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Gerawan Farming, Inc. v. Rehrig Pacific Co.

United States District Court, Ninth Circuit

January 10, 2014

GERAWAN FARMING, INC., Plaintiff,
v.
REHRIG PACIFIC COMPANY, Defendant.

ORDER ON PLAINTIFF'S MOTION TO APPROVE SUPERSEDEAS BOND AND STAY EXECUTION OF BILL OF COSTS

LAWRENCE J. O'NEILL, District Judge.

On August 1, 2013, the Clerk of the Court issued a Bill of Costs in favor of Defendant Rehrig Pacific Company ("Rehrig") in the amount of $11, 052.12. (Doc. 226.) Now pending before the Court is Plaintiff Gerawan Farming, Inc.'s ("Gerawan's") motion to approve a supersedeas bond and to stay execution of the Bill of Costs. Rehrig has filed an opposition to the motion, and Gerawan has filed a reply. Upon consideration of the parties' submissions, and for the reasons discussed below, the Court DENIES Gerawan's motion without prejudice to Gerawan submitting a new supersedeas bond that is in compliance with this order.

I. DISCUSSION

A. Supersedeas Bond

Federal Rule of Civil Procedure 62(d) allows an appellant to stay the execution of a judgment pending an appeal by posting a supersedeas bond. "The purpose of a supersedeas bond is to secure the appellees from a loss resulting from the stay of execution...." Rachel v. Banana Republic, Inc. , 831 F.2d 1503, 1505 n.1 (9th Cir. 1987). The bond "protects the prevailing [party] from the risk of a later uncollectible judgment and compensates [it] for delay in the entry of the final judgment." NLRB v. Westphal , 859 F.2d 818, 819 (9th Cir. 1988). Once the court approves the bond, the stay takes effect. Fed.R.Civ.P. 62(d).

Rehrig asserts four objections to Gerawan's proposed supersedeas bond: (1) the amount of the bond is insufficient; (2) the bond does not establish that the corporate surety is in compliance with 31 U.S.C. §§ 9304-06; (3) the bond indicates that it is subject to the Federal Rules of Civil Procedure but does not state that it is subject to "all applicable federal law;" and (4) the bond improperly attempts to require at least ten days' notice of default or contumacy before the Court may enter judgment against the surety. Rehrig's objections are well-taken.

1. Amount of the Bond

Local Rule 151(d) provides that a supersedeas bond "shall be 125 percent of the amount of the judgment unless the Court otherwise orders." The general purpose of the 25 percent enhancement is to cover the cost of post-judgment interest and any other damages that may be attributed to delay. See C.B. v. Sonora Sch. Dist. , 819 F.Supp.2d 1032, 1057 (E.D. Cal. 2011).

The Bill of Costs awarded $11, 052.12 to Rehrig. Of this, Gerawan has already paid $1, 168.45 (the cost of the second Gorman deposition). This leaves an outstanding balance of $9, 883.67. Thus, pursuant to Local Rule 151(d), the proper amount of the bond is $12, 354.59.[1] The bond Gerawan has proposed, however, is only in the amount of $11, 052.12. (Doc. 229-3.) This falls short, and the Court sees no reason to require less than the 125 percent amount established by Local Rule 151(d). See, e.g., C.B. , 819 F.Supp.2d at 1057.

2. Compliance with 31 U.S.C. §§ 9304-06

Local Rule 151(f) provides that "[n]o security, bond, or undertaking with corporate surety shall be accepted unless the corporate surety is in compliance with the provisions of 31 U.S.C. §§ 9304-06...." Gerawan has not established that its surety is in full compliance with 31 U.S.C. §§ 9304-06. See, e.g., Flagship West, LLC v. Excel Realty Partners, L.P., Case No. CV F 02-5200 LJO DLB, 2011 U.S. Dist. LEXIS 125136, at *4 (E.D. Cal. Oct. 28, 2011).

3. Subject to "All Applicable Federal Law"

Local Rule 151(e) provides that "[e]very security, bond, undertaking, or deposit instrument shall state the conditions of the obligation and shall contain a provision expressly subjecting it to all applicable federal law. " (emphasis added). Gerawan concedes that its proposed bond only indicates that it is subject to the Federal Rules of Civil Procedure, but insists that this is sufficient. The Court disagrees. The bond must strictly comply ...


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