Garamendi v. Henin

• Decision Date: 19 June 2012
• Docket Number: Nos. 10–57000,10–57009.,s. 10–57000
• Citation: 82 Fed.R.Serv.3d 1160,12 Cal. Daily Op. Serv. 6745,683 F.3d 1069,2012 Daily Journal D.A.R. 8266
• Court: U.S. Court of Appeals — Ninth Circuit
• Parties: John GARAMENDI, as Insurance Commissioner of the State of California and as Conservator, Liquidator and Rehabilitator of the Estate of Executive Life Insurance Company, Plaintiff–counter–defendant–Appellee, and Steven Poizner, as Insurance Commissioner of the State of California; State of California, Plaintiffs, v. Jean Francois HENIN, Defendant–cross–claimant–Appellant, and Jean–Claude Seys, an individual; Jean Irigoin, an individual; Alain Mallart; Novatec, Erroneously Sued as SDI Vendome SA; MAAF Assurances, a mutual insurer organized under French law; MAAF Vie SA, a corporation organized under French law, Defendants, Altus Finance SA, a corporation organized under French law; CDR Enterprises, a corporation organized under French law; Credit Lyonnais SA, a corporation organized under French law; Consortium de Realisation SA, a corporation organized under French Law, Defendants-cross-defendants, Artemis SA, a corporation under French law, Defendant-counter-claimant, Francois Pinault, Counter-claimant, Hartford Fire Insurance Company, Third-party Intervenor, Intervenor–Plaintiff, Sunamerica, Inc., fka AIG Retirement Services, Inc.; National Organization of Life & Health Insurance Guaranty Associations; California Life and Health Insurance Guarantee Association; Eric B. Siegel; Apollo Advisors LP; Leon D. Black; Craig M. Cogut; John J. Hannan; Lion Advisors LP; Pegasus Insurance Partners, Intervenors, Sierra National Insurance Holdings, Inc.; Georgia Lee, as Receiver for Sierra National Insurance Holdings, Inc., Plaintiffs/counter–defendants–Appellees, v. Jean Francois Henin, Defendant/cross–claimant–Appellant, MAAF Vie SA, a corporation organized under French law; MAAF Assurances, a mutual insurer organized under French law; Francois Pinault; Jean–Claude Seys; Jean Irigoin; Artemis SA, Defendants, Credit Lyonnais SA; Altus Finance SA, a corporation organized under French law; CDR Enterprises; Consortium de Realisation SA, a corporation organized under French Law, Defendants/cross-defendants, New California Life Holdings, Inc.; Aurora National Life Assurance Company, Defendants/counter–claim–Third–party Plaintiffs, Harry W. Low, as Conservator, Rehabilitator, and Liquidator of Executive Life Insurance Company, Counter–defendant/Third–party Defendant.

683 F.3d 1069

82 Fed.R.Serv.3d 1160

12 Cal. Daily Op. Serv. 6745

2012 Daily Journal D.A.R. 8266

John GARAMENDI, as Insurance Commissioner of the State of California and as Conservator, Liquidator and Rehabilitator of the Estate of Executive Life Insurance Company, Plaintiff–counter–defendant–Appellee,

and

Steven Poizner, as Insurance Commissioner of the State of California; State of California, Plaintiffs,

v.Jean Francois HENIN, Defendant–cross–claimant–Appellant,andJean–Claude Seys, an individual; Jean Irigoin, an individual; Alain Mallart; Novatec, Erroneously Sued as SDI Vendome SA; MAAF Assurances, a mutual insurer organized under French law; MAAF Vie SA, a corporation organized under French law, Defendants,Altus Finance SA, a corporation organized under French law; CDR Enterprises, a corporation organized under French law; Credit Lyonnais SA, a corporation organized under French law; Consortium de Realisation SA, a corporation organized under French Law, Defendants-cross-defendants,

Artemis SA, a corporation under French law, Defendant-counter-claimant,

Francois Pinault, Counter-claimant,

Hartford Fire Insurance Company, Third-party Intervenor, Intervenor–Plaintiff,

Sunamerica, Inc., fka AIG Retirement Services, Inc.; National Organization of Life & Health Insurance Guaranty Associations; California Life and Health Insurance Guarantee Association; Eric B. Siegel; Apollo Advisors LP; Leon D. Black; Craig M. Cogut; John J. Hannan; Lion Advisors LP; Pegasus Insurance Partners, Intervenors,

Sierra National Insurance Holdings, Inc.; Georgia Lee, as Receiver for Sierra National Insurance Holdings, Inc., Plaintiffs/counter–defendants–Appellees,

v.Jean Francois Henin, Defendant/cross–claimant–Appellant,MAAF Vie SA, a corporation organized under French law; MAAF Assurances, a mutual insurer organized under French law; Francois Pinault; Jean–Claude Seys; Jean Irigoin; Artemis SA, Defendants,Credit Lyonnais SA; Altus Finance SA, a corporation organized under French law; CDR Enterprises; Consortium de Realisation SA, a corporation organized under French Law, Defendants/cross-defendants,New California Life Holdings, Inc.; Aurora National Life Assurance Company, Defendants/counter–claim–Third–party Plaintiffs,

Harry W. Low, as Conservator, Rehabilitator, and Liquidator of Executive Life Insurance Company, Counter–defendant/Third–party Defendant.

Nos. 10–57000, 10–57009.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted May 8, 2012.

Filed June 19, 2012.

Patrick P. Salisbury, Salisbury & Ryan LLP, New York, NY; and Brian A. Sun, Jones Day, Los Angeles, CA, for the defendant/cross-complainant-appellant.

David B. Salmons (argued), David M. Balabanian and Geoffrey T. Holtz, Bingham McCutchen, Washington, D.C., for the plaintiff/counter-defendants-appellees.

Charles R. Rice and Arthur J. Shartsis, Shartsis Friese LLP, San Francisco, CA, for the amicus curiae.

Appeals from the United States District Court for the Central District of California, A. Howard Matz, District Judge, Presiding. D.C. Nos. 2:99–cv–02829–AHM–CW, 2:01–cv–01339–AHM–CW.

Before: HARRY PREGERSON, SUSAN P. GRABER, and MARSHA S. BERZON, Circuit Judges.

OPINION

GRABER, Circuit Judge:

Defendant Jean–François Hénin served as an officer of a French corporation that bought assets from an insolvent California insurance company pursuant to a rehabilitation plan. It later emerged that Hénin and others involved in the purchase had misrepresented certain key facts, making their purchase illegal under California law. In the ensuing litigation, Sierra National Insurance Holdings, Inc., came to hold two default judgments against Hénin in federal court. When Sierra tried to enforce those judgments in Hénin's home country of France, a French court refused, citing certain gaps in the content of the judgments. Sierra returned to the district court that had issued the default judgments and filed a motion under Federal Rule of Civil Procedure 60, asking the court to correct the judgments to add an explanation sufficient to permit enforcement in France. The district court granted the motion and entered two corrected judgments. Hénin appeals.

We affirm. The operative, substantive terms of the corrected judgments are identical to the terms of the original judgments. Thus, the amendments only clarified the original intent of the judgments, and the district court did not abuse its discretion in making those changes under Rule 60(a). We also hold that, by failing to challenge the original judgments, Hénin waived his arguments as to setoff, release, and the nature and amount of his liability. Finally, we conclude that the district court did not abuse its discretion by refusing to stay entry of the amended or corrected judgments.

FACTUAL AND PROCEDURAL HISTORY

This appeal arises from two consolidated district court cases involving many different parties and claims. An aspect of one of those cases was previously appealed to us, and our earlier opinion provides a useful summary of the relevant background facts:

This litigation arises from the 1991 insolvency and subsequent rehabilitation of the Executive Life Insurance Company (ELIC), following the largest insurance failure in California history. Pursuant to a judicially supervised rehabilitation plan, Insurance Commissioner John Garamendi (the Commissioner) oversaw competitive bidding for the assets of the ELIC Estate, which included a large junk bond portfolio. Altus S.A., a subsidiary of Credit Lyonnais S.A., which is controlled by the French government, and the MAAF Group, a consortium of French and Swiss insurers, submitted the winning bid. Altus purchased the junk bond portfolio for cash, and the MAAF Group agreed to create a new company to reinsure ELIC's outstanding insurance policies. Artemis S.A., a holding company ..., subsequently purchased a percentage of that junk bond portfolio and the newly formed insurance company.

The rehabilitation plan was a resounding success. The Commissioner proclaimed the rehabilitation of ELIC “by any objective standards a home run,” resulting in a full recovery for 92 percent of the insolvent insurer's former policy holders. The rehabilitation was also a home run for Artemis, which earned hundreds of millions of dollars in profit from appreciation of the ELIC Estate's junk bond portfolio.

In 1999, however, years after the rehabilitation plan had been implemented, the Commissioner learned of a conspiracy between the members of the Altus/MAAF Group to circumvent regulatory barriers to foreign entities, like Altus, from issuing insurance in California.

California v. Altus Fin. S.A., 540 F.3d 992, 995 (9th Cir.2008) (footnotes omitted).

That conspiracy has generated voluminous litigation in several related cases. See id. at 996 n. 3. Specifically, the conspiracy involved false “assurances from Credit Lyonnais and Altus that they did not in fact maintain secret control over the MAAF Group.” Id. at 997. Their control over that company violated California Insurance Code section 699.5, which prohibited “entities controlled by foreign governments, like Credit Lyonnais and Altus, from obtaining certificates of authority from the Department of Insurance to conduct business in California.” Id.

The claims involved in this appeal are asserted against Jean–François Hénin (1) by Sierra National Insurance Holdings, Inc., and its receiver, Georgia Lee (collectively, “Sierra”) and (2) by the Commissioner. Sierra and the Commissioner brought separate actions in California state court in 1999 and 2001. Those actions were removed to federal court, where the district court consolidated the two cases for all purposes.

The relevant complaints are substantially identical. Both complaints state that Hénin “was at all relevant times the chief executive officer of Altus.” Both complaints describe the insolvency and rehabilitation of ELIC, along with the competitive bidding process. Both complaints allege that Altus employed a front for their control over ELIC's insurance business, via secret agreements referred to as “contrats de portage.” Both complaints allege specific misrepresentations relating to Altus' relationship with the front. Both complaints allege that Altus knew that California and federal law prohibited it from owning or controlling, directly or indirectly, a life insurance company. Both complaints allege that Hénin “actively participated” in the deceptions regarding “the extent to which Altus and Credit Lyonnais owned and controlled” the new holding companies that were created to take over ELIC's insurance business. Both complaints allege that Hénin “directly benefited from the acquisition of [ELIC]'s assets through various means, including but not limited to dividends, bonuses, salaries and ownership of companies that at some time directly or indirectly owned or own the [ELIC] high-yield bond portfolio and/or [ELIC] insurance business.” Finally, both complaints allege joint and several liability against all defendants.

For those alleged wrongs, Sierra sought compensatory damages in excess of $2 billion, as well as exemplary damages and expenses. Sierra rested its damages calculation on a claim that the conspiracy prevented Sierra's bid from being accepted, thereby depriving it of the $2 billion in profits that it would have made had it purchased ELIC's assets and insurance business.

The Commissioner's prayer for relief, by contrast, requested not only compensatory and punitive damages, but also restitution for unjust enrichment. The Commissioner appears to have calculated compensatory damages primarily as lost profits. The Commissioner did not specify an amount of damages, but he did seek an accounting to determine that amount.

The Commissioner's complaint and Sierra's complaint also asserted claims against several other defendants involved in the conspiracy, primarily corporations. The Commissioner and Sierra settled with some of those defendants. Others (including Hénin) defaulted,...