Monday, January 23, 2012

Appellate Bonds

The California Supreme Court just held prevailing appellants may not recover "the interest expense incurred . . . to borrow funds to secure a letter of credit that was obtained to secure an appeal bond posted to stay enforcement of a money judgment during the pendency of the appeal."  (Rossa v. D.L. Construction, S183523.)

Existing law provides the prevailing appellant may recover (1) the premiums paid to secure an appeal bond, and (2) the cost of a letter of credit obtained as collateral for the bond.  (Rule 8.278(d)(1)(F).) 

But that's as far as it goes.  The appellant recovers the bond premiums, and the cost (or "charge") for the letter of credit securing the bond, but NOT the interest paid to borrow money to obtain the letter of credit to secure the bond.  That's too many steps removed from the bond, and allowing recovery "would be inconsistent with the historic principle that cost provisions are to be strictly construed," holds the Court today.