Appeal Bonds in Civil Cases: How to Halt Judgment While You Appeal

Losing at trial is a bad day. Losing at trial and then watching the other side freeze your bank accounts while you appeal is worse. In most courts, filing a notice of appeal does not by itself stop the winning party from collecting. An appeal bond is usually what does.

How the Civil Appeals Process Works

An appeal is not a second trial. The appellate court hears no new witnesses and takes no new evidence. Judges review the trial record and written briefs to decide whether the lower court made a legal error serious enough to change the result. They can affirm the judgment, reverse it, modify it, or send it back for further proceedings.

The process takes time, often a year or more. High-stakes cases can climb all the way to the U.S. Supreme Court, which can simply decline to hear them. That is how the long copyright fight over “Stairway to Heaven” ended in 2020, as we noted in our appeal bond basics guide: the Court turned the case away and the lower ruling stood.

Throughout those months or years, the money judgment still exists, and the winner generally wants it paid.

Where the Appeal Bond Comes In

An appeal bond is a surety bond that guarantees the original judgment will be paid if the appeal fails. A supersedeas bond is the version that stays enforcement while the appeal is pending. The word is Latin for “you shall desist,” a point we explored in our post on supersedeas and appeal bonds.

The terms for the bonds are used interchangeably in many courts, but not all. Some jurisdictions treat a cost bond, which covers appellate court costs, as a separate instrument that does not halt collection. Bond requirements can be persnickety and getting them wrong causes delays. Counsel should always carefully confirm which bond the court’s order requires.

Why does staying the judgment matter so much? Without it, creditors can levy accounts, place liens, and garnish wages. Neil Juneja of Gleam Law puts the risk plainly in his firm’s guide to supersedeas bonds: “The appellate court cannot always undo enforcement actions that have already taken place.” A business could ultimately win its appeal but suffer lasting damage from what happened while the appeal was pending.

The bond protects both sides. The appellant can challenge the ruling without facing immediate collection. The appellee knows the judgment will be paid if it is upheld. Courts also benefit, because a bond requirement discourages frivolous appeals filed only to delay payment.

How Courts Set the Bond Amount

The amount of an appeal or supersedeas bond is set by the court. It is usually based on the judgment itself, and post-judgment interest, costs, or anticipated fees are often added. The formulas vary by jurisdiction. In Arizona, for example, the bond is the lowest of three figures: the compensatory damages and related amounts in the judgment, half of the appellant’s net worth, or $25 million. Appellate attorneys Eric Fraser and Andrew Pappas of Osborn Maledon lay this out in their Arizona Attorney article on supersedeas bonds. In federal court, Rule 62 of the Federal Rules of Civil Procedure provides a brief automatic stay after judgment and lets a party obtain a longer stay by posting a bond or other security.

Because the rules differ so much, the court’s order is the controlling document. The bond has to match the obligee requirements in that order exactly.

Collateral, Premiums, and Timing

A surety charges a premium, typically a percentage of the bond amount, paid for each year the bond stays in place. The surety is guaranteeing the full judgment, so it often asks for substantial collateral, sometimes equal to the bond amount. Conveniently, Colonial Surety Company offers three ways to post collateral on required court bonds:

• A Morgan Stanley account. The collateral earns interest, which can help offset the annual premium.
• A wire transfer.
• A letter of credit from a bank.

Timing is where cases get into trouble. Appraising real estate or liquidating assets for collateral can take weeks. Fraser and Pappas advise, “It helps to start discussions early, even before entry of judgment.” They also suggest asking the trial court for enough time to post the bond after the amount is set.

After the Appeal

If the appellant wins, the bond is exonerated and the collateral is released. Counsel should get a court order confirming the exoneration. If the appellant loses, the judgment is paid and the bond is discharged.

If the case settles during the appeal, the settlement agreement should say exactly what happens to the bond. Sureties can be particular about the wording they need to release a bond, so it is worth sending them the draft language before it is signed.

Why Colonial Surety Company

Colonial Surety Company has been in business since 1930. It is rated “A” (Excellent) by A.M. Best, listed by the U.S. Treasury, and licensed in every state and U.S. territory. As a direct writer, Colonial Surety Company works without brokers or middlemen. Its knowledgeable New Jersey-based team answers the phone at 800-321-3662, and customers have given the company a 4.8 score on Trustpilot.

Appealing a judgment? Get a quote for an appeal or supersedeas bond online. Once the bond is approved, you can print it or e-file it directly with the court.

For Attorneys: The Partnership Account®

When a court orders a bond, your client’s deadline becomes your deadline. The Partnership Account® for Attorneys is free and makes bonding speedy and easy. From one dashboard you get:

• Colonial Surety Company’s full portfolio of court and fiduciary bonds, including appeal, supersedeas, injunction, replevin, and receiver bonds
• An efficient way to send bond applications to clients for completion and payment
• Tracking for every client bond in one place
• Direct access to Colonial Surety Company’s in-house legal counsel and underwriting experts

You can also e-file bonds from your phone, even before you leave the courthouse. Sign up once, and rely on it every time a case calls for a bond.