court surety bond
Temporary Restraining Order Bond
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What is a Temporary Restraining Order Bond?
A Temporary Restraining Order Bond, otherwise known as a TRO bond, is a type of injunction bond that provides protection to a defendant against possible loss should the court rule that a temporary restraining order was illegal or unnecessary in the litigation.
Some courts require a plaintiff to post a Temporary Restraining Order Surety Bond in the course of litigation. This type of bond is required by certain courts when a plaintiff wants to prevent the plaintiff from performing a particular act that might affect the outcome of the case. It is also intended to protect the rights of the defendant against any loss arising from the TRO in case the judge later ruled that the TRO should not have been granted. The bond eventually protects the rights of the defendant should be he or she wins the case.
There are instances wherein the court ruled for the defendant, and sometimes the court will establish that the TRO should not have been granted. The court may even find that the defendant sustained losses because of the issuance of the TRO. These losses may vary, from lost income, salary, family, etc.
To ensure that defendants are compensated for such losses, the court may ask the plaintiff to obtain a Temporary Restraining Order Bond. The defendant can seek compensation from the TRO bond if he or she wins the case. Otherwise, the plaintiff will be able to get back payment from the TRO bond if the court decides in his or her favor.
TRO bond payments are determined by the court on a per case basis, involving several factors, including the possibility that the defendant has a strong chance of winning the case.
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How to Obtain a Temporary Restraining Order Bond
The first requirement when obtaining a Temporary Restraining Order Bond is to contact a reputable surety bond company. The surety firm will take care of filing the documents as well as applying for the bond. But expect the surety to conduct a thorough background investigation on you and the case because a TRO bond exposes the underwriter to higher risk compared to other bonds. Keep in mind that each situation is unique and underwriting criteria vary widely depending on the size of the bond, type of case, and financial capacity of the Principal.
The surety firm will evaluate the following before writing a TRO bond:
- The degree of risk: What are the risk factors involved in the obligation? The dollar amount of the bond?
- The Principal: Does the person applying for the bond is financially capable of satisfying the risk?
- The Case: What is the nature of the need for the bond? Why is it needed? What are the possible damage/s as the result of the TRO?
The surety company that will underwrite the Temporary Restraining Order Bond may need to be convinced that the TRO is necessary for the case. The applicant may need to prove to the surety that the TRO is the only legal recourse to preserve the status quo and protect the plaintiff’s rights. Understand that a TRO bond exposes the surety to some risks. The plaintiff must present court orders containing information about the case, including personal financial statements, and a copy of the bond requirement from the court.
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Do I need collateral for a Temporary Injunction Bond?
Collateral is sometimes required for a temporary injunction bond. It depends on the creditworthiness of the applicant. Underwriters will usually look at the size of the bond as well as the client's financial ability to pay the bond if they don't prevail in the lawsuit. Learn more about surety bond collateral.
How Much Does a Temporary Injunction Bond Cost?
If your bond does NOT require collateral, the cost is typically 2-3% of the bond amount. There is a sliding scale for larger bonds (those in excess of $500,000) and your cost may be lower than 2-3%. On the other hand, if your bond DOES require collateral, typically the cost is 1% of the bond amount with discounts for larger bonds.
How Does a Temporary Restraining Order Bond Differ With an Injunction Bond?
A Temporary Restraining Order (TRO) serves the same purpose as an Injunction Order except that a TRO provides a limited period of relief. There are also jurisdictions where a TRO is not available to parties involved in litigation. A plaintiff can immediately secure an inductive relief while awaiting a hearing on a motion for a preliminary injunction in jurisdictions where a TRO is available.
A plaintiff has to provide sufficient, legal cause and present strong evidence to warrant a TRO from a civil court within hours or days of obtaining a preliminary injunction. A TRO will expire if a plaintiff fails to convince the court to impose a preliminary injunction or the court will dissolve the TRO.
Cases involving domestic violence or abuse, or other family law cases, often require a temporary restraining order. Courts usually issue a restraining order in such cases at the beginning or during the trial until a more permanent injunction can be enforced after the conclusion of the litigation.
The TRO in this type of case is aimed at securing the safety of the plaintiff and prevent the defendant from going near the former within a specified distance.
The primary purpose of both a temporary restraining order and a preliminary injunction is to preserve the status quo over the course of the litigation while the court determines the merits of the case.
But while TROs and preliminary injunctions have many similarities, they are quite different. Parties should be aware of this to determine which type or relief they want to seek. There are three distinct areas that distinguish TROs and preliminary injunctions. They notice; the duration of the injunction; and the scope of the hearing.
How Does a Temporary Restraining Order Bond Work?
There are three parties involved in the issuance of a Temporary Restraining Order Bond. The plaintiff is the Principal; the court is the Obligee, and finally, we have the surety bond company that guarantees the bond. A TRO bond provides the same guarantee as an injunction bond. Both allow the defendant to be indemnified against any damage as a result of the TRO requested by the plaintiff.
Underwriters or surety firms, consider several factors when writing injunction bonds. But they face greater risk when underwriting TRO bonds. There are jurisdictions that require the plaintiff to replace a TRO bond with a preliminary injunction bond. This could expose sureties to higher risk because they might accumulate liability under both bonds even, despite the fact that the TRO bond is no longer required.
It should be noted that there have been precedents when the courts had held sureties liable for the combined penalties of the two bonds because the defendant started to incur damages during the issuance of the TRO bond and it continued when it was revised into a preliminary injunction bond. When working within these jurisdictions, sureties must weigh the potential aggregate exposure before writing a TRO bond.
Surety firms who cannot issue both an injunction and a TRO bond should never write a TRO bond in the first place. A plaintiff can seek to obtain a preliminary injunction bond from another surety firm. If this happens, the surety company that issued the TRO bond but cannot write a preliminary injunction is still exposed to the original liability.
Examples of Temporary Restraining Order Bond
Case 1:
Sue has filed a domestic violence case against her husband, Tom. In her complaint, Sue told the court that her husband has been physically abusing her and that his violence has escalated in the past months. A few days ago, Tom tried to strangle Sue and even threatened to kill her on several occasions. Tom allegedly uttered to Sue, “Don’t even entertain the thought of leaving me. If you do, I will hunt you down and kill you.” Sue also told the court that Tom has a history of violence and has been arrested but was not convicted.
To protect herself from further physical abuse, Sue has asked the court for immediate issuance of a TRO against Tom to prevent him from coming near her and from going back to their home until a permanent injunction is settled by the court.
Since Tom will likely suffer from the TRO, including paying for his place or apartment to stay once he is prevented from returning home, etc., the court might ask Sue to post a Temporary Restraining Order Bond to compensate Tom should the court later decides to dismiss the case and rule in Tom’s favor.
Case 2:
Food giant Matlock is suing PureGold Food International for copyright infringement for allegedly marketing a similar product it has been selling to the market for several years now. Matlock also accused PureGold of packaging the product almost identical to its own.
Before a permanent injunction against PureGold is secured, Matlock decided to ask the court to issue a Temporary Restraining Order against its competitor to stop it from marketing, distributing, advertising and selling the said product. Matlock has presented sufficient evidence that without the TRO, the continued sale, marketing, distribution, and advertising of the said product could result in irreparable damage to its company and reputation.
Because PureGold is expected to also incur damage from the TRO, the court will require Matlock to pay a TRO bond to give PureGold a guarantee of indemnification should the copyright infringement case is dismissed by the court.
Getting bonded with Surety bond authority
If you need a Temporary Restraining Bond, you can count on Surety Bond Authority.
Surety Bond Authority is a full-service surety bond company that was a foundation of integrity and a solid reputation. The Company is founded by its CEO Greg Rynerson, who has more than 25 years of experience in surety bonds and insurance industries. Throughout his professional career, Greg has written bonds at the state and federal level for his satisfied clients.
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