Mueller v. State of Hawaii Department of Public Safety, et al.
Filing
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ORDER DENYING DEFENDANT STATE OF HAWAII DEPARTMENT OF PUBLIC SAFETY'S MOTION FOR A STAY PENDING APPEAL AND REQUEST FOR EXEMPTION FROM REQUIREMENT TO PAY SUPERSEDEAS BOND (ECF No. 517 ) - Signed by SENIOR JUDGE HELEN GILLMOR on 3/2/2022. Defendant State of Hawaii Department of Public Safety's Motion for a Stay Pending Appeal and Request For Exemption From Requirement To Pay Supersedeas Bond is DENIED. Defendant State of Hawaii Department of Public Safety's Motion for an additional Temporary Administrative Stay of 30 days is DENIED. (jo)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF HAWAII
ELIZABETH A. MUELLER,
Plaintiff,
vs.
STATE OF HAWAII DEPARTMENT OF
PUBLIC SAFETY; FREDDIE
CARABBACAN; NOLAN ESPINDA,
Defendants.
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CIVIL NO. 17-00571 HG-WRP
ORDER DENYING DEFENDANT STATE OF HAWAII DEPARTMENT OF PUBLIC
SAFETY’S MOTION FOR A STAY PENDING APPEAL AND REQUEST FOR
EXEMPTION FROM REQUIREMENT TO PAY SUPERSEDEAS BOND (ECF No. 517)
On November 12, 2021, following a seven-day trial, the jury
returned a verdict in favor of Plaintiff Elizabeth Mueller
against Defendant State of Hawaii Department of Public Safety and
Defendant Freddie Carabbacan.1
The jury awarded damages against Defendant State of Hawaii
Department of Public Safety in the amount of $5,000,000.
The
jury awarded damages against Defendant Freddie Carabbacan in the
amount of $2,050,000.
On November 15, 2021, Judgment was entered.
(ECF No. 510).
On December 13, 2021, Defendant State of Hawaii Department
of Public Safety filed a Motion for a New Trial Under Rule 59(a)
and/or Remittitur and Relief Under Rule 59(e).
(ECF No. 514).
On December 14, 2021, Defendant State of Hawaii Department
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The jury returned a verdict in favor of Defendant Nolan
Espinda for the claims Plaintiff brought against him.
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of Public Safety filed a Motion entitled, “MOTION RE: SUPERSEDEAS
BOND AND FOR STAY PENDING APPEAL.”
(ECF No. 517).
On January 14, 2022, Plaintiff filed her Opposition to
Defendant’s Motion RE: Supersedeas Bond.
(ECF No. 533).
The Court elects to decide the matter without a hearing
pursuant to District of Hawaii Local Rule 7.1(c).
STANDARD OF REVIEW
Federal Rule of Civil Procedure 62(a) provides that, absent
a court order to the contrary, execution on a judgment and
proceedings to enforce it are stayed for 30 days after its entry.
The losing party may otherwise obtain a stay of the
execution of the judgment by providing a bond or other security
as approved by the District Court.
Fed. R. Civ. P. 62(b).
The
stay takes effect when the Court approves the bond or other
security and remains in effect for the time specified in the bond
or security.
Id.
Rule 62 was amended in 2018.
Under the new rule, a stay
upon filing a notice of appeal is not automatic.
A party is
entitled to a stay of the judgment as a matter of right upon
posting a bond or security.
Mohr v. MLB Sub I, LLC, Civ. No. 16-
00493 ACK-WRP, 2020 WL 3803847, *2 (D. Haw. July 7, 2020).
The
amendment also provides that the Court may allow a party seeking
a stay to post security in a form other than a bond.
Fed. R.
Civ. P. 62(b) Advisory Committee Note to 2018 Amendments;
Philadelphia Indem. Ins. Co. v. Ohana Control Sys., Inc., Civ.
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No. 17-00435 SOM-RT, 2020 WL 3013105, *1-*2 (D. Haw. June 4,
2020).
The purpose of the bond or security is to protect the
prevailing party from the risk of a later uncollectible judgment
and to compensate the party for delay in enforcement of the
judgment.
NLRB v. Westphal, 859 F.2d 818, 819 (9th Cir. 1988).
District Courts have inherent discretionary authority in
requiring and setting the amount of supersedeas bonds.
Rachel v.
Banana Republic, Inc., 831 F.2d 1503, 1505 n.1 (9th Cir. 1987).
The default rule is that the losing party seeking to appeal must
provide a full supersedeas bond covering the entire amount of the
judgment.
Paeste v. Gov’t of Guam, 2014 WL 12725108, *3 (D. Guam
May 28, 2014).
Courts frequently require a supersedeas bond for
the amount of the judgment plus interest, costs, and an estimate
of any damages attributed to the delay.
11 Wright & Miller, Fed.
Prac. & Proc. Civ. § 2905 (3d ed.).
ANALYSIS
A party may seek a stay of execution of judgment as a matter
of right by posting a supersedeas bond.
Fed. R. Civ. P. 62(b).
Defendant State of Hawaii seeks a stay of execution of the
Judgment against it without posting a supersedeas bond based on
two arguments.
First, the State argues that it is not required to post a
bond pursuant to Federal Rule of Civil Procedure 62(f).
Second, the State argues that even if Rule 62(f) does not
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relieve the State from posting a bond, the Court should exercise
its discretion and waive the requirement to post bond or
security.
I.
Fed. R. Civ. P. 62(f)
Federal Rule of Civil Procedure 62(f) provides:
If a judgment is a lien on the judgment debtor’s
property under the law of the state where the court is
located, the judgment debtor is entitled to the same
stay of execution the state court would give.
The Defendant State of Hawaii argues that it is not required
to post a bond in this case based on Rule 62(f).
The Defendant
State of Hawaii’s reliance on Rule 62(f) is misplaced.
The
Judgment in this case is not a lien on the State’s real property
under Hawaii law.
A.
The Judgment Is Not An Automatic Lien Against Real
Property Under Hawaii State Law
Federal Rule of Civil Procedure 62(f) provides for a stay of
execution only when the judgment results in an automatic lien on
the real property of the losing party.
Here, the Judgment in favor of Plaintiff Mueller must
constitute an automatic lien on the real property of the State of
Hawaii in order for the State to be exempt from posting a
supersedeas bond.
Moore’s Fed. Prac. § 62.05 (3d ed.).
The Judgment in this case does not constitute an automatic
lien upon the real property of the State of Hawaii.
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Similar to California law, a judgment may become a lien on
the real property of a judgment debtor in Hawaii, but only after
the creditor records the judgment in the Bureau of Conveyances.
Aldasoro v. Kennerson, 915 F.Supp. 188, 190-91 (S.D. Cal. 1995)
(explaining that the California state law’s requirements to file
the judgment and abstract in the real property records in the
county in which the real property is located does not meet Rule
62(f)’s exemption requirements).
Pursuant to Hawaii state law:
Any money judgment, order, or decree of a state court
or the United States District Court for the District of
Hawaii shall be a lien upon real property when a copy
thereof, certified as correct by a clerk of the court
where it is entered, is recorded in the bureau of
conveyances.
Haw. Rev. Stat. § 636-3.
The Hawaii state law requirement to file the judgment with
the Bureau of Conveyances in order to obtain the lien means that
a judgment is not an automatic lien on the real property of the
debtor.
Hawaii state law’s statutory procedures require
additional steps for a judgment to become a lien against real
property and do not meet the exemption requirements of Fed. R.
Civ. P. 62(f).
See Ribbens Int’l, S.A. de C.V. v. Transp. Int’l
Pool, Inc., 40 F.Supp.2d 1141, 1143 n.2 (C.D. Cal. 1999) (finding
California law filing requirement does not meet criteria for
exemption pursuant to Fed. R. Civ. P. 62(f)).
There is no evidence provided by the Defendant State of
Hawaii to support its position that the filing with the Hawaii
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Bureau of Conveyances is merely a ministerial act to transform a
judgment into a lien.
See Rodriguez-Vazquez v. Lopez-Martinez,
345 F.3d 13, 14 (1st Cir. 2003).
Hawaii has two land recording
systems including Land Court and its Torrens system.
See Wells
Fargo Bank, N.A. v. Omiya, 420 P.3d 370, 377-78 (Haw. 2018).
The
State has not addressed any additional mechanisms or procedures
that may be required for a party seeking to encumber property
registered in Land Court.
B.
See Haw. Rev. Stat. § 501-82(a)(9).
Hawaii Law Does Not Allow For Liens Against Real
Property Of The State Of Hawaii
Even if the entry of judgment constituted an automatic lien
on the judgment debtor’s real property under Hawaii law, Fed. R.
Civ. P. 62(f) is inapplicable in this case because Hawaii state
law provides that a judgment against the State cannot attach to
the real property of the State of Hawaii.
2.
Haw. Rev. Stat. § 651-
There is no legal mechanism for Plaintiff to obtain a lien
against the real property of the Defendant State of Hawaii
Department of Public Safety.
Id.
A judgment lien is defined pursuant to Hawaii law as a lien
binding the real estate of a judgment debtor which gives the
holder of the judgment a right to levy on the debtor’s real
property for the satisfaction of the judgment.
Matter of 2003 &
2007 Ala Wai Blvd. v. City and Cnty. of Honolulu, 944 P.2d 1341,
1353 (Haw. App. 1997), (overruled on other grounds in Knauer v.
Foote, 63 P.3d 389, 393 (Haw. 2003)).
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Section 651-2 of the Hawaii Revised Statutes explains that a
judgment lien cannot be attached to the real property of the
State of Hawaii.
Hawaii Revised Statues § 651-2, provides that
“no writ of attachment shall be issued against the State, or any
political municipal corporation, or subdivision thereof.”
There
can be no lien against the real property of the State of Hawaii
for which Plaintiff can seek satisfaction of the Judgment in this
case.
Fed. R. Civ. P. 62(f) is inapplicable here because there can
be no lien against the real property of the State of Hawaii.
Rule 62(f) does not provide the Defendant State of Hawaii with a
method to avoid posting a supersedeas bond to stay execution of
the judgment.
II.
State’s Request To Waive Bond Requirement
A losing party has the right to a stay of the execution of
the judgment by paying a supersedeas bond, but an unsecured stay
is reserved for unusual circumstances as determined in the
court’s discretion.
Bolt v. Merrimack Pharms., Inc., 2005 WL
2298423, *2 (E.D. Cal. Sept. 20, 2005).
A party seeking a
departure from the normal requirement of a full security
supersedeas bond bears the burden of showing a sufficient basis
for such a departure from the norm.
Lewis v. Cnty. of San Diego,
2018 WL 1071704, *2 (S.D. Cal. Feb. 27, 2018).
Courts rely on five factors in evaluating a request to waive
the supersedeas bond requirement:
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(1)
the complexity of the collection process;
(2)
the amount of time required to obtain a judgment after
it is affirmed on appeal;
(3)
the degree of confidence that the District Court has in
the availability of funds to pay the judgment;
(4)
whether the losing party’s ability to pay the judgment
is so plain that the cost of a bond would be a waste of
money; and,
(5)
whether the losing party is in such a precarious
financial position that the requirement to post a bond
would place other creditors of the losing party in an
insecure position.
Guitierrez v. City of Carson, 2013 WL 12241842, *2 (C.D.
Cal. Jan. 22, 2013) (citing Dillon v. City of Chicago, 866 F.2d
902, 904-05 (7th Cir. 1988)).
The burden is on the losing party that requests that the
Court waive the bond requirement to demonstrate sufficient
reasons to depart from the default rule requiring a supersedeas
bond.
Paeste v. Gov’t of Guam, 2014 WL 12725108, *3 (D. Guam May
28, 2014).
A.
Complexity And Time Required To Collect Judgment
District Courts in the Ninth Circuit routinely rely on the
Dillon test to examine the appropriateness of waiving the
supersedeas bond requirement as the factors are more
particularized and comprehensive than the Nken stay factors.
See
Cotton ex rel. McClure v. City of Eureka, 860 F.Supp.2d 999,
1028-29 (N.D. Cal. 2012) (citing United States v. Moyer, 2008 WL
3478063, *12 (N.D. Cal. Aug. 12, 2008)).
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The first two Dillon factors relating to the complexity and
timing involved in collecting from the State of Hawaii weigh in
favor of requiring a bond.
As Plaintiff points out in her Opposition, collection of the
Judgment against the State of Hawaii in this case is complex and
may cause additional protracted delays in this case.
Payment of
the Judgment would require the passage of a legislative
appropriations bill during the next legislative session.
Haw.
Const. art. VII, § 5; Haw. Rev. Stat. § 37-77; (Opp. at p. 10,
ECF No. 533).
There is no evidence that any steps have been
taken for payment of the Judgment in this case, or that any funds
for fees and costs have been approved and set aside by the State.
The acts for which the Defendant State of Hawaii has been
found liable began in July 2014.
in October 2017.
Litigation in this case began
The District Court previously ruled that the
statute of limitations in this case was equitably tolled based on
Defendant State of Hawaii Department of Public Safety’s
employees’ actions in preventing Plaintiff Mueller from timely
filing her claim.
394).
(Findings of Fact, Conclusions of Law; ECF No.
Any additional delays following the possible appeal in
this case favors requiring the posting of a supersedeas bond.
B.
Defendant State Of Hawaii’s Willingness And Ability To
Pay Judgment
The third, fourth, and fifth Dillon factors relating to the
State’s willingness and ability to pay the bond also support
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requiring a supersedeas bond.
The State has provided no evidence
in support of its claim that it is willing and able to pay the
Judgment and that the funds are readily available.
The State
merely cites to the total tax income it receives without any
context of its budgets, appropriations, or the procedural
mechanisms required for the Judgment to be paid in this case.
The procedural posture of this case and the sanctionable
conduct by the State’s counsel during trial support the need for
a supersedeas bond to protect Plaintiff’s ability to collect.
See Paeste v. Gov’t of Guam, 2014 WL 12725108, *4 (D. Guam May
28, 2014) (explaining the Defendant Government of Guam’s
litigation tactics and the case’s procedural posture supported
the finding that the Government was both unwilling and unable to
pay the judgment).
The Defendant State of Hawaii has a history
of delay and incomplete compliance with Court orders in this
case.
The State Defendant was admonished numerous times during
trial and was monetarily sanctioned for failing to comply with
the Magistrate Judge’s order compelling discovery.
An Order has
entered which required the State to pay attorneys’ fees.
(Court’s November 26, 2019 Order re: Sanctions and Attorneys’
Fees, ECF No. 203).
Defendant relies heavily on the fact that it is a government
entity in support of its request to waive the bond requirement.
Numerous courts have required government appellants to post a
bond on appeal even where there is evidence of funds available to
pay a judgment.
See Paeste, 2014 WL 12725108, *5 (ordering the
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Government of Guam to pay a $2.2 million dollar supersedeas
bond); Balla v. Idaho State Bd. of Corr., 2010 WL 3001442, *2 (D.
Idaho July 28, 2010) (requiring the State of Idaho to pay a
supersedeas bond on appeal in a prison civil rights case);
Cotton, 860 F.Supp.2d at 1028-29 (requiring the City to post a
supersedeas bond even though the City provided some evidence of
the accounts that might be used to pay the judgment).
Here, the Defendant filed no evidence to demonstrate the
availability of funds for the State to readily pay the damages,
interest, and potential fees and costs in this case.
If there is
no issue with the State’s ability to pay and it is financially
solvent as it contends, it “makes a supersedeas bond little more
than a minor inconvenience” and supports requiring the State to
post the bond.
Balla, 2010 WL 3001442, at *1 (quoting
O’Callaghan v. SPX Corp., 2010 WL 299497, at *2 (E.D. Mich.
2010)).
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CONCLUSION
Defendant State of Hawaii Department of Public Safety’s
Motion for a Stay Pending Appeal and Request For Exemption From
Requirement To Pay Supersedeas Bond is DENIED.
Defendant State of Hawaii Department of Public Safety’s
Motion for an additional Temporary Administrative Stay of 30 days
is DENIED.
DATED: Honolulu, Hawaii, March 2, 2022.
IT IS SO ORDERED.
Elizabeth A. Mueller v. State of Hawaii, Department of Public
Safety; Freddie Carabbacan; Nolan Espinda; Civ. No. 17-00571 HGWRP; ORDER DENYING DEFENDANT STATE OF HAWAII DEPARTMENT OF PUBLIC
SAFETY’S MOTION FOR A STAY PENDING APPEAL AND REQUEST FOR
EXEMPTION FROM REQUIREMENT TO PAY SUPERSEDEAS BOND (ECF No. 517)
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