Contract Design Group, Incorporated et al v. Wayne State University et al

Filing 277

ORDER GRANTING DEFENDANTS MOTION FOR STAY OF EXECUTION WITHOUT BOND PENDING APPEAL [#264]. Signed by District Judge Gershwin A. Drain. (Bankston, T)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
CONTRACT DESIGN GROUP, INC., et al.,
Plaintiffs,
Case No. 10-cv-14702
Honorable Gershwin A. Drain
v.

WAYNE STATE UNIVERSITY, et al.,
Defendants.
/
ORDER GRANTING DEFENDANTS’ MOTION FOR STAY OF EXECUTION
WITHOUT BOND PENDING APPEAL [#264]
I. INTRODUCTION
Plaintiffs, Contract Design Group, Inc. (“CDG”) and Robert Murray (“Murray”), filed a
Complaint against Defendants Wayne State University and The Wayne State University Board of
Governors (“Wayne”). Plaintiffs also named three Wayne employees as Defendants: James R.
Sears (“Sears”), Joan M. Gossman (“Gossman”) and John L. Davis (“Davis”). This case went to
trial and, on April 24, 2014, a jury returned a verdict [#202] in favor of the Plaintiffs for their
counts of violation of procedural due process, account stated, and breach of contract.
Presently before the Court is Defendants’ Motion for Stay of Execution Without Bond
Pending Appeal [#264]. This matter is fully briefed and the Court concludes that oral argument
will not aid in the resolution of this matter. Accordingly, the Court will resolve Defendants’
Motion on the briefs submitted and cancels the October 27, 2014 hearing. See E.D. Mich. L.R.
7.1(f)(2). For the reasons discussed herein, the Court will GRANT Defendants’ Motion for Stay
of Execution Without Bond Pending Appeal.

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II. FACTUAL BACKGROUND
On April 22, 2014, the jury returned a verdict for CDG and Murray on their procedural
due process claims, but did not award damages to CDG on the procedural due process claim.
See Dkt. No. 202. The jury found CDG could not establish actual damages, but the Court
Awarded CDG nominal damages of $1. See Dkt. No. 248. The jury also found that the
Defendants violated Murray’s procedural due process rights and awarded him $100,000. Next,
the jury found CDG established an account stated, and awarded CDG $200,000 for this claim.
Lastly, the jury found Wayne in breach of contract, and the jury awarded CDG $250,000 for the
breach of contract claim. In total, Judgment was entered in this matter in favor of Plaintiff in the
amount of $550,000, plus interest as provided by law. See Dkt. No. 203; Dkt. No. 248.
On August 7, 2014 this Court denied Defendants’ Motion for New Trial or Remittitur and
Motion for Judgment or Partial Judgment as a Matter of Law. See Dkt. No. 260. On August 14,
2014 this Court granted Plaintiffs’ Motion for Attorney’s Fees and Expenses in the total amount
of $720,367.69. See Dkt. No. 262. On August 15, 2014 this Court granted Plaintiffs Motion for
Pre-Judgment Interest. See Dkt. No. 263.

Following these decisions Defendants now wish to

pursue an appeal by right to the Court of Appeals.
III. LAW & ANALYSIS
A. Standard of Review
An appellant may obtain a stay of execution on a judgment pending appeal by filing a
supersedeas bond. See Fed. R. Civ. P. 62(d). “Rules 62(d) entitles a party who files a satisfactory
supersedeas bond to a stay of money judgment as a matter of right,” but it “in no way necessarily
implies that filing a bond is the only way to obtain a stay.” Arban v. W. Pub. Corp., 345 F.3d
390, 405 (6th Cir. 2003). This Court has discretion to issue a stay without the filing of a bond.

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See id.

In Arban, the court noted that “an inflexible requirement of a bond would be

inappropriate ... where the defendant's ability to pay the judgment is so plain that the cost of the
bond would be a waste of money.” Id. (quoting Olympia Equip. Leasing Co. v. Western Union
Tel. Co., 786 F.2d 794, 796 (7th Cir. 1986)).
The Sixth Circuit has not outlined a specific test to guide the decision of a district court
when considering whether to grant a request for an unsecured stay. Nevertheless, courts have
tended to examine the purpose of Rule 62(d) in making a decision to grant requests for an
unsecured stay. The purpose of the bond requirement set forth in Rule 62(d) is to protect both
parties. See Hamlin v. Charter Tp. of Flint, 181 F.R.D. 348, 351 (E.D. Mich. 1998). The bond
requirement protects the appellant from “the risk of satisfying the judgment only to find that
restitution is impossible after reversal on appeal” while protecting the appellee “from the risk of
a later uncollectible judgment and also provid[ing] compensation for those injuries which can be
said to be the natural and proximate result of the stay.” Id. (internal quotation marks omitted).
Thus, “Rule 62(d) establishes not only the appellant's right to a stay, but also the appellee's right
to have a bond posted. Because of Rule 62(d)’s dual protective role, a full supersedeas bond
should almost always be required.” Id.; see also Pucci v. Somers, 834 F.Supp.2d 690, 706 (E.D.
Mich. 2011) (quoting Hamlin, 181 F.R.D. at 351).
Despite the presumption that a supersedeas bond is almost always required, two
circumstances exists in which courts are urged to consider foregoing the supersedes bond: (1)
where “the [appellant's] ability to pay the judgment is so plain that the cost of the bond would be
a waste of money” and (2) where “the requirement would put the [appellant's] other creditors in
undue jeopardy.” Pucci, 834 F.Supp.2d at 707 (quoting Olympia Equip. Leasing Co. v. Wester
Union Tel. Co., 786 F.2d 794, 796 (7th Cir.1986)); see also Arban, 345 F.3d at 409 (affirming

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decision to grant stay without bond “[i]n light of the vast disparity between the amount of the
judgment in this case and the annual revenue of the [defendant]”); cf. Dubuc v. Green Oak Twp.,
No. 08–13727, 2010 WL 3908616, at *2 (E.D.Mich. Oct.1, 2010) (preferring an analysis that
“looks to whether there are ‘extraordinary circumstances' that justify deviating from the bond
requirement”).
“When an appellant claims its ability to pay the judgment is so obvious that posting a
bond would simply be a waste of money, courts have generally required the appellant to present
‘a financially secure plan for maintaining that same degree of solvency during the period of an
appeal.’ ” Hamlin, 181 F.R.D. at 353 (quoting Poplar Grove Planting & Refining, Co. v. Bache
Halsey Stuart, Inc., 600 F.2d 1189, 1191 (5th Cir.1979).
B. Legal Analysis
This Court will grant Defendants Motion because Defendants have demonstrated the
ability to satisfy the judgment, and have demonstrated that they will be able to maintain same
degree of solvency during the period of an appeal. In this Court’s June 25, 2014 Order, the
Court considered Rule 62(b)’s bond requirement, and held that, “[g]iven the outstanding posttrial motions” in the case, the stay and waiver of the requirement to post bond was appropriate.
See Contract Design Grp., Inc. v. Wayne State Univ., No. 10-14702, 2014 WL 2892513, at *2
(E.D. Mich. June 25, 2014). In reaching the conclusion, this Court used Rule 62(d)’s factors for
waiver of bond as guidance for our decision regarding Rule 62(b)’ bond requirement. See
Contract Design, 2014 WL 2892513 at *1-2. Ultimately, the Court determined that Wayne had
sufficient funds to satisfy the judgment if it wasn’t successful on its post-judgment motions. Id.
at 2.

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Defendants rely heavily on this Court’s June 25, 2014 Order. See Dkt. No. 264 at 5
(referencing See Contract Design, 2014 WL 2892513 at *2). Specifically, the Defendants
emphasize the fact this Court already determined that Wayne State University has demonstrated
that its ability to satisfy the judgment in this matter is so plain that the cost of the bond would be
a waste of money. See Dkt. No. 264 at 13.
Here, the Defendants primarily argue that this court should grant a stay without bond
pending appeal for two reasons: (1) Defendant Wayne State University is a constitutionallycreated entity whose finances are a matter of public record; and (2) there is currently
$183,500,000.00 in unrestricted funds available to Wayne State University, which Defendants
assert is more than sufficient to pay the judgment and award of attorney fees and expenses in this
case. See Dkt. No. 264 at 12-13 (citing Dkt. No. 264-3 (Supplemental Affidavit of Richard J.
Nork, Vice President of Finance and Businesses Operations, Treasurer and Chief Financial
Officer for Wayne State University, attesting to these facts, and that Wayne State will pay the
judgment, fees and expenses if affirmed on appeal)). According to Defendants, this Court should
have no issue granting a stay without the requirement of a bond because the facts here are similar
to those in Dillon v. City of Chicago, 866 F.2d 902 (7th Cir. 1988). Dkt. No. 264 at 12.
Plaintiffs do not dispute that Defendants have sufficient funds to satisfy this judgment.
Dkt. No. 269 at 3. Instead, the crux of Plaintiffs’ opposition is found in the Plaintiffs emphasis
that the Defendants have not proposed a plan that will ensure prompt payment upon appellate
affirmance. Id. at 4. According to the Plaintiffs, any stay issued by the Court should be
conditioned upon prompt payment in order to stay in line with what Plaintiffs assert to be the
purpose of Rule 62(d): “enabling a judgment creditor that has prevailed upon appeal ‘to enforce
a valid judgment immediately.’ ” Id. at 3-4 (citing Hamlin, 181. F.R.D. at 351. Accordingly,

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Plaintiffs request that Defendants motion be denied unless this Court ensures prompt payment
directing Defendants to satisfy the judgment within 14 days from the issuance of the appellate
mandate with 12% annual interest on the unsatisfied balance. Id.
The Court disagrees with the Plaintiffs arguments. First, Plaintiffs’ insinuation that
Defendants are required to propose a plan that will ensure prompt payment upon appellate
affirmance is misguided. To be clear, the court in Hamlin stated specifically that the Court is
required only to ensure that Defendants will maintain the “same degree of solvency during the
period of an appeal.’ ” Hamlin, 181 F.R.D. at 353 (quoting Poplar Grove Planting & Refining,
Co. v. Bache Halsey Stuart, Inc., 600 F.2d 1189, 1191 (5th Cir.1979).
Second, the Plaintiffs’ framing of the purpose of Rule 62(d) is misleading. As previously
noted, with respect to the appellee, the purpose of Rule 62(d) is to protect the appellee “from the
risk of a later uncollectible judgment and also provide[] compensation for those injuries which
can be said to be the natural and proximate result of the stay.” Hamlin, 181 F.R.D. at 351
(internal quotation marks omitted). Plaintiffs assert that a purpose of Rule 62(d) is “enabling a
judgment creditor that has prevailed upon appeal ‘to enforce a valid judgment immediately.’ ”
See Dkt. No. 269. at 3-4 (citing Hamlin, 181 F.R.D. at 351). This is not the case. The Court in
Hamlin specifically mentions that an appellee has a “right to enforce a valid judgment
immediately[,]” which “Rule 62(d) effectively deprives him of[.]” Hamlin, 181 F.R.D. at 351.
Accordingly, this Court finds that it has been presented with the requisite amount of
information to support granting a stay without requiring a bond because Wayne State has,
“demonstrated the existence of previously appropriated funds, available for the purpose of
paying judgments without substantial delay or other difficulty.” Dillon v. City of Chicago, 866
F.2d 902, 905 (7th Cir. 1988).

Notably, Plaintiffs have acknowledged that “Wayne State

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obviously ‘has sufficient funds to satisfy this judgment.’ ” Dkt. No 269 at 3 (citation omitted)
(emphasis added).

This Court agrees with Plaintiffs to that extent and finds, given the

independently analyzed financial statements provided by the University, that the Defendants’
ability to pay the judgment is so plain that the cost of the bond would be a waste of money. See
Contract Design., 2014 WL 2892513 at *2.
Further, Wayne State has promised to “make every effort to expedite payment upon
affirmance of the judgment” and has noted that “such payment would of course include interest
on the judgment and fees, as has been ordered by the Court, that will compensate plaintiffs for
the time it will take for Wayne State University to process the payment it has promised to make.”
Dkt No. 264 at 5. Thus, this Court finds that, upon the disposition of the appeal, Plaintiff will be
protected “from the risk of a later uncollectible judgment” and will also “receive compensation
for those injuries which can be said to be the natural and proximate result of the stay.” Hamlin,
181 F.R.D. at 351 (internal quotation marks omitted).

Accordingly, Plaintiffs will not be

deprived of the right to enforce a valid judgment and Defendants Motion will be granted.
IV. CONCLUSION
For the aforementioned reasons, the Court will GRANT Defendants’ Motion for Stay of
Execution Without Bond Pending Appeal [#264].
SO ORDERED.
Dated: October 20, 2014
/s/Gershwin A Drain
Hon. Gershwin A. Drain
United States District Court Judge

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