Court Opinion

ID: 3098950
Source: CourtListenerOpinion
Date Created: 2015-10-16 04:55:01.357599+00
Date Added: 2024-06-11T12:26:57.422810
License: Public Domain

COURT OF APPEALS
                                     EIGHTH DISTRICT OF TEXAS
                                          EL PASO, TEXAS

    BUSINESS STAFFING, INC.,                            §
    TRANSGLOBAL INDEMNITY, LTD.,
    INC., HARRY SEWILL, RICHARD                         §
    GABLE CHAPMAN, BART BOGUS,
    BSI INSURANCE SERVICES, INC.,                       §                    No. 08-11-00092-CV
    TRANSGLOBAL MORTGAGE, INC.,
    and LHR ENTERPRISES, INC.,                          §                      Appeal from the

                                  Appellants,           §                109th Judicial District Court

    v.                                                   §               Of Andrews County, Texas

    JACKSON HOT OIL SERVICE d/b/a                        §                       (TC# 17,301)
    JACKSON BROTHERS HOT OIL
    SERVICE and CODY JACKSON,                            §

                                  Appellees.             §

                                       OPINION ON MOTION

         Pending before the Court is a motion filed by Transglobal Indemnity, Ltd. (TGI), Harry

Sewill (“Sewill”), Richard Gable Chapman (“Chapman”), Transglobal Mortgage, Inc. (“TGM”),

and LHR Enterprises (“LHR”) to set aside or modify the trial court’s order increasing the

supersedeas bond to $2,176,051.1 See TEX.R.APP.P. 24.4. We deny Appellants’ motion and

affirm the trial court’s order.

                                              BACKGROUND

         Jackson Hot Oil Service d/b/a Jackson Brothers Hot Oil Service and Cody Jackson (the

“Jacksons” or “Appellees”) filed suit against Appellants for: (1) common law fraud; (2)

fraudulent concealment; (3) negligent misrepresentation; (4) breach of fiduciary duty; (5) breach

1
 Business Staffing, Inc. (“BSI”), Bart Bogus (“Bogus”), and BSI Insurance Services, Inc. (“BSIIS”) are also
Appellants in the underlying case, but are not parties to this motion.
of the duty of good faith and fair dealing; (6) civil conspiracy; (7) conspiracy to unlawfully engage

in the business of insurance; (8) negligence; (9) violations of the Texas Insurance Code; and (10)

violations of the Deceptive Trade Practices Act.

        At the conclusion of the trial, the jury awarded damages to Cody Jackson in the amount of

$1,534,902. On December 22, 2010, the trial court signed a judgment which awarded Cody

Jackson $1,534,902 jointly and severally against Sewill, Chapman, TGM, and LHR and provided

that out of and as part of the $1,534,902 TGI was liable to Cody Jackson for $767,451.2

        Claiming a negative net worth, Appellants each posted $150 cash in lieu of a bond to

supersede enforcement of the judgment. Appellees then filed a Contest of Defendants’ Deposit in

Lieu of Bond and the trial court conducted a hearing on same on December 13, 2011. Appellees

contended that under Texas Rule of Appellate Procedure 24.2, the trial court should strike the

affidavits filed by Defendants as insufficient under the Rule, and increase the amount of the

supersedeas bond to conform with the rule.

        Sewill’s affidavit listed total assets of $202,050 and total liabilities of $1,689,500 for a

negative net worth of $1,487,450. Chapman’s affidavit listed total assets of $132,699 and total

liabilities of $1,594,500 for a negative net worth of $1,461,801. BSI claimed a negative net worth

of $12,941,517.93. LHR claimed a negative net worth of $1,030,230.28. TGM claimed a

negative net worth of $528,189.71. TGI claimed a negative net worth of $830,261.15.

        At the conclusion of the hearing, the trial court granted the relief requested by striking each

of the Defendants’ Certificates of Cash in Lieu of Bond as insufficient, and set the supersedeas

bonds as follows: Transglobal Indemnity, Ltd. -- $471,619; Harry Sewill-- $461,660; Richard

2
 The judgment also awarded other additional damages in favor of Cody Jackson against Sewill, Chapman, and TGI as
well as pre- and post-judgment interest and costs.
                                                       2
Gable Chapman -- $474,984; Transglobal Mortgage, Inc. -- $509.405; and LHR Enterprises --

$258,383.3 The trial court determined that the evidence presented at the hearing established that

the defendants each included the judgment in the instant case as a liability in order to show a

negative net worth, which, absent the judgment, would be positive.4

         In their motion, Appellants claim that the trial court erred by not including the amount of

the judgment in the instant case in its calculation of the net worth of each Appellant and that the

increase in the amount of their respective bonds would cause them to suffer substantial economic

hardship.

                                                   DISCUSSION

         Under Rule 24.1 of the Rules of Appellate Procedure, a judgment debtor may supersede a

judgment by: (1) filing with the trial court clerk a written agreement with the judgment creditor

for suspending enforcement of the judgment; (2) filing with the trial court clerk a good and

sufficient bond; (3) making a deposit with the trial court clerk in lieu of a bond; or (4) providing

alternate security ordered by the trial court. When the judgment is for money, the amount of the

bond, deposit, or security 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.

TEX.R.APP.P. 24.2(a)(1). However, the amount must not exceed the lesser of 50 percent of the

judgment debtor’s current net worth or 25 million dollars. TEX.R.APP.P. 24.2(a)(1).

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

3
  The trial court determined that these amounts represented fifty percent of the net worth of each defendant as found
by the court relative to their respective judgment liability for compensatory damages. The trial court also found that
the judgment in the instant case should not be included in the net worth calculations for purposes of posting a
supersedeas bond.
4
  The trial court also found that in their affidavits and balance sheets, Sewill and Chapman did not report all of their
assets, specifically the fact that each owned a one-third stock equity interest in LHR Enterprises and its assets.
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provides a bond, deposit, or security under Rule 24.2(a)(1)(A) in an amount based on the debtor’s

net worth must simultaneously file an affidavit that states the debtor’s net worth and states

complete, detailed information concerning the debtor’s asset and liabilities from which net worth

can be ascertained. TEX.R.APP.P. 24.2(c)(1). The affidavit is prima facie evidence of the

debtor’s net worth. Id. A judgment creditor may file a contest to the debtor’s affidavit of net

worth. TEX.R.APP.P. 24.2(c)(2). Net worth is calculated as the difference between total assets

and total liabilities as determined by generally accepted accounting principles. Texas Custom

Pools, Inc. v. Clayton, 293 S.W.3d 299, 305 (Tex.App.--El Paso 2009, no pet.); G.M. Houser, Inc.

v. Rodgers, 204 S.W.3d 836, 840 (Tex.App.--Dallas 2006, no pet.). At the hearing on the

judgment creditor’s contest, the judgment debtor has the burden of proving net worth.

TEX.R.APP.P. 24.2(c)(3). The trial court is required to issue an order that states the debtor’s net

worth and states with particularity the factual basis for that determination. Id. The trial court is

also authorized to enjoin the judgment debtor from dissipating or transferring assets to avoid

satisfaction of the judgment. TEX.R.APP.P. 24.2(d). On the motion of a party, an appellate

court may review the sufficiency or excessiveness of the amount of security. TEX.R.APP.P.

24.4(a); Texas Custom Pools, Inc., 293 S.W.3d at 305; G.M. Houser, Inc., 204 S.W.3d at 840.

       We review the trial court’s determination of the amount of security for an abuse of

discretion. Texas Custom Pools, Inc., 293 S.W.3d at 305; G.M. Houser, Inc., 204 S.W.3d at 840.

If we conclude the trial court abused its discretion, we may order the amount of the security

increased or decreased in an amount not to exceed the lesser of 50 percent of the judgment debtor’s

net worth or $25 million. TEX.R.APP.P. 24.4(a).

       In conducting this review, we engage in a two-pronged analysis: (1) Did the trial court

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have sufficient information upon which to exercise its discretion; and (2) Did the trial court err in

its application of discretion? Leibman v. Grand, 981 S.W.2d 426, 429 (Tex.App.--El Paso 1998,

no pet.). The traditional standards utilized to review sufficiency of the evidence come into play

when considering the first question. Id. at 429-30. We then proceed to determine whether, based

on the elicited evidence, the trial court made a reasonable decision, or whether it is arbitrary and

unreasonable. Id. at 430. The question is not whether, in the opinion of the reviewing court, the

facts present an appropriate case for the trial court’s action, but whether the court acted without

reference to any guiding rules and principles. Downer v. Aquamarine Operators, Inc., 701
S.W.2d 238, 241-42 (Tex. 1985). The mere fact that a trial judge may decide a matter within his

discretionary authority in a different manner than an appellate judge in a similar circumstance does

not demonstrate that an abuse of discretion has occurred. Leibman, 981 S.W.2d at 430.

       Appellants had the burden to prove their net worth and therefore, must show the evidence

conclusively establishes, as a matter of law, all vital facts in support of their position. Sterner v.

Marathon Oil Co., 767 S.W.2d 686, 690 (Tex. 1989); Texas Custom Pools, Inc., 293 S.W.3d at

306; G.M. Houser, Inc., 204 S.W.3d at 840-41. In reviewing a “matter of law” challenge, we

must first examine the record for evidence that supports the finding, while ignoring all evidence to

the contrary. Sterner, 767 S.W.2d at 690. If there is no evidence to support the finding, we must

then examine the entire record to determine if the contrary proposition is established as a matter of

law. Sterner, 767 S.W.2d at 690. In conducting our review, we must consider the evidence in

the light most favorable to the challenged finding and indulge every reasonable inference that

would support it. G.M. Houser, Inc., 204 S.W.3d at 841, citing City of Keller v. Wilson, 168
S.W.3d 802, 822 (Tex. 2005). We must credit favorable evidence if a reasonable fact finder could

                                                  5
and disregard contrary evidence unless a reasonable fact finder could not. Id., citing City of

Keller, 168 S.W.3d at 827; Ramco Oil & Gas, Ltd. v. Anglo Dutch (Tenge) L.L.C., 171 S.W.3d
905, 910 (Tex.App.--Houston [14th Dist.] 2005, no pet.). Finally, we must determine whether the

evidence before the trial court would enable reasonable and fair-minded people to find the facts at

issue. Id. We also bear in mind that the fact finder is the sole judge of the credibility of the

witnesses and the weight to give their testimony. Id.

       In reviewing the factual sufficiency of the evidence, we consider all of the evidence in the

record. Ortiz v. Jones, 917 S.W.2d 770, 772 (Tex. 1996); Texas Custom Pools, Inc., 293 S.W.3d

at 306. If a party is attacking the factual sufficiency of an issue upon which it had the burden of

proof, it must demonstrate that the adverse finding is against the great weight and preponderance

of the evidence. Croucher v. Croucher, 660 S.W.2d 55, 58 (Tex. 1983); Marrs and Smith

Partnership v. D.K. Boyd Oil and Gas Co., Inc., 223 S.W.3d 1, 14 (Tex.App.--El Paso 2005, pet.

denied). In reviewing a factual sufficiency issue, we must first examine the record to determine if

there is some evidence to support the finding; if so, then we must determine whether the failure to

find is so contrary to the overwhelming weight and preponderance of the evidence as to be clearly

wrong and manifestly unjust. Cain v. Bain, 709 S.W.2d 175, 176 (Tex. 1986); Texas Custom

Pools, Inc., 293 S.W.3d at 306.

       After a review of the law, the briefs, and the record, and similar to the circumstances

presented in Montelongo v. Exit Stage Left, Inc., 293 S.W.3d 294 (Tex.App.--El Paso 2009, no

pet.), we note that Appellants cite no authority supporting their contention that the judgment must

be included in calculating current net worth for purposes of a supersedeas bond. Indeed, “the

plain language of the statute does not include a contingent money judgment in calculating net

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worth.” McCullough v. Scarbrough, Medlin & Associates, Inc., --- S.W.3d ---, 2012 WL 826177

*1 (Tex.App.--Dallas 2010, no pet.); Anderton v. Cawley, 326 S.W.3d 725, 726 (Tex.App.--Dallas

2010, no pet.); TEX.R.APP.P. 24.2 (a)(1)(A).

           Here, Appellants carried their burden of filing an affidavit of net worth, which is prima

facie evidence of the net worth. TEX.R.APP.P. 24.2(c)(1). Appellees filed a contest to the

debtor’s affidavit of net worth. TEX.R.APP.P. 24.2(c)(2). Appellants presented the testimony

of Alan Sanderson, a licensed certified public accountant in the state of Texas.5 Mr. Sanderson

testified that while he did not conduct a formal review or perform an audit of Appellants affidavits

and balance sheets, he did look at the numbers provided to him and concluded that judgment

should be included on the balance sheets for each Appellant if the judgment was entered prior to

the date of the balance sheet.6 He also testified that he was unaware that the judgment against

Appellants was based, at least in part, on fraud. Finally, Mr. Sanderson testified that he had no

opinion as to the accuracy of the limited information contained in Appellants’ affidavits and

balance sheets inasmuch as he was unaware of and had not seen any of the source material used to

generate that information.

           The trial court properly determined that because the judgment is a contingent liability it

would not be included in the net worth calculation. See McCullough, 2012 WL 826177 at *1;

Anderton, 326 S.W.3d at 726; Montelongo, 293 S.W.3d at 298-99. Further, the trial court had

sufficient information upon which to exercise its discretion, and did not err in its application of that

discretion in this case. See Liebman v. Grand, 981 S.W.2d at 429. Bearing in mind that the fact

5
    Sewill and Chapman also testified at the hearing.
6
 Mr. Sanderson testified that the inclusion of the judgment on the balance sheets would be appropriate under
Generally Accepted Accounting Principles. However, he did not testify that the judgment must be included in the net
worth calculation for purposes of a supersedeas bond.
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finder is the sole judge of the credibility of the witnesses and the weight to be given their

testimony, we conclude that the trial court’s decision was neither arbitrary nor unreasonable. We

find that the trial court did not abuse its discretion because the trial court did not act without

reference to any guiding rules or principles. Downer, 701 S.W.2d at 241-42.

       Appellants also argue that the trial court erred by increasing the amount of the supersedeas

bond because they demonstrated that they were likely to suffer substantial economic harm if

required to post the additional security. See TEX.R.APP.P. 24.2(b). Whether or not Appellants

are likely to suffer substantial economic harm is a question of fact that we review for abuse of

discretion. Ramco Oil & Gas, Ltd., 171 S.W.3d at 918. Here, the evidence presented supported

the trial court’s findings that Appellants had access to the necessary funds to post an adequate bond

to suspend enforcement of the judgment once the contingent liability of the judgment was removed

from the net worth calculation for purposes of posting said bond. Under these circumstances, and

in light of the evidence and in consideration of the entire record, the trial court did not abuse its

discretion in concluding that Appellants would not suffer substantial economic hardship by

posting the additional security required.

                                            CONCLUSION

       Appellants’ Motion to Set Aside or Modify the Trial Court’s Order Increasing Supersedeas

Bond is DENIED. Further, our order issued on January 26, 2012 suspending enforcement of the

judgment pending resolution of the Rule 24.4 motion is dissolved.

April 27, 2012                                 PER CURIAM

Before McClure, C.J., Rivera, and Antcliff, JJ.

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