Opinion
C.A. No. 06A-11-005 MMJ.
Submitted: January 16, 2007.
Decided: January 23, 2007.
Upon Motion of Delaware Department of Insurance to Dismiss Appeal for Lack of Jurisdiction.
GRANTED.
ORDER
1. Petitioners are holders of insurance policies issued by one or more subsidiaries of Royal Sun Alliance USA, Inc. On September 28, 2006, RSA-UK announced its intention to sell its United States-based operations to Arrowpoint Capital Corp. and Arrowpoint Capital, LLC (collectively "Arrowpoint"). Arrowpoint filed a "Form A" Statement with the Delaware Department of Insurance pursuant to 18 Del. C. § 5003(a), seeking the required approval of the Insurance Commissioner of Delaware for acquisition of voting securities of Delaware-domiciled insurers. The proceedings before the Commissioner are docketed as In the Matter of the Proposed Acquisition of Royal Indemnity Company, et al., Docket No. 313 ("Commissioner Proceedings").
2. On October 16, 2006, the Commissioner appointed a Hearing Officer to preside over the Commissioner Proceedings. Petitioners requested recusal or disqualification of the Hearing Officer on the basis of alleged conflict of interest. Petitioners also moved that they be permitted to participate, as affected parties, in the Commissioner Proceedings, as provided by 18 Del C. § 5003(d)(2), for the purposes of taking pre-hearing discovery and presenting witnesses and other evidence at the public hearing.
3. The Hearing Officer denied Petitioners' motions. Petitioners filed this Superior Court action. Petitioners filed an Emergency Motion for Stay of Administrative Proceeding Pending Appellate Review. At the conclusion of the teleconference, which the Court heard on an emergency basis, the Court denied Petitioners' stay application. The Court ruled that it had no jurisdiction to stay proceedings pending interlocutory appeal of the Hearing Officer's pre-hearing rulings.
4. The Hearing Officer subsequently resigned the position. The Commissioner then appointed Professor Lawrence A. Hamermesh as Hearing Officer. Petitioners renewed their application for party status. Professor Hamermesh denied Petitioners' application.
5. By Order on Pre-Hearing Motions dated December 20, 2006, Professor Hamermesh found:
10. Denial of the Moving Policyholders' applications for party status does not deny them a meaningful opportunity to call attention to their concerns about the Royal US Acquisition. They have not squarely contended that such denial would unconstitutionally deprive them of due process of law, and any such contention would lack merit. See LaFarge v. Cmwlth. of Pa., Ins. Dep't., 735 A.2d 74, 78 (Pa. 1999) (in proceeding on insurer's proposal to place asbestos and environmental liabilities in a separate operating entity, notice and opportunity to comment "were adequate to satisfy the requirements of due process," and the "imposition of additional procedures such as sworn testimony, cross-examination, a full stenographic record, and opportunity to submit briefs would entail extensive delay [and] would not materially enhance the interests of [policyholders]"). In this proceeding, the Moving Policyholders have had and will have significant opportunities to present their concerns. They have already submitted comments that will surely need to be addressed in connection with the public hearing in this matter. The Babbel/Wilcox Declaration, for example, raises a number of significant questions ( e.g., about the scope of and responsibility for unfunded pension obligations) that the Applicants and the DID should address in regard to the statutorily required evaluation of the effect of the proposed transaction on the Applicants' financial condition and the Insurers' financial stability. It can be expected that the Moving Policyholders will submit still more comments on the proposed transaction, and those comments should inform the outcome of this proceeding.
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C. Notwithstanding such denial, the materials previously submitted by the Moving Policyholders, including the Babbel/Wilcox Declaration, will be considered as written comments on the proposed Royal US Acquisition, and such materials need not be resubmitted for purposes of such consideration, and the Moving Policyholders may submit additional written comment and argument in accordance with procedures to be established for the public hearing in this matter.
6. On December 22, 2006, the Delaware Department of Insurance filed with this Court a Motion to Dismiss Appeal for Lack of Jurisdiction. The Department argued that this Court has no jurisdiction over any decision of the Hearing Officer because none of the decisions are final under the Administrative Procedures Act ("APA").
29 Del. C. § 10101 et seq.
7. Petitioners argued that the Hearing Officer's order is final with respect to Petitioners' substantive rights and, therefore, properly subject to this Court's review. Petitioners contend that the order is a category of agency action referred to as "gap" conduct, which falls outside the APA and is subject to judicial review under the collateral order doctrine, the Delaware Constitution, and the Insurance Code.
8. The Court held oral argument on the Department's Motion to Dismiss on January 16, 2007. As the Court previously determined by Order dated November 20, 2006, the Hearing Officer's denial of party status to Petitioners is an interlocutory, pre-hearing ruling. Interlocutory orders of administrative agencies are not appealable. In this instance, the Hearing Officer makes recommendations to the Commissioner. The Commissioner's decision, after consideration of those recommendations, is the final determination. This Court does not have jurisdiction to hear an interlocutory appeal from the Hearing Officer's ruling. The Court finds that Petitioners' arguments to the contrary are without merit.
29 Del. C. § 10126.
Clendaniel v. McDaniel Construction, Inc., 787 A.2d 100, 100 (Del. 2001).
THEREFORE, the Motion of Delaware Department of Insurance to Dismiss Appeal for Lack of Jurisdiction is hereby GRANTED. This action is dismissed. Petitioners may file a subsequent appeal from a final determination of the Insurance Commissioner of Delaware.
IT IS SO ORDERED.