D.A. Sues Auto Insurance Company : Courts: Bar sought on new policies from Peoples Assurance, which allegedly failed to pay 2,000 claims.

The Orange County district attorney’s office has sued an insurance company that allegedly failed to pay claims for as many as 2,000 automobile insurance policies that it wrote in the past 13 months.

The lawsuit, filed in Orange County Superior Court on Wednesday, seeks to ban Peoples Assurance Cooperative Inc. in Fullerton from selling or marketing additional insurance policies. It also seeks to stop the company from moving any money from bank accounts except to pay claims.

The suit names Wilbur Piercy, top executive of the firm, and officers Todd Johnson and Frank Hodge. Also named are Transport Risk Ltd., a firm licensed to sell insurance in the British West Indies, according to the district attorney’s office; CDS Enterprises, which allegedly brokered the insurance; Charles David Snyder, owner of CDS Enterprises, and Kelly R. Kohoutek, who allegedly marketed the insurance.

The companies and individuals did not return calls for comment Wednesday.

Deputy Dist. Atty. Jane Shade said the lawsuit was filed because the company continued to sell insurance policies even after the Department of Insurance ordered it in May to stop.

Shade said as many as 1,000 Orange County residents have bought $750 policies from the company since October, 1991. She would not say whether a criminal investigation is under way.

Peoples Assurance is not licensed to sell insurance in California. The company told the Department of Insurance earlier that it isn’t an insurance company and therefore isn’t subject to regulations that require it to have sufficient capital to pay claims, Shade said.

“If it walks like insurance and talks like insurance, it’s insurance,” she said. “It doesn’t matter what you call it.”

Shade said Peoples Assurance has assets of only about $52,000. The lawsuit alleges that the company hasn’t paid claims; it doesn’t specify the amounts involved.

The lawsuit alleges that Peoples Assurance sold insurance across Southern California. Most of the victims, Shade said, were probably in Orange County. Under civil law, the suit could result in fines of $2,500 for each claim.

Shade said Judge Ronald Bauer will hold a hearing at 1:30 p.m. today on whether to grant a temporary restraining order against the company.