In re Nalle Plastics Family Limited Partnership
Supreme Court of Texas, No. 11-0903 (May 17, 2013)
Chief Justice Jefferson (Opinion)
Resolving a conflict among Texas appellate courts concerning the effect of a 2003 statute, the Texas Supreme Court held that the security required to supersede a money judgment does not have to include the attorneys’ fees awarded in the judgment. Construing Civil Practice and Remedies Code § 52.006, which requires a judgment debtor to post a supersedeas bond or other security equal to the compensatory damages and costs awarded in the judgment plus interest for the estimated duration of the appeal, the court held that attorneys’ fees are neither compensatory damages nor costs.
House Bill 4, the 2003 tort reform statute, changed the requirements for posting security to avoid enforcement of money judgments pending appeal. Under previous law, supersedeas bonds were required to cover the “entire judgment,” plus costs and interest. Section 52.006 of the Civil Practice and Remedies Code changed the requirement to encompass “compensatory damages included in the judgment,” plus costs and interest. Courts of appeals reached conflicting conclusions on the effect of this change. El Paso and both Houston courts held that attorneys’ fees are either compensatory damages or costs, and thus must be included in the bond or other security posted to supersede the judgment. Austin and Dallas held to the contrary, exempting attorneys’ fees from the amount of the security. The Supreme Court adopted the latter position, after reviewing definitions and applications of the pertinent terms in several contexts. Although the court focused largely on the meaning of the words used in the new provision, it began by adopting Professor Elaine Carlson’s assessment that the new statute reflects a “new balance” between the rights of judgment creditors and judgment debtors. The court noted that attorneys’ fees can be compensatory damages when fees are an element of the underlying claim, as when a law firm sues a client to recover unpaid fees. While this was such a case, the mandamus action related only to the fees incurred by the plaintiff law firm in obtaining judgment for breach of contract. The court ordered that the judgment debtor be refunded the amount deposited to cover the attorneys’ fees award.
