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offers to compromise because several of the directors had income, net worth
or had made gifts well in excess of the amount offered in compromise.
Serio v. Ardra Ins. Co., 761 N.Y.S.2d 1 (App. Div. 2003). The court upheld a
judgment in favor of the liquidator against a reinsurer and its principals in an
action by the liquidator alleging breach of reinsurance treaties. The liquidator
was not equitably estopped to pierce the corporate veil in order to hold the
principals responsible for the reinsurance debt.
Serio v. Nat’l Union Fire Ins. Co., 795 N.Y.S.2d 529 (App. Div. 2005). The court
rejected an attempt by the liquidator to find coverage under a directors and
officers liability/corporate reimbursement insurance policy for costs the
liquidator incurred in defending the insolvent insurer’s former treasurer in a
third‐party action.
Serio v. Rhulen, 806 N.Y.S.2d 283 (App. Div. 2005). The court denied a motion to
dismiss filed by the defendant officers and directors in an action brought by the
rehabilitator alleging breach of fiduciary duties, voidable transfers, preferential
payments, and diversion of funds. The causes of action alleged in the
rehabilitator’s complaint were adequately supported by factual allegations, and
the claims were not barred by limitations.
North Carolina
State of North Carolina, ex rel. Long v. Cooper, 14 F. Supp. 2d 767 (E.D.N.C.
1996). North Carolina Commissioner of Insurance, as receiver of insolvent
insurer, sued former owner of insurer, who had allegedly stolen premiums,
and other individuals, under North Carolina Racketeer Influenced and
Corrupt Organizations Act. The court held that North Carolina Insurance
Commissioner, as receiver of insolvent insurer, had standing to sue former
president of insurer, under North Carolina’s Racketeer Influenced and
Corrupt Organizations Act (“RICO”), for allegedly stealing insurance
premiums. Furthermore, the court held that the Commissioner’s allegation
that the former president of insurer had stolen premiums sent by
policyholders, while leaving insurer obligated to pay claims, through scheme
which involved use of fraudulent mailing, embezzlement, and willful filing of
a false annual statement, stated claim for violation of North Carolina’s RICO.
The court also noted that a Commissioner “assumes the identity” of an
insolvent insurer when he becomes a receiver.
State ex rel. Long v. ILA Corporation, 1999 WL 183842 (N.C. App. 1999).
Commissioner of Insurance of the State of North Carolina, pursuant to his
statutory powers as liquidator of an insolvent insurer, filed a complaint on
behalf of policyholders and creditors against the chief executive officer of
the insurer and insurer’s parent corporation for breach of fiduciary duties
and negligent mismanagement. The Superior Court entered judgment for
the Commissioner and defendant appealed. The appellate court affirmed
the lower court’s decision.
First, even though the complaint alleged suit as liquidator on behalf of
creditors and policyholders, the Commissioner of Insurance sued the
director and chief executive officer of insurer, and, thus, the Commissioner
had power and standing to assert insurer’s claims for breach of fiduciary
duties to and negligent mismanagement of insurer. Second, claims by the
Commissioner of Insurance as liquidator allegedly on behalf of creditors and
policyholders were brought against the director and chief executive officer
of the insolvent insurer on behalf of estate of insolvent insurer and were
thus protected by statute extending unexpired statute of limitations and