BEFORE THE INSURANCE COMMISSIONER
OF THE STATE OF CALIFORNIA
SACRAMENTO
6. California Insurance Code section 12921.8(a)(1) authorizes the Insurance Commissioner to issue a Cease and Desist Order to a person who has acted in a capacity for which a license, registration, or certificate of authority from the commissioner was required but not possessed.
7. California Insurance Code section 12921.8(a)(2) authorizes the Insurance Commissioner to issue a Cease and Desist Order to a person who has aided and abetted a person described in California Insurance Code section 12921.8(a)(1).
8. California Insurance Code section 12921.8(a)(3) authorizes the Insurance
Commissioner to impose a monetary penalty, pursuant to an order to show cause, on a person described in paragraph (a)(1) or (a)(2).
9. California Insurance Code section 12921.8(c) authorizes the Insurance
Commissioner to issue a Cease and Desist Order without holding a hearing prior to issuance of said Order.
10. California Insurance Code section 1623 states that "An insurance broker is a
person who, for compensation and on behalf of another person, transacts insurance other than life insurance with, but not on behalf of, an insurer."
11. California Insurance Code section 1631 states that "...a person shall not solicit, negotiate, or effect contracts of insurance, or act in any of the capacities defined in Article 1 (commencing with Section 1621) unless the person holds a valid license from the commissioner authorizing the person to act in that capacity."
12. During relevant times herein, COMPLEX maintained a Liability Insurance policy with St. Paul Travelers (St. Paul). Said insurance policy was brokered through Acordia of California Insurance Services, Inc. (Acordia), covered the operations of COMPLEX and provided General Liability, Automobile Liability, Excess/Umbrella Liability, Workers Compensation and Employers' Liability and Production Package coverage, including coverage for Rented Equipment, Rented Props, Sets & Wardrobe, and Third Party Property Damage. COMPLEX was not authorized to solicit, negotiate, transfer, execute or sub-sell the St. Paul Liability Insurance policy to third parties.
13. During relevant times herein, and as a benefit of purchasing a Liability Insurance policy through St. Paul, COMPLEX received multiple blank Certificates of Insurance for an unlimited number of additional insureds for COMPLEX productions. Instead, COMPLEX, by and through its Officer and Director, ROSENTHAL, and its employees WILSON and OUSLEY, and in consideration for receipt of a production service fee pursuant to Production Service Agreements with third-party film/video producers, completed Certificates of Insurance (Certificate(s)) for several third-party film/video productions under the guise of those third-party productions being COMPLEX film/video productions. In these instances, COMPLEX submitted Certificates to Acordia, who in turn forwarded these Certificates to St. Paul. After receipt, St. Paul bound coverage for what it believed to be COMPLEX film/video productions. In fact, COMPLEX did not have rights or claims to the third-party film/video productions, as title, ownership, copyright and collateral rights were vested solely and exclusively with the third-party producer. As such, COMPLEX misrepresented material facts regarding said productions in order to induce St. Paul to cover the risks associated with these third party film/video productions, and transacted insurance without holding a license or certificate of authority. To wit:
a. On July 26, 2005, COMPLEX entered into an Agreement with Limelight Films, Inc. (Limelight). Said Agreement called for COMPLEX to maintain adequate general liability and production insurance coverage during Limelight's film/video production, Thomas Lunch, and for Limelight to pay a production service fee of six hundred thirty five dollars ($635), reimburse COMPLEX for the deductible and to indemnify COMPLEX for all expenses, legal fees and courts costs related to claims wherein the insurance policy becomes null and void as a result of Limelight's negligence. In exchange, COMPLEX added Limelight as an Additional Insured on COMPLEX'S Liability Insurance policy with St. Paul, and thereafter Limelight received General Liability coverage up to $2,000,000, Miscellaneous Equipment coverage up to $500,000 with a $5,000 deductible, Third Party Property Damage coverage up to $1,000,000 with a $2,500 deductible, Non-Owned & Hired Auto Liability coverage up to $1,000,000, and Non-Owned & Hired Auto Physical Damage coverage up to $125,000 with a minimum deductible of $1,000 up to 10% of the loss.
b. On January 3, 2007, COMPLEX entered into an Agreement with Alibi Pictures, LLC. (Alibi). Said Agreement called for COMPLEX to maintain adequate general liability and production insurance coverage during Alibi's film/video production, Helpless Corpses, and for Alibi to pay a production service fee of two hundred ninety five dollars ($295), reimburse COMPLEX for the deductible and to indemnify COMPLEX for all expenses, legal fees and courts costs related to claims wherein the insurance policy becomes null and void as a result of Alibi's negligence. In exchange, COMPLEX added Alibi as an Additional Insured on COMPLEX'S Liability Insurance policy with St. Paul, and thereafter Alibi received General Liability coverage up to $2,000,000, Miscellaneous Equipment coverage up to $500,000 with a $5,000 deductible and Third Party Property Damage coverage up to $1,000,000 with a $2,500 deductible.
c. On March 13, 2007, COMPLEX entered into an Agreement with Mel Saftner (Saftner). Said Agreement called for COMPLEX to maintain adequate general liability and production insurance coverage during Saftner's film/video production, Step Into the Future, and for Saftner to pay a production service fee of three hundred fifty dollars ($350), reimburse COMPLEX for the deductible and to indemnify COMPLEX for all expenses, legal fees and courts costs related to claims wherein the insurance policy becomes null and void as a result of Saftner's negligence. In exchange, COMPLEX added Saftner as an Additional Insured on COMPLEX'S Liability Insurance policy with St. Paul, and thereafter Saftner received General Liability coverage up to $2,000,000 and Miscellaneous Equipment coverage up to $500,000 with a $5,000 deductible.
d. On August 16, 2007, COMPLEX entered into an Agreement with B House Films (B House). Said Agreement called for COMPLEX to maintain adequate general liability and production insurance coverage during B House's film/video production, Training for Triumph, and for B House to pay a production service fee of five hundred eighty five dollars ($585), reimburse COMPLEX for the deductible and to indemnify COMPLEX for all expenses, legal fees and courts costs related to claims wherein the insurance policy becomes null and void as a result of B House's negligence. In exchange, COMPLEX added B House as an Additional Insured on COMPLEX'S Liability Insurance policy with St. Paul, and thereafter B House received General Liability coverage up to $2,000,000, Miscellaneous Equipment coverage up to $500,000 with a $5,000 deductible and Third Party Property Damage coverage up to $1,000,000 with a $2,500 deductible. Subsequently, on August 20, 2007, COMPLEX revised the August 16, 2007 Agreement with B House Films. B House paid to COMPLEX a production service fee of four hundred eighty five dollars ($485), in exchange for which B House received Automobile coverage.
e. On October 1, 2007, COMPLEX entered into an Agreement with Brad Newsham (Newsham). Said Agreement called for COMPLEX to maintain adequate general liability and production insurance coverage during Newsham's film/video production, Beach Event 10-7, and for Newsham pay a production service fee of four hundred thirty five dollars ($435), reimburse COMPLEX for the deductible and to indemnify COMPLEX for all expenses, legal fees and courts costs related to claims wherein the insurance policy becomes null and void as a result of Newsham's negligence. In exchange, COMPLEX added Newsham as an Additional Insured on COMPLEX'S Liability Insurance policy with St. Paul, and thereafter Newsham received General Liability coverage up to $2,000,000, Miscellaneous Equipment coverage up to $500,000 with a $5,000 deductible and Third Party Property Damage coverage up to $1,000,000 with a $2,500 deductible.
14. During relevant times herein, the Agreements described hereinabove provided that insurance claims occurring under the Agreement could only be submitted to St. Paul by COMPLEX, and that each third party was required to supply COMPLEX with the necessary documentation to enable COMPLEX to submit the insurance claims to St. Paul. Furthermore, each Agreement stated that "Full policy is available for review at the offices of Complex Corporation."
15. COMPLEX has never applied for nor received a license from the California Insurance Commissioner to act in the capacity of an Insurance Agent and/or Broker, pursuant to California Insurance Code sections 1621 and 1623.
16. ROSENTHAL has never applied for nor received a license from the California Insurance Commissioner to act in the capacity of an Insurance Agent and/or Broker, pursuant to California Insurance Code sections 1621 and 1623.
17. WILSON has never applied for nor received a license from the California Insurance Commissioner to act in the capacity of an Insurance Agent and/or Broker, pursuant to California Insurance Code sections 1621 and 1623.
18. OUSLEY has never applied for nor received a license from the California Insurance Commissioner to act in the capacity of an Insurance Agent and/or Broker, pursuant to California Insurance Code sections 1621 and 1623.
19. COMPLEX, ROSENTHAL, WILSON and OUSLEY have acted, assumed to act, and/or represented themselves to be Insurance Agents and/or Brokers without holding a license from the California Insurance Commissioner, by soliciting, negotiating or effecting contracts of insurance, in direct violation of California Insurance Code section 1631.
20. COMPLEX and ROSENTHAL have aided and abetted WILSON and OUSLEY to act in the capacity of licensed Insurance Agents and/or Brokers, in violation of California Insurance Code sections 1631 and 12921.8(a)(2).
NOW THEREFORE, Respondents, COMPLEX CORPORATION, HENRY S. ROSENTHAL, MIKE WILSON and DEREK OUSLEY are HEREBY ORDERED to immediately CEASE AND DESIST from acting, assuming to act, or representing yourselves to be licensed Insurance Agents and/or Brokers in the State of California, including but not limited to the following:
a. Transacting or proposing to transact any phase of insurance, including solicitation, negotiation preliminary to execution, execution of an insurance contract, or transacting matters subsequent to execution of an insurance contract and arising out of such contract. "Soliciting" means making any oral or written statement with the intention or possible effect of provoking a person's interest in purchasing insurance. "Negotiating" means having any discussion with the objective of arranging the purchase or sale of insurance for compensation of any kind;
b. Receiving any money, commission, fee, rebate, payment, remuneration or any other valuable consideration whatsoever, for providing insurance coverage in connection with any Production Service Agreements entered into for film/video productions in the State of California;
c. Acting on behalf of, or aiding in any manner, an insured in negotiating for or effecting the settlement of a claim or claims for loss or damage under any policy of insurance covering film/video productions in the State of California; and,
d. Advertising, soliciting business, or holding yourselves out to the public as insurance brokers and/or agents for film/video production insurance coverage.
Respondent, COMPLEX CORPORATION is HEREBY FURTHER ORDERED to immediately CEASE AND DESIST from the following:
a. Aiding and abetting HENRY S. ROSENTHAL in acting, assuming to act, or representing himself to be a licensed insurance broker and/or agent in the State of California;
b. Aiding and abetting MIKE WILSON in acting, assuming to act, or representing himself to be a licensed insurance broker and/or agent in the State of California;
c. Aiding and abetting DEREK OUSLEY in acting, assuming to act, or representing himself to be a licensed insurance broker and/or agent in the State of California;
d. Advertising or holding HENRY S. ROSENTHAL out as an authorized agent for COMPLEX in the State of California;
e. Advertising or holding MIKE WILSON out as an authorized agent for COMPLEX in the State of California;
f. Advertising or holding DEREK OUSLEY out as an authorized agent for COMPLEX in the State of California;
g. Paying any money, commission, fee, rebate, payment, remuneration, or any other valuable consideration whatsoever, to HENRY S. ROSENTHAL, in connection with any Production Service Agreements entered into on behalf of COMPLEX;
h. Paying any money, commission, fee, rebate, payment, remuneration, or any other valuable consideration whatsoever, to MIKE WILSON, in connection with any Production Service Agreements entered into on behalf of COMPLEX; and,
i. Paying any money, commission, fee, rebate, payment, remuneration, or any other valuable consideration whatsoever, to DEREK OUSLEY, in connection with any Production Service Agreements entered into on behalf of COMPLEX.
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PLEASE TAKE NOTICE that the Insurance Commissioner may, pursuant to Insurance Code section 12921.8(a)(3), impose a monetary penalty in the amount of five times the amount of money received by the person for acting in the capacity for which a license, registration, or certificate of authority was required but not possessed, or in the amount of five thousand dollars ($5,000) for each day the person acted in the capacity for which the license, registration, or certificate of authority was required but not possessed. In the absence of contrary evidence, it shall be presumed that a person continuously acted in a capacity for which a license, registration, or certificate of authority was required on each day from the date of the earliest such act until the date those acts were discontinued.
NOW THEREFORE, Respondents COMPLEX CORPORATION, HENRY S. ROSENTHAL, MIKE WILSON and DEREK OUSLEY are HEREBY ORDERED TO SHOW CAUSE why the Insurance Commissioner should not impose, upon each or all of you, a monetary penalty, pursuant to California Insurance Code section 12921.8(a)(3), which is the greater of the following: five times the amount of money received by COMPLEX, ROSENTHAL, WILSON and/or OUSLEY while acting, assuming to act, or representing yourselves to be licensed Insurance Brokers and/or Agents in the State of California, or five thousand dollars ($5,000.00) for each day COMPLEX, ROSENTHAL, WILSON and/or OUSLEY have acted, assumed to act, or represented themselves to be licensed Insurance Brokers and/or Agents in the State of California.
California Insurance Code section 12921.8(c), a copy of which is attached to this Cease and Desist Order, provides in part, as follows:
"A person to whom a cease and desist order has been issued, may, within seven days after service of the order, request a hearing by
filing a request for the hearing with the commissioner."
If you desire a hearing in this matter, your written request for a hearing must be received within seven days after you are served with this Order. The seven days begins to run on the day after the day you are served, and if the seventh day falls on a weekend, the period in which your request must be filed is extended to Monday or the next business day if Monday is a holiday. Your written request for a hearing must be directed to: Geoffrey F. Margolis, Senior Staff Counsel, California Department of Insurance, 300 Capitol Mall, 17th Floor, Sacramento, California 95814.
