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authorized by state law to petition for the liquidation of an insurance company,
the chief counsel was immune from a civil rights action by the insurance
company that it had been denied due process and equal protection of the
laws. The actions cited ‐‐ filing the petition, using discovery, conducting the
trial, and filing exceptions to the court's orders in the case ‐‐ were all part of the
prosecutorial role. As a quasi‐judicial officer, the counsel's motives were
irrelevant.
Durish v. Panan International, N.V., 808 S.W.2d 175 (Tex. App.‐‐Houston [14th
Dist.] 1991). Corporation brought suit against title insurer, for which a receiver
was subsequently appointed. Receiver claimed the action should have been
abated, pending the filing and rejection of a proof of claim in the receivership
proceeding, and a transfer of venue to the receivership court. The court held
that the provisions of the insurance code relied upon by the receiver apply only
to lawsuits brought after delinquency proceedings had been commenced, not
to lawsuits pending at the time of insolvency. The court further rejected the
receiver's claim that liability against him, as receiver, had not been proven,
observing that he was sued in his capacity as receiver, not individually, and that
as receiver, he stood in the place of the insolvent carrier. Thus, entry of
judgment against him was proper.
Eckert v. Montemayor, No. 03‐04‐00507‐CV, 2005 Tex. App. LEXIS 2376 (Tex.
App. Mar. 31, 2005). The court held that a staff attorney for the Texas
Department of Insurance met her burden in establishing the affirmative defense
of official immunity. The staff attorney was given official immunity, because she
was performing a discretionary function and acting in good faith when drafting
a supervision‐release order for an insurance company even though she did not
comply with procedural rights granted in the supervision order.
El Paso Electric Company v. Texas Department of Insurance, 937 S.W.2d 432
(Tex. 1996). The Supreme Court of Texas held that conservator and
liquidator of an insurance company are agents of the state for purposes of
allowing litigants to recover fees and expenses when the state agency brings
a frivolous claim. The court reasoned that the receiver for an insolvent
insurer is an agent of the state based on the Board of Insurance’s ability to
remove the receiver, and the fact that the receiver’s compensation is within
the Board’s control. The court also concluded that the conservator, which is
appointed by the Commissioner of Insurance, is an agent of the state. The
court further reasoned that the Commissioner has direct control of the
conservator and the actions of conservator can be attributed to the Board of
Insurance.
Liability of Company Directors or Officers
Fifth Circuit
Barnhardt Marine Ins., Inc. v. New England International Surety of America,
Inc., 961 F.2d 529 (5th Cir. 1992). Insurance broker brought action as subrogee
against insolvent insurer and its president and chairman of the board to
recover unearned premiums paid after insolvency. Citing the McCarran‐
Ferguson Act, 15 U.S.C. § 1011, the court affirmed an administrative stay
pending resolution of all proceedings in the state liquidation court on the
grounds of Burford abstention. Burford v. Sun Oil, 319 U.S. 315, 63 S. Ct. 1098
(1943). The action against the president and chairman of the board individually
for mismanagement and under‐capitalization was also properly stayed,
because the derivative claim involved the same assets which the Commissioner
was required to collect and distribute in the liquidation proceeding. Pursuit of