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Yenidunya Investments, Ltd., A Cyprus, Eu v. Magnum Seeds

March 30, 2012

YENIDUNYA INVESTMENTS, LTD., A CYPRUS, EU CORPORATION; PLAINTIFF,
v.
MAGNUM SEEDS, INC., A CALIFORNIA CORPORATION; AND GENICA RESEARCH CORPORATION, A NEVADA CORPORATION; DEFENDANTS.



MEMORANDUM AND ORDER RE: MOTION TO STAY EXECUTION OF JUDGMENT PENDING APPEAL

-Plaintiff Yenidunya Investments, Ltd. brought this action against defendants Magnum Seeds, Inc. ("Magnum") and Genica Research Corporation ("Genica") for declaratory relief and accounting arising out of defendants' allegedly wrongful violation of plaintiff's rights as a Magnum shareholder. After granting defendants' motion to dismiss, the court awarded defendants $125,324.75 in attorneys' fees and $1,002.21 in untaxed costs. (Docket No. 44) Presently before the court is plaintiff's motion to stay execution of the judgment pending appeal. (Docket No. 47.)

I. Factual and Procedural Background In October 2003, Spiros Spirou & Co. ("SS & Co.") obtained common stock in Magnum by converting a $2,267,995.00 loan into 2,267,995 shares of Magnum. (Compl. ¶ 7 (Docket No. 1).) In March 2005, Genica offered to purchase all of the outstanding shares of Magnum from the existing shareholders. (Id. ¶ 13.) Plaintiff declined to sell its shares, however defendants exercised a call-option to purchase plaintiff's shares for $1,133,997.50 to be paid over a ten-year period. (Id.) Magnum no longer recognizes plaintiff as a shareholder. (Id. ¶ 10.)

In order to show its good faith intention to pay plaintiff for the sale of its shares, defendants have created a special bank account ("Special Account") into which they have deposited payments due to plaintiff under the stock sale. (Anastassiou Decl. Ex. A (Docket No. 47-2).) Defendant has notified plaintiff that it will hold the funds in this account until such time as Yenidunya provides us with the following documents (the "Required Documentation"):

(i) the stock certificate,

(ii) the executed Stock Assignment and Release, and

(iii) satisfactory proof that Yenidunya is entitled to the payment, i.e. that the right to the payment has not been pledged or sold to someone else. (Id. at 2.) Defendant has further informed plaintiff that:

It is our intent to continue to hold money in this separate account until such time as Yenidunya provides us with the Required Documentation. Upon receipt, we will immediately deliver the Promissory Note and all of the funds in the special account to the proper party. Notwithstanding the foregoing, however, we reserve the right to terminate this account if we determine, in our sole judgment, that our purpose in setting it up has failed. (Id.) Plaintiff has not yet provided defendants with the Required Documentation. (Defs.' Opp'n to Pl.'s Mot. to Stay Execution on J. at 2:25-26 (Docket No. 51).)

On July 6, 2011, plaintiff filed for declaratory relief seeking to be recognized as a Magnum shareholder. Defendants moved to dismiss plaintiff's complaint on the ground that it was barred by the statute of limitations. (Docket No. 12.) The court granted defendant's motion, finding that the statute of limitations had run because "the gravamen of [plaintiff's] Complaint is that the Promissory Note was never a valid contract." (Oct. 31, 2011, Order at 9:7-9 (Docket No. 23).) The court also denied plaintiff's motion for reconsideration. (Dec. 7, 2011, Order at 7:10-12 (Docket No. 29).) Defendants moved for attorneys' fees and the court awarded defendants $125,324.75 in attorneys' fees and $1,002.21 in untaxed costs. (Docket No. 44.) Plaintiff filed notices of appeal as to the court's orders granting defendants' motion to dismiss, (Docket No. 34), denying plaintiff's motion for reconsideration, (id.), and awarding attorneys' fees to defendants, (Docket No. 45).

II. Legal Standard

With a few specified exceptions, Federal Rule of Civil Procedure 62(a) provides for an automatic stay of fourteen days following entry of a judgment. Fed. R. Civ. P. 62(a). A party appealing a district court's entry of a money judgment is entitled to a further stay as a matter of right if he posts a bond in accordance with Federal Rule of Civil Procedure 62(d). Antoninetti v. Chipotle Mexican Grill, Inc., No. 05-1660, 2009 WL 1390811, at *2 (S.D. Cal. May 15, 2009) (citing Am. Mfrs. Mut. Ins. Co. v. Am. Broad.-Paramount Theatres, Inc., 87 S. Ct. 1, 3 (1966) (mem.)). While parties have the right to a stay obtained through a supersedeas bond, an unsecured stay is reserved for "unusual circumstances" and awarded at the court's discretion. Fed. Prescription Serv., Inc. v. Am. Pharm. Ass'n, 636 F.2d 755, 760-61 (D.C. Cir. 1980).

Where a party wishes to post a bond in an amount less than the full judgment, the burden is on the moving party to show reasons for the departure from the normal Rule 62(d) requirement. See Poplar Grove Planting & Ref. Co. v. Bache Halsey Stuart, Inc., 600 F.2d 1189, 1191 (5th Cir. 1979). Among the grounds that may justify waiver of the bond requirement are:

(1) the complexity of the collection process;

(2) the amount of time required to obtain a judgment after it is affirmed on appeal;

(3) the degree of confidence that the district court has in the availability of ...


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