In re AAAA Bonding Company, LLC ( 2016 )

IN THE COURT OF CRIMINAL APPEALS OF TENNESSEE
AT NASHVILLE
August 11, 2015 Session
IN RE: AAAA BONDING COMPANY, LLC
Direct Appeal from the Circuit Court for Rutherford County
No. (No number assigned) Ben H. Cantrell, Senior Judge
No. M2014-02157-CCA-R3-CD – Filed May 5, 2016
The appellant, AAAA Bonding Company, LLC, appeals the Rutherford County Circuit
Court’s revocation of its authority to write bail bonds. The State concedes that the trial
court erred because the evidence failed to show that the owner of the company and his
wife, the circuit court clerk, commingled funds and, therefore, that she received an
indirect benefit from his ownership of the company to justify the revocation. However,
the State requests that we remand the case to the trial court in order for the court to
consider additional proof and make additional findings as to whether the court clerk is
receiving some other direct or indirect benefit from her husband’s ownership of AAAA
Bonding Company, LLC. Based upon the oral arguments, the record, and the parties’
briefs, we reverse the judgment of the trial court but decline to remand the case for
further proceedings. Therefore, the judgment of the trial court is vacated.
Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court is Reversed
and Vacated.
NORMA MCGEE OGLE, J., delivered the opinion of the court, in which JOHN EVERETT
WILLIAMS and ROBERT W. WEDEMEYER, JJ., joined.
Joel H. Mosley, Sr., James B. Mosley, and Joel H. Mosley, Jr., Murfreesboro, Tennessee,
for the appellant, AAAA Bonding Company, LLC.
Herbert H. Slatery III, Attorney General and Reporter; Clark B. Thornton, Senior
Counsel; Jennings H. Jones, District Attorney General; and John Zimmerman, Assistant
District Attorney General, for the appellee, State of Tennessee.
OPINION
I. Factual Background
On August 7, 2014, Melissa Harrell, the owner of AAAA Bonding Company,
LLC, hereinafter “AAAA,” was elected the Rutherford County Circuit Court Clerk. Prior
to taking office on September 1, 2014, Ms. Harrell sold the company to her husband,
Otho Dunaway. On August 19, 2014, AAAA filed a petition requesting approval of the
change of ownership. On August 26, 2014, AAAA filed an amended petition contending
that because Mr. Dunaway did not have the two years of experience needed to qualify as
a full-time agent for a professional bonding company in Tennessee, he could not become
the owner of AAAA and, therefore, had conveyed his interest in the company to Susan
Kerr. According to the amended petition, Ms. Kerr had been a bonding agent for over
fifteen years, would assume the operational responsibilities of the company, and would
serve “as trustee” until Mr. Dunaway could become the company’s approved owner.
At a hearing on the petition on August 27, 2014, the State advised the trial court
that “at some point,” the court was going to have to determine whether Mr. Dunaway’s
owning the company would have an indirect benefit on Ms. Harrell, thereby disqualifying
AAAA from executing bail bonds. The court requested to hear from Mr. Dunaway, and
he testified that he and Ms. Harrell married in November 2013 and that he paid her
$20,000 for the company. He acknowledged that the price was based on his accountant’s
estimate of the company’s fair market value. The appellant’s counsel asked if Mr.
Dunaway was currently an agent for AAAA, and he answered, “Yes, sir.” He said that he
and Ms. Harrell did not own any property jointly, that they did not have a joint bank
account, and that he did not give her any money from his income to pay household
expenses.
On cross-examination by the State, Mr. Dunaway testified that he worked for
AAAA prior to the marriage. After the marriage, Mr. Dunaway and Ms. Harrell lived
together in her home, and she paid all of the utilities. He said that he used all of his
income from AAAA, which was about $700 per month after taxes, to pay child support,
and that he did not go out to eat with Ms. Harrell because he did not have any money.
Ms. Harrell’s mother owned the building in which AAAA was located, and Mr. Dunaway
did not know the amount of the monthly rent. He stated, though, that he would have to
pay the rent when he took over the company. At the conclusion of the hearing, the trial
court noted that the only issue before it was the petition to approve the transfer of
ownership to Ms. Kerr and that the State was not opposing the transfer. Thus, the court
granted the appellant’s petition.
On September 3, 2014, the trial court signed an order approving the transfer. That
same day, the State filed a motion to suspend AAAA’s authority to write bail bonds,
arguing that AAAA was disqualified pursuant to Tennessee Code Annotated section 40-
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11-128, which provides that “[t]he following persons or classes shall not be bail
bondsmen or agents of bail bondsmen or surety companies and shall not directly or
indirectly receive any benefits from the execution of any bail bond: . . . clerks or deputy
clerks[.] In the motion, the State argued that:
AAAA Bonding Company . . . is operating as a company with
all assets and income inuring to the direct benefit of the
Circuit Court Clerk, in as much as Ms. Harrell’s husband is
the beneficiary of the Trust and contingent owner of said bail
bond company. As such, the Clerk receives an indirect
benefit from the operations of AAAA Bonding Company[.]
At a hearing on the motion on September 17, 2014, Ms. Kerr testified for the State
that she and Otho Dunaway entered into an oral trust for her to take over AAAA and that
she was responsible for “all the overseeing of the bonding company at the moment.” She
said that she and Robert Dunaway, Otho’s cousin, were authorized to write bail bonds
and that they were both agents for AAAA. Ms. Kerr had worked for the Harrell family
for fifteen years, first for Buddy Harrell at Harrell Bonding Company and then for
Melissa Harrell at AAAA. After Ms. Harrell took office as the circuit court clerk on
September 1, 2014, AAAA continued to write bail bonds and collect money. Ms. Kerr
said that the company’s fee was always ten percent of the bond and that she deposited all
fees into the company’s bank account. The agent for the bond then received twenty-five
percent of the premium collected, while Ms. Kerr received only a salary. Ms. Kerr paid
herself and the agents from the company’s bank account. She also paid the company’s
expenses, such as utility bills, phone bills, and final forfeitures, from the account. She
said that she had never paid rent for the company’s building and that she did not know
who did so.
On cross-examination, Ms. Kerr testified that the ten percent fee was not always
collected in full and that some defendants still owed money to AAAA. She
acknowledged that if the trial court suspended the company’s authority to write bail
bonds, AAAA would no longer have any income to “chase forfeits” or notify defendants
of their court dates. Ms. Kerr said that she currently was not obligated to pay Otho
Dunaway anything and that she would not be obligated to pay him anything when the
trust ended.
Otho Dunaway testified for the State that Ms. Kerr managed AAAA. The State
asked if he was a bonding agent for the company, and he answered, “I guess I could be
acting as agent. I don’t actually write bonds.” He said he stopped writing bonds two
months before the hearing because he was “basically stepping out” of AAAA “[u]ntil the
Court sees it’s either official or I continue to do what I’m doing or we sell the company.”
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He said that he bought AAAA from Melissa Harrell for $20,000, that he paid her with a
personal check, and that the funds came from money he brought into their marriage from
the sale of a franchise he used to own. A certificate of deposit to secure the company’s
bonding capacity in the amount of $100,000.01 stayed with the business and was
transferred from Ms. Harrell’s name into Mr. Dunaway’s name after the sale.
Mr. Dunaway testified that he and Ms. Harrell kept their finances separate and did
not share living expenses. She owned the home in which they lived, and he did not pay
her anything toward expenses, not even groceries. He said that he used to make $700 per
month from AAAA but that “it went straight to child support.” He said that he was “sort
of salary at that time” and that he “didn’t get the actual twenty-five percent” that agents
normally received because “there were bills due and sometimes we had to use that money
for bills.” He said that he had bought Ms. Harrell gifts from his personal savings and that
he did not buy her anything “from the contribution of this business.” Sometimes he and
Ms. Harrell went out to eat, but he paid for his own meals. They did not go on vacations,
and each one paid for their own vehicle and gasoline. Mr. Dunaway said he currently had
no source of income and paid his child support from his personal savings.
On cross-examination, Mr. Dunaway acknowledged that he set up the purchase of
AAAA based on the advice of his accountant and that he set up the oral trust with Ms.
Kerr based on the advice of counsel. He said he had not paid any money to Ms. Harrell
since taking ownership of AAAA. Moreover, since Ms. Harrell had taken office on
September 1, Mr. Dunaway had not received any benefit from the company and had not
given Ms. Harrell any benefit from the company. On redirect examination, Mr. Dunaway
testified that he worked for AAAA for about one year before he and Ms. Harrell married
and that he received a salary “[i]f there was money there.”
At the conclusion of the hearing, the trial court ruled as follows:
Now, we’ve heard some proof and there is no proof that these
parties [commingle] their funds. Nevertheless, Mr. Dunaway
holds a valuable asset, and that is the beneficial interest in the
bonding company. If the company prospers, he prospers.
And so the Court finds that that is an indirect benefit to her
just by virtue of the married relationship, and so the remedy
in this case would be to revoke the license of AAAA Bonding
Company to write bonds hereafter.
II. Analysis
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On appeal, AAAA contends that the State improperly sought suspension of the
company’s authority to write bail bonds pursuant to Tennessee Code Annotated section
40-11-128 because AAAA is not one of the “persons or classes” disqualified from being
a bondsman under the statute. It also contends that, in any event, the trial court erred by
finding an indirect benefit to Ms. Harrell from the marital relationship alone and that the
State was required to show a commingling of funds by Mr. Dunaway and Ms. Harrell.
The State concedes that the trial court erred because the commingling of funds, not the
marriage relationship per se, is the correct approach for determining whether a spouse
receives an indirect benefit, and that the proof failed to show a commingling of funds in
this case. The State argues, however, that the commingling of funds is not the only
evidence that can show a party received an indirect benefit and requests that we remand
the case in order for additional proof and findings as to whether Ms. Harrell is receiving
an indirect benefit from Mr. Dunaway’s ownership of AAAA.
Tennessee Code Annotated section 40-11-125(a) lists the reasons for which a trial
court may suspend a professional bondman’s approval to make bail bonds. Relevant to
this appeal, a court may suspend a professional bondman’s approval if, after
investigation, it appears that the bondsman has violated any of the laws of this state
relating to bail bonds. Tenn. Code Ann. § 40-11-125(a)(1). Tennessee Code Annotated
section 40-11-128 disqualifies certain persons from acting as bondsmen, stating,
The following persons or classes shall not be bail
bondsmen or agents of bail bondsmen or surety companies
and shall not directly or indirectly receive any benefits from
the execution of any bail bond: jailers, attorneys, police
officers, convicted felons, committing magistrates, municipal
or magistrate court judges, clerks or deputy clerks, sheriffs,
deputy sheriffs and constables, and any person having the
power to arrest or having anything to do with the control of
federal, state, county or municipal prisoners.
Tennessee Code Annotated section 40-11-127 provides, “Upon motion, any district
attorney general may prefer charges to have a bail bondsman stricken from the approved
list pursuant to § 40-11-125 with the same provisions for notice, answer and hearing
before the court, and the same right of appeal.”
A “professional bondsman” is defined as:
any person, firm, partnership or corporation, engaged for
profit in the business of furnishing bail, making bonds or
entering into undertakings, as surety, in criminal proceedings,
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or for the appearance of persons charged with any criminal
offense or violation of law or ordinance punishable by fine,
imprisonment or death, before any of the courts of this state,
including municipal courts or securing the payment of fines,
judgments or damages imposed and of costs assessed by those
courts upon preliminary or final disposition thereof[.]
Tenn. Code Ann. § 40-11-301(4)(A). This court reviews a trial court’s revocation of a
bondsman’s authority to act as a bonding agent under a de novo standard of review.
Tenn. Code Ann. § 40-11-125(d); In re Cox, 389 S.W.3d 794, 798 (Tenn. Crim. App.
2012).
As to the appellant’s claim that Tennessee Code Annotated section 40-11-128
does not provide statutory authority for the suspension of its ability to write bail bonds,
we note that the appellant raised this issue in its response to the State’s motion to suspend
AAAA’s privileges but that the trial court did not address it, instead focusing on whether
Ms. Harrell received an indirect benefit from Mr. Dunaway’s owning the company. A
recent Tennessee Attorney General opinion concluded that Tennessee Code Annotated
section 40-11-128 prohibited the spouse of a deputy sheriff from serving as a bail
bondsperson if the two commingled funds. As the opinion explained:
A bail bond is a contract, In re Sanford & Sons Bail
Bonds, Inc., 96 S.W.3d 199, 202 (Tenn. Crim. App. 2002),
and clearly a bail bondsperson’s employment is directly
affected when the bondsperson executes a bail bond. The bail
bondsperson’s spouse would have an indirect interest in any
such contract if the spouses commingle funds and, therefore,
would “indirectly receive any benefits from the execution” of
that bail bond under Tenn. Code Ann. § 40-11-128. Because
deputy sheriffs are specifically included in the prohibited
“person or classes” listed in § 40-11-128, the statute would
prohibit the spouse of a deputy sheriff from serving as a bail
bondsperson if the spouses commingle funds.
Tenn. Op. Att’y Gen. No. 14-80 (Sept. 4, 2014). The opinion noted that “this Office has
opined on several occasions that when spouses commingle assets, a person has at least an
indirect interest in any contract directly affecting his or her spouse’s employment.” Id.
(citing Tenn. Op. Att’y Gen. 08-102 (May 6, 2008); Tenn. Att’y Gen. Op. 05-017 (Feb. 3,
2005); Tenn. Op. Att’y Gen. 00-181 (Nov. 22, 2000); Tenn. Op. Att’y Gen. No. 88-122
(July 13, 1988)).
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Attorney general opinions are not binding authority. State v. Black, 897 S.W.2d
680, 683 (Tenn. 1995). Nevertheless, they are entitled to considerable deference because
government officials rely on them for guidance. Id. Moreover, “Attorney General
opinions are particularly persuasive when they have been consistently repeated.” H & R
Block Eastern Tax Services, Inc. v. State, Dep’t of Commerce and Ins., Div. of Ins., 267
S.W.3d 848, 861 (Tenn. Ct. App. 2008).
We are persuaded by the reasoning of the attorney general that Tennessee Code
Annotated section 40-11-128 would prohibit the spouse of a court clerk from owning a
bail bonding company or writing bail bonds for the company if that spouse and the court
clerk commingle funds. Thus, we agree with the appellant and the State that the trial
court erred by finding an indirect benefit to Ms. Harrell simply from the marital
relationship. In addition, the evidence failed to show that Mr. Dunaway and Ms. Harrell
commingled funds so that she received an indirect benefit from AAAA’s writing of bail
bonds. Thus, we conclude that the trial court erred by suspending AAAA’s privileges to
write bail bonds.
The State contends that a commingling of funds is not the only way to show that
the prohibited person or class is receiving an indirect benefit from the spouse and that “an
indirect benefit could arise if the couple jointly shared expenses or accumulated assets or
shared other financial interests.” The State requests that we remand the case to the trial
court for further proof and findings as to whether Ms. Harrell is receiving an indirect
benefit from Mr. Dunaway’s ownership of AAAA.
At the August 27 and September 17 hearings, the State and counsel for the
appellant questioned Mr. Dunaway about his and Ms. Harrell’s finances, including their
bank accounts, their payments for residential utilities, their payments for automobiles,
and whether they went on vacation. The State has offered no explanation as to what
additional proof would show that Ms. Harrell is receiving a direct or an indirect benefit
from Mr. Dunaway’s ownership of AAAA. Regardless, as noted by the appellant,
Tennessee Rule of Civil Procedure 52.02 provides in part that “[u]pon motion of a party
made not later than 30 days after entry of judgment the court may amend its findings or
make additional findings and may amend the judgment accordingly.”1 More than thirty
days has elapsed since entry of the trial court’s order revoking AAAA’s authority to write
bail bonds. Furthermore, nothing in Rule 52.02 provides for additional proof. See
Morgan v. Krauss, 2015 WL 5936918, No. M2014-02035-COA-R3-CV at *3 (Tenn. Ct.
App. at Nashville, Oct. 12, 2015). Thus, we decline to remand this case to the trial court.
1
The bail bond forfeiture process is a civil one governed by the Tennessee Rules of Civil
Procedure. Indemnity Ins. Co. of North America v. Blackwell, 653 S.W.2d 262, 264-65 (Tenn. Ct. App.
1983).
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III. Conclusion
Based upon the oral arguments, the record, and the parties’ briefs, the judgment of
the trial court is reversed, and the judgment vacated.
_________________________________
NORMA MCGEE OGLE, JUDGE
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