State Ex Rel. Guste v. ALIC CORP.

595 So. 2d 797, 1992 WL 36469
CourtLouisiana Court of Appeal
DecidedFebruary 26, 1992
Docket23251-CA
StatusPublished
Cited by7 cases

This text of 595 So. 2d 797 (State Ex Rel. Guste v. ALIC CORP.) is published on Counsel Stack Legal Research, covering Louisiana Court of Appeal primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
State Ex Rel. Guste v. ALIC CORP., 595 So. 2d 797, 1992 WL 36469 (La. Ct. App. 1992).

Opinion

595 So.2d 797 (1992)

STATE of Louisiana, ex rel. William J. GUSTE, Jr., Attorney General of Louisiana, and Fred Dent, Commissioner of Securities of Louisiana, Plaintiffs-Appellants,
v.
ALIC CORPORATION, et al., Defendants-Appellees.

No. 23251-CA.

Court of Appeal of Louisiana, Second Circuit.

February 26, 1992.

*798 Department of Justice by J. Marvin Montgomery, Asst. Atty. Gen., Baton Rouge, for Attorney General of La., and Commissioner of Securities.

Breazeale, Sachse & Wilson by Van R. Mayhall, Jr., Robert L. Atkinson, Baton Rouge, for Director of Div. of Ins. for Missouri.

Campbell, McCrainie, Sistrunk, Anzelmo and Hardy by Burgess E. McCrainie, Jr., Metairie, for Commissioner of Ins. for Louisiana.

Before SEXTON, NORRIS and HIGHTOWER, JJ.

SEXTON, Judge.

The Attorney General of Louisiana and the Commissioner of Securities of Louisiana appeal the district court's granting of exceptions of lack of subject matter jurisdiction filed by the receivers[1] of two insolvent insurance companies, one in Missouri and the other in Louisiana. We affirm.

ALIC Corporation (ALIC) is a holding company incorporated in Louisiana, with its principal place of business in Monroe, Ouachita Parish, Louisiana. Glen D. McCart was its president and owned a controlling interest in the corporation.

ALIC owned 100 percent of American Independence Life Insurance Company (AILIC), a Missouri insurance company, which was licensed to do business in Louisiana, as well as several other states. ALIC owned 100 percent of Independence Life Insurance Company (ILIC), a Louisiana insurance company. Each insurance company maintained its principal place of business in Monroe, Louisiana.

Louisiana Receivership Proceeding (ILIC)

On March 9, 1990, the Louisiana Commissioner of Insurance petitioned the Nineteenth Judicial District Court in East Baton Rouge Parish for an order of conservation and other injunctions regarding the books, records, and other assets of ILIC, as well as an injunction against any existing or prospective proceedings against the company. An order of conservation was entered the same day by the district court. On April 6, 1990, an order of liquidation was entered in that matter.

Missouri Receivership Proceeding (AILIC)

On March 9, 1990, the same day that ILIC was placed in conservatorship, the Missouri Commissioner of Insurance petitioned a Missouri state court for an order of seizure of the books, records, and other assets of AILIC, which order was granted the same day. On March 20, 1990, the Missouri court issued a new order giving the commissioner "temporary possession" of AILIC's assets, and the court issued an order of rehabilitation on March 30, 1990. The Louisiana Commissioner of Insurance was appointed as the "ancillary receiver" of AILIC on April 6, 1990, in a proceeding instituted in the Nineteenth Judicial District Court in East Baton Rouge Parish. In the same judgment in which the Louisiana Commissioner of Insurance was appointed as the ancillary receiver, the district court enjoined the "bringing or further prosecuting any action at law, suit in equity, special or other proceedings against the said company or its estate...." An order of liquidation was entered by the Missouri court on April 20, 1990.

Securities and Unfair Trade Practices Proceeding

Louisiana's attorney general's office had been receiving complaints from a number *799 of individuals across the state regarding questionable investment schemes perpetrated by ALIC, its subsidiaries, officers, and personnel.

On March 21, 1990, the Attorney General of Louisiana and the Commissioner of Securities of Louisiana filed suit in the Fourth Judicial District Court in Ouachita Parish against ALIC (the Louisiana holding company), AILIC (the Missouri insurance company), ILIC (the Louisiana insurance company), and the directors, officers, and personnel of those corporations, as well as other corporations whose identities and involvement are not germane to the issues before this court. This lawsuit alleged that the defendants had violated Louisiana's securities laws and had committed unfair and deceptive trade practices. In this suit the plaintiffs obtained a temporary restraining order against certain actions of ILIC and AILIC which was eventually continued in effect by agreement of the parties after the intervention of the receivers.

The two insurance commissioners intervened in this proceeding and eventually filed exceptions of subject matter jurisdiction, as well as other exceptions, only insofar as AILIC, ILIC, and the commissioners were concerned. After hearing arguments and taking the matter under advisement, the district court granted the exceptions and dismissed only those parties from the Fourth Judicial District Court case.

The attorney general and commissioner of securities now appeal, arguing that the district court erred in dismissing them, and further arguing that the district court confused the concept of venue with that of subject matter jurisdiction. The appellees argue that the district court was correct and argue that a receivership is analogous to a bankruptcy proceeding wherein all claims against the defendant insurance company must be filed in the receivership proceeding.

Because one of the insurance companies involved is a domestic insurance company and the other is a foreign insurer which is licensed to do business in Louisiana, the law which applies to a resolution of the issues presented is found in different sections of Title 22 of the Louisiana Revised Statutes, the Louisiana insurance code, although the applicable legal principles are the same, as is the outcome.

ILIC

Receivership proceedings for Louisiana insurance companies are governed by LSA-R.S. 22:732-756.1.[2] This statutory scheme for receiverships is comprehensive and exclusive. LeBlanc v. Bernard, 554 So.2d 1378 (La.App. 1st Cir.1989), writ denied, 559 So.2d 1357 (La.1990). Louisiana's scheme for liquidating insolvent insurers is very similar to proceedings in bankruptcy. Crist v. Benton Casing Service, 572 So.2d 99 (La.App. 1st Cir.1990), writ denied, 573 So.2d 1143 (La.1991).

Unlike bankruptcy proceedings, however, wherein all proceedings involving the debtor are automatically stayed by operation of law, with certain enumerated exceptions, 11 U.S.C. § 362(a)(4), the state district court wherein the receivership proceedings are initiated has the authority to issue broad injunctions to insure that the integrity of the receivership proceeding is maintained. LSA-R.S. 22:734.

Following the filing of the petition, the law requires the district court to hold a hearing to determine whether to order that the insurance company be rehabilitated or liquidated, or whether the proceeding be dismissed. If rehabilitation or liquidation is ordered, the commissioner of insurance is vested by operation of law with title to all property, contracts, and rights of action of the insurer as of the date of the order directing rehabilitation or liquidation, and the district court granting the order shall direct the commissioner to take possession of the property, business, and affairs of the insurer and to rehabilitate or liquidate it as the case may be. LSA-R.S. 22:735. The statutes provide for the filing of claims, LSA-R.S. 22:748, priority of claims and setoffs, LSA-R.S. 22:746-7, and the proof and *800 allowance of liquidated and contingent claims, LSA-R.S. 22:749.

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Bluebook (online)
595 So. 2d 797, 1992 WL 36469, Counsel Stack Legal Research, https://law.counselstack.com/opinion/state-ex-rel-guste-v-alic-corp-lactapp-1992.