Bass v. First Pacific Networks, No. 97-15127

• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)
• Writing for the Court: THOMAS
• Citation: 219 F.3d 1052
• Parties: (9th Cir. 2000) PAULA C. BASS, Executor of the Estate of Arthur C. Bass, Plaintiff-Appellant, v. FIRST PACIFIC NETWORKS, INC., Defendant-Appellee, and T. PAUL FIRE & MARINE INSURANCE COMPANY, Appellee. Office of the Circuit Executive
• Decision Date: 14 April 2000
• Docket Number: No. 97-15127

Page 1052

219 F.3d 1052 (9th Cir. 2000) PAULA C. BASS, Executor of the Estate of Arthur C. Bass, Plaintiff-Appellant,
v.
FIRST PACIFIC NETWORKS, INC., Defendant-Appellee,
and
T. PAUL FIRE & MARINE INSURANCE COMPANY, Appellee. No. 97-15127 Office of the Circuit Executive U.S. Court of Appeals for the Ninth Circuit Argued and Submitted April 14, 2000--San Francisco, California
Filed July 14, 2000

Page 1053

Nicole A. Dillingham, Thelen, Reid & Priest, San Francisco, California, for the plaintiff-appellant.

Lawrence G. Lossing, Lossing & Elston, San Francisco, California, for the defendant-appellee.

Appeal from the United States District Court for the Northern District of California, James Ware, District Judge, Presiding; D.C. No. CV-92-20746-JW

Before: Robert Boochever, Melvin Brunetti and Sidney R. Thomas, Circuit Judges.

THOMAS, Circuit Judge:

We are presented with the question whether, in an action in which the district court's jurisdiction is supplemental, federal or state law governs the recoverability of attorney's fees incurred in filing a motion under Federal Rule of Civil Procedure 65.1 to enforce a supersedeas bond posted under Federal Rule of Civil Procedure 62(d). We have jurisdiction pursuant o 28 U.S.C. S 1291, and we agree with the district court's conclusion that federal law controls and that attorney's fees are not recoverable.

I

Arthur Bass, now deceased, originally filed an action in state court against First Pacific Networks, Inc. ("FPN"), alleging in state claims and a federal RICO cause of action that he was entitled to 425,307 shares of FPN stock. FPN removed the action to federal court based on federal question jurisdiction. See 28 U.S.C. SS 1331 and 1441(c). The district court dismissed the federal RICO cause of action, but retained supplemental jurisdiction over the remaining state law claims. 28 U.S.C. S 1367(a), (c).

The district court entered an interlocutory judgment which determined that FPN stock had been validly issued to Bass. As a

Page 1054

condition of granting stay pending appeal, the district court ordered FPN to post a supersedeas bond in the amount of the value of the stock at the time of the stay order. On December 25, 1993, pursuant to Fed. R. Civ. P. 62(d), FPN posted a bond issued by St. Paul Fire & Marine Insurance Co. ("St. Paul"). The parties subsequently reached a settlement under which the subject stock was sold and the proceeds paid to the estate of Arthur Bass ("Estate") and creditors.

Paula Bass and George Singer, co-executors of the Estate, then filed a motion pursuant to Fed. R. Civ. P. 65.1 to enforce the supersedeas bond against St. Paul for $686,013.75 plus interest, an amount reflecting the difference between the market value of the stock on the date of the district court stay order and the proceeds of the sale of the stock pursuant to the parties' settlement agreement. The district court granted the Rule 65.1 motion in favor of the Estate. This court subsequently affirmed on appeal the district court decision.

The Estate then sought recovery of attorney's fees incurred in enforcing the bond contract pursuant to California Civil Procedure Code S 996.480. The district court denied the Estate's request for attorney's fees on December 19, 1996. Finding a conflict between the state and federal rules, the court applied the analysis set forth in Hanna v. Plumer, 380 U.S. 460, 465 (1965). The court determined that federal law governs the awardability of attorney's fees in a Rule 65.1 action seeking to enforce a supersedeas bond executed pursuant to Rule 62(d). The court also held that Matek v. Murat, 862 F.2d 720 (9th Cir. 1988), abrogated on other grounds, Holden v. Hagopian, 978 F.2d 1115 (9th Cir. 1992), dictated the conclusion that a party cannot recover attorney's fees in an action to enforce a supersedeas bond under the federal rules.

II

Rule 65.1 provides for summary proceedings for the enforcement of the liability of a surety.¹ See Dragor Shipping Corp. v. Union Tank Car Co., 371 F.2d 722, 724 (9th Cir. 1967) (Rule 65.1 pertains only to security required or permitted under some provision of the Federal Rules of Civil Procedure); see also Fed. R. App. P. 8(b). It was intended to provide a uniform rule for summary proceedings against sureties on bonds required or permitted under original Rules 65 and 73. See Advisory Comm. Notes to Fed. R. Civ. P. 65,...