Miga v. Jensen, No. 07-0123 (Tex. Oct. 23, 2009)(Jefferson) (recovery of judgment amount paid pending
appeal when judgment is later reversed, restitution after reversal, unjust enrichment, voluntary payment rule
inapplicable)
DENNIS L. MIGA v. RONALD L. JENSEN; from Tarrant County;
2nd district (02-05-00277-CV, ___ SW3d ___, 11-30-06)
The Court affirms the court of appeals' judgment. (court of appeals majority and dissenting opinion here)
Chief Justice Jefferson delivered the opinion of the Court.
View E-Briefs in MIGA v. JENSEN
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Miga v. Jensen (Tex. 2009)(Jefferson)
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Argued December 14, 2008
Chief Justice Jefferson delivered the opinion of the Court.
A judgment debtor is entitled to supersede the judgment while pursuing an appeal; this defers payment until
the matter is resolved but does not halt the accumulation of interest on the judgment. If the debtor rejects the
supersedeas option and does not otherwise suspend enforcement, the creditor may execute on the judgment
by seizing bank accounts or other property. To avoid seizure, the debtor may pay the judgment outright, which
stops the accumulation of post-judgment interest. But these alternatives to suspending enforcement put at risk
the judgment debtor’s ability to recoup the seized assets or payment when the appeal is successful. The
judgment debtor in this case, under an agreement with the judgment creditor, made a payment toward
satisfying the judgment and subsequently won the appeal. The question is whether the creditor may
nevertheless keep the money because equitable principles of restitution do not apply. Because we reject the
creditor’s approach, we affirm the court of appeals’ judgment.
I
Background
This case stems from Ronald Jensen’s breach of an option agreement with Dennis Miga, under which Miga
would have been entitled to buy stock in a privately held corporation. The facts and the parties are well known
to us. See Miga v. Jensen (“Miga I”), 96 S.W.3d 207, 209 (Tex. 2002). In the initial round of litigation, a jury
found for Miga on all issues, and the trial court rendered judgment in his favor for almost $19 million, plus more
than $4 million in prejudgment interest. To suspend execution during his appeal, Jensen posted a supersedeas
bond in the amount of $25,496,623.39, which subsequent riders increased to $29,500,000. Id. at 210. The
court of appeals largely affirmed the trial court’s judgment. Id.
Despite the bond, postjudgment interest continued to mount. Shortly after the court of appeals’ decision, the
parties entered into an agreed order under which Jensen made “an unconditional tender [to Miga] . . . of the
sum of $23,439,532.78 . . . toward satisfaction of the Judgment in order to terminate the accrual of post-
judgment interest on that sum.” Id. Jensen then filed a petition for review with this Court. Miga moved to dismiss
Jensen’s petition, arguing that Jensen’s tender mooted the appeal. We rejected that argument. Id. at 212. We
noted that, while “explicitly reserving the right to appeal when the judgment is paid would be the safe practice in
these circumstances, . . . payment on a judgment will not moot an appeal of that judgment if the judgment
debtor clearly expresses an intent that he intends to exercise his right of appeal and appellate relief is not
futile.” Id. at 211-12. We observed that, in negotiating the order, Jensen discussed its anticipated jurisdictional
effect with Miga and that “Jensen informed Miga that he believed the Agreed Order would not moot his
complaint, and that he would continue to pursue appellate review.” Id. at 212. Although “Miga . . . complain[ed]
that his refusal to accede to an express reservation of appeal in the agreed judgment and Jensen’s removal of
that language [from an earlier draft] ma[de] the payment of the judgment misleading,” we disagreed:
While Miga may have believed that Jensen’s payment mooted the appeal, he could not have had any
reasonable doubt that Jensen believed it did not, or that Jensen intended to pursue the appeal if legally allowed
to do so. Consequently, because Jensen’s payment was coupled with an expressed intent to pursue his appeal,
he did not waive his right to continue to contest the judgment. Id.
On the merits, we held that Miga’s contract damages should have been measured by the value of the option
at the time of breach, rather than at the time of trial. We reversed the court of appeals’ judgment on that issue
and rendered judgment for Miga for $1,034,400. Id. at 217. Miga moved for rehearing arguing, among other
things, that “[i]f the Court somehow implicitly [held] that Miga has any potential repayment obligation, the Court
should grant rehearing and correct that error.” The Court denied the motion without comment. On remand, the
trial court rendered a modified judgment of $1,879,382.11 in Miga’s favor. The judgment stated that it
addressed “the issues specifically directed in the mandate of the Texas Supreme Court . . . and none other.”
Accordingly, Jensen’s motion seeking to recover the lion’s share of the money he had previously paid Miga
remained unresolved.
Jensen then sought restitution of $21,560,150.67, the difference between the amount paid to
Miga—$23,439,532.78—and the amount owed under the modified judgment. When Miga refused to tender that
amount, Jensen filed this suit. The trial court granted Jensen’s and denied Miga’s motion for summary judgment.
1 A divided court of appeals affirmed. 214 S.W.3d 81. We granted the petition for review.2 51 Tex. Sup. Ct. J.
771 (Apr. 18, 2008).
II
Restitution After Reversal
Restitution after reversal has long been the rule in Texas and elsewhere. See, e.g., Bank of U.S. v. Bank of
Wash., 31 U.S. 8, 17 (1832) (“On the reversal of the judgment, the law raises an obligation in the party to the
record, who has received the benefit of the erroneous judgment, to make restitution to the other party for what
he has lost.”); Cleveland v. Tufts, 69 Tex. 580, 583 (Tex. 1888) (“It is settled that money paid upon a judgment
afterward reversed may be recovered by the party making the payment.”); see also Restatement of the Law of
Restitution (“Restatement”) § 74; Restatement of the Law (Third) - Restitution and Unjust Enrichment
(“Restatement (Third)”) § 18 (Tentative Draft No. 1 2001)3; Charles W. Tainter, 2d., Restitution of Property
Transferred Under Void or Reversed Judgments, 9 Miss L. J. 157, 158 (1936) (“The right of the successful
party . . . is conditional at least upon his having a good cause of action, and if his judgment is reversed he
must, usually, make restitution in some form to the successful appellant.”); Peticolas v. Carpenter, 53 Tex. 23,
29 (Tex. 1880) (noting that “[w]here a judgment for debt is reversed after it has been enforced by execution,
and the case is finally decided in favor of defendant, he is certainly entitled to restitution”). The question here is
whether this case presents an exception to that rule. Miga contends that it does, for three reasons.
A. Does the parties’ contract preclude restitution?
Miga first argues that because the parties’ agreement made Jensen’s $23,439,532.78 tender
“unconditional,” the restitution remedy is unavailable. See Restatement § 74 (requiring restitution upon reversal
unless it “would be inequitable or the parties contract that payment is to be final”). While it is true that “when a
valid, express contract covers the subject matter of the parties’ dispute, there can be no recovery under a
quasi-contract theory,” Fortune Prod. Co. v. Conoco, Inc., 52 S.W.3d 671, 684 (Tex. 2000), here both sides
agree that the Agreed Order is silent on restitution. The order provides that “Defendant Ronald L. Jensen
(“Jensen”) desires to make an unconditional tender to Plaintiff Dennis L. Miga (“Miga”) of the sum of
$23,439,532.78 (the “Tender Amount”) toward satisfaction of the Judgment in order to terminate the accrual of
post-judgment interest on that sum.”
Many of the parties’ arguments here repeat those made last time the case was before us, and our prior
opinion answers most of them. Miga contends that he and Jensen contracted for the payment to be final, but if
that were so, we would not have held that Jensen’s appeal—despite the payment—was viable. Miga I, 96 S.W.
3d at 212. We concluded, instead, that the parties agreed to disagree: “[w]hile Miga may have believed that
Jensen’s payment mooted the appeal, he could not have had any reasonable doubt that Jensen believed it did
not, or that Jensen intended to pursue the appeal if legally allowed to do so.” Id. We agree with the court of
appeals that “implicit in reserving a right to appeal is the right to a refund of the money in the event that the
judgment is later modified or reversed.” 214 S.W.3d at 89. Miga recognized as much in Miga I, arguing that “[i]t
is fundamentally inconsistent for Jensen to say that his ‘unconditional’ payment was conditioned on his right to
appeal and seek restitution.” (Emphasis added.) In this case, he asserts that there is “no language requiring
Miga to refund any of the $23.4 million payment in the event the judgment were later reversed or rendered,”
and Jensen agrees. They are correct—the parties no more agreed that Jensen could not seek reimbursement
than they agreed that he could. The situation would be no different had Miga executed on a non-superseded
judgment. In that instance, there would be no “agreement” that Jensen could seek restitution and no agreement
that he could not, but the right to recover the funds upon reversal of the judgment would nevertheless be
established as a matter of law. Because the parties’ agreement is silent on this point, it does not displace the
restitution-after-reversal rule.
Miga argues that our decision in Excess Underwriters at Lloyds, London v. Frank’s Casing Crew & Rental
Tools, Inc., 246 S.W.3d 42 (Tex. 2008), in which we declined to recognize an equitable right of reimbursement,
should apply here. We disagree. This case involves restitution upon reversal of a judgment, not insurers
seeking restitution from an insured on a third-party claim, against the backdrop of a highly regulated industry.
See Frank’s Casing, 246 S.W.3d at 46-47 (noting that “allowing an insurer to settle claims and then sue its
policyholder ‘foster[s] conflict and distrust in the relationship between an insurer and its insured’”) (quoting Tex.
Ass’n of County Gov’t Risk Mgmt Pool v. Matagorda County, 52 S.W.3d 128, 134 (Tex. 2000)). Restitution in
insurance-related cases involves policy concerns not present here:
[D]isputes between insurers and policyholders over the insurer’s duty to pay a claim, or to settle or defend a
claim brought against the policyholder, present special difficulties for the law of restitution, because the insurer’
s duty to indemnify and defend is subject to extensive regulation under local law.
Restatement (Third) § 35, cmt. c (Tentative Draft No. 3 2004). In addition, in Frank’s Casing, “the insurance
policies spell[ed] out the parties’ respective obligations in great detail,” Frank’s Casing, 246 S.W.3d at 50, while
the Agreed Order did not address the effect of a successful appeal. We agree with Jensen that Frank’s Casing
is inapposite.
B. Was Jensen’s payment voluntary?
Second, Miga argues that the voluntary payment rule precludes restitution. This common law principle
provides that “money voluntarily paid on a claim of right, with full knowledge of all the facts, in the absence of
fraud, duress, or compulsion, cannot be recovered back merely because the party at the time of payment was
ignorant of or mistook the law as to his liability.” Pennell v. United Ins. Co., 243 S.W.2d 572, 576 (Tex. 1951)
(quoting 40 Am. Jur. § 205 (1942)). It is a defense to a restitution claim. BMG Direct Mktg., Inc. v. Peake, 178 S.
W.3d 763, 768-69 (Tex. 2005) (citing Restatement (Third) § 6 cmt. e (Tentative Draft No. 1, 2001)) (“The
restitution claim to recover a payment in excess of an underlying liability . . . meets an important limitation in the
so-called voluntary-payment rule.”)). The rule, “widely used by parties and some Texas courts at one time,” has
diminished in scope, as “the rule’s equitable policy concerns have been addressed through statutory or other
legal remedies.” Peake, 178 S.W.3d at 771 (noting that “this Court has affirmatively applied the rule only once
in the last forty years, and that holding has itself been modified since”). But see Dallas County Cmty. College
Dist. v. Bolton, 185 S.W.3d 868, 883 (Tex. 2005) (holding that voluntary payment rule barred claim for
repayment of student services fee imposed by public junior college district).
The voluntary payment rule precludes a party from “pay[ing] out his money, leading the other party to act as
though the matter were closed, and then be in the position to change his mind and invoke the aid of the courts
to get it back.” Peake, 178 S.W.3d at 768-69. In Miga I, we rejected the notion that the voluntary payment rule
mooted Jensen’s appeal. Miga I, 96 S.W.3d at 211-12. As we made clear, Jensen never led Miga to believe that
the matter was closed. His pursuit of an appeal—and stated intent to seek restitution if that appeal was
successful—removed any reasonable doubt to the contrary. Id.; see also Peake, 178 S.W.3d at 770. The initial
filings in this Court in Miga I show that the parties appreciated these issues even then. Miga complained that
Jensen “cannot reverse course now and seek to recover the payment,” while Jensen responded that the
controversy could ultimately be resolved “either by an appropriate order that Miga return the wrongly awarded
funds, or by a set-off against any liability that might result in the unlikely event that the Court granted Miga’s
petition and decided in his favor the issues raised therein.”
In one of only two cases in which we have affirmatively applied the voluntary payment rule in the last forty
years, we held that a services fee paid by community college students fell within the rule: “In light of the choices
retained and [the students’] right to request a waiver of the fees or otherwise protest the imposition of the fee,
any coercion that existed was not actual and imminent and did not constitute duress as a matter of law,” making
the payment voluntary. Bolton, 185 S.W.3d at 883. We recognized that certain financial incentives or
disincentives, like the fee, do not “transform a choice into coercion.” Id.
In contrast, Jensen faced not only mounting post-judgment interest but the coercive power of the judgment.
In Highland Church of Christ v. Powell, 640 S.W.2d 235, 237 (Tex. 1982), we hinted at this notion, determining
that the voluntary payment rule was inapplicable when a church paid a judgment but made clear its intent to
pursue an appeal. We held that the church’s payment was made under “implied duress,” caused by accruing
penalties and interest, as well as the embarrassment the Church would have faced had execution issued
against it. Highland Church, 640 S.W.2d at 237. The Third Restatement explains it more fully:
Nor is the restitution claim of the judgment debtor barred by the doctrine of “voluntary payment” if the debtor
elects to pay a judgment that he or she regards as invalid, without waiting for the issuance or levy of execution.
On the contrary, any payment made in response to a judgment is treated as a payment made under
compulsion, at least for the purpose of permitting the judgment debtor to avoid the consequences that would
flow from regarding the payment as “voluntary.”
Restatement (Third), § 18, cmt. c; see also id. ch. 2, Introductory Note (Tentative Draft No. 1, 2001) (referring
to a payment made in compliance with a judgment as “[a] transfer[] made under legal compulsion”);
Restatement § 74, cmt. b. (noting coercive effect of judgment).
The court of appeals held that the voluntary payment rule did not apply because “Jensen signed the Agreed
Order under economic duress.” 214 S.W.3d at 92 (noting that “interest on the judgment was accruing at a rate
of ten percent, compounded annually”). In Miga I, we observed that, “[l]ike Highland Church, Jensen was
‘justifiably anxious to avoid the . . . interest which would accrue while the case was on appeal.’” Miga I, 96 S.W.
3d at 211 (quoting Highland Church, 640 S.W.2d at 237). Miga complains that, under Bolton, the mere running
of interest on a judgment is insufficient to constitute duress, and Jensen’s ability to supersede the judgment
eliminated any compulsion. But, as outlined above, it is not just the interest but the judgment’s coercive effect
that make the payment involuntary, regardless of the judgment debtor’s means. To avoid execution pending
appeal, Jensen could either pay the judgment or make arrangements to suspend its enforcement. See Tex. R.
App. P. 24.1. His ability to secure a supersedeas bond does not make his payment voluntary. See Restatement
§ 74, cmt. b (noting that, upon reversal of a judgment, amounts paid can be recovered “although no execution
was issued, and although the payor could have obtained a supersedeas or stay of execution”); Restatement
(Third) § 18, cmt. a (noting that “a party is under no obligation to postpone compliance with a judgment that he
seeks to overturn”). When, as here, payment on a judgment is coupled with an expressed intent to appeal when
appellate relief is attainable, see Miga I, 96 S.W.3d at 212, the voluntary payment rule will not preclude
restitution if the judgment is later reversed.
C. Does Miga’s tax payment raise a fact issue on the equities of restitution?
Finally, Miga asserts that restitution would be inequitable because, believing the funds to be his, he paid $5
million in income taxes. See Restatement § 74 (requiring restitution upon reversal “unless restitution would be
inequitable”). But Miga does not contend that restoring $5 million of the $21 million he received would be
inequitable—he argues that restoring any of the money would be inequitable. In response to an interrogatory
that asked whether Miga contended he should be excused from making restitution “of all or any part of the
Payment on the grounds that [he] lack[ed] sufficient means to make restitution in full,” Miga answered:
No.
Defendants contend that Plaintiff’s claims are barred in their entirety by the express terms of the Rule 11
Agreement between Jensen and Dennis Miga, which provides that the sums Jensen seeks to recover were paid
unconditionally to Dennis Miga.
Miga successfully resisted discovery of his net worth on the same basis, and still maintains that the tax payment
is an absolute defense to a restitution claim.
Miga’s contention is incorrect. Restitution is rooted in principles of unjust enrichment. See Restatement § 1
(“A person who has been unjustly enriched at the expense of another is required to make restitution to the
other.”); Restatement (Third) § 1 (Discussion Draft 2000) (“A person who is unjustly enriched at the expense of
another is liable in restitution to the other.”). While the law of restitution recognizes a defense based on change
of position, the defense generally applies only to the extent that restitution would cause loss to an innocent
party, not the judgment creditor. See, e.g., Restatement § 142, cmt. f (recognizing change of circumstances
defense and providing that “[i]f part of the subject matter is lost or destroyed, the recipient still has a duty of
making restitution of the remainder”); see also id. § 74, cmt. c (providing “[n]or is change of position a defense
to the creditor”).
Moreover, to assess equities, we must also consider Miga’s conduct. Miga’s tax obligation arose because he
exercised control over Jensen’s $23,439,532.78 tender. Well aware that Jensen would continue his appellate
fight to reverse the judgment, Miga could have opted to decline the payment and await the appellate outcome.
Instead, Miga gambled on the strength of his appeal. Jensen’s ultimate success meant that the multimillion
dollar trial court judgment was, in large part, erroneous. Prohibiting restitution would penalize Jensen for the
court’s mistake and is inimical to the unjust enrichment principles underlying the doctrine. We can no more fault
Jensen for his dogged pursuit of an appellate remedy than reward Miga for wagering on an affirmation of the
judgment. The trial court and the court of appeals correctly concluded that, as a matter of law, restitution
comports with the equities.
III
Conclusion
We affirm the court of appeals’ judgment. Tex. R. App. P. 60.2(a).
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Wallace B. Jefferson
Chief Justice
Opinion Delivered: October 23, 2009
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1 Miga’s wife, Mary Patricia Miga, was a defendant in the trial court but has been dismissed by stipulation.
2 We received amicus curiae briefs from Sharon E. Callaway, David M. Gunn, Deborah G. Hankinson,, Shannon H. Ratliff, Robert
M. “Randy” Roach, Jr., and Stephen G. Tipps, supporting parts of Miga’s petition for review; and from Professor Douglas Laycock
and the Texas Association of Business, supporting Jensen’s response.
3 The Restatement of the Law (Third), Restitution and Unjust Enrichment will replace the original Restatement of Restitution,
promulgated in 1936. This draft has been tentatively approved by both the Council and the Membership. See http://www.ali.
org/index.cfm?fuseaction=projects.proj_ip&projectid=14 (last visited Oct. 21, 2009 and copy available in Clerk of Court’s file).