Opinion
LIQUIDATION PROCEEDING UNDER THE SECURITIES INVESTOR PROTECTION ACT, 15 U.S.C. § 78AAA ET SEQ, Sipa Proceeding No. 02-0756, Adversary Proceeding No. 04-0669.
April 12, 2005
OPINION
Introduction
In this adversary proceeding, the Defendant, Edward G. Murphy, III, (Murphy) moves for reconsideration of two opinions and orders dated January 20, 2005. The first ruling dismissed Murphy's third-party complaint (Docket #32) while the second granted partial summary judgment against Murphy on the Trustee's partnership deficiency claim. Docket #33. Murphy also asks for a stay of enforcement of the judgment. Id. The Trustee opposes both motions for reconsideration, will agree to a stay only if a bond is posted, and files its own request for a partial final judgment against Murphy pursuant to F.R.C.P. 54(b). Murphy opposes the Trustee's request.
For the reasons set forth below, Murphy's requests for reconsideration will be denied. The request for a stay, however, will be granted upon the condition that he post a bond in the amount of the judgment. The Trustee's motion will be granted subject, of course, to a stay upon the posting of security.
Timing of The Motions for Reconsideration
Proceeding under Bankruptcy Rule 9023, Murphy maintains that the Court erred in a number of ways in granting partial summary judgment and dismissing his third-party complaint. However, a threshold question must first be addressed: are the motions properly brought under Rule 9023? The Trustee insists that they are not because they are untimely. Such motions must be brought within 10 days of entry of the judgment and, more importantly, that deadline may not be enlarged. Is the Trustee correct on this point? If he is, what are the consequences?
Bankruptcy Rule 9023 incorporates Federal Rule of Civil Procedure 59 which provides, in pertinent part, that "any motion to alter or amend a judgment shall be filed no later than 10 days after entry of the judgment." F.R.C.P. 59(e). In this case, the orders granting summary judgment and dismissing the third-party action were entered on the docket on January 21, 2004, yet the motions for reconsideration were filed more than 10 days later, February 3. The Trustee correctly points out that the ten day deadline is excepted from the enlargement provisions of Bankruptcy Rule 9006. See B.R. 9006(b)(2). The Third Circuit has explained that "the ten day period is jurisdictional and cannot be extended in the discretion of the district court." Welch v. Folsom, 925 F.2d 666, 669 (3d Cir. 1991). Because the motions are untimely, reconsideration may not be requested here.
And the rule of procedure providing for the addition of three days to a prescribed period for responses when notice is served by mail does not apply to motions for reconsideration. See Albright v. Virtue, 273 F.3d 564, 571 (3d Cir. 2001) (interpreting Rule 6(e) to be inapplicable to motions for reconsideration) Bankruptcy Rule 9006(f) is almost identical to that rule and would operate similarly.
And Murphy would fare no better if the motions were considered under Rule 60(b). Courts have treated untimely motions for reconsideration as rule 60(b) motions. See, e.g., Brown v. United States, 2004 WL 1921151 *1 (Fed. Cir.). Rule 60(b) provides:
Incorporated by B.R. 9024.
(b) Mistakes; Inadvertence; Excusable Neglect; Newly Discovered Evidence; Fraud, Etc. On motion and upon such terms as are just, the court may relieve a party or a party's legal representative from a final judgment, order, or proceeding for the following reasons: (1) mistake, inadvertence, surprise, or excusable neglect; (2) newly discovered evidence which by due diligence could not have been discovered in time to move for a new trial under Rule 59(b); (3) fraud (whether heretofore denominated intrinsic or extrinsic), misrepresentation, or other misconduct of an adverse party; (4) the judgment is void; (5) the judgment has been satisfied, released, or discharged, or a prior judgment upon which it is based has been reversed or otherwise vacated, or it is no longer equitable that the judgment should have prospective application; or (6) any other reason justifying relief from the operation of the judgment. The motion shall be made within a reasonable time, and for reasons (1), (2), and (3) not more than one year after the judgment, order, or proceeding was entered or taken.
F.R.C.P. 60(b). The Third Circuit has stated that a "Rule 60(b) motion may not be used as a substitute for an appeal, and that legal error, without more, does not warrant relief under that provision." United States v. Fiorelli, 337 F.3d 282, 288 (3d Cir. 2003) (quotation omitted); accord Smith v. Evans, 853 F.2d 155, 158 (3d Cir. 1988). Because the arguments for relief in the motions are premised on alleged legal error, they may not be brought under Rule 60(b).
The Substance of the Requests for Reconsideration
Aside from the issue of timeliness, both motions to alter and/or amend fail to persuade. The purpose of such a motion, also known as a request for reconsideration, is to correct a clear error of law or to prevent manifest injustice. In re Eagle Enterprises, Inc., 259 B.R. 73, 77 (Bankr.E.D.Pa. 2001). "A proper motion to alter or amend judgment "must rely on one of three major grounds: `(1) an intervening change in controlling law; (2) the availability of new evidence [not available previously]; [or] (3) the need to correct clear error [of law] or prevent manifest injustice.'" North River Ins. Co. v. CIGNA Reinsurance Co., 52 F.3d 1194, 1218 (3d Cir. 1995). The scope of a Rule 59(e) motion is narrow; such motions are to be sparingly granted, and are not at the disposal of an unsuccessful party to rehash arguments and facts previously presented. Keyes v. National Railroad Passenger Corporation, 766 F.Supp. 277, 280 (E.D.Pa. 1991). A decision to deny a motion for reconsideration is placed within the sound discretion of the trial court and will be reversed only where clearly erroneous. See North River, supra, 52 F.3d at1203.
Murphy's request for reconsideration of the partial summary judgment alleges that the Court erred in four places: first, that collateral estoppel should not apply to his argument that he was never a partner of Selheimer Co.; second, that Pennsylvania partnership law did, indeed, cap his liability for partnership debts at zero; third, that he is prejudiced by having to reimburse SIPC for paying claims which he could not contest; and fourth, that no summary judgment should have been entered regarding the Jeanne Murphy claim, liquidated or otherwise.
Preclusion of the Argument That Murphy was not a Partner
In ruling that collateral estoppel precluded Murphy from asserting that he was not a partner of Selheimer Co., the Court considered carefully Murphy's claims of unfairness. Specifically, it discussed at length the equitable exceptions to issue preclusion found in the Restatement of Judgments § 25. Much attention was given to subsection 5(b) of § 25. That subsection does not prohibit retrying an issue if it was not foreseeable in the earlier action that the same issue might arise later and — this is of crucial significance here — that such lack of foresight caused the losing party to litigate less than fully.
What the Court found was that although Murphy may have not foreseen the consequences of losing on the "partner" issue," the adverse result was not due to lack of effort on his part. The Court found that he litigated this question to the fullest degree and, therefore, there would be no unfairness in estopping him on this point.
It is that finding that Murphy points to as clear error. Murphy insists that the purposes of the different procedural contexts — direct payment procedure in the earlier procedure versus a liability assessment in the partnership liquidation — would cause the partnership question to be tried differently. But that premise is simply unacceptable; the element essential to both proceedings is whether Murphy was a partner of Selheimer Co. The same proofs were equally dispositive in both contexts. Looking past all his emphasis on different procedural backgrounds, Murphy simply wants the Court to look at evidence already in the record — evidence, it should be noted, which has now been considered by this Court on three occasions — and arrive at a contrary result. Specifically, Murphy insists that there is no evidence that he received a Schedule K-1. But the Court found probative Perry Selheimer's testimony that Schedule K-1's were issued to the partners including Murphy himself. And Ernest Grothe — another partner — testified to having received K-1's. Murphy's claim that there is no evidence on this point is simply incorrect. The Court reaffirms its earlier holding that Murphy is barred under the doctrine of collateral estoppel from litigating his status as a partner of Selheimer Co.
Did the Court Err in Not Capping Murphy's Liability at Zero?
Murphy reiterates the argument that because he did not share in the profits of the partnership, the Uniform Partnership Act (UPA) shields him from any liability to third parties for partner misdeeds. His present motion alleges that this Court's contrary ruling is in error because it relies on cases that deal with provisions of Pennsylvania partnership law different from those relied on by Murphy. Murphy argues that the Court should have interpreted § 8331(1) unambiguously as he does. The Court will analyze below each of the cases cited by the Court to demonstrate how each provides persuasive authority.
15 P.S. § 8301 et seq.
In In re Labrum Doak, LLP, 237 B.R. 275 (Bankr.E.D.Pa. 1999), certain partners of a dissolving general partnership sought to limit their liability to third parties pursuant to UPA § 8362 which provides, in pertinent part:
In settling accounts between the partners after dissolution, the following rules shall be observed, subject to any agreement to the contrary:
. . .
(4) The partners shall contribute, as provided by section 8331(1) (relating to rules determining rights and duties of partners), the amount necessary to satisfy the liabilities, but if any, but not all, of the partners are insolvent or, not being subject to process, refuse to contribute, the other partners shall contribute their share of the liabilities and, in the relative proportions in which they share the profits, the additional amount necessary to pay the liabilities.
15 P.S. § 8362(4). The Court would conclude that the § 8362(4) offered no protection to the withdrawing partners:
Similarly, 15 Pa.C.S. § 8362(4), . . ., limits the share of partners' liabilities to their shares of profits received. However, it recites no limitation on liabilities relative to the withdrawal of the partner from the partnership. A search of Pennsylvania case law and other secondary sources interpreting this statutory provision or any other provision of PAUPA did not reveal any authority supporting the notion that this section was intended as a limit on the liability of a general partner to third parties. [citation omitted] Rather, a review of the following relevant commentary to § 8362 thusly indicates that its only purpose was to address the allocations of the liabilities of the partners inter se:
the "bottom line" result under general partnership law as in effect in Pennsylvania and most other jurisdictions is that if a negligent or intentionally wrongful act were committed by any general partner in the course of the partnership's business and the available insurance and partnership assets were insufficient to satisfy the claim, any general partner could be called upon to satisfy as much as all of the deficiency and the effective rights of contribution would be limited by the personal assets of the other partners.
237 B.R. at 296. Contrary to what Murphy alleges in his motion, the ruling in Labrum rejected the proposition that UPA § 8331(1) limits liability as to third parties.
Likewise, the analogous argument was rejected in the context of a limited partnership in In re CS Associates, 160 B.R. 899 (Bankr.E.D.Pa. 1993). There, a general partner of a limited partnership raised the following provision of the Pennsylvania Revised Limited Partnership Act to limit his liability to third parties:
15 P.S. § 8501 et seq.
Silk claims that this issue is governed by the provisions set forth in 15 Pa.C.S. § 8343[ sic], which provides as follows:
§ 8543. Sharing of profits and losses.
The profits and losses of a limited partnership shall be allocated among the partners, and among classes of partners, in the manner provided in writing in the partnership agreement. If the partnership agreement does not so provide in writing, profits and losses shall be allocated on the basis of the value (as stated or determined in the manner provided in the partnership agreement, if stated or provide for therein) of the contributions made by each partner to the extent they have been received by the partnership and have not been returned, and otherwise per capita.
Silk's contention that § 8543 is applicable to the instant matter is incorrect. First, a search of Pennsylvania case law and that of other states adopting § 503 of the UPA, after which § 8543 was patterned, did not reveal any authority supporting the notion that this section was intended to govern the liability of a general partner of the limited partnership to third parties.
160 B.R. 908-909. Both cases thus provide authority that refutes, directly or by analogy, Murphy's theory. For that reason, reconsideration will be denied. Murphy's Liability for the Best and Fugate Estate Claims
As to the third case cited by Murphy as inapplicable, Siegel v. Wood, 1894 WL 3509 (Pa.Com.Pl.), that case predates the statutes operative here. However, its holding is apposite. It held that persons claiming to be no more than limited, or special, partners were liable to creditors as general partners because they had not followed the procedure required by the statute to establish limited liability.
Murphy next argues that the Court erred in assessing to him liability for reimbursement of the Best and the Fugate Estate claims. Because he was not a party to the adjudication of those claim, he explains, he would be prejudiced if required to pay those claims. Specifically, he argues that § 723 of the Bankruptcy Code requires that a partner charged with a deficiency be heard as to the amount of the deficiency. However, he offers no authority for that proposition. Moreover, he never comments on the provision of the Securities Investor Protection Act which the Court cited in the January 20 Opinion to overrule his objection to paying those claims. The statute specifically provides that payments on customer claims in a direct payment procedure are to be "given full effect" in a subsequent liquidation. See 15 U.S.C. § 78fff-4(f). Given that unambiguous statement of the law, Murphy's claims of error are rejected.
Inclusion of the Jeanne Murphy Claim in Summary Judgment
The summary judgment included upwards of $841,000 for Jeanne Murphy's customer claim. That is the minimum amount that the parties agree she is entitled to; her claim was filed in excess of $1 million and remains unadjudicated. Murphy argues that because SIPC has not made any payment to Ms. Murphy on that claim and because her claim remains unadjudicated, the Court erred in including the agreed upon minimum claim amount in the summary judgment.
Again, no authority is offered for either proposition that would demonstrate error. Apparently, the Court is simply asked to review its previous ruling. It has done so and concludes that it is sound. Case law provides that a trustee may proceed under Code § 723 notwithstanding that some claims against the partnership remain unliquidated. All that the trustee need prove is that a deficiency will exist with a reasonable degree of certainty. The record shows that it will. For that reason, the Court will not reconsider its inclusion of the Jeanne Murphy claim in the summary judgment award.
Reconsideration of Dismissal of the Third-Party Complaint
Murphy's second motion challenges the dismissal of his third-party action. Specifically, he maintains the Court erred in holding that the third party claim was not the type which may be brought under Rule 14. But that was not the primary reason that the Court dismissed that action. The third party action was dismissed because this Court lacked subject matter jurisdiction over Murphy's action against the other partners. This is something that the motion does not address. Therefore, even if Murphy is correct in arguing that this Court misapplied the rule, it would not change the outcome. There is simply no independent basis of jurisdiction for this Court to hear that claim. For that reason, the request for reconsideration of the dismissal of Murphy's third-party action must be denied.
As a postscript, the Court now sees that it misinterpreted the Third Circuit's ruling in FDIC v. Bathgate to hold that Rule 14 would not allow impleader of a partner's contribution and indemnity claim against co-partners. The Bathgate decision explained that "[a] third party claim may be asserted under Rule 14(a) only when . . . the third party is secondarily liable to the defendant." 27 F.3d at 873. Because the third party complaint alleged that the other partners of Selheimer Co. are liable to Murphy for contribution or indemnity, the other partners would be secondarily liable. Thus, this Court would have the wherewithal to hear those claims but only assuming a jurisdictional basis existed. The salient point of the Opinion is that neither subject matter nor supplemental jurisdiction was present to allow this Court to hear those claims. All else is extraneous to the thrust of the decision and would not support amendment of the ruling.
27 F.3d. 850 (3d Cir. 1994).
For its part, the Trustee maintains that "Murphy probably has no viable claim for contribution or indemnity against [the] third party defendants." See Objection to Motion for Reconsideration (Docket #42) ¶ 6. That argument, however, goes beyond what is pleaded to allege proofs and is, therefore, not responsive in this context.
The Motion for Stay
Murphy next seeks a stay of any efforts to enforce the summary judgment "pending the final adjudication of all claims in this matter." Docket #36, Motion, ¶ 2. But he does not explain what rule of procedure supports his request. Murphy asserts that unless a stay is entered he will suffer irreparable harm. Id. ¶ 3. Exactly what that harm will be is also never quite explained. For his part, the Trustee will agree to a stay so long as security is posted. See Trustee's Objection, ¶ 8.
Given that Murphy has filed a motion for reconsideration, he is proceeding under Rule 62(b):
(b) Stay on Motion for New Trial or for Judgment. In its discretion and on such conditions for the security of the adverse party as are proper, the court may stay the execution of or any proceedings to enforce a judgment pending the disposition of a motion for a new trial or to alter or amend a judgment made pursuant to Rule 59, or of a motion for relief from a judgment or order made pursuant to Rule 60, or of a motion for judgment in accordance with a motion for a directed verdict made pursuant to Rule 50, or of a motion for amendment to the findings or for additional findings made pursuant to Rule 52(b).
F.R.C.P. 62(b). If the post-trial motion is denied, the Court lacks the authority under Rule 62(b) to stay execution. Fallowfield Dev.Corp. v. Strunk, 1993 WL 133326 *5 (E.D.Pa.); accord In re Raymark Industries, Inc., 99 B.R. 298, 300 n. 3 (Bankr.E.D.Pa. 1990). Here, the motion for reconsideration is not properly brought because it is untimely; therefore, grounds do not exist under this subrule to support imposing a stay.
Rule 62 is incorporated entirely by Bankruptcy Rule 7062.
Stay Pursuant to a Rule 54(b) Determination
There are, however, other circumstances pursuant to which the Court can order a stay. These include the stay of a partial final judgment entered under Rule 54(b):
(h) Stay of Judgment as to Multiple Claims or Multiple Parties. When a court has ordered a final judgment under the conditions stated in Rule 54(b), the court may stay enforcement of that judgment until the entering of a subsequent judgment or judgments and may prescribe such conditions as are necessary to secure the benefit thereof to the party in whose favor the judgment is entered.
F.R.C.P. 62(h). A partial final judgment is precisely what the Trustee is requesting, i.e., an express determination that the summary judgment against Murphy in the amount of $251,158.12 be made final for purposes of execution. As the Trustee explains, the judgment is not final because it did not dispose of all of the claims which are part of that suit. Specifically, the Jeanne Murphy customer claim remains unliquidated.
Recognizing that "sound judicial administration" could benefit from relaxing the "final decision" rule, especially in complex cases involving multiple litigants and claims, Federal Rule of Civil Procedure 54(b) was first promulgated in 1939 to permit the district court to enter "partial" final judgments of less than all of the claims. Sears, Roebuck Co. v. Mackey, 351 U.S. 427, 433-34, 76 S.Ct. 895, 100 L.Ed. 1297 (1956). Rule 54(b) now states the following:
Made applicable by B.R. 7054(a).
Judgment Upon Multiple Claims or Involving Multiple Parties. When more than one claim for relief is presented in an action, whether as a claim, counterclaim, cross-claim, or third-party claim, or when multiple parties are involved, the court may direct the entry of a final judgment as to one or more but fewer than all of the claims or parties only upon an express determination that there is no just reason for delay and upon an express direction for the entry of judgment. In the absence of such determination and direction, any order or other form of decision, however designated, which adjudicates fewer than all the claims or the rights and liabilities of fewer than all the parties shall not terminate the action as to any of the claims or parties, and the order or other form of decision is subject to revision at any time before the entry of judgment adjudicating all the claims and the rights and liabilities of all the parties.
F.R.C.P. 54(b). A leading commentator explains the genesis for this rule:
The classic paradigm of a lawsuit — one plaintiff suing one defendant over a single legal wrong — is something of a rarity in modern federal practice. Nevertheless, the final judgment rule, in both its common law and statutory incarnations, was developed largely in the context of such facts. The federal rules increased the opportunity for joinder of multiple claims and multiple parties. The former technical pleading rules were replaced by provisions permitting virtually unlimited joinder of claims and greatly expanded joinder of parties, together with a commensurate power in the district court to structure the litigation and conduct separate trials as justice or convenience might require. Although the increased opportunity for joinder coupled with these case management techniques increases efficiency in the district court, they also create a substantial potential for prejudice from the delay in final disposition and appeal of what are quite frequently entirely distinct claims.
10 Moore's Federal Practice § 54.21[1] (3d ed.). The Third Circuit has explained what factors ought to be considered by the trial court in entering a partial final judgment:
(1) the relationship between the adjudicated and unadjudicated claims; (2) the possibility that the need for review might or might not be mooted by future developments in the district court; (3) the possibility that the reviewing court might be obliged to consider the same issue a second time; (4) the presence or absence of a claim or counterclaim which could result in set-off against the judgment sought to be made final; (5) miscellaneous factors such as delay, economic and solvency considerations, shortening the time of trial, frivolity of competing claims, expense, and the like.
Berckeley Investment Group, Ltd, v. Colkitt, 259 F.3d 135, 144-45 (3d Cir. 2001) citing Allis-Chalmers Corp v. Philadelphia Elec. Co., 521 F.2d 360, 364 (3d Cir. 1975). Depending upon the facts of the particular case, all or some of the above factors may bear upon the propriety of the trial court's discretion in certifying a judgment as final under Rule 54(b). 259 F.3d at 145. Relationship Between the Liquidated and Non-liquidated Claims
The Trustee maintains that there is no relationship between the customer claims that it has already paid out on (Best, Fugate Estate, and Stone) and the as yet unliquidated claim of Murphy's mother. The only element common to both sets of claims is that Murphy will have to pay for both. As to the claims of the Fugate Estate, Best and Stone, the amount of those claims is fixed and nothing about the determination of the Jeanne Murphy claim will alter that.
The Court is constrained to agree with the Trustee's argument. Those adjudicated claims represent the minimum of Murphy's deficiency liability. A positive determination of the Jeanne Murphy claim will only increase that figure.
Would Resolution of the Jeanne Murphy Claim Possibility Moot An Appeal of the Partial Final Judgment?
The Trustee maintains that this Court's determination of the amount of Jeanne Murphy's claim would not affect appellate review of the ruling on Murphy's liability for the Best, Fugate Estate and Stone claims. The Court agrees with that statement; if this Court somehow erred in its determination that Murphy was liable for the liquidated claims, that would not affect how an appeals court would review a resolution of Jeanne Murphy's claim. Risk of a Second Appellate Review of the Same Issue
By entering partial final judgment now, this Court would allow Murphy to appeal the summary judgment ruling as to the Best, Fugate Estate and Stone claims. The Trustee points out that should Jeanne Murphy appeal the ultimate resolution of her claim, that appeal would not implicate issues pertaining to the other claims. The law of the case doctrine, the Trustee explains, would prevent that from happening. Is he correct?
The Supreme Court has defined the law of the case as a doctrine that "`posits that when a court decides upon a rule of law, that decision should continue to govern the same issues in subsequent stages in the same case.' This rule of practice promotes the finality and efficiency of the judicial process by `protecting against the agitation of settled issues.'" Christianson v. Colt Indus. Operating Corp., 486 U.S. 800, 816, 108 S.Ct. 2166, 2177, 100 L.Ed.2d 811 (1998). Under the law-of-the-case doctrine, "once an issue has been decided, parties may not relitigate that issue in the same case." Waldorf v. Shuta, 142 F.3d 601, 616 n. 4 (3d Cir. 1998). Courts often refuse to infer decisions of an uncertain issue, from an ambiguous opinion, including a summary action, or an inadequately considered disposition. 18 Wright Miller, Federal Practice and Procedure: Civil 2d § 4478 (2d ed. 2002) In other words, the actual decision of an issue — whether express or implied — is required to establish the law of the case. In re City of Philadelphia Litigation, 158 F.3d. 711, 718 (3d Cir. 1998). The law of the case doctrine does not restrict a court's power but rather governs its exercise of discretion. Public Interest Research Group of New Jersey, Inc. v. Magnesium Elektron, Inc., 123 F.3d 111, 116 (3d Cir. 1997). The law of the case doctrine applies to appellate as well as trial courts. See Southco., Inc. v. Kanebridge, 324 F.3d 190, 194 (3d Cir. 2003). The Third Circuit has recognized that the doctrine does not preclude reconsideration of previously decided issues in extraordinary circumstances such as where: (1) new evidence is available; (2) a supervening new law has been announced; or (3) the earlier decision was clearly erroneous and would create manifest injustice. Public Interest, 123 F.3d at 116-17.
If this Court were to grant the Trustee's request and Murphy were to unsuccessfully appeal that ruling, it is difficult to see how the appeal of the ruling on the Jeanne Murphy claim would implicate the same issues. But even assuming it did, Murphy would be precluded under the law of the case doctrine from challenging the amount of his liability pursuant to the summary judgment.
Does Murphy have a Means of Offsetting the Trustee's Liquidated Claim?
A partial final judgment would be premature if Murphy had a counterclaim which could reduce that which he now owes the Trustee. But, as the Trustee points out, Murphy has no such claim: his customer claim against SIPC has been disallowed by SIPC and this Court and those decisions were affirmed on appeal. There is nothing Murphy can do at this point to reduce the amount of the liquidated portion of the Trustee's claim. What Miscellaneous Factors Bear on this Analysis?
The Trustee argues that because this case is going on 8 years, certification of the partial judgment is warranted. But exactly why this is so the Trustee does not explain. Merely because it is of long duration does not mandate a hastening to judgment. There are a number of reasons for this case's vintage, some of which are due to Murphy and others which are not. He has vigorously litigated his claims throughout, but this case is a complex one and has taken more than one procedural turn.
Similarly unpersuasive is the Trustee's contention that if he can execute on his judgment now, then that will aid the progress of the liquidation. That does not necessarily follow, especially considering that the Jeanne Murphy claim remains unliquidated. The liquidation of her claim would appear just as essential to completing the liquidation of the Selheimer Co. Estate.
And troubling is the Trustee's argument that his ability to execute against Murphy might aid settlement negotiations. While this Court adheres to the established principle that settlements are to be encouraged, it would be quite inappropriate for this Court to enter a ruling which would effectively grant one party negotiating leverage over the other.
Entry of Partial Final Judgment With a Corresponding Stay
A review of all of the factors enunciated by the Third Circuit reveals that some fall in favor in certifying the summary judgment while others do not. On the one hand, the issues at play in the unliquidated claim are sufficiently separate from those in the liquidated claim. Preclusive doctrines also reduce the risk of redundant use of appellate resources. On the other hand, the Trustee has not demonstrated a pressing need for a final judgment. There is no evidence of record that he will be prejudiced if the judgment is not now certified. There is, for example, no evidence that Murphy — someone whom the Trustee has characterized as well off financially — is on the brink of insolvency. Of course, in fairness it must be acknowledged that there is no evidence to the contrary. In sum, while there may be no reason for delay, there may also be no reason to hasten to final judgment.
Be that as it may, the procedural posture allows the Court to effectively grant the requests of both parties. If the Court certifies the partial final judgment under rule 54(b), then it may stay enforcement of that judgment under rule 62(h) until the entering of the subsequent judgment or judgments. See Curtis Publishing Company v. Church Rickards Co., 58 F.R.D. 594, 598 (E.D.Pa. 1973). The Trustee will accept a stay so long as a bond is posted.
Security Required for Issuance of a Stay
The fashioning of a stay is within the trial court's discretion. Whatever form the security takes, unsecured or otherwise, fully secured or partially protected, the Court must ensure that it does not endanger the judgment creditor's interest in ultimate recovery. See Silver v. Mendel, 1992 WL 163285 *1 (E.D.Pa.). And in determining whether a judgment defendant should post a bond or alternate security, the court must consider (1) the defendant's net worth and ability to post a bond; (2) whether a defendant has cooperated with the court; and (3) whether a defendant's assets are within the jurisdiction of the court. Id.
The Court has not been presented with any evidence which might inform a decision to require a bond versus some other type of alternate security. That being the case, the Court considers the most prudent exercise of its discretion to be the requirement of a bond, as in the Court's experience this is by far the most commonplace form of security required. The Trustee is agreeable to a bond so long as it contains an interest component that would protect the present value of the amount of the judgment. See 11 Wright Miller, Federal Practice and Procedure: Civil 2d § 2909 ("If a stay is entered, the court, if it sees fit, may require the party against whom the judgment has been entered to file a bond securing payment of that judgment with interest." (emphasis added)) The Trustee estimates that the appeal period, if appeals are taken, will last roughly two years. See Objection to Motion for Reconsideration and Stay, (Docket #41) ¶ 6. For that reason, he requests that the bond secure payment in the amount of $1.25 million, which amount factors in interest over that term at the federal judgment interest rate. Id. The Court finds that to be appropriate. Accordingly, the request for a stay shall be granted subject, however, to the posting of a bond in the amount of the judgment which has been entered, with interest as aforesaid.
An appropriate Order follows.
ORDER
AND NOW upon consideration of the Motions of Edward G. Murphy, III, (Murphy) to Alter and/or Amend Judgment Pursuant to Rule 9023 and for Stay of Enforcement of Partial Summary Judgment, and the Motion of the Securities Investor Protection Corporation (SIPC) as Trustee for an Express Determination under Rule 54(b) and For Entry of Partial Final Judgment, the respective responses thereto, and for the reasons set forth in the foregoing Opinion, it is
ORDERED that Murphy's Motions to Alter and/or Amend the Judgment are denied; and it is
FURTHER ORDERED that SIPC's Motion for an Express Determination under Rule 54(b) and for a Partial Final Judgment is granted; and it is
FURTHER ORDERED that Murphy's Motion for a stay is granted upon the condition that he post a bond in the amount of $1.25 million.