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district court had exclusive jurisdiction where the claimant failed to give new
security after notice, even though the surety was in the hands of the state
insurance liquidator.
In re Agway, Inc., 357 B.R. 195 (Bankr. N.D.N.Y. 2006). The bankruptcy court
denied the liquidator’s motion for a determination that the court lacked
jurisdiction or should abstain. By filing a proof of claim in a debtor’s Chapter 11
case, the insurance company in liquidation submitted itself to the bankruptcy
court’s core jurisdiction, and the bankruptcy court could adjudicate the trustee’s
motion to expunge the insurance company’s claim. Also, the court did not
abstain from hearing the motion to expunge, and the “first assuming
jurisdiction” doctrine did not prevent the court from hearing and deciding an
objection to the insurance company’s proof of claim, even though the
liquidation was pending in another court.
In re Concord Casualty & Surety Co., 171 Misc. 893, 14 N.Y.S.2d 94 (1939). The
New York Supreme Court had jurisdiction to determine whether the taxes were
due to the United States for employees employed by the State Liquidation
Bureau in the liquidation proceeding as opposed to the federal courts having
sole jurisdiction.
In re National Surety Co., 7 F. Supp. 959 (D.C.N.Y. 1934). An insurance company
is no longer in possession of or has title to its property upon the filing an order
of liquidation. Such an order gives notice similar to the filing and recording of a
deed or bill of sale or other evidence of title and, therefore, under the Federal
Bankruptcy Act, a court could not exercise jurisdiction over the company for the
purpose of reorganization.
In re New York Title & Mortgage Co., 171 Misc. 207, 12 N.Y.S.2d 977 (1939),
affirmed, 257 A.D. 926, 12 N.Y.S.2d 1022, reargument denied, 257 A.D. 948, 14
N.Y.S.2d 146. Subsidiaries of a mortgage guaranty company in liquidation in
state court were not "insurance corporations" under state court jurisdiction.
Their business was the taking of title to and operating properties foreclosed by
the guaranty company. Thus, the federal court had exclusive jurisdiction to
determine the fairness of plans for the termination of federal receivership of
those subsidiaries.
In re Reliance Group Holdings Inc. Sec. Litig., No. 00‐CV‐4653 (TPG), 2004 WL
943545 (S.D.N.Y. Apr. 30, 2004). The federal district court declined to abstain,
and rejected the liquidator’s argument that the federal court should not
exercise jurisdiction over matters involving the insolvent insurer’s policy
proceeds although the liquidator had filed an emergency petition in federal
court in Pennsylvania. The federal court in Pennsylvania had not yet ruled or
asserted in rem or quasi in rem jurisdiction, the “first filed” rule was inapplicable
because the action had been filed before the liquidator’s emergency petition,
and it would be manifestly unjust to deny the plaintiff’s motion to enforce an
agreement with the insolvent insurer.
Levin v. Tiber Holding Co., No. 98 CIV. 8643 (SHS), 1999 WL 649002 (S.D.N.Y.
Aug. 25, 1999). The court had subject matter jurisdiction, and denied the
liquidator’s motion for remand to state court. The liquidator originally filed a
state court action against an insurer and its owners and obtained a consent
order prohibiting transfer or conversion of the insurer’s assets. Subsequently,
the liquidator commenced a special proceeding in state court, alleging improper
transfers and contempt and seeking a fine against the insurer’s owners. The
defendants removed the special proceeding to federal court, where the court