Posted 10/5/2016

In Financial Casualty & Surety Co., Inc. v. Thayer, 2016 U.S. Dist. LEXIS 136604 (D.N.J. September 30, 2016), the surety appealed the holding of the bankruptcy court that a judgment that it obtained against a bail agent arising from bond forfeitures and unpaid premiums were dischargeable.  The surety had paid the $150,000 forfeiture of a bail bond and argued that the judgment arising from the forfeiture was not dischargeable under 11 U.S.C. § 523(a)(7) (fines, penalties and forfeitures).  The bankruptcy court distinguished a holding by the Third Circuit that held that an unpaid forfeiture was not dischargeable by noting that, in this case, the surety had paid the forfeiture but was seeking indemnification from the agent.  The District Court held that the same policy considerations were at play (holding the bail bondman financially accountable for failures to appear).  It also held that the surety was equitably subrogated to the state’s rights by paying the forfeiture.  Therefore, the court held that the debt related to the forfeiture was not dischargeable under 11 U.S.C. § 523(a)(7).  With respect to the unpaid premiums, the court found that the bail agent was in a fiduciary relationship with the surety.  Further, the court found that the agent’s intentional decision to convert the premiums held in trust for the surety for his own use met the definition of a “defalcation”.  Thus, the court found that the unpaid premiums were not dischargeable under 11 U.S.C. § 523(a)(4) (debt arising from fraud or defalcation while acting in a fiduciary capacity).  The court reversed the holding of the bankruptcy court and remanded the matter for a determination of the precise amount of debt that was not dischargeable. 

In State v. Vaimili, 2016 Haw.App. LEXIS 433 (Haw. App. September 30, 2016) the surety appealed the trial court’s denial of the renewed motion to set aside the judgment.  The crux of the surety’s argument was notice of forfeiture was required to be sent to the surety under HRS 804-51.  (The agent initially had received notice, but not the surety.)  The court held that under State v. Nelson, the “surety” in HRS 804-51 referred to the bail agent.  Further the court referenced State v. Vaimili, 313 P.3d 698 (Ha. 2013), which stated that a surety had thirty days from the time it received notice of forfeiture to set aside the forfeiture judgment.  The motion to set aside the forfeiture was outside the 30 day window.  The trial court’s denial of the renewed motion to set aside the judgment was affirmed.

In State v. Jones, 2016 La. App. LEXIS 1578 (La. App. August 17, 2016), the surety furnished bonds to secure the defendant’s release.  The dependent failed to appear at his arraignment and the court ordered a forfeiture of the bond and issued an alias capias for the defendant.  Two and a half months later, the defendant was incarcerated in Orleans Parish Prison, the same jurisdiction as the original arrest, on account of an arrest for another offense.  However, the defendant was released the same day.  The sheriff had failed to execute the alias capias and detain the defendant.  The surety moved to set aside the forfeiture, arguing that under La. C. Cr. P. art. 345, it was relieved of its obligations based on the defendant’s incarceration.  The trial court denied the motion.  The Court of Appeal affirmed the judgment of the trial court.  It held that the statute contemplates continual incarceration.  As the defendant was released, art. 345 does not provide relief to the surety.  Further, the court stated that the risk that a defendant may be arrested on other charges after the entry of a bond forfeiture and not be held in custody is not a fortuitous event that would absolve a surety from liability.  A dissenting opinion stated that the trial court’s decision should have been vacated and remanded to determine whether the sheriff’s failure to detain the defendant after the subsequent arrest and execute the alias capias modified the surety’s obligation.  A second dissent stated that the surety’s motion to set aside the forfeiture should have been granted.  The dissent disagreed with the majority opinion that the statute requires continual incarceration.  The statute only requires that the defendant be incarcerated at any time prior to the end of the time period to set aside forfeiture.  Further the bond contemplates that the state has complied with its duties, which it failed to do in this case when the sheriff failed to execute the alias capias.  The dissent stated that such a failure is not reasonably foreseeable and the surety should have been absolved of its liability. 

In Harper v. State, 2016 Ga. App. LEXIS 491 (Ga. App. August 18, 2016), the Court of Appeals affirmed the conviction of a bail recovery agent for criminal trespass.  The agent had entered the home of an acquaintance of the defendant by breaking down a locked door.  The Court stated, “nothing in the bond agreement between the bondsman and [defendant] . . . can be construed to provide authority for the bondsman, or the bondsman's agent, to enter [the acquaintance’s] . . . residence without obtaining [the acquaintance’s] . . . consent.”

In State v. Phillips, 2016 N.J. Super. Unpub. 1961 (N.J. Super. A.D. August 25, 2016), the surety furnished two bonds (in the amounts of $30,000 and $1,000) to secure the defendant’s release.  The defendant failed to appear and the court ordered the bonds forfeited.  The surety left a few phone messages for the defendant in an attempt to locate him.  The sheriff’s office apprehended the defendant less than a month after his failure to appear with no assistance from the surety.  The court subsequently remitted the amount to be forfeited to $150 and $4500.  The surety appealed this order.  The Appellate Division reviewed the Remittitur Guidelines and found no basis to conclude that remitting 85% of the bail amount was an abuse of discretion.

In State v. International Fidelity Insurance Co., Case No. 2 CA-CV 2016-0045, (Az. App. August 31, 2016), the trial court forfeited $95,000 of the $100,000 bond and the surety appealed.  The surety argued that the trial court abused its discretion by considering the State’s expenses in keeping the defendant in jail and by failing to consider the substantial efforts of the surety’s recovery agent to locate and secure the defendant.  The Court agreed and remanded the case for reconsideration of the amount to forfeit.  The Court found that the expenses to keep the defendant in jail would have been incurred anyway and were not a result of his failure to appear and subsequent re-capture.  On remand, the trial court again ordered $95,000 of the bond forfeited, without relying on the excluded jail expenses and the surety appealed.  The Court of Appeals examined whether the trial court abused its discretion in light of the factors enunciated in State v. Old West Bonding Co., 56 P.3d 42 (Az. App. 2002).  The surety argued that the trial court placed undue emphasis on the defendant’s willful failure to appear and failed to balance the factors.  (The defendant was recaptured after he was convicted in abstentia after a four hour standoff.)  The Court stated that nothing in Old West prohibits a trial court from placing greater emphasis on the willfulness of a defendant’s failure to appear.  Further, the Court held that trial court did not abuse its discretion regarding its assessment of the surety’s efforts in aiding the apprehension of the defendant.  The Court affirmed the trial court’s judgment forfeiting $95,000 of the bond. 

State v. Nelson, 2016 Haw. App. LEXIS 430 (Haw. Ct. App. September 29, 2016) is an appeal of eight criminal cases in which the trial court denied the surety’s motions to set aside forfeiture judgments.  In each case, the defendant failed to appear and the court sent notice of forfeiture pursuant to HRS 804-51 to the bail agent.  The surety argued that the statute requires that notice be sent to the surety directly.  The Intermediate Court of Appeals held that the term “surety” in the statute refers to bail agents.  The Court examined the legislative history of  804-51 and concluded that the “bail bondsman” was referred to as the “surety”.  Further, the Court noted that other provisions in Chapter 804 suggest that “surety” refers to a bail agent.  For example, a “sufficient surety” is one that meets the Insurance Code requirements governing insurance producers. The Court affirmed the denial of the motions to set aside forfeiture.