One of the most frequent questions asked when a client is considering taking an appeal from an adverse judgment or order is whether that judgment or order is stayed pending appeal. The answer, not surprisingly, is “it depends.” While the general rule is that perfecting an appeal stays proceedings in the trial court, including enforcement of the judgment or order, there are many, many, exceptions to that rule.
One such exception is a judgment or order for “money or the payment of money.” (CCP § 917.1) In such cases, a bond or undertaking is typically required to stay enforcement. The costs of such security can be significant. If you are using an admitted surety insurer, the amount of security required is 1 1/2 times the amount of the judgment. Obtaining a bond through an admitted surety will require that you have sufficient collateral to secure the bond, and sufficient funds to pay the associated premiums, which generally run between 1% and 3% of the total bond amount, per year. So, if you are appealing from a $1 million judgment, you will likely need $1.5 million in assets as collateral, and up to $30,000 per year for the premium.
Obviously, having a stay of enforcement in place pending appeal is preferred, if at all possible. Otherwise, if you pay out the judgment and then obtain a reversal, you are faced with the task of getting your money back. But what if you can’t afford to post a bond? Do you have options?
The answer is yes, you do. Code of Civil Procedure section 995.240 gives the trial court the discretion to waive the bond requirement for “indigent” parties who are “unable to obtain sufficient sureties.” And while parties who can afford lawyers and/or have insurance for their defense may not immediately come to mind as “indigent,” a recent published decision from the Third District Court of Appeal makes it clear that there is no fixed definition of “indigent” and that under this statute, an “indigent” party is simply “any person who is unable to obtain sufficient surety, not just a person who is destitute.” (Guzman v. Superior Court (2026) 122 Cal.App.5th 1286, 1291.)
In Guzman, the defendant sought to appeal a $20 million personal injury judgment. With insufficient assets to secure the necessary $30 million bond, he sought relief under CCP § 995.240, and the trial court lowered the amount of the bond to $1.25 million. The plaintiff sought a petition for writ of mandate or prohibition, and after issuing an order to show cause, the appellate court denied the petition. The court held the statute gives the trial court the discretion to waive the bond if it determines the principal cannot obtain sufficient sureties because they are indigent, and that it is the principal’s actual ability to pay that guides the court’s assessment of indigency. In other words, one need not be destitute to be considered “indigent” under this statute. The trial court did not abuse its discretion where it held a hearing and took evidence on the principal’s financial situation, and the cost of an appellate bond at various levels, before reducing the amount of the bond required. At the heart of the Guzman decision was the court’s concern with access to justice. If a litigant cannot afford a bond, “considerations of immediate judgment enforcement will necessarily impact [their] strategy in seeking and executing an appeal.” (Guzman, at p. 1296.) “[L]itigants who can afford a bond will be in a better position to assert their rights than those who cannot.” (Ibid.) If you or your client are in a position where the cost of the required bond is out of reach, don’t neglect to pursue a waiver or reduction of the bond amount under section 995.240, and to cite Guzman in support of your motion.
