United States District Court, S.D. New York
PATTERSON BELKNAP WEBB & TYLER LLP, David W. Dykhouse, Christos G. Yatrakis, Alexander Michaels, for Plaintiff Ambac Assurance Corporation.
RUTAN & TUCKER, LLP William M. Marticorena, A. Patrick Muñoz, Todd O. Litfin, GIBBONS P.C. E. Evans Wohlforth, Jr., Samuel I. Portnoy, Defendant Adelanto Public Utility Authority.
JOHN F. KEENAN, District Judge.
On March 6, 2014, the Court granted the parties' crossmotions for entry of final judgment on certain claims and counterclaims. Plaintiff Ambac Assurance Corporation ("Ambac") now moves pursuant to 28 U.S.C. § 1963 for permission to register that judgment in the Central District of California. Defendant Adelanto Public Utility Authority (the "Authority") opposes Ambac's motion and cross-moves for a stay of the execution of the judgment on a partial supersedeas bond. For the reasons that follow, Ambac's motion for leave to register is granted, and the Authority's cross-motion for a stay is denied.
In its November 14, 2011 opinion, this Court dismissed all seven claims asserted in the Authority's First Amended Counterclaim. See Ambac Assurance Corp. v. Adelanto Pub. Util. Auth., No. 09 Civ. 5087, 2011 WL 5553444, at *10 (S.D.N.Y. Nov. 14, 2011). On January 11, 2013, this Court granted summary judgment for Ambac as to liability and damages for Ambac's first claim and partial summary judgment as to liability on Ambac's second and fourth claims. See Ambac Assurance Corp. v. Adelanto Pub. Util. Auth., No. 09 Civ. 5087, 2013 WL 139557, at *7 (S.D.N.Y. Jan. 11, 2013). On August 29, 2013, this Court set damages for the second and fourth claims. See Ambac Assurance Corp. v. Adelanto Pub. Util. Auth., No. 09 Civ. 5087, 2013 WL 4615404, at *7 (S.D.N.Y. Aug. 29, 2013). Only Ambac's third claim for specific performance remains pending.
In an Opinion filed on March 6, 2014, the Court granted the Plaintiff's motion to enter final judgment on Plaintiff's first, second, and fourth claims, and also granted Defendant's crossmotion to enter final judgment on Defendant's first, second, third, fourth, fifth, sixth, and seventh counterclaims. See Ambac Assurance Corp. v. Adelanto Pub. Util. Auth., No. 09 Civ. 5087, 2014 WL 888202, at *1 (S.D.N.Y. Mar. 6, 2014). The Court entered an amended final judgment on March 18, 2014. (ECF No. 101.) The Authority appealed that judgment on April 9, 2014. (ECF No. 103.)
Ambac now seeks leave to register the judgment in the Central District of California. The Authority contends that registration is inappropriate and requests that execution of the judgment be stayed on a partial supersedeas bond. Because Defendant argues that a stay would obviate the need for registration, the Court considers whether a stay is appropriate first.
A. Stay of the Judgment
Under Rule 62(d) of the Federal Rules of Civil Procedure, a party may obtain a stay of the enforcement of an appealed judgment by posting a supersedeas bond. See Fed.R.Civ.P. 62(d). The district court also has discretion to stay enforcement on a partial supersedeas bond "if doing so does not unduly endanger the judgment creditor's interest in ultimate recovery." Morgan Guar. Trust Co. of N.Y. v. Republic of Palau , 702 F.Supp. 60, 65 (S.D.N.Y. 1988), vacated on other grounds, 924 F.2d 1237 (2d Cir. 1991). In deciding whether to exercise this discretion, the court considers "(1) whether the petitioner is likely to prevail on the merits of his appeal, (2) whether, without a stay, the petitioner will be irreparably injured, (3) whether issuance of a stay will substantially harm other parties interested in the proceedings, and (4) wherein lies the public interest." Marcoux v. Farm Serv. & Supplies, Inc. , 290 F.Supp.2d 457, 485 (S.D.N.Y. 2003) (internal quotation marks omitted). The judgment debtor seeking such a stay bears the burden of showing "specific reasons" why a stay is appropriate. See Network Enters., Inc. v. APBA Offshore Prods., Inc., No. 01 Civ. 11765, 2007 WL 398276, at *2 (S.D.N.Y. Feb. 5, 2007).
With respect to the first factor, it is sufficient to show that the case presents "a substantial case on the merits" concerning difficult issues. Morgan Guar. , 702 F.Supp. at 65. The Authority contends that this is such a case because there are hard questions concerning subject matter jurisdiction under the Johnson Act, 28 U.S.C. § 1342, and whether Ambac is entitled to reimbursement for a termination payment that was partially triggered by a decrease in Ambac's credit rating.
These issues were not difficult when first considered, and Defendant does not provide compelling reasons for secondguessing. This Court previously rejected the Johnson Act argument on several grounds, primarily because the Authority had not pointed to an "order affecting rates" and because the specific performance claim - which is still pending and not on appeal - was the only claim that might even arguably be precluded by § 1342. See Ambac Assurance Corp. v. Adelanto Pub. Util. Auth. , 696 F.Supp.2d 396, 400-01 & n.2 (S.D.N.Y. 2010). On the question whether Ambac is entitled to termination fees caused by its credit downgrade, the Authority had argued that Ambac acted with "unclean hands" and had a duty to maintain a certain credit rating. Ambac Assurance, 2013 WL 139557, at *4. The Court determined that the unclean hands argument failed because the Authority presented no evidence of "unconscionable, bad faith or inequitable conduct, " and that Ambac never had a contractual duty to maintain its credit rating. Id. at *4-6.
Although the Authority asserts that these issues present difficult questions, it provides no reasons to support this contention. Defendant cites no caselaw indicating that other courts have wrestled with these issues and reached different conclusions than this Court did, nor does it provide an account of how this Court erred. The Authority merely invites the Court to doubt its previous rulings without explaining what should give the Court pause. Thus, there is no reason for the Court to conclude that ...