In Re Martin Lee Kay

Supreme Court of Texas

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No. 24-0149

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In re Martin Lee Kay,

Relator

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On Petition for Writ of Mandamus

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PER CURIAM

This mandamus petition arises out of an appeal from a

$54 million judgment awarded to real party in interest Laura Yosowitz

against her ex-husband, relator Martin Lee Kay. Kay argues the trial

court abused its discretion by (1) requiring him to post judgment

security in excess of statutory caps tied to net worth, and (2) refusing to

accept his offer of alternative security. Although we find no basis to

disturb the trial court’s finding of Kay’s net worth, we hold the court of

appeals abused its discretion in concluding alternative security was

categorically unavailable to Kay. We therefore conditionally grant

mandamus relief and direct the court of appeals to consider in the first

instance whether Kay conclusively established the adequacy of his

alternative security.

I.

Yosowitz sued Kay for breach of their divorce agreement and

fiduciary duties. Following a jury trial, the trial court awarded Yosowitz

roughly $54 million in actual damages. Seeking to suspend enforcement

of the judgment, Kay filed an affidavit of net worth, see TEX. R. APP.

P. 24.2(a)(1)(A), (c)(1), which Yosowitz opposed. Kay’s affidavit asserted

he has a net worth of $754,373. Kay also deposited two cashier’s checks

totaling half of his asserted net worth. See TEX. R. APP. P. 24.1(c)(1)(B),

24.2(a)(1)(B).

The trial court held a multi-day bond hearing at which the parties

principally contested Kay’s net worth. Specifically, the parties disputed

the value of Kay’s 8,277,500 shares in his privately held startup, Entera

Holdings, Inc. 1 Relying on Kay’s accounts of unsuccessful attempts to

sell his Entera shares to qualified investors or obtain a loan using the

shares as collateral, 2 Kay’s experts opined that neither the $46 million

figure from a 2022 appraisal commissioned by Entera or the

$182 million valuation offered by Yosowitz’s experts were

1 Yosowitz did not dispute any other component of Kay’s net-

worth calculation.

2 Kay approached Entera’s two institutional investors, Goldman

Sachs and Bullpen Capital, but the investors refused to extend Kay a

loan collateralized by his restricted shares or to purchase any of his

shares. Kay also made unsuccessful inquiries with the Lovett Agency

and Bernstein about seeking a loan or supersedeas bond with the shares

as collateral.

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representative of the shares’ value. 3 Kay’s experts instead opined the

shares should be valued at $0 due to legal restrictions on transferring

the unregistered securities and consequent low marketability.

Yosowitz’s experts relied on similar data points as Kay’s experts but

opined that no liquidity discount was necessary because it was already

inherent in the underlying number. Yosowitz’s experts also testified

that they applied generally accepted accounting principles (GAAP) in

calculating Kay’s net worth.

Crediting the valuation opinion of Yosowitz’s experts over Kay’s 4

and impliedly rejecting Kay’s offer to tender the stock certificate as

alternative security, 5 the trial court found Kay’s net worth was

$147 million and ordered him to submit a $25 million bond or cash

deposit in order to supersede the judgment. 6 Kay then sought review of

3 Starting with the per-share price from Entera’s Series A-1

Preferred round of equity financing, in which Entera issued 779,505

shares at $22.45 per share to investors, the Entera-commissioned study

applied a 40% discount for lack of marketability, resulting in a per-share

value of $5.39. The value also included a 27.15% discount to account

“for market and Company-specific changes since the transaction.”

4 The trial court found that the testimony of Yosowitz’s experts

was credible, supported by credible and consistent evidence, and based

on sound methodology. The trial court also found that Kay’s experts’

calculations were neither credible nor consistent with the evidence and

that their underlying methodology was not sound.

5 During the bond hearing, Kay offered to tender the stock

certificate for his Entera shares instead of a bond. See TEX. R. APP.

P. 24.1(a)(4).

6 The trial court also denied Kay’s related request to lower the

required bond amount to $1,000 due to substantial hardship, which Kay

has since abandoned.

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the trial court’s supersedeas bond order by motion with the court of

appeals. See TEX. R. APP. P. 24.4(a).

The court of appeals affirmed. First, the court rejected Kay’s

contention that the trial court abused its discretion in finding that he

had a net worth over $10 million. Relying on the trial court’s role as the

sole judge of credibility, the court of appeals upheld the trial court’s

discretion to accept Yosowitz’s evidence that Kay might be able to sell

the Entera shares under an applicable exemption. By extension, the

court concluded, the trial court validly rejected Kay’s evidence that the

shares lacked any value due to his inability to sell them. Second, the

court of appeals rejected Kay’s contention that the trial court abused its

discretion in declining to accept the stock certificate for his Entera

shares in lieu of a deposit or bond. The court held that under Texas Rule

of Appellate Procedure 24.2(e), that option is available only to judgment

debtors “with a net worth of less than $10 million.” TEX. R. APP. P.

24.2(e)(1).

Kay then filed a mandamus petition in this Court. See TEX. R.

APP. P. 24.4(a). He argues that the court of appeals abused its discretion

by (1) affirming the trial court’s calculation of his net worth, and

(2) holding that alternative security is available only to judgment

debtors with net worths below $10 million.

II.

“Mandamus will issue only if a court has clearly abused its

discretion . . . .” In re Prudential Ins. Co. of Am., 148 S.W.3d 124, 135-

36 (Tex. 2004). The abuse of discretion requirement “is fulfilled where

a trial court acts without reference to guiding rules or principles or in

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an arbitrary or unreasonable manner. In re Garza, 544 S.W.3d 386, 840

(Tex. 2018). An error of law or erroneous application of law to fact is an

abuse of discretion. In re Ill. Nat’l Ins. Co., 685 S.W.3d 826, 835 (Tex.

2024). 7

III.

We first consider the parties’ dispute regarding the valuation of

Kay’s Entera shares and his net worth. To suspend execution of a money

judgment on appeal, a judgment debtor must post security as required

by Sections 52.006 and 52.007 of the Texas Civil Practice and Remedies

Code and Rule 24 of the Texas Rules of Appellate Procedure. The Rules

of Appellate Procedure allow a judgment debtor to supersede a judgment

by (1) filing a good and sufficient bond (or cash equivalent) with the trial

court clerk, or (2) “providing alternate security under Rule 24.2(e) or

ordered by the court.” TEX. R. APP. P. 24.1(a)(2)-(4). For a bond or cash

deposit, the amount of security necessary to supersede a money

judgment must equal the sum of the amount of compensatory damages

and costs awarded in the judgment, as well as interest for the estimated

duration of the appeal. TEX. CIV. PRAC. & REM. CODE § 52.006(a); see

also TEX. R. APP. P. 24.1(b)(1)(A), (c)(2), 24.2(a)(1). But the amount

7 Generally, a mandamus petitioner must also demonstrate the

absence of an adequate remedy by appeal. In re Prudential Ins. Co. of

Am., 148 S.W.3d at 135-36. But a trial court’s post-judgment order on

the amount and type of security is not part of the final judgment and

thus not subject to review on appeal from that judgment. See TEX. R.

APP. P. 24.4. Because Rule 24.4 provides express authorization for this

Court’s review of supersedeas bond orders by petition for writ of

mandamus, no showing of an inadequate appellate remedy is required.

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required must not exceed the lesser of: “(1) 50 percent of the judgment

debtor’s current net worth; or (2) $25 million.” TEX. CIV. PRAC. & REM.

CODE § 52.006(b); see also TEX. R. APP. P. 24.2(a)(1).

Kay contends the trial court’s unreasonably high valuation of his

net worth allowed the court to require a bond of $25 million instead of

the roughly $400,000 in cashier’s checks he deposited. In particular,

Kay emphasizes that buyers for his Entera shares must meet certain

criteria, including access to detailed financial information about Entera

that he is not privileged to disclose. Although Kay points to practical

difficulties in finding a buyer who qualifies for one of the available

exemptions, he concedes the sale of his Entera shares is not “an absolute

impossibility.” Instead, Kay argues that Yosowitz failed to identify a

buyer who meets that qualification aside from the two he already

approached. It is the “judgment debtor,” however, who “has the burden

of proving net worth.” TEX. R. APP. P. 24.2(c)(3).

All parties agree the trial court’s calculation of Kay’s net worth

depended entirely on its credibility determinations as to the value of

Kay’s Entera shares. Each party’s team of experts testified in support

of their respective positions, and the trial court found that Yosowitz’s

team was more credible. Cf. City of Keller v. Wilson, 168 S.W.3d 802,

819 (Tex. 2005) (explaining that the factfinder is “the sole judge[] of the

credibility of the witnesses and the weight to give their testimony” and

that “[r]eviewing courts cannot impose their own opinions to the

contrary”). We may not resolve disputed factual matters in a mandamus

proceeding. In re Angelini, 186 S.W.3d 558, 560 (Tex. 2006). Under

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these circumstances, the trial court did not abuse its discretion in

adopting Yosowitz’s valuation of the Entera shares over Kay’s.

IV.

Having found no basis to set aside the trial court’s finding of Kay’s

net worth, we next determine whether the court of appeals erred in

construing Rules 24.1 and 24.2 of the Rules of Appellate Procedure.

Citing Rule 24.2(e)(1), the court of appeals determined that alternative

security is available only to judgment debtors whose net worth is less

than $10 million. We disagree.

Rule 24.2(e) was added in 2023 to address the availability of

alternative security “in [c]ertain [c]ases.” TEX. R. APP. P. 24.2(e). The

addition followed the Legislature’s enactment of Section 52.007 of the

Civil Practice and Remedies Code, which provides that if “a judgment

debtor with a net worth of less than $10 million” makes a required

showing, “the trial court shall allow the judgment debtor to post

alternative security.” Under Rule 24.2(e), the judge is likewise required

to allow alternative security for such debtors. See TEX. R. APP.

P. 24.2(e)(1)-(2).

But Rule 24.2(e) is not the exclusive authority for alternative

security. Instead, Rule 24.1(a) has long permitted a court to order

alternative security, and this permission was preserved by the 2023

amendments. Rule 24.1(a) now contemplates supersedeas by, among

other things, “providing alternate security under Rule 24.2(e) or ordered

by the court.” TEX. R. APP. P. 24.1(a)(4) (emphasis added). Thus, trial

courts are not limited to the alternative security that Rule 24.2(e)

requires in certain cases; they retain discretion to allow alternative

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security under Rule 24.1(a)(4) for judgment debtors with net worths of

$10 million or more.

We therefore hold the court of appeals erred in concluding that

the alternative-security option was categorically unavailable to Kay.

Mandamus relief is appropriate in these circumstances. See TEX. R. APP.

P. 24.4(a); see also In re Corral-Lerma, 451 S.W.3d 385, 388 (Tex. 2014)

(granting mandamus relief in supersedeas case).

Given the court of appeals’ incorrect conclusion that alternative

security was not an option, that court did not reach the question whether

the trial court abused its discretion in impliedly rejecting Kay’s offer to

tender the Entera stock certificate as alternative security. Because the

parties dispute whether Kay provided sufficient proof of the adequacy of

the stock certificate as alternative security, see TEX. R. APP. P. 24.1(d),

we direct the court of appeals to consider that question in the first

instance. We express no view as to the outcome on remand. But we note

that if a court finds a judgment debtor’s net worth to require a

$25 million supersedeas bond only because of the valuation of particular

personal property, an unrestricted tender of that very property into the

registry of the court generally will constitute adequate alternative

security unless the record demonstrates a particular need for different

treatment.

V.

Accordingly, without hearing oral argument, we conditionally

grant mandamus relief and direct the court of appeals to determine

whether the trial court abused its discretion in refusing to accept the

Entera stock certificate as alternative security. See TEX. R. APP.

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P. 52.8(c). We are confident the court of appeals will comply, and our

writ will issue only if it does not.

OPINION DELIVERED: June 13, 2025

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