Opinion ID: 2519630
Heading Depth: 2
Heading Rank: 2

Heading: The Commissioner's Suit Against VEBAH

Text: On February 2, 1998, the Commissioner, in his capacity as the liquidator of PGMA, filed a complaint to compel VEBAH to turn over to him the premiums from January and February 1997 that were withheld. Count I of the complaint was based on HRS § 431:15-323 (1993), which provides that any person, other than the insured, responsible for the payment of a premium shall be obligated to pay any unpaid collected premium held by such person at the time of the declaration of insolvency, whether earned or unearned, as shown on the records of the insurer. Count II was based upon an alleged breach of the PGMA/VEBAH Master Agreement. On March 17, 1998, VEBAH filed an answer to the complaint and counterclaims against PGMA and the Commissioner, alleging: (1) breach of contract by PGMA; (2) breach of contract by the Commissioner; (3) misrepresentation by PGMA; (4) rescission; (5) setoff and recoupment; (6) negligence by the Commissioner; (7) aiding and abetting of PGMA's negligence, misrepresentation, and breach of contract by the Commissioner; and (8) a right to indemnity by and contribution from the Commissioner. On July 8, 1998, upon motion by the Commissioner, the circuit court dismissed VEBAH's counterclaims. The court deferred to the determination from the Special Proceeding that Article 15 applied to PGMA based upon the principle of judicial comity and ruled that HRS § 431:15-319(b) (1993) [7] barred VEBAH's counterclaims. VEBAH appealed from the dismissal order; however, on October 22, 1998, this court dismissed VEBAH's appeal for lack of appellate jurisdiction. On January 29, 1999, the Commissioner filed a motion for summary judgment on count I (his claim based on HRS § 431:15-323). On June 9, 1999, an order granting in part and denying in part the Commissioner's motion for summary judgment was filed. The order included: (1) judgment in favor of the Commissioner and against VEBAH in the amount of $874,437.11 plus post-judgment interest pursuant to HRS § 478-3 (1993) (discussed infra ); (2) an order for VEBAH to pay any and all PGMA premium money in VEBAH's possession and control; and (3) denial of the Commissioner's requests for pre-judgment interest and attorneys' fees on the ground that Article 15 does not provide for either. Thereafter, a final judgment as to count I was filed on August 27, 1999. The same day, count II, the breach of contract claim, was dismissed without prejudice by stipulation. On September 1, 1999, VEBAH filed a motion requesting to deposit funds with the court, to otherwise stay enforcement of the judgment, and to alter or amend the judgment, or, in the alternative, to set the amount of a supersedeas bond. VEBAH's motion was granted in part, and, on October 4, 1999, the circuit court filed an order allowing VEBAH to deposit the funds with the court in lieu of a bond, but ruled that VEBAH remained liable for post-judgment interest until the funds were paid to the Commissioner. An amended final judgment was filed on December 27, 1999. VEBAH filed its notice of appeal on January 11, 2000, and the Commissioner filed his notice of cross-appeal on January 25, 2000.