Kelley v. BMO Harris Bank N.A., as successor to M&I Marshall and IIsley Bank

Background

On June 26, 2023, the court entered judgment on a jury verdict in a breach-of-fiduciary-duty and fraud case. The judgment made BMO Harris Bank N.A. responsible for more than $560 million in damages, plus prejudgment and post-judgment interest. BMO Harris appealed the judgment and moved under Federal Rule of Civil Procedure 62 for a stay of enforcement while the appeal proceeded.

Douglas A. Kelley, acting as trustee of the BMO Litigation Trust, opposed the motion. Kelley asked the court to require a bond for the full judgment amount, including interest, costs, and delay damages.

National Bank Act argument

BMO Harris argued that the National Bank Act, 12 U.S.C. § 91, automatically prohibited enforcement of the judgment during the appeal. The court rejected that argument. It explained that no court in the Eighth Circuit had adopted BMO Harris’s interpretation and that the Supreme Court had not endorsed its view of when a judgment becomes final. The court concluded that the judgment was final and that the National Bank Act did not prohibit enforcement while the appeal was pending.

Bond requirement

BMO Harris alternatively asked the court to waive the bond requirement, arguing that it could pay the judgment if its appeal failed. Kelley argued that a bond was necessary, citing the failure of several banks and the need to protect the recovery sought for victims of the long-running Petters Ponzi scheme.

The court stated that the general rule under Rule 62 is to require a supersedeas bond—the security posted to protect payment of a judgment during an appeal—in the full amount of the judgment, plus interest, costs, and delay damages. The court found that a bond was appropriate because no business is guaranteed to maintain its financial strength throughout an appeal.

Requested $150 million cap

BMO Harris also argued that Federal Rule of Civil Procedure 62(f) required the bond to be capped at $150 million. Rule 62(f) can provide a stay based on the protection available under state law when a judgment is a lien on the debtor’s property. Minnesota law makes a federal judgment a lien on certain real property and caps appeal bonds at $150 million.

The court declined to decide that Minnesota’s bond cap applies in every federal case. It emphasized that Rule 62(f) is intended to provide an automatic stay when the judgment creditor has the security of a lien on the judgment debtor’s real property. BMO Harris had not argued or shown that it had enough real property in Ramsey County to secure $560 million—or even $150 million—of the judgment.

Bond amount and disposition

BMO Harris proposed a bond of $1,158,806,436.37. Kelley did not oppose that amount but asked the court to wait until it ruled on Kelley’s motion to clarify the judgment, which sought to add specified amounts for interest and costs. The court found that waiting was unnecessary because BMO Harris’s proposed bond exceeded Kelley’s requested total judgment by $100 million.

Judge Wilhelmina M. Wright granted BMO Harris’s request to approve the proposed bond. The court ordered that BMO Harris’s motion to stay the judgment was GRANTED in part and DENIED in part, as addressed in the order. The stay was conditioned on BMO Harris posting a supersedeas bond of $1,158,806,436.37 with the clerk of court.