Court Opinion

ID: 2769132
Source: CourtListenerOpinion
Date Created: 2015-01-13 01:00:48.489551+00
Date Added: 2024-06-11T08:30:19.799903
License: Public Domain

Case: 14-20057      Document: 00512898573         Page: 1    Date Filed: 01/12/2015

           IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT     United States Court of Appeals
                                                       Fifth Circuit

                                                                                  FILED
                                                                              January 12, 2015
                                      No. 14-20057
                                                                               Lyle W. Cayce
                                                                                    Clerk
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 R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH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.
    Case: 14-20057     Document: 00512898573    Page: 2   Date Filed: 01/12/2015

                                 No. 14-20057
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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                                  No. 14-20057
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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                                No. 14-20057
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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                                         No. 14-20057
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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