“BOND. APPELLATE BOND.”
(Posted September 26, 2022) We unsurprisingly got no new opinions from Ninth and Franklin last week. (It’s unsurprising because there are only two undecided appeals left from those argued before the recent September session.) That gives us an opportunity to explore an essential but often misunderstood aspect of appellate practice: bonds.
The Code of Virginia provides for two distinct bonds in appeals, each set out in Code §8.01-676.1. The first, known simply as an appeal bond, is essential in almost every appeal. Its purpose is to secure payment of the appellee’s costs and damages in the event the appellate court affirms the judgment or dismisses the appeal. Those costs and damages are usually nominal, and the required bond is correspondingly small – just $500.
The other bond is for suspension of the judgment pending the appeal. It’s also known as a supersedeas bond, for those of you who like Latin; that word translates to “you must desist.” This halts any execution on the lower-court judgment until after the appeal. In contrast to the appeal bond, this can be quite large; see below.
The appeal bond is mandatory – the appellate court can dismiss the appeal if the appellant eschews filing it – and the appellant must file it no later than 30 days after final judgment in the circuit court. You file it with the clerk of the circuit court, usually at the same time as the notice of appeal.
This may come as a surprise, but the suspending bond is voluntary, and your appeal can proceed normally without one. No statute or rule sets a filing deadline. That being said, an appellant who genuinely fears a snap execution – a property seizure or a bank garnishment – should have it in place no later than 21 days after final trial-court judgment. That’s because a judgment creditor can obtain a writ of fieri facias after the 21st day. Code §8.01-466.
Effect of filing
For appeal bonds, this is simple: By filing it, an appellant avoids having his or her appeal dunked. This is a no-brainer.
For suspending bonds, the mere filing of the bond with the clerk – no judicial action necessary – automatically halts all efforts by the judgment creditor to enforce the lower-court judgment. That suspension continues through the course of the appeal, so the appellant doesn’t have to keep posting new bonds at each appellate stage. This bond, too, goes to the trial-court clerk.
As noted above, the appeal bond is $500. Governmental entities such as the Commonwealth don’t have to post it, because the appellate courts won’t award costs or damages against Aunt Virginia. Code §17.1-629.
The size of the suspending bond depends on the size of the judgment. If judgment is for a defendant in, say, a suit for money damages, then there’s no bond involved; defendants who escape tort or contract liability generally don’t have anything to execute. But when a plaintiff receives judgment, the suspending bond has to be large enough to ensure payment of the full judgment in the amount of an affirmance or dismissal.
By statute, the amount of the suspending bond must include one year’s interest, and is capped at $25 million, even if the judgment is for a higher amount. Interest is almost always at the statutory judgment rate, currently 6%. Code §6.2-302. If either party wants to modify the amount of the bond, the procedure is to file a motion, first in the trial court, for that relief. The circuit court has the power to fix the amount of the bond, subject to the requirements of the statute.
The Rules of Court include forms for both types of bonds. Form 1 is the appeal bond and Form 4 is for suspension. You can file both in one document; that’s Form 2. For all bonds, Form 8 sets out how the bond has to be executed.
Both types of bonds require some type of surety. For the $500 appeal bond, the simplest thing to do is use a cash bond. In that case, you prepare, execute, and file the bond form along with a check for $500 payable to “Clerk of Court.” Remember, this goes to the circuit court clerk. For cash bonds, I recommend that you add this language at the bottom of the form: “No surety required per Code §8.01-676.1(S).”
You can use a cash bond for suspension, too, but that can get expensive in large appeals. In many instances, the appellant will choose to employ a professional surety, usually an insurance company. That company will prepare and file the bond, charging the appellant a premium.
The paragraph immediately above this one may lead you to conclude that an appellant should never post a cash bond; just pay the premium and let the surety company take the risk of loss. Ah, but they’re too smart for that; most companies will require that the appellant put up something of equal or greater value, so the company won’t lose money on an affirmance.
To find a bonding company, you’ll probably want to consult an independent insurance agent who handles things like payment-and-performance bonds for businesses. If you go to a bail bondsman who’s hanging outside the City Jail, be prepared for a breathtaking premium for a bond like this. This company provides excellent bond service nationwide, and they’re not bail bondsmen.
Disposition of the bonds
If the appeal is successful, then the clerk of the trial court will return the appeal bond to the appellant. This requires a court order, which is usually by consent. If the appeal is unsuccessful and the appellee obtains an award of statutory damages or of appellate costs, then the bond exists as security for those awards. Upon application, the clerk will pay the bond unto the appellee. If the award is less than $500, the appellee gets his or her award and the remainder goes back to the appellant.
For suspending bonds, the same result occurs with a reversal – the money goes back to the appellant. If the bond is by surety company, the bond is canceled and the appellant is out only the premium paid. If the appellate court affirms, the appellee, as a judgment creditor, can obtain payment of the bond directly. Note that it’s far easier to collect on a bond than it is to execute against a judgment debtor; you just submit a court order and get paid.
What did I omit?
If you have appellate-bond questions that I haven’t anticipated, drop me a line and I’ll answer them. I’ll also update this essay with that answer, so others will get the information, too.