Wallis et al v. Centennial Insurance Company Inc et al

Filing 314

ORDER signed by Senior Judge William B. Shubb on 12/2/2014 DENYING 309 Motion for Equitable Offset and Stay of Enforcement of Judgment. (Michel, G)

1
2
3
4
5
6
7
8

UNITED STATES DISTRICT COURT

9

EASTERN DISTRICT OF CALIFORNIA

10
----oo0oo----

11
12
13
14

DALE M. WALLIS, D.V.M., JAMES
L. WALLIS, and HYGIEIA
BIOLOGICAL LABORATORIES,
INC., a California
Corporation,
Plaintiffs,

15
16
17
18
19

CIV. NO. 2:08-2558 WBS AC
MEMORANDUM AND ORDER RE:
PLAINTIFF’S MOTION FOR EQUITABLE
OFFSET AND STAY OF ENFORCEMENT
OF JUDGMENT

v.
CENTENNIAL INSURANCE COMPANY,
INC., a New York corporation,
ATLANTIC MUTUAL INSURANCE,
CO., INC., a New York
corporation,

20
Defendants.

21
22
23
24
25
26
27

----oo0oo---I.

Factual and Procedural Background
Plaintiffs Dale M. Wallis, D.V.M. (“Dr. Wallis”), James

L. Wallis (“Mr. Wallis”), and Hygieia Biological Laboratories,
Inc. (“Hygieia”) filed a lawsuit against defendants Centennial
Insurance Company, Inc. (“Centennial”) and Atlantic Mutual

28
1

1

Insurance Company (“Atlantic Mutual”) arising out of defendants’

2

alleged wrongdoing in defending Dr. Wallis under a professional

3

liability insurance policy.

4

counterclaim against plaintiffs and a third party complaint

5

(“TPC”) against plaintiffs’ Cumis counsel, Joanna Mendoza,

6

seeking, inter alia, a declaration that they had no duty to

7

indemnify plaintiffs or Mendoza in connection with a breach of a

8

protective order and subsequent sanctions.

9

2013 Judgment (Docket No. 269).)

10

Defendants subsequently filed a

(See November 12,

After conducting a nine-day bench trial, the court

11

found in favor of defendants on both of plaintiffs’ claims and

12

ordered reimbursement for $115,995.90 in fees paid out to

13

Mendoza.

14

subsequently amended the judgment to $86,996.93 and $4,607.65 in

15

costs against plaintiffs.

16

Judgment (Docket No. 277).)

17

288), and the appeal is still pending.

18

stay the enforcement of the judgment pursuant to Federal Rule of

19

Civil Procedure 62.

20

pending arbitration regarding the reasonableness of Mendoza’s

21

fees, and on their claim for $5.6 million in defendants’

22

liquidation proceedings in New York court, they will be entitled

23

to an offset of the judgment entered by this court.

24

at 4-7.)

25

II.

(See November 12, 2013 Judgment.)

The court

(See February 20, 2014 Amended
Plaintiffs appealed, (Docket No.
Plaintiffs now move to

They state that, should they prevail in a

(Pls.’ Mem.

Discussion

26

Federal Rule of Civil Procedure 62 permits a court to

27

stay the execution of a judgment or proceedings to enforce that

28

judgment pending disposition of a Rule 60 motion.
2

Fed. R. Civ.

1

P. 62(b); see Gibbs v. Okla. Dep’t of Transp., 999 F.2d 547, 547

2

(10th Cir. 1993) (“The decision to stay proceedings to enforce a

3

judgment pending disposition of a motion for new trial or to

4

alter or amend judgment or for relief from judgment is left to

5

the discretion of the district court.”).

6

their motion to stay execution of the judgment on their

7

simultaneous motion for relief from a judgment pursuant to Rule

8

60(b)(6) (“any other reason that justifies relief”).1

9

that plaintiffs provide is that under California law, enforcement

Plaintiffs premise

The reason

10

on a money judgment should be stayed under the principle of

11

equitable offset.

12

judgment debtors, have unresolved claims against defendants, they

13

contend, “a stay is appropriate and necessary so that all the

14

claims can be offset against one another when both are final.”

15

(Id.)

16

(Pls.’ Mem. at 3.)

Because plaintiffs, the

“Once an appeal is filed, the district court no longer

17

has jurisdiction to consider motions to vacate judgment.”

Davis

18

v. Yageo Corp., 481 F.3d 661, 685 (9th Cir. 2007) (citing Gould

19

v. Mutual Life Ins. Co. of N.Y. (“The filing of a notice of

20

appeal divests the district court of jurisdiction.”)).

21

after an appeal is filed, “a district court may entertain and

22

decide a Rule 60(b) motion . . . if the movant follows a certain

23

procedure, which is to ‘ask the district court whether it wishes

24

to entertain the motion, or to grant it, and then move [the court

25

of appeals], if appropriate, for remand of the case.’”

However,

Id.

26
27
28

1

Plaintiffs do not pursue a stay under 60(d), Stay with
Bond on Appeal, nor could they, because they have not posted a
supersedeas bond. See Fed. R. Civ. P. 60(d).
3

1

(quoting Gould, 790 F.2d at 772).

2

judgment entered against them, (see March 21, 2014 Notice of

3

Appeal (Docket No. 288)), and the appeal is still pending, (see

4

Pl.’s Mem. at 3).

5

consider plaintiffs’ Rule 60 motion, or its Rule 62 motion for

6

that matter, which is premised on the pending disposition of the

7

Rule 60 motion.

8

trial motion, then they must ask this court whether it wishes to

9

entertain their motion, and if the court agrees, they must move

10

Plaintiffs appealed the

This court thus no longer has jurisdiction to

If plaintiffs want to pursue their Rule 60 post-

in the Ninth Circuit to have the case remanded to this court.

11

Even if the court were to consider the present motion

12

as a request to entertain plaintiffs’ Rule 60 motion, the court

13

would not be inclined to hear the motion.

14

be ‘used sparingly as an equitable remedy to prevent manifest

15

injustice’ and ‘is to be utilized only where extraordinary

16

circumstances to prevent or correct an erroneous judgment.’”

17

re Int’l Fibercom, Inc., 503 F.3d 933, 941 (9th Cir. 2007)

18

(citing United States v. Washington, 394 F.3d 1152, 1157 (9th

19

Cir. 2005)).

20

is erroneous.

21

what they argue is an equitable right for a stay under California

22

law.

23

vacating an erroneous judgment, not for staying a proper one.

24

Plaintiffs are in essence attempting to shoehorn a state-law

25

ground for staying the enforcement of a judgment into Rule 62(b),

26

which is limited in its scope to staying judgment enforcement

27

pending resolution of certain post-trial motions.

28

///

“Rule 60(b)(6) should

In

Plaintiffs do not contend the judgment against them
Rather, plaintiffs base their Rule 60 motion on

(Pl.’s Mem. at 5.)

Rule 60(b), however, is a vehicle for

4

1

IT IS THEREFORE ORDERED that plaintiffs’ Rule 60 and 62

2

motions be, and the same hereby are, DENIED.

3

Dated:

December 2, 2014

4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
5