No Attorney Fees When Collecting on Supersedeas Bond – Court Overturns and Qualifies Precedent

Plaintiffs who successfully defended their judgment on appeal could not recover attorney fees incurred during the appeal when collecting against a supersedeas bond. Centering its discussion on appellate Rule 8, the Supreme Court of Alabama overturned and qualified precedent, and seems to have barred the recovery of appellate attorney fees through supersedeas bonds. Jones v. Regions Bank, No. 1060896 (Ala. Jun. 12, 2009).

After successfully defending their judgment on appeal, the plaintiffs sued on the defendants’ supersedeas bond and sought to recover, among other things, the attorney fees they incurred during the appeal. The trial court denied this request and, ultimately, the Supreme Court of Alabama affirmed that denial.

The issue was whether the supersedeas bond in this case covered such fees; and, more broadly, whether supersedeas bonds can cover attorney fees. The plaintiffs pointed to three cases — Hudson v. Hudson, 555 So. 2d 1084 (Ala. Civ. App. 1989); Osborn v. Riley, 331 So. 2d 268 (Ala. 1976); and Ex parte Home Indemnity Ins. Co., 374 So. 2d 1356 (Ala. 1979) — which they said allowed them to recover attorney fees under the bond. In the language used in these decisions, and so in the reasoning of Jones itself, appellate attorney fees were couched as part of the

costs, and damages as any party aggrieved may sustain by reason of the wrongful appeal and suspension of the execution of the judgment or decree.

The Alabama Supreme Court reviewed the cases cited by the plaintiffs, and held that none of them authorized their recovery of appellate attorney fees under the bond. The main backdrop of the court’s analysis was appellate Rule 8. Unlike earlier law, “[d]amages are not expressly recoverable under a supersedeas bond pursuant to Rule 8.”

Taking the plaintiffs’ three main cases concisely and in order:

Hudson, which was decided well after Rule 8 was adopted, was wrong to hold that appellate attorney fees could figure among the “costs of appeal” that a supersedeas bond could embrace. To this extent, Hudson was overruled.

Osborn differed in two ways from the instant case. First, the supersedeas bond in Osborn was executed before Rule 8 changed the governing law. Second, that bond — unlike the one in Jones, but consistent with prior law — expressly included the “costs and damages” that might flow from “a wrongful appeal,” under which head came attorney fees. Given these differences, Osborn did not warrant the instant plaintiffs’ recovery of attorney fees

Finally, Home Indemnity relied on Osborn in allowing a bond to include appellate attorney fees. But Osborn, as we have just said, itself relied on law that was changed by current Rule 8.  Home Indemnity also misread Rule 8 to continue to allow supersedeas bonds to cover attorney fees. It therefore did not sanction the recovery of fees in this case.

Particularly given its treatment of Home Indemnity, and driven mainly by Rule 8, the Alabama Supreme Court seems to have held that appellate attorney fees cannot be included in supersedeas bonds. The precise question in Home Indemnity was whether the trial court could require the losing party to post a bond that would make it liable for the attorney fees its adversary incurred in defending the appeal. Home Indemnity said the trial court could require such a bond, but Jones rejected the rationale on which Home Indemnity reached that conclusion. Though the 54 pages of Jones are a model of clarity, the decision does not expressly state what seems to be the ultimate implication — that supersedeas bonds can no longer include appellate attorney fees. Jones works through the facts before it, in other words, to yield an apparently broad prohibition.

The lengthy opinion in Jones also treats issues of pre- and post-judgment interest, as well as “postjudgment damages” in property foreclosure suits, all of which should be of interest to the appellate practitioner.