BBBB Bonding Corp. v. Caldwell
| Decision Date | 29 December 2021 |
| Docket Number | A162453 |
| Citation | 73 Cal.App.5th 349,288 Cal.Rptr.3d 439 |
| Parties | BBBB BONDING CORPORATION, Plaintiff, Cross-defendant and Appellant, v. Kiara CALDWELL, Defendant, Cross-complainant and Respondent. |
| Court | California Court of Appeals Court of Appeals |
Law Offices of Jeffrey M. Cohon, APC, Jeffrey M. Cohon, Los Angeles; Weintraub Tobin Law Corporation, Brendan J. Begley, Charles L. Post, James Kachmar and Audrey A. Millemann, Sacramento, for Plaintiff, Cross-defendant and Appellant.
Keker, Van Nest & Peters LLP, Laurie Carr Mims, Jay Rapaport, Niall Mackay Roberts, and Donna Zamora-Stevens, San Francisco; Lawyers’ Committee for Civil Rights of the San Francisco Bay Area, Elisa Della-Piana, Zal K. Shroff and Rio Scharf for Defendant, Cross-complainant and Respondent.
Mitchell Silberberg & Knupp LLP, Mark C. Humphrey, Elaine K. Kim and Alexandra Anfuso, Los Angeles, for Public Counsel, Community Legal Services in East Palo Alto, National Consumer Law Center, The Debt Collective, The Public Law Center, Watsonville Law Center, and East Bay Community Law Center as Amicus Curiae on behalf of Defendant, Cross-complainant and Respondent.
Rob Bonta, Attorney General, Nicklas A. Akers, Assistant Attorney General, Michele Van Gelderen, Michael Gowe, and Alicia K. Hancock, Deputy Attorneys General for the Attorney General of the State of California and the California Department of Insurance as Amicus Curiae on behalf of Defendant, Cross-complainant and Respondent.
Willkie, Farr & Gallagher LLP, Eduardo E. Santacana and Joshua D. Anderson, San Francisco; Chesa Boudin, District Attorney (San Francisco) and Alex Feigen Fasteau, Deputy District Attorney for Prosecutors Alliance of California and District Attorney of the City and County of San Francisco as Amicus Curiae on behalf of Defendant, Cross-complainant and Respondent.
This appeal requires us to interpret a long-standing consumer protection statute in a novel context: whether the requirement under Civil Code section 1799.91 that notice be afforded to cosigners of consumer credit contracts about the risks of guaranteeing such an agreement applies to bail bond premium financing agreements.1 We conclude that it does.
In this putative class action, the trial court enjoined appellant BBBB Bonding Corporation, doing business as Bad Boys Bail Bonds (BBBB), from enforcing bail bond premium financing agreements entered into by respondent Kiara Caldwell and other similarly situated persons who had cosigned on behalf of an arrestee without having first been provided with this statutory notice. BBBB asserts that this consumer protection law has never applied to bail bond agents or to bail bond premium contracts before. BBBB raises many substantive and procedural challenges to the trial court's preliminary injunction, arguing primarily that because the Legislature adopted a comprehensive scheme to regulate the conduct of bail bond licensees, it intended to exclude from such transactions the consumer protections applicable to consumer credit contracts.
We hold that a bail bond premium financing agreement between a cosigner and the bail bond agent is a consumer credit contract subject to the notice provision of section 1799.91 and related statutory protections. No statute or regulatory provision supports BBBB's claim that the legal regime governing bail bond licensees was intended to operate as the exclusive source of law for the bail bond industry. Nor is BBBB able to identify any licensee provision that stands in conflict with the cosigner notice requirement. While we appreciate that this decision may upend business expectations for bail bond agents, we cannot accept BBBB's urging that the injunction should apply only on a prospective basis. To do so would deprive respondent and other cosigners who never received statutory warning of the risks of cosigning a bail bond premium financing agreement of the protections the consumer credit laws were designed to address. We reject BBBB's other challenges to the issuance of the preliminary injunction and affirm.
On June 21, 2018, Caldwell was contacted by BBBB and informed that her friend D.C. had been arrested and was being held in the City of San Leandro jail. To bail her friend out, Caldwell was asked to sign several documents and provide a bail bond premium. Caldwell signed an "Unpaid Premium Agreement" (Premium Agreement) in which she became legally responsible for the bail bond premium of $5,000, representing 10 percent of D.C.’s bail. Pursuant to the Premium Agreement, Caldwell agreed to make a downpayment of $500 and pay the balance due of $4,500 in $450 monthly installments until paid in full.
Caldwell was also required to sign an "Indemnity Agreement for Surety Bail Bond" (Indemnity Agreement) with the North River Insurance Company (North River). That contract provided that the bail bond premium payment would be "fully earned" upon D.C.’s release from jail, and would be renewed annually until the surety was legally discharged from all liability on the bond posted. Finally, Caldwell signed an "Indemnitor/ Guarantor Check List," which contained a series of acknowledgements, including an acknowledgment that she was responsible for making payments on the premium. Caldwell was told that D.C. would separately sign her own copies of the same contracts. Caldwell asserts that she was not informed of the financial risks associated with cosigning for D.C.’s bail bond, and maintains that she would not have cosigned for the bail bond premium if she had been provided with the section 1799.91 notice.
Caldwell was unable to make the installment payments beyond the initial $500 deposit. BBBB attempted to collect from her, repeatedly calling her phone, her mother, and her place of employment in an effort to persuade her to resume payments. BBBB representatives reportedly threatened litigation and claimed she could lose her job if she did not make payments. Eventually, Caldwell changed her cell phone number to avoid the repeated phone calls. Other cosigners attested to similar aggressive collection efforts by BBBB, including highly embarrassing calls to employers, calls made to homes very early in the morning or late at night, and calls in which BBBB representatives stated it could have the cosigner arrested if payment was not made.
In October 2019, BBBB initiated a collection action by filing a complaint for breach of contract and common counts against Caldwell. BBBB alleged she had breached the Premium Agreement by failing to pay the $4,500 owing on the bail bond premium.
In October 2020, Caldwell filed a class action cross-complaint against BBBB alleging causes of action for violation of the unfair competition law ( Bus. & Prof. Code § 17200 et seq. ; UCL) and declaratory judgment. Caldwell alleged that BBBB had engaged in an unfair and unlawful business practice in violation of the UCL by failing to provide statutory notice of the risks of cosigning a consumer credit contract under section 1799.91. She sought restitution of the money she and other putative class members had paid for bail bond premiums, a declaratory judgment that the Premium Agreements are unenforceable, and an injunction prohibiting BBBB from enforcing these agreements and requiring it to provide notice to cosigners in compliance with section 1799.91. She also requested costs and attorney fees.
Caldwell then filed a motion for a preliminary injunction seeking to enjoin BBBB from enforcing or attempting to collect on Premium Agreements signed by cosigners who were not provided with the notice required by section 1799.91. In her moving papers, Caldwell alleged that BBBB commenced at least 150 lawsuits against similarly situated cosigners in the 18-month period from July 1, 2019 through December 31, 2020. Her motion was supported by declarations from several individuals who had cosigned identical or nearly identical Premium Agreements without such notice and had been subjected to BBBB's aggressive collection efforts.
On April 8, 2021, the trial court granted Caldwell's motion for a preliminary injunction. In reviewing the collections complaints filed by BBBB in the other actions, the trial court found that the premium agreements were "typically signed by both the arrestee and the family or friend who acts as an indemnitor." The trial court determined that Caldwell had shown a substantial likelihood of success on the merits of her UCL claim under the UCL's unlawful prong. The court found that the premium financing agreements are consumer credit contracts subject to the notice requirements of section 1799.91, and it rejected BBBB's argument that compliance with bail bond licensing regulations exempted it from complying with consumer protection statutes.
The court further found that the balance of hardships tipped decidedly towards Caldwell because she had demonstrated that she and others like her had been victimized by BBBB's failure to provide section 1799.91 notice. On the other hand, the injunction would not interfere with BBBB's ability to conduct business in California, provided it complied with state consumer protection laws.
The court enjoined BBBB from filing any actions to enforce or collect on bail bond premium agreements against cosigners who were not provided with section 1799.91 notice, or from otherwise attempting to collect on such agreements. BBBB was also enjoined from prosecuting any actions already filed, or seeking to enforce, execute, or collect on any judgments against such cosigners. The court also waived any bond requirement based on undisputed evidence that the cost of posting an injunction bond would be well beyond Caldwell's reach.
The trial court's ruling was stayed for 15 days. Shortly before that stay expired, BBBB petitioned this court for a writ of supersedeas. We stayed the trial court's ruling and ordered expedited briefing.
At the center of this appeal are two statutory schemes...
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