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McConnell v. Industrial Indemnity Co. 219 Cal. App. 2d 809, 333 Cal. Rptr. 418
(1963). The insurance commissioner persuaded a group of insurance
companies to execute an agreement providing for the reinsurance and
assumption of liabilities of an insolvent insurer's worker compensation policies.
The court concluded that the receiver of the insolvent insurer was obligated
first to transfer to the reinsurers, which had undertaken such workman's
compensation obligations, the funds collected in liquidation, to the extent of
the liabilities under the workers' compensation policies. This was to be done
before the claims of general creditors of the defunct insurer were satisfied.
Texas Commerce Bank v. Garamendi, 28 Cal. App. 4th 1234 (Ct. App. 1994).
As prevailing parties in a declaratory judgment action challenging the
Commissioner's failure to designate their priority status as that of
policyholders, the appellants were entitled to an award of attorney fees and
costs as provided for in their investment contracts with the insurance
company.
W. J. Jones & Son v. Independence Indemnity Co., 52 Cal. App. 2d 374, 126 P.2d
463 (1942). Under the insurance code, the commissioner has the duty to
collect the assets and distribute them ratably among the creditors subject to
certain priorities which appear in the code.
Colorado
District of Columbia
H.M.O. Systems, Inc. v. Choicecare Health Services, Inc., 665 P.2d 635 (Colo.
App. 1983). This case involved a judgment for breach of lease and breach of
contract against an insurer put into receivership because of insolvency. The
court held that the money judgment in favor of the creditor was a "class IV"
claim of a general creditor since the creditor did not have an ownership
interest in the leased equipment.
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.