People v. The N. River Ins. Co.

1

THE PEOPLE, Plaintiff and Respondent, v. THE NORTH RIVER INSURANCE COMPANY et al., Defendants and Appellants.

B325691, B328081

California Court of Appeals, Second District, Seventh Division

September 25, 2024

NOT TO BE PUBLISHED

APPEALS from orders of the Superior Court of Los Angeles County, Nos. SJ4402, SJ4403 Natalie Stone, Judge. Affirmed.

Jefferson T. Stamp for Defendants and Appellants.

Dawyn R. Harrison, County Counsel, Richard P. Chasting, Assistant County Counsel, Melissa A. McCaverty, Deputy County Counsel for Plaintiff and Respondent.

SEGAL J.

INTRODUCTION

The North River Insurance Company appeals from the trial court's orders denying two motions by North River to set aside the summary judgments on two bail bonds that North River's agent, Bad Boys Bail Bonds, posted to secure the release of Alvaro Calderon in two criminal cases. In each case, North River argues the trial court lacked "fundamental jurisdiction over the bail bond" because the bond was void under BBBB Bonding Corp. v Caldwell (2021) 73 Cal.App.5th 349 (Caldwell). In that case the court held cosigner bail premium financing agreements that do not comply with statutory consumer protection notice provisions are unenforceable. North River argues that, because "part of the consideration for the bail bond has been deemed unlawful, the entire bail bond contract is void" and that therefore the trial court was "without fundamental jurisdiction to enforce the bond via summary judgment."

North River's argument is based on a false premise. Caldwell concerned a contract between a bond cosigner and the surety. These cases concern a contract between the surety and the government. Caldwell does not affect the validity of the latter. Because the bonds here were valid, the trial court had jurisdiction, and the court did err in denying North River's motions to set aside the summary judgment. Therefore, we affirm both orders.

FACTUAL AND PROCEDURAL BACKGROUND

On September 7, 2015 Calderon was arrested and taken into custody. Bail was set at $90,000.

The same day, Yasmin Vasquez submitted an application to Bad Boys for a $90,000 bail bond. Bad Boys, acting on behalf of North River, entered into an Indemnity Agreement with Vasquez where North River agreed to post the bail bond for Calderon's release, and Vasquez agreed to reimburse North River for various expenses. The Indemnity Agreement provided that, if Calderon failed to appear in his criminal case, Vasquez would pay North River and Bad Boys the costs associated with returning Calderon to custody. The Indemnity Agreement also provided that, if North River and Bad Boys were unable to exonerate the bail bond before the entry of summary judgment, Vasquez would pay North River and Bad Boys the full amount of the bond.

The Indemnity Agreement required Vasquez to pay an annual premium of $7,200 for the bond. To facilitate the payment of the premium, Bad Boys and Vasquez entered into another contract titled Unpaid Premium Agreement, also known as a bail bond premium financing agreement, that prescribed a monthly installment payment plan to "facilitate payment of the premium." The Unpaid Premium Agreement required Vasquez to pay $1,000 down and monthly installments of $500, plus a 10 percent late charge and "legal/collection fees," and contained an acceleration clause in the event of breach or forfeiture of the bond. Bad Boys also required Vasquez to sign a document titled Indemnitor/Guarantor Checklist. After Vasquez signed the documents, Bad Boys posted North River's bond, and Calderon was released from custody. On September 9, 2015 Calderon signed the same four documents.

On September 10, 2015 the People filed a felony complaint against Calderon. After Calderon failed to appear at his arraignment on September 29, 2015, the court ordered the bail forfeited. On October 5, 2015 the court mailed North River and Bad Boys a notice of forfeiture stating they would have 185 days to get Calderon to court. The trial court subsequently granted two extensions, ultimately to April 10, 2017. North River and Bad Boys failed to either surrender Calderon or move to vacate the forfeiture and exonerate the bond by the deadline. On May 16, 2017 the court entered summary judgment on the bond.

In December 2021 the court in Caldwell affirmed an order granting a motion for a preliminary injunction enjoining Bad Boys from enforcing bail bond premium financing agreements with individuals who had cosigned those agreements on behalf of an arrestee without first receiving statutory notices required by certain consumer protection statutes. (Caldwell, supra, 73 Cal.App.5th at p. 358.) According to North River, Bad Boys did not give Vasquez the required consumer protection notice, and Bad Boys and North River are enjoined from collecting the premium from Vasquez.

On June 28, 2022, 61 months after the entry of judgment, North River filed a motion to set aside the summary judgment, vacate the forfeiture, and exonerate the bond. On September 16, 2022 the court denied North River's motion. North River timely appealed.

Meanwhile, on February 6, 2015 Calderon was arrested again. Bail was set this time at $75,000. The next day Ana Rosa Calderon submitted an application to Bad Boys for a $75,000 bail bond. Ana Calderon signed the same four documents Vasquez signed in September 2015.

On February 10, 2015 the People filed a felony complaint against Calderon. After Calderon failed to appear at his arraignment on October 13, 2015, the court ordered the bail forfeited. On October 16, 2015 the court mailed North River and Bad Boys a notice of forfeiture stating they would have 185 days to get Calderon to come to court. The trial court granted two extensions, ultimately to March 28, 2017. North River and Bad Boys failed to either surrender Calderon or move to vacate the forfeiture and exonerate the bond by the deadline. The court entered summary judgment on the bond on May 16, 2017. On June 28, 2022, North River filed a motion to set aside the summary judgment, vacate the forfeiture, and exonerate the bond in the second case as well. The trial court denied the motion. North River timely appealed.

DISCUSSION

A. Applicable Law and Standard of Review 1. The Bail Bond Transaction

"The bail bond transaction 'is a function of "two different contracts between three different parties."'" The first contract is "'between a criminal defendant and a surety under which the surety posts a bail bond in exchange for the defendant's payment of a premium and [the defendant's] promise to pay the full amount of the bond in the event of [the defendant's] nonappearance.'" (Caldwell, supra 73 Cal.App.5th at p. 363.) The second contract is the bail bond. (Ibid.) The "'bail bond is a contract between the surety and the government whereby the surety acts as a guarantor of the defendant's appearance in court under the risk of forfeiture of the bond.'" (People v. American Contractors Indemnity Co. (2004) 33 Cal.4th 653, 657 (American Contractors).) Often, as here and in Caldwell, there is a third contract when the defendant or a cosigner cannot pay the entire bond premium at the time of the bond: the bond premium financing agreement, sometimes called (here and in Caldwell) an Unpaid Premium Agreement. The bond premium financing agreement is "between an arrestee (or cosigner) and the bail bond agent to finance the payment of the premium . . . to secure the undertaking of bail and the arrestee's release from detention." (Caldwell, at p. 363.)

2. The Bail Bond Contract

"The contractual nature of the relationship between the government and the surety leads to the conclusion that the bail order is the offer, and the posting of a bond is the acceptance of that offer." (People v. International Fidelity Ins. Co. (2012) 204 Cal.App.4th 588, 595 (International Fidelity).) "Under the terms of the bail bond agreement, the defendant is transferred from the government's custody to the constructive custody of the surety." (People v. Accredited Surety &Casualty Co. (2022) 77 Cal.App.5th 185, 191.) Thus, "'the consideration of the bond, accruing to the sureties, is [the defendant's] freedom from any other custody.'" (People v. Lexington National Ins. Co. (2007) 147 Cal.App.4th 1192, 1199.) "At any time, a surety may surrender a defendant and exonerate a bond under Penal Code section 1300, subdivision (a)." (People v. Bankers Ins. Co. (2010) 181 Cal.App.4th 1, 5; see Lexington, at p. 1198 ["'When the bail has served its purpose, the surety will be "exonerated," i.e., released from the obligation.'"].)

"'The object of bail and its forfeiture is to insure the attendance of the accused and his obedience to the orders and judgment of the court. (American Contractors, supra, 33 Cal.4th at p. 657.) "If the defendant subsequently fails to appear as required and the failure to appear is not excused, then the court must declare the bail bond forfeited." (People v. Financial Casualty &Surety, Inc. (2022) 78 Cal.App.5th 879, 884 (Financial Casualty); see Pen. Code, § 1305, subd. (a); People v. The North River Ins. Co. (2020) 53 Cal.App.5th 559, 563.) "After the court declares the bail bond forfeited and the clerk of the court mails notice to the surety, the surety has 185 days (known as the appearance period) to secure the defendant's appearance in court." (Financial Casualty, at p. 884.) During the appearance period, "the surety may either cure its breach of the bond by producing the defendant or demonstrate why the breach should be excused." (Id. at p. 887.)

If the bail forfeiture has not been set aside before the expiration of the appearance period, the court must enter summary judgment against the surety. (Financial Casualty supra, 78 Cal.App.5th at p. 885; see Pen....