Got Your Mind On Your Money? Limits on Appeal Bonds

Have you obtained a judgment for recovery of money? Lucky you! Is that judgment unsecured? Ouch.

Well, at least you have some protection should your opponent decide to appeal: Under the Maryland Rules (and unless the parties agree otherwise), the appellant has to file a supersedeas bond covering the whole amount of the judgment that remains unsatisfied, plus interest. Of course, the court can always reduce the bond amount, but it can still be a pretty big deterrent to weak or frivolous appeals that just delay payment and increase the chance that some other creditor will snatch up the debtor’s funds in the meantime. As proposed in the 188th Report of the Maryland Standing Committee on Rules of Practice and Procedure, however, the bond isn’t without limits.

If a bond always had to cover the full amount of an unsecured money judgment, losers at the trial level who owe big bucks to the winners would, as a practical matter, often be unable to afford the opportunity to exercise their right to seek review. The new Report would change Rule 8-423(b), which provides for the bond in an appeal from an unsecured money judgment, to clarify that it is still subject to Md. Code, Cts. & Jud. Proc. Art. § 12-301.1. Pursuant to that statute, a supersedeas bond can’t exceed $100,000 unless the appellant has diverted or dissipated assets outside the course of normal business or is in the process of doing so.

The upshot: Because of the new bond cap, the size of an unsecured money judgment no longer acts at a functional bar to appeal. That said, $100,000 will still be a pretty big hurdle in many cases, and parties that can pay the max can probably pay more. Plus, if the appellant is shedding assets in some irregular way, the cap is lifted. So victors at the trial court still have some safeguards against pointless appeals that can further frustrate collection.