Tex. Standard Oil & Gas v. Frankel Offshore Energy Inc.

• Decision Date: 07 July 2011
• Docket Number: No. 14–11–00125–CV.,14–11–00125–CV.
• Citation: 344 S.W.3d 628
• Court: Texas Court of Appeals
• Parties: TEXAS STANDARD OIL & GAS, L.P., Grimes Energy Co., and Petroval, Inc., Appellants,v.FRANKEL OFFSHORE ENERGY, INC. and FRANKEL RESOURCES LLC, Appellees.

344 S.W.3d 628

TEXAS STANDARD OIL & GAS, L.P., Grimes Energy Co., and Petroval, Inc., Appellants,

v.FRANKEL OFFSHORE ENERGY, INC. and FRANKEL RESOURCES LLC, Appellees.

No. 14–11–00125–CV.

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

July 7, 2011.

OPINION TEXT STARTS HEREOn Appeal from the 127th District Court Harris County, Texas. Trial Court Cause No. 2008–55176, R.K. Sandill, Judge.

Charles A. Sharman, Bellaire, John Kim, Robert M. Roach, Jr., Houston, for appellants.Geoffrey L. Harrison, Ashish Mahendru, Houston, for appellees.Panel consists of Justices FROST, JAMISON, and McCALLY.

ORDER

SHARON McCALLY, Justice.

Appellants Texas Standard Oil & Gas, L.P., Grimes Energy Co., and Petroval, Inc. April 4, 2011, motion to lower bond is pending before the Court. By the motion, Appellants seek review of the trial court's order signed March 30, 2011, determining the amount of security required for them to suspend enforcement of the court's judgment pending appeal. See Tex. Civ. Prac. & Rem.Code Ann. § 52.006(d) and Tex.R.App. P. 24.4. Appellants' motion to lower bond is denied.

This is Appellants' second motion to lower bond. Appellant's first motion asked that this Court “reverse the Order setting bond, hold that Appellants are not required to post a supersedeas bond on amounts awarded for purpose of punishing Appellants, and set the proper amount of the bond based on costs and interest only.” (emphasis supplied) By March 3, 2011, order ¹, 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. Specifically, the March 3, 2011, order granted all relief Appellants sought and remanded the issue to the trial court to determine security from interest for the duration of the appeal and costs. On remand, the trial court calculated security solely from interest for the duration of the appeal because zero costs were awarded. ²

By Appellant's second motion, they now ask that this Court reverse the new supersedeas order of the trial court and hold that they are not required to post security at all. In light of the record as a whole, including Appellant's initial request for relief, and this Court's March 3, 2011, order, we cannot say that the trial court abused its discretion in calculating security precisely as directed by this Court in its order granting Appellant's first motion.

Without the necessity of resort to a statutory construction of § 52.006, we conclude the trial court did not abuse its discretion in setting the bond. We further conclude, again in light of the current appellate record as a whole, that the trial court did not abuse its discretion in estimating an eighteen-month duration of the appeal. Therefore, appellants' (second) motion to lower the supersedeas bond is denied. The stay of post-judgment proceedings ordered on May 10, 2011, is lifted as of the date of this order.

JAMISON, J., concurring; FROST, J., dissenting.MARTHA HILL JAMISON, Justice, concurrence to order.

This case, unique on its facts, brings to light an interesting question of statutory construction concerning section 52.006 of the Texas Civil Practice and Remedies Code. I join the disposition and analysis set forth in the order, concluding that the statutory construction quandary need not be resolved in this case; however, I write separately to urge the legislature to clarify its intent under section 52.006.

1. The statute setting the amounts necessary to supersede a judgment states that it includes “interest for the estimated duration of the appeal.”

In 2003, the Texas Legislature decided that the amount of security necessary to supersede a judgment would no longer include punitive damages. Specifically, it changed the amount of security required from “ at least the amount of the judgment, interest for the estimated duration of the appeal, and costs” to “ the sum of compensatory damages awarded in the judgment, interest for the estimated duration of the appeal, and costs awarded in the judgment.” Compare former Tex.R.App. P. 24.2(a)(1) (eff. Sept. 1, 1997) (amended Aug. 29, 2003 and Sept. 10, 2003, eff. Sept. 1, 2003; amended Mar. 10, 2008 and Aug. 20, 2008, eff. Sept. 1, 2008), with Tex.R.App. P. 24.2(a)(1) (implementing Tex. Civ. Prac. & Rem.Code § 52.006) (emphases added). Thus, the current version of the statute requires the following security amounts to supersede a judgment: “(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 § 52.006(a).¹ This court has previously described the language of section 52.006 as “plain.” Ramco Oil & Gas, Ltd. v. Anglo Dutch (Tenge) L.L.C., 171 S.W.3d 905, 913 (Tex.App.-Houston [14th Dist.] 2005, published order) (“We must not engage in forced or strained construction; instead, we must yield to the plain sense of the words the Legislature chose.”).

Movants suggest that a reading of subsection 52.006(a)(2) without implying the following extra words would be unreasonable: “interest [on the amount of compensatory damages awarded in the judgment] for the estimated duration of the appeal.” See id. § 52.006(a)(2). This position is contrary to the holding of our sister court, in Shook v. Walden, that “Section 52.006, subsection (a)(2) requires [a judgment debtor] to secure the post-judgment interest that is estimated to accrue during the pendency of the appeal, not merely the estimated post-judgment interest on the contract damages or compensatory damages.” 304 S.W.3d 910, 929 (Tex.App.-Austin 2010, no pet.).

The legislature easily could have included additional language restricting the sums on which post-judgment interest was to be calculated for security purposes, if that were its intention, but it did not do so. By specifically referencing only “compensatory damages” in subsection 52.006(a)(1), the legislature clearly expressed an intent to omit punitive damages themselves from the total to be secured, but it did not express the same intent with regard to interest on punitive damages.

2. Post-judgment interest—even on punitive damages—is compensatory.

The purpose of post-judgment interest is compensatory. It compensates a plaintiff for the time-value of money as of the date of judgment: it is not punitive. See Long v. Castle Tex. Prod. Ltd. P'ship, 330 S.W.3d 749, 751 (Tex.App.-Tyler 2010, pet. filed) (“Postjudgment interest is compensation allowed by law for the use or detention of money, computed from the date of rendition of judgment until the date of satisfaction.”); Sisters of Charity of the Incarnate Word v. Dunsmoor, 832 S.W.2d 112, 119 (Tex.App.-Austin 1992, writ denied) (same); see also State v. Public Utility Com'n of Texas, 344 S.W.3d 349, 377 (Tex.2011) (“[A] full recovery ... must include interest to reflect the time value of money”); Miga v. Jensen, 96 S.W.3d 207, 212 (Tex.2002) (“Post-judgment interest is not a punishment inflicted on a judgment debtor for exercising the right to appeal. Instead, like pre-judgment interest, post-judgment interest is simply compensation for a judgment creditor's lost opportunity to invest the money awarded as damages at trial.”).

Post-judgment interest for the lost use of a punitive damages award, calculated from the date of judgment until payment of the award, compensates the judgment creditor in the same way as post-judgment interest on a compensatory damages award does.² By not expressly excluding punitive damages from the calculation of post-judgment interest under section 52.006(a), the legislature manifested its intent that interest on such damages was to be included in the amount for which security was required.

“The early common law viewed any interest as usurious and illegal.” Anthony E. Rothschild, Prejudgment Interest: Survey and Suggestion, 77 Nw. U.L. Rev. 192, 195 (1982). Ultimately, however, the rise in commercial activity led courts to view interest as proper consideration for the use of money. See id. at 195–96 (citing C. Mccormick, Damages § 5 (1935)) (“It could by then be seen that the real evil was not the taking of payment for the lending of money, but taking such payment in an extortionate or unconscionable amount”). Courts began to see that it was necessary for awards to include interest for the primary goal of damages—full compensation—to be achieved. Id. at 196; see also Newburgh Land & Dock Co. v. Tex. Co., 227 F.2d 732, 734 (2d Cir.1955) (explaining that “interest is awarded on the theory that it is indemnity for the delay in paying for the loss.”).³

Post-judgment interest in Texas is governed by the Finance Code and other statutes. See Phillips Petroleum Co. v. Riverview Gas Compression Co., 409 F.Supp. 486, 496 (N.D.Tex.1976) (“In Texas, the right to post-judgment interest is provided by Statute.”); Jarrin v. Sam White Oldsmobile Co., 929 S.W.2d 21, 25 (Tex.App.-Houston [1st Dist.] 1996, writ denied) (“Post-judgment interest is ... mandated by statute.”). Thus, whether it should be limited on certain types of damages or should not be considered in the calculation of a supersedeas bond is a matter left entirely to the legislature and not within the purview of this court: it is a matter of pure statutory construction rather than a common law issue.⁴ The legislature, as set forth below, has otherwise regulated post-judgment interest by setting the interest rate and subsequently lowering it. It has also, in a straightforward manner, prohibited prejudgment interest on punitive damages, see Texas Civil Practice & Remedies Code § 41.007 (“Prejudgment interest may not be assessed or recovered on an award of exemplary damages.”), and it easily could have done the same in § 52.006(a) if that were its intention.

3. The legislature left a gray area in rebalancing interests between judgment creditors and judgment debtors.

Section 52.006 was enacted as part...