Staying Enforcement of a Money Judgment on Appeal

• Jurisdiction: United States,Federal
• Citation: Vol. 34 No. 1
• Publication year: 2021
• Author: By H. Thomas Watson
• topic: Business of Law,Insurance Law,Civil Procedure

Staying Enforcement of a Money Judgment on Appeal

By H. Thomas Watson

H. Thomas Watson, a Certified Appellate Specialist, is a partner at the appellate firm Horvitz & Levy LLP. Tom has published and presented extensively on numerous legal topics, including appellate procedure, medical expense damages, health law, and insurance law.

Unless enforcement is stayed, a judgment creditor can enforce a money judgment as soon as it is entered — unless the judgment debtor is a public entity. (Code Civ. Proc., §§ 917.1, subd. (a), 995.220.) Money judgments are usually enforced by levying against the judgment debtor's property under a writ of execution. (See Ahart, Cal. Practice Guide: Enforcing Judgments and Debts (The Rutter Group 2019) ¶ 6:300, p. 6D-1.) The court clerk has a ministerial duty to issue a writ of execution, which means that the clerk issues the writ in the ordinary course of business without any notice to the judgment debtor or any ruling or approval by the judge. (See Code Civ. Proc., §§ 699.510, 712.010; see also Judicial Council Forms, form EJ-130.)

Under a writ of execution, the judgment debtor's unprotected assets can be seized and its bank accounts frozen. (See Code Civ. Proc., §§ 695.010 et seq., 699.010 et seq., 699.520 et seq.) However, there are several ways to secure a stay of enforcement. Judgment debtors and their counsel should understand all of these available options.

I. The Voluntary Stay

The governing authority. Code of Civil Procedure section 995.230 states that "[t]he beneficiary of a bond given in an action or proceeding may in writing consent to the bond in an amount less than the amount required by statute or may waive the bond." Under section 995.230, judgment creditors can stipulate in writing not to execute on all or part of a judgment, for a specific period of time or until all appellate proceedings have concluded.

There are several reasons why a judgment creditor may decide to waive the appeal bond requirement or agree to a reduced bond or other security.

1. Waiving the bond avoids potential liability for appeal bond costs. The costs of obtaining an appeal bond, "including the premium, the cost to obtain a letter of credit as collateral, and the fees and net interest expenses incurred to borrow funds to provide security for the bond or to obtain a letter of credit" are recoverable by a successful appellant. (Cal. Rules of Court, rule 8.278(d)(1)(F).) These annual costs can total 5-10 percent of the judgment amount over the course of an appeal. If the judgment debtor is financially secure, a prudent judgment creditor may offer to waive the appeal bond in order to eliminate possible liability for such costs. Similarly, a prudent judgment debtor should always ask the judgment creditor to waive the appeal bond, since their refusal to do so proves that the bond was necessary and thereby perfects the right to recover the appeal bond costs. (See ibid. [costs of an appeal bond are not recoverable if "the trial court determines the bond was unnecessary"].)

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2. Parties can negotiate an appeal bond waiver agreement on any terms. Second, the parties can negotiate any deal they want. For example, if a judgment debtor would otherwise incur tens of thousands of dollars in annual appeal bond costs, the judgment creditor might offer to waive the appeal bond in exchange for a nonrecourse lump sum payment (or annual payments) of an amount less than the cost of the bond. If priced right, both parties may benefit from such an arrangement.

3. Agreeing to a temporary stay may avoid needless litigation costs. Finally, even if the judgment creditor is unwilling to waive the appeal bond entirely, the judgment creditor might nonetheless agree to a temporary stay under Code of Civil Procedure section 918 (discussed below).

II. The Temporary Stay Order

If the judgment creditor declines to temporarily or permanently waive the appeal bond (or indeed has begun to execute on the judgment), the judgment debtor may apply to the court for a temporary stay of enforcement lasting up to 10 days after the last day on which a timely notice of appeal could be filed. (See Code Civ. Proc., § 918.) Such a temporary stay can be sought ex parte at any time, even before entry of judgment. Most judges understand that granting a temporary stay of enforcement is appropriate because it gives the judgment debtor time to secure an appeal bond — especially when the amount of the required bond may change as a result of posttrial motions, an award of costs and/or attorney fees, or setoffs due to prior settlements. However, this type of stay is entirely within the discretion of the trial court, and the granting of a temporary stay is therefore subject to any concerns the trial court may have regarding the security of the judgment (e.g., whether the defendant is likely to hide assets from collection).

III. The Admitted Surety Appeal Bond

Admitted surety bonds are often used because they must be accepted. Most judgment debtors secure an appeal bond from an admitted surety to stay enforcement of a money judgment during the pendency of an appeal. Admitted sureties are insurance companies that have been admitted by the...