Opinion
99 Civ. 11395 (RWS)
February 9, 2001
MEMORANDUM OPINION
Defendant Richard Blech ("Blech") moved on January 11, 2001, to stay the enforcement pending appeal of the money judgment in the amount of $13,107,200, with interest at the rate of 6.37%, awarded against him and to Carl H. Loewenson, Jr. ("Loewenson"), the court-appointed receiver in this action (the "Receiver"). The Receiver opposed the motion, and oral argument was heard on February 7, 2001, at which time the matter was deemed fully submitted. For the reasons set forth below, the motion is denied.
The judgment was issued against Blech for his failure to comply with this Court's order of April 5, 2000 (the "April 5 Order") finding Blech in contempt of court for his failure to deliver control of Credit Bancorp, Ltd. and related entities (collectively, "Credit Bancorp") and its assets to the Receiver, his violations of the asset freeze, and his failure to repatriate all Credit Bancorp customer deposits to the United States. The April 5 Order permitted Blech to purge his contempt by assisting with the repatriation of assets to the United States and granting control over Credit Bancorp to the Receiver, and assessed Blech $100 for any prospective failure to comply with the order, with the amount doubling on each successive day Blech failed to purge his contempt. On May 18, 2000, the Receiver sought a money judgment in the amount of $13,107,200, which was the assessment for failure to purge for 18 days under the April 5 Order. On July 3, 2000, this Court issued an opinion (the "July 3 Opinion") concluding that the April 5 Order was a proper finding and order of civil contempt, and that Blech was further in contempt for his failure to deliver to the Receiver certain properties which Blech claimed as his personal property. SEC v. Credit Bancorp, 99 Civ. 11395, 2000 WL 968010 (S.D.N.Y. July 12, 2000)
The July 3 Opinion granted Blech an additional ten days to purge his contempt without incurring the $13 million judgment. Credit Bancorp, 2000 WL 968010, at *19. On July 13, 2000, Blech filed a Notice of Appeal from the July 3 Opinion. On July 25, 2000, Blech having failed to purge his contempt, this Court entered judgment in favor of the Receiver.
Blech has not posted a supersedeas bond and, thus, is not entitled to a stay of execution of the judgment as a matter of right. See Fed.R.Civ.Proc. 62(d); Fed.R.App.Proc. 7. However, he contends that this Court should exercise its discretion to grant a stay. See Roco Carriers, Ltd. v. M/V Nurnberg Express, No. 83 Civ. 8904, 1989 WL 129492, at *1 (S.D.N.Y. Oct. 27, 1989) ("A motion requesting a stay of judgment order is addressed to the discretion of the court.")
In considering whether to grant a discretionary stay of enforcement of a judgment, a court should consider: whether the stay applicant has demonstrated a substantial possibility of success on appeal; whether the applicant will be irreparably injured absent the stay; whether issuance of the stay will substantially injure other parties interested in proceedings; and where the public interest lies. Hirschfeld v. Board of Elections, 984 F.2d 35, 39 (2d Cir. 1992); Petersen v. Vallenzano, No. 89 Civ. 5346, 1996 WL 252376, at *5 (S.D.N.Y. May 13, 1996) (internal citation omitted)
Blech contends that he has made a strong showing of likely success on the merits on the grounds that: the July 3 Opinion acknowledged that the distinction between civil and criminal contempt can be difficult to draw; he was unable to comply with the April 5 Order due to his incarceration in France, and there are admissibility problems with respect to evidence this Court found supported the finding that Blech was in fact able, but was refusing, to comply; and this Court's premise that Blech had previously admitted wrongdoing through his counsel may not be upheld by the Court of Appeals.
It is, of course, "inherently difficult for litigants to convince a judge who has not ruled [in] their favor that they are likely to succeed on appeal." Connecticut Hosp. Assoc. v. O'Neill, 863 F. Supp. 59, 62 (D. Conn. 1994). The court should look to objective indicia including, most importantly, the precedent upon which it relied. Id.; National Union Fire Ins. Co. of Pittsburgh, PA v. Coric, 167 F.R.D. 356, 358 (N.D.N Y 1996). Reaching the determination that the instant contempt order is civil rather than criminal in nature and resolving the evidentiary issues involved were not without their complexities. See Credit Bancorp, 2000 WL 968010, at *6-*8. Nonetheless, this Court's conclusions find ample support in the precedent relied upon to undercut Blech's claim of a substantial possibility of success on appeal. What Blech has done is raise "a list of issues [he] wishes to raise before the Court of Appeals," which is not enough. Malarky v. Texaco, 794 F. Supp. 1248, 1250 (S.D.N.Y. 1992) (quoting Hilton v. Braunskill, 481 U.S. 770, 776 (1987)
Blech contends he will suffer irreparable injury absent a stay because if the judgment is enforced the money will be distributed to Credit Bancorp creditors, will be virtually impossible for him to recover even if he prevails on appeal, and will be unavailable to him to pay for his defense in this action or to support his family.
Pursuant to this Court's order of November 23, 1999, Blech is prohibited from expending funds without the approval of Loewenson, who was appointed by this Court as fiscal agent for Blech. See Order Appointing Fiscal Agent at ¶¶ III-V (imposing asset freeze on defendants' funds, assets, or things of value, and giving authority to fiscal agent to review "applications for necessary transactions of the . . . Defendants"). Neither Loewenson nor this Court have approved expenditures such as those referenced by Blech and, indeed, this Court has already held Blech in contempt for expending funds in violation of the asset freeze. Therefore, although monetary loss may constitute irreparable harm if it is severe enough and there is little possibility that adequate compensatory relief will be available, see Malarkey, 794 F. Supp. at 1250, Blech has not shown irreparable harm here.
Blech contends that no other party will be prejudiced if a stay is issued because the April 5 Order and related orders were erroneously premised on a finding that certain assets are part of the Credit Bancorp estate, rather than belonging to Blech personally, and therefore these assets should not be available to other parties in any case. This argument is misplaced, because this Court already found that the assets in question are not Blech's personal property, and should be brought under the control of the Receiver to be disposed of appropriately, including to provide recompense to the defrauded Credit Bancorp customers. Credit Bancorp, 2000 WL 968010, at *13-*14. Further delay of enforcement of the judgment will prejudice these other parties.
Blech contends that an important public interest is served by ensuring that civil litigants can pay for their own defense, see Cooper v. Town of East Hampton, 83 F.3d 31, 36-37 (2d Cir. 1996), and on the theory that courts have no authority to disgorge a defendant's personal assets before trial, see SEC v. Levine, 881 F.2d 1165 (2d Cir. 1989). The issue of Blech wanting to use the judgment monies to pay for his defense in this action is addressed above. In the July 3 Opinion this Court already considered and rejected Blech's contention that a jury trial is required here. See Credit Bancorp, 2000 WL 968010, at *5 (discussing Levine, 881 F.2d 1165). Moreover, given Blech's ongoing refusal to abide by this Court's orders, the public interest weighs in favor of denying Blech's motion.
Finally, Blech contends that the Receiver has been dilatory in pursuing a motion to dismiss his appeal, and that this has both prejudiced Blech, by delaying resolution of the appeal, and reduced the prejudice caused by Blech to other parties since, according to Blech, it is the Receiver who has caused the appeal process to be delayed. The Receiver moved to dismiss Blech's appeal under the "fugitive disentitlement" doctrine on January 16, 2001, and according to the parties this motion is calendared for argument on March 6, 2001. Assuming arguendo that the Receiver should have pursued this motion more expeditiously — which, given his other obligations, is somewhat doubtful — the delay is not such as to warrant a stay of the judgment on the grounds of prejudice to Blech. On the other hand, although Blech maintains that this Court might as well grant a stay, since the Court of Appeals will soon hear argument on the Receiver's motion, it cannot be said when that motion will actually be decided. Therefore, it is appropriate to permit the Receiver to continue his attempts to enforce the judgment.
Therefore, for the reasons set forth above, the motion is denied.
It is so ordered.