The Colorado Court of Appeals issued its opinion in Colorado Division of Insurance v. Trujillo on March 29, 2012.
Fiduciary Duty—Bail Bonding Agent—License—Bond Premium.
In this case concerning the fiduciary duties owed by a bail bonding agent to his client, respondent Milton Michael Trujillo appealed the final order of petitioner, the Colorado Division of Insurance (Division), affirming the initial decision of the agency’s administrative law judge (ALJ) to revoke and deny his application for renewal of his bail bonding agent and insurance producer licenses. The order was affirmed.
In December 2004, Connie Espinoza gave Trujillo, a licensed bail bonding agent and insurance producer, $3,500 in cash to post bond for her son. Trujillo was unable to post bond for Espinoza’s son. Rather, he gave Connie Cordova, an acquaintance of Espinoza’s son, $2,360 (the $3,500 less $1,140 used to post a bond for Cordova’s friend), claiming that Cordova was the actual owner of the money. Espinoza did not consent to this transaction.
Trujillo contended that the Division erred in denying renewal of his insurance producer and bail bonding agent licenses because the agency misinterpreted CRS §10-2-704 when it determined that he owed a fiduciary duty to Espinoza and should not have returned the bond premium to Cordova. Ted Espinoza is the “insured” under CRS §10-2-704(1)(a), because Trujillo undisputedly received the $3,500 to procure for him a surety bond. Therefore, the $3,500 premium belonged to Connie Espinoza as agent for her son Ted, and it became an unearned premium when Trujillo was unable to post a bond. In the absence of an express agreement, a fiduciary relationship is established between a bail bonding agent and an insured or the insured’s agent when the bonding agent receives a bond premium therefrom, regardless of ownership of the premium. Here, once it was clear that the premium was unearned, Trujillo had a statutory obligation to treat it in a fiduciary capacity and return it to Connie Espinoza. Therefore, the Division’s ultimate finding that Trujillo had a fiduciary duty to Espinoza and breached that duty in failing to return the money to her was reasonable, was supported by substantial evidence, and was not an abuse of discretion.