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Williams v. Wainscott (2/12/99), 974 P 2d 975
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Notice: This opinion is subject to correction before publication in
the Pacific Reporter. Readers are requested to bring errors to the attention of
the Clerk of the Appellate Courts, 303 K Street, Anchorage, Alaska 99501, phone
(907) 264-0608, fax (907) 264-0878.
THE SUPREME COURT OF THE STATE OF ALASKA
THE HONORABLE DONNA LEE H. )
WILLIAMS, Insurance Commissioner ) Supreme Court Nos.
of the State of Delaware, in her ) S-7807/7867
capacity as the Receiver of the )
Great Atlantic Insurance Company ) Superior Court No.
in Liquidation, ) 3AN-87-5072 CI
)
Appellant and )
Cross-Appellee, ) O P I N I O N
)
v. )
)
JOYCE WAINSCOTT, in her capacity )[No. 5080 - February 12, 1999]
as the Receiver and/or Deputy )
Receiver of the Pacific Marine )
Insurance Company of Alaska in )
Liquidation, and the PACIFIC )
MARINE INSURANCE COMPANY OF )
ALASKA IN LIQUIDATION, )
)
Appellees and )
Cross-Appellants. )
___________________________________)
Appeal from the Superior Court of the State of
Alaska, Third Judicial District, Anchorage,
Karen L. Hunt, Judge.
Appearances: Gary A. Zipkin, Susan M. West,
Guess & Rudd, Anchorage, and Diane J. Bartels, Bartels & Bartels,
Wilmington, Delaware, for Appellant and Cross-Appellee. Mark A.
Sandberg, William M. Wuestenfeld, Sandberg, Wuestenfeld & Corey,
Anchorage, for Appellees and Cross-Appellants. Ronald L. Baird,
Office of Ronald L. Baird, Anchorage, and Victoria L. Vreeland,
Gordon, Thomas, Honeywell, Malanca, Peterson & Daheim, P.L.L.C.,
Seattle, for Amicus Curiae Deborah Senn.
Before: Matthews, Chief Justice, Compton,
Eastaugh, Fabe, and Bryner, Justices.
MATTHEWS, Chief Justice.
I. INTRODUCTION
This case concerns the attempts of Great Atlantic
Insurance Company (GAIC) to recover nearly $1.4 million in
reinsurance claims from Pacific Marine Insurance Company of Alaska
(PacAk). In 1989 both companies were declared insolvent and placed
into liquidation. The deadline to file claims in the PacAk estate
was March 1, 1990. In 1994 GAIC submitted four claims to PacAk
which the PacAk Receiver denied. The superior court upheld the
Receiver's decision, concluding that it was supported by
substantial evidence. Because we hold that the superior court
erred in applying a deferential standard of review, we reverse and
remand.
II. FACTS AND PROCEEDINGS
A. Facts
PacAk was incorporated in Alaska in 1979 as United Marine
Insurance Company and later renamed Pacific Marine Insurance
Company. In late 1981 or early 1982 Pacific Marine Insurance
Company (PacWa) was incorporated in Washington. The Alaska
corporation was renamed Pacific Marine Insurance Company of Alaska.
PacWa became the parent corporation of PacAk. PacAk and PacWa
shared officers and employees, as well as offices in Seattle, from
1982 to 1985. Donald Marinkovich was the president of both
corporations.
The present conflict centers around a Quota Share
Reinsurance Agreement (treaty) executed on December 15, 1982. [Fn.
1] The preamble to the treaty stated that it was entered into
between GAIC and "PACIFIC MARINE INSURANCE COMPANY OF ALASKA,
Anchorage, Alaska, its parent and/or affiliated Companies
[Reinsurer]." The treaty was signed by GAIC and Donald
Marinkovich, as president of PacAk. The treaty required PacAk to
reinsure 100% of all policies issued by GAIC that were produced by
general agent Thompson Insurance Enterprises, Inc. (THOMCO) in
Louisiana. [Fn. 2] These policies included policies covering
claims under the federal Longshoremen's and Harborworkers'
Compensation Act. [Fn. 3]
One day earlier, on December 14, PacAk and PacWa had
entered into a contract for quota share treaty reinsurance. Under
this contract, PacAk transferred to PacWa its entire interest and
liability in all present and future policies including all
"reinsurances."
On December 16 GAIC, PacAk, and THOMCO entered into a
Managing General Agency Agreement. This agreement authorized
THOMCO to issue policies in Louisiana and to collect premiums for
both GAIC and PacAk. The treaty covered only policies generated
under this Managing General Agency Agreement.
In January 1983 PacAk entered into an adjustment
agreement with F.A. Richard & Associates, Inc. This agreement
authorized F.A. Richard to adjust claims arising under the THOMCO
policies.
In 1985 PacWa sold PacAk and the December 14, 1982 quota
share treaty agreement between those entities was terminated. [Fn.
4] During the life of the treaty, 267 policies were ceded and
$4,712,850 in premiums was paid. The four claims at issue arose
from Longshoremen's Act policies generated by THOMCO in Louisiana.
B. Proceedings
All three companies were declared insolvent and ordered
liquidated in 1989: PacWa on June 7 in Washington; PacAk on July
12 in Alaska; and GAIC on August 11 in Delaware.
The July 1989 Order of Liquidation for PacAk set a
deadline, or "bar date,"of March 1, 1990, for submission of all
claims against the PacAk estate. The order required PacAk to
provide notice of the liquidation order to several classes of
claimants, including those "who might reasonably be expected to
have a claim against PACAK." The order further required PacAk to
provide notice of the deadline for filing claims and the procedure
for filing claims to policyholders and those who might have claims
against policyholders. Claims were generally to be submitted on a
"proof of claim"form to the Receiver.
On August 1, 1989, PacAk mailed a claim file regarding
injured worker Alex Bourg (the Bourg file) to GAIC because GAIC was
the "insuring company." This file in turn had just been received
from PacWa which represented it to be a claim against the PacAk
estate. Included with the Bourg file was a letter from PacAk
Deputy Receiver Emerson Adams advising GAIC of PacAk's Order of
Liquidation and that PacAk was no longer paying claims. PacAk
mailed the Bourg file to GAIC's then-current Delaware address.
GAIC received the Bourg file and Adams's letter. On August 11
PacAk conducted a mass mailing of proofs of claims and notices of
the deadline to file claims. PacAk included GAIC in the mailing
because it was listed as a "producer"in PacAk's records. The
notice was mailed to GAIC's previous New York address and was
returned to PacAk as undeliverable.
GAIC failed to file a claim with PacAk for any of the
four claims by the March 1, 1990 bar date. GAIC apparently first
learned of the bar date in a telephone call to the PacAk Receiver
on August 31, 1992. On March 14, 1994, GAIC submitted a claim to
PacAk for $368,706.46 in losses resulting from the Bourg claim.
PacAk denied GAIC's claim. PacAk asserted that PacWa reinsured the
claim, rather than PacAk, [Fn. 5] and that the claim was untimely
because it was submitted after the bar date. GAIC subsequently
amended its claim to add three additional claims, for a total of
$1,397,525.32.
GAIC objected to the denial of its claim and a hearing
was held in the superior court. The superior court considered
documentary evidence submitted by both parties, the testimony of an
expert witness on behalf of each party, and heard oral argument.
The court concluded that it would not disturb the Receiver's
decision to deny GAIC's claim as untimely because it was supported
by substantial evidence.
GAIC moved for clarification and reconsideration. The
superior court denied GAIC's motion and entered a Partial Final
Judgment in favor of PacAk. In this order, the court summarized
the evidence presented and again concluded that the PacAk Receiver
had substantial evidence to deny GAIC's claims.
PacAk moved for Civil Rule 82(b)(2) attorney's fees. The
superior court granted the motion. GAIC moved for reconsideration.
The court granted GAIC's motion and vacated its earlier order
awarding attorney's fees to PacAk.
GAIC appeals. PacAk cross-appeals the denial of
attorney's fees.
III. ISSUES
GAIC's contentions on appeal are as follows:
A. The trial court erred in reviewing the denial of its
claim under the substantial evidence test rather than conducting a
de novo fact-finding hearing.
B. The trial court erred in determining that GAIC was not
entitled to notice of the deadline to file claims against PacAk.
C. The PacAk Receiver did not comply with the statutory
notice requirements with respect to GAIC.
D. Even if the statutory notice requirements were satisfied,
GAIC should be excused from compliance with the bar date because of
an agreement between the PacAk and PacWa Receivers that claims
timely filed in the Washington proceeding would be considered
timely in the Alaska proceeding.
E. PacAk is the initial reinsurer under the treaty.
We agree with the first two contentions. The others must
be determined by the superior court on remand. Our disposition on
GAIC's appeal moots PacAk's cross-appeal regarding attorney's fees.
IV. DISCUSSION
A. The Superior Court Erred in Applying the Substantial
Evidence Test. [Fn. 6]
The parties dispute the standard that the superior court
should have used to review the Receiver's decision to deny GAIC's
claims. The superior court deferentially reviewed the Receiver's
conclusions to determine whether they were supported by "substan-
tial evidence,"citing case law involving administrative agencies.
[Fn. 7]
GAIC asserts that Alaska's insurer liquidation statutes
require the superior court to conduct an independent review of its
claim. GAIC relies on AS 21.78.010, which provides that the
superior court has "exclusive original jurisdiction"over insurance
insolvency proceedings, and AS 21.78.170, which provides that the
superior court may "allow, allow in part or disallow"a disputed
claim after reviewing the Receiver's recommendation. Further, GAIC
argues that the Receiver lacks the authority to conduct a fact-
finding hearing, thus thwarting the development of a reviewable
record.
PacAk views the actions of the Receiver as "closely
analogous"to those of a master because the Receiver has "broad
discretion to operate within the area of its expertise." Thus,
PacAk encourages us to find that the substantial evidence test was
appropriate.
We agree with GAIC's interpretation. The substantial
evidence test is employed when courts review an administrative
determination. [Fn. 8] Our statutes do not require a receiver to
conduct a hearing on claims. Instead, the receiver is authorized
to review, investigate, and compromise claims and ultimately either
deny them or recommend to the court that they be paid. See AS
21.78.293(a). When a claim is denied, the claimant has sixty days
to file an objection with the receiver. See AS 21.78.170(c). If
the receiver does not change the denial after the objection is
filed, the receiver must "ask the court for a hearing as soon as
practicable."AS 21.78.170(d). The nature of this hearing is not
specified. However, since no hearing is required on the claim
before the receiver, due process requires a de novo evidentiary
hearing before the court. See Wright v. Black, 856 P.2d 477, 480
(Alaska 1993); Aguchak v. Montgomery Ward Co., 520 P.2d 1352, 1356
(Alaska 1974).
This interpretation is consistent with the evident
legislative intent. Rehabilitation and liquidation proceedings are
creatures of statute. [Fn. 9] See AS 21.78.010-.330. The superior
court's jurisdiction is limited to that expressly provided in
chapter 78. See AS 21.78.020(c). Alaska Statute 21.78.010(a)
provides that the court "is vested with exclusive original
jurisdiction of delinquency proceedings under this chapter, and is
authorized to make all necessary and proper orders to carry out the
purposes of this chapter." Original jurisdiction is "independent
jurisdiction, one not based on or limited to review of another
court's judgment or proceeding." 20 Am. Jur. 2d Courts sec. 66
(1995). By contrast, appellate jurisdiction is "the jurisdiction
of a superior court to review the final judgment, order, or decree
of an inferior court on the record made in the inferior tribunal."
Id. The grant of original jurisdiction in AS 21.78.010(a)
evidences the legislature's intent for the superior court to act as
the initial tribunal regarding a contested claim.
Moreover, we view the Receiver's role as closer to that
of a personal representative in probate proceedings than to that of
a master. A personal representative, like the Receiver, marshals
the assets of the estate and distributes them to the proper
claimants. See A. James Casner & Jeffery N. Pennell, Estate
Planning sec. 2.7.5 (6th ed. 1997). Similarity is also evident in
the
procedures governing disputed claims. The probate statutes require
the personal representative to allow or disallow a properly
presented claim. See AS 13.16.475. If a claimant objects to the
personal representative's disallowance of the claim, it may
petition the superior court for allowance, or sue the personal
representative. See id. In either case, the superior court must
conduct a de novo hearing including, if requested, a jury trial.
See AS 13.06.085; Cavanah v. Martin, 590 P.2d 41, 41-42 (Alaska
1979) (preponderance of evidence standard applies to hearings on
claim). [Fn. 10]
PacAk argues that, even if the superior court erred by
applying the substantial evidence standard, it entered independent
findings of fact that can be reviewed for clear error. We
disagree. The trial court never receded from its position that it
was reviewing the record only to determine whether substantial
evidence existed to support the Receiver's decision. Further, the
facts recited by the court do not resolve the disputed issues in
this case.
In its initial order affirming the denial of GAIC's
claim, the superior court simply concluded that substantial
evidence supported the Receiver's conclusion that (1) GAIC had
received proper notice and (2) its claim was untimely. In the
order on reconsideration the court, in ten numbered paragraphs,
recited facts which it found that the record established. The
facts set out do not resolve such important issues as timeliness;
whether GAIC received notice of the bar date; whether the notice of
August 11, 1989, was sent to GAIC's last known address; and whether
the late filing was excused by the agreement between the Receivers
that claims timely presented in one receivership would be
considered timely in the other. Further, the court concluded the
order on reconsideration, as the court did the initial order, by
stating that the Receiver had substantial evidence to determine
that GAIC's claim was untimely.
B. GAIC Was Entitled to Notice of the Deadline to File
Claims against PacAk.
The superior court determined that, as a matter of law,
GAIC was not entitled to notice of the deadline for filing claims
because GAIC "was not a policyholder nor did it have any claims
against one." The Order of Liquidation for PacAk provided:
12. The Receiver shall give or cause to
be given notice of the entry of this order as
follows:
A. By first class mail to all
policyholders as of the entry of this order and to all persons
known, or reasonably expected to have claims against the
policyholders of PACAK . . . .
. . . .
E. By first class mail to all other
persons who might reasonably be expected to have a claim against
PACAK.
The order specified that only the persons listed in paragraph 12(A)
were entitled to notice of the filing procedures for claims,
including the March 1, 1990 deadline.
The Order of Liquidation did not conform to the
controlling statute. At the time of the order, AS 21.78.290(b)
provided:
After the entry of the order of
insolvency, regardless of prior notice that may have been given to
creditors, the director shall notify all persons who may have
claims against the insurer to file the claims with the director, at
a place and within the time specified in the notice, or that the
claims shall be forever barred. The time specified in the notice
shall be as fixed by the court for filing claims and may not be
less than six months after the entry of the order of insolvency.
The notice shall be given in the manner and for the reasonable
period of time that may be ordered by the court.
(Emphasis added.) [Fn. 11] The liquidation order too narrowly
limited persons entitled to notice of the bar date. GAIC was
entitled to notice of both the liquidation order and of the time
within which to file claims if it "may have had a claim"against
PacAk.
The evidence unquestionably demonstrates that PacAk
should reasonably have known that GAIC "may have had"a claim
against it. The Receiver admits that PacWa forwarded the Bourg
file to PakAk August 1, 1989, with a representation that PakAk was
liable on the claim. She states that "the computer showed this
claim to be a PacAk liability." PakAk forwarded this file to GAIC.
GAIC was therefore entitled to notice of the bar date under AS
21.78.290(b).
C. The Superior Court Should Determine Whether PacAk
Complied with the Notice Requirements in AS 21.78.290(b).
Since AS 21.78.290(b) required PacAk to send notice of
the bar date to GAIC, the superior court must determine whether
PacAk complied with the statutory notice requirements. PacAk
presented evidence to the superior court that it mailed notice of
the bar date and a proof of claim to GAIC twice: first on August
1, 1989, along with the Bourg claim file, and again on August 11 in
a mass mailing of claim forms.
1. The August 1, 1989 mailing
GAIC concedes receiving the August 1 mailing, along with
notice of the order of PacAk's liquidation, but asserts that notice
of the deadline was not included with the file. The superior court
did not address whether GAIC received notice of the bar date with
the Bourg claim file; its only conclusion with respect to this
issue was that the Receiver had substantial evidence to determine
that GAIC received "the notices required either by law or by
express legal relationship of PacAk and GAIC." On remand, the
superior court should determine whether PacAk's August 1, 1989
mailing fulfilled the requirements of AS 21.78.290(b).
2. The August 11, 1989 mailing
On August 11 PacAk mailed notices of the Order of
Liquidation and instructions for filing claims to all companies
listed as "producers"in its records, including GAIC. PacAk mailed
the notice to GAIC's New York address; it was returned as
undeliverable since GAIC had relocated to Delaware. [Fn. 12] Both
parties agree that GAIC did not actually receive the August 11
mailing.
GAIC argues that PacAk failed to send the August 11
notice to its "last known address"and that therefore this mailing
failed to satisfy AS 21.78.290. [Fn. 13] We agree.
Bunner v. Imperial Insurance Co., 225 Cal. Rptr. 912
(Cal. App. 1986), is instructive. There, interpreting the
California liquidation statutes, the court addressed the
requirement that notice of an insurer's insolvency and the deadline
for filing claims be mailed to a claimant's "last known address."
Id. at 915. The Commissioner of Insurance mailed the required
notice to the claimant; the mailing was not returned. Id. at 914.
The claimant, however, had previously moved and did not receive the
notice. Id. Bunner held that the mailing failed to satisfy the
last known address requirement since the claimant's current address
was "readily ascertainable"from county telephone listings and
professional listings. Id. at 914, 917. Thus, a late claim could
be asserted. Id. at 917.
GAIC points out that the Receiver had previously mailed
the Bourg claim file on August 1 and a second letter on August 7
requesting a copy of the Bourg file to its current Delaware
address. The Receiver's secretary, Sarah Baskurt, mailed the
August 1 and 7 letters to GAIC using an address from recent
correspondence. Baskurt obtained GAIC's New York address for the
August 11 mailing from a computer-generated list of agents dating
from September 1988. With minimal effort, PacAk could have
obtained GAIC's current address by cross-referencing GAIC's recent
correspondence in its possession; a resort to external sources was
unnecessary. In view of the fact that PacAk could have "readily
ascertained"GAIC's address had it simply examined its own files
after the notice was returned, and the fact that AS 21.78.290
places the responsibility on the Receiver to prepare and send the
notice, we hold that PacAk failed to send the August 11, 1989
notice to GAIC's last known address. [Fn. 14] Cf. In re Estate of
Evans, 901 P.2d 1138, 1143 (Alaska 1995) (rejecting inquiry notice
as substitute for statutory notice requirement in probate
proceedings); Bunner, 225 Cal. Rptr. at 914.
D. If the Superior Court Finds That PacAk Complied with AS
21.78.290(b), It Should Determine Whether GAIC's Late Filing Is
Excused Because It Was Timely Submitted in the PacWa Estate.
Even if GAIC received proper statutory notice of the bar
date, the superior court should determine whether GAIC's accepted
filing of the same claim with the PacWa estate excuses any late
filing with the PacAk estate. GAIC argues that its claims fall
within an established "protocol"between PacAk and PacWa to accept
claims timely filed with the wrong receivership without penalty.
GAIC explains that such an agreement arose from the confusion
surrounding the previous interrelationship of the two companies.
GAIC points to an affidavit executed by former PacWa Receiver
Virgil McQueen in which McQueen states that "Wainscott . . . and I
. . . agreed that claims which were filed on time but which were
filed with the wrong receivership would be accepted as timely filed
by the correct receivership without penalty." PacAk does not
dispute that such an agreement existed but argues that GAIC needed
to at least have submitted a timely proof of claim in the PacWa
estate.
On December 9, 1991, GAIC filed a claim for reinsurance
with PacWa for the same four disputed claims. [Fn. 15] Although
GAIC submitted the claims after the PacWa bar date, PacWa accepted
GAIC's claims as timely because GAIC was secured by a letter of
credit. In September 1992 GAIC's Deputy Receiver, Frank MacArtor,
wrote the PacAk Receiver, requesting that she accept GAIC's claims
as timely because GAIC had "established a Proof of Claim #1-000001
with PACMAR of Washington as of November 17, 1988, based on a
secured Letter of Credit." The PacAk Receiver replied in October
that she would accept GAIC's claim as timely if GAIC had filed a
proof of claim form with the PacWa estate prior to March 1, 1990.
PacWa's accounting manager, Charles Glass, wrote back that PacWa
had not required GAIC to file a proof of claim because GAIC was
secured by a letter of credit.
Since GAIC was excused from submitting a timely claim in
the PacWa estate, the superior court should determine whether this
excuses a late filing with PacAk. In making this determination,
the court should determine the meaning of the agreement between the
Receivers in light of its purposes.
E. If GAIC Was Not Notified of the Bar Date or If Timely
Filing Was Excused, the Trial Court Should Determine Whether PacAk
Is Liable as a Reinsurer.
GAIC argues that we should direct the superior court to
conclude that PacAk is liable as a matter of law on the policies in
question. GAIC's argument is essentially that PacAk, not PacWa,
was the contracting party with respect to the policies produced by
THOMCO. Further, GAIC contends that the affairs of PacAk and PacWa
were so intermingled that it is just and proper to hold both
companies responsible.
PacAk argues that the trial court has already determined
as a matter of fact that PacAk was not the reinsurer. It relies on
a footnote in the court's opinion on reconsideration which states
as follows:
On December 15, 1982, Great Atlantic
Insurance Company (GAIC) entered into the Quota Share Treaty. The
treaty called for GAIC to cede 100% of the business covered by the
treaty to "the Reinsurer." The Preamble defined the Reinsurer as
"Pacific Marine Insurance Company of Alaska, Anchorage, Alaska, its
parent and/or its affiliated companies." According to the expert
hired by the Receiver to assist in evaluating the GAIC claim, that
definition of the Reinsurer is broad enough to allow either PacAk
or PacWa to assume reinsurance under the treaty. The treaty had an
inception date of 10/1/82 and was cancelled on 6/1/84. GAIC ceded
267 policies under the treaty with a total premium of $4,712,850.
Every GAIC policy and all premium were ceded to PacWa under this
treaty. PacWa received the entire $4,712,850 in premiums paid.
PacAk received no premium whatsoever. The Annual Statements of
GAIC show PacWa as assuming the reinsurance obligations under this
treaty.
The Annual Statements of PacWa show PacWa
as assuming the reinsurance obligations under this treaty. The
Annual Statements of PacAk do not mention this treaty. All of this
is consistent with the manner in which the reinsurance premium was
accounted, with PacAk receiving nothing.
We do not believe that this footnote was meant to be a
finding that PacAk was not a reinsurer of the claims in question.
The court also stated that "given the untimeliness of GAIC's claim,
the court does not reach the other issues raised by GAIC."
Further, GAIC's claim appears to be strong. [Fn. 16] Premium
allocation and preparation of annual statements were matters
internal to PacWa and PacAk over which GAIC had no control. They
do not necessarily determine whether PacAk was a reinsurer. [Fn.
17] The footnote taken alone and without discussion of the
evidentiary basis for GAIC's claim fails to establish that PacAk
was not the initial reinsurer.
On the other hand, we think that it would be
inappropriate for this court to rule that PacAk was the reinsurer
at this juncture. That is the trial court's responsibility as fact
finder. As we view the record, that responsibility has yet to be
exercised.
V. CONCLUSION
We REVERSE the judgment of the superior court and REMAND
for de novo consideration of this case.
FOOTNOTES
Footnote 1:
The disputed agreement called for "treaty"reinsurance because
it covered multiple policies. More precisely, the agreement was a
"quota share"treaty, meaning that it covered a proportion of the
reinsured's losses.
Footnote 2:
PakAk "its parent and/or affiliated Companies"also
"retroceded"to GAIC a 50% quota share of the policies ceded under
the treaty in a separate agreement between PacAk and GAIC. The
retrocession agreement was also made on December 15.
Footnote 3:
As of the date of the agreement PacAk, but not PacWa, was an
authorized reinsurer under the Longshoremen's Act. On January 1,
1983, PacWa became an authorized issuer under the Act.
Footnote 4:
In 1988 PacWa apparently reacquired PacAk, again becoming its
parent company.
Footnote 5:
PacWa has denied GAIC's claims on the grounds that PacAk was
the reinsurer under the treaty.
Footnote 6:
Whether the superior court applied the proper standard of
review to the Receiver's decision presents a question of law to
which we apply our independent judgment. See Butler v. Dunlap, 931
P.2d 1036, 1038 (Alaska 1997); McCoy v. McCoy, 926 P.2d 460, 463
(Alaska 1996).
Footnote 7:
In a dispute between PacAk and PacWa involving similar issues,
the superior court conducted a de novo determination of the claims
presented, giving no deference to the Receiver's decision and
applying the preponderance of the evidence standard. The dispute
occurred within the ongoing receivership proceedings under
consideration in this appeal. The court stated:
1. The Superior Court is the trier of
fact and exercises original jurisdiction over the disputed claims
of PacWa against the PacAk receivership estate.
2. PacWa, the claimant, must establish
its claim by a preponderance of the evidence.
3. The Superior Court will enter
findings of fact, conclusions of law, and judgment and decree
following the trial/evidentiary hearings on PacWa's disputed claims
against the PacAk receivership estate.
The superior court also allowed PacWa and PacAk to conduct
discovery and present testimony and evidence "in accordance with
the civil rules."
Footnote 8:
See, e.g., Nyberg v. University of Alaska, 954 P.2d 1376, 1378
(Alaska 1998); Jager v. State, 537 P.2d 1100, 1107 (Alaska 1975).
Footnote 9:
The parties recognize that case law addressing this issue is
sparse. GAIC and PacAk point to only one unpublished decision to
elucidate the standard of review, State ex rel. McReynolds v.
Petroleum Marketers Mutual Insurance Co., No. 01-A-01-9405-CH00211,
1994 WL 581465 (Tenn. App. Oct. 21, 1994). In Petroleum Marketers,
the trial court upheld the Receiver's decision to deny a late claim
because the court concluded that it could not "substitute its
judgment for that of the Receiver." Id. at *1. Reversing, the
Tennessee Court of Appeals observed that the statutory scheme
granted the trial court general supervision over the receivership
administration as well as the authority to "approve, disapprove, or
modify the liquidator's report of claims." Id. at *2. The court
then addressed the merits of the claimant's excusable neglect
argument after "conceding"that the trial court had the power to
substitute its judgment. See id. We note that the same court
subsequently held that the receivership statutes did not abridge
the traditional powers of the superior court because they were
devoid of any limitations on the standard of review. See State ex
rel. Sizemore v. United Physician Ins. Risk Retention Group, No.
01-A-01-9610-CH-0044, 1997 WL 181526, at *1-3 (Tenn. App. Apr. 16,
1997).
PacAk also cites two cases to emphasize that the Receiver
has "broad discretion"to act; however, these cases are inapposite
because they do not address the Receiver's authority to resolve
disputed claims. See Kentucky Central Life Ins. Co. v. Stephens,
898 S.W.2d 83, 85-86 (Ky. 1995) (applying abuse of discretion
standard to receiver's judgment to sell real estate assets); Minor
v. Stephens, 898 S.W.2d 71, 83 (Ky. 1995) (applying abuse of
discretion standard to Insurance Commissioner's decision to
liquidate insurance company).
Footnote 10:
Cf. Coit Independence Joint Venture v. Federal Sav. & Loan
Ins. Corp., 489 U.S. 561, 572-79 (1989) (holding that court should
review Receiver's decision de novo since statute did not provide
for judicial review under Administrative Procedure Act); Academy
Life Ins. Co. v. Odiorne, 797 P.2d 727, 734 (Ariz. App. 1990)
(remanding to trial court for additional evidence of reinsurance
agreement coverage where two receivers disputed illegality of
agreement); In re Liquidation of Union Indem. Ins. Co., 651
N.Y.S.2d 436, 437-38 (N.Y. App. Div. 1996) (holding that where
unresolved questions of fact remained over proper substantiation of
the claim and liability, the issues "must be determined at trial").
Footnote 11:
The statute was amended in 1990 to require notice by first
class mail to the insurance director, guaranty associations,
insurance agents and "all persons known or reasonably expected to
have claims against the insurer, including all policyholders
. . . ." AS 21.78.290(a).
Footnote 12:
GAIC claims in its opening brief that the move took place on
November 17, 1988.
Footnote 13:
At the time of the entry of the Order of Liquidation for
PacAk, AS 21.78.290(b) provided that notice "shall be given in the
manner and for the reasonable period of time that may be ordered by
the court." The order prescribed that notice should be sent by
first class mail to the "last known address, where available"for
policyholders and those with claims against policyholders (those
claimants in paragraph 12(A)).
Footnote 14:
In 1990, the legislature amended AS 21.78.290 to require that
notice be sent by first class mail to "the [claimant's] last known
address as indicated by the records of the insurer." AS
21.78.290(a)(4). In addition, the claimant now "has a duty to keep
the receiver informed of a change of address." AS 21.78.290(b).
Footnote 15:
This claim reflects the confusion of entities which gave rise
to this case for it is addressed to "Pacific Marine Insurance
Company of Alaska in Liquidation"but the address is PacWa's. In
the body of the claim the reinsurer is referred to simply as
PACMAR, a designation which could be applicable either to PacAk or
PacWa.
Footnote 16:
GAIC supports its claim, in part, as follows:
[T]he signature line on the PacAk-GAIC Treaty
indicates that PacAk is the reinsurer. In addition, PacAk, but not
PacWa, is a party to the Managing General Agency Agreement and the
claims adjusting agreement. In addition, the GAIC Receiver
requested that various former parties involved in the negotiation,
drafting, or implementation of the PacAk-GAIC Treaty review the
treaty and provide their recollections on the identity of the
reinsurer.
Mr. Jack Sullivan, the reinsurance inter-
mediary who drafted the treaty, confirmed in a
June 22, 1995, affidavit that PacAk is the reinsurer under the
PacAk-GAIC Treaty. Mr. Ben C. Roark, the former Controller and
Treasurer for PacAk and PacWa, the PacAk officer responsible for
implementing the accounting functions of the company, states in a
January 4, 1995 affidavit that PacAk is the reinsurer under the
PacAk-GAIC treaty. Finally, Mr. Alan Bottomley, a reinsurance
consultant who prepared an endorsement to the PacAk-GAIC Treaty,
has stated in a June 22, 1995 affidavit that PacAk is the reinsurer
under the treaty.
On the effective date of the termination
of the PacAk-GAIC Treaty, PacAk procured Certificates of Guaranty
on two of the underlying policies at issue. Although the
certificates were only to provide coverage for losses which took
place on or after June 1, 1984 (and, therefore, do not apply to the
losses for which GAIC is seeking reinsurance), the certificates
provided coverage to "PakAk"for two of the same policies which
PacAk now claims are not its liability as a reinsurer.
Footnote 17:
Witnesses Bottomley and Marinkovich ascribe the premium
allocation to the December 14, 1982 agreement in which PacWa
automatically assumed all reinsurance assumed by PacAk. Under this
view, PacAk would be the initial reinsurer whose reinsurance in
turn was assumed by PacWa.
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