Auld-Susott, et al. v. Galindo, et al.

UNITED STATES DISTRICT COURT
DISTRICT OF HAWAII
EVAN AULD-SUSOTT, as Trustee for
(1) IRREVOCABLE LIEF INSURANCE
TRUST OF JOHN L. SUSOTT AND
KATHRYN C. SUSOTT UAD 8/17/1988
AS RESTATED, EXEMPT TRUST FBO
DANIEL C. SUSOTT, and
(2) IRREVOCABLE LIFE INSURANCE
TRUST OF JOHN L. SUSOTT AND
KATHRYN C. SUSOTT UAD 8/17/1988
AS RESTATED, NON-EXEMPT TRUST
FBO DANIEL C. SUSOTT; and
JOHN L. SUSOTT,
Plaintiffs,
vs.
LAURYN GALINDO and DANIEL C.
SUSOTT,
Defendants.
CIVIL 20-00270 LEK-RT
ORDER DENYING DEFENDANTS’ EX PARTE APPLICATION FOR
A STAY OF THE ENFORCEMENT OF THE AMENDED FINAL JUDGMENT
Before the Court is Defendants Lauryn Galindo
(“Galindo”) and Daniel C. Susott’s (“D. Susott” and collectively
“Defendants”) Ex Parte Application for a Stay of the Enforcement
of the Amended Final Judgment (“Application”), filed on
March 13, 2023. 	[Dkt. no. 143.] 	The Court finds this matter
suitable for disposition without a hearing pursuant to
Rule LR7.1(c) of the Local Rules of Practice for the United
States District Court for the District of Hawaii (“Local
Rules”). 	The Court also finds that it is not necessary for
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Plaintiffs Evan Auld-Susott, as Trustee for (1) Irrevocable Life
Insurance Trust of John L. Susott and Kathryn C. Susott UAD
8/17/1988 as Restated, Exempt Trust FBO Daniel C. Susott, and
(2) Irrevocable Life Insurance Trust of John L. Susott and
Kathryn C. Susott UAD 8/17/1988 as Restated, Non-Exempt Trust
FBO Daniel C. Susott; and John L. Susott (collectively
“Plaintiffs”) to file a response to the Application.
Defendants’ Application is hereby denied for the reasons set
forth below.
BACKGROUND
On August 18, 2021, summary judgment was granted in
favor of Plaintiffs as to their fraudulent conveyance claim,
brought pursuant to the Hawai`i Uniform Fraudulent Transfer Act
(“HUFTA”), Haw. Rev. Stat. Chapter 651C, and their constructive
trust claim. 	See Order Granting Plaintiffs’ Motion for Summary
Judgment, filed 8/18/21 (dkt. no. 88) (“8/18/21 Order”), at 26;
see also Order: Clarifying the Order Granting Plaintiffs’ Motion
for Summary Judgment; and Denying Defendants’ Motion for
Reconsideration of the Order, filed 9/23/21 (dkt. no. 99)
(“9/23/21 Order”). 1 	This Court ruled that the 2019 transfer of
the property at issue in this case from D. Susott to Galindo was
void and that the property reverted back to D. Susott. 	8/18/21
1 The 8/18/21 Order is also available at 2021 WL 3669307,
and the 9/23/21 Order is also available at 2021 WL 4342317.
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Order, 2021 WL 3669307, at *9. 	In addition, this Court imposed
a constructive trust, ruling that D. Susott held the property in
trust, for the benefit of Plaintiffs, to the extent necessary to
satisfy their claims against him, but that the appointment of a
new trustee was necessary. 	Id. at *9-10.
Final judgment was entered on November 22, 2021. 	See
Judgment in a Civil Case, filed 11/22/21 (dkt. no. 115)
(“Judgment”). 	Defendants have taken an appeal from the Judgment
(“First Appeal”). 	See Notice of Appeal from a Judgment or Order
of a United States District Court, filed 12/17/21 (dkt.
no. 119). 	A panel of the Ninth Circuit Court of Appeals heard
oral argument in the First Appeal on February 17, 2023, and the
First Appeal remains under submission. 	See Auld-Susott, et al.
v. Galindo, et al., 9th Cir. No. 21-17078, filed 2/17/23 (dkt.
no. 29).
On January 30, 2023, this Court issued an order
awarding Plaintiffs $48,537.50 in attorney’s fees and
$122,472.43 in prejudgment interest, for a total award of
$171,045.93. 	See Order Denying Defendants’ Objections and
Adopting, as Modified, the Magistrate Judge’s Findings and
Recommendation to Grant Plaintiffs’ Motion for Taxation of
Attorneys’ Fees and Award of Prejudgment Interest, filed 1/30/23
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(dkt. no. 138) (“1/30/23 Order”), at 13; 2 see also Minute Order -
EO: Court Order Denying Defendants’ Motion for Reconsideration
of this Court’s Order Denying Defendants’ Objections and
Adopting Modified Magistrate Judge’s Findings and Recommendation
as to Attorney’s Fees and Prejudgment Interest, filed 3/3/23
(dkt. no. 140) (“3/3/23 EO”). 	Defendants were ordered to pay
the $171,045.93 award to Plaintiffs by April 3, 2023. 	[3/3/23
EO at PageID.2137.]
An amended final judgment, reflecting the award in the
1/30/23 Order and the deadline in the 3/3/23 EO, was entered on
March 3, 2023. 	See Amended Final Judgment in a Civil Case,
filed 3/3/23 (dkt. no. 141) (“Amended Judgment”). 	Defendants
have taken an appeal from the Amended Judgment (“Second
Appeal”). 	See Notice of Appeal from a Judgment or Order of a
United States District Court, filed 3/10/23 (dkt. no. 142).
Briefing has not been completed in the Second Appeal. 	See Auld-
Susott, et al. v. Galindo, et al., 9th Cir. No. 23-15364, filed
3/13/23 (dkt. no. 1).
In the instant Application, Defendants ask this Court
to stay the enforcement of the Amended Judgment from April 3,
2023 until ten days after the Ninth Circuit issues its decision
in the First Appeal. 	See Application at 2.
2 The 1/30/23 Order is also available at 2023 WL 1099632.
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STANDARD
Defendants bring the Application pursuant to Fed. R.
Civ. P. 62. 	See id.
Federal Rule of Civil Procedure 62(a)
provides that, absent a court order to the
contrary, execution on a judgment and proceedings
to enforce it are stayed for 30 days after its
entry.
The losing party may otherwise obtain a stay
of the execution of the judgment by providing a
bond or other security as approved by the
District Court. 	Fed. R. Civ. P. 2(b). 	The stay
takes effect when the Court approves the bond or
other security and remains in effect for the time
specified in the bond or security. 	Id.
Rule 62 was amended in 2018. 	Under the new
rule, a stay upon filing a notice of appeal is
not automatic. 	A party is entitled to a stay of
the judgment as a matter of right upon posting a
bond or security. 	Mohr v. MLB Sub I, LLC, Civ.
No. 16-00493 ACK-WRP, 2020 WL 3803847, *2 (D.
Haw. July 7, 2020). 	The amendment also provides
that the Court may allow a party seeking a stay
to post security in a form other than a bond.
Fed. R. Civ. P. 62(b) Advisory Committee Note to
2018 Amendments; Philadelphia Indem. Ins. Co. v.
Ohana Control Sys., Inc., Civ. No. 17-00435 SOM-
RT, 2020 WL 3013105, *1-*2 (D. Haw. June 4,
2020).
The purpose of the bond or security is to
protect the prevailing party from the risk of a
later uncollectible judgment and to compensate
the party for delay in enforcement of the
judgment. 	NLRB v. Westphal, 859 F.2d 818, 819
(9th Cir. 1988).
District Courts have inherent discretionary
authority in requiring and setting the amount of
supersedeas bonds. 	Rachel v. Banana Republic,
Inc., 831 F.2d 1503, 1505 n.1 (9th Cir. 1987).
The default rule is that the losing party seeking
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to appeal must provide a full supersedeas bond
covering the entire amount of the judgment.
Paeste v. Gov’t of Guam, 2014 WL 12725108, *3 (D.
Guam May 28, 2014). 	Courts frequently require a
supersedeas bond for the amount of the judgment
plus interest, costs, and an estimate of any
damages attributed to the delay. 	11 Wright &
Miller, Fed. Prac. & Proc. Civ. § 2905 (3d ed.).
Mueller v. Dep’t of Pub. Safety, CIVIL NO. 17-00571 HG-WRP, 2022
WL 614983, at *1 (D. Hawai`i Mar. 2, 2022), appeal dismissed,
No. 22-15330, 2022 WL 3999969 (9th Cir. Aug. 22, 2022).
A losing party has the right to a stay of
the execution of the judgment by paying a
supersedeas bond, but an unsecured stay is
reserved for unusual circumstances as determined
in the court’s discretion. 	Bolt v. Merrimack
Pharms., Inc., 2005 WL 2298423, *2 (E.D. Cal.
Sept. 20, 2005). 	A party seeking a departure
from the normal requirement of a full security
supersedeas bond bears the burden of showing a
sufficient basis for such a departure from the
norm. 	Lewis v. Cnty. of San Diego, 2018 WL
1071704, *2 (S.D. Cal. Feb. 27, 2018).
Courts rely on five factors in evaluating a
request to waive the supersedeas bond
requirement:
(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
funds to pay the judgment;
(4) 	whether the losing party’s ability to
pay the judgment is so plain that the cost
of a bond would be a waste of money; and,
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(5) 	whether the losing party is in such a
precarious financial position that the
requirement to post a bond would place other
creditors of the losing party in an insecure
position.
Guitierrez v. City of Carson, 2013 WL 12241842,
*2 (C.D. Cal. Jan. 22, 2013) (citing Dillon v.
City of Chicago, 866 F.2d 902, 904-05 (7th Cir.
1988)).
The burden is on the losing party that
requests that the Court waive the bond
requirement to demonstrate sufficient reasons to
depart from the default rule requiring a
supersedeas bond. 	Paeste v. Gov’t of Guam, 2014
WL 12725108, *3 (D. Guam May 28, 2014).
. . . .
District Courts in the Ninth Circuit
routinely rely on the Dillon test to examine the
appropriateness of waiving the supersedeas bond
requirement as the factors are more
particularized and comprehensive than the Nken
[v. Holder, 556 U.S. 418 (2009),] stay factors.
See Cotton ex rel. McClure v. City of Eureka, 860
F. Supp. 2d 999, 1028-29 (N.D. Cal. 2012) (citing
United States v. Moyer, 2008 WL 3478063, *12
(N.D. Cal. Aug. 12, 2008)).
Id. *3.
DISCUSSION
In the instant case, the payment required in the
Amended Judgment is not due until April 3, 2023, i.e., thirty-
one days after the date of the Amended Judgment. 	See Amended
Judgment at 2. 	Thus, the automatic stay of the execution or
enforcement of the Amended Judgment is incorporated in the
deadline. 	See Fed. R. Civ. P. 62(a) (“Except as provided in
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Rule 62(c) and (d), execution on a judgment and proceedings to
enforce it are stayed for 30 days after its entry, unless the
court orders otherwise.”). 3 	Defendants have a right to a stay of
execution of the Amended Judgment if this Court approves their
bond or other security. 	See Fed. R. Civ. P. 62(b); Mohr, 2020
WL 3803847, *2. 	Defendants, however, have not proposed to post
a bond or provide other security. 	D. Susott’s declaration in
support of the Application indicates that he would not be able
to obtain a supersedeas bond or to provided other security. 	See
Application, Decl. of Daniel C. Susott at ¶¶ 4-7. 	The
Application does not address Galindo’s ability to post a bond or
provide other security. 	Read as a whole, the Application
appears to seek a waiver of the bond/security required for a
stay of execution of the Amended Judgment. 	See Fed. R. Civ.
P. 62(b).
“The first two Dillon factors relat[e] to the
complexity and timing involved in collecting from” the
defendants. 	Mueller, 2022 WL 614983, at *4; see also Dillon,
866 F.2d at 904. 	The first factor weighs against a waiver of
the bond requirement because it appears that collection from
3 Fed. R. Civ. P. 62(c) addresses to actions involving
injunctions, receiverships, or a patent accounting, and Fed. R.
Civ. P. 62(d) addresses actions involving injunctions. 	Neither
section (c) nor section (d) applies under the circumstances of
this case.
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D. Susott will be complicated by his limited assets, and
Defendants have not provided any information addressing the
complexity of the process to collect from Galindo. 	The second
factor also weighs against a waiver because Plaintiffs were
required to bring this action to address Defendants’ attempt to
avoid the effect of the previous rulings in Auld-Susott, et al.
v. Galindo, CV 16-00450 LEK-WRP (“CV 16-450”), by fraudulently
transferring the property. 	See generally 8/18/21 Order, 2021 WL
3669307. 	Thus, delaying Plaintiffs’ execution of the Amended
Judgment is not warranted under the circumstances of this case.
“The third, fourth, and fifth Dillon factors relat[e]
to the [defendant]’s willingness and ability to pay the
bond . . . .” 	Mueller, 2022 WL 614983, at *4; see also Dillon,
866 F.2d at 904-05. 	As to the third factor, based on the
current record, this Court does not have confidence that
Defendants have available funds to pay the Amended Judgment. 	As
to the fourth factor, because D. Susott has limited resources
and Defendants have not presented any evidence about Galindo’s
resources, this Court cannot find that Defendants’ “ability to
pay the judgment is so plain that the cost of a bond would be a
waste of money.” 	See Mueller, 2022 WL 614983, at *3. 	Finally,
although Defendants have presented evidence of D. Susott’s
limited resources, they have not shown that D. Susott “is in
such a precarious financial position that the requirement to
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post a bond would place other creditors of the losing party in
an insecure position.” 	See id. 	There is also no evidence that
would support such a finding as to Galindo. 	The third, fourth,
and fifth Dillon factors therefore weigh against a waiver of the
bond requirement.
Having considered all of the Dillon factors, this
Court denies Defendants’ request for a waiver of the bond or
security requirement in Rule 62(b). 	Because Defendants have not
presented a bond or other security, they are not entitled to a
stay of the execution or enforcement of the Amended Judgment.
CONCLUSION
For the foregoing reasons, Defendants’ Ex Parte
Application for a Stay of the Enforcement of the Amended Final
Judgment, filed March 13, 2023, is HEREBY DENIED. 	The denial of
the Application is WITHOUT PREJUDICE to Defendants’ ability to
seek a stay or other interim relief from the Ninth Circuit,
pursuant to Fed. R. Civ. P. 62(g).
IT IS SO ORDERED.
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DATED AT HONOLULU, HAWAII, March 17, 2023.
EVAN AULD-SUSOTT, ET AL. VS. LAURYN GALINDO, ET AL; cv 20-00270
LEK-RT; ORDER DENYING DEFENDANTS’ EX PARTE APPLICATION FOR A
STAY OF THE ENFORCEMENT OF THE AMENDED FINAL JUDGMENT
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