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Wichansky v. Zowine

United States District Court, D. Arizona

June 16, 2016

Marc A Wichansky, Plaintiff,
v.
David T Zowine, et al., Defendants.

          ORDER AND INJUNCTION

          David G. Campbell United States District Judge

         Following a jury trial, the Court entered judgment in the amount of $27, 625, 500 in favor of Plaintiff Marc Wichansky and against Defendants David Zowine, Karina Zowine, Charles Johnson, Martha Leon, Pat Shanahan, Sarah Shanahan, Michael Ilardo, and Alisa Ilardo (“Defendants”). Doc. 535. Defendants ask the Court to stay execution of the judgment without security or with security other than a supersedeas bond. The Court has reviewed the parties’ briefs (Docs. 542, 543, 545, 546, 547, 549) and heard oral argument on June 15, 2016 (Doc. 548).

         I. Rule 62(b).

         “On appropriate terms for the opposing party’s security, the court may stay the execution of a judgment - or any proceedings to enforce it - pending disposition of” certain post-trial motions. Fed.R.Civ.P. 62(b). “An unsecured stay is disfavored under Rule 62(b).” In re Apollo Grp. Inc. Sec. Litig., No. CV04-02147-PHX-JAT, 2008 WL 410625, at *1 (D. Ariz. Feb. 13, 2008) (citing Int’l Wood Processors v. Power Dry, Inc., 102 F.R.D. 212, 214 (D.S.C. 1984)). “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.’” Id. (citing Fed. Prescription Serv., Inc. v. Am. Pharm. Ass’n, 636 F.2d 755, 760-61 (D.C. Cir. 1980); In re Combined Metals Reduction Co., 557 F.2d 179, 193 (9th Cir. 1977)).

         II. Analysis.

         Defendants seek a stay of execution, without security, pending resolution of post-trial motions. Alternatively, Defendants ask the Court to permit security totaling $11, 000, 000 (a $5, 000, 000 bond and a $6, 000, 000 letter of credit), with no security for the punitive damages portion of the judgment, or, if the Court requires security in full, that Plaintiff be granted a security interest in Zowine’s stake in his company, Zoe Holding Company, Inc. The parties have briefed and argued various issues the Court will address.

         A. Denial of Rule 62(b) Relief.

         Plaintiff argues that the Court must deny Defendants’ Rule 62(b) request because there are no currently-pending post-trial motions. As the Court explained during oral argument, however, Rule 62(b) does not require currently-pending motions. Indeed, the deadline for filing post-trial motions has not arrived, see Fed. R. Civ. P. 50(d), 59(b), and yet Rule 62(b) permits a stay pending disposition of precisely those motions.

         Plaintiff also argues that Defendants must show a likelihood of success in their post-trial motions, and other elements normally required for injunctive relief, before they can obtain a stay. Rule 62(b) imposes no such requirement; it looks instead to “appropriate terms for the opposing party’s security” as the basis for granting a stay. Fed.R.Civ.P. 62(b); see also FINOVA Capital Corp. v. Richard A. Alredge, Inc., No. CV02-01277-PHX-RCB, 2008 WL 828504, at *4-5 (D. Ariz. Mar. 26, 2008).

         B. Unsecured Stay.

         A district court 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.” In re Apollo Grp. Inc. Sec. Litig., 2008 WL 410625, at *1 (citations omitted). Unsecured stays are disfavored. Id.

         Defendants have not shown unusual circumstances, or that granting an unsecured stay would not unduly endanger Plaintiff’s interest in ultimate recovery. Defendants argue that they are likely to succeed in their post-trial motions, that they have encountered difficulty securing a bond to cover the full judgment amount, and that the judgment likely will be altered due to post-trial motions or offsets in state court litigation. The Court does not find that Defendants are likely to succeed on their post-trial motions, at least not to the extent of eliminating the jury verdict, and the Court previously has concluded that it will not anticipate or attempt to influence the results of the state court litigation. In addition, mere difficulty in obtaining security cannot be deemed unusual circumstances, particularly when Defendant Zowine claims to own more than $100 million in assets. The Court will not grant Defendants’ request for an unsecured stay.

         C. Alternative Security.

         A supersedeas bond is the typical form of security, but district courts have discretion to allow alternative forms. See Townsend v. Holman Consulting Corp., 929 F.2d 1358, 1367 (9th Cir. 1990); Int’l Wood Processors, 102 F.R.D. at 215. Alternative security must adequately protect the judgment creditor. See Skydive Ariz., Inc. v. Quattrocchi, No. ...


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