Equal Employment Opportunity Comm'n v. Serv. Temps Inc.

• Decision Date: 23 March 2011
• Docket Number: Civil Action No. 3:08–CV–1552–D.
• Citation: 782 F.Supp.2d 288
• Parties: EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, Plaintiff,v.SERVICE TEMPS, INC., d/b/a Smith Personnel Solution, Defendant.
• Court: U.S. District Court — Northern District of Texas

782 F.Supp.2d 288

EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, Plaintiff,

v.SERVICE TEMPS, INC., d/b/a Smith Personnel Solution, Defendant.

Civil Action No. 3:08–CV–1552–D.

United States District Court,N.D. Texas,Dallas Division.

March 23, 2011.

Joel Philip Clark, Gwendolyn Young Reams, Robert A. Canino, Jr., Suzanne M. Anderson, Equal Employment Opportunity Commission, Dallas, TX, for Plaintiff.Todd H. Tinker, Law Office of Todd H. Tinker, Dallas, TX, Elizabeth G. Bloch, Brown McCarroll LLP, Austin, TX, for Defendant.

MEMORANDUM OPINION AND ORDER

SIDNEY A. FITZWATER, Chief Judge.

The instant motion to set amount of supersedeas bond presents the question whether this determination is governed by Texas law or by this court's local rule. Concluding that it is controlled by local rule, the court denies the motion.

I

Following the entry of an amended judgment in favor of plaintiff Equal Employment Opportunity Commission (“EEOC”), defendant Service Temps Inc., d/b/a Smith Personnel Solution (“Smith”) moves the court under Texas law and Fed.R.Civ.P. 62(f) to set a supersedeas bond in an amount that covers actual damages and pre- and post-judgment interest, but not punitive damages. The EEOC sued Smith for violating the Americans with Disabilities Act of 1990, 42 U.S.C. § 12101 et seq. In an amended judgment following the EEOC's acceptance of a remittitur, the court awarded backpay, compensatory damages, and punitive damages. Smith has appealed the amended judgment and requests the court to set the amount of the supersedeas bond based on Texas law. The EEOC opposes the motion, arguing that only N.D. Tex. Civ. R. 62.1 applies, and that the court should not deviate from the Rule absent an objective showing of reasons to do so.

II

Rule 62(f) provides: “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.” The Rule makes clear that, before this court looks to Texas law governing stays of execution, it must first determine that Texas considers a judgment to be a lien on the judgment debtor's property. If a judgment is a lien under Texas law, the court must grant the same stay that a Texas court would give. If Texas law applies, Smith would only need to post security in the amount of compensatory damages, interest for the estimated duration of the appeal, and costs. See Tex. Civ. Prac. & Rem.Code Ann. § 52.006(a) (West 2008) (requiring amount of security to equal sum of compensatory damages, interest, and costs, subject to certain caps in subsection (b) not shown to be applicable here). If a judgment is not a lien under Texas law, however, Rule 62(f) does not apply, and the court does not follow Texas law. And when Rule 62(f) does not apply, Rule 62(d) and N.D. Tex. Civ. R. 62.1 control. See Rule 62(d) (“If an appeal is taken, the appellant may obtain a stay by supersedeas bond, [except in circumstances not applicable here.]”); N.D. Tex. Civ. R. 62.1 (“Unless otherwise ordered by the presiding judge, a supersedeas bond staying execution of a money judgment shall be in the amount of the judgment, plus 20% of that amount to cover interest and any award of damages for delay, plus $250.00 to cover costs.”); Enserch Corp. v. Shand Morahan & Co., 918 F.2d 462, 464 (5th Cir.1990) (interpreting Rule 62(d) as the “general rule,” with limited exceptions for when the losing party objectively demonstrates an ability to facilely respond to a money judgment and remain solvent or when the prevailing party seeks to correct the decree on appeal).¹ Therefore, the resolution of this motion turns on the narrow question whether the amended judgment “is a lien on the judgment debtor's property” under Texas law.

III

Under Tex. Prop.Code Ann. § 52.001 (West Supp.2010), a judgment becomes a lien under the following circumstances:

Except as provided by Section 52.0011 or 52.0012, a first or subsequent abstract of judgment, when it is recorded and indexed in accordance with this chapter, if the judgment is not then dormant, constitutes a lien on and attaches to any real property of the defendant, other than real property exempt from seizure or forced sale under Chapter 41, the Texas Constitution, or any other law, that is located in the county in which the abstract is recorded and indexed, including real property acquired after such recording and indexing.

Under § 52.001, a judgment does not of itself constitute a lien until an abstract is recorded and indexed. Tex. Prop.Code Ann. § 52.003(a) (West 2007) requires that the filed abstract meet certain formal requirements (e.g., include the names of the parties, certain identifying information about the defendant, and certain information identifying the judgment at issue and the amounts due). Moreover, § 52.001 explicitly contemplates two exceptions when a judgment does not constitute a lien. One exception is found in Tex. Prop.Code Ann. § 52.0011 (West 2007), which specifies in § 52.0011(a) that filing an abstract does not constitute a lien when:

(1) the defendant has posted security as provided by law or is excused by law from posting security; and

(2) the court finds that the creation of the lien would not substantially increase the degree to which a judgment creditor's recovery under the judgment would be secured when balanced against the costs to the defendant after the exhaustion of all appellate remedies.

The other exception is found in Tex. Prop.Code Ann. § 52.0012 (West Supp.2010), which provides, with certain exceptions, for the release of a judgment lien when a judgment debtor files an affidavit stating that the real property being claimed by the recorded judgment lien is the judgment debtor's homestead. See § 52. 0012(b), (c), and (f).

The Fifth Circuit has yet to determine whether a judgment rendered by a federal court located in Texas is a lien on a judgment debtor's property within the meaning of Rule 62(f). See El Paso Independent School District v. Richard R., 599 F.Supp.2d 759, 763 (W.D.Tex.2008) (“ El Paso ISD” ) (“The Fifth Circuit has not considered whether a Texas judgment is a lien on the judgment debtor's property such that Rule 62(f) applies and state law controls stays of execution, though it has considered the issue under the laws of other states.” (citing cases)), vacated in part on other grounds, 591 F.3d 417 (5th Cir.2009). One Fifth Circuit panel, however, has considered Rule 62(f)'s applicability to federal courts sitting in Louisiana. See Castillo v. Montelepre, Inc., 999 F.2d 931, 941–42 (5th Cir.1993).² In Castillo the panel reasoned that Rule 62(f) and its purpose of providing federal litigants what they would otherwise receive in their state forum are “qualified by the requirement that the state forum treat judgments as a lien, or encumbrance, on the property of judgment debtors.” Id. at 942. The panel stated that “[t]he purpose behind this requirement is ... plain: judgment creditors must be afforded security while judgment debtors appeal.” Id. Based on this reasoning, the panel concluded that the provisions in Louisiana law afforded sufficient security to judgment creditors so as to satisfy the purpose behind the Rule 62(f) “judgment as a lien” requirement, because, in Louisiana, the act of filing a judgment with the recorder of mortgages establishes by law a judicial mortgage that burdens certain real property or immovable property interests. Id. at 942 & n. 10 (citing La. Civ.Code arts. 3284, 3286, 3299, 3300, and 3302).

The determination of how Rule 62(f) operates with respect to a federal court located in Texas has only been addressed by district courts, and they have drawn different conclusions. In Umbrella Bank, FSB v. Jamison, 341 B.R. 835, 842 (W.D.Tex.2006), a judge in the Western District of Texas noted that the Louisiana process for procuring a judgment lien by registration in Castillo was similar enough to the Texas process to conclude that “the ministerial act of recording an abstract of judgment in a Texas county suffices to satisfy Rule 62(f)'s requirement that ‘a judgment is a lien upon property of the judgment debtor.’ ” Id. The judge in Jamison was also persuaded by his conclusion that the Texas Legislature had manifested a desire to afford judgment debtors in Texas the ability to suspend execution of a money judgment by posting a supersedeas amount that excluded any punitive or exemplary damages, noting that Castillo requires that “great deference must be given to the manifest desire of the [state] legislature.” Id. (alteration in original; internal quotation marks omitted) (quoting Castillo, 999 F.2d at 942). In Euromed, Inc. v. Gaylor, 1999 WL 46224, at *1 (N.D.Tex. Jan. 22, 1999) (Sanders, J.), a member of this court made a statement that is consistent with the conclusion in Jamison. Judge Sanders stated that, “[u]nder Texas law, a properly recorded judgment does constitute a lien on the real property of the judgment debtor.” Id. (citing Tex. Prop.Code Ann. § 52.001).

But another judge of the Western District of Texas has taken a different position. In El Paso ISD the court expressly disagreed with Jamison and Euromed, distinguishing between Louisiana law, which only requires filing a judgment to create a lien, see El Paso ISD, 599 F.Supp.2d at 764 (citing La. Civ.Code art. 3300), and Texas law, which requires the filing of an abstract that complies with additional requirements, see id. (citing Tex. Prop.Code Ann. § 52.003). El Paso ISD held that “[t]his difference is dispositive.” Id. It rejected the premise that the requirement of filing a technically correct abstract is merely ministerial, noting that Texas courts have refused to recognize a lien where the submitted abstract did not conform to the requirements of § 52.003. Id. (citing Wilson v. Dvorak, 228 S.W.3d 228, 236 (Tex.App.2007, pet.denied) (holding that it could not recognize a legally enforceable lien because...