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In re Liquidation of American Eagle Insurance Co.7/21/2005
Before Dykman, Vergeront and Lundsten, JJ.
Wisconsin Reinsurance Corporation (Reinsurance Corp.), a reinsurer of town mutual insurance companies, appeals from a judgment affirming a $15,047 assessment of Reinsurance Corp. by the Wisconsin Insurance Security Fund (Fund) and dismissing an action alleging procedural infirmities. Reinsurance Corp. contends that the Fund exceeded its statutory grant of authority by its assessment. The Fund asserts that WIS. STAT.§ 646.31(2)(a)1. (2001-02) permits town mutuals to submit claims to the Fund, and consequently subjects the insurers of town mutuals to assessment under WIS. STAT.§ 646.51(3)(am)2. While the statutory text reasonably supports either of these interpretations, we conclude that the legislative history of the statute shows the intent to permit assessment of reinsurers of town mutuals such as Reinsurance Corp. Finally, we conclude that Reinsurance Corp. waived most of its objections to the Fund's procedures, and we reject on the merits those procedural objections it has not waived. We therefore affirm the circuit court's judgment.
BACKGROUND
In 1997, American Eagle Insurance Company became insolvent and was under a liquidation order. As directed by WIS. STAT.§ 646.51 the Wisconsin Insurance Security Fund identified the solvent insurers of policyholders who could file claims on the Fund as a result of the American Eagle liquidation. The Fund interpreted WIS. STAT.§ 646.31(2)(a), under which a claim may be filed by "a ceding assessable domestic insurer that is organized under ch. 612 [the town mutual insurance chapter]," as permitting town mutuals to file claims on the Fund for risks they "cede," or reinsure, with another party. The Fund then assessed insurers with whom town mutuals had insured or reinsured certain risks. The Fund determined that Reinsurance Corp. was among these, and found its portion of the American Eagle assessment to be $15,047.
Reinsurance Corp. filed an administrative appeal with the Fund challenging the assessment. Reinsurance Corp. submitted interrogatories, requested documents pertaining to the assessment of Reinsurance Corp. and sought a hearing before the Fund, measures Reinsurance Corp. claimed it was entitled to under Chapter 227, the Wisconsin Administrative Procedure Act. The Fund responded that it was not a state agency subject to Chapter 227 procedures, but that it would conduct the appeal in a fair and equitable manner consistent with the procedures of Chapter 646. It averred that it would attempt to comply with Reinsurance Corp.'s discovery requests, but that a hearing was not necessary because the appeal concerned only issues of law. The Fund asked Reinsurance Corp. to submit a brief outlining its legal arguments against the assessment.
Reinsurance Corp. then sought a declaratory judgment in circuit court (Case No. 2001-CV-3496, hereinafter the "procedures case") ordering the Fund to comply with its procedural demands. The court stayed this action to permit the Fund to make a determination on the merits of the appeal. The Fund then appointed an examiner, who held a hearing and made certain factual findings, and concluded that the Fund had statutory authority to assess Reinsurance Corp. Reinsurance Corp. ultimately appealed this decision in a second circuit court action (Case No. 2002-CV-2571, hereinafter the "merits case").
The merits case and the procedures case were consolidated before the American Eagle liquidation court. Reinsurance Corp. subsequently filed a motion to set aside the assessment, and a separate motion to remand to take testimony to remedy alleged procedural errors by the Fund. The Fund moved for summary judgment on the procedur
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