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Pettit v. Tabor

Court of Appeals of Texas, Sixth District, Texarkana

July 18, 2019


          On Appeal from the 8th District Court Delta County, Texas Trial Court No. 10985

          Before Morriss, C.J., Burgess and Stevens, JJ.


         Robert York Pettit, Jeffrey York Pettit, individually and as trustee of the Big Horn Phalanx Trust, Joseph Austin Pettit, and Emily Anne Pettit Covey (collectively Pettit) moved this Court to review and overturn the trial court's order requiring that they post a $100, 000.00 bond to supersede the underlying judgment. Pettit maintains that because the lion's share of the judgment is properly considered disgorgement for supersedeas bond purposes, the only amount subject to bond is the award of court costs plus interest, totaling $6, 279.83. In the event the challenged awards are not properly classified as disgorgement, Pettit alternatively asks that the supersedeas bond be set within the range of $36, 831.15 to $39, 526.10. For the reasons stated below, we deny the requested relief.

         I. Background

         As alleged below, Marilyn Eileen Pettit Tabor and her brother, Robert York Pettit, each owned a fifty percent undivided interest in two tracts of land and were joint signatories on a bank account intended to be used for maintenance of the land. Tabor alleged that after having told Robert that she was considering conveying her interest in the properties to her children because she had been sued regarding an old business transaction, Robert strongly encouraged her to deed her interests to him on a temporary basis, promising to reconvey the interests to Tabor on her request. Tabor deeded her interests in the subject property to Robert. She also-allegedly at Robert's urging-removed her name from a joint bank account with Robert containing $40, 000.00. Tabor alleged that Robert refused to reconvey the property interests and sued for their return, as well as for her share of the maintenance account.[1]

         Following a bench trial, the trial court determined that Tabor's transfer of her undivided fifty percent interest and title to two tracts of real property to Pettit was void based on fraud and imposed a constructive trust on the property in favor of Tabor. The court further ordered Pettit to execute deeds to reconvey Tabor's property interests to her. Finally, the judgment awarded Tabor $20, 000.00, representing her interest in the maintenance account, $50, 000.00 in exemplary damages, $43, 084.39 in attorney fees, and $5, 924.37 in costs.

         Pettit filed a motion to set a supersedeas bond, asking the trial court to set bond in the amount of $6, 279.83, representing court costs plus interest for one year. Tabor responded, asking the trial court to set bond in accordance with Rule 24.2(a)(2)(A) of the Texas Rules of Appellate Procedure, with the bond representing at least the value of the interest's rent or revenue. Tabor claimed that because the rule only provides a floor for the bond amount, the trial court should set the bond at $525, 934.27, representing one-half of the real property's market value, plus costs and interest.

         Although no testimony was presented at the hearing on Pettit's motion to set a supersedeas bond, Pettit attached to his motion a document captioned "Lease Property Price Opinion for Jeffrey York Pettit, Trustee," relative to both tracts. The document was authored by Terry Driggers of Terry Driggers Realty Services, LLC, and was supported by county appraisal district tax records, including rental comparisons for the home situated on the Hunt County tract.[2] Driggers opined that, with respect to the 224.4-acre tract in Hunt County, "[a]n option would be to lease the pasture for $10-$12 an acre but knowing that a farmer would most likely want a longer term lease to protect the investment they would make in fencing and clean-up." A second option, according to Driggers, "would be to lease to 2-3 hunters which might pay $1000-$1200 a gun to hunt." Driggers opined that this option "would generate around $2240 to $3000 a year."

         Driggers stated that per the tax records, the 1, 728 square-foot home on this tract was built in 2000 with enclosed front and back porches totaling 540 square feet, a septic system, and no central air or heat. According to Driggers, "This home . . . would easily rent in the Commerce area because of the University. . . . To a single family, in my opinion, the home would have a rent value of $1200 to $1500 a month." Finally, with respect to the seventy-acre Delta County tract, Driggers stated that the land is currently leased for hunting, since it is heavily wooded.[3] "An option would be to maybe add two hunters up to $1000 a gun for a possible $2000 extra a year lease."

         II. Analysis

         A money judgment may be superseded by a bond, deposit, or security equal to the sum of compensatory damages awarded in the judgment, interest for the estimated duration of the appeal, and costs awarded in the judgment, subject to certain limitations. See Tex. R. App. P. 24.2(a)(1); Tex. Civ. Prac. & Rem. Code Ann. § 52.006. To supersede a judgment for the recovery of an interest in real property, the amount of security "must be at least . . . the value of the property interest's rent or revenue." Tex.R.App.P. 24.2(a)(2)(A); see Wickliffe v. Tooley, No. 05-15-00696-CV, 2015 WL 5013691, at *1 (Tex. App.-Dallas Aug. 25, 2015, no pet.) (mem. op.).

         Under Rule 24.4 of the Texas Rules of Appellate Procedure, an appellate court may review, among other things, "the sufficiency or excessiveness of the amount of security" and "the trial court's exercise of discretion" in "order[ing] the amount and type of security." Tex.R.App.P. 24.4(a)(1), (5), 24.3(a)(1). And, under Rule 24.4(d), an appellate court has discretion to modify a trial court's order on security. See Tex. R. App. P. 24.4(d); BP Am. Prod. Co. v. Red Deer Res., LLC, No. 07-14-00032-CV, 2014 WL 3419496, at *2 (Tex. App.-Amarillo July 11, 2014, order) (per curiam). In the present case, the trial court awarded Tabor both monetary damages and real property interests. Consequently, we must evaluate the trial court's supersedeas calculations under both Rule 24.2(a)(1) and 24.2(a)(2).

         "We review a trial court's determination of the amount of security required under an abuse of discretion standard." Eagle Oil & Gas Co. v. Shale Exploration, LLC, 510 S.W.3d 92, 94 (Tex. App.-Houston [1st Dist.] 2016, mem. order) (citing In re Longview Energy Co., 464 S.W.3d 353, 358 (Tex. 2015) (orig. proceeding)). Generally, "[t]he test for abuse of discretion is whether the trial court acted without reference to any guiding rules and principles or whether the act was arbitrary and unreasonable." McDaniel v. Yarbrough, 898 S.W.2d 251, 253 (Tex. 1995). Because a trial court does not have "discretion in determining what the law is or applying the law to the facts[, ] . . . a failure by the trial court to analyze or apply the law correctly . . . constitutes an abuse of discretion." Gonzalez v. Reliant Energy, Inc., 159 S.W.3d 615, 624 (Tex. 2005) (quoting In re Kuntz, 124 S.W.3d 179, 181 (Tex. 2003) (orig. proceeding)).

         A. Supersedeas Bond Related to the Award of Property Interests

         Pettit contends that because the trial court (1) found that the transfer of Tabor's real property interests to Pettit were void due to Pettit's fraud and (2) imposed a constructive trust on the real property in favor of Tabor, this remedy is for disgorgement. Pettit therefore contends that this award should not have been included in the trial court's supersedeas bond calculations. We disagree.

         Pettit relies on Longview Energy in support of this proposition. In that case, Longview Energy sued minority shareholders, among others, for breach of fiduciary duty related to the acquisition of assets in a shale formation. In re Longview Energy Co., 464 S.W.3d 353, 355-56 (Tex. 2015) (orig. proceeding). The trial court's judgment placed a constructive trust over the wrongfully acquired assets as well as ...

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