For the second time, federal judge Gusto Gelpí denied a petition from the Office of the Insurance Commissioner to dismiss a lawsuit filed by the owners of Integrand Assurance Company against the commissioner Javier Rivera Ríos and three members of the office.
Last July, Integrand's stockholders Víctor and Ana Salgado sued Rivera, Sub-commissioner Rafael Cestero-Lopategui, Alexander Adams, a lawyer in the Insurance Commissioner’s Office, and Juan Moldes, the officer in charge of the insurer's rehabilitation, for an alleged civil conspiracy intended to harm the insurer’s reputation and thwart its capacity to bounce back from its financial difficulties.
All the defendants were sued in their individual capacities. The verified complaint demands $30 million in compensatory damages, punitive damages to be awarded by the court and attorneys’ fees and costs.
In the two-page order, Gelpí appeared to scold the defendants noting they were rehashing arguments proffered in their first motion.
"Nonetheless, the Court will jointly address Defendants’ position that plaintiffs lack standing to sue; fail to join an indispensable party, and that abstention doctrines bar this Court from entertaining the present case," indicated the chief judge of the U.S. District Court for the District of Puerto Rico.
To support their argument, lawyers for the Office of the Commissioner cited doctrine established in the cases of Barton v. Barbour related to the usurpation of powers and Porter v. Sabin, which states “where a corporation becomes insolvent, and a receiver is appointed by a court of competent jurisdiction, the right of action to sue on behalf of said corporation vests in him.”
Due to an evaluation completed by the Puerto Rico Insurance Commissioner which revealed that the company was in insolvency for $215,717,159 as of May 31, 2019.
"None of these issues are present in this case. Instead, Plaintiffs’ Amended Complaint alleges civil rights violation claims, under 42 U.S.C. § 1983, that mostly precedes Integrand Assurance Company (Integrand)’s rehabilitation and receivership process. More so, an ongoing rehabilitation and/or receivership process, which is presently being appealed before the Commonwealth courts, does not impede this Court from entertaining a separate and independent § 1983 civil rights action," noted Gelpí.
"As noted by this Court at Docket No. 27, Plaintiffs have sufficiently established in their Amended Complaint that they have standing to sue in a derivative capacity and have suffered personal and direct injuries. For these reasons, Plaintiffs, at this stage, are not required to join Integrand, as an indispensable party defendant," he added.
Strike Against Integrand
But last Friday, Gelpí denied without prejudice the plaintiffs' motion for a preliminary injunction in an attempt to stop a liquidation order issued by the San Juan Judicial Center Judge Carmen Merced Torres and petitioned by the Insurance Commissioner.
"An injunctive or extraordinary relief requires that the movant party shows there is no adequate remedy at law... Currently, Plaintiffs filed a Motion in Aid of Jurisdiction at the Puerto Rico Court of Appeals to stay Commonwealth proceedings and enforce a judgment previously ordered by that court. See First Notice of Plaintiffs’ in Compliance with Court Order. Even if said motion is decided against them, further review can be sought before the Puerto Rico Supreme Court. Thus, Plaintiffs have an adequate remedy at law in the Commonwealth courts," indicated Gelpí.
Integrand found itself in financial distress after Maria slammed the island causing over $100 billion in damages. Unable to pay off claims that could have reached $50 million, it voluntarily requested that the Insurance Commissioner’s Office initiate rehabilitation proceedings, who in turn requested the dissolution of the company.