Opinion ID: 1193805
Heading Depth: 3
Heading Rank: 1

Heading: The Superior Court Erred in Applying the Substantial Evidence Test.[6]

Text: The parties dispute the standard that the superior court should have used to review the Receiver's decision to deny GAIC's claims. The superior court deferentially reviewed the Receiver's conclusions to determine whether they were supported by substantial evidence, citing case law involving administrative agencies. [7] GAIC asserts that Alaska's insurer liquidation statutes require the superior court to conduct an independent review of its claim. GAIC relies on AS 21.78.010, which provides that the superior court has exclusive original jurisdiction over insurance insolvency proceedings, and AS 21.78.170, which provides that the superior court may allow, allow in part or disallow a disputed claim after reviewing the Receiver's recommendation. Further, GAIC argues that the Receiver lacks the authority to conduct a fact-finding hearing, thus thwarting the development of a reviewable record. PacAk views the actions of the Receiver as closely analogous to those of a master because the Receiver has broad discretion to operate within the area of its expertise. Thus, PacAk encourages us to find that the substantial evidence test was appropriate. We agree with GAIC's interpretation. The substantial evidence test is employed when courts review an administrative determination. [8] Our statutes do not require a receiver to conduct a hearing on claims. Instead, the receiver is authorized to review, investigate, and compromise claims and ultimately either deny them or recommend to the court that they be paid. See AS 21.78.293(a). When a claim is denied, the claimant has sixty days to file an objection with the receiver. See AS 21.78.170(c). If the receiver does not change the denial after the objection is filed, the receiver must ask the court for a hearing as soon as practicable. AS 21.78.170(d). The nature of this hearing is not specified. However, since no hearing is required on the claim before the receiver, due process requires a de novo evidentiary hearing before the court. See Wright v. Black, 856 P.2d 477, 480 (Alaska 1993); Aguchak v. Montgomery Ward Co., 520 P.2d 1352, 1356 (Alaska 1974). This interpretation is consistent with the evident legislative intent. Rehabilitation and liquidation proceedings are creatures of statute. [9] See AS 21.78.010-.330. The superior court's jurisdiction is limited to that expressly provided in chapter 78. See AS 21.78.020(c). Alaska Statute 21.78.010(a) provides that the court is vested with exclusive original jurisdiction of delinquency proceedings under this chapter, and is authorized to make all necessary and proper orders to carry out the purposes of this chapter. Original jurisdiction is independent jurisdiction, one not based on or limited to review of another court's judgment or proceeding. 20 Am.Jur.2d Courts § 66 (1995). By contrast, appellate jurisdiction is the jurisdiction of a superior court to review the final judgment, order, or decree of an inferior court on the record made in the inferior tribunal. Id. The grant of original jurisdiction in AS 21.78.010(a) evidences the legislature's intent for the superior court to act as the initial tribunal regarding a contested claim. Moreover, we view the Receiver's role as closer to that of a personal representative in probate proceedings than to that of a master. A personal representative, like the Receiver, marshals the assets of the estate and distributes them to the proper claimants. See A. James Casner & Jeffery N. Pennell, Estate Planning § 2.7.5 (6th ed.1997). Similarity is also evident in the procedures governing disputed claims. The probate statutes require the personal representative to allow or disallow a properly presented claim. See AS 13.16.475. If a claimant objects to the personal representative's disallowance of the claim, it may petition the superior court for allowance, or sue the personal representative. See id. In either case, the superior court must conduct a de novo hearing including, if requested, a jury trial. See AS 13.06.085; Cavanah v. Martin, 590 P.2d 41, 41-42 (Alaska 1979) (preponderance of evidence standard applies to hearings on claim). [10] PacAk argues that, even if the superior court erred by applying the substantial evidence standard, it entered independent findings of fact that can be reviewed for clear error. We disagree. The trial court never receded from its position that it was reviewing the record only to determine whether substantial evidence existed to support the Receiver's decision. Further, the facts recited by the court do not resolve the disputed issues in this case. In its initial order affirming the denial of GAIC's claim, the superior court simply concluded that substantial evidence supported the Receiver's conclusion that (1) GAIC had received proper notice and (2) its claim was untimely. In the order on reconsideration the court, in ten numbered paragraphs, recited facts which it found that the record established. The facts set out do not resolve such important issues as timeliness; whether GAIC received notice of the bar date; whether the notice of August 11, 1989, was sent to GAIC's last known address; and whether the late filing was excused by the agreement between the Receivers that claims timely presented in one receivership would be considered timely in the other. Further, the court concluded the order on reconsideration, as the court did the initial order, by stating that the Receiver had substantial evidence to determine that GAIC's claim was untimely.