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Mitchell v. First Call Bail and Surety, Inc.

United States District Court, D. Montana, Missoula Division

October 9, 2019

EUGEN DESHANE MITCHELL, SHAYLEEN MEUCHELL, on their own behalf and as next friend of B.M., Plaintiffs,
v.
FIRST CALL BAIL AND SURETY, INC., ALLEGHENY CASUALTY COMPANY, INTERNATIONAL FIDELITY INSURANCE COMPANY, THE MONTANA CIVIL ASSISTANCE GROUP, MICHAEL RATZBURG, VAN NESS BAKER, and JASON HAACK, Defendants.

          ORDER

          Dana L. Christensen, Chief Judge

         Before the Court is Defendants First Call Bail and Surety, Inc. ("First Call"), Allegheny Casualty Company ("Allegheny"), International Fidelity Insurance Company ("Fidelity"), and Michael Ratzburg's (collectively "Surety Defendants") Motion to Dismiss Plaintiffs' Complaint (Doc. 20), and Defendants' Motion to Strike Plaintiffs' second Motion for Partial Summary Judgment (Doc. 47). For the reasons explained, Defendants' Motion to Dismiss is granted in part and denied in part and its Motion to Strike is denied. All of the claims at issue in the Motion to Dismiss will go forward, except Plaintiffs' strict liability claim which will be dismissed.

         Background

         Today, the majority of defendants charged with a felony use a commercial surety to post bail. (Doc. 1 at 21.) The commercial bail bond functions as a contract between the state, the defendant who promises to appear at a future court date, and the bond agent who acts as a surety of that promise. 8 C.J.S. Bail § 160. If the defendant does not appear, a court will forfeit the bond, giving the bond company the right to redeem its value against the defendant. Although, most courts permit a grace period by which the bond company can produce the defendant in order to avoid forfeiture. E.g., Mont. Code Ann. § 46-9-503.

         As between the defendant and the local bond company, the defendant pays a nonrefundable premium, typically ten percent of the bond, in exchange for the bond agent's services. (Id. at 37.) Behind the scenes, large insurance companies underwrite these bonds. (Id. at 27.) The bond premium paid by the defendant is shared between the bond agent and the insurance company. (Id. at 29.) In exchange for support and services the insurance company offers the local bondsman, the insurance company typically requires the bond agent to pay into a "build-up fund" to cover the cost of forfeiture. (Id. at 32, 34.) For the insurance company, the bail bond is a low risk investment. (See Id. at 30.) But the bondsman plays a high-risk game. At most, he stands to gain his portion of the premium. In the event of forfeiture, he stands to lose ten times as much. (Id. at 37.) To minimize this risk, the bondsman works with a bond recovery agent, colloquially known as a bounty hunter. The bounty hunter makes its money by retaining approximately ten percent of the total bond if he successfully captures the defendant. (Id. at 38.)

         In early January 2017, Eugene Mitchell was arrested for driving with a suspended license and without proof of insurance. The court set bail at $1, 670. Unable to pay, Mitchell's wife (Sheyleen Meuchell) entered into a private bail bond agreement with First Call (a local bond agency) to secure Mitchell's release. Allegheny and Fidelity were sureties on the bond. In exchange, Meuchell paid a $228 nonrefundable premium which Ratzburg (the owner of First Call) agreed to take in two installments. Meuchell paid $115 at the time of signing and paid the second installment approximately one week later. (Id. at 2-3.)

         In the agreement signed by Meuchell and Mitchell (the "Agreement"), First Call reserved certain rights including the right to change the terms of the agreement and to use physical force to apprehend and arrest Mitchell in the event he did not appear in court. (Doc 1-1.) Meuchell was hurried as she signed the contract and Mitchell had no opportunity to review its terms. (Doc. 1 at 4.)

         On April 19, 2017 Mitchell failed to appear for court. (Id.) Two days later, Ratzburg hired Van Ness Baker, Jr., who is the Vice President of an organization called the Montana Civil Assistance Group ("MCAG") to arrest Mitchell. (Id. at 10-11.) Ratzburg issued a document entitled "Arrest of Defendant on Bail Bond" which "authoriz[ed] and empower[ed] Van Ness Baker it's [sic] representative and its stead, to arrest and detain" Mitchell. (Id. at 11.) Ratzburg also incorrectly informed MCAG that Mitchell still owed the second premium payment. (Id.) Montana law allows commercial bond sureties to arrest and surrender those who have failed to appear in court. Mont. Code Ann. § 46-9-510. Montana otherwise does not impose a license requirement or regulate the practice of bounty hunting. (Id. at 26.)

         MCAG is a paramilitary group. It recommends its members carry semiautomatic rifles to be the "last line of defense against any threat" to our nation. MCAG performs for-hire bounty hunting services, typically retaining about ten percent of the total bail bond amount.[1] (Id. at 12.)

         Upon hire, members of MCAG were deployed to search for Mitchell. (Id. at 13.) They staked out his home over the weekend and surveilled his neighborhood. (Id.) Meuchell was aware she was being watched but did not know why. (Id. at 13-14.) At one point, when a guest arrived at the couple's house, MCAG members surrounded the visitor's car with their guns drawn for approximately twenty minutes while they questioned the driver and her teenage daughter. (Id. at 14.)

         At approximately 9:20 p.m. on April 23, 2017, members of MCAG forcefully kicked in the door and entered the couple's home with their weapons drawn. (Id.) They entered the bedroom where Mitchell and Meuchell were lying in bed with their four-year old daughter. (Id. at 14-15.) With guns pointed at the family, someone gave the order not to move. (Id. at 5.) Mitchell was escorted from the room where he was handcuffed, arrested, and taken to the Ravalli County Detention Center, approximately an hour away. (Id.) MCAG filled out a field report and someone called Ratzburg during the arrest to notify him that the "team was securing Mitchell." (Id. at 15.)

         When MCAG arrived at the jail, they produced Ratzburg's petition. (Id. at 16.) However, the officers initially refused to accept Mitchell because MCAG did not have an arrest warrant signed by a judge. (Id.) Officers then began to work up an unlawful detainment charge against MCAG for their unlawful arrest of Mitchell.[2] (Id. at 17.) The five bounty hunters present for the break-in have since been charged with assault with a weapon, aggravated burglary, unlawful restraint, accountability for aggravated burglary, and criminal mischief as a result of the incident. (Id. at 2.)

         Legal Standard

         Rule 12(b)(6) motions test the legal sufficiency of a pleading. Under Rule 8(a)(2) of the Federal Rules of Civil Procedure, a pleading must contain "a short and plain statement of the claim showing that the pleader is entitled to relief." Rule 8 "does not require detailed factual allegations, but it demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal citations and quotations omitted). "To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Id. (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim has facial plausibility when the court can draw a "reasonable inference" from the facts that the defendant is liable for the misconduct alleged. Id. On a Rule 12(b)(6) motion to dismiss, the court must accept all factual allegations in the complaint as true and construe the pleadings in the light most favorable to the nonmoving party. Kneivel v. ESPN, 393 F.3d 1068, 1072 (9th Cir. 2005).

         Legal conclusions, on the other hand, are not entitled to the same presumption of truth. Dismissal is proper where there is either a "lack of a cognizable legal theory" or "the absence of sufficient facts alleged under a cognizable legal theory." Balistreri v. Pacifica Police Dept., 901 F.2d 696, 699 (9th Cir. 1990); Graehling v. Village of Lombard, Ill. 58 F.3d 295, 297 (7th Cir. 1995).

         When ruling on a motion to dismiss, a court generally cannot consider material outside the complaint. Branch v. Tunnell, 14 F.3d 449, 453 (9th Cir. 1994), overruled on other grounds by Galbraith v. County of Santa Clara, 307 F.3d 1119 (9th Cir. 2002). Nevertheless, a court may consider exhibits submitted along with the complaint where the exhibits are: (1) specifically referred to in the complaint; (2) central to the plaintiffs claim; and (3) no party questions the authenticity of the attached documents. Marder v. Lopez, 450 F.3d 445, 448 (9th Cir. 2006). This rule is designed to prevent plaintiffs from "deliberately omitting reference to documents upon which their claims are based." Parrino v. FHP, Inc., 146 F.3d 699, 706 (9th Cir. 1998).

         Discussion

         Surety Defendants move to dismiss the following: Claims 1 and 2 alleging RICO violations; Claim 4 arising under the Montana Consumer Protection Act; Claims 5, 6, 7 and 10 alleging violations of state law for trespass, false imprisonment, assault, and strict liability. The Court will address the claims arising under state law first.

         I. State law claims

         A. Trespass, False Imprisonment & Assault

         Surety Defendants argue that the claims for trespass, false imprisonment, and assault fail because Montana law expressly allows sureties to recover, arrest, and surrender a defendant for whom a bail bond has been posted. (Doc. 21 at 33-34.) The first issue is whether Montana law recognizes either a common law or statutory right for a bail bondsman to arrest a defendant. The related question is whether the Agreement provided First Call with a privilege to detain Mitchell in this case.

         i. Whether Montana law recognizes a bondsman's privilege

         The importance of maintaining liberty while a person is accused and awaiting trial dates back to the Magna Carta and early forms of habeas corpus. See Caleb Foote, The Coming Constitutional Crisis in Bail: I and II, 113 Univ. Pa. L. Rev. 959, 965-67 (1965). Traditionally, the American bail system permitted a surety to guarantee the future appearance of the defendant and payment of any penalty if convicted. Timothy R. Schnacke et. al., The History of Bail and Pretrial Release, Pretrial Justice Inst, 1-2 (Sept. 23, 2010). Historically, the surety was someone who shared a close relationship with the defendant, such as a friend, neighbor, or family member. Id. at 6. "Under the early common law, the bondsman not only undertook the risk of loss of his own property if his principal did not appear, but in some instances, the bondsman was made to suffer the punishment which would have been inflicted upon the prisoner." Ouzts v. Maryland Nat. Ins. Co., 505 F.2d 547, 551 (9th Cir. 1974). As a result of this responsibility, the early common law recognized a bondsman's privilege to arrest and surrender the defendant without resort to the legal process. Id. In 1872, the United States Supreme Court recognized this privilege in dicta. Taylor v. Taintor, 83 U.S. (16 Wall.) 366, 371-72 (1872). In an oft quoted passage, the Court observed:

When bail is given, the principal is regarded as delivered to the custody of his sureties. Their dominion is a continuance of the original imprisonment. Whenever they choose to do so, they may seize him and deliver him up in their discharge; and if that cannot be done at once, they may imprison him until it can be done. They may exercise their rights in person or by agent. They may pursue him into another State; may arrest him on the Sabbath; and, if necessary, may break and enter his house for that purpose. The seizure is not made by virtue of new process. None is needed. It is likened to the rearrest by the sheriff of an escaping prisoner.

Id.

         The bondsman's privilege is a private privilege that arises from the contractual relationship between the parties; it is not governed by criminal procedure. Ouzts, 505 F.2d at 551; Fitpatrick v. Williams, 46 F.2d 40, 40-41 (5th Cir. 1931).

         The parties initially dispute whether Montana law recognizes any common law bondsman's privilege. Plaintiffs argue that the privilege recognized in Taylor v. Taintor does not apply because Taylor was decided in a pre-Erie era "in which courts conceived of the common law as a 'brooding omnipresence in the sky'." (Doc. 29 at 17 (quoting Rodriguez-Tirado v. Speedy Bail Bonds, 891 F.3d 38, 41 (1st Cir. 2018)).) Plaintiffs argue that this view has been '"dramatically discarded' [since] Erie, and it is now well understood that each state declares its own common law rules." (Id.) Be that as it may, it appears Montana has adopted a common law bondman's privilege. In 1892, Chief Justice Blake address the existence of such a privilege, writing:

It is the theory of the law that the defendant in criminal proceedings is under the control of the court, and in actual or constructive custody. Biesman was in the custody of his sureties. In the last case Mr. Justice FIELD for the court said: "By the recognizance the principal is, in the theory of the law, committed to the custody of the sureties as to jailers of his own choosing, not that he is, in point of fact in this country, at least, subjected, or can be subjected, by them to constant imprisonment; but he is so far placed in their power that they may at any time arrest him upon the recognizance, and surrender him to the court, and, to the extent necessary to accomplish this, may restrain him of his liberty [.]

State v. Biesman, 29 P. 534, 536 (1892) (internal citations omitted).

         Plaintiffs next argue that, to the extent any privilege exists, it has been abrogated by statute, citing section 46-9-510(b).[3] Plaintiffs contend that the legislature's specific use of the phrase "surety company" authorizes the "surety company' itself-and not any other agent-to "arrest and surrender" the defendant under the specified circumstances. (Id. at 16.)

         As Plaintiffs note, Montana's statute vests the authority for the arrest and surrender with the "surety company." Mont. Code Ann. § 46-9-510(b). As recognized above, the existence of a bondsman's privilege derives from the contractual relationship between the parties. As it is the "surety company, "-the entity-that entered into a bail bond agreement with the defendant, it is the surety company who holds the privilege. However, quite literally, an entity cannot arrest, nor can it surrender, anyone. Entities act through agents. Commodity Futures Trading Comm 'n v. Weintraub, 471 U.S. 343, 348 (1985). There is nothing in the plain language of section 46-9-510(d) that limits a "surety company" to send only its employees to "arrest and surrender" a defendant rather than an independent contractor, i.e. a bounty hunter. Furthermore, any common law privilege is only abrogated to the extent it is inconsistent with a statute. See Sunburst School Dist. No. 2 v. Texaco, Inc., 165 P.3d 1079, 1091 (Mont. 2007). The absence of any limiting language in section 46-9-510(d) (for example, "only a surety company") is fatal to Plaintiffs' argument. If anything, section 46-9-510(d) is consistent with State v. Biesman. The Court construes it to recognize, not limit, a bondsman's privilege.

         ii. Whether Surety Defendants are immune from liability because of the privilege?

         Recognizing the existence of a privilege is not the same thing as determining whether the conduct in a particular circumstance conformed with the privilege. Privileges are not unlimited. E.g., Mont. Code Ann. § 45-6-201(1) (privilege to enter the residence of another "may be revoked at any time by personal communication of notice by the landowner or other authorized person ... "); United States v. McWeeney,454 F.3d 1030, 1034 (9th Cir. 2006) ("It is a violation ...


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