Wooley v. Lucksinger

Full title: J. Robert WOOLEY, As Commissioner of Insurance for the State of Louisiana…

Court: Court of Appeal of Louisiana, First Circuit

Date published: Feb 13, 2009

14 So. 3d 311 (La. Ct. App. 2009)

Opinion

Nos. 2006 CA 1140 to 2006 CA 1145, 2006 CA 1158 to 2006 CA 1163.

December 30, 2008. Opinion on Rehearing February 13, 2009.

Appeal from the 19th District Court, Parish of East Baton Rouge, Nos. 499, 737, 509, 297, 512, 366, Janice Clark, J.

Joseph E. Cullens, Jr., Baton Rouge, LA, Guy M. Hohmann, Austin, TX, Kimberly S. Morgan, Edward J. Walters, Jr., Baton Rouge, Sue Buser, Gonzales, LA, Jonathan C. Augustine, Baton Rouge, LA, for Plaintiff-Appellee, J. Robert Wooley, as Acting Commissioner of Insurance and Liquidator of AmCare Health Plans of Louisiana, Inc.

James C. Percy, David M. Kerth, Baton Rouge, LA, Robert B. Bieck, Jr., New Orleans, LA, for Defendant-Appellant, Health Net, Inc.

Joseph J. McKernan, Baton Rouge, LA, for Plaintiff-Appellee, Jean Johnson as Texas Special Deputy Receiver.

David M. Latham, Keary L. Everitt, New Orleans, LA, for Plaintiff-Appellee, Louisiana Department of Insurance.

Gary P. Koederitz, Baton Rouge, LA, for Defendant-Appellee, BestCare, Inc.

Wendell Clark, Baton Rouge, LA, for Defendant-Appellee, Thomas S. Lucksinger, Michael D. Nadler and Stephen J. Nazarenus.

Claude F. Reynaud, Jr., Baton Rouge, LA, for Defendant-Appellee, Proskauer Rose, L.L.P. and Stuart L. Rosow.

Harry J. Philips, Jr., Baton Rouge, LA, for Defendant-Appellee, William Galtney, Jr. and Michael K. Jhin.

Mary Olive Pierson, V. Thomas Clark, Jr., Baton Rouge, LA, for Defendant-Appellee, PriceWaterhouseCoopers, L.L.C.

Robert J. Burns, Jr., Baton Rouge, LA, David H. Topol, Washington, D.C., for Defendant-Appellee, Greenwich Insurance Company.

George B. Hall, Jr., New Orleans, LA, Merril Hirsh, Washington, D.C., Kelsey Kornick Funes, Baton Rouge, LA, for Defendant-Appellee, Executive Risk Management and Executive Risk Specialty Ins.

David L. Guerry, Baton Rouge. LA, for Defendant-Appellee, Scott Westbrook.

William C. Kaufman, III, Baton Rouge, LA, for Defendant-Appellee, M. Lee Pearce.

Dominique J. Sam. Michael Charles Guy. Baton Rouge, LA, for Amicus Curiae. Charles C. Foti. Jr., Atty. Gen., On Behalf of the Commissioner of Insurance-Liquidator of AmCare Health Plans of Louisiana, Inc.

Before CIACCIO, LANIER and CLAIBORNE, JJ.¹

1 The Hon. Philip C. Ciaccio, Judge (Retired), the Hon. Walter I. Lanier, Jr., Judge (Retired), and the Hon. Ian W. Claiborne, Judge (Retired), are serving as judges ad hoc by special appointment of the Louisiana Supreme Court.

Table of Contents I. GENERAL FACTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 338 II. PROCEDURAL HISTORY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 346 III. INTERPRETATION OF LAWS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 350 IV. STANDARDS FOR APPELLATE REVIEW OF FACTS AND LAW . . . . . . . . . . . . . . . . . . . . . . . 351 V. CONFLICT OF LAWS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 353 A. Conflict of Laws Facts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 354 B. The Ruling of the Trial Court on the Issue of Choice-of-Law . . . . . . . . . . . . . . . . 354 C. Applicable Conflict of Laws Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 356 1. Law Applicable to the Texas Case . . . . . . . . . . . . . . . . . . . . . . . . . . . . 362 2. Law Applicable in the Louisiana Case . . . . . . . . . . . . . . . . . . . . . . . . . . 363 3. Law Applicable in the Oklahoma Case. . . . . . . . . . . . . . . . . . . . . . . . . . . 369 D. Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 372 VI. STANDARD OF REVIEW OF FACTS IN THE TEXAS CASE A. The Trial Court's Duty to Instruct a Jury . . . . . . . . . . . . . . . . . . . . . . . . . 373 B. The Trial Court's Duties to Rule on Requests for Jury Instructions and to Inform the Parties of Proposed Jury Instructions Prior to Arguments to the Jury . . . . . . . . . 374 1. Right to Submit Jury Instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . 375 2. Trial Court Duty to Inform Parties of Proposed Jury Instructions and Interrogatories. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 378 3. Right of a Party to Object to Proposed Jury Instructions . . . . . . . . . . . . . . . . 379 C. Patent Jury Instruction Error . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 383 D. Jury Instruction and Interrogatory Errors . . . . . . . . . . . . . . . . . . . . . . . . . 384 1. Failure to Give Instruction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 384 2. Erroneous Instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 401 E. Inconsistencies Between the Texas Jury Verdicts and JNOV and the Judgments and Reasons for Judgment in the Louisiana and Oklahoma Cases. . . . . . . . . . . . . . . 428 1. Negligent Misrepresentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 428 2. Proximate Cause. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 429 3. Fraud. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 429 4. Allocation of Fault. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 430 5. Existence of Pledged Capital for an HMO by Health Net . . . . . . . . . . . . . . . . . 434 6. Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 434 F. Recapitulation of Errors Affecting the Texas Jury Verdict . . . . . . . . . . . . . . . . . 434 G. Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 435 VII. STANDARD OF REVIEW OF FACTS IN THE LOUISIANA AND OKLAHOMA JUDGE TRIAL CASES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 435 A. Proximate Cause in the Louisiana Case . . . . . . . . . . . . . . . . . . . . . . . . . . . 435 B. The Tort of Conspiracy in the Louisiana Case . . . . . . . . . . . . . . . . . . . . . . . 435 C. Unfair or Deceptive Acts or Practices in Violation of the as Insurance Code. . . . . . . . 436 D. Allocation of Fault . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 436

E. Refusal to Provide Adequate Written Findings of Fact and Reasons for Judgment . . . . . . . 438 1. Facts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 438 2. Supplemental Assignments of Error. . . . . . . . . . . . . . . . . . . . . . . . . . . . 442 3. Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 442 4. The Trial Court's Reasons for the Nineteen (19) Month Delay. . . . . . . . . . . . . . . 446 5. The Trial Court's Failures to Comply with the Order to Provide Written Findings of Fact and Reasons for Judgment . . . . . . . . . . . . . . . . . . . . . . . . 447 6. Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 448 F. Application of Erroneous Texas Law in the Louisiana and Oklahoma Cases. . . . . . . . . . . 448 G. Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 449 VIII. PRESCRIPTION/PEREMPTION: STATUTES OF LIMITATIONS AND REPOSE. . . . . . . . . . . . . . . . . . 449 A. The Proper Procedure to Assert Prescription/Peremption. . . . . . . . . . . . . . . . . . . 450 1. Affirmative Defense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 451 2. Objection of No Cause of Action. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 452 3. Summary Judgment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 453 4. Prescription/Peremption. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 454 B. Choice-of-Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 457 1. Liberative Prescription or Peremption in the Louisiana Case. . . . . . . . . . . . . . . 458 2. The Texas and Oklahoma Exceptions. . . . . . . . . . . . . . . . . . . . . . . . . . . . 467 C. Conclusion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 468 IX. SHAM SALE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 468 X. PIERCING THE CORPORATE VEIL-SINGLE BUSINESS ENTERPRISE. . . . . . . . . . . . . . . . . . . . 482 A. The Trial Court's Reasons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 482 B. The Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 483 1. Texas Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 483 2. Louisiana Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 484 3. Oklahoma Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 487 C. Burden of Proof and Persuasion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 488 D. Common SBE Circumstances Pre-and Post-Sale . . . . . . . . . . . . . . . . . . . . . . . . 489 1. Pre-Sale Health Net/AmCareco SBE Issue . . . . . . . . . . . . . . . . . . . . . . . . . 489 2. Post-Sale Health Net/AmCareco SBE Issue . . . . . . . . . . . . . . . . . . . . . . . . 490 XI. LIABILITY FOR FRAUD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 492 A. Fraud in Obtaining Regulator Approval of the Sale . . . . . . . . . . . . . . . . . . . . . 494 1. The Stock Purchase Agreement and Side Letter Contract. . . . . . . . . . . . . . . . . . 495 2. The Financial Spreadsheet For The Sale . . . . . . . . . . . . . . . . . . . . . . . . . 497 3. Failure to file Side Letter. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 539 4. Failure to file Letter of Intent . . . . . . . . . . . . . . . . . . . . . . . . . . . . 540 5. Failure to file Closing Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . 542 B. Fraud in Financial Reporting to Regulators After the Sale . . . . . . . . . . . . . . . . . 544 1. Facts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 545 2. The Law of Fraud . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 554 3. Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 557 C. Conclusion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 557 XII. LIABILITY FOR BREACH OF FIDUCIARY DUTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . 557 A. The Texas Case . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 557 B. The Louisiana Case. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 560 C. The Oklahoma Case . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 563 D. Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 564 XIII. LIABILITY FOR VIOLATION OF THE TEXAS INSURANCE CODE. . . . . . . . . . . . . . . . . . . . . . 564 A. The Texas Case. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 564 B. The Louisiana and Oklahoma Cases. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 566 C. Conclusion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 567 XIV. LIABILITY FOR CONSPIRACY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 567 A. The Texas Case. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 567 B. The Louisiana Case. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 568 C. The Oklahoma Case . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 570 D. Conclusion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 570 XV. COSTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 511 A. Facts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 511 B. Conflict of Laws on Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 511 C. Louisisana Law on Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 572 D. Allocation of Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 574