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Note: To stay execution pending appeal of a judgment entered on a jury verdict of 40% fault, PricewaterhouseCoopers (Judgment Co-Debtor) sought permission from Plaintiff (Judgment Creditor) to post a standby LC issued by Wachovia Bank, N.A. When permission was refused, Judgment Co-Debtor moved for judicial approval. The U.S. District Court for the District of New Jersey, Harold A. Ackerman, U.S.D.J, denied the motion.

U.S. Fed. R. Civ. P. 62(d) provides for posting a supersedeas bond and local court rules permitted posting cash, "certificates of deposit issued by a bank licensed to do business in the United States, negotiable bonds approved by the Court or notes of the United States." Although standby LCs are not mentioned by the local rules, the trial court noted that "some courts have recognized that in appropriate circumstances, an irrevocable letter of credit may serve as such security" citing Ligurotis v. Whyte, 951 F.2d 818, 821 (7th Cir. 1992); Trans World Airlines, Inc. v. Hughes, 515 F.2d 173, 177 (2d Cir. 1975); Bishop v. Mid-Am. Auto Auction, Inc., Civ. A. No. 89-2029, 1993 WL 169116, at *1 (D. Kan. Apr. 26, 1993).

The court noted that "the decision to permit an irrevocable letter of credit to serve as security in lieu of a supersedeas bond resides in the sound discretion of the district court." It cited Schreiber v. Kellogg, 839 F. Supp. 1157, 1159 (E.D. Pa. 1993) for the proposition that "the court should exercise the discretion to require less than a full supersedeas bond only in 'extraordinary circumstances.'"

Judgment Debtor argued that it would incur significant additional expenses in obtaining a supersedeas bond. Judgment Creditor, however, raised concerns regarding security of payment. Noting that Judgment Debtor bore the "burden of showing the impossibility or impracticality of posting a full bond", the trial court stated that Judgment Debtor had failed to meet this burden or, indeed, show any "compelling reason why its general desire to avoid incurring the expense of giving a supersedeas bond should take precedence over [Judgment Creditor's] specific concerns regarding security and payment of its judgment."

[JEB/tjd]

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