Utah Battles to Collect Unpaid Assessments
On March 21, 2001, the United States District Court for the District of Utah entered an Order granting Defendant's Motion to Dismiss the Utah Association's unpaid assessment claim against Teachers Insurance and Annuity Association ("TIAA") on the grounds that Utah's general three year statute of limitations barred the Association's claim. The case revolves around the ongoing efforts of the Utah Association to collect unpaid assessments relating to the insolvency of Executive Life Insurance Company (ELIC).
The record in this case reflects that ULDIGA issued an assessment against its member insurers on December 23, 1991, for partial satisfaction of its obligations in connection with ELIC. At that time, TIAA was an ULDIGA member. However, ULDIGA did not "call" its assessments until 1994, 1995 and 1996. TIAA was still an ULDIGA member in 1994 and accordingly paid the 1994 called assessment. However, TIAA was not an ULDIGA member in 1995 and 1996, and declined to pay those latter called assessments. TIAA insisted it was not liable for the 1995 and 1996 called assessments since it had ceased to be an ULDIGA member before those assessments were called. Conversely, ULDIGA maintained that TIAA's liability for the ELIC assessments was established on April 11, 1991, when ELIC was declared insolvent, and when TIAA was an ULDIGA member.
After attempts at settlement failed, ULDIGA sued TIAA on June 14, 2000, to recover the 1995 and 1996 called assessments. Shortly thereafter, TIAA filed a motion to dismiss the claim as time-barred. In granting TIAA's motion to dismiss, the court explained that the Utah statute provides a thirty day period following written call notice for payment of assessments in accordance with the Utah statute, and that the cause of action to collect unpaid assessments accrues upon expiration of that thirty day period. Following this analysis, the court concluded that the Association's cause of action on the 1995 assessment accrued no later than January 31, 1996, and was time-barred three years later on February 1, 1999. Similarly, the court held that the cause of action on the 1996 assessment accrued on January 28, 1997, and was time-barred three years later on January 29, 2000.
Notwithstanding the court's dismissal of ULDIGA's claims for the 1995 and 1996 assessments, the court's decision implicitly recognized that TIAA's liability for ELIC assessments was established as of April 11, 1991, the date of ELIC's insolvency, thus leaving the door open to future assessments ULDIGA for its remaining obligations in connection with ELIC.
For future insolvencies, the issue of when liability for assessments is incurred has been resolved by the Utah Legislature's "Amendments to the Insurance Law," HB 109, passed during the 2001 Legislative Session, and signed into law by Utah Governor Michael Leavitt in March 2001.
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