Xerox Corporation v. JCTB Incorporated et al

Filing 32

DECISION AND ORDER granting 27 Register Judgment Motion ; denying 28 Motion to Stay. Signed by Hon. Michael A. Telesca on 11/14/19. (JMC)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF NEW YORK

XEROX CORPORATION,
Plaintiff,
No. 6:18-cv-06154-MAT
DECISION AND ORDER

-vsJCTB INCORPORATED, SHIRLEY BUI, and
JIMMY CAUDILLO a/k/a JAIME CAUDILLO,
Defendants.

I.

Introduction
This is an action for breach of contract brought by Xerox

Corporation (“Xerox” or “Plaintiff”) against JCTB Incorporated
(“JCTB”), Shirley Bui (“Bui”), and Jimmy Caudillo, a/k/a Jaime
Caudillo

(“Caudillo”)

(collectively,

“Defendants”).

Presently

before the Court are Defendants’ First Motion to Stay Enforcement
of the Judgment (“Stay Motion”) (Docket No. 28) and Plaintiff’s
Motion for an Order Authorizing Registration of the Judgment
(“Register Judgment Motion”) (Docket No. 27). For the reasons
discussed

below, the

Stay

Motion

is denied

and

the

Register

Judgment Motion is granted.
II.

Procedural Status
In the Complaint, Plaintiff asserted four counts: (1) breach

of an equipment finance lease agreement; (2) breach of a promissory
note; (3) breach of a guaranty agreement; and (4) a declaration
entitling it to retake possession of the leased equipment. On
November 2, 2018, the Court granted Plaintiff’s pre-discovery

Motion for Summary Judgment and to Dismiss Counterclaims (Docket
No. 17), and dismissed Defendants’ counterclaims with prejudice.
Plaintiff was granted judgment as a matter of law on Counts I
through III of the Complaint, entitling it to a total compensatory
damages award of $806,019.26 on those counts. The Court further
awarded declaratory judgment to Plaintiff on Count IV, entitling it
to

immediately

retake

possession

of

the

Leased

Equipment

as

identified more particularly in the Complaint.
Also on November 2, 2018, the Court entered the Judgment,
which stated, “Plaintiff is granted summary judgment on Counts I
through

III

of

the

Complaint

and

is

entitled

to

a

total

compensatory damages award of $806,019.26 on those counts.” (Docket
No. 24).
Defendants then filed a Notice of Appeal on November 28, 2018
(Docket No. 25). Their brief was filed in the United States Court
of Appeals for the Second Circuit on March 13, 2019.
Xerox

now

has

filed

a

Motion

for

an

Order

Authorizing

Registration of Judgment in the Central District of

California

pursuant to 28 U.S.C. § 1963 (Docket No. 28). Xerox asserts that
Defendants have neither obtained a supersedeas bond nor paid any
portion of the damages, and an asset search reveals that all of
Defendants’ assets are located in California. Accordingly, Xerox
argues, good cause exists for Xerox to immediately register the
Judgment in the Central District of California.

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Defendants did not oppose Plaintiff’s request to authorize
registration of the judgment in the Central District of California.
Instead, they filed a Motion to Stay Enforcement of the Judgment’s
award of money damages pending the conclusion of their appeal.
Plaintiff has opposed Defendants’ motion to stay.
III. Discussion
A.

Plaintiff’s Motion to Register the Judgment

Title 28 U.S.C., Section 1963 permits a judgment of a district
court to be registered in any other federal district “when the
judgment has become final by appeal or expiration of the time for
appeal or when ordered by the court that entered the judgment for
good cause shown.” 28 U.S.C. § 1963). “A district court has
jurisdiction to consider a motion to certify pursuant to Section
1963, irrespective of a pending appeal.” Coudert v. Hokin, No. 12
CIV. 110 (ALC), 2018 WL 4278332, at *2 (S.D.N.Y. July 30, 2018)
(citing Woodward & Dickerson v. Kahn, No. 89-CV-6733 (PKL), 1993 WL
106129, at *1 (S.D.N.Y. Apr. 2, 1993)).
“Good cause” is demonstrated upon “a mere showing that the
[party against whom the judgment has been entered] has substantial
property

in

the

other

[foreign]

district

and

insufficient

[property] in the rendering district to satisfy the judgment.” Jack
Frost Laboratories, Inc. v. Physicians & Nurses Manufacturing
Corp., 951 F. Supp. 51, 52 (S.D.N.Y. 1997) (quoting Woodward &
Dickerson,

1993

WL

106129,

at

*1

-3-

(emphasis

and

brackets

in

original; further quotation and citations omitted)); accord Owen v.
Soundview Fin. Grp., Inc., 71 F. Supp.2d 278, 278–79 (S.D.N.Y.
1999). “Exact evidence of the debtor’s assets is not necessary[.]”
Coudert, 2018 WL 4278332, at *2 (citing Ambac Assur. Corp. v.
Adelanto Pub. Util. Auth., No. 09-CV-5087(JFK), 2014 WL 2893306, at
*4 (S.D.N.Y. June 26, 2014)). Indeed, “good cause” can be shown in
the absence of an asset search. See Coudert, 2018 WL 4278332, at *3
(“[W]hile an asset search might be a common and expeditious way of
sufficiently demonstrating the existence of such assets, no case
that Plaintiff cites–and the Court is aware of none–suggests that
an asset search is, in fact, necessary. . . . [M]ere property
records, or a showing . . . that Defendant is gainfully employed in
another district, may suffice.”) (citing Owen, 71 F. Supp.2d at 279
(unrebutted property records and sworn testimony sufficient to show
cause for purposes of Section 1963)). Moreover, “[i]n the absence
of contrary evidence, the affidavit in support of the judgment
creditor’s motion should be presumed to be true.” Owen, 71 F.
Supp.2d at 279 (citing AT&T Corp. v. Pub. Ser. Enterp. of Pa.,
Inc., No. 98CIV6133LAP, 1999 WL 672543, at *6 (S.D.N.Y. Aug. 26,
1999) (in the absence of any objections or contrary evidence by
debtor, accepting as true the sworn affidavit of the creditor’s
attorney and granting motion pursuant to Section 1963).
Plaintiff has submitted an affidavit from Janet Atkinson
(“Atkinson Aff.”) (Docket No. 27-1), an employee in its Recovery

-4-

Department. As exhibits to her affidavit, Atkinson has attached
excerpts

from

asset

search

reports

conducted

in

regards

to

Defendants. See Docket No. 27-1, Exhibits (“Exs.”) A & B. These
reports reveal that none of the Defendants has any assets in
New York. See Atkinson Aff. ¶¶ 4-9, Exs. A and B. Rather, all or
substantially all of Defendants’ assets are located in and around
Murrieta and Winchester, Riverside County, California, where the
Defendants reside. See id. ¶¶ 4-9, Exs. A and B (listing addresses
in Winchester, CA for the individual defendants and an address in
Murrieta, CA for the corporate defendant). Standing alone, these
asset search reports are sufficient to establish good cause under
Section 1963 to permit Plaintiff to register the Judgment in the
Central District of California, where Riverside County is located.
See Coudert, 2018 WL 4278332, at *3.
B.

Defendants’ Motion to Stay

Defendants assert that they meet the criteria in the four-part
test governing motions to stay injunctive or equitable relief
pending an appeal, which considers the likelihood of success on
appeal, injury to the movant, injury to the non-moving party, and
the public interest. Defendants’ Memorandum of Law (“Defs.’ Mem.”)
(Docket No. 28-1) at 2-3 (citing Nken v. Holder, 556 U.S. 418, 533
(2009)). Plaintiff argues that this standard does not apply where,
as here, Defendants seek to delay enforcement of a money damages
award. Plaintiff’s Response (“Pl.’s Resp.”) at 6 (citing John Wiley

-5-

& Sons, Inc. v. Book Dog Books, LLC, 327 F. Supp.3d 606, 649
(S.D.N.Y. 2018) (“This Court agrees with those courts holding the
traditional four factors ‘appl[y] only when the judgment sought to
be stayed is for injunctive or equitable relief.’”) (quoting Moore
v. Navillus Tile, Inc., No. 14 CIV. 8326, 2017 WL 4326537, at *4
(S.D.N.Y. Sept. 28, 2017) (stating that the traditional four-factor
test “applies only when the judgment sought to be stayed is for
injunctive or other equitable relief—i. e., when the judgment does
not

fall

within

the

parameters

of

Rule

62(d),

but

instead

implicates Rule 62(c)”); citing Butler v. Ross, No. 16CV1282 (DLC),
2017 WL 6210843, at *2 (S.D.N.Y. Dec. 7, 2017) (stating that “it is
[former] Rule 62(d) and its accompanying test that are applicable
here”)). The Court agrees with Plaintiff that the four-factor test
applicable to stays of judgments ordering injunctive or equitable
relief is not applicable here.
The Court now turns to the question of the proper test to be
employed. Although Defendants do not cite Fed. R. Civ. P. 62, it is
subsection (b) of this rule which provides the statutory authority
for obtaining a stay of a judgment. When Rule 62 was amended in
2018, “[s]ubdivisions (a), (b), (c), and (d) of former Rule 62
[were] reorganized and the provisions for staying a judgment [were]
revised.” Fed. R. Civ. P. 62 advisory committee’s notes to 218
amendment. In particular, “Subdivision 62(b) carries forward in
modified form the supersedeas bond provisions of former Rule

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62(d).” Id.

New Rule 62(b)’s “text makes explicit the opportunity

to post security in a form other than a bond.” Id. Fed. R. Civ. P.
62(b) now provides that “[a]t any time after judgment is entered,
a party may obtain a stay by providing a bond or other security.
The stay takes effect when the court approves the bond or other
security and remains in effect for the time specified in the bond
or other security.” Fed. R. Civ. P. 62(b), amended 2018.
Discussing Rule 62(b)’s predecessor, former Rule 62(d), the
Second Circuit explained that the
purpose of the rule is to ensure that the prevailing
party will recover in full, if the decision should be
affirmed, while protecting the other side against the
risk that payment cannot be recouped if the decision
should be reversed. A district court therefore may, in
its discretion, waive the bond requirement if the
appellant provides an acceptable alternative means of
securing the judgment.
In re Nassau County Strip Search Cases, 783 F.3d 414, 417 (2d Cir.
2015) (per curiam) (citation omitted; emphasis added). A court may
consider the following non-exclusive factors in determining whether
to waive the bond or other security requirement under Rule 62(b):
(1) the complexity of the collection process; (2) the amount of
time required to obtain a judgment after it is affirmed on appeal;
(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

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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. Id. at 417–18 (citation omitted).
After considering the Nassau County factors, the Court is
compelled to conclude that Defendants are not entitled to a stay
without a supersedeas bond under new Rule 62(b), former Rule 62(d).
“Those factors contemplate waiving the requirement of a supersedeas
bond because a court is satisfied that the debtor would be able to
pay the judgment with ease.” Butler v. Ross, 2017 WL 6210843, at *3
(emphasis supplied). Here, Defendants have not demonstrated that
they have the appropriate funds available for the purposes of
paying the Judgment without delay or difficulty. To the contrary,
Defendants rely on their inability to pay the Judgment as the basis
for a stay. Courts in this Circuit have held that judgment-debtors’
assertions of impecuniousness weigh heavily against granting a stay
without bond. See, e.g., Frye v. Lagerstrom, No. 15 CIV. 5348
(NRB), 2018 WL 4935805, at *3 (S.D.N.Y. Oct. 10, 2018) (“Unlike in
Nassau County, here the defendant avers that he is unable to pay
the $33,371.98 judgment in support of his motion for a stay. The
defendant’s concession is determinative of the second, third, and
fourth factors of the Nassau County framework, and assures the
Court that a ‘bond is necessary to safeguard [the plaintiff’s]
recovery.’”) (quoting John Wiley & Sons, Inc., 2018 WL 3956508, at
*27

(“In

fact,

a

concession

of

-8-

inability

to

pay

is

often

‘determinative’ in this inquiry.”); other citation omitted); Moore
v. Navillus Tile, Inc., No. 14 CIV. 8326, 2017 WL 4326537, at *2
(S.D.N.Y. Sept. 28, 2017) (“ndeed, Defendant Navillus’ insistence
that satisfying any amount of the bond would plunge it into
bankruptcy undercuts its position on those three factors.”).
Finally, courts in this Circuit have concluded that “[t]he
fifth Nassau County factor does not envisage waiving the bond
requirement because a debtor simply cannot pay.” Butler, 2017 WL
6210843, at *1. It is true that the fifth factor considers a
debtor’s “precarious financial situation,” “it does so in the
context of considering prejudice to other creditors who may have
claims to the debtor’s property.” Id. at *3; see also Moore v.
Navillus Tile, Inc., 2017 WL 4326537, at *1 (“Significantly, the
bond requirement is not designed to protect the judgment debtor’s
ability to continue in business. . . .”).1
To summarize, none of the factors articulated in Nassau County
factors “take into account the consideration of the debtor’s
financial insecurity as reason alone to waive the bond.” Butler,
2017 WL 6210843, at *4. The Second Circuit has recognized, however,

1

In Butler, the district court noted the existence of “other,
well-established mechanisms by which debtors who assert that they are in serious
financial distress can avoid posting a bond[,]” 2017 WL 6210843, at *3, such as
filing a petition in bankruptcy court, which “triggers an automatic stay and
enjoins collections and enforcement actions by creditors.” Id. (citing S.E.C. v.
Brennan, 230 F.3d 65, 70 (2d Cir. 2000) (“Section 362(a) of Title 11 of the
United States Code stays the commencement or continuation of virtually all
proceedings against a debtor, including enforcement of judgments, that were or
could have been commenced before the debtor filed for bankruptcy.”)).

-9-

that the factors represent a “non-exclusive” list of circumstances
a district court “may” consider in determining whether to exercise
its “discretion” to waive the requirement of the bond. Nassau
County, 783 F.3d at 417. Because Defendants have not suggested an
“‘acceptable alternative means of securing the judgment,’” id.
(quoting FDIC v. Ann–High Assocs., No. 97–6095, 1997 WL 1877195, at
*1 (2d Cir. Dec. 2, 1997) (per curiam); citation omitted), the
Court concludes that it cannot grant the motion to stay. See, e.g.,
Moore v. Navillus Tile, Inc., No. 14 CIV. 8326, 2017 WL 4326537, at
*6 (S.D.N.Y. Sept. 28, 2017) (denying motion to stay without bond
where defendant “made no offer to post a partial bond, or even to
accept

financial

oversight

or

other

conditions

that

might

ameliorate the plaintiffs’ legitimate fears,” district court had
“no way, on this record, of fashioning an appropriate alternative
form of security in this case”).
VI.

Conclusion
For the foregoing reasons, the Court denies the Stay Motion

(Docket No.

28)

filed

by

Defendants

and

grants

the

Register

Judgment Motion (Docket No. 27) filed by Plaintiff.
SO ORDERED.
S/Michael A. Telesca
HONORABLE MICHAEL A. TELESCA
United States District Judge
DATED:

November 14, 2019
Rochester, New York
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