Winecup Gamble, Inc. v. Gordon Ranch LP

Filing 76

ORDER that Gordon Ranch's motion to enforce the judgment ECF No. 64 is GRANTED; Winecup's motion to stay the judgment ECF No. 66 is GRANTED IN PART AND DENIED IN PART; order granting the motion to enforce the judgment ECF No. 64 is hereby stayed until 4/26/2018. Signed by Judge Robert C. Jones on 4/16/2018. (Copies have been distributed pursuant to the NEF - KW)

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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WINECUP GAMBLE, INC.,

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Plaintiff,

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3:17-cv-00163-RCJ-VPC

vs.
ORDER

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GORDON RANCH LP,

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Defendant.

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This is a consolidated action for declaratory relief arising from a contract for the sale of

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real property. On August 30, 2017, the Court granted judgment in favor of Defendant Gordon

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Ranch, the buyer in a Purchase and Sale Agreement (“the Agreement”) for the conveyance of

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certain real property owned by Plaintiff Winecup Gamble (“Winecup”) in Elko County, Nevada

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(“the Property”). (See Order, ECF No. 55.) Gordon Ranch had placed $5 million of earnest

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money in escrow in anticipation of an April 2017 closing date, but then terminated the

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Agreement following severe flooding on the Property in February 2017. The dispute here

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centered on which party was entitled to the earnest money following the termination. The Court

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held that the parties’ deal ended in a no-fault termination based on a casualty event, and

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therefore, under the terms of the Agreement, Gordon Ranch was entitled to a full refund of the

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earnest money. Judgment was entered on October 4, 2017. (J., ECF No. 63.)

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Now pending before the Court are two competing motions. Gordon Ranch asks the Court

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to enforce the judgment and compel Winecup to instruct the title company to release the earnest

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money. (Mot. Enforce J., ECF No. 64.) Conversely, Winecup asks for a stay of the judgment

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under Fed. R. Civ. P. 62(d), in order to keep the earnest money in escrow pending the resolution

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of its appeal to the Ninth Circuit. (Mot. Stay J., ECF No. 66.)

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I.

MOTION TO ENFORCE JUDGMENT
District courts have inherent power to enforce their judgments and take measures

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necessary to compel compliance with their lawful orders. See Shillitani v. United States, 384

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U.S. 364, 370 (1966); California Dep’t of Soc. Servs. v. Leavitt, 523 F.3d 1025, 1033 (9th Cir.

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2008).

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In its order granting judgment for Gordon Ranch, the Court plainly stated that “Gordon

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Ranch was entitled to terminate the Agreement pursuant to Section 14, and is now entitled to a

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refund of its earnest money.” (Order 15, ECF No. 55.) Then in the final judgment subsequently

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issued, the Court ordered that “Gordon Ranch is entitled to all amounts paid on the Property and

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a refund of its Earnest Money and any interest earned thereon.” (Civ. J. 2, ECF No. 63.) These

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orders provide a sufficient basis for the title company to release the escrowed funds immediately

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to Gordon Ranch. The Court understands, however, that the title company may be experiencing

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some trepidation in light of Winecup’s refusal to consent to the release. Therefore, the Court

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clarifies that this order constitutes the “judicial directive” requested by the title company to

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release the escrowed funds to Gordon Ranch, subject only to the conditions stated below in the

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disposition of Winecup’s motion for stay.

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II.

MOTION FOR STAY OF JUDGMENT
a. Legal Standards

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Under Federal Rule of Civil Procedure 62(d), a party taking an appeal from a district

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court may obtain a stay of judgment as a matter of right by posting a supersedeas bond. Am.

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Mfrs. Mut. Ins. Co. v. Am. Broad.-Paramount Theatres, Inc., 87 S. Ct. 1, 3, 17 L. Ed. 2d 37

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(1966). “The posting of a bond protects the prevailing [party] from the risk of a later

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uncollectible judgment and compensates him for delay in the entry of the final judgment.”

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N.L.R.B. v. Westphal, 859 F.2d 818, 819 (9th Cir. 1988). Accordingly, the amount of the bond

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must be sufficient to safeguard the appellee’s ability to enforce the district court’s judgment in

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the event of an unsuccessful appeal. See Rachel v. Banana Republic, Inc., 831 F.2d 1503, 1505

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n.1 (9th Cir. 1987) (“The purpose of a supersedeas bond is to secure the appellees from a loss

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resulting from the stay of execution and a full supersedeas bond should therefore be required.”).

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Here, Winecup has not posted a bond or other security as required by Rule 62(d). Rather,

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Winecup argues that the $5 million already in escrow should be accepted by the Court as a

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satisfaction of its bond requirement under the Rule. Also, the parties disagree as to whether the

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judgment in this case constitutes a “money judgment” such that Rule 62(d) would even apply.

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“Courts have restricted the application of Rule 62(d)’s automatic stay to judgments for money

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because a bond may not adequately compensate a non-appealing party for loss incurred as a

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result of the stay of a non-money judgment.” Hebert v. Exxon Corp., 953 F.2d 936, 938 (5th Cir.

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1992). When considering whether to grant a stay of execution in the context of a judgment

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granting declaratory or injunctive (i.e., non-monetary) relief, courts are guided by four questions:

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(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 issuance of the stay will substantially injure the other parties
interested in the proceeding; and (4) where the public interest lies.

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Washington v. Trump, 847 F.3d 1151, 1164 (9th Cir. 2017), reconsideration en banc denied, 853

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F.3d 933 (9th Cir. 2017), and reconsideration en banc denied, 858 F.3d 1168 (9th Cir. 2017),

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and cert. denied sub nom. Golden v. Washington, 138 S. Ct. 448, 199 L. Ed. 2d 331 (2017)

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(citation omitted). “The first two factors of the traditional standard are the most critical.” Nken v.

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Holder, 556 U.S. 418, 434 (2009).

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b. Analysis

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The Court finds this is not a case where the appellant is entitled to a stay as a matter of

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right. First, Winecup has not posted a bond or any other security to guarantee the judgment as

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required by Rule 62(d). Furthermore, the posting of a bond would not serve the purpose of the

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Rule in this case. The central purpose of the supersedeas bond is to maintain the status quo in

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favor of the appellee, i.e., to protect the appellee’s ability to enforce the district court’s judgment

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in the event of an unsuccessful appeal. To that end, the appellant is required to tie up his own

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funds in a security instrument until the appeal is concluded. Here, whether the earnest money is

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kept in escrow or released to Gordon Ranch, Gordon Ranch’s ability to enforce its judgment is

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not at risk. In reality, what Winecup is attempting to do is to guarantee only its own ability, as

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the appellant, to collect the earnest money in full should its appeal prove successful, without

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putting up any of its own money as security. This is a distortion of the bond requirement and the

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intent of the Rule.

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For similar reasons, the Court also finds that the judgment in this case is best viewed as

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nonmonetary in nature, and thus the automatic stay of Rule 62(d) is wholly inapplicable. The

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Court starts by noting that this was an action for declaratory relief, although that fact alone is not

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determinative. See Hebert, 953 F.2d at 938 (stating that a judgment should not be classified as a

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“non-money judgment” simply because it “takes the form of a declaratory judgment”). In

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Hebert, the Fifth Circuit found a declaratory judgment to be monetary because it required the

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losing party, Albany Insurance Company “(Albany”), “to pay a specific sum of money.” Id. In

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that case, Gretna Machine and Iron Works (“Gretna”) had been found seventy percent liable for

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physical damage to an Exxon barge following an explosion. Id. at 937. Gretna then brought an

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action for declaratory relief to resolve a dispute between its primary insurer, INA of Texas, and

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its excess insurer, Albany. Id. In its judgment, the district court declared that Albany was liable

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to pay “in excess of $298,866.91.” Id.

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However, Hebert is distinguishable from this case. Here, the judgment does not require

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Winecup to pay Gordon Ranch anything. The earnest money placed in escrow was never

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transferred to Winecup, and Winecup has never possessed it. The judgment is not simply a

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money judgment for $5 million. In fact, the amount actually in escrow was entirely unimportant

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to the final judgment in this case, and the only reason the judgment can be “calculated with ease”

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or “monetized,” (see Mot. Stay J. 3–4, ECF No. 66), is because the parties contractually agreed

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on a specific escrow amount of $5 million. Rather than requiring the payment of money, the

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judgment simply requires Winecup to release all escrowed funds back to Gordon Ranch. For this

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reason, the judgment is more akin to injunctive relief than a money judgment.

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Turning then to the traditional stay factors, the Court finds that Winecup has failed to

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make a showing that it is likely to succeed on the merits of its appeal, or that it will be

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irreparably injured absent a stay. Indeed, Winecup has made no argument on these points, as it

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has only maintained that the traditional stay factors are inapplicable here. Therefore, a stay of

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execution for the duration of the appeal is not warranted.

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However, the Court recognizes that there is always a possibility of reversal on appeal,

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and is not insensitive to the fact that the parties will not have certainty in this matter until its

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decision is finally affirmed. See Exxon Valdez v. Exxon Mobil, 568 F.3d 1077,1085 (9th Cir.

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2009). Therefore, the Court will grant a short ten-day stay of execution for the purpose of

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allowing Winecup to seek relief from the Ninth Circuit under Federal Rule of Appellate

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Procedure 8(a)(2). Winecup’s request for a stay beyond this ten-day period is denied.
CONCLUSION

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IT IS HEREBY ORDERED that Gordon Ranch’s motion to enforce the judgment (ECF
No. 64) is GRANTED.
IT IS FURTHER ORDERED that Winecup’s motion to stay the judgment (ECF No. 66)

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is GRANTED IN PART AND DENIED IN PART. The Court’s order granting the motion for

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enforcement of judgment (ECF No. 64) is hereby stayed for a period of ten days, commencing on

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the date of entry of this order. If Winecup has not obtained a stay from the Court of Appeals by

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the expiration of the ten-day period, the title company will immediately release the escrowed

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funds to Gordon Ranch.

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IT IS SO ORDERED. April 16, 2018.

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_____________________________________
ROBERT C. JONES
United States District Judge

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