Suit seeks enforcement of bail forfeiture law

The Maryland District Court’s past failure to collect on forfeited bail bonds cost the state’s taxpayers at least a million dollars and placed underwriters who “play by the rules” at a competitive disadvantage, a Cockeysville-based surety alleges.

Lexington National Insurance Corp. is suing to force the District Court to comply with the collection law the state enacted in 2011.

The complaint, filed last week in Baltimore County Circuit Court, says the District Court failed for 18 months to meet its statutory obligation to hold sureties responsible for the bail bonds they underwrote if the defendants failed to show.

In some instances, sureties simply did not pay the forfeitures, the suit alleges; in others, District Court clerks would waive the forfeiture without any authorization by a judge.

“It’s a competitive injury to [Lexington] when others get by without playing by the rules,” said the company’s attorney, Steven M. Klepper of Kramon & Graham P.A. in Baltimore. “We are simply asking the District Court to do what the law tells them to do.”

Despite the lack of enforcement, Lexington claims it not only made good on the bonds it underwrote but added interest in “rare” cases when it failed to pay on time due to a clerical error.

“Lexington’s competitors — who systematically failed to timely pay forfeited bonds but nevertheless avoided entry of judgment or payment of judgments entered — retained millions of dollars that would otherwise be owed to pay on forfeited bonds,” the complaints states. “That past enrichment of Lexington’s competitors aided them, and continues to aid them, in competing against Lexington in this highly competitive marketplace, to Lexington’s detriment.”

Maryland District Court Chief Judge Ben C. Clyburn declined to comment, through a spokeswoman, because the litigation is pending.

In its lawsuit, Lexington asks the circuit court to require the District Court to re-open any case in which the obligation to pay on a forfeited bond was waived by a clerk rather than a judge, or the waiver did not comply with the law. The order would also require the District Court clerk to notify the insurance company in each of these cases that they have 60 days to pay.

Sureties such as Lexington are retained as guarantors by the bail-bond companies and thus bear the financial risk if the defendant jumps bail.

In 2011, the General Assembly passed a law that requires sureties to pay the court the bond amount, called a forfeiture, within 90 days of the defendant’s failure to appear (or 180 days for good cause shown).

While judges have discretion to refund a forfeiture in limited circumstances, the law also barred the court from making such a refund if the forfeiture was not paid on time.

The purpose of the law, which went into effect on Oct. 1, 2011, was to prevent sureties from avoiding their obligation to pay by filing frivolous appeals that would allow them more time to track down a defendant.

Lexington’s president, Brian Frank, said many of the company’s competitors responded to the law by simply refusing to make payment and relying on the District Court’s lack of enforcement. Frank declined to name specific competitors.

“We just think it’s dead wrong,” Frank said. “If you have an obligation to pay within 90 days, you pay within 90 days. The suit fundamentally is about accountability.”

The suit also says many District Court clerks struck forfeiture orders without a judge’s authorization and without proof of the circumstances authorizing such action.

In some cases, clerks failed to enter the required civil judgment against a liable surety. In others, clerks marked the judgment as satisfied when the criminal defendant was produced, even though the deadline for production had expired and the judgment was never paid by the surety.

Frank said he voiced his concerns about lack of enforcement to the District Court clerk, staff and counsel but to no avail. Frank then contacted the Maryland Bail Bond Association, which wrote a letter in February to House Judiciary Committee Chairman Joseph F. Vallario Jr., D-Prince George’s and Calvert.

Vallario forwarded those concerns to Clyburn and, in May, the District Court adopted protocols for stricter enforcement of the law.

But Frank said the District Court’s prospective action is too little, too late, as the protocols do not make up for the competitive disadvantage the company suffered between Oct. 1, 2011, and May 2013, when it complied with the law but many of its competitors did not.

“This is a last resort for us; we didn’t want to file suit,” Frank said. “We need a level playing field.”

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