GOLDBERG. MARCHESANO v. OLD REPUBLIC

• Decision Date: 25 March 1999
• Docket Number: No. 97-CV-1052., No. 97-CV-954
• Citation: 727 A.2d 858
• Parties: GOLDBERG. MARCHESANO. KOHLMAN. INC., Appellant/Cross-Appellee, v. OLD REPUBLIC SURETY COMPANY, Appellee. Joan Bingham, Appellant, v. Goldberg. Marchesano. Kohlman, Inc., Appellee/Cross-Appellant.
• Court: D.C. Court of Appeals

727 A.2d 858

GOLDBERG. MARCHESANO. KOHLMAN. INC., Appellant/Cross-Appellee, v. OLD REPUBLIC SURETY COMPANY, Appellee.

Joan Bingham, Appellant, v. Goldberg. Marchesano. Kohlman, Inc., Appellee/Cross-Appellant.

Nos. 97-CV-954, 97-CV-1052.

District of Columbia Court of Appeals.

Argued November 10, 1998.

Decided March 25, 1999.

Diana M. Savit and Marvin L. Szymkowicz, Washington, DC, for appellant/cross-appellee Goldberg.

Richard A. Gross, with whom Michael D. Gaffney, Washington, DC, was on the brief, for appellant Bingham.

Robert F. Carney, Baltimore, MD, for appellee Old Republic Surety Company.

Before TERRY and RUIZ, Associate Judges, and MACK, Senior Judge.

MACK, Senior Judge:

This case arises from a breach of contract action that was decided by this court in Bingham v. Goldberg, Marchesano, Kohlman, Inc., 637 A.2d 81 (D.C.1994). After our decision, appellant Goldberg. Marchesano. Kohlman. Inc. ("GMK") attempted to collect payment from a supersedeas bond issued by appellee Old Republic Surety Company ("Old Republic"). This attempt was thwarted when a motion for summary judgment was granted in favor of Old Republic. GMK now appeals. In a related matter, Joan Bingham appeals from a denial of sanctions under Super. Ct. Civ. R. 11 against GMK. We affirm both the summary judgment and the denial of Rule 11 sanctions.

I.

In 1984, GMK filed a breach of contract action against PFP, Inc. ("PFP") and its president, Joan Bingham. On July 29, 1989, Superior Court Judge Harriett Taylor entered a judgment in which both Ms. Bingham and PFP were found jointly and severally liable. Ms. Bingham and PFP filed an appeal, and sought a stay of the judgment pending appeal pursuant to Super. Ct. Civ. R. 62(d). Ms. Bingham obtained a supersedeas bond from Old Republic to secure the judgment against her, but that bond did not mention PFP. Nonetheless, the bond was submitted with a motion for stay pending appeal joined by both Ms. Bingham and PFP. When the supersedeas bond was presented to the trial court and GMK, GMK objected to the amount of the bond. GMK, however, never raised an objection to the fact that the bond was only issued to Ms. Bingham as principal.

In 1994, this court affirmed the judgment against PFP, but reversed the judgment against Ms. Bingham. Bingham, supra, 637 A.2d at 95. PFP has since become defunct. GMK filed a motion to compel Old Republic to satisfy the judgment, claiming the bond covered the liability of both Ms. Bingham and PFP. A new judge, Judge Geoffrey Alprin, was assigned the case. Judge Alprin initially denied the motion, but later vacated his order when it was brought to his attention that not all parties had filed their briefs relating to the motion.

GMK then withdrew the motion and filed suit against Old Republic on November 21, 1995. The case was assigned to a third judge, Judge Michael Rankin. GMK asserted: (1) the supersedeas bond covered both Ms. Bingham and PFP by its own terms; (2) the fact that Judge Taylor accepted the bond as security for the judgment obligated Old Republic to satisfy the judgment against PFP; and (3) Old Republic should be estopped from claiming the bond did not cover PFP. Old Republic filed a third party complaint against Ms. Bingham seeking indemnification for attorney's fees. Ms. Bingham's counsel sent a letter to GMK's counsel, stating that Ms. Bingham intended to hold GMK liable for any attorney's fees caused by GMK's lawsuit.

GMK and Old Republic filed cross-motions for summary judgment. Judge Rankin granted Old Republic's motion for summary judgment, adopting the order Judge Alprin had vacated. Six weeks after summary judgment had been granted, Ms. Bingham filed a motion for Rule 11 sanctions. The request was denied.

GMK appeals from the summary judgment, claiming: (1) the supersedeas bond covered the liability of PFP; and (2) under the doctrine of equitable estoppel, Old Republic should be estopped from asserting the bond did not cover PFP's liability. Ms. Bingham appeals from the denial of Rule 11 sanctions, claiming an abuse of discretion. We disagree with both GMK and Ms. Bingham, and affirm.

II.

Summary judgment should only be granted when "there is no genuine issue as to any material fact and the moving party is entitled to a judgment as a matter of law." Super. Ct. Civ. R. 56(c); Kurth v. Dobricky, 487 A.2d 220, 224 (D.C.1985). GMK first claims the language of the surety bond was broad enough to cover the liability of both Ms. Bingham and PFP. In support of this claim, GMK asserts the language of the bond should be read in light of the trial court's order. We disagree.

A surety bond is a contract whereby one party, the surety, agrees to answer for the debts of another, the principal. 74 AM.JUR.2D Suretyship § 3 (1974). When a party appeals from a judgment of the Superior Court, that party may obtain a stay of the judgment providing the party submits a bond approved by the court. Super. Ct. Civ. R. 62(d). Under the law of the District of Columbia, "[a] surety's obligation must be measured by the conditions stated in the bond...." Bevard v. New Amsterdam Casualty Co., 132 A.2d 157, 159 (D.C.1957); see also In re Estate of Spinner, 717 A.2d 362, 366 (1998)

.¹

In this instance, the language of the contract clearly identifies Joan Bingham as the party whose liability is secured by the bond. PFP is not mentioned anywhere on the bond. While Ms. Bingham was PFP's president and in that capacity could act for the corporation, see D.C.Code § 29-343(b) (1997), the fact that PFP was not mentioned on the face of the bond and that Bingham did not purport to sign in her capacity as president of PFP means that PFP was not a party to the surety contract. Therefore, the language of the bond is unambiguous in that only the liability of Joan Bingham was covered.

GMK argues that because Judge Taylor accepted the supersedeas bond, and stayed the proceeding as to both Ms. Bingham and PFP, the bond necessarily covers both parties. In essence, GMK claims that a supersedeas bond is a prerequisite to granting a stay. This is an erroneous reading of Super. Ct. Civ. R. 62(d). The rule states:

When an appeal is taken the appellant by giving a supersedeas bond may obtain a stay subject to the exceptions contained in subdivision (a) of this rule. The bond may be given at or after the time of filing the notice of appeal or of procuring the order allowing the appeal, as the case may be. The stay is effective when the supersedeas bond is approved by the court.

Super. Ct. Civ. R. 62(d). This rule is identical to the Federal rule. Therefore, we will use federal case law to guide our decision. See In re Mendes, 598 A.2d 168, 169 (D.C. 1991)

.

When an appellant submits a bond that is approved by the court, the appellant is entitled to a stay as a matter of right. Pierola v. Moschonas, 687 A.2d 942, 945 n. 2 (D.C.1997). See also Federal Prescription Serv., Inc. v. American Pharmaceutical Ass'n, 205 U.S.App. D.C. 47, 51-52, 636 F.2d 755, 759-60 (1980)

. That is not to say that a bond is required in order to obtain a stay. See id. It is within the discretion of the judge to issue a stay without requiring a bond. See, e.g., United States v. Certain Real and Personal Property Belonging to Hayes, 943 F.2d 1292, 1296 (11th Cir.1991); Miami Intern. Realty Co. v. Paynter, 807 F.2d 871, 873 (10th Cir.1986); Lightfoot v. Walker, 797 F.2d 505,

reh'g denied, 826 F.2d 615 (7th Cir.1987); Olympia Equip. Leasing Co. v. Western Union Telegraph, 786 F.2d 794, 796 (7th Cir.1986); Brooktree Corp. v. Advanced Micro Devices, Inc., 757 F.Supp. 1101, 1104 (S.D.Cal.1990); Grand Union Co. v. Food Employers Labor Relations Ass'n, 637 F.Supp. 356, 357 (D.D.C.1986). Thus, the mere fact that a stay was issued does not mean that the supersedeas bond covers both Ms. Bingham and PFP, where the bond does not mention PFP as the principal.²

III.

GMK next claims Old Republic should be estopped from claiming the bond does not cover PFP's liability. To prevail on a claim of equitable estoppel, the plaintiff must carry its burden of proof on all of the elements of the claim, which are:

(1) conduct amounting to a false representation or concealment of material fact (2) made with actual or constructive knowledge of the true facts, and (3) with the intention that another person act in reliance upon it; (4) the other person's lack of knowledge and of the means of knowledge concerning the truth of the representation, (5) and his reliance upon the misrepresentation, (6) causing him to act so as to change his position prejudicially.

Cassidy v. Owen, 533 A.2d 253, 255 (D.C. 1987) (citations omitted).

In this instance, there is an argument that counsel for Ms. Bingham and PFP may have misrepresented the coverage of the bond. It is suggested that counsel represented that both Ms. Bingham and PFP desired the stay, and claimed the bond was "sufficient to cover the whole amount of the judgment remaining unsatisfied." This leads to speculation that counsel for Ms. Bingham and PFP may have attempted to slip the supersedeas bond by the trial court, knowing the bond covered only Ms. Bingham's liability but implying that the bond covered PFP's liability as well.

If a misrepresentation occurred (a question we do not decide), it was through the conduct of Ms. Bingham's counsel, not Old Republic. We are reluctant to hold Old Republic liable for alleged misrepresentations concerning the coverage of the bond, when Old Republic itself did not appear to make those representations, nor consent to those representations.

GMK cites a Maryland case, Travelers Indemnity Co. v. Nationwide Constr. Co., 244 Md. 401, 224 A.2d 285, 291 (1966), to support its contention that a surety is bound by the conduct of its principal, even when the surety has not consented to that conduct. In that case, it was held that the surety could not assert a jurisdictional defense once the principal was estopped from asserting it. Id. at 294. To support its...