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held that the special proceeding was separate and independent from the
original state action, thus federal subject matter jurisdiction could be asserted,
and remand to state court was denied.
Mathias v. Lennon, 474 F. Supp. 949 (S.D. N.Y. 1979). The powerful interest of
the state in regulating the insurance industry dictates that the federal court
should abstain from interfering with the rehabilitation process. The Court
refused to decide whether New York's cancellation of Illinois policies in a New
York rehabilitation proceeding violated either New York and Illinois law or
constitutional guarantees. Plaintiff's claims must be raised in state court.
Matter of Bean v. Stoddard, 238 N.Y. 618, 144 N.E. 916, (1924). Even though the
receivership court had enjoined all persons from commencing actions against an
insurance company in liquidation and from meddling with the insurance
commissioner in such actions, this court nevertheless had jurisdiction to grant
leave to an applicant to bring suit against the insurance commissioner in federal
courts to impress certain funds with a trust in favor of the applicant. In this
case, the commissioner had taken possession of the assets of an insolvent life
insurance company, and the applicant (the receiver of a foreign bank) had
attempted to recover the value of the securities which were allegedly converted
pursuant to a fraudulent scheme by the life insurance company.
Moscow Fire Ins. Co. of Moscow, Russia v. Bank of New York & Trust Co., 161
Misc. 903, 294 N.Y.S. 648 (1937). The situs of assets of a dissolved Russian
insurance company was New York, where the assets were held in a depository
in the state with either trust companies or with a bank by court order.
Therefore, the New York state courts had jurisdiction and dominion over the
funds deposited with the insurance commissioner by the Russian insurance
company, which were assets also claimed by the United States as an assignee of
amounts due from the Soviet government to American nationals which were
confiscated by the Soviet government. The United States was required to
follow the municipal law regarding physical control over the assets because
ownership depended on the law of the place where the securities were located.
Ohio Reins. Corp. v. Pacific Reins. Management Corp., No. 85 Civ. 1412, 1990 U.S.
Dist. LEXIS 15169 (S.D.N.Y. November 13, 1990). Plaintiff reinsurers sought
reconsideration of a federal district court order dismissing plaintiffs' action for
fraud against the defendant on Burford abstention grounds. The district court
held that abstention was appropriate because (1) the state proceeding was a
more appropriate forum to consider the state claims at issue, (2) the court's
ruling would have a broad impact on the state's reinsurance policies, (3) the
state had a strong interest in regulating the insurance industry, and (4) the
state's procedure was adequate to handle the claims at issue.
Pan Atlantic Group, Inc. v. Quantum Chem. Co., No. 90 Civ. 5155 (JSM), 1990 U.S.
Dist. LEXIS 15175 (S.D.N.Y. November 8, 1990). Plaintiff reinsurers moved in a
New York federal district court to enjoin the Liquidator from moving in
Kentucky state court for a stay of the New York action. The New York Court
denied the motion on grounds that the plaintiffs did not have a reasonable
probability of success on the merits on the question of personal jurisdiction over
the Liquidator. The Liquidator's contacts with New York consisted primarily of
his prosecution of a separate action in New York and his attendance at a
settlement conference on a related matter in New York. On this basis, the Court
found that the Liquidator's actions did not constitute "doing business" or
"transacting business" in New York.