AIRFX.com et al v. AirFX LLC
Filing
132
ORDER denying 123 Motion to Stay of execution on attorneys' fees pending appeal. See order for details. Signed by Senior Judge Frederick J Martone on 6/6/13.(SJF)
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IN THE UNITED STATES DISTRICT COURT
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FOR THE DISTRICT OF ARIZONA
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Plaintiffs,
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vs.
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AirFX, LLC,
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Defendant/Counterclaimant, )
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vs.
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AirFX.com and Marc Lurie,
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Counterdefendants.
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AirFX.com and Marc Lurie,
No. CV 11-01064-PHX-FJM
ORDER
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The court has before it defendant’s motion for stay of execution on attorneys' fees
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pending appeal (doc. 123), plaintiffs’ response (doc. 125), and defendant's reply (doc. 126).
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Defendant moves for a stay pursuant to Rule 62(d), Fed. R. Civ. P ., which provides
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for an automatic stay once an appellant posts a supersedeas bond. However, defendant has
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not posted a supersedeas bond, and instead seeks a waiver of the bond or in the alternative,
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an order reducing the amount of the bond required to stay the execution of the attorneys’ fees
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judgment. Defendant contends that the following four equitable factors justify its request
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that the supersedeas bond requirement be either waived or reduced: “(1) whether the
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petitioner is likely to prevail on the merits of the appeal; (2) whether, without the stay, the
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petitioner will be irreparably injured; (3) whether issuance of the stay will substantially harm
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other parties interested in the proceeding; and (4) wherein lies the public interest.” Motion
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at 4. Plaintiffs argue that these factors apply only to appeals pending from injunctive relief
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under Rule 62(c), Fed. R. Civ. P. Defendant counters that other district courts have applied
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the four equitable factors in circumstances similar to the ones here. In Hilton v. Braunskill,
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481 U.S. 770, 107 S. Ct. 2113 (1987), the Court noted that equitable factors govern the
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district court’s power to stay an order under Rule 62(c), not Rule 62(d). Id. at 776, 107 S.
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Ct. at 2119. Under Rule 62(c) we have discretion to “suspend, modify, restore, or grant an
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injunction during the pendency of the appeal.” Fed. R. Civ. P. 62(c). But here, a money
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judgment is involved, and thus Rule 62(d), not Rule 62(c) applies.
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Pursuant to Rule 62(d), Fed. R. Civ. P, an appellant may obtain an automatic stay by
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posting a supersedeas bond. The posting of a bond is itself “a privilege extended to the
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judgment debtor as a price of interdicting the validity of an order to pay money.” Biltmore
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Associates, L.L.C., as Trustee v. Twin City Fire Ins. Co., CV-05-04220-PHX-FJM, 2007 WL
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2422053, *1 (D. Ariz. 2007) (citation omitted). Accordingly, to depart from “the usual
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requirement of a full security supersedeas bond” the moving party must “objectively
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demonstrate the reasons for such a departure.” Id. We consider several grounds for waiving
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the bond requirement: “(1) the complexity of the collection process; (2) the amount of time
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required to [collect] a judgment after it is affirmed on appeal; (3) the degree of confidence
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that the district court has in the availability of funds to pay the judgment; (4) whether the
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defendant’s ability to pay the judgment is so plain that the cost of a bond would be a waste
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of money; and (5) whether the defendant is in such a precarious financial position that the
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requirement to post a bond would place other creditors of the defendant in an insecure
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position.” Id. We may also substitute another form of adequate security for the supersedeas
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bond. See Townsend v. Holman Consulting Corp., 929 F.2d 1358, 1367 (9th Cir. 1991).
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Defendant has failed to show that any relevant factor favors a waiver of the bond.
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Plaintiffs argue that the collections process will be difficult and complex because defendant
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is a foreign entity with no known assets in Arizona. Defendant does not argue otherwise.
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Therefore this factor weighs against defendant. Moreover, defendant concedes that even if
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it dismantled its operations, sold its assets, and laid off employees, it may not have the full
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funds available to pay the judgment. See Doc. 122-1 ¶ 11. Thus, the third and fourth factors
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weigh against waiving the supersedeas bond requirement. Finally, defendant argues that it
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will suffer great financial hardship if it is required to post a supersedeas bond. However,
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defendant has not offered specific evidence demonstrating that it is in such a precarious
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financial position that the bond requirement would place it or its creditors in an insecure
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position. Because defendant has not articulated sufficient grounds to stay execution pending
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appeal without posting the supersedeas bond, we decline to waive the bond requirement.
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Alternatively, defendant requests that we consider its “flagship Hayabusa” motorcycle
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as sufficient security to protect the judgment creditor's interest. Mr. Schwindt’s affidavit
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states that the motorcycle has a current market value of approximately $30,000. See Doc.
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122-1 ¶ 6. The stated value of the motorcycle does not cover the $103,972.50 judgment in
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this case. Moreover, we have no way of knowing whether the value of the motorcycle will
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be the same at the end of the appeal. Defendant has also offered to enter an agreement that
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it will not sell or mortgage any of its assets while the appeal is pending. Mr. Schwindt
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affirms that none of defendant’s assets are currently mortgaged, and that no creditors stand
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ahead of plaintiffs in securing an interest in the company’s assets. See Doc. 126-1 ¶¶ 14-15.
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However, the record contains no evidence which allows us to determine the value of
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defendant’s assets. We decline to permit defendant to post security of uncertain value in
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place of a full supersedeas bond.
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THEREFORE, IT IS ORDERED DENYING defendant’s motion for stay of
execution on attorneys' fees pending appeal (doc. 123).
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DATED this 6th day of June, 2013.
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