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Sixth Circuit
AmSouth Bank v. Dale, 386 F.3d 763 (6th Cir. 2004). The underlying coercive
action was a state court suit by the receivers, various state insurance
commissioners, to recover funds embezzled from a number of insurance
companies. The receivers claimed the banks were negligent in not discovering
the embezzler’s fraud. The banks sought a declaratory judgment in federal
court saying that they were not liable to the receivers. The district court
enjoined the receivers from pursuing their state coercive action further and the
receivers appealed. The Sixth Circuit declined to find McCarran‐Ferguson
reverse preemption because an action to evade liability in a threatened
common‐law coercive action by the insurance companies had only an
attenuated connection to the regulation of insurance. However, the court
noted that (1) the declaratory judgments would serve no useful purpose and (2)
that the banks filed the declaratory actions not to resolve liability issues but
instead to gain procedural advantage. Because of these two factors, the
appellate court held that jurisdiction over these declaratory actions should not
have been exercised and the district court’s decision to the contrary was an
abuse of discretion.
Dykhouse v. Corporate Risk Management, No. 91‐1646, 1992 U.S. App. LEXIS
11238, unreported (6th Cir. 1992). Even though the district court had
jurisdiction, Court of Appeals held that the abstention doctrine set forth by the
United States Supreme Court in Burford v. Sun Oil Company, 319 U.S. 315 (1943)
required the district court to abstain from exercising that jurisdiction stating
that Burford abstention is appropriate to avoid considering questions
regarding state liquidation proceedings in order to protect the state's
substantial interests in this regard, provided that no direct federal questions
are involved.
McDonough v. Academy of Medicine, 888 F.2d 1392, 1989 U.S. App. LEXIS
16344, unreported (6th Cir. 1989). State insurance commissioner appealed the
district court disposition of an interpleader action filed pursuant to 28 U.S.C.
§ 1335. The interpleader claimants asserted that the district court erred in not
abstaining from jurisdiction, arguing that the New York state court in which
liquidation proceedings were simultaneously being conducted was the proper
forum to adjudicate claims to the interpleader fund. On appeal, this court
concluded that the district court did not err in refusing to dismiss the
interpleader action on abstention grounds stating that the res before the
district court was not concurrently before the New York court and that until
the issue of ownership of the res was determined, the res could not properly
be part of the liquidation proceedings.
Seventh Circuit
Barrett v. International Underwriters, Inc., 346 F.2d 345 (7th Cir. 1965). While
the court that first invokes jurisdiction over property has exclusive jurisdiction
regarding all other courts with concurrent jurisdiction, that does not preclude
other courts from hearing questions related to the property which do not
interfere with the constructive possession of court with the exclusive
jurisdiction. The federal court could properly permit judgment creditor to
obtain valid lien in the property of insolvent reinsurance group after insurance
commissioner initiated liquidation, but before state court vested insurance
commissioner with title to insolvent group's assets, without invading the State
Court's jurisdiction.
Blackhawk Heating & Plumbing Co., Inc. v. Geeslin, 530 F.2d 154 (7th Cir. 1976).
In an in rem proceeding involving an escrow account, the Illinois State Court
first obtained jurisdiction by initiation of liquidation proceedings and the