Wells Fargo v. Hon. Hoag (CA1 1/28/16)

A statute (12-25108) and ARCAP 7 that reflects it nowadays provide a formula for figuring the amount of a supersedeas bond. The issue here is whether, when the formula doesn’t apply, they prevent the trial court from requiring any sort of security.

This is the same case as Hoag v. French; go there for the underlying details. At some point the trial court made a ruling that resulted in this special action. To recap: Hoag had attempted to protect his substantial trust assets from a default judgment by appointing an offshore trustee; the earlier opinion removed the trustee from the proceedings but the bank continued its collection efforts under an equitable judgment that said it could and that enjoined Hoag from interfering.  Hoag moved to stay that judgment; for reasons not stated in the opinion the bank did not object to the stay itself. But Hoag wanted a stay without filing a supersedeas bond, on the theory that the new bond formula is linked to a money judgment and that since the judgment in question did not award money no bond was called for. The trial court agreed with Hoag; we’ll cut it some slack because the formula is new and the statute not particularly well thought-out. The bank took special action.

The Court of Appeals accepts it as an issue of statewide importance. The bank had apparently framed the issue as whether use of the formula is required only for money judgments; the trial court ruled that it applies to all actions. The appellate court reframes the issue as whether the statue and rule “bar a superior court from taking other steps to preserve the status quo or the effectiveness of a judgment it has stayed pending appeal.”  The opinion says that this is “narrower and dispositive.” “Narrower” is arguable; “dispositive” means “we’ve thought of another way to reach a suitable result.”

That way is to use a provision of Rule 7 that allows the trial court to “make any further order, other than or in addition to the bond, appropriate to preserve the status quo or the effectiveness of the judgment.” The court looks to decisions from other jurisdictions and concludes that the provision applies when a party would otherwise be “effectively and practically [deprived] . . . of the benefits it received by virtue of the judgment in its favor” and would “thereby suffer real, not hypothetical or speculative, harm.” In this case the effect of the stay was to allow Hoag to deplete the trusts that the judgment allowed the bank to go after.

The court remands and directs the trial court to “consider” whether some arrangement – the bank had suggested that the trust payments be held in escrow – would be appropriate.

The problem is of course that evading the issue as raised by the bank suggests that the trial court was right. It really would be better to clarify the statute than to promote an ancillary provision to the position of governing law on supersedeas in equitable actions.

(link to opinion)