$1m+ Appellate Bond Cost Award Affirmed.

Rostack Inv., Inc. v. Sabella, No. B286069 (D2d8 Feb. 5, 2019)

To say enforcement of a money judgment pending appeal, the defendant needs to post an undertaking. Code Civ. Pro. § 917.1(b). (Or if he or she is flush, a cash deposit will do. § 995.710.) To account for postjudgment interest, the undertaking needs to be 150 percent of the judgment, if posted by a licensed surety insurer. Otherwise it’s double. The one mitigator is that the cost of a bond, interest on it, and the costs of financing it are recoverable as an appellate cost if the case gets reversed. Cal. R. Ct. 8.278(d)(1)(F).

Here, Plaintiff won a pretty big judgment—$52 million—in some kind of collections matter. Staying enforcement required Defendant to post a $77 million bond, assuming it was from a licensed surety. The judgment got reversed. So now Defendant is seeking the bond costs—$1.4 million—as costs on appeal. Plaintiff says that’s unreasonable, particularly since Defendant, who is apparently of some means, could have just posted cash, or financed the bond differently. The trial court disagreed and denied a motion to tax. It entered the cost award as a judgment. Plaintiff appealed.

There’s a threshold appealability issue. The underlying case is still ongoing. Plaintiff says the cost award needs to wait to be wrapped into a final judgment. But that’s not right. Unlike trial court costs, which are part of a merits judgment, costs awarded by the Court of Appeal (the amount of which are decided by the Superior Court on remand) are a collateral issue that get entered as an independent judgment. The case law seems pretty clear on that.

On the merits, the question comes down to whether the bond costs were reasonable and necessary. Cal. R. Ct. 8.278(d)(1). The record here contained substantial evidence that Defendant had explored a variety of alternatives. The Court explains that it wasn’t unreasonable for Defendant to account for the opportunity costs of locking up so much cash in deciding to opt for a more financed options. So drawing inferences in favor of the trial court’s ruling, she chose a reasonable path. The fact that there may have been other, cheaper, options—options with potentially problematic consequences for Plaintiff—didn’t make the cost unreasonable.

Affirmed. (With more costs on appeal ….)

Applying Rule Change to Pending Case Isn't Retroactive

Siry Inv., L.P. v. Farkhondehpour, No. B251250 (D2d2 Jul. 9, 2015)

While a prior appeal in this case was pending, the Judicial Council amended Rule of Court 8.278 to permit a prevailing party on appeal to recover the fees and net interest expenses incurred in obtaining an appellate bond. On remand from the prior appeal, the trial court awarded those costs to the prevailing appellant, even though the amended rule didn’t come into effect until after the opinion in the first appeal issued. The application, however, wasn’t retroactive, much less impermissibly so, because the rule did come into effect before the remittitur issued. In the court of appeal, a case remains pending until that occurs. And since there was adequate evidence that the appellants did, in fact, incur expenses in securing the bond, the trial court’s award is affirmed.