Superior Consulting Services, Inc. v. Steeves-Kiss

Filing 72

ORDER DENYING MOTION TO STAY JUDGMENT AND GRANTING MOTION FOR JUDGMENT DEBTOR EXAM. Signed by Magistrate Judge Jacqueline Scott Corley on 9/21/2018. (ahm, COURT STAFF) (Filed on 9/21/2018)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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SUPERIOR CONSULTING SERVICES,
INC.,

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Plaintiff,

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v.
JENNIFER L STEEVES-KISS,

United States District Court
Northern District of California

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Defendant.

Case No.17-cv-06059-EMC (JSC)
ORDER DENYING MOTION TO STAY
JUDGMENT AND GRANTING
MOTION FOR JUDGMENT DEBTOR
EXAM
Re: Dkt. Nos. 60

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The district court ordered “Plaintiff’s counsel” to pay $110,000 as Rule 11 sanctions.

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(Dkt. Nos. 43 & 54.) Defendant subsequently moved for a judgment debtor’s exam. (Dkt. No.

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57.) The Court set a telephone status conference on that motion. At the August 9, 2018 telephone

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status conference Plaintiff’s counsel affirmatively represented that they intended to file a bond to

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stay execution of the judgment. (Dkt. No. 59.) In light of that representation, the Court ordered

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that the bond be filed by August 17, 2018. (Id.) Unfortunately, counsel’s representation was

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untrue; instead of filing a bond, on August 17, 2018 Plaintiff filed a motion to stay execution of

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the judgment pending appeal. (Dkt. No. 60.) After carefully considering Plaintiff’s motion, and

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having had the benefit of a hearing on September 20, 2018, Plaintiff’s motion is DENIED. The

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district court imposed the sanction against Plaintiff’s counsel, that is, Watson LLP, and Plaintiff

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does not even attempt to show that Watson LLP cannot post a bond. Moreover, even if the

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sanctions were imposed against Coleman Watson personally, he has not come close to meeting his

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burden for excusing his obligation to post a bond.

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DISCUSSION

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Under Federal Rule of Civil Procedure 62 a judgment debtor may obtain a stay of the

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judgment pending appeal by supersedeas bond approved by the court. Fed. R. Civ. P. 62(d).

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Plaintiff nevertheless argues that the court has discretion to stay the judgment without requiring a

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bond “(1) where the defendant's ability to pay is so plain that the cost of the bond would be a

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waste of money; and (2) where the requirement would put the defendant’s other creditors in undue

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jeopardy.” Quinones v. Chase Bank USA, N.A., No. 09CV2748-AJB BGS, 2012 WL 1530155, at

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*2 (S.D. Cal. May 1, 2012) (internal quotation marks and citation omitted). Assuming, without

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deciding, that Plaintiff’s recitation of the law as to the Court’s discretion is correct, the record does

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United States District Court
Northern District of California

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not support a finding that either requirement is met for several reasons.
Plaintiff’s motion to stay execution of the judgment of sanctions is premised entirely on its

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insistence that the district court imposed the sanctions against attorney Coleman Watson

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personally, rather than the law firm that represented Plaintiff: Watson LLP. The Court disagrees.

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First, Defendant moved for Rule 11 sanctions against Plaintiff’s “counsel,” not Mr.

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Watson. Nowhere in her sanctions motion or reply does Defendant seek sanctions against Mr.

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Watson as opposed to Plaintiff’s counsel. As the docket reflects, counsel includes Mr. Watson,

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Watson LLP, and Leia Leitner.

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Second, nothing in the district court’s orders granting the sanctions or the transcript of the

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hearing suggests that the court was imposing sanctions against Mr. Watson personally as opposed

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to the law firm that represents Plaintiff. (Dkt. Nos. 43, 47, 54.) To the contrary, the district court

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stated that it was sanctioning Plaintiff’s “counsel.” If the district court intended to sanction Mr.

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Watson alone the court would have called him out by name.

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Third, Plaintiff was represented by more than just Mr. Watson; indeed, Mr. Watson did not

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even appear for the hearing on the motion to dismiss and motion for sanctions; instead, Plaintiff

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was represented by Leia Leitner at the hearing where Ms. Leitner attempted to defend Plaintiff’s

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counsel’s decision to file this lawsuit. (Dkt. Nos. 40 & 47.)

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Fourth, California Business and Professions Code § 6068(o)(3) mandates that an attorney
admitted to practice law in California “report to the agency charged with attorney discipline, in
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writing, within 30 days of the time the attorney has knowledge of . . . [t]he imposition of judicial

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sanctions against the attorney, except for sanctions for failure to make discovery or monetary

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sanctions of less than . . . $1,000.” At oral argument Plaintiff conceded that Mr. Watson had made

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no such report; accordingly, even he apparently does not believe the sanctions were imposed

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against him personally. As the sanctions were imposed against Watson LLP, Plaintiff’s motion to

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stay execution of the judgment must be denied.

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Even if the sanctions were imposed against Mr. Watson personally, the record does not
show that a bond is a waste of money or that other creditors will be put in undue jeopardy.

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Plaintiff’s motion itself demonstrates that a bond is needed: Plaintiff contends that Mr. Watson

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cannot even pay a bond on a $110,000 judgment without going in default on his student loans.

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United States District Court
Northern District of California

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And Mr. Watson’s declaration does not credibly demonstrate that his student loans will go into

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default if he is required to post a bond. He does not explain what the amount of the bond would

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be. He does not identify his income, his other debts, his ability to obtain credit, or the amount of

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his student loan payments. (Dkt. No. 60-2.) His conclusory statement that “[i]t is financially

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impossible for me to personally post a supersedeas bond in the amount of $110,799.50” is not

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credible, especially given that he misrepresented to this Court that the debtor intended to file a

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supersedeas bond. (Dkt. No. 59.)

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For all these reasons, the motion to stay the execution of the judgment is DENIED.

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Further, Defendant’s motion for a judgment debtor exam is GRANTED. A representative of the

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law firm of Watson LLP with knowledge of its finances shall appear in this Court on October 11,

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2018 at 9:00 a.m. for a judgment debtor exam. A separate order will issue on the judgment debtor

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exam.

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Any party may file objections to this Order with the district judge within fourteen days

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after being served with a copy. See 28 U.S.C. § 636(b)(1); Fed. R. Civ. P. 72(b); N.D. Cal. Civ.

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L.R. 72. Failure to file an objection may waive the right to review of the issue in the district court.

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This Order terminates Docket Nos. 57 & 60.

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IT IS SO ORDERED.

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Dated: September 21, 2018
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JACQUELINE SCOTT CORLEY
United States Magistrate Judge

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United States District Court
Northern District of California

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