Salt River Sand and Rock Company v. Dunevant – 6/30/2009

July 23, 2009

Arizona Court of Appeals Division One Holds That Trial Courts Possess Discretion to Condition a Stay of Execution of Judgment on a Supersedeas Bond in an Amount Different from the Judgment Amount.

Gravel Resources of Arizona obtained an $18.5 million judgment against Salt River Sand and Rock Company (“SRSR”).  SRSR thereafter requested that the trial court condition stay of execution on the posting of a $5.5 million supersedeas bond and alternate security because SRSR would suffer undue financial harm if required to pay the full judgment amount.  The trial court denied SRSR’s request, reasoning that trial courts do not possess discretion to set the bond amount below the judgment amount based on inability to pay.  SRSR filed a petition for special action.

The Arizona Appeals Court accepted special action jurisdiction and granted relief, holding that trial courts possess discretion to set the bond amount at less than the judgment amount where the judgment debtor demonstrates that posting a full supersedeas bond would subject it to undue financial harm.  In fashioning alternate security, the trial court should consider the collectable value of the judgment debtor’s assets as of the date of judgment, including the liquidity of the judgment debtor’s assets and the amount the judgment debtor could pay without suffering undue harm.  Generally, the alternate security should preserve the status quo and not be jeopardized pending appeal.  The Court determined that SRSR had met its burden of showing undue harm and remanded the case to the trial court for consideration of SRSR’s proposed alternate security.

Judge Norris authored the opinion; Judges Orozco and Brown concurred.