Consumer Financial Protection Bureau v. Global Financial Support, Inc. et al

Filing 148

ORDER Regarding Defendant's 143 Motion to Stay Pending Appeal. Motion hearing for 10/22/21 is Vacated. Signed by Judge Gonzalo P. Curiel on 10/20/21. (dlg)

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UNITED STATES DISTRICT COURT

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SOUTHERN DISTRICT OF CALIFORNIA

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CONSUMER FINANCIAL
PROTECTION BUREAU,

Case No.: 15-cv-2440-GPC
ORDER REGARDING
DEFENDANT’S MOTION TO STAY
PENDING APPEAL

Plaintiff,
v.
GLOBAL FINANCIAL SUPPORT, INC.,
d/b/a STUDENT FINANCIAL
RESOURCE CENTER, d/b/a COLLEGE
FINANCIAL ADVISORY; and

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ARMOND ARIA a/k/a ARMOND AMIR
ARIA, individually, and as owner and
CEO of GLOBAL FINANCIAL
SUPPORT, INC.,

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[ECF No. 143]

Defendants.

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On August 22, 2021, Defendant Armond Aria (“Defendant”), proceeding pro se,

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filed the instant Motion to Stay Pending Appeal. ECF No. 143. The motion has been fully

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briefed. ECF Nos. 145, 146. Upon consideration of the moving papers and the applicable

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law, and for the following reasons, the Court DENIES Defendant’s motion to stay the

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execution of judgment pending appeal without a supersedeas bond. However, the Court

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GRANTS a temporary stay of thirty (30) days to allow Defendant an opportunity to post

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a supersedeas bond.

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I.

BACKGROUND
On October 29, 2015, Plaintiff Consumer Financial Protection Bureau (“Plaintiff”)

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filed its Complaint against Defendants for alleged violations of various sections of the

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Consumer Financial Protection Act (“CFPA”) and 12 U.S.C. §§ 5531, 5536(a)(1)(B),

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5564(a) and 5565 in connection with the offering, marketing, sale, and provision of

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deceptive student financial aid advisory services. ECF No. 1; see also ECF No. 131

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(Plaintiff’s Amended Complaint, dropping Counts IV and V against Defendant Aria).

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This Court previously stayed the civil proceedings from May 17, 2016 to May 27, 2019

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based on an ongoing parallel criminal investigation of Defendant. ECF No. 73. On

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January 25, 2021, this Court granted partial summary judgment for Plaintiff against

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Defendant Armond Aria and granted Plaintiff’s motion for default judgment against

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Global Financial Support, Inc. (“Global”). ECF No. 120. The Court held Defendants

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jointly and severally liable for restitution in the amount of $4,738,028 and a civil money

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penalty in the amount of $10 million, and the Clerk of Court subsequently entered a

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Default Judgment that reflected the restitution and civil money penalties against

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Defendants. ECF No. 121.

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On March 29, 2021, this Court entered an Amended Final Judgment and Order for:

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(1) a permanent ban on the provision of financial advisory services by Defendants,

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whether acting directly or indirectly; (2) a prohibition on deceptive practices in

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connection with the advertising, marketing, promotion, sale, or performance of any

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consumer financial product or service; (3) a prohibition on violations of Regulation P, 12

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C.F.R. § 1016.4(a); (4) a prohibition on using or disclosing customer information except

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where requested by a government agency or required by law or court order; (5) an order

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that Defendants cooperate fully with CFPB to determine the identity, location, and

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amount of injury with regard to each affected consumer; (6) an order that Defendants pay

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redress in the amount of $4,738,028; (7) an order that Defendants pay a civil money

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penalty of $10 million dollars; and additional monetary, record-keeping, reporting, and

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notice requirements. ECF No. 132.

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Defendant then moved for reconsideration and to stay all proceedings, which

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this Court denied. ECF Nos. 131, 135. On May 19, 2021, Defendant noticed an appeal

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before the Ninth Circuit, Docket No. 21-55525. ECF No. 139. Defendant was

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incarcerated following related criminal proceedings from April 5, 2021 to August 3,

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2021. United States v. Aria, No. 20-cr-3191, ECF No. 28 (S.D.Cal. Apr. 8, 2021). On

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April 9, 2021, the Bureau agreed to Defendant’s request to postpone compliance with

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certain provisions of the Court’s order while Defendant was incarcerated. Schichor Decl.

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¶ 4 (ECF No. 145-1 at 2). The extension lasted until August 18, 2021. Id. On August 18,

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2021, Defendant improperly emailed the Court with a “request for extension of time to

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comply with ECF No. 132,” and was advised that the Court would not consider this

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informal request. The same grounds contained in that email now form the basis of

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Defendant’s instant motion, which is short and summary: Defendant requests a stay of

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execution of judgment based on the fact that, following Defendant’s release from 120-

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day custody, Defendant is “now attempting to return to some sense of normalcy, which

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includes rebuilding [his] health after having lost nearly 40 pounds” during detention. ECF

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No. 143-1 at 2. The motion provides no further rationale, and Defendant has not posted a

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bond or other security relating to the requested relief.

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II.

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DISCUSSION
Generally, the district court is divested of jurisdiction over the matters being

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appealed once an appeal is filed. NRDC, Inc. v. Southwest Marine Inc., 242 F.3d 1163,

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1166 (9th Cir. 2001). However, the district court retains jurisdiction to handle stays of

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judgment and to modify injunctions pending appeal, a limited exception codified in

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Federal Rule of Civil Procedure (“Rule”) 62. Id.

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Rule 62 provides that if an appeal is taken, the appellant may obtain a stay of

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execution of judgment by posting a supersedeas bond. Fed. R. Civ. P. 62(b) and (d). The

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purpose of the supersedeas bond is to secure an appellee from a loss that may result from

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the stay of execution. Rachel v. Banana Republic, Inc., 831 F.2d 1503, 1505 n.1 (9th Cir.

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1987). While Rule 62 “is silent on the amount of such a bond,” district courts have

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discretion to determine the appropriate amount. ThermoLife International, LLC v.

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Myogenix Corp., No. 13-cv-651-JLS, 2018 WL 1001095, at *2 (S.D.Cal. Feb. 21, 2018)

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(quoting Inhale, Inc. v. Starbuzz Tobacco, Inc., No. 2:11-cv-3838-ODW, 2013 WL

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361109, at *1 (C.D. Cal. Jan. 30, 2013)). “Although practices vary among judges, a bond

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of 1.25 to 1.5 times the judgment is typically required.” Id. (quoting Cotton ex rel.

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McClure v. City of Eureka, 860 F. Supp. 2d 999, 1029 (N.D. Cal. 2012)).

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“When a party wishes a court to “depart from the usual requirement of a full

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security supersedeas bond,” the burden is on the moving party to show reasons for the

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departure from the normal practice.” Salameh v. Tarsadia Hotel, 2015 WL 13158486, at

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*2 (S.D. Cal. May 19, 2015) (citing Poplar Grove Planting & Ref. Co. v. Bache Halsey

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Stuart, Inc., 600 F.2d 1189, 1191 (5th Cir. 1979)). A district court may either waive the

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bond requirement or allow the judgment debtor to use some alternative type of security.

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ThermoLife International, LLC v. Myogenix Corp., 2018 WL 1001095 at *1 (S.D.Cal.

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Feb. 21, 2018). In determining whether to waive the posting of a bond, courts consider

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what are known as the Dillon factors: (1) the complexity of the collection process; (2) the

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amount of time required to obtain a judgment after it is affirmed on appeal; (3) the degree

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of confidence that the district court has in the availability of funds to pay the judgment;

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(4) whether the defendant’s ability to pay the judgment is so plain that the cost of a bond

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would be a waste of money; and (5) whether the defendant is in such a precarious

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financial situation that the requirement to post a bond would place other creditors of the

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defendant in an insecure position. Dillon v. Chicago, 866 F.2d 902, 904-04 (7th Cir.

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1988); see ThermoLife, 2018 WL 1001095; see also Kranson v. Fed. Express Corp., No.

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11-cv-5826-YGR, 2013 WL 6872495, at *1 (N.D. Cal. Dec. 31, 2013) (“Courts in the

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Ninth Circuit regularly use the Dillon factors in determining whether to waive the bond

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requirement.”). “Plaintiffs bear the burden of formulating an alternative plan and the

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court will not imagine one of its own.” Salameh, 2015 WL 13158486, at *2.

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Here, Defendant requests that his compliance with “any district court orders be

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stayed until the appellate court rules on the matter.” ECF No. 143-1 at 2. Defendant’s

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sole justification is his attempt to “return to some sense of normalcy,” including

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“rebuilding [his] health” following his incarceration. Id. The Court notes that Defendant’s

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request seems to cover the entirety of the Amended Final Judgment and Order, including

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its injunctive and prohibitory provisions. Insofar as Defendant may be requesting a stay

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of the judgment’s provisions unrelated to restitution and monetary penalties, his request

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is denied. Defendant has provided no justification for a stay of any of the non-monetary

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provisions of the judgment.

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Therefore, only Sections VI and VII of the Amended Final Judgment and Order

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(ECF No. 132) remain at issue. Defendant’s arguments rest on the fifth Dillon factor: a

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precarious financial situation that puts other creditors in an insecure position. Defendant’s

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Reply Brief argues that he is unable to post a supersedeas bond because he has exhausted

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his life savings, needs money to cover living expenses and the costs of his appeal, and if

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forced to post a bond of more than $2000, will be “forced to prematurely file for

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bankruptcy because the Bureau can freeze [Defendant]’s personal bank account and start

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the proceedings to sell his primary residence while he appeals this case.” ECF No. 146 at

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3. In addition, Defendant argues that a bond would place his other creditors, “such as his

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Mortgage Company, Home Equity Loan, and Home Association” in an insecure position.

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Defendant also argues that he is likely to win his appeal, and that he will “comply with

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the orders to the extent that he is able.” Id. at 4.

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A sister district court within our circuit found similar arguments unconvincing. In

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United States ex rel. Cafasso v. General Dynamics C4 Systems, Inc., No. CV-06-01381,

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2010 WL 384594 (D. Ariz. Jan. 29, 2010), Plaintiff Cafasso moved to stay a monetary

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judgment entered against her because of her inability to pay either the judgment or the

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bond, requesting that the court waive any bond requirement and suggesting the

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dissipation of her retirement funds as alternative security. The court, proceeding under

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the Dillon factors, rejected these requests. It reasoned that Cafasso, who was living on

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credit at the time, did not explain how expanding her debt during the requested stay

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would leave the judgment creditor “in as good a position later as it would have as a

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diligent creditor now,” nor did she explain “why bankruptcy is inadequate to protect her

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from execution.” Id. at *4. The court therefore ruled that the judgment creditor was

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entitled to execute on its judgment. Id.

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Here, Defendant has not offered any alternative security, and it is not the Court’s

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role to “imagine” an alternative to a supersedeas bond on Defendant’s behalf. Salameh,

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2015 WL 13158486, at *2. The Court finds that the Dillon factors do not weigh in favor

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of waiving the bond requirement. As to the first two factors, Defendant has not offered

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any arguments or basis for the Court to consider the complexity of the collection process

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or the amount of time required to obtain a judgment after it is affirmed on appeal. The

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Court is not confident in the availability of funds to pay the judgment, and it is clear from

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the moving papers that the Defendant’s ability to pay the judgment is not so plain the cost

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of a bond would be a waste of money. As to the final factor, Defendant has asserted a

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precarious financial position, but the assertion that he “has practically almost no assets” is

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belied by Defendant’s repeated mentions of the residence he owns. ECF No. 146 at 4.

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Nor does the Court find it convincing that Defendant’s recent release from incarceration

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constitutes a reason supporting an inability to pay. The Court agrees with Plaintiffs that

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granting an unbonded stay would be contrary to the public interest because Defendant’s

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resources may diminish over time, making it more difficult to provide redress and

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recovery to Defendant’s former consumers as ordered by this Court. ECF No. 145 at 5.

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See FTC v. Am. Tax Relief, LLC, No. 11-6397, 2012 WL 12886917, at *2 (C.D. Cal. June

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19, 2012) (“[T]he public interest strongly weighs against a stay . . . [where] the alleged

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victims of a fraud have an interest in achieving compensation if they are entitled to it.”).

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This is especially true where Defendant himself asserts that his debt is currently

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expanding, as he is borrowing money to cover living expenses. ECF No. 146 at 3.

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Defendant has not met his burden to show why this Court should depart from the usual

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requirement of a full security supersedeas bond in order to grant a stay of judgment

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pending appeal.

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CONCLUSION

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Based on the reasoning above, the Court DENIES Defendant’s motion for order

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staying enforcement of judgment through appeal without a bond. However, the Court

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GRANTS a temporary stay of thirty (30) days with regard to Sections VI and VII of the

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Amended Final Judgment and Order (ECF No. 132) to allow Defendant an opportunity to

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post a supersedeas bond of $4,738,028. Once Defendant obtains a bond, Defendant is

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directed to submit to the Court the bond and a proposed order to stay enforcement of

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judgment as to Sections VI and VII of the Amended Final Judgment and Order while the

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appeal is pending. If a bond is not submitted within thirty (30) days, the temporary stay

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shall be automatically lifted.

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IT IS SO ORDERED.
Dated: October 20, 2021

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