ABC BAIL BONDS, INC. VS. GLENN A. GRANT (C-000075-17, MERCER COUNTY AND STATEWIDE) ( 2019 )

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-3961-17T2
ABC BAIL BONDS, INC.,
Plaintiff-Appellant,
APPROVED FOR PUBLICATION
v. June 3, 2019
APPELLATE DIVISION
GLENN A. GRANT, in his official
capacity as Acting Administrative
Director of the Administrative
Office of the Courts,
Defendant-Respondent.
Argued March 6, 2019 – Decided June 3, 2019
Before Judges Alvarez, Nugent and Reisner.
On appeal from Superior Court of New Jersey,
Chancery Division, Mercer County, Docket No. C-
000075-17.
John S. Furlong argued the cause for appellant
(Furlong & Krasny, attorneys; John S. Furlong, of
counsel and on the brief).
Joseph C. Fanaroff, Assistant Attorney General,
argued the cause for respondent (Gurbir S. Grewal,
Attorney General, attorney; Melissa H. Raksa,
Assistant Attorney General, of counsel; Joseph C.
Fanaroff, on the brief).
The opinion of the court was delivered by
ALVAREZ, P.J.A.D.
Plaintiff ABC Bail Bonds, Inc., appeals from the trial court's April 6,
2018 order dismissing its complaint challenging the Supreme Court's authority
to revise the guidelines for bail forfeiture remittitur. We affirm for the reasons
stated in Judge Paul Innes's written opinion and the reasons stated below.
As in the past, the Administrative Office of the Courts (AOC), under the
Director's signature, issued a directive regarding remittitur—in this case, the
disputed Administrative Directive #22-17, "Bail and Bail Forfeitures--
Revisions to Procedures and Forms" (Aug. 7, 2017)—intended to conform the
prior guidelines to newly adopted amendments to Rules 3:26-6 and 7:4-5. The
amended rules, like the Directive, were issued after a State of New Jersey
Commission of Investigation (SCI) report, Inside Out, Questionable and
Abusive Practices in New Jersey's Bail-Bond Industry (May 2014). The SCI
report was highly critical of the State's bail bond system, and resulted in the
Court's creation of the Bail Judge Subcommittee of the Conference of Criminal
Presiding Judges (BJS) to evaluate the State's bail system, including the bail
forfeiture recovery process.
The February 2016 BJS report recommended revisions to the standards
for remission of bail forfeitures, making the length of time a defendant was a
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fugitive the primary factor for consideration. Only when a judge finds
"exceptional circumstances," should remission be allowed beyond one year.
After the report was published, the rules were amended, providing that
remission of forfeited bail accord with the revised remission guidelines. 1
ABC filed a complaint seeking declaratory judgment after the issuance
of the Directive, alleging that it was an unconstitutional encroachment on
legislative authority, should be applied only prospectively, and effectuated an
unlawful material change in the terms of existing surety-bond contracts.
Retroactivity is a key issue for ABC, which contends that it effectively stopped
writing bonds in New Jersey after the adoption of the Criminal Justice Reform
Act, N.J.S.A. 2A:162-15 to -26, but continues to have millions of dollars
outstanding in potential liability because more than a thousand bonds remain
in place as of September 2017.
The parties agreed that no discovery was necessary, and that the matter
could be resolved summarily under Rule 4:67-1. After hearing oral argument,
Judge Innes dismissed the complaint on summary judgment.
1
After the entry of a judgment of forfeiture, it may "be set aside, in whole or
in part, pursuant to the court rules, and/or administrative directives, including
but not limited to the Revised Remission Guidelines, upon such conditions as
[the court] imposes." R. 3:26-6(b); R. 7:4-5(b).
A-3961-17T2
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Judge Innes found that ABC had not met its burden of proof establishing
that the Directive was unconstitutional. He reasoned that the revised
guidelines were fashioned to address an important problem greatly affecting
the public interest, were not arbitrary and unreasonable, and were a proper
exercise of police power. Thus, he dismissed the first count of ABC's
complaint.
With regard to count two, Judge Innes concluded, after applying the
"sole outcome" test, 2 that the revised guidelines embodied only procedural
devices intended to advance the efficient administration of justice.
Additionally, since the revised guidelines left untouched a trial judge's
ultimate authority to decide the matters at his or her discretion, including the
grant of remittitur beyond the year a defendant was in fugitive status when
"extraordinary circumstances" are found, they did not outright control a judge's
decision-making. Hence, although the guidelines dictated process, the final
2
The "sole outcome" test is used to determine whether a rule is substantive or
procedural for purposes of rule interpretation. While substantive law defines
rights and duties, procedural law provides the mechanism through which such
rights and duties are enforced in the courts. Winberry v. Salisbury, 5 N.J. 240,
247-48 (1950). "If the rule can determine in and of itself the outcome of the
proceeding, it is generally substantive. If it is but one step in the ladder to final
determination and can effectively aid a court function, it is procedural . . . and
within the Supreme Court's power of rule promulgation." New Jersey State
Bar Ass'n v. State, 387 N.J. Super. 24, 48-49 (App. Div. 2006) (quoting Suchit
v. Baxt, 176 N.J. Super. 407, 427 (Law Div. 1980)).
A-3961-17T2
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decision as to the merits, as always, rested with the judge deciding the matter
based on the proofs presented in the individual case.
Judge Innes did not consider the guidelines to impinge on contractual
rights, and dismissed count three accordingly. He opined that, by placing
bonds with the judiciary, bail bondsmen and the surety had submitted to the
Court's authority to control the administration of the criminal justice system.
And that system had been subject to the Court's control, rules, and guidelines
since 1958. He further rejected ABC's argument that the Directive should be
applied only prospectively, because it was based on case law addressing
substantive, not procedural, changes in the law.
On appeal, ABC raises the following points of error:
POINT ONE
THE TRIAL COURT ERRED IN FINDING THE
ENACTMENT OF THE REVISED REMISSION
GUIDELINES FOR RESOLVING BAIL
FORFEITURE CASES A LAWFUL EXERCISE OF
THE COURT'S RULE-MAKING POWER UNDER
ARTICLE VI OF THE NEW JERSEY
CONSTITUTION.
POINT TWO
THE TRIAL COURT ERRED IN RULING THE
REVISED REMISSION GUIDELINES FOR
RESOLVING BAIL FORFEITURE CASES APPLY
RETROACTIVELY.
A-3961-17T2
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I.
Our review of the trial court's summary judgment order is de novo. See
Templo Fuente DeVida Corp. v. Nat'l Union Fire Ins. Co., 224 N.J. 189, 199
(2016). We employ the same standard on appeal as did the trial court initially
in deciding the motion. Ibid.; Brill v. Guardian Life Ins. Co. of Am., 142 N.J.
520, 540 (1995).
It is well-established that the Court has rule-making authority over all
state courts. See N.J. Const. art. VI, § 2, ¶ 3; see also Winberry, 5 N.J. at
247-48. As Judge Innes observed, ABC bears the burden of overcoming the
presumption of reasonableness that attaches to the Court's rule-making
authority. Am. Trial Lawyers Ass'n v. N.J. Sup. Ct., 126 N.J. Super. 577, 589-
90 (App. Div. 1974).
We have said:
the Court's constitutional authority over practice and
procedure and consequently over the administration of
justice by the court system . . . "flows from and is
vested by organic law. It is necessarily paramount and
exclusive as to matters that are central to the judiciary.
The Court's authority with respect to the
administration of the courts is far-reaching; it
encompasses the entire judicial structure and
necessarily covers all aspects and incidents related to
the justice system."
[State v. Simpson, 365 N.J. Super. 444, 450 (App.
Div. 2003) (citations omitted).]
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In Simpson, a bail bond company unsuccessfully challenged the then newly
instituted procedure whereby insurers who did not satisfy forfeited bails were
removed from a registry authorizing them to write bonds, and barring them
from issuing new bonds. We observed:
[i]t is difficult to conceive of a matter more central to
the administration of the criminal justice system than
the appearance of defendants before the court as the
court requires. At the same time, the Court has the
obligation to protect the constitutional right to bail.
But that constitutional right is clearly qualified by,
among other limitations, compliance with the
conditions of bail not only by the principal but also by
the surety.
[Id. at 451.]
Both legislative and executive authority are also implicated in the regulation
and control of "the bail bond business." Id. at 452. Furthermore, "[t]here is no
cognizable theory based on separation of powers or any other doctrine that
could reasonably restrain the Court from taking such a step to protect the
administration of the criminal courts." Ibid. If the Court can lawfully ban
insurers from issuing bail bonds until they satisfy outstanding judgments,
surely the Court can promulgate guidelines for remission.
Simpson followed the Court's precedents regarding the subject. Thus,
ABC's contention that the revision is unconstitutional, or an overreach into the
Legislature's province, must fail because of the Court's well-established
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obligation to administer the criminal justice system while protecting a
defendant's right to bail. The Directive does not exceed the Court's rule-
making authority, does not impermissibly modify the Court's remittitur
precedents in Hyers-Peace,3 and does not make substantive law through rule-
making. The SCI and BJS reports detailed the serious problems around the
state in the collection of forfeited bails, the lack of uniformity in collection
practices, and the shockingly low percentage of funds bail bond companies
actually paid. The Directive merely recharts the prior approach to the
forfeiture and remission of bails in order to ensure "compliance with the
conditions of bail not only by the principal but also by the surety." Simpson,
365 N.J. Super. at 451.
3
The Hyers court expanded on the prior version of Rule 3:26-6(b) permitting
bail to be set aside if its enforcement was not required "in the interests of
justice." State v. Hyers, 122 N.J. Super. 177, 180 (App. Div. 1973). Finding
this standard alone to be "too restrictive" the court introduced several
additional factors to be considered. Ibid. Soon after, the Supreme Court
approved of the Hyers criteria. State v. Peace, 63 N.J. 127, 129 (1973)
(adopting the factors outlined by Hyers, and adding the "intangible element of
injury to the public interest in almost any case where a defendant deliberately
fails to make an appearance" should also be considered). The "Hyers-Peace"
factors were further refined by Judge Pressler in State v. Clayton, 361 N.J.
Super. 388, 393 (App. Div. 2003), and eventually incorporated into the revised
2007 and 2008 Remittitur Guidelines.
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N.J.S.A. 2A:162-8 vests in trial courts the discretion to fix the amounts
of remittitur. That authority remains unaltered by the Directive, in fact, the
first page states:
The decision to remit bail, as well as the amount
of bail, are matters within the sound discretion of the
trial judge. This exercise of discretion should adhere
to the following policy concerns that have been
expressed over the years: (1) The necessity of
providing an incentive to the surety to take active and
reasonable steps to recapture a fugitive defendant,
and; (2) That if remission were unreasonably
withheld, corporate sureties might be overcautious in
their willingness to post bail.
[Administrative Directive #22-17, "Bail and Bail
Forfeitures -- Revisions to Procedures and Forms"
(Attachment D, Revised Remission Guidelines) (Aug.
7, 2017).]
Certainly, as ABC points out, the one-year "cap" is a significant addition to
case law and prior guidelines:
The court's primary focus under these Guidelines in
determining whether to set aside forfeiture and the
amount to remit is the length of time the defendant is a
fugitive. See factor 1. This factor is calculated from
the date of the defendant's failure to appear in court
and the court's issuance of a bench warrant. The
remission amount is based upon defendant's time at
large, which is limited to a one-year period.
Thereafter, 100% of the bail is forfeited unless
exceptional circumstances are demonstrated by the
surety.
[Ibid.]
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But the Directive, by establishing parameters within which discretion is to be
exercised in the ordinary course, nonetheless retains the trial court's authority
to go beyond the term when it finds "exceptional circumstances" have been
established.
The Court clearly has the authority to revise the remittitur guidelines
after the amendments to the rules. The changes were procedural in nature, and
ABC's argument does not convince us otherwise. See Winberry, 5 N.J. at 247-
48; Simpson, 365 N.J. Super. at 451.
II.
ABC also contends that the Directive interferes with vested rights in
bonds it has issued, and that it effectuates a material change to existing bail
bond contracts.4 This argument is not convincing.
There can be no vested right in bail money forfeited to a court
attributable to a defendant's failure to appear; it is illogical to suggest
otherwise. Despite ABC's characterization, a failure to appear triggering
forfeiture is simply not the presumed outcome of a defendant's release on bail.
Moreover, ABC presented no legally competent evidence to support its claim
4
ABC's counsel indicated at oral argument that ABC wished to waive the
argument regarding a material change of circumstances. Because it was raised
in the brief, we nonetheless address the point here.
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that the revised guidelines materially increased its risk on the outstanding
bonds. See State v. Ceylan, 352 N.J. Super. 139, 143 (App. Div. 2002).
Woven into ABC's argument is the point that its purported contractual
entitlements require the guidelines to be applied prospectively only. The
caselaw ABC cites in support of this position, however, relates to substantive
changes in the law, not procedural ones. It is assumed that defendants appear
when released on bail, and that ABC and all other sureties will engage in
supervisory efforts intended to guarantee a defendant's appearance in court as
required.
III.
The Directive effectuates procedural, not substantive changes. It is not
unconstitutional, is not an unlawful exercise of the Court's supervisory
authority, and does not constitute a material change to existing contracts. It
will be applied retroactively.
One final point. ABC suggests that retroactive application will create an
administrative nightmare for the judiciary. ABC's brief states:
It is difficult to calculate the exact number of
motions for exoneration, typically accompanied by an
offer of surrender, that will ensue in the event of
retroactive application. But plaintiff alone had
roughly 1046 open Superior Court bonds with nearly
$82,000,000 in potential liability for payment of
claims as of July 31, 2017, shortly before the
complaint was filed.
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In Simpson, Judge Pressler noted that hundreds of appeals had been filed
in the years immediately before the opinion,
but because the appellant saw fit to withdraw or settle
them as they were calendared, these asserted
constitutional issues were not adjudicated, and the
stream of individual "verbatim" appeals therefore
continues. All have to be individually processed and
otherwise dealt with, and the resulting undue
administrative burden on the Appellate Division has
been acute.
[365 N.J. Super. at 453.]
Now that ABC's challenge to the Directive has been addressed, we
anticipate that bail bond companies, including this plaintiff and all others, will
be able to litigate or settle their exoneration claims more efficiently based on
the clear standards set forth in the Directive.
Affirmed.
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