125 F.R.D. 185 | S.D. Fla. | 1989
ORDER ON MOTION FOR STAY AND SETTING TERMS OF SUPERSEDEAS
Before the court is the movants’
A literal reading of Fed.R.Civ.P. 62(d) indicates that a court can issue a stay pending appeal only when the judgment debtor posts a supersedeas bond. See Moore, J. and Jucas, J.D., 7 Moore’s Federal Practice, § 62.06 at 62-31 (2d ed. 1987). The only exceptions to this rule appear to be the special cases of Fed.R.Civ.P. 62(a), which are actions involving injunctions, receiverships or patent accountings.
Federal courts today generally follow Fed.R.Civ.P. 62(d) unless a case presents one of two rare instances. See Olympia Equipment Leasing Co. v. Western Union Telegraph Co., 786 F.2d 794 (7th Cir.1986). See also Federal Prescription Service, Inc. v. American Pharmaceutical Assoc., 636 F.2d 755 (D.C.Cir. 1980). In these two circumstances the posting of a bond to secure a stay pending appeal is inappropriate: (1) where the defendant’s ability to pay the judgment is so plain that the cost of the bond would be a waste of money, and, (2) where the requirement would put the defendant’s other creditors in undue jeopardy. Olympia Equipment, 786 F.2d at 796 (citing authority). In such a case, the district court may grant the stay without the posting of any security, or accept a form of alternative security. See Federal Prescription Service, Inc., 636 F.2d 755, 758 (D.C.Cir.1980); Poplar Grove Planting and Refining Co. v. Bache Halsey Stuart, Inc., 600 F.2d 1189, 1191 (5th Cir.1979).
The movants argue that this case is a similar rare instance, and ask the court to exercise its discretion under Fed.R.Civ.P. 62(d) to construct a derivative of the second circumstance.. In their motion for a stay,
Contrary to the movants’ argument, a prospective iiiability to pay a judgment must defeat the request for a stay without a bond. The court can only dispense with the requirement for a bond after the judgment debtor has “objectively demonstrated his ability to satisfy the judgment and maintain the same degree of solvency through the appellate process.” 7 Moore’s Federal Practice, § 62.06 at 62-34 (2d ed. 1987). The District of Columbia Circuit, therefore, has approved a district court’s dispensing of the bond posting requirement where a wealthy judgment debtor’s net worth was forty-seven times the amount of the judgment, and the debtor’s ability to respond was unquestioned. See Federal Prescription Service, Inc. v. American Pharmaceutical Assoc., 636 F.2d 755, 761 (D.C.Cir.1980); accord Northern Indiana Public Service Co. v. Carbon County Coal Co., 799 F.2d 265, 281 (7th Cir.1986).
Similarly, in order to obtain the posting of alternative security, the judgment debt- or must demonstrate a present financial ability to “facially respond to a money judgment and be willing to present to the court a financially secure plan for maintaining that same degree of solvency during the appeal.” See Poplar Grove Planting and Refining Co., Inc. v. Bache Halsey Stuart, Inc., 600 F.2d 1189, 1191 (5th Cir. 1979). For this reason, the Tenth Circuit affirmed a district court’s requirement of the posting of substitute collateral in a case similar to the one here. See Miami Intern. Realty Co. v. Paynter, 807 F.2d 871, 874 (10th Cir.1986). Paynter involved an attorney who faced a $2.1 million malpractice verdict. The attorney, who three days after the verdict drained his checking account and went to Las Vegas to gamble away $60,000.00, had no assets to secure the award. He requested a stay without posting a bond, contending that posting a bond would render him insolvent. The district court then ordered the attorney to deposit the proceeds of his malpractice insurance, which totalled about one-quarter of the judgment, into the court’s treasury in order to obtain a stay. Id. at 872-873. The Tenth Circuit affirmed the district court, finding that the security posted protected the judgment creditors and did not irreparably injure the judgment debtor. Id. at 873 (citing Texaco, Inc. v. Pennzoil Co., 784 F.2d 1133, 1154-1155 (2nd Cir. 1986)).
The movants’ admitted precarious financial condition, therefore, defeats their contention that this case is a rare instance where a bond is unnecessary or alternative collateral properly could be posted. The Institute’s financial statements and Mr. Simpkin’s affidavit reveal that the Institute will have difficulty maintaining the same state of solvency through the appellate process. Accordingly, the court must require the movant’s to post a supersedeas bond.
The amount of this bond can be determined in a straightforward manner. The judgment amount is $1,034,381.36. The court estimates the costs of appeal for these twenty-plus defendants to be $5,000. The court believes statutory post judgment interest during the time of this appeal should be approximately $72,500. The bond amount should also include attorneys’ fees the defendants will incur on appeal. A reasonable amount for these fees is $100,000. Accordingly, the amount of the supersedeas bond is $1,211,881.36.
In addition, the court must exercise its discretion and place certain conditions upon the bond. The movants are all nonresidents. In order to assure that this court has jurisdiction over the movants’ bonding company, the bonding agency shall be the one authorized to do business in the United States District Court for the Southern District of Florida. The movants have asked this court for time to raise the necessary means to post this bond. The court, therefore, will enter a stay for ten days so the movants can post the bond. Of course, a necessary condition of this stay will be that the movants not dissipate any of their assets.
It is important to note that, with the Christie Institute’s admitted financial difficulty, this case appears to be just the type for which the supersedeas is designed— “the financial distress of the debtor puts the judgment creditor in peril if it waits for the appeal to take its course.” See Olympia Equipment Leasing Co. v. Western Union Telegraph Co., 786 F.2d 794, 800 (7th Cir.1986) (Easterbrook, J., concurring). The purpose of a supersedeas bond is to preserve the status quo while protecting the non-appealing party’s rights pending appeal. See Prudential Ins. Co. of America v. Boyd, 781 F.2d 1494, 1498 (11th Cir.1986). The bond “is an important safeguard.” Olympia Equipment Leasing Co., 786 F.2d at 800 (Easterbrook, J., concurring). In essence, because much of the Institute’s assets that must secure this judgment are dependent upon speculative, intangible contributions, the defendants are entitled to the protection afforded by a bond. Furthermore, while the Institute argues that it is in a precarious financial position, its disclosures reveal that they have assets sufficient to secure the bond and pay the expenses of the bond.
Consistent with this opinion, the court
ORDERS and ADJUDGES that a stay of execution is hereby ENTERED until 3:00 p.m. on March 3, 1989. The court
FURTHER ORDERS and ADJUDGES that this stay of execution expires at 3:01
(1) that the movants, through a bonding company authorized to do business in the United States District Court for the Southern District of Florida, post and file with the Clerk of this Court a bond in the sum of $1,211,881:36.
(2) pending the time period from the date of this order until March 3, 1989, the plaintiffs, Avirgan and Honey, the Christie Institute, and Daniel Sheehan, shall not dispose of assets for the purpose of avoiding satisfaction of the judgment.
DONE and ORDERED.
. As the motion for a stay and the supplemental response to the motion for a stay reveal, the movants are the plaintiffs, Tony Avirgan and Martha Honey, Daniel Sheehan, Esquire, and the Christie Institute.
. Avirgan and Honey also have made financial disclosures.
. In their supplement to the emergency motion for a stay, the movants argue that this court's requiring them to post a bond will infringe upon their First Amendment rights. Without citing authority or detailing the type of speech that the bond posting will abridge, the Institute essentially claims that the posting will place it out of business and force the plaintiffs to end their careers as journalists.
Neither contention has any merit. The court’s order today does not abridge the movants' exercise of their First Amendment rights in