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that the state law at issue is neither difficult nor unusual, the first three factors
outweigh this Hartford factor against abstention.
Schacht v. Cadillac Ins. Co., No. 91 C 1188, (N.D. Ill. August 20, 1991). The court
held that Burford abstention was not warranted because the maintenance of
the federal court action would not unduly interfere with the liquidation
proceedings in Michigan. In the federal court case, the Illinois Director of
Insurance, as liquidator in a related Illinois insolvency proceeding, sought to
recover funds allegedly illegally transferred to another insurer who was now
subject to insolvency proceedings in Michigan. The court noted that one of the
principle reasons for applying federal court abstention to claims related to state
insurance insolvency proceedings, to prevent creditors from jumping ahead of
the state's preference scheme for distribution of the estate, was not applicable
to this case.
Selcke v. Medcare HMO, No. 92 C 5704 (N.D. Ill. Dec. 1, 1992). Illinois Director of
Insurance appealed bankruptcy court's refusal to dismiss HMO's bankruptcy
petition. The district court reversed the bankruptcy court and dismissed the
HMO's bankruptcy petition, holding that an HMO is a "domestic insurance
company" for purposes of Section 109(b) of the Bankruptcy Code. The court
rejected the Director's first argument that the bankruptcy court lacked
jurisdiction over HMOs on the ground that Congress in fact intended to exclude
HMOs from federal bankruptcy scheme. However, the court agreed with the
Director that, under Illinois law, an HMO is a domestic insurance company for
purposes of insolvency, and, therefore, an excluded entity under Section 109(b)
of the Bankruptcy Code. In addition, the Court also agreed with the Director
that the HMO was an excluded entity because it is the substantial equivalent of
a domestic insurance company. The HMO's subsequent motion for a stay of the
district court's order pending appeal was denied. See Order, No. 92 C 5704
(N.D. Ill. Dec. 8, 1992).
Tribune Co. v. Swiss Reinsurance Am. Corp., No. 02 C 4772, 2005 WL 692859
(N.D. Ill. Mar. 21, 2005). Under Buford, court held abstention proper where
company filed breach of action against allegedly nominal reinsurer after insurer
entered liquidation because a determination that the agreement between
insurer and reinsurer was not a reinsurance contract would remove the assets
of the agreement from the insurer’s asset pool. The court reasoned that
decreasing the assets available for distribution to insurer’s creditors would be
no less intrusive on the liquidation process than entering a judgment against the
insurer.
Indiana
Kansas
Holz v. H.C. Baldwin Agency, Inc., 140 F. Supp. 860 (S.D. Ind. 1956). The New
York liquidator of an insolvent insurer brought an action against an Indiana
agent of the insurer to recover premiums. The agent raised three distinct
grounds for set‐offs against the premiums due to the liquidator: commissions,
bonuses, and claims expenses. The New York liquidator's effort to have these
issues dismissed on the basis that Indiana should defer to the liquidation
proceeding pending in New York was rejected by the federal court because it
had jurisdiction to resolve the claims between the parties and, in fact, was
compelled to do so because the liquidator has submitted to the jurisdiction of
the court and the rights of the agent under New York law to file a claim were
lost because the last date for filing claims had past.
Hartung v. Sebelius, 40 F. Supp. 2d 1257 (D. Kan. 1999). Applying the abstention
and comity principles of the McCarran‐Ferguson Act and the Burford doctrine,
the court dismissed a case in which rehabilitators of an Idaho insurance