THE SOCIETY OF
LLOYD'S, Plaintiff, vs. WALLACE R. BENNETT, GRANT R. CALDWELL, CALVIN P.
GADDIS, DAVID L. GILLETTE, STEPHEN M. HARMSEN, KELLY C. HARMSEN, JAMES R.
KRUSE, EDWARD W. MUIR, and KENT B. PETERSEN, Defendants.
Case No. 2:02-CV-204TC
UNITED STATES DISTRICT
COURT FOR THE DISTRICT OF UTAH, CENTRAL DIVISION
2003 U.S. Dist.
LEXIS 25476
March 17, 2003,
Decided
March 18, 2003, Filed
DISPOSITION:
[*1] Defendant Bennett's motion to stay orders pending appeal and
for relief from posting supersedeas bond denied.
COUNSEL: For
SOCIETY OF LLOYD'S, THE, plaintiff: James A. Boevers, Mr., Michael N. Zundel,
Mr., Thomas R. Barton, PRINCE YEATES & GELDZAHLER, SALT LAKE CITY, UT.
For WALLACE R.
BENNETT, defendant: David D. Bennett, SCIENCE & LAW CONSULTANTS, SALT LAKE
CITY, UT.
For GRANT R. CALDWELL,
CALVIN P. GADDIS, DAVID L. GILLETTE, JAMES R. KRUSE, EDWARD W. MUIR,
defendants: Alan L Sullivan, Mr., Matthew L. Lalli, Brett P. Johnson, SNELL
& WILMER LLP, SALT LAKE CITY, UT. Theodore W. Grippo, Jr, LINDENBAUM
COFFMAN KURLANDER BRISKY & GRIPPO LTD, CHICAGO, IL.
For STEPHEN M.
HARMSEN, KELLY C. HARMSEN, defendants: Steven A. Wuthrich, MONTPELIER, ID.
For KENT B. PETERSEN,
defendant: Alan L Sullivan, Mr., Matthew L. Lalli, SNELL & WILMER LLP, SALT
LAKE CITY, UT. Theodore W. Grippo, Jr, LINDENBAUM COFFMAN KURLANDER BRISKY
& GRIPPO LTD, CHICAGO, IL.
For STEPHEN M.
HARMSEN, KELLY C. HARMSEN, cross-claimants: Steven A. Wuthrich, MONTPELIER, ID.
For CALVIN P. GADDIS,
cross-defendant: Alan L Sullivan, Mr., Matthew L. Lalli, Brett P.
[*2] Johnson, SNELL & WILMER LLP, SALT LAKE CITY, UT. Theodore
W. Grippo, Jr, LINDENBAUM COFFMAN KURLANDER BRISKY & GRIPPO LTD, CHICAGO,
IL.
JUDGES: TENA
CAMPBELL, United States District Judge.
OPINIONBY: TENA
CAMPBELL
OPINION: ORDER
This matter is before
the court on several objections and motions concerning the court's November 12,
2002 Order granting the Society of Lloyd's ("Lloyd's") motion for
summary judgment (the "Summary Judgment Order"). Specifically, the
Defendants have objected to the form of the proposed judgments, Professor
Wallace R. Bennett has moved for a stay pending appeal and for relief from
posting a supersedeas bond, and Lloyd's has moved to strike portions of
Professor Bennett's affidavits. The court's decision as to each of these
objections and motions is set forth in this Order.
BACKGROUND n1
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n1 The court's Summary
Judgment Order and December 18, 2002 Order denying Professor Bennett's motion
to alter or amend the Summary Judgment Order discuss the procedural background
of this case in more detail.
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The court on November
12, 2002 granted summary judgment in favor of Lloyd's on Lloyd's action to
enforce judgments entered in England (the "English Judgments")
against the Defendants. On December 2, 2002, Professor Bennett filed a motion
to alter or amend the Summary Judgment Order (the "Motion to Alter or
Amend"), pursuant to Federal Rule of Civil Procedure 59(e). The court
denied this motion on December 18, 2002.
Lloyd's served the
Defendants with proposed final United States Judgments and Partial
Satisfactions of Judgments ("Partial Satisfactions") on December 10,
2002. (See Pl.'s Mem. Opp'n Bennett's Mot. Stay ("Pl.'s Bennett
Opp'n") at 2.) Lloyd's subsequently served the Defendants with revised
Partial Satisfactions, which corrected certain errors in the original Partial
Satisfactions and reflected subsequent payments made by some of the Caldwell
Defendants. n2 (See id. at 2 n.2.) The Defendants object to Lloyd's proposed
United States Judgments. n3 (See Harmsen Defs.' Objection, Doc. 107; Caldwell
Defs.' Objection, Doc. 114.)
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n2 The "Caldwell
Defendants," who are represented by the same counsel, consist of Grant R.
Caldwell, Calvin P. Gaddis, David L. Gillette, James R. Kruse, Edward W. Muir,
and Kent B. Peterson. [*4]
n3 Both the Harmsens
and the Caldwell Defendants filed objections to the form of judgments. The
court proceeds under the assumption that Professor Bennett objects to the form
of judgments, as well.
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On January 6, 2003,
Professor Bennett moved (1) to stay the November 12, 2002 and December 18, 2002
Orders pending appeal, and (2) for relief from posting a supersedeas bond.
Lloyd's opposes Professor Bennett's motions and has moved to strike portions of
Professor Bennett's affidavits.
ANALYSIS
I. The Form of
Judgments
A. What Postjudgment
Interest Rate Applies to the United States Judgments?
The Defendants object
to the form of the proposed judgments. Specifically, the Harmsens argue that
Lloyd's "should be burdened by the interest rate that is applicable to
Utah judgments," (Harmsen Defs.' Objection at 1), while the Caldwell
Defendants contend that 28 U.S.C. ¤ 1961 (2002) dictates the postjudgment
interest rates in this case, (see Caldwell Defs.' Objection at 1). Lloyd's
argues that due to the choice of English law provisions in the General
Undertaking [*5] and principles of comity, the United States
Judgments should continue to accrue interest at eight percent per year--the
undisputed applicable English postjudgment rate.
28 U.S.C. ¤ 1961(a)
governs the postjudgment interest rate for money judgments recovered in federal
district courts. n4 See Everaard v. Hartford Accident & Indem. Co., 842
F.2d 1186, 1193-94 (10th Cir. 1988) (applying section 1961's postjudgment interest
rate in a diversity action despite the different rate imposed by state law).
Courts have observed that "the language of ¤ 1961 is mandatory . . . . Its
terms do not permit the exercise of judicial discretion in its
application." In re Carte Blanche (Singapore) Pte., Ltd., 888 F.2d 260,
269 (2d Cir. 1989) (quoting Akermanis v. Sea-Land Serv., Inc., 521 F. Supp. 44,
57 (S.D.N.Y. 1981), rev'd on other grounds, 688 F.2d 898 (2d Cir. 1982)).
Section 1961, however, "shall not be construed to affect the interest on
any judgment of any court not specified in [section 1961]." 28 U.S.C. ¤
1961(c)(4).
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n4 28 U.S.C. ¤ 1961(a)
provides in part,
Interest shall be
allowed on any money judgment in a civil case recovered in a district court. .
. . Such interest shall be calculated from the date of the entry of the
judgment, at a rate equal to the weekly average 1-year constant maturity
Treasury yield, as published by the Board of Governors of the Federal Reserve
System, for the calendar week preceding the date of the judgment.
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In the present case,
the court granted summary judgment on Lloyd's action to enforce money judgments
it obtained against the Defendants in England. The English Court that entered
judgments in favor of Lloyd's on March 11, 1998 is not a court that is
"specified" in 28 U.S.C. ¤ 1961. See 28 U.S.C. ¤ 1961(c)(4).
Consequently, section 1961 does not affect the postjudgment interest rate for
the English Judgments. See id. Section 1961 similarly does not dictate which
postjudgment interest rate applies for the judgments issued in the present
case, as these United States Judgments merely enforce the English Judgments,
English postjudgment interest rate and all. Further, when the Defendants signed
Lloyd's General Undertaking, they agreed that English law would govern disputes
arising between them and Lloyd's.
In sum, because this
action involves enforcement of English Judgments and because the Defendants
agreed that English law would govern any disputes that arose between them and
Lloyd's, Lloyd's is entitled to eight percent postjudgment interest even after
this court enters its Judgments.
B. Should the United
States Judgments Reflect [*7] a Net Sum?
The Harmsens also
object to the method by which the court should determine the judgment
principal. They contend that the United States Judgments should be in the net
amount owing after application of the Partial Satisfactions, because "the
precise amount of accrued interest is unclear and undetermined." (Harmsen
Defs.' Objection at 2.)
Entering
"net" judgments is not proper in this case. In order to enforce the
English Judgments, the United States Judgments are in the amount of the English
Judgments. Given the choice of law and forum provisions in the General
Undertaking, any disputes concerning credits, offsets, or payments must be
settled in the English courts.
II. Is Professor
Bennett Entitled to a Stay Pending Appeal?
A. Professor Bennett's
Motion to Stay and For Relief From Posting a Supersedeas Bond
Professor Bennett
moves to stay the court's Orders pending appeal and for relief from posting a
supersedeas bond. n5 Federal Rule of Civil Procedure 62 authorizes district
courts to stay proceedings to enforce a judgment under certain circumstances.
See Fed. R. Civ. P. 62. Rule [*8] 62(d) provides for a stay upon
appeal. See Fed. R. Civ. P. 62(d). Specifically, Rule 62(d) provides that
when an appeal is
taken the appellant by giving a supersedeas bond may obtain a stay subject to
the exceptions contained in subdivision (a) of this rule. The bond may be given
at or after the time of filing the notice of appeal or of procuring the order
allowing the appeal, as the case may be. The stay is effective when the
supersedeas bond is approved by the court.
Fed. R. Civ. P. 62(d).
"Rule 62(d) has been interpreted to mean that an appellant may obtain a
stay of the money judgment during the pendency of the appeal as a matter of
right by posting an adequate supersedeas bond." Manildra Milling Corp. v.
Ogilvie Mills, Inc., 887 F. Supp. 249, 250 (D. Kan. 1995) (quoting United
States v. Mansion House Ctr. Redevelopment Co., 682 F. Supp. 446, 449 (E.D. Mo.
1988)); see also In re Fremond Sheep Co., 110 F.3d 73, available at 1997 WL
174116, at **1 (10th Cir. 1997) (referring to "the mandatory provisions of
Federal Rule of Civil Procedure 62(d) [*9] " and not addressing
an appellant's Rule 62(d) argument for a "stay as a matter of right"
because the appellant did not raise that argument in front of the district
court) (unpublished decision). But see Hellebust v. Brownback, 824 F. Supp.
1524, 1530 (D. Kan. 1993) (listing requirements, including likelihood of
success on the merits of appeal, for granting a motion to stay pending appeal
under Rule 62(d)), aff'd and remanded, 42 F.3d 1331 (10th Cir. 1994); Endress +
Hauser, Inc. v. Hawk Measurement Sys. Pt. Ltd., 932 F. Supp. 1147, 1148 (S.D.
Ind. 1996) (same).
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n5 Professor Bennett
seeks a stay pursuant to Federal Rule of Civil Procedure 62(c), which provides
for an injunction pending an appeal which is taken "from an interlocutory
or final judgment granting, dissolving, or denying an injunction." Fed. R.
Civ. P. 62(c). Lloyd's analyzes Professor Bennett's motion to stay pursuant to
Federal Rule of Civil Procedure 62(d), which governs a "stay upon
appeal" when an appellant gives a supersedeas bond. See Fed. R. Civ. P.
62(d). This Order analyzes both possible sources for a stay.
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The Tenth Circuit has
explained that under Rule 62(d), "a full supersedeas bond should be the
requirement in normal circumstances." Miami Int'l Realty Co. v. Paynter,
807 F.2d 871, 873 (10th Cir. 1986). Case law makes clear, however, that courts
may dispense of the supersedeas bond requirement if a judgment debtor offers
adequate alternate security. See Endress, 932 F. Supp. at 1149 (stating that
"the court may in its discretion approve an alternate security
arrangement"); see also Paynter, 807 F.2d at 873-74 (stating that district
courts "have inherent discretionary authority in setting supersedeas
bonds" and finding no error where a district court granted a stay without
a supersedeas bond for the full amount of a judgment). As one district court
has stated, "the power of the court to waive the supersedeas bond
requirement is exercised only in extraordinary circumstances, and only where
alternative means of securing the judgment creditor's interest are
available." Endress, 932 F. Supp. at 1149 (internal quotation omitted). It
is the burden of the party seeking a stay "to demonstrate that posting a
full bond is impossible [*11] or impracticable, and to propose a
plan that will provide adequate security" for the judgment creditor. Id.
Next, Federal Rule of
Civil Procedure 62(c) governs injunctions pending appeal. See Fed. R. Civ. P.
62(c). Rule 62(c) provides in part,
When an appeal is
taken from an interlocutory or final judgment granting, dissolving, or denying
an injunction, the court in its discretion may suspend, modify, restore, or
grant an injunction during the pendency of the appeal upon such terms as to
bond or otherwise as it considers proper for the security of the rights of the
adverse party.
Fed. R. Civ. P. 62(c).
To obtain a stay pursuant to Rule 62(c), a movant must establish: "(1) a
likelihood of success on appeal; (2) the threat of irreparable harm if the stay
or injunction is not granted; (3) the absence of harm to the opposing party;
and (4) the public interest is not adverse to the stay." Desktop Images,
Inc. v. Ames, 930 F. Supp. 1450, 1451 (D. Colo. 1996) (quoting Colorado Public
Utillities Comm'n v. Yellow Cab Coop. Ass'n, 192 B.R. 555, 557 (D. Colo.
1996)). [*12]
As an initial matter,
Professor Bennett claims that he is financially unable to post a full
supersedeas bond. n6 See Fed. R. Civ. P. 62(d) (requiring an appellant to give
a supersedeas bond). Even assuming Professor Bennett is impecunious, he has not
satisfied his burden of proposing a plan to provide adequate alternate security
for Lloyd's. See Endress, 932 F. Supp. at 1149. Professor Bennett therefore is
not entitled to a stay as a matter of right pursuant to Rule 62(d).
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n6 Lloyd's has moved
to strike portions of Professor Bennett's affidavits. As explained below,
Lloyd's motions are denied as moot.
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Further, Professor
Bennett is not entitled to an injunction pending appeal pursuant to Rule 62(c)
because he has not shown that he is likely to succeed on the merits of his
appeal. See Desktop Images, 930 F. Supp. at 1452 (discussing requirements for a
stay pursuant to Rule 62(c) and stating that "the true test is whether the
movant has [*13] made a substantial case on the merits").
Professor Bennett's arguments in support of his likelihood of success on appeal
are the same ones that the court rejected in issuing the Summary Judgment Order
and the Order denying Professor Bennett's Motion to Alter or Amend. Professor
Bennett's "mere recitation of arguments previously made and rejected"
is not enough to persuade the court that he is likely to succeed on appeal.
Endress, 932 F. Supp. at 1149. Because Professor Bennett has not persuaded the
court that he is likely to succeed on appeal, the court will not discuss the
other factors in the Rule 62(c) analysis.
In sum, Professor
Bennett is not entitled to a stay upon appeal pursuant to Rule 62(d) because he
insists that he is financially unable to post a supersedeas bond for the amount
of the judgment yet has offered no alternate security to protect Lloyd's
interest in collecting its judgment. Further, Professor Bennett has failed to
demonstrate a likelihood of success on the merits of his appeal, as required
for a Rule 62(c) injunction pending appeal. Therefore, Professor Bennett's
motion to stay and for relief from posting supersedeas bond is DENIED.
B.
Lloyd's [*14] Motions to Strike
Lloyd's moves to
strike portions of Professor Bennett's affidavits. (See Mot. Strike of 1/24/03,
Document ("Doc.") 134; Mot. Strike of 2/18/03, Doc. 149.) Lloyd's
contends that the statements in question, which primarily concern Professor
Bennett's stock holdings and financial status, are unfounded, conclusory,
speculative, and vague opinions not based on personal knowledge. However,
because Professor Bennett has not proposed a plan to provide adequate alternate
security for Lloyd's, Lloyd's motions to strike are DENIED as moot.
Further, on December
20, 2002, Lloyd's moved to strike portions of Professor Bennett's affidavit in
support his Motion to Alter or Amend. (See Mot. Strike of 12/20/02, Doc. 112.)
On December 18, 2002,--before Lloyd's filed its motion to strike--the court
denied Professor Bennett's Motion to Alter or Amend. Accordingly, Lloyd's
December 20, 2002 motion to strike is DENIED as moot.
ORDER
For the foregoing
reasons, the court holds that Lloyd's is entitled to postjudgment interest at a
rate of eight percent per year. Further Professor Bennett's motion to stay
orders pending appeal and for relief from posting a supersedeas
bond [*15] is DENIED. Last, Lloyd's motions to strike are DENIED as
moot.
DATED this 17 day of
March, 2003.
BY THE COURT:
TENA CAMPBELL
United States District
Judge