Yee v. American National Insurance Co.
Annotate this CaseAt issue in this appeal was section 1571, subdivision (a) of the Unclaimed Property Law (UPL): "The [State] Controller may at reasonable times and upon reasonable notice examine the records of any [entity] if the Controller has reason to believe that the [entity] is a holder [of property] who has failed to report property that should have been reported pursuant to [the UPL]." Pursuant to this section, the trial court granted a preliminary injunction to plaintiff, the State Controller (the Controller), to examine the records of defendant American National Insurance Company, a life insurance company. American National appealed, contending that the trial court abused its discretion by ignoring the irreparable injury American National would suffer from a preliminary injunction that granted the Controller the ultimate relief the Controller sought in its lawsuit; in short, says American National, the trial court's decision deprived it of an opportunity to defend itself on the merits. The Court of Appeal essentially agreed: (1) the trial court erred in granting the preliminary injunction because the court did so without a trial on the merits; (2) the standard of "reason to believe" in section 1571(a) meant specific articulable facts that would justify a belief by a reasonable person, knowledgeable in the field of unclaimed property, that an entity was not reporting property as the UPL requires (and one way in which this standard can be met was if the suspected holder of unreported property has been chosen for record examination pursuant to a general administrative plan to enforce the UPL that is based on specific neutral sources); and (3) that if the Controller proved, at trial on the merits, the significant facts underlying its preliminary injunction request, the Controller will have met this "reason to believe" standard with respect to examining the records of American National's in-force policies. Accordingly, the Court of Appeal reversed the preliminary injunction order and remanded for further proceedings.
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