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State v. Nelson

Supreme Court of Hawaii

June 21, 2017

STATE OF HAWAI'I, Respondent/Plaintiff-Appellee,
v.
SEMISI NELSON, Respondent/Defendant-Appellee, and INTERNATIONAL FIDELITY INSURANCE COMPANY, Petitioner/Real Party in Interest/Appellant. STATE OF HAWAI'I, Respondent/Plaintiff-Appellee,
v.
KAREN TERUYA, Respondent/Defendant-Appellee, and INTERNATIONAL FIDELITY INSURANCE COMPANY, Petitioner/Real Party in Interest/Appellant. STATE OF HAWAI'I, Respondent/Plaintiff-Appellee,
v.
CONRADO CABIGON, JR., Respondent/Defendant-Appellee, and INTERNATIONAL FIDELITY INSURANCE COMPANY, Petitioner/Real Party in Interest/Appellant. STATE OF HAWAIʻI, Respondent/Plaintiff-Appellee,
v.
STEVE D. FERRARIS, Respondent/Defendant-Appellee, and INTERNATIONAL FIDELITY INSURANCE COMPANY, Petitioner/Real Party in Interest/Appellant. STATE OF HAWAIʻI, Respondent/Plaintiff-Appellee,
v.
DAVID K. BERRY, Respondent/Defendant-Appellee, and INTERNATIONAL FIDELITY INSURANCE COMPANY, Petitioner/Real Party in Interest/Appellant. STATE OF HAWAIʻI, Respondent/Plaintiff-Appellee,
v.
JUSTIN NAKAMURA, Respondent/Defendant-Appellee, and INTERNATIONAL FIDELITY INSURANCE COMPANY, Petitioner/Real Party in Interest/Appellant. STATE OF HAWAIʻI, Respondent/Plaintiff-Appellee,
v.
CEDRO MUNA, Respondent/Defendant-Appellee, and INTERNATIONAL FIDELITY INSURANCE COMPANY, Petitioner/Real Party in Interest/Appellant STATE OF HAWAIʻI, Respondent/Plaintiff-Appellee,
v.
JOHN PAUL LUNA, Respondent/Defendant-Appellee, and INTERNATIONAL FIDELITY INSURANCE COMPANY, Petitioner/Real Party in Interest/Appellant.

         CERTIORARI TO THE INTERMEDIATE COURT OF APPEALS, CAAP Nos. 12-0001040; 12-0001041; 12-0001042, 12-0001043, 12-0001044, 12-0001045, 12-0001046, 12-0001047, CR. Nos. 05-1-2446, 02-1-1718, 08-1-1192, 11-1-0306, 10-1-1289, 09-1-1364, 09-1-0616, 10-1-0621,

          Matson Kelley and Michael C. Carroll for petitioner.

          Brian R. Vincent for respondent.

          RECKTENWALD, C.J., NAKAYAMA, McKENNA, POLLACK, JJ., AND CIRCUIT COURT JUDGE NAKASONE, IN PLACE OF WILSON, J., RECUSED.

          OPINION

          McKENNA, J.

         I. Introduction

         In eight separate criminal cases, [1] Real Party in Interest-Appellant/Petitioner, International Fidelity Insurance Company ("International Fidelity" or "International") had issued eight separate powers of attorney ("POA[s]") to either Ida Peppers ("Peppers") or Charles Fisher ("Fisher") to execute a bail bond on behalf of a defendant in each case. In each criminal case, the bonded defendant failed to appear as required, and a Judgment and Order of Forfeiture of Bail Bond ("Judgment and Order of Forfeiture" or "forfeiture judgment") was entered in the Circuit Court of the First Circuit ("circuit court").

         Within days of the entry of the forfeiture judgments, the court provided notice of those judgments to the surety listed on the bonds - either Peppers of Freedom Bail Bond ("FBB") or Fisher of AAA Local Bail Bonds ("AAA"). The court later issued letters to International Fidelity informing it of each Judgment and Order of Forfeiture and demanding payment. Over thirty days after International Fidelity received those letters - in fact, in each of the cases except in State v. Ferraris, Cr. No. 11-1-0306, it was several hundred days later - International Fidelity moved to set aside each of the forfeiture judgments, stating that it did not receive notice of the forfeiture judgments as required under HRS § 804-51 (2014) .

         Upon consolidating the motions, the circuit court denied them, concluding that the requirements of HRS § 804-51 were satisfied when notice of the forfeiture judgments had been issued to Peppers of FBB or Fisher of AAA. The court also ruled that International Fidelity nevertheless received notice of the forfeiture judgments when it had received the Judiciary's letters, and that International Fidelity's motions to set aside were untimely.

         In a published opinion, the ICA affirmed the circuit court's "Findings of Fact, Conclusions of Law, and Order Denying International Fidelity Insurance Company's Consolidated Motions to Set Aside Judgment Entered Against International Fidelity Insurance Company" based on the circuit court's conclusion that due process and the requirements of HRS § 804-51 were satisfied when notice of the forfeiture judgments had been issued to Peppers or Fisher. The ICA did not address whether the State's letters to Fidelity Insurance satisfied the statute's notice requirements. See State v. Nelson, 139 Hawai'i 147, 164 n.l3, 384 P.3d 923, 940 n.l3 (App. 2016).

         International Fidelity timely filed an Application for a Writ of Certiorari ("Application") on December 23, 2016. For the following reasons, the ICA correctly determined that notice to International Fidelity of the forfeiture judgments was not required by due process or under HRS § 804-51. Specifically, HRS § 804-51 requires that notice be issued to the "surety on the bond, " and the bonds at issue identify only FBB or AAA - and not International Fidelity - where the surety is required to be named pursuant to Criminal Administrative Order No. 2.1. Additionally, to the extent the forfeiture judgments may be ambiguous, we clarify that the forfeiture judgments were entered "against the . . . surety or sureties on the bond, " i.e., Peppers of FBB or Fisher of AAA.

         II. Background

         To provide context to the proceedings below, we begin with a general overview of the bail process and observations regarding the at-issue bail bonds and powers of attorney, before discussing the circuit court and ICA proceedings and decisions in this consolidated matter.

         A. Bail Process and Governing Laws

         Bail, or the giving of bail, is "the signing of the recognizance by the defendant and the defendant's surety or sureties, conditioned for the appearance of the defendant at the session of a court of competent jurisdiction to be named in the condition, and to abide by the judgment of the court." HRS § 804-1 (2014). The judge[2] admitting a defendant to bail has the discretion to set the amount of bail; in doing so, the judge considers both "the punishment to be inflicted on conviction, and the pecuniary circumstances of the party accused." HRS § 804-9 (2014); Haw. Const, art I, § 12 ("Excessive bail shall not be required .... The court may dispense with bail if reasonably satisfied that the defendant or witness will appear when directed, except for a defendant charged with an offense punishable by life imprisonment.").

         1. Registering the Purchase of a Bail Bond from a Bail Bondsperson

         A person charged with a crime may purchase a bail bond from a professional bondsperson for five to fifteen[3] percent of the total amount of bail set. See Hawaii Crime Commission, Study of Bail Forfeitures in Hawaii 3 (1984) ("Bail Study"). Bail bondspersons who qualify as "sureties" are either self-funded[4] or are licensed insurance producers pursuant to HRS chapter 431, article 9A. See HRS § 804-10.5(b)(2)-(3);[5] HRS § 431:9A-102 ("'Insurance producer' or 'producer' means a person required to be licensed under the laws of this State to sell, solicit, or negotiate insurance."). Unlike self-funded bail bondspersons, bail bondspersons who are licensed insurance producers do not have to comply with single surety property requirements[6] or deposit any security with the court[7] if their bonds are guaranteed by a surety insurer. See HRS § 431:1-202 (2005) ("Insurer means every person engaged in the business of making contracts of insurance and includes reciprocal or interinsurance exchanges."); HRS § 431:1-210(1) (defining surety insurance); supra note 5 (quoting text of HRS § 431:1-210(1)); HRS § 431:10F-101 (2005) (surety's requirements deemed met by surety insurer);[8] Bail Study, at 32 (citing HRS § 431-636 (1976) (predecessor of HRS § 431:10F-101)).

          "[T]he bonds[person] does not actually post the bail with the court, but merely registers the bond purchase." Bail Study, at 32. From July 1, 2002 through June 9, 2010, Criminal Administrative Order No. 2.1 was in effect and outlined procedures for registering or filing bail bonds. Requirements included: (1) "[e]ach and every bail bond shall conform to the ¶Sample Standard Form for Bail Bonds' attached to this order"; (2) "[i]ndividuals and/or entities issuing bail bonds shall be responsible for ensuring that all information appearing on a bond is correct"; and (3) "[e]ach and every bail bond shall have attached to it a power of attorney indicating the insurance company that is insuring the bond." See Crim. Admin. Order No. 2.1 at D-17A.

         After Criminal Administrative Order No. 2.1 was rescinded on June 9, 2010, there were no court rules or orders regarding bail until July 1, 2011, when HRPP Rule 46(b) took effect.[9]

          2. Bond Forfeiture Provisions

         By statute, the following language is deemed to be set forth in each and every bond or recognizance, whether actually set forth in the bond or recognizance, or not:

Whenever the court, in any criminal cause, forfeits any bond or recognizance given in a criminal cause, the court shall immediately enter up judgment in favor of the State and against the principal or principals and surety or sureties on the bond, jointly and severally, for the full amount of the penalty thereof, and shall cause execution to issue thereon immediately after the expiration of thirty days from the date that notice is given via personal service or certified mail, return receipt requested, to the surety or sureties on the bond, of the entry of the judgment in favor of the State, unless before the expiration of thirty days from the date that notice is given to the surety or sureties on the bond of the entry of the judgment in favor of the State, a motion or application of the principal or principals, surety or sureties, or any of them, showing good cause why execution should not issue upon the judgment, is filed with the court. If the motion or application, after a hearing held thereon, is sustained, the court shall vacate the judgment of forfeiture and, if the principal surrenders or is surrendered pursuant to section 804-14 or section 804-41, return the bond or recognizance to the principal or surety, whoever shall have given it, less the amount of any cost, as established at the hearing, incurred by the State as a result of the nonappearance of the principal or other event on the basis of which the court forfeited the bond or recognizance. If the motion or application, after a hearing held thereon, is overruled, execution shall forthwith issue and shall not be stayed unless the order overruling the motion or application is appealed from as in the case of a final judgment.

HRS § 804-51 (emphases added); id. ("This section shall be considered to be set forth in full in words and figures in, and to form a part of, and to be included in, each and every bond or recognizance given in a criminal cause, whether actually set forth in the bond or recognizance, or not.").

         B. Bail Bonds Filed in Cr. Nos. 02-1-1718, 05-1-2446, 08-1-1192, 09-1-0616, 09-1-1364, 10-1-0621, 10-1-1289, and 11-1-0306

         Except for the bail bond issued in State v. Ferraris, Cr. No. 11-1-0306, each of the remaining seven bonds were issued between October 27, 2005 and June 2, 2010, and were therefore required to conform with the "Sample Standard Form for Bail Bonds" attached to Criminal Administrative Order No. 2.1, as that order was in effect from 2002 until June 9, 2010. The bond in Ferraris was issued on March 8, 2011, after Criminal Administrative Order No. 2.1 was rescinded, but before HRPP Rule 46 was amended to provide procedures for the posting of bail bonds. In any event, the Ferraris bond appears to also conform to the "Sample Standard Form for Bail Bonds" attached to Criminal Administrative Order No. 2.1.

         The "Sample Standard Form for Bail Bonds" requires that the surety be identified at the top of the bail bond, together with the surety's address and telephone number. Pursuant to that requirement, the surety listed on seven bail bonds is "Ida Peppers, Freedom Bail Bond, " where the bonds were signed by either Peppers or Linda Del Rio ("Del Rio"). The surety listed on the remaining bail bond is "AAA Local Bail Bonds, Charles Fisher General Agent, " and signed by Fisher. International Fidelity is not identified on any of the bail bonds.

         Instead, International Fidelity had issued the POAs that were attached to each of the bail bonds. Each of the POAs consisted of a pre-printed form that was filled in and signed by an "executing agent" or "atty in fact." The pre-printed forms for each of the POAs were identical except for that used in State v. Nelson, Cr. No. 05-1-2446. The seven identical preprinted forms read as follows:

KNOW ALL MEN BY THESE PRESENTS, that INTERNATIONAL FIDELITY INSURANCE COMPANY, a corporation duly organized and existing under the laws of the State of New Jersey, has constituted and appointed, and does hereby constitute and appoint, [sic] its true and lawful Attorney-in-Fact, with full power and authority to sign the company's name and affix its corporate seal to, and deliver on its behalf as surety, any and all obligations as herein provided, and the execution of such obligations in pursuance of these presents shall be as binding upon the company as fully and to all intents and purposes as if done by the regularly elected officers of said company at its home office in their own proper person; and the said company hereby ratifies and confirms all and whatsoever its said Attorney-in-Fact may lawfully do and perform in the premises by virtue of these presents. THIS POWER OF ATTORNEY IS VOID IF ALTERED OR ERASED, THE OBLIGATION OF THE COMPANY SHALL NOT EXCEED THE SUM OF [ ] THOUSAND . . . AND MAY BE EXECUTED FOR RECOGNIZANCE ON CRIMINAL BAIL BONDS ONLY. . . Authority of such Attorney-in-Fact is limited to the execution of appearance bonds and cannot be construed to guarantee defendant's future lawful conduct, adherence to travel limitation, fines, restitution, payments or penalties, or any other condition imposed by a court not specifically related to court appearances. A separate Power of Attorney must be attached to each bond executed.

         The POA in Nelson reads:

KNOW ALL MEN BY THESE PRESENTS, that INTERNATIONAL FIDELITY INSURANCE CORPORATION, a corporation duly organized and existing under the laws of the State of New Jersey has constituted an appointed, and does hereby constitute and appoint, sic[10] its true and lawful attorney-in-fact, with full power and authority to sign the company's name and affix its corporate seal to, and deliver on its behalf as surety, any and all obligations as herein provided, and the execution of such obligations in pursuance of these presents shall be as binding upon the company as fully and to all intents and purposes as if done by the regularly elected officers of said company at its home office in their own proper person; and the said company hereby ratifies and confirms all and whatsoever its said attorney-in-fact may lawfully do and perform in the premises by virtue of these presents. THIS POWER OF ATTORNEY IS VOID IF ALTERED OR ERASED, THE OBLIGATION OF THE COMPANY SHALL NOT EXCEED THE SUM OF THIRTY THOUSAND DOLLARS ($30, 000.00) AND MAY BE EXECUTED FOR RECOGNIZANCE ON CRIMINAL BAIL BONDS ONLY. . . . The authority of such attorney-in-fact is limited to appearance bonds and cannot be construed to guarantee for failure to provide payments, back alimony payments, fines or wage law claims.

         Based on the contracts Peppers and Fisher (through Bryan Nester ("Nester"), partner of AAA) had with International Fidelity, Peppers and Fisher were required to send immediate notice to International of any forfeitures declared on any bonds written by them that were guaranteed by International. Specifically, Peppers's contract stated: "The Retailer [Peppers] will send, immediately, notice to the Company [International] of any forfeitures declared on any bonds written by him, since such may affect the Company." Similarly, Nester's contract stated: "The Producer [Nester and any subproducers, including Fisher] will send immediately, notice to International of any defaults, forfeitures, or breaches declared on any bonds written by or on behalf of Producer."

         C. Licenses of Bail Bondspersons and International Fidelity

         The circuit court found that at all times relevant, Peppers, Del Rio, and Fisher were registered producers for [International Fidelity] in the State of Hawaii. Indeed, the record contains the licensure certificates for both Peppers and Del Rio, which were issued by the Insurance Division of the Department of Commerce and Consumer Affairs ("DCCA"). The certificates identify Peppers and Del Rio as "resident producers" of surety insurance. Although the record does not contain a copy of Fisher's license, it was represented in a court brief that at the time of the subject bail transaction, Fisher was "an appointed and authorized bail bond agent in the State of Hawaii under the company AAA Local Bail Bonds."[11] A "bail agent" is a type of insurance producer. See HRS § 431:9N-101 (Supp. 2 016) .

         The circuit court made no specific finding, however, as to International Fidelity's license status. International Fidelity had consistently represented to the circuit court that it was a "duly licensed and authorized surety in the state of Hawaii, " but did not specify whether it was a licensed insurance producer governed by HRS chapter 431, article 9A.

         D. Circuit Court Proceedings

         1. Issuance of Judgments and Orders of Forfeiture

         In each of the eight criminal cases, the defendant failed to appear before the court when required. The bail bond posted on behalf of each defendant was therefore forfeited, and the circuit court entered a Judgment and Order of Forfeiture in each case. The language used in each forfeiture judgment was similar, and substantially took one of the following two forms, with relevant language underlined. The first form was used in Nelson, Teruya, Cabigon, and Nakamura:

The above-entitled case having come . . . before the . . . Judge of the above-entitled court, on [said date], and the Defendant having failed to appear or to be present on the said date, and the Court, upon motion of the State of Hawaii, having on said date ordered and declared the forfeiture of the bail bond filed and posted in this case, executed by said Defendant, as principal, and INTERNATIONAL FIDELITY INSURANCE COMPANY (FREEDOM BAIL BOND), through its agent and attorney in fact, IDA PEPPERS, as surety, in the sum of ...,
NOW, THEREFORE, pursuant to the foregoing order, IT IS HEREBY ORDERED, ADJUDGED AND DECREED that the State of Hawaii does have and recovers from the principal and the surety above named, jointly and severally, the sum of . . ., and that execution issue herein according to law.

         The second form was used in Ferraris, Muna, Berry (where "this cause" is stated instead of "this case"), and Luna (where "Charles Fisher" is stated instead of "Ida Peppers (Freedom Bail Bond)"):

The above-entitled case having come . . . before the . . . Judge of the above-entitled court, on [said date], and the Defendant having failed to appear or to be present on the said date, and the Court, upon motion of the State of Hawai[']i, having on said date ordered and declared the forfeiture of the bail bond filed and posted in this case, executed by said Defendant, as principal, and INTERNATIONAL FIDELITY INSURANCE COMPANY, through its agent and attorney in fact, IDA PEPPERS (FREEDOM BAIL BOND), as surety, in the sum of ...,
NOW, THEREFORE, pursuant to the foregoing order, IT IS HEREBY ORDERED, ADJUDGED AND DECREED that the State of Hawai[']i does have and recovers from the principal and the surety above named, jointly and severally, the sum of . . ., and that execution issue herein according to law.

         In most of the cases, either FBB or AAA filed a motion to set aside the forfeiture judgments within thirty days of receiving notice of the judgments.[12] The motions were typically continued to allow the bond companies more time to locate the defendants. Ultimately, none of the judgments were set aside.

         2. Letters Sent to International Fidelity Subsequent to Entry of Judgments and Orders of Forfeiture and International Fidelity's Motions to Set Aside

         Subsequent to the entry of Judgments and Orders of Forfeiture and any continuances that may have been granted to FBB or AAA to locate defendants, letters were sent by the Judiciary to International Fidelity by certified mail, return receipt requested. Each letter's subject line read, "Re: Notification of Bail Bond Forfeiture, " and stated (or used similar language):

         To Whom It May Concern:

Pursuant to Section 804-51, Hawaii Revised Statutes, judgment has been entered on [date of relevant Judgment and Order of Forfeiture] that bail of [relevant amount] be forfeited in the following matter:
Case Number: [relevant case number]
Case Name: [relevant case name]
Name of Issuing General Agent: [Freedom Bail ...

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