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time as an administrative claim had been filed and rejected. The court held that
the receiver was properly added as a party on appeal, noting that the
administrative claim provision of the insurance code applies to claims which
arise after the insolvency and not to lawsuits which are pending at the time of
insolvency. Similarly, the provision which allows the receiver a one year period
after his appointment to appear in a lawsuit is applicable to suits begun at the
trial level, not on appeal. A contrary holding would cause unreasonable delays
in resolving suits which are pending prior to the appointment of the receiver.
Utah
Wisconsin
Old Standard Life Ins. Co. in Rehab. v. Duckhunt Family Ltd. P’ship, No. 2:05‐CV‐
00536 PGC, 2006 U.S. Dist. LEXIS 36781 (D. Utah June 2, 2006). Receiver of
insolvent insurance company sought an order to determine the validity and
priority of certain trust deeds. Defendant filed an answer and counterclaim
alleging various causes of action against the insolvent insurance company. The
receiver sought to dismiss, stay, or remand the claims of Duckhunt on the basis
of the McCarran‐Ferguson Act, the Younger and Burford abstention doctrines,
and the absolute immunity from suit provided by the state receivership order.
The court denied the receiver’s motion. The McCarran‐Ferguson Act, the
Younger and Burford abstention doctrines, and the receivership order do not
prevent the application of federal jurisdiction where the receiver has availed
itself of the federal forum and the defendant’s counterclaims were filed in
response thereto.
In the Matter of All‐Star Ins. Corp., 484 F. Supp. 623 (E.D. Wis. 1980). The
liquidator of an insolvent insurer filed actions in the Wisconsin state courts
against former non‐resident agents to recover sums owed to the insolvent
estate. The state court actions were removed to the federal court on the basis
of diversity of citizenship and were consolidated for purposes of decision on
motions to remand. While recognizing its ability to limit its ruling to a
declaration of the rights among the parties, the federal court chose to exercise
its discretionary powers and remanded the cases to the Wisconsin State Court
citing Wisconsin's strong state interest in orderly liquidation. The federal court
found that the comprehensive regulation of state domestic insurance
companies is of substantial public concern.
Metropolitan Life Ins. Co. v. Board of Directors of Wisconsin Insurance Security
Fund, 572 F. Supp. 460 (W.D. Wis. 1983). When the member insurance
companies of the Wisconsin guaranty fund challenged the guaranty fund's
power to make certain assessments for the liquidation of an insolvent insurer,
and the manner in which the guaranty fund was paying losses, the federal
district court held that abstention was necessary to avoid conflict with rulings
that had and would be made in the state liquidation proceeding. In so holding,
the court noted that the guaranty fund was an integral part of the statutory
liquidation process.
Wis. Comm'r Ins. v. Cal. Reinsurance Management Corp., 819 F. Supp. 797
(E.D. Wis. 1993). In a case brought under the Federal Arbitration Act, the
court rejected an argument that §9 of the Act creates subject matter
jurisdiction in federal courts for motions to confirm arbitration awards.
Sections 3 and 4 of the Act require an independent basis for federal subject
matter jurisdiction in order to apply to a federal court for an order to stay a
lawsuit pending arbitration (Section 3) or to apply for an order directing
parties to arbitration (Section 4). The court rejected the argument that § 9
independently creates federal subject matter jurisdiction because such an
interpretation "would achieve by indirection that which Congress has clearly
forbidden."