Angoff v. Marion A. Allen, Inc.

• Decision Date: 31 January 2001
• Citation: 39 S.W.3d 483
• Parties: (Mo.banc 2001) . Jay Angoff, Director, Missouri Department of Insurance, acting as receiver for Commonwealth General Insurance Company, Respondent, v. Marion A. Allen, Inc., Marion A. Allen, Inc. of Gainsville, Marion A. Allen, Inc. of Ft. Valley, Allen Insurance Associates, Inc., and Allen and Furr, Inc., Appellants. SC82910 Supreme Court of Missouri Handdown Date: 0
• Court: Missouri Supreme Court

39 S.W.3d 483 (Mo.banc 2001)

This slip opinion is subject to revision and may not reflect the final opinion adopted by the Court.

Jay Angoff, Director, Missouri Department of Insurance, acting as receiver for Commonwealth General Insurance Company, Respondent, v. Marion A. Allen, Inc., Marion A. Allen, Inc. of Gainsville, Marion A. Allen, Inc. of Ft. Valley, Allen Insurance Associates, Inc., and Allen and Furr, Inc., Appellants.

SC82910

Supreme Court of Missouri

Handdown Date: 01/31/2001

Appeal From: Circuit Court of Jackson County, Hon. Lee E. Wells

Counsel for Appellant: Kent Sellers, Stacy M. Andreas and Amy B. Marcus

Counsel for Respondent: Bruce E. Baty and Diane Garber

Opinion Summary: The insurance receiver seeks earned premiums from insurance agents that it claims are due to the insurer. The insurance agents argued they were not subject to personal jurisdiction in Missouri and were entitled to set off the premiums it owed the insurer by the unearned premiums that the insurer owed it, leaving no balance owing to the insurer at the time of the insolvency. The court granted summary judgment in the receiver's favor.

REVERSED AND REMANDED.

Court en banc holds:

(1) Missouri has jurisdiction over the agents. Missouri's long arm statute gives the court jurisdiction. Also, the pleadings' allegations, the contracts and course of dealings, and the ability to foresee that its contracts would involve insurance business in Missouri, show sufficient minimum contacts with Missouri to satisfy due process. This result accords with other jurisdictions on the state's right to assert jurisdiction over non-resident insurance agents under similar circumstances.

(2) The agents are entitled to the set-off of pre-receivership unearned and earned premiums. Section 375.1198 provides for the set-off of mutual debts or credits from a contract with an insurer and agent in liquidation. Under the parties' course of dealings, set-off was customary, and the insurer's records at the time of insolvency showed or should have shown a set-off of the amounts claimed against the amounts owed. Exceptions claimed by the receiver are inapplicable. The debts are mutual. The agents are seeking set-off only of pre-insolvency earned premiums with pre-insolvency unearned premiums, as reflected pursuant to their course of dealing. The liabilities of the parties were fixed at insolvency. A fact issue exists, therefore, as to whether, as claimed by the agents, that under the parties' course of dealing, the policies had been canceled and the agents was entitled to a set-off of these pre-insolvency debts as reflected on the books of the insurer at the time of the declaration of a receivership. Thus, summary judgment was improper.

Opinion Author: PER CURIAM

Opinion Vote: REVERSED AND REMANDED. Limbaugh, White, Wolff and Benton, JJ., and Crahan, Dowd and Sullivan, Sp.JJ., concur. Price, C.J., Covington and Holstein, JJ., not participating.

Opinion:

PER CURIAM¹

Marion A. Allen, Inc., Marion A. Allen, Inc. of Gainsville, Marion A. Allen, Inc. of Ft. Valley, Allen Insurance Associates, Inc. and Allen and Furr, Inc. (collectively Agent), appeal the decision of the trial court granting judgment to Jay Angoff, as receiver of Commonwealth General Insurance Company (Insurer), on Insurer's claims against Agent for payment of earned premiums due Insurer at the time Insurer was declared insolvent. Agent argues that the trial court erred in granting Insurer summary judgment because Agent is not subject to personal jurisdiction in Missouri. In the alternative, it argues that, under Missouri law, and under its contract and course of dealings with Insurer, it was entitled to set-off the amount of earned premiums Receiver alleges it owed Insurer by the amount of unearned premiums that Insurer owed it as shown on Insurer's records at the time of the insolvency. It claims that these records show that Insurer owes it more than it owes Insurer; thus, it has no balance owing Insurer at the time of the insolvency and, thus, no debt to go into the receivership estate.

Agent is subject to personal jurisdiction in Missouri. Agent, however, presented evidence that under the parties' course of dealings, Insurer's records at the time of insolvency showed or should have shown a set-off of the amounts claimed against the amounts owed Agent by Insurer, thus leaving no balance due to the Receiver. This is a material fact that is in dispute. Accordingly, the judgment is reversed, and the case is remanded.

STATEMENT OF FACTS

Resolving all factual issues in favor of Agent, against whom summary judgment was granted, the record shows that, in April and July 1988, Insurer contracted with Agent, licensed insurance agents in the State of Georgia. The contract established an agency relationship between Insurer and Agent, enabling Agent to solicit contracts of insurance on behalf of Insurer.

During the course of their relationship, the parties accounted for monies due each other on a monthly basis. The accounting was, in part, based on a system of set-offs whereby, for example, if Insurer owed Agent money representing returned premiums, cancellations, or the like, Insurer would credit that amount against the amount of premiums Agent owed Insurer if the amount Agent owed Insurer exceeded the amount Insurer owed Agent. Agent paid Insurer the difference. When the amount Insurer owed Agent exceeded the amount Agent owed Insurer, the excess was carried over as a credit to the next month. Thus, in some months, as a result of the set-offs, Agent was not required to pay any additional money to Insurer.

Between September 1992 and August 30, 1993, Agent successfully solicited general liability and property policies and trucking policies on behalf of Insurer and had been paid premiums by the insureds. In order to bind coverage for these policies, Agent then paid over to Insurer $321,649.34 of these premium deposits and unearned premiums. In addition, in regard to this and other business that Agent did with Insurer, Insurer's records showed earned premiums due from Agent in the amount of $88,819.50.

In June 1993, Bill Raschke, former head of Insurer's commercial insurance division, called Tricia Adams, treasurer of Agent, to inform her that Insurer was losing its reinsurance for the general liability and property policies. He suggested to Ms. Adams that they move the business to another insurer instead of simply canceling all the policies. They agreed that Agent would pay premiums to a new insurance company to bind the new policies and Insurer would refund the unearned portion of the premiums for the transferred policies to Agent, mailing any difference by check to Agent. Agent, therefore, proceeded to transfer the affected policies to General Insurance Company and sought a refund of the unearned premiums. In recognition of this transfer, Agent states that Insurer's agency statements reflect that Agent was due $87,310.88 for these unearned premiums.

Also in 1993, before Insurer was placed in receivership, Mr. Baskin, Insurer's former president, informed Ms. Adams that he no longer wanted to underwrite the insurance of trucking companies and asked that this group of policies be moved to another insurer. Once again, the parties orally agreed that Agent would bind coverage with another insurer, and after the cancellation of these policies, Insurer would then return the premium deposits regarding these policies, totaling $234,338.46, to Agent. Agent paid First American Insurance Co. to bind coverage for the insureds. As a result of these transactions and set-offs, Agent says Insurer's records reflect refunds due Agent for unearned premiums paid on the transferred policies totaling $321,649.34.²

Then, on September 15, 1993, the Circuit Court of Jackson County ordered Insurer into receivership. At that time, Jay Angoff, Director of the Missouri Department of Insurance (Receiver), was appointed to serve as receiver for Insurer. Nearly two years later, on September 1, 1995, it was determined that efforts at rehabilitation had failed, and Insurer was placed into insolvency.³

Receiver brought suit against Agent to collect the $88,819.50 in earned premiums he said was due Insurer as of the date of the receivership pursuant to section 375.1204⁴ and Agent's agency contracts with Insurer. Agent denied that it was subject to the jurisdiction of the Missouri courts. Alternatively, it requested a set-off against the $88,819.50 in earned premiums of the $87,310.88 in unearned premiums due it related to the general liability and property policies and the $234,338.46 in unearned premiums due it related to the trucking company policies. The lower court granted Receiver's motion for summary judgment, rejecting Agent's claims that it was entitled to a defense of set-off and that the lower court lacked personal jurisdiction over Agent.

MISSOURI HAS PERSONAL JURISDICTION OVER AGENT

The determination whether the assertion of personal jurisdiction over a non-resident is proper requires a two-step inquiry. Farris v. Boyke, 936 S.W.2d 197, 200 (Mo. App. 1996); Shirkey v. McMaster, 876 S.W.2d 648, 649 (Mo. App. 1994). The first step is to determine whether the applicable long-arm statute, in this case section 375.1154, has been invoked by the actions of the out-of-state defendant. Id. If so, then the second step is to determine whether the assertion of personal jurisdiction comports with due process. Id.

Section 375.1154 states in relevant part:

[A] court of this state having jurisdiction of the subject matter has jurisdiction over a person served pursuant to applicable laws or supreme court rule in an action brought by the receiver of a domestic insurer or an alien insurer domiciled in this state:

(a) If the person served is an agent, broker, or other person who has at any time written policies of insurance for or has acted in any manner whatsoever on behalf of an insurer against which a delinquency...