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VALLEY ROUNDUP

Amwest Reaches Accord to Settle Texas Lawsuits

June 27, 1989

Amwest Insurance, a Woodland Hills provider of bail bonds and other surety bonds, said it reached preliminary agreement to pay $500,000 to settle a rash of lawsuits between the company and Dallas County, Tex.

Amwest said it had previously reserved about $300,000 to cover the claims, so it will be forced to take a $200,000 charge against its profit for the second quarter that ends Friday. The total cost from the Dallas County claims, including the settlement and other legal costs, was about $1.1 million, Amwest said. Nonetheless, the settlement was "good news" because it ended two years of complicated litigation, said Robert Goodell, Amwest's chief financial officer.

The lawsuits, which were filed beginning in 1987, stemmed from some 4,000 bail bonds written by a former Amwest agent in Dallas County that went into forfeiture. In underwriting a bail bond, Amwest promises that a person who has been arrested will appear in court. If the person fails to show, the bond goes into forfeiture and Amwest is supposed to pay it off.

However, Amwest disputed its liability for the bail bonds at issue in Dallas County, which led to the litigation.

In another bond-related lawsuit, this one in New Jersey, Amwest alleged that another former agent wrote--without Amwest's authorization--a $1.3-million bid bond for a contractor who was awarded a $26-million municipal contract.

Although the case hasn't been settled, Amwest's attorneys believe that its present reserves are adequate to cover any losses.

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