Bryant v. United Shortline Inc. Assur. Services, N.A.

• Decision Date: 25 August 1998
• Docket Number: No. 97-0093,97-0093
• Parties: 41 Tex. Sup. Ct. J. 772 Jeanne Barnes BRYANT, as Liquidator of Anchorage Fire & Casualty Insurance Company, Petitioner, v. UNITED SHORTLINE INC. ASSURANCE SERVICES, N.A. and Surety Bank, N.A., Respondents.
• Court: Texas Supreme Court

Page 26

972 S.W.2d 26

41 Tex. Sup. Ct. J. 772

Jeanne Barnes BRYANT, as Liquidator of Anchorage Fire &

Casualty Insurance Company, Petitioner, v. UNITED SHORTLINE INC. ASSURANCE SERVICES, N.A. and Surety

Bank, N.A., Respondents.

No. 97-0093.

Supreme Court of Texas.

Argued Nov. 3, 1997.

Decided May 8, 1998.

Rehearing Overruled Aug. 25, 1998.

Harold B. Gold, Dallas, for Petitioner.

James D. Shields, Dallas, Kleber C. Miller, Sterling W. Steves, Richard G. Williams, Christopher G. Lyster, Fort Worth, Jerome H. Ferguson, III, Lawrence E. Ackels, Joseph E. Ackels, Dallas, for Respondents.

ENOCH, Justice, delivered the opinion of the Court, in which PHILLIPS, Chief Justice, and GONZALEZ, SPECTOR and ABBOTT, Justices, join.

In this case, we consider whether a Tennessee chancery court order that gives that court exclusive jurisdiction over the assets of an insolvent insurer precludes a Texas lawsuit by a judgment creditor to satisfy the judgment from funds in a Texas bank, the ownership of such funds being in dispute. The court of appeals held that the Tennessee order exceeded the chancery court's jurisdictional limits, and therefore affirmed the trial court's refusal to enjoin or stay the Texas proceedings. We affirm the court of appeals' judgment, but for reasons different than those expressed in the court of appeals' opinion.

I. BACKGROUND

A. The Tennessee Liquidation Order

Anchorage Fire & Casualty Insurance Company ("Anchorage") is in liquidation in Tennessee. In March 1993, a Tennessee chancery court issued a conservation order placing Anchorage in receivership pursuant to the Tennessee Insurers Rehabilitation and Liquidation Act ("TIRLA"). TENN.CODE ANN. §§ 56-9-101 to -510 (1994). The conservation order directed the Tennessee Commissioner of Commerce and Insurance (the "Commissioner") to take possession of and administer Anchorage's assets; the order specifically authorized the Commissioner to act outside of Tennessee to marshal and conserve Anchorage's assets. The order also temporarily enjoined all persons from transferring or disposing of Anchorage's property, from interfering with the conservator or the conservatorship, from instituting or further prosecuting any actions or proceedings against Anchorage, and from obtaining preferences, judgments, attachments, or other liens against Anchorage or its assets.

The Tennessee court later converted the conservation order into a liquidation order, invoking section 56-9-402 of TIRLA as its jurisdictional basis. Section 56-9-402 allows liquidation of the "assets found in [Tennessee]" of a foreign or alien insurer not domiciled in Tennessee. TIRLA § 56-9-402. The liquidation order converted the temporary injunction into a permanent injunction. More importantly for purposes of this opinion, the order also empowered the liquidator to take possession of all Anchorage assets wherever located. The order named the Commissioner as the liquidator, and authorized him to act through petitioner Jeanne Barnes Bryant (the "Liquidator").

B. The USI Suit

Meanwhile, United Shortline, Inc. Assurance Services, N.A. ("USI") had a $2 million Florida judgment against MacGregor General Insurance Company ("MacGregor"), a foreign general casualty insurance company. Both MacGregor and Anchorage had assets on deposit with Surety Bank, N.A. (the "Bank") in Hurst, Texas. USI sued MacGregor in a Texas district court seeking to preserve MacGregor's assets, including those deposited at the Bank.

The Bank intervened in this action, interpleading several entities, including Anchorage and the state of Tennessee, with claims to the disputed assets. The funds at issue originated from the Bank's insurance premium financing business with MacGregor and Anchorage. The Bank was unsure about ownership of the disputed funds in part because of reinsurance agreements and correspondence between MacGregor and Anchorage suggesting that Anchorage may be entitled to insurance premium finance payments owed to MacGregor. The Bank had been collecting from insureds of both companies. The Bank deposited about $600,000 into the registry of the court pending resolution of the conflicting claims.

The Liquidator moved to dismiss or stay, arguing that the Texas court should afford full faith and credit to the Tennessee liquidation order and require the Bank to adjudicate ownership of the disputed funds in the Tennessee liquidation proceeding. The trial court denied the Liquidator's motion to dismiss or stay and granted summary judgment for USI, awarding it the interpleaded funds.

The Liquidator appealed. The court of appeals affirmed in part and reversed in part the trial court's judgment. The court of appeals held that the liquidation order showed on its face that it was void for lack of jurisdiction, and therefore the trial court did not err in refusing to dismiss or stay the action. However, the court of appeals held that a fact question remained about ownership of the disputed funds. The court of appeals therefore remanded the case for trial.

The Liquidator asserts that the court of appeals erred in several respects. First, the Liquidator contends that the court of appeals should have held that the liquidation order was entitled to full faith and credit, and that, so entitled, the order required that the USI lawsuit be dismissed or stayed. Second, the Liquidator argues that principles of comity require staying or dismissing the suit. Finally, the Liquidator urges that intervention by the Bank was improper and that the interpleader action was inappropriate. We take up these arguments in turn.

II. FULL FAITH AND CREDIT

The United States Constitution requires each state to give full faith and credit to the public acts, records, and judicial proceedings of every other state. U.S. CONST. art. IV, § 1; see also Barber v. Barber, 323 U.S. 77, 79, 65 S.Ct. 137, 89 L.Ed. 82 (1944). Both the United States Supreme Court and this Court have held that the full faith and credit clause applies to orders placing insurance companies into receivership. See Underwriters Nat'l Assurance Co. v. North Carolina Life & Accident & Health Ins. Guar. Ass'n, 455 U.S. 691, 707, 102 S.Ct. 1357, 71 L.Ed.2d 558 (1982); Bard v. Charles R. Myers Ins. Agency, Inc., 839 S.W.2d 791, 795 (Tex.1992). In Underwriters, the United States Supreme Court noted that the full faith and credit clause requires only that an order be given the same effect in the sister state that it has in the rendering state; thus, a void order is no more enforceable in a sister state under the full faith and credit clause than it is in the rendering state. See Underwriters, 455 U.S. at 704 n. 10, 102 S.Ct. 1357 n. 10 ("One State's refusal to enforce a judgment rendered in another State when the judgment is void for lack of jurisdiction merely gives to that judgment the same 'credit, validity, and effect' that it would receive in a court of the rendering state.").

The parties vigorously contest how the full faith and credit clause should be applied in this case. The Liquidator contends that the liquidation order precludes the Texas action, as the order requires all claims against the estate or the property of the estate to be brought in the Tennessee liquidation court.

The Bank and USI respond that the liquidation order is void insofar as it purports to authorize the Liquidator to marshal assets located outside Tennessee. They argue that TIRLA gives the Tennessee court jurisdiction over only those assets of Anchorage located in Tennessee. See TIRLA § 56-9-402(a) (authorizing chancery court to order commissioner to liquidate "the assets found in this state of a foreign insurer or an alien insurer not domiciled in this state") (emphasis added). The court of appeals agreed with this argument, finding that the liquidation order "shows on its face that it was entered in excess of the jurisdiction granted to the court by [TIRLA]." The court of appeals therefore refused to give full faith and credit to the order. Id.

The Liquidator contends that such an argument is an improper collateral attack on the jurisdiction of the Tennessee chancery court, and that such an attack can be brought only on direct appeal in the Tennessee proceeding. Moreover, the Liquidator urges that TIRLA in fact affords jurisdiction to the Tennessee chancery court over Anchorage's assets located in other states. See TIRLA § 56-9-402(c) ("If it appears to the court that the best interests of creditors, policyholders and the public so require, the court may issue an order to liquidate in whatever terms it deems appropriate.") (emphasis added). The Texas Department of Insurance has filed amicus briefs in support of the Liquidator's position, arguing that there is a strong public policy interest in affording full faith and credit to liquidation proceedings in other states, and that this Court recognized such an interest in Bard.

We agree with the Liquidator and the Department of Insurance that Texas recognizes a compelling policy interest in having claims against an insolvent insurer's estate resolved in a single proceeding. See Bard, 839 S.W.2d at 797 (noting that adjudication in receivership proceedings of all claims against insolvent insurer's estate ensures "fair and consistent treatment of all claims"); see also TEX. INS.CODE art. 21.28, § 8. Thus, we have no difficulty in stating that, had the Bank or USI proceeded against Anchorage or the Liquidator, the full faith and credit clause may very well have necessitated dismissal of such a suit. Bard, 839 S.W.2d at 795. What is overlooked in the parties' and the amicus's arguments about the full faith and credit clause, however, is the fact that the action at issue--the Bank's interpleader of funds, the ownership of which is in dispute--is not within the scope of the Tennessee liquidation order.

We need not decide in this case whether TIRLA authorizes the Tennessee chancery court to order the Liquidator to marshal Anchorage assets located outside of...