People v. American Surety Co. CA4/3 ( 2021 )

Filed 12/2/21 P. v. American Surety Co. CA4/3
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
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or ordered published for purposes of rule 8.1115.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FOURTH APPELLATE DISTRICT
DIVISION THREE
THE PEOPLE,
Plaintiff and Respondent, G060408
v. (Super. Ct. No. 19CV002754)
AMERICAN SURETY COMPANY, OPINION
Defendant and Appellant.
Appeal from a judgment of the Superior Court of Monterey County,
Timothy P. Roberts, Judge. Affirmed.
Law Office of John Rorabaugh, John Mark Rorabaugh and Crystal L.
Rorabaugh, for Defendant and Appellant.
Leslie J. Girard, County Counsel, Susan K. Blitch, Assistant County
Counsel, and William M. Litt, Deputy County Counsel, for Plaintiff and Respondent.
American Surety Company (Surety), acting through its agent Bail Hotline
Bail Bonds, posted a $100,000 bond for the pretrial release of Angel Alonzo Zavala.
After Zavala failed to appear at a subsequent pretrial hearing, the bond was forfeited, and
the court subsequently entered summary judgment against Surety.
Surety raises two issues on appeal. First, Surety contends we should “set
aside the summary judgment, vacate the forfeiture and exonerate bail because bail was set
based on an unconstitutional order and in violation of [Zavala’s] due process rights . . . .”
Surety’s contention Zavala’s bail was set unconstitutionally is based on a case decided
more than a year after the trial court set Zavala’s bail—In re Humphrey (2018)
19 Cal.App.5th 1006 (Humphrey I), review granted May 23, 2018, ordered to have partial
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precedential effect August 26, 2020, S247278, affirmed (2021) 11 Cal.4th 135. In
Humphrey I, the Court of Appeal held due process requires a court consider public and
victim safety, a criminal defendant’s ability to pay, and other “individualized factors”
when determining whether a defendant should be admitted to bail and the amount
necessary to secure the defendant’s appearance in court. (Humphrey I, supra,
19 Cal.App.5th at p. 1044.)
The same argument Surety advances here was first rejected in People v.
Accredited Surety & Casualty Co. (2019) 34 Cal.App.5th 891 (Accredited 2019) and has
since been rejected in People v. North River Ins. Co. (2020) 48 Cal.App.5th 226(North River), People v. Financial Casualty & Surety, Inc. (2021) 64 Cal.App.5th 405(Financial Casualty), and People v. Accredited Surety & Casualty Co., Inc. (2021)
65 Cal.App.5th 122 (Accredited 2021). Finding these cases persuasive, we reject
Surety’s argument the bail forfeiture must be vacated.
1
After briefing was completed in this appeal, the Supreme Court issued its
decision in In re Humphrey (2021) 11 Cal.5th 135 (Humphrey II), which is discussed
post.
2
Surety’s second argument is more difficult to comprehend. Surety
contends the bail contract between Zavala and the state was unconscionable, that “even if
the bail contract had been properly formed, it would be unconscionable to enforce” it, and
therefore, the court cannot enforce the forfeiture against Surety. Agreeing with Financial
Casualty, supra, 64 Cal.App.5th at pages 416-417, we conclude Surety forfeited any
claim of unconscionability by failing to raise it in the trial court, and even if preserved,
the claim is without merit. Accordingly, we affirm the judgment.
FACTS
In November 2016, Zavala was charged with attempted forcible rape,
sexual battery by restraint, false imprisonment by violence, and vandalism. At
arraignment, the court set bail at $100,000, without considering Zavala’s ability to pay.
Zavala subsequently appeared in court in custody on five occasions. There is no
indication in our record Zavala ever objected to the bail amount, requested a bail review
hearing, or requested a reduction in his bail based on his individual circumstances,
including his ability to pay.
In March 2017, Surety executed a $100,000 bail bond for Zavala’s release
from custody. The bond expressed Surety’s undertaking that Zavala would appear in
court or Surety would pay $100,000 to the State of California. The bond also included
Surety’s agreement that if forfeiture was ordered by the court, judgment could be
summarily made and entered against Surety, as provided in Penal Code sections 1305 and
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1306.
Zavala was released from custody and made multiple court appearances
while out on bail. But in November 2017, Zavala failed to appear. The court issued a
bench warrant, and a notice of forfeiture was mailed to Surety that month. In December
2
All further statutory references are to the Penal Code, unless otherwise
indicated.
3
2018, the court granted Surety’s motion to extend the appearance period to April 2019
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under section 1305.4.
In April 2019, Surety moved the court for an order vacating the forfeiture,
exonerating bail, and returning any money paid with interest. In its motion, Surety
argued Zavala’s bail was unconstitutionally set, and therefore, the bond was void and the
court lacked jurisdiction to order the bail forfeited. Following a hearing, the trial court
denied the motion. The court indicated for purposes of its analysis, it assumed Surety
had standing to argue the bail was unconstitutionally set and assumed, “without
agreeing[,] that the [c]ourt failed to give [Zavala] a [c]onstitutionally valid due process
review, when it set the original $100,000 bail.” The court, nonetheless, rejected Surety’s
argument, explaining: “It does not matter how the amount of bail was determined . . . .
They either did or did not agree to post the bail amount. The facts they reviewed were
accurate and the process was transparent. [¶] The surety cannot bootstrap [its] failed risk
assessment with a completely separate issue of how the bail was determine[d] for
purposes of avoiding their agreement, which all parties entered into in good faith.” In
July 2019, the court granted summary judgment, ordering Surety to pay the amount of the
bond, court costs, attorney fees, and interest. Surety appealed.
DISCUSSION
I. Void Claim
Surety contends the trial court erred by denying its motion to vacate the
forfeiture and urges us to “set aside the summary judgment, vacate the forfeiture and
exonerate bail.” In a two-step analysis, Surety asserts: (1) Zavala’s bail was not set in
compliance with the constitutional and statutory requirements discussed in Humphrey I,
supra, 19 Cal.App.5th 1006; and (2) because the court used a constitutionally inadequate
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“The period in which a surety must seek to vacate a bail forfeiture is often
referred to as ‘the appearance period.’ [Citation.]” (People v. Financial Casualty &
Surety, Inc. (2019) 39 Cal.App.5th 1213, 1217, fn. 3.)
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process to determine Zavala’s bail, the penalty clause of the bail contract is void. Even if
we assume Surety is correct about the first step, Surety’s argument faulters at the second.
A. Applicable Legal Principles Concerning Bail
“‘While bail bond proceedings occur in connection with criminal
prosecutions, they are independent from and collateral to the prosecutions and are civil in
nature. [Citation.] “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.” [Citations.] . . .
Nevertheless, 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.”’ [Citation.]” (Financial Casualty, supra, 64 Cal.App.5th
at p. 411.)
The statutory scheme governing bail bond forfeitures is found in section
1305 et seq., and a trial court must carefully follow these provisions. (People v. Aegis
Security Ins. Co. (2005) 130 Cal.App.4th 1071, 1074.) “When a criminal defendant for
whom a bail bond has been posted fails without sufficient excuse to appear as required,
the trial court must declare a forfeiture of the bond. [Citation.] The surety that posted the
bond then has a statutory ‘appearance’ period in which to either produce the accused in
court and have the forfeiture set aside, or demonstrate other circumstances requiring the
court to vacate the forfeiture. [Citations.]” (Financial Casualty, supra, 64 Cal.App.5th
at p. 411.) “When a bond is forfeited and the appearance period lapses without forfeiture
having been set aside, the court ‘shall enter a summary judgment’ in the amount of the
bond plus costs. [Citation.]” (Ibid.)
Surety does not contend the trial court failed to follow the statutory scheme
for bail bond forfeitures. Instead, Surety’s argument focuses on the process used in
setting bail in the collateral criminal proceeding and the impact of any irregularities in
that process on its bail contract with the state. Surety contends “the procedures necessary
to ensure [Zavala received] due process were not followed when” the court set Zavala’s
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bail because the court did not inquire as to his ability to pay or whether any conditions
other than bail would secure his appearance in court. To provide some background and
context for this portion of Surety’s argument, we briefly discuss the Supreme Court’s
recent decision in Humphrey II, supra, 11 Cal.5th 135.
B. The Humphrey Cases
In Humphrey II, our Supreme Court held California’s “common practice of
conditioning” an arrestee’s release from custody pending trial “solely on whether an
arrestee can afford bail is unconstitutional.” (Humphrey II, supra, 11 Cal.5th at p. 143.)
There, the court first set defendant’s bail at $600,000 based on the bail schedule.
(Id. at p. 144.) After defendant requested a formal bail hearing, the court reduced bail to
$350,000, but defendant remained unable to afford bail. In determining the bail amount,
the trial court did not consider defendant’s ability to pay or whether nonfinancial
conditions of release might address public safety concerns and assure his appearance in
court. (Id. at p. 145.)
The Court of Appeal granted Humphrey’s petition for writ of habeas
corpus, reversed the trial court’s bail determination, and directed the trial court to conduct
a new bail hearing. (Humphrey I, supra, 19 Cal.App.5th at pp. 1014, 1016.) In doing so,
the Court of Appeal held principles of due process and equal protection “dictate that a
court may not order pretrial detention unless it finds either that the defendant has the
financial ability but failed to pay the amount of bail the court finds reasonably necessary
to ensure his or her appearance at future court proceedings; or that the defendant is
unable to pay that amount and no less restrictive conditions of release would be sufficient
to reasonably assure such appearance; or that no less restrictive nonfinancial conditions
of release would be sufficient to protect the victim and the community.” (Id. at p. 1026.)
The Supreme Court granted review on its own motion “to address the
constitutionality of money bail as currently used in California as well as the proper role
of public and victim safety in making bail determinations.” (Humphrey II, supra,
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11 Cal.5th at p. 147.) Concluding it is unconstitutional “to incarcerate a defendant solely
because he lacks financial resources” (id. at p. 149), the Supreme Court indicated trial
courts “must consider an arrestee’s ability to pay alongside the efficacy of less restrictive
alternatives when setting bail.” (Id. at p. 152.) The Supreme Court affirmed the
judgment of the Court of Appeal. (Id. at p. 157.)
C. Surety’s Argument and Cases Rejecting It
Surety contends the order setting Zavala’s bail was unconstitutional
because the trial court set bail without considering Zavala’s ability to pay or other
individualized factors as required by Humphrey I. County counsel argues Surety lacks
standing to assert Zavala’s constitutional rights on his behalf and the amount of Zavala’s
bail was not set unconstitutionally. Like the trial court, we will assume, without
deciding, Surety has standing and that the court’s determination of Zavala’s bail without
considering his ability to pay was unconstitutional. (See, e.g., People v. American Surety
Co. (2020) 55 Cal.App.5th 265, 270-271 [where trial court set defendant’s bail without
considering ability to pay and American Surety argued bail bond was therefore invalid,
Court of Appeal assumed surety had standing to assert violation of criminal defendant’s
constitutional right].) This propels our analysis forward to the question of what impact, if
any, does the fact the court used a constitutionally inadequate process to set Zavala’s bail
have on the bail bond contract between Surety and the state. The answer: none.
As previously mentioned, this case is not the first to consider a contention
that a Humphrey violation in setting bail barred the trial court from forfeiting the bond
and entering summary judgment against a surety. The argument Surety makes here has
been raised multiple times, and each time, it has been rejected by our colleagues in other
districts.
In Accredited 2019, a panel of the Third Appellate District held a trial
court’s failure to consider a defendant’s ability to pay when setting bail did not invalidate
the bail contract. There, like here, the surety asserted, “[T]he bond should not be
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forfeited because the procedures used to set the bail amount were defective.”
(Accredited 2019, supra, 34 Cal.App.5th at p. 898.) The Court of Appeal disagreed,
explaining: “Humphrey [I] did not discuss the validity of a bail bond contract issued
following a constitutionally inadequate hearing. . . . 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.” (Ibid.) The Court of Appeal noted the statutory requirements for
setting bail address “‘the procedure for the release of a defendant from custody upon
bail’” (ibid.) and “were not intended to protect the surety on the bail bond” (id. at
pp. 898-899). Consistent with a line of cases addressing “‘[d]efects and irregularities . . .
in the proceedings preliminary to the taking of bail’” (id. at p. 898), the Court of Appeal
determined the surety forfeited “any procedural irregularities in the bail setting hearing
when it ‘assume[d] its obligations . . . at the time of the execution of the bond.’
[Citations.]” (Ibid.) The Accredited 2019 court concluded, “[N]oncompliance with the
procedural requirements for setting bail ‘have no legal effect on the forfeiture of bail
upon defendant’s failure to appear for sentencing.’” (Ibid.)
In North River, the Second Appellate District, Division Two also rejected
the argument “that the trial court’s failure to inquire into defendant’s ability to pay when
setting bail . . . rendered the bond (and hence the summary judgment) ‘void.’” (North
River, supra, 48 Cal.App.5th at p. 230.) After discussing the difference between void and
voidable judgments, the North River court concluded “the trial court’s summary
judgment on the bond was not void.” (Id. at p. 234.) The court explained: “That is
because the trial court at all times had fundamental jurisdiction over the subject matter
and the parties. The court had the jurisdiction over the subject matter when it followed
the statutory procedures then in effect when setting the bail amount for defendant
[citations], releasing defendant on bail once the surety posted a bond in the bail amount
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[citations], declaring the bond forfeited in open court when defendant did not appear as
ordered and had no sufficient excuse for his nonappearance [citation], and entering
summary judgment once defendant was not returned to custody by the expiration of the
appearance period [citation]. [Citation.] The court also had jurisdiction over the surety
once the surety posted its bond. [Citation.]” (Ibid.) The North River court further
indicated: “The trial court’s failure to anticipate and adhere to Humphrey [I] in setting
the bail amount” (id. at p. 234) “would, at best, render the bail order voidable as to the
defendant, not as to the surety” (id. at p. 235).
The Court of Appeal in North River discussed the different contractual
positions of the parties in bail proceedings, explaining: “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.]” (North River, supra,
48 Cal.App.5th at p. 235.)
Relying on Supreme Court precedent that bail bond proceedings “‘are
independent from and collateral to’” criminal prosecutions, the North River court
concluded: “The independence of bail proceedings from the underlying criminal
prosecution is why any noncompliance with Humphrey [I] 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. [Citations.]” (North River, supra, 48 Cal.App.5th at p. 235.) To support
this conclusion, the court cited a “wall of precedent” and noted the remedy for
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noncompliance with Humphrey I is a new bail hearing, “not defendant’s immediate
release or the invalidation of any and all subsequently issued bonds.” (Id. at p. 236.)
In Accredited 2021, a case before the Fifth Appellate District, the factual
scenario was slightly different as defendant’s bail was set under the early-out provisions
of the bail statutory scheme. (Accredited 2021, supra, 65 Cal.App.5th at pp. 128-129.)
The Court of Appeal first rejected the surety’s facial challenge to the statutory provisions
governing the forfeiture of bail under the early-out method of release. (Id. at pp. 129-
130.) Then as “a separate and independent ground for” affirming the summary judgment
against the surety (id. at p. 133), the Court of Appeal joined with Accredited 2019 and
North River and “adopt[ed] the legal principle that a constitutional violation in setting
bail (which also sets the amount of the forfeiture) does not render the bail bond
unenforceable as to the surety” (Accredited 2021, supra, 65 Cal.App.5th at p. 134).
Summarizing its reasoning, the Accredited 2021 court indicated: “[T]he Surety explicitly
agreed to the forfeiture procedures set forth in sections 1305 and 1306 and to the amount
of the consent judgment. When such a contract between a surety and the government is
breached, the bond should be enforced.” (Ibid.) Agreeing with holdings in Accredited
2019 and North River, the Court of Appeal concluded “a violation of the criminal
defendant’s constitutional rights does not free the surety from its obligations under the
bail bond.” (Accredited 2021, supra, 65 Cal.App.5th at p. 134.)
In Financial Casualty, Division Four of the Second Appellate District
adopted the reasoning in North River and rejected the same argument Surety presents
here. (Financial Casualty, supra, 64 Cal.App.5th at p. 414.) The court also identified
persuasive policy reasons for rejecting the surety’s claim: “Moreover, policy
considerations support holding Financial Casualty to its bargain. Granting Financial
Casualty the relief it seeks would allow sureties like it ‘to have their cake and eat it too.’
[Citation.] ‘[W]e would be loath to sustain [the surety’s] argument because it would
produce the anomalous result that [it] would reap a windfall, keeping the bond premium
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without running any risk of being held to account on the bond’ in the event the bailee
fails to appear. [Citations.]” (Id. at p. 415.)
Surety asserts Accredited 2019 and North River were wrongly decided and
misunderstood the nature of bail contracts and a surety’s duties and responsibilities under
bail contracts. According to Surety: “When 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.”
This same assertion was addressed in Financial Casualty, supra,
64 Cal.App.5th at page 417, footnote 5. There, the Court of Appeal rejected the
contention, explaining: “Financial Casualty spends considerable time in its briefs arguing
that North River and similar cases misunderstood the contractual relationships between a
criminal defendant, the surety, and the state. In this regard, Financial Casualty’s briefs
are long on inapposite authority, and short on case-specific analysis. In fact, Financial
Casualty properly characterized the relevant contractual relationships in its motion to set
aside summary judgment: ‘As between the surety and the [defendant], the surety
promises to arrange for the [defendant’s] conditional liberty in exchange for the
[defendant’s] promise of payment. As between the surety and the [state], the surety
promises to produce the person of the [defendant], or a sum certain in his stead, at time of
trial in exchange for the [state’s] promise to permit the surety to arrange for the
[defendant’s] conditional liberty while at the same time exercising constructive custody
over him. [Citation.]” (Ibid.)
Below, in its motion to vacate the forfeiture and exonerate bail, Surety
characterized the contractual relationships exactly as Financial Casualty did in its motion
to set aside the summary judgment. (Financial Casualty, supra, 64 Cal.App.5th at p.
417, fn. 5.) This description is consistent with North River’s discussion of the contractual
relationships between the defendant, surety, and state. (North River, supra, 48
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Cal.App.5th at p. 235.) Thus, Surety’s argument North River misunderstands the nature
of the bail contract is without merit.
We find persuasive the reasoning in Accredited 2019, North River,
Accredited 2021, and Financial Casualty and, like them, conclude any Humphrey error in
setting the amount of a defendant’s bail does not invalidate a subsequently executed
bond, forfeiture of that bond, or judgment entered on the bond. Because the procedure
for setting the amount of bail is independent from and conducted prior to any contract
between the surety and the state, any error in the bail setting proceeding prior to
execution of the bond does not invalidate the bond or subsequent judgment on that bond.
Here, the amount of Zavala’s bail had already been set when Surety contracted with the
state, and Surety was free to accept or reject the offer of contract based on that amount.
Any violation of Zavala’s rights when his bail was set did not invalidate the bond or
render void the subsequent summary judgment against Surety.
II. Unconscionability Claim
Surety’s second argument contains a vague unconscionability claim.
Surety captions this argument as “Even if the bail contract had been properly formed it
would be unconscionable to enforce it.” (Capitalization & boldface omitted.) After
briefly discussing general principles of contract unconscionability, the argument mostly
focuses on policy concerns relating to pretrial detention and bail. Surety concludes the
argument by asserting: “Since the court is allowed to limit the application of ‘any
unconscionable clause,’ if the court finds that this contract was legal and formed it may
reduce the penalty to the state[’]s actual damages caused by the breach, rather than
imposing the full amount of the unconstitutionally calculated penalty.”
In its argument, Surety contends the bail contract between Zavala and the
state is procedurally unconscionable, and therefore, the penalty provision should not be
enforced. But there are two fatal flaws with this contention. First, Surety forfeited its
argument by failing to raise an unconscionability claim in the trial court. (Financial
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Casualty, supra, 64 Cal.App.5th at p. 416.) In Financial Casualty, the surety also raised
an unconscionability claim for the first time on appeal. (Ibid.) Concluding the claim was
forfeited, the Court of Appeal explained: “The failure of [the surety] to raise the issue
below deprived the People of notice of any need to develop the record with evidence
bearing on unconscionability. [Citations.]” (Ibid.) Here too, the People have been
deprived of an opportunity to present evidence addressing Surety’s claim of an
unconscionable contract, rendering the claim forfeited.
Second, even if not forfeited, Surety’s contention is meritless as it concerns
a nonexistent contract. As discussed above, there is no bail contract between a defendant
and the state. The Financial Casualty court explained: “[T]he bail-setting order was not
a contract because it did not require [Zavala’s] consent. [Citations.] In the bail bond
context, the defendant and the state do not contract with each other; rather, they each
contract with the surety. [Citation.]” (Financial Casualty, supra, 64 Cal.App.5th at p.
417.) Surety has not identified any unconscionable unfairness in the contract between it
and the state, and therefore, its claim fails.
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DISPOSITION
The judgment is affirmed. Respondent shall recover its costs on appeal.
O’LEARY, P. J.
WE CONCUR:
BEDSWORTH, J.
GOETHALS, J.
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