Opinion ID: 6348791
Heading Depth: 4
Heading Rank: 1

Heading: The insurance conservatorship is an in rem

Text: proceeding Looking to the insurance conservation order itself, the Superior Court asserted in rem jurisdiction over CIC I by authorizing the Conservator to take title to CIC I: 11. The Conservator is authorized in his or her discretion to take possession of any and all assets of [CIC I], including books, records, property (both real and personal), accounts, safe deposit boxes, rights of action, and all such assets as may be in the name of [CIC I], wheresoever situated. 12. Title to all property and assets of [CIC I], designated by the Conservator in his or her discretion, including deposits, securities, contracts, rights of actions, books, records, and other assets of every type and nature, and including both those presently in [CIC I’s] possession and those that may be discovered hereafter, wheresoever situated, that are necessary or appropriate for the orderly conservation of [CIC I] is to be vested in the Conservator or his or her successor in office, in his official capacity as Conservator. The Conservator is authorized to deal with such assets in his or her own name as Conservator or in the name of [CIC I], and all persons are enjoined from interfering with Conservator’s possession and title to such assets. Appellants challenge this view, contending that because title to CIC I was vested in the Commissioner instead of the 22 APPLIED UNDERWRITERS V. LARA Superior Court itself, the conservatorship is not properly understood as proceeding in rem. This view is unpersuasive, for two reasons. First, it ignores the Superior Court’s own explicit assertion of in rem jurisdiction over CIC I: 11. Powers of the Court and the Conservator. This Court shall continue to assert and to maintain sole and exclusive jurisdiction, to the exclusion of all other courts or tribunals, over and to all assets of [CIC I] of whatsoever kind or nature and wherever or however owned or held. Second, United States v. Bank of New York & Trust Co., 296 U.S. 463 (1936) forecloses Appellants’ argument. There, the Court noted that while “the state court directed the superintendent of insurance to take possession of the assets” of the conserved insurance firms, “[t]he proceeding was essentially one in rem,” id. at 475, later noting that “the superintendent still holds possession by virtue of [the state court’s] authorization, and the res thus remains under the court’s jurisdiction,” id. at 476. Garamendi v. Executive Life Insurance Co., 17 Cal. App. 4th 504 (1993), further supports the in rem classification here. Garamendi considered an appeal of a Superior Court order in an insurance conservatorship arising under California Insurance Code § 1011. Id. at 508–09. The conservatorship concerned assets of a limited partnership in which the insurance company under conservatorship owned a 92% interest. Id. at 509. Garamendi held that the insurance company under conservatorship and the affected limited partnership shared an “identity of interest” sufficient to give the Superior Court jurisdiction over the limited partnership’s assets pursuant to the original conservation APPLIED UNDERWRITERS V. LARA 23 order. Id. at 523. In doing so, Garamendi explicitly categorized the Superior Court’s jurisdiction in that action as in rem. Id. This view was subsequently endorsed by this Court in Morgan Stanley Mortgage Capital Inc. v. Insurance Commissioner, 18 F.3d 790, 792 (9th Cir. 1994). Based on the cited cases, the state court insurance conservatorship here challenged is one proceeding in rem. 2. The federal actions are either in rem or quasi in rem proceedings In form, the federal actions are in personam actions asserting claims under 42 U.S.C. § 1983 directed against certain state officials. However, State Engineer instructs courts to look “behind the form of the action to the gravamen of a complaint and the nature of the right sued on” when determining the true jurisdictional nature of a case. 339 F.3d at 810 (cleaned up). Here, in both federal actions, the gravamen of the complaint is directed at ending the conservatorship’s control over CIC I’s assets: PRAYER FOR RELIEF WHEREFORE, in connection with the preceding paragraphs, Plaintiffs respectfully request that the Court enter judgment in their favor against Defendants, and award the following relief: A. An Order declaring the Commissioner’s actions, as alleged, violate Plaintiffs’ rights to due process and equal protection under the 24 APPLIED UNDERWRITERS V. LARA Fourteenth Amendment to the United States Constitution;