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Colorado
Connecticut
In re First Assured Warranty Corp., 383 B.R. 502 (Bankr. D. Colo. 2007). The
Insurance Commissioner of the State of Hawaii seized the assets of PrimeGuard,
an insurance company licensed and domiciled in Hawaii, and thereafter found
PrimeGuard to be insolvent and placed the company in liquidation in the
liquidation court in Hawaii. The Commissioner then filed a motion in the
receivership court seeking to declare PrimeGuard a single business enterprise or
alter ego of two Colorado companies. Before a hearing could be held on the
Commissioner’s motion, the Colorado companies (“Debtors”) filed a petition for
voluntary bankruptcy in Colorado. The Commissioner filed motions to dismiss
the petition and stay the proceedings in the bankruptcy court or abstain from
deciding pending a determination by the Hawaii receivership court that
PrimeGuard and Debtors were a single business enterprise. The bankruptcy
court denied both of the Commissioner’s motions reasoning that corporate
formalities were not disregarded under Colorado law. The court held that
abstention was premature in this context, and a stay was improper. The
Debtors were not insurance companies under Colorado law and could find no
protection under the Colorado insurance receivership statutes. Moreover, the
McCarran‐Ferguson Act provides no assistance to the Commissioner, because
no Hawaii insurance laws will be impaired by the Bankruptcy Code when both
laws are applied to each entity individually. In sum, the court held that the
Commissioner did not demonstrate cause requiring dismissal or stay of the
bankruptcy petition filed by Debtors.
Burse v. American Int’l Airways, Inc., 808 A.2d 672 (Conn. 2002). An appeal in a
worker’s compensation case by the employer and the employer’s insurer in
rehabilitation was not rendered moot by the Pennsylvania court’s stay order,
because practical relief could be obtained by a decision in the insurer’s favor.
D’Agata v. Nutmeg Intensive Rehab., PC, No. CV020077692S, 508, 2002 WL
1843028 (Conn. Super. July 15, 2002). The court stayed a personal injury action
against a defendant whose insurer was insolvent, in light of a Pennsylvania state
court litigation and stay order and based on Insurers Rehabilitation and
Liquidation Act and reciprocity.
Fothergill v. Proulx, No. CIV.3:99CV2259 (PCD), 2001 WL 34546682 (D. Conn. Oct.
18, 2001) (Not Reported). The court denied a motion to stay trial, despite
ongoing liquidation proceedings involving the defendant’s insurer, where the
Connecticut Guaranty Association had not yet decided whether the claim was
insured; also comity provided no basis for stay because the insurer in liquidation
was not a party to the case.
Grasso v. City of Ansonia, No. CIV. 302CV455MRK, 2003 WL 22918494 (D. Conn.
Nov. 7, 2003). The court denied a motion to stay a federal question action,
despite insolvency and liquidation of the defendants’ insurer. Neither the
liquidator nor Connecticut Insurance Guaranty Association (CIGA) was a party to
the federal action, and neither intervened to prevent disruption of state
proceedings. The CIGA Act applies to state and reciprocal state proceedings,
but does not divest federal courts or jurisdiction. The court also declined to
abstain.
Massey v. Town of Windsor, 289 F. Supp. 2d 160 (D. Conn. 2003). The federal
district court stayed a discrimination action against the defendant city whose
liability insurer was declared insolvent and ordered liquidated in Pennsylvania.
Citing the Uniform Insurers Rehabilitation and Liquidation Act and the
Pennsylvania stay order, the court granted the motion for stay and ordered the