Free Motion for Bond - District Court of Colorado - Colorado

Case 1:04-cv-01258-LTB-BNB

Document 113

Filed 09/08/2005

Page 1 of 7

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO

Civil Action No. 04-cv-1258-LTB-BNB STUDENT MARKETING GROUP, INC., Plaintiff, v. COLLEGE PARTNERSHIP, INC., f/k/a COLLEGE BOUND STUDENT ALLIANCE, INC., Defendant. ______________________________________________________________________________ FORTHWITH MOTION FOR APPROVAL OF SUPERSEDEAS BOND AND TO STAY PROCEEDINGS TO ENFORCE JUDGMENT PENDING APPEAL ______________________________________________________________________________ Defendant College Partnership, Inc. ("College Partnership"), by and through its counsel, Rosemary Orsini and Brian K. Matise of Burg Simpson Eldredge Hersh & Jardine, P.C., pursuant to Fed. R. Civ. P. 62(d), hereby moves the Court to approve a First Security Lien on real property as security for a supersedeas bond and to stay proceedings to enforce judgment pending appeal. As grounds therefore, Defendant states as follows: CERTIFICATE OF COMPLIANCE Pursuant to D.C.COLO.LCivR. 7.1, undersigned counsel for Defendant conferred with counsel for Plaintiff regarding this request. Plaintiff does not consent. MOTION 1. The Court entered judgment in this matter on August 25, 2005. Pursuant to Fed.

R. Civ. P. 62(a), Plaintiff may take action to enforce its judgment upon the expiration of ten (10)

Case 1:04-cv-01258-LTB-BNB

Document 113

Filed 09/08/2005

Page 2 of 7

days after entry of the judgment, which time is computed pursuant to Fed. R. Civ. P. 6(a) excluding Saturdays, Sundays, and legal holidays. 2. Defendant intends to file a Notice of Appeal in this matter no later than September

9, 2005, before the expiration of the automatic stay imposed by Fed. R. Civ. P. 62(a). 3. 4. Defendant seeks to stay enforcement of the judgment pending appeal. Defendant has diligently inquired with all of the sureties known to it that offer

supersedeas bonds in the Denver, Colorado area, including out of state sureties. All of these sureties require the deposit of cash collateral equivalent to the amount of the bond, or a letter of credit from a federally insured financial institution for the amount of the bond. See Affidavit of Keri Dugan, attached to this Motion as Exhibit 1. 5. College Partnership has available to it substantial property interests far in excess

of the amount of the judgment entered in this matter; however, College Partnership does not have available sufficient unrestricted cash to post cash collateral required by a surety or to obtain a letter of credit in the required amount from its banks. 6. College Partnership's major shareholder, Kingsley Capital, LLC, is attempting to

sell a mining interest near St. George, Utah, that it owns, with a value in excess of $4 million. A portion of these proceeds would be used to provide College Partnership with additional working capital. 7. Kingsley Capital has offered to provide a First Security Lien on the mining claim

to secure the judgment in this matter in lieu of a supersedeas bond. See Affidavit of Janice Jones, attached to this Motion as Exhibit 2. The mining claim has been recorded with both the Washington County, Utah, Recorder's office as well as the United States Department of the -2-

Case 1:04-cv-01258-LTB-BNB

Document 113

Filed 09/08/2005

Page 3 of 7

Interior. Id. The mining claim has been appraised at $3.6 million to $8.7 million in present value. Id. All required maintenance fees have been paid on the mining claims to the United States Department of the Interior for the year 2006. Id. 8. Kingsley Capital and College Partnership are not aware of any adverse claims,

liens, or other encumbrances on the mining claims. 9. College Partnership has prepared a proposed form of lien for recording with the

Washington County, Utah, recorder. See First Security Lien (attached as Exhibit 3). Upon approval by the Court, Kingsley Capital, Inc., will execute the First Security Lien and submit it to the Clerk of the Court for recording. 10. Plaintiff has filed a Motion for Attorney Fees in this matter. If the Court enters

judgment for attorney fees, Defendant requests that the Court approve the mining claim as security for the judgment and continue the stay of execution on the judgment upon submission by Defendant of a supplemental lien based on the amount of attorney fees awarded. 11. This Court has authority to accept as alternative security a property interest to

secure a judgment in lieu of a supersedeas bond. Olympia Equip. Leasing Co. v. Western Union Telegraph Co., 786 F.2d 794,796 (7th Cir. 1986); Federal Prescription Servs., Inc. v. American Pharm. Ass'n, 636 F.2d 755, 757-60 (D.C. Cir. 1980). The amount and terms of the security is within the sound discretion of the Court. See Olympia Equip., 786 F.2d at 798 (district court's order allowing a property bond consisting of $10 million in cash, $10 million pledge of accounts receivable, and a security interest in other physical assets to secure a $36 million judgment "did not so far exceed the reasonable bounds of judgment as to require us to intervene"). 12. The Court, in its sound discretion, should allow a property bond where a judgment -3-

Case 1:04-cv-01258-LTB-BNB

Document 113

Filed 09/08/2005

Page 4 of 7

debtor demonstrates that it is unable to secure a supersedeas bond from a surety despite diligent efforts, is unable to post a cash bond, and that the property bond provides equivalent security for the judgment creditor. Olympia Equip., 786 F.2d at 796-97. Allowing alternative security protects not only the Defendant, but also other creditors and potential creditors that could be disadvantaged by financial repercussions from the series of events that would be set in motion by execution on the judgment. Id. 13. As noted above, College Partnership does not have liquid financial assets to

provide a cash bond, or to post cash as collateral for a supersedeas bond. College Partnership also cannot obtain a letter of credit in the amount of the judgment from a bank. 14. College Partnership has covenants and other contract terms with creditors that

could result in creditors declaring defaults on other obligations in the event that Plaintiff takes action to execute on the judgment. Such action could have serious financial implications for College Partnership and its other creditors and potential creditors, far outweighing the effect of the judgment in this matter on College Partnership's financial stability. 15. An unpatented mining claim is a vested real property right in all respects. United

States of America v. Friedland, 152 F.Supp. 2d 1234, 1246 (D. Colo. 2001); Tosco Corp. v. Hodel, 611 F. Supp. 1130, 1169 (D. Colo. 1985), vacated as moot after settlement, 826 F.2d 948 (10th Cir. 1987). The value of the mining claim exceeds the judgment amount by a factor of at least 30 times. Accordingly, it provides adequate security for the judgment. In fact, because the mining claim is being posted by a shareholder of College Partnership rather than College Partnership itself, it provides Plaintiff with even greater security than the assets of College Partnership alone would provide. -4-

Case 1:04-cv-01258-LTB-BNB

Document 113

Filed 09/08/2005

Page 5 of 7

16.

Defendant College Partnership proposes that the Court set the amount of the

supersedeas bond at 100% of the amount of the judgment. Alternatively, the Court should set the amount of the property bond at no more than 125% of the judgment, which would reasonably insure payment of costs on appeal and post-judgment interest. 17. The Court should issue an Order temporarily staying execution of the judgment

until the Court rules on this Motion. This stay is necessary to avoid execution on the judgment, along with the other adverse financial repercussions that would result from execution while the Court decides this motion. WHEREFORE, College Partnership respectfully requests that the Court enter Orders as follows: A. Staying enforcement of the judgment in this matter pending the Court's ruling on this motion; B. C. Setting the amount of a supersedeas bond in this matter at $127,462.59; Approving the First Security Lien as security for the judgment in lieu of a cash bond or surety bond; D. Authorizing the Clerk of the Court to accept a fully executed First Security Lien as security for the judgment; E. Staying enforcement of the judgment in this matter pending appeal, to become effective upon the completion by Defendant of both of the following conditions: 1) filing a timely Notice of Appeal accompanied by the statutory filing fee; and 2) filing an executed First Security Lien in the form attached to this Motion, in the amount of $127,462.59; -5-

Case 1:04-cv-01258-LTB-BNB

Document 113

Filed 09/08/2005

Page 6 of 7

F.

Granting Defendant such other and further relief as the Court deems just under the circumstances.

DATED this 7th day of September, 2005.

Respectfully submitted, BURG SIMPSON ELDREDGE HERSH & JARDINE, P.C.

Brian K. Matise 40 Inverness Drive East Englewood, Colorado 80112 Telephone: (303) 792-5595 Facsimile: (303) 708-0527 ATTORNEYS FOR DEFENDANT COLLEGE PARTNERSHIP, INC.

-6-

Case 1:04-cv-01258-LTB-BNB

Document 113

Filed 09/08/2005

Page 7 of 7

CERTIFICATE OF SERVICE I hereby certify that on this 7th day of September, 2005, I filed and/or served a true and complete copy of the foregoing FORTHWITH MOTION FOR APPROVAL OF SUPERSEDEAS BOND AND TO STAY PROCEEDINGS TO ENFORCE JUDGMENT PENDING APPEAL by depositing same in the United States mail, first class postage prepaid, to the following:

Gary Parish, Esq. R. Daniel Scheid, Esq. Sander, Scheid, Ingebretsen, Miller & Parish P.C. 700 17th St., Suite 2200 Denver, CO 80202 Patrick J. McElhinny, Esq. Dianna S. Karg, Esq. Kirkpatrick & Lockhart LLP 535 Smithfield St. Henry W. Oliver Building Pittsburgh, PA 15222 _________________________________ Keri Dugan

-7-