As part of a larger set of articles on Appellate Law inspired by the Court of Appeals of Virginia taking on an expanded role, this article will discuss the often-overlooked but important topic of appeal bonds.
The term “appeal bond” is frequently used colloquially among the Bar to refer to two different types of bonds: (i) a suspension bond or irrevocable letter of credit and (ii) an “appeal” or cost bond. Both types of bonds are addressed in Virginia Code § 8.01-676.1 and in the appendices to Parts 5 and 5A of the Rules of the Supreme Court of Virginia.
Suspending Judgment Enforcement Pending Appeal
A suspension bond, also known as supersedas bond or an irrevocable letter of credit, is quite important as, without such, a party with a judgment can execute notwithstanding that the case is pending on appeal. To avoid this, the appealing party must post a suspension bond from a bonding company or an irrevocable letter of credit from a bank pursuant to Virginia Code § 8.01-676.1(C). A party can deposit cash into the court with the suspension bond in lieu of surety. Va. Code §§ 1-205; 8.01-676.1(S). It is important to coordinate with the clerk’s office of the court from which you are appealing to ensure this process runs smoothly.
The trial court sets the amount that needs to be covered by the suspension bond or the irrevocable letter of credit. Section 8.01-676.1(C) provides that the suspension bond or irrevocable letter of credit must be “conditioned upon the performance or satisfaction of the judgment and payment of all damages incurred in consequence of such suspension[.]” The amount is based upon the amount of the judgment plus an interest calculation for one year from the date of the notice of appeal, up to a maximum of $25 million. Va. Code § 8.01-676.1(J).
Notably, in recognition of the fact that suspension of enforcement pending appeal can be especially harmful to parties in certain contexts, a court may refuse to suspend the execution of a judgment regarding support or custody in domestic relations cases or when a ruling refuses, grants, modifies or dissolves an injunction. Va. Code § 8.01-676.1(D).
On the other hand, a suspension bond or irrevocable letter of credit is not required to suspend the execution of judgment in all instances. A court has discretion to waive the filing of a suspension bond or irrevocable letter of credit for damages in excess of or other than compensatory damages. Va. Code § 8.01-676.1(L). Also, the parties can agree to waive the suspension bond/irrevocable letter of credit requirement altogether or agree to a suspension bond or irrevocable letter of credit in an amount less than the compensatory damages. Id. Further, no security for appeal is required when it is filed to protect the estate of a decedent or person under disability or the interest of the Commonwealth or a locality. Va. Code § 8.01-676.1(M).
Appeal (Cost) Bonds
As for an actual appeal bond, also known as a cost bond, appellants are required to post a bond, or alternatively an irrevocable letter of credit, conditioned on the payment of all damages, costs and fees incurred in the appellate courts. In an appeal of right, the cost bond is due with the notice of appeal. Va. Code § 8.01-676.1(A). In a petition situation, the bond is due within 15 days after the petition is granted by the Supreme Court or the Court of Appeals. Va. Code § 8.01-676.1(B). Generally, the amount of the bond is $500 but that can be changed by a trial or appellate court. Va. Code § 8.01-676.1(A), (B). As with suspension bonds, a party can deposit cash into the court with the cost bond in lieu of surety. Va. Code §§ 1-205; 8.01-676.1(S).
Civil litigators should take notice that with the expansion of Court of Appeals jurisdiction to allow appeals as of right in the vast majority of civil cases, most civil appellants will now have to file a cost bond with their notice of appeal.
The Court’s rules are relatively lenient on cost bonds. Proper execution of these bonds is not jurisdictional. The Court will not dismiss an appeal for a defective cost bond or irrevocable letter of credit unless the appellee files a statement outlining the defects in said bond or letter of credit within 21 days after receiving written notice from the appellant of the bond and the appellant fails to correct such defect within 21 days. Va. Sup. Ct. R. 5:24 and 5A:17.
Forms for Suspension and Appeal Bonds
The Rules of the Supreme Court of Virginia include appendices of forms after Parts 5 and 5A that provide helpful guidance on the proper format for a suspension bond and an appeal bond.
Appeal bonds are critical but often overlooked element of appellate case management. Thus, litigants handling appeals should be well-versed in the law governing suspension and appeal bonds.