However, Work Not Incurred In Particular Special Surety Action Was Not Compensable.
Code of Civil Procedure section 386.6 gives courts discretion to award costs and attorney’s fees to a party who pursues the deposit and discharge procedure provided by section 386.5 in a post-judgment surety bond case, namely, allowing a neutral stakeholder to apply for a discharge and obtain a dismissal if the surety is truly a neutral stakeholder (a “deposit/discharge motion”).
These sections were in play in Wertheim, LLC v. The Bar Pan Mutual Ins. Co., Case No B268539 (2d Dist., Div. 5 Dec. 1, 2016) (unpublished), which involved a dispute between parties about the amount of fees to be paid by a surety on an appeals bond after an earlier appellate proceeding.
The appellate issues involved a determination of the attorney work which can be compensated under section 386.6, given three constructs are at issue: (1) fees can only encompass fees “incurred in such action”—the independent judgment creditor action by which surety files the deposit/discharge motion; (2) fees must be reasonable; and (3) fees are only allowed for reimbursement of fees incurred in connection with independent judgment creditor v. surety action and with the deposit/discharge motion in that action.
By and large, the reviewing court affirmed a fee motion for the prevailing surety except for one item. All pre-motion, motion, and post-motion deposit/discharge work was found compensable in the actual action between the earlier judgment creditor and surety, the post-judgment action by judgment creditor against the appeal bond surety. However, the surety also sought compensation for attorney work in the earlier, underlying action before the independent surety action was commenced. This did not fly because section 386.6 only allows recovery for work in the actual inter se judgment creditor/surety action—so about $10,000 got lopped off of the recovery and both parties were ordered to bear their own costs on appeal.