[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
FILED
________________________ U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
November 10, 2005
No. 04-10877
THOMAS K. KAHN
________________________ CLERK
D. C. Docket No. 93-00581-CR-FAM
UNITED STATES OF AMERICA,
Plaintiff,
versus
JORGE ROJAS,
a.k.a. Chittie,
Defendant,
ATHANS BAIL BONDS, INC.,
GEORGE ATHANS,
Interested-Parties-Appellants
Cross-Appellees,
LIDIA PUCHADES,
Interested-Party-Appellee
Cross-Appellant.
________________________
Appeals from the United States District Court
for the Southern District of Florida
_________________________
(November 10, 2005)
Before BIRCH, CARNES and RONEY, Circuit Judges.
CARNES, Circuit Judge:
In June of 1994 Jorge Rojas was arrested in Miami on charges of conspiracy
to possess with intent to distribute cocaine and conspiracy to import cocaine. The
district court set his bail in the amount of $60,000.
In order to help secure Rojas’ release, Lidia signed an indemnification
agreement with Athans Bail Bond, the surety which actually posted the $60,000
bond for Rojas.1 Puchades pledged her house as collateral, not to the court in order
to secure the bail bond, but to the bail bond company in order to secure her
obligation to indemnify it should the company have to pay on the corporate surety
bond it posted on Rojas’ behalf. She testified that she was not afraid of losing her
1
In connection with this bond, Athans Bail Bonds was apparently acting as an agent for
American Bankers Insurance Company. In some places the record refers to one of those
corporate entities and elsewhere it refers to the other. Because the relationship of the two
entities does not matter to our decision, we will refer to Athans Bail Bonds, the actual party to
this appeal, as though it included American Bankers.
2
house because she knew Rojas—a neighbor of her mother—was a “straight
person,” who could be counted on to show up in court. She was wrong about that.
After pleading guilty to one of the charges against him, Rojas failed to
appear at sentencing on December 22, 1994. The next day the district court
revoked the bond that Athans Bail Bonds had posted and entered an order
forfeiting its collateral. A final judgment of forfeiture was entered on January 20,
1995. The Government never attempted to enforce that judgment against Athans
Bail Bonds. Nonetheless, the bonding company began a foreclosure action against
Puchades based on her indemnification obligations to it. To avoid losing her
house, which was the collateral she had put up to secure performance of her
obligations, Puchades obtained a second mortgage on it for $60,000 and paid that
full amount to Athans Bail Bonds.
In December of 1998, while Christmas shopping at a Miami mall, Puchades
saw Rojas. After unsuccessfully attempting to apprehend him, she reported the
sighting to Athans Bail Bonds. As a result, an investigator working for the
company captured Rojas not long thereafter. He was jailed, and in March of 1999
was sentenced to prison.
Even though she was not actually a party to the corporate surety bond that
Athans Bail Bonds had posted in the district court, Puchades filed a motion to set
3
aside the forfeiture of that bond in view of Rojas’ capture. (She filed it in April of
2001, contending that she was not informed of the capture until shortly before
then.) The district court granted that motion, entering on June 8, 2001 an order
setting aside the forfeiture of the bond that Athans Bail Bonds had posted with the
court.
On September 14, 2001, Puchades filed with the district court a motion to
vacate which asked the court not only to set aside the final judgment of forfeiture
but also to order Athans Bail Bonds to return to Puchades the amount she had paid
it. After Athans Bail Bonds failed to appear for a hearing on the motion, the
district court entered an order on November 7, 2001 granting the motion in both
respects. The order relieved Athans Bail Bonds of the obligation to pay out
anything on the bond it had posted with the court, but required it to refund to
Puchades $60,000, which is the full amount she had paid to it under the
indemnification agreement.
Athans Bail Bonds appealed, and we vacated the district court’s order and
remanded for further proceedings because the company had not been afforded
sufficient notice of the hearing on Puchades’ motion. On remand, the case was
referred to a magistrate judge, who held an evidentiary hearing.
4
At the hearing Athans Bail Bonds contended that it had used the entire
$60,000 Puchades paid it for expenses incurred in searching for and apprehending
Rojas. More fundamentally, Athans Bail Bonds argued that any dispute between it
and its indemnitor, Puchades, should be brought in a separate civil proceeding. In
his report and recommendation, the magistrate judge did not address that
contention. Addressing the merits of the dispute, the magistrate judge found that
many of the claimed expenses were either overstated or nonexistent; he calculated
that Athans Bail Bonds had $37,633.55 in legitimate expenses and recommended
that the district court order the company and its president, George Athans, to pay
$22,366.45 to Puchades. Athans Bail Bonds objected to the report and
recommendation both as to the findings about its expenses and as to the failure to
address its argument that the dispute should be brought “in a civil suit, probably in
a state court.”
In an order entered January 23, 2004, the district court adopted the report
and recommendation of the magistrate judge, and in addition to vacating the
forfeiture of the appearance bond it ordered Athans Bail Bonds and George Athans
to “return $22,366.45 to claimant, Lidia Puchades.” It is that part of the order
Athans Bail Bonds and George Athans appeal.
5
The two of them make four arguments to us. First, they argue that George
Athans was improperly held personally liable for the obligations or debts of Athans
Bail Bonds, a corporation. Second, they argue that Puchades does not have
standing in a federal criminal proceeding to seek recovery from them of the
amount she paid under the indemnification agreement she had with Athans Bail
Bonds. Third, they argue that the district court should have allowed Athans Bail
Bonds to claim all of its expenses for the apprehension of Rojas, including
expenses the court disallowed as part of the company’s ordinary costs of doing
business. Fourth, they argue that the district court judge should have recused
himself. We do not reach any of these arguments, however, because it is clear the
district court did not have subject matter jurisdiction over the dispute between the
parties about whether Athans Bail Bonds or its president was required to refund to
Puchades the money that she had paid under their indemnification contract.
II.
Federal courts are courts of limited jurisdiction. Keene Corp. v. United
States, 508 U.S. 200, 207, 113 S. Ct. 2035, 2040 (1993); Delaware v. Van Arsdall,
475 U.S. 673, 692, 106 S. Ct. 1431, 1442 (1986); Taylor v. Appleton, 30 F.3d
1365, 1367 (11th Cir. 1994). As the Supreme Court has reminded us, “the Court
early in its history wisely adopted a presumption that every federal court is without
6
jurisdiction unless the contrary affirmatively appears from the record.” Van
Arsdall, 475 U.S. at 692, 106 S. Ct. at 1442 (internal citations and marks omitted);
accord Turner v. Bank of N. Am., 4 U.S. (4 Dall.) 8, 10 (1799) (explaining that,
because a federal court is a court of limited jurisdiction, “the fair presumption
is . . . that a cause is without its jurisdiction, until the contrary appears.”);
Fitzgerald v. Seaboard Sys. R.R., Inc., 760 F.2d 1249, 1251 (11th Cir. 1985)
(“[S]ince the courts of the United States are courts of limited jurisdiction, there is a
presumption against its existence.”) (internal marks omitted).
We should not overstep the limits on our jurisdiction and exercise power we
do not have over disputes Congress has not given us authority to decide. Keene,
508 U.S. at 207, 113 S. Ct. at 2040 (“Congress has the constitutional authority to
define the jurisdiction of the lower federal courts, and, once the lines are drawn,
‘limits upon federal jurisdiction . . . must be neither disregarded nor evaded.’”)
(internal citations omitted).
Congress has given district courts jurisdiction to forfeit bail bonds posted
with the court in federal criminal cases, to remit forfeitures, and to exonerate
obligors and sureties. Fed. R. Crim. P. 46(e)–(f) (2001).2 This appeal is not about
2
Fed. R. Crim. P. 46 was amended in 2002, but the only changes were in style and in the
numbering of subdivisions. Fed. R. Crim. P. 46 advisory committee’s note (“The language of
Rule 46 has been amended as part of the general restyling of the Criminal Rules to make them
more easily understood and to make style and terminology consistent throughout the rules.
7
any of that. It involves instead a contractual dispute. On one side of that dispute is
Athans Bail Bond, a company which served as a surety, and its president. On the
other side is Lidia Puchades, an indemnitor of the company on one of its surety
obligations. Congress has not conferred jurisdiction on the federal courts to decide
this kind of contractual dispute. The parties do not have diverse citizenship, and
even if they did, the amount in controversy is not enough for diversity jurisdiction
purposes.
After the criminal defendant was caught, the district court on Puchades’
motion set aside its prior revocation order and set aside the judgment of forfeiture.
Rule 46(e)(2) 3 authorizes district courts to do that, assuming that the indemnitors
of sureties have standing to move under the rule. That is a big assumption but it is
not one that we must test and resolve here. We need not, because it is clear that
neither subpart (e)(2) nor any other provision of Rule 46 authorizes district courts
These changes are intended to be stylistic only, except as noted below.”). In this opinion we
will cite to the pre-amendment version of the rule because that is the version in effect at the time
the case was in the district court. Readers of the opinion in this case should be aware that the
provisions we refer to as Rule 46(e) and (f) are now Rule 46(f) and (g).
3
Prior to the 2002 amendments, see n.1 above, Rule 46(e)(2) provided:
The court may direct that a forfeiture be set aside in whole or in part, upon such
conditions as the court may impose, if a person released upon execution of an appearance
bond with a surety is subsequently surrendered by the surety into custody or if it
otherwise appears that justice does not require the forfeiture.
Fed. R. Crim. P. 46(e)(2) (2001).
8
to go beyond setting aside revocations and vacating forfeitures to ordering the
refund of money a surety had collected from its indemnitor under their contract.
Rule 46 is not about indemnification. It is not about the contractual or other state-
law rights of an indemnitor. It does not purport to give district courts jurisdiction
to decide disputes arising under indemnification contracts.
Rule 46(e)(2) only authorizes a court to set aside bail forfeitures. Rule 46(f)4
only authorizes courts to exonerate a bond obligor (here the bail bond company)
from its obligations under the bond and to release any bail to the obligor. Neither
of those rule provisions nor any other provision of Rule 46 purports to authorize a
court to decide the competing contractual claims arising between an obligor and
indemnitor under the agreement between them.
The Ninth Circuit has inconsistently held that deciding a dispute about the
bond premium the defendant paid a surety is outside a district court’s jurisdiction
to conduct bail and bond proceedings, but that deciding a dispute over collateral
posted by the defendant with the surety is “necessarily ancillary” to that
4
Prior to the 2002 amendments, see n.1 above, Rule 46(f) provided:
When the condition of the bond has been satisfied or the forfeiture thereof has been set
aside or remitted, the court shall exonerate the obligors and release any bail. A surety
may be exonerated by a deposit of cash in the amount of the bond or by timely surrender
of the defendant into custody.
Fed. R. Crim. P. 46(f) (2001).
9
jurisdiction. United States v. Arnaiz, 842 F.2d 217, 219 (9th Cir. 1988). The first
part of the Arnaiz decision is right, the second part wrong. The reasons the Ninth
Circuit gives for concluding that bond premium disputes are outside the
jurisdiction of district courts apply as well to disputes over collateral between the
surety and the criminal defendant in Arnaiz and indemnification disputes between
the surety and indemnitor in the present case.
When asked to decide a dispute over the premium the defendant had paid the
surety to post the bond with the district court, the Ninth Circuit phrased the
jurisdictional question as: “whether the premium dispute is so closely related to
the purposes of the bail provisions that denial of jurisdiction would necessarily
interfere with the district court’s ability to carry out its statutory mandate.” Id. at
220. It answered that question “no.” Id. The court noted that the applicable bail
bond provisions “speak only of the rights and obligations of the parties in
connection with the appearance guarantee.” Id. It observed that the purpose of
bail is to secure the presence of the criminal defendant, and reasoned that the
purpose is fulfilled by the defendant’s surrender as a condition of exoneration. Id.
We agree with that part of the Arnaiz opinion’s reasoning. Because the
outcome of a dispute over the premium can have no effect on the surrender of the
defendant and thus has no bearing on the purpose of bail, federal courts have no
10
jurisdiction to decide premium disputes. Id. Likewise, because the outcome of
indemnification disputes between the surety and its indemnitor following the
surrender of the defendant can have no effect on that surrender and thus has no
bearing on the purpose of bail, federal courts have no jurisdiction to decide
indemnification disputes either.
The Ninth Circuit also found in Arnaiz that there is “nothing to indicate that
Congress intended to extend jurisdiction to a contractual dispute over the bond
premium.” Id. Right. Likewise, there is nothing to indicate that Congress
intended to extend jurisdiction to a contractual dispute about the collateral the
indemnitor posted with the surety or about the indemnification payments that have
been made or are due between them.
In spite of the force of its reasoning running the other way in the part of its
decision involving the premium dispute, the Ninth Circuit in Arnaiz still managed
to conclude that district courts have jurisdiction to decide disputes between a
defendant and his surety about return of the collateral he posted with the surety.
Id. at 221–22. The court thought Rule 46(f)’s “use of the plural term ‘obligors’ is
not insignificant.” Id. at 221. It inferred from the use of the plural the wholly
unremarkable fact that “frequently more than one party has posted security on
behalf of the defendant.” Id. Fueled by that fact the court drove to the conclusion
11
that when the defendant surrenders as required, “all such parties are entitled to the
return of their security.” Id. The jurisdictional problem the court sped by is that if
a defendant is entitled to the return of the security that he posted with the surety as
collateral for the surety’s protection, it is because of the contract between the two,
not because of any provision in Rule 46.5
The principal flaw in the Ninth Circuit’s reasoning in this part of the Arnaiz
decision is the proposition that the money the defendant posted as collateral with
the surety “stood in the same position as if it had been posted directly with the
court.” Id. No, it did not. The money was not posted with the court as bail to
ensure the defendant’s appearance. It was posted as collateral with the surety to
protect the surety in the event the defendant failed to appear and the surety had to
pay out on the bond. If the defendant had not appeared, the court could not have
entered an order forfeiting as part of the bail the money that the defendant posted
5
The Arnaiz opinion’s heavy reliance on the use of “obligors,” the plural, in Rule 46(f)
cannot be reconciled with the purely stylistic revision of the rule’s language in the 2002
amendments. The revised provision, now found in Rule 46(g), does not use “obligors” or any
other plural term. Instead, it simply refers to “the surety” and “a surety.” The drafters of the
revised language assured us that no change in the meaning of the provision was intended. See
Fed. R. Crim. P. 46 advisory committee’s note (“These changes are intended to be stylistic only,
except as noted below.”). Arnaiz’s plural-fixation position is not possible under the revised
language, which effected no change in meaning. Therefore, the revisions refute the Arnaiz
court’s position.
In fairness to the Ninth Circuit, the 2002 revisions were not around when that court
decided Arnaiz. They are around now.
12
as collateral with the surety; it could not, because that money was not part of the
bail. The money the criminal defendant posted with the surety, not being within
the possession or control of the court, was not within the court’s jurisdiction.
Contrast the Arnaiz situation and the one before us here with cases where
money is posted with the court as bail, is still in the possession or control of the
court, and in order to release the bail under Rule 46(f) the court necessarily must
decide where that money goes. See United States v. Rubenstein, 971 F.2d 288,
293 (9th Cir. 1992) (“To release the [bail] funds, it was necessary to determine to
whom they should be released.”); United States v. Parr, 594 F.2d 440 (5th Cir.
1979); United States v. Bursey, 515 F.2d 1228 (5th Cir. 1975). The court in those
instances cannot perform the functions that are clearly within its jurisdiction
without deciding the ancillary question of who is entitled to the money. The court
has the jurisdiction and duty to release, and in order to do that it must decide who
gets it.
That is different from the situation the Ninth Circuit had before it in Arnaiz
and the one we have before us here. In the Arnaiz situation the court could
exonerate the surety’s obligation on the bond—there was no bail to be
released—without deciding whether the criminal defendant had a contractual or
other right to return of the collateral he had posted with the surety. Similarly, in
13
our situation the court could have, and should have, set aside the forfeiture and
exonerated the surety’s obligation on the bond without deciding whether the
indemnitor has a right to a refund of payments she made to the surety under their
indemnification agreement.
The Ninth Circuit asserted in Arnaiz that “exoneration [of the bond]
necessarily included the release of the collateral [the defendant had posted with the
surety], because the defendant’s appearance obligation had been mooted by his
surrender.” 842 F.2d at 221. To the extent “necessarily included” refers back to
the federal court order exonerating the bond, that statement is plainly wrong.
Nothing in Rule 46(f) exoneration orders must, or even may, adjudicate the rights
and obligations of the defendant existing between the surety and its indemnitor
under their agreement.
To the extent “necessarily included” in the quoted assertion from
Arnaiz refers instead to the contractual right of the defendant under his agreement
with the surety, the statement probably is accurate (that’s the way we would
imagine those type of contracts are drafted), but accurate or not the statement is
irrelevant to the jurisdictional issue. The soundness of a decision on the merits, the
correctness of a result if we had jurisdiction to decide the result, matters not one
mite where jurisdiction is lacking. Absent diversity and the requisite amount in
14
controversy, federal courts lack jurisdiction to decide post-set aside disputes
arising under contracts between sureties and criminal defendants, or sureties and
indemnitors.
For all these reasons we conclude that, absent diversity of jurisdiction and
the requisite amount in controversy, a district court does not have subject matter
jurisdiction to decide an indemnification payment dispute between the surety on a
bond posted in federal court and that surety’s indemnitor. Resolving the dispute is
not necessary to determining the surety’s obligation to the court or to deciding any
action the court is authorized to take. The dispute is a matter governed by contract,
not by Rule 46. The court lacks the jurisdiction to be concerned with it.
The January 23, 2004 order of the district court is REVERSED insofar as it
directs Athans Bail Bonds and George Athans to return $22,366.45 to Lidia
Puchades, and the case is REMANDED for further proceedings consistent with this
opinion.
15