{ "id": 2651255, "name": "HAROLD IVES TRUCKING COMPANY v. Mike PICKENS, Insurance Commissioner for the State of Arkansas", "name_abbreviation": "Harold Ives Trucking Co. v. Pickens", "decision_date": "2003-12-18", "docket_number": "03-361", "first_page": "407", "last_page": "414", "citations": [ { "type": "official", "cite": "355 Ark. 407" }, { "type": "parallel", "cite": "139 S.W.3d 471" } ], "court": { "name_abbreviation": "Ark.", "id": 8808, "name": "Arkansas Supreme Court" }, "jurisdiction": { "id": 34, "name_long": "Arkansas", "name": "Ark." }, "cites_to": [ { "cite": "315 Ark. 380", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 1910448 ], "weight": 2, "year": 1993, "opinion_index": 0, "case_paths": [ "/ark/315/0380-01" ] }, { "cite": "338 Ark. 487", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 243591 ], "weight": 2, "year": 1999, "opinion_index": 0, "case_paths": [ "/ark/338/0487-01" ] }, { "cite": "343 Ark. 437", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 226544 ], "weight": 3, "year": 2001, "opinion_index": 0, "case_paths": [ "/ark/343/0437-01" ] }, { "cite": "275 Ark. 28", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 1753614 ], "weight": 2, "year": 1982, "opinion_index": 0, "case_paths": [ "/ark/275/0028-01" ] }, { "cite": "351 Ark. 235", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 1158939 ], "weight": 3, "year": 2002, "opinion_index": 0, "case_paths": [ "/ark/351/0235-01" ] }, { "cite": "Ark. Code Ann. \u00a7 23-90-101", "category": "laws:leg_statute", "reporter": "Ark. Code Ann.", "year": 1999, "pin_cites": [ { "page": "et seq." } ], "opinion_index": 0 } ], "analysis": { "cardinality": 601, "char_count": 13195, "ocr_confidence": 0.742, "pagerank": { "raw": 8.2004109825525e-08, "percentile": 0.4759638496298433 }, "sha256": "fd36545b4ece4eff99ec11bcac3406e0597011d08a39dee2ce93e21d121537b7", "simhash": "1:087c5e30618a578a", "word_count": 2142 }, "last_updated": "2023-07-14T22:11:14.990404+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [ "Arnold, C.J., not participating." ], "parties": [ "HAROLD IVES TRUCKING COMPANY v. Mike PICKENS, Insurance Commissioner for the State of Arkansas" ], "opinions": [ { "text": "Tom Glaze, Justice.\nThis appeal requires us, for the first time, to interpret the meaning of the word \u201caffiliate\u201d in Ark. Code Ann. \u00a7 23-90-101 et seq. (Repl. 1999), known as the Arkansas Property and Casualty Insurance Guaranty Act (hereafter also referred to as the Guaranty Act or Guaranty Fund). We granted appellant Harold Ives Trucking Company, Inc.\u2019s motion to certify the appeal to this court in order to address this question of first impression. See Ark. Sup. Ct. R. l-2(b)(l).\nHarold Ives Trucking Company (\u201cHarold Ives\u201d) is an Arkansas-based corporation. In November of 1999, Harold Ives sold 100% of its stock to Covenant Transport, Inc. (\u201cCovenant\u201d), a Nevada corporation. In 2001, Harold Ives was insured by the Acceleration National Insurance Company (\u201cAcceleration\u201d). On February 28, 2001, an Ohio court declared Acceleration to be insolvent. At the time of Acceleration\u2019s insolvency, Harold Ives had ten lawsuits pending against it in a number of jurisdictions across the United States. Each of these lawsuits was covered under Harold Ives\u2019s insurance policy with Acceleration. Following the Ohio court\u2019s determination of Acceleration\u2019s insolvency, the Guaranty Fund retained counsel to provide a defense in these lawsuits and assumed coverage of the controversies in litigation.\nHowever, on January 25, 2002, Arkansas Insurance Commissioner Mike Pickens filed a Motion to Deny Claim, alleging that Harold Ives had a net worth of over $50,000,000, causing the Guaranty Fund to not be responsible for the relevant claims involving Acceleration and Harold Ives, because those claims were not \u201ccovered claims\u201d within the meaning of the Guaranty Act. Pickens based his argument on the fact that Covenant, which had purchased 100% of Harold Ives\u2019s stock, was an \u201caffiliate\u201d for purposes of the Act, and the Guaranty Fund would not cover unpaid claims of a resident insured whose net worth exceeded $50,000,000.\nSubsequently, Pickens filed a motion for summary judgment on this issue, arguing that, as a matter of law, the Guaranty Fund was not liable for Harold Ives\u2019s claims. Harold Ives responded, disputing that it was an \u201caffiliate\u201d for purposes of the Act, and arguing that the Guaranty Fund did not apply to nonresident parties, such as Covenant. The trial court, however, granted Pickens\u2019s motion for summary judgment, finding that Harold Ives was a wholly-owned subsidiary of Covenant, and that Covenant was an affiliate of Harold Ives, with a net worth in excess of $50,000,000. Therefore, the court concluded, the unpaid claims of Harold Ives were not covered claims as defined under \u00a7 23-90-103 (2) (B) of the Act. On appeal, Harold Ives argues that the trial court erred in its interpretation of the net worth exclusion.\nThe Guaranty Act was enacted for the purpose of \u201cproviding funds in addition to assets of insolvent insurers for the protection of the holders of\u2018covered claims\u2019 . . . through payment and through contracts of reinsurance or assumption of liabilities or of substitution or otherwise.\u201d See \u00a7 23-90-102. A \u201ccovered claim,\u201d for purposes of this Act, is \u201can unpaid claim.of an insured or third party claimant... in cases where the insurer becomes an insolvent insurer, and the third party claimant or liability claimant is a resident of this state at the time of the insured event.\u201d See \u00a7 23-90-103(2)(A). However, there are certain claims that are considered to be excluded or exempted under the Act; most relevant to this appeal, the Act provides as follows:\nA \u201ccovered claim\u201d shall not include an unpaid claim of an insured or third party liability claimant whose net worth as of December 31 of the year next preceding the date the insurer becomes an insolvent insurer exceeds fifty million dollars ($50,000,000); provided, that an insured\u2019s or third party liability claimant\u2019s net worth on such date shall be deemed to include the aggregate net worth of the insured or third party liability claimant and all of its affiliates as calculated on a consolidated basis.\n\u00a7 23-90-103(2)(B) (emphasis added).\nHarold Ives urges this court to interpret this so-called \u201cnet worth exclusion\u201d in such a way as to preclude making it and Covenant \u201caffiliates\u201d for purposes of determining Harold Ives\u2019s net worth. Pickens, as Insurance Commissioner, rejoins by pointing out that the common-sense definition of \u201caffiliate\u201d covers the relationship between Harold Ives and Covenant. We agree. Arkansas \u201chas long subscribed to the notion that common sense is a key element in defining statutory construction.\u201d See Neeve v. City of Caddo Valley, 351 Ark. 235, 91 S.W.3d 71 (2002); Keith v. Barrow-Hicks Extensions of Water Improv. Dist. No. 85, 275 Ark. 28, 626 S.W.2d 951 (1982). In addition to common sense, we have consistently stated that the basic rule of statutory construction is to give effect to the intent of the General Assembly. Neeve, supra; Nations Bank v. Murray Guard, Inc., 343 Ark. 437, 36 S.W.3d 291 (2001). This court will construe a statute just as it reads, giving the words their ordinary and usually accepted meaning in common language. Id. The court will construe the statute so that no word is left void, superfluous, or insignificant, and meaning and effect are given to every word in the statute if possible. Ford v. Keith, 338 Ark. 487, 996 S.W.2d 20 (1999).\nThe specific statutory phrase in issue in this case is the proviso in \u00a7 23-90-103(2) (B), cited above, which reads as follows: \u201cprovided, that an insured\u2019s or third party liability claimant\u2019s net worth . . . shall be deemed to include the aggregate net worth of the insured or third party liability claimant and all of its affiliates as calculated on a consolidated basis.\u201d (Emphasis added.) This court, then, must determine what is meant by \u201caffiliate.\u201d The word is not defined in the statute or anywhere in the Act, but Black\u2019s Law Dictionary defines the word as a \u201ccorporation that is related to another corporation by shareholdings or other means of control; a subsidiary, parent, or sibling corporation.\u201d Black\u2019s Law Dictionary (7th ed. 1999) (emphasis added). Other states have adopted a definition similar to this in their Guaranty Fund statutes; for example, Illinois defines an affiliate of a specified person as \u201ca person who directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with the specified person on December 31 of the year next preceding the date the insolvent company became an insolvent company.\u201d 73 Ill. Comp. Stat. Ann. 5/534.7 (West 2003).\nAs gleaned from accepted definitions of the word \u201caffiliate,\u201d the fundamental question is one of control. Here, Covenant owns 100% of the shares of Harold Ives Trucking, thus making Harold Ives a wholly-owned subsidiary of its parent company, Covenant. Documents filed with the Securities and Exchange Commission indicate that in November of 1999, Covenant \u201cpurchased all of the outstanding capital stock of Harold Ives Trucking Co.,\u201d and as of December 31, 2000, Covenant\u2019s corporate structure \u201cincluded . . . Harold Ives Trucking Co., an Arkansas corporation,\u201d among other corporations. These facts clearly reflect that Harold Ives is \u201crelated to another corporation by shareholdings,\u201d and, in our view, Harold Ives is an affiliate of Covenant. Further, in its responses to Pickens\u2019s requests for admissions, Harold Ives admitted that the net worth of Covenant alone was greater than $50 million. It is plain and undisputed that Harold Ives and its affiliates have a net worth in excess of $50 million, and, as a result, Harold Ives\u2019s claims cannot be considered \u201ccovered claims\u201d within the meaning of \u00a7 23-90r103(2)(B) of the Act.\nIn a related argument, Harold Ives suggests that the assets of an out-of-state resident should not be included in the calculation of an Arkansas claimant\u2019s net worth. In support of this contention, Harold Ives cites Douglass v. Levi Strauss & Co., 315 Ark. 380, 868 S.W.2d 70 (1993), in which this court held that a nonresident corporation could not have a covered claim under this Act. The portion of the statute at issue in that case was \u00a7 23-90-103(2)(A), which states that a \u201ccovered claim\u201d must be brought by a claimant or insured that is a \u201cresident of this state.\u201d Because Levi Strauss & Co. was not a resident of Arkansas, this court held that its claim on the Fund could not be a covered claim, as defined in the statute. That case, however, dealt only with the definition of \u201cresident,\u201d which is simply not a concern in the present appeal. Here, there is no question that Harold Ives \u2014 the insured \u2014 meets the residency requirements of \u00a7 23-90-103(2) (A). For the reasons discussed above, it is our holding that the claims of Harold Ives and its affiliate, Covenant, are exempt under \u00a7 23-90-103(2)(B) and are not covered under the Guaranty Act.\nFor its second point on appeal, Harold Ives argues that the net worth exclusion \u201cshould be interpreted in the context of its legislative history and so as not to conflict with longstanding Arkansas law.\u201d However, Harold Ives cites no Arkansas law to support its argument, but instead relies on the definition of \u201ccovered claim\u201d found in the original Model Act adopted in 1969 by the Insolvency Committee of the National Association of Insurance Commissioners (\u201cNAIC\u201d). However, the Arkansas Guaranty Act was enacted in 1977, and while based on the Model Act, Arkansas\u2019s Act has several significant differences. For example the Model Act\u2019s definition of \u201ccovered claim\u201d provides in relevant part as follows:\n\u201cCovered claim\u201d shall not include . . .\nAny first party claims by an insured whose net worth exceeds $25 million on December 31 of the year prior to the year in which the insurer becomes an insolvent insurer; provided that an insured\u2019s net worth on that date shall be deemed to include the aggregate net worth of the insured and all of its subsidiaries as calculated on a consolidated basis[.]\n(Emphasis added.) Further, the definition of a \u201ccovered claim\u201d also excludes \u201cany first party claims by an insured which is an affiliate of the insolvent insurer.\u201d (Emphasis added.)\nHarold Ives stresses these and other differences in the Model Act and the Arkansas Guaranty Act. For example, 1) the net worth limitation only applies to first-party claims by the insurer; 2) the net worth calculation is narrowly defined to include the insured and its subsidiaries, but not its shareholders, parent corporations, or affiliates; and 3) the language concerning an \u201caffiliate\u201d applies to a company\u2019s relationship with the insolvent insurer, not with its stockholders or related companies. Further, Harold Ives notes that the Model Act \u201cis only concerned with issues of affiliation and control with regard to a claimant\u2019s relationship to an insolvent insurance carrier.\u201d However, we find these distinctions to be irrelevant, as our General Assembly chose not to adopt the language verbatim from the Model Act. The Model Act is not Arkansas law, and Harold Ives fails to cite any Arkansas law that contradicts the definition of \u201caffiliate\u201d as we have discussed and adopted above.\nHarold Ives also raises a number of policy arguments, suggesting that it is not fair to interpret the Act to exclude third-party claims, and that this court should interpret the term \u201caffiliate\u201d narrowly to safeguard the rights of insureds and third-party claimants. Harold Ives also asserts that the trial court\u2019s definition of \u201caffiliate\u201d is overly broad, and such a broad reading is in contravention of the purpose of the Act. However, as discussed above, the trial court\u2019s definition of \u201caffiliate\u201d was entirely correct. The purpose of the Fund is to \u201cprovid[e] funds in addition to assets of insolvent insurers for the protection of the holders of \u2018covered claims[.]\u201d\u2019 \u00a7 23-90-102. The comments to the NAIC Model Act note that the net worth exclusion was included because the Commissioners believed \u201cthat an insured with that much net worth ought to buy insurance intelligently enough so that it would not be insured by an unsound insurer.\u201d To exclude the claims of Harold Ives, whose affiliates have a net worth in excess of $50 million, simply does not contradict the purpose or intent of the Arkansas Act, as Ives suggests.\nIn sum, the trial court applied a proper and accurate definition of the term \u201caffiliate\u201d and correctly concluded that, because Harold Ives and its affiliates had a net worth in excess of $50 million, Harold Ives\u2019s claims were not \u201ccovered claims\u201d for the purposes of the Act. The trial court\u2019s interpretation of the Guaranty Act and its granting of Pickens\u2019s motion for summary judgment, are therefore affirmed.\nArnold, C.J., not participating.\nThe NAIC promulgated the model \u201cPost-Assessment Property and Liability Insurance Guaranty Association Model Act\u201d in 1969.", "type": "majority", "author": "Tom Glaze, Justice." } ], "attorneys": [ "Martin, Tate, Morrow & Marston, P.C. (Memphis), by: Lee Piovarcy, Elizabeth J. Landrigan, and Shea S. Welljord, for appellant.", "Howell, Trice, Hope & Files, P.A., by: Ronald A. Hope and Samuel S. High, for appeEee." ], "corrections": "", "head_matter": "HAROLD IVES TRUCKING COMPANY v. Mike PICKENS, Insurance Commissioner for the State of Arkansas\n03-361\n139 S.W.3d 471\nSupreme Court of Arkansas\nOpinion delivered December 18, 2003\nMartin, Tate, Morrow & Marston, P.C. (Memphis), by: Lee Piovarcy, Elizabeth J. Landrigan, and Shea S. Welljord, for appellant.\nHowell, Trice, Hope & Files, P.A., by: Ronald A. Hope and Samuel S. High, for appeEee." }, "file_name": "0407-01", "first_page_order": 431, "last_page_order": 438 }