Nebraska Supreme Court rules against Florida

Jun 9, 2008

Florida Today--June 6, 2008


OMAHA, Neb. — A multimillion-dollar insurance dispute that’s a decade old received new life on its third trip to the Nebraska Supreme Court because the court ordered a new trial today.

Consequently, the state of Florida won’t be able to collect the nearly $4.7 million a Douglas County judge ordered Omaha-based Countrywide Insurance Agency to pay. The Supreme Court ruled that a jury, not Judge Peter Bataillon, should have decided the case.

Bataillon dismissed the jury in 2006 and ordered Countrywide to repay $2.23 million in premiums owed to the United Southern Assurance Co., and pay $2.44 million in interest.

Attorney William Gast, who represents Countrywide and its owner, David Fulkerson, said he thinks the latest Supreme Court ruling could lead to the end of the case instead of a new trial. That’s because the court supported some of Fulkerson’s main assertions in its ruling.

"I think that this is very close to being over with," Gast said.

A spokesman for the Florida Department of Financial Services, Kevin Cate, said state officials were reviewing the ruling to determine the best way to proceed.

"Our goal has always been to recover funds that are owed to the company in order to avoid future assessments of policyholders," Cate said.

Florida became involved in the case in 1997 because its Department of Insurance took over an insolvent Florida insurance company, United Southern Assurance, that had been doing business with Countrywide Truck Insurance. The lawsuit was originally filed in 1998.

Countrywide Truck Insurance and United Southern were both owned by the same parent company, Concord General Corp. Fulkerson managed Countrywide Truck before the company’s assets were transferred over to his new company, Countrywide Insurance.

Florida maintains that Countrywide Insurance kept money that was owed to United Southern, but Countrywide and Fulkerson deny taking any money fraudulently.

Most of the money involved in the dispute came from premiums Countrywide Truck collected and was supposed to send to United Southern. But when Florida officials ordered United Southern to stop writing insurance policies in 1997, Countrywide Truck did not hand over four months of premiums.

The Supreme Court said Countrywide presented evidence that the missing premium money was either returned to customers or applied to new insurance policies with a different company. So it’s not clear fraud was committed.

"There was no evidence that Fulkerson used the funds from the premiums in this account for his own benefit," the court said in its ruling.

In its two earlier rulings, the Nebraska Supreme Court addressed pretrial motions in the dispute.

The high court ruled in 1999 that the trial judge was wrong to issue a default judgment against Fulkerson and Countrywide.

Then in 2005, the court ruled that it didn’t have jurisdiction to evaluate whether Judge Bataillon should have recused himself from the case.