Transit Casualty Co. v. Intervening Employees

• Decision Date: 06 March 2001
• Citation: 43 S.W.3d 293
• Parties: (Mo.banc 2001) In re: Transit Casualty Company in Receivership Pulitzer Publishing Company, Appellant, v. Transit Casualty Company in Receivership, Intervening Employees, Respondents. SC82520 0
• Court: Missouri Supreme Court

43 S.W.3d 293 (Mo.banc 2001)

In re: Transit Casualty Company in Receivership Pulitzer Publishing Company, Appellant, v. Transit Casualty Company in Receivership, Intervening Employees, Respondents.

SC82520

Supreme Court of Missouri

03/06/2001

Appeal From: Circuit Court of Cole County, Hon. William E. Turnage

Counsel for Appellant: Robert B. Hoemeke and Joseph E. Martineau

Counsel for Respondent: Katherine S. Walsh, James C. Owen and Michael L. Blumenthal

Opinion Summary: The Special Deputy Receiver of Transit Casualty Company in Receivership is appointed to maximize TCCR's assets for policyholders and creditors of the insolvent company and manage its daily business as the equivalent of a chief executive officer. The SDR's compensation is paid from TCCR's assets and approved by the court. The SDR's compensation records are held in camera by the court. They are available to TCCR's creditors, policyholders and department of insurance, but not the public. Pulitzer Publishing Company, which publishes the newspaper the St. Louis Post-Dispatch, sought the records. TCCR claimed that disclosure could harm TCCR in litigation and violate employees' privacy rights. The court found "the evidence presented by Transit that the in camera orders were necessary to protect the Receivership's policy-holders, creditors and their assets to be credible and uncontradicted." Pulitzer appealed.

Court en banc holds: (1) The right to appeal is purely statutory, and with certain exceptions this Court has jurisdiction of appeals by aggrieved parties from final judgments. A final judgment is normally defined as one that resolves all issues in a case, leaving nothing for further determination. As a general matter, the proper course for an aggrieved party without a final judgment is ordinarily by extraordinary writ. In this insurance insolvency receivership proceeding, chapter 375 prevails over the common law and any general statutes. Pulitzer's "final judgment" required for its right to appeal under section 512.020 is found in the complete and exclusive provisions of chapter 375. Section 375.630 defines "final judgment" in delinquency proceedings like this one, making receivership court orders, decrees, and judgments for purposes of appeal final.

(2) Case records are presumptively open to public inspection and copying absent a compelling justification for their closure. It is up to the objecting party to plead and prove convincing reasons to rebut the presumption of openness. Furthermore, when a court exercises its discretion pursuant to Rule 2 and removes certain records from public view, the court's order must cite the specific reasons for closure upon which it relies. Here, this Court must assume that the trial court did not apply the proper rule because it made no specific findings informing the public why the SDR's salary and contract information should remain closed. Furthermore, since it did not plead its reasons for closure with any specificity, TCCR forces this Court to speculate as to the trial court's reason for closing the records since this Court is unable to presume that the trial court relied on TCCR's pleading. Even though the insurance insolvency code is a self-contained and exclusive statutory scheme, there is nothing in the code that mandates the closure of these records. Thus, courts must turn to the common law presumption that the records of courts are open to the public. The circuit court's judgment is reversed and the case is remanded for rehearing giving due regard to the presumption that the court records in question should be open to the public absent a compelling justification that the records remain closed.

Concurring opinion summary: The concurring author agrees with the majority's analysis and conclusion on the merits of the case but writes separately to suggest a different approach to the "final judgment" issue. The concurring author disagrees with the majority holding that the judgment is only final by resort to section 375.630.4. Pulitzer intervened for one purpose, to request rescission of the orders holding the SDR's records in camera. The concurring would hold that the judgment entered against Pulitzer was a final judgment for the sole reason that it disposed of the only issue in the case and was conclusive as to all parties, satisfying the requirements for a final judgment. The action was a judgment, not a ruling subject to change as the majority maintains. Section 375.630.4 does not provide a basis for Pulitzer's appeal and is not the exclusive authority for a final judgment in such cases.

White and Benton, JJ., and Garrison, Sp.J., concur; Limbaugh, J., concurs in separate opinion filed; Wolff, J., concurs in opinion of Limbaugh, J. Price, C.J., not participating.

John C. Holstein, Judge

Pulitzer Publishing Company (Pulitzer) appeals from a judgment denying its motion to unseal court records relating to the compensation and bonuses paid to respondent Burleigh Arnold, the special deputy receiver (SDR) appointed to administer the Transit Casualty Company in Receivership (TCCR) liquidation. Pulitzer argues that TCCR failed to demonstrate compelling circumstances that justify the closure of open court records. TCCR responds that the receivership court in its discretion properly let the records remain sealed due to the real risk of damage to TCCR policyholders and creditors. After opinion by the Court of Appeals, Western District, this Court granted transfer. Mo. Const. art. V, sec. 10. The judgment of the circuit court is reversed, and the case remanded with directions to rehear the case under the presumption that court records should be open to the public absent a compelling justification for their closure.

I.

Transit Casualty Company was a Missouri-chartered property and casualty insurance company licensed to write policies nationwide. In December 1985, the Circuit Court of Cole County declared Transit Casualty insolvent and placed the company into receivership under chapter 375, RSMo, creating TCCR. This receivership is perhaps the largest property and casualty insurance company liquidation in United States history, with approximately 200,000 creditors and liabilities of about $4,000,000,000. To date, TCCR has recovered about $1,000,000,000 from suits against reinsurers and others and continues to recover an estimated $100,000,000 per year. The liquidation has been ongoing for over 15 years and may take more than another decade to conclude.

The director of the department of insurance (Director) is the statutory receiver of TCCR for the purposes of this liquidation. Sec. 375.954.1.¹ There have been several directors since the inception of the receivership in 1985. One of these former directors, exercising his statutory authority under section 375.650.2, appointed the current special deputy receiver, Mr. Burleigh Arnold, in 1987. Mr. Arnold's statutory duty as SDR, under the supervision of the receivership court, is to maximize TCCR's assets for the ultimate benefit of and distribution to the policyholders and creditors of the insolvent company. Sec. 375.650.1. Mr. Arnold also manages the daily business of TCCR as the equivalent of a chief executive officer. His compensation is paid out of TCCR's assets and must be approved by the receivership court.

Pulitzer is the publisher of the St. Louis Post-Dispatch, a newspaper of general circulation in Missouri that often publishes articles about proceedings in Missouri courts, including coverage of this insurance receivership. In 1998, the receivership court permitted Pulitzer to intervene in the TCCR proceedings for the limited purpose of seeking access to certain in camera records containing information about Mr. Arnold's compensation, bonus, and contract terms.² These records and the records of other key TCCR employees are held in camera by the court, originally at the request of a former director. They are available to TCCR's creditors and policyholders, and the department of insurance, but not to the general public. As a precondition to disclosure, those with access to the records must agree not to disclose the information to others.

At the evidentiary hearing on the motion, Pulitzer called one witness, Mr. Steven Divine, chief financial examiner and director of the division of financial regulation at the department of insurance. Mr. Divine testified that in 1994, the department of insurance promulgated a regulation, 20 CSR sec. 200-15.100, requiring public disclosure of the compensation and bonuses paid to SDRs of insolvent insurance companies in Missouri. He also testified that TCCR was relieved from compliance by order of the receivership court in 1995, but that all other insurance company receiverships have satisfied the regulation. He added that it was his understanding that this public disclosure by the other receiverships had not resulted in financial harm to them. He further testified that in his opinion public disclosure of Mr. Arnold's compensation would also not damage TCCR.

TCCR then called five witnesses who testified, essentially, that public access to information of Mr. Arnold's compensation would cause financial harm to TCCR's policyholders and creditors. Mr. Arnold himself was one of these witnesses called by TCCR. TCCR's claim is that reinsurers will use the information as leverage against TCCR during negotiations, and as an affirmative defense to TCCR's lawsuits brought to recover on reinsurance contracts. TCCR witnesses also testified that the records contain confidential employment information and that disclosure would violate the employees' privacy rights.

The receivership court ruled in favor of TCCR, finding "the evidence presented by Transit that the in camera orders were necessary to protect the Receivership's policy-holders, creditors and their assets to be credible and uncontradicted."

II.

The right to appeal is purely statutory, and with certain exceptions this Court has jurisdiction of appeals by...