Opinion
CASE NO. 1:16-cv-1042-AWI-SAB
07-02-2020
The ESTATE OF Casimero CASILLAS et al., Plaintiff, v. CITY OF FRESNO, Fresno Police Department, Officer Trevor Shipman, and Does 1-30, inclusive, Defendants.
Dale K. Galipo, Eric Valenzuela, Law Offices of Dale K. Galipo, Woodland Hills, CA, Jeffrey William Eisinger, Law Office of William Schmidt, William L. Schmidt, Attorney at Law, Fresno, CA, for Plaintiff. Bruce Daniel Praet, Ferguson Praet and Sherman, Santa Ana, CA, Scott Wm. Davenport, Manning & Kass Ellrod Ramirez Trester, LLP, Irvine, CA, for Defendants.
Dale K. Galipo, Eric Valenzuela, Law Offices of Dale K. Galipo, Woodland Hills, CA, Jeffrey William Eisinger, Law Office of William Schmidt, William L. Schmidt, Attorney at Law, Fresno, CA, for Plaintiff.
Bruce Daniel Praet, Ferguson Praet and Sherman, Santa Ana, CA, Scott Wm. Davenport, Manning & Kass Ellrod Ramirez Trester, LLP, Irvine, CA, for Defendants.
ORDER GRANTING DEFENDANTS’ MOTION TO STAY ENFORCEMENT OF JUDGMENT AND WAIVE BOND DURING PENDENCY OF APPEAL
Anthony W. Ishii, SENIOR DISTRICT JUDGE A jury found the City of Fresno ("Fresno"), the Fresno Police Department and Trevor Shipman (together, "Defendants") liable for $4,750,000 in connection with a police shooting. Doc. No. 88. Appeals were filed relating to the judgment and various motions, and Defendants brought the instant motion requesting that the Court stay enforcement of the judgment and waive bond pending resolution of the appeals. Doc. No. 160. For the reasons set forth below, the Court will grant Defendants’ motion for an unsecured stay without prejudice to Plaintiffs’ ability to seek security for the judgment at a later date based on a change in Fresno's financial condition.
BACKGROUND
This case arises out of a September 7, 2015 incident in which Shipman, an officer employed at the time by the Fresno Police Department, shot and killed Casimero Casillas. Casillas's heirs ("Plaintiffs") sued Defendants, and the jury returned an award of $4,750,000 following a February 2019 trial. The Court subsequently taxed costs in the amount of $10,400, Doc. No. 147, and awarded attorneys’ fees to Plaintiffs in the amount of $480,527, bringing the total award to $5,240,927, not including interest and any further awards that might arise from the pending appeals. Doc. No. 151.
Defendants filed notices of appeal on July 19, 2019, February 5, 2020 and February 24, 2020, Doc. Nos. 136, 148 & 152, and Plaintiffs filed a notice of appeal on March 20, 2020. Doc. No. 157. On May 13, 2020, Defendants brought the motion at bar to stay enforcement of judgment and waive bond during the pendency of these appeals. Doc. No. 160.
LEGAL STANDARD
With a few specified exceptions, Rule 62(a) of the Federal Rules of Civil Procedure provides an automatic stay of 30 days following entry of judgment. Fed.R.Civ.P. 62(a). If a decision is appealed, the party seeking to further stay proceedings to enforce a judgment may post a bond or other security, Fed.R.Civ.P. 62(b), or move for an unsecured stay. See Bolt v. Merrimack Pharm., Inc., 2005 WL 2298423, at *2, n.2 (E.D. Cal. Sept. 20, 2005) (citing Fed.R.App.P. 8(a)-(b) and Fed. Prescription Serv., Inc. v. Am. Pharm. Ass'n, 636 F.2d 755, 760 (D.C. Cir. 1980) ); see also, United States v. Simmons, 2002 WL 1477460, at *1 (E.D. Cal. May 14, 2002). While parties have the right to a stay obtained by providing a bond or other approved security, an unsecured stay is reserved for "unusual circumstances" and awarded at the court's discretion. Yenidunya Investments, Ltd. v. Magnum Seeds, Inc., 2012 WL 1085535, at *2 (E.D. Cal. Mar. 30, 2012) (citing Fed. Prescription Serv., Inc., 636 F.2d at 760–61 ); see also, Lightfoot v. Walker, 797 F.2d 505, 506 (7th Cir. 1986) ("The district judge can in his discretion stay the execution of a judgment pending appeal without requiring a bond ....").
Courts addressing motions for bond waiver have expressed a willingness to grant such requests when: (1) "defendant's ability to pay is so plain that the cost of the bond would be a waste of money" or (2) requiring a bond "would put the defendant's other creditors in undue jeopardy." Olympia Equip. v. W. Union Tel. Co., 786 F.2d 794, 796 (7th Cir. 1986) ; see also, Safeco Ins. Co. of Am. v. Cty. of San Bernardino, 2007 WL 9719254, at *3 (C.D. Cal. July 27, 2007) ; Simmons, 2002 WL 1477460, at *1 (citing Dillon v. City of Chicago, 866 F.2d 902, 904–05 (7th Cir. 1988) ). Regardless of the approach, the burden is on the moving party to demonstrate the reasons for "depart[ing] from the usual requirement of a full security supersedeas bond." Poplar Grove Planting & Refining Co. v. Bache Halsey Stuart, Inc., 600 F.2d 1189, 1190 (5th Cir. 1979).
DEFENDANTS’ MOTION
I. Parties’ Arguments
Defendants argue in their opening memorandum that an unsecured stay on the enforcement of judgment is warranted in this case because Fresno has "more than sufficient assets ... to pay any outstanding judgment in this case" and, thus, requiring Defendants to post an appellate bond would result in a "needless expense." Doc. No. 160 at 7:4-11. Defendants assert that bonding the judgment—including damages, attorney fees and costs—would run in excess of $300,000, id. at 6:26-7:3, and set forth declarations and exhibits showing that Fresno has a Moody's credit rating of A3, Doc. No. 160 at 6:5-10; a reserve fund of $34.8 million that could be applied to financial obligations arising from this litigation, id. at 6:10-13; and a $10 million excess policy through a creditworthy global insurance provider—AmTrust Financial Insurance Company ("AmTrust")—that will cover any amounts in excess of $3 million that Fresno may ultimately be required to pay in connection with this litigation. Id. at 5:26-6:4 & 6:14-18. Defendants also assert that, taking into consideration the $400,000 that Fresno has already expended on this litigation, the AmTrust insurance policy will kick in after $2.6 million in additional spend, further reducing Plaintiffs’ risk of an uncollectible judgment. Id. at 5:26-6:4.
Plaintiffs argue in opposition not only that Defendants should be required to post a bond, but that the amount of the bond should be set at $6,551,159 to cover the $5,240,927 that has already been awarded to Plaintiffs in damages, costs and attorney fees, plus interest and any attorneys’ fees or costs awarded in connection with the appeal. Doc. No. 161, Part II.A. Alternatively, Plaintiffs argue that both Fresno and AmTrust should be ordered to "sign a stipulation that amounts owed to the Plaintiffs would not be discharged in the event the City were to file bankruptcy." Id. at 4:6-17. Plaintiffs contend that a bond or stipulations are required here because "in this day [and] age there is a big difference between being a secured creditor as opposed to an unsecured creditor of a municipal debtor," particularly in light of the negative impact the COVID-19 pandemic has had on "most major cities throughout the country." Id., Part II.B. Further, Plaintiffs state that other clients represented by their counsel suffered substantial loses in San Bernardino's bankruptcy in connection with unsecured judgments and cite a news article projecting that the Fresno could suffer a budget deficit of as much as $90 million over the next five years due to COVID-19. Id.
Defendants object to this article on the grounds that it "constitutes inadmissible hearsay, contains hearsay within hearsay, and is unauthenticated." Doc. No. 163 at 4:12-16 (citing Federal Rules of Evidence 801 -803, 805 and 901 ). The Court does not rely on the content of the article in deciding this motion and Defendants’ objection is therefore OVERRULED as moot. The Court notes, however, that Defendants expressly concede that the COVID-19 pandemic is creating financial uncertainty for governments, Doc. No. 163 at 5:5-17, and does take that undisputed fact into consideration in fashioning this Order.
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On reply, Defendants argue that Plaintiffs’ predictions as to the cataclysmic deterioration of Fresno's financial condition are speculative and that a stipulation giving Plaintiffs priority in bankruptcy proceedings "would run counter to the strong public policy" underlying federal bankruptcy law to put creditors on equal footing. Doc. No. 163, Parts 2 & 3. Further, Defendants contend that the Court could adequately address the possible financial impact of the COVID-19 pandemic on Fresno without a bond or stipulations by allowing Plaintiffs to bring a motion to secure the judgment at a later date. Id. at 5:12-18.
II. Discussion
Fresno has shown that it has $34.8 million in emergency reserves that can be applied to obligations arising from litigation, Doc. No. 160-1 ¶ 5 & Ex. B, and a sound credit rating, id. ¶ 4 & Ex. A, as well as a $10 million insurance policy with an established and creditworthy insurer that limits the amount Fresno could have to pay out of its pocket in connection with this case to a total of $3 million (less $400,000 that Fresno has already expended on this case). Id. ¶ 3; Doc. No. 160-4. The record also shows that Fresno's exposure in this case is a small fraction of the combined total of its reserves and insurance policy. Doc. No. 160-1 ¶ 3. San Bernardino's bankruptcy has no apparent bearing on Fresno's ability—as a distinct municipality—to perform its financial obligations and the Court agrees with Defendants that Plaintiffs’ prognostications as to the economic impact of COVID-19 on Fresno's finances are too speculative to rebut Fresno's convincing showing that its resources are more than sufficient to make good on the judgment in this case (as well as any awards that may yet accrue in connection with the pending appeals). Thus, the Court finds that "allowing an unsecured stay will not jeopardize plaintiff's recovery," Bolt v. Merrimack Pharmaceuticals, Inc., 2005 WL 2298423 at *3 (E.D. Cal. 2005), and that requiring Fresno to incur fees in excess of $300,000 to post a bond would be a waste of public resources. See Safeco Ins. Co. of Am. v. Cty. of San Bernardino, 2007 WL 9719254, at *2–3 (C.D. Cal. July 27, 2007).
The Court similarly declines to order stipulations purporting to give Plaintiffs priority over Fresno's other creditors in bankruptcy. Plaintiffs’ scant briefing does not come close to providing a basis for the Court to comprehensively assess the effect, legality or feasibility of such stipulations and, in any event, the Court sees no need for embarking on that murky path given the remoteness of the risk that Fresno will become insolvent while the appeal in this case is pending.
The Court agrees with Plaintiffs, however, that the sands of municipal finances can shift swiftly in times such as these and will therefore grant Defendants’ motion without prejudice to Plaintiffs’ ability to bring a motion of their own to secure the judgment in this case at such time, no less than three months from now, that a demonstrable change in Fresno's financial condition warrants revisiting the question of whether Plaintiffs are entitled to additional protection against the risk of an uncollectible judgment.
ORDER
Accordingly, IT IS HEREBY ORDERED that:
1. Defendants’ motion is (Doc. No. 160) is GRANTED:
2. Enforcement of the judgment in this action is STAYED during the pendency of the Parties’ appeals WITHOUT BOND and WITHOUT PREJUDICE to Plaintiffs’ ability to bring a motion to secure the judgment in this case at such time, no less than three months from the date of electronic service in this Order, that a demonstrable change in Fresno's financial condition warrants revisiting the question of whether Plaintiffs are entitled to additional protection
against the risk of an uncollectible judgment.
IT IS SO ORDERED.