Appellate Court Rejected That Lending Had To Be Specifically Tied In Initial Purpose To Obtaining Undertaking Expense Moneys.
Effective January 1, 2013, CRC rule 8.278 allows a prevailing party on appeal to recover the costs to obtain a letter of credit or fees/net interest expenses incurred to borrow funds to provide security for an appellate surety bond/letter of credit issuance, overruling the prior prohibition against recoverability of such expenses in Rossa v. D.L. Falk Construction, Inc., 53 Cal.4th 387, 390 (2012).
Siry Investments, L.P. v. Farkhondehpour, Case No. B251250 (2d Dist., Div. 2 June 17, 2015) (unpublished) dealt with a situation where the amended CRC rule was not at play when an appellate court issued a prior appeal decision but was in play before the remittitur issued with respect to the prior opinion. The trial court allowed $377,157.22 in net interest to the prevailing appellate party for borrowing over $2.621 million in collateral for appeal bonds.
The party hit with this substantial cost award first cried unfair to the appellate court based on a “retroactivity” concern. But the appellate court found that application of a procedural law in effect at the time of a pending proceeding is not a retroactive application of that law (even if the law changed) given that the remittitur had not issued in connection with the prior appellate decision. Secondarily, the losing party said that there was no evidence that the winning defendants had borrowed these funds specifically for the initial purpose of funding the surety bond in the case; however, the appellate court found there was no specific purpose requirement in amended CRC rule 8.278 such that the costs were recoverable.