LEW ANDERTON AND ANDERTON DEVELOPMENT PARTNERSHIP, L.P., Appellants v. WILLIAM R. CAWLEY, INDIVIDUALLY AND AS TRUSTEE OF THE BILL CAWLEY 1997 REVOCABLE TRUST, CAWLEY-CASCADE, GP, L.L.C., CAWLEY-PB FUN

SUPREME COURT CASES

Laws-info.com » Cases » Texas » 5th District Court of Appeals » 2010 » LEW ANDERTON AND ANDERTON DEVELOPMENT PARTNERSHIP, L.P., Appellants v. WILLIAM R. CAWLEY, INDIVIDUALLY AND AS TRUSTEE OF THE BILL CAWLEY 1997 REVOCABLE TRUST, CAWLEY-CASCADE, GP, L.L.C., CAWLEY-PB FUN

State: Texas

Court: Texas Northern District Court

Docket No: 05-10-00693-CV

Case Date: 11/01/2010

Plaintiff: LEW ANDERTON AND ANDERTON DEVELOPMENT PARTNERSHIP, L.P., Appellants

Defendant: WILLIAM R. CAWLEY, INDIVIDUALLY AND AS TRUSTEE OF THE BILL CAWLEY 1997 REVOCABLE TRUST, CAWLEY-CASC

Preview:LEW ANDERTON AND ANDERTON
DEVELOPMENT PARTNERSHIP, L.P., Appellants v.
WILLIAM R. CAWLEY, INDIVIDUALLY AND AS
TRUSTEE OF THE BILL CAWLEY 1997
REVOCABLE TRUST, CAWLEY-CASCADE, GP,
L.L.C., CAWLEY-PB FUNDING, LP, CAWLEY
FINANCE, L.L.C., CAWLEY FINANCE II, L.L.C.,
BOT REAL ESTATE, L.L.C., COT REAL ESTATE,
L.L.C., LONNIE A. EICHINGER AS TRUSTEE OF
THE CHRISTOPHER CAWLEY 1998
IRREVOCABLE TRUST, LONNIE A. EICHINGER
AS TRUSTEE OF THE KELLY CAWLEY 1998
IRREVOCABLE TRUST, AND MARCUS D. HILES,
Appellees
Motion denied October 29, 2010
S
In The
Court of Appeals
Fifth District of Texas at Dallas
No. 05-10-00693-CV
LEW ANDERTON AND
ANDERTON DEVELOPMENT PARTNERSHIP, L.P., Appellants
V.
WILLIAM R. CAWLEY, INDIVIDUALLY AND AS TRUSTEE OF THE BILL CAWLEY 1997 REVOCABLE
TRUST, CAWLEY-CASCADE, GP, L.L.C., CAWLEY-PB FUNDING, LP, CAWLEY FINANCE, L.L.C.,
CAWLEY FINANCE II, L.L.C., BOT REAL ESTATE, L.L.C., COT REAL ESTATE, L.L.C., LONNIE A.
EICHINGER AS TRUSTEE OF THE CHRISTOPHER CAWLEY 1998 IRREVOCABLE TRUST, LONNIE A.
EICHINGER AS TRUSTEE OF THE KELLY CAWLEY 1998 IRREVOCABLE TRUST, AND MARCUS D.
HILES, Appellees
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On Appeal from the 192nd Judicial District Court
Dallas County, Texas
Trial Court Cause No. 08-05426-K
OPINION
Before Chief Justice Wright and Justices O'Neill and Myers
Opinion By Chief Justice Wright
Before the Court is appellant Lew Anderton's motion to decrease the amount of his supersedeas bond and accept
notice of cash deposit. See Tex. Civ. Prac. & Rem. Code Ann. § 52.006(d) (West 2008); Tex. R. App. P. 24.4. The
trial court rendered judgment awarding appellees $8,386,849.38. Anderton filed an affidavit of net worth reflecting a
negative net worth of $6,557,571.43. In calculating his net worth, Anderton included the amount of the judgment as a
liability. Anderton deposited $100 and served his notice of cash deposit in lieu of a supersedeas bond. Appellee BOT
Real Estate, L.L.C. objected to Anderton's affidavit of net worth. The trial court found Anderton's net worth to be
$1,890,168.77 and assessed the bond requirement at one-half of that amount. The issue before this Court is whether the
trial court erred in excluding the judgment amount from Anderton's net worth.
Anderton contends the trial court erred in excluding the judgment amount from his net worth because it is: (1)
contrary to the plain text of the statute; (2) contrary to the legislative intent; (3) contrary to the generally accepted
accounting principles; and (4) contrary to the only credible evidence presented at the hearing. We review a trial court's
determination of the amount of security for an abuse of discretion. G.M. Houser, Inc. v. Rodgers, 204 S.W.3d 836, 840
(Tex. App.-Dallas 2006, no pet.).
With regard to the amount of a bond that the trial court can set to supersede a judgment, section 52.006 of the
civil practice and remedies code provides, in pertinent part, as follows:
(a)
Subject to Subsection (b), 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)
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costs awarded in the judgment.
(b)
Notwithstanding any other law or rule of court, when a judgment is for money, the amount of security must not exceed
the lesser of:
(1)
50 percent of the judgment debtor's net worth; or
(2)
$25 million.
Tex. Civ. Prac. & Rem. Code Ann. § 52.006(a) & (b) (West 2008). Appellate rule 24.2 states that the amount of the
security must not exceed fifty percent of the judgment debtor's current net worth. Tex. R. App. P. 24.2 (a)(1)(A). Net
worth is the difference between total assets and total liabilities as determined by generally accepted accounting
principles. See Rodgers, 204 S.W.3d at 840. Contrary to Anderton's contention, the plain language of the statute does
not include a contingent money judgment in calculating net worth.
Anderton contends the legislative intent of section 52.006 is to shift the focus away from protecting judgment
creditors and instead to focus on allowing parties to appeal adverse judgments. If the sole focus was on allowing the
judgment debtor to appeal, the legislature would not impose any supersedeas requirement. The legislature struck a
balance. The thrust of the inquiry under section 52.006 is whether the judgment debtor has the ability to meet the
supersedeas bond requirement and whether doing so is likely to result in substantial economic harm. See Ramco Oil &
Gas, Ltd. v. Anglo Dutch (Tenge) L.L.C., 171 S.W.3d 905, 917 (Tex. App.-Houston [14th Dist.] 2005, no pet.).
The trial court conducted a hearing on BOT Real Estate's contest to Anderton's affidavit of net worth. At the
hearing, David Harris, C.P.A., testified on Anderton's behalf. Harris testified that a money judgment should be
included on a balance sheet if: (1) the underlying litigation occurred on or before the date of the financial statement; (2)
the likelihood of an unfavorable outcome is probable; and (3) the amount of the loss can be reasonably estimated.
Harris then testified that Anderton's attorney told him that it was unlikely Anderton would win on appeal. Thus, he
argued that the conditions were met for including the judgment as a liability for purposes of calculating Anderton's net
worth.
BOT Real Estate presented the testimony of Dan Jackson, C.P.A. He testified that this judgment should not be
included as a liability. Jackson stated that not including this judgment as a liability for net worth purposes is consistent
with generally accepted accounting principles. Jackson also testified that Anderton's net worth could not be ascertained
from his balance sheet because it did not include any documentation, calculations, descriptions, or valuations.
At the conclusion of the hearing, the trial court said that it was allowing further discovery with regard to
Anderton's assets and noted that the bond may increase if the evidence shows that Anderton undervalued his assets. In
its order determining Anderton's net worth, the trial court made the following findings of fact and conclusions of law:
1.
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The balance sheet attached to Lew Anderton's Affidavit of Net Worth filed August 25, 2010 is suspect.
2.
Lew Anderton is uncertain as to whether or not all assets are listed on the balance sheet attached to Lew Anderton's
Affidavit of Net Worth filed August 25, 2010.
3.
The Court declines to include the amount of the judgment and interest entered in this case as a liability of Lew
Anderton in determining his net worth because it would lead to the illogical result that Lew Anderton has a negative
net worth, when the other information provided by Lew Anderton would otherwise show that he has a net worth of at
least $1,890,168.77.
4.
The Court accepts the testimony of Dan Jackson and finds that inclusion of the judgment and interest entered in this
case as a liability of Lew Anderton in determining his net worth would not comply with generally accepted accounting
principles.
5.
While the Court finds that the balance sheet attached to Lew Anderton's Affidavit of Net Worth filed August 25, 2010
is suspect, the Court declines to ignore it altogether and finds that Lew Anderton's net worth is $1,890,168.77.
The trial court found Jackson's expert testimony credible. Jackson's testimony supports the trial court's determination.
Accordingly, we conclude the trial court did not abuse its discretion in excluding the amount of the judgment from
Anderton's net worth calculation. We affirm the trial
court's determination as to the amount of the supersedeas bond and deny Anderton's motion to decrease the amount of
his supersedeas bond and accept notice of cash deposit.
CAROLYN WRIGHT
CHIEF JUSTICE
100693F.P05
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