Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Companion Property and Casualty Insurance Co. v. Wood

United States District Court, D. South Carolina, Columbia Division

September 7, 2017

COMPANION PROPERTY AND CASUALTY INSURANCE COMPANY, Plaintiff,
v.
CHARLES DAVID WOOD, JR.; AMS STAFF LEASING, INC., d/b/a/ AMS Staff Leasing Corporation; BRECKENRIDGE ENTERPRISES, INC., d/b/a/ AMS Staff Leasing II; AMS Staff Leasing II, Inc.; HIGHPOINT RISK SERVICES, LLC; and ASPEN ADMINISTRATORS, INC., Defendants.

          OPINION AND ORDER ON ACTUARIAL REPORT

          CAMERON MCGOWAN CURRIE SENIOR UNITED STATES DISTRICT JUDGE.

         This matter is before the court for review of the actuarial report of Matthew P. Merlino, F.C.A.S., M.A.A.A. (“Merlino”). This report (“Merlino Report”) addresses the amount of collateral needed to be maintained, as of April 30, 2017, to cover potential below-deductible liabilities that may arise on policies issued to AMS Staff Leasing, Inc., Breckenridge Enterprises, Inc., and/or AMS Staff Leasing II, Inc., pursuant to the 2006 Coverage Agreement (the “AMS Policies”). For reasons explained below, the court adopts the Merlino Report in full and finds the Total Reserves needed for AMS Policies subject to a $1, 000, 000 deductible limit was $9, 519, 603 as of April 30, 2017.

         This figure shall be used in conjunction with the report of the court-appointed accounting expert, Stephen Wolf, C.P.A. (“Wolf”), to determine whether the collateral account required under the agreement between the parties is underfunded or overfunded. Pursuant to the parties' prior agreement as adopted and ordered by the court, additional funds shall be added or excess funds shall be refunded based on the result of the combined reports. The adequacy of the account shall continue to be reviewed on a quarterly basis and similar adjustments shall be made based on the result of the quarterly reports.

         BACKGROUND

         The court has described the factual context of this case in several prior orders. See, e.g., ECF No. 258 (summary judgment order); ECF No. 414 (order on non-jury issues). In summary, Companion Property and Casualty Insurance Company (“Companion”) and AMS Staff Leasing, Breckenridge Enterprises, and AMS Staff Leasing II (collectively “AMS”), as well as other entities, are parties to the 2006 Coverage Agreement. That agreement established a relationship through which Companion provided certain forms of insurance to AMS, including workers' compensation insurance for AMS employees. The insurance provided is governed by separate policies.

         Due to the nature of the relationship (described by the parties as a “fronting” arrangement), the 2006 Coverage Agreement and other related agreements provided Companion a variety of protections against risk of loss. One of those protections is described in the following paragraph of the 2006 Coverage Agreement:

13. Claims Collateral. During the Coverage Term of the Master Policies, CPCIC [i.e., Companion] shall establish and maintain in its name with the Bank of America an account to serve as a claims reserve fund (the “Claims Reserve Fund”). At the commencement of the Coverage Term the AMS Entities shall make an initial deposit of $1, 000, 000 into the Claims Reserve Fund as the initial “Required Reserve”. Thereafter, on a quarterly basis, the Milliman consulting firm (“Milliman”) shall audit the claims experience in connection with the Policies and determine the appropriate amount of the Required Reserve for the next quarter in accordance with a methodology acceptable to CPCIC in its sole discretion. As actual claims are incurred the AMS Entities shall deposit into the Claims Reserve Fund the amount of such claims on a monthly basis by the 10th day of the calendar month so that the Required Reserve is maintained in the Claims Reserve Fund at all times. CPCIC shall have the right at any time during normal business hours to audit the records of any AMS Entity with respect to claims and the Claims Reserve Fund. All earnings on the Claims Reserve Fund shall belong to CPCIC and no AMS Entity shall have any interests therein. DN [i.e., Dallas National] will be responsible for scheduling and paying for the Milliman audits on a quarterly basis and providing CPCIC copies of these reserve reports within 45 days of the close of the quarter. All earnings on funds held within the Claims Reserve Fund will inure to the benefit of CPCIC.

2006 Coverage Agreement ¶ 13 (Dkt. No. 340-1).

         One disputed issue in this litigation is whether the collateral in the account addressed in paragraph 13 of the 2006 Coverage Agreement is properly funded. Several of Companion's claims either directly or indirectly assert the account is underfunded. See ECF No. 88 (Second Am. Compl.) at First Cause of Action (“Declaratory Relief-Collateral”), Third Cause of Action (“Breach of Contract-Failure to Pay Deductible”), Fourth Cause of Action (“Breach of Contract-Failure to Comply with Audit”). Defendants in contrast, assert several counterclaims directly or indirectly alleging the account is overfunded. See ECF No. 90 (First Am. Ans. & Countercls.) at First Counterclaim (“Breach of Contract-Collateral”), Second Counterclaim (“Breach of Special Relationship”), Third Counterclaim (“Conversion”).

         PROCEDURAL HISTORY

         Just prior to the scheduled jury trial, the parties entered a Joint Stipulation delineating four categories of issue: (1) issues requiring pre-trial resolution (including motions in limine); (2) issues for trial by jury; (3) issues for non-jury resolution to be resolved after the jury trial with issuance of “declaratory judgments as needed”; and (4) “Issues for Independent Accountant/Actuarial Review.”[1] ECF No. 409-1. The Joint Stipulation provided as follows regarding the actuarial review:

A. An independent actuarial firm agreed to by the parties shall prepare an updated actuarial report as of April 30, 2017, using an actuarial methodology approved by the Court and the independent actuarial firm. [footnote quoted below] Companion shall furnish audited data to the independent actuarial firm, whenever available, including for any prior years, but shall not be required to audit any data other than in the normal course of its business. All data provided to the independent actuarial firm shall be simultaneously provided to Defendants. The report shall state the Required Reserve for below deductible liabilities under the AMS Policies. Thereafter, the same agreed-upon actuarial firm shall prepare quarterly actuarial audit reports using the same methodology and advise the parties and Court of the results of same, including updated Required Reserve. The parties will abide by the Required Reserve determinations made by the independent actuarial firm.

         ECF No. 409-1 at 6. The footnote to this paragraph read as follows:

Prior to the preparation of the updated actuarial report, the parties shall have an opportunity to comment on the potential actuarial methodology or methodologies that may be utilized by the independent actuarial firm and notify the Court of any concerns regarding such methodology or methodologies. Companion notes that it does not expressly or impliedly ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.