MIKE CAUSEY, COMMISSIONER OF INSURANCE OF NORTH CAROLINA, Petitioner,
CANNON SURETY, LLC, A North Carolina Limited Liability Company, Respondent. MARK L. BIBBS, Attorney at Law D/B/A BIBBS LAW GROUP, Plaintiff,
CANNON SURETY, LLC, A NORTH CAROLINA LIMITED LIABILITY COMPANY, Defendant.
in the Court of Appeals 22 August 2019.
by Plaintiff from orders entered 18 April 2018 by Judge A.
Graham Shirley, II, in Wake County Nos. 17 CVS 11692, 17 CVS
15505 Superior Court.
Law Group of North Carolina, by Mark L. Bibbs, for
Attorney General Joshua H. Stein, by Special Deputy Attorney
General Daniel S. Johnson, Special Deputy Attorney General M.
Denise Stanford, and Assistant Attorney General Heather H.
Freeman, for Petitioner-Movant-Appellee and
Respondent-Defendant-Appellee in Rehabilitation.
Mark L. Bibbs ("Bibbs") appeals from orders
granting motions filed by Commissioner of Insurance Mike
Causey ("Commissioner") to strike a confession of
judgment against Cannon Surety, LLC ("Cannon") in
favor of Bibbs for $227, 850.50 plus 8% interest, arising
from Cannon's breach of contract to pay for Bibbs'
legal services. The confession of judgment violated an
existing seizure order entered under the North Carolina
Captive Insurance Act, and it was void. Accordingly, we
affirm the trial court's orders.
Statutory Background: North Carolina Captive Insurance
captive insurance company is "an insurance company that
is owned by another organization and whose exclusive purpose
is to insure risks of the parent organization and affiliated
companies." N.C. Gen. Stat. § 58-3-165 (2018).
Captive insurance companies must be licensed, must meet
certain capital and surplus requirements, and must file
annual reports to the Commissioner. N.C. Gen. Stat.
§§ 58-10-345, -370, -405(b), -415 (2018). A captive
insurance company failing to meet these requirements may be
subject to seizure, rehabilitation, and liquidation by the
Commissioner of Insurance. N.C. Gen. Stat. §§
58-10-475, 58-30-1 to -310 (2018).
initiate seizure, the Commissioner must file a petition in
Wake County Superior Court requesting a formal delinquency
proceeding, after which the trial court may issue an ex parte
seizure order directing the Commissioner to
take possession and control of all or a part of the property,
books, accounts, documents, and other records of an insurer,
. . . and that, until further order of the Court, enjoins the
insurer and its officers, managers, agents, and employees
from disposing of its property and from transacting its
business except with the written consent of the Commissioner.
N.C. Gen. Stat. § 58-30-65(b) (2018).
initiate rehabilitation, the Commissioner must petition the
court on one or more specified grounds. N.C. Gen. Stat.
§ 58-30-75 (2018). If granted, a rehabilitation order
appoints the Commissioner as the rehabilitator and directs
the Commissioner to "take possession of the assets of
the insurer and to administer them under the general
supervision of the Court." N.C. Gen. Stat. §
58-30-80 (2018). As the rehabilitator, the Commissioner has
"all the powers of the directors, officers, and
managers, whose authority shall be suspended" and has
broad powers to "take such action as he considers
necessary or appropriate to reform and revitalize the
insurer." N.C. Gen. Stat. § 58-30-85(c) (2018).
Factual and Procedural History
was a licensed special purpose captive insurance company.
Accordingly, Cannon was governed by the requirements set
forth in the North Carolina Captive Insurance Act, N.C. Gen.
Stat. §§ 58-10-335 to -655, and regulated by the
Department of Insurance, which included oversight and
enforcement by the Commissioner. Cannon's license
permitted it to transact insurance for judicial appearance
bonds written by or on behalf of the members of its parent
company, Premier Judicial Consultants, LLC.
September 2017, the Commissioner filed a verified petition in
Wake County Superior Court requesting a seizure order, an
order of rehabilitation, an order appointing a receiver, and
injunctive relief against Cannon. This filing commenced case
number 17 CVS 11692 (the "Insurance Action"). On
that day, the trial court entered a 60-day seizure order and
an injunction as follows:
1. Pursuant to the provisions of N.C. Gen. Stat. §
58-30-65, Mike Causey, in his capacity as Commissioner of
Insurance of the State of North Carolina, is HEREBY ORDERED
to take possession and control of all the property, books,
accounts, documents, and other records of [Cannon], and of
the premises occupied by it for transaction of its business.
2. The Commissioner is hereby authorized, empowered and
directed to take into his possession and control all
property, stocks, bonds, securities, bank accounts, savings
accounts, monies, accounts receivable, books, papers,
records, data bases, printouts and computations, . . . and
all other assets of any and all kinds and nature whatsoever
belonging to [Cannon], wherever located, ...