Opinion ID: 835369
Heading Depth: 2
Heading Rank: 1

Heading: Commencement of the Action and Pretrial Orders

Text: DCBS brought this ancillary receivership action against CCCC and SNIC (the two Superior Group subsidiaries authorized to conduct insurance business in Oregon) in October 2000, soon after the liquidation order was entered by the California court. See ORS 734.200 (authorizing court to direct DCBS director to take possession of Oregon property of foreign insurer, to appoint director as ancillary receiver, and to order liquidation of foreign insurer's Oregon assets); ORS 734.190 (authorizing DCBS director to apply for court order directing conservation of Oregon assets of foreign insurer). At that time, as noted, SNIC had on deposit the $10.6 million related to workers' compensation insurance and reinsurance, and CCCC had on deposit $185,000 related to its workers' compensation insurance business and $260,000 related to its other Oregon insurance business. Defendants did not enter an appearance or contest the appointment of the receiver, and the trial court entered an order appointing the DCBS director as ancillary receiver. After CCCC was declared insolvent in September 2000, the Oregon Insurance Guaranty Association (OIGA) assumed responsibility for administering claims and paying covered claims on workers' compensation insurance policies that CCCC had issued. See ORS 734.510 to 734.710 (establishing OIGA and setting out its authority). From January 1 through July 31, 2001, OIGA paid about $2.6 million for claims and expenses related to CCCC's policies. After the California Department of Insurance revealed the existence of the pooling agreement to DCBS in June 2001, DCBS sought, and the trial court issued, in September 2001, an order releasing funds from SNIC's Schedule P deposit to reimburse OIGA for part of those payments. DCBS asserted that SNIC had agreed in the pooling agreement to reinsure 22 percent of CCCC's business. The trial court order authorized DCBS to disburse $585,233 (22 percent of the amount that OIGA already had paid out) from the SNIC deposit to OIGA and also to disburse to OIGA, on an ongoing basis, 22 percent of the amounts that OIGA continued to pay on CCCC's policies. [7] CCCC and SNIC did not appear in opposition to the DCBS motion. [8] In December 2001, OIGA filed a motion to intervene in the ancillary receivership action, which the trial court granted. After OIGA's intervention, OIGA, rather than DCBS, maintained this action. OIGA's petition on intervention claimed that the SNIC deposit should be available to reimburse OIGA for all of its payments to CCCC's insureds, rather than only the 22 percent of the OIGA payments that the trial court had authorized in its September 2001 order. Among other things, OIGA asserted that the court should treat CCCC and SNIC as the same entity and make SNIC's deposit available to cover claims on CCCC's policies as if the deposit had been made by CCCC. CCCC and SNIC answered the petition on intervention, denying the operative allegations.