CIC, Applied Underwriters and CDI: the Drama Continues

Sacramento, CA (WorkersCompensation.com) – Calling the actions of California’s insurance commissioner “unlawful,” and a “bad faith campaign,” Applied Underwriters Inc. and Applied Risk Services have filed a complaint with the U.S. District Court for Eastern California. The Complaint accuses Commissioner Ricardo Lara, and others in the department of initiation and perpetuation of a campaign “to punish and harm plaintiffs through the conservatorship of California Insurance Company…” it is the latest action in the battle over a merger involving California Insurance Co., Applied Underwriters and Berkshire Hathaway.

You may recall that in 2019, Steve Menzies, who owned shares of California Insurance Co, entered into an agreement to purchase an 81 percent interest in Berkshire Hathaway that was in a holding company that indirectly owned CIC. The plan included selling Applied Underwriters to a third party. What followed were months of accusations among the parties, especially after CIC was redomesticated to New Mexico under an expedited approval process that would create California Insurance Co II and would be merged with the original company.

The complaint filed yesterday says that a rehabilitation plan that the California Department of Insurance filed on Monday would mandate CIC’s book of business o another carrier and that any pending legal proceedings against Applied or CIC, mainly involving the EquityComp program, be resolved based on terms dictated by the commissioner.

“Plaintiffs bring this action only after repeated and good faith attempts over several months to end Defendants’ abusive and unlawful campaign against Plaintiffs and resolve the ongoing harm to Plaintiffs’ businesses and reputations,” the complaint states. “Unfortunately, Defendants have used those discussions as a bait and switch to further their unlawful scheme by exercising authority over CIC to hold it hostage in order to threaten and harm Plaintiffs, without any jurisdiction or lawful power over them.”

The plaintiffs are demanding a jury trial. In the complaint’s ‘Prayer for Relief’ they also seek the following:

A. An Order declaring the Commissioner’s actions, as alleged, violate Plaintiffs’ rights to due process and equal protection under the Fourteenth Amendment to the United States Constitution;

B. An Order declaring the Commissioner’s actions, as alleged, constitute an unlawful taking of Plaintiffs’ property interests in violation of the Fifth and Fourteenth Amendments to the United States Constitution;

C. An Order vacating the Commissioner’s conservatorship of CIC and enjoining the Commissioner from continuing to hold CIC under conservation;

D. An Order enjoining Defendants from continuing to retaliate against Plaintiffs for exercising their First Amendment rights to speech and petition;

E. An Order for reasonable attorneys’ fees under the law

F. Such other relief as the Court may deem just and appropriate.

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