April 22, 2019

Colorado Court of Appeals: Posting Bond is Necessary but Insufficient Condition to Stay Dissolution Proceedings

The Colorado Court of Appeals issued its opinion in In re Marriage of Finn on Thursday, December 30, 2016.

Post-Dissolution Marriage Proceeding—Request for Stay—Romero v. City of Fountain.

Husband and wife had entered into a marital agreement. Wife later filed for dissolution of the marriage, and the trial court subsequently issued a detailed order directing husband to make certain payments to wife within 20 days. Husband filed a motion for post-trial relief pursuant to C.R.C.P. 59 and 60, which was denied. Husband appealed and also filed a motion for stay with the trial court and requested approval of his supersedeas bond; both requests were denied.

Pursuant to C.A.R. 8, husband sought a stay of the trial court’s orders requiring him to pay wife certain sums of money and to return her artwork and other personal property. Husband presented a redacted copy of a cashier’s check in the amount necessary for a supersedeas bond and represented that his counsel would deposit the check if his motion were granted.

Stays pending appeal are controlled by C.A.R. 8(a). Romero v. City of Fountain adopted a four-part test for determining whether a stay should be issued under CAR 8: (1) whether the moving party has made a strong showing that it is likely to prevail on the merits, (2) whether the moving party will suffer irreparable harm if a stay is not granted, (3) whether other interested parties would be harmed by granting the stay, and (4) whether the public interest will be harmed by granting the stay. Romero involved a motion to stay an order denying an injunction. Husband argued that Romero does not apply here.

A stay is an exercise of judicial discretion and not a matter of right. The Colorado Court of Appeals first concluded that posting a supersedeas bond alone is insufficient to mandate a stay in a family law case. As to both the monetary and nonmonetary orders, the court then determined that a court considering a stay of that part of a judgment involving marital and separate property must consider the first three Romero factors; the fourth factor, harm to the public interest, is ordinarily not relevant in the context of a dissolution of marriage. The court found that (1) husband had not made even a cursory showing as to why his appeal was likely to succeed on the merits; (2) husband’s contention that he faces “clear” irreparable harm if a stay is not granted was unpersuasive; and (3) wife would be harmed by the issuance of a stay, because she would be denied benefits she negotiated in the marital agreement.

The motion for stay was denied.

Summary provided courtesy of The Colorado Lawyer.

Tenth Circuit: Refusal to Pay Arbitration Fees Justified District Court’s Removal of Stay

The Tenth Circuit Court of Appeals issued its opinion in Pre-Paid Legal Services, Inc. v. Cahill on Tuesday, May 26, 2015.

Todd Cahill was a former sales associate for Pre-Paid Legal Services, Inc., who agreed not to solicit or recruit other Pre-Paid sales associates during his employment or for two years after termination. Cahill left Pre-Paid to join another marketing company, and Pre-Paid contended he misused trade secret information and solicited other Pre-Paid employees for work at his new company. Pre-Paid brought suit in Oklahoma state court, and Cahill removed the action to the U.S. District Court for the Eastern District of Oklahoma, claiming diversity jurisdiction. Cahill then moved to stay the proceedings pending arbitration, which motion was granted. Pre-Paid initiated arbitration proceedings before the American Arbitration Association (AAA). Pre-Paid paid its share of arbitration fees but Cahill did not. Cahill received repeated warnings from the Director of ADR Services at the AAA that arbitration would be suspended and terminated if he failed to pay, but neither paid his fees nor requested other relief. Eventually, the Director terminated arbitration. Pre-Paid petitioned the district court to remove the stay, and the district court granted the motion.

Cahill appealed the lifting of the stay, arguing the Tenth Circuit had jurisdiction under 9 U.S.C. § 16(a)(1)(A). Pre-Paid moved to dismiss the appeal for lack of jurisdiction, and, if the Tenth Circuit found it had jurisdiction, urged the court to affirm the lifting of the stay.

The Tenth Circuit first analyzed its jurisdiction. Although it generally does not have jurisdiction to review non-final orders, the Federal Arbitration Act provides an exception for orders that refuse to stay proceedings pending arbitration. The Circuit found that the order lifting the stay was essentially an order “refusing a stay,” since the district court declined to continue enforcing the stay after arbitration proceedings were terminated. The Tenth Circuit declined to draw a distinction between a district court refusing to apply a stay and a court refusing to continue a stay once arbitration failed. The Circuit likewise found that Cahill’s request to continue the stay was initiated under § 3 of the FAA.

Turning to the merits of the appeal, the Tenth Circuit found the district court properly lifted the stay. The Circuit found that arbitration had “been had in accordance with the terms of the agreement” because the arbitration clause in Cahill’s employment agreement required the parties to pay their share of fees in accordance with AAA rules. Since Cahill failed to pay his fees and the Director terminated the arbitration proceedings, the Tenth Circuit found arbitration had “been had” pursuant to § 3. Similarly, the Tenth Circuit found support for the district court’s actions under § 3’s language regarding default. There was no dispute regarding Cahill’s failure to pay the arbitration fees. Cahill never asserted an inability to pay, nor did he ask for a modified payment schedule or request for Pre-Paid to pay his arbitration fees. Instead, he allowed arbitration to terminate by refusing to pay the fees. The Tenth Circuit found this failure to pay constituted “default” under § 3. Cahill contended the arbitrators were the correct party to determine default, but the Circuit disagreed, finding the district court’s decision to remove the stay appropriate in light of Cahill’s refusal to pay fees. Even assuming the default decision was left to the arbitrators, the Tenth Circuit found that the arbitrators determined Cahill was in default by refusing to pay the fees.

The Tenth Circuit found it had jurisdiction to hear the appeal and affirmed the district court’s lifting of the stay.

Tenth Circuit: Automatic Bankruptcy Stay Deprives Tenth Circuit of Appellate Jurisdiction

The Tenth Circuit Court of Appeals issued its opinion in Eastom v. City of Tulsa on Monday, April 20, 2015.

Dustin Eastom filed § 1983 claims for malicious prosecution against the City of Tulsa, a Tulsa police officer (Mr. Henderson), and an ATF agent (Mr. McFaddon). Mr. Eastom also filed a negligence claim against the city under Oklahoma’s Governmental Tort Claims Act. After Mr. Eastom filed suit, Mr. McFaddon filed for bankruptcy, and Mr. Eastom’s claim against him was automatically stayed by 11 U.S.C. § 362. The district court entered summary judgment for the City and Mr. Henderson, dismissing Mr. Eastom’s claims with prejudice. It declined to exercise jurisdiction over Mr. Eastom’s state law claims against the City and also dismissed them with prejudice.

Mr. Eastom appealed the summary judgment order, and the Tenth Circuit issued an order to show cause why the appeal should not be dismissed because there was no final judgment as to all parties. Mr. Eastom voluntarily dismissed his district court claim against Mr. McFaddon without prejudice and responded to the show cause order that his appeal was now final because he was time-barred from refiling the claim. However, under Oklahoma’s savings statute, Mr. Eastom had an additional year to re-file his voluntarily withdrawn claims against Mr. McFaddon despite the time bar.

Mr. Eastom waited a year and again appealed to the Tenth Circuit. However, the § 362 stay was still in place, and the Tenth Circuit again ordered Mr. Eastom to show cause why his appeal should not be dismissed for lack of jurisdiction. Mr. Eastom contended the district court’s summary judgment was final because the time for refiling under the savings statute had elapsed.

The Tenth Circuit examined the interplay between the applicable statute of limitations, the savings statute, and the bankruptcy stay, and found that Mr. Eastom’s claims were still not final because the bankruptcy stay was still in place, tolling the statute of limitations. Because the automatic stay prevented Mr. Eastom from exercising legal remedies against the debtor, Oklahoma law prevents the running of the savings statute while the stay is in place.

The Tenth Circuit dismissed the appeal for lack of jurisdiction.

Colorado Supreme Court: County Court Must Stay Execution of Judgment While Appeal Pending in District Court

The Colorado Supreme Court issued its opinion in In re People v. Steen on Monday, February 3, 2014.

Stay of Execution in County Court—CRS § 16-2-114(6)—Crim.P. 37(f).

In this original CAR 21 proceeding, the Supreme Court held that CRS § 16-2-114(6) and Crim.P. 37(f) require a county court, on request, to grant a stay of execution of a defendant’s sentence pending appeal of a misdemeanor conviction to the district court. Accordingly, the Court made the rule absolute and remanded the case to the district court with instructions that, pursuant to CRS § 16-2-114(6) and Crim.P. 37(f), a stay of execution shall remain in effect until after final disposition of a defendant’s appeal, unless modified by the district court.

Summary and full case available here.

Tenth Circuit: 11 U.S.C. § 362(a)(1) Does Not Stay Appeal from Tax Court

The Tenth Circuit published its opinion in Schoppe v. Commissioner of Internal Revenue on Thursday, March 28, 2013.

John H. Schoppe petitioned for review of a Tax Court decision finding him liable for tax deficiencies. While the case was proceeding, Mr. Schoppe filed a bankruptcy petition. That filing prompted the Tenth Circuit to request supplemental briefing from the parties on whether the automatic bankruptcy stay in 11 U.S.C. § 362(a)(1) would apply to this appeal.

The Tenth Circuit held that § 362(a)(1) did not stay the appeal. It was an open question in the Tenth Circuit whether a proceeding is initiated by the debtor when he files a petition in Tax Court or whether the Tax Court proceeding is a continuation of the proceeding initiated against the debtor when the Commissioner begins the administrative process of determining that there is a tax deficiency. The Tenth Circuit agreed with the four circuits that have applied a bright-line rule that a petition filed in Tax Court is an independent judicial proceeding initiated by the debtor, not the continuation of an administrative proceeding. Because the underlying case originated with Mr. Schoppe commencing a judicial proceeding in Tax Court, The Tenth Circuit concluded the automatic stay did not apply.

On the merits, Mr. Schoppe did not file timely federal tax returns for the years 2002 through 2007. The IRS sent Mr. Schoppe a notice of deficiency, determining his income tax deficiencies, as well as additional amounts for failing to file returns, failing to pay tax when due, and failing to pay estimated tax. The Tax Court sustained the IRS’s determination of the deficiencies, concluding that Mr. Schoppe failed to adequately substantiate deductions he claimed for business expenses. Mr. Schoppe appealed.

Finding no clear error, the Tenth Circuit agreed with Tax Court’s determination that Mr. Schoppe failed to substantiate his claimed business expenses.

Tax Court’s decision AFFIRMED.