Ramco Oil & Gas v. Anglo Dutch (Tenge)

• Decision Date: 08 September 2005
• Docket Number: No. 14-04-00433-CV.,14-04-00433-CV.
• Citation: 171 S.W.3d 905
• Parties: RAMCO OIL & GAS, LTD. and Ramco Energy PLC, Appellants/Cross-Appellees, v. ANGLO DUTCH (TENGE) L.L.C. and Anglo-Dutch Petroleum International, Inc., Appellees/Cross-Appellants.
• Court: Texas Supreme Court

171 S.W.3d 905

RAMCO OIL & GAS, LTD. and Ramco Energy PLC, Appellants/Cross-Appellees, v. ANGLO DUTCH (TENGE) L.L.C. and Anglo-Dutch Petroleum International, Inc., Appellees/Cross-Appellants.

No. 14-04-00433-CV.

Court of Appeals of Texas, Houston (14th Dist.).

September 8, 2005.

COPYRIGHT MATERIAL OMITTED

Christopher M. Odell, Michael K. Swan, Houston, for appellants/cross-appellees.

Neil C. McCabe, John O'Quinn, Houston, for appellees/cross-appellants.

Panel consists of Chief Justice HEDGES and Justices FOWLER and FROST.

ORDER

KEM THOMPSON FROST, Justice.

Appellants/cross-appellees Ramco Oil & Gas, Ltd. ("Ramco Oil") and Ramco Energy PLC ("Ramco Energy") have filed a motion under Rule 24.4(a) of the Texas Rules of Appellate Procedure seeking appellate review of what they allege is an excessive amount of security required by the trial court to supersede the judgment from which they appeal in this case. For the reasons stated herein, we require that the amount of bond, deposit, or other security necessary to supersede the trial court's judgment be decreased as set forth below. To this extent, we grant in part the Rule 24.4(a) motion filed by Ramco Oil and Ramco Energy (hereinafter collectively referred to as the "Judgment Debtors"); otherwise, we deny this motion. We grant the emergency motion to lift this court's stay of execution on the trial court's judgment, filed by appellees/cross-appellants Anglo-Dutch (Tenge) L.L.C. and Anglo-Dutch Petroleum International, Inc. (hereinafter collectively referred to as the "Judgment Creditors").

I. FACTUAL AND PROCEDURAL BACKGROUND

On April 1, 2004, the trial court signed an amended judgment against the Judgment Debtors and in favor of the Judgment Creditors. The Judgment Debtors are appealing this judgment, in which they have been held jointly and severally liable for $6.4 million in damages and jointly and severally liable with Halliburton Energy Services, Inc., for $9.8 million in attorney's fees as well as all costs of court.

Eight months after the trial court signed the amended judgment, the Judgment Debtors filed a motion asking the trial court to lower the amount of the bond needed to supersede this judgment to $200,000 and asserting that posting a bond in excess of this amount would cause the Judgment Debtors substantial economic harm. See TEX. CIV. PRAC. & REM.CODE ANN. 52.006(c) (Vernon Supp.2004) (stating that, on a showing by the judgment debtor that the judgment debtor is likely to suffer substantial economic harm if required to post security in an amount required under section 52.006(b), the trial court shall lower the amount of the security to an amount that will not cause the judgment debtor substantial economic harm); TEX.R.APP. P. 24.2(b) (stating that the trial court must lower the amount of security required by Rule 24.2(a) to an amount that will not cause the judgment debtor substantial economic harm if, after notice to all parties and a hearing, the court finds that posting a bond, deposit, or security in the amount required by Rule 24.2(a) is likely to cause the judgment debtor substantial economic harm).

After allowing discovery concerning the Judgment Debtors' net worth, the trial court heard the Judgment Debtors' motion on April 29, 2005. At the conclusion of that evidentiary hearing, the trial court signed an order setting the amount of bond, deposit, or security required to supersede the judgment (hereinafter "Security Amount") at $7.505 million, which the court determined was 50 percent of "Ramco's" 2003 net worth in U.S. Dollars. See TEX. CIV. PRAC. & REM.CODE ANN. 52.006(b) (Vernon Supp.2004) (stating that, notwithstanding any other law or rule of court, the Security Amount for a money judgment must not exceed the lesser of (1) 50 percent of the judgment debtor's net worth, or (2) $25 million); TEX.R.APP. P. 24.2(a)(1) (stating that, for a money judgment, the Security Amount must not exceed the lesser of (a) 50 percent of the judgment debtor's current net worth or (b) $25 million). In this order, the trial court also suspended enforcement of its April 1, 2004 judgment pending appellate review of the proper Security Amount. See TEX.R.APP. P. 24.4.

Days after the April 29 order, the Judgment Debtors filed in this court an emergency motion to review the order setting the Security Amount at $7.505 million. See TEX. CIV. PRAC. & REM.CODE ANN. 52.006(d) (Vernon Supp.2004); Tex.R.App. P. 24.4. The Judgment Debtors asked this court to lower the Security Amount to $200,000. The Judgment Debtors also requested this court to issue a temporary order staying execution on the judgment pending this court's resolution of the motion to review the Security Amount. See TEX.R.APP. P. 24.4(c). This court granted this relief and stayed execution on the judgment pending our decision on the motion. See id.

On June 24, 2005, the Judgment Creditors filed an emergency motion to lift this court's temporary stay based on the alleged threat that the Judgment Debtors would dissipate their assets. The Judgment Creditors also cited a change in the Judgment Debtors' financial condition since April 29, 2005. On June 28, 2005, this court ordered this case abated and remanded to the trial court for the taking of evidence and the entry of findings of fact. See TEX.R.APP. P. 24.4(d). Specifically, we ordered the trial court to conduct a hearing and make findings of fact and conclusions of law concerning the changes in circumstances, if any, concerning the Judgment Debtors' net worth. See TEX.R.APP. P. 24.3(a)(2) (trial court may modify amount of security if circumstances change); TEX.R.APP. P. 24.4(b) (review of the sufficiency or excessiveness of the amount of security may be based both on conditions as they existed at the time of the trial court's order and on changes in those conditions). In this order, we stated that the trial court must lower the Security Amount to an amount that will not cause the Judgment Debtors substantial economic harm if the court finds that posting the required bond is likely to cause substantial economic harm. TEX.R.APP. P. 24.2(b). Furthermore, we instructed the trial court that, when the trial court determines a judgment debtor's net worth for purposes of setting a Security Amount, the court must state with particularity the factual basis for its determination of the debtor's net worth. TEX.R.APP. P. 24.2(c)(3).

On July 21, 2005, the trial court conducted a hearing under this court's abatement order. After hearing evidence and the argument of counsel, the trial court issued findings of fact and conclusions of law stating, among other things, the following:

• The Judgment Debtors' financial condition has improved since the trial court set the Security Amount on April 29, 2005.

• "The net worth of Ramco," based on its market capitalization, is $20 million.

• Although a net worth of $20 million would ordinarily require a reduction in the Security Amount to $10 million, the trial court left the Security Amount needed to supersede the judgment at $7.505 million because the Judgment Creditors agreed that this amount was sufficient.

• Posting a $7.505 million supersedeas bond will not cause "Ramco" substantial economic harm.

• Changes in circumstances do not warrant a modification of the Security Amount set in the trial court's April 29, 2005 order.

II. STANDARDS OF REVIEW

We review the alleged excessiveness of the trial court's determination of the amount of security under Rule 24.4 of the Texas Rules of Appellate Procedure using an abuse-of-discretion standard. See In re Kajima Intern., Inc., 139 S.W.3d 107, 112 (Tex.App.-Corpus Christi 2004, orig. proceeding). Likewise, we review the "substantial economic harm" determination under this standard. See Isern v. Ninth Court of Appeals, 925 S.W.2d 604 606 (Tex.1996) (stating that trial court had discretion to allow alternate security under former Texas Rule of Appellate Procedure 47 and section 52.002 of the Texas Civil Practice and Remedies Code). 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. See McDaniel v. Yarbrough, 898 S.W.2d 251, 253 (Tex.1995). However, a trial court has no discretion in determining what the law is and applying the law to the facts. See Gonzalez v. Reliant Energy, Inc., 159 S.W.3d 615, 623-24 (Tex.2005). A failure by the trial court to analyze or apply the law correctly is an abuse of discretion. Id.

Furthermore, under section 52.006, the trial court's discretion is limited by the requirement that the Security Amount cannot exceed the limit set forth in section 52.006(b) or an amount that is likely to cause the judgment debtor substantial economic harm. See TEX. CIV. PRAC. & REM.CODE ANN. 52.006(b), (c); Bocquet v. Herring, 972 S.W.2d 19, 20-21 (Tex.1998). Therefore, the trial court abuses its discretion if the evidence is legally or factually insufficient to support its findings under section 52.006(b) or (c). See Bocquet, 972 S.W.2d at 20-21; Bass v. Walker, 99 S.W.3d 877, 883 (Tex.App.-Houston [14 Dist.] 2003, pet. denied) (although court reviews sanctions under abuse-of-discretion standard, if there is legal or factually insufficient evidence to support the trial court's fact finding under the relevant legal standard, then the trial court abused its discretion); Hunt v. Baldwin, 68 S.W.3d 117, 135 n. 8 (Tex.App.-Houston [14th Dist.] 2001, no pet.).

As to the net-worth determination and the determination of whether the Judgment Debtors are likely to suffer substantial economic harm, the Judgment Debtors have the burden of proof. See TEX. CIV. PRAC. & REM.CODE ANN. 52.006(c); TEX.R.APP. P. 24.2(c)(3). Therefore, for the Judgment Debtors to show that the trial court abused its discretion as to these issues by ruling based on legally insufficient evidence, the Judgment Debtors must demonstrate that the...