Trial resulted in a sizable judgment against your client. You know to stay judgment enforcement you have to post a bond, but what, exactly, does that mean? And how do you do it?
Enter Dan Huckabay from Court Surety Bond Agency. We sit down with Dan and ask him how we attorneys can be a hero for our clients by knowing a few key things about appellate bonds, such as:
Dan Huckabay’s biography, LinkedIn profile, and Twitter feed.
Appellate Specialist Jeff Lewis' biography, LinkedIn profile, and Twitter feed.
Appellate Specialist Tim Kowal's biography, LinkedIn profile, Twitter feed, and YouTube page.
Sign up for Not To Be Published, Tim Kowal’s weekly legal update, or view his blog of recent cases.
The California Appellate Law Podcast thanks Casetext for sponsoring the podcast. Listeners receive a discount on Casetext Basic Research at casetext.com/CALP. The co-hosts, Jeff and Tim, were also invited to try Casetext’s newest technology, CoCounsel, the world’s first AI legal assistant. You can discover CoCounsel for yourself with a demo and free trial at casetext.com/CoCounsel.
Announcer 0:03
Welcome to the California appellate podcast, a discussion of timely trial tips and the latest cases and news coming from the California Court of Appeal and the California Supreme Court. And now your hosts, Tim Kowal and Jeff Lewis. Welcome, everyone.
Jeff Lewis 0:18
I am Jeff Lewis.
Tim Kowal 0:19
And I'm Tim Kowal. Both Jeff and I are certified appellate specialists and as uncertified podcast hosts, we try to bring our audience of trial and appellate attorneys some legal news and perspectives they can use in their practice. As always, if you find this podcast helpful, we greatly appreciate referrals to other attorneys who may find it useful.
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Tim Kowal 1:15
All right, Jeff. Today we are pleased to have a very special guest with us. It's Dan Huckabay from court surety bond agency, we're going to be talking about bonds and their vital role in the appellate process to effect a stay the all important stay of enforcement of judgment. That's the one of the very first questions that comes up in my in my conversations with attorneys and clients after a devastating judgment has been entered. Sometimes they don't know to ask that question. They just think okay, we take the appeal and then we're off to the races and then we hope for the best but what about when they when you get hit with a an order for judgment debtor examination or there's a levy on the bank account, all your operating cash is gone. You need to talk to Dan Huckabee and his associates at court surety bond association or agency to get a bond so you can affect the automatic stay of enforcement of the judgment. Dan Huckabee is president of court surety bond agency one of the leading providers of appeal bonds in the United States. He has underwritten appeal bonds in almost every state and federal district court for clients ranging from Hollywood stars, professional sports teams, and fortune 500 companies and just my regular old Joe clients as well. He has also served as an expert witness in several cases where appeal bonds represent a central issue. Dan Huckabee is a graduate of California State University right here in Orange County, California, where he received a Bachelor of Science in Business Administration with a concentration in finance. He started CSPA in 1996, as an entry level assistant, and he bought the firm went and became the founder from the founder in 2008. And as president Dan is now responsible for managing the overall operations, helping clients evaluate potential collateral options and obtain the all important appeal bond, negotiating rates and terms and conditions with the surety companies. We're gonna be talking about all the details of obtaining and maintaining the bond during the appeal. Dan Huckabee, welcome to the podcast. Thank you for joining us.
Daniel Huckabay 3:10
Thank you, Tim. Thank you, Jeff. Great to be here.
Tim Kowal 3:12
It's great to have you here. Tell us a little bit more about court surety bond agency and what led you there in the first place and how you became the success story and you know, working, you know, starting as a lowly associate, and now owning the company,
Daniel Huckabay 3:25
out of Ghana kind of an interesting story. I'm one of the few people probably in our industry that had a relative in the industry, my dad was an underwriter for a surety company, and so kind of fell into it. And I my dad unfortunately passed away when I was 14. And he worked with this agency called surety bond agency. And it was then owned by an individual named Ralph Bytom, who just had a relationship with my dad through work. And like so many people do develop a friendship outside of work. And after my dad passed away, he Ralph had mentioned that my older brother ever needed the job to give them a call. And my my older brother had a job and you mentioned that to me. So I gave him a call and started working for the company when I was 15. Just doing odd jobs and, and after that, Ralph couldn't get rid of me and I just kept showing up. And when I worked my way through to Cal State Fullerton and when I when I graduated in 2003, he offered to sell but this time I started buying it and fired fully in 2008.
Tim Kowal 4:22
So you've been you've been working in court surety bonds since since age 15. Yeah, but you don't you don't hear those stories. Everywhere. Most people don't have never even heard of a court surety bond. And Dan has been working on it since high school. Alright, what and then what? How did you rise through the ranks? When did you when did you decide? Hey, I not only enjoy working here, I want to own the place. Yeah,
Daniel Huckabay 4:46
that's a good question. i i When I was in high school, I a friend of mine, and I had decided we were going to go to UT UTI, which is a mechanic school, and I was going to work on cards And I kept having this thought that I wanted to own the mechanic shop, you know, not just work on the cars and, and I think that thought kind of then further developed when I was working, you know, here in high school and I just, I just enjoyed all the different facets of the business and, and I somewhere along the lines, you know, the thought of, you know, owning the business kind of, I guess percolated to the surface, and I realized, you know, that really would be of interest to me. And Ralph was a great mentor. And he was, he was just someone that took a great interest. He was like a second father to me, and, and took a great interest in me. So he, you know, was somebody that helped me help foster that, and me, and it was kind of one of those things right place, right time and, you know, right people in my life and, and so, that kind of came to fruition? Well,
Tim Kowal 5:48
well, that's a great story. Let's move right into talking about these court surety bonds is, as I mentioned, at the top here, I've worked with clients who have made fortunes and finance, and yet they they've never heard of a surety bond. And of course, you know, we're all attorneys here, and a lot of or Jeff and I are attorneys here, and we work with a lot of attorneys, and they've never heard of a surety bond. They don't know what it is until they absolutely need one like yesterday, tell us what is a surety bond? What kinds of people need surety bonds?
Daniel Huckabay 6:19
So surety bonds are they're they're provided by insurance companies are they're very different than insurance. And I think that's one of the things that attracted me to the business. And I can't understand my own insurance policies. I couldn't sell you a general liability policy. If he asked for one, I just wouldn't know what to do. And
Tim Kowal 6:35
they're meant to be read by normal people. No, that's,
Daniel Huckabay 6:40
that's true. The surety industry, I think, is a lot more like banking. It's a credit based business where essentially the surety company is making a guarantee on behalf of their client, which we refer to as the principal to that third party, which are referred to as biology and, and doing so the surety company, the benefit of that bond that they're issuing is not really for the client, they're the principal, there's an indirect benefit, you know, that they're gaining, but really the direct beneficiary is that Albert G, who's getting the bond. And the other big differentiator between insurance and bonds is the principal asked to indemnify the surety against loss. And so in that way, it's really a lot more like a bank loan, except the surety, maybe not dispersing any funds, you know, if there's a claim under the bond, of course they are. But, you know, until that happens, they're just issuing essentially a promise. And there's a lot of different types of bonds. I always like to give the statistics that the surety industry is 1% of the overall insurance industry. So it's a really tiny fraction, which is why a lot of people don't know a lot about it. And then appeal bonds, which we're talking about today are only 2% of that 1%. So it's this really, really tiny sliver of an industry. And so you know, in addition to appeal bonds, the two, if I had to break it up into two big segments, one would be construction, all your public work that happens, both at the state and the federal level, schools, bridges all have to be bonded, so the contractors have to provide the the municipalities of the state that they're working for a bond to guarantee their work. And then the other half is a call it miscellaneous or commercial, which is like a catch all phrase and, you know, peel bonds or, you know, a little sliver of that. And then you've got other types of bonds for court related matters, like preliminary injunction or Release of Lien bonds, and, and then you've got just other tons of other licenses and permits type of bonds as well. Okay,
Tim Kowal 8:40
so, so the the appeal bonds that we're talking about, they really are obscure, they're 2%, of what surety bonds, which is 1% of all the insurance products that are that are out there. So we are in a in a very, very small sliver. But when we when we're talking about appeals as we do on this podcast, they are all important if you want to affect that the appellate stay. So let's let's talk about the the appeal bond are sometimes referred to as the supersedeas bond. The way I often describe the surety bond or the supersedeas bond to clients and other attorneys is that the surety becomes in effect a code judgment debtor, is that roughly correct in the crude way that I am explaining it there that the surety becomes a code judgment debtor who is liable for that judgment alongside the client if the appeal is not successful? Yeah,
Daniel Huckabay 9:29
no, that's a it's a great way to put it. I mean, essentially, the surety has the obligation to pay the judgment creditor if if the judgment isn't satisfied by the judgment debtor. So in that respect, they are, you know, ideally one step behind the judgment debtor, but, you know, in effect, they would they would be responsible if it wasn't satisfied, and
Tim Kowal 9:51
I guess we'll kind of taken this out of order there but just along it, but skipping to the end and keeping with that concept that the surety is required. answerable for that judgment if the appeal is not successful, at the end of that process, does the does the client need to do anything special? Or does the you know what, when the the the appeal is over and the remittitur issues and the judgment creditor now wants their money? Do they just they just go directly to the surety and say, pay up now? Is there? Or is there anything special that has to happen? That's
Daniel Huckabay 10:19
typically what will happen is they'll they'll go to the surety say, you know, this is judgment was upheld and an entirety or in part, and, you know, we're making a claim for this amount, and then the surety will then go to the principal and confirm that fact. And just make sure that the amounts that are being claimed are an agreement. And from there, they'll ask the judgment debtor, are you planning on satisfying this? Or? Or do you want us to satisfy it and you know, if they're holding collateral, they, they will ask you want us to its cash, for example, you want us to use the cash that we're holding, or depending on the type of collateral or circumstance, how the bond was underwritten the first place, they'll they'll look to figure out in coordination with the judgment debtor how, how to satisfy it.
Tim Kowal 11:06
Got it? Yeah. So if the, if the surety is Holding, holding the clients cash, then you probably just, you don't want to pay, you know, pay a different get a different bucket of cash and pay it that that cash was used for the purpose of set aside for purposes of satisfying that judgment anyway. But if it's collateralized with real property, for example, or some other asset that's not not liquid, and then you want to, you have to consider how you want to liquidate that. So the judgment gets paid. So let's get to that in due course, here when we talk about strategies for getting the bond and collateralizing the bond. So of course, surety bond agency issues bonds nationwide, as we talked about in your, in your introduction there, meaning you issue bonds in nearly every state and every court in the country. Are there any key differences in different courts that you have to contend with when issuing the bonds? Are there different requirements in different states for the bond? Are they are they pretty much the same kind of bond in every state?
Daniel Huckabay 12:03
The main differences, I would say come down to the amount of the bond when how much time the client has to put the bond in place. Meaning whether there's an automatic stay, and then there can be some other little nuances related to certain courts require us to have our signatures on file or things like that, to do some, you know, just behind the scenes nuances, but I think from the clients perspective, the two major ones, so the bond amount and the timing.
Tim Kowal 12:33
Yeah, so the the timing being, you know, how fast you need that bond. And in California State practice, there's not a deadline, it's just you want to you want to get that stay in place before you're before the judgment creditor wipes all your bank accounts.
Daniel Huckabay 12:48
in federal court, for example, there's now the, you know, the 30 day, automatic stay. So there's, there's some a little more definition there, that can be relied upon. And a lot of times we find it, it's because of post trial motions and things like that there. There might even be more time than that, you know, that 30 days, but at least from the time the judgment is entered, we kind of have a fixed time frame that we know we can operate with. You
Tim Kowal 13:11
get a lot more hair on fire calls from people in courts with that don't have any automatic stay after the judgment center.
Daniel Huckabay 13:18
Yeah, I would say so. I mean, there's definitely there's usually more pressure and those jurisdictions that don't have some, some type of automatics. And
Jeff Lewis 13:28
to your agency, does your company, she bonds for just about any kind of case? Are there some cases that your company won't touch in terms of a pending appeal?
Daniel Huckabay 13:36
No, well, we don't have a limitation on cases, I would say is like a general category. divorce cases are probably one of the tougher areas just not having anything to do with us or preferences. But the dynamics that exist, because in divorce cases, you have a division of assets that can be taking place. And so if someone is going to usually also you're dealing with individuals and individuals, typically, almost always need are required to put collateral in place. There's exceptions for you know, larger public companies and insurers and things like that. But with those individuals, then you have to have separate property. So if you're, you know, you've got, say, a married couple that has a house together and, you know, an account for $100,000 in there. That's all community property that's being divided. There's no There's no separate property for them to post as collateral. There are certainly cases where we find that someone did have separate property and is able to get the bond like I posted the collateral but more often than not, it's not possible to do the ones that are the types of divorce cases that that are more feasible or where there's already been a division of assets maybe now there's they're coming back, you know about spousal support or child support and or some issue post. You know, the division of assets. So there's already those separate assets. And, and those cases it's a little bit easier because the assets can work with.
Jeff Lewis 15:07
Interesting. Hey, let me ask you in terms of the premiums, you folks charge for bonds, does it change from case to case? And depending on like the risk, or of how you assess whether or not the Appeals can be successful or not? Or is there just a standard formula for how you assess premiums, the
Daniel Huckabay 15:23
shirts don't base the premiums on the case itself, because it really is too difficult. And as you guys know, you know, the majority of appeals aren't successful. So right, they gotta, the odds are stacked against them. But what they really focus on is the type of collateral whether collateral is being posted or not. And if it's not the financial strength of the, the applicant, and then the if collateral is being provided the type of collateral. And the third factor is the size of the bond. So smaller bonds are generally going to have higher rates and larger bonds, it's almost like a volume discount, a scale down the premiums, the larger the bond gets,
Jeff Lewis 16:06
what is what is the general range that premiums that people can expect to pay? If they have to bond around a judgment?
Daniel Huckabay 16:11
It can, there's a pretty wide range, because of all those different factors I just mentioned, but it can be anywhere from a little more than a quarter of a percent all the way up to 4%. You know, everything in between there is kind of those factors, I just mentioned
Tim Kowal 16:26
40% to 4%. Okay, yeah, in my experience, it's been, you know, what 1% is, has been the norm, and in my practice, and the judgments that I deal with in the, you know, the mid to high six figures to low millions, low single million, and
Daniel Huckabay 16:44
I would say that's, that's probably a pretty good average, because the and that size, range, and also when using cash, or like a letter of credit, that tends to be the range will, will fall within when you're really when it gets up to 4%, it's because of real estate being used. Sure, sure, does charge more for that because of the illiquid nature of it. So it's a little bit you can think of a little bit more like a mortgage, or a loan against the property. So they're gonna charge higher rates for that. And then when it gets really to that, that really low range, those are for a really, really large bonds that are, you know, those publicly traded companies and or insurers that are very, very financially strong. Now, the
Tim Kowal 17:28
common scenario in my practice is, you know, the, the client comes to me after there's a devastating judgment entered against them, they want to appeal, we discuss the judgment enforcement risks, and the client decides they want to get a stay immediately. And so I call you or I call Arturo, and said, We need that we need the bond ASAP. So I need you to jump into action. Forget everything else you had planned for today, and just work on our getting our bond, is this. Is this typical for you? Is there is there a way that clients can lay the groundwork to get a plan for a bond ahead of time? Or is that just too impractical? No, no one's going to think about getting a bond until they absolutely have to what you have any? What are your lessons based on your experience and having to get it you're getting all of these hair on fire emails? Or calls about getting a bond?
Daniel Huckabay 18:19
That's a great question. And I think there's a lot that can be done. And I have to say, I give a lot of credit to the legal community, you know, because we, we find that attorneys by and large, you know, advise their clients really well, and give give them a heads up that, you know, this is something that could be needed at early stages, like, we've had people call us before trial. And, you know, and because it's a big, big issue for them. And so they're, they're thinking all the way through, you know, what, what those potential outcomes can be, and we've had people call us before a verdict right after verdict. And, you know, when you when you're getting notified at those periods of time, particularly like, right, you know, right, after a verdict, let's say, because at that point, you kind of know what amount to do, you know, there's potentially some action that's going to need to be taken, but you also have time before the judgment is entered. So you know, and sometimes, you guys know, I mean, that can I can be months, you know, in certain cases, I mean, sometimes it might just be a few days, but whatever timeframe, it is that that adds that additional lead time, particularly in those jurisdictions like California, where there where it's then once it's centered, you know, needed immediately and so, we find, that's probably the number one thing we would encourage, you know, attorneys to advise their clients on is to have these conversations at that early in the stage because really, there's no other than the time to to make the phone call. There's no consequences, no dollars that are being spent. You can take these things pretty far without incurring any real costs. You know, the, and when we have a phone call that initial consultation with a potential client, we can assess, you know, what their options are, if collateral is going to be involved, we can determine, you know, we can kind of determine that generally over the phone, and, and then we can see what kind of collateral they have available. And there's, there's typically different timeframes associated with putting in different types of collateral. So we can kind of give them a roadmap of, you know, timing and cost and things that would be required and, and really, from there, they can, they can even take additional steps, if they choose to continue to be proactive, and getting that process started. With most of these things, you couldn't get a couple of weeks into it before, you might have to incur costs, you know, hard. And so there's a lot that can be done up front. And that's one of the reasons we love doing things like this, because because of the obscure nature of what we do, you know, the more we get that type of message across to attorneys do better, they're able to kind of advise their clients and, and even if they do, do that one thing, you know, make the client aware of its aspired and then encourage them to make a phone call to have that initial consultation, if they can, it can make make the world of difference.
Tim Kowal 21:10
Those are great tips that a trial attorneys should make their clients aware that as they're going into trial, that obviously you know, someone's going to win, someone's going to lose and it could be you that's, that's on the losing end of it. So be prepared to to appeal. And if you appeal be prepared to to stay the enforcement of the judgment. And for that you need a bond. So talk to Dan, talk to Arturo at CSBA. About what you're going to need to start, you know how you need to start moving around your assets are planning to use your assets to collateralize the bond and do that sooner rather than than at the last minute. Another strategy for for trial attorneys, if if they have waited till the last minute, and they need a stay, I always have a template, you know, Code of Civil Procedure 918 motion ready, it's very pro forma motion that you can file for the court to issue a temporary stay of enforcement. And I've talked with with your associate Arturo about, you know, helping sign one of those declaration saying, Yeah, we have, we're in the process of getting a bond issued. So you know, it's just to let the judge know that the we're not just blowing smoke just to try to get a stay overnight, and we are making good faith bonafide efforts to get a bond that will secure the judgment creditor. So let's talk nuts and bolts about we we need to get the bond in place. What what is the process? What is the conversation like with the client in the stock about so that the trial attorneys can plan to tell their their clients what to expect in this process? Or
Daniel Huckabay 22:35
yeah, so So first thing is that that conversation that we'll have with with the clients, and really to gauge the timeframe that they have the amount and then and then from there, we try to get a sense for if collateral is going to be required or not. And to do that if we're simply going to asking some questions about the company, if it's a company, what size the company is, you know, as large as a publicly traded as it is an insurer and then, you know, once we kind of narrow down, okay, we think collateral is going to be required or not, then we'll kind of take what the next step, if it's if we think collateral is not required, then we'll get financial information. If if collateral is required, then we discuss those four types of collateral that can be used, which is cash, letter of credit from a bank, or real estate, or a stock and bond portfolio that's in a non retirement account. And each of those have different costs and timeframes. And so we try to get, what we try to really do is get a sense of the client, not only what they have available, what kind of their preferences are based on their their circumstance, you know, somebody might have a preference to use real estate because they don't want to tie up their cash. But if the judgment, you know, has been entered, and they need the bond in two weeks, they may not have the time. And so we have to help them kind of understand all those different dynamics and help them work through, you know, what the possibilities are. And, and going back to what we were just talking about earlier, the more time we have generally, it allows for all the options to be available, the last time that we have those options start to shrink. And so that's one of the reasons, you know, having those early calls is so important, because we can we can open up the options. And then but whatever the circumstances are, then we try to figure out, you know, where to what next steps to take based on those client preferences and just the overall circumstance and, and those those look differently depending on which type of collateral that is going to be used. Now,
Tim Kowal 24:39
you mentioned four different types of collateral that can be used cash letter of credit, real estate, or a stock portfolio, or there. Can you use a combination of different types of collateral? Yes, definitely.
Daniel Huckabay 24:53
And I'm glad you brought that out, but it is not, you know, for one or the other type of selection that clients, we often have clients using multiple types of collateral. And I should I should note as well and the stocks and bonds, but it's non retirement accounts. I didn't say that already. And so we a lot of times with real estate, for example, you will have clients who use a little bit of cash and then and then use the properties as the bulk of it. How
Jeff Lewis 25:18
about a crypto Fiat? Anybody tried to pledge cryptocurrency as collateral?
Daniel Huckabay 25:23
We haven't asked Nevada. We have not done it. Okay. I don't know that it's possible to do it.
Tim Kowal 25:28
Okay. Not possible.
Jeff Lewis 25:30
You don't wanna take the ride?
Daniel Huckabay 25:34
Yeah, I I, as far as I know, it's not possible. I have not. Can't remember if I've verified it recently. But it's my knowledge. Okay.
Tim Kowal 25:43
Well, these were when we're talking about sure it is in California, we have to use admitted sure it is the bond amount in order to stay. Enforcement of the judgment has to be 150%. If it's it admitted a surety, surety listed by the I think the commission the insurance commissioner, as being admitted, frankly, maybe I'll ask you, Dan, I don't know what it takes to become admitted. I know there. There are quite a few shorties on that list of admitted charities. But what what does it take to be an admitted surety? I assume it's a it's a heavily regulated thing to be an admitted surety.
Daniel Huckabay 26:17
Yeah. So essentially, they're they're a licensed insurer, that that then gets, you know, a particular admission or license for a surety product. And so it is a very significant process, they get approved by the state. And then there's actually a separate department of treasury listing for on the federal side for that. Surety is asked to be listed on in order to provide bonds and they in the federal courts.
Tim Kowal 26:46
Now, when you say that, you know, the surety is one except crypto and you can't use stock portfolios that are based that are that include retirement accounts, is that a function of these are requirements that the surety is have, and is that because of regulation as part of being an admitted surety, they're not able to use those types of certain types of collateral
Daniel Huckabay 27:06
on the retirement accounts. That's actually more of an ERISA law, because they just they're not allowed to those accounts aren't allowed to be pledged that individuals could certainly make distributions from those accounts. But there's there's tax consequences associated with doing that to most people choose not to do that. But on the crypto, I think it would probably be more just a business decision, you know, a judgment, as far as I know of, to not accept those type of assets. Got it.
Tim Kowal 27:36
Now, what happens in the event that a bond needs to be increased, let's say, for example, in the scenario where there's an initial judgment that's been entered, and that's been appealed from, and the client talks, talks to CSBA, and gets a bond issued in the amount of 150% of the face amount of the judgment, and so everything's hunky dory have have a stay of of enforcement affected, but then there's a big cost award that's added on to the judgment now that becomes deemed part of the judgment amount. And the the the judgment creditor files a motion and it gets granted to increase the the amount of the bond required to continue the state of enforcement has to be increased. What happens in that scenario? Is that it does that present a problem. Now,
Daniel Huckabay 28:26
it's actually kind of a fairly common situation, especially in California, just because of that lack of timeframe for an automatic stay, and so you, a lot of people want to get that bond in place for the original judgment, while those other costs are being decided on. And, and so a lot of times, what we see is usually one of two things. One is, we could technically issue a rider, increasing the original bond amount to the new amount or a second option that we sometimes take is to issue a separate bond. And the reason sometimes it can be better to issue a separate bond as if it is a truly a separate entered as a separate judgment. And then and whether it's the possibility that maybe one could be reversed and one not be reversed, then sometimes it can be cleaner in terms of the collateral as you know, as collateral is being held that way, you're not at the shirt, he's not sitting there holding the entire collateral amount because maybe one has clearly been reversed where the other hasn't, then it might be better to issue two separate bonds as a lot of times what we'll do is kind of check with the attorneys that we're working with to kind of see what do you think it's best given the circumstances in this particular case and and we'll get different feedback and and the surety sometimes will have their own input, you know, the situation that which is one of the reasons it's, it's gonna be benefit shoul to work with a surety company that's well versed in these that has a strong claims and legal department. Sometimes we get people, a lot of times when people contact us, the first question is, how much is it going to cost? And which is a totally legitimate, you know, question, an important question that I don't want to sound like I'm downplaying it or dismissing it. But a lot of times when you think about the, the moving parts that are, you know, here with the importance of getting a place to stay enforcement, and you know, the consequences of not doing that the potential issues that you could have holding somebody's collateral for longer than you wanted to, because we issued one bond instead of two, you know, those are, those are factors that in my mind, a lot of time, it takes precedence over the cost, and then the cost becomes an important factor. Ultimately, you need to get it at a good price. But if getting getting the thing, right, and getting it done in time is critical.
Tim Kowal 30:57
Yeah, yeah, getting it right, getting it done in time. And then when it comes to the price, you we had talked about the the range of ranges from a quarter percent to 4%. With with with a lot of judgments in the, you know, high high six figure to low seven figure range being being about a percent and that that percent premium is an annual premium premium that has to be paid in advance of each year, correct? That's
Daniel Huckabay 31:20
correct. So the first year's premium was fully earned once the bond is issued. And I think if those are those are filed with the Department of Insurance, the way they're structured, and I think the reasoning behind that is way if there's, you know, a settlement that surely didn't go through all that work, and then, you know, are in one month premium type of thing. So, but then any any renewals are are prorated if the bond is exonerated midterm,
Tim Kowal 31:46
so the bond gets issued, there's collateral in place the surety issues the bond, then what happens is the bond is about to have to be filed with the court. What happens to the bond at that place at that point to get that stay in place? Yeah, so we
Daniel Huckabay 32:01
are processes that typically provide the bond to the attorney who then takes it and files it with the clerk of the court, and that that bond will get every jurisdiction, I should say is a little bit different, whether they accept electronic copies or not, you know, require originals gentleman in California, my understanding is the originals required and it gets filed with the court. And that's where that's where it stays for the duration of the appeal, and until the deal is concluded. Hey,
Jeff Lewis 32:26
Dan, the miscue question here we talked a little bit about how you figure out the amount of a premium for an appeal and an appeal, you know, there's $1 amount that's been awarded. So the math is kind of easy to pencil out of use you folks in the past for injunction bonds, where there's no real dollar amount at issue, it's more about what are the possible future damages if this bond was wrongfully issued, etcetera? Or if the injunction was wrongfully issued? How does your company go about valuing the risk and assessing what the premium is going to be for an injunction bond
Daniel Huckabay 33:00
injunctions are, like you said, quite a bit different because of the, you know, that underlying obligation not really having a specified amount. And, and so what this shirt is really rely on is, is if the amount is set at that lower, you know, kind of typical $10,000 amount, then they they view the case has been very strong, and likely to prevail. And obviously, the dollar amounts relatively low. And so they will generally issue those pretty freely just based on credit, or maybe getting a, you know, a financial statement. But I would say rarely do we have those ever denied or, or any type of collateral required for them? As the amount gets larger than that's where the surety will start to question the, you know, the strength of the case, and they sometimes then default to collateral being required. They may, you know, if it's 50,000 or 100,000, and it's a really large company, you know, again, they may do it based on the credit worthiness without any collateral. But I would say oftentimes, once it starts to get into, you know, maybe a couple 100,000 Plus, yeah, there's a there's a real tendency to start to require collateral unless it's a really strong applicant. Well,
Jeff Lewis 34:17
let me ask you this, sometimes appeals take a long time or injunctions are in place for a long time pending trial. And suppose you insure or vouch for a company that has really strong financials publicly traded company, like we work, and then in the middle of the appeal or the middle of the injunction, we work files for bankruptcy, and all of a sudden your maybe your collateral is not as strong as you thought it was, or you're a little more at risk. This is a surety ever in a position of having to in the middle of the game, having to go back to its client and say, Yeah, we're going to need more security.
Daniel Huckabay 34:53
Yeah, absolutely. They're their indemnity agreements have provisions that allow them to call for Lateral, they, I can tell you during the during COVID, it was probably, you know, April or May, we got a couple of calls from publicly traded companies that we did not write the bonds for, but that were having their surety is that wrote appeal bonds call for collateral. And they were trying to try to, you know, just get a sense for do they have the right to do this? You know, it's it's common practice, you know, that sort of thing. It's not something that happens often, you know, but it is something that that does happen, it can occur. And it's something that, you know, people should be aware of, you know, and a provision in these agreements.
Jeff Lewis 35:38
Let me ask you, it's speaking of COVID, for those jurisdictions that require an original surety or original document to be lodged with the court with with a lack seal, what did you folks do during COVID? To to get your documents on file?
Daniel Huckabay 35:51
No, we didn't. I would say we didn't experience much of a a difference. But But part of that is probably we did see a huge slowdown. I mean, yeah, of course, we're closed. And so we, you know, the volume of, I guess, activity that we saw was so much lower, it's kind of hard for me to say what all courts were doing. But as far as I know, we you know, we kept issuing the same process, we will provide the original to the, to the attorneys and and what they then did with it, I don't know if it got modified, you know, during that time period, perhaps they did something different on there. And, yeah,
Jeff Lewis 36:29
it's, you know, it's I just think the Orange County Superior Court, I know, there was a time period where the the courthouse was shut down, they had clerk set up with the tables outside and like a bin where you could deposit things. And I'm just trying to imagine, you know, depositing an original document in a bin like that. Interesting. Did COVID-19 Change your business at all, in terms of, you know, kind of rebounded now, in terms of the trial courts are busy or going back to trials and all that, but are there any changes that COVID-19 had in terms of how you do business? Or how you communicate with your clients? Yeah, I would say generally,
Daniel Huckabay 37:02
there's, there's more of this, you know, I mean, the zoom and the teams, I mean, I don't know about you guys, but when somebody says they want to have a conference call, it generally means they want to have a team's calling, which is great. I say, you know, I like having the visual aspect to, in addition to the phone calls. So I would say that's probably, you know, the the main elements. The other thing we have seen is the size of judgments. And it's not directly related to covered per se, but just you know, you hear a lot about the social inflation, the nuclear verdicts, we have seen the size of judgments increase. And we've heard you read about those stories about some very astronomical verdicts. And, and we've seen it on our end for sure.
Tim Kowal 37:51
Let's wrap up our conversation with just a couple more questions about strategy and how the attorney can play a role and help facilitate the role of getting the bond in place, we talked about a couple of roles that the attorney plays, namely advising the client early in the process, that look, if it's worth going to trial, it's worth going to appeal if you lose, and if it's worth appealing, then you want to stay the judgment. So we need to, we need to talk about getting a bond in place to talk to Dan early, before you get that judgment and you start getting your your bank account sees what are some other ways. And then we also talked about, we mentioned getting a 918 temporary stay of enforcement, what are some other ways that that you see the attorneys being involved in this process, then I
Daniel Huckabay 38:39
would say, you know, keeping in contact, particularly in those situations where maybe there's there's post trial motions. So they're the judgment has not been entered yet. Or there's something you know, that is still ongoing to be in close communication about timing, because I have an example of a relatively large case that we're working on. And we've been working on it for, I don't know, five months, and it's got a lot of moving parts to it. And their judgment has not been entered. They I shouldn't say that they they just had a an order of entry for the judgment, but they haven't gotten the official judgment back. And so at any moment, we know that's going to get entered, and we're going to end this jurisdiction we have 21 days after and so we've been trying to make progress towards the final, you know, getting the final bond issued, but one of the factors is the we have to get the bond amount confirmed by the court in this particular situation. So, in that type of situation, you know, we have timing involved, we have, you know, the amount that's it's not totally clear cut, because some in California would say it's one of the more straightforward you know, and whenever you have that, you know, simple formula and one and a half times it can be relatively straightforward and some other jurisdictions when you have interest that is accruing post judgment interest that you're trying to calculate, or there's just other moving parts, you know, going on. And that's really where I think there can be a huge involvement, the attorney side with us, because we need to keep in coordination to make sure we're getting all our ducks in a row.
Tim Kowal 40:22
Yeah, I'm glad you mentioned that about that, you know, we do have that 150% statute under Code of Civil Procedure nine 17.1. And it's, it's a little bit breathtaking for the client to hear, not only do I have to bond this judgment, but I have to bond one and a half times the amount of the judgment. But the the idea is it's supposed to build in there's 10%, post judgment interest accruing, and the appeals take 18 to 24 months. So you've got to, you know, add 20% onto the judgment there. And then there's attorneys fees, potentially for the for the prevailing respondent, if the respondent prevails, of course, and maybe other costs. So in your experience to the does the 150% wind up pretty comfortably covering the ultimate amount that has to be paid at the end of the whole process? Or do you think do you think it's the 150%? is overblown? And should it be reduced a bit?
Daniel Huckabay 41:12
You know, I don't see the exact final amounts all the time. Because there's, you know, there's always a cost and everything that has to be calculated afterwards. By that point, we're usually handing it over to the surance Claims Department to handle. But what I would say is I, I don't know that I've ever heard of it going over. So I mean, it's probably a very safe amount that, you know, to be used, there's probably some of excess there and, and rose it or two to come down.
Tim Kowal 41:40
Because the surety is only liable up to that the amount of the bond. So if it goes over, then the liability goes back to the to the client, the judgment debtor. Let me ask you another question about, you know, back to the top my my first example, or my typical case, where, where the the client is asking me about posting the getting the judgment, enforcement stayed after the judgment is entered. And I explained that there's no deadline to do so. It's just whenever you want to get the stay in place, that's your deadline. And so sometimes that could mean well, I don't have to do it right away, I could take my time and just take a wait and see approach. Is there ever a situation where that where you've seen that wait and see approach backfire that while while the the client is still kind of waiting and seeing before hopping to it and getting the bond and the in the stay in place, where judgment enforcement just happens spontaneously, and suddenly their assets are compromised? Yeah,
Daniel Huckabay 42:37
we had, we had a case earlier this year, it was pretty unfortunate where they came to us, and the judgment creditor had already garnished their business account for a million dollars. And that was the collateral that they would have used for the bond. And they had, they had some other collateral that they presented that they wanted to use. And unfortunately, the surety wouldn't accept that this the way it was, it was structured. And so even though they had, you know, they had net worth outside of this, you know, million dollars that was taken from their operating account, it just, we couldn't get the bond in place with the collateral that they had left. And so they didn't have any option to get the money back or put a bomb in place to get the money back. So they had to proceed forward without without that money. And that was, as far as I understand, from our discussions pretty critical money they need to operate. Yikes.
Tim Kowal 43:30
Well, I wonder in that kind of scenario, you know, I've always taken the position when I'm the respondent, you know, I tell my claim, you want to see the other side post a bond, that means that you're guaranteed to get paid, you're not gonna have to worry about, oh, gosh, you know, do I have to keep throwing good money after bad if I wouldn't, I've already spent so much money getting the judgment. And now I have to spend all this money defending the judgment on appeal. And I still don't know if if the guy has the money to pay the judgment. Well, if they post the bond, you know it. So do use, you know, it occurs to me that it's a good idea for counsel to meet and confer and stipulate about if there's any question about what the amount is, or, you know, when the when the bond has to get it has to get posted. If you need it a couple of weeks time, as we talked about, you can get the temporary state from the court if you're in California state court, but if not, wouldn't it behoove the the respondents counsel and the respondent to say, yeah, we'll stipulate if you are truly working with Dan to get a bond, then we're happy to help facilitate that. Yeah,
Daniel Huckabay 44:26
I think it makes all the sense in the world. I mean, you know, obviously, every case is different, and the parties are, you know, getting on how they're behaving and, and whether they're going to follow through on what they say they're going to do. But I mean, if the parties are, you know, both in earnest trying to, particularly the judgment debtor trying to get the bond and get it in place. It's like you said it boosted a judgment creditor to have that bond. It's a source of payment, you know, allows them to know that if they're gonna go through all this, but there's a there's something at the end of the road for them that Collecting bond?
Tim Kowal 45:00
Well, then you got a ton of great resources for attorneys and litigants who need to post a bond including bond calculators. So you can figure out what what your total out of pocket is going to be there any other any other resources or, or tips or stories you'd like to share, as we conclude our conversation here, Dan, as
Daniel Huckabay 45:18
you said, I mean, our website is called surety.com. And we've got a lot of articles on our website about a lot of a variety of topics, and also specific information for each type of collateral that people can look into and the calculators for the premium ranges that we talked about just for people to get a better sense of, you know, what these things cost and in the process and the term so by all means, we encourage people to visit that and contact us you know, if they have any questions. Terrific.
Tim Kowal 45:48
We'll put links to those in the show notes. And Jeff, I think that's going to wrap it up for this episode. We'll we want to thank again, our our sponsor for the podcast casetext. Each week, we include links to cases that we discussed using casetext's daily update a database of case law, statutes, regulations, codes, and more listeners to the podcast enjoy a special discount on casetext's basic research when they visit casetext.com/calp. That's casetext.com/calp. Yeah,
Jeff Lewis 46:18
and if you have suggestions for future episodes, or if you have questions on how to spell supersedeas, please email us at info at Cal podcast.com. And in our upcoming episodes, look for tips on how to lay the groundwork for an appeal when
Tim Kowal 46:28
preparing for trial. All right, thanks, Dan Huckabay for joining us.
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