The Often-Overlooked Weapon of Seeking a Cost Bond against Foreign Plaintiffs
By Henry S. David and Dana J. Emmer
Henry S. David is the proprietor of The David Firm®, which he founded after 33 years in Big Law. He is a commercial litigator, with a focus on creditors’ rights.
Dana Emmer is Corporate General Counsel at ZestFinance, Inc., a company devoted to serving the unbanked and to creative underwriting. Before joining ZestFinance, Dana worked four years at The David Firm® handling commercial litigation. Dana can be reached at firstname.lastname@example.org.
Your client is sued in California. As is common (if not the norm nowadays), the plaintiff is a Delaware corporation or limited liability company.1 You think of the usual attacks on the pleadings (such as demurrers and motions to strike) and maybe even challenging venue and jurisdiction.2 You think about removal to federal court (if your client is not a California citizen or a citizen of the same state as the plaintiff).3 You may even check with the Secretary of State to determine whether the plaintiff is qualified to do business in California and, if not, investigate whether it is obligated to so qualify.4 But many practitioners overlook a very powerful weapon: seeking an order under Code of Civil Procedure section 1030 ("Section 1030") that the plaintiff post a bond to secure your client’s right to recover costs if your client prevails – and if the plaintiff does not post the bond, the action is dismissed.5