Seizure Issued Against an Insurer was Revoked: The National Civil Court of Appeals (Chamber B) Ordered the Revocation of the Seizure Issued Against an Insurance Company After Verifying its State of Equity.

In re “NAVARRO NELIDA BEATRIZ C/ ORTIZ JUAN CARLOS Y OTRO S/DAÑOS Y PERJUICIOS” the plaintiff (a pedestrian who suffered a car accident) sued the driver of the vehicle that had run her over and had the insurance company joined into the proceedings to obtain redress for damages suffered.

After the closure of the evidentiary stage but before the sentence was pronounced, the plaintiff requested a seizure of funds against the insurance company, on the grounds that the admission requirements of the cautionary measure were verified considering the mechanics of the accident, the causal link, and the increase of debts of the guarantor.

The first instance judge considered that legal plausibility and peril in the delay were duly proved in the file, and decided to issue the preventive seizure against the insurance company for the amount of AR$ 1,918,500, plus AR$ 575,550 to cover interest and the legal costs.

The insurance company filed an appeal against the resolution on the grounds that the admission requirements of the conservatory measure had not been met and that the seizure caused great financial damage to the company. In that sense the company emphasized that there was no evidence that the plaintiff required an urgent relief. In subsidy the company offered surety insurance to substitute the seizure.

In order to evaluate the arguments of the insurance company, Tribunal B of the Civil Court of Appeals analyzed the financial information on the insurer posted on the SSN website -www2.ssn.gob.ar/files/circulares/10247.pdf-. It was there verified that the insurance company (Federación Patronal S.A.) had the fourth (out of 115) largest net worth of all insurance companies in the country in the same line of insurance.

The Court of Appeals concluded that there was no urgency and that the company was solvent enough to face the results of a potential adverse ruling and therefore revoked the seizure ordered by the first instance judge.

While this is not a novel precedent, it ratifies the current case law of the National Civil Court of Appeals that considers that, on a general basis, when insurance companies are solvent no urgent reasons exist to allow for conservatory measures. Other precedents of the Court of Appeals have held that seizures issued against insurers only proceed when final judgment exists and provided a real and specific danger justifies it, since otherwise the liquidity of the company and its commercial activities could be affected. [1]

Also section 33 of the Law 20,091 (of insurance institutions) provides that insurance companies must set up technical reserves for each loss outstanding, in order to ensure compliance of their obligations. In that sense there are precedents that complement the previous case law indicating that ordering a seizure in addition to the funds that the companies are obliged to reserve for each claim would generate an excessive imposition on insurers who would be doubly deprived of funds necessary to conduct their business. [2]

[1] CNCiv. Tribunal M, March 31, 2011, "Sandoval Tania v. María Viviana Laura and others re Art. 250 of the Procedural Code"; CNCiv., Tribunal J,October 23, 2008, "Pereyra Graciela Isabel v. Segurcoop Cooperativa de Seguros Limitada re Conservatory Measures"; CNCiv., Tribunal K, March 8, 2004 "Amicone Mariana v. Comercio Seguros".

[2] CNCiv. Tribunal A, April 25, 2011, "M.N.G and others v. Provincia Seguros SA re Conservatory Measures".