A proposed class-action suit filed in Baltimore Tuesday seeks to collect damages against a bail bond company and its agents whom the plaintiffs say used Maryland courts to obtain judgments under an unlicensed trade name.
The suit names 4 Aces Bail Bonds Inc., which does business as Baltimore’s Discount Bail Bonds, as well as the surety insurance companies that underwrite its bail bonds and the law firm that files debt collection suits for them. It was filed in Baltimore City Circuit Court by the Lawyers’ Committee for Civil Rights Under Law and Towson firm Santoni, Vocci & Ortega LLC.
“BDBB’s efforts to collect premiums, which as an unlicensed bail bond company they were not legally entitled to collect, is the height of exploitation of the criminal justice system and causes people who are already struggling to fall even further below the poverty line,” Kristen Clarke, president and executive director of the Lawyers’ Committee, said.
The bail bond industry is regulated by the Maryland Insurance Agency. 4 Aces’ license was revoked last year on multiple grounds, including the operation Baltimore’s Discount Bail Bonds, which was not a licensed trade name, according to the complaint. The Maryland Insurance Administration issued a final order affirming the decision in March.
But according to the lawsuit, despite operating under an unlicensed and unregistered trade name, Baltimore’s Discount Bail Bonds solicited business and later filed debt collection actions for 4 Aces. Paperwork and signage did not mention 4 Aces, and debt collection suits were filed under Baltimore’s Discount Bail Bonds.
“By filing actions and obtaining judgments against Plaintiffs and Class Members, Defendants have improperly received the assistance of state courts to receive compensation to which they were not entitled … and to enforce contracts obtained through unauthorized business practices,” the complaint states.
The Lawyers’ Committee’s Skadden Fellow, Veryl Pow, said the fact that Baltimore’s Discount Bail Bonds was able to operate and collect judgments despite not being the licensed name for 4 Aces shows the problems that arise from the lack of communication between the insurance administration and the courts.
Judges do not ask if a company is licensed before entering a judgment, which often happens by default after a defendant fails to appear for the hearing.
“Even the MIA is only going to be aware of a company’s existence if there is some sort of investigation going on which is triggered by a complaint filed by a consumer,” Pow said.
The lawsuit argues judgments obtained are void because Baltimore’s Discount Bail Bonds lacked standing as a claimant and 4 Aces was not entitled to receive compensation on contracts it entered with the plaintiffs. The two named plaintiffs entered contracts with Baltimore’s Discount Bail Bonds in 2014 and 2015 and later had debt collection suits filed against them.
The lawsuit cites the Court of Appeals’ decision in Finch v. LVNV Funding, which held judgments obtained by unlicensed debt buyers while they were unlicensed are void.
Pow said state courts cannot enforce contracts by unlicensed business entities “where the entities are regulated for the protection of the public, and I think it’s very clear that the insurance regulations that govern licensing requirements are designed for the protection of the public and not for revenue generation.”
The Lawyers’ Committee previously sent a letter to Baltimore-area courts in February asking that pending debt collection suits filed on behalf of Baltimore’s Discount Bail Bonds be dismissed because it was not licensed. Of the 149 cases mentioned in the letter, one had already gone to trial, resulting in a judgment for Baltimore’s Discount Bail Bonds. It now is on appeal. Others were either dismissed or indefinitely stayed with no action taken in recent months.
The proposed class for the lawsuit includes individuals who have had a judgment entered against them in Maryland courts in favor of Baltimore’s Discount Bail Bond or one of several variations of that name. The claims include violations of the Maryland Consumer Debt Collection Act and Maryland Consumer Protection Act as well as conspiracy to collect payments by unlawful means and unjust enrichment.
The plaintiffs also seek a declaratory judgment that the defendants are not entitled to attempt to collect on contracts entered with Baltimore’s Discount Bail Bonds and any judgments obtained under an unlicensed and unregistered trade name of 4 Aces are void.
“Things like (this) occur on a day-in and day-out basis during contract formation, so this is really about the safeguards that go into the licensing requirements and deterring shady actors who are unlicensed from taking advantage of vulnerable individuals,” Pow said.
The case is Alice Hughes et al. v. 4 Aces Bail Bonds Inc. et al.