Sisra v Billimon [2007] FMCSC 39; 15 FSM Intrm. 266 (Chk. S. Ct. Tr. 2007) (12 September 2007)

CHUUK STATE SUPREME COURT TRIAL DIVISION
CSSC CA. No. 237-2005

PETER SISRA AND HONORIA SISRA,
Plaintiffs,

vs.

OSHIRO BILLIMON,
Defendant.
___________________________________

ORDER DENYING MOTION TO FREEZE FUNDS AND SETTING TERMS OF SUPERSEDEAS BOND

Keske S. Marar
Associate Justice

Decided: September 12, 2007

APPEARANCES:

For the Plaintiffs: Fredrick A. Hartman
P.O. Box 453
Weno, Chuuk FM 96942

For the Defendant: Johnny Meippen, Esq.
P.O. Box 705
Weno, Chuuk FM 96942

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HEADNOTES

Appellate Review  Stay  Civil Cases

The purpose of a supersedeas bond is to protect the prevailing party's interest in a trial court judgment pending the appeal. As such, a supersedeas bond provides a fund out of which a judgment can be paid if it is affirmed on appeal. It provides absolute security to the party who is affected by the appeal. The bond also protects the judgment debtor from levy while the appeal takes its course. In the usual case, a full supersedeas bond is required in order to stay execution of a judgment. The bond's amount is calculated to include the judgment's whole amount, costs on appeal, interest, and damages for delay. Sisra v. Billimon, [2007] FMCSC 39; 15 FSM Intrm. 266, 268 (Chk. S. Ct. Tr. 2007).

Appellate Review  Stay  Civil Cases

Unlike U.S. courts, which require the posting of a full supersedeas bond, the Chuuk State Supreme Court may use its discretion as to whether a cash bond must be posted in the full amount of the trial court judgment. Sisra v. Billimon, [2007] FMCSC 39; 15 FSM Intrm. 266, 268 (Chk. S. Ct. Tr. 2007).

Appellate Review  Stay  Civil Cases

A $7,000 supersedeas bond, which approximates the amount of economic damages the plaintiffs alleged in their complaint plus, at least in part, security against the plaintiffs' costs, interests and delay damages on the appeal but which is far less than the amount of the judgment they obtained, is sufficient when the plaintiffs have consented to the amount. While there is no direct authority that the parties may consent to a lower bond amount than that reflected in the trial court judgment, the principles applied in the settlement context are instructive. Typically parties are free to waive objections to the amount of a claim and settle at whatever amount they may agree upon. Sisra v. Billimon, [2007] FMCSC 39; 15 FSM Intrm. 266, 268-69 (Chk. S. Ct. Tr. 2007).

Appellate Review  Stay  Civil Cases

A motion to freeze funds will be denied when it would violate the stay against judgment pending the defendant's appeal and would merely duplicate the security given to the plaintiffs by the defendant's posting of a cash bond. Sisra v. Billimon, [2007] FMCSC 39; 15 FSM Intrm. 266, 269 (Chk. S. Ct. Tr. 2007).

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COURT'S OPINION

KESKE S. MARAR, Associate Justice:

On June 11, 2007 Peter Sisra and Honoria Sisra ("Plaintiffs") filed their Motion to Freeze Funds of Defendant Currently Held with Deal Fair Enterprises. After oral argument, the court took the motion under advisement. On June 13, 2007, Oshiro Billimon ("Defendant") timely filed a Motion for a Stay of Order/Judgment Pending Appeal and, after hearing oral argument, on August 21, 2007, the court entered an order granting the motion.

By this order, the court denies Plaintiffs' motion to freeze funds and sets forth terms regarding the supersedeas bond posted by Defendant in the amount of 7,000.00 cash which the court approved as a condition of Defendant's appeal by its August 21, 2007 order.

Procedural Background

On November 15, 2005, Plaintiffs filed their complaint against Defendant seeking damages related to their purchase from him of a fiberglass boat and an outboard motor. According to Plaintiff's complaint, Plaintiff paid $7,105.00 to Defendant for the boat and motor, which turned out to be defective. On July 4, 2006, after Defendant failed to answer Plaintiffs' complaint, Plaintiffs filed their application for entry of default and, on the same day, the court's clerk entered a default against the Defendant. On February 14, 2007, the court held a hearing on Plaintiffs' motion for summary judgment. Defendant and his counsel failed to appear. On June 6, 2007, the court entered summary judgment in favor of Plaintiffs, awarding them a judgment in the principal sum of $22,605.00 plus interest. In the June 6, 2007 Order Granting Summary Judgment, the court further ordered that any payments made by Deal Fair Enterprises to the Defendant be garnished to the satisfaction of the judgment.

On June 8, 2007, the F.S.M. Supreme Court heard oral argument on Defendant's motion for a temporary restraining order against enforcement of the June 6, 2007 Order Granting Summary Judgment. On June 11, 2007, the F.S.M. Supreme Court issued an order denying Defendant's motion for a temporary restraining order. [Billimon v. Marar, [2007] FMSC 21; 15 FSM Intrm. 87 (Chk. 2007).] Also on June 11, 2007, Plaintiffs filed their Motion to Freeze Funds of Defendant Currently Held with Deal Fair Enterprises. On June 13, 2007, Defendant filed his Motion for Stay of Order and Judgment Pending Appeal requesting that the court grant a stay pending appeal and set the amount of a supersedeas bond pursuant to Chuuk Civ. R. 62(d). In the motion, Defendant represented his willingness to post as supersedeas bond, "any amount up to the amount as awarded to the plaintiff in the judgment and order of garnishment of June 5, 2005." At the hearing on the motion, Defendant offered to post a cash bond in the amount of $7,000.00. Plaintiff consented to the bond amount. On August 21, 2007, the court entered an order granting Defendant's Motion for a Stay of Order and Judgment Pending Appeal

Analysis

The purpose of a supersedeas bond is to protect the prevailing party's interest in a trial court judgment pending the appeal. Panuelo v. Amayo, [2002] FMSC 45; 10 FSM Intrm. 558, 563 (App. 2002). As such, a supersedeas bond provides a fund out of which a judgment can be paid if it is affirmed on appeal. It provides absolute security to the party who is affected by the appeal. The bond also protects the judgment debtor from levy while the appeal takes its course. Amayo v. MJ Co., [2001] FMSC 36; 10 FSM Intrm. 427, 428-29 (Pon. 2001).

In the usual case, a full supersedeas bond is required in order to stay execution of a judgment. Panuelo, 10 FSM Intrm. at 563; Amayo, 10 FSM Intrm. at 429. The bond's amount is calculated to include the judgment's whole amount, costs on appeal, interest, and damages for delay. Amayo, 10 FSM Intrm. at 429.

Unlike U.S. courts, however, which require the posting of a full supersedeas bond, this court may use its discretion as to whether a cash bond must be posted in the full amount of the trial court judgment. See Panuelo, 10 FSM Intrm. at 563 (While reference to U.S. law is helpful in enunciating general principals regarding posting of supersedeas bonds, the reality of the financial markets in the FSM requires that the established U.S. requirement of posting of a full supersedeas bond, in cash or by a cash-backed surety, receive additional scrutiny.).

In this case, the amount of the court's judgment was for $22,605.00. As set forth above, in the usual case, the amount of the bond posted should reflect the amount of the trial court judgment plus costs, interests and damages for delay. Here, the court approved a cash bond in the amount of $7,000.00, which approximates the amount of economic damages Plaintiffs alleged in their complaint[1] but is far less than the amount of the judgment they obtained.

Any concern the court may have had over the sufficiency of the bond was alleviated by Plaintiffs' consent to the amount. While the court finds no direct authority that the parties may consent to a lower bond amount than that reflected in the trial court judgment, the court finds the principles applied in the settlement context to be instructive. Typically parties are free to waive objections to the amount of a claim and settle at whatever amount they may agree upon. See e.g., Stephen v. Chuuk, 11 FSM Intrm. 36, 43-44 (Chk. S. Ct. Tr. 2002) (even if there was no authority to bind a party to a compromise, he may nevertheless be bound on the basis of ratification or estoppel if he retains benefits derived from the compromise); Truk v. Robi, [1988] FMCSC 1; 3 FSM Intrm. 556, 564 (Truk S. Ct. App. 1988) (regardless of what the actual merits of the antecedent claim may have been, they will not afterward be inquired into and examined when the parties reach a valid compromise and settlement).

Here, in his motion for stay Defendant specifically offered to post a bond in the full amount of the trial court judgment. Yet, at the hearing on Defendant's motion, the parties each agreed that Defendant post the lesser amount of $7,000.00. The court is satisfied that the posting of $7,000.00 is adequate security based on its rough equivalence to Plaintiffs' economic loss and based on Plaintiffs' consent to the amount. Granting Plaintiffs' motion to freeze would violate the stay against judgment pending Defendant's appeal and would merely duplicate the security given to Plaintiffs by Defendant's posting of a cash bond.

Conclusion

Therefore the court denies the Plaintiffs' Motion to Freeze Funds of Defendant Currently Held with Deal Fair Enterprises for the reason that any execution of judgment in accordance with this court's June 5, 2007 order granting summary judgment, including the order for garnishment, is stayed pending Defendant's appeal.

Now therefore it is hereby further ordered that the bond posted in accordance with the court's August 21, 2007 order granting stay pending appeal shall be deposited in an interest bearing account at any of the banking institutions in the State of Chuuk until this case is disposed of on the merits.

In the event that the action resolves in favor of Defendant, the cash security posted pursuant to this and the court's August 21, 2007 order, plus accrued interest thereon, shall be paid to Defendant. In the event that the action resolves in favor of Plaintiffs, the cash security, plus accrued interest, shall be paid to Plaintiffs jointly and severally, to the extent it satisfies any judgment against Defendant in this action.

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^[1]The court notes that Plaintiffs also alleged in their complaint that Defendant repaid them $1,000.00 of the amount ($7,105.00) they allegedly paid to Defendant, thus making the actual economic loss $6,105.00. The amount of $895.00 then, which reflects the amount exceeding Plaintiffs’ alleged economic loss, provides, at least in part, security against Plaintiffs’ costs, interests and delay damages on the appeal.