Reynolds v. National Soc. of Health
| Decision Date | 26 February 1992 |
| Docket Number | No. 23267-CA,23267-CA |
| Citation | 595 So.2d 374 |
| Parties | Eugene REYNOLDS and Eugenia E. Reynolds, Plaintiffs-Appellees, v. The NATIONAL SOCIETY OF HEALTH and the Louisiana Commissioner of Insurance, Defendants-Appellants. 595 So.2d 374 |
| Court | Court of Appeal of Louisiana — District of US |
Rubin, Curry, Colvin & Joseph by Rodolfo J. Aguilar, Jr., Baton Rouge, for defendants-appellees.
Rankin, Yeldell, Herring & Datz by Stephen J. Katz, Richard A. Bailly, Bastrop, for plaintiffs-appellees.
Before SEXTON, VICTORY and STEWART, JJ.
Plaintiffs, Eugene Reynolds and Eugenia E. Reynolds, obtained a consent judgment against the National Society of Health for nonpayment of amounts due under a health insurance policy. The Reynolds then obtained a judgment of garnishment against the Commissioner of Insurance for the State of Louisiana shortly before the Commissioner instituted liquidation proceedings against the National Society of Health. The Commissioner suspensively appeals the garnishment judgment. We vacate the trial court judgment.
Pursuant to a health insurance policy issued by National Society of Health (NSH), Eugene and Eugenia Reynolds filed suit against NSH for medical benefits alleged due and payable under the policy. After obtaining judgment against NSH, the Reynolds petitioned for garnishment, in the Fourth Judicial District Court, against the Commissioner of Insurance for the State of Louisiana, who had under his control property of NSH. In the Nineteenth Judicial District Court, the Commissioner filed a petition for liquidation against NSH. Both the petition for garnishment and the petition for liquidation resulted in judgment for each respective petitioner. The chronology of events was as follows:
February 12, 1990 Reynolds filed petition against National Society of Health (NSH)
September 27, 1990 Consent judgment, in favor of the Reynolds and against NSH, for $8,109.54 due under the policy and $3,900 as attorney's fees, together with legal interest on each amount from the date of judicial demand
October 9, 1990 Reynolds filed petition against the Commissioner of Insurance for garnishment of NSH assets held by the Commissioner
October 19, 1990 Commissioner was served with garnishment pleadings
November 5, 1990 Commissioner received copy of the Reynolds' proposed judgment of garnishment, for approval as to form
November 18, 1990 Commissioner filed petition for liquidation of NSH
November 30, 1990 Order of liquidation signed
February 4, 1991 Reynolds filed rule to obtain garnishment judgment
February 28, 1991 Judgment of garnishment signed, ordering Commissioner to pay to the Reynolds $14,492.96, plus interest
The Commissioner suspensively appeals, arguing that the judgment of garnishment is void under LSA-R.S. 22:762. The Reynolds, on the other hand, assert that a seizure pursuant to a garnishment proceeding is effective upon service of the garnishment interrogatories, therefore, they obtained a privilege on the NSH assets held by the Commissioner prior to the liquidation order.
As part of the liquidation procedures under the insurance code, the Louisiana legislature has adopted the Uniform Insurer's Liquidation Law, codified in LSA-R.S. 22:758 through 22:763. It has been observed that
Its primary purpose appears to be to prevent creditors who are better informed from obtaining unfair preference and advantage to themselves by instituting attachment or similar proceedings against such property of the bankrupt debtor as may be found in their states, ... before less well informed creditors may take action to preserve and protect their claims.
State v. Preferred Accident Insurance Co. of New York, 149 So.2d 632, 640 (La.App. 1st Cir.1963). The statute provides as follows:
Sec. 762. Attachment and garnishment of assets During the pendency of delinquency proceedings in this or any reciprocal state no action or proceeding in the nature of an attachment, garnishment, or execution shall be commenced or maintained in the courts of this state against the delinquent insurer or its assets. Any lien obtained by any such action or proceeding within four months prior to the commencement of any such delinquency proceeding or any time thereafter shall be void as against any rights arising in such delinquency proceeding.
A "delinquency proceeding" is any proceeding commenced against an insurer for the purpose of liquidating, rehabilitating, reorganizing, or concerning the insurer. LSA-R.S. 22:757(2).
Where the Uniform Insurer's Liquidation Law does not apply, such as where the domiciliary state is not a reciprocal state as defined therein, seizure by a creditor prior to appointment of a receiver confers upon the seizing creditor a lien which is preferred over the rights of the receiver as well as those of other creditors. Martin v. General American Casualty Co., 226 La. 481, 76 So.2d 537, 46 A.L.R.2d 1178 [ (1954) ]; Hankins v. Sallard, La.App., 188 So. 411 [ (1939) ]. Where the statute does apply, however, such a preference is specifically proscribed. See LSA-R.S. 22:762.
State v....
To continue reading
Request your trial
-
96 1454 La.App. 1 Cir. 5/9/97, Bayou Contractors, Inc. v. Brown
...of the insolvent insurer because it was set aside by court order in the registry of the court. The case of Reynolds v. National Society of Health, 595 So.2d 374 (La.App. 2d Cir.1992), which is relied on by the Commissioner, is distinguishable. In that case an insured obtained a judgment aga......