Ventas, Inc. v. HCP, Inc.
Filing
558
MEMORANDUM OPINION AND ORDER by Judge John G. Heyburn, II on 8/18/2011; Ventas is entitled to judgment on the mandate of the Sixth Circuit Court of Appeals in the amount of $101,672,807.00, plus interest. The issue concerning the Letter of Credit remains under the Court's consideration.cc:counsel (TLB)
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF KENTUCKY
AT LOUISVILLE
CIVIL ACTION NO. 3:07-CV-238-H
VENTAS, INC.
PLAINTIFF
V.
HCP, INC.
DEFENDANT
MEMORANDUM OPINION AND ORDER
Plaintiff, Ventas, Inc. (“Ventas”), seeks execution of a judgment issued by the Sixth
Circuit in its favor against Defendant, HCP, Inc. (“HCP”) and to draw upon the Letter of Credit
(the “LOC”) issued in conjunction with this Court’s Agreed Order dated December 15, 2009,
staying enforcement of this Court’s earlier judgment (the “Agreed Order”). Additional briefing
at the Court’s request followed a conference with counsel at which all issues were thoroughly
discussed.
I.
On September 8, 2009, this Court entered a judgment against HCP in Ventas’s favor in
the amount of $101,672,807.00. To facilitate its appeal, HCP sought to stay enforcement of that
judgment. After fairly extensive negotiation, the parties executed the Agreed Order in which
Ventas agreed to refrain from executing on the judgment during certain defined appellate
proceedings, consistent with Fed. R. Civ. P. 62(d). Additionally, HCP agreed to post the LOC as
security for the judgment in conjunction with the Agreed Order. The Agreed Order provides that
if “any portion” of the judgment “has become final and nonappealable,” Ventas may draw upon
the LOC “without further order of this Court.”
On May 17, 2011, the Sixth Circuit entered an opinion affirming Ventas’s compensatory
damages award, certifying its judgment as immediately enforceable pursuant to Rule 54(b), and
remanding the case for trial on punitive damages. On May 31, 2011, HCP moved for a panel
rehearing and rehearing en banc. The Sixth Circuit denied the motion and on July 5, 2011,
issued its mandate.
On July 8, 2011, Ventas sent a letter to the Court, arguing that the Sixth Circuit mandate
effectively dissolved the Agreed Order, entitled Ventas to the immediate enforcement of its
compensatory damages award, and entitled Ventas to draw upon the LOC. HCP responded that
because “appeal” to the United States Supreme Court is possible, the Agreed Order remains in
effect and the conditions allowing Ventas to draw upon the LOC have not been met. The
questions before the Court are 1) whether this Court’s stay of execution is enforceable against
the Sixth Circuit judgment and 2) whether Ventas may draw upon the LOC.
II.
The judgment of the United States Court of Appeals for the Sixth Circuit has affirmed
this Court’s compensatory damages award in favor of Ventas in the amount of $101,672,807.00
plus interest, reversed in other regards, and remanded. Generally, once a court of appeals issues
its mandate under Rule 41 of the Federal Rules of Appellate Procedure, all issues within the
scope of the district court judgment are deemed incorporated within the mandate and are
precluded from further review. 20A HON. GEORGE C. PRATT, MOORE’S FEDERAL PRACTICE CIVIL § 341.12[3] (3d ed. 2011). In essence, the court of appeals judgment supercedes the
district court judgment and becomes the controlling or operative judgment. Here, the Court of
Appeals judgment entitles Ventas to the immediate enforcement of the compensatory damages
award under Fed. R. Civ. P. 54(b). This raises the question of whether this Court’s stay of
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execution regarding its own judgment applies to the now-controlling Court of Appeals judgment.
Where any court’s final judgment is subject to review only by the Supreme Court, only
the Supreme Court or the court issuing the judgment may stay the execution of it. 28 U.S.C. §
2101(f). Although the Sixth Circuit has not specifically addressed the issue of a district court’s
power to stay the execution of an appellate court judgment, the federal courts seem to have
reached a consensus. The federal courts have consistently relied upon § 2101(f) for the rule that
district courts lack jurisdiction to stay the execution of an appellate court judgment. See William
A. Graham Co. v. Haughey, No. 05-612, 2011 U.S. Dist. LEXIS 70129, *6-7 (E.D. Pa. June 30,
2011); United States v. Lentz, 352 F. Supp. 2d 718, 725-26 (E.D. Va. 2005); Brinkman v. Dep’t
of Corr. of the State of Kan., 857 F. Supp. 775, 776 (D. Kan. 1994); Gander v. FMC Corp., 733
F. Supp. 1346, 1347 (E.D. Mo. 1990); Mister v. Ill. Cent. Gulf R.R., 680 F. Supp. 297. 298-99
(S.D. Ill. 1988); Studiengesellschaft Kohle, mbH v. Novamont Corp., 578 F.Supp. 78, 79-80
(S.D. N.Y. 1983); See also In re Stumes, 681 F.2d 524, 525 (8th Cir. 1982). “The power of a
district court to grant a stay of judgment pending appeal [under Federal Rule of Civil Procedure
62(d)] terminates when the Court of Appeals issues its mandate,” and any stay issued by a
district court during the pendency of an appeal expires. Gander v. FMC Corp., 733 F. Supp. at
1347.1
The unassailable logic of these cases seems to dictate the initial answers to the questions
1
See also Haughey, 2011 U.S. Dist. LEXIS 70129, at *6 (“It is one thing for a district court to grant a stay
of its own judgment under Rule 62(d) pending the resolution of an appeal to the Court of Appeals...It is quite another
thing for this court to grant a motion to stay [an appellate court judgment pending review of a petition for certiorari
to the Supreme Court]. The district court judgment has been superseded by the judgment of the Court of Appeals,
even though the latter affirms the district court judgment in all respects.”); Brinkman, 857 F. Supp. at 776 (holding
that the issuance of the appellate court mandate dissolved the existing district court stay, even though the appellate
court judgment affirmed the district court on all issues).
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presented. The Agreed Order expired with the issuance of the Sixth Circuit’s mandate. This
Court is without jurisdiction to stay execution of the Sixth Circuit’s judgment – only the Sixth
Circuit and the Supreme Court can do so. HCP could have sought either a stay of execution of
the Sixth Circuit judgment under 28 U.S.C. § 2101(f), or a stay of the Sixth Circuit’s mandate
under Fed. R. App. P. 41(d). It chose not to do so. Rather than rush to execute on its judgment,
Ventas has shown restraint by requesting advice of this Court.
Finally, nothing in the Agreed Order prevents the application of these rules and the
exercise of Ventas’s rights under the judgment of the Court of Appeals. The fact that the Court
of Appeals remanded a portion of the case to this Court for further action does not change the
analysis. Further, the analysis is consistent with whatever result may come from this Court’s
consideration of Ventas’s right to draw upon the LOC which remains under submission.
Being otherwise sufficiently advised,
IT IS HEREBY ORDERED that Ventas is entitled to judgment on the mandate of the
Sixth Circuit Court of Appeals in the amount of $101,672,807.00, plus interest.
The issue concerning the Letter of Credit remains under the Court’s consideration.
August 18, 2011
cc:
Counsel of Record
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