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Lexington Insurance Co. v. Scott Homes Multifamily Inc.

United States District Court, D. Arizona

November 10, 2015

Lexington Insurance Company, Plaintiff/ Counterdefendant,
Scott Homes Multifamily Incorporated, et al., Defendants/Counterclaimants.



Pending before the Court is Plaintiff/Counterdefendant Lexington Insurance Company (“Lexington”)’s Emergency Motion to Extend the Temporary Stay of Execution on the Judgment (First Request). (Doc. 487). Defendants/Counterclaimants Silverbell 290 L.P. (“Silverbell”) and Scott Homes Multifamily, Inc. (“Scott Homes”) filed a response. (Doc. 488). The Court now rules on the motion.

I. Background

Lexington requests-on an emergency basis-that the Court extend the 14-day automatic temporary stay of execution on the judgment, which expires Friday, November 13, 2015. (Doc. 487 at 1). Lexington contends that the Court should extend the 14-day temporary stay until the Court disposes of “Lexington’s forthcoming post-trial motions” that apparently could impact the calculation of the judgment as currently entered. (Id.) Assuming the Court was inclined to deny all of Lexington’s yet-to-be-filed motions, Lexington asserts that it will file a notice of appeal and obtain a stay by posting a supersedeas bond. (Id. at 2-3). Therefore, Lexington explains that it needs additional time to: (1) perform an independent calculation of pre-judgment interest due to the Court’s “unclear” rulings, (2) secure a supersedeas bond, and (3) obtain judicial approval of the bond before filing a notice of appeal. (Id.)

II. Legal Standard

This Court has summarized the relevant legal standard as follows:

Rule 62(b) of the Federal Rules of Civil Procedure allows a federal court to “stay the execution of a judgment” pending disposition of certain post-trial motions. Such a stay can only be granted “[o]n appropriate terms for the opposing party’s security.” Id. An unsecured stay is disfavored under Rule 62(b). See, e.g., Int’l Wood Processors v. Power Dry, Inc., 102 F.R.D. 212, 214 (D. S.C.1984) (“Rule 62, taken in its entirety, indicates a policy against any unsecured stay of execution after the expiration of the time for filing a motion for a new trial.” (citing cases)). Nevertheless, while security should be provided “in normal circumstances, ” a district court in its discretion may grant an unsecured stay in “unusual circumstances, ” where the granting of such a stay will not “unduly endanger the judgment creditor’s interest in ultimate recovery.” Fed. Prescription Serv., Inc. v. Am. Pharm. Ass’n, 636 F.2d 755, 760-61 (D.C. Cir. 1980) (addressing stay pending appeal pursuant to Rule 62(d)); see also In re Combined Metals Reduction Co., 557 F.2d 179, 193 (9th Cir. 1977) (recognizing district court’s discretion to grant unsecured stay under Rule 62(d)).

In re Apollo Grp., Inc. Sec. Litig., 2008 WL 410625, at *1 (D. Ariz. Feb. 13, 2008). The Court also included a footnote that explained:

Some courts have held that an unsecured stay should only be granted when the judgment debtor demonstrates that providing security is “impossible or impractical.” E.g., Int’l Wood Processors, 102 F.R.D. at 214; Gallatin Fuels v. Westchester Fire Ins. Co., No. 02-CV-2116, 2006 WL 952203, at *2 (W.D. Pa. 2006); Frankel v. ICD Holdings S.A., 168 F.R.D. 19, 22 (S.D.N.Y. 1996). The Court, however, does not find these authorities persuasive. Such a standard would be more restrictive than the standard applied to unsecured stays pending appeal under Rule 62(d). Cf. Fed. Prescription, 636 F.2d at 759 (focusing on the judgment debtor’s financial condition as a factor that can weigh in favor of granting an unsecured stay). If anything, due to the greater risk inherent in the longer stay under Rule 62(d), the standard governing the court’s discretion in the Rule 62(b) context should be less restrictive.

Id. at *1, n.1.

III. Analysis

Initially, Lexington’s motion does not suggest whether it seeks a secured or an unsecured stay of execution of the judgment. See (Doc. 487). As nothing is before the Court evidencing Lexington’s financial ability or intent to provide a secured stay, the Court assumes Lexington seeks to extend the current stay of execution of the judgment on an unsecured basis.

In this regard, Lexington has not convinced the Court that this case presents “unusual circumstances, ” nor has Lexington provided any information to show that Defendants/Counterclaimants’ interests will be adequately protected in the absence of security. Lexington did not offer the Court any evidence of its financial condition or other evidence showing its ability to pay the judgment pending resolution of its “forthcoming post-trial motions.” Moreover, Lexington’s assertion that it will file the motions enumerated in Rule 62(b) at some future time possibly makes the present motion premature. Rule 62(b) permits a court to stay the execution of a judgment pending the disposition of motions filed under Rule 50, 52(b), 59, and 60. For Rule 62(b) to apply, however, it is presumed that such motions have been filed by the requesting party. Here, there is arguably no basis for the Court to extend the current stay of execution of the judgment pursuant to Rule 62(b) because Lexington has not yet filed any post-trial motions.

Nevertheless, if Lexington wishes to extend the automatic stay of execution of the judgment until the Court disposes of its “forthcoming post-trial motions, ” the Court will permit it to do so-contingent upon Lexington’s provision of adequate security to protect Defendants/Counterclaimants’ interests. As to the ...

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