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legislature granted exclusive jurisdiction to state court over insurance
liquidation proceedings.
Fabe v. Aneco Reinsurance Underwriters Limited, 784 F. Supp. 448 (S.D. Ohio
1991). State Superintendent of Insurance, acting in its capacity as liquidator of
an insurance company brought an action in state court against reinsurance
companies. After the Supreme Court of Bermuda placed one of the reinsurance
companies in liquidation and appointed liquidators, those liquidators sought
removal of the state court action to federal court based on their status as
agents of a foreign state. The State Superintendent of Insurance filed motion to
remand the action to the state court. The district court held that the Bermuda
liquidators were entitled to seek removal as agents of a foreign state; a forum
selection clause and a reinsurance agreement could not operate as waiver of
the Bermuda liquidators' right to remove the action; any other reinsurance
company did not have to join in the removal; and abstention from jurisdiction by
the federal court was not warranted.
Hudson v. Supreme Enter., Inc., 2007 U.S. Dist. LEXIS 58280 (S.D. Ohio 2007).
The State Superintendent of Insurance, acting as liquidator of an insurance
company, sought to recover unpaid deductibles. The defendant‐insureds
removed the case to federal court, whereupon the liquidator filed a motion to
remand. The motion to remand was granted based on the McCarran‐Ferguson
Act (allowing reverse preemption in certain situations), and the Ohio
legislature’s grant of exclusive jurisdiction to the Franklin County Court of
Common Pleas over insurance liquidation proceedings.
Oklahoma Okla. ex rel. Holland v. Employers Reinsurance Corp., No. CIV‐06‐0426‐HE, 2006
U.S. Dist. LEXIS 61680 (W.D. Okla. Aug. 29, 2006). The federal court denied the
motion of the receiver of an insolvent insurer to remand proceedings to a state
court. The court found that Burford abstention did not apply in this case
because difficult or complex issues of state law were not present. Having a
financial affect on the assets of an insurance company in liquidation
proceedings is not enough to implicate Burford. Because issues were not “so
intertwined with issues of agency authority or state regulatory policy that their
federal‐court resolution would imperil a complex regulatory scheme,”
abstention was not exercised.
Pennsylvania
AIMS Enterprises, Inc. v. Muir, 609 F. Supp. 257 (M.D. Pa. 1985). In a dispute
brought by the insurance commissioner of Delaware, domicile state of an
insolvent insurance company, against the insurance commissioner of
Pennsylvania over ownership of a reserve fund which had belonged to the
company, a federal district court exercised its discretion to abstain. The court
held that to proceed would intrude into Pennsylvania's regulatory process.
Moreover, plaintiffs had an opportunity to be heard in state court before the
commissioner could dispose of the fund.
Brainard v. Foster, Civil Action No. 91‐5308‐5318, 1992 U.S. Dist. LEXIS 3196 (E.D.
Pa. 1992). The Pennsylvania District Court's Memorandum and Order dismissed
without prejudice a suit brought by agents of an unlicensed insurance company,
American Independent Business Alliance Group ("AIBA"), in liquidation to enjoin
the Commonwealth's Insurance Commissioner and the Department of
Insurance from issuing a letter to other agents that threatened revocation of
the agent's license, the return of any commissions earned on the placement of
policies on AIBA's behalf and damages.