Opinion ID: 448934
Heading Depth: 1
Heading Rank: 2

Heading: facts

Text: 4 Rabun has been licensed as an insurance agent by the State of Alabama since 1975 and as a surplus line broker since 1981. He is the sole licensed agent, stockholder, officer and director of Gene Rabun Insurance Company, Inc. (GRIA), an Alabama corporation. In 1980 GRIA entered into an agency agreement with Essex Insurance Brokers, Inc. to sell the insurance policies of Amherst Insurance Company in Alabama. Essex was the national general agent of Amherst. In 1981 GRIA entered into a second agency agreement with Essex to sell insurance policies on behalf of Kenilworth Insurance Company. 5 In April 1982 GRIA was advised that Kenilworth was insolvent and had been placed in liquidation by the Illinois Department of Insurance. In June 1982 Rabun, as president of GRIA, signed an agreement transferring the Kenilworth business done through GRIA to Amherst. Essex returned premiums paid by GRIA and Rabun used them to obtain replacement coverage for Kenilworth's policyholders. 6 This action was brought by James W. Schact, the liquidator of Kenilworth, alleging that Rabun, doing business as GRIA, had violated his fiduciary duty to Kenilworth by cancelling Kenilworth's policies and retaining for himself or disbursing to other insurers premiums due Kenilworth. Rabun moved for summary judgment on the ground that he could not be held individually liable, and Schact moved to amend the complaint to join GRIA as co-defendant and to add a count alleging conversion by Rabun. The district court granted the motion for summary judgment, finding no basis for piercing the corporate veil of GRIA and denied the motion to amend because it continued to assert a claim against Rabun individually. Schact moved to alter or amend the judgment, contending that it undermined Alabama's statutory scheme of individual responsibility of agents and brokers for premiums they collected. The motion was denied. Later the district court entered an order substituting John E. Washburn, Director of Insurance for the State of Illinois, as plaintiff.