Motion to Reduce Amount of Appeal Bond filed by Non-party Infinity Insurance Company

 

Tentative

 

The Court would like to hear argument and is not available for argument on January 18.

Accordingly, the Court CONTINUES the hearing to the next date available for counsel and the Court.

The Court’s tentative ruling is that the motion is denied. This is a tentative ruling. It is not, and may not be cited as, a ruling of the Court.

In addition, the Court has questions for counsel:

First, the affidavit of J.D. Gray states that the the second judgment or appealable order (based on section 998) was for $683,945 in prejudgment interest and $81,789.75 in expert witness fees. (Gray Aff., ¶ 5.) An exhibit to the affidavit, however, states that the judgment or appealable order was for $849,146.58 in costs and $683,945.56 in prejudgment interest. (Id., Exh. C.) Which is correct?

Second, Infinity’s notice of motion and motion states that it is moving “to reduce the amount of appeal bond to $10,000 or an amount that is sufficient to litigate the merits of this motion.” The phrase “sufficient to litigate the merits of this motion” is not clear to the Court. Is Infinity requesting, as alternative relief, that the bond be reduced to 150 percent of the amount of the judgment or appealable order that is at issue in the second appeal?

Third, what is the status of the second appeal?

Background

Plaintiff Daisy Calleja (“Plaintiff”) sued Defendant Jose Perez Chavez (“Perez Chavez”) for personal injuries she sustained in an automobile accident. Perez Chavez died before trial, and Plaintiff named Donna Bogdonavich as a defendant in her capacity as administrator of Perez Chavez’s estate (“Bogdonavich”). (The Court notes that in the court documents there is some variation in the spelling of Ms. Bogdonavich’s name; the Court follows the spelling appearing in the most recent documents submitted by her counsel.)

Infinity Insurance Company (“Infinity”) is the auto liability insurer for Perez Chavez. (Affidavit of J.D. Gray [“Gray Aff.”], ¶ 3.) The bodily injury policy limit is $750,000. (Ibid.)

Plaintiff prevailed at trial. The jury returned a verdict in the amount of $1,176,992.60. (Id., ¶ 5.) After trial, the Court awarded Plaintiff an additional $849,146.58 in costs and $683,945.56 in prejudgment interest based on a Code of Civil Procedure section 998 offer Plaintiff had made to Perez Chavez. (Id., ¶ 5 & Exh. C.)

Bogdonavich filed two appeals: the first appeal was from the jury verdict (Court of Appeal Case No. B317042), and the second appeal was from the award of costs and fees under section 998 (Court of Appeal Case No. B319906). (Id., ¶ 6.)

In connection with the appeals, Infinity posed a bond in the amount of $4,065,127.11. (Id., ¶ 7 & Exh. B.) This amount was calculated based on 150 percent of the total award. (Id., Exh. C.)

In the first appeal, the Court of Appeal affirmed the judgment on August 17, 2023, and issued the remittitur on October 8, 2023. (Id., ¶ 9.) Following the remittitur, on or before December 14, 2023, Infinity paid Plaintiff the full amount owed in connection with the jury verdict and first appeal, $1,448,181.57. (Id., ¶ 9; Danaher Decl., Exh. E.)

The second appeal remains pending.

On December 20, 2023, Infinity filed the instant motion to reduce the amount of the appeal bond. On January 4, 2024, Plaintiff and Bodonavich each filed oppositions to the motion. On January 10, Infinity filed its reply.

Legal Standard

With regard to an appeal bond, the court “may determine that the amount of the bond is excessive and order the amount reduced to an amount that in the discretion of the court ... appears proper under the circumstances.” (Code Civ. Proc., § 996.030, subd. (a).) “The determination shall be made upon motion or affidavit of the principal in the same manner as the motion or affidavit under this article that a bond is insufficient.” (Id., subd. (b).)

An objection to a bond as insufficient “shall be made within 10 days after service of a copy of the bond on the beneficiary or such other time as is required by the statute providing for the bond.” (Code Civ. Proc., § 995.930, subd. (b).) “If no objection is made within the time required by statute, the beneficiary is deemed to have waived all objections except upon a showing of good cause for failure to make the objection within the time required by statute or of changed circumstances.” (Id., subd. (c).)

Discussion

Bogdonavich and Plaintiff each raise threshold issues in their oppositions.

First, Bogdonavich argues that Infinity’s motion is untimely. Bogdonavich points out that under Code of Civil Procedure section 996.030, subdivision (b), a motion to reduce the amount of a bond must be made “in the same manner” as a motion for a determination that a bond is insufficient, and under section 995.930, subdivision (b), a motion for a determination that a bond is insufficient must be made within 10 days after service of a copy of the bond. Here, Bogdonavich argues, the bond was served on all parties on December 27, 2022, and Infinity did not file its motion until almost one year later.

This argument, however, reads too much into the phrase “in the same manner” in section 996.030. Here, Infinity’s argument (or, at least, its primary argument, as the Court understands it) is not that there was something improper in the amount of the bond as initially posted; rather, it is that subsequent developments, and specifically the issuance of the remittitur in the first appeal and the satisfaction of that judgment that was the subject of the first appeal, constitute changed circumstances that make the amount of the bond excessive at this time. In this context, the requirement that the motion be made within 10 days of the initial service of a copy of the bond does not apply.

Second, Plaintiff argues that Infinity, a non-party, lacks standing to bring this motion. The bond, however, specifically identifies Infinity as the party who is providing the bond (technically, an undertaking) under Code of Civil Procedure section 917.1. (Gray Aff., Exh. B.) As the party who is providing the bond, Infinity has standing to seek a determination that the amount of the bond should be reduced.

Turning to the merits, the Court begins by noting that Infinity provides no case authority in support of its argument that an entity that posted an appeal bond may, while the appeal remains pending, withdraw the bond or reduce it to an amount that is essentially nominal (in this context).

In connection with the appeal in this matter, where the judgment is in excess of policy limits, Infinity had essentially three options.

First, Infinity could have posted no bond at all. That would have allowed Plaintiff to pursue all available collection efforts while the appeal was pending.

Second, Infinity could have posted a bond in the amount of the policy limits. (Merritt v. J.A. Stafford Co. (1968) 68 Cal.2d 619, 626.) That would have allowed Plaintiff to pursue collection efforts against the estate (through Bogdonavich) for the excess amount. (Ibid.)

Third, Infinity could have posted a bond calculated based on 150 percent of the full amount of the judgment against the estate. That would stay any effort by Plaintiff to collect against Infinity or the estate.

Infinity chose the third option.

Contrary to its arguments, Infinity did obtain a clear benefit in choosing the third option, both for itself and for its insured. While the appeal is pending, Plaintiff is precluded from attempting to collect against either Infinity or the estate.

At this point, one appeal has been resolved, but the appeal of the other judgment covered by the bond remains pending. The Court is not aware of any authority that would permit an entity to post a bond at the outset of an appeal and then, while the appeal remains pending, change its mind and withdraw the bond.

Finally, Infinity argues that it was misled by, or received poor advice from, the Ford, Walker, Haggerty & Behar firm (“FWHB”), the counsel it retained to represent Bogdonavich. (Gray Aff., ¶ 7.) The Court has reviewed the correspondence submitted by Infinity and it appears to the Court that the information provided by FWHB was correct: as Mr. Reisinger of FWHB stated in a letter bearing the (possibly incorrect) date of January 4, 2022, the bond is necessary “to stay execution of the judgment.” (Id., Exh. D.) In any event, however, even if FWHB violated some professional duty to Infinity (either in written correspondence or some other communication), that is a matter between Infinity and FWHB, not a basis to withdraw the bond.

Accordingly, the motion to reduce the amount of the appeal bond is DENIED.

Conclusion

The Court DENIES Infinity’s motion to reduce amount of appeal bond.

Hearing on Motion - Other Reduce Amount and/or Substitute Appeal Bond is continued to 01/26/2024 at 01:30 PM in Department 29 at Spring Street Courthouse.

Moving party is ordered to give notice.