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Pursuant to D.C. Code Ann. § 35‐2822 (1994 Supp.), the court held that full
faith and credit are to be given to the injunctions of neighboring courts.
Further, the court held that the McCarran‐Ferguson Act required the court to
defer to the Delaware Chancery Court so that it may supervise and regulate
the entire liquidation process. Therefore, the creditors complaint was
dismissed.
Consumers United Insurance Company v. Smith, et al., 644 A.2d 1328 (D.C.
1994). Consumers United Insurance Company (“CUIC”), a Delaware insurer
with its main office in the District of Columbia, sued its D.C. landlord in D.C.
Superior Court to rescind its lease, alleging asbestos issue. The landlord
countersued for rent and was awarded a judgment of $2.5 million. After the
landlord attempted to execute on the judgment, the Delaware Insurance
Department seized CUIC’s assets and obtained an injunction in Delaware
state court against further claims. The landlord ignored the Delaware
injunction and pursued its remedies in D.C. including the execution of its
judgment against a building transferred post‐judgment from CUIC to its
parent in return for a note against cash in a bank account. The Court of
Appeals posed the question presented as: “To what extent does the
appointment of a receiver for a Delaware insurance company by a chancery
court in Delaware – a state which has enacted the Uniform Insurers’
Liquidation Act…prevent a judgment creditor from executing on the
insurance company’s property located in the District of Columbia?” Prior to
the appointment of the receiver in Delaware, the landlord had served an
attachment on CUIC’s bank; a later attachment suggested additional funds
had been received by the bank. Held, landlord was entitled to those funds in
the bank at the time of the first attachment; additional cash collected after
the appointment of the receiver could not be attached by the landlord. The
transfer of the building to the parent company to protect it from attachment
was a fraudulent conveyance as a matter of law and thus ineffective. The
landlord’s lien, since it predated the receivership, could not be enforced by
foreclosure. Further, because the District of Columbia (unlike Delaware) had
not adopted the Uniform Liquidation of Insurers Act, the Delaware receiver
was not vested with title to the assets in question. The court further
declined to adopt the ULIA’s scheme of priorities as a matter of D.C.
common law.
Florida Florida Dep’t of Ins. v. Blackburn, 633 So. 2d 521 (Fla. Dist. Ct. App. 1994).
The court held that the receiver stated cognizable causes of action on behalf
of an insolvent insurer against prior owners and managers for management,
waste, RICO and voidable preferences. The court rejected “sole
shareholder” argument that, under the allegations of the complaint,
defendant only damaged himself, because creditors of the insurer also were
damaged. The court also refused to impute the defendant’s alleged
misconduct to the insolvent insurer under the imputation rule (in pari
delicto), because the imputation rule protects only innocent parties.
In re Allen, 217 B.R. 945 (Bankr. M.D. Fla. 1998). The receiver for an insolvent
insurer obtained a judgment against Allen. Allen filed bankruptcy, and his
discharge was denied because he had failed to account for assets.
Notwithstanding the denial of his discharge, Allen sought to avoid the lien of
the judgment on property that he had claimed as exempt. The bankruptcy
court agreed with Allen, holding that a debtor in bankruptcy may avoid a lien
on exempt property regardless of the nature of the underlying debt. See
also In re Clark, 217 B.R. 943 (Bankr. M.D. Fla. 1998).
Lidsky v. Florida Dep’t of Ins., 643 So. 2d 631 (Fla. Dist. Ct. App. 1994). Florida
statute, based upon Section 31 of the NAIC Model Insurers Rehabilitation