These Recent Cases Could Affect Your Bail Business
- November 15, 2010
- by Collateral Staff
- In the News
[caption id="attachment_2287" align="alignleft" width="250" caption="U.S. Supreme Court"][/caption]
Lack of Notice to Surety Cured with Notice Two Years Later - Minnesota
The defendant failed to appear in June 2007. A notice was sent to the bail agent, but not the surety. A show-cause hearing was set for December 2008. The bondsman and the surety moved to reinstate and discharge the bond because the notice required by Minn.R.Gen. Prac. 702 was not given to the surety and the bondsman. In February 2009, nearly two years after the FTA, the trial court reinstated the bond because the surety was not given notice but refused to discharge it. Instead, the court gave the surety and agent 30 days to request a hearing. The court denied a renewed motion to discharge and entered an order forfeiting the bond. The surety and agent appealed.
The Court of Appeals held that the trial court's reinstatement and 30 days notice cured any prejudice to the surety from the initial failure to notify it. At the second hearing, the trial court properly applied the Shetsky factors and did not abuse its discretion in refusing to discharge the bond. State v. Padilla (Minn.App. 2010)
Lesson Learned - In Minnesota and some other states, the failure of a court to give prompt notice to the surety of an FTA does not automatically discharge the surety. Rather, in these states, the court can cure the lack of notice by simply sending late notice to the surety. Consequently, if you write bail in Minnesota or a state that has similar laws, you should make every effort to follow the status of court cases, particularly on your larger bonds, so that you know when an FTA has occurred.
Immigration Bond Appeals are under Arbitrary and Capricious Standard - Federal
The Department of Homeland Security declared various immigration bonds breached and the surety appealed the rulings through the appropriate administrative appeals. After losing those appeals, the surety filed suit in federal court. The surety argued that the agency's breach decision should be reviewed by the court without any deference to the agency's decision. The federal court, however, held that it would only review the agency's decision on an "arbitrary and capricious" standard. As such, the court would give great deference to the agency's decision and the surety could only win if the court found that the agency's breach decision was not reasonable or was made without adequate consideration of the facts. U.S. v. Gonzales & Gonzales (N.D. Cal. 2010).
Lesson Learned - Immigration bonds are very different than bail bonds. A bail bond forfeiture is decided by a court. An immigration bond breach is decided by a U.S. agency with only limited appeal rights. This is one more reason why immigration bond underwriting must be so strict.
Federal Judge Can Accept Unsecured Bond Without Proof of Solvency - Federal?A Magistrate Judge in federal court set a $100,000 unsecured bond and required three of the defendant's family members to be co-signers on the bond. The government argued that under Federal Rule of Criminal Procedure 46(e), all sureties on an appearance bond must demonstrate assets adequate to cover the bond amount. The Magistrate Judge held that she could order an "unsecured" appearance bond pursuant to the catch-all provision of the Bail Reform Act, 18 U.S.C. 3142(c)(1)(xiv): "any other condition that is reasonably necessary" to assure the defendant's appearance and community safety. As such, the defendant was released without any evidence that the co-signers could pay $100,000 in the event of a bond forfeiture. United States v. Powell (N..D.Cal. 2010).
Lesson Learned - This case provides another example of why very few federal bail bonds are written. Federal Magistrates and Judges have very broad discretion when setting bonds and deciding on release conditions. Unsecured bonds and Pre-trial Release supervision (at taxpayer expense) are the norm.
Oral Premium Receivable Agreement Enforced in Part - Connecticut
The bondsman wrote bonds totaling $215,000. The defendant's father paid him $6,500 before the bonds were posted. The bondsman argued that the defendant owed him an additional $9,150, which was never paid. The Indemnity agreement and promissory note entered in to evidence at trial were not complete and made reference to security for appearance rather than premium amounts. The documents did not state an unpaid premium balance. The defendant admitted that he had agreed to pay $2,650 in additional premium. The court held that because the bondsman's records were so incomplete, there was no written or oral agreement to enforce. The judge did, however, award the bondsman $2,650 based on the theory of unjust enrichment. Arroyo v. Bajramj (Conn.Super. 2010).
Lesson Learned - A fully completed premium receivable note must be executed each time you agree to take premium over time. The note should specifically refer to payment of premium, the payment plan, and the award of attorney's fees to the bondsman if he is required to sue to enforce the note. The agreement should be signed and witnessed. If you do not get the premium payment plan in writing, you risk your ability to collect the unpaid premium. In addition, many states have specific regulations related to the content of premium receipts and unpaid premium promissory notes. Consequently, you should make sure your forms comply with state law.
Guest contributor Mark T. Holtschneider is the Executive Vice President and General Counsel for Lexington National Insurance Corporation, a leading surety that underwrites bail bonds across the country. Mark can be reached at 888-888-2245 or [email protected].
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