Defendant Awarded $1.4 Million in Costs Despite Cheaper Alternative

The California Court of Appeals, Second Appellate District has awarded costs to a defendant who obtained reversal of a judgment exceeding $50,000,000. Her costs included $1.4 million she incurred in obtaining a surety bond that she posted to stay enforcement of the judgment. The plaintiff sought to strike those costs, asserting that the defendant could have obtained a cash collateralized bond, which would have been less expensive, but the court held that the amounts sought were reasonable and necessary and that the mere fact that an alternative that would have been less expensive was available does not render the costs unreasonable or unnecessary. In this case, the defendant did not have the cash available to collateralize the bond and would have had to liquidate substantial assets. In addition, the court held that lost opportunity costs, which the defendant would have suffered if she collateralized the surety bond with cash, is a factor to be considered in determining the method used to bond the judgment.

Sanford Hausler is of counsel with Cox Padmore Skolnik & Shakarchy LLP in New York, New York.

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