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ATLANTA-More than a decade after a trucking insurance program fell apart, its former managing general agent is seeking to sue the rent-a-captive facility that was part of the program.
In a June 10 appeal of a district court ruling barring the action, Richard D. Slautterback and his wife, who co-owned the managing general agency, are seeking to drag Bermuda-based Mutual Indemnity Ltd. into court to face breach of contract and fraud allegations.
The case comes four years after Philadelphia-based Colonial Penn Insurance Co., won a $5.3 million judgment against Mr. Slautterback on charges that the MGA fraudulently bound Colonial Penn as a fronting insurer on the trucking business.
Mr. Slautterback is attempting to appeal a December 1996 ruling by the U.S. District Court in Atlanta that dismissed his case against Mutual Indemnity, saying the MGA had not brought suit within Georgia's six-year statute of limitations for contract disputes.
The trial court ruled that any breach of contract allegations should be brought within six years of 1987, when the program was formally ended. Because Mr. Slautterback did not file his case until 1994, his suit was time-barred.
In court papers, Mr. Slautterback argues that the contract between his former Atlanta-based MGA, American Owner/Operator Underwriters Inc., and Mutual Indemnity did not come to a formal end until Jan. 1, 1991, "the date of the last item of mutual accounts between the AOO and Mutual Indemnity."
The case centers on the trucking insurance program established in August 1985 by AOO, Colonial Penn and Mutual Indemnity.
Under the contract, AOO was to cede a maximum of $12 million in annual premiums to Colonial Penn, which would retain 10% of the premiums and cede the remainder to Mutual Indemnity's Insurance Profit Center rent-a-captive in Bermuda. Profits from the program, minus Mutual Indemnity's fee, would be returned to AOO.
But, problems arose within months after the agreement was signed. Colonial Penn alleged that AOO was substantially exceeding its premium limit and that AOO's records and administration were in disarray.
In 1987, Colonial Penn sued AOO, alleging breach of contract. It then signed a rescission agreement with Mutual Indemnity.
Mr. Slautterback countersued, alleging that Colonial Penn terminated the contract in an effort to get direct access to the book of business.
The Colonial Penn suit resulted in the $5.3 million award against Mr. Slautterback in 1993.
In the original program agreement, AOO paid $432,000 to purchase shares in Mutual Indemnity to enable the MGA to participate in the Insurance Profit Center rent-a-captive. The shares were due to be redeemed in 1991 and, though the funds were placed in escrow after the rescission of the agreement in 1987, Mr. Slautterback argues that 1991 should be the starting point for any time-bar.
He also argues that the 432,000 IPC shares were held in a constructive trust and therefore Georgia's 10-year limitation period for actions against fiduciaries should apply.
Mutual Indemnity expects to respond to Mr. Slautterback's appeal within the 30-day limit.