Employers Ins. of Wausau v. Commissioner of Dept. of Ins.

• Citation: 452 N.E.2d 441
• Decision Date: 18 August 1983
• Docket Number: No. 2-183A11,2-183A11
• Parties: EMPLOYERS INSURANCE OF WAUSAU, Petitioner-Appellant, v. COMMISSIONER OF the DEPARTMENT OF INSURANCE, Department of Insurance, State of Indiana, Liquidator & Plaintiff-Appellees, and Comparison National Insurance Co. of America, Non-participating Appellee.
• Court: Court of Appeals of Indiana

Page 441

452 N.E.2d 441

EMPLOYERS INSURANCE OF WAUSAU, Petitioner-Appellant, v. COMMISSIONER OF the DEPARTMENT OF INSURANCE, Department of Insurance, State of Indiana, Liquidator &amp Plaintiff-Appellees and Comparison National Insurance Co. of America Non-participating Appellee.

No. 2-183A11.

Court of Appeals of Indiana First District.

Aug. 18, 1983.

Thomas D. Titsworth, Francis J. Gantner, John M. Rogers, Bamberger & Feibleman, Indianapolis, for petitioner-appellant.

James L. Tuohy, William J. Wood, Wood Tuohy Gleason Mercer & Herrin, Indianapolis, for appellees.

RATLIFF, Judge.

STATEMENT OF THE CASE

The Marion County Superior Court, pursuant to Indiana Rules of Procedure, Trial Rule 12(B)(6), dismissed the Petition to Surcharge Rehabilitator filed by the appellant-petitioner, Employers Insurance of Wausau (Employers), against the Commissioner of the Department of Insurance (Commissioner), in his official capacity as Rehabilitator and Liquidator of Comparison National Insurance Company of America (Comparison). ¹ From this dismissal Employers now appeals. We reverse and remand.

FACTS

On July 19, 1978, the Commissioner was appointed by the Marion Superior Court as rehabilitator of Comparison pursuant to the provisions of Indiana Code Sections 27-1-4-1 through 30. ²

The Commissioner proceeded with the rehabilitation process, and following his procurement of the court's December 5, 1978, order, made a pro rata distribution of Comparison's assets to ten different reinsurers of the company. Employers, also a reinsurer of Comparison, was not included in this distribution.

Subsequently, on June 28, 1979, Employers filed its Petition to Surcharge Rehabilitator which stated:

"The petition of Employers Insurance of Wausau respectfully shows:

1. On July 19, 1978, the Court entered an order appointing H.P. Hudson, Commissioner of Insurance of the State of Indiana, as Rehabilitator of Comparison National Life Insurance Company of America.

2. Employers Insurance of Wausau is a reinsurance creditor of Comparison National Life Insurance Company of America holding a claim in excess of Two Hundred Thousand Dollars ($200,000).

3. On July 25, 1978, the Rehabilitator filed a proposed plan of rehabilitation contemplating negotiated settlement and payment of claims and the recapitalization of the debtor corporation. At the hearing upon the proposed plan of rehabilitation, petitioner appeared by counsel and objected to any distribution until such time as all claims had been fixed and allowed, in order that all creditors would receive their equitable pro-rata share of the assets of this estate.

4. On October 26, 1978, the Rehabilitator filed in these proceedings a plan of rehabilitation pursuant to which he proposed to report to the Court, within sixty (60) days after the entry of an order approving the plan of reorganization, the ability of the debtor corporation to make settlement of reinsurance contracts in force and demonstrate to the Court that liabilities of the company would not exceed its assets. Step III of the plan provided that the Rehabilitator would not dispurse [sic] any funds toward the settlement of reinsurance contracts until all such settlements had been agreed upon and completed.

5. On December 5, 1978, the Rehabilitator filed a petition for instructions requesting authority to pay from the assets of this estate the sum of Five Hundred Eighty-Four Thousand Seven Hundred Forty-Four Dollars and Fifty-Eight Cents ($584,744.58) in settlement of claims of ten reinsurers. In this petition, the Rehabilitator represented to the Court that rehabilitation appeared feasible and, at least by implication, that the liabilities of the debtor corporation would not exceed its assets at the date of rehabilitation. The Rehabilitator's requested distribution was approved by order of the Court entered December 5, 1978, without notice to parties in interest other than the Department of Insurance and counsel for the debtor corporation.

6. On May 2, 1979, the Rehabilitator filed a petition for authority to suspend further payments authorized under the Court's order of December 5, 1978, representing that all but two of the settlements authorized under the December 5, 1978 order had been completed, there were other creditors of Comparison National Life Insurance Company of America whose claims had not been dealt with under the December 5, 1978 order of the Court, and that, if certain claims of the debtor corporation against retrocessionaires were not recovered, rehabilitation could not be accomplished.

7. Your petitioner alleges on information and belief that Comparison National Life Insurance Company of America has been since the institution of these proceedings, and remains, hopelessly insolvent. Petitioner further alleges that, in procuring the Court's order of December 5, 1978, the Rehabilitator, either knowingly or negligently missrepresented [sic] to the Court that the proposed distribution satisfied the claims of all reinsurance creditors of this estate and that the debtor would be solvent at the date of rehabilitation.

8. Petitioner has made demand upon the Rehabilitator to institute suit to recover the payments made to the reinsurers under color of the Court's order entered December 5, 1978, but the Rehabilitator has refused and failed to take this action.

9. By reason of the above distribution to certain creditors, the Rehabilitator has defeated the right of remaining creditors, including petitioner, to their equitable pro-rata share of this insolvent estate and the Rehabilitator should be surcharged.

10. It has been necessary for petitioner to employ counsel in connection with this petition and all proceedings to be had in connection with same, and its counsel should be allowed reasonable compensation commensurate with any benefits conferred upon creditors of this estate by reason of this action.

WHEREFORE, petitioner prays for an order:

1. Vacating the Court's order dated December 5, 1978;

2. Surcharging the Rehabilitator and the State of Indiana to the extent of the aggregate payments made to those reinsurers set forth in the Rehabilitator's petition filed in these proceedings on December 5, 1978 or, in the alternative, to the extent that those creditors have received more than their equitable pro-rata share of the assets of this estate;

3. Allowing counsel for petitioner reasonable compensation for services rendered, and petitioner prays for such other and further relief as may be just and proper in the premises."

Record at 13-15.

The Commissioner's initial motion to dismiss the petition was denied. However, he later determined Comparison could not be rehabilitated and began liquidation proceedings, at which time he renewed the motion to dismiss, premised on the grounds the petition failed to state a claim upon which relief could be granted.

Following a hearing on the Commissioner's motion, the trial court dismissed the petition pursuant to T.R. 12(B)(6).

ISSUE

Employers has presented a single issue for review. It can be stated as follows:

Did the trial court err in finding Employers' petition failed to state a claim upon which relief could be granted?

DISCUSSION AND DECISION

The trial court erred in finding Employers' petition failed to state a claim upon which relief could be granted.

In reviewing a dismissal premised upon T.R. 12(B)(6) our standard of review is well established. Motions to dismiss are not favored in the law. Hall-Hottel Co. v. Oxford Square Co-op., Inc., (1983) Ind.App., 446 N.E.2d 25, 28, trans. denied; William S. Deckelbaum Co. v. Equitable Life Assurance Society of the United States, (1981) Ind.App., 419 N.E.2d 228, 230. Thus, we seek to determine whether the complaint, or as in the instant case the petition, stated any allegations whatsoever upon which relief could have been granted. Baker v. American States Insurance Co., (1981) Ind.App., 428 N.E.2d 1342, 1345, trans. denied. Only when the allegations present no possible set of facts upon which the complainant can recover is a motion to dismiss properly granted. Glasgo v. Glasgo, (1980) Ind.App., 410 N.E.2d 1325, 1327, trans. denied. Finally, in making its determination a trial court must accept as true all allegations made by the complainant, and view the motion in a light most favorable to the non-moving party. Hall-Hottel, at 28; Deckelbaum, at 230.

The instant case presents a question heretofore not addressed by this court. Essentially, Employers has attempted to surcharge the Commissioner, in his official capacity, as well as the Department of Insurance and State of Indiana, for the amount it would have received had it been included in the pro rata distribution of Comparison's assets as ordered by the trial court on December 5, 1978. None of the cases interpreting the applicable statutory provisions have addressed this precise issue. However, from our review of those provisions we believe Employers has stated a cause of action worthy of being addressed on the merits. ³

In reaching this conclusion we note that Indiana Code Section 27-1-4-17 provides, inter alia, "The department [of insurance] when in charge of the assets of any insurance company may be sued in its capacity as holder and owner of said assets in any action relating thereto ..." provided it is instituted in the court having jurisdiction of the proceedings initiated by the department. Hence, insofar as the Commissioner is the representative of the department, Indiana Code Section 27-1-1-1 through 2, it is only proper that he be named in any cause of action involving the department.

Additionally, while the Commissioner is exempt from "individual" liability for acts performed in connection with his duties, Indiana Code Section 27-1-3-1, Employers' petition does not seek to hold him individually liable. Rather, Employers seeks to predicate liability upon the Commissioner in his official capacity. Thus, the statutory exemption does not shield the...