Summons and Petition for Judicial Review (Nos. 20-0257, 20

,20 2

CIVIL

Received & Flied LE.WIS COUNTY, WASH

Superior Court

NOV 2 0 2020

Lew!s County Clerk

LEWIS COUNTY SUPERIOR COURT

Case Number

0 0 17~ ~fcg1f ion Cover Sheet (CICS)

V ase Title _ACLDN V. OIC

Attorney Name _Spence Freeman __ Bar Membership Number 25069 __ Please check one category that best describes this case for Indexing purposes. Accurate case indexing not only saves time In docketing new cases, but helps in forecasting needed judicial resources. Cause of action definitions are listed on the back of this form. Thank you for your cooperation. Form updated: 8/19/2019 □ ABJ Abstract of Judgment □ PRG Property Damage - Gangs [Rl ALR Administrative Law Review □ PRP Property Damages

□ ALRJT Administrative law Review-Jury Trial (L&I) □ QTI QuietTltle □ BAT Ballot Title □ RDR Relief from Duty to Register D CHN Non-Confidential Change of Name □ RFR Restoration of Firearm Rights

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IN THE SUPERIOR COURT OF THE STATE OF WASHINGTON IN AND FOR THE COUNTY OF LEWIS

In the Matter of

ARMED CITIZENS' LEGAL DEFENSE NETWORK, INC.,

Petitioner.

Cause No. 20-2-00723-21

PETITION FOR JUDICIAL REVIEW OF ADMINISTRATIVE AGENCY ORDER

COMES NOW Armed Citizens' Legal Defense Network, Inc. (hereinafter "ACLDN"),

by and through its undersigned counsel, respectfully Petitions for Judicial Review of

Administrative Order to Cease and Desist and Impose Fine.

I. PETITIONER

1. Petitioner is Armed Citizens' Legal Defense Network, Inc. ("ACLDN"), mailing

20 address P.O. Box 400, Onalaska, Washington 98570.

21 2. Petitioner's attorney is Spencer D. Freeman, Freeman Law Firm, Inc., 1107 ½

22 Tacoma Avenue South, Tacoma, Washington 98402.

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II. AGENCY/AGENCY ACTION

3. Agency: Office of the Insurance Commissioner, mailing address 5000 Capitol

Blvd SE, Tumwater, Washington 98501.

4. Agency Action at Issue: In the Matter of: Armed Citizens Legal Defense AMENDED PETITION FOR JUDICIAL REVIEW - l FREEMAN LAW FIRM, INC,

1107 ½ Tacoma A venue South

Tacoma, WA 98042

(253) 383-4500 - (253) 383-4501 (fax)

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Network, Docket Nos. 20-0257 and 20-0457. Attached hereto as Exhibit A is a true and correct

copy of the Second Amended Final Order on Summary Judgment, dated November 5, 2020 and

served November 5, 2020. Attached hereto as Exhibit B is a true and correct copy of the

agency's Cease and Desist Order, Docket No. 20-0257, dated March 26, 2020. Attached hereto

as Exhibit C is a true and correct copy of the agency's Order Imposing Fine, Docket No. 20-

0457, dated May 29, 2020.

5. Participants at the administrative proceeding: ACLDN; ACLDN's attorney

Spencer D. Freeman; Office of Insurance Commissioner ("OIC") by license attorney but listed

as enforcement specialist Sofia Pasarow; and OIC Presiding Officer Julia Eisentrout.

III. ENTITLED TO JUDICIAL REVIEW

6. On March 26, 2020, OIC served on ACLDN a Cease and Desist Order

mandating ACLDN to cease sales of ACLDN memberships in the State of Washington, alleging

the memberships constituted insurance while ACLDN was not licensed to transaction in

insurance.

7.

8.

On or abopt March 31, 2020, ACLDN served on OIC a Request for Hearihg.

On May 29, 2020, OIC served on ACLDN an Order Imposing Fine, in the

amount of $200,000. OIC simultaneously demanded a hearing regarding the fine.

9. On or about June 2, 2020, OIC's Presiding Officer consolidated the hearings the

Order Imposing fine with the hearing for the Cease and Desist Order.

10. On or about August 12, 2020, ACLDN filed a motion for summary judgment,

24 requesting the Presiding Officer to determine as a matter of law that ACLDN memberships did

25 not constitute insurance.

26 11. On or about August 12, 2020, OIC filed a motion for summary judgment,

AMENDED PETITION FOR JUDICIAL REVIEW - 2 FREEMAN LAW FIRM, INC, 1107 ½ Tacoma Avenue South

Tacoma, WA 98042

(253) 383-4500 - (253) 383-4501 (fax)

1 requesting the Presiding Officer to determine as a matter of law that ACLDN memberships did

2 constitute insurance and to affirm the fine of $200,000 imposed by OIC.

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12. On or about November 5, 2020, OIC Presiding Officer issued a Second

Amended Final Order On Summary Judgment, finding as a matter of law ACLDN memberships

constitute insurance and imposing a fine of $50,000.1 OIC Presiding Officer found that the sale

of ACLDN memberships constitute insurance under the definition of a contract to pay a

specified amount upon a determinable contingency because ACLDN created a Fund from which

members could be granted assistance for legal costs and fees resulting for an incident involving

self-defense.

13. ACLDN has exhausted all administrative remedies.

14. RCWs 34.05.514, 34.05.534, and 34.05.542 granted ACLDN the right to petition

this Court for review of the OIC action and determination.

IV. GROUNDS FOR RELIEF TO BE GRANTED

15. Findings of Fact Paragraphs2 2 to 11 are incomplete in the portrayal of actual

17 facts as material facts are omitted, specifically facts establishing that education is a priority of

18 ACLDN to best ensure lawful useful force is followed.

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16. Findings of Fact Paragraphs 2 to 11 are incomplete in the portrayal of actual

facts as material facts are omitted, specifically facts establishing ACLDN intends to ensure

proper acts of self-defense by ACLDN members are not unfairly treated by the justice system.

1 The original Order on Summary Judgment was issued and served on September 25, 2020, leaving the fine issue

open. ACLDN filed a Motion for Reconsideration. On November 2, 2020, OIC Presiding Officer issued an Amended Order on Summary Judgment based on arguments presented in the Motion for Reconsideration and addressing the fine issue. After further reviewing OIC pleadings on the fine issue, OIC Presiding Officer issued and served the Second Amended Order on Summary Judgment. 2

The Presiding Officer titled the facts "Facts for Purposes of Summary Judgment." "Findings of Fact" is used herein for brevity. AMENDED PETITION FOR JUDICIAL REVIEW - 3 FREEMAN LAW FIRM, INC.

1107 ½ Tacoma Avenue South

Tacoma, WA 98042

(253) 383-4500 - (253) 383-4501 (fax)

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facts as material facts are omitted, specifically facts establishing ACLDN's assistance is beyond

the potential for monetary assistance, but providing members access to network of attorneys and

experts in the field of self-defense.


facts as material facts are omitted, specifically facts establishing that ACLDN retains full

discretion of whether to grant funds to members for assistance in legal costs after an act of self

defense.


facts as material facts are omitted, specifically facts establishing that ACLDN members did not

contract with ACLDN for a promise that ACLDN would grant funds to members for assistance

in legal costs after an act of self-defense.


facts as material facts are omitted, specifically facts establishing that ACLDN members are

probably the least likely gun owners to be involved in shooting or use of deadly force due to

education provided by ACLDN.


facts as material facts are omitted, specifically facts establishing that ACLDN members did not

contract with ACLDN for a promise that ACLDN would grant funds to members for assistance

in legal costs after an act of self-defense.


facts as material facts are omitted, specifically facts establishing that the Fund utilized by

ACLDN for potential assistance for members was and is not solely based upon a percentage of

AMENDED PETITION FOR JUDICIAL lmVIEW - 4 FREEMAN LAW FIRM, INC. 1107 ½ Tacoma Avenue South

Tacoma, WA 98042

(253) 3834500 • (253) 3834501 (fax)

1 membership fees (the percentage subject to change at ACLDN's sole discretion), but also based

2 upon other means of charitable contributions.

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23. Findings of Fact Paragraphs 5 to 7 are not supported by the records as material

facts contained therein were not true or accurate at the time OIC filed the Cease and Desist

Order.

24. Conclusion of Law Paragraph 4 is not support by evidence or law as there was no

8 promise to provide financial assistance, no specified amount, and no determinable contingency.

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25. Conclusions of Law Paragraphs 13, 14, and 22 are not supported by evidence or

law as ACLDN memberships which provided for potential access to assistance with legal

expenses cannot be deemed as a "specified amount." Evidence regarding language of assistance

"up to $25,000" was stale and not true at the time of the Cease and Desist Order or the

administrative hearings. Further, offering assistance with "legal expenses" and/or "bail

expenses" is not a "specified amount" factually or legally.

26. Conclusions of Law Paragraphs 15, 16, and 23-27 are not supported by evidence

or law as an act of self-defense cannot be deemed to be a "determinable contingency" but

instead is an "intentional act" and thus cannot simultaneously be a "contingent act" or

"contingency."

27. Conclusions of Law Paragraphs 17-20 are not supported by evidence or law and

contradict clear case law in Washington defining insurance.

28. Conclusions of Law Paragraphs 28 and 29 are not supported by evidence or law

24 as there was no transfer of risk to ACLDN as" there was no contractual obligation or promise to

25 provide member with financial assistance.

26 29. Conclusion of Law Paragraph 30 is not supported by evidence or law as there

AMENDED PETITION FOR JUDICIAL REVIEW - 5 FREEMAN LAW FIRM, INC. 1107 ½ Tacoma Avenue South

Tacoma, WA 98042

(2S3) 383-4500 - (253) 383-4501 (fax)

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was no promise to provide financial assistance, no specified amount, and no determinable

contingency.

30. Conclusion of Law Paragraph 33 is not supported by evidence or law as there


contingency.


8 was no promise to provide financial assistance, no specified amount, and no determinable

9 contingency.

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contingency.


15 was no promise to provide financial assistance, no specified amount, and no determinable

16 contingency.

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contingency and thus no unauthorized insurance transacted.

35. The Presiding Officer's Order in the Second Amended Final Order on Summary

Judgment is not supported by evidence or law as there was no promise to provide financial

assistance, no specified amount, and no determinable contingency and thus no unauthorized

insurance transacted.

36. OIC's action violates the United States Constitution including but not limited to

preventing ACLDN from engaging in free speech by funding defense to politically motivated


Tacoma, WA 98042

(253) 383-4500 - (253) 383-4501 (fax)

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v. REQUESTED RELIEF

37. Petitioner ACLDN requests that a Declaratory Judgment Order be entered that

ACLDN did not violate RCW 48.05.030 and/or RCW 48.15.020.

38. Petition ACLDN requests that the Insurance Commissioner's Presiding Officer's

Second Amended Final Order on Summary Judgment be set aside.

39. Petitioner ACLDN requests that the Insurance Commissioner's Order to Cease

9 and Desist No. 20-0257 be set aside.

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40. Petitioner ACLDN requests that the Insurance Commission's Order Imposing

Fine be set aside.

Dated this 23 rd day of November 2020.

FREEMAN LAW FIRM, INC.

s/ Spencer Freeman Spencer D. Freeman, WSBA No. 25069 FREEMAN LAW FIRM, INC. [email protected] Attorney for ACLDN


Tacoma, WA 98042

(253) 383-4500 - (253) 383-4501 (fax)

EXHIBIT A

Second Amended Final Order on Summary

Judgment

BEFORE THE STATE OF WASHINGTON OFFICE OF INSURANCE COMMISSIONER

In the Matter of:

ARMED CITIZENS LEGAL DEFENSE NETWORK

Appellant

Docket No. 20-0257, 20-0457

SECOND AMENDED FINAL ORDER ON SUMMARY JUDGMENT

This order is amended to reflect consideration of the Office of the Insurance Commissioner's timely submitted written argument regarding the fine amount. Previously, said written argument had not been considered and was erroneously overlooked prior to issuing the Amended Final Order on Summary Judgment. Thus, this Second Amended Final Order on Summary Judgment addresses the fine amount after considering both parties' submissions regarding the amount, and to address the parties' arguments on reconsideration. This order supersedes both previous orders.

ISSUES

1. Should the Office of the Insurance Commissioner's Motion for Summary Judgment be granted and Armed Citizens Legal Defense Network's Motion for Summary Judgment denied?

2. Did Armed Citizens Legal Defense Network violate RCW 48.05.030(1) and RCW 48.15.020(1) by transacting insurance in Washington as an unauthorized insurer?

3. If so, should the Cease and Desist Order be affirmed?

4. If so, should the Order Imposing a Fine be affirmed?

5. Should Armed Citizens' Legal Defense Network, Inc. 's Motion for Reconsideration of Final Order on Summary Judgment be granted?

6. Should the legal conclusions in the Final Order on Summary Judgment be reversed?

ORDER SUMMARY

1. Yes, the Office of the Insurance Commissioner's Motion for Summary Judgment is granted. Armed Citizens Legal Defense Network's Motion for Summary Judgment is denied.

2. Yes, Armed Citizens Legal Defense Network violated RCW 48.05.030(1) and RCW 48.15.020(1) by transacting insurance in Washington as an unauthorized insurer.

3. The Order to Cease and Desist No. 20-0257 is affirmed.

4. The Order to Impose A Fine No. 20-0457 is affirmed. OIC has the authority to fine Armed Citizens Legal Defense Network under RCW 48.15.023(5)(a)(ii) as a matter of law upon the fmding that ACLDN transacted insurance without authorization from the Insurance Commissioner. A fme of $50,000 is imposed.

5. ACLDN's Motion for Reconsideration is granted in part to amend relevant portions the Final Order on Summary Judgment, without disturbing the ultimate holding granting summary judgment for OIC and denying summary judgment for ACLDN. The legal conclusions that discuss that an act of self-defense can be a determinable contingency are amended and refined in light of the objections raised by ACLDN, and the findings regarding the fme amount are amended to include discussion of the factors considered in setting the fme of $50,000. Summary judgment is still granted for the OIC, and ACLDN's motion for summary judgment is still denied.

BACKGROUND

1. On March 26, 2020, the Office of the Insurance Commissioner ("OIC") issued an Order to Cease and Desist ("Order") No. 20-0257 In the Matter of Armed Citizens' Legal Defense Network, Inc ("ACLDN").

2. On March 31, 2020, ACLDN filed a Demand for Hearing ("Demand") with the OIC's Hearings Unit to contest the Order.

3. On May 26, 2020, ACLDN filed a "Motion to Stay Cease and Desist Order," and requested a stay of the Order.

4. On May 29, 2020, OIC filed Order Imposing A Fine No. 20-0457, which sought to fme ACLDN $200,000.00 for the same conduct underlying the Order to Cease and Desist.

5. OIC filed a brief in opposition to a stay of the Order to Cease and Desist, and oral argument was had on the issue. On July 30th, 2020, the request for a discretionary stay was denied.

6. Pursuant to the case schedule set in these matters, both parties then filed motions for summary judgment, responses, and replies thereto.

AMENDED FINAL ORDER ON SUMMARY JUDGMENT No. 20-0257, 20-0457 Page 2

7. The material submitted by both parties has been reviewed under the summary judgment standard articulated in WAC 10-08-135, applicable to adjudicative proceedings before the OIC per WAC 284-02-070(2)(a).

8. A Final Order on Summary Judgment issued on September 25, 2020, granting the OIC's motion for summary judgment, and denying the same for ACLDN. The record was left open until October 9, 2020, for any briefing the parties wished to submit regarding the fine amount. ACLDN submitted a motion for reconsideration in addition to a brief regarding the amount of any fine to be imposed. OIC submitted a brief regarding the amount of the fine, and a response to the motion for reconsideration. All submissions have been considered prior to issuing this Amended Final Order on Summary Judgment.

FACTSFORPURPOSESOFSUMMARYJUDGMENT

I adopt these facts for the purposes of summary judgment:

1. ACLDN was formed on June 6, 2011, as a Washington Profit Corporation with a principal office located in Onalaska, Washington. Declaration of Jessica Bullington, Ex. 1. Marty Hayes is the President, Registered Agent, and Governor of Armed Citizens. Id. Mr. Hayes is a former police officer, and also president of another company he founded, The Firearms Academy of Seattle, which provides education on the laws of use of force in self-defense, as well as gun safety and marksmanship. Declaration of Marty Hayes, p.l, 2. Mr. Hayes obtained ajuris doctor from Concord Law School through the school's distance learning law school. Id.

2. Armed Citizens Educational Foundation ("Educational Foundation") was formed on September 25, 2012, as a Washington Non-Profit Corporation. Bullington Deel., Ex. 2. The Educational Foundation shares the same principal office street address, principal office mailing address, and governors as ACLDN. Bullington Deel., Ex. 1, 2.

3. A letter from President Marty Hayes, accessible on the ACLDN website, includes the following statements, outlining ACLDN's "two core missions":

First, to help members in the legal fight after they justifiably use force in self-defense by paying for the services of attorneys, expert witnesses, private investigators and other professionals essential to mounting a vigorous legal defense of self-defense on behalf of our members. Our second mission is educating our members (and to some extent, the gunowning public) in the law governing use of force in self-defense and how armed citizens can protect against unmeritorious prosecution.

Bullington Deel., Ex. 9 p. 16.


4. ACLDN does not possess a Certificate of Authority that enables it to lawfully act as an insurer in Washington State. Bullington Deel., para. 7.

5. ACLDN's membership brochure states across the top: "Join the Network-Don't face the legal aftermath of self-defense alone." Bullington Deel., Ex. 7, p. 2. The page is then broken into three sections, entitled "Before," "During," and "After." Id. Under "Before," ACLDN explains that "just as safe gun handling actually starts before you touch a gun, your legal defense should start with personal preparation before you are engaged in a self-defense incident." Id. The section then outlines some of the education benefits, and encourages members to "get to know an attorney" before needing one, and mentions that membership grants access to an exclusive list of attorneys affiliated with ACLDN. Bullington Deel., Ex. 7, p. 2.

6. Under the "During" section, the brochure explains that knowing the laws and being well-educated help to prepare a member to "use force appropriate to save innocent life." That section also includes the following language:

Immediate funding: When a member uses force in self-defense, the Network immediately sends up to $25,000 to the member's attorney, and can provide up to $25,000 in bail assistance. This assistance is extended after any legal self-defense incident whether you use a firearm or other defense option.

Funding we pay to your attorney assures critical precautions are taken including having an attorney present during any questioning, interfacing for you with law enforcement, keeping the news media at bay, and other assistance during those critical times immediately following self-defense.

Bullington Deel., Ex. 7, p. 2.

7. Under the "After" section, ACLDN states that "Armed Citizens' Legal Defense Network membership benefits are not insurance reimbursements. That's a good thing!" Bullington Deel., Ex. 7, p. 2. The section then states that membership benefits:

[G]ive the Network a free hand to tailor post-incident legal assistance to meet the varying needs each situation dictates and paying the expenses to assure a vigorous legal defense if the case goes to trial. This assistance pays attorney fees and if needed, the expertise of an additional attorney or attorneys to contribute much needed experience to the trial team, as well as pay for expert witnesses, private investigators, and other expenses to defense the member's self-defense actions.


Id. The section goes onto explain that even after trial, legal funding can be made available to members to defend against a civil suit, or for retrial or appeal. Id.

8. The Membership Application includes a section titled, "Defend Yourself Confidently." Bullington Deel. Ex. 7, p.1. This section states that "Network members receive financial assistance to assure vigorous legal representation after using deadly force in self-defense." Id. It adds that after joining the Network, a member also receives "extensive education about using deadly force in self-defense and how to interact with law enforcement after self-defense and other aftermath issues." Id.

9. To join ACLDN, a member must pay a membership fee and attest: they are not legally prohibited from possessing firearms, that they are 18 years of age or older, that they legally reside in the United States. Bullington Deel. Ex. 7, p. 1. The cost of

· membership is as follows: a single membership can be bought for $135 for 1 year, $295 for 3 years, and $790 for 10 years. A couple membership can be purchased for $195 for 1 year, $474 for 3 years, and $1390 for 10 years. Id.

10. Upon joining ACLDN, the member receives an Explanation of Member Benefits and a Membership Card. Bullington Deel. Ex. 8, p. 1, 2. Specific benefits include the following:

• 9 educational videos • 235 page book on self-defense. • Access to a list of Network Affiliated Attorneys • For legitimate self-defense claims, an initial fee deposit to the

member's attorney • Coordination of le gal assistance by a Network representative if the

member does not have an attorney • Further financial assistance "to defray the cost of going to trial"

Bullington Deel., Ex. 9; Hayes Deel. p. 3.

The Explanation of Member Benefits reiterates the dual purpose of ACLDN: "1) understand the legal ramifications surrounding use of deadly force and its aftermath, and 2) have access to vigorous and skillful legal representation immediately after a self-defense incident, and continuing so long as the member is in legal jeopardy stemming from a legitimate self-defense act." Id. The ACLDN Advisory Board reviews each case and advises leadership as to specific issues oflegal self-dense "on which decisions to grant financial support rest." Id. This is to ensure that ACLDN does not waste funds defending criminal acts, and to avoid accusations that ACLDN "supports or encourages use of force without justification." Id.

11. ACLDN provided a list of claims made, which showed they made payments on 22 of 25 claims; two of the claims arose from incidents in Washington. Bullington Deel., Ex. 10. Of those two claims, ACLDN made a payment on one. Id. ACLDN paid $2000 for a member who was a victim of road rage and displayed a firearm to stop


the incident; no criminal charges were filed. Id. For the other incident, ACLDN did not find the actions of the member were self-defense, and did not make any payments; that member arrived home to find a neighbor's dog in in his yard, retrieved a gun and fired shots to scare the dog. Id. ACLDN has made payments regarding member claims that range from $400 to $75,000. Id.

CONCLUSIONS OF LAW

I adopt the following Conclusions of Law:

Jurisdiction

1. The OIC has jurisdiction over the person( s) and subject matter of this case pursuant to RCW 48.04.010, WAC 284-02-070 and RCW 34.05.

Summary Judgment

2. "A motion for summary judgment may be granted and an order issued if the written record shows that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." WAC 10-08-135, WAC 284-02-070(2)(a). "But where material facts are disputed, a trial is needed to resolve the issue." Camicia v. Howard S. Wright Constr. Co., 179 Wn.2d 684,693,317 P.3d 987,991 (2014). '' A material fact is one upon which the outcome of the litigation depends." Zimmerman v. WBLess Prods., LLC, 160 Wn. App. 678,693,248 P.3d 601,608 (2011). "If the moving party meets this initial burden, then '[t]he nonmoving party must set forth specific facts showing a genuine issue and cannot rest on mere allegations.'" Id. ( citation omitted).

3. The parties are in agreement that ACLDN does not hold a certificate of authority to act as an insurer, and is not otherwise authorized to transact insurance in Washington. Thus, the primary issue is whether the memberships sold by ACLDN qualify as insurance, such that they are required to have a certificate of authority issued by OIC.

4. As outlined below, ACLDN is transacting insurance in Washington. Thus, the Insurance Commissioner has authority to issue a cease and desist order and to issue a fine, under the provisions listed below. The factual basis for the Order to Cease and Desist No. 20-0257 and the Order Imposing A Fine No. 20-0457 are the same. ACLDN was given additional time for discovery on the fine as that order was filed after the Order to Cease and Desist. Because discovery for the issue of the fine was extended for ACLDN to seek information so they could respond to the fine amount sought by OIC, and that deadline did not pass until after all briefing for the motions for summary judgment and the responses and replies had been submitted, additional time was afforded to the parties to submit any briefing they wished regarding the amount of the fine, after the date of the Final Order on Summary Judgment. The record remained open until October 9, 2020. ACLDN submitted a brief regarding the


fine amount, in addition to the Motion for Reconsideration submitted. OIC submitted argument in support of a $200,000 fine, and also responded to ACLDN' s Motion for Reconsideration.

Objection to Bullington Declaration, paragraphs 9-15 and Exhibits 3-6

5. ACLDN objects to the admission of paragraphs 9-15 of Jessica Bullington's Declaration submitted in support ofOIC's Motion for Summary Judgment, as well as Exhibits 3-6, under the relevance standard.

6. Under RCW 34.05.452(1):

Evidence, including hearsay evidence, is admissible if in the judgment of the presiding officer it is the kind of evidence on which reasonably prudent persons are accustomed to rely in the conduct of their affairs. The presiding officer shall exclude evidence that is excludable on constitutional or statutory grounds or on the basis of evidentiary privilege recognized in the courts of this state. The presiding officer may exclude evidence that is irrelevant, immaterial, or unduly repetitious ( emphasis added).

Subsection (2) of the same statute provides that "[i]f not inconsistent with subsection (1) of this section, the presiding officer shall refer to the Washington Rules of Evidence as guidelines for evidentiary rulings." RCW 34.05.452(2).

7. ER 401 provides that" '[r]elevant evidence' means evidence having any tendency to make the existence of any fact that is of consequence to the determination of the action more probable or less probable than it would be without the evidence."

8. ER 402 provides that "[a]ll relevant evidence is admissible, except as limited by constitutional requirements or as otherwise provided by statute, by these rules, or by other rules or regulations applicable in the courts of this state. Evidence which is not relevant is not admissible."

9. The rule for admission of evidence is broader under the AP A than under the Rules of Evidence; the AP A allows for the exclusion of irrelevant evidence, but does not require it.

10. Paragraphs 9-15 of Jessica Bullington' s declaration and Exhibits 3-6 attached thereto provide information regarding how OIC went about investigating ACLDN and obtaining the information upon which they based the Order to Cease and Desist and the Order Imposing A Fine. I accept the referenced paragraphs and exhibits for the information they contain. I decline to adopt the characterization of ACLDN's response to OIC's investigation as "uncooperative/' or use the information contained therein as justification to impose a higher fine amount. ACLDN responded as they deemed appropriate at the time they were contacted by OIC. They did not believe there was a duty to respond in a certain manner or provide


specific documents, and instead provided a legal analysis explaining why ACLDN memberships were outside the scope of OIC regulation. In tum, OIC proceeded to issue the subpoena duces tecum in order to receive the additional information and responses OIC believed the agency was entitled to obtain. ACLDN complied with the subpoena. In this case, ACLDN's level of cooperation is not grounds for an increased fine amount, but completes the timeline for investigation and OIC's eventual issuance of the Order to Cease and Desist and the Order Imposing A Fine.

The evidence is admissible as described above.

ACLDN is Transacting Insurance

11. RCW 48.01.040 provides that "[i]nsurance is a contract whereby one undertakes to indemnify another or pay a specified amount upon determinable contingencies."

12. "Specified amount" and "determinable contingency" are not defined by statute. "In the absence of such a definition, statutory construction requires that we give undefined words their common and ordinary meaning. To ascertain this meaning, we may use a dictionary." Vance v. Dep't of Ret. Sys., 114 Wn. App. 572, 577 (2002) (citations omitted).

13. In pertinent part, Merriam-Webster defines "specify" as: "to name or state explicitly or in detail." "Specify." Merriam-Webster.com Dictionary, Merriam-Webster, http://www.merriam-webster.com/dictionary/specify. Accessed 16 Sep. 2020.

14. Merriam-Webster defines "amount" (the noun) as:

1. The total number or quantity; aggregate; 2. The quantity at hand or under consideration; 3. The whole effect, significance, or import; 4. Accounting: a principal sum and interest on it.

"Amount." Merriam-Webster.com Dictionary, Merriam-Webster, https://www.merriamwebster.com/dictionary/amount. Accessed 16 Sep. 2020.

15. Merriam-Webster defines "determinable" as "capable of being determined, definitely ascertained, or decided upon." ''Determinable." Merriam-Webster.com Dictionary, Merriam-Webster, https:/ /www.merriam-webster.com/dictionary/determinable. Accessed 16 Sep. 2020.

16. Merriam-Webster defines "contingency" in pertinent part: 1. A contingent event or condition: such as

a. An event (such as an emergency) that may but is not certain to occur; b. Something liable to happen as an adjunct to or result of something else.


"Contingency." Merriam-Webster.com Dictionary, Merriam-Webster, https://www.merriam-webster.com/dictionary/contingency. Accessed 16 Sep. 2020.

17. There is little common law guidance on the application of the current statutory definition of insurance in RCW 48.01.040. Prior to amendment, one Washington court held that "[a]n essential element of insurance is that there be a 'hazard or peril insured against.'" State ex re. Fishback v. Universal Service Agency, 87 Wash. 413,424 (1915).

18. In another context, a Washington court held that " [a] contract may be a risk-shifting device, but to be a contract of insurance, which is a risk-distributing device, it must possess both features, and unless it does it is not a contract of insurance whatever be its name or form." In re Smiley's Estate, 35 Wn.2d 863, 867 (1950). A federal court also noted that insurance involves risk-shifting and risk-distributing. Amerco v. C.I.R., 979 F.2d 162, 165 (9th Cir. 1992).

19. A federal court noted that "the principal ingredients [of an insurance contract] are the consideration, the risk and the indemnity. The consideration is the premium for the insurer's undertaking; the risk may be said to be the perils or contingencies against which the assured is protected; and the indemnity is the stipulated desideratum to be paid to the assured in case he has suffered loss or damage through the perils and contingencies specified." Physicians Defense Co v. Cooper, 199 F. 576, 579 (9th Cir. 1912).

20. These cases provide background and context in determining what constitutes insurance. However, these cases do not provide additional requirements for the definition of insurance that are not specifically listed in RCW 48.01.040.

21. Additionally, in examining whether a contract is one of insurance, the Court has noted that " [ n ]o one can change the nature of insurance business by declaring in the contract that it is not insurance." McCarty v. King Cty. Med. Serv. Corp., 26 Wn.2d 660, 684 (1946). Specifically, the nature of the contract, and "the examination of its contents," aside from the terms used or omitted, determine whether a contract is one of insurance. Id.

22. Given the definitions above, ACLDN is promising to pay a specified amount upon a determinable contingency. The "specified amount" can be identified by using language such as "up to $25,000." This is sufficient to be considered "named or stated explicitly or in detail" under the definition of "specify" noted above. Both parties have discussed Love v. Money Tree, Inc., 279 Ga. 476, 614 S.E.2d 47 (2005), which illustrates that language such as "up to" can render an amount specific enough to qualify a membership as insurance. In that matter, an automobile club membership included language that indicated it would "pay 50% of moving traffic violations up to $ 200; $ 50 for emergency road service; $ 75 for an emergency ambulance service; $ 200 for an emergency travel service if a member's car became disabled more than 100 miles from her home; up to $ 100 in attorney fees to collect damages for personal injuries sustained in an auto accident or to defend a member in traffic court; and up to $ 750 in attorney fees if prosecuted for criminal manslaughter." Love, 279 Ga. 476,478,614 S.E.2d 47, 48-49. The court found that the auto club "undertakes to pay a

AMENDED FINAL ORDER ON SUMMARY JUDGMENT No. 20-0257, 20~0457 Page 9

specified amount of money to its members upon the occurrence of determinable contingencies" and also held that "by enlisting numerous members, the club distributes individual losses among a large group of purchasers." Id. Although not controlling, this analysis is persuasive. The memberships here offer the same type of benefit outlined in Love. The language "up to $25,000" is sufficient in detail to be a "specified amount" within the definition of insurance found in RCW 48.01.040.

ACLDN points out that they have removed the "up to $25,000" language from their website, and argue that they currently specify no amount. But offering to pay a "legal expense" or a "bail expense" is a specified amount as well, although not limited by a dollar amount. The ACLDN materials clarify that disbursements from the funds are always made to vendors, and not directly to members. Although the amounts disbursed vary, these amounts are to pay for specific expenses associated with a member's case. There may be no limit to the amount ACLDN is willing to expend on a particular case, but the amounts expended are tied to specific expenses. This is enough to qualify as a "specified amount" within the meaning ofRCW 48.01.040.

Conclusions 23-27 are amended to reflect consideration of the issues raised on reconsideration.

23. More complex is the issue of whether an act of self-defense can qualify as a "determinable contingency." Certainly, an act of self-defense is determinable; what is less clear is whether it is contingent. ACLDN argues that because self-defense is an intentional act, by definition, it cannot be contingent. OIC argues (and it was suggested in the Order on Motion for Stay) that part of the determinable contingency is the legal and/or bail expenses that arise therefrom, and that these are variables that may or may not occur and thus "contingencies."

Upon further analysis, the event that is covered is the act of self-defense. 1 But self-defense is really a hybrid of a contingent act and an intentional act. It is true that using force to defend yourself from another is an intentional act. However, acting in self-defense is contingent upon circumstances outside the control of the person so acting. An act of selfdefense "may but is not certain to occur." See definition of "contingency," supra. It is also "something liable to happen as an adjunct to or result of something else," the something else being the circumstances that arise that make it appear necessary to defend oneself. Id. So while the decision to use self-defense and act accordingly is intentional, the circumstances that precede such a decision are necessary and contingent, and thus even use of self-defense is a "determinable contingency."

24. This analysis comports with the application of the legal principles of self-defense, and even the principle that self-defense is available as a defense when it is later proven no attack was imminent. As ACLDN correctly pointed out in their motion for reconsideration, in the

1 OIC argued in its response that both bail and legal expenses are determinable contingencies. However, while these expenses may or may not occur, members may receive financial assistance prior to those events. As repairs under a home or auto insurance policy are not "covered events" but flow therefrom, so are bail and legal expenses that flow from an act of self-defense under this rrodel of coverage.


criminal context, the defense of self-defense does not require an attack by a third party. As the pattern jury instructions note,

A person is entitled to act on appearances in defending [himself] [herself] [another], if [he] [she] believes in good faith and on reasonable grounds that [he] [she] [another] is in actual danger of injury, although it afterwards might develop that the person was mistaken as to the extent of the danger. Actual danger is not necessary for the use of force to be lawful.

WPIC 17.04 Lawful Force-Actual Danger Not Necessary. Like many jury instructions, the comments to WPIC 17.04 note that this particular instruction arose out of the common law. The reasonable belief that an attack was imminent, based on the circumstances at hand, is still requked, even though it later is discovered no attack was about to take place. As noted:

If the appellants, at the time of the alleged assault upon them, as reasonably and ordinarily cautious and prudent men, honestly believed that they were in danger of great bodily harm, they would have the right to resort to self defense, and their conduct is to be judged by the condition appearing to them at the time, not by the condition as it might appear to the jury in the light of testimony before it. The appellants need not have been in actual danger of great bodily harm, but they were entitled to act on appearances; and if they believed in good faith and on reasonable grounds that they were in actual danger of great bodily harm, although it afterwards might develop that they were mistaken as to the extent of the danger, if they acted as reasonably and ordinarily cautious and prudent men would have done under the circumstances as they appeared to them, they were justified in defending themselves.

State v. Miller, 141 Wash. 104, 105-06 (1926) (emphasis added). So, while a mistake as to whether a third party attack was actually imminent does not prevent a person from arguing self-defense to a criminal charge, such a belief must still be reasonable and based upon circumstances outside the control of the actor. Proper application of the defense requires that there be circumstances beyond a person's control that either a) an attack is imminent, or b) a reasonable person presented with the same circumstances would believe an attack was imminent, regardless of whether it actually was. Thus, self-defense is still properly considered a contingency; it may or may not occur, and is liable to happen as an adjunct to something else.

25. Grange Ins. Co. v. Brosseau, 113 Wn.2d 91 (1989) discussed how an act of self-defense is intentional, but the circumstances of that consideration distinguish it somewhat from the issue here. In that matter, Brosseau shot and killed Lennis Anderson in what he claimed was self-def~nse after Anderson attacked him with a knife. In analyzing the insurance company's duty to defend Brosseau from a wrongful death lawsuit under both his auto insurance and


homeowner' s insurance policies, the court found there was none because of the intentional nature of the act of self-defense. Under both policies, coverage only extended to "an occurrence" where body injury resulted from "an accident;" thus neither policy covered injuries that resulted from Brosseau intentionally shooting Anderson, even in self-defense. Brosseau, 113 Wn.2d 91, 96-97. Unlike the memberships at issue here, the insurance policies weren't specifically designed to provide financial assistance after an incident of self-defense. The court's analysis centered on whether the intentional act of self-defense qualified as an "occurrence" under both the 1policies, when "occurrence" was defined as "an accident ... which results in bodily injury or property damage." Grange Ins. Co. v. Brosseau, 113 Wn.2d 91, 93. Notably, the Brosseau Court discussed that"members of the public may wish to insure themselves from the cost of defending liability actions where the facts ultimately exonerate them, and that it would not violate public policy to permit an insurance company to defend an action where the insured is excused on the basis of self-defense." Brosseau, 113 Wn.2d 91, 99. This premise is directly at odds with what ACLDN asserts: that acts of self-defense can never be covered by an insurance policy, regardless of that policy's intent.

Further, the Brosseau Court examined the meaning of terms within a policy, and whether an act of self-defense could be considered an "occurrence" within the meaning of the policy; there was no discussion, argument or decision as to whether an act of self-defense could be considered a determinable contingency within the meaning the definition of insurance under RCW 48.01 .040. Nor was there any consideration as to whether an act of self-defense was a contingent act. Thus, finding that an act is both intentional and contingent is not at odds with the holding in Brosseau.

26. The holding that an act of self-defense is both contingent and intentional is also not contrary to the holding in Clemmons v. Am. States Ins. Co., 412 So.2d 906 (Fla. Dist. Ct. App. 1982), also cited by ACLDN. Similar to Brosseau, the court in Clemmons analyzed whether a policy exclusion for intentionally caused injuries or death included a death caused by the necessary use of force in self-defense. 412 So. 2d 906, 907. Even though Leeper intentionally shot Clemmons, he testified that he did not intend to kill Clemmons, but just to keep Clemmons from shooting him; the court ultimately found that the policy exclusion for intentionally inflicted injuries applied, as by intentionally shooting Clemmons, Leeper intentionally injured him, and it did not matter that the ultimate injury exceeded the scope of the injury Leeper intended to inflict. Id. at 910. "[E]ach intentionally caused bodily injuries to another by intentionally shooting him, each acted within their insurance policy exclusion, notwithstanding that the ultimate purpose of each was to accomplish a distant objective or goal quite beyond and detached from the intended act of shooting and the immediate obvious result of thereby inflicting serious bodily harm." Clemmons, 412 So. 2d 906,910. The court did not discuss whether the act of intentionally inflicting harm on another was contingent.

27. To reiterate, while a third party attack is not necessary to successfully apply the principles of self-defense in a civil or criminal case, successful application does require, at the very least, circumstances that would lead a reasonable person to believe acting in self-defense was


necessary. Thus, self-defense is still contingent upon events out of the control of the person choosing to act in self-defense. Self-defense is both contingent and intentional.

28. Additionally, there is some transfer and distribution of risk present in the ACLDN memberships. The risk is that if a member acts in self-defense there may be legal and bail expenses associated with that act. Assuming ACLDN agrees the act was one of self-defense, financial assistance is provided. The risk of legal and other_ expenses is distributed among ACLDN members at least somewhat, as membership fees do account for 25% of the monies added to the fund from which ACLDN draws upon in order to provide assistance.

29. Finally, ACLDN 's disclaimer that membership "is not insurance," does not trump the nature of the relationship between ACLDN and its members. When viewed along with the totality of the contents of the website, the membership application and brochure, and the Explanation of Membership Benefits, this advisement does not alter the relationship that is created between insurer and insured. At the very least, ACLDN is promising financial assistance to members that it deems have engaged in legitimate acts ofselfi-defense. Specifically, ACLDN notes in its materials that any claim reviews that occur are not done for the purpose of denying assistance to members that have acted in self-defense, but rather to ensure that they do not provide financial assistance to any member that has committed a crime. This type of review is similar to the review any insurance company completes to ensure that a claim by an insured is covered by the policy.

Nor are the declarations of 13 members as to their subjective understanding of the relationship determinative as to whether ACLDN membership are insurance. Each declarant states that he or she was "fully aware ACLDN retain full discretion to provide a member access to and receive financial assistance" and that "[a]t no time did I think or believe that ACLDN was providing me ... insurance or contractual obligation to have access to the ACLDN fund." However, these statements do not inform whether the memberships sold by ACLDN fall within the statutory definition of insurance. The standard for application of the definition of insurance is objective: the determination is made by applying the facts of the transaction to the meaning of the words in the statutory definition. Entities cannot evade supervision from OIC by having consumers sign attestations that the consumers agree the product purchased is not insurance and that no contractual obligation to pay exists.

30. For the reasons outlined above, the memberships sold by ACLDN do qualify as insurance, as ACLDN promises to pay a specified amount upon a determinable contingency. As they qualify under this portion of the definition of insurance in RCW 48.01.040, there is no need to reach whether the memberships constitute indemnification.

ACLDN is not authorized to transact insurance in Washington

31. RCW 48.05.030(1) states in pertinent part that "[n]o person shall act as an insurer and no insurer shall transact insurance in this state other than as authorized by a certificate of authority issued to it by the commissioner and then in force ... "


32. RCW 48.15.020(1) provides that "[a]n insurer that is not authorized by the commissioner may not solicit insurance business in this state or transact insurance b:usiness in this state, except as provided in this chapter."

33. It is undisputed that ACLDN does not hold a certificate of authority to transact insurance in Washington, and ACLDN is not otherwise authorized to engage in the business of insurance. Thus, because ACLDN has transacted insurance, they have violated the above statutes.

Authority to issue cease and desist order

34. Under RCW 48.02.080(3), "[i]f the commissioner has cause to believe that any person is violating or is about to violate any provision of this code or any regulation or order of the commissioner, he or she may: (a) issue a cease and desist order ... "

35. Under RCW 48.15.023(5)(a), "[i]fthe commissioner has cause to believe that any person has violated the provisions ofRCW 48.15.020(1), the commissioner may: (i) [i]ssue and enforce a cease and desist order in accordance with the provisions ofRCW 48.02.080 ... "

36. As discussed above, ACLDN has transacted insurance without being authorized to do, in violation ofRCW 48.15.020 and RCW 48.05.030. Thus, under RCW 48.02.080 and RCW 48.15.023(5)(a) the Commissioner had the authority to issue Order to Cease and Desist No. 20-0257.

O/C Authority to Fine and Fine Amount (Amended)

37. Per RCW 48.15.023(5)(a)(ii), "[i]f the commissioner has cause to believe that any person has violated the provisions of RCW 48.15.020(1), the commissioner may: ... (ii) [a]ssess a civil penalty of not more than twenty-five thousand dollars for each violation, after providing notice and an opportunity for a hearing in accordance with chapters 34.05 and 48.04 RCW."

38. "Notice and opportunity for a hearing" does not require that an evidentiary hearing actually occur prior to assessment of the fine. Nor does it preclude resolution of the matter with a motion for summary judgment, prior to and absolving the need for said evidentiary hearing. OIC has satisfied this requirement by informing ACLDN of the right to a hearing, at a time prior to the fine becoming due. The issue of whether OIC has authority to fine ACLDN is resolved in OIC's favor upon determining that ACLDN indeed transacted insurance without authorization from the Insurance Commissioner, as required.

39. However, OIC issued the Order Imposing A Fine well after the initial Order to Cease and Desist was issued. As such, ACLDN was afforded additional time for discovery regarding the fine, in order to prepare any argument regarding the fine amount. While there is no question that legally, if ACLDN is transacting insurance without authorization from the Insurance Commissioner, the Insurance Commissioner has the authority to fine ACLDN, ACLDN was afforded the opportunity to make argument regarding the amount of the fine, after the conclusion of discovery on that issue. Discovery concluded September 9, 2020,


regarding Order Imposing A Fine, No. 20-0457. 2 This was after motions for summary judgment, responses, and replies were submitted. As such, the parties were afforded until October 9, 2020, to provide additional written argument solely on the amount of the fine.

40. Given the facts of this case, there is evidence of multiple violations committed by ACLDN, subjecting them to a possible fine of more than $25,000. Because ACLDN is not a licensed insurer, each membership sold in Washington constitutes a violation of RCW 48.15.020 as an insurance transaction, subject to the penalty of up to a $25,000 fine under RCW 48.15.023(5)(a)(ii).

41. The OIC's argument points out that since ACLDN's inception, they have avoided OIC regulation and thus have not paid premium tax, and because ACLDN has not kept records concerning the total amount of money collected for memberships, there is no way for OIC to calculate what premium tax is owed. In addition, ACLDN has not had to comply with the prohibition on unfair trade practices, has not complied with rate and fonn filing requirements, nor capital and surplus requirements. The OIC adds that under the current statutory scheme, given the more than 2000 separate instances of memberships ACLDN sold in Washington the OIC is authoru:ed to fme ACLDN over $63 million, and thus $200,000 is "abundantly reasonable."

42. Nevertheless, the evidence submitted by ACLDN is credible and demonstrates that they attempted to create a business model that was not insurance, and did not intentionally thwart OIC authority and jurisdiction by conducting business in the manner that they have. Further, ACLDN's behavior in responding to the OIC's investigation was consistent with their belief that they were not transacting insurance, and thus were not required to provide OIC with the documents requested. ACLDN's initial response to OIC's investigation and requests analyzed the legality of OIC's oversight and ACLDN's belief that they operated outside the bounds of OIC jurisdiction. OIC issued a subpoena duces tecum and ACLDN responded by producing the documents sought. In this case, this is not grounds for an increased fme amount.

43. Nor are there any consumer complaints against ACLDN in evidence. Considering they have been in operation since 2008, this is significant.

44. There is no evidence of ACLDN solicitation through social media, radio, or television, or evidence of other large scale marketing campaigns. There is no evidence ACLDN made misrepresentations, intentional or otherwise, that confused consumers about their products.

45. A fme of $50,000 is significant enough to recognize the seriousness of the offense, and the fact that multiple transactions of unauthorized insurance occurred in Washington.

2 OIC argued that the timing of ACLDN's discovery request should preclude raising any issue regarding summary judgment on the issue of a fine. However, as that request was submitted with sufficient time for OIC to respond by the discovery deadline, there is no basis to deprive ACLDN the opportunity to review that discovery and make any argument regarding the fine accordingly. AMENDED FINAL ORDER ON SUMMARY JUDGMENT No. 20-0257, 20-0457 Page 15

ORDER

Based on the foregoing Facts for Purposes of Summary Judgment and Conclusions of Law, the Office of the Insurance Commissioner is entitled to summary judgment.

ACLDN engaged in the unauthorized transaction of insurance in Washington in violation ofRCW 48.05.030 and RCW 48.15.020.

The Insurance Commissioner lawfully issued the Order to Cease and Desist No. 20-0257 pursuant to RCW 48.02.080 and RCW 48.15.023.

The Insurance Commissioner has authority to fine ACLDN under RCW 48.15.023. A fine of $50,000 is imposed and due 30 days from the date of this order.

All future proceedings are stricken

November 5, 2020

Julia Eisentrout Reviewing Officer

Pursuant to RCW 34.05.461(3), the parties are advised that they may seek reconsideration of this order by filing a request for reconsideration under RCW 34.05 .4 70 with the undersigned within 10 days of the date of service (date of mailing) of this order. Further, the parties are advised that, pursuant to RCW 34.05.514 and 34.05.542, this order may be appealed to Superior Court by, within 30 days after date of service (date of mailing) of this order, i) filing a petition in the Superior Court, at the petitioner's option, for (a) Thurston County or (b) the county of the petitioner's residence or principal place of business: and 2) delivery of a copy of the petition to the Office of the Insurance Commissioner: and 3) depositing copies of the petition upon all other parties of record and the Office of the Attorney General.


CERTIFICATE OF SERVICE

The undersigned certifies under the penalty of perjury under the laws of the state of

Washington that I am now and at all times herein mentioned, a citizen of the United States, a

resident of the state of Washington, over the age of eighteen years, not a party to or interested in

the above-entitled action, and competent to be a witness herein.

On the date given below I caused to be filed and served the foregoing Amended Final

Order on Summary Judgment on the following people at their addresses listed below by

electronic mail:

Spencer Freeman, Esq. Freeman Law Firm, Inc. [email protected]

Sofia Pasarow, Insurance Enforcement Specialist Legal Affairs Division Office of the Insurance Commissioner [email protected]

Dated this 5th day of November, 2020, in Tumwater, Washington.

Rebekah Carter Hearings Unit Paralegal


EXHIBITB

OIC Cease and Desist Order

'

STATE OF WASHINGTON . OFFICE OF THE INSURANCE COMMISSIONER

In the Matter of


Unauthorized Insurer.

Order No.

ORDER TO CEASE AND DESIST

Pursuant to RCW 48.02.080 and RCW 48.15.023, the Insurance Commissioner of the state

ofW ashington ("Insurance Commissioner") orders the above.named Respondent, and its officers,

directors, trustees, employees, agents, and affiliates to immediately cease and desist from:

A. Engaging in or transacting the unauthorized business of insurance in the state of Washington; and

B, Soliciting Washington residents to induce them to purchase any insurance contract or service contract.

BASIS:

1. Armed Citizens' Legal Defense Network, Inc. ("Armed Citizens" and the "the

Network") is a registered Washington Profit Corporation, located in Onalaska, Washington and

registered with the Washington Secretary of State on June 6, 2011.

2. Armed Citizens is not an authorized insurer in the state of Washington.

3. The Insurance Commissioner's Regulatory Investigations Unit ("Investigations")

began an investigation based on an internal review of Armed Citizens' website.

4. On April 15, 2019, the Insurance Commissioner's Regulatory Investigations Unit

("Investigations") sent a formal notice of investigation letter to Armed Citizens,

5. Initially, Armed Citizens was uncooperative and did not provide a complete

response to Investigations. As a result, the Insurance Commissioner issued a subpoena duces tecum

upon Armed Citizens on June 26, 2019.

6. On July 26, 2019, Armed Citizens delivered the requested records to the OIC.

7. Investigations conducted a review of Armed Citizens' website. According to the

website, the Network was ~stablished in 2008 to fulfill two (2) core missions:

ORDER TO CEASE AND DESIST ORDER NO. 20-0257

LA - 1601344 - 1

State of Washington Office oflnsurance Commissioner POBox40255 Olvmnia. WA 98504-0255

• To help members in the legal fight after they justifiably use force in self-defense by paying for the services of attorneys, expert witnesses, private investigators and other professionals essential to mounting a vigorous legal defense of self-defense; and

• . To educate members ( and to some extent, the gun-owning public) in the law gov.erning use of force in self-defense and how armed citizens can protect against unmeritorious prosecution.

8. Additionally, Armed Citizens provides members with access to affiliated attorneys,

experts specialized in defense of the legal use of force and educational materials related to the use

of self-defense.

9. Armed Citizens collects membership fees from members and 25% of those fees are

allocated to Armed Citizens' Legal Defense Fund.

10. Anned Citizens advertises that the network consists of 17,00o+ members.

11. Anned Citizens' website states: "Over our 11-year history, the Legal Defense Fund

has grown to two million dollars."

12. Investigations obtained Anned Citizens' Brochure, Membership Application, and

Explanation of Members~ip Benefits.

13. According to the documents, Anned Citizens pays members' attorney and legal

expenses after a self-defense incident, including:

• Fee deposit paid to the member;s attorney immediately after selfdefense for representation during questioning and other vital defense services upon a showing oflegitimateuse of force in self-defense.

• Armed Citizens will work with the member to arrange for bail, after the member has used force in legitimate self-defense.

• Further funding for legal defense expenses after justifiable selfdefense if criminally charged or sued in civil court.

14. Anned Citizens' Brochure and Membership Application states "when ·a member

uses force in self defense, the Network immediately sends up to $25,000 to the member's

attorney and can provide up to $25,000 in bail assistance."

15. The Brochure also states:

The Network advantage is particularly apparent'when we fund a trial team when the money's needed upfront to prepare and defend at trial. Our membership benefits give the Network a free hand to tailor post-incident legal assistance to meet the varying needs ~ach

ORDER TO CEASE AND DESIST ORDER NO, 20-0257

2 State of Washington Office oflnsuranoe Commissioner PO Box 40255

T A 1 £1"11 '1AA 1 (")1..--:n ,u A 004;(),1 IV'!<l;<I;

situation dictates and paying the expenses to assure a vigorous legal defense if the case goes to trial. This assistance pays attorney fees and if needed, the expertise of an additional attorney or attorneys to contribute much needed experience to the trial team, as well as pay for expert witnesses, private investigators and other expenses to defend the member's self-defense actions.

16. Since Anned Citizens began operating in 2008, 2,559 Washington consumers have

purchased memberships that include legal defense coverage.

17. Anned Citizens stated to Investigations that the Network was unable to provide the

aggregate dues paid by members and the total amount allocated to the Legal Defense Fund.

18. Anned Citizens stated the network has not kept records of cumulative payments

made by each member and recreating such records would be purely speculative.

19. Armed Citizens' brochure lists the following membership fees:

Single membership: $135 - 1 year; $295 - 3 year; $795-10 year Couple membership: $195 - 1 year; $474- 3 year; $1390-10 year

20. Anned Citizens provided a list of 25 incidents where members across the country

sought benefits. Armed Citizens made payments regarding 22 of the incidents.

21. Of the 25 incidents, two (2) occurred in Washington. For one of the incidents,

Armed Citizens paid a member $2,000. For the other incident, Armed Citizens did not pay the

member anything as the Network found the member's situation was not self-defense.

22. The Respondent's actions described herein violate Insurance Code provisions that

include RCW 48.05.030 [certificate of authority required) and RCW 48.15.020 [solicitation by

unauthorized insurer prohibited].

IT IS FURTHER ORDERED that nothing herein shall prevent the Respondent from

fulfilling the terms of contracts formed prior to the effective date of this Order pursuant to

RCW 48.15.020(2)(b ).

Any violation of the terms of this Order by the Respondent and its officers, directors,

trustees, employees, agents, and affiliates or the Respondent's failure to fulfill or perform its

contracts subject to this Order will render the violator(s) subject to the full penalties authorized by

RCW 48.02.080, 48.15.023, and other applicable sections of the Insurance Code of the state of

Washington.

ORDER 1D CEASE AND DESIST ORDER NO, 20-0257

T. A - 1 f;() 1 ~44 - 1

3 State of Washington Office oflnsurance Commissioner POBox40255 Olvmnhi. WA QR'i04-0?.'i'i

The Respondent has the right to demand a hearing in accordance with RCW 48.04.01 0,

WAC 284-02-070, and WAC 10-08-110.

This Order shall remain in effect subject to the further order of the Insurance

Commissioner.

THIS ORDER IS EFFECTIVE IMMEDIATELY AND IS ENTERED at Tumwater,

Washington, this °'"2, day of hi') ktL , 2020.

orrl-~ MIKE KREIDLER Insurance Commissioner

By and through his designee

so~w ="To~~~~ Insurance Enforcement Specialist Legal Affairs Division

ORDER TO CEASE AND DESIST ORDER NO. 20-0257

T A 1 r./\1-,AA 1

4 State of Washington Office oflnsurance Commissioner PO Box.40255 {')1.-...,Jn ,u A ()OCAA ()"ICC

CERTIFICATE OF MAILING

The undersigned certifies under the penalty of perjury under the laws of the state of

Washington that I am now and at all times herein mentioned, a citizen of the United States, a

resident of the state of Washington, over the age of eighteen years, not a party to or interested in

the above-entitled action, and competent to be a witness herein.

On the date given below I caused to be served the foregoing Order to Cease and Desist on

the following individual(s) by email and by depositing in the U.S. mail via state Consolidated Mail

Service with proper postage affixed to:

Catherine Woods Camel Badley Spellman 701 5 A venue, Suite 3600 Seattle, WA 98104-7010 [email protected]

Dated this_~_-_·_,+l--... ____ day of {Y)t\,f ~

JOSH PACE Legal Assistant Legal Affairs Division

ORDER TO CEASE AND DESIST ORDER NO, 20-0257

LA- 1601344 - 1

5

, 2020, in Tumwater, Washington.

State of Washington Office oflnsurance Commissioner POBox40255 Olympia, WA 98504-0255

EXHIBIT C

OIC Order Imposing Fine

F'RE~MAN LAW FIRM, INC

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· Date .s~,nn~d:•; <:O~:.;,Q~'.Jll ·· Date Routet;fr ,Y j(l,:,o5~,iQ· · Date C~lenda,re~x· ·,· ·:",~:.' ~

STATE OF WASHINGTON OFFICE OF THE INSURANCE COMMISSIONER

In the Matter of

ARMEJ) CITIZENS' LEGAL DltFENSE NETWORK, INC.,

Unauthorized Insurer/Respondent.

Order No. 20-0457

ORDER IMPOSING A FINE

' This Order Imposing a Fine ("Order") is entered into by the Insurance Commissioner of

the state of Washington ("Insurance Commissioner"), acting pursuant to the authority set forth in

RCW 48.02.060 and RCW 48.15.023. This Order is a public record and will be disseminated

pursuant to Title 48 RCW and the Insurance Commissioner's policies and procedures.

FACTUAL AND L:EGAL BASIS

1. Armed Citizens' Legal Defense Network, Inc. ("Anned Citizens" and "the

Network") is a registered Washington Profit Corporation, located in Onalaska, Washington and

registered with the Washington Secretary of State on June 6, 2011.

2. Armed Citizens is :µot an authorized insurer in the state of Washington.

3. The Insurance Commissioner began an investigation based on an internal review of

Armed Citizens' website.

4. On April 15, 2019, the Insurance Commissioner sent a fonnal nt>tice of

investigation Jetter to Armed Citizens.

5. Initially, Armed Citizens was uncooperative and did not provide a complete

response to the Insurance Commissioner. As a result, the Insurance Commissioner issued a

subpoena duces tecum upon Armed Citizens on June 26, 2019,

6. On July 26, 2019, Armed Citizens delivered the requested records to the Insurance

Commissioner.

7. According to Anned Citizens' website, the Network was established in 2008 to

fulfill two (2) core missions:

ORDERIMPOSING A FINE ORDER NO. 20-0457

LA -1601344 - 1

State of Washington Office of .Insurance Commissioner PO Box 40255 Olympia, WA 98504-0255

• T~ 'help members in the legal fight:4Tt~r1(ii~Y, j~jj4~lfl;)4s~:(~rqe in self-defense by paying for · the services of . attorneys, · expert witnesses, private investigators and other professionals essential to · mounting a vigorous legal defense of self-defense; and

• To educatemembers (and tQ some extent, th¢ gun .. owningpublk)l11 the law governing use of force . in sel£•defe.nse and how atn1ed citizens can protect against unmeritorious prosecution. · ·

8, Additionally, Anned Citizens provides members with access to affiliated attorneys,

experts specialized ln defense of the legal use of force, and educati<>nalmaterlals related to the use

of self.;defense.

9. Armed Citizens collects membership fe.es from members· and2S% o.fthose fees ate

allocated to Armed Citizens' Legal Defetrse Fund.

l O. Armed Citizens advertises that the network consists ofl7,000+ members.

11. Armed Citizens' website states: ucover our 11-year history, the Legat Deftmse Ftmd

has grown to two million dollars."

_ 12. Investigations obtained Armed Citizens' Brochure, Membership Application$ and

Explanation ofMembership Benefits.

13. According to the documents,. Anned Citizens pays members' attorney. and legal

expenses after a self..defense incident,. including:

• .Fee. deposit paid t9 the membe;ri s attorney immediately aft~r selfdefense forrepresentation during questioning and other vital defense services upon a showing of legitimate Use of force in self-defense.

• Armed Citizens will work with th.e memberto arrangefor bail, after the member bas uaed force in legitimate self.;defense.

• Furtherfo.ndlng for legal defense expenses after justifiable selfdefense ifcriminally qharged or sued in civil ~ourt.

< <

14. Anned Citizens' Brochure and Membership Application states "when. a member

u.ses force in self defense, the Network immediately sends up to $2S ,000 to the member's attorney

and can provide up to $25,000 in bail assistance." ·

15. The Brochure also states:

The Network advantage is particularly apparent when. we fund a trial team when the moneyts needed upfront to prepare and defend at trial. Our membership benefits give the Network a free hand to tailor post-incident

ORDER rMPOSINO A FINE ORDER NO. 20-0457

2 State of Washington Office oflnsurance . .Commissioner POBox40255 Olv:moia, WA 98504-025:i>

·· (:l~ai assistance to meet the varying needs each situation dictates and paying the expenses to assure a vigorous legal defense ifthe case goes to triaL This assistance pays attorney· fees and if needed, the expertisi' of M additional· attorney or attorneys to contribute much needed experi~nce to tlte trial team,

. as w¢ll as pay for expert witnesses, private. investigators and other expenses to defend the member's self-defense actions.

16. Since Armed Citi:Zens began operating in 2008, .2,559 Washington consumers have

purchased m.ember$hips that include legal defense coverage.

17. Armed Citizens stated that the Network was unable to provide.the aggregate dues .

paid by members and the total fimountallocated to the Legal D~ense Fund. Armed Citizens stated. · ·. . .

the network has not .kept re~rds of cumulative payments made by each member and recreating

such records would be purely speculative.

18. Armed Citizens' brochure lists the following membership fees:

Single membership: $135 - 1 year; $295 - 3 year; $795.,., 10 year Couple membership: $195-1 year; $474-3 year; $1390- l0year

19. Armed Citizens provided. a list. of 25 · incidents where members across the country

sought benefits. Armed Citizens made payments regarding. 22 ofthe incidents~

20. Of the 25 incidents, two (2) occurred in Washington. For one ofJhe incidents,;

Armed Citizens paid .a member $2,000. For the other incldent, Armed·Citizens did not pay·the

member anything as the Network found the member's situation.was not self .. defense.

21. On March 26, 2020, the Insurance Commissi:oner issued Proposed Consent Order

No. 20-0258 with a deadline to accept of April 27, 2020. The Proposed Consent Order had the

same factual and legal basis as set forth in this Order Imposing A Fine.

22. The cover letter sent with the Proposed Consent Order stated the following:

We are offering Armed Citizens an opportunity to settle this matter by signing the attach«t Consent Order and paying a fine. As part of this settlement, Armed Citizens will admit its violation, pay theimposed fine, and agree to fully comply with all applicable laws of Washington State going forward. The deadline to aooept the settlement offer and pay the fine is April 27, 2020 ... If the settlement offer is not accepted by that date, it will be withdrawn. Upon withdrawal of the settlement offer,. the• Jnsmanoe Commissioner may request a hearing to impose the fine. Alternatively, you may request a hearing yours..,lf... ·

ORDER IMPOSING A FlNE ORDER NO, 20-0457

LA .. MOl344- 1

3 State of Washington Office oflnsurance Commissioner POBox.40255 Olvmoia. WA 98504-0255

23. Anned Citizens has neither agreed to the Proposed Consent Order nor paid the fine

due by the April 27, 2020 deadline.

24. Anned Citizens was notified ofits 90-day right to demand ahearing of the Proposed

Consent Order. SeeRCW 48.04.010, WAC 284-02-070, and WAC l0-08-110. Thedeadline to

demand a hearing is June 24, 2020 .. ·.

25. To date, Armed· Citizens has not demanded a hearing of the Proposed Co:qsent

Order.

26. RCW 48.02.060(1) provides that the Insurance Commis~ioner has the authority

expressly conferred uppn him or reasonably implied from the provisfons of this. code.

27. .. RCW 48.05.030(1) states [n]o person shall act as an insurer and no insurer shall

transact insurance in this state other than as authorized by a certificate· of authority issued to it by

the Insurance Commissioner and then in force; except, as to sue~ transactions as · are expressly

otherwise provided for in this code.

28. RCW 48.01.040 defines insurance as a contract whereby one U11dertakes to

indemnify another or pay a specified amount upon determinable contingencies.

29. RCW 48.05.030(1) states no person shall act as an insurer and no insurer shall

transact insurance in this state other than as authorized by a certificate of authotltyi~sued to it by

the· Insurance Commissioner. and then in force; except, as to such transactions as are expressly

otherwise provided for in this.code;

30. RCW48J5.020(1) provides that an insurer that is not authorized: by the Insurance

Commissioner may not solicit insurance business intpis state or transact insurance business in this '

state, except as provided in this chapter.

31. ~CW 48JS.023(S)(a)(H) states that if the Insurance Commissioner has cause to

believe that any person has violated, the provisions of RCW 48.15.020(1), ·the Insurance

Commissioner may assess a civ.it·penalty of not more than twenty;,five thousand dollars foreach

violation, after providing notice and an opportunity for a hearing in accordance with. chapters 34.05

and 48.04 RCW.

32. . By engaging in the business of insurance without-a Certi.ficate of Authority, the

Insurance Commissioner has determined that Armed Citizens' Legal Defense Network, Inc.,

violated RCW 48~05.030(1) and RCW 48.15 .. 020(1 ), Justifying the imposition of a fine under RCW

48. 15 .023(5)(a)(ii).

ORDER lMPOS!NG A FINE ORDER NO. 20-0457

4 State of Washington Office. oflnsuranoe Commissioner POBox402SS ()lvmnil'I WA QR~04~0?i;li

IMPOSITION OF FINE

In accordance with RCW 48.02.060 and RCW 48.15.023, and based upon the above Legal

and Factual Basis, the Insurance Commissioner hereby imposes a fine of Two Hundred Thousand

Dollars ($200,000.00) against Anned Citizens for violating the Washington insurance laws

described above. Anned Citizens has a time-sensitive right to demand a hearing, which is set forth

below. If Anned Citizens does not timely demand a hearing, Armed Citizens must pay the entire

fine within thirty (30) days of the expiration of the time to demand a hearing. If Armed Citizens .

timely demands a hearing, and after hearing, the presiding officer aftlnns this Order in a final

order, then Armed Citizens must pay the entire fine within thirty (30) days of entry of the

aforementi9ned final order.

NOTICE OF OPPORTUNITY FOR HEARING

Respondent has the right to demand a hearing in accordance with RCW 48.04.010, WAC 284-02-

070, and WAC 10-08-110. This Order is also subject to the provisions of Chapter 34.05 RCW. A

respondent has 90 days from the date this Order is mailed to demand a hearing. If the

Insurance Commissioner does not receive a hearing demand from the Respondent within 90 days

from the date the respondent received this Order, the respondent's right to a hearing is conc~usively

deemed to have been waived.

ENTERED at Tumwater, Washington, this 9,.. 9 day of __ ....,_rl].....,· . .... w; ..... ··------' 2020.

6Yr.l.~ I MIKE KREIDLER Insurance Commissioner

Byand through his de~ignee

--r:~on,~i-. SOFIAPASOW Insurance Enforcement Specialist Legal Affairs Division

ORDER IMPOSING A FINE ORD.ER NO. 20~0457

LA· 1601344 -1

5 State of Washington Office of Insurance Commissioner POBox40255 Olympia, WA 98504-0255

~ERTIFICATJJ; OF MAILING

The u.!1dersigned certifies under the penalty of perjury under the laws of the state of

Washington that I am now and atalHimes herein mentioned; a citizen of the United States, :a

resident of the state· of Washington, over the age ofeighteen years, not a party to or interested in

the above~entitled action, and competent t<> be· a witness herein,

On the.date given below loaused to be served the foregoingOrde,r-ImposingAFitteon _. :

the following individual( s) by .email and by depositing in the U.S. mailvia state Consolidat~d

MaUService with proper postage affixedto;

Armed Citizens' t,egal Defense Netw0.rk, ln'c. Attn: Marty D. Hayes :POBox400 3 399 Centralia. Alpha Rdl Onalaska, WA 98570 mhayes@armedcitizensnetwork:org

Courtesy copy to: Spencer 0; Freeman Freeman Law Fitn11 Inc. 1107 1/2 Tacoma A venue South Tacoma1 WA 98402 [email protected]

Dated this.~day of_ .. _....(_,·y · __ ·}t .,,... ·• ..... ]=+ •. ______ ,....,,2020, in Tumwater, Washington,

JOS PACE Legal Assistant Legal Affairs Divi.sion

ORDER llvlPOSINO A FINE ORDER NO, 20-0457

LA ~ 160l 344 • 1

6 State of Washington Office of Insurance Commissioner PO Box 40255 Olympia, WA 98504-0255

State of Washington ..•.. Office of the Insurance Commis,siQoei' Heatings Unit ·

1NJu11;iti 6~~ t!5~504.02st' Demand for Hearing Wl.~l,!O!!~ 5000 Cap~ l'loulev!lfll ·•·. ·

TumwateriWA·$85!)f · (36Q) n~Ql}2 • . !='AX (360) e&<1-21e2 [email protected]

Please type or print in Ink. Attach a copy of the Order or correspondence In dispute and all documen.ts supporting your demand. This Demand for Heating can be mailed, faxed, hand-<:lellvered or emailed to the Hearings Unit at the .address above.

· For OIC Demands, please provide contact information for all other interested parties and their representatives.

■ Requesting Party (required lnfonnatlon) ·

Name/Business Name OIC Ca$e/Order No. Office of the Insurance C9mmlssloner 20-0457 Street Address Cityj State, Zip

·5000 Capitol Bldv SE Tumwater, WA 98501 Telephone Number Fax Number

Contact Person Telephone Number Emall Address ·• Sofia Pasarow 360-725-7181 360-725-7181

,: • ·Authorized F(~pr&$entative/Attorney for Requesting Party Last Name First M.L Pasarow Sofia Bustness Name Office of the Insurance Commissioner Street Address j City, State, Zip 5000 Capitol Bldv SE Tumwater, WA 98501 Telephone Number Fax Number I Emal! Address 360-725-7181 360-725-7181

Subject Matter of Demand for Hearing I

0 Revocation or Denial of License D Revooatlon or Denial Certificate of Authority or Registration D Cease and Desist Order 0 Imposition of Fine/Consent Order □Other _____________________ _

D Additional Parties/Representatives (for more parties and/or representatives, please attach additl~nal pages)

Last Name First M.I. Haves Martv D.

Business Name Armed Citizens' Leaal Defense Network, Inc.

Street Address I City, $tale, Zip 3399 Centralia Aloha Rd. PO Box 400 · Onalaska, WA 98570

Telephone Number Fax Number I Email Address 360.978.5200 mhaves®armedcitizensnetwork.oro

, ; Issues and Arguments a. Issues - Briefly describe each issue or area of dispute that you wish us to consider. Att~ch additional pages if necessary.

On March 26, 2020, the Insurance Commissioner issued a Consent Order Levying A Fine, Order No. 20-0258, as well as an Order to Cease & Desist No. 20-0257. Armed Citizens' Legal Defense Network, Inc. ("Armed Citizens") was advised that the Consent Order is a settlement offer and, if Armed Citizens wished to accept the offer of settlement, It should sign the Order and pay the fine by April 27; 2020. · By the deadline, Armed Citizens has neither agreed to the Proposed Consent Order nor paid the fine. Based on the violations in the attached Order Imposing a Fine, Order No. 20-0457, the Insurance Commissioner, through Sofia Pasarow, Insurance Enforcement Specialist, is requesting a hearing to impose a fine.

REV(6/18)

b, Arguments - Explain why each Issue or area of dispute listed above should be decided In your favor. Attach additlonal pages If necessary. To the extent known, olte applicable rules, statutes, or oases in suppcrrt of your arguments. Enclose copies of documents concemlng your arguments including documents the Department previously requested from you that you have not yet provided,

Armed Citizens has engaged in the business of Insurance without a Certificate of Authority and thereby violated RCW 48.05.030(1) and RCW 48.15.020(1). The Insurance Commissioner's fine for such violations lsjustified underRCW 48.15.023(5)(a)(ii).

For further details, please see attached Order Imposing a Fine.

Please note: ADDITIONAL REPRESENTATIVE TO ARMED CITIZENS: Spencer Freeman , · Attorney at Law Freeman Law Firm 1 107 1l2 Tacoma Avenue South Tacoma, Washington 98402 [email protected]

II Signature

Either the Requesting Party or the Attomey/Representative can sign this Demand for Hearing. However, if the Representative ls submitting the Demand, contact information for ttle Requesting Party ·.l!l.!Jit be provided under Section 1 above and the Attomey/Representative's contact information must be provided In Section 2. · ·

Signature · . , Date

Sofia Pasarow Insurance Enforcement Specialist Name (please print or type) Title

Signature Date Sofia Pasarow Insurance Enforcement Specialist Name (please print or type) Title

REV(MS)

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The Honorable Judge James W. Lawler Hearing Date: December 4, 2020, 9:30 a.m.


In the Matter of Cause No. 20-2-00723-21

1 o ARMED CITIZENS' LEGAL DEFENSE NETWORK, INC., ARMED CITIZENS' LEGAL DEFENSE

NETWORK, INC.'S MOTION FOR STAY OF ENFORCEMENT OF IMPOSED FINE

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Petitioner.

Note for Hearing: December 4, 2020, 9:30 a.m.

COMES NOW Armed Citizens' Legal Defense Network, Inc. (hereinafter "ACLDN"),

by and through its undersigned counsel, and files this Motion for Stay of Enforcement of

Imposed Fine.

I. INTRODUCTION AND RELEVANT FACTS

This current matter was filed by Armed Citizens' Legal Defense Network, Inc.

("ACLDN") after an Office of Insurance Commissioner ("OIC") action, specifically and Cease

and Desist Order and Order Imposing Fine upheld by an OIC Presiding Officer. ACLDN now

seeks a stay of the Order Imposing fine. ACLDN is not seeking a stay of the Cease and Desist

Order.

ACLDN was established in 2008 to provide education in the lawful use of force (self

defense) and assist in the legal fight against prosecution ( criminal or civil) after justifiable use

MOTION FOR STAY OF ENFORCEMENT OF IMPOSED FINE - 1

FREEMAN LAW FIRM, INC, 1107 ½ Tacoma Avenue South

Tacoma, WA 98042

(253) 383-4500 - (253) 383-4501 (fax)

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of force in self-defense. By way of short explanation, ACLDN sells memberships to its

network. Membership provides (1) access to extensive education regarding lawful use of force;

(2) access to experts in the field of use of force and attorneys experienced in that area of law;

and (3) potential access to a relief fund ("Fund") where ACLDN may grant a member financial

assistance in legal fees and costs associated with an act of self~defense. Declaration of Spencer

Freeman ISO Motion to Stay Enforcement of Fine ("Deel. S. Freeman 11), p 2, ,r,r 6~ 7.

The Fund is made up of: (1) money set aside from each membership, currently 25% but

done at the discretion of ACLDN; (2) corporate donations; (3) bequests; (4) individual

donations; and (5) ACLDN donations beyond membership dues allocation. There is no promise

for access to the Fund. Decision to grant Fund money to a member is based solely upon the

discretion of ACLDN. Deel. S. Freeman, p 2, ,r 8.

On or about March 26, 2020, Washington State Office of Insurance Commissioner

("OIC") issued a Cease and Desist Order, requiring ACLCN to stop selling memberships in the

State of Washington. ACLDN served OIC with a Demand for Hearing on March 31, 2020.

17 ' Thereafter, administrative proceedings began in front of OIC Presiding Officer Julia Eisentrout.

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Deel. S. Freeman, p 2, ,r 2.

On or about May 29, 2020, OIC served ACLDN with an Order Imposing Fine, in the

amount of $200,000, and filed its own demand for hearing regarding the fine. OIC Presiding

Officer consolidated the hearing regarding the Fine with the Cease and Desist Order. Deel. S.

Freeman, p 2, ,r 3.

On or about August 12, 2020, ACLDN and OIC each filed respective motions for

summary judgment on the issue of whether sales of ALCDN memberships constitute insurance

transactions under state insurance statutes. On or about November 5, 2020, OIC Presiding



Tacoma, WA 98042

(253) 383-4500 - (253) 383-450 I (fax)

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Officer issued a Second Amended Final Order on Summary Judgment, wherein she determined

ACLDN memberships to constitute insurance and issued a fine of $50,000. The fine was not

specific to any restitution or alleged damages. It was punitive. Deel. S. Freeman, p 2, ,i,i 4-5.

The current action seeks judicial review of the OIC Presiding Officer's Second

Amended Final Order on Summary Judgment, contesting that the sale of memberships

constitute insurance. This Motion seeks a stay of the imposition of the fine.

II. ARGUMENT

State of Washington Administrative Procedures Act, Chapter 34.05 RCW, expressly

contemplates the stay of an agency order pending judicial review. Specifically:

(1) Unless precluded by law, the agency may grant a stay, in whole or in part, o'r other temporary remedy.

(2) After a petition for judicial review has been filed, a party may file a motion in the reviewing court seeking a stay or other temporary remedy.

(3) If judicial relief is sought for a stay or other temporary remedy from agency action based on public health, safety, or welfare grounds the court shall not grant such relief unless the court finds that: (a) The applicant is likely to prevail when the court finally disposes of the matter; (b) Without relief the applicant will suffer irreparable injury; ( c) The grant of relief to the applicant will not substantially harm other parties to the proceedings; and (d) The threat to the public health, safety, or welfare is not sufficiently serious to justify the agency action in the circumstances.

( 4) If the court determines that relief should be granted from the agency's action granting a stay or other temporary remedies, the court may remand the matter or may enter an order denying a stay or granting a stay on appropriate terms.

RCW 34.05.550.

Outside of an agency action based upon public health, safety, or welfare grounds the

statute does not expressly state mandatory factors or elements to qualify for a stay. In those

three limited instances, the petitioner must show (1) likelihood to prevail; (2) irreparable injury;

and (3) the granting of stay will not harm others. These standards do not apply here. MOTION FOR STAY OF ENFORCEMENT OF FREEMAN LAW FIRM, INC. IMPOSED FINE - 3 1107 ½ Tacoma Avenue South

Tacoma, WA 98042

(253) 383-4500 - (253) 383-4501 (fax)

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Here, the agency action for which a stay is requested is the imposition of a fine. The

imposition of a fine is not based upon public health, safety, or welfare grounds. Rather, it is

punitive. As such, ALCDN does not have to establish the three elements in order to obtain a

stay of imposition of fine.

The imposition of a fine against ALCDN is purely punitive. ACLDN has complied with

the Cease and Desist Order since March 26, 2020 and will continue to comply with the Cease

and Desist Order pending judicial review. However, there is simply no reason to enforce the

imposition of the fine pending judicial review. It does not further protections for the citizens of

the State of Washington in any manner.

ACLDN has filed a Petition for Judicial Review, and hereby simply requests that the

imposition of the fine be stayed pending judicial review. There is very little guidance from

Washington appellate courts regarding standards for stays pursuant to RCW 34.05.550(2).

Actually, none. What is clear is that the superior court has discretion to issue the stay.

Generally speaking, the original purpose of a stay pending an appeal is "maintaining the status

quo and preserving the fruits of the appeal should it prove successful." In re Koome, 82 Wn.2d

816,818,514 P.2d 520 (1973).

ACLDN here requests the court to maintain the status quo pending judicial review.

ACLDN will continue to honor the Cease and Desist Order.

III. CONCLUSION

RCW 34.05.550(2) grants this Court full discretion to issue a stay on the imposition of

the $50,000 fine imposed by OIC Presiding Officer's Second Amended Final Order on

Summary Judgment. To preserve status quo, and hold off on punitive sanctions, ACLDN

respectfully requests an Order Staying Imposition of Fine.



Tacoma, WA 98042

(253) 383-4500 - (253) 383-450 I (fax)

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Dated this 23rd day of Novernt,er 20.20,

FREEMAN LAW.FIRM; .INC:.

·~


FlleBMAN LAWflRM, l!NC .. Attorneyfor·ACLbN

FRIEMANLAWFJRM,JNC, UQ7 ¼ ri!~!lill Av\1ttg¢ Sl,µJ!i

T~l:9ina, WA 9804i o,l1 3S34S(I() 1 (2Sll :1s34so1 (t:ax)

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The Honorable Judge-James W. Lawler Hearing Date: December 4, 2020, 9:30 a.m.


In the Matter of


Appellant.

I, Spencer Freeman, declare:

Cause No. 20-2-00723-21

DECLARATION OF SPENCER FREEMAN IN SUPPORT OF ARMED CITIZENS' LEGAL DEFENSE NETWORK, INC.'S MOTION FOR STAY OF ENFORCEMENT OF IMPOSED FINE

Note for Hearing: December 4, 2020, 9:30 a.m.

1. I am an attorney at law licensed to practice before the Courts of the State of

Washington, the United States District Court Western District of Washington, Eastern District

of Washington, Ninth Circuit Court of Appeals, and United States Supreme Court. I am the

principal attorney with the Freeman Law Firm, Inc., attorneys for Armed Citizens' Legal

Defense Network. Unless otherwise stated, I have personal knowledge of the facts contained

DECLARATION OF SPENCER FREEMAN ISO ACLDN MOTION FOR STAY OF ENFORCEMENT OF IMPOSED FINE - 1

FREEMAN LAW FIRM, INC. 1107 ½ Tacoma A venue South

Tacoma, WA 98402

(253) 383-4500 - (253) 383-4501 (fax)

1 herein this declaration and, if called and sworn as a witness, could and would competently

2 testify thereto.

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2. On or about March 26, 2020, OIC issued a Cease and Desist Order, requiring

ACLCN to stop selling memberships in the State of Washington. ACLDN served OIC with a

Demand for Hearing on March 31, 2020. Thereafter, administrative proceedings began in front

of OIC Presiding Officer Julia Eisentrout.

3. On or about May 29, 2020, OIC served ACLDN with an Order Imposing Fine, in

the amount of $200,000, and filed its own demand for hearing regarding the fine. OIC Presiding

Officer consolidated the hearing regarding the Fine with the Cease and Desist Order.

4. On or about August 12, 2020, ACLDN and OIC each filed respective motions for

summary judgment on the issue of whether sales of ALCDN memberships constitute insurance

transactions under state insurance statutes.

5. On or about November 5, 2020, OIC Presiding Officer issued a Second Amended

Final Order on Summary Judgment, wherein she determined ACLDN memberships to constitute

insurance and issued a fine of $50,000. The fine was not specific to any restitution or alleged

damages.

6. During the administrative proceedings, it was presented that ACLDN was

established in 2008 to provide education in the lawful use of force (self-defense) and assist in the

legal fight against prosecution (criminal or civil) after justifiable use of force in self-defense.

7. During the administrative proceedings, it was presented that ACLDN sells

22 memberships to its network. Membership provides (1) access to extensive education regarding

23 lawful use of force; (2) access to experts in the field of use of force and attorneys experienced in

24 that area oflaw; and (3) potential access to a relief fund ("Fund") where ACLDN may grant a

25 member financial assistance in legal fees and costs associated with an act of self-defense.

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DECLARATION OF SPENCER FREEMAN ISO ACLDN MOTION FOR STAY OF ENFORCEMENT OF IMPOSED FINE -2

FREEMAN LAW FIRM, INC. 1107 ½ Tacoma Avenue South

Tacoma, WA 98402

(253) 383-4500 • (253) 383-4501 (fax)

1 8. During the administraJive proceedings,Jt wa* prtes~nted tha:t the Fund ls made up•

· 9f: (!J money set asid.e frotrt eaoh membership. ~µrrently 2S% l,µt dont attbe disctftiotl of

'l . l.CLDN; (2) corporate donations; (3) bequests;- (4) individual donations; and (S) ACLDN

4 donations• beyond membership due's. alloeiation, There ls ·no promise fo:r aceess tcrthe Fund.

5 De~islon .to grant Fund money to :ainember is ba~ed solely upon the discretinn <>fAOLPN .. 6

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I decJate undet'the. penalty otperjury under the laws of the :state of.Washit1gton that the

foregoing fa true and correct.

DECLARATION OF SPBNCERF.REBMANl80 ACLI>N MOTION FOR STAY OF SNFORC:SMBNT OF IMPOSED .FINE .3

Flti'EMAN tAW'lint,JN(\ HO'l ½ Tilc<itna .Av®\i• Sooth

Tacoma;WA9&402 (ZS3) Jfl'34$® • (2S3) 3!1l4S.OJ (Cax)

IN THE SUPERJOR O,Qf.JRT 0~ THE STATE: OF WAS'H.iN$TON ,,IN AND FOR LJ;WIS C(lUNTY

In the Matter of

Armed Citt.tens' Lega1·oefense Netwqtk

Petitioner,

) ) ) ) ) ) ) )

DO<:Ker·NOTICE NTMTOK

TO: THE CLERK OF THE A80VE~ENTITLEO COURT (Mailing Address: MS: Otk(f1, 846 W. Maln StrE3et, Chthalis,Washlngton $8532 .. 1900)

ANO TO: OFFICE OF THE INSURANCE COMMISSIONER

DATE AND TIME OF HEARING: . . . ..

Pl.ACE OF HEARING:

DESCRIPTION OF CAS.E:

NATURE OFACTION OR MOilON:

lf A$signmentfor trial

IS THIS CASE AT ISSUE?

Friday, December 412020 at 9:30 AM,

LEWIS,CQI.INTY SUPeRtbR.00.U,IJT LAW &·JUSTICi;• Cf:NtiR. 4th FLO.OR 345 W. MAIN $T~E~T . . . OHeHALISj WASHINGTON 98532-1900

Petition for J.udlcial Review

Motion to Stay Enforcement of Fine

__ Non Jury •~ Jury

ESTtMATED DURATION OF TRIAL ___ DAYS

Dated this 24ih day of Novernbsr 202.0;

FREEMAN LAW FIRM,INC ..

~~- ... WSBA NQ. 25.0o9 FREEMAN LAW FIRM) INC.

IN THE SUPilUQJ(;9tJRT OF TllE S'fATt:QF WASSINGTQN IN,,4ND;FORTHE COUNTY OFL:EWISc

8 111 the Matter of

.9 ARMED CJT,lZENS' LEGALDE:FENSE .10 NETWORK, INC.,

Cause No, 20-2-:00723-21

DECLAI.ATION OF ELECTRONIC

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Petitioner. SIGNATURE. .· .

I, Spencer Fre~man, certify $der',penalty ofperjufy Urtderthelawsofthe State of

Washington declare as folfows:

My signature! whether diJital or encrypted~ are intended to authenticateJhis writing and

have the same force and effectas marrual signature$ on all fifed doouxnents in the above-

ref~r~nced matter.

Executed on the 24th da;y of November lOlO at Tac<>ma, Washington.

DECLARATION OF EL8CTROMC SlGNAtURE "' I FnEEMANLAWFIRM,.JNC, . 1107 ½ >r~mii Avenm, South.

'f'ilcomt WA 9&042 (253) 383"4SOO • (253) 383-450 I (fax)

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8 In the Matter of

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Cause No. 20-2-00723-21

[PROPOSED] ORDER GRANTING ARMED CITIZENS' LEGAL DEFENSE NETWORK, INC.'S MOTION FOR STAY OF ENFORCEMENT OF IMPOSED FINE

Petitioner.

THIS MATTER having come in regularly for hearing before the undersigned Judge of I

the above-entitled Court on Petitioner's Motion For Stay of Enforcement of Fine, and the Court

having considered the following:

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Petitioner's Motion for Stay of Enforcement of Fine;

Declaration of Spencer D. Freeman;

_____ ;and

and the Court having considered the records and files herein and being fully advised in

the premises; Therefore,

IT IS HEREBY ORDERED, ADJUGED and DECREED that:

1. Petitioner's Motion for Stay of Enforcement of Fine is GRANTED.

ORDER GRANTING ACLDN'S MOTION FOR STAY OF ENFORCMENT OF FINE - 1

FREEMAN LAW FIRM, INC. 1107 ½ Tacoma Avenue South

Tacoma, WA 98042

(253) 383-4500 - (253) 383-4501 (fax)

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2, OIC shall not e::nfot¢e,finfimposed Qrt Armed Citizen's Legal pefen~eNetwotk

during, and until fin~l J.udgn:ientl1as 'beeA rendered in, A..rmed. Citizen's Leg~tDefens

Network's PetitioQ. fQrJudj~iatReview ..

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8 THE HONORABLE JAMES W, LAWLER

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11 Presented by:

12 The Freeman Law Finn, Inc.

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. reeman WSBA25069 Attorneys for Petitioner

16 Approved as to fonn:

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19 Attorneys for

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ORPER GRANTING ACLDN'S MQTlONFORS!AY OitEN.FORCMENT OF FINE • 2

FR~EMA;N LAW FIRM,INC. 1107 ½ 1'11<:oma Av~ue&lµth

'Dacoma, WA 9!!04J (25~) 3~3-451)9 • (2531 :¼83,.,!S{);I (fax)

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IN THE SUPEIUOR COUR.TOB THE STATE OF WASHINGTON· fNANU FORTB.E COUNTY OF LEWI~·

8 In the Matter of

9 ARMED CITIZENS' ~EGAL DEFENSE lO NETWORK, INC.,

Cause No, 20-2-00723-21

:DECLARATION OF S.ERVlCE

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Petitioner,

:I, Spencer Freeman, certify under J)(}tudty of perjury un4er the laws of the State of

1.4 Washington that I caused the following.documents to be tiled. and serv.ed; 15

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1. Amended Petition for Judicial Revie\v: • ..

i. Notefor Motion .·oocket;

3 ... Motion to Stay Enforcement,ofFine;

4, Declaration of Spencer Freeman; and,

5. Proposed Order.

1:>y fiHni~ a copy of the same via A8C Legal .Messenger to the Ch~rlc of the Coµrt;

and,'by serving a copy ofthesameviaABCLegal Messengerto theOflic·eofthelnsurance 22 . ..

Commissioner and Attorney General's Office; 23

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Executed, on the 24th day ofNovember 2Q20 lit Tacorna, Washington.

l.:>ECLARA TlON OF .SERVICE .. l

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F.R.EE;MAN l,AW F.lRM,.lNC:. iJO? ½ T11J;Oma.AvtnucSoQth

Tae<m~a, WA ~$04Z (2S3J J~~-4500 • (~53) 3$3-4SQI (fax)

Documents

Summons and Petition for Judicial Review (Nos. 20-0257, 20