Clear Blue Insurance, Co. v. Amigo MGA, LLC, No. 3:20-cv-312-GCM, 2020 WL 9810106 (W.D.N.C.).
Issue Discussed: Injunctive Relief
Submitted by Fielding Huseth
Date Promulgated: April 28, 2023
Case: Clear Blue Insurance, Co. v. Amigo MGA, LLC, No. 3:20-cv-312-GCM, 2020 WL 9810106 (W.D.N.C.).
Court: United States District Court for the Western District of North Carolina (Charlotte Division)
Issue Decided: Whether the plaintiff, an insurance company, was entitled to a preliminary injunction – pending arbitration – to require the defendant, an insurance agent, to immediately remit policyholder-paid premiums that the defendant collected on the plaintiff’s behalf.
Submitted by: Fielding E. Huseth, Moore & Van Allen (the author and his firm represented the plaintiff)
May an Injunction Issue Compelling an MGA to Remit Premiums Pending Arbitration?
The plaintiff, Clear Blue, is an insurance company that entered into a contract with the defendant, Amigo, to be Clear Blue’s managing general agent. Under the contract, Amigo was responsible for selling policies, collecting premiums from policyholders, placing the premiums in a trust account, and remitting the entrusted premiums at Clear Blue’s direction. The contract required the parties to resolve any dispute in an ARIAS arbitration, except that either party could seek “interim, preliminary or injunctive relief that is necessary to protect the rights and property of that Party, pending an arbitration award by the arbitrators.”
In its motion for a temporary restraining order and/or preliminary injunction in the Western District of North Carolina, Clear Blue alleged that Amigo was obliged to immediately remit approximately $2.8 million of premiums that it had not yet remitted. Amigo argued, among other things, that Clear Blue (a) had to arbitrate the issue rather than seek relief from the court and (b) in any event could not meet the standard for preliminary injunctive relief because Clear Blue was merely seeking money damages.
The court did not explicitly address Amigo’s challenge concerning the parties’ contractual carve-out for seeking injunctive relief outside the arbitration process. Instead, the court proceeded to analyze the merits of the requested relief under the four-part test for preliminary injunctions: the plaintiff must establish: “(1) that he is likely to succeed on the merits, (2) that he is likely to suffer irreparable harm in the absence of preliminary relief, (3) that the balance of equities tips in his favor, and (4) that an injunction is in the public interest.” Clear Blue Ins., Co. v. Amigo MGA, LLC, No. 3:20-cv-312-GCM, 2020 WL 9810106, at *1 (W.D.N.C. June 19, 2020) (quoting Real Truth About Obama, Inc. v. FEC, 575 F.3d 342, 345 (4th Cir. 2009) (citing Winter v. Natural Resources Defense Council, Inc., 555 U.S. 7, 129 S. Ct. 365, 374, 172 L. Ed. 2d 249 (2008))).
First, the court concluded that Clear Blue was likely to succeed on the merits because the premiums are “owned by Plaintiff.” Second, the court concluded that Clear Blue was likely to suffer irreparable harm absent the grant of a preliminary injunction in part because the premiums were Clear Blue’s property. Third, the court found that the equities tipped in favor of Clear Blue because its potential loss of property would be “permanent.” Fourth, the court determined that the public interest weighed in favor of preventing the loss of assets.
The court granted the preliminary injunction and ordered Amigo to transmit all policyholder-paid premiums collected on Clear Blue’s behalf.
