The case involves Immigrant Rights Defense Council, LLC (IRDC) appealing a judgment from the Los Angeles Superior Court against Hudson Insurance Company regarding the Immigration Consultant Act (ICA). Under the ICA, immigration consultants must secure a $100,000 bond, and individuals harmed by the consultants’ misconduct can sue both the consultant and the surety for damages. IRDC, acting as a watchdog and bringing numerous actions for injunctive relief against immigration consultants, initially sued Hudson to recover attorney fees and costs after prevailing against two consultants bonded by Hudson. The trial court ruled in favor of Hudson, stating IRDC lacked the right to recover these costs from the bond, as it did not qualify as an aggrieved party under the ICA.
On appeal, IRDC argued that the court misapplied surety law principles, which typically hold sureties liable up to the bond amount. However, the appellate court clarified that a surety's liability under statutory bonds is limited to the provisions set forth in the relevant statute and that individuals not harmed by the consultant cannot claim recovery from the bond. Consequently, the appellate court affirmed the trial court's judgment, upholding the ruling that IRDC was not entitled to recover against the ICA bond. The ICA outlines regulations for immigration consultants, including licensing requirements, consumer protections, and specific legal actions available to aggrieved parties.
Any party claiming a violation of the relevant chapter by an immigration consultant can initiate a civil action for injunctive relief on behalf of the public. The Attorney General, district attorneys, or city attorneys may also pursue civil actions for injunctive relief, restitution, and other equitable remedies against immigration consultants. Prevailing plaintiffs in these actions are entitled to reasonable attorneys' fees and costs.
The IRDC, a non-governmental watchdog organization, filed over 90 lawsuits in Los Angeles County between October 6 and October 20, 2017, against various immigration consultants under the Immigration Consultant Act (ICA). The lawsuits targeted consultants, including John J. Lee and Jonathan Licup, with claims alleging 20 ICA violations. Lee, representing himself, received a default judgment resulting in a permanent injunction against him, along with an award of $7,170.00 in attorneys' fees to the IRDC. Licup, who defended himself for a year, entered a stipulation for a final judgment agreeing to a permanent injunction without admitting wrongdoing, resulting in an award of $17,167.65 in attorneys' fees to the IRDC.
The IRDC's complaint against Hudson Insurance Co., filed on December 18, 2019, seeks recovery from the company as a guarantor for the bonds issued to Lee and Licup, requesting full reimbursement of court-awarded costs, including attorney fees.
Appellant filed a motion for summary judgment claiming that judgments against Lee and Licup served as prima facie evidence of their liability, thus entitling appellant to recover from the immigration consultant bonds. Hudson countered that recovery from these bonds was not permissible as they were designated for compensating individuals harmed by ICA violations. Both parties agreed on the material facts but disagreed on the interpretation of the ICA and the bonds. Appellant cited a federal district court opinion where Hartford was required to pay attorney fees from a bond related to an immigration consultant’s injunctive relief, while Hudson referenced a contrary state court opinion favoring Hartford.
On May 6, 2021, the trial court ruled in favor of Hudson, determining that the surety’s liability under the ICA bonds was limited to the terms of the bond and applicable statutes. The court concluded that appellant did not demonstrate that recoveries against Lee and Licup involved conduct causing damages, as opposed to mere regulatory violations, leading to the finding that there was no triable issue. Consequently, the court granted summary judgment for Hudson, with the judgment formalized on June 1, 2021. Appellant appealed this decision, arguing that the trial court incorrectly interpreted statutory provisions concerning recovery against ICA bonds.
The appeal is subject to de novo review, as the relevant facts are undisputed and the issues primarily involve statutory interpretation. The governing principles include the nature of surety bonds, which hold the surety responsible only when the principal defaults, and the necessity of interpreting the bond based on the intent of the parties involved.
In Bank of America v. Dowdy and Corby v. Gulf Ins. Co., it is established that when a surety bond is mandated by statute, the relevant statutory provisions become integral to the bond itself. Interpretation of such bonds involves statutory interpretation, adhering to the ordinary meanings of terms used. The liability of a surety under a bond that aligns with statutory requirements is dictated by the bond's explicit terms, interpreted alongside the applicable statutes.
Specifically, the Immigration Consultant Act (ICA) mandates that individuals acting as immigration consultants must file a $100,000 bond with the Secretary of State, which is intended to protect individuals harmed by the consultant's misconduct. The bond benefits those damaged by fraud or failures in service by the consultant or their employees.
Section 22443.1 outlines that the bond is payable to the people of California for the benefit of individuals affected by the consultant’s unlawful actions. Additionally, Section 22447 allows individuals who suffer damages due to the consultant's actions to recover from the bond, and it permits the Attorney General or other officials to seek relief for injured parties from the bond.
The bonds in question, labeled as “Surety Bond Immigration Consultants,” explicitly reference Business and Professions Code section 22443.1, confirming compliance with statutory requirements. They specify that the bond remains valid unless the principal fulfills all obligations and pays for any damages resulting from unlawful acts. Each bond's coverage corresponds directly to the statutes under which it was issued, indicating that only those specified under the ICA may seek recovery against the bond.
The bond's coverage aligns with the bond statutes, as established in Milliron v. Dittman (1919), where bonds issued for governmental purposes include the relevant legal provisions unless they contradict the bond's express terms. The statutory language explicitly restricts recovery to plaintiffs who have suffered damages, as stated in section 22443.1, which benefits individuals harmed by fraud, and section 22447, which allows claims for damages awarded in actions related to the bond. Legislative intent demonstrates that bond funds are designated for those actually injured by immigration consultant (ICA) violations, as affirmed by Security Pacific National Bank v. Wozab (1990). Clear and unambiguous statutory language should be followed without interpretation, as noted in Delaney v. Superior Court (1990). The bond statutes, enacted after section 22446.5, which allows for injunctive relief and damages, indicate that the Legislature recognized distinct types of relief but limited bond claims to those awarded damages, with exceptions for actions by governmental entities, which may seek equitable relief and restitution. The statutory language aligns with the ICA's purpose to protect vulnerable immigrant populations from fraud, reflecting the Legislature's commitment to expanding consumer protections without imposing obligations or limits on these individuals' recovery.
The ICA aims to protect consumers, the most vulnerable group to fraud by consultants, by limiting bond funds to victim compensation, which aligns with its purpose. This principle was illustrated in **Middelsteadt v. Karpe (1975)**, where the court ruled that real estate licensees could not access the Real Estate Recovery Fund, as it was established to protect clients, not the licensees themselves, who are better positioned to avoid deceitful practices. The court noted that the statutory bond for real estate brokers serves a similar protective function as the Recovery Fund.
In the current case, the appellant, described as a "watchdog association" founded by an experienced immigration attorney, does not fit within the protective class designated by the ICA. The appellant's reliance on **Pierce** is deemed misplaced. In **Pierce**, the plaintiff obtained a surety bond from an auto dealer, which was conditioned on the dealer not committing fraud. After a series of events involving a default judgment against the dealer and negotiations with the surety, the trial court awarded attorney fees to Pierce based on an attorney fee clause in the sales contract. The appeal court upheld the attorney fee award but did so for different reasons than originally noted by the trial court.
Pierce did not initiate a lawsuit based on the contract but rather on consumer protection statutes concerning fraud. The court clarified that the bond in question did not cover breaches of the underlying contract, thus Pierce was not entitled to attorney fees from that source. However, the bond did provide security against fraudulent actions, aligning with the statute allowing recovery for financial losses incurred due to the dealer's fraudulent conduct, specifically violations of the Consumer Legal Remedies Act (CLRA). The CLRA aims to protect consumers from unfair practices and permits a victorious plaintiff to recover attorney fees. Although the bond statute did not explicitly mention attorney fees, the court determined they were recoverable because Pierce was a prevailing plaintiff harmed by conduct covered by the bond terms, and awarding fees corresponded to the principle that a surety's liability matches that of the principal unless explicitly limited. The court noted that the appellant, unlike Pierce, did not meet the bond's conditions, having not demonstrated damages from prohibited conduct. The court also dismissed the significance of an unsuccessful attempt to amend a related statute to allow for attorney fees and reiterated that the surety's liability must adhere to the bond's terms and applicable statutory provisions. Additionally, the appellant's reference to a federal case favoring their position was found unconvincing, as it primarily addressed the silence of the bond statute regarding attorney fees.
The magistrate judge determined that the surety's position incorrectly suggested that individuals harmed by an immigration consultant’s prohibited actions could not recover fees and costs from the bond, which contradicts the overall statutory scheme of the Immigration Consultant Act (ICA). According to the precedent set in Pierce, an injured plaintiff meeting bond statute requirements may claim attorney fees and costs as part of their damages award. However, the appellant, having suffered no damages, could not assert such a claim. The magistrate judge's reasoning, which relied on the principle that a surety's liability mirrors that of its principal, overlooked the necessity for the bond instrument and statutory terms to explicitly permit such recovery. Although the bond statutes do not prohibit attorney fees, the Legislature limited recovery to those who have indeed suffered damages. The principle of inclusio unius est exclusio alterius implies that the inclusion of a specific group excludes others, negating the need for the Legislature to state that those without injury cannot recover. The court affirmed the summary judgment in favor of the respondent, allowing them to recover costs on appeal. The appellant's claim of being “irreparably harmed” as a member of the public due to violations by an immigration consultant was deemed too insubstantial to meet the statutory definition of “injury” or “damage.”
