PSM obtained a judgment against Nat’l Farm, and while Nat’l Farm’s appeal was pending, PSM executed on the judgment, taking possession of Nat’l Farm’s subsidiary, Business Alliance Ins. Co. PSM operated Business Alliance while the appeal was pending, sustaining losses from its operations. The judgment was reversed on appeal. This decision holds that under California law, PSM had to make restitution to Nat’l Farm by returning to it the shares of Business Alliance, but that PSM could not recover from Nat’l Farm the losses it had suffered from Business Alliance’s operations in the interim. Also, the district court did not abuse its discretion in refusing to allow PSM to rescind a quota share agreement with Business Alliance under which it assumed 90% of the risk on Business Alliance’s policies in return for 90% of the premiums. The district court did not clearly err in finding that the quota share agreement was an improvement not necessary maintenance of Business Alliance during the period PSM owned it.
Ninth Circuit Court of Appeals (Tashima, J.); March 7, 2018; 2018 WL 1178071