Judicial Bonds – A Primer

In the vast world of commercial suretyship, judicial bonds are the unheralded workhorses. They are a potential source of many opportunities for professional surety bond producers. Judicial bonds are bonds that participants in a lawsuit, in state or federal court, may be required to post in order to pursue certain legal remedies in civil litigation. The purpose of a judicial bond is to guarantee that the other party will be made whole in the event the bonded litigant loses or the court determines the litigant is not entitled to the right or remedy it obtained by posting the bond. Judicial bonds are also known as court bonds (which, technically, include both judicial bonds and fiduciary bonds), litigant’s bonds, and plaintiff’s and defendant’s bonds. For instance, the losing party at the trial court level can post a judicial bond—a supersedeas bond—both to prohibit the prevailing litigant from enforcing the trial court judgment and to guarantee payment of the judgment, while an appeal is pending.

There are various types of judicial bonds, and they are generally required by statute or by rule. Examples of judicial bonds include, but are not limited to, the following: appeal bonds, supersedeas bonds, cost bonds, injunction bonds, temporary restraining order bonds, attachment bonds, release of attachment bonds, replevin bonds, release of mechanic’s lien bonds, and bail bonds. It should be noted that there are various other judicial bonds that may be required in specific jurisdictions. Statutes concerning judicial bonds and rules of civil procedure vary by jurisdiction, which means that each jurisdiction will have its own statutes, rules, and bond forms. The Federal Rules of Civil Procedure and the Federal Rules of Appellate Procedure govern judicial bonds in federal litigation.

This article will discuss some common judicial bonds: appeal bond, supersedeas bond, injunction bond, attachment bond, and replevin bond.

Appeal Bond

After a final judgment in a civil action, the losing party has the right to appeal that judgment to a higher court. The losing party seeking to appeal the judgment must post an appeal bond to guarantee the opposing party’s court costs if the appeal is not successful. The amount of an appeal bond is generally determined by the trial court. Appeal bonds do not cover damages owed to the successful trial court litigant but are limited to the court costs that the relevant statute or rule permits the prevailing party to recover.

The specific costs recoverable under an appeal bond are determined by statute or local rule, so recoverable costs will vary by jurisdiction. Court costs covered by an appeal bond might include the cost of the preparation and transmission of the record, the reporter’s transcript, the premium paid for a supersedeas bond, and the fee for filing the notice of appeal.

Supersedeas Bond

Appeal bonds and supersedeas bonds are often confused and the terms are often used interchangeably, but they are distinctive bonds. An appeal bond ensures the payment of court costs, while a supersedeas bond guarantees that the prevailing trial court litigant can collect its judgment if the appeal is unsuccessful. When dealing with a bond denominated an “appeal bond,” it is critical to review and understand the prevailing terminology in a specific jurisdiction and review the relevant statutes, court rules, and bond forms to determine exactly the conditions of the bond. What is truly a supersedeas bond is sometimes called an appeal bond. As always with such bonds, the relevant statute, local rules, and bond form will govern the conditions of the bond.

A supersedeas bond is filed in court by the party against whom a judgment has been rendered in order to stay execution of the judgment pending appeal of that judgment to a higher court. The bond guarantees that the judgment will be paid if the appeal fails. The bond is generally equal to or greater than the amount of the trial court judgment although it is within the discretion of the court to determine the amount of the bond. A number of states have enacted statutes to limit the amount of a supersedeas bond that is required to stay enforcement of a judgment.

It should be noted that, without a supersedeas bond, the act of filing an appeal does not prohibit the prevailing trial court litigant from moving to collect its judgment. In order to stay action on the judgment during the appeal process, the unsuccessful litigant must obtain a stay of execution by filing a motion with the trial court and posting a supersedeas bond. Accordingly, the losing trial court litigant may appeal the decision, without posting a supersedeas bond; but in such event the prevailing litigant has the right to enforce the judgment during the appeal process.

Injunction Bond/Temporary Restraining Order Bond

An injunction is a court order that requires a party to do, or to refrain from doing, some particular act. The purpose of the injunction is to prevent actions that would cause irreparable harm or injury to the plaintiff. An injunction bond guarantees that the other party will be paid its damages caused by the injunction if it is later determined that the injunction was wrongful. The conditions of an injunction bond and the damages that are recoverable under such bond vary among jurisdictions; it may include costs, damages, and even attorneys’ fees sustained as a result of a wrongful injunction. The bond amount is usually set by the court.

A short-term, temporary injunction is call a temporary restraining order (TRO). A TRO prohibits a person from an action that is likely to cause irreparable harm. A TRO differs from an injunction in that the TRO may be granted immediately, without notice to the other party and without a hearing. The TRO is intended as a short-term remedy until a hearing can be held. The bond guarantees that the plaintiff will pay any damages to the defendant caused by the temporary restraining order.

Attachment Bond/Release Of Attachment Bond

Attachment is a legal process whereby a defendant’s property is placed into the custody of the court, before trial on the merits, at the request of the plaintiff as a security for the plaintiff’s claim. The main purpose of attachment is quickly to obtain a source to satisfy a judgment that might be obtained against the defendant, who might conceal, abscond with, or otherwise dispose of the property to avoid satisfying an eventual judgment against him. Many states require the plaintiff to post an attachment bond, which guarantees the defendant against loss or damage to the property seized, in the event the plaintiff does not prevail in his or her lawsuit against the defendant. In some states the amount of the attachment bond is expressly stated in the statute, and in others the court decides whether to require a bond and the amount of such bond.

It should be noted that the defendant in such a case usually has the right to have the property returned, before a trial on the merits, by posting a release of attachment bond to serve in the place of the property as security for the plaintiff’s claim.

Replevin Bond

Replevin, also called claim and delivery, is a legal remedy for a plaintiff to recover goods unlawfully withheld from his or her possession, through a process whereby a court requires a defendant to return specific goods to the plaintiff before judgment. A replevin bond protects the defendant against wrongful detention of the property. It guarantees that property seized by a plaintiff will be returned to a defendant, if the court so orders, and that any costs and damages suffered by the defendant will be paid. The amount of the replevin bond varies from state to state and is often set by the trial court judge. Typically, courts will require that the replevin bond be equal to or more than the value of the property in question.

In a replevin action, the plaintiff claims ownership and entitlement to possession of the property, as opposed to attachment wherein the property in question belongs to the defendant.

Conclusion

This article is intended to give an introduction to judicial bonds. While some of the more common bonds are discussed, there are a number of other judicial bonds that must be posted as a condition of a litigant pursuing his or her rights in court. Some judicial bonds require only a general indemnity agreement signed by the applicant, and others require collateral security in the form of cash or an irrevocable letter of credit. Judicial bonds are an important part of the judicial process in every state and all federal courts. Professional surety bond producers should consider the opportunities offered by delving into the broad world of judicial bonds.

The author of this article is Martha L. Perkins, Esq., a Partner in the Washington, DC office of Whiteford, Taylor & Preston, LLP. She can be reached at mperkins@wtplaw.com.

This article is provided to NASBP members, affiliates, and associates solely for educational and informational purposes. It is not to be considered the rendering of legal advice in specific cases or to create a lawyer-client relationship. Readers are responsible for obtaining legal advice from their own counsels, and should not act upon any information contained in this article without such advice.