The San Mateo Superior Court handling the Applied Underwriters’ subsidiary California Insurance Company conservation denied a request from New Mexico Attorney General Hector Balderas to become a party to the case. Not only is intervention not allowed in a conservation proceeding, but the Court also says New Mexico fails to show any need for it to join the case.
The decision is no surprise. It follows every attempt New Mexico has made to interfere with California’s conservation of the troubled and controversial carrier.
New Mexico’s Balderas filed the Motion to intervene in the case on behalf of California Insurance Company II. “The uncertainty generated by the conservatorship – including its lengthy and indefinite duration – harms New Mexico’s interest in permitting the consummation of a merger that has been approved by the State’s Superintendent of Insurance (OSI),” Balderas maintained in the filing.
“Because Code of Civil Procedure section 387, subdivision (d)(2) does not apply in this proceeding, the Motion is denied for this reason alone,” the Court explained, referencing the code section for the intervention provisions. “In any event, even if, as New Mexico contends, the Court has discretion to allow New Mexico to intervene as a party in this action, it declines to do so.”
New Mexico is the destination where Applied Underwriters attempted to rapidly redomesticate California Insurance Company without the approval of the California Department of Insurance or Insurance Commissioner Ricardo Lara. The attempted end-run around California’s regulatory authority is what prompted the conservation order in the first place.
The Court notes that the conservation proceeding has been going on for nearly three years, yet it took New Mexico nearly two years to take any action in the case. That action was a January 2021 notice to show cause against the hastily formed California Insurance Company II in New Mexico that was to be the vehicle for the redomestication.
New Mexico threatened CIC II’s certificate for failing to operationalize the carrier. When that tactic did not intimidate California or impress courts, it backed down and reached an amicable agreement with Applied, giving it two more years to resolve the conservation without suffering repercussions.
The Court noted further foot-dragging on New Mexico’s part in response to the Court’s June 17, 2022, notice of hearing for the proposed CIC rehabilitation plan. It points out that New Mexico was presumably aware of this but “waited until August 29, 2022 to file this Motion. New Mexico, however, offers no explanation for this delay and does not explain why respondent California Insurance Company is unable to adequately represent its interests even though New Mexico has allowed it to do so for the past two years and eight months,” the Court wrote, pointing out that New Mexico’s intervention would do nothing to speed the resolution of the conservation.
While denied party status, New Mexico will have an opportunity to make its interests known to the Court. “Under the briefing schedule set forth in the stipulation and order filed by the Court on August 12, 2022, ‘the deadline for Respondent’s Position Papers’ is November 10, 2022. New Mexico may therefore file a request for leave to file an amicus brief with its proposed amicus brief on or by November 17, 2022,” the Court noted. “This ensures that any concerns that New Mexico may have about the Rehabilitation Plan may be considered by this Court. Accordingly, the Court denies the Motion for these independent reasons as well.”
Copies of the Court’s order are available in our Resources section or by clicking here.