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Kellin v. Lynch - 9/10/2019

Court of Appeals Division One holds that in some circumstances, a supersedeas bond may include potential attorneys’ fees anticipated on appeal.

A bank domesticated a foreign deficiency judgment for a sum certain plus post-judgment interest, which remained outstanding at the time of appeal.  Petitioners contested the enforcement of the judgment in three actions, all of which the Court of Appeals rejected.  While two of the actions were pending on appeal to the Supreme Court, the bank filed applications for writs of garnishment against financial institutions that allegedly held nonexempt funds on Petitioners’ behalf.  The superior court entered writs of garnishment against the financial institutions and Petitioners appealed and sought to waive the supersedeas bond requirement under Rule 7(a)(6) because the garnished funds would remain with the financial institutions on appeal.  The superior court ordered that Petitioners post a supersedeas bond and Petitioners filed a special action to vacate the order setting the supersedeas bonds.

The Court of Appeals accepted special action jurisdiction because interpretation of recent amendments to Rule 7 is a matter of first impression, and affirmed the superior court.  Petitioners reiterated that the financial institutions had frozen the garnished funds, meaning that the superior court’s order requiring a supersedeas bond was an abuse of discretion.  The Court of Appeals rejected this argument, noting that prior version of Rule 7 constrained the superior court’s ability to set a supersedeas bond and the amendments to Rule 7 left both the decision to set a bond and the calculation of the amount of the bond to the “broad” discretion of the superior court.  Accordingly, the superior court exercised its discretion in setting a supersedeas bond amount to secure recovery of potential appellate attorneys’ fees and costs.  In this case, the Court of Appeals, concluded that a garnishment action permits a Court of Appeals to award attorneys’ fees under A.R.S. § 12-1580(e) where the appeal is brought for the purpose of delay or harassment.

Judge McMurdie authored the opinion; Judge Winthrop and Chief Judge Swann joined.

Posted by: William D. Furnish

Posted On: 10/16/2019