Judge Pauley Rules That Jaldhi and Hawknet Do Not Support Vacating Rule E(5) Bonds

In a recent decision, District Court Judge Pauley declined to reconsider his prior Order denying a post-Jaldhi motion to vacate a surety bond that had been posted by the Defendants as substitute security. The Judge similarly denied the Defendants' request that the matter be certified for interlocutory appeal.

The Judge had previously issued a bench ruling on January 15, 2010, holding that the release of a surety bond posted by the defendant pursuant to Rule E(5) is not covered under Jaldhi's limited holding. Relying on a recent decision of Judge Sullivan in a case called Vencedor Shipping v. Ingosstakh Insurance (in which Judge Sullivan had denied the defendant's Rule E(4)(f) motion to vacate a surety bond because "there was no pending arrest or attachment"), the Judge noted that the Bond Agreement itself had vacated the Attachment Order and released all property (including EFTs) that had been previously restrained to the Defendants.

Because Judge Pauley's January 15 ruling was not a final order disposing of the action, the Defendants were not entitled to appeal the decision as of right. Accordingly, Defendants filed a Motion for Reconsideration of the Order or, in the alternative, certification of the matter for interlocutory appeal. In denying both motions, the Judge stated that there was no new controlling authority or evidence contrary to his prior decision which would warrant reconsideration of that prior Order. He also found that no "manifest injustice" would be suffered by the Defendants absent reconsideration, as the Defendants had voluntarily posted the bond in aid of the underlying London proceedings, which were still ongoing. Finally, he ruled that there were no "exceptional circumstances" presented by the case that would warrant interlocutory appeal, as there was no "substantial difference of opinion" amongst the district court judges with respect to applying Jaldhi/Hawknet to a bond posted under Rule E(5).

Read a copy of the Judge's decision

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