State ex rel. Missouri Property and Cas. Ins. Guar. Ass'n v. Brown, WD

• Decision Date: 27 June 1995
• Docket Number: No. WD,WD
• Citation: 900 S.W.2d 268
• Parties: STATE of Missouri, ex rel., MISSOURI PROPERTY AND CASUALTY INSURANCE GUARANTY ASSOCIATION, Relator, v. Honorable Thomas BROWN, III, Respondent. 50341.
• Court: Missouri Court of Appeals

Page 268

900 S.W.2d 268

STATE of Missouri, ex rel., MISSOURI PROPERTY AND CASUALTY

INSURANCE GUARANTY ASSOCIATION, Relator, v. Honorable Thomas BROWN, III, Respondent.

No. WD 50341.

Missouri Court of Appeals,

Western District.

June 27, 1995.

Gerre S. Langton, Kevin P. Schnurbusch, Evans & Dixon, St. Louis, for appellant.

Robert L. Hawkins, III, Hawkins Law Office, Jefferson City; Neil Bernsteina, St. Louis; Alan C. Gold, South Miami, FL, for respondent.

Before SMART, P.J., and LOWENSTEIN and LAURA DENVIR STITH, JJ.

LAURA DENVIR STITH, Judge.

Relator Missouri Property & Casualty Insurance Guaranty Association ("MIGA") seeks an original writ prohibiting the Honorable Thomas Brown, III, Judge of the Circuit Court of Cole County, from continuing to preside over the underlying declaratory judgment action in the court below. MIGA complains that venue is not proper in Cole County and thus Respondent erred in denying its Motion to Transfer for improper venue and for consolidating the current case with Jay Angoff, Director, Department of Revenue, State of Missouri v. Bel-Aire Insurance Co., et al., Cause No. CV 190-11488 CC, a liquidation proceeding also currently pending in the Circuit Court of Cole County. We now make our preliminary writ permanent because venue is improper in Cole County and further order Respondent to grant MIGA's motion to transfer the instant matter to the Circuit Court of St. Louis County.

I. FACTUAL AND PROCEDURAL BACKGROUND

A. MIGA and its Role With Respect to Insolvent Insurers.

MIGA is a nonprofit, unincorporated legal entity that was created by the Missouri General Assembly by the Missouri Property and Casualty Insurance Guaranty Association Act, §§ 375.771 to 375.779, RSMo Supp.1993 (the "Guaranty Act"). ¹ All companies who write insurance and possess a certificate of authority to transact insurance business in Missouri are required to be member insurers of MIGA. § 375.772.1. MIGA was created to protect creditors, insureds, claimants, and the public from losses resulting from the insolvency of insurance companies doing business in Missouri. Department of Mental Health v. Continental Sec. Life Ins. Co., 835 S.W.2d 349, 351 (Mo.App.1992). It accomplishes this purpose by paying certain unpaid "covered" claims under insurance policies written by insolvent insurers. Id.

The Missouri Guaranty Act is based on a model guaranty act developed by the National Association of Insurance Commissioners in 1969. See The Post-Assessment Property and Liability Insurance Guaranty Association Model Act, Model Laws, Regulations and Guidelines, Vol. II, p. 540-1, January 1986 (the "Model Act"). It appears that all or nearly all states have, like Missouri, adopted guaranty acts based upon the provisions of the Model Act. See Wilcott B. Dunham, Jr., Life and Health Insurance Guaranty Associations, at 2 (PLI Comm.Law & Practice Course Handbook Series No. 580, 1991).

In general terms, MIGA operates as follows. If an insurance company is declared insolvent, individuals who have unpaid claims under insurance policies written by that insurer can present their claims to MIGA for payment. § 375.775. MIGA's only office for transacting business is located at 7525 Ravensridge, in St. Louis County, Missouri. MIGA then pays certain limited "covered" claims. § 375.775.1. MIGA has the authority to independently investigate and determine whether or not a claim is "covered." Id. If the claim is paid, MIGA then assumes the right of the claimant to the assets of the insolvent insurer in the liquidation proceedings and the claimant cannot file a separate claim in the liquidation proceeding. Id.; § 375.1212.6. If the claim is disputed by MIGA, MIGA can be sued by the claimant. MIGA also has the power to sue others. § 375.775.2. The Guaranty Act does not contain any specific provisions regarding venue of actions by or against MIGA.

It is only at the point when a claim is paid by MIGA that MIGA becomes involved in the liquidation proceedings of the insolvent insurer. The claims procedures for the liquidation proceedings of insolvent insurers are set forth in the Insurers Supervision, Rehabilitation and Liquidation Act, §§ 375.1150 to 375.1246 (the "Liquidation Act"). This Act is separate from the Guaranty Act and contains detailed procedures specifying how claims, including claims by MIGA and by the insurance guaranty associations of other states, are filed and settled by the liquidator and receivership court.

According to the Liquidation Act, MIGA's claims and the claims of other insurance guaranty associations become Class 2 claims in the liquidation proceedings. The liquidator can pay these claims or disallow some or all of them if found unreasonable. § 375.1218.2. The guaranty associations can contest the disallowance of any claims. § 375.1214. The liquidator has no power over whether MIGA or another guaranty association can deny or pay a claim to an unpaid claimant. Rather, the liquidator can only determine whether the claims of MIGA and other guaranty associations which are presented in the liquidation proceeding will be paid out of the assets of the insolvent insurer.

B. The Underlying Declaratory Judgment Action.

With this background in mind, we now turn to the present action. Bel-Aire Insurance Company ("Bel-Aire") is an insurance company incorporated and licensed to transact property and casualty insurance in Missouri. It is also a member of MIGA. On July 15, 1993, Bel-Aire was declared insolvent. Bel-Aire's liquidation proceeding, Jay Angoff, Director, Department of Revenue, State of Missouri v. Bel-Aire Insurance Co., et al., Cause No. CV 190-11488 CC ("liquidation proceeding"), is currently pending in the Circuit Court of Cole County.

On or about July 15, 1994, Flipps Nine, Inc. d/b/a Hot Wheels Skating Center and Ana Gonzales ("Plaintiffs") filed this declaratory judgment action against MIGA in Cole County--the same county in which the Bel-Aire liquidation proceeding is pending. Plaintiffs are residents of Florida who purchased insurance from Bel-Aire through Missouri purchasing groups. ² Plaintiffs presented unpaid insurance claims based on insurance policies written by the now insolvent Bel-Aire to MIGA for payment pursuant to the Guaranty Act. MIGA refused to pay because Plaintiffs are non-Missouri residents. Plaintiffs seek a declaratory judgment that MIGA is required to provide coverage for their unpaid claims pursuant to the Guaranty Act. ³ Plaintiffs do not plead the grounds for venue in their Petition. Rather, Plaintiffs allege that the Circuit Court of Cole County has "jurisdiction pursuant to its authority as Supervising Court over the liquidation of Bel-Aire."

On August 31, 1994, MIGA filed a motion to transfer the action for improper venue or, in the alternative, dismissal of Plaintiffs' petition. MIGA claims that venue in Cole County is improper; rather, proper venue lies in St. Louis County where MIGA's only business office is located and where MIGA made the decision not to pay Plaintiffs' claims.

On September 6, 1994, Plaintiffs filed a motion in which they maintained that Cole County is the proper venue for this action and moved to transfer and consolidate this declaratory judgment action with the Bel-Aire liquidation proceeding currently pending in Cole County. In support, Plaintiffs claimed that the instant action will affect the liquidation proceedings and should thus be made part of the Bel-Aire liquidation proceeding and be brought before the liquidation court.

On September 9, 1994, Dana L. Frese, the Special Deputy Liquidator for Bel-Aire, filed a motion to intervene in the instant matter. The deputy liquidator also sought consolidation of the instant matter with the Bel-Aire liquidation proceeding on the basis that the liquidator's legal liability will be greatly impacted by the outcome in the declaratory judgment action.

The Circuit Court of Cole County denied MIGA's motion to dismiss and refused to transfer for improper venue. On November 16, 1994, the court also granted Plaintiffs' motion to consolidate the current action with the liquidation proceeding, and granted the deputy liquidator's motion to intervene.

MIGA then filed its Petition for Writ of Prohibition with this Court, seeking to restrain the Circuit Court from acting further and to direct the Circuit Court to transfer the action to St. Louis County. A preliminary order in prohibition was issued by this Court. The Honorable Thomas Brown, III, successor in office to The Honorable James F. McHenry, was substituted as Respondent herein.

II. VENUE IS NOT PROPER IN COLE COUNTY BECAUSE THE CAUSE OF ACTION DID NOT ACCRUE IN COLE COUNTY AND MIGA'S OFFICE IS NOT LOCATED IN COLE COUNTY.

A. Standard for Granting Writ of Prohibition.

Prohibition is a "proper proceeding to test whether a judge is acting in excess of his jurisdiction because of improper venue." State ex rel. McClain v. Heckemeyer, 741 S.W.2d 734, 736 (Mo.App.1987). Relator has properly asked for a writ of prohibition to prevent the Respondent from continuing to exercise jurisdiction over this matter, since such is prohibited if venue is improper in Cole County. Relator also asks the Court to order the Respondent to transfer this case to the Circuit Court of St. Louis County, where venue is proper. If venue is improper in the court in which the action is brought, the trial court has a ministerial duty to transfer the case to a court of proper venue. § 476.410; State ex rel. DePaul Health Ctr. v. Mummert, 870 S.W.2d 820, 822 (Mo. banc 1994). An order in "prohibition may be used to direct a respondent having no jurisdiction over a case [due to lack of venue] to transfer the case to the court which has jurisdiction to hear the case." State ex rel. Uptergrove v. Russell, 871 S.W.2d 27, 30 (Mo.App.1993).

B. Venue is Improper in Cole County Under § 508.040.

It is well-established in Missouri that the "propriety of venue is prescribed by statute." State ex...