Trial Courts Must Adequately Explain the Reasoning Behind Setting Security Bonds
(December 2010) By Gregory L. Arbogast, Associate
For more information, contact Paul Farquharson.
Guzzetta v. Serv. Corp. of Westover Hills,
No. 34 (Del. November 9, 2010)
In Guzzetta v. Serv. Corp. of Westover Hills, the Supreme
Court of the State of Delaware reversed and remanded the trial court's decision
to set a security bond at $10,000. The Supreme Court found that the trial court
abused its discretion by setting the amount of a security bond without
explaining the underlying basis therefor.
Guzzetta, arose out of a
petition for an injunction filed by the Service Corporation of Westover Hills.
In 2007, Robert and Kathleen Guzzetta purchased a residential property in
Wilmington Delaware ("property"). The property was adjacent to a home that the
Guzzettas already owned and their intention was to demolish the structures on
the property in favor of a grassy play area for their children. The Service
Corporation of Westover Hills filed a petition seeking to prevent the Guzzettas
from demolishing the structure on the property, claiming that it would violate a
restrictive covenant in the Guzzetta's deed.
Shortly after the Service Corporation of Westover Hills
filed the injunction petition, the Guzzettas filed a motion for a security
bond. A party is entitled to a security bond when a court issues a temporary
injunction and damages may proximately result from that injunction. The
trial court found the potential for damages and set the security bond at
$5,000.
The Guzzettas then filed a motion to increase the
security bond to $79,146.94. This petition was based on the potential for
damages resulting from higher taxes, higher insurance premiums, increased
demolition costs, increased landscaping costs, and the lost use of the
property. The trial court found that the Guzzettas could potentially suffer
damages from increased taxes, increased insurance costs, and the lost use of
the property. As a result, the trial court vacated the existing bond and set
a new bond at $10,000. However, the trial court did not provide an itemized
breakdown or explanation of the $10,000 security bond.
The Supreme Court agreed with the trial court that the
Guzzettas could suffer damages from increased taxes, increased insurance
costs, and lost use of the property. However, the Supreme Court could not
discern the amount of damages that each finding could cause or how those
findings amounted to $10,000 in potential damages. Therefore, the Supreme
Court remanded the case to the trial court for a breakdown and explanation
of the $10,000 security bond.
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