Ray Capital Inc et al v. M/V Newlead Castellano et al
Filing
138
ORDER granting in part and denying in part 131 Motion to Stay Pending Appeal and to Approve Supersedeas Bond. It is ORDERED that the temporary stay of execution entered in this matter pursuant to the Court's Order dated September 28, 2017 SHAL L EXPIRE at 5:01 p.m. EST on October 30, 2017 without further notice or judicial action. It is FURTHER ORDERED that DHL MUST post and file with the Clerk of this Court a supersedeas bond in the amount of $1,417,766.13 on or before 5:00 p.m. EST on Monday, October 30, 2017. Upon DHL's timely filing of the aforementioned supersedeas bond as instructed, this matter SHALL be stayed pending DHL's presently pending appeal. Signed by Chief Judge J. Randal Hall on 10/25/17. (loh)
IN THE UNITED
FOR THE
STATES DISTRICT COURT
SOUTHERN DISTRICT OF GEORGIA
SAVANNAH DIVISION
IN ADMIRALTY
RAY CAPITAL INC.;
CAPITAL LTD.;
LTD.;
OPPENHEIM
*
CHEYENNE HOLDINGS
*
and LABROY SHIPTRADE
*
LIMITED,
*
•
Plaintiffs,
*
v.
*
M/V NEWLEAD CASTELLANO, IMO NO.
9686338, her engines, tackle,
equipment, furniture,
appurtenances, etc., in rem,
416-093
*
*
*
*
and NEWLEAD CASTELLANO LTD.,
CV
*
Defendants.
*
ORDER
On
("DHL")
September
27,
2017,
DHL
Project
&
Chartering
Limited
filed its Emergency Motion for Stay Pending Appeal and
to Approve Supersedeas Bond.
(Doc. 131.)
Therein, DHL requests
that the Court "stay or enjoin distribution of the vessel sale
proceeds
up
to
the
amount
deposit with the [Court's]
pendency
of DHL's appeals."
of
$[2,371,491.15],
currently
on
Registry in this action during the
(Id.
at 2.)
DHL also requests
therein that the Court ''approve a supersedeas bond in an amount
representing four and one quarter percent
(4.25%)
per annum of
the total amount of DHL's claim to the amount on deposit in the
Court['s Registry]
62(d).,fl
(Id. )
inter alia,
had
an
($2,371,491.15),
pursuant to
Fed.
Civ.
P.
In an Order dated September 28, 2017, the Court,
deferred ruling on DHL's motion "until the Court has
opportunity
submitted by
to
Plaintiffs
consider
as
bond proffered by DHL."2
Plaintiffs
filed
inter alia,
their
to
the
any
argument
propriety
(Doc. 134, at 3.)
response
to
of
or
the
evidence
supersedeas
On October 11, 2017,
DHL's
motion
arguing
that,
DHL should be required to post a supersedeas bond in
an amount between $1,325,229.133 and $2,758,640.26.4
137,
R.
(See Doc.
at 12-15.)
Pursuant
to
Federal
Rule
of
Civil
Procedure
62(d),
appellant may obtain a stay by giving a supersedeas bond.5
1 i.e., a supersedeas bond in the amount of $100,788.37.
2 The Court also stayed in part the execution on the
September 13, 2017, in the amount of $2,371,491.15.
see also Doc. 129-2.)
Judgment
an
"The
entered
(See Doc. 134, at 3-4;
The Court also instructed Plaintiffs and their counsel
that, to the extent that the Clerk of Court had already distributed the funds
remaining
in
the
Court's
registry
to
Plaintiffs
without
retaining
the
aforementioned $2,371,491.15, they were to pay that amount into the Court's
Registry immediately.
(See Doc. 134, at 4 n.3.)
On October 10, 2017, the
Clerk entered notice on the record that Plaintiffs' counsel
$2,371,491.15 in the Court's Registry.
(See Doc. 136.)
had
deposited
3 This figure consists of an alleged deficiency claim that may be pursued by
Plaintiffs in the amount of $1,068,390.12, one-year's interest on that amount
at a rate of 10% per annum (i.e., $106,839.01), plus $150,000.00 in estimated
legal fees.
(See Doc. 137, at 15.)
4 This figure consists of the entire amount DHL seeks to restrain on appeal
(i.e., $2,371,491.15), one-year's interest on that amount at a rate of 10%
per annum (i.e., $237,149.11), plus $150,000.00 in estimated legal fees.
(See Doc.
137,
at
14-15.)
5 See Fed. R. Civ. P. 62(d)
("If an appeal is taken, the appellant may obtain
a stay by supersedeas bond, except in an action described in Rule 62(a)(1) or
(2) .
The bond may be given upon or after filing the notice of appeal or
after obtaining the order allowing the appeal.
The stay takes effect when
the court approves the bond."); see also LAdR 13, SDGa. ("Except as provided
in Rule LAdR 11,
no execution of judgment shall
issue nor shall seized
property be released pursuant to judgment or order of dismissal,
until
fourteen days after its entry.
Upon filing of a motion for new trial or
notice of appeal or motion to set aside default within said fourteen-day
purpose
while
of
protecting
appeal."
1498
supersedeas
a
Prudential
(11th Cir.
appeal
as
1986)
of
at *1
(S.D.
Ga.
Broadcasting-Paramount
also
(7th Cir.
In
re
function
the
conditions
and
Fed.
preserve
the
party's
rights
of
Am.
posts
Baptist
(quoting Am.
of
781
a
Vill.,
of
the
whether
the
Mfrs.
Inc.,
87
Realty
bond conform to
approve or disapprove the bond.
1494,
2007
WL
(internal quotation marks
limited to
sureties
F.2d
Inc.,
Mut.
Ins.
S.Ct.
1,
for
is
pending
bond in accordance
227
court
quo
"A party taking an
Tr.,
the
Facilities
status
entitled to a stay of a money
May 14, 2007)
Theatres,
Boyd,
omitted).
if he
v.
v.
("[0]n a timely application
1955)
the
right
Allen
and alterations omitted)
73(d)
Co.
(citations
62(d)."
to
non-appealing
Ins.
a matter
Rule
1430314,
see
is
from the District Court is
judgment
with
the
bond
a
3
F.2d
a
651,
655
supersedeas,
whether
requirements
are
v. Am.
(1966));
determination
the
thereon
Co.
of
adequate,-
But if it approves,
Rule
it
may
the stay
follows automatically under the last sentence of Rule 62(d), and
the
court
has
no
discretion
in
the
matter.") .
"The
amount
of
the supersedeas bond should cover the potential judgment, appeal
costs,
2012
interest,
WL
and damages for delay."
12930586,
at
*2
(S.D.
Ga.
Jan.
Caviness v.
13,
2012)
Holland,
(citations
omitted).
period, a further stay shall exist for a period not to exceed thirty days
from the entry of judgment or dismissal to permit the entry of an order
fixing the amount of a supersedeas bond and the filing of same.").
Here,
DHL
has
offered
supersedeas bond
a
$100,788.376
in
connection
distribution
of
$2,371,491.15
Plaintiffs
13, 2017
with
its
from
request
the
in connection with the Judgment
(doc.
this matter.
129-2)
in the
Court'
131,
at 2,
stay
Registry
of
the
to
entered on September
pending the resolution of
(See Doc.
to
amount
17-19.)
DHL's appeal in
The Court,
however,
finds that the amount presently proffered by DHL is insufficient
for
several
First,
reasons.
the
interest
one-quarter percent
rate
that
DHL
has
proposed,
four
and
(4.25%), is not a fair metric of the damages
that Plaintiffs will suffer by staying execution on the Judgment
in
part.
Notably,
the
interest
rate
associated
financing transactions upon which
Plaintiffs'
were based was "ten percent
per annum,
(10%)
with
the
underlying claims
computed daily and
on the basis of the actual number of days elapsed and a year of
365
days."
(See Docs.
18-1
through
18-4.)
These
transactions were entered into between December 23,
26, 2015.
(Id.)
Notably,
InterBank Offered Rate
("LIBOR")
0.5836% as of December 23,
May 26,
2015;
September 13,
i.e.,
the twelve-month U.S.
the same
financing
2013 and May
Dollar London
interest rate was approximately
2013 and approximately 0.7568% as of
rate was
approximately
1.7123%
as of
2017 (i.e., the date that Judgment was entered in
4.25% of $2,371,491.15,
Plaintiffs'
favor
in
Administration
based
(LIBOR),
Reserve
matter) .7
(IBA),
Limited
Rate
this
12-Month
on
U.S.
(See
London
Dollar,
Bank
ICE
Interbank
retrieved
of
The
one-year
approximately
0.13%
as
0.22% as of May 26,
as
of
September
Federal
Market
of
Louis,
retrieved
bill
secondary
23,
2013
(See
(US),
from
Board
1-Year
Plaintiffs
in a
market
and
Federal
Reserve
all other factors the same,
could obtain on the
of
13,
rate
was
approximately
Governors
Treasury
https://fred.stlouisfed.org/series/TBlYR,
Accordingly,
October
the same rate was approximately 1.25%
2017.
System
Federal
St.
December
2015;
13,
Reserve
Rate,
treasury
Offered
from
https://fred.stlouisfed.org/series/USD12MD15 6N,
2017.)
Benchmark
Bill
the
Secondary
Bank of
October
of
St.
13,
Louis;
2017.)
the interest rate that
open market
were
they to
engage
similar financing transaction should be equal to or greater
than the
interest
rate
they obtained at
the
time
they entered
into the original underlying financing transactions.
execution
of
precluded
from
with the funds
Judgment
entering
in
this
into
restrained.
a
matter,
similar
Accordingly,
By staying
Plaintiffs
financing
will
be
transaction
the Court will require
that the interest component of the supersedeas bond that may be
7
"The
London
InterBank
Offered
Rate
(LIBOR)
is
a
benchmark
interest
rate
disseminated by the British Bankers' Association based on the rate at which
certain banks predict they can borrow funds.
LIBOR is a reference point in
determining interest rates for financial instruments in the United States and
globally." Gelboim v. Bank of Am. Corp., 135 S, Ct. 897, 903 (2015).
filed
in
this
compounded
matter
daily,
be
so
as
set
to
at
ten
account
percent
for
the
(10%)
per
damages
annum,
suffered by
Plaintiffs by the stay contemplated hereby.
Second,
bond
even at
amount
would
this
still
adjusted interest rate,
be
insufficient
to
the resulting
account
for
damages
that may be suffered by Plaintiffs by a stay of execution on the
Judgment entered in their favor.
Plaintiffs'
favor
(See Doc.
129-2.)
Registry
in
Judgment's
was
entry was
As
present
to
this
matter
$6,682,868.88.
sum
at
of
$7,751,259.00.
the
Plaintiffs
(i.e., $1,068,390.12).
a practical matter,
pursuing that
collective
time
have
of
the
indicated
pursue a deficiency judgment for the difference
between these figures
4.)
the
the Judgment entered in
The total amount of funds held in the Court's
relation
their intent to
for
Here,
Plaintiffs
will
(See Doc.
be
117,
at
prevented from
deficiency judgment during the pendency of DHL's
appeal.
Because
this delay
in pursuing
a deficiency
judgment may allow for the dissipation of assets from which that
deficiency judgment could be collected,
DHL to post
a bond
that accounts
potential deficiency judgment.
the Court will require
for the frustration of that
The Court will not require DHL,
however, to post a bond that includes an amount representing the
funds presently held in the Court's Registry in connection with
this
matter
(i.e.,
$2,371,491.15)
precisely because
such
funds
are presently held in the Court's Registry for safe-keeping and
therefore
there
is
no
risk
that
Plaintiffs
will
be
unable
to
collect on those funds should they be successful on appeal.
Finally,
for
the
Plaintiffs'
bond
amount
anticipated
attorney's fees and costs.
to
pay
"the
(including legal fees)
connection
with
the
costs
on
Notably,
by Plaintiffs provide that
obligated
proposed by
DHL
appeal,
72,
132,
of
all
incurred by the
enforcement
This
Castellano Ltd.'s
successors
150,
asserts
182.)
DHL
Castellano
Ltd.
Plaintiffs
are
fees
incurred
supersedeas
of,
costs
or
the
fees
must
judgment.");
8
»t
'Finance
DHL's
v.
is
118-1,
have
their
this
of
any
on
Newlead
id.
at
27,
assignee
of
Newlead
2,
6.)
matter.
as
a
See
11199069,
90,
Accordingly,
anticipated
included
2015 WL
expenses
Mortgagee in
binding
(See
at
is
(See Doc. 18-6, at
is
the
their
appeal
in
Lepore,
it
and
preservation
and assigns.
that
to
entered
Inc.
2015)
attorneys'
likewise
during
including
[respective]
obligation
Doc.
entitled
bond
Enterprises,
Sept. 3,
(See
account
Defendant Newlead Castellano Ltd.
amount
164-65.)
not
the relevant mortgages held
rights under, any Finance Document . . . ."8
10,
does
attorney's
part
of
Matthew
at
*4
any
Focht
(N.D.
Ga.
("[B]ecause Defendant is entitled to recover his
incurred
require
Avirgan
Document"
is
v.
during
security
Hull,
defined
Plaintiff's
in
125
under
excess
F.R.D.
the
appeal,
the
Court
of
the
underlying
185,
188
(S.D.
mortgages
as
"the
Note,
Fla.
the
Guarantee, th[e] Mortgage, [or] any other document which may at any time be
executed by any person as security for the payment of all or any part of the
Indebtedness . . . ."
(Doc.
18-6,
at 6, 68,
128,
160-61.)
1989)
("The bond amount should also include attorneys'
defendants will incur on appeal.").
$150,000.00
expenses
is
a
reasonable
(including
$100,000.00
is
a
While Plaintiffs argue that
estimate
attorney's
of
fees),
more
reasonable
upon
the
fees the
its
appeal
the
estimate
Court
of
costs
finds
these
and
that
costs
and
expenses.
Accordingly,
IS
HEREBY ORDERED
that
foregoing
DHL's
and
due
Emergency Motion
Appeal and to Approve Supersedeas Bond (doc.
PART,
DENIED IN PART;
consideration,
more specifically,
for
IT
Stay Pending
131) is GRANTED IN
any request therein to
stay execution of the Judgment pending appeal absent the posting
of
a
supersedeas
sufficient
therein
bond
is
DENIED,
to stay execution of the Judgment
the posting of a
sufficient
contours
are
of
which
set
supersedeas
forth
below
but
the
request
pending appeal with
bond
-
is
-
the
GRANTED.
specific
IT
IS
FURTHER ORDERED that the temporary stay of execution entered in
this matter pursuant to the Court's Order dated September 28,
2017 (doc. 134, at 3-4)
SHALL EXPIRE at 5:01 p.m. EST on October
30, 2017 without further notice or judicial action.
IT
IS FURTHER ORDERED that,
the Judgment pending appeal,
Clerk
of
this
Court
a
in order to
stay execution of
DHL MUST post and file with the
supersedeas
bond
in
the
amount
of
$1,417,766.13 on or before 5:00 p.m. EST on Monday, October 30,
2017.9
The aformentioned supersedeas bond MUST have as surety a
corporation that:
of Georgia;
U.S.C.
and
§§
(i)
(ii)
claim,
damages
for delay,
timely
filing
instructed,
pending
of
to
SHALL NOT
in the
State
(iii)
for
appeal
-
agrees
to
undertake
the
full
amount
of
costs
and
expenses,
as
security -
the
interest,
in the amount of $1,417,766.13.
the
aforementioned
potential
and
Upon DHL's
supersedeas
bond
as
this matter SHALL be stayed pending DHL's presently-
appeal.
pursuant
and
liability
deficiency
authorized to do business
is authorized to execute surety bonds under 31
9304-08;
assume
is
The
Rules
alter
filing
59(e)
DHL's
or
of
60(b)
obligations
a
motion
with
for
reconsideration
regards
to post
the
to
this
Order
supersedeas bond
in the timeframe or amount imposed hereby.
ORDER ENTERED
October,
at
Augusta,
Georgia,
this
_^T_V day
of
2017.
HALL, CHIEF JUDGE
IITE:Df STATES DISTRICT COURT
SRN
DISTRICT
OF GEORGIA
9 This figure is comprised of: (i) $1,068,390.12 (Plaintiffs' deficiency
claim); (ii) $249,376.01 (one-year's interest on $2,371,491.15 at 10% per
annum, compounded daily); and (iii) $100,000.00 (Plaintiffs' anticipated
appellate
costs,
including attorney's
fees).
Because of the contingent
nature of Plaintiffs' deficiency claims, the Court has not included interest
on any potential resulting deficiency judgment in its calculations.
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