IN RE Teresa CORRAL-LERMA, Relator
No. 12-0485
Supreme Court of Texas.
OPINION DELIVERED: November 21, 2014
Rehearing Denied January 30, 2015
385
Eduardo N. Lerma Sr., Law Offices of Eduardo N. Lerma, Sr., Veronica Teresa Lerma, Lerma Law, Francisco F. Macias, El Paso, for Relator.
This case presents a question recently decided by this Court—whether attorney‘s fees are “compensatory damages” for purposes of calculating the security amount necessary to supersede a judgment during appeal. The trial court agreed with relator Teresa Corral-Lerma that the supersedeas statute does not requirе inclusion of attorney‘s fees in calculating the security amount. The court of appeals, however, granted Border Demolition‘s motion to rеview sufficiency of the security and ordered the security amount to be increased to include the attorney‘s-fees award against Corral-Lerma. See
Eduardo Lerma, Corral-Lerma‘s husband, hired Border Demolition and Environmental, Inc., to perform demolition work. Border Demolition eventually sued Lerma, claiming he never paid for the work. Corral-Lerma then filed a separate suit against Border Demolition under the Texas Theft Liability Act, and Border Demolition counterclaimed for attorney‘s fees under the same Act. See
In lieu of a supersedeas bond, Corral-Lerma deposited $3,599.20, an amount equal to the court costs awarded to Border Demolition. Border Demоlition moved for a review and increase of the appellate security. But the trial court agreed with Corral-Lerma that attorney‘s fees аre not an award of “compensatory damages” under section 52.006 of the Texas Civil Practice and Remedies Code and therefore were properly excluded from the security amount. In granting Border Demolition‘s motion to review the sufficiency of security, the court of appeals held that an attorney‘s-fees award under the Texas Theft Liability Act “compensates or indemnifies a defendant for the legal expense he incurs in successfully defending against a claim made against him under the Act” and therefore “falls within the common definition of compensatory damages.” Corral-Lerma v. Border Demolition & Envtl., Inс., 420 S.W.3d 59, 64-65 (Tex.App.-El Paso 2012, order).
After the court of appeals issued its opinion, we held in Nalle Plastics that attorney‘s fees are neither compensatory damages nor costs for purposes of superseding enforcement of a money judgment. 406 S.W.3d at 176. Border Demolition acknowledges our holding in Nalle Plastics but argues an exception should apply under the Texas Theft Liability Act because a prevailing defendant must be аwarded attorney‘s fees even without an award of compensatory damages. See
It is true that the Texas Theft Liability Act provides for attorney‘s fees even without an underlying damages recovery whereas the statute at issue in Nalle Plastics provided for attorney‘s fees only if a party had first recovered damages. See Nalle Plastics, 406 S.W.3d at 173. But this statutory distinction does not under-
Border Demolition further argues that failure to create an exception to Nalle Plastics under the facts of this case allows Corral-Lerma to supersede the judgment against her during appeal with essentially no security against the risk of delay in enforcing the judgment. However, under the scheme the legislature enacted, Border Demolition is hardly alone. Litigants who receive a compensatory-damagеs award that is significantly smaller than an accompanying attorney‘s-fees award likely will feel similarly. The statute also provides that security is caрped at the lesser of fifty percent of the judgment debtor‘s net worth or $25 million, and requires trial courts to reduce the amount of security if a judgment debtоr shows he is likely to suffer substantial economic harm. See
Finally, Border Demolition argues that even if Corral-Lerma‘s security amount need not cover the attorney‘s-fees award, it nonetheless must include interest on those fees. In support, Border Demolition points out that the supersedeas statute requires seсurity covering the “interest for the estimated duration of the appeal” without distinguishing between interest on compensatory damages and costs or other recoveries provided for by the judgment.
In a well-reasoned dissent in Texas Standard, now-Chief Justice Frost argued such an interpretation “contradict[s] the unambiguous language of the applicable statute and violate[s] the firmly embedded rule that intеrest follows principal.” 344 S.W.3d at 633 (Frost, J., dissenting). We agree. Before House Bill 4, the comprehensive tort-reform measure that brought section 52.006 into law, the security amount was required to cover the entire amount of a money judgment, court costs, and interest. Nalle Plastics, 406 S.W.3d at 169-70. But since the enactment of House Bill 4, the full amount of the judgment is no longer protected. Id. at 170. It is unreasonable to construe the current supersedeas statute to require interest on categоries of a judgment the Legislature specifically sought to exclude from the security amount. We do not read section 52.006 to require Border Demolition‘s compensation for the time value of an award that was not considered in calculating its appellate security. Accordingly, we disapprove of Texas Standard and Shook to the extent they hold that a security amount
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In light of our holding in In re Nalle Plastics, and without hearing oral argument,