Opinion
No. 1 CA-CV 12-0615
05-09-2013
GARY CRISTION, a single man, Plaintiff/Appellant, v. CRC CONTRACTING, INC., an Arizona corporation, Defendant/Appellee.
The Herzog Law Firm, P.C. By Michael Herzog Attorneys for Plaintiff/Appellant Scottsdale Allen Law Group, PLC By Lynn M. Allen and Jonathan Sullivan Attorneys for Defendant/Appellee Phoenix
NOTICE: THIS DECISION DOES NOT CREATE LEGAL PRECEDENT AND MAY NOT BE CITED
EXCEPT AS AUTHORIZED BY APPLICABLE RULES.
See Ariz. R. Supreme Court 111(c); ARCAP 28(c);
Ariz. R. Crim. P. 31.24
MEMORANDUM DECISION
(Not for Publication -
Rule 28, Arizona Rules of
Civil Appellate Procedure)
Appeal from the Superior Court in Maricopa County
Cause No. CV2007-000955
The Honorable George H. Foster, Judge
AFFIRMED IN PART, VACATED IN PART AND REMANDED
The Herzog Law Firm, P.C.
By Michael Herzog
Attorneys for Plaintiff/Appellant
Scottsdale
Allen Law Group, PLC
By Lynn M. Allen and Jonathan Sullivan
Attorneys for Defendant/Appellee
Phoenix
BROWN, Judge ¶1 Gary Cristion appeals from the superior court's decision releasing to the insurer of CRC Contracting, Inc. ("CRC") a portion of a supersedeas bond filed by CRC to secure payment of the judgment against it. For the following reasons, we affirm the court's ruling regarding the disbursement, but remand for a determination of the appropriate interest calcuation.
BACKGROUND
¶2 On November 15, 2010, the superior court entered judgment in favor of Cristion and against CRC for a total amount of $1,943,296.10, with interest from the date of the judgment until paid. CRC appealed. ¶3 CRC filed a motion to fix the amount of the supersedeas bond, explaining it had ceased doing business in September 2007, had no assets, and lacked the ability to post a bond. To prevent garnishment of the policy during the appeal, CRC's insurer, American Family Mutual Insurance Company ("American Family"), proposed posting a bond in excess of $1.5 million, which would cover the liability insurance policy limits, taxable costs, double taxable costs, expert witness fees, prejudgment interest, and two years of anticipated post-judgment interest. CRC asserted Cristion could recover on the bond only those amounts covered under the policy, and the amount of the proposed bond represented that coverage amount. CRC also asserted American Family had no obligation to post a bond for an amount more than the policy terms. CRC further explained that the bond would secure only that portion of the judgment that would be paid by American Family and that the remainder of the judgment would not be secured against execution. ¶4 Cristion objected to a supersedeas bond in any amount less than the full amount of the judgment. After an evidentiary hearing, the court granted CRC's motion, finding that CRC's only asset was its insurance policy. The court set the amount of the supersedeas bond as requested by CRC based on the insurance policy terms. CRC deposited a cash bond in that amount by means of two checks from American Family. ¶5 The court of appeals affirmed the judgment against CRC. On May 2, 2012, CRC filed a motion to release the bond, requesting that the court order the issuance of two checks: one to Cristion in the amount of $1,488,596.29, which included post-judgment interest to May 2, and the other to American Family in the remaining amount, $104,352.21. The $104,352.21 represented the portion of estimated post-judgment interest that had not yet accrued because the appellate decision was rendered earlier than the two-year estimate on which the interest component of the bond had been calculated. ¶6 Cristion objected to the release of any portion of the supersedeas bond to American Family, contending that, including accrued interest, the amount of the judgment at that time exceeded $2,225,000, which substantially exceeded the amount of the bond. Cristion argued that CRC, not American Family, posted the bond and it was intended to satisfy the judgment against CRC in favor of Cristion. That American Family provided the funds was immaterial, according to Cristion, which asserted that American Family could pursue CRC to recover any excess payment it made on behalf of CRC. ¶7 On May 16, 2012, the parties stipulated that $1,488,596.29 of the supersedeas bond could be released to Cristion, representing the undisputed amount he was entitled to from the bond; the court entered a corresponding order and those funds were distributed to Cristion on May 30, 2012. ¶8 After oral argument, the court granted CRC's motion to release the remaining funds to American Family:
The Court believes the Defendant makes the better argument. The [supersedeas] bond was filed to cover the amount of the judgment including interest, however, the Defendant was unable to post such a bond. The Court therefore allowed a bond in the lesser amount than the judgment to enable the processing of the appeal and to stay enforcement during that time. The insurance company posted the bond in the amount of its obligation to the Defendant and included prejudgment interest as such a bond contemplates. This was the basis upon which the Court granted the motion to post the bond in the first instance. The Plaintiff is not entitled to interest beyond that which accrued during the pendency of the appeal.¶9 Cristion moved for reconsideration, arguing that CRC's original calculation of the amount of post-judgment interest owed by American Family was based on American Family's obligation having terminated on May 2, 2012, when CRC filed its motion to release the bond. Cristion argued that he did not receive payment until June 5, 2012, and thus he was entitled to receive additional interest accrued between May 2 and June 5 in the amount of $18,101.94. He argued that the May 2 motion was not a tender of payment and that CRC did not offer to unconditionally release any funds to him until May 16, when the parties stipulated to a release of a portion of the bond funds. The court denied the motion. ¶10 Cristion timely appealed from the judgment. We have jurisdiction pursuant to Arizona Revised Statutes ("A.R.S.") section 12-2101(A)(2) (2013).
Absent material revisions after the relevant date, we cite a statute's current version.
DISCUSSION
¶11 Cristion argues that under Arizona Rule of Civil Appellate Procedure Rule 7(a)(2), (2009) (amended 2011), the superior court was required to release the entire bond to him. We consider de novo the interpretation and application of a court rule. Greenwald v. Ford Motor Co., 196 Ariz. 123, 124, ¶ 4, 993 P.2d 1087, 1088 (App. 1999). ¶12 The version of Rule 7(a) in place when the bond was set provided in relevant part:
(1) Except in cases involving custody of children, whenever an appellant entitled thereto desires a stay on appeal, he may obtain a stay by filing a supersedeas bond in the superior court in accordance with these rules. . . . The amount of the bond may be determined upon stipulation or upon motion. A hearing on such motion shall be held forthwith. The court may make any further order, other than or in addition to the bond, appropriate to preserve the status quo or the effectiveness of the judgment[.](Emphasis added.) ¶13 Cristion argues that the phrase "shall be conditioned for the satisfaction in full of the judgment" requires the entire bond to be used to satisfy any amounts outstanding on the judgment. He therefore contends that because the amount of the bond in this case was less than the judgment affirmed, the entire bond, including the funds posted that represent the unaccrued interest, must be disbursed to him to satisfy the judgment. Such a reading, however, fails to take into account the entirety of Rule 7(a)(2), the superior court's discretion and power in setting the bond, and the particular facts in this case. ¶14 The purpose of a supersedeas bond is to maintain the status quo pending resolution of the appeal. ARCAP 7(a)(1); Salt River Sand & Rock Co. v. Dunevant, 222 Ariz. 102, 106, ¶ 9, 213 P.3d 251, 255 (App. 2009). The amount of the bond set is usually the amount that would secure the total judgment plus cost, interest, and possible damages attributable to the stay. ARCAP 7(a)(2); Dunevant, 222 Ariz. at 106, ¶ 9, 213 P.3d at 255. However, the court has discretion to determine the nature and extent of the security required to stay execution of the judgment when it finds extraordinary facts and circumstances calling for a different approach. ARCAP 7(a)(2); Dunevant , 222 Ariz. at 106, ¶ 9, 213 P.3d at 255; see also Bruce Church, Inc. v. Superior Court , 160 Ariz. 514, 517, 774 P.2d 818, 821 (App. 1989). ¶15 The court here found that CRC's only asset was its insurance policy, a finding Cristion does not dispute. The bond set by the court secured only that portion of the judgment that would be paid by American Family, which consisted of the policy limit of $1 million, prejudgment interest on the $1 million, certain costs, and post-judgment interest on the entire judgment. The bond amount proposed by CRC expressly included over $380,000 of anticipated post-judgment interest based on the expectation that the appeal would take two years. The court granted CRC's request and set the bond on those terms. The $104,352.21 returned to American Family represents interest that did not accrue before the court of appeals issued its ruling. The funds American Family deposited with the court were submitted to secure only the portion of the judgment to be paid by American Family. Nothing in Rule 7(a) can be construed as transforming these funds into money available as payment on the remainder of the judgment. ¶16 Furthermore, to allow Cristion to recover the excess interest payment would penalize American Family for having posted a bond and for having failed to accurately predict the time for appeal. Moreover, there is no prejudice to Cristion by not being able to recover the funds. Without these funds, Cristion has recovered the limits of CRC's policy with American Family, which is precisely what he would have recovered had no appeal been filed or bond posted. The superior court did not err in concluding that Cristion was not entitled to the unaccrued interest posted by American Family. ¶17 Cristion also challenges the amount of post-judgment interest paid by American Family. Although Cristion asserted in his opening brief he was entitled to interest through May 30, 2012, the day the court disbursed the funds, he conceded at oral argument that the parties' May 16 stipulation to release the funds was an unconditional tender sufficient to stop accruing interest. We therefore limit our analysis to Cristion's alternative theory—that Cristion is entitled to interest up to May 16, when the parties stipulated to disbursement to Cristion of the funds over which there was no dispute. CRC argues its motion to release the supersedeas bond filed on May 2 was an unconditional tender of payment that terminated the accrual of interest on that date. Cristion counters that the motion was not an unconditional tender because it required him to agree that some of the supersedeas bond would be paid to American Family when he claimed all the money should be released to him. ¶18 An unconditional tender stops the accrual of interest on a judgment. Welch v. McClure, 123 Ariz. 161, 165, 598 P.2d 980, 984 (1979). To "tender," a party must "produce[] and offer[] to a person holding a claim or demand against him the amount of money which he considers and admits to be due, in satisfaction of such claim or demand, without any stipulation or condition." See Basso v. Allstate Ins. Co., 118 Ariz. 139, 140, 575 P.2d 338, 339 (App. 1977) (quotation and citation omitted). Here, CRC's May 2 motion did not constitute an unconditional offer to Cristion. The motion was subject to a condition and no money was produced to Cristion. We conclude CRC's May 2 motion to disburse funds was not a valid tender and CRC is therefore entitled to post-judgment interest through May 16, 2012.
. . . .
(2) The bond shall be conditioned for the satisfaction in full of the judgment remaining unsatisfied, together with costs, interest, and any damages reasonably anticipated to flow from the granting of the stay . . . and to satisfy in full such modification of the judgment and costs, interest, and damages as the appellate court may adjudge and award, unless the superior court, after notice and hearing and for good cause shown, fixes a different amount or orders security or imposes conditions other than or in addition to the bond.
Unless otherwise indicated, we cite the 2009 rule of ARCAP 7 because that was the rule in place at the time.
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CONCLUSION
¶19 For the foregoing reasons, we affirm the superior court's ruling regarding the disbursement of the $1,488,598.29 to Cristion. We vacate, however, the court's ruling as to the $104,352.21 and remand for determination of the appropriate interest calculation based on an unconditional tender as of May 16, 2012.
_________________
MICHAEL J. BROWN, JUDGE
CONCURRING: _________________
SAMUEL A. THUMMA, PRESIDING JUDGE
_________________
DIANE M. JOHNSEN, JUDGE