Professional Construction Consultants, Inc. v. Grimes

552 F. Supp. 539, 1982 U.S. Dist. LEXIS 16291
CourtDistrict Court, W.D. Oklahoma
DecidedSeptember 28, 1982
DocketCIV-76-0534-D
StatusPublished
Cited by7 cases

This text of 552 F. Supp. 539 (Professional Construction Consultants, Inc. v. Grimes) is published on Counsel Stack Legal Research, covering District Court, W.D. Oklahoma primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Professional Construction Consultants, Inc. v. Grimes, 552 F. Supp. 539, 1982 U.S. Dist. LEXIS 16291 (W.D. Okla. 1982).

Opinion

ORDER

DAUGHERTY, Chief Judge.

In this case, the Plaintiffs, Oklahoma citizens, have alleged claims against the Domiciliary (New York) and Ancillary (Oklahoma) Liquidators of Summit Insurance Company of New York (SICONY) for the failure of Brite-Side Construction, Inc. (Brite-Side) (not a party herein) to perform as a subcontractor on a project in which Professional Construction Consultants, Inc. (PCC), one of the Plaintiffs herein, was the prime contractor. SICONY issued a performance/payment bond on the project for Brite-Side, and Plaintiffs assert that upon failure of Brite-Side to perform, they made demand on SICONY to complete the subcontract, which SICONY failed to do, whereupon Plaintiffs completed the work required by Brite-Side’s subcontract. Plaintiffs seek damages in the sum of $74,-214.70 for their completion costs caused by failure of both Brite-Side and SICONY to perform. This claim is set out in Plaintiffs’ Amended Complaint herein as their first cause of action. In Plaintiffs’ second cause of action in their Amended Complaint filed herein, they seek damages for their alleged lost bonding capacity in the amount of $187,000.00 which they allege was caused by SICONY’s failure to perform under its bond.

The Small Business Administration (SBA) entered into an agreement with SICONY regarding the project, which provided, “SBA hereby agrees to guarantee to Surety [SICONY] 90 percent of any ‘loss’ Surety may sustain or incur in good faith by reason of execution of the bid, payment or performance bond contemplated by this agreement.” On the basis of this and another agreement between the SBA and SICONY, Plaintiffs have joined the SBA as a Defend *541 ant in both causes of action herein and seek a money judgment against the SBA for 90% of any judgment against the Liquidators. Plaintiffs’ theory is that the SBA agreements made Plaintiffs third party beneficiaries possessed with direct rights against the SBA.

In financial distress, SICONY is in the hands of the Defendant The New York Insurance Commissioner as Liquidator pursuant to the Uniform Insurers Liquidation Act (the Act) which has been adopted by the State of New York. Defendant Grimes has been appointed the Ancillary Liquidator in Oklahoma pursuant to the Act, as enacted in Oklahoma, 36 O.S. §§ 1901 (formerly 36 O.S. § 1801), 1903, 1904 and 1914-1920. Plaintiffs pursued the same claims filed herein by filing a similar action in the District Court of Oklahoma County, Oklahoma, but only against the two Liquidators. SBA was not a defendant therein.

Defendant Liquidators have filed a Motion to Dismiss herein for want of jurisdiction claiming in general that exclusive jurisdiction of this matter under the Act is in the District Court of Oklahoma County, Oklahoma. The SBA likewise has a Motion to Dismiss pending under Rule 12, Federal Rules of Civil Procedure, (1) challenging the jurisdiction of this Court to entertain this matter for essentially the same reasons as asserted by the Liquidators and (2) seeking dismissal for failure of Plaintiffs to state a claim against it upon which relief can be granted. On September 29, 1977 the Court stayed this action stating that, “Accordingly, the Court finds and concludes that for the purposes of economy of time and effort for the Court, for counsel and for the litigants, the instant action should be stayed pending the determination of Plaintiffs’ claim against Defendant Grimes by the Oklahoma County District Court in the ancillary liquidation proceedings of SICONY.”

The District Court of Oklahoma County, Oklahoma, heard the case before it, rendered a decision denying Plaintiffs’ claim, which was appealed and has resulted in a final decision of the Oklahoma Supreme Court affirming such denial. The decision of the Oklahoma Supreme Court, of which the Court takes judicial notice, is reported at 646 P.2d 1262 (Okl.1982).

PLAINTIFFS’ CLAIM AGAINST THE LIQUIDATORS

The Court concludes that the only court with the power to grant the relief sought by Plaintiffs against the Liquidators in the instant case is the Oklahoma County District Court. 36 O.S. § 1902 vests the district courts of the State of Oklahoma with exclusive original jurisdiction of delinquency proceedings commenced pursuant to the provisions of the Act. Under an essentially identical provision of the statutes of the State of New York, the New York Court of Appeals held:

“that the Supreme Court [a trial level court] ... was intended to have exclusive jurisdiction of claims both for and against an insurance company in liquidation.” Knickerbocker Agency v. Holz, 4 N.Y.2d 245, at 250, 149 N.E.2d 885, at 889, 173 N.Y.S.2d 602, at 607 (1958).

In the case of United States v. Bank of New York & Trust Co., 296 U.S. 463, at 475-478, 56 S.Ct. 343, at 346-347, 80 L.Ed. 331 (1936), the Supreme Court considered the jurisdiction of Federal Courts in a case similar to the instant one. It observed:

When the state court directed the Superintendent of Insurance to take possession of the assets . .., the court took jurisdiction of the res. While the Superintendent was a statutory liquidator, he took possession under the direction of the court and the fund was at all times subject to the court’s control. The proceeding was essentially one in rem and the Superintendent was protected by a sweeping injunction in the unimpeded liquidation of the sequestered property. ******
In the other two cases .. . the Superintendent completed the additional liquidation and turned over the remaining assets to the designated depositaries. To safeguard all rights in the funds, they were not to be withdrawn from the depositar- *542 ies except upon a court order.... [I]n the case of the Moscow Fire Insurance Company, suit was brought ... to determine the disposition of the fund. Claims of creditors and shareholders were in course of adjudication in that proceeding when the present suit was brought. At that time, also, in the case of the Northern Insurance Company, the depositary— which had received an assignment for the benefit of creditors — was accounting in the state court for the fund in its hands and the claims of creditors and of those entitled to share in the fund were being heard.
In both these cases the proceedings in the state court were quasi in rem. Control of the funds was essential to the exercise of the court’s jurisdiction to protect the rights of claimants. It was not necessary for the court to appoint receivers, as the funds were already in the hands of depositaries appointed by the court and subject to its direction.

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Bluebook (online)
552 F. Supp. 539, 1982 U.S. Dist. LEXIS 16291, Counsel Stack Legal Research, https://law.counselstack.com/opinion/professional-construction-consultants-inc-v-grimes-okwd-1982.