Investors Equity Life Holding Co. v. Schmidt

• Decision Date: 13 January 2015
• Docket Number: G048284
• Citation: 183 Cal.Rptr.3d 219,233 Cal.App.4th 1363
• Court: California Court of Appeals Court of Appeals
• Parties: INVESTORS EQUITY LIFE HOLDING COMPANY, Plaintiff and Appellant, v. Jeffrey P. SCHMIDT et al., Defendants and Respondents.

233 Cal.App.4th 1363

183 Cal.Rptr.3d 219

INVESTORS EQUITY LIFE HOLDING COMPANY, Plaintiff and Appellant

v.Jeffrey P. SCHMIDT et al., Defendants and Respondents.

G048284

Court of Appeal, Fourth District, Division 3, California.

Filed January 13, 2015

Lewis Brisbois Bisgaard & Smith, Joseph K. Hegedus and Caroline E. Chan, Los Angeles; and Parker Shumaker & Mills, David B. Parker, and Theodore W. Frank, Los Angeles, for Plaintiff and Appellant.

Daley & Heft and Lee H. Roistacher, Solana Beach; Locke Lord, C. Guerry Collins and Michelle C. Ferrara, Los Angeles; and Lewis Roca Rothgerber, Frank D. O'Loughlin and Cindy C. Oliver, for Defendants and Respondents.

OPINION

RYLAARSDAM, J.

Plaintiff Investors Equity Life Holding Company appeals from the judgment dismissing this case on the ground of forum non conveniens. Plaintiff filed its complaint in 2009, and the trial court originally ordered the action stayed on the ground of forum non conveniens. Plaintiff appealed that order and we affirmed in a published decision. (Investors Equity Life Holding Co. v. Schmidt (2011) 195 Cal.App.4th 1519, 126 Cal.Rptr.3d 135 (Investors Equity I ).) In our opinion, we first considered whether Hawaii qualified as a suitable alternative forum for adjudicating plaintiff's claims, affirming the trial court's assessment that it did. We then rejected plaintiff's contention that the court had nonetheless abused its discretion in concluding that the balance of public and private factors favored Hawaii as a forum over California. In the course of assessing the latter issue, we also rejected plaintiff's claim that as a California resident, its choice of forum was entitled to great weight. Somewhat confusingly, we characterized plaintiff's claim to California residency as both “erroneous” and merely “doubtful.” (Id. at pp. 1534–1535, 126 Cal.Rptr.3d 135.)

In 2012, defendants “renewed” their motions, seeking an order dismissing, rather than merely staying, the action. In their renewed motions, defendants seized on statements in our opinion—in particular our rejection of plaintiff's claim of California residency—claiming those statements were law of the case, and reflected a material change in circumstance that warranted an outright dismissal of this case. The trial court agreed. We conclude the trial court's order reflected an abuse of its discretion and reverse.

The lynchpin of any order granting a motion based on forum non conveniens is a determination that a suitable alternative forum exists. It is only after the trial court reaches that conclusion that it would even consider whether the benefits of the proposed alternative forum outweigh the reasons for keeping the litigation in California. In this case, the trial court's original assessment of Hawaii's suitability, as well as our opinion affirming that assessment, was based in part on the promises and stipulations entered into by defendants in this forum. Having relied on those representations as a basis for our rulings, we have an interest in retaining jurisdiction to ensure plaintiff has a remedy in the event defendants do not comply with those promises in the alternate forum. Moreover, our assessment of Hawaii's suitability as an alternative forum was also based on our own analysis of Hawaii's statutes of limitations, which we concluded operated similarly to California's. However, because our analysis of Hawaii law is not binding on any proceeding conducted in Hawaii's own courts, we also explained that “[i]n the event our understanding of Hawaii law is incorrect,” the fact that this case was merely stayed, rather than dismissed, meant “plaintiff will have the opportunity to seek relief in the courts of this state.” (Investors Equity I, supra, 195 Cal.App.4th at p. 1534, 126 Cal.Rptr.3d 135.)

The trial court's subsequent decision to dismiss the action undermined both of those bases for the original suitability finding. If this case were dismissed, California would forfeit its power to act in the event the promises made by defendants in this forum are not complied with, or to offer plaintiff any relief if Hawaii ultimately interprets its own laws in a manner which materially differs from what we had anticipated. Under these circumstances, it was error to order this case dismissed before the parties' dispute is finally resolved in Hawaii.

Additionally, the trial court erred in treating our rejection of plaintiff's residence claim as law of the case. The doctrine of law of the case applies only to legal principles applied on appeal; it has no application to factual determinations, such as whether plaintiff provided adequate evidence to support a claim of residence status for purposes of a forum non conveniens motion. And when defendants renewed their motion following our remand of the case to the trial court, and sought an outright dismissal of this case, plaintiff was entitled to rely on new evidence supporting its claim of significant ties to California. The court erred when it refused to consider that evidence in assessing whether California had an interest in retaining jurisdiction.

Defendants have requested we take judicial notice of plaintiff's petition for rehearing in the earlier appeal, and our denial of that petition. The request is denied.

FACTS

In our prior opinion, we summarized the dispute and circumstances surrounding defendants' initial forum non conveniens motion. We repeat that summary here.

“The first amended complaint alleges plaintiff is the sole shareholder of Investors Equity Life Insurance Company of Hawaii, Ltd. (IEL), an insurance company currently the subject of a liquidation action in the Hawaii Circuit Court for the First Circuit.” (Investors Equity I, supra, 195 Cal.App.4th at p. 1523, 126 Cal.Rptr.3d 135.)

“IEL was a life insurance company organized under and regulated by the State of Hawaii with approximately 99 percent of its policyholders residing in that state. Plaintiff alleges it is a Delaware Corporation ‘authorized to transact business as a foreign corporation in ... California.’ It acquired all of IEL's shares in 1991.

“According to the amended complaint, in 1993 plaintiff received authorization from the Hawaii Division of Insurance to enter into what are described as ‘ “repurchase transactions” ’ and to invest in ‘ “hedging transactions.” ’ The next year, defendant Reifurth became Hawaii's Insurance Commissioner. He filed an action in Hawaii state court to seize and rehabilitate IEL, claiming the repurchase and hedging transactions had rendered the insurer insolvent. (Reifurth v. Investors Equity Life Ins. Co. of Haw., Ltd. (Hawaii Cir.Ct., 1994, S.P. No. 94–0337).) IEL's president stipulated to appointing a deputy insurance commissioner as the insurer's rehabilitator. The amended complaint alleges defendant McCorriston, a lawyer with the McCorriston law firm, which represented Reifurth, allegedly told plaintiff ‘if anything is left over in IEL's estate after rehabilitation or liquidation ..., then that remainder will go to [p]laintiff as the sole shareholder.’

“Reifurth later obtained an order liquidating IEL. Plaintiff appealed that ruling, but the Hawaii Supreme Court affirmed, holding plaintiff lacked standing to oppose the insurance commissioner's liquidation petition. (Metcalf v. Investors Equity Life Ins. Co. of Hawai'i, Ltd. (1996) 80 Hawai'i 339, 910 P.2d 110.) As noted, the liquidation action is still pending.

“In late 1994, Reifurth, represented by the McCorriston law firm, filed an action in Hawaii state court against plaintiff and its owner, Gary Vose, alleging fraud and misuse of IEL's funds. (Reifurth v. Vose (Hawaii Cir.Ct., 1994, No. 94–4337–11).) The parties reached a settlement terminating this lawsuit in August 1996. Plaintiff also alleges that, in 1995, IEL entered into a reinsurance assumption agreement with the then Hawaii Insurance Commissioner, defendant Association, and Hartford Life [140] Insurance Company under which IEL ‘transferr[ed] almost all insurance policy-related liabilities ... to Hartford.’

“According to the amended complaint, ‘[a]t no time did IEL's directors authorize forfeiture and cancellation of IEL's shares of stock,’ nor has ‘[p]laintiff surrendered its shares ... for cancellation and forfeiture.’ ‘Neither Reifurth nor any other person holding the position of Hawaii Insurance Commissioner, or any person acting on behalf of a commissioner, has given timely and proper notice for [p]laintiff, or other person with interest, to cure any impairment that IEL had, and Reifurth and every other person holding the position of such commissioner have failed to take such other steps as would authorize him or her to effect cancellation and forfeiture of IEL's shares.’ But a declaration submitted by defendant Yamano, a lawyer with the McCorriston law firm, asserts plaintiff surrendered its IEL stock under the settlement and Vose signed a document to that effect. Yamano further claims the settlement contained a choice of law clause applying Hawaii law.

“A focal point of the amended complaint is the purported transfer of IEL's stock to a trust controlled by the Association under a stock subscription agreement. Plaintiff alleges that, in December 1996, Wayne C. Metcalf III, then serving as Hawaii's Insurance Commissioner, filed a motion in the liquidation action seeking approval of that agreement. According to the amended complaint, ‘[a]lthough [p]laintiff was a party to the [l]iquidation [a]ction, [it] was not served with a copy of the [s]ubscription [a]greement at the time the ... motion was filed....’

“Plaintiff claims the stock subscription agreement is void because, by its terms, the agreement needed to be submitted to and approved by the court by December 31, 1996, and that was never done. The amended complaint alleges defendants not only failed to serve plaintiff with a copy of the stock subscription agreement or timely submit that agreement to the court for approval, but also took other steps ‘to misrepresent, deceive, and mislead...