In Ahlgren v. Ahlgren, the plaintiff asserted that the defendant breached fiduciary duties by taking assets held in trust for the plaintiff’s father. No. 13-22-00029-CV, 2022 Tex. App. LEXIS 2843 (Tex. App.—Corpus Christi April 25, 2022, no pet. history). The jury found for the plaintiff and awarded him fifty percent of certain assets. “It found that the value of Nim’s share of the assets at the time of Paco’s breach was as follows: (1) $9,074,390 4 in Bitcoin; (2) $1,900,000 for the Park City property; and (3) $375,000 for the Austin property. The jury was not asked to value Nim’s interest in gold. Finally, the jury found that Paco earned a $29,329,378 profit resulting from his breach.” Id. The trial court signed a final judgment awarding:
$29,329,378 in damages and a constructive trust over the following property: (1) 1,079 Bitcoins (fifty percent of the 2,158 Bitcoins held by Paco); (2) a fifty percent interest in the Park City property; (3) a fifty percent interest in the Austin property; and (4) a fifty percent interest in gold held by Paco… The final judgment included a permanent injunction restraining appellants from “selling, transferring, or encumbering” the constructive trust assets. It also restrained appellants from: selling, transferring, or encumbering any cryptocurrency, including [B]itcoin, (i) under the direct or indirect control or ownership of [appellants] as of the date of this judgment (including the proceeds of any such cryptocurrency . . .) or (ii) received from [appellants] after March 13, 2020 [the date appellees filed suit], except as provided in Paragraph 5 [of the permanent injunction.]
Id. The court then set an amount that would be required to supersede certain aspects of the judgment, and the defendant challenged that supersedeas order in the court of appeals. On any party’s motion, a court of appeals may review: (1) the sufficiency or excessiveness of the amount of security, (2) the sureties on a bond, (3) the type of security, (4) the determination whether to permit suspension of enforcement, and (5) the trial court’s exercise of discretion in ordering the amount and type of security. Id. (Tex. R. App. P. 24.4(a)).
The defendants argued that the trial court abused its discretion in setting the amount of security for the monetary award at $25 million because the award constituted an equitable remedy and was not for compensatory damages. The appellate court noted that “with respect to money judgments, a judgment debtor is only required to post security for compensatory damages, interest, and costs [and] ‘compensatory damages’ include damages intended to compensate a claimant for an ‘actual economic or pecuniary loss.’” Id. The court reversed the trial court’s order on this issue:
We conclude that the monetary award constitutes the equitable remedy of profit disgorgement. This classification tracks the judgment’s explanation of the award, appellees’ pleadings which sought “profit disgorgement,” and appellees’ representation to the trial court that the award represented Paco’s “ill-gotten gains/profit in breach of his fiduciary duties.” “Disgorgement is an equitable forfeiture of benefits wrongfully obtained. . . .” Longview Energy, 464 S.W.3d at 361. Such a remedy is available where, as here, “a person who renders service to another in a relationship of trust . . . breaches that trust.” Id. (quoting Burrow v. Arce, 997 S.W.2d 229, 237 (Tex. 1999)). “[E]quitable forfeiture ‘is not mainly compensatory . . . nor is it mainly punitive’ and ‘cannot . . . be measured by . . . actual damages.'” Id. (quoting Burrow, 997 S.W.2d at 240). “The main purpose of forfeiture is not to compensate an injured principal, . . . [it] is to protect relationships of trust by discouraging agents’ disloyalty.” Burrow, 997 S.W.2d at 238. 6
Because the monetary award does not constitute compensatory damages, appellants are not required to post security for that amount. See Longview Energy, 464 S.W.3d at 361 (concluding that judgment debtor was not required to post security for profit disgorgement awarded in final judgment). Rather, to supersede this portion of the judgment, appellants are only required to post security in the amount of costs awarded in the judgment. See Tex. Civ. Prac. & Rem. Code Ann. § 52.006(A); Tex. R. App. P. 24.2(a)(1). Therefore, we conclude the trial court abused its discretion by requiring $25,000,000 as security for the monetary award.
Id. The court also held “that the trial court abused its discretion in conditioning the suspension of the monetary award on appellants’ posting of security for other portions of the judgment.” Id.
The defendants also challenged the supersedes required to suspend the constructive trust portion of the judgment. “The constructive trust awards appellees an interest in both real property (real estate) and personal property (Bitcoin and gold).” Id. The court noted:
Texas Rule of Appellate Procedure 24.2(a)(2) provides: When the judgment is for the recovery of an interest in real or personal property, the trial court will determine the type of security that the judgment debtor must post. The amount of that security must be at least: (A) the value of the property interest’s rent or revenue, if the property interest is real; or (B) the value of the property interest on the date when the court rendered judgment, if the property interest is personal. Tex. R. App. P. 24.2(a)(2). Unlike the provisions governing security for money judgments, Rule 24.2(a)(2) provides the trial court with considerable discretion to determine the amount and “the type of security that the judgment debtor must post.”
Id. The court affirmed this aspect of the trial court’s judgment:
Here, the record establishes that, among the constructive trust assets, the Bitcoin holdings were the most valuable. Appellees suggested to the trial court that the value of appellees’ interest in Bitcoin at the time of trial-$45,504,235.40 7 -would be adequate security for the entirety of the constructive trust. Thus, this amount served as a floor for the amount of security required. While the trial court could have required more security, it could not have required less.
Id. The court also affirmed the trial court’s order in requiring the same security for both the constructive trust and the permanent injunction aspect of the judgment.
Regarding the post-judgment injunction aspect of the order, the court of appeals affirmed, noting that the appellate rules provide: “The trial court may enjoin the judgment debtor from dissipating or transferring assets to avoid satisfaction of the judgment, but the trial court may not make any order that interferes with the judgment debtor’s use, transfer, conveyance, or dissipation of assets in the normal course of business.” Id. (citing Tex. R. App. P. 24.2(d)).