Gibson’s Bakery: “there is serious concern about [Oberlin College’s] ability to pay this sizeable judgment three years from now”
With interest running at over $4k per day, Oberlin College seeks stay of execution of Gibson’s Bakery $32 million judgment, but doesn’t want to post a bond.
The $25 million damages judgment plus the over $6.5 million attorney’s fees and expenses award, puts Oberlin College almost $32 million in debt to Gibson’s Bakery and its owners.
Post-judgment interest in Ohio is 5%, which if my math is correct, on $32 million equals $1.6 million a year just in interest, or $4,384 per day. So that $32 million is going to keep growing as the inevitable appeal winds its way through the courts.
Interest aside, Oberlin College doesn’t want Gibson’s Bakery to start collecting the judgment by seizing bank accounts, college equipment, and anything else they can get their hands on.
Not surprisingly, Oberlin College has filed a Motion for a Stay of Execution of Judgment (pdf.)(full embed at bottom of post). The motion also requests that Oberlin College not be required to post a bond to secure the judgment while the trial court rules on post-trial motions Oberlin College says it will be filing.
Here is Oberlin College’s key argument:
Defendants intend to file motions under Civ.R. 50, 59, and/or 60. And per the express provisions of Civ.R. 62(A), a stay of execution may be issued at any time after a judgment is issued and before the time for filing motions pursuant to Civ.R. 50, 59, and 60 and while such motions are pending.
Defendants further respectfully request that they not be required to post a bond in the amount of the Judgment at this time. In the event that Defendants’ post-trial motions are not successful and require Defendants to appeal, Defendants will then file a supersedeas bond as required by Civ.R. 62(B) at the time Defendants file their notice of appeal. This supersedeas bond, if necessary, will be in the amount of the Judgment, plus any additional amount that may potentially be awarded by the Court in attorneys’ fees.
After noting that post-judgment interest at 5% is pretty much automatic, Gibson’s Bakery pointed out the math:
The judgment interest rate in 2019 is 5%. Therefore, if appeals of this case last just three years, the total amount of post-judgment interest that Defendants will have to pay is $4,742,179.77 –which is $1,580,726.59 per year or $4,330.76 per day.
Three years appears likely for the appeals process, according to Gibson’s Bakery:
Since the jury’s verdict, Oberlin College has given every indication that they are digging in for a long battle. For instance, Oberlin College President Carmen Twillie Ambar has broadcasted plans for an upcoming “lengthy and complex legal process” in her public statements…
Defendants have already expressed that they will not accept the verdict of the Lorain County jury. They have also suggested that they will not accept any adverse decision by the Ninth District Court of Appeals and, instead, will ultimately proceed to the Ohio Supreme Court. The Supreme Court of Ohio’s 2018 Statistical Summar/ shows that the time from filing a jurisdictional appeal to the Supreme Court until a full merit review by that Court averages 496 days.5 As such, a three-year period of appeals (through the Ninth District and Ohio Supreme Court) is a conservative timeframe for purposes of setting the appropriate post-judgment interest amount to be included in the bond requirement.
Perhaps expecting that a stay will be granted, Gibson’s Bakery devotes much of its opposition to arguing for a bond:
A stay of judgment execution is not automatic under Ohio law for private litigants. Defendants do not have some absolute right to a stay of execution. Should the Court decide, in its discretion under Civ. R. 62(A), that Defendants are entitled to bond off the execution of the judgment, then Plaintiffs request that the bond be set at $36,356,711.56….
The need for such bond is made clear by the College’s own statements about its dire fmancial straits. If the College is to be believed, there is serious concern about its ability to pay this sizeable judgment three years from now. At trial, and in its recent filing, the College represented that there was only $59.1 million of unrestricted endowment funds available to pay any dollar judgment and that $10 million of those funds had already been committed to pay down the College’s existing debt. [Trial Tr., June 12, 2019 at 95:13-21] There remains $190 million of existing debt on the College’s books. [Id.] The College has also testified that it has a significant operating deficit and that its deficit situation is not sustainable…. [Trial Tr., June 12, 2019 atpp. 86:1-6, 88:1-9]
The College also testified at trial that they have experienced a “significant” and “steady” decline of enrollment from 2014 to 2018. [Trial Tr., June 12, 2019 at 79:4-17] In describing their economic position, the College offered Exhibit N-33 at trial, which is its May 10, 2019 report entitled “One Oberlin: The Academic & Administrative Program Review Final Report.” [Trial Tr., June 12, 2019 at pp. 99-100] In that Report, the College describes its alleged financial hardships and warns about how many other private colleges have had to close due to financial difficulties …[Ex. N-33, pp. 4-5].
Thus, we know that Oberlin College could attempt to continue using its available funds to pay down its other debts between now and the filing of a notice of appeal, thereby leaving less available to pay the judgment in this case.
Will Oberlin College be able to secure a bond? Probably, but it might not be as easy as you would think. At a minimum Oberlin College would have to pledge substantial liquid collateral, perhaps even 100% of the total judgments plus enough to cover interest. The insurance companies writing these appeal bonds want to take zero risk. It’s possible that Oberlin College could get another financial institution to guarantee payment to the insurance company, but Oberlin College’s credit rating already is under pressure.
[Featured Image: Oberlin town police body cam video on day of shoplifting’
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