245 Park Member LLC v. HNA Group Company Limited

Background

The court previously confirmed an arbitration award of $185,412,763.60 in favor of 245 Park Member LLC against HNA Group (International) Company Limited and entered judgment against HNA International. In a May 19, 2023 decision, the court denied HNA International’s request for relief from that judgment and ordered HNA International to turn over its 100% membership interest in HNA North America, LLC to 245 Park in partial satisfaction of the judgment. The turnover was due by May 31, 2023.

HNA International appealed the turnover decision to the Second Circuit on May 30, 2023, and moved for a stay pending appeal. Alternatively, it requested a brief temporary stay so it could seek a stay from the appeals court.

Legal Standard

Under Federal Rule of Civil Procedure 62(c), a district court may stay an order while an appeal is pending. The court considered four factors: whether the moving party would suffer irreparable harm without a stay; whether another party would suffer substantial harm if a stay were granted; whether the appeal had a substantial possibility of success; and the effect on the public interest. HNA International had the heavy burden of showing that these factors supported a stay.

Court’s Analysis

The court found that the risk of irreparable harm weighed against a stay. HNA International argued that 245 Park might dispose of assets owned by HNA North America before the appeal ended. But HNA International conceded during argument that, because the value of HNA North America could be measured, any resulting harm could be remedied with money damages if the turnover decision were reversed.

The court also found that a stay would substantially harm 245 Park. The judgment had remained entirely unpaid for much of a year, and the court said HNA International had obstructed 245 Park’s collection efforts. Delaying turnover during potentially lengthy appellate proceedings would further delay 245 Park’s efforts to enforce the judgment.

The court concluded that HNA International was unlikely to succeed on appeal. It explained that New York law supported ordering turnover of HNA International’s interest in a Delaware limited liability company directly to 245 Park. The court relied in part on a New York appellate decision that had applied New York law to approve turnover of a membership interest in a limited liability company formed outside New York. HNA International did not argue that the Second Circuit would reach a different result under current New York law; instead, it planned to ask the Second Circuit to send the legal question to New York’s highest court. The court found that HNA International had not shown why sending the question would be appropriate or why New York’s highest court would reject the existing appellate decision.

Finally, the court found that the public-interest factor also weighed against a stay. HNA International argued that reversal could require the parties and others to unwind transfers. The court found no public interest supporting that possibility’s avoidance, while identifying a strong public interest in 245 Park’s prompt enforcement of its judgment.

Disposition

The court denied HNA International’s motion for a stay pending appeal. It granted HNA International’s alternative request for a temporary stay and stayed HNA International’s obligation to transfer its 100% interest in HNA North America to 245 Park until June 9, 2023. The temporary stay was intended to allow HNA International to seek a stay from the Second Circuit and allow that court to decide the request. HNA International was directed to continue preparing for the turnover so it could occur promptly if the temporary stay ended.