United States District Court, W.D. North Carolina, Statesville Division
Cogburn Jr. United States District Judge
matter is before the Court on a Motion for Bond Reduction,
filed by Roger Leon and Keith Percy. (Doc. No. 64).
16, 2018, this Court entered a final judgment in this case.
(Doc. No. 50). That judgment included a monetary judgment in
favor of Rato Power and against Roger Leon in accordance with
this Court's Order issued the same day granting Rato
Power's Motion to Confirm Arbitration Award and Enter
Final Judgment. (Doc. No. 49). The Rato Parties filed the
judgment with the Clerk of Superior Court for Lincoln County
pursuant to 28 U.S.C. § 1962 and N.C. Gen. Stat. §
1-237, which created a judicial lien on Leon's personal
residence in Lincoln County.
Roger Leon and Keith Percy appealed the final judgment and
later moved to stay its enforcement pending the appeal. (Doc.
Nos. 51, 61). Defendants provided a supersedeas bond for the
full amount of the judgment. (Doc. No. 62). On November 13,
2018, this Court granted the motion to stay. (Doc. No. 63).
their pending motion for bond reduction, Defendants now
request that the supersedeas bond be reduced to either $0, or
to $150, 000. Defendants explain in their motion that the
$300, 000 supersedeas bond imposes an undue financial burden
on Defendant Leon because Leon relied on a $150, 000 personal
loan to meet the bond, and the lender now seeks to have the
money returned. Defendants also contend that if this Court
reduces the bond Plaintiff's interests will be
sufficiently protected because a judicial lien has been
imposed on Mr. Leon's personal residence, securing
Plaintiffs if they prevail in this case. Defendants have
submitted exhibits to their Reply brief, showing that Mr.
Leon's residence has a tax value of around $850, 000, and
that Mr. Leon owes about $330, 000 on the mortgage.
Defendants contend, therefore, there is plenty of equity in
the residence to satisfy Plaintiffs' judgment if
Plaintiffs prevail on appeal. Plaintiffs oppose the motion to
reduce bond. The Court will deny Defendants' motion
for the reasons given by Plaintiffs in their opposing brief
and for additional reasons stated below.
of the Federal Rules of Civil Procedures governs supersedeas
bonds. Since this Court granted Defendants' motion to
stay enforcement of the judgment, Rule 62 has been reworded.
The old Rule 62(d) provided that an appellant “may
obtain a stay [of the judgment] by supersedeas bond”
during the pendency of an appeal. Under the new Rule 62(b),
which took effect on December 1, 2018, “a party may
obtain a stay by providing a bond or other security.”
This rewording clarified what case law, including from this
Court, had already established under the old Rule 62-courts
have the discretion to stay proceedings with an alternate
security other than a supersedeas bond. See Barranco v.
3D Sys. Corp., No. 314CV00188RJCDSC, 2017 WL 3174948, at
*1 (W.D. N.C. July 26, 2017) (“In the alternative to a
full supersedeas bond and associated stay as a matter of
right, courts have discretion to grant a stay of execution
absent a supersedeas bond or with a lesser or alternate
security.”). Under either formulation of Rule 62, the
rule's underlying purpose remains the same: “to
preserve the status quo while protecting the non appealing
party's rights pending appeal.” Legacy Data
Access, Inc. v. Cadrillion, LLC, No.
3:15-CV-0163-FDW-DCK, 2017 WL 3725216, at *1 (W.D. N.C. Aug.
the full bond requirement “is the rare case, ”
however, and should only be allowed in “extraordinary
circumstances.” Barranco, 2017 WL 3174948, at
*1. Further, Defendants bear the burden to prove that a full
bond should not be required to stay enforcement proceedings.
Legacy Data Access, 2017 WL 3725216, at *1; see
also Live Face on Web, LLC v. Integrity Sols. Grp.,
Inc., No. 16-CV-01627-CMA-STV, 2018 WL 6415383, at *3
(D. Colo. Dec. 6, 2018) (“The burden is on the stay
applicant to objectively demonstrate the reasons for such a
departure from the usual requirement of a full supersedeas
bond.”) (citations and quotation marks omitted).
Court has recognized that a full bond may not be necessary in
either of two 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 financial burden. Barranco, 2017 WL
3174948, at *1.
Court finds that Defendants have failed to meet their burden
to establish the “extraordinary circumstances”
required to deviate from the standard, full supersedeas bond.
As noted, Defendants first argue that the current bond
“imposes an undue financial burden” because Leon
borrowed $150, 000 to secure the bond, and the lender now
wants the loan repaid. As Plaintiffs point out in their
brief, however, Defendants never disclosed this circumstance
in their original motion to stay enforcement. Nor did they
inform Plaintiffs that they would need to seek to reduce the
bond only six months after it was issued and well before any
appeal could be resolved. Plaintiffs argue in their
opposition brief that, had this been disclosed, the Rato
Parties would have opposed the motion to stay.
as for Defendants' second argument for reducing the
supersedeas bond-that Rato Power's judicial lien on
Leon's home is adequate to secure enforcement of the
judgment-this Court finds that reducing the bond would place
Plaintiffs at risk of not being able to collect on the full
judgment, or having to enforcing the judgment through
foreclosing on Rato Power's judicial lien, which would be
a much more complex and cumbersome process than satisfying
the judgment through the supersedeas bond currently in place.
See N.C. Gen. Stat. § 1-339.41 et seq.
(establishing process for execution sales of judgment
debtor's property). Courts consider the complexity and
length of the collection process when assessing an
appellant's proposed alternative security to a full
supersedeas bond. See, e.g., Dillon v. City of
Chicago, 866 F.2d 902, 904 (7th Cir. 1988); Capital
Source Fin. LLC v. Pittsfield Weaving Co., No.
CIV.A.AW-06-2028, 2008 WL 3850385, at *2 (D. Md. Mar. 7,
2008); Se. Booksellers Ass'n v. McMaster, 233
F.R.D. 456, 459-60 (D.S.C. 2006). Faced with similar proposed
alternatives, courts have rejected a judgment creditor's
lien on real property as a suitable alternative to the
“full and fast relief offered by a supersedeas bond
because of the lengthy and burdensome process required to
enforce the lien through an execution sale of the property.
Sierra Club v. El Paso Gold Mines, Inc., No.
CIV.A.01 PC 2163 OES, 2003 WL 25265871, at *9 (D. Colo. Apr.
21, 2003) (“Moreover, the collection process proposed
by defendant is cumbersome because the [judgment creditor]
would be forced to conduct a sheriffs sale of the real
property to satisfy the judgment. In contrast, a supersedeas
bond provides full and fast relief.”).
this Court finds that allowing the reduction of the
supersedeas bond for the proposed alternative security would
be unfair to Plaintiffs, who did nothing to create the
situation Defendants find themselves in-that Leon took out a
loan that required repayment within six months, when it was
surely obvious to the parties and counsel that resolution of
the appeal within that time period was highly unlikely. The
Court will therefore require that the full supersedeas bond
remain in place to continue staying enforcement of the
THEREFORE ORDERED that the Motion for Bond
Reduction, (Doc. No. ...