An Alameda County Superior Court judge Thursday barred BBBB Bonding Company, doing business under the colorful name Bad Boys Bail Bonds, from trying to collect debts from bail bond co-signors who were not given proper notice under California's Unfair Competition Law.
The preliminary injunction, entered in class-action litigation brought in response to a routine collection action, prevents Bad Boys' debt-collection efforts against co-signors in the class while the litigation is pending.
The case arose from an incident in June of 2018 when Kiara Caldwell, identified in court papers as a privately employed security guard living in Sacramento, allegedly received a call from a representative of Bad Boys who said that a friend of hers had been arrested and "needed to be bailed out of jail."
Bad Boys, a bail bond company based in San Jose, also maintains an office in Oakland, and Caldwell went there to see if she could help. According to the complaint, she was told that her friend could be released if Caldwell put up $500 and signed some paperwork.
The meeting lasted only 15 minutes, and according to the complaint, "much of that time consisted of Ms. Caldwell going to an ATM to withdraw cash, as the Bad Boys representative refused to accept Ms. Caldwell's $500 payment via debit card."
Caldwell paid the $500 and signed several agreements.
One agreement was a premium finance agreement. The bail amount set in the friend's case was $50,000. Bad Boys required 10%-- or $5,000 -- of that amount in order to stand responsible for the full bail amount. However, because Caldwell only provided $500 cash, Bad Boys required an agreement for the payment of the remaining $4,500 over time.
The paperwork also included an "Indemnity Agreement" -- a personal guarantee -- whereby Caldwell became liable for $4,500 as well as the full amount of the bail -- $50,000 in this case -- if her friend did not appear in court or pay herself.
According to the filing, "entire interaction with Bad Boys was rushed and pressured. Ms. Caldwell was simply told where to sign or initial, with the Bad Boys representative offering no explanation of the particular terms of the agreements."
The complaint says that Bad Boys did not tell Caldwell that she would be responsible for paying the $4,500 and that she would have to start making monthly installment payments shortly. Bad Boys also allegedly did not tell her that those amounts were non-refundable.
The California Unfair Competition Law includes a variety of consumer protections. One of them requires that when a person co-signs a consumer credit contract (and isn't receiving the money or property being provided themselves), he or she is entitled to a so-called "1799.91 notice."
The 1799.91 notice has to explicitly advise the co-signor, among other things, that "You are being asked to guarantee this debt. Think carefully before you do. If the borrower doesn't pay the debt, you will have to. Be sure you can afford to pay if you have to, and that you want to accept this responsibility."
The notice further must provide "The creditor can collect this debt from you without first trying to collect from the borrower. The creditor can use the same collection methods against you that can be used against the borrower, such as suing you, garnishing your wages, etc."
Bad Boys did not provide a 1799.91 notice to Caldwell.
The filing states "on information and belief" that Bad Boys has never provided such notice to any co-signor in connection with its bail bonds.
Information and belief is a legal phrase that indicates that while the person does not have direct knowledge of the fact, he or she believes it to be true based on all the information he or she has.
The 1799.91 notice seeks to prevent hasty or thoughtless commitments made by a consumer on behalf of another person, particularly a friend or family member.
While the statute provides a wide array of consumer contracts, according to Caldwell's lawyers, "it's especially important in this in this context because Bad Boys is dealing with people at one of the worst moments of their lives. They're dealing with people...who have a relative or a loved one who's in jail and they desperately need to get this person out..."
Shortly after signing the papers, Caldwell was contacted by Bad Boys and was told that she had to make monthly payments on the $4,500 bail premium.
The complaint alleges that: "Bad Boys began harassing Ms. Caldwell for installment payments. Bad Boys called Ms. Caldwell's personal phone repeatedly... When Ms. Caldwell began declining Bad Boys' calls, Bad Boys began calling from blocked phone numbers to disguise the identity of the caller."
The collection efforts did not stop even when Caldwell changed her phone number. Bad Boys allegedly called Caldwell's mother, and finally, in October 2018, Bad Boys sued Caldwell.
Bad Boys routinely files collection actions against co-signors that fail to pay, according to Caldwell's lawyers, and in most of those cases Bad Boys get judgment by default.
In this case, Bad Boys got something very different.
Keker Van Nest and Peters is a well-known San Francisco commercial litigation firm. Several of its lawyers, along with the Lawyers' Committee for Civil Rights of the San Francisco Bay Area, entered appearances in the case on behalf of Caldwell.
Saying that Bad Boys' acts and practices "are immoral, unethical, oppressive, unscrupulous, substantially injurious to California consumers, and offend California public policy," they filed an unusual class action "cross claim" against Bad Boys.
The filing asserted that the Bad Boys had failed to give co-signors the 1799.91 notice and therefore was not entitled to collect, not just against Caldwell, but against any member of the class who had not been given the notice.
Jay Rapaport, one of the Keker lawyers involved with the case, estimated that the class was likely more than a thousand people.
Alameda County Superior Court Judge Brad Seligman, in an order entered Thursday, determined that the statute was applicable to bail bond agreements, that Caldwell should have been given a 1799.91 notice, and therefore Caldwell had shown a "substantial likelihood of success on the merits" of her claim.
The judge also found that Caldwell and others in the class had been "victimized" by not getting the notice.
The injunction prevents Bad Boys from filing suits or otherwise trying to collect against co-signors on credit bail agreements if they were not given the required notice.
The judge stayed his order for 15 days.
The court did not explain why it stayed its ruling, but Rapaport said, "I would imagine that the court did so to give Bad Boys an opportunity to appeal and to seek a stay from the court of appeal."
Niall Roberts, another of the Keker lawyers on the case, said the ruling "should be a wakeup call for the bail bond industry. The bail bond industry has been operating like they're above the law for decades now."
Even though California voters in 2020 rejected a Proposition to eliminate cash bail throughout the state, Roberts said, "people are finally waking up to the inequities of the cash bail system. They're finally waking up to the inequitable ways that these bail bond companies work and make money from low income people in particular. And I think people are finally ready to fight back."