DM1\723288.1

IN THE UNITED STATES DISTRICT COURT 

FOR THE EASTERN DISTRICT OF PENNSYLVANIA 

TOLEDO MACK SALES & 

SERVICE, INC., 

Plaintiff, 

v. 

MACK TRUCKS, INC., 

Defendant. 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

Civil Action No. 2:02-CV-04373-RLB 

MACK TRUCKS, INC., 

Counterclaim 

Plaintiff, 

v. 

TOLEDO MACK SALES & 

SERVICE, INC. 

Counterclaim 

Defendant. 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

ORDER

And now this _____________ day of ____________________, 2006, upon consideration 

of the Motion for Reconsideration, and any response thereto, it is hereby ORDERED that the 

Motion is GRANTED. This Court’s Order granting a stay of execution on the condition that 

counterclaim defendant Toledo Mack Sales and Service, Inc. (“Toledo”) first post a cash or 

surety bond in the amount of $1 million (Docket No. 182) is hereby VACATED. 

Case 2:02-cv-04373-RB Document 183 Filed 12/04/2006 Page 1 of 11
 2 

DM1\723288.1

It is further ORDERED that execution on the judgment entered against Toledo is stayed 

pending disposition of Toledo’s currently pending post-trial motions. 

 ______________________________ 

 Buckwalter, S.J. 

Case 2:02-cv-04373-RB Document 183 Filed 12/04/2006 Page 2 of 11
DM1\723288.1

IN THE UNITED STATES DISTRICT COURT 

FOR THE EASTERN DISTRICT OF PENNSYLVANIA 

TOLEDO MACK SALES & 

SERVICE, INC., 

Plaintiff, 

v. 

MACK TRUCKS, INC., 

Defendant. 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

Civil Action No. 2:02-CV-04373-RLB 

MACK TRUCKS, INC., 

Counterclaim 

Plaintiff, 

v. 

TOLEDO MACK SALES & 

SERVICE, INC. 

Counterclaim 

Defendant. 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

MOTION OF TOLEDO MACK SALES & SERVICE, INC. FOR RECONSIDERATION

Plaintiff/Counterclaim Defendant, Toledo Mack Sales & Service, Inc. (“Toledo”), hereby 

moves for reconsideration of the Court’s Order granting a stay of execution on the condition that 

Toledo to post a cash or surety bond in the amount of $1 million (Docket No. 182) (the “prior 

Order”). 

For the reasons expressed in the accompanying Memorandum of Law, which is 

incorporated by reference as if fully set forth herein, Toledo respectfully requests that the Court 

Case 2:02-cv-04373-RB Document 183 Filed 12/04/2006 Page 3 of 11
 2 

DM1\723288.1

grant its Motion for Reconsideration, vacate the prior Order and grant a stay of execution of 

judgment that is not conditioned on Toledo posting a bond as security. 

 Respectfully Submitted, 

 DUANE MORRIS LLP 

Date: December 4, 2006 By: /s/ Wayne A. Mack

Wayne A. Mack 

J. Manly Parks 

James H. Steigerwald 

David A. Degnan 

DUANE MORRIS LLP 

30 South 17th Street 

Philadelphia, PA 19103-4196 

215.979.1000 

Attorneys for Plaintiff/Counterclaim 

Defendant Toledo Mack Sales & Service, 

Inc. 

Case 2:02-cv-04373-RB Document 183 Filed 12/04/2006 Page 4 of 11
DM1\723288.1

IN THE UNITED STATES DISTRICT COURT 

FOR THE EASTERN DISTRICT OF PENNSYLVANIA 

TOLEDO MACK SALES & 

SERVICE, INC., 

Plaintiff, 

v. 

MACK TRUCKS, INC., 

Defendant. 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

Civil Action No. 2:02-CV-04373-RLB 

MACK TRUCKS, INC., 

Counterclaim 

Plaintiff, 

v. 

TOLEDO MACK SALES & 

SERVICE, INC. 

Counterclaim 

Defendant. 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

MEMORANDUM OF LAW IN SUPPORT OF MOTION OF TOLEDO MACK SALES & 

SERVICE, INC. FOR RECONSIDERATION

I. INTRODUCTION

Following the entry of judgment in favor of Mack Trucks, Inc. (“Mack”) on its 

counterclaims against Toledo Mack Sales & Service, Inc. (“Toledo”), on November 22, 2006, 

this Court granted Toledo’s Motion to Stay Execution of Judgment on the condition that Toledo 

were to post a cash or surety bond in the amount of $1 million by December 7, 2006. (Docket 

No. 182.) (the “Order”). 

Case 2:02-cv-04373-RB Document 183 Filed 12/04/2006 Page 5 of 11
 2 

DM1\723288.1

Toledo now moves for reconsideration in order to bring to the Court’s attention important 

factual developments which are directly relevant to the question of whether Toledo should be 

required to post any bond as a prerequisite to obtaining a stay of execution. These recent 

developments establish beyond question that (1) Toledo is unable to obtain a bond in any 

amount, and (2) Mack would be unable to recover anything against Toledo were Mack to attempt 

to execute on the judgment today. 

In light of these developments, Toledo respectfully requests that the Court reconsider its 

prior ruling on the Motion for Stay, vacate the Order, and enter an Order staying execution on 

the judgment pending resolution of Toledo’s currently pending motion for post-trial relief. 

II. ARGUMENT

A. Toledo’s Financial Position Has Worsened Dramatically In The Past Few 

Days___________________________________________________________

The Declaration and financial statements that Toledo submitted to the Court with its 

Motion for Stay indicated that, at that time, Toledo’s only substantial unencumbered assets were 

receivables, parts inventory, and real property. However, subsequent to Toledo’s most recent 

submission in connection with its Motion for Stay, Toledo was required by the lender that 

provides the line of credit from which Toledo had been obtaining working capital and other 

funds to pledge all of its assets, including its receivables, parts inventory, cash, and real property, 

as collateral for the line of credit because the lender determined that the line was undersecured 

and that it would not continue to maintain the line without additional security. Faced with the 

prospect of immediate bankruptcy and being unable to continue to operate as a going concern, 

Toledo submitted to the lender’s demands. Consequently, Toledo has no remaining 

unencumbered assets. 

Case 2:02-cv-04373-RB Document 183 Filed 12/04/2006 Page 6 of 11
 3 

DM1\723288.1

This factual development is important in connection with this Motion for Reconsideration 

for two reasons. First, the fact that Toledo lacks any unencumbered assets means that Mack 

would be unable successfully to execute on its judgment against Toledo. Any attempt by Mack 

to try to execute would cause the secured entities to call in their loans and assert their superior 

liens and security interests in Toledo’s assets, leaving Mack empty handed. This is significant in 

the context of the Motion for Stay because it is well-established that a party should not be 

required to post security beyond its current ability to satisfy the judgment. See Alexander v. 

Chesapeake, Potomac, & Tidewater Books, Inc., 190 F.R.D. 190, 193 (E.D. Va. 1999) (“[A]ny 

security or bond offered . . . should simply reflect and preserve defendants’ current ability to 

satisfy the judgment.”). 

The second reason that these recent developments are significant is that they have 

completely eliminated Toledo’s ability to post the $1 million bond contemplated by the Court’s 

recent Order. Toledo can no more post bond in the amount of $1 million than it can satisfy a 

judgment of over $11 million. As a practical matter, in light of its current, highly compromised 

financial position, Toledo’s balance sheet is too weak to obtain a bond of the sort required by the 

Court’s order unless Toledo were to first pledge as security for the bond $1 million in cash or a 

letter of credit (plus a fee to the bonding company for writing the bond). As explained in 

Toledo’s prior submissions and in the Declaration attached to this Memorandum, Toledo has no 

liquid assets and no cash on hand to pledge, and it cannot obtain a letter of credit for this same 

reason. As such, it simply cannot obtain the required bond. Even if a bonding company were 

willing to accept security in some form other than cash for such a bond, which they will not do 

Case 2:02-cv-04373-RB Document 183 Filed 12/04/2006 Page 7 of 11
 4 

DM1\723288.1

here1

, Toledo would still be unable to obtain the necessary bond because all of its other assets are 

already pledged to other lenders. 

B. The $1 Million Bond Requirement Should Be Waived In Light Of The 

Recent Changes In Toledo Mack’s Financial Position 

Long-standing precedent dictates that the Court should not condition a stay on security 

that would be “impossible or impractical” for Toledo to provide. See Gallatin Fuels v. 

Westchester Fire Ins. Co., 2006 WL 952203, at *2 (W.D. Pa. April 12, 2006); HCB Contractors 

v. Rouse & Assocs., 168 F.R.D. 508, 512 (E.D. Pa. 1995); Kinnel v. Mid-Atlantic Mausoleums, 

Inc., 1987 WL 14507, at *4 (E.D. Pa. July 24, 1987); C. Albert Sauter Company, Inc. v. Richard 

S. Sauter Company, Inc., 368 F. Supp. 501, 520 (E.D. Pa. 1973). The reason for this rule is 

clear. The purpose of a security bond is to reflect a judgment debtor’s ability to satisfy a 

judgment and to preserve the status quo as between the parties. See Poplar Grove Planting & 

Refining Co., Inc. v. Bache Halsey Stuart, Inc., 600 F.2d 1189, 1190-91 (5th Cir. 1979); 

Alexander, 190 F.R.D. at 193. There is no reason to force a party to post security that exceeds 

the amount that the prevailing party would collect if it executed the judgment. Requiring 

security that is beyond a party’s financial ability changes the status quo by pushing the judgment 

debtor towards bankruptcy and increasing the prevailing party’s leverage to force settlement. 

See Olympia Equip. Leasing Co. v. W. Union Tel. Co., 786 F.2d 794, 799 (7th Cir. 1986). 

If Mack were to execute the judgment, Toledo’s only option would be bankruptcy, in 

which Mack would be a judgment creditor with an unsecured claim. Given the claims that 

Toledo’s secured creditors and other unsecured creditors would have against the company in 

 

1

 Counsel for Toledo has been advised that bonding companies will not accept non-liquid 

assets such as inventory and real estate as collateral for a bond in a situation such as this 

one. 

Case 2:02-cv-04373-RB Document 183 Filed 12/04/2006 Page 8 of 11
 5 

DM1\723288.1

such a bankruptcy, and the assets Toledo has available to satisfy these claims, it is highly 

doubtful that Mack would collect any money, much less the $1 million contemplated by the bond 

requirement in the Court’s Order. See id. Consequently, by conditioning the stay on a $1 

million bond, the Court has put Mack in a better position than it was in absent the bond. The 

alternative security arrangement that Toledo proposed in its Motion for Stay would better 

maintain the status quo and more accurately reflect and preserve Toledo’s ability to satisfy the 

judgment. 

This Court has held that a motion for reconsideration should be granted when it is 

“consonant with justice to do so.” Ray v. Abington Twp., 2004 U.S. Dist. LEXIS 12768, at *5 

(E.D. Pa. July 7, 2004). Where the Court determines there were errors of law or legal or factual 

matters that it overlooked, the Court may vacate its earlier order and issue a new order consonant 

with a just decision. Seawright, 2005 U.S. Dist. LEXIS 32829, at *2 n.1; Ray, 2004 U.S. Dist. 

LEXIS 12768, at *5. Here, the Court has erred by requiring security that is impossible for 

Toledo to provide and beyond what Toledo could pay if the judgment was executed. 

Furthermore, by requiring only a bond and rejecting the proposals from both parties for 

alternative security arrangements, the Court has overlooked the total absence of liquid assets 

with which Toledo could obtain a bond. 

Though the Court determined that “the 62(b) factors weigh[] in favor of granting 

plaintiff’s motion for a stay,” the practical effect of the bond condition is to deny Toledo’s 

request for a stay. It is unfair and unjust to deny Toledo the benefit of a stay that the Court has 

concluded is deserved merely because of its financial status. Toledo therefore respectfully asks 

Case 2:02-cv-04373-RB Document 183 Filed 12/04/2006 Page 9 of 11
 6 

DM1\723288.1

the Court to reconsider its Order and grant a stay without requiring Toledo to post a bond of $1 

million.

 Respectfully Submitted, 

 DUANE MORRIS LLP 

Date: December 4, 2006 By: /s/ Wayne A. Mack

Wayne A. Mack 

J. Manly Parks 

James H. Steigerwald 

David A. Degnan 

DUANE MORRIS LLP 

30 South 17th Street 

Philadelphia, PA 19103-4196 

215.979.1000 

Attorneys for Plaintiff/Counterclaim 

Defendant Toledo Mack Sales & Service, 

Inc. 

Case 2:02-cv-04373-RB Document 183 Filed 12/04/2006 Page 10 of 11
CERTIFICATE OF SERVICE

I, J. Manly Parks, hereby certify that a true and correct copy of the foregoing Motion to 

Reconsider, together with Memorandum of Law in support thereof, was served this 4th day of 

December, 2006, by hand delivery upon counsel of record as follows: 

 Jeremy Heep, Esquire 

 Pepper Hamilton LLP 

 Two Logan Square, Suite 3000 

 Eighteenth and Arch Streets 

 Philadelphia, PA 19103 

 /s/ J. Manly Parks____________ 

 J. Manly Park 

Case 2:02-cv-04373-RB Document 183 Filed 12/04/2006 Page 11 of 11