When does postjudgment interest start accruing in a case that’s been appealed: at the final judgment after appellate review or at the original, erroneous judgment? The Texas Supreme Court recently answered that question in favor of Tom Loose’s appellate clients.
If the decision went the other way, Loose noted, his clients would have been on the hook for interest that would have doubled a judgment rendered against them.
The background to the high court’s March 28 decision in Larry T. Long v. Castle Texas Production LP is as follows.
The Thirteenth Court of Appeals remanded the judgment in an oil and gas dispute to the trial court so it could assess prejudgment interest based upon when the defendants, the Long entities, received certain billings from the plaintiff Castle. The trial court determined that such evidence was not in the record and that the record itself had to be reopened, according to the decision.
Rather than obtain the additional evidence, the plaintiff instead waived its claim for prejudgment interest. The trial court then awarded postjudgment interest from the date of its original, erroneous judgment, and the court of appeals affirmed.
The defendants appealed the judgment to the high court, arguing that the court of appeals erred because it should have awarded postjudgment interest from the final judgment date.
Writing for the court, Justice Eva Guzman noted that the general rule is that postjudgment interest accrues from the date of the final judgment. However, there is an exception in Texas Rule of Appellate Procedure 43.3 when an appellate court renders, or could have rendered, judgment but instead sends a case back to a trial court for further proceedings. In those instances, if a trial court possessed a sufficient record to render a correct judgment, the rules allow postjudgment interest to accrue from the original judgment date. But that exception didn’t apply here, the high court ruled.
“We cannot agree with Castle [the plaintiff] that postjudgment interest should always accrue from the date of the trial court’s first judgment,” Guzman wrote.
“After the trial court required additional evidence on Castle’s prejudgment interest claim, Castle waived the claim,” Guzman noted in the opinion. “But this waiver of prejudgment interest does not affect the date on which the postjudgment interest accrues. Because the trial court did not possess a sufficient record on which to render a correct judgment on its claims in 2001, Castle is not entitled to a postjudgment interest from the 2001 judgment. In 2009, Castle amended its pleadings for the first time to yield a sufficient record for the trial court to render a correct judgment. Castle is therefore entitled to postjudgment interest from the 2009 judgment.”
Loose, a partner in Locke Lord in Dallas who represents the defendants on appeal, is pleased that the high court agreed with his argument in the case.
“Because of the court’s holding, the Long trusts avoid about eight or nine years of postjudgment interest. That is, they are not paying interest from 2001 to 2009,” Loose said. That interest would have nearly doubled the original $600,000 judgment in the case, he noted.
“For me the challenge in this case was: Courts had not addressed our situation; most of them addressed the flip side of the same coin,” Loose said of the sparse case law on point. “And by that I mean that most of the opinions that addressed this situation” dealt with when the exception would apply. “And so our challenge was to explain why that exception didn’t apply to our case.”
Jeffrey Oldham, a partner in Bracewell & Giuliani in Houston who represents the plaintiff on appeal, did not return a call for comment.