Diamond Falls Estates, LLC et al v. Nantahala Bank & Trust Company et al
ORDER denying Plaintiffs' 117 Emergency Motion for Stay Pending Appeal. Signed by District Judge Martin Reidinger on 10/22/2015. (khm)
THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF NORTH CAROLINA
BRYSON CITY DIVISION
CIVIL CASE NO. 2:14-cv-00007-MR-DLH
DIAMOND FALLS ESTATES, LLC,
SHIRLEY M. BUAFO, and CHARLES K.
NANTAHALA BANK & TRUST COMPANY, )
LUXUR, INC., STEVE E. GRAVETT,
EXCELL PARTNERS, LLC, REALTY
ACQUISITIONS, LLC, and JOHN/JANE
THIS MATTER is before the Court on the Plaintiffs’ Emergency Motion
for Stay Pending Appeal [Doc. 117].
The Plaintiffs Diamond Falls Estates, LLC, Shirley M. Buafo, and
Charles K. Buafo brought this action against the Defendant Nantahala Bank
& Trust Company (the “Bank”) and others1, asserting various claims arising
Over the course of the litigation, the other named defendants were dismissed from this
action, leaving the Bank as the only remaining defendant.
from a real estate acquisition and development loan made by the Bank to
the Plaintiffs. [Doc. 1-1]. On September 8, 2015, the Court granted the
Bank’s motion for summary judgment [Doc. 114] and entered a judgment in
favor of the Bank in the amount of $2,725,989.42, plus interest and attorney’s
fees. [Doc. 115].2 The Plaintiffs then filed the present motion, seeking a stay
of execution of the judgment without the requirement of a supersedeas bond
pending final resolution of the appeal to be filed in this matter.3 [Doc. 117].
The Bank opposes the Plaintiff’s motion, arguing that the Plaintiffs
have failed to demonstrate that a stay is warranted or that anything less than
a full supersedeas bond would adequately preserve the status quo and
protect the Bank’s rights during the appeal. [Doc. 122].
Having been fully briefed, this matter is now ripe for disposition.
Rule 62(d) of the Federal Rules of Civil Procedure provides, in
pertinent part, that where an appeal is taken, the appealing party “may obtain
a stay by supersedeas bond.” Fed. R. Civ. P. 62(d). Rule 62(d) makes clear
that when a supersedeas bond is posted, the appellant “is entitled to the stay
The Court entered an Amended Judgment on September 29, 2015. [Doc. 118].
The Plaintiffs filed their Notice of Appeal on October 7, 2015. [Doc. 119].
as a matter of right.” Kirby v. Gen. Elec. Co., 210 F.R.D. 180, 194 (W.D.N.C.
2000). When a party seeks a stay without the filing of a supersedeas bond,
the issuance of a stay is a matter within the Court’s discretion.
Booksellers Ass’n v. McMaster, 233 F.R.D. 456, 458 (D.S.C. 2006).
Before deciding whether to exercise its discretion in granting a stay
without a bond, the Court first must determine whether a stay is warranted.
Id. at 458. In making this determination, the Court should consider the
(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
proceedings; and (4) where the public interest lies.
Id. at 458 (quoting Kirby, 210 F.R.D. at 195). The party moving for the stay
bears the burden of persuasion with respect to these factors. ABT, Inc. v.
Juszczyk, No. 5:09CV119-RLV, 2012 WL 117142, at *1 (citing Long v.
Robinson, 432 F.2d 977, 979 (4th Cir. 1970)).
With respect the first factor, the Plaintiffs simply direct the Court to their
summary judgment filings. [Doc. 117-1 at 3]. The Plaintiffs fail to explain,
however, how these pleadings would support a finding that they are likely to
succeed on the merits of their appeal, especially where the Court rejected
these very arguments in ruling in favor of the Bank. Accordingly, the first
factor does not weigh in favor of the Plaintiffs.
As for the second factor, the Plaintiffs argue that the Bank may
foreclose on the Plaintiffs’ properties, thereby intimating that a lien on
collateral associated with the underlying debt is a sufficient substitute for a
full supersedeas bond. [See Doc. 117-1 at 3-4]. The possibility of an
alternative to a full bond, however, is not evidence of any irreparable injury
on the part of the Plaintiffs. Accordingly, this factor does not weigh in favor
of the requested relief.
As for the third factor, the Court finds that the Bank stands to suffer
substantial injury if a stay were permitted without the filing of a full
supersedeas bond. As set forth in the Affidavit of Tim Hubbs [Doc. 122-1],
the Defendant Bank is a relatively small entity, with assets at 4% of the
average assets of other North Carolina banks. The Bank has not received
payments on the loan and guaranties at issue for more than two years, and
it has incurred significant expense related to the defense of this lawsuit and
the prosecution of its counterclaims. Furthermore, the Bank is required
under federal banking requirements to classify the loan as a nonperforming
asset, which adversely affects its asset quality rating. Finally, with respect
to the public interest factor, the Court finds that this consideration does not
weigh strongly in favor of either party and is therefore neutral. For all of these
reasons, the Court finds that the relevant factors weigh in favor of denying
the requested stay.
Even where a stay is warranted, however, the Court must nevertheless
exercise its discretion in determining whether the stay should be allowed with
anything less than a full supersedeas bond. “In determining whether to issue
a stay pending appeal on the basis of less than a full bond, a district court
should act to ‘preserve the status quo while protecting the non-appealing
party’s rights pending appeal.’” Alexander v. Chesapeake, Potomac and
Tidewater Books, Inc., 190 F.R.D. 190, 193 (E.D. Va. 1999) (quoting in part
Poplar Grove Planting & Refining Co. v. Bache Halsey Stuart, Inc., 600 F.2d
1189, 1190-91 (5th Cir. 1979)). While this principle is generally satisfied only
by the posting of a full bond, courts have recognized that
a full bond may not be necessary in either of two
polar circumstances: (i) when the judgment debtor
can currently easily meet the judgment and
demonstrates that it will maintain the same level of
solvency during appeal, and (ii) when the judgment
debtor’s present financial condition is such that the
posting of a full bond would impose an undue
Alexander, 190 F.R.D. at 193 (citation and internal quotation marks omitted);
Kirby, 210 F.R.D. at 195. In either case, the Court still need not require a full
supersedeas bond, so long as the Court finds “some other way to make the
judgment creditor as well off during the appeal as it would be if it could
execute at once, but not better off.” Kirby, 210 F.R.D. at 195 (internal
quotation marks and citation omitted).
In the present case, the Plaintiffs have failed to demonstrate that they
can easily meet the judgment or that they will maintain the same level of
solvency during the appeal.
While the Plaintiffs contend that the
“Defendant’s Judgment is fully secured by the Diamond Falls Property and
Plaintiff’s Florida Condo” [Doc. 117-1 at 4], they offer no actual evidence as
to the current value of that collateral. They also have failed to show that this
collateral is likely to maintain its value during the pendency of the appeal.
Alternatively, the Plaintiffs have offered no evidence of their present financial
condition to show that the posting of a full bond would impose an undue
financial burden on them. For all of these reasons, the Court in the exercise
of its discretion denies the Plaintiffs’ request for the imposition of a stay
pending appeal without the posting of a supersedeas bond.
The Plaintiffs may still elect to post a full supersedeas bond as required
by Rule 62(d). Unless and until such bond is posted, however, execution on
the judgment may proceed.
IT IS, THEREFORE, ORDERED that Plaintiffs’ Emergency Motion for
Stay Pending Appeal [Doc. 117] is DENIED.
IT IS SO ORDERED.
Signed: October 22, 2015
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