Reported / Citable
Background
A jury returned a verdict against Phillip Mulacek, Michelle Mulacek Vinson, Pierre Mulacek, and Mauricette Mulacek, after which the U.S. District Court for the Southern District of Texas entered a judgment exceeding $210 million. The Mulaceks sought to stay enforcement pending appeal under Federal Rule of Civil Procedure 62(b), which permits a stay upon provision of a bond or other security.
Rather than secure the full judgment, the Mulaceks asked the district court to approve a $25 million bond under Texas Civil Practice and Remedies Code § 52.006(b)(2), which caps supersedeas bonds at that amount. The district court ruled that the Texas cap did not apply in federal court. The Mulaceks then renewed their request in the Fifth Circuit under Federal Rule of Appellate Procedure 8.
The Court’s Holding
The Fifth Circuit denied the motion and held that Texas’s $25 million supersedeas-bond cap does not apply in federal court. Federal Rule of Civil Procedure 69(a)(1), which incorporates state “procedure on execution,” concerns the mechanics of collecting a judgment—not whether or when enforcement may proceed. Reading Rule 69 to incorporate state stay rules would also render Rule 62(f), which separately addresses certain state-law stays, superfluous.
The court also held that the Texas cap is procedural rather than substantive under Erie. Although the size of a bond may affect settlement pressure, the cap regulates security for staying enforcement after liability has been fixed; it does not define the parties’ underlying rights or obligations. Judge Oldham concurred in the judgment but would have resolved the motion solely under Rule 62, which gives federal courts discretion to set bond amounts, without reaching Erie or Texas law.
Key Takeaways
- Texas’s statutory $25 million cap on supersedeas bonds does not govern stays of federal judgments.
- Rule 69(a)(1)’s incorporation of state execution procedure does not extend to state rules governing whether or when enforcement is stayed.
- A bond rule’s effect on settlement leverage does not, by itself, make the rule substantive for Erie purposes.
Why It Matters
Judgment debtors in Texas federal courts cannot rely on the state’s $25 million cap to obtain a reduced supersedeas bond pending appeal. Unless a federal court exercises its discretion to accept different security, a debtor facing a large federal judgment may need to secure substantially more than Texas law would require in state court.
The published order also clarifies the division between Rule 69’s state-law execution procedures and the federal rules governing stays, while confirming that postjudgment security requirements are procedural for Erie purposes.