Tracy v. Surofchek

The summaries of the Colorado Court of Appeals published opinions
constitute no part of the opinion of the division but have been prepared by
the division for the convenience of the reader. The summaries may not be
cited or relied upon as they are not the official language of the division.
Any discrepancy between the language in the summary and in the opinion
should be resolved in favor of the language in the opinion.

SUMMARY
February 20, 2025

2025COA21

No. 24CA1058, Tracy v. Surofchek — Colorado Rules of
Appellate Procedure — Costs on Appeal Taxable in the Trial
Court — Premiums Paid for Supersedeas or Other Bond —
Letters of Credit

A division of the court of appeals holds, as a matter of first

impression, that the reasonable cost of a letter of credit that is

approved by and delivered to the court to secure a judgment

pending appeal is a recoverable cost of appeal under C.A.R.

39(c)(1)(C).
COLORADO COURT OF APPEALS 2025COA21

Court of Appeals No. 24CA1058
El Paso County District Court No. 20CV30335
Honorable Thomas K. Kane, Judge
Honorable Amanda J. Philipps, Judge

George Tracy and Amy Tracy,

Plaintiffs-Appellants,

v.

David T. Surofchek and Amy Surofchek,

Defendants-Appellees.

ORDER REVERSED AND CASE
REMANDED WITH DIRECTIONS

Division I
Opinion by JUDGE J. JONES
Brown and Yun, JJ., concur

Announced February 20, 2025

Gordon & Rees LLP, John R. Mann, Denver, Colorado, for Plaintiffs-Appellants

Sparks Willson, P.C., Eric V. Hall, Robert J. Bucknam, Colorado Springs,
Colorado, for Defendants-Appellees
¶1 George and Amy Tracy appeal the district court’s order

declining to award them the costs of letters of credit they obtained

to stay execution of a judgment against them pending their

ultimately successful appeal of a part of that judgment. The district

court concluded that such costs aren’t recoverable as costs of

appeal under C.A.R. 39(c)(1)(C) as a matter of law. But we conclude

that a successful appellant may recover the reasonable cost of a

letter of credit that the appellant obtains and delivers, and the

district court approves, in lieu of a supersedeas bond to stay

execution of a civil judgment pending appeal. We therefore reverse

the district court’s order and remand the case to the district court

to determine the reasonable costs of the Tracys’ letters of credit.

I. Background

¶2 David T. and Amy Surofchek bought a house next to the

Tracys’ house. Before moving in, though, they began renovating

their backyard fence, which bordered part of the Tracys’ property.

A dispute arose over who owned a corner area of property where

part of the fence ran, with each side accusing the other of

unneighborly behavior.

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¶3 Though the Tracys and Surofcheks reached a settlement

whereby the Surofcheks paid the Tracys $15,000 in return for a

quitclaim deed to the disputed parcel, the Tracys later sued the

Surofcheks for trespass, conversion and destruction of property,

and violations of the homeowners’ association covenants. The

Surofcheks counterclaimed for breach of the settlement agreement

and abuse of process.

¶4 A jury found in the Surofcheks’ favor on the Tracys’ claims

and on both of the Surofcheks’ counterclaims. It awarded the

Surofcheks $208,542 in damages on their counterclaim for breach

of the settlement agreement and $950,000 on their counterclaim for

abuse of process. The court entered judgment for the Surofcheks

on the jury’s verdicts for $1,169,251.55 (which included

prejudgment interest).

¶5 The Tracys moved the court to approve a letter of credit in the

amount of $1,448,178 to serve as a bond to stay execution of the

judgment pending their planned appeal. The amount purported to

cover the entire judgment. The Surofcheks didn’t oppose the

motion. The district court granted it, and the Tracys delivered the

letter of credit to the clerk of the court. They then filed a notice of

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appeal. But they didn’t appeal the entire judgment: they only

appealed the part of the judgment the court entered on the

Surofcheks’ abuse of process counterclaim.

¶6 While the appeal was pending, the Tracys, again with the

court’s approval, delivered to the court second and third letters of

credit in the amounts of $13,386.94 and $15,809, respectively, to

account for amendments to the judgment and costs pending appeal.

They later delivered three renewed letters of credit because the

previous ones expired after one year. Those renewed letters of

credit, which the court also approved, extended the previous letters

of credit for one year.

¶7 A division of this court reversed the judgment on the abuse of

process counterclaim, holding that the district court had

erroneously instructed the jury. The division therefore remanded

the case for a new trial on that counterclaim. Tracy v. Surofchek,

(Colo. App. No. 22CA0910, July 6, 2023) (not published pursuant to

C.A.R. 35(e)). The division’s reversal of that part of the judgment,

however, didn’t affect the part of the judgment the district court had

entered on the Surofcheks’ counterclaim for breach of the

settlement agreement. Id. at 18.

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¶8 On remand, the Tracys submitted a bill of costs incurred on

appeal to the district court under C.A.R. 39(a) and (c). Among the

costs for which they sought an award was $30,367.89 for the “[c]ost

of premiums paid for letters of credit/supersedeas bond.” They

claimed the “premiums” were $15,074 for the initial letters of credit

and $15,043.89 for the renewed letters of credit. The Surofcheks

objected to these claimed costs, arguing that C.A.R. 39(c)(1)(C)

doesn’t “authorize an award of borrowing expenses incurred in

obtaining a line of credit to secure a letter of credit,” the Tracys

hadn’t shown that they had actually paid these expenses, the costs

were “unreasonable and excessive,” and the Tracys were seeking

costs “associated with judgments that were not appealed” (i.e., the

judgment on the counterclaim for breach of the settlement

agreement).

¶9 The district court denied the Tracys’ bill of costs in its entirety

because the case wasn’t over; the Surofcheks’ abuse of process

counterclaim remained pending. But in the same order, the court

said,

C.A.R. 39 does not provide for the award of
costs associated with obtaining a letter of
credit or the borrowing expenses of

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obtaining a loan. C.A.R. 39(c)(1)(C) allows the
Court to award “premiums paid for a
supersedeas or other bond to preserve
rights pending appeal.” C.A.R. 39(c)(1)(C) does
not authorize the Court to award the costs
associated with a letter of credit.

Plaintiffs seek to recover under
C.A.R. 39(c)(1)(C) borrowing expenses for lines
of credit used to secure the letters of credit,
including for the following costs: loan
origination fees, life of loan flood monitoring,
flood determination fees, recording fees,
and title work. The costs requested are not
premiums for a bond or even a letter of credit
to be issued. [T]hese are expenses
allegedly incurred by Plaintiffs to obtain a loan.
Nothing in the express terms of
C.A.R. 39(c)(1)(C) authorizes the Court to
award borrowing expenses associated with
obtaining a loan to secure a letter of credit.

¶ 10 The Surofcheks voluntarily dismissed their abuse of process

counterclaim. The Tracys then filed a renewed bill of costs, again

seeking an award of $30,367.89 for the “[c]ost of premiums paid for

letters of credit/supersedeas bond.” A different judge than the one

who had previously declined to award costs of appeal until the case

was completed entered an order awarding the Tracys $34,772.09 for

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appellate costs.1 That sum included the costs of the letters of

credit.

¶ 11 The Surofcheks responded to the court’s order and the Tracys’

renewed bill of costs by pointing out that the prior judge had said

that the costs of the letters of credit wouldn’t be awarded — a fact

the Tracys hadn’t informed the new judge of when they renewed

their request — and arguing why, on the merits, the court shouldn’t

award those expenses. The Tracys argued in reply why they were

entitled to recover the costs of the letters of credit notwithstanding

the previous judge’s view on the matter. The court then changed

course, denying the request for the costs of the letters of credit

based on the previous judge’s reasoning.

II. Discussion

¶ 12 The only issue before us is whether the district court abused

its discretion by denying the Tracys’ request for an award of the

costs of the letters of credit. We conclude that it did because it

erroneously viewed any such costs to be outside the scope of

1 The previous judge had retired in the interim.

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appellate costs recoverable under C.A.R. 39(c)(1)(C) as a matter of

law.

A. Standard of Review

¶ 13 “As a general matter, we review a court’s award of costs for an

abuse of discretion. But we review the district court’s legal

conclusions forming the basis for that decision de novo.” Far

Horizons Farm, LLC v. Flying Dutchman Condo. Ass’n, 2023 COA 99,

¶ 34 (citation omitted).

¶ 14 The issue the Tracys raise and we address — whether the

reasonable cost of a letter of credit provided in lieu of a supersedeas

bond pending appeal is recoverable under C.A.R. 39(c)(1)(C) — is

one of law. So if we conclude that the district court erred by ruling

that such costs can’t be recovered, it necessarily follows that the

court abused its discretion. See Far Horizons Farm, ¶ 34; Belinda

A. Begley & Robert K. Hirsch Revocable Tr. v. Ireson, 2020 COA 157,

¶ 62 (a court abuses its discretion if it “misapplies or misconstrues

the law”).

B. Analysis

¶ 15 The Tracys’ contention on appeal requires us to construe court

rules of appellate and civil procedure. We construe such rules by

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applying settled rules of statutory construction. Schaden v. DIA

Brewing Co., 2021 CO 4M, ¶ 32. This means we begin by looking at

the plain and ordinary meanings of the words and phrases used

therein. Krol v. CF & I Steel, 2013 COA 32, ¶ 15; see Schaden, ¶ 32.

But we don’t undertake such an assessment in a vacuum; rather,

we must read the rules as a whole, considering the relevant context.

Krol, ¶ 15. And, just as with statutes, we must give consistent,

harmonious, and sensible effect to all the relevant rules’ parts,

taking care to avoid constructions that would render any part

thereof superfluous or lead to illogical or absurd results. Schaden,

¶ 32; accord Brown v. Walker Com., Inc., 2022 CO 57, ¶ 15.

¶ 16 When construing the court rules at issue, a couple of other

guiding principles come into play. We must construe the rules of

civil procedure “liberally to effectuate their objective to secure the

just, speedy, and inexpensive determination of every case and their

truth-seeking purpose.” Schaden, ¶ 33 (quoting DCP Midstream, LP

v. Anadarko Petroleum Co., 2013 CO 36, ¶ 24); see C.R.C.P. 1(a).

And, where the rules are patterned after or otherwise similar to

federal rules, we may look to the federal rules and to decisions

8
construing those rules for guidance. Schaden, ¶ 33; accord Brown,

¶ 15; Garrigan v. Bowen, 243 P.3d 231, 235 (Colo. 2010).

¶ 17 We start, then, as we must, with C.A.R. 39(c), which governs

“Costs on Appeal Taxable in the Trial Court.” Subsection (c)(1)(C) of

that rule provides that “premiums paid for a supersedeas or other

bond to preserve rights pending appeal” “are taxable in the trial

court for the benefit of the party entitled to costs under this rule.”

An appellant who is successful on appeal is such a party. C.A.R.

39(a)(3).

¶ 18 The Tracys didn’t post a supersedeas bond. But were the fees

paid for the letters of credit “premiums paid for . . . other bond[s] to

preserve rights pending appeal”? The district court thought not,

equating the fees for letters of credit with “borrowing expenses for

lines of credit used to secure the letters of credit” or “expenses

associated with obtaining a loan to secure a letter of credit.” We

disagree with the district court’s analysis and conclusion.

¶ 19 A “premium” is commonly understood as the cost of

purchasing “insurance,” Merriam-Webster Dictionary,

https://perma.cc/YHQ9-ECXR (defining “premium”), or “coverage

by contract whereby one party undertakes to indemnify or

9
guarantee another against loss by a specified contingency or peril,”

Merriam-Webster Dictionary, https://perma.cc/HMQ3-TB78

(defining “insurance”). A fee paid for a letter of credit to secure

payment of a judgment pending appeal is, in essence, a “premium”

because it is the cost of a guarantee of payment by a third party of

a potential loss occasioned by a specified contingency — affirmance

of the judgment on appeal.

¶ 20 And, though C.A.R. 39 doesn’t provide any direct guidance on

what its reference to “other bond” means, it does provide some

indirect guidance. An “other bond” is a bond given “to preserve

rights pending appeal.” C.A.R. 39(c)(1)(C). Certainly the letters of

credit in this case were delivered to preserve the Tracys’ rights

pending appeal.

¶ 21 But we don’t need to hang our hat solely on the language of

C.A.R. 39(c)(1)(C) because C.R.C.P. 121, section 1-23 removes all

doubt. That rule, entitled “BONDS IN CIVIL ACTIONS,” expressly

provides that “[l]etters of credit issued by a bank chartered by either

the United States government or the State of Colorado” are “bonds”

that are effective upon approval by the court, and that “[t]he term

‘bond’ as used in this rule includes any type of security provided to

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stay enforcement of a money judgment.” C.R.C.P. 121, § 1-23(2)(a),

(9).

¶ 22 Therefore, C.A.R. 39(c)(1)(C) and C.R.C.P. 121, section 1-

23(2)(a) and (9), considered together, make plain that a letter of

credit provided to preserve a party’s rights pending appeal in lieu of

a supersedeas bond is an “other bond” within the meaning of

C.A.R. 39(c)(1)(C). It follows that a successful appellant may recover

the reasonable fee for such a bond.2

¶ 23 Federal case law applying Fed. R. App. P. 39 — the federal

analogue to C.A.R. 39 — generally supports this conclusion. See,

e.g., Trans World Airlines, Inc. v. Hughes, 515 F.2d 173, 175, 177

(2d Cir. 1975) (approving the district court’s award of the fee for a

letter of credit partially securing a judgment pending appeal); Smart

Mktg. Grp., Inc. v. Publ’ns Int’l, Ltd., No. 04-cv-0146, 2011 WL

1897214 (N.D. Ill. May 17, 2011) (unpublished opinion); Johnson v.

2 At oral argument, the Surofcheks’ counsel expressly conceded that

the district court erred by concluding that, as a matter of law, the
fee for a letter of credit delivered in lieu of a supersedeas bond can’t
be recovered as a cost of appeal under C.A.R. 39(c). Counsel sought
affirmance of the order on the basis that the second judge was
merely exercising her discretion when denying recovery of this cost,
an argument we reject below.

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Pac. Lighting Land Co., 878 F.2d 297, 298 (9th Cir. 1989) (“Where a

letter of credit has been used and the total cost has been no greater

than a supersedeas bond without collateral, the charge for the letter

of credit has been treated as the equivalent of premiums paid for

the cost of a supersedeas bond.”).3 Decisions of state courts do too.

3 Some federal and state court cases, some of which the Tracys and

Surofcheks rely on, have drawn a distinction between the cost of a
letter of credit that is itself provided in lieu of a supersedeas bond
— which, if comparable to the cost of a supersedeas bond, is
recoverable — and the cost of a letter of credit that is obtained to
secure a supersedeas bond or a loan obtained to pay for a
supersedeas bond. See Republic Tobacco Co. v. N. Atl. Trading Co.,
481 F.3d 442, 445, 449-50 (7th Cir. 2007) (affirming award of costs
to obtain a loan of funds that were used to secure a judgment in
lieu of a supersedeas bond); Johnson v. Pac. Lighting Land Co., 878
F.2d 297, 297-98 (9th Cir. 1989); Lerman v. Flynt Distrib. Co., 789
F.2d 164, 165-67 (2d Cir. 1986) (interest charges incurred in
borrowing money used as collateral to secure a supersedeas bond
not recoverable); Hynix Semiconductor Inc. v. Rambus Inc., No. C-00-
20905-RMW, 2012 WL 95417, at *5-6 (N.D. Cal. Jan. 11, 2012)
(unpublished order); Klapmeier v. Cirrus Indus., Inc., 900 N.W.2d
386, 393-96 (Minn. 2017). But see Bose Corp. v. Consumers Union
of U.S., Inc., 806 F.2d 304, 304-05 (1st Cir. 1986) (per curiam)
(affirming an award of the cost of a letter of credit securing a
supersedeas bond because “there [was] no suggestion that the
charge for the letter of credit was either unreasonable or resulted in
any greater total cost than a supersedeas bond without supporting
collateral”); N. Pointe Ins. Co. v. Steward, 697 N.W.2d 173, 177-80
(Mich. Ct. App. 2005) (same). We don’t need to address that
distinction in this case because the Tracys’ letters of credit directly
secured the judgment, taking the place of a supersedeas bond.

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E.g., Whittle v. Seehusen, 748 P.2d 1382, 1388 (Idaho Ct. App.

1987).

¶ 24 Unlike the district court, we also see significant differences

between a fee paid for a letter of credit used to secure a judgment

pending appeal and borrowing costs of an ordinary loan. With such

a letter of credit, the fee is paid regardless of whether the letter of

credit is ever drawn on, just like a premium paid for a supersedeas

bond. With an ordinary loan, however, the funds are necessarily

disbursed to the borrower, so the cost of obtaining the loan is in all

events the cost (or part of the cost) of actually receiving funds.4

Also, the letter of credit is payable directly to the judgment creditor

by the issuer of the letter, guaranteeing payment to the judgment

creditor; a loan to a judgment debtor doesn’t share these attributes.

See Centrifugal Casting Mach. Co. v. Am. Bank & Tr. Co., 966 F.2d

1348, 1351-52 (10th Cir. 1992) (explaining how letters of credit

work).

4 We recognize that if the letter of credit is drawn on, the amount

taken becomes a loan. But that doesn’t happen, of course, when
the judgment is reversed on appeal.

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¶ 25 All this isn’t to say that any cost associated with a letter of

credit that has some connection to securing a judgment is

necessarily recoverable. (This case doesn’t call for us to set limits

governing all such situations.) But it is to say that the reasonable

cost of a letter of credit itself used in lieu of a supersedeas bond to

secure a judgment is recoverable.

¶ 26 We aren’t persuaded to reach a different conclusion by the

Surofcheks’ arguments for affirmance.

¶ 27 First, contrary to the Surofcheks’ argument, the law of the

case doctrine didn’t require the second judge to adhere to the first

judge’s ruling. “Under the law of the case doctrine, ‘prior relevant

rulings made in the same case are to be followed unless such

application would result in error or unless the ruling is no longer

sound due to changed conditions.’” San Antonio, Los Pinos &

Conejos River Acequia Preservation Ass’n v. Special Improvement

Dist. No. 1, 2015 CO 52, ¶ 31 (emphasis added) (quoting People v.

Dunlap, 975 P.2d 723, 758 (Colo. 1999)). And the law of the case

doctrine doesn’t “prevent[] a trial court from clarifying or even

14
revisiting its prior rulings.” Stockdale v. Ellsworth, 2017 CO 109,

¶ 37 (quoting In re Bass, 142 P.3d 1259, 1263 (Colo. 2006)).5

¶ 28 Thus, the second judge wasn’t bound by the first judge’s

ruling. Indeed, by adhering to that ruling, the second judge in

essence repeated the first judge’s legal error. Far from being

required to adhere to the first judge’s ruling, the second judge was

actually obliged not to adhere to it because it was inconsistent with

the applicable rules.6

¶ 29 Second, we reject the Surofcheks’ invitation to affirm on the

ground the district court had discretion to deny the Tracys’ request

for the costs of the letters of credit. The district court denied the

request only because it accepted the first judge’s view that such

expenses aren’t recoverable as a matter of law. Nothing in the

record suggests that it would have denied the request had it

5 Of course, the law of the case doctrine wouldn’t bind us to follow

the first judge’s ruling in any event.
6 We don’t intend any disrespect to the trial judges in this case,

neither of whom had the benefit of this opinion when they ruled.

15
recognized that such expenses, if reasonable, are recoverable.7

Moreover, because, as we have held, reasonable premiums paid to

purchase a letter of credit to preserve a judgment debtor’s rights are

“taxable” under C.A.R. 39(c)(1)(C), a court would have to be

confronted with extraordinary circumstances to deny such a

request entirely.

¶ 30 For their part, the Tracys ask us to direct the district court to

award them the entirety of the costs of the letters of credit. We

decline the invitation. The district court hasn’t yet ruled on the

reasonableness of these expenses. See Valentine v. Mountain States

Mut. Cas. Co., 252 P.3d 1182, 1186-87 (Colo. App. 2011) (a trial

court has discretion over the amount of costs to award; such

amount should be reasonable). And the Surofcheks challenged the

reasonableness of the expenses on nonfrivolous bases — i.e., that

the letters of credit secured the entirety of the judgment even

7 The Surofcheks’ reliance on Catlin v. Tormey Bewley Corp., 219

P.3d 407 (Colo. App. 2009), is misplaced. That case didn’t involve
costs awardable under C.A.R. 39(c)(1)(C) for bonds used to secure a
judgment. Rather, it concerned claimed costs to finance litigation
(interest on loans), which the prevailing party sought to recover
under section 13-16-122, C.R.S. 2024. (The division held that such
costs aren’t recoverable under that statute.)

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though the Tracys appealed only a portion of the judgment and the

Tracys should have obtained multi-year letters of credit. Because

we are a court of review, not of first view, LTCPRO, LLC v. Johnson,

2024 COA 123, ¶ 46, we leave it to the district court to determine in

the first instance the reasonable amount awardable for these

expenses.8

III. Disposition

¶ 31 The order is reversed. We remand the case to the district

court to determine the reasonable amount of the costs of the letters

of credit that the Tracys delivered to secure the judgment. The

8 The Tracys assert that the Surofcheks waived any right to

challenge the reasonableness of the costs of the letters of credit
because they didn’t object to the Tracys providing the letters of
credit to secure the judgment within the time allowed by C.R.C.P.
121, section 1-23(6). But when the Tracys proposed using the
letters of credit as security for the judgment pending appeal, the
relevant issue from the Surofcheks’ point of view was whether those
letters of credit would adequately secure their judgment. The
recoverability of the costs associated with obtaining those letters of
credit wasn’t relevant to that issue and wasn’t before the court. The
time for objecting to those costs was when the Tracys sought to
recover them after the appeal. The Surofcheks timely did so.
Therefore, there was no waiver. See Mid-Century Ins. Co. v. HIVE
Constr., Inc., 2023 COA 25, ¶ 21 (“[G]iven that a waiver is an
intentional relinquishment of a known right, the circumstances
surrounding the alleged waiver matter.”) (cert. granted on other
grounds Feb. 5, 2024).

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district court may, in its discretion, take additional evidence

bearing on that determination.

JUDGE BROWN and JUDGE YUN concur.

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