People v. American Surety Company CA3 ( 2022 )

Filed 2/1/22 P. v. American Surety Company CA3
NOT TO BE PUBLISHED
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
or ordered published for purposes of rule 8.1115.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
THIRD APPELLATE DISTRICT
(Yuba)
----
THE PEOPLE, C091551, C091552
Plaintiff and Respondent, (Super. Ct. Nos.
CRF180109201,
v. CRF180109202)
AMERICAN SURETY COMPANY,
Defendant and Appellant.
After codefendants Xavier Franco Torres and Manuel Franco Camacho were
charged in a criminal complaint, the trial court set bail for each codefendant in the
amount of $50,000. Act Fast Bail Bonds (Act Fast), as agent for appellant American
Surety Company (American Surety), posted bail bonds in that amount for each
codefendant. Both codefendants failed to appear at a required hearing. The trial court
ordered bail forfeited, notified Act Fast and American Surety of the forfeitures, and
entered summary judgment. American Surety moved to set aside the summary judgment,
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to discharge the forfeitures, and to exonerate bail. The trial court denied the motion and
American Surety appealed. On our own motion, we ordered the appeals consolidated for
purposes of oral argument and decision only.
American Surety asserts that, in setting bail, the trial court failed to consider
codefendants’ particular circumstances including their ability to pay and the minimum
amounts required to effect legitimate government interests. Therefore, according to
American Surety, the order setting bail violated codefendants’ constitutional due process
rights, rendering the bail contracts void. American Surety further asserts that, even if the
bail contracts were not void, it would be unconscionable to enforce them.
We affirm the judgment.
FACTS AND HISTORY OF THE PROCEEDINGS
A complaint charged codefendants Torres and Camacho with first degree
residential burglary (Pen. Code, § 459 [statutory section references that follow are to the
Penal Code unless otherwise stated]), cultivating in excess of six marijuana plants with
concurrent violation of environmental law (Health & Saf. Code, § 11358, subd. (d)(3)),
and conspiracy to commit a crime (§ 182, subd. (a)(1)).
On June 19, 2018, the trial court appointed attorneys to represent the codefendants
and the court continued the arraignment to June 22, 2018. The trial court set bail at
$50,000 for each defendant stating, “the bail remains at $50,000 at this point in time.
That’s the bail schedule.” The court ordered the codefendants to be present on the next
hearing date.
American Surety, through its agent Act Fast, posted bond number AS50-212113 in
the amount of $50,000 for Torres and bond number AS50-207501 in the amount of
$50,000 for Camacho.
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On June 22, 2018, neither defendant appeared as ordered. The court ordered bail
forfeited and issued warrants. The clerk sent notices of forfeiture of the $50,000 bonds
on June 26, 2018.
On January 31, 2019, pursuant to section 1305.4, the court granted an extension of
the 180 day time requirement set forth in section 1305, subdivision (c)(1).
On August 1, 2019, the trial court denied a motion made pursuant to section 1305,
subdivision (g) to exonerate bail.
On September 13, 2019, the trial court denied Act Fast’s motion to vacate
forfeiture and reinstate and exonerate the bail bonds. The court stated the motion was
untimely, lacked merit, and the court lacked jurisdiction to grant it. Judgments on the
same date were entered in favor of the People and against Act Fast and American Surety
in the amounts of $50,000. Notices of entry of the summary judgment were sent and
filed on September 16, 2019.
On November 4, 2019, American Surety filed a motion to set aside summary
judgment, discharge forfeiture, and exonerate bail. American Surety asserted that, where
the bail penalty is set based on an unconstitutional order, the bond is void and the court
lacks jurisdiction to enforce the unconstitutional penalty. American Surety further
asserted that, because bail was set based on an unconstitutional order, which did not
reasonably calculate the amount of bail, the bond was void as an unenforceable liquidated
damages provision.
County counsel opposed the motion, asserting that American Surety’s arguments
had been considered and summarily rejected in People v. Accredited Surety and Casualty
Co. (2019) 34 Cal.App.5th 891 (Accredited Surety). County counsel also asserted
American Surety had failed to provide any authority to establish that a bail schedule
pursuant to section 1269b is unconstitutional.
On December 12, 2019, relying on Accredited Surety, supra, 34 Cal.App.5th 891,
and characterizing that case as on point, the trial court denied the motion.
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DISCUSSION
I
Standing
County counsel contends American Surety lacks standing to assert that the
codefendants’ constitutional rights were violated in the setting of bail. County counsel
seems to ignore the discussion of standing in Accredited Surety, supra, 34 Cal.App.5th
891. In that case, another panel of this court stated: “We agree [the surety] would lack
standing to assert a violation of [the defendant’s] constitutional rights at the bail setting
hearing. [The surety], however, is not appealing the order setting bond. In this case, [the
surety] is arguing that as a consequence of the potential violation of [the defendant’s]
constitutional rights, the bond contract, to which [the surety] is a named party, is invalid.
‘At its core, standing concerns a specific party’s interest in the outcome of a lawsuit.
[Citations.] We therefore require a party to show that he or she is sufficiently interested
as a prerequisite to deciding, on the merits,’ the claims presented by the litigation.
[Citation.] As a party to the bond contract, [the surety] has standing to raise claims
involving its validity. [Citations.] [The surety] has standing because its claim is based
on a theory that the constitutional violation rendered the contract itself void.” (Id. at
pp. 896-897.)
The circumstances are the same here as in Accredited Surety. We see no reason to
depart from the standing analysis in that case, and, accordingly, we reject county
counsel’s contention that American Surety lacks standing to advance its claims.
II
Motion to Set Aside Summary Judgment, Discharge Forfeiture, and Exonerate Bail
American Surety asserts that the trial court erred in denying its motion to set aside
summary judgment, discharge forfeiture, and exonerate bail because the court’s failure to
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set bail in an amount based on a constitutional order rendered the penalty clause of the
bail contract void. According to American Surety, “[s]ince bail is a contract of surety,
the duties of the surety to the State are entirely dependent upon the validity of the
obligation imposed by the court against the defendant,” and “[e]xcessive bail cannot form
a valid obligation for the defendant.” American Surety asserts that, without conducting a
bail setting hearing, the trial court failed to ensure the amount set for bail was not a
penalty, but was instead the minimum amount necessary to effect the legitimate
government interests of ensuring the codefendants’ appearance in court and public safety.
As did the surety in Accredited Surety, supra, 34 Cal.App.5th at page 896,
American Surety here relies in part on In re Humphrey (2018) 19 Cal.App.5th 1006,
review granted May 23, 2018, S247278 (Humphrey), in support of its position that the
trial court violated the codefendants’ constitutional due process rights by failing to
consider their respective circumstances including their ability to pay and the minimum
amounts necessary to further legitimate government interests before setting the bail
amounts. Like the surety in Accredited Surety (Accredited Surety, at p. 896), American
Surety asserts that, because the process used to set bail did not satisfy constitutional due
process requirements, the bail bond contracts are unconstitutional and void.
While these appeals were pending, the California Supreme Court filed its decision
in In re Humphrey (2021) 11 Cal.5th 135. Our high court concluded that it is
unconstitutional to detain an individual pretrial solely because he or she lacks the
financial resources to pay bail. (Id. at pp. 142-143.) “An arrestee may not be held in
custody pending trial unless the court has made an individualized determination that (1)
the arrestee has the financial ability to pay, but nonetheless failed to pay, the amount of
bail the court finds reasonably necessary to protect compelling government interests; or
(2) detention is necessary to protect victim or public safety, or ensure the defendant’s
appearance, and there is clear and convincing evidence that no less restrictive alternative
will reasonably vindicate those interests.” (Id. at p. 156.)
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However, In re Humphrey does not decide the issues presented here because we
conclude that setting bail without the individualized consideration of a defendant’s
circumstances, thus violating his constitutional rights, does not void the underlying bail
bond.
In Accredited Surety, another panel of this court considered whether the
procedural defects setting defendant’s bail, as defined by Humphrey, voided the bail bond
contract itself, but concluded the constitutional violation does not void the underlying
bail bond. (Accredited Surety, supra, 34 Cal.App.5th at p. 897.)
In Accredited Surety, the court recited aspects of the Humphrey case, including the
following: the “First District Court of Appeal held that pretrial detention determinations
must be based on factors related to the individual defendant’s circumstance, including the
defendant’s ability to pay, to ensure that a defendant ‘not be imprisoned solely due to
poverty and that rigorous procedural safeguards are necessary to assure the accuracy of
determinations that an arrestee is dangerous and that detention is required due to the
absence of less restrictive alternatives sufficient to protect the public.’ [Citation.]
Accordingly, the [Humphrey] court reversed the bail setting determination and remanded
for a new hearing, at which time Humphrey would have ‘the opportunity to provide
evidence and argument, and the court [would] consider[ ] his financial resources and
other relevant circumstances, as well as alternatives to money bail. If the court
determine[d] that [Humphrey] [wa]s unable to afford the amount of money bail it f[ound]
necessary to ensure [Humphrey]’s future court appearances, it [could] set bail at that
amount only upon a determination by clear and convincing evidence that no less
restrictive alternative w[ould] satisfy that purpose. The court’s findings and reasons must
be stated on the record or otherwise preserved.’ ” (Accredited Surety, at pp. 897-898.)
After reviewing Humphrey, the court in Accredited Surety rejected the surety’s
contentions, which American Surety reprises here, that the underlying bail bond contract
was unconstitutional and void because the trial court violated the defendant’s
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constitutional rights by failing to consider his individual circumstances including the
ability to pay before setting the bail amount. We quote Accredited Surety extensively as
follows, because, as the trial court determined, it is on point here and effectively disposes
of American Surety’s contentions:
“Humphrey did not discuss the validity of a bail bond contract issued following a
constitutionally inadequate hearing. Humphrey was concerned with how bail setting
procedures can prevent a defendant from being able to make bail. The rights addressed in
Humphrey, and the procedural requirements announced by the court, are intended to
guard defendants’ liberty interests. [Citation.] Nothing in Humphrey or the statutory
rules regarding the setting of bail relieves the surety of its obligations under the bond
once it has been executed.
“Accredited argues the bond should not be forfeited because the procedures used
to set the bail amount were defective. Similar arguments regarding defects in the
bailsetting procedures have been rejected. ‘Defects and irregularities, if any, in the
proceedings preliminary to the taking of bail are considered as waived by the surety
when it assumes its obligations as such at the time of the execution of the bond.’
[Citations.] We find the analysis in these cases persuasive. Accredited waived any
procedural irregularities in the bail setting hearing when it ‘assume[d] its obligations
. . . at the time of the execution of the bond.’ [Citations.]
“Moreover, noncompliance with the procedural requirements for setting bail
‘have no legal effect on the forfeiture of bail upon defendant’s failure to appear for
sentencing.’ [Citation.] The statutory procedural requirements for setting bail set forth in
sections 1269a, 1269b, 1269c, 1270.1, and 1275 do not ‘address the validity of the bond
but rather the procedure for the release of a defendant from custody upon bail.’
[Citation.] The procedural requirements contained in these sections were not intended to
protect the surety on the bail bond. In contrast, the procedural requirements set forth in
sections 1305 and 1306, dealing with the procedural requirements for forfeiture and
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exoneration of the bond, do protect the surety. [Citations.] Failure to comply with the
procedural requirements of setting bail is not among the statutory grounds for exoneration
of the bail bond. [Citations.] Failure to comply with the procedural requirements of
Humphrey, requirements intended to safeguard the defendant’s constitutional rights, did
not render the subsequently issued bond void.” (Accredited Surety, supra,
34 Cal.App.5th at pp. 898-899, italics added.)
More recently, our colleagues in the Court of Appeal, Second Appellate District,
Division Two, held: “any noncompliance with Humphrey would, at best, render the bail
order voidable as to the defendant, not as to the surety. Bail is a function of ‘two
different contracts between three different parties’—namely, (1) a contract 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 his promise to pay the full amount of the bond
in the event of his nonappearance, and (2) a contract between the surety and the People
under which the surety ‘ “ ‘ “act[s] as a guarantor of the defendant’s appearance in court
under risk of forfeiture of the bond.” ’ ” [Citations.]’ [Citations.] If these two contracts
form the two legs of this triangle of parties, the underlying criminal prosecution of the
defendant by the People is the proverbial hypotenuse. Much as the three sides of a
triangle are connected but still distinct, our Supreme Court has observed that ‘[w]hile bail
bond proceedings occur in connection with criminal prosecutions, they are independent
from and collateral to [those] prosecutions . . . .’ [Citations.] [¶] The independence of
bail proceedings from the underlying criminal prosecution is why any noncompliance
with Humphrey during the prosecution does not affect—let alone eviscerate—the trial
court’s jurisdiction over the collateral bail proceedings. Time and again, courts have
ruled that errors in a trial court’s setting of bail during the criminal prosecution do not
let the surety off the hook in the collateral bail proceedings.” (People v. North River Ins.
Co. (2020) 48 Cal.App.5th 226, 235, italics added.)
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We note that the California Supreme Court’s decision in In re Humphrey, supra,
11 Cal.5th 135 addresses neither the validity of a bail bond contract issued following a
constitutionally inadequate hearing nor a surety’s obligations under the bond once it has
been executed.
American Surety asserts that Accredited Surety and North River “misapprehend
the nature of the bail contract,” “misinterpret[] the nature of the contractual relationship,”
and misapply precedent. American Surety asserts that where the bail amount was set in
an unconstitutional manner, “the entire contract based upon that order is void as against
public policy.” According to American Surety, “[w]hen the proper nature of the bail
contract is understood neither the defendant, nor the surety that guaranteed the
defendant’s contract with the State, are liable to the State for a bail debt that was not
fixed by a reasonable method.” American Surety maintains that a surety cannot waive
illegality on behalf of the principal, and the fact that a defendant posts a surety bail does
not serve to waive the objection to the court’s compliance with constitutional
requirements in setting bail.
American Surety’s arguments are virtually all addressed to the bail setting process.
Despite American Surety’s objections, we adhere to Accredited Surety and North River
and conclude that “[n]othing in Humphrey or the statutory rules regarding the setting of
bail relieves the surety of its obligations under the bond once it has been executed,” and
American Surety waived such contentions “when it ‘assume[d] its obligations . . . at the
time of the execution of the bond.’ ” (Accredited Surety, supra, 34 Cal.App.5th at
p. 898.)
American Surety seeks, in effect, to reargue Accredited Surety, or, at the least,
implores us to depart from it and from North River. We decline both invitations.
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III
Unconscionability
American Surety asserts that, even if the bail contracts had been properly formed,
it would be unconscionable to enforce them. American Surety asserts that such contracts
amount to contracts of adhesion, and that, here, all elements of unconscionability are
present.
American Surety did not raise unconscionability in the trial court. We asked the
parties to provide supplemental letter briefs addressing whether American Surety
forfeited this argument by its failure to do so. (See Bhatt v. State Dept. of Health
Services (2005) 133 Cal.App.4th 923, 933.)
American Surety asserts we may address its unconscionability argument, raised
for the first time on appeal, because it presents purely legal issues based on undisputed
facts. County counsel responds that American Surety forfeited the issue of
unconscionability by failing to raise it in the trial court. County counsel further asserts
that the exception to the forfeiture rule upon which American Surety relies is inapplicable
because the issue of unconscionability here is not a purely legal issue but a factual one,
the parties did not present any facts in the trial court, and the facts at issue are not
“undisputed.”
“As a general rule, ‘issues not raised in the trial court cannot be raised for the first
time on appeal.’ [Citation.] On a number of occasions, however, appellate courts have
relaxed this rule and have permitted a party to raise belatedly ‘a pure question of law
which is presented on undisputed facts.’ [Citations.] This forgiving approach has been
most frequently invoked when ‘important issues of public policy are at issue.’ ” (Sea &
Sage Audubon Society, Inc. v. Planning Com. of the City of Anaheim (1983) 34 Cal.3d
412, 417; accord, Bialo v. Western Mutual Ins. Co. (2002) 95 Cal.App.4th 68, 73.)
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“Unconscionability analysis begins with an inquiry into whether the contract is
one of adhesion. [Citation.] ‘The term [contract of adhesion] signifies a standardized
contract, which, imposed and drafted by the party of superior bargaining strength,
relegates to the subscribing party only the opportunity to adhere to the contract or reject
it.’ ” (Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83,
113 (Armendariz).)
“ ‘[U]nconscionability has both a “procedural” and a “substantive” element,’ the
former focusing on ‘ “oppression” ’ or ‘ “surprise” ’ due to unequal bargaining power, the
latter on ‘ “overly harsh” ’ or ‘ “one-sided” ’ results.” (Armendariz, supra, 24 Cal.4th at
p. 114.) To elaborate, “ ‘ “ ‘[p]rocedural unconscionability’ concerns the manner in
which the contract was negotiated and the circumstances of the parties at that time.
[Citation.] It focuses on factors of oppression and surprise. [Citation.] The oppression
component arises from an inequality of bargaining power of the parties to the contract
and an absence of real negotiation or a meaningful choice on the part of the weaker
party.” ’ ” (Parada v. Superior Court (2009) 176 Cal.App.4th 1554, 1570.) “Substantive
unconscionability pertains to the fairness of an agreement’s actual terms and to
assessments of whether they are overly harsh or one-sided. [Citations.] A contract term
is not substantively unconscionable when it merely gives one side a greater benefit;
rather, the term must be ‘so one-sided as to “shock the conscience.” ’ ” (Pinnacle
Museum Tower Assn. v. Pinnacle Market Development (US), LLC (2012) 55 Cal.4th 223,
246.)
“ ‘The prevailing view is that [procedural and substantive unconscionability] must
both be present in order for a court to exercise its discretion to refuse to enforce a
contract or clause under the doctrine of unconscionability.’ [Citation.] But they need not
be present in the same degree. ‘Essentially a sliding scale is invoked which disregards
the regularity of the procedural process of the contract formation, that creates the terms,
in proportion to the greater harshness or unreasonableness of the substantive terms
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themselves.’ [Citation.] In other words, the more substantively oppressive the contract
term, the less evidence of procedural unconscionability is required to come to the
conclusion that the term is unenforceable, and vice versa.” (Armendariz, supra,
24 Cal.4th at p. 114.)
Consistent with its position, cases on which American Surety relies in its
supplemental briefing address circumstances where the courts found the particular matter
of unconscionability in question to be a pure issue of law presented on undisputed facts.
(Carmona v. Lincoln Millennium Car Wash, Inc. (2014) 226 Cal.App.4th 74, 89, fn. 6
(Carmona) [whether a particular provision was unconscionable presented a question of
law and the evidence in the case was not disputed]; D.C. v. Harvard-Westlake School
(2009) 176 Cal.App.4th 836, 868 [regarding unconscionability argument, “[w]e have the
discretion to hear a newly raised question of law that can be decided on undisputed facts
appearing in the record”].)
However, “unconscionability is, in the absence of a material factual dispute, a
question of law that may be raised for the first time on appeal.” (Lennar Homes of
California, Inc. v. Stephens (2014) 232 Cal.App.4th 673, 686, citing Carmona, supra,
226 Cal.App.4th at p. 89, fn. 6, italics added.) Additionally, “[p]rocedural
unconscionability is ‘inherently fact-specific.’ ” (Prima Donna Development Corp. v.
Wells Fargo Bank, N.A. (2019) 42 Cal.App.5th 22, 42.)
American Surety in its substantive briefing on unconscionability asserts that “each
of the elements of unconscionability is present.” Among other things, in arguing
unconscionability, American Surety raises the codefendants’ weak bargaining power, the
absence of opportunity for meaningful negotiation, “setting of bail without reference to
the defendant’s financial abilities or his individual dangerousness,” and additional issues
addressed to codefendants’ weak bargaining power, including dangers presented to
defendants in being incarcerated in pretrial detention as opposed to being freed on bail
and the effect of pretrial detention on defendants in terms of potential job loss, loss of
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income, and impairment of family relationships. American Surety’s arguments are based
on factual issues regarding the setting of bail and the bail contract that were not presented
to the trial court.
We conclude the issue of unconscionability here does not present a purely legal
issue based on undisputed facts. The parties presented no evidence in the trial court on
the issue of unconscionability of the bail contracts. Thus, we decline to reach the issue,
raised for the first time on appeal, as it would be imprudent and unfair for this court to do
so.
DISPOSITION
The trial court’s order denying American Surety’s motion to set aside summary
judgment, discharge forfeiture, and exonerate bail is affirmed. Respondent shall recover
costs on appeal. (Cal. Rules of Court, rule 8.278(a)(1), (2).)
HULL, Acting P. J.
We concur:
MAURO, J.
HOCH, J.
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