CLAIMS ARISING OUT OF ALLEGEDLY PURPOSEFUL UNDERCAPITALIZATION OF CAPTIVE REINSURER SURVIVE MOTION TO DISMISS
This case centers around the relationship between defendant, Ramona Tires (“Ramona”), Automotive Services Insurance Limited (“ASIL”), a captive reinsurance company created by Ramona, and Frontier Insurance Company (“Frontier”). Plaintiff Howard Mills, Superintendent of Insurance, as Rehabilitator of Frontier, filed suit against Ramona alleging that Ramona defrauded Frontier by purposefully undercapitalizing ASIL so as to make it unable to comply with its contractual obligations. Ramona filed a motion to dismiss for failure to plead its fraud claim with particularity under Rule 9(b) and for failure to state a claim under Rule 12(b)(6).
The Southern District of California denied Ramona’s motion to dismiss. Plaintiff’s complaint attributed the following two false statements to Ramona: (1) defendants allegedly promised that ASIL would reimburse Frontier for the first $250,000 of each claim made on the policy by Ramona; and (2) ASIL would remain adequately capitalized. The court found these averments satisfied the requirements of Rule 9(b). The court further held that plaintiff adequately pled claims for unjust enrichment, money had and received, and conspiracy. Howard Mills v. Ramona Tire, Inc., Case No. 07-CV-0052 (USDC S.D. Cal., Dec. 5, 2007).
This post written by Lynn Hawkins.
