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INTERNATIONAL FIDELITY INS. CO. v. CITY OF NY

April 24, 2003

INTERNATIONAL FIDELITY INSURANCE CO., PLAINTIFF,
v.
CITY OF NEW YORK ET ALIA, DEFENDANTS.



The opinion of the court was delivered by: Charles Sifton, Senior District Judge.

MEMORANDUM AND ORDER

Plaintiff International Fidelity Insurance Company ("IFIC") brings this action against defendants the City of New York, Charles J. Hynes, District Attorney of Kings County, and Richard A. Brown, District Attorney of Queens County, seeking a judgment pursuant to the Declaratory Judgment Act, 28 U.S.C. § 2201,*fn1 declaring: (1) 150 judgments of forfeiture of bail entered in Kings County (the "Kings County judgments") and 191 judgments entered in Queens County (the "Queens County judgments") for which plaintiff is the surety were entered in violation of the Due Process Clause of the Fifth and Fourteenth Amendments to the United States Constitution; (2) the Kings and Queens County judgments for which plaintiff is the surety were entered in violation of the Due Process Clause of the New York State Constitution; (3) New York Criminal Procedure § 540 violates the Due Process Clause of the Fifth and Fourteenth Amendments of the United States Constitution;*fn2 and (4) § 540 violates the Due Process Clause of the New York State Constitution. Plaintiff also seeks vacatur of the judgments of forfeiture at issue because (5) defendants obtained the judgments in violation of plaintiff's due process rights under the Fifth and Fourteenth Amendments to the United States Constitution; (6) defendants obtained the judgments in violation of plaintiff's due process rights under the New York State Constitution; (7) twelve of the judgments are unenforceable because defendants Hynes and Brown failed to provide plaintiff with any notice of entry of judgment of forfeiture for two bail bonds in Kings County and ten bail bonds in Queens County, respectively; (8) 108 of the judgments are unenforceable because defendants Hynes and Brown failed to provide plaintiff with any notice of entry of judgment of forfeiture until months after the judgments were entered for three bail bonds in Kings County and one hundred five bail bonds in Queens County, respectively; (9) nineteen of the judgments are unenforceable because defendants Hynes and Brown failed to enter judgments within the statutory period required under N.Y.Crim. Pro. Law § 540 for six bail bonds in Kings County and thirteen bail bonds in Queens County, respectively. Finally, (10) plaintiff claims restitution of previously satisfied judgments of bail forfeiture from the past six years on grounds that during that period plaintiff has been the surety for hundreds of bail bonds in the City of New York for which judgment of forfeiture was entered where defendants failed to provide plaintiff with notice before entry of judgment; thus, such judgments were wrongfully enforced and the amounts paid must be returned with accrued interest. Plaintiff seeks the following relief: (a) on claims 14, a declaratory judgment; (b) on claims 5-9, vacatur of the state court judgments of forfeiture; (c) on claim 10, restitution with interest of payment made on previously enforced bail judgments, and (d) its costs and expenses in this action.

In their amended answer, defendants assert six counterclaims against IFIC alleging: (1) the provisions of N.Y.Crim. Pro. Law §§ 540.10-540.30 are constitutional; (2) judgments of forfeiture issued pursuant to N.Y.Crim. Pro. Law §§ 540.10-540.30 are valid and enforceable; (3) plaintiff's failure to make payments on judgments of forfeiture is a breach of contract; (4) plaintiff's failure to make payments on judgments of forfeiture is a violation of plaintiff's statutory obligations under New York State Law; (5) plaintiff's failure to produce bonded criminal defendants is a breach of contract; and (6) plaintiff's failure to produce bonded criminal defendants is a violation of plaintiff's statutory obligations under New York State Law.

Defendants move pursuant to Rule 15 of the Federal Rules of Civil Procedure for leave to amend their answer to interpose a statute of limitations defense and for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure.*fn3 Plaintiff cross-moves for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure on seven of their ten causes of action.*fn4 Also at issue is the question of this Court's subject matter jurisdiction, which was raised sua sponte by the Court and fully briefed and argued by the parties.

For the reasons set forth below, plaintiff's first, second, fifth, sixth, seventh, eighth, ninth, and tenth claims for relief are dismissed for lack of subject matter jurisdiction. Plaintiff's third and fourth claims for relief are dismissed for lack of standing. Defendants' first counterclaim is dismissed on ripeness grounds. Defendants' second counterclaim is dismissed for lack of subject matter jurisdiction. Defendants' third, fourth, fifth, and sixth counterclaims are dismissed under the New York doctrine of double recovery. I have no occasion to consider defendants' motion to amend the answer.

BACKGROUND

The following facts are taken from the parties' submissions in connection with the present motions and the previous round of summary judgment motions. For purposes of the summary judgment motions, I assume all uncontroverted Rule 56.1 factual assertions are not in dispute. See Titan Indemnity Co. v. Triborough Bridge & Tunnel Authority, 135 F.3d 831, 835 (2d Cir. 1998).

Plaintiff IFIC is a corporation organized under the laws of New Jersey with its principal place of business in Newark, New Jersey. IFIC is an insurance company and writer and issuer of bail bonds operating within the City and State of New York. Since 1990, IFIC has been the surety on hundreds of bail bonds posted in Kings and Queens Counties, New York. IFIC is the largest writer of bail in New York City and throughout New York State.

Bail Bonding Process

Bail is a condition set by the court under which a person arrested for a crime will be released from custody. The purpose of bail is to ensure the appearance of criminal defendants at all court proceedings relevant to the charges against them.

When the court fixes bail, the criminal defendant may submit a bail bond in full satisfaction of the bail amount set by the court; the bail bond is a contract between three parties: the defendant, the surety, and the State.*fn5 The surety may also receive a bail affidavit from the criminal defendant or an indemnity agreement and confession of judgment *fn6 from a third party as collateral against any loss on the bond.

Generally, defendants, or their indemnitors, do not deal directly with the surety, but rather deal with a bail bondsman (also referred to as a producer or retail seller of bail). IFIC authorizes selected bail bondsmen to act as its agents by giving them power of attorney to sign a particular bond for a certain amount. Bail bondsmen prepare papers that are filed with the courts and monitor the defendant to ensure his return to court when required.*fn7 The contract between the surety and the State is reflected in a state-approved form document entitled the "Undertaking of Bail."*fn8 IFIC's limited power of attorney to its bail bondsman is generally attached to and made a part of the Undertaking of Bail. The Undertaking of Bail at issue in this case states in pertinent part:

We, [Defendant] and INTERNATIONAL FIDELITY INSURANCE COMPANY of One Newark Center, 20th Floor, Newark, N.J., surety, hereby undertake, jointly and severally, that the above named defendant shall appear and answer the charge above mentioned, in whatever court it may be prosecuted, and shall at all times render himself amenable to the orders and process of the court; and if convicted, shall appear for judgment, and render himself in execution thereof; or if he fails to perform either of these conditions, that we will pay the People of the State of New York, the sum of ($____) dollars.
Bail Bond Forfeiture Process

New York's bail bond forfeiture process is governed by N.Y.Crim. Pro. Law ยงยง 540.10-540.30. When a criminal defendant fails to appear and a surety fails to produce the defendant as required, the bail bond is generally forfeited ...


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