The cross-appeals of Oberlin College and Gibson’s Bakery are awaiting decision from the Ohio Supreme Court, which has the discretion whether or not to take either appeal. We covered the latest on June 13, 2022, Gibson’s Bakery Wants Ohio Supreme Court To Restore Full Punitive Damage Verdict Against Oberlin College.There is another drama working its way though the courts, namely, Gibson’s Bakery motion to collect on an approximately $36 million Surety Bond of Zurich American Surety Company. The bond was posted so that after judgment was entered for $32 million after the trial, the trial court would issue a stay of “execution” (i.e. collection action) on the judgment pending appeal. Absent that stay, the Gibson’s could obtain an execution on the judgment and start grabbing whatever assets of Oberlin College the local sheriff could find.The bond had very specific language that becomes important (emphasis added):
KNOW ALL MEN BY THESE PRESENTS, that Defendants Oberlin College and Meredith Raimondo, as Principals, and Zurich American Insurance Company, authorized to do business in the State of Ohio, as surety (the “Surety”), are held and firmly bound, jointly and severally, unto Plaintiffs David Gibson, Allyn W. Gibson, and Gibson Bros., Inc. (collectively, the “Plaintiffs”), in the maximum penal sum of Thirty Six Million Three Hundred Sixty Seven Thousand Seven Hundred Eleven Dollars and 56/100 Cents ($36,367,711.56), for which, well and truly to be paid, they bind themselves, their heirs, executors, administrators and successors, and every one of them firmly by these presents.NOW, THEREFORE, consistent with the conditions required by Ohio Revised Code Chapter 2505, if Defendants Oberlin College and Meredith Raimondo (the ” Defendants”): (i) pay the whole of the final judgment that may be required of or awarded against them on final determination of the Lorain County Court of Common Pleas and on any appeals rendered in this action after the exhaustion of all of Defendants’ appeals, including, if applicable, to the Ninth District Court of Appeals, the Supreme Court of Ohio, and the Supreme Court of the United States of America; (ii) abide and perform the order and judgment of the Lorain County Court of Common Pleas, the Ninth District Court of Appeals, the Supreme Court of Ohio, and the Supreme Court of the United States; (iii) pay all the money, interest, costs and damages that may be required of or awarded against them upon the final determination of any appeal(s); and (iv) thereafter abide and perfonn such other conditions as the Lorain County Court of Common Pleas, the Ninth District Court of Appeals, the Supreme Court of Ohio, and the Supreme Court of the United States may provide, then this obligation shall be void, otherwise to remain in full force and effect. If the judgment against Defendants is affirmed and not paid by Defendants to Plaintiffs in full, along with all other amounts ordered during and/or following the appeal(s), immediately upon Plaintiffs’ demand therefore, then the Surety agrees that judgment may be entered against it for the balance of all such amounts due from, but not paid by, Defendants. In no event, however, shall the Surety’s obligation under this bond exceed the maximum aggregate penal sum of Thirty Six Million Three Hundred Sixty Seven Thousand Seven Hundred Eleven Dollars and 56/100 Cents ($36,367,711.56).
Note that the language about exhausting all appeals relates to the bond being “void” if Oberlin College pays the judgment or otherwise complies. There is a separate sentence addressing what happens if Oberlin College does not pay the judgment after it is “affirmed,” which does not require exhaustion of all possible appeals to the Ohio or United States Supreme Courts, and which simply requires demand for payment.
The judgment was affirmed, and the 9th District Court of Appeals decision contained the following provision (emphasis added):
We order that a special mandate issue out of this Court, directing the Court of Common Pleas, County of Lorain, State of Ohio, to carry this judgment into execution. A certified copy of this journal entry shall constitute the mandate, pursuant to App.R. 27.
Oberlin College never sought a stay of the Court of Appeals mandate, and on May 27, 2022, the Gibsons sought execution on the judgment in the trial court in accordance with the mandate. We covered it all in Oops – Gibson’s Bakery Seeks To Execute On $36 Million Appeal Bond Since Oberlin College Failed To Obtain Stay Of Appeals Court Mandate. The Preliminary Statement described the arguments:
Nearly three years ago, a jury of Lorain County citizens took an oath, served through a nearly six-week trial, carefully deliberated, and found Oberlin College and its Dean of Students liable for their ruinous accusations and intentional conduct aimed at the Gibsons. Much has happened since, including the tragic deaths of David and Allyn Gibson-neither of whom lived to see justice done for their family and its business. The bakery continues to labor under the effects of the stigma created by Defendants, but without the relief awarded by the jury.It is now time to honor the jury’s verdict. It is time to execute on the judgment awarded by them, entered by this Court, and affirmed by a unanimous panel of the Ninth District Court of Appeals.The stay of execution entered by this Court only had the power to stay its own judgment. If Defendants wanted to stay execution of the mandate of the Ninth District Court of Appeals, they were required to seek that stay in the Ohio Supreme Court. They did not. Plaintiffs are entitled to judgment on the surety bond as provided by RC. 2505.20.
I expected fast action by Oberlin College. But nothing happened. Well, not exactly nothing. On June 10, 2022, Zurich American filed for an extension of time to respond. The motion provided that Zurich American’s counsel was having outpatient surgery, and this substantive reason (emphasis added):
1. Zurich’s involvement in this action arises from its issuance of Appeal Bond No. 9280167 (the “Bond”), as surety, on behalf of Defendants Oberlin College and Meredith Raimondo (the “Defendants”), as principals, in the penal sum of $36,367,711.56. On its face, the Bond conditions Zurich’s payment, obligations on, among other things, “the exhaustion of all of Defendants’ appeals, including, if applicable, to the Ninth District Court of Appeals, the Supreme Court of Ohio, and the Supreme Court of the United States of America.”2. Though the Defendants’ appeals have not been exhausted and the Bond’s penal sum of $36,367,711.56 is the absolute cap on Zurich’s potential liability thereunder, the Motion requests the Court to enter judgment against Zurich relative to the Bond “in the amount of $36,127,181.25 plus $4,331.19 per diem from the date of filing.”* * *5. Accordingly, because Zurich denies that any payment is owed under the Bond, Zurich requests that the deadline for Zurich’s response to the Motion. be extended until June 24, 2022 so its counsel can fully brief the legal and factual issues arising from the Motion….
But, as we’ve seen in the language of the bond quoted earlier in this post, the exhaustion of appeals related to the bond being void if Oberlin paid the judgment after the exhaustion of appeals. The next sentence does not explicitly require exhaustion of all possible appeals, it only requires that the judgment be affirmed, which has happend. Under this wording, if the judgment was affirmed and not paid, Zurich American was on the hook under the bond upon demand of the Gibsons. Perhaps there’s some case law addressing this exact language, but so far no one has cited it.
On June 13, 2022, the Gibsons filed a supplement to their motion pointing to the “demand” language:
Zurich American Insurance Company (“Zurich”) has recently entered an appearance in this case and informally requested from the Gibsons an extension to respond to the Gibson’s motion. However, no response from Zurich is warranted. Zurich’s own commitment to this Court provided that judgment could be entered “immediately upon Plaintiffs demand2:
[fn. 2 – 2 See Bond No. 9280167, filed July 30, 2019.]
If Zurich is dissatisfied with this result, its remedy is against Oberlin-the party Zurich chose to contract with-not in further delaying relief for the Gibsons.
That supplemental filing by the Gibsons, which appears to correctly apply the language of the bond unlike the Zurich American filing, apparently spurred action by Oberlin College, which filed for a stay today in the Ohio Supreme Court. That application for a stay is premised on the same misreading of the bond as Zurich American made in its filing in the trial court (emphasis added):
Appellants Oberlin College and Dr. Meredith Raimondo (“Oberlin”), under S.Ct.Prac.R. 4.01(A)(2), move for an order confirming and, if necessary, extending the trial court’s stay of execution or, in the alternative, immediately staying execution and any proceedings to enforce the judgment of the Lorain County Court of Common Pleas and Ninth District Court of Appeals—including ongoing efforts to collect from Oberlin’s surety, Zurich American Insurance Company (“Zurich”), which posted a bond that by its express terms requires the exhaustion of all appeals before it becomes collectible.
This reading has the same problem as that proposed by Zurich American.
Oberlin College then quoted language from the trial court’s stay of the judgment:
Oberlin had no reason to seek a stay when it first filed its appeal, because the trial court had entered a stay—unopposed by Plaintiffs-Appellees/Cross-Appellants—through the exhaustion of all appeals, supported by a filed bond in an amount Plaintiffs requested. The trial court issued this unopposed stay in November 2019. See 11/18/19 JE (“Plaintiffs do not oppose” the request for a Civ.R. 62(B) stay), attached as Ex. B. That is, after finding “good cause shown,” the trial court stayed execution of the judgment “until the exhaustion of all of the Defendants’ appeals – including the appeal currently pending before the Ninth District Court of Appeals, any appeal to the Supreme Court of Ohio, and any appeal to the Supreme Court of the United States.” See Ex. B (emphasis added)…..
Exhibit B to the Oberlin College motion, which starts at page 61 of the pdf. linked above, does contain that language, but as the Gibsons pointed out in their motion to execute on the judgment, the trial court could only stay its own judgment, it could not stay a mandate from the appeals court:
The stay of execution entered by this Court only had the power to stay its own judgment. If Defendants wanted to stay execution of the mandate of the Ninth District Court of Appeals, they were required to seek that stay in the Ohio Supreme Court. They did not. Plaintiffs are entitled to judgment on the surety bond as provided by RC. 2505.20.
That’s a legal question that a trial court can determine in the first instance, whether a trial court can ignore the mandate of an appeals court because the trial court previously stayed the judgment. The Gibsons in their motion cite case law they say is on point (see pp. 6-9 of the motion). Oberlin College doesn’t directly refute this issue of the appeals court mandate, but argues against the jurisdiction of a trial court after it has issued a stay of judgment (see Oberlin College’s stay motion at pp. 2-3). This seems like a straightforward legal issue that the trial court would determine on the motion if Zurich American (the party obligated on the bond) raised it, which it has not so far.
So, the language of the bond appears to support the Gibsons. The argument of Oberlin College is more of a general plea to maintain the status quo pending whether the Ohio Supreme Court takes the case. But Oberlin College doesn’t address this unique circumstance, where there is an independent contractual obligation of a surety (Zurich American) that has come due to a third party (the Gibson), and as to which the party seeking a stay (Oberlin College) is not a contractual party. Arguably, Zurich American owes the Gibsons the money, and what happens then is between Zurich American and Oberlin College.
We will continue to follow these proceedings.
[Featured Image: Protest outside Gibson’s Bakery, November 2016]
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