United States District Court, E.D. Tennessee, Chattanooga
K. LEE, UNITED STATES MAGISTRATE JUDGE
the Court, is a Rule 62(f) motion for stay of execution
pending appeal [Doc. 2] and supporting memorandum [Doc. 3]
filed by Cherokee Pharmacy and Medical Supply, Inc. d/b/a
Cherokee Pharmacy, Cherokee Health Care Supply, Inc., and
Terry Forshee, Individually (collectively
“Defendants”). J M Smith Corporation d/b/a Smith Drug
Company (“Plaintiff”) filed a response [Doc. 5].
Defendants replied [Doc. 11]. The matter is now ripe and the
Court finds that a hearing on the instant motion is not
required; rather this issue may be decided on the
briefs. Defendants' motion was referred to the
Court pursuant to 28 U.S.C. § 636(b) [Doc. 6].
matter originated in the United States District Court for the
District of South Carolina (“the Trial Court”).
Following a jury trial, Plaintiff received a money judgment
against Defendants totaling $739, 647.28 [Doc. 3 at Page ID #
55; Doc. 5 at Page ID # 61]. The amount includes the jury
verdict award [Doc. 1 at Page ID # 7-8], as well as
pre-judgment interest, attorney's fees, and costs [Doc. 1
at Page ID # 48; Doc. 5 at Page ID # 61]. Defendants appealed
to the United States Fourth Circuit Court of Appeals [Doc. 5
at Page ID # 61]. The appeal is pending [id.].
filed with the Trial Court a motion to stay execution pending
appeal, seeking to pledge 55 acres of real property as a
security instead of filing a supersedeas bond. Id.
The Trial Court did not allow Defendants “to use the 55
acres as alternative security, ” citing two grounds.
[Doc. 5-1 at Page ID # 75]. The Trial Court found, first,
“Defendants have not shown that the bond would be an
undue financial burden” and second, “the 55
acres' value is far too speculative to secure
[Plaintiff]'s interest in the monetary judgment.”
Id. The Trial Court denied Defendants' motion
but gave Defendants the opportunity to stay execution by
“post[ing] a full supersedeas bond in the amount of
$924, 559.10” by February 21, 2017 [id. at
Page ID # 76]. If Defendants did not post bond, according to
the Trial Court's order, then the Trial Court would grant
Plaintiff's motion for leave to register a judgment
pursuant to 28 U.S.C. § 1963 [id.].
alleges that soon thereafter, it learned one of the
Defendants intended to sell certain assets and transfer
ownership of certain corporate entities. [Doc. 5 at Page ID #
62]. The Trial Court conducted a telephonic hearing with the
parties on February 14, 2017 [Doc. 5 at Page ID # 62]. In
that hearing, Defendants conveyed that they had not and did
not intend to post bond [id.]. Accordingly, the
Trial Court entered an order February 15, 2017 granting
Plaintiff permission, for good cause shown, “to
register the judgment in Tennessee even though this matter is
currently on appeal with the Fourth Circuit.” [Doc. 1
at Page ID # 6]. Plaintiff registered a foreign court
judgment against Defendants in Tennessee on February 17, 2017
[Doc. 1]. Defendants filed the instant motion to stay
execution pending appeal on March 20, 2017 [Doc. 2].
rely on Federal Rule of Civil Procedure 62(f) in support of
their motion seeking a stay of execution pending appeal
[Docs. 2, 3]. Rule 62(f) provides that: “If a judgment
is a lien on the judgment debtor's property under the law
of the state where the court is located, the judgment debtor
is entitled to the same stay of execution the state court
would give.” Defendants assert that “[t]he real
property owned by Terry Forshee is located in the State of
Tennessee to which a lien has attached.” [Doc. 2 at
Page ID # 52]. Citing Tenn. Code Ann. § 25-5-101,
Defendants assert that in Tennessee a registered judgment
acts as a lien on real property [Doc. 3 at Page ID # 56].
Defendants conclude, then, that Rule 62(f) applies, Tennessee
law controls the issue of whether to grant a stay of
execution pending appeal, and that Tenn. Code Ann. §
26-6-106 provides that enforcement of a foreign judgment must
be stayed while an appeal of the foreign judgment is pending
order entered February 2, 2017, the Trial Court noted that
Defendants' citation to Rule 62(f) was
“inapplicable as it applies when the judgment
automatically constitutes a lien on the judgment debtor's
property.” [Doc. 5-1 at Page ID # 75, n.2]. The Court
now finds the rule is similarly inapplicable in the current
motion. Tennessee law provides that “[a] judgment lien
against the judgment debtor's realty is created by
registering a certified copy of the judgment in the
register's office of the county where the realty is
located.” Tenn. R. Civ. P. 69.07(2) (emphasis
added). Tenn. Code Ann. § 25-5-101(b) likewise provides
that “. . . judgments and decrees obtained from and
after July 1, 1967, in any court of record . . . shall be
liens upon the debtor's land from the time a
certified copy of the judgment or decree shall be registered
in the lien book in the register's office of the county
where the land is located.” (Emphasis added.) The
court in Cadence Bank, N.A. v. Latting Rd. Partners,
LLC, No. 09-2540, 2010 WL 4261230, at *2 (W.D. Tenn.
June 22, 2010), agreed with other holdings from the Sixth
Circuit that had found “Rule 62(f) does not create a
basis for a stay where an intermediary step - such as
recordation - is required by state law in order to create a
lien against a judgment debtor's property.” (citing
Kennedy v. City of Zanesville, No. 2:03-cv-1047,
2008 WL 3993894, at *1 (S.D. Ohio Aug. 20, 2008); Lansing
Mercy Ambulance Serv. v. Tri-Cty. Emergency Med. Control
Auth., Inc., No. 5:93:CV:25, 1996 WL 34363072, at *1-2
(W.D. Mich. May 20, 1996)). The Lansing Court found
that determining whether the state at issue is one in which
the judgment is a lien on the property of the judgment debtor
is a “prerequisite” to determining the
applicability of Rule 62(f). Lansing, 1996 WL
34363072, at *1. Tennessee law requires an intermediary step
to create a lien against a judgment debtor's property.
See Tenn. R. Civ. P. 69.07(2); Tenn. Code Ann.
§ 25-5-101(b). Rule 62(f), therefore, does not govern.
Trial Court allowed Plaintiff to register the judgment in
Tennessee pursuant to 28 U.S.C. § 1963. [Doc. 1 at Page
ID # 5-6]; see Chicago Downs Ass'n, Inc. v.
Chase, 944 F.2d 366, 372 (7th Cir. 1991) (holding that
“[a] court with jurisdiction to authorize execution if
the appellant does not post a bond - power a district court
possesses during an appeal - also may make the findings that
under § 1963 authorize execution in another
district.”) Under this statute, a judgment may be
“registered in any district in which the debtor's
property is located, ” and once registered, the
judgment will be “treated as if it were a judgment of
the court of registration - as stated earlier, it is no
longer a ‘foreign' judgment. Following
registration, a judgment creditor may secure a writ of
execution from the registering court and deliver it to the
local Marshal for execution.” United States v.
Palmer, 609 F.Supp. 544, 547-48 (E.D. Tenn. 1985).
Accordingly, then, “judgments registered pursuant to 28
U.S.C. § 1963 must be enforced in accordance with the
laws of the registering state.” Condaire, Inc. v.
Allied Piping, Inc., 286 F.3d 353, 357 (6th Cir. 2002);
see also Palmer, 609 F.Supp. at 548 (finding, in
part, “under § 1963, the law of the state in which
the court of registration sits controls the
their reply brief, Defendants cite Condaire to
support their position that Tennessee law applies, and
therefore, the judgment must be stayed pursuant to Tenn. Code
Ann. § 26-6-106 [Doc. 11]. Defendants argue that Tenn.
Code Ann. § 26-6-106 “directs this Court to enter
a stay of execution of the subject judgment when an appeal is
pending of a foreign federal district court judgment.”
[Doc. 11]. Plaintiff objects to Defendants'
interpretation of Tenn. Code Ann. § 26-6-106(a), which
If the judgment debtor shows the court of this state that an
appeal from the foreign judgment is pending or will be taken,
or that a stay of execution has been granted, the court shall
stay enforcement of the foreign judgment until the appeal is
concluded, the time for appeal expires, or the stay of
execution expires or is vacated.
asserts that the above statute indicates the stay of
execution of the foreign judgment may be lifted when
“the stay of execution expires or is vacated, ”
meaning “the simple fact that the appeal is pending
does not require the automatic stay of the case pending the
entirety of the appeal before the Fourth Circuit” [Doc.
5 at Page ID # 68-69].
position is supported by Tenn. R. Civ. P. 62.04:
“Except as otherwise provided in Rule 62.01,
when an appeal is taken the appellant by giving a bond may
obtain a stay. The bond may be given at or after the time of
filing the notice of appeal. The stay is effective when the
bond is approved by the court.” Tenn. R. Civ. P. 62.04
(footnote added). Previously, Tennessee state courts have
held that “the filing of a notice of appeal, without
more, does not stay execution of the judgment.”
Christmas v. Moore, No. 03A01-9705-CV-00188, 1998 WL
372431, at *3 (Tenn. Ct. App. July 6, 1998) (citing
Underwood v. Liberty Mutual Ins. Co., 782 ...