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federal courts; and (2) the regulation of insurance matters should be left to the
states.
Superintendent of Insurance v. Bankers Life & Casualty Ins. Co., 401 F. Supp.
640 (S.D. N.Y.) aff'd. mem. 526 F.2d 856 (2nd Cir. 1975). The court held that the
state court alone had jurisdiction to adjudicate the validity of the insurance
commissioner's settlement of a federal securities claim the commissioner
brought against the insolvent insurer.
Tolfree v. New York Title and Mortgage Co., 72 F.2d 702 (2nd Cir. 1934). cert.
denied, 293 U.S. 619 (1934). When the superintendent of insurance took over
the assets of an insolvent title company, the bonds and mortgages guaranteed
by the insurer and the principal secured by them, the federal courts should not
interfere with the state's possession. Thus, the district court cannot appoint
trustees for such bonds and mortgages and cannot prevent the insurance
commissioner from interfering with their possession. The court applied this
rule of jurisdiction to the rehabilitation process as it found no difference
between the general character of rehabilitation as opposed to liquidation.
Third Circuit General Glass Industries Corp. v. Monsour Medical Foundation, 973 F.2d 197
(3rd Cir 1992). Plaintiff, on behalf of its 300 workers, brought RICO, ERISA and
Commonwealth tort claims against the Company's employee health insurer in
liquidation (Keystone Medical Services and its successor, Monsour Medical
Foundation). The Third Circuit vacated so much of the District Court's order
dismissing plaintiff's claims that were broader than, or different from, those
asserted by the Pennsylvania Commissioner of Insurance in the
Commonwealth court action and declared that the Federal action be stayed
during the pendency of the liquidation proceedings. The retention of
jurisdiction by the District Court was hoped to avoid any applicable statute of
limitations defense.
O'Neil v. Welch, 245 F. 261 (3rd Cir. 1917). The Pennsylvania state court first
acquired jurisdiction over the corporation and its property for the full purpose
of the judicial proceeding, which includes possession, liquidation, and
distribution, and the state is entitled to retain that jurisdiction until completion.
Riley v. Simmons, 45 F.3d 764 (3rd Cir.), reh'ing denied, 1995 U.S. App. LEXIS
5492 (3d Cir. 1995). Where plaintiffs sought relief under federal securities law
alleging misrepresentations which induced them to purchase annuities issued
by an insolvent insurer (Mutual Benefit Life Insurance Company), the Third
Circuit Court of Appeals held that abstention under Burford was not
appropriate. Reversing the lower court, cited at 839 F. Supp. 1113 (D.N.J. 1993),
and reasoning that the Securities Exchange Act, the basis of plaintiffs' claims,
gives Federal District Courts exclusive jurisdiction over claims arising thereunder,
the Court found that the plaintiffs would not otherwise have timely and
adequate state court review of their claims.
University of Maryland v. Peat Marwick & Co., 923 F.2d 265 (3rd Cir. 1991). The
Third Circuit vacated an Order dismissing the policy holders' Amended
Complaint and remanded to the Pennsylvania District Court an action brought
against the independent auditor (Peat Marwick) of insolvent Mutual Fire,
Marine and Inland Insurance Company, holding that Burford and Colorado
River abstention doctrines did not apply to bar the Federal action because (1) it
did not appear that the Commonwealth court would have jurisdiction over the
policyholder(s)' claims in the insolvency estate but rather a third party (Peat
Marwick); (2) the policyholder(s)' claims were distinct from those brought by