Appellate Bonds
The Court of Appeals did not hand down any published opinions today, so let’s talk about appellate bonds instead. True, it’s not the most interesting of subjects, but it’s something that all trial attorneys should be familiar with, so let’s dive in.
Types of Bonds. There are two types of appellate bonds outlined in Code § 8.01‑676.1: an appeal bond and a suspending bond. Subsections (A) and (B) discuss the appeal bond, also known as a bond for costs, and subsection (C) discusses the suspending bond, also known as a bond for suspension of execution of judgment. An irrevocable letter of credit may be filed in place of either bond. Code § 8.01‑676.1(A) and (C). While an appeal bond is required in nearly every civil appeal, a suspending bond is not. Neither bond is required in criminal appeals. Code § 8.01‑676.1(A1).
Appeal Bond. An appeal bond is required in nearly every non-criminal appeal.[1] Its purpose is to ensure that the appellant can pay the costs and fees of the appeal if the appellant does not win. The security for an appeal bond or irrevocable letter of credit is $500. Id.
In an appeal of right to the Court of Appeals, the bond or letter must be filed “simultaneously” with the Notice of Appeal in the trial court, Code § 8.01‑676.1 and Rule 5A:16, which is due 30 days after entry of the appealable order, Rule 5A:6. The appellant must also notify the appellee of the filing. Rule 5A:17(b). In a petition for appeal to either the Court of Appeals or the Supreme Court, it must be filed within 15 days from the date the Certificate of Appeal is issued. Code § 8.01‑676.1(B). These deadlines are not jurisdictional and can be extended by the appellate court for good cause. Code § 8.01‑676.1(P); Rules 5A:17(b) and 5:24(b).
Suspending Bond. A suspending bond, often called a supersedeas bond, is only required where the appellant wants to stay execution of the judgment that it is appealing. Its purpose is to ensure that the appellant can pay the full judgment amount if it loses. Tauber v. Commonwealth ex. rel. Kilgore, 263 Va. 520, 545 (2002).
The security for a suspending bond or letter must be sufficient to cover the judgment against the appellant and “shall include an amount equivalent to one year’s interest[2] calculated from the date of the notice of appeal” as damages. Code § 8.01‑676.1(C) and (J); Code § 8.01‑682. When the judgment is not monetary, the damages are set “as the appellate court may deem reasonable,” but may not be more than $2,500 or less than $150. Code § 8.01‑682. In any case, the total security is capped at $25 million, regardless of the judgment amount. Code § 8.01‑676.1(J). Though not required by statute, it is a best practice—especially in cases of non-monetary judgments—to move the court to approve the form of the suspending bond.[3] This can be done in an agreed order and avoids a later motion by the appellee that the posted bond is insufficient. (See the section below on defects and modifications.)
Suspending bonds are not available in every case, however. The trial court may refuse to suspend execution of a decree for support and custody in a family law case or a decision with respect to an injunction. Code § 8.01‑676.1(D); Reid v. Reid, 245 Va. 409, 414 (1993).
Like an appeal bond, the suspending bond is filed in the trial court. There is no deadline by which a suspending bond must be filed, but until that time, the judgment creditor may attempt to collect on the judgment. Since collection can begin 21 days after entry of the judgment, Code § 8.01‑466, it is a good idea to make this your informal deadline. Once the suspending bond is properly filed, execution of the judgment is stayed. Code § 8.01‑676.1(C).
Filing. The Rules of the Supreme Court include forms for both types of bonds and for irrevocable letters of credit.[4] All are filed in the trial court.
Each bond must be executed by a party and surety. Code § 8.01‑676.1(F). The form of execution is included in the Rules.[5] Bonds are issued by surety bond insurers, or insurance companies. It is best to use a bonding company that specializes in judicial bonds. The premiums they charge are typically far lower than, say, what a bail bondsman charges. To apply for a bond, most companies will require the appellant to fill out an application, provide copies of relevant court documents, and show collateral sufficient to cover the amount of the bond plus a premium.
An appellant can use cash instead of a surety for any bond, Code § 8.01‑676.1(S). In this case, it is best practice to note on the bond that the appellant is depositing cash as a “bond with surety” pursuant to Va. Code § 1‑205. Most clerks’ offices will not accept a personal check, so call the trial court clerk beforehand to determine whether they will require a firm or cashier’s check.
Letters of credit are issued by banks. If an appellant uses an irrevocable letter of credit, the letter must come from either a federally insured savings institution located in the Commonwealth, or a bank incorporated or authorized to conduct banking under the laws of the Commonwealth or authorized to do business in the Commonwealth under the banking laws of the United States. Code § 8.01‑676.1(F).
Defects and Modifications. If the appellee has any objection to an appeal bond or letter, it must file a statement of the defect. Rules 5A:17(b) and 5:24(b).[7] In the case of an appeal bond filed in the Court of Appeals, this statement is due within 21 days of receiving the appellant’s notice that the bond or letter has been filed. Rule 5A:17(b). In the case of an appeal bond filed in the Supreme Court, this statement is due 21 days after the clerk issues the Certificate of Appeal. Rule 5:24(b). The appellant has 21 days from the date of the appellee’s statement to correct any defect in the appeal bond. If it does not, the appellee may move to dismiss the appeal, and it will be dismissed unless the appellant “satisfies” the appellate court that the appeal bond or letter was properly filed. Rules 5A:17(b) and 5:24(b).
An appellee may also object to the form or issuer of a suspending bond, Code § 8.01-676.1(E)(1), though the Rules do not set a deadline for the filing of that motion.
Both the trial and appellate courts have leeway to modify the amount and terms of an appeal or suspending bond. Code § 8.01‑676.1(E) and (L).[8] Any party can file a motion in the trial court to either increase or decrease the amount of a bond for good cause shown, and the trial court can act on the motion until the Court of Appeals or the Supreme Court acts on a similar motion. Code § 8.01‑676.1(E)(1). The trial court’s decision is reviewable by the appellate court in which the case is pending. Id. Alternatively, a party can file a motion in the appellate court to modify the amount of the bond for good cause shown. Code § 8.01‑676.1(E)(2). The parties may file affidavits of facts in support of their positions. Code § 8.01‑676.1(E)(3).
If a suspending bond requirement has been limited or waived and an appellee can show by a preponderance of evidence that the appellant is intentionally dissipating assets to avoid judgment, the court must rescind the limitation or waiver and may require the appellant to post a suspending bond up to the amount of the full judgment. Code § 8.01‑676.1(K).
If an increase is ordered in a suspending bond, and the appellant fails to effect the increase within 15 days of the order, the suspension of execution of the judgment will be discontinued. Code § 8.01‑676.1(E)(4). If an increase is ordered in an appeal bond, and the appellant fails to effect the increase within 15 days of the order, the appeal will be dismissed. Id.
Post-Appeal. After the appeal has concluded, a mandate will be issued to the trial court. If the appellant prevails, it will move the trial court for an order releasing the bond. This typically occurs through a consent order. If the bond was secured by surety or a letter of credit, the appellant will provide documentation to the surety that it is fully released from any obligation, and the bond or letter will be canceled. If the appellee prevails and the appellant fails to pay, the appellee can make a claim on the bond or draw on the letter of credit.[10] If it is a cash bond, the appellee will obtain an order of payment from the court and present it to the clerk’s office. If the appellee prevails but is not entitled to the full amount of the bond, then the remainder will be returned to the appellant.
[1] Instances when an appeal bond is not required include when an appeal is “proper to protect the interest of the Commonwealth or any county, city, or town of this Commonwealth;” when an appeal is “proper to protect the estate of a decedent or person under disability;” when the appellant is indigent; or when the appellant is a VWCC claimant who has not returned to work or “by reason of his disability is unemployed.” Code § 8.01‑676.1(M), (N), and (O). There can be no judgment for costs against the Commonwealth. Code § 17.1‑629.
[2] This amount is typically the statutory rate of 6%. Code § 6.2‑302.
[3] Though not required by statute, the Clerks of some jurisdictions, for example Fairfax County, require a court order setting the amount of the bond for filing.
[4] In the Court of Appeals, use Part Five A Form 1 for the appeal bond, Form 2 for the appeal and suspending bonds, and Form 9 for the irrevocable letter of credit. In the Supreme Court, use Part Five Form 1 for the appeal bond, Form 2 for the appeal and suspending bonds, and Form 10 for the irrevocable letter of credit.
[5] In the Court of Appeals, use Part Five A Form 8. In the Supreme Court, use Part Five Form 9.
[7] Trial courts retain concurrent jurisdiction with appellate courts to address motions “relating to the amount or form of an appeal or suspending bond pursuant to Code § 8.01‑676.1.” Rule 1:1B.
[8] The parties may also agree to waive or decrease the amount of the security for a suspending bond. Code § 8.01‑676.1(L).
[10] Instructions on how to draw on a letter are detailed within the text of the letter. Part Five A Form 9 and Part Five Form 10.