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Navidea Biopharmaceuticals, Inc. v. Capital Royalty Partners II, L.P.

Court of Appeals of Texas, Fourteenth District

July 16, 2019

NAVIDEA BIOPHARMACEUTICALS, INC. AND MACROPHAGE THERAPEUTICS, INC., Appellants
v.
CAPITAL ROYALTY PARTNERS II, L.P., CAPITAL ROYALTY PARTNERS II - PARALLEL FUND "A", L.P., CAPITAL ROYALTY PARTNERS II (CAYMAN) L.P., AND CAPITAL ROYALTY PARTNERS II - PARALLEL FUND "B" (CAYMAN) L.P., Appellees

          On Appeal from the 151st District Court Harris County, Texas Trial Court Cause No. 2016-22242

          Panel consists of Justices Wise, Zimmerer, and Spain.

          MEMORANDUM OPINION

          Ken Wise Justice.

         This case involves a commercial loan dispute resolved by a high-low settlement agreement and a trial to the court. After several days of trial, the court found that the borrowers owed the lenders an amount in excess of the maximum recovery permitted by the settlement agreement. The court signed a judgment in favor of the lenders for the maximum allowed minus an amount the borrowers had agreed to pay under the settlement agreement. On appeal, the borrowers contend that the evidence is legally and factually insufficient to support the judgment. Because we conclude that appellants agreed to waive their right to appeal and do not assert a valid basis to invalidate the waiver, we dismiss the appeal.

         Background

         Consistent with the parties' briefing in the trial court and on appeal, we refer to appellants as Navidea and appellees as CRG.[1] We discuss only those matters necessary to advise the parties of the court's decision and the basic reasons for it. Tex. R. App. 47.4.

         Navidea entered into a loan agreement and related documents with CRG. In accordance with the terms of the loan documents, CRG initially loaned $50 million to Navidea. One year later, on April 7, 2016, CRG filed suit against Navidea asserting that Navidea had committed several events of default under the loan agreement. CRG initially sought a declaratory judgment and damages for breach of contract. Shortly after that, CRG exercised its contractual right under the loan documents to require U.S. Bank to transfer funds from a certain Navidea account to CRG. U.S. Bank provided CRG $4, 112, 434.17 from the account. The parties refer to the roughly $4.1 million that CRG received from U.S. Bank as the "swept funds."

         The scope of the litigation quickly escalated to involve proceedings between CRG and Navidea in Texas and Ohio. Eventually, however, Navidea and CRG agreed to settle their disputes. In February 2017, the parties stipulated to the terms of a settlement in open court during a proceeding in an Ohio court of common pleas. Among other things, Navidea agreed to pay CRG $59 million and CRG agreed to allow Navidea to sell certain of its assets to a third party. Navidea also agreed to withdraw its counterclaims in the Texas suit and to not assert such (or similar) counterclaims in the future in the Texas suit.

         The parties reduced their settlement to writing in a document titled "Global Settlement Agreement." Under the settlement agreement, CRG and Navidea would litigate CRG's claims and Navidea's defenses in the Texas suit subject to a high-low agreement. The settlement agreement also provided that the Texas court's decision would be "final and non-appealable." In relevant part, the settlement agreement provided:

The Texas Court shall adjudicate the Texas Claims to determine the final amount of the Obligations owed by the Company to the Lenders under the Loan Documents (the "Final Obligation Amount"), provided, that the Final Obligation Amount shall in no event be less than $47, 000, 000 (the "Obligation Minimum") or more than $66, 000, 000 (the "Obligation Maximum) with each such amount net of any amounts received by the Lenders on or prior to receipt of the Deposit Amount, [2] and (1) provided however, that the Company retains, among other rights, the right to assert that all offsets, payments and credits have not been allowed, including without limitation, the credit due for the U.S. Bank funds previously taken by Lenders and (2) provided further, that the Texas Court's decision shall be final and non-appealable and not subject to reconsideration, and shall be binding on all the Parties to this Agreement.

         The Texas suit was tried to the court over several days in December 2017. After hearing the evidence, the court found that Navidea had breached the loan agreement with CRG and that CRG had incurred damages in excess of $66 million. After subtracting the $59 million Navidea had paid under the settlement agreement from the Final Obligation Amount of $66 million, the court signed a judgment ordering Navidea to pay CRG $7 million.

         Navidea immediately filed a letter and emergency motion to stay execution, arguing that the trial court should correct its "math errors" and reduce the judgment to account for CRG's receipt of the swept funds and other reductions. Navidea also filed a motion to correct the judgment in which it argued that the trial court should correct the "math error" in its judgment to reduce the amount of money owed to CRG from $7 million to approximately $2 million.

         On January 10, 2018, the trial court signed an amended final judgment again ordering Navidea to pay CRG $7 million damages. The judgment specified that the $7 million "is new money, in addition to the $59, 000.000.00 previously paid to [CRG] pursuant to the high-low settlement in this case." The judgment also informed the parties that "no additional filings or motions or corrections will be accepted by this Court pursuant to the plain language of the Parties' agreements" and that the court would "not hold any additional hearings in this case." The same day, the court filed detailed amended findings of fact and conclusions of law.

         Navidea then filed an "Emergency Motion to Set Supersedeas Bond and to Modify the Judgment," arguing that the trial court's judgment failed to account for the swept funds and seeking a supersedeas bond in the amount Navidea believed it owed to CRG. Because Texas procedure requires the court to set the amount of a supersedeas bond, the court held a hearing on Navidea's motion. At the hearing, the court rejected Navidea's argument, stating:

The answer is that it is not in excess of what the Court intended to issue. The Court meant what it said, $7 million in new money, period. That's what the judgment says. That's what it means. That's what the evidence was at trial.

         The court also stated that "the evidence sufficiently demonstrated that [CRG is] entitled to an additional $7 million and that the swept funds were just as easily contemplated in the 59 million." The trial court ordered that Navidea file a cash bond of ...


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