Opinion ID: 689743
Heading Depth: 1
Heading Rank: 1

Heading: introduction

Text: 6 The facts are largely uncontested. It is only the legal consequences of those facts that are truly disputed. Capitol, a Colorado insurance company, issued certain annuity policies. GSL is a Florida insurance company which, after negotiation, assumed Capitol's annuity policies in 1989. On December 11, 1989, Capitol and GSL entered into a written Agreement of Assumption of Liability (agreement). Pursuant to this agreement, Capitol sold and transferred all its responsibilities and liabilities under these annuity policies to GSL which assumed full responsibility and liability for such policies. 7 The agreement contained an arbitration provision requiring that any dispute between Capitol and GSL concerning this Agreement or the operation of its terms shall be decided by arbitration. Appellant's Appendix (AA) 22, Agreement of Assumption of Liability, p. 19, Article XII, Arbitration. 8 GSL fell into financial difficulties and was eventually placed under a receivership and subjected to liquidation proceedings. The FDOI, Tom Gallagher, Commissioner, is the receiver for GSL. 9 Faced with the possibility that the GSL liquidation proceedings might result in less than full payment on their annuity policies, the annuitants sought to recover the full value of their policies from Capitol. 10 The annuitants filed a class action claim against Capitol in the Circuit Court for Leon County, Florida on June 22, 1992. The annuitants claim that the purported assignment of obligations from Capitol to GSL is ineffective to relieve Capitol of its original obligation to pay the annuity policies to them. On that basis, the class action seeks a declaratory judgment that Capitol remains jointly liable with GSL to the annuitants whose policies were purportedly transferred from Capitol to GSL. AA 34-35, Florida Complaint p 14. Elsewhere, the complaint seeks a declaration that Capitol remains jointly and severally liable for all obligations under the annuity policies. AA 41, Florida Complaint p 42. 1 The prayer for relief merely requests a declaration that Capitol remain liable to the members of the class [of annuitants] for the performance of all obligations under the annuity policies. AA 42, Florida Complaint, p. 15. 11 Tom Gallagher, as Commissioner of FDOI, appears in the Florida class action in order to represent the class of annuitants. 12 The complaint did not name GSL as a defendant because GSL (under the receivership of Gallagher) admitted its assumption of obligations and liability to the annuitants. 13 Gallagher admits the validity of the agreement entered into between GSL and Capitol. Gallagher further admits the validity of the arbitration agreement. It is further undisputed that Gallagher, as GSL's receiver, may be compelled to arbitrate because a receiver stands in the shoes of the insolvent insurance company. Phillips v. Lincoln Nat. Health & Cas. Insurance Co., 774 F.Supp. 1297, 1299 (D.Colo.1991). It is undisputed that the annuity policies issued by Capitol contain no requirement that disputes between Capitol and the annuitants be arbitrated. 14 The district court below found that Gallagher appeared in the Florida class action solely in a representative capacity for the policy holders and did not appear in the class action in his capacity as receiver for GSL. Capitol does not contest this factual finding. 2
15 Capitol filed an application on October 12, 1993, in the United States District Court for the District of Colorado to compel Mr. Gallagher, as receiver for GSL, 3 to arbitrate. The application to compel arbitration invoked the authority of the Federal Arbitration Act (FAA), 9 U.S.C. Secs. 2 & 4, which provide for the enforcement of certain arbitration agreements. 16 In the application seeking to compel arbitration--the denial of which is the subject of this appeal--Capitol sought to compel Gallagher, as receiver for GSL, to arbitrate the issue of Capitol's liability under, and as required by, the Agreement. AA 3, Application for Arbitration, p. 3, p 10. 17 In general terms, Capitol's application asserts that Gallagher as the receiver for GSL, now denies, disputes or refuses to carry out the obligations it undertook in the Agreement of Assumption of Liability. Capitol asserts this dispute both arises out of the Florida class action and exists independent of any litigation. 18 The district court found that the dispute is a class action law suit in which Gallagher is a representative party plaintiff. AA 99, Dist.Ct.Mem. Opinion and Order p. 3. The district court then held that this dispute, i.e. the Florida class action lawsuit, was not subject to the agreement to arbitrate. 19 The district court found the Florida class action lawsuit involved a dispute between Capitol and the annuitants. Capitol concedes the annuitants are not subject to the arbitration agreement. Appellant's Opening Brief p. 9. The district court specifically found that Gallagher's appearance in the class action as a representative plaintiff did not implicate Gallagher's separate role as receiver for GSL, therefore GSL was not a party to the class action and thus, the Florida class action lawsuit did not involve a dispute between GSL and Capitol. 20 Capitol responded that it did not seek to arbitrate a dispute arising out of the class action, but that a distinct dispute existed between itself and GSL over the issue of whether Guarantee assumed all of the liabilities on the transferred annuities under the Agreement. AA 101, Dist.Ct.Mem. Opinion and Order p. 5. The district court noted that there was no lawsuit involving that dispute. Nevertheless, the district court assumed Capitol could compel arbitration absent pending legal action. The district court found that, even assuming this, there was no dispute between GSL and Capitol subject to the arbitration agreement.
21 Capitol's Opening Brief lists five issues on appeal. Capitol more accurately summarizes the issues on appeal in its reply brief. 22 Focusing on substance rather than form, there are three critical questions which must be answered. The first question is what is the dispute. The second is who is the dispute between. The third is whether it can be said with positive assurance that the arbitration clause ... is not susceptible of an interpretation that covers the asserted dispute. 23 Appellant's Reply Brief, p. 2. 24 Capitol appeals from the district court order denying its application for an order compelling arbitration. Capitol contends the district court erred in finding that the arbitration agreement was not susceptible of any interpretation by which the alleged disputes would be covered by the arbitration agreement. Capitol further contends the district court erred in assuming Florida law allows Gallagher for the FDOI to appear as a representative plaintiff suing on behalf of the annuity holders. 25 Capitol's argument for arbitration proceeds on three different bases. First, Capitol asserts that Mr. Gallagher's appearance in the underlying Florida class action lawsuit as a separately named party plaintiff necessarily implicates his status as receiver for GSL. 26 On this basis, Capitol asserts the Florida class action lawsuit necessarily involves a dispute between itself and Gallagher as receiver for GSL. Capitol further contends that this dispute relates to the Agreement of Assumption of Liability and is thus subject to arbitration. On this basis, Capitol seeks arbitration of whether it is liable with GSL under the annuity policies. 27 Second, Capitol claims that if it is found liable to the annuitants, it has a right of indemnity from GSL. Capitol contends that this claim must be submitted to arbitration. 28 Third, Capitol argues that a determination that GSL and Capitol are jointly liable is necessarily a determination of Capitol's and GSL's rights and obligations inter se. Any such determination, Capitol contends, concerns rights and obligations, which are defined by the Agreement of Assumption of Liability and involves a dispute between Capitol and GSL regardless of whether GSL is a party to the Florida class action lawsuit. 29 Because there is no dispute as to the existence or validity or scope of the arbitration agreement we need not consider such issues or the appropriate legal standards for deciding them. 30 The only issues raised in this appeal are whether there is a dispute at all, what that dispute is about, who is the dispute between and is it covered by the arbitration clause.
31 The arbitration agreement covers only disputes between GSL and Capitol. The record indicates no dispute between Capitol and GSL or Gallagher as receiver for GSL. We affirm the district court. 32 The Florida class action involves a dispute between Capitol and the annuitants. The annuitants are not bound by the arbitration agreement. Gallagher's appearance as a representative for the annuitants does not implicate his separate and distinct role as receiver for GSL. 33 There is no dispute between GSL and Capitol regarding whether Guarantee assumed all of the liabilities on the transferred annuities and whether GSL must indemnify Capitol. The record does not indicate and Capitol does not allege that GSL denies either of these propositions. Thus, there is no dispute over these propositions which must be arbitrated. 34 Last, whether Florida law authorizes Gallagher to sue as a representative on behalf of the annuity holders is irrelevant to Capitol's application for arbitration and does not affect our decision.