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Rhulen advanced claim payments to Transit customers in return for claim
assignments. Rhulen then brought suit against various state guaranty
associations for reimbursement on advanced claims. The Second Circuit
affirmed a dismissal based on lack of subject matter jurisdiction, finding that
since the guaranty associations were unincorporated associations, their
citizenship was deemed the same as the citizenship of their members. The
Second Circuit found that since at least one insurance company member of
each guaranty association was a New York citizen, subject matter jurisdiction
did not exist due to the incomplete diversity of the parties.
Third Circuit
Arkansas
Colorado
University of Maryland v. Peat Marwick & Co., 923 F.2d 265 (3rd Cir. 1991). The
Third Circuit vacated an Order dismissing the policy holders' Amended
Complaint and remanded to the Pennsylvania District Court an action brought
against the independent auditor (Peat Marwick) of insolvent Mutual Fire,
Marine and Inland Insurance Company, holding that Burford and Colorado
River abstention doctrines did not apply to bar the Federal action because (1) it
did not appear that the Commonwealth court would have jurisdiction over the
policyholder(s)' claims in the insolvency estate but rather a third party (Peat
Marwick); (2) the policyholder(s)' claims were distinct from those brought by
the Commissioner of Insurance on behalf of the insolvent insurer in the
Commonwealth court action; and (3) the action was at law, not in equity, and
sought only money damages. 2 Hence, both the District Court and
Commonwealth Court actions were allowed to proceed simultaneously.
Larey v. Morris, 432 S.W.2d 861 (Ark. 1968). The court noted the Arkansas
insurance commissioner had made a mistake in stating that the insolvent
insurer was "not obligated to pay the judgment" against the former insured.
The court noted that the claimant against the insured motorist could always
attempt to collect a judgment directly from the insured or pursue the claim in
the insolvent insurance company's estate.
Benham v. Manufacturers & Wholesalers Indem. 685 P.2d 249 (Colo. App.
1984). The court held that although an alleged impropriety by the Insurance
Commissioner may justify a third party action against the Commissioner, the
subscriber is still responsible for payment of the assessment.
Connecticut Connecticut Ins. Guar. Assoc. v. Raymark Corp., 215 Conn. 224, 575 A.2d 693
(1990). Connecticut Insurance Guaranty Association ("CIGA") was statutorily
created to pay claims of policyholders of insolvent insurers. Consequently,
CIGA serves as a resource for persons injured by asbestos manufacturers,
many of whose insurers have been declared insolvent. An injured party having
a claim against an insured tortfeasor has a legal interest in a coverage dispute
with the tortfeasor's insurer and must be either notified or joined in a
declaratory judgment action to decide the coverage question. Accordingly, in
the absence of some representative of those having a personal injury claim,
the court lacked subject matter jurisdiction in a declaratory judgment action
brought by CIGA, which was acting in place of the insolvent insurer of an
asbestos manufacturer.
Connecticut Ins. Guar. Assoc. v. Union Carbide Corp., 217 Conn. 371, 585 A.2d
1216 (1991). The Connecticut Insurance Guaranty Association ("CIGA") became
obligated to pay claims arising from a Union Carbide plant disaster in Bhopal,
India after some of the Union Carbide's carriers became insolvent. The
Connecticut Supreme Court held that, under the statutory definition of
2 On remand, the Pennsylvania District Court dismissed plaintiff's case based on a statute of
limitations and lack of causation grounds. 1991 U.S. District LEXIS 13561 (9/25/91).