What Is a Supersedeas Bond?

A supersedeas bond is a type of surety bond used in civil litigation. A losing party is typically entitled to post a supersedeas bond following a lawsuit if the party plans to appeal the outcome of the lawsuit rather than settle the matter and pay the judgment awarded by the court. Courts often require supersedeas bonds as a means of ensuring that an appealing party will be able to pay judgment if it loses again on appeal.

Surety Bonds

A surety bond is a general promise that one party will pay another party if a third party fails to accomplish some specific task. A supersedeas bond is a surety bond because the bond issuer is essentially stating that he will pay the current judgment if the appellant loses on appeal or does not otherwise make payment on an outstanding court judgment.

Calculation

Supersedeas bonds can be expensive because they have to cover not only the amount of money awarded to the prevailing party following the litigation, but also any interest accrued during appeal. Interest is included when calculating the supersedeas bond as a way of fairly preserving the money the prevailing party is entitled to if it is successful on appeal.

Waiver and Modification

It is generally within the discretion of the court to waive or modify a supersedeas bond in certain circumstances. Courts may waive the requirement for a supersedeas bond all together if procuring such a bond could cause the appellant to go out of business and otherwise destroy his right to appeal. Additionally, it is not uncommon for courts to waive a supersedeas bond on the condition that appellants retain a certain net worth.

Special Considerations

Depending on the complexity of the litigation, special considerations may affect the amount of the supersedeas bond ordered by the court. For example, in Alabama some courts have not allowed for attorney's fees to be recovered following the litigation, which was necessary to collect on the supersedeas bond. Additionally, in Alaska some courts have held that punitive damages need not be incorporated into a supersedeas bond due to the bond's unique nature.