Sara Lee Corporation v. Sycamore Family Bakery et al

Filing 501

MEMORANDUM DECISION AND ORDER granting in part and denying in part Sycamore Family LLC's 487 Motion to Stay Pending Appeal; and granting Receiver's 495 Motion for Court to Appoint Appraisers for Eleven Properties Owned by Sycamore Family LLC. Signed by Judge Dale A. Kimball on 3/30/2020. (eat)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF UTAH

EARTHGRAINS BAKING
COMPANIES,
Plaintiff,
vs.

MEMORANDUM DECISION
AND ORDER
Case No. 2:09-CV-523-DAK-DBP

SYCAMORE FAMILY BAKERY, INC.,
and LELAND SYCAMORE,

Judge Dale A. Kimball
Magistrate Judge Dustin B. Pead

Defendants.

This matter is before the court on Interested Party Sycamore Family, LLC’s Motion to
Stay Proceedings and Liquidation by Receiver Pending Appeal. Plaintiff EarthGrains has
opposed the motion, and Sycamore Family LLC (“LLC”) has filed a reply in support of its
motion. Accordingly, the motion is fully briefed. The court concludes that a hearing would not
aid in its determination of the motion. Therefore, the court issues the following memorandum
decision and order based on the parties’ briefing and the law and facts relevant to the pending
motion.
On November 14, 2019, the court ordered the Receiver to pay EarthGrains
$3,859,898.96, including $1.1 million from available cash and $2.7 from liquidated real estate.
On December 13, 2019, the LLC filed a notice of appeal. On January 28, 2020, the LLC filed the
present motion seeking a stay of the court’s order pending appeal.
Rule 62(b) of the Federal Rules of Civil Procedure 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 effct for the time
specified in the bond or other security.” Rule 8(a)(1) of the Federal Rules of Appellate
Procedure provides that a party must ordinarily first move in the district court to obtain a stay of
the judgment or order of a district court pending appeal. Fed. R. App. P. 8(a)(1).
The purpose of a stay is to preserve the status quo pending appeal. McClendon v. City of
Albuquerque, 79 F.3d 1014, 1020 (10th Cir. 1996). The parties dispute whether the presence of
the bond or other security is sufficient for a stay or whether the court must also analyze the
additional factors in considering the motion to stay pending appeal. Both parties rely on
Deutsche Bank Nat’l Tr. Co. v. Cornish, 759 F. App’x 503, 510 (7th Cir. 219). The Deutsche
Bank case involved an appeal from a judgment foreclosing a mortgage. Id. at 503. The court
recognized that, “[u]nder the new version of Rule 62, the newly expressed flexibity for the form
of security to protect the appellee gives more explicit support for treating the property in a
mortgage foreclosure appeal as sufficient security, at least as long as the property is occupied and
cared for.” Id. at 510. The court further explained that “since the amended rule no longer
provides completely automatic stays, it allows the courts flexibility to protect a lender-appellee
who needs protection from risks that would dissipate the property or otherwise undermine the
security it provides.” Id. Accordingly, “under the new rules, courts should be able to balance
fairly the appellant-debtor’s appeal rights with the lender-appellee’s rights to security pending
appeal. Id.
In the present case, the court has appointed a Receiver over the LLC’s assets. Because
the Receiver is in control of the properties he seeks to liquidate, EarthGrains has adequate
security that the properties will not be dissipated as a whole. The court, however, recognizes that
there are several properties where income from the properties is being dissipated because the
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properties are not being rented at a fair market value of rent. In balancing the parties’ rights,
therefore, the court stays only the liquidation of the properties pending the LLC’s appeal but
requires the Receiver to obtain full fair market rents for each of the properties pending the
appeal. The Receiver should forward those rental payments to Plaintiff pending appeal. In
addition, there is no need to stay appraisal of the properties pending appeal. The appraisal of the
properties should move forward for purposes of proper rental value and their potential sale.
Based on the above reasoning, the LLC’s Motion to Stay Pending Appeal [ECF No. 487]
is GRANTED IN PART AND DENIED IN PART as explained above and Receiver’s Motion for
Court to Appoint Appraisers for Eleven Properties Owned by Sycamore Family LLC [ECF No.
495] is GRANTED.
DATED this 30th day of March, 2020.
BY THE COURT:

____________________________________
DALE A. KIMBALL,
United States District Judge

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