Receivership of Guarantee Sec. Life Ins. Co., In re, 95-2416

• Decision Date: 19 June 1996
• Docket Number: No. 95-2416,95-2416
• Citation: 678 So.2d 828
• Parties: 21 Fla. L. Weekly D1442, 21 Fla. L. Weekly D1959 In re the RECEIVERSHIP OF GUARANTEE SECURITY LIFE INSURANCE COMPANY, a Florida corporation. Michael J. PETER, et al., Appellants, v. STATE of Florida, ex rel. the DEPARTMENT OF INSURANCE, as Receiver of Guarantee Security Life Insurance Company, etc. et al., Appellees.
• Court: Florida District Court of Appeals

Page 828

678 So.2d 828

21 Fla. L. Weekly D1442, 21 Fla. L. Weekly D1959

In re the RECEIVERSHIP OF GUARANTEE SECURITY LIFE INSURANCE COMPANY, a Florida corporation.

Michael J. PETER, et al., Appellants, v. STATE of Florida, ex rel. the DEPARTMENT OF INSURANCE, as Receiver of Guarantee Security Life Insurance Company, etc. et al., Appellees.

No. 95-2416.

District Court of Appeal of Florida,

First District.

June 19, 1996.

Opinion on Rehearing Aug. 28, 1996.

Larry A. Stumpf and Jacob J. Givner of Rubin Baum Levin Constant Friedman & Bilzin, Miami, for Appellants.

Barry Richard of Greenberg, Traurig, Hoffman, Lipoff, Rosen & Quentel, Tallahassee, for appellee Seapine Corporation.

BARFIELD, Chief Judge.

Appellants challenge a non-final order in an action under the Insurers Rehabilitation and Liquidation Act, chapter 631, Florida Statutes (1991), in which the receivership court denied appellants' motion to vacate or modify its prior injunctive order. The prior order had partially lifted the automatic stay in the receivership action to the extent of allowing the Receiver to be named as a nominal defendant in a suit for damages against appellants by Seapine Corporation (Seapine). Inter alia, it also prohibited service of any discovery on the Receiver without the receivership court's express authorization. We deny appellee Seapine's motion to dismiss the appeal, finding that we have jurisdiction under Florida Rule of Appellate Procedure 9.130(a)(3)(B) and that appellants, who filed the motion which was denied in the order appealed, have standing to appeal. ¹ As to the merits, we conclude that the receivership court should have granted appellants' motion and should have vacated its prior order.

Sections 631.041(1)(a) and (b), Florida Statutes, provide that a petition for an order of rehabilitation of an insurer "operates as a matter of law as an automatic stay applicable to all persons and entities, other than the receiver, which shall be permanent ... and which shall prohibit ... commencement or continuation of judicial, administrative, or other action or proceeding against the insurer or against its assets or any part thereof ... [and] ... enforcement of a judgment against the insurer or an affiliate obtained either before or after the commencement of the delinquency proceeding ..." Section 631.041(2) authorizes the receivership court to grant relief from "the stay against obtaining or enforcing a judgment," with notice to the Department of Insurance and after a hearing, "provided the movant, who has the burden of proof, establishes by clear and convincing evidence that the judgment is not Having carefully reviewed the entire record presented to us and the arguments of the parties, we conclude that the receivership court had no statutory authority to partially lift the automatic stay to the extent of allowing the Receiver to be named as a nominal party in the suit against appellants by Seapine, nor was it statutorily empowered to prohibit service of any discovery on the Receiver without its express authorization. To the extent that section 631.041(4) may be read to authorize the issuance of an injunction "to prevent interference with the department or the proceeding," we agree with appellants that Seapine did not establish the requisite justifications for issuance of such an injunction.

                voidable or void by a receiver and that property from which the judgment would be satisfied does not constitute premium funds or another asset which belongs to the insurer."   It is clear that in its action against appellants, Seapine was not seeking either to obtain or to enforce a judgment against the insolvent insurer or the Receiver, but instead named the Receiver as a "nominal" party in the action against appellants as the result of unfathomable strategies practiced by the parties in a prior incarnation of the damages suit in Dade County. 2
                

The challenged order denying appellant's motion to vacate the prior unauthorized injunctive order is therefore REVERSED and the case is REMANDED to the receivership court with instructions that appellants' motion be granted and the prior order vacated. We recognize that this will nullify the prohibition on service of any discovery on the Receiver and will ultimately result in the Receiver being removed as a nominal party in Seapine's action against appellants, but we do not read section 631.041(1) as prohibiting discovery properly sought from the Receiver as a nonparty to the damages action.

OPINION ON MOTIONS FOR REHEARING

The appellees, Seapine Corporation (Seapine) and the Department of Insurance (the Department), seek rehearing of this court's decision reversing a non-final order in an action under the Insurers Rehabilitation and Liquidation Act, chapter 631, Florida Statutes (1991), in which the receivership court had denied the appellants' motion to vacate or modify its prior injunctive order, In re Receivership of Guarantee Security Life Insurance Company, 678 So.2d 828 (Fla. 1st DCA 1996). Because the Department filed its motion for rehearing more than fifteen days after issuance of the challenged opinion, the motion is dismissed as untimely under Florida Rule of Appellate Procedure 9.330. Seapine's motion for rehearing is denied on the merits, with one exception.

BACKGROUND

Some of the circumstances surrounding this case are set out in this court's opinion on motion to recall mandate, Peter v. Seapine Corporation, 678 So.2d 508 (Fla. 1st DCA 1996), which should be read in conjunction with this opinion. In 1991, the Department was appointed the receiver for Guarantee Security Life Insurance Company (GSLIC), ¹ which is a wholly owned subsidiary of Transmark USA, Inc. (Transmark), owned by Mark Sanford. Transmark also owns all the stock in Seapine, which in 1993 filed a complaint in Dade County to foreclose a multi-million-dollar loan to the appellants. As Receiver for GSLIC, the Department had obtained a temporary injunction against Sanford and Transmark, prohibiting them from disposing of or transferring any of their assets, based upon GSLIC's alleged improper transfer of millions of dollars in property and funds to them. Sanford and Transmark apparently obtained the receivership court's permission to pursue Seapine's suit against the appellants.

In 1994, the appellants filed a motion to dismiss the foreclosure action, asserting that as a result of the receivership action, the Department owned the claims sought to be advanced by Seapine and was therefore the real party in interest and an indispensable party under Florida Rule of Civil Procedure 1.140(b). The Dade County Circuit Court granted what it characterized as "Defendant's Motion to Dismiss for Failure to Join an Indispensable Party," but allowed Seapine to amend its complaint.

The amended complaint added the Department as a party defendant and included a count asserting that the Department claimed "a contingent interest in certain assets of Sanford and Transmark, including their interest in Seapine and its claims asserted in this action." The appellants filed a motion to dismiss, asserting that the amended complaint "does nothing to cure fatal defects found by the Court to exist with respect to the original Complaint," that the Department "owns the claim (and any liabilities connected therewith) asserted in the name of Seapine in the Amended Complaint" and "is both the real party in interest and the only proper plaintiff in this action," that naming the Department as a defendant "is a completely meaningless act as demonstrated by Seapine's failure to request any relief as to the Department in the Amended Complaint," and that absent an assertion of the claim by the Department as plaintiff, "this action cannot properly proceed."

Seapine thereafter voluntarily dismissed the Dade County action and filed a complaint in Leon County nearly identical to the amended Dade County complaint, asserting that the Dade County Circuit Court had determined that the Department "is an indispensable party to an action by Seapine to foreclose upon the aforesaid debt" and that under Florida Rule of Civil Procedure 1.210, the Department was joined as a nominal defendant because it "declined to join this action as a plaintiff." The Department then filed a "Notice of Filing, Injunction and Statutory Stay," reciting the receivership court's August 1991 and December 1992 orders and noting that under sections 631.031(4) and 631.041(1), Florida Statutes (1991), Seapine was enjoined from the commencement or prosecution of any action against the Department as GSLIC's receiver and the Department was prohibited from defending legal actions brought against it without express authorization of the receivership court. When the appellants filed requests to the Department to produce documents in November 1994, the Department responded by filing a "Notice of Stay and Injunction," referencing its notice of injunction and statutory stay and asserting that it could not respond to the request for production "as this would be a violation of the Court ordered injunction."

In the meantime, Seapine had filed in the receivership action a motion seeking an order allowing it to maintain the pending action against the Department as a "nominal defendant." ² The receivership court granted the motion, finding that "successful prosecution of the Seapine action is in the best interests of the receivership and that the Seapine action is likely to proceed more expeditiously if the Receiver remains as a nominal party." The court ordered:

1. The Florida Statute 631.041 automatic stay and injunctions contained in the August 12, 1991 Order of Rehabilitation remains in full force and effect except as modified herein.

2. Seapine is authorized to continue its action in the aforesaid case with the Receiver as a nominal defendant and, to that extent, is released from the stay provisions of the orders of this Court dated August 16, 1991 (sic) and December 2, 1992.

3. No...