Opinion
No. 55882
OPINION FILED: July 6, 1999
APPEAL FROM THE CIRCUIT COURT OF COLE COUNTY, THE HONORABLE PATRICIA JOYCE, JUDGE.
Jon E. Beetem, Hearne, Nickolaus, Green Beetem, Jefferson City, Missouri, for appellant[s].
Lori J. Levine, Carson Coil, Jefferson City, Missouri, Michael L. Blumenthal, Shook, Hardy Bacon, Kansas City, Missouri, for respondent[s].
Before Breckenridge, C.J., Spinden and Stith, JJ.
Joshua Avidan appeals from the dismissal of his lawsuit against Transit Casualty Company in Receivership (TCCR) for breach of his employment contract and against TCCR and J. Burleigh Arnold, special deputy receiver, for civil rights violations under 42 U.S.C. § 1983. The Circuit Court of Cole County found that it lacked jurisdiction over Mr. Avidan's claims and transferred his contract and 42 U.S.C. § 1983 claims against TCCR to "the Circuit Court of Cole County, Missouri, in Cause No. CV185-1206CC," the receivership proceeding, and ordered that these causes of actions be treated as timely filed claims against TCCR. The Court dismissed Mr. Avidan's 42 U.S.C. § 1983 claim against Mr. Arnold based on the doctrine of judicial immunity. On appeal, Mr. Avidan argues that: (1) the trial court's ruling that it lacked jurisdiction is erroneous because the employment contract between Mr. Avidan and TCCR grants jurisdiction to the Cole County Circuit Court; and (2) the doctrine of judicial immunity does not bar his claim against Mr. Arnold because Mr. Arnold's decision to terminate Mr. Avidan's employment was not a judicial act. The judgment of the trial court is affirmed.
Factual and Procedural Background
Transit Casualty Company is an insolvent insurance company that was placed in liquidation by the Cole County Circuit Court on December 3, 1985. When Jay Angoff became director of the Department of Insurance, by operation of law he also automatically became receiver of TCCR, and Mr. Arnold was appointed special deputy receiver. During the course of his duties on behalf of TCCR, Mr. Arnold entered into an employment contract with Mr. Avidan, effective January 1, 1996, through December 31, 2000. The receivership court subsequently approved Mr. Avidan's employment contract. Under the contract, Mr. Avidan was to serve as the Manager of Information Technology for TCCR and his compensation was deemed an expense of winding up Transit Casualty. The contract contained a provision entitled "Applicable Law" which reads as follows:
Mr. Angoff was originally included as a defendant in the second count of Mr. Avidan's petition, but Mr. Avidan later voluntarily dismissed Mr. Angoff from the lawsuit.
This agreement shall be governed by, interpreted under and construed in accordance with the internal laws of the State of Missouri without giving effect to the choice of laws provisions thereto. Each party hereto irrevocably submits to the exclusive jurisdiction of the Circuit Court of Cole County, Missouri for any action or proceeding arising out of or relating to this Agreement for the purpose of hearing and deciding all claims in respect of such action or proceeding. Each party irrevocably waives the defense of an inconvenient forum to the maintenance of such action or proceeding. Each party irrevocably consents to the service of process which may be served in any such action or proceeding by mailing copies thereof to such party at its address specified hereunder or as thereafter changed by proper notice.
The Agreement provided for termination of the employment contract by TCCR upon the occurrence of certain events or for cause. Likewise, the Agreement contained provisions for Mr. Avidan to prematurely terminate the contract.
On June 19, 1996, TCCR terminated Mr. Avidan's employment. In response, Mr. Avidan filed a petition in the Circuit Court of Cole County. Mr. Avidan's petition alleged, in the first count, that TCCR terminated his employment without a reason specified in the contract, thereby breaching his employment contract. In the second count of his petition, Mr. Avidan alleged that TCCR and Mr. Arnold, in his personal and official capacity, while acting under color of state law, deprived him of his property interest in the employment contract without a reason authorized by the contract and in violation of § 1983. TCCR and Mr. Arnold filed a motion to dismiss in which they argued that the court lacked subject matter jurisdiction and that Mr. Avidan had failed to state a claim upon which relief could be granted. On April 13, 1998, the trial court heard TCCR and Mr. Arnold's motion to dismiss, and found (1) that the court lacked subject matter jurisdiction to hear the contract and § 1983 claims against TCCR pursuant to Chapter 375, RSMo 1994, the insurance code, and a court order dated December 3, 1985; and (2) that Mr. Avidan's § 1983 claim against Mr. Arnold was barred by the doctrine of judicial immunity. The trial court transferred Mr. Avidan's claims against TCCR to the receivership proceeding, which was also pending in the Circuit Court of Cole County, and ordered that they be treated as timely-filed claims against TCCR. The court ordered the transfer to be held in abeyance, if Mr. Avidan filed a Notice of Appeal, until the conclusion of the appeal. Mr. Avidan then filed his timely notice of appeal to this court.
All statutory references are to the Revised Statutes of Missouri 1994, unless otherwise indicated.
Trial Court Did Not Err In Dismissing Mr. Avidan's Contract Claim and Transferring the Claims Against TCCR to the Receivership Proceeding
As his first point on appeal, Mr. Avidan argues that the trial court erred in dismissing his contract and 42 U.S.C. § 1983 claims against TCCR and transferring them to the receivership proceeding because the court was bound by the parties' agreement that the Circuit Court of Cole County would have jurisdiction to hear any disputes arising out of Mr. Avidan's contract with TCCR and because the transfer denied Mr. Avidan his right to have a jury decide his claim. TCCR argues that the trial court properly dismissed Mr. Avidan's claims because Chapter 375 confers exclusive jurisdiction to hear claims involving TCCR upon the court supervising TCCR's liquidation and because Mr. Avidan did not have the right to a jury trial. For the reasons stated below, the trial court properly dismissed Mr. Avidan's cause of action and transferred his claims to the receivership proceeding.
The first issue to be considered is Mr. Avidan's assertion that the trial court erred in finding that it lacked jurisdiction over his claims. An appellate court reviews a trial court's dismissal for lack of subject matter jurisdiction only for an abuse of discretion. Beth Hamedrosh Hagodol Cemetery v. Levy , 923 S.W.2d 439, 443 (Mo. App. 1996). In conducting its review, this court must accept as true all facts pleaded and all reasonable inferences arising therefrom. Union Electric v. Platte-Clay Elec. , 814 S.W.2d 643 (Mo. App. 1991). "Dismissal for lack of subject matter jurisdiction is proper when it appears, by a preponderance of the evidence, that the court is without jurisdiction." Levy , 923 S.W.2d at 443.
Mr. Avidan bases his argument, that the employment contract he entered into with TCCR conferred subject matter jurisdiction upon the court named in the contract, upon his interpretation of the "Applicable Law" provision in the contract. The "Applicable law" provision provides that Missouri law governs claims arising under the contract. The clause also waives the parties' objections to personal jurisdiction in Cole County, their objections based on forum non conveniens, and their right to personal service. Mr. Avidan argues that this clause further designates the Circuit Court of Cole County, Missouri, as the exclusive forum in which to bring suit under the contract. We note that the receivership proceeding to which Mr. Avidan's claims were transferred is, in fact, pending in the Circuit Court of Cole County. Mr. Avidan interprets the "Applicable Law" provision, however, as though it specifically permits him to maintain a cause of action in the Circuit Court of Cole County, separate and distinct from the receivership proceeding in that same court. Mr. Avidan asks that this court adopt a similar interpretation of the contact.
It is not necessary to determine whether Mr. Avidan's interpretation is valid, however, because the issue on appeal cannot be resolved by determining which court the contract designated as the exclusive forum for resolution of disputes arising under the contract. Even assuming that the clause granted Mr. Avidan the right to maintain a cause of action in the Circuit Court of Cole County, separate from the receivership proceeding, the clause fails to accomplish what it purports to do because the Circuit Court of Cole County, sitting outside of the receivership proceeding, is without authority to hear the case.
The Circuit Court of Cole County, sitting outside of the receivership proceeding, is without jurisdiction because "any action involving the receivership proceeding must be pursued in the receivership court." State ex. rel. Melahn v. Romines , 815 S.W.2d 92, 94 (Mo. App. 1991) (citations omitted). The insurance code has been held to confer exclusive subject matter jurisdiction to hear claims against a receivership upon the court supervising the liquidation of the insurance company in the receivership proceeding. Medallion Ins. Co. v. Wartenbee , 568 S.W.2d 599, 601 (Mo. App. 1978). The statutes in the insurance code which confer exclusive subject matter jurisdiction to hear claims against a receivership upon the court supervising the liquidation of the insurance company in the receivership proceeding are §§ 375.670, a general provision in the insurance code, and 375.1188, part of the Insurers Supervision, Rehabilitation and Liquidation Act. Section 375.1188 states that "no action at law or equity or in arbitration shall be brought against the insurer or liquidator, whether in this state or elsewhere" after issuance of an order appointing a liquidator of a domestic insurance company. Section 375.670 entitled "Allowance of demands — receiver to review claims against receivership," states in part that "[c]laims presented against the receivership shall be reviewed by the receiver" and establishes a procedure by which the receiver reviews claims.
The legislature's intent is apparent from an examination of the words of these statutes in the context in which they are used and the problem the legislature sought to address with the statutes' enactment. Bowers , 965 S.W.2d at 207. See also Wilson v. Director of Revenue , 873 S.W.2d 328, 329 (Mo. App. 1994)). Since the words of the statutes, given their plain and ordinary meaning, convey a clear and unambiguous meaning, construction of the statutes is not necessary. Wallace , 969 S.W.2d at 383. The legislature intended for the assets of insolvent insurance companies to be administered by one court, through a receiver, and to be distributed according to set priorities. See §§ 375.670, 375.1188 and 375.1218. By the plain, ordinary and unambiguous meaning of their words, §§ 375.1188 and 375.670 confer exclusive subject matter jurisdiction to hear claims relating to TCCR upon the receivership court, in accordance with the general purpose of the insurance liquidation statutes.
Despite the legislature's clear grant of exclusive jurisdiction to the court presiding over the receivership proceeding, Mr. Avidan argues that his employment contract with TCCR is controlling on the issue of jurisdiction. He contends that because TCCR contracted to "submit to the exclusive jurisdiction of the Circuit Court of Cole County" and the receivership court approved the contract, the courts of Missouri are bound to abide by that agreement. However, subject matter jurisdiction arises as a matter of law and cannot be agreed to by the parties. Groh v. Groh , 910 S.W.2d 747, 749 (Mo. App. 1995). Because parties cannot confer subject matter jurisdiction upon a court by agreement, the parties in this case were powerless to alter the legislative grant of exclusive subject matter jurisdiction to the receivership court. See Groh , 910 S.W.2d at 749. Therefore, to the extent the contractual provision purported to grant jurisdiction to the Circuit Court of Cole County, separate from the receivership proceeding, it was is ineffectual and is not binding upon the court.
Mr. Avidan also argues that despite the legislative designation of the receivership proceeding as the forum for adjudicating claims relating to TCCR, he is free to bring suit in another forum because he is entitled to a jury trial of his claims. While actions at law are usually subject to determination by a jury, actions relating to a receivership are not. See Medallion , 568 S.W.2d at 601. The statutes governing insurance receiverships, including statutes establishing the procedures for the resolution of disputed claims with no right to a jury trial, were enacted by the legislature pursuant to its authority to regulate the insurance industry under the state's police power. See Angoff v. Holland-America Ins. Co. Trust , 937 S.W.2d 213, 218 (Mo. App. 1996). An appropriate exercise of the State's police power does not offend the constitution even though the State's actions may interfere with an individual's rights. State ex rel. City of Macon v. Belt , 561 S.W.2d 117, 118 (Mo. banc 1978); Bellerive Inv. Co. v. Kansas City , 13 S.W.2d 628, 640 (Mo. 1929). Therefore, if requiring that claims charged against a defunct insurance company be brought in the forum managing the insurance company's receivership is an appropriate exercise of the police power, Mr. Avidan's argument must fail.
In resolving this issue, it is necessary to address the parameters of a state's police power. The police power is vested in the legislature and the courts afford the legislature wide discretion to exercise such power. Borden Company v. Thomason , 353 S.W.2d 735, 744 (Mo. banc 1962). The function of the police power is "to promote health, welfare, and safety of people by regulating all threats either to comfort, safety, and welfare of a populace or harmful to the public interest." Weber v. Missouri State Highway Com'n , 639 S.W.2d 825, 829 (Mo. 1982). When faced with a conflict between the state's exercise of its police powers and an individual's constitutional rights, the Missouri Supreme Court found:
It has been definitely and clearly established and settled, by the decisions of this court and of the federal Supreme Court, that a statute, or a municipal ordinance, which is fairly referable to the police power of the State or municipality, and which discloses upon its face, or which may be shown aliunde, to have been enacted for the protection, and in furtherance, of the peace, comfort, safety, health, morality, and general welfare of the inhabitants of the State or municipality, does not contravene or infringe . . . the state and federal Constitutions . . ., and cannot be held invalid as wrongfully depriving the appellant of any right or privilege guaranteed by the Constitution, state or federal; the reason and basis underlying such decisions being that the personal and property rights of the individual are subservient and subordinate to the general welfare of society, and of the community at large, and that a statute or ordinance which is fairly referable to the police power has for its object, the "greatest good of the greatest number."
State ex rel. City of Macon , 561 S.W.2d at 118. (quoting Bellerive Inv. Co. v. Kansas City, 13 S.W.2d 628, 634 (Mo. 1929)).
Additionally, the Supreme Court has stated:
[T]he test of the validity of an exercise of police power is reasonableness. In general, the test of reasonableness is met in any case in which the object of the police measure is a proper one . . . and the means adopted to accomplish that object are appropriate. The exercise of police power is presumed to be constitutionally valid; the presumption of reasonableness is with the state. The exercise of police power will be upheld if any state of facts either known or which could be reasonable assumed affords support for it.
Missouri Dental Bd. v. Alexander , 628 S.W.2d 646, 650 (Mo. banc 1982) (quoting Caesar's Health Club v. St. Louis County , 565 S.W.2d 783, 786 (Mo. App. 1978), cert. denied 439 U.S. 955, 99 S.Ct. 353, 58 L.Ed.2d 346 (1978) (citations omitted in original)). The party challenging the state's exercise of police power bears the burden of showing its unreasonableness. Id .
The courts of Missouri have already determined that it is a valid exercise of the police power "to regulate the [insurance] business from beginning to end, thereby protecting individual and public interests." Medallion , 568 S.W.2d at 601 (quoting State ex. rel. Missouri State Life Ins. Co. v. Hall , 330 Mo. 1107, 52 S.W.2d 174, 177 (banc 1932)). However, to contravene constitutional rights, the police power must be exercised reasonably for a legitimate public purpose which has as its object the "greatest good for the greatest number." State ex rel. City of Macon , 562 S.W.2d at 118. Therefore, this court must determine whether designating one court to hear all claims against a receivership is a valid exercise of the state's police power, which reasonably advances the greatest good for the greatest number, when a claimant is denied the right to a jury trial. This determination must be made bearing in mind the presumption of reasonableness and the previously determined validity of the state's exercise of the police power to regulate liquidation of insolvent insurance companies. Missouri Dental Bd. , 628 S.W.2d at 650.
This court has previously addressed a challenge to the constitutionality of the Missouri insurance liquidation statutes by a litigant who was denied the right to a jury trial because he was required to bring his claim in the receivership proceeding. Medallion , 568 S.W.2d at 601-02. In Medallion , this court upheld the trial court's dismissal of the defendant's mandatory counterclaim because it found that the receivership proceeding was the only appropriate forum. Id . With regard to the alleged denial of a jury trial, the court stated that "defendant was provided with a forum for his claim, and procedural complaints should be presented there." Id. at 602. While the court did not articulate why it found the defendant's right to a jury trial was not unconstitutionally denied, the context of the ruling indicates that the court believed the legislature had validly exercised its police power when it required the defendant to bring his claim in the receivership proceeding.
An analogous early Missouri case addressing whether a claimant was entitled to "his day in court" despite the insurance statutes is also instructive of the scope of the state's police power. In Hall , 52 S.W.2d at 177 , the respondent argued that if the Code were the exclusive remedy available for those claiming against an insolvent insurance company, the plaintiff in the underlying suit would effectively be denied "his day in court." The Supreme Court denied this challenge to the insurance code stating, "As against the state in the exercise of its police power, [plaintiff] Duggan has no day in court." Id . The Court held that in the heavily regulated and statutorily driven insurance industry, from which Duggan derived his claim, he was in "no position to contend that he is denied `his day in court,' because, under the Code, the court is without authority. . . ." Id . Although this case does not directly address a claimant's right to a jury trial, it illustrates that the state, exercising its police power, may abridge the rights a claimant might otherwise enjoy in order to protect the public interests in an insurance insolvency proceeding.
In this case, we find that under the circumstances of the contract between Mr. Avidan and Transit, an insurance company already in receivership, the legislature is acting appropriately under its police power by requiring suit be brought in the proceeding. The purpose of the statutes establishing the procedures for the efficient administration of the liquidation of an insolvent insurance company in receivership has as its object the "greatest good of the greatest number" and the means employed are reasonable. Missouri Dental Bd. , 628 S.W.2d at 650; State ex rel. City of Macon , 561 S.W.2d at 118. Mr. Avidan is not being denied a remedy under the receivership statutes. He is provided with a forum in which his claim may be heard and he may present procedural complaints in that forum. See Medallion , 568 S.W.2d at 602. Additionally, because Mr. Avidan was able to contract with TCCR only under the parameters established by the receivership and liquidation provisions of the insurance code,see § 375.1182, he is in no position to complain that his remedy for breach of that contract is governed by the same. See Hall , 52 S.W.2d at 177. The state's mandate that all claims against a receivership be brought in the proceeding is an appropriate exercise of the state's proper object of regulating the insurance industry. See id . See also Medallion , 568 S.W.2d at 601-02. Therefore, Mr. Avidan was not unconstitutionally denied his right to a jury trial.
Point I is denied.
Mr. Arnold is Judicially Immune From 42 U.S.C. § 1983 Suit
As his second point on appeal, Mr. Avidan claims the trial court erred in dismissing his 42 U.S.C. § 1983 claim against Mr. Arnold under the doctrine of judicial immunity. Mr. Avidan argues that judicial immunity applies only to persons performing judicial functions and does not automatically apply to all judicial actors. In response, Mr. Arnold argues that, as special deputy receiver, he was performing a judicial function which qualifies him for absolute judicial immunity.
The common law doctrine of judicial immunity is a valid defense to a § 1983 claim against a receiver. See Property Management Invs., Inc. v. Lewis , 752 F.2d 599, 602-03 (11th Cir. 1985). Court-appointed receivers enjoy judicial immunity for acts performed within the scope of their authority. Id. at 602. When a receiver acts under express court orders, the receiver is acting within the scope of his or her authority. Davis v. Bayless , 70 F.3d 367, 374 (5th Cir. 1995) (finding judicial immunity protected receiver from § 1983 suit filed after receiver searched storage unit for receivership property, as receiver was authorized by court order to enter the storage unit). In fact, when receivers take any action in furtherance of or in the course of administering the receivership, they are acting within the scope of their authority. See Property Management , 752 F.2d at 603-04 (finding receiver judicially immune from § 1983 suit arising from news reports receiver released to media in the course of administering the receivership). See also Smallwood v. United States , 358 F. Supp. 398, 404 (E.D. Mo. 1973) (finding receiver who acted only pursuant to court direction judicially immune from § 1983 suit).
By administrative order, the receivership court expressly authorized Mr. Arnold to "discharge any employees of the Receivership if he deem[ed] such to be in the best interests of the Receivership." Despite the fact that the court gave Mr. Arnold express authorization to fire any employees of the receivership, Mr. Avidan argues that Mr. Arnold's termination of his employment contract was not a judicial function, and thus does not entitle Mr. Arnold to judicial immunity. In support of his claim, Mr. Avidan cites the United States Supreme Court case of Forrester v. White , 484 U.S. 219, 108 S.Ct. 538, 98 L.Ed.2d 555 (1988). In Forrester , the Supreme Court held that a judge who fired a subordinate court employee was not entitled to absolute judicial immunity from a § 1983 claim filed by that employee. Id. at 229, 108 S.Ct. at 545 . The Court recognized that in deciding cases involving common law immunity issues, it has consistently utilized a "functional" approach. Id. at 224, 108 S.Ct. at 542. Under the functional approach, the Court examines "the nature of the functions with which a particular official or class of officials has been lawfully entrusted," and then it evaluates "the effect that exposure to particular forms of liability would likely have on the appropriate exercise of those functions." Id . Applying the functional approach, the Court held that in firing a subordinate court employee, the judge was acting in an administrative rather than judicial or adjudicative capacity, and was, therefore, not entitled to absolute judicial immunity. Id. at 229, 108 S.Ct. at 545.
While both Forrester and the present case involve § 1983 claims resulting from the firing of employees, the functions performed by the judge in firing a subordinate employee and the receiver in discharging an employee of the receivership are different. This distinction was discussed by the Ninth Circuit in New Alaska Development Corp. v. Guetschow , 869 F.2d 1298, 1303 n. 6 (9th Cir. 1989). In New Alaska Development Corp. , the court stated that the purpose of judicial immunity for receivers is to protect against "harassing litigation aimed at judicial orders." Id. at 1303. In administering a receivership, a "receiver functions as an arm of the court by making decisions about the operation of a business that the judge otherwise would have to make." Id. at 1303 n. 6. The receiver is operating the business "only because the court has directed him to do so in connection with a case pending before the court." Id . In terminating Mr. Avidan's employment contract with the receivership, Mr. Arnold was acting in a judicial capacity in that he was making a decision which the court would have had to make had it not directed Mr. Arnold to do so. Therefore, his were the type of acts judicial immunity is designed to protect. See id .
Because Mr. Arnold was acting in a judicial capacity in administering a matter pending before the court, "[t]his situation is dramatically different from a judge's administrative hiring and firing decisions for subordinate court personnel, which have no connection to litigation pending before the court." Id . Unlike the situation in Forrester , here Mr. Arnold was not administering court personnel. Instead, he was performing a judicial function by hiring and firing personnel in furtherance of the liquidation of the insurance receivership pending in the court. His function related to managing the defunct insurance company's personnel and not his or the court's employees. Because Mr. Arnold was acting pursuant to express authorization from the court and in furtherance of administering the receivership, he was acting in his official judicial capacity in discharging Mr. Avidan and is therefore judicially immune from Mr. Avidan's 42 U.S.C. § 1983 claim. See New Alaska Development Corp. , 869 F.2d at 1303 n. 6. Point II is denied.
The judgment of the trial court is affirmed.
All concur.