Asarco LLC v. Americas Mining Corp.

• Citation: 419 B.R. 737
• Decision Date: 02 June 2009
• Docket Number: Civil No. 1:07-CV-00018.
• Parties: ASARCO LLC, Southern Peru Holdings, LLC, Plaintiffs, v. AMERICAS MINING CORPORATION, Defendant.
• Court: U.S. District Court — Southern District of Texas

419 B.R. 737

ASARCO LLC, Southern Peru Holdings, LLC, Plaintiffs, v. AMERICAS MINING CORPORATION, Defendant.

Civil No. 1:07-CV-00018.

United States District Court, S.D. Texas, Brownsville Division.

June 2, 2009.

George Irvin Terrell, Michael C. Massengale, Rebeca Aizpuru Huddle, Samuel Wollin. Cooper, Baker Botts, L.L.P., Garland Doty Murphy, IV, Smyser, Kaplan & Veselka, L.L.P., Houston, TX, James R. Prince, Eric A. Soderlund, Fernando Rodriguez, Jr., Jack L. Kinzie, Thomas Edward O'Brien, Baker Botts, L.L.P., Dallas, TX, Kevin M. Sadler, Baker Botts, L.L.P., Austin, TX, Shelby A. Jordan, Jordan Hyden, et al., Corpus Christi, TX, Michael J, Urbis, Jordan Hyden, et al., Brownsville, TX, for Plaintiffs, Asarco LLC and Southern Peru Holdings, LLC.

Charles A. Beckham, Jr., Brian F. Antweil, Elizabeth Brooks Hamilton, Kirk L. Worley, Mark Ryan Trachtenberg, Haynes & Boone, LLP, Houston, TX, David R. Gelfand, Luc A. Despins, Stacey J. Rappaport, Alan J. Stone, Melanie Westover, Milbank, Tweed, Hadley & McCloy, LLP, New York, NY, David S. Cohen, Milbank Tweed, et al., Washington, DC, for Defendant Americas Mining Corporation.

J.A. Tony Canales, Canales & Simonson, PC, Corpus Christi, TX, for Movant Daniel Tellechea.

Evelyn H. Biery, Zack A. Clement, Mark Allan Worden, Sharon Marie Beausoleil-Mayer, Fulbright Jaworski LLP, Houston, TX, Louis Raymond Strubeck, Jr., John N. Schwartz, Fulbright & Jaworski, Dallas, TX, for Intervenor Official Committee "of Unsecured Creditors of Asarco LLC.

Jacob Lee Newton, Robert T. Brousseau, Sander L. Esserman, Steven A. Felsenthal, Jo E. Hartwick, Stutzman Bromberg, et al., Dallas, TX, for Intervenor Official Committee of Unsecured Creditors of the Subsidiary Debtors.

Debra L. Innocenti, John H. Tate, II, Raymond W. Battaglia, Oppenheimer, Blend, Harrison & Tate, San Antonio, TX, for Future Claims Representative Robert C. Pate.

MEMORANDUM OPINION AND ORDER

ANDREW S. HANEN, District Judge.

On April 15, 2009, this Court entered its final judgment in the above-styled case, awarding ASARCO LLC ("ASARCO") the return of 260,093,694 shares of Common Stock ("SCC shares") of Southern Copper Corporation ("SCC") and $1,382,307,216.75 in money damages and prejudgment interest. (Doc. No. 508). On April 29, 2009, Americas Mining Corporation ("AMC") filed a Motion for Stay of Execution of Judgment Pending Appeal, asking this Court to stay the execution of both the nonmonetary and monetary portions of its final judgment through the conclusion of AMC's appeal to the Fifth Circuit. (Doc. No. 515). ASARCO filed its Response on May 18, 2009, urging the Court to refuse a stay of the nonmonetary portion altogether and to grant a stay of the monetary portion only upon provision by AMC of a full supersedeas bond. (Doc. No. 520). AMC filed a Reply on May 22, 2009 (Doc. No. 523), and a Supplemental brief on May 29, 2009. (Doc. No. 528). This Court held a hearing on May 27, 2009, to consider oral argument and testimony concerning, inter alia, AMC's Motion to Stay and now issues the following ruling.

Having considered AMC's Motion for Stay of Execution of Judgment Pending Appeal, ASARCO's Response, AMC's Reply and Supplemental brief, the argument and testimony of the hearing held May 27, 2009, as well as all relevant facts and law, AMC's Motion for Stay (Doc. No. 515) is hereby PARTIALLY GRANTED AND PARTIALLY DENIED.

Discussion

AMC requests stay of execution of this Court's judgment pursuant to Rule 62 of the Federal Rules of Civil Procedure. (Doc. 515 at 1). Rule 62 outlines various conditions for staying proceedings to enforce a judgment. AMC's request for a stay implicates sections (c) and (d) of Rule 62.¹ Rule 62(c) applies by its terms to orders involving injunctive relief. See FED.R.CIV.P. 62(C) ("Injunction Pending an Appeal. . . ."). Courts generally hold that Rule 62(d) applies only to monetary judgments. See Halliburton Energy Servs., Inc. v. NL Indus., Nos. H-05-4160, H-06-3504, 2008 WL 2787247, at *4 (S.D.Tex. July 16, 2008); United States v. Goltz, No. SA-06-CA-503-XR 2007 WL 295558, at *1 (W.D.Tex. Jan. 25, 2007) ("The applicability of Rule 62(d) turns on whether the judgment involved is monetary or nonmonetary. . . ."). Thus, Rule 62(d) applies only to the monetary portion of the Court's judgment, i.e., the $1,382,307,216.75 in money damages and prejudgment interest.

The portion of the judgment awarding the SCC shares is not a monetary judgment nor does it have all the indicia of injunctive relief. See, e.g., Donovan v. Fall River Foundry Co., 696 F.2d 524 (7th Cir.1982). In circumstances such as these, courts explain that Rule 62(c) should be "applied to an order to do, rather than an order to pay, whether or not the order to do is a conventional injunction." (Id. at 526). Return of shares of stock better approximates an order to do, rather than an order to pay, since the shares do not represent a discrete monetary value, but rather fluctuate in price on a daily basis. Further, the judgment in this respect orders the return of the shares themselves, not their equivalent value. Accordingly, for the purposes of this Order, the Court shall characterize the portion of the judgment awarding the SCC shares as an "order to do," and so apply Rule 62(c).

I. The Nonmonetary Portion of the Judgment (the SCC Shares)

Rule 62(c) provides in relevant part:

(c) Injunction Pending an Appeal

While an appeal is pending from an interlocutory order or final judgment that grants, dissolves, or denies an injunction, the court may suspend, modify, restore, or grant an injunction on terms for bond or other terms that secure the opposing party's rights.

. . .

FED.R.CIV.P. 62(c). A request for a stay pursuant to Rule 62(c) is evaluated in light of four factors: (1) whether AMC's appeal is likely to succeed on the merits; (2) whether AMC would suffer irreparable injury if the stay were denied; (3) whether granting the stay would substantially harm the other parties; and (4) whether granting the stay would serve the public interest. United States v. State of Louisiana, 815 F.Supp. 947, 949 (E.D.La.1993); see Arnold v. Garlock, Inc., 278 F.3d 426, 439-42 (5th Cir.2001); Ruiz v. Estelle, 650 F.2d 555, 565 (5th Cir.1981). If the balance of the equities (i.e., factors 2-4) "heavily" favors AMC, then it need only present (1) a substantial case on the merits (2) when a serious legal question is involved. United States v. Baylor Univ. Med. Ctr., 711 F.2d 38, 39 (5th Cir.1983).

The Court finds that the balance of equities in this particular situation heavily favors AMC. First, testimony at the hearing indicated that were this Court to deny AMC's motion and require it to immediately transfer the SCC shares to ASARCO, AMC could suffer significant adverse tax consequences, causing AMC irreparable harm. Second, granting a stay under the conditions imposed by this Order would not substantially harm any of the other parties to this suit, since the Court hereby orders that AMC deposit the SCC shares at issue in an escrow account with a neutral third party, or the Registry of the Court, during the pendency of AMC's appeal. (See infra).

ASARCO contends that a stay, by preventing ASARCO from taking possession of the stock, would deprive ASARCO of the shares' voting rights, which ASARCO maintains constitutes irreparable harm. (See Doc. No. 520 at 6). This argument fails for three reasons. First, the cases ASARCO cites for this proposition are from the Second Circuit and so do not control. Second, assuming that denial of voting rights does constitute an irreparable harm, denying the stay, and so allowing ASARCO to deprive AMC of possession of the shares during the appeal, would cause the very same "irreparable harm" to AMC precisely to the extent that AMC would be denied voting rights. Thus, if we accept ASARCO's argument, ASARCO will lose whatever it gains on the third factor (harm to ASARCO) to consideration of the second factor (harm to AMC). Third, this Order provides a method for either party to obtain court approval to vote the shares upon presentation, and subsequent granting, of the appropriate motion.

The fourth factor, whether a stay would serve the public interest, also favors AMC. First, case law in this circuit indicates that this factor can be met simply by a showing that granting a stay would not disserve or interfere with the public interest. See Southerland v. Thigpen, 784 F.2d 713, 715 n. 1 (5th Cir.1986); Brown v. Braddick, 595 F.2d 961, 965 (5th Cir.1979). The Court can perceive no harm to the public interest consequent to granting a stay of the stock transfer under the terms described herein. Second, the Court finds that granting a stay in this case would in fact serve the public interest. Although argument at the hearing indicated that the various groups of creditors are split on their support of AMC's Motion for Stay, hundreds, if not thousands, of asbestos plaintiffs and those suffering from environmental damage stand to gain from this stay, while any other creditors may also gain from competition among three separate plans for confirmation in the bankruptcy proceeding. Thus, the Court finds that the balance of the equities heavily favors AMC.

If the balance of the equities heavily favors AMC, then it need only present (1) a substantial case on the merits (2) when a serious legal question is involved. A serious legal question is one "of substantial import to others." Nat'l Treasury Employees Union v. Von Raab, 808 F.2d 1057, 1059 (5th Cir.1987). The Court finds that to the extent that all three of the causes of action on which ASARCO prevailed turn on matters of law heretofore undecided by the Fifth Circuit—matters that implicate a wide range of important corporate-governance, fiduciary, and bankruptcy issues— this case on the merits involves serious legal questions, i.e. questions of substantial import to others, the resolution of which could have "far-reaching effects." See Wildmon v....