Free Response to Motion - District Court of Colorado - Colorado

Case 1:04-cv-01067-MSK-CBS

Document 225

Filed 02/02/2007

Page 1 of 10

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO

Civil Action No. 04-cv-1067-REB-CBS WILLIAM R. CADORNA, Plaintiff, v. CITY AND COUNTY OF DENVER, COLORADO, a municipal corporation, Defendant.

PLAINTIFF'S RESPONSE TO DEFENDANT'S MOTION TO STAY EXECUTION ______________________________________________________________________ Plaintiff, William R. Cadorna ("Plaintiff" or "Mr. Cadorna") hereby responds to the January 12, 2007 Motion and Supporting Brief to Stay Execution ("Motion") filed by Defendant City and County of Denver ("Defendant" or "City") pursuant to Fed.R.Civ.P. 62(b), (d) and (f). Plaintiff responds to the motion as follows: I. DEFENDANT FAILED TO REQUEST A STAY OF THE EQUITABLE RELIEF OF REINSTATMENT. THIS COURT MUST ENFORCE ITS ORDER OF REINSTATEMENT WITHOUT FURTHER DELAY. Defendant has not sought a stay pursuant to Fed.R.Civ.P. 62(c) on the equitable relief of reinstatement also ordered by this Court. It has only sought a stay on execution of the money damages component of that judgment. Consequently, Defendant has waived its right to seek a stay of Plaintiff's reinstatement, and this Court should

Case 1:04-cv-01067-MSK-CBS

Document 225

Filed 02/02/2007

Page 2 of 10

immediately enforce compliance by Defendant of its judgment requiring Plaintiff's reinstatement. Even if Defendant had sought a stay on the equitable relief of reinstatement, this Court would be required to deny a stay on the equitable relief of reinstatement for the very important reasons upon which the court relied in Dutton v. Johnson County Commissioners, 884 F.Supp. 431, 434-35 (D.Kan. 1995). Citing EEOC v. Los Angeles County, 531 F.Supp. 122 (C.D.Cal. 1982), for the proposition that "[a] denial of a plaintiff's rights under federal law, even if only during the pendency of appellate proceedings, constitutes a real and substantial injury to him", the court denied a Rule 62(c) stay on reinstatement of a successful ADEA plaintiff. Id. See, also, Hillman v U.S. Postal Service, ___ F.Supp.2d ___, 2001 U.S. Dist. LEXIS 22409 (D.Kan. 2001)(also denying Rule 62(c) stay on reinstatement pending appeal in a discrimination case). II. STAY OF EXECUTION UNDER FED.R.CIV.P. 62(b) and (d) IS A QUESTION GOVERNED BY FEDERAL LAW IN A FEDERAL QUESTION CASE, NOT STATE LAW. Fed.R.Civ.P. 62(d) entitles Defendant to a stay of execution of Plaintiff's judgment the posting of a supersedeas bond. In its motion for stay of execution and waiver of bond, Defendant asks the Court to excuse it from posting such a bond. Defendant relies upon a Colorado statute, C.R.S. §30-35-501, and Colo.R.Civ.P. 62(e), which it asserts would exempt it from the posting of a supersedeas bond as a condition of staying execution pending appeal in State Court.

2

Case 1:04-cv-01067-MSK-CBS

Document 225

Filed 02/02/2007

Page 3 of 10

An appellant is entitled to a stay on execution of judgment as a matter of right if it posts bond in accordance with Rule 62(d). In re Federal Facilities Realty Trust, 227 F.2d 651, 655 (7th Cir. 1955). The purpose of requiring a supersedeas bond is to "secure an appellee from loss resulting from the stay of execution. Grubb v. FDIC, 833 F.2d 222, 226 (10th Cir. 1987); Miami Int'l Realty Co. v. Paynter, 807 F.2d 871, 873 (10th Cir. 1986). Typically, the amount of the bond matches the full amount of the judgment. Id.; Texaco, Inc. v. Pennzoil Co., 784 F.2d 1133, 1155 (2d Cir. 1986), rev'd on other grounds, 481 U.S. 1 (1987). Defendant argues that Rule 62(e) entitles it to a stay of execution without posting a bond because Colorado law exempts it from the posting of a bond. An important question is, then, is which rule controls: the state statute or the Federal Rules of Civil Procedure, in this federal question case. This issue was addressed in Lamon v. City of Shawnee, Kan., 758 F. Supp. 654 (D. Kan. 1991). The court held that the defendant city in a federal question case was not entitled to an order staying enforcement of a judgment without posting a supersedeas bond. The city argued that as a municipality it was exempt from posting a bond pursuant to Kansas statute. The court held that the federal rules, rather than the state statute, controlled. The court's jurisdiction in that case, as in this case, was based on federal question, rather than diversity, jurisdiction. Thus, there was no Erie question to address. Had the case been a diversity jurisdiction case brought under state law, the question of which law governs would have been closer. See Erie Ry. Co. v. Tompkins, 304 U.S. 64 (1938).

3

Case 1:04-cv-01067-MSK-CBS

Document 225

Filed 02/02/2007

Page 4 of 10

In diversity cases, some courts have deemed staying execution without bond during appeal to be a matter of substantive rather than procedural law, and therefore found that a state statute similar to the one in Colorado should control in diversity cases. In Marrow v. City of Ferguson, 114 F. Supp. 755 (E.D. Mo. 1953), the court ruled that a Missouri statute, similar to the Colorado statute, created substantive, not merely procedural rights, in dispensing with bond on appeal. This holding was endorsed in dicta by the Sixth Circuit in Joseph Skillken & Co. v. City of Toledo, 528 F.2d 867, 870 (6th Cir. 1975). A contrary holding is found in Markowitz & Co. v. Toledo Metro. Hous. Auth., 74 F.R.D. 550 (N.D. Ohio 1977). That court noted the Sixth Circuit's dicta in Skillken, but still concluded that Erie did not control the issue of bond posting and that the Federal Rules should apply, regardless. The court noted that the Marrow decision had been made without any reasoning or citation and without the benefit of the later Supreme Court decisions in Hanna v. Plumer, 380 U.S. 460 (1965) and Byrd v. Blue Ridge Rural Elec. Coop., 356 U.S. 525, reh'g denied, 357 U.S. 933 (1958). The Markowitz court found that the federal requirement that the appellant post a supersedeas bond pending appeal did not impinge on the appellant's substantive rights, even in a diversity case. Judgment had already been rendered and the appellant could pursue its appeal without posting bond. Bond only enabled the appellant to stay

execution of the judgment, rather than recover its assets from the other party should the appellant ultimately prevail. The court observed that the state rule exempting political subdivisions from posting a supersedeas bond did not implicate the question of

4

Case 1:04-cv-01067-MSK-CBS

Document 225

Filed 02/02/2007

Page 5 of 10

"'whether the litigation would come out one way in the federal court and another way in the state court' if the federal court failed to apply the state rule." 74 F.R.D. at 551 (quoting Byrd, 356 U.S. at 537). The court concluded that the federal rule should control since "the supersedeas bond requirement is immaterial to resolving the merits of the parties' claims." 74 F.R.D. at 551. In Wilmer v. Board of County Commissioners of Leavenworth, 844 F. Supp. 1414 (D.Kan. 1993), the district court found the reasoning in Markowitz persuasive, and declined to apply Fed.R.Civ.P. 62(d) to excuse a county from posting a bond in a diversity case. This Court should follow the reasoning of the Lamon, Markowitz and Wilmer decisions and conclude that Rule 62(d), rather than state statute or rule, controls the question of whether Defendant must post a bond to stay execution of a judgment in this federal question case, in which the reasoning of those decision applies with the greatest force. Defendant should be denied a stay of execution or waiver of bond. Plaintiff has been denied justice for four years, and has suffered extreme hardship because of Defendant's indisputably willful violation of the ADEA. The state statute upon which the City relies to yet again delay its day of reckoning is so fundamentally adverse to the policies underlying the ADEA that this Court should find it preempted by federal law. See, e.g., Lawrence County v. Lead-Deadwood School District No. 40-1, 469 U.S. 256 (1985).

5

Case 1:04-cv-01067-MSK-CBS

Document 225

Filed 02/02/2007

Page 6 of 10

III.

STATE LAW REQUIRES MORE THAN MERE MINISTERIAL ACTS TO TRANSFORM PLAINTIFF'S JUDGMENT INTO A LIEN ON THE CITY'S REAL PROPERTY, SO THAT FED.R.CIV.P. 62(f) DOES NOT APPLY Defendant's second argument is that the stay should be granted based on Rule

62(f) which states: (f) Stay According to State Law. In any state in which a judgment is a lien upon the property of the judgment debtor and 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. This rule entitles a judgment debtor to the same stay in the district court as would be accorded in a state court if: (1) the judgment results in a lien on the property of the judgment debtor, and (2) the judgment debtor is entitled to a stay under state law. Hoban v. Washington Metro. Area Transit Auth., 268 U.S. App. D.C. 332, 841 F.2d 1157, 1158 (D.C. Cir. 1988). Defendant claims that C.R.S. §30-35-501, and Colo.R.Civ.P. 62(e) satisfy the requirements of Rule 62(f), because Defendant would arguably be entitled to a stay in a state court proceeding, "unless otherwise ordered by the court". Colo.R.Civ.P. 62(e). Clearly, under Colo.R.Civ.P. 62(e), Defendant is not automatically entitled to a stay without posting a supersedeas bond. Colo.R.Civ.P. 62(e) clearly affords a state court the discretion to require a bond of a municipality if the circumstances warrant it. In any event, the other requirement of Rule 62(f), is not met. Plaintiff's judgment has not automatically resulted in a lien on Defendant's real property. The very source upon which Defendant relies, 1C Krendl, Colorado Methods of Practice §40.2 (2006), makes it plain that more than mere "ministerial acts" are required. Significant measures

6

Case 1:04-cv-01067-MSK-CBS

Document 225

Filed 02/02/2007

Page 7 of 10

are required, including but not limited to the filing of a transcript of the judgment with the county recorder. Id. Therefore, Defendant is not entitled to a stay under Rule 62(f). IV. DEFENDANT HAS FAILED TO MEET ITS BURDEN ADEQUATE GROUNDS FOR A REDUCTION OF BOND OF PROVING

To be sure, this Court has discretionary authority to permit a stay without requiring a full supersedeas bond when the judgment creditor's interests would not be unduly endangered. Miami Int'l Realty Co. v. Paynter, 807 F.2d 871, 873 (10th Cir. 1986); Olympia Equip. Leasing Co. v. Western Union Tel. Co., 786 F.2d 794, 796 (7th Cir. 1986). However, waiver of the requirement of a bond in the full amount will only be granted if the appellant objectively demonstrates good cause. Lamon v. City of Shawnee, Kan., 758 F. Supp. 654, 655 (D. Kan. 1991); Metz v. United States, 130 F.R.D. 458, 459 (D. Kan. 1990). Reasonable factors that should be weighed in deciding whether to waive a full supersedeas bond requirement include: (1) the complexity of the collection process; (2) the amount of time required to obtain a judgment; (3) the degree of confidence that the district court has in the availability of funds to pay the judgment; (4) whether the defendant's ability to pay the judgment is so plain that the cost of a bond would be a waste of money; and (5) whether the defendant is in such a precarious financial situation that the requirement to post a bond would place other creditors of the defendant in an insecure position. Dillon v. City of Chicago, 866 F.2d 902, 904-05 (7th Cir. 1988); Brinkman v. Dep't of Corrections, 815 F. Supp. 407, 408-09 (D. Kan. 1993). Since the City has taxing authority, it is apparent that it has the ability to raise the money. This alone, however, does not justify waiving the bond requirement. Courts are 7

Case 1:04-cv-01067-MSK-CBS

Document 225

Filed 02/02/2007

Page 8 of 10

generally reluctant to waive the bond requirement for governmental entities unless funds are readily available and an effective procedure is in place for paying the judgment. Dillon, supra, 866 F.2d at 905 (7th Cir. 1988)(bond requirement waived because city had existing fund guaranteeing appellee's judgment and procedure to process payment in less than thirty days); Lightfoot v. Walker, 797 F.2d 505, 506-07 (7th Cir. 1986) (bond required because state had no established fund and payment required legislative action); Brinkman, supra, 815 F. Supp. at 409-10 (bond required because established state fund and procedure did not apply to paying type of judgment awarded); Lamon v. City of Shawnee, Kan., 758 F. Supp. 654, 656-57 (bond required because city had no fund from which to pay such judgments and process to pay judgment could be "cumbersome and time-consuming"). The fact that the judgment amount in this case is large means that its payment will not be a routine matter. Defendant has presented no evidence that it now has the funds available or would be able to raise the funds in a timely manner after any appeal is decided. On the contrary, it is likely that considerable time will be needed to raise the funds. In addition, there is no indication that the requirement to post a bond will place the City's other creditors in an insecure position. The City has the burden to objectively demonstrate good cause for waiving the requirement that a full supersedeas bond be posted. Brinkman, 815 F. Supp. at 410. See, also, Poplar Grove Planting and Ref. Co. v. Bache Halsey Stuart, Inc., 600 F.2d 1189, 1191 (5th Cir. 1979)("[A] supersedeas bond is a privilege extended the judgment debtor as a price of interdicting the validity of an order to pay money."). Defendant has

8

Case 1:04-cv-01067-MSK-CBS

Document 225

Filed 02/02/2007

Page 9 of 10

not met this burden and therefore its motion for stay of execution and waiver of the posting of a supersedeas bond must be denied. This Court should stay enforcement of judgment in this case only upon defendant's posting a supersedeas bond in the full amount of the judgment in order to adequately protect Plaintiff and comport with the requirements of federal law. WHEREFORE, for the reasons set forth above, this Court should DENY Defendant's Motion for Stay of Execution and Waiver of Supersedeas Bond, and order Plaintiff's immediate reinstatement in accordance with its Judgment entered November 28, 2006. Respectfully submitted this 2nd day of February, 2007.

MARK E. BRENNAN, P.C. /s/ Mark

E. Brennan

P.O. Box 2556 Centennial, CO 80161 (303) 552-9394 or (303) 797-7687 [email protected] ATTORNEY FOR PLAINTIFF

9

Case 1:04-cv-01067-MSK-CBS

Document 225

Filed 02/02/2007

Page 10 of 10

CERTIFICATE OF SERVICE The undersigned hereby certifies that on the 31st day of January, 2007, a true and correct copy of the foregoing RESPONSE TO MOTION for STAY OF EXECUTION AND WAIVER OF SUPERSEDEAS BOND was served via the CM/ECF system to the following: Richard P. Barkley Hamid M. Khan Brownstein Hyatt & Farber, P.C. 410 17th Street, 22nd Floor Denver, Colorado 80202 Christopher M.A. Lujan Assistant City Attorney, Litigation Section 201 West Colfax, Department 1108 Denver, Colorado 80202

/s/

Mark E. Brennan

10