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Casualty Insurance Guaranty Association (“PPCIGA”) at a pro rata portion based
upon PPCIGA’s statutory limit of liability. The defendant was insured under a
general liability insurance policy issued by American Eagle Insurance Company
(“American”). The plaintiff filed a wrongful death action against the defendant.
A year later American was declared insolvent and the trial court stayed the
proceeding for 90 days until PPCIGA could assume the defense. The jury
returned a verdict for the plaintiff and the plaintiff filed a petition for delay
damages, which were granted by the trial court. The appeals court reversed the
lower court’s decision because PPCIGA did not have an opportunity to argue its
position regarding the amount of damages, no notice was served, and no
appearance was made on behalf of PPCIGA. Consequently, the court held that
since PPCIGA was not a party to the underlying action the trial court did not
have the authority to order delay damages against PPCIGA.
Puerto Rico
Velez‐Oliveras v. Asociacion Hospital Del Maestro, Inc., 198 F. Supp. 2d 70 (D.
P.R. 2002). A stay of the medical malpractice action was not granted where (1)
the health insurer in liquidation was not a party to the suit, (2) abstention was
not justified under Burford because the issues presented would not disrupt the
state liquidation scheme, (3) the equities of the case merited prompt attention,
and (4) the defendants would be entitled to guaranty fund protection whether
or not the federal case proceeded.
South Carolina Insurance Commission v. New South Life Ins. Co., 270 S.C. 612, 244 S.E.2d 289
(1978), on remand, 272 S.C. 438, 248 S.E.2d 591 (1978). The court held that an
order of rehabilitation which vests Chief Insurance Commissioner with title to
the property, contracts, and rights of action of insurer is exclusive, and
Insurance Commissioner has no authority to issue a cease and desist order.
Texas
Washington
Whitson v. Harris, 682 S.W.2d 423 (Tex. App. 1984). Under the insurance code,
the court may enjoin the prosecution of any actions against the insurance
company in receivership, except those actions prosecuted in the receivership
court.
American Star Ins. Co. v. Grice, 865 P.2d 507 (Wash. 1994). While a
declaratory judgment action brought by an insurer was pending, an order of
liquidation and a permanent injunction were issued in respect of the insurer
pursuant to the Wisconsin Uniform Insurers Liquidation Act. The Supreme
Court of Washington emphasized the need for interstate comity and
recognition of the Wisconsin liquidation proceeding. The court determined
that to the extent the action was against the insurer ‐‐ since the insured
sought affirmative action against the insurer in seeking a declaration that it
was entitled to coverage ‐‐ the Wisconsin Uniform Insurers Liquidation Act
called for abatement of the action. The court further determined that to the
extent the action was by the insolvent insurer, the liquidator had effectively
exercised his option under the Uniform Act to abandon the action.
Olivine Corp. v. United Capitol Ins. Co., 92 P.3d 273 (Wash. Ct. App. 2004). The
failure of an insolvent insurer that is a party to the litigation to inform the court
of a stay order issued by a court in a reciprocal state under the Uniform Insurers
Liquidation Act does not waive its right to a stay or dismissal of the action. The
stay order removes the court’s jurisdiction in the matter by operation of statute.
Wisconsin
Janek v. Allstate Ins. Co., 319 F. Supp. 215 (W.D. Wis. 1970). In upholding the
restraining order of an Illinois court, the Wisconsin District Court noted that the
Illinois court had the task of providing for an orderly liquidation and that the