Opinion
No. 05-17-01112-CV
11-07-2017
EMF SWISS AVENUE, LLC, Appellant v. PEAK'S ADDITION HOME OWNER'S ASSOCIATION, CITY OF DALLAS AND BOARD OF ADJUSTMENT FOR THE CITY OF DALLAS, Appellee
On Appeal from the 134th Judicial District Court Dallas County, Texas
Trial Court Cause No. DC-17-02532
MEMORANDUM OPINION
Before Chief Justice Wright and Justices Francis and Stoddart
Opinion by Chief Justice Wright
Before the Court is appellant EMF Swiss Avenue, LLC's ("EMF") amended emergency motion for review of the trial court's denial of EMF's motion to set supersedeas security. The underlying proceeding involved appellee Peak's Addition Homeowner's Association's ("HOA") appeal of the Dallas Board of Adjustment's determination that a building permit was properly issued for construction on property owned by EMF. The judgment at issue is declaratory in nature. Specifically, the judgment grants summary judgment for the HOA and reverses the Dallas Board of Adjustment's decision upholding the building official's decision to issue a building permit. The issue before us is whether that judgment constitutes a judgment for something other than money or an interest in real property such that the trial court was required to set security pursuant to rule of appellate procedure 24.2(a)(3). We agree with EMF that rule 24.2(a)(3) applies to this judgment and required the trial court to set security in accordance with that rule. We grant the motion and remand the issue of security to the trial court for hearing and issuance of a written order setting security within the parameters of rule 24.2(a)(3).
Background
EMF is a developer in the process of constructing a five-story, 253-unit multifamily development on a property in Dallas. The construction was approved through the City of Dallas permitting process. EMF began work and, after more than one year of work on the project, EMF has spent more than $13 million on construction. The HOA challenged the issuance of the permits through the City of Dallas administrative process because the permits do not require EMF to conform to a Dallas ordinance limiting building to two stories (26 feet) in height. The HOA appealed the issuance of the permits to the Dallas Board of Adjustment, and the Board upheld the Director's decision. The HOA then appealed to the district court, with the City and the Board as respondents/defendants. EMF intervened.
The trial court granted the HOA's motion for summary judgment and entered a judgment that reversed the Board's decision. The September 11, 2017 judgment states that "the decision of the Dallas Board of Adjustment upholding the interpretation of the building official is Reversed." (emphasis in original). On September 14, 2017, the City issued a "Stop Work" order to halt all construction on the project. EMF filed an emergency motion to stay enforcement of the judgment, which the trial court denied. EMF then appealed the judgment and filed a motion to determine supersedeas security in the trial court. The trial court denied the motion to determine supersedeas security without explanation.
EMF now seeks this Court's review of the denial of supersedeas under Rule 24.4 and argues that the trial court was required under Rule 24.2(a)(3) to either set the amount and type of security required to suspend enforcement or order the amount and type of security required for the HOA to post to prevent suspension of enforcement of the judgment. Following this Court's request, the HOA, the City of Dallas, and the Board of Adjustment filed responses to the motion, and EMF filed a reply brief. The HOA maintains that the judgment may not be superseded because it is not subject to execution, is not a judgment "for something" as required by the rules, and, as such, EMF is not a judgment debtor. The City and the Board do not affirmatively state that the trial court abused its discretion. They do, however, concur in EMF's contention that all civil judgments can be superseded unless excepted by statute and that Chapter 211 of the Texas Local Government Code does not preclude a court from setting a bond.
Applicable Law
Unless the law or the rules of appellate procedure provide otherwise, a judgment may be superseded and enforcement of the judgment suspended pending appeal. TEX. R. APP. P. 24.1(a). The purpose of supersedeas is to preserve the status quo of the matters in litigation as they existed before the issuance of the judgment from which an appeal is taken. Devine v. Devine, No. 07-15-00126-CV, 2015 WL 2437949, at *2 (Tex. App.—Amarillo May 20, 2015, no pet.) (citing Smith v. Tex. Farmers Ins. Co., 82 S.W.3d 580, 585 (Tex. App.—San Antonio 2002, pet. denied)). Rule 24.1 sets out the requirements for suspending enforcement of a judgment pending appeal in civil cases. TEX. R. APP. P. 24.1. A supersedeas bond must be in the amount required by rule 24.2. TEX. R. APP. P. 24.1(b)(1)(A). Under Rule 24.2, the amount of the bond depends on the type of judgment. TEX. R. APP. P. 24.2(a). When the judgment is "for something other than money or an interest in real property," the security must adequately protect the judgment creditor against loss or damage that the appeal might cause. TEX. R. APP. P. 24.2(a)(3).
If rule 24.2(a)(3) applies, the trial court may decline to permit the judgment to be superseded only if the judgment creditor posts security ordered in an amount and type that will secure the judgment debtor against any loss or damage caused by the relief granted the judgment creditor if the appellate court reverses. TEX. R. APP. P. 24.2(a)(3); Klein Ind. Sch. Dist. v. Fourteenth Court of Appeals, 720 S.W.2d 87, 88 (Tex. 1986). Rule 24.2(a)(3) is routinely applied to judgments that are declaratory or injunctive in nature. E.g., In re State Bd. for Educator Certification, 452 S.W.3d 802, 803 (Tex. 2014) (Rule 24.2(a)(3) applied to permanent injunction prohibiting Board from revoking or treating as revoked teacher's certification); El Caballero Ranch, Inc. v. Grace River Ranch, L.L.C., No. 04-16-00298-CV, 2016 WL 4444400, at *5 (Tex. App.—San Antonio Aug. 24, 2016, no pet.) (Rule 24.2(a)(3) applied to final judgment declaring a valid, express easement); Orix Capital Markets, LLC v. La Villita Motor Inns, No. 04-09-00573-CV, 2010 WL 307885, at *1 (Tex. App.—San Antonio Jan. 27, 2010, pet. denied) (Rule 24.2(a)(3) applied to judgment that is primarily declaratory in nature); Klein, 720 S.W.2d at 88 (stating because disputed portion of judgment is injunction, judgment debtor's entitlement to supersedeas is controlled by subsection pertaining to "other" judgments) (orig. proceeding).
Rule 24.4 allows this Court to review the trial court's decision not to permit suspension of enforcement, and permits us to increase or decrease the amount of the bond, require other changes to the order, or remand to the trial court for entry of findings of fact or taking of evidence. TEX. R. APP. P. 24.4. This Court reviews a trial court's ruling under rule 24.2(a)(3) for an abuse of discretion. Hydroscience Techs., Inc. v. Hydroscience, Inc., 358 S.W.3d 759, 760-61 (Tex. App.-Dallas 2011, no pet.). (citing TEX. R. APP. P. 24.4(a)(5) and EnviroPower, L.L.C. v. Bear, Stearns & Co., 265 S.W.3d 1, 2 (Tex. App.—Houston [1st Dist.] 2008, pet. denied)).
Discussion
We disagree with the HOA's contention that the judgment may not be superseded because it presents nothing on which the HOA can execute and is not a judgment "for something." Rule 24.2(a)(3) applies to this judgment because the judgment is not for money and is not for an interest in property. Rather, the judgment is declaratory and injunctive in nature because it declares that the Board's decision was incorrect and, in effect, declares the permit invalid.
The Amarillo court of appeals' opinion in Haedge v. Central Texas Cattlemen's Association is instructive. In Haedge, the court of appeals determined that a judgment that affirmed a private association's decision stripping certain shareholders of their shares and accompanying right to graze heads of cattle on certain land could be superseded and the amount of security was to be determined under rule 24.2(a)(3). Haedge v. Cent. Texas Cattlemen's Ass'n, No. 07-15-00368-CV, 2016 WL 836084, at *1 (Tex. App.—Amarillo Mar. 3, 2016, no pet.). Shareholders in the Central Texas Cattlemen's Association (CTCA) possess a right to graze 1.6 head of cattle per share on the U.S. Army facility at Ft. Hood, Texas. Id. The CTCA Board of Directors terminated appellants' memberships in CTCA and cancelled their shares following allegation that appellants violated CTCA rules and bylaws. Id. The appellants sued the CTCA Board, and during the litigation, sought a temporary restraining order to allow them to continue to graze their cattle on the Ft. Hood property. Id. The trial court granted the TRO and set a bond for the order at $2,500, which appellants deposited into the registry of the court. Id. Appellants lost at trial, a take nothing judgment was rendered against them, and they appealed. Id. At the hearing on appellants' motion to set security, they presented evidence that it would cost them $66,200 per year to graze their cattle on alternative pastures. Id. CTCA's evidence was consistent with the $66,200 per year valuation. Id. The trial court ordered that the judgment would be suspended by carrying forward the $2,500 bond previously posted. Id.
CTCA sought appellate review of the trial court's order setting bond. Id. The Amarillo court of appeals rejected CTCA's argument that a take nothing judgment could not be superseded. Id. at *3. The court noted that "[t]he purpose of supersedeas is to preserve the status quo of the matters in litigation as they existed before the issuance of the judgment from which an appeal is taken." Id. at *2 (citing Smith v. Tex. Farmers Ins. Co., 82 S.W.3d 580, 585 (Tex. App.—San Antonio 2002, pet. denied). The court also determined that, although the issues in the case involved the rights to use property for grazing, appellants' suit did not directly seek an interest in real property. Haedge, 2016 WL 836084, at *3. Rather, appellants filed suit "seeking a judicial order invalidating the CTCA's Board's decision to terminate their memberships and to cancel their shares." Id. The court held that the judgment entered was for something other than money or an interest in real property and the trial court was, therefore, required to set the amount and type of security and to do so pursuant to Rule 24.2(a)(3). Id. Because the parties agreed that the value of appellants' use of the property was approximately $66,200 per year, the court held that $66,200 per year for the anticipated duration of the appeal was the amount necessary to adequately protect CTCA against loss or damage that the current appeal might cause. Id. at * 3-4 (citing rule 24.2(a)(3)).
The judgment at issue here reverses the Board's decision approving the building permit and is, thus, analogous to the judgment in Haedge, which affirmed the CTCA Board's decision to terminate appellants' membership and cancel their shares. The Haedge court held that the judgment entered was for something other than money or an interest in real property and the trial court was, therefore, required to set the amount and type of security and to do so pursuant to Rule 24.2(a)(3). The same is true here. The judgment reversed the Board's decision and, as a result, declared the building permit improper. That judgment, like the Haedge judgment, adversely affected the property rights of appellants and should be permitted to be superseded under Rule 24.2(a)(3).
We also disagree with the HOA's contention that EMF is not a judgment debtor. EMF owns the property at issue, and the HOA did not object to or move to strike EMF's intervention. The underlying proceeding was brought under Chapter 211 of the local government code. A person "aggrieved by a decision of the board" may appeal that decision to the district court, county court, or county court at law. TEX. LOC. GOV'T CODE ANN. § 211.011(a)(1). The decision on appeal is then appealable to an intermediate court of appeals. See Wende v. Bd. of Adjustment of City of San Antonio, 27 S.W.3d 162, 167 (Tex. App.—San Antonio 2000), rev'd on other grounds, 92 S.W.3d 424 (Tex. 2002) (aggrieved party has standing to appeal the board's decision and to appeal the decision of the district court). Chapter 211 does not define "aggrieved party" or "person aggrieved." Black's Law Dictionary define "aggrieved party" as:
A party entitled to a remedy; esp., a party whose personal, pecuniary, or property rights have been adversely affected by another person's actions or by a court's decree or judgment.Aggrieved Party, BLACK'S LAW DICTIONARY (10th ed. 2014).
EMF, as the property owner, is an aggrieved party to the district court's judgment because its rights have been adversely affected by the judgment. As an aggrieved party, EMF has a right to appeal the judgment and, as the party adversely affected by the judgment, is the judgment debtor for purposes of rule 24.2(a)(3). Moreover, if the term "judgment debtor" was intended to be limited to a party who must pay a money judgment or turnover an interest in real property, that term would not be included in a rule that applies only to judgments that are not monetary and not for an interest in property.
Having determined that rule 24.2(a)(3) applies to the judgment, we next decide whether the trial court abused its discretion by denying EMF's motion to set security. "A trial court's discretion under Rule 24.2(a)(3) does not extend to denying a party its appeal." Hydroscience Techs., 358 S.W.3d at 761 (citing In re Dallas Area Rapid Transit, 967 S.W.2d 358, 360 (Tex. 1998) (orig. proceeding) (per curiam)). Moreover, the rule does not permit the trial court to deny any security at all. The plain language of the rule allows the trial court "to decline to permit the judgment to be superseded." TEX. R. APP. P. 24.2(a)(3). But denying security altogether is not an unfettered right. Rather, the trial court may decline to permit the judgment to be superseded in only one circumstance—" if the judgment creditor posts security ordered by the court" to protect the appealing party from loss or damaged caused by enforcement of the judgment during the appeal. TEX. R. APP. P. 24.2(a)(3) (emphasis added).
The rule unambiguously protects both parties to the judgment. If the trial court decides to allow suspension of the judgment during the appeal, then the court "must set the amount and type of security that the judgment debtor must post" and that security "must adequately protect the judgment creditor against loss or damage that the appeal might cause." Id. If, on the other hand, the trial court decides the judgment should not be superseded during the appeal, then the trial court must order the judgment creditor to post security "in an amount and type that will secure the judgment debtor against any loss or damage caused by the relief granted the judgment creditor if an appellate court determines, on final disposition, that that relief was improper." TEX. R. APP. P. 24.2(a)(3). Here, the trial court refused to set security for EMF to post and declined to allow the judgment to be superseded. On the other hand, the trial court did not require the HOA to post security to protect EMF during the appeal. That was an abuse of discretion.
Accordingly, we grant EMF's motion, vacate the trial court's September 22, 2017 order denying EMF's motion to set supersedeas security, and remand the issue of security to the trial court for hearing and entry of a written order setting security within the parameters of rule 24.2(a)(3). See TEX. R. APP. P. 24.2(a)(3), 24.4.
/Carolyn Wright/
CAROLYN WRIGHT
CHIEF JUSTICE 171112F.P05