Lavoott Bluestone, for appellants.
Jonathan Svetkey, for respondent.
Del Pozo, for amicus curiae New York State Department of
Brooklyn Defender Services et al.; Legal Aid Society, amici
DiFIORE, CHIEF JUDGE
United States Court of Appeals for the Second Circuit, by
certified question, has asked us whether an entity engaged in
the bail bond business may retain the premium paid on a
criminal defendant's behalf when bail is denied and the
defendant is never released from custody. Inasmuch as the
Insurance Law provides that such an entity does not earn a
premium for a bail bond if a court refuses to accept the bond
following a bail source hearing, we answer in the negative.
2011, Arthur Bogoraz was indicted on state law fraud charges
and bail was fixed at $2 million. Plaintiffs, the wife and
family friends of Bogoraz, contacted defendant Ira Judelson,
a licensed bail bond agent affiliated with the International
Fidelity Insurance Company (International Fidelity), a bail
bond surety. Judelson, on behalf of International Fidelity,
entered into an indemnity agreement with plaintiffs whereby
International Fidelity agreed to underwrite a bail bond to
secure Bogoraz's release from custody in exchange for a
premium of $120, 560. Plaintiffs promised to indemnify the
bond and provide collateral. Shortly thereafter, plaintiffs
paid the premium to Judelson, in trust for International
Fidelity. Judelson then posted the bail bond with the court
in compliance with Criminal Procedure Law § 520.20 (1),
"[W]hen a bail bond is to be posted in satisfaction of
bail, the obligor or obligors must submit to the court a bail
bond in the amount fixed, executed in the form prescribed in
subdivision two, accompanied by a justifying affidavit of
each obligor, executed in the form prescribed in subdivision
court thereafter ordered a hearing under CPL 520.30, which
"Following the posting of a bail bond and the justifying
affidavit or affidavits..., the court may conduct an inquiry
for the purpose of determining the reliability of the
obligors..., the value and sufficiency of any security
offered, and whether any feature of the undertaking
contravenes public policy... At the conclusion of the
inquiry, the court must issue an order either approving or
disapproving the bail."
court denied the bail bond at the hearing and the Appellate
Division dismissed a writ of habeas corpus on Bogoraz's
behalf (People ex rel. Aidala v Warden, Rikers Is. Corr.
Facility, 100 A.D.3d 667');">100 A.D.3d 667 [2d Dept 2012], lv
denied 20 N.Y.3d 858');">20 N.Y.3d 858 ). Bogoraz never was released
and, when plaintiffs requested the return of the $120, 560
premium, Judelson refused.
sued Judelson in the United States District Court for the
Southern District of New York, asserting diversity
jurisdiction. The complaint alleged breach of contract,
unjust enrichment, and conversion. After a bench trial, the
District Court found that the indemnity agreement permitted
Judelson to retain the premium (US Dist Ct, S.D. NY, 13 Civ
8383, Berman, J., 2015). The District Court considered CPL
520.20 and 520.30, but concluded that "New York State
practices and statutory guidance are not dispositive"
appeal, the Second Circuit stated that there is a
"dearth" of New York legal authority on this
subject and that the relevant New York Criminal Procedure Law
is "'not dispositive'" (841 F.3d 584,
587-588 [2d Cir 2016]). The court determined that New York
Insurance Law § 6804 (a), the provision relating to bail
bond compensation, "controls the amount of the
premium a bail bondsman may charge, [yet] nothing in that
Article sheds light on when that premium is actually
earned" (id. at 587 [emphasis in original]).
The court concluded that New York State's "interest
in regulating the premiums to be received by bail bond agents
is clear" and that the New York Court of Appeals, rather
than the federal courts, should strike the balance between
the State's interests in "secur[ing] compensation
for bail bond agents" and ...