ANALYSIS OF APRIL 9, 2019 CAV ORDER

(Posted April 9, 2019) The Court of Appeals today hands down a significant published order deciding a matter of first impression on appealability. The case is Guan v. Ran, an appeal of a temporary injunction in a domestic-relations case in Alexandria.

The spouses jointly owned a company. They executed a property settlement agreement, but during the divorce proceedings, they evidently differed over its application to the company. The husband succeeded in getting an injunction against the wife, barring her from the business site, prohibiting her from contacting any employees, directing her to return funds, and barring her from telling anyone that she owned 51% of the company. (The order specifies that her ownership percentage is 49%.)

Stung by this order, the wife pursued a snap appeal, filing a petition for review under Code §8.01-626. That allows a party to seek immediate review, on an expedited basis, of an order granting or denying a temporary injunction.

This review was indeed expedited; the injunction order is dated February 27, just six weeks ago. Today a panel of the Court of Appeals dismisses the petition for review, holding that the wife isn’t aggrieved by it.

How can that be? The injunction order expressly commands her to do certain things and not to do others (including what I regard as a highly suspect prior-restraint ruling that implicates the First Amendment).

The culprit is an often-neglected statute, Code §8.01-631. That specifies that no injunction shall take effect until the movant posts an injunction bond. The husband didn’t post a bond because the injunction order didn’t set an amount, so the CAV panel rules today that the injunction hasn’t taken effect. That, in turn, means that the wife isn’t aggrieved, and she can’t appeal.

This is worth exploring in more detail. The injunction-bond statute begins with this provision:

Except in the case of a fiduciary or any other person from whom in the opinion of the court awarding an injunction it may be improper or unnecessary to require bond, no temporary injunction shall take effect until the movant gives bond with security in an amount that the trial court considers proper to pay the costs and damages sustained by any party found to have been incorrectly enjoined, with such conditions as the trial court may prescribe.

A few key provisions stand out here. First, the general rule is “No bond, no injunction.” That’s unmistakable from the statutory language. But in my experience, most trial judges tend to ignore this rule unless the unhappy recipient of the injunction’s business end points it out. That leads to the second point:

Fiduciaries don’t have to post bonds; they occupy a privileged status and get relief free. Everyone else has to post something, except those movants who can convince the learned trial judge that it would be “improper or unnecessary to require” a bond from them.

The statute gives no guidance on what criteria a judge should use in deciding whether to exempt a movant. Presumably this means that any review of a no-bond-required ruling would be for abuse of discretion. But there’s also no requirement that the aforementioned learned trial judge must make a record of her findings on this point. She can simply add a sentence saying that, in the court’s opinion, requiring a bond would be improper or unnecessary. How’s an appellant going to attack that?

The reality is that no appellant can, short of a manifest error of huge magnitude. But let’s keep exploring.

Where a trial court enters an injunction order that contains no bond language, is the respondent bound to obey it? Before today, I would have advised such a person to obey, rather than face the wrath of a jurist who angrily demands, “What part of my order was unclear to you?!” Today’s order gives some cover to those unhappy litigants; in the ensuing contempt hearing, that person can show up with a copy of this opinion and argue that the injunction hasn’t taken effect yet.

The predictable result of an argument like that is entry of a speedy order directing that no bond is required, so the challenged injunction becomes instantly binding. That means that the respondent’s victory will be short-lived.

For appellate lawyers, we have a new decision on appealability. This isn’t a finality question; this part of the bond statute only applies to temporary injunctions. But this decision imposes a limitation on the petition-for-review process. For whatever it’s worth, I believe that today’s panel gets this entirely correct: An injunction with no bond hasn’t taken effect yet, so there’s nothing to appeal.

This case remains in the circuit court. The next thing that will likely happen is that the husband will set a hearing on a request to waive the bond requirement, or to require a bond in a nominal amount. The wife will oppose that, arguing for a bond equal to half the value of the company. And that puts the matter back in the hands of the judge, who will make a discretionary ruling that will be quite difficult to challenge on appeal.