Even Though Defendant Did Not Win Total Reversal of Damage Award, Total Costs of Appeals Bond Premium Were Properly Awarded To Defendant For the Appellate Win.
Here is an object lesson for all appellate attorneys in a case: carefully assess whether you want an appeals bond. If you lose in a partially big way, the total costs of the appeals bond premium may be a stinging liability for your respondent client.
Brea Imperial, Inc. v. Automotive Wheels, Inc., Case No. G045241 (4th Dist., Div. 3 Mar. 9, 2012) (unpublished) illustrates such a sting for the respondent simply wanting to “secure” a large damage award during the appeals process.
Defendant was awarded $179,856 for appeal bond premiums after the appellate court earlier reversed a damages award against defendant to the tune of $3.16 million, although the “in tact” damages award was still about $1.14 million. The earlier appellate court opinion importantly indicated defendant was entitled to costs on appeal. The lower court awarded the nearly $180,000, representing the appeal bond premium on a $6 million bond over about 3 years.
The costs award was affirmed, in a 3-0 decision authored by Justice Ikola.
Certainly, the appeal bond premiums were expressly recoverable costs under California Rules of Court, rule 8.278(d)(1)(F). Also, the bond was “necessary” under that rule of court, with “necessary” being a loose term in this context. It was necessary to prevent defendant’s assets from being executed upon pending appeal. Forget that defendant might have negative worth, because even a struggling defendant might have assets to preserve (and the bond may allow it to escape from having to play the dreaded bankruptcy card).
Now, that brought the panel to the interesting apportionment issue. Because defendant only got a partial damages reversal (although substantial in nature), wasn’t it only fair that the costs had to be apportioned based on the prior appellate result? Answer: Not really. There is older California Supreme Court authority indicating that a total premium costs award is warranted because the posting litigant has no way of knowing whether any portion of the judgment would remain in tact, over a strong dissent arguing otherwise and lobbying for apportionment. However, the appellate court followed the majority decision on this issue, indicating that no apportionment was mandatory under the circumstances. (See Stockton Theatres, Inc. v. Palermo, 51 Cal.2d 346, 352 (1958).)