SUPERSEDING A JUDGMENT UNDER T.R.A.P. 24: LESSONS ON FRAUDULENT TRANSFER AND THE CALCULATION OF AN INDIVIDUAL’S NET WORTH

White v. Pottorff
Dallas Court of Appeals No. 05-14-00675-CV (January 23, 2014)
Chief Justice Wright and Justices Lang-Miers and Stoddart (Opinion)
White appealed a $30 million judgment and sought to suspend its enforcement pending that appeal. Pursuant to TRAP 24.2(c), White filed a $100 supersedeas bond and an affidavit of net worth, claiming his liabilities exceeded his assets by more than $1 million. The appellees challenged the affidavit, contending that—among other things—White’s gift of certain property to his family after being served with the lawsuit constituted a fraudulent transfer. The court conducted a two-day evidentiary hearing regarding White’s net worth and found it to be $7,566,651. The trial court ordered White to post a bond equal to the lesser of (1) one half of that net worth; or (2) the compensatory damages awarded in the judgment plus two years’ post-judgment interest. The trial court’s ruling was based, in part, on its finding that White’s conveyance of property to his family was a fraudulent transfer. Pursuant to TRAP 24.4(a), which allows a party to seek appellate review of a trial court’s order setting the amount of a supersedeas bond, White filed a motion in the court of appeals, asking it to correct the trial court’s order setting the amount of the bond. An appellate court reviews an order determining the amount of a security for an abuse of discretion.

The Dallas Court of Appeals reversed the trial court’s determination, holding there was legally and factually insufficient evidence to support the fraudulent transfer finding. The Court observed that appellees bore the burden of proving fraudulent transfer by a preponderance of the evidence. Here, although appellees called into question the veracity of White’s testimony and evidence, they failed to carry their burden of proof. In particular, the appeals court found that (1) appellees presented no evidence the transfer of property was for less than reasonably equivalent value; (2) the effective date of the transfer was prior to White’s being served with the lawsuit; and (3) there was no evidence White maintained control over the property after its transfer. Because the appellees failed to meet their burden of proof, the Dallas Court of Appeals reversed the trial court’s supersedeas ruling. Nonetheless, the appeals court found White’s net worth to be in excess of $4 million and ordered him to post bond in the lesser of half that amount or the compensatory damages awarded at trial plus two years’ post-judgment interest.

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