Opinion ID: 2583870
Heading Depth: 1
Heading Rank: 2

Heading: The District Court Proceeding

Text: ¶ 15 The controversy was tried on the briefs and joint stipulations submitted by the parties. The plaintiffs (Chandler) employ approximately five hundred people in Chandler, Oklahoma. Except for the State Insurance Fund, NAICO is the largest writer of workers' compensation insurance in Oklahoma. Chandler requested an application for insurance and a quote for tendering a check for the required premium. Chandler submitted an application, but the Fund declined to provide Chandler with an amount for Chandler to tender as its premium payment. ¶ 16 The Fund also declined to provide insurance, and Chandler asked why it would not receive the insurance. The Fund responded with a letter stating that: While there are many considerations that enter into a decision of coverage, the unique issues and conflicts faced by both parties in providing overage for a fellow insurance carrier were prevailing factors in our decision to decline coverage. ¶ 17 Chandler sought a writ of mandamus in the trial court. The trial court issued an alternative writ. In response to the alternative writ, the Fund stated that it did not issue the insurance because it possessed the discretion to decline to enter into insurance contracts with an entity who is a business competitor, and whose interests might be adverse to the Fund. The Fund subsequently stipulated: On November 17, 2000, the State Insurance Fund advised Plaintiffs that ... the unique issues and conflicts faced by both parties in providing coverage for a fellow competing insurance carrier were prevailing factors in our decision to decline coverage.. . . Defendant has not provided Plaintiffs with any reason other than those contained in the November 17, 2000, letter for Defendant's declining to insure Plaintiffs' employees. Joint Stipulations, O.R. at 40, citation omitted. Chandler argued in the trial court that: There is absolutely no provision under any statute which allows the State Insurance Fund to refuse to provide workers' compensation insurance coverage to any entity due to the fact that the entity is an insurance company that is a competitor of the State Insurance Fund. O.R. at 66. ¶ 18 Chandler argues that the Fund did not possess the discretion to deny insurance to a competing insurance carrier. The Fund argues that Chandler was not entitled to a writ of mandamus because: 1. Chandler failed to prove that a competing insurance carrier, recently relocated to Oklahoma, has met Oklahoma's operational requirements and does not impact the safe carrying of the Fund; 2. Other carriers had declined to provide insurance to Chandler; 3. A contractual relationship with a competitor would impact the Fund's competitive ability, contrary to the Commissioner's fiduciary duty not to enter into contracts contrary to the interests of the Fund; 4. The Commissioner possesses discretion to deny an application for insurance; and 5. Chandler failed to satisfy its burden of proof for mandamus. Chandler contends that NAICO has been located in Oklahoma since 1987, with redomestication to Oklahoma in 2000; that it complied with all Oklahoma examination requirements, and had previously undergone a routine financial examination by the State of Nebraska for a three-year period ending in 1998; and that the burden of proof should be on the Fund to show that NAICO is not an entity for which insurance should issue. Chandler argues that the Fund: . . . has never explained how the mere fact that NAICO is a competitor makes it a risk that is unsafe to carry. The Defendant has produced no evidence nor has it attempted to set forth any evidence that insuring Plaintiffs is beyond the safe carrying of the State Insurance Fund. Plaintiffs' Surreply to Defendant's Reply, O.R. at 64-65. Chandler concludes that the Fund is required to issue insurance to NAICO if it satisfies the statutory requirements for obtaining insurance. ¶ 19 The parties discuss the application of 85 O.S.2001 § 134. Part of that statute states: A. In conducting the business and affairs of the State Insurance Fund, the Commissioner of the said fund, or other officer to whom such power and authority may be delegated by the Commissioner, as provided by Section 133 of this title, shall have full power and authority: ... 2. To decline to insure any risk in which the minimum requirements of the law with regard to construction, equipment and operation are not observed, or which is beyond the safe carrying of State Insurance Fund, but shall not have power or authority, except as otherwise provided in this act to refuse to insure any compensation risk tendered with the premium therefor; 85 O.S.2001 § 134(A)(2), (emphasis added). We recently commented on this language in Fehring v. State Ins. Fund, 2001 OK 11, 19 P.3d 276. Today, SIF's general purpose is simply to insure employers against liability for workers' compensation claims and to assure employees entitled to benefits under our workers compensation laws that they receive such benefits through the insurance. 85 O.S.Supp.1995, § 131. SIF provides such insurance to both private and public employers. Also, SIF's governing statutes plainly indicate, although it is to be fairly competitive with private insurance carriers providing such insurance, SIF is generally a non-profit endeavor [§ 131(c)], and its ability to decline to insure an employer for purposes of the employer's workers' compensation liability is restricted. 85 O.S. Supp.1996, § 134(A)(2). Id. 2001 OK 11, at ¶ 11, 19 P.3d at 280,. We agree with Chandler that the Fund's discretion is limited when deciding whether to issue insurance to Chandler. ¶ 20 The Fund argues that a decision whether to insure a particular risk is an exercise of discretion beyond the scope of judicial review. In Bird v. Willis, 1996 OK 116, 927 P.2d 547, we explained that a district court may issue a writ of mandamus against a state board or agency to compel the performance of an act, and to correct an official's abuse of discretion. Id. 927 P.2d at 552. The Fund's characterization of its act as discretionary does not insulate that act from judicial review. ¶ 21 Section 134(A)(2) states that when a premium is tendered [7] the Commissioner may: 1. Decline to insure any risk in which the minimum requirements of the law with regard to construction, equipment and operation are not observed, 2. Decline to insure any risk which is beyond the safe carrying of State Insurance Fund, and 3. Decline to insure as otherwise provided in this act. The parties also argue whether the Fund possesses discretion to deny coverage pursuant to other statutes. Chandler asserts that this act in § 134(A)(2) refers solely to reasons for not issuing insurance that are listed in § 134. On the other hand, the Fund argues that this act refers to statutes other than § 134 that also control the discretion of the Fund to issue insurance. For example, the Fund relies upon 85 O.S. Supp.2000 § 131(c). [8] (c) Said fund shall be fairly competitive with other insurance carriers and it is the intent of the Legislature that said fund shall become neither more nor less than self-supporting. In the trial court the Fund argued that: Summarizing from our filed Objection, the Act requires the Fund to be fairly competitive with other carriers. 85 O.S. § 131. The Commissioner is a fiduciary, who may not enter contracts adverse to the interests of its policyholders. 85 O.S. § 138.2. It is reasonable and foreseeable that a contractual relationship could impact the Fund's ability to be fairly competitive. It is also reasonable for the Commissioner to be concerned about insuring a competitor with interests adverse to the Fund and its policyholders. Defendant's Reply, O.R. at 55. ¶ 22 Section 131 of Title 85 was part of the 1933 Act creating the State Insurance Fund, and it too required that the fund be fairly competitive with other insurance carriers. 1933 Okla.Sess.Laws Ch. 28 § 1(c). Section 134 of Title 85 was part of that 1933 Act and it also provided that the Fund shall not have power or authority, except as otherwise provided in this Act to refuse to insure any compensation risk tendered with the premium therefor. 1933 Okla.Sess.Laws Ch. 28 § 4(2). The Fund does not possess the discretion to make the Fund less than competitive when insuring a risk. We thus agree with the Fund that § 131(c) is a legislative control of the Fund's discretion similar to that expressed in § 134. [9] ¶ 23 The Fund states that issuing the insurance to Chandler will make the Fund less than fairly competitive with other insurance carriers. Chandler states that this is a conclusion, and that the Fund failed to provide facts in support of the conclusion. The Fund responds that Chandler, in seeking mandamus, has the burden of showing that the Fund acted arbitrarily. ¶ 24 A typical case for mandamus has five elements: (1) The party seeking the writ has no plain and adequate remedy in the ordinary course of the law, (2) The party seeking the writ possesses a clear legal right to the relief sought, (3) The respondent (defendant) has a plain legal duty regarding the relief sought, (4) The respondent has refused to perform that duty, and (5) The respondent's duty does not involve the exercise of discretion. [10] However a writ of mandamus may be used to correct an official's arbitrary abuse of discretion. State ex rel. Smith v. Banking Bd., 1980 OK 84, 612 P.2d 257, 261. ¶ 25 A party seeking mandamus has the burden of proving the clear legal right in himself and a corresponding duty resting upon the defendant in order to authorize the issuance of the peremptory writ. Lee v. Myles, 1964 OK 56, ¶ 8, 390 P.2d 489, 491, quoting, Stubbs v. Excise Bd. of Muskogee County, 1935 OK 778, 49 P.2d 83. We have applied this general rule to mean that a party seeking mandamus has the burden of showing those facts necessary to support issuance of the writ. ¶ 26 In State ex rel. Thomas v. Brenner, 1935 OK 373, 42 P.2d 823, former members of a fire department sought reinstatement. They contended that they could be removed from the fire department only for good and sufficient cause as specified by a state statute. Id. 42 P.2d at 824. We said that they had a burden of showing they had a clear right to reinstatement; i.e., the petitioners were required to present facts showing that their removal was not based upon a good and sufficient cause. ¶ 27 In Hall v. Tirey, 1972 OK 118, 501 P.2d 496, we explained that an official seeking reinstatement to office via mandamus had the burden to prove that his removal did not comply with the legislative standard. Id. at ¶ 20, 501 P.2d at 502. In Hall we explained that a member of the State Board for Property and Casualty Rates could be removed from office pursuant to a statute that listed causes for removal. Id. at ¶ 10, 501 P.2d at 499-500. That statute allowed for removal in case of incompetency, neglect of duty, or malfeasance in office. . . . Id. at ¶ 8, 501 P.2d at 499, quoting, 74 O.S.1971 § 2. In a mandamus proceeding where the official was seeking reinstatement, the Governor did not have a burden of presenting facts showing that the removal was one of the three statutory causes. Rather, the removed official, as the party seeking mandamus, was required to show facts that the removal was not one of the three statutory grounds. In sum, a petitioner for mandamus is required to show a violation of, or failure to perform, the relevant statute or duty. ¶ 28 In our case today, the Fund possesses the discretion to refuse to be a party to an insurance contract that would result in the Fund being less than fairly competitive. 85 O.S. § 131. The Fund argued in the trial court that issuing insurance to Chandler would make the Fund less than fairly competitive, and that Chandler had the burden to prove otherwise. Chandler argues that once the alternative writ issued, the Fund had the burden of showing cause that the peremptory writ of mandamus should not issue. Chandler argues that the Fund did not do so in the Joint Stipulations, or otherwise, and the peremptory writ properly issued. The Fund argues that Chandler is impermissibly shifting a burden to the Fund. ¶ 29 Issuance of an alternative writ does not change a particular fact needed as an element of petitioner's claim to a fact needed as an element of a defense: It is well settled that the burden of proof rests upon the party having the affirmative as made up by the pleadings, and such party must prove every essential fact necessary to establish his cause of action or defense. Board of County Commissioners of Marshall County v. Snellgrove, 1967 OK 108, 428 P.2d 272, 276. The Fund stated that issuing insurance would result in the Fund being less than fairly competitive. In these circumstances, Chandler is required to state facts showing that the issued insurance would not make the Fund less than competitive. ¶ 30 Chandler argues that after an alternative writ issues a defendant has the burden of making an answer and presenting defenses to a peremptory writ. This is correct. 12 O.S.2001 § 1457. [11] Chandler states that it does not know what facts, if any, would support the Fund's argument, and that the Fund should raise those facts in its answer. ¶ 31 Issues in a mandamus proceeding are tried as in a civil action. State ex rel. State Bd. of Public Affairs v. Principal Funding Corp., 1974 OK 16, 519 P.2d 503, 507, citing, § 1459. The Oklahoma Discovery Code, 12 O.S.2001 §§ 3224-3237, governs the procedure for discovery in all suits of a civil nature in all courts in this state. 12 O.S.2001 § 3224. [12] Further, use of discovery procedures in mandamus proceedings is not novel. See, e.g., Polin v. Retail Credit Co., 1970 OK 83, 469 P.2d 1004, 1006 (directing the trial court to reinstate plaintiff's action in mandamus and to reconsider plaintiff's motion to compel answers to interrogatories). ¶ 32 Generally, a party is given an opportunity to use discovery procedures when circumstances are known exclusively by the opposing party. State ex rel. Remington Arms Co., Inc. v. Powers, 1976 OK 103, 552 P.2d 1150, 1153. For example, an insurer's claim file may be discoverable in a proceeding involving an allegation of the insurer's breach of a duty to its insured. Darzenkiewicz v. Jackson, 1994 OK 151, 904 P.2d 66. Such litigation raises the issue whether the insurer had a reasonable basis to withhold payment when the insured requested the carrier to perform its contractual obligation. Heffron v. District Court of Oklahoma County, 2003 OK 75, ¶ 17, 77 P.3d 1069, 1077. The question raised by Chandler is similar: Whether or not the Fund had a reasonable non-arbitrary basis to withhold issuing the insurance when Chandler requested the Fund to perform its statutory obligation. [13] Chandler must be given an opportunity to engage in discovery in the trial court as an opportunity to satisfy its burden of proof. ¶ 33 The alternative writ and answer in a mandamus proceeding may be amended as pleadings in a civil action. 12 O.S.2001 § 1459. [14] Discovery is part of ordinary trial preparation procedure, and it promotes the ascertainment of the truth and ultimate disposition of the lawsuit in accordance therewith. State ex rel. Oklahoma Bar Association v. Lloyd, 1990 OK 14, n. 10, 787 P.2d 855, 859; YWCA of Oklahoma City v. Melson, 1997 OK 81, n. 41, 944 P.2d 304, 311. An opportunity for Chandler to amend its alternative writ and for the Fund to amend its answer as a result of discovery will promote the ascertainment of the truth and ultimate disposition of the lawsuit in accordance therewith. ¶ 34 In summary, we vacate the opinion by the Court of Civil Appeals and dismiss the appeal for lack of appellate jurisdiction. Appellant's motion to dismiss is denied. We issue ancillary relief in the nature of prohibition, and direct that the trial court's writ of mandamus shall not be enforced until Plaintiffs have opportunities to engage in discovery and amend their alternative writ to meet their burden of proof, and Defendant an opportunity to respond to any discovery and alternative pleadings that may be filed. ¶ 35 WATT, C.J., HODGES, HARGRAVE, KAUGER, BOUDREAU and WINCHESTER, JJ., concur. ¶ 36 OPALA, V.C.J. and LAVENDER, J., concur in part and dissent in part. OPALA, V.C.J., with whom LAVENDER, J., joins, dissenting in part. I concur in today's dismissal of this appeal which is prosecuted from a nonappealable mid-litigation ruling as well as in the court's refusal to declare the controversy in suit dismissible for mootness; I dissent from the court's pronouncement of its ancillary writ's command that conditionally prohibits the trial court's enforcement of the latter's own writ of mandamus whose effectiveness is presently suspended by a pre- or midappeal nisi prius order. In advance of its final disposition of a cause, a district court is utterly free to entertain quests for modification (or vacation) relief as well as to allow amendments to the pleadings on file. LCR, Inc. v. Linwood Properties, 1996 OK 73, 918 P.2d 1388, 1392; Johnson v. Johnson, 1983 OK 117, 674 P.2d 539, 543. In the absence of a demonstrated jurisdictional infirmity or of some threatened use of unauthorized judicial force, the trial court's freedom to exercise a broad range of plenary control over all interlocutory rulings may not (and should not) be restrained by this court's midstream interference. Heffron v. District Court Oklahoma County, 2003 OK 75, 77 P.3d 1069, 1073. The exceptional factors for triggering this court's writ power are absent here. There is absolutely no showing of a need for anyone's protection from the threat of judicial usurpation of power. Post-termination stages of this original proceeding should hence be charted solely by the adversary parties' chosen course.