California Insurance coverage Firm accuses regulator of “unlawful interference” in lawsuit
The California Insurance Company of New Mexico (CIC) has filed a lawsuit to join the California Insurance Division (CDI) and prevent the insurer from believing that state insurance regulators are obstructing their efforts to redomicile New Mexico.
The complaint filed in the United States Federal Court, Eastern District, California, names CDI Commissioner Ricardo Lara, Assistant Commissioner Kenneth Schnoll, and Assistant Commissioner Bryant Henley as defendants. The lawsuit alleged that the officers violated the trade clause of the United States Constitution and the CIC’s right to due process. CIC is also calling for compensation for losses resulting from the so-called “illegal manipulation and control of its assets under the protection of CDI defendants”.
The lawsuit comes after the New Mexico Insurance Superintendent’s Office instructed CIC to either immediately comply with any regulations required of his redomestication to New Mexico or face fines and possible revocation of his certificate of attorney.
CIC accused the CDI officials of “unlawful” and “bad faith” of imposing an arbitrary, illogical and illegal conservatory on the insurer – especially after its redomesticaion was approved by several states, including California.
In the complaint, CIC also alleged that CDI suddenly reversed its stance on redomestication after the commissioner initially ruled that the move “posed no risk to California policyholders”. Since the “U-turn”, CIC alleged that the defendants continued to campaign maliciously to harm CIC by blocking its efforts to transfer its assets and businesses to New Mexico.
CIC also alleged that CDI filed a motion with the California State Court for approval of a non-consensual rehabilitation plan. The request would impose sanctions on the insurer for non-compliance with the conservatory. Allegedly, the plan called for CIC to transfer and reinsure its entire “Book of California Business” to an unaffiliated competitor, and to resolve over 40 separate civil litigation on “arbitrary” terms dictated by the CDI.