Salt River Sand and Rock Company v. Dunevant (CA1 6/30/09)

The reason lawyers make ridiculous arguments – apart from not realizing that they’re ridiculous – is that once in a while some judge buys them. Witness this special action about a supersedeas bond.

Gravel Resources of Arizona obtained an $18.4 million judgment against Salt River. Salt River asked the trial court to set the amount of the bond at $5.5 million, arguing that it couldn’t afford a larger one. The trial court thought that it didn’t have the authority to do that, so Salt River took special action.

ARCAP 7(a)(2) clearly says that the trial court can set the bond in an amount different than the judgment. But Gravel Resources quoted a passage from Bruce Church v. Superior Court, 160 Ariz. 514, for a proposition that the court accepted (paraphrasing a bit): the court must require a bond in the full amount if the appellant is too poor to post it. The trial court’s order seemed to recognize that that doesn’t make any sense but blamed Bruce Church.

The thrust of this opinion is that that is essentially the opposite of what Bruce Church, and the cases it cited, said. There are typically two situations in which you’re looking at 7(a)(2) relief: when the appellant is so poor that it can’t post the full bond and when the appellant is so rich that it doesn’t need to. Under Bruce Church there must, in the latter case, be objective evidence that the appellant can pay the judgment. But that requirement doesn’t apply (and this is where the trial court went wrong here) to the former case. If the appellant is too poor to pay, the trial court can give it a break.

The Court of Appeals then addressed the the issue of “what factors the court should consider” in doing so. (Perhaps this issue was raised in the Petition; it wasn’t necessarily raised by the facts or the proceedings below.) The opinion’s analysis of the factors – as usual where “factors” are involved – consists more of a reference to facts that seem to be affecting the court in this case than a statement of principles that will help much to decide the next one. In any event, as near as we can figure it the factors are (1) the collectible value of the debtor’s assets as of the date of judgment, (2) the degree of their liquidity, (3) any “complexities” the creditor would face in collecting the judgment, and (4) what assurances there are that the debtor’s financial condition will not deteriorate during the appeal. The opinion then tells us – as always where “factors” are involved – that “these factors are not exclusive.”

The case was remanded to the trial court for determination of the bond in light of this opinion.

(The back-story here is that Salt River’s owner has plenty of money – but its an Indian tribe. The trial court had ruled that the waiver of sovereign immunity applied only to the sand and gravel operation, from which the assets of the tribe are carefully insulated. Dealing with tribal businesses is not necessarily a bad thing but too many people do so without fully realizing that the chances of recovering from tribal assets is – unless the tribe has been badly advised – essentially zero.)