Council of Ins. Agents v. Richards, Civil No. 2004–16.

CourtUnited States District Courts. 3th Circuit. District of the Virgin Islands
Writing for the CourtGÓMEZ
Citation47 V.I. 738
Decision Date18 July 2006
Docket NumberCivil No. 2004–16.
PartiesThe COUNCIL OF INSURANCE AGENTS & BROKERS, Plaintiff, v. Vargrave RICHARDS, in his official capacity as the Virgin Islands Commissioner of Insurance, Defendant.

47 V.I. 738

Vargrave RICHARDS, in his official capacity as the Virgin Islands Commissioner of Insurance, Defendant.

Civil No. 2004–16.

District Court, Virgin Islands,
Division of St. Thomas & St. John.

July 18, 2006.

[47 V.I. 739]

James M. Derr, Esq., St. Thomas, V.I., Scott A. Sinder, Esq., Daniel S. Blynn, Esq., Washington, D.C., for the Plaintiff.

Carol Thomas–Jacobs, Esq., St. Thomas, V.I., for the Defendant.

Memorandum Opinion


The Council of Insurance Agents Brokers (the “Council”), brings this action against Vargrave Richards (the “Insurance Commissioner”), the Insurance Commissioner of the Virgin Islands, alleging violations under the Privileges and Immunities Clause and Equal Protection Clause of the United States Constitution.

I. Factual and Procedural Background

The Council is a trade association that represents over 300 of the nation's largest commercial property/casualty insurance agencies and brokerage firms. The Council's members also include insurance agents and brokers who are licensed in the Virgin Islands, but who reside outside of the Virgin Islands.

Richards is the Insurance Commissioner of the Virgin Islands. The Insurance Commissioner is charged with administering the insurance laws of the Virgin Islands. V.I.Code Ann. tit. 22, § 53.

[47 V.I. 740]

Under Virgin Islands law, every agent 1 or broker 2 who sells or solicits the purchase of insurance in the Territory—regardless of his or her residence—must be licensed by the Virgin Islands Division of Banking and Insurance. See22 V.I .C. §§ 752, 772. Unlike resident agents and brokers, however, nonresident agents and brokers also must comply with an additional set of requirements, the constitutionality of which are in dispute in this case.

The challenged provisions specifically impose two conditions on nonresident agents or brokers who solicit, negotiate, or effect an insurance contract involving any Virgin Islands risk.

First, a nonresident agent shall not:

[I]ssue an insurance contract covering a subject of insurance resident, located, or to be performed in this territory unless the insurance contract ... is countersigned by its licensed agent ... resident in this territory....

22 V.I.C. § 220(a) (“Section 220”).

Second, the countersigning agent:

[S]hall receive not less than ten percent (10%) of the premium on bonds and all such lines of insurance as a countersignature fee, but in no event may such countersigning resident agent or manager receive more than fifty percent (50%) of the commission payable to the nonresident licensee.

[47 V.I. 741]

22 V.I.C. § 772(d) (“Section 772”).3

The Council brings this action on behalf of its members. It does not seek monetary relief nor does it allege injury to itself. Rather, the Council alleges that title 22, sections 220 and 772 of the Virgin Islands Code unlawfully discriminate on the basis of residency. The Council therefore seeks a declaration from the Court that those sections are unconstitutional. The Council also seeks an injunction to prevent the Insurance Commissioner from enforcing these countersignature provisions.

The Council has moved for summary judgment on its claim. The Insurance Commissioner opposes the Council's motion, and has filed a cross-motion for summary judgment arguing that the Council lacks standing to bring the instant suit.

II. Summary Judgment Standard

Summary judgment shall be granted only if “the pleadings, depositions, answer to interrogatories, and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(c). A fact is material if its existence or nonexistence might affect the outcome of the suit under applicable law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

The moving party has the initial burden of informing the Court of the basis for a motion for summary judgment and pointing out those parts of the record which he or she believes demonstrates an absence of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). If the moving party carries its burden, the nonmoving party “may not rest upon the

[47 V.I. 742]

mere allegations or denials of his or her pleadings, but his or her response must set forth specific facts showing that there is a genuine issue for trial.” Conners v. Fawn Mining Corp., 30 F.3d 483, 489 (3d Cir.1994) (citations omitted). All reasonable inferences are drawn in favor of the nonmovant. Anderson, 477 U.S. at 255.

III. AnalysisA. Standing

The Insurance Commissioner contends that the Council lacks standing to bring this suit and that the action should be dismissed. To have standing to bring a lawsuit under Article III of the United States Constitution, a plaintiff must allege an injury that is fairly traceable to the defendant's conduct and which can be redressed through judicial action. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560–561 (1992). In order for an association to have standing to bring a suit on behalf of its members, it must be able to demonstrate that:

(a) its members would otherwise have standing to sue in their own right; (b) the interests it seeks to protect are germane to the organization's purpose; and (c) neither the claim asserted nor the relief requested requires the participation of individual members in the lawsuit.

Hunt v. Washington State Apple Adver. Comm'n, 432 U.S. 333, 343 (1977). The Court will consider each prong of the test in turn.

To determine whether the Council's members have standing to sue, the Court must assess whether “its members, or any one of them, are suffering immediate or threatened injury as a result of the challenged action of the sort that would make out a justiciable claim had the members themselves brought suit....” Id. at 342 (quoting Warth v. Seldin, 422 U.S. 490, 511 (1975)) (emphasis added). Here, the Council's membership includes individual agents and brokers who are licensed in the Virgin Islands, but who reside outside of the Territory. Declaration of Ken Crerar (“Crerar Decl.”) ¶ 5. The Council has also submitted uncontested evidence that the Virgin Islands countersignature provisions cost the Council's members hundreds of thousands of dollars per year. Id. at ¶ 7. Individual agents and brokers have thus suffered injury through the Insurance Commissioner's enforcement of the countersignature

[47 V.I. 743]

provisions. Accordingly, each such Council member would have standing to bring suit against the Insurance Commissioner. See, e.g., Hunt, 432 U.S. at 343 (noting that the North Carolina statute at issue had caused direct injury to individual Washington apple producers “sufficient to establish the requisite ‘case and controversy’ between Washington apple producers and appellants”).

The Council also seeks to protect the economic interests of its members by representing them in the political process, the courts, and other venues. Indeed, eliminating allegedly burdensome regulations “has been at the top of the Council's agenda for decades.” Crerar Decl. ¶ 8. The interests the Council seeks to protect in this...

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