U.S. Home Corporation v. Settlers Crossing, L.L.C. et al

Filing 765

MEMORANDUM OPINION. Signed by Judge Deborah K. Chasanow on 6/29/2015. (sat, Chambers)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
:
U.S. HOME CORPORATION
:
v.

:

Civil Action No. DKC 08-1863

:
SETTLERS CROSSING, LLC, et al.
:
MEMORANDUM OPINION
On January 22, 2015, following a post-trial motions hearing
on

several

unresolved

issues,

the

undersigned

issued

a

memorandum opinion and final judgment (“the Judgment”) in this
case involving a contract dispute over the sale of 1,250 acres
of land in Prince George’s County, Maryland (the “Property”).1
(ECF

Nos.

730

and

731).

As

part

of

the

Judgment,

Defendant/Counter-Plaintiff iStar Financial, Inc. (“iStar”) was
awarded specific performance of the parties’ Purchase and Sale
Agreement (“PSA” or “Agreement”)2 and Plaintiff/Counter-Defendant

1

This memorandum opinion includes only the facts and
arguments relevant to the narrow issues raised in the parties’
pending motions.
A full factual description of the dispute
between the parties can be found in the previous opinions. (ECF
Nos. 41, 95, 433, 445, 484, 493, 548, 603, 624, 707, and 730).
2

The Parties’ Purchase Agreement (JTX 41) and Second
Amendment to the Purchase Agreement (JTX 56), capture the major
terms of their agreement. The parties also executed a Contract
for Services (JTX 42), and several other documents and
amendments, which provide other relevant details of their
bargain. The Judgment requires that Purchaser pay $114,000,000,
the principal amounts due under the under the PSA and Contract

Lennar

Corporation,

(collectively
settlement

and

its

subsidiary

“Purchaser”),

within

thirty

were

days

and

U.S.

Home

ordered

to

perform

Corporation
proceed

their

to

obligations

under the parties’ Agreement, including payment of the Purchase
Price for the Property and interest on the Purchase Price as
provided for in the Agreement.
Following

issuance

of

the

Judgment,

the

parties

filed

several motions, including: (1) a motion to clarify the Judgment
filed by Purchaser (ECF No. 732); (2) a motion to stay the
Judgment filed by Purchaser (ECF No. 733); and (3) a motion for
a civil contempt order filed against Purchaser by iStar. (ECF
No. 740).3

The issues have been fully briefed, and the court now

rules, no hearing being deemed necessary.

Local Rule 105.6.

For the following reasons, Purchaser’s motion to clarify the
Judgment

will

Purchaser’s

be

motion

granted
to

stay

in

part

the

and

Judgment

denied
will

in
be

part,
granted

and
on

for Services, plus interest as provided for in these agreements.
For simplicity sake, the amounts due under these agreements,
which are fully detailed in the prior opinion, will hereinafter
be referred to as the “Purchase Price.”
3

Also pending are motions for attorneys’ fees and costs
filed by Defendants Steven B. Sandler and iStar. (ECF Nos. 735
and 736).
As noted in the March 3, 2015 paperless order, the
parties’ memoranda in support of their respective motions for
attorneys’ fees are due following the resolution of the appeal.
In addition, the undersigned will defer ruling on Purchaser’s
objections to Magistrate Judge Connelly’s July 16, 2014 order
awarding attorneys’ fees to iStar (ECF No. 711) until the
appellate process has concluded, in order to adjudicate all
submissions regarding attorneys’ fees at one time.
2

condition

that

Purchaser

post

the

requisite

bond.

iStar’s

motion for a civil contempt order will be denied.
I.

Motion to Clarify the Judgment
A.

Interest on the Purchase Price

The first issue is whether the interest rate provided in
the Judgment, which reflects the language used in the parties’
PSA and Contract for Services, should be calculated on a simple
or compound basis.

That portion of the Judgment states that:

Judgment will be entered in favor of iStar
and against U.S. Home and Lennar on Counts
I-III of iStar’s amended counterclaim (ECF
No. 447), in the amount of $114,000,000 plus
interest at a rate of 12% per annum,
calculated on a per diem basis from May 27,
2008 until Purchaser proceeds to Settlement,
plus real estate taxes in the amount of
$1,556,203.32.
(ECF No. 730, at 45 and 731) (emphasis added).
Purchaser argues that the contractual interest rate should
be calculated on a simple basis.

According to Purchaser, “[t]he

Purchase and Sale Agreement does not ‘specifically provide’ for
compound interest or ‘speak directly’ to providing interest on
interest.”

(ECF No. 732-1, at 10).

Purchaser asserts that the

word “compound” does not appear anywhere in the interest section
of

the

PSA,

nor

does

the

PSA

provide

a

frequency

at

which

compounding of interest should occur.
In response, iStar argues that Purchaser has waived its
right to challenge the interest provision because it failed to
3

raise

this

argument

at

trial

or

at

the

post-trial

hearing.

iStar argues that “the PSA contemplates that the 12% interest
rate

will

be

compounded

annually

and

added

to

Price” until Purchaser proceeds to Settlement.
2-3).

the

Purchase

(ECF No. 738, at

In addition, iStar contends that it has consistently

applied a compound annual interest rate as part of its Proposed
Final Pretrial Order, and that it presented evidence at trial to
support its claimed damages based on a compound interest rate.
It asserts that Purchaser waived this issue because it never
challenged

these

assertions

or

presented

rebuttal

evidence.

According to iStar, the plain language of PSA § 3(a) calls for
interest to accrue on the Purchase Price and be added annually
to the Purchase Price.

(ECF No. 738, at 8).

The January 22, 2015 opinion and Judgment did not provide a
specific dollar amount for the interest due on the Purchaser
Price, just as this opinion will not provide a dollar amount,
because

the

daily.

Additionally, the Judgment did not indicate whether the

interest

amount

would

be

of

interest

calculated

on

owed

a

by

simple

Purchaser

or

increases

compound

basis

because the Judgment incorporated the language from the parties’
own Agreement.

Moreover, prior to the issuance of the Judgment,

the parties had not argued that the contractual language was
ambiguous.

Nonetheless, because Purchaser argues that it cannot

obtain a supersedeas bond until it has a clear directive from
4

the court as to what this language means, the court will clarify
the judgment and the contract language upon which the Judgment
is based.4
As noted by the United States Court of Appeals for the
Fourth Circuit in Quesinberry v. Life Ins. Co. of N. Am., 987
F.2d

1017,

1033

(4th

Cir.

1993),

“[a]bsent

a

statute

or

an

agreement between the parties an award of interest on interest
is impermissible either under general federal or common law.”
See also Cherokee Nation v. United States, 270 U.S. 476, 490
(1926) (“What the appellant here seeks is compound interest;
that is, interest on interest[.]

The general rule, even as

between private persons, is that, in the absence of a contract
therefor or some statute, compound interest is not allowed to be
computed upon a debt.”).
Section 3(a) of the Second Amended PSA states that if the
Purchaser wrongfully fails to make Settlement:
the Purchase Price shall accrue interest at
a rate of twelve percent (12%) per annum to
4

iStar’s argument that Purchaser waived this issue by
failing to provide rebuttal evidence at trial or raising this
issue post-trial will be rejected.
This post-judgment dispute
does not involve a new claim or affirmative defense by
Purchaser.
Instead, Purchaser seeks to clarify the damages it
owes to iStar.
Although the court agrees with iStar that this
issue could have and should have been raised in the parties’
post-trial briefs if the parties believed that the PSA interest
calculation provision was ambiguous, because the parties now
dispute the interpretation of the PSA language with regard to
the interest calculation methodology, it is necessary to provide
clarification at this time.
5

be calculated on a per diem basis from the
Settlement Date until Purchaser proceeds to
Settlement
in
accordance
with
this
Agreement.
In such event, any interest
accrued on the Purchase Price shall be
deemed to be an addition to the Purchase
Price hereunder.
(Emphases added).5
The “[a]llowance of interest on the unpaid interest amounts
to compound interest[.]”

Med. Mut. Liab. Ins. Soc. of Maryland

v.

108

Davis,

389

Md.

95,

(2005)

(alteration

in

original)

(emphasis added) (quoting Walker v. Acting Director, Dept. of
Forests & Parks, 284 Md. 357, 367 (1979)) (internal quotation
marks

omitted).

Compound

interest

requires

a

compounding

frequency or “rest period,” a time at which the outstanding
interest owed on the principal balance, if unpaid, is added to
the principal balance, after which time the debtor pays interest
on the new principal amount, which includes paying interest on
the

original

interest

that

became

due.

Cf.

Exxon

Corp.

v.

Crosby-Mississippi Res., Ltd., 40 F.3d 1474, 1488-89 (5th Cir.
5

Similarly, iStar is entitled to interest on the
Development Fee as provided in § 1 of the First Amended Contract
for Services.
As noted in the prior opinion, “[t]he interest
provisions that were added to the Second Amended PSA (JTX 56 §
3(a)) and the First Amended Contract for Services (JTX 55 § 1),
both executed on May 16, 2007, mirror one another, calling for
12% interest in the event Purchaser ‘wrongfully fails to make
Settlement’ under the PSA.”
(ECF No. 730, at 44 n.39).
The
only difference in the interest provision in § 1 of the Contract
for Services is that it accrues on the Development Fee from the
date Purchaser “wrongfully fails to pay the Development Fee at
[] Settlement . . . until U.S. Home pays the Development Fee[,]”
rather than until Settlement.
6

1995) (finding that an agreement called for compound interest
because it required a portion of all bills to be paid within
thirty days of receipt and provided that “[i]f payment is not
made within such time, the unpaid balance shall bear interest
monthly at the rate of twelve percent (12%) per annum”); see
also Texon Energy Corp. v. Dow Chem. Co., 733 S.W.2d 328, 331
(Tex.App. 1987) (noting that the parties’ agreement called for
interest to compound during the monthly “rest period” because it
required bills to be paid within fifteen days of receipt and
“[i]f payment is not made within such time, the unpaid balance
shall bear interest monthly at the rate of twelve percent (12%)
per annum”) (alteration and emphasis in original).

The PSA and

Contract for Services do not provide any “rest” or “compounding”
frequency.

In other words, the PSA does not provide that the

12% annual interest accruing on the Purchase Price “compounds”
on any given frequency, nor is it added to the principal amount
on

any

given

frequency,

certain frequency.

nor

are

interest

payments

due

on

a

See Ronald J. and Dana Cohen Family Ltd.

P’ship v. City of Capitals Inc., 829 F.2d 36, at *1-2 (4th Cir.
Aug.

28,

1987)

(unpublished

table

decision)

(finding

that

compound interest was not permitted when the “language [of the
instrument] [did] not provide for adding overdue interest to the
principal of the debt or for creating an accumulating account of
overdue interest, and then applying the penalty interest to such
7

lump

sum”);

(W.D.N.C.
interest

see

1995)

also

In

re

(reviewing

payments”

Fortescue,

the

required

200

B.R.

833,

“amount,
various

by

type,

and

promissory

834-35

timing
notes

of
and

finding that none required compound interest in part because
they did not specify when interest payments were due); cf. TCI
Courtyard, Inc. v. Wells Fargo Bank, NA, No. 3:13-CV-3465-L,
2014 WL 2095369, at *2 (N.D.Tex. May 20, 2014), aff’d sub nom.
In

re

TCI

(finding

Courtyard,
that

unambiguously

Inc.,

the

called

591

language
for

F.App’x
of

compound

256

the

(5th

parties’

interest

because

Cir.

2015)

agreement
it

stated

that “after default, the interest, to the extent not paid when
due,

shall

be

added

to

the

Principal

Amount”)

original) (internal quotation marks omitted).

(emphasis

in

Indeed, the PSA

indicates that the interest accrues from the “Settlement Date”
until

Purchaser

proceeds

to

Settlement,

at

which

time,

“any

interest accrued on the Purchase Price shall be deemed to be an
addition to the Purchase Price[;]”6 meaning that interest on the
Purchase Price is not due until Settlement, when it is added to
the

principal

amount,

but

at

no

time

before

Settlement

is

Purchaser required to pay interest on interest.

6

iStar argues that the language “shall be deemed an
addition to the Purchase Price” indicates that the interest is
being compounded, but iStar fails to account for the fact that
the interest is not added to the principal amount until
Settlement, meaning that only simple interest is due until
Settlement.
8

Moreover, the use of the term “per annum” in the phrase
“shall accrue interest at a rate of twelve (12%) per annum” does
not indicate that the interest is compounded annually, it merely
establishes the rate at which the interest accrues.

See Berman

v. B.C. Assocs., 219 F.3d 48, 50 (1st Cir. 2000) (noting that
“the

overwhelming

majority

of

Massachusetts

cases

equate

an

interest rate ‘per annum,’ whether in a contract or a statute,
with

simple

interest”)

(internal

citation

omitted);

see

also

American Mill. Co. v. Brennan Marine, Inc., 623 F.3d 1221, 1225
(8th Cir. 2010) (“‘Per annum’ is defined in English to mean ‘in
each year’ or ‘annually.’

Accordingly, the six percent interest

[per annum] is an annual rate, but the plain language does not
speak

directly

to

whether

the

interest

is

to

accrue

on

a

compound or simple basis.”) (internal citation omitted); Helland
v. Helland, 214 Ill.App.3d 275, 277 (1991) (“‘Per annum’ merely
denotes the frequency at which the applicable rate of interest
is to be applied and does not permit a compounded annual method
of

computation.”).

Because

the

PSA

does

not

include

any

language indicating that the accrued interest is added to the
Purchase Price on a given frequency, the use of “per annum”
alone does not suggest that the twelve percent (12%) interest
accruing on the Purchase Price is to be compounded annually.

9

B.

Post-Judgment Interest

Purchaser also seeks clarification as to what interest rate
applies post-judgment:

the federal statutory interest rate set

forth in 28 U.S.C. § 1961 or the contractual interest rate of
12%.

Purchaser asserts that “[t]o the extent the Court intended

to apply the contractual interest rate to the judgment, Lennar
respectfully

submits

that

parties’

pre-judgment

judgment

represents

a

the

Court’s

contractual
‘clear

decision

interest

error

of

rate

law,’

to

apply

of

12%

works

injustice,’ and requires relief under Rule 59(e).”

the

post-

‘manifest
(ECF No.

732-1, at 13 n.7).
Purchaser argues that “[u]nder the well-established ‘merger
doctrine,’ [] the PSA and its pre-judgment contract [interest]
rate ceased to exist and were ‘merged’ into the judgment as of
January 22, 2015.

From that point forward, the judgment must

accrue interest at the prevailing statutory rate of 0.18% — not
the previous pre-judgment contractual interest rate — because
the

parties

did

not

clearly

judgment interest rate.”

and

unambiguously

set

(ECF No. 732-1, at 12-13).

a

post-

Purchaser

contends that because the parties’ Agreement does not contain
any

clear

language

contracting

out

of

the

federal

statutory

rate, the Judgment violates clearly established law by applying
the parties’ contractual interest rate post-judgment.

10

iStar responds that the merger doctrine does not apply in
this case because this is not an instance where iStar’s claims
were extinguished and its contractual rights were merged into
the Judgment; rather, the court awarded it specific performance,
which

can

only

be

satisfied

obligations under the PSA.

by

Purchaser

performing

its

Accordingly, iStar contends that as

part of its award of specific performance, “the Court’s final
judgment entitles iStar to the benefit of all of the contractual
terms, including interest added to the Purchase Price, whenever
Lennar

actually

performs.

The

Court’s

award

of

interest

—

whether for the prejudgment period or post-judgment — is part of
the single, final judgment on iStar’s claims.”

(Id.).

iStar

argues, in the alternative, that even if the merger doctrine
were

applicable,

the

PSA’s

language

expressly

displaces

the

statutory post-judgment rate with the 12% interest rate.
As noted by the Fourth Circuit in Kanawha-Gauley Coal &
Coke Co. v. Pittston Minerals Grp, Inc., 501 F.App’x 247, 254
(4th Cir. 2012), the standard interest rate that courts apply
post-judgment is that provided in 28 U.S.C. § 1961(a):
weekly

average

published

by

1-year

the

Board

constant
of

maturity

Governors

of

System, for the calendar week preceding.”

Treasury
the

“The

yield,

Federal

as

Reserve

The Fourth Circuit

also noted in Kanawha-Gauley that: “despite the rate provided in
§ 1961(a), parties may stipulate a different rate, consistent
11

with

state

citations

usury
and

and

other

quotation

applicable

marks

law.”

omitted).

Id.

Citing

(internal

the

merger

doctrine which stands for the “basic principle that a contract
merges

into

the

judgment,”

the

court

affirmed

the

district

court’s denial of a plaintiff’s motion to alter or amend the
judgment to apply post-judgment the 5.25% interest rate provided
for in the parties’ underlying lease agreement.

The court noted

that the doctrine of merger dictates that “[o]nce a claim is
reduced

to

judgment,

the

original

claim

is

extinguished

and

merged into the judgment; and a new claim, called a judgment
debt, arises.

A single rule should govern interest on any such

debt, the nature of the original claim having become irrelevant
under the doctrine of merger.”

Id.

(quoting Kotsopoulos v.

Asturia Shipping Co., 467 F.2d 91, 95 (2d Cir. 1972)).

The

Fourth Circuit emphasized that “[b]ecause of the doctrine of
merger, other circuits have required that parties first ‘specify
a

post-judgment

interest

rate’

using

‘clear,

unambiguous

and

unequivocal language[,]’” otherwise, the post-judgment interest
rate

set

forth

in

28

U.S.C.

§

1961

applies.

Id.

(citing

Westinghouse Credit Corp. v. D’Urso, 371 F.3d 96, 102 (2d Cir.
2004); Society of Lloyd’s v. Reinhart, 402 F.3d 982, 1004 (10th
Cir. 2005); Kotsopoulos, 467 F.2d at 95).

The court reviewed

the parties’ lease agreement which stated that “[a]ny payment
not

promptly

made

by

[defendant]
12

to

[plaintiff]

shall

bear

interest from the date due at two percentage (2%) points per
annum above the prevailing prime interest rate[,]” and based on
this language found that there was “no express agreement to
overcome the doctrine of merger and § 1961(a).”
(first

alteration

in

original)

(internal

Id. at 254-55

quotation

marks

omitted).
Unlike the agreement in Kanawha-Gauley and the agreements
at issue in the other cases cited by Purchaser, here, pursuant
to Section 15(a) of the Second Amended PSA, Seller’s remedies
after a default by Purchaser were expressly limited and excluded
the

availability

of

money

damages

judgment for breach of contract.

in

the

form

of

a

money

Instead, the parties agreed

that should Purchaser default, Seller was entitled either to:
(1)

terminate

liquated
Agreement

the

damages;
and

Agreement
or

(2)

injunctive

and

obtain

retain
specific

relief,

the

deposit

performance

including

a

fee

as

of

the

court

order

requiring “Purchaser to perform the obligation which Purchaser
is required to perform hereunder, including [] to complete the
Settlement in accordance with the Agreement and pay the Purchase
Price[.]”

(JTX 56 § 15(a)).

As noted in the January 22, 2015

opinion, Seller selected specific performance as its exclusive
remedy, and therefore is entitled to an injunction and order
enforcing the specific terms of the parties’ Purchase Agreement
and

Contract

for

Services,

which
13

includes

payment

of

the

Purchase Price as defined in Section 3(a) of the Second Amended
PSA and the Development Fee as defined in Section 1 of the First
Amended Contract for Services.
these

sections,

because

Based on the express language of

Purchaser

defaulted

under

Section

15(a)(i) of the PSA by wrongfully failing to make settlement,
“the Purchase Price shall accrue interest at a rate of twelve
percent (12%) per annum to be calculated on a per diem basis
from

the

Settlement

Settlement[.]”

(JTX

Date
56

§

until

Purchaser

3(a)).

proceeds

Accordingly,

the

to

parties

expressly bargained for the remedy of specific performance and a
12% contractual interest rate to be applied until settlement,
and at the same time, contracted out of standard remedy for
breach of contract that would have entitled iStar to a money
judgment subject to post-judgment interest under 28 U.S.C. §
1961.

The Judgment, in accordance with the parties’ bargained-

for Default provision and the remedies provided for therein,
orders

Purchaser

specifically

to

perform

its

obligations,

including payment of the Purchase Price based on the specific
terms of the PSA.
result

of

The parties Second Amended PSA, which was the

extensive

negotiation

and

bargaining

between

two

sophisticated parties, clearly defined the Purchase Price and
the

rate

and

method

of

calculating

interest

on

that

price.

Accordingly, the parties’ Agreement clearly and unambiguously
specifies

an

interest

rate

that
14

is

to

be

applied

both

pre-

judgment

and

post-judgment

until

Purchaser

complies

with

its

contractual obligation to pay the Purchase Price and take title
to the Property.
II.

Motion to Stay Enforcement of the Judgment
A.

Stay Pending Appeal

Purchaser argues that pursuant to Fed.R.Civ.P. 62(d) it is
entitled to stay the court’s January 22, 2015 Judgment while its
appeal is pending.7

According to Purchaser, Rule 62(d) applies

to any judgment that it “monetary in nature” and because the
Judgment requires Purchaser to pay $114 million plus interest as
well as real estate taxes, it is a monetary judgment subject to
this

rule

despite

performance.
Rule

62(d)

the

fact

that

it

also

orders

specific

Accordingly, Purchaser contends that pursuant to
it

is

entitled

to

stay

as

of

right

through

the

conclusion of its appeal once it posts a supersedeas bond.
iStar contends that Purchaser misconstrues the nature of
the

court’s

Judgment,

arguing

that

the

court

issued

an

injunction subject to Fed.R.Civ.P. 62(c) rather than a money
judgment subject to Rule 62(d).
7

iStar argues that because Rule

Purchaser also moved to stay enforcement of the Judgment
pending resolution of its motion for clarification pursuant to
Rule 62(b). Rule 62(b) permits a court to stay execution of a
judgment pending disposition of post-trial motions under Rules
50, 52(b), 59, and 60, provided that “appropriate terms for the
opposing party’s security” are put in place.
Because this
memorandum opinion and order adjudicates Purchaser’s motion to
clarify under Rules 59 and 60, its motion to stay under Rule
62(b) is denied as moot.
15

62(c) applies, Purchaser is not entitled to an automatic stay,
rather, it must provide adequate factual support showing its
entitlement to a stay, which it purportedly has failed to do.
Although the relief ordered in the January 22, 2015 opinion
and Judgment is in part “monetary” because it ordered Purchaser
to pay the Purchase Price as part of the settlement process, it
is subject to Fed.R.Civ.P. 62(c) because it is an injunction
ordering specific performance of the parties’ Agreement.

See

Solis v. Malkani, 638 F.3d 269, 275-76 (4th Cir. 2011) (“[T]he
posting of a supersedeas bond may only stay a monetary judgment
pending appeal, Fed.R.Civ.P. 62(d), and does not permit a party
to

stay

injunctive

relief[.]”).

Pursuant

to

Rule

62(c),

“[w]hile an appeal is pending from an interlocutory order or
final

judgment

that

grants

[]

an

injunction,

the

court

may

suspend, modify, restore, or grant an injunction on terms for
bond or other terms that secure the opposing party’s rights.”
In determining whether to grant a stay, the court considers
several factors:

“(1) whether the stay applicant has made a

strong showing that he is likely to succeed on the merits; (2)
whether the applicant will be irreparably injured absent a stay;
(3) whether the issuance of the stay will substantially injure
the other parties interested in the proceeding; and (4) where
the public interest lies.”

Cross v. Fleet Reserve Ass’n Pension

Plan, No. WDQ-05-0001, 2007 WL 7143977, at *1 (D.Md. Feb. 27,
16

2007)

(internal

Braunskill,

quotation

481

U.S.

marks

omitted)

(quoting

776

(1987));

see

770,

Hilton

v.

Long

v.

also

Robinson, 432 F.2d 977, 979 (4th Cir. 1970); Dairy King, Inc. v.
Kraft, Inc., 665 F.Supp. 1181, 1189 (D.Md. 1987), aff’d 851 F.2d
356 (4th Cir. 1988).
weight.

“Each factor . . . need not be given equal

Instead, the court assesses [the] movant’s chances for

success on appeal and weighs the equities as they affect the
parties and the public.”

Par Pharm., Inc. v. TWI Pharm., Inc.,

No. CCB-11-24666, 2014 WL 3956024, at *1 (D.Md. Aug. 12, 2014)
(internal

citations

and

quotation

marks

omitted)

(quoting

Standard Havens Prods, Inc. v. Gencor Indus., Inc., 897 F.2d
511, 512-13 (Fed. Cir. 1990)).
1.

Likelihood of Success on the Merits

“A party seeking a stay pending appeal must make a ‘strong
showing’

of

However,

likely

this

success

standard

does

on

the

merits

not

require

of

the

the

trial

appeal.
court

to

change its mind or conclude that its determination on the merits
was erroneous.”

St. Agnes Hosp. of City of Baltimore, Inc. v.

Riddick, 751 F.Supp. 75, 76 (D.Md. 1990).

Rather, the appeal

“must raise[] serious and difficult questions of law[.]”

Id.

(internal citation and quotation marks omitted); see also Par
Pharm., Inc., 2014 WL 3956024, at *2 (“To succeed, [movant] []
does

not

need

to

demonstrate

that

it

will

certainly

win

on

appeal or that there is a mathematical probability of success.
17

At

a

minimum,

it

must

demonstrate

a

substantial

case.”)

(internal citation omitted).
Purchaser argues that, on appeal, it raised “substantive
objections to a number of the Court’s findings which, in [its]
view,

were

including

outcome

the

demonstrate

determinative

finding

that

that

their

in

Sellers

the

were

representations

not

and

According

to

Purchaser,

“it

was

required

warranties

“actually correct” at the time of Settlement.
14-15).

proceedings[,]”
to
were

(ECF No. 745, at
and

is

absolutely

entitled to verify [] that the truth of Sellers’ representations
and warranties was actually correct.”
original).

Purchaser

contends

(Id. at 15) (emphasis in

that

“[t]he

dearth

of

both

Maryland and Fourth Circuit case law on a number of [the issues
appealed]
merits

makes

and

stay.”

thus

them
a

sufficiently

fair

ground

serious

for

questions

litigation,

on

the

warranting

a

(Id. at 15) (internal citations and quotations marks

omitted).
iStar argues that Purchaser has not shown a likelihood of
success on the merits as “the court has thoroughly examined each
and every facet of [Purchaser’s] arguments over the course of
years and ruled in iStar’s favor.”

(ECF No. 739, at 19).

iStar

contends that Purchaser’s Rule 60 motion and its appeal are part
and

parcel

of

Purchaser’s

“modus

operandi

of

continuing

revive and re-argue the same issues over and over[.]”
18

(Id.).

to

Although the court stands by its prior rulings and final
Judgment, a number of the issues Purchaser plans to raise on
appeal are objections to this court’s interpretations of the
parties’ Agreement, which will be reviewed de novo by the Fourth
Circuit.

Perini/Tompkins Joint Venture v. Ace Am. Ins. Co., 738

F.3d 95, 101 (4th cir. 2013).

Purchaser has not necessarily

shown

success”

a

“strong

likelihood

of

on

appeal,

but

has

identified specific legal findings that raise “serious questions
of law.”

Because the balance of hardships and the interest of

efficiency weigh in favor of maintaining the status quo until
the

appeal

is

resolved,

factor is sufficient.
*2

(granting

an

Purchaser’s

showing

regarding

this

See Par Pharm., Inc., 2014 WL 3956024, at

injunction

pending

appeal

under

Rule

62(c)

despite the fact that “most of [movant’s] dispute with [the]
court’s
arguments

earlier
it

decision

ha[d]

[was]

already

made”

only

rehashing

because

“the

the

legal

balance

of

hardships” supported granting the injunction); see also Cross,
2007 WL 7143977, at *2 (granting suspension of an injunction
pending

appeal

under

Rule

62(c)

because

“[a]lthough

the

[d]efendant’s likelihood of success on appeal is not high, the
balance of factors favors a stay”).
2.

Injury to Purchaser

Purchaser argues that it will be irreparably harmed absent
a stay because it will be forced to take possession of the
19

property and will be “saddled with environmental liability that
cannot

be

undone”

by

way

of

the

Comprehensive

Environmental

Response, Compensation, and Liability Act (“CERCLA”), 42 U.S.C.
§§ 9601 et seq.

(ECF No. 745, at 16).

According to Purchaser,

its environmental liability could amount to tens of millions of
dollars.

Purchaser contends that even if it prevails on appeal,

its status as record title holder even for a short period of
time could result in future environmental liabilities.
iStar argues that Purchaser will not suffer any irreparable
harm by being required to proceed to settlement as ordered.
iStar adds that any harm that may result from Purchaser being
required to settle in accordance with the PSA is a result of
Purchaser’s own “willful acts.”

(ECF No. 739, at 23).

Despite Purchaser’s alarmist speculative claims regarding
environmental liabilities, the court can envision irreparable
harm in the form of administrative and financial burdens the
parties undoubtedly will incur by being forced to settle prior
to

the

conclusion

inconceivable
settlement
Purchaser

of

that

the

documents
prevail,

the

appeal.

parties

without

the

will

At
be

this
able

conflict.

parties

would

point,
to

need

is

finalize

Moreover,
then

it

to

should
expend

additional time and money to return title of the Property to
iStar.

20

3.

Injury to iStar

Purchaser

argues

that

iStar

will

not

be

substantially

harmed by a stay because iStar’s rights will be fully protected.
Specifically, Purchaser avers that “iStar is not only protected
by the supersedeas bond — including an additional 20% premium on
top of the judgment — it also will receive pre-judgment and
post-judgment interest if it prevails on appeal.”

(ECF No. 745,

at 18).
iStar argues that it will suffer substantial harm if a stay
of the January 22, 2015 injunction is granted while the appeal
is

pending

because

it

will

require

iStar

to

“maintain[]

ownership of property it would never have had to take ownership
of if [Purchaser] had complied with the PSA.”
20).

(ECF No. 739, at

iStar also contends that a stay would delay its “long-

overdue” relief and delay of settlement would cause substantial
harm.

Finally, iStar argues that a bond will not fully protect

its interests.
Although a stay will require iStar to maintain ownership of
the Property while the appeal is pending and will delay receipt
of its expected relief, iStar’s rights will be fully protected
during the pendency of the appeal because Purchaser will be
required to post a bond that should adequately secure iStar’s
interests.

Moreover, iStar will not be irreparably harmed by a

delay in settlement, as the contractual interest of 12%, which
21

the parties bargained for as adequate compensation for a delay
in

settlement

Purchaser

by

Price

Purchaser,
until

will

to

accrue

proceeds

Purchaser

continue

to

settlement

provided in the parties’ PSA and the Judgment.

on

the
as

iStar failed to

provide any factual support for its vague assertions that it
will be irreparably harmed by a stay.
4.

Public Interest

Purchaser argues that “[m]aintaining the status quo while
at

the

same

time

protecting

iStar

through

supersedeas bond is in the public interest.”
19).

posting

of

a

(ECF No. 745, at

Clearly, neither party is likely to develop the property

while the appeal is pending.
PSA,

iStar’s

Purchaser asserts that under the

representations

and

warranties

regarding

the

Property only survive for twelve months following settlement.
Accordingly, Purchaser argues that, if it is forced to settle
now while the appeal is pending, it “will have no means by which
to protect its interests except to commence an action against
iStar for any claims stemming from iStar’s representations and
warranties,
(Id.).
because

which

must

be

actually

correct

at

Settlement.”

Purchaser contends that a stay is in the public interest
forcing

settlement

at

this

juncture

will

lead

to

separate and duplicative litigation.
iStar argues that the public interest would not be served
by a stay for three reasons.

First, it argues that “there is a
22

public

interest

in

requiring

contractual obligations.”

parties

to

satisfy

(ECF No. 739, at 23).

their

Second, iStar

contends that “there is a public interest in preventing parties
from disregarding court orders.”

(Id. at 24).

Third, iStar

avers that it is a public company and a stay may adversely
impact its shareholders.
Although
impact

of

none

persuasive,

the

parties’

stay

a

of
on

the

public

for

the

sake

of

arguments

interest

efficiency

regarding

are
and

the

particularly
the

reasons

previously discussed, Purchaser will be granted a stay of the
January 22, 2015 injunction pending its appeal on condition that
it

posts

an

adequate

supersedeas

bond

to

secure

iStar’s

interests.
B.

Supersedeas Bond

Purchaser contends that the court has discretion to permit
it to provide alternative security in place of some or all of
the bond amount it is required to post to stay the injunction.
Purchaser requests that it be permitted to use the Bevard and
Kalapacha Properties as partial security and accordingly, post a
reduced supersedeas bond to stay enforcement of the Judgment
until its appeal is resolved.

Because it will take several

weeks to finalize the surety arrangements to secure a bond large
enough to secure the Judgment, Purchaser also requests fourteen

23

days from the date of the order disposing of its motions to post
the required bond.
iStar argues that Purchaser’s request to use the Property
as security to lessen the bond amount is “nonsensical” as it
would not adequately protect “iStar’s rights as the prevailing
party by using iStar’s property as security” while the appeal is
pending.

(ECF NO. 739, at 27) (emphasis in original).

iStar

argues that requiring a party to post a full supersedeas bond is
the norm and Purchaser has not adequately demonstrated that it
qualifies for an exception to this rule.
In

response,

Purchaser

argues

that

iStar’s

current

possession of the Property, which is purportedly valued at over
$100 million, does not alter the fact that the Property can be
used to safeguard’s iStar’s financial interests against a future
default

by

Purchaser.

In

addition,

Purchaser

attaches

its

United States Securities and Exchange Commission (“SEC”) Form
10-K, as evidence that it “is more than able to satisfy the
judgment

from

its

more

than

$5.2

billion

includes “$885 million in cash on hand.”
and 745-2).

in

equity”

which

(ECF Nos. 745, at 21

Based on the purported strength of its financial

position and ability to maintain the same level of solvency
during

the

appeal,

it

asks

that

the

court

exercise

its

discretion and permit it to provide alternative security for the
Judgment by using the Property to reduce its bond amount.
24

Rule 62(c) permits the court to exercise its discretion to
stay an injunction “on terms for bond or other terms that secure
the

opposing

party’s

rights.”

Fed.R.Civ.P.

62(c).

Courts

applying an analogous rule, Fed.R.Civ.P. 62(d), which permits a
court to stay a money judgment if the movant posts a supersedeas
bond, normally require “[a] full supersedeas bond [] to preserve
the status quo during appeal and preserve the ability of the
judgment creditor to execute on the judgment.”

TransPacific

Tire & Wheel, Inc. v. Orteck Int’l, Inc., No. DKC 2006-0187,
2010 WL 2774445, at *5 (D.Md. July 13, 2010) (emphasis added);
see also RG Steel Sparrows Point, LLC v. Kinder Morgan Bulk
Terminals, Inc., No. WMN-09-1668, 2014 WL 5293682, at *2 (D.Md.
Oct. 14, 2014) (citing Southeast Booksellers Ass’n v. McMaster,
233 F.R.D. 456, 458 (D.S.C. 2006)) (“The overwhelming practice
in federal courts is to presume that the full supersedeas amount
is required absent a motion to alter that amount before the
Court grants the stay.”).8

As noted by Judge Messitte in IA Labs

CA, LLC v. Nintendo Co., 946 F.Supp.2d 429, 430 (D.Md. 2013),
“[t]he

requirement

first,

it

protects

of

posting

the

bond

prevailing

performs
party

two

‘against

functions:
any

loss

sustained as a result of being forced to forgo execution on a
8

Indeed, pursuant to Rule 62(d) and Local Rule 110.1.a,
“[u]nless otherwise ordered by the Court, the amount of any
supersedeas bond filed to stay execution of a money judgment
pending appeal shall be 120% of the amount of the judgment plus
an additional $500 to cover costs on appeal.”
25

judgment

during

the

course

of

an

ineffectual

appeal’;

and

second, it gives the losing party the option of avoiding ‘the
risk of satisfying the judgment only to find that restitution is
impossible

after

reversal

on

appeal.’”

Id.

(quoting

Poplar

Grove Planting and Refining Co., Inc. v. Bache Halsey Stuart,
Inc.,

600

F.2d

1189

(5th

Cir.

1979)).

Although

the

Fourth

Circuit has not adopted a particular standard to guide district
courts’

exercise

of

discretion

in

granting

unsecured

or

undersecured stays, “[c]ourts have found that full bonds may not
be

necessary

judgment

in

debtor

either
can

of

two

currently

circumstances:
easily

meet

the

(1)

when

the

judgment

and

demonstrates that it will maintain the same level of solvency
during

appeal,

and

(2)

when

the

judgment

debtor’s

present

financial condition is such that the posting of a full bond
would impose undue financial burden.”

CapitalSource Fin. LLC v.

Pittsfield Weaving Co., Inc., No. AW-06-2028, 2008 WL 3850385,
at *2 (D.Md. Mar. 7, 2008); see also Poplar Grove, 600 F.2d at
1191; TransPacific Tire & Wheel, Inc., 2010 WL 2774445, at *5;
Alexander v. Chesapeake, Potomac, & Tidewater Books, Inc., 190
F.R.D. 190, 192 (E.D.Va. 1999).
To

secure

iStar’s

rights

while

the

appeal

is

pending,

Purchaser will be required to post a bond in the amount of
$223,440,000, which represents the $114,000,000 due by Purchaser
under the PSA and Contract for Services plus simple interest
26

accruing at a rate of twelve percent annually from May 27, 2008,
the day on which Purchaser was required to settle, until May 26,
2016, about eleven months from the issuance of this order and an
approximate

date

for

the

completion

of

Purchaser’s

appeal.

There is no way to predict the exact amount Purchaser will owe
to iStar at settlement considering that interest continues to
accrue daily on the Purchase Price and the Fourth Circuit’s
timeline for rendering a decision is uncertain.

The undersigned

finds that $223,440,000 is a reasonable estimate of the amount
Purchaser
however,

will
and

interests

owe

while

iStar

upon

conclusion

appropriate

an

bond

amount

the

to

appeal

is

of

pending.

As

appeal,

secure

to

the

iStar’s

Purchaser

has

indicated that it can easily pay the Judgment amount based on
its currently level of solvency, acquiring a bond in this amount
should not cause it any hardships and the bond will serve to
protect iStar’s interests in receiving the Purchase Price and
interest

on

the

Purchase

Price

through

the

pendency

of

the

appeal.
Purchaser will not be permitted to use the Property as
alternative
required

to

security
post.

to

reduce

Although

the

iStar

bond
is

in

amount

it

possession

will

be

of

the

Property, possession does not provide it security for the rights
it

obtained

pursuant

to

the

January

22,

2015

order.

Specifically, iStar’s interests are in obtaining the monies owed
27

to it under the parties’ PSA and Contract for Services and in
transferring title of the Property to Purchaser in order to
avoid the costs of owning and maintaining the Property.

In IA

Labs, 946 F.Supp.2d at 431, the unsuccessful party moved to stay
the judgment pending appeal requesting that the court stay the
judgment without a bond or, in the alternative, to permit it to
post its patents as alternative security.

The court rejected

this request finding that the movant had failed to meet its
burden of showing that the bond would be an undue financial
burden and that its patents were “far too speculative in value
to secure [the prevailing party’s] interest” in the monetary
judgment it had been awarded.
as

property

value

is

The same rationale applies here,

subject

to

change

current value estimate is speculative.
market

value

today

does

not

and

the

Property’s

Moreover, the property’s

necessarily

translate

into

an

equivalent cash award tomorrow for iStar due to fluctuating land
prices and, the difficulty, the parties are all too well aware
of, in bringing large land transactions to fruition.
Purchaser’s

argument

that

it

should

be

permitted

Moreover,
to

post

a

reduced bond because it has more than enough money to pay its
settlement

obligations

is

similarly

unpersuasive.

Although

Purchaser’s SEC filing indicates that it has enough cash on hand
to cover its settlement obligations as of today, its filing also
indicates that Purchaser’s $200 million plus dollar settlement
28

obligations would not be a trivial amount given its financial
status.
Given the size of the bond required, Purchaser will be
given two weeks following issuance of this opinion and order to
obtain and post the bond.

Once the bond is approved, the stay

will take effect.
III. Motion for Civil Contempt Order Against Purchaser
iStar moved for an expedited entry of a civil contempt
order against Purchaser for failing to comply with the court’s
January 22, 2015 order requiring Purchaser proceed to Settlement
within thirty days.

(ECF No. 740).

iStar argues that Purchaser

has made no attempt to comply with the court’s January 22, 2015
order despite its efforts to prepare for closing on February 20,
2015.

(ECF No. 740-1).
Purchaser responds that “iStar’s motion for contempt is an

overreaching attempt to punish a litigant for exercising rights
granted by the Federal Rules of Civil Procedure.”
at 5).

(ECF No. 747,

Purchaser argues that it is seeking to clarify the

Judgment, and until it has obtained such clarification it is
unable to obtain a bond to stay enforcement of the Judgment
while it exercises its right to appeal the underlying Judgment.
Judgment in this case was entered on January 22, 2015.
(ECF No. 731).

Shortly after the entry of the Judgment, on

February 4, 2015, Purchaser filed its motions to clarify the
29

Judgment and to stay enforcement of the Judgment.
and 733).

(ECF Nos. 732

On the same day, Purchaser also filed a notice of

appeal indicating that it was appealing the court’s “judgment
and all other judgments, orders, and rulings in this action[.]”
(ECF No. 734).

iStar filed its motion for a civil contempt

order against Purchaser on February 26, 2015.
As

recently

noted

by

the

Fourth

Circuit

in

Redner’s

Markets, Inc. v. Joppatowne G.P. Ltd. P’ship, No. 14-1527, 2015
WL 1475118, at *1 (4th Cir. Apr. 2, 2015):
“There can be no question that courts have
inherent power to enforce compliance with
their lawful orders through civil contempt.”
Shillitani v. United States, 384 U.S. 364,
370 (1966).
“Moreover, the court that
enters
an
injunctive
order
retains
jurisdiction
to
enforce
its
order.”
Alderwoods Group, Inc. v. Garcia, 682 F.3d
958, 970 (11th Cir. 2012) (citing Chambers v.
NASCO, Inc., 501 U.S. 32, 50 (1991)).
“A court may impose sanctions for civil
contempt ‘to coerce obedience to a court
order or to compensate the complainant for
losses
sustained
as
a
result
of
the
contumacy.’”
Cromer v. Kraft Foods N. Am.,
Inc., 390 F.3d 812, 821 (4th Cir. 2004)
(quoting In re Gen. Motors Corp., 61 F.3d
256, 258 (4th Cir. 1995)).
“Civil contempt
is an appropriate sanction if [the court]
can point to an order of [the court] which
set[s]
forth
in
specific
detail
an
unequivocal
command
which
a
party
has
violated.”
Gen. Motors. Corp., 61 F.3d at
258 (citations and internal quotation marks
omitted). . . .
30

To establish civil contempt, a movant must
show by clear and convincing evidence:
(1)
the existence of a valid decree of which the
alleged contemnor had actual or constructive
knowledge; (2) the decree was in the
movant's favor; (3) the alleged contemnor by
its conduct violated the terms of the decree
and had knowledge (at least constructive) of
such violation; and (4) the movant suffered
harm as a result. JTH Tax, Inc. v. H & R
Block E. Tax Servs., Inc., 359 F.3d 699, 705
(4th Cir. 2004) (citations and quotation
marks omitted).
Id. at *1 (alterations in original).
iStar’s motion will be denied because Purchaser’s conduct
does not amount to contempt.

iStar was fully aware when it

filed its contempt motion that Purchaser had moved to clarify
the

Judgment

enforcement

in
of

order
the

to

post

Judgment

an

while

appropriate
its

bond

appeal

is

to

stay

pending.

Purchaser will not be held in contempt for failing to proceed to
Settlement

considering

that

it

has

the

right

to

appeal

the

January 22, 2015 Judgment and order to proceed to Settlement, as
well

as

the

undersigned’s

previous

orders.

Purchaser

is

properly and timely exercising its right to appeal, and has
taken the appropriate steps in order to effectuate the appeal,
including

moving

for

a

stay.

Moreover,

Purchaser’s

actions

should not come as a surprise to iStar, as Purchaser gave iStar
and the court notice at the post-trial hearing, long before the
Judgment was issued, that Purchaser intended to appeal at least
31

portions

of

the

court’s

post-trial

opinion

and

order.

The

court’s order to proceed to settlement included a timeframe of
thirty

days

in

order

to

settlement post-judgment.
that

Purchaser

would

prevent

the

parties

from

delaying

The order was issued with recognition
likely

decision,

but

with

foresight

affirmed,

the

injunction

be

appealing

that

should

should

provide

the
the

these

underlying
Judgment

be

exceedingly

litigious parties with a specific timeline for performing their
obligations
delay.

to

thwart

future

opportunities

for

discord

and

As the thirty day timeline has now expired, if the

Judgment is affirmed, the timeline will be reinstated following
the appeal.
IV.

Conclusion
For

the

foregoing

reasons,

the

motion

to

clarify

the

Judgment filed by Purchaser will be granted in part and denied
in part.

Purchaser’s motion to stay enforcement of the Judgment

will be granted once Purchaser posts a bond in the amount of
$223,440,000.
bond.

Purchaser will be given two weeks to post the

Finally, the motion for a civil contempt order against

Purchaser filed by iStar will be denied.

A separate order will

follow.

/s/
DEBORAH K. CHASANOW
United States District Judge
32