United States of America v. Stanley

Filing 112

ORDER denying 98 Motion to Stay Proceedings. The United States is afforded 10 days to furnish the Court with relevant information regarding supersedeas bond. Signed by Honorable David C. Bramlette, III on 12/5/2013 (ECW)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF MISSISSIPPI
WESTERN DIVISION
UNITED STATES OF AMERICA
VS.

PLAINTIFF
CIVIL ACTION NO. 5:11-cv-117(DCB)(MTP)

MARKUS BRENT STANLEY

DEFENDANT
ORDER

This cause is before the Court on the defendant’s motion for
stay of judgment and injunction pending appeal and request for
waiver of bond (docket entry 98).
motion

and

response,

the

Having carefully considered the

memoranda

of

the

parties

and

the

applicable law, and being fully advised in the premises, the Court
finds as follows:
On August 23, 2013, this Court issued its Memorandum Opinion
and Order finding that the United States prevailed at trial,
proving by a preponderance of the evidence that the defendant
“willfully attempted to evade or defeat” his income tax liabilities
for

tax

years

1998-2004.

The

Court

directed

that

those

liabilities, as well as the defendant’s 2005-2010 liabilities, be
reduced to judgment.

The Court further directed the United States

to submit a proposed final judgment covering the thirteen tax years
at issue “as to the amount of liabilities, penalties, and interest
owed by Dr. Stanley.”

Memorandum Opinion and Order, p. 26.

The

Court has not yet entered a final judgment in this case; however,
on October 1, 2013, the defendant filed a notice of appeal.

Because the defendant has already filed a notice of appeal,
the Court shall decide his motion at this time, for purposes of
judicial economy and efficiency.

See Henrietta D. v. Giuliani,

2001 WL 1602114, *6 n.1 (E.D. N.Y. Dec. 11, 2001).

In his motion,

the defendant indicates that he is proceeding under Rule 8 of the
Federal Rules of Appellate Procedure, which allows a party to seek
first from the district court: “(A) a stay of the judgment or order
of a district court pending appeal; (B) approval of a supersedeas
bond; or (C) an order suspending, modifying, restoring, or granting
an

injunction

while

an

appeal

is

pending.”

Fed.R.App.P.

8(a)(1)(A)-(C).
While the Federal Rules of Appellate Procedure allow the
defendant to file a motion to stay execution of a judgment pending
appeal

before

the

district

court,

they

do

not

provide

the

procedural rule for doing so. See New Pacific Overseas Group (USA)
Inc. v. Excal International Development Corp., 2000 WL 802907, *1
n.1 (S.D. N.Y. June 21, 2000)(Federal Rules of Appellate Procedure
do not govern procedure in the district courts).

Instead, Rule

62(d)

dictates

of

the

Federal

Rules

of

Civil

Procedure

the

procedure the defendant must follow. However, the standard applied
under Fed.R.App.P. 8(a) and Fed.R.Civ.P. 62(d) is the same.
Rule 62(a) provides:
Except as stated in this rule, no execution may issue on
a judgment, nor may proceedings be taken to enforce it,
until 14 days have passed after its entry. But unless
the court orders otherwise, the following are not stayed
2

Id.

after being entered, even if an appeal is taken:
(1)

an interlocutory or final judgment in an action for
an injunction or a receivership; or

(2)

a judgment or order that directs an accounting in
an action for patent infringement.

Fed.R.Civ.P. 62(a).
Rule 62(d) provides:
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 of the notice of appeal or after obtaining the
order allowing the appeal. The stay takes effect when
the court approves the bond.
Fed.R.Civ.P. 62(d).
The purpose of a supersedeas bond is to “preserve the status
quo while protecting the non-appealing party’s rights pending
appeal.”

Poplar Grove Planting and Refining Co. v. Bache Halsey

Stuart, Inc., 600 F.2d 1189, 1190 (5th Cir. 1979).

Generally, the

bonded amount equals the full amount of the judgment.1
(citing former Rule 73(d) standard).

Id. at 1191

However, the district court

has inherent discretionary authority to set the amount of the bond.
Id.

The bond amount should be sufficient to ensure that judgment

creditors

are

protected

irreparably injured.

and

that

judgment

debtors

are

not

Texaco, Inc. v. Penzoil Company, 784 F.2d

1

Ordinarily, such a bond includes the whole amount of the
judgment, costs, interest, and other amounts unless the court
finds good cause for fixing a different amount for the bond or
having the judgment debtor furnish alternative security. Poplar
Grove, 600 F.2d at 1190-91.
3

1133, 1154 (2nd Cir. 1986).
It is the judgment debtor’s burden to demonstrate that posting
a full bond is impossible or impractical; similarly, it is the
moving party’s duty to propose a plan that will provide adequate
(or as adequate as possible) security for the judgment creditor.
Poplar Grove, 600 F.2d at 1191 (stating that the burden is on the
moving party to demonstrate objectively the reasons for departure
from the full bond requirement; the judgment creditor need not
initiate contrary proof).
In Dillon v. City of Chicago, 866 F.2d 902, 904-05 (7th Cir.
1988), the Seventh Circuit Court of Appeals identified several
factors courts should consider in deciding whether to waive or
reduce supersedeas bonds.

These factors have been summarized as

follows

court

by

the

district

for

the

Western

District

of

Louisiana:
(1) the complexity of the collection process;
(2) the amount of time required to obtain a judgment
after it is affirmed;
(3) the degree of confidence that the district court has
in the availability of funds to pay the judgment;
(4) whether the defendant’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 defendant is in such a precarious
financial situation that the requirement to post a bond
would place other creditors of the defendant in an
insecure position.
Superior Derrick Services, LLC v. Lonestar, 2012 WL 4094513 *2
4

(W.D. La. 2012).
In this case, the defendant requests that the Court waive the
requirement

for

supersedeas

bond

and

stay

collection

of

the

judgment. However, Dr. Stanley has produced no evidence, much less
any competent evidence, that would permit the Court to make an
objective determination of whether his present financial condition
is so dire that posting a customary supersedeas bond would impose
an undue financial burden on him.
evidence,

there

are

no

grounds

In the absence of such record
for

the

Court

to

waive

the

imposition of a bond in the event it finds a stay of enforcement is
appropriate in this case.

Poplar Grove, 600 F.2d at 1191; S.P.

Davis, Sr. v. United States, 2009 WL 2019932 (W.D. La. July 7,
2009).

The United States asserts that for many years, it has

pursued

collection

of

Dr.

Stanley’s

tax

liabilities

and

has

expended substantial resources in vindicating its right to pursue
collection (proving, inter alia, that the 1998-2008 liabilities
were excepted from the defendant’s Chapter 7 discharge because he
willfully

attempted

obligations).

to

evade

and

defeat

these

income

tax

Further, without documentary evidence, Dr. Stanley

testified at trial that this year (2013), he has set up another
corporation to which he claims he will remit all his compensation
for withholding of federal and state taxes going forward before the
money

is

distributed

to

him.

At

trial,

the

Court

received

voluminous documentary proof and the testimony of Revenue Officer

5

Elizabeth McCullough that Dr. Stanley previously falsely claimed he
would do this with his prior corporation, Vicksburg Primary Care
Team, Inc. Through the defendant’s testimony, the Court also
learned that he currently is the emergency room director and a
staff

emergency

physician

for

a

hospital

in

Clarksdale,

Mississippi, with a likely current income of between $300,000 and
$400,000 annually.
The Court has little confidence, given Dr. Stanley’s history
of evasion, in the availability of funds from the defendant to pay
the judgment if it is upheld on appeal.

The Court also finds that

the defendant has provided no competent evidence to determine what
his financial position is and what effects his posting a bond would
have on any of his other creditors.
As for Dr. Stanley’s motion to stay, the Court considers four
factors: (1) whether the movant has made a showing of likelihood of
success on the merits, (2) whether the movant has made a showing of
irreparable injury if the stay is not granted, (3) whether the
granting of the stay would substantially harm the other parties,
and (4) whether the granting of the stay would serve the public
interest.

United States v. Baylor University Medical Center, 711

F.2d 38, 39 (5th Cir. 1983).

In cases in which the United States

is the opposing party, the third and fourth factors merge. Nken v.
Holder, 556 U.S. 418, 435-36 (2009).

In the Fifth Circuit, the

requirement of likelihood of success on the merits is relaxed in

6

cases involving a serious legal question.

In such cases, the

movant need only (1) present a substantial case on the merits, and
(2) show that the remaining equities weigh heavily in favor of
granting the stay.

Commodity Futures Trading Comm’n v. Hudgins,

2009 WL 3645053, *3 (E.D. Tex. 2009).

However, the “‘[l]ikelihood

of success remains a prerequisite in the usual case’ and ‘[o]nly if
the balance of equities (i.e. consideration of the other three
factors) is heavily tilted in the movant’s favor’ will we issue a
stay in its absence and, even then, the issue must be one with
patent substantial merit.”

United States v. Transocean Deepwater

Drilling, Inc., ___ Fed.Appx.___, 2013 WL 3803873, *2 (5th Cir.
2013)(internal citations omitted).
Dr. Stanley has neither met the four-part test for a stay, nor
has he shown that his case presents a “serious legal question.” He
claims

that

his

case

“involves

substantial

issues

of

first

impression and assignments of error upon which reasonable Jurist
[sic] could differ;” (Defendant’s Motion, ¶ 5) however, he does not
identify what these issues or errors are.

In fact, Dr. Stanley’s

case involves the application of well-established legal principals
under Fifth Circuit law to the facts of his case. Based on
arguments the defendant has heretofore made, the unspecified issues
he is likely to raise on appeal are not likely to rise to the level
of a serious legal question that implicates far-reaching effects or
public concerns.

7

The issues posed by this case are whether the defendant’s tax
liabilities

from

1998-2008

were

excepted

from

his

Chapter

7

discharge in bankruptcy, and whether he is liable for all thirteen
years of tax liabilities.

He has not demonstrated any likelihood

of success on the merits, much less a significant likelihood.

His

2009 and 2010 tax liabilities were post-Chapter 7 liabilities and
were not contested during the course of this litigation.
the

defendant’s

2005-2008

liabilities,

the

Court

As for

found

them

excepted from the discharge on the alternate ground that they were
due within three years of the May 18, 2009 petition date, a
proposition that the defendant has never disputed.

As for the

Court’s finding that Dr. Stanley willfully attempted to evade and
defeat the 1998-2004 liabilities, this finding is grounded on
extensive

factual

findings

that,

unless

found

to

be

clearly

erroneous by the Fifth Circuit, support the Court’s ruling under
established Fifth Circuit precedents.
In order to show irreparable injury, the defendant must show
more than “[m]ere injuries, however substantial, in terms of money,
time

and

energy

necessarily

expended

in

the

absence

of

[an

injunction] .... The possibility that adequate compensatory or
other corrective relief will be available at a later date, in the
ordinary course of litigation, [weighs] heavily against a claim of
irreparable harm.”

Dennis Melancon v. City of New Orleans, 703

F.3d 262, 279 (5th Cir. 2012).

8

Should the United States succeed in collecting funds applied
to a tax year as to which Dr. Stanley is ultimately successful on
appeal, he will have an array of statutes at his disposal through
which he could recover.

See 28 U.S.C. § 1346(a)(1) and 26 U.S.C.

§ 7422 (allowing a taxpayer to sue for a refund of an illegal tax
assessment); 26 U.S.C. § 7433 (allowing a taxpayer to sue for
damages for a reckless or negligent violation of Title 26 during a
tax collection). United States v. O’Callaghan, 805 F.Supp.2d 1321,
1328 (M.D. Fla. 2011).
On the other hand, a stay without bond leaves the “United
States vulnerable to an irreparable loss of the entire value of the
judgment.”

Id.

This risk is heightened by Dr. Stanley’s history

of efforts to evade and defeat eleven of the thirteen years of tax
liabilities at issue. As noted above, the third and fourth factors
merge in cases involving the United States.

The defendant asserts

that the “public interest lies in ensuring that a litigant has
access to the appellant [sic] process and whereas in this case, the
rulings are ones upon which reasonable jurist [sic] could differ
and

the

case

on

appeal

Defendant’s Motion, ¶ 7.

raises

issues

of

first

impression.”

However, the defendant retains his right

to appeal regardless of whether he posts a bond, and regardless of
whether the judgment is executed during the appeal.

Strong v.

Laubach, 443 F.3d 1297, 1299 (10th Cir. 2006)(“A judgment debtor who
is unable or is unwilling to post a supersedeas bond retains the

9

right to appeal even if the judgment is executed.”).

Furthermore,

“[s]hould the judgment be reversed on appeal, a district court may,
on motion or sua sponte, order the judgment creditor to restore the
benefits obtained.”

Id.

In this case, where the collection of tax liabilities has been
delayed for many years, and where the Court has found that the
defendant willfully evaded paying his taxes, the United States has
a critical interest in the prompt collection of the taxes, and
granting a stay would frustrate, not serve, the public interest.
Dr. Stanley has not shown that he is entitled to a stay, much less
one granted with a waiver of bond.
The

long-established

practice

in

the

Fifth

Circuit,

as

interpreted in Poplar Grove, is to grant an automatic stay under
Fed.R.Civ.P. 62(d) upon posting of a supersedeas bond in the full
amount of the judgment plus interest and other costs unless the
court in its discretion finds good cause for fixing a different
amount

for

the

bond

alternative security.

or

having

the

judgment

debtor

furnish

This provision of the federal rules is

rationally tailored to protect a judgment creditor such as the
United States from loss during the course of the appeal, and to
protect the appellant’s interest against having to pay the judgment
and later pursue recovery of any payments in the event his appeal
succeeds.
The defendant has failed to show that approval of a bond less

10

than the full judgment amount would protect the United States’
interests.

Nor

has

the

defendant

presented

to

the

Court

a

financially secure plan for maintaining solvency during the period
of appeal.

Therefore, the Court finds that Dr. Stanley has not

sufficiently demonstrated the need for a departure from the normal
supersedeas bond requirement.
For

the

foregoing

reasons,

the

Court

shall

deny

the

defendant’s request for a discretionary stay and injunction of the
final judgment to be entered by the Court.

However, the defendant

is entitled to a supersedeas stay as of right if he posts bond in
an amount sufficient to cover the entire amount of the judgment,
including interests and other costs.

Therefore, the Court shall,

in the event the defendant wishes to post a full supersedeas bond
in the appropriate amount, grant a stay conditioned upon the
defendant obtaining the bond.

The United States has requested

leave to promptly submit a calculation of “the full amount of the
judgment and costs, plus interest.”
Accordingly,
IT

IS

HEREBY

ORDERED

that

the

defendant’s

motion

for

discretionary stay of judgment and injunction pending appeal and
request for waiver of bond (docket entry 98) is DENIED;
FURTHER ORDERED that, in the alternative, the Court shall
grant a stay conditioned upon the defendant obtaining a full
supersedeas bond in an appropriate amount. To this end, the United

11

States is afforded ten (10) days to furnish the Court with the
relevant information including the full amount of the judgment and
costs, plus interest, constituting the correct amount of the bond.
Upon receipt of this information, the Court will enter an order
requiring supersedeas bond and enter its Final Judgment.
SO ORDERED, this the 5th day of December, 2013.

/s/ David Bramlette
UNITED STATES DISTRICT JUDGE

12