in Re Longview Energy Company and in Re Huff Energy Fund, L.P., and Riley-Huff Energy Group, Llc
464 S.W.3d 353
| Tex. | 2015Background
- Longview Energy sued Huff Energy principals (Huff and D’Angelo), Huff Energy, WRH Energy Partners, and Riley‑Huff for breach of fiduciary duty after Riley‑Huff acquired Eagle Ford prospects pursued by Longview.
- Jury found breaches and that Riley‑Huff wrongfully obtained Eagle Ford assets; Longview sought equitable disgorgement (constructive trust), not damages.
- Trial court imposed a constructive trust over most Riley‑Huff Eagle Ford assets and future net production revenues, and separately awarded an additional $95.5 million against all defendants jointly and severally; the amended judgment did not explain the monetary figure.
- Defendants posted a $25 million supersedeas bond; Longview moved to increase security for each defendant (up to 50% of net worth or $25M) and sought post‑judgment operational discovery from Huff Energy to protect the judgment during appeal.
- The trial court ordered increased security (except for Riley‑Huff) and extensive monthly production/operations document production; the court of appeals reversed the security order (holding the $25M bond sufficed collectively) and affirmed the discovery order. Parties petitioned the Texas Supreme Court.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the monetary award (future net production revenues + $95.5M) is "compensatory damages" under Tex. Civ. Prac. & Rem. Code §52.006 and Rule 24 | Longview: award is remedial/disgorgement (not punitive) and thus compensatory for supersedeas security purposes | Huff: award is equitable disgorgement (or punitive/unexplained) and not "compensatory damages," so security under §52.006(a)(1) is not required | Court: Award is not compensatory damages; Huff need only post security for costs ($66,645), not for the monetary award |
| Whether Rule 24.2/§52.006 caps should apply per‑defendant or to the judgment as a whole | Longview/court of appeals: caps apply to judgment as a whole | Huff/trial court: trial court applied caps separately to multiple jointly liable defendants | Court: Did not decide (unnecessary after holding award is not compensatory) |
| Whether trial court abused discretion by ordering post‑judgment discovery under Rule 24.1(e) in lieu of additional security | Longview: discovery was a permissible, reasonable means to protect creditor and prevent dissipation | Huff: discovery exceeded Rule 621a limits, coerces settlement, and burdens right to appeal | Court: Discovery order was within trial court discretion and not an abuse; Rule 24.1(e) not limited by Rule 621a |
| Scope of security required to supersede contested constructive trust (and operational assets) | Longview: additional security or equivalent protections needed to protect the judgment during appeal | Huff: increased bond would cause substantial economic harm; existing bond sufficed | Court: Trial court’s decision to provide discovery in lieu of further bond for the constructive‑trust portion was not an abuse of discretion |
Key Cases Cited
- Omaha Hotel Co. v. Kountze, 107 U.S. 378 (recognizing historical rule that appeal invoked supersedeas)
- Pennzoil Co. v. Texaco, 481 U.S. 1 (U.S. 1987) (context for massive‑judgment supersedeas issues and bankruptcy response)
- Texaco, Inc. v. Pennzoil Co., 729 S.W.2d 768 (Tex. App. 1987) (state appellate proceedings after the Pennzoil verdict)
- Texaco, Inc. v. Pennzoil Co., 748 S.W.2d 631 (Tex. App. 1988) (post‑verdict procedural history including settlement/dismissal)
- In re Nalle Plastics Family Ltd. P’ship, 406 S.W.3d 168 (Tex. 2013) (holding attorney’s fees are not "compensatory damages" under §52.006)
- Burrow v. Arce, 997 S.W.2d 229 (Tex. 1999) (discussing equitable disgorgement and fiduciary remedies)
- ERI Consulting Eng’rs, Inc. v. Swinnea, 318 S.W.3d 867 (Tex. 2010) (on measuring fiduciary liability and restitutionary principles)