Court Opinion

ID: 7827277
Source: CourtListenerOpinion
Date Created: 2022-09-07 18:10:20.710773+00
Date Added: 2024-06-11T16:30:53.943195
License: Public Domain

DONALD L. Corbin, Justice, dissenting. I dissent from the majority’s conclusion that Appellants waived their rights to notice and a full hearing based on an alleged breach of their agreement with Appellee Insurance Commissioner. I am troubled by the majority’s conclusion that the Commissioner was not required to comply with the mandatory requirements of Ark. Code Ann. § 23-68-104 (Repl. 1994), despite the fact that the Uniform Act provides the “sole and exclusive method of liquidating, rehabilitating, reorganizing, or conserving an insurer[.]” See Ark. Code Ann. § 23-68-103(c) (Supp. 1999) (emphasis added). The Act plainly contemplates that a full hearing will be held before the trial court may grant the relief sought by the Commissioner in the delinquency proceedings. The reason for a full hearing is unmistakably to enable the trial court to make a learned ruling based on all the facts. Receivership of an insurance company has far-reaching effects, beyond those felt by the company’s owners and directors. It has very real effects on the policyholders and any other persons who may have claims against the insurance company. Their interests must be protected. Section 23-68-104 advises the trial court to consider the interests of “the policyholders, creditors, stockholders, members, subscribers,” as well as the interests of the public, in granting or denying the appointment of a receiver. How the trial court can consider those interests without the benefit of a full hearing prior to the appointment of a receiver is beyond me. Given the other interests at stake, I do not believe that the Commissioner may skirt the notice requirements contained in the Uniform Act based solely on what he claims is a waiver of notice by the owners of the insurance company. More significantly, I do not read the agreements between the Commissioner and Appellants as giving the Commissioner unilateral authority to determine when a breach of the agreements has occurred. That should have been an issue for the trial court to determine, after hearing evidence from both sides. The trial court’s determination that there was a prima facie breach of the agreement is of little or no value, as it was made ex parte. Moreover, I disagree with the majority that the “hearing” held on August 4, 2000, after the trial court had already made its ex parte ruling, was sufficient for purposes of due process. Appellants undoubtedly had a higher mountain to climb in attempting to convince the trial court that it had erred in making the initial determination that a breach had occurred. Furthermore, the “hearing” granted after the fact was, in reality, no hearing at all; no court reporter was present, and no evidence was heard. Additionally, I disagree with the majority that the waiver contained in the agreements sufficed to allow the trial court to issue a permanent injunction and restraining order without notice to Appellants. Arkansas Code Annotated § 23-68-105 (Repl. 1994) only allows the trial court to issue an injunction or restraining order without prior notice to the insurer if the Commissioner has first sought a show-cause order. That was not done here. It is evident from the steps statutorily required that the act of placing a corporation into receivership is serious business. The Commissioner is required to commence a receivership by applying to the trial court for an order directing the insurer to show cause why the receivership should not be granted. A “full hearing” must then be held, during which the trial court is to consider the interests of all potential affected parties, as well as the public. See section 23-68-104. Only after a full hearing may a receivership be granted. At a minimum, the statutory scheme contemplates that interested parties will be given an opportunity to be heard before a receiver is appointed and a permanent order is entered. Under the facts of this case, even if it can be said that Appellants waived their statutory rights to notice, at a minimum, they should have been provided with notice to be heard on the issue of whether the agreement had, in fact, been breached. Constitutional notions of due process require at least that much. It stretches credulity to envision the Commissioner having such complete unchallengeable authority that he not only can avoid the notice requirements of the statutes, but that he can be judge and jury on the issue of whether a breach has occurred. Finally, what is most troubling to me are the far-reaching effects this decision will have. I fear that the agreements employed by the Commissioner in this case will be used as a template to place other insurance companies into receivership. This “procedure” offends public policy and the very reasons behind the passage of the Uniform Act. As explained above, the Act clearly spells out the steps that the Commissioner must take before an insurer may be placed into receivership. The requirements are straightforward and simple, and, more importantly, they are the sole and exclusive means to place an insurer into receivership. It was thus error for the trial court to require anything less than compliance with the statutes. Arnold, C.J., and Thornton, J., join in this dissent.