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Dale v. Colagiovanni, 443 F.3d 425 (5th Cir. 2006). Various insurance companies
were negatively affected by a fraudulent conspiracy. Receivers for the insurers
brought suit and named among the conspirators: the Vatican. The Vatican was
implicated because the fraudulent conspiracy was carried out by an agent acting
with apparent authority from the Vatican. The court of appeals reversed a
lower court’s denial of immunity to the Vatican under the Foreign Sovereign
Immunities Act (“FSIA”). In doing so, the court of appeals concurred with
previous holdings in the Fourth and Ninth Circuits that an agent’s acts,
conducted with the apparent authority of the state, is insufficient to trigger the
commercial exception to FSIA.
Health Net, Inc. v. Wooley, 534 F.3d 487 (5th Cir. 2008). Texas, Oklahoma, and
Louisiana receivers successfully brought suits against Health Net, Inc., claiming
breach of fiduciary duty, fraud, and conspiracy, all to the detriment of an
insolvent insurer in receivership. The receivers obtained compensatory and
exemplary damages. Health Net then sought an injunction to block the verdict
and awards against it on the grounds that the judgments were obtained by
fraud. The receivers acknowledged in the appeal that ex parte communications
with the judge had taken place. The Louisiana Court of Appeals dismissed
Health Net, Inc.’s injunction request but placed sanctions on the receivers’
counsel. The court of appeals affirmed the injunction dismissal and vacated the
sanctions on the grounds that Louisiana’s state laws regarding insurer
insolvency may necessitate some ex parte communications. Furthermore, the
involvement of the federal courts in this process would disrupt the state’s
treatment of insolvent insurers. Both the Younger and Burford abstention
doctrines apply in this case.
Martin Insurance Agency, Inc. v. Prudential Reinsurance Company, 910 F.2d 249
(5th Cir. 1990). After the insolvency of Transit Casualty Insurance Company, a
Missouri domiciliary, the plaintiff insurance agency paid the
policyholder/claimants and sought reimbursement directly from reinsurers.
The reinsurance certificates at issue contained standard insolvency clauses,
requiring payment to the receiver in the event of insolvency of Transit; thus,
the reinsurance proceeds could be considered assets of the estate. Further,
the reinsurers were exposed to double liability because claims to the
reinsurance would likely be asserted both by plaintiff and by the receiver.
Although the court found that it had subject matter jurisdiction, it found that
the action should nevertheless be dismissed based on the abstention doctrine
of Burford v. Sun Oil, 319 U.S. 315, 63 S. Ct. 1098 (1943), without prejudice to
plaintiff's right to re‐assert the claim in the Missouri liquidation court.
Webb v. B.C. Rogers Poultry, Inc., 174 F.3d 697 (5 th Cir. 1999). The State of
Texas place Employers National Insurance Company (ENIC) in receivership.
A permanent injunction was ordered preventing any person from interfering
with the state receivership court proceedings. The receiver brought suit in
state court against B.C. Rogers, an ENIC policyholder, to collect unpaid
worker’s compensation premiums. B.C. Rogers removed to federal court on
the grounds of diversity. The receiver sought to have the case remanded to
state court. The basis for remand was that the Burford abstention doctrine
applied and that the permanent injunction enjoined B.C. Rogers from
litigating the dispute anywhere other than the receivership court. The court
failed to recognize the Burford abstention doctrine stating that the Burford
doctrine applies only where relief being sought is equitable or otherwise
discretionary. The court reasoned that the state’s interest must yield the
federal court’s “strict duty to exercise the jurisdiction that is conferred upon
if by Congress.”