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November 29, 2012 (Special Meeting) Page 1308
<br />Koch: The statute 58 -72 -60 says "...which he knows to be," but it goes on to
<br />say "...or which by reasonable diligence he could have discovered to have
<br />been ".
<br />Burrage: Well don't they have to prove that?
<br />Koch: Yes, they would. But if they take the position that it was something
<br />that fit within the purview of this statute and refused to pay on the bond,
<br />then what would likely happen is that the person who was alleged to have
<br />suffered the loss would have the option of suing the principal on the bond -
<br />they could also sue the bonding company and contend that it was a valid bond
<br />- but they could also join as hearty defendants, the county and the
<br />individual commissioners who voted for the bond, (inaudible) but the bonding
<br />company's contending they're not going to honor.
<br />Burrage: Can they cancel the bond without a reason?
<br />Koch: Let me look back at the exact language.
<br />Poole: I have to say what's right here, it says "This bond may be cancelled
<br />by the" - I understand I'm not an attorney but he just happened to have a
<br />copy sitting here - "This bond may be cancelled by the surety as to future
<br />liability by giving written notice by certified mail addressed to each
<br />principal and the obligee at Cabarrus County, North Carolina and 30 days
<br />after the mailing of said notices by certified mail this bond shall be
<br />cancelled and null and void as to any liability thereafter arising with
<br />surety remaining liable, however subject to all the terms and conditions of
<br />this bond bringing all acts covered by this bond up to the date of such." So
<br />it doesn't say, when I read it - and you can say if it's different -
<br />Burrage: You know what, that's probably true of any bond this county -
<br />Poole: It's probably true any - your, your insurance you have at your house
<br />or anything like that, they can cancel it. For pretty much any reason they
<br />can come up and cancel something and, you know, there's not a whole lot that
<br />you can do. I have - I don't want to digress too far, but I have a doctor
<br />who got the insurance company cancelled him and he has absolutely no
<br />recourse, it just says we can cancel whenever we want to, if we want to. And
<br />due to changes in healthcare laws, he was sent a letter just like that and 30
<br />days later, that was the end of it. There was no recourse.
<br />Burrage: Well my doctor -
<br />Poole: Unless you have something different to add...
<br />Koch: No, I think that the proper way to interpret that that you read was
<br />that they can cancel for good reason, for any reason, for no good reason, and
<br />for no reason at all. So I think that they retain (inaudible) and probably
<br />could just cancel it at any time, of course they have to give you that notice
<br />we talked about earlier. But to answer your questions, yes, they could.
<br />White: But if we're not listed as the obligee, then we, the county, would
<br />never get notice the way that's - that sentence reads. The sentence reads
<br />that the principal would be notified and the obligee, and in this instance,
<br />the principal would be Mr. Small and the obligee, by statute, would be the
<br />State of North Carolina.
<br />Koch: That is technically correct. And that's why, because of that
<br />discrepancy between the statute and the obligations of this board, locally,
<br />that it was suggested that it be made payable to the state and to the county.
<br />That way both would get notice.
<br />Measmer: Who is the current bonding company that is used?
<br />Koch: Penn National or-
<br />Harris: Penn National.
<br />Measmer: And how much does that cost?
<br />Harris: For a four year bond, $710.
<br />Measmer: And why are we not able to see the reason behind their decision to
<br />not bond Mr. Small?
<br />Koch: I may let Tony answer that one, he may, from his experience more
<br />specifically know the answer to that question, but that is - it probably has
<br />to do with the fact that it was Mr. Small's application, not the county's
<br />application - I would guess. But because, just as with any other
<br />underwriting decision, it would only be disclosed to the applicant, as
<br />opposed to some technical third party.
<br />Poole: Any other questions from Rich? Okay. I told you we'd get to you Ben.
<br />I just wanted to make sure if there were technical questions like that that
<br />we could ask Rich and Tony to address. So as we've been told the (inaudible)
<br />you got a letter from Rich and you can - you've heard the four things, I
<br />wrote down four things that we need to address - and I'm sure you came here
<br />today to clear up any questions, so you are welcome to (inaudible). Turn on
<br />your microphone and I'll turn it over to you.
<br />Small: Thank you, Madam Chairman. I just want to say thank you for the
<br />opportunity to be here today, for everyone taking the time out of their
<br />respective schedules to come and meet. Insurance companies, are as Rich Koch
<br />has mentioned, are not always fair, they don't always provide the coverage
<br />they're supposed to provide - for whatever reason they didn't provide
<br />coverage in this instance. I got a phone call from Mr. Mike Downs, County
<br />Manager, on Thursday, November 15 informing me of the decision of the
<br />insurance company not to bond my application and a request from Mr. Downs was
<br />made that I secure my own bond. I told him I would be happy to do that. My
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