The Journal of The DuPage County Bar Association

Back Issues > Vol. 26 (2013-14)

Stays Of Judgment Pending Appeal Pursuant to Supreme Court Rule 305
By Christine Olson McTigue

The case has finally reached an end in the trial court. The losing party is planning on filing a notice of appeal and, not surprisingly, wants to stay enforcement of the judgment pending the outcome of the appeal. Supreme Court Rule 305 sets forth the requirements to stay monetary and nonmonetary judgments pending an appeal.

Stay of a Money Judgment. Perhaps the most common type of judgment sought to be stayed is a money judgment. A judgment creditor can pay the judgment and still appeal an adverse judgment,1 but most (if not all) prefer not to do so. The filing of a notice of appeal does not stay enforcement of a judgment.2 Under Supreme Court Rule 305(a), a money judgment is stayed if a timely notice of appeal is filed and an appeal bond or other form of security, including “letters of credit, escrow agreements, and certificates of deposit,” is approved by and filed with the trial court. In addition, pursuant to Rule 305(j), the filing of an insurance policy pursuant to section 392.1 of the Illinois Insurance Code (215 ILCS 5/392.1) is allowed, but a policy less than the judgment amount is insufficient to obtain a stay.3

Rule 305(a) provides that the bond or other security “ordinarily shall be in an amount” sufficient to cover the amount of the judgment, plus costs and interest reasonably anticipated to accrue.4 The Commentary to Rule 305 notes that in “some limited instances” the appeal bond requirement may be so onerous as to create a barrier to an appeal, citing Price v. Philip Morris, Inc., 341 Ill.App.3d 941, 793 N.E.2d 942 (5th Dist. 2003), vacated by supervisory order under no. 96644 (September 13, 2003), a class action in which a 10.1 billion dollar judgment was entered against the defendant.5 In virtually all other cases, however, the security must cover the amount of the judgment and costs plus interest reasonably anticipated to accrue during the pendency of the appeal.6 The condition of the bond shall be for the payment of the judgment, interest and costs if the judgment is affirmed or the appeal is dismissed.7 The bond of an executor or administrator shall be conditioned upon payment in due course of administration.8 The bond of a guardian for a minor or disabled person shall be conditioned on payment as the guardian has funds therefor.9 If an appeal is prosecuted by a public, municipal, governmental or quasi-municipal corporation, or by a public officer in his official capacity, the court may stay the judgment without requiring that a bond be given.10

Under Rule 305(a), the bond must be presented, approved and filed within the time for filing the notice of appeal. If additional time is needed, Rule 305(c) provides that on motion made within the time for filing the notice of appeal, the time for filing the bond may be extended by the trial court, but extensions of time may not aggregate more than 45 days unless the parties stipulate otherwise. Rule 305(c) also provides that an extension of time can be granted by the Appellate Court.

Requirements for an Appeal Bond. In addition to contacting a surety to underwrite a bond (or obtaining another form of security), the amount of the bond must be calculated. There is no automatic formula to calculate the amount of the bond so that it covers the amount of the judgment, plus interest and costs. The judgment amount and costs are fixed; the variable in the equation is computing sufficient post-judgment interest. Post-judgment interest in Illinois is nine percent, six percent where the defendant is a unit of local government.11 Accrual of interest is simple interest, not compounded.12

Assume the judgment is $100,000 and the plaintiff has incurred $1000 in costs. Also assume that an appeal will last 18 months. Post-judgment interest is computed as follows:

Add the judgment and costs for the total amount of the judgment. Here, $100,000 + $1000=$101,000. Compute the interest owed for one year. $101,000 x 9%=$9090. Compute the interest owed for one month.

$9090÷12=$757.50. Add 18 months of interest to the total judgment. $101,000+$13,635=$114,635.13

As mentioned above, the bond must be presented to, and approved by, the trial court. It is necessary, therefore, to obtain the bond from a surety before the motion to approve the bond is presented. All original forms of security that are approved shall be filed with the clerk of the circuit court.14

It is possible to amend a notice of appeal to specify parts of a judgment not specified in the original notice of appeal.15 If a notice of appeal is amended to include a judgment that requires a stay, or greater security than was originally posted, the original stay does not extend to any additional judgment specified in the amended notice of appeal.16

In this situation, the appellant can obtain a stay for the new judgment following the steps used to obtain the original security.17

Furthermore, upon motion, the reviewing court may change the amount, terms or security of the bond or other security.18 The stay is terminated if the appellant fails to comply with the court’s order.19

While not pertinent to the issue of a stay, some further points regarding appeal bonds are worth noting. A bond is issued by a surety. Both the principal (the judgment debtor) and the surety are liable for paying the judgment.

The surety is liable, even if there are technical defects in the bond.20 The receipt by the obligor of the benefits of a bond is sufficient to create consideration for enforcement and will estop the obligor from denying liability on the bond.21 Technical flaws in a bond do not negate that consideration when the plaintiff relies on the bond and the defendant obtains a benefit.22 In practice, the appeal bond is an unconditional promise to pay the judgment. If the judgment is increased on appeal, the principal is liable for the increased judgment, but the surety’s liability is limited to the amount stated in the bond.

When the time comes to pay the judgment, it is the principal’s ultimate responsibility to ensure payment. Most sureties require that the principal pay first. In addition, once the judgment is satisfied, most sureties require that a court order be entered providing that the bond and the surety’s obligation on the bond is discharged. Rule 305 does not address discharge of a bond. The reviewing court will entertain such a motion.

Stay of a Nonmoney Judgment, in General. In the situation where a money judgment is not involved, the posting of security is usually not a relevant factor. The Illinois Supreme Court discussed this issue in Stacke v. Bates.23 Stacke was a dissolution of marriage case. The trial court ordered by husband’s estate to pay May Bates equitable maintenance during the estate’s appeal of the maintenance-in-gross order. The estate sought a stay. The Appellate Court entered a stay of the equitable maintenance award. The Supreme Court affirmed.

The Supreme Court noted that the consequences of granting an injunction and a stay are similar, but rejected requiring the party seeking the stay to show irreparable injury. The court reasoned that a movant seeking a stay of a money judgment does not face that hurdle.24 The court stated there are numerous factors that the court should consider in granting a stay. The party seeking the stay is not required to show a probability of success on the merits, but must present a “substantial” case on the merits and show that the balance of equitable factors weighs in favor of a stay.25

There is no specific set of factors to be considered; the most persuasive whether the party seeking the stay has a likelihood of success on the merits.26 Two other factors are whether a stay is necessary to secure the fruits of the appeal if the party seeking the stay is successful and the likelihood if the responding party will suffer hardship.27

The court should engage in a balancing process as to the rights of the parties, in which “all elements bearing on the equitable nature of the relief sought should be considered.”28

There are very few reported decisions discussing imposing a stay under Rule 305(b). Perhaps the best advice in seeking such a stay is to focus on all elements bearing on the equitable nature of the relief sought.

Stay Pending Appeal of Termination of Parental Rights. Rule 305(e) provides for an automatic stay pending appeal of termination of parental rights. This rule avoids the problem encountered in In re Tekela29 and In re India B.,30 cases in which the court dismissed the appeals as moot, holding that a notice of appeal does not stay enforcement of a parental rights termination order and an adoption based on the termination order becomes unchallengeable after one year.

In essence, pursuant to Rule 305(e), an order terminating parental rights entered in a proceeding under the Juvenile Court Act of 1987 (705 ILCS 405/1-1, et seq.) shall be automatically stayed for 60 days after the order of termination. If a notice of appeal is filed within 60 days of the termination order, the stay shall continue until the appeal is complete or the stay is lifted by the reviewing court. If a notice of appeal is not filed within the 60 days, the stay expires.31

The termination order is stayed to the extent that it would permit an adoption without the parent’s consent or surrender, and also stays the termination order with respect to any person or agency to consent to an adoption.32 The termination order does affect the trial court’s jurisdiction over the care, custody, visitation and support of the child, and a guardian may take any authorized action other than consenting to an adoption.33 A bond is not required to obtain a stay of adoption pending an appeal of termination of parental rights.34

Stay Governing Interests in Property. Rule 305(k) governs the situation where an appellant fails to obtain a stay where real property is the subject of the appeal. This rule provides:

If a stay is not perfected within the time for filing the notice of appeal, or within any extension of time granted under subparagraph (c) of this rule, the reversal or modification of the judgment does not affect the right, title or interest of any person who is not a party to the action in or to any real or personal property that is acquired after the judgment becomes final and before the judgment is stayed; nor shall the reversal or modification affect any right of any person who is not a party to the action under or by virtue of any  certificate of sale issued pursuant to a sale based on the judgment and before the judgment is stayed. This paragraph applies even if the appellant is a minor or a person under legal disability or under duress at the time the judgment becomes final.35

The consequence of failing to follow this rule is simple: if a stay is not obtained in an appeal involving real property (a piece of land or a building) and the property is sold to an independent third party while the appeal is pending, the appeal is dismissed as moot.36

This rule applies even when the plaintiff has filed a lis pendens notice regarding the property.37 In order to successfully argue that an appeal is moot because the property has been purchased, the record must disclose that the third party purchaser is not a party.38 In the alternative, this can also be shown by an affidavit supporting a motion to dismiss the appeal.39 If other forms of relief could be awarded, such as damages, then an appeal is not moot for failing to obtain a stay.40 The failure to obtain a stay does not moot an appeal when constitutional issues are raised.41

Procedure for Obtaining a Stay. As a general rule, a request for a stay must be made in the trial court.42 This is done by motion. A motion for a stay may be made in the Appellate Court, but the motion must show that application to the trial court is not practical, or that the trial court has denied an application or has failed to afford the relief requested.43 A motion for a stay in the Appellate Court should comply with Supreme Court Rule 361 regarding motion practice in the reviewing court. If the record on appeal has not been filed, a supporting record on appeal pursuant to Rule 328 must be filed. It is also a good idea to attach to the motion a copy of the proposed form of security.

In the situation of termination of parental rights, Rule 305(e)(4) provides the specific procedure to follow in the appellate court for lifting a stay when it is clearly in the best interests of the child. Motions to lift the stay must be accompanied by suggestions in support of the motion (a legal memorandum) and must be served on all parties to the Juvenile Court Act proceeding and the parties to any related Adoption Act proceeding (if known).44 If the movant is a party to the adoption proceeding, the motion must include the caption and case number if the adoption proceeding, and the court in which the action is pending.45 Furthermore, the motion must have a supporting record as provided in Rule 328.46 If the movant was not a party to the Juvenile Court Act case and cannot provide a supporting record, a decision on the motion will be deferred until after the record on appeal is filed.47 If the stay is lifted, the clerk must transmit a certified copy of the order lifting the stay to the clerk of the trial court, and also send a certified copy to the trial judge in the adoption proceeding.48

Conclusion. Obtaining a stay of judgment is discretionary with the court and is not a simple process. It is important to start the process for obtaining sufficient security even before filing a notice of appeal, such as obtaining an appeal bond, arranging other security when seeking to stay a money judgment, or crafting an argument to show the court the equitable reasons to stay a nonmonetary judgment.

1 Bricks, Inc. v. C and F Developers, Inc., 361 Ill.App.3d 157, 161, 836 N.E.2d 743, 747 (1st Dist. 2005).
2 Nemanich v. Long Grove Country Club Estates, Inc., 119 Ill.App.2d 169, 174-75, 255 N.E.2d 466, 468 (2d Dist. 1970).
3 Forrester v. Patrick, 167 Ill.App.3d 105, 112-13, 520 N.E.2d 1188,1193 (1st Dist. 1988).
4 Supreme Court Rule 305(a).
5 2004 Commentary to Rule 305. The author has never encountered a situation where security less than the amount of the judgment was found to be sufficient to support a stay.
6 Supreme Court Rule 305(a)
7 Supreme Court Rule 305(g).
8 Id.
9 Id.
10 Supreme Court Rule 305(i).
11 735 ILCS 5/2-1303.
12 Halloran v. Dickerson, 287 Ill.App.3d 857, 863, 679 N.E.2d 774 (5th Dist. 1997).
13 Id. at 864, 779.
14 Supreme Court Rule 305(m).
15 Supreme Court Rule 303(b)(5).
16 Supreme Court Rule 305(f ).
17 Id.
18 Supreme Court Rule 305(h).
19 Id.
20 Hanover Ins. Co. v. Smith, 137 Ill.2d 304, 310, 561 N.E.2d 14, 17 (1990).
21 Id.
22 Id.
23 Stacke v. Bates, 138 Ill.2d 295, 562 N.E.2d 192 (1990).
24 Id. at 303-04, 195.
25 Id. at 309, 198. See also Boundary Waters Bank v. DHH, LLC, 2013 IL App(4th) 121141-U, ¶38.
26 Stacke v. Bates, 138 Ill.2d at 306, 562 N.E.2d at 196.
27 Id. at 305, 307, 196, 197.
28 Id. at 308-09, 198.
29 202 Ill.2d 282, 780 N.E.2d 304 (2002).
30 202 Ill.2d 522, 782 N.E.2d 224 (2002).
31 Supreme Court Rule 305(e)(1).
32 Supreme Court Rule 305(e)(2).
33 Id.
34 Supreme Court Rule 305(e)(3).
35 Supreme Court Rule 305(k).
36 Estate of Pendleton, 250 Ill.App.3d 296, 621 N.E.2d 171 (1st Dist.1993); Cosmopolitan National Bank of Chicago v. Nunez, 265.App.3d 1012, 639 N.E.2d 636 (1st Dist. 1994).
37 Town of Libertyville v. Moran, 179 Ill.App.3d 880, 535 N.E.2d 82 (2d Dist. 1989).
38 Pinnacle Corp. v. Village of Lake in the Hills, 258 Ill.App.3d 205, 208, 630 N.E.2d 502, 505 (2d Dist. 1994)
39 Cosmopolitan National Bank of Chicago v. Nunez, 265 Ill.App.3d at 1015-16, 639 N.E.2d at 638.
40 Paquette v.Coble, 271 Ill.App.3d 1110, 1113, 653 N.E.2d 1262 (1st Dist. 1995).
41 Teachers Ins. & Annuity Ass’n of America v. LaSalle National Bank, 295 Ill.App.3d 61, 691 N.E.2d 881 (2d Dist. 1998).
42 Supreme Court Rule 305(d).
43 Id.
44 Supreme Court Rule 305(e)(4)(B).
45 Id.
46 Supreme Court Rule 305(e)(4)(C).
47 Id.
48 Supreme Court Rule 305(e)(4)(D).

Christine Olson McTigue has her office in Wheaton and concentrates her practice in all areas of civil appellate law. She received her Bachelor of Arts, magna cum laude, in 1981 from the University of Minnesota; and her J.D. in 1984 from Loyola University of Chicago.

 
 
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