In Texas Commerce Bank v. Garamendi (1994) 28 Cal.App.4th 1234, the court considered whether the Commissioner, in his capacity as conservator of an insurance company, should be responsible for the attorney fees of banks that had brought a successful declaratory relief action challenging the Commissioner's failure to designate their priority status as policyholders. The Commissioner had argued he was acting as a public official when he made the designation, and hence was not subject to the attorney fees provision in the contract between the insurer and the banks. (Id. at p. 1240.) The court disagreed, concluding that the Commissioner was standing in the shoes of the insolvent insurer, rather than acting in his capacity as a public official, when he made the priority designation. (Id. at pp. 1245-1246.) The court relied in part on Prudential Reinsurance Co. v. Superior Court (1992) 3 Cal.4th 1118, which stated, in the context of setoffs between an insolvent insurer and its creditors: "It is well settled that once insolvency has occurred and a liquidator has been appointed to assume all the rights of the insolvent insurer, he does so subject to all legal defenses and setoffs to which the insolvent was subject at the time of insolvency and liquidation orders. (Ins. Code, 1031.) In other words, the liquidator steps into the shoes of the insolvent insurer, taking the relevant claims and defenses as he finds them." Pursuant to his duties as the conservator of an insolvent insurer, the commissioner set a creditor priority status, which the appellant banks contested in a declaratory relief action. After the appellant banks prevailed, the court concluded that the commissioner was obligated to pay attorney fees pursuant to the attorney fee provision in the contracts between the insurer and the appellant banks. It held that, as the conservator of an insolvent insurer, the commissioner stood in the shoes of the insolvent insurer and was therefore bound by the attorney fee provision in contracts the insurer entered with the appellant banks. ( Texas Commerce Bank v. Garamendi, supra, 28 Cal.App.4th at pp. 1245-1248.) The commissioner had argued that in setting creditor priority status, he acted as a public official, not as a private party, and did not stand in the shoes of the insolvent insurer in the declaratory relief action. ( Id. at p. 1240.) While acknowledging that the commissioner acts as a public officer on behalf of the state and as a trustee for the benefit of the creditors of the insolvent insurer, Texas Commerce Bank held that upon his appointment, the liquidator also assumes the rights of the insolvent insurer subject to all the legal defenses and rights to which the insurer was subject at the time of the insolvency and liquidation orders, and thereby steps into the shoes of the insolvent insurer. ( Id. at p. 1245.) The court determined that the commissioner had neither identified the state's interest in making the priority designation, nor explained how denying the appellant banks priority designation furthered the state's interest. In addition, it found that the commissioner took an untenable position by erroneously interpreting the contract, thereby compelling the appellant banks to sue. ( Id. at pp. 1245-1246.) Based on these facts and equitable considerations, the court held that the commissioner, as conservator, stood in the shoes of the insolvent insurer when he erroneously determined the appellant banks' priority status and defended that position in the declaratory relief action. Thus, he was bound by the contractual attorney fee provision. ( Id. at pp. 1246-1247.)