Friday, November 14, 2008
Court of Appeal Clarifies Rule for Calculating Appeal Bonds
By STEVEN M. ELLIS, Staff Writer
A party seeking to stay enforcement while it appeals a monetary judgment calling for periodic payments must pay a bond calculated on the award’s entire present value, not just the portion which may come due during the appeal, this district’s Court of Appeal ruled yesterday.
Denying Verdugo Hills Hospital’s request to reduce the bond in its appeal of a professional negligence judgment requiring periodic payments over the next 57 years—or until the plaintiff’s death—in an amount presently valued at almost $15 million, Div. Four reasoned that state law requires appeal bonds to be calculated based on lump sum present value in order to assure the entire judgment will not become uncollectible if the appellant becomes insolvent.
A jury made the award to Aidan Leung in 2007 after he brought suit through a guardian ad litem alleging the hospital and Dr. Steven Nishibayashi failed to provide his parents sufficient warnings and information, and to diagnose and treat his condition, when he exhibited signs of neonatal jaundice shortly after his birth in 2003, resulting in severe brain damage and motor impairment.
Following the verdict, Los Angeles Superior Court Judge Laura A. Matz granted the hospital’s request for a periodic payments judgment under Code of Civil Procedure Sec. 667.7, which provides an alternative method to pay future damages that exceed $50,000. However, she also ordered the hospital to provide security for the payments in the form of a bond from an admitted California surety, or an annuity from an approved list of companies, and ordered that Leung recover the judgment’s present value if the hospital failed to post the security.
The hospital appealed, and asked Matz to reduce the amount of its appeal bond under Sec. 917.1, which requires an appellant to post a bond or other undertaking in an amount twice that of the underlying judgment—or one and one-half times the amount if given by an admitted surety insurer—in order to stay enforcement while an appeal is pending.
It contended that the amount necessary to obtain a stay should be calculated on the amount that was or might become due while the appeal was pending, but Matz rejected the hospital’s argument and required a bond of more than $22 million.
The hospital—ultimately joined by the California Medical Association, the California Hospital Association and the California Dental Association as amici curiae—then petitioned the Court of Appeal for a writ of supersedeas setting aside the trial court’s ruling.
However, Justice Thomas L. Willhite Jr.—after the California Supreme Court ordered the Court of Appeal to vacate a previous summary denial of the petition—wrote that Matz had ruled correctly because the statutory text requiring calculation based on the “amount of the judgment” provided “no exception for lump sum judgments payable over time.”
“In stating that the undertaking may be enforced, the statute does not state that it may be enforced only for the amounts currently due or due within 30 days after the remittitur, rather than for the entire lump sum judgment. To the contrary, it is entirely consistent with the purpose of Sec. 917.1—to secure the judgment pending appeal—that if the undertaking is enforced, the judgment creditor of a lump sum judgment payable over time be able to receive the entire judgment amount from the surety.
“If the bond were only in the amount that came due during appeal, the judgment creditor would have no assurance of collecting future payments, despite the fact that the judgment reflects a lump sum damage award.”
Presiding Justice Norman L. Epstein and Justice Steven C. Suzukawa joined Willhite in his opinion.
Attorneys on appeal were Michael Thomas and Maureen F. Thomas of Thomas & Thomas and Feris M. Greenberger, Jennifer C. Yang and Robert A. Olson of Greines, Martin, Stein & Richland for the hospital; Luan K. Phan, Albert T. Liou, and Donald L. Saltzman of Richardson & Patel and Andrew N. Chang and Stuart B. Esner of Esner, Chang & Ellis for the plaintiff; and David S. Ettinger and David M. Axelrad of Horvitz & Levy for the amici.
The case is Leung v. Verdugo Hills Hospital, B204908.
Copyright 2008, Metropolitan News Company