in Re Navidea Biopharmaceuticals, Inc. and MacRophage Therapeutics, Inc. ( 2018 )

Petition for Writ of Mandamus Conditionally Granted and Memorandum
Opinion filed March 8, 2018.
In The
Fourteenth Court of Appeals
NO. 14-18-00036-CV
IN RE NAVIDEA BIOPHARMACEUTICALS, INC. AND MACROPHAGE
THERAPEUTICS, INC., Relators
ORIGINAL PROCEEDING
WRIT OF MANDAMUS
151st District Court
Harris County, Texas
Trial Court Cause No. 2016-22242
MEMORANDUM OPINION
On January 19, 2018, relators Navidea Biopharmaceuticals, Inc. and
Macrophage Therapeutics, Inc. (collectively, “Navidea”) filed a petition for writ of
mandamus in this court. See Tex. Gov’t Code Ann. § 22.221 (West Supp. 2017);
see also Tex. R. App. P. 52. In the petition, Navidea asks this court to compel the
Honorable Mike Engelhart, presiding judge of the 151st District Court of Harris
County, to set a supersedeas bond amount. Real parties in interest are Capital
Royalty Partners II, L.P.; Capital Royalty Partners II – Parallel Fund “A”, L.P.;
Parallel Investment Opportunities Partners II, L.P.; Capital Royalty Partners II
(Cayman) L.P.; and Capital Royalty Partners II – Parallel Fund “B” (Cayman) L.P.
(collectively, “CRG”). We conditionally grant the petition.
BACKGROUND
CRG loaned $50 million to Navidea in 2015. CRG claimed that Navidea
defaulted on the loan. According to the verified facts contained in Navidea’s
petition, CRG then “swept” $4.1 million from Navidea’s bank accounts (the “Swept
Funds”), and filed suit against Navidea. Thereafter, the parties entered into a global
settlement agreement (“Settlement Agreement”). Pursuant to the Settlement
Agreement, Navidea immediately paid CRG $59 million. The Settlement
Agreement provided that the trial court was to determine a final obligation amount,
which was to be no less than $47 million and no more than $66 million. Further,
under the Settlement Agreement, the parties agreed that (1) Navidea retained the
right to assert entitlement to all offsets and credits, including “without limitation, the
credit due for the U.S. Bank funds previously taken by Lenders”; and (2) “the Texas
Court’s decision shall be final and non-appealable and not subject to reconsideration,
and shall be binding on all of the Parties to this Agreement.”
On December 27, 2017, the trial court signed a final judgment, ordering that
CRG recover $66 million from Navidea. The order further stated, “To be clear,
though, this judgment requires Defendants ‘Navidea’ to pay an additional Seven
Million Dollars ($7,000,000.00) in new money on top of the Fifty Nine Million
Dollars that ‘Navidea’ has already paid pursuant to the 2017 settlement agreement
entered into prior to the commencement of the trial of this case.”
2
Navidea filed a motion to modify or correct the judgment and stay
enforcement of the judgment. On January 3, 2018, the trial court granted a stay and
signed the following order:
After reviewing the pleadings on file and any arguments of
counsel, the Court hereby stays the execution of its Judgment which
would otherwise be immediately collectible and executable through 5
p.m. Houston time on Wednesday, January 10, 2018. The Court will
either enter an amended Judgment and Findings and Conclusions by
that time, or not. No additional filings will be considered, and no
additional hearings will be held.
CRG filed a response to Navidea’s motion. The trial court struck CRG’s
response, stating:
On its own Motion, the Court hereby STRIKES from the record
in this case Plaintiffs’ January 5, 2018 “Response in Opposition to
Defendants’ Motion to Correct Judgment, and Plaintiff’s [sic] Motion
to Enforce the Global Settlement Agreement” as well as the cover letter
and propose [sic] order filed with that Response. The Court’s January
3, 2018 Order plainly stated that no further filings would be accepted.
Plaintiffs’ [sic] acknowledge this in their cover letter. Plaintiffs
nevertheless ignored the Court’s Order. The Court means what it says
in its Orders. Any further filings by either side in this case may result
in a show cause order from the Court regarding substantial sanctions.
On January 10, 2018, the trial court signed the following first amended final
judgment, which stated in part:
IT IS ORDERED, ADJUDGED, AND DECREED that Plaintiffs
recover from Defendants the amount of $7,000,000.00 in damages,
which is new money, in addition to the $59,000,000.00 previously paid
to Plaintiffs pursuant to the high-low settlement agreement in this case.
3
IT IS FURTHER ORDERED that the Plaintiffs recover from
Defendants post-judgment interest at the rate of 5% per annum from the
date of this Amended Final Judgment.
The Court Orders, Adjudges, and Decrees that this Amended
Final Judgment replaces the Final Judgment signed on December 27,
2017, and this Amended Final Judgment disposes of all claims, all
defenses, and all parties.
It is further ORDERED that no additional filings or motions or
corrections will be accepted by the Court pursuant to the plain language
of the Parties’ agreements. Further, the Court will not hold any
additional hearings in this case.
The trial court also entered findings of fact and conclusions of law.
On January 16, 2018, Navidea filed an emergency motion to set a supersedeas
bond and to modify the judgment. In its emergency motion, Navidea argued that the
amended final judgment did not expressly credit $4,112,434.17, which was the
amount of the Swept Funds Navidea previously paid above the $59 million
settlement amount. Navidea explained that the parties disagreed about the meaning
of the phrase in the judgment, “new money, in addition to the $59 million previously
paid.” Navidea contended that the $7 million includes the $4,112,434.17 in Swept
Funds; CRG believed that the $7 million does not include the Swept Funds. Navidea
asserted that, if CRG’s interpretation were correct, CRG would be entitled to collect
$70,112,434.17, which is more than the maximum amount of $66 million permitted
by the Settlement Agreement. Navidea asked the trial court to modify the judgment
“to clearly show which party is clearly right.” Navidea stated that such modification
would “let [Navidea] know whether an appeal of the Court’s damages award is
warranted.”
4
Under the Settlement Agreement, CRG can collect amounts owed by Navidea
by drawing on a letter of credit five days after entry of judgment, and, according to
Navidea, CRG had attempted to draw the full $7 million on the letter of credit.
Therefore, Navidea asked the trial court to (1) set a supersedeas bond in the amount
of $2,887.565.83; or (2) stay enforcement of the judgment until the court set a
supersedeas bond amount. Navidea stated that it filed the motion to protect its rights
for a potential appeal, and that its motion did not implicate the contractual waiver of
appeal of the trial court’s determination of the final obligation amount. Navidea
stated it may appeal the judgment “at least to the extent it does not credit [Navidea]
with its payment of the Swept Funds and requires total payment in excess of the $66
million ceiling set by the high-low provision of the Settlement Agreement.”
Navidea also filed a supplement to its emergency motion to set a supersedeas
bond and to modify the judgment. The following comment was included in the
electronic notice that Navidea’s supplement was accepted for filing:
Please be advise [sic]. The Court will NOT consider Defendants’
Emergency Motion to Set Supersedeas Bond and to Modify Judgment
and this Supplement as per Judgment and FOF/COL signed
01/10/2018. Thank you for your attention in this matter.
Navidea then filed its petition for writ of mandamus, in which it asserts that
the trial court abused its discretion by refusing to set a supersedeas bond amount.
Navidea also filed an emergency motion to stay the judgment. We granted the stay
and requested CRG to respond to the mandamus petition. We now address the merits
of the petition.
5
STANDARD OF REVIEW
Generally, to be entitled to mandamus relief, a relator must demonstrate that
(1) the trial court clearly abused its discretion; and (2) the relator has no adequate
remedy by appeal. In re Nat’l Lloyds Ins. Co., 507 S.W.3d 219, 226 (Tex. 2016)
(orig. proceeding) (per curiam). A trial court clearly abuses its discretion if it reaches
a decision so arbitrary and unreasonable as to amount to a clear and prejudicial error
of law or if it clearly fails to analyze the law correctly or apply the law correctly to
the facts. In re H.E.B. Grocery Co., 492 S.W.3d 300, 302–03 (Tex. 2016) (orig.
proceeding) (per curiam); In re Cerberus Capital Mgmt., L.P., 164 S.W.3d 379, 382
(Tex. 2005) (orig. proceeding) (per curiam).
Determining whether a relator has an adequate remedy by appeal requires a
careful balance of jurisprudential considerations that implicate both public and
private interests. In re Ford Motor Co., 165 S.W.3d 315, 317 (Tex. 2005) (orig.
proceeding) (per curiam) (quotations and citations omitted). “When the benefits of
[mandamus review] outweigh the detriments, appellate courts must consider whether
the appellate remedy is adequate.” In re Prudential Ins. Co. of Am., 148 S.W.3d
124, 136 (Tex. 2004) (orig. proceeding). A relator does not have an adequate remedy
by appeal if he is in danger of losing a substantial right. In re Van Waters & Rogers,
Inc., 145 S.W.3d 203, 211 (Tex. 2004) (orig. proceeding) (per curiam).
ANALYSIS
By rule, judgment debtors are entitled to supersede a judgment, thereby
suspending enforcement, by posting security set by the trial court. Tex. R. App. P.
24.1, 24.2(a)(3); In re Crow-Billingsley Air Park, Ltd., 98 S.W.3d 178, 179 (Tex.
2003) (orig. proceeding) (per curiam); see also Miga v. Jensen, 299 S.W.3d 98, 100
6
(Tex. 2009) (“A judgment debtor is entitled to supersede the judgment while
pursuing an appeal.”); Ex parte Kimbrough, 135 Tex. 624, 626, 146 S.W.2d 371,
372 (1941) (orig. proceeding) (“[U]nless otherwise provided by statute, all final
judgments may be superseded, pending appeal by the filing of a proper supersedeas
bond.”); Anglo-Dutch Petroleum Int'l, Inc. v. Greenberg Peden, P.C., 522 S.W.3d
471, 492 (Tex. App.—Houston [14th Dist.] 2016, pet. denied) (stating that the Texas
Supreme Court recognizes that “a judgment debtor is entitled to superseded the
judgment while pursuing an appeal”) (quoting Miga, 299 S.W.3d at 100)). The trial
court generally has no discretion to refuse to fix the amount of a supersedeas bond.
Houtchens v. Mercer, 119 Tex. 431, 437–47, 29 S.W.2d 1031, 1033–37 (1930) (orig.
proceeding); In re It’s The Berry’s LLC, No. 12-06-00298-CV, 2006 WL 3020353,
at *2 (Tex. App.—Tyler Oct. 25, 2006, orig. proceeding) (mem. op.); Vineyard v.
Irvin, 855 S.W.2d 208, 211 (Tex. App—Corpus Christi 1993, orig. proceeding);
Elizondo v. Williams, 643 S.W.2d 765, 767 (Tex. App.—San Antonio 1982, orig.
proceeding); Amalgamated Transit Union, Local Div. 1338 v. Dallas Pub. Transit
Bd., 430 S.W.2d 107, 120 (Tex. Civ. App.—Dallas 1968, writ ref’d n.r.e.), cert.
denied, 396 U.S. 838, 90 S. Ct. 99, 24 L. Ed. 2d 89 (1969). Mandamus may issue to
compel the trial court to fix a bond amount. It’s The Berry’s LLC, 2006 WL
3020353, at *2; Elizondo, 643 S.W.2d at 767; Burgher v. Chrisman, 604 S.W.2d
536, 537 (Tex. Civ. App.—Dallas 1980, orig. proceeding); Cont’l Oil Co. v. Lesher,
500 S.W.2d 183, 185 (Tex. App.—Houston [1st Dist.] 1973, orig. proceeding). The
trial court’s discretion only extends to the amount of the bond and not to whether the
bond should be granted or whether to fix the amount of the bond. Cont’l Oil Co.,
500 S.W.3d at 185.
7
The trial court’s refusal to consider the motion and set a bond amount was
“pursuant to the plain language of the Parties’ agreements”, which we construe to
mean that the trial court interpreted the Settlement Agreement as waiving any right
of appeal by Navidea. CRG likewise contends that the trial court did not abuse its
discretion in refusing to set a bond amount because Navidea waived its right to
appeal the judgment.
We do not decide this question and do not address whether Navidea has, by
the Settlement Agreement, waived its right to appeal a complaint that the trial court’s
judgment grants relief beyond the scope of the parties’ settlement because that is a
matter for any forthcoming appeal. We hold only that the trial court’s duty to set a
supersedeas bond amount is ministerial, even if the trial court believes a party’s right
to appeal has been waived. By refusing to set supersedeas bond amount, the trial
court has effectively denied Navidea the right to file a bond in the amount it contends
is sufficient to supersede the judgment pending a potential appeal.
Navidea’s remedies by ordinary appeal will be inadequate in this instance.
The trial court signed the first amended final judgment on January 10, 2018.
Pursuant to the Settlement Agreement, if Navidea does not pay the full amount owed
to CRG within five days of the trial court’s determination of Navidea’s final
obligation amount, CRG is entitled to execute on the judgment by drawing on a letter
of credit. If CRG collects the full $7 million ordered by the judgment before Navidea
is able to appeal the judgment, that does not necessarily moot the appeal but Navidea
will be faced with attempting to recover funds collected by CRG if Navidea is
ultimately successful in an appeal. Any restitution rights Navidea may acquire by a
8
successful appeal may be rendered ineffective if the trial court does not set a
supersedeas bond amount.
Navidea has shown that (1) the trial court abused its discretion by refusing to
set a supersedeas bond amount; and (2) it does not have an adequate remedy on
appeal. See It’s The Berry’s, LLC, 2006 WL 3020353, at *4 (granting mandamus
relief when trial court failed to set bond amount); Vineyard, 855 S.W.2d at 211
(explaining that the trial court generally has no discretion to refuse to fix the amount
of a supersedeas bond and there is no method under the appellate rules to review the
trial court’s refusal to allow the appellant to file a supersedeas bond).
CONCLUSION
Having determined that the trial court abused its discretion by refusing to set
a supersedeas bond amount and Navidea does not have an adequate remedy by
appeal, we conditionally grant the writ and direct the trial court to set a supersedeas
bond amount. See It’s The Berry’s, LLC, 2006 WL 3020353, at *2 (stating that
mandamus is appropriate to compel a trial court to set the amount of a supersedeas
bond); Elizondo, 604 S.W2d at 537 (same). The writ will issue only if the trial court
fails to act in accordance with this opinion. Our January 22, 2018 order staying
enforcement of the judgment will remain in place until the expiration of seven days
following the trial court’s signed order setting a supersedeas bond amount.
PER CURIAM
Panel consists of Justices Christopher, Donovan, and Jewell.
9