U.S. v. Martinez

Decision Date28 July 1998
Docket NumberNo. 1435,D,1435
Citation151 F.3d 68
PartiesUNITED STATES of America, Appellee, v. Alejandro MARTINEZ, also known as Alejandro Martinez-Garcia; Jose De Jesus Zapata-Herrera, also known as El Chino, also known as Jose Mario Perez; Nelson Aybar; Johnny Aybar; Felix Hernandez; Jose Miguel Rodriguez; Michael R. Williams; Margarita Hernandez; Francisco Bolivar; and Holguer Miguel Garay, also known as Luis Alicia Reina, Defendants, Milagros Angeles; Rafael Polanco; Isabel Berrocal; And Guillermo Estevez, Appellants. ocket 97-1449.
CourtU.S. Court of Appeals — Second Circuit

Cheryl A. Krause, Assistant United States Attorney for the Southern District of New York, New York City (Mary Jo White, United States Attorney, Craig A. Stewart, Assistant United States Attorney, of counsel), for Appellee.

Carmen M. Grullon, New York City, for Appellants.

Before: WINTER, Chief Judge, McLAUGHLIN and CALABRESI, Circuit Judges.

McLAUGHLIN, Senior Circuit Judge:

BACKGROUND

In August 1992, Alejandro Martinez was arrested for conspiring to distribute cocaine. Almost immediately after his arrest, Martinez began cooperating with the government. On September 2, 1992, Martinez signed an agreement with the government in which he agreed to plead guilty to one count of conspiracy to distribute cocaine. He also agreed to assist in the prosecution of his co-conspirators and to testify against them.

For its part, the government agreed to forego charging Martinez with a number of other crimes and promised that if Martinez provided "substantial assistance" it would move for a downward sentencing departure pursuant to U.S.S.G. § 5K1.1. Finally, the agreement provided that Martinez's family would be entitled to government protection at his request.

On September 2, 1992, the same day that he signed the agreement with the government, Martinez was released on $250,000 bail. On behalf of Martinez, five persons posted a $250,000 appearance bond secured by $10,000 cash. The sureties on the bond were Milagros Angeles, Rafael Polanco, Isabel Berrocal, Guillermo Estevez and Francisca Nieves. Martinez's wife, Marisol, put up the $10,000 cash.

The bond provided that Martinez was required to "appear before [the district] court and at such other places as the defendant may be required to appear." The bond also specified that it was a "continuing bond (including any proceeding on appeal or review) which shall continue until such time as the undersigned are exonerated." The bond recited further that each surety would be "jointly and severally liable for the full amount of the bond in the event of any breach of bond conditions."

Before the sureties signed the bond, the government subjected them to a comprehensive interview. First, the government addressed the sureties as a group. Although Estevez and Berrocal were not proficient in English, the other three sureties were fluent in English and were able to explain the information presented by the government. In addition, Martinez's lawyer, who is bilingual, was available to translate.

During the group interview, the government cautioned all the sureties that Martinez was facing serious charges and a long jail term. The government explained that it possessed strong evidence against Martinez and that he had a strong incentive to flee. Indeed, the government actually urged the sureties to assume that Martinez was guilty in assessing their willingness to sign the bond. The government explained that by signing the bond, each surety was personally guaranteeing that Martinez would make all required appearances and would not violate his bail conditions. The government specifically warned the sureties that if Martinez violated any of his bail conditions, it would seek full recovery of the bond from the sureties, regardless of their ability to pay. Finally, the government urged the sureties to ignore anything that Martinez's family and lawyers told them about his innocence.

The government did not tell the sureties that Martinez had agreed to plead guilty; nor did it tell them that he was cooperating with the government.

The government then interviewed the sureties individually to assess their financial qualifications and their ability to exercise moral suasion over Martinez, should he decide to flee. In addition, the government again sought to ensure that each surety understood the information earlier imparted during the group interview. After interviewing each surety individually, the government found all five sureties qualified, and all five sureties signed the bond.

On September 16, 1992, pursuant to his agreement with the government, Martinez pled guilty in the United States District Court for the Southern District of New York (Griesa, C.J.), to one count of conspiracy to distribute cocaine. The government did not inform the sureties of this guilty plea. On October 26, 1993, Martinez pled guilty to a new charge of making false statements to a government agent. This second charge arose out of false statements made by Martinez during his debriefing session. The government also did not inform the sureties of this second plea.

Martinez was scheduled to testify against his co-conspirators on November 1, 1993. However, he did not show up at the trial. The government soon learned that Martinez had fled to the Dominican Republic, purportedly because his co-conspirators had threatened members of his family living there. On December 2, 1993, Martinez was indicted for bail jumping. He has never returned to the United States.

On June 16, 1994, the government moved for a default judgment ordering forfeiture of About seventeen months later, the sureties moved to vacate the default judgment, arguing that: (1) they did not receive notice of a forfeiture hearing; (2) the government wrongfully concealed Martinez's agreement to plead guilty and to cooperate with the government; and (3) they were entitled to an evidentiary hearing before forfeiture was ordered. Judge Griesa denied the sureties' motion on July 3, 1997, holding that the failure to disclose the plea agreement did not invalidate the bail bond. In addition, Judge Griesa found that the interests of justice did not require vacatur of the forfeiture order.

Martinez's appearance bond. Notice was served on all the sureties and their counsel, but no objection was made to the forfeiture. On August 10, 1994, Judge Griesa granted the default judgment and ordered the bond forfeited.

The sureties now appeal, solely on the grounds that: (1) their obligations under the bond were excused because the government concealed Martinez's guilty plea and his plea agreement; and (2) Judge Griesa should have granted an evidentiary hearing on their claims.

DISCUSSION

We review Judge Griesa's denial of the motion to vacate the default judgment under an abuse of discretion standard. See Commercial Bank of Kuwait v. Rafidain Bank, 15 F.3d 238, 243 (2d Cir.1994).

The sureties argue that the government's failure to inform them of Martinez's plea agreement and subsequent guilty plea relieved them of all obligations under the bond. The sureties present three theories to support this claim: (1) the failure to inform the sureties was a material modification of the bail conditions; (2) the failure to inform constituted fraudulent concealment; and (3) the bail bond was unconscionable.

It is important to note that the sureties do not now claim that the government had a duty to inform them that Martinez agreed to cooperate with the government; they make it clear that their claims are based only upon the government's failure to disclose Martinez's agreement to plead guilty and his subsequent guilty plea. Thus, the feature of Martinez's agreement that required him to cooperate is not at issue on this appeal.

Material Modification

The sureties believe that the government had a duty to inform them of any modification of Martinez's bail conditions, and, consequently, that the government's failure to do so relieved them of their obligations under the bond. They regard Martinez's agreement to plead guilty and the resulting guilty plea as modifications of the bail conditions that the government was obligated to disclose.

It is, of course, rudimentary that under certain circumstances the government's failure to notify a surety of a modification in bail conditions will discharge the surety's obligation under a bail bond. However, "[a] surety is not relieved of its obligation on a bond by a modification of bail conditions unless the government has materially increased the surety's risk without notice to and consent of the surety." United States v. Gambino, 17 F.3d 572, 574 (2d Cir.1994). The sureties seek to invoke the "material increase" exception. Martinez's plea agreement, however, was signed before the bail bond was issued, and was never modified thereafter. Thus, the agreement did not modify the terms of the bond. Properly analyzed, the sureties' argument concerning the plea agreement is actually a fraudulent concealment claim; we discuss this claim in detail below.

The guilty plea itself did take place after the bail bond was signed, and arguably could constitute a material modification of the bail conditions. However, the failure to disclose the guilty plea did not affect the sureties' obligations here because Martinez's guilty plea did not materially increase the sureties' risk.

The sureties signed a continuing bond that guaranteed the defendant's appearance even after his conviction. See United States v. Catino, 562 F.2d 1, 3 (2d Cir.1977). A defendant's guilty plea does not constitute a material modification of the terms of a continuing bond because by signing such a bond, a surety assumes whatever increased risk of flight results from the defendant's conviction, whether at trial or after a guilty plea. See United States v. Noriega-Sarabia, 116 F.3d 417, 421 (9th Cir.1997); United States v. Casey, 671 F.2d 975, 977 (6th Cir.1982); see also Catino, ...

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