Huff Energy Fund, L.P. v. Longview Energy Co.

• Decision Date: 12 February 2014
• Docket Number: No. 04–12–00630–CV.,04–12–00630–CV.
• Citation: 510 S.W.3d 479
• Parties: The HUFF ENERGY FUND, L.P.; WRH Energy Partners, L.L.C.; William R. "Bill" Huff; Rick D'Angelo ; Ed Dartley; Bryan Bloom ; and Riley–Huff Energy Group, LLC; Appellants v. LONGVIEW ENERGY COMPANY, Appellee.
• Court: Texas Court of Appeals

510 S.W.3d 479

The HUFF ENERGY FUND, L.P.; WRH Energy Partners, L.L.C.; William R. "Bill" Huff; Rick D'Angelo ; Ed Dartley; Bryan Bloom ; and Riley–Huff Energy Group, LLC; Appellants

v.LONGVIEW ENERGY COMPANY, Appellee.

No. 04–12–00630–CV.

Court of Appeals of Texas, San Antonio.

Feb. 12, 2014.

Dean V. Fleming, Michael W. O'Donnell, Fulbright & Jaworski L.L.P., Jeffrey Webb, Sharon E. Callaway, Crofts & Callaway, P.C., Ricardo R. Reyna, Brock Person Guerra Reyna, P.C., San Antonio, TX, Thomas R. Phillips, Matthew C. Wood, Baker Botts, L.L.P., Pamela Stanton Baron, Attorney at Law, Austin, TX, Daryl L. Moore, Daryl L. Moore, P.C., Houston, TX, for Appellants.

Mikal C. Watts, Francisco Guerra IV, Edward W. Allred, Watts Guerra & Craft, L.L.P., Brian P. Berryman, Watts Law Firm, L.L.P., San Antonio, TX, Craig B. Florence, Stacy R. Obenhaus, Rachel Kingrey, Randy D. Gordon, Gardere, Wynne, Sewell, L.L.P., Dallas, TX, Claudio Heredia, Rolando M. Jasso, Knickerbrocker, Heredia, Jasso & Stewart, P.C., Eagle Pass, TX, for Appellee.

Sitting: SANDEE BRYAN MARION, Justice, MARIALYN BARNARD, Justice, REBECA C. MARTINEZ, Justice.

OPINION

SANDEE BRYAN MARION, Justice.

In this opinion, we address appellants' complaints regarding the amount of a court-ordered supersedeas bond and court-ordered discovery.¹ We consider first whether the statutory cap on a supersedeas bond contained in Texas Civil Practice and Remedies Code section 52.006 applies per judgment or per judgment debtor. The trial court in this case determined the cap applied per judgment debtor. Appellants argue the cap applies per judgment. We also consider whether the trial court erred in ordering ongoing discovery "for the duration of the appeal." Appellants assert post-judgment discovery is not permitted under Texas Rule of Civil Procedure 621a.

PROCEDURAL BACKGROUND

Appellants, The Huff Energy Fund, L.P. ("Huff Energy"); WRH Energy Partners, LLC; William Huff; Rick D'Angelo; and Riley–Huff Energy Group, LLC ("Riley– Huff") (collectively, "appellants") are the judgment-debtors below. In the underlying judgment that is the subject of this pending appeal, the trial court granted a constructive trust over all right, title, and interest of Riley–Huff in and to certain assets, and ordered that appellee, Longview Energy Company ("Longview"), recover "from the [appellants], jointly and severally, [certain] production revenues ... and an additional $95,500,000.00." Appellants jointly posted a supersedeas bond in the amount of $25 million ("the joint bond"). The trial court subsequently ordered appellants to increase the security as follows: "[T]o the extent [appellants] wish to stay the judgment's enforcement pending appeal, The Huff Energy Fund, L.P., WRH Energy Partners, LLC, William Huff, and Rick D'Angelo are each ORDERED to post security in the amount of $25 million or 50% of the [appellant's] current net worth, whichever is less ...." The trial court also ordered Huff Energy to produce certain documents during the pendency of the appeal.

In addition to their joint notice of appeal from the underlying judgment, appellants also filed a motion pursuant to Texas Rule of Appellate Procedure 24.4 seeking review of (1) the trial court's June 25, 2013 "Order Granting Longview's Motion to Increase Security" that requires four of the five appellants "to [each] post security in the amount of $25 million or 50% of the [appellant's] current net worth, whichever is less, within 20 days of the date of this order" and (2) the trial court's June 25, 2013 order directing Huff Energy to produce or cause to be produced a variety of documents "pertaining to all wells and leases within the constructive trust in which Riley–Huff or The Huff Energy Fund, L.P. holds an interest ... on a monthly basis for the duration of the appeal."

SUPERSEDEAS BOND

The alleged excessiveness of the amount of security, as determined by the trial court, is reviewed under Rule 24.4 using an abuse-of-discretion standard. See Ramco Oil & Gas Ltd. v. Anglo Dutch (Tenge) L.L.C., 171 S.W.3d 905, 909 (Tex.App.-Houston [14th Dist.] 2005, published order); TransAmerican Natural Gas Corp. v. Finkelstein, 905 S.W.2d 412, 414 (Tex.App.-San Antonio 1995, pet. dism'd). Generally, the test for abuse of discretion is whether the trial court acted without reference to any guiding rules and principles or whether the trial court acted arbitrarily and unreasonably. Ramco, 171 S.W.3d at 910. But, a trial court has no discretion in determining what the law is and applying the law to the facts. Id. Accordingly, the trial court's interpretation of applicable statutes is reviewed de novo . Id. at 912. A failure by the trial court to analyze or apply the law correctly is an abuse of discretion. Id. at 910.

A. Compensatory Damages

Appellants contend this case does not involve compensatory damages because Longview sought recovery based on disgorgement, which is not compensatory in nature. Therefore, appellants first assert the trial court erred in requiring four of the appellants to each post additional security because the $25 million joint bond is sufficient to supersede the entire "non-compensatory" judgment award.

The Texas Civil Practice and Remedies Code provides that, subject to a statutory cap, "when a judgment is for money, the amount of security must equal the sum of: (1) the amount of compensatory damages awarded in the judgment; (2) interest for the estimated duration of the appeal; and (3) costs awarded in the judgment." TEX. CIV. PRAC. & REM.CODE ANN. § 52.006(a) (West 2008) (emphasis added). Chapter 52 does not define "compensatory damages," however, the Texas Supreme Court has recently considered the definition of "compensatory damages" in the context of an award of attorney's fees. See In re Nalle Plastics Family Ltd. Partnership, 406 S.W.3d 168 (Tex.2013). The Nalle Court first noted that "Chapter 52 does not define ‘compensatory damages.’ " Id. at 171. The Court then referred to Black's Law Dictionary's definition of the term as "damages sufficient in amount to indemnify the injured person for the loss suffered."Id. (citing BLACK'S LAW DICTIONARY 445 (9th ed. 2009)). "The dictionary notes that the phrase is interchangeable with ‘actual damages,’ defined as ‘[a]n amount awarded to a complainant to compensate for a proven injury or loss; damages that repay actual losses.’ " Id. at 171–72.

The Court also referred to Civil Practice and Remedies Code Chapter 41, which defines "compensatory damages [as] economic and noneconomic damages," but not exemplary damages. TEX. CIV. PRAC. & REM.CODE § 41.001(8). "Economic damages" are those "intended to compensate a claimant for actual economic or pecuniary loss." Id. § 41.001(4). "Noneconomic damages" are "damages awarded for the purpose of compensating a claimant for ... nonpecuniary losses of any kind other than exemplary damages." Id. § 41.001(12). "Exemplary damages" are "any damages awarded as a penalty or by way of punishment but not for compensatory purposes." Id. § 41.001(5). Although the Nalle Court did not decide whether Chapter 41's "compensatory damages" definition explicitly governed, the Court concluded that, "[a]t the very least, it is consistent with our own conclusion based on the phrase's ordinary meaning and our precedent—that attorney's fees incurred in the prosecution or defense of a claim are not compensatory damages." Nalle, 406 S.W.3d at 174.

Like the Court in Nalle, we need not decide whether Chapter 41's definition of "compensatory damages" explicitly governs because a plain reading of this judgment supports the conclusion that the $95,500,000.00 is compensatory in nature. The trial court rendered its judgment "based on the verdict, the evidence at trial, and the pleadings, and arguments of the parties." In its petition, Longview sought "a constructive trust over all the subject leases in [appellants'] possession or on any assets that the [appellants] obtained by virtue of the usurpation [of corporate opportunity]," punitive damages, and title to stolen leases, "but if it is unable to recover title for any reason ... [recovery of] the value of the stolen leases."

The jury answered affirmatively to each question inquiring whether one or more of appellants failed to comply with his or her fiduciary duty and whether one or more of appellants wrongfully obtained assets in the Eagle Ford shale as a result of this failure. Based on these affirmative answers, the jury determined the (1) market value of the Eagle Ford shale assets that Riley–Huff acquired as a result of the failure to comply with a fiduciary duty, (2) what Riley–Huff paid for the Eagle Ford shale assets it acquired, (3) the amount of past production revenues Riley–Huff derived from these assets, and (4) what Riley–Huff paid to develop these assets. In addition to the constructive trust, the trial court awarded Longview recovery "from the [appellants], jointly and severally, [certain] production revenues ... and an additional $95,500,000.00." Nothing in the judgment indicates the award of $95,500,000.00 is punitive in nature. See Tex. Standard Oil & Gas, L.P. v. Frankel Offshore Energy, Inc., 344 S.W.3d 628, 629 (Tex.App.-Houston [14th Dist.] 2011, published order) (noting that in a prior order "this Court granted appellant's first motion and reversed the trial court's initial determination of security, as it was improperly calculated upon damages that are, by order of the trial court, punitive in nature.") (emphasis added). Any attempt to go behind the trial court's judgment would be speculative. When, as here, "a judgment is unambiguous with no room for interpretation, it is our duty to declare its effect in light of the literal language used." Harper v. Welchem, Inc., 799 S.W.2d 492, 495 (Tex.App.-Houston [14th Dist.] 1990, no writ). Accordingly, in light of the language used in this judgment our conclusion that the $95,500,000.00 constitutes "compensatory damages" is consistent with the ordinary meaning...