The California Court of Appeals last week upheld a lower court’s ruling barring a company from collecting on $38 million of unpaid debt because consumers were not provided the proper disclosures in advance.
A copy of the ruling in the case of BBBB Bonding Corp. vs. Kiara Caldwell can be accessed by clicking here.
The plaintiff was trying to enforce bail bond premium financing agreements against individuals who had cosigned the documents, but those individuals were not provided a statutory notice of the risks of cosigning a consumer credit contract. The plaintiff argued that it had never been required to provide the disclosures because bail bonds are governed by their own set of statutes and are not the same as consumer credit.
But there is nothing in California state law that excludes bail bond companies from having to follow consumer credit laws, the Appeals Court noted. And the documents that cosigners are required to sign a document that ultimately qualifies as a consumer credit contract, the Appeals Court ruled.
As a result of the ruling, the plaintiff was enjoined from filing any new actions to collect or enforce bail bond premium agreements in situations where the cosigners were not provided the required disclosures and from prosecuting any actions that had previously been filed. The plaintiff in this case had approximately 150 lawsuits it had filed in California, out of 18,000 bail bonds contracts it had underwritten. The face value of those contracts was $38 million.
In a complaint filed against BBBB Bonding, Caldwell is seeking full restitution for her and for all cosigners as well as a requirement that the company amend its business practices.
Consumer advocates warned that any other bail bond company not following consumer protection laws will likely face a lawsuit as a result of this ruling.
“Today’s decision is a devastating blow to the bail industry. The court confirmed that it is absolutely illegal for bail companies to violate consumer protection laws. This case is proof that the bail industry is abusing and exploiting vulnerable California families,” said Elisa Della-Piana, Legal Director at the Lawyers’ Committee for Civil Rights of the San Francisco Bay Area, in a statement. “We anticipate that the impact of this decision will ripple across California — any bail company violating consumer laws should be ready for a lawsuit.”