Here’s an analysis of the Supreme Court of Texas case, In re Martin Lee Kay (No. 24-0149, decided June 13, 2025). You can read the full opinion by clicking here.
Case Overview
Background:
Laura Yosowitz won a $54 million judgment against her ex-husband, Martin Lee Kay, for breach of their divorce agreement and fiduciary duties. Kay wanted to suspend the enforcement of the judgment while he appealed, so he filed an affidavit claiming his net worth was less than $1 million, and offered cashier’s checks representing half that value. The main dispute was how much Kay’s shares in his private startup, Entera Holdings, Inc., were worth. Yosowitz argued they were valuable; Kay argued they were essentially worthless due to restrictions on selling them.
Key Issues:
- Did the trial court abuse its discretion in valuing Kay’s net worth (especially his Entera shares)?
- Did the courts err by refusing Kay’s offer of alternative security (tendering his Entera stock certificate instead of a cash bond)?
Court Findings and Reasoning
1. Net Worth Valuation
- Kay’s Argument:
His Entera shares couldn’t be sold easily, so they shouldn’t be valued highly for bond purposes. - Yosowitz’s Argument:
Her experts valued the shares at over $100 million, following accepted accounting practices, and said restrictions didn’t wipe out their value. - Trial Court’s Decision:
Sided with Yosowitz, found Kay’s net worth to be $147 million, and required a $25 million bond to suspend the judgment. - Appellate Review:
Affirmed the trial court. Said courts are the “sole judge of credibility,” and Yosowitz’s experts were credible. - Supreme Court:
Agreed there was no abuse of discretion here. The trial court’s decision on credibility and valuation stood.
2. Alternative Security
- Kay’s Offer:
Instead of a cash bond, he offered to surrender his Entera stock certificate as security. - Lower Courts:
Rejected this, citing rules that alternative security is only available for people with net worth under $10 million. - Supreme Court:
Disagreed with this reading. Rule 24.2(e) (added in 2023) requires courts to accept alternative security for those under $10 million, but doesn’t mean others can’t offer it under Rule 24.1(a)(4). The trial court has discretion to allow alternative forms of security for anyone, not just debtors under $10 million.
Outcome
- The Supreme Court conditionally granted mandamus relief:
- Net Worth: The trial court’s valuation stands.
- Alternative Security: The appellate court erred by saying alternative security was categorically unavailable to Kay. The case is sent back to the court of appeals to decide if Kay’s proposed alternative (the stock certificate) is adequate security given the size and nature of the judgment.
- The Supreme Court notes that, in general, if a high bond is required mainly because of a unique asset, a debtor offering that asset as security should generally be considered—unless there’s a clear reason not to.
Key Takeaways
- Trial courts have broad discretion in deciding net worth based on conflicting expert testimony.
- Alternative security for judgments is not limited to those with low net worth; higher net worth individuals can also propose alternatives, at the trial court’s discretion.
- The adequacy of alternative security (like stock certificates instead of cash bonds) must be considered on a case-by-case basis.
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