Simulnet East Associates v. Ramada Hotel Operating Co.

The sole issue in this diversity action is whether the district court abused its discretion in requiring, on the eve of trial, a $500,-000 cost bond as a condition to proceeding to trial. The litigation had proceeded for three years without a demand for a cost bond. The district court granted defendants’ motion for a bond five days before trial. When the plaintiffs were unable to post the bond, the district court dismissed the action. We hold that this was an abuse of discretion, and we reverse.

i:

Simulnet is the successor in interest to several agreements to provide satellite television services .to 25 separate Ramada Hotel properties throughout the country. Simulnet sued Ramada under various legal theories, including breach of contract. The litigation progressed for three years, during which time there was extensive discovery generating some 4,000 documents. The .district court denied Ramada’s two motions for summary judgment, as well as its motion to dismiss.

At the pretrial conference five days before the scheduled trial, Ramada requested that the district court order Simulnet to post a cost bond for the fees and costs Ramada had thus far expended. Ramada contended it *574…