Appeals court ruling clarifies law on appeals bonds

An appellate court on Tuesday affirmed a seven-figure award of costs in a case involving a disputed $30 million loan.

The 2nd District Court of Appeal's decision held that an award of appellate costs is a separate and independent order that's immediately enforceable even if further proceedings are pending in trial court. It also held that appellate costs may be recoverable even if less expensive alternatives may have been available.

The opinion also addresses a question of first impression, writing: "The parties have not cited, and independent research has not disclosed, any authority specifically addressing whether lost opportunity costs are a factor which can be taken into consideration when determining whether costs incurred were reasonable and necessary. We believe that lost opportunity costs are an appropriate factor in determining the method used to bond the judgment."

The ruling emphasized, "the law is only that lost opportunity costs should not be awarded."

The court originally awarded appellate costs after attorneys at Gibson, Dunn & Crutcher LLP successfully appealed a nearly $70 million judgment on behalf of client Angela Chen Sabella, the daughter of a deceased Hong Kong billionaire.

She sought approximately $1.4 million for the cost of obtaining a surety bond pending the appeal. Rostack Investments Inc. moved to tax those costs, calling them unreasonable and unnecessary. The trial court denied the motion.

Mayer Brown LLP represented Rostack. Julian W. Poon of Gibson Dunn represented Sabella.

Poon said in a statement that he's "gratified" by the decision, which he said "clarifies the law in significant ways, including underscoring that appellants need not select the absolute least expensive means of posting an appeals bond and making clear that appellate awards of costs on appeal are final and immediately enforceable once entered and before further proceedings in the trial court (e.g., a trial) have taken place."

The opinion was written by Justice Laurence D. Rubin. Justices Tricia A. Bigelow and Elizabeth A. Grimes concurred. Rostack Investments, Inc., v. Sabella, B286069 (Cal. App. 2nd., Feb. 5, 2019).