To: who wrote () 7/13/2007 2:21:46 PM From: Bill from Wisconsin 1 Recommendation of 99661
California court freezes Eagle's receivables
Yesterday, July 12, 2007, a California court issued a restraining order that prohibits Eagle Broadband from disposing of any of its accounts receivable until it has posted a bond of at least $104,401.96.
Here is a link to a copy of Judge Kevin J. Murphy's order, which was entered in Eagle Broadband vs. Does, Case No. 1-05-cv-050179, California Superior Court, Santa Clara County:
The order goes on to explicitly notify Eagle that failure to comply with the restraining order may result in Eagle being held in contempt of court.
In October 2005, Eagle sued Thomas Mould (a/k/a Benderanddundat a/k/a DOE 5) and six other Yahoo message board posters, alleging defamation and unfair competition. In March 2006, the court found that Eagle's case against Mould was meritless, and in August 2006, the court ordered Eagle to pay Mould $66,451.68 to cover his attorney fees and costs.
Under California procedure, Eagle had 60 days to either pay the judgment or file an appeal and post a bond (see California Code of Civil Procedure, section 917.1). In October, Eagle filed an appeal (which is still pending), but it ignored its obligation to post a bond. This forced Mould to engage in additional litigation to try to collect the debt.
The ruling says that Eagle will have to pay Mould's attorney fees and costs for his post-judgment collection efforts (in an amount to be determined), in addition to the $66,451.68 Eagle was ordered to pay Mould last August.
The ruling gives Eagle 30 days to post a bond for at least $104,401.96 (one and a half times the August judgment, plus some interest), and prohibits Eagle from "assigning, mortgaging, selling, or otherwise disposing of any and all accounts receivable, rights to payment of money, or claims for payment of money due from third parties", until the bond is posted. The order also says: "NOTICE is hereby given that failure by the judgment debtor to comply with the restraining order may subject the judgment debtor to being held in contempt of court".
I'm guessing that Eagle has sufficient cash on hand to quickly post a bond and terminate the restraining order, but it's hard to say, because the most recent public financial data for Eagle is more than four months old. (Eagle's next Form 10-Q is due on Monday.)
I'm not sure why Eagle was so ornery for the last nine months about paying or securing this judgment. Unlike the recent $3 million Cubley judgment, which obviously might put Eagle out of business, the $66,000 Mould judgment seems to have been well within Eagle's ability to pay. On Eagle's last quarterly balance sheet before the judgment, and on each balance sheet thereafter, Eagle has claimed to have had unrestricted cash well in excess of the judgment amount (Eagle had $689,000 in cash as of February 28, the date of the most recent report). Instead of just putting up the money, Eagle chose to make Mould engage in collection proceedings, for which Eagle had to pay its own lawyers and now it has been told that it will have to pay Mould's lawyers as well.