Praxis Energy Agents Pte Ltd. v. M/V Pebble Beach

Filing 100

MEMORANDUM ORDER re 97 MOTION to Enforce Judgment or a Supersedeas Bond filed by M/V Pebble Beach is DENIED. Signed by Judge Leonard P. Stark on 12/6/21. (ntl)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE

PRAXIS ENERGY AGENTS PTE. LTD.,
Plaintiff,
C.A. No. 17-559-LPS

V.

MN PEBBLE BEACH
Its engines, tackle, apparel, and freights,
Defendant in rem.

MEMORANDUM ORDER
WHEREAS, on July 26, 2021, the Court issued an order (D.I. 84) awarding Sithonia
Shipholding S.A. ("Sithonia"), the owner of Defendant in rem, MN Pebble Beach, $170,402.01
in attorneys' fees and costs incurred in connection with this lawsuit;
WHEREAS, the order also required that Plaintiff Praxis Energy Agents Pte. Ltd.
("Praxis") pay an additional $27,527.33 into the Registry of the Court as countersecurity,
representing the difference between the award of attorneys' fees and the amount then being held
in the Registry (see id.);
WHEREAS, on August 9, 2021, Praxis filed a letter indicating that it was "unable to
make [the] further deposit," citing reasons including that it had "experienced a downturn in
business" and that "it no longer [was] operating" (D.I. 85);
WHEREAS, after the Court ordered Praxis to submit evidence sufficient to support its
claims of financial hardship (see D.I. 88), on August 17, 2021, Praxis submitted an affidavit of
its Director, Theodosios Kyriazis, attesting to Praxis ' lack of assets, strained liquidity, and
multiple pending claims against it (see D.I. 89-1 );

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WHEREAS, on August 18, 2021 , the Court issued an oral order excusing Praxis from
paying the additional countersecurity (see D.I. 90), explaining:
The Court "possesses broad discretion in deciding whether to order
countersecurity." CAC Mar. , Ltd. v. Redbrick Ventures, Ltd., 2021
WL 3048405, at *2 (D. Del. July 20, 2021). "In deciding whether
countersecurity should be ordered, two major principles govern: (1)
parties should be placed on an equal footing with respect to security;
and (2) Rule E(7) is not meant to be so burdensome so as to prevent
the bringing of the suit." Id. In view of Praxis ' financial hardship
(see D.I. 85, 89-1), the additional countersecurity appears to be
burdensome. The parties are already placed on substantially equal
footing with the existing security and countersecurity deposited.

(Id.);
WHEREAS, on August 30, 2021 , the Court entered final judgment. (D.I. 93) Relevant
to the instant motion, the final judgment provides:
The amounts [of Praxis ' countersecurity] held in the Registry of the
Court pursuant to the orders of the Court shall remain in the Registry
of the Court until Praxis has paid the judgment for fees and costs, or
until after all appeals (if any) have been ruled upon.

(Id.) ;
WHEREAS, on September 24, 2021 , Praxis filed a notice of appeal to the United States
Court of Appeals for the Third Circuit, appealing the final judgment and several of the Court's
prior orders issued in the course of this lawsuit (D.I. 94);
WHEREAS, on October 13, 2021 , Sithonia filed the pending motion for an order for a
supersedeas bond or to enforce judgment (D.I. 97);
WHEREAS, the Court has reviewed the parties' submissions filed in connection with
Sithonia's motion (see, e.g., D.I. 97-1 , 98, 99);
NOW, THEREFORE, IT IS HEREBY ORDERED that Sithonia's motion (D.I. 97) is
DENIED.

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1.

Contrary to Praxis' contention (see D.I. 98 at 1), the Court retains jurisdiction to

consider Sithonia's motion. 1 "The filing of a notice of appeal ... confers jurisdiction on the
court of appeals and divests the district court of its control over those aspects of the case
involved in the appeal." Griggs v. Provident Consumer Discount Co. , 459 U.S. 56, 58 (1982).
However, "[a] district court, during the pendency of an appeal is not divested of jurisdiction ...
to issue orders regarding the filing of bonds or supersedeas bonds." Venen v. Sweet, 758 F.2d
117, 120 n.2 (3d Cir. 1985).
2.

Pursuant to Federal Rule of Civil Procedure 62(b), a party may obtain a stay of

execution on a judgment by posting a supersedeas bond. 2 However, "courts may forego that
requirement when there are other means to secure the judgment creditor's interests." In re Diet

Drugs (Phentermine/Fenfluramine/Dexfenfluramine) Prod. Liab. Litig., 582 F.3d 524, 552 (3d
Cir. 2009); see also e.g. , Montalvo v. Larchmont Farms, Inc. , 2011 WL 6303247, at *1 (D.N.J.
Dec. 15, 2011) (" [D]istrict courts within the Third Circuit have found that they have discretion
under Rule 62(d) to waive the bond requirement in whole or in part."); Arban v. W Publ 'g

Corp., 345 F.3d 390, 409 (6th Cir. 2003) (finding that Rule 62(d) does not constrain district
courts from granting stays in accordance with their discretion); Fed. Prescription Serv. v. Am.

Pharm. Ass 'n, 636 F.2d 755, 757-58 (D.C. Cir. 1980) ("Rule 62(d) only operates to provide that

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The Court finds that it lacks jurisdiction with respect to Sithonia' s request that the Court "enter
an Order releasing to Sithonia the funds currently held in the Court' s Registry as partial
satisfaction of the final judgment." (D .I. 97-1 at 7) Granting this request would require the
Court to alter the final judgment currently on appeal, a judgment which provides that the funds
"shall remain in the Registry of the Court until Praxis has paid the judgment for fees and costs,
or until after all appeals (if any) have been ruled upon." (D.I. 93) Thus, this aspect of Sithonia' s
request is denied without prejudice.
2

Rule 62(b), as amended in 2018, carries forward the supersedeas bond provisions of former
Rule 62(d) in a modified form .
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an appellant in all cases may obtain a stay as a matter of right by filing a supersedeas bond, and
does not prohibit the district court from exercising a sound discretion to authorize unsecured
stays in cases it considers appropriate."). The purpose of the supersedeas bond is "to preserve
the status quo during the pendency of an appeal and protect the winning party from the
possibility of loss resulting from the delay in execution." VICI Racing, LLC v. T-Mobile USA,
Inc., 921 F. Supp. 2d 317, 335 (D. Del. 2013). In "extraordinary circumstances," courts may
exercise their discretion to waive the requirement of a supersedeas bond where "posting a full
bond is impossible or impracticable," and where alternative means will "provide adequate (or as
adequate as possible) security" for the judgment creditor's interest. See Grand Entm 't Grp., Ltd
v. Star Media Sales, Inc. , 1992 WL 114953, at *2 (E.D. Pa. May 18, 1992).
3.

Here, exceptional circumstances warrant a stay of enforcement of the judgment

without requiring Praxis to post a full bond. While Sithonia is correct that the Court' s prior order
excusing Praxis from providing countersecurity for the full amount of the judgment applied a
different legal standard and, so, is "not the same" as a ruling that Praxis need not post a full bond
for the final judgment pending appeal (see D.l. 97-1 at 5-6), the Court's factual finding of Praxis'
financial hardship underlying the prior order informs the Court's decision on the instant motion.
According to the Kyriazis affidavit, Praxis "has ceased operations and has no income, or, except
for the PEBBLE BEACH claims and approximately USD 8,000 bank account balance, no
substantial assets." (D.I. 89-1

,r 3)

pending claims against it. (See id

In the meantime, Praxis is facing more than $1.4 million in

,r,r 4-8)

Given Praxis' financial condition, requiring it to post

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a full bond, or even a bond equal to the difference between the award of attorneys' fees and the
amount currently held in the Registry of the Court, would be impracticable, if not impossible. 3
4.

Either ordering Praxis to post a bond or, in the alternative, allowing Sithonia to

enforce the judgment against Praxis, would engender a substantial risk of driving Praxis into
insolvency, which - if it were to occur - would cause irreparable harm to Praxis, and would "put
[Praxis' ] other creditors in undue jeopardy." Olympia Equip. Leasing Co. v. W Union Tel. Co.,
786 F .2d 794, 796 (7th Cir. 1986). Courts across jurisdictions have waived or reduced the bond
requirements that would result in a judgment debtor' s insolvency. See, e.g., Miami Int '! Realty
Co. v. Paynter, 807 F.2d 871, 874 (10th Cir. 1986) (finding that district court did not abuse

discretion in granting stay without full supersedeas bond when judgment debtor "was financially
unable to post a full bond and that execution on the judgment would place him in insolvency");
Utah Physicians for a Healthy Env 't, Inc. v. Diesel Power Gear, LLC, 2020 WL 4904188, at *2

(D. Utah Aug. 20, 2020) (finding that bond for less than full judgment was warranted where
defendant "would be irreparably harmed in the form of insolvency, bankruptcy, the potential
foreclosure of [Defendant's] home, and the termination of . .. employees"); Fed. Trade Comm 'n
v. Commerce Planet, Inc., 2012 WL 13015007, at *9 (C.D. Cal. Sept. 13, 2012) (staying

judgment pending appeal based on reduced bond where judgment debtor "cannot post a full bond

3

Sithonia cites Evergreen Cmty. Power LLC v. Riggs Distler & Co. , Inc. , 2012 WL 2974891
(E.D. Pa. Aug. 31 , 2012), for the proposition that the Court should apply the factors set out in
Dillon v. City of Chicago, 866 F .2d 902 (7th Cir. 1988), to determine whether an "exceptional
circumstance" exists. (See D.I. 97-1 at 3-5) The first four Dillon factors, however, appear to
relate to the scenario in which a judgment debtor has sufficient resources to satisfy the judgment
but posting a supersedeas bond would create "an unnecessary waste of money" or an
"administrative burden." See Evergreen, 2012 WL 3781538, at *2; Dillon, 886 F.2d at 904-05.
The fifth Dillon factor - "whether the defendant is in such a precarious financial situation that
the requirement to post a bond would place other creditors of the defendant in an insecure
position" (Dillon, 886 F.2d at 905) - is more pertinent here.
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for the $18.2 million judgment, and enforcement of the judgment would leave him insolvent");
Jack Frost Labs., Inc. v. Physicians & Nurses Mfg. Corp., 1996 WL 709574, at *1 (S.D.N.Y.

Dec. 10, 1996) ("(W]here a judgment debtor would otherwise be in danger of being driven into
bankruptcy pending appeal, a stay may be granted without the debtor posting a bond in the full
amount of the judgment."); Hurley v. Atlantic City Police Dept. , 944 F. Supp. 371,378 (D.N.J.
1996) (granting stay without bond where there was "strong likelihood that enforcement of this
judgment would push (the judgment debtor] into bankruptcy"); C. Albert Sauter Co., Inc. v.
Richard S. Sauter Co., Inc., 368 F. Supp. 501 , 520 (E.D. Pa. 1973) (setting bond at less than full

amount of judgment where defendants " (were] without sufficient assets to satisfy the judgment
and [were] unable to obtain a bond in the amount of the verdict plus counsel fee and costs").
5.

In the Court's view, Praxis' countersecurity currently held in the Registry of the

Court- which accounts for more than 80 percent of the total attorneys' fees awarded- has
provided security for Sithonia's interest to an extent that is as practically adequate as possible
under the circumstances, and has placed the parties "on substantially equal footing" with regard
to their respective securities for the judgment currently on appeal. (See D.I. 90) While
Sithonia' s judgment is not fully secured, that consideration is outweighed by the unfavorable
consequences of the reliefrequested by Sithonia, and is undermined by Sithonia' s failure to
persuade the Court that allowing it to enforce judgment before Praxis completes its appeal would
increase the probability of collecting the judgment in full. See Olympia Equip., 786 F .2d at 799.
In sum, this case presents "exceptional circumstances" warranting excusing Praxis from posting
a full bond for the final judgment pending appeal.

H
b~1!hTARK

December 6, 2021
Wilmington, Delaware

UNITED STATES DISTRICT JUDGE

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