28 N.Y.3d 454 (2016)
A bail bond surety may not retain a premium when the criminal defendant is not released on bail because the surety does not assume any risk if bail is denied after a bail-sufficiency hearing.
Summary
In Gevorkyan v. Judelson, the New York Court of Appeals addressed whether a bail bond entity could retain a premium when bail was denied after a bail-sufficiency hearing and the defendant was never released. The court held that the entity could not retain the premium. The court reasoned that under New York’s Insurance Law, a bail bond surety only earns a premium upon “giving bail.” The court interpreted “giving bail” to mean the actual release of the defendant. Because the court did not approve the bail and the defendant was not released, the bail bond was not “given,” and the premium was not earned. This decision emphasizes the principle that the premium follows the assumption of risk, which does not occur until the defendant is actually released on bail.
Facts
Arthur Bogoraz was indicted on fraud charges, with bail set at $2 million. Bogoraz’s family contacted Ira Judelson, a licensed bail bond agent affiliated with International Fidelity Insurance Company, to secure a bail bond. The family entered into an indemnity agreement with Judelson, and paid a premium of $120,560. Judelson posted the bail bond with the court. A bail-sufficiency hearing was held, and the court denied the bail bond. Bogoraz was never released, and when the family requested a refund of the premium, Judelson refused.
Procedural History
The family sued Judelson in the United States District Court for the Southern District of New York, alleging breach of contract, unjust enrichment, and conversion. The District Court ruled in favor of Judelson, finding the indemnity agreement permitted him to retain the premium. The Second Circuit Court of Appeals, noting a lack of dispositive New York legal authority on the matter, certified a question to the New York Court of Appeals: Whether Judelson could retain the premium. The New York Court of Appeals answered in the negative.
Issue(s)
1. Whether a bail bond entity may retain a premium when a bond posted pursuant to CPL 520.20 is denied at a bail-sufficiency hearing conducted pursuant to CPL 520.30, and the criminal defendant is never admitted to bail.
Holding
1. No, because a bail bond surety may not retain a premium when the defendant is not released on bail, as per New York’s Insurance Law.
Court’s Reasoning
The court primarily relied on the interpretation of New York’s Insurance Law Article 68, which regulates the bail bond industry. The court found that a premium is earned only when the bail bond is “given,” which the court equated with executing the bond and securing the defendant’s release. The court noted that the Insurance Law does not expressly define “give bail bond.” Therefore, the court examined the meaning of the term at the time the law was enacted, concluding that “giving bail” encompassed the release of the defendant. Because the court denied the bond at the hearing and the defendant was never released, the bond was never “given,” and no premium was earned. The court found the surety does not assume risk until the defendant is released on bail, and thus the premium is not earned until that time. The court stated, “The surety does not incur this risk when the principal is not released and so has no opportunity to jump bail.” Furthermore, the court considered the legislative intent to protect against abuses in the bail bond industry. The court reasoned that allowing the surety to retain the premium in this situation would be inconsistent with the legislature’s goal of regulating compensation and preventing exploitation of defendants.
Practical Implications
This case provides clear guidance on the enforceability of bail bond premiums when bail is denied after a bail-sufficiency hearing. Attorneys handling similar cases should: consider New York’s Insurance Law to determine when a premium is earned; recognize the importance of risk assumption in insurance law; and be aware that the premium is not earned until the defendant is released. The decision suggests that bail bond agents may need to adjust their practices to refund premiums when bail is denied, even after the bond has been initially posted. Later cases should likely follow this precedent and, under similar facts, deny the surety the right to retain the premium.