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Opinion rules on 2 issues of first impression

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The Indiana Court of Appeals was faced with two issues of first impression in one opinion – the meaning of Indiana Code Section 27-9-3-34(d) and whether a party is entitled to a jury trial for disputes concerning claims in liquidation proceedings.

In Carol Cutter, as the Commissioner of the Indiana Department of Insurance v. Classic Fire & Marine Insurance Co. v. J.W., et al., No. 49A05-0906-CV-315, Indiana company Classic Fire & Marine Insurance issued a general liability policy to Alaska corporation Allvest in 1995 for one year. During its policy coverage, Allvest let CFM know that women were going to file claims of sexual molestation against an Allvest employee. In 1998, the Indiana Department of Insurance’s petition for liquidation against CFM was granted.

Allvest’s claim for indemnification from CFM under the policy was identified as disputed claim 83, which the Allvest bankruptcy estate sold to the women’s attorney. Allvest was placed in involuntary Chapter 11 bankruptcy in Alaska several years after the women filed their claim. The women, known as the J.W. claimants, got final judgments against Allvest totaling more than $1.22 million before Allvest went into bankruptcy. The bankruptcy court awarded them more than $430,000.

The J.W. claimants wanted a jury trial on the disputed claim and argued they were entitled to full faith and credit in the Indiana insolvency proceedings based on the Alaska judgments. In 2006, the Alaska bankruptcy court approved more than $555,000 from Allvest’s bankruptcy estate for the J.W. claimants, which the Department of Insurance as liquidator objected to based on double recovery. The trial court agreed with the liquidator and dismissed disputed claim 83.

The appellate court ruled that the J.W. claimants’ claim against Allvest and Allvest’s claim against CFM are two separate, distinct claims, so a distribution on the disputed claim 83 won’t result in a double recovery. The trial court erred in its decision.

With respect to judgments or orders entered against an insured, such as Allvest in CFM’s liquidation proceedings, Indiana Code Section 27-9-3-34(d) says “The following do not need to be considered as evidence of liability or the measure of damages: A judgment or order against an insured or the insurer entered after the date of filing a successful petition for liquidation.”

The liquidator argued the J.W. claimants have to prove their claim against Allvest from scratch; the J.W. claimants argued the Alaska judgments are entitled to full faith and credit. Since it’s first impression for Indiana courts, the judges looked to Montana and Pennsylvania cases, which held a judgment or order against an insured filed after a successful petition for liquidation against the insurer isn’t conclusive of liability or the quantum of damages. In CFM’s liquidation proceedings, the Alaska judgments aren’t conclusive evidence of liability or the measure of damages, the COA judges concluded.

The judges noted that the statute doesn’t prohibit a judgment or order against an insured or an insurer entered after the date of filing a successful petition for liquidation from being considered as evidence of liability or the measure of damages.

“The particular facts of each case, the legal issues involved, and the Indiana Rules of Evidence should be used to determine whether such a judgment or order may be considered as evidence of liability or the measure of damages,” wrote Judge Terry Crone.

In the other matter of first impression, the appellate judges ruled that a party isn’t entitled to a jury trial for disputes concerning claims in liquidation proceedings. I.C. Section 27-9-3-37(b) prescribes a hearing before a judge, not a jury.

The case was remanded for further proceedings.
 

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  1. Excellent initiative on the part of the AG. Thankfully someone takes action against predators taking advantage of people who have already been through the wringer. Well done!

  2. Conour will never turn these funds over to his defrauded clients. He tearfully told the court, and his daughters dutifully pledged in interviews, that his first priority is to repay every dime of the money he stole from his clients. Judge Young bought it, much to the chagrin of Conour’s victims. Why would Conour need the $2,262 anyway? Taxpayers are now supporting him, paying for his housing, utilities, food, healthcare, and clothing. If Conour puts the money anywhere but in the restitution fund, he’s proved, once again, what a con artist he continues to be and that he has never had any intention of repaying his clients. Judge Young will be proven wrong... again; Conour has no remorse and the Judge is one of the many conned.

  3. Pass Legislation to require guilty defendants to pay for the costs of lab work, etc as part of court costs...

  4. The fee increase would be livable except for the 11% increase in spending at the Disciplinary Commission. The Commission should be focused on true public harm rather than going on witch hunts against lawyers who dare to criticize judges.

  5. Marijuana is safer than alcohol. AT the time the 1937 Marijuana Tax Act was enacted all major pharmaceutical companies in the US sold marijuana products. 11 Presidents of the US have smoked marijuana. Smoking it does not increase the likelihood that you will get lung cancer. There are numerous reports of canabis oil killing many kinds of incurable cancer. (See Rick Simpson's Oil on the internet or facebook).

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