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.