve the same injuries

for which the Plaintiff Funds seek to recover here.”

      On remand, the trial court applied $16,932,422.65 for the CBRE settlement

and $4,954,910.65 for the C&W settlement to the jury’s $40 million verdict. The

trial court again refused to apply the LLV settlement credit.

      Neither party suggests a standard of review for determining whether the trial

court correctly applied some, but not all, of the settlement credits. Depending on

circumstances, appellate courts have applied either an abuse of discretion or de novo

standard of review. See Utts v. Short, No. 03-03-00512-CV, 2004 WL 635342, at

*3 (Tex. App.—Austin Apr. 1, 2004, pet. denied) (mem. op.) (applying abuse of

                                        –11–
discretion review when analysis did not involve statutory interpretation); Oyster

Creek Fin. Corp. v. Richwood Invs. II, Inc., 176 S.W.3d 307, 326 (Tex. App.—

Houston [1st Dist.] 2004, pet denied) (applying abuse of discretion when reviewing

amount of settlement credit); Wein v. Sherman, No. 03-10-00499-CV, 2013 WL

4516013, at *11 (Tex. App.—Austin Aug. 23, 2013, no pet.) (applying de novo

review).

      Our analysis of the LLV settlement turns on questions of statutory

construction, construction of the settlement agreement, and application of legal

principles that do not involve questions of disputed facts. We, therefore, review such

legal questions de novo. See Galle, Inc. v. Pool, 262 S.W.3d 564, 571 n.3 (Tex.

App.—Austin 2008, pet. denied); see also Wein, 2013 WL 4516013, at *11.

      New York General Obligations Law section 15-108 provides the following,

in relevant part, regarding releases:

      When a release or a covenant not to sue or not to enforce a judgment is
      given to one or two or more persons liable or claimed to be in tort for
      the same injury . . . it reduces the claim of the releasor against the other
      tortfeasors to the extent of any amount stipulated by the release of the
      covenant, or in the amount of the consideration paid for it, or in the
      amount of the released tortfeasor’s equitable share of the damages . . .
      whichever is the greatest.

N.Y. GOL § 15-108(a) (McKinney 2007) (emphasis added). Nothing in section 15-

108 requires the two defendants be liable upon the same theory. Kock v. Greenberg,

14 F. Supp. 3d 247, 271 (S.D.N.Y. 2014), aff’d, 626 Fed. Appx. 335 (2d Cir. 2015).

All that is required is they be subject to liability for damages for the same injury. Id.

                                         –12–
      The purpose of General Obligations Law 15-108 is to encourage settlements.

Westwood Chem. Co., Inc. v. Kulick, 570 F. Supp. 1032, 1039 (S.D.N.Y. 1983)

(citing 12th Ann. Rep. [1974] McKinney’s Sess. Laws 1791, 1817). “A prelitigation

settlement is one of the most inexpensive means of resolving disputes and therefore

should be encouraged as a matter of public policy.” Id. Further, New York courts

have recognized that General Obligations Law 15-108 is consistent with the

equitable principle that a claimant may not obtain a double recovery for the same

injuries and damages. See Carter v. State, 528 N.Y.S.2d 292, 427 (N.Y. Ct. Cl.

1988).

      Credit Suisse argues the LLV, CBRE, and C&W settlements concern a release

of liability for the same injury found by the jury—damages resulting from

Highland’s reliance on the faulty appraisal when investing in the Refinancing. Thus,

it contends the $40 million judgment must be reduced by the $50,420,910 Highland

received from all three settlements thereby resulting in a net zero verdict. We

address each settlement in turn.

      Highland received $23,275,710 from LLV. To be entitled to a settlement

offset, Credit Suisse needed to establish that Claymore, as Highland’s assignee, was

a releasor and the LLV settlement released a party “liable or claimed to be in tort for

the same injury” forming the basis of the jury’s verdict. N.Y. GOL § 15-108(a).

      Per the LLV “Settlement and Release,” the “Creditor Trust” was created

pursuant to a bankruptcy plan “on behalf of and for the benefit of various creditors,

                                        –13–
including: (i) Class 1 creditors (the Pre-Petition Lender Beneficiaries),” among

others, collectively referred to as “Beneficiaries.” Highland was defined as a Class

1 creditor. Thus, by the plain language of the settlement agreement, Highland was

included as a “Beneficiary” of the “Creditor Trust.”

      The “Creditor Trust Assets” included, in relevant part, “the Avoidance

Actions and Insider Actions and the proceeds thereof, which shall be deemed

assigned to the Creditor Trust on the Effective Date.” The settlement defined

“Avoidance Actions” in relevant part as “all claims and causes of action held by any

Debtor.” It defined “Insider Actions” in relevant part as “the claims and causes of

action held by any Debtor.”

      Claymore contends these definitions expressly limited the scope of the

Trustee’s authority to prosecute and settle claims to the Insider and Avoidance

actions held by the Debtors. Because the “Creditor Trust Assets” included actions

held by only the Debtors, not Highland, the Trustee could not have released

Highland’s claims through the LLV Settlement. We disagree.

      Claymore ignores key definitions and provisions in the LLV Creditor Trust

Agreement and the LLV Settlement indicating the Debtors no longer owned the

Avoidance and Insider Actions. Article VII, Establishment of the Creditor Trust,

detailed the “Transfer of Assets to Creditor Trust.” It provided that the Debtors and

Creditor Trustee established the Creditor Trust “on behalf of the Beneficiaries, to be

treated as the grantors and deemed owners of the Creditor Trust Assets,” and the

                                        –14–
Debtors “transferred, assigned, and delivered to the Creditor Trust, on behalf of the

Beneficiaries, all of their right, title, and interest in the Creditor Trust Assets,

including Avoidance Actions and Insider Actions.” (Emphasis added). Further, the

Creditor Trustee held the Creditor Trust Assets in the Creditor Trust for the benefit

of the Beneficiaries, subject to the terms of the Plan and the Agreement. Highland

was a beneficiary under the Credit Trust.

      The LLV Settlement provided that the “Trustee of the Creditor Trust pursuant

to his authority under the Plan” had the “authorization to bind the Debtors and

Beneficiaries to the terms of this settlement.”     Construing the provisions and

definitions together, we conclude Highland, as a beneficiary under the Creditor

Trust, which included Creditor Trust Assets Highland owned by assignment from

the Debtors, and such assets included causes of actions the Trustee had power to

pursue (and did pursue and settle) on Highland’s behalf, Highland was a “releasor”

for purposes of N.Y. GOL § 15-108(a). As the valid and effective assignee of

Highland, Claymore likewise was a “releasor” for purposes of the statute.

      This does not end the analysis. We must now determine whether the “same

injury” requirement of section 15-108(a) was met. N.Y. GOL § 15-108(a).

      Credit Suisse argues the LLV Settlement released claims for the same injury

determined by the jury. Claymore responds the LLV Settlement resolved claims

related to injuries suffered by the Debtors, not Highland, and the Trustee only

                                       –15–
released those claims the Debtors may have held arising from the 2004 dividend, the

2007 refinancing, or any other event. Again, we disagree.

      The LLV Settlement provided that “the Parties have compromised and settled

all their differences, and they now wish to resolve all disputes between them relating

to the Debtors, including but not limited to all disputes relating to the November

2004 Loan, the November 2004 Distribution, the Subsequent Projections, and the

Debtors’ bankruptcy.” “Subsequent Projections” included “subsequent valuations

of the Debtors’ assets and projections of revenue following the November 2004

Distribution, including but not limited to valuations and projections made in

connection with the 2007 refinancing of the Debtors’ debt.” (Emphasis added). As

described, the LLV Settlement released and resolved the LLV Developers’ claims

related to “projections made in connection with the 2007 refinancing.” This is the

same injury Claymore pursued in the trial court, and the jury found and awarded

damages.

      The jury charge defined “Claymore,” in relevant part, as “an entity that was

assigned the claims brought in this lawsuit” by entities (including Highland) that

“participated as lenders or acquired the interests of lenders in the 2007 Lake Las

Vegas refinancing transaction.” The jury charge instructed the jury to determine

damages for “[t]he difference, if any, between what [Claymore] paid and the value

of what [Claymore] received in the 2007 Lake Las Vegas Refinancing.” The jury

answered $40 million. In the following question, the jury was asked to “state the

                                        –16–
percentage of fault of CBRE, Cushman & Wakefield, Lake Las Vegas

Developers/Management” and Credit Suisse entities.7 The jury assigned ten percent

of fault to Lake Las Vegas Developers/Management. Thus, the $40 million awarded

to Claymore included damages for the same injury encompassed in the LLV

Settlement (the 2007 Refinancing).

        Our conclusion is further supported by the trial testimony of Scott Ellington,

Highland’s Chief Legal Officer.                During the trial on the merits, he testified

Highland’s portion of the LLV Settlement was approximately $23 million. He

admitted Highland applied the $23 million as an offset to the damages it was seeking

at trial. He confirmed the LLV Settlement included claims related to the 2007

Refinancing.

        We conclude the LLV Settlement satisfies the requirements of section 15-

108(a); therefore, the trial court erred by failing to reduce the $40 million jury verdict

by $23,275,710.00. In reaching this conclusion, we reject Claymore’s argument

Credit Suisse waived its argument by failing to challenge the trial court’s findings

and conclusions in the first appeal. The trial court accounted for the LLV Settlement

as part of its rescissory damages award in the first judgment; therefore, Credit Suisse

had no reason to appeal the court’s decision at that stage. Because the supreme court

    7
      The charge further instructed that CBRE, C&W, and LLV Developers/Management were not
defendants in the case; nevertheless, the jury had to consider whether any were at fault (as well as Credit
Suisse) for causing Claymore’s losses.
                                                  –17–
reversed the rescissory damages award and the trial court failed on remand to deduct

the LLV Settlement from the jury’s $40 million damages award, Credit Suisse raised

its argument at its first opportunity on remand.

      We likewise reject Claymore’s invitation to rely on the Trustee’s bankruptcy

complaint to define the scope of the injury suffered by the Debtors. In the complaint,

the Trustee asserted, “The key event in this lawsuit is a $470 million distribution that

the owners of the LLV paid to themselves on November 1, 2004.” Thus, Claymore

argues it did not (and could not) seek damages from the 2004 Distribution paid to

the LLV developers; therefore, the LLV Settlement was not for the same injury.

      Claymore ignores the language of the LLV Settlement, which includes a much

broader release than the 2004 Distribution and encompasses the 2007 Refinancing.

The application of section 15-108 is determined by the scope of the release.

Claymore has failed to provide authority indicating otherwise. Instead, Claymore

encourages the Court to ignore the “brief reference to the 2007 Refinancing as

irrelevant” in the LLV Settlement. We refuse its invitation. The LLV Settlement

specifically stated the “claims and objections of the Lawsuit related to, among other

things, . . ., including but not limited to . . . the 2007 refinancing (the “Subsequent

Projections”). The parties settled and compromised all their differences, which

included those related to the “Subsequent Projections.” These are not irrelevant,

brief references but instead express releases of claims. Accordingly, the trial court

erred by refusing to apply the $23,275,710.00 LLV Settlement to the jury’s damages

                                         –18–
award.     Applying the LLV Settlement, the damages award is reduced to

$16,724,290.00.

      We next consider the trial court’s allocation of the CBRE and C&W

Settlements to the jury verdict. Neither party disputes Credit Suisse is entitled to

setoffs for the CBRE and C&W Settlements. Instead, they disagree on the amount

Credit Suisse is entitled based on the trial court’s calculations. We review the

allocation of these settlement credits for an abuse of discretion. See Utts v. Short,

No. 03-03-00512-CV, 2004 WL 635342, at *3 (Tex. App.—Austin Apr. 1, 2004,

pet. denied) (mem. op.) (applying abuse of discretion review); Oyster Creek Fin.

Corp., 176 S.W.3d at 326.

      When the settling party seeks to limit its effect in a subsequent action, the

burden is on that party to establish “why and to what effect it should be accorded

less than its apparent full effect.” Id. at 428. If the releasor fails to do so, all the

monies paid for the release will be applied to reduce the terms of the release.

Westwood Chem. Co., Inc., 570 F. Supp. at 1039.

         Credit Suisse asserts it is entitled to the full amounts of the CBRE Settlement

($21 million) and C&W Settlement ($6,145,200) because Claymore failed to present

evidence that any portion of the settlements were for an injury other than what the

jury found (“losses Highland suffered from its direct purchase of LLV debt in the

                                         –19–
Refinancing”).8 Both parties submitted post-submission letters explaining their

positions as to how the Court should apportion applicable settlement credits if the

Court reversed the trial court’s damages award for the Secondary Market Purchases

(which we have) and how to calculate interest.

         Credit Suisse argues that after subtracting the full amounts of the three

settlements from the jury’s damages award, the result is - $10,420,910.00.9 Thus,

Claymore’s judgment equals zero. Claymore responds the trial court had all the

evidence necessary to make the allocations, which included “the gross value of the

debt underlying the two claims, the settlement agreements themselves, and, of

course, the settlement amounts,” and properly allocated $16,932,422.65 of the

CBRE Settlement and $4,954,910.65 of the C&W Settlement to the $40 million

award.

         We need not decide whether the trial court erred in calculating and allocating

the CBRE and C&W Settlements. Assuming without deciding the trial court

correctly allocated the CBRE and C&W Settlements, the two settlements total

$21,887,333.30 which is greater than the amount of damages left after subtracting

the LLV Settlement.10 Therefore, regardless of whether we entertain Credit Suisse’s

   8
      It is undisputed Highland settled with C&W for $12 million; however, only $6,145,200 of the
settlement was allocable to the Refinancing.
   9
       $40,000,000 - $23,275,710 - 21,000,000 - 6,145,200 = -$10,420,910.00.
   10
      $40 million (Jury damages award) - $23,275,710.00 (LLV Settlement) = $16,724,290. $16,724,290
(damages award after applying LLV Settlement) - $21,887,333.30 (CBRE + C&W Settlements) = -
$5,163,043.30.
                                                 –20–
argument or accept Claymore’s argument, we land in the same place—a negative

damages number resulting in a $0 judgment for Claymore. See, e.g., Williams by

Williams v. Niske by Niske, 615 N.E.2d 1003, 1005 (N.Y. 1993) (“If the settlements

exceed the verdict, the nonsettling defendants have no liability at all.”).

Accordingly, we sustain Credit Suisse’s second issue.

                               Prejudgment Interest

      In its final issue, Credit Suisse argues the trial court erred in calculating

prejudgment interest when it deviated from well-established New York law.

Claymore responds the court acted within its discretion and properly calculated

prejudgment interest.

      The standard of review for a trial court’s award of prejudgment interest is

abuse of discretion. See Rosenthal v. Rosenthal, No. 01-99-00058-CV, 2001 WL

1383132, at *5 (Tex. App.—Houston [1st Dist.] Nov. 8, 2001, pet. denied). A trial

court abuses its discretion when it acts without reference to any guiding rules or

principles. Id.

      Both parties agree interest is not a penalty, but rather the cost of using another

person’s money for a specified period of time; it is not meant to punish defendants

for delaying the final resolution of the litigation. See Love v. State, 78 N.Y.2d 540,

544 (N.Y. 1991). It is not to provide a windfall to either party, but instead a form of

compensation intended to make the injured party whole. See Mitsui & Co., Ltd. v.

American Export Lines, Inc., 636 F.2d 807, 824 (2d Cir. 1981). The parties disagree,

                                        –21–
however, on how to calculate prejudgment interest when considering the settlement

credits.

       After the first trial, the court used the aggregate method to calculate damages.

On remand, the trial court deviated from the aggregate method and instead adopted

a different approach suggested by Claymore called the Bauman method. We are

mindful of the broad discretion a trial court has in calculating prejudgment interest;

however, the trial court used both methods at different stages of this complex

litigation. Because a settlement credit applies that the trial court did not account for

when calculating prejudgment interest, the trial court should be given the

opportunity to consider the best method to promote the objectives of prejudgment

interest under New York law given our resolution of Credit Suisse’s issues on

appeal. Accordingly, we decline to provide an advisory opinion on prejudgment

interest and remand for further proceedings.

                                     Conclusion

       We reverse the $23,235,910.61 damages award for Claymore’s secondary

market purchases and render a take-nothing judgment on this claim. We conclude

the trial court erred by failing to allocate the LLV settlement credit to the jury’s $40

million award for fraudulent inducement. Because the trial court did not have an

opportunity to consider prejudgment interest under the new damages award

calculation,

                                         –22–
     we remand to the trial court for further proceedings.

                                         /Erin A. Nowell/
                                         ERIN A. NOWELL
                                         JUSTICE

210649F.P04

                                      –23–
                                    S
                            Court of Appeals
                     Fifth District of Texas at Dallas
                                  JUDGMENT

CREDIT SUISSE AG, CAYMAN                       On Appeal from the 134th Judicial
ISLANDS BRANCH AND CREDIT                      District Court, Dallas County, Texas
SUISSE (USA) LLC, Appellants                   Trial Court Cause No. DC-13-07858.
                                               Opinion delivered by Justice Nowell.
No. 05-21-00649-CV           V.                Justices Smith participating.

CLAYMORE HOLDINGS, LLC,
Appellee

      In accordance with this Court’s opinion of this date, the trial court’s award of
$23,235,910.61 for appellee Claymore Holdings, LLC’s secondary market
purchases is REVERSED and judgment is RENDERED that appellee Claymore
Holdings, LLC take nothing on its claim.

      We REVERSE and REMAND to the trial court for further consideration of
prejudgment interest in light of the Court’s opinion.

      It is ORDERED that each party bear their own costs of this appeal.

Judgment entered this 14th day of February 2023.

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