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California Court of Appeals found that a court overseeing an insurance
insolvency proceeding has in rem jurisdiction over a third party's assets
when that party has an "identity of interest" with the insolvent insurer, even
if the third party is not involved in the business of insurance. Prior to
insolvency, the insurer formed and funded a separate partnership for the
purpose of real estate investment. A secured creditor of the partnership
brought contract and tort actions in federal court against the partnership
after the Insurance Commissioner had been named conservator of the
insolvent insurer. The Insurance Commissioner intervened and had the
federal court action dismissed and then moved in state court for jurisdiction
over the secured creditor's claims. The creditor appealed the denial of its
motion to vacate the trial court's order in favor of the Commissioner. On
appeal, the court found that because the insurer had a substantial part of its
business tied up in the partnership for the purpose of investing its capital
and this partnership accounted for 10% of the insurer's real estate
investment, there was an "identity of interest" between the insurer and the
partnership. The court also ruled that federal bankruptcy law does not
preempt a state court from assuming jurisdiction over a controversy
involving a non‐insurance entity when the state's exercise of jurisdiction is
reasonably necessary to promote the rehabilitation of the insolvent
insurance company. In so holding, the court stated that "the jurisdiction of a
state court overseeing an insurance insolvency cannot, in reason, be any less
comprehensive than that of a bankruptcy court in similar circumstances."
In re Executive Life Ins. Co., 32 Cal. App. 4th 344 (Ct. App. 1995). In reviewing
a trial court's approval of a plan of rehabilitation for an insolvent insurer, an
"abuse of discretion" standard should be applied.
Connecticut Connecticut Life and Health Insurance Guaranty Association v. Jackson, 173
Conn. 352, 377 A.2d 1099 (1977). The court ruled that the guaranty association
must exhaust its administrative remedies with the insurance commissioner in a
dispute with the commissioner over the interpretation of a provision in the
guaranty fund law before it could bring an action for a declaratory judgment in
the courts.
Florida Capitol Fidelity Life Insurance Co. v. State ex rel. Department of Insurance, 478
So.2d 1105 (Fla. Dist. Ct. App. 1985). In an insurer delinquency proceeding
brought by the Florida Department of Insurance against an insolvent life insurer,
alleged affiliates of the insolvent insurer appealed the denial of motions to
vacate orders which directed them to show cause why they should not be
required to make return of case distributions paid to them by the insolvent
insurer. The appellants could not raise at that time questions regarding the
court's subject matter jurisdiction over them, because such issues were not ripe
for review until the trial court determined its subject matter jurisdiction. In
addition, because these appellants were third‐party defendants in the insurer's
delinquency proceeding, they had no standing to challenge the venue of the
original action brought by the Florida Department of Insurance.
Chase Bank of Texas Nat. Ass'n v. Fla. Dep't. of Ins., 860 So. 2d 472 (Fla. 1st DCA
2003). Florida's Insurers Rehabilitation and Liquidation Act confers jurisdiction
on the circuit court over a third‐party claim in an insurance liquidation
proceeding. 860 So. 2d at 473. Whether the circuit court has subject matter
jurisdiction is a question of law that depends on the correctness of the court's
interpretation of various provisions of Chapter 631, Florida Statutes. 860 So. 2d
at 475. Section 631.021(1), Florida Statutes provides that “[t]he circuit court shall
have original jurisdiction of any delinquency proceeding under this chapter....”