State of Georgia v. Sun States Insurance Group, Inc.; Regulatory Technologies, Inc. v. State of Georgia
332 Ga. App. 197
| Ga. Ct. App. | 2015Background
- The Georgia Insurance Commissioner was appointed liquidator of International Indemnity Company (IIC); he appointed deputies including Harry Sivley, cofounder/CEO of Regulatory Technologies, Inc. (Reg Tech), which assisted in the liquidation.
- Sun States (IIC’s sole shareholder) objected to the liquidator’s proposed final accounting and discharge, alleging excessive administrative charges and improper transfers to Reg Tech/Sivley and seeking surcharge of the liquidator and related relief, including attorney fees.
- The court ordered an independent audit; the auditor identified credits due the estate and raised questions about payroll, overhead, and contract compensation charged by Reg Tech.
- The liquidator supplemented the accounting and conceded some credits but disputed other audit findings; the trial court permitted Sun States to pursue surcharge claims and to present evidence regarding attorney fees.
- The liquidator moved to dismiss based on sovereign immunity; the trial court denied dismissal, ruling the Insurers Rehabilitation and Liquidation Act (the Act) waived sovereign immunity to permit disgorgement of improperly removed estate funds and authorized attorney fees. The appellate court reviewed those rulings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Act waives sovereign immunity so court can order repayment to liquidation estate | Sun States: Act’s supervisory/audit/discharge provisions evidence waiver allowing monetary recovery to estate | State/liquidator: Sovereign immunity bars money judgments against the State absent explicit statutory waiver | Reversed in part — Act’s provisions do not specify extent of waiver or authorize recovery of money damages from the State, so sovereign immunity not waived as trial court held |
| Whether OCGA § 33-37-8.1(b) (official immunity) bars claims related to the discharge application | Sun States: Section should not shield intentional/wanton misconduct; evidence supports exception | State/liquidator: Section provides immunity for receiver and employees for claims arising from duties | Affirmed in part and remanded — appellate court held trial court properly reserved ruling and may consider evidence under the statutory exception for intentional or willful and wanton misconduct |
| Whether trial court may award attorney fees under the Act | Sun States: Fees recoverable as part of relief for successful surcharge/objection | State/liquidator: No waiver of sovereign immunity and Act does not authorize fees against State | Reversed as to fees insofar as based on a finding that Act implicitly waived sovereign immunity; fee claim to be reconsidered consistent with OCGA §33-37-8.1(b) on remand |
| Whether Reg Tech must remain a party and is liable alongside liquidator | Sun States: Reg Tech participated in administration and should be joined/surcharged | Reg Tech: Joined appeal with State asserting immunity/other defenses | Appellate decision on Reg Tech follows disposition as to State; remanded for further proceedings consistent with above holdings |
Key Cases Cited
- Ga. Dept. of Corrections v. James, 312 Ga. App. 190 (de novo review of sovereign immunity dismissal)
- Shekhawat v. Jones, 293 Ga. 468 (sovereign immunity protects the State and its agencies)
- Cameron v. Lang, 274 Ga. 122 (official-capacity suits are suits against the State for immunity purposes)
- Colon v. Fulton County, 294 Ga. 93 (statutory waiver requires the statute to specify the right and extent of waiver)
- City of Atlanta v. Barnes, 276 Ga. 449 (statutory refund remedy demonstrates how waiver extent can be specified)
- Williamson v. Dept. of Human Resources, 258 Ga. App. 113 (FEPA example where statute specified allowable relief and thus waived immunity)