Seneca Ins. Co. v. Ross

507 S.W.3d 798

SENECA INSURANCE CO., INC., dba Eydie's Bail Bonds, through Victor Burgess, Agent, Appellant,

v.Kalvin Davon ROSS, Appellee.

No. 08–14–00101–CV

Court of Appeals of Texas, El Paso.

December 15, 2015

Richard S. Gladden, Denton, TX, for Appellant.

Henry C. Paine, Marsh, Paine & Waddill, P.C., Denton, TX, for Appellee.

Before McClure, C.J., Rodriguez, and Hughes, JJ.

OPINION

ANN CRAWFORD McCLURE, Chief Justice

Seneca Insurance Company challenges a judgment which requires it to return a $750 bail bond premium. It pitches the case as an opportunity to interpret as a matter of first impression what the Legislature intended by the phrase "reasonable cause" under Section 1704.207(c) of the Texas Occupations Code. That clause governs the standard under which a trial court might require a bail bond surety to return all or a part of a bond premium when the bonding company surrenders a criminal defendant. TEX. OCC. CODE ANN. § 1704.207 (West 2012). And while it is tempting to wade into this novel question of statutory interpretation, aided by the excellent briefing of the parties, for the reasons set forth below we resolve the appeal on a much more mundane ground.

FACTUAL SUMMARY

Some of the facts of this case are fairly straightforward, but some are disputed. Kalvin Ross was charged with felony assault along with two other misdemeanor charges.¹ The two misdemeanor charges were assigned to a County Criminal Court, while the felony charge found its way to the 431st District Court for Denton County.²

On September 23, 2013, after being arrested and finding himself in jail, Ross called Eydie's Bail Bonds (referred to as Seneca throughout the rest of the opinion). Seneca agreed to post three bonds, in the total amount of $15,000, to obtain his release on the three cases.

Seneca charged Ross $1,500 as the premium on the three bonds. Ross initially agreed to pay $700 down and pay the additional $800 by the end of three months. This arrangement was documented by a written agreement reflecting these terms. Ross signed a one page form contract stating the total premium as $1,500 for the "bond or bonds." An application form, which Ross also signed, notes that of the $1,500 total premium, $700 had been paid and $800 was to be paid within three months.

Ross, who was not working at the time, verbally agreed about a month later to pay $100 every two weeks towards the balance of the premium. He contends, however, that he could not meet that repayment schedule, and was told by a collector from Seneca to do what he could. He, or persons on his behalf, paid $75 on November 14, 2013; $100 on November 15, 2013, and $80 on January 8, 2014. His payments thus totaled $955 towards the $1,500 bond premium.

On January 24, 2014 Seneca filed an "Affidavit of Surety to Surrender Principal" executed by its agent Victor Burgess, in which it claimed: "The Defendant has failed to pay the fee as required. I fear I cannot produce him for court." As a consequence, a capias was issued on January 30, 2014, to arrest Ross. Ross appeared before the 431st District Court on January 31, 2004. Bail was again set at $7,500. The court appointed counsel for Ross after finding him to be indigent. The court then set a show cause hearing to determine if the "reasonable cause" claimed by Seneca in its January 24, 2014 affidavit was in fact reasonable.

At the hearing, Ross, Victor Burgess, and his wife, Eydie Burgess, all testified. Victor Burgess, who signed the surrender affidavit, claimed he was concerned about whether Ross would appear for his court hearings based on the non-payment, the fact Ross had not called in regularly to Seneca while out on bond, and because he had once gone to Waco while out on bond. In his words, "[o]ur experience has been when people don't pay their fees as agreed in a timely fashion and they don't call in on a regular basis, that they don't—they frequently do not show up for court." But Victor Burgess had no personal knowledge to support his claim that Ross had not called in and conceded there was nothing improper about Ross going to Waco.

Ross testified in substance that he agreed to the $1,500 bond premium, that he made the initial down payment and some payments, but because he was looking for work he could not pay the balance. About a month after his release, he reached an agreement over the phone with a Seneca employee named "Abe" to pay $100 every two weeks. He admitted not paying the entire balance of the bond premium, or making the $100 payment every two weeks. But he contended he was told by Abe to "do what I could" and "just make payments the best you can." Ross had court dates on January 17, 21, and 28, 2014 and appeared on all of those dates.

Eydie Burgess, the manager for Seneca, also testified. She verified that three bail bonds were issued by Seneca, one for $7,500 on the felony charge, and two bonds in the amounts of $5,000 and $2,500 for the misdemeanor counts. The premium on the $7,500 bond was $750. Seneca internally allocated any payments pro-rata towards the three bonds in the sense that until they were all paid in full, none was individually paid. Thus while a total of $955 had been paid by Ross, Seneca considered that no one bond premium had been paid in full.

She also contended that Ross was not surrendered just because of money. Rather, she contended the failure to pay the bond premium was an indicator of his potential flight risk:

Q. [By the Court] Would you agree with me that the surrender was more about the money than fear that he wasn't going to show up for court?

A. Not—no. I do not surrender people just to collect money.

...

Q. And understand my question. My question wasn't, was it only the money; my question was, wasn't it more the money that concerned you than the fact that you feared he would not appear in court?

A. No.

...

Q. Nonpayment is a civil contract issue and it can be handled separately. And I agree with you, a bondman's primary concern should not be surrender because I'm not getting paid. It should be surrender because I don't think they're going to show up and I don't want to be on the hook.

A. I agree.

We understand these witnesses to claim that the combination of there being some difficulty in reaching Ross, plus the fact that many people who do not pay their accounts also miss court dates, created an apprehension that Ross might not appear. Seneca claims this insecurity justified it filing an affidavit on January 24, 2014. But the trial court had problems understanding how this claimed insecurity suddenly arose after January 17, 2014 when Ross had timely appeared for a court setting, but before his next scheduled hearing date on January 31, 2014.³

At the conclusion of the hearing the trial court indicated that there was no reasonable cause to surrender Ross:

THE COURT: I do find that this contested surrender was without reasonable cause. I'm going to also state that while other findings of fact and conclusions of law certainly are possible if someone requests them, that it doesn't matter, quite frankly, whose burden it is, because regardless of whether I impose that burden on Mr. Ross or on your client, I think the evidence is pretty clear that there is not reasonable cause for surrender in this case.

...

I don't believe that an affidavit filed with the Court should be made disingenuously, and I think this one was. I don't think there was any good faith basis whatsoever to claim there was fear that he would not appear in court when he had been in court three days before and seven days before this affidavit was filed. The evidence, as I see it, indicates that this was about money and nothing else. And courts are simply not expected to be, nor should they be expected to be, collection agents for attorneys or bail bondsmen. That's my finding. I'll enter an order consistent with it.

The trial court later signed an order stating that Seneca's surrender of Ross was without reasonable cause, "in that the reasons stated in the Affidavit of Surety to Surrender Principal and filed on that date were not supported by the evidence presented at the hearing." The order required Seneca to refund the $750 premium to Ross, and severed this part of the case into a separate proceeding so that it would become the final judgment of the trial court.

THE RELEVANT STATUTORY PROVISIONS

When a surety (the bail bonding entity) signs on to a bail bond, it assumes a monetary risk if the principal (the criminal defendant who bonded out) fails to appear. See e.g. TEX. CODE CRIM. PROC. ANN. art. 17.08(1), (2) (West 2015); Bowling v. State, 229 Ark. 441, 444, 316 S.W.2d 343, 344 (1958) ; State v. Honey, 165 Neb. 494, 497, 86 N.W.2d 187, 189 (1957). At early common law, the surety had nearly unlimited rights to seize and surrender the principal back to the authorities. See Taylor v. Taintor, 83 U.S. (16 Wall.) 366, 371–73, 21 L.Ed. 287 (1872). Under the Texas Code of Criminal Procedure, the surety can end its financial liability on the bond by physically surrendering the principal back into the custody of the authorities, or appropriately notifying the authorities where the principal is otherwise incarcerated, or filing an affidavit stating the cause of surrender with information sufficient to allow for an arrest warrant to be issued. TEX. CODE CRIM. PROC. ANN. art 17.16(a)(1), (2) and art. 17.19(a).

Because any re-arrest could obviously work a hardship on the principal, later case law accorded the principal a civil cause of action for breaching the bail bonding agreement. Ex Parte Vogler, 495 S.W.2d 893, 894 (Tex.Crim.App.1973) (so stating in dicta); Karakey v. Mollohan, 15 S.W.2d 692 (Tex.Civ.App.–El Paso 1929, no writ). The Legislature also provided a quicker and less cumbersome remedy, albeit one with a limited recovery. See McConathy v. State, 545 S.W.2d 166, 168 (Tex.Crim.App.1977). Under TEX. OCC. CODE ANN. § 1704.207(a)(2), a surety can accomplish a surrender by filing an affidavit in the proper court which among other things,...