Khera Interest Inc. v. Wilmington Trust National Association Not in Ints Individual Capacity but Solely as Trustee of the MFRA Trust 2015-1

Motion Denied and Order filed October 28, 2021

In The

Fourteenth Court of Appeals
____________

NO. 14-21-00404-CV
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KHERA INTEREST, INC., Appellant

V.

WILMINGTON TRUST NATIONAL ASSOCIATION NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY AS TRUSTEE OF THE MFRA
TRUST 2015-1, Appellee

On Appeal from the 151st District Court
Harris County, Texas
Trial Court Cause No. 2020-11448

ORDER

Before this court is appellant’s motion to modify a supersedeas bond. We
deny the motion.

This appeal concerns the status of a mortgage lien held by appellee on real
property (the “Property”) to which appellant has the title. On May 25, 2021, the
trial court entered a final order granting declaratory relief to appellee and holding
appellant’s title to the Property was subject to appellee’s mortgage lien. The order
did not itself specify the mortgage lien’s value or amount.

After this appeal began, appellee placed the Property on a non-judicial
foreclosure list and scheduled it for a September 7, 2021 foreclosure. Before the
Property could be foreclosed on, appellant filed a motion with the trial court on
August 26, 2021 to suspend enforcement of the judgment and set a supersedeas
bond. While the motion remained pending with the trial court, the parties agreed
to defer foreclosure through September if appellant deposited $2,500 into the trial
court’s registry. Appellant did so, and the foreclosure did not proceed as originally
scheduled. On September 7, 2021, the trial court issued an order requiring a
monthly payment of $1,300 from appellant, which appellant had acknowledged
was the Property’s monthly rental rate at the time, in order to supersede the
judgment while the appeal proceeded. While appellant has paid that amount as
ordered by the trial court, it has sought relief from this court on the basis the trial
court ordered an erroneous amount for supersedeas.

Under Texas Rule of Appellate Procedure 24.4(a)(1), parties may seek
appellate review on the sufficiency or excessiveness of the amount of a security
ordered by a trial court as a supersedeas bond. We review such decisions for an
abuse of discretion. See O.C.T.G. L.L.P. v Laguna Tubular Prods. Corp. 525
S.W.3d 822, 829 (Tex. App.—Houston [14th Dist.] 2017, mand. denied). An
abuse of discretion exists when the trial court acts without reference to any guiding
rules and principles or when it acts arbitrarily and unreasonably. See id. (citing
McDaniel v. Yarbrough, 898 S.W.2d 251, 253 (Tex. 1995)).

Texas Rule of Appellate Procedure 24.1(a) authorizes judgment debtors like
appellant to supersede a judgment pending appeal by, among other methods, filing
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with the trial court a good and sufficient bond, which must be in the amount
required by Rule 24.2. See Tex. R. App. P. 24.1(a)(2), (b)(1)(A). Rule 24.2
contains two possibilities for the proper supersedeas amount in this case. When a
judgment is for “the recovery of an interest in real . . . property,” the amount of the
security “must be at least[] the value of the property interest’s rent or revenue.”
Tex. R. App. P. 24.2(a)(2)(A). When the judgment “is for something other than
money or an interest in property,” there is less of a numeric limit to what must be
or can be ordered by the trial court as a supersedeas bond. Rather, the trial court
“must set the amount and type of security” so as to “adequately protect the
judgment creditor against loss or damage that the appeal might cause.” Tex. R.
App. P. 24.2(a)(3).

Appellant’s initial argument contends that, because the underlying judgment
is for something other than money or a property interest, the underlying
supersedeas bond is excessive under Rule 24.2(a)(3) as it exceeds adequate
protection against loss or damage to appellee. This argument is not consistent with
this court’s precedent. In Abdullatif v. Choudhri, we considered which of those
two rules best fit a judgment awarding declaratory relief clarifying who held
ownership interests in several non-corporate business associations. 536 S.W.3d
48, 50–51 (Tex. App.—Houston [14th Dist.] 2017, no pet.). Although the
appellant in that case contended that superseding such relief was governed by Rule
24.2(a)(3) on the basis that the underlying declaratory judgments were for
something other than money and property, we held that Rule 24.2(a)(2) and its
property-based limits applied since the underlying declarations “validate[d] a
transfer of interests in . . . property to [the appellee].” Id. at 55. That rule applies
here with equal force. The current case’s declaratory judgment regarding how

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appellee’s mortgage lien impacts appellant’s title to real property is just as much a
judgment for the recovery of a property interest as a declaration about who owns,
and the extent to which they own, interests in business associations. So Rule
24.2(a)(2) and its standard for “the value of the property interest’s rent or revenue,”
rather than Rule 24.2(a)(3) and its requirement for “adequate[] protect[ion for] the
judgment creditor,” is the proper rule for evaluating the amount of this case’s
supersedeas bond.

That largely resolves appellant’s motion, as of the four different amounts
appellant contends are a more appropriate measure for the supersedeas bond, three
of them (the interest on the underlying note, zero on the basis that the lien itself
serves as adequate security, and the $2,500 deposit appellant initially placed in the
trial court’s registry) do not align with Rule 24.2(a)(2)’s the requirement that the
bond be set at “the value of the property interest’s rent or revenue.” All that
remains is appellant’s fourth proposal, the Property’s net rental value. Appellant
contends that in light of such costs as ownership and management expenses, it only
nets $650 on the $1,300 it receives in rental money each month. However,
particularly as there is no indication that appellee would itself necessarily be
paying those costs instead of a tenant, we see no abuse of discretion in the trial
court’s choice to use the total rent appellant receives, rather than the net amount it
receives from rent. Cf., e.g., Hayes v. Johnson, No. 05-17-01116-CV, 2019 WL
2266390, at *1 (Tex. App.—Dallas May 28, 2019, no pet.) (discussing an
arrangement by which a property tenant not only paid the property owner rent each
month, but also paid the owner’s insurance and property taxes and was moreover
“responsible for ‘upkeep’”).

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 Accordingly, as this court finds no abuse of discretion in the trial court’s
decision to require $1,300 per month to be deposited to supersede its judgment, we
deny appellant’s motion to modify its supersedeas bond.

PER CURIAM

Panel Consists of Justices Wise, Bourliot, and Zimmerer.

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