United States District Court, W.D. Kentucky, Paducah
HEARTLAND MATERIALS, INC., et al. PLAINTIFFS
WARREN PAVING, INC., et al. DEFENDANTS
MEMORANDUM OPINION AND ORDER
B. Russell, Senior Judge.
matter is before the Court upon a motion by Defendants,
Warren Paving, Inc. and Slats Lucas, LLC, to approve security
and stay execution of bond. (DN 121). Plaintiffs, Heartland
Materials, Inc., William R. Frazer, LLC, and Southern
Aggregate Distributors, Inc., have responded (DN 123), and
Defendants have filed a reply (DN 125). Plaintiffs have also
filed an objection to Defendants' reply. (DN 126). Fully
briefed, this matter is ripe for adjudication and for the
following reasons, is DENIED. Defendants shall have seven (7)
days from the entry of this opinion and order to produce a
bond or other security in compliance with this order.
recitation of the facts of this case may be found at
Heartland Materials, Inc. v. Warren Paving, Inc.,
No. 5:16-CV-00146-TBR, 2018 WL 2324075, at *1 (W.D. Ky. May
22, 2018). On May 22, 2018, this Court granted
Plaintiffs' motion for summary judgment regarding their
request for declaratory judgment and their claim for breach
of the Amended Assignment Contract due to Defendants'
failure to make royalty payments after June 2016. Under the
Amended Assignment Contract, Defendants must pay $0.2667 per
ton of limestone mined from the property that is subject to
the agreement. Id. at*3. Then, on April 11, 2019,
this Court ordered that Defendants must pay Plaintiffs
compensatory damages, legal fees, pre-judgment interest, and
post judgment interest as explained at Heartland Materials,
Inc. v. Warren Paving, Inc., No. 5:16-CV-0146-TBR,
2019 WL 1576990, at *11 (W.D. Ky. April 11, 2019). On May 10,
2019, Defendants filed their notice of appeal of (1) the
Court's May 22, 2018 memorandum opinion and order, and
(2) the Courts April 11, 2019 memorandum opinion and order.
request the Court to issue an order approving a cash bond or
security in the amount of $1, 891, 699.52 and staying
execution of the Court's judgment pending disposition of
the appeal to the Sixth Circuit Court of Appeals. This amount
represents: (1) past royalties accrued through November 30,
2018 with pre-judgment and post-judgment interest calculated
through June 2020; and (2) attorney's fees with interest
calculated through June 1, 2020. Plaintiffs object to the $1,
891, 699.52 figure because they claim “it is
insufficient to adequately protect the Plaintiffs as it does
not include the royalties due and owing from January 20, 2019
(the December 20, 2018 royalty) through the pendency of the
appeal, nor interest thereon, nor allow for the costs of
appeal.” (DN 123-1 at 1).
Rule of Civil Procedure 62(b) provides: “At any time
after judgment is entered, a party may obtain a stay by
providing a bond or other security. . . . 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 other
security.” Rule 62 “entitles a party who files a
satisfactory supersedeas bond to stay a money judgment as a
matter of right.” Arban v. West Publ'q
Corp., 345 F.3d 390, 409 (6th Cir. 2003) (citing Fed.
PrescriptionServ., Inv. V. Am. Pharm. Ass'n, 636
F.2d 755, 759 (D.C. Cir. 1980)). Rule 62(b) balances the
interests of both parties by permitting “an appellant
to obtain a stay to avoid the risk of satisfying the judgment
only to find that restitution is impossible after reversal on
appeal” and, although the rule deprives the appellee of
its right to immediately enforce its valid judgment, the bond
provides “both insurance and compensation to the
appellee.” Buckhorn, Inc., v. Orbis, Corp.,
No. 3:08-CV-459, 2014 U.S. Dist. LEXIS 122677, 2014 WL
4377811, at *1 (S.D. Ohio Sept. 3, 2014) (citations omitted).
“Because of 62(d)'s dual protective role, a full
supersedeas bond should almost always be required.”
Id. (quoting Poplar Grove Planting & Ref. Co.,
Inc. v. Bache Halsey Stuart, Inc., 600 F.2d 1189,
1191 (5th Cir. 1979)). “Courts generally require that
the amount of the bond include the full amount owed under the
award, anticipated appeal costs, post-judgment interest, and
damages caused by the appeal.” Poplar Grove, 600 F.2d
at 1191. The requirement for a bond should only be waived in
“extraordinary circumstances.” Tri County
Wholesale Distrib., Inc. v. Labatt USA, 311 F.R.D.
166, 172 (E.D. Mich. 2017).
Court does not approve Defendants' Proposed Cash Bond or
Security in the amount of $1, 891, 699.52. This amount is
inadequate to protect the Plaintiffs' interests because
it does not include the royalties owed from January 20, 2019
(the December 20, 2018 royalty) through the pendency of the
appeal. Defendants' proposed cash bond omits the ongoing
royalties which are due to Plaintiffs. In its March 22, 2018
Memorandum Opinion and Order, this Court declared
“[Defendants] are contractually obligated to pay
royalties for all limestone mined and shipped or loaded for
transport from the property pursuant to the terms of the
Amended Assignment Contract and the royalty obligation
enumerated therein.” [DN 67 at 29]. The Court also
declared “as to future payments [of royalties], the
Plaintiffs are entitled to specific performance.”
Id. at 28. Therefore, it is necessary to account for
future royalties to appropriately protect Plaintiffs'
it is impossible to provide an exact accounting for future
royalties over the course of the appeal, the Court is
satisfied that an estimate of the total amount that is
currently due combined with an estimate of the amount which
will be due over the next eighteen months will appropriately
protect Plaintiffs' interests while allowing the
Defendants to obtain a stay during the pendency of their
appeal. The Court will base its estimate on the most current
information on the record.
27, 2018, Plaintiffs filed the affidavits of William R.
Frazer and John William Bogle Jr. [DN 77-1 and 77-2]. These
affidavits mirror one another and each affiant attests to the
authenticity of mineral tax returns that are attached to the
documents. Frazer and Bogle attest that the mineral tax
returns were submitted by Defendant Warren Paving, Inc. in
discovery. The mineral tax returns account for tons of
limestone produced for the months of June 2016 through August
2017 (the “Period”). During this
fifteen-month-period, 2, 842, 850 tons of limestone were
produced. Therefore, an average of 189, 523.33 tons of
limestone were produced per month during the Period.
Multiplying this average monthly production by the
contractual royalty rate of $0.2667 per ton results in a
product of $50, 545.87 per month. Unpaid royalties up to, and
including, the month of November 2018 are already calculated
into the Defendants' Proposed Cash Bond or Security. But
five months of unpaid royalties are currently due.
Five months at the average rate of $50, 545.87 per month
equals $252, 729.35 currently due. The Court agrees with
Plaintiffs that it is appropriate to project the bond or
security out to account for eighteen months of future
payments. Eighteen months at the average rate of $50, 545.87
equals $909, 825.66 in future royalties. Adding the two
figures together results in a sum of $1, 162, 555.01 in
estimated royalties. Adding the estimated royalties to the
$1, 891, 699.52 of Defendants' Proposed Cash Bond or
Security-which provides security through November
2018-results in a sum-total of $3, 054, 254.53.
Court holds that Defendants must provide a bond or security
in the amount of $3, 054, 254.53 to obtain a stay. Pursuant
to Local Rule 65.1.1(a), this bond must be in one of the
following three forms: (1) a surety company approved by the
United States Department of Treasury; (2) cash in an amount
set by the Court; or (3) a personal surety secured by real
estate that is compliant with the requirements of Rule
65.1.1(d)-(g). In this case, Defendants' bond or security
may be comprised of any combination of these as long as they
amount to a combined total of $3, 054, 254.53. For example,
Defendants may provide a cash bond in the amount of $2, 000,
000.00 and satisfy the remaining $1, 054, 254.53 through a
surety company approved by the United States Department of
Treasury. Alternatively, Defendants may choose to provide the
entire amount in any of the forms allowed by Rule 65.1.1.
Defendants must, however, provide a bond or security in the
amount of $3, 054, 254.53 within seven (7) days of the entry
of this Memorandum Opinion and Order to obtain a stay.
Court is not persuaded that the alternative bond offered by
Defendants is appropriate. In their reply, Defendants propose
a bond arrangement whereby they agree to provide the $1, 891,
699.52 in cash bond and then place all royalties that are
currently due and which will become due during the appeal
into an interest bearing bank account as additional security.
In other words, the Defendants propose that they will set
aside royalties due to Plaintiffs as they become due.
However, the Court is persuaded by Plaintiffs' objection
that this arrangement would be a recipe for further
litigation on the issue of the supersedeas bond. The proposed
arrangement would require Plaintiffs to monitor the royalty
deposits and if there were any disputes in amount or
timelines of a deposit, then the parties would be back in
front of this Court again.
foregoing reasons, and being otherwise sufficiently advised,
IT IS HEREBY ORDERED, Defendants' motion
to approve security and stay execution of judgment by
Defendants [DN 121] is DENIED. Defendants
shall provide bond or security-in any form or combination of
forms provided by Rule 65.1.1 of the Joint Local Rules of
Civil Practice-in the amount of $3, 054, 254.53 within
seven (7) days of the entry of this order.
If Defendants do not timely ...