Written by Amanda Riedl 

 

A Temporary Restraining Order (TRO) is issued by a judge to restrain one party from engaging in some act. A temporary restraining order bond is a court bond filed by plaintiffs to protect the defendant from damages if the TRO was wrongfully issued. A TRO bond can sometimes be referred to as an injunction bond, and while the language changes depending on the state, for the most part, the terms are interchangeable.

TRO bonds are often needed in non-compete disputes. For example, Jerry works for an interior design firm. Upon his hiring, he signed a contract containing a non-compete clause.  Four months after Jerry left the firm, Mae, the owner of the interior design firm, found out Jerry was contacting some of the company’s former clients. Mae went to court to file an injunction to prevent Jerry from soliciting any more of the firm’s clients. The judge for Mae’s case required her to get a $10,000 temporary restraining order bond to protect Jerry from damages if the TRO was wrongfully issued.

In the case above, the judge determined that while it is likely that Mae would win on the merits of the case, Jerry was due some sort of protection in the event he was wrongfully restrained from continuing with his solicitation.

An alternative for getting a bond is to post cash directly with the court.  Often times, legal counsel might advise such a path since it saves the client from having to come out of pocket for the full amount of the security.  For small bonds beneath $1,000 this is common practice; however, when the court requires a higher bond amount, the posting of funds might not be as appealing or feasible, and the bond provides a valuable alternative.

Of course, posting cash with the court in lieu of a bond is an option in any litigation matter, but a secondary, and just as critical, element to consider is timeliness.  Going back to the example above, Mae does not have any time to waste while Jerry continues to solicit her clients.  It would be damaging to her company to continue risking losing customers when she does not have to.  It is important to work with an agent who understands the urgency, and has the facilities in place, to act quickly.

There are numerous factors the surety considers when requested to issue a TRO bond:  bond amount, bond wording, jurisdiction, nature of the case, assets/actions being restrained, and much more.  Anybody who occasionally finds themselves in the position of needing these types of bonds would be wise to develop a relationship with a surety facility that understands their needs and the urgency the bond requires. 

Some other common bonds that may be required on the plaintiff side are attachment bonds, replevin/sequestration bonds.  Replevin and sequestration bonds both involve a plaintiff re-obtaining his/her property from a defendant.  Attachment bonds involve seizing the defendant’s (debtor’s) property to secure payment of a judgment to the plaintiff (creditor).  Replevin, sequestration, and attachment bonds are all secured by the plaintiff to ensure payment to the defendant should the judge rule in favor of the defendant.  As with injunction and TRO bonds, the court will determine the bond amount.  These bonds are also, generally, time sensitive, so it is important to get a plaintiff’s bond issued as quickly as possible.

Plaintiffs bonds involved in restraining actions, attaching, or seizing property should be treated with the utmost urgency, and the agent must consider all of the characteristics of the situation in one phone call and have the ability to move forward.  International Sureties has been relied upon over many decades for TRO/Injunction bonds because of our understanding of the nature of the bond and streamlined process to issue them quickly.  Experience matters, and this is one time when you do not want to have to educate an agent about a product they have seen only a handful of times, if ever.