                NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
                          File Name: 05a0608n.06
                             Filed: July 19, 2005

                                       No. 04-3119

                         UNITED STATES COURT OF APPEALS
                              FOR THE SIXTH CIRCUIT


JAMES HALL,

       Plaintiff-Appellant,

v.                                                   On Appeal from the United
                                                     States District Court for        the
CONSOLIDATED FREIGHTWAYS                             Northern District of Ohio
CORPORATION OF DELAWARE,

       Defendant,

LUMBERMEN’S          MUTUAL      CASUALTY
COMPANY,

       Defendant-Appellee.
                                           /

BEFORE:       BOGGS, Chief Judge; RYAN and ROGERS, Circuit Judges.

       RYAN, Circuit Judge.        The plaintiff, James Hall, appeals from a district court

order limiting the liability of Lumbermen’s Mutual Casualty Company, the surety of a

supersedeas bond, to the penal sum of the bond. The supersedeas bond was issued by

Lumbermen’s Mutual to the defendant, Consolidated Freightways Corporation, following

a jury verdict against Consolidated Freightways for discriminating against Hall, its former

employee, because of his race. After the jury rendered its decision, the district court

granted remittitur with respect to the punitive damages the jury awarded, but the judgment

was fully reinstated on appeal. Hall then moved against Lumbermen’s Mutual to satisfy the

judgment. Under the terms of the supersedeas bond, Lumbermen’s Mutual is bound by
(No. 04-3119)                                -2-

any modification of the judgment ordered by the appellate court, but its liability is expressly

limited to the penal sum of the bond. The district court ruled that Lumbermen’s Mutual was

liable for the penal sum only, that is, the original judgment, but not for the larger judgment

as modified on appeal. For the following reasons, we AFFIRM.

                                              I.

       The relevant facts of the case are reported in a previous decision of this court and

are only briefly recounted here. See Hall v. Consol. Freightways Corp., 337 F.3d 669 (6th

Cir. 2003). On November 6, 1998, Hall filed a complaint in the United States District Court

for the Northern District of Ohio, alleging that his former employer, Consolidated

Freightways, had discriminated against him in violation of Title VII of the Civil Rights Act

of 1964 and Title I of the Ohio Revised Code. Specifically, Hall alleged race discrimination,

racially hostile work environment, wrongful termination based on race, and retaliation. At

the end of a 10-day trial, the jury returned a verdict in Hall’s favor and awarded him

$50,000 in compensatory damages plus $750,000 in punitive damages, for a total award

of $800,000. Consolidated Freightways filed a motion for remittitur, which the district court

granted, reducing Hall’s punitive damages award from $750,000 to $252,400. The court

also awarded Hall $123,000 in attorney fees and $24,055 in costs. Both parties appealed.

       While the appeals were pending, Consolidated Freightways filed a motion to stay

execution of the judgment and, shortly thereafter, submitted a supersedeas bond which it

had obtained from Lumbermen’s Mutual. Pursuant to Federal Rule of Civil Procedure

62(d), the district court approved the supersedeas bond and granted Consolidated

Freightways’s motion to stay execution of the judgment pending the appeals.
(No. 04-3119)                              -3-

       The bond provided as follows:

               KNOW ALL MEN BY THESE PRESENTS, that we, Consolidated
       Freightways Corporation, as Principal, and Lumbermen’s Mutual Casualty
       Company, as Surety, acknowledge by this instrument their obligation to pay
       Plaintiff James Hall, or his successors, the sum of FOUR HUNDRED FIFTY
       THOUSAND ONE HUNDRED THIRTY-FIVE AND NO/100 DOLLARS
       ($450,135.00) in Case No. 98-2554 above.
               This bond is filed in accordance with the requirements of the U.S.
       District Court for the Northern District of Ohio, as security for a stay of
       execution of judgment pending appeal in the above named action, pursuant
       to Rule 62(d), Federal Rules of Civil Procedure, and Rule 8, Federal Rules
       of Appellate Procedure.
               Both the Principal and the Surety are bound to satisfy in full the
       judgment of the District Court in Case No. 98-2554, including costs and
       interest, if the appeal should be dismissed or the judgment affirmed.
       Principal and Surety are bound also to satisfy in full any modification of the
       judgment ordered by the appellate Court. If the judgment should be reversed,
       then this bond shall be discharged.
               Should the Principal, Consolidated Freightways Corporation, satisfy
       the judgment as described above, all obligations under this bond will be
       discharged. Should the Principal, Consolidated Freightways Corporation, fail
       to satisfy the judgment as described above, all obligations under this bond,
       including the obligation of Lumbermen’s Mutual Casualty Company, the
       Surety, to satisfy the judgment, shall remain in full force and effect.
       PROVIDED, HOWEVER, that in no event shall the Surety’s liability exceed
       the penal sum of this bond.

       Thereafter, this court reversed the district court’s ruling reducing the punitive

damages award and directed the district court to reinstate the full jury award of $800,000.

Hall, 337 F.3d at 680. Hall then moved against the surety, Lumbermen’s Mutual, to

execute the judgment. The motion was granted by the court in a marginal entry order

dated October 28, 2003. Lumbermen’s Mutual then moved to vacate the marginal entry

order, arguing that its liability under the supersedeas bond did not exceed the penal sum

of $450,135 as stated in the bond. The district court granted the motion in part, directing

Lumbermen’s Mutual to pay Hall the amount of $450,135 forthwith, while establishing a

schedule for briefing the remaining amount in dispute. On December 23, 2003, the district
(No. 04-3119)                                 -4-

court granted Lumbermen’s Mutual’s motion to vacate in full, concluding that Lumbermen’s

Mutual had satisfied its obligation under the bond when it paid the penal sum of $450,135

to Hall. The court reasoned that the bond’s modification provision seemed ambiguous, but

that the ambiguity was resolved by the bond’s final provision limiting the surety’s liability to

the penal sum. On January 6, 2004, Hall filed a motion for reconsideration of the district

court’s December 23, 2003, order, which was denied. This appeal followed.

                                               II.

       The supersedeas bond issued by Lumbermen’s Mutual was posted pursuant to

Federal Rule of Civil Procedure 62(d) and enforced pursuant to Federal Rule of Civil

Procedure 65.1. “Because Rule 65.1 simply allows for an enforcement mechanism for

bonds posted under Rule 62(d), only a federal question is involved. As such, federal law

. . . applies.” Bass v. First Pac. Networks, Inc., 219 F.3d 1052, 1055 (9th Cir. 2000).

       For if it be true, and it undoubtedly is, that the giving of . . . a bond was an act
       done pursuant to an authority exercised under the Constitution and laws of
       the United States, it must follow that the bond so taken is to be interpreted
       with reference to the authority under which it was given and the principles of
       jurisprudence controlling such authority, and not by the local law.

Tullock v. Mulvane, 184 U.S. 497, 512-13 (1902).

       There are no applicable federal standards governing the construction of

supersedeas bonds, however, so we must “look to state law bond provisions and

construction for guidance.” United States ex. rel. Miss. Road Supply Co. v. H.R. Morgan,

Inc., 542 F.2d 262, 267 (5th Cir. 1976). Under Ohio law, the rules of construction employed

to interpret a supersedeas bond, as a surety contract, are the same as those rules utilized

to interpret all written agreements. See State ex rel. Herbert v. Inland Bonding Co., 46

N.E.2d 623, 626 (Ohio Ct. App. 1942), overruled on other grounds, 51 N.E.2d 710 (Ohio
(No. 04-3119)                                -5-

1943). Generally, courts presume that the intent of the parties can be found in the written

terms of their contract. Shifrin v. Forest City Enters., Inc., 597 N.E.2d 499, 501 (Ohio

1992). If a contract is unambiguous, the language of the contract controls and “[i]ntentions

not expressed in the writing are deemed to have no existence and may not be shown by

parol evidence.” Aultman Hosp. Ass’n v. Cmty. Mut. Ins. Co., 544 N.E.2d 920, 923 (Ohio

1989). Ambiguity in a contract may arise when two contractual provisions are in conflict

with each other. See Fairmont Creamery Co. v. Ewing, 182 N.E. 883, 885 (Ohio Ct. App.

1932).

         Hall argues that the plain meaning of the bond’s modification provision requires that

Lumbermen’s Mutual be held liable for the balance of the judgment as reinstated on appeal.

Lumbermen’s Mutual counters that the bond expressly limits its liability to the stated penal

sum.     We acknowledge that the supersedeas bond arguably contains an ambiguity

inasmuch as two provisions of the bond appear to conflict with each other. On the one

hand, the bond provides that Lumbermen’s Mutual, as surety, is “bound . . . to satisfy in full

any modification of the judgment ordered by the appellate Court,” which would seem to

include the $800,000 judgment reinstated on appeal. On the other hand, the bond

expressly provides that under no circumstances will the liability of Lumbermen’s Mutual

exceed the penal sum, which in this case appears to be the original $450,135 judgment

acknowledged in the bond.

         The modification provision appears to be a vestige of former Federal Rule of Civil

Procedure 73(d), which required that a supersedeas bond “be conditioned . . . to satisfy in

full such modification of the judgment and such costs, interest, and damages as the

appellate court may adjudge and award.” Fed. R. Civ. P. 73(d) (repealed 1968). Although
(No. 04-3119)                                -6-

this rule is no longer good law, Lumbermen’s Mutual is nevertheless contractually bound

by the “modification of the judgment” language set forth in the supersedeas bond.

       In adherence to the principle that contracts should be interpreted so as to give effect

to every provision of the contract, Farmers’ National Bank v. Delaware Insurance Co., 94

N.E. 834, 839 (Ohio 1911), the district court reasoned that to hold Lumbermen’s Mutual

liable for the full judgment as reinstated on appeal would render the last provision of the

bond ineffectual: “To find in Plaintiff’s favor, the Court would have to completely ignore the

asserted penal sum and the last sentence . . . of the bond which expressly limits

Lumbermen’s liability to the penal sum.” To avoid this result and to resolve the apparent

ambiguity, the court interpreted the bond’s apparently conflicting language to mean that

Lumbermen’s Mutual was liable for any modification of the judgment on appeal, “but in the

event that the court of appeals modifies the judgment by increasing the amount above

$450,135, Lumbermen’s Mutual’s liability is limited to the penal sum, i.e., $450,135, and

Consolidated will be responsible for the balance.” We perceive no error in the court’s

reasoning.

       Hall contends that the district court’s interpretation, while salvaging the provision of

the bond limiting the surety’s liability to the penal sum, simultaneously “‘eliminates [the

modification provision] from the contract and makes it purposeless and unnecessary.’”

(Quoting Farmers’ Nat’l Bank, 94 N.E. at 839.) Hall’s argument is without merit because

it presupposes that the only modification of the judgment contemplated by the parties was

a full reinstatement of the original judgment. During its appeal to this court, Consolidated

Freightways contended that the evidence in the case did not support an award of punitive

damages in any amount, whether under federal or state law. Hall, 337 F.3d at 671. Had
(No. 04-3119)                                -7-

Consolidated Freightways prevailed in only this aspect of its appeal, the judgment would

have been remitted to an amount less than the penal sum stated in the bond. The district

court’s order denying Consolidated Freightways’s Rule 50 motion relating to punitive

damages would have been reversed, leaving intact the remaining award of damages.

Although this would have resulted in a partial reversal of the judgment, Lumbermen’s

Mutual would still have been bound “to satisfy in full [the] modification of the judgment

ordered by the appellate Court.”

       The district court’s interpretation of the bond’s terms is also supported by the general

rule that a surety’s liability is limited to the penal sum stated in the bond. Elliott v. Marc

Wilcher Realty, Inc., 171 N.E.2d 543, 547 (Ohio Ct. App. 1959). While nothing prevents

parties from contracting for a different result, including increasing a surety’s potential

liability to cover any increase in the judgment on appeal, the language of the bond does not

indicate that such an agreement was reached in this case. Rather, the surety’s liability is

expressly limited to the penal sum.

       Hall argues that the term “penal sum” is itself ambiguous and should be interpreted

“to include not just the $450,135 obligation but also ‘any modification of judgment ordered

by the appellate court.’” We disagree. A natural reading of the language of the bond

indicates that the term “penal sum” refers back to the only monetary amount actually

specified in the bond, namely, “the sum of . . . []$450,135.00[.]” The term does not include,

in addition, any potential increase in the judgment ordered by the appellate court. Indeed,

given the purpose a supersedeas bond is intended to serve, the latter construction would

arguably provide a windfall to Hall.
(No. 04-3119)                               -8-

              The purpose of a supersedeas bond is to preserve the status quo
       while protecting the non-appealing party’s rights pending appeal. A judgment
       debtor who wishes to appeal may use the bond to avoid the risk of satisfying
       the judgment only to find that restitution is impossible after reversal on
       appeal. At the same time, the bond secures the prevailing party against any
       loss sustained as a result of being forced to forgo execution on a judgment
       during the course of an ineffectual appeal.

Poplar Grove Planting & Ref. Co. v. Bache Halsey Stuart, Inc., 600 F.2d 1189, 1190-91

(5th Cir. 1979) (emphasis added).

       Hall’s interpretation of “penal sum” would not preserve the status quo as it existed

when the district court entered its judgment. Rather, Hall’s interpretation, while protecting

his ability to execute the judgment he obtained in the district court, would also enable him

to collect a larger judgment from the surety in the event his appeal was successful. While

it would undoubtedly be more convenient for Hall to collect the entire judgment from

Lumbermen’s Mutual, especially considering that Consolidated Freightways has filed for

Chapter 11 bankruptcy protection, a reasonable construction of the bond’s language

indicates that Lumbermen’s Mutual’s liability is limited to the $450,135 obligation stated in

the bond.

                                             III.

       For the foregoing reasons, the district court’s order limiting the liability of

Lumbermen’s Mutual to the penal sum of the supersedeas bond is AFFIRMED.
