Opinion
Civil Action 91-2321 c/w 96-0244, Section E/1
September 19, 2001
RULING ON MOTION
Defendant St. Tammany Sheriff's Office moved for a stay pending appeal of this matter without or, alternatively, with posting of a supersedeas bond pursuant to F.R.C.P. 62(d) and (f). Plaintiff opposed the motion. The matter came on for hearing before the Court on September 19, 2001. For the reasons that follow, defendant's motion for a stay pending appeal without the necessity of posting a supersedeas bond is GRANTED.
Analysis
The judgment amount against St. Tammany Sheriff's 0ffice ("Sheriff") is in excess of $4,000,000.00. Rule 62(d) authorizes a stay of execution of a judgment on appeal upon posting by the judgment debtor of a supersedeas bond. Rule 62(f) states:
Stay According to State Law: In any state in which a judgment is a lien upon the property of the judgment debtor in which the judgment debtor is entitled to a stay of execution, a judgment debtor is entitled, in the district court held therein, to such stay as would be accorded the judgment debtor had the action been maintained in the courts of that state.
The requirement for posting a supersedeas bond pending appeal is to "preserve the status quo while protecting the non-appealing party's rights pending appeal." Poplar Grove Planting and Refining Co., Inc. v. Bache Halsey Stuart, Inc., 600 F.2d 1189, 11990-91 (5th Cir. 1979); see also Castillo v. Montelepre, Inc., 999 F.2d 931, 941 (5th Cir. 1993), r'hrg denied, 10/5/93 (The purpose behind Rule 62(f) is that "judgment creditors must be afforded security while judgment debtors appeal.")
The Sheriff claims that he is entitled to a stay without a bond pursuant to 62(f) because (1) under Louisiana law a judgment creates a "judicial mortgage" or lien on the judgment debtor's property, and (2) under state law (La. R.S. 13:4581), as a political subdivision of the parish, he is exempt from having to post a bond.
Burge opposes a stay without a bond arguing correctly that the Sheriff cannot meet the first requirement of rule 62(f) because La. Const. Art. 12 § 10 exempts public property, including the sheriff's assets, from seizure, which exempts those assets from the effects of a judicial mortgage, and without a lien or judicial mortgage, there is no adequate security for his judgment. He argues that it will be difficult for the Sheriff to pay the "very large judgment", and that a bond is necessary to secure his judgment pending appeal.
Judge Porteous addressed this situation re a judgment against the City of New Orleans in Wykle v. City of New Orleans, Civ. A. No. 96-1369, 1997 WL 266615 (E.D.La). Judge Porteous required the City to post a bond, reasoning as follows:
The judgment creditor is entitled to security. The burden is on the moving party, that is the City of New Orleans, to demonstrate objectively to this Court the reasons for departing from the usual requirement of a full security supersedeas bond to suspend the operation of the money judgment. Poplar Grove Planting and Refining Co., Inc., v. Bache Halsey Stuart, Inc., 600 F.2d 1189, 1191 (5th Cir. 1979). . . . The City has not set forth in its motion how it intends to pay this judgment if this Court's judgment is affirmed on appeal. . . . The City of New Orleans has failed to meet its burden of proof.
In Poplar Grove, the district court granted defendant appellant's motion for a stay pending appeal of a $270,985.65 judgment with posting of a $10,000.00 bond as total security. The 5th Circuit reversed noting that the record on appeal contains no evidence of defendant's present ability to pay the judgment. Poplar Grove, 600 F.2d at 1191. The Court reasoned:
If a judgment debtor objectively demonstrates a present financial ability to facilely respond to a money judgment and presents to the court a financially secure plan for maintaining that same degree of solvency during the period of an appeal, the court may then exercise its discretion to substitute some form of guaranty of judgment responsibility for the usual supersedeas bond.Id.
In Castillo, the 5th Circuit affirmed the district court's waiver of a bond from the judgment debtor, the Patient's Compensation Fund, because state law (the act creating the Patient's Compensation Fund) specifically provides for the satisfaction of judgments out of the Fund on a semi-annual basis by legislative allocation. Castillo, 999 F.2d at 942.
The Sheriff produced the affidavit of James J. Trainor, who prior to July, 2001, was chief administrative officer with supervision of all financial officers employed by the St. Tammany Parish Sheriff, along with the audit report of the St. Tammany Parish Sheriff's Office by Smith, Huval Associates, L.L.C., for the fiscal year July 1, 1999 through June 30, 2000. Mr. Trainor's affidavit confirms (1) that the audit report shows that as of June 30, 2000, the Sheriff's General Fund had a balance of $7,429,051.00; (2) that approximately $2,000,000.00 of general fund monies was spent to acquire a new parish-wide radio system during the fiscal year ending June 30, 2001 and that the General Fund balance at that time was in excess of $5,500,000.00; (3) that with the exception of the matter at bar, no judgments have been rendered against the Sheriff which have not been paid; and (4) that the Sheriff is insured against adverse judgments in any civil pending civil suit arising out of conduct prior to July 1, 2001 and for all civil suits arising out of conduct subsequent to July 1, 2001. The Sheriff argues that because the Sheriff's expenditures and revenues are a matter of public record, he cannot conceal or dispose of assets that could be used to pay the judgment. Sheriff's counsel also conceded the authority of this Court to seize the Sheriff's assets to satisfy the judgment.
The Court finds that the Sheriff has the present financial ability to pay the money judgment. To guaranty the maintenance of that same degree of solvency pending appeal, the Court will require that the Sheriff file into the record a copy of the audit report for the fiscal year ending June 30, 2001, and each annual report thereafter during the period of appeal.
Conclusion
Accordingly, for the above and foregoing reasons,
IT IS ORDERED that the motion of defendant St. Tammany Parish Sheriff's Office for a stay of execution of judgment pending appeal and for a waiver of a supersedeas bond BE AND IS HEREBY GRANTED;
IT IS FURTHER ORDERED that the defendant St. Tammany Parish Sheriff's Office file into the record a copy of the audit report for the fiscal year ending June 30, 2001, and each annual audit report thereafter during the pendency of appeal.