Maxum Indemnity Company v. Drive West Insurance Services, Inc./Mulberry Insurance Services. Inc. et al

Filing 126

ORDER granting in part and denying in part 121 Plaintiff's Motion to Stay Execution of Judgment Pending Appeal. Signed by Judge Timothy S. Black on 1/28/19. (rrs)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF OHIO
WESTERN DIVISION
MAXUM INDEMNITY COMPANY,
Plaintiff,
vs.
DRIVE WEST INSURANCE
SERVICES, INC. / MULBERRY
INSURANCE SERVICES, INC., et al.,
Defendants.

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Case No. 1:13-cv-191
Judge Timothy S. Black

ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFF’S
MOTION TO STAY EXECUTION OF JUDGMENT PENDING APPEAL
This civil action is before the Court upon Plaintiff/Counterclaim Defendant
Maxum Indemnity Company (“Maxum”)’s motion to stay execution of judgment pending
appeal (Doc. 121) and the parties’ responsive memoranda (Docs. 123 and 125).
I.

BACKGROUND

On November 9, 2016, the Court issued an Order denying Maxum’s motion for
summary judgment on rescission and granting Defendant/Counterclaim Plaintiff National
Condo & Apartment Insurance Group (“NCAIG”)’s motion for summary judgment on its
counterclaim. (Doc. 110). Thereafter, on October 23, 2018, the Court issued an Order
granting NCAIG’s motion for pre-judgment interest, post-judgment interest, and entry of
final judgment. In that Order, the Court entered judgment against Maxum in the amount
of $2,948,697.40, plus post-judgment interest. (Doc. 119).

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Maxum filed a notice of appeal on November 11, 2018. (Doc. 122). Pursuant to
Fed. R. Civ. P. 62(b), Maxum moves the Court to stay execution of the judgment through
the disposition of its appeal without the necessity of a bond. Alternatively, Maxum
requests that the Court permit Maxum to file a supersedeas bond in the amount of the
judgment and enter a stay of the enforcement of the judgment pending Maxum’s appeal.
(Doc. 121 at 2).
II.

STANDARD OF REVIEW

If an appeal is taken, Rule 62(b) 1 provides that “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).
“A party taking an appeal from the District Court is entitled to a stay of a money
judgment as a matter of right if he posts a bond in accordance with Fed. R. Civ. P. 62(d).”
Am. Mfrs. Mut. Ins. Co. v. Am. Broad.-Paramount Theatres, Inc., 87 S. Ct. 1, 3 (1966).
The Sixth Circuit has held that Rule 62 “entitles a party who files a satisfactory
supersedeas bond to a stay of money judgment as a matter of right. . . . However, the
Rule in no way necessarily implies that filing a bond is the only way to obtain a stay. It
speaks only to stays granted as a matter of right, it does not speak to stays granted by the

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Rule 62 was amended effective December 1, 2018. The case law discussed in this opinion
analyzes the former Rule 62 provision, which provides: “If an appeal is taken, the appellant may
obtain a stay by supersedeas bond. . . . The bond may be given upon or after filing 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) (2018).
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court in accordance with its discretion.” Arban v. W. Publ’g Corp., 345 F.3d 390, 409
(6th Cir. 2003) (emphasis added). “[T]he court has no discretion to deny the stay itself,
but only to fix the amount of (or to waive) the bond.” Buckhorn Inc. V. Orbis Corp.,
2014 WL 4377811, at *1 (S.D. Ohio Sept. 3, 2014) (citing Frommert v. Conkright, 639 F.
Supp. 2d 305, 308 (W.D.N.Y. 2009)).
III.

ANALYSIS

The purpose of Rule 62(b) 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.” Exel, Inc. v.
Southern Refrigerated Transport, Inc., 2014 WL 6901765, at *1 (S.D. Ohio Dec. 5,
2014) (internal quotations omitted) (quoting Cohen v. Metro. Life Ins. Co., 334 F. App'x
375, 378 (2nd Cir. 2009)). Maxum is entitled to a stay of execution of the monetary
judgment if it posts a supersedeas bond. Arban, 345 F.3d at 409. However, Maxum
requests that the Court issue a stay of execution of the judgment without a supersedeas
bond. It is in the Court’s discretion to dispense with the supersedeas bond requirement.
However, a “full supersedeas bond should almost always be required.” Exel, 2014 WL
6901765, at *2 (quoting Hamlin v. Charter Tp. Of Flint, 181 F.R.D. 348, 351 (E.D. Mich.
1998)). District courts within the Sixth Circuit have required parties seeking a stay of
execution of judgment without a supersedeas bond to demonstrate “extraordinary
circumstances” justifying such a waiver. Id.; Monks v. Long Term Disability Benefits
Plan, 2012 WL 1598294, at *2 (S.D. Ohio Sept. 3, 2014); Buckhorn, 2014 WL 4377811,

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at *2–3.
Here, Maxum contends that its financial solvency and stability warrant the waiver
of the bond requirement. 2 The Sixth Circuit has found that in certain circumstances,
bond is inappropriate “where the defendant’s ability to pay the judgment is so plain that
the cost of the bond would be a waste of money.” Arban, 345 F.3d at 409. “Those
circumstances tend to be when the appellant demonstrates a disproportionately high
income in relation to the judgment or when the appellant has posted cash, accounts
receivables, or other assets as security.” Continental Casualty Company v. Indian Head
Industries, Inc., 2016 WL 1573259, at *1 (E.D. Mich. Apr. 19, 2016) (quoting
Transportation Ins. Co. v. Citizens Ins. Co. of America, 2013 WL 4604126, at *4 (E.D.
Mich. Aug. 29, 2013)). Yet courts in the Southern District of Ohio have found that bonds
should be required “even when the defendant clearly has the ability to pay.” Buckhorn,
2014 WL 4377811, at 2; Monks, 2012 WL 1598294, at *3.

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Although the Sixth Circuit has not defined a specific test to guide a district court’s discretion
when considering whether to waive a bond requirement, some district courts within the Southern
District of Ohio have adopted the Seventh Circuit’s five factor test provided in Dillon v. City of
Chicago, 866 F.2d 902 (7th Cir. 1988). See e.g., Buckhorn, 2014 WL 4377811, at *2; Monks,
2012 WL 1598294, at *2–3. When determining whether the waiver of the supersedeas bond
requirement is appropriate under the Dillon test, courts consider: (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 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. Dillon, 866 F.2d at 904–05. Here, Maxum argues that each of these factors
favor waiving the bond requirement, but primarily relies on Maxum’s purported ability to satisfy
the judgment. (Doc. 121-1 at 4).
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Maxum’s motion attached an affidavit and exhibits reflecting that, in 2017,
Maxum had cash and short-term investments in the amount of $23,609,000 and netoperating cash flow of $5,023,000. (Doc. 121-3). Maxum also reports that its parent
company, The Hartford Financial Services Group, Inc. (“Hartford”), has cash in the
amount of $102,000,000. (Doc. 121-4). Yet, Hartford is not a party to this action and
Maxum does not provide any evidence that Hartford would be obligated to satisfy the
judgment against Maxum. Additionally, while the affidavit presented by Maxum states
that Maxum will be able to satisfy the judgment within thirty (30) days, the affidavit does
not state that Maxum has set aside the funds necessary to satisfy the judgment. (Doc.
121-2 at ¶¶ 6–7).
In Arban, the Sixth Circuit affirmed the district court’s waiver of the bond
requirement where the appellant could clearly pay the judgment. In that case, however,
the judgment against the appellant was approximately $225,000 and the appellant’s
annual revenues were greater than $2.5 billion. Arban, 345 F.3d at 400, 409. As NCAIG
notes, in Arban the appellant’s annual revenue was over 11,000 times greater than the
judgment. (Doc. 123 at 4). The Sixth Circuit described that difference in revenue and
judgment as a “vast disparity.” Arban, 345 F.3d at 409.
Here, the $2,948,697.40 judgment against Maxum is greater than half of Maxum’s
annual operating cash flow ($5,023,000). The Court finds that this is not the type of
“vast disparity” between the amount of the judgment and annual revenue of the appellant
as was contemplated in Arban. See Buckhorn, 2014 WL 4377811, at *2 (finding no “vast

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disparity” between a $3.1 million judgment and the appellant’s alleged $88 million in
assets.) Moreover, while Hartford’s financial stability and solvency is clearer than its
subsidiary Maxum, Maxum has not explicitly stated that Hartford would satisfy the
judgment in this case. Yet courts in the Southern District of Ohio have declined waiving
the bond requirement even when an appellant states that its parent company will satisfy
the judgment. Exel, 2014 WL 6901765, at *3.
Therefore, because Maxum has not demonstrated a vast disparity between its
revenue and the judgment, has not presented evidence that it has set aside funds to satisfy
the judgment, and cannot simply rely on the financial stability of its parent company,
Maxum has failed to meet its burden to demonstrate “extraordinary circumstances” that
justify a waiver of the bond requirement.
In its motion, Maxum alternatively requests that the Court stay execution of the
judgment by filing of a supersedeas bond in the amount of $2,948,697.40, and issue a
temporary stay to enable Maxum to post the bond within fourteen (14) days of this
Court’s Order on the motion. The Court finds that this request is appropriate and satisfies
Rule 62(b).
IV.

CONCLUSION

Wherefore, for the foregoing reasons, the Court GRANTS IN PART AND
DENIES IN PART Maxum’s motion to stay execution of judgment pending appeal.
(Doc. 121). The Court DENIES Maxum’s motion for stay pending appeal without
posting a supersedes bond. The Court GRANTS Maxum’s motion to stay execution of

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the judgment by posting a supersedeas bond in the amount of $2,948,697.40 within
fourteen (14) days of this Order.
IT IS SO ORDERED.
Date:

1/28/19

Timothy S. Black
United States District Judge

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