Metcalf v. Investors Equity Life Ins. Co. of Hawai`i, Ltd., 18691

• Decision Date: 11 January 1996
• Docket Number: No. 18691,18691
• Citation: 910 P.2d 110,80 Hawai'i 339
• Court: Hawaii Supreme Court
• Parties: Page 110 910 P.2d 110 80 Hawai'i 339 Wayne METCALF, Insurance Commissioner of the State of Hawai'i, Petitioner-Appellee, 1 v. INVESTORS EQUITY LIFE INSURANCE COMPANY OF HAWAI'I, LTD., a Hawai'i Corporation, Respondent, and Investors Equity Life Insurance Holding Company, Intervenor-Appellant. Supreme Court of Hawai'i

Page 110

910 P.2d 110

80 Hawai'i 339

Wayne METCALF, Insurance Commissioner of the State of Hawai'i, Petitioner-Appellee, ¹ v INVESTORS EQUITY LIFE INSURANCE COMPANY OF HAWAI'I, LTD., a Hawai'i Corporation, Respondent and Investors Equity Life Insurance Holding Company, Intervenor-Appellant.

No. 18691.

Supreme Court of Hawai'i.

Jan. 11, 1996.

Wayne S. Sakamoto (of counsel) (John Francis Perkin, Lyle Hosoda, Kimble R. Cook and Donald L. Wilkerson, with him on the briefs, of Perkin & Hosoda), Honolulu, for intervenor/respondent-appellant.

John Y. Yamano (William C. McCorriston and Joel D. Kam, with him on the brief, of McCorriston Miho Miller Mukai), Honolulu, for petitioner-appellee.

David J. Reber (Karen L.S. Stanitz and Russell K. Kaupu, with him on the brief, of Goodsill Anderson Quinn & Stifel), Honolulu, for intervenor-appellee.

Before MOON, C.J., and KLEIN, LEVINSON, NAKAYAMA and RAMIL, JJ.

PER CURIAM.

Intervenor-Appellant Investors Equity Life Insurance Holding Company (IELHC) appeals from the circuit court's January 27, 1995 order granting Petitioner-Appellee's petition to liquidate Investors Equity Life Insurance Company of Hawaii (IEL) pursuant to Hawai'i Revised Statutes (HRS) chapter 431, article 15 (1993), the Insurers Supervision, Rehabilitation and Liquidation Act (Article 15). ² IELHC, which is IEL's parent company, ³ raises two points of error on appeal: 1) there is insufficient evidence in the record to support the circuit court's findings of fact (FOF) and conclusions of law (COL); and 2) the circuit court's failure to provide for a full evidentiary hearing was a denial of IELHC's right to due process. We do not reach these contentions, however, because IELHC lacked standing to oppose the liquidation petition in the circuit court.

The dispositive issue in this case is whether IELHC had standing to appear before the circuit court, notwithstanding the court's August 10, 1994 order approving the parties' stipulation to allow IELHC to intervene in the delinquency proceedings for the purpose of proposing a rehabilitation plan.

Although HRS § 431:15-307(d) (1993) provides that the circuit court may make the necessary declarations in a proceeding to liquidate an insurance company "[a]fter providing such notice and hearing as it deems proper " (emphasis added), the court's decision to provide IELHC an opportunity to participate in these delinquency proceedings did not, in itself, confer standing on the company. Article 15 does not recognize the interests of shareholders, like IEHLC, of an insolvent insurance company. Cf. Hartnett v. Southern Am. Fire Ins. Co., 495 So.2d 902, 903 (Fla.Dist.Ct.App.1986) (affirming the trial court's holding that shareholders of an insolvent insurance corporation did not have standing to participate in delinquency proceedings). Rather, HRS § 431:15-104(c) (1993) provides:

No court of this State has jurisdiction to entertain, hear or determine any complaint praying for the dissolution, liquidation, rehabilitation, sequestration, conservation, or receivership of any insurer, or praying for an injunction or restraining order or other relief preliminary to, incidental to, or relating to that type of proceedings other than in accordance with this article.

(Emphases added.) Under Article 15, the Insurance Commissioner possesses the sole discretion to prepare a rehabilitation plan "[i]f the rehabilitator [i.e., the Insurance Commissioner] determines that reorganization, consolidation, conversion, reinsurance, merger, or other transformation of the insurer is appropriate [.]" HRS § 431:15-303(d) (emphases added). ⁴ Furthermore, HRS § 431:15-305(a) (1993) provides in pertinent part that "[t]he court shall permit the directors of the insurer to take such actions as are reasonably necessary to defend against the petition[.]" (Emphasis added.)

Like the Florida statute construed in Hartnett, supra, the purpose of Article 15 is for "the protection of the interests of insureds, claimants, creditors, and the public generally with minimum interference with the normal prerogatives of the owners and managers of insurers[.]" HRS § 431:15-101(d) (emphases added). "Absent from the purpose of the act is the protection of shareholders of the insolvent insurance company. Section [431:15-101(c) ] provides that the act 'shall be liberally construed to effect the purpose stated in subsection ( [d] ).' " Hartnett, 495 So.2d at 903 (emphasis in original). ⁵ Therefore, we hold that IELHC did not have standing to oppose the petition to liquidate IEL in the instant case.

Accordingly, this appeal is dismissed for lack of IELHC's standing to oppose the petition to liquidate IEL in the circuit court.

1 Wayne C. Metcalf succeeded Lawrence M. Reifurth as the Insurance Commissioner of the State of Hawai'i during the pendency of this action. Pursuant to Hawai'i Rules of Appellate Procedure (HRAP) Rule 43(c)(1), Metcalf has been substituted automatically for the Petitioner-Appellee in the instant case. Although not a named party, the Hawaii Life and Disability Insurance Guaranty Association is expressly granted standing to appear in...