Why a Civil Defendant May Need to Post a Bond to Appeal
A certain high-profile defendant has been in the news lately in regards to posting a bond to stay enforcement of a large judgment, so large it is likely (though far from certain) that it will be reduced on appeal. I will not name the defendant but suffice it to say that the coverage of this issue has evidenced more political bias than understanding of the legal concepts involved. A review of California law involving appeals and enforcement of judgments may therefore be helpful.
A certain high-profile defendant has been in the news lately in regards to posting a bond to stay enforcement of a large judgment, so large it is likely (though far from certain) that it will be reduced on appeal. I will not name the defendant but suffice it to say that the coverage of this issue has evidenced more political bias than understanding of the legal concepts involved. A review of California law involving appeals and enforcement of judgments may therefore be helpful.
A judgment creditor may generally start enforcing the judgment upon notice of entry of the judgment
The plaintiff or other party with a monetary judgment in their favor becomes the judgment creditor while the party with a monetary judgment against them is a judgment debtor. Once the Clerk of the Court has "entered" a judgment in the record, said judgment may generally be enforced up to ten years from its date. Such enforcement may begin immediately unless, for example, the trial court grants a stay or the judgment debtor chooses one of the options below.
As a practical matter, there is usually some delay in enforcement as a judgment creditor should obtain one or more "abstracts of judgment" from the Clerk of the Court in the county where the judgment has been entered. The creditor must then "record" these in any counties where the debtor wishes to enforce the judgment by, for example, filing a lien.
General Rule: judgments are stayed pending filing a notice of appeal
A defendant in a civil suit generally has 60 days after being given proper notice of entry of judgment to file a notice of appeal. (California Rules of Court, rule 2.) As an aside, there is a complex series of extensions related to filing post-trial motions such as a motion for a new trial.
Judgments are generally "stayed" upon filing an appeal, meaning they cannot be enforced, but, as discussed below, there are exceptions, the most important involving the enforcement of judgments for sums of money. (Code of Civil Procedure section 916; Code of Civil Procedure section 917.1.)
Exception: monetary judgments
Crucially, monetary judgments are not automatically stayed pending an appeal. (Code of Civil Procedure section 917.1) This is for the obvious reason that a judgment debtor would then have an incentive to appeal even if there is no merit to the appeal; such a delay, of course, may make it less likely the judgment creditor will later be able to find the judgment debtor's assets.
There is an exception to this exception, though. Judgment amounts that are for "costs of suit" only are stayed despite the rule noted above. If a party makes a successful offer under Code of Civil Procedure section 998, i.e., a reasonable offer to compromise is made and then rejected, the enforcement of costs awarded to a successful offeror under section 998 is stayed upon filing a notice of appeal. (Id.)
How to appeal without paying the judgment creditor
A judgment debtor is subject to attempts to seize their assets, garnish their wages, or place a lien upon their accounts if the judgment is not stayed pending appeal. Because it may be difficult to recover funds once paid to the judgment debtor, the judgment creditor should explore the options below to avoid payment of the judgment while the appeal is pending.
1. Posting a bond or undertaking by an "admitted" or "personal" surety
This is most often done by posting a bond by "an admitted surety insurer," meaning a "surety" - someone who will post the bond and then be responsible for payment of the judgment if the appeal is not successful - that is licensed in California. (Id.) The bond amount would be 150% of the judgment. (Id.) The additional amount beyond the judgment itself may be necessary to cover the "simple interest" upon the judgment at the annual rate of ten percent.
It goes without saying that an admitted surely will require payment in some percentage of the bond or undertaking to provide this service.
The posting of a bond or undertaking may also be done by a friend or relative, i.e., a "personal surety." (Id.) The amount posted by the personal surety must be 200% of the judgment. (Id.)
The requirements for being a personal surety are found in Code of Civil Procedure section 995.510 and include 1) being a resident of California, and 2) having net assets in California that exceed 200% of the judgment. Neither an attorney nor the "principal," the judgment debtor, may act as a personal surety. (Id.)
2. Depositing money with the Court
If one cannot obtain a bond or undertaking and nevertheless wishes to appeal, does one have to pay the judgment directly to the creditor to avoid seizure of assets? The answer is no: the judgment debtor may deposit money or negotiable securities directly with the Court. (Code of Civil Procedure section 917.1)
The complete text of section 917.1 is quoted below:
917.1. (a) Unless an undertaking is given, the perfecting of an appeal shall not stay enforcement of the judgment or order in the trial court if the judgment or order is for any of the following:
(1) Money or the payment of money, whether consisting of a special fund or not, and whether payable by the appellant or another party to the action.
(2) Costs awarded pursuant to Section 998 which otherwise would not have been awarded as costs pursuant to Section 1033.5.
(3) Costs awarded pursuant to Section 1141.21 which otherwise would not have been awarded as costs pursuant to Section 1033.5.
(b) The undertaking shall be on condition that if the judgment or order or any part of it is affirmed or the appeal is withdrawn or dismissed, the party ordered to pay shall pay the amount of the judgment or order, or the part of it as to which the judgment or order is affirmed, as entered after the receipt of the remittitur, together with any interest which may have accrued pending the appeal and entry of the remittitur, and costs which may be awarded against the appellant on appeal. This section shall not apply in cases where the money to be paid is in the actual or constructive custody of the court; and such cases shall be governed, instead, by the provisions of Section 917.2. The undertaking shall be for double the amount of the judgment or order unless given by an admitted surety insurer in which event it shall be for one and one-half times the amount of the judgment or order. The liability on the undertaking may be enforced if the party ordered to pay does not make the payment within 30 days after the filing of the remittitur from the reviewing court.
(c) If a surety on the undertaking pays the judgment, either with or without action, after the judgment is affirmed, the surety is substituted to the rights of the creditor and is entitled to control, enforce, and satisfy the judgment, in all respects as if the surety had recovered the judgment.
(d) Costs awarded by the trial court under Chapter 6 (commencing with Section 1021) of Title 14 shall be included in the amount of the judgment or order for the purpose of applying paragraph (1) of subdivision (a) and subdivision (b). However, no undertaking shall be required pursuant to this section solely for costs awarded under Chapter 6 (commencing with Section 1021) of Title 14.
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