In In the Interest of K.K.W., a father and mother, who were settlors, filed competing claims regarding the interpretation of a trust for their son. No. 05-16-00795-CV, 2018 Tex. App. LEXIS 2174 (Tex. App.—Dallas March 27, 2018, no pet. history). The trial court found for the father, granted him declaratory relief regarding the interpretation of the trust document, awarded $453,866.52 in attorney’s fees to the father, $578,115.62 in attorney’s fees to the trustee, court costs and also awarded $200,000 in conditional appellate attorney’s fees to father and $145,000 in conditional appellate attorney’s fees to the trustee. Based on costs and conditional appellate fees, the trial court set the bond at $401,475.00 to suspend enforcement of the judgment. The mother appealed the court’s security ruling. The court of appeals first discussed the rules for superseding a judgment:
Judgments for the recovery of money are subject to rule 24.2(a)(1), which provides that the amount of the bond, deposit, or security must equal the sum of compensatory damages awarded in the judgment, interest for the estimated duration of the appeal, and costs awarded in the judgment. Tex. R. App. P. 24.2(a)(1). The security amount for a judgment that is for the recovery of money may not exceed the lesser of 50% of the judgment debtor’s current net worth or 25 million dollars. Tex. R. App. P. 24.2(a)(1)(A)-(B). 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). Rule 24.2(a)(3) is routinely applied to judgments that are declaratory or injunctive in nature.
Id. The court then held that an award of attorney’s fees is generally not included in the amount of security because they are not damages or costs. The court held that “If this were only a money judgment, then the security is excessive because it exceeds the amount of costs plus interest on those costs for the estimated duration of the appeal.” Id. But the court went on to discuss the impact of the declaratory relief in the judgment:
But there is also a declaratory component of the judgment and, therefore, the judgment is partially a judgment for something other than money or an interest in property. Under Rule 24.2(a)(3), the amount of security to suspend enforcement of declaratory relief “must adequately protect the judgment creditor against loss or damage the appeal might cause.” Tex. R. App. P. 24.2(a)(3). The additional security awarded to suspend enforcement of the declaratory relief consists solely of conditional appellate fees awarded in the judgment. Such fees are not properly included as security and are excessive as a matter of law. The reasons are simple.
First, a court is prohibited from requiring a party to post bond for conditional appellate fees… Second, because recovery of conditional appellate fees are conditioned on a future event that may or may not occur, such fees are not a loss or damage that an appeal might cause and, therefore, are not properly included in the amount of security to suspend enforcement of a declaratory judgment… Finally, conditional appellate fees are attorney’s fees, albeit fees not yet earned, and attorney’s fees incurred in the prosecution or defense of a claim may not be included in the amount of security ordered by a trial court. Simply put, the trial court was prohibited from including conditional appellate fees in the security amount.
Appellees’ attempt to characterize the security amount as something other than security for the conditional appellate fees is also unavailing. We disagree with appellees’ contention that the trial court could pick any reasonable number for the security amount as long as it was less than 50% of Mother’s net worth. The 50% of net worth limit applies to money judgments, and appellees maintain that this judgment is not for the recovery of money. Tex. R. App. P. 24.2(a)(1)(A). Instead, they argue that the additional security is to suspend execution of the declaratory judgment and is proper under Rule 24.2(a)(3). Under that rule, the trial court was charged with determining a security amount that could adequately protect appellees against loss of damage that the appeal might cause them in relation to the declaratory judgment. But there is no evidence in the record showing that the appeal will harm appellees in any way as to the declaratory judgment. The declaratory relief in the judgment does not require Mother to take any action or enjoin Mother from certain actions such that suspending enforcement of that part of the judgment would somehow harm Father or the Trustee. On the contrary, no changes were made to the Trust or its operations. All parties must simply continue acting under the Trust as they always have. No security is needed to protect appellees from any harm an appeal may cause in relation to the declaratory relief.
Id. The court decreased the amount of the bond to cover the court costs and interest thereon.