MAC NAUGHTON v. HARMELECH et al

Filing 441

MEMORANDUM OPINION & ORDER DENYING defendants' motion stay enforcement of the judgment pending appeal and without bond or alternatively with a reduction in the amount of the bond, re 430 Application/Petition. Signed by Judge Kevin McNulty on 12/1/16. (cm )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY

W. JAMES MAC NAUGHTON,

No. 09-cv-5450 (KM)(MAH)

Plaintiff pro

Se,

MEMORANDUM OPINION
AND ORDER

V.

SHAI HARMELECH pro Se, CABLE
AMERICA, INC., d/b/a SATELLITE
AMERICA and USA SATELLITE &
CABLE, INC.,
Defendants.
KEVIN MCNULTY, U.S.D.J.:
On July 13, 2016, I granted and denied in part cross-motions for
summary judgment filed by pro se plaintiff James Mac Naughton and
defendant Cable America, Inc., and denied the motion to dismiss filed by pro se
defendant Shai Harmelech and Cable America (collectively, “defendants,”
unless otherwise specified). On July 22, 2016, Defendants filed a notice of
appeal of my summary judgment decision. I thereafter entered judgment in the
amount of $71,763 in favor of Mac Naughton on September 6, 2016. On
November 8, 2016, Harmelech moved to stay enforcement of the judgment
pending appeal without a bond or alternatively with a reduced bond.’ Cable
America joins Harmelech’s request.
Defendants contend that they need only post a reduced bond—or
none—because they already paid Mac Naughton “$50,000.00 as part of a global
settlement agreement between Mac Naughton and his alter ego company Casco
Bay Holdings LLC”; “$37,000

.

.

.

for earlier bad checks”; “$20,000 that Mac

Naughton billed in alleged research that he could not prove”; “$20,000 in
Mac Naughton filed a response on November 13, 2016 (ECF No. 433) and
defendants filed a reply on November 22, 2016 (ECF No. 438).
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wrongful billing.” Defendants also argue that they should receive credit for the
roughly $140,000 in damages they are seeking against Mac Naughton in
actions pending in New Jersey state court and the Illinois federal court. (ECF’
No. 430)
Fed. R. Civ. P. 62(d) permits an appellant, as a matter of right, to
obtain a stay by posting a supersedeas bond. The Court of Appeals for the
Third Circuit has not squarely addressed whether a district court may waive
the bond requirement. But see In re Diet Drugs, 582 F.3d 524, 522 (3d Cir.
2009) (noting that “courts may forego [the bond requirement] when there are
other means to secure the judgment creditor’s interests”) (citations omitted)).
The predominant view, however, is that a district may reduce or waive the bond
requirement. See, e.g., Dilion v. City of Chicago, F.2d 902, 904 (7th Cir. 1988);
Fed. Prescription Serv. V. Am. Pharm. Ass’n, 636 F.2d 755, 759 (D.C. Cir. 1980);
Hurley v. Atlantic City Police Dept., 944 F. Supp. 371, 375 (D.N.J. 1996)
(collecting cases). I will assume arguendo that I possess that authority.
A supersedeas bond should be waived only in “extraordinary
circumstances.” See United States v. Kurtz, 528 F. Supp. 1113, 1116 (E.D. Pa.
1981). Factors that should be evaluated in determining whether to waive or
reduce the bond requirement include:
(1) the complexity of the collection process; (2) the
amount of time required to obtain a judgment on
appeal; (3) the degree of confidence that the district
court has in the availability of funds to pay the
judgment; (4) whether the defendants 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 the other
creditors of the defendant in an insecure position.
Hurley, 944 F. Supp. at 375 (citing Dillon, 866 F.2d at 904-05). “The judgment
debtor bears the burden of demonstrating objectively the need for departure
from the usual requirement of full security by showing that posting a full bond

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is impossible or impracticable.” Schreiber v. Kellogg, 839 F. Supp. 1157, 1159
(E.D. Pa. 1993).
Defendants have not demonstrated why this is an extraordinary
case that warrants the grant of an unsecured or only partially secured stay.
Defendants have not claimed that they are unable to pay a full bond or that
paying a full bond would endanger the security interests of other creditors.
E.g., Hurley at 388. They have not proposed any alternative plan to provide
security for the judgment. E.g., Kurtz at 1116. Nor have they offered evidence of
any kind concerning their assets, income, or liabilities, or cited any authority
sugge sting that a supersedeas bond may be waived based on an argument that
the judgment is offset by claims brought in unrelated litigations.
Instead, defendants’ motion is best characterized as an attempt to
relitigate that which was already decided. “In fact all payments made prior to
the signing of the promissory note were applied to reduce the amount owed to
Mac Naughton from $108,132.28 to $65,000.

.

.

.

That is why the parties

entered into a note for only $65,000, rather than the amount originally owed.”
(Opinion, ECF 408, p. 8-9 & n.12) As I explained, discussing the $37,000 in
bounced checks, defendants were not entitled to double counting of the
bounced $37,000 checks plus the instalment payments by which they repaid
Mac Naughton for the bounced checks. (Id. at 8—9 n. 12, 20) I also explained,
based on the evidence, that credit was given for payments made after the date
of the promissory note, in reduction of the balance (but not for payments
preceding the making of the note, because the principal amount of the note
would already have reflected them). (Id. at 20) I also rejected the claims that
Mac Naughten overcharged for legal services, which were unsupported by any
evidence. (Id.)
Defendant attempted to re-raise these matters in opposition to the
plaintiff’s application for entry of judgment. (See Letter of Aug. 12, 2016, ECF
no. 418) Plaintiff noted that these issues had already been disposed of on
summary judgment. (ECF no. 419)1 accepted that position and entered
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judgment in the amount sought by Plaintiff, which was in accordance with the
reasoning of the summary judgment opinion.
The allegation of a $50,000 settlement with a corporation said to
be Mac Naughten’s “alter ego,” alleged to be applicable to the promissory note
that is the subject of the judgment, is at least new. It consists of nothing more,
however, than a reference in a motion brief. (ECF no. 430) No affidavit or
evidentiary support is proffered, and no further details are given. Mac
Naughten attaches to his opposing certification what purports to be a copy of
the settlement agreement in question, dated November 17, 2015. (ECF nos.
433 and 433-1) Mac Naughten points out that by its terms, the settlement
agreement relates to a corporation, Casco Bay Holdings, LLC, relating to a
$100,000 escrow account in an Illinois state court. The agreement requires
release of $50,000 to Casco Bay (and $50,000 to another firm). The settlement

also required Defendants to pay $125,000 by December 31, 2015. Defendants
do not claim to have done so. And the releases, as well as other obligations,
were contingent on the consummation of the settlement via payment of the
$125,000.
The settlement, if consummated, would have retired seven listed
matters pending in the Illinois courts, as well as this action and two other
actions pending in New Jersey. But it was not consummated. And nothing in
the record before this Court establishes that the $50,000 released from the
Illinois escrow should be credited directly against the promissory note balance.
Should this $50,000 release have been intended to retire the promissory note
debt, defendants could and should have said so in connection with opposing
summary judgment. This argument comes too late; a motion for reduction of
bond is not an appropriate forum to bring additional arguments in opposition
to summary judgment.
Defendants’ proposal that the bond be waived or reduced based on
unadjudicated claims that they have brought against Plaintiff in other actions
requires no analysis.
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Defendants have failed to demonstrate good cause to waive
or
reduce the bond requirement of Rule 62(d). The motion
will therefore be denied.

ORDER

ACCORDINGLY, IT IS this 1st day of December, 2016,
ORDERED that defendants’ motion stay enforcement of
the judgment
pending appeal and without bond or alternatively with a redu
ction in the
amount of the bond (ECF no. 430) is DENIED. No stay will be
granted except
upon the posting of a bond or other acceptable security suffi
cient to cover the
amount of the judgment plus interest and costs for the likely dura
tion of the
appeal.

:
KEVIN MCNULTY
United States District Judg

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