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)

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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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