One of the things that we are often dismissive of is the payment of claims by sureties. Given that surety companies write their bonds with an assumption of “no losses” it can be easy to think that there aren’t any losses. Unfortunately, that is not the case.
As you can see from the article below, Western Surety had to pay over Three Hundred Thousand Dollars for payment of losses due to one of their bonded individuals. Western argued that it didn’t have a duty to pay because it wasn’t informed about the claims (it kind of does have a point here – you do have to notify the surety if there are any claims).
Still, it’s a good point to recognize that there are plenty of surety bond claims out there.
Bond company ordered to pay $300K of Palmertree settlement
Western Surety Co., which issued the public official bonds for former Warren County Circuit Clerk Shelly Ashley-Palmertree is liable for $300,000 of the $818,251.75 she owes the county, a Hinds County chancellor has ruled.
“I’m glad to see it. I’ll be glad to get it in my hands,” Warren County Board of Supervisors President Bill Lauderdale said. “It’s been a long time coming.”
The ruling signed by Chancellor J. Dewayne Thomas and filed June 29 with the Hinds County Chancery Clerk’s office, said Western Surety, which issued the $100,000 bonds for each of Palmertree’s three terms as circuit clerk, had a contractual obligation to reimburse the money to the county.
Thomas dismissed Western Surety’s claim it was not liable because State Auditor Stacey Pickering and the county failed to tell the company about the claims against Palmertree
“The issuance of a surety bond creates a contractual relationship between the surety and its principal,” Thomas wrote in his decision. “The contract for the suretyship binds the surety absolutely and unconditional.”
“The law is clear that Western Surety is liable to the state Auditor (and the county) for the extent of its coverage of Palmertree for $100,000 per term for three consecutive terms.”
Palmertree is presently serving a five-year prison sentence in the Central Mississippi Satellite Facility for women in Flowood for embezzling $12,000 from her office’s civil and criminal accounts in 2012.
She pleaded guilty March 30 to stealing an additional $103,736.75 meant for restitution of crime victims from an account under her care between Jan. 1, 2013, until supervisors removed her from office May 15, 2014, after OSA investigators turned up evidence she had declared residence in Madison in 2013. She was sentenced to an additional five years on the second theft to be served with the first sentence.
In March 2013, she filed suit against Pickering and Warren County over claims she owed the county $671,751.75 in excessive salary above the state-mandated cap for circuit and chancery clerks and questionable subcontractor payments to her father and predecessor in office, Larry Ashley, from 2006 to 2011.
The county and Pickering countersued, and later amended the total to $818,251.75.
In March 2015, Palmertree dismissed her suit against the county and Pickering, and Thomas entered the $818,251.75 judgment against her.
Western Surety challenged the county’s claim it was on the hook for $300,000 of the judgment.
“It’s been almost two years, I hope we’re ahead and haven’t spent more (in) legal fees that we’re getting in,” Lauderdale said. “It’s good to get it. Glad the auditor was able to get that.”