Petersen-Dean, Inc. v. National Union Fire Insurance Company of Pittsburgh, PA.

Background

The court had previously denied Petersen-Dean, Inc.’s petition to vacate an arbitration award and granted National Union Fire Insurance Company of Pittsburgh, PA.’s cross-petition to enforce the award. The arbitration panel had ordered Petersen-Dean to provide $2 million in interim security. Judgment was then entered, but Petersen-Dean had not complied.

National Union moved under 28 U.S.C. § 1963 to register the judgment in other federal districts. Petersen-Dean filed a cross-motion under Federal Rule of Civil Procedure 62(b) to stay enforcement while its appeal was pending.

Registration of the Judgment

Section 1963 allows a money judgment to be registered in another district when the court that entered the judgment finds good cause. The court explained that good cause may be shown by evidence that the judgment debtor lacks enough property in the original district to satisfy the judgment but has substantial property in another district. A creditor may rely on affidavits and other documents and does not have to provide exact evidence of all of the debtor’s assets.

The court found good cause because Petersen-Dean is a California corporation with its principal place of business in California, and National Union submitted a sworn statement that an asset search found no assets in New York. Petersen-Dean did not dispute those facts.

The court rejected Petersen-Dean’s argument that Section 1963 did not apply because the arbitration award concerned interim security rather than the merits of the arbitration. The court held that the judgment was plainly a money judgment because it required Petersen-Dean to pay a fixed amount of $2 million. The court therefore granted National Union’s motion to register the judgment in California or any other appropriate district.

Request to Stay Enforcement

Rule 62(b) generally allows a party to obtain a stay after judgment by providing a bond or other security. The court discussed factors identified by the Court of Appeals for the Second Circuit, including the complexity of collection, the time needed to obtain payment after an appeal, confidence that funds will be available, whether a bond would be unnecessary because the debtor can plainly pay, and whether the bond would put other creditors in an insecure position.

Petersen-Dean relied primarily on its claimed financial fragility. It argued that posting $2 million could allow a major lender to accelerate repayment, potentially causing insolvency and bankruptcy. The court held that financial hardship or inability to pay does not, by itself, justify waiving the bond requirement. It also found that Petersen-Dean’s asserted risk to other creditors did not outweigh the other factors.

The court emphasized that the arbitration panel had considered Petersen-Dean’s financial problems and had set security at $2 million, substantially below National Union’s claimed $27 million in damages. A stay would produce the result the arbitration panel had sought to prevent: leaving National Union without security for the costs of the arbitration. The court therefore denied Petersen-Dean’s motion to stay enforcement.

Disposition

Judge Alvin K. Hellerstein granted National Union’s motion to register the judgment in other districts and denied Petersen-Dean’s cross-motion to stay enforcement. The court directed the Clerk to terminate the motions and mark the case closed.