In Re: Fruehauf Trailer Corporation

Filing 58

ORDER DENYING APPELLEES MOTION FOR APPEAL BOND 54 by Judge Dean D. Pregerson. (lc)

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CLOSED

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UNITED STATES DISTRICT COURT

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CENTRAL DISTRICT OF CALIFORNIA

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IN RE
FRUEHAUF TRAILER
CORPORATION; CHRISS W.
STREET,

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Plaintiff,
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v.
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DANIEL W. HARROW, AS
SUCCESSOR TRUSTEE OF THE END
OF THE ROAD TRUST, AND
AMERICAN TRAILER INDUSTRIES,
INC.,

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Defendants.
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___________________________

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Case No. CV 11-09218 DDP
ORDER DENYING APPELLEE’S MOTION
FOR APPEAL BOND
[Docket No. 54]

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I. Background
Appellant Christ Street (“Appellant” or “Street”) appealed the

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Bankruptcy Court’s denial of his Rule 60(b) motion for relief from

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judgment.

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Bankruptcy Court.

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Circuit.

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Appellee Daniel Harrow’s (“Appellee”) Motion for Appeal Bond

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(“Motion”).

See Docket Nos. 1, 8.
Docket No. 41.

See Docket No. 43.

Docket No. 54.

This Court affirmed the
Street has appealed to the Ninth

Presently before the court is

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II. Legal Standard

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Under Federal Rule of Appellate Procedure 7, courts have the

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discretion both to determine whether a bond is appropriate and if

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so, the amount.

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2008 WL 4680033, at *6 (N.D. Cal. Oct. 21, 2008).

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court may require an appellant to file a bond . . . in any form and

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amount necessary to ensure payment of costs on appeal.”

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App. P. 7 (emphasis added).

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Rule 7 says “may” instead of “shall.”

Fleury v. Richemont N. Am., Inc., C-05-4525 EMC,
“A district

Fed. R.

The Ninth Circuit has emphasized that
Azizian v. Federated

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Department Stores, Inc., 499 F.3d 950 (9th Cir. 2007).

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district courts have interpreted Ninth Circuit authority to create

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a three factor test for deciding whether a Rule 7 bond is proper:

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(1) the appellant’s ability to post bond; (2) the risk that the

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appellant will not pay costs if the appeal is unsuccessful; and (3)

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the likelihood that the appellant will lose his appeal and be

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subject to costs.

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499 F.3d 950).

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risk of nonpayment by an unsuccesful appellant.”

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Inc., No. C 09-01733 JW, 2011 WL 2790181, at *1 (N.D. Cal. July 5,

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2011).

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III. Analysis.

Id. at *7

Some

(applying the reasoning of Azizian,

A bond is meant to “protect an appellee against the
Yingling v. Ebay,

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1. Ability to Post Bond

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“The first factor, ability to pay, is grounded in due process

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concerns.”

Schulken v. Washington Mut. Bank, No. 09-CV-02708-LHK,

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2013 WL 1345716, at *4 (N.D. Cal. Apr. 2, 2013).

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care not to “unduly burden a party's right to appeal.”

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499 F.3d at 961.

Courts must take
Azizian,

Here, there are serious concerns about Appellants

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ability to pay, and thus concerns that a Rule 7 bond would prevent

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him from exercising his right to appeal this Court’s decision.

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Street’s counsel submitted a declaration stating that he is

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Street’s personal friend, that Street was only able to pay $15,000

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of the $50,000 in legal fees associated with his appeal to this

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Court, and that Street is unable to pay the legal fees for his

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Ninth Circuit appeal.

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Appellee contends that Appellant’s inability to pay lacks

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credibility, as several attorneys have previously represented him

Pitet Decl. ¶¶ 2-4, Docket No. 55-1.

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in this action.

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Appellant may once have had appreciable funds to litigate this case

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does not mean he currently does.

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address Appellant’s counsel’s declaration, nor does his memorandum

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and reply cite any contrary evidence.

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28; Docket No. 56 at 2:18-22.

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contrary evidence exists, the “unsworn statement in [Appellee’s]

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briefing is not evidence.”

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No. 11-CV-5435-LHK, 2012 WL 4713716 (N.D. Cal. Oct. 1, 2012)(citing

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United States v. Zermeno, 66 F.3d 1058, 1062 (9th Cir.1995).)

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Appellant’s inability to pay weighs strongly in favor of denying a

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Rule 7 bond.

Docket No. 56 at 2:18-22.

However, the fact that

Additionally, Appellee does not

See Docket Nos. 54 at 5:18-

While Appellee’s briefs argue

J & J Sports Prods., Inc. v. Jimenez,

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2. Risk the Appellant will not Pay

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The likelihood of encountering difficulty in collecting

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judgment against an unsuccessful appellant is another factor in

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determining the appropriateness of a Rule 7 bond. Schulken, at *7.

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Appellee argues that he has been unable to collect the $1,521 in

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costs associated with the appeal to this Court in addition to the

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$7 million judgment levied against Appellant in the bankruptcy
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proceedings.

Docket No. 54 at 6:1-11.

As to the $1,521 in

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appellate costs before this Court, it does not appear that

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Appellee’s request for costs has been ruled on.

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Appellant should not be faulted for not paying what he has not been

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ordered to.

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paid the $7 million, but he states he cannot afford to–a likely

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proposition since, as discussed supra, he cannot afford to pay his

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attorney for the Ninth Circuit appeal.

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$7 million, the instant factor weighs in favor of a Rule 7 bond.

See Docket No. 45.

However, Appellant does not dispute that he has not

In light of the outstanding

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3. Likelihood Appellant will Lose Appeal

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The likelihood of success on appeal is another factor bearing

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on whether a Rule 7 bond should be issued.

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Based on the reasoning articulated in this Court’s order,

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Appellant’s Ninth Circuit appeal is unlikely to succeed.

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factor weighs in favor of a Rule 7 bond.

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IV. Conclusion

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Schulken at *4-5.

Factors two and three favor ordering a Rule 7 bond.

This

However,

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the second factor–risk that Appellant will not pay–is at odds with

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the first factor–ability to pay. The second factor should not

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function to nullify the first, considering the first factor’s due

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process concerns.

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of the strong due process concerns of forcing Appellant to pay a

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bond that the evidence suggests he cannot afford, the Court DENIES

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Appellee’s Motion.

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IT IS SO ORDERED.

See Schulken, 2013 WL 1345716 at *4.

In light

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Dated: June 25, 2013
DEAN D. PREGERSON
United States District Judge

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