IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 14-20057

AAA BONDING AGENCY, INCORPORATED, a Texas corporation, who is an 

appointed agent of Safety National, a Missouri corporation, 

 Plaintiff - Appellant

v.

UNITED STATES DEPARTMENT OF HOMELAND SECURITY; ERIC H. 

HOLDER, JR., in his official capacity as United States Attorney General; 

JEH JOHNSON, in his official capacity as Secretary of the Department of 

Homeland Security; RON ROSENBERG, in his official capacity as the 

Director of the Administrative Appeals Office of the Department of Homeland 

Security, 

 Defendants - Appellees

Appeal from the United States District Court

for the Southern District of Texas

USDC No. 4:05-CV-2159

Before DAVIS, WIENER, and HAYNES, Circuit Judges.

PER CURIAM:*

This dispute over twenty-three immigration bonds stems from ongoing 

litigation between the Department of Homeland Security (“DHS”) and AAA 

* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not 

be published and is not precedent except under the limited circumstances set forth in 5TH 

CIR. R. 47.5.4.

United States Court of Appeals

Fifth Circuit

FILED

January 12, 2015

Lyle W. Cayce

Clerk

 

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Bonding Agency, Inc. (“AAA”) about more than 1,400 bonds DHS deemed 

breached by AAA and its co-obligor, Safety National Casualty Corporation 

(“Safety National”). In AAA Bonding Agency Inc. v. United States Department 

of Homeland Security (“AAA Bonding I”), we held that DHS may only enforce 

an immigration bond against a surety company or bonding agent that has 

received notice demanding delivery of the alien covered by the bond. 447 F. 

App’x 603, 609–10 (5th Cir. 2011) (unpublished). In light of that decision, DHS 

and Safety National signed a Settlement Agreement releasing AAA from 

liability to the extent it is jointly and severally liable with Safety National. 

The district court held that AAA Bonding I severed the joint and several 

relationship between AAA and Safety National. We disagree. Accordingly, we

REVERSE the district court’s grant of summary judgment and REMAND for 

further proceedings. 

I. Factual Background

Immigration bonds procure an alien’s release from DHS during the 

pendency of deportation proceedings. Safety National, a surety company, and 

AAA, a bonding agent, are co-obligors that post bonds on behalf of aliens to 

secure their temporary release. The co-obligors’ contractual obligations are 

governed by the Form I-352 bond agreement (“bond agreement”), which 

requires them to deliver an alien to DHS upon receipt of a Form I-340 demand 

notice (“demand notice”) from DHS. A bond is breached when “in response to 

a timely demand the obligor . . . fails to produce the alien at the location 

specified in that demand.” In such an instance, DHS sends a breach 

determination to the obligors, which the obligors may challenge by filing an 

administrative appeal or filing suit in the district court, among other options. 

In the present case, Safety National and AAA were co-obligors on over 

1,400 immigration bonds deemed breached by DHS. AAA and Safety National 

sued DHS, challenging the agency’s bond breach determinations. In AAA 

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Bonding I, we held that DHS may only enforce a bond against an obligor that 

has received a demand notice requesting delivery of an alien. 447 F. App’x at 

609–10. “When notice was provided to only one obligor, that notice triggered 

that obligor’s duty to act. However, as to the obligor that did not receive notice, 

that obligor’s duty to act has not been triggered.” Id. at 609. 

After AAA Bonding I, Safety National and DHS negotiated a world-wide 

settlement of their dispute (“the Settlement”). Although the Settlement 

expressly reserved the United States’s rights against AAA, it also stated “if 

any federal district court holds that, but for this Agreement, AAA Bonding or 

any other agent company would be jointly and severally liable with Safety 

National for any of the [bonds] . . . then any claim that the United States may 

have with respect to these [bonds] will be released as to AAA Bonding . . . to 

the extent that the United States’ claim against Safety is released.” 

In light of the court’s decision in AAA Bonding I and the Settlement, 

DHS and AAA filed cross-motions for summary judgment with respect to 24 

bonds where AAA alone received notice. While DHS argued that AAA was only

liable severally for each of these bonds, AAA maintained that the bond 

agreement, which established joint and several liability, was controlling, and 

that the Settlement between Safety National and DHS released AAA from 

further liability. The district court granted summary judgment for DHS with 

respect to 23 bonds, finding AAA only liable severally on each.1 AAA timely 

appealed. 

II. Discussion

“We review the district court’s grant of summary judgment de novo,

applying the same standard as the district court.” Chaney v. Dreyfus Serv. 

1 The district court denied DHS summary judgment with respect to one bond and

remanded the bond to DHS for further consideration. As such, that bond is not considered 

on appeal. 

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Corp., 595 F.3d 219, 228 (5th Cir. 2010). Summary judgment is appropriate 

where no genuine issue of material fact exists and the moving party is entitled 

to judgment as a matter of law. FED R. CIV. P. 56(a). AAA and Safety National

filed their initial claim pursuant to the Administrative Procedures Act (“APA”), 

5 U.S.C. § 701 et seq., challenging DHS’s bond breach determination. See 8 

U.S.C. § 1226; 8 C.F.R. § 103.6. When considering agency action, we evaluate 

whether the agency’s conduct was “arbitrary, capricious, an abuse of 

discretion, or otherwise not in accordance with law.” 5 U.S.C. § 706(2)(A).

The rights and obligations of the United States with respect to contracts 

entered into pursuant to federal statutes are traditionally governed by federal 

law, and the bond agreement states that “[f]ederal law shall apply to the 

interpretation of the contract.” See United States v. Seckinger, 397 U.S. 203, 

209–10 (1970). “Applying federal law in the contract context includes looking 

to principles of general contract law that can be found in treatises or 

restatements of the law.” Univ. of Tex. Sys. v. United States, 759 F.3d 437, 443 

(5th Cir. 2014) (citation and internal quotation marks omitted). 

We interpret contracts in “light of all the circumstances, and if the 

principal purpose of the parties is ascertainable it is given great weight.” See 

RESTATEMENT (SECOND) OF CONTRACTS § 202(1) (1981). The plain language of 

the bond agreement commands that AAA “shall be jointly and severally liable 

with the surety[, Safety National,] for any breach of this bond agreement.” It 

notes that “the liability of a co-obligor is in addition to, not instead of, that of 

the principal obligor” and emphasizes that “[a]ny obligation or duty imposed 

on an obligor by this contract applies equally to all co-obligors.”

This contractual language manifesting an intent to enter into a joint 

relationship is controlling unless, inter alia, there are express words of 

severance or the terms, in context, articulate an intent to be bound severally. 

Dallas Gas Partners, L.P. v. Prospect Energy Corp., 733 F.3d 148, 160 (5th Cir. 

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2013) (quoting 12 WILLISTON ON CONTRACTS § 36:4 (4th ed. 1990)). DHS 

concedes that the bond agreement contemplates joint liability for AAA and 

Safety National, and DHS has not pointed us to any contractual language 

severing this relationship. See RESTATEMENT (SECOND) OF CONTRACTS § 201(1)

(“Where the parties have attached the same meaning to a promise or 

agreement or a term thereof, it is interpreted in accordance with that 

meaning.”). Furthermore, the bond agreement tasks both AAA and Safety 

National with performing on the contract; it does not delineate responsibility 

between the parties. See 9 JOHN E. MURRAY, CORBIN ON CONTRACTS § 52.3 

(Joseph M. Perillo, ed. 2007) (explaining that the distinction between a joint 

and several obligation, and a several obligation, is whether the obligors 

“promise[d] one and the same performance or . . . two different performances”). 

Although the bond agreement imposes joint and several liability, the 

Agency argues AAA Bonding I severed this joint relationship, rendering AAA 

solely liable for bonds where it alone received notice. We disagree with this 

reading of the case. In AAA Bonding I, AAA and Safety National argued that 

neither party had to perform if both co-obligors did not receive notice from 

DHS. 447 F. App’x at 609. The court rejected this argument, reasoning that 

notice to both parties was not a condition precedent to performance because 

the bond agreement did not clearly specify notice to both was required. Id.

Instead, AAA Bonding I held only that DHS is unable to enforce a bond against 

an obligor that has not received a demand notice for delivery of an alien. 447 

F. App’x at 609–10. 

Thus, while its holding affected DHS’s ability to enforce the bond 

agreement, AAA Bonding I did not change the terms of the agreement itself, 

which mandates joint and several liability. This conclusion is supported by 

AAA Bonding I’s language, which does not refer to “express words of severance”

in the bond agreement but instead focuses on the contract’s enforceability

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against an obligor that has or has not received notice. Dallas Gas Partners,

L.P., 733 F.3d at 160; see AAA Bonding I, 447 F. App’x at 609. This principle 

is manifest in other contexts. For instance, where the statute of limitations 

has run on a cause of action or a plaintiff is unable to obtain jurisdiction over 

a party, the defendant’s contractual obligation is unchanged, but the plaintiff’s 

ability to enforce that obligation is curtailed. See RESTATEMENT (SECOND) OF 

CONTRACTS § 8 (1981) (“An unenforceable contract is one for the breach of 

which neither the remedy of damages nor the remedy of specific performance 

is available, but which is recognized in some other way as creating a duty of 

performance . . . .”). Thus, DHS’s inability to enforce a bond breach against a 

party that did not receive notice does not alter the joint and several 

relationship between AAA and Safety National.

Furthermore, DHS’s construction would undermine the intent of the 

statutory scheme. The bond agreement and its accompanying regulations 

dictate that “[o]nly an acceptable surety company . . . [can] be the principal 

obligor on a surety bond.” See 8 C.F.R. § 103.6(b) (defining what constitutes 

an “acceptable surety”). While AAA does not qualify as an “acceptable surety,” 

DHS’s interpretation of AAA Bonding I would allow it to unilaterally transform 

a bonding agent, such as AAA, into a principal and sole obligor by sending it 

notice without sending notice to Safety National. This would undermine the

bond agreement’s provision that limits the principal obligors to “acceptable 

surety” companies. See RESTATEMENT (SECOND) OF CONTRACTS § 202(5) (1981) 

(“Wherever reasonable, the manifestations of intention of the parties to a 

promise or agreement are interpreted as consistent with each other . . . .”).

The Settlement between Safety National and DHS releases AAA to the 

extent it is joint and severally liable with Safety National. Because we 

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conclude that AAA is jointly and severally liable on the 23 disputed bonds at 

issue here, AAA is released from liability on those bonds.2 

Accordingly, we REVERSE the decision of the district court and 

REMAND for further proceedings consistent with this decision.

2 Because this issue is dispositive, we do not address the other issues raised on appeal. 

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